Bankless - 79 - The Crypto Coalition | Ryan Selkis

Episode Date: August 23, 2021

Ryan Selkis is the Founder and CEO the crypto data analytics platform Messari. Last time Ryan was on the podcast, we debated Ether’s properties as a money and the triple point asset thesis. We revisit many of these topics and explore what has changed in the landscape over the past year. However, we also discuss a perhaps more pressing issue: the state of regulation for the industry. Ryan is poised to take a strong leadership role in the political side of crypto, and he’s developing offensive strategies for the crypto vs. nation-state conflict. Listen in to learn why he’s now a single-issue voter. ------ 🚀 SUBSCRIBE TO NEWSLETTER: https://newsletter.banklesshq.com/  🎙️ SUBSCRIBE TO PODCAST: http://podcast.banklesshq.com/  🎖 CLAIM YOUR BADGE: https://newsletter.banklesshq.com/p/-guide-2-using-the-bankless-badge  ------ BANKLESS SPONSOR TOOLS: ⚖️ ARBITRUM | SCALING ETHEREUM https://bankless.cc/Arbitrum  🍵 MATCHA | DECENTRALIZED EXCHANGE AGGREGATOR https://bankless.cc/Matcha  🔐 LEDGER | SECURE YOUR ASSETS https://bankless.cc/Ledger  🦄 UNISWAP | DECENTRALIZED FUNDING https://bankless.cc/UniGrants  ------ 📣 TracerDAO | Building DeFi Infrastructure. Join the Discord! https://bankless.cc/TracerDAO  ------ Topics Covered: 0:00 Intro 4:00 Ryan Selkis of Messari 6:44 Ryan’s Broad Approach 12:41 Why Do They Hate Us? 18:13 “Protecting Us” 27:30 Single Issue Voters 35:49 It’s a Team Sport 45:00 Aligning with Regulators 54:00 Institutional Reactions 57:23 What the Markets Say 1:01:01 Ether as an Asset 1:08:40 The Flippening 1:10:44 Ethereum’s Narrative 1:13:53 Market Cap vs Money 1:17:37 Institutional Demand 1:19:55 Hot Sectors for Analysis 1:23:24 The Network State 1:26:41 Closing & Disclaimers ------ Resources: Ryan on Twitter: https://twitter.com/twobitidiot?s=20  Ryan’s Tweet Thread: https://twitter.com/twobitidiot/status/1426020410370449410?s=20  Mainnet Event: https://mainnet.events/  Messari: https://messari.io/  ----- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research. Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here: https://newsletter.banklesshq.com/p/bankless-disclosures 

Welcome to bankless, where we explore the frontier of internet money and internet finance. This is how to get started, how to get better, and how to front-run the opportunity. This is Ryan Sean Adams. I'm here with David Hoffman, and we're here to help you become more bankless. David, Ryan Zellkus on the podcast, we cover two things. First, everything that's going on in the government, regulation, nation state versus crypto. And second, we got to ask him once again, what is. thoughts on Ether? Has that changed since the last time we spoke? Last time we debated it, last time we argued it. Really interesting discussion here. I really think Ryan could be positioned to become one of our industry's leaders. He already is at Missouri. But now that this political

conversation has really blossomed, Ryan really seems to be positioned to take a even more leadership position, kind of helping the crypto industry navigate a part of the world that everyone really gets frustrated about and no one really wants to have to partake in, yet you're kind of damned if you don't. And Ryan seems to be having just a fireball of energy behind him with regards to how to approach crypto regulation to get what we want. And rather than acting defensively, which is like anytime some sort of bad regulation comes up, crypto like rises to the challenge to defend us, Ryan is thinking offensively, which is how do we attack these issues and instantiate crypto in the parts of the world that we want to instantiate them in

before bad regulation even comes about. I think that's a fantastic strategy and I really enjoyed that part of the conversation. And then like you said, Ryan, in the second half of the show, we turned to a rehashing of a debate that we had last time Ryan came on the show about ether as an asset, whether institutions are going to be interested in it and where it fits in his personal opinion and his portfolio. And there was definitely some concessions from versus last time that he came onto the show, not as many as I would have hoped. But I think if we just keep on revisiting this conversation with Ryan over and over is simply going to be a death by a thousand concessions, it was nice to see that Ryan has come around more and more to ETH as an asset like

we kind of have been spinning here on bankless. But I think there's a lot more room where he can keep on coming around to Eith a little bit more and more and more. Yeah, there's definitely room for growth there, you know, at the same time, like the last conversation we had, it was literally a debate on whether ETH is money or not. What we meant by that was, is it a reserve asset worthy of monetary premium? Is it going to like do well in the future? Well, listeners will have to tune into that section to hear what Ryan has to say. We'll leave it there. Anyway, guys, this was another fantastic discussion. We hope you enjoy it. Before we get to the conversation, we want to thank the sponsors that made this episode possible. Arbitrum is an Ethereum scaling

solution that is going to completely change how we use DFI. If you've been using Ethereum for the past 12 months, you've probably noticed the high gas fees and the slow confirmation times that have been plaguing defy. Too many people want to use Ethereum and it doesn't have enough capacity for all of us. That's where Arbitrum comes in. Arbitrum is a layer two to Ethereum, which means Arbitrum can increase Ethereum's throughput by orders of magnitude at a fraction of the cost of what you are used to paying. When interacting with Arbitrum, you can get the performance of a centralized exchange while tapping into Ethereum's level of security and decentralization. This is why people are calling this Ethereum's broadband moment where we get to add performance onto decentralization and security.

If you're a developer and you want to save on gas costs and overall make a better experience for your users, go to developer.offchainlabs.com to get started building on Arbitrum. If you're a user, keep an eye out for your favorite defy apps building on Arbitrum. Arbitrum has been working with over 300 teams, including Ethereum's top infrastructure projects, and we'll be opening up to all users shortly. There are so many apps coming online to Arbitrum, so you may want to be working. to pack your bags in preparation for the great migration to Arbitrum layer 2. To get up to speed with Arbitrum, follow them on Twitter at Arbitrum and join their Discord. Bankless is proud to be supported by Uniswap.

Uniswap is a new paradigm in asset exchange infrastructure. Instead of a cumbersome order book system where trades are matched with other humans, Uniswap is an autonomous piece of software on Ethereum, which is what Ryan and I call a money robot. No human counterparties or centralized intermediaries, just autonomous code on Ethereum. Input the token you want to sell and receive the token you want to buy. Something brand new in the Uniswop ecosystem is the Uniswap grants program is now accepting applications for grants. We have been saying this for a while and we'll say it again. Dow's have money and they are in need of labor.

If you think that you have something to contribute to the Uniswap Dow, apply for a grant to Uniswap. Just look at the size of the Uniswap treasury. It's almost $3 billion. This mountain of capital is looking for labor. Do you have something of value to contribute to the Uniswap Dow? No matter how big or small your idea is, you can apply for a UniGrant at Unigrant.org and help steer Uniswap in the direction that you think it should go.

That's exactly what we did to get Uniswap to be a sponsor for Bankless, and you can do the same for your project. Thank you, Uniswap, for sponsoring Bankless. Bankless Nation, we are super excited about our next guest. He's been on the show before. This is Ryan Selgus. He's the founder of crypto analytics firm Masari Crypto. He's a long-time crypto advocate.

He's been a content producer in crypto for quite a long time. And more recently, he's become a single-issue voter. We're going to talk about what that means, too. Ryan, great to have you back. Welcome to Bankless. Thank you for having me. I'm surprised that you wanted me to come back and slap you around a little bit more after the last. Oh, man.

Well, you are alluding to the second topic we're going to cover, which is Eith. and whether your thoughts on Heath have changed. We had a debate the last time you were on on whether ETH is money or not. Want to get to that. But first, man, I got to tell you, it feels like you've been on a streak lately or something. Masari just raised $21 million from some massive names.

Point 72. That's billionaire Steve Cohen. That's his firm. You've been spitting fire about unelected bureaucrats in government. I feel like rallying the crypto industry about what's going on in the infrastructure bill and getting the industry involved in politics. How's it feel, man?

How's it feel to be Ryan Selkis these days? Feels pretty similar to how it did two weeks ago. I've lived through a lot of chaos in the last eight years in crypto. You know, that's a lot of dog years. So I think generally pretty steady. You know, social media can can be read a bunch of different ways. And I know when to dial down and up intensity, I think, depending on what's going on.

But it doesn't really change my day to day. So I think the first thing that is really important about the last couple weeks is what happened in the way that it happened with the infrastructure bill and this last minute provision that was inserted and then the bipartisan efforts to amend this particular provision of the bill and then the last minute stonewalling. everything about the process cover to cover was essentially 100% of what everybody hates about the U.S. government and government and today's decaying institutions in general. So this was not a very like risky position to go out in a limon, but it was an opportunity, I think, to help shake people awake and kind of catalyze people and get them riled up in the Ari Emanuel.

Never let a crisis go to waste camp, right? So I do think that this is a crisis for crypto. I don't think that it's going to shut the industry down. I don't think that it's something that's going to necessarily cripple us, but it's definitely a move in a very negative direction that we're going to need to work hard to overcome. So it is a crisis. And I think to the extent that people are finally starting to take political effort seriously and ongoing engagement down to D.C. seriously, that's important. Now, when I say engagement, that's a loaded word. And a lot of my frustration, I think the unique voice that I have in this particular issue is, I'm sick of the bullshit as is everybody else. But most people can't actually say that quiet part out loud because they're running

regulated businesses within crypto. They're either running an exchange, a custodian. They have a token. They're investing other people's money, right? So there's a lot of things that I think are pretty unique about me just from where I sit in the industry, A, running an information business, and B, not necessarily touching other people's money or processing crypto transactions, so it can be a little bit more vocal about some of this. The other thing that's important is this is a very bipartisan response right now. I think if you look back to the early crypto days, it's a lot of libertarians. It's a lot of like, you know, crypto anarchists and small. government axonists more than anything else. But more recently, crypto, Ethereum, all the new

application builders, there are a lot of progressives or classical liberals, I guess, that have entered the frame more recently. And it's not that they don't care about progressive issues. They do. They just also happen to be very passionate about tech's ability to kind of advance humanity and be a part of the solution, particularly when, you know, juxtaposed with government and some of these like legacy, like monolithic institutions. So I think both from like right and left, the thing that has changed in the last couple of weeks is people are really fired up. There's an opportunity to get engaged down in D.C. and enforce the issue because this is going to be very politically expensive for representatives on both sides if they end up on the wrong side of it. And I think the,

The big unique tone or niche that I think I tapped into is the fact that engagement no longer needs to just mean education, advocacy, kissing ass, essentially. There is, I think, an opening to play a little bit of offense now. And I think everybody right now is scrambling and figure out, how do we do this productively? Because, yes, most of this is still a. an education problem. And the episode that you guys just did with Jake was perfect, right? Like, I agree with him.

Like anything that can be ascribed to incompetence versus malice, generally, it's incompetence. And it's historically just been that they're not paying attention and they don't understand how this tech works. But I don't think that's really an option any longer for elected representatives to not pay attention because crypto is the fastest growing sector of American tech. I think it's important for us from the geo,

geopolitical perspective, particularly when we compare ourselves to China and our future competitiveness. And it's basically the only technology that is doing anything to preserve civil liberties in this country and defend against the overreach of the ubiquitous surveillance state. You look at Apple's announcement from last week that was buried, or a couple weeks ago, that was buried on a Friday that they're essentially going to incorporate backdoors into their products. You think about basically what Treasury is trying to do with this bill in making sure that all of defy is surveilled. And at some point, we need to push back against the illegalization of all private transactions and play a little bit of offense. And I think riling up the base,

organizing at more of a grassroots level. And yes, ultimately primaring and unseating elected representatives that are openly hostile versus just ignorant about crypto is going to be a good strategy. The difference between this year and years past is we have a lot of money to actually put this in action. And I think it has to be done now because the market has been going up. And if you're going to play offense, play offense in a bull market when there's as much distress as they're currently as in institutions, don't do it after a 50, 60, 70 percent drawdown when they can just slap us around on consumer protection, on fraud, on everything under the sun that you know is coming the next time the market takes a deal.

I love your voice in the space. And for the listeners, I think we're going to divide this conversation like two parts. The first is we've got to talk about regulatory nation state versus crypto. And the second part is I want to hear an update on your opinions on ETH as an asset, Ryan. But like, let's stay with this theme of playing offense, crypto versus nation state. This is for bankless listeners, this is kind of a taste of the fire that Ryan's been spinning lately on crypto. And I think this really resonated. There's a lot of likes on this tweet. But it's basically the message, I'm sick of feeling like we have to apologize for all our early stage and walk on eggshells around politicians and regulators. This is Ryan

tweeting this out. We built a $2 trillion financial market from scratch in less than a decade with absolutely no institutional help and active encumbrances from government. Meanwhile, the banks give you 0.025% interest on your deposits and front run your trades legally. And DC Gryfters overspend and debase your tax dollars while they insider trade stocks with impunity. And this really captured, I think, a lot of the Zieggeist and Crypts. and that's kind of that playing offense. As you said, it feels very much, Ryan, like the politicians are kind of newly experiencing this force and not sure on what side they're going to fall on, right?

So, like, it's a bipartisan thing. It's not left versus right, like almost everything else in our political discourse these days. And the politicians haven't yet decided, are they going to be crypto-friendly? Like, what's the cohort? What's the coalition around crypto that's going to support this? or are they going to be anti-crypto? And what's the coalition that's going to support that?

It feels to me like it's all squishy and they haven't figured it out. But can we talk a bit about like, I'm curious, it seems in D.C. that there is a certain contingent. We asked Jake this question as well, but like that is against crypto. And I want to know why. Like, why do they hate us? Well, because they can't control it or they can't control it in a way that they would like to, which is fully, I guess, for lack of a better term.

And for many decades now, we've had a two-party system that is really just one big government party with different policy goals. Libertarians lose elections because they always say, vote for me, I'll do less work. And it's probably what we need, but it's not a very good message because people want to know, I'm going to vote for someone powerful. They're going to advance my agenda. They're going to advance my interests. I'm going to get this, this and this from this political leader. And really what we need is just a greater degree of.

decentralization. And I think that's where crypto has been pretty powerful. If you think about crypto basically being like an opt-out political movement in many respects, it's a way to play that thesis proactively. And what I've compared it to, you know, you think about like gold bugs versus people that are building in crypto. Gold bugs are waiting for the end of the world, living in a cabin in the woods and digging holes in the ground to put shiny metal back in from once it came.

Folks in crypto might have the exact same thesis as those gold bucks, but instead of being in a cabin in woods digging a hole in the ground and putting a shiny rock waiting to ride out the apocalypse, they're actually in the front lines building things. Every day, and every single day, a new problem is created in crypto because of the unintended consequences of what has been built so far. And almost always, so. someone immediately recognizes the problem and starts a business to solve that problem. We've seen this for a decade now. Every single major problem that crypto has unleashed onto the world, the horror, has ultimately yielded like a billion dollar business.

You look at chain alias. It's a $5 billion business right now. They have done data forensics to help regulators and law enforcement worldwide actually track money launders. You look at tax bit, just a few-year-old business. The narrative is that crypto is full of tax evaders and people that don't want to pay their taxes, and this is just a way to kind of cheat the government and your fellow citizens. Tax bid is a $1.3 billion business. Did they get there because people are evading their taxes or they're trying desperately to pay them in a manner that doesn't take a week and a half

to understand how to comply with impossible tax policy in the U.S. or abroad? Masari. We were created to basically be a first principal's Edgar repository for disclosures and other project information, solve the investment fraud issue. I can tell you right now, some of my investors have relationships with Ripple. One of the first things that I did when we started the company was, right, a multi-month screed against Ripple and how horrible their investment practices, their token selling practices were for their end investors. and how shady the marketing was around it. So there are folks in this ecosystem that want to see it survive, advance, and ultimately become more anti-fragile

and get built out in a way that is going to be a force for good in the world versus just sitting on the sideline saying, everything is going to shit, everything is broken, there's no way to fix it. I'm going to buy gold, wait for the dollar to get the base, and then come out of my cocoon or my hiding after a decade when the dust has settled. And I think that's pretty powerful because it's techno-progressives and it's classical liberals and it's like all the libertarians molded into one, but playing offense instead of just defense and basically saying, you know what, we're all screwed.

I feel like that's particularly true in Defi, this whole idea of like we're building a new, better financial system. That's the goal, more transparent, more open, right? It's like, I'm curious what you think about this. It seems like everybody in Washington all the time is trying to protect us from crypto. It's like this protection atmosphere. Well, you know what it is. It's just a massive projection.

Yeah, I was wondering. This is what they do. They're corrupt. Is it code for like control? They want to control us? Is that what protection means? No, all of their concerns just project their own corruption. Right.

They're worried about grift, whereas the revolving door in D.C. is just from a seat in influence in D.C. to a lobbying seat. were in-house at a big corporation and then back again. You know, Janet Yellen made $7.2 million last year during COVID when she was giving speeches to financial services companies via Zoom. $7.2 million, her time is not that valuable. I refuse to believe that unless she was ultimately going to become the new Treasury Secretary, which of course happened.

So that's money well spent, but that's just part of the grift. And this happens at all levels of D.C. People know that it happens. It's just assumed that this is kind of the way that business is done in D.C. And there's no real way to stop it. So if you think about the ethos of D.C. and the people that are working there and what the revolving door looks like and how people actually make their money, then of course they're projecting all the worst things onto tech, onto, you know, crypto finance and all the entrepreneurs that are working.

Because this is how they would be operating if they're in the private sector. It's just in their DNA. And so let's call that out. Okay. So it's in their DNA. But let me ask you this question because this is actually further in the agenda we wanted to get to. But let's get to it now. You also tweeted out recently about crypto that we need to spend money.

Lots of it. Like crypto should also be playing this game, is what you're saying. And we should also, I don't know, maybe pay for Janet Yellen to come speak to us. I don't know. Are you basically advocating that crypto play the same game that everybody else plays in D.C. and have a stake at the table? Is that something that's important to crypto? And is there a moral issue with that?

I hate it, but I think you have to fight fire with fire. And I think people are slowly starting to wake up to that. And here's the issue. Crypto can be shut down. China just proved that it can be. Do I think the U.S. moves that quickly? do I think it's as dire the political situation and kind of surveillance state in the U.S. as China?

No. But it's certainly not where it was 10 years ago, 20 years ago, 30 years ago, certainly a couple hundred years ago when the country was formed. So we are moving in that direction. And I think the reality is there's a lot of damage that regulators and policymakers can do to crypto via. tax policy and by over extending the Patriot Act and all of the associated provisions related to national security that they'll kind of throw at us. And we saw a sample of this with the Treasury's

report on privacy tokens late last year. And if you remember December, January, when Steve Mnuchin on his way out of office was essentially trying to sneak in some of these last minute provisions that would make it very difficult to support any privacy tokens. This was a big part of what they had in mind. So anything that they can't control, I think is scary to them. And so if you ultimately want to get elective representatives in office that understand why this is important, not just from a constitutional theory standpoint, but from an electoral standpoint and from the perspective of their constituents, then that's going to take active engagement beyond

just yelling people on Twitter. You're going to have to host fundraisers for politicians that are going to be on the right side of the issue that have this as part of their platform that are going to be going up in primaries against their 70, 80-year-old counterparts that have been in office since before the Internet was created. So I think there's no way around that because the alternative is pretty bleak. Everybody, likes to talk a big game that we can just like route around the government and and you know this is permissionless and so you know even if it is shut down we're we're still going to be able to operate these systems that's all true but it's just going to it will cover to cover be a black market and there's a

sizable contingent of the world that is not going to play ball like Americans and Europeans are not going to transact in in systems that are deemed illegal by their authorities because those are still relatively functioning, well-functioning societies that have otherwise robust financial services. And so you're not talking about situations like Argentina and Venezuela and sub-Saharan Africa and high inflation countries in Southeast Asia. People will generally fall in, and there will be some contingent that will not and they'll opt out. But it doesn't change the fact that it will be illegal or it will be extremely expensive or cumbersome from a user perspective to actually participate in these systems.

So, you know, the folks that are the loudest and have this battle cry on Twitter that, like, we need to play a different game or we need to opt out. The problem with that is there's no new land in the world. There's no place that you can escape to. There's no free world to settle like we had when America was settled and the country was founded. you can't even escape to the metaverse, right? Like they will literally tax, this is what we're talking about. They'll tax and surveil everything that you're doing in the metaverse even.

And I know that you are being completely facetious, David, and this is more proof that I listen to you guys versus just kind of come on once in a while to harass you. But like one of you made the comment in the Jake episode about like the IRS literally wants to know when your axes are mating. And it's not that far from the truth. like any activity that you have in the Metaverse, they're still going to be,

they're still going to look at like, where was your phone logged in to, to establish a tax nexus, which is insane. And so if there's no place to escape to physically, and you're not allowed to do virtual commerce even, even if it's completely unplugged and kind of disassociated from the rest of the economy,

then you have no other choice to put the kind of fight on their home turf. And I think you can do so intelligently. So, you know, I'm not, I'm not advocating for, like, January 6th insurrection. Like, that's, that's the worst type of, you know, undisciplined, theatrical, dangerous type of revolt. And ultimately, it's completely counterproductive. And it's extreme. Everybody knows that. I'm not even advocating for, like, online harassment or, you know, vitriol, it's, you know, directed or, you know, female senators or congressmen getting misogynistic tweets and threats and, you know, all the garbage that you see. What I'm suggesting and advocating for, and I think a lot of people agree with,

even if there's not as forceful about it because they can't be, is, you know, we have to start grading these folks on a one to five system. And the fives that are allies get a tremendous amount of support, an eye-opening amount of support through social channels, through grassroots campaign efforts, through political donations, through super PAC contributions, the ones have the exact opposite in terms of how well-funded their enemies are and their political rivals. And then the two through fours is where you can continue to focus on the education and advocacy. But the education and advocacy work for the two-through-fourers will be infinitely easier if they see what's happening to the ones and fives.

Because on the fives, you've got a big carrot. and on the ones, you've got a big stick. And if we can unseat some folks like Brad Sherman that are in the one camp, as established as he is, and threaten folks like that or even make their lives very difficult during the midterms, it's going to pay, I think, extremely lucrative long-term dividends. That's to say nothing of the broader impact that we can have just through social channels, because crypto is very, very vocal. And I think the challenge error is like different, but it's, how do you contain some

of that enthusiasm or kind of channel it proactively so we don't look like a bunch of nut jobs, which may never be solved. Ryan, I think, I would think we definitely need to unpack this because I think this is a fascinating point of the conversation that we should really spearhead here. I was going to ask you, now that we have this like regulatory drama of the last two weeks in our rearview mirror, what have we unlocked? But I think you've kind of already answered that question in bits and pieces in the last 10 minutes or so. I think where this is going and what you're talking about when we're talking about reviewing our regulators on the merits of whether

they support our industry or not, I think really what has happened in the last two weeks for this industry is everyone has taken a moment to reflect on what crypto really means to them and ask themselves the question, am I a single issue voter when it comes to politics and crypto? And I think we all know that crypto has so much tribalism and like a desire to defend our home turf and so much energy and as we all know, so much capital behind it that perhaps the measure of a single issue voter body of the crypto world might actually be one of the most significant cohorts of a voting body that we've seen arise out of any part of the political sphere that we've seen in America in the last, I don't know, since the NRA. Let's go into details on to how you think the

crypto voting body can galvanize itself and direct itself to get what it wants in Washington, D.C. What are the next steps? Now that we have identified that we are here in this moment of time, how do we actually adequately capture this energy and direct it to get what we want done in D.C.? So I'll answer that question in terms of like what are the methods and how can we actually make some forward progress there. But first, you know, it's important to note. I intentionally use the NRA as like a call to action just because it's a good X for Y comparison and it's provocative. So it kind of hits all the Twitter checkboxes. Right. But there couldn't be anything that's further from the truth in terms of the fundamental issue that I think crypto single issue voters have with the government.

right now. You know, the NRA, you know, guns are used in school shootings and mass shootings and, and, you know, gun violence is a real problem in the country. You know, other, I won't kind of name drop other organizations, but most of the other organizations where you have single-issue voters, the issues that they're talking about are extremely contentious. There's often, like, an element of violence or, like, national security implications that kind of rally people up. And in crypto the issue is there's no opposition. Like there are very few intelligent opposition leaders to crypto. It's basically proponents and then people that don't understand it.

That's an extremely powerful position to be in because like I said, it's not just about like right wing or libertarian or progressive voters that are working in the industry right now and that actually care about building this tech and preserving. its ability to get developed in a way where you can still regulate the centralized organizations that are building broker services. And so I think that is just a major difference between some of the other Lightning Rod individual member-led organizations, the card-carrying member organizations for other lobbying groups. Now, how do you actually win that? I think there's probably about a dozen people collectively working in D.C. right now at the major think tanks and

trade associations that everybody knows about in crypto. 20 tops working on defending this entire ecosystem. And that, I think, has worked in the past because we haven't really been on the radar. This is one of the first times that crypto has been a major part of the conversation in any legislation that's been passed. Most of the conversations to date have been regulatory in nature, right? How's the IRS going to treat this for tax purposes? What's the SEC say about, you know, whether this is a, whether these tokens or securities or what's going to happen to Bitcoin ETF? What does Treasury, you know, think about the AML, you know, KYC requirements for, for crypto brokers, things like that? How is FinC thinking about this from a kind of monitoring standpoint?

point. The only bills that have been, I think even tangentially tied to crypto haven't really gone anywhere. And so this last minute provision, it was only included because the politicians thought there was some type of money that they could extract from the industry. Again, follow the money and you'll see where their real interests lie. And so I think now that it's on the radar, the big thing this changed is we've we've kind of had Pandora's box opened on us where they looked at the $28 billion score from the CBO and their estimate as to what tax receipts could be with tighter enforcements and tighter surveillance of Defi in particular. And now that's something that can't be undone, nor can the kind of battle that ensued over this because now they know that actually this is a much bigger deal to our constituents. and this is a pretty fiery community that we didn't really know existed before. But the actual people in D.C. that are funded to do this on a full-time basis,

there's probably about 20. So the first thing that that needs to happen is we need to make sure that coins down to the blockchain association and some of the other groups that are popping up have the funding that they need. And we have the right lobbyist infrastructure in place to do the combination of like education advocacy work. and then just generally have a better coordinated PR campaign. That could be funding, endowing chairs at think tanks so that the research from the

independent Heritage Foundation or Hutchins or Brookings, wherever, that all of these folks in D.C. actually are relying on to support their policy positions. There's a lot that we can kind of do there and coordinate from a policy support standpoint. And then most importantly, which is what I've been talking about, is just getting more involved in electoral politics and having this grassroots effort where you have hundreds of thousands of dues paying members to an individual member dominant organization, where you can actually mobilize people in local elections, local campaigns, you know, going to town hall meetings, all the blocking and tackling that I think people don't really appreciate until,

until you see how much politicians care about not having pains in their ass, just harassing them at all times. And it's one of those situations where the squeaky wheel gets the oil. And so a combination of money, boots on the ground, and just potential bad publicity, I think is probably enough to get our ultimate policy goal, which is not don't tax us, give us favorable treatment, do this, that, the other thing. it's don't regulate things that you don't understand. And don't penalize crypto unnecessarily, particularly versus traditional financial services companies that we're talking about or other tech giants that wouldn't be subject to the same regulation. I can definitely say I would be a card carrying member of the self-sovereign crypto lobby group. And maybe they could issue that as an NFT.

That would be a bit more conducive to the way I carry things these days. But one thing that gave me hope, you kind of started this episode, and I completely agree. You use this term state surveillance, right? It feels like there is an all-out assault on our digital privacy and freedoms. It's not just crypto. It spans beyond crypto, right? So, like, the newest thing with Apple releasing a software update to give them the ability to basically scan all of your local photos on any Apple device, right?

How dystopian is that? And what's weird about this, Ryan, is like, Like, there is nobody in our government who is pushing back against these things, right? Maybe they're not incented to push back. Maybe they don't care. But what's given me some hope actually recently is crypto has the, and I think we've seen this of the last two weeks, has the coordination ability and the capital and just the raw community fervor to push for self-sovereignty.

And maybe we launched this thing, and it's primarily about crypto, cryptocurrency. But then maybe it expands and we capitalize other areas we care about. Because like, look, if I have the right to own cryptocurrency, but Apple has the ability to like scan my device or whatever it wants, like I don't want to live in that world either. And this is why I've kind of come, I don't know, I used to be less enthusiastic about engaging, you know, on the lobby level and in DC and like, you know, as the traditional organizations have. But I think we need to for these issues because if the crypto industry doesn't, who's going to? Right? Like, big tech isn't going to come to the defense of privacy and self-sovereignty. They don't care.

Right. So, like, it's got to be us at some level. And maybe we start with crypto and expand from there. That is a hopeful future. What are your thoughts on that? Yeah, I think that there's multiple ways to do this. But, you know, generally speaking, I think we have the resources right now. let's win the battle that's right in front of us.

And then we can start talking about how we play with other organizations. Because I ultimately think that this is a team sport. And ideally, you know, we've already seen allies at the, you know, EFF that fight for the future at a number of other organizations. And I think generally there's often a lot of overlap that can be. done in terms of research, in terms of advocacy work, and, you know, I think across the board, it's a starting point to just kind of focus on cleaning our own house and then ultimately being in a position where we can cross-pollinate for many other important issues across the board.

I see what you're saying, and I think that this is like a wedge. And that's why I think about it as like a political movement in and of itself, because there's so much that I think is embedded in in crypto values more broadly that we haven't really defined as a community because we've generally been so focused on like all the differences between the communities versus you know are the kind of common interests that have been shared historically and and that's by design right like it's a decentralized community it's not a company that can just kind of lay out its all of its core values I'll tell you like just for me personally, it's almost been like a little bit liberating because we went,

we went through this period with Trump in office where you could not talk about politics at all, like in like any, in any context, because the, the tenor was just so over the top charged. And I think, you know, before that, it wasn't entirely different, but, you know, before that in, in like the 2009 to, you know, 2015 environments, there was a lot of political discussion within crypto because this movement had political roots and it was, it was, you know, kind of anti-government, I guess, anti-big government, certainly to start. And then, you know, Trump took office and it's like you can't actually talk about anything political because you're like three steps away from either being referred to as a communist or a non-examination.

Nazi and so like nothing good comes of it. And then, you know, again, two weeks ago, when we saw the bipartisan effort, and you see everyone from like Ted Cruz on the one hand to a 21-year-old Brown progressive writing an open letter to Elizabeth Warren, like on literally the same side of the issue, I have trouble thinking of like a starker contrast than those two people. articulating the same argument for like why it's important to support crypto long term. You know, and it's kind of like smash the Overton window to a certain extent for I think a lot of people that have maybe fallen into the camp of what I would think of as like radical centrism or like, you know, just like blinders on. Let's focus on building and not focus on every single debate that has that is basically just like, like dominated today by the two like five percent extremes of the bell curve with everybody in

the middle just getting shut out because they don't want to talk about or they don't want to incur the wrath of being on the wrong side of an issue. And I think this, the conversations that I've seen and like the general agreement, importantly with, with, I think many of the people in crypto on certain kind of core values has been, it's been illuminating. And I think it's also been empowering for people to that kind of feel strongly about the why like we're in this industry, aside for just the memes and the money, which, you know, is a nice byproduct. I think that's been a good rally point and, you know, people have been comfortable of getting a little bit more politically engaged.

Hey, guys, coming up next in this show, I ask about the possible future of perhaps alignment between the Ethereum, DFI, industries and the United States nation state regulators in an attempt to allow them to increase dollar demand, dollar dominance, the brand and strength of the US dollar abroad. We all know that stable coins are such an important role in Defi. How can we convince regulators to tap into that strength rather than regulate that strength away? There is a possible future where we are actually aligned with these two things rather than adversarial. And then in the second half of the show, we also turn to the question of ether and its investability as an asset as regards to institutions, which is a continuation on the first time we had Ryan Selkis on the podcast

roughly about nine months ago. We asked about Ryan's updated thoughts around Ether the asset, how he's weighted his portfolio to have more exposure to Ether, and yet where he still believes Bitcoin fills an important niche in the world of crypto. All these conversations are coming up next in the show. But first, before we get there, we have to talk for a moment about some of these fantastic sponsors that make the show possible. When you shop for plane tickets, you probably use Kayak, Expedia, or Google to compare ticket prices. So why would you limit yourself to just one exchange when you trade crypto? When you make your trades, you want to make sure that you're getting the best possible price on your trade

and that you aren't paying high gas costs that you could have otherwise avoided. That's why you should be using Macha. Mata routes your orders across all the various DFI exchanges on Ethereum, Polygon, Binance SmartChane, and gives you the best possible prices without taking any commission. Macha has smart order routing that splits your order across multiple liquidity sources if Masha sees that it gets you better pricing. Trading on Mata is super easy because it pools the liquidity for me into a single easy-to-use platform and that has even saved me multiple times from accidentally picking the wrong decks to trade on and accidentally getting a bad price. Mata also allows for 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. New to Macha is an integrated Fiat on-ramp so you can purchase crypto-dust.

directly with your, you can purchase crypto directly with your credit or debit card and have that fiat be instantly traded for any token that has liquidity. When you're making a trade, head over to macha.xyz slash bankless and connect your wallet to start getting the best prices and most liquidity when you trade your crypto assets. Living a bankless life requires taking control of your own private keys. Not your keys, not your crypto. That's why so many in the bankless nation already have their ledger hardware wallets, which makes proper private key management, breeze. But the Ledger ecosystem is more than just a secure hardware wallet. Ledger is the combination of the Ledger hardware wallet and the Ledger Live app. And if you're used to seeing

all of your crypto services and favorite D-Apps all in one place, Ledger is where you want to be. Not only does Ledger let you buy crypto assets straight from the app, but it also hooks into decentralized exchange aggregators like Pereswap, which makes sure that you are getting the best prices on your trades without your assets ever leaving your control. Defi never stops growing. and the Ledger Live app grows alongside with it. So click the link in the show notes to see all the Defi apps that Leisure Live has. And stay tuned as more and more apps come online. And if you don't have a Ledger hardware wallet, what are you even waiting for?

Go to ledger.com, grab your ledger, download Ledger Live, and get all of your D apps all in one place. Ryan, one possible future I see ahead of us is that we actually have an opportunity to convince regulators that a lot of the last. lining with the crypto industry is in their best interests. Using the stablecoin side of defy is a way to export the U.S. dollar and the value of the U.S. dollar and dollar demand globally. And it also, if we can get regulators support behind this, it can be a huge offensive weapon

against the Chinese CBDC, which I think people who do pay attention to it generally agree that it's a massive threat to dollar dominance. meanwhile we have U.S. regulators having these banking panels or seminars asking what is crypto even useful for just really broadcasting their complete naivety about what is so cool about this industry. So there's a future world where we can actually convince U.S. regulators that instead of being overbearing and over-regulating this industry, that we can actually get them to use this industry as a weapon against the Chinese CBDC. Are you optimistic that we can actually make this happen? And if we can make this happen, do you have any thoughts about the right path to get there?

I think that argument, it works because it's truthful, right? If you just look at how quickly the U.S. can move at a kind of centralized government level on certain issues, it's just, it's not very fast by any stretch of the imagination. And that's actually the one thing that's been like very positive for folks within crypto in the American. in European scenes. If our governments were as functional as China is, I'm not saying that we want to live there, but if we were as functional as the CCP is and just making unilateral moves, then we could have a real problem if there was political opposition to what we're doing. But generally speaking, because we move slowly, things get funded slowly, innovation happens

slowly. And so I think there's a credible argument to be made that the installed like tech base, that we have is really going to have to be built by private companies and that are facilitating transactions and these open protocols because a

Fed coin is just not like can you just imagine how inferior like Fedcoin as a product would be if it was rolled out by the big banks it's laughable. It would definitely suck. You're just not going to have anything near what we see in crypto.

And maybe the government would argue that's for the good and for the protection of consumers. But I think, you know, by and large, I buy that argument. I think we should make that argument that the government should be working proactively with crypto companies and supporting them. And yes, regulating the centralized businesses that are working on this infrastructure. Because it is arguably the best way to preserve the dollar strength. over time. So say we do go down this path in an attempt to get regulators who really, really don't like crypto to be more okay with crypto in an attempt to use crypto to be offensive

against the Chinese CBDC or just protecting the brand of the dollar. I'm going to go ahead and guess that if this reality plays out, the crypto industry is going to have to give some concessions. We're going to have to make some compromises with the way that this industry works. The first thing my mind goes to is perhaps something like Tether. But even U.S. has a very non-KYC element to it that is probably concerning to a lot of U.S. regulators. Those are the first two concessions that I come to my mind is probably more regulation around stable coins. But what olive branches can we give to regulators that doesn't just hamstring what makes

defy and crypto so cool? Or what are they really going to ask for probably no matter what? Do you have any thoughts on that? I think the hard line in the sand needs to be that developers and code, needs to be protected. And the ability for someone to actually receive customer information needs to be taken into consideration as to whether certain regulation should be put on any contributor to an open network. So this is basically like the staking and kind of validator issue on the one hand and then

just the contributors of code on the other. So, you know, I think that we have to be realistic, and I think that the industry is realistic about centralized companies, centralized exchanges in particular, being very proactive about working with regulators. I think we should expect that there's going to be continued oversight and tax reporting requirements and in general, like customer information sharing requirements, the coin bases of the world, the Gemini's. And to be honest, I don't even know that any of those organizations are like pushing back on that. I think the big sticking point might be around private transactions. And we already kind of saw hints of that six, you know, six, nine months ago. And aside from, you know, private transactions is going to be defy, which is, you know, just, There's a lot of capital gains that are arguably being generated in decentralized exchanges,

that there's no oversight over and there's no kind of clear tax reporting policy. Having said that, the data forensics companies exist to get that information. So, you know, again, you're coming into this situation where if you are the IRS, you can make very clear guidance that transactions of, such and such a nature on decentralized exchanges are taxable events. And you need to, you know, if you are attempting to launder money or, or, you know, evade taxes by, you know, parking your money in defy, that's a really bad way to operate. And, and ultimately, you know, you're going to get caught because there's a digital paper trail and it's a terrible way to actually execute a

scheme like that. So I think I don't I don't think that our expectations or what we're arguing for is unreasonable by any stretch of the imagination. And that's what makes me so confident that a like a grassroots effort like this could actually work out very, very effectively because we're on the right side of this. And I think the arguments that we have at our side make sense. And And no one has really pushed back against them other than the very ill-informed takes of, well, if this software can exist, then it's probably not good for society and we should shut it down or try to move it offshore. We've only heard a few people really say that. Yeah, I agree with this. So, like, I think there are enough wins for regulators and legislators in the U.S. government here in crypto for them to get actually excited about it.

It's like if they're not going to compete with China's central bank digital currency by rolling their own, which they can't. We just talked about that. I don't think there's an appetite to do that. What is their strategy? Well, like, it's got to be crypto. Export U.S. dollars on crypto rails, right? Like Ethereum. What I do worry about, though, Ryan, is that maybe just in Congress, and maybe this is a symptom of, like, where the U.S. government is right now, is just they're too, like, old and set in their ways to actually do it. You know? Like, they're just too, too, content with the status quo. So we just roll around, like roll on like the U.S. is doing on a number of issues. Don't make any progress forward. We just settled the status quo. And doing that is not a

sustainable strategy for the U.S. So that is my worry. Not that there's not enough wins here. It's just that they don't care. Maybe they don't care. But let's talk about something else that's sort of related because I know you're very plugged into the institutions. And I'm curious what the reaction is from sort of the big money institutional world to all of this. Did they freak out that crypto was like, it didn't reflect it in the market price, which is interesting. But were they freaking out that crypto is like a potentially contentious issue in front of Congress and that this, you know, Treasury is possibly against it? Is that a bad signal to them? I think it's a wake-up call. Again, I think the existing regulated businesses and brokers

are going to continue to be regulated and they're going to continue to have big compliance teams and legal budgets and I think they'll be just fine, right? So I don't think that there's, I wouldn't say that they're alarms. I think it's less about being alarmed by like openly hostile actors within the government and more alarmed that this happened

on such short notice, it was, you know, it was extremely fast. How it happened was very dysfunctional. And so now we're more or less at the mercy of those that are going to be writing the rules at the unelected regulatory body level. Right. So how much authority is Treasury going to have to write rules? How much authority is the SEC going to have? How much, that is where authority is ultimately getting delegated. And that's definitely not a net positive. So I think a lot of what's being done right now with respect to, you know, kind of arguments in the House and trying to meter some of the native impacts of what we already saw past in the Senate, it's really just kind of laying the groundwork and setting the precedent for future court challenges. And, you know, maybe we can get lucky and there's improved land. language it comes out of the house and is ultimately incorporated into any final legislation that passes. But I think right now it's more of a long-term game. And I can tell you, if they're not alarmed, everybody is certainly very mobile right

now at the institutional level. And that's, you know, defy, major investors. And then, you know, obviously the regulated groups themselves. Obviously, it won't name, individual name. but I'd say it's pretty universal that people are fired up and taking this very seriously. So as we all know, this is probably crypto's biggest regulatory event. We couldn't stop talking about it for two weeks. We're still talking about it now.

And as a community, generally everyone kind of feels pretty emboldened after the fact, even though technically we kind of lost. And during the actual debates and the drama around different amendments, and everyone was getting scared about crypto being regularly, to death, crypto asset prices, like, had a stellar weekly performance. Like, Ether went from $2,300 up to $3,000. Bitcoin was below $40,000 and then zoomed up to $47,000. So in the face of crypto's biggest regulatory hurdle, asset prices, like, had a stellar

week. What does this tell you? Does this tell you anything? What signal is this? People are distracted by pengoose. Really? Do you generally think that the asset price movements were just uncorrelated to the drama that was going on in D.C.? Honestly, I have no idea.

I've a long time ago given up on trying to understand what moves to crypto markets. But I guess the point is this isn't like China. Like when China actually like push the miners out, that was a major event. And it had some like fundamental impact on both Ethereum and Bitcoin. I would say long term, it was a massive net positive because it made proof of work cleaner and you kind of de-risk some of that geopolitical element. I think with what happened last week, for folks that are on the outside looking in, it doesn't necessarily look like the end of the world per se because it's like, oh, well, you know, the folks that passed the bill ultimately went on the floor and said, here's what we meant. And so here was our intention in the rule. Obviously, we didn't mean that developers would be captured.

Obviously, we didn't mean that stakers would be captured. So there was already like a little bit of hedging and people, you know, kind of hear that and they're like, oh, okay. Well, this is probably just like lawyers dotting the eyes and crossing the T's, right? And I just, I think that's, this is going to play out over the course of years, right? Like even in the, in the worst, worst case scenarios, some of the rules that we're talking about and some of the policy that's that's going to be implemented. We're talking about like 2023, right? Like, you know, certainly into like 2022, deep into 2022. So we're still quite a ways away from that. And so I think there's plenty of time to prepare. There's going to be plenty of like, you know,

court challenges and, you know, a lot of procedural issues. And, you know, this is really just kind of like the first ending in terms of how this ultimately plays out. But it's not something that would necessarily move the markets, you know, one way or the other on, you know, on a day-to-day basis. It's funny. Sometimes I wonder in crypto whether we just like create explanations based on price or like if the market had have fallen out during those two weeks, for other reasons, unrelated, we definitely would have pinned it in the crypto industry on, you know, regulation. It's always hard. I sort of agree with you that the short-term noise in the market is so difficult to discern whether it's like signal or noise or whether it's based in current events or not. So definitely I have to think about this over the long run.

This kind of brings us to the second topic here, Ryan, that we wanted to get you on for. And this is the topic of ether, ether as an asset. So bankless listeners, longtime bankless listeners, may know we had a debate last year. David was kind enough to host about ETH as a store of value compared to Bitcoin, right? I'm not going to use the term money. Let's not get hung up on the term money. But it was basically a debate as to whether Ether would accrue monetary premium, perhaps surpassing the monetary premium of Bitcoin.

And your take was like, hey, no, ETH is not a good monetary reserve asset. My take was, yes, it was. And then we had this conversation with like a number of different, different trails on it. But I'm curious. So it's been, I don't know, close to nine months or so since we last talked about this in December. Has your opinion on ETH changed since we last spoke? And if so, in what ways? I think the world has changed. So I ultimately think your thesis was right for maybe reasons I disagree with. I don't want to say it for the wrong reasons, but But I think that the eth thesis, like there's been new information over the course the last six months that I think is pretty important.

The first kind of major item for me is we've actually de-risked the move to ETH2 pretty significantly. When we last talked, it was it was kind of very earliest phases of it. Everybody was celebrating, oh, look at all the ETH that was locked in the staking contract for the beacon chain. 1559, I think it was a big milestone. I also just think the continued evolution and like health of defy, all the other markets that continue to predominantly, you know, ride the Ethereum rails, the just explosive continued growth in stable coin adoption and usage and lending markets

and basically every conceivable metric for decentralized finance. And then importantly, the fact that we still haven't seen a ton of value leakage from Ethereum to other smart contract platforms and chains. We're starting to see interoperability with layer ones. We're starting to see layer one versus layer two, value flows, and that'll play out over time. But for the most part, Ethereum is like the base layer is, you know, continue to show that it's resilient and primarily responsible for a lion share of. of crypto transactions writ large.

So one thing that I would like to see more of and we'll likely have some product come out here is I think we've gotten so used to like market cap dominance. We just need to have like all of the other like dominance metrics top of mind and whether it's like transaction volume, lending capacity, AUM for whatever applications, Ethereum has continued to move up into the right, aggressively.

So where I, where I disagree with you in like the whole like Bitcoin to Ethereum debate is, you know, I actually had the epiphany from Arthur Hayes at Bitmax. I think the way that he articulated it, kind of clicked everything in a place for me because it was something that I kind of felt, but didn't really have a good kind of verbalization of. And he made the point that if you look at like M0 versus the market cap of like big tech. they're about $6 trillion each. Is Ethereum going to be money or is it going to be the equity in the decentralized financial system?

And this is not at all at odds with what I've been saying for years. In fact, I don't know if you guys were there, but like Ethereum, two years ago, 2019, I was on stage and everyone was talking about, you know, I don't know, whatever like the hot topic of the moment was in like Web 3 or decentralization, the internet, whatever. And I was on stage and basically said to a room full of Ethereum world computer maximalists that like if Ethereum was just the settlement layer for defy, that's literally all that it needs to be.

And that's kind of where we are now. It's not to say that that's the only thing that's happening on Ethereum, of course. But the fact that Ethereum as a platform is generating real fees for the like financial internet that is a massive multi-trillion dollar opportunity itself. That does not necessarily make it a better money or a better shelling point for people that are thinking about just the value settlement use case that Bitcoin has kind of built a narrative around. I also just think that the most entertaining outcome would be a 50-50 split between like the money winner and the financial internet winner so that Ethereum maximalists like yourselves and then Bitcoin maximalists, on the other hand, can just argue in perpetuity over the flippinging and like the reflippening and the unflippening and like, and we basically

just kind of run in circles forever because everybody's talking past each other about like, okay, how are people actually valuing these two very different but important things? I will say from a fundamental standpoint, the other thing that has definitely worked in Ethereum's favor that I underappreciated late last year was how rapidly like the ESG narrative was shift. And, you know, from my perspective, we, like the black rocks of the world starting to get more active on, you know, climate policy and the potential risk that that could create for Bitcoin as a holding of not only individual investors,

but potentially a treasury holding for other companies, is a pretty meaningful development that we saw in Q2, and I think that had a real impact. And I think they're staying power to that negative narrative for Bitcoin potentially. Having said that, that's not something that Ethereum solved yet either. It's on its way to, but until it's solved, it's not actually solved. So I think there's certainly a bunch of things that have changed,

but my core thesis for a long time has been both are valuable. Bitcoin is more valuable. I'm probably slightly overweight Ethereum at this point because of that new information. Wow. I still don't think it's money. I still don't think it's money. But I think the risk reward for both, if you put a gun to my head, I'd probably pick Ethereum right now. Wow.

Overweight ether. That is a change. When you say overweight ether, Ryan, is that overweight versus Bitcoin, as in you have more ether than Bitcoin? No, I'm not stupid. Wow. The slaps are coming in. Well, let me ask. I am from a, yeah, I am overweight from like a portfolio standpoint.

Got it. Versus where they sit from a market valuation standpoint. So I'm curious. So I know the term money can be distributed. for people. So let's not use this, whether it's money, whether it's a reserve asset, whether it's kind of equity in this GDP that is Ethereum, whatever it is, right? Ultimately, like, asset price go up if it's successful, if this thesis is successful, is kind of what I think. The last time we talked asked you about the flippinging, or you brought it up maybe,

and you said the answer is definitely no, Heath would not flip in Bitcoin. Do you still believe it's a definite no? I don't think it's a definite no anymore. So I think that's why I've moved overweight. But I'm also not going too aggressively in the other direction. Like there are tax reasons also not to, you know, to go aggressively in the other direction because I think both are going to succeed long term. And I definitely think that Ethereum is potentially relatively undervalued right now. So I'm putting more there progressively.

But my position has not flippened. That's not to say, I've, I am not convinced that we will see a flippening of market cap in the next couple of years, but the probability is not negligible either. By the way, one thing that's interesting, I know you use the term Ethereum maximalist for David and myself. I don't think of myself as an Ethereum maximalist at all. In fact, David and I helped propose the index co-op, this thing we call the Bed Index,

which is a third Bitcoin, a third ETH, and a third defy, right? I think that is juxtaposed with possibly Bitcoin maximalists who would take up that mantle and claim Bitcoin that all they buy is Bitcoin, right? So, yeah, like the term maximalist is a bit different. But I have always thought that for a long time, ever since we started bankless, that the eth, I guess, fundamentals and the narrative was not appreciated. And I want to ask you a question about narrative because I think that was one of the things you mentioned in your end of 2020 thesis paper where you kind of sort of

wrote predictions for 2021. One of the challenges with Ether is the narrative is too complex, is what you said. Do you think the narrative complexity, has that been simplified a bit better? Is Ether maybe better understood in not quite mainstream, but in sort of the circles that are buying it? Yeah, I think narratively, it's, I still don't agree with like the triple point asset, like that particular memetic. A lot of people have, right?

I think it's resonated with a lot of folks. But I'm a little bit more simple than that. You need ETH for working capital for gas and to stake. So you need Ethereum for working capital, and it is a capital asset now. It's more like equity in the decentralized internet than anything else. It just so happens. You also use that for transactions for now. You don't necessarily have to, right?

Like, you know, you can use USDC, many, many applications on defy, denominated in USDC or USDT or another stable coin. So you're already starting to see that. And, you know, at the end of the day, you know, anytime that you run a transaction, you probably want it to be dollar denominated. Most people in the world will want it to be dollar denominated. So even if it's like an auto conversion to ETH at the time that you're paying a transaction fee for a specific defy application.

that's something that can be solved and you don't necessarily need to hoard ETH to pay for ETH at the time that you need it for a transaction. So the reserve demand is not necessarily the same as it would be for money. The reserve demand, the reason you would want to hold it is for a combination of convenience today and then staking and collateral. And that I think it makes a lot of intuitive sense for investors. And like I said, it's just, it's such a massive market that, that both narratives can win.

And look, maybe you will still prove to be right in that, you know, people will use this for money too. But I think generally speaking, people align around the single best use case for a single technology. And in this case, the capital asset for a financial internet, I think is the stronger memetic that is getting institutions excited about because they look at this like, okay, JPMorgan is a $400 billion company. Ethereum is a $400 billion technological network that we can understand because these fees are getting burnt. There's like real money that's getting earned by those that are securing the network, kind of like Bitcoin, but more of like a shareholder-based perspective. I think that's, it's really easy to grok. And I think defy reinforces that because some of the other defy applications

are very similar. You're providing liquidity. You're providing lending, you know, lending, you know, capital for underwriting loans. So, like, the whole, like, stake, earn, deposit kind of ethos and the flywheel that creates in terms of network security, I think is, like, an important facet here. Last time, Ryan, that we had to you on the show to talk about this same debate, we had to take some time to actually define money because it was a question of, is ETH money? And we landed on, you know, monetary premium is how you just. determine if something is money or not. But I want to ask you this, because Ryan said for a moment,

setting money aside, we're all kind of primarily focused on number go up, right? Market cap. What's the size of these market cap things? And so say for a world, in a world where ETH does flip in BTC and Ethereum has a larger market cap than Bitcoin, in your opinion, does that make ETH money? Or how does the relationship of the market cap and whether a thing is money or not? How do those things relate? Can Bitcoin still be money yet still be under the market cap of Ethereum? Do you think that the value of tech stocks will eclipse that of M0? Going back to the co-opted example from Arthur, which I think is the right framing,

I think the answer is yes. So will it happen? How does value accrue to ether versus Solana dot, you know, all these other networks? And by the way, the other layer once, or sorry, the other layer two is because like each these other layer two's, they're going to have their own financial incentive frameworks across the board because someone's going to need to actually process transactions on any blockchain, whether it's a shard, whether it's another network, whether it's the main chain, and they're going to need to be incentivized to do so.

So we'll see. But like I said, I'm bullish on both. And right now, the growth in the Bitcoin story, is still all about like government debt, deficits, monetary defacement, and that trend is not decelerating. For Ethereum, it continues to be all about decentralized finance, permissionless, you know, kind of innovative marketplace infrastructure. And that is only accelerating.

And we see the KPI's for Ethereum and all the applications that are running on it. And the KPI's just keep getting, crazier and crazier. And more applications keep getting built, you know, on that infrastructure. So I think I think both are, you know, still very healthy. It's a little bit of an unfair comparison from a fundamental evaluation standpoint, though, because if you think about Bitcoin as money and the memetic around money, and you think about Ethereum as ultimately being priced as a financial internet and like the underlying stock or asset that secures the financial

internet, then one is going to have only memetics behind it because, you know, all currencies or memes, and then the other one is going to have some like actual KPIs behind it. So, again, I think to synopsize overweight Ethereum, but not more ETH than BTC, I definitely think that a flipping is possible. Maybe not likely, but, you know, certainly, maybe like my probability is up from 0.1% to to 20%, so you got a 200x return on that, which is not too bad. There you go. I'll take a 200x any time.

Yeah, exactly. And then, you know, ultimately speaking, it's going to be entertaining for me to watch from the sidelines as people argue about semantics for the next 15 years. Oh, the arguments will be unceasing. Hopefully we can come together on the regulatory issues, but we know that there will still be arguments. Last question on this is what one comment you made was about institutional demand in our last conversation. And at the time, Bitcoin was getting a lot of institutional demand. I think Saylor had

just made some of his, you know, earlier purchases. Institutions were talking about adding it to the balance sheet. But that time you said institutional demand for ETH is a mirage. And I think you're kind of right. Like, there wasn't a lot at the time. I mean, we made the argument that, well, you know, ether is kind of a cycle behind, but it will play that cycle a little bit quicker than Bitcoin because Big Brother helped Ether out and, like, created the channel. Now, Ether just has to follow that trail as an asset. Are you starting to see more institutional demand interest for ETH as an asset as well? I mean, I'm not really at the front lines of this.

I'd say anecdotally, yes. For me, the thing that matters, I want to see more institutional adoption of ETH for sure, because our business at Pensari is market and sales. for crypto is an asset class. You don't need a market intelligence platform if it's just one or two assets that you care about. So for us, like, it's critical to have institutions actually interested in supporting ETH

because that's going to help lead them down the rabbit hole for defy and ultimately like the universe of potentially interesting applications and assets. So I think the half-life is what we look at. I think the half-life to get someone from like interested in Bitcoin or not interested versus what it takes to get someone who's already bought Bitcoin to buy EF to get to go from, I have Bitcoin and ETH now like what's DFI and then, you know, all the way down, you know, into actually being like an active participant in these ecosystems or, you know, NFTs are probably

their own complete, you know, wildcard because it's a more, you know, kind of consumer-friendly and like retail-driven phenomenon. But for everything else, I think if you like Bitcoin, you're probably to look at ETH at some point. If you like ETH, you're going to look at Defi. And that's going to be kind of the natural progression of things over time. Can I ask Ryan? So Ed Misari, I've definitely seen an increase in focus on like defy tokens and like the Metaverse and some really fantastic research and analysis on these topics. I think a lot of this like didn't exist a year ago in general as kind of, you know, asset classes. But what are, are the sectors, I guess, within crypto that you are most excited about and that Masari is most

excited about providing analytics and research for. Is Defi a key sector? Is kind of NFTs in the metaverse a key sector? What are the hot things we should be looking for out of Masari? So, I mean, we've been covering these assets on a sector by sector basis. I think we're one of the earlier ones to kind of come up with these designations for per asset basis and have that, you know, on our homepage, we've had that on our homepage for a year, being able to toggle between Defi and Web3 assets and privacy coins and stable coins so that you're not just kind of comparing everything, you know, apples, oranges and bananas across the, across the ecosystem. I think there's probably more hard data on Defi and those financial applications, like

how much capital is locked, what the interest rates are. are, what the exchange rates are. And there's just, I think, more infrastructure, like open infrastructure, like subgraphs have been developed for all these different markets. NFTs are definitely interesting, but I, there's no real, like, price discovery on, like, individual NFTs, right? So, like, how that factors into, like, a market intelligence platform for institutions, I don't really know.

I'm sure we'll probably have like rare rocks like digital jpigs on the site at some point if like the market continues to be insane. But right now I think we're just taking a wait and see approach on like how NFTs get incorporated. In the meantime, we definitely have a bunch of research on the NFT space. And I've been keeping a close eye on that and Dow infrastructure and other bits of that infrastructure stack myself. because we know that there are going to be additional plug-ins over time. So, you know, we'll see. And stay tuned. We got Maynett coming up.

Just a few weeks. You guys are going to be there. I'll be there. Absolutely. Good. Get comps. Maynett, September 20th through 22nd. We'll be talking about all these things.

And the general theme of the event is, you know, basically our interoperable future and the multi-chain future. So we'll be going through the basics, obviously for Bitcoin and Ethereum, but a lot to focus on defy, decentralized web applications, NFT infrastructure, Dow infrastructure, and then interoperability between other layer ones and layer two is probably the kind of core themes of the event. I'm about to submit my speaker application to Maynet right after this, Ryan, so maybe you can help me get that one process. It better be good, David.

Oh, man, it better be good because I'm not even. involved. Fair enough. You can't pull any strings for you, David. Sorry, you're on your own, man. We'll take care of you. We'll find a way. Every single year, Ryan, you put out a famously gargantuan report titled something along the lines of cryptotheses for the following year, right? So big predictions about, it's also a summary about, you know, crypto over the last year, but also predictions over the next year as well. And in the crypto thesis for 2021, you kind of finished off with this section that you titled exiting to the network's state. And I think this conversation actually becomes relevant once again, as if it always was, but really becomes relevant with the earlier

conversation we were having with the regulators and how they are pushing us into compliance, pushing us into regulation, pushing us into capture. So I want to pick your brain a little bit on what does it mean to exit to the network state and how is this conversation becoming relevant once again? I think the network state, you know, a lot of the writing and a lot of the thinking there has been centered around what Bologi has been talking about for quite some time. And, you know, basically, you know, COVID has accelerated a bunch of tech trends and crypto is kind of at the intersection of a lot of them.

So I think I can't speak as intelligibly and is with quite the crystal ball that that he has. But I do think that because of how incompatible some of our legacy institutions and kind of legacy laws are with kind of the current reality of where we are at the tech, there's going to be some real friction points and issues to resolve that are going to require some political resolutions. And the very best thing that we can do right now is hope that there's just plenty of, you kind of channeled fury, channeled assertive response to make sure that people don't unintentionally

regulate us out of existence or to oblivion, because ironically, that would be the very worst thing when you're talking about protecting investors, the very worst thing in terms of promoting economic growth in the country, very worst thing for civil liberties and privacy, because the folks that are building in crypto are the ones that are taking those values seriously. So I think the network state is, I like the real world. I don't want to just live in the cloud. So I think the network state is more about the future of the economy and the future of kind of individual responsibility and kind of sovereignty and how we kind of plug in and cooperate since more work is crossing and borders and more economic activity and social activity is happening online.

Stay tuned for my 2022 thesis, which there's no way I'll be able to write this year because I can't afford to take time off to write a 500 page book. I think you will find a way to give us something, Ryan. You've never let us down before. It's going to be a tweet storm. There you go. We'll take it. One of 1179.

Yeah. Ryan, it's been fantastic to have you on bankless. We've really appreciated your voice in the space. all along, especially recently, really appreciated everything that Masari has put out and continues to put out as well. Thanks for joining us today. Thank you. Always a pleasure, guys. Guys, action items for you, a couple of them. Ryan alluded to it, but Masari's mainnet conference is happening September 20th to 22nd. Make sure you check that out. David's going to be there. I think some other folks from bankless. Unfortunately, I can't make it myself. It's going to be a fantastic

conference. You can find more info in the show notes or at May. net. Events. Also, check out Masari.com if you already haven't. This is something I check on a regular basis. Just fantastic crypto analytics. In fact, you see it every single week on the weekly roll-up. Yes, you do. When we check the prices? And when I'm feeling particularly unhealthy about crypto prices, I'm checking this like frequently throughout the day. Anyway, great analytics there. Make sure you check that out as an action item. Of course, guys, risks and disclaimers. Bitcoin is risky. ETH is risky. Will the flipping happen? We don't know. Defy is risky.

All of this stuff, you should know. You could lose what you put in. But we are headed west. This is the frontier. It's not for everyone, but we're glad you're with us on the bankless journey. Thanks a lot.