Bankless - ROLLUP: 4th Week of March (Uniswap V3, Fidelity ETF, BTC Energy Waste, Jack Dorsey NFT)

Starting point is 00:00:08 Bankless Nation, it is the last week of March. David, what are we doing this morning? We are rolling it up. We are rolling up the last week of March, getting a full week's worth of crypto news injected into your brain as fast as possible. First, we're going through the markets. What is the market saying? Then we are going through releases. What got released in the last week? Then we go through the news cycle. What was the conversation like in the news over the last week? Then lastly, we finish up with some ecosystem takes. Who had some good opinions? Then we go into what David and Ryan are excited about and then we finish things off with the meme of the week. Guys, there is a lot to fit in this week. Absolutely. This comes out at you every Friday morning,

Starting point is 00:00:49 both on the podcast and YouTube. So catch it that way. David, you ready to get into markets? Let's do it. All right. What is the market telling us about Bitcoin this week? Bitcoin in a little bit of a slump this week. We are down to $52,200. You know, again, still $50,000, Still relatively expensive Bitcoin. But from people's expectations of what a bull market is like, this is low, I guess. And so we've been having a number of red days ever since, I think, like March, the middle of last week, so 10 days ago, Bitcoin has been in this downtrend. And people are bearish, honestly, is my sentiment read of the market.

Starting point is 00:01:32 It's funny. The market certainly has a short-term memory, David. Like, when in doubt, guys, zoom out. If you zoom out, we're doing pretty well on the year, aren't we? We're doing okay. We're doing okay. When we started, Bitcoin started this 2021, roughly a little bit over $20,000. So let's remind us of that fact.

Starting point is 00:01:52 Do it just fine. How about Eith? Eth is kind of the same story. And I feel like Ethereums are even more bullish. This despite our ultrasound, yeah, bearish, excuse me. And this despite our ultrasound money podcast this week. So maybe enough folks haven't heard it. Maybe the right people haven't heard it.

Starting point is 00:02:09 I'm not sure. What is making people bearish on ETH these days? Yeah, when Bitcoin trends down, ether always trends down harder. Again, and when Bitcoin trends up, Ether also trends up harder. So like when there is a bearishness in the market, there is more bearishness with this ether price. So we are at the low, low price of $1,612 for the ether price, only a little bit more than $200 dollars above the previous all-time high versus Bitcoin, which is two and a half times this previous all-time high. So like a bunch of Ethereum market commentators are just feeling bearish, I guess,

Starting point is 00:02:44 which is weird. But again, you know, I guess it's really about people's expectations versus reality and people have really high expectations, I think. I will stick to what we've been saying for the last year. So hilariously undervalued, even at these prices, specifically in a bull run, I think we'll see higher highs before this is all over. Let's talk about total locked in defy, David. Actually, let's do total value locked in D5 first with D5PALs. So we are kind of flat, I guess, in this first quarter ever since February, $40 billion or so locked in DFI. What is this telling us?

Starting point is 00:03:23 Yeah, it's just telling us the same thing as the market at this point. Prices are going up, prices are going down, and that's really just changing the value locked in defy. I don't think that's much of a different story other than the asset prices of these things that are in these applications. There's only so much that value locked in defy can really tell us, and especially when, you know, this market is guided by price movement. This is really at this local point in time, just a proxy of price movement. How about DPI? So this is the top 10 defy assets by market captured in this index. It's down on the week too. So DFI is taking a top of tumble along with Bitcoin and Ether. What's the story here? Yeah, last week, DPI was at $440. This week,

Starting point is 00:04:07 we're at $380. Again, same tumble that we're all talking about. And then I believe DPI is also down versus ETH. And so this is just people are having fear, I guess. So people are moving into safety, which means they're moving up the market cap stack. DFI tokens are moving into ETH. ETH is moving into BTC, BTC is moving into the dollar. Then that's just the general like 10 weeks or 10 days of bearishness that we've seen lately. So has this slowed down DFI season then in your mind? Are we maybe kind of in a holding pattern? The D5 season is on pause. Yeah, I'm stuck between like we are about to finish this consolidation period and April's going to be really, really awesome. And the other The other thing I'm stuck behind is like, oh, this could be like a really long flat period,

Starting point is 00:04:58 and we don't actually break out of this flat period until something like June or July with EIP-159 when that gets triggered. And if you look at the DPI versus ETH on those timeframes, the 2021 timeframes, you do kind of see this wedge that is forming. Ryan, if you hit that maybe that six-month marker at the very bottom of your screen. Yeah, yes, yeah. So people are thinking that this area needs to get filled over the next three to four months. And then we can have defy season. But defy season unofficially on pause. Unofficially on pause.

Starting point is 00:05:36 All right. We'll see where that heads in the weeks and months to come. It does feel like overall, David, the market is taking a little bit of a breather during this bull cycle. Let's talk about this tweet because even though prices are down, the Ethereum economy just keeps humming. This is some analytics and stats from into the block. We've got almost 600,000 daily active addresses being used in Ethereum. And an active address is like a bank account. These are all representative capital pools. 600,000 of them being used daily. That is absolutely massive. Addresses with a balance have increased by over 4.4 million. There's about a trillion dollars being transacted

Starting point is 00:06:21 on chain. 96% in Q1, this is all Q1, this is all year to date stats, 96% of the ETH addresses are also profitable on their ETH. And a lot of ETH is leaving exchanges too. Anything else we should highlight on some of these into the block stats. Yeah, this is, to me, this just indicates the discrepancy between market fundamentals and user expectations or price expectations.

Starting point is 00:06:47 People, people are expecting things like 2017 to happen now. And I think that's perhaps why the price maybe got a little bit ahead of itself, even though I don't really think it did. But like the fundamentals that are behind the Ethereum economy, again, just keep on chugging. Keep on chugging. Keep on getting stronger. As does defy revenue, David. So we just passed the one billion mark in total defy protocol revenue. One billion dollars in revenue generated by these new money protocols. That's super exciting, David. Like, look at this. Look at the growth here. So much of this has come since January.

Starting point is 00:07:25 Yeah. And it looks like it's kind of that hockey stick parabolic growth that you look for in emerging high growth, tech stocks, economies, high network effect, sorts of areas. That's what we're seeing here. And this, again, is something there was no inkling of in the 2017 bull run. A lot of projects. Zero revenue. Yeah. Zero defy, basically.

Starting point is 00:07:50 in 2017 and no capital assets. So part of this 2021 bull market is the story of the rise of capital assets in crypto primarily being led by these defy tokens. Even though prices are down, revenue just keeps going up. Yeah, we started this year again at 0.4 billion revenue in defy. And so that means in Q1, 0.6 billion dollars of defy revenue has been made. This defy revenue metric, I think, is a really blunt instrument because it doesn't talk about Not all revenue in every single defy app is the same. Not every single defy app captures the same amount of upside of that revenue, for example. So like liquidity providers in Uniswap, those are 100% of the people receiving the Uniswap fees,

Starting point is 00:08:36 and Uniswap token is receiving 0% of that fees. That may change in the future. So yeah, it's a very blunt instrument, but also it does a very good job of seeing like, well, it doesn't, it call it blunt, but like a billion dollars of cash flow is a billion dollars of cash flow. Like, in aggregate, defy has made a billion dollars of cash flow and has made point six billion dollars of cash flow in the last quarter. And so if anyone tells you that like defy is just a bubble, like you can point them to a billion dollars of money being flown around at the direction of these governance tokens, which is important thing to note. Yeah, in par of conversation earlier this week when we were talking about Wall Street, Wall Street is starting to understand these defy tokens as capital assets as well. So that is a narrative paradigm shift also.

Starting point is 00:09:21 David, have you ever wondered what is in some of these crypto indexes? Because this chart from Misari, this table layout from Masari, kind of shows what the various options are. And the question I often get from people who are new to crypto is like, what's a way I can just set it and forget it? Like buy an index and then just leave it. And here are four different options and the composition of those options. You hear us all the time talking about the DPI, the DFI Pulse Index. It's an index that we really like because it's compiled of these top 10 defy tokens by market cap. But you can also go the traditional route and buy indices from what we would call crypto banks.

Starting point is 00:10:04 There's the Bitwise 10. There's the Grayscale large cap. There's the Bloomberg Galaxy index of tokens. And there's also BitWise, which we've talked about. this is a new index with D5 specific tokens. Kind of cool to see it laid out in this way. Do you have any favorites here, David? Yeah, well, I can have some very much some unfavorants here.

Starting point is 00:10:26 Look at the Bitwise 10. It's 80% Bitcoin, 15% Ethereum. And then the next biggest largest allocation is 1% to light coin. And everything else is so small. 0.9% chain link, 0.8% Bitcoin cash, 0.6% stellar lumens. This is absolute crap. And this is like the bitwise 10 is like the biggest index for crypto there is. And so like my my head is that look at the bitwise top 10 versus the bitwise defy.

Starting point is 00:10:54 And look at that difference in quality. Bitwise defy is uniswap, Aves synthetics maker compound urine, UMA, zero X loop ring. All of those have all of those have revenue associated with them. Do you know, Ryan, do you know how much revenue, like coin made in the last year? How much, David? The blockchain took in less than $100,000 worth of fees in the, the last year. And so like, and stellar lumens, I'm pretty sure it's less than two grand of fees in the last year. And like, fees for store value assets are a different story than revenue tokens.

Starting point is 00:11:24 That's important to note. But like, just look, you might as well, if you're going to invest in the Bitwise 10, you might as well just put Bitcoin and ether on your balance sheet and call it a day. Use the Bitwise DeFi Index or the DeFi Pulse DPI index to get your real indices here. Because what's the point of allocating 0.3% to EOS? Like what? That makes no sense. Well, Bloomberg Galaxy, and I think this index, if I'm correct, the Bloomberg Galaxy Index was created in like 2018 or 2019. It has a 3% EOS allocation and a 8% Bitcoin Cash allocation, which feels like very arbitrary to me as well. So that one might make even less sense than the Bitwise 10. But I think the point here, David, is like we're still very early stage in these index.

Starting point is 00:12:14 in these indices and more need to be more need to be made that that capture the the good assets in this space the good me the most bankless assets in this space and i think david we're going to have some stuff to announce along those lines with bankless pretty soon more on that at some future episode but bankless has opinions on what should be in an index let me tell you strong opinions strong opinions so stay tuned for that let's get to this last one in the markets this is a tweet from Joe Wisenthal. Wow, the GBDC, that is the gray scale Bitcoin trust, of course, that we've talked about so often on bankless. Premium to NAV just keeps getting more negative. Now at negative 14%. Almost the entire time I've been in crypto while this product has been here, David, it's been trading at a, it's been trade. GBDC has been trading at a premium to NAV. That means it's more expensive than buying Bitcoin on spot. The last few weeks, that has reversed and it's getting even more negative. So you can actually buy GPDC in your Fidelity account at a 14% discount to spot. We've talked about this a few times on roll-ups, but it hasn't

Starting point is 00:13:30 ever dropped to this degree. What's kind of the net effect of this? This is simply a product of the fact that it takes six months for people to deposit their BTC into the trust and then be able to turn that BTC into GBT and then sell that and pocket that premium. That six months lead time means that people are committing to this trade for six months. They don't know what premium they're going to get at the other end. And so, you know, when, and people have been making so much money on this trade, this has been such a common trade. The premium for the, for GBT has been positive, which means that people have just like institutionalized this premium, which is terrible. because at some point the premium must become efficient, right?

Starting point is 00:14:14 If it's positive for as long as it has been, which it's been positive ever since like 2015, really people haven't really been working this premium. It really has been about 2019 or later, but still, people have been just assuming that this premium is going to work, and so they've been throwing Bitcoin into gray scale, and now the premium is going in the opposite direction. And it makes sense that the premium should fluctuate

Starting point is 00:14:38 above and below zero and try to hold zero as steady as possible. But because of the regulatory requirements, we have to have that six months gamble where people submit their BTC and hope that the premium lasts. And this actually reminds me of like the whole ample fourth rebasing mechanism where it would rebase positively and then it would rebase positively again and it would rebase positively again. And then people got stuck in that psychology.

Starting point is 00:15:03 It's like, oh, this thing just prints money. And so they would throw money into it. and at some point it just becomes inefficient, and it starts to unwind in the other direction. I think it's possible that this negative premium is the new status quo for quarters, multiple quarters long, because that's what it's going to take to unwind all of these people that have made these bets into turning BTC into GBTC

Starting point is 00:15:25 and pocketing that premium. It definitely could be, especially as we've talked about before, if more competition starts to enter the horizon. This is a news item, but Fidelity has just filed for an ETS, a Bitcoin ETF, that is a competitive pressure on the less efficient GPDC product. And maybe the market's starting to price some of those things in. But I'll tell you what's interesting, David, is some of the downstream effects of what you were saying. People ask the question, like when you deposit your crypto, say Bitcoin in a centralized crypto bank

Starting point is 00:15:56 and you lend it out to someone like BlockFi, you earn a decent interest, 5%, 6%. A lot of that interest was generated off of this GBDC. arbitrage opportunity. Now that that's going away, we're starting to see some downstream effects. So BlockFi has recently slashed their rates. Used to be you could deposit a fairly large amount of Bitcoin into BlockFi, receive five to six percent interests on a loan. That has dropped down to like the one to two percent interest rate. So we're seeing some of this downstream effect on the crypto lending markets as well, at least the centralized crypto lending markets. I think that's going to filter into defy.

Starting point is 00:16:38 Now, some people have gone so far as to say, well, this makes crypto lenders like BlockFi insolvent. I think there's a lot of FUD going around like that. I don't believe it. I don't think somebody like BlockFi is going to, unless they're terribly mismanaged behind the scenes, going to go insolvent in the middle of a bull run like this with the balance sheet they have and with the investors they have. But it does change around the market dynamics.

Starting point is 00:17:04 And there's some downstream effects. of this. Anything more we should say on that, David? I got nothing. All right. Well, guys, we are going to get to releases in just a minute, but first, we want to talk about the fantastic sponsors that made this roll-up possible. 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 yearn.

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Starting point is 00:19:26 Go to monolith.xy Z to sign up. and get your monolith visa card today. All right, guys, we are back with releases. Let's talk about this monster release. David, we had Devin, who is a founder of OpenC on the podcast just a couple of weeks ago. Now, OpenC is raising $23 million to scale the largest marketplace for NFTs. What is OpenC and why is this raised significant? OpenC is basically the Craigslist, eBay, Amazon of NFTs, right?

Starting point is 00:19:59 So like, like, duh, like that's the easiest business model ever. So congrats to Devin in OpenC. I expect this to work out. And I would imagine that most listeners of this podcast have been on OpenC at least once. And it's really just an NFT explorer along with like an NFT transaction history, right? And so you can see, because everything is on chain, you can see previous offers being made and accepted or denied for any NFT, right? And so pretty cool. Yeah, check out that. Ask Me Anything we did with Devin, who's the co-founder of OpenC for more info on this.

Starting point is 00:20:36 You know, it's pretty amazing, too, is the investors who are leading this round. People like Naval, you see, but also Mark Cuban, Tim Ferriss, Alexis O'Hanian from Reddit. So Blow, RAC, a lot of the people who are in the NFT scene are part of this, a lot of mainstream people, too. So that's great to see. David, let's also talk about another past. Ask me anything, guess the folks behind Alpha Finance. As soon as it's going to be everyone. Yeah, that's true.

Starting point is 00:21:05 We're collecting them all, guys. We produce a lot of content around here. All right, but this is Alpha Finance. Really interesting protocol when we took a look at it. But now they're adding another layer to their token, which is token economics. They are adding, I believe, cash flows to their token. What's going on here?

Starting point is 00:21:24 Yeah, so alpha token holders will actually be receiving fees from the protocol, right? And so this is something I really hope, and I'm not sure if this is the future of Defi, but I really hope it is. And one of my biggest critiques and not mine, this is an opinion that I share with many other people, is that equities on the equity stock market, the ones that don't release dividends, mainly the tech stocks, they're really just a valuation on greater fools, right? like you'll buy Apple just because it's Apple and then you hope that you'll sell it for a higher price later. You're not buying it because it's paying you money. And this is something I'm hoping that Defi really doesn't fall into this trap of not like there are fundamentals and then there's

Starting point is 00:22:06 a token, but there's a discrepancy between those two things. So when we actually as an as an industry pay out the dividends generated from the protocol to the token holders, that actually is an intrinsic link between the value of the protocol and the value of the token. And so this is what Alpha is doing. So nice job, Alpha, actually paying out money to the token holders. And I hope this trend continues because I want there to be a link, an associative link between the value of the token and the actual revenue and value of the application that isn't just association, but is actually intrinsic to actually passing value. And so nice job, Alpha, paying their token holders. Good job. fees accrued in the first six months would have been 1.7 million. So not insignificant and growing quite fast. I agree with you there, David, because what else do you do with excess capital that your protocol generates? You've got only two other options besides releasing it in some sort of a dividend form. One is you put it in a Dow Treasury. And then the question is, what are you going to do with all of that capital? Can you find a productive use for it? And the Dow Treasury is so large, I think it's hard for them to find a productive use for all of it.

Starting point is 00:23:13 of this capital. The second thing you can do is buy back your tokens as well, buy and burn. That's what Maker does. So all of these mechanisms are super interesting. And I think the future of defy tokens, let's talk again about the future of defy analytics. These assets, of course, are open source. These networks are completely open source. Dune Analytics, which is, I think they go to spot. If you were trying to be a defy financial analyst, this is the tool that you're using. They just released their V2 version. It's now live. I have to confess, I haven't taken an exhaustive look at this. But why is Dune Analytics? Why is this important for us to know about this tool, David? Yeah, Dune Analytics is all about data analysis of DFI. And so like we've been saying before on the

Starting point is 00:24:04 bankless podcast is like defy ethereum in these economies are inside out they're completely transparent and by that definition there is so much data it's like as much data as you can possibly need so now it's about how to we parse through that data how do we consume that data and doing analytics is a data consumption tool so i expect this to to really just inject itself into the mainstream consciousness when especially when the wall street pros come over and and want to play in defy they're going to need data analytics and things like Dune Analytics are going to be able to provide that to them

Starting point is 00:24:39 and so it's really going to be about who can use these data digesters, these data processors. That is really going to be a very valuable skill moving forward and we are already seeing VCs and DFI teams and almost every, anyone, try and find people that can use these DFI data consumers like Dune Analytics.

Starting point is 00:25:02 That is a really valuable skill that everyone wants. And so banging on that drum, if you are looking for a job in crypto in DeFi and Ethereum, get good at Dune Analytics. It's really valuable. Absolutely. Here's a chart from our friend Richard Chen, who was on the podcast, the One Confirmation podcast. This is Defi, total Defi users over time. Look, man, we just silently crept up to over 1.6 million unique defy users. This is the sort of analytics you can get in real time on Dune. Super cool, man. Super cool tool. Let's talk about NFTs for a second and a release. Crypto.com is coming out with an NFT distribution tool. You know what this is kind of, I'm starting to wonder about NFTs.

Starting point is 00:25:47 We've got people who just kind of said NFTs are absolutely a bubble. He sold all of his proceeds that he made from his art from crypto into Fiat. We have groups like crypto.com now starting to enter that it just really doesn't feel as authentic as it once was. I wonder if we're starting to see the early signs that NFTs are kind of getting overcrowded. The lower quality things are starting to flood into the space. This just felt like a signal to me. You know, God bless Crypto.com. Use the credit card. But getting into the NFT space, you know, months in, it feels kind of top signaling. What do you think here? Yeah, I'm reminded of Suz-Zoo's metaphor of the shit coin roller coaster. For those that aren't familiar, go Google search the euthanasia of roller coaster.

Starting point is 00:26:35 And it's just a roller coaster that goes in loop to loops to loops, but the loops get tighter and tighter and tighter. And the metaphor is that the iterative cycles on these things are just faster and quicker and shorter and of lesser quality because people are trying to get in on the hype. That's what this feels like to me. It feels like we're going through the euthanasia roller coaster of NFTs right now. Possibly. Possibly so. But we are just getting started, I think, on Ethereum layer two. Here is Hermes. This is a ZK roll-up layer two that just came out this week.

Starting point is 00:27:06 I think this is targeted on payment use cases. This is something that's kind of flown in under the radar, David. We've talked about so many different layer two projects. This has been out there building. Now they're deployed on Ethereum for the payment use case. I think this is part of the theme that we're seeing going into the second quarter of 2021, that layer two is coming with like a force and it's here and the tech is being built out and a lot of different approaches are being tried. So pretty cool. You guys can check out

Starting point is 00:27:37 Hermes at hermes.io and start using layer twos now today. David, I think you might have some commentary on this. What is going on with Maker? They're increasing their death ceiling. What are they doing here and what does this mean for Ethan Maker? Yeah, dropping an absolute cannonball into the protocol change for MakerDAO, increasing the maximum debt ceiling for Ether as collateral from $2.5 billion to $15 billion. And so what this means is that each collateral inside of Maker Dow has certain risk parameters, and one of these risk parameters is called the debt ceiling. And that's how much dye is allowed to be drawn out of certain specific collaterals, right? And so Ether has this maximum 2.5 billion die that is allowed to be borrowed against Ether, the collateral type.

Starting point is 00:28:28 And the risk parameters can get adjusted in order to make sure that the MakerDAO system is appropriately solvent, appropriately controlling risk. But they are deciding that it's an okay move to increase the debt ceiling from $2.5 billion to $15 billion die for Ether as collateral. And so MakerDAO is letting Ether be far more capital efficient as a collateral. type in its vals. And so we are, I think what we are going to see is an increase of ether inside of MakerDAO, and we're going to see a very significant increase of dye circulating supply. And the moral of the story is that ether is becoming, again, the most capital efficient

Starting point is 00:29:08 asset on Ethereum due to its trustlessness advantages. Absolutely massive amounts of die liquidity are possible as a result of this. And that's pretty cool. Yeah. And the reason they can do this goes back to a theory that we talk about so often on bankless, we term this economic bandwidth. So ether has more economic bandwidth than it did a year ago when some of these debt ceilings were set at $2.5 billion. Why does it have more economic bandwidth? Because ETH has increased in moneyness. It's become more liquid. Its total market cap has increased by a tremendous amount. So that allows Maker to and die to consume more of this value, this more. of this trustless economic bandwidth. And ETH is increasing in its store of value property and its

Starting point is 00:29:57 moneyness, as we would say. Just for added perspective, there's currently only 2.9 billion die outstanding. And so going from a 2.5 billion die debt ceiling for ether to 15 billion die is a big deal. Like that is a lot more die out in the ecosystem. Bullish maker, bullish for ETH as a monetary unit as a monetary asset. Very cool. David, something else. that's very cool is the bankless community has offshoot. Now, this is somebody who's starting a new podcast inspired partially by Bankless HQ and ETH Hub about ETH life, ETH culture, the story behind builders. Do you know much about this? I haven't given it a listen yet, but I'm excited to do so. Yeah, no, I haven't listened to it yet either, but I have it in my rotation. Dennis, he works at

Starting point is 00:30:46 Khyber, been in the Khyber team for years now, been in Ethereum. since before I was. I met him in Tel Aviv when I did my ETH Triple Point Asset talk. And so he's doing the ETH Life podcast,

Starting point is 00:30:59 which is a podcast dedicated to the countless Ethereum passionately building on the best blockchain in the world. So Dennis, perhaps an ETH maxi

Starting point is 00:31:08 join the club, I guess. I only point myself as an ETH Maxi because everyone else does. I actually don't accept that identifier, but I take it as a funny joke. I'm a big fan of more,

Starting point is 00:31:19 more Ethereum content. Like, please, someone else help. We need more Ethereum content. So, Dennis, I'm super happy to see that you started a podcast. Yeah, it's awesome, guys. Check out that podcast, definitely. All right, David, let's flip to news. We got us to talk about the big news item of the week.

Starting point is 00:31:36 The Alpha League. I missed it. What happened? Uniswap, man. It's somebody doing with unicorns. So Uniswap is dropping its version three. This is like long-awaited, much-teased version three. We actually put out a whole Alpha League video.

Starting point is 00:31:49 about this that will include in the show notes that you can take a look at, which is our sort of first analysis, first reaction. I think we got some things right, a lot right. We probably got a few things wrong. We got something wrong. We got something wrong. It would be the first time. But look, Hayden Adams, is going to come on the podcast and clear it all up for us. That will release sometime in the next week or so on the bankless podcast. But give us the skinny. What is new in Uniswap v3? Yeah, the cool new feature about Uniswap V3 is what they call concentrated liquidity. And so previously, if you want to provide liquidity, for example, to the ETH-dye pair,

Starting point is 00:32:28 you would provide it for the full range of possible ETH-Di trading valuations, which is literally infinite in both directions, right? Like up to $1 million ether to down to one penny ether, right? You would be providing liquidity for that full possible range of money expressions. With concentrated liquidity, you can just provide liquidity for between $1,800 ether and $2,200 ether. And what this means is like you are taking on more impermanent loss risk, as in take, for example, you are providing in just those same parameters, $22 to $1,800 equity on the ETH die pair.

Starting point is 00:33:06 If ether is at $1,800, that means you have 100% of your liquidity position in ether, and you have 0% of it in dye. And then if ether goes from $1,800 to $2,200, that it flips. Because you have concentrated liquidity in just that spectrum, at $220, ether, because you are supplying between $220 and $1,800, when the ether price moves to $220, you have 0% ether and 100% of your LP position as die. And so it allows you to market make around a very specific band of liquidity inside the uniswap curve. And that has enormous implications to what it can do. And so I think people are going to get

Starting point is 00:33:50 really creative with these variable liquidity across the same curve of spectrums that UNSWPV3 is offering. Absolutely. It makes parts of the curve very deep in terms of liquidity, maybe deeper than anything we've ever seen in an automated market maker. One thing it does not do is we sort of thought it did at the very beginning is act as kind of a stop. loss for a liquidity provider. It really doesn't do that. It's almost more like you're, you're adding leverage in a way between those positions. You're taking on even more in permanent loss risk if you, if you, you know, do an ETH die pair in a specific narrow band. More on that when we talk to Hayden. Anything else we should say on that for now? Yeah, Hayden's just been

Starting point is 00:34:33 begging us to get him on the Bankless podcast. And so finally, now that he finally released Uniswap v3, I guess we'll let him come on. Maybe. I guess. I guess. We'll be generous. Yeah, we'll let you on this time. But, you know, just because you released V3. Just because you're going to V3. All right, David, DeCentraland Casino pays in die. This, like, file this under weird jobs categories, like weird crypto jobs categories. Decentraland, of course, is this entire virtual world. And inside of Decentraland, this populated virtual world, almost like a virtual reality city, we have a casino and this virtual casino is hiring people to operate the casino tables and paying them full-time positions in die in order to do so. This is crazy. This is like, you know, ready player one stuff. Very cool. But we talk all the time about the jobs that are available for you in the crypto and the defy economy. Did you know you can get a job at as a virtual casino table

Starting point is 00:35:38 operator, maybe at a poker table or something like this. Crazy stuff. Yeah, imagine working at a casino at home. How crazy is that. And just think about the, and so this is kind of like exactly what Ready Player 1 predicted, where like the economy inside of like the virtual world will come to dwarf the economy out at the outside world. And if that prediction comes true, we would see like something like this where, you know, some of these very initial use cases would come to manifest manifest themselves in the virtual world. No surprise that it's something along the lines of gambling that seems to be where these things start off with. And so I think that's just absolutely fantastic. There are jobs available for inside of VR to operate a casino. That's just so cool.

Starting point is 00:36:22 Also, you're getting paid in crypto money, right? It's like people talk about, well, where are these money is actually going to be used? Well, they're being used in this new crypto economy. That is the unit of exchange. It's die. It's not physical fiat dollars. Yeah, and the other thing that this reminds me of is the sovereign individual thesis where people around the world are going to compete in the same job markets. And so somebody in some third world country gets to compete with somebody from the United States. And that wage, maybe the wages are less interested for somebody who is in the first world rich countries, but more interesting for people in the third world countries. And so this could be a great equalizer for people in third world countries who are trying to access better wages because everyone is operating on the same playing field in VR and online. That's pretty cool.

Starting point is 00:37:13 Look, man, we are entering an entirely new economy, entirely new job market. And I'm glad you're with us because this is the cusp of things. We need to learn these sorts of things in order to stay relevant and to earn wages in the 21st century here. All right. Let's talk about this petition letter coming from the Maker Dow community. and they're petitioning one of their largest investors, which is a A16Z, Chris Dixon and team. We've had Chris on before. This is the maker community actually asking A16Z, they own a bunch of MKR tokens, asking them to get more involved in governance here.

Starting point is 00:37:51 Apparently they want their input. They want their votes on various maker doubt proposals. And A16Z is currently less active than the community would like them to be. You know, what's interesting here is this is sort of the same problem that stocks fall in under, right? So like, you know, whoever votes in major shareholder decisions. Like, I own various mutual funds. I never vote. I always use some sort of a proxy.

Starting point is 00:38:19 And I do think sometimes these Dow's struggle from almost a tragedy of the commons problem, whereas, like, you know, A16Z, if the governance decisions are going according to plan, they don't necessarily have to spend time on these issues and provide governance feedback if the rest of the community is already doing it for them. So I wonder if we have to kind of tweak around incentives to get better governance participation in the future for some of these DAOs like Maker. What do you think? I think the other half of this story is that Maker Dow is trying to dissolve the Dow.

Starting point is 00:38:54 They're trying to dissolve the foundations. And so therefore they need the next biggest MKR holder to step up, right? because as soon as the foundation dissolves, A16Z will be the next largest governor of Maker Dow holding 6% of all MKR tokens. And also, I believe when A16Z bought those MKR tokens, they said that they wouldn't use them for governance because they wanted the community to govern things. And they didn't want to, they didn't want to tinker with that, right? They wanted to be a bottom-up system. But, you know, the Maker-Dow, that was two years ago, two plus years ago. And so now the Maker-Dou protocol is in a state where like we need all all players to get involved right because the foundation

Starting point is 00:39:36 is no longer steering the ship and so this is more i think it's more of an invitation to say like hey like it's cool to play in governance now um there's a conversation here to be had about governance by vc's or governance by hedge funds but at the end of the day you know these systems are really governed by capital and so i feel like it's going to be a normal distribution between like retail traders who own MKR and A60Z who owns a MKR. It's going to be an interesting story to follow, absolutely. I agree. Absolutely. Okay, Beeple, so we've reported on this last few weekly updates. He made a massive amount in the NFT market, $69 million sale, and those funds were raised in ETH. He apparently, it's come out that he immediately converted 53 million of his NFT earnings.

Starting point is 00:40:26 It's almost all of them after, I think, the third parties kind of took a chunk from the sale. He converted that from ETH to USD. David, what does this mean to you? I mean, this is just the logical thing to do. Like, people, he's got taxes to pay. He received this money in this volatile cryptocurrency, which he wasn't really familiar with. And so it's like kind of the rational thing to sell this into USD. Like, the guy wasn't rich before.

Starting point is 00:40:54 Like, people, people wasn't rich. And now he has $53 million. And he has it in a volatile crypto asset that he's not familiar with. Of course he's going to sell it. Like, it'd be crazy not to. Now, at the end of the day, like, we can say, but like he's going to miss out on all the gains. Like, blah, blah, blah. Like, and I think you're kind of right.

Starting point is 00:41:13 Like, this is going to ultimately, I think, turn into a Bitcoin pizza story. This is going to be the Beeple Eith story. But at the end of the day, I also don't completely don't blame him. Like, he doesn't understand Eith is ultrasound. money. He doesn't understand Ethereum is the native settlement layer on the internet. He just got paid $53 million for making some digital art. Like, we don't have to hold him accountable to make sure that he just like holds Eath so like he can help us pump our bags. Like no, like let the guy cash out. Yeah, totally agree. He like full, he owes the community nothing. He has the

Starting point is 00:41:44 full ability and right to cash out. I do think at some point in the future you may be regretting this. But who knows? Maybe maybe not. You know, maybe he's just happy with what like he should be happy with $53 million. Yeah. What's that mean where he's crying with the cash, wiping cash with the tears away from his eye of the dollar bill? It's going to be okay for people. Yeah, it's going to be okay for him.

Starting point is 00:42:03 But I do think that, you know, this is why it's also important to get the narrative out, that ether is a store of value because people don't quite understand and they might have, be making some decisions that they later regret sort of Eith pizza type moments. The other thing he said here, which I understand the context, is that NFTs are absolutely a bubble. So he's feeling that.

Starting point is 00:42:27 He's feeling like, I just created a piece of digital art. It just sold for $69 million. I don't understand any of this. I'm just going to get out while this thing is bubbling. And it's like end of story because it could be over tomorrow. So I understand that perspective too. Yeah, daily reminder that one year ago, Ether was $100. So crazy.

Starting point is 00:42:48 It's probably time to sell if you're people. number of ETH validators. This is a tweet from Evan Van Ness. So one thing that people don't understand is the sheer amount of validators in ETH2. Right now versus other proof of stake chains. So this is a table of EF2 validators. There's 110,000 unique validators versus Tezos. There's about 400 versus Cosmos, 125 versus other proof of stake networks like Nano,

Starting point is 00:43:20 117. Ethereum is a different flavor of proof of steak. I think people miss that. You know, proof of stake is not all alike. There is various levels of democratization of your ability to actually run a node. And Ethereum is on one end of the spectrum, which is the most decentralized proof of stake consensus mechanism that exists right now. Some of these other proof of stake networks are much less centralized or much less decentralized. Any takes here, David? Yeah, it's important to note that like validators on Ethereum are inherently different because like you could be running multiple validators on one machine, right? Like one validator equals 32Eath. Two validators equals 64Eth. If you have 64Eth, you can stake it on one machine. Tezos and the 397 validators there,

Starting point is 00:44:14 that might actually be 397 unique machines. I am I think that's, true. Still, only less than 400 is incredibly like not decentralized. That is not a good number. And so like there is some parsing apart to fully understand the impact of this number. But at the end of the day, the economics, the game theory of this is converges upon decentralization no matter what. Because, you know, maybe you have 3,200 ETH and you have 100 validators. Well, you have the hundred times more incentive to protect Ethereum, right? And so the, the game theory holds up. Absolutely.

Starting point is 00:44:52 All of these proof of stake networks have different tradeoffs with respect to decentralization, other things. Elon Musk. Hello, Elon. Came out this morning. Don't defy defy. So now Elon is talking defy. So it was like Dogecoin.

Starting point is 00:45:08 It was, you know, NFTs. It was Bitcoin. And now it's defy. What does this mean? Is he just trolling all of us, David? No, no, he's, this is him. I mean, no, I don't know. But here's my opinion.

Starting point is 00:45:20 He's going down the D5 rabbit hole and he's figuring it out. Maybe he read ETHIS his ultrasound money. I'm pretty sure he came across bankless earlier in his lifetime. And so who knows? Who knows? Yeah, we'll have to see. Definitely, Elon, you are invited on the bankless podcast. That's a standing invitation.

Starting point is 00:45:38 So you just let us know when you're ready. Let's talk NFTs, David. Starkware is raising some funds. This actually isn't specific to NFTs, but it's a technop. that Immutable X is using to create sort of an NFT trading chain. We've talked about that a little bit before. But Starware has just raised a whole bunch of money as well. It's part of the story.

Starting point is 00:46:02 And they've got technology that allows you to kind of scale on Ethereum's layer two. It seems like so many layer twos are using Starkware tech. What should we talk about here? Yeah, I think what this means is that Immutable X is going to launch sometime maybe next week, question mark and immutable x is that this it's got crazy tailwinds behind it it's both NFTs plus layer two uh and these are this is the team behind the gaza unchanged these guys have really been optimizing for scale and gas optimization since day one right uh and so i think this is really people are going to always ask like you know how is ethereum going to do anything for the world if

Starting point is 00:46:41 it costs like 200 dollars to mint an nfts well the answer is darkware and immutable x i'm looking forward to seeing that Immutable X story play out over the long term because I think they're going to be really important NFT scaling infrastructure. And for anyone that's read my article, digital cultural revolution, I have high aspirations for what NFTs can do for the future world of creators and art and general digital culture. Short term, there might be a bit of a bubble in the NFT market. We're not sure. But long term, all of this stuff is hugely, hugely bullish, definitely. Twitter CEO, Jack Dorsey, sells his first NFT tweet. for $3 million, sold it on Ethereum-based platform called Cent.

Starting point is 00:47:21 So Jack Dorsey's getting in the scene as well. This is kind of a defy NFT combo, and he's active. Jack Dorsey has been a pretty strong Bitcoiner. I don't know if I'd call him a maximalist, but I would. You would. You would. He hasn't talked much about any other network. So it talks a lot about the value of protocols, decentralized protocols,

Starting point is 00:47:43 decentralized protocols, but only talks about crypto and the content. of Bitcoin. Do you think that's going to change? Oh, God. I don't think so, unfortunately. I think Jack Dorsey is pretty well entrenched. For some reason, Bitcoin maximalism kind of just like takes hold in people's brains. And when it stays there, it stays there. Yeah. Well, we will have to see. He's doing something with NFTs. But he's donated all of this to charity. Maybe that's a part of the rabbit hole for him or maybe just stays a Bitcoin or forever. I want to know why he did this, though, because that is really the bigger question. It's like, why is Jack Dorsey NFT in tweets?

Starting point is 00:48:20 And we know that Jack Dorsey is interested in turning Twitter into more of a client system where Twitter itself would just run one client, but it would enable more open-source technology to Twitter and allowing different clients to make tweets. And so he wants to decentralize the actual Twitter protocol. So that's interesting. And so that comes from his very deep rooted knowledge in distributed systems. and crypto systems.

Starting point is 00:48:45 And so why is he minting NFT tweets? Because that's also highly relevant. I want to see what the long-term... He's doing it for a reason. This is a research and development type move from Jack Dorsey here. Yeah, there's definitely a lot in the broader crypto market for what Jack's trying to do, which is kind of create protocols out of social media platforms. We'll see where he goes with that.

Starting point is 00:49:08 Nifty's backed by major investors buys into meme V2 date announced. This story is about the meme founders. Maybe you could explain this project a little bit. They've just teamed up with some pretty large investors to launch something new, something called Nifty's. Mark Cuban is involved in this. Joe Lubin, other VCs. The whole meme story, we had Jordan from Mimon a while back to kind of tell us about

Starting point is 00:49:35 the inception of this thing. But it's a crazy bizarre story how this organization formed. And now it's actually receiving like traditional. mainstream investment to extend what it's doing, which is like, what, building out meme-based NFTs and selling them, like an NFT production house? Yeah, the crazy, this is, my through line for this story is like how much demand there is for good projects. Because if people who are familiar with meme, the meme story, meme started off as a joke where

Starting point is 00:50:06 people minted this token called meme and then they air dropped it to people. And then all of a sudden, the people that got air dropped to. just decided to start doing work for it. And they accidentally created this meme protocol, which is now receiving funding and legitimate seed investment to carry the vision out. And so I'm fuzzy on the details, but it's something along the lines of like,

Starting point is 00:50:29 you can mint your NFT and deposit it into meme, and meme will issue you, like, rewards. It's kind of like some bank account, like savings interest system for artists. Again, I'm fuzzy on the details. But like the fact that this thing started off as literally a meme and is now receiving VC funding is pretty crazy. And that just indicates to people how much demand there is for good investments in this space. Yeah, absolutely.

Starting point is 00:50:56 Time Magazine is also getting in on the NFT. This is our last NFT story this week. They've got three special edition covers. One says, is God dead. The other is, is truth dead? And the third, which is probably my favorite, is Fiat dead? So Time Magazine, Time the company of course, like just this is this is traditional media, right? Now they're joining the NFT, the NFT, I guess, hype train engine and they're selling these magazine covers. The third one is Fiat Dead is kind of interesting to me, David, because it's like it's clearly targeted to the crypto market for crypto culture essentially. In a way, we are incenting mainstream media to give crypto what it wants, which is more crypto culture.

Starting point is 00:51:43 And I find that kind of interesting, too. They're definitely trying to sell these to crypto natives. My head is at the is God dead one, actually. And that takes a little bit longer to explain. But God is dead is that Najitsai quote, where he ran through the streets and said, God is dead, God is dead. And really, that was a parable of how Nuzitsi,

Starting point is 00:52:07 I'm terrible pronouncing his name. But he was saying, like, are old institutions, no one pays attention to anymore. And so what is going to organize us in the future? That is what he meant by God is dead. And to me, that's like a heralding of like, are we about to migrate from one set of archaic institutions into what? And that is the question, is God dead?

Starting point is 00:52:27 Like, well, if our previous ways of organizing are defunct, what do we move into? That's my takeaway. Absolutely. Time is trying to tap into something that appeals to crypto-natives for sure with us. It's very cool to see them enter. Bitcoin stuff, David, Fidelity, the massive bank, the massive asset manager in traditional finance, they have now filed for a Bitcoin ETF.

Starting point is 00:52:52 David, if Fidelity can't get this done, right, who can get it done? I think traditional big banks get what they want from the federal government. So I think what this means is that an ETF is all but inevitable. There's no way regulators are going to hold out when they, their lobbyist bankers even want Bitcoin ETF. So a big, big move, I think, for Bitcoin, big move for crypto in general. Yeah, that's exactly right. If Fidelity can't do it, no one can.

Starting point is 00:53:24 And if Fidelity can't do it, again, I'll re-echo what I said in the last week, weekly roll up. If Fidelity can't do it, then this is definitely a political move to protect the interests of the U.S. dollar. And they're putting those interests ahead of retail investors who are getting F'd up by trust. as we talked about with the GVTC premium debacle earlier. And so the listing of a Bitcoin ETF does not help the U.S. dollar. It hurts it.

Starting point is 00:53:50 But it's what the people want. And so we're going to see this play out. Can Fidelity break through to the SEC and get the Bitcoin ETF? Hopefully they can. Well, we're on the subject, David. Maybe we should touch on regulation as kind of a category. This is the People's Bank of China has now officially said about their central bank digital currency. Of course, we've told you that they're moving full steam ahead on deploying a

Starting point is 00:54:13 digital currency, a central bank administered digital currency in China. The quote is that a completely anonymous central bank digital currency is not an option. This is kind of one of those headlines, which is like, yeah, we knew that. Surprise, surprise. Central banks, government coins do not want, when they go digital, will not preserve anonymity, will not preserve privacy. They want to track all the transactions for many reasons. I think, David, that this is going to be true, not just for China, but for any country, Western countries, Europe, anybody that deploys a central bank digital currency, there's going to be a, there's going to be no incentive for these states to actually implement privacy measures as part of the deployment. Like civil rights groups will

Starting point is 00:55:07 fight have to fight awfully hard to make that happen. And it feels like such an uphill battle. So the digitization of central bank digital currency means the death of privacy, at least in my mind. That's my prediction. Yeah, that's exactly right. I have no further takes. All right. Well, let's get to this then. Thadif is drawing up some cryptocurrency guidance. I think, David, we should, this is not really good news. They may be targeting defy and NFTs, but people need to understand what FATIF is because it's not central to anyone, nation states, sort of an association of nation states. Can you talk about what FATF is and the implications of this guidance that they've just put out?

Starting point is 00:55:50 Yeah, it's kind of this just this global advisory group that all of these global powers, like United States, countries in the EU, even more, that they just listen to and generally subscribe to. And people are talking about, well, since they're just an advisory group, does this even matter? but apparently like the social contract between all these people that subscribe to the FIDF as an advisory group, according to Coin Center, if a member of the nation state was to refuse to implement FADF guidance, then there could be severe diplomatic or financial consequences could result. So there are three specific things that this slew of guidance brings to these countries who apparently are supposed to listen to the FADF.

Starting point is 00:56:31 One is surveillance obligations for non-custodial entities, And so I'm just going to read here because this is outside of my domain of expertise. The draft advocates for an expanded definition of VASP's virtual asset service providers, the persons or businesses obligated to register and conduct AML surveillance. These people could now include non-custodial participants in cryptocurrency networks, such as multi-sig minority keyholders and various participants in smart contracts and layer two mechanisms. And so I'm actually a Gitcoin multi-sig signer. And so I would have to actually present KYC AMLs to, I don't know who, maybe Gitcoin, I guess.

Starting point is 00:57:12 I don't, I don't know. But because I'm a multi-sig minority keyholder for something that spends money and manages funds, that's weird. And then there's also scrutiny of peer-to-peer transactions and privacy-enhancing technologies. The draft subtly advocates against peer-to-peer transactions and transactions involving privacy-enhancing technologies. think Zcash Monaro, but also ZK money that got released on Ethereum recently. This draft argues that regulated virtual asset service providers should limit support for transactions with non-regulated parties, so-called unhosted wallets, aka uncasodial wallets, aka your personal Ethereum address, and insist that developers of new protocols

Starting point is 00:57:54 should limit the availability of private and peer-to-peer transactions by design. Ooh, don't like that. And then last one is customer counterparty identification. The draft recommends that virtual asset service providers should subject all transactions to the travel rule. This would obligate exchanges to collect specific information about who their customers are paying or being paid by. This is similar to the proposal counterparty identification requirements in FinCEN's ongoing midnight rulemaking, the one made by Steve Mnuchin, which said that if you ever want to withdraw money from a crypto wallet, you have to attest to your ownership of the money that you are sending it to, and then vice

Starting point is 00:58:34 versa, if you're sending it from your crypto wallet to Coinbase, you have to attest that those are your wallet as well. So just overall, just more and more surveillance going on or suggested for surveillance from FAAF. So yeah, we don't like this. This is bad. Yeah, I guess it's important to realize that this is just kind of guidance or some sort of a proposal that they put forward to these countries. David, this definitely feels like final boss type stuff, right? And it's throwing down the gauntlet and saying, we want all transactions to be identified. We want to know AML KYC. We want to know the sending and receiving parties on both sides of those transactions. And we don't like peer-to-peer transactions. And we don't like, we especially don't like peer-to-peer private transactions. So this is

Starting point is 00:59:23 final boss stuff. This is stuff that, you know, is going to be hard to fight. and I'm not sure what the implications of all this are. Some folks are saying, look, it's just a proposal. We've seen stuff like this over the years for crypto all along. And others are saying that this might have teeth in the future. So we'll have to watch this one and see how it plays out. I guess in good regulatory news, there are some people like Hester Pierce, Crypto Mom, as people in the crypto industry know her.

Starting point is 00:59:55 Hopefully she's coming on the bankless podcast at some point, too. we've been in touch, who take a much more rational view on this growing industry. So here's a quote from Hester Pearson, a recent speech, I believe. Perhaps government officials should pause to consider the flip side of crypto. It's value in protecting people from illicit activity. She has always been very pro-crypto, seeing this industry blossom, seeing all of the good things that come for countries and citizens that adopt cryptocurrency. and advocates for things like we should have an SEC approved ETF for mainstream.

Starting point is 01:00:34 So there are some good people in regulatory bodies and government that actually understand this space. And wherever possible, David, I think we need to elevate the conversation to them and elevate their roles in government bodies. Yeah. And at the end of the day, this is a nuanced subject. But, you know, crypto is a populist movement. It's bottom up. It's money and systems by the people for the people.

Starting point is 01:00:57 people. And there's a certain amount of resonance that we see certain people in governmental bodies have resonance with that populist movement. We saw people like AOC immediately align with what I call a populist uprising with a whole GME debacle, the people versus the hedge funds. And so many members in government just immediately aligned with the people, not the hedge funds. And so there's a certain amount of pro-populism, I would say, in the United States Congress. And I think certain things about crypto, if we as an industry, if we represent them in the right way, we can get them convince them that this is actually like populist technology for the populist movement, that they are also helping support. And so we need to figure out how to share that populist message

Starting point is 01:01:43 in this technology because, you know, what the, what the FADF is really is doing is helping entrenched players. And people like AOC and Bernie Sanders, the very populist left movement, don't like entrenched players. That's exactly who they're going against. And so there's an angle here that we can definitely work with. Yeah. And the same is true, I think, for the populist, right? And those groups as well. But this is absolutely a battle for hearts and minds.

Starting point is 01:02:08 That is certainly important. We need to propagate these narratives to win that battle. David, have you kept up with this? This is BitClout. Maybe we'll end on this. What is BitClout? This story says it's an insider's only pre-launch. but it's really a social media revamp.

Starting point is 01:02:28 So it's almost like a Twitter on some form of a maybe a Bitcoin forked blockchain. Have you kept up with this story? Yeah, I have not kept up with it. But what I have gathered is that it is supposed to be a censorship-resistant platform for general defy stuff. And this defy stuff, this version, flavor of defy, is leveraging the clout of celebrities to help people speculate and monetize. And so where this censorship resistance comes into play is like celebrities are getting their image monetized by someone else. And if this thing is truly censorship resistant, then that'll just happen regardless because it's centricerisip resistant. And so it's going to be tested, I guess, on that spectrum.

Starting point is 01:03:12 But I don't really know much more about it other than that. Yeah. So I looked into it a little bit and I actually tried to use it and started using it. And so one of the interesting things they did is they took about 15. accounts from Twitter and they just auto ported them over to BitCloud, right? It's almost like, you know how sushi swap sort of did a vampire attack on Uniswap? It's almost like a vampire attack on Twitter and trying to bring those profiles over. But the other thing that they're doing is like crypto economically incenting all of these accounts. So every individual who has an account

Starting point is 01:03:49 on BitClout gets a certain amount of these BitClout tokens that can be claimed. And then people can buy or sell them. Trade the various assets and trade the various accounts. So like, I don't know if you know this, David, but like you're in here too. Like if I look up trustless state, how much am I worth? Let's find out. Is that how it works? I think it will show you at least it will show you how much, let's see, trustless.

Starting point is 01:04:19 three s's. There you are. This is you. I'm pulling up your BitClout account. Okay. So this is your coin price. $749, okay? 750 smackers.

Starting point is 01:04:32 You've got two followers. People will trade that up or down. And in order to claim this, you have to actually create a private key for yourself and then tweet out something from your Twitter account to actually claim it. But I don't know if you know this, dude, but you've got some creator coins already. So you've got 25,

Starting point is 01:04:49 worth of creator coins. I have $25,000 I can go get? Yeah, I'm pretty sure. You can't actually go get it though. So here's the thing. You can go claim your account, but apparently there's only a way to buy BitClout tokens with Bitcoin. So you can buy them, but they haven't yet turned on withdrawals.

Starting point is 01:05:09 So I don't know if actually you can like, by the time you go to withdraw this, whether it'll be worth that much. But that's how they're incenting people to start using these like look at Tyler Winklevoss here. Let's see how much money. Let's see how much Bitcoin is up value he has. So almost 900K. It's market value that Tyler's been awarded with the tokens he holds. So anyway, maybe an interesting experiment. Yeah. Maybe. Yeah. The other thing is like a whole bunch of insiders got in first, right? So and these are insider VC firms that,

Starting point is 01:05:44 you know, pre-invested in this. So that's like all of them. It's almost like it feels a little bit like the opposite in some ways of some of the fair distribution, sort of community distribution trends that are going on this summer. So some people don't love that about big cloud. Yeah. If the actual account holders were made all the money, not the VC funds, that I bet this would have made a much bigger splash. It's possible. But yeah, we'll have to see where this evolves.

Starting point is 01:06:12 David, are you ready to get to takes? Yeah, let's do it. Okay. What's the first take here? NFTs explained in two images. What are we looking at here? Yeah, so we are looking at, I don't even know if this is an image. We just see a white box with JPEG in it, and then we see another white box with NFT in it,

Starting point is 01:06:30 except the NFT box has a little blue Twitter checkmark on it, of authenticating the legitimacy of the NFT. And this is what we've been saying about NFTs all along. It's not about the image. It's about the legitimacy. It's about the authenticity. And so if you want to understand why NFTs are going for millions of millions of dollars, when like you can just take a screenshot and get it.

Starting point is 01:06:49 get the same thing, it's because one is legitimate and one's not. And people fight over these Twitter blue checkmarks all the time. And Vitalik actually recently just put out a blog post on his blog talking about how one of the most underappreciative forces in the world is legitimacy. And so I see this as an extension of that. NFTs are valued because of their legitimacy. Yeah, Vitalik's blog post was just like brilliant this week. And right, that's the same thing that gives cryptocurrencies, it's value, right? Why is Ether more valuable than Ethereum Classic? Why is Bitcoin more valuable than like Bitcoin Diamond or Bitcoin Satoshi's vision? It's because legitimacy. The people make it so. The people make it so. And the social coordination mechanism

Starting point is 01:07:35 underlines all of these crypto economic systems. And underlines like all of our traditional legacy systems as well. It's like this hidden force that operates everywhere. And it's very clear to see, I think in NFTs, the aspect of legitimacy coming out and being assigned some level of value. Totally. Ryan, this one's you. Tell us about efficiency. Yeah. So, you know, what's really striking to me with Uniswap V3 launches how they did it with so few people, right?

Starting point is 01:08:05 So Wells Fargo has about 200,000 employees, right? One of the largest banks in the world, 200,000 employees. Coinbase is an order of magnitude smaller in terms of its number of employees. employees. And so in order of magnitude more efficient, they have 200, 2,000 employees. And again, like Coinbase with a, you know, $100 billion market cap is getting, is closing in on Wells Fargo's market cap as well. But they're doing it with much fewer employees, right? And then we've got Uniswap, which is even an order of magnitude more efficient. They're doing everything that they're doing. Or two orders of magnitude. Yeah, that's right, David, like two orders of magnitude more efficient.

Starting point is 01:08:45 And because of all this, it just really feels like traditional banks don't stand a chance, right? You can do everything you need to do with much fewer employees when you use crypto as a economic settlement. And then when you get into defy, we're even talking about more orders of magnitude more efficient. Like the amount that Uniswap has done, they've grown Unitokens to a $15 billion valuation with just 20 employees. And that's the benefit of deploying something on Ethereum. And I think like what's the net benefit for the world's in society? Right now, the finance industry in the U.S. consume 6% of GDP. A lot of this is like rent seeking, low value finance, just like a lot of, you know,

Starting point is 01:09:28 there's some efficiency there. Paper pushing. There's a lot of inefficiency there. And what if we could allocate all of that GDP to something better? That is the promise of defy. The arts, you know, social good, public good. Like, who knows what we could do with that. But this technology is really transformative.

Starting point is 01:09:46 You can do everything that like a bank can do with 20 employees rather than 200,000. That's the bottom line. Yeah, the Uniswop has a little trick up its sleeve. And it's really 20 employees plus Ethereum. And Ethereum is where it gets so much tailwinds, right? Ethereum is providing security to Uniswap intrinsically. And that's why Ethereum as a piece of technology is so powerful. Free security to anyone that builds on it.

Starting point is 01:10:11 And so that's where so much. that efficiency comes from. Yeah, free security, basically a banking layer to plug right into without the overhead of an entire nation state. David, this D5 pulse, I know, caught your eye. This was a poll done by D5Pulse, a Twitter poll. And the question was asked, which quality of the scalability trilemma do you find the most important? Decentralization, security, or scalability. Decentralization, one, with about 50 percent. Second came security. third came scalability. What is this, you know, Twitter poll survey telling you?

Starting point is 01:10:50 Yeah, what's the takeaway? So happy to see that decentralization is coming in first at 50%, but it needs to be way higher than 50%. Because, you know, we have security in the legacy system. Like we have encryption and Shaw 256 like encryption for that protects your bank account. We've got that. We have scalability. We already have that as well.

Starting point is 01:11:13 decentralization that is the unique thing that crypto economic networks bring to the table. So the fact that like people are saying, well, we know we need priority and we need to prioritize more security and more scalability is missing the whole entire point. And so like people that who are in crypto who don't value decentralization are missing the point. Like decentralization comes first and decentralization is why this is a movement by the people for the people. And so again, I'm glad that decentralization came in first. But also it basically needs to be 100%, right? Because this whole entire industry is based on top of decentralization.

Starting point is 01:11:49 If we don't have decentralization, we don't have anything. How do you change their mind then? Probably answering to more scalability because I think what people are talking about is just like, I don't want to pay gas fees. And so the way that you don't pay gas fees is you use a centralized system. And I think the way that we change people's minds, is by solving security and scalability so that people can be reminded about why decentralization is so important.

Starting point is 01:12:16 It's difficult to know that how important decentralization is until something like really bad happens. I feel like the GME moment where everyone realized that, you know, all of traditional finance is completely rigged. Yeah, gated backdoor deals. That's when they realize the value of decentralization. But absent that, like you can kind of go on your merry way and not realize that you're on a centralized system that has these people who can pull the strings.

Starting point is 01:12:45 Granted, though, if Ethereum and crypto at large is doing things right, people should forget about decentralization because it's securing the system, right? Like, we have decentralization, therefore we can kind of forget about it. It should just be in the background. You're totally right that decentralization only becomes relevant when somebody rugpole somebody or attack something or et cetera. So maybe perhaps that people are devaluing decentralization is actually an indication that the decentralization is actually working. David, I don't know if you saw this report by Ryan Watkins, but it was talking about creating an independent monetary system on top of Ethereum.

Starting point is 01:13:24 And the difference between stable coins that are really pegged to the dollar versus this new crop of non-pegged stable coins that we've talked about so often on bank lists. And here's a graphic I liked in particular. Let me see if I can find it. It paints Ethereum and Ether as sort of the base reserve asset of the system in the same way that gold was a reserve asset of the legacy traditional financial system before the 1930s. And then these new assets like Rye, which we might talk about OHM and float being sort of based on top of this reserve asset. and then DeFi protocols being kind of the banking layer. I was really struck by this comparison and this analysis because on the Ethereum side, this is really a self-sovereign, completely parallel monetary system from the central banks

Starting point is 01:14:21 that has no external dependencies. And that's really the vision that we're building for and building towards on top of Ethereum. It's really cool to see a Masari analyst put it in this way and really, understand that bankless is the end destination here. Yeah, I made a very similar graphic back in my ether triple point asset article, and I'm pretty sure that's where Ryan got the inspiration for this one. But when I made it, I made the Ethereum triangle inverse because Ethereum is being built, we are building on top of Ethereum. And Ethereum, Ether, the asset, gets injected upwards into DFI, right? It gets sucked up into the DFI economy to make these new products. With the

Starting point is 01:15:01 legacy system, is very much a top. top-down system where gold is captured by the central banks and then forcibly makes the people below it use the dollar. And so I do think that illustration of a bottom-up versus top-down system is important. Let's talk about something else because this is one of those self-sovereign reserve assets that are being built on top of Ethereum, an asset we've talked about called Rye. You said, get your brain sync to this new paradigm. USDC die are dollars or dollars. coins, but Rye, that is a true stable coin. What's the difference between a dollar coin and a stable coin, David? Yeah, we have crypto dollars in USDA and die and USD tether, and those are

Starting point is 01:15:45 crypto dollars. And then there are stable coins. I'm trying to get people to re-architect in their brain what a stable coin is, because previously stable coins are things that are pegged to the dollar, but that's because we didn't really have any alternatives. I think the more accurate definition of what a stable coin is, is something that is stable that isn't a dollar. If it was a dollar, we would just use the word dollar, but stable is its own thing. And when we call dollar stable coins that is using this false anchor of the stability of the dollar, and people should be reminded that the dollar is actually not stable. We just don't have any other anchor better than it to anchor things too. And something that could come out of crypto economics, could come out of Ethereum, is new

Starting point is 01:16:28 paradigms of stability. And so I think Rye, which is, again, a new paradigm instability is the new stable coin. And so, Ryan, if you go to my next tweet, I think what I say when I'm talking about this to Stefan from the, from the Reflexer project, CEO of Reflexer, the team that put out Rye, I've said, I've become a huge fan of intentionally using the less optimal word stablecoin, even though it's still accurate on a technical level, as the mechanism is a claim to. to claim semantic territory. And so I say, Rye, right, Rye is speaking this next quote. No, fuck you. You're one dollar. I'm a stable coin. Uh, because again, the dollar is not necessarily stable. It's all stability is, it's a referential. You need two points. It's relative. You need two

Starting point is 01:17:15 points to claim stability. And what Rye is, is it's a new paradigm in stability. It's a new paradigm in, uh, what a stable coin can be. So, die, U.S.EC, those are crypto dollars. Rye is a stable coin, and that's my take. Yeah, that's a very cool take. I think that's going to become increasingly important to the Ethereum economy and to the crypto economy to have our own source of self-sovereign, non-central bank dependent monetary assets out there. That's definitely a cool difference. David, we are going to get to what we are excited about and, of course, the meme of the week. But before we do, we want to tell you about the sponsors that made this episode possible. AVE is a borrowing and lending protocol on Ethereum and just recently released AVE version 2,

Starting point is 01:18:03 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 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.

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Starting point is 01:19:12 and it has been my main exchange of choice to make my crypto buys and sells. Gemini is available in all 50 states in over 50 countries worldwide, and on Gemini there are markets for over 30, 30 various crypto assets, including many of the hot defy-tokens like Wi-Fi, Ave, Uni, and also they are one of the few exchanges that has liquid dye markets. Having both the option of logging into the Gemini.com website or instead opening the Gemini mobile app has allowed me to be able to access any and all exchange and on or off-ramp services that I've needed to on a moment's notice. With instant deposits and fast withdrawals,

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Starting point is 01:20:31 First off, as we all know, money printer go burr is the meme of the year, the meme of COVID, and we're about to have ether burner go burn noises for ether. And that's coming in July. EIP 1559. EIP 1559, the one we know and love. But also, what I'm also kind of worried about for the industry at large is that these are coming, massive coming headwinds for Bitcoin because of the energy conversation. And this is something I've really been thinking about lately.

Starting point is 01:21:00 I've actually kind of changed my mind on the whole Bitcoin energy debate because while Bitcoin itself is useful and I'm glad that it exists, that doesn't mean that the energy consumption of Bitcoin is actually useful energy consumption because Bitcoin can be a useful product, but literally the way that it works is it becomes a useful product by wasting energy. And so there's an important nuance there because people think that like whether you're what side of the energy debate that you land on is determined on whether you or not you think Bitcoin is valuable or not. But I think there's a more nuanced take where you can say that Bitcoin is valuable and

Starting point is 01:21:39 Bitcoin is made by a race to waste energy, right? Proof of work is also proof of waste. And so Bitcoin can be valuable, but it's secured by wasting energy. And like maybe it's not a waste. and when we encompass everything because Bitcoin is useful, but it's still wasting energy. The energy is still unproductive. And so I don't think Bitcoin, the climate change narrative and Bitcoin's is wasteful narrative, I think will actually be the biggest threat Bitcoin has ever faced.

Starting point is 01:22:11 And as a result, that's going to put massive tailwinds behind Ethereum in its proof of stake form. I don't think people are ready to assume that like Ethereum is going to be this green, efficient energy savings system that the Ethereum community knows it to be because it's not there yet. But once proof of stake is here, there's going to be a massive juxtaposition behind Bitcoin's intentionally wasteful use of energy and Ethereum's absolutely zero use of energy. And that is something I'm perhaps, I guess I'm excited about, but I'm really just like, that's going to be an interesting story to follow. Yeah, yeah, absolutely. I think so. Today I tweeted something out, you know, we had our ethos ultrasound money episode, which is, you know,

Starting point is 01:22:55 it's just fantastic. I thought. And there were a lot of arguments about, about Ethereum there, but there were a lot of, I guess, criticisms about Bitcoin's engine, right? Just, Justin Drake, you know, at least compared the Bitcoin engine to the Ethereum engine and said that the Bitcoin engine, economic engine, was much less efficient. And I tweeted out and I asked if any Bitcoiners would like to kind of respond to these criticisms, rebuttal. them. Any like Bitcoiners who are like rational and can, you know, make an argument. It seems that way. But one name that always comes to mind is Nick Carter, right? And someone actually tagged Nick Carter on that tweet to come respond to some of these, you know, criticisms. And he said, I can't.

Starting point is 01:23:37 I'm too busy fighting people over the energy debate. Eco-socialists, he called them, about the energy debate. And I just thought to myself, man, I'm really glad I don't have to fight that debate on the like when when we're talking about Ethereum in like 18 months once the the network merges and once Ethereum transitions to proof of stake, there is no need to go into the into media and fight the eco-socialists as as he called them on any of this. You could just say, yeah, and the answer to the energy problem is a more efficient engine and it's called proof of stake and we're not burning energy anymore. So I think you're right. This is the early phases of Bitcoiners having to fight that narrative. And what they're going to have to do is justify

Starting point is 01:24:24 Bitcoin's value proposition, not just for consuming all of this energy, but for consuming this energy and in the while there's other systems out there like Ethereum proof of stake. And that's going to be a hard case, I think, to make. And it's not just a one month, you know, media picks up this story. It's going to be like the next 10 years of fights. in this whole climate debate. And we've already seen Bitcoiners really struggle to explain Bitcoin's value proposition outside of proof of work because people don't like to admit that Bitcoin is valuable after it's done like a 10,000 percent three years for the three years after you said it was

Starting point is 01:25:05 rat poison squared, right? People have the cognitive dissonance of not wanting to accept Bitcoin and then like and then they just get to align themselves with while it's wasteful, right? Right. And like also imagine not having, Imagine trying to fight like the climate change fight. The whole world is against climate change, right? And then all of a sudden, Bitcoiners are having to align themselves for better or for worse

Starting point is 01:25:30 with like the climate change deniers. Like those are the Bitcoin allies, right? Which is kind of weird. That's not the most ideal group of people that you want to align yourself with. And it's just not, they're not fighting themselves in good company. Again, regardless of whether Bitcoin is a useful, useful end result of all of that energy, that's where Bitcoin has found itself to be, which is not a favorable position. Yeah, agreed, definitely. Ryan, what are you excited about? You know, I'm going to say

Starting point is 01:26:01 Uniswap V3. And the reason is we get to explore a whole new money Lego. I feel like the version three design is just a, it's a significant departure from Uniswap V1 and V2. It's like a whole new design space that that's opened up. And the cool thing about this is we've said so often, David, anything that can be tried and made on defy will be, right? This is a whole other design, but we don't lose the Uniswap V2 design. That's still out there that can still live, that can still accrue liquidity. If the market selects for V3 and V3 wins over V2, then that just means V3 was superior, but we don't lose anything in the process. And even, you know, forks, Uniswap, formerly Uniswap forks like Sushi Swap, get to execute on that original V2 design.

Starting point is 01:26:50 So we've just created this whole new potentially revolutionary automated market maker design called Uniswap V3, and we don't lose anything that made the previous iterations of this work. And then it's all going to be deployed on optimism come springtime, right? So this is Ethereum layer two in option in action, a whole new automated market. make your design. It's just super bullish. And then of course, David, we finally have Hayden Adams coming to the podcast to talk about all of this. Yeah, finally letting him on. Seriously, he's a hard guy to track down. We got Mark Cuban on bankless before we got Hayden Adams. So this is a much anticipated episode. So I'm pretty excited about all of that. Yeah, for those that aren't

Starting point is 01:27:39 understanding the joke about Hayden Adams, is we've been trying to get Hayden Adams on the podcast since the genesis of Bankless. Since we started. Yeah. We did this like intro series of like all the basic defy apps. And we got like Mariano from MakerDA to talk about MakerDAO fantastic representative. We got Robert Leshner from Compound to talk about Compound. We got Stani from Ave.

Starting point is 01:27:59 We got Kane from Synthetics. And we had to talk to not not, Hayden. We talked to Caleb who again, fantastic representative from Uniswap. But Uniswap was the only application that we couldn't get the actual founder for. So a whole year later, we're finally getting Hayden on the podcast. It's going to be a good one. We asked him to specifically set aside two whole hours of recording time to make that podcast happen. Yeah, absolutely.

Starting point is 01:28:24 So that's much anticipated a year in the making podcast. All right, David, let's get to meme of the week. The whole point about the weekly roll-ups, the whole point, the meme of the week. This is why the roll-ups exist. Here it is. It's a, you know, look, it's Justin Drake Week, so we got a Drake meme. What's going on in this meme? Yeah, this is the traditional Drake meme, the one where, like, the first panel is Drake saying no, and the second panel is Drake saying no to learning finance at school. And then it's Drake saying no to learning about finance through crypto. And I can personally...

Starting point is 01:28:57 He's saying yes. Oh, yeah, saying yes to learning about finance through crypto. And I can personally 100% relate to this because I don't know about what you studied in college, Ryan, but I studied psychology and health sciences. And so all of my financial and like learning has happened through crypto. And I kind of consider myself to be pretty well educated with how finance works. I can keep up with all my like my finance bros that went to actual finance school. And so, you know, learning about finance through, quote,

Starting point is 01:29:27 unquote, the dark forest where you have to get to the other end of crypto to really understand crypto. And once you do, you know about finance. Yeah, it's funny because I actually took finance as part of my undergraduate and I feel like I actually didn't truly learn finance until I started learning crypto. And it's because what they teach you in business school, like, you know, traditional education is like corporate finance, which is this small sliver subset of finance. Right. It's like finance for the old world. They don't teach. you the history of money. They don't teach you like in-depth economics. They don't teach you about the social coordination systems behind all of these monetary assets. They don't really teach you

Starting point is 01:30:08 anything from a personal finance perspective in terms of, yeah, game theory, how to grow your net worth like individually, you know, long-term games, all of these things. All of that came through studying crypto. So man, if you want to actually learn finance, like not just like corporate finance, lowercase finance, but finance with a capital F, crypto is the crash course, man. I think even writing for bank lists and doing these podcasts, David, it's been a massive education experience for me, certainly. And, you know, I haven't learned anything as fast as in crypto. And the cool thing about it, too, is like, every decision costs you, you know, like, or benefits you. So you get to, you get instant feedback as well.

Starting point is 01:30:57 Did that work or did you fit that? Yeah, exactly. So look, if you're trying to learn real finance, listening to bank lists, learning crypto is the way to do it. I think there's some truth in this Drake mean. Absolutely. Absolutely. This is a good one. All right, man.

Starting point is 01:31:14 I think that's all we have. Of course, risk and disclaimers. Defy is risky. Eith is risky. So is crypto. You could lose what you put in. But we are headed west. This is the frontier.

Starting point is 01:31:25 It's not for everyone. but we're glad you're with us for another bankless roll-up. Bankless Nation, it is the last week of March. What time it is? Kill it, kill it. Restart. What time it is? Will Yoda speak for you on a Friday?

Starting point is 01:31:48 Friday morning. We should do that for the April Fool's weekly roll-up. Oh, that's going to be fun. That'd be terrible. I would rather shoot myself. How would we do it in an accent? Do you have any like, you have a British accent or something? That's what makes it good.

Starting point is 01:32:06 All right. If neither of us can do accents. All right. I'll just copy Anthony's Daily Grey intro. Have you heard of Anthony's Daily Grey intro? It's so funny. So we'll try to speak like an Australian and he'll try to speak like an American. Sure.

Starting point is 01:32:19 Yeah. Uh-huh. All right. Ready? Yep.

Bankless - ROLLUP: 4th Week of March (Uniswap V3, Fidelity ETF, BTC Energy Waste, Jack Dorsey NFT)

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