Bankless - ROLLUP: China Turns Bullish On Crypto | Celsius Bailout Plan

Starting point is 00:00:00 This is the most interesting part of this article. Hong Kong Securities and Futures Commission released a rulebook for the crypto industry last year, stating that retail investors can start trading crypto from June first. What? Bankless Nation, it is the first Friday of June. What time is it, David? Oh, Ryan, it's the Bankless Friday Weekly Rollup where we cover the entire weekly news on crypto, which is always an ambitious endeavor.

Starting point is 00:00:26 There is so much to cover this week, which is why I'm talking so fast. I'm also, it's the morning time for me now. for the first time in two months. So I'm extra caffeinated. Welcome back to the East Coast. Yeah, it's great. It's great to have you. It's good to see that background again, David.

Starting point is 00:00:40 I missed it. We're seeing kind of a, you know, a different background for the last week. I missed those bricks. Yeah, no, the brick and the lighting and the good camera, it's all back. Do you know, it's June? And last year, 16 days from now, three hours capital went bust. So we first found out about it. Oh, really?

Starting point is 00:00:56 Yeah. This is three years capital month. This is a rare. Terra month, and this month is three-oer's capital month. Man. Yep. Man. Time flies, right?

Starting point is 00:01:03 When you're having fun. Are we having fun? Little did we know we still had FTCS ahead of us at this point. But actually, okay, well, that means that it's been roughly one year since ether bottomed. It's been one year since the ether bottom in that case. That's true. Yeah. About one year since the ether bottom.

Starting point is 00:01:17 We're going to talk about that then. Also, a few topics of the week. Did China just do a 180 on crypto? Yeah. Did you read about this? I just started to, and I want to get your take on it. But I feel like no one is talking about it. And we're going to talk about it.

Starting point is 00:01:28 What else we got to cover? We got this Celsius end game. So if you are a Celsius creditor or you're interested about the state of Celsius creditors, hi, Ryan, you're going to find out exactly how much money you're going to get. And if you are over $5,000 of a Celsius creditor, you're going to get something else. I'm prepared to be disappointed. Yeah, definitely hold your breath on that one. World coin raising $110 million, $115, divides the crypto industry, continues to be polarizing.

Starting point is 00:01:54 And then also the secret to winning the bear market. We've got to take from Kobe at the end here. All right. Before we get in, David, we've got a special. from our friends and sponsors. Do you want to add some more excitement to your life? Your staking life, that is? You can add excitement to the staking routine of ETH

Starting point is 00:02:11 using the asymmetrics protocol. What is this thing, David? So for those that are familiar with pool together, asymmetrics is like pool together, but for ETH staking. And so you stake your ether, and then instead of giving a just boring 4.5%, you get anywhere between zero and a thousand percent. it could be anyone probably going to be zero might be a thousand percent and so this is what we call a

Starting point is 00:02:37 prize linked savings account and so all of the yield gets pulled up and then one lucky winner gets everyone's yield and everyone else gets zero uh zero percent yield uh and so if you would like to add a little excitement to your ethestaking asymmetrics is for you banklist dot c slash asymmetrics uh you also can follow them on twitter asymmetrics underscore eth on twitter look at this look this almost 7eth that you could just get on the daily right now. That's the current reward pool. Kind of fun, right? So only 234 users are competing for that 7th.

Starting point is 00:03:10 Huh. So I believe there's also like an extra little incentive. So you actually technically get more yield if you like net everything out with asymmetrics. You just have to be ready to get 0% for a while. Or maybe a thousand. You don't know until you try. Yeah, you can try. Try your luck here. Okay, let's get to the markets, though. Bitcoin price. What are we at on the week?

Starting point is 00:03:35 Call it a flat week, up half a percent on the week, started at 26,700, ending at 26,900. All right. How about Ether? Actually, up 2.5 percent. So Ether is up on the week. Started at 1820. We are up to 1865. And the ratio, ETH Bitcoin. We actually got pretty high up on Ether this last week. Did we? Can we talk about that? What's the spike? What's this green candle here? Yeah. I think that was when the... the debt ceiling got raised. Ah, the 29th.

Starting point is 00:04:03 So coupled to trad markets. But still, a slowly positive, optimistic trajectory lately on ether, 2.5%. Ether BTC ratio. Looking really good if you are directionally long Ether, like I am, at 0.0692. Wow. Happy ratio. That's a pretty big ratio gain in the month of May. The ratio is up only in May.

Starting point is 00:04:26 Yeah. Wow. Like, I'm zooming out on the, by the way, on the crack. in pro charts which lets you do this uh very nice i can see the ratio over time uh yes okay so we're back around the the april yeah like mid april but but you're right after a dip um you know at the end of april where we've been up up only in may for the ratio so uh go go eith total crypto market cap 1.17 trillion dollars pretty flat pretty flat david give us some stable coin numbers too uh down ryan down stable coin numbers okay so 12

Starting point is 00:05:00 month change in stable coin supply. It's bad. 162 billion down to a 126 billion year to date change since 2023, 139 billion. The total amount of stable coins that have been issued. So it's like kind of market cap of stable coins, which is a great usage metric for stable coins. Yeah. So the stable coin supply in crypto is our liquidity. So it's a very base. It's important to see where stable coins are going. Seeing them go down is bad because that means there was less liquidity in the system. Interestingly, though, Tether is at a all-time high. So Tether, the year-to-date of Tether started at $70 billion is currently at $83 billion, surpassing its all-time high. Twelve months ago, it was at $83 billion. Then Three Ro's capital got liquidated and started to trend downwards. But now Tether

Starting point is 00:05:52 has resumed all-time high. So for a while, U.S.C. was looking real good against Tether, a lot of market share lately ever since a year ago and especially after the banking crisis USC's had some headwinds and tether has gotten some tailwinds look at this chart so i have a take on this you know last bear market stable coin supply actually grew a bunch so this is just this is tethered that is gargantuan yeah 2019 versus 2021 in fact it grew primarily during the bear market we were at like five billion dollars of tether supply yeah 20 20 fast forward to 2022 uh touching a $85 billion. Right.

Starting point is 00:06:30 That is some growth. But you know what's interesting is why this decrease. One explanation for this is T-bills, treasuries are actually the best yield farm out there right now. And that is outside of defy. In the last bear market, with interest rates, fed interest rates at 0% or close to 0%, very low, let's just say, defy interest offer the best yield on your dollar is no longer the case. Although here's a take. Maker is trying.

Starting point is 00:06:58 The maker Dow is mulling a proposal to boost the die savings rate to 3.3%. God, when's the last time you heard the die savings rate? It's been a while. It's probably 2020. I haven't even thought about it since 2020. I used to consider the die savings rate as like the binary star system between the the eith stake rate and the die savings rate. This is when die was like the only meaningfully like decentralized stable coin on Ethereum.

Starting point is 00:07:23 And then it's been at zero for a very long time or at 1% as of recently. but this is 3.3% is not small. That's a decent chunk of MakerDAO revenue going into the die savings rate. Yeah, that's definitely not small. That will increase the supply of dye in the market. That's the aim. And by the way, making them more competitive with basically debilts, with treasuries out there, which are about 5% something like this.

Starting point is 00:07:46 So crypto creeping up there. It's a nice equilibrium. Let's talk about eth staking, though. What is this chart from Hildobie? Yeah, this is crazy. Okay, 17.4% of all staked. Ether was deposited last month in the month of May. Wow.

Starting point is 00:08:01 That is significant. 17.4% of the total estate happened in May. Including the deposit queue, which is a one-way queue into the beacon train. That's crazy. Yes. I mean, this is much more than I thought. Yes. Yeah.

Starting point is 00:08:16 In the same way this kind of feels like post-EIP-1559, it ended up burning way more ether than people thought. Yeah. Same things happening with staking. It's like, man, people are staking way more than we thought that they would. anytime you say eith burn rate you know i got to open up ultrasound money just it's been at least two weeks since we've opened up ultrasound money oh man look at this look at this this is beautiful down only heat supply we are negative 275 000 ether since the merge damn there you win one million

Starting point is 00:08:43 tell me about the ethereum validator queue though that's interesting stories speaking of all time highs the weight to be on the beacon chain for a validator is at all time high 38 days so if you deposit 32 ether. You got to wait 38 days. The world's most popular club. You can't get in. You gotta wait 38 days. Everyone wants to get in. The exit time is at zero minutes. Zero minutes?

Starting point is 00:09:06 You are free to leave. Anytime. It was a happy hour in there, so you know, everyone's trying to get in. Total MEV distributed to validators. Here's an interesting stat on its own. 200K, ETH, distributed to validators of MEV. What does this tell us?

Starting point is 00:09:23 So MEV, this also includes tips. So just anything above base fee is what we're looking at. So 200,000 ether was distributed to ether stakers, cumulatively total, since proof of stake has launched. So ether has received. So spenders have been sent 200,000 ether to savers. This is why ether is great savings technology. And this is a meme I am just ripping from the hands of bitcoins who said VTC is great savings technology. Staked Ether is the best savings technology of all time.

Starting point is 00:09:57 And what we're seeing here is we're seeing spenders, people with short time preferences, giving their time preference to people with long-term time preferences, the eth-stakers. See, guys, what you don't know about David is he is actually a hardcore bitcoiner. He just substitutes the word Bitcoin for ether, and it's the same exact thing. Except it works way better.

Starting point is 00:10:19 Do Bitcoiners have always been right, except they just chose the wrong thing. All right. For the bankless maximalists out there, though, of which both you and I consider ourselves, we want maximally bankless things. This was a great headline and story coming out of decrypt this week.

Starting point is 00:10:38 Ethereum and Bitcoin balances on exchange edge towards a five-year low. What? Wow. So take a look at this. The amount for ether, anyway, there's now 18 million eth, ether on exchanges. That represents 15%.

Starting point is 00:10:56 Did you know, though, in the summer of 2020, it was 30%. So we have about half of the amount of eth on exchanges in custodial systems than we did in 20, 20, 3 years ago. I love that. This is great. This means more people are going bankless. More people are taking custody of their private keys and getting. it off of custodial solutions, very, very bullish on this metric. So we should ask why is this happening? What's going on here? Why are so many people going bankless?

Starting point is 00:11:29 So, I mean, the first, this trend definitely started with post-FTX. So, like, everyone who's been on a centralized exchange has been like, you know, I'm going to try out that self-custody thing. So even there's been outflows of free eth from even all the good exchanges, like Coinbase and Crackett, right? So that's going into people's self-custody, however they want to do that. there's also regulatory fears. And so if the choke point is like, you know what, I'm, I don't want to get choked out. I'm going to do the self-custody thing first. And then also there's the beacon chain, which is sucking up all the ether, which requires self-custody.

Starting point is 00:12:00 Kind of, mostly, most of the time, some of the time. And so interestingly enough, hardware wallet sales are also up only as well. And so there's just all of this demand. And also at the same time, versus 2020, defy as like a utility is way better than it's ever been. The utility of being bankless is up. So as the industry has developed, the reasons to self-custody has also increased. Another one of the most bullish things going on that no one's talking about because it's a bare market and we don't like good news. Except we do on bankless.

Starting point is 00:12:31 I'm always down for some good news. Cyrus Yenese had a really good take, I think, on the current state of the NFT market. Why don't you give us the TLDR? The NFT market is garbage and going to zero. And retail hates JPEGs and crypto Twitter hates all coins with pictures. He's being hyperbolic here. And then he follows up and says, here are a few reasons why I haven't dumped my NFTs because of this.

Starting point is 00:12:54 First, I still like my JPEGs more than I ever liked true alt coins. The art is worth more to me than looking at XRP or Iota balance on a block explorer. He's just picking out like shit coins, basically, picking on them. The market caps of these NFTs are extremely tiny now. A one-eath floor translates to a $20 million market cap. That depends, of course, on the supply of the NFT. generally speaking, the 10,000 PFP is like kind of the standard. Even at the depths of the 2019 bear market, giant scams still maintained higher market caps than this.

Starting point is 00:13:26 $20 million market cap is insanely small. NFTs are structurally underinvested in because people don't understand them yet. Blue chips like punks and apes are sitting at a $1 billion market cap. Which $1 billion coins have more staying power and brain value and utility and fundamentals than punks? I'll wait. Memes are still extremely popular. People have quit buying them, but they can't. can't quit talking about them.

Starting point is 00:13:47 There's something about JPEGs that gnaz at you. They don't disappear the way Neo-Iota and Avax did. Can it really go down another 90% from here? Don't answer that. I'm fairly certain someone will come along and buy this up soon. Why? Because mixing, gambling, and art is a new cultural phenomenon.

Starting point is 00:14:03 I think it's a great series, line of thought. Like, I think, don't overthink NFTs. They were a big bubble, and they were this first big bubble. And, like, just like, Let's be like stupid simple here. Isn't you just saying basically NFTs are better meme coins than meme coins?

Starting point is 00:14:21 Yes, that's exactly right. There you go. That's what it is. And they're going to pump again for the same reason they pumped in the first time. And I think like low, like illiquid, low cap NFTs are like a great place to place your bets in this bear market. I think one one thing I see Cyrus is saying though is the blue chip ones in particular. Those are the ones that are kind of like surviving, right? And there's definitely going to be some up-and-comers.

Starting point is 00:14:44 But definitely there's going to be. the vast majority of NFTs they're going to go to zero or close to zero, right? Yes. Yeah. I think the game is to pick your bets, pick your, place or chips as to which ones do you think are underpriced,

Starting point is 00:14:58 low priced, but still being like circulating around on crypto Twitter. You're betting on culture, aren't you? Yeah. You just make these cultural bets. Cough MFers. Stop shilling your bags, sir. I don't even know. I might own an MFer. Yes, I did.

Starting point is 00:15:12 You have one. Yeah, you have one. You convinced me to buy one. God only knows what. that that's priced at right now. I'm sure it's close to zero. One if, all right. Yeah, yeah. See, it's not at zero. It's like, no, no, that's not too bad. Yeah. That's about what I bought it for, I think, something like this. Uh, all right, David, we've got some stuff coming up. What do we have coming up? Coming up next, we're going to talk about China's potential 180 on crypto, which might be the most bullish news I've ever heard ever and no one's

Starting point is 00:15:37 talking about it. Are people not talking about it for a good reason or not? We don't really know. The Celsius deal gets inked. So what you need to know, especially as a Celsius creditor, And then also, is this the darkest winter cryptos ever had we discussed? But first I'm going to talk about these fantastic sponsors that make the show possible, especially Cracken, a preferred exchange for 2023. If you have not tried out Cracken or all of the beautiful charts that we talk about every single weekly roll-up, go try it out right now. Cracken Pro has easily become the best crypto trading platform in the industry.

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Starting point is 00:17:36 This is coming straight from Beijing. A Web 3 innovation and development white paper? We're not seeing these kinds of white papers being written by the White House these days. Tell us what's going on. So this white paper, which I'm trying to figure out the significance of the Beijing Municipal Science and Technology Commission, which released this white paper. I'm not a China expert at all. So I have no idea how this institution scales in the world of like authorities in China. Anyways, the document states that Web3 technology is an inevitable trend for future internet industry development.

Starting point is 00:18:09 The commission aims to construct Beijing as a global innovation hub for the digital economy. To that, in Beijing's Chow Yang district, will spend at least $100 million yuan, $14 million, every single year until 2025. Not that much money, but still it's more than zero. This got on CZ's radar who gave a take. Interesting timing on this Web 3 white paper, he says. Not sure of the authenticity. Lots of talks about NFTs, VR, AI, Metaverse, etc. Looks like Bite Dance, JD, and Baidu each have their sections.

Starting point is 00:18:39 Gavin Wood and Beeple were mentioned. Web 3, Web 3, Web 3 over the place. Yeah. Gavin Wood? Yeah. Look, someone actually printed this out too. It's an actual printout of the white paper in paper form. Imagine that. And so this is the most interesting part of this article, this white paper.

Starting point is 00:18:56 To me, Hong Kong Securities and Futures Commission released a rulebook for the crypto industry last year, stating that retail investors can start trading crypto from June 1st. What? Okay. Okay, first, Hong Kong. Can you repeat that? Hong Kong. This is Hong Kong, not China, which is an important difference. Okay.

Starting point is 00:19:13 Although, is it an important difference? Yes. Yes. No, it almost seems like the experimental zone for the rest of China, the financial experimental zone, but go on. This is the Securities and Futures Commission. So is that like the equivalent of the, if the SEC and CFTC combined, that's what this would be? Inside of Hong Kong.

Starting point is 00:19:34 Yeah. Okay. Go ahead. Say that retail investors can start trading crypto from June 1. So first off, congrats to Hong Kong for getting rules. Really happy for you guys. And if this was mainland China, this would be massive. Hong Kong's a great pigeonhole, great foothold, great beachhead for the rest of China.

Starting point is 00:19:54 But retail investors can start trading crypto. Wow. Well, that's just fantastic. This is great. There was also a segment, I guess, on TV in China. So from the China Central television. CZ called the Chinese community buzzing after Bitcoin was seen on TV in a segment. And of course, this is pretty tightly controlled state media.

Starting point is 00:20:20 So very intentional to choose to show Bitcoin or not. This is like buy Bitcoin, withdraw cash, redeem. I don't know, again, what all of this means, David. It's difficult to parse, but there seems to be a warming to crypto in China. We in the West are still trying to figure this out because we don't know how big of a deal this agency is. This segment that you're talking about is actually taken down. So it's taken down retrospectively. Well, that's not great.

Starting point is 00:20:49 So others have said, Wu blockchain, his tweets, this is an unimportant government department in Beijing. And it is just deliberately exaggerating emotions. It focuses on the AI and metaverse while the Chinese government is nothing supportive of crypto. So some people are saying it's a nothing burger. I am in a couple chats asking some Chinese friends and other people's opinions about like, yo, what's the deal here? Like, how legit is this? And there is contention.

Starting point is 00:21:16 No one can come to consensus on this. Oh, really? Some people are saying, hey, it's a big deal. Others are saying it's not a big deal at all. Yeah. That's kind of the question. I guess maybe that's the measured take. But China really, I think, has been an enigma on crypto.

Starting point is 00:21:31 So very difficult to discern. But I guess one take on this is I think whenever you say, so China and the U.S. of course are economic rivals, rivals in many different ways. It seems like increasingly if China, if the U.S. goes hard on like banning crypto, negative on crypto, I think China will in turn support crypto. Like if the U.S. zigs, China's going to zag. Take the other upper end of the sick. Yeah.

Starting point is 00:21:57 Right, which is probably long-term bullish. Good for crypto. Yeah. Now, on the back of this, even in Hong Kong, I don't see like a whole bunch of crypto projects being like, all right, cool, Hong Kong. We're moving to Hong Kong. Let's do it. Right. And so until I see that sort of skin in the game and stake, I think the market will be pretty undecided as to whether China is actually warming to crypto or whether this is just a flash in the pan. And the thing is, I feel like China has changed its mind on crypto so many different times. If China came in and said,

Starting point is 00:22:30 we are so bullish on crypto, like we're going to allow everyone to do anything. And that would be really bullish for a moment, and then they could completely change their mind, as they have already done five times over the next year. And so, like, even if we got the most bullish news possible of China, like, no one would be like, okay, but are you serious, though? Because we don't really know. So mixed review on this news, but probably more positive than certainly negative, right? Trending in the right direction. Worst case, it's a nothing burger, but there could be something here. Tell me about the end game. That is correct. That is not bearish. If there's anything we know, it is not bearish. There we go. Tell me about the end game for Celsius, though, David. You promised. Am I going to get any... Okay. So are you ready for this headline, Ryan? I don't know.

Starting point is 00:23:13 I'll brace myself. Fahrenheit wins bid to acquire assets of insolving... Wait, Fahrenheit. Are AI's writing these... Coin desk articles now? Crypto consortium Fahrenheit has wanted bid to acquire the insolvent lender Celsius network whose assets were previously valued at around $2 billion. Oh, okay.

Starting point is 00:23:29 I thought they got this wrong. I thought they converted Celsius to Fahrenheit. No. Fahrenheit is the winner of the grid. Crypto consortion called Fahrenheit has purchased Celsius. So freedom units taking the victory here. Okay, so the group will acquire Celsius institutional loan portfolio, staked cryptocurrencies, mining unit, and additional alternative investments.

Starting point is 00:23:49 So the plan proposes that all Celsius assets except liquid cryptocurrencies will be transferred to a newly formed company, Nuco. And so here's the deal. Here's the deal. You ready for Iran? Yeah, I'm ready. What you're going to get? Do I get anything?

Starting point is 00:24:03 If your Celsius bag is more than $5,000, you will get a small distribution and become a shareholder in this new company, which is going to have some private equity, some mining assets, etc. It's a little bit more. It's a little bit more than 5K. So that's what I get, huh? Oh, yes. Yes, perhaps. Okay.

Starting point is 00:24:20 And so what does Celsius currently have to give all these new shareholders of this new company? They have some DeFi crypto assets. They have some, they have a loan book, loan book purportable. P.E. and VC investments, liquid cryptocurrency, about $500 million, and also mining assets, because Celsius wanted to buy Bitcoin miners because they thought that was a good thing to do with the money. So this new plan proposes that all of these, except the liquid crypto assets, will go into newly formed company, NUCO. 100% of the equity in this new company will go to the creditors that are owed more than $5,000 pro rata. Those owed less than $5,000 will get $0.70 on the dollar

Starting point is 00:25:00 on their claims and no equity. If you are a Celsius holder, it's a totally different deal if you have 5,000 or less. If you have less or less than 5,000, I should say, then you just get 70%. Right. So you get a 30% haircut and you get 70% and no equity. If you have more than $5,000, you get this new co equity. You know, so if they're, depending on how they're marking this, like $5,000, say you have ether in Celsius and Celsius goes insolvent. That ether was priced higher.

Starting point is 00:25:31 Yeah. So like 70% on your dollar for a forcehold of ether for that amount of time. I didn't think about that. Like play out. If it's marked to market at the time. If it's marked to market. Yeah. If in dollar.

Starting point is 00:25:40 I don't know how they're doing that. Huh. Yeah, I don't know that detail. That'd be a good question. 70% on the dollar for the claims and no equity. Yeah. It depends on what the value of ether was at the time, certainly. Yeah.

Starting point is 00:25:52 Okay. So if you are a creditor above $5,000, you should not expect to see much returns after you get all the deduction. So you get the distribution of the liquid crypto assets that is left. after they pay out the sub 5,000 people. Any share of the monies that Celsius gets from suing Machinsky, so that's fun. And then you also get the share of this new company equity.

Starting point is 00:26:12 Machinsey has no money. Come on. You're not going to get anything. No, he cashed out a lot of money. Oh, really? He cashed out hundreds of millions, him and his wife. Yeah, along with all the other executives. Yes, yeah, big clawbacks. All right.

Starting point is 00:26:24 I mean, I don't know how much that's going to translate. It's revenge equity, then I'll take some of that. Okay, so there are new managers. and investors also that need to be paid. So $35 million per year salary to be paid to the management team of this new company. So who are these guys? That's why I think it's the Fahrenheit team. The Fahrenheit team. Who will be putting $50 million of their own money to buy the shares of this new company? Their equity is subjected to a two-year lockup that they can sell up to 30% of their equity after one year if Celsius equity trades at 150% of net asset value. After one year,

Starting point is 00:26:57 the Fahrenheit team has the option to dump on you if Celsius equity, tokens increase in value. So they can, the Fahrenheit can sell in one year if, uh, the value of this new equity token goes up by 50. What are they going to do? What's their business? Are they going to take it? They're going to take it, reshuffle it, try and rebuild it. Um, I don't know. The same thing was going on with FTX 2.0 right now. It's like they're also trying to restart that exchange. Yeah. I, I'm not, I'm not bullish on this equity. Um, I'd rather get 70% of my money back right now. I'd rather, than have this.

Starting point is 00:27:32 I take it you had more than $5,000 in Celsius. Yeah. Yeah. I mean, not much more, but like, yeah. Yeah.

Starting point is 00:27:38 So I'm not, I don't love this. I, but I don't know the new managers. Schmalich. Schmimiminski is going to be a new manager. I mean, if there anything like the old managers,

Starting point is 00:27:51 like, come on. This doesn't help. Well, hey, if you have enough money to buy a company like this, to make a bid in this state in the market, you got to be doing something not terrible.

Starting point is 00:28:00 But that, That's hopeful. Fahrenheit. All right. So we're freedom units. Is that what they're called? Freedom units? Yeah, Fahrenheit.

Starting point is 00:28:09 Oh, my God. You're making a joke about the Fahrenheit system rather than the metric system. I thought that was the token. They're called like Freedom Units. It wouldn't surprise me. All right, David. Well, let's move on from Celsius. I'm going to leave that in the distant past here.

Starting point is 00:28:21 I want to talk about where we are today in the crypto market right now. And this is a question for the OGs. Is this crypto winter darker? than the last. What inspired this question for me was I saw this tweet from icebergy, who said, every chat I'm in is super depressed about the current state of crypto. I don't know what chats this individual is in. They look like kind of a dev angel investor focused on crypto, NFTs in Bitcoin. So probably a crypto trader type, but definitely fall as price as closely as we do. So that kind of begged the question to me, is this crypto winter darker than the last one? And I put out

Starting point is 00:28:59 a question to the OGs. I got a bunch of fantastic responses. Maybe I'll read a couple and then I'll get your way in. So Dan McArdle says, no, not at all. In 2011, by the way, Dan's been through about all of these. In 2011, negative 94% he's talking about, I think he's talking about Bitcoin price primarily, so not full crypto market cap. So 2011 was negative 94%. It was easy to fear. it was done for decades. Crypto was done for decades. 2015, we got a negative 87%. That was the bear market there.

Starting point is 00:29:35 2019, negative 84%. That was the last one. But digital gold had caught on the beginnings of defy were apparent. 2023, we're only down 78%. Centralized stuff failed. Oh, well, every other bear market was worse. So Dan's take was every other bear market was worse.

Starting point is 00:29:51 And he brought some data points objectively. rather than 2011, negative 94%, 2019, negative 84% Bitcoin at least, is only negative 8%. So that's a take. Brantley.eath says, not even close. Crypto is an order of magnitude bigger, more developed, better funded now, and has a far lower chance of total failure at this point. DC investor says, no, because we are not dealing with existential crisis. But we got big enough this time where mainstream questions the value prop like the natives

Starting point is 00:30:23 last time. A lot of responses to this. From what I could tell, most of the OGs, here's Anthony Sasano. It says, not even close. Last bare market, people were questioning if crypto would even survive. This bare market, there's more genuine actual long-term focus building going on than I've ever seen before. Most of the OGs are saying, no, it's not worse. Do you concur? What's your take on this question? I think there's two sides of this conversation. I think almost by definition, OGs who have seen two bull markets. So that's you, that's me, that's Zazano, that's a number of these people here. By definition, like, it's not as bad for them because, A, one, they've done it before. And B, they bought in at like 10x lower prices to begin with. So for them, specifically,

Starting point is 00:31:06 it's not as bad because they're just in a little bit more of a cushy position. I think the first, everyone's first bear market feels the same, stresses them out in unique and different, in unique ways. And that is always going to be the same. Everyone's first bear market, their conviction is going to be tested. Last bear market, we had certain challenges that we do not have this time. And this bear market, we have new challenges that we did not have last time. Last time, Ethereum funding was about to go to zero when you were about to, like,

Starting point is 00:31:35 have to pause development to figure that out, right? And we legitimately had no use cases on the app there. Like, why, in Ethereum inspired me in 2017 to 2018? I can't remember. it was just like the vision I guess I was around yeah the hope for that it could be something Reed did not have the regulatory

Starting point is 00:31:53 oversight and like Gary Gensler and chokepoint 2.0 so that is the new challenge and that is what these current people who are going through this bear market are questioning themselves about not about like what's the utility etc etc and so yes every single bear market is

Starting point is 00:32:09 the stress from every single bear market for every single new cycler is always valid and unique And I would also agree that, yes, these challenges are different and perhaps easier, but they are still extremely like tough challenges. So I'm a little bit on both sides. What's kind of interesting is this is sort of almost a bare market defined by a negative regulatory reaction, negative nation state reaction to crypto. And that just means we're there. Like we're at the end of the level.

Starting point is 00:32:41 This is round one of the boss fight, right? and like we're fighting the final boss. This won't be the only battle. I think the final boss will take multiple forms. But like that's how far we've actually come. And if you had told me in 2019 that the 2023 bear market would go down to just less than a trillion dollars, I'd be like, bear market. Wait, what?

Starting point is 00:33:07 But yeah, but that's because you're, that's just because of when you got in though. It's just like the where your disposition as a result. of the place that you started in the crypto industry. I'm just, I guess what I'm saying is objectively at one trillion dollars, we got some punch. There's something here in crypto, and that means something. But I totally acknowledge that everyone's bear market probably feels just about the same. So if this is your first time, it probably feels like the first time comparably to an OG. But that's why I do think OGs can kind of take the perspective a little bit.

Starting point is 00:33:42 they have a valuable perspective in that they can say objectively, rather than my own feelings, objectively, is this a harder bear market than previous? And they're saying, anyway, it's not worse than the last one. The threat of crypto not coming back is completely gone in my mind. And that is the big difference. David, what do we have coming up next? Coming up next, Blend. Blur's new NFT lending platform is putting in numbers. We got the World Coin race to talk about USC natively on arbitrariness. which when we got some moon pay executives pocketing $150 million before shuttering the company. Oof. And so much more to talk about. But first, a moment to talk about these fantastic sponsors,

Starting point is 00:34:20 especially Metamask and Metamask Learn to learn about all of the crazy crypto jargon that Ryan and I sometimes use without explaining ourselves. So if we do that, sorry. But also, MetaMask Learn has a product to learn all about that. So let's go hear from them right now. Learning about crypto is hard. Until now, introducing Metamask Learn, an open educational platform about crypto, Web3, self-custity, wallet management, and all the other topics needed to onboard people into this crazy world of crypto. Metamask Learn is an interactive platform with each lesson offering a simulation for the task at hand, giving you actual practical experience for navigating Web3. The purpose of Metamask Learn is to teach people the basics of self-custody

Starting point is 00:34:59 and wallet security in a safe environment. And while Metamask Learn always takes the time to define Web3 specific vocabulary, it is still a jargon-free experience for the CryptoCure. user. Friendly, not scary. Metamask Learn is available in 10 languages with more to be added soon, and it's meant to cater to a global Web3 audience. So, are you tired of having to explain crypto concepts to your friends? Go to learn.menomask.io and add Metamask learn to your guides to get onboarded into the world of Web 3. Mantle is a brand new, high-performance Ethereum Layer 2 network, built differently from the other Layer 2 you may be familiar with. Mantle is a modular layer 2 built on the OP stack, but uses eigenlislein.

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Starting point is 00:36:07 in the world. Bit Dow. Mantle already has sub-communities from around Web3 onboarded to help the growth of Mantle, like Game 7 for Web3 gaming, or EduDow for the world of D-Side, and buy-bit for TVL, liquidity, and on-ramps. Check out Mantle at mantel. Mantle at mantle.combe, Blur's NFT lending platform has put in some absolute numbers, loan volumes of $308 million in the past 22 days. Why 22? Because it launched 22 days ago. to the NFT trading platform that we all know is blur. Their blend platform is doing something like 20 to 30% of the total platform's revenue. So Azuki's amassed 70,000 ether in loan volume coming from 6,500 loans, coming in at number

Starting point is 00:36:55 one in the preferred NFT borrowing collection on blend. Cryptopunks coming in at 35,000 eth in loan volume, Malady is coming at 22.5,000. So we all knew that NFT-Fi was a thing, but blend. from Blur has just like dropped an absolute cannonball in the world of NFT finance. This is just exploded. So 82% of the NFT lending market. Can you just explain what is an NFT loan, David? Yeah. So you put up your NFT as collateral and then you loan some money. You take it to the pawn shop basically. Yep. Yep. Yep. And you pay you back your ether, your USC. I'm assuming this is all ether. And then you get your NFT back or you don't and you get

Starting point is 00:37:33 liquidated and somebody buys your NFT as a like a put on the NFT. Wow. So, this could cause some tears if NFTs go up again and somebody, you know, ponded off and sold the bottom effectively. That's very interesting, though. It's good to see NFT-Fi taking off. Tell me about the Coinbase wallet, David. Yeah, so Coinbase wallet has introduced gas-free USDC transactions on Polygon. So you can send USC on Polygon using the Coinbase wallet for free. Coinbase will cover your gas fees. I was wondering what the mechanism behind this. And so this is actually using EIP 3009, which is an account in the account abstraction category. So it's using this EIP 3009 transfer with authorization.

Starting point is 00:38:16 It's a meta transaction, which is, again, part of the whole account abstraction thing. And so Coinbase just relays the transaction, pays the Matic gas fee, and you get free USEC transfers on Polygon. I think like this is a cool marginal improvement for a narrow use case, which is USC in Coinbase Wallet on Polygon. but I think why this is a big deal is that it extrapolates very, very well. As soon as EIP 4-844 comes, dank sharding and gas fees on layer 2s come, there's going to be a fight for consumers, for wallet users, for transactors on chain. And it's going to come to, like, I bet you, most transactions on chain from retail users end up being free because someone's going to subsidize that because that is a competitive advantage.

Starting point is 00:39:00 They should be free. predicting this with this information. I'm a loosely held prediction. Most transactions from retail end users are just going to be free on layer 2s. Or free, or they might get paid for transaction. That's a different story. Well, this is really interesting because this is a key element of U.S. Imagine the crypto experience right now.

Starting point is 00:39:22 Imagine if you were to transfer money from somebody in Venmo, you actually had to have like PayPal stock, a portion of PayPal stock to pay that fee to transfer. like that's a bad ux and so this is working on that problem here by the way uh us dc is now natively on arbitram as well actually not yet sorry you gotta wait seven days june 8th it will be natively on arbitram so it's good news for layer 2s as well um david what is going on here moon pay executives pocketed 150 million dollar raised from series a of course this is the account uh web 3 is going just great from our friend molly white's account yeah okay

Starting point is 00:40:00 Of course it would be her. Hey, Molly, how you doing? What's up, Molly? Okay, so what is the story here? What dastardly deed just went on in Web 3 again? Moon Pay Insiders, CEO Ivan Soto Wright, and along with others, sold $150 million of their own equity in their series A raise in 2021. So Moon Pay raised $555 million at a $3.4 billion valuation. And then the founders cashed out $150 million of that right before crypto crash. Not a good look. Not great. VCs have some responsibility in the kind of their documents, you know, raises to not let this happen to them. And because this, if you're an investor, this kind of thing does not feel good. If you just invested in a company and the founders are already exiting before they've seen it through. Right. So I guess a little bit like shame on the VCs

Starting point is 00:40:51 who also did this too. But also shame on like moon pay. Like it's just bad form to do this. Yeah. It's definitely a, if it bleeds, it leads type of headline. Maybe the VCs were okay with it for some particular reason. But man, MoonPay was inside of one single bull market. As a founder, I would feel bad if I exited inside of the same bull market. I would, like exit in the next bull market. That's the social contract. After you get the thing done and it's really there and it's really built. Hey, maybe they consider it done. Paradime. One of, I think, the most prestigious, one of the, one of the better VC companies in crypto, I would say, is broadening its crypto only focused to areas, including AI? So Paradigm just caught the AI bug. That's the

Starting point is 00:41:34 story here. David, are they abandoning crypto? Is Paradigm done with crypto? What's going on? So they have changed their bio on Twitter. They've also changed some of their website. So it used to be paradigm backs disruptive crypto slash web three companies and protocols. And now it's paradigm is a research-driven technology investment firm. The line, there's a line, we believe crypto will define the next few decades, was removed from the homepage, which now makes no mention of Web3 or blockchains. And so a comment from a source for the block,

Starting point is 00:42:06 which wrote an article about this, this change doesn't mean the company is shying away from crypto, but rather highlighting its reach into adjacent areas such as AI. So Paradigm gets the AI bug, changes up their website. And like, why is this news?

Starting point is 00:42:19 Because people are talking about it on crypto Twitter. Paradigm or now drifters, they never were committed to crypto in the first place, blah, blah, blah, blah. What's your take on this, Ryan? I don't think so. Look, VCs are going to go where the opportunities are for VCs.

Starting point is 00:42:35 So look, if crypto is jealous about that, I don't really understand that take. I guess I will say that there is an element where a lot of investors, though, in general, like the shine is worn off of crypto. Like, AI is the new hot thing from an investor perspective, right? Right. And I think that there's some opportunity in that because when everyone else, like, the best time to actually be looking at AI was probably like 2021. You know what I mean? Like right before. But everyone was focused on crypto.

Starting point is 00:43:07 Yeah, I think it's kind of a no story. Maybe crypto's feeling a little bitter about being forgotten here. I think it's right. I think it's exactly that meme of the guy like looking over his shoulder and his girlfriend, the crypto girlfriend, is like, who are you looking at? and the paradigm's looking at AI. Like, again, why are we talking about this take? Well, because there's a decent number of people decent, number of people on crypto Twitter

Starting point is 00:43:31 who were like up in arms about this. In my mind, this isn't news. Y'all are just bored. So why are we talking about this day? We're talking about it because other people are talking about it. Last week, three weeks ago, people were canceling bank lists. Two weeks ago, people were canceling Ledger. And now people are canceling paradigm because they changed a bio.

Starting point is 00:43:50 Oh, people are canceling paradigm over this? Yeah, this is why this is news. It's like people are trying to cancel Paradigm. It's like, no, this is done. You betrayed us. Paradigm. Paradigm has like a billion dollars that they need to deploy. In crypto, though, there is news.

Starting point is 00:44:01 It's layoff season. Binance layoffs. They're calling this a pruning of non-performers. And they have laid off apparently 20% of their workforce. I believe that's correct. They had 8,000 employees. Oh, my God. Yeah, it's a lot, right?

Starting point is 00:44:18 So 20% down. Also just noticed this, this, week in Nansen, analytics company, a great product they've built. They just laid off 30% of their workforce. So the CEO kind of heard about this and this is his take. It's an extremely difficult decision. We announced a reduction of our team by 30%. Two reasons for this. First, we scaled up the team on the back of breakneck growth. It's kind of a whiplash. Crypto was, you know, expanding so fast, you felt like you needed to hire a ton and now you have to take that off. And this year has been brutal for crypto markets. So,

Starting point is 00:44:51 I think crypto startups, crypto companies are taking an opportunity to sort of prune and to scale back right now. And that's just the way things are in the bear market. These companies aren't going anywhere. I'm very confident of that. They are just taking some time to kind of prune. Coinbase did this earlier in the year. Like Gemini did this, Cracken did this last year. All the big companies have laid people off.

Starting point is 00:45:16 This is just a normal part of the market cycle. Like there is the layoff phase for it for every. company. And really, like, if you're not, if you are optimizing for growth and you are not laying people off in the bear market, you haven't picked the correct optimization point. That's what Brian Armstrong straight told us with his policy that last time we had him on the podcast. Like, it's always, it's sad to see layoffs. It's like an unfortunate headline for the company. But like if you, if you, if you are not laying people off, then you didn't hire enough in the bull market. So this is normal. Expand, contract. Expand contract. That's how things grow here. Speaking of

Starting point is 00:45:51 expansion, WorldCoin, just getting ready to expand mightily, I think here. Sam Altman and company raised $150 million for the WorldCoin project. What is the significance of this? Well, the WorldCoin is really putting rubber down onto pavement. And so they are just ramping up everything. I feel like they think that they are primed to take the next big steps as a company to scan more people's eyeballs to get more orbs out into the world and actually go from kind of a Monolith to more of a modular company, which is part of the whole like world coin. Every time you say that, scan people's eyeballs with an orb. It just can't not sound dystopian.

Starting point is 00:46:27 It is, it is dystopian. The reason why I'm like a comfortable saying those words is because like I have accepted that biometric scanning is a valid attempt to produce civil resistance. And once you accept that premise, you understand that there are. Then it's like, okay, well, what are you going to scan? prints. What are you going to scan your face? Well, you need to scan something. And the iris is the most civil resistant part of your body. So if you, if you accept these assumptions, then you get, okay, we're going to have to scan everyone's irises. But think of this. I get that. So technically, this may be the right solution. But think of this. Crypto bros want to go orb you.

Starting point is 00:47:10 The optics are terrible. And that's world. And who is it? Oh, it's the maker of chat GPT, the most powerful AI on the planet wants to be. Oh, and the orb is this like, chrome ball that like all these WorldCoin employees have a habit of like pulling out of their backpack. I mean, there could be, you know, all press is good press kind of thing. Like, this is very attention grabby in a way. I just wonder if it just, you know, segues itself off a cliff rather than actually works. That's my big question right now. The actual, if you're concerned about how the WorldCoin project is going to work or not,

Starting point is 00:47:44 you should pay attention to how people are trying to game it. And that is definitely currently underway right now. People are trying to game WorldCoin. Because the idea is of WorldCoyne and part of what they're raising money for is that they make building the orb more permissionless. And they also make scanning eyeballs also more permissionless. So you have like orb agents. God, agents of the orb.

Starting point is 00:48:09 Agents of the orb who are like not employed by WorldCoin who are incentivized to go scan people's eyeballs because the protocol pays them to do that is like a referral fee. I know this is so. Damn. This is not making me feel better. As soon as you incentivize that to happen, well, how are you going to get to 8 billion people? You have to do this in a permissionless incentive driven way.

Starting point is 00:48:28 Yeah. And so like they pay you in WorldCoin to scan people's eyeballs as like a referral fee. And so then people are going to be like, okay, do I need to go scan individuals or can I game the system somehow? And so like people are trying to game the World Coin Protocol and like Sibble attack it. And if it stands, if the World Coin Protocol stands up to the, those civil attackers who are paid to try to attack the thing and it still works, you got to be bullish on the system. I'm sorry. I think it's purporting to solve a massive

Starting point is 00:48:56 problem. That is the upside here. It's right. It's like identity, some kind of an on-chain identity solution. But wow, the branding's not great. One thing they have to really do is they have to get the privacy maximalists on their side. I think they have to get the decentralized, decentralization maximalists on their side because they're not going to get the centralizers on side. You know, the nation state level wants to... Of all the vectors to hate WorldCoyne, I think that one is actually the easiest to account for.

Starting point is 00:49:22 What? Which one? Privacy. Privacy. It's pretty easy to not... They have all of the, like, here's how we don't collect your data. That's all available. And, like, generally accepted by people I respect. You have to get people who are respect in the privacy community to, right, and

Starting point is 00:49:38 penalty audit this. It can't just be WorldCoin being like, we don't start anything. I would love Zucco's take on WorldCoin. Zucco's take. Yeah. A few of other. privacy maximums we've had on, Matt from Hopkins. Remember we had him on the podcast. I would love his take.

Starting point is 00:49:53 Anyway, interesting, a lot of money. Big Warchest here and some major investors coming in, including blockchain capital, A16Z, Bain Capital, et cetera. So it's definitely a lot of VC firepower here. Speaking of which, Magic just raised $52 million to grow crypto wallet as a service used by corporate clients like Mattel and Macy's. Yeah, these guys. guys have been around for a while. They used to be called a Fort Maddock wallet, if you remember that.

Starting point is 00:50:20 Way back when? Yeah. Okay. That's who these guys are. I actually haven't heard about them in a very long time. But I remember working with back in my last startup as like, hey, we need wallets for people who don't give a shit about crypto. Very practical. Very practical. Very practical. Yeah. Very similar to Coinbase's as a service system that they built up. Yeah. So congrats of the magic people. You guys have been a heads down building for a very long time. Very good project. David, what do we have coming up next? Coming up next, we got questions from the nation. We're going to talk about Lido's dominance.

Starting point is 00:50:52 We're also going to talk about whether or not Ethereum is better or worse because it has a respective and visionary thought leader, Vitalik, of course, takes of the week and what Ryan and I are bullish on. And then we got a song-a-day from Song-A-Day, man. And we will get started with all of that stuff as soon as we talk to some of these fantastic sponsors that make this show possible. Immutable is at the forefront of Web3 Gaming, on a mission to bring digital ownership to every player,

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Starting point is 00:52:55 Of course, these are asked in the bankless discord, which is available to all bankless citizens. Here's the question. Given Lido's dominance and staking share and clear intentions not to self-limit their shares, Rockapultz Dow did, would it be possible for the Ethereum Foundation to implement a cap on the maximum share any protocol can control? While not ideal, would it be possible to implement a protocol upgrade as a last resort to protect the network from majority control? Blue Furball asks this question.

Starting point is 00:53:24 David, what do you think? So there's two parts of this question that I think are worth pulling out. Would it be possible for the Ethereum Foundation to implement a cap? And then is that cap even possible at all? So EIPs come from many different places. Whether or not the Ethereum Foundation has deemed it appropriate to, actually push and promote an EIP. EIPs are discovered more emergently.

Starting point is 00:53:48 The Ethereum Foundation didn't push 4-844. Dankrad and Proto Lambda, who's now on optimism. These people came up with Deng sharding and then pushed that. So I'll just throw an objection to the idea that the Ethereum Foundation is implementing the cap. I mean, you have to get client devs on board as well. I mean, you get this outside of the Ethereum. EF researchers. So if like Dankrad and Justin Drake came to consensus about an EIP, then yeah, that came from the EF.

Starting point is 00:54:19 They are influential. Yes. And they are in the EF. So like semantics here. But the bigger question is like, can we implement a cap? And that answer is no. We cannot. Because the Ethereum beacon chain does not actually know what is an entity and what is a solo staker.

Starting point is 00:54:34 It doesn't have information about who is what. And so that is a subjective thing. That is something external to the protocol. So it's not actually possible. How would you determine who's got what ether where? The Ethereum protocol is not aware of that fact. And so there's no way to actually enforce decentralization at the protocol layer. That's part of the layer zero.

Starting point is 00:54:59 So I think there was actually discussion this week, a lot of discussion on LIDA this week, you know, and some concern about the share of the market. It's over 30%. I don't know if it's like 33, 36 percent somewhere that. range. It's in the 60%? No, no, no. It's not that high. Yeah.

Starting point is 00:55:15 As part, you know, what are you saying? Is a proportion of total eth-staked? Of liquid-staked ether. Okay. Liquid-staked, ether, yes. But total eth-staked, it's closer to the low-30s. And that's what protocol, like, designers are really mostly concerned about, is the total proportion here.

Starting point is 00:55:32 And if it gets over one-third, one-third versus two-thirds, you know, like, there are different bad things that can possibly happen. Danny Ryan wrote a great. post about this this week, which you might refer you to as well. So there's cause to be concerned, but the remedy is on the social layer, I think right now. It's basically people saying, hey, don't stake with Lido. They have too much steak. So interestingly enough, it's also where the problem arises, because Lido is explicitly a monopolistic doubt. They have explicitly stated, no, our goal is to be the staking provider.

Starting point is 00:56:10 We will not self-cap because that's antagonistic to our vision for ourselves, which is to be the most decentralized staking as a service protocol. But don't you think Ethereum needs to be resistant to that? So people often compare it to Prism, Prismatic, right? And they say, well, you know, Prism took, you know, fantastic steps to sort of self-limit their own growth. And there was a time where they were like 70% of the beacon chain client, right? And kind of growing.

Starting point is 00:56:38 And now they're back down to like, what, 30 to 40%. What's different, though, with Prism versus this is there's no profit incentive for Prismatic to increase in market share. In fact, it would only cause more hassle for them. I mean, I remember we talked to Preston Van Loon after and Terrence from Prismatic after the Ethereum finality event. And they were like, thank God there were other clients. It's like, it puts the burden off of us. Yeah, Lido does not say, thank God there's rocket pool. Exactly.

Starting point is 00:57:07 Lido looks at rocket pool and be like, I want your stake to Eith. Okay. Put it in my vault. So what do we do about this? Is it a problem? What do we do about this? My answer for what we do about this is like level up. We have to have some staking competitors that are competitive with Lido and win the old-fashioned way,

Starting point is 00:57:28 which is like a competitive tool set that people want to stake with. it's not happened yet, which is so maybe that's a bit like hand wavy. Right. Do you have a better answer? Yeah, there's plenty of staking as a service DAO is coming on to the scene. So there's competition available. The supply of competition coming into the market is that's not a problem. Many people would like to start and are starting staking as a service orgs.

Starting point is 00:57:57 Some differentiated, some not. Really, the big answer is we need solo stakers. So there was the rated.network report that came out that there was 6.5% of validators on Ethereum are solo stakers, which sounds like a small number, and maybe it is. But remember, 6.5% are these ultimate hardliners who will not compromise Ethereum till I die, go down with the ship. These are these type of people. And you only need a minority of those to make sure the Ethereum is protected. you they're still the concern of like anything above 30% is bad the Lido apologists will say well Lido itself is a decentralized org it wants to be decentralized even more than it already is

Starting point is 00:58:42 and it's taking steps to be fair taking steps yes then and then the other light the further Lido apologist will just point at Rocket Pool and say hey that community that the rocket pool just wants it's mad at Lido because Rocket Pool wants that ether too because they're in second place Because they're in second place, right? Yeah. Granted, the culture around Rocket Pool is healthier for Ethereum. So if Rocket Pool had more and Lido had less, I would say that that would be objectively better for Ethereum. But you also have to be aware of the incentives for Rocket Pool in that community.

Starting point is 00:59:15 Everyone wants to take down Lido. Ultimately, is the layer zero that is going to be the thing that protects Ethereum. And so this is why anytime Lido shifts into having too much control, you're going to get just like, natural pushback from a nebulous set of participants with their own individual incentives. I will say going back to my first point, though, making solo staking easier is going to always be the best answer. Yeah, there's so much work to do with making. And that's really what the EF should be doing is making gooeyes for solo stakers. Goose. So like if you have to as a solo staker touch the command line, that's bad. And we should not have that. And we should fix that. And

Starting point is 00:59:58 that's going to be a bunch of better solution. I think so too. I think so too. But the layer zero is trying all sorts of things, including shame, right? Shame. Shame. Yeah. Shame. Lido, stop being so monopolistic. Well, it's shaming Lido, but also shaming people who stick with Lido. And that is a stick that layer zero can use. I just, we got to have better sticks. We have better carrots and sticks than that. Do you own any steak teeth at Bankless? Or do we only own our eth? We don't know any R-Eath, but we You're talking about Lido Staked, Eith? Lido Stakeet, yeah.

Starting point is 01:00:31 We don't own E at Bankless. But we do run, we do run rocket pool mini pools. Yes. Oh, are you trying to virtue signal? Yes. David just slip that in there. Just virtue signal. We're doing, we're doing our part.

Starting point is 01:00:46 All right. Here's a question from Canis, Kness. Here's a question from Kness. What effect do you think it has on the evolution of specific, of a specific chain the fact that Ethereum has a clear, respected, and visionary thought leader. Vitalik, of course, compared to Bitcoin, that has none, really. What do you think about that? So Satoshi did the white paper thing.

Starting point is 01:01:11 Right. He was there for a little bit. He participated on various Internet forms and then disappeared. Right. And Vitalik, he founded this thing, created the white paper, has not disappeared, has been active in shepherding this. I think in a decentralized leader type of way. So it's very different from the model of a CEO, but still, he has not abandoned the project. He's been working on it, even though most of the other Ethereum co-founders did sort of abandon

Starting point is 01:01:39 Ethereum in early days. And I didn't honestly know what Vitalik would do, whether he would kind of stick with it or whether he'd do the Satoshi thing. Anyway, the question is, what effect do you think this has had on Ethereum? I am grateful that Vitalik is the leader that he is. The bitcoinsers will point to Vitalik and be like, look how centralized Ethereum is, whatever Vitalik says goes. To some degree, like whatever Vitalik says goes isn't wrong, but it's not in the way that

Starting point is 01:02:08 they're saying it is. They're saying like, yeah, like Vitalik is this dictator of Ethereum. It's like his way or the highway. The only things that Vitalik feel strongly about are like the right things to feel strongly. He's just right. He's like the right leader. And I say that as somebody who's like, you know. You follow Vitalik more like you might follow like Gandhi.

Starting point is 01:02:26 For instance, it's not like top down. The Bighorners are going to love that one. You know what I mean? But seriously, though, there's an element of like, there's some spiritual leadership here. He's earned it. Right. And his track record is proven. Now, as somebody who spent the last two months with Vatalik and Zuzaloo and Montenegro,

Starting point is 01:02:43 I can tell you he's doing many other things that are not Ethereum. And so he is a leader of across industries, across technologies. And so, like, Ethereum is not the guy. It's not his full-time job. The guy's a guy. Like, he's not the leader of Ethereum. He's Vitalik. Also, he has philosophical directions for about how Ethereum should be developed and stuff.

Starting point is 01:03:06 But, yeah, he's doing, he's living a life. And some of it happens to be concerned about Ethereum and other things he's concerned about, like, network states and longevity and public goods. So, I mean, the question of, has this had an effect on Ethereum? Undoubtedly so. In fact, I would say Ethereum would not be where it is. if the leader kind of abandoned it, not abandoned it, but just went, you know, MIA after the white paper or after Ethereum 1.0, right? It really needed some shepherding leadership. And I'm kind of reminded, you know, I'm a sucker for like founding, you know, America type of things, right?

Starting point is 01:03:46 Founding fathers, after they wrote the Constitution, they didn't just like yeed out of there, right? I mean, they were still, even Washington, won the Revolutionary War, served as president for a period of time. the country kind of needed that. There were a lot of questions that the original constitution didn't solve. And so you needed a bill of rights. And so you needed to hash things out in like the Federalist papers and all of these things, if the founders of the United States just left after the first white paper of America was shipped, this would have been a complete mess.

Starting point is 01:04:16 It took some time to sort all these things out. And I think the same is happening with Ethereum. It's more complicated than Bitcoin, too. Yeah. Right. Bitcoin had the luxury of being simple enough where the founder could just leave and it be okay. Ethereum was not that, and is not that, and needed that guidance from the people who are philosophically and ideologically aligned for me. I still think Bitcoin needs it too.

Starting point is 01:04:35 Well, that's a different story. The best leadership that I see Vitalik doing and that I know actually works is when he writes articles titled legitimacy on his blog post and that article becomes cited in startups' reasons for existing. I've seen the Vitalik legitimacy post cited in like Dex more than most other like articles that I've read. And that's just leading leading in this very like passive like low touch way that still steers an entire ecosystem. Yeah. Yeah. I don't know if I answered the question, but I think we gave the content that the illithic question asked for us. Well, yes, Vitalik was necessary.

Starting point is 01:05:19 Yes, it massively influenced Ethereum. No, it wouldn't have gotten here without a Vitalik. or someone like him, and I do think he is actually a fairly unique type of leader in history. A lot of leaders kind of grab power and they tend to keep it, and he's gone in the other direction. Vitalik is much less necessary for Ethereum to succeed today than he was five years ago. In fact, I think at this point, if Vitalik left, Ethereum would be totally fine. That would have been true a number of years ago. The last few times I've introduced Vitalik on the podcast, I've introduced him as Vitalik,

Starting point is 01:05:53 the guy that holds the record for the most ignored EIPs, proposed EIPs. It's true. I think most of these EIPs are ignored. Huh. That's interesting. We should delve into the ignored ones. Maybe there's some good ideas there. That is some niche content.

Starting point is 01:06:09 I don't know. I've not understand it. All right, let's get to some takes of the week. We got one big one from Kobe. So Kobe on opportunity, how do you win during the bear market, David? What do you do? This is the season that we're in. We've called it kind of the apathy market.

Starting point is 01:06:25 Kobe had some advice. And I think he said this sometime in maybe 2021. In the bull market. At the peak. So when everyone was drunk, and look at these podcast participants. Do you recognize some of these faces here? Van Spencer Suzu. I don't know who the others are.

Starting point is 01:06:43 Okay. Some bull market content people. Anyway, this is pre-pre three-hour capital demise. Let's play the clip. You think the majority of people that don't make it are the people that lose interest between ball markets. Like, people that have known about it from so far back who still haven't made it. It's because they, as soon as it gets frothy, it gets to the bull market, they, they re-buy the all-time high breakout. So they re-bought at like 20K.

Starting point is 01:07:16 And they play the ball market. They're a little bit naturally bearish. and the bear market hits and they stay interested for about a year and then towards the tail end like late 2018, 2019, they just naturally lose interest and they go, oh, this shit's over,

Starting point is 01:07:32 I've got life commitments, whatever. And then they get back involved when it starts getting frothy again. And those are the people that are not going to make it. So if there is one piece of advice that I can give is like find a way to remain the same level of interest that you have now

Starting point is 01:07:49 when you check the chart every year, day you like lose sleep over your positions whatever the fuck you're doing you over leveraged apes like you need to have the same level of interest when everything's really boring because right now it's like everyone's interested right like my uh my like parents are like super and like what shall i buy my friends from school way back when are hitting me up saying is cardano good and whatever but none of those people are interested in the in the bottom no of those people are interested when it's going sideways for six months and if you tell those people at the bottom in the six months sideways now's the time they fucking ignore you they're like

Starting point is 01:08:25 nah it seems a bit risky like it's not for me i'll look at it later and then they hit you up in january of this year like is it too late to get in by the way and you're like no just immediately mark it by it's like 25k or something it's 30k and they're like i'm gonna wait for a dip and at 60k they're like is it too late to market by like you said you're like bro i have no advice for you anymore i told you at 4k to buy i told you like 6k to buy told you at 7k So the way you have to make it is try and perpetuate your interest through the boring bit. The boring bit is where the opportunity is when all these moonboys and all the marketers and all the lapers, they disappear from Twitter and they don't participate anymore.

Starting point is 01:09:05 Their accounts just stop tweeting. That's the bit where you're supposed to be interested and you're supposed to be taking your next three years of positions. Most people that don't make it, they just stick around for the fun bit. That's it. Stick around for the boring bit. There it is, David. So try to maintain your interest during the boring.

Starting point is 01:09:20 boring bit. This is the boring bit. Let me ask you, how do you maintain your interest and how have you done it in previous bore markets? Yeah, in 2019, was the last bore market that we had. It's when I was felt like I was taking crazy pills, man. It's like the uniswap got invented. Die was growing like crazy. Compound was being utilized and no one was talking about it. And the advice that I have is like there is going to be similarly exciting innovations that are, granted, going to be more complex. because we're one more cycle, more mature. But there's going to be things that excite you, that you're looking around and no one else is getting excited. And you're like, why the F not?

Starting point is 01:10:00 Now, if you're good at this game, if you're a good investor, if you're good at playing the crypto world, you will understand, and if you have identified it correctly, you'll understand that that's alpha, and you're not taking crazy pills. I felt like I was taking crazy pills for a whole entire year, if not longer. But this is where you have to understand, like, no, you're the smart one. you are paying attention when other people are not. And looking for alpha is actually easier so long as you understand that, like, yes, people aren't going to be excited about this thing for maybe a frustratingly long amount of time.

Starting point is 01:10:33 But so long as you see the vision and you have identified opportunity, that this is the year to do it. And we were talking about like the bore market incoming at the end of 2022. It's like first we have the we're punched in the face bear market and now we're having the bull market. And here we are. We've arrived. So now it's a matter of like, hey, this is where you actually make millions of dollars next bull market. If you identify the opportunities. You have to, in order to do this, though, okay.

Starting point is 01:10:59 So I think Kobe's advice is so salient around do whatever it takes to stay interested, right? Okay. So realize that during the bull market, your brain was actually rewired for dopamine hits. Every time you checked price on your phone, your app and the price went up, boom, dopamine hit. Where is it going to go next? Oh, it's down a little bit. But boom, big increase again. And you're looking at your net worth and you're like, wow, this is amazing.

Starting point is 01:11:27 Every time I refresh, it goes up. You got hooked on the dopamine. So you consumed all this crypto content. Now, that dopamine is all gone. All right. So you have to get your hit. Like your brain wants chemical hits from something. And you have to get it from something else.

Starting point is 01:11:43 All right. Where you can get it, at least for me, it's been doing stuff, building something, learning about something, trying a new DFI protocol, trying a new wallet, like learning about ZK machine learning or some sort of obscure topic, and then maybe making content about it. If you have dev skills, and obviously you build something, right? If you don't have dev skills, if you have other kind of softer skills, then you're writing, you're researching, you're doing all sorts of things to keep yourself

Starting point is 01:12:16 busy and you have to get the chemical hit that way instead. So you have to really rewire your brain. And I think if you stay here and if you can maintain your interest, then as David, you just said, like there's benefit on the other side of that. But you have to sort of trick your brain into it because you've been addicted to the dopamine price hits. It's no longer present anymore. You got to get it from somewhere else. You know what's a great source of dopamine, Ryan? What's that? is when all of the things that you thought were true come true and turns into a million dollars because you stuck it out through the bear market that's a nice source of dopamine yeah but it's not instant is it it takes some time and uh anyway it first takes the crazy pills section you have to feel

Starting point is 01:13:01 like you're taking crazy pills yeah and that's how you know you're on to something that's where we are um all right what else we got another take of the week what's this is yours uh yeah this is this is me uh so here's my take actually not a take is a question do y'all think that i can't can get Ryan to sign up for another weekly show. And so here's my idea for the show. 35 minutes long on Wednesdays, five minutes for the intro. And then we talk about what we're going to talk about. And then 15 minutes, I teach you about something. And then another 15 minutes, you teach me about something. That's the show. Like anything? It's just not crypto. Just you come and you teach me something. I would imagine that the listeners would enjoy it if it were to be about

Starting point is 01:13:40 crypto because we did just talk about figuring out ways to say interested in crypto during the board market but there is no requirement that it is about crypto yes correct are you you trying to get like is this a a side way to get the the food podcast in here you're going to come with like nutrition lessons every year world war two podcasts I don't know my god could be anything yeah I mean look it's the hardest thing for me is just finding time to do recording David as you know I'm saying we carve out the time and anyone else who needs a meeting in that time can F off. Really?

Starting point is 01:14:15 So we just carve out dedicated time every week to do this. And stop doing it. Stop doing other meetings. I don't know. I mean, one question I would have for the Bankless Nation is, would they be interested in this? For me, one thing that gives me the dopamine hits is when we get feedback from these shows, when people are actually interested when we get, like, viewers on our shows. And when I, like, hear feedback that, hey, like, great episodes.

Starting point is 01:14:40 You know, product market fit. Product market fit. That's the kind of thing. So a signal for this would be, if we heard from Beckless listeners, that this kind of show format was interesting. Maybe they get too much content from us already, David. I don't know, man. Don't we do like three to four podcasts a week every single freaking week?

Starting point is 01:14:57 And we're talking about adding another one here. I remember when, let's see, it was the weekly roll-up, which was the third show that we layered on. First, we did the Monday podcast. And then I was like, Ryan, we need to do a weekly, like, new show to cover this event that's happening. so we layered on state of the nation. And then I was like, Ryan, we're only covering one weekly news thing.

Starting point is 01:15:13 We need to recover the entire week of news. So let's do the weekly roll up. But that was like two years ago. We've been doing these three podcasts for like two years now. I think it's time for another podcast. And I think if you pull up this tweet, I just sent you in Zoom, Heath Wave, put it nicely. David learns something.

Starting point is 01:15:28 Ryan learned something. And I learned two things. Sounds like a good deal to me. There you go. Well, I want to hear what the Bankless Nation things. Let me mull that over, David. I can't give you an answer. Can't commit.

Starting point is 01:15:41 No, I can't commit on the spot. You know, I'm naturally breaks anyway. But I will say, to your credit, I did think that the podcast was a bad idea in the beginning. I did also think that adding the weekly roll-up was a bad idea. And weekly roll-up has become like the cornerstone of this podcast. It's been my favorite. I enjoy it. Like, this gives me energy.

Starting point is 01:16:02 Sometimes it's hard to kind of get your head around all the topics. But I enjoy these little chats we have. So I don't want to discount this. Tell me what you're bullish on this week, though, my friend. So I know we just came out of, hey, how do you maintain interest during the bore market? My strategy is to invest time and energy into something completely different so that when you do have time for crypto, you make it very intentional and you go very deep rather than just getting like scrolling through crypto Twitter.

Starting point is 01:16:29 You don't have to talk about the meme coins if you don't want to, that kind of thing. Yeah, exactly. You're free to ignore what you consider noise and just tap into intentional stuff. Anyways, so I'm bullish on climbing mountain. What? Completely unrelated. Actual mountains. Actual mountains. Outside the universe, mountains.

Starting point is 01:16:46 So in one month time, you'll be doing two weekly roll-ups with Anthony Sazano. Oh, my God. I will be in the middle of mountains in Washington, Mount Rainier and Mount Baker. And then at the end of ETHC, I've signed up to climb the Matterhorn, which, by the way, is verifiably insane thing to do to sign up to climb the Matterhorn while having done zero mountains before, which is why I have to go to two other mountains. also dangerous question mark? On the risk spectrum, yes, I would say. Everything's on the risk spectrum. How far on the risk spectrum is this?

Starting point is 01:17:20 Everest. Much so Everest is 26,000 feet. The Matterhorn is 15,000 feet. Just judging a mountain by feet is a very imprecise picture. I mean, look at how fucking steep that thing is, dude. I mean, are you sure? You see the ridge that is on the right side? I don't want to do this podcast solo, David.

Starting point is 01:17:41 Yeah, I know. Well, not only is it your co-host, but it's also a very integral member of the bankless team as well, so it's two of us. So, hey, you know, if we both go down, like, you might as well just fold the thing. Oh, my God, wow. This is great. This is great news. I'm excited for you. So what kind of training goes into this?

Starting point is 01:18:02 I've been going to the gym twice a day for the past week or so, ever since I got back from Montenegro. Just start now. starting that training. Well, I was running around in Montenegro. Now I have 50 pounds on my backpack on a stair stepper, which, let me tell you, is extremely boring. My God, though. Makes crypto very interesting. You can listen to some podcasts while you do it there, right? That's exactly what I did. That's exactly right. Yeah. Wow. Well, this looks crazy. I would never attempt something like this, and I'm also proud of you. But also, be careful. Don't be proud of me. I haven't done it yet. Okay, but just even trying to attempt this is crazy. Well, we'll see if I can actually get it halfway up the mountain. But that's what I'm very, very excited about. I don't know how to get exposure to mountains, but if I could, I would.

Starting point is 01:18:46 No bore market for David. He's going to climb the Matterhorn. Matterhorn, yeah. That's incredible, man. What are you bullish on around? It's nothing nearly as exciting. Something about crypto. Is that okay?

Starting point is 01:18:58 Wait, what? It's restaking. So we did this episode with Sri Ram, who is kind of, the father of restaking. He's the founder of this protocol called Eigenlayer. We record that earlier this week. It comes out on Monday. Got me really excited about restaking, at least excited, probably 80% excited, 20% concerned,

Starting point is 01:19:22 which is always the most interesting type of podcast. And I feel like restaking will either hit product market fit and it'll be absolutely massive or it won't, right? But if it does, it'll be a really big deal. So this, to me, restaking is potentially as big as layer 2s were for scaling decentralization. And it's as big as MEV was in terms of the challenges presented to the protocol and protocol research. It really changes the incentive game. And to me, it's as big as maybe the merge or something like it for the value of ethelior.

Starting point is 01:20:03 the asset. So you combine all of these things and man, restaking is like this massive rabbit hole that I feel like we'll be journeying on not just now, but in the years to come. That again, is if it hits, if it achieves product market fit, and I think there's more than a fair chance it will. So this is something I think that you want to know, learn about Ethereum and you want to know about crypto. This is probably the newest frontier to go explore. So I anticipate this first episode will be one of many that we actually do on restaking. In fact, we're talking about doing a panel with Sri Ram and some of the protocol researchers as well, and, you know, and talking about this further. So I'm bullish on it, but like scared bullish on restaking is what I

Starting point is 01:20:48 would say. Maybe the same way you're bullish about climbing the Matterhorn. At least I hope you're a little like cautiously fearful. If you're not a little bit scared, you're not, you're doing something wrong. Yeah, exactly. I feel the same, except from the comfort of my home. So I, The scariness can stay inside of the computer. Yeah. The investable surface area around resaking is significant. I mean, it's been, it's as large as layer two, like you said. It's going to change the game.

Starting point is 01:21:13 It's going to change the game, I think. Thank you for making this section about crypto. Yeah, yeah, you're welcome. Meme of the Week. We have no meme of the week, but we do have something special for you guys. And this is a moment of Zen song. So full disclosure ahead. A lot of language in the next song.

Starting point is 01:21:30 here that you're about to hear. I think it's worth it because it's like that's exactly how I feel. Like we've got to stop sending our money to randos on the internet who are just going to scam us. I feel justified in playing this song. This is a song by song Dayman that we're about to hear. So let's let's play that. I'm going to get to risk and disclaimers and then stick around for that. Of course, got to let you know none of this has been financial advice. Crypto is risky. You could lose what you put in. But we are headed west. This is the front of It's not for everyone, but we're glad you're with us on the bankless journey. Thanks a lot.

Bankless - ROLLUP: China Turns Bullish On Crypto | Celsius Bailout Plan

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