Bankless - 2021 ROLLUP: Top 20 Crypto Moments in 2021

Starting point is 00:00:00 That gets us to number one, David. Number one, do we have a drum roll? Ryan buys a turtle. All right, no, okay, actual drum roll. All right. Actual drum roll. Yeah. I kind of heard it.

Starting point is 00:00:16 It's something. We'll add it in post. We'll put it in post. Sound effects and post production. Number one, coming in number one. Hey guys, welcome to another bankless estate of the nation episode. This one's going to be a fun one. I got my Christmas hat on, David, and I'm in the holiday spirit.

Starting point is 00:00:34 And I'm also in the spirit of, like, recapping everything we did in 2021. So what are we doing in this episode? We're going through the top 20 things, top 20 big things that happened in crypto in 2021. Going down, starting from 20, going down all the way down to number one, because that's how countdown works. And then we will, of course, finish off with some honorable mentions as well. these are loosely ranked in some kind of combination of chronological order but also with significance. So as we go down the list, the things get bigger and bigger in deal, but also later and later in the year.

Starting point is 00:01:09 So there's some sort of method to the madness there. Guys, you know the Spotify yearly wrap-up tells you what music you listen to, how many hours you spent and all that sort of thing. That's what we're doing. These are all stories that we talked about on the weekly roll-ups. And so this is like a wrap-up of the year in crypto. A roll-up of the roll-up. It's a roll-up of the roll-ups. This is sharded roll-ups right now, I think.

Starting point is 00:01:32 Did you know, Ryan, that you can actually settle a roll-up onto another roll-up? That's actually technically a thing you can do. And that is what we are doing with the yearly roll-up. My brain's not ready for that, okay? I was just getting modular blockchains and playing in my brain. Now you're talking about like roll-ups and top of roll-ups. I'll leave that for 2022, okay, guys. Hey, before we get in, we got to talk about hashflow, though, David.

Starting point is 00:01:55 So hashflow is a defy OTC desk. People know what DFI is, but what's an OTC desk? Yeah, an OTC desk. OTC stands for over the counter. If you are a big trader trading a lot of volume and you just want your price to be optimized, then you go to an OTC desk. But as we all know, if you can do it in C-Fi, you can do it even better in D-Fy. And so that's what hashflow is.

Starting point is 00:02:20 Hashflow is your DefiOTC desk for big trades with zero slippage, MEV protection, and a bunch of other cool features as well, a ton of liquidity. And so you can check them out at app.hashflow.com. If you are high volume trader or just making a big purchase, Hashflow might be the place for you. Tight spread, zero slippage liquidity, MEV protection. Also, soon, they'll provide a way to grant yield on top of this liquidity. So you can actually be a liquidity provider on hash flow,

Starting point is 00:02:50 and there is a Google forum. If you want early access to that, you can check that out. We'll post that link in the show notes as well. All right. So, David, I usually ask you what's the state of the nation this week? But today's different because this is the last state of the nation episode of the year. It's the last podcast, you and I are recording for the year. We're going to go on holidays.

Starting point is 00:03:08 So tell us, you've got to tell us what's the state of the entire year in crypto, not just the week. Sum up the year for us in one word. It's a tall order, Ryan. But I think the state of 2020. is proven. We are proven. Crypto has proven itself in so many different ways. Inflation, we got a solution for that. Terrible culture, we got a solution for that. Terrible culture. Web 2 gargantuanes that are consuming all of our data, we got a solution for

Starting point is 00:03:39 that. All of the use cases that we've always dreamed of in crypto are finally proven out in 2021. So, Ryan, the state of the year in crypto is proven. I think it's true, man. We, uh, We definitely had a lot to prove coming into 2021, and we proved it to mainstream. So I'll plus one that. And I think one of the things that we've proven most is that crypto can be a home for new forms of institutions, right? And the old institutions better get on board or get out of the way. So we are about to get to the 20 biggest events that happened in 2021.

Starting point is 00:04:14 But before we do that, we want to thank the sponsors that made this episode possible. Arbitrum is an Ethereum scaling solution that's going to completely change how we use DeFi. And now it's live with over 100 projects deployed. Gas fees on the Ethereum L1 sucks. Too many people want to use Ethereum and it doesn't have enough capacity for all of us. And that's why teams like Arbitrum have been hard at work developing Layer 2 solutions that makes transactions on Ethereum cheap and instant. Arbitrum increases Ethereum's throughput by orders of magnitude at a fraction of the cost of what we are used to paying.

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Starting point is 00:06:36 even waiting for? Go to Ledger.com, grab a ledger, download Ledger Live and get all of your defy apps all in one space. All right, Bankless Nation, here we are now. We are counting down the top 20 biggest events, the marquee events news items from 2021. And what a year it's been. Just an incredible year for crypto. Hard to summarize all of these things. But we are going to attempt to do that. So what are we doing, David? We're doing a countdown from 20 all the way to one. And what's the rank ordering here? It's a little bit chronological, a little bit by significance. So as things progress down the list. They happen later and later in the year, but they are also more and more significant as well. Ryan, are you ready to get started? Yeah, let's get started, man. Let's start with number 20.

Starting point is 00:07:21 What is number 20 on our list of top 20 biggest events? Yeah, number 20 is Ether and Bitcoin break all-time highs. And this happened at the very beginning of the year. In fact, Bitcoin actually broke its all-time highs in 2020. So technically that did not happen in 2021. Bitcoin broke its all-time high on the 14th of December 2020, and then Ether broke its all-time high on the 18th of January 2021. After three years of depressed bearishness throughout a very long and drawn-out bear market, after Defy Summer happened, which brought in a ton of new energy, Bitcoin finally broke its all-time highs on December 14th, 2020 at $21,000. And then Ether followed Sue a little over a month later, breaking through that $1,400 mark.

Starting point is 00:08:10 in the first few weeks of January. So that's really how we started off this year, is breaking new all-time highs. So we started this year bullish. I feel like we ended it bullish, but also we're in kind of this weird crap territory, David. And we'll see what's in store for 2022. I think both you and I are still bullish going to the new year.

Starting point is 00:08:29 But that remains to be seen what's going to happen. But let's get to number 19 on our list. So number 19, GME and the rise of meme stock. So GME, of course, is the famous game stock stock. They had a little debacle with hedge funds. That happened earlier in the year. And we covered it significantly on bankless. I think it proved out the use case for defy in a big way.

Starting point is 00:08:55 But what was this story? What happened here? There's so much packed into this story. It's the story of stimulus checks, the downstream effects of stimulus checks, which definitely were a big theme of 2020, going into the hands of retail trade. and the retail traders showing the power of all of, you know, apes aping together, apes strong together, or apes together strong, that one. And then also going up against institutions.

Starting point is 00:09:21 It was the apes versus Citadel, the hedge fund. And then also showing the power structures of the world where when a bunch of retail traders band together to short squeeze a big hedge fund, the big hedge fund calls up Robin Hood and says, yo, stop trading. And so this has so many different stories, like wrapped in it, inside of it. The Stimmy checks, retail traders banding together, the inflation and pushing out on the risk curve that people have as a result of increasing printing of dollars, the power structures of the world, the hedge funds connected with the infrastructure to make sure that the hedge

Starting point is 00:09:57 funds can't lose. Oh, man, so much wrapped into this. And this really kicked off the Memes-Dunk Revolution. AMC happened right after this. Dogecoin mooned from below a penny up to 25 cents right after this. And it really just kicked off so many things in 2021. What do you think about this energy? Do you think it's a healthy energy or do you think it's a little bit unhealthy?

Starting point is 00:10:20 I know definitely no traditional mainstream media's view on this, which is pretty negative. But what's your take on this? Oh, I think it's definitely an indication of something that crypto very much stands for, which is power going back into the hands of the individual. and the individuals having and realizing they have more power than what they previously discovered. And so, no, I'm very, very optimistic about this. Also, just like, again, individuals taking more control over their own personal finances, granted meme stocks is kind of, okay, like, whatever, I'll, I'm not going to fight that fight.

Starting point is 00:10:52 But yeah, I think it's just emblematic of the year at large. Yeah, another story wrapped up in that is, of course, like how Reddit analysts are better than the best analysts in Wall Street and how if we band together and research these stocks and these various assets, these opportunities, we can uncover things that Wall Street doesn't. That's really cool example there.

Starting point is 00:11:15 That's number 19. Let's get to number 18. So this is Michael Saylor buying Bitcoin. He did it all year. We'll also wrap up Tesla buying Bitcoin in the mix year. Both of those things happened in Q1. Of course, for Michael Saylor, it's happened the entire year. Why is this number 18 on our list? Yeah, also Michael Saylor also bought a bunch of Bitcoin

Starting point is 00:11:37 in 2020, but it was really Michael Saylor and micro strategy buying Bitcoin in 2020 and then also continuing to do it all throughout 2021 and then actually convincing other companies like Tesla to follow suit. So yeah, 2021 was the year that Tesla, the biggest, one of the biggest public companies out there puts Bitcoin on the balance sheet. And also really when Elon Musk as an individual starts just participating in crypto discourse. And we'll talk about that in the honorable mentions category later. But yeah, Michael Saylor, Tesla, and a few other public companies, putting Bitcoin on the balance sheet was a big theme in 2021. Still kind of contrarian, though, because even though, like, Microstrater's doing it, you know, a handful of other firms are doing it. It didn't maybe get as

Starting point is 00:12:24 widespread as people thought it was at the beginning of 2021. There was this idea that all Fortune 500 companies or many of them, their CFOs were going to like, I guess, ape into Bitcoin and start adding it on the balance sheets. And that didn't happen. Yeah, no, that's, people thought that this was going to be a snowball that just rolls. And it kind of stopped with Tesla. After Tesla, like no big significant company put it on the balance sheet. And I, perhaps people just looked at like the volatility of both Elon Musk and Michael Saylor as individuals and be like, well, well, that's, that's, that's It involves how a set of individuals. Not so sure about this one.

Starting point is 00:12:56 Yeah, right. Yeah, exactly. Well, let's get to number 17. So that was 18. But number 17 is the rise of layer two's. David, you and I called for layer two summer to happen. It kind of happened-ish at the end of summer, which is the launch of all of these new layer twos.

Starting point is 00:13:12 But there were definitely some massive successes on the layer two front this year, particularly in these application-specific layer twos like D-Y-D-X. Right here, we're looking at layer two beat. Why was the rise of layer two's a big story this year, number 17 on our list? Well, because the conversation about layer twos and Ethereum has been happening since, you know, 2017, we've talked about layer twos. And so it looked, yeah, plasma. State channels.

Starting point is 00:13:38 Yeah, payment channels. Yeah, all, like, Raiden, all these, like, layer twos, technical and technically count as layer twos, but they weren't the layer twos that we really, really, you know, hoped or dreamed for. And so after 2017, 2018, 2019, 2020, 2020, layer twos are coming. Layer twos are coming. Ryan, we started this podcast saying,

Starting point is 00:13:57 layer twos are coming. In 2021, layer twos actually came, fully fledged, layer twos, EVM-compatible, smart contract-enabled, trustless layer twos arrived on Ethereum. After years and years of research and development and experimentation, main nets are actually deployed

Starting point is 00:14:14 onto the Ethereum layer one, and that's huge. It's been many, many years coming, didn't really have the blow out, you know, if, you know, here, the blow out like adoption that we hoped that they would have. Turns out it was a little bit of a slow role. Turns out these things do not go are not, when you deploy them onto main net, they are not in their final form.

Starting point is 00:14:34 They are still like relatively constrained and limited. But they are in their last phases of just research development and, and the last phases of just actually being tested by the real world market, which is, of course, the last thing. So 2021, actual L2s with actual smart contract capabilities, with actual trustlessness. this came to Ethereum. This kind of bleeds into our next item on the list. Number 16, clocking in number 16, D-Fi, bigger than C-Fi. And this is a story, I think, in two parts.

Starting point is 00:15:05 The first is this. We're looking at a tweet from Hayden Adams from February 15, 2021, earlier in this year. Uniswap just became the first decentralized trading platform to process over $100 billion in volume and exciting. milestone for D-Fi, that on some days was larger than the volume on Coinbase. Also, there were some days in 2021 that Stablecoin liquidity and volumes on Uniswap V3 dwarfed that of Coinbase as well. So kind of a flippening in progress there. The second part of this story is Antonio from DYDX, and this dovetails into what you were saying about scalable layer two's with number 17. He said,

Starting point is 00:15:50 five years ago, I left Coinbase and I eventually founded, uh, founded DYDX today for the first time. DYDX is doing more volume than Coinbase. Oh my God. This DFI protocol deployed on layer two now doing more volume than the Coinbase exchange. Defy grew bigger than CFI in a few cases in 2021. And that's a big deal. What are your thoughts? I think just having days and weeks where,

Starting point is 00:16:20 where defy is doing more volume is just of course the first step to doing months and years. So I think it's it's days and weeks in 2021 and 2022 and beyond it starts to be like oh we're like defy exchanges are doing more volume than coinbase on a monthly basis and then it's not many months after that until it's a yearly basis and then after that is just forever and now defy is completely just eaten CFi's lunch and that is what so just bullet bullish on that and we got the first taste of that in 2021. Bullis, the bankless thesis, which of course says that defy protocols will be at the very bottom layer for the entire financial ecosystem.

Starting point is 00:16:59 Okay, we just breeze through five of these. We're getting to number 15 now. Number 15 is clocking in. China actually banned Bitcoin this time, crypto this time, not just Bitcoin, but all of crypto. All right. So this has been like common fud in crypto circles for many years. Oh my God.

Starting point is 00:17:16 Years. A couple months or so. China's banning Bitcoin. China's banning crypto. Something like that is happening. Well, this year, it felt like they actually did it. How do we know that? There was a mass exodus of proof of work mining machines and companies out of China into other regions of the world. We'd never seen that before. Why is that number 15 on our list, David? Because it's going to be very indicative of global shifts of power. If you believe the crypto thesis that open permissionless public networks are going to be the dominant form of just financial activities. And then you see China pushing out not just Bitcoin mining, but all crypto infrastructure, like websites, exchanges,

Starting point is 00:17:56 out or out of China. And not only do we know that from the hash flow migration, hash rate migration, but we also just know this from the data of holdings of crypto assets inside of Chinese exchanges have also gone to zero. So we know that China is actually pushing out basically everything about crypto. And so this might be the thing that finally ends China's like significant dominance. This might be the thing that costs them significantly in growth and just, you know, integration into the real world economy in the future. It's also really truly helped the Bitcoin narrative as hash flow goes from the east into the west where U.S. regulators are feel much more comfortable about it. It's helped Bitcoin mining, proof of work mining go from

Starting point is 00:18:40 coal-heavy to green energy-friendly. And so that's also helped with its narrative tailwinds. And so there's a lot, a very significant number of positive second and third-order consequences as a result of China actually banning crypto this time, except sad for the actual Chinese citizens because they are now only have the option of the Chinese central bank digital currency, which while it is doing fantastic things to unbank the, or bank the unbanked, it's also putting them even further under-considered. control of the Chinese authoritarian government.

Starting point is 00:19:13 That last point, I think merits some repetition as well. We did a fantastic podcast on the Chinese Central Bank digital currency and their plans around blockchain earlier this year with a book called Cashless. Somebody wrote about what's going on in China. And so if you want to dig deeper into the story, which I encourage you to do, go check out that podcast. We'll include a link to it in the show notes. But that's exactly what China is teeing up.

Starting point is 00:19:40 So step one, get crypto out. Step two, replace crypto with this centralized pseudo-crypto type of system that is completely controlled by the Chinese government. And you have to wonder what other nation states will do in reaction to this, right? There's kind of a fork in the road. Will they follow China and pursue that path? Or will they follow the open, permissionless crypto path and continue to develop on top of those rails? It's something we'll be monitoring into the next year. All right, that's 15. Number 14, this was big, man. A central bank finally adopted Bitcoin. Bitcoin became legal tender in El Salvador. They started purchasing it on El Salvador, a nation state balance sheet. Why is this number 14, David? This has been part of the Bitcoin unofficial roadmap for forever. Like, you know, first individuals, then companies, then countries.

Starting point is 00:20:36 And after countries, there's not much more beyond that. There's only bigger and bigger countries. And so El Salvador, you know, small country, small GDP, but the first. And so Bitcoin is now officially a cryptocurrency, the first ever cryptocurrency, is now legal tender in an entire country. This did not, this also drew a bunch of criticism, you know, the dictator nature of the president of El Salvador, Neubu Keli, and also, So kind of the forcing of Bitcoin upon individuals and businesses in El Salvador didn't always

Starting point is 00:21:12 wasn't always received with positive feedback from both the citizens of El Salvador and from others as well. This has also drawn the attention of institutions like IMF, who feel very, very threatened by this, by the independence of El Salvador from the global financial system. And overall it has been just a huge narrative tailwinds towards alternative currencies that aren't just fiat currencies printed out of thin air by central banks. So just a very powerful story. And hopefully the first of many to come of countries that are choosing alternative assets as legal tender in their countries. Yeah, I think it's an extraordinary story. And I like that

Starting point is 00:21:50 you called it part of Bitcoin's unofficial roadmap, because that's exactly what it is. It's now Bitcoin is on an adoption roadmap. There's not too many, you know, technical plans and improvements in the works, but definitely a lot of adoption things. to take. And the IMF's response on this has been like, let's quarantine the contagion. Let's make sure this doesn't spread to other places in Central America, other places in the world. It was definitely shot across the bow of the nation states and existing institutions of the world. So that in itself is fascinating and I think worthy of being on our list here this year. Let's get to number 13, though. Unlucky number 13, I guess. It's a meme number in itself. And 69,

Starting point is 00:22:33 million dollars is also a meme number. That was the price at which this Beeple artwork sold. $69 million. The highest crypto art sale in history making Beeple, the creator of this art, one of the top three most valuable living artists. Absolutely incredible. This happened in March of this year. We're still in Q1 of NFT Mania, which we'll cover, I think, on this list in in some more detail. But what are your thoughts on this one? Yeah, this this I think is really emblematic of many of the things that make NFTs so cool. People was famous for making digital art, one digital art per day for years, like didn't miss a day. And digital art's not easy to create in a short amount of time. And so the, and as a result of just the nature of digital art before

Starting point is 00:23:25 crypto, he never really had any way to monetize his artwork, monetize his, you know, creations. NFTs gave Beeple the ability to actually monetize his digital art. And so just from going from a guy who kind of an indie guy with a cult following of just like making weird digital art things every single day and a decent size Instagram and then going to actually being able to sell those things because of the power of it slapping a token onto a JPEG that made Beable the number one or one of the top three most valuable living artists. So this is the story of NFTs at large. A lot of digital art, new forms of art, don't have a way to be monetized, and NFTs offer

Starting point is 00:24:08 that for so many people. People was just like a signal of things to come. A lot of digital artists will be funded by NFTs in ways that they weren't previously able to monetize their art. So this was just the first of what turned into a whole entire movement. And now we have photography NFTs, other digital, like music NFTs. You know, Audius has a whole entire platform. platform, for example. And so this is just a great example of the power of NFTs, putting money into the hands of artists that previously did not have such an opportunity.

Starting point is 00:24:38 I think if you're measuring the timeline of the creator economy, right? This $69 million dollar people sell is going to be a key milestone in that. It's like this is an artist's connection directly to fans and a way to monetize his art pieces without any third parties. And the creator economy is definitely a big theme that they carried forward through the rest of the year. But so were NFTs. And that brings us to number 12 on our list. Only a dozen more to go. Number 12, Cryptopunks, board apes, and profile NFTs, PFP, NFTs. What a crazy year for this asset class. Let's talk a little bit about, you know, bored apes, cryptopunks, breaking Sotheby's estimates. Where do you want to start with this one, David? Yeah, the profile picture of NFT movement really just prove. It really helped the whole broader NFT movement because you could see profile picture NFTs in your Twitter handles. And now I have them also in my Instagram and Facebook handles.

Starting point is 00:25:38 And when I uploaded it to my LinkedIn account, I was like, ha, ha, ha, now everyone on LinkedIn has to look at my crypto punk. You put a crypto punk on your LinkedIn profile. 100%. 100%. Awesome, man. And so that I can add my turtle. I think this is really just a breakout use case of the Metaverse, like actually putting a digital representation of yourself as your digital avatar on your all. your social media counts. As it turns out, as the definition of the Metaverse has expanded,

Starting point is 00:26:03 it's expanded into platforms like Instagram and into platforms like TikTok. It turns out that's what the Metaverse is. So having digital representations, unique digital representations, just was an extreme use case and also the dollar value of things like Cryptopunks and Bored Apes. The sticker shock of these things allows people to flex and people love flexing, especially with art. And also just a combination of just like a, a coherent. community, like there's all the cryptopunks, there's all the bored apes, but also have unique people inside of those in those communities. So like you have 10,000 cryptopunks, 10,000 individuals, but you know, only one of them is the albino smile with the hat, right? So I'm a, I'm a crypto punk,

Starting point is 00:26:46 but I'm only this crypto punk. It allows for communities to form with individuality also inside of those communities. And so not only was it a way to flex in the metaverse, flex your NFTs, but also a way to signal that you're a part of a tribe. You're a part of a community, but you're a unique part of a community as well. So just a really big movement this year with the whole profile picture NFT phenomenon. This is New Wave Flex, New Wave Rolex for sure. And I think you're right about something about the profile. It was a perfect fit for all of our existing social media platforms that we know and love.

Starting point is 00:27:23 You could just glue it directly into your avatar image. and it sort of became a representation of you in the Metaverse. Also, from a price perspective, David, what are some of the prices that we're talking about with Cryptopunks and Bored Apes? Like, what are the floor prices or some of the big sales over the course of the year? Well, Cryptopunks recently had that over $10 million sale for a single Cryptopunk, making it the highest profile picture NFT sale ever. The floor price of Cryptopunks, I believe, is low at 60 right now.

Starting point is 00:27:54 The highest, I think, it got to was like $100. 60-Eath, yeah. The highest it got to was 144. I believe board apes are clocking in at 45-eath for the floor. There's a big conversation about board apes flipping crypto punks in terms of the floor price. But overall, just generalized adoption. The board apes have been like the story of an NFT profile picture adoption hands down. I think it's specifically because they got launched in 2020 or early 2021. So they had some of that early momentum. Jimmy Fallon's got a got a board ape. the chain smokers has a board ape. Really, board apes have kind of won the pop culture meme.

Starting point is 00:28:32 But we've just really seen... David, is it true that board apes launched? I think I've got something in my notes, like April 20th, 21. Yeah, 420, 20201. Such a new project. Right, right, yeah. So huge, just huge victory by board apes for how much mainstream adoption they've gotten in such a short amount of time.

Starting point is 00:28:51 And so, yeah, we've got the headline up, collection of board ape NFTs, breaks Sotheby's estimates with three days to go. Also, Cryptopunks also sold on Sutherbees. And so really just making their way into traditional art sale auction houses. And so they aren't the only ones as well. Other art blocks made their way here. Also, shout out to Cool Cats.

Starting point is 00:29:12 Definitely deserves to be up here as well. Cool Cats, NFTs, of which I gave mine away. So slight regret on that one. But, okay, it's fine. It's fine. Well, you got someone else into crypto, right? I did. Yes, I did.

Starting point is 00:29:25 That's what this whole move that's about. That's number 12. All right, guys, number 11, getting closer to the top 10. Not quite there yet, but getting closer. Number 11, Axi Infinity. Of course. Just two words. Breakout game, absolutely crushing it.

Starting point is 00:29:39 Some stats. This is a tweet from, let's see, August 6th. The first NFT project, Axi Infinity, did hit $1 billion in all-time NFT trading volume, history in the making. 2.5 million monthly active players in October. The AXS token was about $30 million in market cap this time last year. It got to highs of like $8, maybe $9 billion in the course of a 12-month time span. Absolutely, the breakout token, the breakout price appreciation,

Starting point is 00:30:16 maybe the breakout app of the year combining NFTs and crypto games. Why does this make number 11 on our list? besides everything I just said. Just to help listeners frame the context of one billion in all-time NFT volume, that happened in August, so not even counting the rest of the year. OpenC hit $10 billion in NFT trading volume in November. And OpenC is a platform for trading NFTs. Axi Infinity is a specific NFT project,

Starting point is 00:30:47 and that one NFT project did $1 billion in August. So that is absolutely insane. The SLP token, the strange love potion that is the medium of exchange token in Axi infinity, has also become a medium of exchange token in the Philippines. And start contrast to Bitcoin as legal tender in El Salvador, we now have strange love potions as the unofficial medium of exchange token in the Philippines, which is just crazy. The absolute, just insane amount of reach that this application got.

Starting point is 00:31:19 Entire, like, investment and funds and as funds have been spun up as a result of Axi Infinity, right? Like, oh, Axi Infinity did that thing where they went from, you know, 30 million to $8 billion. Like funds have started as a result of that to invest in crypto gaming. And so just blow out success and just absolutely just move the needle

Starting point is 00:31:40 with what it means to be a crypto game. And it has really just redirected a ton of capital into crypto gaming to people trying to emulate that sort of success. Absolutely. And also all of the rise of all of these gaming guilds as well has been another story. And these gaming guilds themselves receiving investments as well

Starting point is 00:31:58 to sort of marshal the gaming workforce and gaming communities. So super exciting stuff. Guys, we are going to be back with the top 10 biggest items from 2021. But before we do, we want to thank the sponsors that made this episode possible. Alchemics is one of the coolest new defy apps on the scene. It introduces self-paying loans, allowing you to spend and save, at the same time. Deposit the die stable coin into the Alchemics vault in order to get an advance on the interest it generates. Borrow up to 50% of the total amount of your deposited die

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Starting point is 00:33:14 Follow Alchemics on Twitter at AlchemicsFI and join the Discord to keep up to date with Alchemics V-2 and to get involved in governance. Macha, everyone's favorite deck aggregator, has just launched an open beta for gasless trading. So if you're trading more than $5,000 in common eth and wrapped Bitcoin pairs, then your gas fees on Macha are free. And that's why you should be using Macha. Mata routes your orders across all the various DFI exchanges on Ethereum, Polygon, Binance, smart chain, and gives you the best possible price without any trading fees or unnecessary slippage.

Starting point is 00:33:48 Masha has smart order routing that splits your orders across multiple liquidity sources. If Masha sees that it gets you better pricing. Trading on Masha is super easy because it pulls the liquidity for me into a single and easy-to-use platform and has even saved me multiple times from accidentally picking the wrong decks to trade on and getting a bad price. Masha also allows you to make limit orders on chain so you can set and forget your defy-trades and they will go through automatically while you're away. So when you're making a trade, head over to Macha.xy-Z slash bankless. connect your wallet and start getting some of the best prices and most liquidity when you trade your crypto assets. All right, guys, we are back with the top 20 biggest crypto items of 2021. This is a

Starting point is 00:34:30 roll-up of roll-ups. All right. So we're hitting them quick. We're going through them. We went through 10 already. Now, here we are with the top 10. We're going to come back and start with number 10 here. The story is OpenC, OpenC the platform, the eBay of NFTs. crossing 10 billion in all-time sales volume. David, you just mentioned that earlier. From a benchmark perspective, they had months that were bigger than entire quarters for Etsy, okay, Etsy, which has been in existence for years in the physical space. Getting up there with eBay type volumes, not quite passing it, but getting up there this year, what an incredible breakout application for crypto, OpenC. What else you want to talk about.

Starting point is 00:35:16 Definitely one of the things that surprised you and me, Ryan, in 2021 is the just insane amount of adoption that NFTs got. Turns out people like to trade pictures. And so all that OpenC's does is facilitate that sort of behavior. Oh, would you like to trade pictures? Well, you must go to OpenC. And it seems it makes a ton of sense that OpenC had just the insane amount of success that it did in the same year that meme stonks became a really big thing. and the retail trader just buying into memes became a really big thing. Retail traders buying into memes, that is exactly what OpenC enables.

Starting point is 00:35:54 It's like, here, David, go for it. Do you know that domino's meme, right, where, like, the first domino starts and then, like, it collapses in the end. It's like, I feel like some of the first dominoes are, you know, back to, like, central bank stuff. Stimmy checks, inflation. Easy monetary policy, stimulus checks, right, which cause meme stocks, which causes retail phoma phenomenon, which causes like the entire bullcase of NFTs and kind of it meets where you get open sea volume crossing 10 billion this year, right? It's like all of these things are connected. 100%. No, that's exactly right. Yeah. You get your $1,400 stimmy check and then at the end of that

Starting point is 00:36:29 domino is open sea crossing $10 billion in all time sales volume and you're stuck with a bunch of of a liquid JPEC. I've stuck with a bunch of turtles. That's at the end of the domino. Is that where you got your turtle, Ryan, on open sea? Yeah, of course, right? All turtles come from the open sea. Thanks for that. T-Up, David. Wow. Number nine, the Coinbase IPO. That was a long-expected IPO. We thought it was going to happen. We hoped it was going to happen. And it happened in 2021. That was a big event, though. Direct listing on NASDAQ, April 14th was the plan. Why is this significant? Why is it number nine on our list? Yeah, Coinbase is crypto's biggest company. Most employees, biggest revenue, it's our flagship.

Starting point is 00:37:19 It's kind of a signal for the rest of the industry. Now having our biggest company as a public company on the NASDAQ, on the New York Stock Exchange, is just very, very legitimizing. And it actually allows people to invest in the world of crypto in ways that they are used to through selling shovels and also doing it through inside of their brokerages, centralized exchanges. Again, the pre-crypto world is just used to exposure like this. And so it's good for the rest of crypto because it's legitimizing to our industry. It also allows Coinbase to get the funding from the legacy world that they need and allows people to have exposure

Starting point is 00:37:59 in ways that they're more comfortable with. One interesting fact about the Coinbase direct listing, which I think people forget, even though it made a big deal at the time, is that Coinbase gifted 100 shares to every single one of its employees ahead of the direct listing. And I think that directly came as a result of the whole air drop culture, airdrop phenomenon, specifically Uniswap, the retroactive airdrops. Like, hey, employees, we are retroactively rewarding you for your contributions to Coinbase with 100 shares. And I remember, Ryan, when Uniswap did their air drop,

Starting point is 00:38:33 we talked about how Uniswap has shifted the Overtin window of capital, what it means to have a relationship between capital and labor, and allowing labor to earn capital. not just currency as a way to solve wealth inequality and wealth distribution. And I think Coinbase is taking a leaf out of the ethos of crypto by gifting out 100 Coinbase shares to all of its employees. And so not only was it one of the biggest direct listings, biggest public events of all time, or excuse me, in 2021, but it also did it in a very crypto ethos way. So congratulations to Coinbase and tip of the hat. Yeah. So I guess one thought on that to you is,

Starting point is 00:39:11 right? So overall, I think it was a great move. And I think it's like net, very legitimizing to the space to have a crypto bank, a crypto company listed on the NASDAQ. I think there's a lot of value there where you have Wall Street analysts now pouring through a coin-based documentation and as a byproduct, learning about Ethereum and Bitcoin and like Defi, right? That's super cool. And I think that's fantastic. But also part of me, even though they did things like the employee gift of shares, part of me feels like this is also a missed opportunity, right? So part of me is a little bummed out that we didn't, there wasn't a token at the end of this for actual users, because that would have been the completion of your thought, right? So like there's some value in air dropping equity or tokens, stocks in this case, to employees.

Starting point is 00:39:58 But the next step would have been some sort of token, some sort of appreciation, some sort of value dropped to the actual liquidity providers and users of Coinbase. And we weren't able to make that happen. And I think part of that is like goes to number eight on our list, actually. So it's a brilliant segue from number nine to number eight. And that is the story of Gary Gensler. Okay, Gary Gensler, and the article's down, bad gateway for Gary Gensler. Let me try to reload this. Gary Gensler was confirmed by the U.S. Senate as the chairman of the SEC. He had previously served in other administrations. He was previously, people forget this, the CFTC chair as well, did a stint at MIT, actually taught courses on blockchain, taught courses on crypto, good courses

Starting point is 00:40:55 as well. I saw some of these lectures, very knowledgeable about the space. And I think some people in crypto thought, hey, this is a good thing. Somebody knowledgeable about crypto is coming in in one of the U.S.'s primary regulatory bodies, they actually know what they're doing and actually talking about. But wow, what a disappointment. Like, Gary, you were the chosen one.

Starting point is 00:41:18 And you failed us. Blocking the Coinbase earned product, no clarity, and the difference between utility tokens and securities and when a network becomes decentralized enough to become a commodity, harsh crackdowns on many areas,

Starting point is 00:41:37 that seem like heavy-handed, rather than collaborating with the industry, it's a very antagonistic approach and some of that has leaked into, you know, Senate meetings where Gary gives testimony, Gary Gensler gives testimony, and, you know, senators press him on various things. And he just seems very anti-crypto in posture and in agenda and a tremendous disappointment. And I almost wonder if that is part of the reason we didn't get a coin-based token. Right? If the U.S. had have leaned into that, pressed into clarifying rules and regulations with respect to what's the security and what's not, maybe we would have gotten that. But David, why is Gary Gensler number eight on our list? Yeah, he just exactly what you said, has really

Starting point is 00:42:25 influenced the rest of the industry, really spooked a lot of people. It's moved a lot of projects and teams and capital outside of the U.S. because the threat or in restrictions, of operating in the US has just become, when people do their cost-benefit analysis, they say the U.S. not a good spot just because of the posturing and the messaging and the lack of clarity coming out of the SEC. We were all told to be cautious. I think the sentiment going into Gary Gensler was cautious optimism about it's like, oh, somebody that finally knows about crypto, that's not going to be just a dunce about how this industry works. Finally, you know, any clarity, any sort of, you know, good clarity is exactly what this industry.

Starting point is 00:43:07 needs. And turns out the need to be cautious was the thing that was the right thing to be rather than optimistic because not only did we get, even though Gary Gensler knows exactly how crypto works, the clarity that we've gotten is absent, right? So even though he knows everything, like we know nothing. And so the signaling out of SEC has been basically empty and has really shifted how the whole entire market works right now because everyone is really cautious to be inside the U.S. We got airdrops that did not go to U.S. investors. We have coin-based products that are not going to U.S. citizens.

Starting point is 00:43:44 And overall, like the U.S. is starting to fall behind in terms of market adoption. A lot of people going to things like just Europe, almost anywhere in Europe or Canada and Mexico as well. Yeah, absolutely. Definitely proven to be kind of an institutionalist. And we should qualify this by saying it's not everyone in the SEC. True. This is, you know, Gary's take, but it's certainly not other. chair members as well. Hester Purse, for example, has pushed back against this agenda.

Starting point is 00:44:13 And, you know, she is a member of the SEC as well. But we'll have to see what happens in, in 2022. Gary Gensler was number eight on our list. Getting into number seven now, David, it's a story of Constitution Dow. This Dow that formed, what, in like 10 days or something, maybe a shorter time period in order to buy something, in order to form capital, to bid against a billionaire or many billionaires, to purchase a copy, an original copy of the U.S. Constitution, a lot of symbolism in this movement. Also, a living, breathing use case of the power of Dow capital formations, the sorts of things you can do in a crypto economy that you couldn't do in traditional meat space. What is the story? Why is it? What is the story? Why is it?

Starting point is 00:45:04 is this significant? Why is this number seven? Yeah, the story is that over 17,000 people contributed a collective $47, $48 million into Constitution D out to collectively buy the Constitution. 17,000 people with the average contribution size of $206 per person. So this was a fantastic grassroots event. I think like half of the people that signed up to be part of the Constitution Dow and send in, again, an average of $206. This was their first time using MetaMask. This is the first time using Ethereum. They just saw some headline.

Starting point is 00:45:40 Internet group of people wants to buy the Constitution. And also, you can be a part of this. And apparently that was enough for people to learn how to use Ethereum, how to use Metamask, how to get Ether into Metamask, and then also join a Dow. And so an insane example of just like adoption for a specific use case. And this is just one Dow. And so hopefully Constitution Dow is a harbinger of things to come. in 2022 with the power of Dow's and the power of capital coordination.

Starting point is 00:46:08 And the same theme of, you know, apes strong together, this is the same energy. Like join a Dow, get something done, just buy something that you want. I think we're going to see a lot of this in 2022. Definitely a theme. Like it definitely goes back to, you know, the GME conversation with meme stock conversation that we're having earlier. And all that said, with all of the success, Constitution Dow didn't actually, wasn't able to actually purchase the Constitution.

Starting point is 00:46:34 ironic is a hedge fund manager, bought it out from under them. The Citadel one, the one that called up Robin Hood to tell them to stop trading. Exactly. Like, what a full story. What a way to bookend the year, and kind of the way it started. That was interesting. The other story that was interesting that I think we'll get to you a little bit later was, you know, some people were pretty upset, disappointed by Ethereum gas fees

Starting point is 00:46:58 when they were trying to withdraw some of their funds, when they were trying to deposit. for a lot of people, it wasn't even worth the gas fee in order to withdraw some of their funds. So that caused some growing pains and consternation as well. But Constitution Dow definitely deserves to be in our top 10. And that's why it was number seven. Let's get to number six. Moving closer to this top five. Can't wait.

Starting point is 00:47:23 EIP 1559. Okay? I say 1559. 1559 is what many of you say. this is the improvement proposal for Ethereum that started burning ETH, improved the fee mechanism for the way everyone pays gas fees on the Ethereum network. It went to play August 4th, I believe, in the Ethereum London hard fork. This was a long-awaited EIP and a very important one from an economic perspective and also from a user experience perspective. Why is this worthy of number six, David?

Starting point is 00:47:57 Well, this is the biggest upgrade to any public blockchain ever, let alone a blockchain that is settling billions and billions of dollars of value like every single week. So this is an example of so many different things. The Ethereum core developers, the client developers, actually being able to coordinate around a spec on EIP-1559, implement that into their client software. After going through a rigorous research phase, which brought in, you know, Tim Ruffgarden, who is a game theory and economist professor at some very prestigious school, brought in a bunch of debate from the ecosystem.

Starting point is 00:48:38 This was one of the most, probably the EIP that had the most eyeballs on it ever. And like you said, like long-awaited two years of communities just drumming saying, hey, we want EIP-1559. We want EIP-1559. And then it actually arriving on Mainnet, without a hitch, by the way, completely just seamlessly integrating into Ethereum and starting to make Ether the asset ultra-sound money. And so to me, when I saw EIP-1559 get integrated, this is already after the beacon chain launched.

Starting point is 00:49:10 But the beacon chain actually was a new blockchain separate from the current Ethereum L1 that everyone touches all the time. And so EIP-159 was the biggest change to the actual live Ethereum blockchain. And so to me, this was the biggest signal that the rest of the Ethereum roadmap was absolutely going to get executed upon because of how big of a lift that it was, how complicated it was, and how well it went off without a hitch. And it has so many important points to bring up with regards to Ethereum, network security, the hardness of money, the relationship between the money and its economy, and the ability for a community to rally around something that it wants and the

Starting point is 00:49:47 developers that support that community to actually listen and implement it. And so I think everybody was surprised with how much Ether EIP1 559 would actually burn inside of the same year when this got launched in August, we would burn over 100,000 ether. No, excuse me. Yes, 100,000 ether. And just a lot more than people thought it would burn when we were daydreaming about it years ago.

Starting point is 00:50:14 And so EIP-1559, formally in the rearview mirror for Ethereum. Absolutely. And, you know, we couldn't leave it with just one slot on the top 20 list. We have to touch it again. because number five, clocking in a number five, is the ultrasound money narrative. And that dovetails nicely with EIP 1559, but isn't the only aspect of EIP 1559, right? So when we talk about ultrasound money, David, and this narrative taking hold, as I think exemplified by this fantastic website, the community came up with, Ultrasound.money, what are we talking about here? Why is this

Starting point is 00:50:51 worthy of number five. Why is this a major narrative and proof point that came out of 2021? Also, correction, Ryan, if you go down and hit all, it is 1.2 million ether that has been burnt since the implementation of EIP-1559. So, yeah, 10x larger than how I thought it was. Ultrasound money is the first significant, like, meme for ether, the asset, which Ethereum and ether, the asset, really struggled to actually get a grasp on like, hey, like, why is ether valuable? Once upon a time, people just thought it was gas. It was going to have a very high velocity. It wouldn't really store any value. But slowly over time, DFI got built out, and ether as a collateral became a very viable use case. Then EIP-159 happened, and the scarcity

Starting point is 00:51:37 of ether turned into a function of the demand for the Ethereum block space, aka the Ethereum economy. Meanwhile, in the background, we had proof of stake happening, which will be eventually merged. And overall, when you tie all these things together, we finally came up with a meme, Ultrasound Money. And so there's a lot baked into what Ultrasound Money actually means. And turns out that that is actually a good enough meme to get into mainstream adoption. So you can now read about ultrasound money in like Bank's finance reports about Ethereum and just investigative deep dives into the economics of the Ethereum network.

Starting point is 00:52:15 And so now people understand when once upon a time where ether, people thought ether was just this velocity utility token. Now people understand it to be what it really is, which is ultrasound money. Yeah, I remember talking with people back in, you know, 2018, 2019 saying things like, even 2020, the one thing Ethereum is missing is a monetary policy, right? It's like, just like a cohesive, understandable monetary policy, what supply looks like in the future. And that monetary policy is ultrasound money, right? And you can kind of see this on the, on the website. site. If we look at projecting the supply into the future, we've got two parts of three components

Starting point is 00:52:54 in place already that make ether ultrasound money. That is the beacon chain launch, the ability to stake ETH that happened December of 2020, and then EIP 1559, which happened in August. And then next year, going to 2021, we have the proof of work chain going offline and being replaced fully by proof of stake, which will decrease issuance by another 4.1 percent. So that's going to be, next year is going to be the true ultrasound money era for Ethereum issuance. And the cool thing about this is I feel like David, we no longer have to talk about it or meme it very much because now people can just see it in the data and in the numbers. And these numbers are continuously reported block by block. Ethereum becomes more scarce, ether becomes more scarce.

Starting point is 00:53:40 And the meme propagates. So it's kind of taken a life on its own. And that's why it's number five on our list. big year for Ethereum's monetary policy. Now we get to number four, which is kind of the downside of this as well, some bumps along the road that Ethereum hit. And that is gas fees. Ethereum gas fees being too damn high. Okay. So there's a good side of that, of course, because high gas fees means high blocks-based demand, which is product market fit for Ethereum. That's the thing it's trying to drive towards.

Starting point is 00:54:17 It's like more demand for its block space. But the flip side of this is it prices a lot of user activity off of main net, off chain. And users get upset about this, right? Why should a uniswap trade cost $50? I mint an NFT and it costs $250. I can't even afford to move it from one account to another. It's not even worth that much. So there's kind of almost like a populist uprising from a user person.

Starting point is 00:54:45 perspective saying, ETH fees are too damn high. I'm going to side chains. I'm going to alternative layer two's. Ethereum is broken. This cannot, this cannot persist. And of course, I'm not going to, I'm not going to tease number three. We'll get to number three in a minute. But that leads to number three on our list, too. But let's talk about for a minute, Ethereum fees being too high. And what are the ramifications and implications of this that played out over 2021? Yeah, there's a friction with ether as ultrasound money and Ethereum as a utility network to do defy smart contract stuff. And Bitcoiners have actually had this criticism of Ethereum for forever now.

Starting point is 00:55:23 It's like either you can have a smart contract platform or you can have sound money, but you can't have both, implying that like the more, the higher the value of the asset is, the less utility the actual smart contract chain can offer. And that's true in a world where there's only one single Ethereum layer one. I think in 2022, we are going to discover that the Ethereum L1 is not a place for users. That is not where people should find the utility. The utility is discovered in execution environments and where transactions actually get executed. And while that does happen on the L1, it also happens on layer two's.

Starting point is 00:56:00 And so while we're watching this graph of ETH price, ETH gas fees go up and up and up and up and up, I think we are also simultaneously seeing users pushed out into the layer two's more and more and more and more. The incentive to go to layer two's goes up as gas fees go up. That's what L2s are for. And so we are in this limbo period, this weird, awkward phase of Ethereum where everyone's still on the layer one, gas fees are really, really high. People haven't migrated to layer two, but eventually everyone will be on layer two and they will reconstruct in their heads what it means to pay a gas fee.

Starting point is 00:56:32 And so this is how Ethereum gets best of both worlds. It has cheap execution on the layer two and then strong settlement assurances on the layer one. and that's hopefully how we can balance these things. I think while we're in this awkward phase, this idea and this concept of the Ethereum main chain, not big for users, but now it's for chain settlement, for the settlement of roll-ups, which is an aggregation of all sorts of user activities.

Starting point is 00:56:58 While Ethereum is in this awkward phase, I think competitors have really taken advantage of it. And that gets us to number three on our list. We're in the top three now, the biggest things that happen in 2021. and that is the rise of alternative layer ones and their assets. We're talking Solana, we're talking Avalanche, we're talking Terra, we're talking Binance smart chain earlier in the year, and a slew of other competitors that have locked in a tremendous amount of total locked value. They have

Starting point is 00:57:28 NFT ecosystems, they have a DeFi economies and defy projects that are not the typical Ethereum projects. Some of these are copies, things that have occurred on Ethereum. Some of them are sort of net new, and they're all taking advantage of low gas fees and Ethereum's high gas fees in order to execute their strategies. Of course, we also have more Ethereum-line side chains like Polygon, which are moving to layer two technology as well in the mix. But let's talk a little bit about the rise of alternative layer ones. How did this happen and why?

Starting point is 00:58:06 As it turns out, what you wanted to sell or be selling, at the start of 2021 was block space. When it comes time for just mainstream adoption of crypto, where everyone's coming to become and start doing crypto things, turns out we need a ton of block space for those people to do crypto things with. And expensive block space isn't going to onboard the world. Ethereum as a resource constrained network, which constrained means how it allows itself to maintain decentralization.

Starting point is 00:58:34 Having that constrained block space just doesn't create enough block space for the whole rest of the world. And so layer ones, other alternative layer ones, have taken advantage of this fact that Ethereum has constrained block space. And so I think Binance Smart Chain, Avalanche, Solana, and a few others as well have all cropped up in order to answer for the growing demand for block space. And they actually, those were the chains that actually met the demand of users. And that's why since January of 2021, when Ethereum had over 95% dominance in TVL, Ethereum is now down to 62.5% of, total TVL supplies is of Ethereum. The rest of the one-third of that total TVL is split between chains like Terra, Binance, Smart Chain, Avalanche, and Solana. It's interesting. Many people are

Starting point is 00:59:22 calling this a new multi-chain world. This is kind of the new normal and expecting Ethereum's market share of total locked value to erode over time. Others will counter and say, look, we haven't yet seen layer twos in their fully manifested form and wait until Ethereum, gets out of puberty, you know, and comes out on the other side of this with, you know, big muscles and a new job. And, you know, it's like, it's got its entire roll-up ecosystem that's launched on top of it. And that might be a different story going into 2022. So we'll have to see. But, David, we are now to our top two. Top two items on the list of biggest things. I want listeners to pause and reflect on what they think it is before we get in there.

Starting point is 01:00:05 What do you think it is? What could it be? Top two things. What else happened in this crazy year that was 2021? Coming in at number two, David buys a crypto punk. Right. That's what's number two, right? Shilling our bags. That's number two, yeah. Not number two.

Starting point is 01:00:22 The real number two is this, the infrastructure bill. Oh, yeah. Et tu Brutei, okay? Politicians betraying us, treasury betraying us. This infrastructure bill is all too important in the American legislative process and a very important bill to get passed. Treasury snuck in a provision that made a whole bunch of our crypto transactions, the regular things, where I send you some Eith, David, or you purchase a crypto punk, we're called brokers in these transactions. KYC, AML, tax requirements, everything that comes with it, really clamping

Starting point is 01:00:55 down on the space. This language was snuck into the infrastructure bill, a must-pass bill sometime over the summer. And we got to see a lot of things play out as a result of this. We got to see some conversations in Congress about proof of work versus proof of stake and maybe some broader understanding of what Defi actually is, some pushback as well. I also feel like the crypto community woke up and discovered some of its latent strength, its ability to actually push policy decisions, its ability to flex some muscle from a lobby perspective and to start educating members of Congress, a lot wrapped up in this one. That's why it's number two.

Starting point is 01:01:42 What from your perspective makes it so high on our list? This is the event where crypto learned that if it's not at the table in these negotiations, then it's on the menu. And that's exactly what happened here. It's like no one, people, no one, we didn't really have any crypto representation during when some of this infrastructure dealmaking was being written. Therefore, they were like, oh, the crypto people will just tax them a lot so we can get a bunch of their money. And it turns out we weren't there to defend ourselves. And that's probably the last time that that's ever going to be true, because now we are definitely there. And so what used to be a very significant deficiency in our representation in Capitol Hill

Starting point is 01:02:22 has turned into just a great amount of just energy put behind. the people that are now teaming up. And there's a lot of different lobbying groups, things like Coin Center and Blockchain Association that are now becoming far better coordinated between each other. There's a lot more energy and a lot more funding here. New lobby groups are coming to the table. We saw Andrew Yang saying that he wants to make the Humanity Forward Party, the Crypto Party.

Starting point is 01:02:49 Politicians have realized that there is money and energy inside of this movement. And they saw that from the reaction. of the crypto industry towards the infrastructure bill. And so while it was a big L in a way, it definitely was a big L. Like there's definitely, and this wording is still in this infrastructure bill, by the way. So like we're actually all still going to become brokers at the end of the day. But while while it was an L, I think it's really a long-term W because we're going to be able to redirect some of that failure into what crypto people are good at. And what crypto people are good at is winning.

Starting point is 01:03:25 And so we always find our way to make lemonade out of lemons. And I think that's exactly what's going on here. And this doesn't go into effect until the year 2024. So we've got some time. Also, you know, there's a lot of work going on to pass an amendment, to push an amendment through that would kind of nullify these problematic clauses in the infrastructure bill. So that's ongoing work.

Starting point is 01:03:47 And I think exactly to your point, right? So the crypto industry and politicians realize that crypto has the two things that they really like. and that's money and votes. We are passionate single issue voters when it comes to crypto freedoms. And I think politicians are starting to wake up to that. Toward the end of the year, David, there was a, I believe, I forget where in Congress this was,

Starting point is 01:04:13 what committee, what organization in Congress this was. Do you recall it somewhere in Congress, and there was one of the most successful meetings we had to date about crypto, crypto items and crypto on the agenda, there were actually some politicians, Congress members, who stuck up for crypto, talking about the merits of even things like Web 3 in a way that we hadn't previously seen. So that is this muscle in action, and that I hope is the future conversation around crypto in the legislative bodies of the U.S. That gets us to number one, David.

Starting point is 01:04:48 Number one, coming in at number one, inflation. 7% inflation this year. The number one item, a macro item, something crypto people have been predicting for years. We've seen asset price inflation. Now here's inflation in CPI, in consumer prices, in energy, in housing, in groceries, all the things you care about that you spend your money on as an individual consumer showing up there. They said it was transient at first earlier this year. did not show itself to be very transient.

Starting point is 01:05:27 They're getting rid of the word, recycling the word transient. But let's talk about this. Why is this number one, David, of all the things we could have put as number one for 2021, we chose inflation. Why? I think this story just indicates why monetary policy, global monetary policy, is so, so important. Because if we go and recap the list that we just ran through,

Starting point is 01:05:53 So many of these things are triggered by inflation, by the money printer. Bitcoin and Ether, starting at number 20, Bitcoin and Ether, new all-time highs. That definitely has to do with the money printer. GME and the rise of meme stonks and the pushing out of individuals with their stimmy checks into risk-on trades and just yolowing their money into Robin Hood. Maybe that's because of the money printer. Michael Saylor and Tesla buying Bitcoin, definitely because of inflation. Defy, bigger than C-Fi, definitely has tailwinds because of all the money going into

Starting point is 01:06:23 crypto because of the inflation. Bitcoin legal tender in El Salvador. Well, the other currency that El Salvador has is the dollar, which is inflating. So now they also have Bitcoin, which isn't. People's $69 million sale, definitely because of people are being pushed out on the risk curve because of inflation. Bored Apes profile picture NFTs, probably the same thing. Axi Infinity, maybe, probably. OpenC, $10 billion in NFT volume. People are trading JPEGs because of the devaluing of the dollar in the same way that did you know fun fact ryan that uh Rolexes are completely sold out across all Rolex stores well so like open C is also doing 10 billion dollars in NFT volume this these are the same energies um uh coinbase IPO maybe not gerry gensler IPO uh maybe not constitution Dow maybe not

Starting point is 01:07:10 EIP-559 eth is ultrasound money ethereum fees are all too high not necessarily due to inflation but definitely telling the other side of the story of disinflation uh and also the rise of alternative layer one demand for block space, perhaps just a demand to do crypto things, crypto being an anti-inflation hedge. And so I think the reason why we're talking about inflation here is because it impacts everything. Everything is impacted by the monetary policy of the global macro reserve asset, which is currently the dollar. It impacts all forms of life. It impacts everything we do. And now the fact that it's at 7% annualized in the last month, it could only get hotter from here.

Starting point is 01:07:51 inflation is the most influential, impactful thing that happened in 2021, in my opinion. David, did you just do a roll-up of the roll-up of roll-ups? Did you know, Ryan, that you can settle a roll-up that settles on another roll-up? That settles on a roll-up? Yeah, that settles on a roll-up. The real reason we put inflation as number one is because it was an opportunity to roll-up this entire roll-up, which was an aggregation of roll-ups anyway. That's the real reason.

Starting point is 01:08:18 But, yeah, also, look, it affects everything. It is that first domino in that domino meme to go over, and it leads to all of these things downstream. I think a question going into 2022 is, why is the Fed going to do about it? Here's a Jim Bianco tweet that says they don't have a lot of choices. Maybe they have two choices, and both of them are bad. You respond to inflation and hike the interest yields aggressively, okay? Or you don't respond to inflation and you destroy inflation. your influence reputation as a governor of the system, as the Democratic Party in this instance.

Starting point is 01:08:59 And so you can't also do nothing and wait too long because, you know, people are upset, the price of the pump. People are upset with asset prices rising. So what do you do? They're kind of in between a rock and a hard place. And, you know, they'll have to make some difficult decisions. But it's not even clear that the Fed is even in control at this point. They're kind of a, they're just going with the system and responding as needed to, you know, to what they think they should do. They're sort of a product of the system at this point. That's something that we will be tracking in 2022.

Starting point is 01:09:33 And that's our wrap-up. The top 20 things, biggest things that happen in crypto for 2021. David, there are some honorable mentions we should also get to you that almost made our list. What are those honorable mentions? Yeah, the first one that we have, again, in no particular order. The first one is loot. The whole loot phenomenon.

Starting point is 01:09:52 Ryan, remember when we were buying black images with white text on them on OpenC? That was fun. Yeah, that was a crazy week. Yeah, it turns out that like this whole loot phenomenon, which was an inverse of the typical NFT JPEG phenomenon, where rather than having the actual JPEG tell people what the token means, you have the token tell developers what it looks like.

Starting point is 01:10:16 And what that means is that there's actual embedded data in this token. that actually has items inside of it that allows the world around loot to come and be built around it rather than having a token just resemble a specific JPEG. So it's an inverse between the data and the token. And that allows people's imaginations to go wild. Game developers can just go wild. And that really, really, it was actually really at the start of this whole kind of metaverse word.

Starting point is 01:10:43 The metaverse word was definitely being used. But it really got kicked off with this loot phenomenon, at least inside of the crypto industry, with this design of a token that is inside out, that allows the imaginations of the people and its owners and the developers around it to actually bestow what the thing actually looks like. So that was a huge conversation starter and still actually has a bunch of just like building and investment and trading going on to this day. Another honorable mention is in real life crypto events. They came back a little bit this year. I think there'll be more in 2022, but they came back this year and that was important for the industry. What are your thoughts?

Starting point is 01:11:18 I would say they came back, but also it was a first because the crypto in real life crypto events of 2017 and 2018 were of a very different time. And there weren't very many in real life crypto events from 2018 to 2019 because it was a bear market. The crypto events that are here today are making headlines in magazines and pop culture magazines. And as it turns out, dope parties are a way to onboard a lot of people into crypto. And so crypto is not only getting its foundation strengthings on a fundamental basis, where Bitcoin is being bought by central banks, but also in real life, crypto people are now, it's now a cultural movement. And it's a global cultural movement. And so this is, I think, really shifting what it means to be part of the crypto industry, because now being part of the crypto industry also implies that you go to something in real life, Ryan, Ryan. It's happening. I'll be going to things in real life next year, I promise. Not a 2021 thing. It's a 2022 thing. Let's group these next honorable mentions together. Elon Musk, pumping Doge as well. That was a theme for the year. Pumping all sorts of things.

Starting point is 01:12:28 Elon Musk, the meme lord, was an honorable mention, something that happened a lot in 2021. also shib the price of dog coins going wild so somebody you know reportedly on shib turned $8,000 into $1 billion I'm not sure how much liquidity was on that $1 billion but quite a trade on SHib tokens and meme coins so dog tokens went wild this year also NFTs made SNL as well do you remember that SNL skit David what's the significance of that again, NFTs is just making their way into mainstream adoption. SNL, it's a cultural icon. And now they're just, they made us get about NFTs.

Starting point is 01:13:13 And so NFTs are just now at the family dinner table. People are going to talk about them here at Christmas. They talked about them at Thanksgiving. If it's in SNL, it's in public awareness. The last, the last two honorable mentions, the ETH Bitcoin ratio, ETH may be gearing up for a flippinging. We talked a little bit about that at the outset. but that looks like it's getting closer,

Starting point is 01:13:35 maybe a potential going into 2022. And maybe the last item on the list is Facebook, becoming meta. Facebook, maybe co-opting the Metaverse idea or maybe building an alternative to it. Depends on your perspective here. What are your thoughts on that last one, meta? Yeah, it's definitely a sign of how much the metaverse is in vogue and also a sign of Facebook trying to run away

Starting point is 01:13:59 from its previously tainted branding, but I don't think it's going to be able to get too far away from that. two still web two. But the, maybe 2020 is the year of the Metaverse. Maybe that's too soon. I don't know. But the Metaverse is on people's minds, be it big Silicon Valley companies or individuals like us. The Metaverse is in. Guys, that's it. Top 20 items for the year plus some honorable mentions, bonus items for you. We hope you have a happy holiday. It's been a lot of fun doing bank lists this year. David, I don't know how many recordings we did.

Starting point is 01:14:33 this year, how many articles we wrote. There's a whole bunch. And we hope you leveled up just as much as we did this year. I see a meme of the year on the agenda too, David. I don't know if you snuck this into the list. Oh, yeah. I don't have too much conviction on that one, but I think it's fun either way. All right. meme of the year. Defy mullet thesis. There it is. See, in the front, defy in the back. Man, I got to say, dude, you look great a mullet. I think you should try this for real. Dude, that looks like a real photo of you, man. Like, that's not, that It looks like a college Ryan. It's what it looks like under here.

Starting point is 01:15:08 Crypto wife is fantastic. That's best mimer on Twitter, in my opinion. Guys, this has been State of the Nation. Hope you enjoyed it. Let's get to the financial disclaimers. Disclaimers is the end of the episode. ETH is risky. Bitcoin is risky.

Starting point is 01:15:23 Crypto is risky. You could definitely lose what you put in. Take it from the guy in the Santa Hat. 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.

Starting point is 01:15:35 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 Unlocked. If you're interested in crypto, the bankless community is where you want to be.

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Bankless - 2021 ROLLUP: Top 20 Crypto Moments in 2021

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