Pod Insights Bankless ROLLUP: Bitcoin Breaks Below $60K | Saylor’s Three Bad Options | ETH Labs | The Quantum Clock About this episode Markets are bleeding as Bitcoin breaks below $60K and Strategy faces its biggest test yet. Ryan and David unpack Saylor’s three-way squeeze, ETH Labs vs. the EF reset, quantum timelines moving up, and Illinois’ new crypto tax.
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TIMESTAMPS
0:00 Intro
3:35 Bitcoin Below $60K and Strategy’s 3 Body Problem
https://www.tradingview.com/chart/KZYJV3ef/
https://www.strategy.com/
https://x.com/saylor/status/2069028571880845340
https://x.com/saylor/status/2069682624956612731
https://x.com/Pentosh1/status/2069797143917855024
https://x.com/jdorman81/status/2067616073479078386
https://x.com/jdorman81/status/2069857950202835258
https://x.com/ki_young_ju/status/2069646523668033833
https://x.com/PeterSchiff/status/2070146847692185798
https://polymarket.com/event/what-price-will-bitcoin-hit-before-2027
17:59 ETH, Stocks, South Korea Selloff, and the AI Trade
20:59 Why Crypto Is Down: AI Attention, Debasement Pause, and the 4-Year Cycle
27:06 Mover of the Week: $CARDS and Pokemon Cards as RWAs
https://www.coingecko.com/en/coins/collector-crypt
31:32 Ethereum’s Center of Gravity Shifts: EF Cuts and ETH Labs
https://x.com/VitalikButerin/status/2069431500035023121
https://blog.ethereum.org/2026/06/23/ef-structure
https://x.com/aerugoettinea/status/2069017140846330107
https://x.com/tkstanczak/status/2069454499509596582
https://x.com/bobbyong/status/2069965817882755342
https://x.com/ethlabs_org/status/2069104073245159573
https://ethlabs.org/thesis.html
https://x.com/TrustlessState/status/2069110440903196810
https://x.com/trent_vanepps/status/2067593124398989551
51:50 White House Quantum EO: Are Crypto Timelines Moving Up?
https://x.com/WhiteHouse/status/2069154174818754759
https://x.com/projecteleven/status/2069151681015627881
https://x.com/drakefjustin/status/2061793725299224676
57:25 Illinois Passes a 0.2% Crypto Transaction Tax
https://x.com/0xBeaconLayer/status/2069120528238121154
https://x.com/manwithadogg/status/2069158605664756205
https://x.com/DarrenBaileyIL/status/2070149517102469527
59:50 Portfolio Check and Crypto Bottom Watch
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Not financial or tax advice. See our investment disclosures here:
https://www.bankless.com/disclosures
Transcript 11,587 words · 3 speakers
0:04 Speaker 00 Bankless Nation, it's time for the weekly roll-up. It is the last week of June and for what feels like the third time this month, three out of the four weeks, there is just blood in the streets. We got Ryan back this week, back from vacation. You picked a bad time to come back from vacation. You should actually just go back on vacation.
0:20 Speaker 01 I came to find out. I came to find out if Michael Saylor is death spiraling because that's what I heard. The whole micro-strategy ecosystem.
0:28 Speaker 00 We are currently death spiraling, but like you don't really know how far it goes. Maybe it's just a baby death spiral. Anyways, Bitcoin is trading below $60,000. Master MicroStrategy is trading below $100 for the first time since March of 2024. And Stretch is trading at $74, billions of dollars off of where it ought to be trading at $100. So Strategies, they've got $1.7 billion in preferred dividends obligations and like, like nine, 10 months of coverage left. So we're gonna ask the question, is it all over for Michael Saylor?
1:06 Speaker 01 I think that means just nine months and then we'll be in a bull market. I think you planned this perfectly.
1:11 Speaker 00 Dude, I think if Bitcoin, we'll talk about this, but the easiest solution is that Bitcoin just goes up and then Michael Saylor is just free and clear.
1:18 Speaker 01 Not gonna be a problem at all. Also, I saw this, David, on the week. ETH Labs has just been announced. People are asking if this is the new Ethereum Foundation. It is not quite a fork, but it is started by some former EF members. We'll talk about that. Also, the Ethereum Foundation itself, reducing headcount quite significantly, like something like 20 to 40%. So is this a restructuring? Is this a crisis? What does Vitalik think about this? And there was an executive order as well, coming to the White House this week. It caught my attention because they were talking about quantum. Apparently, the US wants to build a quantum computer. And get this, they think, they think quantum relevant, crypto-relevant computers might come by. Yeah, cryptography, according to Talchoff.
2:03 Speaker 01 We gotta watch that clip later. Cryptography. The cryptography relevant to quantum computers could come as early as 2031, and they want all systems to be ready for that. So we'll talk about what that means for the US, what that means for our crypto protocols as well. David, before we get in, you got a shout out to make to our friends over at OKX.
2:24 Speaker 00 Yeah, OKX, so the ICE, the Intercontinental Exchange, parent company of the New York.
2:30 Speaker 01 Different ICE.
2:30 Speaker 00 The markets oriented ICE.
2:33 Speaker 01 Yes.
2:34 Speaker 00 Which is the parent company of the New York Stock Exchange. They backed OKX, had a $25 billion valuation because they want to launch tokenized New York Stock Exchange stocks and derivatives later this year on OKX specifically. This is TradFi on one side, coming to DeFi on the other, all in the same app. This is the new money app from OKX. Trusted by over 120 million users globally, OKX is bringing products to the United States. This is now a US company that Wall Street has been talking about for years. And so if you are not on OKX, they are offering you a 6% deposit match using the link in the show notes. So click that and get onboarded to OKX and get your 6%. Unless you are in New York or Texas, it is not available to you.
3:20 Speaker 01 Sad. Sorry. Sorry, New York. It's weird that it's Texas as well.
3:23 Speaker 00 Usually you don't, usually New York's common. Texas is not so common.
3:26 Speaker 01 Yeah, usually you don't hear that. It is good to have another exchange available in the US. Like more options are better, specifically coming from the people behind the New York Stock Exchange. But David, let's get into the blood in the streets.
3:37 Speaker 00 Yeah.
3:38 Speaker 01 That you were teasing about. So show us some blood. This is Bitcoin and on the US price chart. I think you have a moving average line here.
3:46 Speaker 00 Yeah, so these are four hour candles. This blue line going across my screen is the 200 week moving average, which historically Bitcoin just does not stay below the moving average, 200 week moving average very often. We are currently 5% below the 200 week moving average.
4:00 Speaker 01 I will say it did for a while, for a good bit, several months, many months in 2022, 2023 bear.
4:08 Speaker 00 Yeah, okay, let's zoom all the way out. I will say, I think we, I think we talked about that last summer. Like it has spent maybe. 5% of its time below the 200-week moving average. And it's dominantly in the 300 days and right after FTX. The 300 days after FTX is when it spent basically all of its time below the 200-week moving average.
4:30 Speaker 01 So how many days will we spend below the moving average? What number is that, 62?
4:36 Speaker 00 Right now, $62,400 and Bitcoin is trading at $59,500 right now.
4:42 Speaker 01 Yeah, we're in the 50s. We're officially in the 50s. Is some of that on the week due to some of the concern around the Michael Saylor universe?
4:51 Speaker 00 This is a question I have, is how big of a deal is Michael Saylor as it relates to the Bitcoin price? Or does Bitcoin not care and Bitcoin happens to Michael Saylor, but Michael Saylor does not happen to Bitcoin? I don't know the answer to that.
5:08 Speaker 01 They're two gravitational objects, right? Bitcoin is clearly the bigger one, but Michael Saylor is maybe a planet orbiting that star. Maybe he's a really big planet. Maybe he's also, maybe this is a binary star system, too.
5:20 Speaker 00 If it's a binary star system, Ryan, that means that Bitcoin is dependent on Michael Saylor, which in my mind means that Bitcoin project has failed.
5:26 Speaker 01 That's sacrilege, okay.
5:27 Speaker 00 Yeah, yeah. I mean, they have, a strategy has 850,000 Bitcoin.
5:34 Speaker 01 Yeah.
5:35 Speaker 00 Quite material.
5:36 Speaker 01 Yeah.
5:36 Speaker 00 Still, in the broad schemes of things, it's, it's... What percentage is that of total Bitcoin supply?
5:42 Speaker 01 I don't know, 3? Something like that?
5:43 Speaker 00 God, that's a lot. Okay.
5:45 Speaker 01 But like, yeah, yeah, I mean, fair point. But he is kind of the marginal buyer and he is the bull of all bulls, right? He sits on the throne of being, you know, chief bull officer of the Bitcoin ecosystem. But what's happening over in MicroStrategy? Because you teased in the intro that
6:00 Speaker 00 Yeah, let's just look at this.
6:01 Speaker 01 That strategy was actually down, what is it, down?
6:04 Speaker 00 What chart does this remind you of, Ryan?
6:06 Speaker 01 Down, let me see, down seven.
6:09 Speaker 00 25%, 25% off of, it doesn't have a peg.
6:13 Speaker 01 Okay.
6:13 Speaker 00 But I call it par. It's supposed to trade.
6:16 Speaker 01 Oh, this is stretch you're showing.
6:17 Speaker 00 This is a stretch.
6:18 Speaker 01 This is not MSTR, right?
6:20 Speaker 00 Yeah, well, I'll show MSTR in a second.
6:22 Speaker 01 Okay, so what's, can you remind people what stretch actually is and why this is significant that it's down so much?
6:28 Speaker 00 Stretch is, actually, I'll just show you this ad.
6:32 Speaker 00 Do you remember this ad, Ryan? This is an AI ad of some babe in a pool in the Bahamas or like in Asia drinking a margarita. And she goes, "I'm not meant to live a comfortable life. I put all of my savings into stretch." What is stretch? Stretch is a stock that pays me 11% a year in dividends for holding stretch. 11.5% paid monthly. So that's what stretch is. It's meant to trade at $100. Because when it's trading above $100, strategy just gets to hammer the ATM and they mint more stretch and they pocket the cash and then they can buy Bitcoin with the cash. They pay out also with the cash that they have, they pay out the dividends.
7:16 Speaker 00 And the supply of stretch has grown so large that they have annual dividend obligations of $1.7 billion a year. And then they also have in reserve $1.4 billion. And so they have, they also have debt obligations elsewhere as well. And so they have about 10 months, this is on their website, they have 10 months of dividend coverage for stretch. But there is simply, three things are going down all at once. The Bitcoin price is going down. MSTR, I'll pull up MSTR now, MSTR is going down bad, very bad. And then also stretch is going down. And so MSTR from the very tippy top is down 84%.
7:58 Speaker 01 Okay, 84%. Whereas Bitcoin is down, what, like 60, 50, 60%?
8:04 Speaker 00 53%, 53%.
8:06 Speaker 01 53%, okay.
8:07 Speaker 00 Yeah, so all of, all three of these things are down, which is really cornering strategy's, Michael Saylor's, options.
8:15 Speaker 01 Sure.
8:15 Speaker 00 When all three go down. He just doesn't have a lot of options. He does have time. He has 9.8 months of dividend coverage, so he has time, but he does not have a lot of options right now. And I guess the reason why Stretch is trading at $75, even though it's in theory supposed to be trading at $100, is people are worried. It's like a lack of confidence of the solvency of Stretch. Because like, say, Ryan, I tell you, "Hey, Ryan, there's this company. It has amazing dividends. It pays you 11% dividends, but the company is going to go defunct in 10 months." Like, what's that company worth? Not $100 a share.
8:57 Speaker 01 Yeah, I think I would ask, like, what is the probability of the company to pay me back? Right? So how much cash do they have? And then, like, cash in dollars, because I'm getting paid in dollars, so same either of the account. And then I would say, what else does the company have in terms of their balance sheet to be able to sell to go pay me back, right? And of course, if you look at Strategy, there's a lot of things they could sell. It's called Bitcoin, and there's tens of billions of it. And they could just sell some Bitcoin and pay me back. But of course, you know, that, in the three bodies that you described, that, you know, a market sale of Bitcoin at some level, that kind of tanks the Bitcoin price, which isn't good for MSTR, isn't good for-
9:41 Speaker 00 He did sell 32 Bitcoins. Bitcoin, the Bitcoin price did not respond positively.
9:45 Speaker 01 Yeah.
9:46 Speaker 00 He did sell this week a bunch of MSTR. So he sold MSTR. It was trading earlier this week at like 1.3 NAV, NAV value. So like-
9:56 Speaker 01 Premium to NAV is just barely, barely a premium to NAV, barely above one.
10:00 Speaker 00 30% premium is not bad. Yeah, but you know what's barely a premium to NAV? 1.03, which is where MSTR is today. The fact that it's still positive is actually incredible. Yeah, but it was 1.05 at the time of, when I woke up this morning. So it's down to 1.03.
10:17 Speaker 01 Wait, but, wait, okay, Strategy is still at a premium to NAV? It's not under-
10:21 Speaker 00 It's a 3% premium to NAV.
10:24 Speaker 01 Okay.
10:24 Speaker 00 So what does this mean? Is that the value of all of the Bitcoin that Strategy has, which is $50 billion, is what Strategy is worth? $50 billion?
10:37 Speaker 01 The stock, basically.
10:37 Speaker 00 The stock.
10:38 Speaker 01 So he can't do any more ATM. He can't mint very much more-
10:41 Speaker 00 He can do 3% more.
10:42 Speaker 01 Well, no, he could do, he could go below if he wants.
10:44 Speaker 00 He can go below.
10:46 Speaker 01 But every time he does this.
10:47 Speaker 00 But that's, that's breaking a social contract.
10:49 Speaker 01 Well, yeah. I mean, every time he does that, I mean, we've talked about the way Dats are structured, right? Every time, like Bitcoin is scarce, but strategy stock is not scarce. So it does have a money printer and the money printer has a name. His name is Michael Saylor. Because Michael Saylor owns massive amounts of, of, of strategy. So he's basically governance for strategy. So he can just continue to dilute MSTR holders and MSTR can get punished. That's why MSTR is down, what, 83%? And a Bitcoin is only down like 53%. Also, MSTR had a ridiculous MNAV premium previously. It was like two, three X, something like that. Four at one time. It was insane. That couldn't last forever.
11:29 Speaker 01 But anyway, now he's right on the cusp of like, what does he do next? Type of question, right? It's like, he's running out of tricks. He's running out of cards in the sleeve to pull out and just be like, I've got another bailout. And he also this week, make this make sense, he's still buying Bitcoin, right? Did I see that?
11:48 Speaker 00 So it started the week, the MNAV of, of strategy started the week at 1.3. It's now down to 1.03 because they sold, they sold a bunch of strategy to finance 300 more million dollars to add to the USD reserve, which is why they're at 1.4 billion dollars. And then they also bought 520 Bitcoin for 35 million. So they.
12:11 Speaker 01 So still buying Bitcoin?
12:12 Speaker 00 He's still buying Bitcoin.
12:13 Speaker 01 Not much though.
12:14 Speaker 00 It's a little bit revealing that they bolstered the USD reserve by 300 million and only bought 35 million dollars of Bitcoin. Like it feels a little bit like a token buy of Bitcoin. You said, you said the word, the three bodies. We're invoking this three body problem idea, which I like got from Twitter. And this is a tweet from, from Pentosh. He said, I kind of feel like the market keeps telling Saylor, he can't keep all three things, stretch MSTR and Bitcoin. There's just like three different incentives for three different groups and you can't, you can't juggle all of them. Cause there's three social contracts here and. The under duress, Saylor has to break one. So what are the three social contracts?
12:58 Speaker 00 He can't sell, he can't mint new MSTR below an MNAV of one. Because the whole point of owning MSTR is that your Bitcoin per share always goes up. And if he mints MSTR equity below MNAV of one, you're breaking that social contract. Like, why own MSTR when you can just own Bitcoin at that point? You can't sell Bitcoin because that's the social contract. That's the whole deal. You are the Bitcoin buy guy. You don't get to sell Bitcoin. That's another social contract. You only buy. And you have a social contract to pay the dividends of your stretch equity preferred offering, which he only has 10 more months of. And so, under duress, Saylor has to break a social contract.
13:43 Speaker 00 And I think when Stretch trades at a 25% off of the par, off of the $100 peg, I think that is the market saying that they think that they might get the short end of the stick.
13:55 Speaker 01 Sure. I mean, Jeff Dorman had a take, which is basically like, what probably, the 70% probability is Michael Saylor will continue to do what he's doing, which is continue to ATM mint strategy as long as he can every month, and just hope things get better with the Bitcoin price.
14:16 Speaker 00 Yeah.
14:17 Speaker 01 And that's what he's doing. That's the course that he's playing.
14:18 Speaker 00 So far.
14:19 Speaker 01 And maybe he'll be able to build enough runway so that some of these other bodies in the three-body problem don't spin off and cause him bigger issues. But there is always the possibility here, and he knows he has this card, to rip off the Band-Aid, sell three to four billion of Bitcoin, and then just, you know, be like, hey, Stretch holders, see, we have it. Maybe he could use some of that cash to actually buy some SDRC.
14:44 Speaker 00 Yeah.
14:45 Speaker 01 That could be value accretive if he gets that a discount to MSTR holders. And like, that's probably what's gonna happen, one of those two options. I don't think he is like, I don't think, unless this goes on for a long time, I don't see a death spiral scenario. Scenario here, unless Bitcoin death spirals down, of course. Or like the more probable scenario, if you're kind of like bearish on market conditions, is that it's just like a slow melting ice cube. I think Austin Campbell made this remark in a recent post I saw, which is just like, over five years, this whole thing could like melt away if Bitcoin doesn't get the accretive price performance that all investors expect, and that quite frankly, you and I expect.
15:28 Speaker 01 So I don't see the Terra Luna death spiral still.
15:32 Speaker 00 I definitely don't see that.
15:33 Speaker 01 But like if I, you know, there is the possibility that he burns his bridges with the preferred share STRC type of instrument, and that those holders get pissed.
15:46 Speaker 00 And get wiped out, you mean?
15:47 Speaker 01 I don't, I don't think they'll get wiped out, but they can't be happy. They're not happy now.
15:51 Speaker 00 No.
15:52 Speaker 01 I mean,
15:52 Speaker 00 No way.
15:53 Speaker 01 Is anyone happy with this trading like 24% off of the principal price?
15:56 Speaker 00 No, not when I saw, not when I saw this babe, this babe drinking this margarita, and she's asking, answering the question, why is her lifestyle so good? And her answer is, I bought Stref. No, anyone who listened to this has not happy.
16:11 Speaker 01 Yeah, that's right. And of course, there's bears like Peter Schiff. I see all over Twitter, warning that this is the Bitcoin bubble, that, you know, it's gonna get like, basically,
16:23 Speaker 01 dancing with glee that this is happening.
16:25 Speaker 00 Yeah, I am, I am noting that in my head, just like Peter Schiff is getting really loud right now. I will say that like there, like I think Michael Saylor's backed up against a corner with Stref, because he truly can't, like the idea with Stref is like, yeah, in theory, they have no claim on the Bitcoin. We don't have to sell the Bitcoin. In theory, they could be wiped out. They have no legal claim. But then you have like this, the AI ad of the babe drinking the margarita. I'm like, dude, that is a lawsuit waiting to happen.
16:52 Speaker 01 Sure.
16:53 Speaker 00 And so he, legally speaking, he probably doesn't want to go down that route, even though he might technically check out, like it's still gonna be messy. And I, the thing that he's been doing, which is minting and hammering the ATM at MSCR, seems to be the, the path of least resistance.
17:10 Speaker 01 Yeah.
17:11 Speaker 00 I still think it's gonna work out.
17:13 Speaker 01 I don't think.
17:14 Speaker 00 I like, I kinda think it's still gonna be okay.
17:16 Speaker 01 Maybe not, maybe not. And it depends what, it all depends on what Bitcoin price does, really.
17:21 Speaker 00 Right, right.
17:22 Speaker 01 Speaking of that, uh, what's the polymarket saying on the week?
17:25 Speaker 00 Yeah, let's check this out, let's check this out.
17:26 Speaker 01 It's been a while since we looked at this.
17:28 Speaker 00 Bitcoin, polymarket is giving Bitcoin a 48% chance of hitting $45,000, a 31% chance of hitting $40,000, and it basically stops there.
17:40 Speaker 01 Yeah.
17:41 Speaker 00 Yeah.
17:42 Speaker 01 What about the upside?
17:43 Speaker 00 The upside, uh, let's see, we have a 50% chance that it hits $75,000, and this is all in this year.
17:50 Speaker 01 By the end of the year.
17:51 Speaker 00 So 2026, so there's equal probability that Bitcoin hits 75,000 as it does 45,000.
17:57 Speaker 01 Yeah, the bearish numbers are growing. Uh, should we check in on our little friend ETH, David?
18:02 Speaker 00 Yeah, yeah, let's check it out, let's check it out, let's check that out. Uh, ETH is not looking great. ETH is not looking great.
18:07 Speaker 01 Is that blue line, the 200 week as well?
18:08 Speaker 00 Yes, yeah, the blue line.
18:10 Speaker 01 It's well below the blue line.
18:11 Speaker 00 The, what's notable to me is that the blue line, the 200 week moving average is not going up. Like, that's just...
18:18 Speaker 01 It's an ugly 200 week.
18:19 Speaker 00 Yeah, it's a flat, it's been flat for over a year, so.
18:21 Speaker 01 Mr. Cycle.
18:22 Speaker 00 ETH is now 36% below the 200 week moving average, which it's never been that low.
18:28 Speaker 01 It's spent some time below, though, in 2025, right? The whole tariff thing.
18:33 Speaker 00 Right, right, oh yes. And it was, it was, it was here, and then Tom Lee came in and hammered $18 billion into ETH, and ETH hit all-time high, and we're kinda back to that same price range again.
18:46 Speaker 01 Okay, well, more on Tom Lee a bit later in the episode. How are regular markets doing? How the trad markets?
18:51 Speaker 00 Okay, yeah, let's look at the, let's look at the indices. Uh, there's been a little bit of a toppiness in the indices, like, you can kinda see it, like, rolling over at the top. This is the S&P, uh, but really, it's, in the grand scheme of things, it's fine. Like, we're down 3% from the top, uh, of the S&P, the Nasdaq's doing the same thing. Um, there's definitely been a lot of market volatility. You might have noticed, Ryan, that your portfolio got absolutely obliterated in overnight trading on Tuesday of this week.
19:15 Speaker 01 Yeah.
19:16 Speaker 00 Uh, this happened because, uh, South Korea, South Korea regulators made some comments about... Cautioning retail investors on leveraged ETFs, apparently leveraged ETFs. You're gonna get, I wonder, I wonder what ETFs, semiconductor ETFs, leveraged semiconductor ETFs in South Korea. Regulators were like warning about them. And then as a result of that, the South Korea's benchmark K O S P I index plunged 10%. They triggered a 20 minute halt. People got liquidated, you know, people got carried out. It was a very brutal day. And then it carried over into our market. So on Tuesday, that's why the Nasdaq fell 2.2% and the S and P dropped 1.4%. But then Ryan, you know what saved the day? You know what the entire, what the new Nvidia is?
20:01 Speaker 01 What's, am I crying?
20:02 Speaker 00 M U. M U earnings got posted yesterday and they just obliterated earnings. So they had $41 billion in revenue, which would be an estimate of $36 billion.
20:15 Speaker 01 Incredible.
20:16 Speaker 00 Wild. And then their, their Q3 revenue is up 75% from Q2. Wild. This is the thing that's already trading like well over a billion dollars. This thing, if you bought M U, Ryan, on January 1st of this year, you would be up 330%.
20:34 Speaker 01 Don't tell me that. I don't want to hear that.
20:35 Speaker 00 330%.
20:37 Speaker 01 That's amazing. It's incredible.
20:39 Speaker 00 So M U earnings came in yesterday and it was very, very good. And it, and like every single day, every single week, the market is like, is the bubble, is the bubble popped? You know, there's a memory stonks over, like is the AI trade over? And seemingly every single week, we have something like this. And it's like, no, no, throw the dice again. We're back in it.
20:58 Speaker 01 We got more. We got more. I have a take on this. I have, I have three reasons why I think crypto, the crypto market is down. When I, when I zoom out, when I've been thinking about this over the past couple of weeks, you ready for it?
21:08 Speaker 00 Sure.
21:09 Speaker 01 All right. The first reason is basically exactly what you said. All the attention, all the auction in the markets, all the capital is in AI. And so crypto is very much an attention economy. I mean, I think a store of value asset of which like Bitcoin is the predominantly most of the crypto economy. And then ether, another store of, a store of value is still the underpinning of the crypto market. Right? And that is very much an attention asset. It's very much a memetic like gold is too, but gold has 5,000 years of history here.
21:40 Speaker 00 Yeah, you don't need as much attention on gold.
21:43 Speaker 01 You don't need, because it's always been here. There's always the gold bugs. There, there, there always will be at some level. But crypto is really suffering from the attention shifting to AI. That's the first one. It's probably pretty obvious. Yeah, everyone's looking at Micron and Nvidia. And they've moved their capital and attention from crypto. But I think it, you know, bears repeating. The second is the debasement trade is on pause. And we could see evidence of this in the gold price. So gold is creeping closer to $4,000 per ounce.
22:15 Speaker 00 Which is down, right?
22:16 Speaker 01 It's down, right? It was 5,300 or so at the highs when Peter Schiff was dancing on the other side. It's down significantly since. Michael Howell actually had a great post on this and he talks about the reason why it's on pause. And it's because over the past few months, China has really paused on kind of their, their, their money printing printer. And so liquidity has actually reversed coming out of the PBOC. He's not actually sure why. People aren't sure why some, you know, he points to maybe the Iran conflict causing China just be like, oh, pause. We don't want more production. We don't want to consume more oil, but for whatever reason, they have paused liquidity. The dollar is strong. You know, the Fed isn't printing much more liquidity.
22:58 Speaker 01 So liquidity cycle has changed and he thinks this will be temporary, but as long as that is happening, the debasement trade is not gone, but it's just on pause. It will resume because it has to resume because you've seen the charts.
23:12 Speaker 00 Right.
23:12 Speaker 01 You've seen US debt to GDP ratios. China's in a similar situation from real estate, all sorts of things where they need to print their way out too.
23:22 Speaker 00 The most bullish thing for liquidity was the Trump administration doing their damnedest attempt to doge the government. And then the spending just linearly increasing upwards.
23:34 Speaker 01 Yeah, but people are like, oh, the debasement trades, it's over, right? Gold is going, Bitcoin's going. It's not over, it's just on pause right now. And that's how it was always going to work. It would pause and then resume. So, but this paused right now. The, the, the third reason is this, it's just the four-year cycle, David. And, um, Michael NATO.
23:52 Speaker 00 Four-year cycle, unphased.
23:53 Speaker 01 It's unphased and Michael NATO wrote a post this week that I thought was really good. He was just talking about what we have to do every four years. You talked about the reason why is we have to deleverage. And so this is the realized price here, 1.9 trillion in Bitcoin. This is the valuation we got to in the last bull cycle, 2.5 trillion. That premium from the realized price, the amount everyone, you know, bought in at effectively. And the, the valuation, that 1.5 trillion dollar premium, that was all a lot of credit. Those perps, you know, DeFi loans, stablecoin loans, centralized, all of these loans on top of that. And every single four years, we have to purge the credit, the excess credit.
24:35 Speaker 00 Is that what we're doing right now? We are purging?
24:36 Speaker 01 That's what we're doing. We're purging all of that credit.
24:39 Speaker 00 Michael Saylor's got to cough something up, dude.
24:41 Speaker 01 Well, he took on some leverage, like leverage is sin, right? So he took on some leverage. He didn't take on a lot. But like, yeah, I guess he did take on much more than he has in previous markets. So maybe he'll have to cough it up, maybe he won't. But this purple, uh, you know, graph right here, might have to get close to the blue graph, might have to even get below it. And in previous cycles, it's gotten about, you know, 20 to 30% below it. This is realized price.
25:05 Speaker 00 Below it.
25:06 Speaker 01 This is 50, if you want to translate this to Bitcoin price, below 54K.
25:11 Speaker 00 Okay.
25:12 Speaker 01 So those three things are happening. We have AI attention dominating unless AI attention slows, it's hard for crypto to get a run. You know, uh, secondly, debasement trade on pause, you could see this in the, in the global liquidity. And then third, it's the four-year, uh, uh, deleveraging cycle that we're seeing. So some of this has to get washed out and deleveraged. No, I don't think crypto is over. No, I don't think it's like the end. This is just the point in the kind of the, the big meta cycle that we're in.
25:43 Speaker 00 Do you, listen to my episode with Arthur Hayes?
25:46 Speaker 01 Not yet, no.
25:47 Speaker 00 Uh, he's, he's, he's got a interesting brand right now in crypto.
25:53 Speaker 01 I've seen some of his brand is like, uh, grifter, shiller and dump, like pump and dump type of brand.
25:57 Speaker 00 Yeah, yeah, yeah.
25:59 Speaker 01 Is there a little bit of that?
26:00 Speaker 00 Yeah, that's not what I talked to him about. What I, I just, I kind of moved on to just like, he has this broader idea of you want to sell the AI top to buy the crypto bottom and those things will happen at the roughly around the same time, potentially.
26:13 Speaker 01 Did he say when?
26:16 Speaker 00 Uh, in, he, he gave a bunch of reasons as to why it will be a bubble.
26:21 Speaker 01 Okay.
26:21 Speaker 00 And then why it will pop and then, and then in like classic Arthur fashion, he's like, this credit event is going to be bigger than 2008 and the government is going to start printing and that's when you want to buy Bitcoin. But like, the details of that I'm sure are going to be incorrect, but directionally, I find it very interesting of just like, there's going to be AI, the AI trade is going to get wiped out at some point, like some, some people made way too much money way too quickly and they're going to get wiped out.
26:49 Speaker 01 Sure.
26:49 Speaker 00 And it seems like there could be a timing there of like crypto can't live until AI dies.
26:57 Speaker 01 I think that's right.
26:58 Speaker 00 I, I think I, it's a, it's a narrative.
27:00 Speaker 01 But I don't want AI to die either.
27:02 Speaker 00 I don't want AI to die, but like, it's a narrative that I am interested in tracking.
27:05 Speaker 01 Yeah. Meanwhile, the only crypto asset that is pumping, you call this chart into the agenda, is something called cards. Is this a real world asset for Pokemon cards, David?
27:15 Speaker 00 That might actually be what it is. Uh, Pokemon cards, the whole gotcha universe is pumping right now.
27:23 Speaker 01 What's the gotcha universe?
27:25 Speaker 00 That's like, it's like, I, I don't know why it's called that. Uh, but it's the, it's the, it's the trading card ecosystem.
27:31 Speaker 01 Okay, so it's just Pokemon cards.
27:33 Speaker 00 Pokemon cards, there's like, there's one piece cards, there's other cards out there that are trading.
27:37 Speaker 01 Okay.
27:38 Speaker 00 Uh, but dude, these are just like altcoins for millennials, but they're real Pokemon cards. And like, there's a huge trad real world asset, like non crypto, trading card ecosystem happening. Kind of like how people are like buying and selling Rolexes in COVID.
27:55 Speaker 01 Yeah.
27:55 Speaker 00 Some of it. It's making it on chain and cards is that cards is like a virtual platform for buying and selling.
28:03 Speaker 01 I've never thought about this, but it'd be interesting to go deep, deep dive in the Pokemon cards ecosystem and just understand how the, the central fiat issuers of Pokemon cards, how they like manage supply. Like how they make sure that they don't print too many Pokemon cards or like what that, cause it's an economy that they built. It's a pretty valuable one.
28:22 Speaker 00 That's why there is, there, there is a little bit of that. And I asked Andy, Andy 8052, he had, he's running Monster and it's, it's literally just like a virtual, you can open up Pokemon cards virtually. And he literally has a treasury of Pokemon cards. And he said that like Pokemon as a brand, they did a very good job maintaining the brand and preserving the value of the OG, OG cards. While still minting new cards that are different. And there's a brand that failed at that was Yu-Gi-Oh, where they just hammered the ATM, if you will. And they, they overinflated their cars and they destroyed the value for all the collectors. And so there's a little bit of an art to the issuance of new editions of cards, because you still need to preserve the value of all your old cards.
29:07 Speaker 01 I swear seeing Pokemon cards going to terror makes, gives me some optimism for NFTs again, the rise of NFTs. These are just NFTs.
29:15 Speaker 00 These are just NFTs.
29:16 Speaker 01 They're real world NFTs. David, we've got more to talk about. Um, the, the EF is cutting back, but ETH Labs is stepping in. What does this mean for Ethereum, all that number of other topics? We'll see you in a minute, but before we do, we want to thank the sponsors that made this possible.
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31:39 Speaker 00 So this week, we had, we had two announcements. The EF cut its budget by 40% and its staff by roughly 20%, which was 54 people. So 54 people no longer work at the EF, which means that the EF is like 200 people still to this day. That's pretty big still. That's pretty big. There's a restructuring into five clusters. So there's now clusters at the EF and it's, the EF is now kind of just intentionally framing itself as just one node among many when it comes to like this stewardship in direction of Ethereum. On the other side of the aisle, ETH Labs. Was launched as a new independent nonprofit research and development lab with a just a kind
32:22 Speaker 00 of a different emphasis than the EF, like ETH as an asset and Ethereum, the network being co-developed, placing Ethereum to be the settlement layer of the global economy, putting points on the board for Ethereum, trying to win. And so ETH Labs is entirely comprised of former EF technical talent, some very big names, Ansgar, Casper, Barnaby, Josh Rudolph, Julian Ma. If you're in the Ethereum world, you recognize these names. So there's a little bit of a tale of two cities going on here.
32:53 Speaker 01 Yeah, I guess maybe let's, um, let's talk about the EF, their structure and getting smaller. So Vitalik put together a post, he actually ends this post and said this, "The past years have been challenging era for Ethereum." I think a lot of ETH investors certainly feel that. A lot of people in the Ethereum ecosystem feel that too. Good to see him put that into words. He said, "I personally favor," when talking about, like this post was revealing, because there's a number of, you know, Vitalik thoughts, which are always very important for the stewardship of Ethereum. "On ossification of the Ethereum protocol," he says this, "I personally favor a soft, lean and done approach to Ethereum. Once the straw map is completed," that's the current Ethereum roadmap, "generally stick
33:35 Speaker 01 to security fixes and small, high-value changes and have a much higher bar for considering new features." So I think the idea here is that the current EF structure and funding gets it, crops, that censorship resistance, it's open source, privacy, security, those being kind of the priorities. And then, once the straw map is done, like, the role of the EF shrinks even further still. And so, this post was, I thought, good for Vitalik. I'm glad that somebody from the Ethereum Foundation publicly addressed this, glad that Vitalik did, because what we were seeing over the past three to six months was kind of a leakage of what we thought were key people in the Ethereum Foundation. I mean, starting with
34:19 Speaker 01 Tomasz, but then Chai, the other executive director, leaving a number of high-profile departures. Now, some of those have, have joined this new org that we're going to talk about in a second, but, you know, Vitalik has been pretty much, pretty quiet on this until now. So I guess it was all culminating in this.
34:38 Speaker 00 There's another post from Bastian, who is the new current executive director of the EF, making a pretty clear post about what the scope of the EF is moving forward. So he started with what the EF is not going to be for. The EF is not going to be like important. The EF is not trying to make itself important. The EF is not for
35:03 Speaker 01 God, that's clear. I mean, I feel like that's been super clear for a long time, but okay.
35:08 Speaker 00 The EF is not for corpo appeal or for ecosystem popularity.
35:12 Speaker 01 All right.
35:13 Speaker 00 We are not here to please short-term speculators or prop up TBTF neo-sophies? I don't know what that is. What is that?
35:21 Speaker 01 A TBTF neo-sophie? Let me look that up while you're going through it.
35:24 Speaker 00 And then also there, the EF is not for marketing every app on Ethereum. What is the EF for is eliminating Ethereum weaknesses. So they want the EF to help defensively strengthen places where Ethereum is or still can become extractive, totalizing, or vulnerable to cartel or estate capture. So croppy stuff, like what is the EF doing? It's narrowing this focus onto croppy stuff. Something that he said was, "The EF exists to harden every surface of Ethereum." Crop is the center of resistance.
35:55 Speaker 01 Yeah, yeah, yeah.
35:56 Speaker 00 Privacy, security, all that kind of stuff.
35:59 Speaker 01 I was glad that they put some priorities here, too. Privacy being one of them.
36:03 Speaker 00 Quantum resistance.
36:05 Speaker 01 Quantum resistance, which is huge. We'll talk about that later. Now with the dates, you know, continuing to, I guess, you'll fall back for when we'll get a quantum breaking computer that seems even higher priority. There's even some question whether Ethereum will be ready, let alone Bitcoin. But having that as a centerpiece, if the EF was just able to deliver that, that would be actually incredible. My favorite part of Bastian's post was actually this, where he talked about ETH, the asset.
36:35 Speaker 01 Glad they said ETH the asset. Making ETH normal digital cash is how he put it. You need to find it like this. A private dignity respecting, debasement resistant and surveillance resistant medium of exchange and store of value, as well as the native asset of private computation and private coordination for both humans and their agents. So, good to see some emphasis on Ether the asset and not just Ethereum the network. Something that I know you love to see and I love to see as well.
37:10 Speaker 01 I do have a definition for TBT F Neo SIF.
37:16 Speaker 00 Yes.
37:16 Speaker 01 Too big to fail is TBT F. And SIF is a systemically important financial institution. So it's big banks, basically. So that was the departure from the EF. And then we had ETH Labs.
37:28 Speaker 00 The downsizing and restructuring and narrowing of scope of over the EF. An important point about the EF is that they were consuming 15% of their treasury per year. That was their intentional part of their treasury strategy as the run and maintain structure of the EF. And now that is going down to 5% of the EF budget per year. They're also, I think, just downsizing some mega projects. So this might be the last DevCon, the DevCon India in Mumbai. So things like this. So they're just really leaning up and kind of hunkering down.
38:01 Speaker 01 Which needed to happen, right? Bobby Ang from CoinGecko makes the point. The organization was 270 people before they laid off 20% of their staff. And Telegram has a total team side purportedly of like 50 people.
38:14 Speaker 00 Yeah.
38:15 Speaker 01 Hyperliquid, I don't know, what are they, like a dozen?
38:17 Speaker 00 14, yeah, 14.
38:18 Speaker 01 So 270 is a lot of people for developing a crypto protocol, right? So maybe they just needed to lean down as all organizations eventually do.
38:29 Speaker 00 Should probably keep going.
38:30 Speaker 01 Timosh was pretty favorable towards this too. I don't know if you saw his post on this. You read this?
38:35 Speaker 00 Mm hmm, tell me.
38:36 Speaker 01 He basically said, this is generally the direction that I would have wanted the EF to go into. So he's pretty supportive. But he ends it with this. He says, my base worry is about execution. If you look at the diagram, you know, this diagram of all the different seven areas. He said, it's still pretty like messy, pretty unclear, the structure. You know, maybe it's too hierarchical rather than flat. And so he said, this mostly likely reflects the team's challenges and controlling pressures for people to keep titles. People keeping titles, general org stuff, right? Like, the EF is not immune to the bureaucratic tendencies of governments.
39:15 Speaker 01 And I think that's sort of some of the malaise that has befallen the structure over the past 10 years.
39:22 Speaker 00 I mean, my confidence in the EF, like fixing itself and like becoming new again and being effective. Like, I've, I just don't think that's where it's going to happen at the EF. And so, yeah, they're leaning up, but it doesn't mean that they're turning into this polished, well-run organization. It kind of seems to be that this, the lack of being well-run is a little bit intentional by design because they don't want the EF to be like important.
39:53 Speaker 01 Maybe? I don't know. I, it's, this is, seems like a step in the right direction for sure. But let's talk about what, at least I am more bullish on, and I think you probably are too. Tell me about ETH Labs. So this is a net new entity. We got a blank canvas.
40:06 Speaker 00 Yes.
40:06 Speaker 01 We can do this thing right with this organization. What is ETH Labs? Who is behind it?
40:11 Speaker 00 ETH Labs, in my mind, this is my words, not theirs. I'm recording with Onsgar and Casper tomorrow. That episode will come out on Monday.
40:17 Speaker 01 Some of our favorites from the EF.
40:20 Speaker 00 Yes, yes, yeah. The, the, I don't like to pick favorites, but I really like Casper and Onsgar.
40:27 Speaker 01 Yeah.
40:29 Speaker 00 I'll say that like ETH Labs, in contrast to the EF, wants to be important. Here's, here's a line out of ETH Labs that I really like. Principles do not change the world until people benefit from them. And the reason why that's important to speak through the lines is like, sure, a lot of Ethereum's values, the crops, the decentralization, the censorship resistance is great. It doesn't matter if those. Things aren't relevant.
40:55 Speaker 01 Yeah.
40:56 Speaker 00 Labs is trying to make Ethereum as relevant as possible. And so, like I said, this is Onsgar, Casper, Barnaby, Julian Ma. Again, some heavy hitters with funding from Bitmine, Sharplink.
41:11 Speaker 01 Okay.
41:11 Speaker 00 A handful and like a number of other just individual contributors. And so this is where they're getting their funding from, a bunch of grants from organizations.
41:19 Speaker 01 Commercial entities.
41:20 Speaker 00 Commercial entities. And they have a whole, they have a whole website. And so this is, think of this like as a small, lean, refined group of very competent protocol specialists who want to do things that the EF isn't going to do. And this has to do with scaling. I think like layer one scaling is now kind of in the realm of ETH Labs. Cause I don't think the EF is taking on layer one scaling. And so ETH Labs is now doing layer one scaling. And they are, I think they're kind of still working on exactly what like step one, step two, step three is. But this is really about an organization that wants Ethereum to put points on the board.
42:04 Speaker 01 Yeah.
42:06 Speaker 00 There's like this one central slot in the crypto world where there are single settlement layer for all of internet finance. Ethereum is the only ecosystem that fits in that slot. And they want to make sure that Ethereum inhabits its spots at the best of that ability. And so this, this is the ETH is winning, Ethereum is winning org in my mind. Whereas the previous one was like, we're indifferent to ETH winning.
42:29 Speaker 01 I mean, the hopeful vision here is this is like a Bronze Age mindset, lean EF basically that wants to win. And I really did like their, their thesis, as you said, part of it, but they also said this, we believe ETH matters.
42:42 Speaker 00 Yeah.
42:43 Speaker 01 The asset, it's called ETH Labs, guys. It's not called Ethereum Labs. The most valuable programmable story values how they define it. A decade of broad distribution, deep liquidity, maximally trustless asset on Ethereum. Yes, that's exactly it. That is something I was never convinced the EF fully believed. I know Justin Drake, I know some members of the EF believed it. It was never convinced that. The EF fully believed that, or for that matter Vitalik fully believed it. They also said this, "We believe DeFi matters." Thank you. That's the use case. That's one of the four points of the pillars of their thesis. And we believe adoption matters. I believe those three things too. I wasn't sure that the EF prioritized those three things.
43:23 Speaker 01 So it's good to see an organization spin up and do it, funded by people with commercial interests in this too. So this is a nonprofit, but commercial interests are funding it. So Tom Lee has got $300 million in staking revenue that he throws off of EF staking every year. How much does it cost to fund this team, do you think?
43:42 Speaker 00 Not that much.
43:43 Speaker 01 Couple million?
43:43 Speaker 00 Not that much.
43:44 Speaker 01 Few million?
43:44 Speaker 00 Not that much.
43:45 Speaker 01 And so what a great ROI for him.
43:47 Speaker 00 Salaries that they're used to getting from the EF, their expectations are probably pretty low.
43:51 Speaker 01 I'm glad. Now, the question for me is like, of course, like any new, or can they execute? Will they be able to, and what parts of the roadmap will they execute on? Like if the EF, will there be conflict? Will the Ethereum Foundation be like, "No, you know, like you can't work on single slot finality," or whatever they try to work on, "because we've got that." I don't know how this is all going to be worked together, but like, um, good to see the blood stay in the Ethereum ecosystem and for us to have a new org to actually propel the platform and vision forward. So I'm bullish. I'm like cautiously bullish because it's a new org, but like, imagine these developers and protocol engineers like leaving the Ethereum ecosystem.
44:33 Speaker 00 Oh my god.
44:33 Speaker 01 Joining in, you know, another blockchain company or something.
44:36 Speaker 00 Or going to AI or whatever.
44:39 Speaker 01 And they didn't. They stayed here. And so I think the net story here is actually bullish Ethereum. At least that's my interpretation of it, but we'll see.
44:47 Speaker 00 Yeah. And the timing of the EF announcing their restructuring, plus the launch of ETH Labs, maybe, maybe that's coincidental, but I think it's very illustrative because now the EF is explicitly saying that they just want to be one node in a network. And ETH Labs is like, "Hello, we are also, thank you for the invitation into this network. We are also a node on this network." Power dynamics, I think, are TBD to be played out.
45:13 Speaker 01 Well, the EF did not fund them. Notice. That's what, that's kind of interesting. I'm sure they had the option to fund them.
45:19 Speaker 00 Probably, but also like the EF is in potentially a funding crisis. We'll talk about that in a hot sec. Like, maybe it's like, oh, like, get Tom Lee to do it. He's got plenty of money. But, uh, like, who has the steering wheel? There, there's a huge synergy here in my mind where like the ETH Labs is looking at the EF and being like, you guys got crops. And Vitalik is like, yeah. And Bastion is like, yeah, we got crops. Crops. We are taking care of crops. So now ETH Labs doesn't have to worry about crops because the EF's got it. And the EF, the ETH Labs is going to worry about like market adoption, scaling, you know, commercial relevance. And those two things are synergistic.
46:01 Speaker 00 But I do imagine there being like, who, who's got how many hands on the steering wheel? And the thing is like, Ansgar, Casper, Barnaby, Julian, Josh. These people are very influential when it comes to the EIP process.
46:14 Speaker 01 They have some earned legitimacy.
46:16 Speaker 00 They have earned legitimacy. And so I am hoping that we can take some of the power, the leadership power of the EF and like orient it towards ETH Labs. And that not to be, not to be like dominant, but like, let's give ETH Labs some like leadership over the direction of Ethereum.
46:36 Speaker 01 I think we will. I think that's exactly what's happening. I think this is part of kind of a new era for Ethereum that's just starting to build. But you, you mentioned a, a funding problem or a funding crisis. I've heard other people talk about that. Is that Trent's take here? So Trent was formerly EF of the Protocol Guilds. I'm not sure if he's still in the Protocol Guild, but he had a post this week called Succession After Subtraction. What was he saying?
47:02 Speaker 00 Yeah, so a handful of points here. His, his first points, which kind of echoes what I was just talking about, is that legitimacy tends towards power law pooling and the EF still holds quite a lot of legitimacy. There's the Ethereum brand. Vitalik is at the EF. The EF has the pre. Treasury, they own ethereum.org, they own ethereum, at ethereum on Twitter. They have a decade of just Lindy. And there's a ton of just legitimacy pooling that all kind of concentrates there. And so he's illustrating it's difficult for new nodes on the network to emerge when the EF sucks up all of the oxygen, whether it wants to suck up the oxygen or not.
47:44 Speaker 00 However, he is saying also at the same time that there is just like a funding crisis. So $30 million a year of core dev funding, it costs the EF with their limited budget remaining. And so to some degree, they are giving up. There is an open window of opportunity for a new organization with new funding to come in because there's that power vacuum being set up. But I think what Trent's real point is, is that we need legitimacy to be spread away from the EF. That's the succession part, but also the difficulty in doing so. That's kind of the through line of the article.
48:18 Speaker 01 I sort of, I got transposed. I kind of disagree with parts of it because he talks about a funding crisis, but I think there's actually an execution crisis in Ethereum.
48:26 Speaker 00 Right.
48:27 Speaker 01 It's like a shipping crisis.
48:28 Speaker 00 Yeah. So if you talk about- What's the point of funding incompetent shipping?
48:31 Speaker 01 That's right. If you talk about 30 million a year, and let's take that number, let's say that that's 10% of what Tom Lee makes on ETH staking every year.
48:39 Speaker 00 Yeah.
48:39 Speaker 01 10% could fund the whole thing. You think he's not, you think that ETH stakeholders are not willing to do something like that?
48:45 Speaker 00 Yeah.
48:46 Speaker 01 I, I think they would do it to a competent organization that could execute, that could actually like move the dial on Ethereum, the asset. So I think that's where the EF has fallen short in some ways. And I think this legitimacy shift, uh, shift will happen so long as other organizations step up and are able to execute. So this is all good. This is part of the process is just like taking way longer than I hoped it would.
49:11 Speaker 00 Can I give you a bit of a teaser for this? These are Osgard's words. That's part of the ETH Labs and a little bit of a teaser for the episode that I'm about to record with him tomorrow.
49:21 Speaker 01 Okay, yeah.
49:22 Speaker 00 ETH Labs wants to co-develop Ethereum and ETH.
49:28 Speaker 01 I don't know. Co-develop Ethereum and ETH?
49:31 Speaker 00 Yeah. Yeah, they're an Ethereum R&D lab.
49:35 Speaker 01 Yeah.
49:35 Speaker 00 I thought it was the hottest line ever. Why are you so muted?
49:37 Speaker 01 We need co-develop.
49:39 Speaker 00 They're gonna develop Ethereum, but with--
49:41 Speaker 01 Oh, the two things together.
49:43 Speaker 00 To ETH and Ethereum together. They are going to co-develop Ethereum. Yes, okay.
49:47 Speaker 01 That's hitting me different now. Thank you. Say it like that. The second time it hit me. David, we got more to discuss, including the Illinois governor signed to the worst crypto tax I've ever seen. I can't believe this is real.
49:58 Speaker 00 I saved this part for when you were back. I didn't want to talk about this with Tom.
50:02 Speaker 01 No, this is gonna be so fun to talk about, alright? We'll get to all that and more, but before we do, we want to thank the sponsors that made this episode possible.
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51:48 Speaker 01 There's a new episode waiting for you now.
51:50 Speaker 00 Ryan, I think-- Everyone reasonable will say that the Donald Trump presidency is mixed, you know? Maybe, maybe there's some good things, but there's definitely some bad things. Sure. One positive thing I will firmly say about the Donald Trump presidency is their approach to technology is serious and correct. It's much better, yeah. It's much better. They're taking like structurally important technology very seriously, and we're hitting the gas pedal. So this week out of the White House, a tweet that said, "Investing in American quantum leadership like never before. President Donald Trump signs executive orders on quantum, supercharging a national effort in innovation in quantum
52:34 Speaker 00 technologies, ensuring national security, and continuing American growth in a critical industry." Yes, correct, full points. Let's listen to this clip right now.
52:44 Speaker 02 Quantum technologies represents the next generation of innovation across computing, sensing, and networking with enormous significance for our country's economic growth, scientific research, and cybersecurity. It's really a big deal that we're doing today, and the country's doing really well, as you know. In 2018, I signed the National Quantum Initiative Act into law, which led to doubling the federal government investment in quantum research and development. I think you all know about that. That helped unleash billions of dollars of private investment in America's quantum industrial base, promoting significant scientific and technological progress, like progress like we've never seen before, actually. We
53:27 Speaker 02 want to keep that positive momentum going in America with the orders that I'm signing today, and these will really have a, I think, place at a big step forward. We're already the leader by a lot, and we're going to be now the leader by a lot more.
53:42 Speaker 00 Great job. Love it. Taking it seriously. That was a serious clip. Sorry, Ryan, I have one more clip that I want to play. This is a hilarious clip.
53:52 Speaker 02 That we're going to be investing in American quantum leadership like never before to stay ahead of the pack. We're way ahead right now. We'll keep it that way. The second order I'm signing directs federal agency to transition to what is called quantum cryptography. Does anyone know what that is?
54:15 Speaker 01 Quantum cryptography.
54:17 Speaker 00 Cryptography.
54:19 Speaker 01 That's amazing.
54:20 Speaker 00 Does anyone know what that is?
54:22 Speaker 01 That's great. Well, we know a little bit of what it is. We've been talking about it on Bankless for the past couple of years.
54:29 Speaker 00 Just a little bit. Okay, let me summarize everything in the executive order.
54:32 Speaker 01 Yeah, what's in this thing?
54:34 Speaker 00 Okay, so we are migrating the timeline forward for being quantum secure by four years, from 2035 to 2031. That's great.
54:42 Speaker 01 That's all agencies have to have quantum resistant crypto.
54:47 Speaker 00 Cryptography.
54:48 Speaker 01 Algorithms by 2031 rather than 2035. That's a massive, like, that's almost like, that's like a 40% increase forward in timelines here.
55:00 Speaker 00 We're also going to build a quantum computer. And so the executive order establishes the quantum computer for application development and discovery science. And we are, we, the United States of America, are aiming to build a powerful quantum computer for scientific discovery with a planned deployment at the Department of Energy facility and potential access for the broader scientific community. Reporting points to a target, a targeting and meaningful capacity by 2028. By 2028, the United States government is going to have a cryptography-relevant quantum computer for, for scientific discovery.
55:37 Speaker 01 Yeah. I think this is a really big deal. This is the US saying this is a national priority. They're going to invest in it. I'm sure they're getting the tip off from the, the leading frontier labs in quantum in the US and maybe in US allied countries like Google, I'm sure, is just being like, hey, we're making huge progress on this. And this is all a national defense type thing. Because, like, imagine all of the communications that, that could be tapped into and hacked if somebody had a quantum computer. I mean, the US absolutely has to beat China to this in order to maintain its, its kind of position in the world and not to be at national security risk. But this is moving faster than I think anyone thought.
56:22 Speaker 01 Remember, Justin Drake put out that post. In March 20, well, in March of this year, and he said that, what did he give it? A 10% chance by 2030? Is that it? Yep. That we would have quantum? Uh huh. I now put the odds of QDA by 2032 at 50%, 10% by 2030. And I would expect his estimates have even like increased, have fallen back. Yeah. You know, since then. Yeah. So this is happening very fast. Not sure that Bitcoin will be able to, to make it in time. It's even unclear that Ethereum will be able to make it. Well, I mean, the, they'll figure it out. It just could be really bumpy if this happens. Yeah.
57:07 Speaker 01 Within the next five to six years. Yeah. Bitcoin is not ready. They're, they're just so not ready. Even like, even Ethereum has so much to do. It's a lot of work. It has, we have a lot to do between now and then. I mean, at least Ethereum's taking it seriously, but man, dude. Yeah, yeah. Let's finish with this, David. This, do you see the Illinois governor? You did see this. I did see this. Let's talk about it. I saved it. I saved it for you. Okay, this is a, a 0.2% crypto transaction tax on everything. This was signed by the governor of Illinois on June 16th. So it's already signed. It's a law that has passed now. It's, wow. It's going to, it's not effective yet.
57:52 Speaker 01 So it's effective January 1st, 2027. So within six months, it's going to be effective. And this is in play for anyone in Illinois. It's the first statewide transaction tax of its kind. It is called the Digital Asset Privilege, the Digital Asset Privilege Tax Act. So implying that if you have digital assets, you are a privileged individual. And what it's doing is this is not a capital gains tax. What an assumption. I don't feel very privileged right now. This is not a profits tax. This is a tax on movement. So if you do anything to move your crypto assets from one place to another, there's a tax on it. That is. 0.2% is the tax.
58:34 Speaker 01 There's a tax for keeping it in custody, 0.2%, just like touching your crypto. There's a 0.2% chance tax, not for stocks, not for bonds, not for Bitcoin. It's unclear whether moving crypto assets from a self custodial account that you hold to another self custodial account that you hold also incurs this tax. It could. The language is unclear and vague and all of this happens in Illinois. Like places like Chicago, what if you're a listener, a bankless listener in Chicago? Like, how livid are you right now?
59:08 Speaker 00 Do you just have to like go and drive over the state boundary? What's a state that's next to Illinois?
59:14 Speaker 01 No, I'm sure it's a residency type thing, right? Yeah, so you'd have to like move to Florida for six months every year or something like that.
59:20 Speaker 00 This has got to be legal.
59:22 Speaker 01 It's state tax, it passed, it's law.
59:25 Speaker 00 It doesn't feel right.
59:27 Speaker 01 I mean, I think it will be challenged. So a repeal bill was introduced within days. I think it could be challenged in the court system. But for now, it's the law that's going into effect January 1st, 2027. And it's the worst tax I've ever heard of.
59:43 Speaker 00 Yeah, it's just so confounding. It's just like that just in nukes everything.
59:49 Speaker 01 Yeah, yeah. Let's end with this. We haven't talked about this in a while. But David, I know you are buying some things in crypto. I don't know if you're bottom ticking anything right now. What's your portfolio looking like?
1:00:02 Speaker 00 I have a portfolio of Hype, VVV, Near and Zcash, which is like, kind of like-
1:00:07 Speaker 01 It's very trendy.
1:00:08 Speaker 00 It's very trendy. I will say like people were harping on me for like hopping on the trend. When I tweeted that like, I tweeted this one thing. People, I was like, after I sold all my ETH, I bought those four things. And then, and then in the tweet I said, and now I'm buying Lit. But people are like, oh, David bought Zcash. All of those positions, I will say, are in the green other than Zcash. Yes, still. Still. Yes, that's correct. Yeah. Lit is-
1:00:35 Speaker 01 In the green relative to ETH?
1:00:37 Speaker 00 No, taller's dude. Yeah, yeah. Zcash, I bought it like 550 or 80 or something. So that one's kind of down bad. But like Near is still up and, and, oh no, Venice might not be up anymore. Venice might be down. Business might be down. Anyways, Lit is the token that I'm the most concentrated in. Just because like it seems so damn cheap to me. You know Lit, lighter?
1:01:02 Speaker 01 Of course, yeah. I think it's a great founding team. It's basically an Ethereum app. You can think of it that way. Perps are huge. The question is, it's like such a power law winning game, right? With Hyperliquid, like there could be a world where-
1:01:16 Speaker 00 Cause how many exchanges have there been that are worth many billions of dollars?
1:01:19 Speaker 01 Yeah, Coinbase, you know-
1:01:21 Speaker 00 Cause it's an exchange business. So it is a Dex, it's a ZK layer two on Ethereum that is a Dex. A Perp Dex. It's got spot, it's got perps. But like it's going to, it's competing, it's trying to compete with the biggest exchanges out there. Not just Hyperliquid, but also Coinbase and like Binance and OKX. And it just wants to have its like internal operations be ZK circuits on Ethereum layer two.
1:01:48 Speaker 01 Yeah, I could see it. I mean, the architecture makes sense. The team is fantastic. It's can they, can they run faster than some of the big competitors they're, they're trying to execute against, right?
1:01:58 Speaker 00 Did you know Vlad, the founder, is like on the CFTC like board of advisors or something?
1:02:03 Speaker 01 That's cool. Very cool. I mean-
1:02:05 Speaker 00 He's in the right spots. So that's my most concentrated bet.
1:02:08 Speaker 01 Yeah. Well, are you thinking about anything else? Or are you just wait and see right now?
1:02:13 Speaker 00 Everything else is in, is in the stock market. I'll say buying lighter has been the first time my money has flown from the stock market to crypto in a long time. You really have been going the other way.
1:02:24 Speaker 01 Yay. Sign of the times, sign of the times.
1:02:27 Speaker 00 I think, am I eyeing anything else? I don't think I'm eyeing anything else.
1:02:31 Speaker 01 Yeah, I, I think it's an interesting time for the market. I think that I'm probably pretty convinced that we'll bottom sometime in the second half of this year. And that'll be a great time to buy all sorts of things.
1:02:43 Speaker 00 By what?
1:02:44 Speaker 01 Still, I'm still trying to decide. I mean, certainly, certainly store value assets will have a comeback.
1:02:50 Speaker 00 You mean the majors?
1:02:51 Speaker 01 The majors. I'm still, you know, I still think ETH could have a, could have a run. I understand some people don't think that. Apps and crypto, big deal.
1:02:59 Speaker 00 I mean, say what you will about ETH, it is at a discount.
1:03:03 Speaker 01 Yeah, yeah. I think everyone will say that.
1:03:06 Speaker 00 It is 30% below, 35% below the 200 week moving average. So like it's a deal.
1:03:12 Speaker 01 Probably. It could be. It could be. It could very well be. Could be a deal. And it could still go down a little bit more before it goes up. But I think we're close to the bottom now. We just... Spot bottom-ish. Still waiting for a bit more. Yeah.
1:03:24 Speaker 00 Bankless Station, that is it for this week. Ryan will be back next week. He is not going on another vacation. He'll be back, back in pocket. Until then, though, crypto is risky. You can lose what you put in. But we are headed west. This frontier is not for everyone. We are glad you're with us on the Bankless journey. Thanks a lot.
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