Bankless - ROLLUP: CFTC's Attack On Crypto | FTX Offloading Billions | Live From Permissionless!

Starting point is 00:00:06 Bankless Nation, it is that time again for the weekly roll-up, and David and I are doing it from a special location again. Oh, my God, I forgot to set you up, David. Let me ask you the official question. Let's do it. David, what time is it? Oh, it's the Bankless Friday weekly roll-up, but it's happening on Thursday. Yes, it is. Because we are on Wednesday, the third day of permission list here in the Cracken Booth on the floor of Austin, Texas. We have a live audience for the first time ever. It's a little bit intimidating. Live studio audience.

Starting point is 00:00:30 Bankless citizens, people in the bankless Dow, all watching us as I speak these words right now. I don't know how I feel about that, but here we go. You know what? We're just going with it. This is a fantastic setup that we have here at Permissionless 2020. Actually, Permissionless 2. Permissionless 2 is what they call it. And Crack and put this booth together for us.

Starting point is 00:00:47 So extremely grateful for the hospitality. This is a professional setup. Yeah. Way better than my home office. Not some amateur shit. That's for sure. I know. And so David and I are in person today, obviously.

Starting point is 00:00:58 And we're here to bring you the week. We roll up. All right. Topics of the week, David. What are we talking about, man? The CFTC has joined the SEC in the fight against crypto. Oh, wait, that's bad. That's a bad thing.

Starting point is 00:01:10 Yeah, I thought they were the good guys. That's not great. Okay, well, there's more. FTX is about to sell a huge potion of their token holding. Should we, oh, that's also bad. Oh, no. Ethereum Foundation just drop a proposal on a native liquid staking. That's good.

Starting point is 00:01:23 That's a good thing. And then finally, friend.com, not dead yet? Okay, also good. I came back from Burning Man, and I thought that friend's tech would be dead, and it was like four times larger. than I ever thought that it would be. Is there some signal there? Yeah. And then my share price going into Burning Man was 0.7.

Starting point is 00:01:41 Dude, I don't want to hear about your share price. And I came back from Burning Man. It was 0.2. And I was sad. Well, that makes me happy. Sorry, David. And then some more bad news of the week. Vitalik's Twitter got hacked.

Starting point is 00:01:53 It's my ex got hacked some details around that and how to protect yourself from Twitter and how to make sure that you actually might be exposed. You might have your phone number in Twitter and you don't know about it. So we're going to talk about that. one that I didn't know. Like if Italic can get hacked, then, uh, you know, what about the rest of us? David, uh, before we get into the chatter of the week, and I know we want to talk about permissionless even before we get to the markets. Uh, we got to do a shout out to our friends and sponsors over at AVE because a lot of you guys listening are still in AVEV2. And there's the,

Starting point is 00:02:25 there's the opportunity to upgrade to AVE3. Cool. Tell them, tell them why they should upgrade, David. Well, first off, the ABE3 protocol is just better than V2. 3 is better than 2. It's a higher number. But why is it better? There's just a different amount of efficiency. There's asset efficiency in ABEV3. There's gas efficiency in ABEV3. There's some extra bells and whittos. There's asset isolation mode, so you can get some better parameters for specific assets inside of isolation mode.

Starting point is 00:02:52 And then you can also just do a bunch of things all at once, like remove assets, swap assets, redives deploy assets, all in a single transaction because of Aube3. So if you are one of the users that has up to over a billion dollars, in Ave v2. Everything is better if we all have the same party rather than two different parties. So go and migrate from Ave v2 to Ave V3, you laggard. Yes, because three is better than two. Three is better than two.

Starting point is 00:03:17 There's also Avee Grants Dow. So grants, that's free money for builders who are building on the Ave protocol with extra emphasis on the Go stable coin, the green new stable coin out of Ave. So if you would like free money, do you like free money? Yeah, I mean, this isn't quite free because I've got to build something, David. Sure. Okay, you trade your labor for money. But unconditional money after you build something or to build something, I don't know, details are in the show notes, also at avagrants.org. I'd be down. All right. Before we get to markets, I think the people deserve an update on permissionless.

Starting point is 00:03:48 Yeah. Okay. So let's talk permissionless. It's been great so far. We're on the second, the last third of the last day of permissionless. So it's coming to a close. So do you want to tell me about some of your favorite talk so far? Let's start with the content. I've done eight talks I've done eight talks excuse me I have moderated eight panels so I'm racking up the content

Starting point is 00:04:09 how many did you get to I did one David eight to one wow anytime I'm asking Is lower better or higher better I don't it depends on whether you like to do lots of panels or not I love doing panel

Starting point is 00:04:20 okay I don't so anytime someone asked me to do a panel I'm like David would you like to do this panel wait that's how I ended up with eight okay I think that my favorite one was we did a Jesse Pollock and Ben Jones On Chain is the new online conversation, which, I mean, we just had them on for the Super Chain,

Starting point is 00:04:36 but this was a net new episode, net new conversation. And I really enjoyed that one. That one felt really fun. And that one I actually just did not prepare for because I just know these guys. Yeah. What was the takeaway from that? So we have, like, On Chain is the new online. This is the new Top of Funnel for Base.

Starting point is 00:04:53 Base is kind of like base in the front, optimism governance in the back. We have the golden era of Web3 design happening around base. Like, we're getting better at design for attracting new people to get them on chain. And then we have retroactive public good funding in the back. And so connecting those dots and filling in the gaps a little bit and then talking about how this is a flywheel, right? More people coming in on base leads to more retroactive public goods funding, which makes base better as a part of the OP stack, which leads to more people coming into base. And this is all a flywheel that hopefully scales public goods out to the world. That is a TLDR of the conversation.

Starting point is 00:05:26 Doesn't mean that you shouldn't also go listen to it. It's available on the YouTube on Blockworks YouTube, not banked this YouTube, actually. Yeah, there's, and you know, do you want to ask me what my favorite one was? Sure, right? You only did one, but what was it? It was actually the one that I loved, and it wasn't because of me. It wasn't because of the moderator. But the panel that we got to do with the regulators.

Starting point is 00:05:45 So it was Hester Purse. I think we'll talk about it later in an episode. Hester Purse, Brian Quinten, CFTC regulator, Tom Emmer, House Majority Whip. So we got a member of Congress to come to our crypto conference. And then Kristen Smith. Of course. And she's kind of a crypto lobbyist.

Starting point is 00:06:02 And this, honestly, it gave me some hope, David, because things are looking kind of bleak from a U.S. regulatory perspective. And this gave me some hope because these people were fired up and they were ready to fight for crypto. And they have some power in D.C. to do that. You say bleak, but it's definitely bleak with strong notes of optimism. Yeah. Yeah. I think the comment that got the most applause was towards the end where Hesperer said, we don't even need to I can't remember what she said

Starting point is 00:06:30 the details went but the punchline was like the law is on our side. Yeah. So we just have to make sure that the United States has, just runs by the rule of law and then we will be golden. Yeah, absolutely. It's nice having the law on your side. Oh, I mean, that is great and we are winning in the court system, that's for sure. That was a point that was

Starting point is 00:06:46 made. David, there's also been some bankless parties going on. We had the largest party that we've ever thrown. That was 600 people. 600 people. A bunch of bankless citizens, some little podcast guest Jesse Pollock was there. The blockbord scene was there. Gosh, everyone, I think, I don't know if there was

Starting point is 00:07:02 other parties that Monday night, but everyone was at our party because it was the best. It was so fun. We throw the best parties. Yeah, meeting in real life. Meeting people in real life. I was getting used to like, you know, the handshakes that you do and like the hugs. Ryan is learning how to be human here. This is actually the third time that Ryan and I have ever hung out. It does feel normal. He does feel

Starting point is 00:07:18 like a human. He's doing, he's coming along with doing human things. I think I got a lot of proof of humanity on this trip. There's a lot of Twitter posts out there with images. So I think think RSA truthers, they're going to have a hard time after this conference. Speaking of this conference, what is happening next year? Next year. So you missed it. People missed it. Permissionless three. This is something that I've been unpacking with Mike from Blockworks. We've had a lot of plans for permissionless three. I think we're kind of realizing that,

Starting point is 00:07:45 A, we want to keep on doing this. So permissionless three, here we go. Salt Lake City in October, 2024. But we wanted to be something net new. Like, there's a bunch of conferences out there. There's a bunch of, actually, there's three conferences going on this weekend. And we want permissionless to elevate. We think that we can apply some innovation to the content world, to the conference world, and make something that's not just a conference, something that's bigger than a conference that has a conference in it, but more stuff around it. Here is my shoot from the hip idea that I'll share with you that is not totally set in stone,

Starting point is 00:08:14 but I'm going to try and convince the Blockwork squad of this. So day four. You're using your podcast fully platform to do that. That's exactly right. Day four of a three-day conference, which I know. doesn't make any sense, but that's because day four, I want to be tribal field day, tribal games. So this is like tug of war and dodgeball and an obstacle course. A lot of night years from high school from field day.

Starting point is 00:08:38 You can't invoke that? Yeah, yeah, I do. And so like if you are part of the tribe, like layer two versus arbitram dodgeball or bankless versus blockworks tug of war or bankless doubt. I don't know. Are you a part of a tribe? Come to the tribal field game. Thanks.

Starting point is 00:08:54 Day four of other three-day companies. In an industry dominated by nerds, David wants to bring back P.E. Bowling. Yes. Oh, my God. Well, you know, I don't know if you were a nerd or jock in school, David, but, you know. I'll let the listeners come to the conclusion on that one. All right.

Starting point is 00:09:09 Well, cast your votes, folks. Let's talk markets, David. Get to the market. So, sorry for the FOMO if you couldn't make it. Permissionless has been awesome. But let's get to the regular scheduled program. Thanks to Crack and, of course, for these charts. What are we looking at on the record?

Starting point is 00:09:23 The cracking charts in the crack and booth. It's been great. Crackception. Okay, Ryan, I just had to pause our recording because I needed to verify this and I am verifying it. We're up on the week. We're up on the week. I don't know how that happened. We dumped.

Starting point is 00:09:36 We had the classic conference dump. We always dumped during conferences. But somehow we're up on the week. Bitcoin starting the week at $25,100, up 4% to $26,300. Wow. Oh, good for us. Yeah. How about Eath Price?

Starting point is 00:09:49 Eith Price, 15, 50 on the week. We must have just like bottom tick the perfect timing. 4% on the week to 1610. And the ratio? Down 2.5% on the week. ratio go down because ETF, or is this noise? Yeah, something like that. Or noise.

Starting point is 00:10:04 But definitely, ETF is pushing fresh around the big worth. Total crypto market cap, $1.07 trillion on the week. I think that's about flabbed. All right. Well, look, I'm happy to play the happy music this week. This has overall been a net win on the price side. All right, David, we're just talking about the week-to-week price action. But I want to zoom out for a minute and talk about the cycle, the year that we're in.

Starting point is 00:10:23 Did you see this? Yep. This is great meme. I don't know who made this. This is fantastic. Can you describe for listeners what we're looking at? Okay, so we are looking at a, call it a four by four box grid, but these things are shifted up because the boxes lean upwards.

Starting point is 00:10:38 And the first box in the top left corner is 2011, followed by 2012, 2013, 2014. And so these things go upwards. And then we go one row down, 2014 to 2017, and then we go down. And so these things are, we're talking about the four-year cycles, cut up. into four years, right? And so, 2022 is lining up with the first year of a four-year cycle where it's the bear. It's red. You see that they're feeling it's pink red.

Starting point is 00:11:01 And then 2023, pre-bull, leads into 2024, first bowl and 2025, second bowl. Maybe second bowl is synonymous for a blow off top. But we are most of the way through pre-bowl. And this is like, I feel like this is a part of a bell curve meme where it's just so stupid, simple to understand that's just like, oh, like the cycles can't play out, efficient market hypothesis, we're not going to have another cycle again. It can't be four-year cycles over and over and over again. That's the mid-curve take. And I think the left curve take is just like, it goes in four-year cycles. Yeah, I totally agree. And so is the right curve take, right? So we got bear, we got pre-bowl,

Starting point is 00:11:35 we got first bowl, we got second bowl. And if you look at this chart, I mean, it kind of maps, right? So 2023 is like 2019, which is what we've been saying, which is like 2015, which is like 2012, You remember 2012? No, I don't. I was not here for 2012. 2019, I would definitely characterize as just price being completely divergent from fundamentals. And that's definitely what I feel. David, this is the base case.

Starting point is 00:11:57 This is kind of my prediction. You know, like, it's hard to make predictions on cycles yet. I'm kind of ready to make it. I feel like it's probably going to play out this way. Yep. Until proven otherwise. Tell me about friend. Okay.

Starting point is 00:12:12 So you alluded to this in the intro, you're talking about coming back from Burning Man, being surprised that friend.com was still a thing and it's like four times larger than I left it. Okay. How do we know it's still a thing? I think we should talk about some metrics here. Yeah, there's a dune board that we can look at. I'll pull out some of the details here. The numbers I'm about to spit out already five days old. And so there's even more numbers than this. But in the, from the 8th of September, new users came in at a thousand new users up 50%. Returning users, 4,000, 25%, up 25%. And then total incoming users. And this is as of just before recording, total users of friend.tech, unique users, unique addresses, for 1,480,000.

Starting point is 00:12:52 And these are much more high, wait, can be that number again? 148,000 unique users of friend tech, unique Twitter accounts that have signed into friend tech, which is why this is a better metric than just like a unique Ethereum address. Wow. The volume, the TVL of Frontec, 18,000 ether, that's $28 million. dollars and that's 4,500 ether in fees that has been collected by the system and that is that has been split one half of those fees goes to the friends tech team the other half goes to all the friends tech participants all the people that are aggregating the trading fees

Starting point is 00:13:24 2.2 million transactions 2.2 million transactions can I ask you a question about this tvL really quite sure so is this tvL all eth you're talking about 28 million in eath we're not talking about a native friend tech token that's there is no to lading nope no stable coins it's it's a it's a meh maxi system there's only one currency inside of friend tech and that's that's that is great yeah i'm very excited about this okay so but but but remember i mean we did this episode there's ponzi there's ponsi economics behind this of course a little bit a little bit i mean it's mostly it's kind of true for all type types of finance like finance is perceived yeah so these are all paper games yeah because that's how finance works finance is paper gains um so these is

Starting point is 00:14:08 ZeroX Racer Alt, who's one of the creators of FrenTech, his share price is 8.8. There are 360 shares, which they call keys, which I'll call shares. Market cap 970 ether. So Racer, number one on Frentec, market cap of almost 1,000 ether, followed by Xerox Captain Levi. Xerox Captain Levi, there's an interesting story to him. I think this is true. He wasn't like an influencer or anyone, really, before Frenton tech. He's just been working the system.

Starting point is 00:14:36 He has been working the system. Absolutely grinding. He came into my share room, my key room, whatever. And it's like, hey, David, will you buy one of my shares? And I'm like, okay, his share price is 0.002. I'm like, I don't, I'll just appease this individual. I don't know who they are. Yes.

Starting point is 00:14:53 So I buy one of his shares. He's now number two. Wow. That's a great. Your price of 6.5 ether is one of the biggest, it's by far the biggest returns I've ever had. And at the time, I was like, oh, okay, fine, I'll just do it. And now I'm like, man, I should have bought 10.

Starting point is 00:15:06 Well, all of these are still crypto people, which is. which is somewhat interesting. Yeah. All the only fans people have been pushed out, and the crypto people are back on top. Oh, really? I wonder what the next cohort is. Do you think this still has staying power?

Starting point is 00:15:16 Or is this just a... This has way more staying power than I thought that it would. They're, the three, remember the three comma three from... Yeah, so that started to emerge, which has raised my heckles about, man, that doesn't feel sustainable. That's a Ponzi game wrapped in a Ponzi game. It's a 3-3 came from the Olympus style, which had some astronomicalical price action in 2021.

Starting point is 00:15:37 And then also in reverse. as well, because 3-3 was 3-3 is like, hey, everyone buy and don't sell. And that doesn't work over the long period of time. Because the game theory, someone's going to sell at some point in time. Why are people doing this? Why is 3-3 emerging? Well, why is TVL and France Tech going up? Well, people are farming the air drop.

Starting point is 00:15:56 People are starting to unpack the black box of the points distribution. There's a points distribution at the end of every single week. And people are assuming that this is going to just be a precursor. Like, how many points you have is going to lead to how much tokens that you are. you get for the airdrop. And so people are starting to figure out the algorithm for how they're distributing points. And they're realizing that if you just have a high portfolio balance, you'll get a lot of points. And so that's incentivizing people buying people's shares. So they don't really care about people's shares. They're just buy. Just hit by so you can farm the airdrop farm. So this has

Starting point is 00:16:25 turned into an airdrop farm, I would say. I get it. Yeah, I get it. I still don't, I'm still a net. Like, I think this is still a net good. I think it's still doing more good than I'm hesitant. Yeah, we did an entire episode and why there's some hesitancy, but this is fairly fascinating. The first month, 5.3 million paid to creators through Frentec,

Starting point is 00:16:47 5.3 million in app revenue. We talked about the TVL. This is one particular user's experience here. This is not easy, tweeting this out. I only deposited about 5th into Frentec some weeks ago, and then he's showing his portfolio value, and it's like 19th right now, including 7.1 eth in trading fees.

Starting point is 00:17:07 So some people are now making some substantial money. Check how many followers this guy has. How many followers? Is this a big influencer or is this? How are you talking about their Twitter followers? Yeah, not easy. Not easy. A hundred and ten thousand followers.

Starting point is 00:17:20 Okay, I would definitely categorize that person as an influencer. So they are getting some trading fees. Those trading fees are coming from the benefits of just having a lot of social capital. But man, the portfolio numbers, I mean, that's just capital appreciation of Friends Sacks. Friends shares are up. There you go. Friends shares are up.

Starting point is 00:17:36 David, what do we have coming up next? Coming up next, CFTC takes their turn as being the bad guy of the week. Not to be upstage. Gary wants that position, that number one spot. So he's doubling down. He's doubling down on his anti-crypto approach. Metamask launches snaps. So we're going to talk about that.

Starting point is 00:17:51 And also, FTX bankruptcy is incoming a massive sell wall of crypto. How will that affect markets? We're going to unpack some of those numbers and more. But first, a moment to talk about our fantastic sponsors. Cracken, who are in the Cracken booth on stage here at Permissionless. So thank you, Cracken for supplying the booth. the charts and also sponsoring bank lists let's go here for them right now crack and pro has easily become the best crypto trading platform in the industry the place i use to check the charts and the

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Starting point is 00:19:52 I feel like Anakin. I thought you were the chosen one. What, to the CFTC? Yeah, no, it wasn't Anakin. Who was it? It was Obi-Wan, saying to Anakin. I mean, the CFTC was supposed to be. I think a lot of people in crypto, a much more moderate, incredibly neutral version of a regulator.

Starting point is 00:20:08 And we're constantly pointing out, hey, SEC, we wish you could be more like the CFDC. More like them. And so that's the context through which this press release comes out. I'll read the title. CFTC issues orders against operators of three DFI protocols for offering illegal digital asset derivatives training. What are these protocols, David? Open, 0X and Derricks. Open, if you are familiar with Squyth, which is Squyreedith, which is a leverage product, that came from Open. ZeroX or Macha. They also have a number of integrations across the space. Macha, I use Macha quite often. Yes. And then Derek's, I'm less familiar with Derricks, but it's another derivative of exchanges. Derivatives, of course, fall under the purview of the CFTC, and so they have deemed that they don't like these projects.

Starting point is 00:20:54 Yeah, so Derricks and Open were charged with failing to register as a swap execution facility. failing to register as a futures commission merchant, failing to adopt a customer ID program, that's Bank Secrecy Act, AMLKYC stuff. And they were all charged with illegally offering leveraged and margin retail commodity transactions in digital assets. Oh my God, can you imagine? It sounds like a bunch of nation states speak. I mean, some of these things were just basically levered assets. I mean, Open has been here since the very beginnings of DFI. They were one of the initial kind of options projects. I've explored just a fantastic team. I believe based in the U.S.

Starting point is 00:21:32 Zero X as well. Oh, geez. They built so much. Will Warren. Shout out Will Warren. Yeah. And Derek's not so sure about the... But like, this is quite the chilling effect, I think.

Starting point is 00:21:42 So the fines were not subsistial. These aren't long-tail, shitty defy project. No. These are our friends and families just like inside of the crypto space, building primitives that to support permissionless finance. Yeah. So it's pretty sad. It's kind of depressing.

Starting point is 00:21:57 The fines were not substantial. So Open 250K, 0x, 200K, Derricks, 100K. And a cease and desist. And a cease and desist? God, so I don't know what the future of Open is. They haven't released anything publicly around this. I think for 0X and Macha, it means basically like from their front end, basically delisting some of these leverage tokens, right? Because, you know, adults in America can't make wise choices.

Starting point is 00:22:25 And so if you have a levered ETH product, it's not allowed, right? So, Macha is a front end to ZeroX, which is spun up by the ZeroX company, but the Zerox Protocol is just like Uniswap, anyone who wants to D-List assets can F off. You can't. Yep. Yep. So anyway, quite the chilling effect. So what does a new company, a Defi project do? Now the CFTC is also going a little bit rogue, going a little bit Gensler.

Starting point is 00:22:51 There was one commissioner that dissented here. Oh, and Hester Purstile? Yes. Hester Purst style descent. which was good to see. But also, unfortunate, David, only one. I don't know how many CFTC commissioners there are. It's like five to seven, something like that. David's Googling it for us. But only one dissented. It would have been nice to see another voice, another couple of voices here. Anyway, five commissioners. Commissioner Summers, Mercingers, dissent went like this. The commission's

Starting point is 00:23:21 orders in these cases give no indication that customer funds have been misappropriated or that any market participants have been victimized by the D5 protocols in which the Commission has unleashed, I like that word, unleashed its enforcement powers. I am concerned that the commission in these cases is taking another step down the path of bringing enforcement actions when we should be engaging the public. Yeah, yeah, yeah. That's a good point. No one that I know feels aggrieved. There are no victims here. There aren't. So, but the CFDC feels aggrieved enough to shut it down in America. This is, I think, a pessimistic take from Gabe Shapiro, but maybe an accurate one. What's his take here? Gabe says that the CFTC is an even worse regulator.

Starting point is 00:24:03 Ooh, that's, this SEC is pretty bad. I'm assuming he's in alluding to the comparison of the SEC. He says, if you run any kind of interface, et cetera, for a defy credit protocol, block the United States. Many people told me I was crazy when I said that the CFTC's case against Uki-Dow, that's the BZX protocol, simply makes defy illegal under the CFTC's view of U.S. law. I was right. Okay. The prospect of a regulator being worse than the SEC. I'm not ready to go that far, but this case does not look good. And here's something that's equally disconcerting these charges, David, Anton Chang, making the point that geo-blocking was not enough in this case.

Starting point is 00:24:44 So Open was fine, 250K, sent that cease and desist for leveraged that wasn't even executed through Open. It was executed through Uniswap. Okay. They bought the asset through Uniswap, and then they charged Open because Open created the assets. Yeah, but the website that Open maintained actually implemented geoblocking. So if you went to the website for Open, they were doing the right thing by banning, you know, American residents from participating. The right thing, yeah. The fact that it was on Uniswap was enough.

Starting point is 00:25:16 And the fact that they took what they thought were preventive measures to make that CFDC happy was not enough, even though they do block. There will never be anything that's enough. Nothing will be enough. Absolutely brutal here. So this is Jake Trevinsky. Perhaps we should later arrest the idea that the CFTC is a better regulator for crypto than the SEC. Today, the CFTC violated the court's opinion in the Uniswap class action and its own principles an attack on DFI. The Uniswap course case was, of course, we talked about that last rule up.

Starting point is 00:25:44 That was a big boon for crypto and defy. I don't know. If we can take this to court, is this just more surface area for future wins? I don't know, David, because they keep just respawning Gary Gensler. They've got like unlimited Gary Gensler's that they're throwing at us. All right. And so their response is a pretty hot. Yeah.

Starting point is 00:26:02 But when I made this point to Jake, all right, here's part of the silver lining. And I do want to get to the silver lining in a minute. I said, hey, it feels like we're losing here. What's happening? Jake says they can say whatever they want in a settlement agreement or in speeches or in guidance or in notices of proposed rulemaking. None of it counts unless a court says it does. You may have noticed that we keep winning in courts.

Starting point is 00:26:24 Oh, yeah. That's not going to stop. In the end, we win. The courts are slower moving, but they are making the right decisions. In the end, we win. I happen to believe that, David. I think we're on the right path. Okay, so there's potential here for these companies to take the CFTC to court and we can win. 100%. I mean, we have to be bankrolled to do that. We have to be ready to do that. We have to bankroll. There is another CFTC commissioner that's recommending an alternative approach. I noticed that commissioner, fam here, that is her name, she did not dissent. And I wish she would have, although she is proposing a pilot program, a sandbox, so that, you know, companies can come in and, I guess, you know, use the sandbox type approach so that they foster innovation. Maybe that'll take off. Maybe not. It hasn't worked when Hester Purse proposed it on the SEC side. Is this, is this, so like, there's always that question of, like, is this malicious or is this ignorance? Yeah. I don't know. I'm, is it, am I overly optimistic to call it ignorance? Like, because they, the punchline that we know is that they are asking things that are impossible. And they are not, there is no way out for these protocols to be compliant based on the nature of what they are. And so, and then they are giving charges anyways.

Starting point is 00:27:39 Ignorance? No, not at this point, David. I think that I think I'm in team, this is malicious. This is an actual kind of squelching of what we're doing here. It's another overreach. It's a, it's a mini Gary Gensler type of move. We've seen it play out the SEC. I do think that regulators' incentives skew in this direction anyway.

Starting point is 00:27:58 You did say a line I remember forever ago about just like why might you want to be bearish about the state of regulation is because like all the smart regulators get frustrated and then they go leave into the private markets like Brian can contends of the formally of the CFTC nowadays 16 Z. We like Brian. You were talking to him on stage. Yeah. He's no longer in the regulatory apparatus. He is at A16C where he probably feels much better able to suit the. industry and work and work forwards. Yeah, there's like a values brain drain where they kind of get sucked out into crypto. The chairman of the CSC. The chairman of the CFTC is a gentleman by the name

Starting point is 00:28:35 Rosson Benham. And I feel like he should come on the podcast. He's a Democratic appointee. He hasn't embraced anything crypto positive yet. So we'll see. Yo, Gary does not want to be upstage this week. We're talking about the CFTC. And apparently he doesn't like that. So he had some things to say. He was called in front of Senate in a Senate hearing, and he took some time out of his testimony to say some things about crypto. Do you want to hear it? All right. That's good. And help protect Americans from the crypto abuses that cost consumers billions. If they were to live up to the investor protection built into their current laws, it would help investors. But right now, unfortunately, there's significant noncompliance. And it's a field which is rife with fraud, abuse, and misconduct.

Starting point is 00:29:22 That's maliciousness. It's no malicious when I can see it. Significant non-compliance that is rife with fraud, abuse, and misconduct. You know, he never actually listened to companies when he says non-compliance. It's just like homogenous, general, vibe of non-compliance. Yes. They feel very non-compliant. He actually continued, we've seen this story before, Gary said.

Starting point is 00:29:45 It's reminiscent of what we had in place in the 1920s before the federal securities laws were put in place. Of course, right? It was the Wild West, and then the SEC wrote in and saved the day. Thus, we have brought a number of enforcement actions, some settled and some in litigation to hold wrongdoers accountable and promote investor protection. So that's how he feels about crypto, David. If there's one thing that I think listeners should do is they should listen to Eric Voorhees' opening speech at permissionless. Oh, my God. Brought the absolute guns to the table. Man, that was, it really started off the conference out well. And if anyone feels energized, to have some anti-nation state regulation content thrown their way. Definitely listen to Eric's speech. You know, the thing about that speech, and I think Eric's approach in general.

Starting point is 00:30:30 He called us farm animals. Well, he could, you know, so it's sort of that type of talk, right, from Eric. So he gets like right to the- It's pretty militant. He goes almost like a militant towards it. But what I love about Eric is it's no apologies. Yeah. Like, what do we have to apologize for?

Starting point is 00:30:46 Unapologetic. Yeah. One of his comments there was they should be giving Hayden Adams a no. Nobel Prize. Yeah. For creating orderly markets. Yeah. Doing the SEC's job.

Starting point is 00:30:56 Yes. And what are we doing? Suing people. Suing over. Doing D. Doing D. D.I. out of here.

Starting point is 00:31:02 Suing Macha. Suing Zero X. That's what we're doing. I do think, though, David, I mentioned the, like, my favorite, one of my favorite. Your panels were great to you. I'm not denigrating your panels. But your one panel was better. This panel is great.

Starting point is 00:31:13 Okay. And the reason it was great is because Hester Purs was there. You want to hear what she says, David? Yeah. If Chair Gensler did wake up tomorrow morning and say, you know what, I want to chart a new course. What would that new course look like? What kind of solutions would you recommend for us?

Starting point is 00:31:29 Where are the problems that you're seeing? Having that kind of stuff ready to go, if we can really work on developing those kinds of solutions now, and I know Congress is working certainly on that, I know that there's a lot of industry work being done on that, but having those concrete solutions ready to go when Chair Gensler does wake up on the other side of the bed and say, I'm going to do things differently.

Starting point is 00:31:52 Then if we're doing that, I think we're in a good place. If we're just going to be in this bad place we are that we're in now, and then when that change happens, there's nothing there to put in its place, then we're in a really bad place because it takes a long time to get these changes work through. So we need to be really ready to go when the opportunity strikes. I do appreciate how she just assumes that an inevitability of time, Gary Gensler will come to the light.

Starting point is 00:32:21 Yeah. One will be forced or have to be enlightened, probably forced. Yeah, I actually think there might be some replacement going on. And I, for one, would be happy to nominate Hester Perst for chair of the SEC. I think she did a fantastic job. You have a tweet here. You want to... Yeah, this was while I was watching your one panel.

Starting point is 00:32:40 I tweeted out, a mountain of respect for Hester Purse, who eagerly shares opinions in public forums while her role at the SEC constrains what she can say. She can't talk directly about the SEC versus Ripple or gray scale cases or speak on behalf of the SEC directly, but she gets on stage and speaks her mind anyways. She engages with us. She comes from permissionless. She chats with you. Could you imagine? She chats with you, Ryan.

Starting point is 00:33:03 No, I think it's fantastic. And Tom Emmer was there. They've got some legislation. I mean, there's some stuff going. I do think it's an inevitability that the U.S. rights the ship. I just, I hope it doesn't take, you know, years. So meanwhile, while all this is going on, institutions. continue to adopt. I think they're pretty excited about the spot Bitcoin ETF. It's going to happen.

Starting point is 00:33:24 It's going to happen. So what are we looking at here? Well, it just so happens that another trad institution with $1.5 trillion in wealth filed for another spot Bitcoin ETF this week. Franklin Templeton, which is perhaps the most boomer name I can think of for our financial institutions. Franklin Templeton? No, it just sounds very... It doesn't even sound real. It sounds extremely trad. They have $1.4 trillion in assets under management. So that's kind of, yeah. I feel like I should have heard. Yeah, I feel like I should know them.

Starting point is 00:33:52 Yeah. They have filed for the spot Bitcoin ETF. So there's another big trad institution pushing for this as well. The interesting thing about this one is that Cracken is actually the Oracle. So for the prices for the Spot Bitcoin ETF. So cool. Congrats to Cracken on that one. In Oracle in this context, what do we mean by that?

Starting point is 00:34:09 So the spot and the ETF, all the ETFs need an Oracle. It's actually not Cracken specifically. It's CF benchmarks, which is wholly owned by Cracken. So Cracken Subsidiary is doing the spot Bitcoin pricing. And so you remember when one of the, I can't remember which, but some of the, one of the Bitcoin ETF spots, like updated their filing to include surveillance sharing. And then all the other ones also is like, oh, we have to also include that. Yeah.

Starting point is 00:34:35 So this spot Bitcoin and ETF, the new thing about this one is they're using CF benchmarks, Cracken subsidiary to provide the surveillance sharing. And they are the one thing doing the thing that is the final nail in the coffin about why the SEC is claiming that it is not approving a Bitcoin ETF. Now we are doing that we are doing that's the thing that CF benchmarks is doing. I just learned about this just now. We are closing in on this. There's nothing left.

Starting point is 00:34:58 There's nothing left. You have to approve it. If you want to get a bit more optimistic on the regulatory landscape in the U.S., you've got to watch the panel. We'll include a link in the show notes to the permissionless panel that we were referencing. Also, David, this was some news this week. This is FDX, the ghost of FTCS. It's still here.

Starting point is 00:35:16 They're going bankrupt, of course, and they got a lot of crypto. They don't like crypto that they have to sell in order to give back to their creditors. So the question in my mind, and I think in crypto's mind, is who is going to take the hit from all of this? All right? I mean, what do their bags look like? It's reported, David, that they have $3.4 billion in crypto assets. At current prices. At current prices.

Starting point is 00:35:40 And they are allowed by the courts to sell up to 100 million worth of tokens per week. And that can be increased up to 200 million. Oh, man. That's a lot of sell pressure, my friend. Cell pressure, yeah. Okay. So which assets are under question? Of course, the big question to have.

Starting point is 00:35:57 The biggest asset that they have to sell is going to be Solana at $1.16 billion. Biggest buy a lot. A lot of this Salon is locked. And I think locked for a very long amount of time. What do you mean by locked? So they get sell it? Vested, yeah. So the FTX was an investor in Solana.

Starting point is 00:36:13 Of course, the Solana, FTCX relationship was like ripened. 2021, 2021, 2022. Now the FTCX is gone, Salon is clear from that, but they still have a lot of vested stole. I think the last of it unlocks in like 2027 or 2029, so it's over a very long period of time. You know what, though? I still totally think you can sell that OTC. Someone buy the, like, oh, you're right. Yeah, the vesting. Oh, you're right. So, so if there was an OTC buyer, they could buy the locks salon it, but that wouldn't. That wouldn't be self-pressure. It wouldn't be self-pressure. You're right. But still, like, over there is, it's a very significant amount of Solana, Like a very precise.

Starting point is 00:36:46 Is that like 10% of market cap? Something close to that? 1.16 billion dollars of Solana is going to be, let's go look at the Salana market cap. The Solana market cap is $7.4 billion of market cap. How about? Liquid market. It's a $10 billion. So yeah, that's about 10% of the sole market cap of cell pressure over the next five plus years.

Starting point is 00:37:08 It's a long time. It's a lot of soul. Yeah. It's a pretty big over. Yeah. What else we got? After that is going to be Bitcoin. So Bitcoin coming in at number two at $560 million.

Starting point is 00:37:19 That is fully liquid, of course. And then ether is number three at $192 million. I feel like that's a decent amount for Bitcoin. But the Bitcoin and Ether amounts, I feel like Bitcoin and Ether can kind of eat that. Yes. Yeah. I mean, Sam always, like, there was a general resistance and resentment between the Ethereum community and Sam. And so as a result of that, like, there was just less ether proportionally than other assets.

Starting point is 00:37:43 Oh, cool. Right? So, like, there's 192 million. million dollars of ether, a very liquid asset. There's 137 million dollars of APTOS, a very illiquid asset. I don't know how that's probably also locked up, but again, that's a massive overhang for aptos. Tether, XRP, there's some other ones as well. Yeah, this is going to be some cell pressure. That's some overhang. Do you think this is going to affect prices, or do you think it's more specific to these particular assets? The reason why there's four-year cycles is because

Starting point is 00:38:12 of reflexivity. Like, once people realize the game is on, then the game is on. And I think the cell pressure of this will be a meme that resurges its head over and over and over again. And it may be weeks will have downward cell pressure as like, kind of like the, the Mount Cox thing. It's like every once in a while, I'll peel it, oh, Mount Cox is going to sell. And then it never actually happens. It's probably going to be something like that. Yeah. All right, David, what do we have coming up next? Coming up next, scroll's main net is announced for when? Well, we know. We'll tell you, but not now. Vitalx X account is hacked as a result of the swim swam swap attack and a bunch of other stuff as well.

Starting point is 00:38:46 We're going to get through all the news and more. But first, a moment from these fantastic sponsors that make this show possible, especially Metamask portfolio also here on the floor at Permissionalists. We're going to talk about MetaBack snaps coming up. So thank you for MetaMask for sponsoring this message. Let's go hear from my member right now. Are you a Metamask user? Well, you're listening to Bankless, so of course you are.

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Starting point is 00:40:08 on the go. With a uniswap wallet, you can easily create or import a new wallet, buy crypto on any available exchange with your debit card, with extremely low Fiat on-ramp fees, and you can seamlessly swap on main net, polygon, arbitram, and optimism. On the Uniswap mobile wallet, you can store and display your beautiful NFTs, and you can also explore Web3 with the in-app search features, market leaderboards, and price charts, or use Wallet Connect to connect to any Web3 application. So you can now go directly to D5 with a Uniswap mobile wallet, safe, simple custody from the most trusted team in Defy. Download the Uniswap wallet today on iOS. There's a link in the show notes. David, this caught our attention this week. This is from Mike Nuter, who is an EF researcher,

Starting point is 00:40:46 and he published... Also my rock climbing, buddy. Oh yeah. You guys climb rocks together? Yeah, he's in Williamsburg. Where do you climb? Bouldering, right? Bouldering, yeah. He called himself a pebble wrestler, which is a nickname for boulder, and I thought that was just absolutely hilarious. Okay, so this pebble wrestler is proposing a two-tiered staking proposal, presenting a hypothetical native liquid staking token design. If that doesn't mean anything to It's basically like rather than having an LSTs and leaving that up to like this quote unquote private market, Lidos, the rocket pools, anybody else, you know, this well as anybody else who does it, making that part of the protocol enshrining liquid staking token as part of the protocol. Now, I don't think either of us have gone into the design of this. And we probably have to do an entire episode with your pebble climber.

Starting point is 00:41:32 Wait, was it? Pebble wrestler. Pebble wrestler. In order to find out what this is. I hope he's going to be okay with this. But I think it's interesting. I think that is interesting. It's like a countermeasure.

Starting point is 00:41:41 It's a possible countermeasure move where like the public state, I'm going to use government analogies here for a second. Please do. Just hang with me. So it's like a, the public nation state is saying, oh, this is a monopoly. This is threatening the public good of what we're creating of our citizens. And so we're going to grab this private asset and make it a state run asset. Okay.

Starting point is 00:42:06 And they're not quite grabbing the assets. So they're not like taking LST. They're just providing an outlet. They're like rather than private will have a public type. Maybe it's like public health care, I guess, and that whole debate. Single pair of healthcare? Yeah. People are going to get massively triggered by all of this with what I just said.

Starting point is 00:42:21 But I feel like it's a helpful analog. I think that's right. And this is actually very like fitting with what the role. I see the role of the AEF is. And I've heard this articulated elsewhere. It's an antitrust force for Ethereum. Yes. Anti-Trust force.

Starting point is 00:42:35 Where a monopoly emerges that impacts the protocol. Like, I would consider uniswap a monopoly in liquidity, because it's like dominates 80 to 90% of liquidity in swaps in Ethereum. Does that impact the protocol? No. Is Lido a growing monopoly and might it impact the protocol? Yes. Or any other LST that might grow to have more than 33% share.

Starting point is 00:42:55 Yeah. And so what Mike is doing here, and they are proposing like, hey, here is an LSC system that we can enshrine as a credibly neutral force in the protocol itself. where there's no token, there's no profit motives, there's no anything, and it is like state-run infrastructure to ensure the credible neutrality of Ethereum. I would say that the Pepsi, PEPC, from Barnaby, Protocol Enforced Proposer Commitments, is of a similar vibe to eigenlayer. Yep. So if eigenlayer kind of grows so incredibly large that it needs a check by the protocol,

Starting point is 00:43:28 we have Pepsi ready to go. It's not ready to go, but is in development. And so this is of a similar vein. I again, I just skim the details, but this has some economic ramifications that I'm not here. I am entirely comfortable. Yeah, we're going to have to talk to Mike about this. So I don't really know if I support this proposal or not, but I'm in kind of finding out more mode. And I think it's interesting nonetheless. All right, while we're on the infrastructure track, let's talk a little bit about Metamask. I feel like this is actually a pretty big upgrade infrastructure for Metamask. This week, they launched Metamask snaps in Open Beta 4. It's been brewing for a while. My simplest explanation of this is if you think of a wallet as a browser, so think of like the analog to the internet. You know, you had early kind of Netscape, Internet Explorer, and now you're probably like using Chrome or Brave or something like that, okay? So a wallet is kind of like an Internet Explorer for crypto or it's kind of like a browser for crypto. And you know the ability that browsers have had, I feel like Chrome really pioneered this with different extensions. So you go to kind of the Chrome extension store.

Starting point is 00:44:30 You download your favorite extensions. So ironically, MetaMask is actually an extension on top of your Chrome browser. Is that ironic? I don't know. It's fun. It's something. It's a fact. Yeah, what's the definition of irony?

Starting point is 00:44:42 Anyway, didn't Alana... Let's stop this podcast and consider this. We'll do an entire episode on it. Put in the backlog. Okay, so what they're doing is basically giving the ability to launch extensions onto MetaMask. That's what a snap is. What are MetaMask? It's extensions for your MetaMask.

Starting point is 00:44:57 Not just extensions because you can also... You can kind of change the... default about MetaMask, the way that it looks. Yeah. So it can be an extension. It can do anything. MetaMask can do anything. There are already developers that have been building MetaMask snaps under the hood for a while.

Starting point is 00:45:12 So there are some snaps ready to go. And so this is just kind of going to be, this isn't going to be probably the biggest upgrade to MetaMask. Well, because it makes it like permissionless. Anybody can deploy an extension. Open source. Open source Metamask. Open source snaps. So all of those things you're like, uh, Metamask, when are you going to implement this feature?

Starting point is 00:45:30 here. And I don't know how many times. Build a snap for it. Build a snap. Somebody can build a snap for it. So there's a library. I plan to spend some time discovering different snaps, seeing one's useful. And, you know, maybe we'll do an article on this and beg this newsletter.

Starting point is 00:45:43 Snaps. David, David. Vitalik was hacked. Oh, no. Last week. You're not worried about this? I just know about it. Okay.

Starting point is 00:45:51 Not a surprise for David here. Okay. So what happened, though? Okay. So surprise. You can turn off SMS, two-factor authentication. on Twitter on X, but you can still use it to recover a password. So there's two things that you need to turn off in order to cover your traces on Twitter.

Starting point is 00:46:11 I actually did not know this. And now I do know this, so I turned it off for me. But this is how Vitalik got sim swapped, and that's how they got access to his Twitter. I think $691,000 and a couple crypto punks from some OGs got drained. one thing I definitely learned from this is OGs fell for this and when I read this tweet I immediately recognized it as like this is a

Starting point is 00:46:36 compromised tweet and it was interesting that some OGs fell for it and other people like didn't I'm realizing that getting fished depends on the context that you're in so like OG why are OGs getting fished because maybe they're just not on Twitter that often it's a Twitter skill not a Web3 skill

Starting point is 00:46:52 yeah so let's talk about the mechanics of what happened out of nowhere it looked like Fatalix Twitter account publish this tweet. It's basically to celebrate proto-dank sharding. That's very precise. Yeah. Dalek might say that. No, he wouldn't ever say that. But anyway, coming to Ethereum, consensus is, and then it goes on, you can mint an NFT. There's a call to action to mint an NFT. Exactly. And so this was actually some fissure that had taken over Vitalik's account. And if you go to try to mint this NFD, there's some code in their malicious code that will

Starting point is 00:47:22 actually drain your wallet and steal all of your funds. And so what David was saying is some Oh, geez. Like some crypto-native people actually fell for this because, oh, it's Vitalix official account. This is such a sad, fun fact. This is a sad fact. The first ever crypto punk that was minted got drained. Oh, my God. Cryptopunk number one.

Starting point is 00:47:42 Yeah. If it's a sad fun fact, then I don't think it's fun. I think it's just a sad fact. So that's what happened. And how did it happen, as you're saying, he was sim swapped, which means somehow his carrier, I think it was like T-Mobile or something like this, probably some sort of. So someone, some hacker called them up and convinced them somehow to port his phone or the other phone. And because in Twitter, actually, if you sign up for Twitter Blue, they ask for your phone number.

Starting point is 00:48:10 Yeah. Okay. So I'm sure Vitalik went through that process, gave the phone number. And then if somebody, it sim swaps your account and triggers password account recovery, account recovery. Then it sends it to the new phone number. And that's how this all happened. So what are the lessons here? So he actually, Vitalik went to Farkaster to talk about this.

Starting point is 00:48:32 I'm assuming he's regained access to his Twitter. But he, the main like kind of mic drop moment was that, well, Farcaster, you can't be sim swapped because there's no phone for a Farcaster. It is your ENS name. It is your Ethereum address. So Farcasser accounts have assurances here about how and who can access those things, which I find. Because it's secure.

Starting point is 00:48:51 It's secured by private key. It's secure by private key. That's the big difference here. So that's a takeaway. I guess another message is watch out. for sim swaps. Yeah. I mean, you can have your mobile company add a PIN number.

Starting point is 00:49:02 Let me just say that does not necessarily protect you. The social engineering, like, honestly, this is pretty goddamn damning of phone companies. We should be pretty upset as an industry, as all of these phone companies that aren't taking this problem seriously, and likely one of the culprits are probably coming from inside the house. Yeah. Like, it's either social engineering externally or somebody in T-Mobile, an employee or access to T-Mobile databases and servers who can have the ability to do this.

Starting point is 00:49:27 So, T-Mobile, yo, look at your shit. Yeah, well, you know, I don't know if they listen to bank lists, but- somebody at who works at T-Mobile listens to bank lists. Odds are. What can people do, though, all right? So one thing you can do is try to call them, add the PIN number to your account. That's kind of going to be a dead end. Some people use Google Fi, at least in the U.S., and this has no vector for attack in this way, right?

Starting point is 00:49:50 So it's all kind of Google Advanced Protection, and you can really lock it down. There's no way to social engineer it. That's another mechanism for that. That's how to prevent sim swap. What you really need to do, what you really need to make sure of is none of your key accounts, like Twitter or Gmail, have a phone number activated account recovery. Okay? So that means...

Starting point is 00:50:09 Just remove your phone number from your Web 2 life. Yeah, because that means if you do get sim swapped, no one can actually get inside of your accounts. So it's, you know, at worst, you know, two-day inconvenience kind of thing where you get your account restored. So that's the learning lesson there in how we can protect ourselves. David, Espresso, partnering with off-chain labs. Okay, what's going on here? Yeah, off-chain labs, aka Arbitrum and Espresso, a decentralized sequencer.

Starting point is 00:50:34 They have partnered up so that they can get some decentralized sequencing into the world of Arbitrum. This improves transaction ordering to bring a shared sequencing option to Arbitrum tech chains. You can fight front-running and harmful forms of MEV, so this is just M-E-V fairness coming to the world of Arbitrum. And this also is actually part of Arbitrum's strategy. like super chain strategy, if you will, they actually don't have a super chain strategy. They want to work with decentralized sequencers so that the aggregate of all chains can be sequenced together. So it's rather than having a super chain strategy, like optimism, it's just like the whoever has a chain. And so it's more, it's like the space between all of those super chains,

Starting point is 00:51:14 whoever signs up for espresso is part of the arbitral system, which is also more open. I think that's how that's works. I feel like we have to do some episodes on this. Yeah, but my, I probably Butchered. My rough understanding of how this works is arbitrum is the only sequencer right now for arbitram chains. Yes. Now espresso is also a sequencer. Yes. And any chain that espresso also services as a sequencer on. Let's say they're on arbitram one and they're on all of the other arbitram chains as well. And let's say they're also a sequencer on the optimism network, right? That improves the interoperability between optimism. Cost chain execution. It's through shared sequencing. Right. And that's very bullish. That is the reason why an arbitram might want to adopt someone like espresso, right? There's definitely some like network, some power a lot network effects to share sequencing. Absolutely.

Starting point is 00:52:02 David, some nouns news this week. I'm not going to go through the whole thread, but 40% of nouns are quitting the doubt and claiming a refund. There's some nouns drama. Yeah, noun fork. Okay, so what's going on here? I think the way that this works is nouns at some point in time we're going for over 100 ether per noun.

Starting point is 00:52:19 And that was one noun is sold every single day. So 100 ether into the noun's treasure. Nowons are now being sold for lower prices, like 20 to 30 ether a day last I checked. Which means a lot of nouns are like underwater. But nouns, one noun is one vote. There's a treasury of ether. And so I would assume that there is a desire for some nouns to get their ether back. And so 40% of nouns have done that.

Starting point is 00:52:44 It's basically like the rage quit option, right? Yes. Give your noun back and you take your share, your equivalent share of the ether. Yep. Mm-hmm. And so just this is people just being. disgruntled about the way that the nouns treasury is being handled. They just don't agree with the way the capital is being allocated. And so they are saying, peace. We're out. You know, I've, I talked to some,

Starting point is 00:53:03 this is kind of a noun skeptic type thread. It's basically like, hey, decentralized treasuries don't work, Dow's don't work, that sort of thing. And, you know, I think there are some flaws with a Dow managed token vote treasuries. Sure. But I also talk to a noun bull, William Picer. Yeah. He's actually like, hey, no, this is right. This is like the cleansing process we need. Yep. And now we just have the true believers left. And now this ARB opportunity has been swallowed by the market. We have a smaller treasury. But that treasury is full of token votes by a rabid group of fans.

Starting point is 00:53:33 So this is the natural kind of cleansing process. And, you know, nouns will be reborn. Well, also there's the potential here. So, like, early nouns buyers, like, for example, the first noun ever got sold for for $613 ether, $1.9 million. And, like, for a long time, nouns were being sold for hundreds of ether. And so even if you are an early noun holder and you are down in ether, a new noun buyer who's, you know, buying a noun for 20 ether, is buying 30 or 40 or 50 ether's

Starting point is 00:53:59 worth of treasury with their 20 ether purchase. Right. So it's actually rational for the early buyers to, like, get their ether and then rebuy cheaper nouns because newer buyers are buying free ether, basically. And there's like, I don't like that R-B, I would like to rebalance my portfolio. And so I'm sure some nouners, some nouners are going to quit, some nouners are going to re-buy at a lower price, and then there's going to be more quality across the down. Yeah. So is it broken or is it working? Is it performing? I think this is an example of an

Starting point is 00:54:28 efficient market playing out. So I would say this is, it's rational, expected. I sort of think so, too. David, we're just going to breeze by this story, but the headline is crazy. So there's a cryptocurrency exchange founder in Turkey, and he was just jailed for 11,196 years. Yeah, that's a lot of years, Ryan. That's a lot of time. Can you remember? Can you Imagine if SBF was in Turkey, what would happen? Oh, he would get a high score for sure. That would be like hundreds of thousands of years. Wow, Turkey does not mess around.

Starting point is 00:55:00 This was for fraud. I love this fact. So why is he being sentenced for embezzling for stealing users' funds? I love this fact. He's sentenced to 11,196 years and a $5 million fine. Wow. He stole one of those millions of dollars. Okay, so apparently this guy, he really is like the SBF of Turkey.

Starting point is 00:55:19 it sounds like. I don't know much about this story, but he's got the hubris of an SBF. He said this to the court. I am smart enough to lead any institution on earth. Yo! That is evident in this company I established at the age of 22. Wow. I have not acted amateurishly. Wow. I think he should just go to jail and do the whole like sardines and cigarettes, Ponzi in there.

Starting point is 00:55:41 Oh, my God. He can have his jail institution. The SBF of Turkey. It's a long jail sentence, though. All right, catch this. The FBI is investigating the whole barrens. Barry Silbert versus Winklevoss, type of allegations? What's going on here? Yeah, so as a part of an ongoing review of DCG and Genesis Global Capital, Genesis, the FBI agents, SEC staff, and New York City prosecutors sat down with Cameron Winklevoss to discuss his allegations of fraud that he levied against Barry Silbert.

Starting point is 00:56:09 So, like, everyone is innocent until proving guilty, but some very big players are taking a look at what's going on here. David, this is getting kind of serious, I think. That's pretty serious. I don't. I would not want to be in that position. Mountain Protocol has just launched, David. We're doing an entire episode on Mountain Protocol. What's the TLDR of this thing? Mountain Protocol on-chain T-bills, part of the real-world assets coming to be tokenized on-chain. Mountain Protocol is one of them.

Starting point is 00:56:32 USDM. So instead of USCC, which has no native yield to it, USDM is a tokenized T-bill. So it's trying to be a currency inside of defy, but instead with the native yield of the Treasury market. So it makes sense. David, this is a product I'd actually love. I bet you would. If we can get it through the regulatory gauntlet, you know, it's like, it's like USC, except USC plus 5% yield.

Starting point is 00:56:57 Well, it is long. It sounds good to me. So it got through the regulatory gauntlet. So far. So far. It just, it feels like it's taking kind of a tether type approach of like offshore type approach. Anyway, listeners, you guys can listen to the podcast and let us know what you think

Starting point is 00:57:09 about it. Another big launch this week was the bankless team. Oh, that's us. We told you guys about it last week, but we have now officially launched a bankless claimable claimables I like that what's a claimable Ryan well it's a thing that you can claim on chain it's usually has a um a valuable property associated with it so it could be an air drop yep it could be uh something you were eligible for because you hold a specific nfts or an NFCS you here's the point is you really don't know yeah what you claimant will be anything

Starting point is 00:57:40 they could be anything and all you have to do is type your eth address into this website double check the URL make sure you're on the bankless site and not on some Fisher's site. The reason why we know that this is valuable is because we have a bankless product now. We have a thing that you can connect your metamast to or airdrop hunter, et cetera, your wallet. There are 100,000 claimables that the bankless nation is able to claim. Yeah. We know this for a fact.

Starting point is 00:58:04 We verified it. That is, and they are worth collectively $350,000 of claimables. That is not including the millions of dollars of Arbitram and Connected Airdrops as well. There's a lot of money that bankless citizens. I don't know how many times I'm going to be so annoying. Y'all have money. Go get it. Using claimables.

Starting point is 00:58:22 Go claim your stuff. Your free stuff, guys. So it's available for bankless citizens right now. Super excited about that release. Also, our friends over at Blockworks who are helping to throw this conference with us. Well, they did most of the heavy lifting. They did the back.

Starting point is 00:58:33 Yes. Blockworks research is announcing Blockworks Analytics. I haven't checked out this product, but what is it, David? They're saying this is a singular destination for real-time data-powered instincts. And so I think there are many products out there like this. Like the block has a data platform. I know the Defiant has a data platform. From what I'm seeing in this preview, I haven't been able to find the page.

Starting point is 00:58:53 I don't know if it's like actually launch launched yet. We are rushing through this conference, so apologies. The reason why I'm bullish about this particular analytics platform is that I think Mike Ippolito specifically, we just recently had them on bank lists, but like the two founders, they really know what's up. So they know what is good data. I know in the preview you can see like layer two sequencing profits. Like that's data that I'm interested. So I think just the brains of Mike and the Blockworks team plus an analytics platform, I think

Starting point is 00:59:21 we could get some really valuable insight out of that. So I'm looking forward to getting my hands on that. David, this was kind of a cool release coming out of the conference as well. Layer Zero and Google Cloud. What is up with this? Before doing this roll-up run, I came down from a panel talking about this with Raz from Layer Zero and Rich from Google Cloud. So Layer Zero has smart contracts on every chain, like the Layer Zero smart contracts, which are also immutable, by the way. That's kind of cool. And so any single new chain, so like the Ethereum Layer 1, Optimism, Mainnet, Base, pick another chain, Salana, Avalanche. And so any single chain has Layer Zero smart contracts. And then what these smart contracts do is with a between the chains, you have an Oracle provider passing messages between the Layer Zero smart contracts, and that's how these chains become interoperable.

Starting point is 01:00:07 Google Cloud is one of these oracles. Now, Oracle, if I say the word Oracle, you might think like Price Oracle, because that's what like something like ChainLink does. This is not that we're using Oracle in a different context. This is an Oracle that's saying, hey, this chain's messaging box has this date. I'm going to pass that message to, I'm going to be the Oracle for the other chain, the destination chain. And so kind of like how you have Metamask RPC nodes and you can, it defaults to infura. Or you can select that drop down and you can pick a different one. This is like one of those.

Starting point is 01:00:36 So kind of like how Google is the default search. engine for your web browser. This is Google Cloud being a, um, a Oracle for the layer zero cross-chain messaging network. I don't know if it's, um, specifically default, but it is like the, a very strong first choice for people like me who I'm not going to run a layer zero system and an Oracle. I'm just going to pick Google because I, I pick Google for search engine. Fuck it. I'll pick them for a hypothetical you because you're not actually picking Oracle, are you? Uh, I mean, you have the option to. You have the option to. But you have Google out of the bottom. But you have Google out of the box to use. I got it. Okay. I want to dip in sometime, you know, and evaluate kind of what layer

Starting point is 01:01:16 zero is doing. And it's not just layer zero. There's, there's a bunch of... C-C-I-P from Chain Lake. C-C-I-P from Chain Lake. Not C-C-C-C-P. No, no, no, not that one. That's a different kind of work. And I want to evaluate kind of like the bridge-type platform type play versus the superchain type play versus, like, intense. All of these things... Versus. I mean, I think they solve a similar in some way, which is like getting assets from one place to another. There's a there there for sure. Fragmented multi-chain ecosystem. And I don't know what the winners are going to look like, but we need to get to the bond.

Starting point is 01:01:48 Or why the winners will be the winners is the big question. I haven't decided yet. David, what do we got coming up next? Coming up next, questions from the nation takes of the week and a meme of Ryan in real life because it's so damn memeable. One of the questions, how do you calculate the market cap of Eath when we keep burning it? Interesting. We're going to get to all of this and more.

Starting point is 01:02:05 But first, I want to talk about these fantastic sponsors that make this show possible. Are you planning to launch a token? Is your token already live? And are you granting your employees and contractors vesting token awards? And are you trying to figure out how to take care of taxable events for your team? Toku makes implementing a global token incentive award simple. With Toku, you will get unmatched legal and tax support to grant and administer your global team's tokens. Toku will help you navigate across the life cycle of your token from easy-to-use pre-launch token grant award templates

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Starting point is 01:03:05 Mantle, formerly known as BitDAO, is the first, Dow-led web3. ecosystem, all built on top of Mantle's first core product, the Mantle network, a brand new, high-performance Ethereum Layer 2 built using the OP stack, but uses Eigenlayer's data availability solution instead of the expensive Ethereum Layer 1. Not only does this reduce Mantle network's gas fees by 80%, but it also reduces gas fee volatility, providing a more stable foundation for Mantle's applications. The Mantle treasury is one of the biggest Dow-owned treasuries, which is seeding an ecosystem of projects from all around the Web3 space for Mantle. Mantle already has sub-communities, from around Web3 onboarded, like Game 7 for Web3 gaming, and Buy Bit for TVL,

Starting point is 01:03:43 liquidity, and on-ramps. So if you want to build on the Mantle network, Mantle is offering a grants program that provides milestone-based funding to promising projects that help expand, secure, and decentralize Mantle. If you want to get started working with the first Dow-led layer-2 ecosystem, check out Mantle at mantel. And follow them on Twitter at ZeroX Mantle. All right, the question from Dairy.

Starting point is 01:04:03 If market cap is unit price multiplied by the circulating supply, when we burn aren't we reducing the market cap in a sense or can we consider burnt eth part of the market cap what say you david uh yes okay we when we burn eth it is gone it is gone from the accounting it is removed from the line item so burnt eth is no longer a part of the ethereum market cap we are literally reducing the circulating supply of ether so you're both market cap and fully diluted for for those that count uh and so no you do not consider burnt eth as part of the market cap you do consider burnt eth as part of the market cap that was burnt. So no, as we burn more eth, the market cap of if ether goes down, which is why it's actually bullish, because that means when you buy ether, you're buying

Starting point is 01:04:48 it at a better valuation, the more that ether is burnt. Yeah, I think there's maybe also some confusion on a distinction here. So the definition that the questioner gives of unit price times the circulating supply, right? That's market cap. That is one definition of market cap. But I like fully diluted market cap a little bit better for this type of, you know, metric, right? So because I don't know when you say circulating supply for ETH, what you actually mean. I think that depends on different things. There are some projects where it's very clear what you mean. So you've got a bunch of tokens that are vested or long suppliers and things like that.

Starting point is 01:05:19 And they're not circulating at all. I'm not sure entirely what you might mean by circulating. But let's take a look at fully diluted. So that would be unit price. Well, so for Ether, market cap and fully diluted valuation is one-to-one. It should be the same. And Bitcoin is also one-to-one, except for all of the lost coins out there. So Bitcoin also has a lower market cap than actually reported because something like 3% of Bitcoins is lost.

Starting point is 01:05:44 So the real market cap of circulating supply of Bitcoins is actually 3% lower than reported because everyone who just reports the market cap of Bitcoin just includes. There's a lot of ethoscelain. There's also gone as well. I don't know what the percent is actually accounted for in the circulating supply. All right. Okay. All right, David, we haven't compiled any takes this week. But let me ask you, what do you bullish on?

Starting point is 01:06:03 I am bullish on permissionless three. Go figure. At permissionless two, already focused on permission. That's October in Salt Lake City. I kind of already gave my tease for why I think it's going to be exciting. The reason why I think permissionist is so cool is I'm very bullish on podcasters organizing conference content. It's just it's the same skill set.

Starting point is 01:06:24 I have been to my fair share of conferences out there, Ryan. I have seen when people who don't have that skill set organize talks and panels and it's like, you know that one family guy meme of like the giraffe platypus elephant animal? Yeah. That's how I feel like a typical conference. Like, what the hell is this panel? Like, ooh, put this together. Who titled this?

Starting point is 01:06:43 What moderator, this moderator's bad, boo. I'm so mean. Yeah, that's kind of mean, David. It's pretty mean. I mean, so you, me, Mike, Jason, and the other, many others at Blockworks, we organize every single bit of content here. The panels make sense. I only organize the good ones, David.

Starting point is 01:07:00 I don't know. Yeah. The panels and panelists make sense. We do a good job, I think, organizing content. And the Blockworks team is just so. polish with an actual event planning. It's really, and so I think we are both coming together and

Starting point is 01:07:13 realizing that we're not done yet with improving the conference experience. I think just another three-day conference of programming and talks is table stakes and I want to do something net new in addition to that because we've got that on lock. We figure that out and I feel strong. We've done that twice in a row.

Starting point is 01:07:29 Permission list three, I want to be more than a conference. A conference and something. Yes, and. I talked about that in the intro, but I think there's a lot of innovation, an arc of innovation to do in the crypto conference circuit, because it's a very special time. It's the one time of year where the bank this community gets to show up in real life. We just had 100 people watching us at the very start.

Starting point is 01:07:49 We're down to just a handful now. It's a time where your Twitter friends get to show up in real life. I was on a stage with Ethan Buckman from Cosmos, Anatoly from Solana, and Ben Jones from optimism. And we all just talked about. We hash stuff out about our visions for the. endgame. Like, that is, you don't get that anywhere else. And that's such low-hanging fruit content. So I'm bullish on us, like, doubling down on really diving into what a crypto-native conference is and not just doing the same, like, template of conference in the future.

Starting point is 01:08:21 That's cool. Yeah. What are you bullish? So I am bullish on the vibes of this conference. Vives are good, right? You know, this, this is the one conference that I go to, obviously. So I couldn't tell you if it's the best conference or not, David. I frankly have no idea, okay. I mean, special place for DevCon, special place for DevCon, special place for ECC, but permissionist, it's a league of its own. Yeah. So like the, but the vibes here, for me were, we're fantastic. The regulatory panel was, was bullish. I asked each of the panelists,

Starting point is 01:08:48 you know, Tom Emmer, Hester Purst, like, are we going to make it? Is the U.S. going to make it? The answer was yes. Hell yes. Like, hell yes. Like, because we're here and we're fighting. And they showed up to this conference. I mean, that speaks volume in the bear market. Meeting the community was so bullish. It just struck me how, yeah, this bear market is a bear market. But It is 10x, the last bear. 10x bear in terms of builders, in terms of interest, in terms of value creation. And so just hang on, guys. I really made this full circle.

Starting point is 01:09:18 The very beginning where we were talking about the markets. Four-year cycle, it is 2019 again. And this 2019 is 10X the last time we were in this part of the cycle. And the pre-bull cycle is really where we are. And I feel like that should be this roll-up title. We're in the pre-bull cycle right now. And that was really impressed upon me. you get that experience in real life, in meeting everyone, and seeing all of the builders.

Starting point is 01:09:42 And yeah, I'm leaving this place more bullish than I was, David. For sure, for sure. I've definitely been taking a moment to reflect today, walking around for mission list and like, look around, look who's here. This is a bare market conference. You don't get that many of these. And I say that in a good way. Like, bear market conferences are special because there's all your friends and there's

Starting point is 01:09:58 no noise. Yeah. Next year is going to be a little bit more wild, I'm sure. The next one's going to be crazy. All right, David, me of the week. What are we closing with? I don't know if I've screened this one. Oh, here it is.

Starting point is 01:10:07 This is Joseph DeLong here at Permission Litz running into Ryan. Taking a selfie of Ryan with the caption, so proud of my son on his first day of high school. And man, that slaps. I'm disappointed with how many people like this guy, David. I'm in my white collared shirt. You know, I'm just looking like a little child, my backpack on it. A little bit.

Starting point is 01:10:30 It's, yeah. Hey, he's proud of you, though. I let that man in the conference, you know? Just waiting outside. This is how you repay me. Joseph. Oh, well. All right. We're going to end with risks in a minute, but first we disclose. David and I are investors in Arbitrum. No, I'm not. Just you. That's just you. Oh, I forgot about that. Yep. Sorry about that, David. Oh, well. Both David and I also hold Eith.

Starting point is 01:10:50 We are long-term investors. We're not journalists. We don't do paid content. There's a link to all bankless disclosures in the show notes. And let me leave you with this. Special sign-off for permissionless to, of course, crypto is risky. You could lose what you put in. But we are headed west. This is the frontier. It's not for everyone. But we're glad you're with us here on the bankless journey. Thanks a lot.

Bankless - ROLLUP: CFTC's Attack On Crypto | FTX Offloading Billions | Live From Permissionless!

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