Bankless - ROLLUP: CZ to Jail? | Consensys sues SEC | IRS vs. Crypto | USDT in Telegram

Starting point is 00:00:00 Speaking of meme coins, we're going to talk about Bitcoin and it's happening. Bitcoin is not the meme coin, but what happened on the happening, basically Bitcoin's meme coin event. So the happening, of course, happened last week. And we've seen happenings before. It's pretty much a non-event, except for the fact that it just happened. This one's different, though. Bankless Nation, it is the last week of April. It is time for your bankless weekly roll-up.

Starting point is 00:00:26 David, we got so much to talk about where are we starting. The Bitcoin happening one week later. How are the Roon's doing? Well, they're probably doing better than CZ who might be sentenced to jail for how long? What was the reaction to all of that? What else we got, Ryan?

Starting point is 00:00:40 Dude, why are you smiling at CZ going to jail, man? That's like serious. It was the transition between Rooms and CZ, that was funny. Is it one of those awkward smiles that you know? You hear tragic news and you smile. Yeah, it's just one of those things. It's just how you react to it, yeah. We'll talk about that.

Starting point is 00:00:55 We'll talk about how the cryptic community is reacting. I think it's a little bit different than SBF. Also, this is very sad. two more crypto privacy developers were arrested in the U.S. What is going on? We've got to talk about that. And the IRS also wants everybody to register their unhosted crypto wallets. So your metamask, your ledger, David, all that's got to be on a tax form.

Starting point is 00:01:16 We'll talk about that too. And then an LRT announced their token release, which then triggered liquidations. How did that happen? And then Telegram, also expanding into the world of payments using Tether, 900 million users in Telegram. Now all proximate to a wallet and to stable coins. I'm sure that that's just the start. Is this the beginning of a new Super app? Before we get into all of those details and everything else that happened this week, a moment to talk about our friends and sponsors over at Safe. Safe, of course, you know Safe. It's a multi-sig. That's where bankless.eath is. It's a multi-sig.

Starting point is 00:01:51 It's where I have my own multi-sig. A lot of people have their own multi-sigs. And they frequently use SAFE because it's the largest account abstraction leader with $100 billion in TVL that just announced their safe activity rewards program. So you get rewarded for using your safe, making transactions through safe, holding assets and safe, doing things with your safe. So there is a link in the show notes to getting started with your safe pass that they want you to get so you can get your rewards from the safe ecosystem. You know, it's not only they want you to get it. I want you to get it. We want you to get it because it is a key to amplifying the points that you receive in your safe. So we just claimed ours yesterday. I don't know if you know this, David,

Starting point is 00:02:29 in one of our multi-sigs because if you have safe tokens. I did it. Do you not know that? Oh, you didn't do that? I did it. I was told it was done. I didn't know what you did it. Because I guess it takes two people to do, huh?

Starting point is 00:02:41 Yeah. It was me and somebody else who's not you. Okay, well, thanks for doing it. You're welcome, bro. For me to thank you. And now that we have the Safe Pass, we get extra points when we use Safe. So if you do more transactions, if you have, more assets in there. If you

Starting point is 00:03:01 do more stuff in your safe, you get more points. Now, I don't know what these points are going to be redeemed for entirely, but I'm sure they will be redeemed for some sort of incentive in the safe ecosystem in the weeks to come. So if you've got a safe, that's just a PSA. Go get your safe pass. Speaking of safe, okay,

Starting point is 00:03:17 so like safe, I mentioned my multi-sig via NOSISA safe, like in 2019. I think we did ours in banklets in like 2020. NOSISAF is, it's like one of the earliest projects, products that's been in crypto. It's like the first, like when you spawn as smart contract ecosystem, like what's the first thing that you build? Oh, you, you build a multi-sig. You build a vault. And so, like, this is how, like, safe has secured, like, so many

Starting point is 00:03:38 billions of dollars over the years. They, they, theyirdroped their token last cycle, but it was non-transferable. So you could claim it. It's like locked in your wallet. It was locked. And it's been locked. It's been locked for a very, very long time. It actually just unlocked this last week, like a couple days ago. So you actually now know what the token value of the safe product is. coming in at it. Yeah, I almost forgot we had Safe tokens, right? Because we couldn't do anything with them.

Starting point is 00:04:02 Which you would claim inside of your safe which is how you got the safe tokens. All right. $1.9 billion? $1.9 billion? Yeah, for the market cap of Safe. Oh, that's pretty impressive. And that just happened this week too, right?

Starting point is 00:04:14 Governance is unlocked it. So safe tokens are now transferable. So that's another PSA for you. David, let's get to the markets on the week. Thanks to Cracken for these glorious charts. Flat, but glorious. What are we looking at in the week? Better than down. Yeah. Flat is not down, which is good news in the last like four weeks or so. Bitcoin started

Starting point is 00:04:34 the week at 62,800 up one and a half percent to 64,400. Actually, 700, just kidding. And then ETH price also up, but still kind of flat. Start of the week at 3,060, up about 3% to $3,160 to $3,000. David, do you have any snipe orders in for like any prices? What did you call it last week? Stink bids. Stink bids. Stink bids. You get a stink bids? No, because Bitcoin Eath? If I have dollars, I don't hold on to them. I don't, because like, stink

Starting point is 00:05:04 bids require you to be patient. Oh. And I just, I just bid. Your spur of the moment type of person? Oh, I have dollars. Oh, now I have Eith. Looks cheap. Oh, my. It looks cheap. That's not 10K.Eath. I'll buy. Hey, look, anything under 10K.Eth

Starting point is 00:05:19 is a super cheap right now. How about the ETH Bitcoin ratio? It's not great, Ryan. 0.048. Yeah, I got all the way down to 0.047. 8. It's the lowest it's been in a long-ass time. Well, I'm sorry for your loss, David, but Bitcoin's having its moment in the sun and hopefully Eith gets that

Starting point is 00:05:35 this cycle. We'll have to see that. It hasn't happened yet. As soon as we get a goddamn ETH ETF. Let me tell you. How about the global crypto market cap today? 2.5 trillion dollars. $1.5. Layer 2 updates this week brought to you by Mantle, as they always are,

Starting point is 00:05:51 which is a... I gotta stop saying new and upcoming layer 2 because they have really cemented themselves as Their ecosystem is pretty mature, yeah. Yeah, super impressive. 1.25 billion in total locked value. Okay, there's lots we could talk about on layer two's this week. I want to highlight maybe three things.

Starting point is 00:06:09 All right. So one is cost. Layer two beat, by the way, just put together a new kind of like chart, new set of dashboards called costs. And I want you to see this, David. I don't know if you looked at this. So if I go to the seven-day cost of layer two. Actually, no, no, no, I'll go to the one-day cost of layer two.

Starting point is 00:06:27 Okay. So one day costs of layer two is what they're paying in a post blob space is cheap world. Blob space is available in blob spaces is cheap. Look at this. Arbitrum 1, they are spending $3,000 a day. $3,300 a day. This is their cost, the cost that they pay to settle all of their transactions. $1.7 million transactions. $3,300. Crazy cheap. Okay, this is a total cost for all of the transactions. this Arbitrama has 1.7 million transactions on a daily basis. Let's, let's filter it, click that little button, and let's filter it by per transaction. So total cost per transaction of the 1.8 million transaction, 0.0074 cents to settle to Ethereum.

Starting point is 00:07:13 Or like per per user transaction. Per transaction. It's pretty impressive. And I think the TLDR of this is like, as we said before, when this gets cheap, when like layer two fees to Ethereum gets cheap. You know what everyone talking about Ethereum is so expensive? Well, from a chain perspective, it's really not. From a user perspective on those chains, it's really not. But like cheap fees are just going to spawn more layer two. We're going to get more and more layer two. When it's more profitable to build a layer two, you will get more layer twos. Yep. Another thing I wanted to show you in the layer two ecosystem, David, is the number of active wallets. So look at this chart. This is active wallets per week in the Ethereum ecosystem.

Starting point is 00:07:52 you span. It's not all of the chains in the Ethereum ecosystem, but some of the major ones. We are now at 10 million active on-chain wallets in Ethereum. Pretty cool. Yeah, that's a doubling in a year. Yeah. This is, yeah, I guess what, like 10 million. It's kind of the size of New York City, right? Like, that's, you know, a sprawling metropolis of users or something like that, 8 million, 10 million? Oh, yeah. Oh, yeah. In that zone. Other thing that's cool this week is base just became. the number two chain after Ethereum in terms of number of USDC, amount of USDC supply inside of it.

Starting point is 00:08:31 Not surprising, consider Coinbase's started to settle on the base chain itself. Do you have any takes on this? Well, yeah, so Coinbase owns, I think, 25% of Circle. There's totally a competitive competition with Visa angle going on here. They're using base chain to, like, store their own USC and user account USC. so they're just using base their own chain as their own settlement network for the coin base exchange. I expect this. I honestly could see like USCC on base or passing Ethereum layer.

Starting point is 00:09:01 Oh, for sure. I think it's up. I think it's up only. I think it could become the number one USC chain. I think you might as well call base USC chain. They're trying to make it. They're trying to make it a payment chain, I think, over time. Like maybe a competitor to visa or something like that.

Starting point is 00:09:14 Yeah, for sure. David, let's talk about the movers. It wasn't stable coins. Of course, on the week. Wasn't Bitcoin. Wasn't Ether. It was in stable coins. That's for sure.

Starting point is 00:09:22 It was your favorite, my favorite, meme coins were up on the week. All right. Between 50 to almost 100 percent, Bonk was up 97% on the week. Pepe was up 54% of flokey. I even know what flokey is. 40% on the week. Dog with hat, it's got a 20% 28% on the week. That's our favorite.

Starting point is 00:09:43 That's what we love. Yeah. I know your bullish meme coins. Speaking of meme coins, we're going to talk about Bitcoin and Bitcoin and it's happening, Bitcoin is not the meme coin, but what happened on the happening, basically Bitcoin's meme coin event. So the happening happened last week, and we've seen havingings before. It's pretty much a non-event, except for the fact that it just happened. This one's different, though, because now the chart that you are seeing on the screen, you are seeing the fees

Starting point is 00:10:07 paid to Bitcoin miners, the blue, the very flat blue bars are the block subsidy. That was the 6.25 BTC that was minted per block paid to miners, which is now 3.125. And then the orange, is the block fees. Since the happening, you have seen, call it like a pre-havening. It was like a five to one ratio of block subsidies to block fees.

Starting point is 00:10:30 That's how it's been like almost for, like for a very long time. For most of Bitcoin's history, like there hasn't been much in terms of block fees. Well, no, actually the fact that those fees are actually in existence. Those are all ordinal's fees. For most of Bitcoin's history,

Starting point is 00:10:41 there was no orange bar. It's like a super slimmer. It's like a six to one a ratio of fees to block subsidies, blocks subsidies being the six. Now, post-habiting is pretty volatile, but with runes, the introduction of runes, block fees are just totally surpassing all historical total incentives. So, like, for the podcast listeners, we're seeing bar charts that are like five times higher

Starting point is 00:11:06 than the pre-habiting security budget. And that's all coming from a rune fees, transaction competition to become a transaction in the Bitcoin blockchain to mint runes. We should explain what runes are. but before we do, I just have a comment on this. So I used to be of the camp and I still sort of am. I used to sort of think the having was like a bit weird to celebrate. And by the way, sometimes we say having, sometimes we say having.

Starting point is 00:11:35 And I just like can't help it. There's not consensus. Yeah. Well, I mean, I've got so many people what it is and they all give me different answers. Oh, so both are acceptable. So you can say having. Both are acceptable. Okay.

Starting point is 00:11:45 So we'll use them interchangeably then to, you know, be the. Really throw off. off the listeners. Yeah, exactly. Anyway, I used to be at the camp that, like, it's kind of weird to celebrate. Like, I get that word celebrating algorithmic, kind of insurance. The monetary strength of BTC. But, like, there's a, there was, at least it used to be, especially, like, last happening. No one would acknowledge that this is actually reducing, cutting your security budget, Bitcoin security budget in half as well. So it's kind of like you're celebrating this algorithmic issuance policy, but like you're also celebrating

Starting point is 00:12:19 well, the economic security of our blocks is now like half, right? And I was very worried about this and didn't think that the Bitcoin community was giving this enough attention or time because if you cut your block subsidy, you have to make up for it and block fees in order to have the same security budget. And it's interesting, David, that that is what's happening only more so. Like, because there is now building on Bitcoin, I'm actually, if this is sustained, of course, I'm much less worried about the block subsidy, like dropping down. I think a big question, though, is how sustainable is this? Roons, Bitcoin layer twos.

Starting point is 00:12:56 Will that be a sustainable source for L2 fees going forward? Yeah, that's totally right. The main difference between the Ethereum security budget design with EIP-1559 is that Ethereum tries to ensure its sustainability internally with its own internal mechanisms, like fee capture via 1559, whereas what we're seeing, here with ordinals and runes starting to become a very dominant part of the Bitcoin security budget. Those are things that are actually external to the protocol. Well, but also, Ethereum is going to issue block subsidies potentially as long as it needs to.

Starting point is 00:13:29 Do you know what? Yeah. Like it because it knows that it can't demand on external influences to protect itself. Ethereum wants to always ensure at the very end that it will have the assurances that it will be secure. Which always seemed to me a more like conservative approach to this. But anyway, we should probably. explain just a recap of what runes are, David. What are they and why are they causing the spike in

Starting point is 00:13:52 Bitcoin block fees? Runes are a new introduction to Bitcoin, the Bitcoin app layer, the Bitcoin Layer 1. They are fungible tokens on Bitcoin. So we probably all know what Ordinals are. They use Bitcoin Blockspace to etch or inscribe JPEGs into Bitcoin Blockspace, and that is an ordinal. Runes do a similar thing, but it produces fungible tokens inside of the Bitcoin Layer 1. So they are native to the Bitcoin layer one, fungible tokens that you can trade and send a lot like ERC20 tokens on Ethereum, but with like a lot less functionality. Like no, there's no smart contract inside of Bitcoin for any of these tokens. They're just tokens, which is why when I did the transition into the segment, I called them

Starting point is 00:14:31 meme coins because they're kind of constrained to becoming meme coins. If you want to invoke some sort of like meeting into them, it has to come from outside the protocol because you can't put logic into ruins. But as the creator said, meme coins, that's perfect product market fit. So like let a thousand meme coins bloom. And that's really what we're seeing. This is a dashboard. By the way, this is on a centralized exchange, OKX, a dashboard of ruins.

Starting point is 00:14:55 It is pretty cool to see Bitcoin tokens actually trading on centralized exchanges. Yeah. That's a new thing. There were some of the Ordinals tokens maybe doing that. I wasn't paying attention to that. But now like. Ornals, yeah, NFTs. Yeah.

Starting point is 00:15:07 So Magic Eden has been like really. Not just that. There were BRC 20s, BRC 20s, right? Yeah, but those are ordinals. Those are old minerals. Okay. BRC20s are ordinals. So the BRC20s were like trying to layer on fungible tokens on top of an ordinal.

Starting point is 00:15:20 And they did it kind of worked. Didn't work. It's cluji. They worked enough to have speculative memeery. Okay. But not like this. They're basically like an ERC-11-1-1-15. But Casey was like somebody just like brute-forced fungible tokens.

Starting point is 00:15:36 Casey, the creative ruins and ordinals. So he said somebody just, somebody just brute-forced fungibility onto an ordinal. Let's just actually make a brand-new protocol. We'll call it ruins. That's what ruins was. Oh, and how this relates to the happening is he just co-released it. He just co-released it. On the having happened, right.

Starting point is 00:15:49 Just because why not? You got the maximum touchdown on Bitcoin. Anyway, these on the OKX, these are the leading coins in the ruins ecosystem. One is called ZZZZZZZZZZZ Z. I think it's called. Okay, so in the naming of ruins, there is no space. Yeah. So instead of a space, they have a little dot.

Starting point is 00:16:06 It's like a bullet. That counts as the space. That's why there are bullets here. We got dog go to the moon. Of course, all separated by these spaces, as you said. Dot, dot, dot. Satoshi. Z, Z space, V space, F, E, H-U space, F-E-H-U space, dot.

Starting point is 00:16:21 Look at this, like, straight five Zs in a row or Dog Go to the Moon. I mean, look these market caps, man. Like, this is 50, no, sorry, 45,000 Bitcoin. Market cap, which is $3 billion. It's about $3 billion market cap for a Bitcoin ruin called ZZZZ, Z-Z, Fahoo ZZZZZ ZZ Wow And then the number two market cap

Starting point is 00:16:47 Is yeah Dog Go To Moon I love I love Satoshi Nakamoto Enu number five Solid name 80 million dollars Wanko

Starting point is 00:16:59 Roon Macro Memeh Gob is Gob Borghs Gop Bhopin's G Honey Badger Coin All right So like there's no way to like

Starting point is 00:17:08 actually do any fundamental analysis on these things right It's just like oh I like that name Oh ha ha this is Eric Wall, pissing off eth-maxis and Bitcoin maxis alike, and he is tweeting a picture of one-day block space fees. And look at this. Bitcoin takes the lead with $78 million. $78 million and absolutely dwarfs Ethereum on the one day. Ethereum comes in second place, nothing else is close, with $3.2 million in one-day fees. Look at that. The block space is valuable again.

Starting point is 00:17:40 funnily enough for like i i put out a tweet that i was retweeting this thing i don't really feel aggrieved at all by this i think it's cool that bitcoin is generating fees like this means like hey at least something is being productive here that's because you're not in eith maxi david that's because i'm not in eith maxi i will say it did make me feel a very immense appreciation for eip 1559 because these 78 million dollars of btc that that people are paying to mint and trade and purchase money are going straight to minors oh yeah who have expenses and overhead and a Eventually, they all sell Bitcoins. Miners are bullish Bitcoin.

Starting point is 00:18:13 They would love to hold Bitcoins. But in the fullness of time, they are forced sellers of Bitcoin because of the overhead of their operations. They have to pay for electricity or they have to pay for new chips. What a payday for miners, though. Eventually that Bitcoin's gets sold. Huge payday for miners. Whereas if this was on Ethereum, which it frequently is when there's NFT drops, 1-559 burns that.

Starting point is 00:18:32 And so it actually gets recycled back into the value of ETH rather than gets sold by miners and turns into like a line item in their PNL. Yeah. Well, that just makes you a greedy plutocrat, David. That's what I say. Yep. Yep. This is a... Okay. So, Bitcoin is now treading this territory of its block space fees are really high. This is a tweet from Hector Lopez. 82% of wallets that hold Bitcoin cannot move right now due to high fees. So if you have trace amounts of Bitcoin inside of a Bitcoin wallet, it's not worth it for you to move your Bitcoin, like, outside of your self-custody because it's too expensive. That's what happens when you have high. high block space fees. It's the same thing that Ethereum has been through and will continue to go through, like moving forward. It's even worse for Bitcoin because I think this just shows how much more small a Bitcoin block is than an Ethereum block. And then data through per time, Ethereum just has so much more data per Bitcoin block in comparison to Bitcoin block.

Starting point is 00:19:30 And so like it's just a really, when there's any marginal amount of demand for Bitcoin block space, fees just go through the roof. I was going to ask you this, though. So here's a tweet. how sustainable is this? This is from Dan Smith. Bitcoin ruins are playing out exactly like the short-lived inscriptions craze we saw on

Starting point is 00:19:47 Avalanche and Arbitrum. I don't know, pretty bearish on the longevity of this. In the meantime, miners stay winning and you put some stats about some of the largest collections.

Starting point is 00:19:59 The question is, is this a flash in the pan or is this sustainable? If you have any takes on that, very hard to guess. It's certainly part of the meme coin mania this time on Bitcoin. and first time tokens have been in a reasonable way on Bitcoin.

Starting point is 00:20:14 But the question is, do you think all of this is sustainable? There's definitely some Bitcoin exceptionalism that tokens and ordinals, like ruins and ordinals, will receive just because they're on Bitcoin. Part of the pitch of a Bitcoin ordinal is that like, well, the Bitcoin blockchain is going to be around forever. And so you can be assured that the data of your ordinal will also be around forever. And it's on like the one blockchain with all of the Lindy. And so there, yeah, so there's, Bitcoin does have like some exceptionalism in it. You can see that in the monetary premium.

Starting point is 00:20:44 And so therefore, I think, ruins and ordinals get some overflow from that. But also at the same time, Bitcoin, the blockchain is entering in the dangerous world of utility. And if you are trying to invoke utility into your chain, you have to, you have to keep on moving. Like, you have to add more and more utility. You have to keep on evolving. And so, like, what is the evolution? path for further utility, further expressiveness for ordnals and runes. The one that I see that's very clear and obvious are Bitcoin layer two's.

Starting point is 00:21:13 Because of what ordinals and runes are, which are like native to the Bitcoin layer one, all of the data for a ruin or an ordinal is on the Bitcoin layer one. They are fully interoperable with Bitcoin layer twos, which are far more expressive than the Bitcoin layer one. And so maybe that is the path where the Bitcoin blockchain does grow and evolve in its utility. and so maybe that is the future path. But at the same time, like, ordinals and runes are, like, strictly an inferior technology to a smart contracting system.

Starting point is 00:21:43 Yeah, I think Casey called it, you know, a Stone Age, right, is in terms of what you're dealing with. Casey, the creator of this. It's also difficult to, I mean, $78 million worth of fees. That's what, like, people are paying for, like, how do you sustain that? In day number one, which is quite literally a flash in the game. For sure, for sure. This is a take here. I can't help but be disgusted by some of the behavior I see in the Ordinals and Rune's ecosystem.

Starting point is 00:22:09 There's influencers, Ord influencers. They're grifting and stealing from you as blatantly as I've ever seen. And it'll be egregious with Roons. And he goes on to explain Bitcoin block times are 10 minutes long. And he goes on basically. I think there are many. He basically is saying the MEV opportunities, the arbitrage and sniping opportunities in Bitcoin Rooms and Ordinals ecosystem is massive and people are taking advantage of that.

Starting point is 00:22:33 And so this is what happens when you see like $78 million of daily fees. Like where is that coming from? It's actually coming from MEV. Yeah. Casey said that there wouldn't be as much. He didn't anticipate as much MEV in ruins. I mean, yeah, how can there not be, right? Yeah.

Starting point is 00:22:52 If there are fees on your blockchain, there is MEV. Okay, so Bitcoin Blockspace has a new set of buyers, meme coin buyers. And Bitcoin the asset, of course, This has been something we've talked about since early the year has a new set of buyers, which is the institutions. Let's go check in on the Bitcoin ETF this week. Inflows versus outflows. Things are starting to slow down in Bitcoin ETF world.

Starting point is 00:23:16 What are we looking at? Yeah, we're just seeing a tapering of both the inflows and the outflows. So outflows are lessening, inflows are lessening. And so we are staying at an equilibrium, which, again, like I said last week, and I think the week before it, and I think the week before that, which is why prices haven't moved. we're probably going to stay flat for a while until we probably see some BTC inflows because that is ultimately the thing that's wagging the entire market right now. Two investment advisors, however, have allocated over 5% of their portfolio into a Bitcoin ETF.

Starting point is 00:23:48 There is some Kansas advisor who put $20 million into Fidelity. That's 6% of an investment advisor's portfolio. And then also some investment advisor in Minnesota put 17%. That's 5% of their portfolio. So you can see starting to see still make further marginal buyers of extremely boomer investment advisors

Starting point is 00:24:08 starting to put BTC into their portfolio. I know I say the word boomer a lot and I'm sorry if that offends any actual boomer listeners but these are actually Eric Ballotunis's words. He calls them, he says like here's a homepage of the Kansas advisor that just plowed $20 million into the Fidelity BTC ETF. Literally this is as boomer as it gets.

Starting point is 00:24:27 And if you look at the picture like, yeah, come on. They're all suit and tie. Yeah, it's definitely what I think crypto adoption looks like with RIAs, right? Which is like these registered investment advisors in the U.S. kind of like just starting to buy a portion of funds and exposing their clientele to it. You are no longer early if you are buying Bitcoin. These people are buying Bitcoin now.

Starting point is 00:24:53 I think early is kind of a spectrum. It depends. I mean, they're still early for registered investment advisors. And so there's still some alpha there. It's just like you're not early like, you know, many listeners were many years ago on Bitcoin, but it's still super early for registered investment advisors. David, let's check in on the grayscale ETF as well. So that, if I recall, was like bleeding to the other ETFs.

Starting point is 00:25:19 You know, Fidelity was taking share from them. It was all of the outflows. It's because they had the most expensive ETF out there. It was like, well, they have the most expensive ETF, but they also had all the buyers. So it was the most crowded, like, asset in history in crypto. Are you saying because it used to be a trust and then it's transferred to the ETF? So it was already really big. All the new ETFs were all net new buyers, whereas the GPTC has like had buyers from like eons go.

Starting point is 00:25:43 And their fee doesn't help. 150 basis points, 1.5% fee on this ETF. That's a lot of money. But they've rolled out something to help mitigate that. What do they got? And they're rolling out a mini Bitcoin ETF, which is exactly the same thing. I think it's just like another second ETF out of gray scale.

Starting point is 00:26:01 This one instead of having the 1.5% fee has a 0.15% fee. I believe that's 15 Bips. And this is the lowest, either the lowest or tied for the lowest of all the fees out of the Bitcoin ETFs. And what's important to note here is like you can actually, if you are a GPTC holder,

Starting point is 00:26:20 one of the reasons why you might not want to sell your GPDC and go into a different ETF is that that triggers a taxable event. and you might have been buying GBTC when it was like, you know, 80% lower, like a significant taxable event for you. Like you might be up very, very significantly, and you don't want that taxable event. So you're just taking the fees to the face because you don't want to pay the taxes.

Starting point is 00:26:42 So you can actually roll over your GPTC into this brand new, gray scale mini Bitcoin ETF. And that is not a taxable event, some sort of fancy shenanigans going on there to make that true. And so you can get instead of, you can hold your R BTC with gray scale, continue that, and not pay the 1.5% fee, pay the 1.5% fee. And so I think the growth of this mini BTC ETF that they call it, you'll actually start to see

Starting point is 00:27:07 the bifurcation of people who are selling GBTC to get out of the very high fees versus people that are actually just selling just to get out of BTC as a whole because they made that speculative bet of I'll buy GBTC at that significant discount and sell during the, once the ETF is approved. You can see those two populations emerge. just a way for gray scale to kind of salvage its business. It's sort of a lifeboat, right? Because, you know, the 1.5% fees are just not sustainable. And, you know, this 15 BIPs, I know you're a big fan of BIPs, this, this 15BIPs mini-ETF alternative is just, it's actually cheaper in terms of

Starting point is 00:27:43 fees than almost all of the other ETS. So it's a way for them to salvage this, which totally makes sense. I think it'll be, it should be neutral, though. I mean, it's not like, I don't think it's going to do anything. It's not going to attract any more marginal buyer. Yeah. Exactly. So it's just a good for gray scale type thing. But it could prevent marginal sellers. So that is bullish. You know, I was thinking about the RIA investor class who is now sort of like getting up to speed on Bitcoin. I was thinking about them. I think about them a lot, David. Yeah, they're in my thoughts, often. Thoughts and prayers. Mostly prayers. But here's one unsung story. So they're starting to understand Bitcoin. Oh, there's this digital asset. It's like gold, right? Here's a story that they're going to understand. Give them like, five years maybe. Hopefully it's sooner, but five years. Hold your breath,

Starting point is 00:28:31 Bankless Nation. That is, crypto now has this cycle. We have productive capital assets. Okay. If that doesn't mean anything to you. I've heard this before. It does to the RIAs, all right? Because they like productive assets. They buy things like stocks with with dividends. And we have those now. This is interesting from Token Terminal, who by the way, I think they're doing fantastic work over there. Like showing you what a cryptocurrency, uh, crypto-native P&L looks like, right? And so if Ethereum, these are two protocols, if Ethereum and Maker were to issue their earnings report, right?

Starting point is 00:29:06 Like, imagine they did this. Of course, this is completely on-chain. There's no centralized, like, in a group that kind of issues this, so you can find all this data on-chain. If they were to do that, then Ethereum earnings would be $370 million on the Q1 quarter. That's big. That's over, like, well-examination.

Starting point is 00:29:26 north of a billion in terms of like annual profits, which is exceptional. This is Maker, which is, of course, a longstanding D5 protocol, blue chip, 30 million on the quarter. Like really impressive if you look at these assets from just a productivity element as well. Anyway, this is a story that I think for crypto natives, there's still time to front run. I will tell you, though, I'm not, I don't get optimist. Yeah, keep on front running the crypto's industry, it's like deciding that like fundamentals and revenue is actually bullish. I've been waiting for that for like five years. This is what I think of when I think of fundamentals and crypto.

Starting point is 00:30:04 And yeah, I get, so maybe. Now fundamentals and crypto is which crypto Twitter influencer is talking about your meme. Maybe I'm just praying the RIAs get it. RAs, they don't start buying box. And push out the meme coins in this industry. God damn it.

Starting point is 00:30:18 Make fundamentals matter again. Make fundamentals matter again. They never did. All right. What do we got coming up? Coming up next. CZ might spend three whole years in prison. Is this fair?

Starting point is 00:30:30 What are people's reactions to this and why? And then also more crypto privacy devs arrested. Who's next? Is it you? Is it me? Is it your local podcast or I hope not? But first, before we get there, a moment to talk about some of these fantastic sponsors

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Starting point is 00:32:57 Toku.com. That's team at toku.com. All right, here it is. CZ is looking at three years in jail, David. Here's a tweet. The U.S. recommends a 36-month prison sentence for billionaire finance CEO CZ, and the scheduling is sentenced for the end of this month. So a few days from now, April 30th. A few of the highlights from the prosecution what they're saying. A custodial sentence of 36 months, which is twice the high end of the guidelines range, would reflect the seriousness of the offense. This is the prosecution speaking. Promote reasonable respect for the law, afford adequate deterrence, and be sufficient, but not greater than necessary, to achieve the goals of this sentencing. That's what they're saying. Of course, the major misconduct that

Starting point is 00:33:42 CZ has already pled guilty for is that he failed to implement an effective AML program that's anti-money laundering program at Binance, and he allowed illicit actors to use the finance exchange, like to do illicit things. That's the summary here. And the prosecution is asking for three years in jail. I got to tell you, David, jail time actually surprised me. I don't know why I was surprised, but the fact that CZ could go to jail for this for like years, it was actually surprising to me. I kind of thought that all of this was going to be negotiated ahead of time by CZ and his team. That's definitely what Arthur Hayes did when he had to settle with the DOJ. was it the DOJ,

Starting point is 00:34:23 over the Bitmex case, he said, like, hey, I'm not coming in to negotiate. I'm not coming in to talk to you guys until, like, we agree on some certain terms. And those terms were, like, ended up being, like, house arrest. CZ's defense team says that no defendant

Starting point is 00:34:36 in a remotely similar bank secrecy act case has ever been sentenced to incarceration. And I quote, although probation references a conversation in which Binances chief compliance officer warned Mr. CZ that there were users from sanctioned countries on Binance.com.

Starting point is 00:34:50 The reality is that finance a non-U.S. company was not prohibited from having users from U.S. sanction countries on its platform. So some back and forth between CZ's events, saying, hey, this is 36 months in jail is too much. I'm guessing, like I said, I kind of always thought that this was already negotiated ahead of time. We'll see. I bet you it's something closer to Arthur Hayes than actual jail. You think so? I mean, who knows? This is up to the judge, right? This is up to the court system. And Arthur Hayes, as you said, he got six months on house arrest, basically. Yeah, in his mansion.

Starting point is 00:35:26 Didn't spend any time actually in jail. I think there's an interesting contrast with, there's been a lot of banks over the past decade, David, that have been charged massive fines, billions of dollars in fines for breaking AML laws as well. And I've never heard of bankers going to jail. So there's the case where, like, yeah, like maybe you can kind of like pre-negotiated this. or it could be that the U.S. prosecutors, and maybe the judge and the courts, are really trying to make an example of CZ. That's kind of what they were saying in their statement, like would reflect the seriousness of the offense, promote respect for the law, and afford adequate deterrence. That to me just says, like, we want to make an example of CZ.

Starting point is 00:36:09 So I don't know. Maybe the political climate has changed or maybe there's something about this where they're really going to, like, go for the jugular here. C.C. actually wrote a letter to the court where he said, he apologized for his poor decisions and accepted full responsibility for his actions in a letter to the judge. There is no excuse for my failure to establish the necessary compliance controls at Binance. I originally became interested in cryptocurrency because of the inclusiveness and equal opportunity and provides everyone to the world. Looking forward, I see many opportunities in biotech as well. Specifically, I feel too much of the current medical research is too profit driven. Words cannot explain how deeply I regret my choices that result in me being before the court rest assured that it would never happen again is what CZ says to the court. So kind of saying, hey, I had a bad guy passed, but I'm going to be a good guy in the future, I promise. Yeah, this is a pleading to the judge, basically.

Starting point is 00:37:02 He said, I also apologize to everyone I've led down, my family, my friends, finance, employees, and the larger crypto community, right? This is a very contrite letter basically saying, I don't want to go to jail, you know, like I'm sorry. I've learned my lesson. And he talks at the end about another area I will continue to spend my time is helping youth which was a priority for me so he's

Starting point is 00:37:24 he's trying to paint the picture to the judge good guy he's going in full good good guy arc um so he he has a sister I believe that works at jp morgan who spoke on his behalf as well and is kind of like writing letters to the judge uh his kids are in the u.s they go to uh like u.s colleges and they have also you know spoken out and so like CZ is really trying to gather a lot of support there's letters of support from a U.S. ambassador to China, professors at University, Columbia University, Morgan Stanley managing directors. It's really a whole campaign to kind of, you know, like show that CZ's on a good guy arc and has learned his lesson. He just doesn't want to go to jail, man. I get it. Not just those of all the people you mentioned, 161 total letters of support.

Starting point is 00:38:09 So there was a very like a coordinated effort to like, hey, can you please write a letter to the court saying don't put CZ in jail? What do you think? about this. What do you think about this? So, 36 months in prison, should he get prison time? I asked the crypto community this question, but before they speak, I want to hear what you say. I do, I mean, I've said this before many times on the weekly roll-up. I do think that CZ has some like pretty crazy skeletons in the closet. I don't think they're related to anything about this. Like the bank secrecy stuff and financial surveillance things, which is what he's being charged for and what he's going to jail for, I care less about.

Starting point is 00:38:46 The things that, like, I know that CZ has done that are wrong are more, probably more in their familiar camp for what people are known in the crypto Twitter space, which is, like, backdoor dealings about pumping tokens and, you know, unsavory relationships with Dress and Sun, and things like this that are kind of actually back in the rearview mirror of 2017 to 2020. I think Cizzi realized that he was becoming at the head of a very large empire, and he knew that he would have to eventually, like, kind of button up and manage risk, which is slowly the arc that CZ has been on this entire time. 36 months in jail for like what is, you know, very much like, you know, very illegal things.

Starting point is 00:39:27 Kind of seems like a good deal. Like the guy's going to come out after three years at most, if that's what this sentence is, like a big gigabillionaire, and he's going to be just fine. Three years, man. That sucks, though. So the question of the crypto community, should he get prison time? No prison time. 82% yes prison time 17% yeah that's because it's like CZ in according to crypto

Starting point is 00:39:51 tritters like you got so well SBAF stole people in crypto's money CZ did not do that right and I think didn't lose anyone's money I think there's just a a number of crypto people myself included who think that AML KYC laws are like broken anyway and so um probably treat that with less severity than maybe some well but it's all up to the court system now so we'll have to David, speaking of AML KYC, all right, this was a huge this week. The Samurai Wallet founders were arrested on Wednesday morning. So that happened just a couple of days ago. One of them is extradited from Portugal.

Starting point is 00:40:28 They could face up to 25 years in prison. So the Samurai wallet, this is a Bitcoin wallet, and it has a coin join feature. CoinJoin is like pretty old technology in the Bitcoin world. It's basically a mixing service. So all of the Bitcoin U-TXOs, which is what a Bitcoin is, all goes into this coin-join thing. they get mixed up and then you get sent back a new UTXO, which is your new Bitcoin, same amount, but now you have some amount of privacy with where that UTXO came from. And so like I said, this technology has been around.

Starting point is 00:40:57 This is not the only time this coin join technology has been used. The problem with coin join is that it requires a centralized server to do some coordination about which UTXO is selected for input into a coin join cycle. And so this is what the samurai founders were at. actually like operating and maintaining. You can actually go to the samuraiwallot.com website and you'll notice that it is seized by the FBI. This is what it looks like right now.

Starting point is 00:41:23 This website has been seized. It's a big FBI notice. Like the Silk Road type notices that they've seen previously. Yeah. So the samurai wallet coin join functionality is actually dead. It is actually a down service, unlike tornado cash, for example, which, I mean, the devs are also having their court case, but tornado cash as autonomous code on Ethereum is still operating,

Starting point is 00:41:43 unlike this one. And so there's also some other differences here. The accusation of these two developers is that they actually kind of targeted gray and black market activities intentionally. They made more than $100 million in profits from fees from money laundering from legal dark web markets. They facilitated around $2 billion in unlawful transactions between 2015 and now. And then there's also some pretty bad facts is what a lawyer would call them, which is like, samurai founders' messages to their investors talking about their intent to solicit activity from gray and dark markets and kind of boasted and invited illegal activity. So yeah, as a lawyer,

Starting point is 00:42:27 probably some bad facts. We'll have to see, you know, everyone gets their day in court, but materially different from the tornado cash case, which there is no such evidence that either the developers facilitated or aided in any sort of nefarious activity. Obviously, nefarious activity did use tornado cash, but that wasn't any sort of result of the actions of the founders of tornado cash. And also, tornado cash was, like, totally autonomous. And so, like, while we don't enjoy privacy devs or devs who write code to be arrested, the precedent for this, I don't think is as meaningful as it is as it is with a tornado cash case. Yeah, I guess, like, you know, that subtlety is definitely a difference. And I think it makes the tornado cash case, which is, like,

Starting point is 00:43:12 two devs got arrested, charged with, like, anti-money laundering stuff. Publishing code, yeah. Yeah, makes it more defensible. But, like, I think that there goes to the basic question of, like, should U.S. citizens have the right to private transactions of their cryptocurrency? And, like, all of those subtleties, that'll get worked out in kind of, like, courts in terms of what's permissible and what's not. But I think the samurai wallet devs were basically, they took kind of like this Silk Road

Starting point is 00:43:39 vantage point. And they basically, like, everybody should have access to purpose. privacy. And if we have to run centralized servers for that, then so be it. Right. Like, I don't know that the DOJ right now is making the distinction that you're making of like, these guys were writing private code. These guys are, you know, like writing immutable smart contracts on Ethereum because they're both arrested right now. Like, both groups are arrested right now. Go straight to jail. Go straight to jail. And I think that's like the biggest concern about this. Like, it really feels like the U.S. is putting its foot down and saying, we don't want the world, U.S. citizens or anybody,

Starting point is 00:44:16 to have the ability to transact privately. And they've enjoyed these benefits in the banking system to date, right? They have like the eye of Soron. They can see all the transactions that are going on at any one time. And I think that the concern here for crypto is, whether it's a tornado cash, whether it's samurai, is where does this stop? Right? Like, we're talking about 25 years for writing code that helps people keep their transactions private. Yes, bad guys can use Tornado Cash code, but it's required if you want private transactions. There's no other way to do it in crypto right now. So here's another thing, David. They treat the banking system with kid gloves, right? Over the last 10 years, there have been dozens of cases of AML breaches of some of the largest banks

Starting point is 00:45:06 in the world. HSBC, just like others. And the UN estimates there's two trillion in money laundering by big banks each year. And I never see any of the bankers go to jail. They're never just like arrested from their homes and like they have facing 25 years of prison time, which makes me feel very much like crypto's being targeted in this case. And so tornado cash developers, privacy developers. We have samurai wallet developers. Like, what about Aztec? That is a layer two. there's a private layer two. What about Zcash? This is an entire blockchain

Starting point is 00:45:40 that keeps all transactions shielded in private. Are they going to come after them next? We don't really know because this is not like laws on the books through a congressional act of any sort. This is like regulators and the DOJ coming after these people.

Starting point is 00:45:58 And so like where does it end? It's kind of the question. And I think what their objective is is to push out a lot of fear in the industry to get people to stop using these tools and to get people to stop developing them. And actually, here's the concerning thing. I think it's working, right?

Starting point is 00:46:15 Like, if you're a dev working on something related to privacy and crypto, like, you're going to stop working on that thing unless you want to face the possibility of prison. Yep. Yeah. Just the incentive of the state is always to capture the next most marginal illegal person doing the next most marginal legal activity. So at some point, the court has to stop them.

Starting point is 00:46:38 Hopefully that's the tornado cash case. Speaking of the courts, deciding things, this is actually some breaking news that we had to pause recording right now just to actually inject into this weekly roll-up. Consensus, the Ethereum Software Studio, is actually suing the SEC. So this is coming out right now.

Starting point is 00:46:52 Wow. So apparently, the SEC gave consensus a Wells notice, and then the consensus was like, okay, great, we're going to see you guys. And so they are preemptively suing, and the SEC over a number of different things. I think the main SEC lawsuit against Consensus is that its popular Metamask wallet,

Starting point is 00:47:13 everyone knows Metamask, is a broker dealer because it probably has that swap feature in it. And so Consensus is... Oh my God, it's the same thing as Uniswap, right? Same thing as Uniswap. Uniswaps is a broker dealer, so Metamask must be a broker dealer too. Every wallet.

Starting point is 00:47:26 Yeah, yeah. Same thing. Yep. Yeah. And like Metamask is just like it has that like transaction swap feature and it uses on-chain dexes and decks aggregators to fill those orders. So this is the precedent that's going to be decided around that. But consensus is saying, hey, we're not going to wait for you guys to sue us.

Starting point is 00:47:43 We're just going to sue you preemptively to get clarity ahead of time. And also, Ryan, they're also going for ETH as a security. This is the new thing. Wait, what? They are trying to get a court to get the SEC to state. Oh, consensus is trying. Consensus is.

Starting point is 00:47:58 I thought you meant the SEC was trying to like suing consensus. Okay. Yeah. Consensus is going after the SEC, leveraging the court saying, hey, court, get the SEC to say that ETH isn't a security. So this is in the consensus complaint against the SEC as well as an injunction to the SEC to leave ETH devs alone. I don't know if that means, but apparently that's in there as well. Leave them alone. That's great.

Starting point is 00:48:23 All right. So we're being a bit more aggressive and proactive, right? Not waiting the lawsuits to come to us, taking them to court. No one's scared of the SEC. Everyone's scared of the DOJ. No one's scared of the SEC. SEC's a joke. Yeah, Finson is kind of scary these days for sure

Starting point is 00:48:37 in the financial surveillance stuff. All right, what do we got coming up? Coming up next, an LRT token deep pegs and causes liquidations, RETRO. The super chain gets a little bit more real, and the IRS wants you to pretend that your ledger wallet is a broker-dealer. So joining forces with the SEC.

Starting point is 00:48:53 Well, let's go hear about all this stuff and more. But first, a moment to talk about some of these fantastic sponsors that make the show possible, especially Mantle. The chain with all of the yield, your M.E. The yield and all the other types of yield in the DeFi ecosystem that's on Mantle. If you have not checked out Mantle, check it out today. There's a link in the show notes to get started with Mantle. Let's go here for them right now.

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Starting point is 00:53:00 That will actually launch on May 30th is when that token will be live. Second largest LRT after EtherFi with 33.5% market share. $3.5 billion in deposits. So season one campaign ended on April 26th. Season 2 incentives will start soonly thereafter. This is kind of a new meta. Season 1 is like people's retroactive air drop and season 2 is like, but wait, there's more. Don't leave.

Starting point is 00:53:24 So airdrop details again, claiming on the 30th. The total air drop allocation for both season one and season two is 12%, 7% for season 1. And then there was some air drop eligibility as well. Minimum number of 360 easy points per wallet. As the Renzo org announced their airdrop. That was the good news side, right? That was the good news. There was a little bit of a hiccup post.

Starting point is 00:53:49 So Renzo did not have withdrawals enabled yet. So if you had EZEath, which is the Renzo LRT, you could not, you can't just unwrap it and get your ETH back. If you wanted your ETH back, you'd have to go to Uniswap and sell it. They will eventually open up withdrawals, but withdrawals was not enabled. Once they announced their token and that the Snap shop had happened, all the AirDrop farmers were like, oh, well, we're done here. I'm going to leave the protocol. Except since there was no withdrawals, the only way to leave is to sell your EZEth for ETH on Uniswap, which causes the disequilibrium in price.

Starting point is 00:54:22 Like this? What we're looking at on the screen? And so for bank listeners, we are looking at what is called a big wick. A deep peg. Yeah. So the price of easy eth, deepeged all the way down to like $680 for what is worth one ether.

Starting point is 00:54:38 And so some numbskull. That's like a 70% deep. That's a big deep peg. Yeah. Yeah. Because some idiot, just like market sold all their easy eth into uniswap, not accounting for. how much liquidity was there, which was not enough

Starting point is 00:54:51 to actually account for the outflow demands. There's something like $30 million of liquidity inside of the unit cell pair, so it depacked. Someone learned a harsh lesson that day. Someone immediately took a 70% haircut, yikes, trying to become an airdrop farmer. That's why it's just like, hands off guys. Calm down, take a breath, calm down.

Starting point is 00:55:08 Come down. You're doing. Anyways, there is also leveraged airdrop farmers in the DeFi ecosystem who have EaseEath as collateral or other types of collateral that is related to EasyEath, specifically inside of Morpho. And so if Morpho and the Morphal vault that uses EZEath as collateral,

Starting point is 00:55:29 it uses the Uniswop exchange to get liquidity for any sort of liquidation. And so it uses Uniswap as like, hey, what's going on over there? Is there enough? What's the price of EasyEath on Uniswap? And when it gets cut in half by like 70%, then all of a sudden Morpho is like, well, we're going to have to liquidate you guys. And so there's a big liquidation. Morpho because some trader, someirdrop farmer, just hit market sell into Uniswap into like no

Starting point is 00:55:54 liquidity. And so, yeah, so this is, we have discovered that we are on some sort of efficient frontier of risk inside of the leveraged air drop farming ecosystem, people that were depositing easy eth into Morpho to borrow more ETH to go like leverage up on point farming. Yikes. And then we also learned that you don't dump into Uniswap. We also learned that LRTs should enable with draws before they announce their airdrop, that's the correct order of operations. Lots of learning. Lots of learnings for everybody. Lots of learning. I mean, who would have known that if you stake your eth, then restake it, and then lever long on it, you could get liquid in, right? And wind that very up, baby. I mean, but people should be aware. LRT's candy peg, sometimes

Starting point is 00:56:38 quite significantly. LRTKKKKK. And I mean, as a result, you probably just shouldn't lever up. By the way, this is a chart that's kind of worrying to me a little bit. I don't know if this is a chart for the future. This is the, you know, the Carrack protocol, the new restaking protocol? Yeah, Carrack is like the eigen competitor. That's like, oh, Igen is just ETH and LSTs? Well, you can restake with Kerak with anything. Okay, but

Starting point is 00:57:00 here's the problem. If you look at this pie chart, the stake that's in Carrack right now, about 75% of it, is eigenlayer LRTs. Okay? So this is ETH that's been staked, restaked, and then restaked again. It's not just 70% LRTs.

Starting point is 00:57:16 It's 34% LRTs, and then 41% derivatives of those LRTs in Pendle. It's levered? It's levered LRT? Oh, yeah. Uh-huh. Yeah. All right.

Starting point is 00:57:25 Okay. So, like, so here's the structure going on. So let's start from, I'm going to start the very long. You really want to get into this. Yes. Here's the structure that's being built right now. We have the beacon chain. Proof-of-stake beacon chain with these stakers.

Starting point is 00:57:37 We're good. Solid. Super strong. We have, uh, uh, eigen-layer as a, and the withdrawal contract for eigenlayer. That's where the slashing events happen for AVS. It's new, but okay. Well, it's designed to be, it's new. It's designed to be, like, no one is supposed to be slashed unless they are really meaningfully, like, F up.

Starting point is 00:57:56 Like, you can be an AVS and never have a slashing event unless somebody, like, materially felt that. Go on. Okay. So that's eigenlayer. Then LRTs, deposit ether or LSTs into eigen layer on top of that. And that's, that's the Igen layer LRT ecosystem. Then we can enter the Ethereum defy layer where some people are doing pendent. trade. Some people are leveraging up on Morpho. Some people are like providing liquidity in Uniswap.

Starting point is 00:58:22 That's some of the LRT ecosystem. Got it. And that's, that's the conversation that we just had with Renzo and Morpho and all that. Okay. Super risky. Now we enter, this is where Kerak is built on. This is where Kerak starts. No, no, not all of Kerak. 75% of Kerak starts here. And those assets are deposited into Kerak for the Kerak points. You know what? People get liquidated in the, in these things like, I mean, come on, come on. Do not complain. Do not complain. You know what you're doing. You're hunting for some points here. Oh, my God. All right, David, let's move on to something a bit more stable. Telegram is allowing USDT payments. So 900 million telegram users out there. Do you know that? I know we are one of them. And it's just going to work like sending a direct message,

Starting point is 00:59:11 except with the staple coin, except with Tether. So free, cross-border, instant. Pretty impressive. Telegram is really like doubling, tripling down on crypto these days. But yeah, finally getting their like crypto like ecosystem that they promise in like 2018. But come back to me when we can do some liquidations on Telegram. Because tether payments, not exciting. Staplecoins are so boring to you right now. Let's get some like Telegram restaking stable coin leverage going on. Well, I mean, this does pull the question of where the next super app is going to live, right?

Starting point is 00:59:42 Telegram kind of building on top of crypto to become a payment super app. X, of course, is building a wallet. They're not talking about any crypto plans right now. So far, it seems to be built on the trad banking system so far. And they're trying to turn X into a Venmo type experience. And we also have, this is a rumor just coming to this episode, David. So not completely substantiated. Looks like Stripe is adding crypto payments, finally, this summer.

Starting point is 01:00:05 Look at this. This is a good old fashioned crypto wallet. And of course, everybody uses Stripe. So, I don't know, a lot of... It feels like 2022. I know. we're actually getting some of that adoption that we were hoping for. Pivoting into the world of this super chain,

Starting point is 01:00:18 optimism is releasing a multi-chain upgrade system. So this is a way for all of the chains in the Optimism super chain to upgrade their chain at once via a single shared upgrade contract. So when this one single contract upgrades and we're upgrading the OP stack, all of the chains in this super chain all upgrade all at once. And so this is just part of the growing scope

Starting point is 01:00:44 of the super chain. And then this is, of course, Liam saying, native interop between base world chain, cello, Zora, OP, Maynett, and all the other future super chains, Fraxtel is also one of those. These will all upgrade in unison and there will all become universally composable. That's great. If we can just solve fragmentation across at least the super chain ecosystems, right, that would be like, you know, 80% of the challenge today. Think of more chains. This is a little curveball this week, right? Shiba Inu has raised $12 million for its new chain

Starting point is 01:01:18 by selling an unreleased token, treat, token, because you know, you give treats to your dog. Yeah, yeah. So that it could have a privacy-focused layer three built on top of the Shib layer two. So this is a FHFHE fully hormamophic encryption roll-up that settles down to the Shibarium layer two, which is actually a size.

Starting point is 01:01:43 chain, which is the own native validator network. And so they spit out this new token called treats, which is the native token of the SHIB layer three that's going to be a privacy focus layer three that settles down to the SHIB layer two, which is actually a side chain. Wow. Wow. Okay. I think I get it. It's actually a side chain, so it's not a layer two. So it's not even, it's a layer three. But did you say privacy focused? Privacy focus? It's an FHFSA, fully homoific encryption roll-up. That is a privacy. layer three, that's some deep tech. I did not expect this. Let's just introduce

Starting point is 01:02:17 privacy into crypto via the meme coins. The DOJ will never see it coming. Well, actually, this is a meme coin that's building, maybe, presumably. I have to see what they build. But wow, that's how we're going to revolutionize the world, huh? Revoking their meme coin status. Injecting utility. Wow. Both strategy. Tell me about this, David.

Starting point is 01:02:33 So Lido is starting with DVT. I think DVDs, I understood it, is you get to stake with friends, right? So you can kind of like do group staking, can be less than 32-Eath. but remind me about that. And it seems like this is maybe a step towards making Lido more decentralized. What's going on here?

Starting point is 01:02:51 That's exactly right. So DVT distributed validator technology. Basically, you and your buddies can create a virtual validator in the cloud of sorts. And so if none of y'all have 32Eth, but you need the 32Eth, you guys can band together and have like 2, 3, 4, 5N number of nodes that all put in ETH into a pot. Once you get over 32th, you can become an Ethereum validator. And only one of you has to sign a message on everyone else's behalf. And the cool thing is, if one of you fails to sign a message, somebody else can take over that role.

Starting point is 01:03:20 And so it's not only a decentralization mechanism, but it's also an uptime mechanism as well. Actually, Lido originally gave, I think, OBLE Network a grant way back in the day to research a DVT before it was actually a piece of software. And so this is actually coming full circle from an initial Lido given grant to research and develop. develop DVT. Now, Lido is bearing the fruits of that grant so that they can actually use DVT to include 72 net new node operators into the Lido ecosystem. That's like, that's very big. Tripling. Yep. I guess because they have 30 right now, right? So 32. Yeah. So they're adding 72 onto the previous 32 that already existed. That's great. All right. So if you don't have 32 Eith, all you need is one and then a very rich friend or a group of friends, right? All that easy. Or maybe hopefully you're all

Starting point is 01:04:11 equally rich. David, this was annoying, super annoying this week. This is the IRS news. So here's, when's the last time you looked at a 1099 tax form? You ever look at these? No, I pay someone to look at them for it because I don't want to do that. If you have an exchange account with our favorite exchange or Cracken, Cracken's going to send you a 1099 every year, like detailing your trades and transactions

Starting point is 01:04:35 you did. This is a new proposed form from the IRS for digital assets. So it's a 1099 for digital asset proceeds from broker transactions. Are you making me look at an IRS form? Yeah, yeah. Okay, well, let me zoom in. Let's enhance. Enhance.

Starting point is 01:04:50 I'm going to zoom this in, right? So, okay. So a Coinbase or a Cracken or something like exchange has to send you one of these. There's a checkbox, broker type involved in the transaction, a kiosk operator, digital asset payment process or hosted wallet provider or what's this? Unhosted wallet providers. Broker type. Broker type.

Starting point is 01:05:10 Unhosted wallet provider. What is a broker that is an unhosted wallet provider? Okay. I have a wallet on this computer right now. It's my computer a broker? The IRS thinks your ledger is a broker, basically. That's the huge concern with this type of a tax form, because what it could mean, David,

Starting point is 01:05:26 is that if you are a uniswap user interface, or if you are a Metamask or something, you have to go find the identities of anyone who has used an unhosted crypto wallet inside of your application, go track down their social security. any number, like where they live, all of that, to send them this 1099. That is the nightmare scenario if the IRS considers unhosted crypto wallets essentially a broker. This is what Sheehan. Isn't this what consensus is suing the SEC over? Because like Metamask, the last thing that

Starting point is 01:06:00 MetaMask wants to do is different branches of the government. You know, we're fighting the Hydra here. So we like, that's the SEC head of the government. This is the IRS head of the government. We're going to kill. We're going to chop off the SEC head and then the IRS is like, The IRS, that wasn't me. Like, you know, bites our head. And that's what's happening. So this is Sheehan. He is a, like, crypto tax expert.

Starting point is 01:06:18 Can you take the IRS to court? I mean, I think we're going to have to take them all the court, David. He says, I don't think crypto will be sued anonymous or privacy preserving anymore. Get your shit figured out. At least in the U.S. Yesterday, the IRS issued this, the form they were just talking about, and brokers will be required to generate this form for the sale of transactions. Okay.

Starting point is 01:06:37 We're not sure sure exactly whether the IRS, like, did this accidentally. whether they don't know what they're doing or what. But we'd already given comments on this. This is months ago. The problem is the form captures, data points, is date acquired, date sold, date proceeds. It would also create a massive IRS database of every single person's crypto wallet

Starting point is 01:06:57 and, like, who owns it? I mean, like, what a honeypot. This is... Dang. Anyway, we talked too much about the different heads of the hydra in this episode. I'm just kind of exhausted by it, but that's another thing for you to think

Starting point is 01:07:11 about, I know you spent a lot of time thinking about your 1099 forms, so. Totally. Yeah. What's that line? Like, you don't account, don't attribute something to, like, malice. Which could be contributed to, or attributed to, what's it, like, being a mistake or something? Incompetence. Stipidity, something like this.

Starting point is 01:07:29 In this case, I think for the government, when it's about the government in relations to crypto, it's got to be inverted. It's not incompetence. It's actually malice. I think it could be both. A little bit of both. The good news, says Jake Trevinsky, is. these rules make literally no sense at all.

Starting point is 01:07:44 And the great news is... Is that good news? Yeah. Well, he says the great news is we really like filing lawsuits. So if you were a crypto lawyer, you're about to be real busy. I mean, you already have been. Yeah. Yeah.

Starting point is 01:07:57 This can only be explained by wanting to discredit and destroy crypto. It's another crypto take. Right. Right. Thanks, Gay. It's like all the Hydraheads are kind of working together at this point. It feels very coordinated. Yeah, it's all happening at once. David, some raises to mention.

Starting point is 01:08:11 on the week. There's two that bankless ventures is involved in. The first one is movement. What is this? Yeah, movement is so simple. A move EVM layer two on Ethereum. So move the language. This is the thing, the coding language developed actually by Facebook, and that was the focus of the Libra DM project. Developers speak very highly of move for some reason. I don't know. I, because I'm not a dev, but everyone loves move. It's object oriented, which I think is like what are tokens and NFTs other than objects? So I think there's a interconnection there. Yeah.

Starting point is 01:08:44 But the point is different virtual machines that are extremely performant as layer two's on Ethereum. And so a move-based layer two. That is bytecode equivalent with the EVM. So you get both the benefits of MOVE and the ecosystem of the EVM. They say, Ryan, 30,000 transactions per second with bytecode compatibility of the ETH. 30,000. How many you think of those are votes?

Starting point is 01:09:08 How many of those are good transactions? Oh, wow. David, you couldn't resist. The answer to that is zero bankless sanction because move and movement is not a layer one so it doesn't need consensus and it's not Salana delegated proof of sake so it doesn't need votes.

Starting point is 01:09:23 Wow. You had to go there. I just had to explain the joke. Authentic as well. They raised $4 million their seed round. This, to me, this bankless ventures was involved. This is almost like a RAS, like an infrastructure layer, roll up as a service.

Starting point is 01:09:36 You've heard that for the roll-up ecosystem. This is that for eigen apps. It's kind of infrastructure. What this means is more eigen apps, I think, faster because we have the infrastructure. You just, like, kind of printed out. More yield, hopefully, if you were a restaker, although, like, don't go and re-leverage your restake. We just talked about that.

Starting point is 01:09:54 And something as well called stateless roll-ups. What is a stateless roll-up, David, that's possible on authentic? Yeah, so a stateless roll-up. So a roll-up is a blockchain, right? And so blockchain has trustless state. Ha, that's my Twitter name. stateless roll-up is basically just like take the state out of a roll-up and then what's what are you left with compute so you get stateless compute so like these are compute networks which can compute certain things

Starting point is 01:10:18 literally anything and that can be kind of a module inside of the roll-up ecosystem or any sort of like anything in the valence of Ethereum can leverage the stateless compute of these specific ABSes. This is like a perfect bankless ventures deal because we like scaling things. We love restaking and we need more AVS's. And so this, I think there's actually going to be more AVS's than there are roll-ups. I think it's, there's more need for, you think that? More AVS is than roll-ups in the long-tail. Well, some roll-ups can be ABSs, yes?

Starting point is 01:10:51 You just economically- I think, yeah, I think AVS is actually encompass a larger Venn diagram. The roll-up Venn diagram fits inside of the AVS Venn diagram. And the eigenlayer ecosystem is like really hitting the gas, now. And so, but like what is needed the most is more AVS is. Yeah, apps, actual apps that people use. Actual Agin apps. Yeah, I think we're the only ones I call them Agin apps, but more people should. And so Authentic just helps eigenlayer Aves spawn and structure themselves and build themselves. Well, guys, that has been the roll-up. The last thing I want to talk to you

Starting point is 01:11:26 about, David, is your big fight that's coming up, okay? I just want an update because I was looking at this on the week. This is the polymarkets. People are gambling. People, you know, Crypto- to speculate. Nick's coming, he's getting on, he's biting on my heels. If you, if you haven't heard, the margins have compressed. Is it May 30th? Is that the date? You're fighting Nick Carter. Okay. Me and Nick Carter are fighting karate combat. These podcast tightens. It's basically kickboxing. All right. You are winning so far in terms of the betting markets. Always happened. 50% on David Hoffman. That's gone down though. I don't know. I'm sorry if you're happy about that. Sorry to 60%. Yeah. And then Nick has 43%. There's like a lot.

Starting point is 01:12:05 of money on the line. It's growing over here. There's like $63.5,000 be able betting between me and Nick Carter. And I'm just enjoying seeing Nick taunting you and like you clapping back on all the social media that I follow. This is Nick thinking about David Hoffman. Do you see my most recent tweet about this? I don't think so. I don't know. What'd you say? There's this telegram group of all the fighters in the card. So there's six fights going on. We're actually the headliners because really, you know. Of course.

Starting point is 01:12:36 Who else is fighting? Anyone I would know? Billy McFarland from the fire festival guy? No way. I saw that documentary. Who's he fighting? Uh-huh. I don't know.

Starting point is 01:12:46 I don't know. Yeah, so he's in the card. But yeah, we're the headliners. So there's this like group of us and they're like, hey, you guys have to go get like a medical exam, blah, blah, all that kind of stuff. Like logistics. And Nick just drops a question in there. It's like, will there be drug testing? because I don't see anything about drug testing in this.

Starting point is 01:13:07 I'm like, dude, bro. You can't just have that. Is he roiding up to come beat you? Is that what he's doing? Do you think he's got something? So I tweeted a screenshot of him asking that. That being the implication. I don't think Nick would take words.

Starting point is 01:13:21 No, he would never. It seems not characteristic of him. That would be so fiat of him. It's very fiat of him. Yeah, it would be very fiat of him. Anyway, if anyone knows any royd steeler, hit me up. Oh, my God. Are you, so how's true?

Starting point is 01:13:34 training going for this? Like, are you going to be ready? How are you feeling? Oh, I'm not fine. How you feeling, champ? I'm pulling an Atsom. No, what? By the way, I, so you're not the only crypto, can't call you crypto influencer, David? That's what other people say. Okay, but if you do, I get to go on a quick soapbox about that. All right, then I won't say it. We got to end this episode. I did watch the Ansom fight, though. Okay, so this is Ansom versus I don't know who. Anson. Barney. Barney. Barney.

Starting point is 01:14:03 Okay, I don't know. Anselm, unlike you, is definitely a crypto influencer. We're not sure about David, but is definitely one. And, yeah, I watched three rounds of this. I'm not a big boxing guy. You watched three and a half rounds. I can't really assess what I watched. Ansem did lose.

Starting point is 01:14:20 I will say that. And yeah, I don't know if you have any thoughts on this fight, anything that you've learned, anything that you're going to do differently, any different kind of energy you're going to bring to the Nick Carter fight. But, yeah, it's... No, I'm going to, this is actually a message to Nick. I'm going to perfectly bring the amps and energy into it. I'm just, I'm just not going to train.

Starting point is 01:14:42 I'm just going to, I'm going to wing it. Oh, wow. I believe in myself. Yeah, I believe in myself. I'm just going to eat myself into this without training. Yeah. Wow. I was not giving a lot of faith to one side of that prediction market here, David.

Starting point is 01:14:54 But I'm rooting for you and we'll be following your training with great interest. And certainly updates on the roll-up from time to time. Let's end with this. Crypto is risky, so is karate boxing and whatever you and Nick are getting up to. You could lose what you put in, but we are headed west. This is a frontier. It's not for everyone. But we're glad you're with us on the bankless journey.

Starting point is 01:15:12 Thanks a lot.

Bankless - ROLLUP: CZ to Jail? | Consensys sues SEC | IRS vs. Crypto | USDT in Telegram

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