Bankless - ROLLUP: Coinbase Insider Trading | Three Arrows Capital Speaks! | The Merge Approaches

Starting point is 00:00:00 Just remember, I'm the better looking one. Of course. Yeah, I'm the one that actually exists in real life. Yeah, David's the one that you're actually going to see at a conference. Hey, Bankless Nation, happy last week of July. Summer is almost over. But happy Friday morning to you. We're going to be drinking a cup of coffee.

Starting point is 00:00:19 As we enjoy the weekly roll-up, we hope you are as well. David, how are you doing today? Oh, absolutely fantastic, Ryan. Some more, three Aeros Capital fallout. We said last week that it was probably coming. But as far as it goes, that's like the only contagion stuff we have to talk about this week. This is the last time we talked about three hours capital? Well, I don't know about that.

Starting point is 00:00:40 But like the topics like Celsius seems to be over, Voyager's over, is only three hours capital that's left. All right. Getting some closure this week, hopefully. We're also going to be talking about Coinbase. An employee got arrested for insider trading. Yeah. You can be an insider trader at Coinbase.

Starting point is 00:00:56 And there's some fallout with the SEC and Coinbase that got into another tussle. and even the CFTC is weighing in on this. We're going to cover that as well. Big drama. Big drama in the regulatory space. And the last test net, the last test net ever. This is the last step before the actual merge is scheduled. It's here.

Starting point is 00:01:14 The goarly test net is coming in the 6th to 12th of August. We don't know when because it's set by a TTD number. We'll talk about that later. But Ryan, it's happening. It's happening. It's happening. It's happening. Lights in the background.

Starting point is 00:01:27 That's great. As always, guys, this comes to ask you every Friday morning. This is the best way to recap your week in crypto. Hope you're joining us. And make sure you like and subscribe. If you are, so if you're on YouTube, make sure you like this video and subscribe to the channel. And if you are listening to this on podcast form,

Starting point is 00:01:44 rate and review, wherever you listen to your podcast. On Spotify, by the way, this is now in video version. We partnered with Spotify. They partnered with us. I don't know. What are the other? We now have bankless video capability on Spotify, which gives us another platform beyond YouTube.

Starting point is 00:01:58 It's pretty cool. I enjoy it. Yeah, if you're a Spotify listener, you can become a Spotify viewer. And then at the crypto conferences, people can stop mixing me and you up. That's great. Just remember, I'm the better looking one. Well, I'm the one that actually exists in real life. Yeah, David's the one that you're actually going to see at a conference. So it's definitely going to be David, all right?

Starting point is 00:02:22 All right, we should also talk about our friends at RhinoFi. I know they wanted us to get the message out that formerly, formerly, They were called Diversify, and now they are RhinoFi. Formerly, they were also a decentralized exchange, and now they are more than that. You can swap. You can also trade, of course. You can deposit into liquidity pools.

Starting point is 00:02:42 What else can you do with RhinoFi? So Rhinophie just abstracts all of the many, many chains that are existing and coming online in this multi-chain future. So all the basic stuff like Ryan said, like trading and swapping, but you can also put your assets into liquidity pools. You can also invest. invest them in various parts of inside of the multi-chain future. And as we just go and grow and grow in complexity, stuff like this is going to be more and more needed in order to just like

Starting point is 00:03:10 manage all of your defy stuff across all of the chains. The reason why it looks like this on Ryan's windows, because every time we start recording, I have him squeeze his window. Yeah, real tight. Yeah, real tight. But it would look a little bit more expanded on your desktop when you go to the link in the show notes to go check it out. Yeah, go check it out. I think part of the reason that we got so burned last cycle, not we, I mean, crypto collectively, and using C-Fi platforms, is because D-Fi user interfaces weren't there yet. It was just easier to deposit in Celsius and block-fi. But now with Rhino-Fi's of the world, we are upgrading our D-Fi experience. Just a reminder, C-Fi failed this cycle, but D-Fi didn't. This is a way to double down

Starting point is 00:03:49 on it, start leveling up using tools like Rhino-Fi. It's 100% bankless. So this is all on a layer two. 100% organic. Br-ranged. Bankless organic experience for you here. All right, David, let's get to the markets. Bitcoin, what's it doing? Some good things. Bitcoin started the week at $23,200, ending the week at $23,700, up 2.5%.

Starting point is 00:04:12 Up to a half percent. Nice green week. Green weeks, stacking on green weeks. We got, I think, three green weeks in a row, right? Knock on wood. Did that happen? That can happen during the bear market? That's allowed.

Starting point is 00:04:24 It's allowed. But the bigger story was this one. one. What's this chart telling us? This is a Bitcoin chart again, but let me actually pull up the Ethereum chart. Yeah, we need that one. The lines are a bit steeper upward. What are we looking at? Started the week at 1570. We are currently clocking in at 1726, up 8.7%. Was it, was it last week that Eath was up 30%? I think it was. Yeah. Again, just stacking on the green so we're, oh, don't ask me to do that. That 8% plus the 30% we're 38% on two weeks. No, that's not how it works. You can't add, you can't add percentages. I know. Yeah.

Starting point is 00:05:00 I didn't know that. Yes, I do. I'd have to go back to the 14 day. Right, right, right. The good news is we're green, we're up, and we're heading in a good direction. I think there's a story here. Did you see it just like suddenly leap up? Yeah. I guess that was Wednesday on the day of recording. And that's something to do with the Fed. Actually, Jerome Powell spoke that line, that nice green candle into existence, I think. And we're going to get to get to why that. is in that story. But before we do, let's take it quick. God, I'd love to be able to speak green candles into existence. Yeah, only, sorry. You have to apply for the position of central banker, David. Oh, I know. Do you want that job? I'm out. No, no, I don't. Sounds like a terrible job.

Starting point is 00:05:40 Like, honestly, everyone hates you all of the time. Sorry, Powell. ETH Bitcoin ratio. What's a ratio telling us? Up 6.2% is up to 0.02. My Eith BTC trade, finally coming back to parity. Is that a real trade you made or is that a train your head? No, a long time ago. I've been holding it. Oh, really? Yeah, I've been knuckling it, yeah. You know, sir, I've never had the guts to make that trade.

Starting point is 00:06:04 People trade in the ratio. The short, Bitcoin long ether. Yeah, I mean, like, I would do that by just holding Eith over Bitcoin over the long time horizon, but, like, actually trading this ratio is, like, scary to me. Spooky territory. I admire you, David. Have I told you that? Well, thank you.

Starting point is 00:06:22 Don't, don't. You shouldn't mind. me for other reasons other than my trades. You're trading, not your trading game. We could always look at the DPI ratio if you're curious about ratios. But how about the crypto market cap? Are we above a trillion this week? Yeah, we're above a trillion.

Starting point is 00:06:38 We were at one trillion last week. We are up to 1.138 trillion. The math is easy this week. We are up 13.8%. Nice. Gas prices still down on Ethereum? Gas prices like crazy low. 10.

Starting point is 00:06:52 10 guay. Average gray fee. You know what we'd be like super ironic, Ryan? What? Is if like we merge and there's no burn? Ether is not deflationary. There's no ultrasound money after all of this. After all of that.

Starting point is 00:07:06 So like the deflationary threshold is seven and we are at 10. Ah, we're just hanging on. We're hanging on. So I don't know. What's so funny is when transaction fees are high, people get bearish. Because they're like Ethereum is not scaling. What's the matter? matter. Transaction fees are so high. Now on the flip side, when transaction fees are low,

Starting point is 00:07:28 they're like, bearish again. No one's using Ethereum, David. Yeah. It's like a lose-lose scenario. Yeah, bearish when fees are high, bearish when fees are low. I mean, okay, then that just means you're just a bearish person. Yeah, probably. I'm optimistic in both of these cases, so it's a good time to get your transaction fees through. But I do hope. I mean, just for the posterity of it, like post-merge, we got to be ultrasound, right? We got to be burning more E. We got to be. I will just personally spam the network with what you. Please do. Just for like, you know, five minutes or something.

Starting point is 00:07:59 Just for the meme, yeah. Yeah, okay. By the way, five minutes of spanning Ethereum, I'm pretty sure that is at least like half a million dollars. So I will not actually be doing that. We'll call in, we'll create a Dow for it. You know, Ultrasound Dow. I don't know. Social Sound backstop.

Starting point is 00:08:14 Get a little bit to hope. Okay. Markets. The Fed press release. So the big Powell raise came out, I guess, on Wednesday. The Federal Reserve issued a statement that said they were going to increase the federal funds rate, that's the interest rate, of course, to 2.5% to 2.5% to 0.75%. That is a 0.75%? This is, of course, the biggest rate hike, I believe, let me see. since Volker. The fastest tightening of monetary policy since Fed Chair, Paul Volker, battled double-digit inflation in the 1990s, is the headline here. Weak economic data was the

Starting point is 00:09:08 reason, although Powell did say here, here's a quote from him, I do not think the U.S. is currently in recession, he told reporters that after the end of the latest policy meeting. And he cited unemployment rate that is still near a half century low and solid wage growth and job gains. It doesn't make sense that the U.S. would be in a recession. What's interesting about that statement, though, is I remember last summer he was telling us about transitory inflation. And this summer he's saying, I don't think the U.S. is not in a recession, and that wouldn't make sense at all.

Starting point is 00:09:41 So I'm not actually sure whether he believes that or not or is kind of playing the act or what this is. I've been thinking about this a lot this last week actually after listening to like Lin Alden and Luke Grom in our podcast but also content that Kyla Scanlan has been putting out

Starting point is 00:09:57 I actually think that every single word that comes out of the Fed Reserve is an act there is nothing that is actually him it's there's nothing that is not specified everything is done as like a theater

Starting point is 00:10:14 there is another lever to tinker with the economies yes that's exactly yeah, we talk about what are the levers of the tool of the Fed? They have interest rates and they have quantitative easinging and Titan. They also have how they appear as a big tool, a narrative.

Starting point is 00:10:30 And so that is actually probably the biggest tool. And so I think when you read these statements by the Fed and you see the words that the Fed chair does not think that the U.S. is currently in a recession. That is not what the Fed Chair actually thinks. That is what he wants you to think.

Starting point is 00:10:46 That he thinks that. That doesn't work forever, right? Okay, so this is, well, markets are just a hall of mirrors. Sure. It's like, well, they think this, so I think this, so they think that, so I think this. Right, but like it's kind of the Keynesian beauty. Like, once we start to know that the Fed chair is actually not telling us the truth, but is telling us what he wants us to believe, then it's like conception.

Starting point is 00:11:09 You have to go one layer deeper at that point. And then so does the Fed. And then we go one layer deeper. Oh, my God. Wow, if we could just outsource this to robots and code, that would be so much simpler. Zero layers deep? Wow, wouldn't that be nice? The question is, though, is this a peak in the inflation rate?

Starting point is 00:11:27 I think that's a question. We had 9.1% remember the last time, but what was interesting about this, I think, David, is what we'll get to next. The market actually liked this. So think about this. We go 0.75, 75 bibs up, pretty big raise, pretty big move to tightening. but the market had kind of expected this to happen. And then what do you think the market does? Does it go down or does it go up?

Starting point is 00:11:51 Well, up is the answer to that. NASDAQ, shot up. Crypto, shot up. And we're going to get into a thread as to the reason for that. But let me ask you, David, were you surprised at that? Nothing surprises me anymore. So tightening and we go up. I just don't have an opinion as to the direction of the market.

Starting point is 00:12:10 I've been in buy-only mode for the past like three months. Do you know, it seems counterintuitive, though, right? It's like you actually like raise rates and then NASDAQ and crypto would, you know, pop up. And that's why we're seeing the ETH pop of 9% this week and also, you know, Bitcoin up this week. It was actually after the Fed meeting. Right. Why don't we get into this thread? What is macro elf saying?

Starting point is 00:12:32 This is a voice I've increasingly enjoyed on macro topics. But why don't you read this out? It's a whole thread about this. Yeah. So macro alf, ALF, says, Powell Hikes 75 Baseline. points and yet NASDAQ and Bitcoin are going to the moon. What the heck? While I disagree with the unfolding market narrative here, let me try to explain why we are witnessing such a rally. Despite openly recognizing economic grosses if softening the Fed unanimously, exclamation point, decided to

Starting point is 00:12:59 hike Bips by 75%. It's all about inflation, inflation, inflation. But markets convincingly started to rally only when Powell went ahead and said the following, quote, we are now at levels broadly in line with our estimates of neutral interest rates, and after front-loading our hiking cycle, until now, we will be much more data-dependent going forward. Let's find out why this is so relevant. So macro-alph continues and says, the neutral rate is the prevailing rate at which the economy runs at its potential without overheating or excessively cooling down. I think that is called threading the needle. I think that's called a soft landing. With the 75-bips hike, the Fed just reached its estimate of a neutral rate. From here, they aren't.

Starting point is 00:13:40 contributing to economic heating anymore. And then here we see a graph. And then he continues, but that also means any hikes from here are going to put the Fed in an actively restrictive territory. So I think he's saying that we have established an equilibrium with the economy. The economy is not going to go up. It's not going to go down. It's going to be flat. And so he continues and says, but that means that any hikes from here are going to put the Fed in an actively restrictive territory. The bond market knows that every time the Fed becomes restrictive, they break something. So Powell was asked a couple of very important questions. I'm guessing in like the after the statement, they had like a press, like seminar thing where the reporters could talk to them.

Starting point is 00:14:21 What about bond market pricing? 70 BIPs cuts in 20, 23. What about financial conditions? So what about forward guidance? And so this is when the quote from here on out, we are fully data dependent from and that's the key quote. That's the quote at which the rally started the rally started happening. the markets. Before that, it was kind of nothing. The 0.75 did nothing to the markets. But this statement from here onwards, we are fully data dependent. That was the differentiator. Right. And so the question of, what about forward guidance is answered by from here on, for here onwards, we are fully data dependent, meaning forward guidance is gone. And so, again, the threat continues. Why is this relevant? It all starts from a very strong opinion that the

Starting point is 00:15:05 bond market has developed the strong opinion that the bond market has. has developed about inflation over the last few months, it's going to move down and very fast. Inflation, the bond market thinks the inflation is going to go down fast, bigly. Between July 23 and 24, the CPI is priced to print at about 2.9%. So, where were we at? 9.1% last month. Allegedly the bond market, and between July 23 and July 24, the CPI is priced in from the bond market to be at 2.9%.

Starting point is 00:15:39 basically at Target. So the bond market is pricing in that the Federal Reserve is going to get inflation under control in about one year's time. So if Powell is not nearly on autopilot anymore, and the markets have a strong opinion on inflation and growth collapsing, they can also price all other assets based on this scenario. So basically saying, if the bond market is pricing this in, so is everything else. If you look under the hood, market action also validates this narrative, hence why, you know, QQQQQ, the NASDAQ is going up, Bitcoin is going up, crypto's going up, And so what's performing here, outperforming here, NASDAQ crypto, of course, as I just said,

Starting point is 00:16:13 if the Fed isn't going to tighten financial conditions on autopilot anymore, real yields will actually start declining again. And here we actually do see yields start to decline. And they continue, again, we're almost done. When real yields decline, value intensive and risk sentiment-driven assets classes outperformed. That's because the marginal return for owning cash USD becomes less attractive, and the incentive to chase risk assets is larger,

Starting point is 00:16:37 such as QQQ, the NASDAQ and Bitcoin. Do I think this rally has legs, question mark? I can rationalize the narrative being built post-FOMC, but no forward guidance equals a very, very volatile Fed ahead of us. One small hawkish turn, and it's all gone. You must price in some additional risk premium here, not less. Basically, what he is saying is that the bond market has priced in, we're solving inflation in one year's time.

Starting point is 00:17:03 So as soon, and because the Federal Reserve is not operating under a forward guidance scenario anymore. They are saying we are completely data driven at this point. If the data comes out and shows that we are not solving inflation within one year time, the market is not positioned for that and will likely react to that in a volatile manner, like hinting to the downside. And so that's like the main conclusion to this threat. Yeah. So the TLDR is that data-driven statement has a market thinking that the Fed is done increasing for now. Like nothing more than sort of expected. It won't get super ultra aggressive, right? That's what the market thinks. But the reason this rally might be tenuous is because if the market

Starting point is 00:17:47 is wrong about that and inflation is much more persistent, it may drive the Fed's hand to change. Because now the Fed is data driven, apparently. So can you trust this rally is a question of, I don't know. Can you, like what is inflation going? to be in the future. That's sort of how tenuous this is right now. So I don't know. I mean, it's cool to see a rally like this, I suppose, but we're probably not out of the woods yet. And I guess we're all pretty data dependent from here on out. Absolutely. Yeah, the data is going to be the thing leading the market is an interesting place to be. NFTs. You know, last week we're talking about, yeah, it's just a just a nice soft transit.

Starting point is 00:18:35 to something that matters a lot less than the global monetary policy, I guess. The NFT price floor. Actually, I was looking for a dashboard of kind of the biggest by market cap NFT projects, and I found this, NFTPriceflore.com. Someone sent it to us. We can include this from time to time. But quick recap, David, what are you looking at? Just like maybe the top five, how big are the top five NFT projects by floor cap?

Starting point is 00:19:04 Yeah, so I really like this measurement. floor cap, which is the price floor multiplied by the number of assets, which is basically what a market cap is, judged by the floor. So coming in at number one, of course, Board Ape Yacht Club, floor cap of 857,000 ether, followed by Cryptopunks at 714,000 ether. That gap is way closer than I thought it was. Once upon a time, like, Board Apes were like almost three times Cryptopunks, now they're almost at parody, followed by mutant apes, other deed for other sides,

Starting point is 00:19:37 moonbirds, clone X, I don't know what that is, and then autoglyphs. Do you know 857, board apes, equates to about 1.5 billion? I don't want to know.

Starting point is 00:19:49 1.5 billion. That's the value of 10,000 board ape NFTs right now. But there's not that much liquidity there. There's 477 ether that was traded in the last 24 hours. I get a decent volume, I guess. I wonder if like NFTs continue to become more financialized, if we'll see this kind of free up a little bit. Do you know what I mean? Like to your point, they're super illiquid right now. But like what happens if you can kind of lend against them, borrow against them? I don't know. Does that change the liquidity of them? Yeah, I think it should. Yeah. That's interesting. Anyway, we'll look at this from time to time to see the health of the NFT market. Let's move to... I expect there to be different things there in the future. I would not expect the like this, do you ever remember, what was it, coin market cap before there was coin gecko? And like, looking at like the total market cap in 2017, like, it's completely foreign to what it is now

Starting point is 00:20:44 because like things rotate out of like the top 10. I expect there to be big rotation out of the top 10. Oh, that's a good take. So you don't think Cryptopunks, you know, C is in the top five? Oh, Cryptopunks in the top five. David's the Cryptopunks maximum. I just, I was fishing. I got this NFT project to chill. Yeah. Cryptopunk Maximist. Okay.

Starting point is 00:21:06 Merge. David, you want to talk about the merge? I do want to talk about the merge, Ryan. How did you know I wanted to talk about the merge? It's so exciting. Okay? It's happening. And I guess, you know, quick tease in the market section today.

Starting point is 00:21:18 This is from DFI server. More than $7 billion of annual cell pressure. It's $20 million of daily cell pressure will be eliminated the day the merge is complete. How press reminds us of that. This is not how pressed, but something that he would say, going to be fireworks for the month following the merge. I know if you saw this chart, David, but again, once again, we're talking about post-merge.

Starting point is 00:21:41 ETH issuance is going to be reduced, like 4.1% to 0% hopefully negative in the negative territory, right? Not good. I hope so. And that's an 87% reduction. Incredible. Issuance reduction of 87%. The triple havinging. It's like three havenings in a row.

Starting point is 00:22:00 if you're used to kind of Bitcoiner terminology, and that is happening. So if the test net is happening in early August, we'll get to what that means for potential main net deployment. But we know what this means for issuance is a massive amount of cell pressure will be removed from the market at day one. So, Ryan, I just want to help put into context how big $7 billion is. off the top of your head, do you know how much capital, how much dollars micro strategy has purchased of Bitcoin? Not how much Bitcoin that they have in dollar terms, how many dollars they've used to purchase Bitcoin.

Starting point is 00:22:40 I'm going to throw a number at you. Okay. You ready to catch? Okay. Hey me. Two billion. Four billion. Four billion. Okay. Double. They have spent four billion dollars on Bitcoin. And with this, with the, you know, post-merge, Ethereum basically gets, we have this current, equilibrium where we are now and post-merge we have this a new equilibrium which is equivalent to a seven billion dollar buyer coming in yearly every single year dollar cost average in until history ends more reliable than michael sailor even yes much more reliable michael sailor is out of cash i don't know if you've noticed but his like cash the amount of that he's bought it's like now he whenever he's like oh michael sailor bought bitcoin is like he's adding 0.01% of like to his to his uh stack Yeah.

Starting point is 00:23:26 $7 billion yearly, yearly. Yeah. What's cool about this, too, is like, if you're an eth holder, every time the Ethereum Blockspace sells some blocks to somebody, which is what this is, Ethereum selling blocks, you get money. How great is that? It's so awesome. Anyway, we're excited about the merge.

Starting point is 00:23:49 Let's talk about this going into the merge. This is from Felix Hartman. and this is a total market capitalizations, the good old Bitcoin dominance chart. This is what Felix says. We're well into the bare market, yet unlike the previous one, Bitcoin dominance is still bleeding lower

Starting point is 00:24:07 while ETH dominance is on a steady rise. ETH is now a mere 120% outperformance away from flippinging Bitcoin. ETH did around 120 performance, outperformance from January 2020 to September 2020. So nothing crazy. David is the flippinging back on the menu, sir. Okay, so flipping has always been on the menu, but also people are like, oh, one day, like, ether might flip Bitcoin, like all the, all the ETH people say that, me including.

Starting point is 00:24:37 But, like, people forget that, like, the flippinging is just the first flippinging. Like, then there's the second flippinging, and then there's the third flippinging. Like, where you just start lapping Bitcoin over and over and over again. Like, you're allowed to be... Oh, you mean, like doubling? Yeah, you double Bitcoin, then you triple Bitcoin, and then you quadruple Bitcoin. Oh, jeez. Come on, man.

Starting point is 00:24:55 Don't grave dance on Bitcoin, okay? It can be number two and be fine. I'm sorry, but fundamentals are fundamentals, right? I don't like the rules. What do you think about this take? Because I've seen this increasingly, and it happens whenever Ith is coming closer to flippinging Bitcoin, especially in the Bitcoin Maximilist community.

Starting point is 00:25:13 It's like, if you flip in Bitcoin, you destroy the entire non-sovereign store value meme. Like, you kill it all. It's one of the many. many ass backwards takes out of the Bitcoin maxi camp. What they mean to say is like if you flip Bitcoin, well, then you like you remove the king and then you just make it so like somebody can flip you. Yes. No, the correct take is if Bitcoin gets flipped by the second chain, then it'll probably get flipped by the third chain and it'll probably get flipped by the fourth chain too.

Starting point is 00:25:42 It's a problem for Bitcoin. If somebody, if something flips Bitcoin, it's because they effing deserved it because their fundamentals are strong, not because I'm like magical, ooh, we popped the the immaculate nature of Bitcoin and it's like manifest destiny to be the biggest crypto ever. It's that fundamentals matter and Bitcoin hasn't been paying attention to fundamentals since Genesis. David, if Ether got flipping. And I will remind you it has. If Ether got flipped.

Starting point is 00:26:07 XRP. Yes. Flipped it. Right. One point in time. Something else did too. I missed for calling this. XRP at least.

Starting point is 00:26:15 Maybe XRP twice. It was Bitcoin Cash. Bitcoin Cash as well. Yeah. So did XRP and Bitcoin Cash deserve it? Are you talking about a flippinging that is more sustained in terms of time? Yeah, more sustained and like not when markets are just super illiquid and young. And also that happened during the irrationality of the bear market.

Starting point is 00:26:33 But it's simultaneously when XRP flipped, like, yeah, flipped ether. Ether was also $80, which I would also say it was extremely irrational. That was just an irrational time in the market. I also find it ironic that like kind of if you're a Bitcoin Maximus, your whole purpose in life is to actually like flip in gold, and that the whole thing. And like, well, if gold can be flippant, I don't know, that is the king by Bitcoin.

Starting point is 00:26:59 Like, I don't know. It's just like, of course, better stores. If Bitcoin flips gold, the world just destroys Ryan. That's what a gold maximalist might say. Peter Schiff gets you on the podcast. No, no, no. No? Have you ever heard him speak? Oh, God, yeah, it's awful.

Starting point is 00:27:16 I haven't in a long time. It's been a while. Okay, actually, he's one of those people where like his macro takes are super awesome, his asset takes are terrible. Yeah, I know those people. I know those people. All the Bickhorners. Those people don't have enough Eith.

Starting point is 00:27:29 Let's talk about this for a second. The maxi hats are on today. Sorry. Toning down, I'm just excited about the merge, David. He who controls the infrastructure, controls the universe. This is Greg tweeting this out. And this is kind of an org chart of SBF, Sam Bank, Bedfried, beloved crypto banker.

Starting point is 00:27:48 and he has been on a buying spree this cycle, right? Assets that are kind of like have depreciated massively. Other crypto banks helped bail out BlockFi. And I think the take here is that's great. Sam managed his money very well and is very well positioned for this. It's also a little bit alarming to me to see even more consolidation in the C-Fi space. Like all of the companies that managed to stay healthy and retain a balance sheet are now buying all of the companies that didn't. And so what we get the result of all of these kind of acquisitions is further and further consolidation and centralization.

Starting point is 00:28:32 CZ is also doing the same thing. And I'm just like, okay, these are smart business people. I get it. But it's another reason why DFI looks like very hopeful and very bright is because we've always been concerned at bankless. that if we just replace one set of bankers with another set of central bankers, we haven't really achieved anything in this whole crypto journey. And like, I'm not faulting SBF or CZ for being like responsible and good business people in doing this. But I'm just saying like this system is kind of broken if it's all consolidated with a new set of bankers. Like we got a new J.P. Morgan on the

Starting point is 00:29:09 scene and he's SBF. All right. Coming up next, like I said, three errors capital is on the table. they speak, Su-Zoo and Kyle Davies. They did an interview with Bloomberg. They actually said words. So we're going to read out some of the quotes to hear what they have to say. I'm going to go ahead and put on my Fed cap for that one, saying all the words that coming out of Kyle Davies and Suu are not their true selves, but instead an act because that's probably what they have to do in the moment.

Starting point is 00:29:36 Anyways, after that, Coinbase Insider Trading opens the window for the SEC to target the entire industry. So there's two parts of the story, an insider trading a coinbase, that's bad, but just like kind of an open-shot case. What the SEC is doing as a result of that is terrible and needs to stop and now it's triggered the attention of the CFTC. So we're going to get into all those details and more and the rest of the show right after we get through some of these fantastic sponsors that makes the show possible. Arbitrum is an Ethereum layer two scaling solution that is going to completely change how we use defy and NFTs. Some of the coolest new NFT collections have chosen Arbitrum as their home, while DeFi Protocol. calls continue to see increased liquidity and usage. You can now bridge straight into Arbitrum for more than 10 different exchanges, including finance, FTX, Whoobi, and Crypto.com. Once on Arbitrum, you'll enjoy

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Starting point is 00:31:35 crypto assets, manage your NFTs, and connect to other wallets and defy apps. So whether you're new to crypto or you're a season pro, it's time to ditch those risky extensions, and it's time to switch to the Brave wallet. Download Brave at brave.com slash banklists and click the wallet icon to get started. Hey guys, we are back talking first about Three Aros Capital. I wouldn't mind, David, if this is the last time for a while we talked about Three Ro's Capital. And I feel like this kind of gives us maybe a little bit of closure on this story. But the story is Kyle Davies and Sous with the founders of Three Ro's Capital and definitely in the spotlight, they spoke this week. It's their first interview. It wasn't on bankless, it was on Bloomberg in written form, and we have some of

Starting point is 00:32:15 their quotes here. David, what are some of the choice quotes from this article in Bloomberg? Three years capital founders break their silence over the collapse of the crypto hedge fund. What did they say? Yeah, first one comes in from Suu, and he says, people may call us stupid. They may call us stupid or delusional, and I'll accept that. Maybe. He said maybe? But they're going to, you know, say that I absconded funds during the last period where I actually put more of my personal money back in. So that's not true, like the absconding is not true. Again, like my take, I was going to save this to the end, but I'll say it here. This kind of feels like a whole like PR stunt. Like why would Three Ro's Capital take an interview

Starting point is 00:32:54 with Bloomberg? It's because they need to, they need to fight their image right now because it's probably relevant in court. That's my take. I'm going to go ahead and poison the well here with that. Quote number two from the, from the article, advisors in charge of liquidating the fund said in the July 8th filings that Sue and David. hadn't cooperated with them and that the founder's whereabouts were unknown. Sue said death threats had forced them into hiding. Quote, this does not mean that we've been, that we haven't been communicating with all relevant authorities, said Zhu in the telephone interview with Davies and two lawyers from Salterra LLP. We have been communicating with them from day one.

Starting point is 00:33:27 Again, PR management, again, is my take, is my take. Quote number three, this whole situation is very regrettable, Kyle Stabee says. many people lost a lot of money. Yeah, it is very regrettable. That's certainly true. Quote number four. Efforts by Sue and Davies to deflect blame are a sharp contrast

Starting point is 00:33:47 to the pair's previously relentless campaign of cheerleading crypto assets and belittling critics. Nerves were raked in new this week by creditor claims that the founders put a down payment on a $50 million yacht before the fund went under. A claim Sue Zuz said was a part of a smear campaign. The boat was, quote, bought over a year ago and commissioned to be built

Starting point is 00:34:05 and used in Europe, Sue said. He rejected the purpose. perception that he enjoyed an extravagant lifestyle, noting that he biked to work and back every day and that his family only had two homes in Singapore. That's it? It's just living on the poverty line here. We had two homes. Quote, we have never been seen in any club spending lots of money.

Starting point is 00:34:24 We have never been seen, you know, kind of driving Ferraris and Lamborghinis around, Sue said. This is kind of smearing us, I feel. It's just a classic playbook of, you know, when this stuff happens, when fun blows up, then you know these are kind of the headlines that people like to play. Quote number five. What we failed to realize was that Luna was capable of falling to effectively zero in a matter of days, and that this would catalyze a credit squeeze across the industry that would put significant pressure on all of our illiquid positions, Suzad.

Starting point is 00:34:56 After that day when Bitcoin went from 30,000 to 20,000, that was extremely painful for us, says Kyle. And in that, that ended up being the kind of the nail in the coffin. last quote for Kyle and I there's so many crazy people in crypto that we kind of that kind of made death threats or all of this kind of noise said Sue we feel that it's just in the interest for everyone if we if we can be physically secured and keep a low profile I think that is maybe it is in the interest of everyone maybe not it's definitely in the interest of Kyle Davies and Suu to be physically secured and keep a low profile that's for sure yeah and of course death threats are not cool that's probably that's probably true they are probably actually getting death threats. Yeah, I believe that. I mean, that is a legitimate reason for hiding. But like, I,

Starting point is 00:35:43 but death threats and not cooperating with the council. Did you hear an apology? No. Did you hear a hard? I heard that it was very regrettable. You know, maybe we made some mistakes along the way. That's, um, I read this article because it was fascinating because, as I said before, like I feel like I wanted some closure from this.

Starting point is 00:36:03 Sure. Because, like, I can't, hearing this now, if you're just new to crypto, I can't describe to you how revered these guys were, three-eurs capital were during the bull market. They were like, the trader gods. Trader gods, greatest traders to ever live. Like, this is just what it felt like crypto-Twitter and the broader community kind of bought up. Like, you want to see the best traders in the world. It's Suzu Kyle Davis, Three-Ros capital. And so I wanted to understand how mechanically they went bust, right, from their perspective.

Starting point is 00:36:37 And this is what I gleaned from the story between the quotes about yachts and such. So how did three years capital go bust? Number one, they failed to manage risk. Yeah, kind of a requirement to go bust. Quote from the article, we believed in everything to the fullest. Not the kind of thing you want to say if you're managing risk. And by the way, these are not just lessons for three rows capital. these are lessons that are applicable to us.

Starting point is 00:37:00 How do we not fall in the 30s capital track? So they went all in on these speculative projects. They used margin. They didn't hedge. It's kind of like gambling. If you were approaching crypto like that, it's not the way to do it. Number two, they got wrecked by Luna.

Starting point is 00:37:13 We failed to realize that Luna was capable of falling to effectively zero in a matter of days. What happened, I think, David, is something that can happen to you everyday investors, people on the bankless journey, is you get FOMO. You get, in this case, Alt-1 FOMO. And what happened,

Starting point is 00:37:28 was Thoreau's Capital missed a number of big Alt-1 run-ups, right? They missed that whole Solana thing, that multi-cointed friends got in on. And so they started to believe their own narratives. They wanted to play catch-up, and they added risk in an effort to catch up. They didn't have to do this, but they wanted to get more out of the Alt-1 narrative. And so they went in on Luna, and they went in big. Also, Avalanche, I think. Number three, they got wrecked by Steak Death.

Starting point is 00:37:58 pegging from Eith? The quote from the articles, are there people who, there are people who also leveraged long-staked Eth versus ETH who will get liquidated as the market goes down. The answer to that question is yes. So they didn't appropriately manage the risks when they were entering into kind of these markets that were somewhat obvious, right? Of course, you can't make the assumption that Dye is always going to stay pegged to a dollar. You can't always make the assumption that steak ETH is always going to maintain its peg with Eith. And if you are margining and risking some of your assets based on that assumption, that is a bad move. Number four, they got wrecked by GBDC, as many people did, because everyone did it. Then the trust went to the discount and then went to a far

Starting point is 00:38:40 bigger discount than anyone thought possible. So like during these kind of market events, things can happen that you don't expect like GBTC, depegging in such a big way. And they didn't consider that. And then, of course, like, they didn't do the classic thing of they weren't ready for Bitcoin to go to 20K. This is Suu again. Bitcoin went from 30K to 20K. That was extremely painful for us. That ended up being the nail in the coffin.

Starting point is 00:39:08 Crypto investor, are you ready for a 90% drop in your assets? Okay? In the last bear cycle, ETH went down by 95%. I knew many a good crypto investor who got their positions liquid. in something like MakerDAO. It's like, and these people are great investors. Full confession. I was one of them too.

Starting point is 00:39:32 There we go. Where's that po-app? I think we both would have that po-app. So I didn't get liquidated, but it came closer than I ever want to feel again. All right? So like, you got to be ready for these drops. Summary of the lessons for us from the three hours capital bust. Number one, how do you avoid this in the future?

Starting point is 00:39:51 they went bust because they took too much leverage, they believed their own hype, they bought the top on speculative assets, they weren't ready for a 90% drawdown, and they invested more than they could afford to lose. At the end of the day, this is basic stuff. It's almost new-level stuff, right? It's the stuff that we all need to embed deep in our psyche

Starting point is 00:40:09 if we want to survive on this journey. And I think the final lesson from all of this is the pros aren't always what they seem, okay? The traitor gods didn't end up being gods after all, You got to do your own research. Don't listen to what David and I say. Don't listen to what Suzu says. Do your own research on this stuff.

Starting point is 00:40:28 Yeah. There's that quote that everyone's an expert in the bull market. It's more about being an expert in the bear market. That's where true colors show up. What is the fallout reaction from this interview? Like it wasn't very favorable. No, there's a number of, yeah, the block put out an article that had some reaction takes to the Bloomberg article.

Starting point is 00:40:51 And so a quote from the block article says, One disgruntled party told the block that they were absolutely disgusted after reading the interview and said, stop hiding and deflecting blame and own up to your own mistakes. Cooperate fully with the relevant parties and do not ghost those involved with this. And a second quote from Arthur Hayes,

Starting point is 00:41:07 and this one's awesome. Arthur Hayes, no stranger to controversy. He's the guy that got charged by the CFTC for operating Bickmex was scornful in a threat on Twitter, taking issues with Sue's claim that he wasn't flashy. Come on, y'all. Sue ain't flashy. He rides a bike to work and then to the marina where his super yacht is moored. Only two homes. Brough, you straight summoning it in the Kampong, aka Tanglin. I don't know what

Starting point is 00:41:31 these references are. He wrote, rich people references. I'm assuming rich, rich neighborhoods in Singapore, maybe. He wrote referring to different Singapore neighborhoods. Yeah. There it is. That's the story. Case closed. That's what we can learn. I hope we can move on from this. And I know we will. David, let's talk about this next item, which is big. Coinbase Inside trading. And I think there's two pieces to this story. Why don't you tee us up with both those pieces? Yeah, yeah. So the first one is just a headline, right? Coinbase product manager arrested on insider trading charges, you know, kind of more or less the full story. You kind of get it. There's not really too much crazy there. Two individuals profited by $1.5 million in illegal trades

Starting point is 00:42:12 on 25 different crypto assets and at least 14 different separate Coinbase public listings. And so the idea here is that Coinbase lists these. tokens, these people that know about it ahead of time buy the tokens, and then they sell the tokens after the listing, after the token pump. Coinbase has been listing a lot of, like, just ridiculous tokens lately. Like, ones that I don't even think are on uniswap of all places. Wait, really? Yeah, I don't know if that's true, but it's like the names of the tokens are like, I, like, what was that? What was that? What was that right? Let's go Brandon coin. Like, stuff like this. It took bad, bad tokens. It's like already questionable. So like they're kind of

Starting point is 00:42:48 digging themselves a whole. But anyways, these. These, two brothers charged with doing illegal trading. But that's like the much smaller side of this story. The much bigger side of the story is that the SEC is charging these two brothers for trading illegal securities. And that's where so much collateral damage comes into this whole entire. Wait, there's two charges here. One is like wire fraud, which is the like the base charge. Right. But they're also charging them for legal securities? Yes. So the SEC is, is, claiming that the assets being traded are securities. And so they're taking these two brothers,

Starting point is 00:43:26 and there's also a third person, a friend. And they're taking these people to court for wire fraud and for trading illegal securities. So what this does, Ryan, is it implicates Coinbase as an illegal securities exchange. It implicates every other exchange that also trades these assets as an illegal securities exchange. It implicates the issuers of these tokens

Starting point is 00:43:47 as issuers of unregistered illegal securities, And the worst part about this, Ryan, is you know who the defendants in this case are? These three, these two brothers and this other guy. Oh, so they're picking, they're picking on them. Like, I understand they were at fault. There's a real wire fraud charge here. No one is contesting that. But the SEC is trying to make a broader point, I suppose, in court?

Starting point is 00:44:10 Right. Yes. And so, like, say these people like plead guilty, I think this is the way this works. These brothers plead guilty because they don't have the resources to fight the SEC. and whether or not they trade securities is not their fight. They're fighting whether they should go to jail or not over wire fraud. They don't care if they were securities or not.

Starting point is 00:44:27 You who does care is Coinbase and the token issuers who aren't defendants. And so since they're not defendants, they can't stick up from themselves because they're not involved in the case. It's ridiculous. It's actually the most spineless move I can think of. Like, it's like, okay, so yes,

Starting point is 00:44:45 fire fraud, front running bad. The thing they did is in, inexcusable, charge them. Like, we have a legal system for a reason. Let's use it to its full extent. It's the securities thing that the SEC is sneaking in. That implies a much more insidious agenda. Okay, let's see what Jake Trevinsky says.

Starting point is 00:45:05 I'll read this first read it. In a thread reader, please. The SEC alleges in today's complaint that nine digital assets are securities, but don't explain their analysis for even one. Right. They also didn't sue the issue is, or exchange. where the tokens traded, the people with resource to fight back, they just went after one man and his family. It's hard to overstate what a mess this will be. The SEC's jurisdiction

Starting point is 00:45:30 turns on whether these assets are, in fact, securities. This means the case may require nine mini trials, one for each asset to resolve their security status without the issuers or exchange to defend any. Wow. This is like a winning on a technicality? Is this what the SEC is trying to do here in order to push its, I guess, regulatory apparatus into controlling more of crypto? Yeah. Yeah. It's super, super nefarious. Jake had another great thread, which we'll read here. The SEC followed a complaint yesterday, accusing 10 companies of violating the securities laws, nine digital asset issuers in one exchange. None of them are the defendants in the case. None of them will get their day in court.

Starting point is 00:46:14 And if this isn't regulation by enforcing, then nothing is, here's a threat. defendants are three individuals, Coinbase employee, brother, friend, etc., we've already talked about this. In addition to the SEC suit, the DOJ indicted them for criminal wire fraud, blah, blah, blah, blah. To be clear, I'm not trying to excuse insider trading. Of course, another way, that's what we're saying. The SEC alleges that the defendants committed securities fraud by using material, non-public information to trade ahead of Coinbase listing announcements. To establish jurisdiction, the SEC claims that the assets in question the nine digital assets are unregistered security. As far as I know, the SEC has never addressed these assets before. We've learned the SEC's views on the facts, patterns that it believes,

Starting point is 00:46:57 that it believes qualify them as securities for the first time in a federal complaint rather than in guidance or rulemaking. This is regulation by enforcement. It's not uncommon to learn for the first time when an enforcement agency has identified a violation when a complaint is filed, but typically that happens when the agency files an action against the person who they think broke the law. This is different, very different. here the SEC isn't just accusing the defendants of breaking the law. The SEC is also accusing

Starting point is 00:47:21 10 unrelated, uncharged companies of breaking the law, 9 for failure to register digital assets, securities, and one for operating under an unregistered national securities exchange. Despite leveling accusations against uncharged companies in public, the complaint is devoid of legal analysis. They didn't even give any analysis as to why the tokens are securities. The SEC just makes a few allegations of fact, and then similarly concludes that they satisfy Howie. But surely these are security tests, which is kind of the legal court justification for why things are securities in the U.S. To win, the SEC must prove that one or more of these assets is a security. In a real sense, these companies are on trial too, but the SEC

Starting point is 00:48:02 didn't name them as defendants. They are only allowed to defend themselves in court. They are not allowed to defend themselves in court. On principle, this is deeply unfair and unjust. Yes, that's probably a good place to wrap it up. It goes on, yeah. You know, there's a lot more to this, but I think we kind of get the gist. Okay, so that's what's going on. Besides the defendants who are in this regrettable position of also

Starting point is 00:48:26 trying to defend against the SEC here, Coinbase wrote a post fighting back here. The title of this blog post is, Coinbase does not list securities end of story. This is sent by the chief legal officer

Starting point is 00:48:42 of Coinbase. The TLDR is, Coinbase does not list securities on its platform, period. I think the TLD is all we need to read here. Just read the title. Yeah. And it's like, the tone of this is like, hey, SEC, F off. We're not, we don't see securities. We don't even know, like, why are you saying these are securities? You've provided no justification for why. You've given no clarity, despite the crypto industry having asked for this for like the last seven, eight years. And now you're just blanketly saying through this enforcement action that certain things are securities or not.

Starting point is 00:49:17 My question, though, is, David, is this actually, in one way, is sort of a good thing in that, like, the SEC will also have to prove in court that these nine assets are securities. I don't know. Maybe some of them genuinely actually are securities. I can't, like, attest to each of them. It's just the principle of, like, we have no idea what's the security and not. There's no clarity. We have absolutely no clarity from the SEC.

Starting point is 00:49:42 and they keep pointing to the Howie test, which is like, is it 1930s, 1940s legislation about an orange grove has not been adopted for the modern world and certainly not adopted for the world of cryptocurrencies. And they can barely say Bitcoin is not a security. They barely say that. And sometimes they say ETH is not a security. And other times it feels like some of them try to wheel that back a little bit too. And so we have absolutely no clarity, even though. some of these assets are clearly commodities.

Starting point is 00:50:16 And this is what the SEC is doing. And I don't know what the end game is or why they're doing it, David. Yeah. Yeah. I think this is just an illustration of what happens when one agency just gets off the rails and tries to do a power grab. And so the CFTC is playing in this game as well.

Starting point is 00:50:34 So they release a statement. And they release a statement that starts with a quote, which I really love. And the quote is, in the words, words of federalist papers number 49, the people are the only legitimate fountain of power, and it is from them that the constitutional charter is derived. Government is and should be the servant of the people, and it should be fully accountable to them for the actions, which it supposedly takes on their behalf. First principles, baby. Yes. Yes, we love the first principles thinking.

Starting point is 00:51:04 And then they continue, the case, SEC versus Wahee, one of the brothers, is a striking example of regulation by enforcement. The SEC complaint alleges of dozens of digital assets, including those that could be described as utility tokens and or certain tokens related to decentralized autonomous networks are securities. The fact that the CFTC is making a public statement about the errant nature of the SEC, that's a big deal. Well, yeah, this is a commissioner saying basically to the SEC, guys, chill. Chill. Chill. Like just chill, Gary. Right. Okay, you've gone too far. You're crossing some lines here. And it's not even clear that this is SEC's jurisdiction, right? I mean, there's some turf war between the CFTC and the SEC. And the CFTC so far has been

Starting point is 00:51:48 much, like, more pro-market innovation. Right. And not enforcement, like, through regulation through enforcement. See, the problem with that, Ryan, is that, like, the CFTC is like, okay like you guys industry there's some rough edges but like good job keep going let's see let's see where this goes will like be relatively hands off bitmex no no bad we're going after you but like for the rest of you guys like keep going cautiously and then the SEC is like oh CFTC you're just like leaving this open for us we can have all of this we'll take it like we'll take it like we'll take all of this it's the same reason libertarians never win elections right right just because it's just like the tactics they use of just you know aren't aren't working so So the bigger government policy ends up winning. But this is really hurting coin stock. I don't know if you've seen this, David, but Coinbase shares tumbled 21%, and this was right after the report

Starting point is 00:52:43 that it's facing an SEC probe. I guess that's what you call it, being probed by the SEC. Sounds lovely. Coinbase valuation, look at this since IPO, David. That's brutal. We got a bear market here, of course. Sure, but like it was, ironically,

Starting point is 00:53:01 I think when Coinbase IPOed, Yeah, that was the top of the main market. It felt like the top of the market, man. It's kind of funny because I'm like kind of bullish Coinbase at these prices. Ironically, you know what it takes for it to be especially bullish coinbase? For the SEC to get just like a leash on it. Yeah, through the court system. I mean, where else is the leash going to come?

Starting point is 00:53:22 It's got to be executive order, which doesn't seem to want to bring that in or the court system. This is interesting as well. Related, unrelated? Who knows? Kathy Wood of Arc. She used Bitcoin Bull, of course, Ark Invest. They just sold nearly 1.14 million shares of coin at all time lows of $53, and their average purchase price was $254.

Starting point is 00:53:46 It's down bad on that trade. It's called down bad. Yeah. I guess like a take is a reminder take here is. I feel like a lot of people are trying to solve problems through regulation right now in the Coinbase. So even if you think about the Coinbase insider trading problem, David, what if we just allowed everyone to list assets? And there was no such thing as front running.

Starting point is 00:54:13 Imagine that. We don't have to imagine that. That's called Uniswap. To take here is stop trying to solve everything with regulated crypto banks. That's what the Gensler's want. The answer to listing front running is uniswap where anyone can list. The way to prevent another Celsius is by using Ave where loans are on chain. We have the solution.

Starting point is 00:54:37 It's called Defi. I do think that defy doesn't solve everything. But it does solve some of these problems here, including lack of transparency in a black box. We had the Celsius's and the blockfies of the world. And also including Coinbase front running. If you're listing asset on Uniswap, anyone can list any time. There's no insider information whatsoever for an asset listing. and it eliminates the problem completely.

Starting point is 00:55:01 You eliminate the need for regulation. That is the model for defy, or the regulation happens on chain, and everyone can be a regulator. Anyone can audit this thing at any time. That is the better solution than, you know, clamping down in a big way. The whole point of labeling something as security

Starting point is 00:55:19 is because of information asymmetry. Like if you are the issuer or the manager, then you know things, then the buyer does. And that gives you a bunch of power. a lot, not everything, you just said that DFI doesn't fix everything. So we're alluding to the same thing. But like DFI fixes a lot of the information asymmetry, like the majority of it. And it really reduces information asymmetry.

Starting point is 00:55:42 So like sure, like 10 people could get together, make a Dow, issue a token. And that might be considered a security because we have these issuers. But like, you know, maybe, you know, I don't know, join the Discord, see what they're up to. If they allow allow that. You can see their behavior on change. you can see that when it gets like basically they're like quarterly statements in real time

Starting point is 00:56:04 you get to see revenues. So like a lot of transparency happens when so even if it's a security if it's a token on chain automatically there's so much reduced information asymmetry so I don't know Gensler take it into account bro.

Starting point is 00:56:18 Yeah what we're saying is there's wins for you Gary if you come to DFI if you get back to base principles of what are we trying to do more transparent, fair, orderly efficient markets. There's some wins on the DFI front. And we wish you would see that, Gary and the SEC. It makes us sad. David, this is not sad, though. Breaking. Some good news, some breaking news. What is happening now with the verge of the merge? Yeah, the Ethereum developers have announced

Starting point is 00:56:45 the merge date for the goarly test net. It's weird to say they announced a merge date and then the date is arranged the August 6th and 12th. That's because of the way that this works. They've announced the TTD, which is total terminal difficulty, which is basically a metric that is related to the hash power of the Gorely network. Basically, as we get closer, we'll kind of know this date. Between 6th and the 12th, it'll happen. The Gorley TestNet is going from the group of August, which is the last test net before the merge. Bankless will be live streaming this and host some Eastakers, probably Anthony Susano if he wants to come. Whoever is big in the Staking community that wants to come, we'll host them. We're going to live stream this.

Starting point is 00:57:26 merge. If it all goes well, if it all goes well, Ryan, I give it four weeks to merge. Maybe five. Five, maybe six. Maybe six. September. September. Wow. If it goes well. If it goes well. September merge. And the others have gone well. I will say. And the others have gone well. They will have gone well enough to pass that test of going well. Yes. Correct. Correct. This is big, man. This is big. This might be happening. Guys, we're going to stream it here, of course. We're going to have a lots of merch coverage for you so much that you'd be sick of talking about it. But we got some other things to cover when we come back.

Starting point is 00:58:03 First, POP and the WNBA. This is a non-speculative crypto use case. Love what Poepep is doing here. Secondly, the Uniswap token, there's some fee switch rumblings. They may be turning on the revenue stream. We'll talk about that too. And it's effect on the larger DeFi token market. But before we do, we want to thank the sponsors that made this episode possible.

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Starting point is 00:59:20 rather than them controlling us. Lens isn't a social media app. It's a protocol to let 1,000 Web 3 social apps bloom. Lens is a permissionless and transparent social graph that is owned by the user. In crypto, we say not your keys, not your crypto, and on Lens, we say not your keys, not your profile. With Lens, your followers go with you

Starting point is 00:59:36 to whatever social media application you want to use. And instead of being trapped by an algorithm chosen by that app, Lens lets you choose the way you want to experience your social media. Lens is the last social media handle that you'll ever need to create. So in order to get started, There is a secret code word in the show notes.

Starting point is 00:59:52 Enter that code word in the Google Form links, and you'll be well on your way to entering the world of Web3 Social. And we're back with the battle of the ZK EVMs. This was a huge theme during ECC week. Three different teams independently launched their ZKEVM roadmap. Scroll Polygon and ZK Sync. Happened to just be ZKEVM week. Probably, depending on when you're listening to this,

Starting point is 01:00:14 I am hosting a live stream with Scroll Polygon and ZK Sync. today, Friday, if you're listening to this today, 8 a.m. Eastern time. And so it might already have been happening. Maybe if you're listening to this very early morning, it's about to happen. We are hosting all these teams to talk about their ZKEVM. But

Starting point is 01:00:32 we have three different teams going after the ZKEVM. Ryan, can you explain why we are so bullish on ZKM and what the difference is between all of these various ZKEVM flavors? We talked about it last week, why ZK EVMs are important. And it's basically because you can

Starting point is 01:00:48 get all of the goodness and expressivity of the Ethereum main chain only in a layer two that is, you know, ZK roll-up secured. And there is this term that was bandied about that like people still have questions about of EVM equivalence. What does it mean? How do you stack these platforms side by side? And I thought this was a great illustration of equivalence. So what you're trying to do is everything that you can build and deploy on the Ethereum mainnet, you want to be able to do the exact same thing, have it be mirrored as close as possible to the Ethereum mainnet on a ZK in a ZK EVM world. And the different ZK EVM solutions take different approaches to that. If you're to kind of like boil a technical stack into three layers, you have kind of like

Starting point is 01:01:32 the very low level runtime layer. It's where everything is kind of eventually compiled down all the code that somebody writes and solidies compiled down to runtime. Above that, you have another layer, the bytecode layer. And then above that, you have the actual language So in the case of Ethereum on the main net, you're programming the language of solidity in almost all cases. And so EVM equivalence and EVM compatibility means some level of the runtime bytecode and language layer mirroring what's happening on the Ethereum side. So Starknet basically allows you to do solidity, but then it transforms that into another kind of language that is called Cairo. and then it has its own bytecode layer, it has its own runtime,

Starting point is 01:02:17 does not mirror Ethereum closely. ZK Sync is kind of next. It allows you to write in solidity, and then it compiles that down, but the bytecode and runtime are still different than the Ethereum Mainnet. Hermes goes a step farther, and some of the bytecode,

Starting point is 01:02:35 like at the kind of the op-code layer, is basically the same as Ethereum Mainnet. And then Scroll goes, the farthest, where it is the most equivalent to Ethereum of all four of the solutions where it gets down to kind of the bytecode layer. And the runtime, of course, is the ZKEVM. That's kind of the difference between all of these solutions is you can sort of transport your solidity code. On Starknet, you kind of have to learn some Cairo on ZK Sync. You can sort of port your solidity code, same with Hermes and Scroll. But with Scroll, it has more,

Starting point is 01:03:12 equivalence to Ethereum at the bytecode layer and these other solutions don't have as much that they have some. Well done. I'm impressed. I'm impressed. Someone more technical is just going to be like, all of that was trash. Bad explanation. But everyone less technical is be like, oh, wow, thanks, Ryan. He's really smart. He's really smart. Let's talk about this Hayden tweet, David. So this is the Uniswap token. It is printing money, not the token, but the protocol. Protocol. What do we look at? Yeah, we're looking at it. We've seen this so many times before, but this one is, is even the biggest, the biggest discrepancy between the uniswap fees earned through the uniswap trading fee protocol, $7.5 million in one day versus Ethereum's $2 million. So like uniswap fees up,

Starting point is 01:03:56 Ethereum gas fees down. It's like $9 million a day average in daily earned fees for uniswap liquidity providers, which is just crazy. I mean, we usually would talk about this in markets, but there's more to the story this time. So we have. there's a governance proposal about the uniswap fee switch not necessarily to turn it on but it perhaps about a redesign so a this thing coming out of a latent q sac fee switch design space and next steps and he begins saying there has been a lot of discussion around whether the fee switch should be turned on this in most of this discussion i see an assumption that using this fee the fee switch equals money going to unit token holders i think this is limiting i'm not going to read out this

Starting point is 01:04:39 whole entire proposal but there's conversations in the Uniswap governance about the fee switch. So like anything at this point would be great. And anything is happening. Something is happening. There is a podcast coming out on Monday about Dow governance and how Dow governance needs to get fixed in order to fix protocol fees.

Starting point is 01:05:00 So that's highly relevant. That is with Hazu is one of the best podcasts we've ever recorded. But the fact that Uniswap's printing money, there is a proposal being actively discussed called fee switch design space and next steps. Yeah, these are the signs you need to switch. You think it might be? It's not not coming at the very least.

Starting point is 01:05:20 I don't know if we're making steps in the right direction, but we are not making steps in the wrong direction at the very least. Look, I think that Haseo episode is perfect, because there is this perception of like our defy protocols, our blue chips are not broken. Like, they just handled the recent crash phenomenally well. They're still printing money from a revenue perspective. but there's a perception that the tokens themselves are broken from a value accrual perspective.

Starting point is 01:05:46 Valueless governance tokens has turned into an actual, not a meme, but actuality. Exactly. And so that's the discussion we have with Hasu is how do we fix that? And I'm pretty optimistic that we will fix it and fix it this cycle. And we're starting to see that in governance play out. Anyway, definitely tune into that episode. David, I've had this question of whether, I don't, not many people are talking about it, which maybe means people aren't going to do it. But, like, you know, it could, I could imagine that the chain that gets forked, you know, merge and becomes kind of the canonical Ethereum chain with proof of stake, right? That will obviously happen. But someone will probably continue to operate the Ethereum chain in a proof of work chain, in a proof of work environment.

Starting point is 01:06:29 Like an Ethereum classic classic classic type of move. No, classic cash. Classic cash. Oh, is this a thing that's happening? Oh, I don't know, but I would imagine that. What else were going to talk? Well, like, it just seems like opportunity. Do you remember that time when there was like, I don't know, 50 different flavors of Bitcoin,

Starting point is 01:06:47 like Bitcoin Diamond, Bitcoin. Bitcoin. Bitcoin, I don't know. Private. Bitcoin Gold. Yeah, exactly. Cash. Bitcoin Satoshi's Vision.

Starting point is 01:06:53 Around the time that Bitcoin Cash forked. Right. Yeah. Satoshi's vision. All of these things. You could probably append an adjective to Bitcoin. And there was probably a fork of that. It was called the fork and fair launch era.

Starting point is 01:07:07 And it was equivalent to, our DeFi Yield Farm era, but for Bitcoin and Proof of Work. Like 2017 era? 2016 to 17, yeah. 2016 and 27. So do you think anyone's going to do this? Yeah, probably. Like the miners? I mean, like the, it just takes a very minimum amount of coordination to coordinate on the new shelling point, which is the proof of work chain that forks off of Ethereum before it goes to proof of stake. Like, why not? Well, and the thing is, like, if some people do it, then like, traders do it. And if traders do it, then other traders do it.

Starting point is 01:07:38 of a sudden becomes a shelling point. I feel like all the people that would have done this are busy with their own chains, though. You know, like, they've already made a chain. Justin's son. Yeah, right. It's like, you know, he's got Tron. You can't fork in it another Ethereum.

Starting point is 01:07:52 Sir, you under estimate Justin's son, sir. He could teach another. Justin will do whatever he wants if it makes him money. Look, the great news, if you were an eth holder is, of course, you just get this coin too. Yeah. Whether it's valuable or valueless, get it. Sell it. Free Air Job.

Starting point is 01:08:08 free for it that i will say that that you should sell it you never know d'i i don't know how fast or slow but eventually you should get rid of it okay not financial advice but you should definitely sell you should definitely sell nfts stuff david this is pretty cool uh oh by the way we didn't even finish we didn't even start that story this story this story this story was a different story antpool which is a a proof of work mining farm for Ethereum, supports Ethereum Classic ecosystem with $10 million investment. Ethereum Classic is the proof of work, Ethereum chain that forked off of Ethereum with a Dow Hack.

Starting point is 01:08:46 It's the one that's embraced proof of work. Ampoole, a proof of work miner, has invested $10 million to support the Ethereum Classic ecosystem. Makes sense because these people have hefty, hefty financial investment into proof of work. And so they would love it if Ethereum Classic had a vibrant ecosystem so they could just mine that chain and sell those tokens because like you go like what is the Ethereum classic market cap,

Starting point is 01:09:10 Ryan? It's got to be under a billion, right? I was just looking at this. Yeah. Are we? Market cap. Oh, wow. Five. Wow. Wow. Wow. This is 8.5 billion, my friend. Well, yeah, but it's also up 40% on the day. Oh, it's been appreciating relative to ETH recently. Yeah, well, big time. Right. Yeah. Yeah. And so, but also this like quarter trillion dollar network, Ethereum is going to turn like all of the revenue towards proof of work miners off. And then like these miners that are mining this like quarter or $200 billion network are all going to go and start mining this $8 billion network. And so like margins are going to get real thin.

Starting point is 01:09:47 And so these miners are investing in Ethereum Classic because they need to pump up the chain because that's their revenue source. Maybe that's David. Maybe maybe that's why there won't be many forks or any forks of a pre-merged Ethereum is because Ethereum Classic kind of has that niche already. Yeah, but if you fork off of the most recent. in chain, you get a lot of, like, Maker Dow and all, like, compound, all these things are still, like, the contracts are on Ethereum. Things like die will break because the ether price on the new

Starting point is 01:10:15 ether price will go to, like, zero or, like, very, very low. Like, USC is not going to be honored. A lot of things that are going to be extremely chaotic on that chain, but like, I don't know, like, you can pick something up from the ashes. There go. For the enterprising young scammer. Just, uh, start your own chain. Just long enough for me to sell. Just let me sell. There you go. Hey, maybe sell. something could come of it. We shouldn't be so sure here, David. Yeah, something as in more ether for me.

Starting point is 01:10:43 Let's talk about POAP, NFT stuff. This is Roz saying I'm a gigafan of POAP because they found product market fit outside speculation. And this is a tweet of POAP. A few have done that. In a stadium on the Megatron. Scan to collect your WNBA

Starting point is 01:11:01 NFT. It's a POAP. and this is a partnership with the WNBA. The WMBA releases like this to do like, what is this? And they say, we're excited to announce that everyone attending the 2022 WMBA Commissioners Cup Championship presented by Coinbase on July 26 will have the opportunity to mint a free collectible NFT called a POAP. This is the first ever WMBA issued NFT and it serves as a digital proof that you attended the game kind of like a ticket stub or souvenir.

Starting point is 01:11:32 Cool. Cool. That's very good explanation of what a POAP is, actually. Yeah, right? Yeah. Good job, guys. And that's exactly what a POAP is. This is the POAP itself on POAP.

Starting point is 01:11:44 Wow, it's pretty. Dot Gallery. Yeah, looks great. And I think about... 84. 84 people. No, no, no. Apparently 700 people or so input of their emails.

Starting point is 01:11:57 There's still, you know, we'll start working at, something like this. And, you know, but these are new people entering. the crypto world that previously wouldn't have. And these are definitely more the normie side, right? This is not an speculative asset use case. It's nothing defy. I guess it's NFTs, but all you had to do is show up to a game, to an event.

Starting point is 01:12:18 That's cool. I love that. So like 84 people got them. So 84 people pulled out their phone, scanned their QR code, and had a mobile wallet to collect that POAP. 84 people at a W-MBA game had a mobile wallet. That's kind of cool. Let's talk about this, David.

Starting point is 01:12:34 There's a bill before Congress, bipartisan bill seeks to eliminate taxes on crypto transactions under $50. If I had one of those kazoo things, I'm like, I mean, cool, but just under $50, that's all. $500 or something. Yeah, come on, $500, please.

Starting point is 01:12:52 I mean, yeah, but these are some of the... That's not even dinner. Like, if I have to pay somebody back for dinner, it's like over $50. Right? I mean, I guess this is gas fees, maybe, sometimes, most of the time on Ethereum. I guess, yeah, that would be nice. That'd be nice.

Starting point is 01:13:09 Some progress. I don't know. It's something. We have to see if that goes anywhere. Do you know that? It's something meme? It's something. I haven't seen that me, but yes.

Starting point is 01:13:17 Oh, really? I see it now. Other news, Solana has physical stores now. It's like the Apple store. There is a Solana store. Looks like in the background, there's some T-shirts. Looks like there's a shoe. over there.

Starting point is 01:13:32 Yeah, what is that? There's some NFT frames as well. Okay. I can say anything more about this, you know? Salana's got a store. Slana's got a store. Is it open 24-7 or is it close? Where is this store?

Starting point is 01:13:47 I would kind of like to visit, actually. Come on, that was a funny joke. What'd you say? Is it open 24-7 or does it close? Oh, dude. Great. Edit that, delete that. We're going to do that.

Starting point is 01:13:59 Don't do that. That was a good joke. Move on. Chippole, buy the dip promo, includes $200,000 in crypto for customers' coin-based accounts. The restaurant chain is also giving away $2 million in guacamole and queso to celebrate national avocado. Oh, God. It's a bear market. God, next, next, next. You wanted to include this, David, so you have to live with it. Now, tell us why this is significant for a roll-up, sir.

Starting point is 01:14:23 Oh, coin chipotle has adopted crypto. Bullish guacamole. Next, please. Next, please. Oh, it's the same story again. Introducing Introducing Web 3 subscriptions coming out of Mirr, this is a real announcement. We're back to being totally serious. Mirr says that they are excited

Starting point is 01:14:41 to announce the launch of Web 3 subscriptions. This new feature allows readers to subscribe to any mirror publication with their wallets and receive email notifications when content is posted. For creators, Web3 subscriptions open the door to building

Starting point is 01:14:53 a wallet-based community as opposed to an email-based community that can be used across Web3. So basically, rather than using your email and password, you use your Ethereum wallet. And a big headline, big, like, line that they title a paragraph is, the future of community is wallet native. Big fans of that.

Starting point is 01:15:10 Big fan. I like, I really like what MIR is doing. It's like MIR the substack killer. I don't know. They're making some progress. This is all about winning the hearts and mind to the creator community, and I think that's better done with NFTs. David, what's this?

Starting point is 01:15:21 As previous substack customers, we would know. Wallet Connect. Current, sir. Oh, yes. Oh, yeah. Oh, yeah. Don't jump the gun. Wallet Connect, say hello to the future of chat with Wallet Connect chat.

Starting point is 01:15:33 You can DM any user using any wallet on any chain. So Wallet Connect releasing a chat feature. Cool. Nice. Nice. Next. I like this. I want to do it. I just don't know who to do it with, David. Yeah. I mean, we have like, we chat on Discord, right? Right? We chat you up. Yeah. Okay. Ryan, you want to take this one. You should take this one. Yeah, yeah. Okay. This is raises. So we're talking about raises. So Aptos is a layer one.

Starting point is 01:15:59 chain that just raised $150 million from FTX, jump crypto, and more, and friends. I think APDOS was the former people involved with the DM project, the NOVE project at Facebook. So APDOS consists of the leaders, engineers, and strategic talent behind years of development at DM and Novi. You remember when DM was like a big thing. And in 2018, it was the blockchain that was going to come eat Ethereum and all of the other smart contract chain. games. It's called DM. It's best engineers in the game. They're at Facebook. And they develop

Starting point is 01:16:34 this, not solidity, this programming language called move. Well, it's back. Now it's called APTOS. And I've actually heard in the developer community, some rumblings, that move is kind of cool. Kind of works better in some ways, maybe than solidity. That does not say much for the aptos chain. I'm not sure about that, but the same tech. And it kind of begs the questions, is like you look at some of the investors here, FTX and Jump Crypto. Besides Aptos, there's another chain that's similar to this that also uses move rather than solidities,

Starting point is 01:17:04 it's called Sue. And so is this the rise, David, of the Eth Killer Killers? Question mark. Is this a Salana killer? Around the roller coaster we go. Yeah, it's interesting. And instead of investors, of course,

Starting point is 01:17:18 are the typical investors who funded other layer ones in the past. The skeptic take here is rotator is going to rotate and we get a new crop of Alt layer ones every single cycle and here's another one. I guess the more optimistic take is awesome, more funding.

Starting point is 01:17:37 Move is potentially a really cool technology. Who knows what these blockchains can bring to the table, doing more experiments, getting more funding for these experiments as well. What's your personal take, my friend? I don't know how to differentiate it other than the backstory of Facebook

Starting point is 01:17:55 I'll wait until I see a community. There you go. What a recent rational take from my co-host here. I'm just exhausted, Ryan. Are you hot in there? Do you have the AC off? No, I'm exhausted of all of all the ones. I thought you're exhausted because we just did like a three-hour podcast with Belize this one.

Starting point is 01:18:15 We do a lot of podcasts, guys. Unstoppable domains, they just reached unicorn status after their latest raise. So over a billion dollars, that's what Unicorn means. a $65 million series A. I don't, how does unsuppable domains make money? I feel like they've gotten drowned out by ENS. They sell domains.

Starting point is 01:18:34 It's a good business model. Dot crypto. I have a dot crypto. I do not purchase it, but I have one. Let's talk about jobs. You didn't give them money. Bankless jobs for it. A few cool jobs, of course. As always, this is your reminder to what, David?

Starting point is 01:18:49 What do they need to do? Get a job in crypto. Do you listen to how much fun me and Ryan have. I mean, Bankless probably has the most amount of fun out of any company. Everything's like this. We do. I mean, I'm just, we have a lot of fun. We want you to get a job.

Starting point is 01:19:03 Other companies, other companies also have fun. Yes. And so you should get a job in crypto because they are probably more fun than your boomer Web 2 Tradfai job. Oh, there's also some bankless jobs Alpha. Oh, wow. I wonder why I was talking about how fun it is to work at Bankless. But first, Vertex Protocol, a

Starting point is 01:19:19 marketing coordinator. That's non-technical. Bankless, UX, U-X-I design. That's non-technical. Senior newsletter editor. We are looking for that. It's literally the best job on the market. Also, non-technical. Really hard to do, but if you got it, you got it.

Starting point is 01:19:32 Streams. It's looking for a financial analyst. Steakfish. Wait, is that non-technical? That's definitely non-technical. That's not technical. Okay. Okay, cool.

Starting point is 01:19:40 Steakfish, smart contract software engineer. Steakfish. Backend engineer. Steakfish, blockchain marketer. That's on technical. Steakfish, front-end software engineer. Steakfish DevOps engineer. Bankless Academy, Product Manager.

Starting point is 01:19:52 Don't know what that is, but it's definitely not technical. Bankless Academy, I know what that is. I mean, I do know what that is, but I don't know what they're up to. Guys, there's so much for you there. Go follow the bankless jobs board at bankless.toppalot.com. Make sure you plug in your email. You'll get these updates via email when they come up and know what the jobs are. David, DevCon is coming up too.

Starting point is 01:20:12 You should do a quick PSA for DevCon. What's DevCon about? And what's some of the alpha around DevCon? Yeah, so it's a little bit like DevCon that we did back in Amsterdam. was the first DevCon. DevCon, this will be the seventh, no, sixth, sixth DevCon. This one, it's held all over the world.

Starting point is 01:20:31 If I was on my game, I would be able to list off every previous city that DevCon's ever been to. Even though, Ryan, I have been to zero of them, and I'm very bummed about that, but I will be going to DevCon number six. So DevCon ticket sales are underway. They are release in tranches.

Starting point is 01:20:46 You can get your tickets at DevCon.com slash EN for English slash tickets, or devcon.org. Oh, did I say.com? dot org. Devcon.org for your tickets. It's in Bogota, Columbia. Some people got a little bit turned off by, like,

Starting point is 01:21:00 is that safe? Look, everyone's asking. Is it safe, David? If Vitalik's going, I'm going. And I'm going to go anyways, even if he doesn't go. Looks beautiful. I'm definitely going. Like, yo, there are hotels and stuff. It's fine.

Starting point is 01:21:14 It's fine. Yeah. It's going to be great. It's happening in October, like, 11 through 14th of October. So I will certainly be going, which is, yeah, I'm very excited. There is also a special discount for students, builders,

Starting point is 01:21:31 and particular students from Latin America. So we'll include a link to where you can find that as well. David, we've got some hot stuff coming up next, including questions for you and I from the nation, including, is Heath a Veblen good? Question mark. I love this question. What is a Veblen good?

Starting point is 01:21:48 another question. What's Ryan and David's life like when they're not working? Does that even exist? Who let that question in? Hot takes from crypto Twitter. Of course, we've got a few hot takes for you as well. We'll be right back. But before we get there, we want to tell you about these fantastic sponsors that make bankless possible. ZK Sync is an Ethereum Layer 2 network that is pushing the frontier of high performance blockchains that don't compromise on security or decentralization. ZKSink has combined the power of zero knowledge roll-ups in the Ethereum virtual machine, enabling developers to build the greatest web three projects possible, ones we haven't even seen yet. Crypto needs its killer applications to onboard the world, but crypto killer apps need ZKSink as a platform to build on first. It's generally accepted that zero knowledge roll-ups

Starting point is 01:22:31 are the conclusion of crypto blockchain scaling technology, and ZKSink is leading the charge into the final frontier of crypto economics. So if you're a developer who wants to build your app on a future-proof foundation, which gives your users the best Ux possible, check out ZKSink's website at ZKSink.io. And yes, there's also going to be a new new. a token, so give them a follow on Twitter 2 at ZK Sync. Rocket Pool is your decentralized Ethereum staking protocol. You can stake your eth in Rocket Pool and get our ETH in return, allowing you to stake your ETH and use it in Defi at the same time.

Starting point is 01:23:02 You can get 4% on your ETH by staking it with Rocket Pool, but you can get even more by running a node. Rocket Pool is the only staking provider that allows anyone to permissionlessly join their network of validating Ethereum nodes. Setting up your Rocket Pool node is easier than running a node solo, and you only need 16Eth to get started. get an extra 15% staking commission on the pooled ETH that uses your node to stake. You also get RPL token rewards on top.

Starting point is 01:23:25 So if you're bullish e-staking, you can boost your yield by adding your node to the decentralized rocket pool network, which currently has over 1,000 independent node operators. It's yield farming, but with Ethereum nodes. You can get started at rocket pool.net. And you can also join the rocket pool community in their Discord. You can find me hanging out there sometimes in the chat, so I'll see you there. Hey, guys, we are back starting with the questions for the nation. As a reminder, if you have a question for David and myself for the rollup, get it in,

Starting point is 01:23:48 Go follow us on Twitter. That's bankless HQ on Twitter. If you have a question for the roll-up, we're throwing a thread out there every Wednesday and just add your question to the list. The first here this week is from my moneyplan.c.h. Is Eith a kind of Veblen good? That is a good that's demand increases as its price increases like designer handbags, the Gucci, the Prada, that sort of thing. Is Eith a Veblen good? David, what do you say?

Starting point is 01:24:16 Ryan, the answer is unequivocally. Yes, yes it is. And we have two ways of answering this question. One, we can just kind of reason about this. Ether, the yield, the real world yield, as in like what you can buy with ether yields, goes up when ether price goes up, right? And so, but not, how am I trying to say this?

Starting point is 01:24:39 Okay, so 32 ether gets you like 5 to 7% yield at like $1,000 price. It'll still get you a 5 to 7% ethnominated. yield at $1,000 or $10,000 or $100,000. So the yield does not go down in real terms as the price goes up, which makes it desirable as price goes up because the yield is always the same. We also can see this in the transactional volume of this thing, whereas we've, we're talking about today, Ryan, where the volume of gas markets or the gray prices super low because it's a bear market.

Starting point is 01:25:15 but when it was a bull market, we had 40, 400, 500, 500, 600 sustained gray gas prices for weeks because as the economy heats up on Ethereum, more transactions happen on Ethereum, more ether gets burnt, more yield goes to stakers. And so as ether price goes up because the bull market is on, the yields go up, the eth burn goes up, and the price goes up. And so this turns into a positive feedback loop, which is exactly what a Vebbling good is. So this thing actually perpetuates itself forward. Now, it doesn't do that in a short time frame.

Starting point is 01:25:49 It does it over like 10, 20 year long horizons. And so this self-perpetuating bull market, I think, will take a long time to play out. But yes, this thing is a vebling good. It also gets more liquid as the price goes up. That's like a normal property of all assets. But it's especially true of ether because it has its own native liquidity inside of things like uniswap and balancer and like all these exchanges. And so Ethereum provides ether its own liquidity, which scales with price. It provides increasing yields as price goes up.

Starting point is 01:26:19 So price goes up, but yields increase faster in real terms, not in these terms, in real terms. And so is ETH a kind of VEBLEN-Gluid? Does it get more demand as price goes up? Answer, Ryan, is yes. Yes, it does. There it is all along. It wasn't ultrasound money. It was luxury money.

Starting point is 01:26:38 All along. That is a terrible branding. The quota of money. The Gucci of money, sir. I do not subscribe to this brand. and good. That's what you just said, David. I quoted you directly. Let's go to the second question. How does your day week normally look like in terms of work outside of the hours you record? Would love to know how you guys go about your days. Hmm. Why don't I pull up the bankless calendar, David,

Starting point is 01:27:00 and see if there are any hours that you are not recording this week. Because I think you might be recording during more daytime hours than you're not recording, sir. Oh, yeah. Yeah. This week was special. This week was a, I did a lot of podcast this week. Well, why do you answer? When you're not recording, what are you doing? This week has been so far, wake up at like seven in the morning and then and then kind of clock out at like 7 p.m. go get dinner and then come back and write a little bit more for like an hour.

Starting point is 01:27:34 This week has been like only bank that's been kind of insane. What is it like normally? It's that wake up at 7. maybe I clock out at like five, go to the gym, go get a dinner with a friend, and then I come back and start writing more. I don't necessarily think that I have a healthy work life file. See how fun this is, guys? This is crypto. Well, look, man, when it's a hobby. Get a job in crypto, guys. It's also your job. It's kind of hard to like separate. I mean, I have a similar schedule to you as like I wake up at like 630, 730. I spend some time with a family.

Starting point is 01:28:12 family. I have kids. I have a puppy, a dog. I do all of my family stuff. And then I get into bank lists. I'm usually like trying to catch up on what happened the previous day. It's sort of where my day starts. So that's like email, Twitter, Discord, telegram, like digesting massive amounts of information and data and like sorting it, putting it in different places. I do all those same steps except I skip email, but then I get discord messages from Ryan saying see email. See email or I will screen I will literally screenshot David an email Forge me to check my email

Starting point is 01:28:47 Show this to you here you go And as I just described it like information sorting I'm like oh my god am I an AI That was like is this what I do? Is your optimization function? Anyway I do that for a while And then man we have so much going on in a bank list If it's not the podcast it's look at the newsletter

Starting point is 01:29:06 Trying to improve the product We're launching a new website We've got some other initiatives some member initiatives that we're doing and we have a team of like we have to stop talking about bank lists what he says Fuma says would love to know what you guys do oh my god I misread it outside your work hours outside of work hours and not not how we work sir this is outside of the hours you record so I was getting to the other non-recording hours okay yes I guess okay so in terms of hobbies and such my hobby is also crypto and

Starting point is 01:29:38 defy and like philosophy and economics and history and all of the things that crypto touches. So it's all, it's all kind of one in the same. I am a, I guess I love to read books. I'm reading a book on kind of, you know, there's a new Christopher Nolan movie coming out called Oppenheimer. Are you a Christopher Nolan fan, by the way? Yeah, certainly. Ever talked about this?

Starting point is 01:29:58 Okay. So Oppenheimer is coming out, and I just recently started reading a book called The Making of the Atomic Bomb. That sounds great. It is great, David. That's great. Are you making fun of me? No, no, that's a really interesting period.

Starting point is 01:30:11 Like, like, you know, the United States, like, we kicked Germany's ass, and then we stole all their rocket scientists. And then we started making rockets. And the book starts before that. It starts with kind of the scientists who actually discovered the physical property of a thing that hypothetically existed, but they didn't actually know existed, called the atom, the freaking atom. And once you discovered that existed, then everyone's like, well, what do we do with it? And some brilliant scientists were like, we can hardly. the energy of the sun from this thing. Both for good, like, it's just fascinating.

Starting point is 01:30:43 So it's all of these scientists who are going to say in the late 40s. We could harness the energy of the sun. Look, it's the atomic era for a reason. Anyway, I do stuff like this. I go on historical tangents. I listen to podcasts. Spent time with my family. That's my life, man.

Starting point is 01:30:58 You exercise, right? You used to have exercise on your calendar in the morning, right? I used to. I haven't gotten to it, man. Yeah. I've actually been, since coming back from, ETC I've actually gotten into it. I got some sore glutes right. I got some sore glutes right now. You know I used to lift right? Yeah yeah yeah totally like yeah you're a big deadlift right

Starting point is 01:31:16 or heavy as you but like yeah I have not lifted in like two years yeah it's been bad yeah I need to get back into this bank yeah I need to do this oh okay I also need to redeem myself because I said like like made it seem like I eat food and and do bank and stuff and sometimes I skip the food stuff I thoroughly enjoy rock climbing so there's a rock climbing gym not too far away so I'm on I'm often there. Also, big, big smoke saminer. I don't know. I was going to say smoker. Didn't know that. But that doesn't, uh, doesn't land so well. No, yeah, I smoke some real good salmon, Ryan. Really? You have never had my smoke salmon. But yeah, you can ask my San Diego friends, the Alfalfa boys. Can you smoke that? Like, in your, this might be a super new question. Like, in your apartment,

Starting point is 01:31:58 do you have a way to do this? You cannot smoke stuff. Yeah, so this was back in San Diego. But I've, there, so like, I've got this fire escape. And you are You are not supposed to put things on your fire escape at all. But like it's right next to my window. And so I'm thinking about getting one of these like green eggs, because they come in various sizes. Famous green egg smokers get the medium size and just like carry it through the window. Just share some with the rest of the apartment and no one will complain.

Starting point is 01:32:24 It'll be fine. All right. We saw one more question then. Okay. Very important question. Is bankless doing a merge watch party and how do I get an invite? We are going to be a part of a merge watch party. We will not be hosting the merge watch party.

Starting point is 01:32:36 the actual merge watch party will be done by the Ethereum Foundation on the Ethereum Foundation YouTube and me and Ryan will be there, or at least I will. But it will be the goarly test net that we will be hosting a watch party hosting a watch party. Did you just say at least I will? Dude, I'm not missing the merge live event. You kidding me? I've just said, I don't volunteer. It's virtual, right? I don't have to appear in person. You know I'm going to be there. Yeah, you can pre-record yourself and put it. Guys, that's going to be really exciting. How do I get an interesting? invite, invite will be available. Everyone can come. I hope the entire crypto community comes. This is the biggest event in crypto, I think, since the launch of Ethereum. Before that,

Starting point is 01:33:16 it's probably the launch of Bitcoin. It's like the third biggest event to ever happen in crypto. Are we overhyping this, sir? Let's get to takes. No, no, it's the biggest event in crypto since the launch of Ethereum. What's, what's this take from Kronk? Kronk. CT sentiment, crypto Twitter sentiment. In November 2021, we're all going to be billionaires in this super cycle, July, 22, Germans will have to eat their own cats this winter to survive. Oh, wow, that was dark. It's a little dark, but you know, crypto sentiment runs real hot and then real cold. Yeah, right. And it's been real cold lately. Generally counter-tradable? Question mark? Yeah, good question. Sometimes. You got a hot take, though. How about I read this? It's a hot take from

Starting point is 01:33:55 David Hoffman. Number one, the 2017 bull market was Ethereum-driven. Explanation. Bitcoin had its own story, but it was the ICO mania at the center stage. That wasn't a hot take. That was the lead up to the hot take. That was the lead up. Okay. We're still building. Number two, the 2000, uh, the 2020 to 2021 bull market was clearly Ethereum driven. Defy, NFTs, gaming. Number three, the next bull market will be three three three, bull markets. Three out of three. Three out of three bull markets led by Ethereum, the bottom line, Ethereum leads rocket. Send that tweet to the moon. We're not, we're not done yet. We're not done yet. Wait, that was not the hot, that was not the hot take. You got two more takes.

Starting point is 01:34:35 Oh, I didn't know. This is a three for one package. Sorry, I'm ruining David's incredibly hot take here. The third Ethereum bull market will be a fees-based bull market. The merch will allow Ethereum fees to actually move ETH price. Uniswap, synthetics, MKR, and all the fee commanding tokens will also lead. The next bull market is based on fees. The third tweet. Here's the hot take.

Starting point is 01:34:57 Here's a hot take. We're just building. Okay, now you ready for it? Bitcoin's unsustainable security budget is actually not going to be a issue. issue for like 20 years. As Eith goes through a 20 year bull market helps it helps support Bitcoin price along the way. There, that was the hot take. You actually said that in the tweet. All right, so it ended with basically the son grows up and supports the father. Yep, yep, yep, yep.

Starting point is 01:35:28 That's that what's that meme of like the mutant ninja turtles who are like being taught by the dojo person and then the dope person person and then the and then the Mutinutals are super strong. I, you know the Star Trek meme. I see the Star Trek meme of like, are we friends? And the one Star Trek guys goes, no, well, the others say yes at the same time.

Starting point is 01:35:47 I've been kind of mean to Bitcoin in this episode. That's Bitcoin saying no, we're not friends. And the theorem saying yes, we are. Okay, this isn't a take, but I thought that's pretty cool. So I just put it in here. This is Tim Bako.

Starting point is 01:35:57 He goes, first time here, here being the Seattle, Washington NFT Museum. And I'm impressed. Beyond the Art, the Museum also has a main. net miner in proof of stake test net running. So there's this NFC museum in Seattle, probably why this has showed up on my radar, because Seattle's my hometown. But also what we're seeing on screen here is what that one specifically is like this nanopools mining software. And Ryan, this was like the beginning of the first like nine months of my life was like

Starting point is 01:36:25 staring at this screen, watching my miners like mine ether. And like if you zoom in, you see these little like green words that say like unit confirmed. And you're like, boo, I go. one nice yay wow what a what a great date idea take your

Starting point is 01:36:40 perspective date to the nerd museum in Seattle here at the NFD museum and watch live proof of steak

Starting point is 01:36:47 command line uh all right Vitalik he had a great update at ECC I watched the video

Starting point is 01:36:53 it's about 45 minutes long completely worth it an update on the Ethereum roadmap we pulled out two slides here

Starting point is 01:37:00 and I think the big question here there's much more in his full presentation. But the big question I think people have included is, what percentage of Ethereum are we complete? Right? And so Vitalik has given the line before that the difference between Bitcoin and Ethereum is Bitcoin is 80% complete. And Ethereum is about 40% complete. That's a big difference

Starting point is 01:37:22 between the communities. He actually said from his perspective about the Ethereum roadmap that we are 55% complete once we finish the merge. So just over halfway complete. I want to ask you, David. So first of all, that number, 55%. Does that feel about right to you? What would you have said about completion? And so when we did our roadmap episode with Fitalic,

Starting point is 01:37:49 he talked about there's like all this extra stuff that there's a chance that we just don't have the time to get it into Ethereum before this thing settles. And this thing, his talk. at ECC is about Ethereum settling down, saying, like, we're about to go through this period of rapid change with the merge. After that, we need to let things, like, stabilize. But, like, there's a lot of things in the Ethereum roadmap that, like, are kind of far out there. And we might not actually get to it before we, like, learn or accidentally unlearn how to coordinate, which is a feature, not a bug. Like, eventually these things, these blockchains need to calcify. So I think when

Starting point is 01:38:22 Fittalik says that post-merge, we're at 55% done, he's accounting for if we did absolutely everything on the Ethereum roadmap and we never really calcified before we like we were unable to get some of the last remaining things on. And so I think that's that 50% percent measurement. What are we looking at here? Because this chart, I think, tells a story here. And describe the axis for us and the shape of this line here. Yeah. So we're seeing an S curve, right? And the vertical axis is the capability of the system. So as we go higher, the capability goes up. And then the the horizontal axis is, of course, time. And then we have this, we are here.

Starting point is 01:39:00 And where we are is, like, right before the steepest part of the S. So we are on what Vitalik is saying is with the merge, we are on the cusp of the most, the period of the most rapid change. A lot of things are going to change. And increasing capability. Like, yes. Like, blockchains aren't necessarily supposed to go through rapid change.

Starting point is 01:39:21 So this is a compromise that we're making because we know that we can make a more performance system, higher capabilities, of course. But then what he's saying is like, okay, we're about to go through the merge and that's going to change a bunch of things. After that, like, yo, we need to chill. We need to let things like steep a little bit.

Starting point is 01:39:37 Like we need to focus on some other things other than the protocol. Also the developers need to break. So like, we're going to go through this period of rapid change and then we're going to chill. But he's also saying, he's also saying that over time, you know, big criticism of Ethereum is so it's always changing.

Starting point is 01:39:51 It's like that's only the case right now. It is eventually the S curve, kind of like curves down and it stops. It ossifies to a certain level of capability. And even in this chart, not the X curve, not the same as curve, the curve, the curve of the complexity of the system. So the chart that we were talking about previously was the capability. And then this next chart that we're now going to look at is the complexity of the system.

Starting point is 01:40:15 And so the we are here is we are right up to the point of maximum complexity. We're about to go into maximum complexity. And so what Vitalik's saying is once we get to that point of maximum complexity, we should start becoming less complex, not more complex. Removing things. Removing extraneous things. He actually gives example in the purge, the whole like purge, purge, whatever thing. Yeah, exactly. Purge, the great purge, the great Ethereum purge. I'm here for it. David, those are the takes. What do you bullish on this week? Ryan, you know how I recorded a bunch of podcasts this week? Yes. Yes, I do. Yeah, I'm bullish on all the podcasts I record. What's your favorite? You have to just name one that you've reported so far. No, I have three. I have three.

Starting point is 01:40:53 What are your three favorites? So you know the cypherpunk t-shirts that we made out of the bankless down? Oh, yeah. I interviewed one of the names that's on the cypherpunct shirt. David Chomp. David Chomp. Coming on a podcast. So that was just an honor.

Starting point is 01:41:08 We stand, this crypto industry stands on the shoulders of giants. And I got to interview one. So that's coming out. I also did the food podcast. The food podcast I've been talking about. Yes. Not what you expect. But the cool thing about it is we use very similar.

Starting point is 01:41:23 words like anti-fragility and like the decentralization of our food supply and how like did you crypto pill this nutritionist or was he he's already crypto-pilled oh really yeah he's already crypto-pilled so he like he leaned into this with me and he's like we like we have a debt to pay to our soil because we have not been like reintroducing nutrients back into our state to pay to our soil yes dude and so like we've had fiat soil this whole time we've had fiat soil and like now we need to like change our, because we have been borrowing and pulling out nutrients from our soil, leaving it empty, and we need to put nutrients back into it. We need to start saving nutrients more than we are borrowing nutrients. This is some Safidine amuse type level stuff here, David.

Starting point is 01:42:08 Dude, it was really, really, no, but it's really, really good. Cifidine de Moose is like, he's acceptable at the best. But like, we have to have this soft landing, if you will, of how we change the way we produce our food, or else if we don't, we're going to like overreach and then crash. These are the same principles of decentralization, anti-fragility, like savings and debt, but we apply all of these same words that we've been using in crypto to like this food crisis that's coming. It's like it's one thing when like we have a crisis in financial markets, Ryan, because we can just kind of print money. You can't print food. Like what happens as a result of that is people starve. And so I actually, this was one of, it's a really good podcast from a

Starting point is 01:42:46 content perspective. But Ryan, it's also one of the like, I think one of the most important podcasts that I've ever created because of like how important this information is. You have my attention, sir. I will be listening to this one. Please, please listen. What else you got? And number three is all the ECC videos of the ECC interview with Vitalik, 30 minutes long, that's out.

Starting point is 01:43:06 Kane, Warwick is out. I talked to Kane about, I think of Jesus last week, I talked to Kane about his fight with Suu. A lot of this content, by the way, is coming on YouTube, all right? But special thing, for people listening to the podcast primarily, We are doing a massive content dump on Saturday where we're releasing all, is it seven or eight of these ECCC episodes? Eight. All at once.

Starting point is 01:43:30 All at once. That's just a fun experience. Eight hours, but broken up into eight different episodes. So you can, you know, pick and choose as you see fit. Yeah, get the full Eith experiment, right? So you could listen to six out of eight or, you know, listen to all eight. Listen to all eight twice. Listen to all eight.

Starting point is 01:43:43 Yeah. Yeah. Definitely add reduced. Add reduced. Going from six minutes down to like less than two minutes. So you're welcome. Ryan, what do you bullish on? What am I bullish on?

Starting point is 01:43:53 You know what? Defy tokens. Okay, so the Hasu podcast that we are releasing on Monday, the theme of that episode was supposed to be how we fix defy tokens. But the actual content was a bit more bearish and turned into a question of can we fix defy tokens? And the truth is, Haseu wasn't 100% sold that we could. And yet, as we had this discussion about all of the flaws with defy token accrual mechanisms right now and the regulatory landscape that exists, the difficulties. By the end of that episode, David, I was more bullish because I see these, all of the difficulties that we outlined, though they are large, are also surmountable. Right.

Starting point is 01:44:45 Like, these are problems that can be solved. We've solved them before in humanity. Exactly. And so I left that episode more bullish on defy tokens, particularly at their current values. When you see like the Uniswop, we're talking about that case, how much money it's printing. David, I was just running the math and $78 million a day. Is that what it was? 7.8.

Starting point is 01:45:09 What it was it? 7.8 million dollars a day. 7.8 million a day. So what is that? 7.8 million dollars 400 and wait wait 46

Starting point is 01:45:22 50 million a year is what that amounts to is that it? No, no it's 2.9 billion 2.9 billion? A year. 7.8 times 365 is 2.8

Starting point is 01:45:37 5 billion. Oh yes, of course. Yes. Sorry, I was multiplying that only by 6 not 365. 2.8 billion dollars. What the fuck did you? I don't know why the six was in my calculator instead. Proof of humanity right here. I can't calculate everything.

Starting point is 01:45:53 So $2.8 billion. And like that's just one protocol. And anyway, I am bullish on defy token to the future. I think the problems ahead of us from a governance perspective are completely solvable. I think regulatory is an issue. It's an obstacle. But actually the constraints that regulatory have given us, I mean, we're growing in a different way in a different direction and they're okay and they will also be removed over time. So

Starting point is 01:46:20 defy tokens is the thing I'm bullish on, David. I will have to say that the fees collected by Uniswap, $2.8 billion of fees are fees that are paid to liquidity providers and you have to pay them. So I think Uniswap fairly might get 5% of those fees. If it took a five, oh, that's a pretty steep charge. But let's run that number, $140 million a year in revenue for Uniswap. If Uniswap took a 5% cut on the 0.03% average trading fees of Uniswap LPs. 142 million a year. And what's the cost of that? Like very low.

Starting point is 01:46:54 A couple million. Right? So this is kind of, it's kind of close to profit at that level. Really cool. I am similarly bullish. Meamy the week, sir. If we can fix, if we can fix DeFi tokens by fixing Dow governance, we've got to fix Dell governance first. True. True. That's the topic of Monday's podcast. David,

Starting point is 01:47:13 meme in the week. What are we looking at? Here we go. So this is the famous friends meme where Phoebe and Joey are, Phoebe's trying to get Joey to say the words. And so Phoebe goes re, and Joey goes re, and Phoebe goes, se, and then Phoebe goes Eschin, and Joey goes, Eschen. And people goes, recession. And then Joey goes, Risk on season. Yeah. That's awesome. Yep. Which one are you positioned for, Ryan?

Starting point is 01:47:42 I am positioned for both. Surprise, Phoebe and Joey. I got both sides. That's the crypto barbell strategy, my friend. Risk on recession. The crypto barbell strategies all weather. Okay? That means you have cash on one side.

Starting point is 01:47:57 You have crypto on the other side. You get the maximum risk on. And then you also have the safe haven. risk off and nothing in the middle. That's me. That's a good meme. This is one of the better memes you've had. Nice to meme.

Starting point is 01:48:09 Yeah, who did this? Nice meme. Some intern that works with Haska trades, whoever that is. Cool. That's some up-and-coming meme more talent here. Guys, as always, crypto is risky. None of this has been financial advice. Never is on bankless.

Starting point is 01:48:22 You could definitely lose what you put in. But we are headed west. This is the frontier. It's not for everyone, but we're glad you're with us on the bankless journey. 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 and gain your financial independence. We recommend joining our daily newsletter, podcast, and community as a bankless premium subscriber to get the most out of your bankless experience.

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