Bankless - ROLLUP: 2nd Week of January

Starting point is 00:00:00 David, it is Friday morning. What is it time for? It is time for roll-ups, weekly roll-ups, where we inject a whole entire week's worth of news into your brain in as short of a time as possible. We go through a number of different topics. First, we start with the market. We ask what the market is telling us. Then we move into releases, who released what in the last seven days. Then we go into the news, what's happened in the news cycle. Then we finish off with some takes. who had some interesting takes this week out in the crypto ecosystem. And then we top things off with what David and Ryan are excited about. Ryan, are you ready to get into it?

Starting point is 00:00:49 I'm ready, man. Let's get started with the market. I am setting the timer. Keep us on track. David, let's talk about the market. So we had like what, a mini bear market and now we're out of it. What's going on with Bitcoin? Yeah, we had a famous two to three day long bear market.

Starting point is 00:01:04 We ended last week with Bitcoin touching $42,000. So all this happened in the last seven days. Bitcoin touched $42,000, fell down to $31,000. And then it regained $40,000 earlier this morning. It's currently just a couple hundred dollars below $40,000. So we experienced a quote unquote two-day bear market and now we're back at it. Pretty interesting price action. I feel pretty good that we kind of predicted this. On the last rollup, we said get ready for 30 to 40% drops. We just saw what, a 30% drop closing in on 40 with ether. Do you think we're out of this? yet. Yeah. So this has been really interesting. The conversation about crypto prices leading up to last week was that,

Starting point is 00:01:45 you know, quote unquote, there's a new paradigm, right? Because we would see like five to seven percent dips and then they would just get bought, right? So we never really had those famous like 30 to 40 percent corrections. And so that's what we talked about last week. We said this, the likelihood of a correction is coming. But previously, corrections can be like, you know, we saw a 30 percent correction. And previously we've seen 40 percent corrections that, you know, turn into like two weeks of just bearish. is sometimes even three weeks. But this is very much in line with like the dip got bought so hard. So we still had one of our big 30% declines. Again, that's actually below average for how large one of our classic retracements is. And then it just got bought within seven days. So we are already back into bullish territory. It's all happened within seven days.

Starting point is 00:02:30 That's pretty incredible. All right. Let's take a quick look at the Bitcoin prize from this week to this. excuse me, the ether price from last week to this. So we fell to about 900. And what are we hovering at now? Yeah, we are roughly $20 above $1,200. Again, roughly six days ago, five days ago,

Starting point is 00:02:51 ETH started to pump above $1,300. It touched $1,350, which I got me, it got me really excited. I sat down and just watched the charts just to see if we were going to all-time high, didn't quite make it. Again, then we dumped to 900 and now we're back above $1,200. David, remind us, what's that magic all-time high number that we're looking for for ether? 1420. 1420 is the number to beat.

Starting point is 00:03:17 All right. We'll see if Anthony Sasano can be freed if we get to 1420 or higher. What happened with the defy pulse index? So this is, again, the top 10 defy tokens. A number go up there too, right? Yeah, just a little bit. Last week, we were at $22.7 billion. today we are at just over $23 billion locked in defy.

Starting point is 00:03:39 Defy tokens and Defy in general has actually done really, really well. I've been calling it a slow crescendo that doesn't stop crescendoing. We're not really seeing a pop, but things are starting to heat up. Things are starting to boil. Total locked value looks like it is just touching all-time high as well. So that's essentially all assets under management in defy protocols. So it's an important vanity metric. It sort of measures the economic bandwidth of.

Starting point is 00:04:04 the defy ecosystem. Let's talk about a particular defy token that is maker. It's kind of been a sleeping giant for almost like the last year or so ever since, ever since that Black Thursday in March of last year where it sort of took a big tumble. But it had an explosive week. This is a seven-day chart, even a 14-day chart. Looks like it's massive run-up. What's going on with the maker token? Yeah, I think what's even interesting, Ryan, if you hit the max button to zoom all the way out, the maker USD price has been flat ever since like completely since like late 2017 or 2018. It dipped down to $500 in the bear market. And then it stayed at $500 literally until, you know, just a couple of days ago where it exploded upwards.

Starting point is 00:04:50 The maker Eath price, that has also been something worth watching because of the MKR eth ratio has just been suffering. Like you are getting less and less ether for your MKR ever since like the middle of 20. 18. Yet that trend finally reversed. MKR just yeated itself to right below its almost all-time highs back in 2017. And so it just made up for so much lost ground in such a short amount of time. Pretty interesting price action. David, you know what this reminds me of like it's that old investor equip that time in the market beats timing the market. And that is so true. Projects with good fundamentals like assets like ether, even assets like maker. I mean,

Starting point is 00:05:30 the die stable coin has been on a tear. It's above. of a billion dollars. You don't want to try to time those things. If you looked at the last year and you'd be like, oh, project is dead. It's flat. It's no longer cool. And then suddenly you get these 14 days and you like double in price, almost triple in price and hit all time high. Right. So you can't time these things, guys. You have to invest in assets and tokens with strong fundamentals and just hold, right? Timing is a swing trading thing that you might not be equipped for with Explore. growth like this. And also, I would like to say before we move on, actually, the DPI price was heavily

Starting point is 00:06:09 influenced from this. So DPI went from last week, $185, which is the DFI Pulse index token. It went from $185 to $208. And the DFI tokens did not get a big of a hit during that retracement as many other assets like Ether and Bitcoin did. And a part of that rise in the DPI token price was because of that very strong maker appreciation. Yeah, absolutely.

Starting point is 00:06:32 makers weighted heavily there. Okay, it looks like retail is starting to enter as well. We're coming up with some new metrics and numbers for that. This is one I really like. This is new weekly Twitter followers for crypto exchanges. So it looks at Cracken, Binance, Coinbase, their Twitter accounts actually. And it charts the number of net new followers that they've had on a weekly basis over time. You can see in this chart, we are for the first time approaching something closer to 2017 numbers. but we've got a lot of room to grow. So 2017 started adding 100,000 per week. And then it picked out at 200,000 per week. And we're at about 75,000 per week now, which is explosive growth from the last two years, but still not at its peak. This indicates that retail is starting to use crypto exchanges,

Starting point is 00:07:24 starting to get back into crypto. What do you make of this? Yeah, and also using crypto exchanges as probably their new source of information because they probably don't know where else to go. They probably haven't been introduced to bankless yet. I can definitely corroborate some of this retail entrance. I'm starting to get text messages from some old college buddies that we are pretty close with back then, kind of lost contact with them.

Starting point is 00:07:47 But because I'm pretty degenerate with my Instagram stories, I put a lot of Bitcoin and ether talk up there. So people know I'm in the industry. And now everyone's coming to ask, like, should I buy Bitcoin? And it's always an interesting answer to that question. And I try and pack as much information as I can into that question, but it never really seems to do it justice. It's starting, isn't it? It's starting. And we might be at just the start. We think it's still going to go a lot higher from here. If you want to live a bankless life, you need to get a monolith defy visa card.

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Starting point is 00:09:45 if you have deposited collateral. Here you can see me getting a 200 USDC loan against my portfolio of a number of different DeFi tokens and ETH. a variable interest rate because it's a lower rate than the stable interest rate option, but I could choose the stable interest rate option if I wanted to lock that interest rate in permanent. One of AVE's V2 features is the ability to swap collateral without having to withdraw your assets, trade them on uniswap, and then deposit them back into AVEA. AVE does all of this for you all in one seamless transaction, so you don't have to repay loans in order to change the

Starting point is 00:10:18 collateral you have back. Check out the power of AVE at AVE.com. That's AAVE.com. That's AAVEE.com. Another thing that's, I think, is interesting is that all of the numbers are so much bigger now in this bull cycle, David. So I'm sorry, put out this tweet that Bitcoin is now moving by its entire market cap from the March 2020 low. It's market cap there at a price of 4,800 multiple times a day. So it is moving by its entire market cap on a daily basis. This entire market cap from less than a year ago is now the day. daily volatility of Bitcoin. Absolutely insane. These numbers are just so much bigger. Even the Coinbase volume is bigger, starting to show the early signs of a retail market yesterday.

Starting point is 00:11:09 Actually, this was earlier this week, rather. Coinbase just recorded its highest daily volume ever of almost $10 billion. This is crazy when you look at the chart and compare it to growth. if it's like a, you know, 5x already of the peak of 2017. Yeah, it's pretty crazy. And Bitcoin moving as much of his previous market cap back in the depths of the bear market is an interesting metric. I don't really have any evidence to back up this claim, but I kind of have this rule of thumb that the day that Bitcoin paints like a $20,000 one day candle might be

Starting point is 00:11:44 like the blow off top that ends the bull market, $20,000 being the previous all-time high. So like the day that Bitcoin runs from like $200,000 to like $220,000 or something, maybe that's the blow off top. I don't know if that's if that has been backed up by anyone, but that's something that I'm looking forward to. David's got his own superstitious numbers around these numbers, but you know, could be the case. It's definitely the numbers are bigger. Another reminder, of course, I actually saw an advertisement, David, when I was looking at ether scan earlier today. It was CME advertising ether futures. And they are coming.

Starting point is 00:12:17 They're still coming on February 8. 2021. So speaking of bigger numbers, this of course allows large institutional investors to make bets on ether in ways that they couldn't before that they can currently on Bitcoin. What do you think's going to happen as a result there? Famously, that kind of when Bitcoin got its futures on the CM8 sort of marked the top of the Bitcoin market, I don't think that'll be the case for Ether. But what's your take? Are we going to see any volume, any kind of price? appreciation as a result of this event? Yeah, futures are the way that, you know, some preferred high capitalized institutions

Starting point is 00:12:56 prefer to get access exposure to some of these assets. It's just a more capital efficient way to deploy capital. For some reason, institutions like it more. So when futures open up to big institutions, it is a new mechanism for accessing exposure to ether. And I think that this is not at all near the top of the market. I think the fact that Bitcoin, when Bitcoin got its futures, it was just a complete coincidence that it happened at the top of 2017.

Starting point is 00:13:25 I expect this to be very bullish for ether long term because it's opening up the floodgates for more institutional exposure into this asset. Absolutely. All right, David, that is the market. Let's talk for releases. The first is some news on layer two scaling. Tether is launching on Hermes. I've not heard of Hermes before.

Starting point is 00:13:43 I have not heard of this. Okay. So this is a layer two scaling solution that's based on Z. RUL-up, so some interesting tech here. I've not heard of Hermes. I think it's part of the layer T's story of Ethereum, though. Why is this potentially interesting? Yeah, it's just, I think, one of the many stories about L2 adoption. I don't know if Hermes is going to be the L2 that is adopted. Tether's also on Omise Go network. Tether is one of the biggest gas consumers of the Ethereum blockchain. So they also have the incentive and the capital to experiment with a bunch of

Starting point is 00:14:15 L2s. And this looks like one of them. Ultimately, the winning L2s are going to be the ones that everyone else wants to be on. So there's sort of a coordination game going on there. And I think it's very much up to some of these L2 solutions to prove themselves this year. Also some interesting news. Nexus Mutual, we had Hugh Karp on the podcast. They are a decentralized smart contract insurance protocol. They are now expanding their decentralized insurance.

Starting point is 00:14:42 They still do ensure smart contracts against protocol rest, smart like hacking rest, that sort of thing. They're now moving that same offering to ensure centralized exchanges. I think this is a good example of defy starting to enter into the, the C-Fi space. The centralized space after kind of conquering all of the smart contract insurance area. Now Nexus is moving into centralized exchanges. What do you make of this? Yeah, this is just one more step of software eating the world.

Starting point is 00:15:16 And I think this is a great feat. We know that one of the biggest chinks in this industry's armor is centralized exchanges getting hacked. You know, Defi has this negative connotation to some for being, you know, very rug-poly and very hacky and like you can get your funds swipe from you in Defi. But if you look at the total dollars lost, Defi is dwarfed by centralized exchange hacks. And so I think this is a fantastic product that is obviously very needed. And I think perhaps an interesting customer for this product is the exchange. changes themselves. This offers like Cracken or Gemini or Coinbase to purchase insurance against

Starting point is 00:15:53 their own hacks. That's pretty interesting. And this is also just one more step closer for something like Nexus Mutual to offer products for like people like me to insure my car or something. This is just something further out like into the real world. It's the next closest hanging fruit. But again, the real world is for next or the real goal is for Nexus to be able to ensure anything. So this is them breaching that territory. Yeah, it's probably a 5 to 10x of the total addressable market size for Nexus, the protocol. So that's very exciting, I think, for everybody who's supporting that project and maybe invest in that token. Something else interesting.

Starting point is 00:16:32 I saw this on the block this week, David. So this is a Bitcoin mining, the second largest Bitcoin mining pool, a pool called Pulin. They just rolled out a hash rate token that is essentially an ERC20. that tokenizes hash rate. So it tokenizes the, basically the ASIC power of their individual pool. And they're selling that as an ERC 20 token. What's interesting about this? Yeah, this is a, it's really important for Bitcoin miners to have financial infrastructure

Starting point is 00:17:08 because they need hedging options. Because Bitcoin miners are an inherently long Bitcoin. They don't have a way to express any alternative view. unless they have access to like financial options. And, you know, what is defy other than just like endless financial engineering? There were already options like this available to Bitcoin miners, but they were very much a centralized play. Like Bitcoin futures first off are like a great option for miners,

Starting point is 00:17:36 but also hash rate futures, which are a real thing. And now a hash rate token on Ethereum, I think it's actually going to be, offer, you know, competitive differences of some of these centralized alternatives. It's so interesting that once again, it's kind of the gravity well of Ethereum sucking another type of asset into itself and settling on Ethereum. Also, back to kind of layer two and what we're talking about. I don't know if you've been following Connects, but they have recently been talking a lot about their vector platform. What does that do, David?

Starting point is 00:18:11 Yeah, Connects is a payment layers infrastructure. And they are doing maybe it's a pivot. maybe they're just adding on to their current offering, but just offering what is kind of like middleware or middle payment layers between other L2s, right? So, you know, allowing one L2 to talk to another L2 using the Knext L2, right? So lots of L2 is going on. But mainly, we're just finding different ways to communicate and pass value around the Ethereum ecosystem without having to make transactions on the... And the reason this is really important is because ideally we want to live in a world where all of the different layer two roll-ups are integrated and connected and interoperable

Starting point is 00:18:49 and at some level, composable with each other so that even Fiat on-ramps can happen in L2. And we just use the main net for security, right? That is a much more gas-efficient and like more scalable world. And that's what Connects is starting to build. So that's cool as that develops. So, David, this was really interesting this week as well. Fair has created a name resolver for the distributed web. So they're using two pieces of technology. One is IPFS. So that's, you know, file coin. This is sort of a distributed storage type of

Starting point is 00:19:26 protocol. And also Ethereum, particularly Ethereum names, domain names, ENS names. I have Ethereum domain names. I know you have Ethereum domain names. What this essentially does is connect Ethereum domain names to the rest of the web so that you could type in your Ethereum domain name in a browser without an extension and actually be directed to a website. So what this means is instead of using DNS, which is the centralized domain service that the entire internet uses, people can start using Ethereum as a decentralized name service and create unstoppable websites. This is part of a sliver of that promise of Web 2, essentially this whole decentralized internet that no single party could shut down. And I think it's super exciting for Ethereum use cases.

Starting point is 00:20:20 And this is an Ethereum use case that's a little bit outside of the money title as well. I know lots of people have been talking about that and asking about that for years. What's your take on this? Yeah, this kind of goes back to the original vision of Ethereum before we kind of knew what Ethereum could do. like Ethereum was supposed to be the quote unquote the world computer and also run unstoppable code. This is kind of a return to some of that early thinking of Web 3 technologies trying to build a totally persistent, decentralized and permanently available internet stack.

Starting point is 00:20:55 That is something that is completely part of the Ethereum roadmap. It just doesn't have the tokens and price charts to go with it. So it's kind of forgotten and lost under the noise. It's something that fascinates me just doesn't get as much attention as some of the other things but I'm very, very excited about a completely trustless and decentralized web built on Ethereum. I think people kind of forget how trusted the internet.

Starting point is 00:21:18 DNS, that is a centralized trusted system that is just kind of an organization that we give the rights to organize the internet for us too. But it does not belong in the protocol sync thesis and something like this totally does. It's just a centralized database. What's also interesting, I think, is that maybe this increases the value of ENS names. More adoption, of course, definitely increases the value in the sorts of things you can do with ENS names.

Starting point is 00:21:47 That's something to watch as well. Argent is one of our favorite wallets for DFI. It's like one of my number one recommendations when somebody asks me how to get started in DFI. And they've just released EF2 staking inside of it as well. What's your take here? Yeah, just a really nice feature out of Argent. For those who want to stake their ETH, but maybe they don't want to run a node. And maybe they just don't even want to manage their own private keys or ledger.

Starting point is 00:22:13 And they just want them to have their Argent. You can put your ether inside of Argent and using an integration with Lido, which is a staking as a service provider. They can stake in Ethereum 2.0. What's nice about this, too, is if you have less than 32Eth, you can start staking with Argent. Synthetics is doing some things on Layer 2 as well. This is the optimistic rollout. They just laid out a roadmap for adoption.

Starting point is 00:22:39 Actually, starting, they're going on Mainnet, actually on the day you're listening to it on January 15th. And then they have some next steps after this. David, is this going to be the year of Layer 2 for Ethereum? Yeah, this is such a big deal. This is optimistic Ethereum coming live to Mainnet. Synthetics has always been at the head of the curve with integrating and tinkering. and experimenting with optimism. So synthetics was always destined to be the first team,

Starting point is 00:23:10 this first big DAP to incorporate optimistic Ethereum, optimistic roll-ups into the Ethereum main net. And it looks like that day is finally here. We are actually going to see a significant amount of the synthetics activity, which itself is significant move off into the L2. So the way that they are doing this is that they are starting to migrate some of some of their most basic functions into an L2. So S&X staking is moved on to the L2, whereas some of the some other things like minting

Starting point is 00:23:41 is also going to be moved on to the Synthetics L2. Some things are being kept on the L1 just for simply because something needs to be there. But you can now think of synthetics as a protocol that exists with one foot in the Ethereum L1 and one foot in the Ethereum L2. And depending on what you want to do, you would participate on either. side of that of that boundary. Absolutely. This is part of Defi kind of re-architecting itself in this new roll-ups L2 paradigm. So very cool to watch that play out. David, let's get to the news. And I want to start here. This is a fascinating rumor. And it just came out yesterday. This is Gemini considering

Starting point is 00:24:23 going public as well. Following in Coinbase's footsteps, Coinbase, of course, has announced an IPO. why not Gemini? It sounds like there's rumors of that. What does that mean for crypto this year? Yeah, and this is, I believe, the third IPO rumor that we've heard. Well, I guess Coinbase wasn't a rumor because they straight up announced their intention. Yeah. And then there was one more that I can't remember what it was.

Starting point is 00:24:46 It was another company announced plans to go public. Gemini Marks the third. And interestingly, Gemini is also an exchange right behind Coinbase. And I think Coinbase did a fantastic job with announcing that, timing their announcement, literally on the day of the Bitcoin breaking the all-time high. And I think you and I are both pretty bullish on the Coinbase IPO. The initial valuations were estimated to be at $50 billion, but I think you and I Ryan are ready to commit to believing that that is going to be well above $100 billion,

Starting point is 00:25:18 just because there's going to be a Cryptomania and people are going to want exposure to Coinbase as exposure to crypto. Gemini is going to get all of those same benefits. So it's no surprise that Gemini is trying to capture some of the mania going. on so that they can boost their IPO price. A few things I'm glad about here. One is I am glad that they are going public rather than selling their companies to a bank or somebody in big tech like a Facebook or Amazon.

Starting point is 00:25:43 So I'm glad about that. The second thing I'm glad about is that there's some competition here. It's not just Coinbase. If Gem and I joins the ranks as well, they're going to push Coinbase into maybe more innovation. In particular, I wonder how these exchanges and their public offering, on the stock market are going to compete against defy offerings, right? So there was an airdrop quite famously with Uniswap. Why not anirdrop for Coinbase users? And if Coinbase doesn't decide to do it,

Starting point is 00:26:13 why not anirdrop for Gemini? You can issue some sort of a tokenized security on Ethereum today. That could be an exciting future. And I think it's more likely to happen if there's some competitive pressure between these giant exchanges. You know, I don't really know the details behind this. but I can't imagine that airdropping equity to customers is all that different than airdropping tokens to customers. Maybe the infrastructure and defiance way easier. But I would imagine that that's a possible innovation to have. Well, if you're going public, if you're going public, you don't have the accredited investor laws,

Starting point is 00:26:50 at least in the U.S. to go through. So why not? Why not? Coinbase, Gemini, if you're listening to this. Drop us some Gemini token. Speaking of Gemini, this is pretty exciting as well. Gemini is launching a credit card. They just announced that today as well with potential crypto rewards.

Starting point is 00:27:11 So what does this mean, David? I know you're particularly excited about using this. Yeah, totally. So this is a credit card that you can apply for and you get cash back. I think up to 3% cash back is what they advertise in Bitcoin or other crypto rewards. Ether is in there as well. This is the second credit card that we've seen. BlockFi did a similar one.

Starting point is 00:27:30 1.5% cash back on fiat purchases in Bitcoin form. Gemini looks like they're rolling out a credit card with even more cash back, with even more crypto assets, cash back. Importantly, Ether, I will be getting this credit card 100%. Totally. I'm pretty excited about that. So important that this is not like a visa card that's just a debit card that you load with crypto and spend, right? This is a credit card. So you're actually like, you know, it's based on credit. It's not money that you already have, which is a little bit different. So are you going to basically replace the other credit cards that you have from the traditional banking system and something like this? Yeah, so I have an Apple card, which I really like just because it integrates with all my other Apple products, but it doesn't

Starting point is 00:28:12 give me Ether cash back. So everyone knows I like Ether, so I'm going to be migrating. That's awesome. We had some interesting regulatory news as well here, David. So we have a new SEC chair that was just named under the Biden administration. This guy's name is Gary Gensler. Sources say from what I'm hearing, I don't know that much about him. And of course, the proof will be the actions he takes. But apparently, Gary could be a more crypto-friendly SEC chair than Jay Clayton was, you know, maybe not going as far as we would like being like sort of a like a crypto insider and advocate. But he might not be crypto hostile and you might actually be crypto-friendly. He certainly had a history of pushing back against the big banks in the past. Do you have any takes here?

Starting point is 00:28:58 Yeah, I feel like that's kind of surprising. I could totally see a world where the Biden administration came in and recommended a pretty top heavy, heavy-handed regulator, somebody that might, you know, be in the rural on gray camp, you know. So having a friendly one is really, really awesome. I think having a friendly SEC commissioner as it relates to crypto is as good as we could hope. Yes. And I want to be clear, I don't think we totally know how friendly he's going to be, but he does know about this tech. has written about it before. He does know about crypto and blockchain. So it remains to be seen, but it could be good news. It's a story to watch. It is a story to watch. And speaking of good news, David, we did it. We did it. What did we do? We kicked out the comment period from 15 days to 45 days for that FinCEN guidance that was proposed by Secretary Mnuchin, which said, which was coming down like super heavy on unhosted wallets, saying that exchanges would not be able to send crypto outbound to wallets that they did not KYC themselves personally. We don't like that. That's bad.

Starting point is 00:30:03 And as a result of over 6,000 comments, I think was a very high number. The very short 15-day comment period got extended to 45 days. But what's important about this is that the Biden administration said that they are going to end all midnight regulation proposals if they are not finalized by the time the Biden administration comes in. And that 45-day comment window period, period extends beyond when Biden will become president, which means that this will probably not make. That is huge. The crypto community really delivered, and the bankless nation really delivered on these comments. I think it's an example of how we can take political action, even in a nation state, to accelerate the types of monetary freedoms that we want. In other good regulatory

Starting point is 00:30:47 news, David Anchorage has become the first OCC approved national crypto bank. So Anchorage is a crypto custody type of solution. So they custody assets on behalf of individuals on behalf of funds. And now they can custody crypto assets for federally chartered banks. So that means a JPMorgan who doesn't want to create its own crypto custody type of solution can farm that out to someone like Anchorage and have a regulated solution for that. That is OCC approved. I think, David, this is an example of regulation, and particularly banks in the U.S., starting to adopt crypto infrastructure. Brian Brooks has been pivotal in all of this as well. He currently leads the OCC. So very exciting development. In other news, Morgan Stanley has boosted their stake in micro strategy to basically

Starting point is 00:31:46 11%. So Morgan Stanley, Big Bank, owns 11% of micro strategy, which means that they have a claim on 11% of micro strategy's Bitcoin and micro strategy has a lot of Bitcoin. Microscadety has 70,470 Bitcoins, which means that as a result of that, Mike Morgan Stanley has a claim on roughly 7,600 Bitcoin. So that's pretty cool. And you know, Bitcoin by prox. This is kind of like what Michael Saylor was trying to get done in the first place when he just yolode all of his company's treasuries into Bitcoin and then also took on debt to get more Bitcoins. And now everybody wants his company's share price. So that's cool. It's funny. He's looking like a genius now. I think when you're early to things, you do look like a genius. And he's definitely been early on this trend. Absolutely. David, do you want to get into some takes? Let's do it. All right. First take here, sushi is on the rise. What is sushi for people who don't even know what we're talking about? Yeah, sushi swap is a uniswap clone fork, clone fork, something like that. And it had this rocky start where it was a product of DFI summer, product of yield farming, product of that speculative mania. And then,

Starting point is 00:32:53 I also had that kind of rocky start where the original founder, Chef Nomi, took off with the dev fund. So there was a dev fund for all the LP rewards, the farming rewards. 10% went into a dev fund. And chef Nomi snagged that and ran. Later he returned it. And then the protocol has kind of been handed off to new management, particularly with Zero X Mackey, who we are in talks with with getting on the bank list podcast for a state of the

Starting point is 00:33:18 nation episode. So that's pretty cool. Ever since then, ever since people have written on. off sushi swap as just like a product that just got, um, got tainted by, by the, uh, the, the, the, the, the, the, the, the, swipe of the funds, uh, it's been on the rise, both in volume and in share price. And now it's kind of a beloved defy project. People love, uh, sushi swap.

Starting point is 00:33:39 And now it is a topic of conversation as to like, how this very similar product to uniswap is taking its own path, providing its own value to the, to the, to the ecosystem that is separate and distinct from uniswap. Well, Eric Voorhees had an interesting comment here. that I think relates to what you're saying. He said, and he's describing the liquidity battle between Uniswap and sushi. He said a public real-time liquidity battle between two relatively decentralized crypto protocols. Exist in cyberspace.

Starting point is 00:34:08 Nobody's forced to participate. Nobody can turn it off. This is sci-fi digital hyper-capital capitalism finance, and it's coming for the banking system. So, of course, this appeals to Eric's sensibilities, these kind of libertarian, sensibilities, but he's also talking about like the predatory nature. We're really in the jungle with these defy protocols. It's kind of a liquidity war zone. And they're going to battle amongst themselves first. But then they're going to go take on the banks and the banks won't know what hits them. Right. When the banks have been just sheltered in this protective bubble from, you know,

Starting point is 00:34:44 ever since the 08 crisis, they've been protected by the Federal Reserve. They don't have to fight in that competition. They are not in a tooth and nail fight that is defunders. defy defy is a crucible of economic financial innovation if you do not do good you die interestingly eric when he made this take when you made this tweet he was retweeting ryan wakins we've also had him on the bankless state of the nation where ryan says the best part about the competition between uniswap and sushi swap is that it is completely transparent and trackable in real time no need to wait for financial filings no need to wait make estimates it's all auditable on chain an open window into competition at high

Starting point is 00:35:23 hyper speed. That's what's so cool about this industry. The competition is inside out and we get to see every single trick and that every single protocol has up their sleeve and we get to vet them in real time, something that we do not have access to in the legacy finance. David, what do you make of these dividing lines that's discussion in the community between like Uniswap versus versus sushi. Now sushi is almost being painted as kind of a community led project, whereas Uniswap is now getting painted as sort of this VC insider project. And sushi is shipping really fast, but they're shipping smaller features. Whereas Unitswap, it feels like it's, it's kind of frozen what it's doing right now. And it's gearing up for a massive V3 launch, which who knows all the cool

Starting point is 00:36:06 things it could contain. So maybe going for the grand slam rather than the single hit. What do you make of this discussion? Yeah. And that just shows how much room there is left to grow these protocols as is. Sushi Swap is making incremental improvements, integrations, you know, listening to the community, doing the low-hanging fruit things that the community really wants. And then Uniswap is doing something, I would say, similar to synthetics, where they are pushing the boundaries of crypto-economics. They are really pushing the limits on, you know, L2 when, so when their L2 announcement comes on to Ethereum, I'm sure it's going to be absolutely massive. And I don't think Sushi Swap is really focusing on that level of

Starting point is 00:36:48 you know, frontier exploration that Uniswap is doing. Yet at the same time, sushi swap is given extra credit for being really good business developers, really, really having like open conversations and open invitations towards integrations with the rest of Defi. And that is something like, and both of those domains are really important for all of all other DeFi money apps. We both need exploration into the L2 and we also need integrations. And it seems to be that there's so much areas to innovate in that not even one protocol can go in all directions all at the same time. So as a net benefit to this ecosystem, really happy to see Sushi Swap expanding the fold in integrations and at the same time Uniswap expanding the fold of L2 scale. Both of those things

Starting point is 00:37:32 are good and I expect the rewards and spoils that one finds to be ferried over to the other in the future. Yep, we definitely all benefit from this competition. Gemini is the world's most trusted cryptocurrency exchange. I've been a customer of Gemini since I first got back into crypto back in 2017, and it has been my main exchange of choice to make my crypto buys and sells. Gemini is available in all 50 states and over 50 countries worldwide, and on Gemini, there are markets for over 30 various crypto assets, including many of the hot defy tokens like Wi-Fi, Avey, Uni, and also they are one of the few exchanges that has liquid dye markets. Having both the option of logging into the Gemini.com website or instead opening the Gemini mobile app has allowed me to be able to access any and all exchange and on or off ramp services that I've needed to on a moment's notice. With instant deposits and fast withdrawals, I'm able to make my money do the things I want it to when I want it to.

Starting point is 00:38:30 You can buy crypto safely and securely on Gemini with the peace of mind of knowing that your investments are insured and protected with industry leading cybersecurity. You can open up a free account in under three minutes at Gemini.com slash go bankless. And if you trade more than $100 within the first 30 days after sign up, you'll be gifted a free $15 bonus. Check them out, gemini.com slash go bankless. Synthetics is Ethereum's decentralized derivatives liquidity protocol. What does that mean? Synthetics is a platform for creating and trading synthetic assets, which are assets that are priced via an Oracle rather than bids or asks. Traders can use the Quenta Exchange, which hosts and trades all of the synthetic assets created by synthetics.

Starting point is 00:39:18 Traders on Quenta can trade synthetic tokens like SBTC, S-Oil, or S-D-Fi. Because Quinta is powered by synthetics, traders experience zero slippage on their trades. No, I didn't mean low slippage. I meant no slippage because that is the power of the synthetics platform. No slippage on your trades. You can also easily short assets with ICINTHs, which are synthetic assets that move inversely to their target asset. Synthetics isn't just for traders. Developers can build on synthetics to access the infinite liquidity offered by synthetic assets.

Starting point is 00:39:51 Or investors can stake collateral to the protocol and earn fees that the protocol collects. If you're a trader and you're looking for a trading platform and not found in the legacy world, check out quenta.io. If you're a developer or you just want to earn yield on your collateral, go to W. www.synthetics.io, where you can stake your SNX or ETH and earn fees from synthetics. David, did you catch this article? We were talking about Brian Brooks earlier. I can't access it. It looks like there's a paywall.

Starting point is 00:40:20 But he made this great comparison. This is in the financial times between defy and this idea of self-driving cars. And so he painted the picture for like, Mainz, where are you laughing at? This giant bullet? I'll let you finish your take and then I'll give mine. Okay. So I actually thought this was a really useful analogy for people who have no idea what's happening in DFI and crypto at all. But they do know something of like self-driving cars.

Starting point is 00:40:52 And he sort of walks through kind of like how everyone was afraid of self-driving cars at first. But obviously they're kind of a revolution. but we also recognized that regulation had to change as well. Like self-driving cars, we're going to shake up the insurance industry. It's going to shake up everything. And he says that defy is going to do the same thing for money and going to do the same thing for finance. And regulation has to change as well.

Starting point is 00:41:21 I really like this line. Those antiquated rules, the existing regulations, need to be revisited just as regulations that mandate the use of the fax machine should be revisited. So get ready. for self-driving banks. He is telling the financial system. Kind of cool. I can't remember where I saw this take. It was on Twitter. I think we're from Larry from the from the block, but he said that self-driving banks is the most boomer meme of all times. And you know what? That's maybe that's just what we need. You know, I don't think that's what we need. I don't think anybody in Defi could have made the

Starting point is 00:41:52 self-driving bank meme, but I guess we have that one for all the boomers out there. Yeah, absolutely. And I think it does speak to a to a certain audience. David, what do you think of this message to another audience. This is an audience on like CNBC, which is the existing place. I guess, you know, some generations get their financial news. An investor Bill Miller said on CNBC that Bitcoin gets less risky, the higher it goes. This is kind of a controversial sort of statement. Do you agree with it or disagree? Yeah, I agree with it. It's because like, you know, tulips as a mania popped and didn't come back. But if tulips came back a second time or a third time or what Bitcoin just did, which is a fourth time. If Tulips came back a fourth time,

Starting point is 00:42:37 that would indicate that, you know, maybe this isn't a mania, maybe something is really here. So, you know, the return of the Jedi four times in a row, the Jedi's coming back, you know. So like the risk there, the risk to reward profile is lower, I would say. Buying $3,000 Bitcoin, I think is more risky, from this perspective is more risky than buying $30,000 Bitcoin, but there's also much less upside. And if you had been sticking it out through the bear market, because you understood that this was, this tulip mania was coming back anyways, and it's actually not a mania because manias don't come back twice.

Starting point is 00:43:10 That's how you profited off of people like this, buying in when you can measure out that asymmetric upside. Yeah, I think comments like this on CNBC are causing a lot of people to start to talk about crypto more and more. We've got something from Mark Cuban too. I can hop to that. He said that watching crypto's trade, he calls them cryptos,

Starting point is 00:43:31 is exactly like the internet stock bubble. Exactly, he said. Some might survive like Bitcoin and Eath, but others are dot com era. They will die. This is going to be a bubble burst, right? What's interesting about this, David, is like he makes that comment. And then it's just like, Mark, we've seen this happen four times now, right? Of course this is how it's going to play up.

Starting point is 00:43:57 This is the crypto cycle that we've been talking about forever. it's happened three times already. This is the fourth. We're going to bubble up to some insane valuation. And then things are going to pop. And the survivors will come back and start building and they'll be alive for the next cycle. I expect it to play out like this. Do you think this is like news to Mark like the first time he's seen this?

Starting point is 00:44:20 Or what's your take here? Yeah, I think what's news to Mark is that, you know, he probably wasn't really around for the ICO mania, which other people also called similar to the dot-com bubble. And I do think that there's perhaps, perhaps, you know, another dot-com bubble ahead of us, this time actually at the size of the actual dot-com bubble in crypto. I think that is a possible future ahead of us. I think what Mark is saying in this time where, you know, your comment below, it was pretty funny.

Starting point is 00:44:46 This is our fourth of these, Mark. But Mark is just like, this is his new to the game. But what's the same for Mark that's different this time is the size of where our base is, right? So Bitcoin, Ether, starting from a much higher position. And, you know, the dot-com bubble was massive. That was a trillion. I can remember that I don't know the numbers out of the top of my head, but it was way bigger than the mania of crypto back in 2017. So I think what's more similar this time is the comparable sizes. You know, I asked this question. You're talking about the crypto bubble in 2017. Was it a net good or a net bad? I asked this question on Twitter specifically talking about ICOs. Were ICOs net good or net bad? 65% of the people that answered this survey said it was a net good, 34% said it was a net bad.

Starting point is 00:45:38 I feel like enough time has passed now, and now that we're entering another bull market, we can actually ask this question. What's your take on this question, David? Net good or net bad? Yeah, I like those balances, actually, 66 to 33, because we can obviously say both, you know, but I think if I wanted to get a concrete answer,

Starting point is 00:45:55 I think in the moment it's a net bad because in the moment people lose money, you know, teams, you know, swindle their cash and then they run. They don't fulfill their promises. People lose. People get burned. That's what a bear market happens. But then over the next like two, three, five, 10, 20 years, we start to incorporate the lessons we learned. And so in the moment, it's bad. As time goes on, we actually are able to extract value and lessons that improve this industry as a whole. So over the long term, net good. And that's why I like these 63-33%, or 66-33% distribution, we're like three, four years away from the ICO mania, where we've started to incorporate and, you know, bake in some of the lessons that we learned

Starting point is 00:46:34 to not repeat them. And so I think that's a good thing. It would be worse if we didn't learn lessons. Yeah, so much infrastructure was built. And there were some survivors, right? Obase is an example. Synthetics is an example. These are ICO companies. These survived and built something really great. You know, the last thing maybe we should cover in the take section, because this is a take that's broader than crypto, but has some intersection with crypto. I thought Fred Erison summed it up well. Why decentralized matters, he put in quotation marks, went from being theoretical to mainstream overnight. So he was, of course, talking about censorship on some of the web platforms that we use today.

Starting point is 00:47:15 What's your take on this and how does it intersect with crypto? Yeah, with the absolute scrutiny that Facebook has been put under because of it being a centralized platform, especially as it relates to the 2016 and 2020 elections and social dynamics in America. And then also with the deplatforming of Donald Trump, which, you know, crazy to think that Silicon Valley tech companies can silence the president of the United States, regardless of what you think about him. To me, that signals a starting gun for some of the values behind Web3 permissionless protocols. Permissionless protocols don't just have to be about money. They can also be public squares, you know, public institutions for communication like Twitter,

Starting point is 00:47:54 but using decentralized protocols. Fred's comment why decentralization matters going from theoretical to mainstream overnight. I think that's a really great take. Yeah, and it's this idea. I think it's protocol synthesis idea. Basically that protocols are more scalable than centralized entities. And they can certainly be more scalable for things like free speech. but decentralization is back on the menu, I think, and that'll have some interesting implications for

Starting point is 00:48:20 crypto. David, let's get to the last thing on our agenda. What are you excited about right now? I am excited about the Justin Drake episode that we are about to record tomorrow. I'm really excited about that. Justin did a fantastic job putting out an agenda, really making my job easy for me. For those that don't know, Justin Drake is a researcher at the Ethereum Foundation. He's been with Ethereum since the beginning.

Starting point is 00:48:45 He's very, very intelligent. He's specifically very smart with cryptography, which is what this whole entire industry is based on. And so the subject matter that Justin wanted to introduce to the bankless podcast was what he called moon math. Or what happens when we really unlock all of the cryptographic tools that we have been, you know, researching and developing in the last few years. Something that Justin Drake put into the agenda, I think I want to read here because it's a really great teaser for what that podcast is about to be. about. Justin says, cryptographic hashashes and signatures are the modern day fire and wheel. Two breakthroughs considered moon math at the very beginning of this. We have achieved so much

Starting point is 00:49:24 with just these two innovations. Bitcoin, BitTorrent, Ethereum 1.0 are just protocols combined of hashes and signatures. And so Justin continues saying, imagine what we can achieve with Snarks, MPC, TLP, F-H-I-O. I only know some of those acronyms. Snarks is a scaling. mechanism. MPC is multi-party computation. Basically, there are many, many tools in the cryptographic tool belt that we have not yet used to create a more protocol sync depth world. You know, what happens when we can actually leverage cryptography more and more and more in ways that we have not yet been able to. A lot of cool things can come out of that. Really excited for that to podcast to come out a week from. David, how technical do people have to be to listen to that podcast? Is Justin going to break it down?

Starting point is 00:50:12 Are we going to help break it down into like language in terms that anyone can understand? Yeah. So I actually had a pre-call with Justin to go over some of these topics. And I think this is going to be really easy to understand. He does a really good job of bringing cryptography down to the 101 level. And, you know, I'm not even ready to go into like the 200 level of cryptography. So as hosts, because I don't think either of us, I really have strong skills in cryptography. I think that's going to make it really easy for listeners to understand.

Starting point is 00:50:40 And we'll do a good job breaking it down. David, I will be right there with you, ready to have some dumb questions of Justin Drake to help break this down. Really exciting. All right, Ryan, what are you excited about? You know, I'm just excited about everyone who is about to enter crypto because they're going to enter crypto with a blank slate. I tweeted this out this morning. The next 100 million people entering crypto aren't maximalists. So there's huge opportunity there in that they don't have religions.

Starting point is 00:51:09 They don't have preconceived notions of. what crypto should be or what particular assets should be. They're open to learning. They're open to new narratives and new ideas. And ultimately for like defy projects and all of the crypto projects out there, it's going to be about user experience. What new superpowers do they now have in this crypto world that they didn't have previously? So it'll be, I think, a lot less about ideology and more about user experience,

Starting point is 00:51:38 more about practically how this thing works. So it's going to be great to have some fresh blood in the space. I feel like partially the last two years, it was like the same crypto community over and over again, having the same debates and the same battles. And I'm just really excited to get some fresh blood in this space, some new entrants who are blank slates and are excited to learn about crypto and defy. Yeah, on a similar note, I'm also very excited for crypto media. This has been something that I've been beating the drum on for a while. back in 2016, 2017, when you wanted to get into crypto, there were very few media options.

Starting point is 00:52:14 There were a few Bitcoin podcasts or a few Bitcoin writers, but there was nothing else. There was basically only Bitcoin. And that really bolstered just the Bitcoin Maximilus Bent, which I know that you and I just do not agree with. Bitcoin, there's not going to be one asset to rule all of crypto. It's not going to be like that. There's going to be a diverse set of many, many assets. So I'm excited for this to see what happens in this cycle when so many different media options are available to people so they don't get stuck in the rut of Bitcoin Maximil. And if you want to help

Starting point is 00:52:43 promote that effort, you can give bankless five-star reviews wherever you listen to your podcast because we are trying to climb the iTunes business and investing charts so we can get the bankless gospel into as many years as possible. So if you want to help make sure that people don't get stuck in the maximalist rut, give us those five-star reviews so we can help spread the truth. I like how you link that in there, David. And of course, if you're watching on YouTube, make sure you like and subscribe. Guys, this has been your weekly roll-up. Thanks a lot.

Bankless - ROLLUP: 2nd Week of January

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