67 - The Altcoin Slayer | Eric Wall

Eric Wall is a prominent thinker and contrarian in the crypto space. He has an independent mind and is unafraid to bust through groupthink and act as an ideological razor for the crypto community. In this episode, Eric dives deeply into a variety of profound takes on Bitcoin, Ethereum, and his approach to the community. ------ 🚀 SUBSCRIBE TO NEWSLETTER: https://newsletter.banklesshq.com/ 🎙️ SUBSCRIBE TO PODCAST: https://podcast.banklesshq.com/ 🎧 Get this Episode's Debrief: https://shows.banklesshq.com/p/exclusive-debrief-the-altcoin-slayer ------ BANKLESS SPONSOR TOOLS: 💰 GEMINI | FIAT & CRYPTO EXCHANGE https://bankless.cc/go-gemini 🔀 BALANCER | EXCHANGE & POOL ASSETS https://bankless.cc/balancer 👻 AAVE | LEND & BORROW ASSETS https://bankless.cc/aave 🦄 UNISWAP | DECENTRALIZED FUNDING http://bankless.cc/uniswap ------ Bankless Podcast #66: The Altcoin Slayer Guest: Eric Wall Eric Wall is CIO of Arcane Assets, and a well-known (and often infamous) writer and thinker in the crypto space. He has engaged in arguments with camps and tribes throughout the space, remaining unapologetically independent and committed to his values. Though a Bitcoiner at heart, Eric has come around on Ethereum as the ecosystem has matured. In this episode, we dive into values and the ethos of crypto that Eric fights for. As a principled believer in trustless systems and decentralization, Eric walks through many of the big-picture obstacles and accomplishments of the crypto space. Viewing this landscape with a digital biologist's lens, we address these projects as digital organisms, following many of the same laws we see in nature. Wherever organisms exist, Darwin is nearby. Eric brings a refreshing and unfiltered set of takes to the Bankless Podcast, reminiscent of other independent thinkers we've had on like Hasu. Regardless of your opinions on Eric, he represents an important part of the blockchain conversation. He serves as an ideological razor, giving no one the benefit of the doubt and prioritizing accountability and earned legitimacy. ------ Topics Covered: 0:00 Intro 4:45 Eric Wall, the Altcoin Slayer 7:45 The Term “Trustless” 16:58 Eric’s Approach to Crypto 22:50 Networks are Organisms 31:50 Survival of the Fittest 41:50 Bitcoin vs Layer 2 59:15 Tribes vs Facts 1:06:30 Eric’s ETH Journey 1:21:43 Thoughts on Proof of Stake 1:31:14 Is ETH Money? 1:40:58 What ETH Gets Wrong 1:53:55 Navigating the Frontier 2:01:00 Closing & Disclaimers ------ Resources: Eric on Twitter https://twitter.com/ercwl?s=20 Proof of Stake is Less Wasteful https://ercwl.medium.com/proof-of-stake-is-less-wasteful-b2854a191766#:~:text=Image%20of%20a%20diesel%20generator,ever%20had%20on%20the%20platform. ETH is Irreplaceable https://newsletter.banklesshq.com/p/eth-is-irreplaceable ----- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research. Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here: https://newsletter.banklesshq.com/p/bankless-disclosures

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:08Ryan Sean Adams?

  Welcome to Bankless, where we explore the frontier of internet money and internet finance. This is how to get started, how to get better, and how to front run the opportunity. I'm Ryan Sean Adams. I'm here with David Hoffman, and we're here to help you become more bankless. David, we have the altcoin slayer on the show, Eric Wall. How is that conversation?

• 0:31David Hoffman?

  Yeah, this is the first time I've actually gotten able to talk to Eric Wall, and he's somebody that's really helped me formulate mental models in this space. And Eric Wall, for those that don't know, very, very prominent in 2017, 2018 as a guy that seemed to go against everyone's grain, like not just one particular's community's grains, but everyone's grain. And so like while he's a big Bitcoiner, he's not afraid to tell Bitcoiners when they're wrong. And while he was never really convinced by the Ethereum crowd, he has, as of late, talked very positively about certain merits of Ethereum's construction. But then we'll also go ahead and say that the overall all Ethereum project is a complete mess. So this guy thinks for himself, and that's kind

• 1:15David Hoffman?

  of why we got him on, not to go into depth about his mental models and the way that he thinks, and his opinions about certain things, but then also as an exploration into the way that he puts thoughts together inside of a space where so many people are telling you how and what to think. Eric Wall thinks for himself.

• 1:37Ryan Sean Adams?

  This is Bankless meets Tribeless. I really feel like Eric Wall strives as much as possible not to affiliate himself with one particular pattern of thought or one particular tribe. In fact, I think early on, he very much associated himself with, as a Bitcoiner, like very much put the mantle of that tribe on his shoulders. And we talked about almost his like ejection from the Bitcoiner sphere by the so-called high priests and what that, what that felt like. It was almost like he was excommunicated. So we We went through that and I guess maybe the through line here is we have a contrarian thinker, a tribeless individual. And what's interesting to me, David, is he is coming to some of the

• 2:21Ryan Sean Adams?

  same conclusions that we've come to as part of the the bankless platform, some different ones, but also many of the same conclusions. But he's doing it like outside of the Ethereum ecosystems influence or the bankless ecosystems influence. He's almost like arriving at these opinions independently. And that that's what was so interesting about, I think, this podcast and Eric's journey and his story. It's just the way he thinks, but how he has arrived at these opinions. It's definitely not through group think and through like tribe affiliation. It's like when he says it, you know that like he actually believes it in that moment. Not to say he doesn't

• 3:06Ryan Sean Adams?

  change his mind, because there are many instances where he he's admitted changing his mind. In fact, you know, the the tweet that got him on the show, I think, was he said in 2020, he stopped being wrong about ETH. Those are his words, not mine. He stopped being wrong about ETH. So this is someone who's also very willing to do it like a 180 when he sees that the evidence points in a different direction. So kind of a cool thinker, somebody we've wanted on the podcast for a while.

• 3:35David Hoffman?

  And we actually went down a rabbit hole that we weren't expecting to towards the beginning of the podcast where we get to talk about my favorite subject of like evolutionary crypto asset.

• 3:45Ryan Sean Adams?

  It was not planned.

• 3:46David Hoffman?

  Yeah, what is it like biology and like the evolution of crypto networks, right? I'm I have a deep seated belief that the best way to understand this industry is through a biological perspective. And Eric Wall shares that belief. And we actually kind of went down that rabbit hole earlier in the podcast. And I think that's going to be a new line of a line of topic on the bankless podcast that we haven't really touched on. I'm really happy that we were actually able to touch on it.

• 4:13Ryan Sean Adams?

  Yeah, it's kind of like expect the unexpected in this podcast. Right at the very beginning, he actually called me out on some beef that we've had previously, right? So we just enter in on that conversation. So overall, really fantastic episode. Of course, you can get a download of David and my thoughts in the debrief episode. That is available for premium subscribers on the Bankless premium feed. So make sure you check that out too, if you are a premium subscriber. And with that, David, let's talk about the fantastic sponsors that made this episode possible.

• 4:46David Hoffman?

  Bankless is proud to be supported by Uniswap. Uniswap is a new paradigm in asset exchange infrastructure. Instead of a cumbersome order book system where trades are matched with other humans, Uniswap is an autonomous piece of software on Ethereum, which is what Ryan and I call a money robot. No human counterparties or centralized intermediaries, just autonomous code on Ethereum. Input the token you want to sell and receive the token you want to buy. Something brand new in the Uniswap ecosystem is the Uniswap Grants Program is now accepting applications for grants. We have been saying this for a while and we'll say it again. DAOs have money and they are in need of labor. If you think that you have something to contribute to the Uniswap DAO, apply for a grant to Uniswap.

• 5:30David Hoffman?

  Just look at the size of the Uniswap treasury. It's almost $3 billion. This mountain of capital is looking for labor. Do you have something of value to contribute to the Uniswap DAO? No matter how big or small your idea is, you can apply for a uni-grant at unigrants.org and help steer Uniswap in the direction that you think it should go. That's exactly what we did to get Uniswap to be a sponsor for Bankless and you can do the same for your project. Thank you, Uniswap, for sponsoring Bankless. Aave is a borrowing and lending protocol on Ethereum and just recently released Aave version 2, which has a ton of cool new features that makes using Aave even more powerful. With Aave, you can leverage the full power of DeFi, MoneyLegos,

• 6:13David Hoffman?

  Yield and Composability all in one application. On Aave, there are a ton of assets that you can deposit in order to gain yield and all of those same Assets can also be borrowed from the protocol if you have deposited collateral. Here you can see me getting a 200 USDC loan against my portfolio of a number of different DeFi tokens and ETH. I'll choose a variable interest rate because it's a lower rate than the stable interest rate option. But I could choose the stable interest rate option if I wanted to lock that interest rate in permanently. One of Aave's V2 features is the ability to swap collateral without having to withdraw your assets. Trade them on Uniswap and then deposit them back into Aave. Aave does all of this for you, all in one seamless transaction.

• 6:56David Hoffman?

  So you don't have to repay loans in order to change the collateral you have backing them. Check out the power of Aave at Aave.com. That's A-A-V-E dot com.

• 7:06Ryan Sean Adams?

  Bankless Nation, we are super excited to introduce you to our next guest. Eric Wall is a contrarian crypto investor. He is the Chief Investment Officer at Arcane Investment. He's someone I don't always agree with yet. He's also someone I always appreciate, and I think that's because he busts through group think. He isn't afraid to change his mind, yet he manages to stay extremely convicted in his beliefs at the same time. I think we're going to learn a lot from Eric in this podcast. Eric, welcome to Bankless. How are you doing today?

• 7:39Speaker 02

  Thank you so much, Ryan. Kind of surprised to be here because we've had this, you and me, we've had this ongoing spat about a particular argument that we've had in the past about how to correctly apply the term trustless to different types of cryptocurrency systems. And because of our inconsistencies of opinions there, I've, I'm a principled, I'm a principled person and I try to stick to my principles as hard as I can. And one of my principles is that if somebody uses terminology in a way

• 8:19Speaker 02

  that I think is harmful to the overall ecosystem, then, you know, I cannot prevent people from saying what they say, but I can at least choose who I engage with. I think the spat that we had was, you know, kind of a mild one and, you know, now I'm pretty much over it. But it would be good if we could just, you know, just spend. A few seconds, just hashing over that little piece of disagreement that we had around trustlessness. I can explain the argument if that's helpful to you.

• 8:56Ryan Sean Adams?

  Yeah, let's do it. And to Bankless listeners, as you can see, the introduction did Eric justice because we didn't plan any of this pre-recording and we're jumping right in with the contrarian opinion. Eric, yeah, I'd love to hear you. So I think this is in regards to an article that I wrote sometime in March 2020. And the reason I'm remembering is actually because I did pull it up because I was wondering if you would pull this up and want to talk about this first. And the article title is called ETH is Irreplaceable. And it's basically a taxonomy about the trustlessness, the spectrum of trustlessness of certain assets. So I make

• 9:41Ryan Sean Adams?

  the basic assertion that, you know, different assets on Ethereum have different, or in crypto writ large, have different levels of settlement guarantee, right? And like even in the real world, different assets have different levels of settlement guarantee. Some are backed by the nation state, some require like legal, legal trust, some are more bearer asset instruments, and some I put in a quadrant called a trustless quadrant. And again, I pitched this as sort of a spectrum of trust, right? Recognizing that nothing on earth, nothing that can be created, nothing that has ever been created is completely trustless. But I think you take

• 10:24Ryan Sean Adams?

  issue with the term trustless in and of itself. And I would love for you to explain that as we start this episode, where you take issue. And we'll see whether we actually disagree at the end of this, or whether we agree.

• 10:39Speaker 02

  Yeah, so I can give my take. The reason that I took issue with how you characterized the trustlessness taxonomy was that

• 10:51Speaker 02

  If I remember it correctly, and please correct me if I'm wrong, you basically put different cryptocurrency projects on an axis, on a spectrum where they went from more trustless to less trustless. Whereas in, yeah, you can see in this chart here that

• 11:17Speaker 02

  basically you can go from more trustless to less trustless, where I think that there are

• 11:25Speaker 02

  things that are completely trusted that should not be on a trustless diagram at all. So I don't think that trustlessness can incorporate everything, because there are some things that should be completely outside of the spectrum because they're trusted. So I don't think that you can say that, you know, a bank is just less trustless, or and that the DAI is more trustless. I think that banks are 100% trusted and doesn't belong in a diagram of trustlessness at all. I think that's how I recall the argument.

• 12:09Speaker 02

  And I tried to persuade you to remove completely trusted things from a trustlessness diagram. And you rebutted and said, well, you know, that's not how I think about it. And I said, well, if that's the case, then I'm going to stop engaging with you until

• 12:30Speaker 02

  you've refreshed your thinking on it. And then we had all these discussions around how you can view this topic. And now, you know, I've listened to your bankless part. And I don't think that you are

• 12:43Speaker 02

  a malicious actor in any way. We just had a disagreement about terminology. But I don't think that you are harmful or that you're bringing a negative

• 12:58Speaker 02

  nuance to the industry. So that's why. That's why I came on. That's why I've now come around. So I'm on the pod now. I think we can get over this and we can, we can be friends again and, and chat about things that are really important because I think that our main goals with our efforts in the cryptocurrency space are pretty much 90% aligned.

• 13:21David Hoffman?

  So Eric, I think that if I'm interpreting what you're saying correctly, that what you are really asking to change in this diagram here is really asking to change where like the X, X and Y axes are. It's like on, and so perhaps they, so you, you do agree that there's this thing in concept called, called trustlessness that some crypto assets try to emulate, like, you know, Bitcoin and Ether to perhaps the most degree. And I think what you're saying is everything to like, perhaps on the left side of this diagram, you, you are saying like, why are we even calling it, putting it on the trustless spectrum at all in the first place? Let's use completely different words for

• 13:59Speaker 02

  Exactly.

• 14:00David Hoffman?

  Completely different part of this zone.

• 14:02Speaker 02

  Exactly. Exactly.

• 14:04Ryan Sean Adams?

  What different words would you use than Eric versus trustless?

• 14:09Speaker 02

  No, I just put trusted and trustless in completely different axis. You should have a split here where you put things that ultimately do depend on trust in a complete, on a completely different axis here. And because right now, if you look at the, you have trustless issuance

• 14:34Speaker 02

  on the Y axis and then the trustless settlement on the X axis. I think that you should have, there should be an axis that goes to the left where you have completely trusted things. But you know, I don't want to spend too much time on this spat.

• 14:52Ryan Sean Adams?

  Can I just, can I just say something? I actually don't think there's a real spat there. I think much of this is actually semantics. And probably the result of me just being a sloppy diagram drawer. I think maybe someone who's listening to bankless and in the bankless. Nation can take the diagram that we're showing right now and come up with something that better illustrates that. Because fundamentally, I think I agree with with what you're saying, right? Like, some assets are completely trusted on on one side of the spectrum. And then you have the spectrum of trustlessness, where maybe you get this this perfect state on the other side of the spectrum.

• 15:34Ryan Sean Adams?

  That's that's completely trustless, but of course, no asset can achieve that. I just think the diagram is maybe drawn in a way that does not make that clear. And somebody else could do a better job. I'm not a diagram. That is not my day job. I was just trying to write an article to get a concept out there and a mental model out there, which is the mental model of different assets on Ethereum have different degrees of trust. So if you're buying USDC on Ethereum, final settlement actually happens in meatspace. It happens inside of a Coinbase bank account in the traditional finance world.

• 16:15Ryan Sean Adams?

  And that is a much that has much different settlement guarantees than something like DAI, where you have a larger degree of that settlement happening on chain. And of course, that is much different than something like Bitcoin, where the entire settlement process, it's a bearer instrument, the entire settlement process is on chain. I felt like the crypto world didn't completely understand that at the time. Anyway, I actually think that we are closer in alignment, maybe than than was previous thought coming into this podcast. And some of this is just as a result of a sloppy diagram design that could be improved upon. What say you, sir?

• 16:53Speaker 02

  I'm perfectly happy with this resolution of the argument. And I think that if we just zoom out a little bit and like, why are we having this types of disagreements in the first place? It's because, you know, my um interest in the cryptocurrency space. Um, you know, I've I I got into into the Bitcoin industry uh very long ago. I purchased my first Bitcoin in two thousand twelve. Uh, please don't rob me because I got the I lost all of them when Mt. Gox uh collapsed in two thousand fourteen. So don't think that uh, you know, don't come to my house and think that you're gonna find find an ocean of Bitcoins there that I bought for

• 17:36Speaker 02

  uh ten dollars piece. Um, uh, but uh, you know, I've become so fascinated by uh cryptocurrencies as a concept and as a revolution that I'm so ideologically and philosophically interested in the space that you know, how I view my participation and interest in this space. It's not about, you know, I don't care uh as much as I probably should uh from a commercial perspective about uh, you know, making the right types of business relationships or uh positioning myself strategically. Like if I had that intention of, you know, just building out

• 18:20Speaker 02

  um, you know, uh, making as much money as possible, then I would have been on Bankless Podcast a year ago or, you know, so to to to market myself. But I care about the space and I care about things being uh stated correctly so that we can as an industry move in the direction that I think is most interesting. And that direction is where how much can we decentralize pieces of the economic world and the finance world uh to to basically create a form of revolution that changes how humans can interact and how society can function. Uh, that is much larger and much more interesting goal to me than, you know, caring about who I am friends with.

• 19:06Speaker 02

  Um, so that's why I will get into arguments with all sorts of people that I kind of actually like. Uh, but I cannot, you know, I'm just trying to make sure that we're all on the right path of uh optimizing uh how much we we we can improve uh the systems, the systems of today.

• 19:27David Hoffman?

  Well, Eric Wall, I think that is an extremely noble goal and it's a goal that we share on the Bankless Podcast as well. We very much view this as a very fun industry with a lot of money-making potential, but really at the root of it is much more of a political and cultural revolution. And we see ourselves as people that are attempting to steward that revolution into existence. And so tip of the hat for being on that same path as well. And I kind of want to just dive deeper into why this industry and why this revolution resonates with you so much. You talked about your philosophical interest in this industry. Let's dive deeper

• 20:11David Hoffman?

  down that hole. What about this industry do you think really is fitting for the future of the world that you think should come about?

• 20:20Speaker 02

  Yeah, I just want to add one thing to that before we get into that topic, which is, you know, how come the three of us, we seem to have the same ideological alignment? How come we get into these kinds of spats? And I think that has to do that I am such an old, I describe myself as an old dog. You know, my terminology and my way of thinking of things comes very much from the early days of Bitcoin. And we shaped the early terminology for things in order to make sense and classify different cryptocurrency systems. And that has been a

• 21:02Speaker 02

  very conservative and restricted type of terminology and taxonomy. So that's why, you know, people that come into this space perhaps a little bit later that aren't, you know, as plugged into that type of taxonomy thinking, that's why I think we can get into disagreements. It just happens that we come a little bit into this space from different angles. I'm a longtime Bitcoiner. We care very, very much about very specific anal things and we are a CD in terms of that. So that's the only reason that I think that, you know, we have this kind of kinds of spats.

• 21:43Speaker 02

  But to get back to your question, um, you know, I have a, I have a, I have actually, I, I don't have a YouTube channel, but I have a YouTube account. And I use that YouTube account just to collect all the videos of presentations that I've made that other people have uploaded. And I put it into a, a, a playlist so that I can, you know, gather, um, all my performances in the, in, in the past that have been recorded. And one of those performances that I personally like the most was when I was invited to a Swedish cryptocurrency. Just a meetup and they asked me to talk about consensus algorithms and, uh.

• 22:30Speaker 02

  In that format, I got full, full, uh, control of what I wanted to express and what I wanted to say. And what I wanted to talk about there was, and now I think, uh, maybe this sounds, uh, like an outdated take or, you know, everyone's heard it before. But when this happened, this was four, four or five years ago. I think it was four years ago when we talked about it. I described how I view, uh, Bitcoin as a digital, uh, a primitive digital form of life. Because if you think about what actually constitutes life, what is life form? Is an amino acid a life form? Is a bacteria a life form?

• 23:14Speaker 02

  Uh, there is no discrete step where something, uh, goes from being, you know, not alive to more alive. It's, it's a spectrum, just like the trust, trustlessness spectrum that we talked about. Uh, we, when things are complex enough and they are self-sufficient enough and, uh. They act organically enough, then we say they are alive. So, you know, a bacteria operates almost entirely algorithmic.

• 23:48Speaker 02

  And I think that Bitcoin, when I compare Bitcoin to a very primitive life form, like a bacteria, or even perhaps a mushroom, mushroom is the one that I think Bitcoin mostly resembles. I do classify Bitcoin as a, as a, as a, as a, as a, as a primitive form of life. And I think that there are gonna be more and more primitive life forms. Like everyone knows, of course, like AI, when AI becomes sentient. But you know, not all life forms are sentient, but they can still be sentient, because they can still be life forms. So we don't have sentient digital life forms yet.

• 24:28Speaker 02

  But we are now seeing that we are ha- are having digital life forms that haven't reached sentience yet. So the way that I think about it and what makes me most interested in the cryptocurrency space is just thinking about how we are seeing digital things come to life and we can analyze those as life forms. And I think that if you look at the Bitcoin system, you know, every 10 minutes, there's a block, almost like a pulse. And if you listen, if you put your ear next to a Bitmain server hall, you can actually hear Bitcoin's breath.

• 25:09Speaker 02

  So I do think, I do think of these things as primitive life forms and are very interested in, and, and all cryptocurrencies are competing with each other, which makes it, we also have an evolutionary aspect to it, which where the strong and the weak, the, the, the strong, it's, it's the survival of the fittest. It's basically like a big Hunger Games game. And what adds an extra interesting quality to this evolutionary game of cryptocurrencies is that what's, you know, in the, in the physical evolutionary world, you know, a cat cannot clone the features of a dog. A cat, it, it can do that over many, many iterations.

• 25:54Speaker 02

  And it can evolve into a dog if it needs to, but in the cryptocurrency. World uh one cryptocurrency can actually steal features from another project, which changes the entire dynamics of the evolutionary game. So uh Charles Darwin, when he was analyzing different life forms and evolution, um that was probably very interesting to him uh to think about. And I think that we have a new uh evolutionary game with different rules that are to me, because they're new, it's it's even more interesting. So it's the intellectual uh challenge of being able to actually take all of that in and analyze it from that perspective.

• 26:39Speaker 02

  And that later also translates like if you understand the evolution of cryptocurrencies, if you have that as your framework, that you're thinking about it as as as uh things that have different evolutionary char- characteristics that that make them uh fit to survive, then you can actually become an investor uh because if you can pick the ones that are likely to survive, then you can also be a good investor. So that's how uh even though this sounds very, you know, abstract and theoretical and scientific, it actually maps perfectly well with being a cryptocurrency fund manager, because I just gotta try to understand the dynamics of the game and the evolutionary game.

• 27:20Speaker 02

  And and and I think, David, that you've probably written some article that uh also tunes into this theme, haven't you?

• 27:29David Hoffman?

  Yeah, yeah, this is a really one of my favorite subjects in this industry is is is I actually don't think you can really understand the crypto industry at large if you aren't viewing it from a biological perspective. Uh and one of the reasons like this this industry is famously like so multidisciplinary and that complexity of so many disciplines turns into complexity theory, uh which turns into just the the conversation that you started off with was with is where does life actually begin? And and we don't really know, but the patterns are that life is always about the management of economic resources. And if some sort of organizational entity can manage these economic resources appropriately

• 28:13David Hoffman?

  to the benefit of the life form and growing because it's as a life form, it is efficient at consuming economic resources while also capturing further economic resources. All of a sudden, we have like the groundings for sustainability. And so I I applied this same sort of mental model to to DeFi apps, right? Where DeFi apps are, and I use ether as like the metaphor of like nutrients or food. Value is like the the new communication medium inside of the, you know, the internet of money or the crypto world. And so DeFi apps that consume ether and then output some sort of like useful product that is demanded by the market are able to go out into the world and venture into this

• 28:57David Hoffman?

  new landscape that is the internet, find nutrients, which is value, you know, valuable assets, and then produce something new, right? And so the the mental model for this is that like, or or more concrete model for this is that MakerDAO, you come in and you submit ether, you can, and the MakerDAO consumes that ether, and then it outputs dye, and that dye is demanded by the environment around Maker. And so because Maker is a viable economic manager life form, it has sustainability. And we can talk about that with basically every single DeFi app. Like, there's some amount of value input, there's some amount of value output, and

• 29:37David Hoffman?

  because the output is demanded, and because the the DeFi application is efficient, there is more value that is created by the DeFi app more than it is consumed. And all of a sudden, it is a net outputter of economic resources, which is good for the world. There's more value created by these things than what is consumed, and that's why they are sustainable, and we can put them into the category of life forms. And I think this is an insanely interesting topic of conversation that I was not actually did not know we would actually be going down this rabbit hole, but it's literally my favorite rabbit hole in all of crypto.

• 30:11Speaker 02

  Might as well, but yeah, that was something that I dived very deeply into into 2015, 2016. And it's been my framework of thinking for a very long time. But it's, I think you phrased it very well and I resonate with, with what you said to a very large degree. But yeah, let's, let's jump into the other, other topics that you guys wanted to discuss.

• 30:39Ryan Sean Adams?

  Well, really quick there, cause I think we're, we're starting to see how Eric well thinks, right? Which is a kind of part of the, the entire purpose of this podcast, because I think you, you bring some really interesting insights to the table. But you, you almost just painted yourself just now as sort of a, a digital biologist of types, right? Just studying the evolution of.

• 31:02Speaker 02

  Yeah, I used to call me, I, I used to call myself a crypto Darwinist. I was thinking about, I was, I was, I was, I was thinking about actually giving out the, that, you know, there's this Darwin award that you give to.

• 31:17Ryan Sean Adams?

  Someone does something really stupid there, right?

• 31:19Speaker 02

  Yeah, and I was thinking that I could be the crypto Darwinist and I could give the Darwin award to like projects like, you know, like Iota.

• 31:30Speaker 02

  Yeah, yeah, that has, you know, if, if, if a crypto project has, you know, one server and if that server shuts down, the entire system fails. Then you get the Darwin award.

• 31:42Ryan Sean Adams?

  Okay, so this was, this is like the question of like your lens on the world is a crypto Darwinist, a digital biologist, right? Like the, the large question is, I think in that perspective, what sorts of digital life forms are more likely to outsurvive others? Because if that's your lens of thinking, that's really how you have to think about everything, whether it's Bitcoin or Ether or Ethereum or any DeFi protocols. I'm curious before we get into some like specific takes from you, Eric, about that lens. What sort of digital life forms do you think have the best fit in crypto?

• 32:25Speaker 02

  Well.

• 32:28Speaker 02

  I'm gonna answer your question like from how I thought about it from three years ago, but my thinking has changed a little bit since then. But how I used to think of it was that if you're gonna think of something as a life form,

• 32:45Speaker 02

  is decentralization a very big necessary component? And I do think that it is perhaps one of the most fundamental components into creating something into a life form. Because, you know, if a server on your computer, is that a life form? I mean, you can turn it on, you can turn it off. It doesn't have an ability to sustain itself. Like if you look at the mushroom, the mushroom actually does provide, it takes up nutritions from the soil of the ground and it transforms that into a resource for the rest of the ecosystem of the nature.

• 33:24Speaker 02

  So it doesn't live, it lives in a kind of symbiotic relationship with nature. And I think that all life forms ultimately, in order to survive in the long term, have to find their place into the ecosystem, into the ecologics of it. And I think that Bitcoin fits very well in that category because, you know, Bitcoin pays for itself. So people want access to the censorship resistance system of Bitcoin to preserve wealth and transfer value. So that's how Bitcoin contributes to us as an organism.

• 34:05Speaker 02

  And then we contribute to Bitcoin by providing energy and electricity to Bitcoin. So there's a symbiotic relationship there where, you know, it's very difficult to kill Bitcoin because Bitcoin provides something to us. And as long as that organism is providing something to us and we need, and actually pays for itself with the currency that the miners can get from mining it, then I see a very... A very strong likelihood for that organism to survive. But then, of course, you know, there are and I'm not saying that that may, you know, that the most decentralized currency.

• 34:49Speaker 02

  And this goes into my to my later stage thinking of as of late. You know, how much does decentralization actually matter? You know, is a cryptocurrency? Like if you take something like

• 35:03Speaker 02

  a semi decentralized cryptocurrency. Does it naturally have a shorter lifespan? Just because it is more centralized. You know, my to my intuition tells me that more centralized platforms, they have regulatory

• 35:22Speaker 02

  regulatory risks around them that could cause them to get shut down at any point in time. So that the more centralized platforms are much more likely to survive in the long term. But we also have to consider that. Okay, so so what happens if a if I if I if a semi centralized platform meets regulatory crackdown? Can they not fork that platform? To use a more decentralized consensus algorithm and make the organism survive anyway? So I'm not as convinced today that, you know, I used to just look at the current fundamentals of each system. But now I am

• 36:05Speaker 02

  taking much more into account the transmutative qualities that all cryptocurrencies have. And I think that perhaps what breathes life into Bitcoin is not the code in the Bitcoin system. It's much more the community and the developer community that breathes life into the Bitcoin system as well as the Ethereum system. And that changes the equation a little bit. If you catch my drift.

• 36:38David Hoffman?

  Eric, so I'm reminded of this metaphor about like ant colonies or beehives where like there is this organism, right? But the organism isn't the bee, it is the swarm, right? It's not the, it's not an individual ant, it is the system at large. And these ants seem to be working in like this mindless, just like algorithm, this mindless, that each ant feels like this little bit of code and just is part of this overarching system. And it's the overarching system that is the entity at large, right? And that very much feels like Bitcoin or Ethereum, right? Where like the Bitcoin is, it's one, there's one thing, there's one Bitcoin, but there are like, you know, and potentially infinite nodes, right? And you, what Bitcoin is, when you download the Bitcoin blockchain, you

• 37:23David Hoffman?

  are replicating Bitcoin. You are going through the life process of, you know, copying the DNA and then putting it on your node, your server. So it's not your server that's alive, but it's the desire to replicate Bitcoin. And so holistically, I mean, there's a reason why Bitcoiners on crypto Twitter are called cyber hornets, right? Like the metaphor sticks. And so the not one person or individual represents Bitcoin, it's about a collective movement. But also, my question to you is like, you know, are to some degree ant colonies and beehives aren't really the most paradigm breaking thing as a life form on this planet? Like, you know, humans, I would say with, with more, in my opinion, centralized energies

• 38:07David Hoffman?

  inside of us, you know, a cerebral cortex and just straight up like brain power? I would say that is a, an analogy towards more centralization. And to some degree, like, the question is like, well, if there's more centralization, is the lifespan of the system shorter? Perhaps. But if the regulatory risk never comes, to some degree, there is some sort of justification for more centralized operation, more, more prefrontal cortex operation, if you will, because under the paradigm that, you know, regulatory risk never actually comes, well, then you can actually plan and progress further into the, into just, you know, become more progressive and more iterative faster. How do you feel about, about this analogy and this comparison?

• 38:51Speaker 02

  No, I like it because I like the ant colony analogy. And I think that if you apply that to humans, humans are also ant colonies in two ways. The first way is that, you know, we, just like you said, each individual ant is a very primitive being that can probably only have perhaps 12 different ideas and one at a time in their head. Go left, go right, it's hot here, it's warm there, it's sticky, you know. And also smell is one of the things that you use. But, and we humans, we are also, but, but the colony itself, the ant colony itself is a completely different life form that can resist.

• 39:36Speaker 02

  You know, if somebody puts a shovel into an ant colony, it reconstructs itself. So that, the ant colony is much more sophisticated and has much more a stronger chance to survive than what a single ant does because it works in this unified, as a unified life form. And we as humans, we also function that way in, in, in two ways. The first one is that we are made up by a bunch of cells and bacteria and all, and our internal organs. Each component within us is also a little bit like an ant.

• 40:18Speaker 02

  They have, they do have very, very simple tasks that they perform. But the collection of all of those components creates the sentient beings that are us. So in that way, each individual human is an ant colony. But then if you bring it into a larger scale and you think about society, society is also like an ant colony. And because we are compared to a society, each human is pretty, you know, simplistic. They go to work, they have their desires that they want to fulfill and they write and do things or carry objects. But in us, but if you think about like a nation or a Tao or a...

• 41:02Speaker 02

  Um, you know, you might humanity, humankind as a whole, that's also a very big ant colony. And I mean, of course, humanity as a whole has much more uh bigger chance to survive than a single uh human uh does. So I do think that decentralization happens at many different levels. And I do think that, you know, that and that's still something that I'm grappling with, you know, when I'm analyzing cryptocurrencies. Uh, how much the decentralization quality uh is necessary for the uh long term lifeline of that project?

• 41:42Speaker 02

  Also, because the thing that I previously mentioned, that these projects can transform, they can change, they can warp very quickly, much more quickly than anything we've seen in the fiscal world.

• 41:52Ryan Sean Adams?

  So let's talk about uh applying your brain and that lens to things. So you mentioned earlier in the introduction, Eric, that you you're part of the old guard, got into Bitcoin early. Uh, got into Bitcoin to to study this digital biology that was in front of you, just intellectual curiosity. You also got in for the uh social movement decentralization. You got in for the right reasons before everyone knew it was going to jump to like fifty K, right? Um, but we had an inkling at that time. I I'm curious, though, because I've seen you on Twitter and other places. You're also not afraid to break rank with some of the old guard.

• 42:33Ryan Sean Adams?

  And I think, of course, it's uh difficult to say that Bitcoin has any one singular uh thought view, but certainly Bitcoin maximalists do, which is there shall be only Bitcoin. Bitcoin will accrue the most value. There there are certain other i ideals, I I would say, that I would attribute to Bitcoin maximalism. I'm curious your thoughts on this, Eric. What do you think Bitcoiners get wrong?

• 43:01Speaker 02

  Um, yeah, this is such a uh such a tough, tough uh topic to discuss and something that I've been one of my uh like main, not only professional, but also, you know, there's personal challenges in life. Um, you know, I

• 43:20Speaker 02

  As I said, I think that you framed it pretty correctly that I'm this digital biologist and I observe these different life forms and I'm very interested in the dynamics and the interplay and the Hunger Games of crypto. That's what I'm primarily interested in. So I don't, and in that game, you know, I have things that I root for and I root for the decentralized ones to survive. Because if they survive and the industry moves in that way, then I think that we have very, I mean, if we focus on centralized systems and then they get shut down and then the game is over and there's nothing more for me to analyze.

• 43:57Speaker 02

  That's why I try to make sure that we keep things as decentralized as possible. And that's why I have been a proponent of Bitcoin for very long. But if there is another system that comes along and it can flaunt their wings in a way that is interesting. You know, I'm not gonna say that I just want this single life form to persist. I want the evolutionary process to produce the absolute best winner. And in order to do that, you have to,

• 44:35Speaker 02

  you can't, you can't lock your mind into a single frame of thinking. And one of the, what's happened, what happened to me interacting with the Bitcoin space was that in 2017, what happened was that you saw all these other cryptocurrency projects pop up. And you had tons of capital flowing into ICOs and all of them marketed themselves as the next Bitcoin that had unlimited scalability, no fees and perfect decentralization. And I saw that a large of the community that could have become Bitcoiners and that could have contributed to our goals of breathing this life form

• 45:19Speaker 02

  or helping this life form develop were directed in the wrong direction. And I, and I knew that because of my computer science background. Background, I was was, and I I actually, my master's degree in computer science, I did study. I took my degree to specifically arrange it around the cryptographic primitives that underpin blockchain technology. So my master's thesis that I wrote in two thousand and fifteen was about blockchain technology. So I knew that I had the ability to dive deeply into these different white papers and understand which projects are poorly constructed.

• 45:57Speaker 02

  So I took it upon myself to try to educate or help people understand which projects are the wrong directions if we want to create everlasting life forms. So the reason that I became very popular in the Bitcoin industry was because they they they they they used to call me the altcoins layer. They viewed me as a person that could protect Bitcoin. And you know, I had I had I had meetups that I would go to here in Sweden where they would, you know, basically, before I went up on stage, they called, "Let's bring on the altcoins layer," and then everyone applauded.

• 46:42Speaker 02

  And that made me very, very likable. Everyone liked me in the Bitcoin industry. And of course, I liked being liked by a lot of people, a lot.

• 46:54Speaker 02

  But my I my intellectual interest in this space has never been tribal in the sense that I just want my coin to survive. I I I zoom out and I just want the industry to survive. And in order for the industry industry to survive, it means that we need to make the best decisions possible. So what happened to me was that I noticed some types of research going on in the Ethereum side of things. Uh, if you want, if you want, if we want to get specific, it was actually uh the ability that you could construct uh layer two solutions on top of Ethereum

• 47:39Speaker 02

  uh that provided uh uh very, very attractive uh decentralization uh properties uh whilst also preserving much, much more of the UX uh advantages uh than for instance, Lightning does. So I think that Lightning is very good at being decentralized, but I don't think that Lightning has a great user experience. Whereas if you look at the rollup, uh it's uh it has a very high degree of decentralization because they've solved the so-called data availability problem that used to haunt these layer two solutions on Ethereum protocols before, but they solved that problem.

• 48:20Speaker 02

  And uh a rollup functions very much in a way as a sidechain functions where uh maybe, maybe if I'm getting too complicated with things, but if I put it simply in a rollup, what you can do, uh if you have an Ethereum address, I uh right now, I can send you money and uh uh uh an endless amount of money or not endless, but I can send you any amount in my wallet to your wallet on the rollup without you even knowing about the rollup system existing, without you running a node. All you have to do is generate the private key, give me the public, your Ethereum address, and I can send you for low fees at an excellent user experience. I can send that money to you. Whereas in Lightning, that's not possible.

• 49:05Speaker 02

  The recipient has to run a Lightning node. They need to have inbound liquidity in order to accept the payment. Um, so uh when I noticed this, uh that the layer two systems on Ethereum um were uh providing benefits that we couldn't do in Bitcoin because we don't have uh statefulness, we don't have uh and if we look at something like ZK rollups, we don't even have the uh, we don't even have the uh, the, the, the uh. The virtual, a virtual machine in Bitcoin or opcodes, if you will, we don't, I don't know if you're familiar with the word, but Bitcoin basically operates on something called opcodes.

• 49:48Speaker 02

  And each opcodes executes a programmatic function and we don't have complex enough opcodes in Bitcoin to create something like easy K rollup. And ZK rollups and optimistic rollups are excellent layer two constructions. And we can't build those in Bitcoin unless we upgrade the system in a little, in, in some way. So that made me, um, you know. I tried to, I, I thought that, you know, I had this naive theory that because I had been a Bitcoin for so long and they, I was the old coin slayer and everything. And I thought that everyone really believed me when I, uh, you know, that I was intellectually honest.

• 50:33Speaker 02

  I thought that I had made enough progress as a Bitcoiner and demonstrating how much I'm committed to the right goals and ideals. That when I say that there is something happening in the Ethereum space that we should pay interest to, because it moves, it moves the needle in terms of technological innovation. I thought that they would believe me, uh, but they didn't.

• 51:01Ryan Sean Adams?

  What happened instead?

• 51:03Speaker 02

  Uh, they called me, uh, Peter Todd called me potentially dangerous and John Carvalho, uh, basically called me, um. Uh, I don't know if he called me a scammer or many of them called me an idiot, uh, and rejected. Uh, they thought that I'd become a shitcoiner. Yeah. Shitcoin is basically what happened. They started to call me a shitcoiner.

• 51:27Ryan Sean Adams?

  Excommunicated from a religion, it feels like a little bit by the high priests.

• 51:32Speaker 02

  Yes, that's, that's very much how, how it felt like and I, you know, I tried to

• 51:43Speaker 02

  say like, you know, if you want to perfect the, like, you know, I'm still on your team and I think like if you want to make Bitcoin the best it can possibly be, then we need to look at all types of innovation that is happening in the cryptocurrency space. All of that is relevant. It doesn't matter where it comes from. And I think that people like, and I don't want to mention names, but there's a lot of people that just inherently mistrust any type of innovation that comes outside of the Bitcoin community. And that, I think that that comes from ignorance, that it's because they don't have the ability to, I mean, it's just a technological system.

• 52:26Speaker 02

  The rollups are a technological construction. It's objectively defined. Doesn't matter at all, uh, who's the author, if you just look at the code. And that is a part of the Bitcoin philosophy that we don't care about who Satoshi Nakamoto is. We care about the code and what it can do. So I really don't understand how you can be so against innovation coming out of other projects. If the results of, of, uh, what, what that technology can provide is actually helping you. That seems very much to me like some just, you know, tribalism and unintellectual.

• 53:09Speaker 02

  Yeah, like you said, religious type of behavior. That saddens me a great deal and actually I, I, I said that it broke my heart to see Bitcoiners not being able to take this in because it did, it did break my heart and it made my entire cryptocurrency experience completely different, realizing that, you know.

• 53:35Speaker 02

  We weren't, uh, people didn't see it the same way as I did. And I am still trying to do what I can to, to work for the Bitcoin system. But I do see so much things happening inside of the Ethereum system that I think is really, really interesting as well. And now, I mean, Bitcoin is this digital gold, and I do believe that Bitcoin has legs as a digital gold. But, uh, and, and I am following the, the innovations in Bitcoin, like Taproot upgrades. I do think that's interesting. But, um, I mean, if you are, if you are intellectually curious and, uh, you want to see what you can do with the blockchain protocol,

• 54:17Speaker 02

  um, then it's more interesting to, just as a researcher, to look at what's happening inside of Ethereum right now. And one of the things that made me, um, uh, that actually cemented, uh, my understanding that Bitcoiners weren't acting in a good faith technological, um, view on these things was that, uh, uh, after, uh, uh, ZK rollups, uh, were presented and I tried to, I tried to, to, to bring, uh, ZK rollups as a, it's a, it's a research project to the Bitcoin community.

• 54:59Speaker 02

  And I asked them on Twitter, like, let's look at this research, research that is being done. And isn't it quite fantastic what they've been able to achieve? And everyone said, no, no, no, that's just, just come, come, come, come, complete bullshit. This comes from Vitalik's computer scam nonsense, premind bullshit, blah, blah, blah, blah. Uh, then, uh, Greg Maxwell, Gregory Maxwell, who's the, one of the most respected and original, uh, long time contributors to the Bitcoin, uh, system. Uh, he came out and said that, yeah, uh, ZK rollups, uh, those are awesome, but they were actually my idea. I look at this forum post that I wrote in two thousand, uh, thirteen, and I, and I was like,

• 55:41Speaker 02

  You see, like, the developers, the most knowledgeable developers of Bitcoin actually resonate so much

• 55:51Speaker 02

  with the how good and how useful this technology is, that they've actually been trying to create it themselves. And now that it has been finished, because the Ethereum Foundation and other cryptographic, like the C Cash community, has worked so much on perfecting zero-knowledge proofs, those are now efficient enough that we can actually use them, now that they are here. And now Bitcoiners are saying, you know, that they're calling it a scam, even though that, you know, we've been trying to create these primitives in Bitcoin for such a long time. So that just made me, you know, how, what can I argue with? You know, even the Bitcoin designers themselves wanted this, and I think there's just this big gap

• 56:37Speaker 02

  in the Bitcoin community where the developers, like the high priests of Bitcoin, like the people on Twitter, they have one understanding, they have a limited understanding of the Bitcoin system. And they, but they're very, the tones, like the, how they phrase themselves and how, how, how they act and how they behave, they think that they're carrying the torch for the Bitcoin developers, that they're preaching the gospel of the Bitcoin, the core views of the smartest people in Bitcoin, but many times they aren't.

• 57:17Speaker 02

  And that's my problem, that many times the people who are the loudest in Bitcoin are sometimes

• 57:26Speaker 02

  not the most educated or knowledgeable about Bitcoin. So then I get into arguments about these, with these people, because, you know, it's usually, I don't have that much disagreements with real Bitcoin developers, I just have disagreements with people who don't understand what Bitcoin developers truly think. And so, but me being very vocal on, a person on Twitter, the Bitcoin developers aren't that vocal on Twitter.

• 57:59Speaker 02

  Put me in a different category and I had to, you know, I thought, I thought I would be able to bridge the gap between the Ethereum and the Bitcoin communities. But I ended up becoming this controversial figure. Ethereum's called me a Bitcoin maximalist. Bitcoiners call me a shitcoiner.

• 58:18Speaker 02

  What, I, I, I'm, I'm trying to stick true to the facts and I'm trying to stick true to technological innovation and progress. If that makes a shitcoiner and a maximalist of me at the same time. So be it. I'm not going to change who I am and what I say. And I do want to, I just add a nuance of humility to that. Because now I'm making it sound like I'm the smartest guy in the room and everyone else is stupid.

• 58:48Speaker 02

  That only happens most of the time. Some of the time I'm, I'm, I'm, I'm completely, I'm completely wrong. I'm, I'm kidding. I am, I'm, I'm not the smartest, I'm not, you know, I don't consider myself to be, you know, so much smarter than everybody else. You know, I'm, I'm also in the space just trying to learn as much as I can and figure things out.

• 59:12Speaker 02

  And, and this is the situation that I've gotten myself into.

• 59:16David Hoffman?

  Yeah, Eric, I, I've also attempted to try and bridge the gap between Bitcoiners and Ethereum's. And it seems to be just an insurmountable chasm to, to cross. So my question to you, to really finish off this, this part of this conversation before we move on to other things is that, you know, you, you talk about Bitcoin and, and its merits, and then you also talk about the Bitcoin community and their rigidity and thought. Did, did your experience with being, you know, being called a shitcoiner by the Bitcoin maxley, back maxies and everything that you've talked about. Did that change your stance towards Bitcoin, the system at all? Did, or do you separate the community from Bitcoin?

• 59:57David Hoffman?

  And say, look, well, there's this tribal community around Bitcoin, but it doesn't really impact Bitcoin, the, the system, Bitcoin, the BTC, the asset, Bitcoin, the protocol. Or did your reaction in relationship with the Bitcoin community also change your stance to what you think Bitcoin really is?

• 1:00:13Speaker 02

  Yeah, I mean,

• 1:00:17Speaker 02

  when I started to talk about ZK rollups and the necessary opcodes that we would need to implement in Bitcoin in order to facilitate a state machine and an opcode that can interpret as zero knowledge proof. And also just seeing how the discussions around drive chains is going. I am a little bit more bearish these days that the types of innovations that I think are necessary to create a useful, a user-friendly payment mechanism out of Bitcoin have been restricted because, you know, because Bitcoin, if we're going to upgrade and make the system as useful as possible,

• 1:01:02Speaker 02

  then we need to, I need to make sure that when I speak to the Bitcoin community and the developers speak to the Bitcoin community, that they understand what is the most rational path forward. And if we become stupid as a community, a stupid community cannot make Bitcoin survive good. And I don't think many Bitcoiners believe that Bitcoin is perfect as it is and it just needs to continue on and then it will win the world. But it's not like that. I mean, you're not going to have, you don't have the capacity in Bitcoin for everyone to open even lightning channels. And even if we, even if we say that we did have the capacity to open up

• 1:01:46Speaker 02

  lightning channels using channel factories and all other things that you can do with lightning. Like then, even then, the user experience of lightning may not be sufficiently well-equipped to actually become the payment mechanism that the entire world uses. So I do think that there are challenges to be overcome when it comes to making Bitcoin perfect. I do still think, I do still think that Bitcoin is the project that I like the most, but yes, getting shunned from, well, I wouldn't say I'm shunned, you know, I still have, I'm still relatively liked by

• 1:02:29Speaker 02

  a part of the Bitcoin community. So I'm not completely shunned, but yes, of course, you know, it broke my heart and it also.

• 1:02:42Speaker 02

  Made me perhaps diversify my portfolio. And I do hold, I've made it public that I do hold ether.

• 1:02:54Ryan Sean Adams?

  Let's talk about that. Can we talk about that, Eric?

• 1:02:57David Hoffman?

  Hey, Bankless Nation. I hope you're enjoying this conversation with Eric Wall thus far. We are about to turn to a recent tweet that Eric Wall just made where he said that I stopped being wrong about Ethereum sometime in 2020, where Eric Wall decided to change his mind and be more optimistic about the future of Ethereum. So we asked, what did it take for him to really change his mind after he came, after he had these negative experiences with these Bitcoiners? We also turned to an article he wrote that really impacted me where he titled it, "Proof of Stake is Less Wasteful." And this actually ultimately became one of the core components of ultrasound money. This thesis that proof of stake is inherently extremely efficient because it has to award the least amount of ether,

• 1:03:41David Hoffman?

  because the people that are staking are the most bullish on it. So they'll compete for the least amount of ether possible. And that's why proof of stake doesn't have to issue all that much. Eric Wall, as a contrarian lone wolf investor, has been through so many crypto cycles. So we finish off this conversation just asking Eric about what does it take to really make it through this industry in a multi-cycle timeframe? And so he has a ton of great lessons and takeaways that I'm really excited to share with you guys in the second half of the show. But first, we have to take a moment to talk about some of these fantastic sponsors that make this show possible. Balancer is DeFi's most powerful automated market maker. Typical AMMs just have two tokens inside of one liquidity pool, which can lead to fractured liquidity across the many pairs of DeFi.

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• 1:06:49Ryan Sean Adams?

  What we've seen up to this point, I think, is someone who is a... Digital biologists looking at these systems, also not a Bitcoin maximalist, maybe more of a decentralization optimizer, decentralization maximalist. And it seems to be the case that that's part of the reason that they called you the altcoin slayer is because you called a lot of the altcoins out on their shit, on the stuff that wouldn't work. But that intellectual pursuit also brought you to Layer 2s and Ethereum and some of the improvements in rollups that are being made. And you saw the potential for decentralization in these Layer 2s

• 1:07:32Ryan Sean Adams?

  that didn't quite exist in Bitcoin. I put this tweet out, I guess, a couple of weeks ago. "I was wrong about ETH," I said, "no one actually says that I was wrong about ETH, but a lot of people should be saying it." I get a lot of replies, of course, it's just, you know, it's fun on Twitter to like poke the bear a little bit, Eric. Not that you do that at all. It is fun, though. And then your reply was the one that actually was most interesting to me out of the many hundreds of replies that that thread got. And you said this, "2016, I was wrong about ETH when I sold it for $6 after the DAO hack. 2017, I was wrong about ETH when I rushed home to grab my 2FA exchange login

• 1:08:16Ryan Sean Adams?

  after the first Enterprise Ethereum Alliance announcement, think I had missed the rally. 2020, I stopped being wrong about ETH." And I think you linked to a specific tweet that you made in August 2020. Presumably, you purchased some ETH at that time before you hadn't had as much. Can you talk about that journey? I think a puzzle piece to the journey is bullish on rollups, maybe bullish on Ethereum scalability in this new avenue. But was that the only part of the journey? Tell us about the journey. I can, yeah.

• 1:08:54Speaker 02

  Yeah, uh, first of all, I think the tweet that you're referring to, uh, I bought Ethereum. And I had Ethereum before that, but I did, uh, acquire as much ETH as I could when it was trading around one hundred and ten dollars. And this was during the COVID, uh, the coronavirus driven crash in, must have been March twenty twenty. Uh, but yeah, I did, I, I, I was wrong about, you know, in, in two thousand sixteen during the DAO hack. I was, uh, like you said, a decentralization maximalist. And when I saw that, uh, the, uh, the way that I thought about Ethereum was that, uh, this was an immutable,

• 1:09:39Speaker 02

  an attempt to build an immutable, uh, execution, uh, engine for, uh, um, autonomous programs. And, uh, the DAO hack, uh, showed that the social consensus overrules, uh, the programmatic code, which means that, and at this point in time, in that point in time, the project was heavily centralized around the talent thought. Uh, it's become, it's, it's improved from that now. Uh, so, so I, I didn't, I, I didn't think that, uh, after the DAO hack and, uh, seeing that, uh, actually I saw, the reason that I sold was just seeing that the DAO got hacked. And I, that's when I immediately just rushed and sold all my Ethereum at six dollars.

• 1:10:24Speaker 02

  Uh, and then I was skeptical whether or not, uh, fixing, uh, surgically fixing the DAO hack using social consensus was the right path. Now I do think that it is the, it was the right, uh, decision to make. I've changed my, my, my mind there. But, uh, I, I, I, let's perhaps address the thing that you asked specifically, like, when did I actually start to come around to the Ethereum system? And I think, um, I think it was probably around, I mean, in two thousand seventeen, that's when I heard about the Enterprise Ethereum Alliance and

• 1:11:03Speaker 02

  Ethereum was trading at eleven dollars and I was at work listening to this, uh, this, this, uh, webcast where it was being announced and I

• 1:11:14Speaker 02

  I understood how huge this was going to be, enterprises that were going to use Ethereum. Now the enterprise Ethereum, the enterprise Ethereum alliance didn't turn out to be that big of a there, from my perspective anyway, there haven't been that major of a contribution. But it did bring so much like validation to Ethereum as a project. So I knew that that was going to be massive and that's why I, I, I rushed home to, to acquire more ETH at that time. But I wouldn't, I wouldn't say that I was like an Ethereum believer at that point. I just saw that there was going to be probably a rush in the price at that point.

• 1:11:51Speaker 02

  What happened was that I was working in the traditional financial sector as a techno, as a, at a technology provider company. So we were building, the company that I worked for was called Synover. Not a lot of people know about this name, but in terms of providing exchanges, like, like the New York Stock Exchange or the Australian Securities Exchange, like exchanges where stocks and other financial instruments are traded. There are two large companies, or there were two large companies providing matching engines and clearinghouse technologies to the world.

• 1:12:33Speaker 02

  And that was, NASDAQ was the largest one. They actually had their market, their market technology division here in Sweden, where they developed the tech that they sell to other exchanges. And the second company is also here in Sweden, it was called Synover. And they were the largest competitors with each other for 20 years. And I joined that firm right after I finished my master's thesis on blockchain technology and actually wrote the master's thesis for Synover. And the, the thesis was about how can we use blockchain technology to, to create a decentralized security settlement system.

• 1:13:09Speaker 02

  And then I got to work with the Sinova for quite a few years and I very quickly became the head of the cryptocurrency and blockchain strategy there. And I was involved, well, not, I was to some extent involved in the, you know, I got to learn how do we supply these exchanges with technology? Like when an exchange wants to upgrade, like in a Mac, if a matching engine uh run by the Australian Securities Exchange wants to upgrade their system and how slow that process was, like they have to get the technology from a technology provider.

• 1:13:45Speaker 02

  And then it goes through all this, you know, Q and A and testing and it's just the, the, you know, the, these types of things could take five years. Uh to move from one system to another. The types of innovation that I was seeing happening in the internet overall, you didn't see that in the financial world at all. And you didn't have open permissionless innovation in traditional finance. It was very clunky and you had all these antiquated systems that were interlinked with each other. And the way that the securities and also the banking system has developed is, you know, we had the paper-based processes.

• 1:14:26Speaker 02

  And then you digitize those paper processes to emulate what you could do with pen and paper into digital processes. And then you just built on from that and you ended up with this incredibly complex, interlinked mess of a system with different moving parts that like if we wanted to recreate the security settlement system and clearing system of today. I think we would have done it completely differently, but we cannot, you cannot change the entire plumbing of the financial world. Uh by improving the current system.

• 1:15:04Speaker 02

  I think that you got to start from scratch and I think that if you want to start from scratch and you want to give, uh you want to make the.

• 1:15:15Speaker 02

  The, if you want to make the, if you want to create the correct environment for innovation, then you have to look at how innovation has happened on the internet. Like, when I, for, for instance, if I get in, if I go to, when I went to the US, uh, I visited a crypto conference in the US in two thousand and eighteen, and I rented a car, a jeep, uh, and I wanted to drive through the Nevada, uh, desert to go to Las Vegas, which was where, where the conference was. And I had a GPS system there, and, uh, the, at one point in time, I was running out of fuel. And, uh, I, uh, took, I used the GPS system to, uh,

• 1:16:00Speaker 02

  point me to the closest, uh, gas station. And they said I had to drive, uh, two hours to this location. Uh, and, and I was driving on this, uh, straight road for two hours. And when I arrived there, two hours later, uh, now I'm almost running out of gas. Uh, the GPS tells me that this, this is the first time that you can turn around your car and go back the other direction and drive four hours that way instead. And that's the closest, uh, gas station. So I almost, uh, I almost died in the Nevada desert. This was in the Death Valley part of, of the, uh, uh, of, of the, of the US, like, it's close to the Yosemite, uh, National Park.

• 1:16:43Speaker 02

  So I almost died because of this shitty GPS system. And it's because, uh, the car company, they got their technology delivered by a specific technology provider, uh, provider. And if I have my smartphone instead, uh, then, you know, there I can choose between any type of, uh, map app. Uh, I can choose between Apple Maps, Google Maps, and if they aren't any good, there's gonna be another app. And that's what you want. I think of traditional finance as this jeep where I'm restricted to this shitty system that a single company has developed. And if you want to upgrade that, you have to ask the company to give us a

• 1:17:25Speaker 02

  GPS system, whereas if it's the internet, then you can have all people from all over the world deliver apps and you can just install the best one and use the best one. And that's why uh map apps on smartphones are so much superior than than uh the shitty GPS systems that make you die in the Nevada desert uh that that you that you that you find in the traditional world. So I want that type of uh permissionless permissionless innovation environment to happen in uh in the financial world. And I wrote a long email to the CEO of our company. I still have it. It was in two thousand nineteen.

• 1:18:10Speaker 02

  Where I told him that, you know, the what I'm seeing happening in Ethereum is exactly this vision uh of not the dying in the Nevada desert because we're having permissionless innovation for financial apps happening right now in Ethereum and it's gonna move so much faster. It's gonna it's it's and because we cannot upgrade, we cannot wait for a thousand engineers to upgrade a thousand antiquated uh financial systems running on the programming languages from the from the seventies. That's not gonna, we're not gonna get there with a with a current financial system.

• 1:18:48Speaker 02

  But cryptocurrency, like Ethereum platforms like Ethereum bring us a clean slate where we can create the right type of environment to create the best type of of uh platform for financial innovation. So I think that we basically have like when the taxi industry had their Uber moment. I think that the traditional finance industry is having their Uber moment right now. And I go and I meet like traditional market making companies and fashion institutions. And, you know, I think that they should look at DeFi and that also makes it complicated for me to talk with Bitcoiners because they hate DeFi. And they hate DeFi because they look at all their rug pulls and they look at all the scams.

• 1:19:33Speaker 02

  But I think that's the wrong way to think. About it because uh you could have looked at Bitcoin in two thousand and eleven and you could have said, well, the only thing that Bitcoin is used for is to buy drugs on Silk Road. And they would have been correct, but it's the fundamental properties of the system that decides what you can do with it with in the future. It's not how it's currently used. We used to always say Bitcoin is always used to say, well, yeah, there's a lot of people buying drugs, doing shady stuff with Bitcoin. But uh if you look at uh a car, for instance, uh who was the first uh which demographic was the first demographic to use cars? Well, the cars were very, very expensive. Normal people couldn't afford cars, but people that were making bank robberies.

• 1:20:18Speaker 02

  They uh could spend the money on a car because that could make them actually escape the police when they robbed the bank. Uh so they would buy cars and uh that's why uh criminal people uh will be the first one to buy Bitcoin. Because then they can buy drugs and they can make a lot of money. And in Ethereum, there's going to be a lot of people that are making scams. Uh but if you just focus on that initial usage and you don't think about what can happen with a technology. It's, I mean, it's the same way, like, maybe internet was mostly used to send around pornographic pictures between horny geeks.

• 1:20:57Speaker 02

  At one point in time, it didn't mean that internet wasn't going to change the entire uh the entire uh world of finance one day. And I have described DeFi as like a few, now I think we're moving away away from it. But I think that I have described a few, a year ago, I I described DeFi as in the the ASCII, you know, ASCII A S uh C I I. Uh version, like the ASCII porn version uh of the internets, basically. But we we you can see that the fundamental properties are there. Everything is working kind of shitty now. But I do think that, you know, what's going to come out of this industry is going to be uh completely amazing and and change the entire world.

• 1:21:43David Hoffman?

  Yeah, I like the metaphor of like just the siloed data providers or service providers for the GPS with as like the current financial institution, whereas DeFi is like this massive crucible survival of the fittest. If you don't, if you aren't a good product, you're not going to make it. And, and it's all done on this one canonical platform, right? It's very much like the, how we articulate the bull case for DeFi as well. I want to turn to one of your also Ethereum subjects that you've written about and talked about in the past. And this was really a pretty like, at least for me, it was very much of a groundbreaking article for how I understood proof of stake. And that was your proof of stake is less wasteful article. And this was, for me, the first articulation of the nature of proof of stake security that is ultimately now

• 1:22:28David Hoffman?

  a part of a very fundamental piece of the ultrasound money thesis. And, and so the way that you articulated this is that you, it was like you articulated the natural efficiency of proof of stake systems to provide security. And the way that I articulated this in response to after reading this, your article is that Ethereum naturally and proof of stake in Ethereum naturally rewards bullishness, very much like a DeFi yield farm, right? But instead of the incentives of this, this Ethereum native yield farm, which is proof of stake, the incentives are so incredibly strong because they are being rewarded with ether, the asset. And naturally,

• 1:23:08David Hoffman?

  the cost of proof of stake is the how much you have to pay people to be bullish on Ethereum. And if there are plenty of people who are super, super bullish on Ethereum, then the actual cost is to hear Ethereum are almost minimal. And Eric, you wrote this piece back at the end of 2019. So one I want to ask you about like, has your mental models about proof of stake become updated at all since then? And how do you articulate this, the same kind of thesis like a year and a half later?

• 1:23:40Speaker 02

  Actually, I think that, you know, I spent such an immense amount of time thinking about, you know, I had, you know, I was very influenced by Paul Stork, who's a friend of mine now, that I was very much in the same way as most Bitcoiners at the time thought that you can, it's inherently impossible to create a more

• 1:24:13Speaker 02

  cost-efficient consensus algorithm, because you have a security budget, it means you have a reward that can be farmed by miners or validators, and you're always going to be able to, everyone is always going to spend

• 1:24:32Speaker 02

  as much resources as they can to earn that reward, as long as they're still profitable. So if the reward is $100, you're going to spend at least $99 worth of work, whether it be locking up your capital or burning electricity. So you cannot create a more

• 1:24:54Speaker 02

  cost-effective system than what proof of work already is. And that was the way that I thought about it. And then you have this entire conversation around, okay, well, locking up liquidity versus burning energy. If we contrast those two things, Paul Stork's argument was that, well, you know, locking up liquidity also has a cost.

• 1:25:18Speaker 02

  It has a cost that now you make capital inaccessible to society that could have been put to bed to better use.

• 1:25:29Speaker 02

  That's a, that's a very, very actually complicated thing that I go through in the piece, and there's multiple ways that you can look at that. One way that you can look at it is that, okay, but when you lock up capital, the value doesn't get trapped there, it actually flows back to the, like, if you have, like, If you have Bitcoin and we take fifty percent of the supply of Bitcoin and we lock it up. And only fifty percent is circulating, then it's gonna. And demand can only go into the circulating amount of the supply. The value is gonna rise in the, in the, in the unlock, in the circulating pool. So.

• 1:26:07Speaker 02

  You cannot fundamentally trap value, but there, the, the, the nuance there that I go through in the article, I think, is that. Uh, when, when you have a specific parties locking up their capital. I mean, the, the, the, the, the participants that has the, the, this capital to lock up. They are usually people that have accumulated resources. And people that have accumulated resources probably have some type of knowledge. And when they lock up their liquidity and it just flows back and it gets splashed over this uniform blob of people. Uh, then you actually do lose some economic potential because it's now.

• 1:26:47Speaker 02

  You have, you have concentrated, uh, portions of liquidity that can be injected into projects. That can, it can be invested, it can be used to do productive things. Now it just flows back into a, a, a gray blob. Of people and they don't necessarily, like if everybody, if you put a hundred dollars in every person's pocket. It doesn't necessarily mean that anything exciting is gonna happen. They're gonna buy a hot dog and then it's over. Uh, whereas this single investor with all that capital could have created a fantastic business. So I do think that there is, uh, there is definitely, uh. Uh, like some, uh, there is a cost to society for locking up liquidity, uh, but.

• 1:27:33Speaker 02

  If, uh, like you said, if the person that is locking up that liquidity. If what he wanted to do with that liquidity was just to hold Ether. Then it, then there is no, there is no negative consequence. And that's what I realized in the article. That if you have these bullish people on Ether, then they are, they are going to be the, and they, when they are staking Ether, they're not causing any cost to, to the society overall. And, and just in the same way that we're talking about in Bitcoin mining, the people who are going to be the most profitable mining Bitcoin are the ones that have access to the cheapest source of electricity.

• 1:28:18Speaker 02

  And that's, that's usually people that are monetizing excess renewable energy, like the energy that they can't use for anything else. They can only throw it away or mine Bitcoin with it. Their cost for the electricity is zero. So that's going to be the, Bitcoiners think that that's going to be the predominant source of electricity for Bitcoin. And if you apply that same lens of thinking to Ethereum, then what is the cheapest source of liquidity in Ethereum? Well, it is the people who are committed to holding Ethereum for a very long time. They have no alternative cost. There's nothing else that they would have done with the capital. They have zero cost to, to, to, to, to use this capital to, to stake Ether. They, they do take on some risk.

• 1:29:02Speaker 02

  There's always, of course, some risk. There must be some risk with staking, but there is no cost to society. And with mining, you still have like, even, even if we say that all the energy in the world that has been used to mine Bitcoin, you still have the cost of actually producing the ASICs, the ASIC miners. You cannot make those, that cost disappear. You cannot say that that is 100% produced by renewable, you know, you didn't get the steel from, from wind. I mean, so, so because of that,

• 1:29:37Speaker 02

  proof of stake is actually less wasteful. And I do think if Ethereum becomes a form of money or something that people believe in, like an investment that people want to hold. The I don't want to go exactly into that, Rob, but if we just take a a a cryptocurrency system that runs on proof of stake and we say that this system is going to be the hard sound money that we're going to use in the future, then there's going to be tons of people that just hold the currency, because hard money inherently increases in value in alignment with the the output of society growing, the uh uh the the production rate of society

• 1:30:21Speaker 02

  as that improves, it's going to increase the the the the value of the currency. That's how economic, that's how economics work, and it works very well when the supply of the currency is fixed. So, yes, I do think that what's written in that article very much, you know, I think I came to the to the conclusion and I Paul actually wants to debate me about this article. He thinks that I am wrong and we have scheduled a preliminary debate. We haven't set the date, but we have decided that we are gonna discuss this in deep detail at one point. However, other people say that they want us to do it in

• 1:31:03Speaker 02

  written format because it's too difficult to go through these very, very complex nuances online. But I hope I answered your question that, yes, what I wrote there is very much how I think about it today.

• 1:31:14Ryan Sean Adams?

  Eric, what's so fascinating to me about this is like bring bring this a full circle to sort of like human beings as a having collective power, human beings is almost like an ant colony, right? So like, what is money? Money is um a the the collective thought of a society, of a group of human beings, in terms of where they want to store their wealth and where they want to store their value, right? There's there's almost like this memetic quality to money. What is the best money? It's the money that everyone else chooses to be money. And what's interesting to me about your argument is like, we we've

• 1:31:56Ryan Sean Adams?

  talked about this with Justin Drake in in Ultrasound Money, which is like an ultrasound money episode, which is like if a network, a crypto economic network like Bitcoin or Ethereum, has a monetary premium in its base asset, it gets this economic security.

• 1:32:16Ryan Sean Adams?

  For free, essentially. And you just extended that in 2019 with your article to proof of stake. So like, if there's a bunch of people who are bullish about Ether and they hold their Ether, they're going to do this at the lowest possible cost. It's almost like the network gets economic security at a discount. Why? Because the base layer asset has this special privilege in that it is a monetary asset and not all cryptocurrency networks get to have that privilege. Bitcoin, of course, has had it. We would argue on Bankless that Ethereum is also getting it. But I noticed something, Eric, that you stopped short of calling Ether

• 1:32:59Ryan Sean Adams?

  "sound money." And I'm curious, because you have this history in Bitcoin, what is holding you back from thinking about Ether as sound money? Or am I wrong about that? Do you think Ether is sound money right now?

• 1:33:15Speaker 02

  Um, I think, I think, I think you know my answer already. And I think that, I mean, Bitcoin is a reaction to that money can be so easily manipulated by politics in the central banking system. And Bitcoin goes in the completely different direction. It goes, it takes us back to the gold standard and we adhere to the philosophy of Bitcoin and Bitcoiners all over the world. We care most of all about the predictability of the monetary

• 1:33:54Speaker 02

  policy of Bitcoin. And we view that as one of the most foundational properties of a good sound money. Whereas in Ethereum, you have a different philosophy where you care more about securing Ethereum. You want to secure your DeFi systems by having a sufficient security budget for that. And you don't have any qualms about changing the emission rate of Ether to accommodate what the system needs. So the reason why I do think of Bitcoin as having

• 1:34:36Speaker 02

  upper hand in becoming dominant store value and the dominant medium of exchange is because the meme of a strong monetary immutable monetary policy, whether or not that actually factually works in practice or not, you know that reality and facts don't actually

• 1:34:59Speaker 02

  have so much influence into the thinking and brains of humans. But it is the memes that count. So I think that the meme of an immutable predictable monetary policy that Bitcoin has historically followed, whereas Ethereum hasn't and also the very beautiful inception of Bitcoin of Satoshi Nakamoto, who never ever spent a penny of the early Bitcoins that he made and then he disappeared and had no influence in the system. Bitcoin is much more this abstract brand, it's just Bitcoin.

• 1:35:42Speaker 02

  You don't know who the founder is and the monetary policy is immutable. It aligns so, it fits so much well. It fits so much better into this category of a digital gold than Ethereum does. And I do think that there is a very strong reasons why gold was the most formidable form of money for thousands of years in human history. And I think that the cryptocurrency that better emulates those properties are gonna win in the matic game of creating a sound money, because after all, it is a matic game. Now I do think that Bitcoin is gonna, the mistake that Bitcoiners did was focusing on the stock to flow ratio, which is

• 1:36:28Speaker 02

  I mean, you don't, gold has an emission rate, right? Uh, there's new gold being brought out, dug out of the ground. Uh, that isn't 100% predictable, but all we know that is roughly, it's around 2% every year. Uh, so, but, but because Bitcoin is supposed to have a fixed supply, then, uh, this whole idea of, you know, that you, you know, the stock to flow model, of course, I think perhaps most of your listeners do. I mean, now so many Bitcoiners think that the reason that Bitcoin is going to be successful and hyper Bitcoinization is going to happen is because the price is going to go up so much just because Bitcoin has a fixed supply. But if you are now in that frame of thinking,

• 1:37:12Speaker 02

  uh, and now Ethereum is going to burn a portion of its fees, uh, after EIP 1559 gets activated and Ethereum could create it and is already creating a meme of itself uh, in having a deflationary supply, uh, supply that shrinks because the gas fees are being burnt. Then now the stock to flow ratio of, uh, of, of Ethereum isn't even infinity. It's goes into the negative, but it actually goes into the complex number plane. Uh, so, uh, I think Bitcoiners have shot themselves in the foot by play, trying to play the memetic sound money game by looking at the stock to flow ratio.

• 1:37:56Speaker 02

  And you know how much I did to, uh, try to get Bitcoiners away from that. Uh, because I knew that this would, uh, fuck everything up for Bitcoin if we focused on too much on the stocks flow ratio. And that's why I've spent the last, uh, year or so trying to, uh, get people away from the stock to flow ratio, uh, obsession and getting them more focused on the rainbow chart, which, which doesn't have this, uh, supply centric, uh, way to analyze how the price should, uh, go up. And that's, that's why I'm now, uh, the rainbow guy, uh, because I, I, I knew that this was going to happen. I tried to get people away from, from. The stock to flow ratio.

• 1:38:40Speaker 02

  I ultimately, I think I perhaps failed and because of that Ethereum is gonna have a great chance to compete in the memetic game of being sound money. That's Bitcoiners fault on their own. They created this situation for themselves. And the way that I the way that I, how I acted in that situation is I just, I, I, I

• 1:39:05Speaker 02

  I I built a larger ether exposure in my bags because in, in two thousand one, one year ago, I, I, I knew that

• 1:39:18Speaker 02

  first of all, I knew that the layer two solutions for Ethereum were gonna

• 1:39:24Speaker 02

  work out and I knew that

• 1:39:27Speaker 02

  I, I, I also knew that the, there's gonna come a tons of people into into the cryptocurrency debate and they're gonna think that Bitcoin uses too much energy. And as also I understood that E I P this happened a bit later, I think that a while later that I understood that the, the supply of Ethereum is also gonna shrink. I did see that, you know, now Ethereum has so much potential to start competing in the memetic game of, of being money that you know, flipping is no longer off the table, you know, I personally still prefer the predictable monetary policy, like that's how I think that we, we should

• 1:40:12Speaker 02

  that's most powerful principle to stick by if you want to create sound money. But I do think that Ethereum has been fundamentally undervalued because it has these other arguments that also resonate very well. So I did build out a big Ethereum stack and now I'm outperforming Bitcoin because of that. So thank, that's thanks to the stock to flow Bitcoiners that made stock to flow such a big part of what cryptocurrency is that I'm now, and now I can bank on the meme of deflationary supply in Ethereum because of that. So I guess in the, that's the silver lining of being tortured by these stock to flow obsessionists in.

• 1:40:58David Hoffman?

  Eric, do you think that Ethereum being sound money, Ethereum is, Ether is disqualified from being sound money, or do you think that it could become sound money via like different routes other than just a completely hard cap monetary policy? Is this something that Ethereum, Ether and Ethereum can find over time? And then also, do you think that if there is a flippanting, that it is, the prerequisite is of that, you know, if the Ether being quote unquote "sound money" in the eyes of, you know, the people that value it? Or can it, or can it flip in Bitcoin via other, you know, just other merits?

• 1:41:38Speaker 02

  Well, I think that Ether can become a money. I don't think that Ether can become sound money in the sense that Bitcoin can become sound money. It can, it can become a kind of money that people may use and they may even use it if this edge case of the flipping does happen and Ethereum wins over Bitcoin and people start to use it as money. It's, it's going to be a much, much sounder money than any type of fiat money that we have because even though that, yes, the monetary policy can be changed, it's still going to

• 1:42:21Speaker 02

  be, it's like Bitcoiners like to say, well, Bitcoin, Ethereum is not no different than, you know, just a central bank designed to buy treasury bonds or changing interest rates and then printing money. But I do think it's different. I mean, it's, it is, after all, it's a centralized protocol. And if you're, if you're involved a little bit in Ethereum governance, you know that Ethereum at least has the potential to cement its strategy around the monetary policy much more than what you could expect from a nation state.

• 1:43:01Speaker 02

  So I do think that Ethereum can be much sounder money than, than fiat currency can be. But I don't think that Ethereum necessarily should strive to ever become. I mean Ethereum can become a sound money in the sense that the supply is very constrained, right? We can't reach that phase where the it's actually negative emission rate year over year. But that's not, you know, my definition of sound money. My definition of sound money also includes the this predictability. And it's never going to get as good of a brand in that category as Bitcoin has because Bitcoin never changed its monetary policy.

• 1:43:39Speaker 02

  And Bitcoin also has this immaculate conception and leaderless launch and brand around it that Ethereum can never compete with. But that doesn't mean that, you know, it doesn't mean that it still can't, that it can't win ultimately. So I do think that the flipping can happen. Ethereum can be relatively sound money, but it's never gonna, it's never gonna get as far. If Bitcoin succeeds as sound money, it's going to be a sounder form of money than Ethereum

• 1:44:23Speaker 02

  can achieve in its best case scenario, if that makes sense.

• 1:44:27Ryan Sean Adams?

  So Eric, we've given Bitcoiners a hard time on this episode. I think it's time to give Ethereum's a hard time, too. What's something you think Ethereum's get wrong?

• 1:44:41Speaker 02

  Oh, my God.

• 1:44:44Ryan Sean Adams?

  Well, just too much? Is your brain just spilling over with all of these things?

• 1:44:50Speaker 02

  I mean, you know, I don't, I don't want to point fingers at specific people and specific projects, but I think that there is like the, I think that like overall, the entire Ethereum project is an entire mess right now. And some can think that it's a beautiful innovative mess, but I actually do think that governance wise. It's a kind of a clusterfuck. It's not the best governed system that you have out there. I do think that the Ethereum's themselves, like the Ethereum people, they don't.

• 1:45:37Speaker 02

  They many times they don't understand the types of, like if you take a DeFi application for instance. And then they start to talk about the qualities of this DeFi application. And what they're describing, like if you talk about the decentralization and the trustlessness properties of this application. Compared to what the factual reality is, then Ethereum's are very easily misled into thinking that the product is much better than it is. And they underestimate so many of the risks that they are creating in DeFi.

• 1:46:14Speaker 02

  That that, you know, I'm seeing these, I'm constantly seeing these systemic risks being built up inside the Ethereum. System and I don't think that the stewards of the, like the Ethereum thought leaders and the builders of Ethereum. I mean, I, I, I, I see so many things coming out of Ethereum's mouths that make me. Shiver on a, on a, on a daily basis. Like, like if we, if we just take an example, like, do you remember when we had this whole? Supply gate scandal in when we tried to get just somebody to respond to what the supply of ether was?

• 1:46:55Ryan Sean Adams?

  Yes, and for, for listeners, there was sort of a narrative among Bitcoiners. It's just like, "Hey, you can't prove what the supply of ETH is, Ethereum's. Tell us what the supply of ETH is." And a number of, of prominent Bitcoiners, you know, pushed this out and kind of challenged the Ethereum community. To, to say what the supply of ether was. That's what you're referring to.

• 1:47:18Speaker 02

  Yeah. And then Vitalik said, "Look at Ether's scam."

• 1:47:23Speaker 02

  And that was, I mean, I cannot understand, like, did you just miss eight, 10 years of cryptoeconomic history? Like, did you just miss the entire purpose of what we're trying to achieve here? We're trying to build systems that can be independently verified by everyone.

• 1:47:44Speaker 02

  Then you cannot, if you're creating this, you know, acceptance that looking at sources like if you're looking at sources like EtherScan, if that is the basis that you're, you're, you're, that's how you're educating people in your, in your system, you're gonna end up, I'm thinking, you know, what I'm most worried about in Ethereum is that you're constantly compromising on decentralizing, but I mean, and I do, I got, first, first of all, I gotta give Ethereum two those that compared to Solana, Avalanche, and Minus, Smart Chain, and all these other Ethereum

• 1:48:28Speaker 02

  killers, then Ethereum has stayed true to the decentralization philosophy much more than those other projects. That is why Ethereum has difficulties scaling and then moving fast and, and, and, you know, they are, you know, Ethereum's are actually trying a little bit to have a decentralized system, whereas many of, you know, the Definity in these projects, they don't care, and their hash graph, they don't care about it at all. Ethereum, they, you do care, you do care about it. So, so I gotta give you two this for that, first of all. But when you, when we're,

• 1:49:10Speaker 02

  when we're talking about, you know, syncing the, an Ethereum node, for instance, we're always, we're always moving. The goal post. So first, it was that sync the entire Ethereum chain, then you know, let's just look at the the state root of Ethereum and let's just sync from that and then we can then we can use what's called fast sync. So we just see, we just look at the, we just look at the current state and then we just verify the proof of work on the headers. And now we're moving to snap sync, which syncs even like in fast sync, you actually did sync.

• 1:49:51Speaker 02

  You did fully sync part of from a snapshot. You did sync the actual Ethereum blockchain. But in snap sync, you're syncing even less of the and that's becoming the default now, that you're you're actually validating less and less and less of the Ethereum protocols and rules. All the time in order to make your clients faster. And I think also that the the terminology and the language is deteriorating where because I think it's fine. I think it's completely fine. If you want to snap sync your node. If you think that security mechanism is enough for you, by all means do it.

• 1:50:34Speaker 02

  There are Bitcoiners that run their clients with assume valid flags where they also skip part of the of the validation. But if you're going to call that a full node, if you're going to call those nodes full nodes. And you say it validates them. What people are going to think is that they are independently validating the entire system. Then you are creating these systemic risks in the Ethereum system where all of a sudden we've changed the terminology so much and we changed the default settings of everything so much that we can actually have the entire system collapse by

• 1:51:12Speaker 02

  very few nodes actually collapsing. Like if you take Matic, for instance, like I did tweet about Matic pretty recently and I did say that I am Just learning about the system because I have been on Matic for a long time because I considered it to be just a proof of stake sidechain and I'm much more interested in the rollup things. But but from my understanding, a Matic node,

• 1:51:40Speaker 02

  it gets its, the keys, the validators in Matic, they are chosen in an Ethereum smart contract on the mainnet. That's where those keys are set. But the full nodes in Matic, they don't sync the Ethereum chain. So how do they know when they're looking at that contract? How do they know that what is inside that Ethereum mainnet smart contract is actually valid if the Matic nodes don't actually sync the Ethereum chain? So it's these types of things that I see where you're having applications that are just reading information from completely centralized sources

• 1:52:23Speaker 02

  and you're creating, not at all, in many cases, decentralized systems. I do, I do have to say though that I have changed my, my, my, um, I used to be so anal about decentralization when it came to Ethereum that I, that I didn't think that,

• 1:52:46Speaker 02

  that I thought everything was going to fail, but I have later changed my thinking now to valuing much more than just the permissionlessness quality, like what you really need to have in order to create this innovative environment is just that people can build things permissionless, that they can use it without there being any guardians. So it's permission, it's permissionless to build. That's the most important quality. And I don't know if decentralization, I mean decentralization, decentralization saves you from a few, perhaps not very likely risks that may not happen or regulatory camp downs that may not happen.

• 1:53:25Speaker 02

  But the, the, the, the, the way that the DeFi evolution and, and, and the revolution is going to happen mainly comes from the permissionlessness quality and the composability qualities more. So I'm, I'm not, I'm not that concerned about that Ethereum is just semi-decentralized these days.

• 1:53:53Speaker 02

  Did that answer your question?

• 1:53:55Ryan Sean Adams?

  It does, yeah, and we absolutely don't have time to go into all of those items. I will note on the supply issue, the Ethereum community eventually provided a much better response than what you said was Vitalik's initial response with some code that sort of validated the Ether supply. But what's super interesting, Eric, is I think among honest Bitcoiners that we see who are drawn towards the thesis of decentralization, we hear kind of a common sentiment of like, the thing I worry about Ethereum is an erosion of the values of decentralization. And it can happen to a community quickly. And I think that's really what you're expressing in your comments here.

• 1:54:38Ryan Sean Adams?

  One other axis of decentralization that I think the Bankless program emphasizes to you is like the the access of having a banking layer that is custodial. Right? So that I feel like is an erosion of the Bitcoiner value systems. If you're using instead of, you know, a a trading system like like Uniswap, which is relatively decentralized, you're doing your trading on Coinbase or or Binance when you are using BlockFi instead of Aave, right? So that is another axis that I feel like the Bitcoin community doesn't look at enough. The decentralization of not just their monetary system, but the banking layer on top.

• 1:55:19Ryan Sean Adams?

  And Eric, we probably don't have time to get into all of that because we've got to come to a close. Is there anything you want to say though, quickly?

• 1:55:25Speaker 02

  No, I want to say that I think that you're correct. And I think I was on a podcast with Stefan Lever and Udo Wertheimer talking about, okay, so what if Lightning doesn't work out? They said, oh, we're probably going to use no custodial solutions for transferring Bitcoin. And I do think that, yes, because you can do so much more with Ethereum, we're going to be able to decentralize more things inside. The more parts of finance is going to be decentralized in Ethereum. So I do very much resonate with what you just said right now. And I do think that it is true that Bitcoiners do underplay that part of this conversation. So, yeah, I I I agree with you on that notion, definitely, yeah.

• 1:56:08David Hoffman?

  Eric, on the Bankless Podcast, we like to give out this line about just how we are all like going west. We are all exploring the frontier. You don't have to do it alone. You can join a community, you can join a club. But I see you as venturing off in the frontier very much on your own as like this lone wolf person who very clearly thinks for himself, but has, you know, chosen to specifically not be tribal and really just stick to your own guns and stick to your own values and thought processes. And the other characteristics I would describe to you is that you kind of default to skepticism and you generally proceed with caution, which I think are very valuable characteristics to have

• 1:56:51David Hoffman?

  and perhaps why you have been in the crypto industry for so long and not gotten washed out as so many people do. So can you kind of reflect on these qualities, maybe the ones I named and maybe the ones I didn't name, that you think have really been helpful for you to navigate this industry for such a long period of time? And then also, what, do you have any other advice for, you know, first cyclers or crypto novices who are just getting into this world of crypto and think that perhaps like Cardano or Ripple are the future?

• 1:57:21Speaker 02

  Yeah, definitely. You know, I, it's pretty crazy, but I did find a unique, what I found, in my opinion, was a unique niche in the cryptocurrency space was to just stick to the truth, like just stick to the, like what is the actual nature and reality of the situation and speak your mind without bias. So I tried to be as unbiased as possible and surprisingly, there's almost nobody else that is trying to fill that niche of being as unbiased as possible.

• 1:58:04Speaker 02

  You know, most people, they have their project, they want to make the best out of that project. And I don't know if there are any other unbiasedness maximizers out there.

• 1:58:16Speaker 02

  I know that there are some like, I think that's probably Ha Su, a friend of mine, that he also, I feel like he sticks to that principle of just not caring about bias and just caring about the reality. So, so yeah, that's, that's what I have to add on that. And he also asked me about.

• 1:58:37Speaker 02

  You also asked me about if I have any first cycle recommendations to people.

• 1:58:45Speaker 02

  When we started to talk in this podcast, we talked about how I came into this space as this

• 1:58:51Speaker 02

  digital biologist that, but it's actually not entirely correct. I actually came into the space as someone that wanted to learn how to become a financial trader. So for

• 1:59:05Speaker 02

  it was only a few years down the road when I really understood the components of the blockchain, that I understood that it was a primitive life form.

• 1:59:15Speaker 02

  But I spent, I spent two years or three years trying to learn how to trade and for many of those years I was using very, very stupid primitive technical analysis. I was looking at the same dumb indicators that you see all of these technical TA advisors use. I was following the MACD, RSI, RSI indicators and trading based on that. And it didn't, it took me until I learned how to program and backtest my own strategies to understand that I was doing complete nonsense things. And then I started to question the whole field of technical analysis and especially the Bitcoiner technical analysis that I found out that it was basically just a big scam. And if I could give

• 2:00:00Speaker 02

  anybody some advice, don't go down the technical analysis route. You cannot, they don't work, they're not going to sell you a course that's going to make you infinite money for $50 a month. Try to get involved in communities, like try, you can, you can become actually very rich in the cryptocurrency space by just learning how these systems work, producing value and becoming members of, for instance, DAOs and Ethereum. And I mean, these, like, I think you have put it in a pretty nice way that, like, we, we have DAOs in Ethereum that they're looking for workers. And if you can provide work to those DAOs, you, you can get

• 2:00:40Speaker 02

  crypto coins. Then you can use those crypto coins to invest in other systems that you understand and then you can build wealth for yourself. That is how you become profitable in this industry if you're starting with no capital today versus trying to buy a $50 horse. That's, that's pretty much my, my, my advice.

• 2:01:01Ryan Sean Adams?

  There you go, Bankless Nation. That advice from Eric Wall. Of course, none of this was financial excess, but Eric has been in crypto since 2012. He survived up to this point by holding views on decentralization and thinking about the long term of the space, the long-term trajectory. Eric, it's been a pleasure to have you on Bankless. You know what, man? I feel like we're much more aligned than I thought we were at the start of this podcast, and it's always good to see a kindred spirit in the space who's here for some of the same reasons we are on the Bankless Podcast. So, thanks for joining us, man.

• 2:01:39Speaker 02

  It was a pleasure. Thanks for having me on.

• 2:01:41Ryan Sean Adams?

  Action items, of course. You have to follow Eric Wall, @ERCWL on Twitter. Got some fire thoughts coming at you. We will also include some of the articles we referenced in the show notes. One that David mentioned, "Proof of Stake is Wasteful on Cows, Volcanoes, and Staking." If that doesn't tweak your interest...

• 2:02:01David Hoffman?

  Proof of Stake is less wasteful.

• 2:02:02Ryan Sean Adams?

  Is less wasteful. Thanks, David.

• 2:02:04David Hoffman?

  Very important point. Very important point.

• 2:02:06Ryan Sean Adams?

  Disregard what I just said. Anyway, the show notes are available for you to read. Those articles are referenced, of course. Guys, risks and disclaimers. Bitcoin is risky. Eth is risky. DeFi is risky. You could lose what you put in, but we are headed west. This is the frontier. It's not for everyone, but we're glad you're with us on the Bankless journey. Thanks a lot.

• 2:02:27David Hoffman?

  Hey, we hope you enjoyed the video. If you did, head over to Bankless HQ right now to develop your crypto investing skills and learn how to free yourself from banks and gain your financial independence. We recommend joining our daily newsletter, podcasts, and community as a Bankless Premium subscriber to get the most out of your Bankless experience. You'll get access to our market analysis, our alpha leaks, and exclusive content, and even the Bankless token for airdrops, raffles, and unlocks. If you're interested in crypto, the Bankless community is where you want to be. Click the link in the description to become a Bankless Premium subscriber today. Also, don't forget to subscribe to the channel for in-depth interviews with industry leaders, Ask Me Anythings, and weekly rollups where

• 2:03:11David Hoffman?

  we summarize the week in crypto and other fantastic content. Thanks, everyone, for watching and being on the journey as we build out the Bankless Nation.