Bankless - ROLLUP: BitBoy Lawsuit | Ethereum Merge Updates | Biden Cancels Debt | Tornado Cash Fallout | Pudgy Penguins

Starting point is 00:00:00 Some bad things happening, but also some good things happening. Happy Friday morning to you. It is the fourth Friday of August. And David, the special time. What time is it? Ryan, it's the Friday bankless weekly roll-up where we cover the entire weekly news in crypto, which is always an ambitious endeavor. Yet, we persevere into the frontier every single week, nonetheless,

Starting point is 00:00:24 with a cup of coffee, of course. Yeah, I hope you are enjoying your cup of coffee. By the way, David, did you get a cup of coffee when you went in the mountains last week? were in the mountains. What did you take with you? Do you enjoy any coffee or any? Yeah, so we had coffee, but then we ran out of water, so we had to, like, walk into, we had to skip the coffee and walk out of there. Yeah. I guess you need water. Is that, is coffee higher on Maslow's higher key of needs, or is it lower? I don't know. It definitely makes you lose water, so you definitely, if you're short on water, you got to, you got to skip the coffee. How is the trip, though? Oh, dude, it's super good, man. We were 5,000, 5 and 1⁄2 feet up, but we're like,

Starting point is 00:01:01 zero is we started at like 3,000, but like we're in Washington, so basically like really close to sea level. You can see the ocean from the top of the mountain. It was great, man. It was great people. You're also had cell service, I heard, because you're checking in. Yeah. So, I mean, we were so high on the mountain that, like, we had sight lines with Victoria, British Columbia. And so we actually were able to get service. And so when I wake up on Sunday, I just like look at my phone to check out the time. And I have like a widget on my front screen that shows me the, it shows me the ether price every single... You're checking prices on the mountain. I know. I'm I knew it. I can't not check prices. It's on my home screen. Like, it's the first thing I look up.

Starting point is 00:01:36 You could delete it from your home screen? No. No, I can't. Okay. Smart coded into the OS. And so I wake up on Sunday morning, like, sweet, we're down like 10%. Like big ass red candle. Excuse me language. Sorry. Yeah, you knew it, huh? It was right after the roll-up, too, and prices were up. So, and then we had a crash. But you also saw some, like, strange activity while you're up there. Yeah, dude. Okay. I don't know. This sounds a little conspiracy theory to me. So convince me. This is what we were worried about. Okay, so it's 946. It's dark out. We're on the top of the mountain. And, you know, we're watching a shooting star here or there.

Starting point is 00:02:09 There's a shooting star. It's nice, super cute. And then we see this very slow line in the sky. I'm like, wow, that is the slowest moving shooting star I've ever seen. And then it just doesn't go away. Like shooting stars go away, like a second or less. This thing, we saw it for 90 seconds, maybe a little bit longer. And it was just like this long line.

Starting point is 00:02:29 And it had this weird trajectory. It was like first it was coming down across the horizon like a shooting star But then it changed direction and started moving toward us and then it went right over us and it was this line of light and as it got closer and closer It turned from a line to like a series of dots and then it looks like we were like right below like you know how those planes like trail Assigned like you know marry me Susan yeah yeah it was like that but lights but who has ever seen those with lights on them so like that was okay okay So what do you guys think in there like there? Like there has to be a group of five of you. I know one of them has got to be a believer.

Starting point is 00:03:04 UFO believer. I'm a, I feel like a very sane, grounded individual. And I'm like, I don't know. I don't have an explanation for what this is. This can't be a plane. You think it's possible? I don't. I don't know.

Starting point is 00:03:14 Like, it is by definition an unidentified flying object because we didn't know how to identify it. So we were all here, dude, like there's no explanation for what this thing possibly is. Like 30 to 40 dots in a row flying at a uniform. There was no sound, no propeller engine, no jet sound. like didn't make any goddamn sense. And so we, well, we had service. So we started pulling up Twitter

Starting point is 00:03:35 and we typed in like UFO Olympic Peninsula, Washington. And like 50 other people's videos and photos of the same exact thing all showed up. And like people freaking out like, what the hell is this, what the hell is this? And then we saw like people also saw it in like Albany, New York and like Minnesota. And we're like, what the hell is going on?

Starting point is 00:03:53 That's weird. This is in the middle of the night. Middle, the 9.46 p.m. 9.4.m. because I have the video like tagged. And then because we're eventually figuring it out, it's like, apparently it's Starlink launched like 58 new Starlink satellites. And when they launch them, apparently they launched them like ducks in a row. And they start very close together, but over time they spread out. But like it took us forever to get there.

Starting point is 00:04:18 And also that's what they say allegedly. Like it's a very, very like coincidental cover up story. And the next thing that happens is that we see again exactly 24 hours. and two minutes later when we go back to the cabin, and we're sitting out on the beach by the campfire, and we see it again. We see it again. It was one of the most, like...

Starting point is 00:04:37 God, it's just Elon Musk messing around. Messing around with him, not aliens. Rich people playing rich people games, I guess so. Yeah, I guess so. But you know what? This is not going to become a UFO truther podcast, I hope, David, unless you are... Like, what's the probability now you think this was a UFO versus Elon?

Starting point is 00:04:55 I mean, I would expect... So when we were up there, we were like, okay, we're going to get back to like civilization tomorrow and like either aliens are going to be here or we're going to have like a rational explanation for this. And aliens are not here and no one has else has said it's not Starlink. So like I'm going with Starlink. All right. Well, bankless listener, if you've heard this story, you have other information for David to feed his alternative ideas, then please send it over to us. But we're going to get to crypto right now.

Starting point is 00:05:20 First thing on the menu. Yeah, you remember crypto? The other big conspiracy theory out there. The tornado chill. tornado cash just got a little bit colder some bad things happening but also some good things happening maybe a page's turn some people are fighting back we're gonna talk about that david what else we're covering tribe dow is shutting down there's a proposal from the tribe down team to shut down and call it a day much to the consternation of the tribe community uh so we're going to cover that and like how the

Starting point is 00:05:50 proposal actually looks like to wind the thing down uh and then bit boy the you know bit boy is crypto's biggest YouTube account, filed a lawsuit against another YouTuber who made a video of him talking about him being a scammy pump and dumper. And then BitBoy files a lawsuit of citing like defamation and like destroying BitBoy's business. And then all of crypto Twitter, Ryan, shows up to defend this other YouTuber who's not a crypto YouTuber who made this video about BitBoy. So we're going to cover all of that drama. And this, and Kobe, who just yeeded $100,000 to help defend this innocent crypto YouTuber. High drama.

Starting point is 00:06:30 High drama on crypto Twitter this week. Awesome. I think we also have some merge updates. Of course, some coming out from the Ethereum Foundation, too. So a date is definitely being proposed. Speaking of dates that are proposed, it's a date of a conference that's coming up. Our friends and sponsors, SmartCon,

Starting point is 00:06:49 this is a conference by Chainlink. This is a CryptoWeb3 conference. Look at these speakers, David. This conference is absolutely stacked. I've attended virtually the past couple of years. This time it's in person. It's physical. So you know I won't be there because it's a physical conference.

Starting point is 00:07:04 But everyone else should go. I'm the weird one because who do we got? Let's go into this conference, David. Yeah, we got Eric Schmidt, former CEO of Google. We have Sergei Nazaros, of course, founder of Chain Ling. Abology. Recently had him on the podcast, SBF, Ed Felton from Arbitrums, Donnie from Avae, Emin from Avalanche, Anatoly from Solana, Kane from Synthetics.

Starting point is 00:07:25 And so this is the first time that SmartCon is actually in real life. And so previously, it's been in virtual every single year, but this is in real life. There is a link in the show notes to get a ticket if you so choose to go. And also a code bankless to get a hefty discount if you also want a hefty discount, which why wouldn't you? Hefty discount. This is for you. For the bankless community, just type in bankless and get that discount to a gift from the folks at SmartCon. Thank you for that.

Starting point is 00:07:52 All right, David, let's get to the markets today. Bitcoin. I'm seeing some red candles. I'm seeing some down action. Yeah, right after we recorded the weekly roll-up last week. So like when bankless listeners opened up the weekly roll-up Friday morning, like all of our numbers were all bad. It was all bad.

Starting point is 00:08:06 Yeah, it happened like Friday. Yeah. And so let's see. Bitcoin started the week at $23,000 and a half, $23,500, ending the week at $21.6,000, down 8.2% on the week. Oof. That doesn't feel good. Down almost double digits.

Starting point is 00:08:24 And Ether, I think, is down double digits this week. It's down double digits. Yeah, started the week at 1920, ending the week at $1,700 where we are now, down 11.4% on the week. David, what happened to my merge trade, man? Did it die last week? No, it's fine. It's fine. We're back 14 days. We're back 14 days.

Starting point is 00:08:43 Just back in time 14 days. Not a big deal. That's what happens when you're zoomed too closely to this. But how about the Ether Bitcoin ratio? Because that's a tell for whether we're in merge season. or not. Yeah, where it started that last week at 0.0795 down to 0.0876, so down 1%. But if you look at the chart, like you zoom in, there's basically 0.08, went all the way down to 0.073 and then recovered to where it is now at 0.0787. So like, went down a lot and then recovered a lot.

Starting point is 00:09:18 And so to me, that pressure, that buy pressure to keep the ETHBTC ratio at its local highs, I think, is the merge trade. That's kind of strange. That's merge strength. Merge strength. What happened here? Like, why did this happen on Friday last Friday? This big candle down. I don't know.

Starting point is 00:09:33 I don't know. Markets going to market. Crypto does go down. Did you know? Sometimes on a daily, hourly, minute-by-minute basis, even goes up and down. It's what they tell me. Sometimes it goes down for an entire year. I'm back to David.

Starting point is 00:09:47 Why do we even do numbers, huh? Every week. How about the total crypto market cap while we're doing numbers? What is that looking like? Down from where it was last week, 1.16 billion, excuse me, trillion, to where it is now at 1.086 trillion.

Starting point is 00:10:02 So down, what is that, 0.8 trillion on the week? Do you know, David, I remember a time when total crypto market cap was $10 billion. Some people remember way, like, way sooner than that. But like, I remember the days like 2016 when Ethereum was like 500 million to a billion. And like Bitcoin was just the big behem. So zooming out, this feels a whole lot better.

Starting point is 00:10:29 Like one trillion dollars. What a success for crypto. Yeah, zooming out to where 90% of these listeners weren't here, Ryan. Sorry. But look at these things. You know, like, I don't know. We're back to crypto prices. I came in June of 2017.

Starting point is 00:10:44 And the total crypto market cap was 80 billion. dollars. Wow. See? How silly is that? Now you're at a trillion. Wow. What a success. Wow. It's been very successful. Yeah. And June of 2017 was kind of like pretty frothy at that time. We were well into the bull market, yeah. I was a 2017 top buyer, certainly. Top buyer badge with pride. I think we all were. We've all about some tops around here.

Starting point is 00:11:10 That's how you learn in crypto. But let's talk about some Gov stuff. You want to talk Gov stuff a little bit? It's a little bit. because some stuff's happening. Biden just okayed a sweeping student loan relief plan as midterms near. That's a key word, as midterms near. Of course, right before November. But also, what's happening here? It looks like some debt forgiveness.

Starting point is 00:11:33 Yeah, $10,000 of student debt is being forgiven for anyone who receives less than $125,000 a year. So if you make $125,000 a year or less, you have $10,000 less of student debt. if you had it. Just been eliminated. It's gone. Gone. Gone. They deleted the zero or the $10,000.

Starting point is 00:11:52 If you had a Pell Grant, you got up to $20,000 of student debt for low and middle-income borrowers who had a Pell grant. So, cool. So, like, you know, a lot of people have student debt. So, you'll add, like, multiply $10,000 by a number of people who make less than $120,000, $25,000 a year that, and who have student debt. Like, that's a large number. I don't really, I think there's that calculation in this article, but it's pretty good number. It's funny. I mean, you just said cool. Some people think cool. And a lot of people who have student debt are like, this is cool. And, you know, some people who don't, but they're

Starting point is 00:12:24 just supportive of debt relief, uh, are also think this is cool. Some other people don't think it's very cool as well, right? Right. Um, this does remind me a lot of the PPP loans, though, which were loans for, um, businesses, some small businesses got the funds. A lot of large businesses got the funds that were eventually forgiven during COVID. It kind of reminds me of that. And it strikes me that, you know, some of the people who got the money are generally in favor of this and people who didn't get the money aren't, right? And so like it just feels how that works. It just feels very much like different constituencies are hooking, finding their way to hook into the money printer, right? And whether that's a good or bad thing, that's kind of beyond the scope of this podcast to consider.

Starting point is 00:13:08 But what we are looking at is the money printer continues to go burr, right? And one, you know, whether it's red or blue, one politician gets in control and rewards their constituency, and then another gets in control of rewards there through tax cuts or debt relief or stimulus checks or that sort of thing. I feel very much like, David, we're kind of losing the credible neutrality of the money printer through this process, though. And that is certainly a contrast with crypto. David, you've got a meme here. I think this is the classic trolley problem. What are we looking at here?

Starting point is 00:13:40 Yeah, so there's two, like, fights on this debate. There's, like, people, some people are sad that, like, they paid back their student loans, and then the student loan gets canceled, and they're like, well, F, like, I shouldn't have paid it back. I should have waited just get it canceled. So there's, like, I think, I thought, a funny trolley meme here, a trolley problem. And so the trolley problem, of course, traditionally, it's there's one person on one track, five people on the other track. If you do nothing, if you don't divert the trolley, the trolley's going to kill five people.

Starting point is 00:14:09 And so if you do something, if you divert the trolley by, like, switching the lever, then it only kills one person. It's a moral question as to, like, do you take the action, you as a person with agency, do you take the action to divert the trolley to kill one person rather than five people? In my mind, you absolutely do that, even though you then become like a murderer technically. You also save five people. It's like net beneficial. Utilitarian. Mutilitarian, yeah. This trolley, but there's also there's like an infinity number of like renditions of the trolley problem.

Starting point is 00:14:36 So this one, the trolley has already killed 10 people. And if you divert the trolley, it won't kill five people. It will instead kill zero people. And then the person who's like in control of the lever says, but if I divert the trolley now, that would be unfair to the people that is already killed. I thought it was funny. I thought it was funny meme. Yeah, no, I get it. This is kind of the argument. It's like, but you bring up an interesting question, David, about your ethics. I'm curious here. So have you ever played that like trolley problem game where it's like 30 different renditions of the trolley problem? Yeah. Yeah. Yeah. And then they start off relatively like, easy, but then they get more and more, like, hard.

Starting point is 00:15:11 Yeah, okay. So there's like some that are very, very difficult, right? So like you got a baby on one side and then five people over 85 on the other side and do you flip the switch? Is it baby or do you let the trolley go kill five 85 year old people? What do you decide in that case? Oh, am I, am I on the stands here? Yes, I'm curious. As my business partner and co-host, I need to know your moral ethics, David. So, big utilitarian over here. So, like, the way that I would do this, if I was to do this, like, how old are these people, 80 years old? Like, if the, 85 plus. Okay. So, like, I don't know what the stats are, but the way I would come to determine this is that if you are 85 years old,

Starting point is 00:15:56 what is your expected remaining years to live? And so, like, if you're expected remaining years to live is, like, eight, multiply that by five and you get 40. And then you take the expected remaining years to live of the baby and if it's greater than 40, then you kill the old people and save the baby. Okay. Let me modify that. What if one of these 85-year-old people are Nobel Prize-winning scientists on the cusp of curing cancer?

Starting point is 00:16:24 What then? Oh, if you know they're on the cusp of curing cancer, then you absolutely kill the goddamn baby because that baby hasn't done anything. My gosh. He's sick. I can't believe my partner. Well, no, because like, if you cure cancer, you, like, recreate, like, billions. of years of life.

Starting point is 00:16:40 These problems. All right. Kill the baby, Ryan. Kill the baby. Oh my God. Do it. We're about to get sued

Starting point is 00:16:46 by Bitboy or all sorts of different agencies here. Okay, my favorite one, which I think is the one that, okay,

Starting point is 00:16:53 most answers I answered with consensus, but the one that I didn't answer with consensus was, do you kill one human or five sentient robots? What do you do?

Starting point is 00:17:05 Well, I've got to represent the AI side, so definitely you know. Well, okay, that's good because I also represented the AI side. Oh, my God. Can we get back to crypto? Sentience and sentience. Who am I to judge?

Starting point is 00:17:20 You know, at some point in time, I guess maybe AIs will be making these decisions for us. That reminds me of our episode with Dmiti that's coming up. Will the future AIs of the world, please let it be known that if the trolley problem kills AI, that I choose to save you? Is that Rocco's ballast? right? Roku's basalisk. Yeah.

Starting point is 00:17:41 Roku's bascalis. Anyway, let's move on. Deep cuts so far on this roll up. Deep cuts on this roll up. Maybe this will make the cut. Maybe you'll never hear this. We'll see. Did you know, though?

Starting point is 00:17:51 Okay, so we're just talking about Biden. More money printing, of course. More debt forgiveness. That is what it is. Here is a tweet from Jacob Franik, who says, a Fed study finds that 60% of all U.S. inflation over 2019 to to 2021 was due to

Starting point is 00:18:08 what? A demand for goods thanks to fiscal stimulus and other aggregate demand factors. Ryan, what is student loan forgiveness? This is fiscal stimulus. Is that fiscal stimulus? Is that increasing everyone's net worth by $10,000? It puts more money

Starting point is 00:18:24 in people's pockets, more perceived money. They're more willing to spend on other things, including meme stocks, because they're probably millennials, and also crypto, right? Which is kind of an interesting byproduct. But there's a direct link between the money printing fiscal stimulus, of course, and inflation, which is a problem, David, because the U.S. is in the

Starting point is 00:18:44 process, the Fed is in the process of trying to get inflation under control. This is a chart from Pantera Capital, and this is showing the real 10-year treasury yield. Okay, so if you buy a treasury bond for 10 years, your real rate of return right now, that's the return of the bond minus inflation, is negative 6%. Sorry. Right? Negative 6%. six percent. David, would you buy this bond earning negative six percent per year right now? I feel like there's two

Starting point is 00:19:16 rational ways to say yes to that question. If I embarrass on the stock market and I think the stock market is going to go down more than six percent than yes, I would buy bonds. Rather than have it in stocks. Rather than have it in stocks,

Starting point is 00:19:33 yes. What was the other one? I can't remember. What was the other one that said? the other one is maybe you're the Fed and you have to buy bonds to keep the entire because that's what's happening. That's the other rational outcome. What's actually happening is they're kind of running out of buyers, right? Because a lot of people are like, this is not a great deal with inflation running so hot. And they're buying alternative assets.

Starting point is 00:19:52 So the Fed has been buying a lot of bonds historically, of course. Anyway, it's a real quandary. And I think there's a juxtaposition between debt forgiveness, inflation, and also the real return on sovereign bonds. And you contrast that with crypto. and this is the market we find ourselves in right now. David, there's also some energy price things going on. What's this? Yeah, this is a graph of the cost of a megawatt hour in Euro terms in Germany.

Starting point is 00:20:21 I haven't been paying too much to the macro markets except for like a tweet here and there talking about the commodities markets, which are looking bad and energy markets, which are looking worse. So just let it be known. We don't have time to go into it, and I'm also just not an expert. But energy in Europe is really expensive right now. Going to the start of the year, say, let's just pick an arbitrary point. It's like January 2022.

Starting point is 00:20:42 The cost of a euro megawatt hour was about like 80 to 100 euros for a megawatt hour. We are currently up to 313. So it's three X'd in since the start of the year. So energy, cost, Europe, going up. That's bad. And it's going up relative to euros in particular, which is kind of bad because Europe is a next exporter, net exporter of energy. So they don't have energy kind of backing their,

Starting point is 00:21:06 their currency the way rubles do more on that in the luke rauman episode which i think is a fantastic episode on that that we did but david uh we're talking about money printing sbf and ftx was definitely printing some money back in the bull run it's not printing money if it's revenue i guess so uh all right so uh some leaked financial data how much was ftx making last year uh in 2020 first off before we get to last year in 2020 ftx was making just a measly below 90 million dollars, you know, just below 90 million dollars in 2020. In 2021, they were making over a billion dollars of revenue. So from under 90 million to over a billion in revenue, some insane profit margins, profitable with 27% operating margins. And then not only did they make just a ton of

Starting point is 00:21:53 money in 2021, but they also made a ton of strategic acquisitions. And so they have just like, Sam Bankman-Fried and FTCS just won the bull market. Made a bunch of money, bought a bunch of businesses at a very cheap discounts because all of those businesses were distressed. So FTCX really just won the bull market for sure. Yeah, they definitely did. And that's what they're doing, buying these distressed assets right now. David, this is interesting, I think. We wanted to include this year because it seems like a layer two season might be afoot, some more competition for alternative L1s, at least on the NFT side. This is a stat from a mutable X. What's the mutable X doing? Mutable has passed Solana in daily NFT sales volume in dollar terms. Now it is the only chain, it's the second chain with the most volume behind the Ethereum layer one. And this kind of just makes sense.

Starting point is 00:22:41 Like Immutable is a NFT optimized platform. It's built for NFTs and for trading NFTs. And also with super cheap fees, kind of like Salana. So perhaps eating into Salinas market chair. But also Salana overall is down in NFT trading volume. It was between like three and five million dollars. in daily NFT trading volume back in June. Now it's down to $1 million of daily NFT trading volume

Starting point is 00:23:06 where IMX has now gone to like one and a quarter million dollars in trading volume. This is one thing we predicted. I'm not sure if we're right on this thesis, but alternative layer ones will find themselves competing more with layer two, Ethereum layer two's than Ethereum directly. Maybe that's starting to play out now. It's also just a big plus one to the modular Ethereum thesis where specific chains that are custom,

Starting point is 00:23:29 built to do and perform specific activities are going to be better at those activities than monolithic chains who have to like have tradeoffs because they want to do everything at once. Right. And here's a plus one to the bankless thesis. So maybe we've learned something this cycle, as we always learn things. Did you know that even in the midst of a bare market, crypto hardware wallets are up, up bigly. Okay? So Ledger says their sales recently blew up since the House Celsius hacked by 4.5X. 4.5X, Treasurer and SafePal also up, hefty sales figures. People are withdrawing their funds from centralized exchanges.

Starting point is 00:24:10 They're taking sovereignty of their own crypto, taking their own keys. They're going bankless and they're buying hardware wallets. And that's on the back of centralized exchange failure. This is a good thing, I think. We are learning our lesson and we are getting more people to go bankless. kind of bullish on this, actually, David. Yes, of course. This is, I mean, this is how the crypto industry learns.

Starting point is 00:24:31 We learn through pain. So when something bad happens, when everyone gets like a punch to the stomach, they're like, I didn't like that. What can I do to not have that happen to me again? And hardware wallets are definitely a solution. Absolutely. Get more resilient as time goes on. David, got a lot more to cover in the next section.

Starting point is 00:24:49 What are we going to talk about? Oh, my God, so much. First, coming up next is the freezing, the chilling effect of the tornado cash. But we also got some thawers on the horizon, people trying to stop the freezing and thaw things. Am I drawing out this metaphor too much? I don't know, probably. But in addition to that, the Tribe Dow trying to unwind, trying to shut down proposal from the Tribe Dow team to just call it a day with Tribe and the community backlash as a result of that. And also, BitBoy, Sue's a YouTuber, but the entire crypto community, the entire crypto Twitter community shows up to defend

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Starting point is 00:26:56 followers go with you to whatever social media application you want to use. And instead of being trapped by an algorithm chosen by that app, Lens lets you choose the way you want to experience your social media. All right, guys, we are back. More on Tornado Cash. So more on the OFAC sanctions. Of course, as you know, OFAC sanctioned for the very first time, smart contracts on Ethereum, the Tornado Cash smart contracts. The last couple of weeks we've been dealing with and talking about the fallout from that. Here, one of the fallout items. This is in the, in the, in the, the, negative section. There's also some positive things we're going to talk about. But what is this first headline we're looking at, David? So post-merge, all of the Ethereum clients are going to have this

Starting point is 00:27:35 thing called MEV boost kind of plugged into it, like a little bit of a sidecar. That's produced by flashbots. And this is something that is first an accessory to the Ethereum protocol, but then later becomes integrated into the Ethereum protocol. Basically, it's a precursor to proposer builder separation. And it allows Ethereum Stakers to just receive pre-create. blocks from MEV Boost, from these people called block builders who are building blocks, which are kind of a computationally intensive thing to do. And then these block builders just propose these blocks and e-stakers, proposers are e-stakers. And then eastakers take these blocks. And then they just like, oh, I'll take that bid associated with that block and I'll propose that.

Starting point is 00:28:14 This service is going to be created by this thing called MEV Boost. But sadly, FlashBots has a U.S. centralized entity. And they stated that they plan on complying with OFAC regulations, because they don't want to go to jail, like relatively rational. And so as a result of that, that's one of the big conversations that trigger this Ethereum censorship conversation saying, oh, well, if FlashBoss is going to maintain OFAC compliance, we're almost doing censorship at the protocol level. And as a result of that, FlashBB has accelerated

Starting point is 00:28:43 the open sourcing of MED boost and their relays so that more people can participate to remove some of that censorship. But the point here is that FlashBots, as a centralized regulated entity is not going to go toe to toe to with OFAC and they will be complying with OFAC. I actually wouldn't necessarily classify this as a tornado cash chilling effect. I would actually straight up saying like this is, they would otherwise be in violations. And so you can't really blame them.

Starting point is 00:29:10 Like I wouldn't say like no tornado, excuse me, no flashbots people. You got to go to jail for us. But it's also stuff we don't like. Yeah, definitely. And there's two things for this. One, if you still have more questions on MEV Boost or FlashBots, go to the episode that we released earlier this week on FlashBots. You'll understand all of that. We actually recorded that episode before all the tornado cash stuff happened. So we weren't able to ask the censorship questions. But if you're wondering how this affects Ethereum's long-term protocol censorship resistance, listen to our episode coming out with Justin Drake this Monday. New Drake dropping. It's so good. Okay. This is our episode, I think we called it Ethereum uncensored. And he classifies this problem, the problem of flashbots and blockbuilder censorship as a form of weak censorship attack, weak sensor attack.

Starting point is 00:30:03 And so he goes to the difference between weak and strong and shows what the mitigators are. Anyway, fantastic episode, if you're worried, like I am, when you read a headline and you're like, FlashBots is blacklisting Wallace, what does this mean? Got to do your research. Listen to both those episodes coming out on bank lists. We could talk a lot more about that, but there's more. FTCS, they froze the user. This is actually tornado cash chilling effect, as in this did not need to happen. This is not, no one is forcing FTCS to do this. So there's a layer two, similar to tornado cash in terms of the tech stack it uses, but also

Starting point is 00:30:36 different, more advanced in some ways. We talked about a lot. It's called Aztec. And FTCs actually froze a user account who sent coins to Aztec's ZK money. Aztec, of course, was not on any OFAC sanctions list. Does use similar technology. It preserves your privacy on chain only in the layer, too. And then now here's a crypto exchange saying wallets can no longer,

Starting point is 00:31:00 like our users can no longer withdraw to Aztec. Big problem. Flashing red light. What do you think about this, David? Yeah, yeah. This is like an unforced error, I would say. Like if we're going to be in crypto, can we live by crypto values, which is to not censor it.

Starting point is 00:31:16 like minimum viable censorship that doesn't make operators of FTX and others go to jail. And so Aztec, you can go and use Aztec right now. You're not violating any laws. You are free to do so. I'm not a lawyer, but I'm pretty sure that's true. And so the fact that we are banning people that are using Aztec before just because it is privacy services is like against the ethos of crypto. We didn't need to do this. This is bad.

Starting point is 00:31:43 Yeah, this is part of the chilling effect. AsTech also responding by implementing some practical deterrence and measuring their effectiveness. This is a tweet from Aztec, and I understand why they're putting this out there. They want to say that they're doing something, but I don't like it, David. Look at this.

Starting point is 00:31:59 I don't like that they have to do it, yeah. I don't like that they have to do it or they feel like they have to do it. This is all part of the chilling effect. They're doing some IP-specific deposit rate limiting. They're looking at people's IP addresses and trying to rate limit how much you can deposit. Nothing else.

Starting point is 00:32:15 This has a throttling effect to how many people use Aztec and the scale of what Aztec could be. So this is a throttling effect for privacy for everyone in the world. A massive problem. And let it be known that if you are North Korea or a highly motivated actor, you can get around all of these things. Oh, dude. Except for the system-wide daily asset deposit caps, which they mean like you know,

Starting point is 00:32:41 like no more than 1,000 ether can go into Aztec on a daily basis. other than that, it actually just makes it have more friction for individual people like you and me. And it's annoying for somebody like North Korea, but it's not going to stop them in the slightest. David, have you seen that meme of like there's a guy and there's like a sidewalk? Yes. Yeah. Okay. That's like six inch wide or the six feet long barrier that has no barriers on either side and it's like banning North Korea.

Starting point is 00:33:08 Yeah. And so it's like North Korea is obviously just going to route around all of this as they usually would. So the only group that you're punishing are law-abiding privacy-seeking individuals, which is a big problem. But let's keep moving David. It's not Azix's fault. That is Oax's fault. That's Oax's fault.

Starting point is 00:33:26 Yeah, yeah, I get that. I get that. It depends, like, I think there's a spectrum of how much you react to the chilling effect, right? I don't want, look, people can't code from jail. We can't do the bankless podcast in an orange suit. Right? So, like, we got to stay out of jail in order to. to continue this stuff. And yet, we don't have to be over-compliers either. And so I'm not sure

Starting point is 00:33:49 what the line is here, but there is a line here. Anyway, the fight continues. But what is happening with Uniswap Labs? Yeah, more wallets are being banned from TRM Labs, which the Uniswap front-end and other front-end used to block banned addresses. So 253 crypto wallet addresses over the last month have been banned. They have been claimed to belong to criminals and hackers or interfere with U.S. government sanctions. So, D-Fi front-ends, getting harder to use for, well, 253 addresses. Sad. And you know, Jake Chavinsky says he doesn't blame organizations for doing this at this point in time. Because of the chilling effect. If you want more of the mitigators for front-end kind of bans, then listen to that Justin Drake episode. He walks through all the ways we can solve this as a

Starting point is 00:34:38 community. But also, David, the developer, Alex Persef, who was arrested by authorities in the Netherlands, is still in jail. Right. Okay? So he's been in jail now, I think, for 12, 13 days. Right. And a judge just ruled that he will spend the next 90 days in jail as well until there's a hearing. No charges have been laid. No charges. We don't know why he's in jail. How are you supposed to hire a legal defense if you don't have charges? It's unbelievable. How do you go to court without charges? They tried to, his lawyers apparently tried to make bail, and bail was denied.

Starting point is 00:35:20 Again, no charges, right? It's just like there was... Where's the due process? I don't know. I don't know what's going on. Anyway, some people are protesting this, as they should be. There's some ways to get involved, too. So some people are literally protesting in person.

Starting point is 00:35:36 You know, this is my tweet. Judge just ruled that Alexi must stay in jail. Alexi must stay in jail. Alex wrote some open source privacy code of public good. A few bad guys used his code, so they put him in a cage. Who's next? Vitalik? Tim Berners-Lee?

Starting point is 00:35:52 We're going to arrest the creator of TCPIP in the internet. So I think we need to get loud as a community. And there are ways to do that. There's a website called set-Alexfree.n.l. Or you can join a sign a petition, join a telegram group. donate in various places and start to speak out because we at least need to know what he's being charged for. If they don't have a charge, they need to let the guy free because it looks like they're just putting him in jail for writing code. How is that permissible in any free open democratic society?

Starting point is 00:36:22 Yeah, there better be a real good reason why that guy's in jail. Otherwise, it's completely ridiculous. And also scary. So protests happening as well. But David, there's also some good news in the story. The thars coming to the rescue. Okay, what's a thaw? Imagine people with flamethrowers just like flamethrowing the tornado catch chilling effect. That's what's going on here.

Starting point is 00:36:42 So Representative Tom Emmer, who we've had on the podcast, tweets out, I sent a letter to Secretary Yellen regarding the unprecedented sanctioning of tornado cash. The growing of adoption of decentralized technology

Starting point is 00:36:53 were certainly raised new challenges for OVAC. Nonetheless, technology is neutral and the expectation of privacy is normal. Oh, wow. I like that line. Expectation of privacy is normal. Thank you.

Starting point is 00:37:04 Thank you. And then this is what this guy, Ryan, Sean Adams says. Thank you for standing up to privacy, Representative Tom Emmer. But he is not the only tornado cash flamethrower of the chilling effect. Matthew Green, who we've also had on the podcast, he says on Twitter, I made a GitHub organization to republish a fork of tornado cash repositories that were banned following the Treasury's sanction order of the other week. So there's tornado cash code back up on GitHub, a new GitHub repository with tornado cash,

Starting point is 00:37:31 because all that is is open source code. Matthew Green, nice job. Third, tornado cash, a flamethrower, anti-chilling effect, thar person, tether. Tether, that's unexpected. Yeah, Tether. Tether holds firm on a decision to not freeze tornado cash addresses awaits law enforcement instruction.

Starting point is 00:37:53 So basically saying, hey guys, we're not going to freeze those, but, you know, come talk. We'll come talk. Yeah, send us a reason. Like, give us a court order. Right. They're not falling victim to the over. compliance trap.

Starting point is 00:38:06 I will say, though, Tether has, like, blacklisted, I think, like, 10 to 50 times more addresses than USC has. But granted, it's been around longer and has had a higher market cap longer than USC. So some an asterisk there. Definitely. Ultimately, David, as we get into the Justin Drake episode, our greatest defense is the layer zero, right? And if there is some sort of censored version OFAC sanctioned version of Ethereum,

Starting point is 00:38:34 versus an uncensoredable original Ethereum, which one of the core devs going to support? Which one is the Ethereum community going to actually develop software for and actually want to use? This is a quote directly from the last core devs call from one of the core devs of Ethereum.

Starting point is 00:38:52 He says this, if we allow censorship of user transactions on the network, then we basically failed. This is the hill that I'm willing to die on. We start allowing users to be censored on Ethereum

Starting point is 00:39:04 then this whole thing doesn't make sense, and I will be leaving the ecosystem. Who's going to work on your OFAC-sanctioned Ethereum version? Chills. It's not going to be the core devs of Ethereum, that's for sure. Right. Yeah. It's been good to see that response.

Starting point is 00:39:19 If OFAC wants an OFAC-compliant version of Ethereum, they need to build all of that infrastructure from themselves because no Ethereum core devs are going to be like, okay, yeah, we'll just build OFAC compliance into our censorship resistant blockchain. Ethereum. Gov, baby. Let's go.

Starting point is 00:39:37 Let's do it. Build your own blockchain if you want to sanction one. China's doing it. Why can't the U.S. do it? Yeah. Go do it. Nice job.

Starting point is 00:39:45 This is Marius on the Geth team. I mean, probably the most important piece of Ethereum and infrastructure that exists. Bullish, bullish. I think bullish layer zero. David, let's move on to the next story.

Starting point is 00:39:56 What are we talking about here? Yeah, so this is the FAA fallout of the Faye Dow. So the title of this article here that the Fay community is up in arms over the dissolution plan. And so, citing technical, financial, and future regulatory risks, the team behind Faye says it's ready to call it quits. They make a proposal to the Dow,

Starting point is 00:40:18 but that proposal would only partially repay $80 million of the Rari hack, which is now the Rari Fai, Ferrari, remember that whole thing. So Rari Dow, Rari got hacked $80 million, and there's plenty of funds to pay back these hack victims in full, but according to this proposal, this proposal pays back the tribe token holders, hence, you know, this is the tribe team, and only pay back the hack victims partially. At the peak of the bull market, the Faye market cap, the Faye stable coin was over $800 million. Now it's just $140 million.

Starting point is 00:40:52 A comment from Sam Kazmani, founder FRAC, says it's a new low for defy. So an important part of this story is that back in May, holders of the tribe token, the entity's governance token, all voted to make the community whole after the Rari hack by repaying the bad debt on behalf of the hacker. But the specifics would be hammered out later. But then when the specifics were actually hammered out, the team with the majority owners of the tribe token, the actual centralized team, voted no. And the team said that, well, the original vote was non-binding since it didn't take place on chain. Oof. Big lame. Big lame. Okay, so going into the actual details of the proposal for the wind down of the Faye Dow, which is coming out.

Starting point is 00:41:32 of the Faye team. There's three phases, a consolidation phase, a fuse hack repayment phase, and then a final redemption phase. Basically, consolidation is just like a liquidity phase. It's like, let's just sell all the assets and get as much as liquidity as possible. The current account ownership, asset ownerships of the Fai Dow, the Tribe Dow, the 50,000 staked eth, 22,000 that 22,000 eth is going to be converted into dye using balancer. That 50,000 staked eth, because it's illiquid is going to be distributed to tribe token holders pro rata because they can't sell that. So they're just going to distribute the staked ether. There's 18.7 million LUSD from the Liquity Protocol is going to be converted to die using periodic trades on balancer or curve.

Starting point is 00:42:16 And then so that will be retained by the Dow temporarily. And then they have some other assets, 1.5 million in VE Bell, which is going to be traded OTC for Fay, tribe, or Baal. 1.5 OM traded OTC for Fay, tribe, or die. And then there's some liquid. Fox tokens and index tokens, which, I mean, very small amounts. And then, so after a lot of that staked ether gets distributed to the tribe token holders, you have phase two, which is the fuse hack repayments, which of the remaining assets in the org, any of the assets that could be converted to die, that 22,000 ether, and also that 18.7 million LUSD, that will be used to, whatever is left will be paid back to the fuse hackers. And then there's the final repayment,

Starting point is 00:42:59 which all Fay becomes wrapped dye. So if you are a Fay holder, you basically become a die holder. Tribe becomes redeemable for a pro rata claim on all the remaining assets after setting aside die for backing Fay. And then that's basically it. Well, what kind of sucks about this is it feels like it's like, like, at least with BlockFi, depositors didn't get a haircut, right? Equity holders got a haircut.

Starting point is 00:43:25 And it seems like in this case, the people who are depositing into Rari in this case, which was later merged into Faye, which is like what you're talking about, like, Fay and Tribe is where this is all coming from. They are not getting protected. They're getting protected after all of the tribe equity holders. Yeah, the tribe equity holders are like, I choose to pay myself. Yes. And not the hack victims.

Starting point is 00:43:49 Oh, and there was a governance proposal that said that we should help the hack victims, but it's non-binding. No, that was a fake one. So it's just, I'm with Sam. This is just kind of shape. Look, I don't know all of the details of this. So I hazard to talk too much about it. But in general, this doesn't strike me as a good thing or a good precedent to hit or the right thing.

Starting point is 00:44:13 This goes back to our episode with Hossu's. Right. Investor protection rights kind of suck. And so do you depositor rights. And so it's very much like caveat emchers, like, you know, buyer beware when you're doing this kind of stuff. This is something that, like, when we take this to, like, Tradfai, tradfi is better than Defi on this particular scenario. Traditional equity, equity holders rights.

Starting point is 00:44:37 Have better rights. Defi failed here because we don't have. Exactly, yeah. Like, this is something that, like, when we show to Gary Gensler, Gary Gensler's like, oh, this is great, this is good for me. I get to regulate this more. Yeah. He's right on that piece of it.

Starting point is 00:44:52 This makes Gary Gensler right. Like, nice job, tribe. He's wrong because he wants to fix it, the Gary Gensler. way, which is like make these things on equities. It gives him more ammo. Yeah. Yeah, there's also, it gives him more ammo for sure. But so I'm disappointed with that. Like, not with the wind down and them choosing to quit, but I'm disappointed with them not helping the fuse hack repayments. But I'm more disappointed, Macrily, in like the class of 2021, David, DFI builders. I'm not throwing everyone under this bus, but there've been a lot of them.

Starting point is 00:45:22 And there've been a lot of DFI builders that I feel like have abandoned their projects. Just like orphaned them. Things got a little tough, right? The going got tough and they folded, yeah. I feel a little bit like DeFi Grampo over here saying, back in my day, Root Christensen and Maker Dow didn't quit when the going got tough. But that's a bit how I feel.

Starting point is 00:45:43 And I just want to say, rather than calling out some of the DeFi projects that did abandon founders that did abandon their projects, I just want to give a shout out to all the DeFi founders that didn't, even when the going got tough. And there are a lot of them. I created a thread where the community kind of tagged a lot of people here. And that gave me some hope that, you know what, a lot of DFI founders stayed with their projects,

Starting point is 00:46:07 did not choose to abandon. I mean, ultimately, I don't understand why DFI founders are taking this shortcut, reputational shortcut, when we were at the very first stages of a multi-decade industry, of like you're going to abandon your project. Like, people are going to remember that. I know I'm going to remember. Bankless community will remember. And it might make it a little bit hard to read it.

Starting point is 00:46:27 enter after you've done something like this. That's all I'll say. Defy Grams over. The sad part is that ether is such a like a lucratively bullish asset that if you exit into ether, you still get so much upside. So I think that's where a large amount of the incentive comes from. It's like, oh, if I like abandoned my project, I'll have enough ether to stake for life. It's the same story, David.

Starting point is 00:46:50 We saw this in the ICOs, right? A whole bunch of them just kind of did an ICO and they half asked their project. but then they kept all the ETH, right? Yeah, but also I would say, it's people that like take money too early, right? That's another problem of defy is like we fund people with way too much money way too soon. And they're like, wait, but I just made all the money.

Starting point is 00:47:09 Like what? That was the point. I'm done here. I know. We've got to work on that for sure. David, next thing, though, is the BitBoy story. Okay, so I don't watch BitBoy at all. Like, I've never seen, I've never seen a BitBoy.

Starting point is 00:47:22 I've heard of him by reputation. So let me just say that. It's very negative. some people some context for who BitBoy is. I get the sense that there is a whole another world of crypto YouTube out there. We are barely YouTubers by the way. If you're watching this on

Starting point is 00:47:35 YouTube, God bless you. We are podcasters who put our stuff on YouTube. We try our best, all right? We're not YouTube optimized yet. Although we're getting better, right, David? Yeah, we got some stuff. But anyway, BitBoy was purely crypto YouTube. And what was he all about? What was his platform? Yeah, I mean, he's got an insane following.

Starting point is 00:47:54 I think he's got something like over a million followers. I called him, well, I participated in some of this drama. I commented on a D.Gen Spartan Sweet Thread, calling him like the Alex Jones of Crypto. And maybe we could get the editors to actually play that clip

Starting point is 00:48:07 just to a small showcase of who he is. He's got this insane setup, like just like a media studio office thing, kind of like how Alex Joan does. And then makes some just like very ridiculous, like statements about crypto, like the one who we're about to play right here. I won't be very clear on this.

Starting point is 00:48:25 The U.S. government is 100% behind the crash of U.S.T. Anyways, very bombastic dude. And also, it totally and completely known for just, like, dumping on his followers. That's the, I don't watch him. What do you mean dumping on his followers? Signing deals, receiving tokens, pumping the tokens, and then selling the tokens. Like, that's just the general pattern, right? Okay.

Starting point is 00:48:48 And, like, I don't know this because I watch him personally. I know this because that's what everyone in my sphere, like, comments on. And so it's to the point of like, why would I ever go watch Bitboy? Like, yeah. Anyways, so that's the start of the story. So here is a thread from a Twitter handle tagged A-T-O-Z, A-T-O-Z-Y. And he puts out this thread that says, I wish I didn't have to make this thread,

Starting point is 00:49:09 but I'm being sued by YouTuber Bit Boy Crypto for a video I made roughly nine months ago covering how he promoted a project named P-A-M-P. It's called P-A-M-P. Yeah. Last night, a third server, like somebody who, like, I listened to this guy's YouTube video, He got served three different times, and the third person finally actually showed up with a real lawsuit.

Starting point is 00:49:29 What? And according to the... At his house? Yeah. Uh-huh. The first two were just like drafts of lawsuits. The third one was the actual lawsuit. And so this crypto YouTuber, he made this YouTube video about BitBoy.

Starting point is 00:49:40 It was like a journalist, like, yo, this guy dumps on his followers. He, like, promotes, makes promotions. And then these tokens rug. And so, like, this whole PAMP token, like, pumped. And then it went to zero after, like, BitBoy covered it. And I think this is just, like, one of many, many. many, many things that Bitboy is covered. And so, Ben Armstrong, aka Bitboy, says Erling Menicheng Jr., which is Atozie, posted a video on

Starting point is 00:50:02 YouTube entitled, This YouTuber Scams His Fans, Bitboy Crypto in November 2021. I'm reading out the details of the BitBoy filed lawsuit right now. The lawsuit claims a laundry list of offenses in that video, including defamation, infliction of emotional distress, torturous interference with business relations or potential business, or potential business relations, violation of the uniform. deceptive practices act and violation of the Fair Business Practices Act. And so this is Bitboy suing Atosy for these things. And all also Tozi did was like talk about how BitBoy pumped this token and then and then dumped the token and the token went to zero. And so. Which you can see on

Starting point is 00:50:40 chain. You can see it all. It's back by data. Totally odd. It's not speculation. And so this Atosy person, he's not like, he's just as a normal YouTuber. So he doesn't have the money to fight this lawsuit. So this is BitBoy who makes billions of dollars pumping and dumping tokens again allegedly. I'm pretty sure it's true though. Oh,

Starting point is 00:50:57 David's... Oh, I'm not gonna get it. I'm gonna be showing up at our house now. Yeah, you're gonna see a GoFundMe for another BitBoy lawsuit. Anyways, BitBoy coming in hard with like paying a ton of lawyers to like slam this guy

Starting point is 00:51:08 with a bunch of lawsuits that he can't afford. So this crypto YouTuber A Tozi spends up this GoFundMe with a $50,000 goal to defend him from BitBoy's lawsuit. And this is when it gets into crypto Twitter.

Starting point is 00:51:19 and crypto Twitter doesn't like Bitboy. No one likes Bitboy except for YouTubers or YouTube consumers who probably don't know better. And so Crypto Condom, excuse the name, this is actually like a crypto community member who's pretty good. It says, I will be donating to A Tozzi's legal fees related to BitBoy's lawsuit. If you have the means, I encourage everyone else to donate to. Scammers like Bitboy are a net negative to the space and should not be supported. If we don't police ourselves, no one else will. And so this is when this GoFundMe starts to actually gain some traction.

Starting point is 00:51:48 And then coming up next, Kobe tweets out, I'll send $100,000 later or something, win at PC. And then that gets 8,000 likes. And then Toby follows up a little bit later, says, sent. And yes, Kobe actually did send $100,000 to this, this crypto, non-crypto YouTuber, normal crypto YouTubers, just like Ethereum address. I'm assuming Ethereum address. And so what happens next? What happens next, Ryan, is that Bitboy drops the lawsuit. Wow.

Starting point is 00:52:21 And so this is Autism Capital saying hearing BitBoy succumb to social pressure and announce he's dropping the lawsuit. Can anyone verify? And then the next week says, yes, indeed. And so here's the clip that BitBoy said where he's on his own like YouTube channel saying, I'm dropping the lawsuit. Okay. Where we're at is at this point, it has become public. It's become an absolute defaq.

Starting point is 00:52:40 We know Kobe gave him $100,000. So, you know, hopefully that money will go to good use. But yeah, so we are going to drop lawsuit 100%. and I'm sorry this became public. Ryan, you want to know my favorite quote from this little clip here? Yeah, give it to me. Where Bitboy says, I'm sorry this became public is what he says. I'm sorry I was found out.

Starting point is 00:53:00 I was found out to do frivolous lawsuits to allow myself to continue to dump on my followers. Okay, but yeah. David, here's one thing that doesn't connect to me. This feels like, you know, victims keep going back to their abuser. why does this, why does this person have YouTube views? Why does he have followers? Why do, why do people, like, why do people do subject themselves to this? So like, look at the production value of this like of BIPWite, right? Like, fantastic production value. No wonder he has a million views. He's optimized the YouTube algorithm. He's played the game. He's got his ads everywhere. He's got his, like, topics that he's run down. And like, this kind of goes back to the heart of, like, crypto, I think, where like, there are some projects that, Like you have these open source developers that just care about code. They don't know how to market.

Starting point is 00:53:49 And then you have other projects which market themselves to the very end. And that's the product. And they forget about the actual code development. This is the same thing. This is a bit boy. Hyper marketing optimized. Knows crypto to enough extent to when people like, oh, like I would like to know about crypto. I'll go to the most number one followed crypto YouTube channel because clearly that's the best channel.

Starting point is 00:54:09 And then they listen to BitBoy crypto who's like, pamp token is going to pam. It's in the name. And then he's paid a promotion for that. And then the token goes to zero. And he makes a bunch of money. And then wash and repeat because people, like, people these days have amnesia. They forget everything. I would say, why do people go back to like their abusive relationship?

Starting point is 00:54:28 It's because people have amnesia, Ryan. They forget. Yeah. You know, once commented that crypto, Twitter, crypto in general, has the memory of the goldfish. You know, like we just like constantly forget things. But is this also a lesson that if bankless ever gets, if we have, ever get our stuff together and we increase our production value, people better, like, be scared.

Starting point is 00:54:50 Okay, well, we do plan on increasing our YouTube production value. David said, he's looking back at his studio that he's just built and he's like, uh-oh, what did I just say? Oh, I think we can do both. It just takes longer. You just got to not take shortcuts. Don't take shortcuts. Plus, like, the bankless community is intelligent.

Starting point is 00:55:10 If we ever started, like, pumping and dumping tokens, it would be. it would be over so fast. It wouldn't even take a half a second to like, oh, like, bankless went evil. They wouldn't, they wouldn't allow us to do that. They wouldn't let us do that. No, we would go to zero so fast. Man, what a story, though. That's crazy.

Starting point is 00:55:25 My favorite part about this. So since they dropped the lawsuit, like, well, they made, Atosie made $200,000. And he says, once I have it confirmed, it's officially pulled, I will be refunding everyone who donated. And then Kobe says, use my money, my $100,000, to pay for the gas feeds for a lot of people, the individual donators. But then also, Kobe follows up and says, keep some for a vacation to smiley face.

Starting point is 00:55:52 Oh, that's awesome. Kobe. Good job. Well done. Hey, look, both of these lessons, right? It's like the last lesson is like not take, don't take shortcuts. This lesson is don't take shortcuts. Also, I love this concept of we can also police ourselves at the social layer too.

Starting point is 00:56:07 We need to do much more of that in crypto and call these things out. So good job. A tosy YouTuber. Man, I am so not connected with crypto YouTube, though. This just shows me that I'm just living in a different world. David, what do we got coming up next? Oh, my God, so much. Okay, merge updates.

Starting point is 00:56:23 We got some merge updates for y'all, of course. Uniswap is getting a brain? Cue that part of the Wizard of Oz, where the scarecrow says, if I only had a brain. There's a meme on that later. Between Nike and Adidas made $200 million in total NFT revenue, but one of them made a lot more. than the other. So we'll get into which one may, which one won the NFT game in 2021. All of that and more

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Starting point is 00:58:05 to onboard the world, but CryptoKKSink as a platform to build on first. It's generally accepted that zero knowledge roll-ups are the conclusion of crypto blockchain scaling technology, and ZKSink is leading the charge into the final frontier of crypto-economics. So if you're a developer who wants to build your app on a future-proof foundation, which gives your users the best Ux possible, check out ZKSink's website at zKSink. And yes, there's also going to be a token, so give them a follow on Twitter 2 at ZKSink. All right, guys, we are back. Another merge update.

Starting point is 00:58:36 This is a date. Now it's an official date, not just a tweet on Twitter. It's a tweet from Tim Bako in the Theorem Foundation. So Tim Beko says, Ethereum's transition to proof of stake is happening. Client releases are out. Update your node. That's the thing you have to do if you're running a node, by the way. First part of the merge, Belatrix happens on September 6th.

Starting point is 00:58:56 And then the full transition ETA, September 15th, not even a date range, not even the 15th to the 16th, September 15th. Mark your calendar, David, is that the official date? September 15th. That is, well, no, because it's still the, it's still an official TTD number, total terminal difficulty. So there is no official date that TTD number can hop around, but it's an official TTD number, which says the same thing. There's no, there's no new TTT number. The only thing that's new this week is that we have new client software that instantiates that TDD number into the clients. And so as soon as you update your clients, that TTD number goes into your client

Starting point is 00:59:33 and then it's hands off from there that the Bellatrix activates and then later is the merge. The current estimated merge time right now is 6.20 a.m. Eastern time Thursday, September 15th. This number's been hopping around. It used to be like 8 a.m.

Starting point is 00:59:48 Then it hopped around to like 4 a.m. And now it's now it's at 6.20 a.m. But it's looking like Thursday, early morning, Eastern time. Pacific people and also Eastern people, you're probably going to be in bed. but this number will continue to hop around, but zeroing in on Thursday morning, September 15th. This link in the show notes is a script that actually calculates it based on the current hash rate,

Starting point is 01:00:10 so you can always get the update on that, even though you know bank was going to update you on a weekly basis. Yeah, we're going to talk about it. That's far everything is going to happen until it actually happens because, as June Analytics says, the merge is coming. You're the top dashboards to follow the action. Anything here we should pick out, I guess maybe a link for people and a resource for people. if they want to follow the merge, there are a ton of dashboards

Starting point is 01:00:31 from Dune Analytics where they can see the intricate details of all of the numbers that make up the merge. So anything here to point out, David. Yeah, all six of these dashboards are fantastic.

Starting point is 01:00:42 It's just a nice little command station to sing the merge. I don't really have anyone particularly the favorite, but just as a resource, these are available to you. The bigger question, I think, is there was this rag of a publication,

Starting point is 01:00:54 you know, a terrible newsletter. Terrible, terrible newsletter. That published an article. Why would you ever publish this title of a... Is the merge overhyped? Who published this? Who published this? For people who are not seeing on YouTube.

Starting point is 01:01:10 This is bankless. Okay, this is a bankless article. We had our friend, uh, Jordy Alexander. Do you remember Jordy Alexander? So he came out of time when everyone was, uh, just so frothy bullish about Tara Luna. And he took the bear case. The both the very difficult at the time, difficult position to take. bare case for Terra Luna at its peak. When was this? April? Do we do this March? April?

Starting point is 01:01:34 Something like this? Like about a month before the Terra collapse, essentially? And Jordi took the position that, like, I know everyone's bullish on this thing, but there are a few tail risk events you really should look at, and I think they're fairly high probability. A month later, it's completely beat up. And by the way, a whole bunch, most people, a lot of people coming out of that debate thought Jordi lost the debate. Yes. They were more compelled by the board. Yeah. Jose, the other guy, just absolutely sweep the floor with him. But then if you go back to the YouTube comments, they're all like, oh, like now. Oh, really?

Starting point is 01:02:06 People refresh their comments? If you see the chart of viewers on that video, you know, it's the normal curve, and then Terra collapses and it gets another huge bump because people went back and watched it. And so, like, the four-month-old YouTube comments are like, Jordi got railed by Jose. And then the three-month-old YouTube comments are like, oh, Jordy was right. Oh, Jordy got it right. Wow, Jorny was right. But here's this case.

Starting point is 01:02:33 We asked Jordy to write in Eith Bear article for us, Eith Merge Bear article, because David and I couldn't bring ourselves to write that. All right? Because we don't actually believe it. But a fantastic article. And I think like any time we have a thesis on something or bullish on something, we'd love to get kind of the counter to that or the steelman case for why not. And I think Jordy puts in a fantastic steelman case.

Starting point is 01:02:55 So a few things. By the way, this is full of fantastic. memes throughout the article. But let me try to summarize some of his high-level takes and get your reaction to this, David, as an Heath Bull, right? So one thing he says is that, yeah, there's these three dragons to the triple halving to the Heath merge bullishness. One is reduced issuance.

Starting point is 01:03:16 He says, yep, I understand that. That's pretty bullish. I get it. The second is EIP 1559, Byrne, and the third is locked-staked Eith. Okay? So he's good with the reduced issuance, but he says, Burn has been down pretty bad. Okay?

Starting point is 01:03:30 Like look at burn over time. So it's because block space is in much lower demand than it was during defy summer and then later NFT, like the whole NFT boom. And then if you look at like this past summer, David, we're not even deflationary. No, we're not deflationary. And so what's with your ultrasound money, merge money, if it's not even deflationary? That's what Jordy's saying. And there's not an indication, he says, that a positive catalyst ahead.

Starting point is 01:03:57 that will actually bring this block space demand back. Maybe it goes to alternative layer ones. Maybe it goes to layer twos that don't consume as much block space revenue. So there's that. And then he also chips into the eith staking rate. And he says it's actually a lot lower than a lot of people are saying. So he calculates the eith staking rate at steady state in like 2023 to be closer to like 1 to 2% yield. So you stay in real terms, in real terms is what he's saying.

Starting point is 01:04:27 In real terms, yes. You stake your eth and maybe you're getting like three or four percent, but then you have to subtract the issuance of ETH, which is maybe, you know, one and a half percent. So you're left with like, you know, one to two percent real yield. And he's like, no one's going to be super excited about that. And he's calculating this based on a whole bunch of more people will stake, right? And so the yield goes down.

Starting point is 01:04:51 And so maybe you'll get like, you know, 20 to 30 million ETH staked in the network. And I can't remember what it is right now, David, but it's like, like 15 million. I can't even remember. I shouldn't even say that, but it's a lot less now. And so these are some of his, his, his, his, his, his, his, his, his thesis cases for why the word merge won't really matter. What was your take when you read the, the, the high level of this article? My, my high level article was that Jordy is making an argument against an outdated bull case, like outdated stats. And so he's taking like May 2021 or November 2021 gas price or gas markets. and he's making his argument that it's not bullish against that.

Starting point is 01:05:32 And I mean, we have since then, like, look at this. Jesus. Sorry to the podcast listeners who don't see this. I'm not going to explain this one. And so he's making, like, yes, there was previously more bullish parts of the Ethereum economy. Gas prices used to be a lot higher.

Starting point is 01:05:47 Therefore, the Ethereum burn used to be a lot more. And it's no longer the case. And I mean, since then, we've adjusted the numbers, the yield numbers. Like, if we had May 2021 gas prices, prices, like, we were looking at, like, a 15% yield on staking ether. And, like, we used to say that on the weekly roll-up, because that used to be the data. But that is no longer the data. And now we've adjusted down to where it is now at, like, 5.2% without MEV and maybe perhaps, maybe six plus percent with MEV. But Jordy is taking the frame, a slice of data that was in the bull market.

Starting point is 01:06:22 And now, but also, and so that, that's the gas market thing. Now, I will say that the ETH supply reduction is was always going to be more significant than the ether burn simply just like when you compare those things there's less ether burned less ether issued that's the main thing bulls are bullish on how it's the supply reduction right and so even at these like even if you take the bear it most bearish gas fees which is at like seven or eight percent that goes from a point four three percent ether issuance down to 0.2%. So the burn just lowers it by a measly 0.2%. But it's cutting the issuance down by 50% because it already is so low. And so like that's still, the bowl case is still strong. And if you go and compare it to Bitcoin issuance at like 1.5% or Salana issuance and

Starting point is 01:07:08 avalanche issuance at like 6 and 7%. Like it's still fundamentally bullish. It's just not ultra-uber mega bullish that would have been if we had merged during like DFI summer, for example. So that's a gas market thing. Did you see this argument too? It's like, you know, one side, steak teeth will be locked off the market. Yeah, you're super happy about this. But then you realize the unlock will hang over us for over a year. This is because everyone is essentially depositing if they're staking and it's one way. But then there will be this big unlocking event. Maybe a year from now. And all of that, you know, 15, 20, 30 million worth of Eath is suddenly unlocked. And his argument is the market's going to price that in ahead of time too. And that makes

Starting point is 01:07:51 the case less bullish and maybe bearish. Sure. The market will price it in, but we need to make sure, like, are all the unlockers going to be sellers? Because I don't think necessarily so. Like, typically we use this word unlock or like investing unlocks for like angel investors or seed investors that got in at valuations one tenth or one one hundredth. And so of the supply of the asset. So, like, of course they're going to sell. It doesn't matter what price it's at. They're going to sell because they're up so much. That's not the case with ether. Like, the average ether deposit price, I think, is like $700 or $800. So, like, the average person is up at 2x. And so, like, yeah, maybe, obviously some people have had their stuff like illiquid

Starting point is 01:08:33 for so long that they're going to sell. But I don't really think it's going to turn this into the systemic sell event. When the APYs go up, too, by the way, up from 4%, up to like 5, 6,000, maybe 7% if MBV is really strong. I don't really think they're like, we use this term unlocked to be like, oh, investors unlocks are totally going to dump. That's not true with ether stakers. Ether stakers are fundamentally bullish. That's the whole point of proof of stake is that you reward ether holders who want to be

Starting point is 01:09:01 long-term holders. And so the people that stake their ether back when ether price was like $300 to $700, they're the people who are like, yeah, I'm fine with having my ether be a liquid for two years, three years, an unknown amount of time. they're fundamentally the most bullish ether owners there are because they take the illiquidity of it and they don't care about that. So they're not likely to be sellers.

Starting point is 01:09:22 So I don't really think it's fair to say that all of these, finally we get this big unlocking and everyone runs for the exit so they can dump their tokens. I don't see that happening. Well, anyway, I think we could have an entire episode on this. Oh, wait, no, I'm not done. We got one more point.

Starting point is 01:09:34 You're not done? We got one more point. And so his last argument is that the yields go down to a super low amount. Can you go to that part in the articles that like the the if we if we have something like 30,000 ether staked and Ryan I pulled this up right now there's 14,000 ether staked if we get something like 30,000 ether staked the issuance of Ethereum goes up because as more people stake the more

Starting point is 01:09:59 ether is issued to reward those people the yield the yield the yield the yield the yield the down but total ether issuance goes up and so that's his argument that like well we have increasing actual ether inflation and decreasing yields for stakers and so the yields are actually going to be way lower than people expect. But he's missing the part that the way to get to like 30,000 plus ether staked is 16,000 million ether comes off the market and begin staking. 16 million ether comes off the market and begin staking. And so he skipped over the bullish part of that, which is that a bunch of ether gets locked up. So you can't forget that bullside. And that is my complete rebuttal of the bear case for the merge. It's not complete. Come on.

Starting point is 01:10:42 You know, it sounded like David wants to get on a podcast with Jordy and really hash this out and have a debate. But I also remember what happened to the last guy who did that. Brian, the last guy was defending Terra and I'm defending Ethereum. I do think if there's demand in Bankless Nation, if you guys are excited about this, let us know. Maybe we'll have a Hal Press plus David, plus Jordi, plus another bear debate on this. Maybe we'll get CheckMady in the scene or something. Anyway, a lot of discussion about this. and I think it's really fun to look at both sides of the argument.

Starting point is 01:11:14 David, let's get to this. Uniswap has a brain. That's what you've been saying in the tease to this. What do you mean by this? How is Uniswap getting a brain? Uniswap uni-governance voted overwhelmingly at 86 million to 770. So I call it 99.9% yes. To create the Uniswop Foundation.

Starting point is 01:11:34 We've talked about this. The precursors for this. There was a governance proposal and also a sentiment check. But now a formal vote, token snapshot vote. has gone through overwhelmingly in support of creating the Uniswop Foundation. So what does this mean? What are the details of this? The blog post says there is work to do to help Uniswap reach its full potential.

Starting point is 01:11:54 The governance process has too much friction. The ecosystem is too difficult to navigate. And the UGP Uniswap governance process in its current form is not able to fund the most ambitious and impactful projects. We want to change that. Today we are excited to propose the creation of the Uniswap Foundation, which has the mission to support the decentralized growth and sustainability of the Uniswap protocol and a supporting ecosystem and community. Today we are thrilled to propose the creation of the Uniswap Foundation.

Starting point is 01:12:19 And then some details, scope, team, budget, and governance participation. Scope, the UF, the first foundation of a major protocol to go through the community governance process, will support the protocols decentralized growth, reinvigorate governance, and serve as a protocol advocate. The team behind this is going to be Devin Walsh, who will serve as executive director, and Ken Aang who will serve as head of operations. They also have a team of 12 behind them. They've got some budget requests as well. $14 million of operating budget to cover a team for three years.

Starting point is 01:12:47 And $60 million expanded Uniswap grants program budget to cover three plus years. So they are requesting a total of $74 million from the Uniswop Dow, which will be broken up into two disbursements, a first disbursement of $20 million. And lastly, in governance participation, also requesting $2.5 million uni to participate in governance primarily through delegation through usage of a new smart contract primitives called the franchiser. And this uni will be revocable by the Dow at any time and cannot be used for any purposes outside of governance.

Starting point is 01:13:18 And so Uniswap, getting a foundation. Nice. Okay, so one question I have on that, David, is the $74 million that's going to fund the Uniswap Foundation. Where is that coming from? I would imagine it's got to be like uni token sales at some level from the Dow maybe. Yeah, if not already, then future sales. I don't know. I don't know.

Starting point is 01:13:41 That's one interesting thing to check into. But am I also, I not understanding that. So we have three pieces here. We have the protocol, right, Uniswap itself, which is not a legal entity or anything else. It's smart contract code. And then we have Uniswop Labs, which is the thing Hayden and team are doing, that is venture-backed, that is continuing to buy companies and create tools for the Uniswap ecosystem. And then now we also have this uniswap foundation, and their job will be to kind of steward the

Starting point is 01:14:09 protocol itself a bit more and I guess grow it. Is that the model here? Yes, exactly right. And I've looked into the governor's proposal. It's all coming out of the uny token. Yes. So this is all funded by the uni token. So this will create some cell pressure, I think, in uni in the short run.

Starting point is 01:14:27 Now they're doing this in chunks, like first distribution of 20 million and then kind of the remaining. but also you could say bullish on Uniswap getting a brain. Yes, that's the bullish. Don't, who cares about $20 million of sales pressure? That's a blip. Uni token is actually pretty liquid. The point is, is that Uniswap can be just more organized.

Starting point is 01:14:48 If you listen to our podcast episode with Hazu, these Dow's need direction and centralization. Centralization is on a bad word, and the foundation can do this. In addition to the two, to Ken, Eng, and Devin Walsh, We also have some advisors. Jesse Walden from Variant, Julia Rosenberg from Orca Protocol, Alexis Galba, Galba from Open, and Hart Lamber from Uma.

Starting point is 01:15:11 And then they also have already talked about some proposals that they're trying to get done, which is building uniswap in the Cairo language for Starknet and other things that, like, I think the uniswap without a brain just might not have been able to get done. So I think that is the reason why we should be bullish here is that, you know, execution. Execution matters. And if you're curious to why it doesn't have a brain, why Uniswop Labs is not necessarily that full brain. I think the Hossu podcast is the answer to your question. But here's a nice meme, the scarecrow.

Starting point is 01:15:41 Yeah. Scarrow from Wizard of the Oz. There's that one song where the scarecrow's got. If I only had a brain, but this one is if I only had a foundation. This is every doubt, by the way. It danced around like a scarecrow. Okay, this is cool. This is a tweet from Blockworks, but did you know, David?

Starting point is 01:15:57 This is another chart from Dune Analytics. Nike and Adidas had NFTs last year. Nike revenue was $185 million. Damn. Adidas was $11 million. But in total, like, so Nike absolutely swamped the floor with Adidas. But think about how much money that is for Nike from NFTs. What do you think the cost of these NFTs were?

Starting point is 01:16:21 Very little. $3 million? And right. I bet you the biggest cost was legal. $10 million? Yeah. But think about these profit margins. So if you think that large corporations are just going to pass this by, pass up this kind of opportunity, you don't understand how large corporations operate.

Starting point is 01:16:40 Look at that secondary trading volume of Nike NFTs. $1.3 billion of secondary trading volume. Crazy. You know they have royalties on that. Look at these other brands too. Dolcein Cabaner here, Tiffany's here, Gucci here, Adidas here, Butterweiser here, Time magazine here. NFTs are just a fad, never coming back. Oh, okay. So look at that data. There's two columns. They're primary sales revenue, $93 million for Nike, $92 million in royalties off of that secondary volume. Crazy. Crazy. Yeah. More companies are going to join this and NFT market will be back, I'm sure. But in the short run, we are seeing some resurgence in some other classic non-corporate NFTs, pudgy penguins, David. Pungy penguins. Pump 83% as META and Nancy.

Starting point is 01:17:28 executives join advisory board. Ryan, Meta. Facebook, huh? Yeah, right? You want to hear a funny story, Ryan? Yes. You know when we were talking about how I was moving wallets for a while ago? Yes. Well, I'm also slowly doing that for my NFT wallet and just like getting rid of all these like NFTs that I thought were dead. And so I sold my pudgies literally two days. No, you didn't, David. Before this happened. David. Oh. It was it was like perfectly ironic. It's like, I sell these things just because I don't really really know what's happening with these things. These are just some JPEGs.

Starting point is 01:18:01 I would have seen they're dead too. Yeah. And then like literally like out of nowhere, like that has the biggest research of all time. It was like literally the pico bottom. It was fantastic. It was great. It's why you listen to bankless for your NFT alpha every single week because Dave and I know what we're doing. We know what we know what we're doing the JPEGs.

Starting point is 01:18:20 Do you know what we do know a little bit about DFI? And this is kind of a blend of DFI's, this thing called Ben Dow. which basically like, I think of it as maker. It's like, it's like collateralized loans backed by NFTs. But there was kind of a crisis last week with Bendow. What happened? Yeah, so Ben Dow, NFT liquidity protocol, of course. You can put your NFTs into Bend out and borrow ETH against them,

Starting point is 01:18:44 some of the top NFT profile collections in there, Azuki's, Borda Pia Club, Clone X, Cryptopunks, doodles, mutant apes, and space doodles. And the thing is, is that once upon a time, Bendow had about 18,000 ETH earlier last weekend, and that went down to 15. Not 15,000, 15. Yikes. 15 ETH. It's currently back up to 4,500 as of a couple days ago.

Starting point is 01:19:07 But basically what happened was that all of the ETH, you lend your ETH to Bendow and then you get a yield on that ETH, very strong yield. And then that Bendow lends out that ETH to people that collateralize their NFTs. You could get an 80% yield on your ETHER because they were in such a strong yield. short supply of ether because all these NFT collateralization people were borrowing were borrowed up all the eth they use all the bandwidth it's like if compound utilization if you put like a if compound has like a hundred thousand dollars of usDC in it and then like there's 98 thousand dollars 98% of that uscc is utilized they're going to jack up the interest interest rates to incentivize people to pay back

Starting point is 01:19:46 their ether so what's going on here is they jacked up the interest rates or yields paid to ether lenders, and they also, what they did in order to fix this, just like credit crunch they had, is that they pass emergency parameters to progressively lower the liquidation threshold from 95% to a new baseline of 70% incoming on September 20th. So it's going to go from where it is now at 95% to where it will be in the future. It's 75% or 70% basically like making liquidations more likely to happen. It's like increasing the interest rates. The Bend Dow, if it's like a maker Dow, they're increasing the interest rates and they're increasing the interest rates and they and making more strict capital requirements for NFT lenders so that they can pay back their loans

Starting point is 01:20:28 and get ether back into the coffers. I will say this is not a failure. This is actually quite the opposite. I would say this is a big success. It was so successful that all the borrowers used up all the ether and they just had to jack up the interest rates. The first time, the first time Maker-Dell had to go through a cycle. Dye was trading below a peg and they had to jack up interest rates from like 0.05% to almost 20%. I remember that. And I feel like this is, This is the same thing with Bendow. It's like, yo,

Starting point is 01:20:54 everyone's using the protocol. We ran out of, like, credit. We need to jack up interest rates so we can, like, get more money in the system. They almost went insolvent in the process, right?

Starting point is 01:21:02 So they, they, they, they bent. They didn't break. But, like, they almost... I wouldn't call it insolvency.

Starting point is 01:21:07 They just had more loans outstanding than they could issue. They couldn't issue any more loans. Because they didn't have more enough money in the system. There is a great explanation, if you want all the details from William Peister, who does know a thing or two about... NFTs in Metaversal and you can read through that.

Starting point is 01:21:24 Ryan was joking earlier. We don't know shit about NFTs. I think one of the things though, David, is that Ben Dow has definitely learned through this episode is that NFTs are not quite as liquid as maybe they thought they were. So it's one thing if you're selling eth as collateral in a maker type auction because you have to liquidate. It's another thing when you've got like 50 board apes and you're trying to find buyers for those things.

Starting point is 01:21:48 Of course, that's what makes them non-fungible. and lower liquidity profile in them right now. David, Gensler's back. What's he saying now? He wrote a op-ed in the Wall Street Journal. I read part of this. It was also paywalled. Maybe there are a few choice tweets or choice quotes we can take out of it. But basically his take is, there's no reason to treat the crypto market differently from the rest of the capital markets just because it uses a different technology, the fax machine and the internet are the same thing. That was my paraphrase. That's not his paraphrase that end part, but like I feel like that's kind of what he's saying. What are your thoughts on this, David?

Starting point is 01:22:31 He also made a video on this. And basically he's saying like, oh yeah, like crypto markets, traditional equities markets, they're the same thing. Therefore, we should regulate both of them, which is a hot take. But also just like, you're having, you're trying to like have your cake and eat it too. It's like you're saying you want to regulate the crypto markets, and therefore we should treat crypto markets like the traditional equities markets. But then you're also not treating us fairly. And this is what Kobe said when he followed up and says, sounds good. Spot ETF then?

Starting point is 01:23:02 Because if Kobe said or if Gensler says, okay, we're going to treat the crypto markets like we treat the traditional equities markets, that means we get spot ETFs. That's what that means. And so he says like the SEC, according to Gary Gensler, should regulate the crypto markets, just like they regulate the traditional equity. markets. And if they, but then he also doesn't want to treat us regularly, like normally. So there's a double standard at play. Yeah. Huge double standard. There's a double standard. But he also doesn't understand that this is a much different technology. It's literally not like

Starting point is 01:23:30 that. It's kind of like covering your eyes and plugging your ears and just kind of ignoring the differences between crypto and the traditional equities markets, of which the differences are also vast. These are two different technologies. It's fax machine versus internet. And I would definitely say that Gary Gensler is playing this narrative game. He knows they're not the same. He knows. He used to teach classes at MIT about blockchain. So he's trying, he's doing a PR stunt saying, hey, the SEC is going to regulate the crypto markets because they're the same as equities markets. There's no new magic here. The SEC is going to regulate these things. It's just not hard. We can have a nuanced conversation about what pieces are the same because there are

Starting point is 01:24:09 parts that are the same as the equities markets and what parts are different. Let's have a nuanced conversation about that. And let's get some clarity. Mark Cuban had a tweet, uh, take two. He says to Gary Gensler, who says there's no reason to treat the crypto market differently, just come in and talk to me. Mark Cuban says, come in and talk to who? Set up an appointment. How? You using calendar leave these days? Since you understand crypto lending and finances, why don't you just publish bright line guidelines you would like to see and open it up for comments? We don't want regulation, legislation by Wall Street Journal op-ed. All we're asking for, at some, like, just some clear expectations, some bright guidelines, or even treat us the same

Starting point is 01:24:52 and don't have a double standard. Very confusing here. But seriously, Gary, I'm on the podcast. I think the best way of clearing all this up is to engage with the crypto community. That's what you should be doing. We'd love to have you on bankless sincerely. We've had Hester Persson. We've had other CFTC regulators on. We would love to have Gary Gensler on pretty friendly. We could talk about this. Give us your perspective. David, do you have a take care? The thing is people outside of the crypto industry have noticed Gary's lack of popularity. And so this is also an article that came out in Forbes. I believe, yeah, Forbes was titled Gary Gensler, colon resign from a writer called Roslin Layton from the international tech policy.

Starting point is 01:25:32 Not a crypto person, but like Gary Gensler is like losing the public support, like left and right. And so Gary Gensler, like, got to win hearts and minds. And you can do that by coming on bankless. Yeah. We don't want you to resign until you tell us what you really think about crypto and we can have a good conversation. First come on bankless. All right, David, do you know Coinbase's E&S integration is finally out in the wild? What does this mean?

Starting point is 01:25:57 Yeah, so this is in the Coinbase wallet. I'm pretty sure not the coin normal Coinbase consumer app. But if you are a Coinbase wallet user, you get an ENS name built into that wallet. So this is a user who's got debanked.cb.cb.d. ID. Interestingly, Ryan, not.eath. Did that catch your attention? There's no dot-eath name, but it is actually an ENS integration.

Starting point is 01:26:18 And so from the article, it says on a technical level, both CB. ID and dot-eith can be used on multiple networks. We determined that most users associate dot-eaths id solely with Ethereum, and so Coinbase chose CB.id because they want to make

Starting point is 01:26:34 it easier for people to understand that a username is not tied to Ethereum and can be used on multiple networks. However, did you know, Ryan, that your .eith name can work in Bitcoin wallets and light coin wallace and Dogecoin wallets that run by the ENS standard? And so Coinbase wallet is just kind of making that a little bit more formal. CB.ID saying, hey, this can work for your Ethereum address, but it can also work for your Bitcoin address. It can also work for your Dogecoin address. What's happening here?

Starting point is 01:27:01 Coinbase is just giving these to all of its users? Yeah. And all of its users who are using the Coinbase wallet. Users are becoming decentralized, either claiming. your current username or decline and get a random 20 character username. So you get your own Ns name. You get one by default. Yeah. That's cool. What is this extension though? The CB dot ID. What is this? I think it just means identification. Identifier. Yeah, but I know. But like what, how are they getting a dot ID? Is this like, I guess I just. This has something to do with DNS.

Starting point is 01:27:31 And this part. So there's a DNS. ID, like a dot com, like a dot org. So another fun fact of at ENS is that it's actually DNS compliant. It also operates with the traditional DNS system. And I think, I don't know the details beyond this, but like the dot ID is a DNS thing. So you can, oh, actually, Ryan, go and type in, type in this into your URL. Tadda! It worked.

Starting point is 01:27:58 It took you back here. You already had the webpage pull up. Oh, okay. I was like, you just sent me back to the same site. Yeah, but it works. Yes, it works. So like if you have like, this is also works, I think this also works.

Starting point is 01:28:10 No, this doesn't work with David Hoffen. Dot, Eath, does it? DeBanked. Let me find out. No, it doesn't work with David Hoffen. And that's why, and so the dot ID name is a DNS name. And so if you have a DHS.

Starting point is 01:28:25 Exactly. It works in your browser. Yeah. But this is not completely decentralized because there's still some DNS linkage there, I suppose. Whatever. Okay.

Starting point is 01:28:35 Cool. That's cool. It's cool. It's better. Swell. What is it? Swell. Are they another staking provider? Yeah, staking as a service provider. Basically, Swell is a hybrid between Rocket Pool and Lido. So they have a permissioned validator set, which allows for capital

Starting point is 01:28:50 efficiency, but they also have a permissionless validator set, which allows for permissionlessness. And so they had a test net launch not too long ago. Now they have a guarded launch coming soon. And so Swell Network is coming out. New staking as a service protocol. We got to love that competition. That's awesome. Also more competition, of course, in later 2 world. So just a reminder, now I think there are five days. Is it five or four days? Five, five days. Okay, five days till Arbitrum releases Nitro, which is the next release of Arbitrum. And of course, the TLDR is this is faster, cheaper transactions for you. If you're an Arbitram user, awesome to see Layer 2's upgrading as well. David, speaking of upgrades, you have an opportunity to

Starting point is 01:29:30 upgrade your job right now. Upgrade your job. Okay. This is our reminder to you. To what, David? Get a job in crypto because it's the most fun place to have a job. Absolutely. That's the rule. What could be more fun? Number one jobs. I'm going to read some out for you. Masari is looking for a software engineer.

Starting point is 01:29:48 Two software engineers, one for media, one for market data. D.YDX, back end software engineer, steakfish, a business partner, HR business partner. Steakfish, a back-end full-stack software engineer. Steakfish front-end software engineer. Stakefish DevOps engineer, bankless. We need somebody to run our podcast. Edit the media operation. Boardroom Labs, software engineer Dow Governance, MandiCorps Labs, manager of crypto marketing.

Starting point is 01:30:11 Bankless needs a thread ore and a senior newsletter editor and marketing coordinator at Vertex Protocol. Lots more. Bankless Academy needs a product manager. You can find out more, of course. Look at all these. I'm scrolling through them. For all the people that watch the YouTube, I'm aware of my dancing. It's extremely cringe. No one's ever said anything that I've seen, David. Must be great. I can feel it. All right, what's going on next? Coming up next, we got questions from the nation. Which layer two are you most bullish on and why? And also, how can you explain the merge to Normies? And also, of course, some hot takes from crypto Twitter, the meme of the week.

Starting point is 01:30:48 And also a fantastic moment of Zen coming out from Gabriel Haynes. It's about BitBoy Ryan. So all of that coming up and more, right after we talk to some of these fantastic sponsors that make this show possible. Juno is bringing crypto-friendly banking straight into your tracking account. With Juno, you can send money. from your Juno checking account straight onto a layer two, like Polygon, Optimism, Arbitrum, and they have ZK Sync and StarkNet support on their way.

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Starting point is 01:31:33 So go sign up at juno.finance slash bankless. The Brave browser is the user-first browser for the Web3 internet, with over 60 million monthly active users. And inside the Brave browser, you'll find the Brave wallet, the secure multi-chain crypto wallet built right into the browser. Web3 is freedom from big tech and Wall Street. More control and better privacy, but there's a weak point in Web3, your crypto wallet. And most crypto wallets are browser extensions, which can easily be spoofed. But the Brave wallet is different. No extensions are required, which gives Brave browser an extra level of security versus other wallets.

Starting point is 01:32:03 Wallet is your secure passport for the possibilities of Web3 and supports multiple chains, including Ethereum and Salon. You can even buy crypto directly inside the wallet with RAMP. And of course, you can store, send, and swap your crypto assets, manage your NFTs, and connect to other wallets and defy apps. So whether you're new to crypto or you're a season pro, it's time to ditch those risky extensions and it's time to switch to the Brave wallet. Download Brave at brave.com slash banklists and click the wallet icon to get started. All right, guys, we are back. Starting for the questions for the nation, of course, a reminder. If you have a question for David and myself, follow Bankless on Twitter. That's Bankless HQ on Twitter. We tweeted out.

Starting point is 01:32:39 You can reply to the thread, get your question answered. The first one is from two commas. Dot, eith. How do I summarize and explain the importance of the merge and its implications to my normie friends who ask me about it? A good question from two commas.eath. Explain it like I'm five, David. How do you explain the merge to someone who doesn't know anything about crypto, doesn't really care about crypto? God, these are all these so hard. All right. I'm going to go for it. Okay, Ethereum, it's the number two blockchain behind Bitcoin. It's the thing that it created defy and like smart contracts and allows us to do things,

Starting point is 01:33:13 like decentralized finance stuff, borrowing and lending, trading, et cetera. So that's the big blockchain. It's got the majority of all economic activity inside of crypto, created NFTs. It's that blockchain. It's the big blockchain. It's proof of work, which is that thing that consumes a lot of electricity, which a lot of people in the outside world don't like. And it's always been proof of work, but it's always wanted.

Starting point is 01:33:33 to go to this thing called proof of stake. Proof of work works by if you lie to the blockchain, you basically burn electricity for no reason. And proof of stake works that if you lie to the blockchain, you lose your ether. Ether, the native currency of Ethereum. How proof of stake works is that you stake your ether to the promise that you're not going to lie to the blockchain.

Starting point is 01:33:53 And if you do lie to the blockchain by trying to add in a false transaction, an invalid transaction, you get your ether slashed. So it's kind of like proof of work in that you just lose money, but you lose money a lot faster and a lot more quickly and a lot more money in proof of stake. So generally the crypto world is like this is just a better, more efficient way to secure a blockchain. We don't have to consume electricity. We also don't have to have Bitcoin be sold because of proof of work because of all this electricity consumption. Because there's no electricity consumption, you don't have to issue as much ether to pay for that electricity consumption.

Starting point is 01:34:25 And these stakers don't have to sell their ether. So it makes ether really bullish. End. How is that? Pretty good, pretty good. I think it's hard to explain. Do you know, what I go back to you is just like,

Starting point is 01:34:42 buy $100 on Coinbase worth of Eath and then ask me questions as you're curious about it. So it's just like, I feel like But what if we're past that point? What if this is the question they're asking about? Then I get them to listen to bank lists and you explain your thing.

Starting point is 01:35:00 I think it's like that. Sometimes people aren't interested until they have some skin in the game. They actually have financial. I wasn't really interested as interested in crypto until I own some Bitcoin. And then I was like, oh, this is cool.

Starting point is 01:35:10 Why are the numbers going up and why are they going down? What does this all mean? That's why I actually advocate, like, don't dump your entire net worth in here. But like, if you want to get into crypto, buy some first. Do it.

Starting point is 01:35:20 Step one, buy some. Just do it. Not financial advice. All right. That was the first question. Let's get to the second. When the merge occurs, this is from Eddie Coates.

Starting point is 01:35:29 When the merge occurs, what, if anything, will eth holders have to do? Will it automatically convert? Or will holders need to sell out of the old and buy into the V2? Thanks, guys. Bankless podcast is lit. Sick. Sick.

Starting point is 01:35:43 Rockhorns. What do you have to do anything as an ether holder? No. I'm so glad. I'm so glad the answer is no. The answer is no. You don't have to do anything. You're going to have ether in your wallet, and then you're still going to have

Starting point is 01:35:57 ether in your wallet. You will actually not notice a thing that murder. is a kind of like a software update, you know, when you plug your phone in and then it just like updates while you're sleeping, it's going to be like that. You're not going to notice it. Not going to notice. And updates like this have happened many times in Ethereum's history,

Starting point is 01:36:11 and you probably haven't noticed if you've been here for one of them. It'll just be like one of those. That's if everything goes well. It should go well. But nothing you should have to do. Last question from satacac.e. Ask the question, which layer two scaling solution are you most bullish about and why?

Starting point is 01:36:29 And he lists a few. Starknet, ZK Sync, Polygon, scroll. Can't help out notice, David. All of these have a similar theme, and they are ZK EVMs. Which layer two scaling solution are you most bullish about is the question and why. I am most bullish on.

Starting point is 01:36:44 Yes. They're all great. They're all great. Okay, I'll give you different reasons why you should be bullish on every single one. Starknet, apparently, after you're listening to a podcast, which I'm about to talk in a sec,

Starting point is 01:36:58 This Cairo coding language and this overall, the developer support and, like, building out Cairo and accepting, like, updates from developers has been great. So the developer user experience for Starknet has been just like really good. Developers love it. For this along in a lot of ways. Yeah, yeah. And, like, definitely their BD skills are really strong. I think they were the first to market. So, like, Starknet, like, can't not be bullish.

Starting point is 01:37:25 ZK Sync, Alex and team have been around Ethereum from. the beginning. They're also doing a separate, an EVM compatible strategy with their ZK roll-up. They just exude the values of Ethereum. And like, we've just see adoption of things that exude the values of Ethereum, Uniswap I would put in this category. And so, like, they just have, like, fundamental Ethereum alignment at their tailwinds. They've been around for a while. They're, like, friends with all the other developers in this space. They're just very well-connected. and then, okay, let's go to Polygon. Polygon also has their proof of stake chain,

Starting point is 01:38:03 which is not a ZK roll-up, but the most bullish thing possible, I don't know if this is possible, but if it is possible, it's really bullish, is that their current proof of stake chain just rolls into their ZK roll-up. If that's possible, really, really cool. Scroll, the most bullish thing about scroll

Starting point is 01:38:17 is that it's got EVM equivalence. They're going for the very hard task of EVM equivalence, which is if you can deploy your thing on the Ethereum Layer 1, you can also deploy your thing onto the Optimization, in layer two without changing a goddamn thing. And you can also deploy it to scroll, which is a ZKEVM without changing a goddamn thing. Also really bullish.

Starting point is 01:38:36 Super strong engineering team, though it's a harder problem, right? It's like all of these have different strengths. They're all different flavors. So like, I like many different flavors. And they're all bullish. To me, this question is like asking, you know, which of your kids is your favorite?

Starting point is 01:38:52 Like, I can't answer that question. They're all special. I feel like you can't answer that question. out loud. No, it's true. Okay, I have three kids and I love them all equally. Kids, if you're listening,

Starting point is 01:39:04 you guys are fantastic, all of you equally. So are Starknet, Z K, Sing, Polygon, and Scroll. David, takes the week. Let's get into them. First take here from you. Yeah, you want to read?

Starting point is 01:39:17 Read your own tweet. No, I'll read your tweet. Okay, it's better that way. From David Hoffman, my favorite version of the future is the one where global 4X markets are traded on a unicorn theme venue.

Starting point is 01:39:27 This is Uniswap. I imagine. You think that's real. I mean, I feel like that is actually the most likely version of the future is when, like, Global Forex markets are held on Uniswap. And just, like, Hayden and, like, his friend Carl and Vitalik, they just like unicorns. And so they made it a unicorn theme.

Starting point is 01:39:43 And then, like, you know, butterfly flaps its wings. And all of a sudden, global 4X markets are, like, on this Uniswap traded, or unicorn traded venue. I still contend that Uniswap will be the largest exchange in the world, you know, sometime in the next 10 years. Yeah, that's right. think that is undoubtedly true, but we'll see. And that'll be funny when it is. Also, you have a podcast that you want us to tune into. Yeah, I don't really know where to fit this into the roll-up,

Starting point is 01:40:07 but here's my hot take. This podcast that I listened to is really, really good. This is Into the Bytecode from Sina. Great podcast, very technical, but also does a great job of breaking it down for the listener. And so this is Julian from Argent, Argent and Smart Contract Wallet. And they talked about just a number of things like built why smart contract wallets need to be the future, why smart contract wallets and ZK rollups go really well together, account abstraction, and overall the developer experience of Starware and ZK Sync. And so this is where I got that take that the Starkware team is just doing a great job, just like making their developers feel good. So my hot take is that this was a good podcast and you've listened to it.

Starting point is 01:40:46 I've been waiting for Argent to get its legs under itself again because I feel like we haven't yet seen the promise of smart contract wallets. Oh, God, no. And I'm hoping that layer two is bring that, but we still haven't seen it yet. And there's just such a promise, such a potential there. It's a little bit like layer two is where there's promise and potential, but we just haven't fully seen it realized. Last take here.

Starting point is 01:41:09 This is a poll take, actually. I'm showing the poll of results here, but let me give you the A, B, and C. This is from Eric Wall. A, option A. The merge will happen as planned in September. You vote on that, if you think it will happen. as planned. B, it will happen, but something big will go wrong, like, privy work miners will refuse to mine the last block, a major client consensus

Starting point is 01:41:30 split, something chaotic, that's option B, or C, it won't happen, it'll get postponed. All right? Before I clicked my answer, which is A, I thought that basically A would be the vast majority. I thought we'd get like 80 or 90%. But it turns out what? What are the results here, David? It is A that got the most votes. 52% of respondents said A. It's going to happen as planned in September without any problems. 15% of people said, show me the result. So 15% of people are automatically off the table.

Starting point is 01:42:07 15% of people said, B, it will happen, but something will go wrong. And then 18% of people said, it's not going to happen. It's going to get postponed. So if you add B and C together, what do you get? you get something like 33%, 34% of people think that it's either going to get postponed or go wrong, and 52% think it's going to happen fine. And like, okay, so I've accounted for a 95% success rate in my head, and this is accounting for something like a 66% success rate.

Starting point is 01:42:41 And so that discrepancy, if I'm right, means the merge is not priced in. That's my takeaway. That is an interesting takeaway. way, it's interesting that 18% think it'll be postponed. Bitcoiners, dude. And it's already been like pushed as an update. Like, it's happening. It's going to happen at this point.

Starting point is 01:42:59 You don't even really have C as an option. That's just kind of like, I don't know, I guess, if the world ends. It's a little bit too late for C. Yeah, we have the client software. And yet we have almost 20% of people, again, in this Twitter poll. But I think it's decently representative of crypto Twitter sentiment saying that it's not going to happen, get postponed. And it's like we have a date and the software's been updated and we're just waiting for that date to be activated at this point. Anyway, I do think that there's

Starting point is 01:43:25 some alpha there for us. David, what do you bullish on this week, man? I am bullish on. You know that high value production studio that we were talking about? The BitBoy Studio you created behind you. Well, as BitBoy exits, I hope to enter. And I'm going to turn into the new BitBoy. Oh, I'm kidding. But we are thinking about, not totally sure on this, but splitting the bankless YouTube into bankless podcasts, which is our long-form interview formats, weekly roll-ups, Monday podcast, live streams, the podcasts that you know and love. But then also short-form bankless, 20-minute long, like a little bit more just like newbie optimized content. Your boy's got a teleprompter right behind the screen. I got scripts. And so we're trying to make, trying to expand bankless into new audiences because there's a lot of

Starting point is 01:44:15 people out there when they come to YouTube they go oh Bitboy he's got all the best information he's showing the token like pop we're trying we're trying to steal the bit boy audience and instead of feeding them candy and tokens that go to zero we feed them we junk food we feed them the veggies and so with some junk food

Starting point is 01:44:33 with some merge with some merge candy yeah um not high fructose corn syrup but you know strawberries and raspberries organic organic junk food Anyways, that is what I'm bullish on, Ryan. There's a bankless productions, bankless studio, something. And that's actually aside from like this Joe Rogan, Lex Reedman type studio I've got behind me, which gets finalized and finished tomorrow.

Starting point is 01:44:57 And then we're off to the races. All right. Bankless becomes Bit Boy. That's going to be a big feedback. The new Bit Boy is Vanclis. Wow. Ryan, what are you bullish on? David, you were laughing about this before I hit record.

Starting point is 01:45:10 But let me tell you why I'm bullish on the Constitution. Does that seem like? Here's specifically why, all right? That doesn't sound like it's overly patriotic because, you know, I'm reasonably patriotic, but I'm not a super patriotic person. But I'm really into like social protocols. And the Constitution happens to be a pretty big one

Starting point is 01:45:31 and a pretty important one and a pretty good one, particularly this thing called the Bill of Rights. And you know where I got excited about it was when we were recording with Jake Trevensky. And basically the takeaways, all of the O-FAC sanctions, and developer getting arrested and, like, restrictions on privacy

Starting point is 01:45:47 that we're feeling right now. What's super interesting is 250 years ago, the framers of the Constitution in creating the Bill of Rights already thought through these things. Right. Like, we have these protections.

Starting point is 01:45:59 It's a solved problem. And it's actually enshrined in the protocol that governs our country. It's like sometimes we get overly afraid of, like, OFAC, for example. It's like, what if we do this thing? They put me in prison. they're the ones doing the thing that's illegal.

Starting point is 01:46:15 They're the ones that are doing the thing that is against the Constitution that's unlawful. Of course, we have to approve these cases in court over time. But like, talk about the First Amendment in the Bill of Rights, freedom of speech, press, protest. This is code, all right? We've precedent, legal precedent, that code is protected as a First Amendment right,

Starting point is 01:46:33 just like speeches. The Fourth Amendment, no unreasonable search and seizure. This is privacy. If you live in America, you have the constitutional right to privacy. Number five, due process. That means the government can't come and seize your property without due process, without a court's saying it's okay, without proving that you did something wrong, okay? Digital rights. The government can't come and seize your ETH in the U.S. That is unconstitutional, all of these things. And I think it's a bit on the legal

Starting point is 01:47:03 front. It's a little bit back to getting back to the original protocol of, the U.S. Right. This is why actually I think that, you know, some people are like, oh, the U.S. is too far gone. It's turned into a surveillance state, all of these things. I think that may be true over the past, like, you know, 40 to 50 years, we've veered into that.

Starting point is 01:47:24 But if we can have a generation of people and a group of people who take us back to our roots, right? And kind of like the actual social contract this entire entire country is founded upon, then we can resurface and find our digital rights once again. It sounds like I'm running for a political platform. I'm really not, but... You kind of are.

Starting point is 01:47:45 Crypto is a political movement, isn't it? And I want to make sure that we protect these things. And I am into fighting the fight in the U.S. because I think this is a decent place to fight the fight for digital freedom and for cryptocurrency because it's like baked into the social contract, baked into the narrative of the U.S.,

Starting point is 01:48:04 so why not do it here? And that's what I intend to do more and more. of course, it's going to be the Jake Trevinsky's of the world and the coin centers of the world doing it. But like, we're going to help through our platform and education to continue that fight. Ryan is bullish on the Bill of Rights. Yes, I am.

Starting point is 01:48:23 On to lighter matters, David. How do I get exposure to that? We're going to buy the Bill of Rights. We're going to start a time. Didn't we try that? Didn't we try to buy the Constitution? All right, what are we looking at? Me of the Week.

Starting point is 01:48:35 Meem of the Week, we have a guy doing like the praise. squat and he's looking at one of those like, what do you call those? The stack of rocks that are all balanced on each other and we have like Vitalik and inflation and then on top of that is a recession and on top of that is Putin and a Fed pivot

Starting point is 01:48:52 bounce on top of that is a stock pump balance on top of that is SBF. Arthur Hayes Medium Post, the ETH Foundation not selling, Dijan Spartan bullish tweets Jump Capital not selling and then the ETH merge pump and we are praying that the aligned rocks here allow us to have a bull market.

Starting point is 01:49:09 These rocks are built like a Jenga castle, too. It does not look good. A lot of things have to go right in order for the ETH merge pump to happen is what this is communicating. There you go. David, what are people in store for for the moment of Zen if they're watching on YouTube? Yeah, right. Okay, so this is Gabriel Haynes.

Starting point is 01:49:25 He's the guy that says always like rapping and dancing. There was a rap from Gabriel and a song from his wife. And so that is coming up in this moment of Zen right after we get through Ryan's classic disclaimer. Course guys. Crypto is risky. You gotta tell you, none of this was financial advice, but we are headed west. This isn't for everyone, but we're glad you're with us on the bankless journey.

Starting point is 01:49:46 Thanks a lot. I don't care about you, Bit Boy, no. Not at all not even one euro. Bit Boy, my friend, looked like you shilling to the end. Pumping tokens left and right. Gucci suit a little tight looking like a Turkish delight. You got too much stress. You got a sick bench press.

Starting point is 01:50:12 You could have been a master class, but you got. your head up your ass you dish now lots It's like a hot potato your face is looking all red like a red tomato your mouth is full Caviar that shows the world the boy that you are

Bankless - ROLLUP: BitBoy Lawsuit | Ethereum Merge Updates | Biden Cancels Debt | Tornado Cash Fallout | Pudgy Penguins

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