Bankless - ROLLUP: Elizabeth Warren's Anti-Crypto Army | Arbitrum Controversial Vote | Dogecoin Twitter

Starting point is 00:00:00 Elizabeth Warren tweets out this image. Elizabeth Warren is building an anti-crypto army triggering the entire actual real army of crypto Twitter. Bankless Nation, happy Friday morning. It is time for the bankless Friday weekly roll-up where we cover the entire weekly news in crypto, which is always an ambitious endeavor. And here to help us explore that frontier, we are tapping in Anthony Cizano. Anthony, welcome back to the weekly roll-up, man. How's it going?

Starting point is 00:00:29 Hey, man, I'm going great. Thanks for having me back on. Lots of news to cover. So I know Anthony, you are a fellow coffee maxi like me, but it's a little bit late for you to have coffee. I'm sure you already have it. But I just finished my first cup of coffee. So we're going to go through all caffeinated and stuff. All the topics of the week. Arbitrum's first governance vote, which was to sell a billion dollars worth of tokens. Turns out it wasn't actually a vote. Much more drama ensues. You're going to cover all of that news and give our takes as well to unpack all the nuances about that. A brand new frontier gets unlocked in the M.E.V. world, potentially a new paradigm, now unearthed by a validator who sandwiched attacked a sandwich attacker. We will discuss that and what that means for the MEV landscape. And Liz Warren is gathering her anti-crypto army and everyone is trembling in fear, right, Anthony? Yeah, yeah, I'm literally trembling in fear right now.

Starting point is 00:01:22 All right. So you guys know the deal. Bankless Nation. Make sure to like and subscribe, rate and review, wherever you get the podcast, because this is how we get all of this fantastic information. scaleed out to as many people as possible. This comes out every Friday morning. And this is, of course, where we cover all the crazy, crazy, crazy crypto industry. And first, some news out of bank lists that came out on April 1st. You might notice that Anthony Sizzano is here, not running out Ryan. That's because Ryan and I have broke up. What was funny about this is how many people actually fell for it.

Starting point is 00:01:54 So, emphasis on the April 1st date. To this day, people are. are still reaching out to me and be like, man, I can't, I can't believe you guys broke up. The reason why Ryan is not here is because he is having some very well-deserved time off with his family and kids powered down and getting some software updates on some beach somewhere, hopefully relaxing. Ryan and I did not break up. That was an April Fool's joke. And seriously, the amount of people that got tricked by this April Fool's joke actually

Starting point is 00:02:25 warranted me having to bring this up here on the podcast. Yeah, yeah. I mean, I honestly hate April Fool's Day because I have to go through it twice, living in Australia, first in Australian April 1st and then second on April 2nd for me, but April 1st for like America. And I have to put up with it for 48 hours almost. And it's just, it's not great. Yeah. So Ryan and I, Ryan will be back next week for all the regularly scheduled programming. And then quickly before we get into the markets, we actually got some nice perks out for the Bankless Nation. here from CoinDesk Consensus 20203. This is actually not a sponsored message, but they have given the Bankless Nation 15 pro passes to the Consensus Conference. That is worth $2,200 first come, first serve inside of the Bankless Nation Discord. And then the next 100 people after that will get 50% off. So I bet you those first 15 tickets are already taken. But that is one of the benefits of being inside the Bankless Nation Discord. So if you want, one of those 150% off tickets for

Starting point is 00:03:30 Consensus 2023, jump into the Bankless Nation to fill out the form. This is happening April 26th to 28th at the end of this month in Austin, Texas. Getting into the market's Bitcoin price, starting the week at $27,300, ending the week up half a percent. So still green at $27,800. Let me zoom through to the ether price starting the week at $1,800, ending the week at 1870, up 4.5% on the week, and also the ether Bitcoin ratio up 4.5% on the week from 0.064 to 0.07. Anthony, give me your read on the markets. How is this last week and last month on the markets from your perspective? I think it's led to a lot of renewed optimism about the markets just because these are the highest prices we've seen in a little while on both BTC and ETH, and people are

Starting point is 00:04:22 getting excited again, thinking that, you know, this might be the early innings of a new bull market and things like that. I struggle to kind of say that. I don't think it's the early innings of a new bull market. I think that Ethan BTC are still in this range that they've been in for quite a while, and it just feels like we're doing this, what people call crabbing. We're basically going sideways for quite a while. I think that's probably going to be the theme for the rest of the year, to be honest. I don't expect a new bull market this year, maybe next year, right? But, generally, yeah, whenever this sort of stuff happens, obviously people are going to get excited, but I think people tend to forget that we could go back down to, you know, low 1000s on,

Starting point is 00:05:01 on ETH, you know, 20K for BTC or something like that, with relative ease and sentiment can change very quickly. But, you know, generally, yeah, I don't really pay attention to day to day, week to week kind of movements. You know, I see people getting excited and I'm like, you know what, doesn't really bother me either way. Just obviously looking at the long term and thinking, obviously, that ETH's going to be higher long term. I have my conviction on that and my thesis around that. But yeah, it's interesting just to see different people's takes on it, because you've always got the traders who always just trying to trade whatever volatility there is, because that's their bread and butter, right? If there's no volatility, they can't really trade and there's

Starting point is 00:05:37 not really much opportunity. But as soon as the volatility starts, you see all these kind of narratives form and all this sentiment change because people are just trying to trade, trade it. You know, people long-term investors are thinking, oh, wow, okay, finally the bull market's back, you know, but yeah, as I said, I don't think that it's the ball market. I just think that we're in that kind of accumulation range that we've seen in previous bare markets where, you know, the diehard buyers are buying, traders are trading. The retail investors, most of them are not here right now. But eventually, I think that eventually we go back into a ball market and they come back.

Starting point is 00:06:10 Yeah, at least in the ether price, we haven't seen these prices since August of 2022. And we are about at that high that August 22 price is kind of the, resurgence after the three arrows capital liquidation. And so before that, it was May of 2022. And that was just in that perpetual down price action that happened for like almost 14 or 15 weeks, which was, you know, what was 2022 and 2021. And so we are as high as the big bounce back out of that initial liquidation candle that when Ether went down to just below $900.

Starting point is 00:06:46 So went down to below $900, bounced back up to basically $2,000. in August of 2020. Yeah, I think it was based. The merge hype kind of got us back. I mean, that was just the narrative people latched onto, I think, as an excuse. But it's funny just saying like where the price is now because if you go back to 2019, a similar thing happened where it kind of bounced back up to a point. It was like $360 or something.

Starting point is 00:07:11 And then after that it went, it went back down to like eighth particularly went from like the bottom to 360 back to like one third. during 2019. So it was a very volatile year, but we didn't set new lows. Even during the COVID dump, it just went to the previous kind of low. So I think people generally should be prepared for that if it repeats itself and not get, not to get too ahead of themselves just because there's a few weeks of positive price action. Yeah. Just a quick comment on the ratio, the Bitcoin Ether ratio. We had a really good week in the ratio after just getting slammed for the past like two or three weeks. So Ether is up 4.5% on the week when it's been like four weeks,

Starting point is 00:07:54 four to actually a few months of just down the price action on the ratio. What's your read on the ratio here? It is by far the noisiest chart, I think, in crypto. Getting signal from like the ratio chart is really, really hard. I don't think anyone really trades it on the shorter timeframes. It's more of a longer term narrative thing where you're like, okay, right now feels like Bitcoin season or right now feels like each season and people will trade. Ethan BTC and then that'll reflect in the ratio. But generally, yeah, I think that looking at maybe

Starting point is 00:08:24 month to month is the best time frame for the ratio rather than day to day, week to week and even kind of shorter than that. Because yeah, as I said, it's a very noisy chart and you can see that, just zooming out on it generally how noisy it can be. And it's funny because it's something that a lot of people use to form narratives and to dunk on each other, like when it's going up, you know, Ethereum's are dunking on Bitcoin is and when it's going down, Bitcoin is dunking on Ethereum. And it's just a perpetual game of that. But I think what it generally just does is it just kind of follows over the shorter timeframes. It follows just that kind of sentiment, that trade of sentiment, where they're just playing the volatility between BTC.

Starting point is 00:09:01 You know, now it's time to bid BTC or now it's time to bid Eith and other stuff. And yeah, that's why generally I think it's very noisy. It's very hard to get a good read on it over the short term. But longer term, I mean, yeah, everyone should know by now. if anyone who knows me knows longer term, I believe in the flippinging. And I think that eth is definitely going to outperform Bitcoin. But yeah, it's very hard to get signal over the shorter timeframes, that's for sure. All right. Moving into general market talk, Ethereum is now being held in self-custody, the bankless way, and away from exchanges

Starting point is 00:09:32 at the highest level since the week the token was, since the week ether was introduced eight years ago. So the ratio of ether in self-custody, in defy, in away from exchanges, is at all-time highs. And that actually correlates with, for the second month in a row, Uniswap has beat Coinbase in trading volumes. Now, I remember when Uniswap came out in 2019, and that would be unheard of to talk about back in 2019, that Uniswap would be beating Coinbase, the biggest, highest volume, centralized exchange that's out there, maybe save for Binance. And for the second month in a row, Uniswap has beat Coinbase by more than a little bit, 45% higher than Coinbase's volume, the best month, Uniswap's best month since January 2020.

Starting point is 00:10:19 Anthony, give us your read on this. Yeah, I mean, I'm not surprised by this, to be honest, considering how much liquidity and capital has moved on chain, not just on Ethereum layer one, but on these layer two's as well. And Uniswop obviously dominates there for decentralized exchange trading. And if you include, like, even the other decentralized exchanges, not just Uniswap, then it's even much higher than that, right? Which is pretty cool to see to kind of see that all of them put together, I just blast away Coinbase, which is the second biggest centralized exchange.

Starting point is 00:10:52 Still not higher than Binance, but obviously, I think Binance is like almost 10 times the trading volume of Coinbase. So it's quite a bit bigger. Maybe not that much these days. I think the gap is definitely closing. But there's still, there's still pretty big gap there. But generally, yeah, if you had told me that this was going to happen so quickly as well, like a couple years ago, I would have probably not believed you because

Starting point is 00:11:13 I, decentralized exchanges have such a grip on, I guess, volumes and liquidity and trading. But in hindsight, looking back, it's kind of, well, if liquidity can move as fast as it can move on crypto rails, and there's no reason why these things can't happen very quickly. And I think that's what we've seen play out. Inosoft's not the only decentralized exchange that's seeing a lot of volume right now. Trader Joe, which recently deployed in addition to their avalanche, their original home base avalanche deployment also deployed on arbitram a few months ago. The volume on Arbitrum, and I know you saw these numbers, Anthony, is now three times what it is, a little bit over

Starting point is 00:11:50 three times what it is on Avalanche. So in the 24-hour volume on Arbitrum, $177 million, measured on March 30th, when it was just $58 million on Avalanche. And so this is Size Chad tweeting out who's on the Arbitrum team. Looks like Trader Joe is now primarily an arbitral. from Dex, and then he's got the look at me. I'm the captain now. Anthony, give us your take. Yeah, I mean, maybe I'll cop some heat for this, but I had primarily been very bearish on Avalanche because their main thing was the C chain, which was just an EVM chain. And I figured that L2s, like Arbitram and Optimism that were EVM compatible and equivalent, would offer a much better experience on the EVM front. And that would lead to a lot more liquidity and

Starting point is 00:12:39 trading and activity than we would sell on these other these other kind of um uh l ones that were evm compatible so this doesn't surprise me at all and it's really funny because i used to see trader joe fans and even even the found are kind of like crapping on ethereum for the high fees well now you know they're on the l2s and they're doing better than on avalanche so everyone comes to ethereum i all roads lead to ethereum as we like to say yeah sadly it really takes a bear market to force the contraction to really make this happen. But this is something that you and I and many other people in the Ethereum community have been saying that this is going to happen one way or another. And the Ethereum gravitational pull is pretty hard to escape from. Here's a tweet out of Eric

Starting point is 00:13:23 Wall, moving on to different subjects, talking about the NASDAQ correlation between Bitcoin is at the lowest point ever since 2021. How do you feel about that? How do you feel about our correlation to NASDAQ being low. What's your sentiment there? I don't know if NASDAQ is the best thing to compare with Bitcoin too, because Bitcoin's primarily trying not to be a tech play, right? It's like, the Bitcoin has always told you that Bitcoin is like tech second. And first, it's like trying to be a reserve currency or trying to be like a digital gold or something like that. So I don't know if it's the best comparison. But generally, yeah, I mean, especially in the bare markets, correlations tend to go to like one.

Starting point is 00:14:05 Everything just correlates with each other because everything's getting sold off with each other and indiscriminately, especially during the peak fear of bear markets. So to see the correlations come down again usually points to a more favorable market and you see that play out in the prices. But yeah, I mean, maybe comparing it to like the S&P 500 will be better than the NASDAQ. I know people do that a lot because, yeah, I generally think based on the narrities, people probably trade Bitcoin more like, I don't know, more in sync with that than the Nasdaq. But yeah, I haven't looked too closely at this sorts of stuff.

Starting point is 00:14:40 And you can find correlations, but they don't equal causation across anything you want to. So it can kind of become a bit of a self-fulfilling narrative within the day. Yeah, I do enjoy having the disconnect because being a non-correlated asset class was kind of one of the original visions between crypto. And I think one of the where all of this correlates. relation really came from and why Bitcoin, even though it's purported to be this non-sovereign store of value digital gold, it's still traded like a tech stock is because it's all about liquidity, right? It's all about Federal Reserve liquidity. And so even though the narrative is that that's

Starting point is 00:15:17 what Bitcoin is, it's still a very volatile risk asset that falls right in line with all the tech stocks these days. A little bit more interesting news than the Bitcoin market. It's U.S. government now has 49,000 bitcoins that it's sees from the Silk Road Hacker. This part of the news is old news. We've known that the government has this. But what is new is that 10,000 bitcoins and what is assumed to be eventually all 50,000 bitcoins is going to be sold. So they transferred basically 10,000, 9,800 bitcoins to Coinbase. And then also the right remaining 40,000 bitcoins to two new addresses. And that 10,000 Bitcoins was purportedly sold. Last week, we talked about Michael Saylor buying new Bitcoins

Starting point is 00:16:03 and turns out he might have been buying the U.S. government's Bitcoins because they were selling at the same time he was buying. The bearish news here is that 40,000 Bitcoins, roughly $867 million of Bitcoins, is going to be sold by the United States government over the next few months or perhaps the next few years. And so not a not a existential amount of cell pressure, but not a definitely non-zero amount of cell pressure. Anthony, is this signal or is this noise? Yeah, I mean, it's kind of hard to tell because just the nature of markets, you know, there's going to be different points where there's more or less liquidity, right? It was probably much easier for them to sell that BTC over the last couple months than it would have been to sell it at the end of maybe last year or when

Starting point is 00:16:49 volumes kind of go down a lot more than than what they've been over the last couple of months. I do believe that they said that they were going to aim to sell all of it this year. So I don't know what kind of cadence they're going to do. And I don't know how they're going to sell it. I think they're going to sell it by OTC. And it seems like they also got a really, really bad execution price. I saw some metrics around this saying that they had sold it at like an almost 10% discount to what the spot price was on the days that they basically said that they sold it.

Starting point is 00:17:17 Yeah. So I don't know what happened there, whether they just really wanted to get rid of it. I don't know how. I mean, it's the US government. they can literally print the money to buy the BTC. So I don't know how sensitive they are to that. But generally, yeah, it was a bit of a weird thing that kind of came out when they published their report that they said they did. I believe it was a 10% discount to what the spot price was at the time that they sold.

Starting point is 00:17:43 Yeah, United States really paper handing the Bitcoins here. One funny quip I saw about this is that here's a tweet from Joe McCann. Just so we're clear, United States regulators sent coin. base a Wells notice while the US government also sent $200 million of Bitcoin to sell that said Bitcoin. I mean, there's nothing really real here, but this is kind of funny to see these juxtapositions. Yeah, I mean, the juxtaposition is definitely funny, but I don't think there's any signal in this because there are different departments of the US government, right? And they're not all talking to each other all the time. And at the end of the day, they can, like,

Starting point is 00:18:18 a regulator can still send a Wells notice and then they can still use the service to do whatever they want. And maybe I don't even, I don't even know if the timing was, was lined up on this either. And I think people are well aware at this stage that the SEC is a bit of a rogue agency within the US government anyway, and they just seem to be doing their own thing. So yeah, but the US government's absolutely massive. Like you can't just say that they're all kind of like in sync with each other. They all know what they're doing. They all talk to each other. No, I don't, I don't think so. I think that they went to Coinbase because they're like, Coinbase is a US company. They're going to be able to process this for us. we can trust them to do it, you know, in a safe and secure manner.

Starting point is 00:18:54 And they're regulated too. I don't think probably there is some rule that the US can't sell this Bitcoin to any unregulated institution or, you know, it's not like they're going to send it to finance, right? That would be even even funny. If they send it to Binance after the CFTC did that massive kind of thing, a lawsuit against finance, right? So, yeah, I think it was like the, just the logical spot for them to go to, like Coinbase,

Starting point is 00:19:19 right? Yeah, right. All right. That is the market section coming up next. We got to talk about this arbitrage from governance drama. We also, we talked a lot last week about Elizabeth Warren, and that was before she released her war on crypto campaign. So we're going to talk about Elizabeth Warren a little bit more. Also, I've got to talk about Elon Musk and Doge, because that is in the news cycle this week. Seiz has an Interpol rumor. We're going to have to unpack that. All of this news and more is coming right after we talk to some of these fantastic sponsors that make this show possible. You know Uniswap as the world's largest decks with over $1.4 trillion in trading volume, but it's so much more. Uniswap Labs builds products that lets you buy, sell, and use your self-custody digital assets in a safe, simple, and secure way. Uniswap can never take control or misuse your funds, the bankless way. With Uniswap, you can go directly to Defi and buy crypto with your card or bank account

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Starting point is 00:21:26 NFTers out there, the brand new Cracken NFT beta platform gives you the best NFT trading experience possible. Rarity rankings, no gas fees, and the ability to buy an NFT straight with cash. Does your crypto exchange prioritize its customers the way that Cracken does? And if not, sign up with Cracken at crackin.com slash bankless. we are back with this Arbitrum drama. We're going to start with talking about Arbitrum. Here's a tweet that really just kind of raised the alarm, if you will, about this. Arbitrum Foundation made a proposal, AIP1, to allocate 750 million ARB tokens for admin and operational costs, but Arbitrum holders voted against it.

Starting point is 00:22:05 Now they said that the vote was just a formality, and they have already spent 50 million tokens of the proposed 750 million Arbitrum tokens that the Foundation was going to receive. And this tweet from Eden Ow concludes, your vote is not a vote. So here is the snapshot. 76.6% of voters voted against this Arbitrum Improvement Proposal Framework AIP1, basically the genesis of the Arbitrum Dow. This is a proposal created and originally proposed by, I'm guessing, the Arbitrum Foundation or at least initial core Dow members,

Starting point is 00:22:42 that really would just set in stone what Arbitrum. would look like. And in this Dow proposal, 750 million arbitram tokens was going to be sent to the Arbitrum Foundation and that the Arbitrum Foundation would be able to just more or less administer these funds as they see fit. And so this caused some concern with the Arbitrum Dow and the Arbitrum community because these tokens were sent and then a portion of these tokens were sold and then other portions these tokens were sent around regardless of the status of this vote. And so people were concerned with like, well, like, why are you guys selling tokens? We hadn't, we didn't even approve this thing.

Starting point is 00:23:22 In fact, this proposal ended a few days ago very clearly against. So 76% voted against it, 12.5% voted for it. And the remainder voted to abstain. And then as it turns out, the Arbitrum Foundation and Arbitrum team says, no, this AIP number one wasn't actually a proposal to begin with. It was actually just a ratification process. This is the way that it's going to be, regardless of the Dow vote. And everything after this is up to Arbitrum governance. But this first initial proposal is actually not a proposal.

Starting point is 00:24:00 It is a ratification process. It's just a formality, if you will. But the things in this proposal is going to be the way that it is, regardless of the way that the Dow votes. And so sorry about it is the way. is the way that the community is perhaps interpreting the communications from the arbitram Dow. Anthony, I know you and I both have our perspectives on this and maybe to start this conversation off. I think, I believe you are an arbitram investor. I am not an arbitram investor. And so those are

Starting point is 00:24:33 our disclosures. Anthony, give us your take as to the events. Yeah. So, I mean, there's a lot to unpack here, I think, that people didn't realize at first. But I'll try and keep it short and sweet just to summarize my thoughts on it. So I think what people got most upset about when it came to this was the poor communication and the lack of transparency. So this stemmed from the fact that as you said, this AIP was only put forward as a formality. All of the decisions in here were made before the token went light and before the Dow went live. So essentially all that was happening was that the decisions that had already been made were being formalized and ratified. It was silly for this to even go to a vote, to be honest, because it set the obviously wrong expectations and it confused people.

Starting point is 00:25:17 And it was just really poor communication overall from the foundation here. And people also need to understand that the foundation is something that was spun up as a separate entity to off-chain labs, which are the original developers of the Arbitrum network. So off-chain labs and the Arbitram Foundation are completely separate, legally, logically, and they had to be. and the foundation is the entity that launched the Dow and the token, basically. So what they did was they said that we're going to allocate 750 million arb tokens to the foundation at Genesis, basically, and they made that decision before anything was live, before the Dow was live or anything like that. And then we're going to use that for various activities.

Starting point is 00:26:00 So 10 million arb tokens were sold to cover foundation-related expenses, and this is where another thing that people didn't understand. off-chain labs can't fund the foundation because they have to be separate. So any expenses that the foundation incurred needed to be covered in some other way and they chose to sell $10 million worth of tokens or more than $10 million Arb tokens to fund that. And these expenses included all the legal expenses to set up the foundation, the Dow, the token, everything around that,

Starting point is 00:26:27 and all the administrative expenses, people expenses, everything, it was, I think, $3 to $4 million just for that, right? and not including all the future expenses that are going to be incurred. And then they also sent 40 million arb tokens to Wintermute, which is a market maker, to do market making things. Now, this was not a gift. It was a loan, basically. So they didn't send it to them and say, here, have 40 million tokens.

Starting point is 00:26:49 No, it's loaned to them at some kind of like interest rate. Maybe it's 0%. And then it's also that has a term. So maybe it's a year. Maybe it's two years. But that is supposed to be used for market making on exchanges, whether they be centralized or decentralized. Now,

Starting point is 00:27:05 that stuff wasn't communicated. That's where the lack of transparency and the crappy comms came from. That kind of stuff wasn't communicated initially. And then the community hit back and they did, Arbitrum did communicate this. And actually yesterday or even today,

Starting point is 00:27:19 I don't know if it was today or yesterday. From when we're recording this, Arbitrum posted a bunch of new texts. So they posted a transparency report that covers everything that the foundation did before the Dow and token was launched and they published AIP 1.1 and 1.2, which are actually going to be real proposals that ARB token holders have a say on and the results of the vote is going

Starting point is 00:27:45 to be binding. It's not just going to be a formality. It's going to be a real proposal. So, as I said, like my general thoughts on this was that I think people overreacted. I think that it was just a communications issue here and obviously a bit of a lack of transparency as well. And I think there was a lot of things that people just didn't have the context the round. And that's why they're an uproar about it. And I think since then, as I said, there's this new thread from Arbitrum that came out that alleviates a lot of these concerns and also publishes the much needed transparency along with these new AIPs. And also going forward, the Arbitrum governance has the ability to change the terms now of what the foundation

Starting point is 00:28:24 originally decided on. So they can say, if Arbitrum governance wants to, they can say, well, no, we think 750 million tokens is too much for the foundation. We're going to take a portion of those back and we're going to put it back into the Arbitrum Treasury and they're going to stay there. So those sort of things can happen from now. But yet, the drama was really around AIP1. And as I said, it should never have gone to vote to begin with because it wasn't really going to vote. It was a formality. And that was, I don't know what happened there. I don't know why that was the case. But that's, that was my overall opinion on it. Yeah. And I agree with everything. I really think that the cause for frustration is not because of arbitrum or the choices that they made,

Starting point is 00:29:06 but because of the legal hurdles and legal gymnastics that they are forced to go through as a result of the legal environment here in the United States. So, like, once again, I'm going to point the finger back at just, like, the regulatory environment that forces this, like, foundation structure that also is very, what makes it very, very delicate about, like, how did the tokens come into existence? who gave the tokens to the foundation. All of these things are very careful and very delicate, and that forces that really constrains and constricts these organizations to be able to do what's best for the community and the protocol. And as a result of that complexity,

Starting point is 00:29:45 they had this miscommunication where they said, like, hey, we're going to ratify this thing, but also because of the regulatory environment, it doesn't matter, we're going to have to do this anyways because we are constrained in our choices here. So the first, before this, there's two parts that we're going to cover here. You touched on it a little bit, but there's an April 3rd Twitter thread that Arbitrum put out. And they say, thanks for all the feedback and all the participation on the Dow.

Starting point is 00:30:11 It is likely, the AIP one is likely not going to pass the ratification. But again, the decisions being made are already made. Before we dive in, we want to clarify why 10 million ARB tokens were sold by the Arbitron Foundation. Foundation is a separate entity to off-chain labs. It was established with no funds, no money. The 10 million ARB tokens were sold to Fiat to fund pre-existing contracts and pay for the near-term operating costs. For example, the $3.5 million setup costs that's outlined in AIP1,

Starting point is 00:30:42 the cost to set up the foundation so it can do its job. The foundation does not exist to sell tokens, only sold enough to fund its current operating expenses, and has no near-term plans to sell more tokens. And so that's where the $10 million came from, or excuse me, the 10 million tokens came from. And then also, like you said, the remaining 40 million ARB tokens has been allocated what they say as a loan to a sophisticated actor in the financial market space. That's Wintermute. That's a market maker.

Starting point is 00:31:13 By the way, any ARB token holder is highly interested in Wintermute having these 40 million tokens because this means that, what a market maker does is increase the liquidity of the spot price of the ARB token. So if there is some big fund out there who's unallocated to ARB, yet they are bullish on ARB, they be as a result of this liquidity that's coming from Wintermute can buy ARB tokens without moving the price too much. And so it increases the scope of external actors who can purchase and put ARB tokens on their balance sheet because they're bullish ARB, because there's sufficient liquidity for them to do that. Additionally, on the other side of things,

Starting point is 00:31:57 for everyone who got the airdrop and wants to sell, because they just want to sell and do that, it also increases the liquidity of sellers. So they don't also move the price downwards. And so I think the community, who might be frustrated by this, should consider this increasing the liquidity of R by transferring these $40 million tokens to a market maker.

Starting point is 00:32:20 it's bullish on both sides because people get to exit who want to exit without disturbing the price and it opens up the scope of funds to enter and they otherwise wouldn't if there wasn't sufficient liquidity there. So this is this first tweet thread. That's my explanation for like why we should be accepting this 40 million transfer to Wintermute. This also happened by the way with with OP and optimism. They also sent tokens to Wintermute. This is a pretty normal practice. And then again the $10 million that were sold ahead. of time. It's unfortunate that it was done in this way and communicated in this way, but like anyone who is, in my opinion, questioning the incentives of the Arbitrum team and Arbitrum

Starting point is 00:33:00 org, I think is really kind of missing the point. And so here's another tweet thread that came out last night at 9.30 p.m. my time, Montenegrin time. I think that's 3.30 in the afternoon Eastern time. They said, the foundation will not move any of the remaining 700 million tokens in the administrative budget wallet until an acceptable budget and smart contract lockup schedule has been approved by the Dow. And so the Arbitrum org is responding to a lot of the feedback, regardless of whether it's like justified or not, they are responding to the feedback and the criticisms from the community. So like you said, Anthony, I'm just repeating what you said. Three new documents have been posted. A transparency report about the foundation's initial setup.

Starting point is 00:33:46 AIP 1.1, lockup budget and transparency, and AIP 1.2, amendments to the current founding documents. And so this is just them reacting to the wants and desires of the community. So just some more details on these reports. The transparency report describes actions taken to get the Dow up and running. As these have already occurred, the Dow will not be asked to vote on them. However, the Dow can change these parameters and future and rolls via future AIPs. So that's the first document. AIP 1.1 proposes important restrictions on the foundation spending, including a smart contract-enforced lock-up schedule that releases linearly over four years, further adjustable by the Dow.

Starting point is 00:34:27 And AIP 1.2, also proposes well-defined budgetary principles and categories and mandated transparency reports. These have been posted on the community forum and will be available for feedback for at 72 hours before a planned week-long snapshot vote. So the culmination of this thing is more transparent. and more agency by the Dow, yet the initial 1.1 or AIP1 is still going to go through because that's just needs to happen for legal purposes and for foundation cost purposes and also just because it's, in my opinion, the correct thing to do. Any further thoughts on that, Anthony? Yeah, no, I think that you covered most of it. And I also think that the Arbitrum or Foundation had already had plans to post these things and the transparency of it.

Starting point is 00:35:16 report and everything. Anyway, it's just that they seem to have been following some kind of defined standard operating procedure that they came up with pre-Dow and they just did it and they probably didn't put too much thought into it. They didn't think the community would go into such an uproar. And now that they saw that that was probably the wrong way of thinking about it. They've come back strong, I think. And I'm someone who likes to judge people on what they do after they make a mistake, right? So they made the mistake and now they seem to be really. killing it in making up for it in my opinion. I really do like the transparency report. I've read through it. It covered all of the, I think, questions people had and these new AIPs, which are, as I said,

Starting point is 00:35:55 actually going to be binding as per the way token holders votes. I think we'll go a lot to restoring confidence in the arbitram Dow. Yeah, I want 100% agree. And also, like, sometimes just Dow culture, the foundation is set up with capital so that they can, the purpose of the foundation. So, like, I actually want to go into this a little bit. The purpose of the foundation, as they've stated, is that for the sake of operational and administrative efficiency, a separate account controlled by the Operatrim Foundation will be created, 750 million ARB tokens will be transferred to the administrative budget, for the purposes of making special grants, reimbursing applicable service providers for the total setup

Starting point is 00:36:36 costs, and further funding out of the administrative budget wallet, shall require approval of an AIP from the Arbitrum Dow pursuant to the AIP process. The idea we want, at least me speaking on behalf of the Arbitrum community, we want the Arbitrum Foundation to be able to fund projects, fund people, put money in people's hands without having to be burdened by an encumbering Dow governance process. I think it shouldn't be a shock, but like we have not figured out Dow governance. We have not figured out streamlined and efficient capital allocation and functioning by DAOs. Sadly, centralization still works in this industry.

Starting point is 00:37:21 And the people who make up the Arbitrame Foundation and the point of the Arbitrm Foundation is to be able to move faster than what would be a dysfunctional DAO because, I mean, I'm just assuming that this Dow would be at dysfunctional from the beginning because they kind of all are. So in my opinion, it would be who the Arbitrum community to put power and control in the hands of a select few people, controlled by governance if they ever do something wrong, so that they can move faster and make better decisions than the Dow can as a whole versus mere snapshot vote. That's my like hot take on the matter.

Starting point is 00:37:56 Yeah, yeah, I mean, Dow is when they first started out need a lot of stewarding by, you know, maybe the original team and a foundation that's being spun up. They can't just be here, everyone, we've got a Dow now go to your own devices. There've been projects that have done that before, and I don't think they've been very successful. So I think the projects that will succeed the most when trying to become a Dow is they stick to it, right? They steward it along. But I think for legal reasons, the foundation gets spun up in order for them to enable them to do that, right? And this means that like off-channel labs is just one actor in the Dow.

Starting point is 00:38:30 The Foundation is another actor of the Dow. And then you have the community delegates that are other actors. So you can have those separations there. People will criticize that and say that it's a lot of decentralization theater where they're just doing it because of the regulatory environment. And it's like, okay, well, that can be true. But at the same time, it can also lead to better outcomes later on where it actually does become truly decentralized.

Starting point is 00:38:51 And you have a really vibrant community of stakeholders that operate the down and that kind of submit proposals and people vote on it and they care about doing what's best for the Arbitrum protocol and the Arbitrum ecosystem. So yeah, I think both things can be true at the same time. Just one last rabbit hole during this whole thing. Since we're talking about the Arbitrum Foundation, I just want to put a little bit more color on it. So here is the AIP1, the initial proposal, the ratification thing that kind of triggered the ire of the Dow community members. Some Dow community members is the very loud ones. And here's a part of it that I want to just focus on is like the structure of the foundation and how it works.

Starting point is 00:39:33 So as a Cayman Islands Foundation, the Arbitrime Foundation is required to have at least one director responsible for the management and operation of the Arbitrown Foundation, in particular, approving and entering into contractual arrangements on behalf of the Arbitrm Foundation. Once again, a thing that a Dow cannot do is enter contractual relationships. That's why we need a foundation. So the directors, the three directors who I'm about to list, are responsible for ensuring that AIP's Arbitrum Improvement Proposals do not, one, compromise their fiduciary duties owed to the Arbitrum Foundation, two, violate the Arbitrum Foundation's amended and restated

Starting point is 00:40:11 memorandum of association or bylaws, the Arbitrum Dow original constitution or the AIP process or any other laws or regulations of applicable jurisdictions, making sure the Arbitrum Dow doesn't violate laws. And then three, cause the Arbitrum Foundation to be in breach of or in violation of any contracts agreements or other arrangements. So the foundation is saying, hey, Dow, if we sign a contract, no proposal can go through the ratification process that makes us break the law or violate a contract. So like, kind of just like regular legal stuff. So the initial directors of the Arbitrum Foundation are Campbell Law. Edward Noyans, who I believe is this individual, Web3 directorship and Dow services. I believe this is just like a

Starting point is 00:40:58 a Trad Dow delegate, like a foundation delegate, if you will, somebody who's like disconnected and independent and like provides these services. I'm assuming that he's based in the Cayman's. And so I'm assuming this is a service that this man provides and is well trusted in the space. And then lastly, Ani Banner G, who I also don't know, but I think, oh, I couldn't find out who this person was. Anyways, three initial directors of the Arbitrum Foundation who are like custodians, if you will, of the org. The Arbitrum Dow may remove or elect the Arbitrum Foundation's directors or expand or reduce the number of directors at any time pursuant to the non-constitutional AIP.

Starting point is 00:41:41 So that is the foundation. And then there's also a security council. A committee of 12 members of a multi-sig wallet, which has the ability to perform both emergency and non-emergency actions, further detailed in section free of the Arbottram Dow. and here these people are. Mo Dong, co-founder of the seller network, Harry Kalladner, Arbitrum, OffChane Labs member, Diane Di, co-founder of Dodo, Adex,

Starting point is 00:42:07 Caleb Lau, software engineer at EtherScan, Ed Felton, one of the co-founders of Off-Chane Labs, Brian Pellegrino, co-founder, CEO of Layer Zero Labs, and then Patrick McNabb, co-founder of Mycelium-slash-Tracer Dow, Justin Drake. We all know who Justin Drake is Bartek from Layer 2 Beat, Rachel Bowsfield, software engineer at Offshane Labs, Patricia Wartaller, the Mr. Poap himself, and then also Yoav Weiss, security researcher at the Ethereum Foundation. All of these security members, security council members are paid $5,000 a month in ARP tokens to secure the foundation and do their

Starting point is 00:42:49 roles. And so that is a foundation. That's how it works. That's how it's structured. And so here is my rationale for why people got so upset by this. And it's because crypto people love drama. And so this was a thing to be upset about. And so people decided, elected to get upset about it. And so here is a meme of, it's a Simpsons meme. It doesn't actually make sense if I try to explain this out loud. But the idea is just like crypto Twitter is addicted to drama.

Starting point is 00:43:18 And this is Lisa Simpson drinking coffee. and she's just like addicted to coffee. I was like crypto people love drama. And so this is one billion tokens or one billion dollars worth of tokens getting sold by Arbitrum. Like very hot thing to tweet and like very easy to like pile on to.

Starting point is 00:43:35 And so my explanation for why this turned into such a big deal is like one part the communications could have been a little bit better. And second part, it was really easy to turn this into a very viral like dramatic event. So that's my explanation as to why this turned into what it was. Moving on. Elizabeth Warren tweets out this image.

Starting point is 00:43:53 Elizabeth Warren is building an anti-crypto army triggering the entire actual real army of crypto Twitter. Anthony, what was your reaction when you saw this tweet from Elizabeth Warren? So the funny thing about this is I come at this from like a totally non-U.S. political view because I don't live in America. I don't follow U.S. politics very closely at all, to be honest. And I only know who Elizabeth Warren is, because of her crypto takes and because everyone on crypto Twitter is always complaining about her.

Starting point is 00:44:25 But I know what her kind of like stances are and her policies are after looking into it a bit. And I saw this and I'm like, you know what? This is actually going to be popular with her base. And this is probably going to win her some votes given that right now a lot of people outside of crypto don't have a positive view of crypto because one, they probably lost money in the bull market. right, a lot of people came in at the tail end of the bull market and then lost money in the bear once the bull market just kind of collapsed. And two, they saw a lot of other stuff like terror collapsing last year and FTX, the biggest fraud since basically, what, Bernie Madoff, right?

Starting point is 00:45:03 So I think that this resonates with a lot of people. But as you said, like this triggered like everyone in crypto and the actual crypto army kind of responded to it. If you actually look at all the replies to this tweet, she just gets ratio to a million in different times. I just keep scrolling down and it's kind of, it's kind of hilarious to see all the replies. But yeah, that was my first kind of reaction where I was like, look, she isn't trying to appeal to anyone in crypto at all. Obviously, she knows that this isn't going to resonate with them. Her team knows not going to resonate with them, but she's trying to appeal to her existing base

Starting point is 00:45:36 and any potential new voters. And as far as I can tell, she's in a relatively safe seat as well. and she doesn't actually have to work that hard to retain it from what I've seen. So, yeah, again, this could resonate with those people pretty strongly. Yeah, how many tweets are this? This got 1,500 likes, and then this one response, CoinBiro, the other very big YouTube channel about crypto says, imagine thinking that building an anti-crypto army is going to win you votes, 4,300 bucks.

Starting point is 00:46:08 What I find funny about that is that it actually is going to win her votes with certain people. and it's not going. But what you said is like, it's going to be very popular with her base. Her base was already going to vote for her. Yes, yes. But the people that weren't going to vote for her in crypto, doesn't matter what she does.

Starting point is 00:46:26 They're not going to vote for her, right? So for her, it's like the people, she doesn't have to be friendly to crypto people because they're never voting for her. Even if she is friendly to them, they disagree with her about a lot of other things too because she has a lot of very, I guess, like you call them progressive policies

Starting point is 00:46:40 or very, very, like, I don't want to say far left policies, but like they're pretty on that side of the special. And I feel like in crypto, you get a lot of centrists generally from what I've noticed. And depending on where you go, there are a lot of people, a lot of crypto people define them as libertarians. They're not voting for Elizabeth Warren, right? So to her, it's like, I'm pissing off people that are already pissed off at me and

Starting point is 00:47:04 hate me. So who cares, right? Yeah, it's just increasing the polarity. My big, like, critique here in addition to just like, hey, crypto is not what you think it is. It's just like, people don't like to stand for things in opposition of something. Like, what do you believe? I believe in the anti-crypto movement. Like, that's what you stand for?

Starting point is 00:47:25 Like, it's weird to stand for something in opposition to something else. Like, it's not, you're just like letting yourself be defined by the world around you. Anyways. Of course. It's like someone running on like anti-technology army or like anti-this army, anti-that-armie. Like, it's actually weird for a democratic politician to be running on an anti-kind of, I guess, progressive thing, right? At least from my point of view, it's usually, you know, from my point of view, the conservatives that would be anti-something because they want to keep the status quo. I don't know.

Starting point is 00:47:59 It's different. I know in the US compared to Australia, I'm probably coming at this with an Australian view on politics. But when I saw that, I was like, yeah, it's a bit weird. It's a bit weird. I read an article. I don't have it up here, but this article says, Elizabeth Warren, starting to recruit conservative Senate Republicans to her anti-crypto cause, also getting some early positive vibes from bank lobbyists who also want to rein in digital asset, startups, partnerships

Starting point is 00:48:27 with GOP lawmakers. That's the Republican Party. Elizabeth Warren's the opposite of Elizabeth Warren's party. partnership with GOP lawmakers reflects broader focus uniting progressives and conservatives watchdog groups and bankers wanting to prevent the growth of crypto. So like

Starting point is 00:48:43 it's interesting like this reaction is like attracting bankers and conservatives like I'm anti-bank, not necessarily anti-conservative but Elizabeth Warren certainly is anti-conservative and so it's interesting to see like who she's aligned with that is

Starting point is 00:48:59 adjacent and very different from her actual typical base. She also just gave us the very easy opportunity to make this meme, which is bankless is building a pro-crypto army. And that was just way too easy. And we just got as many likes as Elizabeth Warren. So I'll count that as a victory. And then here is perhaps a slightly mean meme. But this is like, okay, grandma, let's get you to bed. And the grandma says, you know, it's mean, but it's so accurate, right? Like the average age of the, of a U.S. politician is very old. It's not exactly something that would lend itself to being progressive generally on technology because typically a lot of the older folks

Starting point is 00:49:36 don't understand it because they didn't grow up with it and it's a lot it becomes hard from the wrap their head around it. And so and I think it's not just technology. It's, it's a lot of things. And I don't think that's a controversial opinion to have where the too many old people run the country. And I actually saw someone say this on Twitter. I don't know who it was, but they said it a little while ago where they said, we don't trust like the old people in a lot of other jobs, but we trust them to run the country. Like, how does that work, right? Yeah. Since we're talking about Twitter drama, let's move on a little bit to Elon Musk, who turned, if bankless listeners who are viewing the YouTube, will notice that in the top

Starting point is 00:50:13 left corner of the screen here, there is no longer a little Twitter bird icon, the little blue bird icon. There is a Doge icon. Elon Musk, this last week, replaced the Twitter bird with Doge. And then he tweets out a very old. screenshot of some old tweets between him and Wall Street Betts chairman, Twitter account, talking about one of the original conversations about Elon Musk needing a new platform. This was in like the platforming conversations way back when. And Chairman, Wall Street Betts chairman just says, just buy Twitter. And then he follows up saying, and then change the bird logo to a doge.

Starting point is 00:50:53 And then Elon Musk follows up saying, ha ha, that would be sick. fast forward to today he did it he did it he changed the Twitter icon to Doge Anthony you use Twitter a lot what are your thoughts it's not going to save Twitter's revenue well you know what is going to save the price of Doge which pumped a whopping

Starting point is 00:51:18 4% up in Doge well done Elon well done pumping Doge yeah just He's got this weird fascination with Doge that just doesn't seem to be going away for him. And I don't know, it kind of felt like a late April Fool's joke that kind of just stuck around for some reason. I saw it. I was like, whatever.

Starting point is 00:51:41 I wasn't even surprised, honestly. I was like, you know, this is just Elon doing Elon things. But at the same time, it's like, bro, I think you should be focusing on Twitter's massively declining revenue and hoping you can kind of save that, right? moving on to actually some other some further Twitter drama actually to really round this out this is the last big news of the week before we get into the regular old news Kobe has done this in the past this is Kobe the Twitter account famous crypto Twitter personality we've had them on bank list for episode number 100 tweets out this hash very long hash and this is an activity that he's engaged in in the past a number of times

Starting point is 00:52:19 where he just tweets out a hash and it's basically using Twitter as like a public time stamping tool. Someone, oddly enough, was able to decode this hash and this hash read Interpol Red Notice for CZ. A red notice is a very big deal. It's basically saying all the countries that abide by this agreement arrest this man when you see him. So it's like an international warrant for your arrest. So Interpol red notice for CZ. Perhaps a very big deal. BNB token dropped like 10% on this news causing a bunch of liquidations. Bitcoin and Ether dropped on this news. And someone, so then crypto Twitter started to ask like, okay, how did they hack?

Starting point is 00:53:01 And how did they decode this hash? Because the point of the hash is for it to be hidden unless you know the secret. The secret is Interpol red notice for CZ. But only Kobe, in theory, would be able to decode this hash using that seed phrase. So it's a way for him to like timestamp in public a statement, but not actually reveal the statement. So as a result of this news, a lot of people started to get really fearful. What, did CZ go into jail?

Starting point is 00:53:28 Is Binance being taken down? And so Kobe tweets out, I have posted Shaw 256 hash of rumors over 20 times in the last year without the secret being revealed. The point of a hash commitment scheme is so that no one is supposed to be able to read them until after the secret is revealed. And so one of the big news that's happened is that CZ had to tweet out that this was just fud, latest fud, only spread by our crypto news outlets, likely planted, sponsored by another exchange,

Starting point is 00:53:57 very petty, hurts the industry and hurts themselves, basically completely denying all fud. And then Kobe presents another tweet thread that says, hey, this secret of this hash was not supposed to be revealed. Kobe says that he discussed this rumor with a handful of possible people, and someone that he discussed this rumor with and implicitly shared the seed with, leaked the seed to cause a stir at Kobe's expense, removing the context of the rumor. Highly doubt any theories about brew forcing the hash are true, since no others have been broken,

Starting point is 00:54:30 including the one I've posted after the other hash. Anthony. Open and shut story, it's already concluded. It's easy, apparently, is denying all rumors about a red, interpol red notice. What's your take here?

Starting point is 00:54:45 This literally all happened while I was sleeping. Oh, really? Yeah, the entire thing while I was sleeping. So the initial, the hash that Kobe put out the someone decoding it the price going like down CZ tweeting about it and then waking up

Starting point is 00:55:01 to Kobe apologising that's literally in the eight hours I was asleep this all happened so for me it was like okay this is just drama that I completely missed I don't have to worry about this but I mean it's just it goes to show that like even trolling like at this scale I guess

Starting point is 00:55:16 can be quite quite damaging but I don't think I blame Kobe for it to be honest considering that this is kind his brand right to just troll and uh obviously as he said uh breaking it or brute forcing it is quite difficult um even if it's unsalted so someone in his circle kind of i guess i wouldn't say betrayed him but like leaked the information um but yeah i think people with a large following generally forget like how much of impact that can have uh i know you know sometimes we can forget as well depending on what we kind of tweet out and what we put out there so and it's kind of hard for

Starting point is 00:55:50 for people to remember that sometimes. And yeah, I think that these moments are humbling for those people. Yeah, but I even wouldn't say that like Kobe was even doing that. He wasn't trolling. I think the idea was like he was trying to get a flex so that if a red notice was actually issued,

Starting point is 00:56:07 he would be able to say like, oh, I learned this at this point in time. It's like shame on Kobe's trusted friend that leaked that information. Like that's really where the blame should be placed, but we just don't know who that is. Yeah, yeah. And it sounds like now they're just...

Starting point is 00:56:20 Yeah, yeah, no, I can, I can see that. But, I mean, the reason why I say trolling is because Kobe always does that. Like, he's always your posting on Twitter and trolling. So it could have been just both, right? He could have been like, oh, it was a troll or, you know, I was right, basically. All right, fam, coming up next, we're going to get an update on the Euler Explort. That story is concluded right after we talk about it. And there's some drama in the MEP flashb bots world.

Starting point is 00:56:46 There's a bunch of raises, so perhaps more jobs coming. our way and overall we're going to get some updates on EIP 4844. And so much news is coming right after we talk to some of these fantastic sponsors that make this show possible. Learning about crypto is hard. Until now, introducing Metamask Learn, an open educational platform about crypto, Web3, self-custody, wallet management, and all the other topics needed to onboard people into this crazy world of crypto. Metamask Learn is an interactive platform with each lesson offering a simulation for the task at hand, giving you actual practical experience for navigating web internet. The purpose of Metamask Learn is to teach people the basics of self-custody and wallet security in a safe environment.

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Starting point is 00:58:39 With Arbitrum, experience Web3 development the way it was meant to be. Secure, fast, cheap, and friction-free. The Euler story coming to a conclusion, Euler Labs tweets out, ready for an update? Yesterday, after three weeks, the Euler Exploder of March 13th returned all of the recoverable stolen assets

Starting point is 00:58:56 to the Euler Dow Treasury. It is one of the largest recoveries in Dufi history. So $200 million exploited, $200 million returned. I've seen plenty of exploited money being returned back to the original Dow before, but not of this size and not nearly close to 100%. percent. Great news. Congrats to the Euler team. It's weird to say congrats to this, but I'm sure this is a huge weight off of their shoulders and also to all of the affected users of Euler. Anthony, give me your thoughts.

Starting point is 00:59:34 Yeah, I mean, this is obviously the best kind of result that anyone could have hoped for by far. I think that initially when I saw this playing out, I said on my own show that I didn't think that the funds would be returned because the hacker was already moving them through. tornado cash. But it does seem like the hacker or hackers were either identified or close to being identified and they kind of got scared and were like, holy crap, we need to return the funds now or else we're like, we're screwed because they didn't even keep the bug bounty that Euler offered them, right? They basically said, hey, you can keep like 10% of it or something, just return like the rest of it. They didn't even do that. And 10% of it was $20 million, right? So it seems like the investigations that oil labs and associated parties and just like freelance parties were doing actually paid off.

Starting point is 01:00:24 And they probably ended up finding out who they were or were very close to it. And the hackers were like, you know, this isn't worth it. Let's just return everything. And I don't think oil labs is going to be pursuing legal action anymore on this front. But someone else still might, right? If they know the identities and they pass that on to law enforcement, law enforcement might still want to do it at the end of the day. So, you know, who knows? But the positive thing is, the only thing that really matters at the end of the day is that pretty much all the funds were

Starting point is 01:00:51 returned. And there is also a proposal now, or not a proposal, like a breakdown of how they're actually going to be returned to users. So people should be made whole very, very soon. Yeah. So Euler continues to tweet out, all energy has now been turned to making sure affected users can claim back their share of the recovered assets as soon as possible. The claims calculations are not necessarily simple and a little bit more patience will likely be needed before. Assets can be claimed by their rightful owners. A proposal will be published shortly, including an outline, questions, thoughts, and contributions regarding the claim process should be posted on the orular forums.

Starting point is 01:01:26 My mind is like, it's two things, one of two things happened with this exploiter. One, they found who that person is and they say, hey, we are going to come with the full force and might of legal agencies and throw you in jail as long as possible. the exploiter felt really bad and returned it. I'm going to go with the first one. I think they're like exploiting $200 million on the internet, even with the best like VPNs and tornado cash and like ZK tech, even using all of that tech to the best of your ability,

Starting point is 01:02:02 you're going to leave a trail. And I think this, this effort really tilts power to the hands. It already was, but really exemplifies how much power is, in the hands of people, like the non-exploaders. The, as an exploiter, you don't have that much power, even if you exploit $100 million, $200 million, $5 million.

Starting point is 01:02:24 The trail that you leave, the data that you leave is going to be enough for people to find you. And so just don't do it. Just don't do it. Just like be, do bug bounties. And that's you're a nation state that doesn't care. Unless you're North Korea. Yeah.

Starting point is 01:02:38 They don't give a shit if they get caught, right? but that's a bit of a different situation. Yeah. Moving on. Retroactive public goods funding number two, if you are not familiar with retroactive public goods funding, it is kind of a new frontier of grants giving in the Ethereum ecosystem specifically for public goods.

Starting point is 01:02:57 So this is out of the Optimism Project. This is one of their big experiments with funding public goods and Dow governance at large. And so we now have the results of the second retroactive public goods funding And so here on the screen in very tiny text because so many people got a bunch of money, we can see where a lot of like, I think something like $20 million got allocated in OP tokens to, coming in at number one at 8.3% L2B, 7.5% ETH Global, 7.3% Build Guilds, 6.7% X-Partec, 6.1% ZACXBT, and it goes on and on.

Starting point is 01:03:38 Pollynea got 3.2%. Bankless Academy got almost 2%. So congrats to you guys. And it goes and it goes and it goes. And so this is kind of like Gitcoin, but with a new flavor and a new style. And so many people... This is like Gitcoin on steroids though, given the amounts, right? Like back in the Gitcoin grants that days of when, in the earlier days, like this was, I guess, something that people could only dream of.

Starting point is 01:04:07 because you're giving the percentages, but the actual amounts here and then translate to dollar amounts are huge on this. Because the OP token is worth over $2. So if L2B got $250,000 tokens, they got half a million dollars, right? And then individuals like Zach XPT got almost $200,000 tokens, which is like almost $400,000. You mentioned Polinaia, 100,000 tokens, it's $200,000. Like, these are really big amounts that have been given for past work,

Starting point is 01:04:36 that have been done in the in the crypto-etherium ecosystems and this is just the educational one. There are two other categories that got a lot of tokens as well. And this is a tiny portion of the total tokens that are allocated. There's 800 million OP tokens in total allocated to these rounds, right? And this was only a 10 million OP token round. So there is still plenty of tokens left for future rounds. And if the OP price maintains around $2, that's huge. amounts because it's not like this was only distributed to a small set of projects. This was

Starting point is 01:05:11 distributed to 170-something projects, so a lot of love was spread around here, which is just, yeah, it's amazing to see. Yeah, protocol, I didn't even realize that. I was just looking at the education section. So here we are in infrastructure. Protocol Guild got 15% of infrastructure token, so I guess a percentage doesn't even matter now. Protocol guild got... Over a million dollars worth, yeah. Yeah, 557,000 open. token. So like one, one point two million dollars, Geph, we funded Geth. We funded Geth. That's so crazy that we funded Geth. The execution client of the Ethereum layer one, now also layer two, or excuse me, now also Ethereum 2, which is blasphemed to use that terminology. Solidity, Lighthouse, Gourley,

Starting point is 01:05:58 all of these clients, these open source Ethereum clients that are Ethereum got funding, in like famously always having a funding problem. O-P craft, the Minecraft using the OP stack got funding. It's a safe Nosis wallet got funding. Man, this is really, really cool. And this goes back to just like one of the big core reasons why I'm here in the space is human coordination and funding open source.

Starting point is 01:06:25 The bull case for this whole thing is like being able to give financial rewards to open source public. goods things. And so optimism is really just leading the charge here and putting a lot of money into corners of the internet that previously would not have been able to get it. So if this interests you, if you have something of value that you are building and you think that you could use some grant funding to continue doing that thing because it's open source, it's a public good, something of this nature. Make sure you sign up for OP grants public good funding round number three because that is eventually coming. I'm not 100% clear on how this all works, but I don't think

Starting point is 01:07:03 you can necessarily sign up for it. There is a bunch of optimism governance delegates. I think there's like 80 of them that nominate projects and then they all vote on it and that that's how it's all weighted. So I don't think you can necessarily quote unquote sign up. Someone has to nominate you. But if you're visible enough, if you're doing good enough work, you could possibly, you know, post something somewhere and say, hey, like this is all the work that we're doing. Please consider us for for this round sort of thing. but it's not like Gitcoin grants where everyone puts their own grant up there and then it's a different kind of way of doing things. And also just one other note here as well, as I said, I believe there's 800 million OP tokens being allocated to this, which is a huge chunk of the supply. I believe it's like, what, 20% of the supply or something?

Starting point is 01:07:48 It's something crazy, right? Imagine a public company doing that. Like when a company goes public, right, in the real world, imagine them allocating 20% of their shares to the, I don't know, know, whoever builds on them, the ecosystem around, whoever creates educational tools for them. It doesn't really work for, I think, centralized companies. I think it works extremely well, obviously, for decentralized protocols because you have such a broad ecosystem that can build around it and on top of it and are incentivized to do so for different reasons. So that's why this is such a huge deal, because it is a large amount of

Starting point is 01:08:20 money that is, and a really cool thing is that it's actually subsidized by the market. The market, people buying O.P. tokens is the reason why O.P. is worth. much. So like people, some people say, oh, it's printed out of thin air. It's like yes and no. It is printed out of thin air, but people are paying for it. So it's not like it's just money that's not worth anything. People are actually paying for it. There's liquidity there. So it's actually really cool. It's basically regenerative finance, redirecting speculators to public goods. And I think that's what excites me most about it. Yeah, Digen to regent, certainly. Yeah. Exactly. Yeah. It's been my almost like both my investment philosophy.

Starting point is 01:08:59 and also reason for being in crypto, that the ecosystem that has the best public goods infrastructure wins. Which country has the best bridges, the best airports, the best roads, the best sewage, the best like water piping? That country is going to be able to foster development and innovation and quality of life better than a different country that doesn't have that same sort of emphasis. And so this is just the beauty of crypto. is that public infrastructure, public goods, the quality of that public goods increases the

Starting point is 01:09:36 upside and financial returns of the things that we invest in. And so this is why optimism's retroactive public goods funding effort is both good for humanity and also really bullish. At least that's my take. I'm also an advisor to optimism because I believe in this stuff. Okay, Anthony, I'm going to need your help to walk me through this one. But there was some interesting new events in the world of MEV on Flaskin. bots where a rogue validator, this is a tweet from Mudit Gupta,

Starting point is 01:10:04 rogue validator on flashboats exploited other MEP bots. And so stole, stole, I want to ask you if this is the right word to use, stole $25 million from an MEP bot. And this MEV bot, what they did is they try to do a sandwich attack, which is a normal, pretty frequent thing to happen on Uniswap. Like 50 sandwich attacks have already happened since you've listened to this episode. the idea is someone comes in, buys a token on Uniswap, because they bought that token on Uniswap, they moved the price 1.5%. An M.AV bot sees that, and so they buy the token ahead of the person

Starting point is 01:10:40 buying, again, ahead of the person who's just going to just ape in. And then they sell those tokens that they just bought to that person at the 1.5% higher price. And then they sell the tokens on the other side. And so the MEV bot can capture and pocket that. arbitraise basically and they just reduce the optimum execution price for this person just making a market buy and they're able to pocket 1.5%. So this is the normal occurrence happens all the time. It's maybe even happens since I just started talking about the sentence. But what is new here is that a validator took the sandwich bundle from an MVV bot, which is how this works. It bundles up transactions and replaces the victim transaction with its own that

Starting point is 01:11:24 exploited the MEV bot and managed to seal $25 million. Never before done, but use the flash botch protocol to get this done. And so now I think the concern here, and can correct me if I'm wrong, Anthony, is that any validator who's processing a block has this ability to do this if there is a sandwich attack bundle in the block that they propose. And that is the new concern here. or at least maybe that's only true inside of the FlashBots sidecar protocol. Can you explain this anything I missed here? Yeah, I mean, there's actually a bit to unpack here. So basically, so maybe just to explain how this all works from a more basic level.

Starting point is 01:12:11 So FlashBots is a company that developed a software called MEV Boost. Now, the MEV Boost software is used by about 9, well, 90% of validators talk to the MEB boost software. in order to build their blocks for them. It's called external block building. And there are a bunch of relays that you can connect to as a validator and it'll build your block that way. And this exploit that happened was an exploit in the MEV boost relay software that allowed this to happen.

Starting point is 01:12:41 Now, this has actually since been patched, but the patch has also led to its own negative consequences. But the patch, from my understanding, should make this impossible to do now. You won't be able to do this again. This was actually just the one-off kind of exploit, and then it's been patched. But at the same time, what the validated did was actually punishable

Starting point is 01:13:01 by the Ethereum protocol. So this validator itself has been slashed. It got slashed, it lost one-eath in slashing for proposing two blocks, basically double-signing, proposing the same block twice. And the thing is, is that that didn't actually work

Starting point is 01:13:19 to dissuade them, because losing one-eath to profit $25 million obviously is a good trade, right? But yeah, as you say, any validator can do this exploit, but the exploit itself, as far as I can tell, isn't possible anymore. Now, the patch that FlashBots introduced for the relay of software to prevent this from happening, as you can see here from Mariano's tweets, actually, unfortunately, makes it more difficult for solo validators to propose blocks. And it makes it so that there's a higher chance of them missing their block proposal, which means that overall effectiveness of

Starting point is 01:13:57 the network goes down. And what this means is that there's more missed blocks on the network overall, and that leads to network degradation. Now, it's not that big of a concern. I think it increased it by maybe 2% so far. Over time, that may go up as just more of solo validators miss blocks, right? Because they may be running low-powered hardware. And if they're talking, if they're outsourcing their block building to a relayer, it adds extra late. This patch adds extra latency to that. And then because they're a solo validator on lower powered hardware,

Starting point is 01:14:29 they could lead to a late block or a missed block. So, yeah, the patch itself, the initial patch has led to this. But I think there's even, there's another patch coming or there's more work being done to help this along as well. But yeah, this wasn't an exploit of the Ethereum Protocol. This was an exploit of the MEP. boost relay software that did not account for this because essentially in the MEV world, I think most people assumed that validators wouldn't engage in this behavior, that validators

Starting point is 01:14:59 would essentially just play by the rules where that that's not the case, right? And if you're a solo validator, a single validator has a chance to produce a block, a really low chance, but it should on average produce a block every three months. I think these validators were spun up a few weeks ago, so it got lucky. there wasn't just one validator that was spun up. There was multiple ones that this attacker spun up. So it fell into the amount of time that you would expect for this validated to propose a block. And obviously, if it had happened on one of the other validators,

Starting point is 01:15:31 they would have done this exploit on those. So they were prepared for this attack. This was a premeditated, you know, maybe months in advance attack. And they're like, all we need to do is be able to propose a block, and then our exploit will go through and will profit this amount of money. Now, I don't know if I'd use the term stole. I don't know if steel is the right word, because generally people really hate the MEV bots that sandwich attack because it's such a toxic

Starting point is 01:15:54 form of MEV. But technically it is stealing because you took money from, you know, took money that wasn't yours, so to speak. But sandwich attack is steal money from users by taking money that's not theirs as well. So it's like, it's kind of like, it's funny how it's a different way of thinking about it. But yeah, that's the general gist of what happens. So I think the clearest thing I want people to be on, So the thing I want people to be clearest on is that this was an exploit, not in the Ethereum protocol, but in the MEV boost software, which most validators talk to, which is another problem in of itself. Like this MEV boost sidecar software is not great for a number of reasons and is only necessary

Starting point is 01:16:33 because of MEV being such a big thing. But there are a lot of initiatives in place to basically obsolete MEV boost. One of them is called PBS, or enshrined PBS, I should say, proposed a builder separation, which is basically taking the MEV boost software and saying, let's just stick it into the core protocol so that this isn't just some sidecar software, it can actually just work as part of the core protocol. But MEV Boost being a sidecar software is really great for testing it out and informing PBS designs because now we know that validators are actually going to engage in this behavior

Starting point is 01:17:06 so we have to design around it and we have to make sure that they can't do this. So there's a lot of moving parts to it, but hopefully that summarizes most of it for people. but if people don't understand it, it's fine. This is a very complex topic overall when it comes to MEV. Yeah, certainly. And if this subject matter intrigues the listener, we did an episode with Matt Cutler from BlockNative talking about the supply chain.

Starting point is 01:17:29 Very good episode. Yeah, I remember that one. Yeah, super good episode. And so you can get a full unpack of the whole supply chain of this and also how PBS will eventually become a part of the Ethereum protocol. I will say whether or not you want to call it stealing. I think it's more or less informed by the fact that the person that did this, the validator that did this, funded their wallet via Aztec, a privacy tool. So it's kind of like an omission of guilt.

Starting point is 01:17:53 Like you came in with privacy tech. Like you know, you know what you were doing. That's a dangerous thing to say though. That's a good point. I will accept that. Well, but yeah. Well, not that not that you're implying that their only reason people use privacy tools is to commit crimes. That's what you just said.

Starting point is 01:18:10 So the wallet that funded this, that did this exploit, they've done one thing, which is fund this validator out of Aztec. If I, if it was another wallet that was like trading NFTs and then like trading on defy and then used Aztec, I was like, oh, that's just a normal use of Aztec. But the, this one validator funded their wallet with Aztec to intentionally obfuscate where the money came from. I think that's like kind of an admission of guilt. yeah but that's if you think that what they did was stealing right right because maybe they don't think what they did was was actually stealing maybe they thought what they were doing was a highly profitable trading strategy right and i just didn't want people knowing who they were

Starting point is 01:18:52 that's what i'm saying it's funny like when you get into that that discussion with people because people will have different views on it but yeah i get what you're i get what you're saying about funding it via a privacy protocol um but but generally yeah i think that it just depends you ask really. There's no kind of, I guess, hard law or hard fact around it. I think that that does depend on people's different opinions on it. Right. A sandwich attack from Uniswap will rob a victim of like 1.5% and that is, some people interpret that as theft. This robbed someone of $20 million. Yeah, yeah. The numbers are a little different here. Yeah, yeah, that's true. Peter, Peter Siglasi, he's one of these open-source.

Starting point is 01:19:38 core devs who works on Geph tweets out synthetic stress test for my 4844 blob transaction pool attached to zero to four blobs to every inbound transaction on main net and dump it into the blob pool what this really means is Peter here is stress testing the throughput of a post-ethyreum 4844 world he said the result is 10 gigabytes worth of pending transactions at a churn rate of 150 per block 80 milliseconds hit after block processing not negligible RAM usage, CC Jesse Pollock of Coinbase. Sazzle, Anthony, can you interpret this for me? Yeah, yeah.

Starting point is 01:20:16 So, I mean, I think you got it. He's stressed testing what an Ethereum network looks like when AIP 4844 or blob-style transactions are hitting the network. He's seeing if Geth can handle it without significantly bumping up its RAM usage or hardware usage and its latency as well, which is critically important. And as I was discussing before, latency is very important for validators because you want to be able to propagate the block to the network in a timely fashion. Blocks are only 12 seconds. Obviously, if it takes longer than that, you're going to miss a block.

Starting point is 01:20:48 And it's not going to be great for anyone. So it's very promising seeing this because Geth has traditionally, I think, been one of the most maybe hardware hungry of the execution layer clients. So if Geth is able to do this like with the same hardware requirements and negligible increased RAM usage here, year than the other client should as well. But it also points to the fact that like 4844 is just making such amazing progress and we should be on track to get this delivered by in the next upgrade, which is called Cancun, hopefully by the end of the year. This is the one that's coming after Chappelleau, which is due in a few days.

Starting point is 01:21:21 So yeah, just very promising developments happening here. OpenC Pro is now introduced a while ago. OpenC acquired Gem, an NFT aggregator. And they have done a rebrand into OpenC Pro. and so that is now up and running. And Argentine airline is issuing tickets as NFTs on a blockchain that you can transfer to someone else and they can use that ticket, which is pretty crazy. And so you buy the ticket from them. There's no additional fee from just buying the ticket.

Starting point is 01:21:53 But then this airline collects 2% on any time one of these NFTs is traded, transferred, and then whoever wants to redeem this for an actual flight can do so. Kind of crazy. Micro Strategy now owns one out of every 150 Bitcoin's that's ever in existence. That's a tweet out of a Bitcoin magazine. And something, and I'll pause here for your take, Signature Bank turns out was a service provider for Tether and actually gave Tether an inroad into the American United States onshore financial system, which gives us perhaps some increased indication as to why perhaps signature bank

Starting point is 01:22:33 was more under the crosshairs of regulators and the FDIC and the Fed than other banks. Anthony, any take on any of that is? Yeah, I mean, the Bitcoin news with Sailor owning one out of it, or micro strategy, I should say, which is basically Sailor, owning one out of every 150 Bitcoin. I don't actually think this is a good thing at all. I don't think it would be a good thing for any crypto network that's trying to be decentralized. This just points to extreme wealth concentration.

Starting point is 01:23:02 Imagine if someone. in the, I guess, U.S.D. ecosystem. I don't know if that's the correct term, was able to own, you know, a huge chunk of the USDA supply, right? Like, and they do. And it leads to a lot of negative consequences and it leads to a lot of wealth inequality, I think, for people. So, yeah, I don't actually consider this to be a good thing

Starting point is 01:23:23 for a number of different reasons, one of them being the perception of being, you know, a lot of unequal wealth going on there. But that's just generally my take on that. And then the signature bank stuff, look, Tether, obviously, people have a lot of opinions on Tether, and they have had that for years. And it's obviously not something that US regulators are a fan of because they don't have much visibility over it. So if they saw that signature was servicing Tether in any way that was relatively large,

Starting point is 01:23:53 they probably used that as justification for going after signature. Or one of the reasons, they probably looked at it and like, wow, okay, there's this shady, dodgy thing. that we don't have much oversight on and signatures servicing them, well, we're going to shut you guys down because we don't like this, basically. So there could have been a bit of that. But it's very hard to tell because this stuff isn't public yet, at least. And you need to submit freedom of information requests in the US to get this information.

Starting point is 01:24:18 And you're never guaranteed to get it either because of one reason or another. So, yeah, a lot of it is speculation. But, I mean, it's no secret that the US regulators don't like Tether. Yeah, indeed. ZK. Sink had its first outage. The ZKZE-K-Z-K-Ret network experience downtime from 152 to 602 a.m. Central European time. The team identified the cause, resolved the issue, and the system is now healthy and back online. And then they issued a post-mortem after they had some time to look at what actually happened.

Starting point is 01:24:52 So TLDR, the fix took five minutes, they say. The monitoring of what happened has significantly improved. They say, remember, era is an alpha. in decentralizing the sequencer is, of course, the long-term goal. And so just to really do the TLTR as to what happened here, the database for the block queue, the queue for ZKSync blocks failed, causing the block production to halt. The database health alert did not trigger because it could not connect to

Starting point is 01:25:20 collect all its metrics. Despite this, the server API remained unaffected. Transactions continued to be added to the menpool, and curies were served normally. They have comprehensive monitoring, logging, and alerting in place across all components. However, since API was functional, none of them were triggered. It's a challenge to predict and cover all edge cases all at once,

Starting point is 01:25:38 as situations like no blocks for a while can actually be quite normal. At the time of the incident, the entire team was together at an offsite. While the team is usually distributed, the engineers online in various time zones around the world. In this case, it was 2 a.m. for everyone when the problem occurred, however, the fix was implemented within five minutes, they say. they've assigned a special role to our database monitoring agents, enabling them to connect to the database and continuously gather metrics, even during database issues, similar to the ones that they experienced at the time,

Starting point is 01:26:09 and they have done some other things as well, so they've shared like database stuff that kind of goes over my head. Anthony, what's your take? So two main takes here. One, I mean, this is the pitfalls of centralization, right, where if you're centralized with one sequencer and there's like a centralized team managing it, it goes down, it goes down, there's no way to, to get around that. Whereas

Starting point is 01:26:32 decentralizing the sequencer, let's say there were 10 different entities running a sequencer each, right? If five of them went down, it wouldn't matter. There's still five processing the transactions. And that's the beauty actually of L2s, or one of the cool things about L2s is that you actually only need one of them. So if nine of them went down and one was still processing the transactions, you would, it would still be fine. You probably wouldn't even notice that anything was wrong, right? And then two, in a contrast, It's probably clear ones, which needs two-thirds of them to be online. Yeah, well, yeah, exactly.

Starting point is 01:27:03 I mean, it depends on which layer one it is and depends on what, how they operate. But yeah, it's one-thirds or two, I mean, so, yeah, it can be one-third or for it to be online for the stuff to be processed, two-thirds for finality on Ethereum. I mean, as I said, it's different per network just depends on what system they're using. But then secondly, in a properly constructed L-2 that has an exit to L-1 functionality, even if all the sequences are down, you can still exit to L1 on the L1. So you would be able to use the Ethereum Network to interact with Ethereum Layer 1 network, to interact with the L2 contract in order to withdraw your funds,

Starting point is 01:27:41 even if all the sequences were offline. And that can be done today with Arbitrum. I don't know about optimism, but I know for a fact Arbitrum has an exit on L1, which means that even if the Arbitrum Sequencer never came back online, you would still be able to get all your funds back by doing the transaction on L1, like a normal transaction that you would do, which is the power of L2s. And this, again, speaks to what you were just saying about,

Starting point is 01:28:05 how this is very different to an L1 going offline. And L1 going offline means that literally everything built on top of it no longer functions. There is no way to get your money out. If the L1 goes offline, your money is basically stuck. You can't withdraw. There's no transactions being processed. You can't send your funds to an exchange to sell them for fiat or whatever, right? whereas with an L2, properly constructed L2 that has an exit on L1, you know, the L2 can go offline.

Starting point is 01:28:30 It doesn't affect any of the other L2s, right, in terms of operation. It doesn't affect the L1, and you can exit to the L1. So that's why Ethereum L1 focuses a lot on liveliness and how you get liveliness and, you know, high up time is by limiting the amount of hardware that's required to run the infrastructure of the chain and limiting how much transactions per second the layer one can do, which obviously results in high fees, but this is the whole kind of modular roadmap

Starting point is 01:29:00 that Ethereum is going through for scaling, where keep the L1 decentralized with really, really good liveliness by keeping hardware requirements low, by sacrificing TPS at L1 and scalability at L1, but get massive scalability at L2 with those nice properties

Starting point is 01:29:17 of being able to exit to L1 if you need to. Yeah, Anthony, you've seen my fighting with the Solana and Avalanche communities on Twitter these days. And they claim that we, me and other people, they would probably include you here, is that we don't hold our own layer twos to the same standards that we hold other layer ones. Because when Solana and Avalanche go down, all the Ethereum people are like, this is why you use Ethereum. Do you agree with that take? What's your take about that take?

Starting point is 01:29:46 I mean, I think that it's a kind of funny take because I think that the L2s, are competing with these kind of monolithic L1s like Salana in terms of competing for on the execution side of things, executing transactions. But at the same time, I wouldn't compare an L2 to an L1 on the liveliness side of things because it's two very separate things, as I just explained how L2s are very different to L1s. So even though I think the L2s are competing with L1, monolithic L1s, on the execution side of things, on executing transactions, on getting used. and economic activity and all that sorts of stuff,

Starting point is 01:30:23 I think that there is still a very big difference between an L2 and an L1 when you're talking about the liveliness of the chain or the way the chain operates because as I just explained, an L1 is very, very different to an L2. Certainly. And moving on to other parts of the ZKC ecosystem, they got $100 million in TVL in the last four days.

Starting point is 01:30:44 So the growth in DKSink seems to not be impacted about this. And also, Argent, who I know has been, waiting for ZK Sync to ship their ZKEVM for a very long time. Now has ZK Sync era as something that you can access inside of Argent. And so I am very bullish and excited about the frontier of ZKEVMs. I know you are as well. And also I will add my disclaimer. I am an advisor to Matter Labs,

Starting point is 01:31:13 the software company behind ZK Sync. Raises. Raises. Okay, ledger. Ledger. Everyone's got a leisure these days. I'm pretty sure. At least I got like six of them. Ledger raises $108 million, adding more money in its series C funding. And so no change in valuation, but $108 million back into the bank,

Starting point is 01:31:35 into the bank account for Ledger. Congrats on the raise. Layer Zero raises $120 million at a $3 billion valuation. This was a bull market raise. It's just now being announced like many, many months later, which is why this like valuation raise around is insane. And sometimes this happens just for like legal reasons. Li-Fi, Leifi, is it Li-Fi? I don't even, I go between Lefie and Li-Fi. I don't know what to land on. Li-Fi, which is a cross-chain bridge, decks aggregator,

Starting point is 01:32:11 aggregator has raised $7.5 million in a series A led by coin fund and superscript. Also, Anthony and I are angel investors in Li-Fi. a previous round, so there's disclaimer there. If you want to use the Li-Fi cross-chain decks aggregator aggregator, you can check it out at jumper.com. It'll put you from any chain you want to any token that you want in one big trade. Pretty common there, or pretty common UX there. It looks just like un-swap. And then lastly, ENS.d. Vision, which is kind of just a data aggregation site for the ENS world, ENS domains, just led two million dollars in funding round. One confirmation, I believe was the lead along with Mark Cuban, Bology, Super Rare, DYDX, and

Starting point is 01:32:57 OpenC. And those are all the raises of the week. Pretty healthy raise week. Anthony, any takes on all these raises? There's still plenty of money out there that's willing to fund crypto projects, which is obviously pretty cool, pretty bullish generally. I think that, as you said, like there are some raises that may seem insane to people, but they were done quite a while ago.

Starting point is 01:33:16 And a bull market raise is actually six months into a bear market. So I would consider anything up to like mid-2020 to be a bull market raise. So even if the raise was done in like May or June of last year, that I would still consider that a bull market raise because VC tends to have a six-month lag to the public markets in crypto. So yeah, if you see these wild numbers, just know that they were most likely done when markets were a lot more favorable and the appetite was a lot bigger.

Starting point is 01:33:42 But these days, from what I've, seeing the valuations on pretty much everything are down a lot because of the fact that it is a bear market, which is actually a pretty good thing for investors because they're looking at this and being like, wow, okay, I've got all this capital and the valuations are really low compared to what they were in the bull market. This is a better kind of risk reward return for me. Let's fund this. And that's why you're seeing a lot of things keep getting funded because there's still a lot of money there to go into these projects. Yeah, I think a lot of people are more kind of concerned. and some of the layoffs that are happening,

Starting point is 01:34:13 both in the Trad Silicon Valley Tech World and also some of the bigger crypto companies that are out there. But man, it's just, in my opinion, it's just a transfer of talent from the big companies to the startups. And so I think this is overall bullish for exploring the frontier of crypto.

Starting point is 01:34:32 So speaking of jobs, we got some jobs to talk about. So if you are interested in getting a job, you can go to banklist.com slash jobs and check out the banklist job. board where we post as many jobs that we can find out on the crypto frontier, starting with RISE who's hiring a marketing manager if you are a non-technical marketer person, also a sales development representative for somebody who is an expert in Web3. Uniswap has got a senior product lead, an application security engineer and a senior mobile engineer bankless, that's us,

Starting point is 01:35:03 has a senior product designer, another podcast video editor, and also a social growth lead if you want to work at what is, in my opinion, the best company. being crypto. Consensus has got a director of engineering. Adidas is hiring somebody who can do global head of web three planning and strategy. There are so many jobs that are available here. I only read out the first little bit. Oh my God, it keeps on going. There's at least 20 jobs here. So if you want to check out the jobs, banklist.pollett.com slash jobs. There's also the talent collective where you can let the jobs come to you. So you can post your resume and talk about what your skill set is 747 active candidates in the talent collective. And so that is a message to

Starting point is 01:35:45 people who are hiring. Go check out all of the talent that have posted their post, their profile on the talent collective. Bankless, just matchmaking, man. We're matchmaking jobs and people. Tender for jobs. Yeah, matchmaker. Yeah, Tinder for jobs. Anthony, we got some questions from the Bankless Nation that I want to throw your way as well as a few takes of the week and also the meme of the week. But first, a moment to talk about some of these fantastic sponsors that make this show possible. The Phantom wallet is coming to Ethereum.

Starting point is 01:36:15 The number one wallet on Solana is bringing its millions of users and beloved UX to Ethereum and Polygon. If you haven't used Phantom before, you've been missing out. Phantom was one of the first wallets to pioneer Solana staking inside the wallet and will be offering similar staking features for Ethereum and Polygon. But that's just staking. Phantom is also the best home for your NFTs. Phantom has a complete set of features to optimize

Starting point is 01:36:37 your NFT experience. Pin your favorites, hide your uglies, burn the spam, and also manage your NFT sale listings from inside the wallet. Phantom is of course a multi-chain wallet, but it makes chain management easy, displaying your transactions in a human readable format with automatic warnings for malicious transactions or phishing websites. Phantom has already saved over 20,000 users from getting scammed or hacked. So get on the Phantom wait list and be one of the first to access the multi-chain beta. There's a link in the show notes, or you can go to phantom.com.com list to get access in late February. Bankless Nation, we are back with questions from the nation. If you are a Bankless Nation citizen, you subscribe to Bankless, definitely go into the Bankless Nation

Starting point is 01:37:17 Discord where we have the weekly roll-up questions where you can get your question answered by myself or Ryan. But this week, Anthony, or you can just ask me a question directly in my Ask Me Anything channel if you so choose. Anthony, first question to you. After the Chappellea and EIP 4844 upgrades, what protocol upgrade do you think should write be? prioritize next as the most important and urgent and also why i think you're the perfect person to ask this question to what's your opinion anthony so i go back and forth between two things so it's between the upgrades that are part of the verge which is basically swapping to verical trees and pbs i'm leaning more towards pbs lately on especially over the last few months so proposed a builder

Starting point is 01:38:00 separation as i discussed before when we're talking about the mv stuff just because i believe that that MEV is overall pretty negative. And the current system we have in place for fighting back against the negative externality of MEV isn't great. Relayers, you know, MavV relays, there are a bunch of them, but it's still very centralized. There's not that many of them. And I don't like that we're outsourcing block building to these relays. So I would say that I probably think PBS should be prioritized, but I don't actually

Starting point is 01:38:31 think from what I've seen that it would be ready before VirgilTree. So I would say the vertical trees probably comes before PBS. But I would prefer to see PBS go live first. But it really just depends on the state of the research and development in those areas. Great. I agree with all of that response. And that question came from Rocket Poolster. So thank you Rocket Poolster for that question.

Starting point is 01:38:55 I believe that means Rocket Pool. I'm big fans of Rocket Pool here. Next question up coming from Red Panda. Does the ARB token have any utility or fundamental value potential or is it purely for governance? If it is purely for governance, why would we attach much value to it? What's your take, Anthony?

Starting point is 01:39:12 Is it just a valueless governance token? No, I think right now, obviously, it's for governance, but in the future, there are other potential ways that can be used. One of the major ones is basically staking to become a sequencer, and by doing that, you get a share of the fear of revenue of the Arbitrum One network and the M.E.V. from that's as generated by the arbitram one and associated networks, even like Arbitruma and things like that.

Starting point is 01:39:37 But yeah, generally a lot of these things will just start out as governance tokens for legal reasons, to be honest. And I think that over time the DAO can add whatever utility it wants. There are some DAOs where they don't really have the power to do that or at least feel very powerless in doing that, but it just depends. So I would say right now, yeah, your bet would be, you know, it's a governance token. You're valuing it based on that, but also you're betting or speculating that In the future, they're going to introduce these functions, they being the Dow, are going to introduce

Starting point is 01:40:05 these functions in order to drive more value to the ARB token. Awesome. And again, if you want to ask questions for next week, questions for the weekly roll-up is the channel in Discord. Moving on to takes of the week, this is a take from Lawrence. This is the primary threat to the American financial system, apparently, and it is a picture of what is elliptic curve cryptography. Anthony, you want to unpack this one, or should we just leave that as his?

Starting point is 01:40:29 I mean, I think it speaks for itself, really. Like, the war on cryptography has been going on for a long time. And honestly, if you read the history about it, which I know you've covered a lot extensively in the past and you've read the history about it, there was a pretty small window of time where we actually were able to kind of be successful here, and we were successful at making sure that cryptography wasn't outlawed, I guess, so to speak. But it wasn't, it was done by a relatively small group of cyberpunk. back in the cyphepunk, sorry, I should say, back in the day. But as I said, like, you've covered this extensively.

Starting point is 01:41:05 I don't know exactly what it was called, but you did it a while ago. You read through the before Bitcoin series. Yeah, the before Bitcoin series. And I think for people interested in, you know, the war on cryptography that happened a few decades ago, you should definitely go check that out. Second and last take of the week. I don't even think this is a take, but I just wanted to bring this into share because I thought it was too funny. El Chapo. Small tweets out,

Starting point is 01:41:29 I shit you not. This arrived in the mail today, and it is an FTX visa card. I think this was a service that they were rolling out at the very end of their lifespan, but somebody just got a debit card from FTX. You know what's funny? There's that saying that something's not worth the paper

Starting point is 01:41:48 that it's written on. This is literally not worth the paper that it's attached to, right? like so yeah that's that's funny though that this was a thing great memorabilia man like i would just keep that in my wallet just to like pull that off just like it's a great conversation starter for the crypto world yeah for sure and to round out this show anthony thank you so much for walking us through all of this news while fearless leader ryan is off on a vacation bitcoin magazine uh for those that don't know bitcoin magazine's uh led by my former co-host prior to to banklist

Starting point is 01:42:23 CK, they tweeted out a pretty good meme. The people who are 30 trillion dollars in debt are giving you a credit score. And this is just like the Spider-Man character, just like reading out, very uninspiringly just reading something out on stage. Anthony, what's your take on this meme? This is like pure Bitcoin a bait, right? This is what they're all about. Like this is, if there's ever a meme made specifically for Bitcoiners, this is like it, right? Oh, I always just think it's... One thing I will appreciate by the Bikorners is that they will pull back the curtain

Starting point is 01:43:00 as to like some of the farcness of like modern day society more aggressively than like anyone else. And sometimes they do it with really good means. They're definitely very aggressive and passionate about it, which leads to these, yeah, good memes, right? This is a scalable way to show people the absurdity of the system, right? So yeah, I think it's a good meme. Yeah, yeah.

Starting point is 01:43:19 So next time you get your credit score checked, remember that the people, the organizations, that control those organizations that did that. Oh, $30 million. Kind of like to themselves. Anyways, I digress. That is a conversation for a different day. Anthony, that was an absolute marathon, an hour and 49 minutes.

Starting point is 01:43:35 You and I both like to talk, and so thank you for helping us guide. Thank you for guiding the bankless nation through all of the news and the week. Big round of applause for Anthony Sizzano, everyone. If you like Anthony Zizano and the takes that he's got, he does. The Daily Gway, which is a daily newsletter and daily YouTube video. updating everything that you need to know about mostly the Ethereum ecosystem and some really good takes on the newsletter as well. Anthony, if people are interested in following you and subscribing to the Daily Gway, where should they go? Just go to Twitter. My Twitter profile has all the links

Starting point is 01:44:08 to everything that I'm doing. So my profile is Sassel 0X, S-A-S-S-A-L-0-X, and they can find me on there. And yeah, I just want to say thanks for having me on. And I hope Ryan's software update went well. Yeah. Yeah. The breakup is, we're getting over the breakup. He's getting a new software updates. Oh, he will be back next week. Yeah. But I look forward to having you back next time that Ryan goes down for his software update, which seems to, you know, semi-regularly, maybe twice, three times a year. Thank you so much, Anthony. Cheers. Thank you. See all. Bankless Nation, you know the deal, risk and disclaimers. Crypto is risky. ETHER is risky. But if you've been watching our trad macro videos, everything else is also risky too.

Starting point is 01:44:50 stuff's risky. You can lose what you put in, but this is the frontier. It's not for everyone, but we are glad you are with us on the bankless journey.

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