Bankless - ROLLUP: 4 Year Cycles | $JUP Airdrop | ETH ETF Rumors

Episode Date: February 2, 2024

Bankless Weekly Rollup 1st Week of February, 2024 ------ 🏹 dYdX | STAKING https://bankless.cc/dYdX-staking-podcast  ------ 🎧 Listen On Your Favorite Podcast Player:  https://bankless.cc/Podcast  ------ BANKLESS SPONSOR TOOLS: 🐙KRAKEN | MOST-TRUSTED CRYPTO EXCHANGE https://k.xyz/bankless-pod-q2  🔗CELO | CEL2 COMING SOON https://bankless.cc/Celo  🗣️TOKU | CRYPTO EMPLOYMENT SOLUTION https://bankless.cc/toku  🛞MANTLE | MODULAR LAYER 2 NETWORK https://bankless.cc/Mantle  💸 CRYPTO TAX CALCULATOR | USE CODE BANK30 https://bankless.cc/CTC  ------ TIMESTAMPS 0:00 Intro 1:30 dYdX https://blockworks.co/news/dydx-chain-liquid-staking  3:00 stTIA https://x.com/stride_zone/status/1753057572708315569  3:50 MARKETS 5:30 Interest Rates https://www.reuters.com/markets/us/feds-faith-immaculate-disinflation-narrative-put-test-2024-01-31/  7:20 4 Year Cycles https://x.com/MikeIppolito_/status/1751260864949186776  https://x.com/mrink0/status/1751262550249861500  https://www.ft.com/content/4d3790e0-cf12-47f9-a129-b44f4ed70e67  16:30 Jupiter Airdrop https://x.com/weremeow/status/1752355081499132228?s=20  https://www.coingecko.com/en/coins/jupiter  https://www.reddit.com/r/solana/comments/18r31pb/meow_here_i_am_the_founder_of_jupiter_ama/  https://twitter.com/weremeow/status/1735544950417436806  20:30 Farcaster Frames https://metaversal.banklesshq.com/p/farcaster-frames  https://twitter.com/dwr/status/1752183814737322379?s=20  https://blog.spindl.xyz/p/why-farcaster-frames-are-important  https://twitter.com/dwr/status/1751636894989897990  https://x.com/dwr/status/1752333651734675918?s=20  https://x.com/dwr/status/1752709131977490702?s=20   https://twitter.com/dwr/status/1751675485984055440?s=46  28:15 New Onchain Users https://drive.google.com/file/d/1auz3m9oiDeYnFxFN-tLveyQFanC_BJLo/view  https://flipsidecrypto.xyz/flipcomm/crypto-users-crypto-users-yv2zCa  33:30 FTX Repaying Funds https://www.coindesk.com/policy/2024/01/31/ftx-expects-to-fully-repay-customers-but-wont-restart-defunct-crypto-exchange/   37:15 Blobs Testnet https://twitter.com/parithosh_j/status/1752468658868126030  38:05 Protocol Guild Pledge https://twitter.com/TimBeiko/status/1752458526407139680  https://x.com/ether_fi/status/1752376059394408458?s=20  https://x.com/ether_fi/status/1752754098984878536?s=20  41:20 Friend.tech Points https://twitter.com/friendtech/status/1751038251056738459?s=20  42:45 Puffer Finance Points https://x.com/puffer_finance/status/1751954283052810298?s=20  43:50 ETH Spot ETF https://twitter.com/RyanSAdams/status/1752075849044549966?s=20  https://www.theblock.co/post/275174/sec-ethereum-etf-approval-may-standard-chartered-bank  47:20 Ripple Chairman Hacked https://twitter.com/chrislarsensf/status/1752702297971532258?s=20  https://cdn.arstechnica.net/wp-content/uploads/2024/01/USA-v-Powell-Order-on-Motion-for-Miscellaneous-Relief-1-25-2024.pdf  https://docs.fcc.gov/public/attachments/DOC-398483A1.pdf  49:50 Bankless 2024 Badge https://x.com/BanklessHQ/status/1752715915706175541?s=20  50:30 Meme of the Week https://twitter.com/sherlock_hodles/status/1752731162676441378?s=20  ------ Not financial or tax advice. See our investment disclosures here: https://www.bankless.com/disclosures⁠  

What really causes the four-year boom bus cycles in crypto? Is it the Bitcoin happening like everyone says it is? Or is it something else? Bankless Nation is the first week of February. And it is time for the weekly roll-up. David, you know, we've never done a roll-up on a leap month? February has 29 days this month. You know that's true fact.

It's our first bankless leap month. Yeah. Is that something to celebrate? I don't know. I don't know what it means. I don't think it is. No? I don't think it is.

Celebrate the 29th of February. It's below my line. Unless it's their birthday. All right, we'll just talk about what is above your line this week. Farcaster frames, they are the hot new thing on the app called Farcaster. All right? But the question is, is this the killer app that crypto social media actually needs to take off? We haven't had our iPhone moment yet, but could this be it?

And surprise, people with money in FTX are being paid back pretty damn soon here, but how much is the question? And also, where is that money coming from? Speaking of money, Jupiter on Salana has launched its juptoking at an earth-shattering $7 billion dollar valuation. I think one of the largest air drops, maybe top three air drops of all time. How did the Salana network hold up? Was it able to keep itself upright? We'll talk about that.

And speaking of valuations, we've got to talk about the Fed. It's getting a little hawkish, all right? That might impact our crypto valuations. All of that and more. But first, we're got to talk about D-Y-D-X, because D-Y-D-X is the number one, Dex volume in the world. DYDX chain, the new Cosmos chain, has recently launched with a six-month incentive program that they want you to know about. They are distributing $20 million in D-D-X rewards to traders and market makers on the D-YDX chain. So you can earn D-YDX as you trade on the

D-YDX chain. Trading on DYDX is basically free right now. If you are a trader on D-YDX, you can check your rewards at DYDX.TRAD. But there is also ongoing rewards for stakers and traders that are permanently a part of the DYDX system. Traders on the DYDX chain get 90% of their trading fees back in the DYDX token. But you can also stake DYDX to validators of the DYDX chain, just like you stake your Eth to Ethereum. You stake your DYDX to the DYDX chain, currently getting about 15% APR on the YDX chain. The reward mechanism is actually non-inflationary because they are paying DYDX stakers in

USDC, Ryan. Isn't that interesting? You stake DYDX, you get paid. in USDA. It's a cash-flowing asset, my friend. That ain't no point. That ain't no point. That's a token, Dave.

Those are points called U.S. dollars. And 4.2 million USC has been distributed over 11,000.2 D-YDX stakers. So thank you to DYDX for sponsoring this message. But also in the news this week, stake D-YDX is now a thing. Inside of the cosmos ecosystem, I learned this week, Ryan, there's this thing called Stride,

which is like the staking as a service for Cosmos. And so staked D-Y-D-X is now a thing. Liquid-staked D-D-X, just like liquid-staked-D-X, but also staked Tia from the Celestia ecosystem is also now a thing. I think there's a growing conversation in the Celestia world about Celestia-Tia

as modular money. And I would call this evolution, staked Tia, liquid-staked Tia, as like an evolution of a progress on that goal, if that is indeed their goal. So like stride, making some big moves in the cosmos ecosystem. I'm sure it's Tia's goal.

I'm sure it's Celestia's goal to have that monetary premium attached to their asset. But can they do it? That'll be a question, I guess, for another day. If you're interested in learning how to stake your DYDX, if you have DYDX on Ethereum, that is no longer the home of DYDX. There is a link in the show notes for how to stake DYDX on the DYDX chain if you want to learn more. All right, let's get to the markets this week, David.

What is Bitcoin shown us on the week? I got some pretty round number price movements this week. 40,000 is where we started the week. 43,000 is where we are ending the week up about 7.5%. Pretty good, 7.5%. We like that. I mean, it was pretty red week last week. So now we're kind of like starting to fill in that gap.

ETH price. Also some round number movements starting the week at 2,200, ending the week at 2,300, up 5% on the week. How about the ratio, David? Ratio down slightly on the week. We are below 0.054. but not news. Thanks to Cracken for these charts. I like to see him going up, and that's what happened this week.

Make them go up. David, how about total crypto market cap? What are we looking at? 1.71 trillion. Call it flat. Flat on the week. It's been flatty. And Layer 2 beat.

Layer 2 beat, also flat. So slightly up in TVL, we're at 21 billion locked in TVL on layer 2's with a 5.5x scaling factor. Arbitrum coming in at $10.5 billion. in TVL, followed by optimism at 5, followed by Manta Network, a brand new ZK layer 2, which I think is the subject of a big old air drop farm at $1.6 billion. Manta base number 4, Medis, number 5, 6 is ZK Sync Era and number 7 Mantle, and then DYDX. Interesting, immutable, and ZK Fair. So this is...

Never heard of ZK Fair. This is the horse race to watch, though. And, yeah, it's one of the most interesting that's going on right now. David, let's flip, though, to the Fed. what is going on in the broader macro markets this week. I think Jerome Powell had something to say. What did he say? Yeah, I heard it was a hawkish FOMC meeting this week.

The TLDR that I've gotten the vibe of is the last FOMC meeting, everyone was like, we just got the pivot. And then this FOMC meeting, everyone's like, oh, maybe we didn't, maybe we didn't get the pivot. That's kind of my TLDR. Do you have any more color ad? Yeah, I mean, so Jerome Powell said, inflation is still too high. And recall, the rates right now are 5.25% to 5.5% in kind of that range. And he said, inflation's too high. There's ongoing progress to bring it down. It's not assured.

He wants to get inflation back down towards 2%, which is the central bank target. And he said, rate cuts would not be appropriate. Yeah, and I think you're right, David. Some investors were surprised by this because there was talk of this, maybe the pivot. that is the decreasing of rates happening as early as March of this year. And it looks like that's not going to happen. Powell is not giving us a full pivot yet. Though that could happen later in the year, David. I think that's still on the table. And the FOMC indicated as much expecting rate cuts later in the year. We just have to wait on those, I guess. My understanding is that the pivot is inevitable because high interest rates means that the United States government has

to pay a ton of money on its debts, which are massive. And so I just just, as a matter of incentive, we have to have the pivot. But that's like, if I keep on saying that, it'll be the bigelious time that I said that in the last like 18 months. So I'm kind of like starting to feel like I'm beating a dead horse or I'm a broken record or something. That's still true, right? Yeah, it's still true. I got to do his wait. So just wait. All right. How long? A few months. I don't know. It's going to happen this year. I'm still, and look, something crazy could happen. You never know, but it looks like we're still on track, just a little bit delayed. David, you know we talk about crypto and the boom-bust cycle

happening every four years. And of course, this is sort of our base prediction. Yeah, a four-year cycle. And so we are like, we're getting into the bull territory of this, this full four-year cycle. The reason that many in crypto have always pointed to for this four-year cycle that I have not fully bought into is the happening. Because it turns out that the Bitcoin haven't its supply about every four years. And of course, the magnitude of that as a percentage of Bitcoin supply is decreasing over time. This is the tiniest happening yet in terms of total Bitcoin supply. But still, that's one of the reasons given for four-year cycles in crypto. Mike Ippolito has a different take on that. Maybe the four-year cycle is not caused by the

Bitcoin happening. Maybe it's something else. What are we looking at here? we are looking at a graph that basically looks like a sineusoid it is a wave going up and down up and down in the background it's just like a model for a sinusoid and then there's a chart in front of that sine usoid that is the global liquidity index as in how much liquidity is there in the global markets around the world and that that line is a little bit more choppy but it generally follows a that four-year sine usoid in a very rough fashion but like the pattern is is pretty clear And then if you just look at this in the crypto context, right, we had the 2013 Fork and Fair Launch bull market, which was at the peak of the rise and the peak of the 2013 to 2014 sinusoid. Then we had the 2017 bull market, which also same thing.

And then also we had the 2021 peak as well. And so it all just lines up with liquidity. And I think this is the big conclusion that people got to after Bitcoin went from like $69,000 down to $20,000 as. inflation set in where everyone was like prior to that everyone was like bitcoin is an inflation hedge and then inflation happened and bitcoin went down because interest rates went up and turns out where we are now remodeling our idea about what bitcoin is it's an index for liquidity which is exactly what this theory would would say yeah i i think that's right and i think this sort of explains crypto four year cycles even more than bitcoin i will point out it could be both though right it doesn't just have to be one thing but i do think that um worldwide global liquidity is kind of the big explainer here. And just to give a sense of what this global liquidity index is based off of, it's basically the central banks of the world. So all of the, you know, the central banks, so that's the Fed, essential banks of China, Japan, EU, all of them, and also commercial banks. They are kind of the levers or control mechanisms for how much

liquidity is in the actual market. So at the end of 2023, we had a global liquidity of about $170 trillion, and that is on pace to rise in this cycle. So we're at kind of the trough of global liquidity, and now making our way up as more liquidity is injected by the banks into the market. That is what this trend line kind of predicts, and those are the ways that you were just saying. I want to double down on that punchline. We are past the trough of the recent sinusoid, and we are on our way up. That's kind of where we are in this trend.

And so if it was as violent of an uptrend as it was last cycle, we have a long way to go in terms of more liquidity coming into the markets, which always impacts risk assets the most, which is crypto. That's us. I mean, you could see this on other charts too. This is a comment from Mike's tweet. If you know this, but Satoshi was actually a macro economist is so interesting how the Bitcoin four-year happening cycle is also timed with these four-year cycles of liquidity in and out of the market. And it goes to show, David, like one thing that's always true of markets is it's all about inflows and outflows, isn't it? Right? And so fundamentals make their way into prices over time. But in the business cycle, time reigns, like the two to five year time range, it's all about liquidity.

And so, I mean, this looks very bullish for crypto assets and then probably risk on assets in general. And, you know, the punchline here is. it's actually less about interest rate. So people look at the interest rate and they're like, it's 5%. That's high. It's higher than it's been in the last like 10 years, right? It's not just about interest rate, guys.

It's also about the liquidity that is sloshing around in these markets. And it looks like all of the banks are ready for another cycle of money printing. Speaking of inflows and outflows, the GBCC outflows have slowed this week, especially in the last two days. So the 2930th and 31st have been some pretty notable change. ranges in tune in the Bitcoin ETF world. So on net, there was negative $17 million outflows on the 29th between all of the gray scale outflows versus the other ETF inflows. On the 30th, which was Tuesday, there was $378 million inflows into all of the Bitcoin ETFs. And then yesterday, at the time we're recording the 31st, $240 million inflows. So over the last two days, we've had over

like $600 million of inflows into the Bitcoin ETFs, which have surpassed all the gray scale outflows. The gray scale outflows on the 29th, 30th, and 31st, 289, 192, 170 million. So that number of gray scale flowing out, GBTC flowing out of gray scale to Coinbase being sold, turning all these candles red, is slowing. That is a lower number. We needed to get rid of all of those outflows in order to resume the ascent upwards, didn't we? And it, it's, it's, it's, it's, It might be no accident that this week we saw 7% gain on Bitcoin and these outflows have started to halt and stultify. So that's good.

That's healthy market activity. That's what we need in order to go back up. David, what do we have coming up next? Coming up next on the second half of the show, we're going to talk about Jupiter's $7 billion token launch. Did you get that air drop? Bankless Nation. We're also going to talk about Farcaster Frames and if crypto found its social killer app,

as well as record amounts of on-chain user growth in 2020. which chains grew the most. Was it Ethereum Layer 2's or was it newer layer 1s? We're going to talk about all that and more. But first, I want to talk about some of these fantastic sponsors that make the show possible like Cracken, our preferred exchange for crypto in 2024. If you do not have an account with Cracken,

click the link in the show notes to get started with Cracken today. Cracken knows crypto. Cracken's been in the crypto game for over a decade. And as one is the largest and most trusted exchanges in the industry, Cracken is on the journey with all of us to see what crypto can be. Human history is a story of progress. It's part of us, hardwired. We're designed to seek change everywhere, to improve, to strive.

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Not investment advice, crypto trading involves risk of loss. Cryptocurrency services are provided to U.S. and U.S. territory customers by Payward Ventures Eek. PVI doing business as Cracken. Are you launching a token? Is it already live? How are you managing the legal and tax obligations for providing token grants to your team? It's no secret that token management gets complicated. Between learning all the legal language and tax obligations in every country that your team is in, token grant management can feel like an obstacle course.

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Sello is seeing a meteoric rise with over 300 million transactions and 1.5 million monthly active addresses. And now Sello is looking to come home to Ethereum as a layer two. Optimism, Polygon, Matter Labs, and Arbitrum have all thrown their hats in the ring for the Sello Layer 2 to build upon their stacks. Why the competition? The cello layer two will bring huge advantages like a decentralized sequencer, off-chain data availability secured by Ethereum validators, and one block finality. What does that all mean for you? With cello layer two, gas fees will stay low and you can even pay for gas natively using ERC20 tokens,

sending crypto to phone numbers across wallets using Social Connect. But Sellow is a community governed protocol. This means that Sello needs you to weigh in and make your voice hurt. Join the conversation in the cello forums. Follow Sello on Twitter and visit cello.org to shape the future of Ethereum. Big AirDrop this week. Solana's biggest decks, Jupiter, just launched its jupe token. What do people need to know? 10 billion jupe tokens. This air drop was actually announced. There's going to be four phases.

This is phase one. The future criteria of phases 2-2-4 are undecided. But this was actually announced all the way back at Solana Breakpoint in 23, November 15th, 2020. 10 billion jupe tokens going to 955,000 Solana wallets, almost a million wallets. Definitely not a million users in Solana pre-November of 2023. Of that 95,000 eligible airdrops, airdrop addresses, 485,000 addresses have claimed those tokens. 646 million jupe tokens. That's about two-thirds of the air drop, which I believe is 10%. I need to double check these numbers, but I believe 10% was airdropped of the $7 billion, which means $700 million was air dropped to Jupiter users. Where are you getting $7 billion? Is that the market cap of Jupiter? That is the market cap at the drop. It is now at $6 billion, which I mean, still plenty of respect.

Yeah. Yeah. Still $6 billion. So almost a billion dollars in token value was dropped to $600 million. At the current price is $600 million. Wow. Wow. Which might be number two behind Arbitron, which dropped like two billion to users. Yeah, because Jupiter is like the primary decks on Solano. Yeah. It's kind of winning so far. It's like a super decks.

It's not just an AMM. It's also a decks aggregator with like a bunch of just other bells and whistles. It's got, it's like, it's like all the decks bells and whistles, like hooked into one app. Okay. So how did Solana the actual network? I'm sure this was a flood of activity of people claiming their Jupil Hopkins, getting very excited. How did the network handle that load? Network stayed up and running, but a bunch of failed transactions happened. I think something like

50 or 60 percent failed transactions, so people were pretty frustrated about that. But it was significant improvement from what Solana would have done like a year ago, which was topple over. And so it stayed online, didn't break a sweat in terms of block production. But now, Solana as an ecosystem is like just paying attention towards its fee markets and its congestion. and so this is like the new era of development in Salana. So I would call that a success. They have work to do, but it's a success. Those are the big boy problems, right?

When you get so many users your network can't handle it, right? You got to keep up with it and you got to figure out front running and MEV and all of these things. And I think it's a sign of increasing maturity that Solana is working on these problems. And of course, if you're a bankless citizen, then you probably knew about the Jupe AirDrop because we covered it in the AirDrop Hunter. And you can claim that. If you don't know whether you're eligible or not, you can also claim that on the bankless website, bankless.com slash claimables. Type your Solana address in and see if you qualified.

And David, you've scheduled a live stream with one of the founders of Jupiter, I believe, to talk about this and talk about future plants. Yeah, that founder's name is Meow. He is a cat. And we are having a live stream tomorrow 8 a.m. Eastern time, because I believe he's in Singapore hours, to talk about Jupiter and the Jupiter AirDrop. And so this will actually conclude my. Salana app player series that I've done over a while. I did Tenor. I did Gito and now Jupiter and these are like the

three big apps on Salana and it's going to be round out that series. Are you expecting a cat to actually show up? Like is this going, is this person going to be pseudonymous? No, no. It is he is a man who I'm sure if you investigated you'd be able to find out his name and he will show up as a dude. But he will also call himself meow. I am now meow meow is what I'm expecting to hear. Well it sounds Sounds like it's worth $7 billion. This is a crypto. Sorry, Chad Fai. I've got to get you this weirdness.

Speaking of weirdness, and this came out last Friday, David, but it really made waves. Farcaster Frames. So talking about Farcast, we're talking about the Crypto Social Network. It's kind of a Twitter type of competitor called Farcaster.

And they've rolled out a new feature called Farcaster Frames. William Pister of Bankless. William Pester, one of the analysts at Bankless described it like this. the crypto social scene just got a huge level up. That's because Farkaster just introduced frames, which can turn any cast, which is Farkaster's equivalent of a tweet, a cast as a tweet, into an interactive app. This new feature offers awesome new possibilities for the Farkaster

ecosystem, ranging from in-cast air drop checkers to one-tap gasless NFT mints. So the idea here, David, is that rather than have just a tweet, which, you know, on Twitter, it's a, a, piece of content, right? It's an image, it's a video, it's some text. You can actually tweet, or as Farcaster calls it, cast, an interactive application inside of the cast itself. That makes sense. So like some examples of this, literally, one of the first apps, I don't know if you ever saw it, like, you ever played Doom on a Ti-83 calculator? You ever see that? No, I never, not on a calculator. I would be like four or five years old sitting on my dad's lap and he would move and I would press a space bar and I would kill the monsters and my,

mom did not like that. We're like on a on a PC, right? On a computer. Yeah, yeah. Well, one of the, kind of the things that is done, like, have you ever seen Doom on like a pregnancy test? Like, people love putting Doom. Yeah, you can. I know the meme of we can put Doom places, but I'm not seen Doom on a pregnancy test. Like, not in person. All right. I've seen this on the internet. And anyway, so Doom as an early application in a frame, just why? Because you can. But there's some really other cool apps that people have developed. And once again, this functionality just dropped on Friday. All right. And there's already something like 500 different frames that have been developed. Tell us about some of the frames that are possible here, David. Well, I mean, the first one

that everyone should go play is the Doom one, of course. But in addition to that, there's a chess trainer. So you can just play chess inside of a tweet, a farcaster cast. There's a song drop, which is a music, NFT minting a frame from sound XYZ. There's NFT mince, so gasless NFT drops on Farcaster. One of the more creative ones, Netheria, a text-based game where users attempt to conquer a monster. The way that I would explain this is like if Twitter is Bitcoin, as in all you can do is write text, and that's how Bitcoin is expressed, then Farcaster frames are like smart

contracts on Ethereum, where you can put smart logic in, you can put logic into your tweets, aka your casts. That's how I would explain that very, very simply. And so it's just opening up the world of just like innovation to the Farkaster community and people are doing cool stuff with it. And this is, I'm just here for this because, you know, let's put place complexity on the margins, allow for coders and developers to have Clay to work with and see what they come up with.

Why didn't Twitter ever do this? I don't know. Well, they didn't because their model is kind of against it. Twitter and all the other social media platforms are now these walled gardens, right? Even your Facebook used to be much more innovative with kind of the Facebook API and used to get like games like Farmville. Now none of that exists, right? So what's really cool about this is all of the permissionless innovation that's been unleashed. And, you know, I've been excited about Farcaster for a while, right? Yeah, you've been on there for all month, right?

I mean, I've been there for a while, but I started to get really active about six weeks ago when it just felt to me like Twitter was just too toxic. It was just getting like too toxic, right? And so just, you know, algorithm, it's, we've talked about this ad nauseum, right? It very much incentivizes clout chasing, dunking, like, you know, and Farcaster seemed to me, maybe it's because it's small, a much healthier crypto community. I just loved it. But the thing about FARCaster up to this point, David, and all crypto social that I've used is it didn't feel significantly differentiated from traditional social media. So you go on a farcaster, it just looks like Twitter. And you're like, all right, so it's a healthier Twitter. Cool. It's not the 10x

better thing. David, this is the first time I've actually seen crypto social present potentially a 10x better use case. Right. And there's actually not, we call it crypto social. It is crypto social. But this is just a social innovation on a crypto-adjacent application? Yeah, crypto-adjacent and, you know, also, I mean, they've designed this thing with kind of open borders, so it's completely permissionless. Shre-Rom, who we've had on the podcast of A16C, says the Farcaster and Frames Energy is how 2005 Web2.0 Web Energy felt like. And I very, I kind of remember that in the Internet history. You're talking about the open-source era of Web 2.2.0. he's talking about or the Chris Dixon podcast when we went from Web 1 to Web 2 and it was no longer

just read. It was about right. Like this kind of feels like that. And for the first time, I saw a glimpse of what could be the way we onboard the masses. Like, oh, cool. Now we have a social primitive that allows us to expose the own verb, right, to use Chris Dixon's framing of it. We could do all sorts of crypto things on top of this.

So I'm pretty excited about it, even though it's like early days. it's still just the crypto-native community. But I think this has some real potential, and we'll see what's unleashed, what's built on top of Farcaster frames. Yeah, I called Farcaster or a crypto-adjacent application because it just has this very small on-chain footprint, like one user transaction on Farcaster, on optimism per account.

But also these frames can be bridges into crypto use cases. Like we've already seen like NFT drops and sound mints and NFT mints and all this kind of stuff inside of frames. And so it's, it is a port. to allow for crypto expressivity to come into a Web2 social app. And so it's a little bit just about the culture of Farkaster is about enabling crypto use cases that you would never see from any of the Web2 gargantuan's. As a result of frames, daily active users spiked immediately to 10,000, breaking 10,000.

And then that was, I think, on Saturday of last week. And then Monday of this week, we're up above 14.5,000. I think it's over 15,000. daily active users on Farkaster, which makes Farkaster by far the most popular crypto application that we have. Like daily active users? Absolutely. And David, they did it without points. They did it without big token incentives. They have warps. They do. They do have warps. But they're not gamifying it. But I don't know if anyone speculating on them, like people are speculating on like EigenLeer points. No, I think it would be somewhat foolish to do so actually.

Like you can buy warps inside of the app, but it's not sort of like. Oh, with money? Yeah. With money. With credit card? Yeah, with credit card or with your ETH, if that's what you want to do. But it doesn't have kind of the speculative, you know, token mania side of things. They're not using that growth hack yet, which is pretty interesting. Yeah, if Warps turned into actual like ERC 20 tokens, that would be very large. That would be a big move.

Yeah, for sure. That's not happening. Not happening for a while. Not happening. Maybe ever. Not happening at least for a while. Dan and the co-founders of, they're taking the slow, steady route. and like they're getting it right.

And yeah, for sure. I respect that. Yeah, for sure. David, I also respect the numbers that crypto is putting out with the number of users on chain. So here's a report from Flipside crypto this week that shows the total number of acquired users across all of the years that crypto has existed, starting from 2012 to 2023. And the headline here is that on-chain crypto users grew by a record, 62 million.

in 2020. Now, what do we mean by an on-chain user? This is this analytics platform particular, is their particular definition. But basically, they kind of mean an active address. Okay, so that doesn't map one to one necessarily to a human being. There were not 955,000 users of Jupiter. Yes, there were not. So, but each of these kind of mapped to, let's call it like a crypto bank account, right? It's an active address. And it does mean that it's So they had to use the chain at least once past year and then use it actively in like twice or more in the years preceding that. So it is a good proxy for not all the humans on chain, but it is a good proxy for, I guess, some of the users. I mean, bots are users too, right?

Bank accounts are users too. Anyway, 65 million. And that's the highest it's ever been. In fact, most of these years have been up from the previous except 2019. That was an outlier year where we had fewer on-chain active users in the last. Yeah, exactly. But take a look at this compilation here. What does this look like to you when we compare the different chains?

All right, we got 15 million active wallets on Ethereum, 7 million active wallets on Arbitrum, 5 million active walls on Solana. 15 million active wallace on Polygon. Polygon, a really standout bar here. It's as big as Ethereum's. and 2 million on base, 3.5 million on Polygon, 10 million on Bitcoin. All right.

That's the compilation. They could have organized that a little bit better, but okay. I mean, it's cool to see all of this on-chain usage, and this is going to hit 100 million in no time, definitely this year. David, what do we got coming up next? FTX users are getting their money back,

how much of it, and will we see FTX 2.0? And are we going to have to wait until 20, 25, for the ETH, ET? God, I hope not, but someone says so. Also, a new LRT protocol brings in a hundred million dollars in TVL in just under one day. And also, most importantly, bankless citizens are getting something new. So stay tuned after the sponsors to find out what that is. But first, a moment to talk about some of these fantastic sponsors that make this show possible, especially Mantle, the layer two with staking built in. You can stake your ETH with Mantle. You can use the Mantle layer two. What you

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There is a link in the show notes. David, you remember that FTX thing that happened last year, right? I remember. Yeah. Actually, that wasn't last year. That was two years ago. Two years ago. That was well.

That was 20, 23. 13 months ago. Okay, so 15 million people lost to combine $30 billion or more. Some estimates are $35 billion. The question in all of the bankruptcy proceedings is, how much would they get paid back? Would they get paid back anything? And the answer, it seems, has come this week. What are we looking at for the FTX creditors?

So the headline reads, FTCX expects to fully repay customers. and we are not going to see FTCX 2.0, which I kind of think is sad because I think that would have been hilarious. Like them rebooting the exchange? Yeah, that's what FTC2.0. Yeah. Okay.

Yeah. But yeah, apparently, that would be hilarious. That would be peak drama. I mean, what's the Elon Musk line? Like, whatever's the most comical is the thing that's going to happen. Yeah. Anyways, uh, FTX users fully repaid.

So everyone's getting all of their money back with a big old asterisk of what your money is, is U.S. value at the time that the FTX exchange went defunct. The bottom. You are getting your money back at the worst, almost the worst prices that we had all of last bare market, which makes many users very upset. Because, I mean, why, how did, where did all this money come from? There's been some clawbacks.

There has been some VC investments out of FTX that have actually done well. There has been some money actually discovered under the couch cushions. and all of that money, especially like the sole tokens and the GBTc tokens have significantly increased in the market value. Like Bitcoin did over 100% an increase. Like it was $20,000 when FTC went under. It's now $40,000. But then also GBTC appreciated even more than that. And all of it. So like the reason why so many people are getting all of their quote unquote money back is because, oh yeah, crypto markets bounced back. And so they're not really getting what they feel like is their money back, but they get to say, like, hey, we paid back everyone's money.

I mean, but still, not bad. And it could be worse. Like, I got to say not bad. I mean, 30 to 35 billion. When does this ever happen in a bankruptcy? If you told, it was as if, I guess, the market affected this was as if you were an FDX depositor, Sam just hit market sell on all the assets at the worst possible time, right? Yeah.

But like, at least you're getting something back. That doesn't happen in bankruptcy cases. usually if you're a creditor. I mean, if you told someone outside crypto that, yeah, FDX depositors, they lost $30 billion, and then they got $30 billion back 18 months later, like, that sounds good. Now, when you denominate to your point in crypto assets, it's a lot worse, but- You underperform the crypto markets. Yeah, I just got to say, this never happens in, outside of crypto, but it does tend to happen in crypto, like from time to time, although Celsius, I don't think it's going to happen, blockify is not going to happen, so.

Yeah, maybe not all the time. I would like to see how much of this money being recouped was actually made from VC investments. Because they had that anthropic investment and others too. And they're not over, right? So, like, the VC investments could keep on paying off, in theory. Are creditors going to get all those too? I don't know.

Yeah, I don't know. I think they're trying to just dispose of everything at this point in time and just kind of end the chapter of this FTX cycle. Hey, speaking of new chapters, the theorem's got a new chapter coming, which is the next Ethereum upgrade. What is the latest on that? We just had the second of three Ethereum test nets upgrade to Dengoon.

Blobs are now on the Sepolia TestNet. I bet 99.9% of listeners have never used a Suppolia TestNet. But the point is, is that as soon as we get to three of three successful test net upgrades to Dengun, we get to take that all the way to the main chain, to the Ethereum Layer 1. We are at two of three now. I think the next one will happen in two or three weeks, and then maybe two or three weeks after that. We will have a full Dancun upgrade on the Ethereum main net. End of March.

End of March. Looking good. On track for end of March. These are my words. This is not in the Ethereum developers words. These are just my estimations of time. End of March, looking good. That's going to feel good when that ships, David.

So in addition to the upcoming hard fork, some good news, I think, for open source development and client development, the core dev development, specifically on Ethereum. Tim Beko is introducing the Protocol Guild Play. So any project that has a token can take the Protocol Guild pledge and donate 1% of their native token to the Protocol Guild. David, what is the Protocol Guild and what's the significance of this pledge? Yeah, the Protocol Guild is a collection of open source Ethereum engineers contributors to the Ethereum project who just work either for the EF or work towards Ethereum and are just, they just work out of the goodness of their heart. They're working on open source technology, which means they're not compensated for that. So that means the Ethereum ecosystem needs to come up with funds somehow, somewhere in order to pay these people.

People like Peter from Geth, who we were talking about last week ago. Our fate is entirely in Peter's hands, right? Peter from Geh is in there. Mike Noider is in there. Alex Stokes is in there. Tim Beko, Trent Ben Epps, who are part of the stewards of the Protocol Guild. Dom, we've had him on the podcast. Just a ton of people.

There's like, I think, 300 people plus. Anyone who contributes to Ethereum open source, anyone who, who, like, builds a client. And the Protocol Guild, it's Dow, is a Dow. Protocol Guild is a Dow. And it also governs over who's in there. And people donate to the Protocol Guild, send money to the Protocol Guild, just say, hey, it's a solution to Ethereum funding.

And so the Protocol Guild pledge is to say, hey, if you are on Ethereum, if you're using Ethereum, consider donating 1% of your tokens, of your token generation event to the Protocol Guild. And that token is slowly trickled out over many, many years towards members of the Protocol Guild, who have been vetted by other Ethereum, EF members, and others, as to deemed worthy of being receiving in some of these funds. So this pledge, this idea, this pledge was announced by Zimbako, and then immediately Etherfi, one of the largest liquid staking token projects that are new and upcoming in the

eigenlayer ecosystem, announces that they are taking the pledge. So Etherfi has committed 1% of their upcoming token will go to the Protocol Guild in order to support the continued development of Ethereum. So just big hats off to Etherify. This, I mean, Ethereum alignment is kind of a meme, but like, hey, there are people contributing, building Ethereum, and we are all standing on those people's shoulders, and those people are in the Protocol Guild. And so very, very well done by Etherify.

Also in Etherify news, they have announced their Mega Week. So this is in the LRT ecosystem. Mega Week is just like juiced incentives for the EtherFi system. they are distributing 3 million eigenlayer points from the Etherfi treasury to new and existing E.E.E. holders, that is the restaked liquid restake token from Etherfi over the next 10 days that started January 3rd, 31st, ending February 10th. And so if you are interested in getting some catching up on your eigenlayer points, Etherfi is giving you away, giving away 3 million points over the next 10 days. We still have to do that. We're giving away points. Yeah, we still have to do that liquid restores. Staking Tocons episode, David. Yeah, and we're doing that tomorrow.

Oh, cool. Okay, cool. And I mean, speaking of points, a lot more points giving going on. So this is friend.com. Tonight, we're doing our final weekly distribution. I guess this is the final of points. Yeah, they are ceasing for the points. Points are being ceased. Well, how do we know that?

I mean, we just did an episode on points. It's what they are saying. Yeah. We are trusting them. You know, six months later, they can be like, oh, it's back on again. No, I don't think so. I don't think so. They are ceasing their distribution.

and I think that they actually launched a token. I think Frentek tokens coming soon, TM. Ah, so you think this is a pretty binding, strong social commitment? That's what they are saying. That's what they are saying. It's what they are saying. Yeah, I could not imagine them saying this without that turning into a token. I mean, V2 launch of Frentek, remaining 10 million beta points being distributed up to that.

And then V2 launches. So V2 of Frentek is coming. Points are going to have a point, quote unquote, is what they said. So the Frentec token is probably coming. Yeah, okay. All right. well, some hard hints then. What do you guys can read between the ones?

What do you guys can read between? Friend tech? Yeah. You know, here's the thing about friend tech. Over billion? Yes. Yeah. It's a unicorn season, baby.

Crypto going in into pole cycle. It's over a billion. I will say for myself, I haven't used Front Tech recently. I haven't, yeah. I use it pretty hard for the first three weeks, and then that was it. It kind of just didn't have enough

to kind of keep me sticky, right? Aside from the initial novelty, of it. So, I mean, maybe others are different or maybe they're adding some features. We'll see how that develops. Also, Puffer Finance, giving out some points. What's this about? Puffer Finance, that is the LRT project that I mentioned that has sourced over $100 billion in 20 and under 20 hours. They have just launched their vampire attack on Lido. There's a meme apparently out there of a puffer fish eating a carrot. And so Puffer Finance has like leaned into that meme. And so what's the carrot? I don't know. I don't know. It's a, it's a, it's a,

YouTube video. I just learned about this. Anyways, so like, yeah, so if you take Lido Staked Ethan put it into Puffer's vaults, you're taking carrots and putting it into the Puffer. I don't know. Anyways, Puffer just launched and just like over $100 million has slowed into their vaults. Congrats to Puffer.

I got to say, I'm looking at this tweet. This does not look like organic traffic here. 91,000 likes 167,000 retweets. Puffer announced their their investment from Binance Labs and then all traction I've ever gotten of any Puffertweet I've ever done has just like completely blown up. I think there's just like a Binance swarm of Twitter

accounts that come and just like yeah, I don't know. David, a disturbing headline I read this week was basically the spot ETH ETF approval is unlikely until 2025 or 2006. I don't believe it. I don't want to believe that. Well, investment banks. T.D. Cowan anticipates that the SEC won't approve a spot Ether ETF before late 2025 or early 2006. This is the reasoning, David. They say this is a political call. We believe there is no upside for SEC Chair Gary Gensler to approve a spot Ethereum ETF, given how much, how upset progressive Democrats were over the agency's approval of the spot Bitcoin ETF earlier this month. That's what their analysts say. No, no upside. What about not getting sued?

If you approve the ETHETF, you don't get sued. I mean, he's getting a lot of suits. So this is some sound logic, although these analysts, I don't know, that they're saying this a bit pretty emphatically, right? When really there's sort of a probability distribution cloud. So I called in James Safert to actually, who is kind of the go-to Bloomberg analyst. He and Eric Balchunis are the people, I think, have the best takes

on the probability of the Ethereum ETF. And this is what James Safert says. there's more work to be done on this, he says, but we're probably in the 60% range for 24 right now. So over 50%. Feels low. Yeah, it's lower than what he said probably three to six months ago, you'll know. So it's over 50%, he says, but not meaningfully so. I wouldn't be stunned either way.

Gensler really wants to. He can kick the can down the road. There was no more can kicking for Bitcoin. I think that is the most valid point here. I think Gensler will kick the can down the road. as long as he can, until he gets sued, which he will if he kicks it too many times. Well, that was kind of James Safer's take as well.

I said, you know, Gensler really does hate crypto, so unless a court forces him, why would he? And James says, yeah, that's the bearish take. But on the flip side, it's not exactly a good look to go back to the same court and be told the exact same thing. Okay, so that's also bad upside is maybe he's actually, he does care about his optics. and so maybe Jimmy James is saying

if he cares about his optics enough he will approve the ETH ETF even before getting sued Yeah it kind of could go Which only accelerates it by like six to eight months Oh the interesting thing is Gary is kind of the decider Right because there's five votes For the SEC on whether to prove this or not

And Gary was the decider Three to two For the Bitcoin ETF so he's still the decider He still got all the power David This same week another analyst said The SEC is very likely to approve the spot Ethereum ETF. This was an analyst from Standard Charter Bank and called in a price prediction. Basically, ETH is going to hit 4K in the next two months because we are on the brink of the Ethereum

ETF getting approved. So don't know. There's takes on either side of this and it could probably go either way, though I still lean more bullish for sure. Yeah. This bank's take just happens to coincide with that ETH price pump in the middle of the week up to $2,400. But I mean, I'm not, I'm not, I'm not, I'm not want to listen to banks frequently. I'm going to just say that that's just, that's what noise. You do have a bank account, though, don't you? Yeah, but I'm not listening to them. I don't listen to my Wells Fargo. So this was crazy. The co-founder and chairman of Ripple, that's the XRP coin, of course. Chris Larson announced yesterday. Actually, Zach XBT caught this before this was publicly announced. Because Zach XPT is apparently everywhere on chain. And Zach XBT said it appears Ripple was hacked for about

$112 million worth of ripple and then XRP rather and then Chris Larson confirmed it. He said there was unauthorized access to my personal XRP accounts and the exchanges were notified to freeze the affected addresses and I mean that's a lot of money though for Chris and for the XRP community to to lose in a hack. Do you have any other takes on this? Yeah, why is he he has like a handful of wallets and one of them and one of them has $112 million of Ripple. Yeah, just a personal wallet. God, Ripple's such a goddamn scam. That's your take?

That's my take. That's all I have to say. Oh, wow. Well, I don't know if the hackers are going to get away with that. No, because there's no defy on Ripple. All of the major exchanges that have Ripple liquidity are just tracking those wallets. They're not going to get anything out of it. They'll probably get it back.

Now, we don't know how he lost $100 million of Ripple, but a common vector. for attack for anybody in crypto is the classic sim swap, where an attacker actually swaps your mobile phone number for theirs in some sort of social engineering attack, where they call a phone company basically and they switch your number to their number and then get two-factor authentication type of access and sort of compromise your account. I don't know if that's what happened with Chris Larson, but like this is an important PSA for everybody in crypto to realize it could happen to them. And what you need to do is make sure you are using not your mobile phone number

as your second factor off in all of your logins, but use something like Google Authenticator. That was like the primary prevention. But David, there was a sim swapping ring that stole $400 million. Just like one guy in Chicago in a ring and that was brought to court this week. So that's- We got him? Well, yes, this one, there's more. And when you're talking about a bounty of like hundreds of millions of dollars, lots of scammers are looking at that with mouths watering.

And I'm sure are entering the space. So we always have to keep on our guard for sure. And much cooler and more exciting news, bankless, that's us, has released a 2024 badge. So if you are a bankless citizen, we do this every single year. The POAP for being a bankless citizen. January of every single year or now February, you get one of these. It's done. It's shipped.

It's now claimable for all the bankless citizens out there. In code, we trust. It's in every single po-app. This is the Year of the Dragon. There's an animated little po-app. Breathing fire into the bankless bee. I think it's just absolutely gorgeous. If you have one of these,

that means you probably should be also going to the bankless meetup at Heath, Denver. We should also go. There's a link in the show notes. If you are a bankless citizen, you can go claim it now and then tweet it, and I will retweet it. There you go. Wow. Retweet the dragon, David.

What do we got for meme of the week? Meme of the week. Hard times create air drops. Air drops create good times. That's where we are now. Good times create Ponzi's. That's coming up next. Be careful.

And then Ponzi's create hard times. Make sure you are prepared for the next two phases of crypto because those are the phases in which you get wrecked. Now is a time in that you get rich. So I hope everyone's having a fantastic time collecting their airdrops. Another, in addition to the Jupiter AirDrop, the mode network air drop went live today. I have claimed a few of mine.

You should as well. I think there will be a link in the show notes for that. Have fun harvesting. Be wary that lucrative harvesting creates Ponzi's in crypto. We're not there yet. I haven't seen one yet, but they are inevitable. How do we know when we are in the good times create Ponzi's phase, David? Do the air drops just get dumber and dumber?

And the projects get stupter and stupider. Yeah. People come in, hook. I've never been in crypto before, and they start launching billion-dollar air drops, and no one knows who the hell they are, what the projects are, what they're doing. And, yeah, that's what you saw. Look for talk show hosts, look for celebrities painting their nails and posting on Instagram. Like, these are, like, top signals.

Is that way we should be looking at? I mean, it's just so far this is very- The top signals changed every single year. Last cycle was so confusing because it was a year's worth of top signals. And after one year straight, by the time we got to, like, November of 2021, December of I'm like, what's the point of listening to a top signal? They're all top signals and crypto still goes up. And if you had sold at any time during 2021, you would have been doing just fine. Yeah, I think that we are still comfortably in the airdrops create good times because

this phenomenon really hasn't escaped beyond kind of like crypto natives yet. Nothing We're still below all time high prices in Ether and Bitcoin. Yeah, exactly. Nothing about this cycle has brought in mainstream yet. So look for that. Look for the signals specifically. not among the crypto-native crowd, but when it starts to leak outside of that, that's when you should worry about the good times creating Ponzi and then the subsequent hard times that will happen as a result of this. But the hard times, they do come. Some disclosures as we end this episode, both David and I are advisors and Eager.

Also, Bankless Ventures is an investor in some of the liquid restaking token projects that we mentioned in today. Both David and I hold Eith. We are investors. We're not journalists. We don't do paid content. there's always a link to all disclosures at bankless.com slash disclosures. And you know, crypto is risky. You could lose what you put in. But we're headed west. This is the frontier.

It's not for everyone. But we're glad you're with us on the bankless journey. Thanks a lot.