ROLLUP: BTC ETF Rumors | Uniswap Fee Switch | SBF Trial Continued

Bankless Weekly Rollup 3rd Week of October ----- 🧥 Take the Survey and Win the Bankless Jacket! https://bankless.cc/survey ------ BANKLESS SPONSOR TOOLS: 🐙KRAKEN | MOST-TRUSTED CRYPTO EXCHANGE ⁠https://k.xyz/bankless-pod-q2 🦊METAMASK PORTFOLIO | MANAGE YOUR WEB3 EVERYTHING ⁠https://bankless.cc/MetaMask ⚖️ ARBITRUM | SCALING ETHEREUM ⁠https://bankless.cc/Arbitrum ⁠ 🗣️TOKU | CRYPTO EMPLOYMENT SOLUTION https://bankless.cc/Toku 🦄UNISWAP | ON-CHAIN MARKETPLACE ⁠https://bankless.cc/uniswap 🔗 CELO | CEL2 COMING SOON https://bankless.cc/Celo ------ TIMESTAMPS & RESOURCES 0:00 Intro 3:20 Markets 5:15 Janet Yellen on War https://news.sky.com/story/we-can-certainly-afford-two-wars-us-treasury-secretary-says-12985335 7:50 A Trade War https://x.com/KobeissiLetter/status/1714280042547806316 9:10 Treasuries vs Bitcoin https://twitter.com/robustus/status/1714303541077020770 10:30 Vance on Young People https://x.com/pythianism/status/1714697205259325511 12:22 Commodity-Like Money https://x.com/MikeIppolito_/status/1714710556865597816 12:50 Vitalik Not Dumping https://warpcast.com/vitalik.eth/0xb8ccf84d 13:45 Crypto Dollars https://twitter.com/sebventures/status/1714226872471470452 https://twitter.com/MikeIppolito_/status/1714345259847561526 18:00 BTC ETF Flub https://pbs.twimg.com/media/F8kL82PX0AAC0dm?format=jpg&name=medium https://pbs.twimg.com/media/F8kL82PX0AAC0dm?format=jpg&name=medium https://twitter.com/watcherguru/status/1713921987783885072 19:20 How it Happened https://cointelegraph.com/news/clarification-sharing-false-spot-bitcoin-etf-news 21:10 Surprisingly Bullish https://twitter.com/0xfoobar/status/1713931735086313788 22:40 Analyzing the Trade https://twitter.com/john_j_brown/status/1713927067337646410 23:30 Larry Fink https://twitter.com/pythianism/status/1714026700894359838 24:50 SEC Getting Involved https://x.com/JSeyff/status/1714987065664766303 25:50 Uniswap Fees https://twitter.com/haydenzadams/status/1713987105666265113 27:40 People are Upset https://x.com/econoar/status/1713998895079145858 https://twitter.com/NTmoney/status/1714023810586804732 30:50 Nuanced Takes https://x.com/jessewldn/status/1714023895164920267 https://imgur.com/srTluvB https://imgur.com/52GHn8p 32:25 Closing Thoughts https://x.com/hosseeb/status/1714092908415156365 https://twitter.com/RyanSAdams/status/1714009148147241042 https://twitter.com/trustlessstate/status/1714123412904267857 38:25 Uniswap Stats https://dune.com/hagaetc/dex-metrics https://twitter.com/1kbeetlejuice/status/1714096389024579796 https://app.blockworksresearch.com/analytics https://twitter.com/tomkysar/status/1714397906629783671 44:00 SBF Trial Continues https://futurism.com/the-byte/legal-experts-sbf-deep-trouble https://blockworks.co/news/sam-bankman-fried-trial-day-10 https://www.theblock.co/post/256368/blockfi-ceo-points-finger-at-alameda-ftx-for-collapse-of-crypto-lender-during-testimony-at-sbf-trial https://twitter.com/innercitypress/status/1713711029614448686 51:05 Scroll Mainnet Live https://twitter.com/Scroll_ZKP/status/1714286874020528554 https://www.youtube.com/live/FWzdCbFXAy8?si=LYpHH1xGkncyAUUh https://www.bankless.com/airdrop-hunter 52:50 Coinbase Perpetuals https://x.com/coinbase/status/1714642518678155709 https://www.coingecko.com/research/publications/crypto-derivatives-market 57:40 Elizabeth Warren vs Crypto https://x.com/RyanSAdams/status/1715026122704900217 https://x.com/KMSmithDC/status/1714007648364880282 1:01:30 Fighting Back https://www.bloomberg.com/news/articles/2023-10-13/sec-won-t-ask-court-to-reverse-its-decision-on-spot-bitcoin-etf https://twitter.com/JSeyff/status/1712935855877128662 1:02:10 EtherFi Token https://x.com/ether_fi/status/1714695381957902428 1:05:00 Jimmy Zhong https://www.cnbc.com/2022/11/07/feds-seize-3point36-billion-in-bitcoin-the-second-largest-recovery-so-far.html https://www.cnbc.com/2023/10/17/crypto911.html?taid=652e795bddbbd60001a5835f 1:11:30 Protecting Citizens https://twitter.com/shaughnessy119/status/1714384326467399858 1:12:15 MEV Searchers https://appointmenttrader.com/ 1:14:45 Mirroring the Stock Market https://twitter.com/degenspartan/status/1713030953193591084 1:16:40 Permissionless Finance https://twitter.com/ErikVoorhees/status/1712229910477967781 1:17:30 What Ryan’s Bullish On https://u.today/joseon-blockchain-ecosystem-introduces-first-ever-virtual-nation-state https://www.joseon.com/l/en-US/ https://joseon.cloud/JoseonWhitepaper.pdf 1:22:30 What David’s Bullish On 1:25:20 MEME of the Week https://vxtwitter.com/tomkysar/status/1714066425071984992?s=46 ------ Not financial or tax advice. See our investment disclosures here: https://www.bankless.com/disclosures

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

• 0:00Ryan Sean Adams?

  The BTC ETF gets approved. Actually, no, it didn't. Instead, $65 million of liquidations occurred due to an eager beaver news organization.

• 0:09David Hoffman?

  Not Bankless.

• 0:10Ryan Sean Adams?

  Not Bankless, not us. But we did accidentally get a mock dry run of what a Bitcoin ETF approval would do to the market, and Larry Fink, of all people, gives his take.

• 0:22Ryan Sean Adams?

  Hey, Bankless Nation. It is the third Friday of this beautiful month of October. And it's time for what, David?

• 0:30David Hoffman?

  Oh, the Bankless Friday Weekly Rollup, Brian, where we cover the entire weekly news in crypto, which is always an ambitious endeavor. Yet, we persevere nonetheless into the frontier. Ryan, you got your morning coffee?

• 0:40Ryan Sean Adams?

  I got my morning coffee. It is black.

• 0:44David Hoffman?

  What number of pots are you on? I know you measure coffee in pots.

• 0:48Ryan Sean Adams?

  Second pot, about halfway through. So I would say one and a half pots.

• 0:52David Hoffman?

  You're gonna need some extra coffee to get through this rollup because it's a little bit of a doozy.

• 0:56Ryan Sean Adams?

  Yeah, there's so much going on this week. It was actually an action-packed week. Number one, we talk about Uniswap fees. They have been flipped on.

• 1:04David Hoffman?

  Yay.

• 1:04Ryan Sean Adams?

  But everyone is upset about this because it's not the Uniswap fees you actually hoped. Doesn't mean things for the uni-token necessarily. Let's talk about, what else we got, David?

• 1:14David Hoffman?

  Coming up after that, a false positive on the approved Bitcoin ETF sends the market in for a roller coaster. It turns out that no Bitcoin ETF has been approved, but we did learn some things. And so we will talk about what we learned.

• 1:26Ryan Sean Adams?

  It's all about the lessons learned along the way.

• 1:28David Hoffman?

  That's why we're here, just for learning. A new Layer 2 hits mainnet, so we'll talk about why that one's unique. Another Layer 2 just dropped. And then, of course, Ryan, what are we gonna end with?

• 1:37Ryan Sean Adams?

  David, you remember that guy who was storing $3 billion in Bitcoin that he stole from the Silk Road?

• 1:42David Hoffman?

  I remember this guy.

• 1:43Ryan Sean Adams?

  Okay, so a year ago, and the FBI found it in his basement. Well, we have the full story on today's show. CNBC did an exhaustive interview, an in-depth story on Jimmy Zhong of Gainesville, Georgia, the Bitcoin billionaire.

• 2:00David Hoffman?

  Gainesville.

• 2:01Ryan Sean Adams?

  Literally Gainesville. So we're gonna talk about that, too. David, before we get in, we have a special message from who? Ourselves.

• 2:08David Hoffman?

  Ourselves.

• 2:08Ryan Sean Adams?

  Actually, yeah. Yeah, what do we? Want the Bankless Nation to go do?

• 2:11David Hoffman?

  We've got a survey. We got a survey to make the podcast better. So we would like you to fill it out. If you are a listener of the podcast, surprise you are, we would like your feedback about how we can improve the podcast. So there's a bunch of questions about who you are, when you started listening to Bankless, why you listen to Bankless, what types of episodes you like. We are working on a new show format coming midweek is a little bit roll up. But we need more information about you guys. So we can understand what you guys want. So we can figure out how to structure that show. One or a few lucky responders will get a very cool Bankless Sujikin jacket, which is quite literally the coolest piece of apparel that I own. I don't, it's in my closet. I don't have it on me. Do you have a picture of it?

• 2:55Ryan Sean Adams?

  Look at this.

• 2:55David Hoffman?

  Yes. Super cool. Super cool. I think it's great. It's also reversible in case, you know, I don't know why you wouldn't ever want to rock this. My gosh, but it also is reversible to be a little bit more tame. Yeah, bear on both side, on one side, bull on the other. It's awesome. So yeah, go fill out the survey. Go fill out the survey.

• 3:12Ryan Sean Adams?

  That's David looking out in his Sujikin jacket over the New York landscape.

• 3:16David Hoffman?

  Shout out Dave Krugman for taking that photo.

• 3:19Ryan Sean Adams?

  That's awesome. All right, David, you ready to get to markets?

• 3:21David Hoffman?

  Yeah, let's do it. Let's do it.

• 3:23Ryan Sean Adams?

  Okay, let's stop.

• 3:23David Hoffman?

  Happy, happy sounds. Happy sounds.

• 3:25Ryan Sean Adams?

  Oh, really?

• 3:26David Hoffman?

  We didn't, we didn't get a double digit week, but man, Bitcoin put in a 7.5% green.

• 3:32Ryan Sean Adams?

  What?

• 3:33David Hoffman?

  Seven day candle. Yeah.

• 3:34Ryan Sean Adams?

  7.5%?

• 3:36David Hoffman?

  Percent. Yeah.

• 3:37Ryan Sean Adams?

  That's a big week.

• 3:37David Hoffman?

  More than 1% a day.

• 3:39Ryan Sean Adams?

  We are just hovering below 30K. So what's the number on the week?

• 3:42David Hoffman?

  Started the week at below 27,000. We are now at almost 29,000, 28,700, up seven and a half percent.

• 3:49Ryan Sean Adams?

  That's crazy. And look at this big spike here. We're going to talk a little bit about that.

• 3:52David Hoffman?

  That was, that was the fraud. It wasn't fraud. It was a mistake. It was, it wasn't.

• 3:58Ryan Sean Adams?

  Yeah, it was a mistake. It was a big old mistake that we learned a lot from.

• 4:01David Hoffman?

  Saying the fraud word on this podcast.

• 4:04Ryan Sean Adams?

  That's great. All right. How about ETH price on the week?

• 4:07David Hoffman?

  Less happy, starting the week at 1530, ending the week at 1665, up 2.5%. So definitely a Bitcoin week.

• 4:13Ryan Sean Adams?

  Still happy though, still up though, but the ratio is kind of down.

• 4:18David Hoffman?

  Extremely sad, ratio is all the way down to 0.0545.

• 4:23Ryan Sean Adams?

  If you're a Bitcoin bull, this is not sad, this is happy.

• 4:26David Hoffman?

  Well, I think if you're overall a markets bull, like crypto markets, like first Bitcoin, then the rest of the market, this is how it goes. I doubled down, I ate up a little bit more of my ETH BTC trade, just a lower dollar cost average into like lower the price. How do you explain this?

• 4:41Ryan Sean Adams?

  Yeah, I know what you mean.

• 4:42David Hoffman?

  You get what you got me saying, yeah.

• 4:45Ryan Sean Adams?

  And how about crypto market cap on the week?

• 4:47David Hoffman?

  1.13 trillion dollars, so definitely up. Total market cap is looking good.

• 4:52Ryan Sean Adams?

  L2B?

• 4:54David Hoffman?

  Painting the floor.

• 4:55Ryan Sean Adams?

  L2B, we're hovering above 10 billion in total value locked and on the activity side. Yeah, unchanged. Activity side, we're kind of hovering in the same around.

• 5:05David Hoffman?

  Five, yeah. We hit at some 6X on layer twos on Ethereum, now we're down to 4.8, but still holding high.

• 5:13Ryan Sean Adams?

  Well, let's broaden our horizons to macro, the rest of the world beyond crypto for just a minute. So this is Janet Yellen this week saying, "America can certainly afford to support Israel and Ukraine." So this is her saying, the US Treasury, of course, David, saying that America can certainly afford to support two wars on two different fronts. Where do you think she gets that confidence, David? Because I'm not so sure about our ability to support wars or pay for all of the things that America wants to pay for. Where do you think she gets that confidence?

• 5:46David Hoffman?

  It's a pretty hot take to say that America can finance two other people's wars when we have like a very...

• 5:55David Hoffman?

  Bad deteriorating fiscal situation internally like our own house is not in order. And then Janet Yellen, who's the Treasury Secretary, she's a manager of the Treasury. She's trying to make, you know, our, she's managing our budget. And then she is saying, quote, "We need to come up with the funds both for Israel and for Ukraine. This is a priority," which is a very politicized statement. So it kind of just goes into the whole thing, the whole like story arc of the US dollar and the politicization of the US dollar. It's like our dollar is a weapon for a means to an end to get what America, the American empire wants. And that is, I am here on crypto to not have politicized money.

• 6:39David Hoffman?

  And this is extremely politicized.

• 6:41Ryan Sean Adams?

  You also have a take here, war is the most inflationary thing humans do. What do you mean by this?

• 6:47David Hoffman?

  Yeah, war is extremely inflationary. When a building collapses because of a bomb, that building is capital being destroyed. And we have to go rebuild that building. Who is going to finance that? Who is going to rebuild all of this destruction that wars cause? It comes out of the fiat because we're not like, we're not going to increase taxes. We're not going to, you know, we can't make more money. Actually, just kidding, we can't make more money. It comes from inflation. And so like when we finance wars, where does that money come from? It comes from inflation. We just print our way to finance it.

• 7:24Ryan Sean Adams?

  Yeah, and if you want evidence of that, go look at World War I, go look at World War II, go look at all of the wars throughout history and what they do to the nations that, you know, that partake in them.

• 7:36David Hoffman?

  Right. It is a transfer of value from the monetary base to fighting war, which is just straight destruction. I think it's like one of the worst fiscal like decision you can make.

• 7:48Ryan Sean Adams?

  And we also have some hot wars going on, but we also have some trade wars going on. This is a Kobayashi letter saying, "The last thing we need right now is a trade war. Taming inflation with skyrocketing energy prices and geopolitically geopolitical conflicts is already hard enough. Unfortunately, we're taking one step forward and two steps backward." I think they are referring to a trade war with China. So about a year ago, David, President Biden restricted AI chip sales to China. And now, last week, as of last week, he actually expanded that restriction to include another set of chips. Nvidia, particularly a maker of some of these GPU chips, which of course GPUs are kind

• 8:32Ryan Sean Adams?

  of the chips that AIs eat up.

• 8:34David Hoffman?

  It's kind of the new oil.

• 8:36Ryan Sean Adams?

  Yeah.

• 8:36David Hoffman?

  We need everyone's chips.

• 8:37Ryan Sean Adams?

  Down 7.5% on the back of this restriction. So the stock has raised $100 billion in value just over 20 in the last 24 hours.

• 8:46David Hoffman?

  $100 billion. For reference, Ethereum is $180 billion market cap.

• 8:52Ryan Sean Adams?

  Geez, man. Nvidia is absolutely flying, huh? But yeah, this is another thing that also decreases productivity. It's not a hot war, but even trade wars are negative value creation for all parties involved, unfortunately. Speaking of negative value creation, David, I want to take a look at the value of US Treasuries compared to Bitcoin from the beginning of COVID. What are we looking at here?

• 9:21David Hoffman?

  So we're looking at a chart here. If you bought, if you were like, oh, COVID's scary, I'm going to fly to safety and where is safety for the average person? It's a bond. If you did that at the beginning of COVID, a 20 to 30-year US Treasury bond, you're down about 50%. You're down bad about 50%. You lost half your money.

• 9:41Ryan Sean Adams?

  The safe asset.

• 9:42David Hoffman?

  The safe asset. If you went to Bitcoin at the beginning of COVID, you're up 230%.

• 9:47Ryan Sean Adams?

  Wow.

• 9:48David Hoffman?

  Yeah.

• 9:48Ryan Sean Adams?

  What were you thinking?

• 9:49David Hoffman?

  Flight to safety.

• 9:51Ryan Sean Adams?

  What were you thinking that week, the beginning of COVID? It was a week in March when all of this broke, if I recall correctly.

• 9:56David Hoffman?

  Yeah, I, I was, I had fear, for sure. Yeah, I was like, oh, like pandemics are a thing that can totally happen. Like, how bad is this going to get? I think we got lucky with COVID with how bad of a disease it actually was. Like, it could have been way worse.

• 10:12Ryan Sean Adams?

  I completely agree. I thought there was the potential to like to head into like a, you know, an almost decade-long depression type of era, right?

• 10:21David Hoffman?

  I was considering that reality, for sure.

• 10:25Ryan Sean Adams?

  It was a crazy time, but yeah, the flight to safety, at least in the form of US government bonds, did not work out so well. David, this is a take from Vance Spencer. What's he saying here?

• 10:34David Hoffman?

  Vance says, "When no millennials or Zoomers can afford a house and job prospects are limited, don't be surprised when price-to-earning ratios for Zeitgeist, tech stocks, or crypto are going to go vertical even with higher rates. Interest rates don't matter to millennials and Zoomers. They have no savings and little prospects to ever have them. Even big tech friends are living paycheck to paycheck." So like big tech friends, people working at Google or Meta are very well-paid people are still living paycheck to paycheck. Vance says, "All that matters is swinging for the fences, a portfolio optimized for the Instagram lifestyle, and this is actually quite rational. Spend more time in Asia and you'll understand the crushing paradox for young people."

• 11:17David Hoffman?

  We definitely saw this energy throughout crypto. It was one of the big narratives that supported crypto during its bull market. It's like, "Why buy a monkey JPEG? Like, why go down the list of risks?"

• 11:27Ryan Sean Adams?

  It's like, "Why not?"

• 11:28David Hoffman?

  Why not? It's like, "It might be worth a million dollars. It's a new narrative. Like, we'll run with it." And so when the interest rates, where they can't buy a house, you can't have savings, you need to swing for the fences. And so portfolios are going to be like, people are dollar-cost averaging into swinging for the fence portfolios right now.

• 11:48Ryan Sean Adams?

  Yeah, it's pretty crazy. And so Vance is making the case that even though stocks are valued at very high rates from a PE ratio perspective, they could go even higher. But you know, it's kind of, it's almost sad, though, David, because it just feels like the, you know, the statement of people are desperate and so they're just gonna gamble is what's actually happening here. And to me, that's sad.

• 12:09David Hoffman?

  I feel like time is a flat circle. This was like, this was like content that we were talking about for like, I think, a year and a half straight during the bull run. And I think people are just noticing like, "Hey, there's a bunch of Tinder. This is, this is bull market Tinder for what's going on." Mike has a similar take here. Crypto combines two of today's biggest trends. One, a return to commodity like money. It's part of the Neil House fourth turning, Ray Dalio, like transitions, like every once in a while, we blow up our money and so we return to commodity like money that you can't blow up. And then two, religious-like online communities. Fade it at your peril. Fade crypto at your peril. I totally agree.

• 12:48Ryan Sean Adams?

  Yeah, especially going into this world. You know who is not fading ETH, David? Just actually a reminder, Vitalik helped remind everyone is Vitalik. He's not dumping on us.

• 12:58David Hoffman?

  Vitalik would like you to know that he's not dumping on you.

• 13:01Ryan Sean Adams?

  I think somebody asked him the question because there was a transfer of something like 4 million of ETH from not his address, but an address, addresses connected to his address.

• 13:12David Hoffman?

  Ethereum condition, you mean?

• 13:14Ryan Sean Adams?

  Uh, no, it was from Vitalik, like not his specific addresses, but you know, he's moved some ETH somewhere else and they ended up selling. And so he was asked in AMA, "Hey, are you selling?" And he was like, "Nope, that's a nonprofit. I haven't sold any of my ETH since 2018. So these, these sales are from donations."

• 13:33David Hoffman?

  Right.

• 13:34Ryan Sean Adams?

  I don't know, man. If you're selling your ETH, are you smarter than Vitalik? That's my question. That's my question today in this market. So there you go. Some clarification there. David, you know what's killing it even in the bear market?

• 13:48David Hoffman?

  Tell me.

• 13:49Ryan Sean Adams?

  Crypto dollars. Okay. What are we looking at on screen here?

• 13:53David Hoffman?

  Okay. So this is interestingly crypto dollars on Tron. We're looking at a chart of weekly active addresses settling stablecoin payments across various blockchains. Ethereum, Tron, Binance, Polygon, Optimism, Arbitrum, Phantom, Avalanche, and then also like USDT, USDC. USDT active addresses on Tron are by far the most active addresses settling stablecoins in all of crypto. And it's followed up by Binance Smart Chain, followed by Ethereum. Ethereum is third. And then USDC is a, like a long second behind USDT. Tron, just the absolute payments gargantuan for settling USDT.

• 14:31Ryan Sean Adams?

  It's pretty crazy, actually. And, um, but stablecoins in general, active addresses are about flat. And, uh, you know, Nick Carter reminded us in our crypto dollar episode we did earlier this week, that flat is actually up in these hard economic times.

• 14:44David Hoffman?

  You know, you know what's not on that chart?

• 14:46Ryan Sean Adams?

  What's that?

• 14:47David Hoffman?

  Solana. Didn't even make the chart.

• 14:50Ryan Sean Adams?

  It's true. Uh, but if you look at this, stablecoins are now the 16th largest sovereign holder of treasuries. Okay. So stablecoins hold more US treasuries than Norway, South Korea, Saudi Arabia, Germany, the Netherlands, Mexico, the UAE.

• 15:08Ryan Sean Adams?

  So they are, they are rising in terms of the amount of treasuries that they are, they are holding. I think if they break into the top 10, David, that's when

• 15:16David Hoffman?

  The force to be reckoned with.

• 15:17Ryan Sean Adams?

  Yeah, that's when it's a force to be reckoned with. That's when Janet Yellen, Jerome Powell really have to pay it more attention.

• 15:23David Hoffman?

  Well, okay, breaking into the top 10 is not hard. Like it's the top three. It's Japan, China, UK that are the big ones. If stable coins doubled, they would be like number four.

• 15:33Ryan Sean Adams?

  In the top 10. I know. It's absolutely crazy. So very bullish crypto dollars. If you want to get more bullish on crypto dollars, we did an episode with Nick Carter earlier this week that you absolutely have to catch up on if you haven't. David, what do we have coming up next?

• 15:46David Hoffman?

  Coming up next, Uniswap is collecting fees, but no, not the Uniswap you're thinking of. We'll talk about that. The BTC ETF gets approved. Actually, no, it didn't. Instead, $65 million of liquidations occurred due to an eager beaver news organization.

• 16:01Ryan Sean Adams?

  Not Bankless.

• 16:02David Hoffman?

  Not Bankless, not us. But we did accidentally get a mock dry run of what a Bitcoin ETF approval would do to the market. And Larry Fink, of all people, gives his take. SBF Trial, Week 3, all this stuff and more. New Layer 2 mainnet, some really good stuff. So we're going to get to all of that and more. But first, a moment to talk about these fantastic sponsors that make this show possible, especially a preferred crypto exchange for 2023. If you not have an account with Kraken, consider clicking the link in the show notes to getting started with Kraken today. Kraken knows crypto. Kraken's been in the crypto game for over a decade. And as one of the largest and most trusted exchanges in the industry, Kraken is on the journey with all of us to see what crypto can be. Human history is a story of progress. It's part of us, hardwired.

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• 17:25David Hoffman?

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• 18:09David Hoffman?

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• 18:18Ryan Sean Adams?

  Okay, David, that green candle we were looking at earlier, where did that come from? Did it come from this tweet?

• 18:23David Hoffman?

  Yeah, so CoinTelegraph reported earlier this week, "SEC approves iShares SPOT Bitcoin ETF." The approval of the SPOT Bitcoin ETF is the big thing that we are all waiting for. It's the big one. It's probably gonna be the thing that kicks off the bull market.

• 18:40Ryan Sean Adams?

  So this is breaking news.

• 18:41David Hoffman?

  Breaking this, like way earlier than people expected. Like, it's on the table to get an approval, but like, we're kind of waiting for December, January, not, what month is it, October? And then we got this surprising, like, report from CoinTelegraph that a SPOT Bitcoin ETF got approved.

• 18:57Ryan Sean Adams?

  There's just one problem with this tweet, of course, and what's that, David?

• 19:02David Hoffman?

  What?

• 19:03Ryan Sean Adams?

  It's not true at all.

• 19:05David Hoffman?

  Right, the big problem, yes, the big problem, yes. But before it was realized to be not true, Bitcoin went all the way up above $30,000, touched $30,000, and then immediately fell back down because people realized that, like, wait, wait, wait, this is not, this is not real, causing almost up to $100 million of liquidations on various exchanges. Oof, not great. And like I said, people quickly realized that, like, wait, this is not confirmed. Can we get, can we get a source, source, please? And no one was able to produce a source.

• 19:35Ryan Sean Adams?

  So what happened? How did this happen?

• 19:37David Hoffman?

  So there was some news Telegram groups where people are sharing news, sharing alpha. And somebody just says in a Telegram group, I found in my Bloomberg terminal that the iShares spot Bitcoin ETF was approved. So the source was this one guy said that he saw it in his Bloomberg terminal. If it's in the Bloomberg terminal, it's legit. This guy said it was in the Bloomberg's terminal. It was not in the Bloomberg terminal.

• 20:02Ryan Sean Adams?

  So that was the source was a rando on Telegram that said it was in the Bloomberg terminal. That is kind of the source. And then what happened from there?

• 20:10David Hoffman?

  Yeah. And so CoinTelegraph is part like one of the few people who's like in the arena of trying to break news as fast as possible. Like there's a big difference between first and second. And so they just absolutely jumped the gun and send out the tweet, which sends the markets flying without verifying. Yeah. And so like shorts get liquidated. Bitcoin adds in like billions of dollars onto its market cap and then loses it momentarily afterwards. Not great. Not great. Like BlackRock had to issue a statement saying like, no, uh-uh, no, it wasn't approved. It wasn't approved.

• 20:43Ryan Sean Adams?

  Oh my God. So this is absolutely big. And then so what did CoinTelegraph say on the back of this?

• 20:50David Hoffman?

  They said, we're sorry.

• 20:52Ryan Sean Adams?

  Did you see the, there was a news clip, I think CEO or an executive at CoinTelegraph was at a conference?

• 20:59David Hoffman?

  CoinTelegraph representative, yeah.

• 21:00Ryan Sean Adams?

  Right. And you know, they, they asked her about this event as it was going on and she spoke to the difficulty with the modern news ecosystem.

• 21:11David Hoffman?

  Incentives around news.

• 21:13Ryan Sean Adams?

  Yeah. The pressure and incentive to get something out there as quick as possible. Right. And a bunch of people saw this clip and were like, oh, wow. She's totally deflecting.

• 21:21David Hoffman?

  Yeah.

• 21:21Ryan Sean Adams?

  All blame.

• 21:22David Hoffman?

  That was not a very well accepted line.

• 21:24Ryan Sean Adams?

  Yeah. That didn't work out.

• 21:27David Hoffman?

  They didn't accept that one.

• 21:28Ryan Sean Adams?

  So what are we looking at here?

• 21:31David Hoffman?

  Okay, so then there was a bunch of speculation. It's like, okay, well, like, why would, somebody was manipulating this market. Like, that was a move. Somebody made money here. So Fubar, I don't know if it's how to verify the integrity of this analysis. This is beyond me, but he goes, insider trading T Wapping, time weighted average price. It just means you buy more as more volume happens. An inside trader T Wapping in preparation for a fake Bitcoin ETF announcement tweet pumped, which retraced once shown false, yet higher than expected strength shown from people buying the fake ETF news is making people buy the preparation for the real ETF announcement. Are there any questions? Basically, Fubar is saying

• 22:11David Hoffman?

  there were more buyers than anticipated for the ETF approval. And so now, as a result of that, people are actually buying Bitcoin. So this is a fundamental catalyst, a real, true fundamental catalyst.

• 22:25Ryan Sean Adams?

  So we got more than a trial run. We actually, you know, people were so bullish on the fact that price went up due to this fake news that they actually.

• 22:35David Hoffman?

  Became bullish.

• 22:36Ryan Sean Adams?

  Became bullish.

• 22:37David Hoffman?

  Yes. It started, it's a snake eating his tail. But it's like, more people were caught off guard with how fast this impacted the market. So people started buying. And that's why, that's why Bitcoin's up. Like, you know, I'm not gonna say it's all of the price action this week, but a decent chunk of it.

• 22:52Ryan Sean Adams?

  So here's an account, John Brown says, learnings from false rumors on ETF. Number one, the market eagerly anticipates an ETF. Two, most exchanges continue to work well under load and liquidations. Oh, yeah, exchanges didn't go down this time, David. Number three, liquidity upwards is thinner than expected. Wow, yeah, it's true. It like, we just burst through those lines. And number four, CoinTelegraph sucks. Oof.

• 23:16David Hoffman?

  Sorry, CoinTelegraph. But also, that was your fault.

• 23:18Ryan Sean Adams?

  You know what? It was a bad week for journalism in general, just like, reporting on things like, you know, truth and accurate news. And I think a lot of people realized through, like, Israel Palestine conflict and other things like

• 23:30David Hoffman?

  Right.

• 23:30Ryan Sean Adams?

  How?

• 23:31David Hoffman?

  Journalism is weird in this, in this year.

• 23:34Ryan Sean Adams?

  It's very bad. I mean, back to the CoinTelegraph executive. I mean, she's not wrong. There is this crazy incentive to get news out first without verifying the actual facts. And that's happening in mainstream news circles as well.

• 23:45David Hoffman?

  Come second.

• 23:46Ryan Sean Adams?

  Yeah. Okay, slightly unrelated, but this is Larry Fink, the CEO of Blackrock and probably one of the most plugged in people to try to find it possible.

• 23:56David Hoffman?

  I don't know why you said that. It's extremely related.

• 23:58Ryan Sean Adams?

  Well, I think he said it before the ETF kind of debacle.

• 24:03David Hoffman?

  No, no, no, no. It is in response. Did you listen to the clip?

• 24:06Ryan Sean Adams?

  Oh, really?

• 24:06David Hoffman?

  Yes.

• 24:07Ryan Sean Adams?

  Okay, well, let's watch this.

• 24:08David Hoffman?

  Yeah.

• 24:09Speaker 02

  This rally is way beyond the rumor. I think the rally today is about a flight to quality.

• 24:15Ryan Sean Adams?

  Oh, my God, it is.

• 24:16Speaker 02

  You know, all the issues around the Israeli war now, global terrorism. And I think there's more people running into a flight to quality, whether that is in treasuries, gold, or crypto, depending on how you think about it. And I believe crypto will play that type of role as a flight to quality.

• 24:35Ryan Sean Adams?

  He said flight to quality three times.

• 24:38David Hoffman?

  He said crypto is a flight to quality, depending on your perspective. Everyone has their own perceived perspective. And then, but he said crypto is a flight to quality.

• 24:48Ryan Sean Adams?

  Man.

• 24:49David Hoffman?

  Hearts and minds.

• 24:50Ryan Sean Adams?

  Hearts and minds. But also bags, David, because this is how I know Larry Fink has bags, is Bitcoin ETF.

• 24:58David Hoffman?

  Fill then chill. These are the rules. Fill then chill.

• 25:01Ryan Sean Adams?

  I think he's filled, and I think the ETF is coming with BlackRock here pretty soon. Oh, speaking of which, what's this?

• 25:07David Hoffman?

  Yeah, so this is James Sefert, who says, there's an update. BlackRock filed an updated Bitcoin ETF perspective early this morning. This is the morning of October 19th, Thursday, which is likely in their response to SEC comments that we've seen from Arc, Fidelity, and others. The conclusion, what does this mean? Just more confirmation that issuers are in talks with the SEC, which means that the SEC knows that they're gonna have to approve it.

• 25:31Ryan Sean Adams?

  It's gonna happen. Gary can't, Gary cannot reject it any longer. He's gonna get totally mowed over. It's coming.

• 25:39David Hoffman?

  You know, you know when my, my next climb, my mountain climb is scheduled for? Right around some of the deadlines for the spot that climbs to have approval.

• 25:49Ryan Sean Adams?

  It's January, isn't it?

• 25:50David Hoffman?

  It's January.

• 25:51Ryan Sean Adams?

  Oh, my God, David, if that happens, we'll know for sure. You are on some kind of a quest on these mountains.

• 25:57David Hoffman?

  These are the biggest mountains I've yet to climb, too.

• 25:59Ryan Sean Adams?

  The joke is, every time David is climbing a mountain, he's actually destroying a Gary Gensler horror cross.

• 26:05David Hoffman?

  Yeah, because Gary Gensler takes an L in some court somewhere.

• 26:10Ryan Sean Adams?

  Okay, Uniswap, they're switching on fees, okay? But we've teased this a couple of times. Uniswap Labs, all right, tell me about this. What are we looking at?

• 26:18David Hoffman?

  Okay, so here is Hayden's announcement tweet about this. He starts off saying, "I work in crypto because of the immense positive impact I believe it can have on the world, removing gatekeepers and increasing access to value and ownership." You know, he's TLDR, he's saying like, hey, guys, we're turning on the fees on the Uniswap front end. And he's really kind of dressing it up.

• 26:39Ryan Sean Adams?

  What are the fees?

• 26:41David Hoffman?

  So the fees are 0.15% on a trade that goes through uniswap.org. So the uniswap.org website will add 0.15% fees to your Uniswap trade. This is not the Uniswap protocol. And this is why everyone was upset and like why Hayden needed to make this longer announcement just to like, again, take caution around the announcement of Uniswap Labs turning on the fees. Uniswap protocol has not had, no fees, still no fees.

• 27:07Ryan Sean Adams?

  Okay, so there's two, there's two types of ways you could collect fees, right? So there's one on the protocol level. So every time someone makes a swap, the protocol could say, hey, we get, you know, whatever, 15 basis points of that.

• 27:20David Hoffman?

  We can have 15 basis points of that.

• 27:22Ryan Sean Adams?

  Okay, and then the other time to collect fees is actually on the user interface itself.

• 27:28David Hoffman?

  Right, the where the transaction is generated in the first place.

• 27:31Ryan Sean Adams?

  Right, so if you do a swap right now on MetaMask, for instance, the MetaMask, well, it charges you a fee. There's a swap fee that MetaMask then takes. That's how it generates revenue.

• 27:39David Hoffman?

  Which is pretty high.

• 27:40Ryan Sean Adams?

  Yeah, something like that. And so this is Uniswap saying, hey, now on the Uniswap UI, Uniswap Labs, now on the UI, we're going to take 15 basis points of swap fee. And also in our web app itself. So in the browser wallet that Uniswap supports, they're going to take that, too. So why is everyone upset, David?

• 28:00David Hoffman?

  People are upset because they feel like the uni token has been abandoned.

• 28:06David Hoffman?

  And I think that they think that Hayden has more of a responsibility to the uni token than what he has, what he's been shown. And so they feel upset that Uniswap Labs is a for-profit company that's trying to take care of itself, and it's just abandoned token holders. And so Uniswap Labs has equity. There are investors in Uniswap Labs, A16Z Paradigm, like own equity in Uniswap Labs. They also own the token. But the Uniswap Labs is taking the fee. And now the uni token, which has like dangled the fee switch, like, oh, Uniswap V3, it's got a fee switch, guys, but it's not on. And where are the fees actually going? It's going to Uniswap Labs,

• 28:49David Hoffman?

  you know, the investors, the equity holders pockets.

• 28:53Ryan Sean Adams?

  But David, what's the process? What's the process of turning that fee switch on to the, for the uni token? Because the uni token could also have a fee switch in addition to Uniswap Labs.

• 29:03David Hoffman?

  This Uniswap protocol could turn on the fee switch and have that go to the Uniswap DAO, which would be in effect the uni token. That is a governance vote. I haven't got onto the details specifically, but it sounds like there has been a handful of attempts of turning on the fee switch. And the DAO has voted down. And the people are pointing fingers towards the investors. I need to verify that. But that is the claim, that investors, the large VC whales, have voted no on the protocol fee switch and yes on now.

• 29:33Ryan Sean Adams?

  I think, I think, David, some of them have, some of them haven't. This is Eric Connor with the very pessimistic, critical take of this move.

• 29:40David Hoffman?

  The very negative take towards Uniswap, not bad.

• 29:42Ryan Sean Adams?

  So let me get this right. Uniswap launches uni, that's the token, and in original launch, post-hype fees, post-hypes a fee switch that gets people excited. Uniswap VCs tied closely to labs continue to make sure fee switch doesn't happen, allegedly. I don't know. I don't know how true that is. But anyway, that's what Eric says. Uniswap Labs enables fees for themselves. That's the charge. It's basically like, rather than put the fee switch on the uni token side, you're just taking the fees in the UI side.

• 30:12David Hoffman?

  Here's Nick Tomato, who says, "The purpose of a protocol token is to align the incentives of developers, investors, and users." He continues, "Without pure alignment, users and retail get screwed worse than in Web 2." In Web 2, there is explicit misalignment in incentives. We all know that Facebook's business is not aligned with its users. When a Web 3 protocol launches a token, alignment is assumed and reflected in the token distribution. When this turns out to not be the case, the users and the retail investors are deceived. This is wrong. So that's a more measured take than Eric Connor. Like, I don't think the VCs that own Uniswap Labs equity are like, "Guys, turn on the fees." Like, they're just, they're doing other things. Like Hayden and

• 30:54David Hoffman?

  the other executives at Uniswap Labs are like, "We have a company and we need to make revenue at some point. Let's stop bleeding money and let's start making money." And so they turned on the fee switch.

• 31:06Ryan Sean Adams?

  Well, that's what Jesse Walden says here. Another VC, "Uniswap Labs products create lots of value for end users. This is an important step," talking about the fee switch for Uniswap Labs on the way to sustaining that long-term value. And the healthiest protocols have sustainable products built on top. That is Jesse's take on this, that, you know, they have to have a business model in order to continue to develop the wallet and continue to develop the user interface. And absent this, what, do you want them not to have a business model? That's the take here.

• 31:34David Hoffman?

  Some people will say yes to that question.

• 31:37Ryan Sean Adams?

  Yeah. Here's a take from Leighton. What's he saying here?

• 31:40David Hoffman?

  Yeah, here's Leighton Cusack saying, "If you are mad that the Uniswap protocol fee switch is not on, these are the people to yell at." And then he lists a link that shows all of the major delegates towards the Uniswap, the Uniswap protocol, which is A16Z, there's Jesse Walden, Gauntlet, Robert Leschner, Consensus, sorry to name names, but these are the people that have been delegated to uni tokens. If you want to go turn the Uniswap fee switch on, these are the people of influence that need to be convinced to vote for that.

• 32:09Ryan Sean Adams?

  Leighton had another take on this, which is maybe more the, you know, the positive side. And this is just-

• 32:14David Hoffman?

  Positive is pro Uniswap Labs, is what you mean?

• 32:17Ryan Sean Adams?

  Yeah, pro Uniswap Labs. He says this, "There's a clear opinion divide in Uniswap Labs' decision. Crypto builders who understand why it's good and professional influencers who don't." I think he's making the case that just like, Uniswap Labs needs to have a sustainable business model. Like, the builders need a way to generate revenue. And like, if you're depriving them of that, then-

• 32:36David Hoffman?

  You're telling them that they can't exist.

• 32:39Ryan Sean Adams?

  Exactly.

• 32:41Ryan Sean Adams?

  So what, let me ask you, what's kind of your concluding thoughts on this? What's your concluding take, David?

• 32:47David Hoffman?

  Yeah, there are some, we're gonna read a Haseeb take who I think, there's just some analysis about the story arc that is where fees will ultimately converge in the fullness of time as it relates to front end versus protocol that I think are really, really good.

• 33:00Ryan Sean Adams?

  You want me to pull up that?

• 33:01David Hoffman?

  Yeah, actually, let's start there. Yeah, so he's responding to this Matty take who says, he's responding to someone, so we're kind of entering in the middle of the conversation. They say, "I don't think it's that simple, but clearly there's some soft max aggregate fee that the market will bear." Soft max as mean like, people only accept some amount of fees before they will move elsewhere or just not trade. So the market will develop some sort of limit as to like how many, how much fees users can bear. "All else equal, the higher the fee earned by token holders, the less room is available to equity holders or front end people." Uniswap Labs, then uniswap.org is not the only front end to the Uniswap protocol. Other front ends can trade on Uniswap and have different fees because that's just how this works.

• 33:45David Hoffman?

  "There's an asymmetry because routing fees to equity holders, the front end, less directly impacts token holders because users can trade on different interfaces." Uniswap, uniswap.org is, there's no moat there. People can very easily type in a different URL to go to a different front end to trade there and just ignore the fee that has now been turned on by the Uniswap front end. And so Matty continues and says, "This asymmetry in payoffs helps explain why one would expect the front end fee to be turned on first, and it is why it'll be increasingly difficult for the token to accrue fees." And Haseeb just follows up and says, "I totally agree with this," and gives the analysis that I kind of agree with, where many front ends will turn on fees,

• 34:28David Hoffman?

  and that will actually inform the protocol how much the market is willing to bear for their fees. It makes sense for the periphery to turn on fees first, and then that is like user testing, market testing. And if the, the, the front ends all like kind of converge on like 0.15, 0.3, 0.1% of protocol fees, well then- The the token holders, the deeper in the stack versus the interface, have the information that they need, like all of these front ends are taking 0.15%. Let's turn our fee on to 0.15% and totally rug all equity holders or all front ends, because the protocol is understanding that this is what the market will bear.

• 35:11David Hoffman?

  Protocols are, they gotta be slower to move than front ends, like Hayden and Uniswap Labs, they just turned it on because they're a centralized company and they can just do whatever they want. The protocol is going to take a larger, longer time to move. This is just the nature of protocols. But like, the token has the winning thumb war. They just need to turn on the fees. And I think this might be a moment in Uniswap's history where like, okay, that whole like promise of the fee switch was cute, let's effing do it. And I hope that's how this plays out, and that's my opinion.

• 35:40Ryan Sean Adams?

  Yeah, I think it can play out that way. I think, I think there could be a fee, there could be a fee on the protocol, obviously, and there could be a fee on the user interface. One, one thing, when you put a fee on the user interface, even Uniswap Labs, they're inviting competition to enter the ring and build against the Uniswap protocol and add their own fee as well. So from a decentralization perspective, this might give us a diversity of front ends that we didn't have before. The, the other, I think, factor in play here is obviously the SEC. Okay, so like, I think there is a world where the uni token could have received fees from even the fee switch on Uniswap user interface, right? And from, from day one.

• 36:23Ryan Sean Adams?

  But how can you do that when you're a US-based entity? Yeah, I think the, the question I would have for people who are saying, well, why can't Uniswap Labs just give those fees back to the participants? Like, how can they do that in the US? There's no way a US-based company can actually share these fees to the uni token holders, given the current posture of the SEC in the US. And so should they, should they break securities laws? And if you're saying, well, you know, Uniswap Labs already has a whole bunch of uni tokens, and why don't they just sell them to the market? Well, that's not a sustainable business model. And that's going to put downward pressure on the price of the uni token anyway. And so that's kind of counterproductive. I don't know. I think in the fullness of time, some of this gets resolved. I do think the fee switch will happen on the uni token itself.

• 37:07Ryan Sean Adams?

  And, um, you know, hopefully it gets resolved, but there are, there are people that felt like this was, um, value extractive, I would say, from a uni governance token perspective.

• 37:18David Hoffman?

  Well, when we had, remember when you had Vance Spencer on the show to talk about smell, like the smell, the token index, synthetics maker, Ether, Lido, Link. Why, and then we asked him like, yo, why isn't, why isn't Uniswap here? And he cited like, I think there's a misalignment between equity holders and token holders. And he would be able to say like, yeah, this is what I was talking about.

• 37:38Ryan Sean Adams?

  Yeah, I think my takeaways from this are it's, it's not good for governance tokens that don't have a real source of cash flow. If you're just a governance token, if you're just a utility token, it's, it's not great for that entire asset class. And, uh, any US-based token team, I don't think it's necessarily bullish for them either. Uh, and if, yeah, if you're just a token without cash flows, you're just doing governance. It really calls into question, like, why that token is worth what it's worth right now. And so those are some of my takeaways. But you, you think this is some bear market rabble rabble, don't you, David?

• 38:12David Hoffman?

  Yeah, well, that was my headline of this meme. I, this is here, the man standing up the freedom of speech meme. And I just say, the protocol fee switch and front end fees are just separate conversations. They're separate conversations. People who I think are like mad at Hayden or Labs, I think are just muddling the waters here. It's like, you, like, the token has the power. We do, we do need to be able to express it. So like, perhaps shame on VCs if they are actually oppressing token holders from trying to turn that on, but they're also token holders too.

• 38:41Ryan Sean Adams?

  Yeah. Uh, well, this could amount to a lot of revenue, I think. What are we looking at here?

• 38:47David Hoffman?

  Yeah. So let's talk, just let's talk about the actual metrics behind this. So let's get some numbers to frame the debate that we're talking about. First, Uniswap DEX dominance on Ethereum is about 75%. So all DEX volume on Ethereum, all DEX trades, Uniswap accounts for 75%. So like, that's huge. Pretty big dominance on Ethereum. Like the next biggest one is PancakeSwap at 7.4%. So that's that's Uniswap Dex dominance. Uniswap has 75% of all Dex trades on Ethereum. The Uniswap.org front end, which is what we're talking about with where the new fees are, that accounts for 35 to 40% of all Uniswap trades. So that's actually a pretty healthy amount of trades going through the Uniswap front end.

• 39:30David Hoffman?

  I don't know where the other like venues are, but like aggregators would be the next big one. And then also MEV, people just like trading straight through the protocol, no interface. But like Uniswap is definitely like the very, the most popular place to trade on Uniswap, 35 to 40%. And so that is the 0.15 percentage of fees. That's where that's coming from. This is, I actually just got this from Mike Belida from Blockworks. So this is their new Blockworks research platform that they gave me access to. So I could talk about this Uniswap Labs trading interface. They just slapped this together. Pretty cool interface. Since the, since the fee switch has been turned on, the Uniswap Labs organization has earned $110,000. And that's been like over two and a half days.

• 40:14David Hoffman?

  And so a little bit over $100,000 over, over, over almost three days, about $30,000 a day, about $12 million a year at current rates in a bear market, in a bear market. So Uniswap Labs is getting about $12 million a year from this, which is pretty, pretty good. Yeah.

• 40:34Ryan Sean Adams?

  But the context is they've lost some in the uni token, at least to the extent that Uniswap Labs was holding uni tokens. So Uniswap fees went live five hours ago. They made 8K in that time. Meanwhile, they lost 200 million in market cap on the uni token over the past 24 hours.

• 40:49David Hoffman?

  So uni token took a big hit in price. Well, not, not, not big, not small. Yeah. So here's the, here's the price of the uni token right after Hayden tweets. Goes from $4.20 down to $3.85. The actual, the release of the uni token happened at $3. So like it went up to like $45 and then top of the bear. And that's all the way back down to basically it's like debut price, a little over $3. I mean, if you think the uni fee switch is never getting turned on, then maybe, maybe yours bears uni tokens. If you are, if you think that in the fullness of time, the fee switch will get turned on. Like this is, look at this dip. This is your dip. This is the dip for you.

• 41:34Ryan Sean Adams?

  Yeah, I mean, the market is adjusting in real time to information, right? And it looks like, you know, I guess one question I would have for you, though, David, is, and this is a question I asked on Twitter earlier this week, is uni tokens or coin, which are you more bullish on? Like, if you had to pick one, right? Because both are exchanges, but one is kind of like a squishy governance token that maybe has a claim to fees such as they are. The other is like a fully registered security, where you have like legal guarantees and there's a management team.

• 42:09David Hoffman?

  Where it's their job to make that thing go up in price.

• 42:10Ryan Sean Adams?

  Yeah, with fiduciary responsibility. So it very much shows you that like the uni token is a different type of asset. It is certainly not a, you know, a stock, right? It has different kinds of guarantees.

• 42:23David Hoffman?

  Right.

• 42:24Ryan Sean Adams?

  But you're right.

• 42:24David Hoffman?

  Okay. Yeah, fully diluted valuation of UniSwap is now under $4 billion, market cap $3 billion. So there's some dilution that'll eventually happen, but not too much. Coinbase valuation is $18 billion. And so Coinbase is, like you said, is an exchange. It's also got other lines of businesses that Uniswap does not have. We did a podcast on this recently, exploring all their lines of businesses. We're actually going to talk about when they have an announcement. $18 billion versus $3 billion, $4 billion?

• 42:55Ryan Sean Adams?

  That's interesting.

• 42:56David Hoffman?

  That is interesting, actually. I hold both. I hold both coin and uni. I'm bullish both. And I, if I'm staking a bet, I think the Uniswap fee switch gets turned on sooner rather than later, like inside of one cycle.

• 43:10Ryan Sean Adams?

  Okay. Well, I am temporarily bearish on governance tokens, but that could, that could certainly change. David, what do we have coming up next?

• 43:18David Hoffman?

  Coming up next, coming up next, SBF Week 3. How's it going? How's it going, Sam? How you doing? We're going to ask you that. We're going to ask that question. New Layer 2 live on mainnet and Coinbase International Exchange launches. Uniswap's already international, but Coinbase is making its way there. And so we'll talk about all of these details and more. But first, a moment to talk about these fantastic sponsors that make this show possible, like MetaMask portfolio. If you have not opened up your MetaMask portfolio, because I know you have a MetaMask account, there is a link in the show notes to go open up your MetaMask portfolio. It's pretty cool. Check it out. MetaMask Portfolio is your one-stop-shop to navigate the world of DeFi. And now, bridging seamlessly across networks doesn't have to be so daunting anymore. With competitive rates and convenient routes, MetaMask Portfolio's bridge feature lets you easily move your tokens from chain to chain

• 44:02David Hoffman?

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• 44:32Ryan Sean Adams?

  David, we gotta check on Sam Bankman-Fried this week. It is the third week of his six-week trial, I believe. And I think this headline that we have up on the screen about sums it up, at least to me. "Legal Experts Say SBF Is In Deep Trouble." Things aren't looking too hot.

• 44:50David Hoffman?

  Thanks for that analysis.

• 44:51Ryan Sean Adams?

  There you go. "As former FTX CEO, Sam Bankman-Fried's criminal trial settles into its third week, legal experts don't seem particularly optimistic about the ex-billionaire's chances of exoneration."

• 45:03David Hoffman?

  I have a number of friends who are not legal experts who are watching, who are in the courthouse watching this, and they say the same things. I don't know if you need to be a legal expert to say that.

• 45:14Ryan Sean Adams?

  Maybe it's more credible coming from a legal expert, though. You got this list. What's this last line saying?

• 45:20David Hoffman?

  I'll read this last line in a second. There's a little bit of context, which is that there's a big question going on, which is, will Sam Bankman-Fried take the stand? Will he testify?

• 45:29Ryan Sean Adams?

  Yeah.

• 45:29David Hoffman?

  Because I'm sure he has words to say, but if he goes up there, he will be questioned by the prosecutor. And are, do they want that? Like, gut take, no, you don't. But the question is, the trial is going so poorly that they kind of think like, well, there's not much to lose, so let's go for the Hail Mary.

• 45:49Ryan Sean Adams?

  Well, you know what? SBF has always been a bit of a gambler, I'd say.

• 45:53David Hoffman?

  I'm sure SBF is like, "Put me in, coach, put me in."

• 45:57Ryan Sean Adams?

  So what's to say?

• 45:58David Hoffman?

  A former federal prosecutor and law professor at Duke says it's very rare that a defendant can turn a case around from the witness stand.

• 46:07Ryan Sean Adams?

  Okay, not looking so good, but three things happened this week that I think are worth touching on. So one is Sam's high school friend goes on the witness stand. So

• 46:17David Hoffman?

  Who also worked at FTX.

• 46:19Ryan Sean Adams?

  How he did.

• 46:19David Hoffman?

  And worked at FTX, yes.

• 46:21Ryan Sean Adams?

  Cool. What's the TLDR from this part?

• 46:23David Hoffman?

  Okay, so the TLDR here is that of all FTX executives that have testified so far, Singh, who's the friend, has the biggest, best moral compass. One of my friends who was there who's reporting on it said that like they felt the most empathy for this particular gentleman who described admitting to admitting guilt to various crimes, including fraud, money laundering, campaign finance violations inside of the FTX arena. This individual described that he had felt suicidal in November of 2022 when FTX declared bankruptcy. He mentioned that there was a tense atmosphere among the executives in early November 2022. There was a war room of sorts that, quote, he said, "a crazy blame game going on." So

• 47:08David Hoffman?

  everyone kind of blaming everyone else. Go figure how like Caroline just immediately defects and goes full prisoner's dilemma is like, "I'm cooperating with the government." He confirmed that Alameda took billions from FTX and that SBF was the mastermind behind it. Like, no shocker, no surprise there. That's like the third time that different people have all said this. He also portrayed Sam as a formidable character who had met with many celebrities. He had described the massive SBF's spending habits, including endorsement deals with high, very high investments and in connections to celebrities like Hillary Clinton, Katy Perry, Orlando Bloom, and the Jenner family. And quote, "I honestly could not tell you what they do." As in, like, why do we have these relationships? I don't

• 47:52David Hoffman?

  know. And that was, I think this is the last FTX executive that will testify. So that wraps the whole like inner circle testimony.

• 48:02Ryan Sean Adams?

  Another ghost from 2022 is Zach Prince. He is the BlockFi co-founder and CEO. He apparently got on the witness stand and said, hey, you know why BlockFi went bankrupt? It was because of that guy right there. And he pointed at SBF.

• 48:16David Hoffman?

  Because he gave us fraudulent books.

• 48:18Ryan Sean Adams?

  Yeah. Zach Prince said he would never have doled out funds had he known false balance sheets were being used. So actually lent money to FTX.

• 48:28David Hoffman?

  1.1 billion to FTX.

• 48:29Ryan Sean Adams?

  1.1 billion dollars on those. Remember we were talking about last week, the seven different alt balance sheets?

• 48:35David Hoffman?

  Right.

• 48:35Ryan Sean Adams?

  That FTX actually had.

• 48:37David Hoffman?

  Yeah, I'm sure I'm sure BlockFi got one of those. I think alt number seven, the worst one.

• 48:42Ryan Sean Adams?

  And lent him money based on it. Would have never done it. So all of the retail loss on BlockFi, of which, oh, there are many, probably even Bankless listeners, I was one of those too, dude. Lost money in BlockFi as a result of this. And then there was this comment from SBF lawyers about whether Sam would attempt to jump on the witness stand or not.

• 49:06David Hoffman?

  So unhinged.

• 49:07Ryan Sean Adams?

  I don't think they're doing him any favors, man. What is he saying?

• 49:10David Hoffman?

  Okay, so this is a tweet from somebody who's covering this debacle. SBF Sunday night filing, a re-request for trial day Adderall, so he can decide whether to testify. Quote, "As we approach the decision of whether Mr. Bankman Fried will testify, because of the lack of access to Adderall, he will not be able to concentrate." And so they are saying, hey, we need to get Sam some Adderall so he can, so he can speak words coherently.

• 49:39Ryan Sean Adams?

  I feel like that is not doing him any favor. Doesn't he have an Adderall problem anyway? This is how we got in this whole predicament.

• 49:46David Hoffman?

  I'm glad that Sam Bankman Fried is off of his amphetamines, off of his opers.

• 49:51Ryan Sean Adams?

  Wish it happened earlier, actually, honestly.

• 49:53David Hoffman?

  Going back up to the Zach Prince thing, the friend that I have that's down at the courthouse reporting, like what witness Zach Prince talked to, like the jury and to everyone listening, and she just, she said that he was just like a huge douche.

• 50:06Ryan Sean Adams?

  Oh, really?

• 50:07David Hoffman?

  Yeah, just like super cringe, wouldn't stop using finance tech bro like lingo, and the court had to stop him over and over and over again and say, hey, can you explain that? And like, the reason why I'm pulling this out is like, and this is Natasha Hoskins from the Boys Club, by the way, they're doing a great job just like reporting on the court. She's in there, like watching this happen. And so like the statement is that Zach Prince was totally managing BlockFi's finances super well and it's up to Sam Bankman-Fried and it's all his, his fault. It's like, if you look at, she said like, they, he had to disclose some of his decision-making about whether to give Alameda money or not. And she said like, yeah, like he was gambling too, man.

• 50:50David Hoffman?

  Like he was also effing it up. He just has the benefit that he can actually point to Sam Bankman-Fried. But like Zach Prince was not doing good risk-adjusted analysis of the capital of his customers either.

• 51:03Ryan Sean Adams?

  Well, that was, that, that was certainly evident. I think a lot of retail is feeling that now, David. But let's go on to brighter things away from the SBF trial, at least this week. We only have three more weeks of that. Scroll mainnet just went live. David, what's been launched?

• 51:17David Hoffman?

  Yeah, Scroll, the ZK EVM, bytecode equivalent with the EVM. That, that ZK EVM just went live. So this is a true copy and paste your app onto Scroll and it's good to go. That's what that means to be bytecode ZK EVM equivalent, open source from day one. Created in collaboration with the Ethereum Foundation, interestingly, and a community of independent collaborators. And so this is just kind of, kind of a big day, obviously a massive day for Scroll, but a, a bytecode equivalent ZK EVM layer two on Ethereum is a big deal. Big deal for the ZK world, big day for the layer two world. So congrats to Scroll.

• 51:56Ryan Sean Adams?

  And we did an entire episode on this. If you want to find out more, go catch that episode. It's on the RSS feed and also our YouTube channel. And David, do you know the, the talented analysts over at the Bankless Airdrop Hunter have actually put a few quests up that might make folks eligible for this Scroll airdrop? If they launch a token at some point in the future.

• 52:20David Hoffman?

  It's a layer two, dude. How, how do you decentralize a layer two without a token?

• 52:25Ryan Sean Adams?

  Exactly.

• 52:25David Hoffman?

  I don't know how you do else. That's, that would be new.

• 52:28Ryan Sean Adams?

  We have no special knowledge on, you know, how they might disseminate this token, but we've got some folks that are hunting the, the airdrop opportunities here.

• 52:37David Hoffman?

  I mean, we asked Sandy and Torgal, hey, are you guys going to win the token? And they said that they are not focused on a token. Not that there wasn't a token, but they're not focused on it.

• 52:47Ryan Sean Adams?

  So bankless.com slash airdrop hunter. If you want to join some quests and do that. David, there are some perps coming out of Coinbase. What are we looking at here?

• 52:56David Hoffman?

  Yeah. So this is the Coinbase International Exchange launch. So perpetual futures have arrived, not for Americans, sorry. And so if you are in eligible, non-US countries, you can now trade Bitcoin, Ether, Litecoin, and XRP. Fantastic. Perpetual contracts. Coinbase.com slash perpetuals is the new exchange. Okay. But why is this a big deal, Ryan? Like, well, thank you. Thank you for asking. You remember, you remember BitMEX? That's was a huge exchange. It's gone under. FTX like was famous for its perps. That also went under. Binance has eaten up the market share for perps.

• 53:32Ryan Sean Adams?

  What are perps, by the way?

• 53:34David Hoffman?

  It's kind of like our crypto native version of options or like native leverage. It's actually like a financial primitive made by crypto people for crypto people that actually could get ported back into TradFi. Like this TradFi can do this, too. We just made perps based on the constraints of blockchains. So this is kind of like our contribution, crypto's contribution to the world of financial primitives. Turns out there's still things that you can build there.

• 54:01Ryan Sean Adams?

  Yeah, they allow you to go margin long, right?

• 54:03David Hoffman?

  Yeah, super capital efficient. Like, if you like, how do you, you know, whenever you see those like advertisements for like 100x leverage on some like B tier exchange that you don't know anything about? That's a perp. That's a perp. And so perps, because like derivatives, it's a derivative. It's a derivative financial product under the purview of the CFTC, which is why BitMEX went under because the CFTC is like, hey, BitMEX, you can't, you're not registered. You need to go away. And so then it went away. And so the derivatives market's massive just because of the capital efficiency that you can get. You can get like leverage on your money, like $1 means up to $100 of capital. And so this is why exchanges like Coinbase are tromping at the bit to be able to service this demand

• 54:47David Hoffman?

  because the fees outpace the fees that you can take on the spot market. The fees are lower, but the volume is much larger. And so Coinbase, I'm sure, is just very Stoked to be able to enter this market slowly, like in good old Coinbase fashion, just like very late. But they're now in the game and they're doing it.

• 55:06Ryan Sean Adams?

  Well, it's a game that FTX has completely like left open, right? It's just really it's just like.

• 55:12David Hoffman?

  First dominated and then died.

• 55:14Ryan Sean Adams?

  That died, but you know, Binance is the big player here. And if you look at actual trading volumes, I mean, look, all of this orange David, this looks like it's about 70%, 75% of all exchanges actually happens in these perps.

• 55:28David Hoffman?

  Right.

• 55:29Ryan Sean Adams?

  Perp tokens and derivatives and it's not on spot.

• 55:32David Hoffman?

  Yeah, so spot is about 25% of volume. Derivatives perps is about 75%. We actually just recorded a bull case for coin episode with a couple of crypto Twitter analysts. And so we actually have some speculation about like, what could this mean for Coinbase, the company? So let's go hear some hypothetical numbers.

• 55:51Speaker 03

  If Coinbase was able to do what FTX did from January 2021 to January 22, over that year, Coinbase would make $720 million. Okay, that's a bit bigger. That'd be good for a 23% jump in Coinbase's overall revenue. So now we're getting into things that are really gonna potentially move the stock. And then if we go even crazier, right? And think about Binance, which is obviously the whale in all exchange talk. If Coinbase is able to capture 25% of Binance's volume on perps, that would mean 3.6 billion with a B billion.

• 56:33Speaker 03

  Revenue jump and that's good for a 97% increase over last year's total revenue for Coinbase. And that, you know, we can get crazier from there, but you know, you can kind of see how quickly, how much money, you know, this product can throw off for Coinbase.

• 56:50Ryan Sean Adams?

  You could get crazier from there, but perps are absolutely massive. It's a huge opportunity for for US exchanges like Coinbase. So.

• 56:57David Hoffman?

  Yeah, I think this is the big question, which is like Coinbase is going after Binance's market share. They're entering the international offshore exchange arena. How much perp capital, trading volume desires the comfiness of an onshore United States company that's producing this offshore exchange? How much capital will go from like, oh, I prefer Brian Armstrong overseas? That is an unknown question.

• 57:21Ryan Sean Adams?

  Yeah, I think so. There's also an unknown question as to how much of this market share DeFi can take. Right? There's like, there's only of all of the players in kind of perps today. It's only really DYDX that has any kind of market share and that's still tiny. It's just like 1%. There's got to be some new perp designs that that happen in DeFi to take some of this market opportunity away. So we will see. David, I just saw this when we're getting into the agenda and my only conclusion is this, David. Elizabeth Warren is actually trying to kill crypto. Like she actually is. I think it's aggressive. I think it's it's coordinated. This is a letter led by Elizabeth Warren has some other senators who have signed off on it,

• 58:03Ryan Sean Adams?

  but she's basically asking the IRS to speed up its crypto tax reporting rules. And these are some tax reporting rules that would be absolutely disastrous for DeFi in the United States. In particular, they make it such that all DeFi user interfaces as very vaguely defined as they are, which could mean something like EtherScan, for instance, and certainly could mean something like the Uniswap front end or crypto wallets. It could expand to basically all of the interfaces and applications that we use in DeFi. They would have reporting obligations, IRS reporting obligations. All right. And so this is a an interpretation that the IRS has had.

• 58:46Ryan Sean Adams?

  Recently that they they they put out publicly and the public is now commenting on that. In fact, we're doing an entire episode about this. We're going to be putting this out next week with the DeFi Education Fund on how disastrous this interpretation of the tax rules would be by the IRS and what we can do about it, how we can push back against it. But Elizabeth Warren here in this letter, David, is saying that the IRS should accelerate its implementation of these tax rules. Originally, the IRS was going to deploy them over the next two years. And she says, we can't wait that long. We got to push this forward even faster. And yeah, that's it's incredibly alarming what's

• 59:27Ryan Sean Adams?

  going on. And that's not the only thing. She actually penned an op ed this week in the Wall Street Journal titled Cryptocurrency Feeds Hamas's Terrorism. Okay?

• 59:40David Hoffman?

  Oof, oof. Wait, we just know that that's just false. We know that's false. You can see it on chain. You can see the lie on chain.

• 59:48Ryan Sean Adams?

  It's just opportunistically dishonest. This is like low rung politics. Hamas is obviously in the news right now and her association of that with crypto is completely targeted. It's completely aggressive. And I don't know why they're doing this. I don't know why she is doing this specifically, but this seems like an aggressive targeted campaign against crypto. I'm very concerned about this IRS interpretation, implementation of tax code laws. But it just doesn't stop there. It's been like the entire trajectory of Operation Choke Point over the last 12 months or so. And I have no idea where it's coming from. So that is the context here. We are definitely under attack in crypto. And I

• 1:00:31Ryan Sean Adams?

  feel like I haven't fully realized it until lately, how bad it's actually gotten, how coordinated and aggressive it is.

• 1:00:38David Hoffman?

  Right. I think, I mean, we as crypto citizens in the United States, like definitely we would enjoy improved and updated tax guidelines for how we do taxes. And that's not what we're getting. And like, we want precise and aligned tax Guidelines and what we're getting is like this blunt tool and then Elizabeth Warren is like, yeah, but now faster, like just hit them with a hammer, hit them with a hammer. That's basically what is Elizabeth Warren doing? She is understanding that like she can get $50 billion, that's the number that she cited, $50 billion of taxes out of crypto. If we just hit them with this massive blunt like tax ban hammer and it's basically a way to like,

• 1:01:20David Hoffman?

  you know, to push the industry away and saying like, hey, everything you're doing, just like blunt taxes. It's just a hammer.

• 1:01:28Ryan Sean Adams?

  It's certainly pushing a lot of crypto, I think, interest out of the United States, at least for right now. So, but we are winning in the court system, David. What are we looking at here?

• 1:01:37David Hoffman?

  Yeah, so this is a headline out of Bloomberg saying, SEC won't appeal court decision, paving the way for grayscale spot Bitcoin ETF. And so this is just another indication that we have of Gary Gensler and the SEC backing down in the courts. And so they, the SEC lost their court case against grayscale about turning their spot, their Bitcoin treasury into a spot Bitcoin ETF. They could have appealed it, they did not. So, weak Gary.

• 1:02:07Ryan Sean Adams?

  Yeah, it's, it's going well in the court system, at least we got that going for us. David, what are we looking at? This was a release this week that was notable.

• 1:02:14David Hoffman?

  Yeah, back to some crypto native stuff. EtherFi tweets out, after a tremendous amount of hard work by the whole EtherFi team, we are excited to announce that we are shipping our L S T E ETH, so lowercase e ETH. It is an L S T like Lido, like Rocket Pool, like Diva, except it's different because it's Eigenlayer's native restaking token. And so it is a liquid staking token that is also earning the yield of Eigenlayer restaking networks. So it's all the yield bundled up into one token. So you'd expect logically, it has the yield of Ethereum staking and what other, whatever other Eigenlayer networks are also up and running in the early stages of Eigenlayer.

• 1:02:57David Hoffman?

  And so it would in theory have more yield, which is why it's cool.

• 1:03:01Ryan Sean Adams?

  Money Legos, David.

• 1:03:02David Hoffman?

  Yeah, good meme.

• 1:03:04Ryan Sean Adams?

  David, what do we have coming up?

• 1:03:05David Hoffman?

  Ever tell you about the sad story of Money Lego Sadiq?

• 1:03:08Ryan Sean Adams?

  No.

• 1:03:08David Hoffman?

  Yeah, it's the only private keys that I've ever lost.

• 1:03:12Ryan Sean Adams?

  Ah, what happened to them?

• 1:03:13David Hoffman?

  It was in my Argent smart contract wallet and I lost the Guardian and I don't know where this, yeah. So I think MoneyLegos.ETH expires in like 2025 and I'm just gonna like watch it, watch it go.

• 1:03:24Ryan Sean Adams?

  Does it have, okay, and does it have any crypto in it? Not much?

• 1:03:28David Hoffman?

  I think I lost my Arbitrum airdrop in there as well.

• 1:03:32Ryan Sean Adams?

  Sad. Well, speaking of crypto people.

• 1:03:34David Hoffman?

  If anyone buys MoneyLegos.ETH, please talk to me. It's the one meme that I made that I'm super proud of, other than triple point asset. I do own that one.

• 1:03:43Ryan Sean Adams?

  Speaking of people losing crypto, we got to tell you the story of Jimmy Zhong, who is the guy who had 3 billion in Bitcoin in his basement and he lost it to the FBI, okay? It's gonna be story time coming up after the break. David, what else we have?

• 1:03:56David Hoffman?

  I actually have a story time for you as well. It's completely unrelated, but it's one of the biggest bear market signals and it's all the MEV searchers have moved to restaurants in New York City. It's something I learned about this week. And then of course, we have a take, takes of the week. One take from Dgen Spartan about crypto is the mirror image of stocks and a few other things and what David and Ryan are bullish on. So we're gonna get to all of this and more, but first, a moment to talk about these fantastic sponsors that make the show possible. Cello is the mobile-first, EVM-compatible, carbon-negative blockchain built for the real world. And now, something big is happening. Introducing the Cello Layer 2. It's a game-changing proposal that's going to bring Cello's rapidly growing ecosystem home to Ethereum. Vitalik has shared his excitement for the Cello Layer 2 on the Cello forum, so has Ben Jones from Optimism.

• 1:04:40David Hoffman?

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• 1:05:18Ryan Sean Adams?

  All right, David, you ready for story time?

• 1:05:20David Hoffman?

  I love story time.

• 1:05:21Ryan Sean Adams?

  All right, do you remember that guy that we're talking about? Like, the FBI suddenly discovered $3 billion worth of Bitcoin. That was in November of last year. It was in the midst of a lot of craziness, I think, the SBF stuff and all of this. So we didn't talk about it for very long. But the story was, the FBI uncovered $3.6 billion worth of Bitcoin from some guy's basement in Georgia, in Gainesville, Georgia. Yes, Gainesville, Georgia. And this was Bitcoin from the original Silk Road hack. This was Bitcoin that was actually stolen from Dread Pirate Roberts of the Silk Roads. It was 50K worth of Bitcoin.

• 1:06:05Ryan Sean Adams?

  And suddenly, it popped back on the FBI's map, and they raided somebody's house and confiscated $3.6 billion worth of Bitcoin. So at the time, it was just a crazy story. We didn't know very much about it. But here are the details here. So the guy's name was James Zong of Gainesville, Georgia. And he pleaded guilty to all of this stuff. James was apparently living the high life in Gainesville, Georgia. Okay? This is a picture of James right here.

• 1:06:40Ryan Sean Adams?

  This is James and his friends, Gainesville, Georgia.

• 1:06:43David Hoffman?

  For the podcast listeners, this is the stereotypical crypto nerd who stumbled into a ton of wealth and now has two attractive women at his side.

• 1:06:53Ryan Sean Adams?

  Yes.

• 1:06:53David Hoffman?

  Multiple times. Here's the same picture I just described, but now on a boat.

• 1:06:57Ryan Sean Adams?

  Yes. So how did the FBI actually track this down? So apparently Jimmy, as his friends call him, not just James, Jimmy, he had a break-in, actually. So he had a break-in in 2018 or so, and somebody broke in. It's assumed to be one of his friends or somebody close to his circle broke in, stole some of his Bitcoins. So he called the cops. And it was only like 150 Bitcoin, which is a small amount for him. He's like half a million dollars or something. But he called private investigators to go help him with that. And so he was on private investigators' radar. And then in 2019, he mistakenly sent a transaction to a centralized crypto exchange

• 1:07:41Ryan Sean Adams?

  that had AML KYC to him.

• 1:07:43David Hoffman?

  That's how he effed up.

• 1:07:44Ryan Sean Adams?

  Add his identity, all right? And this put him on the radar of Chainalysis, who of course, tracks all of these different addresses. They probably know a lot about you, Bankless listener, you know, listening to this and your on-chain profile. And they flagged this particular address with Jimmy Zhong's, you know, identity and they called the FBI. And so two-

• 1:08:09David Hoffman?

  That is a huge own goal.

• 1:08:11Ryan Sean Adams?

  Yes, yes. Unfortunate mistake for Jimmy Zhong. So two FBI agents show up to his house. They pretend that they are private investigators as well and they're trying to help him find the 150 Bitcoin that somebody stole from his house. And so he invites them in, he shows them, you know, his basement and the cool like stripper pole that he has installed there.

• 1:08:34David Hoffman?

  Oh my God, he had his stripper pole in his house?

• 1:08:35Ryan Sean Adams?

  Yeah, he did, in his basement. And so they talk and, you know, they chum it up and they just discover more about Jimmy and it becomes pretty obvious.

• 1:08:46David Hoffman?

  He invites them into his home and he just gives them everything.

• 1:08:50Ryan Sean Adams?

  Yeah, he's just a really friendly, he's a friendly guy by all accounts, but these FBI agents are clearly, you know, vetting more information, they're building the case. And then they show back, they show up another time, this time with like a full warrant-

• 1:09:04David Hoffman?

  Right.

• 1:09:04Ryan Sean Adams?

  -for his arrest and the ability to, to search his house because they, they, they know essentially he's got more Bitcoin.

• 1:09:12David Hoffman?

  Yeah.

• 1:09:12Ryan Sean Adams?

  In fact, might be the Silk Road thief. I mean, he stole from a thief, so he's the thief of the thief. And apparently Jimmy was hiding a lot of his Bitcoin in a Cheetos popcorn tin. So there was, there was millions of dollars. That's where I keep my private keys, you know? It's Cheetos popcorn tin and then also under the floorboards of his house. So here's how a Bitcoin OG actually hide, hid his Bitcoin. You know, that's kind of what I had in mind, actually. Yeah. That's what I envisioned. Very much. It looks like, like, like tens of thousands of dollars of cash, some silver. Yes. And some private keys. Yeah, some private keys. And do you remember these? These are actually like the. They're one of those called Cacatus coins, Cacatus coins? Exactly.

• 1:09:58Ryan Sean Adams?

  So they're actually Bitcoin representations in, in kind of a coin form. And then of course, you know. I don't, I've never actually understood how those work. Speakeys. Yeah. Anyway, completely busted. But the craziest part of this story, I feel like, so they arrested Jimmy. He got a year in prison. Of course, they took all of the Bitcoin back. But the craziest thing about this, David, is the government wasn't even really that mad. And do you know why? It's because. Cause he was a hooligan. Yeah, no, no, he was a holder. That's what he was. Jimmy Zhong did not spend any of this Bitcoin. All right. And so what Bitcoin? Well, yeah, because, because he would get in trouble. I know, but what the, what the FBI originally did was they obviously, they got all this Bitcoin

• 1:10:43Ryan Sean Adams?

  from the Silk Road, from Ross Ulbricht, and then they sold it fairly, fairly immediately. Like a year. And then who's the guy that, that bought it? What's his face? James Draper? Draper? Yes, yes. VC. And he did quite well in that. It went for a premium because the government was selling it. So it was like, yo, this is clean Bitcoin. This is good. This is like cleaned by the government. And so it went for a premium. Yeah. So, but if they had gotten this Bitcoin at that time and sold it, they said they would have gotten $320 a coin or they would have made, the government would have made $14 million. And because Jimmy Zhong diamond handed it for like 10 years, now the government got three, three billion in profit, like 3.6 billion in profit. Nice job, Jimmy. Nice job.

• 1:11:30Ryan Sean Adams?

  So that is the story of Jimmy Zhong in Gainesville, Florida. And yeah, that's, you know, wishing, wishing the best. David, we got some takes of the week. What's the first one we're looking at?

• 1:11:41David Hoffman?

  Bankless Nation should be pretty familiar with the takes like these. Now, this is Tommy from Delphi goes, congrats, United States. The Celestia airdrop is not accessible to you. There's 800 million Telegram accounts and US users that cannot access the in-app wallet of Telegram. There are zero DYDX nodes in the new DYDX chain that are inside of the United States. And Eigenlayer restaking nodes not in the United States will see premium usage. As in, if your Eigenlayer node is not in the United States, you will make more yield. You imagine being this protected from the future of technology. I am so protected.

• 1:12:16Ryan Sean Adams?

  Protected from all of the upside, all of these gains, all of these airdrops. David, what are we looking at here? This is a MEV take.

• 1:12:24David Hoffman?

  Yeah, so this is my story time for you. This is something that I learned during my, my gossipy travels in New York.

• 1:12:30Ryan Sean Adams?

  Okay.

• 1:12:31David Hoffman?

  Okay, so you know what an MEV searcher is, right?

• 1:12:34Ryan Sean Adams?

  Yes.

• 1:12:34David Hoffman?

  You want to, you want to explain what an MEV searcher does for the Bankless Nation?

• 1:12:37Ryan Sean Adams?

  You, you explain it.

• 1:12:38David Hoffman?

  Okay, so MEV searchers, they just crawl the blockchain and they find arbitrage. So they rebalance Sushi Swap and UniSwap. They just, they just, you know, they sandwich people. They just find arbitrage opportunities.

• 1:12:50Ryan Sean Adams?

  Little nanobots looking, picking up all the profit.

• 1:12:53David Hoffman?

  That make markets on Ethereum in DeFi extremely efficient. Because if it's, there's an inefficiency, they will eke out that profit. Lately, that, that skillset has some searchers, there are some searchers out there. They might be listening to this right now, shout out. There are some searchers out there who are either bored by the bear market, aren't finding profit on Ethereum in the bear market, or just are intrinsically interested to take their skills to other venues.

• 1:13:19Ryan Sean Adams?

  Yes.

• 1:13:20David Hoffman?

  This is appointmenttrader.com. Apparently, there are at least two searchers out there who are very good at their jobs, who are now searching out for arbitrage opportunities on appointmenttrader.com. What is appointmenttrader.com? Well, there are a number of restaurants and neighborhoods in New York where like, if you want to get a reservation. You have to like hit refresh for the week that that restaurant will open up their reservations for and then you like get it as soon as possible. Otherwise, you're not getting a reservation. If you have a reservation, you can sell it on the secondary market.

• 1:13:52Ryan Sean Adams?

  No way.

• 1:13:54David Hoffman?

  For a buyer of that reservation. So people will, this is, it's like ticket sales. So bots are, bots are going and they are MEV, they are MEV-ing like New York restaurant like reservations. And so like they will, they'll try and buy then and make the first reservation, but then they will also arb between reservations as if there's, if somebody is like selling a reservation for too cheap, they'll buy it up and then resell it. And they'll sandwich, they will arb out New York restaurants. So like the New York restaurant liquidity market is like made very deep. Like the order book for New York restaurants is liquid because of these goddamn MEV searches.

• 1:14:37Ryan Sean Adams?

  Well, can we tokenize it and can we spin up a Uniswap market?

• 1:14:41David Hoffman?

  I, that is going to be up to them, man.

• 1:14:44Ryan Sean Adams?

  That's hilarious.

• 1:14:45David Hoffman?

  This is a theory of exporting this technology to the world.

• 1:14:48Ryan Sean Adams?

  I guess so. This is a take from DJ and Spartan. What are we looking at?

• 1:14:52David Hoffman?

  Yeah. So DJ and Spartan made a good take. I thought it was interesting. He says crypto is the mirror image of the stock market. He actually says Grip2 is the mirror image of the stonk market because he is a crypto Twitter DJ and that's the word that they use. In stonks, you get a big dump every few years when panic supply overwhelms a stable demand. That's, that was the COVID dump that was, you know, anytime there's like a big, this is like the Berkshire Hathaway model. You just, you just hold a bunch of cash and then when there's what DJ and Spartan says, a panic supply overwhelms a stable demand, you buy those in the stock market. In crypto, in Grip2, you get a big pump every few years

• 1:15:33David Hoffman?

  when panic demand overwhelms a stable supply. You sell those. And this is kind of how I've described crypto bull markets every now and then is like, society is just going to forget about crypto for three years. And then one year, all of society remembers crypto exists.

• 1:15:50Ryan Sean Adams?

  They'll panic buy.

• 1:15:51David Hoffman?

  And they realize that they've made three to four years of progress and they're like, oh, I'm underexposed. Bye.

• 1:15:57Ryan Sean Adams?

  Yep.

• 1:15:57David Hoffman?

  If you are part of the Exactly, right. And if you are a part of the stable supply, you, bankless listener, you are a part of the stable supply. You sell those is what Dgen is saying. And I just like to address the position.

• 1:16:10Ryan Sean Adams?

  I do. And I think that if you do dabble in trading at all, like, so it's optional whether you sell those or not, right? Some long-term holders will be like, who, what do I care? It's noise on the way down. It's noise on the way up. What do I care? I'm gonna hold for another 10 years, right? Or you could dabble a little bit in in trading, right? Which is like, what I would say.

• 1:16:29David Hoffman?

  Long-term trading, I would call it.

• 1:16:29Ryan Sean Adams?

  Yeah, long-term trading, which is you just sell a little bit. When, when everybody else is FOMOing in, because that's what they're going to do, right? They don't, they panic buy rather than panic sell. That's a, yeah, it's a good take. David, here's an Eric Voorhees take. Like every bank in the world, FTX was closed source, custodial, spied on and censored its users and advocated for compliance with government regulation. Open source, non-custodial, permissionless finance is the antidote. This is what pisses me off so much about Elizabeth Warren and others in the US actually trying to clamp down on DeFi.

• 1:17:07David Hoffman?

  Using terrorism as a cudgel?

• 1:17:09Ryan Sean Adams?

  Yeah. And, and, and trying to shut down our open source, non-custodial, permissionless finance. Because that is the thing that worked when FTX and BlockFi and all of the other, you know, centralized lending providers were going under. And so taking that away from us, basically, that's, you know, how are you helping any American when you do that?

• 1:17:33David Hoffman?

  Yep, 100%.

• 1:17:34Ryan Sean Adams?

  David, um.

• 1:17:36David Hoffman?

  What are you bullish on?

• 1:17:37Ryan Sean Adams?

  What am I bullish on?

• 1:17:38David Hoffman?

  Yeah, you're going first this week.

• 1:17:40Ryan Sean Adams?

  Okay, I'm going first this week. This is actually not something I'm bullish on. This is another, I guess it's story time week because.

• 1:17:47David Hoffman?

  Okay, all right, cool.

• 1:17:48Ryan Sean Adams?

  This was like the most bizarre thing I think I've seen so far in like, or this year in crypto. It's called Joson. All right, let me explain to you what Joson is. Joson is the first blockchain ecosystem, first ever virtual nation state. I saw this from a newsletter I read, telling me about Joson. I was like, oh, cool. It's Bologies Network State idea. Let me go look into this project. So David, this is the project. You see, this is joseon.com.

• 1:18:14David Hoffman?

  Joson or Josion?

• 1:18:16Ryan Sean Adams?

  Joson, the first cyber nation state recognized by a UN member nation. All right, that sounds promising. So Joson is a non-territorial successor state to the Joson Empire, which was a Korean Empire founded in 1392.

• 1:18:36David Hoffman?

  A Korean Empire.

• 1:18:38Ryan Sean Adams?

  Yeah, so we're going back in history and this is the successor crypto nation state to the original Joson Empire, you know, founded in 1392. So I was like, okay, what is this?

• 1:18:49David Hoffman?

  Says who is the, why is this successor?

• 1:18:52Ryan Sean Adams?

  Some crypto person is like, hey, we're going to carry on the legacy. Okay, so the country name, other names for this are the Chosen Empire, the Korean Empire. The language is any, any language, right? It's an internet community. So it's not just English. It's, it's any language, freedom of religion.

• 1:19:10David Hoffman?

  Okay.

• 1:19:11Ryan Sean Adams?

  Okay, freedom of censorship. They have a currency called the mu.

• 1:19:17David Hoffman?

  Mun?

• 1:19:17Ryan Sean Adams?

  Mun, yes, excuse me, the mun, which is the legal national currency that has all of the benefits of a cryptocurrency.

• 1:19:25David Hoffman?

  The government, it's a crypto, it's a crypto.

• 1:19:27Ryan Sean Adams?

  Yeah, it's a cryptocurrency. This is all, this is all on chain. Okay, this is an EVM based sidechain called Joson. It's a digital country. The government, here's where, here's where it gets very interesting. The government is a constitutional monarchy. Okay?

• 1:19:42David Hoffman?

  Okay.

• 1:19:42Ryan Sean Adams?

  There's a king.

• 1:19:44David Hoffman?

  Right, I would imagine it's the guy who wrote the words that we're reading.

• 1:19:47Ryan Sean Adams?

  Yeah, it, his name is Andrew Lee, King Andrew Lee, His Imperial Highness. Okay? This is the founder of a crypto nation state and he put himself as the sovereign king of this thing. Okay?

• 1:20:02David Hoffman?

  Because of course you, that's exactly what you would do. Of course, of course you would do this.

• 1:20:06Ryan Sean Adams?

  Who's going to join this country where this guy is the king?

• 1:20:09David Hoffman?

  At least one person.

• 1:20:10Ryan Sean Adams?

  Okay, so who is this guy? I, I looked up the, the white paper.

• 1:20:13David Hoffman?

  Oh, these are some names that I've, these are some old names.

• 1:20:16Ryan Sean Adams?

  His name is Andrew Ling. Yeah, Andrew Lee, excuse me. It's been 10 years since I made this statement. This is a statement he made. He said, "In 50 years, I hope to be alive on earth. However, if I'm not, I hope to be known in history as a man who helped bring happiness to the world." It's been 10 years since I made this statement, 11 years after I declined joining Ripple's leadership team for 6% of all XRP coins. So he declined that. And 12 years since I voluntarily left the world's leading Bitcoin exchange. And now he has set himself up to be the king of Jossan. And do you want to look at Jossan's tokens here, David? How many tokens he has? This this this proud country, 20% goes to the Jossan government, 5% to Jossan officials,

• 1:21:00Ryan Sean Adams?

  government officials. Yes. 65% goes to the Jossan Ministry of Isn't this all him? Yes. This is all him. And then 10% issuance goes to kind of like anybody, I guess, who wants to buy in. Which is also him. Wait, but is there anyone else in this new country that's not him? I have no freaking idea. I mean, you can buy the MUN token if you want. So you can be a Jossan. What does being in this digital nation, nation state? What is this? Network state? Yeah. What do I get? What do I get? Well, it's not, it's not really clear. It's not really clear what the upside is, but you could definitely buy some MUN tokens and you can join this. You can become a denizen, which is a little

• 1:21:42Ryan Sean Adams?

  bit different than a citizen. They have a different take on it. It's like this quasi corporate entity. And you can join this country where this guy, Andrew Lee, is is king and you can pledge your allegiance to him. And I was thinking, as I was reading this, so this is what we're doing with Bology's network state ideas. We're we're creating these network states with like kings in them. And it made me a little sad, but also that's probably how we start, right? Like, there's going to be all of these cults and weird network state experiments first. And then maybe we'll land on something that is actually wholesome and decent. So that's the story of Jossan, David. And if you become a denizen, I mean, let me know. And tell me how it is. You know, it might be cool.

• 1:22:28Ryan Sean Adams?

  I can't tell if you just wasted my time or not.

• 1:22:31David Hoffman?

  What the hell was that? I definitely wasted your time. What do you bullish on this week, man? Oh my God, I don't know. How do I come back from that? I have so many more questions.

• 1:22:42David Hoffman?

  Okay, what do I bullish on? I wrote this article. I'm bullish on everyone reading this article. And that's the title of the article. The article is titled, "Five Big Questions About the Future of Crypto." Usually when I write, I have some idea that I very much believe in, that I want to express, that like I think I'm right about. And this one is the opposite of that. This is five questions that I would like to have answered so that I can have some clarity about crypto.

• 1:23:08David Hoffman?

  But the point, the point is that these are, I think, very important questions. And one of the first one like is how, what does the future of Ethereum scaling look like? We know it's rollups, but actually there's still plenty of more questions. Many superchains or one uber chain, huh? Yeah, one uber chain is a term that I just made up. And then there are also sub-questions to help answer the questions. Two, where does value get captured in the rollup stack? There's a tension here between rollups as a service providers versus layer two tokens. So I kind of unpacked that. Number three, where is the equilibrium of liquid staking tokens? There's a bunch of, you know, there's more than just market forces. LST or many? Right, exactly. Number four, does Solana get gobbled?

• 1:23:52David Hoffman?

  I mean, Bankless Nation, it kind of understands my, my general take there, but I think there's some. You have a fixation on Solana, David, don't you? Well, yeah, I think Ethereum is going to gobble it up. But is that, is that the question? Is it going to do that? But also the most important one. Is this one of our Discord conversations? Yeah, I ripped, I screenshotted one of your comments. But you got, you asked for that, I remember that. I did ask for that, yeah, yeah. But the most important one of the five is how do we get price discovery to happen on chain?

• 1:24:22Ryan Sean Adams?

  Rather than on centralized exchanges, which is where it happens now.

• 1:24:26David Hoffman?

  Right. Currently, price discovery happens on Binance. And if it wasn't happening on Binance, then it would be happening on Coinbase. And if it wasn't happening on Coinbase, then it would maybe be happening on Uniswap. It should be considered unacceptable to all crypto believers out there that price discovery about the assets that our crypto networks produce happened exogenously. It needs to happen endogenously. We need endogenous price discovery over our own assets. And until we can rip the trophy of price discovery from the hands of centralized exchanges, we will always be in their shadow. So how do we get price discovery on chain is like the big question? And that's what I'm bullish on. It's I'm not bullish on anything. Please go read the article.

• 1:25:09Ryan Sean Adams?

  You know what, David? These are five excellent questions, I think. And I think that, you know, I learned a lot more from your bullish, what you're bullish on segment than you probably learned from mine about Josan, David. But like, these are really good takes. What do we got for meme of the week here?

• 1:25:27David Hoffman?

  Meme of the week, we're throwing it back to the Uniswap drama. The tweet is devs absolutely unhinged about this one. And it's the regular old Uniswap interface, but with the option to leave a tip. Would you like to leave a 15% tip? 20% tip?

• 1:25:41Ryan Sean Adams?

  Are we gonna say that thing obligatory of like, man, tips are getting insane, aren't they?

• 1:25:45David Hoffman?

  Tips are getting insane.

• 1:25:46Ryan Sean Adams?

  Everybody, everything's asking for a tip and it, you know, that it's not starting at 5% anymore. It's like 10%, 15%, 20, 25%.

• 1:25:55David Hoffman?

  I always tip restaurants, of course. And I try to draw the line very firmly there.

• 1:26:00Ryan Sean Adams?

  Yeah. I, yeah, I agree. Tipping is everywhere. Tipping culture is in. So now it's been added to the Uniswap UI. David, we got a really cool moment of zen, actually. This is, do you know Theo Von?

• 1:26:12David Hoffman?

  It's not that cool.

• 1:26:13Ryan Sean Adams?

  Well, he's a comedian and it's funny, but I think it perfectly captures what normies think about crypto right now and about

• 1:26:21David Hoffman?

  NFTs, yeah.

• 1:26:22Ryan Sean Adams?

  NFTs and about our computer money. So we'll play that right after we get through the disclosures and the risks and disclaimers. First disclosures, David and I are investors in Scroll. Uniswap is also a sponsor of The Bankless Show. They were in the news this week. So obviously we talked about them. We are long-term investors. We are not journalists. We don't do paid content. There's always a link to all Bankless disclosures in the show notes. You can find that in the show notes section. I don't have to say that twice. There's always a link to all bankless disclosures in the show notes, risks and disclaimers, of course. Crypto 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. Now here's the moment of Zen. David, let's watch this together.

• 1:27:07David Hoffman?

  Oh, God.

• 1:27:08Speaker 04

  Look at that NFT market. That thing disappeared. I mean, what the fuck was that?

• 1:27:12Speaker 05

  It sounded dumb from the jump. And I would say it sounded dumb. People would be like, you don't get it. I'm like, I think I do. And now it's all like, everything's been proven right. Like, it's all, it's all gone. Yeah. And I don't know why the board ape wasn't good in the first place, but you're gonna spend billions on this thing. It was very, very dumb.

• 1:27:30Speaker 04

  And I think the person spending billions, I think it's just one guy telling his buddy, hey, let's write an article that say you spent a billion.

• 1:27:37Speaker 05

  Yeah.

• 1:27:37Speaker 04

  And then we'll get everybody else to buy bullshit.

• 1:27:40Speaker 05

  Yeah.

• 1:27:41Speaker 04

  It's like the guy who said he spent a billion never even spent a fucking billion. I think they spent five grand paying a website to make an article.

• 1:27:48Speaker 05

  Mm hmm. And computer money isn't real. I don't believe that you have like a billion dollars in crypto. That's the same as having a billion dollars in real money.

• 1:27:55Speaker 04

  Yeah.

• 1:27:55Speaker 05

  I don't buy it.

• 1:27:56Ryan Sean Adams?

  Okay. The thing is like a part of that is actually like, some of that was not, we don't have to make commentary on it. That was the moment of Zen. All right.

• 1:28:03David Hoffman?

  See you guys later.

• 1:28:04Ryan Sean Adams?

  The episode's over. Goodbye.