ROLLUP: The ETH Issuance War | $130M Coldcard Exploit | Saylor Sells Again | Uniswap Launchpad

Ethereum’s monetary policy is suddenly up for debate. Ryan and David unpack the issuance fight dividing researchers and DeFi builders, the Coldcard exploit that hit users who “did everything right,” Saylor’s latest Bitcoin sale, and markets ripping back to all-time highs. --- 📣SPOTIFY PREMIUM RSS FEED | USE CODE: SPOTIFY24 https://bankless.cc/spotify-premium --- BANKLESS SPONSOR TOOLS: 🔓NEAR | TRADE CONFIDENTIALLY, GET 20% BACK https://bankless.cc/near-pod 🔑BITKEY | GET 10% OFF USE CODE: BANKLESS | #bitkeypartner https://bankless.cc/bitkey ✈️COINBASE ONE CARD | EARN 5% BACK IN BITCOIN https://bankless.cc/coinbase-one-card 📊BITGET | TOKENIZED STOCKS 2.0 https://bankless.cc/bitget-stocks 🎯THE DEFI REPORT | ONCHAIN INSIGHTS https://thedefireport.io/bankless --- TIMESTAMPS 0:00 Intro 0:25 Markets, AI, and Bitcoin https://x.com/bulltheoryio/status/2084634593836372202 https://www.vanityfair.com/story/anthropic-situational-awareness-wedding 6:31 Saylor’s Bitcoin Selloff https://x.com/hedgeye/status/2084278278794117372 https://x.com/zerohedge/status/2084247862833971631 https://x.com/saylor/status/2084315637715763579 18:00 Ethereum Issuance Fight https://x.com/zoomerfied/status/2084641592615256254 https://x.com/jdetychey/status/2084638778677751889 https://issuance.wtf/ https://x.com/TrustlessState/status/2084685295484633349 https://x.com/StaniKulechov/status/2084925768711213105 https://x.com/StaniKulechov/status/2084667208668467574 https://x.com/DCinvestor/status/2084971858311438688 https://x.com/MikeSilagadze/status/2084703078909907000 39:59 Coldcard Wallet Drain https://x.com/itscoachgoodman/status/2083527082223563157 https://techcrunch.com/2026/08/04/hackers-steal-over-130-million-by-exploiting-bug-in-offline-hardware-wallets/ https://www.coindesk.com/tech/2026/08/05/coldcard-exploit-could-boost-demand-for-regulated-bitcoin-exposure-analysts-say https://thedefiant.io/news/hacks/i-did-everything-right-coldcard-victims-recount-losing-life-savings https://x.com/EpsilonTheory/status/2083642741075124680 https://x.com/lopp/status/2083575437599371321 https://x.com/AriDavidPaul/status/2083591462726361235 https://x.com/PeterMcCormack/status/2083631731052290261 52:00 Uniswap, Clarity, and Crypto Updates https://x.com/Uniswap/status/2084678603812274275 https://polymarket.com/event/clarity-act-signed-into-law-in-2026/clarity-act-signed-into-law-in-2026 https://www.coindesk.com/policy/2026/07/27/u-s-senate-puts-off-crypto-clarity-act-for-now-as-it-focuses-limited-bandwidth-elsewhere https://x.com/Cloudflare/status/2084648084131242402 https://x.com/NEARProtocol/status/2082879865385062520 https://x.com/zerohedge/status/2084614210118426971 https://x.com/arc/status/2084993791413678099 --- Not financial or tax advice. See our investment disclosures here: https://www.bankless.com/disclosures

• 0:04Speaker 00

  Bankless Nation, it's the first week of August and it's time for the Bankless Weekly Rollup. We've got some topics of the week coming your way. The ETH issuance war, we got another debate about an EIP in Ethereum lands. This one's different in the sense that it talks about Ether as money. So everyone has an opinion on it, including me and Ryan.

• 0:24Speaker 01

  David, yeah, I want to find out your opinion because we haven't discussed this yet. But I know, I think it was like three weeks ago when we heard rumor that this was on the horizon. You said to me, you were excited for the drama. So my friend, you got some drama, all right? You got some discussion about this and I want to get your take.

• 0:47Speaker 00

  Yeah, it's basically the ETH researchers versus the app layer, which usually you don't get such a clean line dividing this drama. But that's what we got. So we're going to talk about that. We're also going to talk about the cold card exploit. So over a hundred million dollars of Bitcoin drained from what was thought to be very safe and secure Bitcoin cold storage. Everyone, the common line was that everyone did everything right. And yet the Bitcoin got yanked. We're going to talk about how that happened and what is happening as a result of that over in Bitcoin land. Talking about the stock market, S and P and Dow Jones and the indices hitting all time highs when there was blood on the streets last week. Dude, wild.

• 1:30Speaker 01

  Yeah, what?

• 1:31Speaker 00

  Wild, what? Apparently you can have an all time high in the stock market at any time, no matter what happened the day or a week prior.

• 1:40Speaker 01

  Yeah, it was real buy the dip week. Also, we got to talk about Sailor. He sold some Bitcoin again, and he explained himself this time. He said, I speak as one saver to another. What was he talking about? We'll discuss that as well. Let's start actually, David, with the stock market all time high. This is the S and P, so it's not the NASDAQ. S and P, what, had been off in July, like 5%, 6%. I know NASDAQ was down about 10%, something like this. And we got what looks to be in the first week of August, a V-shaped recovery out of that hole. And now S and P is all time high. NASDAQ has not quite hit it, but like, can you explain that? What happened?

• 2:22Speaker 00

  I don't know, man. I'm sharing my screen and you can see the candle. The candle's big. Like we had that gargantuan rise out of the bottom of the Iran war with three massive candles that brought up the S and P up 11% across like 20 days. The candle looks like that. It is a, the weekly candle in the S and P is a 3% candle that brought it from 7,500 all the way up to the tippy top, almost 7,800. We're down a little bit at the time of recording, but just like a gargantuan like recovery out from like where the S and P was down 3.5% off of its highs. And then it rocketed up 6% or 7% in a very short amount of time.

• 3:05Speaker 00

  And this was all on the backs of Leopold from situational awareness, getting liquidated right at the bottom. So he must have been the absolute Pico bottom because he had a pretty decent fund that had a lot of the assets that had just made incredible gains. And forced seller at the bottom. And then, and then I think, I think maybe that gave the market the confidence it needed to just hit the, hit the buy button because the game's not over. And Citadel was stepping in like, that's my read.

• 3:37Speaker 01

  It does seem like confirmation that at least the market thinks the game is not over for AI and the AI trade continues. I mean, this is even more stark if you look at NASDAQ, right? Kind of that V-shaped recovery. It almost looks like Ashen Brenner got margin called, he got carried out, he got liquidated here. And then once his positions were liquidated, the market recovered. And so it's like, it almost looked like it was targeted to take him out. And then like the market spins back on the other side of things. Now, last week, we weren't sure if he was like out, out, you know, Thero's capital style hedge fund is kind of like deleted. They are underwater. Apparently this was still a flesh wound.

• 4:20Speaker 01

  It took a pretty large chunk out of his fund. So he is down 67% in July, but David, still up big on the year. Okay, this fund was outperforming, doing incredible work earlier this year. It's been an absolute superstar fund. It had a rough month, but did not completely collapse under the weight of this liquidation. The fund went from 20 to 30 billion dollar peak to about eight to 10 billion remaining. Most of that in privates, a lot of the public positions were sold off and liquidated as a result of this. So he's still around, he's still fighting, and it looks like the market has just recovered from this large liquidation.

• 5:05Speaker 00

  He was reportedly on 400% leverage, which, yeah, like you get liquidated. You get liquidated at that number.

• 5:15Speaker 01

  Didn't you tell me he was at his wedding when this happened?

• 5:18Speaker 00

  So he was, I think, I think it was the day. So there's a Vanity Fair article, there's a bunch of articles titled, "How to elude billions and gain a wife in two days." Whether or not he was like in his tuxedo, like, you know, like ready to walk up to the altar. I don't know the timing of that, but like it was inside of that window of opportunity where he was getting liquidated and had to get on the phone with Citadel's Ken Griffin to bail him out. Not bail him out, but just like buy his bags. But yes.

• 5:55Speaker 01

  Sorry for the grandkids.

• 5:56Speaker 00

  Sorry, not the best codedness of that memory, I think, for his future, but like, whatever. Ultimately, his fund is still up 80% on the year. So it's still one of the best performing funds in a while, but you'd have to be a little.

• 6:11Speaker 01

  Better than crypto assets.

• 6:12Speaker 00

  Better than crypto assets. As an LP, you would have to at least be like, at best, mixed feelings because you were previously up like 5X, 6X on your money. And now you're up 80%. And so you're still doing very well, but.

• 6:28Speaker 01

  Yeah.

• 6:28Speaker 00

  You were doing really well a second ago.

• 6:31Speaker 01

  Yeah, but it's also just sort of the risk management wasn't there, right? I mean, this was quite a cascading collapse. So I mean, LP's got to be a little shaken, little rattled. But the FOMO is back in, the AI trade continues. How about our friend, Michael Saylor over at Strategy? He sold some Bitcoin on the week. What was that about?

• 6:50Speaker 00

  Yeah, so we have like, I think, three main instances of Sailor selling Bitcoin. The first one where he sold 32 Bitcoin, collapsed for the Bitcoin price by like $18,000. The next sell of Bitcoin, I can't remember the numbers, but it was much more than 32. It was like in the hundreds, maybe a couple hundred Bitcoin.

• 7:11Speaker 01

  Yeah, that's right.

• 7:12Speaker 00

  And Bitcoin was like flat or like even marginally up on the week. This week, MicroStrategy announced that it sold 1,638 Bitcoin worth 105 million. And Bitcoin jumps from 62,000 to 63,500. So Bitcoin up on the week. Ryan, I'm bullish about this news. I'm bullish about this news.

• 7:36Speaker 01

  Wait, why?

• 7:38Speaker 00

  Michael Saylor, the number one holder of Bitcoin, selling over 1,000 and a half Bitcoin and Bitcoin goes up? This, the bull case for me is that Michael Saylor needs to be removed from the market as a key man risk to Bitcoin price. And when he is selling 105 million dollars of Bitcoin and the Bitcoin market doesn't care and actually goes up, it's like, oh, you, and like the market no longer cares about you. You're free to like move to the background as like the main marginal pricer of Bitcoin.

• 8:14Speaker 01

  Yeah, I think that's true. He's no longer the main character of Bitcoin price action, which is probably healthy because the market, I think, when he sold the 32 Bitcoin priced all of these future sales in basically.

• 8:25Speaker 00

  Totally.

• 8:26Speaker 01

  And now, right now, the market outlook on what Strategy is going to do is it's going to be a graceful unwind process of some of this leverage. It's not going to be chaos, it's not going to be cascades. We know what Sailor is going to do. If there's an Mnav premium, he'll mint some more MSTR shares. MSTR holders might feel differently about this. They might not feel great about what's happening, but you know, he's going to sell Bitcoin in order to pay preferred share owners. I noticed STRC is back up above 90, it was like 92, 93.

• 8:59Speaker 00

  STRC looks good.

• 9:01Speaker 01

  So much, much healthier. It's up 30% from the June lows, which at $71, that was like a good buy back then. Right now, yeah, STRC, right now.

• 9:14Speaker 00

  Oh, yes.

• 9:15Speaker 01

  Bitcoin is kind of in an interesting place. Like what are we at the time of recording? 64K, something like that?

• 9:21Speaker 00

  64,500. We have been riding the 200-week moving average since the middle of June, basically. So like six weeks, we have been riding the 200-week moving average from $62,000 to where it is right now at like $64,000.

• 9:37Speaker 01

  So the 200-week is about $64,000 and we're just riding that. And we have been under that, what, like 40 days? Like a few times briefly during this bear market, haven't we? But like not a long time.

• 9:50Speaker 00

  40 days, no, I would say under a week, we have been under the 200-week.

• 9:54Speaker 01

  That's lately, I guess.

• 9:56Speaker 00

  Lately, historically, like we were under the 200-week moving average, like, yeah, I think 40 to maybe a little bit longer. But that was again, post 3R's Capital Luna FTX contagion, which come on, you don't see any blood on the streets like that.

• 10:11Speaker 01

  Well, that's interesting. So Bitcoin has been highly correlated to NASDAQ. So part of the reason Bitcoin is up on the week is because NASDAQ is also up and the correlation has.

• 10:22Speaker 00

  I don't know if that's true. I don't know if that's true.

• 10:24Speaker 01

  It's the correlation has like not been higher in recent, like recent terms. But the question, the question is.

• 10:30Speaker 00

  If you look at the NASDAQ chart and the Bitcoin chart, those are just different looking charts.

• 10:33Speaker 01

  I mean, they, yeah, I guess like in recent times, over the last 30 days, but. I guess, I think the question is, has Bitcoin bottomed relative to NASDAQ?

• 10:46Speaker 00

  It's always the question. It's always the question.

• 10:48Speaker 01

  And so like, are like, how are you feeling about it personally? Are you prepared to sell your AI stocks? Are you like fading this recovery, market recovery? And like buying crypto assets? Are you still like, okay, AI trade back on? I guess we're in for like, I don't know, round three, round four, whatever round this is in terms of AI trade recovery here. What's your, what's your outlook right now?

• 11:13Speaker 00

  Yeah, I, yeah, I've been asking and talking about this question a lot in the last week or so. And I think we've been talking and asking about this question a lot on the weekly roll up. As a vibe, the most non-technical like pseudo-answer possible. If you just look at this chart, which is the Bitcoin chart with weekly candles that goes all the way back to 2020, you see the cycles, right? You see the 2020 cycle, you see the 2022 to 2023 and a half bear market. And then you see the current cycle where Bitcoin went up to 130. This, the tail end of the current cycle coming down from 130,000, it just doesn't look done yet. The chart doesn't look like it's done completing its cycle.

• 11:56Speaker 00

  So as a vibe, like you can see it going down a little bit more.

• 11:59Speaker 01

  Yeah.

• 12:00Speaker 00

  And then, and then having a big U-shaped bear market for like a year and a half.

• 12:05Speaker 01

  Sure.

• 12:06Speaker 00

  So as, as just speaking as to the visual aesthetics of the chart, it doesn't look done yet, which is not a good answer, but it kind of correlates with like the whole, the cycles are intact. And if we believe the cycle is intact, the, the visual shape of the chart looks 85% complete, but not 100%.

• 12:26Speaker 01

  I'll give you another vibe that I feel, which is kind of sort of similar to this, which is we don't fully bottom until the AI trade is over. And the market acknowledges that. Because I think what's happening, even as I'm looking at you, you're not prepared to sell your AI tech stocks and your QQQ, whatever else you have in your TradFi portfolio, and buy crypto right now. Cause you don't quite think it's over yet. And that's what I think the rest of the market also sees. They're still disproportionately in AI, they're still in NASDAQ. And they haven't yet come back to crypto. And I don't think we get that full recovery until that happens, until the AI.

• 13:10Speaker 01

  Like the AI trade might have to die in order for crypto to live. I think that's from a vibe perspective, how this could all play out.

• 13:19Speaker 00

  I, I'm, I've been thinking about that more and more and more. You, I was listening to your episode with Michael Nadeau this last week. And the word time-based capitulation came up a bunch.

• 13:29Speaker 01

  Yeah.

• 13:30Speaker 00

  Where like, I don't have, I don't have any reasons for why there's any more forced sellers or sellers at all in Bitcoin. Like who, like Sailor is selling a thousand and a half Bitcoin. And then price is going up, like no one is a forced seller. There's not that much leverage in the system. Plenty of leverage in perps in the down market coins, but whatever. So like, who's going to be the forced seller? The answer is like, no one. But there could be opportunity cost sellers where the QQQ and like Micron and like SK Hynix

• 14:03Speaker 01

  Exactly.

• 14:04Speaker 00

  doubles in price. And you're like, what am I doing with this stupid fucking Bitcoin?

• 14:09Speaker 01

  Yeah.

• 14:09Speaker 00

  That's still at $64,000. And I want to get into the AI trade, so I'm selling so I can buy the top of the AI trade. And like, you can kind of see, you can kind of see that. And that, that could take the rest of, when I, when I just said, the aesthetic completion of the AI, of the, of the Bitcoin cycle could need six more months. And you could see the AI trade running for six more months, nine more months. And then the time-based capitulation of Bitcoin holders being like, fuck these stupid Bitcoins. Let me buy, let me buy some more memory stocks, even though memory stocks have gone up 5,000%. I kind of think you can see that happening.

• 14:51Speaker 01

  I could see it too. I could see it too. That, that might be what is playing out right now and what has to play out before we see the bottom and before we see the bear market conclude. David, we got more to discuss. I want to talk to you about the ETH issuance war. What is going on? What is the proposal that rocked the Ethereum world this week? Also, the cold card exploit, victims did everything right. What happened? Could this happen to other self-custodial holders? You said it seemed like no one did anything wrong, but somebody did. Okay, there was, there was a problem in this. We'll unpack what that is, all this and more. But before we do, we want to thank the sponsors that made this possible.

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• 17:44Speaker 00

  with no impact on your credit score. Or just visit Coinbase.com/Banklist. Terms apply. That's Coinbase.com/Banklist for more information. On August 4th, six Ethereum researchers, Jerome Deschesha, Justin Drake, Dap Lion, Pintail and a few others, proposed a change to ETH's monetary policy, mainly how ETH staking rewards work. This is being called the tapered issuance burn. The idea is that Ethereum pays people, pays stakers for staking their ETHs, but there's no cap on how much Ethereum pays for ETH stakers. No matter how much of the total ETH supply gets staked, even if all of the total ETH supply gets staked,

• 18:24Speaker 00

  stakers will still earn a positive yield, which means that there is always an incentive to stake more ETH forever. And so people are worried that, yep.

• 18:34Speaker 01

  Can I stop you? So there's no cap, but there is a curve to issuance, right? Issuance does go down the more stakers that, that come into the, into the picture.

• 18:43Speaker 00

  That's not true. Issue, always issuance always goes up the more ETH gets staked. The rate of new issuance goes down.

• 18:50Speaker 01

  Yeah, proportionate, like a, a, a smaller proportionate amount, the, the rate of new issuance, right? That's the way to say it.

• 18:57Speaker 00

  Yes, yes, yes. So right now we have a third of all ETH staked, but it, there's been a perpetual march upwards. And this proposal like proposes the idea that we don't want that number to, you know, approach 100%. We don't want 100% of ETH staked, but there's nothing to stop that from happening because there's always an incentive to stake more, because more ETH will be minted to pay for the security of the ETH being staked. And so what this proposal does is that Ethereum starts destroying, burning a slice of the rewards before stakers receive them. The more of the supply, the stake that's staked, the bigger the slice that is burnt. So this is called ETH targeting.

• 19:42Speaker 00

  This previously was called ETH targeting, or excuse me, stake targeting. So once staking, ETH staking hits about half, 50% of all ETH, and we're about 33% of all ETH right now, the entire reward gets burned, meaning staking pays essentially nothing beyond 50% stake. And the incentive to stake more ETH basically shuts off. And so this caps the incentive for staking ETH beyond 50%. So at like 45%, the staking rewards is almost nothing. You only have like 5% of these otherwise issued staking rewards being paid to stakers. And then at 50% is zero. So for people staking today, if this proposal were to go through, the practical effect

• 20:27Speaker 00

  would be that their base staking yield drops roughly in half from about 2.6% yield to 1.2% yield if this change were to go in right now. Who is pushing this and who is against this? The EF and EF researchers like this proposal. One of the-

• 20:46Speaker 01

  Is that generally true? Or is it just the, the subset of EF and research types who have their names on this proposal? By the way, Justin Drake is one of them. So I don't think he said anything public in support about this, but he is named on the proposal.

• 21:01Speaker 00

  So that's- He's on the, he's authoring the proposal, yeah.

• 21:04Speaker 01

  But you're not saying it's like all of the ETH researchers and all of the EF?

• 21:09Speaker 00

  Yeah, definitely. I mean, there's no consensus inside of the EF. Yes, you're right. So the people who are, who have proposed this are all EF researchers and like the researcher type. The people who are against this are interestingly all the Dap layer people. So DeFi founders like Stani from AVE, Mike Silagadze from EtherFi, Lido is against this. DC Investor, as a community member, he is very anti this. And so it's basically EF, a handful of EF researchers and then basically everyone else.

• 21:45Speaker 01

  Sounds like a great proposal.

• 21:47Speaker 00

  Let me try and just like run through the arguments for both sides.

• 21:51Speaker 01

  Cause here's the thing, here's the thing, as you're running through that, I think I really want to understand, right? Because the proposal takes as a given that there is some problem right now and some problem with this. And it takes a given that we are on this march towards 100%. And the closer we get to 100%, the more problems that we'll see. I think that assumption really needs to be reinforced.

• 22:21Speaker 00

  Tested, yeah.

• 22:22Speaker 01

  So what do the authors say about the problem here?

• 22:25Speaker 00

  Yeah, so the pro case, the pro argument for tapering slash targeting is that Ethereum is overpaying for security. And as a broad strokes, Ethereum, it's been discussed that Ethereum is overpaying for security. So therefore we should reduce issuance. That has happened many times. When we were in the proof of work phase, issuance went from five Ether block down to three Ether block, down to two Ether block before we had the merge. And so there's a little bit of precedent of, hey, we're overpaying for security. Let's pay less for security. And that's just a matter of like economic efficiency and making Ether goes along the social contract of minimum viable issuance. Like if we like minimum viable issuance, this is that.

• 23:09Speaker 00

  So that's one pro argument. The next pro argument is that unbounded staking, so a capless, a constraintless amount of incentive to stake ETH erodes vanilla ETH's moneyness and centralizes the network on LSTs. And so with 100% ETH staked, you're going to see like Lito's stake to ETH or like Rocketpool, our ETH. Those will be Ether in the Ethereum economy because vanilla ETH will all be staked. So you'll actually see a disappearance of vanilla ETH and it will be replaced by liquid staking derivative tokens.

• 23:51Speaker 00

  And so as far as the Ethereum economy is concerned, basically it's going to be Lito's staked ETH or Rocketpool's our ETH, some sort of LST rather than vanilla ETH. And so that essentially that captures the network by these liquid staking tokens and vanilla ETH kind of disappears.

• 24:09Speaker 01

  And also there's an argument there under that, that ETH would ETH, vanilla ETH would lose its moneyness relative to those other units, right? It'd be almost like rather than in the US economy, rather than us using the dollar, we're using like treasuries or something like that. Or not even treasuries, we're using like Bank of America money markets in order to pay for our Starbucks coffee.

• 24:32Speaker 00

  Yeah, exactly. Yeah. And yeah, and so like this also just kind of, if you are just trying to hold vanilla Ether, it, this allows, if this proposal goes through, holding vanilla Ether will be much more palatable and you won't get diluted nearly as much by holding vanilla Ether. And so it's a, it's a pro ETH is money change is, is an argument.

• 24:57Speaker 01

  Is, yes.

• 24:58Speaker 00

  Is an argument, yeah. Lastly, it's like, it's like a minimal change, it's really not that complicated. They call it credible, it's just a permanent, single constant that leaves most things intact. Like MEV is not being changed, EIP 1559 is not being changed. And it's kind of being framed as like just completing the post-merge monetary architecture.

• 25:16Speaker 01

  It's a minimal like technical change. It's just like a few variables in the code we have to change to make this happen. Like saying it's a minimal change from us, like anytime you do anything to monetary like policy and issuance, this is, it ain't a minimal change. This is a pretty big social change, but they're saying it's minimal from a tech perspective, it's not complicated. There's not going to be a bug in the system, it's, it's pretty easy to implement.

• 25:39Speaker 00

  Yep. Okay. The opposition argues that this actually just accelerates the centralization that it claims to fix. So compressing yield, reducing the amount of issuance for ETH stakers makes it more difficult for the marginal ETH staker. So solo stakers and home stakers are going to have a harder time because they are less efficient than the industrial, commercial stakers like Lito or Figment.

• 26:04Speaker 01

  So well, you just cut their revenue in half, but they have the same fixed costs.

• 26:08Speaker 00

  Exactly. And so people who really like operationalize and minimize their fixed costs do better here. But you know, the hobbyist staker, the people that carry their own hardware, pay for, pay for all the costs. Those people are getting pushed out and that's going to be the home staker, the solo validator, which as a social contract and as like a system, you know, Ethereum has always preserved the sovereignty and power of the individual solo staker. That's like, that's who runs Ethereum, you know? Ethereum is not a product by corporations and institutions. It's a product by the user for the user and this makes that harder.

• 26:50Speaker 00

  The next argument is that staking yield is DeFi's base rate. So leveraged staking loops, LST collateral on AVE, you know, structured product, institutional treasury allocations. All of that, all the fact that staking yield is a thing is a pretty core primitive that holds up a lot of DeFi. Tapering it towards zero collapses so much of what DeFi is built on and just reduces a lot of the Ether in DeFi. So if your vanilla Ether isn't getting yield, well, you can get it in DeFi. And taking the yield away from Ether, I think the argument is that a lot of Ether would not have a reason to be in DeFi.

• 27:32Speaker 00

  And DeFi would just be, have less TVL and be overall less rich as like a sector. And then lastly, credibility and process, this is just like the issuance debate. There's like a 48 hour comment period, an aggressive timeline from the researchers who are saying like, yo, let's, let's push this through. And then the community is like, yeah, it's too, too fast. And then also just like issuance in Ethereum is all already extremely low. It's one of the lowest, if not the lowest chain with the lowest issuance. Why are we trying to lower it anymore?

• 28:10Speaker 01

  It's as low as Bitcoin. It's, it's as low as Bitcoin after like 12 years, you know, Bitcoin doing this.

• 28:16Speaker 00

  So it's, it's just, why are we trying to fix a problem that's not actually a problem? Why like, like perfect is the enemy of good, we're pretty good here. Why are we trying to be perfect? And then also modelers of saying that this is just like, we underestimate second order effects if this changes go through. We don't really know the second order effects and that is dangerous. And so let's just not touch it. So I feel like those are the two sides.

• 28:45Speaker 01

  There's another sub-argument here that I've seen, which I think is also good, which is like, hey, anytime you open the window to changing the dials on monetary and issuance, you kind of reset the clock. And now everyone knows your store of value asset can actually be tweaked and changed. This is the ancient Bitcoin 21 million argument and their core criticism of Ethereum is like, you guys move the dials. And so like anytime you move the dials, you prove that the dials can be moved and you prove that there's some sort of centralized cabal, you know, like doing this. And so like, if you move the dial, you sully the experiment at all, right? And then you're in position is now we'll move it a few times.

• 29:27Speaker 00

  And we'll move it to being more restrictive and beneficial to ETH holders.

• 29:32Speaker 01

  That's right, that's right.

• 29:33Speaker 00

  Always in that direction, not like always in favor of less issuance, not more issuance. I'm not, I'm not into that argument. I think the version of that argument that I do agree with is, yo, Tom Lee just bought 5% of ETH and his whole entire idea is that he gets to stake it and get the yield and we're just rugging that from him. What the fuck? And so that as a adulteration of the social contract, I think is very valid. And Tom Lee is gonna be like, what the fuck are you guys doing? What if, what if this pisses off Tom Lee and he sells the Ether? Not inherently because Tom Lee is like, I'm worried about you guys like tinkering with the monetary policy, but because I'm worried about you guys destroying the value of my investment.

• 30:19Speaker 01

  I actually think that you might be underrating that, or at least I rate that like much higher. I think that.

• 30:24Speaker 00

  The tinkering of the dials of monetary policy.

• 30:26Speaker 01

  Oh yeah, I think there has to be absolute overwhelming consensus. Like it has to be like a, a bill going through Congress with 99 senators voting yes for any issuance change to happen. And especially when we're at this point of like.

• 30:44Speaker 00

  I agree with that, I agree with that.

• 30:45Speaker 01

  We already have like. Really good issuance. It's already fine. What problems are you solving? I guess I'm sort of revealing my hand of like where I sit on this debate a little too much. But I guess I, I really do believe the Bitcoin argument of like, you gotta ossify that monetary policy and the faster that Ethereum gets to complete ossification of it and that no one touches it because it's like good enough, the better for the moneyness use case and the story value use case. What I think is interesting about both sides, and then we could talk like about some of the takes that we've seen and what, what you think and maybe what I think is both sides are speaking on behalf of the solo stakers,

• 31:29Speaker 01

  you know, of decentralization. This is about the solo stakers. Both sides are saying, hey, this is good for the moneyness of ETH, right? So the side that's saying, hey, we gotta push this forward is saying, yeah, we're doing this because ETH is money. And the side that says, no, no, no, no, no, don't do this because you'll, you'll kill ETH's ability to be money because you're, you're dialing with a monetary policy and you lose credibility that way. And also ETH is money in the DeFi economy. You nuke the DeFi economy somehow because of staking yields going down. Then you also lose moneyness there, right? So it is, I guess, if you zoom out refreshing, that both sides really care about ETH as a monetary asset.

• 32:12Speaker 01

  So I mean, that's a, that's a win I take from this episode. They're just divided in terms of how to actually do this. So what are some takes that you've seen that from around the community that they've enjoyed or some points that we really didn't highlight yet?

• 32:27Speaker 00

  Most of the takes on crypto Twitter, Ethereum Twitter have really just been from the anti camp because it's, it's their position to react to this proposal. So Stani says Ethereum should not focus on gaming, staking issuance and cutting staking rewards. That is not the problem Ethereum needs to solve. Priorities are privacy, scalability and security. Yield becomes unpredictable, a negative factor for any institutional buyer, making ETH borrowing strategies mostly unviable. Ethereum should not be punished for its growth. DC Investor says issuance is already very low. Staking yield is now a key driver. Predictability matters. Solo stakers should not be priced out. Focus on scaling. Mike from EtherFi says disappointing on every level.

• 33:10Speaker 00

  EIP released with only 48 hours notice. Every builder on Ethereum opposes this. This reinforces the Ethereum critics' position that the network is run by a small group of insiders. I think that has been interesting to me is like, if you build a ETH product, an ETH deposit product like AVE or EtherFi, you don't like this. No one, no one who's building an ETH DeFi product likes this. And I think that is very important signal. And I think this is something that like the Ethereum community has been like trying to elevate in the 2024 like EF crisis of like, please listen to the builders building on Ethereum and making Ethereum valuable and Ether valuable. And that is Mike and Stani and Lido.

• 33:50Speaker 00

  And so like those people have, these people have skin in the game and the people with skin in the game are saying no. And the ETH researchers, you can argue, maybe they, they love the ivory tower like technical perfection, but they have less skin in the game than Stani from AVE or Mike from EtherFi because they're researchers. They don't have businesses built on this ecosystem on top of this foundation.

• 34:15Speaker 01

  So what's your take on this? You think it's a good idea? You think it's a bad idea? If it was up to David, would you vote yay or nay?

• 34:23Speaker 00

  Uh, I mean, like you just, exactly what I just said, like I can't, I can't in good faith vote yay for this proposal when every single DeFi builder is saying no. Like DeFi is how ETH became monetized as a monetary asset. And if they're not happy, then like it's, it's hard to in good conscience vote yes for this. I like this proposal from a technical purity standpoint, like in a vacuum. I think this is a good proposal if we didn't have DeFi and Tom Lee and all of the path dependency that we have, but we do have that. So this would have been a great proposal to have introduced like years ago, six years ago, seven years ago, eight years ago,

• 35:08Speaker 00

  when like as soon as possible, basically. Maybe, maybe one improvement to the proposal is that let's not have this jump from 100% ETH targeting to 50% ETH targeting. Maybe we can implement it over a very long time, like a decade. So like at first it targets 100%, then it targets 99%, then it targets 98%. And that takes 10 years to approach 50%, so it smoothes it out. But I don't think even DeFi would really like that at all. And so I also agree with your point is like it's, it's ETH, the monetary asset. We need overwhelming consensus in order to change this. And so I like the proposal, I like the proposal in a vacuum,

• 35:52Speaker 00

  but there's too much baggage to say yes.

• 35:56Speaker 01

  Yeah, I, I think that my position is I don't even like the proposal in a vacuum, probably. Like it's interesting as like a hypothetical in a white paper, like what if we did this? But I think you need overwhelmingly good reasons in order to actually change issuance. And I don't, I don't see those reasons. Like the benefit does not seem worth the cost. As opposed to the merge, okay? Incredibly obvious, full community buy-in that we were going to take proof of work issuance to proof of stake issuance and change issuance policy accordingly.

• 36:38Speaker 01

  There was a technical reason for that. There was massive benefit. There was overwhelming consensus. This doesn't even have anywhere near the mark, like the, the benefits are sort of ethereal and vague and second order. And we don't like know. But the other thing I, I go to is like just kind of an Occam test of just would this, if this got implemented, would this make me more bullish or more bearish on ETH? And the conclusion there is more bearish. Like I would not be more bullish if this proposal was actually pushed out and implemented. And on that basis alone, it's, it's kind of, it's not a good idea from my perspective. Now, there's another question, which is what's the probability that this goes forward and actually gets pushed, gets moved through?

• 37:23Speaker 01

  And I think that probability is like quickly approaching 0%. So I think we're like under five, like we're just, I don't think this is going anywhere.

• 37:33Speaker 00

  I don't think this is going anywhere.

• 37:34Speaker 01

  Particularly given the reception that it received. If it had a completely different reception, if there's overwhelming positive sentiment, then maybe it would have a shot. But it is dead in the water at this point and I, I predict there will be no issuance changes. So at some level, some of the people saying, aha, look over Ethereum, it's just like, it's changing issuance policy again. See, it's not decentralized. It's captured, all of these things. No, this is what decentralization actually looks like. This is the messy process of decentralization taking place. There's a proposal. It's pushed out there. The rough consensus of all of the stakeholders and participants and investors and researchers and app builders weigh in on it

• 38:16Speaker 01

  and it hasn't reached the threshold. And so it doesn't happen. It gets shot down and that's all healthy. So we just had a long conversation about it, but like I don't think it's going anywhere. And you know, if, if this would make you bearish, you, you don't have to worry about that because I don't, it's just not gonna happen.

• 38:35Speaker 00

  I would agree. Yeah. Like I said, it's one thing to be frustrated about the EF for not being communicative to its app builders and its DeFi ecosystem. It's another thing to push a proposal where the DeFi builders are all saying this harms my business. And also my business is in the business of monetizing ETH and making, making it more valuable. So WTF? Yeah.

• 38:58Speaker 01

  Are you gonna host some debates on this though?

• 39:00Speaker 00

  Um, I was thinking about hosting a debate, um, but instead I think I'm just going to talk to some of the DeFi app builders about their, their opinions. Cause like we, I did, I did this episode actually with Casper and Osgar forever ago. Like this is not a new proposal. This is, this proposal is like two years old now.

• 39:21Speaker 01

  It was some sort of targeting proposal and particularly at a time where some assumptions didn't play out, remember? Like people were thinking that Lido would sort of dominate everything and just like get all of the stake. And like, I think some of the things that people assume just like haven't played out fully. But yeah, we, we have covered this train before, haven't we?

• 39:41Speaker 00

  Yeah, yeah. And so, um, so I've already technically done the, the pro side of it. And so now I'm going to do the anti side of it. And like, I can embody the pro argument well enough where like I can throw my interesting like angles at them and they can see what, I can see what they do with it. All right, let's move on to the cold card exploit. So this is an individual named Jonathan Goodman, who tweeted out, $1.6 million in Bitcoin was drained from my account on July 29th in the cold card wallet hack. My Bitcoin was in cold storage. My keys were on a cold card device kept in a safety deposit box that had never been connected to the internet. This part's nerdy, but here's what happened.

• 40:21Speaker 00

  Hackers discovered a vulnerability in the part of the hardware wallet code used to create seed phrases. This allowed them to use AI to brute force guessing seed phrases. I was at our cottage and heard about the hack today. No way this affects me, I thought. I logged on to Wasabi, the software that lets me view my Bitcoin wallets online. Right away I saw lines of red transactions, withdrawals. And I knew from 9:36 to 9:43 PM on July 9th, every wallet I had ever had, had been emptied. 18.2 Bitcoin gone, over $1.6 million Canadian. Perhaps the hardest part about this is that I did everything right.

• 41:04Speaker 00

  I never shared my seed phrase with anyone. My devices never touched the internet. Everything was kept in multiple safes and safety deposit boxes. None of it mattered. Oof.

• 41:14Speaker 01

  Absolutely brutal. Absolutely brutal. So the Cold Card, for those not familiar with it, is sort of like a Ledger Wallet or a Trezor, some more popular devices, I think optimized really for the Bitcoin community. So it was a smaller wallet in terms of footprint, but didn't support other coins. It was more the Bitcoin purist approach to it. And of course, this same story played out in, I don't know, maybe thousands of other cases?

• 41:45Speaker 00

  A hundred and thirty million dollars total in Bitcoin being exploited from offline hardware wallets.

• 41:51Speaker 01

  And some of these, you know, are pretty like, uh, smaller holders, of course. These are retail investors and they're doing the thing that Bitcoiners are supposed to do, going bankless can do, which is like, not your keys, not your crypto. Okay, not my keys, not my crypto. I will have custody of some keys. That's what they decide to do. And they use a hardware wallet and still it gets drained. Maybe let's talk about what went wrong here specifically. So the original poster said something to do with the way randomness that the seed phrase was generated. What went wrong in the Cold Card?

• 42:32Speaker 00

  Yeah. So with a seed phrase, a seed phrase has theoretical randomness, as in like, there are so many different possible combinations that even with AI, there's no way to try all of them because there's more possible ways to create a seed phrase or a private key than there are like atoms in the universe. Like that's a theoretical security of Bitcoin.

• 42:53Speaker 01

  Right.

• 42:53Speaker 00

  Apparently, the way that Cold Card was generating seed phrases was imperfect in its randomness, as in it had like a kink or a flaw in its randomness generation that allowed for AI to like detect that pattern and reduce the scope of how much randomness it would need to do. And this is actually just like, I once upon a time read a book on ciphers. You'd actually like it, I should send it to you. And like, the number one way to break a cipher is that there is an imperfect, imprecise way of generating randomness and there's like a flaw and that gets exploited by some pattern analysis.

• 43:34Speaker 01

  Like some kind of weak entropy. So whenever you're generating a private key of some form, you have to have actual true randomness.

• 43:41Speaker 00

  Perfect randomness.

• 43:42Speaker 01

  Yeah, there are many ways to do this. It's not like an unknown thing. It was just apparently the Cold Card Wallet, it had a random number generator that was like much better, but it was not actually switched on. So it was using this much weaker form of randomness instead. And they didn't know about this. Did they, it wasn't, I don't know, wasn't switched on. They were using the weaker method rather than the stronger that they actually had. And so that means everyone who used a Cold Card Wallet from this time period, from like, you know, 2021 and beyond,

• 44:23Speaker 01

  actually generated private keys that could be guessed by some attacker, some sort of that was not impervious to a brute force attack. Because that's what's happening right now. And there have been waves of these attacks, right? Where, you know, hackers are just looking for Cold Card wallets, finding that profile and then guessing at the seed phrase using AI to do that. And then once they do, they drain the wallet.

• 44:50Speaker 00

  Brutal. We don't really know who the hackers are. Like, obviously, I think everyone's first reaction is North Korea. We don't really have any evidence that it's North Korea.

• 44:59Speaker 01

  It could be anyone at this point, especially after this gets publicized. And anyone who wants to go try to do this can like then go do this. I think we should tie this off with a few other things. One is, this problem does not exist in the Trezor, Ledger wallets and the more popular wallets. They have since, you know, released and emphasized how their randomness is actually generated. So it's not a flaw that happens in some of these other hardware wallets. So should be like safe if you're using one of those. I guess the other thing though is, does this pose an existential question as to like self-staking and self-custody? Or sorry, not self-staking, self-custody in general?

• 45:44Speaker 01

  So if, like, you're still trusting the hardware wallet manufacturer with this type of thing to like generate private keys correctly and to do things correctly? Like, I guess it's a wake-up call that you can do everything right from a self-custody perspective and still be vulnerable to this? Some people are saying this will cause everyone to move their Bitcoin to ETFs or to put it on exchanges where these sorts of attacks aren't possible. Do you think this is the end of self-custody, David? Do you think it's just like too hard? There's too many problems with it and people choose not to do this moving forward?

• 46:27Speaker 01

  And it'll all go into custodial providers?

• 46:31Speaker 00

  I was getting lunch with a friend this week and she told me that she was working at a company and somebody connected her with a contact that they wanted her to talk to. And they took a few meetings and built some trust, got them to download Obsidian, which is a thing that you use and I use. But it was a borked version of Obsidian. So after three meetings, she downloaded it and it stole all of her money in her browser extension.

• 46:59Speaker 01

  Are you serious?

• 47:01Speaker 00

  Yeah. And the reason why I bring this up is because they were using AI to fake themselves on the call and to run this exploit. And so like the common denominator here is AI. AI has been just like the big, and that wasn't imperfect math. That was social engineering. Nonetheless, AI assisted. And, you know, AI is the reason why people are scared to have their money in DeFi at the moment. Like AI is shaking the foundations of self-custody. And that's scary. And like, there's probably the fewest self-custody and the fewest bankless people

• 47:42Speaker 00

  since 2021, 2022 because of AI. And there's seemingly more holes to find using AI maliciously than it is easier to like patch them using AI to be defensive. And so like, yeah, dude, it's like the darkest days for self-custody ever. Like, no matter how you want to secure yourself, like AI can find a way there, whether it's like exploiting perfect randomness or your friends accidentally connect you to the wrong Telegram account because like the name looks kind of similar and they weren't checking.

• 48:22Speaker 01

  So right now, the attack abilities are exceeding the defense abilities right now. It's just finding vulnerabilities. So whether that continues.

• 48:30Speaker 00

  It's a long time to recover from that because that is, like, losing all of your money strikes straight into the heart of your emotions. And like, once it does that, then like, no one wants to go doing self-custody. And like, this guy, this guy that lost 1.6 million dollars of his, after doing everything right? Do you think he's ever going to do self-custody ever again?

• 48:52Speaker 01

  Yeah, right. And like, I guess from one perspective, this could totally have been avoided if Cold Card did things the right way instead of doing it the wrong way. But at another level, like, what is an individual supposed to do? Like, am I supposed to like analyze exactly how the randomness was like, you know, for the hardware wallet that I purchased, how that was generated? In order to feel safe that it's like actually working? Like, that's just not feasible for the average person. So, yeah, it's definitely a big pothole here. And hopefully, hopefully, things turn around a little bit. But for now, do not, if you are using Cold Card, of course, the message is,

• 49:36Speaker 01

  get off of that wallet.

• 49:38Speaker 00

  Do something else.

• 49:38Speaker 01

  Move your assets, do something else. And we'll hopefully the attacks subside and people are able to migrate.

• 49:47Speaker 00

  All right, let's move on. We're going to talk about a few more things. We've got to talk about Clarity Act not looking good on a lifeline in the teens probability on Polymarket. We're going to talk about that. We're going to talk about Uniswap pools. Pools dot trade is, yes, pools dot trade is their new product, or I'm going to tell Ryan exactly what he needs to know about Uniswap's new token launchpad. And then also, CloudFair. Make those listeners know this if they listen to our episode with Matthew Prince, but CloudFair is introducing crypto wallets for anyone who wants it. What are they doing? What are they doing? We got the answers. We're going to talk about all that and more. But first, we're going to talk about some of these fantastic sponsors that make the show possible. Markets don't move one asset at a time. One day it's Bitcoin, the next Nvidia, then gold, and then the S and P.

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• 51:12Speaker 01

  Some exciting news. We are launching a new podcast to help people figure out the crypto cycle, how to navigate it. The best crypto cycle investor I know, his name is Michael NATO. He runs the DeFi Report. This is the guy that sent me a sell alert before the 10-10 price drop happened. His cycle analysis has been absolutely on point. I've been following him for years, and this year we started recording weekly podcast episodes. Each one, we get into his portfolio, what he's holding, the market structure, entry targets, fair market value of Bitcoin and Ether, and where we are in the cycle. There's new episodes that are released every Wednesday. They're 30 minutes, they're short, they're punchy.

• 51:47Speaker 01

  I think this crypto cycle is harder to navigate than most, so let's do it together. Go subscribe to this podcast, search The DeFi Report, wherever you get your podcasts, YouTube, Apple, Spotify, or find a link in the show notes. There's a new episode waiting for you now.

• 52:00Speaker 00

  Uniswap introduced a 24-hour countdown yesterday for pools dot trade. It took them like 27 hours. They had a little bit of a shaky start, but they introduced pools dot trade, which is Uniswap's own native token launchpad. Like Pump Fun. It's Pump Fun for Ethereum.

• 52:17Speaker 01

  Uniswap is doing Pump Fun now?

• 52:19Speaker 00

  Yeah. And like granted, there are so many token launchpads on Ethereum. This is not a new thing, but it is new that Uniswap is going verticalizing and going down to the actual token creation mechanism. And so they have a couple of ways to launch a token, a couple of different mechanisms. Both end up in a Uniswap V4 pool with a fixed 1 billion supply of tokens. So there's the crowd launch token. So that's a four-hour T-WOP auction to help make like just bundle resistant. Cause like a big problem in the meme coin token launchpad world is that like one person will bundle up a bunch of wallets and own like 30% of the supply, then dump on your head.

• 52:58Speaker 00

  So that kind of fixes that. And then it graduates at a $10,000 fully diluted valuation, or it refunds everyone if the $10,000 market cap doesn't get launched. Or there's instant launch, which is just like no rules, Wild West, like buy at your own risk. It's live immediately, classic bonding curve style. And so, yeah, Uniswap has released a token launchpad. Looks pretty similar to all the other kind of like token launchpads out there. But it is kind of exciting that Uniswap is launching it. And so there is a, I think one of the interesting things is that the fees collected by this go back into buying the token itself.

• 53:36Speaker 00

  And so there's, it's touted as like more volume. It's even more beneficial for the price of the token as opposed to that coming out of the pool, of the liquidity pool. It goes back into the Uniswap pool in the token itself. And so it was an incentive for people to use it. What's your reaction?

• 53:55Speaker 01

  What do you think? Just like Robinhood meme coins kind of woke them up to this possibility? I mean, that's one reaction. The other reaction is just, it does seem like Uniswap is shipping, like shipping harder again. And I'm wondering kind of why. I mean, I know they were always shipping, doing a lot in the background, but it feels like some regulatory malaise has maybe lifted. And they are getting back to trying new products and experiments again?

• 54:25Speaker 00

  Is that what you're saying? It kind of feels different in Uniswap land these days?

• 54:29Speaker 01

  Yeah.

• 54:30Speaker 00

  Yeah. Cause I was talking to, I was hanging out with some crypto friends last night and like we all said the same thing is like Hayden's tweets for the last two months feel more like founder Modi about Uniswap. And they're like shipping more things. Yeah, I would agree. I think maybe at some point, just like the, the safety nest of your treasury kind of like runs out and you realize that you need to like generate positive economics. And like Uniswap as an org has been a pretty big organization in the past. And again, also to your point with the launch of Robinhood, if you go to the Robinhood metrics, like Uniswap dominance in Dex volume is massive.

• 55:13Speaker 00

  So the number one Dex on Uniswap is on Robinhood chain is Uniswap V3. The number two Dex is Uniswap V2, and the number three Dex is Uniswap V4. And that's to combined 99% of Dex volume on Robinhood.

• 55:30Speaker 01

  Wow, that's a big win for them.

• 55:31Speaker 00

  Dominating on Robinhood chain. And that actually does go into the uni token fee burn. And so with the launch and success of Uniswap on Robinhood chain, the amount of uni being bought back and burned by the protocol has doubled because of Robinhood chain. Particularly because of meme coins. And so, because meme coin activity on Robinhood is 50% of all meme coin activity in crypto as a total. And all that volume is on Uniswap. And so Uniswap is burning uni tokens twice as fast versus like all the other chains combined. And so you can see like, oh, Uniswap sees value here, like revenue is coming in, this is working. The token hit like a, like a, like a 10-month high or an eight-month high recently, the uni token.

• 56:16Speaker 00

  And so, yeah, like Robinhood chain and Uniswap have like kind of seen some like new life. And I think it's about like, can they keep this motion going?

• 56:24Speaker 01

  Yeah, it's very, very good to see. Uniswap in motion. Clarity seems to be completely stalled.

• 56:31Speaker 00

  Losing, losing motion.

• 56:33Speaker 01

  Losing motion. So two weeks ago, we were at 41% probability on Polymarket, 28% last week. Now it's 15%. So the, there was no filing of cloture before recess. So that means it's not going in front of the Senate. Democrats are still holding out on the ethics issue. I guess the White House compromises weren't enough, and also they have other concerns. I think it's not going to happen this year for sure. And we have to wait until the outcome of the elections to see if the new incoming Congress, yeah, the midterms actually wants to pick this up or not.

• 57:12Speaker 01

  I don't think it passes. We may have lost our shot, may have lost our opportunity. I don't think that's the end of the world because we have a pro crypto regulatory force. And as long as we stack up enough wins and get enough momentum, there's no way future administrations can kind of unwind that. Like once BlackRock has tokenized its assets, it's like Democrat administration, are they going to tell BlackRock, Larry Fink, like, hey, sorry, you got to undo all of that. That's now illegal. No, that, that, that will already be in motion. It'll be too late. So that's probably the move crypto needs to do to get ahead of this.

• 57:51Speaker 00

  I think there's probably a big loss for like young startups and future startups because of clarity. And so, yeah, BlackRock is protected, but there are probably a bunch of theoretical hypothetical startups that won't exist because clarity, clarity is not a thing.

• 58:06Speaker 01

  I think that's probably true. David, good news on CloudFlare front, though. We've been covering them for a while. So what move did they make this week?

• 58:14Speaker 00

  They introduced CloudFlare wallets, which is pretty simple, allow you to store stablecoins, purchase services, and receive funds across the web. Wallets are not new, but CloudFlare using wallets is definitely new. CloudFlare is basically the internet's firewall. And so if you go into a website that is protected by CloudFlare, they have a little gate. When we talked to Matthew Prince, the CEO of CloudFlare, he was very into the idea of protecting the content of the internet from the Google AI crawler bots that extract your content and then don't pay you for it.

• 58:54Speaker 00

  And I think this is the first tool introducing like a wall between user-generated content on the internet and the bots of the, of the internet scraping that content. And so he's trying to like protect users and make the bots pay for them. And so the idea is like, this is actually a wallet for bots. Maybe it's your bot, but you need to pay in order to scrape the internet and you need to pay the people who produce the content. And so the first tool of like a big series of like mechanisms that need to be introduced for this vision to come into fruition, but it's pretty cool to see it in action. New this week out of the near ecosystem is staking for near AI. So you can now stake near token and then you get confidential inference.

• 59:40Speaker 00

  You just get free inference because from the near AI part of near. So you know, there's no, you don't pay for it with your card. There's no like cloud account. You stake near, you get inference, pretty comparable to what Venice is doing, where like you buy API credits and you get inference. And also Venice uses near AI. And so near is kind of just building its own vertical of, hey, we have distributed GPU clusters all over the world. That's the near AI product. If you stake near, you just get inference.

• 1:00:12Speaker 01

  David, that's a work token. Do you remember work tokens?

• 1:00:14Speaker 00

  It's a utility token.

• 1:00:17Speaker 01

  Very cool. Yeah. So you're doing a number of things from a utility perspective that's, I think, going to be accretive to the, to the value of near.

• 1:00:25Speaker 00

  Yeah, I'm talking to Ilya today actually about like exactly how this works and why and how like what near really represents with all of this. I'll definitely be using the work token as a concept to talk to him about it. Another, another news on the week, Polymarket seeking investment at more than $20 billion valuation. Brian, what's your reaction to $20 billion?

• 1:00:47Speaker 01

  It sounds about right to me. I mean, they are, yeah, it does. I mean, Prediction markets are markets. Polymarket is an exchange. Exchanges are product market fit, hugely profitable business. Prediction markets are going to increase in the future. Polymarket gets a take rate. I don't know, I haven't looked at the math behind exactly how they're justifying this valuation. But what was it like 9 billion? Was it that earlier this year? Was that a year ago during the ICE deal talks? And so 20 billion seems about right. I mean, it's the future. I hope they IPO. Like, I hope, or like there's a token or something.

• 1:01:30Speaker 01

  I hope Polymarket is, becomes investable to retail investors. Cause that's been the only, the shame of this whole process. But yeah, 20 billion seems right. What do you think? Do you think it's, do you think it's maybe the prediction markets is overplayed? You see sports books coming back to take a chunk out of them?

• 1:01:50Speaker 00

  Sports books are coming back, trying to take a chunk out of them. Sports books are valued in the two-digit billion range. So like 10 to like $30 billion is the sports book, like arena. And then like what they're, what prediction markets are going for is like the CME, which is in the three-digit billion range, like 100 to 200 billion. So it's still in the sports book range. I think everyone in crypto wants less of the sports book comp and more of the CME comp. But I don't, but they're nowhere near getting anywhere close to the CME. There's like a lot left to do on that story.

• 1:02:21Speaker 01

  A lot of competitors have entered, that's for sure. Including, you know, Robinhood, of course. I know they're, they're friends, but they could also do lots of things with their own prediction markets.

• 1:02:30Speaker 00

  Robinhood's prediction market revenue is now 2X's its crypto revenue. And so prediction markets as a category, very lucrative, very monetizable.

• 1:02:39Speaker 01

  That's right.

• 1:02:40Speaker 00

  Last news on the week, Ark from Circle, main net is coming September 16th. Ryan, are you holding your breath?

• 1:02:46Speaker 01

  I'm not super excited about it, but like maybe it's a backend infrastructure type of thing. I don't know. It's another chain. Like, I probably won't see it. So not super interesting to me. What about you?

• 1:02:59Speaker 00

  No.

• 1:03:01Speaker 01

  No. Just before we close, David, like zooming out, where do you think crypto is right now? Like, are we lost in the wilderness? Is this another bear market where it's just like, the tourists have left, the settlers stay? Does it feel different? Like, what's your state of crypto right now?

• 1:03:20Speaker 00

  Do you know that there's a meme of the, the girl watching the guy place like the square peg in the square hole and like the circle peg. But it always fits into the same hole. Like, that's the joke is like, it doesn't matter what shape it is. It always goes into the same hole. And then you're like, the circle goes, it goes in the circle hole. And he goes like, that's right, in the square hole again. And it's like, I'm explaining this meme. It's like, oh, meme coins again. Like, oh, see this shape? Like, oh, we're doing meme coins again. And it's just like, shit dude, like not, DeFi is not great. Like self custody, not great. Like, it's just meme coins. And that, it's a bit, it's a bit frustrating.

• 1:04:02Speaker 00

  I've kind of capitulated it to just like, okay, well, like they're at least fun and I'm having fun with my friends. But in terms of just like what we're doing on chain is like sick. We're doing meme coins again.

• 1:04:13Speaker 01

  That's the new thing.

• 1:04:14Speaker 00

  That's a bit frustrating.

• 1:04:15Speaker 01

  Yeah, but like, what about, I don't know. There, there's a lot that is working and has been set in motion and is kind of continuing to build, I suppose. Right? So DeFi is actually working. It's growing like at a much slower rate than I think we hoped. Store of value, that's still a thing in Bitcoin and maybe Ether at some point takes, takes more of that. Those are some use cases that are working.

• 1:04:42Speaker 00

  Yeah, yeah, maybe, maybe I'm being overly pessimistic. There are a bunch of things that feel like they're like kind of close, but not quite here yet. Like, we still don't have a very big ecosystem of tokenized docs, tokenized real world assets. There's like 17 competing standards and not one of them has really taken the lead. We need that in order for like perp platforms to create a fully internalized perp spot basis trade. And which unlocks so much opportunity in the per platforms, but we don't quite have that yet. So like there, there's, we feel like we're close, but making really slow progress on that front. And that I feel like is also constraining on like the creativity, what we can do here.

• 1:05:26Speaker 00

  Clarity was supposed to be really helpful with that, but doesn't seem like we're getting it. I don't know, you can, going back to like the market conversation, you can kind of see just like nine months, six, six months, nine months of boredom happening. And then, and then like there's capitulation and then, and then you realize that I will actually wait. Some of this stuff is working and like the rubber's hitting the pavement and then it'll work. Yeah, it just feels like a little bit like a waiting game right now. And then in the midst of that waiting game, people are getting hacked.

• 1:05:55Speaker 01

  I think that's right. It's a waiting game. I think maybe we talked about it earlier in the episode. People won't love crypto again, investors at least, they won't love crypto again until they start hating AI. So that probably needs to play itself out too.

• 1:06:08Speaker 00

  Yeah, yeah. All right. Well, Ryan, this is the first time we've recorded the roll up and I'm home and you're elsewhere. So go and go enjoy your vacation wherever you are, my dude.

• 1:06:18Speaker 01

  I appreciate it.

• 1:06:20Speaker 00

  Bankers Nation, that was the weekly roll up. Thanks for being with us. Once again, crypto is risky. You can lose what you put in, but the institutions are here. So we're going even further west. This is a frontier, it's not for everyone and we're glad you're with us on the bankers journey. Thanks a lot.