Bankless - Coinbase Launches Base | SEC Sues Terraform Labs & Do Kwon | Spotify Token Gating | OpenSea vs. Blur

Starting point is 00:00:00 David, you're not going to fire me, are you? I think it does take two people to do this podcast, at least you and I. I was not prepared for that question. Ryan, well, can I see you in my office after this? I'll be better, David. Bankless Nation, happy fourth Friday and the final Friday of February, 23. David, what time is it? Ryan, it's the Bankless Friday weekly roll-up.

Starting point is 00:00:30 We cover the entire weekly news in crypto, which is always an ambitious endeavor, yet we persevere into the frontier. Nonetheless, like we always do, with coffee. Got coffee? I've got coffee. Let me tell you. I can tell you. And I don't know if that's the coffee speaking right now, David, or that excitement in your voice is just like all of the incredible things that have happened this week. Like what the hell? It's a good day to be going bankless, my friends. Let's a good day to be in crypto. You know what? We shouldn't tease them any longer. We should just get into some. the headlines that we're going to discuss in this epic weekly roll up the fourth Friday of February. David, what's on the agenda? Coinbase drops the base a new blue layer two on the scene. Yeah, that's right. Coinbase has its own dedicated layer two. A new blue layer two. I love that.

Starting point is 00:01:18 Yeah, you like that one. And so we're going to talk about all those details. What does that mean? What does it mean for a coin for Coinbase to have its own layer two? How are they building that? What are all the implications behind that? So we're going to unpack that and more because bankless got the scoop. So coming up after that, and the sad, sad news, SEC sues Terraform Labs and Doquan, which, I mean, that's not a surprise. But the implications of what that lawsuit might imply are bad. So we've got to talk about the details, the precedent that that might set if that goes forward. And then third, Spotify.

Starting point is 00:01:54 The app that some of you are using right now to listen to this podcast is, going to have tokens in it soon. Yeah. Which is pretty cool. Seems like it. Seems like maybe podcast NFTs. Podcast NFTs. Music NFTs are a thing.

Starting point is 00:02:07 Token gating. We're going to get into all of that and more. David, before we do, we got to talk to folks about something we don't often talk about on bankless. And that is, what does it mean to become a citizen of the bankless nation? I'm going to close that URL.

Starting point is 00:02:21 Do you know why? Because that was the, this is our new beta site, by the way. This is going live in about weeks time. I think our dev team might kill me. Soon TM.

Starting point is 00:02:30 Two weeks. And you have the opportunity to become a bankless citizen. It includes our token reports where we dive in, our analysts talk about token ratings for all sorts of popular tokens. Which is getting these tokens are getting an update, by the way, as a result of today's news. So these token reports always stay updated as the meta shifts. Yes. And it's because David and I are, look, we're not plugged into the day to day. we hired a talented team of analysts to actually put these together, and they're smarter than us.

Starting point is 00:03:03 And faster than us. Yeah, David and I are losing our reflexes, all right? We were top of our game three years ago. We are no longer, but we have the best people who are doing this. We also have a bankless nation member-only Discord. We talk about a lot. A premium podcast feed with a ton of goodies. And David, just this week, we released the debrief on the premium podcast feed.

Starting point is 00:03:24 We also released a special Q&A Twitter session that we had with Eliezer. Eliezer Yudkowski, of course. And that was the Q&A that we had promised after that crazy episode that we recorded. So all sorts of goodies come on the special premium podcast feed. You can only unlock that when you become a bankless citizen. All the extra content that we have, that we don't have space for in the normal RSS feed. All the extra content gets on the premium RSS feed. But those are only some of the details.

Starting point is 00:03:53 You get to go to our in real life Denver meetup. You get to go to all the future meetups that will have at ECC and permissionless. You'll get to unlock future access for things that we can't yet talk about. There's a bunch of reasons to become a citizen of the bankless nation. You can also join my Q&A channel and ask me questions. Can I ask you a question? I've never done that. In my Q&A channel, sure.

Starting point is 00:04:14 Just so I can't in real life. I have to reserve it for the Q&A. That's what the channel's for. Yeah, okay. Fair enough, David. Anyway, all this, $17 a month. It's like a Netflix subscription, that much Netflix costs. And anyway, we think you should become a member of the bankless nation.

Starting point is 00:04:31 We'd love to have you on the journey with us. David, let's get into the markets this week. What is Bitcoin Prize doing for us? And we're viewing this, of course, on our favorite place to exchange tokens. Cracken. Our number one recommended crypto exchange. These are the charts for Bitcoin and the dollar. What are we looking at on the week?

Starting point is 00:04:49 Looking at on the week, start of the week at $25,000, ending the week at $24,000, which means Bitcoin is down 4%. You are zoomed super far out. You are looking at like a year's time frame. But that's what, if you zoom in, that's what we are now. We are down 4% on the week, lost $1,000 off of the Bitcoin market cap. All right. How about Ether? What's that doing on the week? Ether down 3.3%.

Starting point is 00:05:12 Start of the week at 1725, currently ending the week at 1650. 1650. Yeah. So, wait, you said, is up or down? Down. Why are we down? Doesn't feel like we should be down. Because like seven days ago was like the top tick of last week.

Starting point is 00:05:29 So like sometimes we just fall victim to unfortunate timings of what was exactly 24 or 70, seven days ago. So it was basically a flat-ish week. It's pretty flat-ish. But it just looks kind of down. We dumped it down like ether hit $1,600. Bitcoin also kind of hit a recent low. But then we bounced right back off of that. And so the, the bowl is.

Starting point is 00:05:48 the bears are in a very strong game of tug-of-war right now. Look, I'm not even using the browser tabs for this. I'm using the Cracken tabs for this. ETH Bitcoin ratio, what's that looking out? 0.069, which is relatively unchanged on the week, up about half a percent. All right, but still not up in the, like, to the recent highs, right? Below 0.07 is like kind of a low for ether in the ratio in local terms. Bitcoin having a bit of a recovery, we might say. Some people are really celebrating that. We'll see if that lasts. total crypto market cap what do we above a trillion above a trillion's down on the week but 1.15 trillion dollars all right david let's uh cover what's going on in the fed real quick because

Starting point is 00:06:29 i just really want to get to some of the crypto news this week um the first is this the fmOC had their meeting here's what you need to know um all officials almost all the officials favored moving 0.25 percentage points or bips point 25 bips in the next meeting i'm just saying bips bips because david hates that yeah but you also fumbled it which kind of goes to my point bips are dumb uh the next meeting anyway we'll probably see a 25 bip basis point increase in march and then a some of them want a 50 a point 5 percent uh never mind i'm not doing the bips thing Thank you. Some of them want a 0.5% increase, and they're probably not going to get it.

Starting point is 00:07:17 But the Fed says, basically, forget about the pivot. We still got work to do on the inflation. We're not pivoting now. And the market doesn't expect the federal funds rate, the inflation, sorry, the interest rate to increase beyond about 5.3%. So we're kind of close to peak, at least, according to the markets. That's what's going on there. The interest rates aren't hiking as fast as they used to be. We might get close to a top.

Starting point is 00:07:40 What is going on in the world of ultrasound money, though, David? It's at all-time lows in supply since the merge. So that's just great. I think how much ether have we burnt since the merge? So in 35,000 ether. Wow, in 160 days. So almost 35,000, 35,000 either in half of a year. That's just great.

Starting point is 00:08:00 That's just great. The down only on the supply. Yeah, this is all-time lows. Big time. Every single week. We've hit all-time lows every single week for like over a month now, I think. We are negative six bips, David. Can you read that?

Starting point is 00:08:13 I hate that you just said that. 6.6 pips, to be precise. Yeah, so yearly deflation is 0.066% negative. That's pretty cool. Why do we always talk about this? This is some context for this? Here's a tweet we pulled up. What does this say?

Starting point is 00:08:28 Yeah, so this is from Data Always, who has been pushing back on the focus from ETH influencers, if you will, about the bird. Just say bankless. So data always retweets their own tweet. The first tweet says, The ultrasound money, cult really confuses me. If we match the highest ever yearly average burn, we see a supply decrease of 2 to 3%. With constant fully diluted value,

Starting point is 00:08:53 it's an insignificant price pump. Deflation is a meme. The bulk cases flows. And then they continue and say, most of their responses to this just go to show how few people understand flows and how much information asymmetry still exists. The issuance reduction matters a lot.

Starting point is 00:09:08 the nuance is that the rate of burn deflation means almost nothing for flows. Okay, what do they mean when they say this tweet? What they're basically saying is that the real price catalyst was the merge, not the burn, as in the elimination of proof of work issuance is the thing that changed the flows, as in killing all of that issuance killed the outbound flow away from ether, the asset, as in the cell pressure was eliminated. They are saying that the burn, the thing that you and I talk about at the start of every single weekly roll-up Ryan, is much more insignificant because in comparison to the actual total market cap of ether, how much we are burning is insignificant and it doesn't impact the flows of the cell or buy pressure of ether. So they're saying that the deflation is a

Starting point is 00:09:56 meme. The people that focus on the burn are focusing on a meme and not the fundamentals, the real fundamentals is the flows, which is a combination of eliminating the proof of work issuance, which I said, but then also just net new buying pressure. So just because like we're burning ether doesn't mean anyone's buying it. So that is the pushback from data always here. I just heard ultrasound money cult and I stopped listening, David. Are we in a cult? What's going on here? Hey, but you know what? I think we're pretty reasonable about it. I think this point is a good point, of course. And yet it's also what I think many in the so-called ultrasound money cult I don't know what call.

Starting point is 00:10:32 And when people refer to Colton, I don't know who they're talking about, but at least on bank list, I think this is pretty consistent with what we've said from the very beginning. The reason we talk about this and are celebrating this is not from a flow's perspective and number go up.

Starting point is 00:10:45 It's because, guys, look, Ethereum has a monetary policy now, and it's pretty badass. I think takes like this, don't remember the time from 2018 and 2019 when ETH as Money was in complete dispute, and the 21 million hard cap was the only way you could design, a hard money cryptocurrency market cap.

Starting point is 00:11:05 It's the only way that we knew. It's the only mechanism we had. What we're celebrating is this mechanic. And what we're trying to spread is the knowledge of how this works. That is the purpose of the ultrasound money meme. So I don't dispute the facts in this case. But I'm going to continue to talk about this

Starting point is 00:11:21 and celebrate it until more people understand. Click into that tweet and then scroll down because I think I gave a response to this tweet. Oh, yeah. And so here's what I said. It's less about the raw numbers of deflation and more about the fact that, Ethereum is a self-governing economic system that's able to capture its own energy. So like the

Starting point is 00:11:37 ETH supply chart, the thing that we look at, is a cool way to illustrate the activity of Ethereum. If there is a strong, vibrant economy, that means ether is deflating. And so deflation is a symptom of high activity on the Ethereum app layer. So that's why I celebrate deflation. It's because like, oh, there's activity happening. The crypto's not dead yet. Like if we are deflating, crypto's not dead yet. Yeah. Well, Data always replied and said, All I want is for people stop worshipping the chart. So stop worshipping the ultrasound money chart, maybe. We'll try.

Starting point is 00:12:07 I'll do my best. No promises. What do we got today? This is a big week for Arbitrum. They just passed an important milestone. What did they accomplish? Oh, just transaction volumes through the absolute roof. So the new all-time high in transaction volume for Arbitrum, I think 2x is previous

Starting point is 00:12:23 all-time high. So just really healthy activity. Speaking of healthy activity on an app layer, Arbitrum passed Ethereum. Yeah, Arbitrum and layer two by itself past the Ethereum L1 transaction. First time this has happened ever. Ever. And it won't be the last. Definitely not.

Starting point is 00:12:41 I mean, these L2s are going to go sky high relative to Ethereum transaction. I'm going to guess a new layer two is going to come onto the scene and absolutely blow past all other layer twos and transaction capacity. And my prediction for this will be talked about in a short time. What do we got here, David? Here's another take on Arbitram getting some details of this data. Yeah, same conversation. Take a look at this efficiency, says Hunter, who I know is an Arbitrum fan because he's got the small brains, PFP. February 24th on 2022, which was pre-Nitro upgrade, Arbitrum's Nitro upgrade. Arbitrum did 106,000 transactions, which cost $165,000 in fees. A year later, February 20th, 2023, post-Nitro, Arbitrum did basically a million transactions with $155,000 in fees. So basically a 10x in total, transaction volume, 9x, and then basically a zero change in the actual fees it took to get that done. So, yeah, 8.7x increasing capacity with $10,000 saved in fees.

Starting point is 00:13:41 And that's because they are able to compress more things in an Ethereum transaction, in a piece of Ethereum block, right? So their compression technology has gotten better over the last 12 months. That's what that means. That's exactly right. And then the last thing in the market, so we'll talk about Coinbase's Q4. 2022 earnings are out. And an interesting note here is the how much each asset, Bitcoin Ether or other coins represented of the total trading volume on Coinbase. And so if you zoom into that

Starting point is 00:14:14 little graphic, Ryan, so last year in Q4 of 2021, it was 16% Bitcoin, 16% Ethereum, 68% all other crypto assets of trading volume. This year, it's 35% Bitcoin, 33% Ethereum, 33% other crypto assets. So I think this just shows that like speculation on the long tail of crypto assets has kind of gone out the door and people have flown towards blue chips. Totally. And Ethereum and Bitcoin neck and neck for that title of trading volume king, at least on Coinbase. That's pretty big. David, but we got some bigger stuff coming up.

Starting point is 00:14:48 Give us a tease. Coin based. Coinbase drops the base. We're going to talk about the brand new Coinbase layer two, which there's so much to talk about there. And so we're going to unpack all of those details. Not only did we have the opportunity to interview Jesse Pollock from Coinbase about this vision. The bankless zoomer analysts were able to put in some alpha report. So we'll talk about all of that and more.

Starting point is 00:15:09 Four huge revelations in the SEC's charges against Doquan and Tara Labs. Why so late? Why didn't they do this earlier? Maybe they were waiting for a more warm climate for them to push past more precedent that's stricter. Perhaps we'll talk about all of that. and then royalties caught in the crossfire of the NFT Marketplace Wars. We got an update on withdrawals. We got to talk about Spotify.

Starting point is 00:15:32 So much to talk about. But first, a moment to talk about some of these fantastic sponsors that make the show possible, especially Cracken, our strategic sponsor for 2023. Check them out. Cracken has been a leader in the crypto industry for the last 12 years. Dedicated to accelerating the global adoption of crypto, Cracken puts an emphasis on security, transparency, and client support, which is why over 9 million clients have come to love Cracken's products.

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Starting point is 00:17:52 50 cents a day and provides a wealth of knowledge and support on your journey west. I'll see you in the Discord. Guys, it actually happened. Coinbase is going to be the first exchange, the first U.S. publicly traded company to launch a layer two. David, that layer two is called base. It's based on optimism technology. It settles on Ethereum. It is fully EVM compliant. David, what are the details here? So the base test net is live today. That is what is being announced today. The base test net layer two main net soon TM. There's no date launch for the main net.

Starting point is 00:18:31 We'll get this out of the way. Base, the token does not exist. There is no base token. There is no base currency. There's no error drop. There is only a test net for a rollup called base from Coinbase that is built on the OP stack from optimism. But there are significant second order effects of this. And like first off, just like think about this from first principles.

Starting point is 00:18:52 Coinbase is building a optimistic rollup to enter the arena alongside optimism, arbitram, Polygon, and now base. And so like you can add base to that list. It is going to be the, uh, like official chain of Coinbase. So this is kind of like the Binance smart chain, but for Coinbase. It is fully permissionless for developers to build on.

Starting point is 00:19:16 So uniswap, I will expect to see. governance votes from like things like uniswap, AVE, saying, hey, we should deploy our application on base. I expect all of those votes to be a resounding yes. You're going to see other like optimism native infrastructure to also want to go over to base. There's going to be a huge land grab for defy apps to be on base. So I think that is what we're about to see. So how did this project even get started? And so both Coinbase and optimism were both working on EIP 4844 proto Dank Charting. Also, Proto Lambda, which Proto Dank charting is named after, is on the optimism team.

Starting point is 00:19:53 And then there's a few other developers on the Coinbase side of things. They were all working towards 4844. So they were all in the same room together. And that's when the conversation started about, like, hey, Coinbase, there's this thing called the OP stack. If you guys just wanted to, I don't know, perhaps fork the OP stack and make your own OP chain, you could easily do that. And that peaked to the interest of Coinbase. And when we interviewed Jesse, bankless, we have an interview with Jesse for more details. He said that Coinbase had been interested in starting their own chain twice before. They looked at doing this endeavor twice before. They already had the base name for years now, apparently, but it was the OP stack technology and their partnership with optimism,

Starting point is 00:20:33 their collaboration with optimism that really unlocked the door. And so really that's the news. There's so many more things to talk about. Some percentage, some unknown percentage of all base transaction fees are going to the OP collective. We don't know that this percentage, but some percentage of transaction fees are being routed towards adding to the OP collective treasury. To support public goods to support. Well, that's actually up to optimism governance. That is what optimism governance tends to do is to support public goods, but that will be for OP governance. How will you pay for gas on base? You will pay for that for gas with ether. Coinbase is going to be the only sequencer, the one-of-one sequencer of the base chain. But Jesse, in our

Starting point is 00:21:18 review did say that the long-term vision of base was to be a fully permissionless network, not just from a builder perspective, but also from a validator perspective. So they have the same aspirations as optimism and arbitram to eventually become a fully permissionless chain with a fully permissionless validator set. Now, Ryan, we explicitly asked Jesse, is there going to be a base token? And he said, no. And then I specifically asked Jesse, well, is base going to be a permissionless validator set in the future? And he said, yes. And those Ryan's are conflicting statements. So one of these things has to give.

Starting point is 00:21:53 Is that true? Could you not use... How do you do a permissionless validator set without a token? Well, don't... Isn't the only thing that you need is some sort of kind of collateral to stake? So couldn't you, could you use ETH as part of your sequencer set rather than a native token? I guess that's true.

Starting point is 00:22:12 Or something like Eigenlayer maybe, right? Or like, I wonder. I think the design space is broader than just, um, L2s that are spinning up tokens. But anyway, look, you did all of the details. So I bet that answered like a hundred questions for the bankless nation. I want to zoom out and talk about this from a high level perspective because I think that this is a really big deal for crypto.

Starting point is 00:22:35 I think this is like top five things that have ever happened since I joined crypto, David. It's definitely behind the merge. It's behind a few other things. But like this is top five. And I think people are probably asking why. Like, why are Brian and David talking about this so much? Why do they think it's such a big deal? So another, you know, an exchange launches a chain.

Starting point is 00:22:54 Like, who cares? It's not, it's about how they launched the chain, all right? That's the big difference. When we had Brian Armstrong on the podcast in October of 2021, we asked them the question, when Coinbase chain, when's that going to happen? He said, when the technology is ready, we'll do it. When we feel like we can launch in a way where we can maximize, maximize decentralization, And when the technology is available to do that, then we'll launch a chain.

Starting point is 00:23:20 They're launching a chain now. The technology is here, David. And the way that they're doing this is different than the way, say, Binance launched their chain, right? Binance controls the validator set. Binance, if it has, you know, two-thirds majority, it could do all sorts of nefarious activity on chain. Coinbase launched with a layer two. They are a sequencer on the layer two, but they cannot steal funds on chain.

Starting point is 00:23:46 They have limited powers. Why? Because this entire chain settles to Ethereum. So this is a maximally decentralized way to actually launch this chain. And it's the maximally bankless way to launch this chain as well.

Starting point is 00:24:01 So it's aligned with those values. The other thing I'll say is Coinbase has like 110 million verified users. A tiny, tiny fraction of this. Maybe like 1%, maybe 1% to 2% are actually going full bankless and going on chain after they create like a Coinbase account. Why is this?

Starting point is 00:24:23 It's because the tools are really hard today, David. It's like we talk about this every like the user experience isn't there. It's it's difficult to get into crypto. Coinbase is going to onboard a vast majority of their verified users. And let's say they they onboard, you know, maybe 20%, right? It's 20 million. 20 million new people. We will have like 10xed the amount of people on chain using crypto. And of course, this was not possible a couple of years ago. Transaction fees were too high.

Starting point is 00:24:58 But now that you have a layer two, now that you have EIP 4844, transaction fees can be fractions of a penny. So the technology is here and it's ready. And I think that they are going to set a cookie cutter for other publicly traded companies to start going down this path to other crypto exchanges, other crypto banks. We start to get rid of the overhang of why do you have to use a centralized lending provider like a Celsius or a blockfi when you can have an easy onboard experience into a layer two with completely open source auditable code on the back end. Anyway, so many reasons this is so

Starting point is 00:25:39 exciting. But that is the big picture of why this is a big deal. It's the way that they are launching this chain, I mean, using ETH as the money, rather than doing like a pump and dumb token, it's just a really fantastic way to approach this. And exactly what we've predicted that exchanges would do over the long run. Yeah. So we put, we have so much more information. We have a YouTube video, an interview with Jesse Pollock. I put it in a Twitter thread. We have a newsletter release on the, on the bankless newsletter, which goes through some of the the implications of this. Just some of the stats that are in the tweet thread.

Starting point is 00:26:17 110 million users on Coinbase with $80 billion in assets. So some reaction to this like, oh, a brand new optimistic rollup alongside Arbitrum optimism and Polygon and bases it in TestNet? Like, how is it going to fill up its chain? How is it going to compete with all these fully developed layer twos? Arbitrum only has half a million unique addresses on it. Coinbase has 110 unique verified users. 110 million.

Starting point is 00:26:46 110 million, yes. And so like 1% of Coinbase's users, if they can get them onto the base chain, is already more than double the most used layer two on Ethereum today. And so don't like, coin, like we have all the apps on layer twos. Coinbase has all the users and all the money. And so this is going to, we asked Jesse the question, like, how will Coinbase present base to their users? This is going to be the, like, Coinbase approved layer two. And so, so many people come into this industry through Coinbase, and Coinbase is going

Starting point is 00:27:18 to be like, oh, would you like to withdraw your assets from the centralized crypto bank that we are? Feel free to deposit it onto base, a layer two on Ethereum. And so, like, this is aligned with the crypto idea. And so the tweet that I wrote in the tweet thread, I say, base makes Coinbase bankless, because Coinbase can encourage, as you. users to withdraw from Coinbase and deposit onto base while still being inside of the Coinbase ecosystem. So it's adding in a layer two into the product offering from Coinbase. It's proof of

Starting point is 00:27:52 reserves. Yeah, it's automatically proof of reserves on the whole entire chain. So with base, it's still a Coinbase product, but users are self-sovereign and self-custodied. So it is the bankless version of Coinbase, which is just so awesome. There's going to be haters, David, that's say, but this is all AML KYC, that, you know, this is... It's not. It's a permissionless network. It's not now, but like every, every account that withdraws, of course, is AML KYC by Coinbase because they have to be.

Starting point is 00:28:24 I care a lot less about that right now than I do about this massive amount of users that are being, like, that are being onboarded into self-sovereign technologies. All right. Like, if this is still, yeah, I, I, I, I, it is. fact, I don't even know how you get around that problem at this stage and still use a centralized exchange in some nation state. But I still think this is like, this is going to onboard millions, tens of millions of people into the bankless money system that we all love. And I do think it's, it's just, there's also some symbolism here in that like there's so much crazy crap that went down

Starting point is 00:29:03 in 2022 with centralized entities stealing the funds, right? This is the answer to 2020. This is the answer to 2022. Okay, we'll use decentralized technology where you can audit the code completely, where we can't steal your funds, has proof of reserves right out of the box, and Defi will facilitate this. I do kind of wonder, do you think this will eat up the Coinbase Exchange business model a little bit? Not zero, but I think the net value add, I think, is significant. And Coinbase is always looking for new products that are providing revenue beyond. exchange activity because they need to diversify their income because like 90 plus percent of their like quarterly revenue is always exchange activity. So that's why staking, Ethereum staking is so

Starting point is 00:29:51 valuable to them because it's a diversified revenue source that puts less risk on exchange activity. And this opens up so much surface area for on-chain products. This is one of the things that Jesse was really hammering in our interview. Base is where their coin base is going to put all of its on-chain products. And so they have their own little domiciled network. to play favorites. They get to play favorites because it's their own network and they're going to put all their products there. And so this is just opening up a massive new world of opportunity for Coinbase. I wanted to take this conversation into why optimism. And so like I said, Jesse and the optimism team started collaborating on EIP 4844 and that's I'm assuming where

Starting point is 00:30:31 OP stack conversations happened. So the OP stack is the scaffolding for optimism change. So Optimism's bedrock upgrade is built with the OP stack. Base is built with the OP stack. The OP stack is this like open standard, the scaffolding for, you know, build your own layer two. Build a layer two workshop. And so when all and when more and more layer two chains

Starting point is 00:30:56 are built using the OP stack standard, because they're all standardized, there is more synergies between interoperability, composability, just fluidity between these different chains. So as more and more open, stack chains come into existence, the boundaries between all of these chains can start to blur. So, Coinbase is making a bet on this super chain vision. The optimism team calls this the super chain vision.

Starting point is 00:31:23 So Coinbase seems to be in on this vision that the more and more chains that build on the OP stack, the boundaries between these things blur. And this is part of the ethos as to like why layer two is in the first place. Like why build a layer two chain instead of your own customized blockchain? like BNB chain or your own app chain. It's because it apparently is Jesse's and Coinbase's philosophy that building a layer two is building a bridge, not an island. That's a line from Jesse in our interview.

Starting point is 00:31:52 Coinbase wants to build bridges, not islands. And so the layer two, building a layer two network on Ethereum allows base to be connected to all the other layer twos on Ethereum and all the assets on the layer one and all of the users. And so they are bridged right into Ethereum's ecosystem. But in addition to that, the OP stack also provides that same interoperability with the optimism super chain that is slowly being built. And so not only is it building bridges into Ethereum and all of its layer two's, but it's

Starting point is 00:32:22 building more direct bridges into optimism and all of its other future chains that are totally going to come because the OP stack code base is the most forked layer two code base that exists. Yeah, I guess like optimism basically wants all the fork so they develop some sort of network advantage for super chains. Exactly. All the forks. I am hopeful that super chains can talk to other super chains in the future.

Starting point is 00:32:41 I know we've sort of like hinted around this. Slowly they will. I want the ZK Sync to be able to talk to the optimism, to be able to talk to the arbitrum and all of that. You know, one other side product of this too, we mentioned that Coinbase is not launching a token. And the cool thing about a layer two is because you don't have to. That's what's cool about it. If you're launching your own layer one side chain, you have to have a token because you have to

Starting point is 00:33:04 inflate that token to pay for security budget. budget, a layer two already comes with its own security intact. It's a less expensive. It's a cheaper way for a Coinbase to do this. And part of our conversation with Jesse was like, hey, the reason we couldn't do this two years ago is because it was infeasible. Like the tools weren't there. But then when we tried to get support for this project internally at Coinbase like in, you know, 22 with OP stack, the code is ready. It's like, here's a chain out of a box. Just fork it. And by the way, it comes with its own economic security. You don't even have to launch a token.

Starting point is 00:33:36 The tools are getting easier. This is like the wordpress. This is why we're going to see an explosion of chains too. Anyway, we could say more and we probably will throughout this episode. But that is the news for you. I just one thing, though, I'm already seeing some apps start to. There's a land grab. Okay.

Starting point is 00:33:53 Apps are trying to grab as much real estate on base chain as possible. This is oil or finance, right? Is it oiler? Yeah. So Euler saying, oiler can become the main trading venue for CBE. I think it kind of already is. First off, what is oil? it's like compound or Ave, but with a few extra governance-free mechanisms.

Starting point is 00:34:12 And so they are already planning their migration onto base. And so the- And not a migration from another chain, but more a additional support, right? A deployment, yeah. So this is Jesse. Jesse tweets out, today I join 100 plus contributors from Coinbase to launch Build on Base. Base is the builders chain for Coinbase, the builders of the world. and he is also, Coinbase, as a result of this announcement,

Starting point is 00:34:39 also becomes the second protocol dev development team of the OP stack. So now it's OP Labs and Coinbase, which are collectively building the OP stack. So that's pretty cool. Just congratulations, Jesse. Also just shout out to Jesse, who not only pioneered this effort, but also pioneered the KZG ceremony

Starting point is 00:34:59 being prompted to all Coinbase users, just like the alignment that Jesse is creating between Coinbase and the Ethereum decentralized ecosystem is so strong. So it's like, well done, Jesse. That's really cool. And so if you have, if you want to learn more, we interview Jesse. That interview is available already on the YouTube. I'm sure some of you have already watched it. We are also live streaming with the optimism team at 10 a.m. Eastern time this morning, Friday morning, the 24th. And so we're going to get the optimism perspective on this as well. No shortage of content, guys, from bankless. I should mention in the interest of disclosures,

Starting point is 00:35:32 Both David and I are advisors for optimism, support that project, think it's wonderful. Also, early investors in Euler Finance as well. Full disclosure. You can always find that at bankless.com slash disclosures. I don't own any coin, though, like the actual stock. Do you? I don't own boomer assets. All right.

Starting point is 00:35:55 Well, that's it, man. Let's talk about the SEC, shall we? Here we go. We tried to hold off the SEC as long as possible. Okay, here it is. Some breaking news. SEC sues Terraform Labs and Doquan. Terraform Labs, of course, the protocol team behind Terra.

Starting point is 00:36:09 Why so long? Like Terra collapsed almost a year ago. Why so long? Ryan, is it perhaps the political environment is more conducive for the SEC to get away with more things now that FTX has collapsed? Is that possibly why? I don't know. That's pretty cynical, David. That's pretty cynical.

Starting point is 00:36:26 SEC files a lawsuit against Terraform Labs in Doquan for allegedly orchestrating a multi-billion-dollar crypto asset securities fraud by repeating false and misleading statements to build trust before causing devastating loss for investors. Good so far though, right? That's what they should be doing. He's a scammer. It's a scammer. Yep, yep. Okay, good job, SEC, right? Yes, Gary Gensler says that Terraform Labs failed to provide the public with full, fair, and truthful disclosure as required for a host of crypto asset securities. Gensler commended the SEC staff on their investigation, adding the defendants attempted to prevent us from obtaining important information about their business. This case demonstrates to the lengths to which some crypto firms will avoid complying

Starting point is 00:37:05 with securities laws. Okay, so trying to paint all of crypto as just as bad as Doquan. I'll throw a flag on that, but this is what we get into when we're a bunch of DGens who ape into algorithmic stable coins. Also worth noting that Doquan was actually served by the SEC at Missouri Mainnet in New York in 2021. So this story has actually been going on for a while. Okay, what does all of this mean? So here's a Coin Desk article that says, huge revelations in the SEC's charges against Terraform lapse. SEC findings describe the entire terror system as a fraud, similar to Sam Bankman-Fried's FTX.

Starting point is 00:37:41 So I'm going to read out all four points, and we'll go into each of them here. Number one, TerraUSD's stability was a complete and conscious fabrication. Conscious. Intentional, intentional, yes. Two, Doe Kwan and his allies were cashing out big time the whole entire time. Shady. three, the Chai deal was even faker than we thought. I don't know what the Chai deal is.

Starting point is 00:38:04 Chai payments platform, an e-commerce system in South Korea. That's right. It was sort of the pump around this. See, retail's really using this. We have adoption. We have real-world adoption in South Korea. That's what Chai was.

Starting point is 00:38:17 Okay. And then fourth, it turns out U.S. regulation does matter. Again, the headline from this article. Kwan and his team are accused of committing crimes in the United States that affected several U.S. victims. Yes. I'm sure. Are you ready to take these one by one? Yeah, sure. So what's number one? The stability was a complete farce, apparently. It was never stable.

Starting point is 00:38:37 Yeah, so Terraform and Kwan secretly arranged for a third party to purchase massive amounts of U.S.T to restore the $1 peg when Terra USD experience a small depegging from $1, from its $1 target price. When was this? Was this when Terra started to wobble in 2022? No, this was a year ahead of that in May of 2021. So the narrative of UST being rock solid was a complete fabrication because the Terra USD price was wobbling in as early as May in 2021. So the SEC compares this fake to the fake laboratory tests that led to Elizabeth Holmes Dec. I can't disagree with that, David. I mean, they were advertising a product that was stable and they knew that it absolutely wasn't. They were just propping it up. By the way, who is that third party that purchased the massive amounts of UST to restore the peg when Terra was in trouble?

Starting point is 00:39:27 was that? Who did that, Ryan? Oh, that's a four-letter word, I think, starts with the J. Is that am I right about that? Jump. Jump. Jump. Jump. Jump. Jump. We'll get to them. Yeah. God damn. Okay. So Doe Kwan and his allies are cashing out big time. A variety of tentative attempts to trace funds flowing out of Terra foreign labs after the collapse

Starting point is 00:39:46 found that Do Kwan cashed out hundreds of thousands of dollars worth of Bitcoin while he's in Serbia, and that was after terror collapsed. The SEC claims that Kwan and his accomplice. transferred over 10,000 bitcoins from Terraform and the Luna Guard Foundation and converted over $100 million of that Bitcoin into Fiat withdrawals through a Swiss bank in June of 2022. Do you remember the Luna Guard Foundation? This was the non-on-chain, like a group of actors, like just trust us with the money. We're going to purchase this Bitcoin with Luna and then we're going to use that to prop up the price of US. Remember when we suggested that why does your, why does your algorithmic stable coin, which is apparently perfectly stable, need an external agency to help

Starting point is 00:40:31 maintain the peg. Off chain with just a few set of key signers that we have to trust. And apparently, they were taking that. Weird. Huh. Huh. Who could have seen that? What else we got?

Starting point is 00:40:44 Anyways. Okay. So, Chai deal, even faker than we thought. SEC describes that not only did Doquan exaggerate the Chai-terror relationship in his own statements, he created an entire fake server to move fake money around to stimulate fake transactions with the clear cold of deceiving investors. Wow. Wow.

Starting point is 00:41:04 Look, I'm grateful for the SEC for doing this part of it. Dude, you can't even hate it, man. No, it's like this is, the public didn't know this. We need to know this. Good job. I mean, we want the SEC to help us prosecute the scammers. Last but not least, evidence suggests that Kwan use his Twitter account to promote Terra USDA to Americans and insult critics who warned of flags that led to the currency.

Starting point is 00:41:26 see his collapse. Insult critics. I was personally insulted. I was there. Were you insulted too? I mentioned in that sentence. Are you named in this whole, you know, court document here? They insulted David Hoffman.

Starting point is 00:41:40 Insult critics who warned of flaws. Yeah, that was us. All right. Okay. Moving on. Who got rich? Question mark. We found out who got rich.

Starting point is 00:41:51 Apparently according to these documents, jump capital. Jump capital. Say the name. Jump capital. It's actually jump crypto, which I think is a subsidiary of jump. They made $1.2 billion from Terra. 1.2 billion. Retail got destroyed, David.

Starting point is 00:42:09 These guys... They were also the ones responsible for helping maintain the peg after it was known that the peg was instable. I'm just so tired of the sharks and the mercenaries in this space. Like, they should be called out. Guys, this is not okay. This is... Do you remember, like, this was kind of like peak financial.

Starting point is 00:42:25 Pansborough culture in crypto that I absolutely hated, which was just like, yeah, let's just make tons of money. It was just like Wall Street infecting us. Look, we have nothing against making money, right? Like, we're all crypto investors. We just think you can do that by betting on things early. Right. And waiting until something is built that's useful. And then receiving the upside after the useful thing is built. Kind of the traders, the mercenaries coming here. Don't care about that. They made money. They're not even, they're named in this report.

Starting point is 00:43:01 No charges against them. They didn't do anything illegal, David. Right. Technically. Yeah. $1.2 billion. I ask you, does that feel fair? Retail gets completely destroyed by this and they made out fine.

Starting point is 00:43:17 Jump capital. It incensed them to do it again, David. Give it back. Anyway. So there are a bunch. This is a tweet from Scytial. who's like one of the most savage people on Twitter, and he's always right, in my opinion.

Starting point is 00:43:30 Jump trading propped up Terra after it almost broke early on. Instead of letting it die in the early stages, they covered it up, letting the bubble grow significantly larger than it needed to get, exacerbating the pain for the entire crypto community. And this is retweeting Fat Man Terra, who's a Twitter account that focuses on the Tara news. And Fat Man Terra says,

Starting point is 00:43:50 the SEC filing also indirectly confirms the fact that Jump secretly bailed out the USC project without disclosing to retail, leading to the scheme ballooning even further in destroying many people's lives and in the first place. Okay, so this is only half the story, because the other half of the story is the implications of this lawsuit against Terra because there are precedents being set. And so this SEC case against Doquan and Terraform Labs says that UST, the stable coin UST, is a security because it is redeemable for Luna, which is a security.

Starting point is 00:44:23 So I think implying that like the stable coin itself wouldn't have been a security, but it had this enshrined formal relationship with Terra or with Luna, the equity asset of the Terraform ecosystem or the chain. And so because UST was natively convertible to Luna, the SEC and the SEC determined Luna to be a security, then UST therefore becomes a security because of this enshrined form of relationship. And not just USC all potentially algos stable coins in the future. Not just that, Ryan, all wrapped assets. And so what Mike Selig says is that this precedent, if set, means that any rapper can make an asset into a security. Are you talking about like wrapped eth? Well, not necessarily not wrapped eth because of how. Staked Eith.

Starting point is 00:45:07 Steak dex. Yeah. So A. Eith in Ave, C, Eth in compound. S. Eith derivative tokens. Anything with a wrapper that has some sort of like, you know, money Lego component to it could potentially become a security. This is the thing that is so pernicious and so insidious is, you know, thank you SEC for helping

Starting point is 00:45:29 investigate and take down a scammer. But you're using this. And exactly what they should have been doing. Gensler is using this as a land grab opportunity to get more control over a crypto. He's setting a precedent. It's evil genius. I tweeted this. Gensler's next strategy is to go after Doe Kwan and UST because he knows no one will defend

Starting point is 00:45:46 them. How can we defend them? How can we defend it? We didn't defend them at the time. And if he wins, he'll establish broad precedent for more control over crypto. It's evil genius. Thanks, though. I don't see a friend here.

Starting point is 00:45:59 Yeah, Doquan, a bunch of others screwed this up. By the way, you know what we should do is go back and listen to that Luna Terra debate that we had in, was this April of 2020, before the thing blew up? Like two weeks or three weeks before we said this would happen. We said in the exit, like there was a bull bear case. We were quite clearly on the bear case, and we said, hey, we're just worried if this whole thing blows up. The regulatory backlash on us will be severe and significant. And Doquan and the lunatics and the Terribles won't have to pay that cost, but we will because we believe in this technology. Because we're going to still be here.

Starting point is 00:46:37 And that's exactly what's happening. And it's so frustrating to see. It's just so frustrating to see. Doquan's got $100 million and he's hiding in Serbia somewhere and now we have to clean up his mess. Sick. All right. Well, look, a little bit of good, a little bit bad. I'm choosing to remain super optimistic this week because we've got a lot more to talk about, David. What's coming up next? Update on the Ethereum withdrawals. Got some good news on there. Spotify is going to get some tokens inside of it. Our NBA TopShaw NFTs securities. So much more to talk about. We've got some flashbots update as well. So we're going to get to all of this news and more. But first, I'm going to talk about some of these fantastic sponsors that make the show possible. Uniswap is the largest on-chain marketplace for self-custody digital assets.

Starting point is 00:47:22 Uniswap is of course a decentralized exchange, but you know this because you've been listening to bankless. But did you know that the Uniswop web app has a shiny new Fiat on-ramp? Now you could go directly from Fiat in your bank to tokens in Defi inside of Uniswap. Not only that, but Polygon, Arbitrum, and Optimism, Layer 2s are supported right out of the gate. But that's just Defi. Uniswap is also an NFT aggregator, letting you find more listings for the best prices across the NFT world. With Uniswap, you can sweep floors on multiple NFTs, and Uniswop's universal router will optimize your gas fees for you. Uniswap is making it as easy as possible to go from bank

Starting point is 00:48:01 account to bankless assets across Ethereum, and we couldn't be more thankful for having them as a sponsor. So go to app.uniswap.org today to buy, sell, or swap tokens and NFTs. Arbitrum 1 is pioneering the world of secure Ethereum scalability and is continuing to accelerate the Web 3 landscape. Hundreds of projects have already deployed on Arbitrum 1 producing flourishing defy and NFT ecosystems. With a recent addition of Arbitrum Nova, gaming and social daps like Reddit are also now calling Arbitrum home. Both Arbitrum 1 and Nova leverage the security and decentralization of Ethereum and provide a builder experience that's intuitive, familiar, and fully EVMMM. compatible. On Arbitrum, both builders and users will experience faster transaction speeds with significantly lower gas fees. With Arbitrum's recent migration to Arbitrneitro, it's also now

Starting point is 00:48:53 10 times faster than before. Visit Arbitrum.io, where you can join the community, dive into the developer docs, bridge your assets, and start building your first app. With Arbitrum, experience Web3 development the way it was meant to be. Secure, fast, cheap, and friction-free. David, is Spotify rolling out token support? I don't know, but that's what this screenshot looks like. What do we look at here? That's what it looks like. Yeah. So here is a screenshot. It says, welcome to Spotify's token enabled pilot. We're happy you're here. So what we are looking at is a sign in with a wallet, metamask, rainbow wallet, ledger, zirion inside of a Spotify mobile experience. Wow. And then once you connect your wallet, you get to connect your

Starting point is 00:49:35 and then apparently it changes the behavior of Spotify and unlocks certain experiences. So This is available for Android users in the US, UK, Denmark, Australia, and New Zealand, I think. Yes, good job. Cool. Thank you. And so token-gated access to music content in Spotify. That's awesome. It's so cool.

Starting point is 00:50:02 Podcasts NFTs, music NFTs, token-gated content. This is a huge boom for creators. I wonder a few things. Like, first of all, implications of this is like, does Gary Gensler want to be? to control music NFTs too and all of the tokens on Spotify that unlock it? Like, does he really want? He probably does. He probably does.

Starting point is 00:50:21 What are you asking, right? Of course he wants that. The other thing I would say is the experiences for Android users only, not Apple. And I almost wonder. It's a pilot. It's a pilot, but I almost wonder if Apple is going to, maybe it's not going to be available for Apple. You know Apple wants to tax.

Starting point is 00:50:37 They want to do their 30% tax on all NFT transactions. But yeah, I don't think there's, I mean, I don't know anything. about this, but I can't imagine that there's like actual trades or transactions going through. You're just loading up token gated access. That's just the start, though. Like there's going to be a button in Spotify of like, yeah, I want to download that like buy this Drake NFT. I'd like to get access to this.

Starting point is 00:50:59 Yeah. Of course they would. And Apple wants to take a charge. I just think that these sort of stupid like gatekeeping just cannot stand because a competitor will just be like, fine. If you want to charge, we'll just support Android. And then maybe I'll get rid of my eye. iPhone because I want to do NFTs. And then Apple will have to submit and bend the knee.

Starting point is 00:51:20 This is, it's, it's a competitive dynamic. And, you know, the, the gatekeeping is just not sustainable with Web3. That's just not what we do here. We can't charge rent on all this stuff. I 100% agree with you. I just find it kind of funny and ironic that you're telling you, gatekeeping will not stand. I want token gated access in my apps. Creator gatekeeping is totally fine. This is power to the creators. It's decentralized. It's distributed. So, um, cool.

Starting point is 00:51:47 Nice job, Spotify and whoever is leading that. Really, really good work there. But we got here. Okay. Uh, withdrawals. The Sepolia chapella scheduled for February 28th. Say that three times fast. What is chapella?

Starting point is 00:52:01 Chappellella is a combination of Shanghai and Capella. Cause we just love our words in the Ethereum ecosystem. Uh, it is the upgrade for withdrawals for the Sepolia test net. And that will happen on February 28th. Uh, So that's pretty cool. Granted that this, I can't imagine that this upgrade is all that complex. We're really just enabling withdrawals.

Starting point is 00:52:19 But we have a test event for that. This is March. Is, do you think it's going to go? We're going to go live in March. February 28th. But do you think we're going to get the next Ethereum upgrade in March then? Is sort of what this means? Late March, early April.

Starting point is 00:52:29 Sounds right. That sounds right. That's bullish. Yeah. FlashBots announces MEV share, a programmably private order flow that empowers users redistributes MEV and takes a step towards decentralized block building. Okay, so what is this? MEV flashbots, of course, we know flashbots.

Starting point is 00:52:47 They are the people that help actually reduce some of the gasees on Ethereum by creating a private off-chain marketplace for block building and block proposing. Now they are doing the same thing for users and putting their transactions into blocks that allow for users to recapture some of the MEV that they might be creating. And so how does this work? users can choose exactly what transaction data of their transactions to hide and then also reveal through programmable privacy. So searchers, if you are familiar with this whole, like how a block gets built, searchers build in a competitive order flow auction for the right to execute against

Starting point is 00:53:30 users' private transactions. Selectively revealing transaction data can help searchers better optimize their bids, which means higher payments back to the user. So because you, Users can keep their transactions private. Users can bargain for the M-E-V that they create without permissioning search or competition. Basically, your transaction on Ethereum through this thing called M-EV share will create some sort of M-EV. By keeping your transaction data private, you can actually force searchers to pay you for the M-EV that you create.

Starting point is 00:54:03 And so this is a way to get back some of the value that you put into the Ethereum ecosystem. You know, this whole time you were talking, I was just admiring these heart messages. Who's the graphic designer that came up with this? Okay? The day after Valentine's Day, and we got these hearts, M-E-V-U, matchmaker, zero-x81, babe, relay on me. I wish these were real. I would buy these. I would buy these for sure. David, some layoffs that came down the pipe this week. Polygon Labs cut staff by 20%. So a 20% cut for Polygon Labs. Also, immutable has reportedly laid off 11% of its staff. What's your take on some of these layoffs?

Starting point is 00:54:45 We saw a whole bunch toward the end of last year, some more early this year. Do you have a high-level take on this? Yeah, laying off people when the markets go turn down, it's just a symptom of just like when you've optimized for growth. And so when the markets turn against you, you have to trim and cut back. This is just the natural process of things. It doesn't mean that, like, Polygon is doing badly. It doesn't mean immutable is doing badly. It just means they hired a lot during the bull market.

Starting point is 00:55:14 And now resources have dried up. And so they have to cut back. A lot of companies overhired. And so in order to optimize, they are cutting back. This is just a normal part of the process. David, you're not going to fire me, are you? I'm not going to leave me off. I think it does take two people to do this podcast.

Starting point is 00:55:31 At least you and I. I was not prepared for that question. Ryan, well, can I see you in my office after this? I'll be better, David. NBA Topshots moments. They might be securities. Moments of time are now securities. Well, awesome.

Starting point is 00:55:49 Yeah. What else? Everything's a security. This podcast could be a security if we tokenize it. Bankless podcasts are, oh, I don't even want to say that out loud. Don't say it. Don't say the words that will be used against you, my friend. But what is this headline and what does it mean?

Starting point is 00:56:04 Yeah, NBA branded Top Shot Moments, NFTs may be securities, Judge Rules in Dapper Collapse case. Ultimately, the court's conclusion was that Dapper Laps offered was an investment contract under Howie, the judge wrote. So we're going to have to follow this story, but it turns out where the scope of what a security is is in expanding itself to Top Shot's moments. Great. So basically, we have even less clarity

Starting point is 00:56:33 on what's the security and what's not. not a security as this is going through the court system. And digital collectible of a moment of time is a security. Okay. So a video game item that drops if it's an NFT, is that a security? Totally a security. You think so? Yeah, that flaming long sword of fire that does 172 damage. It needs a 10K report. It needs a filing. Little Bobby shows up and little Bobby picks that up off the ground. Gary Gensler shows up at your door. He says, hey, that's a security. Hey, Bobby. Do you know, do you know, Put that down. Put down that security, Bobby. Look, and if you have questions, just go to Gary Gensler's office hours. He's happy to answer any of your question and then throw you in jail.

Starting point is 00:57:16 All right, OpenC versus Blur. What's going on here, David? So OpenC, as a result of the blurred dominance in the NFC marketplace has changed their OpenC fee to 0%. So OpenC now charging 0% on trades for a limited time. They have also moved the, optional creator earnings, half a percent minimum for all collections without on-chain enforcements. And then lastly, marketplaces with the same policies will not be blocked by the operator filter. So this is really just the collapse of margins in the NFT marketplace.

Starting point is 00:57:51 When you have a competitor, is this because in response to blur? Is that what's going on? Yeah, because blur volumes are eating OpenC's lunch. And so they had to drop all their fees in order to stay competitive. Like, didn't Blur exceed OpenC volumes last week? Yeah. Yeah. For like the first time. That's right. Yep. Yep. This is take from Frank de God's.

Starting point is 00:58:10 A harsh reality. NFT marketplaces are trying to maximize market share so they can raise bigger VC rounds. And the best way to get market share is to have the lowest fees for high frequency trading. Godspeed. I don't care about that because the user's benefit. Bring my fees down to close to zero. Except for artists. This does shoot artists. The artists are caught in the crossfire because artists really, really like royalties. Does this, so this cuts royalty? Or is it just? open seas. So Blurr is trying to minimize royalties because they want to

Starting point is 00:58:38 maximize the value to NFT traders. And so they're routing around creator royalties because that is an extra fee that traders don't want to pay. I still think that creators will just respond in kind and they'll just like do a thing where I meant 100 and then I keep 100 and then I sell those back. That's one option. There's also the option for creators to make a NFT contract that enforces royalties at the contract level. So you have to pay a royalty. that will make it harder to be composable into other NFT marketplaces,

Starting point is 00:59:08 but it is an option. Very cool. I like the competitive dynamics, David. Yeah, there's that tweet about Blur dominated this month. It's a whole month of January, or it's February. Accounting for 46% of January's total, that's January, January's total NFT volume,

Starting point is 00:59:24 outpacing OpenC. So OpenC was 40%. Blur was 46%. Granted, this is the month that Blurr dropped their token. So that is going to be a very hot month. Yeah, that probably skews things. David, do we have any Bitcoin news, maybe?

Starting point is 00:59:37 I did look at the Ordinals data. Ordinals volume is down. And so trending down to the downside. But it's been a very, very healthy no matter what. So it's definitely not dead. But Ordinol's activity down a little bit. The only other Bitcoin news we have is this tweet from Patrick Hansen. This is a take.

Starting point is 00:59:57 Patrick is at the EU side of circle. So he believes in stable coins, of course. So that is his bias. He works for USC basically. Patrick tweets, in El Salvador, after hundreds of millions of top-down public investments, only 1.6% of remittances are sent via Bitcoin. Meanwhile, driven by natural bottom-up demand, one-third of Latin American consumers have used stable coins for everyday purchases.

Starting point is 01:00:24 The market is loud and clear. So this has been a growing sentiment, again, an indictment against Naïi Buckele of El Salvador of just like really forcing Bitcoin on its citizens using a lot of El Salvadorian capital and money to buy Bitcoin and make Bitcoin investments when the critique is that that money could have been used to support public goods for El Salvador.

Starting point is 01:00:48 Wasn't the remittance use case always dumb for Bitcoin? I never understood this because it was just basically like hold Bitcoin. Just hold it. It'll go up in value. the use case of Bitcoin is you hold it while the money printer is printing. If I'm holding my money, like that's the last thing I actually want to spend. I want to spend my inflating currency.

Starting point is 01:01:12 I want to hold my Bitcoin. And the same is true of ether, really. It's not a good medium of exchange. Right. It's not a good unit of account. It is a fantastic store of value. So wasn't destined to fail from the beginning? I would say so.

Starting point is 01:01:26 Yeah, because like the whole, you use Bitcoin for remittances. Actually, I'm not a believer in the whole blockchain, not Bitcoin thing, but that's what a blockchain is for is for remittances. I could pay my gas fees, my ETH gas fees in USD. I would. I would just have it like, because then I don't have to be like, ah, well, you know, I paid an ETH and now do I have to buy that back? Yeah, I got to do taxes.

Starting point is 01:01:47 Yeah, I got to do taxes. Thank you. Exactly. What's this from Caitlin Long? This was interesting last week. Yeah, so moving on to a new subject. Caitlin Long tweets out this tweet, it's time for me to review a few, a review. reveal a few things. I've just published a post, Shame on Washington, D.C. for shooting the

Starting point is 01:02:04 messenger. And so Caitlin tweets out, today I'm publicly disclosing for the first time that, A, I handed over evidence to law enforcement of probable crimes committed by a big crypto fraud that started months before that company exploded and stuck its millions of customers with millions of dollars flosses. Is she talking about FTX? She might be talking about FTX there, Ryan. She doesn't name them by name, though. No, it does not. And then B, I also warned bank, of a mounting bank run risk inside banks servicing the crypto industry before the bank runs ultimately hit. So Caitlin Long saying, hey, I told regulators in law enforcement about the FtX fraud, and then I warned banking regulators of all the contagion that might happen. What happened as a

Starting point is 01:02:45 result of that? Well, her bank, which is a fully custodial, this is a custodia bank, which is like a fully, fully backed, reserved bank out of Wyoming. What happened to custodia? Custodia. banking license, banking charter, I believe, was denied and now disparage for daring to even come through the front door. So Caitlin Long, founder of this custodia bank, who's trying to be a responsible, fully custodied crypto bank, reports to law enforcement about FTX, talks about all the incoming contagion, and then gets the door slammed on her face. So she actually went to the regulator's office and asked, and not only did they not help her, they actually didn't listen when she was trying to whistle blow on the things that she saw going on in the industry.

Starting point is 01:03:31 Yeah. So Jesse Powell retweets this and says, Jesse Powell of Crackett and says, I can't tell you how infuriating it is to have pointed out massive red flags and obviously illegal activity to regulators only to have them ignore the issues for years. Quote, they're offshore. It's complicated. We're looking at everybody, end quote, is what Jesse is saying that the regulators are saying for years.

Starting point is 01:03:53 And then to be used as their example. So like, I mean, this is obviously hitting very personally for Jesse because, you know, Cracken just got staking inside of the U.S. shut down by the SEC, even though it's a relatively low risk good product. And Jesse's been doing some of the similar stuff as Caitlin for years now. And then all of us. So like, this is what our complaint about Doquan, Ryan is like all the bad guys come in. They make a bunch of money. They cause a bunch of destruction. They cause a bunch of chaos. And then they go hide in Serbia and all the people who believe in this industry take all of. the blame. Take all the The good people like Jesse, right? Who is actually like whistleblowing talking

Starting point is 01:04:32 about the red flags. Two regulators actually showed up to Gary Gensler's office to talk to him. What does he get for that? A $30 million fine. And sorry,

Starting point is 01:04:40 you can no longer have a staking product. Yep. Meanwhile, Sam Bankman-Fried is watching football and is VPN. Is he watching football or playing video games?

Starting point is 01:04:50 Probably moving assets around. You're Sam watching. You would if he could. We know this. That's what the claim is. is like, the court is like, hey, why are you on a VPN? And Sam Bac and Fried was like, I'm watching football. That guy doesn't watch. No way, really? Yeah, you haven't heard this part of the story? No. So he got in trouble for using a VPN when he shouldn't be. And he just said, yeah, I'm watching

Starting point is 01:05:09 football. He's like, dude, you're at home. Turn on the TV. You don't need a VPN for this. Oh my God. The Griff don't stop. Oh, this is more Jesse. He says this. I have a theory. Regulators let the bad guys get big and blow up because it serves their agenda. Number one, destroy capital resources and crypto to burn people deter adoption number three give air cover to attack good actors the bad guys are actually on side good guys are the enemy men it does feel like that sometimes doesn't it david yeah yeah yeah so gonzler is trying to say like jesse of crackin that man sold an unregistered security he's bad and meanwhile like our perspective is like jesse katelyn many others calling out the actual frauds, the actual risks, and they're our heroes, they're our good guys.

Starting point is 01:06:00 But from the outside in, like, Gary Gensler and his like office hours campaign is trying to do to the same thing that Elizabeth Warren's trying to do, which is paint us all as like shadowy super coders. But Jesse's saying, and that's all intentional. That's all part of the evil genius play. I hope that's not true, but it feels like it is. And it, you know, the evidence is weighing on, and that being the possibility here. David, collab land launched a token.

Starting point is 01:06:24 What is this? What does it mean? Yeah, so people who are familiar in the Dow space or in the Discord space will definitely know Collabland. It's basically very, very important Discord infrastructure. So Collab is a governance token and used within the Collab Land ecosystem. So holders will be a part of the Collab Land Dow, feature requests, bounties, create the marketplace. Token claim will begin on February 23rd, which is today. So that was yesterday, if you're listening to this on Friday. Friday. And so if you are an Earnify subscriber, I'm sure you'll be getting a notification

Starting point is 01:06:56 of your eligibility for this. So if you're not an Earnified subscriber and you don't know what that is, go to Earn.Fi and sign up to get notified of airdrops like this one. David, what's going on at Superfluid? Did they introduce a new feature here? Yeah, Superfluid vesting. So what is superfluid? Superfluid is streaming payments. So micro pennies per block cents over time. Just superfluid. fluid payments. So like instead of just streaming money baby. Streaming money. Yes, thank you. And so the superfluid vesting is a way to vest using the superfluid contracts over time. So you can now put in vesting contracts using superfluid. So the tokens for a specific protocol or whatever

Starting point is 01:07:39 stay in the sender's wallet until the very moment that they are vested in a stream directly to the recipient's wallet with or without a cliff. So there's no token lockup in a smart contract. And these tokens can be put into... This is the thing DYDX should have done. Do you remember a few weeks ago? Like, go when we were talking about, they made, you know, promises, investors made promises, and we could have just done this on the smart contract. That's what super fluid is doing.

Starting point is 01:08:05 It's enforcing vesting at the code layer, which is like, hey, that's a good use of smart contracts. That's a great use. And then also out of FI-Land this week, we've talked about FI-Land before, but they've announced their $2 million-dollar seed round. what is filand. It gives you this like little 3D landscape to place little objects and you can only place the objects

Starting point is 01:08:26 if you have done the thing in Web 3 that enables you to claim those objects. So for example, you can place a uniswap object on your land if you've traded on uniswap. What's yours look like, Davidhoffman.eath, brother. It's, uh, how do I find you? Uh, search accounts right there.

Starting point is 01:08:43 Oh, David? Davidhoffman. Hoffman. Hoffman. My little, my little, my little, file land. Yeah. Yeah.

Starting point is 01:08:48 I know. This was included just so David could brag about his Fyland here. Yeah, exactly. Yeah. And so if you've traded on Uniswap once, you can get the Unoswap land. But if you've traded on Unoswap like 10 times, then your Unoswap icon grows bigger. It's like the Level 2 version. Super cool.

Starting point is 01:09:02 You have 16,000 experience points here. And so I can use that experience to buy other things in the Phi Land ecosystem. Philand is on Polygon. Look at these quests you've achieved. Right? Look at all my achievements. Man. A busy little B over here.

Starting point is 01:09:18 There we go. There's my fine land. Look, I got a bunch of little trees. I got my open sea ship. So you can even, you can even like I've linked in the YouTube channel, which goes to banklets. So not only can you do your Web3 achievements, you can also put in your Web 2 identity and you can link like your Instagram, your YouTube, your substack. So this is just a fun, cool little experiment in on-chain identity that I thought was pretty cool. Yeah, social signaling. You can connect with the best wallet ever. The best wallet ever, the best wall ever, of course. Thank you, Metamask for sponsoring this. Yes, thank you.

Starting point is 01:09:50 And so you can go in and like you will have your land out of the gate. I think you do need to have an ENS name. So you log in with Metamask into your ENS wallet and then you can start building out your file land. And then of course, just as a disclaimer, both Ryan and I are investors in both superfluid and file land as we just mentioned. No, I'm not in superfluid, just you. Oh, that's right.

Starting point is 01:10:11 You forgot to sign. Moving on. Jobs this week. Bankless.com.com slash jobs. Uniswap Labs is looking for a senior software engineer. Bankless is looking for some writers, some social growth leads, overpriced JPEGs, needs a producer.

Starting point is 01:10:30 Bankless needs a growth marketer, consensus, a director of an engineering. Adidas, global head of Web3 strategy and planning pre-PO, senior Web 3 front-end engineer. I could go on, even though some companies are laying off. Many more are hiring, crypto just keeps getting bigger.

Starting point is 01:10:48 Go look at the job opportunities at bankless.palat.com and check that out. David, what do we have? Coming up next. Coming up next, we got questions from the nation. Hey, Ryan and David. What do you think Fatalek would be working on if he wasn't working in crypto? Great question. We'll talk about that, as well as some takes from the week, as well as what are Ryan and

Starting point is 01:11:05 I bullish on moving forward and also one of the best moments of Zen that we've ever had ever. So stay tuned for all of that and more. But first, a moment to talk about some of these fantastic sponsors that make the show possible. The Phantom wallet is coming to Ethereum. The number one wallet on Solana is bringing its millions of users and beloved UX to Ethereum and Polygon. If you haven't used Phantom before, you've been missing out. Phantom was one of the first wallets to pioneer Solana staking inside the wallet, and we'll be offering similar staking features for Ethereum and Polygon.

Starting point is 01:11:33 But that's just staking. Phantom is also the best home for your NFTs. Phantom has a complete set of features to optimize your NFT experience. Pin your favorites, hide your uglies, burn the spam, and also manage your NFT sale listings from inside the wallet. Phantom is, of course, a multi-chain wallet, but it makes chain management easy, displaying your transactions in a human-readable format,

Starting point is 01:11:54 with automatic warnings for malicious transactions or phishing websites. Phantom has already saved over 20,000 users from getting scammed or hacked. So, get on the Phantom waitlist and be one of the first to access the multi-chain beta. There's a link in the show notes, or you can go to phantom.com slash waitlist to get access in late February. How many total airdrops have you gotten? This last bull market had a ton of them. Did you get them all?

Starting point is 01:12:16 Maybe you missed one. So here's what you should do. Go to Earnify and plug in your Ethereum wallet, and Earnify will tell you if you have any unclaimed airdrops that you can get. And it also does poaps and mintable NFTs. Any kind of money that your wallet can claim, Earnify will tell you about it. And you should probably do it now because some air drops expire.

Starting point is 01:12:33 And if you sign up for Earnify, they'll email you anytime one of your wallets has a new irdrop for it to make sure that you never lose anirdrop ever again. You can also upgrade to Earnify Premium to unlock access to airdrops that are beyond the basics and are able to set reminders for more wallets. And for just under $21 a month, it probably pays for itself with just one air drop. So plug in your wallets at Earnify and see what you get. That's E-A-R-N-I.F-I. And make sure you never lose anotherirdrop.

Starting point is 01:12:59 Questions from the Bankless Nation Discord. Here we go. Question from proxy. People always say layer twos do inherit the security of their layer one when compared to side chains. But what does that actually mean? That's a very relevant question this week given the base announcement. So the difference between base as a layer two and base as its own side chain is what? What does it mean to inherit the security of Ethereum for a chain like base?

Starting point is 01:13:30 Yeah. So a layer two has a formal and specific relationship with its layer one in a way that a side chain does not. And so a layer two makes certain cryptographic commitments to, a layer one that binds itself to the layer one to follow certain sets of rules. And so it makes promises, commitments, cryptographic commitments to the layer one that it will abide by the rules that it sets for itself. And those rules are things like being able to make a transaction on the layer two from the layer one and all the other cryptographic assurances that you need to make a blockchain, a blockchain. And so basically, it allows people on the layer one,

Starting point is 01:14:13 to make transactions happen on the layer two, that means that the validator or sequencer of that layer two does not have more power than the layer one has. And so if the sequencer for a layer two on Ethereum goes rogue and they stop processing transactions, they stop propagating blocks and you are, as a user, left abandoned and cut off from interacting with the layer two, you can use the layer one to go get your money. A side chain does not have that power. does not have that relationship because a side chain is just another blockchain that posts data to a bigger chain, a layer one chain, but doesn't make any formal cryptographic commitments to that. How was that explanation? Does that check out for you?

Starting point is 01:14:57 Yeah, that checks out. You know, one kind of analogy I use in my mind is I think of like these chains is like, imagine these big cities in the cloud. Okay, so Ethereum is like the biggest city of all in the clouds. It's the city in a cloud, all right? Side chains do not have a bridge. back to Ethereum that is like everlasting and eternal and that can't be broken. They're their own independent cities. So if the side chain goes down and like someone takes all your funds, something bad happens, there's no way to exit back to the big cloud city of Ethereum. With a layer two like arbitram or optimism or now base, there is an everlasting, cannot be

Starting point is 01:15:40 broken, no other dependencies bridge. back to Ethereum. So if bad things happen in the cloud city of base, so the cloud city of optimism, users can always run back over that bridge back to Ethereum. And I'm saying users, I mean like the assets, there's always an escape hatch. That is one big difference from a user perspective.

Starting point is 01:16:05 Yeah, the escape hatch, I think analogy is really right. It's the escape hatch exists and the power, who has power over that escape hatch? is the layer one to Ethereum. So what is really the difference between a layer two and a side chain is that a layer two gives up certain authorities to a power that is stronger than itself,

Starting point is 01:16:24 which is the Ethereum layer one. And so that's how users always have assurances that they can be bankless if they need to be even in the event of a rogue layer two operator. Yep, absolutely. And layer two is really the only configuration that kind of takes this form, right?

Starting point is 01:16:41 So it's much different than a side chain from that perspective. All right. Well, it gives a layer to its name. As in like without, without creating that relationship, it's not a layer two because a layer two implies that you can't, you can't jettison the layer one. The formal cryptographic relationship is what makes something a layer two because it gives itself, it gives power to the layer one.

Starting point is 01:17:03 It's corruption resistance too. It's like, so if the city in the cloud gets corrupt and if you're on a layer two, you're fine because you can always go back to Ethereum. another that was a great question proxy a question from palu proi actually is the name that proi right in the down around proi sorry proi um hey ryan and david what do you think fatalic would be working on now if you weren't in crypto what about both of you um that is palu asked that question david what do you think vitalic would be working on have we ever asked him that if he wasn't in crypto what would you be working on vitalic i don't know if we have yeah i mean we'll take a

Starting point is 01:17:37 whatever podcast with vatelic that we can get so maybe we'll offer this prompt to him him. Vitalik does a lot of things outside of crypto. Let's just do a Vitalik podcast, but we can't talk about crypto the entire time. But no crypto? Yeah. How cool would that be? So Vitalik does a lot of things outside of crypto.

Starting point is 01:17:54 A lot of people don't realize this. He's very interested in longevity. He's very interested in AI. And he's very interested in charity and charitable giving and impact, basically. So it would probably be something, maybe all three of those things. And so he's, he's, he's, he's, he's, he's, He's very tapped into the longevity world, so maybe he would be, like, helping promote research in longevity science. What about the public policy type stuff, you know, quadratic voting and that kind of thing?

Starting point is 01:18:23 He's, like, very interested in sort of the underlying protocols and mechanics that governs society. That governs society. And I think help us coordinate. I mean, Ethereum is one gigantic coordination technology unlock that you're creating in the protocol layer. But he's done other things. Like quadratic voting could be a place. to nation states or, you know. Yeah. I think that Denver, city of Denver is experimenting with quadratic funding for its own public goods.

Starting point is 01:18:55 Yeah. It'd be very interesting. How about you if you were in crypto? What would you be doing? I think, let's see, how many years have I been crypto? I would have graduated from PT school. I would have a lot of debt and I would be working as a physical therapist would probably be my answer. Really? Is that way? But like, I think that's the path that I was on prior to crypto. That's the path you were on.

Starting point is 01:19:16 But let's say, maybe another phrasing of this question is, if you had to do something right now that wasn't crypto, what would you be doing? And is it physical therapy? Is that your, you know, passion?

Starting point is 01:19:28 Okay. So that would have been, that's the path that I jettisoned in 2017. Probably, okay, so if crypto deleted, but I had all my same skill sets, yeah,

Starting point is 01:19:37 it would probably be, like content production and writing. A food podcast. We know this. Yeah, I'd be a podcaster in a different field, I guess. What field? Maybe AI. Maybe AI.

Starting point is 01:19:48 Some future, yeah, exercise was definitely a part of it. But like, I don't know, I think I would have landed on some like futuristic sci-fi technology to be some sort of content producer about. That's probably the easiest answer. That was going to be my answer too, especially after that L-Easer episode is like, AI podcaster. Should we pivot the podcast, David? But seriously, we don't, we have more AI content coming.

Starting point is 01:20:12 So maybe this future is actually going to manifest. That's a great question. All right, let's get some takes to me. Wait, is that, that was your answer? Is like AI podcaster? Look, it would have to be some, you know, nothing quite like, there's nothing like crypto on the planet. It's just like, it's just, it ties so many of my interests together.

Starting point is 01:20:28 It's just like finance, investing, startups, economics, politics, social theory. Like, psychology is just everything. Right. Yeah. I think I would be. an investor though no matter what sure like there would have to be some cross-section of entrepreneurship and investing and it probably gravitate more towards that than content production i mean you're the one who is like david right we should start a podcast and i was like uh i don't know so i don't have quite i don't really see it

Starting point is 01:20:54 yeah i don't have the content producing uh gene but there's something i love about investing and that is like investing is just um you get rewarded when you're right it's this like so many fields um it's impossible to ever find truth. Like, how do you find truth? How do you know if you're right? Investing fulfills that gratification for me of like, you're in the game and you're playing, and you can be right and you can be wrong.

Starting point is 01:21:23 And there's like some underlying truth to it. And I don't think I could leave that side of things. And that's more interesting than the investing side is just you think about something, apply a thesis, and you get an answer to, to the hypothesis, right, if you're right or not. And investing, I think, rewards that more than just about anything else. Maybe science does, but I don't have the patience for science, I think.

Starting point is 01:21:49 Yeah, yeah, I think that's a good take. Elon Musk, that's a take of the week. What's he saying? Okay, says Elon. What should we do about it? Question mark. What is he talking about? He is replying to a tweet from Lyron Shapira,

Starting point is 01:22:03 who tweets out, what if AI is going to literally slaughter every living creature on this planet in the next three years, watch Eliezer Udalski's new interview on bankless and see why that's not even a joke. And then he makes a tweet thread with clips and other threads. And then Elon responds to this tweet, okay, what should we do about it? Which, Ryan, when I saw that tweet, I'm like, oh, I thought you knew. Isn't that what you said? Yeah.

Starting point is 01:22:27 Isn't that your job, Elon? Yeah. I mean, what should we do about it, David? Is this? My only solution, Ryan, is to help further this conversation. That's my only contribution I have to solving this problem is making more content about it so people can know about it. So that will not be the last word on AI that you hear on bankless. All right, David and I are thinking through some next guests. We've got some names in mind. We'll be doing some reach out. Eliezer, I think, had a really interesting perspective, but it's not the only perspective in this

Starting point is 01:22:59 in this space. And I think, look, we're not going to pivot the podcast into an AI alignment podcast. But we are going to explore this topic. What did we just say earlier? Crypto touches everything. Everything. And certainly touches artificial intelligence. And artificial intelligence touches it.

Starting point is 01:23:14 This is, I think between crypto and AI, these are the most interesting technologies, at least to me, for the next decade. No question about it, they will intersect in all sorts of interesting ways. Yeah. And it was interesting. We put out this podcast with Eliezer titled, we're all going to die, which talks about the AI alignment problem, which in TLDR is like, if we make a super intelligent AI, we don't know how to make it care about our existence.

Starting point is 01:23:39 It might consider us completely, it might just be completely indifferent to us. And it might use us. At least you think that's a base case. He thinks that's the base case. He thinks that's like the very likely. And so far, no one has really been able to argue against that. Some people diminish how big of a deal that question is. but that is, I think, the issue.

Starting point is 01:23:59 We released this episode a week early, and then the Bankless Nation Discord was an AI Discord for a week, because that's all they would talk about it in there. And then there's, like, another discord that I'm in, and like I brought up some of these questions in here, and they started talking about AI. And then this episode goes public,

Starting point is 01:24:17 and all of crypto Twitter for at least a day starts talking about AI. And so, Ryan, I haven't told you this, but Vitalik messaged me this morning. He goes, by the way, I'm not sure if you really, the extent to which that one episode has made a huge public impact raising the awareness on the AI safety issue. And so like this is how much this conversation, the L. EASER's like warnings,

Starting point is 01:24:36 have been like pushed to the back of people's minds. And so like now it's actually kind of good that I think a non-AI podcast is promoting this conversation because no one else is doing it. Yeah. Absolutely. We're also privileged with the ability to ask the really dumb questions. which I think we did look the dumb questions are what's on everyone's mind too so I am I actually you like I was in a bad place after that episode but at the same time I'm very glad that we did it and I think there'll be more from that to you okay David what do we have a tweet from Frank de God who's also a podcast guest this week what problem do NFTs solve that's in quotes people want to buy digital goods that's it that's the problem that solves mic drop like I think it's so like

Starting point is 01:25:22 people who think like does that really need to be an NFT i think is an invalid question it's like why not people people like buying sometimes you you must like this guy frank to gods because like sometimes i hear you say this sort of thing people like the jpegs like but why is the jpeg going up this is the early days because people like jpegs that's all it is think about it isn't it you don't have to overthink it this is a take that i put out that i want to get your judgment on ryan can i read it yeah you go for it okay this is from from you uh if you buy a token on the open market, you're allowed to shill to your heart's content. Any other form of acquiring a token probably requires disclosures in order to promote. A token that you specifically issued,

Starting point is 01:26:03 it's never appropriate to promote. Okay, let me look through that again. Three rules, three Hoffman rules here. If you bought it on the open market, you can shill it. Number two, any other form of acquiring a token probably requires disclosure in order to promote. Okay, so if you got it as an advisor or you got it as a gift or something like this, or as a sponsorship, Number three, a token that you specifically issued, it's never appropriate to promote. I agree with all of those. One thing that I might put an asterisk on in number one is not just if you bought it on the open market, but if you bought it on the open market and you have some kind of like a bias in that,

Starting point is 01:26:45 like let's say you own over like 2% of the supplier, 5% of the supply. or let's say that it comprises like a substantial portion of your net worth, like it's 50% of your net worth or something like that, then that's the asterisk I would also put. That also probably should be disclosed or people should be generally aware that that's the case too. Otherwise, I think that these are, Hoffman rules are fantastic rules for disclosures, and I think more people should be following them. Yeah. Thank you.

Starting point is 01:27:17 And I would say that these are all just rules of thumb. There are plenty of instances where like some of these things, won't apply. For example, a token that you specifically issued, if you're an artist and you're making NFTs and that's your like income, absolutely shill that. If it's art, show that to the degree, you're an artist. This is more about like these things as financial assets, I would say. I agree. And then even then you're shilling the art, which is the product and you're not necessarily shilling the finance. Yeah, exactly. Yeah. David, here's a take here. What's this? Oh, God. So this is ZeroX Edgar, who's tweeting out the SEC case against Tara Luna.

Starting point is 01:27:53 By the end of May 2022, U.S.T. Luna, Raps Luna, and MIR were essentially worthless, wiping out more than $40 billion in combined market value. Domestic institutional investors experienced billions of dollars in losses in market valuations. Countless retail investors lost their life savings and ended up in debt as a result of collapse. Here's the punchline. For example, a pharmacist in California borrowed $400,000. against the value of his home to purchase UST and lost his entire investment. A painter in Vermont invested $20,000 in U.S.T set aside for his son's college education,

Starting point is 01:28:27 but lost it all when the Terraform ecosystem collapsed. Oof. Don't do that. Don't, I mean, yes, Doquan is at fault. Also, take some responsibility and don't invest your college science education or your home to buy a financial asset. What do we do about this, David? I don't know. Like at some point, this is,

Starting point is 01:28:51 this is always how frauds and, like, scams and Ponzi schemes, like, work. For some reason, they just attract the reptile brain of so many people out there who don't know how to think about these things. And then they do stupid stuff, like mortgaging $400,000 against the value of your own home

Starting point is 01:29:08 to purchase UST. One take, I think, is just you have to have a investor mindset, and that includes, like, an investor psychology. Right. So you can like feel yourself foaming into something. Like that is a, that is a feeling. You know that feeling. Yeah.

Starting point is 01:29:24 If you start to feel rising up in you, this feeling of like get rich quick. I need it now. Yeah. I need it now. This could be an overnight thing. Like by, buy, buy. You should always cast doubt on that feeling. Go go for a jock.

Starting point is 01:29:40 Take a hot shower. Like really consider it. Give it due diligence. Wait three months and see if you still feel that way. Like, it's, we can't, no one can protect you. Gary Gensler can't protect you against all of the different ways that you can kind of like think you're investing your money and you're actually investing it in a scammer scheme. So that's on you.

Starting point is 01:30:01 And my hope is that people just develop better instincts and better defense and better investor psychology around this stuff. That's, that's the only protection. What else do we do? I don't know. Okay, this was a fun thread. This is Pac-Man from Blur. when I did my interview with him

Starting point is 01:30:19 he was the person on the right this AI generated not AI generated but just like cartoon version of anime yeah is it was also animated so when he opened his mouth the anime person opened his mouth and also moved around but then so this is a a web 2 me versus web 3 me

Starting point is 01:30:37 person tweet thread yeah and so Pac-Man and most of the Blurred team have all been anonymous but Pac-Man puts out this thread doxing himself and telling a little story about how Blur came to be and who he is. And so I always think it's a fun story of when and on founders decide to un-an-on themselves, to docks themselves.

Starting point is 01:30:55 And so if you are curious to hear that story, a very human story of the founder behind Blur, there is a link in the show notes. Very cool. All right, David. What do you bullish on this week, my friend? I mean, so I'm bullish on layer twos. I'm bullish on the OP stack. I'm bullish on so much of this

Starting point is 01:31:14 being proving a lot of the bankless theses that you've been beating the drum with for years now. What's more to say? I'm also bullish, though, East Denver, which in about one hour I'm taking a flight out to Heath Denver to go. And so I will see all of you there, especially those going to the bankless meetup. I have never missed in East Denver.

Starting point is 01:31:34 It is the most magical time of the year. And so I'm bullish on all these things, Ryan. More magical than Christmas, David? Yes, it is. The most magical time of the year for David. Wow. It's definitely go say hi to David. He'll be wearing a big bankless shirt.

Starting point is 01:31:47 I think a lot of the bankless folks will be too. We have nine bankless team members going to eat out. But then there's huge representation in the bankless nation. I count the number of bankless shirts that you see. Yeah, bankless shirts that you see. Dow Punks, bankless Dow shirts. Yeah. A lot of culture there.

Starting point is 01:32:04 Exporting culture. Exactly. What are you excited for around? I agree with you. And look, you promise not to front run me this time. And then, you know, I did it. I got front run, but you kept it shorter. You can elaborate.

Starting point is 01:32:16 It's a great day to be going bankless. I think this is, you know, with the launch or the announcement of the launch of base, this is further proving out a lot of the theses we've had in this space for a while. Protocol sync thesis. This idea that the most credibly neutral technologies and coordination structures will kind of sink to the bottom and form the base of everything else, they'll be forced to build on top. of this, the idea being like a Ethereum, for instance, or a defy protocol that is incredibly decentralized, like a uniswap, for instance, will be at the basis.

Starting point is 01:32:53 That's a thesis that we've talked about from the very beginning. We've been bullish on layer twos for a very long time. In fact, David, we predicted that a major exchange would launch on a layer two when people thought that that was stupid and foolish. And like, why would they? Why wouldn't they all launch their own chains and trade their own tokens? and isn't that the game theory of it, turns out it's not. The defy mullet, this idea that we'd have kind of banks in the front,

Starting point is 01:33:18 fintech in the front and defy in the back, Ethereum, the network being a settlement layer for the world, a settlement layer for other crypto banks first, and then for all banks, that bank ledger systems would essentially become either layer twos or side chains on Ethereum. I mean, this is how we go bankless. This is how this movement wins.

Starting point is 01:33:40 And it's just very gratifying to see this thesis playing out. Like the bankless thesis works. Sometimes you just got to wait. Yep. Right? And like, I don't know. I'm just, I'm very excited about this movement, some of the ideas that we've talked about from the very beginning actually coming to life.

Starting point is 01:34:00 And this week was just a major event for that. So a major exchange, 110 million users, now launching a layer two. So essentially bending the knee to Ethereum in the process. process, bending the knee to decentralization, betting the knee to the people, and doing kind of the right thing, embracing crypto values. And it's really cool to see. So this is getting me out of the funk of 2022. You know, it's like, it's just such a hangover from 2022. It just, I felt gross at the end of 2022. And this kind of thing, this builder's momentum, it's not even about prices. Who cares about prices? The prices aren't pumping on this news. I don't care. I don't care. I don't care. I don't

Starting point is 01:34:40 at all. It doesn't matter. Wall Street doesn't understand this. Why would we expect the price of coin-based stock to pump? I don't even think the crypto market understands how big this is. Coin. Coin price is down 1.5%. Good. That's great. Like, that's the thing. I don't even care anymore because I know that this thesis is going to play out in, you know, in kind of the right direction. And anyway, slowly, yes. Slowly, slowly. It's not overnight again. Get rich slowly. Yeah. And anyway, I'm also very excited for these things, and that's all I have to say about that. I'm excited for just millions of more layer two users. Right?

Starting point is 01:35:19 Maybe we can get our grandma to use layers to use layer twos. That is the bull case for base, is that Coinbase is the front end for its own, yes, grandma, is the front end for the base chain, and they just fix all of the UX and UI issues that are plaguing. I'm working on my parents. You know, my parents, I just, they have fun. on an exchange, they've never really done much in crypto, right? Like in crypto. They're not crypto-native.

Starting point is 01:35:44 That's like the base case. Yeah. Most parents. Yeah. I don't know about grandma. She might be a little, you know, I'll help grandma. It's okay if grandma does. Sorry.

Starting point is 01:35:54 That's it. Meme of the week time. You ready? Let's do it. What do we got? This is the Change My Mind format. And we got Gary Gensler sitting real comfy, drinking some coffee, saying everything's a security.

Starting point is 01:36:05 Change my mind. I can't change his mind. I don't think. I can change his mind, but I could hopefully help people make that invalid. Not that the opinion of the United States government, Gary. I remember my wise co-host once saying, Gary Gensler, if everything is a security, then nothing is a security. I think that is the truth. You can't have everything be a security, Gary. That's where we'll end it. David, we got a really cool moment of Zen coming up that I think you should tease and provide some context for it. So this is the second

Starting point is 01:36:38 song put together by El Cocoa, who is a bankless nation citizen, also part of bankless Dow. This is a ballad, the ballad of Alexi, the, of course, software developer behind Tornado Cash, who is still in jail. And so it's a very long song. It's like four plus minutes written by El Cocoa, all by himself. I think you are absolutely going to enjoy this one. And if you are interested in collecting this, this is an NFT that is available on OpenC, if you really enjoy this song.

Starting point is 01:37:07 Guys, I should end with the risk and disclaimers. As always, before we get to the moment of Zen, crypto is risky. You could definitely lose what you put in, but we are headed west. This is the frontier. It's not for everyone, but we're glad you're with us on the bankless journey. Thanks a lot. Holland is simping for the U.S. for the big strong government.

Starting point is 01:37:40 They're trying to impress, and they don't give a shit about the scared young kid that they've locked in a cage when all he did was fight for the fundamental. rights for which our ancestors paid the ultimate price. The trial's not over. There's still time to fight for Alexi and all mankind. Inequity just grows and grows and often this results God knows in rebellion and war against the bourgeoisie and all kinds of things we don't want to see. So we said instead of starting a fight, we'll build a city in the sky where we treat people

Starting point is 01:38:22 right and you can keep your banks and your powers that be and we'll pay your taxes and if need be we'll contort our dows into LLCs and we'll create your CBDCs for free and help undermine totalitarian regimes and we'll even jumpstart your economy and give you what you need to withstand the Chinese even before it's something you know that you need and we'll help to build a future maybe less captured by greed And you didn't say stop when we started to build And we thought it was because our city fulfilled All the freedom's ideals and rights

Starting point is 01:39:04 That speak to human nature of all types But as it turns out, that wasn't it You just ignored what you thought wasn't a threat And then you went and broke down Alexi's door And you drug him off like a prisoner of war And for three long months There was no charge as you've pat each other's backs and your heads got large,

Starting point is 01:39:26 but you didn't realize when you snagged your prize that history will write you as the bad guys. Our tech is neutral, but our movement is not. And personal sovereignty is what we want. You crossed a line now make it right because we're an enemy. You won't know how to fight. But Holland is simping for the U.S.,

Starting point is 01:39:52 for the big, strong government. They're trying to impress, And they don't give a shit about the scared young kid That they've locked in a cage When all he did was fight for the fundamental rights For which our ancestors paid the ultimate price The trial's not over There's still time to fight for Alexei and all mankind

Starting point is 01:40:15 Agold fault and died So certain rights wouldn't get brushed aside And when we think back we're filled with pride Citizens, politicians side by side But there's a hungry beast that we just can't say And that monster's name is the nation state And no matter how much we all want to believe The monster just grows without reprieve

Starting point is 01:40:55 Well, we have a new weapon to fight this fight And we ask our officials to do what's right Forget your power and your fucking greed The world's changing quickly And we need for you to fight for humanity instead of destroying people's lives just to bolster your career because that's a shitty way to get ahead.

Starting point is 01:41:21 So Holland, go tell Alexi, go home to your wife. She loves you and is afraid for your life. We overreacted and that's on us. We hope the rest of the world will trust that they can still visit Amsterdam because we're actually not an authoritarian regime. And we regret our actions regarding Alexi to the extreme.

Bankless - Coinbase Launches Base | SEC Sues Terraform Labs & Do Kwon | Spotify Token Gating | OpenSea vs. Blur

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