Bankless - ROLLUP: Crypto Rallies | Gemini vs Barry Silbert | Game of Thrones NFT | Ethereum Liquid Staking | Inflation

Starting point is 00:00:00 The Winkle-Vi escalate their fight against Barry Silbert and digital currency group causing Barry Silbert to have to release in letter to investors. Sam Bankman-Fried, our favorite three-letter acronym dude, as doing more Sam Bankman-Free thing, so get ready to face palm. And Coinbase lays off 20% of its staff while Binance is looking to increase its staff by 30%. Bankless Nation, it is the second Friday of January. We're in 2023. I hope you're ready for what are we about to give him, David? The bankless Friday weekly. Roll up, Brian, where we cover the entire weekly news in crypto, which is always an ambitious endeavor, yet we persevere nonetheless into 2023, which so far has been bullish. So far bullish. Numbers are up this week. 12 days. 12 days of green. Yeah. We've got some double digit green too. We're going to get to that in the markets. Also going to talk about

Starting point is 00:00:52 digital currency group versus the Winklevoss twins. The fight has escalated even further. On Twitter, of course, because where else do modern people fight? Got to be in public, got to be on Twitter. We'll cover that. We'll tell you what's going on there. And we'll see if we can draw any conclusions from that. What else are we talking about today? Meanwhile, FTX discovers $5 billion under the couch cushions. Wow, that's pretty sweet.

Starting point is 00:01:16 SPF requests access to his Robin Hood shares in order to pay for his legal defense. You'll never guess what happens next. And then sadly, Coinbase has to lay off 20% of the staff. ahead of Crypto Winter, but Binance is hiring. And then Ryan's also going to walk us through some CPI numbers as well, because we got that literally this morning just a few hours ago. Inflation deflating, inflation down. So that's good news.

Starting point is 00:01:41 Inflation deflation. Let's talk about that in a little bit. But first, got to tell you about our friends and sponsors over at Osmosis. Osmosis is a Cosmos app chain that specializes in Defi. David, you want to tell the Bankless Nation about this cool app chain and what it can do? Yeah, it's the liquidity app chain of the Cosmos ecosystem. And so if you ever listen to our episode, why Uni-Chain is inevitable with Dan Elitzer. He gave the case as to why Uniswap will eventually produce its own application chain. Osmosis is the instantiation of that thesis inside

Starting point is 00:02:16 of the Cosmos ecosystem. And it is perhaps a place to get started if you are interested in exploring the Cosmos ecosystem. You can bridge right in to Osmosis from Ethereum, Polygon, Binance, Pocodot, Arbitrum, all the highly used places. And you can do some things, the normal things that you would do on any sort of decks. You can swap tokens. But because it's an app chain, you can do some other cool things as well, like liquid staking and other things like this. So if you want to explore the osmosis universe and the cosmos ecosystem, there's a link in the show notes. You can go to osmosis.

Starting point is 00:02:48 Dot zone slash bankless. You know, David, I wouldn't have said this a year ago, but the Cosmos, DeFi on the Cosmos, in the Cosmos, ecosystem is really matured and I think it's worth exploring some in 2023 at least that's been part of my new year's resolution all right david let's get to markets we got the happy music i hope it's very happy bitcoin is up tell me about it oh it's uh it's up bigly it's up uh 8.7 percent starting the week at 16,800 ending where it is right now at a whopping 18,250 8.7 on the week is this uh up on cpi is this up on macro is what why are we up. Well, okay, so if you look in the far right on the screen, you see that big red candle that

Starting point is 00:03:32 goes from like $18,000 down, like $18,300 down to below 18. That was right after the CPI print. So CPI print came out and then it jumped $200 down to $300 and then immediately jumped right back up to where it is now at $18,250. But it's been running up all throughout the last week or so, and especially yesterday, this also happened to Ether 2. 17, it went from $17,400 and just zoom straight up to $18,400 inside of like half a day. It's, um, crypto's kind of following the market a little bit, I think. I wonder what the correlation looks like right now. You mean trad market? Yeah, trad market, stocks and such. Um, I guess just, just more so. Um, well, maybe this was a disproportionately good week for

Starting point is 00:04:16 crypto though, even, even, even though trad markets went up. Okay, what happened with ETH price? That's a big story too. Yeah, ether started the week at $1,250, where it's been hovering around being just like the $1,200 stable coin for the past like two months, up 12 and a half percent all the way up to $1,400. It hit a high of $1,420, which was the exact high of 2017, by the way. There's that number again, yeah. Fell down, did the same thing at Bitcoin. As soon as the CPI print came out, it dropped down to $1,350, but it has since recovered in that moment, back up to $1,400 where we are now. So up 12 and a half percent on the week. and I are about to discuss in a little bit is, have we bottomed yet?

Starting point is 00:05:00 Think about that, listener, as we get to the next section. But first we'll talk about the eth to Bitcoin ratio, an important ratio in this market. What's that showing? We are up three and a half percent on the week. It's been a very good week for the ratio. It's harder. So, like, moving it, the ratio is harder than the dollar. Like, crypto prices move very a lot versus the dollar.

Starting point is 00:05:23 But ether and Bitcoin, they don't move as much in relation to it. other. So 3.5% is actually like a decent move. We are currently clocking in at 0.076. We hit a high of 0.078. David, this is not the eth of the last bear market, is it? This is a totally different. This is a different different. I think we can see it here. Here's ultrasound money. A number you and I were looking at earlier in the week was the supply change since the implementation. Oh my God, it's down a thousand eth in a week. Yeah. So over the last 120 days, guys, ETH has only increased in its total

Starting point is 00:06:00 issue, it's total supply, and this is of course selling pressure by 2000 ETH, right? It's not ultrasound, it's not deflationary at this point, but only 2000 ETH versus what it would normally be and what it was in the previous bear market, we would have added 1.4

Starting point is 00:06:16 million ETH supply. What does that equate to? David, run some numbers for me. What does that equate to in terms of dollar terms? Basically, rounding up slightly to $2 billion. $2 billion of sell pressure, just eliminated. We did not have. And that was in last bare market. No wonder, ETH went all the way down 94% and way underperformed Bitcoin. Different ETH, different asset completely. And so I'm actually not surprised to see the gains on the ratio here.

Starting point is 00:06:46 Let's zoom out on this chart really quick. If you don't mind, let's go out. Let's go out really. How far do you want to go? Oh, now the candles are getting super tiny. These cracking charts can do anything so we can uh yeah if if those are wondering these the sexy new interface is the crackin pro new interface uh cracking pro has really got a cosmetic upgrade lately so thank you for crack in for serving us these ever important prices i mean so we have a lot of time left to start filling out these this this bear market candles uh there's probably i'm if this follows that like last bear market we just a lot more volatility still has to leave we're just going to like find a bottom yeah look at this over here right yeah chop back in 2018 but i mean if you compare you

Starting point is 00:07:24 of those two peaks, like, you can kind of tell we're at the tail end of, uh, just like the, the depression of the peaks. Uh, there were, here. There was this, maybe. Like, there was that one moment, uh, back in like June, July of 2018, where like ether and Bitcoin started to flatten out. Like, I think Bitcoin was flattening out at 6,000. Ether was flattening out at like 300. And they're like, okay, fine, we established a bottom. And then the bottom fell out. And we went down like another 50%. So if we are trying to say that this is the same as last cycle, then that would still be ahead of us.

Starting point is 00:07:58 But I don't necessarily think that that's ahead of us. I do think that ETH is a different asset this cycle. And it might be more apt to compare ETH to Bitcoin of previous cycle than ETH to ETH of previous cycle. I don't know if that draws any insight. But like I was just looking earlier. So ETH is down 71% from all time high. Bitcoin is down 73% more than ETH.

Starting point is 00:08:20 That certainly not the case last bare market where Bitcoin was surviving and doing okay when Bitcoin was, or in ETH was completely getting destroyed. Very interesting. Okay, what about total crypto market cap? We've got to be below trillion. We got above 900 billion. So we were finally back above 900 billion. We got 919 billion dollars. Okay. Well, let's talk. We've seen a 9 there. It is. Let's talk about the inflation numbers. They can, came out earlier this week. They were good. December inflation report. The headline is consumer price gains continue to cool. Here's the chart for you. David, do you see this kind of spike for inflation? This is a fully zoomed out chart all the way from 1965, all the way to 2023, where we are now. And we're down to 6.5% inflation for December. And that of course is... A low, low number of 6.5%. Well, it peaked in June, 9.1%. And ever since we've been...

Starting point is 00:09:20 going down, down, down last month that we saw a report. In November was 7.1% now it's 6.5%. The reason the market reacted favorably-ish to that was because it was just exactly at what was predicted by the market. The street was saying 6.5%. We came in at 6.5%. This, of course, is still well above the Fed's mission, which is a 2% inflation rate.

Starting point is 00:09:47 Maybe they'll increase that to 3%. That's what some are saying. Powell's holding firm that the target is 2%. And then of note, of course, before the pandemic, before all of this chaos that you see from 2020 onwards, inflation used to be 2.1%. Used to be the most boring number in all of finance because for the last decade or two, it's always been like 2%. Never changed quite volatile these days.

Starting point is 00:10:14 What do you think? Are we done with inflation? So we just recorded our podcast with Tyler Cowan, which comes out on Monday, and he mentioned that we really need to cease three months in a row of decreasing inflation to really feel okay-ish in confidence about the trend here. And we recorded with him a few days ago, and this was the print that we were looking for to see if it would continue to trend down for three months in a row. And it is. And so he said three months is what you need to start having some amount of confidence. So I think we are in the earliest stages of being able. to have some amount of confidence about a downwards trend.

Starting point is 00:10:49 And I think every single month after that, where we continue to print lower, we're just going to start stacking on the confidence and the confidence and the confidence. And that's really what it takes for risk appetite to come back. And so we are on to the first of many boxes that are checked, but it is the right step in the right direction. Well, let's switch back to the crypto cycles again. So some people are saying there was a lot of leverage in the system, quite obvious, built up in 2021 and 2022. And now that leverage is gone. It's been washed out. It's been flushed down the

Starting point is 00:11:24 toilet. Bye-bye, three errors capital and all of the margin traders that got completely wrecked. This is a tweet from Jack. Do you want to tell us what he's saying? Yeah, Jack is saying over-leverage was the theme of the year. It was really the theme of the entire bull market being over-leveraged. But how much leverage remains in the system this year? He asks, despite major blows from incumbents like FTCs, Bitcoin liquidations are down significant. It's a significant. It's a significant. in the second half of 2022, suggesting that the majority of leverage has been washed out. And it's probably also why we're seeing a lot less volatility in crypto asset prices is that leverage is volatile. Leverage adds to volatility.

Starting point is 00:12:00 And now that things are stable, there's less incentive to take leverage because you can't really trade as much in this market. But you're just seeing lower liquidations, both on the long and short side, meaning we are in a much more healthy, much more grounded phase in the market, which implies that we are closer to a bottom than we otherwise would be if we had a lot of leverage. Well, let's just flat out ask the question. I did on Twitter. Has crypto-bottomed? This was a result poll.

Starting point is 00:12:27 44% said yes. 55% point three said no. So kind of split. Pretty even. Pretty even. I call that even. A little more saying no. What's your answer to that?

Starting point is 00:12:38 Have we bottomed yet, David? Have we seen the all-time lows of this cycle? Yeah. I mean, when we hit below. $800 ether and like below $16,000 for Bitcoin, that I don't think we're going back there. Like Bitcoin got or ether got down to $870 or something. Like that is the question. So you think we bottomed. I don't think we're going below that. I think that was in your predictions. I think you're still like cautiously worried about a three-digit ether and I still don't think that's going to happen.

Starting point is 00:13:07 I don't, I don't necessarily think we'll go below the 800. It was like 800 something. I can't remember what the bottom tick was for ETH. But I mean, that's something really bad would have to happen. Yeah, it would have to be another event. I mean, like, go back and look how strong ETH is from a, from a supply perspective, right? It would have to be something that utterly shakes the confidence of existing holders. And I can't actually think about what that would be. It would have, if like, Coinbase would have to go insolvent or Binance would have to go insolvent or something like that. I mean, I really do feel like, and we'll talk about this a little bit later, that the digital currency group piece is the last bit of contagion. That's really where we ended

Starting point is 00:13:51 the year, and that still feels kind of to be the case. But can you make, you know, so I- Etherbottomed at $880, by the way. I am also going to, I guess I'm making things less interesting by agreeing with you, but like I'm also going to say crypto-bottomed. Now, that doesn't mean we're not in for a lot of chop and a lot of stagnation and this whole apathy phase ahead, I still think that's in store. But can you make the steel man the argument that crypto has not bottomed yet? What would somebody who is still bearish on crypto say? What do you think would be their main arguments here? I'm not going to be very good at this.

Starting point is 00:14:33 You had the complacency bottom. First we had like the leverage and flush out bottom, which we think happened. And then you were talking about a complacency bottom, or a complacency bottom. like sweet now crypto is going to be boring for like two years in a row and people are going to be frustrated that nothing exciting is happening in the crypto markets and then like just ebbs down people are just like this is boring i'm out uh there's some opportunity elsewhere and so people sell for the complacency bottom that marks the actually the beginning of the next bull market i think there's that but i don't again i don't get much credence to that and then and then there's like there's actually

Starting point is 00:15:05 more contagion that we really know about when DCG it's totally going to go under they're going to sell everything that they got, that's going to put a lot of cell pressure into the market, and that can do another round of cascading liquidations for over-leverged players. That would be the other case. I don't think that's going to have an idea. I think that would be the steel man argument. It's just that there's this apathy drop, and it's gradual, and it's over time. And that's basically in crypto.

Starting point is 00:15:31 If there's nothing new in crypto, that means down by default. There's nothing new. People who's interest, it's down. And so you kind of have to bet that nothing new is going to have. and apathy will creep in over the next year or two. David, I got to say, I can't get behind the case that nothing new is going to happen in crypto. And there's so much building going on. There's so much excitement. I mean... Yeah, that's a big difference between the last bull market or last bear market and this bear market is like there's so much energy in pockets.

Starting point is 00:16:00 There's pockets of very strong energy. Like the Arbitrum ecosystem, I've been hanging out with the treasure ecosystem, the small-verse. They are, they're crazy. dude, they're nuts. They have so much energy. And during the 2018 to 2020 bear market, like, it was just like you and me and DC investor and Anthony Sizzano and Eric Conner. And Molok down. And Molok Dow was like the most interesting thing that we had. There was, it was just like, hey guys. How's your, how's your week going? Anything new with you? Uh, I eat his money, right? Yeah, it's money, right guys? This is a chart you put together. And this is kind of a commentary on

Starting point is 00:16:40 on the cycle and where the last cycle actually topped. Can you explain what you're showing here, David? Yeah, so this is a little bit of a messy chart, but that's because I had to layer the same charts upon each other over and over and over again. So the only thing that is uniform about this is time. Prices are not uniform, of course, but all time lines up. And so we've got the Solana, the Luna, the Polygon, and the Ethereum chart. Solana is the main one that you see in purple. Luna is the gold one that's kind of invisible, but it's different. color so you can kind of see it and it's also the one that goes to zero in May. Just look at the shape, guys.

Starting point is 00:17:14 Yeah, look at the shape. Yeah. And then there's polygon, which is like the cyan color. And then there's Ethereum, which is the normal coin gecko blue color in the very background. And you can kind of just see the progress of the bull market go on. It was, we've said it before. It was Ethereum's show for the all of 2021 and then the first half of 2022. And that is where I am like hovering my cursor over it right now. You can't really see it because my cursor's white. Yeah, Ryan's got it. That peak right there.

Starting point is 00:17:44 That was it was Ethereum's bull market. And that's also when gas fees hit like $600. And people, newcomers were like, I'm so excited about crypto, but I can't use Ethereum. What else can I do? And that's when Solana started its bull run. It's also when Polygon started its bull run. And so then that's when Solana hit all-time highs at around the same time Ether hit all-time highs $4,900.

Starting point is 00:18:06 Solana hit its all-time highs of like something like $250. And then Polygon, not, or excuse me, Luna, not too long after that, a few months after that, it's all-time highs and then went to zero immediately after hitting all-time highs. I just think it's a nice way to kind of do an audit as to how these markets progressed. Well, this is what Van Spencer called everything after something like April or May of 2021 is, was the low conviction rally. Yeah. Right. So we had, first we had the high conviction rally that you see kind of up to here. And I felt like that lasted through kind of like March of 2021.

Starting point is 00:18:43 And that was a lot of like bear market OGs like us saying like everything that's happening right now makes sense. Oh, dude. I remember for for months before, I would just tweet out on the regular like, ETH is stupidly underpriced. Right. Right. And I just hit like, it's still stupid.

Starting point is 00:18:58 It's 300. It's still stupid. Like I would keep doing that. And I kept tweeting until about, now that I recall, until about like ETH was above a thousand until like March of. of 2021. And I stopped tweeting that, right? But like, that felt real to me. Everything after this was like narrative, clearly a lot of margin. It was a lot of like kind of greed. It was the market getting carried away. They call this the exuberance face. This is not, this is not particular

Starting point is 00:19:29 to crypto. This happens in every single market where human psychology is involved, which is all markets. And so I don't think the market was very honest past April of 2021. Past $2,000 ether, which it hit in like April of 2021, I think is when we got carried away with leverage as an industry. And that's exemplified by the fact that ether goes from $2,000 to $4,000 inside of like six weeks. And then it crashed from $4,300 down to like $1,700 from from May to June of 2021. And that was the first indication that, like, hindsight 2020, that this market is now based on leverage.

Starting point is 00:20:11 Everyone is taking leverage. This is now a full-blown casino. It's no coincidence that now, if you want to buy ETH, you're paying, like, first quarter, 2021 prices, basically, because that was back to the time when the market made more sense than the pre-leverage time. All right, Dave, we've got a lot more to talk about other than markets, of course. What's coming up next? Coming up next, the Winkleweye escalate their fight against Barry's.

Starting point is 00:20:32 Silbert and digital currency group causing Barry Silbert to have to release in letter to investors. Sam Bankman-Fried, our favorite three-letter acronym dude, as doing more Sam Bankman-Free thing, so get ready to face palm. And Coinbase lays off 20% of its staff while Binance is looking to increase its staff by 30%. So all of these conversations and more. But first, a moment to talk about some of these fantastic sponsors to help you go bankless. Cracken has been a leader in the crypto industry for the last 12 years, dedicated to accelerating the global adoption of crypto, Cracken puts an emphasis on security, transparency, and client support,

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Starting point is 00:22:04 So here's what you should do. Go to Earnify and plug in your Ethereum wallet, and Earnify will tell you if you have any unclaimed airdrops that you can get. And it also does Poaps and mintable NFTs. Any kind of money that your wallet can claim, Earnify will tell you about it. And you should probably do it now because some air drops expire. And if you sign up for Earnify, they'll email you anytime one of your wallets has a new irdrop for it to make sure that you never lose anirdrop ever again.

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Starting point is 00:22:49 round 3, round 4. I don't know what round we're in, David, but I do know. Okay, Cameron Winkle-Vos tweeted another open letter out, this time to the board of Digital Currency Group, which, of course, the board appoints the leader of Digital Currency Group, which is the CEO, Barry Silbert. It seems like there is definitely a feud going on.

Starting point is 00:23:08 I don't know, David, if you want to pull out any colorful quotes from this open letter. I will say the TLDR is Cameron wants Barry fired. He says he's unfit for duty, basically, and that the board should, he's proven himself. Here's a quote, unfit to run DCG and unwilling and unable to find a resolution with creditors that is both fair and reasonable. As a result, Gemini, acting on behalf of its 340,000 earn users. Wow, that's a lot. Request that the board removed Barry Silbert as CEO, effective immediately.

Starting point is 00:23:43 Wow, shot across the bow. Actually, that's more than a shot across the bow. I mean, that's a direct shot. That's a criminal charge from Cameron Winklevoss to Barry Silbert. And the things that, if you read this full thing, it's actually pretty interesting. he's basically saying that Genesis gave Gemini and Gemini Earn information that made them believe that Gemini was totally solvent. And that was only true based off of misleading and fraudulent statements and accounting fraud. Cook the books kind of thing.

Starting point is 00:24:12 Cook the books, yes. And so whether or not this is true or not, we'll take an investigation into Grayscale and into Barry Silver. But that's kind of what Cameron is saying this is what we need because we, as operators of Gemini Earn, feel rugged because of, misleading and fraudulent statements as of Barry Silbert and Genesis and Grayscale. And so he's documenting all of these things that he is claiming is true about Genesis and Barry Silbert and putting this into a letter which he then release on Twitter. There's also some righteous indignation here because it's not it's not just Cameron and Gemini, but he keeps talking about retail. You know,

Starting point is 00:24:52 340,000 Gemini earn users who affect are out of money. Their money is locked in digital currency group. So he's kind of shifting that onto DCG. Not all is healthy in DCG world as well. So what is this headline? Yeah. So there is a wealth management division out of DCG that is shutting down. And this actually isn't news. This was released as intention from Barry Silver, not too long ago, but parts of the digital currency group are winding down. Genesis is actually laying off a bunch of staff. And so they're doing a bunch of cost cutting coming out for the crypto winter. And of course, they have that hole in their balance sheet that everyone knows about. So in the digital currency group side of things,

Starting point is 00:25:37 they are just doing kind of the same thing that everyone else is doing, which is trimming the fat, cutting costs, retracting for the winter. And so that's kind of par for the course. Barry Silbert, however, did release a letter to investors, a letter to shareholders of digital currency group. And this came, this was basically in response to Cameron Winklevoss, although not actually officially in response, but like, you know, you read between the lines, it's like, this is being sent out. To his shareholders technically, but he's sort of. Yes, yes, but it's been definitely inspired and motivated by being charged with fraud by the

Starting point is 00:26:13 Cameron Winklevoss. So he starts off the letter saying, first, I'm incredibly proud of the role that DCG and I have played as pioneers and builders over the past 10 years. He then goes on to list a bunch of accomplishments from DCG. He says, I have fond memories of the early days of our industry, working hard to educate, fighting in the trenches with fellow entrepreneurs and investors looking to gain legitimacy for crypto. It's funny because he's been here for a while. I mean, so have the Winkle Vost wins, but so has he. Yeah.

Starting point is 00:26:40 He continued, and he's kind of like trying to prop himself up. He's like, hey, I believe in everything that I've done. I'm an OG. Yeah, I've been here working in the trenches. Look at this line. Speaking at conferences to rooms with three people getting snickered at on CNBC, right? He's like, I am deep crypto. He then continues. In contrast, the past year has been the most difficult of my life, both personally and professionally.

Starting point is 00:27:01 Bad actors, repeated blowups, freaked havoc on our industry with ripple effects extending far and wide. Although DCG are subsidiaries and many of our portfolio companies are not immune to the effects of the present turmoil, it has been challenging to have my integrity and good intentions questioned after spending a decade pouring everything into this company and the space with an unrelenting focus on doing things the right way. So this is the part that's like basically the response to Cameron Winklevah saying, I am offended that I'm being charged of these things. And he then finishes this letter saying, I hope this letter in the accompanying Q&A, there's a Q&A in this letter which we don't have time to go into, but is linked in the show notes. that explains other developments and addresses some of the speculation about DCG, some of which is reasonable and some of that is completely baseless and false. Hopefully this helps clarify our position. So that was Barry Silber's response. We don't know the full truth yet, right? The easy answer

Starting point is 00:27:56 it would seem is if everything's going okay, can't you just give the $900 million back to Gemini earned customers? I'm sure it's definitely not that simple, of course. But we do know authorities are definitely involved. So DCG is being investigated right now by the DOGA and by the SEC as well. So I'm sure the truth will emerge. Yeah, but specifically the report says that neither Genesis nor DCG has been accused of any wrongdoing. So they are investigating and they have all, the Department of Justice is investigating along with the SECG and they have said that DC, they are not charging Genesis or DCG with anything of wrong. wrongdoing. I just feel like we're kind of in the he said, she said moment of things where like

Starting point is 00:28:43 one of them's probably right or there's some truth in the middle, but we just don't know yet. We don't have kind of all of the facts in this case. So I don't think this will be the last time we talk about DCG. But the last domino has not fully fallen yet. David, what else we got to talk about? Oh, you know, our good friend SBF. So there's no real rhyme or reason to these flow of stories or we're just going to go through them one by one. First up, the most comical one, SBF seeks access to his Robin Hood shares worth about half a billion dollars, $450 million, because he needs to pay for legal fees. So SBF is like, hey, can I have some of my money so I can pay for legal fees?

Starting point is 00:29:20 Guess what happened, Ryan, just a few days later. What? The United States government seized the Robin Hood shares. Wow. So the answer to that question was, no, no, you cannot have access. They're ours now. Yeah, they're ours now. Thank you for that half a billion dollars.

Starting point is 00:29:35 in other parts of the Sam Bankman-Fried, I don't know, debacle, I guess is when you, Titanic. Yeah, Titan. They found, FTX has found over $5 billion of what they call cash, liquid cryptocurrency, liquid investment securities, and measured at the date in question, so the recent times. They found money. They found $5 billion, they say. That's the change in the couch you were talking about. Yeah, exactly.

Starting point is 00:30:01 The $5 billion of change. Have you looked in your couch cushions lately, Ryan? you might find $5,000. Importantly, in this memo that they've released, they do not ascribe any value to the holdings of dozens of illiquid crypto assets, which are holdings that are so large relative to the total supply that our positions

Starting point is 00:30:18 cannot be sold without substantially affecting the market for the tokens. So they're saying that, like, they're not counting the illiquid tokens that they can't sell. And still $5 billion. Which implies that, wow, that's $5 billion real dollars. We're talking 40%?

Starting point is 00:30:33 People are not. not buying this. People are not buying this. And so this is a tweet from Connor, who I'm not familiar with, but he just says, $5 billion, question mark. I went through every wallet. I could find that FTX owns. The biggest positions are 700 million of Seoul, mostly locked. 575 million of FTT, 371 million of maps. FTT does not count. Sorry. A bunch of millions of dollars of other tokens that I'm not familiar with, 90 million dollars of WBTC. Maybe they know something about that we don't, and maybe they know Ethereum addresses and other addresses that we don't, but if these are the addresses, then that $5 billion is questionable. So we are unsure. I think the jury is still out as to how

Starting point is 00:31:14 much money was actually found in fantastic FTX fashion. So the same Connor Twitter account says, my simple model is that the estate, the FTX estate, wants a win and good publicity to talk about all the progress they've made. In my opinion, this $5 billion number vastly overstates what they could sell in an open market and improperly sets credit or expectations. of a high percentage of asset recovery. Don't give us hope yet. Don't give any of the creditors hope. It's probably a lot worse than that.

Starting point is 00:31:40 But they were very clear. We have located $5 billion of cash, liquid cryptocurrency, and liquid investment securities. That's a very clear statement. That was very clear. Yeah, I hope that would be backed by something more than we saw in those tweets.

Starting point is 00:31:55 This is a tweet as well coming out. This is breaking as of earlier this week. Prosecutors are telling lawyers connected to SBF, the fraud investigation, case that the case is so sprawling that it could exhaust resources of the Southern District, since it includes potential bribery, count them, that's one, campaign contribution violations, two, market manipulation, three, on top of theft, four, and fraud. That's a lot of things, such that it could exhaust the entire Southern District's ability to actually prosecute these things.

Starting point is 00:32:29 Someone I think called this a DDoS attack. Yeah, I bet you if you scroll down, you'll see Nick Carter. It's like, oh, the old legal system DOS attack, denial of service attack. That's like a loophole inside of the universe. It's like if you can do so many illegal things that the court system can't fund finance itself to sue you, you can get away with a portion of them. I mean, you're still going to jail for life, but they're going to do with some stuff. Okay. Well, yeah, exhausting an entire district's capability to prosecute you. That's crazy. You are so incredibly illegal that an entire district doesn't have the money to sue you. So this happened to, SBF just tweeted this out.

Starting point is 00:33:07 It's a link to his substack. SPF has a substack, apparently now. Brand new, you know. In the title of this article is FTCS pre-mortem overview. And Sam just gives it a complete overview of what happened. An audit from his perspective. I was skimming through it to see if there was anything new. But I think it was just like a documentation of all of the stuff that he's been saying on Twitter spaces and all, like, all of his like.

Starting point is 00:33:31 Do you know what it was to me? Because I haven't watched all the Twitter space. It's just like shifting blame, right? Like so basically the first, the second sentence here. At the end of the day, FDX is just somewhere between that of Voyager and Celsius. We're not that bad. In between Voyager and Celsius, okay, look at all these. There's a lot of that conversation about being not as bad as Voyager, Genesis, Celsius,

Starting point is 00:33:54 blockfied, Gemini, happened to all of us, all as a group. There were comments about down here, David, you know, about how crazy the market, the market actually was, the 2022 market crashes. He goes in this narrative and he says, then over the course of the year, markets crashed again and again and again. And Alameda reportedly fails

Starting point is 00:34:16 to sufficiently head his position until summer. Bitcoin crashed 30%. Bitcoin crashed another 30%. Bitcoin crashed another 30%. And then he lists all of the things that happened in 22. I'm like, yeah, it's freaking crypto. What the hell?

Starting point is 00:34:28 He doesn't know that, dude. Are you new? Sam Bakeman-Fried. Yes. He was a first cyclist. is new? He's a first cycler. He was born in an up-only paradigm. David, earlier in this, he was bragging about, and I don't know if any of this is justified, but something about that, that like Alameda on the book should have had enough reserves to sustain a 94% market crash.

Starting point is 00:34:55 I'm like, 94%? I mean, we've had those before, you know. Right. Right. Like, if you're- That's what you should expect. That's the base case. That's not the worst case. That's exactly what you should expect. Especially when you printed a bunch of funny money, bro. This was perhaps the most detached statement in the whole note that I read. He said this, I believe that had FDX International been given a few weeks, it could have likely, it could likely have utilized its illiquid assets and equity to raise enough financing to make customers substantially whole.

Starting point is 00:35:32 Even now, he says, I believe that if FDX International were to reboot, there would be a real possibility of customers being made substantially whole. He still thinks... Well, this goes back to our conversation last week where, like, one take is that SBF actually thinks he's innocent and a good guy trying to do the right thing. I think he actually does think that. We've just given an incredibly diluted person, like billions and billions of dollars. And he continues to be diluted. Diluted, yeah.

Starting point is 00:36:03 Wow, what a lesson for crypto. I'm sorry. I'm sorry. All right, what else we got, David? Our third news item this week. Yeah, sad news out of Coinbase, they are cutting a fifth of its workforce. They also cut 18% of their staff last in June. So just overall big contractions in Coinbase employees.

Starting point is 00:36:23 But I think this is part for the course. This happened last bear market. This is just what it takes to be on the frontier of growth. That means that when the bull market comes, you lay people off. It's not like a mistake. It's not like a misjudgment as to crypto. It's just like, oh, the bear market's here. We have to cut costs.

Starting point is 00:36:42 As a result of all these layoffs, Coinbase says that this is bringing down their operating expenses down by 25% for the quarter ending in March. The company will also be shutting down several other projects with, quote, a lower probability of success. This article continues with general commentary about the tech sector. And it says, Coinbase joins a chorus of us. other tech companies cutting jobs after going on a hiring binge during the COVID pandemic. Last week, Amazon said it would cut 18,000 jobs. Salesforce reduced its headcount by more than 7,000 jobs, which is 10%. Elon Musk slashed half of Twitter's workforce after taking the helm of CEO.

Starting point is 00:37:19 Meta, Facebook, cut 11,000 jobs about 13%. And also crypto companies, Genesis, Gemini, and Cracken also reduced their workforces. And the last line I'll read here is every company in Silicon Valley felt like we were just focused on growth, growth, growth, and people were almost using their headcount number as a symbol of how much progress they were making Armstrong, Brian Armstrong said. The focus is now on operational efficiency. It's healthy for the ecosystem and for the industry to focus on more on those things. This to me is just what a bear market is. As prices go down, as things contract, you operate on efficiency rather than growth. These are cycles. Things

Starting point is 00:37:57 go too fast and now they came down fast and that's what's happening. Although, Although, David, Binance is bucking that trend. Yeah. Or posturing at least, at the very least, to say so. True. Crypto exchange Binance plans a 15 to 30%, not cut. Hiring spree this year in 2023, even as rivals slash jobs. That's what CZ is saying, that they're focused on hiring and they're going to hire another

Starting point is 00:38:25 15 to 30%. What do you think about this? Yeah, CZ says that Binance needs to get the company. well organized ahead of the next crypto bull wrong and admitted that the exchange is not super efficient. Yet who wants to hire more. Might be some posturing. I don't know. Show strength. We've definitely seen CZ posture before. Remember when we had him on on bankless and it was, we were like, oh, the question we had was like, CZ, SBF and FTX are buying everything under the sun. Like, what are you doing? And CZ was like, uh, Binance has first, for buying.

Starting point is 00:39:02 dibs on everything, on everything. He's buying his first dibs. He's buying our leftovers. Yeah, he's buying our sloppy seconds. Yeah. So there's definitely some posturing out of CZ. We've definitely seen this behavior before. So far, it has not been inaccurate. And yet we don't know.

Starting point is 00:39:18 We don't know one way or another, do we? But CZ has definitely been kind of hard to unsee as the number one exchange. So praying for Binance's solvency. All right. What do we got coming up next? Coming up next, optimism takes the number one spot of transaction volumes across layer 2s. And OpenC integrates Arbitrum Nova, which is Arbitrum's gaming chain, into the OpenC marketplace. So the L2 wars are hot and everything is good for Ethereum, of course.

Starting point is 00:39:48 NFTs had a crazy week. Pleaser Dow is working with Edward Snowden. Rolling Stone magazine is working with Pussy Riot and Game of Thrones launches an NFT. It's not great. Get your face palms ready because it's going to be funny. So all of that and more as soon as we talk to some of these fantastic sponsors that make this show possible. Uniswap is the largest on-chain marketplace for self-custody digital assets. Uniswap is, of course, a decentralized exchange, but you know this because you've been listening to bankless.

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Starting point is 00:41:49 assets, and start building your first app. With Arbitrum, experience Web3 development the way it was meant to be. Secure, fast, cheap, and friction-free. All right, guys, we're back. The flippinging, no one was talking about. Optimism overtakes arbitram for daily active addresses and transactions per day. So this is arbitram still leading on a total locked value. So it's kind of like an assets on the chain sort of measure.

Starting point is 00:42:13 But optimism leading on transactions. What do you make of this, David? Yeah, I mean, this is just momentary to optimism taking the lead. We'll see if they can sustain it. I think I don't know how to read into this too much. There's a lot of more analysis that really needs to go into why optimism is getting more transaction volume, but I think it does lend itself a little bit to the philosophical differences between these chains. Arbiturum is very, very defy-heavy. Optimism and the optimism team

Starting point is 00:42:40 are always really focused on literally how do we build a new world, like a new governance structure, new organizational systems, new economies. And so the fact that the economy of optimism as a governance system, a two-house model, and all of the, and all the real defy and NFT stuff's going on, that kind of tracks versus Arbitrum, which is a lot of. is more like defy and uh nfti and kind of i guess arbitram's just getting more finance use cases at this point maybe maybe yeah uh we'll have to get ben on it i think we should get bent on why on on this like what what about uh what's new in the optimism ecosystem but those charts the trend here if you're looking at the screen the optimism transaction volume chart is just like solid rock

Starting point is 00:43:21 solid up into the right arbitram had a big wave and it's slowly come down since a peak um i bet you these things with leapfrog over and over and over again. Yeah, it's really interesting to see these economies emerge. OpenC is now supporting Arbitrum Nova. What does that mean, David? Arbitrum Nova is Arbitrum's second chain. So the first Arbitrum chain is called Arbitrum 1, because it's the first chain. Arbitrum Nova is the second chain. It's a chain dedicated to social and gaming, and so it's like a roll-up, but with off-chain data. So there's other data dependencies. Your data is not stored on Ethereum. It's stored with what's called a data-evalval. availability committee, which is a committee of data providers that are not Ethereum. So there's

Starting point is 00:44:02 different dependencies there. But what do you get from that? Super fast and super cheap. And so this is Arbitrum's gaming chain. And now Arbitrum has two chains that are integrated inside of OpenC. So just big progress, big progress. Yeah, that is big. What do we got here, David? You're calling this the L2 bull market. Why? This is just a list of very green numbers of transaction volume across Ethereum and all of the layer two chains. So in the last seven days, 58% increase in transactions on optimism, 42% increase transactions on Arbitrum 1, immutable, 47% increase, DYDX, 113% increase in transactional volume. Now, if you look at the numbers, the actual numbers are Ethereum 13.7 transactions per second,

Starting point is 00:44:54 optimism seven transactions per second arbitram two and a half immutable two and a half d x two and half so like still actually low numbers but these are just actual these aren't capacities these are what is actually being used and so the volumes are up uh but still have a lot more to go i expect things like optimism arbitram immutable to definitely pass because they have the capacity to definitely pass ethereum in transaction um volumes i expect that to happen this bar market this was interesting too it looks like coinbase is maybe becoming a rocket pool odow member why would they do that so coinbase has its own ethereum staking service of course internal but they are also going to be working with rocket pool yeah so we bankless is an

Starting point is 00:45:42 odal member for rocket pool sasel anthony sazano is also a new odal member to rocket pool what is the odow it's called the oracle dow rocket pool just needs uh the oracle price for They just need to, as a part of the system, they need to understand what the price is for ether. And so they get that through the ODAO, so people that are trusted and also put up a bond to, to report the Oracle price of Ether to Rocket Pool. Coinbase is now being proposed as an ODAO member. And so this is perhaps- That doesn't mean they're going to stake any customer funds on Rocket Pool. But it does mean they're getting involved in the project. Exactly.

Starting point is 00:46:23 that's really the important point to take home. It's like the ODAO membership for Coinbase is them getting their foot in the door because now Coinbase has ODAO, like governance, if you will, as in like they are part of the system. I think it's the first way that Coinbase becomes comfortable with staking through Rocket Pool. And if you've been in the Rocket Pool trading a channel inside of their Discord, it's like one of the most high energy channels that exists. Yeah, they probably think this is incredibly bullish and that this means coin base taking is imminent. This has always been one of the the thesis of the bullcase for Rocket Pool. It's part of the Defy Mullet thesis or the Protocol Sync thesis, which is something that we've

Starting point is 00:47:01 been hammering into people's heads for as long as we can. Centralized companies can use decentralized protocols for their services. And if Coinbase just stakes through Rocket Pool, they actually can make more money than if they just run their own nodes themselves. profitable for them to stake through rocket pool. And so I think this might be an early indication of that thesis playing out. That could be cool. I mean, that would be amazing. We also see like how much better would it have been if BlockFi, for example, in Celsius and all of the other centralized lending companies used something like AVE or compound. Sure, exactly. Rather than

Starting point is 00:47:39 kind of these centralized providers for it, that's defy-mullet as well. All right, let's talk NFT stuff, David. So the NFT community seems full of life. This is a new announcement by Pleaser Dow. Can you explain what this is? Yeah. And also disclaimer, I'm a part of Pleaser Dow. Pleaser Dow is working on a Web 3 auction house. And so an auction house is at Pleaser.com. That's Pleaser without an E. In collaboration with Edward Snowden and Daniel Ellsberg. Do you know who Daniel Ellsberg is, Ryan? I don't. Who's Daniel? He is the whistleblower that released the Pentagon Papers that started to actually turn the tide of the Vietnam War for releasing a lot of the back channel comms in the in the Pentagon that was like, hey, the Vietnam War is like totally illegitimate. That's Daniel Ellsberg right there. And so Pleaser Dow bought the Edward Snowden piece, the NFT that Edward Snowden made that was about his whistleblower for the NSA.

Starting point is 00:48:39 They bought that for $4.something million. We bought it. And that's an NFT that is inside of the Pleaser Vaults. And now that the Pleaser Dow has created this auction house, Daniel Ellsberg is making an NFT, kind of how Edward Snowden did, and is going to be auctioned out off today in a few hours. So yesterday for listeners,

Starting point is 00:49:02 hopefully it goes for a lot of money because all of the money is being donated. 50% is being donated to the Freedom of the Press Foundation. which was also where all of the money for the purchase of the Edwards-Nodin NFT also went the four-plus million dollars. And then the other 50% of this Daniel Ellsberg auction is going to the Daniel-Elzberg's personal foundation for also donations. So I think that's really cool. Very cool. Yeah. And I think you did a show about I haven't caught up with that show, but it's on bankless with James. James, yeah. Talking about that.

Starting point is 00:49:35 NFT artists, did you know they are launching on Instagram these days? This is a headline from CoinDest. So top NFT artists are launching projects on Instagram, and they're selling out in seconds. This, to me, David, is somewhat detached from a crypto-native world, so I don't necessarily see what's going on in these communities. But if you'll recall, meta and Instagram added NFT functionality, I firstly built it to kind of view NFTs.

Starting point is 00:50:01 Now apparently the ability to mint and sell NFTs. And they're selling like crazy. I don't know what we're looking at. specific one year. That looks like a weird NFT to showcase, but okay. Here's another one from Sandeep. So a lot of these are based on Polygon, of course. This is one called Accutars, I believe.

Starting point is 00:50:24 Anyway, what's interesting about this is there seems to be still appetite for NFTs. It's in a new platform on Instagram. Excuse me, Ryan. They're digital collectibles. Yes, sorry, sorry, sorry. Digital collectibles. and what's interesting to me too is Met is taking like 15 to 30% of the proceeds to sales and creators are still doing it

Starting point is 00:50:45 so bullish question mark bullish digital collectibles at least not NFTs of course those are bad I think it's going to be stuff like this and the combination of Instagram and the

Starting point is 00:51:00 branding digital collectibles people are just going to get it like oh this is a digital collectible on the internet that's a cool technology. When my tribe does it, it's cool. When your tribe does it, I hate it. Well, sure, yeah. Your NFTs are dumb. Your NFTs on OpenC are dumb. My digital collectibles on Instagram are great. Amazing. Why? Because it's from my favorite creator in this amazing fan community. And like, yeah, it's totally tribal, isn't it? I think this is just like the technology of Ethereum,

Starting point is 00:51:27 slowly working its way into corners of the internet that already exist. This is, again, the protocol sync thesis playing out. And this is also going to unlock. new creators and new communities to have digital collectible powers, and we're not going to hear about it on crypto Reddit or crypto Twitter. Like, it's going to be new communities, and that's going to be part of the vision of how this whole revolution happens. Yep, they don't even know they're using crypto. It's always been the vision. Lens Protocol is letting creators issue token-gated content. So what do you make of this, David? Yeah, this is following the footsteps of other platforms that we see in the space like mirror,

Starting point is 00:52:06 any sort of content can be turned into a token and be created. But also, there are creating tools for token gating. So posting inside of lenses token gating application, all that content becomes encrypted and only made accessible to users who meet certain conditions, having a certain amount of reputation, holding a certain token, being a certain, I don't know, thing or person.

Starting point is 00:52:31 It's really smart, right? It's so simple. It's like the idea, you know, Twitter rolled this thing out. I don't know if I've even seen it in use, but the idea that you can subscribe to different Twitter accounts, basically, is kind of a premium service and just receive their premium-only tweets. Oh, yeah, right, right, right.

Starting point is 00:52:48 Substack has a similar model in that, you know, they'll send up free post and then premium posts. Well, Lenz is just doing like token-gated posts, right? Because none of these previous Web2 platforms are doing token gating yet. They're just doing simple subscription. payments. And I think that creates a whole new incentive model is really smart of lens to do. It's like a Web 3 native feature that only they can do. I really wish I could tweet out and have a tweet only

Starting point is 00:53:15 be read by people with a certain like NFT, for example. So if I wanted to tweet out to all my mfers, it's to be like, no, don't show this tweet to anyone who doesn't own an MFer. Right. Yeah, that'd be really cool. Or like just the bankless community. Imagine there was a bankless NFT. Oh my God. Could you imagine? There are bankless badge, badge, badge tokens, of course,

Starting point is 00:53:34 which are like our POAP badges. We did NFTs before it was cool. Yeah. Digital collectibles, actually. Well, no, ours are NFTs. Our are NFTs. Okay, ours could be NFTs. What's going on with Rolling Stone Pussy Riot?

Starting point is 00:53:47 What's happening? Yeah, so Rolling Stone Magazine is working in collaboration with Nadia, aka Pussy Riot, aka the dissenter who made a bunch of fun of Putin and then got kicked out of the country. And so just in the same vein as Edward Snowden and Daniel Ellis, Pussy Riot is selling NFTs on the Coinbase NFT platform in collaboration with Rolling Stone. So we got some two Eath bids for a collection of, I think, 11 or 12 of Pussy Riot's pictures. If you don't know who Pussy Riot is and you're looking at these pictures for the first time and you're like, what the fuck?

Starting point is 00:54:20 That's a normal reaction. That's kind of the point. That's kind of her brand. I've hung out with Nadia a few times. She's deep in the crypto world. She's also a member of Pleaser Dow, actually. She's a hoot to hang out with. Let me tell you.

Starting point is 00:54:33 She's DM me before. I've never connected with her. But she listens to some bank lists, doesn't she? I think so, yeah. Yeah. Uh-huh. Okay. All right, we got moonbirds.

Starting point is 00:54:41 She has a necklace that she wears all the time, and it's just a dude, big penis. It's a penis necklace. Fantastic. Yeah, if you didn't know that. Blue Chip NFT Project Moonbird signs with Hollywood talent agencies. What is this about? Yeah, I don't know much of this world. What is it, United Talent agencies?

Starting point is 00:55:01 Yeah. United Talent Agency is, I think, like a massive deal in Hollywood. It's kind of like the guild of actors. Maybe it's like a little bit of a monopoly. I don't know. But Kevin Rose and the Moonbirds have signed a deal with United Talent Agency to just promote the Moonbirds brand. And so what does UTA bring to the table?

Starting point is 00:55:22 This is from the article. They are 1,400 people with. divisions in film, television, music, video game sports, books, branding, licensing, speaking, marketing, fine arts broadcasts. It's like a network of influencers, like old. Is that what it is? I'm asking a question, actually. I don't know.

Starting point is 00:55:37 They said their job is to vet, broker, and execute partnerships and expansion opportunities across a variety of fields is to help promote the Moonbirds brand on a global scale and just trying to get out of just being recognized as a big brand inside of Web3. This has, I learned, also already been done by both Larva Labs and Yuga Labs. So this is not a first in the NFT industry. Hmm. Got to do it ethically with full disclosures, though, as Yuga Labs learned, I think recently. This is Van Spencer's take on it.

Starting point is 00:56:08 What does he say? This is a Van Spencer take from back in the day when Larva Labs did this deal in the first place. This was August of 2021. So over a year ago, this was raised by Luke on the bankless side of things who used to work in Hollywood before we totally poached the hell out of him. And so Vance Spencer says the Larva Labs UTA deal is great, but the bigger vision is to create IP with open licensing APIs where anyone can use the IP for anything. Example, UTA goes out of business and Larva Lab stops calling the shots. But then Vance finishes and says the blockchain unlock will be moving IP licensing from scarcity to

Starting point is 00:56:45 abundance mindset. And so I think this is really the early conversations of the decentralized bottom up brands. And these are kind of the NFTs that I really like, like MFers, for example, is a decentralized headless movement of branding. Whereas moonbirds in Yuga Labs, in Larva Labs, anyone who's signed a deal with UTA is like, hey, UTA, make our brand better, like ascribing agency to an agency to make the brand better versus MFers. Just go wild, make infinity derivatives, just be MFers. Like, there's two different styles there. Just anarchy versus like top, like centralization, right? And like, I don't even know what's more effective. I think that both will find this niche. Yeah, each one's probably got its own facts and circumstances. Um, I know that this, I guess this is not

Starting point is 00:57:32 an effective NFT. Well, I mean, at least for me, uh, Game of Thrones, NFT, the builds your realm experience brought to you by Warner Brothers. So we now have Game of Thrones NFTs as if the show didn't already jump the shark. Now they're getting on the NFT bandwagon. Wow. Ryan does not have good things to say about Game of Thrones. I mean, what do you think of these NFTs, David? Do you have good things to say about them? And he takes here. So I think what we're looking at here, if you go back to the marketplace, these are like packs, like card packs. Like if you open them up, there's like five of them. If you hit filter in the top left. Yes. Yes. Yes.

Starting point is 00:58:08 So, yeah, so here are the animations of the people of Game of Thrones. And, man, does it look like a cheap mobile game? Oh, wow. Yeah. Did you see, do you see this tweet here, David? Yeah. So this is Funky Dong saying, I bought this for 0.07th. Why might you ask?

Starting point is 00:58:27 Do you hate yourself funky? No, it's because I know art when I see it. And these fingers, that's art. And so we are looking at an animation of this guy who's like, it's definitely some junior animator who's got some crazy spindly like two feet long fingers that's attempting to grab this spear and it's just like missing and the animation's all bad. And this is, it kind of feels like a Kevin moment. You remember Kevin of course.

Starting point is 00:58:53 Yeah, I remember Kevin. Yeah. But how are they selling, David? They sold out, dude. Of course they did. Of course they did. How do they still sell out? They're even calling them NFTs.

Starting point is 00:59:03 I don't know. Who's buying these things? I don't know. But apparently, so there's a game that goes with these things. things apparently. So there's like utility. Maybe they can, maybe they can fix the animations. All right. Well, maybe David and I are missing out on these fantastic NFTs. You know, art is completely subjective. All right. What is backing a USDC? This is a tweet from John Paul Coning who really follows stable coins quite well. It turns out that 30% of USDC is actually

Starting point is 00:59:35 Black Rock government money. So Black Rock bonds, I believe, and this is up from zero percent in October. So it happened really quick. From 0% to 30%, that's about $13 billion of USDC reserves. Those are, that's the funds, the collateral that backs the coin USDC when you use it on Ethereum or any network is actually managed by BlackRock. What do you think, David? Is this a good thing or bad thing?

Starting point is 01:00:04 Black Rock bad. Black Rock is a bank, and so we shouldn't want them in crypto? What's happening here? Yeah, so John continued this thread and gave a take that I think I agree with. He goes, since the proportion of USC reserves invested in the Circle Reserve Fund has risen to about $28 billion, he says that this is likely a win for USC users because Circle is yielding some control over USC's reserves to an external manager subject to SEC regulation, which ultimately makes usDC safer transparency improved since users can now get regular updates from black rock and black rock is like a you know like a tradfi approved uh institution regulate regulatory mega institution mega institution right and so it's basically an extension of the state and so using a black

Starting point is 01:00:50 rock as like a vehicle to put usc inside of is what he's saying is like this is just a good use of transparency tools and protections for users and ultimately us dc is already an extension of the state anyways. It's dollars in a bank, so it doesn't make it any more centralized. So I think this is just layers of protection around companies that are very much the opposite of FTX, if you will. Well, I think it's definitely regulatory protection too, because now that the somewhere like the SEC looks at tether and they're like, no, uh-uh, and then they look at USC and they're like, uh, okay, BlackRock, our friends, the incumbents, we know these guys. And they're okay with USC. I think that's what's probably going on. This was kind of disturbing and disappointing to me,

Starting point is 01:01:36 David. This is Ben Hunt talking about BlockFi and specifically some of the leadership of BlockFi having cashed out during the last year or so. Do you want to read this out? Yeah. So this is after we got a report, a transparency report from BlockFi and equity holders in the cap table. So apparently, Ben went down this rabbit hole to just look at the data. And he goes, tweets out on Twitter. CEO, Zach Prince, cashed out $9.3 million from his BlockFi account, about 70% of his account in early April 2022. This was right before the Luna Three-Ros Capital Contagion. And then he cashed out another $850,000 in mid-August, 22, after BlockFi got bailed out by FTX. I think it was actually Alameda. And he says, he follows, yes, I'm accounting for market

Starting point is 01:02:26 declines in the assets. And so cashing out $9.3,000. million before every all the contagion happened you know i think you can kind of give him the pass on that um cashing out almost another million dollars after getting bailed out by ftx uh is a doesn't feel great not so great um yeah it's like it's like the it's like the cost between like that is his money um he's totally that's his money he's able to withdraw he's able to press a withdrawal but i think withdrawing from his own product though his own withdrawal yeah it's like lack of confidence voted no confidence, right? And the second piece, especially in mid-August, right?

Starting point is 01:03:03 And even the first piece in April, I mean, BlockFi, I guess, prior to contagion. Yeah, I mean, an informed person might be able to understand the writing on the walls. It's like, is, like, he would be able to see, like, how solvent Blockfire was or not. I think it's hard to not give him a pass on that one. But it's still, you know. Doesn't feel great. It doesn't feel great. When a whole bunch of people lost money in Block Fy specifically.

Starting point is 01:03:28 Yeah, and the leader didn't. Okay, well, speaking of CFi, Nexo office was raided by Bulgarian police in a wide investigation. What is going on with Nexo, David? This was breaking as of, I think, this morning. So yeah, this was kind of crazy. This is out of Bloomberg. Cryptolender's office in Sofia was rated by Bulgarian police on Thursday as a result of an investigation into suspected money laundering and tax crimes. More than 300 police officers, prosecutors.

Starting point is 01:03:58 and national security agents are taking a part in this operation, which was stated from a Bulgarian chief prosecutor who told reporters in Sofia. Nexos used to operate inside the United States, but like a few months ago, they closed down their operations because probably, I'm guessing what happened was the SEC was like, hey, that's a security and they just didn't want to fight it. So they just went offshore. Started to be like some smoke out of Nexo.

Starting point is 01:04:25 The article continued saying, authorities are investigating London-based NXO on suspicion of money laundering, tax crimes, and offenses involving unlicensed banking activities. Kind of all the same thing that I think the SEC was worried about. Nexo put together a tweet thread, which was kind of like a defense of themselves. You know, I skim through this. And the trouble with this, David, is you just really don't know who to believe. It looks like this tweet thread was centered on AML KYC. and maybe they're kind of implying that's the reason that they're under investigation, I suppose you'd call this.

Starting point is 01:05:05 But they said that they've always been abiding by the laws. Now, David, at this point in time, I don't, you know, we're hearing things whenever something like this breaks. You're hearing kind of bank run types of murmurs, right? But we haven't actually seen anything to indicate that people are unable to withdraw their funds. Now, that could change quickly. The knee-jerk reaction is nexos insolvent. They don't have any money. But that's not what's being reported.

Starting point is 01:05:29 What's being reported is tax fraud and banking violations. Right. I mean, where there's smoke, there might be fire. And I know, and I would suggest if you have money in NXO to probably withdraw it. But I haven't seen anyone say, hey, I have money in NXO and I can't get it out. I haven't seen any report like that yet. I have some seen some things on Twitter of critics saying, hey, bankless, why did you ever do anything with NXO in the past before? I think we should probably talk about that and address that.

Starting point is 01:05:57 Bankless listeners, long-time bankless listeners might remember a stint that we did with Nexo as a sponsor of bankless. They actually booked a podcast sponsorship slot for the entirety of last quarter of Q4. We cut them short after about six weeks of this when there started to be some fishy stuff going on in the general CFi space. Nothing by NXO. Nothing by NXO. by NXO. We met with them. We told them,

Starting point is 01:06:25 hey, we don't feel comfortable given everything that's going on with FTX in continuing this partnership and we sort of, we cut them off

Starting point is 01:06:33 there and then. I will say retrospectively, and we've kind of talked about this in general, partnering with NXO at that time in Q4 was definitely a mistake, right?

Starting point is 01:06:46 I think that our feeling going into it was not all centralized lending companies are bad. There are some good ones, aren't there? There have to be. Nexo had just come through the gauntlet of Thero's Capital getting destroyed and BlockFi getting destroyed and Celsius getting destroyed. And they were actually like talking about acquiring other companies. It felt like a reasonably safe, like if you go in with eyes wide open and you understand that

Starting point is 01:07:18 giving up your private keys means giving up your coins, but you're willing to do that. You do your own due diligence. It seemed like they might be able to make it. And look, they still might. But I've got to say, this doesn't make me feel good that they have been associated with the bankless brand. Like, you don't like to see one of your, one of the sponsors of your podcast being rated by the police. For tax and money laundering? Yeah, not great. Exactly. So even though the scope of their ad was like short and very limited, I got to say, I mean, I think you and I've talked about this and we regret it. We wouldn't do it again.

Starting point is 01:07:54 I mean, I think there were some lessons learned in sort of all C-Fi lenders coming out of 2020. And it's something that, like, very few of them are on solid ground. If any of them are on solid ground. I will say if you kind of zoom out and look at the discernment we've had on sponsors just in general, I felt pretty good about our discernment with picking sponsors up into this point. You know, like this is not. an industry that's incredibly hard to navigate, right? Like, you know how we end every podcast with like crypto is risky? You could lose everything. Even picking sponsors. Like, we don't know which ones

Starting point is 01:08:34 might have smart contract bugs or shady founders. We try to do our best. In this case, I think this was probably a big fat fail. And I definitely regret it. And so apologies to anyone we may have let down with this one. You could tell. like David and I are not perfect. We do try our best. We, we hope and we think that the good outweighs the bad generally on bankless. I would take this one back if we could. And I hope you guys know, we're not going to get everything right on bankless, but we're going to continue to do our best. I don't know if there's anything you want to add to that, David. Yeah, I just trying to put myself back into the shoes that we were going into Q3, Q4, 2022 was when we signed on on NXO. Like, of course,

Starting point is 01:09:20 the taste of centralized borrowing and lending desks weren't was not good at that time. And so like it was a conversation we had like is is this the right sponsor? And using the calculus of like, well, Nexo wanted to buy everything that Celsius would give them before they got outbid by FTCS. And so to me that was like, oh, that's, we just went through the acid test of who, who was over leveraged and who was responsible. And Nexo kind of seemed like the responsible one. So now, now that we have more information, turns out that that was incorrect. What was so crazy about it is, David, is like, all of them failed. Yeah. Like, that's, that's the unreal thing is like not one borrowing and lending desk made it through 2022. They all blew up. And I was hopeful that there

Starting point is 01:10:03 would still be some kind of good guys there that were able to make it and there just haven't been. Anyway, we are leveling up. We're learning from this experience. I think as an industry, we're learning from this. Do not expect us to support any centralized lending company. in 2023, probably ever again, unless we get some sort of proof of reserve system down. And we are being much more discerning. We're not going as fast when it comes to sponsor selection. And we're adding some new due diligence to the process. Yeah. And I think the last thing I'll say on this is like this whole 2022, like aside from like centralized companies blowing up, was a massive lesson for I think for all of the industry and definitely me as well

Starting point is 01:10:44 is the combination of just like, well, interest rates are very, a very big deal. as it turns out, but also the idea of like how toxic yield is when it's like paired with a borrower on the other side. But that's like, you know, there's a bunch of borrow money markets are a thing in Tradfai. And they totally work in Tradfai too. But it's the combination of like money markets, you know, Gemini Earn, Genesis, like all that stuff. And then on the, what is downstream of that, which I did not appreciate until after all of this contagion happened, was like 1,000 APY pool twos and funny money printed out of thin air and basically the entire bull market, which was just like high yield and funny money. And then when all of those pool twos dried up

Starting point is 01:11:25 and went to zero, like that just slowly worked through the system. And it didn't really matter how responsible you were as a money market. There was too much hot air in the entire industry. And so every single centralized lender went insolvent. And that's just like a lesson in economics that me and I think the entire industry learned this year. Yeah, absolutely. Well, speaking of which, I guess, as long as we're talking about investigation, who is this guy? I remember him from some time last year, but the stable coin exchange, Sabre is under investigation by the DOGA as well. Who's this guy? Ian, I believe his name is, and Dylan, are they twin? Are they brothers? Yes, I think they're brothers. Yeah, we reported on this a while ago. You remember the story of the one or two,

Starting point is 01:12:13 like Solana developers that spun up and sock puppeted like 12 different like defy apps on Solana and it triggered a bunch of TVL and it was like responsible for like lost in all the scams last year I'm sorry I just forgot this one yes right this was this was this was the one developer who was actually like 11 different pseudonymous developers that created all these like financial interlocking protocols that double in triple accounting counted crypto deposits and it like inflated the Solana TVL by like 40%. That guy, that guy, those two brothers are the, that's what we're talking about. Those two brothers are under investigation. So, surprise.

Starting point is 01:12:52 That's great. All right, David. One note on races, of course, is that startup funding levels are now their lowest in almost two years. So VCs is about a 75% drop from last year in terms of funding activity. Look, I think that's a very healthy thing because the private valuations in crypto that were out there and that we were seeing were absolutely crazy. And so they needed some cooling down. And I think this is bullish and also not surprising. You have anything more to say on that? The numbers here is that VC firms invested 2.3 billion in crypto startups during this last quarter. It's a good number. Not a bad number. But that is a 75% drop from the same period previous year. So like one interpretation is like, oh, VC funding is totally dried up. I think that's

Starting point is 01:13:42 actually the wrong angle. It's got healthy. VC funding was insane a year ago. And now it's, now it's healthy. Yeah, it was bad now and now it's much better. Speaking of which, there's still investment going on in crypto and there are still jobs to be had in crypto in particular. Bankless is hiring. We are looking for a director of business development. Got some sales experience. Come on talk to us also un-swap labs, senior software engineer. WebAsie is software engineer over DAPS. WebAsie, also a QA analyst. You can find these jobs. You go to bankless.com.com slash jobs. All right. What do we got coming up next, David? We're going to get into questions from the bankless nation. And this is coming out of the

Starting point is 01:14:25 Bankless Nation Discord, which, Ryan, did you know that we completely revamped the structure of the Bankless Nation Discord? I did know that. It's looking pretty good. The conversation's hot. What's going on? What's the talk of the Discord this week? And by the way, how do people get into that Discord? Because you can't just click a link, right? Yeah. So there will be one soon, but there is a link in the show notes. If you want to go into the Discord channel to ask Ryan and I questions, because every single Wednesday, before we record this episode on Thursday, we go into the weekly roll-ups questions channel. We add everyone and say, hey, what questions do you want us to read out on the weekly roll-up? And so there's that, there's that channel. There's also.

Starting point is 01:15:04 a bunch of other channels. Like I said, we completely reorged them. So there's a lot of vitality being injected into the Discord. And so, Ryan, you ready to get into questions? Okay, so the first question is from Walshie. Walshie says, the first cryptoconference I ever went to was permissionless. I guess that was last year. Sorry to ask you somewhat chill your own conference. I'm so glad you're asked. But I had an absolute blast. It was my first real Web3 social experience. Everyone I met was so warm and the vibe is best described as welcoming and galvanizing. I learned so much by following your advice and taking as many people as possible to all of the talks and booths and meetings and everything else. What could we expect from permissionless V2 in Austin later this year?

Starting point is 01:15:46 And where, so it's in Austin. When is permissionless V2? And what can people expect, David? Yeah, permissionless 2020. Coming in hot in September 11th through 13th of 2023. That's this year. So you got eight more months to come. it's going to be a lot bigger.

Starting point is 01:16:04 The biggest take I heard was when I told people that permissionless was a first year conference last year. It was like, what? Which is, I'm super proud of that fact. And I know the Blockworks team feels similarly. So, I mean, the second round of Permissionless, Permissionless 2023 is just going to be that much bigger and badder because it'll be our second time doing this. So we got Eric Vorhees locked in as a keynote speaker. We got Mary Catherine Lutter from Uniswap. We got Justin Drake, of course, coming back.

Starting point is 01:16:30 Hazu's coming in. Donnie's coming in, Zach Emanion's coming in, and we're just, you know, we're eight months out, so we haven't locked in even all like the big super chat speakers that we really want to, which is to say nothing about how Chad Erick Forhees is. And so I'm super stoked for everything that we're going to do. There's also this year going to be a hackathon as well. And so that is the shiny, sparkly new thing out of permissionless. There's going to be a hackathon leading up to this, which I'm pretty stoked for.

Starting point is 01:16:57 And there's one thing that I think people should appreciate about hackathons. they're pretty considered, they're considered dev-oriented, right? These are developers to go compete for prizes. But a hackathon with a non-dev person who can communicate extremely well, who can make a pitch deck, who can present a non-technical person, I mean, is super appreciative. And devs kind of, often devs need somebody to do that lift for them. So if you are a non-technical person, but you want to get involved in, like,

Starting point is 01:17:28 very big projects come out of hackathons. Earnify, which is now called Bankless Labs, came out of a hackathon. So there's a lot of opportunity there. And in addition to the actual conference, which is going to be some great talks, I'm sure Ryan and I are going to moderate a ton of them. There's the hackathon. Then there's also the side events. There will, of course, be the bankless meetup. We are organizing for the inner circle, for the bankless nation discord. If you are in there, if you're a premium member, we're going to organize a meetup at East Denver. We'll be doing the same thing at Permission List in Texas. So tickets are going on sale every single week.

Starting point is 01:18:02 A new batch of tickets is going out. Actually just went out. Prices go up every two weeks. So the longer that you procrastinate and don't get your ticket, the more that you pay more money. So you can go, if you know that you want to go to permissionless in September, definitely get your ticket now. There's a link in the show notes to get that done. The way that makes the most sense to get that ticket is to upgrade bankless premium,

Starting point is 01:18:23 by the way. And when you do that, you get into the Discord we were just talking about. And you also get 30% off that ticket. So it kind of pays for itself. Bankless premium pays for itself because 30% off of permissionless is more than a year's of bankless premium. The next question is, with people in crypto companies having PTSD from all the cascades of liquidations, will people be less inclined to take such leverage risk next

Starting point is 01:18:46 time? I hope the answer is yes. But at the same time, I wonder if that will make the next bull run less explosive. What chance do you think there will be a next bull run that does not bring new all-time highs. Are we going to get a muted bull run? Are we ever going to see all-time high again? What do you think about that, David? And this question is from Yeti 77. Thank you for the question. I think people will totally ape right back into leverage as soon as the bull market comes back. Part of the fact that we are not in a bull market, part of the fact that prices are more stable, they're less volatile,

Starting point is 01:19:21 they're also lower, is a symptom of people taking less leverage. When people take leverage, They mint money out of thin air, and then they use that money to buy crypto assets, and that makes the crypto assets go up in price. And so the fact that people aren't doing that is why we have settled down to these new lower prices of $2,400 or $1,400 ether and $18,000, $18,000 Bitcoin. We're kind of monkey brains. People that participate in markets are using their reptile brains. And so as soon as people get bullish, people are not going to be able to think rationally. they're going to ape right back into leverage. Some of them will be able to make money.

Starting point is 01:19:59 Many of them will not. But what does the chance that the next bull run does not bring new all-time highs? Depends on what crypto asset you're talking about. I won't consider it a bull run until we do reach new all-time highs, however. And the idea that ether and Bitcoin won't reach new all-time highs again, I ascribe 0% chance to, 1% chance for Bitcoin. Yeah, it's basically if that happens, then kind of crypto's dead. it's just like, if you believe, like, it's going to hit another bull run.

Starting point is 01:20:31 Like the contrary bet to all of this is like you betting against fundamental human nature. Yeah. Right. To think that another bull market won't play out like the last, you know, three or four in crypto, it'll play out similar. There will be some differences. It could be longer. There could be different highs or lows.

Starting point is 01:20:48 But like fundamentally, we're just looking at fractals. And we'll see the exact same fractal play out in the next bull market. And if you think that we won't hit all-time highs, it's kind of because you think crypto's already peaked. Is that zero? And if you think we peaked at how many 150 million people around the world that own crypto, how many people are in defy right now? I mean, the population of a large city, maybe five to ten million, something like that,

Starting point is 01:21:16 like it's relatively small. If that's our peak, wow. I would be blown away surprise. We are just scratching the surface. We're still in this early adoption. phase. So you have to be patient. Here's the thing. This market will also test your faith or your belief in that because you'll see some jumps and then it'll hit something and it's not quite all time high and then you'll go back down and it'll be apathy for like weeks and months. You'll be like,

Starting point is 01:21:41 well, maybe it was all over. Maybe bankless was wrong about this. Maybe the thesis is not playing out how I thought. Maybe Heath isn't going to 10K. Oh no. Maybe none of those things. It's you just have to be patient is the thing. And yeah, that's coming from, you know, somebody who has, we've been through a couple of these cycles. I felt these same things. I asked that same question that you're asking last cycle. And I guess I just, I feel like I know how it's going to play out for the next cycle. Not exactly, but I can, I'm making the bet for sure. David, we got another question from Zen mode. How do you think the Shanghai upgrade will impact LSD narratives, STE, ETH dominance versus our ETH is the question from Zen mode here.

Starting point is 01:22:25 Yeah, so this is definitely in vogue in conversation in the Ethereum land. It's like, all right, when withdrawals are unlocked, what's going to happen? Like, what are the narratives? I think we were talking a little bit about this last week. Lido has a ton of ETH that is locked in its vaults. That becomes unlockable. And so we are going to see how much of that Lido-staked Eth gets withdrawn, how much of that withdrawals goes into other liquid staking derivatives like rocket pool

Starting point is 01:22:53 steakwise, maybe centralized providers, hopefully not. And so like that's like rocket pool super hungry for some of Lido's ETH. Like if you're a rocket pool bowl, you think that that's going to become your staked eat inside of rocket pool. And the only reason why it's not already is because we haven't enabled withdrawals. And so these people are like, you know, they're all chomping at the bit to get to eat at Liido's ether. And Lido's probably like, you guys aren't going to get any of my ether. Like, this is my ether. You're not getting any of it. And so this is really like the fight that's

Starting point is 01:23:28 going on right now. Yeah, I just wanted to find some terms for people, right, to make this a little 101. How do you think the Shanghai upgrade? Shanghai is an Ethereum upgrade that is probably coming the end of this quarter or early next quarter that will enable people to unlock their staked eth. Okay. So that's what the question is asking. Will impact LSD narratives. That is liquid staking derivative narratives for two specific protocols. That is liquid staked eth and liquid staked rocket pool eth. Liquid staking is basically just like once you stake your eth, you have the ability to then use that staked eth as a token. Do other cool defy things. You can hold it in your wallet. You can trade against it. So it's actually fully

Starting point is 01:24:12 liquid. It's not staked. It doesn't feel like it's locked anymore. It's a token representation of that stake. And I do think you're right, David. It's just, we've talked about this on bankless. This is kind of a snow globe moment for liquid staking, which is like, you're going to shake the snow globe again, and then all the kind of the snowflakes are going to just fall in different places. I don't think it's going to be just down to these two, right? Lido versus Rocket Pool. You mentioned a couple of new entrants. I'm aware of a slew of new entrants as well. There's a bunch of startups. Some are in stealth mode. Some are about to ship to maintenance. this date and they're hungry and they know the market's going to reopen after the Shanghai

Starting point is 01:24:53 upgrade and they're chomping at the bit. So a big opportunity here is why people are excited. The games are just beginning. That's right. All right. Speaking of which, David, let's get to some takes of the week. Are you ready for the first one? Yeah, let's do it. All right, take of the week. This is from Loll. I will read the tweet out. Law says there are a dozen or so Nike swoosh level memes that could emerge from independent crypto artists in the next decade. Artists is leveraging the power of Creative Commons IP and immutable tech to compete with behemoth institutions. Here are a few in the running at this time. What are we looking at here?

Starting point is 01:25:28 So these are the gnawls, the nouns goggles, the nouns glasses, absolutely iconic. They were in a Super Bowl. Coming up next, I actually don't know what this one is. This is... Cow with Shadow? Not iconic for David and I, yeah. Yeah, I don't know what that is. This is an MFer, which I'm a huge fan of.

Starting point is 01:25:45 and this is Xcopy, right? So these are some of the very identifiable, very decentralized headless brands. And this kind of goes back to the conversation about the talent agency out of Moonbirds versus a headless brand like MFers. I'm a big fan of the headless brand movement. It's cool.

Starting point is 01:26:03 It's new. I think MFers are so iconic and so recognizable that calling them the decentralized Nike Swish brand of Web3, I think is a great take. That's why I put it in here. Look at that guy. Look at that guy. He's so cute. He's just being a little MFer, you know?

Starting point is 01:26:18 Just like, mine and knows his own business, duping around on his computer. What's cool about this is unlike the swoosh, right, no one owns it, right? I mean, Nike owns the IP of the swoosh, and they're going to do the contracts with all the athletes to plus up the swoosh and make it cool. It's up to these communities to kind of do that. It's just a completely fundamentally new model that, do you remember the take of the professor? we had on a week or two ago and talking about copyright. Yeah, Brian Frye, he's basically like, NFTs may kill copyright. You may not need it any longer.

Starting point is 01:26:55 And, you know, if he's right about that, then I definitely think something is going to emerge as a Nike swoosh, probably even bigger. Chris Brininski says, if I had to guess, this rally has legs. People were so downcast near the bottom that lots are probably poorly positioned, may end up chasing it. they can't if they can't take the FOMO doesn't mean we won't get a retest later, but a hated rally for a time makes the most sense here. What do you think? So he is quote retweeting DC investor who is saying, I'd prefer if no one really trusted this rally. So people are going back

Starting point is 01:27:28 and forth and like, all right, like ether is up like a couple hundred dollars, Bitcoin's up a couple thousand dollars. Ooh, we're bullish. We're bullish. I'm definitely guilty of this as well. It's back on, baby. But Chris Berniske is saying, if I had to guess this rally has legs, implying that there's a real movement here. Like people were overly bearish, and now because we stopped going down, people are saying, well, if we're going to stop going down, does that mean we're going to go up?

Starting point is 01:27:54 And that's what is happening. And so Chris is just saying people were overly bearish. And so this rally is real. Spike up and then a retest. Yeah, probably. That's how it's played out in the past. So we were light on the takes this week. So I'm just going to ask you a question, David,

Starting point is 01:28:10 that I'm curious about, because we never discussed this. Now that we're in 2020, we can look back and zoom out and reflect on 2022. Do you regret it? Would you wipe out the year 2022 in crypto if you could?

Starting point is 01:28:24 This is a very like deep philosophical question, I think, because like, all right, would you go back and erase World War II? Like, would you go back and erase the Holocaust? Yeah, kill baby Hitler. I might kill baby Hitler. I might do that. But then like if I didn't,

Starting point is 01:28:40 I kind of, my philosophy on this is like, okay, if I did kill baby Hitler, there would just be another one later, right? Like, you actually don't solve the problem. He wasn't the problem. There was a deeper root problem, right? Like, there was mob mentality in the 20s and 30s that created the space for that, right? And so there's a take from history, which is like, look, it was inevitable. Something like that was inevitable. I mean, the shape of it was definitely shaped by the person, but there's some inevitability about the lesson. that people need to learn at that time, something like this. So, like, who was the biggest villain of 2022?

Starting point is 01:29:16 It was like SBF, right? So would I delete FTX and SBF? Well, like, sure, but then it would just create, like, it would just leave the door open for a different person to do the same exact thing, right? And so humans, we learn through pain. If everyone is feeling very, has a mindset of pain right now and loss, because a lot of their hard-earned money is now worth a lot less.

Starting point is 01:29:40 like this is a lesson that you are now going to learn. And if we didn't learn this as an industry in 2022, then we were just going to learn it at a different time. And maybe it would actually be even more painful. And so I'm not really one to say that like 2022 brought nothing of value. It definitely brought hardship. You know that meme of like good times, hard times breed, breed strong people. Strong people produce good times, produce weak people, weak people produce hard times.

Starting point is 01:30:08 I just see us going through that cycle. and you can't skip forward in that cycle. You have to experience for better or for worse, all parts of it. I agree with that. I just don't have a dissenting opinion on that. I think 2022 needed to happen. It was ultimately, it was healthy. It's going to be good for us long term.

Starting point is 01:30:29 We have to kind of zoom out. And with all of this stuff, you have to take the bad with the good. I just look at the way we're entering 2023. and I contrast that with the way we entered 2022. And the way we entered 2022 was very, very deeply, fundamentally unhealthy. It felt like kind of a just a different kind of community that was not in touch with the utility it was providing to the world and was not in touch with its core values. And I feel coming into 2023, like we've restored some of that.

Starting point is 01:31:04 Yeah, it's more quiet. Yeah, we don't have the kind of the mainstream attention. But guess what? We haven't deserved it yet. We're still in the early years of this decade. So let's go and earn it. So I'm actually happy that 2022 happened. It's unfortunate.

Starting point is 01:31:20 A lot of people got hurt. If you could win these lessons without that, I mean, that would be amazing. But I just don't think life works like that. At least, yeah, I just, I've always learned through my mistakes and through like, you know, kind of problems. As long as they're not catastrophic, then we can kind of. of learn and rebuild and move on and be stronger. So yeah, I agree with you. I didn't know what your take would be, though, but that's interesting. That's what it is. So the only thing I want to add on to this

Starting point is 01:31:50 is this should always be a moment of reflection. Like bull markets make people think and do things and become a different person. Everyone's a different person in the middle of a manic bull market. And so you should think about how did that bull market change you as an investor as a person, character. How did it change your personality? And how perhaps did that impact your decisions to buy or sell? Like did you, did you fomo into that NFT? You should have a self-reflective moment as to like, how did that impact me? Because we are going to do it again. And if you are not in more deeper touch with yourself that because of this last bull market that we went through, you perhaps will make the same exact mistakes that you made last bull cycle. So that'll be my one,

Starting point is 01:32:38 my one message about that. So what are you bullish on this week, David? Well, this is going to be a moment where I'm glad that I'm going first because I know that you and I are bullish on. You took mine, didn't you? The same thing, yeah. So we just recorded this episode with Wayne from Spruce ID, which is the organization working on the sign-in with Ethereum Standard. It was a good episode, a really, really good episode. I think it's going to be one of these episodes that, like, embeds itself into listeners' brains.

Starting point is 01:33:05 They're probably going to be thinking about it for a very long time about its implications. and they're going to realize that they are here for the tech. Because I think the best take out of that episode is that Google, Facebook, Apple are just banks for our identity and our data. So you've got the banks of Tradfi, but the banks of Silicon are banks for your data and your identity. And this has all been a part of the grand crypto vision, first money, then identity. Yeah, look, you took mine. So I'm just going to plus one that. I know, I did.

Starting point is 01:33:37 I'm sorry. But look, our brains are in sync on this. I think we both feel that the time of, like, for identity, for decentralized identity is like, as here. It's just like firing up. It's like 2016 again, the birth of Ethereum and smart contracts and programmable money. Now we have this decentralized programmable identity type of primitive taking hold. And I feel strongly, David, that like identity could be just as important, just as profound, if not maybe in some ways more profound. than money, than taking back money.

Starting point is 01:34:11 And this is a technology that I think I support. I believe it's net good for the world. It's nice about this, too, is the signing with Ethereum. There's no bags to show. There's no token. All right? And like, how can anybody be mad about this external to crypto? It's literally a net good created.

Starting point is 01:34:32 It's a public good, created as a byproduct of the existence of Ethereum. If Ethereum didn't exist, I don't think we could have a decentralized identity tool like signing with Ethereum. And if, by the way, you don't know what we're talking about right now at this point, why this is so great or why David and I are so excited about it, stay tuned for that episode. I think it's coming out, not next week. Next week is Tyler Cowan on Monday, but the week after, I think, is when we have the slated, David. Yeah, but it'll be next week for bankless premium subscribers who get the early release.

Starting point is 01:35:03 There you go. and yeah you you tell us if you think it's as important as an episode and a topic as we do so David meme of the week what do we got this week meme of the week I saw this one on Twitter we might have actually done this meme before I think we have but since it was a CPI print day today we're bringing this meme back and it's the meme of the chat human looking at a monkey the chat human is saying you're such a dumb animal and then the monkey responds you're waiting for the fed to tell you how much your, how much value your anti-establishment digital currency will lose. Like, yeah, we are kind of doing that.

Starting point is 01:35:39 We are subject to the gravitational forces of the Fed, aren't we? But that's the system we're trying to disrupt. We're just not there yet. Yeah, we've got a long way to go. Stay tuned for the moment of Zen this week, by the way. Great moment of Zen. If you are listening to this on the podcast, it's a good song, but it is an even greater video. So definitely watch it on Twitter, which is where it's hosted.

Starting point is 01:36:01 And that's that. Well, I'll end as I always do. Risk and disclaimers, of course, crypto is risky. So is Defi. You could definitely lose what you put in. But we're headed west. This is the frontier.

Starting point is 01:36:14 It's not for everyone. But we're glad you're with us on the bankless journey. Thanks a lot. And the Fed raised rates and they kicked us. We were down. Voyager and Celsius died with the whimper sound. But we said GM. We said GM.

Starting point is 01:36:35 SBF and FDX, Carolina. life. Axin losses are pumping don't cry. We didn't take profits at the right time. But we said GM, we said GM, GM.

Bankless - ROLLUP: Crypto Rallies | Gemini vs Barry Silbert | Game of Thrones NFT | Ethereum Liquid Staking | Inflation

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