Bankless - ROLLUP: 3rd Week of January

Starting point is 00:00:00 David, happy third week of January. What are we doing today? We are rolling up the third week of January. It is roll-ups time where we go through a whole entire week's worth of news in one single episode. Get that roll-up and injected right into your brain. We go through the market. We talk about what the market is doing. Then we go through releases. What got released in the last week? Then we go through some news. Talk about what happened in this last week of news. Then we get into some ecosystem takes and then we finally finish it off with what David and Ryan are excited about. Ryan, are you ready? I'm ready. I'm excited about a lot of things. Let's do this. All right. You want to start with markets, David. That's my favorite place to start anyway. So we have to start with

Starting point is 00:00:54 Bitcoin Prize. But you know, I am, I'm really excited to talk about Heath Prize. But I'm going to hold my excitement for a minute. Let's talk Bitcoin. Yeah. Coming off of a very volatile last week, the second week of January, where Bitcoin went from like $42,000 down to $30,000. $40,000, we're almost doing the same thing. Bitcoin is at $31.5,000 after touching $40,000 last week. So volatility is just keeping strong. And so people are getting a little bit bummed about this drop in prices, especially right after we touched ether price. This is just how it goes, folks. This is what the market does. Up and down, a little bit of shop in the bull market. Nothing to worry about. Let's talk ether. David, it finally happened.

Starting point is 00:01:40 It finally broke its previous all-time high of $1,420, topped out at $1,40, which is awesome because we broke the all-time high, but kind of fucking lame because we only broke it by $20. Oh, I don't even care. I mean, so, like, I was told so many times during 2018, 2019 that this would never happen, and it just happened last week. I wish I could go back and, like, find all of the tweets that, you know, that says, man, this would never happen that ether was dead. All of these things. Pretty, pretty satisfying, I think that ether went all the way back from a 95% drop, came back, hit its all time high.

Starting point is 00:02:23 It's trading lower than that now. I don't really care. We hit the milestone, man. That's, that's what I wanted to see. And I think that's a great marker that this is the bear market or the bull market is in full effect. Where do you think things go from here? Other than up and to the right, I think we are in for some short-term chop, but the ball has been rolled down the hill and there's no stopping it, right? Maybe some short-term chop in the next week or a couple weeks, but like people's attention are on this industry now. Like there's no stopping stopping this from happening. Anthony Sassano is out of jail now. Is this possible this entire bump was engineered by Anthony? Is this possible just to get him out of jail? Well, I did. I bought some

Starting point is 00:03:07 Heath to explicitly try and help Anthony get out of jail. I know a few other people did. Anthony probably did too. We will see how engineered this was, if it was engineered by Anthony or not. Of course, it wasn't really. But I think what this really tells us is, I mean, for me, this is the power of a high conviction bet. Ryan, you and I totally believe that this day would come where ETH would break its previous

Starting point is 00:03:31 all-time high. And I believe that even when Ether was $80. I believe that at $80 ether, we would once again see $14. $1,300 ether. And then we did. Shout out to the holders. You guys helped make this happen and you reap the rewards when things like this do happen. David, let's talk D5 for a minute. So where are we hanging with the DFI Pulse Index?

Starting point is 00:03:53 At the time of recording, we are at $22.2 billion locked in DFI. If we had recorded this a couple of days ago or even yesterday even, it would have been over $25 billion. I think it peaked out at $25.2 billion. That is the highest number ever locked in Defi. And the DPI also similarly topped out at, I think, $225 per DPI index token. Currently, it's hovering around $205. So, defy tokens are coming along for this ride as well, though ETH kind of took the headlines earlier this week.

Starting point is 00:04:30 Yeah, we were talking about holders, David, and Pantara put out this follow-up report talking about the upside to holding Bitcoin as an asset. And, you know, it's similar to Ether, the Bitcoin has a longer history. And here's the magic of it, David. In order to win at crypto, as long as you're buying assets like Bitcoin and Ether, all you have to do is hold. Like, that's it. So any time period, if you held Bitcoin for at least three and a half years, you win. Like, and you win by a lot. that's all you have to do. It sounds so simple. Why is it hard?

Starting point is 00:05:09 Yeah, this is what this report from Pantera is saying is there are zero people who have held Bitcoin for more than 3.5 years who are not in profit, right? And this actually kind of goes into how I think about some trades and some investments. You know, I'm not a trader. I don't really pay attention to the charts when I buy some assets like defy tokens that I want. And sometimes I buy it the wrong time because I bought into the hype and bought into the phomo and then it drops. But like my personal bias, my personal rule of thumb is I never buy a token that I'm not willing to become a bag holder of.

Starting point is 00:05:40 And the reason is because you can just hold your way out of the floor, right? You can just hold your way out of the bear. So if you're if you have conviction about the asset and you're not a trader and you are an investor, holding is the secret to success in this crypto market. And what this report shows is that it's in no one, zero people have been holders for more than three and a half years and are and are not in profit. with Bitcoin. And that's the maximum. That means it's probably even less amount of time for people to just hold through dips before they're in the profit. Do you know what's crazy too? So this is a report that came out from Vision Hill. What Vision Hill does is they provide a composite index of a whole bunch of crypto funds. So the private crypto funds that you have to be an accredited investor to

Starting point is 00:06:24 get in, they basically track their performance. You know what their performance was in 2020, David? I don't know, but I'm going to go ahead and guess it's less things. than if they had just held. It was less than if they just held. Exactly. By a lot. By a lot. So, you know, it depends on the funds.

Starting point is 00:06:41 Different funds have different strategies. But the composite index, so kind of the index behind the other indexes, if you put your funds in the average crypto hedge fund, you would have done well last year, 170% up, right? That's a great number. Good number. Like, be happy with that, I guess. But if you just held Bitcoin and did nothing,

Starting point is 00:07:01 you would do 425% up. Actually, I think these numbers might be wrong. I think Bitcoin was 360%. Okay, so the numbers we have on the screen are wrong. But if you just held Bitcoin, you would have gotten 360%. If you held ETH, all you did was hold Eth, you would have done 425% up. So holding Bitcoin, holding Eith in 2020, you would have outperformed all of the geniuses in their crypto hedge funds, maybe not all of them, but the average. And you wouldn't have

Starting point is 00:07:36 incurred any fees. So these hedge funds charge a 20% to 30% annual performance fee on the profits, plus 2% annualize, no fees, holding Bitcoin, holding ether, you would have outperform them. Like, it's not only that you're going to be profitable on a holding strategy for any, any time period, greater than three and a half years. You're actually going to outperform most crypto hedge funds on that time horizon. This is why on the bankless program, we talk about the value of the crypto monies, specifically ETH and BTC.

Starting point is 00:08:11 They are the benchmarks for this whole entire industry. And this also illustrates why it's so powerful to actually practice. Crypto and DeFi and Ethereum is a skill. And self-custody is one of those first skills that you learn. And if you gave up bothering to learn that self-custody skill and instead just went to the funds, to and just exported your responsibility of researching and learning and getting your hands dirty.

Starting point is 00:08:36 If you just didn't bother to do that, you lost out on like two to three X more gains than you would have if you had learned to buy and hold the crypto monies, the Bitcoin and Ether and do it yourself. That's that's the cost of not actually teaching yourself the skills to be in crypto. Yeah, absolutely. And you know what? Holding is a skill too. Last thing I'll say in this. I had a friend who came to me in 2018, and he said, you know, gave me some advice, which I buy, talked about Bitcoin and Ether. He went out and bought Ether. He bought it at like $500, right?

Starting point is 00:09:07 And 2019, and my advice was basically, hey, if you're doing this, you got to buy and hold for five to 10 years, right? Like, that's it. Just don't touch it, but buy and hold for five to 10 years. And he texted me in 2019, and he was like, oh, so this is going well. So his $500 Ether dropped to, like, you know, the low hundreds. And then it turns out he sold it. You know, like this is the thing.

Starting point is 00:09:32 It's holding is also a skill that you need to develop as part of your crypto investment strategy. And you have to learn how to ignore the volatility and look at the long, look at the long term on this on this thing. If you are looking for a product that connects your Fiat bank account with defy tokens and products, you need to download the Dharma mobile app. Dharma is a non-custodial smart contract wallet and comes with a bridge that connects you right into your bank account. Dharma is the fastest and most efficient wallet between your fiat and your bank account and any token on uniswap or even any vault in year. With Dharma, you can get over $25,000 per week into the defy universe and you can do it non-custodially. If you or anyone you know is hot on defy and you're trying to get your money into a defy investment, Darmah is the place to go. Signing up and going through K-Y-C is an absolute breeze.

Starting point is 00:10:32 It took me just under three minutes, and after signing into my bank account via Plaid, I am now just one transaction away from any token that Uniswap has to offer. Go to www.dh-dh-R-M-A-O, that's D-H-A-R-M-A-O, download the DARBA app and get yourself unbanked today. Avey is a borrowing and lending protocol on Ethereum, and just read recently released Ave version 2, which has a ton of cool new features that makes using AVE even more powerful. With AVE, you can leverage the full power of defy money Legos, yield, and composability all in one application. On AVE, there are a ton of assets that

Starting point is 00:11:14 you can deposit in order to gain yield, and all of those same assets can also be borrowed from the protocol if you have deposited collateral. Here you can see me getting a 200 USDC loan against my portfolio of a number of different defy tokens and ETH. I'll choose 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 permanently. 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 AVE. Avey does all of this for you all in one seamless transaction,

Starting point is 00:11:50 so you don't have to repay loans in order to change the collateral you have backing them. out the power of AVE at AVE.com. That's AAVEE.com. David, fundamentals while we're talking about it, let's talk about this, this thread from Spencer Noon. There's 11 signs, he says, that ETH is going to blow past its all-time line. This is a thread all about fundamentals, which fundamentals you want to pick out of this thread, David? Well, of course, we have to mention fees. We really enjoy the fee metric on the bankless program because of how ungameable it is. There's no better way to prove that there is demand for a blockchain by showing how much money people are willing to pay

Starting point is 00:12:31 to use it. According to this screen cap that Spencer took, you know, the last seven days of fees for Ethereum was $7.2 million, seven-day average. Bitcoin was $4.3 million. And then even uniswap, an application on Ethereum, collected $2 million worth of fees. These are big numbers. Yeah, absolutely. A few other things. The number of ETH transactions, he says, is 7X smaller than its 2018 gain, all time highs. And so he says this is a sign that Wales and institutions still haven't entered the game. What's he saying here, David? Yeah, he's saying that it's still kind of retail that is playing in Ethereum that, you know, there's a large amount of ETH. There aren't large amounts of ETH moving on chain, which means there aren't yet big buyers. I guess you could actually interpret this bearishly. That's probably if I was a Bitcoin maxi, I would say like, oh, like institutions aren't buying eth.

Starting point is 00:13:29 And perhaps that's bearish or perhaps that's an opportunity. Yeah, absolutely. He goes through a few more hash rate, Ethereum active addresses. I generally like Ethereum active addresses. These are eth addresses. Heath addresses are almost like bank accounts. And right now, that figure of ether active addresses has doubled year to date. is now it's all-time high. So the bank accounts on the Ethereum network are using the network

Starting point is 00:13:56 more than they ever have. We hit all-time high on that fundamental metric too. Yeah. Yeah. There's, there's nothing more bullish to me than more and more people using Ethereum as their banking layer. Yeah. It's supposed to be for. He goes through, he goes through a number of defy users, total locked value and defy, all of these things, stable coins, all of these metrics that we report out. So lots of fundamental reasons to be bullish as well. I saw this report from FundStrat to David. So FundStrat is kind of a group that appears on MSNBC quite a bit. This is sort of a mainstream finance group.

Starting point is 00:14:37 And they just put out a price prediction for ETH of over 10K. So it's starting to leak into mainstream finance circles too. What do you think about this number? Yeah, like I want to know how some of these funds and entities come up with their price predictions. They made a specific prediction of $10,500. I want to know where that $5,000 came from or $500 came from. Yes. But, you know, the 10K meme is getting exported out of the inner circles of Ethereum into the greater world of people that are interested in investing in crypto assets.

Starting point is 00:15:09 You know, fair enough. I haven't read the full report, but this line stuck out at me. So the person wrote this report said, blockchain computing may be the future of the cloud. The future of the cloud? So like what are we talking about here? I don't know what that means. Oh, man.

Starting point is 00:15:26 I would like to know what that individual meant. So price predictions coming out at over 10K, but it's not clear to me that that mainstream finance actually understands what Ethereum is yet or what ether as an asset is. They're just bullish for some reason. If they did understand it, they'd probably be a higher valuation. Yeah, absolutely. Okay.

Starting point is 00:15:45 That's market, David. Let's get into releases. So do you want to start with this first one? Yeah, M-Stable, which is a literally called a meta-stable coin where, you know, there's so many different stable coins on Ethereum. M-sable is a project that kind of offers a new stable coin on Ethereum using a basket of other stable coins on Ethereum, hence the meta. They are launching their M-USD save, kind of like a vault feature. It's like a high-yield savings account.

Starting point is 00:16:11 Pretty cool for people who are trying to access yield in D-Fi while also controlling for their own risk. More in more yield opportunities in D5 for sure. And have you kept up with the second one? Saddle raised 4.3 million for a slippage free defy trading. That's that's sort of the headline. But saddle is basically, it's a fork of a stable coin automated market maker, an AMM called Curve. That's really popular, very well used. The saddle forked some of their code, apparently rewrote the code. What is interesting about this? story, do you think, David? Yeah, I don't, I actually don't know the competitive differentiator between saddle and curve. I do know that there is plenty of room for more than just one version of a

Starting point is 00:16:56 defy application. I think that's what sushi swap proved out that, you know, not just uniswap is going to dominate the AMM market. And I think this is the same thing with Curve and Saddle. Saddle saying, like, you know, curve is great, but I think we can do something in here as well. And there's plenty of space for more than just one protocol to offer the same, same product. They had a bit of a rocky start with some issues at launch, but we will see how it plays out. Certainly more competition is better for defy users. The one thing I'll say on this to you, David, is it does seem like there's this dichotomy for many protocols where you have sort of a VC-backed version and a more crypto community-led version. Yeah, bottom up. Yeah. And so for almost every protocol,

Starting point is 00:17:38 you have both of those strategies being deployed. So we'll see how that turns out with Sattel. loop ring has been on a tear lately. This is one of the the shippiest teams in in crypto right now. There's constantly shipping. I've never heard that adjective before. I love it. Oh, never, you've never heard that adjective? I use it all the time. I have never heard shippiest. All right. What are they shipping? Yeah. So loop ring and L2 scaling mechanism for Ethereum with AMMs on it. So exchange functionality and an order based decks as well. has put their product, their app into the Google Play Store. You know, not the actually not, not the most revolutionary thing.

Starting point is 00:18:20 You know, we're not trying to infiltrate Google Play Store. That's not really the goal of Ethereum. But we do need people to download applications like Loopering, like Metamask, like Argent on people's phones. The difference with this loopering app is it is a direct integration into a smart contract wallet on LoopRings L2. So people, people who download the Loopring app are having their first interaction. with Ethereum on an L2, right?

Starting point is 00:18:47 And so to make an Argent wallet, it costs like $40 worth of gas that actually Argent pays because if the user just downloads Argent, they don't have any ether. So the Argent team pays for that gas to deploy their smart contract wallet onto the L1. And then also transactions on Ethereum using Argent are actually more gas intensive because it's a smart contract wallet. We actually just recorded a podcast with Vitalik talking about social recovery and L2. and we go into details about this. That podcast is coming out in a few weeks.

Starting point is 00:19:19 But what Vitalik is bullish on is smart contract wallets on the L2, and that's what loopering has rolled out here today. This is great news because it means Arjun is going to go there next. And so are the other smart contract wallets. I'm really excited about this. Speaking of being excited, ETH II has been going pretty darn well. Like, I don't want to use the word flawlessly, but there hasn't been a hiccup since network.

Starting point is 00:19:44 launch. What did we launch back in December, right? So we're closing in on two months of like it just working. No news is good news at this point. Yeah. I've like almost forgotten that it's up there, right? Things. Well, it's continuing to accrue new ETH. I don't know. It's 2.6 billion, something like that. Total Eth stake. So it's just humming to write along. And Danny Ryan put together a fantastic report that we'll add to the notes that you can go take a look at and see what's new there. David, let's talk about this one. We're speaking about roll-ups in layer two. Optimism has just launched on Maynett with synthetics. What's going on here? Yeah, the long-awaited optimistic flavor of roll-ups, the one of two flavors of roll-ups that

Starting point is 00:20:33 this whole entire Ethereum ecosystem is bullish on, gets their soft launch on to the Ethereum L-1. And synthetics is the team pioneering the usage of this new optimism L1. And so, you know, Ethereum is just scaling in all directions. Look at this graphic. Looks like Cryptoutopia right there. It's just on the horizon. It's what the optimism team says. We'll see.

Starting point is 00:20:54 Coinbase is doing some much needed infrastructure work. What is this story about? Yeah, Coinbase is famous for going down all the time, especially last bull cycle during 2016 and 2017. Coinbase would crash all the time. I kind of would figure that they would have fixed this by now, but it turns out like Coinbase is continuing to crash all the time. They had three, three plus years to figure this out. Turns out they didn't. But now they just released a statement saying that they are going to

Starting point is 00:21:22 quote unquote figure this out by kind of compartmentalizing some of their back end infrastructure. Probably should have done this a few years ago, Coinbase. Like what were you doing during the bear market? Well, maybe they are just like surprised by all of the demand, you know, in this bull market. I guess that's good. It's always a good sign when Coinbase is crashing during the bull market, I guess, for price. I guess. I don't know. Question mark. What's going on with Yerne here, too? I was told that Yerun had a 30K cap that they weren't going to issue any more tokens, but it turns out they're issuing tokens. Why are they doing this? What are they doing? This is just a proposal, so this is not finalized. However, there is been growing conversation about how to fund Yarns developers,

Starting point is 00:22:07 right? And one of the ways that we could do this is by just minting the protocol token. Many other DFI protocols like AVE have done this. Uniswap has like a $500 million treasury of unitokens that they can use for development. Wynne doesn't have that because it committed to that 30 million, 30,000 YFI token cap, which it's now trying to perhaps walk back on. Maybe that $30,000 or 30,000 unit meme is actually not the best thing for the protocol. And especially there is some incentive alignment friction between the developers and the token holders that they are hoping this mint can help solve. And so they are just looking to fund development. And personally, I think we should absolutely make sure that all wire and developers are correctly incentivized to build for wired.

Starting point is 00:22:58 I think my personal opinion is that keeping ourselves locked into that $30,000 hard cap just for the meme. is a disservice to the people that are actually adding value to Wynne. So you're not mad about this? I'm not mad about this. You know, what's funny is fair launches are easy, but like governance post-fair launch is hard. You know, I think what the community is finding out. It's easy to issue a token. It's hard to build a product.

Starting point is 00:23:24 Right. If WIrne, if Wi-Fi was trying to be a money, like a Bitcoin or an ether, this would be an absolute no, right? But this is more of a capital asset. And the truth of the matter is they didn't have a way to, fund their protocol development. It reminds me kind of of the synthetics pivot. Remember we talked with with with with with cane and originally,

Starting point is 00:23:44 uh, they were planning to issue synthetics according to the, the Bitcoin, uh, schedule. Happening every four years. That happening every four years just because, why? Just because that was because of me,

Starting point is 00:23:56 that was popular. You thought you had to do that. And then when they finally started thinking about it and scratching your heads, you're like, no, we should be issuing a coin to reward the activity we want in our protocol, which is liquidity. So let's go do that. And it turned out very well for them. So as long as you're not competing as a money, this sort of thing is not necessarily bad, but it is interesting how these communities are governing themselves. David, last thing, we had Lynn Alden on the podcast, post our podcast, maybe partially in response to some of the

Starting point is 00:24:24 questions she raised. She put out a phenomenal piece. I thought it was good anyway, about ether as an asset. And it's not necessarily that she was bearish, but she found, generally that ether and Ethereum were not ready for primetime investment yet would be maybe my take on it. We have a related response. Can you tell us about this? Yeah, when Lynn Alden writes a piece, and she put time and energy into that piece, the economic analysis of Ethereum. And when, and I do not believe that Lynn Alden was just like contributing to the BTC maxi dog pile on Ethereum. I think that was an open invitation for her to gain more insight in. understanding for her own benefit. You know, she put her rationale down onto paper as an invitation

Starting point is 00:25:11 for the Ethereum community to respond. And, you know, I think she wants to be convinced. She just needs to be convinced. And so I took the time as well as Lucas. And we also made this open to just the general bankless nation community to help contribute. And so we've gone through some of Lynn Alden's arguments and formulated our own responses to them. And I don't think Lynn Alden is anti-Eth or anti-Etherium. She is just a macro investor. And let's be real here, the market cap of ether is $160 billion. That doesn't show up on macro radar. Like, that's small. That's tiny. Yeah. It's just starting to show up. Absolutely. So where can people find this response, David, at the time that we're publishing this. Yeah, that we are recording this on Thursday.

Starting point is 00:25:55 That article, this response is also going out on Thursday. That's today. So for listeners, it was yesterday. You'll be able to find that at newsletter.com. Banklesshq. All right, man. That's exciting. I'm glad for that to go out. Just continue to dialogue with Lynn, right? All right. News, Goldman Sachs, I've heard of these guys. They're bankers somewhere, right? They're entering the crypto market, quote, soon with a custody play. I feel like I've heard this from Goldman Sachs before, and probably the last time was the last bull run. There were murmurs of Goldman like opening trading desks and getting into custody. Maybe it's for real this time. It's funny to see banks, flooding back into this space. Yeah, custody is the low-hanging fruit first stop shop for somebody like Golden Sacks to get exposure into this world. Just learning how to hold it for their customers is kind of how they get their foot in the

Starting point is 00:26:47 door. I believe it. The difference between 2017 and 2020 custody plays is there's actually a lot more opportunity for custody plays. We saw PayPal purchase BitGo a while ago as a custody play. and then all the other like custody plays, all the other protocols, or not protocols,

Starting point is 00:27:07 teams and companies and startups that were custody-based, got really excited because like, oh, you know, PayPal just bought BitGo. Who else is coming to buy, you know, my company, my custody play. And I think that's kind of what we are seeing play out. There's a lot more options for companies like Golden Sacks to just buy a custody play.

Starting point is 00:27:24 I think what may have happened with Bitco is, if I recall that deal may have fallen through, I'm not actually sure, but certainly, yeah, certainly PayPal was in talks about buying Bitcoin, and then something broke down the last minute, if I'm recalling correctly. But yeah, I totally agree. Cussies makes sense to start from a banking perspective. I have a bit more respect for banks like Fidelity that were also here during the bear market.

Starting point is 00:27:49 Goldman, to me, feels a little bit like a fair market entry. Well, things are good. We're going to go enter, of course. Whereas Fidelity's been building this stuff since 2014. Anyway, it's good to see some more competition. in that area. Speaking of that, the world's largest asset manager

Starting point is 00:28:05 is a firm called BlackRock. They have billions in assets under management. Like, excuse me, I said billions. But what I meant was trillions with a T. T. That's crazy. They just produced some filings, some SEC filings that suggest

Starting point is 00:28:24 that they are looking to buy, possibly buy big into crypto, specifically into Bitcoin. Is this a big deal? Yeah, I'm not sure how much speculation this is or just like reporters or investigators connecting the dots behind BlackRock filings. But what's going on here is apparently BlackRock

Starting point is 00:28:43 is doing all the filings that it needs to do in order to compliantly put Bitcoin on the balance sheet. And so, I mean, the timing is fitting. Like there's plenty of mania and excitement about this space. So that would make sense. If Black Rock is putting Bitcoin on the balance sheet, Like there's no better signal. Like, you know, Druck and Miller, that's great.

Starting point is 00:29:03 Like, you know, Raul Paul, that's great. Like, you know, Ray Dahlia talking about Bitcoin, that's great. This is BlackRock. There's no more, like, bigger of an institution after this. Like, this is the top. This is the biggest institution. If they're putting Bitcoin on the balance sheet, like everyone should be paying attention to that. Yep, they do not make them any bigger.

Starting point is 00:29:22 David, let's switch to this. So this is Biden administration stuff. It looks like Janet Yellen is going to be. come Treasury Secretary, so replacing Steve Mnuchin, and she's given some remarks lately that might get into the agenda here. But let's talk about the first. The first thing is she said that the U.S. must act big on the next coronavirus relief package. What does acting big mean? Money printer go burr. I'm pretty sure that's what that means. This is pretty expected out of what we expected out of a Biden administration. We always knew that Biden was going to be very

Starting point is 00:30:02 favorable towards reliefs of relief packages, right? They want to put money into the hands of the people. That's kind of, in my opinion, the value prop behind the Democratic Party was that they are pro relief and they want to get cash into the economy more than the Republicans did. And so this is them fulfilling those promises. All right. And this Janet Yellen backing it up. And at the same time, she was calling for more money printing, if you will. She was also saying that cryptocurrencies are a concern. What are they a concern for? Terrorist financing.

Starting point is 00:30:35 Classic boomer statement out of Janet Yellen here saying, let's turn on the money printer and get relief into the hands of the people. At the same time, let's also restrict or stop as much of that money going into Bitcoin. Like, that's kind of what I'm getting at, is they are, the Federal Reserve, the federal chair, the U.S. dollar is trying to get printed so it can put itself into the hands of the people. Yet at the same time, if people just take those dollars and buy Bitcoin with it, that's bad.

Starting point is 00:31:04 And so I feel like this is what Janet Yellen is trying to get in front of. Yeah, it's very difficult to know whether this is coming from like sort of the state, we want to surveil all transactions kind of prong of things or whether this is just a fear that something like the U.S. could lose its reserve currency status. Maybe both of those things simultaneously. I thought Mike Dutas had a great response to this on Twitter because it's such a fallacy. I thought this mostly died in 2015 and 2016, quite honestly, David, the narrative that my crypto and Bitcoin were only for terrorist activities and money laundering. Like that died way back then because since that time, we produced a ton of data. This is a chain analysis. They

Starting point is 00:31:49 actually produce data for big government agencies and less than a percent. 0.3, 4 percent of cryptocurrency activity in 2020 was criminal in nature, according to their report. That's a whole lot less than cash money in briefcases. Like the U.S. dollar is cash is a far better tool for terrorists and money launderers than cryptocurrency is. Yeah. And this kind of just goes to show that anyone that says that crypto is used for

Starting point is 00:32:19 terrorist financing or just illicit activities has some sort of bias or ulterior motive. Either Janet Yellen is naive and she is just touting off the first statement about Bitcoin that comes to her mind or she has ulterior motives, which is protecting the brand and the value of the U.S. dollar. My opinion is it's the second. We always seem to see David the same like headwinds and tailwoods coming out of the government. Like some things that are bullish for crypto and some things that are bearish simultaneously. It's interesting to see how that will evolve with this new administration. Coinbase is making moves as well.

Starting point is 00:32:53 We're talking about Coinbase earlier. They just purchased Bison Trails. What's Bison Trails? Bison Trails is a node operation service. They're also probably going to be massive players in the staking as a service industry, which I guess Coinbase is now gaining exposure to that as well. Bison Trails, if you want to stake your ether using Bison Trails,

Starting point is 00:33:15 you can stake your 32 ether with them. in a non-custodial fashion. I used to be privy to the details as how that works. If you want to stake your ether and also retain custody but not run your own node, bison trails would be for you. They also do nodes and node services for basically all other meaningful blockchains. And now they are owned by Coinbase. Guys, this is a signal.

Starting point is 00:33:36 The crypto banks are definitely going to get into staking in a big way. David, let's breeze through these last ones. Soldier Boy is tweeting about NFPA. How exciting is that? Wow. Maybe we get Soldier Boy on bankless at some point. Would we take that interview, sir? I think we would. I think we would. Yeah, I mean, I was a big fan of Soldier Boy in middle school, so I'm not going to pass that opportunity up. All right. I think this just shows the resonance between creators and NFTs. I think the value proposition of NFTs is extremely obvious for creators like Soldier Boy. I think that's the head. Yeah, what's so funny is, so this tweet originated. from, he asked, like, should I release my own crypto or something like that?

Starting point is 00:34:22 And people like, no, don't do that. You'll get in trouble. Remember 2017 when Paris Hilton, blah, blah, blah. All these celebrities tried to release tokens. He's like, oh, okay. And somebody was like, yeah, but you should check out NFTs. And he was like, okay. Obvious answer.

Starting point is 00:34:36 I'm releasing an NFT. What's going to happen this market is like, you know, we talk so much about fractal patterns and how history rhymes but doesn't repeat, right? So like 2017, all the celebs wanted to release a crypto token, 2021, this bull market is going to be all NFTs, my friend. I think that's how it's going to work. Much stronger product market fit. It just makes so much more sense. We don't need a currency per celebrity.

Starting point is 00:35:00 However, celebrities are fine to make art because that's kind of what they do in already. Yeah, perfectly legal. All right, Pax Gold. So this is a token on Ethereum. They reach over 100 million in market cap. on tokenization of all the things, including gold. And also this last headline, Pornhub just added a whole bunch of other cryptocurrency to their payment options. I guess that's a good thing. I don't know. It's the tokens that they added, which is what's interesting to me. They added

Starting point is 00:35:32 XRP, Ripple, Binance coin, BNB coin, and Doge, and also USDC. I think it's going to be the USDC coin that gets used the most. But, you know, it's, who knows? In that order, who knows? Who knows? Who knows? Indeed. People just want to get rid of some their other coins. I guess this is a way to do that. David. I'll trade some XRP for some porn. You have XRP? That's the bigger headline. Oh my God. No, if I did, it would be a good trade to trade it for porn. Gemini is the world's most trusted cryptocurrency exchange. I've been a customer of Gemini since I first got 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

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Starting point is 00:37:06 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. If you want to live a bankless life, you need to get a monolith defy visa card. Monolith is a one-two punch of both an Ethereum smart contract wallet and an accompanying visa card that lets you spend the money that you have in your Ethereum wallet everywhere where Visa is accepted. When you swipe your monolith visa card at the grocery store or at a restaurant, it actually makes a transaction on the Ethereum blockchain that spends some of the money you hold in your Monolith wallet. It's insanely cool and it's one of the best tools out there for living a bankless but still normal life.

Starting point is 00:37:54 Monolith also offers on-ramp services for getting your Fiat money into the world of Defi. So it's trivial to top up your monolith card if you ever need to and your deployment. deposited money goes straight into your non-custodial wallet, so your money is never held by a centralized intermediary. Because Monolith is native Ethereum infrastructure, the money you hold in your Monolith wallet still has the power of Defi behind it. Swapping assets on Uniswap or earning yield in Defi is at your fingertips. Go to monolith.xyz and sign up to get your Monolith Visa card today. Okay, takes. Let's start with the first one. This is one from a guy named David Hoffman. on Twitter. You should follow that guy. Smart guy. He says that Ethereum is a bet that the future is

Starting point is 00:38:40 going to be different. What do you think he means? Yeah, what does he mean? I don't know. I think my interpretation of this tweet is that, you know, Ethereum is a revolutionary piece of technology. And it's doing a little, it's offering an alternative mechanism or vehicle to do almost every single in the previous industry differently, either a little bit differently or a lot differently. And then it's also offers totally brand new things to the table. I think we are, it's obvious to that to people and to listeners that the world is changing. The world is changing really, really rapidly. And I think in a world that is changing rapidly, Ethereum offers, you know, ways to capture that change. You know, Ethereum is a bet that the world is going to be different. Yeah, definitely. It's probably a good

Starting point is 00:39:24 bet. One thing I'd also say here is like some people think Bitcoin is a bet that the world's going to be bad in the future. Like the world's going to fall apart in the future. Like the world's going to fall apart in the future, right? The whole Bitcoin Citadel idea. Ethereum is not necessarily a bet that the world's going to fall apart. I mean, I think it can thrive and do well if the world falls apart, but it can also do well if we have a roaring 20s era, right? Like so it's not necessarily a doomsday asset in the way that some paint Bitcoin as, which I think is interesting on that tweet as well. That reminds me of one of my favorite quotes from Amin Soleimani, Bitcoin in times of war, Ethereum in times of peace.

Starting point is 00:40:03 Interesting. There you go. Speaking of Pornhub, I mean, so, Laman. Oh, man. Breaking. Heath global hackers are now called money mechanics.

Starting point is 00:40:15 What? What's a money mechanic? This is an outgrowth of Brian Brooks' self-driving banks meme, which is, again, the most boomer meme for understanding defy I've ever heard of. Yet, I think it's going to go miles

Starting point is 00:40:29 with trying to get people people's heads wrapped around what the hell this thing going on in Defi is. And so if we are going to adopt the term of defy is self-driving banks, that makes all defy money Lego builders, people building on Ethereum, money mechanics. I like it. Wow, going miles. I like what you did there, David Hoffman. Nice, nice pun job. All right, this is from Spencer Nune. This is another take that we thought was interesting. He says he has no idea on how to value Eith. Why is that a good thing, David. Yeah. Yeah. So I think this is an extension of the triple point asset thesis, right, where the triple point asset thesis believes that, and if anyone can find an asset that fits into all three asset superclasses earlier than ETH, that would be news to me. The triple point asset thesis is that there are three asset superclasses, store value capital assets and consumable assets. And ether is the only asset that fits into all three categories. We've never seen this before. And I think what Spencer Noon here is saying, like, he has no, idea how to value ETH because it just breaks all previous paradigms. It breaks all previous models.

Starting point is 00:41:36 And I think I re-coded this tweet and said, you know, valuing Eath breaks the calculator. I think it's bullish that we don't know how to value Eith. That's that to me, that just means that the sky is the limit. Yeah, other people have put it this way, like assets like Bitcoin and Ether, they can be priced, but not valued. So ultimately, it is this pricing, supply, and demand mechanic and what is the top on these assets? It's a big question mark. We can only guess. No top. All right. David, this was a really good take. This is kind of a tweet and also an article from Josh Stark and Evan Van Ness. So every year they do this. What do they do every year? They give us a recap of Ethereum in that year. It's one of the most valuable pieces of just

Starting point is 00:42:22 articles that comes out every single year. If you want to get reminded what's happened in Ethereum in this last year, which I mean, there's a ton. Josh and Evan, they always produce this article. It's always a nice recap of the year in Ethereum.

Starting point is 00:42:35 Yeah, here's my takeaway. This is their first point. They had four points. But the first point was interesting is bigger than Bitcoin. So they made the statement that Ether, Ethereum,

Starting point is 00:42:45 specifically eclipsed Bitcoin the network as the blockchain with the most valuable block space. And they brought the data, to prove that total transaction volume on Ethereum for the first time in 2020 exceeded that of Bitcoin. So that means transaction settlements as denominated in U.S. dollars. So settlements of ether certainly help that. All of the defy assets, also stable coins were a big part of that story.

Starting point is 00:43:13 So more value is getting settled on Ethereum than versus Bitcoin now for the first time. and that line between them, kind of that gap between them, continues to increase an accelerated way. Also, daily transaction volume. So this is revenue, essentially. So this is how much are people willing to pay for block space, essentially? Bitcoin has always been higher than Ethereum, like always. People were more willing to pay for Bitcoin blocks versus Ethereum blocks. And now that's changed in 2020. So for the first time, people are, are, there's greater demand, greater value and fees being generated from Ethereum versus Bitcoin. It's funny that that was a, that that's been a metric that Bitcoin Maximus specifically have talked about like forever, fee generation. That proves that your block space is valuable. Yeah, how much fees are you generating XRP or like, you know, Bitcoin cast or whatever blockchain?

Starting point is 00:44:13 Well, now Ethereum is generating more fees. There's a pretty decent argument that could be made that the amount of fees that your blockchain pulls in relative to its block space is perhaps the number one metric that indicates the hardness or the soundness of the money on top of it. Yeah, absolutely. And of course, this is an important metric for Bitcoin in the future because its security will ultimately depend on the fees it generates from its block space. So a flippening, I suppose, from a network perspective, from a block space perspective this year, but we have not seen a flipping in asset value

Starting point is 00:44:52 in market cap of Bitcoin versus Ether. And we'll see if that plays out in the future. Some people believe it could play out this cycle. I'm not sure. What do you think, David? This cycle would be tough. I would be surprised. However, I would be pleasantly surprised.

Starting point is 00:45:10 All right. This is from Hayden Adams. Uniswap is doing 2% of the new. York Stock Exchange, that seems to be the new... 2% of the volume, specifically. Of the volume specifically. And he asked the question, I love this. I love this energy from Hayden.

Starting point is 00:45:27 Come on the podcast, Hayden. He asked the question, when 100%, right? So like, he thinks that... Will Uniswap match the New York Stock Exchange in volume? Dude, to me, it's only a matter of time. It's only a matter of time. That's not that far away. Unifswap may not be the category winner here.

Starting point is 00:45:44 like that also remains to be seen. But if it's not uniswap, then it's going to be some defy, defy protocol that does. It's, it's coming this decade. And in this cycle, maybe uniswap doesn't match the New York stock exchange in volume.

Starting point is 00:46:02 But I bet you, with much more certainty that all exchanges on Ethereum do, totally. Like if you include curve and sushi swap and all the other AMMs, I bet you that definitely breaches 100% of the volume on the New York Stock Exchange. There you go, prediction. Was that including your predictions, David, for 2020?

Starting point is 00:46:20 It is now. 21. All right, there go. You heard it here. The last question, we'll end on this with takes, and then we'll get to what we're both individually excited about. The question of, have we earned this all-time high with Ethereum right now? Have we earned the all-time high with Bitcoin?

Starting point is 00:46:40 This comes from a quote that Vitalik made near that, the apex of the bull market in 2017. Yeah, December 12th, 2017. Yeah, right before I all-time highs. Yeah, he said market cap just hit half a trillion dollars today, but have we earned it? And his implication was, no, we haven't earned it. There's a lot of vapor here.

Starting point is 00:47:00 The question on everyone's mind, I think, is this time, as we're seeing the market cap exceed this, has crypto earned it? What's your answer to that? Yeah, I mean, if something has earned something is always a subjective question or so yeah and we'll obviously take a subjective answer. One thing is worthy of noting is that when Vidal tweeted that in December of 2017, there was nothing that we do on a daily basis today back then, right?

Starting point is 00:47:29 There wasn't even Maker Dow. Maker Dow wasn't even launched at that time. There was no defy. There was crypto kitties and then there were ICOs. So it was obvious that we did not earn it back then. I think it's totally justifiable to say that we have earned it. We're actually, the crypto market cap is actually 2x higher than what Vitalik said. Vitalik said half a trillion.

Starting point is 00:47:48 We're above a trillion dollars right now. But absolutely we've earned it. Yeah, totally. Like, defy is a real product. It's a got product market fit. In Bitcoin, we don't even need to talk about Bitcoin. Like money printer go burs means that Bitcoin is justified. There's no denticoin this time around.

Starting point is 00:48:05 There's no BitConnect this time around. It feels much more healthy. But I got to say, David, I'm going to be looking for that tweet from Vital, too, because he basically called the top last cycle in December because by January, everything was on kind of the decline, January of February. That's exactly right. All right, David, let's get to this. What are you excited about, my friend, this week?

Starting point is 00:48:29 So one of my favorite podcasts that actually has taught me a ton about just finance and economics before I got into the realm of crypto was the Planet Money podcast. And they just released a podcast that was a rerun of a podcast that they had done before. But the reason why they re-released this podcast was because the Biden administration just got elected. And people wanted to ask the question or get the answer to the question, how are they funding all of their COVID relief mechanisms? Right. They are, the Biden administration has a ton of relief mechanisms, a ton of money going out. And so Planet Money put out this rerun of this, what the hell is MMT podcast that they produced, I think, in 2017, 2018.

Starting point is 00:49:10 And so like this is just an example. in the same way that we look out for examples of crypto breaking into the mainstream. MMT, modern monetary theory, the theory that the central bank or the currency issuer, which is the United States, can't be insolvent because they can print new money. That MMT is making is breaking its way into the mainstream. I'm excited to see how that lands with people. Like how are people going to integrate MMT into their brains now that the Biden administration is just like, you know, making it rain COVID relief all over the United States.

Starting point is 00:49:40 Yeah, anytime people start thinking about money, I think is definitely bullish for Bitcoin and Ethereum and for crypto in general. And nothing like receiving a $2,000 check to start thinking about where the source of this comes from. And then like what actually is money, the nature of money. So I definitely agree. That's cool. What else are you excited about? Yeah, the other thing I'm excited about is this last week, we saw optimism roll out on main net Ethereum.

Starting point is 00:50:11 We're seeing loopering rollout, their smart contract wallet on their L2. Obviously, there are over two million ETH in the deposit contract, over $2 billion committed to the future of ETH2. And that's all part of proof of stake. So many Ethereum, anti-Etherium narratives are just getting the last nails

Starting point is 00:50:32 and just pounded into the coffin. Like Ethereum 2 is shipping, Ethereum is scaling, proof of stake is here. That's only going to continue. And especially as so much new attention comes into this space, like they aren't, they aren't going to be thinking like what is the execution risk of Ethereum 2.0 because it's so close, right? And all the other commitments that Ethereum as an ecosystem and as a technology has committed to are being fulfilled. And so these new people who are trying to get a grasp for what the hell is going on in the space aren't ever going to go through that will Ethereum actually work phase.

Starting point is 00:51:05 They are going to see it working and delivering as promised. and that's got me really excited. Yeah, absolutely. A lot has been delivered during this bear market on Ethereum that like the previous bull market, previous cycle, we didn't know for sure whether this stuff was going to come through or not. So well positioned for sure. Ryan, what are you excited about?

Starting point is 00:51:27 I'm excited about a new meme or a new narrative. So, you know, you were talking about- Oh, Ryan's cooking up a meme, boys. Cooking up a meme. Get ready. you were talking about like a lot of the fud there's one last sort of fear hang on Ryan sorry Bryce sorry let's start you over because my internet was it was unstable you were just got super robotic you were saying you were talking about and then I lost you

Starting point is 00:51:57 okay um do you want to just ask me the question again or sure okay Ryan what are you excited about I'm excited about a new meme, my friend. I'm cooking up a new meme. Ryan's got a meme coming. Memes in the oven. We'll see if it takes or not. Who knows? But you were talking about the fear, uncertainty, and doubt with Ethereum and how a lot of that's dissipated. There's one fud point remaining, and that is around ether the asset. So people still like to say, yeah, Ethereum's great, but ether the asset won't include. any of the value of Ethereum, right? So I think that narrative is going to shift. I was reading Danny Ryan's point, which we post about the roadmap for ETH2 that we mentioned earlier, and made me think of the positioning for the roadmap for ether the asset, right? So we talk so often

Starting point is 00:52:54 that there's a roadmap for Ethereum the network, but there's also a roadmap for ether the asset. And here's how you can understand it. Three words. Bond, burn, bay. We get our three Bs, all right? Three Bs. Tell us about them. Bs. This is, okay, 2020 was bond. This is the release of staking.

Starting point is 00:53:14 This is ether as an internet bond. This turns ether into a productive yield-bearing instrument. 2020, bond, okay? 2021, burn. We are going to be releasing EIP 1559 very likely in 2020. That is Ethereum's scarcity engine. That means all of this block space that's so highly valued in generating fees, a portion of that gets burnt every single transaction.

Starting point is 00:53:42 A portion of ETH gets burnt, gets taken out, out of circulation, like gone from existence. So what we're actually going to see is some disinflationary pressure on ether as an asset. It literally becomes more scarce every time Ethereum is used. 2021 burn 2022 bend this is our last B okay you're gonna have to tell me on this one I don't know what bend means

Starting point is 00:54:09 bend so it's just because it's a third B David honestly I was going to use reviews but like we got bend okay so what we're doing is we're bending issuance that is where Ethereum reduces its issuance from about four and a half percent to 1% and that could even go disinflationary if we're able to burn

Starting point is 00:54:28 more ETH every year So that happens when the proof of work system merges with the proof of stake system. ETH one merges with ETH two. And then all of the issuance in order to power the economic security of proof of work gets cut off is no longer needed. And the more efficient economic security of proof of stake kicks in fully and you get something close to 1% issuance. So those three things. 2020, we saw the bond. 2021, we're going to see the burn. And in 2020, we're going to see the bend of Ethereum issuance.

Starting point is 00:55:06 I think that is a narrative that maybe has legs, the three Bs, but it's certainly helpful to understand the asset roadmap for Ether moving forward. Guys, this has been a fun roll-up to do with you. Of course, risks and disclaimers, none of this was financial advice. Crypto is risky. ETH is risky, so is Defi. You could lose what you put in. But thanks for joining us. Of course, this is the frontier. We are on the journey and we're glad to have you with us. Thanks a lot.

Bankless - ROLLUP: 3rd Week of January

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