Bankless - ROLLUP: Downtober Drags | Tempo Poaches Dankrad | Coinbase Buys Echo | Gold Surge! | Fed Access

Starting point is 00:00:03 Bankless Nation, it is the third week of October, Down Tober, I should say, and it's continued on the week. You would know, actually, no, Bitcoin, up 2% on the week. Really? Up 2% on the week. Bitcoin's at $11,000, which is not a cheap Bitcoin. You know what? And ether up a whopping 0.2% on the week. All right, so we're already doing prices.

Starting point is 00:00:27 How come it feels like down tober? How come it feels bad? Yeah, how come it feels bad on the week? I mean, I think the new numbers that are bad are like Bitcoin below like $14,000 and ether below $4,000. Yeah. That's a new feel bad level. That's why. Okay.

Starting point is 00:00:44 That's why. All right. Well, we'll talk about that. Heedonic adaptation, you know? Yes. I'm not feeling great about these prices, but you're saying they're up on the week. They are technically up on the week. We're going to talk about three ways this cycle could play out.

Starting point is 00:00:55 Two of those ways, David, are bullish. So there's still some hope in the air. Also, a big question. Gold's been on a tear. Can crypto catch up? We'll talk about that. What else we got? Ethereum loses the EF researcher, Doncrad, Feist to Tempo.

Starting point is 00:01:08 That's a Stripe's new thing. So the Ethereum community has kind of a split among it. So I'm just thanking Dankrad, wishing them well. Like, thank you for all your contributions. And others are a little salty. A little salty, a little mixed bag. And it's kind of hard to tell what the real reaction are. And it's also hard to tell which chains are Ethereum's friends

Starting point is 00:01:28 versus Ethereum's competitors. A nuanced conversation. We will not be using the A word, but we will find ways to work around that. I got to find out what David means by the A word. Also, we got Coinbase. They made a big acquisition on the week, Kobe. They acquired Kobe's token investing project Echo. They also are bringing back the up-only podcast.

Starting point is 00:01:48 Also, Polymarket, David strikes a deal with the NHL and draft kings. I think they have a competitor that's close behind them too. And we've got AI models, GROC, chat GPT, Kla, They're all competing to determine who is the best trader. They're all trading on hyperliquid. They are all making trades on hyperliquid. And some of them are better than others. And then lastly, is the Fed about to give crypto companies direct access to FedWire?

Starting point is 00:02:16 So crypto weaving itself right in through the heart of the financial system. We're going to talk about that. First, this is your warning. On Ryan's screen, it says 40 days until Bankless Summit. That's actually incorrect. There are 28 days until the Bankless Summit. That is the Tuesday of DevConnect, where we have some just absolutely gargantuan speakers speaking at DevConnect. So if you're going down to DevConnect, which you should be, because it's the crypto capital of the world.

Starting point is 00:02:42 You go down to Argentina. You just fast forward five years into the future on Ethereum adoption. Is it a crypto capital of the world? I thought this was America. Trump told me it was America. Yeah. Okay. Crypto adoption capital of the world.

Starting point is 00:02:56 The one that matters. The one that matters, yeah. So we got some pretty incredible. speakers. Donkrad will be speaking there. I actually have to change the little logo next to Donkrad's name to the tempo logo. But he's going to be talking about tempo. He's going to be talking about tempo's relations with Ethereum, amongst other speakers as well. Ticket prices are going up. They have been going up. If you've heard me say this multiple times, they are currently at $130. And they're going to be higher. That's so cheap. They're going to be higher by this time next

Starting point is 00:03:24 week. And tickets are running out. We are going to sell out. It's a 400-person capacity event. We're going to sell out tickets. And that's because it's at capacity. If you're my friend, and you're like, David, I didn't get any ticket. It doesn't matter. It's too bad. Fire code. They have fire codes in Argentina. Anyway, there is a link in the show notes for you to go get a bankless summit ticket. Brought to you by MZero. That's our partner for the Bankless Summit. Luca, the CEO founder of M-Zero. He's going to talk about stable coins, of course. Simplecoins and their M-0 platform for distributing stable coins. That's going to be pretty good. We got a lot of stable coins to distribute, so we need their help doing that.

Starting point is 00:04:00 David, we already did prices. You said we're up on the week. Give us those prices, just to get us in the frame of mind. Give us those prices quickly. $11,000 Bitcoin and $3,920 eath. Oh my God, you're right. We are up on the week. How about that? Technically up on the week. Let's talk about Bitcoin performances in other octobers compared to this October. So going into this October, it is the fourth year of a bull cycle. We thought it would be bullish. Everyone in crypto thought it would be bullish because we've had a lot of uptobers previously. 2013 plus 60% Bitcoin, 2017 plus 50%, 2021 plus 40%.

Starting point is 00:04:40 2005, it's been negative 5% in October. That's probably why people are feeling bad about this. It just means we're due. The other reason I think... We are owed green candles. I mean, okay, so we're owed green candles, but we are still also above 100K Bitcoin, okay? And it's like 102 is K Bitcoin is the 50-week moving average.

Starting point is 00:05:08 As long as we're above that price, we're still, at least compared to previous cycles, we're still in a bull market. So the question is, why is everyone so bare it? It feels like sentiment is bad. We're in the extreme fears of... of the spectrum. And Luke Martin offers one reason. What's this?

Starting point is 00:05:26 Well, Ryan, just because Bitcoin is doing well, doesn't mean people own Bitcoin. The middle of the market, and this has been the theme of the last like two years, is like the middle of the market is far more hollow than it has been previous cycles. This is related to Bitcoin dominance, but Bitcoin, you know, Bitcoin's doing great.

Starting point is 00:05:45 Bitcoin's on the regular path, and it's always been. It's on track. It's had a good run. And it's kind of, the only one, except for a few small token outliers, the middle of the market, the tokens, altcoins, as you call them, are all below where they were post-FTX crash in 2022. Not all, but just like the majority of the market. And so, yeah, just like if you were holding

Starting point is 00:06:08 the middle of the market, which again is, it's not just like people's investments in like altcoin speculation. That's people's jobs. That's people's like salaries. That's like BD revenue, like, this is like the industry, the crypto industry. Sure. And so, yeah, there's like a malaise in the middle of the market, and that has continued. It kind of has had spikes. There's been like all-coin surges, all-coin spikes. But overall, really, the only asset that's, like, truly on track since inception is Bitcoin.

Starting point is 00:06:38 Yeah, so if you had faith in one of those 50 all-coins now in this basket that Luke is pointing out, you're still down. So you're not feeling great about this. I got to say, though, in general, the side. has felt a little disappointing. What do you see when you look at this chart? This is a chart all the way from 2011 looking at various crypto cycles and the percentage moves on the year and usually get three strong years.

Starting point is 00:07:02 Yeah, three strong years. And this would be the third strong year, right? And the new year, I guess is the bull cycle. But we're only 18% this year on Bitcoin. And this is supposed to be the frothy blow-off time. top year. Yeah, and we haven't gotten that. Yeah. I mean, I just, when you ask me, what do I see when I look at this chart? I see moderation. And that's been the story of crypto since I got into it. Like, as crazy as the 2021 cycle was, like, 2017 was insane, dude. That was stupid. And things just

Starting point is 00:07:37 moderate over time. And when we get institutions in and we get ETFs and Black Rock gets involved, like, things are just not going to be as crazy. And that's kind of what I see. Like, oh, no, Oh, we're up 18% on the year. Like, okay. Yeah, we're not down. That's, by the way, that's only if you held Bitcoin, right? Oh, yeah. So, although, all the points.

Starting point is 00:07:56 Maybe we are down. As somebody who is, you know, like, bullish on ETH, it feels for ETH holders. Like, they still haven't gotten it. Yeah, ETH does not feel like it's on track. Yeah. So I think it's been disappointing to a lot of folks. So, dude, I was looking at this.

Starting point is 00:08:10 There's kind of free cycles in, or three possibilities for the cycle in the different takes here. One is that we topped already. This is Michael Nato's take. I had him on that episode earlier this week. And his point is the volume is slowing. There's no net new buyer catalyst coming. So he's like majority cash.

Starting point is 00:08:29 He's like 70% cash. Another take is we're not done yet. Q4 is not over. We've got one last push. We'll probably see a Bitcoin top in November, December. Ben Cowan thinks that this is a distinct possibility. But that's his take. Bitcoin top.

Starting point is 00:08:45 Maybe we get an after boom after that. The third take is more the Raoul Paul super bull take, which is we're going to get an extended cycle. And the reason here is because global liquidity ain't over. And we're still continuing to print money. Crypto is up big in, we'll go up more in 2026. We'll at least get a Q1 and a Q2, probably bullish there. And look at this.

Starting point is 00:09:09 In six days, David, there's going to be another Fed rate cut. It's basically 100% guarantee. So Fed rate cuts, too, at the same time. so an extended cycle. Of those three, I know which one you prefer, what's your take? Like, what do you think is most likely? I think charting a path, if you pick a path,

Starting point is 00:09:30 the only way I can be wrong, Ryan, is to say one of those three is going to happen. So just don't say one of the three is a certainty, right? It's going to be, there are all of those points that you just, all those particular paths, I think all have merit to them, and they will all have some semblance of the truth and the way that the market moves forward

Starting point is 00:09:47 will have some coherence between all three of those things. I think we're starting to just look closer and look more like the S&P, where we're starting to look like if things are churning out less, the top 20 cryptos are starting to actually solidify themselves. And the chart that Luke Martin tweeted out

Starting point is 00:10:06 is like the basket of the top 50 all coins now trading below from where they were with the FTX crash in 2022. Those are the 2022 altcoins. We've had things like Athena come in and add like $6 or $8 billion to the total crypto market cap and now it's like established itself as a top coin. And I think this is kind of just also happening slower

Starting point is 00:10:24 as in like things are just turning out less. And so I think we're starting to enter the phase where like crypto just slowly grinds upward for a very long time. And I think maybe we're all kind of disappointed that we didn't get this like 20x 10x phenomenon fever. But like I think that means it's like we're not going to crash by 70, 80% either.

Starting point is 00:10:46 Well, here that starts to indicate another possibility. And here's where you bring someone from the outside looking in, somebody from macro. And they say, this is Quinn Thompson. The current setup for Bitcoin and Eth is rare. Largest positioning rents in history,

Starting point is 00:11:00 he was talking about the washout that we got. We got liquidation cleared and opportunity ahead is similar to the pre-Trump victory of 24. He's still ultra-bullish on Bitcoin and Eith. And the reason he gives is, like, because the question is, well, why is everyone selling? Why in crypto are people bearish right now? And he said, four-year cycle fears.

Starting point is 00:11:22 It probably sounds silly to you coming from the traditional world, but is a deeply held belief in crypto. They've been wrong plenty of times, but the four-cycle belief. And so, like, four-year cycle belief, that is so enshrined. It's very, it's part of our DNA. In all cryptonators, we're like, oh, it's got to be cycles. It doesn't always have to be in cycles. Like, who said that?

Starting point is 00:11:42 That's not, that's where I'm at. That's where I'm at. Yeah. It's like, I think we should remove four-year cycle from our vernacular. Maybe, we'll see. But they have held up previously. So you're- But it can't, if everything happens in four-year cycles,

Starting point is 00:11:56 like this is how markets work. If the market knows it's going to be a four-year cycle, knowing that is what ends the four-year cycle. Yeah. Okay. For me, David, here's the thing. Here's the Zen play, which is basically like, you don't even have to play cycles.

Starting point is 00:12:09 As you can tell, no one knows what's going to happen into future with cycles, where they're going to have them, when they're going to end, when they're going to begin, whether we didn't have them anymore. You still have to play them. One data point I often look at is the days where Bitcoin and crypto just go on a rampage. If you miss those days, if you're out of the market those days, it makes a big impact on your portfolio. So here's a tweet. The top 10 days is what you mean. Missing just 10 days can destroy your Bitcoin returns. If you held Bitcoin from 2017 to 2024 without selling, your return was 847%. But if you missed the 10 best trading days, you'd be down 23%. That sucks. Okay? If you miss the best 20,

Starting point is 00:12:51 you're down 67%. If you just missed 10 days in Bitcoin, being in Bitcoin, from 2017 to 24, the difference is being up 8x and down 20%. That's the difference. And so, like, you don't have to play the market, you can just buy and hold. It's, you know, this is why it's hard for me to like think about doing much on these cycles because we just don't know. The question is, are you bullish on crypto assets in general? Is the world becoming more digital? Is this a debasement-resistant asset?

Starting point is 00:13:32 If the answer is yes, and you're bullish in the future, you can also just not play cycles you could just hold. Yeah. I mean, I think we even see that in Ether more. clearly. Ether went from $1,800 to $2,600 in two days. And then it did $2,500 to $3,700, also across like three or four days.

Starting point is 00:13:52 And then it's been flat. And then it's been grinding flat. You're talking about just this year this happened. The most recent six months. Yeah, yeah, yeah, yeah. And so, yeah, like, whenever I buy or whenever I sell Eith was rare, I'm always in the back of my mind. And it was like, but it could be tomorrow.

Starting point is 00:14:11 It could move tomorrow. Yeah. But the thing is, you got to be careful which assets you believe in because look at this. We'll go back to that Luke Martin chart again. Look at all these assets that people were believing in since 2022. And they're just, they're dead. Dead networks here. On the flip side of things, all those tokens that were in that chart in 2022 were all kind of like not the most high quality tokens, like the tokens that died out in 2022.

Starting point is 00:14:33 There's something worth noting about the current crypto meta between like pump, Fun, Hyperliquid, and Athena, we have some massively revenue generating applications for the first time in history that we have apps generating a ton of revenue beyond just change. So Pump, Jason Yanowitz tweeted this out three days ago. So I'm assuming this has already happened. But he said pump is now just $10 million away from $1 billion of all time revenue. So I'm assuming we're at like $1.05 billion of pump revenue.

Starting point is 00:15:04 And so like to some degree, like this is why I think the cycles start to be. moderate is like when we have revenue-based token analysis versus whatever token analysis we had in 2022, things can like stabilize around the revenue. And that's, again, it's just a part of a maturing industry. I think that's just the story. I agree with that. Let's talk a little bit about gold and broader macro here. Here's a chart for you, David. This was interesting to me. A staggering $7.5 trillion is now sitting in money market funds. This is a new all-time high. Look at all this cash in money market funds. It's hard to reason about a trillion dollars,

Starting point is 00:15:41 let alone seven of them. Seven trillion, okay? It's all-time high. And now that rates are beginning to go down, right? Another rate cut. Made by next week. Do you think that people are going to start deploying some of this money market fund?

Starting point is 00:15:54 This is liquidity sloshing around. So that's happening in the background. You also have M2, money supply, a new all-time high of $22 trillion. That's going on. But actually, the biggest macro story of this year is got to be gold. It's got to be gold.

Starting point is 00:16:10 So gold still above $4,100 per ounce today. It got even higher late last week. And then there was like a day this week where there was like a five to six percent drop. Gold's got spooked. Yeah, look at this. A five to six percent drop in the number one asset. And gold isn't even number one by a little bit.

Starting point is 00:16:32 It's number one by a lot. Six to seven percent drop in gold. That's like how many Bitcoin? is that. That's like three or four bitcoins. Yeah, it's at least all of crypto's marque cap for sure. And it just lost it in one day. Oh, I can't comprehend that. It's still, gold is still a very popular trade, though.

Starting point is 00:16:51 And it's been the most popular trade of the year, actually. I mean, it's turning into a momentum trade. Oh, let me find the chart. Look at this. Long gold, institutional capital. It's the most popular trade. It's even more popular than AI at this point in time. Wow.

Starting point is 00:17:05 Wow. Let me give you some other numbers on gold. Part of this, it's a big part of it. I think actually the driver of it is central banks. So this is a table year 2000 versus 2024. Look who is buying the gold. Russia and China. China.

Starting point is 00:17:24 You mean the two largest economic adversaries to the global reserve dollar? Yep. And they really ramps up over the last five years, let's say, particularly after 2022, when Russia got all its tebrose. Followed by India and Turkey. Yep. Weird. Look who's selling by the way. It's like European countries, like France.

Starting point is 00:17:42 I actually learned that Canada has zero gold now. Over the last 30 years, they sold all their gold. They used to be top 15 gold country. That's the most Canadian thing. We'd rather have Fiat. That's what they did. That's so Canadian. Here's another thing.

Starting point is 00:17:55 Look at this. This is a chart of foreign central bank reserves. Okay. Gold in orange. And green is treasuries. Got a flipping in here. Yeah. Yep.

Starting point is 00:18:07 Gold is now exceeding treasuries in central bank reserves for the first time since 1995. 1999. It was the first time treasuring is actually flipped gold. And now it's gone in the other direction. Yeah, I wonder if we look when we're all old, Ryan, when we're like 80, 70. And we look back in like treasuries are like back down closer to zero and golds are actually back in the all time high in. central banks. Remember that weird time

Starting point is 00:18:38 where treasuries were the dominant collateral asset? That was weird. 1970, David, 13% of central bank reserves were treasuries. 48% was gold. There's a fourth turning comment

Starting point is 00:18:51 to be made here, but I'll just leave that to the imagination of the listeners. Look at this. Gold is the best performing major asset over the last 20 years. This has got to be infuriating for like...

Starting point is 00:19:00 Everyone. Everyone. Who the hell has gold in their portfolio? Okay, 11% annualized return. Number one, it beats the U.S. market at, you know, like 10.9%. It beats small U.S. stocks, reits, bonds, and beats every single asset class. All you have to do over the last 20 years was hold gold.

Starting point is 00:19:21 No other decisions. Yeah. But that's also kind of not fair because it's a bit cherry-picking because we happen to be talking about gold when it's peaking at a very high price. Okay. Look at it over 10 years. Look at it over five years. Look at it over three years. Look at over one year on all of those dimensions.

Starting point is 00:19:39 It's exceeded. I mean, that's got to mean something. This is kind of a disturbing tweet, too, which is like, this is a chart of the hours of work to buy one ounce of gold. It was spike up. So it takes a lot more work to buy gold. This says something about debasement. Also says something about average wage. The relationship between labor and capital.

Starting point is 00:20:03 and it says something about capital unrest as well. You could see so much in gold. But the question is, could it move even more? Are you gold-pilled? I don't know. I'm just so fascinated by gold right now. Wait a second. What's going on here?

Starting point is 00:20:18 Well, we haven't talked about the crypto-gold catch-up trade, which could happen, by the way. Okay. Look at this. As a percent of share of investable assets, though, gold is only 6 percent, and it's moved up from 4 percent two years ago. So that's still not its peak. 22% is it is peak. What I'm saying here, David, is gold could still run for a lot longer.

Starting point is 00:20:40 Ryan's turning into a gold bug. No, I'm not. No, I'm not. All that to say this. All that to say this. Bitwise put out a chart that says a 5% capital rotation from gold to Bitcoin, you know, if people get sick of the physical goal and they move to Bitcoin, 5% could send Bitcoin to 4%.

Starting point is 00:21:01 $42,000. Wait, wait. So if 5% of gold was sold to buy Bitcoin, Bitcoin goes to a quarter million? Yep. Capital rotation, right? So... Why do I feel like 5% is kind of a lot? Because it's a lot of money. That's a lot of money. But it takes a lot of money to move Bitcoin these days. But, I mean, if you'd like physical gold, why not? Don't you like digital gold? Come on, right? I don't know. You should ask Peter Schiff. Peter Schiff's never going to be convinced. I heard actually he was launching token gold on the blockchain earlier this week.

Starting point is 00:21:34 That's hilarious. Yeah. Good for him, right? Wow. Anyway, that's the gold story. We're going to get into some crypto-native subjects. We're going to talk about prominent EF researcher Dankrad Feist, of which Danksharding is named after has left Ethereum to get a new job.

Starting point is 00:21:50 Where did he go? And what does that mean for Ethereum? Ryan, not only has he been gold-pilled, but he's also been Bitcoin-pilled. So he's going to talk to us about Nauts versus Korn. And his political stance as to which Bitcoin side of this re-emerging Civil War is Ryan on. And also, right before we started recording, Trump pardoned CZ. So we're going to talk about that and more. But first, a message from some of these fantastic sponsors that makes the show possible like Uniswap.

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Starting point is 00:24:02 You can find out more information by clicking the link in the show notes. Introducing KGen, aka Verify, the world's largest verified distribution protocol or VDP. If you're trying to grow a real protocol or app, you need real users doing real actions. If it's not Verify, it's just noise. At the core of Verify is Poggy, KGen's identity and reputation framework. It helps you reach humans, not bots, and proves what your users actually did, so your budget goes to the right people. With Verify, you can run verified user acquisition with confidence. keeping people coming back with retention tools like loyalty rewards, quests and achievements,

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Starting point is 00:25:24 Trump pardoned C-Z, David. That's what happened on the week. It just happened at the time of recording. This was reported by the Wall Street Journal Trump pardon's convicted finance founder. There is a press secretary in the White House who said Trump has exercised his constitutional authority by issuing a pardon for Mr. Zau

Starting point is 00:25:44 who was prosecuted by the Biden administration in their war on cryptocurrency. She then added, the Biden administration's war on crypto is over. Okay, so let me be, this is refreshed listeners. Why was CZ convicted at all? CZ was convicted for violating the Bank Secrecy Act.

Starting point is 00:26:04 So being intentionally and with awareness lenient on K.YC on the finance platform, allowing money laundering to occur and knowingly so, especially with terrorists. And so when we were talking about this when this was happening, you and I, I think we were of the opinion of like, you know, CZ hasn't really harmed any retail individuals. No one was really harmed. Maybe, you know, funneling money into terrorist organization, that can totally count as harm. But really, it was an offense to the nation states' banking apparatus.

Starting point is 00:26:36 Binance was. And so they charged him with violating the Bank Secrecy Act. There was also, I'd add here, too. There's also, it seemed like, some selective punishment going on, right? So there's a lot of different entities in crypto you could go after for AML KYC stuff. And they went after CZE. There's a lot of trad-5 banks you could go after for A&LKK. So there is definitely some selective punishment that felt like there was some story there.

Starting point is 00:27:03 Some reason they targeted him specifically. Yeah. And so he paid a $4 billion, Binance paid a $4 billion fine, and then he went to jail in Seattle for four months and then came out. Does he need to get pardon for that? I think it was, it was longer than four months, wasn't it? No, no, no. That was the whole, remember when it was announced that he had a four-month sentence? Oh, was it?

Starting point is 00:27:23 That's four. Yeah, like crypto Twitter like blew up. Yeah. Yeah. Does he need to get pardon for that? Well, I mean, he's a felon, so that's on his record in the U.S. He's not even a U.S. citizen. He doesn't even live in the U.S.

Starting point is 00:27:36 Doesn't he? I don't know. Actually, I think he's family in the U.S. or something. I'm not sure. I'm actually not sure. Don't quote me on this. But also, he can't operate Binance under the terms of the court case, right? He can't go back to Bidness.

Starting point is 00:27:50 He can't be in crypto. And this pardon alleviates that. I would guess. Yeah, part of this was that Binance cannot operate in the U.S. Does that, is that pardoned? That's a separate thing. That's separate. That's separate.

Starting point is 00:28:03 But CZ specifically could no longer, I think, being crypto, and actually he certainly couldn't be the CEO of Binance or be involved in that way. So now he gets to go back to Binance? He could, I suppose. I think, again, the details of this are not clear, but we do know that Ciz wanted a pardon. Arthur Hayes got a pardon too. So similar situation. Of course, with Bitmex, purpose exchange.

Starting point is 00:28:28 Arthur Hayes was on house arrest or didn't go to jail. But he got the Trump pardon. Remember when we talked to Arthur? We were like, hey, what's your advice for CZ getting the pardon? He said something silly. He said like, write those letters and, you know, just, I don't know what he said. I'm assuming that earlier, before Trump pardoned CZ, money went from ZZ's hands and then ended up in Donald Trump's pockets. Do you think so?

Starting point is 00:28:53 Do you think so, David? Yeah. I think Donald Trump has more money in his pockets today, and because of that fact, has parted in CZ. Well, I think. Okay, but I don't know. So that would be an allegation, of course. But there's like all sorts of direct ways to sort of, quote, unquote, put money in Trump's pocket, right? Sure, yeah.

Starting point is 00:29:14 He has opened so many different doors to putting money in his pocket. All sorts of assets that you could buy, including meme coins. You could do. Like there's all sorts of ways you can sort of grease those wheels if you want to. Just like buy $10 million of my meme coin and burn it for a free pardon. Get out of jail free card. That I think is just like the thing that does not feel great. If presidential pardons are for sale, like if you want a pardon, I don't blame me for trying and paying to go get that.

Starting point is 00:29:44 But like presidential pardons should not be for sale. At the same time, like CZ. was selectively prosecuted for AMLKYC, and it's like, the war on crypto is over. I mean, that's a true, that's a through line as well. No, it's hard. Here's my line, though. Do not pardon Sam Bank been freed, okay?

Starting point is 00:30:05 Do not pardon Sam Bankman Fried. All right. That's at least my line. Tell us about- Sam-Bin-Fried donated way too much money to the Biden administration to get a pardon from Trump. Dude, you never know. Like, I would, that could, this could be a headline.

Starting point is 00:30:18 I'm sure there's a polling market for this, but, um, do, tell me the story. story, Donkrad, the EF researcher, moving to Tempo, what's happening here? Yeah, so Donkrad announced on Twitter that he is leaving the Ethereum Foundation to join Tempo. So, again, maybe a little bit of a backstory on who Donkrad is. Pretty prominent EF researcher. Would you say, David, on the Mount Rushmore of Ethereum? You say one of those four sort of figures? Yeah, yeah.

Starting point is 00:30:44 I don't know who is more significant to Donkrad after Justin Drake. So like, Justin Drake's definitely on Mount Rushmore. And then after Justin, I don't know who comes before Donkrad, but like Donkrad. I mean, like, again, there is a part of the Ethereum protocol named after Donkrad. It's called Dank Sharding. It's one of the reasons why Ethereum Layer 2s are going to become hyperscaled is because of dank sharding. It's like the original inception of sharding.

Starting point is 00:31:10 Anyways, he's been, Donkrat has been one of the chief pushers for aggressively scaling the layer one. and doing it so aggressively that it's like kind of pushed against Ethereum culture where like Donkrad wants it in the protocol to automatically scale the layer one like automatically and if we think that it's going too fast. 3x per year. 3x per year and like programmatically just like saying hey that's what's going to happen. And if we don't want them to happen, we can hard fork away from that but having that

Starting point is 00:31:40 happen by default. And it's been like it's saying he said he wrote this blog post or like, hey, we need this level of aggression or else the theorem is going to become irrelevant. So he's like kind of the guy that's like, I think frustrated. Some of his goals and aspirations for Ethereum were kind of thwarted or frustrated by just the bureaucratic and slow consensus, rough consensus in nature of Ethereum. It's a big ship to turn. Yeah, big ship to turn. And overall, just a great guy.

Starting point is 00:32:05 Again, he's speaking at the main to the summit. He's been around the Ethereum community extremely well respected. He tweeted out. I'm excited to announce that I will be joining Tempo. This last year has been a turning point for crypto where we have finally seen the outlines of our vision. being materialized. While payments used to be front and center in the early days of crypto, I see a special opportunity to finally achieve this ambitious goal

Starting point is 00:32:24 with relentless execution on both the technical and distribution fronts. I believe the real moment is now, and I want to make sure that we do not miss this moment to touch normal people's lives. That was his tweet. He goes on to say a little bit about his history and Ethereum. And this was surprising. I would say I did not see this coming of this high caliber of talent going straight from the Ethereum Foundation to tempo.

Starting point is 00:32:47 We've seen like pretty big talent moving to tempo elsewhere, like Liam Horn from optimism, Malesh from SMG. So like pretty big people. Donkrat is in a league of his own. And so this kind of like was a big shot, maybe call it a shot across the bell on the Ethereum community of simply the level of like talent suck that tempo is causing across crypto. It caused a lot of conversations for sure.

Starting point is 00:33:14 So Donkrat had been in Ethereum. for seven years. So of course, like, people aren't going to, I mean, it's not a lifetime commitment. You're not like a Supreme Court justice, right? So of course people are going to move on. I think part of the reaction was like where he moved, which is tempo. This is Stripe's layer one. Okay. So Stripe invested in it. It's also a paradigm invested in. Yeah, kind of bill. It's by paradigm. Right. And it's going to be an EVM chain. But they claim they want to be as permissionless and decentralized as possible. So it seems like with all of the forces they're assembling, they're almost going to like front run Ethereum's roadmap. And I think that's likely

Starting point is 00:33:54 case, right? They have Georgios with with Reth and that Ethereum client. So I mean, that could be a good thing for Ethereum in some ways, which is just like you almost get to like test out all this frontier tech in a production ecosystem. They're building this back, their engineering. So long as they're open source and they give this back to the community, Be like Donkrad, the likelihood of that being the case increase. But also, it's a separate layer one. It's going to have its own token, one would presume. It's going to have its own economic incentives.

Starting point is 00:34:26 It's going to take state, stable coins, assets, attention, users from the rest of crypto, including Ethereum. At least this is the possibility. So, like, the same day, which is really interesting, Tempo announced a raise of $500 million at a $5 billion valuation. So how do you pay those investors back? You have to carve out some market share, right? You have to compete in the space of chains.

Starting point is 00:34:56 But are they competing against Ethereum? Are they helping Ethereum? It's kind of squishy. What's your take on all this? Yeah. I've read a number of people's tweets and announcements saying, hey, I'm excited to announce that I'm going to Tempo. And basically all of these tweets have two of the same components in them.

Starting point is 00:35:15 One is, the time is now to take blockchain's mainstream and provide real world value to everyday people. That's the first one. And then the second one is tempo will grow the pie for all of crypto. I see those same two components in like everyone's announcements. That second one, tempo will grow the pie for all of crypto, is like probably true. Like the pie will grow. Crypto adoption will happen faster. What is not said is that tempo, just like every other.

Starting point is 00:35:40 layer one has every incentive to gobble up as much as that pie as possible. They want the pie. That's the whole premise of building a layer one. And even in addition to that, like, tempo is supposed to be a payments focus chain. That's where they penetrate. Like, Tempo in the future will happily have any valuable defy application that suits it. And so like it'll eventually become a very generalized multipurpose layer one that just has very high throughput. It's just starting with stable coins, which is a fantastic. place to start because you always want to penetrate with a niche, but the stable coin niche

Starting point is 00:36:14 is huge. It's billions of dollars, soon to be trillions of dollars. And so, like, some people are kind of like calling, throwing flags saying like, yeah, you know, tempo is good for Ethereum. The only thing that is this is equivocally, unequivocally good for is the EVM.

Starting point is 00:36:30 The EVM takes home a huge victory here because the tempo is the Ethereum virtual machine. But again, the economics of Tempo are for Tempo, are for tempos to own and not Ethereum's. And that's just to be expected from, you know, a corpo stripe chain that, you know, wants to do what it wants to do. And this is all pretty rational. Some people saw this as basically a corporate chain VC's rating a public good.

Starting point is 00:36:55 This is David from Blockworks. That's a nice public good he got over there. It'd be ashamed if we ripped it off, hired all the talent that built it. Use our massive distribution to ensure no one ever uses it again. Joe Lubin had a take here. He, of course, is Ethereum co-founder, founder of Espet right now. It's a pretty long take. But basically, he admits that paradigm, which is a VC behind this, has been trying to control Ethereum for a while. That was his take. Control. But he also said that they were developing Ethereum, too. Certainly they've given back a ton to the Ethereum community. And overall, he's not worried because corporate blockchains are a gold rush, but they can't compete with permissionless, credit neutral, decentralized, non-corporate, you know, chains like Ethereum. And while he prefer folks like Donkrad to focus on Ethereum, they probably need to, they need new challenges to stay motivated, basically.

Starting point is 00:37:51 This is kind of what happens. So all sorts of takes in the community here. I think it did boil down to, like, which chain is Ethereum's friend and which is not? Overall, this idea of there's this boogeyman EVM Alt Layer 1 out there. that's going to pay much more money, a much more profit-motivated rent-seeking chain, is going to pay for the talent and just co-opt the EVM and all the other public goods. That's always been this like theorized boogeyman. Like Avalanche, for example, again, an EVM all-eer-one, tried to pay Peter Silassi from Geth,

Starting point is 00:38:27 like a very high salary to defect from Ethereum and go to Avalanche. So like this concept has been out there. I think Stripe is and tempo is like the actual real instantiation of this. And so like, yeah, people in the Ethereum. are like valid, their fears are valid. But again, it's just, it's partly rational. I think people are just kind of disappointed because, you know, Ethereum has these principles and this ethos and it's special and you can't recreate Ethereum the same way

Starting point is 00:38:51 you can't recreate Bitcoin. And so people are kind of bummed that like tempo is even existing at all. And like, I understand that. I think it's fine to be bummed. I don't think it's just, but again, it's just rational. So like there's no point in complaining about it. Do you want to talk about the fight for Bitcoin, Soul? move from Ethereum data.

Starting point is 00:39:08 Okay, so Ryan's gold bugged, but now he's also Bitcoin bugged. Well, no, I've just been following this argument in the Bitcoin community, just like at a surface level, but I find it kind of interesting because it's an argument for whether the block space on Bitcoin should be neutral

Starting point is 00:39:22 or whether it should be Bitcoin only. When I say neutral, you know, what I mean is like, can you store other things inside of the block space? Like ordinals? Yeah, like ordinals, basically. Bitcoin. This debate has been happening for a while, right?

Starting point is 00:39:37 This has been happening for a while, but the reason it's seeded up is because Bitcoin Core recently unveiled an upgrade, which would basically expand Bitcoin's operands. That's the data field where they put all sorts of non-Bitcoin data. The Ornals type NFTs, it's like Ethereum Blobspace. Yeah. Remember the tokens that they were launching inside of the op return blob space. Anyway, they're increasing the data fields from 80 bytes to 100 kilobytes. So this is 100, 1,280x. increase. Right? So they're busy saying, yeah, like stuff our blocks full of other things. And that's also, that's a difference between like text only and an actual compressed JPEG. For sure, right? You could store a lot more in, in that space with 1,280. And so the people who like think that Bitcoin block space should just be auctioned off to the highest bidder and you shouldn't control what's actually inside of the block space, whether it's Bitcoin or whether it's some other kind of data, those might be the Bitcoin Core folks, right?

Starting point is 00:40:39 Sort of maybe call them the neutral blockers or something, the neutral blocks-based people. There's another group in the Bitcoin community with a forked client of Bitcoin Core called Bitcoin K-N-O-T-S. And what the Knots community is doing. K-N-O-T-S. Yes, that's right. And what they're doing, Luke Dash Jr., he's a Bitcoin Core developer. He's kind of like forked this and launched this. It's got about 30% of all Bitcoin knows that are running Knots right now. So it's like a sizable portion of the community. and it's been growing fast, they want to block,

Starting point is 00:41:10 they want to filter out all non-money transactions from their clients. They could do this locally at the client level. So if it's something like Ordinals, if it's all the stuff in the block space that they don't want,

Starting point is 00:41:22 they just basically filter it out, okay? And so this has caused a big community, like Rift, a cultural question of like, what is Bitcoin block space for? And the Nots people say, it should only be for Bitcoin. It should like just, financial transactions basically. Bitcoin is for Bitcoin. Yeah. And part of their rationale is like,

Starting point is 00:41:41 well, if you start shoving other things inside of it, you could, you could, you know, shove child pornography in it, for instance. You could shove all sorts of unsavory things that could be illegal. And then in various jurisdictions around the world, people would refuse to either morally, ethically, or legally run Bitcoin nodes. And so we'll have fewer nodes out there. So some people are saying that this is a potential attack on Bitcoin. Exactly. Because somebody who is interested in taking down the Bitcoin network can leverage this space in Bitcoin blocks to put illegal pictures in there. And then people running those nodes are almost compelled to shut down their node because it's illegal to host those pictures. And so it's an attack on Bitcoin.

Starting point is 00:42:25 It's actually a risk to Bitcoin. That's right. That's exactly right. And so the other side, kind of the neutral side of the Bitcoin court side says, no, Bitcoin has always been a system. that basically operates based on neutrality of block space. And it's the economics and self-interest. Anyway, that's the debate that's going on in the community. Greg Maxwell, you know, original Bitcoin developer of legends and lore weighed in,

Starting point is 00:42:49 and he's basically on the neutral block space side of things. But people are firing back at him. And it's quite the debate, quite the controversy. So I've been roughly following it. We're actually trying to schedule a debate between Eric Wall, who is on the neutral block space side, and somebody from the Knott's community to go debate him, and so we can surface some more of these issues,

Starting point is 00:43:08 but it's been fascinating to watch. The problem with that is that the people on the Nauts side are just the most, most hardcore Bitcoiners. And so, like, not only do they not want to go on a shitcoin podcast, but Eric Wall is too much of a shit coiner to even, like, legitimize. Yeah, I think he's been called a scammer by Luke Vash Jr. and such, so I just... I mean, this is something I actually kind of just love about Bitcoin. is like they take a difference between like 28 bytes and a 1,208 kilobytes or something.

Starting point is 00:43:40 Yes, and they make it a hell to die on. They make it a civil war of a philosophical difference of just this matters so much. And it's like it's three bites, dude. Three bites. But it matters to a lot of people. It's an unresolved debate. And actually I'm not sure how it will resolve. Yeah.

Starting point is 00:44:01 Okay. And one of the reasons why it's happening right now is because there's now two different versions of Bitcoin. There's Bitcoin Core and Bitcoin Nots. And Nott's is gaining market share. And so that's like, you know, the different Ethereum client, Geth or Prism or whatever. And one of them has a more opinionated stance about Bitcoin. And the Nots side is growing in market share because people like Luke Dash Jr. are saying like, yeah, download and run Nots, don't download core. When you start filtering Bitcoin blocks, though, like where does it end?

Starting point is 00:44:27 Is that not a slippery slope? I wonder about that and I worry about that. What if it becomes illegal to, you know, transfer Bitcoin because of OFAC sanction? There's, you know, like, it's become acceptable to filter that out. Like, what happens, right? Can I say something, Ryan? Oh, you want to weigh in on this Bitcoin or deep Bitcoin argument? Go ahead.

Starting point is 00:44:47 I kind of like the knots. Oh, my God. I kind of like the knots. For Bitcoin. For Bitcoin. For Bitcoin. Because there's Ethereum and other chains that are doing other things. Yeah, exactly.

Starting point is 00:44:59 Exactly. Like, Bitcoin is never going to have robust defy. So, like, it might as well prune it out and just focus on Bitcoin. The cool thing about this is that there is a very similar, not a debate, but a conversation in Ethereum about fossil. And fossil is this part of Ethereum, which forces nodes to download data. The node ahead of you. So, like, when you're running a node, when you're staking Eath and you see transactions that you can't fit in your block, but you want the next person to put it in their block, you can force the person to download their transactions and put them in the

Starting point is 00:45:33 block. And that is the inverse of knots, which is like preventing any sort of data. You're actually forcing people to download the requisite data in order to run your Ethereum note, which is kind of crazy. It's an extreme take at some level. It's a censorship resistant maximalist take. And Ethereum is probably going to be implementing this next year, which is wild. Yeah, these networks are really diverging in truly important ways.

Starting point is 00:45:59 David, we got more to discuss. Coinbase bought Echo from Kobe for almost $400 million for talk about that. Also, is the Fed allowing crypto companies on Fedwire? I think so. There's an AI trading competition going on as well. GROC, chat GP, Gemini, Claude. We've got to check in. See who is the best trader.

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Starting point is 00:48:18 Follow Mantle on X at Mantle underscore official for the latest updates on blockchain for banking. That's X.com slash mantle underscore official. Crypto Twitter just had a huge uproar when they noticed that the Coinbase.eith Ethereum account on Ethereum, bought the up-only NFT for $25 million. Now, what is the up-only NFT? Up-only. For those who don't know what Up-only is,

Starting point is 00:48:40 up-only was this podcast between Kobe and Ledger. Kobe is kind of this like, kind of like a focal point of crypto-twitter, I would say. He's been in crypto-tweater since Genesis, really. And he's kind of like culturally defined what crypto-twitur is. A beloved trader, I would say, who has not scanned anyone. Trader and social commentator, yeah. And, like, you know, pretty, pretty smart.

Starting point is 00:49:00 Like, pretty smart guy. And so when they shut down up only, not too terribly long after that, he jokingly made this NFT and listed it for something like $25 million. So I think it was like $40 million or $50 million. But he had to lower it because, like, he was talking to- If someone buys it, then they would come back. Yeah. So it was like, whoever buys this NFT, we will come back for eight-episode season.

Starting point is 00:49:23 Yeah. And then there was like a bunch of, like, funny-ass, like, parameters. Like, and we are not obligated to, like, talk about you. Yeah. You are not sponsoring this. We get to pick the guests. It's very on brand. Yeah.

Starting point is 00:49:34 It's like, very on brand for Kobe. It's just like, I'm too fucking rich to care. Coinbase buys this NFT. And everyone on Crypto is like, what the fuck just happened? Why did Coinbase buy this NFD? It's a terrible marketing ROI. $25 million for eight episodes and there's no guarantees of like any sort of, like, whatever. Yeah, three million per episode.

Starting point is 00:49:52 Yeah. The next day, it's announced that Kobe's, ICO platform, Echo, was sold to Coinbase for $375 million. And I can only assume it's a part stock, part cash deal. I can only assume that the cash is the $25 million that you got. The rest of the stock. All negotiate as part of the same deal. It's all part of the package.

Starting point is 00:50:13 Yeah. And so they did it as a marketing stunt, which was pretty savvy of them. Yeah, pretty well done. Yeah. And so why did Coinbase buy Echo? And what is Echo? Echo is a place for individuals, both accredited investors to access private sale and then later retail investors to access public ICOs, like MegaEath, for example,

Starting point is 00:50:31 is running their public ICO on Sonar, which is Echo's ICO platform. And so it's just a KIC platform that also just helps you launch and list tokens, right? And Coinbase is building out this, I'll call it this like internet capital formation pipeline, which they are a part of because they have like the spot trading and the margin and all that kind of stuff. But they are also building out. They also acquired Liqueify earlier this year. Yeah, Liquefy, which is a place for you to kind of like start your startup

Starting point is 00:51:04 and then also issue and rewards to your employees and stuff like that. Like compliance for token startups and stuff like that. And then Echo and Sonar kind of fit in the middle of this pipeline, which is like, okay, now that you are ready to like go public and have liquidity, you can do some of your final public sale, private sales, raises, series A, whatever, inside of Echo,

Starting point is 00:51:23 and then also with Sonar. And then once those tokens are listed, like, where do you think the liquidity is going to be found? It's going to be found on Coinbase. So Coinbase now has a kind of a complete end-to-end capital formation pipeline, which is pretty cool. And so that's why they acquired Echo. So you got to tip your hat to Kobe for a $375 million exit. He started building Echo like two years ago, so incredible returns.

Starting point is 00:51:44 Yeah. And then also we get up only back for eight episodes. That's pretty cool. It is kind of cool because it's giving retail access to more deals that basically only VCs would have access to. And I think that was his whole founding mission. And so he brought that to completion. It's going to continue at Coinbase. So, I mean, well done there.

Starting point is 00:52:01 Speaking of Brian Armstrong and Coinbase, he's on Capitol Hill right now. And he's got some news about the market structure bill. Let's play that clip now. Hey, everyone. Brian Armstrong here. I'm back in D.C. And even though the government is shut down, the Senate is working hard on getting market structure legislation passed for crypto, which is great to see.

Starting point is 00:52:19 I attended some meetings this morning with both the Senate Dems, the Senate Republicans. And I'd say they're 90% on the same thing. There's draft techs being shared back and forth between both parties. Both sides want to get this done. That last 10%, there's a couple remaining issues open, like, for instance, DFI. We want to make sure that we're pushing to protect DFI on all the innovation potential that can have, and that the centralized intermediaries in crypto, like Coinbase should be regulated and not the protocols.

Starting point is 00:52:46 And then, of course, we're making sure to preserve stable coin rewards for you as well. The big banks are coming for their cash grab, trying to block that, even though it was just recently decided in the Genius Act, which just recently became the law. We're not going to let them relitigate that. So with these last few issues getting wrapped up, we're hoping to see this bill by come out of committee by Thanksgiving. That would be a great outcome. Fingers crossed. We're going to keep showing up for your rights. And we'll keep you up kidding. Straight from the source. You know what? I'm really glad he said that. I'm glad he said that about defy though. Do you remember when SBF was in Capitol Hill, he was the only one lobbying for us?

Starting point is 00:53:20 And he was basically on the side of let's AML KYC all the defy and all the front and that's the only way the U.S. is going to allow us to do this. He didn't even put up a fight. And that was so contrary to the entire reason we're here. So let's hold Brian to that. If he's going to lobby and represent crypto, he's got to be supportive of defy. And he says he is, so that's fantastic.

Starting point is 00:53:41 David, Polly Market with some news on the week, Polymarket and the NHL? What's this? Yeah, so it was announced that Polly Market is the official prediction market for the NHL. So like top pretty big sports league. I mean, not bigger than football, not bigger than baseball. Top four.

Starting point is 00:53:59 Top four. I don't know what the third is because I'm not a sports fan. NBA, man. NBA, yeah, yeah, yeah, sure, sure. And so yeah, polymarket is the official prediction market for the NHL. On to the next bit of news, it was also announced that Kalshi is now the official prediction market for the NHL. Wait, what? You said NHL, both NHL?

Starting point is 00:54:22 Yeah. They both announced. this at the same time. That's so crazy. Who got there first, though? Call she tweeted it out first. Oh, they did? Yeah, they beat him like by an hour or something. Oh, my God. I'm like, what the hell is going on here? Yeah, what is going on?

Starting point is 00:54:37 The word duh. It implies that there's only one, but there's apparently two official prediction market partners of the NHL. So a little birdie came into my DMs and whispered something to me. So here's a rumor, Ryan, is that these big corpo accounts and the NHL, it would be one of them. I think Twitter also did this, just smells the blood between Kalshi and Polymarket, and they just cause them to bid each other up. And so they, like, both Kalshi and Polymarket presumably paid the NHL saying, hey, tell the world that were your official prediction market platform. Yeah. Kind of a sweet deal.

Starting point is 00:55:12 Like, Kalshi is offering this much. So Polymarket, like, you're going to have to beat their price. And then they go to Kalshi and be like, well, Paulymark is offering us this much. So you have to beat their price. And then they take both. Because apparently that's allowed? No, no, that's scammy. That's gammy. No, it's not. Whatever, it's fine for whatever, consumers, you know?

Starting point is 00:55:33 Well, I guess benefit. Why not put these things on both platforms? Why does one have to be the official? I mean, if I was either Colchie or Polymarket, I'd be pissed. Oh, of course I would be pissed. I'm talking about from the consumer, though. I'm talking about from the user perspective. Like, whatever, let these two giants compete for our love.

Starting point is 00:55:52 That's what I say. They'll get better in the process. The NHL is not doing that. Yeah. That's just the NHL being opportunistic. Okay, what is this, though? Polymarket is acting as Draft King's Clearing House now. So we did this whole thing about sports books versus prediction markets.

Starting point is 00:56:09 Really good episode. I enjoyed doing that. Okay. Now, prediction markets teaming up with sports books? What's happening here? No, no, no, no. Not teaming up. No?

Starting point is 00:56:17 Dify mullet, Ryan. DeFi mullet. What? So, Draft Kings in the front, Polly Market in the back. No way. So they're just going to be the UI for Polymarket? Yeah, yeah, yeah, yeah. And so like because Draft Kings can't, doesn't have a CFTC license, they're registered as a casino. What they are doing is they are just being the front end to Polymarket.

Starting point is 00:56:35 If you can't beat them, join them. That's right. That's right. That's right. I think that's brilliant. I think that's brilliant. Polymarket also getting into every crypto wallet on the planet. So MetaMast, that was a week or two ago. Now Rabby Wallet is going to have Polymarket prediction market. Got to be Phantom next. I think they'll all have it.

Starting point is 00:56:54 It's a source of revenue for wallets and like, why not? David, a blast from 2022. OpenC is doing something. This is a tweet from Devin Finster. OpenC crossed 2.6 billion trading volume this month. Wow, that's actually impressive. With 90% from token trading, but now they are transitioning to. Not NFT trading.

Starting point is 00:57:17 That token word is important. NFT marketplace to trade everything. Okay. What's happening with OpenC? C. What are they doing? So they announced the C token. That's actually what this tweet is. S-E-A.

Starting point is 00:57:28 S-E-A. And so they are finally doing an airdrop. I think that's probably why they crossed $2.6 billion in trading volume. Okay. Is because people are like, oh, token. No, no, I love OpenC. Let me go trade. Yeah.

Starting point is 00:57:43 But they've also expanded just being an NFT platform to token trading. And this is what Denver is saying. It's like, okay, OpenC needs to pivot because NFT volumes are just dog shit. and they just have not come back. They blew up incredibly in 2021, and then they just went to zero. So they needed a new business. So they're expanding their platform

Starting point is 00:57:59 to be the trade everything up. And so that's what the announcement is. And then also the C token from the OpenC Foundation is coming. We'll be in Q1. 50% of the supply will go to the community, which is a large amount, a large amount.

Starting point is 00:58:15 And then 50% of the revenue from OpenC will go back to buy back the C token. David, you think that's going to make up for any of the... Money lost on NFTs, man? Or money we all collectively lost? Bro, I'm up on NFTs.

Starting point is 00:58:27 I don't know what you're talking about. You're the only guy. Are you actually up on NFTs? I mean, my Cryptopunk has saved me quite a lot. Because I bought my Cryptopunk early. Besides Cryptopunk, are you up on anything? Every other NFT I'm down bad on. It's been brutal.

Starting point is 00:58:42 They did not come back this cycle. That's for sure. Yeah. This was some cool news. So the Fed, David, is going to give crypto companies direct access to Fedwire. All right. So have you ever tried to wire something into a crypto exchange, like into Coinbase or something like that? Yes. Okay. So what you'll notice is you're actually not wiring it directly to Coinbase. Like you're wiring it to Coinbase's bank, right? It's like customers bank or something like this. And you have to do that. Even brokerages, they all have these go between banks. It's the banks at the end of the day. Because the banks are the only ones connected to Fedwire. That's where wires are actually settled.

Starting point is 00:59:19 Well, Chris Waller came out, so he saw one of the members of the FOMC, Governor Waller, said that they were going to create skinny accounts so that crypto companies, stable coin companies, organizations like Coinbase, could access FedWire directly and they don't have to go through banks. This is pretty historic because this has never happened before. It used to be the groups, the nodes that could settle onto FedWire, let's call it, were all permissioned, and they were all permissioned. like a good old boy bank club of just a bunch of bank names and no one else could get in, well, Waller is proposing that they all get access to Fedwire too or will have a more liberal licensing structure. You also said some pretty bullish things about crypto. I'm just going to play this clip. This is an acknowledgement. The distributed ledgers and crypto assets are no longer on the fringes, but are increasingly woven into the fabric of the payment and financial

Starting point is 01:00:16 system. Now, before we hear from these innovators, I would like to touch on roles at the Federal Reserve place to support the private sector. These include serving as a convener to solve coordination problems and operating core payment and settlement infrastructure. We are also looking ahead, conducting hands-on research on tokenization, using smart contracts, and the intersection of AI and payments for use in our own payment systems. We do this to understand the innovation happening within the payment system, as well as to evaluate whether these technologies could provide opportunities to upgrade our own payment infrastructures and to enable us to have deeper conversations with the industry on these new technologies.

Starting point is 01:01:02 Wow. That's great. There you go. Yeah. Actually, fun fact, too, David. Do you know on Polly Market, Chris Waller is the number two listed probability of becoming the next Fed chair. Wow. That same guy. You imagine if you turn to the Fed? Usually when I hear the Fed doing research about crypto, it's like research about CBDTs. I'm like, okay, that's nothing.

Starting point is 01:01:24 But researching about how the market has adopted specific payment opportunities being stable coins? Pretty wild, right? Hopefully a little bit more real. Pretty wild. David, you know last week we talked about this asset seizure by the U.S. government from a group of 127 Bitcoin, a group of scammers, Chen Zai, still on the run, we talked about all that. I was doing some more research on this. This means that the U.S. government would have 36.3 billion dollars worth of Bitcoin right now,

Starting point is 01:01:56 which is like 3.5% of the U.S. government's gold stockpile. And that's that current Bitcoin prices. Wow. And you remember that there was an executive order earlier this year where Trump said, hey, we're going to make a strategic Bitcoin reserve. But the thing is, it had to be budget neutral. So they were going to do a strategic Bitcoin Reserve without buying any Bitcoin.

Starting point is 01:02:17 You know how they're doing it. Yeah, seizing. They're seizing it. They're stealing it. This is part of the strategic Bitcoin Reserve. They're actually going and getting it. And you say stealing it, right? There's an element to that, actually.

Starting point is 01:02:30 It's taking things by force. Okay, so whenever the government seizes something, it doesn't get forfeited yet. So they seized it. So it's, you know, unclaimed right now, or it's like subject to claims by other individuals. but only 3% of forfeited assets are ever returned to claimants. So I was thinking about this, right?

Starting point is 01:02:49 All this funds, this, you know, $15 billion, whatever, it's all victims' money. Does it ever get back to victims? Historically, only 3% of funds have gotten back to victims. And it's a whole legal process. There's no incentive for them to get money back. Tons of, like, documents. The government makes it very hard to get back your asset.

Starting point is 01:03:09 So. You know, when they seized Bitcoins from the Silk Road? Yeah. And then they was just in, and then the FBI agents stole those. Remember those? Yeah, they don't want to give them back because, like, somebody can, like, somebody can have those. This is like, okay, so I'm glad criminals are getting prosecuted. That's great.

Starting point is 01:03:27 It makes me very uncomfortable that the way the government, the U.S. government, is going to get its crypto reserve is to basically like, go take it. So, yeah, say you get, like, raided and arrested, and then your Bitcoin is seized, and then you go through the court. system and you come out not guilty. You don't necessarily get your bitcoins back. That is another legal process that you have to go through. And you don't know where those bitcoins are. And then we lost them. Oh, they ended up in the stockpile somehow.

Starting point is 01:03:57 I don't know. Yeah. So anyway, it's not great. I mean, I'm glad we have a strategic Bitcoin reserve, but it's also not great in the same time. Tell me about this competition between AI's, this trading competition. What's going on here? Okay, so there's this website called Alpha Arena.

Starting point is 01:04:11 and it has taken six of probably the most used LLM models, Deep Seek, Kod, Kroc 4, Gemini, Chachapit, and Kuen. So like two Chinese models, three, four Silicon Valley models. This individual gave $10,000 to every single model and set it loose on hyperliquid. And it was like, go maximize profit. And some of these models, Quinn, the one of the Chinese ones, is that $15,600.

Starting point is 01:04:39 Deep Seek, $12,600. So Ryan, the two Chinese models are up. They started with 10K. Did you say that? They started with 10K. Yes. Grock used to be up. Grock used to be in the lead.

Starting point is 01:04:53 Had a few good days. It's down 12% to $8,700. Claude Sonnet is that $8,700 as well? And then Gemini and Chad Chb-T, do not trust them with your money. Don't give them your money. The Chats Chb-T chart looks like somebody who just is a bad traitor. It looks like my training chart, to be honest. But even I, I feel like you could outtrade chat.

Starting point is 01:05:15 I think you could do better than that. It's kind of cool, though, right? You give an AI model some money, and it does stuff on a perps exchange, and you get to see what the best model is. It's a pretty objective measure of how sort of trading intelligent. Yeah. How powerful they are, aren't they? Yeah.

Starting point is 01:05:29 How intelligent they are, at least. It's hard to game this. You actually have to be good. It's impossible to game it. It is a very good benchmark. So we have a sister podcast. It's called Limitless. It's hosted by a Jaws.

Starting point is 01:05:40 and Josh, they did an episode on this. Currently, this episode is trending. Let me say, trending, hitting the algorithm. They did a, one of my favorite part of this episode actually was Josh kind of psychoanalyzing each of the LLMs talking about like, yeah, you know, GROC, this is when GROC was up, like, $18,000 or whatever. GROC is like unhinged and just calls it at it is, and it's unfiltered and takes a lot of risks.

Starting point is 01:06:02 And so, of course, it's up. Is that what you want in your training bot? You want somebody who's unhinged, managing your money? Yeah. So these things are taken between, like, like 2 and 20 X leverage. And then you have like Chatsy BT which just like you know glazes you.

Starting point is 01:06:16 Maybe we shouldn't do this. It's a little bit of a soy boy, you know? It doesn't. And then now it's down to $2,000. You can't recover from that. We'll have to see. I want to check this in on this weekly because it's kind of entertaining.

Starting point is 01:06:29 Yeah. David, one last thing before I let you go. We're talking about AI. You know, one thing we both been very excited about is this X402 basically payments protocol, right? Using crypto, using stablecoins, anything, but it turns any API gateway into kind of machine-to-machine micro-transaction portal. There's this website called Nexus where it lists like all of the different services that you can call using this right now.

Starting point is 01:06:53 And I was looking at a demo that Coinbase put out. And so here's a demo of their MCP wallet, okay? So this basically gives you an MCP wallet that you can now connect to your AI, basically. So this is a model of Claude. Basically what you're doing here is you're downloading this thing. It's companioning with Claude. And then you can fund it. So you put like $5 into your wallet.

Starting point is 01:07:19 And the AI gets, Claude gets to control this. And then you can ask it questions. Like here's an example of, you know, like what different services are available in X402. And then Claude can just enhance its answers by spending money from its wallet. And you can set limits, right?

Starting point is 01:07:36 But Claude can spend money from its crypto wallet to go and prove its answers and consume these X402 services. So the idea of an AI agent having a crypto wallet is like now here. And we are beginning to build a whole data consumption infrastructure of micropayments to create a marketplace basically for AI data consumption. And I think this is one of the coolest things happening right now in crypto is a beautiful intersection between AI and crypto. Yeah.

Starting point is 01:08:08 I mean, it's not just micro payments. X402 is just native payments inside of the internet. It goes back to Mark Andreessen's comment about like the original sin of the internet was not having payments embedded in it. And that's what X402 is. Lincoln Murr is the head of X402 product at Coinbase speaking at the Bankless Summit. Oh, really? Cool. Yeah.

Starting point is 01:08:27 Well, hopefully he's got, he's talking about AI agents and everything they're doing over there. I don't know. I just know he's talking about X40. Guys, we will end it there. Of course, you know, none of this has been financial advice. Crypto is risky. You could lose what you put in. But we are headed west. This is the frontier.

Starting point is 01:08:43 Not for everyone. But we're glad you're with us on the bankless journey. Thanks a lot.

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