ROLLUP: Genesis Bankrupt | SEC vs Gemini | Bitzlato | New 3AC Exchange GTX | MetaMask Staking | ETH Denver

3rd Week of January, 2023 ------ Crypto Tax Calculator | Free Crypto Tax Calculator htthttps://bankless.cc/CTCpodcast https://bankless.cc/cryptotaxcalculator ------ JOIN BANKLESS PREMIUM: https://newsletter.banklesshq.com/subscribe ------ BANKLESS SPONSOR TOOLS: KRAKEN | MOST-TRUSTED CRYPTO EXCHANGE https://bankless.cc/kraken UNISWAP | ON-CHAIN MARKETPLACE https://bankless.cc/uniswap ️ ARBITRUM | SCALING ETHEREUM https://bankless.cc/Arbitrum EARNIFI | CLAIM YOUR UNCLAIMED AIRDROPS https://bankless.cc/earnifi ----- Resources: 0:00 Intro 4:20 MARKETS 6:20 Total Crypto Market Cap 7:50 Fed Cutting? https://twitter.com/DeItaone/status/1615404601489883136 9:05 Debt ATH https://twitter.com/WatcherGuru/status/1616086891098415104 9:40 ETH Ultra Sound https://ultrasound.money/ 11:00 Ethereum Quarterly Report https://newsletter.banklesshq.com/p/state-of-ethereum-report-q4-2022 16:50 FTX Solana Position https://twitter.com/b1ockgreg/status/1615506527741263872 18:05 FTT Pumping? https://www.coingecko.com/en/coins/ftx-token 21:30 SEC vs Gemini https://www.cnbc.com/2023/01/12/sec-charges-genesis-and-gemini-with-selling-unregistered-securities.html 22:54 Winklevoss Defense https://twitter.com/tyler/status/1613674686646484992 24:35 Who Benefits https://twitter.com/dogetoshi/status/1613660660981796869 25:10 After the Fact https://twitter.com/cryptowendyo/status/1613666846041067523 26:05 Saving Investors https://twitter.com/LewellenMichael/status/1613741457248030720 26:30 Is Genesis Bankrupt? https://twitter.com/fintechfrank/status/1615781926161235976 28:45 Is it Priced In? https://twitter.com/business/status/1615885016164081664 29:40 CoinDesk for Sale https://www.cnbc.com/2023/01/18/coindesk-engages-lazard-to-explore-sale-as-dcg-crisis-grows.html 32:55 International Crypto Enforcement https://twitter.com/AP_Abacus/status/1615749853950115844 36:00 Bitzlato https://www.theblock.co/post/203516/wtf-is-bitzlato-crypto-twitter-rolls-eyes-at-dojs-big-arrest 41:30 3AC New Exchange? https://www.theblock.co/post/202589/3ac-zhu-davies-new-crypto-exchange 42:00 Trading Claims https://twitter.com/JJcycles/status/1615005217551966208 45:45 Ethereum Validators https://decrypt.co/119370/ethereum-validators-hit-500000-ahead-scheduled-shanghai-upgrade 46:10 Dev Report https://www.developerreport.com/developer-report 48:10 Norway Arbitrum https://twitter.com/arbitrum/status/1613801636350119937 49:12 MetaMask Staking https://twitter.com/MetaMask/status/1613953273957945352 49:45 2017 Cryptopunk Sale https://twitter.com/mullet_eth/status/1615099917806051349 52:30 SBF Congress https://www.coindesk.com/policy/2023/01/17/congress-ftx-problem-1-in-3-members-got-cash-from-crypto-exchanges-bosses/14554945567 53:50 Digital Dollar https://www.coindesk.com/policy/2023/01/18/digital-dollar-project-warns-on-uss-cautious-approach-to-cbdcs/ 55:35 FTX is Solvent https://twitter.com/SBF_FTX/status/1615507065337958401 56:17 MiCA Delay https://blockworks.co/news/mica-delay-until-april-gives-eu-crypto-firms-ample-breathing-room 57:15 Releases 1inch: https://blog.1inch.io/introducing-the-1inch-hardware-wallet-47e2a2a8d5a0 Den: https://twitter.com/OnChainDen/status/1615363420429381635 MeanFi: https://twitter.com/aztecnetwork/status/1615348404842008583 59:10 Raises Diva: https://www.theblock.co/post/202690/diva-closes-3-5-million-seed-round-for-distributed-liquid-staking-protocol Obol: https://twitter.com/ObolNetwork/status/1615385163218948096 Flashbots: https://twitter.com/theblock__/status/1616020690326388738 Sleepagotchi: https://twitter.com/dberenzon/status/1615453029360365569 1:02:15 ETH Denver Meetup https://imgur.com/TbapHDs 1:03:00 Questions from the Nation https://youtu.be/Os10Ln8sMOc?t=6166 1:09:00 TAKES of the Week 1:09:30 Crooked Cop https://twitter.com/twobitidiot/status/1613673970896703488 1:11:10 Wild West https://twitter.com/ErikVoorhees/status/1613548809635741696 1:12:20 Owning vs Trading https://twitter.com/zhusu/status/1613389245007233026 1:13:50 BTC Supply Cap https://twitter.com/TrustlessState/status/1613924471391551488 1:15:50 What David’s Bullish On 1:18:35 What Ryan’s Bullish On 1:23:45 MEME of the Week https://twitter.com/cyounessi1/status/1614822327484833801 ----- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research. Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here: https://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?

  Gary Gensler and the SEC are charging Gemini and Genesis, charging them with unregistered securities with selling those. And they're doing all of this after the fact. David, this is a total mall cop move, isn't it?

• 0:16Ryan Sean Adams?

  Bankless Nation, it is the third week of January. David, tell them what time it is.

• 0:22David Hoffman?

  Ryan, it is the Friday Bankless Weekly Rollup, where we cover the entire weekly news in crypto, which continues to be fiasco after fiasco, although entertainment value does increase lately. And so if you are not drinking your coffee, what are you doing? Go grab your coffee because it's going to be a pretty good rollup. Might be, might be kind of long. We'll see, we'll try and speed this up. It's going to be a long one, but there's a lot of good stuff to talk about this week.

• 0:46Ryan Sean Adams?

  I mean, it's quality, though.

• 0:47David Hoffman?

  It's really good stuff. It's some good stuff.

• 0:49Ryan Sean Adams?

  All these rollups, there's just quality. And I'm drinking my, I think this is my fourth, I want to say, cup of coffee. Nothing like the fourth. Right? What do you want, number one, number two?

• 1:00David Hoffman?

  It's the first, the number, it's always downhill after number one.

• 1:03Ryan Sean Adams?

  It's true. Till tomorrow, you gotta sleep it off and then wake up. And yeah, your eighth isn't tasting as, as good as your second, is it?

• 1:10David Hoffman?

  Do you seriously eat, drink eight cups of coffee sometimes?

• 1:13Ryan Sean Adams?

  I'm not going to say I don't, okay? I'm not going to say I don't.

• 1:15David Hoffman?

  That is insane. I would literally die.

• 1:19Ryan Sean Adams?

  Someday we'll have, we'll do flights of coffee together, David, you and I.

• 1:23David Hoffman?

  No, I would, can we do flights of beer?

• 1:26Ryan Sean Adams?

  Both, first the coffee, then the beer. Mix it up.

• 1:28David Hoffman?

  We'll do that permissionless, how about that?

• 1:30Ryan Sean Adams?

  Sounds good. All right, topics of the week. We've got to discuss the bankruptcy of Genesis. That might actually be happening. Some news broke this week and also the unbundling of Digital Currency Group. It's all wrapped together. What else are we talking about?

• 1:42David Hoffman?

  Yeah, if anyone is interested in buying CoinDesk, you might be in luck. Following that, Gary Gensler, the mall cop, coming in hot, being all mall copy.

• 1:53Ryan Sean Adams?

  On that segue.

• 1:54David Hoffman?

  On that segue, beep beep.

• 1:57David Hoffman?

  And then the big news of the week, crypto Twitter just struck by fear when rumors of the Department of Justice was going after an international crypto exchange that starts with the letter B, a massive takedown.

• 2:11Ryan Sean Adams?

  What?

• 2:12David Hoffman?

  So, hold on to your seats because we got to cover that one. It was absolutely gargantuan news.

• 2:17Ryan Sean Adams?

  Going to talk about that, too. All right, guys, if you're listening on YouTube or watching on YouTube, make sure you like and subscribe. If you are listening to this on the podcast, of course, subscribe to that podcast, too. David, before we get in, got to talk about our friends and sponsors over at the Crypto Tax Calculator because, David, you know what season it is?

• 2:36David Hoffman?

  Oh, God.

• 2:38Ryan Sean Adams?

  It is tax prep season, my friend.

• 2:40David Hoffman?

  Do you guys hear how jubilant Ryan is right now?

• 2:43Ryan Sean Adams?

  Do you know I'm only excited because the tools have gotten better? It used to be so much more painful to do this kind of thing. And that's why we're talking about Crypto Tax Calculator because this is probably the best tool I've seen for those complicated trades, those complicated DeFi transactions. You know, the stuff where you're like on a layer two and then you're interacting with this weird DeFi protocol?

• 3:04David Hoffman?

  Derivative token inside of another app.

• 3:07Ryan Sean Adams?

  Yeah. Blah, blah, blah, blah, blah.

• 3:09David Hoffman?

  Right. The yield is volatile.

• 3:11Ryan Sean Adams?

  Yeah, you're a liquidity farmer somewhere. Anyway, wouldn't it be nice if you just plug in your ETH address and we just calculate what you owe?

• 3:19David Hoffman?

  Yeah.

• 3:20Ryan Sean Adams?

  This is what Crypto Tax Calculator does.

• 3:22David Hoffman?

  That is previously what I do, but I do it to a human. But it makes sense that the AI is stoked about the calculator that you can just plug into your...

• 3:29Ryan Sean Adams?

  Don't give it to you. Humans aren't as good as robots, David. How many times do we have to talk about this?

• 3:34David Hoffman?

  That's why I keep you around.

• 3:37Ryan Sean Adams?

  All right, so this will sort out your tax nightmare. So, that's why I'm a little excited, a little jubilant because this is the best tool I've seen for those complicated transactions. They've got L1s and L2s, 600 integrations, coverage for about 300,000 cryptocurrencies.

• 3:53David Hoffman?

  I did not even know that there were that many.

• 3:55Ryan Sean Adams?

  Thank you. All you got to do is connect your wallet and it spits out what you owe. And so, this is a way for D gens to actually do their taxes. If you're D gen thinking about not doing your taxes, I would advise against that.

• 4:08Ryan Sean Adams?

  Not a good idea.

• 4:08David Hoffman?

  You either do it now or you do it later and it's worse if you do it later. Let me tell you, I have experience with that one.

• 4:13Ryan Sean Adams?

  Yeah, do not procrastinate these things. Anyway, you guys can go to bankless.cc/cryptotaxcalculator and sign up. Also, if you sign up with the code BANK30, do you hear that? BANK30, you get a 30% discount on this puppy. So go check that out in the show notes.

• 4:30David Hoffman?

  Yeah, but if you are in the Bankless Nation Discord, there is a different code for even more percentage off. So if you are a Bankless Nation member, go into the Discord if you are interested in getting that more than 30% discount.

• 4:43Ryan Sean Adams?

  Even better, even better. Okay, let's get to the markets, David. What are we talking about on the Bitcoin prices? Are we up, we down?

• 4:50David Hoffman?

  We are up big on the week, starting the week at $18,900. Up double digits in Bitcoin to where we are currently at $20,900. 10% on the week for Bitcoin, that's big.

• 5:02Ryan Sean Adams?

  Double digits, you mean percentage wise?

• 5:03David Hoffman?

  Double digits percentage wise, yes.

• 5:05Ryan Sean Adams?

  That's big because last week, I remember we were up too. And now we're above 20K, which is a big milestone. That's feeling pretty good. I mean, what are the bears doing right now? Are they retreating?

• 5:17David Hoffman?

  I think they are covering or buying, one of the two. We are definitely getting short squeezed out of the bottom right now. That's what basically the theme of the last 10 days, I'd say, is short squeeze off the bottom.

• 5:28Ryan Sean Adams?

  Usually trader bears have a little denial face for a while. And I think I've seen some of that on Twitter as well. Okay, how about ETH? What's that doing for us?

• 5:35David Hoffman?

  Ether price started the week last week at $1,420, up 8%. Where we are currently at $1,535. We touched $1,620 for the high, the intra-week high. This whole like Department of Justice fear mongering caused the market to jump down a bunch. We've recovered a little bit, but not too much. So we are currently at $1,535, so up 8% on the week for Ether.

• 6:01Ryan Sean Adams?

  It's gotta be painful for bears. That's a, that's a, that's a big week for ETH as well. How about on the ETH Bitcoin ratio, up or down?

• 6:07David Hoffman?

  Yeah, retraced a little bit because of last week's was extremely green. I think last week was something like four or 5% green, I can't remember. Two and a half percent, we are down, two and a half percent, we are down to 0.0735 on the ratio.

• 6:19Ryan Sean Adams?

  Bitcoin's back, baby. It's back, never left.

• 6:22David Hoffman?

  It's not dead yet.

• 6:25Ryan Sean Adams?

  This is, look, global cryptocurrency market cap, David, I can read these charts too. We are above a trillion this week.

• 6:31David Hoffman?

  One trillion dollars.

• 6:33Ryan Sean Adams?

  Wow.

• 6:33David Hoffman?

  It's been three months since a trillion, maybe two. Definitely since, since prior, I think FTX caused us to absolutely nuke below a trillion. And now we are at point, 1.01 trillion.

• 6:44Ryan Sean Adams?

  You guys will remember at the, at the top of the market in 2021, we hit three trillion. So back above a trillion, the trillionaires club, I guess, for, for crypto, we've reached it.

• 6:57David Hoffman?

  I remember in 2017, if you go to that peak back in 2017, I remember sending a message in my like crypto chat to all my friends.

• 7:04Ryan Sean Adams?

  This little baby thing?

• 7:05David Hoffman?

  Yeah, we were at 900,000. We were about to hit one trillion for the first time. And so I like sent out a message like, all right, guys, how many months after we hit one trillion, will we hit three trillion? And it was like, and this was December of, of 2017. I was like, all right, is it going to be February or April or June of 2018? And when we hit like three trillion and turns out it was

• 7:29Ryan Sean Adams?

  Turns out what?

• 7:29David Hoffman?

  Four more years later.

• 7:31Ryan Sean Adams?

  It was for those 48 months rather than four months, right? Or whatever, six months, something like this.

• 7:35David Hoffman?

  Off by a smidge, yeah.

• 7:36Ryan Sean Adams?

  Not bad though, not bad. So markets feeling good this week. We, we did get there eventually. Now, now we've of course retraced down below trillion, but we're back. All right, let's talk about some other market metrics here, David. One is conversation about the Fed, maybe the Fed cutting interest rates, which is pretty big. The Fed's set to cut interest rates by the end of 2023. This is not the Fed, of course, saying this. This is not Jerome Powell. This is KPMG. So this is an analyst saying this, that the Fed might cut interest rates amid a US recession. Think the exact prediction is this, that in the first half of 2023, that's the half that we're in right now. We will enter a recession.

• 8:19Ryan Sean Adams?

  And do you recall what a recession actually is, like the technical definition?

• 8:23David Hoffman?

  Yeah, it's like three quarters in a row of declining growth or something like that.

• 8:28Ryan Sean Adams?

  It's like two. Yeah, it's two consecutive quarters of negative growth domestic product. And of course, GDP is the value of all the goods and services that a country produces. So that would be two quarters of negative GDP. So KPMG is saying, we'll, we'll go into a recession this quarter and that will cause the Fed to stop cutting interest rates.

• 8:48David Hoffman?

  Are we not already in a recession? I thought we were.

• 8:50Ryan Sean Adams?

  Not technically, right? Okay. It's, uh, we haven't actually technically hit that R word. So the idea being that the Fed might start cutting interest rates at the end of the year. This is sort of what analysts are saying and what the market is saying. That said, what is this tweet telling us?

• 9:06David Hoffman?

  Yeah, the, this, this tweet and the next tweet, I think, contrast really well with each other. Uh, this is Watcher Guru, one of these like breaking Twitter accounts. US, US national debt reaches an all time high of 31.4 trillion dollars. 31.4 trillion dollars of collective debt.

• 9:25David Hoffman?

  All time highs. I mean, it's always reaching all time highs and it reached an all time high again.

• 9:29Ryan Sean Adams?

  Yeah, I mean, that, that's to tell us that the money supply keeps increasing no matter what the economy is doing, uh, bear or bull, it's always increasing, it seems like.

• 9:39David Hoffman?

  And in stark contrast, the ETH burn is burning. Uh, we are at negative 2,170 ETH. So I think these things to these like all time high of US debt versus, uh, burning ether, the rate of ETH burn being a pretty, pretty close to all time highs, uh, is like nicely contrasting with each other. When debt reaches all time high, it is like, it's like future dollars that need to be burnt in order to come back to an equilibrium. And we have a debt of 31 trillion dollars that we need to like collectively like burn in order to come back to like zero to net out. And ether is just burn and ether.

• 10:19Ryan Sean Adams?

  Right.

• 10:19David Hoffman?

  It's burn and ether left and right.

• 10:21Ryan Sean Adams?

  It's so interesting to watch kind of the, you know, we, we've talked about Ethereum like a GDP, basically, you know, Ethereum being sort of a, a digital nation. Ethereum also has ether and a monetary schedule for ether. And rather than hitting debt all time highs, as you said, it actually went deflationary since the merge. So that happened on Sunday. By the way, David, I was kind of looking at these numbers. You know, it's dipped into deflationary territory, ultrasound money territory before, but then when block space demand decreased, of course, issuance, net issuance goes up. Now it dropped back down. So ETH is once again ultrasound money since the merge. Do you know, the bankless analyst team put together a state of Ethereum and

• 11:06Ryan Sean Adams?

  comparing quarter, last quarter, so Q4 of 2022 with Q4 of 2021. And we do this every quarter. Ben from our team puts this together. I think it's a fantastic post. A lot of takeaways from this report, but you could see sort of what the GDP, what the economy of Ethereum looks like in a bear market, because Ethereum in last quarter was definitely in a bear market as compared to the fourth quarter of 2021, when it was kind of up only, and it was pure bull market. So a few metrics to look at. Net revenue, network revenue, that is, was down by 93%.

• 11:47David Hoffman?

  Ouch.

• 11:49Ryan Sean Adams?

  What does, what does the Ethereum economy kind of like, I guess, produce? Or what is its tax base? Maybe that's a better way to say it. What is it selling is blocks? And so network revenue was down from about 4 billion in 2021 Q4 to 267 million.

• 12:07David Hoffman?

  And so this is saying just like, gas fees are down by 93.8%. That's synonymous, right? And so like network revenue, block space sales, gas fees, these are all different words to say the same things. Yeah, block space demand is down 94%.

• 12:22Ryan Sean Adams?

  Yep. Now, this is interesting. So is ETH burned? And you would sort of expect that. So in Q1 of last year, we were burning a lot more ETH. EIP 1559 was already implemented. So the burn was down as compared to the previous quarter, 2021, Q4 versus 2022 Q4, was down 94% as well.

• 12:43David Hoffman?

  This next metric, I think is so awesome.

• 12:47Ryan Sean Adams?

  What is it?

• 12:47David Hoffman?

  So, we are, we have 94% less Ether being burned because we have 94% less block space demand for Ethereum.

• 12:56Ryan Sean Adams?

  And yet?

• 12:57David Hoffman?

  Yet, the ETH inflation rate is down, I think it's a broken metric because it went from positive to negative. So even with a 94% reduction in Ether blockchain, Ethereum block space demand, Ether inflation is down like over 100%. It was at...

• 13:17Ryan Sean Adams?

  101%.

• 13:18David Hoffman?

  It was at 0.364% yearly inflation rate.

• 13:22Ryan Sean Adams?

  Well, actually for the quarter, that was for the entire quarter, it increased 0.364%.

• 13:28David Hoffman?

  Ah, excuse me. Okay, so yes, the Q4 of 2021, Ether inflated, the issuance grew by 0.364%. In this quarter, even with 94% of block space demand leaving the ecosystem, Ether inflation went to negative 0.004%. And why did this happen, of course? Because of the merge. The merge happened.

• 13:54Ryan Sean Adams?

  I mean, that's the first full quarter Ethereum's ever had of being deflationary, ultrasound money, that happened last quarter, net deflationary in Q4 of 2022. So that is a very bullish metric, I think. And then we have daily active addresses, just down 20%, actually not down too much, considering it was, it's been a bear market. And then, read this one, ETH staked. What has that done?

• 14:18David Hoffman?

  Almost doubled. It was 8.8 million Ether staked last year, 2021 Q4, 15.8 million. We were actually at this time of, because this concluded, this was last quarter, we have like 19 days of January since then, and we're over 16 million staked. So we are almost double since Q4 2021 of ETH staked.

• 14:37Ryan Sean Adams?

  You can look at the other aspects of the economy. You can look at kind of DeFi on Ethereum. Of course, DeFi TVL is down 75%. Stablecoin supply is only down 5%, which is impressive. So that stayed pretty steady. People are rotating back into stablecoins. They're not exiting to fiat in a bank account.

• 14:55David Hoffman?

  Yeah, that makes sense. DeFi TVL Ether price down like 60, 70%. Stablecoin supply gets a boost as a result of that because like where does that value go? It goes into stablecoins. So that's probably why stablecoins are only down 5%.

• 15:08Ryan Sean Adams?

  Liquid staking deposits also doubled. So that's been huge. And this is why we're seeing kind of the LSD tokens we were talking about last week increase a whole bunch. NFT volumes is an interesting metric as well. So NFT, daily NFT traders is only down 14%, which is interesting based on, based on last year.

• 15:30Ryan Sean Adams?

  And the L2 ecosystem, of course, is sort of a marvel to behold. You know, Arbitrum monthly active addresses is up 730%. Optimism is up 740%. So even though Arbitrum network revenue and Optimism network revenue, they sell block space too, is down. The active addresses are just up and to the right.

• 15:54David Hoffman?

  But also it's, it's important to know that Arbitrum network revenue and Optimism network revenue, okay, down 86%, down 63%. Like, we want the Ethereum revenue, layer one revenue to be up, but actually we want layer two revenue to be down. Because when layer two revenue is down, that means layer two transaction fees are also down. And so when Arbitrum released Arbitrum Nitro, when Optimism released Bedrock and all, like all their other updates, they were actually making their layer one footprint smaller. And so network revenue going down is actually a sign of success for these things because that means fees are going down.

• 16:25Ryan Sean Adams?

  Yeah, this is, but this is really cool. This is what the Ethereum economy looks like in a recession. And you could see a bunch of the markets are, a bunch of the metrics are down. But one thing that's very interesting is supply also goes down. That does not happen during the recessions of nation state. Usually debt increases during recessions that nation states have. Whereas in Ethereum, it's, you know, money supply has decreased. So pretty interesting to see. David, why don't you talk about this too? I know we've been, we've been tracking prices of other alternative layer ones. I think the Solana price maybe warrants some discussion. What's this tweet saying?

• 17:04David Hoffman?

  I think this is coming out of the announcement last week where FTX found a bunch of like crypto assets under the cushions. And so we've discovered how much FTX owns of Solana, the Sol network. FTX owns 11% of Sol tokens of the market cap of Solana, which is a dubious place to be in.

• 17:26Ryan Sean Adams?

  $700 billion worth.

• 17:28David Hoffman?

  $700 billion. Like you can't sell that amount into the market and it would send it to zero. And so like, there's this precarious position where this entity that's going through bankruptcy owns 11% of the market cap of Solana.

• 17:41Ryan Sean Adams?

  Needs to be liquidated.

• 17:42David Hoffman?

  Needs to be liquidated. Yeah. I don't know how that happens. That's bad.

• 17:47Ryan Sean Adams?

  Right.

• 17:47David Hoffman?

  That is bad.

• 17:48Ryan Sean Adams?

  Yes. So this, this could be obviously a negative price catalyst on Sol tokens. Interesting. We had Anatoly on the podcast, recording that just last week. We're gonna release that episode too. He definitely thinks Solana has a bright future ahead. So stay tuned for that episode and you'll catch his take there. This was interesting too. Why did the FTT price, this is FTX's native token. Why did that spike randomly on Tuesday of last week, Thursday of last week, today?

• 18:15David Hoffman?

  We're looking, we're looking at two, the two week price action. And actually this spike on the very far right just happened since we started recording. We are back above $2.30. I mean, D gens in crypto will trade absolutely anything. Like some people just think this thing is a goddamn casino, which it totally is. But yeah, FTT price, the token of FTX is pumping for some goddamn reason.

• 18:37Ryan Sean Adams?

  What's the market cap of this thing?

• 18:39David Hoffman?

  Is relative, fully diluted valuation, $600 million.

• 18:43Ryan Sean Adams?

  How?

• 18:44David Hoffman?

  What the hell, dude?

• 18:46Ryan Sean Adams?

  I don't understand. It's.

• 18:47David Hoffman?

  We should start an exchange.

• 18:50Ryan Sean Adams?

  News on that coming later, David. What do we have coming up next?

• 18:53David Hoffman?

  Bankless starts an exchange.

• 18:55Ryan Sean Adams?

  We are absolutely not doing that. Someone else is.

• 18:58David Hoffman?

  Somebody, well, somebody else is shutting down an exchange. But that'll be the third thing, the third big news of the week that we talk about. First, we got to talk about DCG, the DCG fire sale. We got the Genesis bankruptcy. So the bankruptcy is probably starting. I don't think it's official, but it's looking. Pretty likely rumors and then also rumors have surfaced that CoinDesk is looking for a buyer. CoinDesk, of course, is a subsidiary of DCG. So the unbundling of DCG is underway. And then beep beep Gary Gensler mulc up coming through now that he's arrived on the scene. Now that DCG and crypto are weak, Gary Gensler comes with his traffic ticket. Save the day.

• 19:38David Hoffman?

  And saving the day. And then an exchange that starts with the letter B gets charged with the department by the Department of Justice. Oh no, everyone run and hold on. So we're going to get to all of those subjects and more. But first, I want to talk about some of these fantastic sponsors to help you go bankless like Kraken, who lets you get your boomer money out of TradFi and into the sci fi world of crypto. Kraken has been a leader in the crypto industry for the last 12 years. Dedicated to accelerating the global adoption of crypto. Kraken puts an emphasis on security, transparency and client support, which is why over nine million clients have come to love Kraken's products. Whether you're a beginner or a pro, the Kraken UX is simple, intuitive and frictionless,

• 20:19David Hoffman?

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• 21:04David Hoffman?

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• 21:49Ryan Sean Adams?

  Gary Gensler and the SEC are charging Gemini and Genesis, charging them with unregistered securities, with selling those, and they're doing all of this after the fact. David, this is a total mall cop move, isn't it?

• 22:04David Hoffman?

  This is ridiculous, dude.

• 22:06Ryan Sean Adams?

  Can we actually read what the charges are from this CNBC article?

• 22:12David Hoffman?

  Yeah, so according to the SEC and Gary Gensler, Gemini Earn Program and Genesis were selling unregistered securities with a high-yield product offered to depositors. Genesis loan Gemini users crypto, kept a portion of the yield, shielded that profit with Gemini. And a quote from the SEC, Genesis should have registered that product as a securities offering. Okay.

• 22:36Ryan Sean Adams?

  Yes.

• 22:37David Hoffman?

  Okay.

• 22:38Ryan Sean Adams?

  Go on.

• 22:39David Hoffman?

  That's great that we know this now, that they should have done that, that we are being informed of this now.

• 22:44Ryan Sean Adams?

  How does this help retail, David?

• 22:45David Hoffman?

  That they are bankrupt.

• 22:46Ryan Sean Adams?

  I'm sure there's a way for this to help retail that has $900 million stuck in Gemini Earn accounts. This is Tyler Winklevoss tweeting about this, saying, "It's disappointing that the SEC chose to file an action today." What is he saying in this tweet thread?

• 23:02David Hoffman?

  He's basically saying like, yo, WTF, this doesn't do anything to help further our efforts. This isn't helping us with the proceedings between Gemini Earn and Genesis. And he says, "This action does nothing to further Earn users and get their assets back. It's totally counterproductive." And also, the Earn program was regulated by the New York Department of Financial Services, and they've been already in discussions with the SEC about the Earn program for more than 17 months.

• 23:32Ryan Sean Adams?

  That's Gemini has.

• 23:33David Hoffman?

  Gemini has, yeah.

• 23:33Ryan Sean Adams?

  Gemini has always engaged with regulators. That's been part of their thing.

• 23:37David Hoffman?

  That's been their brand. Like, we are the compliant crypto exchange. And so Tyler says that even after, in discussions with SEC for 17 months, they never raised the prospect of an enforcement action until after Genesis was bankrupt and they paused withdrawals, which is insane.

• 23:54Ryan Sean Adams?

  Counterproductive.

• 23:55David Hoffman?

  Right. After it's too late.

• 23:58Ryan Sean Adams?

  That's called like some major CYA type move, cover your ass move by Gensler and SEC here.

• 24:03David Hoffman?

  Big time.

• 24:04Ryan Sean Adams?

  And doesn't help earn retail, get its money back.

• 24:08David Hoffman?

  Actually, it's going to cost both Genesis and Gemini money, which they're already like running on fumes on. And any money that they have to go to deal with this from the SEC is coming out of future depositors money, like returns. Like, they're already going to get, like, depositors are already going to get like less than 50 cents on the dollar. Now it's going to be like, now the SEC is coming in with fines and depositors are going to get 45 cents on the dollar, 30 cents on the dollar, like, less as a result of the SEC.

• 24:36Ryan Sean Adams?

  This is a take from Doge Toshi. The SEC charging Gemini and Genesis after users lose their funds is like OpenSea blacklisting an NFT after a hacker sells it. Like, it doesn't do any good. Why are you, what are you doing?

• 24:52David Hoffman?

  But I will, I will carve out OpenSea. That is just a thing that their lawyers forced them to do. It's not like what they want to do. It's not like they have a bad policy where they are choosing to do this.

• 25:02Ryan Sean Adams?

  It doesn't help. That's the thing.

• 25:04David Hoffman?

  But it, but both coming, are coming back to regulation. Like, they are forced to do that because of regulation. And then the SEC is doing this because, again, regulate, regulation.

• 25:12Ryan Sean Adams?

  Did you see David, Gary Gensler's video?

• 25:14David Hoffman?

  He made a little influencer video.

• 25:16Ryan Sean Adams?

  Advertising it. Did you see Office Hours with Gary? Actually, let's play some of the sound behind this.

• 25:20David Hoffman?

  Oh, God.

• 25:21Ryan Sean Adams?

  We do that?

• 25:21David Hoffman?

  We have to.

• 25:22Ryan Sean Adams?

  Office Hours with Gary.

• 25:23David Hoffman?

  All right, let's do it. What do seatbelts have to do with crypto lending?

• 25:34David Hoffman?

  Chinchillas.

• 25:37Ryan Sean Adams?

  So influencer video about this from Gary Gensler. This is the reply. I got a lot of likes. I don't know if he was ratioed here. He's almost ratioed here. It's from Crypto Wendy. You charged them after the fact, Gary. This impacts retail, less money to go around, legal fees and fines. It's like running a stop sign that wasn't there and giving someone a ticket. Please give clear guidelines that bolster positive growth. Yes, please do that. That's what we've been hoping for. Not more of this, not more gumming up the works. David, here's a meme on this, too. I love this.

• 26:07David Hoffman?

  You know, I'm a big sucker for SpongeBob memes. This is the episode. I can't remember. They're trying to save Bikini Bottom from something. Man, I'm actually sad that I can't remember the details of this episode. But it's at the end of the episode. They've totally destroyed the city and it's SpongeBob turning to Patrick and said, we did it, Gary. We saved investors from crypto after like the city just totally destroyed.

• 26:29Ryan Sean Adams?

  Very disappointing. So that's what's going on there. Meanwhile, the big question on everyone's mind is Genesis going bankrupt? This came out on Wednesday today. A post from Frank Chappell of The Block. Genesis Global Capital Creditors are negotiating a prepackaged bankruptcy plan with the firm. A prepackaged bankruptcy plan. That's interesting terminology. Apparently this would allow for a swifter process to go through bankruptcy. If you do this kind of prepackaged deal before you actually enter the bankruptcy proceedings. So it could happen a lot faster than say something like FTX where you're you're kind of forced. It's negotiated bankruptcy, I guess.

• 27:12Ryan Sean Adams?

  And so these are still rumors, I think, but this was actually reported by Bloomberg as well. That the headline of this says crypto firm Genesis is preparing to file for bankruptcy. So maybe Bloomberg has a closer source. It says the crypto lending unit of DCG could file as soon as this week. And I guess, David, that impacts all of DCDG, which is Digital Currency Group. Could you just refresh people on the structure of Digital Currency Group? And like the things that it owns. Digital Currency Group, of course, Barry Silber is the CEO. They own Genesis, which is this.

• 27:50Ryan Sean Adams?

  Asset that is preparing to to file bankruptcy, this entire institutional lending and borrowing company. What else is in their portfolio?

• 27:57David Hoffman?

  Yeah, so Genesis, the lending desk, Grayscale and the GBTC ETH E trust, which are kind of actually the source of all the contagion. Also, something that got basically kneecapped by the SEC by not being able to be turned into an ETF. So like the SEC is just really just punching us at every single moment. Anyway, sorry. They DCG also owns CoinDesk, which we're about to talk about, and just a few other things, this thing called Foundry, Luno, TradeBlock, and also just a bunch of private equity investments, venture capital investments throughout the space.

• 28:29Ryan Sean Adams?

  You have a take on this.

• 28:30David Hoffman?

  Pretty, pretty big, pretty big, like, what do you call these things? Consortiums of subsidiaries? Pretty big organization.

• 28:37Ryan Sean Adams?

  It's a giant organization, many billions of dollars, kind of a longstanding crypto institutional organization, too. David, do you think all this is priced in? Or do you think that this is going to cause some more tumultuous times in crypto markets?

• 28:52David Hoffman?

  Yeah, you said that this is really just rumors at this point. We actually don't know if this is true, but I think everyone is chalking this up to like, yeah, this is totally, this is going to totally happen. Like, something's got to happen. And it looks like there's not really too many paths forward. So Genesis preparing for bankruptcy, DCG will probably keep, will keep Grayscale because that thing is an absolute cash cow. But I think everyone, the fact that markets didn't really nuke when we got this bad, bad news, because this perhaps implies a bunch of selling pressure, implies that this was already priced in. And so this, the market's like, I don't care about any more bad news. Like, I'm not selling at this point because we're already so down bad.

• 29:32Ryan Sean Adams?

  I actually think it's, in a way, it's good news because we do have to clean this up, right? And it's been in limbo for a period of time and markets hate uncertainty. This is maybe more certainty. What happens to CoinDesk, David?

• 29:42David Hoffman?

  Yeah, so this is another rumor, but crypto publication CoinDesk has hired Lazard, which is a private equity investment bank, I believe, to help facilitate the sale of CoinDesk. So CoinDesk is a valuable product, a valuable company. And so they are looking for a buyer because DCG needs the money. So CoinDesk-

• 30:03Ryan Sean Adams?

  Who's going to buy CoinDesk, David?

• 30:04David Hoffman?

  CoinDesk is up for sale. Who wants to buy CoinDesk?

• 30:08Ryan Sean Adams?

  Do you think traditional media will buy it? Like somebody like CNBC? Or do you think this will come internal to the crypto?

• 30:13David Hoffman?

  No, I think, I think- Outside, I, my bet is somebody outside of crypto, something like a Bloomberg or something like that.

• 30:20Ryan Sean Adams?

  Is that, do you have any preference? Is that more bullish? What if someone like CZ buys it? Binance buys CoinDesk, how would that make you feel?

• 30:27David Hoffman?

  That would be not great.

• 30:28Ryan Sean Adams?

  Okay, how about Bloomberg?

• 30:30David Hoffman?

  I'd like that to keep that in the States, please.

• 30:32Ryan Sean Adams?

  Bloomberg buys CoinDesk, what do you think?

• 30:34David Hoffman?

  That'd be great, that'd be awesome.

• 30:36Ryan Sean Adams?

  Okay.

• 30:36David Hoffman?

  That'd be awesome.

• 30:37Ryan Sean Adams?

  How about Blockworks Group buys CoinDesk?

• 30:41David Hoffman?

  That would be Chad as fuck. That'd be so Chad.

• 30:48Ryan Sean Adams?

  Yeah, we'll see what happens. But fire sell of assets, right? In order to, in order to survive.

• 30:53David Hoffman?

  The unbundling of DCG, they're basically probably gonna sell everything except for Grayscale, because Grayscale's the cash cow. I mean, there's like a whole conversation there about like how they're, they just like jettisoned Genesis. They let, they, Three Arrows Capital, Genesis let Three Arrows Capital do the Grayscale trade and it was the facilitating mechanism to put a bunch of TVL into Grayscale, which is the cash cow for basically all of DCG and now they're just selling the wreckage. Yeah, there's a bunch of like bad takes, negative takes about that.

• 31:22Ryan Sean Adams?

  Also, DCG has a pretty strong venture arm too, with a lot of assets that have appreciated massively in value and you wonder if some of that's gonna be up for auction as well.

• 31:32David Hoffman?

  Before we move on, there's some irony here to pull out. So CoinDesk is for sale, right? Because the parent company, DCG, is underwater because of the Genesis insolvency because of the...

• 31:44Ryan Sean Adams?

  Are you gonna say they broke the original story of FTX?

• 31:48David Hoffman?

  So CoinDesk broke the original story of FTX about the Alameda balance sheet, which caused CZ to tweet about that, which caused the FTT to dump, which caused Alameda to get liquidated, which caused the insolvency of FTX, which created, and that was also triggered by Three Arrows Capital. Like all of this, like contagion, this is what contagion is. And so at the end of this loop of contagion is Genesis going under, which is a DCG product, which that whole thing got pinpricked by another DCG product. So CoinDesk picked, pricked the bubble that ultimately led to the unbundling and sale of their parent company.

• 32:26Ryan Sean Adams?

  What are you gonna do though? It's just good reporting. Good job for CoinDesk for doing that.

• 32:30David Hoffman?

  Honestly, like, great job, great, well done CoinDesk. Wait, that is just good journalism, well done.

• 32:34Ryan Sean Adams?

  But also, we're sorry.

• 32:36David Hoffman?

  Yeah, and sorry about that one, yeah.

• 32:37Ryan Sean Adams?

  Yeah, it's not your fault, but you did the right thing for crypto, thank you.

• 32:42David Hoffman?

  Dude, this industry.

• 32:44Ryan Sean Adams?

  It's crazy, right? Look, I just think, I mean, I think in some ways, every industry is like this, except just crypto is like every other industry, but more so.

• 32:53David Hoffman?

  But more.

• 32:53Ryan Sean Adams?

  And it's like more open and the debates and like things happen on Twitter. And yeah, it's very open. Speaking of open and crazy, there was a massive threat. Almost gave crypto a heart attack earlier this week. But it seemed like a bunch of government organizations were banding together to announce something. There was like a pre-announced.

• 33:13David Hoffman?

  Rumors started like simmering throughout crypto sphere. So here's a tweet. Update, not only is the DOJ announcing at 12:00 PM Eastern, there's rumors of an announcement came out of the DOJ, but they will be joined by the FBI, the US Treasury, OFAC and the state of New York.

• 33:29Ryan Sean Adams?

  Wow.

• 33:30David Hoffman?

  Whoa.

• 33:30Ryan Sean Adams?

  This, this happened Wednesday morning, Wednesday morning.

• 33:33David Hoffman?

  Wednesday morning, yeah. So rumors got circulated that the DOJ was going after an exchange that started with the letter B. I don't know how that letter B rumor got out there, but it definitely did. Here's another tweet. One of my good friends told me the DOJ will sue Binance this year and the fine will be in the hundreds of millions of dollars. Oh, God.

• 33:50Ryan Sean Adams?

  This guy's good friend.

• 33:52David Hoffman?

  Oh, good friend. Sources, sources. All right, let's keep on going. As guys, the fear, the fear just like hit all time highs. And so here is a press release out of the Department of Justice. Media advisory, Department Attorney General Lisa Manaco will lead a press conference to announce a major international cryptocurrency enforcement action. The US Department of the Treasury will announce an action in this space. TV coverage will be provided by the network pool.

• 34:18Ryan Sean Adams?

  People, people were, there was so much speculation on crypto Twitter that morning. I can't even keep up with it. And some people were talking about validating anyone who wasn't OFAC compliant and a validator would basically be net banned in the US. Like there was, there was talk of this.

• 34:34David Hoffman?

  Fear off the charts.

• 34:36Ryan Sean Adams?

  Oh yeah, there was talk of like every, every major crypto company you can imagine, you know, could have been a target for this, like, you know, super scary. And honestly.

• 34:44David Hoffman?

  Every, every single one of my discords and telegrams that I frequent were all like, oh God, God.

• 34:49Ryan Sean Adams?

  What's happening?

• 34:50David Hoffman?

  What's it gonna be?

• 34:51Ryan Sean Adams?

  12:00 PM. All right, so what was it? What did it end up being?

• 34:56David Hoffman?

  Crypto exchange BitLazzo, the founder was arrested and was charged by, do you even know what this exchange is?

• 35:05Ryan Sean Adams?

  Bits Lotto.

• 35:07David Hoffman?

  Bits Lotto.

• 35:08Ryan Sean Adams?

  Is that how you say this?

• 35:09David Hoffman?

  I have no clue. I have no clue.

• 35:12Ryan Sean Adams?

  That was the big B that they were going after. It wasn't finance.

• 35:16David Hoffman?

  I don't even know, man. Okay, so this is a Russian founder of a centralized exchange Bits Lotto.

• 35:23Ryan Sean Adams?

  Yes.

• 35:23David Hoffman?

  For laundering and crypto asset crimes. I think laundered, allegedly laundered more than 700 million funds. The founder Anatoly Legadomov was arrested in Miami.

• 35:36Ryan Sean Adams?

  This is it? This is it? This is the big announcement?

• 35:40David Hoffman?

  I had, no, I had never heard of this exchange before.

• 35:42Ryan Sean Adams?

  I have never either. This is somebody named Haley Lenon.

• 35:46David Hoffman?

  She's a lawyer, yeah.

• 35:48Ryan Sean Adams?

  She says, "DOG enforcement action against Russian exchange Bits Lotto. I've worked in the space since 2013, never heard of it."

• 35:56David Hoffman?

  Never heard of it.

• 35:57Ryan Sean Adams?

  Honestly, never heard of this exchange. Who knows?

• 36:00David Hoffman?

  So this showed up in the charts. So this is what caused Ether to go from $1,600 down to like $1,490. And then this news came out and it just like pumped right back up to like 1,550. And we're like, I don't care. I don't care about Bits Lotto.

• 36:13Ryan Sean Adams?

  So of course you got to appreciate the memes coming out about this, the sense of the relief, of course, but this classic meme, what are you looking at?

• 36:20David Hoffman?

  This is the army man protecting the sleeping, the sleeping child.

• 36:23Ryan Sean Adams?

  Knives and missiles and grenades.

• 36:25David Hoffman?

  And so we got Selsier, Voyager, BlockFi, knives and grenades is raining down on this child while the Department of Justice is protecting the child from a feather. And the feather is Bits Lotto.

• 36:34Ryan Sean Adams?

  This is another one. I love this.

• 36:37David Hoffman?

  This is a picture of the police drug bust and there's three police officers at the end of a drug bust and the drug bust is a, is a single marijuana pipe.

• 36:50David Hoffman?

  A marijuana pipe that there's like five stores around me in New York that I could buy.

• 36:54Ryan Sean Adams?

  This is funny. Do you think that, okay, so with the SEC, you know, announcing, going after Gemini and Genesis, and then also the DOJ coming up with this announcement, do you think that this is all sort of PR of these government agencies to be just like, look, we're doing things and we're doing things fast in crypto. See, we're doing something. And so they're just picking that kind of the lowest hanging fruit they can find and making a much bigger deal out of this.

• 37:21David Hoffman?

  Because they can.

• 37:22Ryan Sean Adams?

  Yeah, because they can. It just seems like a sort of a theater type game. It's not actually protecting retail. It's not actually helping us moving this industry forward.

• 37:31David Hoffman?

  It's not actually doing their jobs. Yeah.

• 37:33Ryan Sean Adams?

  They're hoping maybe to score some points with.

• 37:36David Hoffman?

  I think like crypto natives that are listening to this podcast probably need to put themselves in the shoes of their, their parents, their cousins, I don't know. And they, and they're going to read the headline, the DOJ charges crypto exchange for $700 million of money laundering. And the guy's now going to jail. And they're probably going to be like, nice job DOJ, well done. And then they're going to hear about like FTX, Genesis, Gemini earned customers insolvent SEC charged them. And they're like, nice job. Yeah. Nice. Well done, government.

• 38:07Ryan Sean Adams?

  Like that's what my tax dollars.

• 38:09David Hoffman?

  And they don't know the difference. They don't know how much of an absolute farce this is.

• 38:12Ryan Sean Adams?

  They may have never even heard of Binance, for example. And so they can't tell you the difference.

• 38:16David Hoffman?

  The difference between the words Binance and Bits Lotto is not a lot to an outsider.

• 38:22Ryan Sean Adams?

  You're absolutely right. That's exactly what's going on. And actually Theo asked in the bankless discord this week, does this change anything? So what's your answer to that? The Bits Lotto news, does it change anything?

• 38:34David Hoffman?

  I mean, what even is it? This isn't even a thing. There's nothing. So nothing's changing because this isn't even a thing. This is a nothing burger.

• 38:41Ryan Sean Adams?

  I think so. It changes nothing fundamentally. I think what we might see is more of the trend of more agencies coming out with kind of these, these theatrical performances of who they're going to kind of go after next. And I don't anticipate anything useful coming out of that for, for investors in retail and crypto. Anyway, that's what's going on right now, but we're not done yet. We've got a lot more to cover, David. What's coming up next?

• 39:05David Hoffman?

  There's even more. So the Three Arrows Capital founders, Ryan, would like you to give them money for their brand new venture called GTX.

• 39:17David Hoffman?

  Wow. And so we are going to talk about this amazing investment opportunity that you must invest in right now. We'll talk about the details. Of course, I'm joking. Do not do that. And then also, we're gonna, I want you, Bankless listener, to guess, put a number in your head, how many members, individual members of Congress, received political donations from SBF and FTX. Think of a number, because we'll talk about that number as soon as we give it back from some of these fantastic sponsors to help you go Bankless. Uniswap is the largest on-chain marketplace for self-custody digital assets. Uniswap is, of course, a decentralized exchange, but you know this because you've been listening to Bankless. But did you know that the Uniswap web app has a shiny new fiat on-ramp? Now

• 40:01David Hoffman?

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• 40:44David Hoffman?

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• 41:28David Hoffman?

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• 41:37Ryan Sean Adams?

  Suzu and Kyle Davies, formerly of Three Arrows Capital, have an investment opportunity they'd like you to consider.

• 41:43David Hoffman?

  Oh, oh, boy. I'm so excited.

• 41:45Ryan Sean Adams?

  Get this, David. They are raising $25 million for a new crypto exchange, and they're calling this GTX.

• 41:55David Hoffman?

  Why, why they are calling it GTX?

• 41:58Ryan Sean Adams?

  I don't know.

• 41:59David Hoffman?

  No, the answer, Ryan, is because this is the actual real answer. I am not making this up. This is not a joke. The reason why they are calling it GTX is because G comes after F. That is literally a slide in their pitch deck. After FTX comes GTX.

• 42:16Ryan Sean Adams?

  It reminds me of their classic artwork purchase of art blocks right at the top. It looks like a goose.

• 42:22David Hoffman?

  It looks like we like the goose.

• 42:23Ryan Sean Adams?

  We like the goose. Do you remember this?

• 42:24David Hoffman?

  Yeah.

• 42:25Ryan Sean Adams?

  How, how is, how is anybody considering investing in this thing?

• 42:29David Hoffman?

  So this isn't actually just a normal crypto exchange. This is an exchange that is meant to be able to trade claims. So Celsius claims, FTX claims, Genesis claims.

• 42:42Ryan Sean Adams?

  Three Arrows Capital claims?

• 42:43David Hoffman?

  Yeah, probably. I mean, that is not specifically in the deck, but you can only imagine that they are trying to create an exchange to trade claims on all of the insolvent companies of 2022.

• 42:55Ryan Sean Adams?

  I'm getting suddenly very bullish because who has better experience with insolvent companies?

• 42:59David Hoffman?

  Right.

• 43:01David Hoffman?

  They created their own demands for this stupid exchange that they're trying to make.

• 43:06Ryan Sean Adams?

  You gotta build what you know. Come on, David. They're doing, this is actually pretty bullish. I didn't know that. So it's for distressed assets specifically?

• 43:14David Hoffman?

  It is for claims on future like rewards of whatever people would get. And so the idea is that FTX imploded, leaving more than 1 million creditors out of pocket. And so here's, here's the total addressable market. The, the 1 million creditors of the, of 2022 crypto. The exchange offers depositors the ability to transfer their FTX claims to GTX and receive immediate credit in a token called USD G, the pitch deck says. So we're, we're back to printing funny money.

• 43:48David Hoffman?

  And that's the deal, man. Like, if you have a claim, you can go to GTX and get your FTX claimed.

• 43:54Ryan Sean Adams?

  Here's someone who's actually seen some of the slides giving commentary on it. Garlim, thanks for finding this. What's?

• 44:03David Hoffman?

  20. I just love the numbers they're getting from. 1 million crypto creditors that are owed money, plus the $2 billion of collective insolvency as a result of 2022. So like, we know the address.

• 44:17Ryan Sean Adams?

  The audacity of this.

• 44:22Ryan Sean Adams?

  The audacity of this pitch deck. Okay, let's go on. Our roadmap, what's the roadmap looking like? Oh, you first, look, it's a multi-step roadmap, so they're just starting with claims.

• 44:32David Hoffman?

  Of course.

• 44:32Ryan Sean Adams?

  Okay, after that, there's another circle which is crypto.

• 44:35David Hoffman?

  They're just starting with FTX claims and then, and then, three years capital claims come on the market, and then they can sell more shitcoins.

• 44:44Ryan Sean Adams?

  Yeah, and then they go into stocks and trading, and they become bigger than Robinhood, and then they go into FX markets and more. It's, you know, easy.

• 44:53David Hoffman?

  So how much are you investing, Ryan?

• 44:55Ryan Sean Adams?

  Oh, my God.

• 44:55David Hoffman?

  I'm in for half my net worth.

• 44:57Ryan Sean Adams?

  I can't believe anyone is investing in this.

• 45:01David Hoffman?

  Like, the odds that it works are decently above zero for at least them to get liquidity and being able to exit and start leveraged trading Bitcoin again.

• 45:12Ryan Sean Adams?

  Do you know what? If there was another team launching this, it could actually be somewhat interesting.

• 45:18David Hoffman?

  To you, yeah. I mean, like, again, to your point, like, they know that market, and so like, if you think that this is a viable product, like, they are actually kind of are the right people from the job. I hate to say it.

• 45:32Ryan Sean Adams?

  Why anyone would give these guys money after this is beyond me. But, look, people think they can just come back from massive scams in crypto.

• 45:40David Hoffman?

  Well, I don't know if they have any other choice.

• 45:42Ryan Sean Adams?

  This is still what I believe SBF is trying to do. It's kind of a comeback story.

• 45:48David Hoffman?

  New SBF article dropped this week. We'll talk about that.

• 45:50Ryan Sean Adams?

  We'll talk about that, too. All right, let's move on. Ethereum, good news here. It hits 500,000 validators ahead of the scheduled Shanghai upgrade. That's a lot of validators, David.

• 45:59David Hoffman?

  Half a million validators, of course. Multiply that number by 32, and you have the amount of Ether deposited into the beacon chain. So congrats to the beacon chain for half a million validators.

• 46:09Ryan Sean Adams?

  I got good news for you too, David. The devs are still here. There are now 23,000 monthly active developers in crypto. And if you look at this chart here, I'm gonna zoom in a little bit.

• 46:20David Hoffman?

  This is coming from a report out of Electric Capital. And I remember this, I think they do this report every single year. So this is not just some like rando report from some weird. This is a great report. Link in the show notes to definitely go and dive deeper into this.

• 46:32Ryan Sean Adams?

  They're scanning all the public GitHub.

• 46:34David Hoffman?

  Yes, this is a thorough report.

• 46:36Ryan Sean Adams?

  Yep. And basically it has doubled from 2020. But what's interesting here is, do you see that flat line? Like, big price appreciation, whole bunch of developers come into crypto in 2017, the end of 2018, and then it flattens out. Where, again, we're at the leveling out phase, 2022, where we're not going to go down very much, but we're probably going to keep pace with the amount of developers we have. We'll build, price appreciates, whole new, it's like a cycle. This happens over and over. It's, in fact-

• 47:03David Hoffman?

  You can just see the accumulation period. So like in 2017, developers go from like, does a 100x? And then like prices go down 95%, while the developers get heads down busy for like 18 months. And then they create the next bull market, and now we're back into that accumulation phase. I remember seeing like numbers like this in 2018, and it was one of the big like reasons like, okay, I'm not crazy, even though my bags are down 95%, my net worth is basically at zero. All the developers are still here. So something's happening. And you'll notice that this, this chart never goes down. Developers are always up only in crypto.

• 47:41Ryan Sean Adams?

  Chris Dixon calls this the innovation cycle. If you want to Google that, you can read an article about this, this very effect. This is why, you know, we say sometimes like crypto investing is not hard. I'm like, like, look at this, the numbers, like, it's telling the story.

• 47:53David Hoffman?

  Yeah.

• 47:54Ryan Sean Adams?

  You know?

• 47:54David Hoffman?

  The area under the curve of that chart is also the rate of progress of crypto. And which is why I'm so bullish on this particular bull market or bear market versus last is because the area under the curve of magnitude of building happening is the most it's ever been in crypto, ever.

• 48:10Ryan Sean Adams?

  100%, 100%. Cool news from Arbitrum. The Norwegian government is testing a cap table platform on Ethereum using Arbitrum Layer 2 scaling. I know you've explored this a little bit, but what are they doing?

• 48:21David Hoffman?

  Yeah, so this is a, the Norwegian government has announced the development of Brock Brock. I don't know how to.

• 48:28Ryan Sean Adams?

  Norwegian.

• 48:29David Hoffman?

  Yeah, Norwegian. Oh, with a line through it, the Viking language. And so there is a bunch of just like private shareholder cap table information for unlisted companies, companies that are not publicly trading. But the Norwegian government's Brock platform allows these companies to manage their cap table on Arbitrum. And so it's a cap table management for not yet public companies. Just to help them make the process more faster, more efficient, more secure. This is a great use of a blockchain.

• 48:59Ryan Sean Adams?

  A hundred percent. We have a global permissionless, you know, settlement layer that anyone can program against. Why wouldn't you want to put stocks on this thing? Of course, the New York Stock Exchange is never going to do it. Why? Because they're the incumbent, but Norway is happy to say, oh, look at this technology. It's promising. Let's check that out.

• 49:15David Hoffman?

  Moving on to some other big news. Metamask enables staking right from the Metamask wallet. You can now deposit your ether straight into Lido or Rocketpool, straight through the Metamask UI. They also report the APYs that each of these protocols give you.

• 49:30Ryan Sean Adams?

  Nice decentralized staking as well. Rocketpool is a much more decentralized option than going to your local exchange. So pretty cool to see this.

• 49:38David Hoffman?

  Also, shout out to all the Rocketpool homies. Rocket RPL got listed on Binance this week, immediately jumped like 25%.

• 49:45Ryan Sean Adams?

  Yes.

• 49:45David Hoffman?

  Just for trace a little bit, but it's exciting.

• 49:49Ryan Sean Adams?

  What's this about? An NFT world? You wanted to highlight this Discord message. This is from Mullet. One of my favorite CryptoPunk NFTs Discord screenshot. This was in 2017.

• 50:00David Hoffman?

  Yeah, so this is the CryptoPunk Discord, of course. This account named Cyborg says in the Discord, I'm about to do something either extremely stupid or wonderfully smart. Wish me luck. And then not just a few moments later, the CryptoPunk bot that reports all the sales shows up and goes, a zombie punk was sold for a whopping 1.89 ether for $564. And some other person in the Discord goes, whoa, because that was a big sale.

• 50:29Ryan Sean Adams?

  For a JPEG.

• 50:30David Hoffman?

  For a JPEG, $560. For a JPG? Who's spending this much money in 2017 on JPGs? Of course, that zombie punk is probably worth 1,000 times more in ether terms. And yeah.

• 50:44Ryan Sean Adams?

  Can I just shout out the value of being contrarian, right? Do you know Ben from our team dug this tweet out? It was from an old archive as we're migrating from Substack to our new website. It was like surfacing all of these old articles. This was a tweet from 2019 where I said 10x investors know it's not enough to be contrarian. It's not enough to be right. You have to be contrarian, right? ETH is contrarian now, even in crypto circles. I think it's contrarian, right? We'll see. This was like depth of the bear market where ETH was feeling real bad 2019.

• 51:16David Hoffman?

  The only people talking about ETH were you, me, Anthony Zano, DC Investor, Eric Connor, Cyrus Unesi, like a few other people.

• 51:24Ryan Sean Adams?

  It's a pretty small group. It was a contrarian bet. It was always like, yeah, Bitcoin might come back and probably will come back. And I mean a contrarian bet in crypto circles, but so this is also the key, similar to punks, right?

• 51:38Ryan Sean Adams?

  A lot of people make contrarian bets. A lot of those contrarian bets are contrarian, wrong.

• 51:42David Hoffman?

  Yeah, they're contrarian for good reasons, not bad reasons.

• 51:45Ryan Sean Adams?

  Yeah. And then most people make bets that aren't contrarian. And so you have sort of average performance and average returns on those sorts of bets. The thing you want to find in crypto is the contrarian right bets, because that's what gives you kind of the 10x returns and the 30x returns and the 50x returns. And this, of course, ETH is up even now in the bear market 10x from the time this tweet. This tweet ETH was floating at 170 and you know, we're 10x from that.

• 52:12David Hoffman?

  I'll say that the last time I felt that ether was contrarian was like in the second half of 2021, when it was Solana avalanche Luna season. That's when I felt like Ethereum was contrarian locally.

• 52:24Ryan Sean Adams?

  On a relative basis, for sure. Yeah, it could be contrarian price to other assets as well. David, we got to answer that question about how many members of Congress got cash from Sam Bankman Freed?

• 52:40Ryan Sean Adams?

  What is the answer to that question?

• 52:42David Hoffman?

  One in three. I guess the article that you're linking at is not showing up, but one in three members of Congress, which comes out to 196 US lawmakers, took direct contributions from FTX and other FTX executives. 196.

• 52:59Ryan Sean Adams?

  I told my wife this and she was like blown away.

• 53:02David Hoffman?

  Yeah.

• 53:03Ryan Sean Adams?

  Like, that's a third. A third. And now they're trying to unwind all of that. But FTX was just everywhere and Sam Bankman-Fried was just everywhere trying to, trying to infect our government bodies in the United States of America. It's pretty scary, actually.

• 53:18David Hoffman?

  Yeah, the cancer was definitely spreading. And cancer, cancer is really the way to explain how that.

• 53:23Ryan Sean Adams?

  Corruption is cancer.

• 53:24David Hoffman?

  It was corruption. Yes, exactly. A line from this article was that most of the politicians responded to questions from CoinDesk said that they handed it over to charities to remove the taint of contributions. Can you give it back to the customers? Why didn't you do that?

• 53:43Ryan Sean Adams?

  It's messy, I guess. I don't know.

• 53:45David Hoffman?

  You just gave customer money to charity.

• 53:46Ryan Sean Adams?

  I would also love to see what the charities were. That would be nice if that was transparent.

• 53:51David Hoffman?

  Their own foundations.

• 53:52Ryan Sean Adams?

  It could be like air quotes charities, who knows?

• 53:54David Hoffman?

  Right, right.

• 53:55Ryan Sean Adams?

  This is interesting. Digital Dollar Project warns on the US's cautious approach to CBDCs. I think you have a take. This is a white paper that a project called the Digital Dollar Project came out with. And what's the, what's the TLDR of this white paper?

• 54:10David Hoffman?

  I think the subtext is that the Chinese CBDC has been moving ahead, full steam ahead for years now with real progress. Meanwhile, you and I have made fun of whatever, like banking, Senate Finance Banking, whoever the Federal Reserve.

• 54:23Ryan Sean Adams?

  They just talk, don't they?

• 54:24David Hoffman?

  Doing research reports about perhaps doing a digital currency for the United States. So this Digital Dollar Project says, hey, guys.

• 54:32Ryan Sean Adams?

  Hurry up.

• 54:33David Hoffman?

  Like, do something. Do something. And so they call the US's approach to CBDCs an unsustainable position. And they are advocating for either doing a CBTC.

• 54:44David Hoffman?

  Or allowing the stablecoin market to be that. It's like, pick one and make forward progress in one of these two directions, but the current situation is unsustainable, which is something we've been trying to say on the weekly rollup since I think Bankless was inceptioned.

• 54:59Ryan Sean Adams?

  This is an idea that's been around in business circles for a long time from Clay Christensen, which is kind of the idea that the incumbent always gets disrupted because they're on top. They don't think they have to innovate. Of course, you know, Jerome Powell and the dollar is on top. It is the world's reserve currency. They don't think they have to do anything new, but you know, competitors are nipping at their heels and they're out innovating. And this is one key way they're out innovating.

• 55:25David Hoffman?

  Interestingly, the digital dollar project, Ryan, is actually led by Chris Giancarlo, who we've had on the podcast, a former member of the CFTC. So the guy knows a thing or two.

• 55:33Ryan Sean Adams?

  Yeah, he was the head of the CFTC commissioner. Also Crypto Dad, I got his book sitting right back there. Good book.

• 55:40David Hoffman?

  Great guy.

• 55:41Ryan Sean Adams?

  SBF new post on Substack. This guy is now a blogger. What's he saying?

• 55:46David Hoffman?

  His weekly reminder that FTX US is totally solvent and always has been. Just yet another, you know, Excel math blog post from SBF.

• 55:56Ryan Sean Adams?

  Not validated, just.

• 55:57David Hoffman?

  Do you do not need to read this? Like, don't waste your time. But this is just your semi-regular reminder that Sam Bankman-Fried thinks that FTX US is totally solvent and you should too.

• 56:08Ryan Sean Adams?

  Do you know what? I still got him on notifications. I need to stop him from all of the craziness in November. But yeah, I'm just sick of it. I'm sick of hearing from SBF, but he's still posting.

• 56:18David Hoffman?

  He's still posting.

• 56:20Ryan Sean Adams?

  This is some legislation in the EU. It's called MICA. All right. This is sweeping European Union crypto legislation. And David, I think we really need to dive in on this legislation on Bankless because it's actually happening. Now, it's been delayed. That's the news this week. It's been delayed until April, which gives EU crypto firms some breathing room. But David, we are having a panel with some experts on MICA. It's happening in the next couple of weeks so that we can get informed. You know, we're based in the US, obviously. And so we often, we see, you know, US regulations. Yeah, we just see, that's the. Information that comes closest to us and affects us that we understand. I think we want to dive into MICA and fully understand that. So that is coming down the pike.

• 57:01Ryan Sean Adams?

  I've heard that MICA is, you know, so-so, some good, some bad.

• 57:06David Hoffman?

  Some wins, some losses.

• 57:08Ryan Sean Adams?

  Yeah, not absolutely terrible for crypto, but also not great. So we'll dive into that in the next couple of weeks. And just a word that that's actually been delayed until April. So some more breathing room there.

• 57:20David Hoffman?

  Got a handful of releases to talk about. One Inch, the Deft aggregator, which is across many, many networks, is coming in into the world of hardware wallets. So a little, little turn of development here. A cool, spiffy new hardware wallet, expected to go on sale later this year. No buttons, it's a touchscreen. It's one of those e-ink grayscale touch displays. The whole entire thing looks like a screen. So 2.7 inch screen, touchscreen, no buttons, grayscale screen. Looks kind of like a size of a credit card-ish. Cool. One Inch coming into the hardware world of hardware wallets. Also coming out is this thing called DEN, which is something that's built on top of Gnosis Safe. And so I think what this really is, is just like a UX layer on top of Gnosis Safe,

• 58:03David Hoffman?

  which can be kind of clunky if you're not used to it. But DEN is a brand new way to access Gnosis Safe. They're working with over 180 teams, they said, and secured over $80 million. And so a new layer on top of DEN. And also coming out of an integration between Mean Finance and Aztec. Mean as in the average, not mean as in the emotion, but average. Mean Finance. This was actually raised in the Bankless Nation Discord because somebody was asking for a way to do on-chain dollar cost averaging. That is the simple way to explain what Mean Finance is. If you have stable coins or assets and you just want to have this system do auto DCE for you, Mean Finance is where it's at. They are doing a connection, integration with Aztec Network. Aztec is a zero-knowledge rollup.

• 58:47David Hoffman?

  It's actually a zero-knowledge, zero-knowledge rollup. So one layer of zero-knowledge recursions. That's how they get extra scale and also privacy, which has let Mean Finance do some extra cool new features, like flexible swap periods, privacy, gases trading and.

• 59:02Ryan Sean Adams?

  This is actually, actually private DeFi.

• 59:05David Hoffman?

  Private DeFi, private DCE.

• 59:07Ryan Sean Adams?

  Money market. Pretty cool here.

• 59:09David Hoffman?

  So cool new stuff to try out in the world of Ethereum.

• 59:12Ryan Sean Adams?

  I also have some raises this week, David, a few that are notable. The first is Diva, just closes a $3.1 million seed investment. This is another $3.5 million seed investment. This is another distributed liquid staking protocol. So up there, try to compete with Lido and Rocketpool. And just note, David and I are angel investors in this one. Very supportive of decentralized staking protocols. Anything else?

• 59:38David Hoffman?

  This one's unique, though, in that it is coming with the V T right out of the gate. This is what really attracted me to it is like they were emphasizing distributed validator technology right out of the gate. And so what is distributed validator technology? It's you and a bunch of buddies can come together and create a virtual node with all of your computers that make sure that the node is always online, online without any risk of redundant signing. So that's why, that's why I really like that one. Obel Labs, Obel raised $12.5 million in a Series A led by Pantera. Obel is the pioneer of D V T. So Diva is using D V T. Obel has been pioneering D V D for many, many, many protocols to use. I guess this is a D V T raise week this week, but Obel is just announcing their Series

• 1:00:23David Hoffman?

  A for raised $12.5 million undisclosed valuation. But also disclaimer, mine, I are also investors in Obel Labs in their seed round because, again, D V T gets me hot and bothered.

• 1:00:36Ryan Sean Adams?

  Also on the raise list this week, Flashbots is seeking a $50 million investment at a billion dollar valuation. It's a pretty steep valuation for the bear market, but Flashbots is just, I mean, they pretty much own the M E V market share on Ethereum right now. And maybe it's worth that to some investors.

• 1:00:54David Hoffman?

  Yeah, plus there's a bunch of just absolute giga brains at Flashbots. So it's definitely some exposure to some frontier level thinkers.

• 1:01:03Ryan Sean Adams?

  Last one, David. This is a sleep to earn protocol called sleep agachi?

• 1:01:10David Hoffman?

  Sleep agachi!

• 1:01:11Ryan Sean Adams?

  For your sleepy, you get paid while you sleep? Is this the idea?

• 1:01:14David Hoffman?

  I don't know. The title here is 3.5 seed round to continue building a mobile application with gamification to improve sleep health. Social elements and gamification for sleep health. I think the sleep to earn is not the official branding, but that is what is like kind of what you get when you read through the lines.

• 1:01:34Ryan Sean Adams?

  Sleep to earn.

• 1:01:34David Hoffman?

  Sleep to earn.

• 1:01:36Ryan Sean Adams?

  Whatever happened to just work to earn? Remember those days? I don't know why we need a Ponzi game for every single thing?

• 1:01:43David Hoffman?

  I mean, I feel like when I do get good sleep, I feel rewarded because of how good that that feels.

• 1:01:48Ryan Sean Adams?

  I can earn tokens.

• 1:01:49David Hoffman?

  I don't know if you need to add money on top of that, but hey, if you can.

• 1:01:52Ryan Sean Adams?

  Sleep better.

• 1:01:52David Hoffman?

  Yeah. Turn all of my behaviors into financial assets. That's good.

• 1:01:57Ryan Sean Adams?

  I guess that's crypto.

• 1:01:58David Hoffman?

  When coffee to earn, if you are doing a coffee to earn investment, I want you to DM me. We'll talk about that every single weekly rollout. Coffee, drink your coffee to earn, you know?

• 1:02:08Ryan Sean Adams?

  And get coffee reward points.

• 1:02:10David Hoffman?

  It's coffee agachi.

• 1:02:10Ryan Sean Adams?

  The more we talk about it.

• 1:02:12David Hoffman?

  Ryan, I've got a new venture I might want to go explore.

• 1:02:14Ryan Sean Adams?

  All we need is Suzu and Kyle Davies to be leads on this. Also, we have some questions from the nation coming up. David, we also have a meetup coming up at ETH Denver. So ETH Denver happens in February, and there is going to be a meetup of the Bankless Nation. So what's going to be happening at this event? And who can attend?

• 1:02:33David Hoffman?

  Yeah, so we got a nice little brewery that we've reserved for three hours, four to seven, on a day that is disclosed inside of the Bankless Nation Discord. So again, if you are a Bankless Nation citizen, there are details in the Bankless Nation Discord for our meetup. Free beer, free beer. Yeah. Yeah. And there's going to be a stage. We're going to figure out how to do some sort of show, maybe a Q and A session. I don't really know. But beer and content, beer and content. Who doesn't like that?

• 1:03:01Ryan Sean Adams?

  Live.

• 1:03:03David Hoffman?

  Yeah, live, live content. Yeah. So if you are a member of the Bankless Nation, definitely don't miss that if you want to go. And if you're going to go to ETH Denver, definitely come hang out with us because we're going to all hang out in real life and drink beer. David's going to get, David's going to get loose.

• 1:03:16Ryan Sean Adams?

  Uh oh. This will not be recorded then. We know that for sure. It's a, you know, unrecorded cut. All right. Question from the nation, David.

• 1:03:25David Hoffman?

  Yeah.

• 1:03:25Ryan Sean Adams?

  We've got a few. What's the, the first one here? Who are we looking at?

• 1:03:28David Hoffman?

  Yeah, this is Spartan Solutions, of course, who's got, I think, the best PFP inside of the Bankless Nation Discord. I saw somewhere, someone explaining that the ETH deflationary threshold isn't set, isn't a set gas fee, but changes with the amount of validators there are on the network. Is that correct? And that is correct. That is correct. And so I'm actually going to take this moment to show the article that's coming out next week. I haven't finished the title, but there are two charts in this title that will, in this article, that will show you, if you keep on scrolling down, that will show you the actual issuance curve of Ether. And so this is the amount of Ether that is issued versus with the total amount of ETH staked on the horizontal axis. So when there is more Ether staked, issuance goes up.

• 1:04:13David Hoffman?

  And so the more Ether that is staked to the network, the higher the gas fee is, it's needed to become ultrasound because there's more issuance. And so that is the answer. That's not a fixed number. As more Ether is staked, more, higher gas fees are needed in order to be net deflationary.

• 1:04:29Ryan Sean Adams?

  Interesting. These are good charts. Where'd you get these charts?

• 1:04:32David Hoffman?

  That is from Colin Myers, who is actually the founder of Obol.

• 1:04:36Ryan Sean Adams?

  Ah, very cool. Yeah, that's, I'm looking forward to that post, David. I haven't, I haven't read that yet. Here's another question from Luke Ethwacker. Why does Bankless measure whether ETH is deflationary, a deflationary asset against the supply that existed at the merge? He's right, we do do that. In fact, we just did that in the market section. Shouldn't we analyze whether it is deflationary in comparison to its peak supply? According to ultrasound.money, peak supply happened on October 7, 2022, and ETH has been deflationary, therefore, and therefore, in my mind, an ultrasound asset since then. So I think he's making the point that, hey, the entire last quarter ETH has basically been deflationary. But whenever I see you guys talk about it, you're always pointing to this ultrasound money chart,

• 1:05:20Ryan Sean Adams?

  which, you know, there's, there's a dial on this where you can see, like even this, this is since merge, ETH supply since merge. And that's what ETH, Luke Ethwacker is asking.

• 1:05:31David Hoffman?

  Yeah, so this is unpacking, revealing the dirty little secret of ultrasound money is that it's actually not clearly defined what it is. So is Ether has been ultrasound since, depending like Ether has been deflationary since the merge.

• 1:05:46Ryan Sean Adams?

  Yeah, you can pick a date.

• 1:05:47David Hoffman?

  You can pick a date, right? And actually, like, this specific supply of Ether at the day of the merge is just an arbitrary number. That doesn't really mean anything. I think there's a number of different ways to define ultrasound. I think the correct way to define what ultrasound money is, is the theoretically maximum amount of supply reduction that is safe for a crypto economic protocol, which is a mouthful of a definition. But even when Ether inflates, as in when the supply is going up, under that definition, it's still ultrasound because Ether, between the combination of EIP1559 and proof of stake, is the theoretically maximum amount of supply reduction that you could get in that environment, even though it is still inflating.

• 1:06:32Ryan Sean Adams?

  Well, I think you can measure on time periods too, though, right? To his point, this is just arbitrarily ETH to supply. But at the beginning of the episode, we also talked about ETH supply in Q4 of last year, 2022. And it was deflationary by negative 0.004% actually. So in that time period, it was deflationary. I think the ETH supply since the merge date will become less relevant over time. It still might be a factor, but it still happened relatively quickly. We might start looking at this on the monthly, quarterly, and annual basis instead.

• 1:07:05David Hoffman?

  I think that's right. But yeah, the interaction between the words deflationary and ultrasound is like an unknown science that we're just kind of loosely talking about.

• 1:07:14Ryan Sean Adams?

  Oh, you're saying we're making this up as we go?

• 1:07:16David Hoffman?

  Absolutely, dude.

• 1:07:17Ryan Sean Adams?

  That's how all language and all memes work, actually, at the basement level.

• 1:07:22David Hoffman?

  Breaking bankless is making it up as they go.

• 1:07:27Ryan Sean Adams?

  Here's another take from Necrosis, or a question, rather. "I see a lot of fud about L2s being very centralized. How centralized are Layer 2s? And what are their plans to become more decentralized and trustless as they grow?" This was asked in the Bankless Discord, of course. What's your answer for Necrosis here?

• 1:07:44David Hoffman?

  Yeah, so this is a very good question. How centralized Layer 2s are, it's not an easy thing to say in one sentence, but you are on the mark that Layer 2s have various degrees of centralization. Many Layer 2s are just a multi-sig. Arbitrum and Optimism are just multi-sigs. I believe that's true. But there are other things as well to increase the security of these things. And Vitalik, actually, at Rollup Day in Bogota, did a talk on this. And so, yes, to say Layer 2 rollups are decently centralized in their current form today. We do have the path to un-centralize them, to decentralize them. And Vitalik talks about that in this video that I've linked.

• 1:08:27David Hoffman?

  Timestamp the link in the show notes if you want to get that question answered. The TLDR is there are multiple layers of redundancy that are able to be built, where you could have a multi-sig, but you could also have the actual fraud proof. We're worried about fraud proofs and bugs, and so we need to have a multi-sig. Like, there's a bunch of nuances there. It's not enough to go into, but if you want to learn more about this topic, there is a Vitalik talk in the show notes.

• 1:08:51Ryan Sean Adams?

  And Layer 2B is doing a great job covering this, right? They have the level of centralization, the decentralization of each of these Layer 2s. And I think the point that Vitalik is making in his presentation today is that almost all rollups are still on training wheels. But the idea of training wheels is, training wheels can be taken off, and then it's a real bike, a real decentralized rollup. If you're a sidechain, you're always gonna have those training wheels. It's not even training wheels. Like, you are training wheels, or you're a tricycle. You're not even a bike. You're something else. So that is the point. And I don't know the timeline on some of these things, but...

• 1:09:31David Hoffman?

  Every single Layer 2's got their own timeline, yeah. They're all in the race.

• 1:09:34Ryan Sean Adams?

  Exactly.

• 1:09:35David Hoffman?

  They love to fight about how far they are in the race, though. That is, that's true.

• 1:09:38Ryan Sean Adams?

  Let them fight.

• 1:09:39David Hoffman?

  They love fighting about that, yeah.

• 1:09:40Ryan Sean Adams?

  More decentralization is better. David, let's get to some takes. Here's one from Ryan Selkis. He's talking about Gensler, our favorite, our star of this episode. Gensler attacked Coinbase. He cozied up to SBF, biggest fraud since Madoff, spit in the face of retail investors by rejecting spot ETFs, and spent more time finding bankrupt entities and Kardashians than fixing problems. He's a crooked cop on the beat, not a public servant. Ryan Salk is always dropping the fire on Gensler.

• 1:10:08David Hoffman?

  Love it.

• 1:10:09Ryan Sean Adams?

  He's been doing it for a long time. I don't know. Like, this is the, probably the most critical interpretation of what Gensler's doing. But David, I honestly, given the actions, I can't say he's wrong about this.

• 1:10:20David Hoffman?

  He's super right. Yeah, I really wouldn't want to drive the point home. Gensler attacked Coinbase. Coinbase had their own version of Gemini earn, which was not going to get plugged into Genesis. It was going to be their own yield source. It was going to be native to them. And the SEC says, if you guys ship this product, we're going to sue you for, for selling unregistered securities. And then Coinbase was like, oh, scared, not going to offer that. And so we had the safe, we had the safe outcome and the SEC was like, no, you can't have that. And then, it's so dumb, dude.

• 1:10:51Ryan Sean Adams?

  Do you know that movie, The Departed? Have you ever seen that with like Leonardo DiCaprio and everyone? Do you know how it's like, there really were no good guys in that movie? It's like all the cops were bad too. It's like, not to say that crypto doesn't have its share of bad guys and villains. It totally does.

• 1:11:05David Hoffman?

  Right.

• 1:11:05Ryan Sean Adams?

  But that also doesn't mean all of the cops trying to kind of regulate this industry are good and doing the right thing. I think we have some bad guys in, in those circles as well. Here's another take. What's this one from Voorhees?

• 1:11:18David Hoffman?

  Eric Voorhees says, "Wild West is not a term of disparagement, but the embracing of the frontier and a celebration of permissionless individualism." God, all of those words just, yeah, warm my soul, warm my soul. Yeah, so I gave this a retweet because I wanted to add, this was, this was hot on the heels of Gary Gensler calling crypto a Wild West, right?

• 1:11:39Ryan Sean Adams?

  Oh, he said that again?

• 1:11:41David Hoffman?

  Yeah, he says that crypto is a Wild West that needs to get reined in. So Eric Voorhees tweeted that. I retweeted Eric Voorhees and I say, I'm in crypto because it's the Wild West. That's why I'm here. Gary Gensler's labeling of crypto as a Wild West that needs to be. Be reined in is the same mindset that motivated frontiersmen to go west in the first place to get free from tyranny and oppression. So like the irony here is that Gary Gensler is the dude that motivated people to go west in the first place. That's why we're doing this. That's why we're doing this.

• 1:12:11Ryan Sean Adams?

  The frontier. It's not for everyone, but we're headed west.

• 1:12:14David Hoffman?

  That's definitely for me.

• 1:12:17Ryan Sean Adams?

  From inception. Yeah, I agree with that. Before he sees it too. Suzy, how to take this week? I'm gonna read out that take. Owning crypto in cold storage when done properly is one of the most anti fragile financial acts one can take. Trading crypto aggressively is one of the most fragile financial acts one can take. He would know. I've learned the hard way, as many others have this past cycle. Stay humble and stack stats, baby. Just stay humble and stack stats.

• 1:12:44David Hoffman?

  Humble. I mean, this is just a Suzy take that is

• 1:12:48Ryan Sean Adams?

  It was celebrated. Look at all these likes, David.

• 1:12:50David Hoffman?

  Yeah, yeah. Okay. But the only reason why we're putting this take in here is because of a prediction that was made by Eric Wall, where Suzy and Kyle Davies miraculously become influential Bitcoin maximalists. I did not expect this to happen this quickly, but this is that. This is this is that. And so Hunter

• 1:13:07Ryan Sean Adams?

  Psyops works. Like, he's not wrong in this take, but he's obviously playing an influential game. Why is anyone listening to this guy right now?

• 1:13:16David Hoffman?

  Right. Well, Bitcoiners are listening to them, to him, because he's saying the Bitcoiner words. He's saying stay humble, stack chat stats. And the Bitcoiners like, yeah, those are our words.

• 1:13:24Ryan Sean Adams?

  So if you say the thing the tribe wants you to in social media, the tribe will celebrate you no matter why, the reason that you're saying them, or if you actually believe them. So then you can just manipulate the mob by saying things that the mob likes to hear? Is that what you're telling me?

• 1:13:38David Hoffman?

  Yeah, that's right.

• 1:13:39Ryan Sean Adams?

  Well, that really sucks, David.

• 1:13:41David Hoffman?

  Anyways, let's burn a bunch of ether, right, Ryan?

• 1:13:45Ryan Sean Adams?

  I mean, like, geez, if we reprob up these influencers again as influencers, like, we almost deserve it, don't we? This is your take. I'm going to read it out. Bitcoin will hit its supply cap in the year 2140. That's when issuance finally goes out, right?

• 1:14:01David Hoffman?

  Yep.

• 1:14:01Ryan Sean Adams?

  It approaches zero and it kind of hits zero, I guess, at that point. The ETH supply hit its cap last year. Wow. Tell me about that. First of all, justify that. Explain that one. How's that work?

• 1:14:15David Hoffman?

  Yeah, so there's a prediction. There's a claim being made here, but the Bitcoin supply, we know the Bitcoin supply curve around 2140, it will stop issuing Bitcoin and it will be

• 1:14:25Ryan Sean Adams?

  That's the year.

• 1:14:26David Hoffman?

  That's the year, 2140. In 120 years, roughly, in 120 years, zero more Bitcoin will be issued. And then I follow up and say the supply cap for Ether hit its cap last year, which I'm claiming is like the supply of Ether is down only because now it's ultrasound. That in theory could not be true. We could technically stop having so much gas fees and then and then we would issue more, but I'm claiming that that's not going to happen. But I'm saying, let's contrast these things. Bitcoin supply stops inflating in the year 2140. Ether supply stopped inflating last year. That was my spicy take of the week.

• 1:15:00Ryan Sean Adams?

  Wow. You might be wrong a little bit on that, like in that maybe it peaks this year, but like I think you'll be mostly right.

• 1:15:10David Hoffman?

  Yeah.

• 1:15:11Ryan Sean Adams?

  Which is like the thesis of-

• 1:15:12David Hoffman?

  I'm placing money on that I'm right.

• 1:15:14Ryan Sean Adams?

  And so that means about 120 million. So that means what you're saying is Ether will never hit 121 million in terms of supply.

• 1:15:22David Hoffman?

  Well, yeah, I mean, go up to the peak of issuance right after the merge, like whatever that peak is. I'm saying that supply of Ether will not be greater than 120,533,000, which is this peak, which happened, hit last year.

• 1:15:33Ryan Sean Adams?

  That's a very precise estimate.

• 1:15:35David Hoffman?

  Yeah, exactly. And I've got like 15,000 Ether, yeah, 15,000 Ether of Wiggle Room. So we need to not issue 15,000 Ether and I will be right.

• 1:15:46Ryan Sean Adams?

  There you go.

• 1:15:47David Hoffman?

  From this point, from this moment.

• 1:15:49Ryan Sean Adams?

  Tell me what you're bullish on, and it can't be ETH.

• 1:15:53David Hoffman?

  I'm bullish on an article about Ether.

• 1:15:57Ryan Sean Adams?

  So is he, that guy.

• 1:15:59David Hoffman?

  And so I've got an article that's going out a week from today, which is Thursday for Bankless listeners.

• 1:16:06Ryan Sean Adams?

  You were just teasing that same article, right?

• 1:16:08David Hoffman?

  I'm teasing, we teased the article, and so you can start to like read a little bit about it. But it goes out next week. I was just hit with a whiff of inspiration this last weekend, and I just banged out an article. And I was, I'm actually pretty proud of it. It's about how Ethereum automatically balances itself. Gas fees, the ETH stake rate, this is a self, this is a loop of signaling that allows the Ethereum economy to self-manage itself. And what is the process? What is the project of crypto economics? It's about making self-governing financial systems. And so there is a system that has been created between gas fees, between the ETH stake rate, between the supply of staked ETH,

• 1:16:45David Hoffman?

  the heat of the DeFi economy, and all of these things create an equilibrium that allows Ethereum to induce economic activity during cold seasons and pull back economic activity when things get too hot. And it does it automatically, where the Fed tries and does this manually, Ethereum does this automatically. And the thing about the Fed is that this Fed is actually its own source of chaos. And so the Fed is trying to maintain stability in the economy, but then the economy is looking at the Fed and being like, "Ooh, they're raising interest rates, trade, trade, trade." And so like the Fed is actually a source of chaos into the system. Ethereum does not have that source of chaos, and so it is a magically auto-balancing financial system.

• 1:17:26David Hoffman?

  That article comes out on Thursday next week, along with a video as well, if you are a video-minded person. And then inside of the Bankless Nation, there's going to be a Q and A session, discussion, a book club, if you, if you will, for anyone that has any questions. So that will happen on Friday, a week from the time you are listening to this, at 3:00 PM Eastern. I'll go into the little watercooler video voice chat inside of the Bankless Nation Discord, and we'll have a little Q and A. So if you read this article and you want to ask questions and talk about it and unpack it a little bit more with me, I will be there on Friday, 3:00 PM Eastern Time. So I will see you there.

• 1:17:59Ryan Sean Adams?

  It really is an algorithmic monetary policy, which is kind of cool. And also what Bitcoin has promised from inception. Except Bitcoin does not have a balanced algorithm.

• 1:18:08David Hoffman?

  It's too fragile.

• 1:18:09Ryan Sean Adams?

  In other words, yeah, supply decreases and then security goes out the window. I mean, transactions, like if Bitcoin was solely dependent on transaction fees. I saw the stat the other day, it'd be about $2.5 million in Bitcoin security spent per day. The cost of attack is just like miniscule in the millions of dollars, just not sustainable. And yeah, I think that's still a much underappreciated aspect of Ethereum and the Ethereum economy.

• 1:18:40David Hoffman?

  Well, that's what I'm bullish on, right? What are you bullish on?

• 1:18:43Ryan Sean Adams?

  Another underappreciated aspect of what we're doing here in crypto and Ethereum economy, and that is new frontiers. And really, the inspiration for this, David, was that episode we had with Arbitrum, where it's my first time to really talk to some of the participants in the Arbitrum community. That was an episode that came out earlier this week. If you want to learn about Arbitrum, what people are doing, go check that out. And I guess I had two observations under the kind of this motif of new frontiers. The first is this allows for much more diversity, like rather than monocultures. So what I was struck with is the Arbitrum community is so very, very different from Ethereum mainnet and from the application ecosystems and players on Ethereum mainnet. And I know we're going to talk to optimism in the coming weeks, that community and Polygon as well.

• 1:19:28Ryan Sean Adams?

  I think optimism is going to be more different still. And like Polygon, that's a whole nother variation. It reminds me, before crypto, David, believe it or not, I used to travel a lot, like a whole lot. And I've probably visited almost every, every state in the US, at least the continental US.

• 1:19:45David Hoffman?

  Sounds awful.

• 1:19:47Ryan Sean Adams?

  Yeah, it was, it was a lot of travel, but you get like airports and that sort of thing. But you have the ability to kind of experience each state in the US. And you realize how diverse the US actually is. Like, you know, going to somewhere like Alabama is much different than going to somewhere like, Washington State, you know, it's two totally different experiences of the US. Which is very different from New York and there's a different feeling in the West Coast versus the East Coast versus the Midwest. And so culturally, it's different. There are also different laws for every, every kind of state and every geography. But it's interesting because somehow this diverse set of jurisdictions and states, as they're called with borders,

• 1:20:29Ryan Sean Adams?

  all works, right? Because they have the same set of shared values. What makes them American? If you, if you go down to kind of the shared values as, you know, that the founders kind of put together, it's in the constitution, a decentralized protocol, right?

• 1:20:41David Hoffman?

  Layer one protocol.

• 1:20:42Ryan Sean Adams?

  Yeah. And that's what's so cool is what I'm seeing in Arbitrum is it's not similar, it's not the same as Ethereum, but it's kind of an echo of the value system, yet it's its own independent culture and set of applications and also set of new frontiers too. Like we've just opened up in layer two, these vast new lands to basically settle. And so entrepreneurs can go out there and set, build new things. Users can go out there and use new products. Governors can go out there and kind of figure out how to govern these ecosystems as well. And yet it's, it's somewhat like the United States as well, which is like this shared experiment of all of these different states, right?

• 1:21:25Ryan Sean Adams?

  Where if one state develops an innovation, it can pass it on to another state and they all sort of level up together. And so

• 1:21:32David Hoffman?

  Leveling up together while retaining their cultural differences.

• 1:21:34Ryan Sean Adams?

  Yeah, exactly. So if the Arbitrum community, you know, game five really takes off there, let's say, and sort of treasury ecosystem, they develop some sort of groundbreaking wallet type application that is super easy to use, that can be exported to every other state, every other layer two in Ethereum. It's just so exciting to me to see all of this come together and to realize, here's, here's the net of it is to realize we are just like not even 1% through this journey here. Like I was almost, you know, part of me was sort of in lack of imagination really is just like, oh, the set of applications that we have in Ethereum in 2019 and 2020, they are going to be the Like the big pockets of of culture and inspiration for Ethereum. No, like there's going

• 1:22:16Ryan Sean Adams?

  to be all of this innovation across all of these layer twos, and we are just getting started. And so that means there's a far more opportunity. Ninety nine percent of the opportunity is still ahead of us in the crypto economy, and we're just like a few steps on that on that road. So new frontiers is what's really exciting to me. And seeing these layer twos blossom is really nailed that home for me.

• 1:22:38David Hoffman?

  Yeah, I think the angle you're really touching on is like the social scalability of the layer two system, which is like, what's what's your vibe? Are you like, does Arbitrum fit your vibe? Or does optimism fit your vibe? Like, what vibe do you want? Because there's a layer two for you. Like, are you trying to like reorchestrate like human governance and create like a new digital like digital state? Because that's what optimism is trying to do with their two tier token model. Are you in the big world of DeFi and gaming? Because that's what that's what Arbitrum is all about. Like, what do you want on Polygon? You got Magic Eden over there and like Abagachi. So like, what's your vibe? Because we got a layer two for you. And the cool thing is, this is also true outside of crypto, because the cultural differences are all across the alt layer ones. But when you do the same thing,

• 1:23:22David Hoffman?

  the social scalability on Ethereum, like you're all in the same ecosystem. So you have composable communities, because you can exist both on Arbitrum and on optimism at the same time. And you can't do that on the layer ones. And so this is all about like social scalability. Like, how can the layer two ecosystem map on to the values and cultures that we find out in the real world?

• 1:23:40Ryan Sean Adams?

  Yeah, it's it's really cool. And it's, I think, one of the most exciting times to be in crypto, honestly, is January 2023, because we're just, we're just starting this journey. All right, David, we got one meme of the week. It's a powerful meme. What are we looking at here?

• 1:23:55David Hoffman?

  This is Cyrus Unesi. This is the meme. It's kind of an esoteric meme of the two people at the gate lowering or raising the gates. One guy says to the other, rampant money printing caused the worst inflation in 40 years. Raise the interest rates. And then the next panel is, the government is going to default on debt this Thursday. Lower the interest rates. And then following, eggs are $12 a carton. Raise the interest rates just a little bit. Just a little bit.

• 1:24:21Ryan Sean Adams?

  I love the image of it's just like one guy through raw human strength, just like cranking this thing. And it's, it's just medieval, and it kind of doesn't work, and it's non automated. That's, that's really what's happening right now with the economy, isn't it?

• 1:24:33David Hoffman?

  Exactly. Sadly, no, no moment of Zen this week.

• 1:24:36Ryan Sean Adams?

  Well, we got to end it there, guys. We will end with our usual risks and disclaimers, of course. And just to remind you, crypto is risky. We always say that at the end of every Bankless episode. You could definitely 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.

• 1:24:54David Hoffman?

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

• 1:25:39David Hoffman?

  fantastic content. Thanks, everyone, for watching and being on the journey as we build out the Bankless Nation.