Bankless - ROLLUP: CZ Busted?! | Gensler Testifying Soon | SBF in More Trouble | War on Crypto Continues

Starting point is 00:00:00 Gary Gensler to the principal's office. Can we get Gary Gensler to the principal's office? Wait, I thought he was the principal. You can bring him to another office? There's the principal's principle, which he is now going to. Yeah, so he has been summoned. Bankless Nation, it is the last Friday of March. It's time for, what is it, David? The Bankless Friday weekly roll-up, where we cover the entire weekly news in crypto, which is always an ambitious endeavor. This week is a medium week, not so bad. Everyone can take a breather. Medium. Still, a lot of happen, though. So, yeah, we persevere, nonetheless, regardless of whether it was a big week or a medium week in crypto. And here we are.

Starting point is 00:00:40 Yeah, you have to. You have to keep going, right? Because you never know which roll-up might be the last roll-up. You just never know. Life is uncertain, David. A few topics of the week, though. Oh, I got to start here. You're not in your usual place, though. No, I'm not a different background. Different background. I am currently in Montenegro, which is not in ever a spot that I ever thought I'd be, to be honest. Wait a second. Wait a second. Isn't that the place Doquan was just found, or like late last week, a Friday of last week, and you are there too? I was at the same airport that Doquan, Doquan was at like five days ahead of me.

Starting point is 00:01:17 Yeah, I'm on the hunt for Doquan. That's what I'm doing. People don't know right now whether you're joking or what's going on, but we'll just let the mystery continue. We got some topics of the week. Number one, there is a CFTC versus Binance battle. Binance getting busted by the CFTC. We're going to dig into that. What else, David? ZK. Evm continues. We got two of them this week. Last week we had one. This week we have two. They're doubling every week. Every week. So far, they have been doubling every single week for two weeks in a row. And then lastly, Gary Gensler to the principal's office. Can we get Gary Gensler to the

Starting point is 00:01:55 principal's office? Wait, I thought he was the principal. You can bring him to another office? There's the principal's principle, which he is now going to. Yeah, so he has been summoned to testify. Are these the right words in court about his actions against the crypto community? In court? Is it in court or in Congress? No, not in court. The court of the people, which is Congress.

Starting point is 00:02:17 Gary Gensler, to face Congress grilling over crypto policy. Gary Gensler will testify before the House Financial Services Committee. Okay, so Gary Gensler is testifying in front of the House about his treatment of us. there we go those are the details i'm i'm here for a good gensler grilling i'm i'm here for it let's do it it's about time market fit that's exactly what i want speaking of product market fit we got to talk about our friends over at in fiora because they have an API nfti API that i think has some product market fit david tell us about it this one's for the devs isn't it yeah this is for the devs so this is an sdk for an API uh for your nfti app if you will so whether you are

Starting point is 00:02:57 You don't know what that means. You're not a dev. Yes. So just absorb this knowledge through osmosis. I'll brute force it into your brain. So Inferra has got an SDK for you, the NFT builder out there, whether you are doing most of the things that NFT contracts do, selling an NFT, buying an NFT, minting an NFT. Infura has got an SDK for you to make that easy for you. Three smart contract templates to allow you to write onto eight different blockchains and mint NFTs, either ERC 721's, or, or 115 tokens to really expedite the building of your NFT process, your NFT application. There is a link in the show notes for you to get started. You can sign up an account with Infura to get started, or you could just go to bankless.

Starting point is 00:03:40 cc slash infura. There it is. Well, it will help me shill in NFT? That's another verb that's often used. We all start somewhere, but that's not in specifically the API. Okay, can't help you shill. Can help you do everything else, though. Click the link of the show notes, guys.

Starting point is 00:03:56 Got to get to the markets, David. What is Bitcoin telling us on the week? Bitcoin down half a percent, which I consider flat. So started the week at 28,000-ish currently, or 28,700, currently at 28,400, currently at 28, 420. Flat week for Bitcoin. On the week, I'll take a flat. How about Eith?

Starting point is 00:04:17 Eth, down 2.3% on the week, started the week at $1,8,125, currently at $1,7,925. 2.5%. I mean, all this, not. bad considering, right? Not considering that the world's on price. Yeah. Interesting. I think we'll get into that in a little bit. How about the ratio? What's that saying on the week also flat? Down 2%. So 0.063. So I believe the third consecutive week of a down ratio price. Bitcoin still has that strength. Bitcoin. Yeah. Bitcoin. Yeah. How about a total crypto market cap? One point two, three trillion dollars. One, two, three. Not too bad.

Starting point is 00:04:56 I, look, I consider all of this a win in this economic environment. Yeah. A bear market, right? Just like, hopefully, this is not only narrative. Hopefully there was actually real new buyers of Bitcoin in the last, since the last banking crisis. The worst case scenario would be that it was just sidelined crypto traders who had a bunch of stable coins, who then decided to buy on the narrative that real buyers would be coming. That's what we don't want to be true.

Starting point is 00:05:23 What we do want to be true is bankers were like, Bitcoin. Okay. I think that's probably still early. I think it's all still the same recycled buyers. But that's how all of these things start. That's the bare case. I know that's still the bare case, but it doesn't mean that they're wrong right now. And you have to start somewhere.

Starting point is 00:05:40 And you always start with that foundation of existing buyers who are like, I'm a little scared. I'm going to stable coins, and then they buy back in. I think this might be the story as to why, David. And this, to me, looks like fundamentals. This is from Jim Bianco. This is the Fed's updated balance sheet. You can see the numbers here.

Starting point is 00:05:55 Now two-thirds of the quantitative tightening has been reversed. So over the course of starting in 2021, all the way to up till March, the Fed had been, actually, sorry, from 2022, March of 2022 or so up until 2023, a full year, the Fed had been tightening. They had been destroying assets on the balance sheet, decreasing the balance sheet, I should say. And it went from like $9 trillion all the way. to 8.3-5 trillions. They got $700 billion in decrease in the Fed balance sheet.

Starting point is 00:06:33 And then what happened, David? Then $500 billion came back inside of two weeks. So nice try, Fed. You guys really did your best. And Ryan, you're saying you said the Fed was able in the last year. Again, the interest rate started March 2022. Now we are in March, 23, one year. we had a good, a good old, good old, good old fashion fed try.

Starting point is 00:06:59 Good college try. Good old college try. We started at basically $9 trillion. So when you said we shaved off $700 billion, we started from $9 trillion. So $700 billion is a lot of money. It's quite a lot of money. We started from $9 trillion. We got down to basically $8.3 trillion.

Starting point is 00:07:20 And then in the last, it took us a year to go from $9 trillion to $8.3 trillion. And now it took us two weeks to go from $8.3 trillion to $8.7 trillion, $75 trillion. David, this seems to be the big debate. You had a good run, fed. Well, there's still some debate here. So a lot of people are still saying, including Ben Hunt, who we had on the podcast as part of kind of are the banks insolvent? Is the dollar going to hyperinflate?

Starting point is 00:07:44 He says this spike right here is just temporary. You know, he always uses the analogy of like, you inject liquidity right into the heart, right? This is kind of the like wake up the pay. patient kind of needle. And then it goes back down eventually. Whereas Bology, Arthur Hayes, say, uh-uh, this is permanent. And by the way, this spike, you ain't seen nothing yet. This is going to continue to increase. Bologi is like, in 90 days, this is going to be massive. Whereas Arthur Hayes thinks it will take years. Jim Bianco gave us a pretty reason take, I feel like, was kind of in the middle, wait and see. How would you summarize Jim Bianco's take from our episode

Starting point is 00:08:22 earlier this week. Jim Bianco is towards the Ben Hunt end of the spectrum. So I would say Bologi and Arthur Hayes are actually pretty close to each other in terms of their position. Like Bollogy saying 90 days until Bitcoin's $1 million, which is very fast. Arthur Hayes saying two years to a million dollars, which is still very fast. He's saying two years maybe a million. A million is on the table in two years.

Starting point is 00:08:45 Ben Hunt is like, that's complete noise and ridiculousness and actually totally irresponsible. and Jim Bianco is less emotional, I'd say, than Ben Hunt is, but still directionally agrees with Ben Hunt saying that, yes, this line that we are looking at on the screen is extremely vertical. We just erased two years of rising interest rates. Think of all the pain in the market that we've had for the last year, excuse me, the year of interest rates. Think about all the pain that we've had. And then we just erase all of that progress from the Fed's perspective inside of two weeks. Jim Bianco says, okay, but this spike that we've had,

Starting point is 00:09:21 is not systemic. It doesn't mean the same amount of QE and liquidity injection that stimmy checks do. And so this is much more contained, compartmentalized to just the banking sector. And it's not going to leak out to the actual bank accounts of, you know, mom and pop and Joe and Alice, right? And so I think this is actually, of those four interviews that we did. And damn, did we really try and get down to the bottom of this? And I feel like we did with Jim Bianco. Yeah, I feel closure on this.

Starting point is 00:09:56 Honestly, I went in being like, let's get two sides of the story here. And what we ultimately ended up getting is like four different perspectives, which is actually closer to reality. I mean, things are complicated. Real life is complicated. And so getting all of those four perspectives kind of, yeah, I feel closure on it anyway. This is another piece of the macro story here. This is Elf saying the same thing. Macro Elf, that is.

Starting point is 00:10:22 It took 215 years for the U.S. to reach $7 trillion in debt. This is he's zooming out here. Then it took only 27 months, March 2020 to June 2022, to add another $7 trillion. 215 years to get to the first $7 trillion, and then 27 months to get to the next $7 trillion. This is, of course, all of the outstanding debt, you know, from COVID. This is the big jump right here.

Starting point is 00:10:49 these 27 months. This is the big story, I think, here of like, if you zoom out a little bit, even past the two-year mark, look how large and how fast the Fed balance sheet has actually grown. Yeah, he also finishes that tweet saying, debt is not a bug of our credit-based money system. It's actually a feature. What does he mean by that? I'm confused by that. I think he's saying central banks are kind of designed to do this. This is what they do. I mean, this is the nature of, like, compound interest, right? So like when you see an exponential curve like that, I don't think it should be totally like foreign that this is happening because, I mean, this, when you inflate a currency at 2% per year, this is actually the same shape of the chart that it would look like. This is certainly

Starting point is 00:11:31 more than 2% per year, but this is what happens. Did you listen to it? So Ben Hunt's strongest point to me is like you can have a hard money Bitcoin type of or Ethereum type of monetary system because what you lose is credit. You lose the, the, the ability. ability to pool social credit together, and that's what a fiat regime brings. And by the way, he would argue the last, you know, 150 years of economic prosperity, everything we enjoy in a modern economy is because we have that social credit. We have that trust. And so he really rejects the idea that we would kind of go back in time and reestablish things. So that's his take. And I think maybe Macrof was saying something similar in debt is not a bug of our credit-based

Starting point is 00:12:18 money system. It's a feature, right? How else do you get credit, David, in kind of a hard money, hard asset regime? That's the question Ben Hunt posed. And I understand elements of that. And Jim Bianco kind of echoed that and he's like, hey, banks actually play, this is bankless, but banks play a function. Did you know? The function that they play is not as a data, is not as a money warehouse. That's kind of stupid. I mean, we can hold our own private keys. We don't have to warehouse our money inside of a, you know, Wells Fargo. But the role that they do play is like small community credit creation. And that is a role that right now, Defi and Cryptos, is not fulfilling. And there is some role for banks in that world. So I understand that

Starting point is 00:12:57 perspective, too. Yeah. I think the thought experiment to really understand this, this metaphor that Ben Hunt was saying was that, say we have a Bitcoin standard, you could have a bank that have Bitcoin that has Bitcoin deposits that operate on a fractional reserve system. So they take in 10 Bitcoins and then they lend out 100 Bitcoins and then they charge interest rates to get that back. The reason why, so in theory, like you could still get credit in a Bitcoin system. If you had just like a Bitcoin bank that denominated in Bitcoin and did the whole fractional reserve thing. That's technically still possible. The reason why the economics would still be different is that in the Bitcoin banking system with a Bitcoin standard with Bitcoin credit,

Starting point is 00:13:36 you actually don't have a Federal Reserve which can mint Bitcoins on the other side to backstop banks if something goes wrong. And so even in a Bitcoin banking system, you still have much more credit risk because, again, if the bank goes insolvent, you have somebody who can print Bitcoins on the other side, which allows for more credit at lower interest rates,

Starting point is 00:13:56 therefore more investment in the future, therefore ultimately more debt on the Federal Reserve's balance sheet to happen. Yeah, this is my question. Look at this chart, David. So this central bank chart, how does this chart compete against this chart? Something like this, a crypto-economic system. By the way, for those... Those are going in different directions.

Starting point is 00:14:13 Just listening to this. So the Fed balance sheet is obviously spiking up, expanding at a precipitous rate. And I just pulled up ultrasound money, which is Ethereum, supply decreasing. Right. Those charts look inverted to each other. So which do you want to hold? Do you want to hold treasuries in the dollar? Or do you want to hold this thing?

Starting point is 00:14:35 That's what I don't think central bankers have fully calculated, that now there is another option, a better option. And we do get to have both. Like, we want to, as individuals, hold ether because of its deflationary properties and it's store of value over the long term. And as a society, we also want fiat so we can get a home loan, for example. Both are good. I think you can have both.

Starting point is 00:15:01 I think you can totally have both. Yeah, but I'm not holding this one. I'm not holding dollars, though. I am. So, like, I have a home loan. I have debt in dollars. I love debt in dollars. Oh, don't you?

Starting point is 00:15:14 Isn't it great? You ever look at your mortgage? And you're just like, oh, my God, that is just inflating the way. That is getting less expensive over time. Right. Fantastic. Meanwhile, I've got ether on the other side. Like, that is a beautiful symbiosis.

Starting point is 00:15:30 For you, it is. Definitely. For me. I don't know what it does to society. I mean, that this is what we're grasping. grappling with. This is Chris Berninski's take on this, on this whole thing, David, which is, he says this. Maybe this kind of sums up the discussion we've had. A number of people asking me what I think about in the context of the current baking crisis, regulatory fights, Bologis

Starting point is 00:15:48 bet, and so on. So here it goes. Current banking crisis is bullish for crypto long run. Short term, we're likely in the eye of the storm, so expect volatility. But the banking crisis has been a monetary-induced policy. Too much. Too fast with rate hikes and will be solved by monetary policy. Fed and other central banks will drop rates, perhaps even this year, as the market is now anticipating, which will allow existing bonds to rally, and voila. Banks that are currently struggling will have healthy balance sheets again, in quotes. This banking crisis is also more likely to cause disinflation than hyperinflation, in Chris's opinion. Credit is drying up as interesting. BTFP isn't the same as stimmies. Stimies went straight to consumer spending, whereas

Starting point is 00:16:30 BTFP is shoring up bank balance sheets, which is likely to just sit there. But disinflation will give the Fed and the other central banks cover to lower rates. And that will breathe air back into the fire of growth stocks and crypto, turning regulation in crypto. And then he ends with this. As for Obology's bet, I don't take him literally, but more as directionally alerting people. In this distracted day and age, sometimes you need to do severe things to get people's attention. He's done that. But as I said earlier, I think disinflation from here, is more likely than hyperinflation, at least for the coming years. Really interesting take here is biology was kind of being intentionally mammatic about this.

Starting point is 00:17:12 And the bit signal, 90 days, a million dollar Bitcoin bet, that was him intentionally kind of being hyperbolic about this. He said he wasn't, he said he wasn't doing that. Yep, I know. He said on the podcast that this is not him doing a marketing stunt. Yeah. Well, so another reasonable take from Chris, and I guess we'll see. We are what, you know, 80 days left, 75 days left. Yeah.

Starting point is 00:17:41 Speaking of upcoming dates, what do we got happening pretty soon, David? We got withdrawals happening pretty soon, Ryan. Ether withdrawals coming. The date is April. What's the date? If you scroll down, I can read it up because I don't have it memorized. April 12th. April 12th.

Starting point is 00:17:54 And so LSD tokens are getting a nice. little bump in their price because of the incoming Shanghai upgrade. So this is when we can, as validators, withdraw our ether and ether just gets violently sold into the market and the ether dose is zero crashes. Yeah, that's what happens next. Well, what do you think is going to happen at withdrawal? It's up or down. Price go up, number go down. What do you think? Flat. Flat. Flat. Yeah. Staking tokens going up now. Flat, flat. First flat, maybe for a week, maybe for two weeks. And then people will realize that

Starting point is 00:18:27 it was quite literally a bullish unlock in the sense that the stakers just aren't dumping their ether because stakers are inherently bullish ether and then people will realize that everyone that hasn't bought ether in the last month because they're fearful of the staking withdrawal unlock are going to be like

Starting point is 00:18:44 oh it's over and the stakers didn't sell well I'll guess I'll buy back my ether and then we go up David thinks the unlock will be bullish it'll be flash unlock bullish for a weekish and then bullish I don't have a strong opinion on that, so I'll just take yours. Sounds good, David. Tell me about Arbitrum. Are you surprised that my conclusion is that it's bullish? Are you surprised about that opinion?

Starting point is 00:19:09 I'm not, David. I'm not surprised. Let's talk about Arbitrum, though. So they had a token launch. Was that last week? That went out to the market. That was last week before it launched. It was last week. It was announced two weeks ago. It was launched last week. Right, right, right. It's all blurring to me. Arbitrum, total locked value jumped a nice two billion dollars you can see it in the charts on layer two beat and there's also some reports of airdrop farming what is this tweet david yeah so this is a tweet of what looks like just one device emulating what looks like hundreds of devices and i can only assume processing transactions on arbitram so this is what a modern day airdrop farm looks like um i'm still yet to see an analysis a report of the farmed nature of the arb air drop um it's like 600,000 addresses and we don't know what percentage of them might be farmed.

Starting point is 00:20:01 Hopefully it's low, but you're worried that it might be high. I'm sure the efforts of the Arbitrum AirDrop like curation, like the criteria, pruned away like 90% of, at least 90% of the AirDrop Farmers' efforts. But like 90%, like they need to have, well, it is what it is. Ideally they would prune away 100. Pruning away 100 is damn near impossible. How close to 100 did they get? is the million dollar question,

Starting point is 00:20:29 and I have yet to see an answer to that question. How successful were air drop farmers? We do not know the answer to that. Decentralized exchanges seem to be recently successful. This is Hayden Adams tweeting. Dex versus centralized exchange. I don't know if to say sex. You're not going to say sex?

Starting point is 00:20:45 Dex versus sex volume is at an all-time high of 25% since the FTX collapse. Pretty incredible on the back of 2022. New all-time high. Decentralized exchanges are crushing. This is a tweet about, have you ever wondered, David, how much eth is just lost forever? I have actually. I actually wonder about that quite a lot. Okay.

Starting point is 00:21:08 Well, this is Connor, and he's got the answer for it. You want to read this? Thanks, Connor. Connor says, I've categorized thousands of instances of Ethereum typos, user errors, and buggy contracts. Thus far, I've found $6,000, $6,000, about $1.15 billion that is lost forever. and I'm assuming verifiably lost forever, which is about half a percent of the circulating supply. That's a lot.

Starting point is 00:21:34 That's not a small amount. That's not a small amount. And you can see where he came up with some of these numbers. The parody wallet bug alone. That's almost like... That sucks. Yeah, that's almost like 0.5% alone. That's a good piece of Ethereum history lore

Starting point is 00:21:49 that I bet you a lot of 2021 crypto people don't know too much about. Oh, okay. Well, why don't you tell them? Oh, God. It's such a crazy story, man. So there was this library of code. I don't know. This is stretching my developer's, like, technical ability to tell the story. But like there was this library, code-based library or something.

Starting point is 00:22:10 And a junior dev on the parody team was messing around with it and sent this very infamous message to, I think, inside the parody Slack that says something along the lines of, oops, I accidentally killed it. He accidentally deleted the code library. or something, which basically froze the multi-sig for parity. Parity was a consensus client that didn't... How did they get all that either? I thought this was the Pocodot raise.

Starting point is 00:22:43 Was this the Pocodot raise? Yeah. My memory of this is this is a Pocodot raise. They basically put it in a wallet, a smart contract, like a multi-sig type early prototype smart contract type wallet, and there was a bug in the wallet. That wasn't the Gnosis safe. their own custom-made multi-sick.

Starting point is 00:22:59 Yep. And the bug caused a billion dollars worth of ETH now to be stranded there forever and locked forever. Yeah, the message is, I think I killed it. That is terrible. Unfortunate, but that means 0.5%,

Starting point is 00:23:14 which doesn't even include an ultrasound money chart, of ETH is probably locked forever. And it's getting, that's going to increase over time. Yeah. All right, David, what do we have coming up next? Coming up next, we got the big news the week, Gary Gensler goes to the principal's office, which I'm sure everyone is just, we'd love to talk about that. But first, we're going to have to talk about Binance getting

Starting point is 00:23:34 busted by the CFTC, and we'll give our takes about that, how serious of a deal that is. ZK. Evm's, an oiler update, SBF managed to get in trouble again. So we'll talk about that and more. But first, a moment, to talk about some of these fantastic sponsors that make this show possible, especially Cracken, our recommended crypto exchange, because Cracken has been here for 12 years, and I can only assume they're going to be for at least 12 years more, if not the entire rest of crypto, which is why if you are unsure about your centralized exchange, perhaps you should sign up with Cracken. There's a link in the show notes. Here we go. Cracken has been a leader in the crypto industry for the last 12 years. Dedicated to accelerating

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Starting point is 00:24:49 And for all of you NFTers out there, the brand-new Cracken NFT beta platform gives you the best, NFT trading experience possible. Rarity rankings, no gas fees, and the ability to buy an NFT straight with cash. Does your crypto exchange prioritize its customers the way that Cracken does? And if not, sign up with Cracken at Cracken.com slash bankless. How many total airdrops have you gotten? This last bull market had a ton of them. Did you get them all? Maybe you missed one. 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 you're

Starting point is 00:25:24 wallet can claim Earnify will tell you about it. And you should probably do it now because some airdrops expire. And if you sign up for Earnify, they'll email you anytime one of your wallets has a new air drop for it to make sure that you never lose an air drop ever again. You can also upgrade to Earnify premium to unlock access to air drops that are beyond the basics and are able to set reminders for more wallets. And for just under $21 a month, it probably pays for itself with just oneirdrop. So plug in your wallets at Earnify and see what you get. That's E-A-R-N-I.F-I. And make sure you never lose another air drop. Binance gets busted. David, the CFTC sued Binance over what they say are regulatory violations. This is a press release from the CFTC. What is going on here?

Starting point is 00:26:07 Yeah, so the CFTC has filed a civil enforcement action charging CZ and three entities that operate the Binance platform with numerous violations of the Commodity Exchange Act and other CFTC regulations. So this complaint charges that Binance Holdings Limited, Binance Holdings, i.e. Limited and Binance Services Holdings Limited together, Binance. Man, that's a lot of entities. And that's not all of them. Operate the

Starting point is 00:26:33 Binance centralized digital asset trading platform along with number of other corporate vehicles through an intentionally opaque common enterprise with CZ at the helm as Binance's owner and chief executive officer. The defendants allegedly chose to knowingly disregard applicable provisions

Starting point is 00:26:49 of the Commodities Enforcement Act while engaging in a calculated strategy of regulatory arbitrage to their commercial benefit. Okay, let me summarize that. TLDR, CFTC is suing finance and CZ on allegations that the company knowingly offered unregistered crypto derivatives products inside the United States against federal law. Like that's a crypto derivative is like a future or something. Yes.

Starting point is 00:27:13 They didn't get the CFTC's blessing. Exactly. Yeah. Directed U.S. customers to evade compliance controls through VPNs. Poorly supervised its business didn't. implement KYC or AML processes and also had a poor anti-evation program. And also they never registered as a compliant futures commission's merchant. And so the CFTC in continuing litigation against its defendants,

Starting point is 00:27:38 the agency seeks disgorgement, civil monetary penalties, permanent trading and registration bans, and a permanent injunction against further violations of the CEA and CFTC regulations. This is interesting, David. This is not a charge of fraud, it seems like. It's basically, it's, you didn't follow the rules. You did not follow the rules. You didn't file the paperwork and register for your, you know, derivatives products.

Starting point is 00:28:04 And you didn't do the AML KYC stuff that is required by U.S. financial law, the CFTC. This is not like an SBF. You're running a Ponzi scheme. There's, you know, the assets aren't backed type of charge. I don't even think it's the same type of charge that BitFenix was charged with, which was some of this, but wasn't there also? Bitmax. Bitmax. Excuse me. Well, BitMex was charged with violating the bank secrecy act, which is a massive deal. Right. So what does all this mean? What is your take on this?

Starting point is 00:28:41 Well, there's some other things in this report as well. So there's a link in the show notes to read the report. There are some pretty damning things. And so here's a link. There is a thread of we are looking at one tweet in a very long, thread of a summary of this report. And so I'll read this one tweet to kind of indicate the more egregious side of things instead of just like failing to do KYC and registering. So reading from the report here. Internally, Binance officers, employees, and agents have acknowledged that the finance platform has facilitated potentially illegal activities. For example, in February 2019, after receiving information regarding Hamas transactions on Binance, Lim, a Binance executive, explained to a colleague that terrorists usually send small sums as

Starting point is 00:29:22 as large sums constitute money laundering. So they send small money through Binance because they don't want to send large money because large money triggers the flags. So the colleague replied, you can barely buy an AK-47 with 600 bucks. And with regard to certain Binance customers, including customers from Russia, Lim acknowledged that in a February 2020 chat, they quote is, like, come on, they are here for crime. Binance's MLRO, I don't know what that is, agreed that we see the bad,

Starting point is 00:29:51 but we close two eyes. And so, like, the more direct charge that's being made here is Binance was the host of a very significant amount of money laundering, and they just completely were aware of that and just looked the other way, maybe perhaps, obviously, totally willingly. So that's the more damning charge that's going on here. Yeah. And I also don't think that's any surprise to anyone in the crypto industry.

Starting point is 00:30:16 Like, without any evidence, I totally assume that that's what's going on. Yeah. It's just interesting. I guess the posture here is, okay, CFTC, understood. But at the same time, they're going after Binance. They're also going after, not the CFTC, but US regulators. They're going after Coinbase. I mean, we just talked about that last week, like shutting down Coinbase staking.

Starting point is 00:30:40 Wells notice to Coinbase from the SEC. And I know that Coinbase is much more thorough being U.S. located on AML and KYC acts. So, you know, I don't know. I understand it. I understand why the CFTC is doing this. What is, um, finance's response to this complaint? Yeah, so CZ made a response to the CFTC complaint.

Starting point is 00:31:02 So I'll just read the first two sentences here. Today the CFTC filed an unexpected and disappointing civil complaint despite our working cooperatively with the CFTC for over two years. Upon an initial review, the complaint appears to contain an incomplete recitation of facts. And we do not agree with the characterization of many of the issues alleged in the complaint. Basically, CDC is saying, like, they're going to fight back. I'll assert again, and I'll say without evidence that I, with talking with me and my friends and the chats that we have, like, everyone kind of assumes that CZ and Binance was allowing

Starting point is 00:31:37 a bunch of money laundering to process through their change. I know a friend, perhaps, that has logged into Binance while under a VPN, while Binance has not been allowing US customers and was still able to trade under on Binance. That is like an open thing that the industry has been doing. Americans has been doing. We've all known that that's an easy and trivial thing to do. You just use a VPN. I'm just saying this is what my friend did, would use a VPN and then get in and get out.

Starting point is 00:32:05 And like that's been an open secret that the entire industry has known. So I don't think anyone is surprised that like a bunch of illegal money laundering has been going through Binance. And so the fact that this is happening is like no surprise to me. and I think an inevitable conclusion, today is to finally the day. And the bull case for this is that Binance pays a fine, they settle

Starting point is 00:32:26 with the CFTC, and maybe even gets the green light to, they can argue some of the things like permanent dismantling or whatever. They can fight that in court. But hopefully this actually starts a conversation which makes Binance perhaps more

Starting point is 00:32:41 jurisdictional friendly with the US. It's very interesting to me because I guess they have, because they have the power to do AMLKY and because they have sort of the, you know, big, big red button to ban someone or to allow them to stop logging in, that they're now responsible for that, which is very interesting. And as a contrast to like a defy protocol, right, which has no control over these things. So the uniswap code base, it has no ability to differentiate the money, the identity,

Starting point is 00:33:12 anything else. And I guess if you are, this, this also, not only does it sort of push some of these centralized platforms to button up, which is what you were saying, pay the fee and then button up, I think that's probably the hopeful outcome that Binance would have. It also pushes things more towards decentralized protocols, where no one has the ability to do the AMLKYC, ban someone, you know, push the button where it's kind of completely open. And, you know, the CFTC can't go, I guess maybe they can try to sanction code next, right?

Starting point is 00:33:45 Which is where they, what they did with trying to cash. But the CFTC didn't try, but the powers that B did, yeah. Interesting stuff, interesting stuff. Two more bits of news on this thread is that in the lawsuit, the CFTC versus Binance Holding clearly states that Bitcoin, Ether, and Lightcoin are all commodities. The implication of this is that perhaps on an alternative world, the SEC might have sued someone else saying that these things were securities,

Starting point is 00:34:11 but the CFTC is saying their commodities, which is like this is a proxy war between the CFTC and the SEC. and the SEC. Yeah, right. You think Gary Gensler read that and was like just pissed off. I'm sure he read it on Twitter. Yeah, and his mentions.

Starting point is 00:34:25 David, the war on crypto, it seems like it is continuing. There was an economic report from the president that came out last week. There had an entire chapter. This was like 90 pages called digital assets,

Starting point is 00:34:38 relearning economic principles. It's kind of like, oh, look, the kids are learning the world of money and finance? No, no. Relearning economic principles is what it was called. There was, you know, I read parts of this, not the entire thing, but like it felt like 90 pages of just FUD being like, okay, so let me offer you an example quote. You didn't read this, did you?

Starting point is 00:35:02 I skimmed it. Today, cryptocurrencies don't offer any fundamental value, nor are they a better alternative to fiat money or more effective payment system. Instead, their innovation has been mostly about creating artificial scarcity in order. to support crypto assets prices. And of course, the conclusion, David, the report continues, is that the nation's financial infrastructure has the potential to offer these same benefits. They're basically like, yeah, that crypto thing is a scam,

Starting point is 00:35:33 Ponzi's, get rich quick, and what people should be using is our central bank digital currency, our existing financial system. There is no need for cryptocurrency. It's just a bunch of grifters and scammers. and the real solution that they're looking for is, of course, the Fed coin, the central bank digital currency. That is the conclusion of this report.

Starting point is 00:35:53 Hey, man, water's wet, skies blue, you and I are bullish ether, and the United States wants you to use the dollar. Like, this is just what it is. Look, is it the United States? It's definitely the White House right now. I will say that. Maybe there are other factions of government that can see this. The powers that be in the United States, yeah. This is Fred Erasm, 15%, he says, of the annual White House report. is devoted to crypto-fut. I have a question for you, though.

Starting point is 00:36:21 It's admirable that you even skim this thing. I have a question for you, though, David, which is something that's been on my mind lately the last two to three weeks as sort of the anti-crypto and the pro-crypto sides, some of that argumentation has reached maybe a fever pitch, at least a local high.

Starting point is 00:36:39 Do you think the U.S. will ever make it illegal to own cryptocurrency? Like flat-out ban. You as a citizen, you must turn in your crypto, kind of executive order, 6102. You remember that where FDR banned gold, basically you had to sell it back to the government. An individual American citizen could not own more than some amount of gold. You know, basically melt down your jewelry, melt down your gold and sell it back to the feds. That's what actually happened in the early 1930s.

Starting point is 00:37:13 And by the way, that law was in existence for like 40 years. Didn't get that reversed until like the 1970s. Do you think that could happen with crypto? No, absolutely not. Why do you not think that? Because we have a court of law. We will sue them. It did happen in the United States in the 1930s.

Starting point is 00:37:33 And there were courts of law. It's not like the 1930s and have courts of laws. No, no, it's executive order. We're in a different society now. I happen to be outside of the United States And if that law ever got past, I would not be coming back. Yeah, well, that's interesting.

Starting point is 00:37:53 I haven't read much up on the kind of the 1930s if similar gold hoarders made that choice. And by the way, that's what they were called, gold hoarders. This is sort of the vitriol, which is basically like you must hate, you're not a patriot, you're just hoarding, you're greedy. You're defecting from the coordination. this is a public good.

Starting point is 00:38:12 We need to all maintain our fiat currencies, right? Exactly. Very, very anti-cantialist, anti-sort, like, do it for the public, do it for the social good. I guess what I'm seeing, David, is similar narrative sentiments starting. You know, like Ben's Hunt push back against Bologi, where he's like, you know,

Starting point is 00:38:32 you're causing a bank run, Bologi, by even saying this. And Bology's saying, I'm just telling people to get to the lifeboats. Are you against lifeboats? If the ship isn't sinking, you have nothing to worry about Ben. And Ben is pointing at Bology and saying, you're causing this. What about kind of the social good of keeping this system intact?

Starting point is 00:38:53 We lose all of these things if everyone flees to the life raft. I'm seeing the seeds of this, this kind of idea of crypto hoarders, crypto bros. I'm seeing it. So I don't know why you're so convinced this couldn't happen in the United States. I totally think it could. I put a poll out, by the way, and I asked the question, will the US ever make it legal to own cryptocurrency? Followers on Twitter said, no, 60%.

Starting point is 00:39:16 Yeah, this is surprisingly close. I just don't know why you think it's not possible, but you're just saying that society has progressed. I mean, it's certainly possible, but yes, it's a progression of society, it's a progression of technology. Things were more extreme back then. Like, that was an extreme time in people's lives, like pre-internet times.

Starting point is 00:39:38 Dude, we had like Nazism. was an extreme time, right? We think we are entering some pretty extreme, not quite 1920s, 1930s level, like late 1920s, but like things have gotten a lot more extreme than like when I grew up in the 90s. I think we've adapted as a society. I think the internet allows information to spread. It allows us to learn from history faster. Like I don't think it would be possible for us.

Starting point is 00:40:07 I'm reading a bit of history lately. I don't think it would be possible for us to have like the 60 million deaths as a result of just like a mind virus of communism in Soviet Russia because if we had the internet, I don't think that that would have been possible. I don't think that we would have, I think when there's just imperfect information and just the way that the society works back in those days, I think extreme circumstances were allowed to rise much more than in today's world. world. Really? I think so. I totally, I totally think this is possible. This whole scenario, I totally think 60 million, 100 million deaths could happen in the, you know, in the, in the, in the 21st century. But that aside, let's talk about this specifically, which is the U.S. could make it illegal to own cryptocurrency. I think the first step towards that wouldn't be just a flat out ban. It would be basically a choking off of Biot to crypto exchanges. Yeah, there's other ways to do this.

Starting point is 00:41:04 Yeah. We're already seeing a little bit of that, David. Like, we are one step down that path. And the next step would be like, sure, you can buy crypto on an exchange or an an ETF, but you can't withdraw to your, like, just take Coinbase, take Cracken, no more withdraws to non-custody wall. That seems much more plausible to me. Well, and then it's basically, and then after that, the next step would be, if we ever get to this step, would be, and by the way, a bunch of crypto bro hoarders, turn in your cryptocurrency.

Starting point is 00:41:32 Yeah, make it, make it the legal version. Yeah. For sell. You have to exchange it for this ETF version of it. I'm not, look, I still sign like... I seem slightly more plausible. I can see this. I still think like this is 10% probability, but like if shit hits the fan.

Starting point is 00:41:48 Yeah. I'm saying if if... It depends on how the dollars, if central banks are actually threatened, right, as they were in the 1930s, like kind of... And then they, you know, politicians and society sort of rallies around, yeah, we have to be in this together. It's like war times, it's bad times. You can't, you can't leave on the lifeboat, right? things get worse. If everyone leaves on the lifeboat,

Starting point is 00:42:12 I could see it happening. But maybe I'm being pessimistic here. Anyway, I wanted to have that conversation with you. I'm glad we had that. Yeah, now I didn't know that I had to think about that, but now I do. Let's take this to the courts. Crypto also has defenders,

Starting point is 00:42:27 even outside of crypto. So, David, you said one of our recourses is the court system. Certainly the United States does have a court system. And this is a white paper, courtesy of Cooper and Kirk, which is a law firm that is actually, they've previously sued the FDIC and the OCC and the Fed over Operation chokepoint 1.0, which was the choking off of certain industries like marijuana industry from the banking system.

Starting point is 00:42:52 And now they are alleging in this white paper that the U.S. government is doing the same thing to crypto. What's the summary of this report? Yeah, they sent a letter to U.S. Congress regarding the clandestine financial war against the cryptocurrency industry. urging Congress to hold agencies accountable and propose questions and steps to obtain answers. They are claiming that regulators are using regulatory tools and pressure tactics to prevent crypto integration to the financial system and that it's up to Congress to hold federal banking regulators accountable. Now, Ryan, I was not here during the time in which gold was made illegal, but I would imagine, maybe there was stuff like this. Maybe I'm being naive.

Starting point is 00:43:31 But this is an example of like the pushback that comes very early and very hard by a very engaged community that perhaps I don't think we had way back then. And so this isn't any action. This is just a letter that is drafted by a law firm. But it is allowing the world, the people of the United States, to have the foundation to stand on to air their grievances. Yep. It's basically executive branches is kind of forcing this.

Starting point is 00:44:00 And we have two places we can go to fight it. Judicial, which is the court system, which is what they're attempting to do. And they're also calling on Congress. to push back against it. Speaking of Congress, Gary Gensler, he's got to go in front of Congress. Is that what's happening?

Starting point is 00:44:13 Yeah, Gary Gensler to face Congress grilling over crypto policy is the headline. So Gary Gensler is going to testify before testified. Gary Gensler is going to testify. Oh, man. You sound giddy. Before the House Financial Services Committee, its chairman, Patrick McKinnery has confirmed

Starting point is 00:44:31 that this is going to happen. This is going to happen on April 18th, and he will face questions. over his approach towards the crypto ecosystem. Gary is going into the hot sea. I'm sure he's going to prep for this. There's no way that he isn't like cognizant and intentional about his strategy towards the crypto world.

Starting point is 00:44:49 So I'm sure he's going to come with a pre-prepared list of deflections saying something like he's already said. I just look towards the Supreme Court for guidance. I apply the rules of the securities laws that have been established before me. I'm sure he's just going to... Do you want to take a shot every time he says Howie test? Yeah. Oh, I mean, I don't want to die, but that's a fun game.

Starting point is 00:45:16 This is kind of interesting because I have observed this too. There does seem to be increased partisanship over crypto. I would not have said this two years ago that one party was more pro-crypto than the other. It seemed sort of about even and both were kind of like almost neutral on it. But that has started to change. What is this tweet that we've pulled up here? Yeah, this is a tweet from Dennis Porter, who is a bitconer that we've actually had on Big List before, and he tweets out, pro-crypto and pro-Bitcoin Democrats are lining up to voice their opposition to their own party stance. Democrats are on the verge of driving away their own voters in losing support from this important new voter block.

Starting point is 00:45:54 In my opinion, it could cost Democrats a 2024 election. And then there are screenshots of four crypto-Twitter personas who are saying that they are perhaps reconsidering their previous Democratic base. in support of the Republican Party if indeed the Republican candidate was sufficiently pro-Crypto and I'm sure other facts and circumstances as well. This is someone saying, I have never once voted for a Republican president,

Starting point is 00:46:21 but is considering this. This is also Chris Berninski, and we quoted earlier, crypto is going to be an issue for voters in 2024, and already that is a sign of us winning, but I have also never seen the U.S. government be so draconian in fact, so long as it's not Trump, it may cause me to vote Republican for the first time in my life.

Starting point is 00:46:41 This is very interesting. I know you have a way in on this too, like a personal story. I am screenshoted here, yeah. Okay, what's your take on this? Yeah, so I am one of the four people that is being screenchotted and tweeted out by Dennis.

Starting point is 00:46:53 And I said, my entire family is Democrat. I was once considered myself a Democrat, and now I kind of consider myself just politically agnostic. Great party. Great, great party. Yeah, that's a great way to put it. I was once a Bernie bro because F. Hillary, so I'm putting my political opinions out here. Sorry for that. I, too, would vote Republican for the first time, given that it is the correct pro-crypto candidate. And also the Dems continued on the anti-crypto war path. Since I'm here grandstanding about my political opinions, I also followed up this tweet with another tweet saying, and that Republican would also have to be pro-choice. That's what I believe. And so, like, for me, my personal political belief,

Starting point is 00:47:34 are that I'll vote on almost a single issue voter for crypto. So long as that candidate is not an insane person, I will vote for the pro-crypto candidate. It's definitely making you a question, right? Previous political beliefs over this one thing, and it could start to cost the Democrats. Is that a popular position in your family, David? No, it is not.

Starting point is 00:47:58 So actually, so growing back to Chris Berniske's tweet, I shared Chris Berniske's tweet with my, in my family chat, because my entire family is like pretty thumbs up about Elizabeth Warren. And I just said, hey, guys, like my entire industry thinks that Elizabeth Warren is super cringe and not treating us with respect and is actually doing the whole emperor's wearing no clothes thing because the way she talks about our industry is coming from a place of completely just misunderstanding and being uninformed about things. And it's making our entire industry not just question her. stance and information about crypto, but basically her stance and information about any other industry. It's kind of like when you understand how the mainstream media reports on crypto, and you're like, well, they just got that wrong. And so is that how they report about

Starting point is 00:48:48 everything? Because they're getting crypto wrong. And so what about everything else? I think that's true. Although I will say one thing is just, I think people are inherently skeptical of like industry bias, right? There's like big pharma, there's, you know, the gun lobby, all of these things and big banking and big crypto, that could be a thing. Crypto is not big crypto, but like crypto bros, that sort of thing. To me, this is less about an industry fighting for, like, its ability to exist and survive, although that's part of it. To me, this goes far deeper than that.

Starting point is 00:49:19 This is like a basic, like American civil liberty to own freaking digital property. Right. Like, this is a bipartisan issue. Something that embodies American values. This is deep the level of like constitutional like this is freedom of speech. This is digital civil liberties. And to me, this is not a about like one kind of party helping and getting donations from crypto or not or getting crypto. This is just like why can't we all rally around this being like core to a Western classically liberal democracy that embodies human values and translates that for the digital age. That's what is to me. I don't know if that's an effective argument on anyone in your family, but that's certainly what I believe. And this is also increasingly what I think some politicians are giving voice to. So we had Tom Emmer on the podcast earlier this week, David, and I know like you were on

Starting point is 00:50:17 at the beginning, you had some internet connectivity and then you weren't able to finish it. Not fully established here in Montenegro. Dude, you should see how fired up he was. I'm looking at the thumbnail, man. Is this a thumbnail from the comment? Yes. Yes. That I think I saw that face. He is so fired up, and we talked to him a year ago. So we talked to Tom Emmer a year ago, and he's pro-Crypto. This time it was a different Tom Emmer, different politician. He clearly thinks that crypto is going to, I don't know, his motivation,

Starting point is 00:50:46 but assume he's just kind of a politician going with the votes and that sort of thing. He clearly thinks that this is a cornerstone of his platform. And I think, David, because he is the whip in the house, that is number two, most powerful. seat and House of Representatives, I think this could become a platform for Republicans in 2020. Because the Democrats are letting them have it for the Republicans. It's like, this is free real estate. Basically. And somebody's got to go get that cohort of votes. And we have got a two-party system. So it's going to be either one party or the other. And by the way, the more one party

Starting point is 00:51:19 embraces it, the more the other party has to be like, we're not those guys. So that's just how they stand for that. We don't stand for that. So anyway, I don't know how it's. So anyway, I don't know how it's all going to unfold. It's really at its courts. It should be a bipartisan, just American issue, but it does seem like the Republicans are kind of making this part of their platform. We'll see how that carries in 2024. Right. So when I was arguing with my, my sister is perhaps the leader of my family in the pro-war inside of things. And she was like, yeah, you crypto bros, like, you think you don't need regulation. Like, look what happened to crypto in the last year. I'm like, are you serious? We are begging for regulation.

Starting point is 00:51:58 And this is what, this is the, you're just touting what Elizabeth Warren is saying. Like she's trying to position us as these like rogue shadowy supercoters who don't want any regulation. And my response to her is like, no, you're doing the same thing that she is, which is misunderstanding and misrepresenting our industry and casting us off as like these barbarians, crypto like gunslingers. Ander kiss. Please regulate us. Please. You're going to get clipped by this, by the way. Somebody's going to clip that. Please regulate us. David Hoffman. You were saying, clarify before you get clipped on what you're actually

Starting point is 00:52:34 saying. If you can be regulated, if you are a centralized entity, if you are a bank, if you have, if somebody deposits trust into you, you are in need of regulation. If you are a decentralized protocol that is permissionless or also aspires

Starting point is 00:52:52 to be permissionless and you need a path to become permissionless. I mean, regulation isn't just like clamping down the gates. It's also providing clarity and paths forward for crypto protocols to mature. Yes, clarity and paths forward. Right? Absolutely. Yeah. So internet, get the full clip. All right. Don't just, don't just clip David saying, please regulate us. My God. Crypto bro, like, screaming from, bleeding from his eyeballs once regulation. Crying. Yeah, right. Well, you know what? Gary Gensler, you'll be happy to know,

Starting point is 00:53:22 says, David, the rules are already clear. This is SEC's Gensler, insisting, Clear rules for the crypto market already exist. But the regulator says the digital asset industry is rife with noncompliance. You already have all of the rules in front of you. It's perfect clarity. I've already explained this to you in office hours with Gary. Your problem is you're just noncompliant. That's what Gary says.

Starting point is 00:53:47 Thanks, Gary. I'm looking forward for you testifying, by the way. In front of Emmer, too. What's Emma going to do? Get them, Tom. Okay. this is going on in the meanwhile, David. This is just a contrast point.

Starting point is 00:54:00 Maybe we'll end this section here. The freest country in the world, aka what America purports to be, is choking off crypto while Hong Kong is opening the floodgates. Do you see this? I am including a Bloomberg article, Hong Kong regulators toast meetup to help crypto firms with banking. How you're just talking about like politicians filling the vacuum.

Starting point is 00:54:21 Free real estate, free space here is exactly what Hong Kong is doing. Right. Coming out of Hong Kong, can you believe this? Being like, okay, if New York City, the U.S. government doesn't want to be part of this crypto revolution, doesn't want to be sort of a nexus for finance in this world, then we will be. And I think it's straight and embarrassing for the United States. And this is the take that Tom Emmer had, which I share. Is America just going to build its future on debt?

Starting point is 00:54:48 Are we actually going to build something again? That's a question. And crypto is like a new generation of the Internet. It's an invitation to go build things here. and what we're doing with these policies and all of the marvelous clarity Gary Gensler is giving us is driving builders

Starting point is 00:55:03 offshore outside of the United States. You are not welcome here at crypto entrepreneur and if we keep doing that, it's not going to be good for the United States. Crypto will be fine. It's just not going to be good for the U.S. Maybe we'll end it there. What do we got coming up next?

Starting point is 00:55:18 Oh boy, that was a while, man. Okay, coming up next, two more ZKM's land on the Ethereum main net. We got some good news out of oiler, maker Dow has a new path for die, SBF gets in trouble amazingly. The guy just can't get, can't stop, can't stop him. And then AI training, I'm talking about AI now, is getting called for a timeout. So all of this 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

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Starting point is 00:57:27 So get on the Phantom waitlist and be one of the first to access the multi-chain beta. There's a link in the show notes or you can go to phantom. dot app slash waitlist to get access in late February. David, this week,

Starting point is 00:57:39 the second ZK EVM just launched. So we've doubled ZKEMs in two weeks. This is Polygons ZK EVM. Tell us about it. So yeah, Polygon ZKM, long awaited, just shipped to Mainnet. Ryan, Sean Adams,

Starting point is 00:57:54 my co-host here, had a fantastic show with Jordi Bellina and Mihalo from Polygon. Jordi, Fun fact, previously. I actually loved this story because I was on, I was, it was me, this is going to be a deep cut of a story. It was me, Mariano Conti and Mihalo in ECC, 2021. I had just come off out of my scooter accident, if you remember that. Oh, black eye and everything?

Starting point is 00:58:17 Yeah, yeah. Oh, teeth? Yeah. No, no, just a black eye. I didn't lose anything. Yeah, no, just a black eye. Didn't you can chip a tooth or something? You went to the dentist.

Starting point is 00:58:24 Yeah. I chipped a tiny little. little tooth and then it came back. Yeah. It grew back. Yeah. Okay. Wow. Anyways, so fast forward like four weeks into ECC. I still had a little, you know, a little bit of puffiness. Anyways, it was me, Mariano Conti, the guy that deployed multi-collateral dye and maker in like 2019. We're all just getting a beer towards the end of ECC. And Mihalo gets a phone call. He looks at it. Steps immediately up and goes and he answers it. And me and Mariano just continue having a beer.

Starting point is 00:58:53 and then mihalo comes back with an overjoyed like facial expression and we were like dude what was that and he was like do good news man good news I can't tell you it was this it was this it was the polygon acquisition of zK hermes of hermes which was geordie bellinist project which is the man that you see on the screen to the left and fast forward to where we are today this is the culmination of that phone call of that that partnership agreement

Starting point is 00:59:21 and now we have the ZKEVM live on Mainnet. And so that was what was launched. When was that launched on Tuesday? Tuesday of the week. Yeah. On Tuesday. ETH as the gas token. Maddock is the payment to validators.

Starting point is 00:59:35 We've got a full interview if you want to check that out. And the cool thing is how fast and furious these ZK. EVMs are now coming. I feel like this is Crypto's broadband moment. This is Ethereum's broadband moment, at least. David, we just got our second. But here's consensus coming out and introducing a third. third.

Starting point is 00:59:52 Man, they're also fine. Okay. Lena, it's called a developer ready ZK roll up powered by consensus. I haven't investigated this, but they're just coming out of the woodwork now. We got ZK.

Starting point is 01:00:04 EVM suddenly. It's March 2023 and we got block space that is going to get real cheap. You want block space? We got blocks space. Where ether is selling block space. Oh my gosh. Speaking of block space,

Starting point is 01:00:18 layer two beat. All right. I love layer two. of layer to be. Because they provide transparency to all of these roll-ups that are coming to the market. And as we multiply our chains,

Starting point is 01:00:28 it's hard to know what the decentralization and security guarantees are on each of these chains. Did you see this? They added this little kind of pie chart. What are we looking at here? Yeah, so this is a five.

Starting point is 01:00:40 Think of this like an orange slice for the podcast listener. So an orange slice with five slices. And each of these slices can be various colors, gray, yellow, red, and I'm assuming, I'm assuming green, maybe, actually. We don't see any green yet because nothing's green yet.

Starting point is 01:00:58 I actually don't know if green is possible. Is green possible? This is an orange slice of, what, the risk? Security risk. Yeah, so there's five different like things that all roll-ups need to be secure on. Data availability, where is the data stored? And can that data be rugged? Upgradeability, validator failure, sequence or failure, and state validation.

Starting point is 01:01:17 All roll-ups need to improve on this, on all five of these things. And so this pie chart that you can see, I actually am still confused that so whether or not, sorry, there are only three colors. There are, is gray, yellow, and red. Ah, okay. Man, this should really make gray green.

Starting point is 01:01:35 Gray is green. Intuitively, gray is green. Green doesn't exist, but gray is good. Yeah, so there's gray, yellow, and red. And so you can see the characterization, a snapshot of what the security risks for every single layer two are and what they have to work on.

Starting point is 01:01:52 Basically, you want your orange slices, you want the whole thing, the whole circle to be all gray. Gray. Can we please, Bartek, come on. Can we get this in green? And the closest is Arbitrum one, which has three.

Starting point is 01:02:05 Orange slices out of five. And yes, you just said orange slices, but there's no orange color, okay? Davis is actually talking about the orange, not yellow. I'm worried that people will see, like, color orange. We totally screwed this up,

Starting point is 01:02:19 but we are not editing this out. All right. This is raw, unfiltered, bankless material. Two of the orange slices are orange. All we're trying to say is go to layer 2b.com.

Starting point is 01:02:31 If you want to check in on the risks associated with your layer two, that's probably all we need to freaking say. Next topic. Get it out of here. Euler, good news. David Euler, the exploiter. Returned 51,000 Eath. 51,000 Eath.

Starting point is 01:02:49 And actually, even more. the next, there was another transaction that returned another 7,000 ether. There was also another transaction that I've returned something like 20 million die. They got 84% of their funds back. 84% of oil or

Starting point is 01:03:02 exploited funds are returned. That is, if you had told me that we were going to get 84% of funds back, the day was exploited, like, wow, that is unheard of. That's pretty good. Let me ask you here, what are these criminals doing? I wasn't following this story. So like, you go, you

Starting point is 01:03:18 hack something. You, you pack like $150 million and then you go and a week later, two weeks later, you return 84% of it. Who does this? Like what is happening here? So there's two routes. So understanding that I, my first take on the first exploit was like, man, this is totally North Korea because they immediately went into tornado cash implying that they had no intent on returning the funds. So follow up on this story and I'll give my take after this is in a series of messages written into the data of transactions on the Ethereum blockchain. The exploiter says this.

Starting point is 01:03:53 Jacob here, I don't think what I will say will help me in any way, but I still want to say it. I fucked up. I didn't want to, but I messed up with others' monies, others' jobs, and others' lives. I really fucked up. I'm sorry. I didn't mean all that. I really didn't fucking mean all of that. Forgive me.

Starting point is 01:04:11 And in another transaction, he says, Jacob, apparently. the rest of the money will be returned ASAP. I only look after my safety and that is the reason for the delay. I'm sorry for any misunderstanding. Implying if we're taking this, if we're taking Jacob seriously, that we are going to be getting 100% back

Starting point is 01:04:28 of oil or exploited funds. What is this? One of two things happened, maybe both. One, law enforcement found him and said, hey man, you are going to jail. If you don't return the funds right now, you're going to go to jail for like a big time. If you return the funds only right now,

Starting point is 01:04:46 you will only be go to jail for a little bit, something like this. Something along this lines. That's how it works. That's how it works. So it's directionally correct. The other one is like he actually felt bad about all of the lives that he damaged.

Starting point is 01:04:58 And so he returned it out of guilt. But then he also said, I'm going to go with option A there, David. I'm going to go with option A because he, I mean, assuming Jacobs's his actual name. He was like, yo, the gig is up. You guys got me. Here's all the money back.

Starting point is 01:05:10 And it's also me doing this. I'm sorry. here's your money back. I'm sorry. I'm sorry. I say, crypto, like worst robbers in history. Imagine going like, you know, stealing something from a bank and then like returning a week later, me like, hey, guys, I'm sorry. I met, I was going through a rough patch. Yeah. Here's the money back. I didn't think of the consequences. I really didn't think about it. I'm sorry. So strange.

Starting point is 01:05:33 Well, such is crypto and these negotiations happen on chain. Maker, what's a new era has begun, chapter zero. What are we looking at here? We are looking at a promotional graphic. If you turn on the sound, it doesn't say anything. It is just music. So I actually was trying to get the details of what this announcement means. And there wasn't too much there. I went into the governance forums.

Starting point is 01:05:59 I opened up the links. I looked at what was being proposed. Man, it's make it really bureaucratic. And so they are tweeting out chapter zero. A new era has begun. A governance proposal has passed. that ratifies a new constitution, which includes for MakerDAO to, one, increasingly decentralized the collateral backs die.

Starting point is 01:06:22 And I think the big, obvious low-hanging fruit here is removing dependence on USC, but perhaps also for real-world assets. Second, allowing die to free float relative to the dollar. This was an original idea from Maker-Dow that has kind of been pushed to the back burner for a very long time now, but now is returning. Questionable. Also questionable is the timeline on this. I don't know how, like, is that this year? or are we just saying that we still want to do this? I don't know.

Starting point is 01:06:45 And also improvements to the actual governance process of MakerDAO. And they also said that they are going to limit real world asset collateral. These are the notes that I have from Christy, thank you, Christy, who did more research than me. But man, is finding out what this actual announcement is actually really confusing. If someone can summarize this for me, they'd be really appreciated. My high-level take on it was they want to go less than the direction of real-world assets and more in the direction of crypto-native assets because the real-world is looking a little anti-Crypto these days.

Starting point is 01:07:15 Yeah, but maybe that's not what they did. Ticketmaster is doing an Ft stuff. This is cool. Okay, but I thought Ticketmaster was the villain since they jacked up those Taylor Swift concerts. And, you know, I resent them being associated with crypto, but you tell me this is a good thing. If you accepted that face value,

Starting point is 01:07:34 which maybe I'm overly optimistic and bullish on humanity, but I will. Ticket Master has launched the ability for artists to offer token-gated ticket sales, meaning that a sale can only be unlocked or access with a specific NFT. That's cool. They've launched a token-gated option for special access to concerts and event tickets for eligible NFT holders. And they also have a suite of artist-driven tools offering many unique ticketing services,

Starting point is 01:07:59 including face value ticket exchange, a program that limits transfer and locks in resale prices at face value. I don't know if that is done by a smart contract, but in theory it could. Verified fan, a registration system that filters out, scalpers and bot users who are looking to acquire tickets for the purpose of reselling and Ticketmaster requests, a service that eliminates the traditional on-sale rush by allowing artists who sell tickets to high-demand shows through a fulfillment and request model. During the purchasing process, Ticketmaster prompts a user to connect a wallet to verify

Starting point is 01:08:31 ownership of an NFT. After that, it's the same buying process. So token-gated access to buying some NFTs along with some other equitable tools and services that in theory could all be smart contracts, but it wasn't stated whether they are or not. Is this a reformation of Ticketmaster? I wouldn't go that far, David. But look, this is a pretty big deal, actually.

Starting point is 01:08:53 Ticketmaster is absolutely massive. These tokens are minted on Ethereum and accessible via Metamask and Coinbase. This is onboarding more people to kind of NFTs. I think in any other, like, you know, news cycle or week or like in a world where Ticketmaster was less hated at this specific moment of time, we probably would have led the episode with this.

Starting point is 01:09:13 Probably. This is actually huge news in terms of the thing that we care most about, which is like onboarding the world to crypto and Web 3. Pretty big. I think it's fair to be skeptical about Ticketmaster just by nature of what there are and their incentives. And also at the same time,

Starting point is 01:09:31 it's also fair to accept that this, maybe it's not Ticketmaster, but is coming. Like verifiable tickets as tokens on Ethereum, by someone somewhere. I bet you, Gary thinks these are securities. Oh, do you want to ask them? Yeah, come on the podcast, Gary. We'll ask you.

Starting point is 01:09:49 Gerber. That's the only way we can find out. Come to office hours with David and Ryan. Microstrategie, they just bought more Bitcoin. There you go. 6,455 new bitcoins to come to a total amount of bitcoins of 138,955.

Starting point is 01:10:08 they also paid off a loan that was collateralized by Bitcoin. We tried to unpack it and really understand it. Something else happened. But anyways, Microsanage, you bought more Bitcoin. It was a while. It was a while something they bought another Bitcoin. David, you didn't want me to include this link, but we had some discussion about it.

Starting point is 01:10:25 Do you know how much this would be worth? For the record, Bankless Nation, I told him to not do this. Let me finish. Let me finish, David. Okay, if Microstrategy had purchased Eath rather than Bitcoin, rather than $4 billion. Do you know how much they would have, David? I'm assuming more, more money.

Starting point is 01:10:44 $6.5 billion. Almost double. There is no second. If they had bought Ethan said. David, David wanted to strip this because he felt like, I told Ryan to not do this. And I was like, you know what? I am gas today.

Starting point is 01:10:57 You be breaks. Yeah. And try to stop it. YouTube viewers will notice that he typed in the URL instead of pulling it up. This might get cut by our editors. I don't know if this will make it but let's talk about this.

Starting point is 01:11:11 The NASDAQ is launching crypto custody service in Q2. The NASDAQ? Are they abandoning stocks, David? Are they looking over their shoulder at the crypto walking? They are totally abandoning all stocks and equities going crypto only. That's the news. No, I'm kidding.

Starting point is 01:11:28 They're first primarily providing custody services for Bitcoin and Ethereum. This is the top of the rabbit hole of a long list of potential services that they could do. It starts with custody. Kind of cool. Avalanche had an outage last week. What happened?

Starting point is 01:11:42 Avalanche, the sea chain, was out of order for about 50 minutes, halted the block production, a bug related to blockchain validation. They released an update. This was the second time that this has happened in seven days, which triggered me to make a tweet that caused me to fight with a bunch of Solana and Avalanche people, and that was more or less my weekend. And David, sorry about all of that, and he takes it all back. Yes?

Starting point is 01:12:05 Eh! There are some tweets that I could have phrased better. There are some tweets that I could have been more precise. Everything I said, I completely believe. I've never written a single tweet that I didn't believe in. There are a couple, a couple of one or two might be out there. Except those ones.

Starting point is 01:12:21 Yeah, except the ones that were deleted later. The U.S. is charging SBF for bribing China. How much more trouble can this guy get in? Okay. What's happening now with Sam Begman-Fried? that is the SBF, San Bankman freed. He is charging with paying $40 million to Chinese officials as a bribe so that they would unfreeze his hedge funds accounts.

Starting point is 01:12:48 Yep. That sounds like a crime, David. Yep. Well, they're frozen for a reason. But I guess it was China that froze them, and he paid them $40 million to unfreeze them. All right. Okay.

Starting point is 01:13:00 Well, now he's in trouble with two governments, I guess. This is some AI news, which we usually don't cover, but I think this is important. This is an open letter to pause all giant, large-scale AI experiments. And I got to think that this is maybe not inspired by the bankless podcast with Eliezer, but certainly inspired by Eliezer himself and his caution and concerns about AI safety issues. Bankless listeners might know if you didn't listen to this episode, early in the

Starting point is 01:13:33 you can catch in the archive. We had Elie Zier Yudkowski on, who basically told us we're all going to die because AIs... Quite literally. Quite literally. Going to become super intelligent. We're in the process of becoming super intelligent.

Starting point is 01:13:49 There was no way to keep them aligned with humanity and our ethics and morality. And so that would result in the inevitable demise of human beings. The AIs would just basically sort our atoms and do something else with them. So it seems like that's not just him that's concerned about this. This is an entire open letter saying to stop, to pause all large-scale AI experiments. Like stop chat GPT-4 is what I'm reading in this article.

Starting point is 01:14:17 Give us some more context. Stop all AI innovation more powerful than chat GPT4. That's the limit. That's the way. We're at chat gb-t4 like armistice. Like everyone pause. Everyone stop. So this is the Future of Life Institute, which is a nonprofit organization that works.

Starting point is 01:14:32 to reduce global catastrophic and existential risk facing humanity, particularly from advanced artificial intelligence. So this is a petition that you can go sign. It's already signed by Elon Musk, Steve Wozniak, Gary Marcus, Yoshio, I don't know, and others. If that is something that you've heard. Evol Harri, David. Andrew Yang? Oh, wow. Yeah, wow. That's a Max Tegmark.

Starting point is 01:14:59 Man, oh, you need to read some books by Max Tegmark. our mathematical universe. Have you read that? Also, Life 3.0. Oh, great books. Great books. Dude really like them. These names. Yeah. What's your take? Are you going to sign this, David? What's your take on this?

Starting point is 01:15:19 I don't. I need to consider that. I don't know enough to sign this. I don't know. I actually really had to consider that for a moment. I don't know. And I actually, I'm worried that signing a letter is not going to do anything to stop it. Right, because this is a Moloch problem, right? So like say nine people out of 10 agree to sign the letter and pause all. And one defects. Well, then that one person just gets the lead, right? Or one country or something.

Starting point is 01:15:42 This is a classic Moloch problem. Yeah. I will have to say that the LESR podcast that we did, like I've heard from multiple people that it had made waves in the AI community more than it had before. And I think it was important that Eliezer did a non-AI podcast for that to reach new audiences and permeate outwound. outbound. So I'm not, I think this is not necessarily a coincidence that this letter is happening right now. Look, we are not done exploring AI, the AI safety problem. And I think our next,

Starting point is 01:16:13 the next stop for Banglis is to get the kind of the counterpoint to ELEs or someone who's a bit more optimistic on AI. So we've got some guests lined up in, because this is what we do. So expect to deep dive there and maybe at some point. There's be a fun piece of trivia. The AI guest that we have recorded, I think we're recording with him next week or maybe the week after. No, a couple weeks. Yeah, week after, spoke at East Denver 2018. So if you care to find out who that is, there's a little bit of trivia for you. All right.

Starting point is 01:16:42 Someone will find out. Dune integrates chat GPT4. Wow. Okay. Speaking of, is this the crypto plus AI? Of course, you know, conversation, this is Dune Analytics, fantastic dashboard for coming up with all of crypto analytics. We use it so frequently on the roll up to show data. It's kind of a complicated dashboard to operate.

Starting point is 01:17:05 I haven't really dove down how to spin up a board. But I mean, I guess data always uses it. Hill Dobby uses it. We've used Dune Analytics on the weekly rollout many, many times. It requires kind of a technical brain to operate. This is what's so fascinating, though, about Chat GPD and why I think it's so hard to stop because, like, right now it's so damn useful.

Starting point is 01:17:24 Could you imagine going to like, you and I don't know SQL, not very good with this, we can't construct your own boards? When you love to be able to go to, like, Dune Analytics and type in like, and just speak to Syria. You need the number of ETH addresses from date, you know, January to March that stake to ETH.

Starting point is 01:17:41 Boom. Outputs an answer. Like that's what chat DPD4 can do. And it's going to consume all of this public available blockchain data anyway. And so that's part of the Moloch trap is how do you stop it? So it's too useful to try to shut down. All the Dune board creators who do like selfless work

Starting point is 01:18:00 and create boards for us to view. Like, again, like, people like Hildobby, people like Data Always, there's a few others. We are now going to be thanking chat GPT4 and their services will no longer be leaded. Sorry, guys. Geez, well, look, the bulk case is it, for them,

Starting point is 01:18:18 is it allows people to operate on a higher order of, rather than constructing the dashboard, you just have to know what questions to ask. Right, yeah. I said that for seriously because I thought it was funny. Sorry, I'm taking things too seriously because it's the AI topic and it scares me, David. That's cool. By the way, I am an investor in Dunan Analytics.

Starting point is 01:18:37 I don't think we mentioned this. You and I are both investors in L2B. Got to mention this, of course. All of our disclaimers are always at bankless.com slash disclaimers. David, Metamask is integrating sign in with Ethereum much more natively these days. What's this news? Yeah, so this is Bruce ID, the Twitter account, Spruce is basically the, studio behind signed in with Ethereum. So sign in with Ethereum is now being, so like,

Starting point is 01:19:05 everyone knows they're like, you know, log in with Facebook, login with Google. Metamask is now having like a login, a sign in button. And it is integrating with the sign in with Ethereum protocol. And so that is what is being announced here today. Signed with Ethereum integrated with Metamask. David, I think we're going to see sign in with Ethereum on more websites, including.

Starting point is 01:19:24 Including ours. This little website right here. Bankless.com has silently asked. added the ability to connect with your eth address. Look at me doing this. Connect your wallet. Look at you. This way to log in.

Starting point is 01:19:36 All right. Metamask, our favorite wallet and sponsor ever. Thank you. Connecting with an address. Boom. Sadly, we don't see that part on screen.

Starting point is 01:19:44 Sign in to verify identity. Let's fucking go. This is dope. There we go. We don't see the MetaMask because Zoom doesn't do the screen share for MetaMask. Sorry. Right. And then I just signed in.

Starting point is 01:19:55 So I linked my wallet with my bankless citizenship. and now I don't have to log in order to access all bankless citizen content. You don't have to log in with your email and password. You do get to log in with your Ethereum address. So when we launched the bankless website, it was unequivocally, one of the most positive responses about the website, like everybody was positive except for one complaint. I know.

Starting point is 01:20:19 Which I had with the email. Which was that they needed to log in with an email and password. That was the one, everyone, everything was unequivocally positive. And this one person was like, Bankless, bad, because signing in with an email address. And first off, I'll remind you, we're a newsletter. We need your email address. And fast forward, however many weeks ago, we launched this website about a month ago.

Starting point is 01:20:43 Now we have signed with Ethereum. Yeah, it's just actually, it was like two weeks. It took a step. Oh, wait. When did we launch the website? Two weeks ago? Yeah, two weeks. Maybe two and a half.

Starting point is 01:20:54 Jesus. Time is weird. Yeah, zoom in. By the way, speaking of, Zoom in fast. Do you like that? Cracken Exchange just announced an official partnership with Williams Racing. What's cool about this is there's some way that Cracken has provided for you to get your NFT potentially on the back of a race car.

Starting point is 01:21:16 Yep. This is a partnership with Williams Racing of F1. So this is F1 Motorsports. It's not NASCAR. Not NASCAR. European, yes. So New Horizons, new frontiers for Cracken, if you will. So they have a Cracken logo on a race car.

Starting point is 01:21:29 So Cracken is getting a race car. And they have real estate on this race car for your listener. You, that's you, your NFT could be on the Cracken race car. How do you get your NFT? Do not freaking put your dick butt on the back. Do not shame the crypto industry. I could. Don't.

Starting point is 01:21:48 I can do it. I'm asking you not to, though. Not to try. How do you feel about an MFer? He's totally going to try. I feel fine about an MFer. Okay, but not a dick butt. Honestly, whatever you want to do, dude.

Starting point is 01:22:02 It's permissionless, all right? I can't stop you anyway. I wouldn't even try. So the details of how to get your NFT on this race car is in this link in the show notes. You put your NFT, I'm assuming this is how this works. You put your NFT into the Cracken NFT platform and then probably sign up. I bet you that's how that works. There you go.

Starting point is 01:22:21 Cracken is a sponsor of Bankless, thank you. Also adding Layer 2 support, which we always. We love that. We love that. You can now send and receive your stable coins natively to Arbitum. There you go. David, some other layer to releases going on. Conduit is a crypto-native infrastructure program that allows you to launch a roll-up in just a few clicks.

Starting point is 01:22:43 I'm pretty sure we predicted this feature would be coming. You can now issue a token. The OP stack, yes. So the whole idea a long, long time ago, was that the OP stack is the ERC 20 token for roll-ups. here we have a startup that is executing on that idea. So that not only is a save release, it's also a raise announcement. So this is a startup that raised, I think,

Starting point is 01:23:02 $7 million from Paradigm. And they are one-click OP stack deployment. Man, that is really, really cool. I think it's really cool. Yeah, that's really cool. We're going to have, you know, you know how it's very easy now, like to launch your own token?

Starting point is 01:23:17 And that was revolutionary in 2016 with Ethereum's basically provided a platform for that. Now it's going to be just as easy to launch your own entire. chain. So we're going to have an absolute explosion of chains when it's as easy to spin up a website, launch a token as it is an entire chain. David, we got tokens. We got chains. We also got jobs, David, new jobs of the week. And I got to do a shout out for a very important role bankless is hiring for. What do we need here? What we need is someone to edit this podcast that you are

Starting point is 01:23:46 listening to right now. We are looking for a podcast video editor slash media operation. So if you are familiar with audio and video editing software, if you've ever edited a podcast before. If you've ever edited a video before, we are interested in talking to you, especially if you live in EST or European time zones because a bankless nation never stops producing content. So we quite literally need a podcast editors across the globe because Ryan and I produce way too much content at all hours of the day. So that is the job. If you want to work directly with me and Ryan to edit and produce podcasts, please click and

Starting point is 01:24:22 the show notes and apply. We got 30, maybe 40 million downloads, I think, on the podcast. We're trying to get to 100 billion. And then a billion. That could be a metric you help us reach here. Got some other jobs going on too. Rise is hiring a marketing manager, a sales development representative. Uniswap needs a senior product designer, an application security engineer, and a senior mobile engineer who's a React Native. You can find all of that. And more at the bankless job site, bankless.com slash jobs. David,

Starting point is 01:24:52 What do we have coming up next? Coming up next, we got the questions from the nation. We're going to talk about whether or not Ryan changed anything about our portfolio as Bology scared us out of our pants. We'll talk about that as well as who was the first ZK. Evm on Mainnet. And then we got some takes of the week and we got what were bullish on. And then we got some memes of the week.

Starting point is 01:25:11 There's more than one meme this week. So stay tuned because both of them are very, very good. But first, a moment to talk about some of these fantastic sponsors that make this show possible. Learning about crypto is hard. Until now, introducing Metamask, Learn, an open educational platform about crypto, Web3, self-custody, wallet management, and all the other topics needed to onboard people into this crazy world of crypto. Metamask Learn is an interactive platform with each lesson offering a simulation for the task at hand, giving you actual practical

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Starting point is 01:27:03 Secure, fast, cheap, and friction-free. We've got the questions of the week. This is a question from Big Wiggle, 501 from the bankless citizen discord. After your chat with Bology, does your portfolio remain the same? Have you made any changes? I think this is a question to you and I. Did you make any changes after the 90-day Bitcoin bet and our conversation with Thebology? I want, Brian, you to guess whether I changed anything.

Starting point is 01:27:31 No, David, you did not change a thing. Unless there is the slight probability that you just purchased some more ETH is my guess. I would consider that not changing my strategy. So you didn't. Correct. Yes. No change is driving. I will say, like, during the Bology week, the Bitcoin, the BitSignal week, I was like,

Starting point is 01:27:53 hmm, okay, maybe I should perhaps reconsider my position, reconsider my trade. Because you don't have any Bitcoin, or you have a little bit of Bitcoin? What's your... Well, technically, I'm short Bitcoin because I have sold Bitcoin for Ether to do my Ether long bet. I think that that's short Bitcoin relative to ETH. It's not short Bitcoin. Not to the dollar. I don't think you would be short Bitcoin to the dollar. I would never ever be short any crypto asset ever. God, are you insane? Why would you? I'm offended.

Starting point is 01:28:20 Remember the person that got liquidated shorting Luna while it was crashing? Like, no way. No way. Anyways. So no, I did not change anything. While I did, like, take a moment and like reflected and reconsider it's like, okay, apology is saying this. Arthur Hayes also saying this. Perhaps this is not the time to have a net short position against Ether versus Bitcoin. I waited until next week to like sleep on it and then reassess. and I have decided that I will not do anything.

Starting point is 01:28:50 So you're still bullish on Eith relative to Bitcoin. So you're still making a bet on the ratio then too. Correct. You're even doing more. Correct. Well, like I said, that is an 18 plus month long position. And I don't think anything's changed. My position has not changed either.

Starting point is 01:29:07 I've been long Bitcoin for a long time. Oh, right. So Ryan actually does on Bitcoin. I do. I have not purchased Bitcoin also in a long time. and I will continue purchasing ETH. I think that everything that Bologi and Arthur say, I don't do this in my mind,

Starting point is 01:29:26 but you can kind of substitute ether as an asset. I don't think that Bology or Arthur fully understand or believe in the monetary premium virtues of Ethereum in a high-conviction way that you or I do. I think anything, basically, that benefits the monetary premium story, of Bitcoin actually doubly benefits

Starting point is 01:29:49 maybe I shouldn't maybe claim kind of any sort of ratio but even more so benefits the Ethereum narrative over the long run so I haven't changed the long run big emphasis on over the long run because I actually will take Bologi's side that and I do take

Starting point is 01:30:05 the ball of the policy puts the wind and the sales of the Bitcoin narrative and also the long term Ethereum fundamentals but emphasis on long term. Like that doesn't hit until later. But Ryan, that is the long-term perspective that you have, that you take.

Starting point is 01:30:22 Yeah, it was more confirmation, okay, well, this is what crypto people have been saying for a while. And it looks like this is happening. So I haven't changed a thing, but also was really like already way overweight crypto. So there's not much I could change. I can't get any more bullish. All right. This is a related question, though. If you're going to have an IRA for a 70-year-old crypto friend,

Starting point is 01:30:46 70, not 7-year-old. How would you diversify into ETH and Bitcoin? So, on the older side in that generation, what would you advise them of 100%? So they have, they have their pool of other assets. And now they want to know, I've got some pool for crypto. What should I buy? Not financial advice. But your hypothetical friend.

Starting point is 01:31:07 If I was a financial advisor who would, in theory, therefore, give financial advice, which I'm not. For entertainment only, then was it. entertainment only. Yeah, so the 70 year old is an interesting detail because that implies like, you know, an end of life phase. And so the question is like, yeah, how healthy is a 70 year old are they live in like five more years, 20 more years? Like how much, right? Well, I mean, like at that point, like you have to start to consider these things, right? And so if we're thinking a five to 10 year long time horizon, the shorter the time horizon, the more weight I would go to Bitcoin. And if we are thinking that this is a 70 year old,

Starting point is 01:31:45 yoga person who still goes on runs, then I would start to shift more towards ether. So if we're thinking short term, I would go 50-50 Bitcoin Ether because that is my bias towards Ether. And then, you know, as soon as we start to hit like 10 to 15 to 20-year-long time horizons, I would start to go, maybe if we're doing a 20-year-long time horizon, I would go 80% Ether, 20% Bitcoin. Yeah, that's similar to what I would say. And it's interesting you're not saying any other tokens. But like, so it would just be Ethan Bitcoin, right? I mean, if they want to hear my shit coin portfolio, I'm happy to.

Starting point is 01:32:21 I'm happy to talk about that. Actually, I would do either 70 or 80% ETH and either 20% or 30% Bitcoin. And I would do that ETH, a portion of that nice staked Eth. I mean, if you are in your 70s, like, how nice is it to have some sort of fixed income asset as well? So you have the option to kind of sell it as it comes in or keep? bit. And that is something that ETH staking provides and is pretty unique. So I definitely overweight on ETH either 70 to 80%. But I would have

Starting point is 01:32:55 some Bitcoin. It wouldn't be 0% for a 70 year old. Yeah, I think that's right. Yeah. Okay. By the way, I say the term shit coins like endearingly. Like I love my shit coins. I don't think they're shitty. I love them. The term of endearment. Yes. This is a rocket polster question. Who really was the first ZK EVM to Mainnet? Who one, David. Yeah.

Starting point is 01:33:17 So, like, I'll put a metaphor. You know when, like, I did this to my sibling, you know, when like a sibling, like, lick something to claim something. Yeah. That's kind of what happened with the ZK EVMs. It's like that one just like, you know, stuck their tongue out. Yeah, exactly. ZK Sync was technically first, be polygone by a few days.

Starting point is 01:33:38 I will have to say, ZKSink has been around for since 2017, 2018. We were processing Gitcoin transactions with ZK. sink, the first ZK sync roll-up, which was a ZK roll-up, not a ZK-EVM, but so, but it was been around for a while. The fact that Polygon is anywhere close to that is like a huge tip of the hat to the Polygon engineering team for catching up to, to ZK Sync. But ZK. Sync was technically first. There you go. ZK. Sync was first. My, my answer would be, and does it matter? I mean, they were three or four days apart. Like we're getting ZK. EVMs every week now. I think we're okay. You know, that probably won't matter in the grand scheme of things.

Starting point is 01:34:17 David, let's do some takes of the week. You ready? We'll start with yours. Oh, man. This is, okay, this is the take that triggered a bunch of fighting out there. So sometimes, actually it was this one and another one. Sometimes, this is my take. Sometimes I feel bankless, us, that's us, right? Should victory let more often. We ignored Solana, Avalanche, and Terra during the bull market in which we got our not friendly label as blind ethmaxis. The thing that happened next was Solana went down 80% versus Ether. Avalanche went down 70% versus Ether. Luna is basically at zero. More or less, for all the same reasons that they would be, that this is unsustainable, this is just like the in what's in

Starting point is 01:34:58 vogue at the moment. And we chose to not cave to external pressure and not cover something that we didn't really understand or believe in. And then meanwhile, we focus on layer 2s. And so our listeners disproportionately got the O.P. and Arbitrum air drops compared to other media organizations because that's what we chose to focus on. And we also pounded the table about cross-layer-1 bridge risk. So I can't take credit for, of course, all of this stuff, but I'm saying that our listeners leaned in towards layer twos more than Alt-Layer-1s and also leaned and shied away from cross-Layer-1 bridge-risk.

Starting point is 01:35:32 And so we got a lot of shit in the second half of 2021 because that was not in vogue. Layer-2s were not cool during that time. You know what was cool? art layer, alt layer once. And you and I had conversations many times, like, dude, are we out of touch, like with what's going on? And perhaps in that moment, maybe we were. But this is when we decided that bankless is making content for things that you and I believe in, not what other people want us to believe. And so that choice, I think, has been to the great benefit of our listeners so far. And all the choices that we've made about bankless and the things we choose to

Starting point is 01:36:09 talk about and how we talk about them. I would make again immediately. Bankless is not perfect, but neither is this industry. And I think if you can scroll down, because I don't have my own tweetman list, I only hope that we can continue this track record. And that was my take of the week. Yeah.

Starting point is 01:36:24 I agree with that. And you know, I got to play the role of making sure that we inject some humility into this too. 100%. Definitely doesn't mean that we're perfect. And maybe it's the Canadian in me, David. But like, I have a hard time like tweeting a victory lap type tweet. I'm glad you do that on behalf of Bankless,

Starting point is 01:36:43 because if we don't do it, who else is going to? But I will say we're definitely not perfect. But I hope the listeners know that what you hear on Bankless is authentically what we actually believe. And we try to stay as curious and open-minded as possible. We're also not perfect at that. We also have our biases. But I'm actually not against...

Starting point is 01:37:09 Like, I think you want somebody in crypto to have biases, right? They just have to be biased towards the right things. Like whenever possible, we try to be biased towards bankless technologies and towards decentralization and towards things and products we think are making the world better and are in it for the long-term game. So I appreciate bias as long as it's not like it's long-term oriented bias. And we do try to maintain that here. So we appreciate like every. everyone kind of holding us accountable for these values.

Starting point is 01:37:43 I do think at times we've been maligned a little harshly. But yeah, we're going to keep bringing this platform to you guys. And you'll always know that when you come to bankless, this is what David and I authentically think, whether it's right or wrong. And maybe we'll be a little stubborn on some of our convictions. I think that's reinforced that a little in us. Finding the balance of conviction and yet being open-minded

Starting point is 01:38:09 is probably the sweet spot for all investors. The last thing I'll say on this is, do not expect bankless to be journalists. We are not journalists. We don't like the J-word. We don't like that word. We talk about news, but we are and always have been

Starting point is 01:38:22 crypto investors that are on the journey going bankless, and we're just sharing what we're learning here. So, yeah, maybe we'd turn that into what bankless is kind of take and message. And we also attempt to wear our biases on our sleeves. Like, it's not like we're hiding them and, like, shoving them in the closet.

Starting point is 01:38:39 I think we're pretty open and transparent about how we're biased. And I also followed up this tweet with one small more, another follow on tweet saying, I'll be much happier to talk about Solana and Avalanche Rip Luna, next bull market after they've completed a full stress test cycle. Meanwhile, gearing up for another round of shit thrown at us during next year's, next cycles crop of new layer ones with a community,

Starting point is 01:39:04 brand new people new to the space. It does happen every cycle, doesn't it? Yeah. David, this is a David Friedberg tweet. Cash is now a risk asset is a pretty big paradigm shift. Cash being a risk asset is a big paradigm shift. What's he saying here? Basically, this is talking about the bank insolvencies, right?

Starting point is 01:39:23 So if you hold your money in a bank and that bank is at risk of going insolvent, your cash is now at risk. The other thing you could do is hold the United States treasuries, but that's also at risk. And so, like, nowhere is safe in your dollars. David Freeberg is a co-host of the All-In podcast for those that did not know that. Ah, right, right, okay. He's the Sultan of Science, if you listen to it.

Starting point is 01:39:45 I also had to take on risk. I was thinking about risk this week. And because there's something I was confused with, when they teach you sort of portfolio theory and you go to kind of finance classes in your undergraduate or in business school, they always talk about this term called volatility. And the finance textbooks seem to equate volatility with risk. Like they're one and the same. If an asset or portfolio is volatile, that also means it's risky.

Starting point is 01:40:09 I got to say, David, I is just an investor, like practically, have found that that is not true at all. And I think particularly when you look at, like, crypto, this is an asset that is very volatile, but surprisingly low risk. And I don't mean all crypto, by the way, because there are some very risky crypto assets. But in particular, I'm talking about something like Bitcoin or Ether. And so I tweeted this. I consider ETH a volatile asset.

Starting point is 01:40:37 I do not consider it particularly risky. People often mistake volatility and risk. Another way to say that maybe is Ethan Bitcoin feel more risky than they actually are. It's for me because they can go down 80%, like 85% relative to the dollar. That means they're volatile. But if you held, did you actually lose anything? And so going back to this tweet from,

Starting point is 01:41:02 David Friedberg, cash is now a risk asset, right? For me, treasuries are much more risky than Eidth. A risk in the real way of it being risk, not volatility. Yes, this is Fiscanties who tweeted, I think, clarified the point that I'm making. Volatility becomes risk when, one, you use leverage. That's how volatility can increase risk. Or two, your time horizon is short or unpredictable. That's totally how volatility becomes risk.

Starting point is 01:41:31 but volatility and risk are not the same thing. And people, I think, look at crypto as an asset class and confuse those two. The other thing is number three is what I would add to Fiscanti's tweet here is if you cannot stomach volatility that also increases your risk. If you have like a visceral emotional reaction

Starting point is 01:41:51 to seeing your crypto portfolio appreciate 5x and then go down 85%, or if you don't have convictions, another way to say this, you definitely increase the risk that you are going to hit the sell button. And it becomes a much more risky asset. So I don't know if that makes sense to you, but like this is, by the way, what they teach you in business school.

Starting point is 01:42:13 They teach you that volatility and risk are one and the same thing. And in order to decrease risk, you want to decrease volatility. But it does nothing to reduce tail risk. And it hasn't really, that that paradigm on the world has not helped me become a better investor in the crypto asset space. I think understanding that paradigm early on when I was getting into crypto and everyone was like, crypto could go to zero, it's super risky,

Starting point is 01:42:38 but then you understand the fundamentals of crypto and it actually cannot go to zero. It actually like a buyer steps in somewhere. Right. It kind of can't. And like all of a sudden, like you start to understand and unpack this difference. There's one thing about Fiscanti's tweet

Starting point is 01:42:53 I want to change actually a little bit. Number one, if you use leverage, I want to change that to your a measure of exposure. So like say I have $100, if I have $1 of Bitcoin and $99, that volatility of Bitcoin

Starting point is 01:43:09 is not a risk. If I have $100 of Bitcoin in $0 and also I need to pay rent and put food on the table, then that volatility does become risk. And then you can also get into leverage and you can leverage $100 into $150 and then that volatility becomes super risky.

Starting point is 01:43:28 So it actually isn't, a binary about whether you are or are not on leverage is a function of your exposure to the asset and your short-term needs. I think that's a great point and it's totally true. And I'd also say that might come packaged in with the term leverage because in a way what you're sort of doing is you're leveraging your future ability to pay rent. Sure. When you like risk too much in crypto, right?

Starting point is 01:43:51 I guess it's a form of leverage. But yeah, point is completely valid. All right, got to ask you the question. What do you bullish on this week, David? Okay, so this is a different one this week. This is the Permission List 2023 Twitter account, which its job is to promote the Permissionless 2023 conference, which I'm a huge fan of.

Starting point is 01:44:10 I love promoting it. It is also, Ryan, the best meme account in crypto Twitter that I have been able to find. It is extremely obvious that a Zoomer runs this account, and they are making some memes that I have never seen before, and they are hilarious. New territory, new frontiers. New territory.

Starting point is 01:44:30 New territory. And so like it's super zoomer. And I chuckle at every single one. Also, there's a healthy amount of SpongeBob memes, which I'm a big fan of. But this is awesome. Dude, even the least funny memes here are better than most people's memes.

Starting point is 01:44:50 And so I call it. What I'm bullish on is like, I'm just bullish on the memes and jokes that are coming out of this account. Like I will say it's, I haven't seen this Twitter account do much else other than one, promote permissionless and two, make memes about permissionless. This is why it exists. And I'm sorry, this is just product market fit.

Starting point is 01:45:08 I just love it. I just think it's so funny. Well, David's so excited about the memes, which I also am. You know, the conference is coming up. And we're going to be there. I hope the Bankless Nation is going to be there. That's September 11th through 13th in Austin. Thousands of crypto folks there.

Starting point is 01:45:24 It's talking about defy, talking about, you know, NFIS. talking about NFTs, talking about crypto, regulatory, institutional, everything. It's a fantastic conference. And by the way, if you are a bankless citizen, you get a discount, right, David? 30%, which pays for a year's worth of your bankless membership. Also, ticket prices go up every two weeks.

Starting point is 01:45:44 I think there's something in the $400. They go up by a percentage, by the way, which means it's exponential. So if you are now interested in getting permission to ticket, you would behoove you to go get a ticket earlier. and also opening the subscription while you're out of it. There you go.

Starting point is 01:46:01 Ryan, what do you both on? I, look, I really enjoyed the Jim Bianco episode is my favorite episode that we put out this week, I think. And one of the thing that he said sort of stuck out to me, which we're beginning to see, the beginning of crypto decorrelate, become uncorrelated with the stock market, right?

Starting point is 01:46:22 We have promised the world an alternative financial system, an alternative banking system. And if we are just acting like a risk on asset that is completely correlated with the stock market and it's just a magnified version of holding the S&P 500, that's not the ticket. That's not an alternative banking system.

Starting point is 01:46:47 And so what we're seeing is, you know, bank stocks down, crypto up. That is a good, indicator that we are starting to build on this harder path, which is an alternative money system, an alternative financial system, that's there for you when the central banks and the banking system fail. And that's really, as the existing system, as fault lines show more and more, as that narrative propagates, is that truth propagates, crypto should be showing, should be going up. Right. And it's showing, or it's too early to call it, but it's showing, but it's showing,

Starting point is 01:47:25 showing early signs of actually doing that. And that makes me bullish because that means maybe the market is a little bit smarter and that we're not just like a, you know, meme funded meme stock kind of market as that's the way it was acting in the end of 2021 and 2022. This is a, it feels much more real and substantive than ever before. So that's what's making me bullish. Yeah. I think not only that as in like crypto now.

Starting point is 01:47:55 can express itself independently from the stock market. But the other big takeaway I had with Jim Bianco is that the economy, the health of the economy is now being expressed in the stock market, which also has not been true for a very long time. And so the fact that those were divergent is not a sign of health. And the fact that economic strength is now a requirement for the stock market to go up. It just makes me feel good because that means Main Street and Wall Street are being connected again.

Starting point is 01:48:22 So another reason to be bullish about the trad world. Yeah. There you go. Speaking of Jim Bianco, too, he puts out some dank memes himself, the Bianca research account. He's giving the permission this account and run for their money.

Starting point is 01:48:33 This is Janet Yellen. What do we looking at here? So Jim Bianco tweets out, Yellen, the banking system is sound and resilient. And this is a Photoshop picture of Yellen who's playing the slots at a casino. And let me tell you,

Starting point is 01:48:46 it does not look photoshopped. That looks like a lady who could be at the slot machines. She looks like she's having a great time. I don't be good for this at all. This is fantastic. We also got another one. Second meme.

Starting point is 01:48:59 Second meme the week from Fiskanties. And this is a SpongeBob meme, so you know David included it. The U.S. government says, let's kill crypto by any means necessary, apart from Total Banning, call it Operation Choke Point. And then Crypto, and this is a picture of SpongeBob with like these pincor things that are squeezing SpongeBob made of a sponge around the neck. And you can just see SpongeBob is just like, just chilling. He's just loving it.

Starting point is 01:49:23 He's just like, yeah, he's slightly gay. giggling because he's a punch, you know? Like, crypto's like a river. It just roused around. It's the biggest obstacle and continues. I mean, the tighter they squeeze, though, the bigger crypto gets. This is the problem that centralized institutions are going to have with crypto. Squeeze me, baby.

Starting point is 01:49:40 You're proving our point if you squeeze us, you know. Risk and disclaimers. Got to end with this. Of course, crypto is risky. You know it is. You could lose what you put in. But we are headed west. This is the frontier.

Starting point is 01:49:52 It's not for everyone. but we're glad you're with us on the bankless journey. Thanks a lot. None of this has been financial advice.

Bankless - ROLLUP: CZ Busted?! | Gensler Testifying Soon | SBF in More Trouble | War on Crypto Continues

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