Bankless - ROLLUP: Crypto Bear Market? UST Luna Collapse. Instagram NFTs. Coinbase Bankruptcy? Bankless Youtube Ban.

Starting point is 00:00:00 Bankless Nation is the second week of May. Oh my God, David. What a week it has been. I didn't even get to what this is. This is the roll-up that you're listening to you, okay? What do we do on this show, David? We recap the news in crypto, which, Ryan, I say is always an ambitious endeavor. I don't know if we're going to make it this week.

Starting point is 00:00:21 Yeah, man. Oh, my God, dude. This is the craziest week I've ever been in crypto. Like, I could say that. And there have been many crazy weeks. But we just watched a... How big was Luna at the outset of this? Combined about $50 billion.

Starting point is 00:00:37 Combined market cap. In just like three days time, four days time, I don't know, it felt like a year. But it was actually like three days time. We watched that $50 billion thing go from $50 to zero. Zero. Yeah. You know how we talk about crypto speed running, the history of money and finance? Well, we just spanned the Weirangor Republic hyperinflation event.

Starting point is 00:00:58 That's what we just did. I mean, yeah. Yeah, and it's crazy. And look, guys, we're going to get into all of that. And, of course, a lot of people lost a lot of money, which is no laughing matter. And we do have sympathy for the folks that lost money. I think this is definitely a time to reflect in the crypto ecosystem. So, and we've said before, it's not about gloating.

Starting point is 00:01:18 It's about reflecting on what's happened and learning. And so we actually did an entire episode on this, David, that we put on the podcast. So we're just going to do the tease in today's episode. we're going to talk about the crash of the Luna ecosystem. But if you want more, go tap into that episode that we just released yesterday. Yeah, we're going to go and try and do the Luna thing in under 10 minutes, but the episode itself is 50 minutes for the full deep dive into the whole entire ecosystem. There is a little bit extra information that has happened in the last 24 hours that we will cover.

Starting point is 00:01:49 But in addition to all of that stuff, there's also Coinbase bankruptcy fears, question mark. Should you be concerned? TLDR, the answer is no, at least in my opinion. but we'll cover as to why people have those fears. Also, Ryan, this is the same week that the bankless YouTube got banned. I don't know if you remember that. It seems like it happened forever ago. And then, of course, Instagram adding NFTs.

Starting point is 00:02:13 And so, you know, some bad news, some also some very good news. And then, of course, some funds blowing up, which is kind of how you kind of know that we're close to the bottom is when funds start blowing up. That is what we're going to talk about amongst many other things. The Instagram thing alone, that would have been the headline. this week and that happened on Monday and it got completely overshadowed. Okay. So many things not overshadowed. How big is that? Facebook, 2.9 billion people in the meta Facebook,

Starting point is 00:02:41 Instagram social network. They just added NFTs. It's absolutely gigantic, but it all got overshadowed. Of course, we'll get to all of these things. Before we get there, I want to talk a little bit about Opelus. And these guys are awesome. Okay. So Opelus provides health insurance, payroll, benefits, everything you need to be a self-sovereign employee. That means you can work for a doubt. You know how David and I are always saying in these roll-ups, hey, go quit your corporate job. It's probably boring.

Starting point is 00:03:09 Come join us in crypto. We talk about the job opportunities. This is a tool for how you do that because your big question if you're quitting your job is, okay, what about health insurance? At least if you live in the U.S., that is like one of the top three questions. Opelus solves that problem.

Starting point is 00:03:24 David, what do they get if they become an Opelus member? by the end of May. I think it's May 25th. May 25th. Yeah, you get you get tokens and we all like tokens, right? Opolis, they have their own native token and that is a reward for signing up and being a part of the Opolis Dow. You get a thousand work tokens. Plus you also get a thousand bank tokens, because a lot of bankless Dow members are also Opelisk customers. So there's a partnership there. Thousand work tokens, thousand bank tokens when you sign up with Opelis by May 25th. There is a link in the show notes, bankless.com.c.c.comus with a capital O at the start to get your tokens.

Starting point is 00:03:58 Amazing. All right, David, let's get into markets. Man, what a bearish week this was. In addition to all the other stuff. You know, the reason I'm laughing is because we've been through this before, and I'm not worried long-term at all about crypto, but what is the short-term Bitcoin price telling us on the seven-day, David? The Bitcoin started the week at $39,000, and it bottomed yesterday last night at $26,000.

Starting point is 00:04:25 Wow, 26? Yeah, 39 to $29,000. 26, down 36%, down to the very bottom on the week. It's recovered since then. We are currently at 29,400 at the time of recording, down 27% on the week. But yeah, the bottom, the bottom on the week was down 36% a single week. Do you know when we get in the 20s? Like, do you remember the top in like 2017, David?

Starting point is 00:04:47 Well, yeah, 20,000, yeah, 19. Oh, yeah, that's right. And it briefly flashed up to 20,000. That was like a miracle. We're getting close to that. We're getting close to the like all-time high top. I didn't think about that. The last bear bull cycle.

Starting point is 00:05:01 Incredible. Overall, Bitcoin, from the top of the more recent top of, I think, like $69,000. Nice. 62% or down 62% from the very, very peak to the very bottom. How about Eith? Is that telling a different story? Similar story. Yeah, it started the week at $2,900.

Starting point is 00:05:20 Bottomed last night at $1,700. That was Wednesday night. We always record these Thursday morning. So down 31% on the week. At the bottom last night, it was down 42% currently clocking in at just almost $2,000. Down 65% from the top, Ryan. 65%. And what was our top in the 2017-2018 cycle?

Starting point is 00:05:45 What number was that, David? 14-40. 14-40. Okay. I mean, we're getting closed, right? When you get to the 1,000 and 2,000 range, you're starting to get close. nowhere near the bottom of that cycle, which is like $80, ETH.

Starting point is 00:05:57 We're not going to $80. We're not going to $80. If anyone thinks that they are buying $80, you are absolutely delusional. I think it's hard to imagine a world where we get to triple-digit Eth. Yes, I would agree. But the 1,000 range, we could range here for a while. I don't know.

Starting point is 00:06:13 Look, triple-digit Eth could happen. Who knows anything can happen in crypto. That would really surprise me. But we'll see what happens. How about the ratio? I wonder what story that's telling us. Ratio was holding up really, really good, except for yesterday. It plummeted at 0.075 down to 0.068.

Starting point is 00:06:31 So it took a steep nose dive, which is very unfortunate because I actually took a long ratio position literally yesterday. I'm sorry, man. Four went out for David. Yeah, four went out for me. There's a lot of people who need some support in the markets this week. So if you don't laugh, you'll cry. Yeah, let it be known.

Starting point is 00:06:51 that while we're all smiles and joking here. Like, oh yeah, no, like, we're down big too. Oh, yeah. This is the mask. There's just tears inside, guys. We've just, the difference between us and a lot of others, other people is like we've done, we've been here before. Yeah. Like, I was serious and sad last cycle. Same, same. And so like, you know, this time, I mean, I know how to take it on the chin. People are going to be like watching this and be like, you guys sounded so giddy. What, like, why? What's wrong with you? What did you do? It was like, I would never short Eth. last week. Okay, but we're down bad just like you. All right, guys, it's just if you don't laugh,

Starting point is 00:07:25 you'll cry. And this is a temporary thing. So now, when I say temporary, we don't know how long the temporary could be. It could be months. I mean, we've gone through years before too. What about the total global crypto market cap, David? Yeah, I didn't look at the numbers for the last week, but it's bad. Overall, oh, wait, no, I did it. Oh, my God, I thought that was the top from the top. Last week, we started, we started last week at 1.9 trillion. We are down to 1.3 trillion. We lost $600 billion in total market cap. $600 billion of wealth destroyed. So that's like individual wealth, fund wealth, like all the wealth, all the crypto wealth,

Starting point is 00:08:03 $600 billion. You could round that up. It's close-ish to a trillion. I mean, it's not a trillion. It's like a trillion over the last like month or so, a trillion dollars of capital destroyed. Down 32%. The total crypto market cap down 32% this week. Yikes, that is painful.

Starting point is 00:08:18 All right. Speaking of pain, let's get to the Fed watch because, I mean, I think some people are blaming macro conditions in the Fed for some of these events. And the Fed just released inflation numbers. Actually, not the Fed. This is the Consumer Price Index. It's all tied together because the Fed is obviously watching these numbers. The Fed consumes these numbers, yeah. They do. They consume. They set monetary policy, at least partially based on them. The March CPI Consumer Price Index was 8.5% year over year. The April, that was just last month, was 8.3%. So slight down, but also over what was expected. Slate up. Yeah, well, slight down from March. So March was 8.5%

Starting point is 00:09:03 and April's 8.3%. So slight down. But above what was expected, what was expected was 8.1%. So I don't know what the market did with that, I guess, just more coughing up blood. Yeah. Yeah. Was wasn't super favorable. The take from Raal Paul, which I think makes a ton of sense, is that like the crypto markets, the equity markets, all markets are just down, like down, down, down, tech stocks are wrecked. And this is largely where a lot of inflation came from in the first place, is assets going up, and then a lot of people just start buying stuff because they're rich. All those people are no longer buying stuff because they lost all the money. And so the demand is killed. But the thing is, like, Raul Paul thinks, is that demand is already dead.

Starting point is 00:09:46 but it's going to take a while for that to show up in the CPI numbers. It's lagging. It's a lagging indicator. And so, like, he thinks that, like, there's already the case for the Fed to stop being, like, stop punching the crap out of the market and start to being a little looser, but it's going to take a while for those numbers to actually show up in CPI. Meanwhile, they keep on, they keep on punching the market, right? And so this is like, this is like, remember that World War I movie in, like, 19, 17 or something

Starting point is 00:10:12 where, like, they already, the war was already over, but they hadn't heard about it yet. this guy had to go to the generals to say, hey, don't invade the war's over. Right. Yeah, so this is like that. It's over, but like news has to like proliferate to the Fed first. It is a take. Is it take?

Starting point is 00:10:28 That would be a hopeful prediction. The reason we know that's Raoul Paul's take is because we spent 90 minutes with him earlier this week. That episode is going to release on Monday. It's already out for premium subscribers. Yes, it is. If you're a premium subscriber, if you're not, you should go get it because you download it now.

Starting point is 00:10:42 But that episode is entitled, should we be scared? And Raul Paul goes through maybe some reasons we should be scared across the market, but also how this market's going to turn around. And the TLDR, as David said, is he actually thinks the high CPI has already been painted and we're now going to be lower from here. Then he anticipates the bonds will start turning around. Then he anticipates the Fed will start kicking the crap out of the market and the pain will stop. And ultimately, this is a really interesting prediction. Everyone's going to get another stimulus. He thinks that. He thinks the world governments are going to actually inject cash back into their respective economies through like direct deposits and this sort of thing.

Starting point is 00:11:23 So anyway, stay tuned for that episode. It is here if you're a premium subscriber. If not, it's coming out on Monday. David, what does this mean for alternative layer ones? Well, I mean, they're all kind of down bad. They're down bad the most. Just like, you know, first cycle of things always get hit the hardest, Ryan. So all the Alt-Layer ones are down way worse than the rest of the market. For example, let's start with Cardanos, down 65%, down 84% all-time high. Salana down 81% from all-time high. Pocod down 83% from all-time high. Avalanche down 78% from all-time high.

Starting point is 00:12:03 We don't even have Luna on this thing because Luna is literally down 100%. It's right here, David. There are plenty of zombie trends. chains out there, like EOS, for example. EOS is only down 95% from all-time high. We have never seen something go down at 99%. I have never seen a top, Luna was a top 10 crypto asset, right? Bigly. And this all happened in a week. Last week, yeah. We'll talk about that. Yeah. What does this chart look like? This is just like chart gore. Oh, it's a straight line down. Oh, my God. It's a straight line down. Look at it. Yeah. Yeah. It's like it's looking at a train road. You can't look away.

Starting point is 00:12:42 In stark contrast, not that stark, but, you know, decently, Bitcoin is down 56%, Ethereum, Ether, down 58%. This is, for a lot of reasons, again, newer stuff gets hit harder. But also, like, the newer holders are also, they just get scared more, right? Like, Bitcoin and Ether, they have holders that have gone through a bear market. And so this is mostly to be expected. Like, there's always a flight to safety in bear markets. So things at the bottom of the crypto market cap, like, list work their way up towards the

Starting point is 00:13:12 top. And it's actually nice, it's interesting to see Ether not down much worse than Bitcoin last year, or last cycle, I mean, it was down way more than Bitcoin just because it was the first cycle. Yeah, I have a take about this too. I actually think that the death of Luna this week, everything that went on really marks the end of the alternative layer one trade. That has been a super popular trade almost throughout all of 2021 and lasting up until now. But I think the death of Luna sort of kills it for a lot of people because there are some underlying systemic risks in many of these alternative layer ones that haven't really been priced in or factored in. And what I think we're going to see in the next kind of narrative play is actually a return to

Starting point is 00:13:57 some fundamentals. And rotators will rotate into the next narrative as well. And if the next narrative is stronger fundamentals, I don't think they're going to be flying into Bitcoin so much. They're going to, of course, because that is the ultimate safety asset in crypto. at least that's perception, I think they're going to be coming to Ethereum and then later to layer twos. And I mean, we've made this case many times on bankless, but there are just so many catalysts coming up for Ethereum and Layer 2s. The merge is one. Go listen to our merge episode that we dropped with Hal Press earlier this week. Incredibly bullish episode. Just supply and demand dynamics. Also, security, right? It's like Ethereum securities super tried and tested. What we saw in the

Starting point is 00:14:40 collapse of Luna is not true. just the entire economy turned into the Weimar Republic. We saw all of its military, all of its security degraded in basically a 24 to 48 hour period of time. Now it can be attacked by like a few dollars if you have it. Layer two tokens are coming. That's been a narrative. We've got strong staking returns. So it's really going to be the market, the rotators are going to choose, well, should I rotate? They'll rotate, of course, into fiat for a while, into US dollars. But then they'll come back and they'll say, okay, what's going to return fastest in crypto? Is it going to be Ether Bitcoin? And I would put my money on Ether because it has Defi, it has NFTs, and it has

Starting point is 00:15:21 killer economics coming up, especially post-merge. Yeah, and also let's take a moment to reflect on the state of the Alt-Layer ones right now. Like Luna did the first thing of the crypto market ever and went down basically 100% because of the hyperinflation of the Luna token because of the Algo Stable coin. Solana went down for seven hours again for like the six or seven time. I don't even know. Not down in price. You meant an outage. An outage. The blockchain went out. And so like now there's the joke of like Solana's only open for business hours. The avalanche sea chain is going up. The gas fees are going up, which is like their big claim to innovation is that like the avalanche is the low low fee chain, but it's not. And they also are doing their scaling via like

Starting point is 00:16:03 subnets. But that's really just like off brand sharding with fractured security. So that's not going to work. Tara, we already talked about Terra Phantom also blew up as soon as Entray just left. So that ecosystem is down bigly. And so like almost all of the predictions that the Ethereum camp made about the compromises that these Alt Layer ones have made have started to come true in the last like three months. You know, I'll add another one to the pile, which near, which is interesting, some interesting tech there, of course, too. But they were going in the direction of just kind of copying Tara and launching an algorithm

Starting point is 00:16:30 stable coin. That's probably a bad idea. It's like wrong timing, Jonah Hill. Not right now. There's a reason why Ethereum has made the choices that it's made. Yes. And we're not saying alternative layer ones will never come back. I'm sure they'll have another season, another narrative.

Starting point is 00:16:47 But I do think that this week is going to change the narrative. And of course, David and I, we play narratives a little bit, but not too much. We're more interested in the fundamentals. But I think that's it. The new narrative is fundamentals, at least for some period of time. It always is in the bear market. And while we go into the layer two season, we're going into layer two season. we're going into layer two season during a bear market.

Starting point is 00:17:08 So I don't really think like it's going to be hard for the layer two season to like completely changed the market. I don't really think that's going to happen. Yes. But what is going to happen, Ryan, is layer two season is going to be a builder's bull market as in stuff is going to be built and it's not going to be reflected in price. And that is your opportunity, listener. This is the opportunity to take the bull by the horns during the bear market is so strong

Starting point is 00:17:31 if you just pay attention to fundamentals. Yeah, absolutely. I don't want to go over predictor here, but I actually think while we're in a bear market, it's obviously confirmed by the price action. I don't think this one is going to be as prolonged, David. No way to know that, no way to tell. I feel like this is the sort of thing that's going to be, it's going to take your breath away. It's like, you know, going on a roller coaster, right?

Starting point is 00:17:54 You're just going down that big dip. It's going to take your breath away. It's going to be sharp. It's going to be severe. But it's also going to be fast, at least a lot faster than previous bare cycles. Again, that's probably right. That's just kind of a feeling based on what I'm seeing in the market. But this does not feel like a multi-year-long winter that lies ahead for us.

Starting point is 00:18:16 The chances that the bottom is already in, I would say it's pretty significant. There you go. Yes, we'll see. I think we could go further down, but it just won't be as long as probably my take. But let's talk about. Oh, I hope it's as long as possible, to be honest. I mean, the last time it got a little long, David. I was getting like, are you sure?

Starting point is 00:18:35 Are we right? I was like, God, damn, we're going to do this another for another year. Yes. Let's talk about coin. Coinbase. Also bare markets. Yeah, so what did they do? They just released their earnings report.

Starting point is 00:18:47 They are down. Down bad. From 1.1 billion in Q1, 2021, to 20 million. 1.1 billion to 20 million. So that's a steep drop. I think the TLDR is some big hiring. There's some bear market impact. But what's crazy about this, David, is the PE ratio of Coinbase.

Starting point is 00:19:07 You know what that is right now? Tell me. 4.6. Oh, God. That's lower than Ether. Isn't that lower than Ether right now? It's really low, okay? It depends how you measure PE for Ether.

Starting point is 00:19:18 But like the average for the S&P is about 20 right now. Wow. It is 4.6. Dude, things are so oversold. The coin price is that like, I don't know, it was like something like $90 or $80 went down bigly after earnings. It's been going down ever. cents it listed at like 400 something dollars it's so cheap coin it's like 14 billion dollars right now

Starting point is 00:19:39 14 billion dollar market cap right now uh it's absolutely bling my mind as well now they did do a lot of hiring i don't know how efficient that was but um i mean that p ratio is just like crazy to me uh so maybe we're in oversold sold territory uh guys we got a lot to cover what are we going to cover next we're we're going to speed run the u s t debacle the u sd demise terror demise uh and we're going to talk about the Instagram NFTs. We're going to talk about how bankless got canceled, but we're back because you're watching this on the YouTube or you're listening on the podcast. And then it's just a bunch of other stuff too. So much more to cover, guys. We'll be right back. But before we do, we want to thank the sponsors that made this episode possible. If you're trying to grow and preserve your

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Starting point is 00:22:40 That's AABBE.com. And also check out the AVE protocol governance forums to see what more than 100,000 Dow members are all robbing about at governance.com. All right, guys, we're back. We're going to start here. U.S.T. Luna, Terra, the biggest collapse in crypto history. David, what are we looking at in this chart? Yeah, this is the U.S.T. chart for its trading for tethers. You can see it start to wobble on the 8th of May, but it picked itself back up again, but halfway through the 9th of May, it dropped down to 75 cents, recovered up to 90 cents, but then shortly thereafter, it dropped all the way down to 30 cents

Starting point is 00:23:17 to where we are today at 46 cents. I'm pretty sure we are actually lower at this current moment. But this is the USC stable coin out of the Terra ecosystem, losing its peg bigly, going down bigly. And you might be asking, why is it not down to zero if the whole thing is collapsed? Well, that's because Luna collapsed on its behalf. Luna is minted in order to redeem a UST. So you can, in order to get $1 worth of, if you have one dollar, one UST, you can get $1 worth of Luna because it will mint the Luna to make you whole. then you can go to the secondary market and sell all your Luna to get your dollar back. So Luna has been hyper-inflating, and I went from where, during this whole thing, it started about $85.

Starting point is 00:24:00 It is now currently below a single penny.007 cents because it just hyper-inflated because the peg became insustainable. The peg got attacked by an attacker who was very well capitalized, that attacker made out with almost a billion dollars, causing a bunch of fear so people tried to exit. There wasn't enough liquidity for everyone to exit, causing this hyperinflation event. So Tara, for the first ever token to actually go to zero in the crypto ecosystem. Look at this, David. So all of these gains were basically within the last year or so, 2021. So people bought here.

Starting point is 00:24:33 They bought around, I don't know, 30 cents or so back in the beginning of 2021. And then they just experienced an over 120x gain, a massive gain. Thousands of percent. Yes, thousands of percent. And then they lost it all. in a single week. That's what happened. I've never seen a chart like this.

Starting point is 00:24:55 Yeah. I mean, the only other chart that we've seen do this is BitConnect, but that was a verified Ponzi scheme that everyone knew was a Ponzi scheme. And so that went to zero,

Starting point is 00:25:05 but that was in 2018. And that was at a $3.5 billion dollar valuation. I layered these two charts on top of each other and controlled it for time. BitcoinX went from $3.5 billion market gap down to zero. Luna was over $40 billion at the peak. So, like, by far, the craziest destruction of capital event in crypto history, not even close. Yeah, incredible.

Starting point is 00:25:29 Guys, we went through the full story of all of this. If you're looking for all of the details, we just did a 40-minute episode on it, and we just launched that on Wednesday. So go check YouTube, go download that on the podcast. You want to hear the full story. But what David and I are doing is giving you the latest update and doing the quick summary right here. And I understand one thing that's happened since we recorded that episode, but the terra blockchain has also been halted. Is that the case?

Starting point is 00:25:54 Yeah, that happened actually in the last five minutes or five or ten minutes because of the Luna token is so cheap. It's so cheap that people could just buy it up and start to become validators on the blockchain and then basically 51% the blockchain to death. So they just said, like, yo, this thing is dead. It's over. We're stopping the blockchain

Starting point is 00:26:12 and letting whatever assets that remain on the blockchain to be redeemed. There are tokens on there. the tokens are also down bad. But yeah, this is the first. I've never seen a blockchain actually get stopped, Ryan. This is not only have I never seen something go to zero. I've never seen people actually turn off a blockchain.

Starting point is 00:26:30 It's usually a meme. Like the asset's going to go to zero or it's going to kill the blockchain. In this time, it actually killed the blockchain. The asset actually did go to zero. Pretty incredible. A lot of people were affected by this. Let's keep that in mind, of course. And again, as we said earlier in the episode, it's like even if you were right about Tara,

Starting point is 00:26:49 This is an opportunity to reflect and not gloat. But these are a lot of tweets of well-known people, well-known investors in the crypto space, who lost their net worth almost entirely. This is the co-founder of Real Vision, Remy talking. This is a founder of Delphi talking. Delphi Labs. Do you want to read some of these tweets?

Starting point is 00:27:12 Yeah, Jose, who's the one that we actually had on the podcast to talk about the bull. He was the Terra Bull. And on the podcast, he talked about how he, He was just extremely bullish on Terra. And he goes brutal, like many others, I lost most of my net worth here. My heart goes out to all the other lunatics who are hurting many much worse than me. If you are feeling down, please get off crypto Twitter and spend some time with family and people you love. My DMs are open to.

Starting point is 00:27:36 We'll do a longer tweet that next week when I've had some time to reflect and collect my thoughts. Yeah, this is a common story throughout the Luna ecosystem. Obviously, there were many, many people who were bullish on the Algo stable coins. that and sometimes when price goes up, instead of taking money off the table, people put more money on the table. And, you know, I mean, I do that too with ether. But that's my currency of choice. Other people picked Terra as their currency of choice and just never really took money off the table and now have sadly lost a bunch of their net worth. On the frontier, this is risky.

Starting point is 00:28:09 Yeah. One thing I will say about Jose is he took the bull case, but he also went all in. So he wasn't just saying this. And I think that's, you know, even though he got massively hit during this event, it is commendable. He wasn't just talking. He was putting his money where his mouth was. But this is the Tara Luna subreddit right now. And what are we seeing here?

Starting point is 00:28:32 It's like a bunch of stories of people losing their savings. It's just a bad place to be during the 2018 to 2019 bear market, like pinning the suicide hotline number. on our cryptocurrency and other subredits was a frequent thing. Like that happened many, many times. Like on days like today where the whole entire market was down 30, 40%, and like some ICOs were going down to like, you know, down 80, 90%. The suicide hotline number was a very common thing to see pinned. A lot of people.

Starting point is 00:29:03 And what's sad about this is that like Terra, the UST and the yield wrapped around anchor was actually put into products and made into like NeoBank Savings accounts. So like people, they would just wrap Anchor and then like solicit savings and it was branded as a savings account. So a lot of individuals just said, oh, I can get like, you know, 15, 20% on my, on my dollars. So I'll deposit into this app. And then the app just put it into Anchor in the back end. Now a lot of retail, a lot of, and uniquely a lot of Western retail. In contrast to Bick Connect, which was largely Eastern, a lot of Western retail really was hit by this.

Starting point is 00:29:39 And the reason why I differentiate that is because it's kind of when Western retail, people really get there, get hurt. Western regulators. Western regulators come, and that's when things get serious. We're starting to see that already, as we mentioned in our episode on Wednesday, this is Janet Yellen talking to Congress, I believe, and she's talking about, she's asking for legislation by the end of this year on stable coin, stable coin legislation. The SEC, this is a report that the SEC, they've already been suing terraform labs, and one former SEC lawyer is saying that they have every reason to continue to sue Terra Forum and Terra for UST.

Starting point is 00:30:21 Yeah, certainly. I mean, the SEC served Doe Kwan at Mainnet, Missouri Mainnet last year. Actually, unrelated. It was at his mirror platform. Yes. But you can only imagine that they want to go after Doquan now. They're already there. Doqon will never be coming back to the United States.

Starting point is 00:30:41 A lot of funds were hurt in the process. too. I know these are rumors who don't have stories yet, but some large funds were very exposed to not only Luna and UST itself, but to the entire ecosystem. Remember, Tara is a smart contract platform. There are all sorts of different applications and builders developing on it before it turned Weimer Republic and just inflated away and totally disappeared. I don't know if we can mention any names or what we want to say about this, but what would you say about the funds that were impacted by this and the capital outflow? Yeah, well, there's a lot of very public funds who were all very publicly in the Terra ecosystem.

Starting point is 00:31:17 I mean, Mike Novigrats, Ryan has a Terra tattoo of a wolf with a moon. Oh, I remember that. Yeah, yeah. So I think we can go ahead and assume that Galaxy Digital took a big hit here. The Delphi boys, the Delphi team, who are a great bunch of guys. They were all very bullish on Terra. I don't think Delphi Digital was exposed to Terra too much, but it was mainly Delphi Labs that had all the terror exposure, hashed, tribe, republic.

Starting point is 00:31:45 Some other funds are definitely hit by this. Definitely hurting. One thing I tweeted out, because some people were saying that even talking about the events of this week, right, in the way that we've been talking about it, which is like, hey, let's reflect, let's learn some lessons. Let's also show empathy for those impacted, particularly retail who didn't know better. you know a lot of people are saying hey don't dance on graves don't uh don't gloat and i want to be clear that like maybe some people are gloating in crypto but uh no one i respect is gloating about what happened it's very unfortunate uh no one i said this no one i respect is cheering for us t to fail

Starting point is 00:32:26 all we're saying is we showed you that this was a possibility and by we i mean a lot of people in crypto vitalic was one of them for instance and many in the community dismissed it like it was maximalist fud. So here's the thing. A mature community can handle good faith critiques. No chain is perfect. This is an opportunity to grow. I do think this is an opportunity for all of us. But when you start to interact with the community that can't handle good faith critiques, then that's when your warning signal should start to go off. You know that something is wrong with this community. They're not taking risk. They're not taking criticism. They're not taking issues maybe seriously enough. And I think part of that culture is why we got where we got with 50 billion

Starting point is 00:33:13 in market collapse basically overnight. And definitely, Doe Kwan is to blame here. He has been extremely aggressive, extremely mean, extremely toxic on Twitter. And he really created this culture in the Terra ecosystem that that was an okay thing to do. So when we had our Terra Bull vs. Bear episode, we got absolutely swarmed in the YouTube comment saying, like, we're bunch of maxis who don't know anything blah blah blah blah and just like this was the culture that do kwan created around his ecosystem of just like fudding every other project that says anything bearish about terra and so like dude do kwan takes you to have all of the blame here and he has been the silence out of do kwan has been absolutely deafening in the last week all right guys so there's

Starting point is 00:33:55 there's a lot more here there's a lot more that we have unpacked go listen to that episode i'm gonna maybe close this section with with this david what do you think the takeaways are What did we learn from this episode? Yeah, crypto is here to completely reinvent money and finance. We are going to completely eat the traditional financial system. And then we're also going to make a much, much bigger financial system and to replace it with. So we can't take shortcuts along the way. This is a long-term game.

Starting point is 00:34:26 And when you see ecosystems taking shortcuts, delegated proof of stake, algorithmic stable coins baked it into consensus, fueling growth with unsustainable yields inside of anchor protocol. When you take shortcuts to achieve growth, we threaten the whole viability of this whole entire crypto project. And especially as we have gone into this multi-chain ecosystem, the choices that other layer one blockchains impact other layer ones. There is ether on the Terra ecosystem.

Starting point is 00:34:55 There is ether on the Solana ecosystem. The choices that those layer ones make will come to impact the distribution of ether and the mechanics of proof of stake on the Ethereum ecosystem. We cannot have shortcuts determine the future of this whole entire financial system because the whole world will eventually become a crypto-enabled world and what that world looks like is going to be determined by the choices that we make in the early genesis of this whole entire industry. Absolutely.

Starting point is 00:35:21 I think the best mental model, I think Fiscanti said something like this, but when you're taking shortcuts like the centralization shortcuts, I'll go stable coin type shortcuts, you know, the yield type of shortcuts that terrorist taking, you're actually taking returns and taking growth and taking profit from the future and you're bringing it forward in an unsustainable way. So that is not what we want to do in crypto. And that's why, you know, bankless has always been about, okay, let's build this thing right. No shortcuts. Let's do it decentralized. Let's obviously be open to all sorts of approaches, but let's make sure they're sustainable and their long term. If you want to hear our full take on

Starting point is 00:35:57 that, once again, click in the show notes, go to the crypto meltdown episode. the biggest collapse in crypto history where we covered all of this. David, I wish I could say this was the only stable coin drama this week, but there was some other stable coin drama, not nearly as significant, of course, but Tether losing its $1 peg? What's that about? Yeah, the timing on this is definitely just out of fear, I would say. So, U.S.T loses its peg. USDT, Tether also starts to lose its peg,

Starting point is 00:36:26 but the differences between these two things could not be more stark. Tether has money in the bank. their redeemability window is always open, where U.S.T. Terra has to generate confidence from reflexivity, which is a terrible thing to put confidence in. Tether, USD generates confidence from actually being redeemable for actual dollars, which it always is. But nonetheless, during the fears of Bitcoin dropping, ether dropping, almost over half a billion dollars or half a trillion dollars of capital being wiped out, people started to have fear about Tether and other stable coins. And so Tether started to lose its peg. That Pegg

Starting point is 00:37:00 has I'm pretty sure since been restored, but this just generally, like, added to the whole fear of the whole entire week this last week. Here's Paulo Arduino, CEO of Tether slash Bitfinex, or CTO of Bifenex, somewhere in that ecosystem. He goes, GM. Reminder that Tether is honoring its U.S.E redemptions at $1 via tether.TO, $300 million have been redeemed in the last 24 hours without a sweat drop. So this is just a fear, fear beginning fear, but there's no, unless I'm missing something, and I'm pretty sure I'm not, there's absolutely no reason to be fearful of Tether. And there almost has never been any fear to really be had about Tether. Only fearmongering on the Tether ecosystem.

Starting point is 00:37:38 Not saying it's a great stable coin, but it's always been redeemable. Yes, it has. I think the thing that most than crypto industry would want out of Tether is additional transparency. The kind of transparency we'd see at USC. And of course, it's not decentralized either. So ideally we want something much more decentralized, but it doesn't pretend to be at the same time. definitely not going to suffer the same fate as Luna, almost impossible for it to do so.

Starting point is 00:38:05 But that is not where the fear ended, Ryan. There was a report coming out of Coinbase, a report with the SEC, I believe, that drew concerns about what would happen to user deposits in the event that Coinbase might go bankrupt. And this became relevant because, again, the coin price is down bigly, earnings is down. And so people are, and then also on top of that, this report came out that said that

Starting point is 00:38:31 when you deposit your crypto into Coinbase, you are not depositing it. You are crediting Coinbase. You are a creditor to Coinbase. And in the event of Coinbase bankruptcy, you would not be guaranteed to get your funds back. You would be in line during bankruptcy court saying, hey, here's what Coinbase owes me because I deposited one Bitcoin, whatever ether, and so I would like to get that back. But you would have to go to court to get that back, according to this documentation. So this also caused fear that people might not be able to get their money back in the event of Coinbase going bankruptcy. First and foremost, there is no reason why Coinbase is going bankrupt. That is just like, in the event of Coinbase going bankrupt, not that this is happening. Coinbase is not anywhere

Starting point is 00:39:12 close to bankruptcy. They have plenty of funding. They have plenty of money. So that is not a concern at all. This is in the event that Coinbase does indeed go bankrupt, would I get my money back? And so to address these concerns, Brian Armstrong put out a tweet thread that read and gave out some of these answers. And he goes, while we have no risk of bankruptcy, however, we have included a new risk factor

Starting point is 00:39:32 based on an SEC requirement called SAB-121, which is a newly required disclosure for public companies that hold crypto assets for third parties. For our retail customers, we are taking further steps to update our user terms so that we offer the same protections

Starting point is 00:39:46 to these customers in a Black Swan event. We should have had these in place previously, so let me apologize for that. The disclosure makes sense that in these legal protections have not been tested in court for crypto assets specifically, and it is possible, however unlikely, that a court would decide to consider customer assets as part of the company in bankruptcy proceedings. And so this is just because a crypto centralized exchange that takes user deposits has never gone bankrupt before. And since crypto aren't, they are not securities, users, and because of that, there's just legal gray area. So this is a regulatory concern,

Starting point is 00:40:20 And this is unprecedented. We've never seen this before. Therefore, we've never had legislation before. So this is actually not a call to action for Coinbase. This is a call to action for more legal clarity as there almost always is. Yeah, I think that's the takeaway. I think the question of, is Coinbase going bankrupt or is Coinbase going to take all of its user funds in the event of bankruptcy?

Starting point is 00:40:42 It's kind of much ado about nothing, really. This was, as you said, it wasn't a report by the SEC. This was an SEC filing that Coinbase had to make. They registered it with the SEC. and it's just kind of some legal language near the bottom that I think people took. They hadn't seen it before, and they ran with it, and they extrapolated it in weird ways. I can't imagine any court system would not decide to refund customers in the event of bankruptcy. And Coinbase is so far from bankruptcy, it's not even a thing to worry about.

Starting point is 00:41:12 So much ado about nothing. Yes, but we still want more investor protections and investor confidence, and that is up to the regulatory agencies. Yes, much more legal clarity in cryptos is needed, that's for sure. How about this, David? We were banned last Sunday. Dude, I completely forgot. Bankless was banned from YouTube, okay?

Starting point is 00:41:34 This happened on Sunday. It was Mother's Day. In fact, I think I was in bed, and I woke up to text that morning, on Sunday morning, David, and I think it was a text from Luke. He was our editor, a text from you. And I turned in the Discord, and I saw this screenshot. It's from Ben on our team. He was taking a screenshot of someone on Twitter who said,

Starting point is 00:41:53 WTF just happened to bankless headquarters because our YouTube was banned, blocked, rugged. We got letters, we got email from YouTube saying you've been deactivated. Oh, we did get an email. There was an email to my, yeah, my personal email account. That's used to me. It said something, it's not like it's helpful. It just said, like, you broke our terms of service, see you later.

Starting point is 00:42:18 You know, bye. I'm like, look, what? did we do? Oh no, what did David do now? Did he upload something inappropriate? But no, it's just our regular bankless stuff. So what happened here? Well, that was the full story. That's as much as we knew. And so, like, this happened Saturday night. And so this happened at like 10 or 11 p.m. Saturday night. And so we kind of had an all hands moment in the bankless HQ Discord. And we're like, all right, what do we do? What do we do? And we basically stayed silent because it was the middle of the night. We know the way forward for this is to make a bunch of noise, but we're going to wait until

Starting point is 00:42:53 Sunday morning to do that. And so we emailed some people that we've had on the show who we know have connections to YouTube, but basically we knew that it was going to come down to making a ton of noise on Twitter. And so Sunday morning, drafted up a tweet, said like, yo, bankless is banned. Retweet this to make sure that you want, to let YouTube know that we want to get bankless YouTube back and instantiated in live again. And that, that, That worked. Definitely the most liked tweet out of bankless ever hit 14,000 likes inside of like, I don't know, a couple days. And so thank you for everyone that helped do this. Couldn't have done it without you. Couldn't have done it without our community.

Starting point is 00:43:34 Especially all the people watching on the YouTube right now. This is back online because we were able to make a bunch of noise. What's crazy about the story is like once again, no reason was given. We were just completely deactivated. So we had, you know, 150,000 subs. subscribers on bankless YouTube and then 10,000 hours of content, like all of our podcasts, all of our videos, all completely wiped. Now, we use YouTube for distribution, of course. So we do have backups of this sort of thing, but to be just completely wiped from a platform on the internet does not feel good. And lots of people say, well, why don't, why don't you host it, you know, in IPFS and with Web3 technologies and platforms? And the truth is, a lot of these

Starting point is 00:44:15 platforms aren't ready yet for what we're trying to do. And the other. The other thing is part of the bankless mission is we want to reach as many people as possible, a billion people. Plus, we can't do that unless we have the distribution of Web 2. And so we need Web 2 in the interim. But if they're going to ban us, we will go to take our content to other platforms, certainly. It's one thing I love about our podcast, David, is we control the RSS feed. In the podcast world, right, you just publish and an Apple picks it up or Spotify picks it up. Now, Spotify's trying to be like a platform of social media thing, so they're a little bit different. It's very different. in the video world. There's no RSS feed for videos, so you have to host it on the platform.

Starting point is 00:44:54 So a lot of challenges with that. I mean, the short story is because we got our community, because you helped us raise, make a lot of noise about this. There were tweets, people were pinging YouTube, people were talking about canceling their subscription, all of these things. That's why we were restored. It was because of you. Thank you. We appreciate it. Well done. Seriously. Class for the listener. Class for the listener. Bankless Nation came through for us. Now, it's great because we have a community that can support us,

Starting point is 00:45:25 and we've gotten to a size where we can get loud and we can mobilize when we need to. But there are other content producers, crypto content producers, Gabriel is one, who are also banned in this crypto banning incident. It's not the first time this has happened to the crypto industry either. And some people don't have the ability to raise a ruckus, get on YouTube's radar, and get decisions like this reversed. So it's a real problem. It really is. And this is so all of this small,

Starting point is 00:45:56 and this happens rampantly throughout the ecosystem where just small indie producers who just like making videos for their small community can't figure out how to get the attention of YouTube. And so those people just do not have a voice because they are silenced by the Web 2 world. Eventually we got a reply that's from team YouTube saying confirming bankless channels back up.

Starting point is 00:46:16 We're so sorry this happened. looking into other channels you mentioned in your tweet. Thank you so much for bearing with us, DMing you with more. They still haven't reinstated others. I will say that one of Bankless's best assets that we have is that we talk about the value of censorship resistance and deplatforming.

Starting point is 00:46:32 We talk about the perils of Web 2. So this is the wrong community to mess with because we talk about this all the time. And so when YouTube and other Web 2 platforms come to de-platform crypto-relevant communities, like we know what we're dealing with. We know what we're talking about. So it's just like the wrong thing to mess with. Yeah, absolutely. This is an invading Russia in the winter type of move here. I will say, like, we don't know fully why we were banned and a reason was never given.

Starting point is 00:47:02 This could have been bots going crazy. This could have been a complete mistake. But that's just the point, isn't it? Right? It's like you get banned. You have no idea why. No one tells you anything. And there's no recourse for you. So voice was. are only recourse, and that's what we used. To their credit, YouTube did reinstate us quite quickly, and also, and I thought very highly of this, the CEO of YouTube, okay? She apologized publicly on Twitter. This is Susan from the CEO of YouTube. We clearly made a mistake bankless, glad our teams were able to fix things quickly, and then she goes on, can you DM me or contact info and we can talk offline? Love the level of conversation happening around crypto on YouTube.

Starting point is 00:47:46 very interested in Web 3 and the role we can play in the topic. So I think the bankless community just helped us perform a jujitsu move, which is we turned crypto YouTube channel gets banned into a conversation with the CEO of YouTube. So now we're about to go have a conversation with the CEO of YouTube. She's scheduled something for David and I. I have no idea what she wants to talk about. But I think it's about this, David, very interested in Web 3. and the role YouTube can play in the topic, okay?

Starting point is 00:48:18 Again, earlier, like, you know, earlier this week, Instagram adding NFTs, okay? Web 2 realizes that they are going to need Web 3 in the future, and so I think we can turn this into something good. Not saying we have full, you know, like unmitigated trust in YouTube, and we want to depend on them for everything in the future, but they can help propagate Web3. protocols and Web3 technology, and so we want to use them whenever we can to propagate that freedom. So turn this into a good thing, and it was thanks to the bankless community. Thank you. Thank you. Once again, well done. We needed you guys.

Starting point is 00:48:58 All right, let's go in and get into some layer two things, because while many, many things are down, some things are up. Here's Kelvin Fischer on Twitter saying, optimism hitting a transaction day record today. Interesting stuff seems to be holding up. So I put some data together. here in this image here. Two things that are at all-time highs on optimism is daily transaction fees hitting records for three days in a row, I think dwarfing, doubling the daily average transaction fees of history

Starting point is 00:49:26 and also fees earned per day, also at just gargantuan all-time highs on the optimism layer two. If you don't know about retroactive public goods funding and how the fees on optimism layer two can go into your pocket, you've got to listen to that layer two trillion dollar bullcase for layer two opportunity episodes

Starting point is 00:49:43 that we put on the bankless YouTube and podcast recently. But optimism, seeing just some great growth, and you just love to see it. Also, a fantastic article, very short article, three-minute read was released called The Economics of Roll-up feeds from Alex Beckett. There's this line that roll-ups get cheaper with more users, and it goes into the full deep dive about how this is true.

Starting point is 00:50:03 There are various costs for layer two's, fixed costs, variable costs, average variable cost, total cost, marginal cost, average cost. And when you put all of this data together, you get a full comprehensive understanding as to how layer two fees work. But basically, layer two fees go down the more people use them. This is a great resource to understand some more technical content in an easy-to-understand format.

Starting point is 00:50:24 There's a link in the show notes to read all of that. But TLDR is, roll-ups get cheaper when more people use them. That's crazy because layer ones do the complete opposite. They get more expensive as more people use them. So there are no economies of scale. And this is great news for roll-ups. And just some quick and final stats on the, layer two ecosystem right now. Optimism did $500,000 of fee revenue just yesterday. Arbitram did

Starting point is 00:50:48 $200,000. And layer two's, Ryan, have consumed 2.2% of all daily gas used on Ethereum yesterday, the second highest on record. So when I say, when you guys are, we're all sad that the prices are going down, but the bull market opportunity is on layer two. You've got to grab the bull by the horns. Got to grab the bull by the horns. Yeah, this is, uh, we'll see how layer two is fair during the crypto recession, but it's looking good so far. And yeah, I'm expecting big growth here, too. Crypto recession. I like that more than crypto market. Yeah, I think that's what we're in. I think it's just a crypto recession, right? Kind of a blip. NFT stuff, though. This doesn't feel like it should happen during a crypto recession because this is big news. I think on any other week, this would be

Starting point is 00:51:31 what we would talk about the most and lead with. Instagram is now providing support for sharing NFTs. And they started doing this on Monday. Mark Zuckerberg talked about it. I actually didn't get caught up with all of his comments, but the TLDR is we want to work with Web 3. Web 3 is very important. We're going to be kind of the centralized pieces, but we recognize that decentralized protocols are also important. And so we're going to incorporate NFTs into our technology stack, into our platform, into what we're doing in virtual reality, but also more immediately into freaking Instagram, okay? 2.9 billion people on the planet.

Starting point is 00:52:11 Use Facebook, use Instagram, use meta products, and now we're providing them another gateway to crypto? That is not recession stuff. It's kind of bullish. What platforms are they plugging in? Well, one of them is going to be Ethereum, of course. In the future, Solana and Flow as well. But co-launching with Ethereum is actually Polygon.

Starting point is 00:52:34 and this is pretty big. So the rights, a lot of the reads will happen, like if you're reading NFT data from the chain, you just want to display something in Instagram. That's going to be Ethan Polygon, Solana and Flow. But the rights, according to one of our sources, will happen only at first on Ethereum and Polygon. The rights, that means minting. They're going to mint on Ethereum and Polygon, and this functionality will start to be exposed into Instagram. David, I feel like we have to unpack that entire story.

Starting point is 00:53:05 I feel like we need somebody from META to actually come on bankless. Maybe this is enemy territory. I don't know how they view it, but maybe we're collaborators as well. They need us more than we need them, right? Okay, so they just come into our house. Let's come on bankless, Mark Zuckerberg. Let's talk about what you are doing with NFTs and how you plan to incorporate that into META. But I feel like this is super bullish.

Starting point is 00:53:29 Yeah, we are actually recording with the Polygon team, Tomari. Friday for an episode that will come out while we were at Permitialist on Tuesday. So we're going to talk all about this. And of course, I'm sure, William Peaster out of the Metaversal newsletter from Bankless will also be going into the deep dive as well. So if you're looking for more information on this, stay tuned because Bankless got you, for usual. For usual. Leading into this one, Ethereum NFT Collection Doodles names Billboard Executive as new CEO. So NFT, PFP, community's getting CEO, getting executive leadership. I mean, we saw it work with Yuga Labs and board apes.

Starting point is 00:54:02 So why not, why not others? And doodles definitely have the capital to get it done. So congratulations to Julian Holguin, for joining the NFT collective doodles. That's cool. The Pope's getting into NFTs, David. Can you believe this, man? I did see this, dude.

Starting point is 00:54:18 You didn't see that coming? The Vatican is preparing a galley. That was not a joke. I saw the news. No, I did not see it coming. The Vatican is preparing a gallery in the metaverse with NFTs. So that's kind of cool. NFTs are for everyone, man.

Starting point is 00:54:33 Look, everyone's getting into it. I could read more, but you can click a link in this show notes to see what the Vatican and the Pope is doing with NFTs. In an effort to democratize art, the Vatican City, in partnership with augmented reality company, Sensorium, and Humanity Do Point O, will create a virtual exhibition based on NFTs. Did not have that one on my bingo card. Also, breaking out of Pool Suite, this one's really really really, really, really,

Starting point is 00:54:56 quick and easy. Pool Suite, it's an NFT company, uh, NFT team that got this NFT memberships for joining pool parties. Uh, they are launching Manor Dow because they want to buy a manner. Uh, so if you want to be a part of Manor Dow, you can join Manor Dow at manor Dow dot com. Uh, the aesthetics of Pool Suite, I always thought was really cool. Also Ryan, this news reporter, this 80s theme news reporter. Uh, her name's Ali, I went to college with her. I haven't seen her. Yeah, right. This person's from the 80s. How old are you, David? When were you born? Dude, like she, she's all about the 80s. She just looks like she's from the 80s. Anyways, it's crazy to see this person I was hanging out with in college on a pool suite

Starting point is 00:55:32 Twitter account tweet. What's up, Ali? It's been a while. That's amazing. Do you think she listens to Bankless, David? I don't think so. I think this is her first thing in crypto. Go look her up. Send this to her. Let's talk about regulation. I mean, we talked about a lot of it, but do you remember when Arthur Hayes and company Bitmex was brought to task for illegal trading? Oh, I did. Yeah, certainly. I certainly remember. Absolutely. Because it seems like so long ago to me, I guess this is, what's happening now? There's a court order. I think this has been mostly resolved. Is ordering Arthur Hayes and the Bitmex founders to pay $30 million for illegal training. Actually, $10 million each for the three of them for a total sum of $30 million. Arthur Hayes, I'm pretty sure his personal net worth at maybe at the peak was... You think you can afford it? It could have been a billion dollars, dude. So a $10 million fine to Arthur's Hayes. Slapp on the wrist. Is nothing. Is nothing. That is a fart for him. And so, yeah, I think he's going to be fine.

Starting point is 00:56:35 And also, like, I'm kind of curious as to what happens when Arthur Hayes gets out from under just all of this mess, all this legal mess. Like, he's been writing about crypto. He's been into crypto. What does Arthur Hayes do next? Yeah, he's not retired. That's for sure. So we will have to see. Tradfai stuff. Do you know, Germany doesn't tax you on crypto if you sell it after one year? Did you know that? I'm moving right now. Okay.

Starting point is 00:56:59 That's a thing. I'm looking at pastoral. I'm going to taxed. Germany isn't going to tax Bitcoin, not going to tax Ethereum if it's sold after one year of possession. Even if they're used for staking. Amazing. This is like the most crypto-friendly legislation I've seen.

Starting point is 00:57:15 I mean, maybe someone lives in a jurisdiction in a country somewhere that has more favorable legislation than this. But of course, in the U.S., you've got short-term capital gains if it's less than a year, and then long-term, if it's over a year. There's no condition where you're not paying taxes on crypto. Right. Yeah. Tax-Rand is always coming.

Starting point is 00:57:32 Yeah, incredible. Not in Germany. Germany, the tax man is banned after one year. I guess they are trying to attract crypto natives to the German economy. I'm not sure it's going to work. What's this, David? Yeah, Coin desk. This is a CoinDest article saying with the headline,

Starting point is 00:57:49 we effed up big time millions of dollars worth of juno tokens were supposed to be sent to a community wallet because a copy and paste error validators sent the funds to a wrong wallet permanently 36 million dollars of juno tokens just deleted this uh this chain has been kind of a mess i believe um the the quote from the article's unprecedented community vote last week was supposed to seize millions of dollars worth of juno tokens from the wallet of a whale who was accused of gaming a community airdrop. So basically, it was a token holder vote to snatch the tokens out of this individual's accounts. And then unfortunately, the validators in the Juno network were going to restore these tokens to the rightful owner, just like fat-fingered it, copied and paste it, and sent it to the wrong

Starting point is 00:58:33 address. They screwed up again. Wipses. Yeah. Not a good look for the Juno-MECA systems. All right, moving on, moving on. Last week, the Hop Protocol announced hop-dow, and of course the Hop token. They say, today, hop begins this journey to become core Ethereum infrastructure operated and controlled by our community. The hop drop, it's out. You might have got one if you've used the protocol. If you sent more than $1,000 over a hop protocol, you got the airdrop. If you sent $100 over Hot Protocol 10 times, you also got the airdrop. If you liquidity provided, you got the air drop. You can check your air drop, probably a link in the show notes. But we also did a show with them. I did a show with Chris Winfrey detailing all about the hop.

Starting point is 00:59:16 and where it came from, how it came to be. Not very, very little capital investment into Hop Protocols. So like very, very community-owned, ethos is strong. They actually got swarmed by a bunch of their, quote-unquote, community members because the people got mitigated out of the hop drop because people farmed the hell out of hop trying to farm the airdrop. But they did a very good job mitigating airdrop farmers to making sure that their token went to their community members

Starting point is 00:59:44 who were actually engaged. and this made a lot of people very, very angry because their farming strategies got nullified. And so there's this angry cohort of people who are in the hop discord yelling at the hop team saying, this is unfair, you're only giving it to whales. But again, if you sent $100 over hop 10 times, you also got the airdrop.

Starting point is 01:00:04 And so I wrote an article of Bank List last Monday detailing the changingirdrop meta because optimism also had these changing airdrop strategies to mitigate farmers and to make sure that the token goes to their community. And so this is the new AirDrop meta. And if you want to understand that, read the article. But basically, if you want to get future air drops, you can't just try and farm them with minimum viable strategies. You've got to pretend like you're a user. So you might as well actually just become a user. And so that is the alpha. Be a real person. Be a real person.

Starting point is 01:00:33 You have to create like 40 different Metamask accounts to try to farm the thing. Just like use it. Just use it. As a normal person would use it. And you're more likely to get tokens now. That's a good thing, I think. That's definitely a good thing. Compound Finance. This is actually really cool. Today, compound treasury received a B-minus credit rating from S&P global ratings. This makes Compound Treasury the first institutional defy offering to be rated by a credit rating agency. Pretty cool. Pretty cool. Somebody joked that this actually makes them a B-minus is junk bond. But like, that's not, it's not compound protocol. It's the assets and lending creditworthiness of the lenders. It's all of the assets inside of it and the lenders that makes it a junk bond status.

Starting point is 01:01:16 But at least we're on there. We're on there, right? We got our work cut out for us, man. We just need better and better assets. Yeah, we can't expect to start at the top of this rating scale. No, we got Moody's and S&P and Fitch. We can work our way up. You call us junk now, but now we're on the charts.

Starting point is 01:01:32 Up only. What's a lot of iOS apps I've noticed recently. This is a Zapper's new iOS mobile app that just came out is here. Go check this out. download it. Zapper is a fantastic tool for looking at your NFT and crypto portfolio. Don't look at that part, though. Wait, wait until the bull market. Yeah, skip the portfolio. Look at your NFTs. Go to the NFTs section, okay? Just look at the pretty pictures and look at prices until we're out of this crypto recession. DYDX, they just also announced

Starting point is 01:02:03 the release of their iOS app. They were teasing some big news, and I guess this is it. It's really cool that these crypto defy exchanges are starting to get into the mobile space, making their user interfaces that much more friendly and getting us ready for the other side of the crypto recession. David, when we come out of this and on board another 100 million or 200 million users. Also coming out of the news here, Zora with a $50 million raise. So congratulations to Zora. Coming out of Katie Hahn, Coinbase, Kindred Ventures, Zora is an NFT marketplace, but it's also an NFT marketplace protocol. So kind of like how macha is a Dex aggregator built on top of zero X.

Starting point is 01:02:44 Zora is an NFT marketplace built on top of the Zora like aggregator, right? So it's a protocol and an app. And so they've raised $50 million. They have been very explicit that a token is coming. And so if you haven't made a purchase of an NFT on Zora, I might, might do that for the token. Just do it like a normal human would. Okay. Yeah. Don't be, don't be ridiculous. Just buy something you like. You buy something you like. You might get a token, but they have been very explicit that the token is definitely coming. And so cool, cool. Congratulations, Cizora.

Starting point is 01:03:16 One other raise that was notable this week is Decrypt. Gcript is a crypto news, crypto media publication. They just spun out of consensus. They were incubated by consensus. And they raised $10 million at a $50 million valuation. Congrats to Decrypt for that. Sometimes we include Decrypt in our, in our, in our, stories. We're going through the roll-up, you know, sometimes. Good job, DeCript. Jobs, David. Now is our weekly reminder for you. This is for you. We don't do this for us. This is for you, a reminder to get a job in crypto. Because even if it's a bear market, crypto's still hiring. David, you got a job in crypto during the bear market, didn't you? Oh, yeah. Well, I got it going into the bear market, right? I got my job in February of 2018, literally like six weeks after the top. And then that company blew up later that in that August. I got another crypto job. That job blew up. And then I got a third crypto job. That company's still around. And then I,

Starting point is 01:04:19 and then we started bankless. But the difference between 2017 and 2018, not to scare, not to scare you guys. But the difference is all of these companies have raised insane valuations over the last year. They are flushed with cash, ready to spend it. So I do not think. And plus, okay, the first company was an ICO advisory company. Yeah, David worked just some shady companies before they were. Okay. Not realty, okay?

Starting point is 01:04:43 They were legit. After that one was an STO security token advisory, which was like, after once ICOs were done, it rotated into STOs and then both of those blew up. Yeah. It seemed like a good idea at the time, all of these things, right? That's just something that we're leaving into the history. That didn't come forward. Well, you know what?

Starting point is 01:05:00 Is the future in the present is these companies are hiring? I'm going to go through a few jobs on the bankless job boards. Where do you find this at bankless.pallet.com slash job? Make sure you sign up. Also join our collective. Submit your resume and these crypto companies will come to you. That is the magic of it. I'm going to name a few, though.

Starting point is 01:05:17 Marketing Manager at Wanderverse Incorporated. This looks awesome. VP of Engineering, ZKX, ahead of growth at Zee. DKX, non-technical, lead community manager, crypto skulls, Dow, a senior product designer at Parcel Incorporated, Ethereum core developer. That is the most technical role he will ever find out. A goaling engineer at Starknet client. Very technical. I could go on. There's a whole bunch of Coinbase job openings. They are still hiring UX designers. All sorts of great stuff on the bankless job board as usual. Guys, we got so much more to cover. Coming up, we get to questions.

Starting point is 01:05:55 from you guys from the Bankless Nation, one of our new favorite sections. So a question from a listener who can't stop buying ETH. Maybe need some help. Maybe needs some advice. I don't know if we can help them with that, David. It doesn't sound like a problem, Ryan. Who gets gas fees? Post the merge.

Starting point is 01:06:12 Who gets them? Do you get them? Do I get them? We'll cover that and more when we come back after these fantastic sponsors that make this episode possible. Arbitrum is an Ethereum layer two scaling solution that's going to completely change how we use D-Fi and NFT. Over 300 projects have already deployed to Arbitrum, and the Defy and NFT ecosystems are growing rapidly. Some of the coolest and newest NFT collections have chosen Arbitrum as their home, all the while Defyreport protocols continue to see increased usage and liquidity. Using Arbitrum has never been easier, especially with the ability to deposit directly into Arbitrum through all the exchanges, including Binance, FTX, Hube, and Crypto.com.

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Starting point is 01:08:12 the industry's most battle-tested and resilient, stable coin. Using Maker, you don't need to sell your collateral if you need liquidity. Instead, you can spin up a Maker Vault and use your collateral to mint dye directly. With Maker, the power to mint new money is in your hands. The Maker protocol is extremely hardened and operated by one of the most experienced Dow's in existence. They've been here

Starting point is 01:08:31 since the beginning, they've seen it all, and so you can mint dye with the assurance that your collateral is safe. Soon, Maker will be present on all chains and L2s, so minting die can take place on oasis.app, Zerion, Zapper, or any other defy protocol that you use. Follow Maker on Twitter at Maker Dow and learn from the oldest and most resilient Dow in existence. And we're back. Questions from the Nation. Again, a new segment out of the Friday weekly roll. This is the second time we have done this, but we're doing this every week going forward. Every Wednesday, there is a tweet coming out of bank lists saying questions from the nation.

Starting point is 01:09:04 If you have a question, drop them in here. We'll choose the ones that have a bunch of favorites to answer. This one only has one like, but I personally liked that. I'm pretty sure that's my like. That one likes is David. That one likes me. And so EmptyBags.Eath says, I can't stop buying Eith. My wife wants a new kitchen.

Starting point is 01:09:20 My kid needs braces. It's hurting the ones I love. I bought a sandwich the other day and cried halfway through and I calculated its opportunity costs in the future value of ETH. My question is, should I also be buying Maddoch? And Ryan, you're an advisor to Maddox, so you can't answer this question. That's not allowed. So I'll go ahead and answer this question.

Starting point is 01:09:38 I have personally trimmed almost every single token and sold it into ETH in the last like three months or so, except for Madik. And so that is one of the very few tokens that I still hold. because, I mean, layer two seasons ahead. And also, have you seen how much execution Maddoch, the Polygon ecosystem has done? They just onboarded NFTs with Instagram. And so, like, I'm into the layer two thesis.

Starting point is 01:10:03 I'm into the layer two rotation. And Maddoch has been around for a very long time. They are building very, very aggressively. I, of course, will never advise you to buy anything other than ether. But Maddoch doesn't seem like a bad buy. Yeah, I would bucket this in the theme of layer twos as well. We are very bullish on layer two ecosystems in general. Madic is partially a

Starting point is 01:10:25 layer two. It's partially not, but it has a foot in both worlds. It has a lot of layer two type acquisitions. Well, that's just the Madic Polygon or the Polygon proof of stake chain. There's also like the infinity other ZK roll-ups and other chains that are also related to Madic. Yeah, that's what I'm talking about. All right, let's go to the next question. So the next question from Jasper the Friendly Ghost. Are you sure these aren't your alt accounts, David? I don't know if these names are real. here. I'm just civil-attacking the questions from the election. I mean, that last question kind of seemed like a little fishy there. Do I look like I've got a kid with braces, Ryan? You'd look like you'd write that in a question to us. Real world assets are supposed to scale

Starting point is 01:11:04 die into a real USDC competitor. Are you worried about the introduction of assets that have pricing based on centralized agencies? If die becomes, say, 20% USDC, 40% U.S. property, 40% crypto, we've actually increased U.S. reliance. The meat of this question is, what about all of the nation-state dependencies that are backing the value of die? What do you say to that, David? Yeah, so many people just misunderstand die and how it's built and what its ethos is. So I'll take that U.S.D.C. isn't the most ideal collateral inside of Maker, but also the maker team would also agree with that. However, 40% U.S. property, people think that that is a centralization regulatory risk, but it's actually not, because every single instance of real-world

Starting point is 01:11:52 assets inside of Maker-Dao is its own specific agreement, its own specific legal structure, and that legal structure isn't on chain. There are individual trusts that are just beholden to the Maker Protocol itself. So there is not one single sweeping legislation that could stop all of these assets being good collateral inside of MakerDAO. And so if there is like 50 different real world assets, a hundred different real world assets, or if like the MakerDAO vision comes, like thousands and thousands of instances of real world assets inside of MakerDAO, every single one of those is its own independent thing. There is no centralization amongst all of those things.

Starting point is 01:12:33 And so the real world assets itself are decentralized because there are so many of them. It's decentralization by numbers. and it also gets just regulatory immunity because it's playing nice with the United States. It's putting, it's making the capital and value of the United States to work. So it's actually playing inside of an ecosystem that is friendly in a very safe and secure way. And so it's both being, it's both like playing nice with regulators but also being untouchable by regulators at the same time. It's so genius. It's so genius. And people think that's, oh, this is centralization.

Starting point is 01:13:08 Like it's actually not. It's roundabout decentralization, and it's beautiful. I think that so the one thing that die does depend on is it's basically the game theory that not all nation states will, in all jurisdictions, will ban, like, defy and die and maker at the same time. It's kind of playing that game theory arbitrage. There's always going to be some friendly jurisdiction out there. If there was a super, if there was a world where the government went ultra evil, all

Starting point is 01:13:36 governments, they cluded together, all jurisdictions said, we're going to, wipe this thing off the mat. First of all, it's very unlikely because, as you said, they have a lot to lose if they do that. Then maybe you could say, hey, we need something different. We need something more than die. But in which case, we have ether, we have Bitcoin. We have other stable-ish assets like Rye, which are super interesting, which is basically the die play, only it's completely Eith collateral and it's all settled on chain. So I feel like crypto has a lot of options for this. Let's get to the next question, David, because we got to burn to these. Before that, just one last thing. The strength of the real world assets inside of MakerDAO is related to the strength

Starting point is 01:14:14 of property rights of that particular country. So you will never see like Chinese real assets inside of MakerDAO just because, you know, China will come and take your stuff. But like the, the assurances that property rights are good in particular countries will lead into real world assets inside of MakerDAO. Yes. Let's go to this question. Why is everyone saying that each staking yield will rise after the merge from the current four and a half percent or so, That's what you get if you stake Eif to more than 10%. I couldn't find any explanation to that. David, what is the simple explanation as to why?

Starting point is 01:14:46 We're going to get close to 10% post-merge on Eith staking yield. Right. So if you are staking, people right now with proof of work, people pay and they bribe miners to get their transaction ahead of the line, right? If you need your transaction in immediately, you've got to pay miners extra above and beyond the base fee, above and beyond the typical gas fee to get your transaction in the line. accounts for roughly about 10% of the total transaction fee, and this is where the staking yields will

Starting point is 01:15:15 increase. From the current 4.5% to the now-hypothesized 7%. The hypothesized number used to be way higher, like 12 to 15%, but that was during DFI summer when gas fees were like 400 to 1,000. Now that gas fees have settled down to 10%. The equilibrium has been about 90% base fee, 10% staking tips. But in the post-merge, validators get the tips rather than the miners. And so the staking yield for e-staking will go up to include the value of the tips. Yeah, you're going to get those sweet, sweet transaction fees, is the TLDR. And the percentage is also affected by the amount of people who stake. So if there's more people staking, if there's more capital being staked, then percentage

Starting point is 01:15:52 actually goes down. So ideally, we're in our conversation with Hal Press earlier this week, he's like, in my perfect world, I'd be the only staker of Eith, right? Because that would maximize Hal Press's returns, of course. That's also my perfect world as well. For Hal Press? For you? No, for me.

Starting point is 01:16:08 I want to be the only sacer of Eith. All right, let's get to the takes, guys. This is the first one from Kevin O'Waki. It's all about Dow's. Yeah, Kevin Awaki says, the community has hurt itself by restrictively defining a Dow to mean a community group

Starting point is 01:16:21 embracing the tyranny of the structurallessness. This is basically, the tyranny of the structurallessness basically means like when there is no structure, there are the people who, people can create tyranny in that structure because there's no rules. And so,

Starting point is 01:16:35 Kevin follows up and says, there's been a rather successful movement to discredit the efforts of any Dow with even a loosely centralized structure as not being a really a real Dow. Kevin follows and says, in my opinion, this is totally wrong. The D in Dow can just mean decentralized governance via a permissionless token. It doesn't have to mean a chaotic, loose web of individuals. The A in Dow can just mean some level of smart contract automation to help with high level decision making. It doesn't have to mean that all in initiatives must be atomic, well-formed, compound-style direct democracy proposals. The O in Dow can just mean what it means in Tradfired, a group of people and resources with a mission and structure to achieve that mission. I've been hammering this home for a while. Dow's are the worst name. They decentralized autonomous organizations. We should actually just call those defy apps, things like Uniswap, things like compound.

Starting point is 01:17:27 Those are DAOs. The DAOs that people think of, like bankless DAO or Gitcoin Dow, are actually dues. decentralized organizations or digital organizations. They're just basically, we need all the same hierarchies. We need all the same structure. We need all the same delegation of responsibilities, but also in the digital realm. And so instead of filing like an LLC with Delaware,

Starting point is 01:17:49 you make a transaction on Ethereum to incorporate a token for your digital organization, not a Dow. And so if you are a Dow, it's like, oh, we don't want leadership because we want to be decentralized. You're wrong. You do want leadership because leaders get stuff done. done. So instead of thinking Dow's, think do, it's digital organizations. I think in the ideal due, the truth is everyone can be a leader to or anyone can be a leader, which means it's very

Starting point is 01:18:15 metacratic. You can just chip in, do something, rise to the top if you're providing value to that organization. So it's not as, it doesn't need to be as hierarchy. It doesn't need to be a hierarchy as corporations are as well. There's much more ability to just get things done. This is a tweet from some guy. Ryan Sean Adams tweets out, sometimes the best investments in crypto are the ones you don't make.

Starting point is 01:18:42 What does that mean? What I mean is like, you know, it's kind of like Warren Buffett where he'll just sit there for years. Sometimes years goes by, doesn't deploy any capital, doesn't do anything. He's just patient, right?

Starting point is 01:18:53 And I think sometimes in crypto, we feel like we always have to be deploying capital, doing something, trading. And that's when we get ourselves in the most trouble, right? Sometimes the best thing you can do is absolutely nothing. Sometimes the best investment you make is the one you actually don't make, right? You just don't give into the FOMO, don't give it into the FUD, and you just maybe don't epe into that thing. I think a lot of people learn that with Tara this week. It's just I, you know, I was getting a nice 20% yield on my, my UST, but I didn't realize the risks associated with

Starting point is 01:19:29 that yield did not compensate for the yield that I was getting. So the risk-adjusted reward was not 20%. It was something very far in the negative direction, right? And so sometimes we'll do our best work and our best investing when we're not overly eager, when we spend time to actually understand what we're investing in. We feel very certain that what we're buying has strong fundamentals. I think we've gotten in some bad habits over the past, like 18 months or so in the past full market of like aping in. Remember that you know the term that just really rose to prominence and phase?

Starting point is 01:20:03 Let's just ape in. It's kind of fun. Yeah, you want to ape into some things, but like, let's not go overboard with it. And I think people are realizing that truth this week as we're coming out of the lunar crisis. All right, wow. The week is over.

Starting point is 01:20:17 But what are you excited about? Hang on, we still got Friday left. That's true. Whatever happened on Friday, sorry, we didn't cover it. I'm sure something's going to happen. But, Ryan, I'm excited for the cheap ether, man. Like, when we were doing the show with Hal Press, I, like, opened up my Gemini account and, like, two X the size of my daily buys. And, like, as the price has gone down, like, I'm seeing those daily buys, like, get me more ether.

Starting point is 01:20:40 And so that gets me excited. He did that, like, mid-podcast? Oh, yeah. Oh, yeah. You are crazy. You are crazy. Like, well, sometimes you say wait on your investments. And I'm like, well, not for ether.

Starting point is 01:20:52 Yeah, he just destroyed my last take. And you were like, look, but this is the yin-yang. Look, I'm all gas. You're all gas. I'm breaks. And that's why you listen to bank lists because you get the taste of both. It's also daily average bias. So I'm not baking my entire bank account. That's true. David's not crazy. Yeah. Oh, yeah. A little crazy. Anyways, the bear market is like, I spent 2018 through 2020, like learning everything I knew about crypto. And so the bear market kind of feels like home, man. Like the moon boys are gone. The noise is gone. We've returned to fundamentals. We can start to think, not.

Starting point is 01:21:27 in one year long time frames, but decade-long time frames. And that's just really refreshing, really healthy. And like, you know, some, this is the part of the cycle where some people will stick around and learn the value of decentralization, centricer resistance, permissionlessness, all the things that make crypto tick. And the people that don't will leave, and they'll form FOMO back into the next bear market, like 50% too late. And so the spoils, go to people who stick around and learn these lessons. Last week, Ryan, I said I was excited for permissionless and to meet you. I'm still. excited about that. But I said that last week. And so this week, Ryan, I'm excited for the bear market.

Starting point is 01:22:01 Yeah, look, I'm looking forward to that too. But, you know, I'm also excited about the bear market. I'm just going to, I'm going to plus one that because I guess maybe we'll call it the crypto recession instead. Does that make people feel better? Right. I'm just, you feel better now. It's like, it's like, it's like bear market building, recession building is the best kind. You said lower prices. We also get back to fundamentals. I feel like for for a long time, people weren't paying attention to the things that really mattered in crypto. And so we get a lot less noise, a lot more ability to kind of like focus on what matters. A lot more writing gets done.

Starting point is 01:22:34 As we've said before, the tourist leave and the settlers stay. So it's kind of a great time to be in crypto. And the cool thing is I've never been more certain in any other crypto recession, bare market thing, that crypto was going to make it out on the other side and be even stronger for it. It's like in 2017, 2018, in that bear market, 2018, 2019, like, I wasn't so sure. I mean, like, when E2. I did start to question my sanity in 2020. Right.

Starting point is 01:23:04 It's the only thing that we've produced here, Bitcoin, is DFI really going to take off? Will anyone care? Like, keep in mind, none of these things existed. NFTs weren't a thing. Smart contracts only had one use case, and that was the ICO. And it was just absolutely obliterated. Some people said tokens will never come back as a result of this. And so we've come so far.

Starting point is 01:23:26 And now there's not a shadow of a doubt in my mind that crypto is going to be here for the long run. So that's why you and I are just smiling throughout this episode because even though we're in a crypto recession, even though we got people have bear market blues and a lot's gone on, a lot of people have lost money. Crypto as an asset class isn't going anywhere. And that's why this is still the opportunity of a generation. Now, more than the last time you listen to a bank, episode, right? It's like there's even more opportunity now because prices are lower. Certainly, certainly. Yeah, we invented defy last bear market. What will we invent this bear market? I don't know, but it will be great. It's a good. All right, meme of the week. What are we

Starting point is 01:24:06 looking at, David? Oh, God. I'm just going to let this play. This is the tweet is what you look like when you show your NFTs to other people. And this is like for the listeners out there, This is like the TikTok video where people are lining up. They're doing a move and they walk off camera. I don't know what game this is, but they all have something like, like the thing around their waist, like a three pack that's like I don't. Laser tag, Power Ranger. It's something I don't know.

Starting point is 01:24:32 I don't know. But these are like grown men, dude. Is this really what we like, have you ever shown someone one of your NFTs in public? Oh, 100%. Totally. Really? Dude, I have a fucking NFT on my wall, man. So do I.

Starting point is 01:24:46 You haven't even noticed it. You haven't even said anything. Oh, yeah, your turtle's back, huh? Yeah. It's a recession market turtle, okay, David? It's just slowing things down for the recession. All right? No need to be speedy.

Starting point is 01:25:00 You were waiting the entire podcast for that one, huh? Oh, I had that crap. Do you know it? Also, guys, stick around because we've got a really hot moment of Zen from Ben, from the optimism team. Who knew Ben was so talented? Of course, guys, if you like this episode, make sure you like, subscribe to the podcast.

Starting point is 01:25:16 If you're on YouTube, subscribe, of course, like the video. If you're on the podcast, set it to a friend, tell someone to subscribe to bankless. None of this has been financial advice, though. ETH is risky. Crypto is risky as we just experienced this week. You could lose what you put in, but we are headed west. This is the frontier. It's not for everyone, but we're glad you're with us on the bankless journey.

Starting point is 01:25:39 Thanks a lot. Ampleforth, ESD, D5 dollar U.S.T, basious cash, iron, fine, neutrino protocol. Tower financing you rich, steam dollar bid shares, USDS, FRAX, unsustainable. Don't start an algo stable. It'll start off work until the market worsens. Don't start an alga stable. No matter how you frame it, you just can't sustain it well.

Bankless - ROLLUP: Crypto Bear Market? UST Luna Collapse. Instagram NFTs. Coinbase Bankruptcy? Bankless Youtube Ban.

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