Bankless - 📺 ROLLUP: China Crypto Ban | NFTs & Bitcoin on Twitter | Compound Bug | Virgil Griffith

Starting point is 00:00:07 Hey, Bankless Nation, it is the fifth week and last week of September. And you know what time it is? David, tell them. It is roll up time. Time to roll up the entire week of crypto, which like I always say, is an ambitious endeavor in this industry. An insane amount of things happen every single day. And we are going to roll up the last week of September here on this Friday, Bankless Weekly, roll up. Ready, Ryan? Yep, I'm ready. Enjoy this with your cup of coffee, guys. And David, it looks like you've had a few cups of coffee. Looking good, man. You're back. in your place, right, off the road. Yeah, and start contrast to a very, very tired hotel room weekly roll-up.

Starting point is 00:00:43 I'm back in San Diego with my setup, with my coffee in the morning, multiple cups of coffee today. So, yeah, it's going to be a fun weekly roll-up this week. All right, guys, we have so much to cover. I think we're going to hit the China ban. They banned crypto for the 500th time, but this time maybe they mean it. We're going to get into that. We're also going to touch on NFTs on Twitter.

Starting point is 00:01:02 Is this the new blue checkmark? We've got to talk about Virgil Griffith as well. guys, so this is going to be a jam-packed roll-up for you. A bunch of cool things mixed in with some unfortunate things. And the China ban actually has some silver linings, which we're about to get into the market section. The Virgil Griffith story, no silver linings there. So you're going to hear some frustration coming out of me and Ryan later in the show.

Starting point is 00:01:25 But I think the coolest thing is Twitter, led by Jack Dorsey, who only talks about Bitcoin, did two things, like you said. One was integrate NFTs on their platform. So you can get your verified NFT. And you can also tip with Bitcoin now with Twitter. So they're doing two things. One's Ethereum Focus. One's Bitcoin focused.

Starting point is 00:01:45 I wonder which one the market will like more in the future. We will see. I can't wait to talk about that some more. So we're going to get into those items. One, a few announcements we need to share with you. So if today you're listening to this, it is Friday, October 1st, then that means, discounts have just launched for permissionless. So permissionless is a defy conference.

Starting point is 00:02:09 We are putting this on with our friends at Blockworks. I think it's going to be the biggest defy party of 2020. And you guys need to be there. This is going to be in Florida where we had a David. West Palm Beach. West Palm Beach. Almost forgot. And so what they're doing with the ticket rollout is they're rolling out 250 at a time.

Starting point is 00:02:30 So every two weeks, 250 new tickets get issued. up. They get snapped up quickly. If you are a bankless premium member, you can get the tickets at 30% off every two weeks. Tickets increase in price. I think it's $300 in something. But if you're a bankless premium, we get $95 off this week. So if you're interested in coming with us, partying in Florida, then check this out in the show notes and jump on permissionless train. As the resident conference goer here, it's no surprise that Ryan forgot where we were going. But Yeah, Ryan is actually going to be there too as well. I'll be there by iPad or am I actually attending in person.

Starting point is 00:03:08 We have discussed this yet. I mean, you don't live too far away from West Palm Beach. Yeah, I'm going to be there in person, guys, definitely. It's been a ton of fun organizing this event with the Blockworks team. They definitely understand that crypto conferences aren't just about the conferences and more about how it's a cultural festival. So if you've never been to a crypto conference before, don't think of it like a boring conference. Think of it something much more closer to

Starting point is 00:03:35 a, literally a festival of the arts, a festival of culture. There's going to be the actual conference with actual, like, good content and talks, but then after the fact it's going to be just a bunch of good vibes. So looking forward to that. Bankless is going to throw a party? Maybe. I have to convince Ryan of this. I haven't talked about it to him yet.

Starting point is 00:03:53 No, you send it to me in Discord. I was definitely down. I haven't commented on that, but guys, we are throwing a party. Absolutely. So be there. Also, NFT. gallery, they're going to have like tons of cultural things too. So make sure you check this out. One last thing on this is we're working a little bit with the sponsor team and there's been a ton

Starting point is 00:04:10 of interest from prospective sponsors. But we want some defy sponsors to partake in sponsorship. So if you are interested in being a defy sponsor, we've got a lot on the list. We want the premium. We want the cream of the crop defy sponsors to show their force at this conference. Then ping one of us, I don't know, DM us or something. And we'll get you, touch with the right people. We are just holding the floodgates of the dam of centralized companies who are all are tromping at the bit, right? But, like, DFI companies generally, A, don't have the opportunity or don't, like,

Starting point is 00:04:43 think about this as, like, as a place to, like, get their branding out. Because, like, generally, defy companies have their own community to help support their branding. But, like, let me tell you, if the DFI companies don't take it, the CIFI companies absolutely will. So we're holding the, we're holding the doors closed on the CIFI companies. We're making room. We're making room.

Starting point is 00:05:01 So like, come talk. Come talk. Also, this is like an offer that I think you have maybe three more days before if you're listening to this. If you become a bankless premium member by Sunday in the next three days, you get a bankless t-shirt. This is the bankless essential t-shirt. It's the one I'm wearing right now, the one David and I are displayed in in many of our shows. All you have to do, I think the value on this is like $28. All you have to do is sign up for bankless premium. You can see the benefits will include a link in the show notes. But it's a full. market opportunity report every Monday. You get to hang out with the crew in the Inner Circle Discord chat. Podcast debriefs. You're not catching all of the podcasts unless you are bankless premium. David and I do extra podcasts after the show and release that on a bankless premium feed. Alpha leak emails, you would have known about DYDX in advance if you got these emails. Also a 30% discount to the conference we were just talking about and an NFT badge. All of that is included in bankless premium. The newsletter is designed to pay for itself.

Starting point is 00:06:05 So don't get left behind. All you need is one alpha leak and it's like a 10x return. I tell you, we'll get to one of those alpha leaks later. But lastly, we got to talk about Zirion, David. So Zirion wants us to get the word out to you. They are doubling down on NFTs, tripling down on NFTs. I think we are looking, you probably use Zirion for your, like your DFI user interface to do. Like, for me, Zirion is like a go-to tool.

Starting point is 00:06:32 I can't be without it. But right now, I'm displaying on screen one of David's ETH addresses. And I'm seeing a lot of NFTs in this address. And these are your NFTs, right? Please ignore the Fidenza rocks, which are 100% scams that I thought that like, oh, like, I thought it was going to be like in the 80. Do you leave these yet? I need to send them away from my portfolio. So please ignore the Fidenza rocks.

Starting point is 00:06:54 They are scams. Do not buy them. I got rugged. But here my flowers. my flowers, right? Wait, you just scrolled right by my fantastic flower collection. Oh,

Starting point is 00:07:04 no, the portfolio gets better as you go along, right? All right, we're looking at flowers, here are my flowers. The black and white ones are the rare ones, fun fact. But I really like that rose one in the middle here.

Starting point is 00:07:16 And then if you keep on scrolling, then I also ignore those. Those are bad. And yeah, also get rid of those. Gender Roads and Cybercongs, the London EIP-159 gift. My pudgy penguins,

Starting point is 00:07:27 which are super cute. Super cute penguins. both look rare, and then, of course, finishing off is the Cryptopunk 1118. Also, you can see it right behind me. Yeah, Zerion, doing a really good job making an NFT portfolio interface alongside your DeFi portfolio. Sir, no turtles in this portfolio yet. What are you doing, man? You sleeping on turtles. I'm absolutely sleeping on turtles. As soon as I see a turtle in my Twitter feed, I put it away. You mute, you block. I mute the turtles. You know what's awesome about this, is I haven't used this yet, but you can actually configure this interface to display an

Starting point is 00:08:06 NFT through Xerion on your Apple Watch too. So something else to check. Another way to flex when you're off your screen, where you're just out in public, it becomes like your NFT Rolex, just like that with the new features, NFT features that Zeron is adding. So if you're interested in checking that out, we'll include a link in the show notes. Thanks to Zirion for sponsoring this message. Yeah, shares. So that galaxy egg is dope. Fidenza rocks, man. That's awesome. I love that that problem. The potential rocks are not

Starting point is 00:08:37 are not awesome. You are proud of them. All right, guys, we're going to get to the markets next. David, you want to start with Bitcoin markets? Bitcoin, starting the week at roughly $44,000, got up to the high price of $45,000, and then it has fallen after that. down hit the lows of roughly $41,000 a number of times throughout the week. And then it has reclaimed $43,200 at the time of recording.

Starting point is 00:09:05 Generally flat, down 1% on the week. Unexciting. It's a good day when Bitcoin is above 40K. That's what I say. Yeah, every 10K, right? Yeah, every 10K, absolutely. How about Heath? How's it doing?

Starting point is 00:09:19 Heath starting the week at roughly, what was it, $3,000. got smacked pretty hard, fell all the way down to $2,750, where we did see some liquidations. Reclaimed $3,150 twice inside of the week, and it also fell, again, twice inside of the week, down to $28,000, where we are now almost trying to get our heads right above $3,000 at the time of recording. So some volatility this week between 2,750 and 3,150. A lot of volatility, yeah. It's pretty crazy. We're back to the chop.

Starting point is 00:09:54 Are we back to you, the crab season once again? I thought we were almost out of that at the end of the summer. And September was looking promising. Now it's let me down in the second half. What's going on, David? Well, we have a bunch of fud, right? So we have like this, the regulatory fud that scared a lot of people. We also had China banning crypto, which apparently the market is actually reacting to this

Starting point is 00:10:14 time, which is like a first since 2017. And then there was this whole like treasury debacle, insider trading. like insecurity in the legacy markets, the traditional markets got hammered this week. The first day that legacy markets got hammered, crypto fell right in parallel with it. The second day, which was today, I believe, today or yesterday, crypto markets have instead become resilient to that. So, like, I think crypto markets are done being scared, and they're now just kind of waiting for everything else in the world to solidify so they can, like, finally show some

Starting point is 00:10:49 strength. I think, like, I always think this. crypto markets want to show strength, there's just been like a bunch of fud in the last week or so. So many coming from so many different directions. And so like once we, once the rest of the world can just deal with that, I think we can resume bullishness. But that's my take. Yeah, I still feel like David, we are in like a major bull trend, right? If this kind of level of fud had happened during a bear market when everyone's pessimistic,

Starting point is 00:11:15 I mean, crypto would have tanked and it would have stayed down for a while. The fact that we're even kind of seeing this volatility and really, rebounding, it still indicates to me we're in the secular bull market. Yeah, we are not hitting new lows. We are getting fud and we are not hitting new lows. I do think that the fourth quarters, you know, generally it's been good for crypto, particularly in both years. So we'll see how this fourth quarter pans out, but it still could be good for crypto. We'll keep you updated every Friday as we do. All right, let's talk about this. Updates on the ETH to Bitcoin ratio. What's going on here?

Starting point is 00:11:49 Nothing too much. I believe last week it was at point. 0.07 something, something. And right now we're at 0.069. So flat on the week for Eith, BTC. There's rumors of like a Bitcoin ETF in October. Remember Raul Paul said that. And Bitcoin has shown some resilience, some strength. I wonder if it's kind of feeding on that rumor. I wonder if we'll actually see something. I've been waiting for like a kind of a mea copa from Gensler to just be like, here's an olive branch, crypto. Your ETF. I hate you in all of these other ways. But I'm going to give you this ETF, maybe that's going to happen in October. That could shed some light, or that could give some life to Bitcoin, but we'll have to see.

Starting point is 00:12:32 Absolutely. The two faces of Gary Gensler, the nice face we haven't seen yet. So maybe that one, maybe that one does come on. Come on, Gary. Help us out here. All right. Defy Pulse. This is lower than I've seen for a while. So we're at 68 billion total locked value. I think it's because crypto's gotten sort of pummeled in the last quarter. You know, I actually think that that might be a bug on DefyPulse, because if you look at the chart, that chart is definitely above $80 billion. Yeah, it is. So there's a little bit of a discrepancy there.

Starting point is 00:13:02 Sometimes the DeFiPulse.com front end does experience some bugs just because, like, there's so many different ways to count. So what's the real number is? 81 billion, then, it looks like, on the graph. Yeah, well, that's the higher one. So we'll go on that one as the source of truth. 81 billion locked in D5. When in doubt, skew bullish, folks.

Starting point is 00:13:19 Cryptos in a 10-year secular bull market. Wait, Ryan, you're giving away all of our bankless secrets. Let's look at ETH locked in D-5, though. That's where I think this chart gets interesting. I'll focus on the chart. We're at 7.8 million Eith locked in D. Which is an all-time high. This is an all-time high.

Starting point is 00:13:37 Well, let's see. I'm pretty sure that's true. Let me scan out. Yeah. No. Close. Close. Super close.

Starting point is 00:13:43 Yeah. Count it. Tide. All-time high since April, right? Yeah. And really close to the all-time high ever. So that's a good sign. I think it's nice for ETH to become more reliant on this much more trustless piece of collateral

Starting point is 00:14:00 rather than all of kind of the staple coins that we've seen going around the ecosystem. So, okay, how about DFI Pulse Index? Where are we at with DFI tokens themselves? Yeah, the DFI pulse index started the week at roughly, can you go to the one week chart, start of the week at $327 hit the high of the week at $348 and the low was $275. Again, you're seeing a lot of that volatility in the DPI token, ending the week at $304, overall down 6% on the week. All right.

Starting point is 00:14:32 Now we're going to take a look at this chart, which is the ratio of DPI to EIF. It's not DFI season yet, David. No, it's flat. Last week it was at 0.1. this week is at point one. So we are flat on the week with some interweek volatility as well. You sound sad about that.

Starting point is 00:14:50 You sad about that? You want DFI season to come back? I do want DFI season. It's always so much fun. But like NFTs just don't stop being bullish. And so like all the attention keeps on going there. Yeah, we should start putting some NFT indices on this. Like I don't know the best one.

Starting point is 00:15:07 We need some, we need some defy NFT infrastructure to come out. People need to start using fractional. more so we can stop talking about the floor price because the floor is just such a terrible metric to actually measure the value of these things. Yeah, dude, if there's a bankless listener out there who has a good idea for a consistent metric we could use to talk about the value of NFT markets over time, let us know. We've seen some indices, but nothing that has kind of the mind share of something that we would need to report on this prestigious high journalist integrity media outlet, which bankless is.

Starting point is 00:15:41 Wait, I can't tell a lot. you were being facetious or not. Oh, no. That was 100% serious. Let's talk about the bed index. That is our favorite index in crypto-composed 30% Bitcoin, 30% E-30% DPI itself. What are we looking at on the week? Yeah, down 4% on the week, started the week at 136, hit the high of 143, hit also a low of 115, ended the week at roughly $134. There you go. You know, David, I think it's time we check in on our friend EIP 1559. I mean, it's been close to two months now. Yeah, great guy doing great things. Just like busy burning. You know, every day, ETH is burnt is a day that I am bullister. But let's look below the surface. That's the title of this article itself. And what does

Starting point is 00:16:29 EIP 1559 look like below the surface? Has it accomplished its goals? Yeah, so the author who is named T does a fantastic write-up, just kind of trying to parse apart the data of EIP-1559. And the cool thing about EIP-1559 is that, like, the data that comes out for it is, like, not known how significant that data is, what it really means. EIP-159 is emergent, as in the properties and behaviors and data that arrive out of EIP-1559, there is no canonical, like, definition of what these things mean. And so this is actually one of the best. Because there's no history.

Starting point is 00:17:06 There's been done. There's no history. Like, not only has it never been done in crypto, but, like, blockchains and EIP-1, Like, everything is new. Everything is new. And so there's a lot of data here, and T gives his interpretation and analysis, but he definitely qualifies it saying, like, hey, this is just my take. And, like, we're going to need to have more data to see what these things mean.

Starting point is 00:17:26 There's a ton of fantastic graphs and some analysis with each one. So if you want to just learn more about how EIP-159 is impacting Ethereum and Ether, definitely check this out. It's a great homework assignment for people who are trying to dive deeper to the code. of Ethereum in the the the the eth markets and they're just overall some great analyses what what is this take here David like what's the

Starting point is 00:17:50 the summary of it is EIP 1559 working as designed or no yeah it's absolutely working as designed what he was trying to indicate is like well okay it's working as as designed but like how does that actually change things right like we know we know EIP 1599 it like it makes it easier to transact

Starting point is 00:18:09 it burns ETH but what does that act do. So like, what does it do to daily minor cell pressure, for example? It's one in here. Right. And like how does it actually impact the ETH price at all? Right. And his, his take, if I remember correctly, is like in the short term, it actually doesn't impact the ETH price at all because the ether that's being burnt is like literally the most elastic portion of the ETH supply. It's the most flexible that actually doesn't impact the price. But what it does do in the future is that it will prevent price drops in the future, right? So really, it's like, and this is actually... Helping to set a floor. It's helping set a floor, right? And so in the future, especially in the long-term future, this is like,

Starting point is 00:18:53 and this is actually what I said in my original EIP-1559 article is that it's paying, like, EIP-159 when it burns ETH, it's like Ethereum putting security in a rainy day fund, right? It's like when there does come a time of high-stress environments, that reduction, in cell pressure because we've been burning it for the past one, two, five, ten years, there's just simply less eth available to sell. And so one of his takeaways, which again, is up for interpretation, is that during future like volatility events, the downside should be dampened as a function of how much total eth was burned. Yeah, that's why I say, full circle. It goes back every day that eth is burned is a day

Starting point is 00:19:35 that I am bullish. And that's long-term bullish. I can't tell you what's going to happen in the short run. But long-term, term. This is a secular trend. I mean, we passed a billion dollars worth of ETH burnt, right? Over 300,000 today. Today, we actually passed 400,000. 400,000 today, right? And so, like, this pressure is just going to keep compounding on Ethereum, that you get the merge. Everything bankless listers knows. We don't have to belabor that point, but bullish. I'm glad someone has done some deep diving on EIP 1559. David, let's also talk about D-Y-D-X. That was a story with some numbers.

Starting point is 00:20:11 In the market section, we love to talk about numbers. This is Antonio. Antonio is the founder of D-Y-D-X. He's going to actually be coming on the podcast on a Cylination on Tuesday, right? So he says, five years, I left Coinbase. I remember when he tweeted that he left Coinbase. He eventually founded D-Y-D-X. Today, D-Y-D-X is doing more trade volume than Coinbase.

Starting point is 00:20:33 God, like, oh, yeah. Just what is the moment I've reflected? election five years it takes that's what it takes five years for a d5 protocol to get built and then do more volume than the company that originally hired the guy like wow that's crazy congratulations Antonio yeah it's it's it's huge Antonio so like looking forward to talking to you soon and this is the market share this is a graph of the market share of DYDX they're up to 27% market share of dex volume changes yeah right yeah decks volume right and this includes some of the sillier decks is like pancake swap and that sort of thing too.

Starting point is 00:21:10 So actually even higher than that, probably, in terms of real decks volume. Totally. And like the other cool thing is like this is the second decentralized exchange app to pass Coinbase in volume, Uniswap being the first. I'm pretty sure Coinbase actually, I mean, over time has done more volume and like sustains itself as the leader over time. But like, hey, like breaking it over a 24-hour period or even a seven-day period, which Uniswap has done, is just the first step.

Starting point is 00:21:36 Yeah, well, D-YDX is doing a lot of things right, right? So like Perpetuals is a fantastic product. Everybody loves that. They were one of the first to roll out on layer two. So under the hood, this is all ZK roll-up technology, right? And also I think what's given them steroids, some extra juice is kind of their token rollout and the token launch, which they're using for liquidity mining. But you have an alternate theory as well as to why it's gained so much traction recently.

Starting point is 00:22:06 tell us about that, David. I think these theories are definitely paired. Like, everyone likes tokens, and when tokens exist, they attract a lot of attention towards the app. But also at the same time, we have China banning crypto, and apparently it's real this time. And the reason why we know it's real is because we can see Chinese actors actually making decisions to... Exchanges.

Starting point is 00:22:28 Shut down. Like, outflows. You can actually see this in the blockchain, right? Which is, like, the ultimate source of truth. And that is the clear differentiator between this China. ban and the infinity other China bands that we've seen. And so there's speculation that all of this demand out of all these Chinese exchanges to trade and speculate and do exchange things has gone from these Chinese exchanges to

Starting point is 00:22:51 D-Y-D-X, to a trustless D-Fi exchange, which operates on a similar performance level because of the layer two as the exchanges that they are fleeing from. And so I think the big takeaway here is that we're in a nation state, like, China comes and bans crypto, where do they go? They don't go to another alternative, like more Western centralized exchange. They go to defy, right? Because they just got, quote unquote, censored. And so they're not going to go onto another censorable platform. They're going to go onto a defy platform. And so there's an article here out of Coin Telegraph that says the DYDX token gains 80% in a week. What's driving the Dex token rally.

Starting point is 00:23:31 And their subline is traders raise their bids for the decentralized exchange token, believing as it would benefit from China's decision to classify all crypto transactions as illegal. And so there's speculation that people are moving on to DYDX in order to escape China, which just makes sense. Like, go on to the censorship-resistant platform after you get censored by your nation-state. That's what they're for. Well, yeah, there's sort of a crypto narrative for you. It's like China ban equals bullish for defy.

Starting point is 00:23:58 Bullish banning. That could be what's happening. Love that, man. Love that. I think that could be what's happening. David, let's also explore another trend that's happening. This is the trend to total lock to value in the multi-chain, as people say. So this is interesting.

Starting point is 00:24:15 This is a plot of market cap of Ethereum and a number of other chains. And obviously, we've seen sort of an alternate layer two kind of resurgence with, you know, I guess finance earlier in the year and then Solana and Avaland. more recently, starting to really increase in market cap. And this is interesting when you look at a market share perspective, but I think it's actually more interesting to look at from a total locked value perspective, right? So Ethereum dominance is dropped from 84% of total locked value to 77%. So it's down, you know, I guess 7%. 7%, right? And then Binance has gone down a little bit. Salana's gone up. from about 1% to 4% to 5%.

Starting point is 00:25:08 Terra has gone up a little bit. Avalanche has gone from basically nothing to 2% Phantom as well. I want to get your take on like, what do you make of this? Is total locked value? Is it moving into these other ecosystems? And is that to the detriment of Ethereum? What does that mean for the space? Is that bullish alternative layer ones?

Starting point is 00:25:30 What do you think? Yeah, so the take here, and I've been, we've been saying this for for forever now, it's like during bull markets, Ethereum's capacity gets consumed. And there's overflowing demand that Ethereum cannot satisfy because it has not done, like, layer one sharding in the L2 ecosystem is about as nascent as the alternative L1 ecosystem. So when there's overflow for Ethereum main chain demand,

Starting point is 00:25:55 when gas fees exceed $100 of transfer, people need to go elsewhere. So some go to layer twos, some go to other L1s. And so what we're seeing here is that, like, The crypto industry has done a fantastic job bringing new people in, and a lot of new people don't want to or simply can't transact on the Ethereum L1, so they go elsewhere. The interesting story here to me is the lack of consensus as to where else to go, right? So Binance Smart Chain was like the first app, the first like other alternative L1 to like

Starting point is 00:26:26 absorb some of Ethereum's overflow. But we've seen that actually go down this week while Solana, Terra, Avalanche, and Phantom have all gone up. There doesn't seem to be a clear consensus as like, oh, Ethereum is full. Here's where we go next. Everyone's just going everywhere, right? And anti-prosynthesis, one of, like, he's probably the only person that will actually accept the ETH Maxi label willingly, has tweeted out this one tweet, which I really, really like, is like, you know, if you ask, like, what, what alternative L1 is going to kill Ethereum, you'll get 10,000 different answers. because there actually isn't like a viable like the next second place to Ethereum, right?

Starting point is 00:27:06 There's just like five third places. And that's why you don't see any of the overflow to Ethereum going into one specific blockchain. They're all kind of getting spread out. I remember when Rao Paul came on the podcast and he mentioned briefly about like Ethereum dominance going down from its highs, right, in terms of total locked value. And he's like, yeah, it'll probably like decrease from 80. to like 75%, maybe 70%, but that's still a lot.

Starting point is 00:27:35 Right. Especially when everything is 10xing, right? Yeah, it's basically sort of a, you know, a prediction of power law winners in the space, which, you know, I tend to kind of agree with. But I have another take on this too, which is like, I think actually, David, total locked value can be a flawed metric in some way.

Starting point is 00:27:54 And made this point in an article that I wrote in, you know, 2020 on bankless talking about trustless economic bandwidth versus like economic bandwidth that is more trusted. And what I meant by that is like it is more valuable from a bankless and decentralized decentralization perspective, right, to have capital on chain, which I call economic bandwidth, so value on chain that doesn't have any outside trust dependencies, right? So which is the whole point of this whole thing. So, like, if you're looking at USDC versus die, right, die is better. It's more trustless because it has less trust guarantees.

Starting point is 00:28:38 It has less USDC inside of it. It's backed by other things like ETH, for example. And if you look at another asset on chain like Rye, which is fully backed by ETH, that is, you know, less trusted still. And if you look at ETH in and of itself, right, that is the most trustless asset on Ethereum. And so what we miss when we look at just pure total locked value, total value locked, is we missed whether this is like actual trustless value or whether it's just some kind of a stable coin. We also miss the settlement guarantees of the chain, right?

Starting point is 00:29:15 So like if we wanted to look at this and put another, I guess, column here, we could look at the Coinbase side chain, right? What's Coinbase? It's a ledger. It's a side chain. It has one validator, and that is like the Coinbase database organization. AWS servers.

Starting point is 00:29:32 But it has like shareholders, right? It has Dow participants. Anyone who owns coin shares, I guess, has governance vote over it, right? So why not include them from a total locked value person? Well, you don't because we don't call that defy. But there is this scale, right? Ethereum is the most decentralized, you know, defy platform.

Starting point is 00:29:52 Coinbase is not decentralized at all. and some of these chains are like somewhat in the middle. And I think a lot of this starts to look a bit more like a phantom, for example, or a Terra, for example, or even a polygon and side chain example, looks a bit more like fintech and a bit less like permissionless, trustless, defy. That's why I think total act value can be misleading. Where are we talking about trusted total act value? Are we talking about purely trustless total act value?

Starting point is 00:30:24 The trustless is the stuff that I care about and the stuff that is, I think, the most sustainable and, you know, fits the protocol sync thesis of being like the most permanent and foundational for this whole operation. Do you explain that? Does that make sense? 100%. And if listeners want to dive more into this, I highly recommend reading the article from Nick Carter called It's the Settlement Assurances Stupid. Or if you want to consume something out of bank list, there is, um, talk I gave at Ethereum called Settlement Assurances and the Protocol Sink Thesis. And it describes this spectrum of just like not all, when you make a transaction on a blockchain, not all, it doesn't necessarily, they're not all created equal, right?

Starting point is 00:31:09 Not all transactions are equally as trustless or equally have as strong settlement assurances, right? So like when you send a light coin transaction, light coin blocks happen every 2.5 minutes. Does that mean when that block finalizes on light coin that you have as the same amount, of settlement assurances is when you do when you make a transaction on bitcoin no absolutely not those are different levels of settlement assurances therefore different levels of trustlessness and each one of these blockchains have are on that same sort of spectrum how strong are the assurances that you have when you make a transaction that that transaction actually settles and the answer to this question needs to go into the architecture of the actual blockchain itself but also the asset that you are also transferring right

Starting point is 00:31:52 And so if you send USDC, both of those things. It's both of those things. If I send Ryan USDC on Ethereum, well, actually, did it really settle or not? It's actually not really related to the architecture of Ethereum or any other blockchain that's on because you're actually trusting Circle to actually be these final arbiter of final settlement, right? And so these are very nuanced subjects. And this is a new concept for you, settlement assurances, I highly and highly encourage you to go, read, it's the settlement insurance,

Starting point is 00:32:23 Stupid by Nick Carter, and then also the settlement insurances in the Protocol Sync thesis video, which is on the ETH, Ethereum, YouTube, and then there's also some things I will put them in the show notes as well. Yeah, that's it. We'll just do you guys a favor and put some of the stuff in the show notes, but it does require, but the last thing I'll

Starting point is 00:32:40 say on this, is this, David, is, I don't think this is a zero-sum game either, right? Like, more value, more eyeballs, more entrance into whether it's a more centralized side chain or some alternative layer one, it's all good for the space. It's all good for Ethereum. I think it's all good for Bitcoin, right? People often think that like this is some sort

Starting point is 00:33:03 of a tribal game where there's going to be big losers and big winners. But like, even like, look, man, Ethereum is good for Bitcoin. Bitcoin Maximus don't know it, but it is. It's been you think Bitcoin would be above 40K if not for Ethereum? Hell no. Absolutely. Absolutely no chance. And it works the other way too. I mean, Bitcoin, Ethereum wouldn't even have been possible about Bitcoin. So none of this guys is a zero-sum game either. This is all going to be good. And we think the most decentralized protocols eventually will sink to the bottom, win the most market share and be the most dominant. And that's a good thing if that happens. Well, it actually goes even further than that, right? So like when you have a maximally decentralized protocol, you can build centralized stuff on top of that. You can compromise on decentralization later. right and so another article that that uh and also a bankless podcast i think number five uh it's called um the two faces of ethereum or the defy risk spectrum or the defy trust spectrum the cool thing about maximizing decentralization is it allows you to compromise on decentralization later right

Starting point is 00:34:10 but you have to get decentralization first and so if you want to build a centralized permission side chain on ethereum like you can do that right like you have that option available Well, you can't do the opposite. You can't... Yeah, you can't put the cart for the horse. Yeah, you can't build Ethereum on the side chain. Absolutely, guys. Well, we got excited about that Porsche.

Starting point is 00:34:28 We got to keep moving on. I wonder why our roll-up's lasso along. I have no idea. Hopefully you guys enjoy them. We definitely enjoy doing them. So, all right, well, this is what's a graphic that caught my eye. This is from Coin Metrics. Their newsletter is fantastic, by the way.

Starting point is 00:34:45 It comes out weekly. But this is a chart of the Uniswap. three trading pairs. And you can see the various assets that are trading with. You see Tether, you see USDC, you see dye. But this big pink cloud that you're seeing, that's all ETH, right? Trustless economic bandwidth. Trustless economic bandwidth on Ethereum. And I think the position, what this graph is really showing us is on Ethereum, and I think in general across DFI, ETH is positioning itself and becoming positioned by default to be the reserve asset of defy, right? This is back to that narrative.

Starting point is 00:35:23 We talked about reserve asset of NFTs, talk about reserve asset of the metaverse even, which is kind of a newer thing. But back to the reserve asset of defy, it's bearing out on the graphics. That's what Uniswap is using as its primary trading pair. And that's a great thing for decentralization. Any other follow-ups on that, David? No, I think this actually fits in right into the conversation. we were just having, yeah.

Starting point is 00:35:46 Yeah, absolutely. Okay, last thing for you, on the market side of things, pretty big milestone for Polygon. Again, this is their side chain solution and proof of stake type solution, but they just eclipsed Ethereum layer one in daily active addresses for the very first time.

Starting point is 00:36:04 Okay, so this is a great illustration of why it's actually valuable to compromise on decentralization because you can scale better that way. Centralization actually scales really, really far because you've actually compromised on decentralization. But because Matic, because Polygon is built on Ethereum, they get to give all of their users the ability to exit into the more trustless, into the more decentralized version of the universe, right? So you can get more scale

Starting point is 00:36:32 by reducing decentralization, but once you hook into Ethereum, you also get the benefits of Ethereum. Yeah, absolutely. And look, this is not a new idea either. We just call them sidechains this sort of thing now. But like, where did you guys start your crypto journey? I bet it was on an exchange, a centralized exchange, right? Which is a side chain, which then you then exited to continue the D5 world. Same thing is happening here. But anyway, I think a lot of users will start their journeys on, obviously exchanges,

Starting point is 00:37:02 on side chains, and on layer twos. And that's where we're going to see the user growth. We'll probably see the capital growth on mainnet, but the user growth will happen on these layer twos and side chains. 100%. All right, David. Last thing, total locked value in Tracer just exceeded $20 million. So, that's super cool. And I know you did to meet the nation with them. When's that coming out? It's coming out Monday at 12 p.m. Eastern time. 12 p.m. Eastern time. It walks us through the history of Tracer Dow. They have one of the most interesting Genesis stories I've ever heard, as well as

Starting point is 00:37:36 where the team actually got the expertise, where they got the idea, how what their roadmap is, and where they are going. So if you want to learn more about one of the most promising young Dals that I've ever seen, check out Tracer Dau. Yeah. On the Meet the Nation, on the Bankless YouTube. Building on Arbitrum perpetuals protocol, you've heard us talk about it in previous roll-ups as well. All right, guys, we are going to be back with the releases for the week. But before we do, we want to thank the sponsors that made this episode possible. Bankless is proud to be supported by Uniswap. Uniswap is a new paradigm in asset exchange infrastructure. Instead of a cumbersome order book system where trades are matched with other humans, Uniswap is an autonomous piece of software on Ethereum, which is what

Starting point is 00:38:17 Ryan and I call a money robot. No human counterparties or centralized intermediaries, just autonomous code on Ethereum. Input the token you want to sell and receive the token you want to buy. Something brand new in the Uniswop ecosystem is the Uniswap Grants program is now accepting applications for grants. We have been saying this for a while and will say it again. Dow's have money and they are in need of labor. If you think that you have something to contribute to the Uniswap Dow, apply for a grant to Uniswap. Just look at the size of the Uniswap treasury. It's almost $3 billion. This mountain of capital is looking for labor. Do you have something of value to contribute to the Uniswap Dow? No matter how big or small your idea is, you can apply for a UniGrant at Unigrant.

Starting point is 00:39:02 And help steer Uniswap in the direction that you think it should go. That's exactly what we did to get Uniswap to be a sponsor for Bankless, and you can do the same for your project. Thank you, Uniswap, for sponsoring bankless. The era of Proof of Stake is upon us. Proof of Stake systems like Ethereum, Terra, and Solana allow the industry to move away from the hot, loud, and wasteful proof-of-work systems

Starting point is 00:39:24 and return back to a cottage industry of individual stakers and individual validators. And that is what we need to make this industry stay decentralized. Individuals must play their part in crypto network validation. And that is what Lido is. here to do. Lido makes staking accessible to everyone at the click of a button. By delegating your stake to Lido's network of nodes, you can access the yield offered by proof-of-sake systems and claim your share of the network transaction rewards. Do you have 32-Eth and want to stake

Starting point is 00:39:52 it to Ethereum, but running a node sounds intimidating? Or maybe you have less than 32-Eth, and you need to pool your Eth with others so you can access staking yields. Lido offers a solution for both. simply go to lydo.fi choose which assets you want to stake and deposit them to the Lido validating network. Lido is working to make sure proof of stake stays as decentralized as possible and is committed to decentralizing its own validating network to eventually become a completely permissionless protocol. So if you want to stake your ETH, Terra, or Sol, and get liquidity on your stake, go to lydo.fi to get started. All right, guys, we are back with the hot releases of the week. The first is this, David,

Starting point is 00:40:32 is launching an NXTP protocol. They say to improve liquidity. Connects, of course, is dealing with the kind of the Ethereum multi-chain space. So the ability to transition and move seamlessly assets from, say, an arbitrum to an optimism back to main net without waiting for anything. It's kind of an interoperability protocol. What are they doing here? Yeah.

Starting point is 00:40:55 If you guys remember mine and I talking about hop protocol, it's very, very similar. just hopping assets between layer twos. Connect's has actually been in the Ethereum space for as long as I can remember, working on payment channels, which we all know is a very foundational, fundamental piece of technology, but it's kind of been a solution

Starting point is 00:41:16 looking for a problem because we used to think, oh, we'll scale Ethereum with payment channels, and then we forgot that, like, well, you don't have generalizability on payment channels. That's really, really hard. And so, like, we have this awesome piece of technology led by Arjun Bup,

Starting point is 00:41:30 Bonnie and a bunch of other people working on payment channels. But now with this layer two ecosystem absolutely exploding, we actually now have the problem that we have the technology to solve for. And so Connects has been reappropriating their already existing payment channel tech to expand payment channels between all the different layer twos. I think two weeks ago, we shouted them out because they recently passed $500 million in volume over their NXTP protocol. but that was before they announced the main net, which is what they are announcing right here.

Starting point is 00:42:04 So they have the NXTP protocol mainnet, which is going to help you live a life on layer two by bridging all the layer two, so you never actually have to touch the Ethereum L1. They had a blog post forever ago announcing what they were building, and they had a fantastic meme called the L1 is lava, as in like you never actually have to touch the L1. Don't touch it. Yeah. And so this is what it means to be a citizen, I think, in the whole global nexus of Ethereum, which is you only if you want to, do you have to actually go to the L1?

Starting point is 00:42:36 These bridges are super important, really essential infrastructure for the next wave here. Speaking of infrastructure, Antre, the founder of WIREN and YFI, of course, a famous DFI builder in the space. He is launching an NFT marketplace or has launched an NFT marketplace. But the title of this article, is a Coinbase article, says, Andre's new NFT marketplace is a vampire attack suicide pact. Wow. Well, like, what is that?

Starting point is 00:43:05 That sounds like some hyperbole. He's going up against OpenC, I guess. That's the vampire part of this. What's your take here and what does this mean? Well, I think after OpenC had that drama with the insider trading employee, who they have since let go, everyone has been asking, it's like, hey, wait a second, OpenC, it's not a DAP. It's not an application, it's a company.

Starting point is 00:43:27 And so now there's been some attention on decentralized marketplaces, peer-to-peer marketplaces for NFTs. And so Andre, in his tweet that we're watching here, he's demoing what very much looks like an open-see type format, but apparently it's a P2P version of that. It's also built on Phantom, apparently, which Andre Cronier is a big fan of. But he's also built other things on Phantom before that

Starting point is 00:43:51 he ultimately just ports to Ethereum, because that's where all the users are. And the title of this piece, the vampire attack, is alluding to, like, well, OpenC doesn't have a token. And we all know what happens when, like, something that doesn't have a token gets forked. And then a token is added before that original token exists, right? We saw this with the sushi swap drama. That's how Sushi Swap came into existence in the first place. A vampire attacked Uniswap before a Uniswap had a token.

Starting point is 00:44:17 So the idea is that this new NFT marketplace is, in theory, going to get a lot of adoption if it can find a way, to vampire attack OpenC. OpenC's code is not open source and verifiable, so I think that makes it a little bit more difficult to actually do that. I'm not a coder, so I don't know, but I'm pretty sure that's true. But either way, the incentive

Starting point is 00:44:40 to vampire attack OpenC before it has a token is really, really strong. We were actually recording with Devin Finser tomorrow, Friday, today's Thursday. And so I'm actually going to be asking this question. It's like, yeah, like wait, wait, wait a second, Devin.

Starting point is 00:44:56 Like, how are you guys going to, like, have a moat if you don't have a token? Question of my. Yeah. The other important piece here, of course, is like they're going to be expanding to each chain. But this is all open source as well. So Andre is going to release this as an open source project. But in general, I love competition like this, David, because I think it leads to you better user experience, better products, cheaper products for the end customer.

Starting point is 00:45:19 So vampire attacks, bring them on. It's great. It just ups our game. Let's talk about this, David. Coinbase just released a direct deposit feature. So this allows users to get paychecks in crypto. It's not what you've always wanted. If you're like working in a corporation, right,

Starting point is 00:45:37 getting a paycheck in crypto in USC or maybe some slice of that in Bitcoin or ETH, maybe the bed index someday, rather than getting it into your Wells Fargo account, how much more convenient is that? It looks like Coinbase is making a plane. there. And it's fulfilling sort of some speculation that we've had in the very early days of bank lists that all of these exchanges

Starting point is 00:46:00 would slowly transform into banks. We call them crypto banks in the early days. And this is the next checkmark, right? Oh, direct deposit just like a bank? Yep, we're doing it. What's your take? First off, much better banks. Let's divide a line between... Upgraded banks.

Starting point is 00:46:16 Upgraded banks. Like crypto-powered crypto-enabled banks. And we're going to talk about this later, but like the more and more that Coinbase becomes a bank, the more and more it threatens all the other banking institutions out there, which according to, I think, some of the incumbents will be argued, it prevents, presents a systemic risk, right? Like, if Coinbase is literally so successful that it sucks up all the deposits of the other banks,

Starting point is 00:46:41 the other banks are literally in trouble and they are very, very integrated into the rest of the financial system. So this is probably causing a bunch of concern from all the boomer banks out there that aren't crypto-powered, while they watch Coinbase just run circles around them when it comes to innovation and just consumer benefits. Look, it's not just us saying this. This is exactly what Kathy Wood told us when we had her from Ark Invest on the podcast a few weeks ago. She's like, hey, you're seeing this ugly regulation because the banks are scared. Like they're pushing on the regulators to go do something in defy and crypto. And maybe that's what we're seeing. End game type stuff, I think.

Starting point is 00:47:17 If I never have to touch Wells Fargo again, I can get all my basic financials. services out of Coinbase, which are so basic, by the way. I just need direct deposit with a just enabled and then just the ability to like transfer money and pay my credit cards. Like there is not very many steps left before I just have to fundamentally question why I keep my Wells Fargo account. Oh, David, we've got some more shade on Wells Fargo coming to this podcast. Just wait to the news section, my friend. Wells Fargo, get ready. All right. USDA as well has been enabled in Angel List. So Angel list is a very popular kind of angel investing platform. And now they are enabling not just Fiat, but USDC. So this is another step for USDC to gain some traction in kind of the emerging

Starting point is 00:48:03 fintech space, which is also awesome. Speaking of fintech and DFI mullet type stories, we got fintech in the front and defy in the back, a firm. Have you ever used a firm? They're like a fintech type product, but they like split payments or no, they delete. They lay payment, right? Yeah. So they turn one expensive purchase into like a monthly thing that you can pay for over time. Okay, I hate those things personally. But I understand that

Starting point is 00:48:29 it's an interesting product. Clearly, they have some adoption. What's interesting about the story is they're kind of pivoting to Defi, not entirely pivoting, but they're rolling out debit cards that allow customers to buy and sell crypto directly from savings accounts as a product.

Starting point is 00:48:47 So, you know, I think it's interesting here, is they've got some traction, product market fit, with their single killer app feature, right? And now, where are they looking for the green space opportunity? Well, it's all crypto. And they appeal to millennials, Gen Z, sort of that demographic. Guess who likes crypto? Same demographic. This is the defy-Mullet thesis playing out where fintech companies start building on top of

Starting point is 00:49:13 decentralized protocols. And I'm here for it, man. I love this stuff. We're going to see more and more of this stuff throughout the year and throughout the years to come. It's kind of interesting that the crypto thing about their new product has nothing to do with the core business. But that's also kind of cool, right? It's like it doesn't even matter. It's just they think it's valuable enough that they're doing it anyways. And the more and more we can get companies to do this, the more and more crypto gets integrated into our actual economy, our fintech economy, our existing economy. The harder and harder it is for regulators to gut that stuff out after it already gets integrated.

Starting point is 00:49:47 integrated. It's a heat shield for the regulatory heat for sure when we have more adoption like this. Dave, this is interesting too. So I guess the index co-op folks are creating a polygon indecacy, right? It's called PDI. It sounds like it's an investment, it's an asset that you hold that invests in a whole bunch of polygon assets, like polygon apps and this sort of thing. Yeah, I think it's like the Polygon app layer token. So if you want to not only bet on Polygon by buying Maddoch, you can also bet on the Polygon app layer by buying the Polygon diversified index from Index Co-op. That's really cool. I was curious where Index would grow and looks like they're pressing into all of these interesting spaces. David, last thing for the week,

Starting point is 00:50:32 NAMI is a layer two scaling effort as well. I don't know too much about NAMI, but they have just announced $8 million in funding led by Dharma partners, and they are supposedly bringing some ETH scalability to layer two. It's kind of an optimistic roll-up type approach plus some state channels, but I don't know much about this project. Any takes here. Yeah, I also don't know much about it. It seems to be coming out of left field for me. A couple of people I've talked to have had some grumblings about being, they're just a little bit unsure as to what the product actually is. I think it's going to be a wait and see for me. Yeah, absolutely. But that is out now. Let's talk about raises, David,

Starting point is 00:51:15 The big raise of the week, I think, is this social token raise with the ROL protocol. So we've been talking about social token infrastructure. It's starting to attract more and more capital. They just raise, Rohl raised $10 million. And REL is kind of like this social money experiment, would you say? It allows people with followings, communities, to issue their own token in easy ways. You don't have to deal with smart contracts and, you know, fork code. They just make the whole thing easy.

Starting point is 00:51:44 Any takes you there? My take is that actually I think social tokens and Dow tokens are actually kind of closer than what people think. These things aren't very well defined and I think we're only going to define them as they get more and more used and more and more built out. And so stay tuned. This goes back to like thousands and thousands and tens of thousands and millions eventually of tokens are coming. Right. I don't know that regulators are prepared for that world either, but they're coming, like it or not. The regulators are waiting for them to show up at their door to ask permission.

Starting point is 00:52:20 Yeah. Last thing for you guys, before we get into the news is jobs. This is your weekly reminder. Get a job. Get a job. For a Dow. Go work for crypto. Go do your part.

Starting point is 00:52:31 We've got a community manager of role from Eriguan. Erigorn. I'm Lord of the Reims, man. This is like Oregon. And also a founding board. blockchain engineer at highlight, a senior software programmer from popcorn, community lead from popcorn as well, senior front-end web developer for Tracer Dow. In addition, I don't know, there's dozens more of jobs on this board. So if you are looking for a job in crypto, best way to

Starting point is 00:52:57 get it is on the bankless job board. Go check that out. We'll include a link in the show notes. And I bet you a decent number of those jobs come with tokens and everyone likes tokens. Never know. Never know. All right, guys. time. David, what are our news headlines for the week? What are we going to talk about? Yeah, coming up first, we're going to lead with the fun stuff is NFTs on Twitter. Yay. So if you have an NFT that you think is especially cute or your crypto punk that you think is especially cool, you can now prove to the rest of Twitter that is literally something that you do actually own instead of just right-click saving it. And so that's pretty cool.

Starting point is 00:53:36 Ethereum has found its way into the depths of Twitter and is doing it with NFT. NFTs. I've been saying this a bunch of times on the bankless program, and I'll say it again. NFTs are how Ethereum markets itself to the rest of the world. It's literally Ethereum's marketing surface area. It's the social flexing aspect of things, and it's also the verifiable aspect of things. And so, Ryan, you've got a tweet here that you tweeted out saying, Twitter should roll out a blue checkmark for NFT profile picks to just validate them against Ethereum. Every social network will be doing this. It's the most obvious feature ad ever. And that came in August. 29, which was a month ago. And then, just recently, we have a developer at Twitter teasing what an NFT verified profile might actually look like. And so that involves actually syncing

Starting point is 00:54:25 up your address with some of the various options that we all know in love, like MetaMask, Coinbase Wallet, Trust Wallet, Argent. And if you have an NFT in those addresses that you link, you can sign a transaction to verify you own a NFT. That's pretty cool. This is awesome, man. this is exactly what crypto wanted. This is exactly it. All we wanted was for Twitter to authenticate and verify our NFTs as profile pictures on the platform, right? And here they are. They're doing it.

Starting point is 00:54:55 Look at that little ETH logo right next to the profile picture. Yeah. Do you think they're actually, you think Jackson allow that to make it into the production version? Yes. It's not an Ethiopia flag, right? It's the ETH logo this time. Checkmate, Jack. It's kind of cool that they'll differentiate on what chain you own this thing, right?

Starting point is 00:55:11 Because like somebody could create a Cryptopunk clone on some other chain and it wouldn't be the same thing, right? So yeah, this is exactly what crypto needs. I think this will add massive legitimacy for NFTs. I think this is gonna add value to NFTs. I also think every single social media platform is gonna follow in their footsteps, right?

Starting point is 00:55:33 Like Twitter is the lead here. Then next is gonna be Instagram, like Facebook, TikTok, everybody's gonna follow this trend. No one cannot. now that Twitter's rolling this out. They're probably already working on it, David. Right? Like, when I tweeted this out in August,

Starting point is 00:55:47 you know, I was just thinking about it. It was just like a shower thought. Like, wouldn't that be cool? They were working on it at the time, obviously. It's a very obvious feature for these social network platforms. I don't know, Ryan. I think they took your tweet and they ran with it. I think it was your idea.

Starting point is 00:56:01 I should, I've been tweeting Jack to, like, do lots of things on Ethereum. And this is the only, only response to every single one. He just, I swear to God. He just picks and juices. And at the same time, I'm going to front run this. We were going to talk about this later. I'm going to talk about right now. You can now also tip on Twitter with Bitcoin. This is the other, the Bitcoin thing that they integrated as well. And so I'm looking forward to seeing the data as to what comes out. What do you think is going to be used more? I know what I think, dude. I think people don't want to spend their Bitcoin. They want to flash their NFTs. They don't want to spend their Bitcoin. One's going to have product market fit. The other's barely going to do anything. Unfortunately, like, unfortunately, like, if it's, It's great, but... Payments on Bitcoin. We've tried this before.

Starting point is 00:56:44 We've been trying it since the inception of crypto, right? People don't care about payments. Anyway, all right, let's talk China, David. So China's bad phase, yeah. Yeah, sad face. Okay, this is, I guess, stuff getting real in China. We've had bands before. This time, maybe it's different.

Starting point is 00:57:04 We had Saw Hill on the podcast. If you guys missed that earlier this week, go check out our State of the Nation with Saw Hill, where we cover this in depth. But what's the high level take here? What are they banning? What does this mean for us? Yeah, so what are they banning is a little bit kind of up in the air.

Starting point is 00:57:19 I think it's more related to actual businesses. So if you are helping facilitate crypto transactions, then that's bad. But there's a little bit of speculation that simply holding crypto and owning crypto is still okay. It's going to be one of those things where we're just going to have to find out after the fact. Chinese regulators, they kind of get to do whatever they want, right? And so they will interpret their own laws in ways that will benefit them by their choosing. But as far as being a business in China, you are shutting down, basically, is what's going on. And not only are businesses inside of China, but businesses that are serving Chinese customers are also restricting

Starting point is 00:58:01 access to their platforms to Chinese customers. So we've seen mining pools, not allow Chinese miners. We see exchanges that are based in China with a lot of Chinese customers, have extreme outflows. And this is why we know that this ban is real, because we are actually seeing on-chain verifiable data and decisions being made by companies that are in China or relating to Chinese customers actually change their policies. So it's kind of like the easiest tell ever to figure out, oh, yeah, this one's actually real. Yeah, Huobi, which is a large exchange based in China, they are getting rid of if you're a Chinese citizen and you're on Huobi, you have to exit, you have to leave, right? They're,

Starting point is 00:58:40 they're blocking them all from their platform that's going to phase out. Also, you mentioned outflows, David. There was a coin-based chart that just showed like Ethan Bitcoin outflows from Huobi on, like over the last few months, but then on the, on the, um, the news of this and it was just like this single red spike down. Yep. Yep. Exit all Chinese exchanges. Largest largest decrease ever. Now, to some of your thoughts earlier, we're talking about maybe some of this is going to end up in defy. Like this capital has got to go somewhere. China's just squeezing the balloon.

Starting point is 00:59:13 They're squeezing it outside of their borders, outside of their regulated exchanges. Seems like a short-sighted move, but it's going somewhere else. Maybe it's going to defyed. Maybe it's going to U.S. exchanges. Maybe it's going to the binances of the world, but they don't want it in their jurisdiction. This is also something that I noticed this week, David, is they blocked Coin Gecko, coin market cap, and trading view. It's all blocked in China now.

Starting point is 00:59:36 great firewall. Of course, you can VPN around that, I guess. Right. But this is now more censorship of Defi, maybe a direct attack on Defi and Crypto to make these websites blocked in China. It's the first time they've been blocked ever. As we all know, you actually can't ban crypto. You can only ban your own citizens from touching crypto.

Starting point is 00:59:58 And so crypto, it's still actually in China. It's just now illegal for you as a Chinese citizen to actually touch it. And that's an important distinction, an important takeaway. I mean, how much can China, they've already banned video games, apparently. So, like, how much is China actually going to ban before their citizens are just fed up with it? I mean, it's China. So the answer is, like, a lot. But there's a tipping point somewhere.

Starting point is 01:00:21 Yeah, absolutely. And I think they're just going to, you know, many citizens are just going to not listen, right? They'll just find other avenues and ways of doing this move capital the way they want to. All right. those are the three, well, actually, the third item that we wanted to talk about, I think we should save to the end of this, David, because that's kind of a deep, sober topic. Virgil Griffith, an Ethereum developer, was pled guilty, just pledging on Monday to some charges. We'll get into that in the detail.

Starting point is 01:00:55 But first, let's talk about some happier subjects. And we'll get back to Virgil Griffin. Happy first. Yeah. Okay. So let's talk about. this on Ethereum is this $23 million fee. So BitFinex paid a $23 million fee accidentally, I believe, in just a kind of a routine type of transaction. What happened here?

Starting point is 01:01:18 Yeah. So what happened here was they swapped out the send value with the gas fee value. And so how much they wanted to send, they actually accidentally put into how much gas they were willing to pay. Oops. Have you ever done that? I have not done that. No. I've never met either. I mean, things get really complicated when you're in an organization as large as BitFenex and you're sending that much money. It's like they're not using Metamask, right? They're using their own proprietary software. And when you do that, and they were sending it on to diversify the ZK Singh or ZK proves layer two.

Starting point is 01:01:52 And something just went wrong in the transaction. Fortunately, 99% of the time transactions go to a centralized mining pool. and those mining pools are known individuals, and they don't miss when they just get a random $23 million transaction. So that transaction actually got sent back because, like, hey, you can just go knock on the centralized company's email addressing. Hey, we accidentally mailed you guys, $23 million. Can you send that back to us, please? And like, everyone knows who these people are. And so they sent it back. So the money ended up back in the right spot. But the lesson here is that layer two transfers have growing pains with them. We still have to nail down our protocols and harden our code. these are the early days of layer 2s and things go wrong every now and then.

Starting point is 01:02:36 Yeah, absolutely. I wonder what would happen if a validator in kind of ETH II received this amount of money, and it was like an anonymous validator. Right. At that point, you would just pray and pray that that person was altruistic. Yeah, here's your $23 million back. Wow. What a reward, though, as a validator just suddenly have that pop up.

Starting point is 01:02:57 All right, let's talk about this. Avey, we've talked about this before, but the institution, of defy, that's starting to happen. AVE ARC is a platform on AVE. It's built on the same protocol, but it is open and primarily whitelested and targeted towards large institutions. Now they are gearing up for launch. Anything to talk about here, David? Nothing other than the previous Fireblocks podcast episode that we did that talks about all this infrastructure that's something like an institutional version of Avey needs to support their institutional clients. This is a huge frontier that we are just now pulling the curtains back behind. Yeah, I think they just want they just yeah,

Starting point is 01:03:37 well, but it's fine. It works. It works on bankless. They just want some KYC, right? They have to have that. And this, this institutional capital is kind of sitting dormant with low APYs, you know, outside of defy and they want access to some of these yields. So this is a way to get them that access. Also, David, There was a blip, a scare in compound earlier this week. And I noticed that some people pinged me on Discord is like, what is this? What's going on with compound? I was concerned at first that the worst was happening,

Starting point is 01:04:12 which was maybe there's some kind of zero-day bug in compound itself. And like contracts are getting drained, right? Because so much of this industry is built on compound yield. But what actually happened was, less severe. What happened? Yeah, so the actual bug was that the comp token, which is issued at a regular rate to all the people supplying or borrowing from the compound application, over time, you get a trickle of comp to reward you for participating either on the supplier or the demand side. What happened was that I believe there was an update to the comp compt controller, which controls

Starting point is 01:04:50 the comp token like a week ago, and apparently people were allowed to claim more comp than they were actually supposed to be issued. And so this was more or less like an inflation bug in the comp token. I don't think it was like... Just the comp token. None of the pools. Yeah. Pools are fine.

Starting point is 01:05:06 Deposits are fine. Like no, all funds are safe. Except for the comp token had a little bit more supply get sent out into the markets than was intended. I don't know how much more supply. Apparently it was actually a decent amount. I think it was like $80 million.

Starting point is 01:05:19 But other than that... Yeah, a lot. Yeah, it was exactly. I think it was $80 million. So I ran this calculation or was 280,000 comp tokens that were released, which is the equivalent of about

Starting point is 01:05:30 $80 million released into the wild. So not awesome. Not awesome. But I mean, if you tell me that like this is the bug that compound has, I'm like, okay, thank God Jesus. Yep. It's okay.

Starting point is 01:05:43 I was super relieved to hear about this and they'll get that fixed and upgraded. So I guess no big deal this time around. We got to wait for those zero date. Knock on wood, like a billion times. You know what's cool here to you, David.

Starting point is 01:05:58 Next bit of news is if you ever played Axi Infinity, before October 26, 2020, check your wallet. This is Axi Infinity tweeting this out from their account. They just air dropped $60 million, $800,000 AXS tokens to their earliest gamers. Just a thank you. Like, just a reward.

Starting point is 01:06:17 Here, oh, geez, you believed that this when no one did. And so here's $60 million. How freaking awesome. is that? Yeah. That's pretty crazy. It's really cool. I've seen people report, they got $9,000.

Starting point is 01:06:30 I heard another person report they got $16,000. I'm not sure the metrics as to how they distributed it to their players, but like $60 million to early players when there wasn't nearly as many players as there are today, that's a nice chunk of change. You know, David, we ran a post on AXIA tactic, a how to on bankless March 2020. That would have been well before this. If you did your bankless homework, you got some money. from AXS. That's all I'm saying.

Starting point is 01:06:55 Brian, did you do your bankless homework? My homework is to publish the post, David. Okay? You give out the homework. You don't actually do it. I mean, bankless is alpha. I'll just say that. Maybe I have some more homework to do. Can't take our own lessons. Can't take our own lessons.

Starting point is 01:07:19 Moving on, let's talk about the amount of ETH at a stake, because it's an absolutely colossal amount at this point, almost 8 million ETH staked. So at current prices, LIDA reports this, that's $22 billion worth of ETH backing the economic security of the beacon chain, which of course doesn't have stayed on it yet, right, but will. And it's really cool to see this amount of value

Starting point is 01:07:47 is far more efficient than proof of work. If you guys listen to any of our Justin Drake episodes where we talk about like ultrasound money. You've heard that mean for ETH, the asset, one of where it comes from, came from Justin Drake episodes on bankless where he actually describes the economic efficiency and the importance of having a massive amount of money backing a network like Ethereum.

Starting point is 01:08:11 Any other takes here? Yeah, with ETH and Ether, right, two sides of the same coin, you have ultrasound money on the ether side. You have ultra-secure Ethereum on the Ethereum side. And it's, yeah, you like that one? I like that. And as we get closer and closer to the merge date, the number of how, the dollar value,

Starting point is 01:08:31 the capital measure of how much is staked on the beacon chain on the future Ethereum chain is just making it safer and safer and safer when we do port over, that's just more and more security towards DFI. There was the myth at one point in time, David. I remember in the doldrums of 2018, 2019 that the price of ETH doesn't matter.

Starting point is 01:08:52 That was so wrong. I have a button for that. I have a button for that. Thank you. It deserves another one. Push that again, please. That's how wrong it is. Now we know, right?

Starting point is 01:09:06 Now we can see as we transition to proof of stake. It's becoming self-evident that the value of ETH is the economic security. The network is super important. Look at this slope up. Yes. Thank you. Look, this is ETH deposited over time, and it's just a nice curve up. It does not go down at all.

Starting point is 01:09:25 Well, I mean, it can't. It can't go down. So there's that. But it continues to stay. No, it can't because it can't get withdrawn. Well, I mean, we're still at 6.6% yield from staking. So still not a bad yield. Yeah, ETH denominated yield, 6.6%.

Starting point is 01:09:41 Eventually, this has got to drop to, like, something like the risk-free rate, right? which has got to be like 3, 4%, something like that. So this is all playing out as expected. David, let's get into NFTs really quick. Snoop is getting into NFTs. We talked about it last time, but now he's actually got something going on in the Metaverse. I see a Snoop car here.

Starting point is 01:10:03 I see what looks like a virtual party. Here you go. Oh, wow, look at this. Oh, my gosh. Okay, so what we're looking at here is the sandbox game. And I think what's going on is that they've signed on Snoop Dog as like their influencer, right, to get onboarding and traction. If you're, for people listening to the podcast, it looks very much like Minecraft, very blocky. And when you actually, I've actually gone and done a little bit of investigating us.

Starting point is 01:10:31 So what this thing actually is. It actually looks like a very well built out sort of like, if for those that remember Second Life, kind of like that, you get to build your own assets. You get to build your own avatars. Each of these assets are NFTs. you can buy it with this native sand token currency. So it's very much a virtual world universe that is NFT powered, and they've gotten Snoop Dogg on their, like their influencer team. So it's pretty cool.

Starting point is 01:10:58 We'll see if this actually gains any traction. The only reason why I noticed it was because of Snoop Dogg, it didn't really come from any of my like internal NFT Ethereum circles. But hey, like NFTs are exploding beyond of what I can comprehend or pay attention to. So who knows? Yeah, that's what cool. Do you see some board apes in the screen clips here? Oh, I missed them. It's integrating other NFTs, right, here it is.

Starting point is 01:11:20 So I can run around with my crypto. My crypto punk would actually, or Cryptopunks at large, would fit very well into this aesthetic because they're already very pixely. Yeah, import, you can import them into this world, I'm sure. But by the way, do you know what Sandbox is built on? Is it some kind of a side chain? It's all Ethereum. I don't know if it's on a layer two.

Starting point is 01:11:37 I can't imagine it wouldn't be, but I do know it's on Ethereum. If it's got board apes, it also reads. the Ethereum blockchain and imports those NFTs in, which is super awesome, man. Entire world is being built around this. Let's talk about another NFT news. Dapper Labs, whom you know the folks behind NBA Topshots and also the original CryptoKitties, they're expanding into the NFL. So I think they're just doing the same play in the NFL as they did with the NBA.

Starting point is 01:12:08 and they're signing Packers Aaron Jones as well. No, sorry, that's wrong. FDX is signing Aaron Jones. I guess all of crypto is trying to get some legitimacy and credibility with the NFL market. But let's talk about this Dapper Labs thing. It seems like an obvious play for Dapper after you hit the NBA to go after the NFL. And probably a big deal for them. What do you think?

Starting point is 01:12:33 I mean, we all know that there is this massive world of collectibles that runs alongside sports. right like you can go into any sports stadium go into the uh the um what's it called like the where is where do you go buy things inside of sports stadiums like to buy the merch yeah but there's this specific David and I are really good at sports once upon a time once upon a time yeah um like the players drop I don't know you can go in and like you can buy signed baseball bats signed baseballs and now we can make more virtual representations of like whatever I don't know however they want to do this but like virtual collectibles uh and

Starting point is 01:13:07 And again, like, I don't think people are going to go and be like, why would I buy this, like, digital version? They'll just do it. They're just going to buy it. My favorite athlete did this. Like, I want this memorabilia. It's digital now. That's even better because now I can display it in my phone. It doesn't have to take up space in my house.

Starting point is 01:13:22 Exactly. So onboarding the world again. Again, I think of dapper more as sort of a side chain, right? And I think all of this will flow into the rest of the crypto economy. It's all pie expanding good stuff. Team Store. It's called a team store. That's what it's called.

Starting point is 01:13:40 Listeners need to know that. Listeners are probably like, what the hell, guys? Don't you do any sports. All right, Bitcoin stuff. Bitcoin's Lightning Network just reached all-time highs, which is super cool to see. I'm a huge supporter of Lightning, David.

Starting point is 01:13:55 It is a trustless way at lower cost of transaction to send Bitcoin. So I'm pleased to see some adoption here. And they're getting up to... 3K. They broke 3K. Yep. 3K, Bitcoin that is. So that's the equivalent of about $120 or so million. So it's great to see lightning catch on.

Starting point is 01:14:17 Part of this might be El Salvador. Part of this might be maybe the Twitter traction on tipping. Maybe that's too early. I don't know. But other things like that, I will say, if you go to D5 Pulse right now, lightning is number 41 on the D5Pel. Like it's not an apples to apples comparison, right? But a 3K is more Bitcoin than I have, but like in the grand scheme of things, it's not a lot.

Starting point is 01:14:42 Not a lot. Yeah. Yeah. But we'll be monitoring this and see how it goes. And I think this is a good sign. This is a bankless money system as well. It's just always the question, David. Do people really want to spend their Bitcoin?

Starting point is 01:14:54 I don't know. And have you ever used Lightning? It's pretty clunky. No. And most people haven't. And most people think that they have, except they've actually just used a custodial service that runs a Lightning Node for them. Exactly right

Starting point is 01:15:07 And I think there's a reason The Ethereum community Abandoned state channels Yeah Right Or And it's easy to like hop across protocols

Starting point is 01:15:16 But like payment channels State channels Never really took off on Ethereum And Until this whole L2 thing But also Also like state channels Built on

Starting point is 01:15:27 On an EVM It's fundamentally different than state channels Built on a UTXO model Yep Absolutely But anyway Good news there

Starting point is 01:15:35 David, we should talk about the visa regulation, or sorry, not visa regulation, but visas actually just released a white paper. They're developing an interoperability concept so that central bank digital currencies can talk to cryptocurrencies and, I guess, exchange trade with one another. So this is like a... And other central bank digital currencies too. It's like a general... It's a whole interoperability network, right? Yep. Okay, so I didn't read this entire white paper.

Starting point is 01:16:04 but cool to see Visa expanding the space. Any other takeaways for us here? Yeah, my takeaway is the infrastructure for CBDCs, it's getting built out faster than the CBDCs actually are. Like, the United States has not started. Except in China. Except in China. China's crushing it, right? Crushing it, right? Like, they don't even need infrastructure. They just need, you know, the actual CBDC, which is getting rolled out. So Visa is like, hey, we have this interoperability like mechanism to bridge all the CBCs in crypto. And then the actual federal reserve of the United States is like, CBDCs, do we really need that?

Starting point is 01:16:38 I mean, the answer is yes, but like they don't even know it yet. But yeah, the private market is like ahead of the public markets by orders of magnitude. So I think Visa is just like taking a gamble that at some point in time, the U.S. regulators will get their head out of their blanks and figure out that they do need a CBDC. And then Visa's like, hey, we're waiting, we've been waiting for you. Yeah, absolutely. Absolutely. Visa is absolutely getting ahead. They've seen the light with crypto, even though the U.S. government has not. Let's talk about some more U.S. government stuff. This will tease us up for our next conversation, David.

Starting point is 01:17:11 But one inch, which is a Dex aggregator, did you know that they just blocked U.S. traders for the first time? So it's a geo-block. If you go to one inch from the U.S., you will be kicked off the site. You'll be geo-blocked out of it. I know some folks use VPNs, but step. And I think they're doing this because they're planning to create a U.S. only product. It's like bifurcate. But this is back to the story. It's like, okay, so a one inch is an aggregator and user interfaces can be blocked. The underlying smart contracts that power one inch and that power all of the assets and

Starting point is 01:17:49 decentralized exchanges behind them, those are things that cannot be blocked. Right. So you can still have access to those because it's D5, because it's on Ethereum. But aggregators have a role. and can definitely block individuals from using their platform. And I hate going to these sites, David, and being present in the U.S. And just because I'm a U.S. citizen, I can't freaking use it. Like, what's up with that, right?

Starting point is 01:18:15 Missed a DYDX AirDrop because of that. Tons of U.S. citizens did, right? Like, it's no other country, by the way. It's not even like North Korea and Iraq. China. China. but like, it's so strange to be blocked out of this emerging financial system as a U.S. citizen, as a citizen of like a free country.

Starting point is 01:18:41 And I don't understand. What's your take? Yeah. So Dex aggregators, they are actually on the more centralized side of the spectrum. They're not completely on chain. I do believe there is some like Web 2 infrastructure that is a component of aggregating all the dexes. For sure. Yeah.

Starting point is 01:18:58 The order routing is. is a smart contract on chain, but I think the API pings and like getting in the information that is all done in a centralized fashion. So like in theory, like the decks aggregators are a, a like,

Starting point is 01:19:10 do have a centralized front end that can be blocked and that will actually mess up. The choke point, right? That will actually mess up the product, unlike Uniswap, unlike balancer, unlike the actual true decks is out there. And so like, and I think one of the reasons why we can definitely say that that's true

Starting point is 01:19:25 is because they would, well, they're making a U.S. version of their front end, right? what they actually put on the U.S. version versus the international version, how they differentiate those things? Who knows? Also... We think they could say they tried, right? I think that's what some of these companies are trying to do. Right.

Starting point is 01:19:41 We're trying to comply. Speaking of trying to comply, so the CFTC just imposed a penalty. This is a commodity of future exchange regulator in the U.S. of $1.25 million against Cracken for offering illegal off-chain digital asset trading and failing to register as required. So I think this is maybe some of the futures. The TLDRs, they gave their customers margin accounts,

Starting point is 01:20:06 and they didn't register with the CFTC. I mean, I guess that's actually like pretty straightforward. Yeah, totally. I won't go harp on like, yeah, that's actually a relatively normal. That's not like anybody targeting crypto. I see normal, relatively normal things coming out of the CFTC. Right, yeah. David, like they seem at least to date, they've been much more reasoned and rational about this.

Starting point is 01:20:26 And it's interesting about this is 1.25 million. just like a slap on the wrist for somebody like Cracken. I mean, Cracken's probably like, yep, worth it. Wells Fargo, man, I told you we'd get back to Wells Fargo. Here they are. Wells Fargo has been overcharging customers for like seven years in a row. This is a final settlement from a case that spans from like 2010 to 2017 or 2018. And what they were doing, David, if you were a...

Starting point is 01:20:59 small business customer, and you were trying to exchange, say, some, like, dollars for, like, euros or something, they would actually give you the wrong amount, okay? So if it's like, if the exchange rate was like 1.025, they'd do like 1.052. Just, like, switch around two digits and then pocket the rest, okay? And the whole, like, all of the, like, many, the culture was to do this, to cheat their customers, right? This is what the settlement actually says. Wells Fargo created an atmosphere in which employees openly joked about and celebrated taking advantage of the bank's customers.

Starting point is 01:21:39 Nice. Right? You know what fixes this? Dex aggregators. Tell me, right? Yeah. Like, no person in the middle of this. Like, you could see all of the transactions on chain, on exchange.

Starting point is 01:21:53 That's what we're moving toward. That is the reason for bankless. So banks can't screw people over. And it's nice for the DOJ, the DOJ. the DOJ had to go prosecute this, right, in court, had to catch them. How many times are the banks not caught doing these things? We'll never freaking know, right? But like, the DOJ doesn't have to worry about this sort of thing if all of this is on chain and they could see the full transaction history. And the customer does too, which is important, which is why what a huge missing

Starting point is 01:22:20 component that Wells Fargo doesn't have to deal with is like report their on-chain data of like how they actually got the number that they got, right? And that, right? Right. Brian, if you remember, I think, in like, 2013 or 2014, there was a big story as to how Wells Fargo did so well after the O-A crisis. And then in 2014, they were charged with, like, the culture at Wells Fargo promoted their, like, salespeople, their bankers

Starting point is 01:22:46 to open up as many accounts from their customers as possible. And so they were charged with, like, their bankers being really, really aggressive with their customers saying, like, hey, you need to open up this account in this account and this account, because they needed to make quota. Their bankers were salespeople. And so they got charged in 2014

Starting point is 01:23:03 for having a culture that promoted opening unnecessary accounts, and they were also doing it to their customers without even asking their customers' permission because the pressure on these bankers to make sales quotas were so incredibly strong that it became a toxic, abusive relationship

Starting point is 01:23:18 between the bankers and their employees. And so this is what happens when you have a financial system that is no longer innovating and growing and developing but has just switched to an extraction-based model because there's nothing left in the web legacy financial world so you have to extract as maximally as possible.

Starting point is 01:23:37 And there's no innovation, there's only extraction left in that world. Absolutely. Rent collection, gouging. These are words that come to mind as you're talking about. You know what we need to do, David, is break up with our banks. Yeah, I've heard this one before. That's what we need to do.

Starting point is 01:23:49 Open finance, guys. This is the solution. This is why we're on the journey. Senator Lummis might be on the journey as well. at least she seems to be in our court. We've been looking for advocates coming out of the Senate. She might be one. In fact, we're hoping to get her on the bank's podcast at some point in time.

Starting point is 01:24:07 But she laid out in front of the Senate some principles for U.S. digital currency, talked about the role of stable coins, talked about America's leadership in global financial services, is something that the country should be proud of. And they should extend that into cryptocurrency, lean into it, rather than trying to try to stop it and trying to create barriers and blockers every time someone wants to do something with cryptocurrency. That is a welcome message, David. Any other takeaways from her notes here? I think we should keep on going. Absolutely. Other than good job and thank you. Yep. Well, let's get to this. While we're talking about the U.S., Virgil Griffith, David,

Starting point is 01:24:48 do you want to start with this story because people might not be promoted to the story in the context. Give us that. Virgil Griffith, he is an Ethereum developer that was actually before my time. I never had the honor of meeting this guy. For those that know the hamster dance or the skunk dance or the raccoon dance that a lot of these core Ethereum people did, I can't remember at DevCon or something, there's a funny little dance out there. There are Vitalics out there, Karl Flores, so all doing this funny and funny little dance. And Virgil Griffith was there too, right?

Starting point is 01:25:20 And that's kind of where I see him in the space. But he's a very core part of some of the early days of Ethereum, very just overall proponent of how blockchains and crypto economic systems that span global communities cannot create global peace. And he actually made the decision to go to North Korea to give a talk at a North Korean blockchain conference out there. Turns out North Korea has crypto conferences too. And then when he came back, he was arrested

Starting point is 01:25:50 for violating sanctions and helping teach Korea how to get around sanctions, the criticism of that decision by the U.S. government was that he didn't teach North Korea anything that you couldn't have already found on YouTube or just Googled it, apparently. So, like, granted, there is a little bit of naivete, like, hey, don't go to North Korea and teach about crypto transactions. A lot of naivety doing that. But also at the same time, like, he's not doing anything inherently illegal.

Starting point is 01:26:20 right, like, according to the United States he was, but like he was just promoting knowledge and education about this thing that is inherently open source, right? Like, they're going to learn about it anyways. And so he got arrested. This news story that's come out here is that he got arrested a couple years ago. The new story came out here that he had a trial. He's been hammering on the fact that he's not guilty,

Starting point is 01:26:41 but his trial just started last Monday. And he opened up that trial with a guilty plead and a request for 6.5 years in jail. whereas the maximum sentence could be up to 20, so he requested six. And the story has to go from there, but that's the gist of it. Yeah, I think it's definitely sad, right? I think that Virgil, it seemed to me, had sort of a crypto-utopian sort of vision, and I think he was going to North Korea, which is obviously one of the worst regimes on the planet,

Starting point is 01:27:15 right? Very oppressive, like terrible regime, right? But I think Virgil was going there perhaps with good intentions as far as like, you know, talking about cryptocurrency and the freedom this could provide and kind of the enhanced coordination it could provide and didn't realize the full impact of his decisions, right? And the U.S. arrested him, I think, when he was coming home to visit family on Thanksgiving, coming to the U.S. and he's actually been in the same,

Starting point is 01:27:50 for the last two months anyway, it's the same prison that Jeffrey Epstein was in for like the last two months, so it can't have been pleasant. I think there was an increasing amount of pressure on him to maybe plead guilty and not actually risk going to prison. Yeah, 20 years in prison.

Starting point is 01:28:08 So it's an unfortunate story because I don't think that what he was doing was legally wrong in the eyes of the US government, right? I think his defense would say, hey, he was just teaching them things that they could find online, and this is like an open conference, and this is all publicly available on YouTube. And for my part, I believe that that's true. But like, even if you think it was legally wrong, I mean, not morally wrong.

Starting point is 01:28:35 Right. Right. And this is a very harsh sentence for, I guess, the stated crime of what Virgil may or may not have done. So kind of sad to see it, David. from my perspective. I don't know if there's anything more to say on it. So for those that listen to the before Bitcoin series we did, where I read out Peter Pan's four-part series

Starting point is 01:28:58 about the history of the cypher punks, this is in my mind a continuation of that story, of people that dedicate their lives towards cryptography in the social public systems, public good systems that they create, and that ultimately runs and butts heads with nation-states who don't like systems that are outside of their, control of which cryptography is inherently about that.

Starting point is 01:29:19 So Amin Soleimani, who's the writer of this thread that we are looking at right now, starts this thread off with, his name is Virgil Griffith. It was fun to see everyone this week in New York, but I'll admit I was walking around with a hole in my heart and a looming sense of dread. Virgil's trial starts this Monday, hashtag Free Virgil. And then he goes through the history of both this case and also where it fits into the greater case of the story of the cypherpunks. He said, tweet number 12, he goes, all of us in crypto today are downstream of the original

Starting point is 01:29:56 cypherpunks. We inherit their 50-year struggle to emancipate cryptography as a weapon to exclusively for militaries and provide it as a tool for individuals to use to protect their speech from illegitimate surveillance. And so I feel like maybe if I put, again, I never met Virgil Griffith. I don't know what he's like, but if I want to put my mom. my brain inside the mind of a cypherpunk, when you promote adoption of cryptography,

Starting point is 01:30:20 you promote adoption of public resources that can escape oppression. And so maybe Virgil's mind is like, well, I'm going to go to North Korea, which is the site of the most oppression in the world, and hope this information leaks out. I don't know how that works. I think from a cypher punk's perspective, right,

Starting point is 01:30:37 and from somebody who's deep into cryptography, you're going to a terrible, oppressive regime, and you're kind of preaching the gospel. You're kind of preaching like freedom technology. It's like going to a regime like this and talking about the value of freedom of speech. At least I think that's what it is like in Virgil's mind, right? And I just contrast this.

Starting point is 01:31:00 It's very clear, I think, that the U.S. government wanted to make an example out of Virgil, right? Because clearly this is not actually a national security threat in any way, shape, or form. right um but like technically you know was a crime community just absolutely wanted to make an example out of this and i i just contrast that with like man the amount of people who went to jail after the you know 2008 shenanigans that went on it's like one guy maybe like virtually zero people right yeah we're just talking about the wells fargo incident you know 73 million dollars slap on

Starting point is 01:31:39 the wrist right um Sometimes the punishment far exceeds the quote-unquote crime committed. I think this may be one of those cases. So it's sort of a sad day in crypto. And just to tie this thread off, tweet number 17, Amin goes, today the U.S. government treats cryptocurrency with as much superstition as it did with encryption in decades past. I really like that framing, treating crypto as superstition.

Starting point is 01:32:06 In that context, they are attempting to cast Virgil's presentation as a military-grade violation. But just like encryption, cryptocurrency will inevitably triumph. And for years now, when cryptocurrency is widely adopted across the globe, Virgil's presentation to North Korea will appear trivial. It will seem as silly as prosecuting someone for sharing the, quote, military secrets of HTPS. Absolutely. Well said.

Starting point is 01:32:30 We'll leave it at that. Guys, we're going to cut to our sponsors and then we'll be back with some takes of the week. Here they are. The Ave protocol is a decentralized liquidity protocol on it. which allows users to supply and borrow certain crypto assets. AVE version 2 has a ton of cool features that makes using the AVE protocol even more powerful. With AVE, you can leverage the full power of Defi Money Legos, yield, and composability all in one application. On AVE, there are a ton of assets that you can supply to the protocol in order to gain yield,

Starting point is 01:33:03 and all of those same assets can also be borrowed from the protocol if you have supplied collateral. Here you can see me borrowing 200 USDC against my portfolio of a number of different defy tokens in ETH. I'll choose a variable interest rate because it's a lower rate than the stable interest rate option, but I could choose the stable interest rate option if I wanted to lock in that interest rate in permanently. V2 also features the ability for users to swap collateral without having to withdraw their assets, trade them on un-swap, and then deposit them back into AVE.

Starting point is 01:33:35 With AVEA, users can do this in one seamless transaction, saving you time, and gas costs. Check out the power of AVE at AVE.com. That's A-A-A-V-E.com. Gemini is the world's most trusted cryptocurrency exchange. I've been a customer of Gemini since I first got into crypto in 2017, and it's been my main exchange of choice

Starting point is 01:33:55 to make my crypto buys and sells. Gemini is available in all 50 states and in over 50 countries worldwide, and on Gemini, there are markets for over 30 various different crypto assets, including many of the hot DeFi tokens. And it's one of the few exchanges that has liquid dye markets. Gemini just launched their Earn program where you can earn up to

Starting point is 01:34:14 to 7.4% interest on 26 various crypto assets. If you're tired of paying fees in Defi, or you don't want to worry about defy exploits, but you still want to earn interest on your crypto assets, Gemini Earn is the product for you. Another product I'm stoked to get my hands on is the Gemini crypto-back credit card, which gives you 3% cash back on all of your purchases, but paid to you in your preferred crypto asset. When I get my Gemini's, credit card, I'm going to make sure that I get my cash back in ETH. So whenever I buy something, I get a little bit of ETH bonus back to me at the same time. You can open up a free account in under three minutes at Gemini.com slash go bankless. And if you trade more than $100 within

Starting point is 01:34:53 the first 30 days after sign up, you'll be gifted a free $15 Bitcoin bonus. Check them out at Gemini.com slash go bankless. All right, guys, we are back. Takes of the week. Let's start with this, David. Why don't you read this take and then I'll comment on it? Read your own tweet. I will read your tweet for you. This guy, Ryan, Sean Adams, I don't know who he is, never met him before, says, my advice for the U.S., one, buy ETH and BTC for your treasury. Two, issue a Fed coin as an ERC 20 token. Three, become the world's most friendly defy jurisdiction. That's it. That's literally all you have to do to win the next chapter of the internet. Ryan, what's this guy saying?

Starting point is 01:35:33 I mean, I couldn't have said it any better. I really do think those the three things that the U.S. needs to do. And if it just does those three things, hell, let's take two. Pick any two of those U.S. government and you will be ahead of any other geographic jurisdiction on the planet. But I don't know, they're not doing any of these right now, which makes me worried. It's very simple. Some people think it's maybe more complicated than it is, but it really is this simple. buy Bitcoin and Eith, issue a Fed coin of some sort as an ERC20 on Ethereum,

Starting point is 01:36:11 and just be really friendly to the talented engineers that are building defy in your country. Make it an appealing jurisdiction rather than pushing them outside, which is what they're doing right now. Ryan, you've made it seem really, really simple, but that's because you skipped a step, which is step zero, stop caring about all the incumbents and check your biases at the door. That's why they're not doing it. That's why it's not simple, right?

Starting point is 01:36:33 That's the tweet behind the tweet. Man, some guys should tweet that out. All right, David, why don't you take this one? So this is interesting. I'll read the headline here. The SEC is threatening Coinbase to protect the public, but not in the way you think. Okay. This was a fantastic thread that you should absolutely go and check out yourself.

Starting point is 01:36:54 We're not going to read the whole thing because it's a little bit long. But basically, O Juice underscore Eath, talks about how because of trying to get the recovery going, after their pandemic, the reserve requirement ratios for banks have gone from 10% to 0%. And if we go, yeah, we're going to start at tweet number six here. It goes, banks are more or less offering the same interest rates as each other. Right now, this is around 0.05%. For decades, there have not been any significant products with better rates whilst maintaining the convenience of the liquidity of the savings account until now.

Starting point is 01:37:27 At a 5% interest rate, which is literally a 100x improvement than any savings account at a bank, is what Coinbase Earn has offered what was going to offer, except here's the problem. The problem is that the product is so good and it's such a no-brainer and can very realistically cause millions of depositors to move their savings to the Coinbase Earn product. And then the last week that we're going to read is, which means a concentration of dollars will suddenly be siphoned off into the institution Coinbase banks with. And every other bank would be left unable to meet that 10% reserve requirement. So what they are worried about is that Coinbase's products are going to be so incredibly successful

Starting point is 01:38:06 that banks will never be able to actually return to a 10% collateralization requirement, which is saying something about the power of the product, the Coinbase Earned product, that the SEC told them that they were going to sue them if they've released that product. Okay, so basically what he's saying is Coinbase Earn and crypto-related products like this are so good that it's going to slurp in all. of the money from the banking system, cause the banks to collapse, and public, we don't want a banking system collapse like 2008 again, do we? Right.

Starting point is 01:38:39 So we're protecting you from that. The product was so good that it's going to collapse the economy. What? It's going to collapse this banking, this strong foundational banking system that we've propped up. Yeah, I, you know, I think that could be it. I'm sorry, if good products collapse the economy, what the, the end. actual F are we doing? Look, it goes back to the tweet that you were just talking about, right?

Starting point is 01:39:06 Which is like, we don't want to disrupt the incumbents. That's why we're doing this. That's the tweet behind every tweet. Too big to fail. Behind every regulatory action that we're seeing that's aggressive towards crypto. Literally not allowed to have nice things because it'll break all the bad things in our entire society's built on bad things. Well, you've got to take on this, right? So this is actually, well, I don't know if it's your take or, you know, this guy, David Hoffman.eath on

Starting point is 01:39:34 Twitter, goes by the handle of Truseless State. Really smart guy. He's got a cool punk. Crypto is going to nerve the SEC, is what you said. And this goes back to a post you wrote earlier in the week. What do you mean by this? Yeah. So Gary Gensler is coming at crypto super hard, right? Trying to, I think, more or less, do everything he can to have more and more jurisdiction over crypto, basically wants everything to be a security, right? And like, careful what's your wish for it Gary. Like if everything becomes a security, I don't think you realize how trivial it is to spin up a new token. Like spin up a new ERC20 token, spin up a new social token, a new Dow token, a new NFT that represents some in-game asset. Like if you do you want all of those

Starting point is 01:40:16 to be securities? Because what's more likely? Is it more likely that as a result of your desire to regulate all of these things, you actually have to ease back what it actually means to regulate those things? Or do you want everyone who ever issues a token to come knocking on your door, wait in line with their forums and say, hey, Gary Gensler, will you please give me my stamp? Like, what's going to be more likely? I think it's going to be more likely that we're going to use this asset printing press, which is the ERC 20 or ERC 721 standard, and print a bajillion tokens. Gary's going to get real upset that they're all securities. But in order for him to legitimize what the SEC does as a regulatory body, they're just going to have to have

Starting point is 01:40:58 to water down what it actually means to be a security, right? And so, like, sweet, like, this thing on my wall is a security. Like, yay, like, everything's a security. The SEC does not want to have jurisdiction and regulate, like, a flaming sword of gondi or something. Yeah, right. Right. Like, that's what you're saying. Is they're biting off way too much, like, much more than they can chew, and it's actually going to completely, I guess, uh, water, Water down the definition of a security. Yeah. Yeah.

Starting point is 01:41:32 So if everything's a security, nothing is, guys. Let's take this next tweet, David. This is, I think, a meme tweet that some people took seriously from Bankless HQ Twitter. What is this? Wait, the headline isn't a meme. That's a real headline, right? No, this is a meme, dude. Oh, is it?

Starting point is 01:41:52 Oh, okay. Oh, okay. Well, I just ate the onion in that, in that case. I love it. Got them. Got them. All right. Well, okay. So the headline is, that makes more sense as to actually who's actually the picture depicting Lindsay Graham, I believe, is who that is who that is the bottom headline is, Senate bans, NFTs, quote, the trend is bankrupting our youth, which I guess is a wink-wing to the fact that, like, when you buy one NFT, the next thing that happens is you buy a second one, and then right after that you buy a third one. That's funny because I'm pretty sure the guy that tweeted this, Michael Wong, he's working on a crypto satire website, very. much like The Onion. And we talked about how like our KPI's is like how many people can we get to, do you know the term, eat the onion? Okay, now tell me. It's like when somebody like reads an onion article and then they take it seriously and they start blowing it up on Twitter. It's like, oh, yeah. You just ate the I just ate

Starting point is 01:42:44 the onion. Yeah. And so like the secret skunk works project out of the bank list out, is there's going to be a crypto satire website show, website, like news organization, very much like the onion that has meme only headlines. And the KPI. is like, all right, how many times can we get people to actually believe some of the BS headlines that we're going to write? That's awesome. I'm in the first victims, son of a bitch. Yeah, well, here's the bottom behind this. This is a meme, guys.

Starting point is 01:43:11 But the fact that people think it's real is exactly why Congress is failing us, right? There's a take. This trend is bankrupting our youth, Senate bans, NFTs. That's why Congress is failing us because people actually believe that's true. I have another confession for you, David. This is my meme. Is it yours? It's not like the Wong's?

Starting point is 01:43:28 I was thinking about the satire thing and everything you said. And I was like, you know what? I'm going to throw a meme up. I did. Hey, sometimes the Ryan Sean Adams memes, they'll get you. They're okay. They're great. You just don't know when they come.

Starting point is 01:43:44 Yeah, it's a surprise every time. All right. Let's see this. Golden Age of Building, David. We'll look back on the 2020s and remember it as the Golden Age of Building. This is another tweet that you put out there last. week. What does this mean? Yeah. Once upon a time in high school, I was really into the world of aviation. And in the world of

Starting point is 01:44:04 aviation, there's the golden age of aviation, which was the 1930s. It's just when so much innovation happened. And a lot of the same technologies that we use today for flying in aviation was found in the 1930s. And I think that that is what we are seeing here with the 2020s. When this decade is over, I think we're going to look back and we're like, God, that was fun. Remember when there was cool. Those were great times. It's actually a call to action for everyone listening. Just like, hey, take a moment and reflect and remember what it's like to be where we are today

Starting point is 01:44:37 because we only get to do this once. And it's a good time regardless of all the regulator fomo out there. Or regulator fud, excuse me. FUD, yeah. Well, it's certainly fomo. But with denial is fud. There you go. And so, yeah, like, hey, we're in the golden age of building.

Starting point is 01:44:54 There's cool stuff being built every single week. there's cool things happening. And I think we will look back with nostalgia on this era. I totally agree. I'm super grateful to be here. I'm grateful for all the listeners. And, you know, that kind of that sense of gratitude really underlies, I think, the best projects that they know they're early. They know they're doing something super cool. And yeah, it's really important to pause and just reflect on that sometimes, David. Good thought, man. Let me ask you this. Last question in the week. What are you excited about? Dude, okay, so I was at MCon last week and Maine, or excuse me, MCon two weeks ago and

Starting point is 01:45:32 Mainnet in New York last week met a ton of cool people. And like the number of times that I would go up to one of the booths at Mainnet at Missouri Mainnet and just like meet with some people. Somebody would say like, hey, like, the reason why I got this job at company X or project wise is because like you and Ryan kept on like just yelling at me to get a job in crypto. Either on the newsletter or on the podcast. Like you guys say, like, hey, like, you can do it. Like, you can quit your legacy job and get a job in crypto. And so I did it.

Starting point is 01:46:00 I think I ran into, like, I think seven people at Mainnet. And that's not even counting. I'm, uh, Amicon. Wow. That said, like, hey, like, I got a job in crypto because you, because you guys at bankless, like really encouraged me and inspired me to do that. And so I'm honored and humbled that people actually listen to us at all. And the fact that you guys, so many of you have gotten jobs in crypto is also,

Starting point is 01:46:21 thank you for helping turn this into the golden age of building. because the people that quit their jobs to take the step into crypto and take that risk are the people that are going to be pioneering so many more people in crypto in the future. So thank you for taking that leap. And if you are yet to take that leap, what are you waiting for? Like, don't miss out. It's a fun time. As we say, it's people all the way down.

Starting point is 01:46:44 Nothing more exciting than attracting good people to this space. That's absolutely awesome here, David. Yeah. And before I ask you what you're excited about Ryan, hey, look, according to Twitter, it's International Podcast Day. Look at that. Hey. Happy International Podcast Day. Do you know what episode number this is?

Starting point is 01:46:59 This will be the weekly, I don't know what weekly roll-up number this is, but we are on- How many podcasts do you think we're done right now? The actual Monday podcast will be number 89. I think state of the nation, we're up to like 60-ish. Weekly roll-ups were at like 40.

Starting point is 01:47:14 Yeah, take 80, I guess, and like roughly like multiply that by four. Yeah. Probably what we're doing because we do like. Well, no, because the podcast started earlier than all the other ones. So I say like three. maybe. So we're definitely over 200. I think we're over two to 300. Well, there you go.

Starting point is 01:47:29 Okay. One day will count. While you tell me what you're excited about, I'm going to go to Libson and actually count. Yeah, I'm going to look that up right now. Okay. What's your number? What's your number? What's your number? My number is 364. Okay. All right. Now tell me what you're excited about, Ryan. All right. So while you're looking that up, what I'm excited about is also a bankless podcast right now because we- $245. Oh, God. I was way up. 245 podcast. That's still good. That's still really good. Now, how many hours is that? Multiply that by like...

Starting point is 01:47:59 At least 1.5. Yeah. 1.5. Multiply that by 1.5. All right. So we just secured a dream guest on bankless. It's like when we started the bankless podcast, we had a list of like, I don't know, 5, 10 names that were like, hey, we'll be doing it if we get this name.

Starting point is 01:48:17 And now we got one of those names, another one off the list. I'm super excited about it. Not going to reveal it now, coming later in October. We'll have a big reveal soon, but we're very excited. And I think this just reflects as like one of the reasons I got into crypto and started like in, you know, crypto media, I got into crypto first. I thought all I wanted to do was invest, right? But then I realized like, like investment and kind of like narrative and learning about this stuff, we can learn about this stuff collectively, right? That's why we started bankless. And that's why we started the bankless podcast to go on the journey together because we can level up together. And one thing we realize very early, David, is if crypto is going to go mainstream, there has to be a big tent around it, right? It can't just be like this isolated cult of weirdos and geeks, right? It has to saturate itself into all areas of culture. And so that's why we're doing bankless is to saturate crypto and defy and these values into culture. So that means like politicians. That means regulators. That means musicians.

Starting point is 01:49:20 That means investors, anybody who's out there, we want to get them on the bankless podcast. And here's the beautiful thing about it, David, is like, if they adopt crypto protocols, okay, they adopt crypto values. Ooh. All right? We tricked them. We got them. And that's how we changed the world. As long as our values are embedded in the protocols, when they adopt crypto, they don't know it, but they're adopting crypto values.

Starting point is 01:49:47 When they buy that NFT, what's that NFT secured by? What's it paying out? What's it propagating the economic security of Ethereum, which is a decentralized money system that embodies crypto values. So this is a covert ops, man. And we're doing it by getting these big guests, by listeners tuning in, by you hitting the subscribe on YouTube.

Starting point is 01:50:09 If you haven't subscribed yet, you are helping to propagate crypto values and crypto culture to the world. And that's what I'm excited about today. That was a great answer. I'm looking forward to talking to that guest, of which we've named on this show before. So I will say that. Of which.

Starting point is 01:50:27 Of which we've named. So you can go back in past episodes. All of them. Every two one. Start writing those. All 200 and how many? 2405, yeah. Yeah, it shouldn't take long.

Starting point is 01:50:38 Me the week. Meen of the week time. Let's see this. What are we looking at? All right. We are looking at that famous picture of two people getting divorced and, you know, They're separating out their beanie babies. This was in the 90s, I believe.

Starting point is 01:50:51 But instead of beanie babies, they're NFTs. So we got this couple ones pulling out a cool cat. The one of the one's about to grab a me bit. There's a cromies squiggle in there. If you get divorced, make sure you know which, who's getting what NFTs? That is a very, very important point, sir. That's awesome. All right, guys.

Starting point is 01:51:08 Hopefully there's not. Don't get divorced. Hopefully don't get divorced, but also hopefully our NFTs don't go by the way of beanie babies. Yeah, is that what? This is a pre-lip. Yeah, what are those beanie babies worth now, huh? Got them.

Starting point is 01:51:23 Fliarious. Too much inflation. All right, guys. This has been the weekly roll-up. Of course, none of this has been financial advice. Eith is risky. Defi is risky. I'm sorry.

Starting point is 01:51:33 I mean, NFTs are risky as well. You could lose what you put in, but we are headed west. This is a frontier. It's not for everyone, but we're glad you're with us on the bankless journey. Thanks a lot. Hey, we hope you enjoyed the video. If you did, head over to Bankless. HQ right now to develop your crypto investing skills and learn how to free yourself from banks

Starting point is 01:51:52 and gain your financial independence. We recommend joining our daily newsletter, podcasts, and community as a bankless premium subscriber to get the most out of your bankless experience. You'll get access to our market analysis, our alpha leaks, and exclusive content, and even the bankless token for airdrops, raffles, and unlocks. If you're interested in crypto, the bankless community is where you want to be. Click the link in the description. to become a bankless premium subscriber today. Also, don't forget to subscribe to the channel for in-depth interviews with industry leaders,

Starting point is 01:52:24 Ask Me Anythings, and weekly roll-ups where we summarize the Week in Crypto and other fantastic content. Thanks everyone for watching and being on the journey as we build out the Bankless Nation.

Bankless - 📺 ROLLUP: China Crypto Ban | NFTs & Bitcoin on Twitter | Compound Bug | Virgil Griffith

There aren't comments yet for this episode. Click on any sentence in the transcript to leave a comment.