Bankless - ROLLUP: Celsius Bankruptcy, Vitalik's Book, GHO Aave Stablecoin, 3ac StarkWare Token

Starting point is 00:00:00 Like we need local, at home, decentralized, sustainable agriculture food production, which, Ryan, is veggies and meat. Veggies and meat. I have opinions on this thing. All right. David doing a nutrition podcast is just about the most bare market thing I could think of right now. Hey, Bankless Nation, it is time for the weekly roll-up. Happy third week of July.

Starting point is 00:00:24 I hope you have your morning coffee. David, you drinking a morning coffee? Oh, two every single day, yeah? Absolutely. Just two? We never miss it. No carbs and coffee, right? Oh, absolutely.

Starting point is 00:00:33 No, black coffee. As soon as you put anything into coffee, sugar, milk, anything, it becomes a beverage. It's no longer a coffee. Wow, dude, these takes. These tacksie takes? Yeah, anti-carb maximalism here. I don't know if we're going to stand for it. We're not talking nutrition today, though.

Starting point is 00:00:49 I know you want to start another podcast. But the topics of the week are crypto. David, what are we going to cover on the roll-up today? Celsius files for bankruptcy after paying off its defy loans. important, very important order of operations there. So we're going to cover that. Suu of Three Arrow's Capital leaks the Starknet token, and then the next day, Starknet announces the token.

Starting point is 00:01:12 Go figure. Thanks, Sue. We're going to cover it something. Cover all of that, both like why he leaked the Starknet token and all the Starknet token details. Also, Vitalik, writing a book coming out on Amazon called Proof of Steak. Do you have it pre-ordered, Ryan? I did pre-order that, yeah, just last week.

Starting point is 00:01:29 And then AVE doing a stable coin. G-H-O for Goz, the Go Stablecoin. Cool. A lot happening in crypto, of course. We're going to talk about markets in just a second. And of course, if you like the roll-up, if you like the bankless podcast, if you appreciate what we are doing here. If you want to spread the word, make sure you like and subscribe.

Starting point is 00:01:48 Give us a review if you are viewing this podcast, listening to this podcast in your podcast player, too. Spotify, Apple, if you will. This comes out every Friday, of course. Also, something new on Spotify. We actually have video on Spotify now. Right. I was just going to say that. Yeah. So if you are on Spotify and you also want to see mine and Ryan's faces, that option is available to you.

Starting point is 00:02:08 Yeah, it's great. I actually started seeing that on the Lex Friedman podcast. It was the first time on Spotify. I saw Spotify video and I kind of like it. It gives us another avenue for distribution of the video beyond YouTube. So we get some redundancy there. YouTube is the only place that we have our video. Well, not anymore because of Spotify. But it's kind of crazy to think about like, oh, well, we put out the podcast everywhere. YouTube's the only place that gets the video. And do you remember that one time YouTube kicked our channel off? Yeah.

Starting point is 00:02:34 Remember that one time the YouTube CEO apologized for kicking us off YouTube? That was pretty cool. I can't believe that happened. That was this year, right? That was this year. It's all a blur. Wasn't that long ago. One thing you need to do, though, is go check out Juno.

Starting point is 00:02:48 Juno is sponsoring this message. I really like what Juno is doing. This is a crypto-native bank account. Of course, I have a bank account, David. Like full confession. I know you do too. We have to, we have Fiat bills that we have to pay. My landlord doesn't take ether, sadly.

Starting point is 00:03:03 Not that I would pay either. Yeah, sadly, maybe someday. But my bank account, I bank at Wells Fargo, like true story, it sucks. I can't do anything in crypto inside of my Fiat bank account. And that is why, if you have a bank account, you also need a crypto-native bank account. What features does Juno bring to the table, David? Yeah, so your Juno checking account can turn into your token on Polygon in like one click. Five minutes or less.

Starting point is 00:03:31 And so, like, you know, my, my world also bank at Wells Fargo. That's why we pick on Wells Fargo all the time. It goes from Wells Fargo to my Gemini to swap to Ether to then into my, like, crypto wallet. On Juneau, it goes from your checking account to Ether on your preferred layer two of choice, Polygon, optimism, Arbitrum, ZK Sync and Starkware coming soon, in one click, right? And so we're just cutting out like 30 minutes and like 17 button presses. And you probably have to reset your password anyways.

Starting point is 00:03:57 And so that's like super awesome. Like checking account to layer two, crazy. 6% on your USC. If you want that, that's an opt-in thing. 3% on Bitcoin and Ether. But then if also, if you sign up, if you get a direct deposit, which also can be turned into crypto. So you go from your employer paycheck to crypto to a layer two all inside of one app, which is awesome. But the direct deposit gets turned into crypto. And if you sign up and get your direct deposit, they will pay you $100. And if you deposit crypto on the crypto side, they'll pay you $10. So there is a link in the show notes to sign it for On Juno.

Starting point is 00:04:30 This is the new era of banks. We're going to have banks for a while, sadly. But we do want the good ones to have cool crypto-native features that allows you to leave your bank easier, if you so choose. Another step to going bankless. Click the link of the show notes. That's bankless.com slash Juno to find that out. David, let's get to markets.

Starting point is 00:04:49 What's Bitcoin doing this week, my friend? Yeah, Bitcoin, a little bit down on the week, start of the week, at $20,400. Oh, it's gone up since I wrote down these prices. crazy. Okay, so crypto markets, they move. Not that much, though. Not that much. Don't get too excited. So down from 20,400 up to, down to 20,150s, like down 1%ish, one and a half percent. And how about ETH? Ether, started the week at 1185, currently at 1115. So down about, what is that? I have to redo these numbers because, like, when I wrote these numbers, it was 1080, not 1115. So like rough, 6%, down 6%, call it?

Starting point is 00:05:26 Quick math. Yeah. As of now, as of now, when you listen to this on Friday morning, it'll be completely different. So none of what David said actually matters. Why don't even do this? I don't know. Why don't we even tell you price? You know it's just going to change. But we're looking at trends over time, David, and the trend is down bad. But there's also some interesting inflation news. And crypto is not responding as negatively to that recent inflation news as it could have. So maybe there's a silver lining there. We'll get to some of that later. But what about the ratio, David. Ratio, flat on the week.

Starting point is 00:05:59 Flat on the week. It's flat. 0.055. It's not telling us anything. It's telling us. Market doesn't know what to do right now. Global cryptocurrency total market cap. We are under a trillion dollars.

Starting point is 00:06:11 What are we headed at today? Last week, we were up to 976 billion this week. We're down to 929 billion. The good news is we get to celebrate that one trillion yet again and probably get back down. Again. Again. repeat. What is the point of looking at any of these prices? How about Ethereum gas prices? Not doing too bad there. I mean, they're down as well. So if you're trying to get a transaction through,

Starting point is 00:06:37 it's a good time to do that. Defi's cheap right now. I think the average great price in last week was like 20-something. You doing anything new on Ethereum? It's like all the cheap gas transactions. I'm not doing too much. No? Well, that's reflected in like the usage charts. Like the usage charts, it's generally down. Except you know, I was looking at the usage You know the usage chart that's actually up in terms of like usage and volume? USDC stable coins. I was going to say the transactions I actually did on Ethereum this week were all like withdrawals and deposits and like stablecoin stuff.

Starting point is 00:07:09 I was like, oh, it's nice. I only have to pay like a dollar for that. Usually it's like five, six, something like this. All right, let's talk about the big macro story, which continues to be inflation. David, new numbers came in this week and they were the worst in 41 years. They were higher than last month. Yeah. U.S. inflation just hit a four-decade high of 9.1%.

Starting point is 00:07:32 That is the headline in the Wall Street Journal. We should break this down a little bit. But first, here's the chart. Look how bad it is. 9.1%. Inflation just shooting up like a rocket in 2022. And then from a category perspective, what are the big contributing categories, David?

Starting point is 00:07:53 Yeah. Energy is obviously the big one. So the biggest ones are fuel oil in the last year has doubled. Gasoline has gone up 60%. Gas utilities up 38%. Electricity up 14%. So those are the biggest ones and they're all energy related. The next one after that is food like groceries up 12%,

Starting point is 00:08:10 which is also a proxy of energy. And then new cars is like the first non-food, non-energy one, which is up 12%. Overall CPI up 9.1%. I heard this really awesome illustration for energy. they're like, why do people pay attention to energy, like so much in the global macro space? Energy is like nature's interest rate. It is the cost of doing things. If you need to move yourself any further than where you can walk, you have to consume energy. Elevators, take energy. Escalators,

Starting point is 00:08:41 take energy. Cars, energy. Trains, energy. Buses, planes. Like, those things also move all of the things that people need, like food. And so when energy prices goes up, like the cost. The cost of of existing also goes up, which makes the world a harder place to exist in as it goes in. So this is why everyone's concerned. Yeah, it's like a transaction fee for real life, right? I guess that's why they call it gas on Ethereum. It is really the analog. If you want to do anything in the Metaverse on the Ethereum, you have to pay gas.

Starting point is 00:09:11 I want to do anything in real life, it's going to come at you through the price of energy and fuel costs. David, we are also looking at the DXY, which is, this is basically U.S. dollars. the ratio of U.S. dollars to, primarily the yen, Japanese yen, and the euro. Yeah. It's both of those. I think the euro is a dominant one. But it's a basket of currencies.

Starting point is 00:09:33 I think the euro is the biggest one, followed by the yen. And what's the story with the DXY? What's it doing? Yeah, we are hitting also a very, very long time high, all-time high, and for a while. I think, like, the last time it was this high was something like 2001 or 2002 or something. 109 is the index. For record, let's see, in the most recent entire. it was like 102 back in like 2017, also when they were like raising interest rates most recently.

Starting point is 00:09:59 But then COVID hit and it dumped. When the dollar's high, everything else is low by comparison. And so like you when you see this dollar index, you're like and you're seeing that go through the moon. Like all assets have suffered because that's the dollar going up versus, well not all assets. This is as best of currencies, but like strength in the dollar, right? A lot of like everyone's going to France for ECC in a little bit, myself included. and all of a sudden, like, my Fiat dollars is gonna buy me some extra breakfast, you know?

Starting point is 00:10:27 Did you see, David, euros and the dollar are at parody? It's broke down down below parity. It's like, below parity? Yeah, one euro is $1.99, wait, $1, $1 and one cent is now one euro. No, wait, the inverse. Damn it, I'm so bad at math. Anyways, the dollar's stronger than the euro. Yes, but that was like, so early in the week,

Starting point is 00:10:50 I made the joke that Circle is just releasing a new stable coin. The Euro stable coin, it's called USC. Kind of funny. But also, like, I mean, if you're European holding euros, not that funny. Yeah. And it's, I don't know how long this is going to persist for, but our episode coming out with Luke Gromman is fantastic for answering this question about dollar strength and why it is strong.

Starting point is 00:11:17 Doing a lot of macro content recently. I've really been enjoying and learning a lot. But how did the market react? Yes, so do I. How did the market react to all of this? You've got a meme for us. I thought this was a great tweet. So Northman Trader, good Twitter account, says,

Starting point is 00:11:32 today market's sold off on a hot CPI frame, right? Because if CPI is high, that means like, oh, no, like the Fed's going to raise interest rate, scary. That means, like, you know, risk on assets is going to get plummet even more. So Northman trader says, today market sold off on a hot CPI print as it implies more aggressive rate hikes by the Fed.

Starting point is 00:11:48 But then stocks rally. realizing that this would result in a recession sooner, implying rate cuts earlier than expected, before dropping again, realizing that a recession would come first. Basically, like, hello volatility, hello uncertainty, we don't know what happens next, and just like people are confused. Hello, this face. This is this the face that investors should be hearing? Podcast listeners don't have to look at that face of that dog.

Starting point is 00:12:10 But you should. This is why you should watch on Spotify right now. This is, you know, a question I've said that I've had in the roll-up for the last few, a couple of weeks about macro markets. Well, I feel like I finally got my answer. The question was, I was mystified why some people in macro are saying, the Fed should just raise rates to four to five percent. Like, we need that immediately.

Starting point is 00:12:32 And other people are saying, no, if the Fed raises to four to five percent, like, it breaks everything. The U.S. goes and solve it can no longer pay its interest payments. I was trying to understand why there's a difference of opinion. And here's one thing I concluded in our episode with Lynn Alden, are upset with Luke Grumman, that things are different. They're much different than the 1970s and Paul Volcker, where we could just increase interest rates. And the big difference is we are at the end of a long-term debt cycle. We have a massive amount of debt now in, you know, the modern nations, modern

Starting point is 00:13:08 economy, the U.S., Europe, Japan, China, all around the world. And so I tweet this out, we're at the end of a long-term debt cycle, and the only way to de-leverage is to hold interest rates, below inflation for most of this decade. Inflation is not politically tenable, so Powell must play the idiot by pretending to fix inflation while simultaneously pursuing it. That actually might explain some of the actions of Powell, right? I thought that was a really good and very nuanced take. Well, well done.

Starting point is 00:13:34 Well, this is kind of what I gleaned from our Luke Graman episode, is just kind of, everyone's like, what the hell? Does Powell not know what he's doing? Maybe he knows what he's doing. Maybe he has to play the role of an actor, play the role of an, idiot because the only way out of this, when you have wartime debt levels, then you kind of get wartime inflation on the other side of this. And this is to Linnauld's point, very much like the way the 1940s played out, where for that entire decade, you had about 6% inflation.

Starting point is 00:14:09 Well, interest rates were at 0%. So the delta was 6%. And some of years you had 19%. That is basically the way out of this. And Lynn Alden said this too. She said, what does the Fed know versus what does the Fed know and not, aren't telling us? So this is just a game of game theory. It's just like, all right, what are we going to portray to the markets that we're going to do? And what do the markets think that we're going to do? And so it's just, it's a game of game theory between the markets and the Fed. And so like, like, how smart is the Fed? And like, if they're just playing dumb, like, oh, yeah, we're going to raise interest rates as long as CPI goes higher. And then the CPI goes higher and the market just crashes on the CPI high CPI print the game theory works

Starting point is 00:14:50 in favor of the Fed like it did the thing that they wanted to do without actually raising interest rates yeah and they know the only way out is through high CPI so we hope that they know that we don't actually know what they know Ryan the other alternative is is this uh or Jim Powell is an actual idiot and we're all screwed that's still I don't know I'm actually uncertain which is true I guess we get to find out man the 2020s are fun Yeah, this is great. What's this take, Dave? Game theory with all of our economic lives.

Starting point is 00:15:18 Dimitri Kofrinas, we've had on the podcast before. I also thought that gave a really useful take. He says, I've been saying this for months. The Federal Reserve exists within a political system, and that system is currently fighting a proxy war with Russia and increasingly China. Policymakers are aware of that. A rising dollar creates leverage in that war. When you are a nation state with a currency,

Starting point is 00:15:39 and that currency is strong, you have more ammo to shoot with. As in when you print money and that money is stronger, you can do more things with that money. And so I thought this was a really good take. Like, we need a high dollar so that we can fight our actual kinetic war with Russia as a proxy, and then our economic war with China.

Starting point is 00:15:58 So a rising dollar is like in the interest of like the incumbent and political establishment of the United States. Do you know, David, I just realized we need to do an episode on this, macro episode, the weaponization of the dollar. I want to dive into this in more depth. I mean, I was just thinking I have to

Starting point is 00:16:14 Dimitri back on. I'm sure he would, he would, well, he says he's going to do this. So maybe we'll let him do this, and then we'll just invite him on, and he can tell us what he learned. He does the hard work. Yeah. And then we snatch you from it. Thanks, Dimitri. Love you, man. What else, David, as we're talking about inflation. Do you know, just run some of the math here, right, on like gains. If you're thinking about your portfolio, where to store your value. Of course, if you have it in a savings account, a dollar in a savings account, it goes down nine percent every year. Terrible place to hold value. So what do you do? Do you do? Do you invest it? Well, everything's going down, so you've got to be careful of the asset class, but

Starting point is 00:16:48 Ryan Peterson makes this point. With a 9.1% inflation, if your portfolio makes less than 12% per year, the IRS takes 100% of your real dollar returns. The tax optimizer is here to remind you. There's still taxes, too. And so even a 12% return, you're actually making zero in terms of real returns, nominal returns, maybe, but zero in terms of real returns because you've got to pay 30% of that at least to the IRS. So where does anyone make money? I'm making less than 12% this year. I'll tell you that.

Starting point is 00:17:20 Yeah, it's probably the negative. Well, that means you don't have to pay any taxes, David. There's your silver lining. You can't pay tax if you aren't making money. Here's Arthur Hayes, and he says, must watch the JPI and the euro, the Japanese yen and the euro. Expect an, quote, intervention to weaken if the USDA,

Starting point is 00:17:37 to weaken the USC if Japan is greater than 150 and the euro is greater than 90 cents on the dollar. Intervention means fed money printing, printing money means be a coin number go up. The situation is fluid. So this is what I'm seeing more and more more is more. It's more than people are saying like there's a path forward that seems not implausible where like the money printer gets turned on again. Yeah, I think, and this is also to pump our Luke Graman episode on Monday, go listen to that

Starting point is 00:18:01 episode what he talks about is basically a very likely way forward is that the Fed is going to start having to bail out Japan and Europe. It's allies. Yeah. Do that in various ways by probably. purchasing bonds. And so watch out for that. And I guess that's good for crypto. I know what it means for the rest of the world, but it's good for a scarce commodity asset. The take here is that in times like these, the economy is now like under the whim of politics. Like the economy used to be a

Starting point is 00:18:30 free market. It's no longer a free market. It's going to do the thing that like the political institutions want it to do. Yeah, which is exactly why we need to do more on geopolitics here, David, to understand this. All right. What's happening in the crypto world? Getting out of the inflation conversation. This is a stat about miners. Yeah, new all-time high set by miners selling Bitcoin. A net of 88,000 bitcoins were sent to exchanges from miners a new all-time high. So I guess that doesn't mean actually sold. Miners sent it to an exchange, but like, miners don't buy Bitcoin. The implication, miners don't buy Bitcoin. They mint Bitcoin. And so a net outflow from miners to exchanges was hit in an all-time high yesterday.

Starting point is 00:19:10 Why do you think this is happening? Are they just trying to cover costs? Yeah, yeah, they've got to protect themselves. from further downside because like if bitcoin goes down like another 50 percent like a bunch of miners go underwater so they also have to like hunker down for the winter like miners are a massively resource intensive kind of industry right it's like all the energy costs but also all the hardware costs what is uh what does this take about treasury values of defy protocols yeah so hasu had a really good take on this a while ago where like treasuries that count their own native token as like their treasury like you shouldn't be doing that because you can meet your token as much

Starting point is 00:19:43 you want anyway, so it doesn't really count. But for some reason, we do it. So anyways, the treasury of Ave at the peak was $1.08 billion. Today it is $101 million. Uniswap at the peak, $4.8 billion. Now it's $1.3 billion. Index, peak, $105 million, now it's $4 million. Four million? Yeah, oof. So like these treasuries, which are held, largely held in the native tokens, but other defy tokens as well are all downpad. And so like this, Hawsey was ringing the alarm about this. It's like, guys need to diversify your treasuries at the peak, not at the bottom, or else it'll be in trouble. And no one really seemed to do that. Yeah, I think very few took his advice. But that's a great point. It's like, you know, if you look at Apple's balance sheet and you're

Starting point is 00:20:28 like, how much cash on hand do you have Apple? They're not going to count all of the Apple shares that they could potentially mint, or they might have in reserve somewhere. We're going to tell you about actual money in the bank. I have an infinity money treasury. Yeah. How much Bitcoin do you have? How much ETH do you have? How much stable coins do you have? That is your treasury if you're a doubt. And I think we're learning that lesson. Real money. David, what is this? This is a kind of a, the Lido, liquid staking balance as compared to all of the other liquid ETH tokens out there, liquid eth staking tokens out there. And what are we seeing here? Yeah. So the concern of Lido centralization has been pretty big for a while. And you can see it's showing up here in the numbers.

Starting point is 00:21:07 4.1 million ether is staked with Lido, which of the, the liquid staking services, people that have like a liquid staking derivative, like Lido has StakedEth, Rocket Pool has REth, Lido's got 90.6% of that share. And so like the centralization of Lido is like an increasingly large concern. Some people call it like the biggest centralization,

Starting point is 00:21:27 the biggest systemic risks to Ethereum since the Dow itself, just because like network effects we get network effects. Like steak teeth is super liquid. It has the most integrations. Like stake teeth is the most useful of staking derivatives. So there's a lot of centralization

Starting point is 00:21:40 power that a lot of people are worried about. Yeah, I guess my take on this is, yes, I'm concerned, but it's not like, it's not like a code red. Well, like, you know, yellow, orange, like, I'm concerned, but I also think it's still very early. My other take here is something we've been saying a lot is the key to changing this is better competition, really. Right. Right. We can't put other limitations on Lido. It's, it's home staking has to get better. Other liquid staking providers have to get way better. And then lastly, I'll say, I don't think any of this is like permanent. No.

Starting point is 00:22:13 I mean, we don't even have withdrawals yet. So it's still too early to see, but it is something to pay attention to and it's important. I do think it's become very obvious. David, I feel like this was obvious two years ago, or three years ago, when we read that piece from Dan Ellitzer on Superfluid collateral. That the killer app is liquid eth staking. Once you stake your eth, there's an asset that's produced on the other side of that. People want to do things with that asset in defy. That is the marvel of tokenization.

Starting point is 00:22:40 So that is a killer app. And all the competitors need to figure out how to compete with Lido on that level in order to eat some of the markets here and take that away from them. David, what do we have next? Coming up next, the big stories of the week. Of course, Celsius files for Chapter 11 bankruptcy. Zero's capital leaks the Starknet token. Starknet then later launches their token, not launches their token, and ounces their token.

Starting point is 00:23:03 So we're going to get into all those details and, of course, the rest of the news, right after we get through some of these fantastic sponsors that help you go bankless. Rocket Pool is your friendly, decentralized Ethereum staking protocol. You can stake your eth with Rocket Pool and get our ETH in return, allowing you to stake your eth and use it in Defy at the same time. You can get 4% on your ETH by staking it with Rocket Pool, but you can get even more by running a node. Rocket Pool is the only staking provider that allows anyone to permissionlessly join their

Starting point is 00:23:28 network of validating notes. Running a rocket pool node is easier to set up than running a solo node, and you only need 16Eth to get started. Why would you do this? You get an extra 15% staking commission on the pooled ETH, so your APEPS. is boosted. So if you're bullish-e-staking, you can increase your API and get some extra tokens by adding your node to the decentralized rocket pool network, which currently has over a thousand independent validators. It's yield farming, but with Ethereum nodes. You can get started at rocket pool.net

Starting point is 00:23:52 and also join the rocket pool community in their Discord. You can find me hanging out there sometimes in the chat, so I'll see you there. Maker Dow is the OG Defi Protocol. The first Defi protocol to ever exist even before we called it Defi. MakerDAO produces Die, the industry's most battle-tested and resilient stablecoin. Using Maker, you don't need to sell your collateral if you need liquidity. Instead, you can spin up a Maker vault and use your collateral to mint dye directly. With Maker, the power to mint new money is in your hands. And there's something new in the MakerDAO ecosystem. Every time a new MakerDAO is opened, the owner can claim a POAP, which contributes funds to one tree planted, an organization with

Starting point is 00:24:27 ongoing global reforestation efforts, creating a world where digital participation and the health of our environment can live side by side. Soon, Maker will be present on all chains and layer two's bringing the biggest and best defy credit facility to everywhere there is defy. So follow Maker on Twitter at MakerDow and learn from the oldest and most resilient Dow in existence. All right guys, we are back talking about Celsius. They have

Starting point is 00:24:47 finally filed for Chapter 11 bankruptcy. I know we've been talking about CFI lenders a lot and we can't seem to get away from them because new news develops every single week. What is this, David? Is this kind of the nail in the coffin? Celsius is finally saying, we can't find it

Starting point is 00:25:03 acquire. There's no other way out. legally we have to go bankrupt. Right. Yeah, remember a number of people, I think NXO took a look at, or maybe it was FTX, took a look at Celsius, is it balance sheets? Both of them, probably. Yeah, probably both of them. And interested in acquiring the thing.

Starting point is 00:25:18 And then they were like, oh, no, no, no, no, no, no. So, like, as a result of that, like, you know, the only option left you have is bankruptcy. So reading from the article here, today's filing follows the difficult but necessary decision by Celsius last month to pause, withdrawals, swaps, and transfers on its platform to stabilize its business and protect his customers. Without a pause, the acceleration of withdrawals would have allowed certain customers,

Starting point is 00:25:41 those who were first to act, to be paid in full while leaving others to wait for Celsius to harvest value from illiquid or longer-term asset deployment activities while they receive a recovery. Celsius says it has $160 million cash on hand enough to support certain operations during the restruction process. After paying off all of their defy loans in compound, Celsius announced that they had filed for Chapter 11 bankruptcy early Thursday morning after paying off their defy loans. And so the users of the centralized app all have to sit on their hands while they wait for the dust to settle and they're probably going to take a haircut, including you, Ryan, all of the users of compound or Avey or MakerDAO or all the defy apps that Celsius used

Starting point is 00:26:26 are being paid back in full because of the protections of the defy app protocol itself. That is my takeaway. What's your, what are your thoughts? I think that's, I think that is the takeaway. And that's what we've seen this, this week before they actually formally announced chapter 11. They paid off more than 800 million in debt to defy apps, uh, which is really cool. And they even unlock their STEth. They paid off their debt to, to AVE as well. DeFi apps paid in full. Look, man, the take is this. I tweeted this out. Notice that defy loans are the only ones insolvent CFI companies are paying back right now. The code is forcing them to pay back their loans, not laws, not attorneys, not courts, code. And it's almost like Defi works better, David. Weird.

Starting point is 00:27:12 That's the take. Why are we even here? They couldn't, they had no alternative. They didn't have to go to court because they couldn't go to court because the rules of the collateral are written in code. Basically, unless you pay me back. Yes, unless you pay back AVE, they're going to take all of your collateral. And that's, it's worth it to you to pay off. So you have to, like, it's incredible to me how well defy lending worked through this process. And I can't say enough, this is, this is the bright spot of everything that's gone on over the last, you know, two to three months. And certainly everything that's gone on with centralized lending protocols. Right. There's also another part of this story. There's this account zero X, X, B1, that's famously part of the Celsius story. No one really knew

Starting point is 00:27:56 who this account was, they just knew that they were doing stuff in Defi, making a ton of money, and associated with Celsius, and now this account tweeted out and revealed who they are. So this account says, hi, I'm Jason Stone. From August 2020 to April 2021, I led a group of talented individuals who manage the zero exit B1 address. After discussions with Celsius in mid-2020, Celsius began an acquisition of Kifi, a company that this individual had founded. And thereafter, Kifi pivoted to staking and deploying DFI strategies for Celsius. In August of 2020, ZeroXB1 was created and with other addresses, Celsius would send customer deposits to us to manage. Shortly after, Celsius shared private keys to the address with us. Over the ensuing months,

Starting point is 00:28:41 transferred hundreds of millions of dollars of customer deposits for us to invest. By the time, Celsius and Kifi parted ways, we were managing nearly two billion of assets. Celsius' risk management platform monitored our investment strategies and performance using hedgeguard and debank. So basically, Zeroxb1 would go in like yield farm, do strategies, make a bunch of money, and then Celsius would like see what they're up to with these apps. With $2 billion in assets, by the way, depositor assets. Celsius promised the XeroxB1 team members that they assured us that as a part of this monitoring, their trading teams were actively hedging any potential impermanent loss from our activities in liquidity pools. They assured me that they had risk management and hedging in place to account

Starting point is 00:29:22 for fluctuations in token prices. But in late 2021, we discovered Celsius had lied to us. They had not been hedging our activities, nor had they been hedging the fluctuations in crypto asset prices. The entire company's portfolio had naked exposure to the market. So, like, if you're taking customer deposits, you're not supposed to take those, like if they're USD deposits, right? You're not supposed to take those USD deposits and then buy ether with it in the hopes that ether goes up. That's opinionated. What you're supposed to be doing is you're supposed to doing delta neutral stuff that it doesn't matter what the prices of things do. You still get yield either way. They were taking opinion-opininated stances on the market with customers' deposits,

Starting point is 00:29:57 which puts them in a position of potentially not making that money back. So, Zeroxv1 continues. After seeing these and other major problems in how the company operated, we informed Celsius that we wish to terminate our relationship. That was in March of 2021. We told Celsius that we would work with them to unwind our various positions over the following months. By April of 2021, however, because, I mean, bullish, bullish part of that year, the value of assets under management had increased by another $800 million. But when we unwound the DFI position, Celsius suffered impermanent loss. At first, they believed the impermanent loss was evidence of Keefei stealing and accused me of being a thief. They later to accept the impermanent loss for what it was, but we claimed

Starting point is 00:30:34 I was responsible for it, and completely ignored the fact that they had full visibility into all trading strategies deployed by Kifai and promise to hedge that exact risk. I have tried for over a year to quietly settle this dispute with Celsius pursuant to the contracts, Celsius signed with Kifai. They owe Kifi a significant sum of money. We have been more than reasonable in tempting to resolve this with them. Basically, it continues to say that they have filed, they are suing Celsius trying to get some money. But yes, that's what Celsius did with your money.

Starting point is 00:31:05 It's crazy how irresponsible that was, just that story of like they found someone who could manage money in D5 protocols fairly well, gave them $2 billion when that fund and that individual said, this stuff I'm doing is kind of risky. Are you sure about this? They're like, no, we're hedging the risk in other areas of the business. Which is totally fine.

Starting point is 00:31:25 If they were doing that, that would have been like a risky but okay business. Like they weren't doing that. Maybe. And then they come to find out they weren't even doing it. So it's just all of the shady stuff behind the scenes. And it's so interesting because the user experience you have as a retail user is like, deposit your funds here, get 8% back. And the money comes in each month.

Starting point is 00:31:48 and you're like, oh, this sounds great. Well, on the backside of this, I'm not going to say it was running like a Ponzi scheme, but risk management was woefully inadequate. Absent. It was absent. Absent. Completely absent. The question, I think, for people, including myself,

Starting point is 00:32:05 who've deposited money into Celsius is, are we ever going to get our money back, David? What do you think the answer to that question is? Yeah, not all of it. I think you will get in the ballpark of a 30, 50% haircut. You'll get 50th percent of your money back. I asked this question from Twitter.

Starting point is 00:32:23 The truth is no one knows. It's going to chapter 11. And a bunch of the people were like, yeah, no way. Sorry, kiss it goodbye. Some people are being snarky. Yeah, you're definitely going to get it all, Ryan. We'll get something back. You're just forced holding or some of the answer.

Starting point is 00:32:38 So it seems like the sentiment is this is kind of a Mount Gawkes type situation. And it's not looking good for getting your funds back. maybe some portion of it. And an unknown amount of time. Years down the line. Yeah. After the court society. Yeah.

Starting point is 00:32:53 Yeah, absolutely. David, what do we got next? Starkware token. What is this? Oh, no. First off, we got to start with Three O's Capital. So, like, Suu breaks his silence on Twitter. And so he tweets out, sadly,

Starting point is 00:33:06 our good faith to cooperate with the liquidators was met with baiting. Hopefully they did exercise good faith with regard to Starkware token warrants. basically the lawyers never exercised Starkware token warrants. This is like legal stuff that I'm not totally familiar with, but you have to like do a thing in order to get the tokens after you invest in starkware you got to do a thing.

Starting point is 00:33:26 But the lawyers didn't do that thing and maybe maybe you know more about why they would have not done this either out of negligence or... Probably negligence. They probably just missed it. It's kind of a technicality and they didn't check the box, right? Right.

Starting point is 00:33:42 Anyways, this was released to Twitter And which was like the first news of a StarCware token, even though everything's going to have a token. So you know everything's going to have a token. But this is like the first formal indication that we've seen of Starcware having a token. The other interesting. It's also Suzu's first tweet in like forever, right? First tweet sends the,

Starting point is 00:34:02 because he's been on the land. First tweet sends that one that you can see right there. It sends June 14th saying we are in process of communicating with all relevant parties and intend to pay them fully back in full. Also, not necessarily. true, evidenced by the fact that no one knows, Ryan, where three errors capital founders are. So where in the world are the three arrows capital founders? People kind of assume Dubai, but no one actually knows. Dubai being a convenient place to not have an extradition treaty with

Starting point is 00:34:32 basically the rest of the world. But Suu, Three Roos Capital, Kyle Davies, missing. Yeah, so I guess things like this, on Friday, lawyers for Three Ro's Capital creditors, the people who want their money back, claimed that Sousou and Davies have not yet begun to cooperate in any meaningful manner. Adding that the two kept their camera and audio off at an initial Zoom meeting. So you have the Zoom meeting and they're keeping their camera and audio off. Like it's kind of a classroom during COVID and it's virtual school or something. They're just not like locking in. So who knows where these guys are and what's going to happen next? But that, I guess, is the big alpha that we now have a start wear token.

Starting point is 00:35:12 Suu is selling his house in Singapore, but he's only, he's looking for a buyer to wire him money to his Dubai bank account, which, you know, you can't see his money in a Dubai bank account. That's like kind of the whole point. So he's got like this $40 million home

Starting point is 00:35:28 that he's trying to liquidate. I don't know if he's liquidated or not. Why isn't he using crypto? It's not very crypto native of him. He's using Dubai banking system. Yeah, maybe. Well, yeah. Anyways, here's a picture of the three euros capital office in Singapore.

Starting point is 00:35:40 with some uncollected mail. There it is. It doesn't look very good. This is what it looks like when a major hedge fund completely folds. NFT collection? We talked about that last week.

Starting point is 00:35:53 This is still has to be liquidated, huh? Yeah, so this is the starring night throws capital's like NFT fund, which, I mean, they bought the top of the NFT mania, absolutely. But good taste, good taste. People think that this is a really, really good collection.

Starting point is 00:36:07 Those are kid punks. Oh, kid punks, sorry. I don't know about that one. That one's not necessarily good taste. But yeah, there's a bunch of really cool stuff in here, which it's all going to be liquidated. So if you are an NFT collector with a bunch of cash on hand, you might have a field day soon.

Starting point is 00:36:22 Yeah. Do they still exist? NFT collectors with cash on hand, David, do you know any left? Oh, with cash on hand? I don't know about that one. All right, StarCware tokens. So what is the news then?

Starting point is 00:36:33 It was pre-released by Three Roos Capital and then more formally released by Starcware just days later. Yeah, one day later, yeah, exactly. So StarCWare tweets out, Starknet Alpha was launched on the Ethereum Maynett, November 2021. Now it's a time to advance its decentralization as demanded of an L2 on Ethereum. Here is our decentralization proposal, introducing the Starknet token and the Starknet Foundation, pretty much like Playbook for decentralizing your layer two. And so they released three blog posts, part one, part two, part three.

Starting point is 00:37:04 We're only going to read out parts of one and three. But the key points of blog post number one says, Starknet's decentralization involves a native token and a new foundation, again, part for the course. The Starknet token is used for governance and as the network's payment and staking asset. So that's actually, I mean, not a crazy choice, but demanding your own token to be the payment token

Starting point is 00:37:25 for that particular layer two, that's an interesting choice to consider. Like that's arbitram, optimism. They don't do that. They take ether as the gas for the layer two. rather than the network's native token. So the take here is that like, well, if this Starkware's token

Starting point is 00:37:42 is the new gas for the Starkware layer two, they're like really more aligned with the Starkware layer two than they are with the Ethereum layer one. So it started to make it as all self-sovereign ecosystem. So there's that. 10 billion tokens have been minted

Starting point is 00:37:55 and their allocation has begun. The Starkware Foundation now being set up will have a mission to maintain Starknet as a public good. We do like that public good word. So here are the details. 10 billion tokens. We'll pull up a pie chart here in a second.

Starting point is 00:38:09 17% going to Starkware investors, three hours capital, which that's going to get liquidated and distributed, which, I mean, I'm kind of fan of that because of decentralization. They had like a lot of it. And then 32.9% of two core contributors. That is the Starkware team. If you add those two numbers up, I believe you get 49.9%. And then on the other side of things, 12% to grants, 10% to the foundation.

Starting point is 00:38:34 8.1% is unallocated. to be determined, 2% donations, 9% community rebates, and 9% community provisions. So you have 49.9% on one side. That's like the centralized team and investors, and you have 50.50.1% on the other side, which is various forms of the community, the foundation, like long-term starkware development. Ryan, what's your take on this distribution? Yeah, it's not bad. I mean, it seems kind of par for the course. 50% is maybe a bit on the high side from an investor and kind of core contributor perspective. 49% actually. Sorry,

Starting point is 00:39:09 yes. Not quite 50%. But I don't know. It's just, you know, some of its semantics, 10% here, 10% there. I'm not really sure. The big question to me is like, how are they actually going to distribute the tokens to their users in the community? How does that work? Do we have any details on that

Starting point is 00:39:26 or a timeline? I don't think we do. I don't think we do. No. Very limited timeline. This is still an announcement to launch a token. And you kind of wonder if they just did it a day. after the Su-Zoo news came out, and they kind of rushed it as a result. And so that might be part of the reason they don't have dates. Not sure. They had all these, they had three blog posts, and it came out 24 hours after the Su-Zoo announcement. That would be, I think they had this ready to fire.

Starting point is 00:39:52 Yeah, maybe. So, yeah, so that's what's going on in Starkware world. How many more player twos are we waiting for now? ZKSink. ZKSink. There are a couple others in the works, too. Oh, yeah. Oh, there's a ton. Oh, yeah. Has Aztec released their token? As Tech has a token. There's scroll that's still in development. Scroll, that's right. Yeah, there's a ton of layer two's left. But they're like, these are between Starkware, Stark, uh, between Starkware, ZK Sync, optimism, and Arbitrum. Arbitrum also needs release a token. Those are like the big ones, I'd say. That's right. And they're probably all going to release their token during the bear market. So I guess we will see what happens there. Yeah. Guys, coming up next, the story of Vitalik writing a book. I just found this out last week. What is

Starting point is 00:40:33 writing. We'll talk a bit about that. Also, Aave launching a stable coin. Is this going to be a die competitor? Are they doing something else? And then finally, Disney and Polygon are teaming up. We'll talk a little bit about that. Before we do, we want to thank the sponsors that made this episode possible. Arbitrum is an Ethereum layer two scaling solution that is going to completely change how we use DFI and NFTs. Some of the coolest new NFT collections have chosen Arbitrum as their home, while DFI protocols continue to see increased liquidity and usage. You can now bridge straight into Arbitrum for more than 10 different exchanges, including finance, FTX, Whoopi, and Crypto.com. Once on Arbitrum, you'll enjoy fast transactions with cheap fees,

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Starting point is 00:42:23 If you have a Ledger already, you probably already have it and get started securely staking your crypto assets. All right, guys, we're back. David, did you know that Vitalik is writing a book? Like, I know you know now, but did you know before last week? No, I knew it this week. You knew it this week? Yes. Oh, you found out.

Starting point is 00:42:39 Okay, so I just learned this last week, and I was like, surprised because I follow what that man does. Like, I read this research posts, all right? I stalk Vitalik Boutrin. In a way. Notifications are on. Yeah, notifications are on and dialed up. But, yeah, just learned.

Starting point is 00:42:56 He's coming out with a book. This book is set to release on. September 13th, I believe. It is now for sale on Amazon. It's called Proof of Steak, the Making of Ethereum, and the Philosophy of Blockchains. So he's co-writing this. It's not just Vitalik, but there's another author, Nathan Schneider, who I believe is a editor. He's an editor, okay.

Starting point is 00:43:17 He's an academic of some sort, and he actually jumped in the thread and was commenting. I was asking questions back and forth. I'm anxious to read this. The author, or the editor says, it's a, about giving crypto and blockchains a philosophical underpinning and kind of separating it from the scams. Like, it is a good thing for the world. If you're a serious person, an individual, and here's why, Vitalik is making the case to a different crowd than probably the crowd that listens to bank lists. That is the attempt.

Starting point is 00:43:49 It seems like that's what the editor is saying anyway. Beautiful. I cannot wait to read that. That is exactly the type of content that I'm looking for. I heard a funny joke somewhere that was like, I'm starting to think this whole like Ethereum merge thing is really just a point to sell of Vitalik's book. Oh, well, the dates.

Starting point is 00:44:06 Okay. Let me say, September 13th, is that also going to be the real estate of the merch? It's a reasonable merge date. It's a reasonable merge date. It's not crazy, right? Just saying it's not crazy. That's how it's trying to sell his books.

Starting point is 00:44:20 The Bitcoiners were right. I knew he's a scammer. It was all about this book. This is the reason for starting Ethereum. Just the long con, Vitalik. Good job, man. All right, AVE, they're doing a stable coin. I'm pretty excited about it.

Starting point is 00:44:33 What are we talking about? Aave Bucks? Is that what it is? Ave Bucks, is that what it is? Ave Bucks, stable coin fears with a proposed new token. So AVE companies, the centralized team that stewards the AVE protocol, propose a new dollar peg stable coin to the protocols Dow on July 7th. The G-H-O for Ghosts, that's the Avey icon, like, mascot.

Starting point is 00:44:56 will be minted by borrowing against assets locked as collateral on AVE. Borrowers were still earned yield on their deposited assets while also racking up interest on their borrowed GHO, according to AVE company's proposal. Interest payments will go directly to the Dow Treasury, of course, and can be considered revenue. A welcome word in the bare market. This is the power of defy that GHO allows for more liquidity for decentralized stable coins in the market, more fees for AVE, more volume and fees for curve, more stability for other states,

Starting point is 00:45:26 stable coins and more attractiveness of defy in general compared to C-Fi wrote Mark Zeller, who works at AVE. So basically, it's like Maker-Dal, but with a money market attached. So if you slammed like MakerDA and compound together, like, boom, you would have the Avey stable coin, which is great. That's awesome. Makes a lot of sense. It's all collateral-backed. It's collateralized. This is not like the Terra Luna fiasco at all. So it's using the strengths of the maker model and the strengths of Avey, which is the money market piece. So is the thing going to be called ghost? Ghost? Yeah, that's going to be the Go Stable coin. GHO. It's going to be called Go. Yeah. All right. I think, I mean, I am not the arbiter of their pronunciations. I think it's worth exploring and unpacking the differences of

Starting point is 00:46:10 Maker Dow die versus AVE Go. So Maker Dow, extremely risk adverse, extremely hardened, going after real world assets and like real world integrations, where Avey is a little bit more defy crypto native going after maybe a little bit more of the long tail of risk. Not totally, not totally done the long tail, but like opening up more total assets to Mint Go than you can put into Make Her Doubt and Mint Die. So like we're starting to see some separation. MakerDAO, like real world assets, extremely risk adverse, extremely conservative. Avey, not super, not totally super conservative, still very risk adverse.

Starting point is 00:46:46 Avey's never been hacked in any way. But also accepting a little bit more liberal on the long tail of crypto-native tokens. So you can start to see some divisions in like the decentralized table coin. I'm actually just so happy we have a second decentralized table coin. I think that's so great. It's so great. Missed opportunity to call it Ave-Bucs. Maybe that's still on the table, guys. But if you're hearing me, not a bad name. But you know what's cool? Ryan, we could call it Ave-Bucks. We start that means. I was saying you're leaking in the bankless table-coin strategy of bankless bucks that we have. Is that coming? Bankless bucks?

Starting point is 00:47:18 What that's going to be, what is it going to be the collateral that's that, David? Oh, well, TVD. Okay, all right. David's making stable coins on the flight. But do you know what's funny to me is how much, as you were describing it, how much things have changed for me? I used to think of AVE as, oh, that's pretty risky. Yeah.

Starting point is 00:47:35 Right? It's like, oh, I prefer Maker Dow. If I'm taking margin out or taking a loan out of my Eth, I'll do Maker Dow rather than Avey. Avey's just seems so blue chip and so risk off now. And I think part of that is like they've done a great job. And Lindy effect, they've been here for a couple of years and it's worked very well. The other part of that is the Overton window has completely shifted.

Starting point is 00:48:02 Right. So now we went in this bull cycle way out on the risk spectrum. Right. We saw things like Luna and UST and that whole implosion, all these algorithmic stable coins and like what's happened with a C-Fi lending, right? Like those, the safe places like block. Fai and Celsius to deposit your funds have completely exploded. Now I'm like, AVE is just, it just seems so safe. It seems so blue chip. It seems so gram-a-ready. And that's totally changed for me in the last couple of years. Totally. All the things that are still alive right now,

Starting point is 00:48:35 I mean, we still have to make it to the other side of the bull market, but it seems like the most of the downside volatility has happened already. So like if it's going to break at a protocol level, it would have broken by now. So like all the stable coins that exist today, I feel like you can definitely start to like endorse these things pretty pretty well. You could have always endorsed thy like AVE, the stable coin. I don't think it really adds any new risk of the AVE protocol. It's a new product, not necessarily a new like risk vector, I'd say. And then and then also fracks like killed it this this bear market in a good way, in a good way like killed it to the upside. You're doing well. You didn't die. Yeah. They survived like UST, goodbye,

Starting point is 00:49:15 Wonderland, MIM, I'm pretty sure that's gone. For the most part, it is. Anyways, I wouldn't trust it personally. But now we have three really awesome decentralized table coins, optimizing for three different things. So, you know, it's fair market, build market. Yeah, absolutely. It's absolutely great.

Starting point is 00:49:31 A big week for Maddoch as well this week in Polygon. So the first bit of news is Robin Hood just started allowing deposits and withdrawal support for Maddoch and for Polygon. So that's another Fiat Bridge, Fiat Gateway. And Robin Hood, of course, I don't know, 20, 25 million users, something like this, now have a way to get directly onto Polygon. Also, some breaking news from Polygon. They are excited to be the only blockchain chosen to be part of the Disney Accelerator Program. What is this, David?

Starting point is 00:50:02 Yeah, so six companies selected to be a part of the Disney's 2022 Accelerator Program. I didn't know that's existed, but now I do. Is a business and development program designed to spur the growth of innovative companies around the world. this program which starts in a week, so like next week, is looking to develop technologies with augmented, augmented reality, non-fundable tokens, and artificial intelligence. I mean, you can kind of just guess and see,

Starting point is 00:50:26 imagine for yourself, how those things fit into a Disney product, right? Like, I don't think it takes that much imagination to put those things together. During the course of the program, each participating company will receive guidance from Disney's senior leadership team, as well as a dedicated executive mentor. And like Ryan said,

Starting point is 00:50:41 Polygon is the only blockchain-native platform selected in a six company lineup. Cool. Yeah, good for them. Good business development, of course. You know, always waiting for Disney is the giant of IP in the world to start doing things with the Marvel universe, the Star Wars universe, like Mickey Mouse and friends in NFTs. And maybe this is a way to explore that as well a bit more.

Starting point is 00:51:04 David. Oh, this is really, really cool. Yeah, man. What's happening? This is the EMS markets. EnS markets, I always like to say there's always a bull market. somewhere. Even in the midst of this fair market, somebody's still making money. And right now, it is the EMS domain name holders. And specifically certain clubs of holders. These clubs have come out

Starting point is 00:51:26 of like the ether. So we had like the 999 club, which is anyone who owns numbers 0-00 through 999.eath. You are in the 999 club. Then there's also the 10K club, which you know, add another digit. I'm in the 10K club. Thank you. What number do you have? I actually don't know. It starts with 68. 642, I think. I don't know.

Starting point is 00:51:48 But then there's also other clubs, right? There's like Arabic number clubs. Like a bunch of clubs are being established. And it's basically like this like bottom up like non, non-ERC20 token Dow, right? So it's like these clubs. And so there's this tweet thread that has a bunch of these metrics that I'll read out here. With a current floor price of 25Eath, the 999 club has quickly become the most expensive of all the ENS clubs and now is considered an icon of ENS domains.

Starting point is 00:52:15 To look into the 999 club, we've pulled addresses of all 506 different holders of the 1,999 NS names. The first thing we notice is the lowest amount of paper hands that we've ever seen, 2.4%. I'm pretty sure what that means is only 2.4% of total holders has sold. I think that's like four or five, six people. This is the highest of the category classified by this particular algorithm. and 168 of these holders of the 506 have their ENS domain as their primary ENS name record. And so, like, their numbers actually, like, registered to their Ethereum address.

Starting point is 00:52:52 So, like, 33% of these holders are using these digits as their ENS identity. And so next up is the 10K Club, which is, like, 1,000 through 9,99.Eth, a larger amount of supply and a 1.6th floor, the 10K club has an unsurprisingly higher ratio of paper hands, but to put things in perspective, the ratio is still higher than things like Azuki's or Doodles. The 10K Club is made up of 4,368 wallets. Two hundred 18 of them also own a 999 Club ENS. That means almost half of the 99 Club also owns a four-digit ENS name. This time, 668 holders have defined their address as an ENS primary domain. Ratio is lower than the 99M Club, but the network effect is still greater with four times as many people flexing their four digit numbers. And this is just the numbers

Starting point is 00:53:46 club. Like I said, there are other numbers, the clubs, ENS clubs in the ENS game. You can check them out at ENS.Division. What is with this? Why is this happening? So first of all, let me say dot-eat. Humans like tribes, Ryan. Okay, but like, first of all, like dot-eaths are, I think the perfect bare market NFT to start trading. I don't know. It just feels so essential, so close to the metal. So foundational. Like, so I get that aspect of it after fashion. But like, why now? EnS has been around forever.

Starting point is 00:54:16 Why are we suddenly now in July of 2022 and also June and May? Why are we now getting this DGEN bull market on ENS's? Can you explain this to me? Yeah, I actually do have an answer for that. Well, some part is just like, you know, ghosts in the machine. Like some people just like to trade things. But also, I'll say that, you know, a lot of new NFTs. speculators that came in bought ether at higher prices, much higher prices than they are now. And so

Starting point is 00:54:44 like, ENS names are a great tax-lost harvesting NFT to purchase after you bought your 4,000-K ether, and now it's on to $1,000. So you can buy an EMS name because it's still, if you're buying an EMS name, you're still longing Ethereum mostly. So you get to tax-loss harvest all that ether that you bought. But you can also buy an NFT that you know is not going anywhere. Unlike, like, all the other, like, JPEG NFTs that are opinionated. Like, do you like the cash-law? hats. Do you like the punks? Do you like the apes? Like it doesn't matter. Like everyone plays in the NFs game. Like you, you Ryan have an ENS name. I've gotten the NS name. We're considered like defy people more than we are NFT people. But even us have ENS names, right? And so that I think.

Starting point is 00:55:23 And also just like there's historical relevancy. Like the DNS don't world has made people bigillions of dollars. And so like we're just repeating history again. I get it. I get it. I get all these arguments. A nice pro tax tip by the way, David. I'm proud of that one. That was good. That was good. Tax loss harvesting is awesome. But, okay, but like all of that stuff was true before now. Like, why do we see this? Like, JPEGs just leave a bad taste in people's mouths now. Ah, that might be it.

Starting point is 00:55:52 So people are like anti-image, anti-JPEG, and they're like, I want something real. Yeah, give me something. It's a proxy for Ethereum. Okay. And dot eths are like, it's a proxy for Ethereum, but it's also like, it's tangible. It's real. It has utility. What can you do with a dot-eath?

Starting point is 00:56:06 Anything. Like, you can, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's, human readable name for any Ethereum address or any, I guess, address in general on the internet. And that has utility. And maybe that's where the market's going for NFTs. Yeah. Yeah. So, like, you know, I think crypto punks are cool. But like that doesn't necessarily, that's not a universally held opinion, right? Like some people think crypto puns are cringe, even though those people are wrong. But like, if you are walking to a club, a Metaverse club and you have 0.00.eath as your name, everyone thinks you're cool. Really? So you can still flex. It's a universal.

Starting point is 00:56:38 signal. I think that's it, man. I think the explanation is exactly what you said. JPEGs are out. JPEGs are out. So what are the... JPEGs aren't universally out, but like, again, they're more... Do you know what I mean? I've read so many takes this week about, like, just in mainstream media about, like, NFTs being a scam and, like, just, it's endless, man. JPEGs are just not... JPEGs aren't appearing on Jimmy Kimmel these days. That's for damn sure, right? It's like totally out of mainstream culture, except Bill Murray, being countercultural. He went and he bought a cool cat this week. Yeah, nice cat, that's the cool cat that I would expect Bill Murray to purchase. Do you know he's buying the dip here?

Starting point is 00:57:14 Yeah, wow, yeah, good for him. Yeah, pretty close. One more thing on the ENS names before we move on. I think this needs to be like seconded, but I think this whole thing got started when people noticed like a bunch of people in like Arab countries buying number NS names. And like the license plate, low-digit license plates in like places like the United Arab Emirates, are like similarly status symbols. So like people will pay big numbers

Starting point is 00:57:41 for like low digit license plate numbers. And so ENS, it's like even bigger market. And so I think this got triggered it in the east. And now like the West is like, oh, we also want to play this game. And now the game's on. Have you ever had a personal license plate, David? No, I haven't.

Starting point is 00:57:56 Yeah. Bankless. Bankless is sadly eight letters. I actually did. No, no, no. No, no. I could do that. BN-K-L-E-S-S. We could do that. Yeah.

Starting point is 00:58:05 Yeah. I don't have to do it. You don't have a car. I don't have a car anymore. You're out. Okay. I have a minivan. A confession.

Starting point is 00:58:13 Do you have a minivan? I'm not putting that on it. Yeah, dude. You don't have kids and everything. I will take a picture of my minivan and show it to you. I don't think, well, don't put your license plate online, though. Oh, yeah. Good call.

Starting point is 00:58:27 Thank you. Thank you. Opsack lesson for you as well. GameStop. Finally launched their NFT marketplace as well. What is this thing looking like, David? Yeah, this is Matt Feinststom. Stone. Used to be at loopering now at GameStop. And he goes, GM, everyone. GameStop NFT is live in

Starting point is 00:58:42 beta, non-custodial Ethereum Layer 2 Marketplace, where the community can truly own the digital assets that they love. You can check it out at nfti.gap.com. And so now this is the Verge. GameStop's NFT marketplace has arrived just in time for a crypto market crash. God, they just can't let us give us a bridge, man. Can't let it be fine. Come on, Verge. Yeah. Anyways, buy, sell, create NFTs on the GameStop NFT marketplace. Over 200 collections are on there with more than 53,000 NFTs listed. And you can connect the newly launched GameStop wallet, which we talked about a few weeks ago, to your digital assets. You can also use options like Wallet Connect and Metamask. Right now, not everyone can create an NFT, only certain creators can apply it, but I'm sure they're going to open up in the future.

Starting point is 00:59:26 But also, of course, GameStop. It's got the word game in the name, Ryan. They're about a, gaming company. They have bigger plans than address a marketplace down the line. They said in a press release that it plans to expand functionality into areas like Web3 gaming. On the NFT marketplace, GameStop is already teasing support for Immutable X, a platform on Ethereum that's used by some NFT games is coming soon. Also previously, we've talked about the $100 million grant program between GameStop and Immunables to help build out the world of Web3 gaming. So you could just imagine it's like, oh, I'm playing my game. I found my super awesome, like long sort of flame. It's worth $10,000. I'm going to take it to the GameStop marketplace and sell

Starting point is 01:00:04 it. Like, you can totally see that world. This is pretty cool. I like it. And what is this built on? So, I know it's a layer two. Do you know what the marketplace is built on? Is it immutable? Is it loop ring? Is it some combo of both? That is a good question. I do not know. It's one of those two things. It's one of those two things. Oh, immutable X coming soon. Yeah. Well, that's what I talked about. They're teasing it. So like, what is it currently based on? I mean, I bet you, I bet you it's, if it's not both now, it will be later. That's a question for Matt. We'll go find out, guys, and let you know. But it is on layer two. And that's pretty cool. I would

Starting point is 01:00:34 I would guess it's either immutable or loop ring or some combo of both. David, let's get to some Bitcoin stuff. I guess this isn't Bitcoin stuff. It's maybe Bitcoin Tribe stuff. Michael Saylor this week quoted as saying, Ethereum is obviously a security. Obviously, David. I think Ethereum is a security, he says.

Starting point is 01:00:51 I think it's pretty obvious. It was issued by an ICO. There's a management team. There was a pre-mine. There was a hard fork. There's continual hard forks. There's a difficulty bomb that keeps pushing back. And then he says,

Starting point is 01:01:01 I think all proof of stake networks are securities, all of them, and they're all very risky. It's above my pay grade. The regulators will decide whether or not they will allow them to continue or not. It's the only good take he had. The regulators will allow. I don't know that the regulators get to decide whether the networks continue, but I guess they get to establish some sort of stamp of legitimacy on them.

Starting point is 01:01:23 David, do you think that this is just some insecurity here about Eith being a security or Eid not being a security? Do you think that like Bitcoin or Bitcoin maximalists, let me say, are threatened by Ethereum? I mean, we've had... They've always, they always happen. The CFTC has clearly stated multiple times that ether is a commodity. We've had senior members of the SEC say that as well. Ether is a commodity along with Bitcoin.

Starting point is 01:01:50 Grip it in here. We've had a long period of time since the initial ICO, the continuing acceptance, more decentralization of Ethereum over the EU. years, there haven't been strong indications that any senior officials in the U.S. actually are targeting Ethereum as a security. So regardless of whether you think it's a security or not under the definition of a security, it doesn't seem to be that's the direction the regulators are trying to proceed and pursue. What do you think about this? Yeah, this is the classic old man yells it, cloud meme. Like, Bitcoiners, for people that have been on crypto Twitter for longer than

Starting point is 01:02:29 like this bull market. This is like just a classic talking point of Bitcoin Maxis about Ethereum. Like oh, there was a pre-mine. Oh, Vitalik controls everything. Meanwhile, Vitalik holds the record for the most ignored and unemerged EIP addresses or EIPs to Ethereum.

Starting point is 01:02:45 Fun fact. Like no control of the monetary supply. Like, you know, blah, blah. Like all these like talking points, eth is a security. You know, Vitalik's a scammer. Anyone who thinks of a vatelics is scammer. Like that's a legitimate take that people have on crypto Twitter.

Starting point is 01:03:00 Like, Vitalik is a scam. He's building a scam. He's the biggest scammer of all time. Like, that's just ridiculous. And so, like, this whole, like, ether is a security thing. It's really just like, there's like this very strong do not break ranks culture in Bitcoin and the Bitcoin camp. And this is like one of those talking points that they say. It's like, no, only buy Bitcoin because everything else is a security.

Starting point is 01:03:22 It has got to be the least cypherpunk take I've ever heard from Bitcoin Maximus, which is like, hey, nation state, like, come help make ether security, please. You know it's just in the interest of their bags. I don't understand. I mean, I would think that, like, hardcore Bitcoiners, hardcore Bitcoin Maximus, aren't they, like, don't they skew libertarian? Aren't we trying to get away from kind of like nation state control of our monetary system and that in the entire point?

Starting point is 01:03:52 So let assets compete. Why not let assets compete? I don't understand the appeal to Papa Gensler to come take a look at Ethereum and get them in trouble. Yeah, it's libertarianism when it's about Bitcoin, but if it's about anything else, is they're like super status. Like the Bitcoin Maximilus is like a state, and if you go against the will of the state, they come at you with their Cyber Hornet Army. Are you a Bitcoin Maximus?

Starting point is 01:04:19 Come at David and I and tell us why we're wrong about this. I've heard it all. Do you think Bitcoin Maximus listen to me? Is this anymore, David? Probably not. Well, no, because you're not allowed to, like, to consume anything that's like, it's literally like one of these, like, extremist religions. Like, you are not allowed to receive education outside of the Bitcoin state. You are not, you are not allowed to flirt with the enemy. You are not allowed to go on other people's podcasts. Like, you have to stay inside of the Bitcoin cult. And if you go outside of the cult,

Starting point is 01:04:49 like, you'll be exiled. Like, look what happened to Nick Carter. Like, the same, the same just extreme tribalism exists beyond Bitcoin maximalism and it's a part of Bitcoin maximalism. You're a Bitcoin maximalist. Don't you dare flirt with bankless. Turn this episode off right now. Do not dare. You know, even Dan Helt and some prominent Bitcoiners actually rejected the, you know, the take of Ethereum being a security and agreed with our takes here. Anyway, let's get to some releases, some good news here. What is this? Pseudo-A-M. Sudo-A-M from Sudo-Swap. This is is an NFT liquidity infrastructure. So some quick tidbits about what this actually is.

Starting point is 01:05:29 It's an AMM for NFTs, but you know, you've got to get a little bit more creative because it's not that simple. But three things you can really do. You can create pools that gradually buy or sell NFTs along price curves. You can provide liquidity to pools to buy and sell those NFTs to earn fees. And you can directly list all of your NFTs at fixed prices. Liquidity providers have full control over their pools pricing. They can address it at any time. There's endless possibilities for new pricing models.

Starting point is 01:05:54 basically there is more infrastructure for liquidity on NFTs. Like, NFT financialization really needs to improve. There's so much left to do. Are you bullish on this category? Oh, big time. Like, NFT defy integration. Like, NFTs are super illiquid, and they need to be more liquid to it in order to be more adopted and just useful.

Starting point is 01:06:12 And so we have things like collateralize NFT infrastructure. Like this is also another one. Just like things that provide liquidity to NFTs, I'm pretty bullish on. Yeah, I think this is alpha guys. I think a lot of NFTI5 building is. going to happen during the bear market. And you're going to see the fruits of that in the next bull cycle. Also this, Lens Tube. What is this? An open source web three video sharing social media platform built on top of Lens protocol and live on Polygon. Yeah. Yeah. So there's two

Starting point is 01:06:41 protocols in the back end here. One is LivePier, which has been around for a while, just like decentralized video transcoding and streaming, and then R-Weave for the data. So the data's all on R-Weave, live peer does all the video transcoding, and then, like, lens tube is the front end, so they're connecting all the dots for you. Here's our, here's my friend Gabriel Haynes. Crypto-Twill recognize him. So yeah, there's now a more decentralized alternative for YouTube. David, we got to do this. Look at Gabriel. He's got some subscribers here. We got to set up our lens tube account on bankless. Guys, some big raises this week. The first light speed raised $7 billion across four funds and launched a new crypto-native team. That is absolutely colossal

Starting point is 01:07:24 raise. Seven billion dollars during the bear market. Who's got seven billion dollars these days? Apparently, now they do. Also, multi-coin capital launched a $430 million venture fund. I think the theme here is it's a good time to deploy capital in the bear market. I think smart funds have raised or gotten the commitments to raise in the bull market. or using their reputation in order to keep raising and are planning to deploy a lot during the bear market. This is why this feels much different than 2018, David, when no one was, like, you wouldn't see any of these,

Starting point is 01:07:59 this level of raises. Like, everything completely dried up. Now people are still investing. Yeah, I mean, I think VCs are just like licking their lips. Like, the time, the power has shifted back into the camp of VCs where in 2021, the power was in the hands of founders and builders. Like, if you had a product, you could raise infinite amount of money

Starting point is 01:08:19 and infinite evaluation and like VCs were having to push out other VCs to get into deals. Now it's the inverse. Now the VCs are like, ha, powers back in our side now. Like we've got all the money and you've got none of it.

Starting point is 01:08:30 We set the terms now. We set the terms. So yeah, VC, financialized, capitalized VCs are in a good spot. That's good because private valuations were getting nutty. Absolutely insane compared to public as well. This is Lifi.

Starting point is 01:08:43 They just raised 5.5 million in a strategic ecosystem round. This is a bridging aggregator technology. Pretty cool. Not just a bridge aggregator, a bridge and Dex Aggregator, aggregator. So it gets you from chain A to chain B

Starting point is 01:09:01 while simultaneously getting you from asset one to asset two at the same time. I mean, you can just imagine in a blossoming of blockchains, both alternative layer ones and many, many layer twos, and also assets. You can just teleport from chain to chain,

Starting point is 01:09:16 while also swapping assets at the same time. And it just routes your order through the best possible way to make sure you preserve all your capital while you go through that. Chain teleportation. That's better than chain bridging, David. And asset teleportation. Dana and I are investors in this one too.

Starting point is 01:09:32 Just a small portion angel investors. Also, Chris Dixon, he just funded Farcaster. And what's cool about this is I don't use Farcaster, but it seems kind of cool. and I could imagine myself using this years ago. This is basically like RSS plus. And I remember one of Chris's initial theses like 10 years ago and A16C more broadly was that RSS would kind of take off

Starting point is 01:09:58 as an open protocol, right? And that world didn't really happen. Instead, we got kind of the social media closed ecosystems of like, you know, Twitter and Facebook and other social networks and like even the substacks of the world. I think his thesis is the reason it didn't work is because RSS as a protocol did not have value capture, did not have a token, did not have money, did not have payments. And now I think this is another attempt at that to revitalize this protocol, which is RSS, and to add a business

Starting point is 01:10:32 layer on top of it. I haven't looked at the details, but I recall that being one of Chris's talking points and theses. Cool, cool. I'm a big fan. Yeah. Yeah. This is Web 3, like reinvigorating Web 1. And there are a lot of cool things about Web 1. Not that I was there for it. Totally. NOS is safe. They just raised $100 million led by 1KX.

Starting point is 01:10:56 NOSIS, I mean, NOS is just a great tool for storing funds in a multi-sig type way. $100 million, apparently. I bet they raised some of that during the Bull Run and are announcing it now. And he takes on this. Yeah. I mean, everyone uses this problem. product, right? Like, everyone has, not everyone, a lot of people have multi-sigs. I have a personal multi-sig that I use. Ryan and I have the bankless multi-sig. Like basically every single

Starting point is 01:11:23 Dow's treasury is inside of the NOSIS multi-sig. They're also rebranding it. This is also a rebrand to SAFE. So take off the NOSIS and just add SAFE. And so it basically is, it's of all contracts in Ethereum. Here's a good bit of trivia. NOSIS Safe, now called Safe, has stored and secured the most value of cross-Eetherium over time. So, like, it has the biggest, like, TVL of assets locked. That's because of just how simple, stupid, the contracts are. And it's just, like, a basic multi-sig. And it's just battle-tested, man. Yeah. Right? Like, there's $40 billion in there. I didn't know NFTs were in here, too. 13% of all crypto punks are in safe right now. Pretty cool. I need to put mine in there. Good to see them continuing to invest there.

Starting point is 01:12:07 And, of course, with all of this investment money, that means there are jobs available for you. what do we tell you every single week? Get a job in crypto if you can. And I'm here to tell you you can because there are some companies that are hiring. There is a jobs board that is ready to feed you those jobs. Let me read a few. Smart contract, software engineer, steakfish, back end, full stack, software engineer,

Starting point is 01:12:27 Steakfish, Front end engineer, software engineer, steakfish, devops engineer, steakfish. They want a lot of engineering talent. Looks like Alliance Dow, looking for a CTO, also a software engineer. a senior software engineer. Also, an executive assistant. It's on technical. Otterspace wants a solidity engineer. Uniswops is hiring. Are you Generis is hiring? Chainlink is hiring. Arjun is hiring. Talley is hiring. I could go on, but I won't. You can see all of these job positions, the bankless.

Starting point is 01:12:57 Dot pallet.com slash jobs. Go check those out. All right, David. What are we on to you next, my friend? Sponsors. Sponsors. Taking a quick break to talk about some of these fantastic sponsors that make the show possible. But then we're going to come back and talk about questions from the nation takes of the week and what David and Ryan are bullish on and of course the meme of the week. The layer two era is upon us. Ethereum's layer two ecosystem is growing every day and we need layer two bridges to be fast and efficient in order to live a layer two life. Across is the fastest, cheapest and most secure cross chain bridge. With a cross, you don't have to worry about high fees or long wait times. Assets are bridged and available for use almost instantaneously.

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Starting point is 01:14:17 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. Brave wallet is your secure passport for the possibilities of Web3 and supports multiple chains,

Starting point is 01:14:39 including Ethereum and Solana. 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 if you have a question for David and I, on the weekly rollup,

Starting point is 01:15:05 we will answer your question. The way to do that is look for this tweet coming to the best. bankless HQ Twitter account, ask you questions. Here's the first question I'm going to ask you. I think it's the difference between proof of stake and proof of work. This is from Jeremy Mefford. Mefford. Sorry, Jeremy. I don't. I overcomplicated your name, Jeremy. I haven't heard a POS, that's proof of stake. Proponent addressed this point from proof of work people very well. Proof of stake leads to the rich getting richer within that system. Drake's answer to Alden was unsurprisingly, was surprisingly unsatisfactory. That's Justin Drake, a bankless podcast episode he's

Starting point is 01:15:45 referring to. Is this just a trade-off that is lived with due to other benefits proof of steak brings? So what of this idea that proof of stake is just the rich getting richer, David? Yeah, also is on the topic of talking points that Bitcoin Maximus talk about all the time. This is one of those things. Like proof of stake is just like the rich get richer paradigm. A lot of, they also call it like this is a Fiat paradigm. It's like the people with a bigger steak have the bigger say, that's all totally, like, completely wrong. It's just, it's like such a swing and a miss. And so I'll do my best to, like, summarize it here. To the question of what, which one has higher returns on capital? The cool thing about proof of stake is we know exactly

Starting point is 01:16:23 how big the returns on capital are. In right now, I think the stake rate is 4.2%. Post-merge, it'll jump up to 7 and then it'll come back down. It'll be some sort of equilibrium between like 5%, 5%, 5%, 6%, 4 to 6%, 4% to 6%. We don't really know until it happens, but like 46% ballpark year over year returns on ether. So, like, that is how much capital begets capital in the world of proof of stake. And proof of work, people don't associate with, like, capital begetting capital because, like, there's this work word, and you have to do work in order to, like, mine the blockchain. But it's like, you're not really doing work.

Starting point is 01:16:56 You're just racing to consume as much electricity as possible. The cool thing about proof of stake is that it cuts out so many middlemen that preserve the ability for individuals to actually participate in this game. In the world of proof of stake, there are so many middlemen that separate $1 from turning into $1 worth of security. And this is really the thing you need to optimize for is if you have $1 of capital, how do you produce $1 worth of security?

Starting point is 01:17:22 And proof of stake is going to like directly, like coupling those things directly. Proof of work has so many middlemen that separate $1 worth of capital from $1 of security. So you have like the mining facility. You have to buy all of the hardware. You have to house the hardware in a big facility. You have to cool the facility.

Starting point is 01:17:40 You need a ton of electricity. So a lot of Bitcoin mining facilities build their own power plant at this point. You need to have supply chains with ASIC manufacturers. That starts to be having political connections. Do you have actual political connections to the manufacturers? So you need to invest in all of these things that aren't hash rate. And everything that you have to invest in is a place where economies of scale can be expressed. So like the difference is, is like if you put in $1,000 into ether and you get 6% on your ether

Starting point is 01:18:10 year over year, or if you put in a billion dollars or a million dollars, like pick your number of digits, everyone gets the exact same amount of interest rate on their ether year over year. In proof of work, if you cannot start a proof of work farm with $1,000, or $10,000 or $100,000, you'll be completely uncompetitive. So in order to play the game of proof of work, like, mining, you have to invest tens of millions of dollars into a proof of work mining operation to be viable because the economies of scale are so incredibly large. And the crazy thing is, is like, if you put in $10 million, you will get some amount of hash rate. But if you put in

Starting point is 01:18:49 $100 million, you are going to get far more than 10 times the amount of hash rate because it returns, it favors capital. And so like the returns on proof of work on capital investments into to proof of work mining are far greater than 6%. It's something like 50 to 100 to 150% depending on how professional your mining operation is. So compare the proof of the 6 to 7% yield on proof of stake to like the 50% to 150% yield on a Bitcoin proof of work mining operation.

Starting point is 01:19:21 That is the rich get richer model. And so like the only reason why people think that it's proof of stake is because it's actually formally a part of the actual system is like, yes, you get compound interest. and people like, oh, compound interest. Like, that's the rich get richer. No, like, I'm sorry.

Starting point is 01:19:36 Who is cutting a hundred million, like, are you cutting a hundred million dollar or $10 million, like, PPM, private placement memorandum for your Bitcoin mining operation? Like, no, you're not. Only the rich are doing that. Yeah. Yeah.

Starting point is 01:19:51 So I agree with all of that. And here's, I guess, one way to think of it. So first of all, it's important to acknowledge both systems are the rich get richer. Right. Like, a capital, system is the rich get richer. But proof of work is like 10 times worse than proof of steak. I would say larger than that. Maybe larger. But like proof of steak is actually an improvement on the rich get richer.

Starting point is 01:20:13 It's not as bad. It's the minimum, it's literally the minimization of rich get richer. Because again, if you have 32-Eth or 3200-Eth or 32,000-Eth, you get the same amount of yield, no matter what. It's kind of like the rich get richer in the same way that investing in like in an ideal world, treasuries or sovereign bonds are the rich get richer. Sort of like that. That's, that's one important part. And then the other important part to understand is proof of work is just proof of stake with extra steps. Right. And so here's what we mean. Here's what you're saying here is like, in both cases, it requires capital. Right. Okay. And like, what are these ASIC machines that you're using? They're tokens. They're forced alignment to the protocol. Yes, except these tokens,

Starting point is 01:20:59 are much harder to get. And I'm talking about the ASICs. You wouldn't think of them as, you think of them as hardware, computer hardware in the real world. They're like tokens. They're units of capital to charge. And so if you think of them as physical tokens,

Starting point is 01:21:12 essentially, the difference between buying an ASIC and putting it in a massive data center, like the supply chain, the, you have to have connections, like energy consumption. You have to be a company

Starting point is 01:21:24 and a very sophisticated company with business development team, with like, location with physical space in order to do that. Versus, with Ethereum and any staking network, you can buy your token on freaking uniswap. That's your unit of capital. How much more accessible is that? I think that is another important difference to understand. And so I think the counter argument will be like, oh yeah, like Bitcoin miners, they have to expend all this extra money. You have to buy, you have to expend your rewards to buy the ASICs. You have to expend your rewards to pay

Starting point is 01:21:57 for the mining operations. You have to expend the rewards to pay for energy. Like, that is, that is risk and that is baked into the returns. And so actually, the more risk that there is, the more expenses there are, the only reason why people are going to do that are because the returns are literally higher as a result of that risk. Yeah, yeah, totally. Well, I think we've talked about that for, we get excited talking about this. I wrote an article covering it. It's called four misconceptions between proof of work, proof of stake that, like, in my mind, I think is the clearest articulation into these arguments. So if you want to explore that more, go read that article. I'm going to make a big mistake and ask you another question that you're probably equally passionate

Starting point is 01:22:33 about, which is my question for you, David. What does David have against carbs? Ryan Sean Adams asked this question for the roll-up. What do you have against carbs, man? Okay, so people not on crypto Twitter, I just randomly decided to like pick up this anti-carb campaign. And like it actually caught a lot of my followers by surprise. Like, oh, David read like a magazine on keto and now he's like a keto maximalist. People don't actually know that I actually study this in college and consulted on it for a couple of years after school. So like I have actually, I have this in my background.

Starting point is 01:23:04 You're really against carbs. No, okay, no, that's mostly a meme. Okay, so like the typical American diet is something like 70% carbs, 20% fats, and 10% proteins, when like the optimum balanced diet is something like 50% to 60% fats, like 20%% 40 to 50% to 60% fats like 20% like 20-ish percent protein and like 20 percent carbs. Like that is actually a true balanced diet.

Starting point is 01:23:30 Like heavily weighted in fats and like not nearly as much weighted in carbs. And so like the crazy thing is like in the same way that like the government controls the price of the dollar, they're also controlling the price of corn. The reason why there's literally high fructose corn syrup in everything is because corn, making high fructose corn syrup is basically free. And there's nothing worse for you. and goddamn high-fructed corn syrup. It's literally everywhere.

Starting point is 01:23:58 It's completely. So it's like, it's sugar. It's a big filler. It's also highly addictive. You know it's a great business model, Ryan? Carbs. Everyone's addicted to them. They show up, you know, carbs show up in the brain.

Starting point is 01:24:10 They fire the brain, the parts of the areas of the brain that the same place that cocaine and heroin do. And like just as much sugar does. Like absolutely crazy. So like, it's a crazy business model. Like we're suing these, that one family for, like, like getting everyone addicted to painkillers. Like the big food industry is doing the same thing with carbs.

Starting point is 01:24:30 You're just addicted to carbs. Carbs are the opioids that no one notices, David? That's exactly right. Dude, I don't want to get you started on this, okay? Because it's a long... I can tell you've got a lot to say. Bankless Nation, who would enjoy an episode on Bankless? Maybe some side stream or something with David on nutrition.

Starting point is 01:24:46 Because I would actually like to school up with you. I've already got it in the works. It's already happening. Yeah, so there's this guy who I listen to Anthony Gustane, Gustane, he would do the perfect keto podcast, which is now rebranded into something else. Anyways, the way that this, this is not just like David going rogue and doing a nutrition podcast. There's, the world of agriculture and sustainable agriculture is very much tied to decentralization, whereas we have like highly centralized production of corn and factory farmed meats, which are

Starting point is 01:25:17 terrible, both for like your health and for the animal. And everything is super centralized. And like a way, and that's, we can't live on this planet that. way. Like, it can't work that way. We're going to kill the planet. What does make us work on this planet is sustainable agriculture, which is inherently tied into the concept of decentralization, like robust, anti-fragile, like, harmony with nature farms that are distributed all across the world in a very decentralized manner that is in harmony with nature. That is robust, that is longevity, and especially as, like, global supply chains break down, and, like, we can't cooperate with Europe or China or anything. Like, we need local, at home, decentralized, sustainable agriculture food production, which, Ryan, is

Starting point is 01:25:59 veggies and meat. Veggies and meat. I have opinions on this thing. All right. David doing a nutrition podcast is just about the most bear market thing I could think of right now. I'm going to personally end the bear market with this podcast. I am somehow intrigued by it, and I want to learn more. Last thing here is there was some talk of David doing a dance. So Anthony Sassano, he's supposed to do a dance at a certain point when Heath hit a price point. I think that price point was hit. What was that? Was that like a thousand? I think it was all time high by the end of 2020. And we hit that. And we hit it in December. And he didn't pay his debt. He didn't do the dance. So this is David.

Starting point is 01:26:38 This is David Hoffman, my co-host here. Okay. Not just a nutrition podcast, not just a crypto expert. But apparently, you know how to do the Napoleon Dynamite dance? You're not doing it here. Oh, so you have to learn first. David says this. if Heath hits all-time high by end of 2023, not 2022, huh? 2020. 18 months here. I'll do the Napoleon Dynamite dance to clear

Starting point is 01:27:03 Anthony Sasano's debts to crypto Twitter. Crypto Twitter must agree to these terms. I wholeheartedly agree, sir. That's getting a retweet. I agree to these terms. I'm writing it down. This means you are doing this, David. So, get ready, man. Anthony has said that

Starting point is 01:27:21 he's okay with this, but also, like, this is a debt to crypto-twitter. So, like, Anthony owes this to crypto-twitter. I'm saying, I will pay back Anthony's debts, but crypto-tweet-I-tweet. I don't really know how to get consensus by crypto-twitter. So maybe you do what Ryan did and go to this tweet and say, like, I agree to these terms or I do not agree these terms.

Starting point is 01:27:39 Consensus. Everyone wants this, David. I've only heard of, like, three people that have said that they agree. Okay, what's the threshold for crypto-twittering, Twitter agreeing to these terms, huh? 50 comments. 50 comments. 50 comments saying, I agree.

Starting point is 01:27:52 And it has to be like a 90 to 10 ratio of yes to knows. All right, guys. I'm going to tweet this out. 50 comments. You heard it on the roll-up. So make sure we want to see David do this dance. We'll broadcast this on the roll-up clip as well. All right, takes the week.

Starting point is 01:28:05 It's a good thing that Ether's not going to hit an all-time hot by 2023. Really? That's also the most bear market thing I've heard David say. Spicy Vitalik is the best Vitalik. All right. What is he saying here? He's pushing back on the whole Ethereum is a security talk that. was going around here.

Starting point is 01:28:24 I'll read his first tweet, and you read a second. It's amazing how some proof of work proponents just keep repeating the unmitigated, bare-faced lie that proof of stake includes voting on protocol parameters. That's one of the arguments for why Ethereum

Starting point is 01:28:36 should be a security. You can use ETH to vote, and you actually can't. It's false. It doesn't, just like proof of work doesn't. And this so often just goes unchallenged. Nodes reject invalid blocks in proof of stake and in proof of work.

Starting point is 01:28:49 It's not hard. And he follows this up, because he is quote tweeting someone who says, the fact that you can vote on something to change its properties is proof that it's a security. Love Bitcoin. Vitalik says, a small grammar nuance in English. When talking about things like proof of stake,

Starting point is 01:29:05 we don't say, it's a security. We say, it's secure. I know these suffixes are hard, though, so I forgive the air. That's the spicy take, which is saying, like, hey, you Bitcoiners who think that ether's a security because of proof of stake, no, it's extra secure, unlike the proof of work hard cap model,

Starting point is 01:29:23 which that's into run out of security budget. This was what I was going back earlier where people think that, people associate proof of stake with governance because your stake determines the next block. But no, like your 32 ether is an ASIC. What determines the rules and the update to the rules

Starting point is 01:29:40 are people that download and update their nodes. Just like in Bitcoin. Node operators. You do not need to stake to update your nodes or determine the future direction of the blockchain. node operators do this. You don't have to have money. You don't have to have any...

Starting point is 01:29:53 Well, all you have to do is be able to run a node on a machine, and then you are essentially validating. Yes. So here's the last take that we'll... I think that's the last take. No, we got one more. This is me, and I say, how to become a millionaire?

Starting point is 01:30:06 This is it. This is going to work. Everyone who's listening to this, who follows this, can become a millionaire, hopefully. 50% chance. Number one, stick around and pay attention

Starting point is 01:30:16 during the bear market. Number two, that's it. That's all you do. That's all you do. So, yeah, I mean, the whole idea is that alpha is generated in the bear market. The people that stuck around during the 2018 to 2020 bear market, like, they got to participate in DFI summer, which was like, I don't know about you, Ryan, but like, DFI summer was way more, like, lucrative than 2021. Like, there was just, like, money being printed everywhere.

Starting point is 01:30:42 It was super fun. Like, the vibes were really good. And then also people who were participated in DFI summer, they knew. the bull market was on, like a whole 12 months before, like, other people that had left during the bear market or people who didn't know about crypto. So, like, we knew the 2021 bull market was going to happen in, like, April of 2020. And so we had, like, six months, nine months, like front run, everyone else. Yeah, totally. You got to stick around in order to do that. I have a third way to become a millionaire, though, David.

Starting point is 01:31:10 10% inflation for the next decade. Everyone gets to be a millionaire. Like, the U.S. dollars eroding that fast, exactly. All right, final take for you. This is a whole letter from Pintera. We can't read the letter in this take, of course, but I think the synopsis is the title. Defi worked great. All of C-Fi was failing all around us. Defi worked great.

Starting point is 01:31:33 Dan from Pantera Capital pushes back against the idea that has become a narrative somehow that Celsius and BlockFi, all of these were like Defi. And here's an article he's pointing to, defy has an existential problem. No, Defi worked incredibly well during this downturn, and he pushes back on all of that. So I'll leave that for your homework. While I asked David the question, we end these episodes with, what do you bullish on this week, my friend? Am I allowed to, like, leak some alpha? Certainly.

Starting point is 01:32:05 Yeah. You mean the alpha. Is it something I've heard? Yeah, you know all about it. I know about this. Yeah, you know about the alpha. Leak away then. For the first time ever, there is more being built at Bankless behind the scenes.

Starting point is 01:32:16 than out in public. Like usually almost everything we do is completely in public. Like 95% of bank lists is out in public. It's just like the discord and coordination, the 5% of coordination that's like in private. For the first time ever, there's like more stuff being built in private

Starting point is 01:32:30 that we've got in secret than it was in public. I feel tease, sir. Yeah, do you feel tease? Are you teasing me? I'm teasing. You're teasing the bankless? Is it working? Well, I know what's going on,

Starting point is 01:32:42 so it's not working on me. But yeah, that would pique my interest. Yeah. Yeah. When am I going to find out more, David? Well, there's a number of different things. There's this one thing that is happening, and then there's this other thing that's happening. And then there's the third thing, which is the bankless studio, which most people know about, but they don't know to the degree of how awesome it's going to be. So there's there.

Starting point is 01:33:03 I teased one of the three things. There you go. We got some stuff coming is what David's saying in the pipeline. Yeah. Ryan, what are you excited about? What are you excited about the universe, David? Yeah. And I mean this literally this time. So you can't talk about like my deep thoughts are weird. The James Webb Telescope, okay? This has been a project that's been like over a decade long. And it launched last December.

Starting point is 01:33:26 I've been following this. This is the only thing I might be more excited about than the Ethereum merge. It might be. I've got nutrition. You've got in the deep space. Deep freaking space. Yes. And the James Webb Telescope.

Starting point is 01:33:40 And so you guys probably saw this. The pictures were all over the place. Pictures came back from the first pictures from the James Webb Telescope, and they are absolutely phenomenal. Okay? We're looking at here is like some of these stars, David, are just 500 million years old. Okay, we are looking back deeper in space than we ever have.

Starting point is 01:33:59 That's like 95% through the timeline of the universe. That's how far back we are looking here. And it just blows my mind. You know, there's tons of stuff you can find. Like, you know, R-slash space is full of these images. if you want to get super geeky. But I think I have a crypto take here too, which is like, this is a 2020 thing

Starting point is 01:34:20 that I think the world needed and I think we needed. Because first of all, what is the James Webb Telescope? Well, it's a public good. This is open source knowledge that we can now share across the internet. It's kind of like some of the things that we're building in crypto,

Starting point is 01:34:35 and that's amazing in and of itself. It's also a massive engineering undertaking, right, that has taken over a decade. This project was far more complicated than anything humanity has ever launched into space. Just the level of detail and planning and everything had to go right in order for the mirrors to unfold. It's just an incredible story. And that we were able to do this as a species is absolutely phenomenal. We have a giant eyeball apparatus in space now.

Starting point is 01:35:03 And that's cool. Also, this is like scientific discovery. And as we know, like science, technology, that is the way we actually progress. right these inflation cycles these monetary policy things that's not actually doing anything for progressing and improving humanity and quality of life for humans in the short run the way we improve quality of life is through technology that's the thing that always works and we need science in order to do that and then this gives me like a new perspective it gives people a new perspective on the universe and it's a time where like i mean there's wars happening there's conflict everywhere

Starting point is 01:35:39 no one can get along. And this is something that we coordinated on to launch into space. I don't know, it's just a breath of fresh air in the 2020s. And I feel like we really needed that. That's my take on the telescope and why it's important. I love it. One thing I've been thinking about a lot lately is that while there's like so much short-term bearishness and like because of like the recession that is about to happen to us and all of our assets are down bad, everyone's like focus on the next like one to two years, like how do I make sure I get to one of these two years? And then there's like even greater stuff like that, like global geopolitical things are totally going to shift. The world's going to look super different in five years. The dollar's about to collapse.

Starting point is 01:36:16 Like, oh, this short term, short term in the grand scheme of things, like bearish stuff that like, damn, we're going to have to like the whole fourth turning thing. Like there's this big world transition that we're about to go through. But on the other side of that, there's like this space race that's about to trigger. There's like this metaverse that's about to develop. There's like biohacking and gene editing that is like on the cusp of this exploding. There are so many cool things ahead of us. And like they're all positioned to be like, like the thing that pulls us out of this just like crazy, terrible, like global reshuffling that we're about to go through. Yeah, I totally agree. I think, I mean, bullish humanity over the

Starting point is 01:36:49 long run. Always. Bullish humanity. Uh, meme of the week, David. What do we live in this week? Yeah. This is a Mike 3 at Enjoyor on Twitter. It says, base carbon working on a day playlist and the playlist is titled three Aeros capital, three AC. And it's song one, can I borrow a dollar? two, I need some money. Song three, give me yo money. Song four, money. That's what I want. Chuck Brown, song five, we need some money. Song six, can I borrow a dollar again? Song seven, spare some change. Eight, can I borrow a dollar? Nine, can I get some money? Yeah, Thoreau's Capital is down bad. Oh, it keeps on going. It keeps on going. I need money. Can I borrow a dollar? I need money. I need money. Give me money, money, money, money. Oops. That's it. That's the Heroes Capital playlist. If you're into that kind of listening, then

Starting point is 01:37:38 we'll include a link where you can find that on on Spotify. Guys, as always, none of this has been financial advice. Crypto is risky, eth is risky, so is Bitcoin. You could definitely lose what you put in. But we are headed west. This is the frontier. It's not for everyone. But we're glad you're with us on the bankless journey.

Starting point is 01:37:55 Thanks a lot.

Bankless - ROLLUP: Celsius Bankruptcy, Vitalik's Book, GHO Aave Stablecoin, 3ac StarkWare Token

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