Bankless - ROLLUP: Bankless Arena?! | $600M Crypto Hack | Prepare for the Merge | PoS & PoW Misconceptions

Starting point is 00:00:00 We can't wait to tell you who put their name on the next crypto sports arena. I'm super excited about this, David. I know you're smiling to you. I know you're excited. I kind of want to skip right there, but it goes in the news section. Happy Friday morning, Bankless Nation. It is the last week of March, or is it the first week of April? I'm not too sure, David, but I do know one thing.

Starting point is 00:00:22 It is time for what? The bankless weekly roll up, Ryan, where we cover the entire news in the last week in crypto, which is always an ambitious endeavor, yet we persevere. Nonetheless, covering everything that happened in the markets, the news, what's going on, the NFT shenanigans, the regulation shenanigans. We cover it all here on the Friday Bankless Weekly Roll-up. Absolutely. Fastest way to get your crypto digest and some hot stuff, hot topics this week.

Starting point is 00:00:50 It's going to be a fun week. It's going to be a fun week. Look, we got to talk about more crypto companies putting their names on sports stadiums. Okay? Who could that be? Who could that be? April 1st, it's happening. We're going to tell you about the biggest one yet. I think this is bigger than FTX. I think this is bigger than crypto.com. This is the biggest one yet. And we can't wait to tell you who put their name on the next crypto sports arena. I'm super excited about this, David.

Starting point is 00:01:16 And I know you're smiling to you. I know you're excited. I kind of want to skip right there, but it goes in the news section. It's not the biggest in terms of deals, in terms of money deals, but it's the biggest in terms of culture, I would say. I totally agree with that. Also, one of the biggest hacks maybe in crypto history, the Ronan side chain, there was an exploit. So this was a $600 million plus hack. We got to cover that. What happened? What went wrong?

Starting point is 00:01:40 Our side chain's really safe. What does this mean for Axi infinity, of course? Because that's the Ronan side chain. Also, David, there are so many misconceptions out there about two things. Number one, the Ethereum merge. Number two, proof of stake. We're going to lay those misconceptions to rest. and also talk about traditional finance institutions, waking up to the merge, waking up to proof of stake, lots of reports there.

Starting point is 00:02:04 So a number of things to cover. I'm excited to dive in. Dave, before we get there, we should talk a little bit about permissionless. This is a conference, and we are getting closer and closer. I think we're like two months away. Is that correct? Yeah, the drum roll for permissionless is getting louder and louder. May 17th to 19th, Palm Beach, Florida.

Starting point is 00:02:23 It's just going to be insanely fun. This is gearing up to be a reunion of the bankless podcast and also so many more guests and panelists and speakers, some insane content. All of your favorite bankless previous podcast guests are going to be there. Justin Drake, Chris Dixon, Nick Carter, Eric Peters, who's a huge in the traditional finance world.

Starting point is 00:02:44 We had them on the podcast. Gho for Maxi, of course. Jake Chavinsky for all the people who are trying to get downloaded with the legal and regulatory side of the crypto industry. Ryan Selkis, of course. what would a conference be without him. Donnie from Avey, just had him on the show.

Starting point is 00:02:58 It's going to be the who's who of crypto events smack in the middle of the year, May 17th to 19th in Miami, or in Palm Beach, Florida. Bankless is throwing a party. I'm going to be there vibe in. Ryan and I are going to meet for the first time. The number of things that is going to happen at permission list is off the charts. There's not even enough time to talk about it here. So you've got to get your ticket.

Starting point is 00:03:20 There is a link in the show notes to go get your ticket. If you are a bankless premium subscription, briber, you get 30% off, which pays for your entire bankless premium for the year. So there you go for that. And you got to come. You got to come. It's going to be a huge event. I'm really looking forward to it.

Starting point is 00:03:35 Ryan, I know you're excited for permissionless. Why are you excited for permissionless? I'm excited to meet you, David. That's really why I'm going. The conference is cool and everything, but like let's finally meet in person. I guess. I guess. Hope the podcast doesn't end as a result of that.

Starting point is 00:03:51 David, something else going on. our friends at Consensus on the NFT side wanted to give the Bankless Nation a heads up. So on April 10th, it is National Youth HIV AIDS Awareness Day. And Mac, MAC, the makeup company, is actually releasing an NFT collection. This is going to be powered by Consensus NFT. It's going to be dropping on April the 10th. And it's featuring art by Keith Herring. The cool thing about this, I think, is.

Starting point is 00:04:23 Some of you listening have kind of dabbled around in NFTs, haven't really gotten into it. But this is an opportunity for the NFT, the first-time buyers of NFTs, to get a cool NFT and also support a great cause because all of the proceeds of this NFT actually go 100% to support youth impacted by HIV and AIDS. And this is in two forms. So one, the initial purchase price of the NFT. And then because NFTs are so badass, every resale of that NFT, 2.5% also goes to the cause of HIV and AIDS and the youth impacted by it. There's three rarity levels.

Starting point is 00:05:05 So there's like a bottom tier of like just $25 NFT all the way up to a $1,000 NFT at the rarest level. Only 25 of those. And all of these, of course, are super scarce. The art is not released yet. Okay? It's not released yet. I can't wait to see what these look like. But if you want to partake in this, at least check it out.

Starting point is 00:05:26 What you got to do is go sign up. I've got the website in front of me right now, but a quick link to that would be bankless. dot CC slash MAC, capital M, capital A, capital C, that'll get you there right away. I'm going to pick up one of these, David, because it's a good cause, man. In Vitalik's blog post about legitimacy,

Starting point is 00:05:48 he talked about ways that NFT projects can gain legitimacy, and it was through donating to causes. We saw this with people pleaser's effort in her NFTs, like some portion of the proceeds going to a charity to establish legitimacy. A hundred percent of the revenue is going to this charity. So extremely legitimate, I think, is how the conclusion to that. I think so. Yeah. Very legitimate. Yeah. And this is cool to see companies partaking in this, too. So it's also a crypto saturation story. A lot of wins here for everyone.

Starting point is 00:06:18 Um, speaking of wins. Are we getting wins in the market, David? Let's flip to market stuff. Bitcoin price. Any wins there on the week? Yeah, we got some wins. We started the, uh, they started the week at $43,000, hit a high of $48,000, of which it almost was at the time of recording, except in the last like hour or so.

Starting point is 00:06:36 We tanked. We tanked from 47 and a half down to $45.7,000. Still, though, Ryan, up 7% on the week, maybe a little bit less, maybe like 6.5%. Uh, it's a good week. It was a good week. It's been a good month. It's been a good month. It's been a really good month. Like, look at this. And I'll take it. I have to say the bearish David weekly roll-up, which people have definitely tapped into and have been teasing me about. So far, has painted the bottom. Look, some people are calling that a top signal, David. I hate to break it to you, man, but, ugh. What's a top signal? You mean a bottom signal? The top signal of you, excuse me, sorry. Bottom signal. Bottom signal of you being bearish.

Starting point is 00:07:12 I'm sorry. For the first time ever on a roll-up, you're bearish. You go back three to four weeks and you look at the fundamentals of the macro market and tell me how it's in how hard it was to be bullish in that moment like give me a break it was difficult some of us managed to do it though okay david let's talk about eith price uh hopefully we're going up too are we yes yes yes indeed started the week at $3,050 hit a high of $3,450 up $400 for the peak but also has kind of retraced in the last few hours here we always record these on Thursday morning Thursday March 31st down or excuse me up Up 9% on the week, down like 2% or 3% in the last hour, to where we are now at roughly about 3,300. Ryan, you're showing the Bitcoin price chart just ever.

Starting point is 00:07:55 Am I? Oops. Let me flip that ether. There we go. There we go. Yeah. So chopping around, had a really bullish week, kind of retrace a little bit just now. But again, up 9% on the week.

Starting point is 00:08:06 Yeah, I was looking at, I was just looking at the shape of the chart. I was like, that looks a lot like Bitcoin. How about the ratio? Ration to Bitcoin ratio. Ration. Ration. So up about 2% on the week. Started last week at 0.07.

Starting point is 00:08:20 We were up to 0.0717. 2%. Up 2%. So that means I am 2% more bullish. How about you? That's about right. We got some candy charts to show. And then Market Monday this week put a bunch of charts into the newsletter. And there's just this same pattern that you see across the three most important charts in crypto in my mind,

Starting point is 00:08:43 which is Bitcoin Ether and the ETH-BTC ratio. Starting all the way back, I guess I think this chart starts, it really gets bullish in the start of 2021, where Bitcoin zoomed from like $20,000 up to almost $70,000. And then it went from 70, went down to 36, from 36, went back up to 70-ish. I'm kind of rounding these numbers here. And then after it hit like 69, the high of $69,000,

Starting point is 00:09:07 and then went back down to $36,000. But now it is, again, retracing, bouncing off that bottom. So there's a channel here with higher highs and higher lows over time. This is a one-year-long channel. And the same channel is seen in the ether price. If you scroll down to the ether price, it's the same thing. It's the same thing. Higher highs over time, higher lows over time, over a really long time frame.

Starting point is 00:09:28 This is like an 18-month-long channel. But we bounce right off of that bottom. And like, you can just, if this channel is something to take guidance from, like, what is the current top of the channel? Like, for Bitcoin, it's $75,000. For ether, it's $55,200. And the same channel you can see in the ETH-BTC ratio. And so if you scroll down once again, Ryan,

Starting point is 00:09:51 you can see, yeah, just a little bit more, it's there too. And so, like, what happens if the ETH-PTC ratio bounces, which it did off the floor of like 0.06, 0.055 as the absolute bottom, again, higher lows and higher highs. What if it goes up to 0.09, where the top of the channel is? Like, hmm. Hmm.

Starting point is 00:10:10 What happened to bearish data, David? He's nowhere to the scene. It's gone. Well, like, Putin is absolutely effed. He's got no options. Like, Ukraine's fundamentally winning. There's, like, peace talks. There's peace talks.

Starting point is 00:10:24 Like, commodity prices are coming down. All of the bearish reasons have dissipated. And so, like, if you were the person that bought into the fear, congratulations. That worked out for you. Look, my co-host just makes decisions based on the data. And the data has changed. right? Information coming has changed. Macro looking a bit brighter. I don't know about like the Fed in inflation though. I don't know if that's changed. That data point still feels a little bit bearish,

Starting point is 00:10:50 but the question there is does that even matter though? Sometimes it doesn't matter. Maybe maybe heavy inflation is actually good for crypto. Do you want to store your value in dollars or do you want to store it in crypto assets that have nice channels like this? Let's talk about the bed index. So that's a third, a third, a third. We must be up on the week. It looks like we are. Bigly, yeah. Actually, this is up more than Bitcoin and Ether. DeFi won the week this week. Up 11% started the week at $107, ending the week at $128. So, Defi, leading the way this week. You ready to call it DeFi season? Oh, God, no. I would not. Never. I'm cursed. Curst. How about Eth gas? That's always fun to talk about on a weekly basis. We up or down? Yeah, gas prices are up on the week, and the last week the average was 22 gway for the week. We are up to 40, up to 40 average gas for the week.

Starting point is 00:11:43 So gas markets are up, again, which is a bullish indicator. It's always funny to me because I don't know how to feel about gas prices rising because at one level I'm like, oh, man, my ether transactions going up. At the same time, it's like also a bold market signal, ethel block space, more valuable. Ethereum's not dead yet. Yeah. Yeah, revenue going to staking in the future, bullish for ether the asset. So I'm always of divided mind with respect to that.

Starting point is 00:12:09 And I think the market is too. The market can't figure out whether high eth gas prices are good for ether or bad for ether. It's like people calling it in either direction. I say it's- I think market analysis is definitely when gas prices are up, ether value is going up. I think that's pretty strongly correlated. I think that's a, yes.

Starting point is 00:12:31 And I think that's a bankless thesis as well. that on the main chain, gas fees have to continue to increase over time, right? Transaction fees will decrease in layer two, but they have to continuously increase on Ethereum Mainnet. And that is actually, exactly, thumbs up, yeah, exactly, one direction or the other. And that is actually the bullcase for ether, the asset when you run the numbers, when it becomes a capital asset. Anyway, we'll get to more of that later.

Starting point is 00:12:58 But let's talk about some other market news. one is that anchor which is a defy protocol on terra money market a money market borrowing and lending so similar to comp similar to uh... similar to uh... ava compound or avey it just topped avee leapfrog avey with 14 billion in total octal value you can see here on defy llama so there's ave there's anchor only only maker is higher lido and curve those are the three defy protocols that are higher than anchor at this point and this is all coming off of this Terra explosion, this UST explosion, that is Terra's stablecoin UST. And of course, the last two weeks we've been talking about how Doquan and the Terra ecosystem

Starting point is 00:13:43 is planning to backstop this algorithmic stablecoin, rather than being backstopped by the meme narrative price of the Luna token, backstopping it with billions of dollars of Bitcoin. And that process has started with these Bitcoin buys. I put this tweet out there because I feel like this is a conversation we need to have on bankless. Is Terra UST the future of crypto money? Or is it a ticking time bomb waiting to explode? I think those are two sides of the spectrum. Maybe the truth is in the middle.

Starting point is 00:14:17 I'm not sure. But I feel like that's an episode we need to have, David. And I think we have some guests line up for that. We're in the process of doing it. So hopefully an episode next week on this topic. Yeah, Wednesday. Wednesday, we're going to figure it out. We're going to get the right guess.

Starting point is 00:14:30 We're going to have one bowl versus one bear. We already have had multiple very qualified people, very intelligent people, well-informed people, to raise their hands saying they want to argue either for the bowl or the bear side. So we're going to pick out the best candidates, throw them into a Zoom together, and they're going to fight. See what happens? They're going to fight, yeah. And so that's going to happen on Wednesday. And, you know, just some comments, Ryan, like, Doe Kwan on Twitter has been, like, I'm going to call it icericing.

Starting point is 00:14:57 he's been icarusing pretty hard and he's been kind of a bully like this has been something that people have noticed is like Doquan's being a bully on Twitter and it has been as as a function it seems to be as a function of Terra price, Luna price as Luna goes up Doquan gets even more confident

Starting point is 00:15:13 I think he's icoracing man I think I think this is like there's so many top signals right now for Terra but what do I know I'm just an ETH maxi so there there is a thing called bull market goggles I think and like your price has exploded in the way that it has. It's hard not to let that, you know, make you feel like you have this sense of

Starting point is 00:15:34 invincibility. But look, this panel is for us to really discover this, this bear in bull markets, to understand a bit more about the USC ecosystem, arguments on both sides. I'm always worried about algorithmic stable coins, just in general. It's because, like, all of the past experiments have failed. If I had an explosion sound on my soundboard, I would have played it by now. They have. Right, in various ways, and maybe this time it's different.

Starting point is 00:16:00 If it is different, let's try to understand how. And I do think that there are successful models for algorithmic stable coins out there. It's just, let's see, I prefer the ones that are maximally trustless when we're doing that and certainly transparent. Anyway, we're going to dive into this and hopefully surface both sides of the argument for you guys in bank lists so we can all learn together and see if this is Icarus or, if this is like the next new thing, and this time it's different. One last comment on this. Ryan, Pop Quiz, who was the last extremely confident person on Twitter? Doquan put out a tweet, By My Hand, Die Will Die, as in Die from Maker Dow.

Starting point is 00:16:43 You know, he just wants to have UST be the perfect decentralized, trustless stable coin to dominate the market. So he tweets out, By my hand, Die Will Die. So Pop Quiz, who is the last extremely confident agro builder on crypto? Twitter to talk negatively about MakerDA. Well, that's got to be Danny Sesta. And what happened three weeks later? I mean, I don't know. Where is Danny?

Starting point is 00:17:08 Where is Danny? I didn't come on the podcast. I don't know where he is. I don't know where the frogs are. Yeah, it does, I'm feeling a little bit of that energy. Yeah. Right? Maybe it's different.

Starting point is 00:17:19 Look, there are some, like, personalities that are just like that, you know, the Elon Musk of the world who's actually, like, building things. But we have to see. We want to unpack this a little bit more. Another similarity is that Doquan also has an invitation out in his Twitter DMs to come on bankless, which he has not yet replied to. So there's that. Well, we'll see.

Starting point is 00:17:39 Defy Pulse Index, the DPI. This is huge. This is an index put together by a defy protocol called Index Co-op. We're big fans of it. DPI is actually part of the Bed Index as well. It's an assortment of the top blue chip defy assets on Ethereum. it was just listed by Gemini as a coin. So along with, you know, index itself and Maple and fracks and some other coins,

Starting point is 00:18:06 they are listing the first defy index. And I think, David, this is the first defy index to be listed on an exchange. Pretty big milestone here. Yeah, this is something that the index co-op and just defy in general has really been looking for for a really, really long time. It's hard to get liquidity and demand for DPI, the DFI. the Defi Index when it's stuck inside of DFI, it's stuck inside of DFI.

Starting point is 00:18:29 Like you have to actually go buy it on Uniswap, which means you have to take self-custody of it. A lot of people want indices products like DPI, but they also want it to be inside of their centralized exchange with centralized custody. And DPI has been around for over a year now and hasn't been able to break into the centralized exchange marketplace for reasons.

Starting point is 00:18:49 There is some, like, risk involved because in theory, like the index co-op can just change everything about the DPI, so there's some risk involved for centralized exchanges to list this. That's why it's been slow. But finally, we're getting the DPI into Gemini. So hats off to Gemini. Thank you for getting that guy. We love you. Love you guys. And just like, come on, let's get more going. Let's go. Let's list them all. Let's list them all. I mean, look, a year old, but this does also demonstrate like Lindy effect in indexes, right? Like, you wouldn't necessarily as an exchange want to list an index product that's like two months.

Starting point is 00:19:24 sold, right? Like 60 days into this thing. You have to give it some time to work out the kinks, figure out what it's doing. And I think DPI has reached that point. So it should be a mainstay, right? Gemini lists it. All the other exchanges are going to have to compete to list it. Really cool that DFI products are breaking in here. Let's talk about Germany for a second. Almost half of Germans are now invested in crypto. Hats off to Germany, the richest country in Europe. Okay? Yeah. And this is great. Like, I think, once you get 50% of your population, and this is like 44%, almost 50%, it's kind of over for anti-crypto regulators. It's kind of over because like the people are speaking with their wallets,

Starting point is 00:20:09 they're voting with their wallets and they're saying, we want crypto. And so if you try to push through anti-crypto legislation, you're going to have a much stiffer resistance than when you tried to do that in the first decade of crypto and everyone thought it was like scam. money and only 1% of the population owned it. So to me, the most bullish thing is for crypto to A, be understood, as we've said before. But B, to be owned. That is super bullish. So easy. Yes. Yeah. Germany and really Europe at large has always been, I think, a little bit ahead of the curve. A lot of developers in Germany. So very strong, like just community there. So cool. Yeah, that's cool. I wish we could get there in the U.S. I don't think we're

Starting point is 00:20:54 at 50% yet, but this is cool. This might take us there, stuff like this. This is RAC. Grammy award-winning artist, had him on bank list before. Do you want to read out this tweet, David? Yeah, he goes, I've personally made 12.5 Eath, about $40,000, which is equivalent to almost 10 million plays on Spotify. RAC would have needed 10 million plays on Spotify to make $40,000.

Starting point is 00:21:16 And he just made 12.5 eth in his number of drops. If you scroll up, Ryan, it'll show up what he's talking about. but like his NFT drop on sound XYZ made 10-Eth, 100 editions for 0.1 each, 0.1.Eth each for $310 a piece. And so in addition to royalties on top of that, 2.5 eth and royalties, this would have taken him 10 million plays on Spotify. Now, I am a huge RAC fan. And so, and I'm actually, since I already have Spotify up, I'm going to go to RAC on Spotify. And we're going to see how many plays that he got on his number one song, 44 million. plays on his number one song. And so that is, and so he's got a number of, and he's only had three songs above 10 million plays each. And, and that took years for him to establish those plays.

Starting point is 00:22:04 And he did this in mere minutes. NFTs and crypto and just tokens and decentralized, trustless programmatic finance, putting money into the hands of artists. Yeah, this is super cool. He said, he said this too on the tweet. So yes, 100 people generated more income than 9.75 million. in users. Let that sync in. This harkens back to our conversation we had and I would encourage listeners to go listen to it if you haven't with Lee Jen where she talked about

Starting point is 00:22:32 forget the 1,000 true fans thing. 100 true true fans can make you for you. You can have a narrow fan base of the most 100, like the 100 most passionate people about the thing

Starting point is 00:22:48 you're creating completely fund everything you're doing. as a creator. Because these are sort of like the most passionate individuals who are willing to spend any amount and not just spend this amount, but actually invest this amount in you because they believe in you. This is the power of NFTs in the creator economy. And I think that's what RAC is saying here and demonstrating. And there's also, we did a show with RAC and Meet the Nation. If you guys want to meet Andre, great guy, great music, listen to his music in college. And then also the episodes that we did with Blau also come to mind. If you guys,

Starting point is 00:23:22 are interested in the subject matter. Super smart guy. Both of. Aztec's roll-up. This is hot. This is hot. No, sorry, 20-K-Eth in deposits shielded. What is Aztec?

Starting point is 00:23:33 Why is this hot? Yeah, so Aztec is a layer two privacy roll-up. It also has a layer one smart contract system. But this is, I believe, yeah, this is the layer two. 20,000 ether is now in Aztec shielded. So that's 20,000 shielded ether, as in private ether. This is basically like to take Z-cash, the blockchain, but make it into a layer two. That's basically what this is.

Starting point is 00:23:54 And there's some other smart contract functioning as well. And so, like, this is, like, tornado cash, but even better. Using ZK technology to have private ether transactions, which sounds like we're going to be needing even more and more as we go into this highly authoritarian future that we kind of see ahead of us. So, like, remember Ryan last, I think it was last week or maybe the week before, but we were talking about Elizabeth Warren being super cringe when she was asking somebody in Congress some hearing about like if you have these cross-chain bridges, can't you just obfuscate all the

Starting point is 00:24:25 ether? And like, she was making the point that like crypto is making it easy to obfuscate, but like she was getting her details wrong about how like crossing bridges are obfuscate. Anyways, it was super cringe. She was trying to paint a narrative. The thing I'm a little bit concerned about Ryan is like what she was looking for. She was attacking, she was attacking the wrong source. What she thinks crypto, all of crypto is, is what Aztec is building. And so like, this is a regulator's worst fear. It's prime. private layer two's that has complete assurances as to privacy and ownership and payments. So like once regulators get their minds around ZK technology, which is going to take a while,

Starting point is 00:25:02 I'm a little bit worried that they're actually going to have some real fodder to fight. All right, but here's the problem. Why in the world is it regulators' worst fear that citizens actually have privacy on their crypto assets? They don't have access to a list of all of the physical property I own. they don't know how much cash I have in my wallet, in my physical wallet, or gold bars I might have in a vault somewhere in my basement, okay? But they need to know everything about my digital transactions. This is like, the problem is establishing this as a norm, like an outrage norm that Elizabeth Warren and any politician has no right to be angry about privacy of crypto transactions.

Starting point is 00:25:46 we need to like bust through that as a norm. Like it's absolutely ludicrous, authoritarian, and ridiculous that like free private speech in the form of money on the internet would be a thing that's controversial in any Western democratic country. You don't need to convince me, right? I'm sorry. The nation state is not going to like this. I'm not saying that for bankless listeners either.

Starting point is 00:26:11 I just needed to say that. You're totally right. That should be the approach. I have zero faith that that's going to be the approach. Exactly. Same here. This is why we need to be active, guys. We'll get to that when we get to the regulatory section.

Starting point is 00:26:24 But first, man, we're going to talk about the sponsors and when we get back. We've got to talk about that breaking news. This is happening. Arenas being purchased by crypto companies. We're going to get right into it. Before we do, we want to thank the sponsors that made this episode possible. Arbitrum is an Ethereum layer two scaling solution that's going to completely change how we use D-Fi and NFTs. Over 300 projects have already deployed to Arbitrum.

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Starting point is 00:29:25 Look, I feel like we should just maybe get right to the press release here because this just dropped this morning, this morning, okay, for State of April, this morning. Wells Fargo Arena is now the bankless arena. David, do you want to read this press release here? Yeah, the arena for the Philadelphia, Flyers and the 76ers is that arena in Philadelphia is now bankless arena. We got it. We got the name. We did it. The bankless arena. Okay, first FTX did it, then crypto.com, now bankless. We are just taking it back from the banks. We don't, we didn't care about any other arena,

Starting point is 00:30:01 but it was the Wells Fargo arena that their naming rights happened to have ended this year. And so we submitted the bid. We won the bid. It's not the biggest naming rights deal. We don't have FTX money. We don't have crypto.com money. But, you know, we were early to ETH. We have some money. There you go. And so, Wells Fargo Arena, now Bankless Arena.

Starting point is 00:30:24 Sick as, sick as F. Sick as F. Yep. Last minute bid as well. Citadel CEO, Ken Griffin tried to beat us out for this. The internet bit. That was a nail-biter. Yeah.

Starting point is 00:30:33 Yeah, absolutely. But managed to do it. Guys, all of the details are here for you in the press release that we just published on bankless so we'll include a link to that but look this is more evidence that crypto is here to stay you know what should what should we get next we got an arena what's next oh god i don't know it's going to hold country thank by an island start with an island the bankless island totally worth it hey hey congratulations man like pass on pass on the back thank you to the bankless community uh and everyone that has listened to bankless and all the sponsors for bankless uh we

Starting point is 00:31:07 couldn't have done it without you uh you know this is crypto taking over You know, we're putting our names on places, and bankless is next up. Yeah. Thanks to SBF too. Bankless arena. It just has a great ring to it. Yeah, I can't wait to see the Flyers play. Man, it's going to be awesome.

Starting point is 00:31:21 I love sports. Anyway, we should move on, okay? Because that's a big deal. That's a big deal. But there are some other things that are happening in crypto as well. Apple Pay, integrating with Metamask. This is not a super big deal, but it feels like a big deal. Tell us about this.

Starting point is 00:31:38 Yeah, so this is an integration with wire. Y-R-E right into Metamask. And WIRE has this widget that allows you to buy, I think, up to like $500 worth of Ether using Apple Pay. And now that's hooked right into Metamask. So you can now get Apple Pay into Metamask to buy Ether and other tokens straight from your credit card, straight from your debit card using Apple Pay. And so this is, I think this is going to be especially useful for activities on Layer 2s because, you know, $500 of Ether on the, you know, $500 of Ether on the layer one isn't too useful. But then things like gaming where people don't really care about ether or Ethereum, but they need to fund their wallet to play games, that's going to be really

Starting point is 00:32:20 useful. This has always been what wire has always been building towards. This integration has been, this Apple Pay via wire has been a thing for a while. It's just now it's in Metamask. Yeah, that's cool. It's just greater access to Fiat and onboarding that into crypto is awesome. OpenC just added Solana NFTs this week. And of course, Solana NFTs shot up in price. many of them, the floor prices have risen for sure. OpenC calling this the best kept secret in Web 3. Multi-chain NFTs, that is a thing now, and OpenC is supporting them, whether it's Arbitrum, optimism, Polygon, Solana, Avalanche, NFTs everywhere on all of the chains. It seems to be the direction we're moving in. Yeah, OpenC has just, is just killing it on the execution layer. Kind of a

Starting point is 00:33:07 bummer that Solana isn't EVM compatible, right? Because then you have to have an alternative wallet. Like I have my trustless state OpenC account where everyone can go check out my NFTs, and that's my Ethereum address for my NFTs. But that's a different wallet for my Solana wallet, which I don't have. But if I did have one, it would be different because it's not an EVM thing. But I'm assuming they're eventually going to integrate Avalanche, and that will be the same wallet. So things like that. But anyways, OpenC, blockchain agnostic, integrating wherever there's NFT demand, as you would expect. One of the features we were talking about earlier is like, how do we get privacy on

Starting point is 00:33:41 chain? So we're talking about Aztec. This is another interesting solution to privacy on chain. Privacy, it's also identity. Polygon just unveiled an identity service that leverages ZK proofs. So this is the ability to check credentials of an individual polygon user without revealing private information, kind of useful. also I think my take on this too is that some of these side chains like in ecosystems like polygons and these layer twos are going to compete by adding on interesting services right so this is like a layer two slash side chain adding identity as a service on top of their chain of course Ethereum doesn't have that natively baked into the protocol some some change

Starting point is 00:34:35 layer twos might decide to add oracles, for instance, price oracles. I think this is going to be an evolving landscape of all of these layer twos and side chains kind of competing on the feature level in order to win against the competition because it's a it's a pretty competitive world out there, survival of the fittest. And so everyone's trying to carve out their niche in their area. And I think adding features like identity are one such way to do that. What's your take? Unlocking and solving identity in ways that develop.

Starting point is 00:35:05 can build on that and build just using that identity primitive is going to unlock so many use cases. Some we already know about, but many, many more we don't know about because we haven't had that unlock yet. So many people are working on this. Polygons working on this. Disco.xyZ is working on this. Identity as a primitive is absolutely massive and it's really going to be one of the things that elevates the metaverse to the next level. So this is kind of why some people are starting to meme social summer 2022, they're seeing the writing on the wall as the infrastructure is starting to be built out yet. I think summer's a little bit early, but like social web three, it's on the horizon and it's going to be great. Yeah, it's fascinating to me that all of these features seem to be being built

Starting point is 00:35:47 on the execution layer as well. Like we'll never see an identity service on Ethereum main chain. We'll probably never see like a centralized Oracle service on Ethereum main chain either, which is, in my opinion, a good thing. Keeps the protocol, base level protocol less complicated. B&B, formerly Binance chain, they are launching application-specific side chains to reduce network strain. So this is BNB chain, which is a side chain, also launching side chains. What's a side chain? Okay.

Starting point is 00:36:19 Right? That's a semantics thing, Ryan. What is a side chain, right? And I don't personally see B&B as kind of like competitive with, uh, you know, more decentralized, even layer ones, but even alternative layer ones. It's like 21 validators, all of which are like mostly owned or like somehow carteled by Binance. So effectively, to me, this is a side chain.

Starting point is 00:36:45 Some might call it an alternative layer one semantics. But it's funny that they are expanding by launching other side chains. Right. As soon as B&B chain gets congested in demand, in too much demand, they start to become modular. So plus one to the modular blockchain thesis. this is what this is. You know, centralized version of modular blockchains probably has a niche to fill, I guess. I think this is less modular blockchain to me.

Starting point is 00:37:13 Like modular blockchain to me is where you're actually like building a stack in modules. This is like a network of monolithic blockchains to me. You're just like stringing together monolithic blockchains as side chains. It's a step, it's a small step on the spectrum of modularization towards the modular side. But yeah, it's like one step on a very long journey, right? Why not be a layer two? I don't know. You could do that too.

Starting point is 00:37:35 They don't want to bend the knee. Opera. They don't like bending knees. Opera, taking a giant leap into Web3. They were adding Solana, Polygon, StarkX, and others. This is Opera, the browser. It's like a low percentage of market share browser. It's like, you know, 2%.

Starting point is 00:37:48 Let's call it browser. But what I love about this is the other Web3-friendly browser is Brave. And now we have Opera and we have Brave. And they're both competing against one another and a race-tive. to build features fastest, where Google Chrome just turns like, I have all the market you. I don't have to do anything. I don't, you know, I'm just like the incumbent here.

Starting point is 00:38:08 And these two operating, these two browsers are like battling it out to be the, the winner of the Web3 movement and the change that's happening. Yeah, Web3 integrated, Web3 native browsers has got to be the way forward in the browser landscape. It can't just be with extensions. And so I think we are to be on the very beginnings of like a new age of what a browser actually looks like. And like you said, it's just opera and just brave. And opera is doing things that Brave's not doing. So like opera, kind of like the dark horse crypto, like a dark horse browser.

Starting point is 00:38:39 I guess because they were basically in last in terms of market share, they had to kind of do something, but they're doing their right things. So like, nice job. Nice job. Do you know what I always thought it would be cool for like a wallet to become big enough to go back in the other direction, like go buy a browser. Or go build a browser or something like this. Metamask browser? That's a great brand for a browser. That'd be badass. I love that. I don't know. Anyway, it's good to see.

Starting point is 00:39:03 We're starting to see it. Also, Defy Saver. So this is an app built on Maker. They are adding automated stop and loss and take profit options for Maker vaults. What's cool here is just, you know, we don't talk about it very much. But on all of the base protocols, particularly ones that have been around for a long time like Maker, an entire application infrastructure is being built out on top of these things to make the protocols easier. I think we've got something else on Maker later in the episode, but it's just cool to see.

Starting point is 00:39:31 Cool. Yep. Features being built into DeFi, more power for the users. You'll love to see it. Raises. Ready for raises? Raises. Some big raises this week.

Starting point is 00:39:38 Yeah. A layer zero raise. One billion dollar valuation. Yeah, Ryan, I raise a billion dollars for my podcast. Did you know? Where do you think we got the money? So that's how you afforded the arena. Yeah, that's exactly right.

Starting point is 00:39:50 Okay, so this is A16Z, FTX and Sequoia, leading a $135 million round for this layer zero. What is layer zero? Layer zero is a, other than the bankless podcast, exploring the culture behind the people behind projects rather than projects themselves, is also a blockchain interoperability network. It's like, consider layer zero as in like,

Starting point is 00:40:10 you know, the subterranean network between blockchains. It's kind of a semantics debate as whether it's a layer zero or just a different layer two. It's a bridge, man. It's a bridge. It's a bridge.

Starting point is 00:40:20 But anyways, cross-chain composability. Layer zero enables developers to build decentralized applications that simply weren't possible before, says Ali, a general partner at Adreason Horowitz. But yeah, I mean, if you believe in the blockchain, multi-chain, polychain interoperability world, this would be right up your alley.

Starting point is 00:40:37 This makes it a ton of sense. I'm bullish bridges in general. I'm bullish bridges. You know, in our conversation with Olaf, though, which that episode is coming. Unreleased, not next Monday, but the Monday after this is Olaf at Polychain. He actually, his thesis was that Bridges could actually become, competitive with layer two's and layer ones and actually host their own applications, which was kind of a novel idea to me,

Starting point is 00:41:04 but maybe explains the aspirations for a $1 billion valuation, because this is definitely layer two territory now. It's like a $1 billion valuation. We already have a unicorn in the bridge world, which is pretty crazy to see. Yep. Congrats to those guys. Avalanche.

Starting point is 00:41:21 They just launched $100 million creator fund with Grimes. That's Elon Musk's, Are they still together? I think they are. Yeah, they're married, right? Okay, cool. Yeah, they have a kid. Yeah, they named their kid hello weird.

Starting point is 00:41:34 Yeah, but yeah, exactly. Yeah, that's all I remember. Anyway, Grimes is in it. It's a Web3 platform. What's interesting about this story, David? Yeah, so this is a $100 million fund coming out of the Avax token, and they are just building out Web3 social Open OP3N, kind of in the same vein as the Web3 social

Starting point is 00:41:56 that we talked about just a second ago, but also on the panel that we had, a $100 million initiative for creatives to build projects on Avalanche as the blockchain network grows his profile with non-crypto-natives. That is the story. I got some takes about the token, right? And you know, unless you have it. Tell me about the takes. I mean, my only first take is like Web3 Social is hot.

Starting point is 00:42:17 This has a little bit of, do you remember when EOS, the U.S. platform announced. Yeah. Voice, right? And they bought like a domain name and everything. They invested millions of dollars. It wasn't $100 million at that time. It was less. Now we're at $100 million.

Starting point is 00:42:30 But what do you think this means for the token for Avalanche? Okay, look at that next paragraph. Named the Culture Catalyst Initiative, the first of these funded projects paid out of the network's native token Avax. Right? So this wasn't a raise, really. Actually, this was just a token sale of $100 million of the Avax token to fund this initiative. Ryan, do you know the inflation rate for the Avalanche blockchain and the Avax token?

Starting point is 00:42:54 Why don't you tell me? because it's hard, it's hard to divine that. I've looked in a few places. Yeah. They don't have ever figured out yet. According to Missouri, the AVAX token is inflating at 26% per year. And so that means that in order to sustain its current price, 26% of the value of the market cap of Avalanche

Starting point is 00:43:12 needs to be turned into buying demand for Avaxes to maintain its current price. At the same time, they are selling the Avax token to fund all these development initiatives. You know, investments, investments into the ecosystem. You know, you got to invest in yourself to grow out the eco-execisement. ecosystem. But like, I'm just getting flashbacks of the 2017 Ethereum ICO mania where so many ICOs had just stockpiles and stockpiles of ether. And it, that is the reason why ether went from $1,400 down to $90 because so many ICOs had to sell their ether to pay for taxes just to sell it at all, just to give to fund their teams. Consensus had to do this to stay alive. And so like, I'm,

Starting point is 00:43:50 I'm seeing the inflation rate of AVAX, which if Mizari is correct, at 26.6.6. And they're doing all of these raises by selling the token. And like, that is a lot of selling pressure, bro. Like, how is that getting absorbed? That's the thing. I think that people need to remember that issuance isn't free money. It's selling pressure. Issuance is selling pressure ultimately.

Starting point is 00:44:14 And at some point that can catch up to you. And so the thing is like, I guess that made of less is never, not never do this sort of thing, but make sure when you do it, you're invested. very strategic and you've got to return on capital story. So, but that is a lot of issuance. And some people might say, well, this is the problem with Ethereum. Ethereum never does these sorts of investments. That's why more like centralized alternatives like Avalanche and Terra will overtake Ethereum. I don't know. I don't know if I buy that. I guess we'll have to see what happens. I mean, they can definitely pay developers way better than the Ethereum ecosystem has because

Starting point is 00:44:51 of decisions and actions like this and also because they have just a, a ton of. ton of VC backing. If you go look at the AVAC's price chart, you don't need to pull it up. Like, it doesn't look like there's any selling pressure. Like it's a bullish looking chart, which is kind of confusing to me. Like you don't, that is a discrepancy in my mind of the chart looking kind of bullishish, but there's so much issuance. There's so much inflation. It's insane. Yeah, we'll see. Maybe, I don't know, maybe that kind of thing doesn't really catch up to you unless there's a bare market. It shows up in bare markets for sure. If we're back bull market territory. They may have a long runway still. Let's talk about this. Delphi Digital.

Starting point is 00:45:29 They just led a $5 million seed round for another money market protocol called ZK lend. This is on, I think. Starkware. Starkware. Okay. Starkware. What's this? You know, I'm assuming it's like an Ave type compound money market borrowing and lending, but a ZK roll up. So lower transaction fees, higher speeds, the things that we all know and love. there's got to be some consolidation here at some point in time. Does every single chain, every single piece of technology need its own money market? And as soon as there are ZK EVMs, then like things like Ave, which have been battle tested and hardened and have also been progressing in their own roadmaps can just deploy there too. So lots of competition to be had. And you know

Starting point is 00:46:15 what happens when there's a lot of competition? Good things happen for the users. Yeah, that's true. That's true. Okay, let's talk about this last one. This is, uh, Nifty chat. Nifty chat. I was actually in on this, uh, full disclosure, but they just raised a million dollars. And Nifty chat is kind of cool because it's, it's basically like Discord and chat room meets Web 3 NFTs. So you can like kind of go here, log in your NFT and you get like, let's say you have a crypto punk, right? It will pull the fact that you have a Cryptopunk and create a Cryptopunk specific chat room or like mini Discord for you, which is kind of neat. There's another,

Starting point is 00:46:55 there's another app that does this too called MetaLink, which I also like. But it's kind of cool, right? It's going to give Discord, I think, run for its money, which needs to start adding some NFT features. Remember they tried to do that and then backed off of it a few months ago? Right. Yeah. So can I like put on my Cryptopunk hat and chat as my Cryptopunk? And then like rip off my Cryptopunk mask and put on my MFER hat.

Starting point is 00:47:18 and then chat as a different account. Is that how this works? Yeah. The idea is trying to bring these communities together, too. So it's like you and all the crypto punks. And if I don't have a crypto punk, I can't get in. I'm not welcome to chat. I'm outside the party, man.

Starting point is 00:47:29 Nope. No crypto party for you. I don't have a crypto punk. I do have an MF or so I can come and chat with you there. Jobs time. This is the time of the week where David and I remind you to get a job in crypto. If you haven't already, go get a job in crypto. It's fun over here.

Starting point is 00:47:45 It's a good time. It's real fun. real fun. We're buying arenas over here. You too can buy an arena. All right, let's talk about it. A few jobs. We're going to read them out because these are hot. A co-founder for an innovative Omni-Chane Defi primitive. This is ominous.

Starting point is 00:48:03 Who is the hire to be announced in Paris? Oh, okay. This sounds too good to be true. Wow. So go check out that job description. Masari is hiring a blockchain engineer for Dow's, a software engineer for market data. Syndica is hiring an operations manager.

Starting point is 00:48:19 Smart DFI, senior product designer, senior Go Rust engineer at Syndica, senior full stack engineer, syndica, senior software engineer, AirDrop Labs, product manager at Nori, bankless web developer for bankless, a bankless editor for bankless as well. Community manager for bankless academy,

Starting point is 00:48:37 I could go on. We've got Uniswap jobs, Uniswap Labs listings, Ethereum Foundation listings, a whole lot more. Go check out the bankless job board. Here's the thing. So those that are curious,

Starting point is 00:48:47 This is actually how I dance in the club. So you'll be able to see that a permission list at our party. I can't wait to see that in person. Look, this job board really works too. This is somebody from Smart Defi saying Bankless was responsible for over 75% of our core team hires across all positions. It's pretty cool.

Starting point is 00:49:05 It felt like using cheat codes. You can't leave that part out, Ryan. It felt like using cheat codes. So just let me know that the talent that is listening to Bankless is significant. And if you want to tap into some of that, talent. The jobs board is a place where you can as a talented person post your resume with a talent collective or as an employer and post your job. There's a link in the show notes.

Starting point is 00:49:28 Yeah, very cool. Let's keep going here. David, you ready for news time? Yeah, this is definitely the news of the week other than the bankless arena. Big news of the week. All right, take a breath with me. $600 million, probably over $600 million. That's like three stadiums this week. That's like the Roan Bridge has been exploited for 173,000 ETH and 25 million USDC. The Ronan Bridge, of course, is a side chain that AXE has been building out. Responsible, I think, for a lot of AXE's growth over the last 12 to 18 months after it launched, like cheap transactions. But what happened here, David?

Starting point is 00:50:09 Tell us the story. Yes. So this was not a smart contract exploit. This was not a bridge exploit of the actual bridge. What happened here was that this bridge was a multi-sig bridge, which is relatively common, and there was a five of nine multi-sig that controls the bridge. It just so happens that the private keys,

Starting point is 00:50:30 this was basically a private key theft. So the attacker, the exploiter, found a way into the nodes that actually maintain the keys. So rather than just like having these seed phrases written down somewhere, the way that this bridge maintained, I'm assuming, or at least this is in the spirit of accuracy, the details are to be determined. But these are like nodes in the cloud. And these clouds, these nodes, these five of nine nodes or the validator nodes for the bridge

Starting point is 00:50:56 are verifying transactions, making transactions to make this bridge work. But the private keys are in the nodes. They're in the cloud. And so the attacker was able to get... They're like in hot wallets, basically. They're hot wallets, yeah. Five of them. And the attacker was able to access the cloud servers, the, the,

Starting point is 00:51:12 the nodes directly and just basically get five of the nine multi-sig private keys. So basically there was no malicious attack. There was no just like smart contract exploit. The attacker just got all of the private keys. And so then he just withdrew all of the ether and USC down to the main chain. And so we haven't really seen an attack like that because like it's pretty easy to secure that. This is kind of like one-on-one security, I think. Well people, people remember the last bridge hack, which actually wasn't that long ago, which was the wormhole bridge hack. What was that?

Starting point is 00:51:45 Like $200 million? This is a bridge from Ethereum to Solana. Right. Something like that. And that was actually a smart contract code hack. Yes, that was a buck. This was not that. This was a multi-sig.

Starting point is 00:51:57 Theft of private keys. This is we got your private keys type of hack. So I think a lot of implications from that that we should probably talk about. The first one, Ryan. Pop quiz. Do layer two roll-ups have private keys? They do not, sir. They do not have private keys. They do have upgrade contracts, which is an asterisk. So there's that.

Starting point is 00:52:18 Well, I mean, this is kind of a lesson, I think. Maybe we'll get to the learning lessons later, but like this is a lesson on side chain security for the crypto ecosystem. Maybe a very difficult lesson to learn. But let's talk about this too. So hacker goes, steal $600 million. The crazy thing about this is like, imagine like you're a bank robber and you go and you steal from a bank. But like, what's the last thing you do? Well, like, what you're doing, everything you do with that money is like, it's as if you're

Starting point is 00:52:50 broadcast on YouTube, live streamed, like, whatever you do. So everyone knows what you're doing with the money. We can't get to you, but like, we know what you're about to do. We can watch it. And that's what's happening. We can actually see what this hacker is doing with the $600 million. Okay, so you're a bank robber. You steal $600 million from a bank.

Starting point is 00:53:10 this is what the attacker does next is he deposits all of this I don't know if all the money but a lot of this money into FTX that's like a bank robber robbing 600 million dollars and going to a different bank and depositing it okay being live streamed on security cameras being live streamed okay so why did the attacker do this uh it's bait it's people have come to the conclusion that this is not just some like novice oh i get to have this money now i'll send it to FTX and to cash it out no what's very likely happening is that the uh account that it was deposited to in FTCX was like purchase, right? It was somebody else's account that they got the password or email address for.

Starting point is 00:53:46 So they were able to access somebody else's KYC account. Fake IDs. Fake ID, right. Yeah, yeah, yeah. And then, like, maybe, I don't know what they were doing in there. Like, I can't imagine that they sent it outbound to a bank account because they had to have to send it to their bank account if they want the money. What is more likely happened is they sent it into FDX and then withdrew it from FTCS,

Starting point is 00:54:05 which made it invisible to the chain, but it made it very visible to FTCX. So FTX knows where this money is. And we actually, there was a tweet out of Sam Bankman-Fried that said, I acknowledge that this is happening. We are investigating and taking action if and where appropriate. So like they're up to something. It just doesn't seem like a good strategy, though. Like, I don't know.

Starting point is 00:54:25 Like you go steal from a bank and then you deposit it into another bank. And the other bank knows, you know, has your funds for some period of time. Maybe it's been withdrawn. But sort of knows all of your transaction history can freeze your account. can track this down. I don't know if this is a good way to escape with the money. And that's kind of the flaw, I guess. If you are a black hat crypto hacker right now, it's just like, it's relatively, it's not easy to go hack money and crypto, but like we see these things every week. This is just one of the biggest. But like, if you're smart enough to hack, are you smart enough to get away

Starting point is 00:55:01 with it to get away with the money and somehow withdraw it? We haven't seen many hackers complete that last circuit. No, definitely not. The other very interesting. thing about this story that is just a complete curveball. Ryan, the Ronan side chain was exploited. This hack happened on March 23rd, Wednesday, March 23rd. No one noticed until the 29th. I forgot about that. Six days later, people, no one noticed. When somebody tried to withdraw, they were like, I'm trying to withdraw my ETH and it's failing. Why? Because the ETH's not there. It's not in the, it's not the bridge vault anymore. Right. And so people were probably sending Eith into the chain because that was probably fine, but like getting back out, there was no,

Starting point is 00:55:43 there was an empty vault. Six days. Six hundred million dollars went missing for six days. Oh, crypto. There's a joke going around Twitter. I think Kobe was the spawn of this joke where he said, oh yeah, I noticed that the Ronan side chain got hacked. Therefore, I went and shorted Axi, but then the token prompt and it pumped and I got liquidated because no one noticed. Right. Exactly. Exactly. Sorry for the laughter. That's $600 million. A lot of people have lost money. AXE has stated that they are going to reimburse people.

Starting point is 00:56:16 I don't know how they're going to do that, but they have stated that that is their intentions. It's always unfortunate when we see $600 million getting lost. That is the reason I'm laughing, though, is because I expect everyone to be reimbursed. I mean, Axi has massively deep pockets. And we've seen this before, right? With this Lana wormhole hack, everyone was just reimbursed.

Starting point is 00:56:37 Is this ultimately just coming out of A16 Z? Is A16 Z footing the bill for this one? I don't know. Actually, I actually think that what will happen is they'll get the money back because the Black Hat hacker will find it's impossible to actually. And so we'll cut a deal in some fashion or it'll get frozen. I think they'll get their money back. But if not, yeah, then I suppose that comes out of somebody's treasury.

Starting point is 00:56:59 Just give $580 million back and have $20 million. Your life is going to be the same. Black hats. It's easy. Don't be greedy. Yeah. Congrats. You be white hat.

Starting point is 00:57:11 You pulled it off. Give it back. Take the $20 million or whatever number you can settle with and then have a good life. Well, some people are worried because this is not the only side chain, of course, with a bridge. There are many. One of which is Polygon. Yeah. And so this is from, oops, account muted.

Starting point is 00:57:28 Chris Black. I also have it muted. By the way, Polygon is secured by a five of nine multi-sig, just like. the Ronan network, he says, and they've refused many, many times to answer any questions about how these keys are secured. Somebody from the Polygon team, that's a legitimate concern, okay? If this can happen to Ronan, can this happen to Polygon in the same way? Why don't you read the response, David? Yeah, this is somebody who's on the Polygon team, so is informed, like, has actual information about this. CISO, Chief and Security officer or something?

Starting point is 00:58:01 Yeah, something? I don't know. It says, Polygon keys are secured in a very different way than Ronan. All Polygon keys are on offline hardware wallets like a ledger, not on a server connected to the internet, which is the vehicle for exploit of the Ronin side chain. Cool storage. Cold storage. Good, like, how it should be. For that reason, it's impossible to do a Ronan-like attack on Polygon.

Starting point is 00:58:23 And this person continues in the next tweet. No backup is stored digitally on a device connected to the internet. Unfortunately, there's no way for me to prove this to you, so you just have to take my word for it. So, like, obviously, just have to take my word for it is kind of like, a hotline in trustless crypto. Like we don't want to trust people. It just needs to be the way that it is.

Starting point is 00:58:43 But also, we can't have the details of the Polygon security mechanism public on Twitter because then that just informs the attackers on how to do it. So it's appropriate that this is not information that's publicly known because then that is a risk vector. So in my mind, the current state of Polygon Security, if it is indeed an offline cold storage wallets that like perhaps not all of the multi-sixiners know the locations of the other multi-six signers. That makes sense. As far as we can tell, the security for Polygon is grade A level security. They've done it right and they're taking it seriously. Yeah. It's got to be better than

Starting point is 00:59:21 Ronan, but also I think there are some learning lessons here, right? And the top learning lesson for everyone listening is side chains do not inherit the security of the base chain. chain. Okay. So let me just repeat that for a second. Side chains do not inherit the security of the base chain. So if you move your assets from something like Ethereum to another chain, and if that's a side chain, realize that you are incurring some risk in that, in that move, in that transaction. You are now in a different security paradigm than you were. And I think this is just like, I'm very careful with what I do on side chain. chains, right? It's like I know some of the risks and I'm not going to be like putting my net worth

Starting point is 01:00:10 on a side chain or significant amount of my net worth on a side chain at this point in time. And I think at some level the same goes for layer twos. I mean, they don't have the Lindy. So just be careful where you're moving your money and your assets. The second thing, I think I took away from this is again a reflection that is really, really hard for hackers to get away with funds on chain. Right? So, like in this case, I don't know that the hacker's going to be able to get away with it. And they really weren't in the wormhole cold case either. And then the third thing, I don't know if this is a good lesson for us to take away, but it is a lesson that the market's taking away is that if the chain is capitalized well enough,

Starting point is 01:00:55 the pockets are deep enough, you got some of that VC money, you got a nice treasury, then when something bad happens, oftentimes people get reimbursed. Is that a good thing? Is that a bad thing? I'm happy for the scenario, but it does set a precedent where people sort of expect to be reimbursed. And we tend to become more reliant on this trust dependency here. Some people say that's a feature, some people that it's a bug. I think it depends. I sure wouldn't want to see that on layer one chain. I guess on a side chain, maybe that's a compromise. that you're willing to make. But I do get worried

Starting point is 01:01:33 when everyone expects a bailout, starts to expect a bailout. There's a big enough amount of money that's lost where it can't be bailed out. I guess it's appropriate for bailouts to happen in the beginning stages of this whole bridging, bridge or ecosystem. As bridges get more hardened,

Starting point is 01:01:49 as users get more informed, we would probably simultaneously expect bailouts to happen less and less and less, but we're at the very beginning stages, so I guess bailouts are appropriate. But we don't know if there's a bailout coming on this one. That is, I think that's just speculation.

Starting point is 01:02:02 Yeah, it's a promise from AXE, but yeah, we don't know the mechanics of it. So just to see. Just to wrap up this conversation, just some market chatter. The Ronin token, the RON token was $2.40 before the hack, and it is now currently at $1.70. So down like 30-ish percent, not, not that crazy for how big of a loss it was. The AXS token kind of unfazed, really. It's kind of, it's mostly just down four percent. or it's ups 9% in seven days,

Starting point is 01:02:33 which is a little bit nuts, but it peaked at $72, and then the hack happened, and now it's at like $63. Look, this is the market telling us it's not really worried about this event. The market's saying it's going to get resolved. Yeah.

Starting point is 01:02:45 Without big losses, a big incident. That's a big hack. That's a big hack. All right, let's move on. Let's talk about some Ethereum stuff, David. And I think it's time to clear out some misconceptions here. And we want to do a few misconceptions. The first, there's some misconceptions.

Starting point is 01:03:00 going on about the merge right now. And we're going through a tweet thread from Trent, Van Epps. But I think we're going to focus on maybe five things, five misconceptions of the merge. Do you want to take the first one? Yeah, the first one is that stakers get unburnt fees. And so not all of ether is burnt in a transaction fee. And in proof of stake, it's about, it actually doesn't change versus proof of work versus proof of stake.

Starting point is 01:03:27 EIP 1559 on average burns about 75. of a transaction fee. In the future, stakers will get this 30%. So unburnt fees, tips on the execution layer will be sent to stakers. That's pretty awesome. I don't know that many people know that. Post-merge, if you stake, you actually get those tips. You get the transaction fees. Passive income. In addition to new ether that's minted as a block reward, you also get 30% of all transaction fees, which in bull markets can be very significant. Absolutely. The second thing wanted to highlight, this is a misconception. A lot of people think that once they,

Starting point is 01:04:04 once the merge happens, that they will be able to withdraw their ETH from the staking contract. Uh-uh, can't. Not post-merge, okay? Not immediately post-merge, I should say. So staking in Eth right now is a one-way ticket. It still will be post-merge.

Starting point is 01:04:20 You will not be able to withdraw your Eth post-merge. There will be another update that happens. I don't know, this could be three months later, six months later, longer. Six is the estimation that I've heard. Yeah. So we'll have to see how long it takes. But at that point in time, you'll be able to withdraw, not immediately.

Starting point is 01:04:34 I think there's some pros to this, which is a lot of people are saying, well, post-merged, a bunch of the steak the ETH is going to get sold. No, it's still going to be locked. It's going to be locked. But also, keep in mind that when you stake, that ETH is going to be locked. It's a one-way ticket. You're not going to be able to withdraw your ETH post-merge. So that's the second misconception to clear up.

Starting point is 01:04:53 Yeah, the alpha here is that post-merge, there is zero net new ether introduced into the second market. The block reward issuance is going to stakers, which is locked because they can't withdraw. The fees are going to stakers, which is locked because they can't withdraw. The reason why they can't withdraw is just reduce complexity. One step at a time, this is a very big deal to merge to proof of stake. And so we're just keeping it simple, doing one thing at a time, letting things sit, letting things stabilize. And then the withdrawals will be unlocked roughly six months later. In that time, in that six months, the yield on staking goes from like 5% to probably like 15% and the demand to stake will be three X'd because the yields are going to be three

Starting point is 01:05:34 times higher. And so there's going to be three times more demand to stake ether, pull ether out of the secondary market to stake it and no ability to withdraw for six months. Bullish. I think so as well. Why don't you take the next one, number three, the third misconception. The merge will not reduce gas fees. I think people got this conflated when we started talking about Ethereum 2 versus Ethereum 1. And once we merge, we're at Ethereum 2. That's no longer the case. Sharding will reduce gas fees, but that's later.

Starting point is 01:06:03 That is phase 2. This is currently phase 1, which is the merge. So the merge is not going to reduce gas fees. I'll take the next one. This is just a reminder. I think if you've been listening to Bankless, you probably know this. But the ETH issuance is about to drop from 4.3% in proof of work to 0.43%. That's a smaller number.

Starting point is 01:06:25 It's crazy, though. It's a lot small. 4.3% to 0.43%. This is far lower than Bitcoin, like post-havenings. It'll take many years. It's the lowest of any blockchain. By far. By the lowest of any blockchain.

Starting point is 01:06:37 And that 0.43%, a significant portion of that is going to be burnt. That's where we get to ultrasound money, deflationary ETH as an asset. Because if the amount of ETH burnt exceeds 4.3%, then we're in deflationary territory. Negative ETH burnt on the year. So think about that. 3% to 0.43% that is the ETH issuance in the post-merge world. Here, you want to do some comparisons, Ryan? The current ETH issuance rate, inflation rate is 4.3% as you just said.

Starting point is 01:07:08 Solana is a little bit above 9% in inflation rate. And Avalanche, as we said earlier, is at 26% inflation rate. Both Salana and Avalanche are proof of stake, but their much higher issuance rate comes from the centralized monolithic blockchains that they have. they have so much throughput that they need to issue a ton of currency in order to secure that very high rate of block space issuance. The more you create block space, the more you have to spend on security because you have more block space to secure. Because they are very, very high throughput blockchains, because they're centralized, they have to issue a ton. Ether, Ethereum is much more limited in block space because we want to maintain decentralization at the base layer.

Starting point is 01:07:49 That's how you do that. Therefore, it doesn't have to issue as much, so it's as low as 4.3%. The point, though, Ryan, of why I'm doing this, is that this is comparison, 4.3% of Ethereum in proof of work mode in comparison to other proof of stake blockch. And so when Ethereum joins Solana and Avalanche in proof of stake, it's going to be 0.43% inflation rate on ether versus Solana's inflation rate of 9% versus Avalanche's inflation rate of 26%. These are in different categories. It's just killer economics, man. And that's not including the burn. That's not including the burn.

Starting point is 01:08:22 Well, let's talk about the fifth misconception, and why don't you do this last one? Yeah, this is a good one. Running a node post-merge does not require any eth. You can be either a staking, validating node, and you can add transactions to the blockchain, or you can be a listening node, and you can send your own transactions to the Mempool via your own node, but you do not, in order to run your own node, you do not need to add any eth to it. It is free and accessible to anyone to run a node. Do you know that's not actually true, Ryan, for Avalanche?

Starting point is 01:08:56 I know I'm trying to not be an e-maxi here, but in order to run a node on Avalanche, you have to be a validator. In order to access the M-Pool and see what's going on in the M-Pool to participate in M-P-P-E-A-Valach tokens, which is reminiscent to order flow for people that own the shares of the network. It's concerning to me as to the gating of that information

Starting point is 01:09:18 away from the public because the public can't run their own avalanche note. Yeah, I am also concerned about that. But this point is really important because some people say, well, it's going to cost thousands of dollars worth of ETH to run a note. No, it's not. It's just cost to hardware, and anyone can run it from a consumer machine. That's, by the way, always been a case. Anyone can run a node on Ethereum today.

Starting point is 01:09:40 Just go download Geth and set it up. DapDode or something else. David, you know what's cool about this, these misconceptions, is they're starting to fade on the institutional side. Okay, so... People are starting to get it. I don't have a Bloomberg terminal or a subscription or whatever is required, but there is now an analyst at Bloomberg who covers Ethereum, and he is writing some fire content about

Starting point is 01:10:04 Ethereum, and there are few articles that someone forwarded me this week. This is one on how Ethereum is transitioning to a global asset. This article absolutely nails it. There's another article on how the DC... model suggests the network asset for Ethereum, ETH, is undervalued. We just did some episodes with Ryan, Alice, and others on the DCF model for Ethereum. We did our DCF model with Justin Drake over a year ago. Yes, we did that over a year ago. Our conclusion was that I think ether might be undervalued. This is what this analyst says too. Conservatively, ether could be worth 6,100. Well,

Starting point is 01:10:44 you plug in whatever numbers in the DCF and you spit something out, but it's sure a lot higher than it is today, depending on the numbers you put in. But, like, you know, like any obvious number, it will be higher. And then here's an entire Bloomberg article on the merge, how the merch will be a super catalyst. I guess all this to say is the institutions are starting to get it. And it's funny to me because we've been talking about the value proposition, ETH is a triple point money for like probably two years, I would say,

Starting point is 01:11:10 like longer than that if you go back, but on bankless for about two years. And it's interesting to me to see kind of the lag time of like institutions starting to get on board and starting to understand these narratives. This is from our friends at One River Asset Management. And they bought one of the biggest Bitcoin buys in history about a year and a half ago. It's like they are an institutional hedge fund who is now very crypto-focused. This is what they say about Ether.

Starting point is 01:11:36 Ether is being transformed into a low-risk bond asset. And it is cheap. Remember, Ethereum the Internet bond? Remember all those articles we wrote about? Remember what we were talking about? I remember. The largest institutional investors are no saying it, okay? is increasingly clear, this is a quote, that the future of finance runs on Ethereum with

Starting point is 01:11:54 ETH as a reserve asset to the ecosystem. The institutions are now repeating it. The narrative is cementing. Still an early set of institutions, but it's out there now. We did our job. One of the things I've been hammering about as to one of the most underappreciated aspects of proof of stake with EIP-159, and basically Ethereum versus Bitcoin, is like, Bitcoin is really hard to value.

Starting point is 01:12:20 It's hard to put numbers and models around demand for Bitcoin. It's just like, do you take it on faith that people value this? Is really the Bitcoin investment thesis. With Ethereum, you have the issuance rate. You have the burn rate. You have the stake rate. You have active addresses in defy. You have demand for ether in defy.

Starting point is 01:12:39 There's so many metrics in numbers, especially when, like, there's, first off, the appropriate numbers to actually make a DCF analysis, which is very comfy zone for, institutions. But the sheer number of just things to measure metrics for ether the asset just is enabling institutions to be comfortable. It makes it feel like it's in their wheelhouse, which kind of is. And it's definitely one of the most bullish things about ether. It's like you can actually reason about it with metrics and numbers rather than just like assuming that there's going to be sufficient demand for an asset. Yeah. They're like, oh yeah, we know bonds. We know, we know equities and we know capital assets. Oh, and this thing performs like a bond, like an

Starting point is 01:13:18 equity like a capital asset okay we can value that thing and oops when we plug it in the spreadsheet it spits out a much higher price than the price of eth now that's what's going on look at look at that we look at the words that they use low risk bond asset and it is cheap that's all you need to know that's all you need to know uh let's keep moving though because the merge is coming there's still a lot of misconceptions about this transition from proof of stake to proof of work and i hope bankless listeners got a chance to tune into our episode with Lynn Alden and Drust and Drake. That was kind of a debate on the merits of both sides. We put together, and you wrote a post on bankless this week,

Starting point is 01:13:56 that dives into four misconceptions about proof of stake versus proof of work. And I think this is information that's worth getting out there. Why don't we hit all four of these points, David? What's the first one? Yeah, the first one is, the rich, do not get richer in proof of stake. This is a common critique of proof of stake, is that it's a rich get richer system. And actually, it's completely the opposite.

Starting point is 01:14:21 The fact that yield is baked into the asset allows everyone in the world to democratize access to the upside. So there is no difference in rate of return for somebody that invests $1 billion into ether versus $1 million into ether versus $1,000. Everyone gets the same rate of return. And in proof of work, it's actually, that is the actual rich get richer system

Starting point is 01:14:44 because of how much complexity and middlemen there are between $1 of capital and proof of work getting translated into $1 worth of hash power. You got to invest in the A6. You got to invest in the mining facilities. You got to get the A6 through the supply chains. You got to have relationships with manufacturers. You got to power your facility. You have to cool your facility. And all of these things have respond to economies of scale.

Starting point is 01:15:05 And that means that there's significant competition around Bitcoin miners, which Bitcoin is really like. But it is actually indoctrinated. who can invest more capital into proof of work most. So that's a misconception number one. The next one is that proof of stake is like equity money and proof of work is commodity money. These are mental models, but like in terms of actual definitions, it's not empirical.

Starting point is 01:15:29 There are no empirical definitions. So I go through this and I actually make the claim that ether has both commodity-like and equity-like characteristics, and Bitcoin has mostly neither. And I explained in the article about that. So that's number two. Proof-of-stake does not give governing, powers to stakeholders. There is a difference between on-chain governance and token vote governance

Starting point is 01:15:49 and proof of stake. These are different things. There are systems that have on-chain governance like Tezos and DeCred. And Tezos is proof of stake. DeCred is a hybrid proof of work, proof of stake. But the consensus mechanism and on-chain governance are completely different things. And Ethereum does not have on-chain governance. And lastly, dealing with 51% attacks, how does a proof-of-work system deal with a 51% attack if the time come? basically the answer is if somebody can generate enough hash power to 51% attack a proof of work network, they have enough hash power to do it in forever.

Starting point is 01:16:25 So if honest miners can't source enough honest hash power to overcome that 51% attack, that proof of work chain is dead because the attacker has enough hash power to attack it into infinity. The exact opposite thing is true with proof of stake, where if somebody is attacking the proof of stake network, because ether is registered to Ethereum, unlike A6, ether is actually at a specific Ethereum address.

Starting point is 01:16:47 The network can identify who is the attacking address, where is the attacking eth coming from, and we can coordinate around a fork to do something about that, whether it's forcibly exiting them from the validator queue or slashing their ether. It's just so much easier to discover and route around an attacker in proof of say than it is proof of work. So those are the four big misconceptions that I addressed in this article.

Starting point is 01:17:09 I did my best to make this extremely digestible, so I highly encourage everyone to go read it if you are trying to get your learn on about why the hell we're doing this whole proof of sake thing in the first place. I think there is a difference between sort of an opinion on proof of stake versus proof of work and which produces a better money. I think there can be some variation in opinion there. But there's also some fact that I think you lay out in these misconceptions, right? It's like it's a fact that proof of stake is not more. rich get richer than proof of work, right? And it's like empirically a fact that proof of work can lead to economies of scale that help the rich to get richer. So I think it's important when you're looking at this to like separate the fact versus the opinion. And, you know, some of these

Starting point is 01:17:56 misconceptions can be refuted just with like, hey, have you actually thought deeply about this? And here are the facts as we lay them out. Now, there are some disadvantages with proof of, proof of stake versus proof of work, like weak subjectivity. There's like some more deeper, deeper answers to some of these things. But I don't think these misconceptions actually hold up under any scrutiny. Anyway, go take a look at that. David, let's flip to some NFT stuff. A few things happen this week.

Starting point is 01:18:27 Number one is Tiffany and Company. Apparently they just acquired an NFTs. So Tiffany and Company, Tiffany Rings, Diamond Rings, and NFTs, I guess. This is the same NFT that Budweiser bought. This is one of the rocket ones where you can kind of build your own rocket and each one has their own different brand. This seems so off brand for Tiffany, but you know, the metaverse is weird.

Starting point is 01:18:48 So, all right, cool. Do you think somebody's like, there's some consultant out there who's like, I have my 10 easy steps to how a corporation can enter the NFT game and, like, lays out exactly the strategy for what they should buy first. Can you imagine being that consultant. Like, imagine this NFT on a PowerPoint. is like, all right, like Tiffany, board of directors.

Starting point is 01:19:08 Like, we're going to buy this NFT for the podcast listeners. This is a kind of a shittily drawn, excuse my language, a poorly drawn, hand-drawn rocket with different components. It looks like a flash game from like the early thousands. And now it's part of Tiffany and company. Yeah. Well, next is the consultant recommends you buy a Cryptopunk or a Board Ape. That's what you should do next.

Starting point is 01:19:30 Or a stadium. Budweiser. They have beer.eath cans. Look at this, man. Oh, that's a real can. I thought that was Photoshop. No, that's a real can. Oh, I got to get one of those.

Starting point is 01:19:43 I don't know where you can get these. Okay, this is an NFT beer fest. So I don't think they're cranking these out of their factory. I don't think you can go to your supermarket and buy these, but they do exist. Beer. Dot Eith, king of NFTs, Budweiser, going all in with their dot-eath address, right? If you, if I saw a beer. dot eith on a beer can in like my local like supermarket, I would just absolutely die. That would

Starting point is 01:20:07 be way too cool. It might actually get me to drink a Budweiser. Oh my god, it says the king of NFTs on it. I know. That's great. That's great. Oh, there's a GM badge. There's a GM badge right in the middle. Where? Right. Yeah, right in the center. That's great. Just well done. Whoever's do it well. Budweiser is just in the NFT game. They totally are. Totally are. Putting craft beers to shame, okay? Just crack open a bud. Bitcoin stuff, okay? Macro strategy. Macro strategy. Macro strategy? Yeah, macro strategy. A $205 million loan to do what, to buy Bitcoin. I saw this title and I was like, who is macro strategy? Is this a typo? Well, it turns out it's a subsidiary of micro strategy. It's Michael Saylor again. He's here. He's got a subsidiary of micro strategy. And when they

Starting point is 01:21:00 asked him what we should name it, Michael. He said macro strategy, and he's using that to buy more Bitcoin, of course, dollar cost averaging in. It's the perfect name. It's the perfect name. Michael Saylor living up to his total Chadness. $205 million on a loan worth of Bitcoin. I do still think that'll pay off for him. Let's talk about this. There was a campaign that launched this week called, Change the Code, not the Climate. You've heard Bitcoin fuels the climate crisis, but did you know a software code change could clean it up? Wow, that sounds enticing. What can I do? How can I upgrade Bitcoin and get rid of the environmental waste? Is that a way to do that? This is the

Starting point is 01:21:40 campaign. Estimates show Bitcoin uses more electricity than all of Sweden. I mean, at a surface level, this is super damning, right? Bitcoin alone could help warm the planet by more than two degrees. I'd love to see the details on that one. Bitcoin is resurrecting fossil fuels. A software code could change it, could fix it by 99%, why aren't they doing it, right? Like at a surface, if you're kind of mainstream, if you're sort of a normie, you already don't like crypto because you don't own any, you've heard some bad things. And you read this, you're like, this is terrible. Right. I hate Bitcoin. Right. This is the campaign that is being pushed out. And guess who's funding it in part? Greenpeace, of course, EWG, but also Ripple, the Ripple Foundation. Oh, those

Starting point is 01:22:26 bastards. Yes. Ripple is in on it hard. If anyone has ever thought that Ripple has been a friend to the industry, like think again. Okay, well, give me your take on all of this. What do you think about this?

Starting point is 01:22:41 Okay, so when I was reading that, I was like, wow, this feels like it's coming from somebody who knows something about the industry, right? Like a Bitcoin Maxis would point to this and be like, because it labels Ethereum,

Starting point is 01:22:51 like, why isn't Bitcoin doing proof of stake like Ethereum is? And it's like, this is like probably interpreted as, like a narrative attack against Bitcoin by Ethereum. It turns out it's Ripple. Wow, I didn't know that. Yeah, it's Ripple.

Starting point is 01:23:02 My take on this is that it is really, really probably spinning a lot of narrative, and it's probably way more not true than it is true. For sure. At the same time, the rest of the world is totally ready to hear this. This narrative just resonates with people. It lands so hard. Even if it's wrong. I'm conflicted on this because, like,

Starting point is 01:23:26 like, if Bitcoin was what Bitcoiners would believe it to be, a lot of this stuff could actually become true. Like, imagine if Bitcoin was a $100 trillion network, like, and it's still proof of work. It would be consuming an absolutely insane amount of energy. And so, like, that is true. What is not true is that, like, there's any amount of evidence that Bitcoin, the network, is increasing the average global temperature. There's no evidence to that. And so this is really just a narrative campaign. Oh, God. It's just stuff like, it does. Just god damn bastards. God damn it.

Starting point is 01:23:58 It doesn't, look, it doesn't show like the totality of the picture. Like the drying industry, just like drying your clothes. It consumes more electricity output, the entire industry than Bitcoin has in its existence. Right. It's just stuff like this. Benchmarks we don't really see. It's not telling the full story. It's, you know, can you just click a button and upgrade a software code to reduce Bitcoin's energy used by net?

Starting point is 01:24:22 No, you can't. It's not how this works. Right. It's not, Bitcoin is resurrecting fossil fuels. Maybe, maybe in some places, but like, in others, it's incentivizing actually green usage for usage. Yeah, this is ridiculous. But here's the thing.

Starting point is 01:24:39 I guess when you're thinking about the narrative battle that we're all fighting, I'm just, we just talked about proof of stake, I'm very glad that crypto proof of stake does not have to fight these types of battles. Yeah, it's one of those things where like I'm very frustrated with Ripple for doing this, but at the same time, like, yo, Bitcoiners, this is your fight-to-fight. Like, good luck. We, you know, Ethereum has six more months.

Starting point is 01:25:02 Yeah, I don't know. Three more months. I don't know, we'll see. Three to six more months, yeah. It's not even fighting it, though. It's just like, we're going to switch. Okay, so here's a great tweet out of Mazzari. This is what I was saying with tumble dryers.

Starting point is 01:25:13 Look at this less than Bitcoin. Yeah, this image is a little fuzzy, so I'll read it out. Carbon emissions of Bitcoin compared to other industries. Bitcoin 41 million tons of CO2 per year or something. gold industry, 122 to Bitcoin's 41. Global banking, 130 to Bitcoin's 41. Tumble dryers, 53 to Bitcoin's 41. So do you, do you wash your clothes? Do you dry your clothes in a dryer? Because you are producing more energy than Bitcoin's. You don't have to. You can hang these close up. Aviation industry, 1,982 to Bitcoin's 41. So like, what are we really being concerned about here?

Starting point is 01:25:53 Yeah. I think, I think, I think, there's some takes here, of course. But again... You remember the leave Britney alone meme? Like, leave Bitcoin alone? Yeah, there's an element of that for sure. But also, Bitcoiners, good luck. Nick Carter, which the best for you.

Starting point is 01:26:08 Wouldn't want that job. Yeah, no, that's a hard thing to defend proof of work, I think, over the next decade for sure. But we have other battles to fight in the regulatory front. And I think one of the main battles that everyone in crypto should be concerned with is this attack on our bankless wallets, on non-custodial wallets. Here's the fight that Bitcoiners don't have to fight. But they should also, yeah, well, they don't, I guess.

Starting point is 01:26:33 Well, they do. Like, Bitcoiners want, they're in private key access, of course. Oh, yeah, I guess so. I was mainly referring to defy, but yeah. This is super, this is super important, okay? So last week, a Coinbase user in Canada sent me this letter, and this is an email, rather, from Coinbase. Starting on April 4th, Coinbase will introduce some changes required by Canadian regulators.

Starting point is 01:26:53 Specifically, when you send crypto to another financial entity or money services business, then transactions over $100,000 Canadian dollars, we legally require you to ask for the information about the recipient of that transactions, their name and address. Boo. This is like the question I have. So this is first on the menu, AMLKYC. They want to know who you're sending funds to if it's over $1,000. But what's next on the menu?

Starting point is 01:27:24 Just disable withdraws to crypto while it's all together. Like they could very easily do this. This is a nexus to do this with crypto banks, essentially. And my concern is that governments like the Canadian government want to trap crypto into the existing financial prison system that we have, digital financial prison system, this Panopticon, where they get to monitor all of the transactions. And with a click of a button, they can shut them. down. That is not a good system. There's not the bankless, decentralized finance money for the

Starting point is 01:27:55 system that we are fighting for. I think some Canadian politicians, to be fair, are pushing back on this. So this is one. His name is Pierre Pouliev, I think. Come on, Mr. Canada. Come on, Poliev, I think. This guy has a good shot from what I've been told at becoming Canada's next leader in Canada's conservative party. I'm not sure to what extent that's true. But look at this campaign. Let's make Canada the blockchain capital of the world. Right. This is going to be the new division in politics. Are you pro or anti-crypto? And it's going to be the incumbent who are already politicians that's going to be anti-crypto. And it's going to be the newer politicians. They're going to be pro-crypto. And this doesn't break down and left and right to me. I heard a progressive candidate

Starting point is 01:28:43 in the U.S. wrote a fantastic editorial piece on why the left should embrace Web 3 and embrace crypto this week that I read too. So that's a counterforce. But the EU as well, they're coming down against unhosted wallets. This is just breaking today, I believe. What's happening here? Yeah, the tweet says that's from Patrick Hansen, the econ and L-I-B-E committees, I don't know what that is, of the EU Parliament voted in favor of the FTR compromises DNA that cracked down on unhosted wallets. Entire regulation drafted to be voter on later today, but we'll certainly go through breakdown of the vote and more updates in this thread. Basically, the EU voting to basically control unhosted wallets,

Starting point is 01:29:27 restrict withdrawal to unhosted wallets. Oh, God, the unhosted wallet thing, that's basically like, is your wallet custodied by an institution that has an address? They don't like that. They don't like an unhosted wallace. It's such like a nanny state thing. It's like, oh, you need to have a wallet that is taken care of by somebody else. Like, no, I don't.

Starting point is 01:29:44 I can host my own wallet. That's kind of the point of crypto. Exactly. It's a terrible. So this hasn't gone through yet, but I'm not sure the process for which this sort of thing becomes a law in the EU, but it's on its way. And another example of kind of a regulators and government officials not liking unhosted wallets and the battle that's ahead. Patrick Hansen ends it like this. This information comes straight at the EP. I will share an official link overview of the vote here, ASEP. We have lost. the battle, that's this, but this is far from over. So there's still some steps in the process through which we could get something like this shut down. But you could see it, right? Last week we're talking about some of this talk in the U.S. from Elizabeth Warren, wanting to do similar types of actions. Now we're seeing it in Canada. We're seeing it in the EU as well. This is the SEC who has come up with this very expansive definition of the term

Starting point is 01:30:42 exchange and they it's very unclear what an exchange actually includes like is it is it code is it a non-custodial wallet is it something like uniswap something in defy the language that they're trying to put in place in a proposed rule in the u.s is very unclear and so there is a they've asked for comments i think there's like maybe 20 days remaining 30 days of comments this is some action we can take is actually to comment against this. We'll include a link in the show notes where you could tell the SEC don't create more uncertainty for defy. But the language around what's in exchange and what's not is incredibly unclear.

Starting point is 01:31:22 And I think it's also unclear by design. So we don't know if this is more of the same kind of energy of a rejection non-custodial wallets, but it sort of feels like it. And in all of these places, I almost feel like, you know, the boats kind of leaking. And people in the crypto industry are like, where's the leak? We're just trying to bail it out. We're just trying to get the water out of the boat. And we have to do this on a weekly basis.

Starting point is 01:31:47 Like they're just kind of wearing us down. There's always something that's trying to slip by and get past. Yeah. The number of things that they can do is probably more than we can probably patch the holes for. So the solution for this has always been to build our way out of it, which is what we are doing. Germany, 50% with crypto. That's how we do this. That's how we do this.

Starting point is 01:32:10 What's this story, David, in good news, Maker Dow is hooking up with traditional bank? What's that mean? Yeah, so Maker Dow is really innovating in ways that other organizations are not. They're taking this very real-world approach of getting real-world assets into Maker-Dow through a combination of just like LLCs and trusts to custody real-world property and then have these loans using the Maker-Dow system, loans generated against these real world assets. No one else is doing this. And it's one of the most bullish things about MakerDAO that no one really understands. There is controversy about MakerDAO as in like it's kind

Starting point is 01:32:49 of like the banked version of Defi. But I would contend that it's actually quite decentralized in the model that they are doing this. But you know, there is so much value out in the real world and the only organization that is going after that to put that into TVL inside of contracts is Maker. So you go to like something like DeFi Lama and you look at like, oh, it's It's got ether and Uni tokens and link tokens inside of its balance sheets. Only Maker has real world property, real world real estate inside of its vaults with a die backing it. Or no, backing die. Yeah.

Starting point is 01:33:25 So, like, it is, it's in a league of its own. And Maker is, in my mind, one of the most underappreciated things in Defi. This is kind of, I think your words are like, it's a back end for banks, right? What's cool about this is this small bank based in the suburbs of Philadelphia. It's a 151-year-old community banks, not one of the big ones, not like a Wells Fargo or in HSBC. It's just kind of a community bank, local community bank. They are trying to put $500 million in assets inside of makers, so you could lend and borrow against that, and that would be collateral forms of basis for dye.

Starting point is 01:34:01 So it's creating some innovation for some of these credit unions and banks that are much smaller, and it's sort of a bridge for these banks to defy, which is really cool. So, yeah, I'm, I think this is a counterforce against all of the regulatory scrutiny and pressure is just like, hey, look at the value that we can drive, the efficiency we can bring to our financial markets. These small banks are able to use these defyed protocols and provide benefits to the world. And this is in stark contrast to like the algorithmic stable coins of the world, which are kind of backed by a fractional reserve backed by nothing to some portion of them or aren't fully

Starting point is 01:34:41 backed. Like this is direct, in my mind, the equal and opposite force for that, where it's backed by extremely real things. And that $50 million loan that this HBV bank is asking for, there's going to be something, there's like going to be a steep fee with that. Like the risk of the real world assets is going to come with a maker-dousability fee and TBD on what that number is. But that's $50 million, which the MKR.

Starting point is 01:35:06 token is going to get burned as a function of that stability fee. There's going to be some sort of interest rate on $500 million, and it's going to go to burning MKR. That's kind of cool. I'm just excited that we get to see all these experiments play out, right? As I've long said with Maker. And so, we will be covering all of this and more in a live stream happening today, Friday for the listener.

Starting point is 01:35:27 Maker Dow, like I said, I think is one of the most underappreciated things. Because of the existence of the centralized foundation of Maker Dow, They haven't been able to market themselves in the way that other organizations have. So we're giving three Dow members a chance to give the most bullish case for MakerDAO and MKR that is happening as a live stream 9 a.m. Pacific, 12 p.m. Eastern time Today, Friday, as you are listening to this.

Starting point is 01:35:50 So if you want to hear the case, so why MakerDAO is so fundamentally bullish, we're going to hear it from three Dow community members who are bullish MKR. I think you should ask him if Doquan is going to kill Dye. I think I will. Guys, we're going to do. We will be back with the races of the week, but before we do, we want to thank the sponsors

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Starting point is 01:38:04 With Maker, the power to mint new money is in your hands. The Maker protocol is extremely hardened and operated by one of the most experienced Dow's in existence. They've been here since the beginning, they've seen it all, and so you can mint dye with the assurance that your collateral is safe. Soon, Maker will be present on all chains and L2s, so minting dye can take place on Oasis.app, Zerion, or any other Defi protocol that you use. Follow Maker on Twitter at Maker Dow and learn from the oldest and most resilient Dow in existence. All right, guys, we are back with the takes of the week. This is from someone on the institutional side. Mike McLaughan, he says, what?

Starting point is 01:38:42 Why don't you read this out, David? Yeah, demand is increasing, supply is declining, and Ethereum's position at the epicenter of the digitization of finance and money. So just further price appreciation, Ethereum, the denominator for NFTs, and the top platform for tokenization is becoming the collateral of the internet. This is a good take. This is nothing new to bankless.

Starting point is 01:39:02 listeners. But the cool thing about this is this is coming from TradFi. That's why we're talking about this. This is a Tradfai guy, Mike McGlone, who's at Bloomberg, 46,000 followers on Twitter. Probably none of those followers are the same followers that we have on Crypto Twitter. Those are brand new followers. And we got Tradfai people speaking bankless language about ether. People are waking up. Tradfai is waking up. Bankless quoting Bloomberg quoting bankless. That's what this looks like to me. Let's talk about this. This is a Reddit thread that I ran into this week, and something about it resonated for me. So it was this, or at least caught my attention. Yes, I am in it for the money. I don't care what people think. Cryptocurrency

Starting point is 01:39:42 from the perspective of a male in his 30s. That is the title of the post. The poster goes on to describe the conditions today. There's no wage growth, no prospects in many countries, constant financial crisis that keep hitting and hitting us from all sides. Now inflation, it's going to melt our savings. That's if we're lucky enough to have savings in the first place. education system that's a joke in most countries crippling deaths high cost of living rents going up and up and up and so on crypto for a lot of us is the only way out the only way to be able to afford a house or flat in the future so yeah you bet i'm in it for the money and i don't give a damn what people think priority number one for me is to provide for my family what do you think about this i'm in it for

Starting point is 01:40:27 the money, 100% that's why I'm in crypto. It's because there's no better way to get money for someone who's like early in their life. All of the other opportunities have been already extracted. What do you think about this take? Oh God, I could talk about this for hours. He talks about so many things and I'll just reiterate them. No job prospects, constant financial crises, new inflation, melting savings, crippling deaths, high cost of livings, rents going up. So yeah, he needs to be about the money. But the system. that is creating all of these things is a result of the centralized, captured financial system that we are leaving. And the reason why crypto works is because why crypto number is going to go up and why

Starting point is 01:41:08 this guy is going to make money is because crypto is fixing all of those problems. One of those problems is not having any money. One of the best use cases of crypto, Ryan, is number go up. And so that is the first thing that solves so many people's lives with crypto. One of the number go up is the most freeing thing possible. And so being in it for the money is the bootloader to talk about everything else about crypto. Crypto's not here to make you rich. It's here to set you free. But in order to be free, it really, really helps to be rich. And so that is like the first step. And so once this guy finally gets rich off of crypto, he's going to start to realize that the, and this is what Kevin O'Waki talks about with regenerative crypto economics. The cool, the reason why crypto works is because

Starting point is 01:41:55 we're all in it for the money. And instead of the old banking system, the old government system, the old institutions capturing us, everyone being here in it for the money is actually enabling for these systems to work. Bitcoin is secure because people are greedy and they need to mine Bitcoin. Ethereum works because people are greedy and they want to stake as much ether as possible. The systems, these democratized systems where everyone wants to be greedy and for a number to go up is how this industry is powered. There's why there's energy in Daos.

Starting point is 01:42:26 There's why there's energy in Ethereum. There's why there's energy behind the Uniswap Dow. This is why crypto works. And so this is always the first step in people's journey into getting into crypto. First, you're here for the money, then you get the money, and then you understand the values behind how this industry is powered. We've got to get you wealthy before we get you healthy. God.

Starting point is 01:42:48 Why did I say all of that? Look, man, it's like this is the first step to freedom, right? We said it before that crypto is a journey towards freedom, and you can't have financial freedom unless you have some level of financial independence. But the thing is, like, I think the important thing to remember is like sometimes, you know, we've said it before. Decentralization is kind of a luxury for the wealthy, right? I think decentralization hopefully becomes more important to people over time.

Starting point is 01:43:16 But at first, like, the way you got into crypto, the way I got into crypto, it was very much about like how is this an opportunity to achieve some level of financial freedom and it's totally fine if you're in it for the money at least at first just don't stop when you have the money right keep going be in it for everyone else lend a hand downward don't pull up the ladder help other people to centralization is a public good for everyone that keeps this system free of corruption and cancer and corrosion and that's definitely what we need so it's almost like david my expectations are higher for people who know better and have been in this industry for a long time. And a lot of when we get like a little bit maybe preachy on decentralization, it's not

Starting point is 01:43:59 talking to people who haven't like made it in crypto yet and are just trying to get wealthy. It's talking to people who are here already wealthy and like know better. Know that if we don't create systems that are sustainable in the future, there's no future for this industry and it won't do the good capital G that we think it can. The way that you said that where like you're kicking the ladder out as you go, that's a really important point. And that's why after you get yours, it's important to reach your hand down and pull someone else up with you. And a way to do that is to promote decentralization because that is how these systems are going to generate wealth for our kids and our kids' kids. So this guy needs to focus

Starting point is 01:44:37 on getting as much money as possible because like he said, his number one concern is providing for his family. Once he has done that, he can consider, it has the luxury to consider more things. number going up on Bitcoin and Ether because these assets are decentralized to turning into promoting centralized systems is akin to getting yours and then shutting the door behind you. So that's why, once you get yours, you've got to promote values. There you go. How many jobs you have in crypto? This is a great tweet.

Starting point is 01:45:08 Actually, I love this tweet. The three in Web 3 stands for three full-time jobs. That's the tweet. What do you think about that? How many jobs do you have? When you can work for 50 Dow's. There is no limit as to what you can do. And sometimes when you work for multiple dows,

Starting point is 01:45:24 you can do work that is doing work for multiple dows at once. Really blurring the lines between what's a job and what's not a job. Yeah, we tell you to get a job in crypto. We're not telling you to be less busy. I mean, you'll be more busy when you get a job in crypto. That's a good point. Remember that. That's a good point.

Starting point is 01:45:40 All right. Proof of stake will go down in history is one of the most democratizing forces of power that has ever been invented. I feel like I read that from someone this week. Great quote. David, that's yours. Whoever said that as a genius. Just complete genius.

Starting point is 01:45:54 What did that genius mean by this quote? Yeah, Ryan, earlier you tweeted out this week and you flashed on the screen, what is the entire point of crypto? What is the point of crypto? And I said pushing power to the margins. So what we were just talking about with decentralization. The way that crypto works is over the long term, the structural balance of crypto is stable so that future generations do not feel disenfranchised.

Starting point is 01:46:16 And the way that we do that is we push power into the individual. who are always at the margins. You've got the institutions at the center. You've got the individuals at the margins. Crypto is here to put power at the margins. David, I think we're going to skip what we're excited about this week because I know we're both excited about the same thing. It's super obvious. Yeah. The bankless arena. I've always wanted my name on an arena. But I think I'll settle for bankless's name on an arena. It's way better. Way better. So let's just jump to the meme of the week. And there was a lot of meme fodder this week that we could get into. But this is the one we chose.

Starting point is 01:46:53 Because this is the iconic Will Smith slap Chris Rock week that kind of shook the world. I woke up to this on Monday and I was like, wait, what happened? It was crazy. Can you believe that happened first of all? Yeah, no, that was a surprise. That was a surprise. It was a little bit refreshing. Here's some just like good old classic Hollywood drama.

Starting point is 01:47:15 Slapstick? Don't promote violence. but like if I have to choose between the drama of the week being Will Smith slapping Kevin Rose and Russia invading Ukraine, I'll go with... Wait, wait, Will Smith slapping Kevin Rose? Oh, excuse me. Sorry, Kevin Rose. Who's the guy? Who's the guy that got slapped?

Starting point is 01:47:32 Chris Rock. Chris Rock. I don't know why I say Kevin Rose. That's funny. It has nothing to do with Kevin Rose. Yeah, like a little bit more lighthearted of, you know, drama in the news field this week. It's not like... This meme is of Bitcoin.

Starting point is 01:47:47 slapping this shit out of the bear. Bear market's over. So that's why this meme of the week. And Ryan, you have a fantastic caption. I'm going to swear here. So cover your kids' ears. Keep my coin out of your fucking mouth. I can't believe you said that at the Oscars fan.

Starting point is 01:48:04 That's hilarious. Guys, that's it for the weekly roll-up. I hope you enjoyed. We're going to get to the moment of Zen. Stump and you got to stick around for it. But of course, got to end with our disclaimers, as usual. None of this has been financial advice. Bitcoin, Eith, and DeFi, they're all risky.

Starting point is 01:48:20 You could lose what you put in. But we are headed west. This is the frontier. It's not for everyone, but we're glad you're with us on the bankless journey. Thanks a lot. Yo, hey guys, you guys fuck with NFTs? Hey, what's up, man? Yeah, we're building right now.

Starting point is 01:48:34 We're really just bridging the gap between Web 2 and Web 3. Oh, I'm building. We're really just bridging the gap between Web 2 and Web 3. We're building. Just hanging out with my boys over here. They're speaking. I'm not speaking because you know, I'm just busy building.

Bankless - ROLLUP: Bankless Arena?! | $600M Crypto Hack | Prepare for the Merge | PoS & PoW Misconceptions

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