Bankless - ROLLUP: Elon Musk Buys Twitter?! | 8.5% Inflation | Tax Week | Epic Games Building the Metaverse

Episode Date: April 15, 2022

2nd Week of April, 2022 ------ 📣 CONSENSYS | M·A·C: NFT Collection for a Good Cause https://bankless.cc/MAC  ------ 🚀 SUBSCRIBE TO NEWSLETTER: https://newsletter.banklesshq.com/  🎙️ SUBSCRIBE TO PODCAST: http://podcast.banklesshq.com/  ------ BANKLESS SPONSOR TOOLS: ⚖️ ARBITRUM | SCALED ETHEREUM https://bankless.cc/Arbitrum  ❎ ACROSS | BRIDGE TO LAYER 2 https://bankless.cc/Across  🏦 ALTO IRA | TAX-FREE CRYPTO https://bankless.cc/AltoIRA  👻 AAVE V3 | LEND & BORROW CRYPTO https://bankless.cc/aave  ⚡️ MAKER DAO | THE DAI STABLECOIN https://bankless.cc/MakerDAO  🦁 BRAVE | THE BROWSER NATIVE WALLET https://bankless.cc/Brave  ------ Topics Covered: 0:00 Intro 5:00 MARKETS 5:05 BTC Price 5:47 ETH Price 6:35 Ratios, BED, Gas https://www.indexcoop.com/bed  10:55 Total Crypto Market Cap https://www.coingecko.com/en/global_charts  12:00 ETH Min Gas Price Post-Merge https://twitter.com/domothy/status/1512817907130114059  16:00 ICHI Token https://www.theblockcrypto.com/post/141788/ichi-token-price-collapses-by-99-in-latest-defi-debacle  20:42 White House: Extraordinarily Elevated Inflation https://twitter.com/disclosetv/status/1513574076383645699 https://www.reddit.com/r/Superstonk/comments/u1xynt/the_annual_inflation_rate_in_the_us_accelerated  https://twitter.com/TrustlessState/status/1514569232306118659  26:00 Bloomberg Merge Estimates https://twitter.com/RyanSAdams/status/1513892957371437074  34:10 RELEASES 34:40 Robinhood Crypto Wallet Transfers https://www.theblockcrypto.com/post/141008/robinhood-widens-user-access-for-crypto-wallet-transfers-unveils-plan-to-support-lightning-payments-for-bitcoin  36:53 Polygon KPI Liquidity Mining https://twitter.com/0xPolygon/status/1511373161623089152  38:50 Umbra Now Available on Optimism & Arbitrum https://www.scopelift.co/blog/umbra-launches-on-optimism-and-polygon  39:35 Uniswap Swap Widget https://twitter.com/Uniswap/status/1514603576093335553  41:00 AVAX Mempool Opening Up https://twitter.com/trustlessstate/status/1514013436878983173  44:50 RAISES 44:55 Epic Games $2B to build an Avatar Filled Metaverse https://twitter.com/FT/status/1513575145805336577  45:45 Uniswap Labs Ventures https://twitter.com/Uniswap/status/1513564875037061122  50:00 Circle $400M https://www.prnewswire.com/news-releases/circle-announces-400m-funding-round-301523647.html  50:20 AVAX Labs https://twitter.com/TheBlock__/status/1514615631877836814 52:45 Ignite (formerly Tendermint) Launches $150M Accelerator https://www.theblockcrypto.com/post/141302/ignite-formerly-tendermint-launches-150-million-accelerator-for-web-3-projects?ref=coingecko  53:35 Goldman Sachs Invests $88M in Certik 54:13 Nomad $22M https://blog.nomad.xyz/nomad-raises-22m-seed-round-for-security-first-interoperability-5d6b15c96007?gi=1dbc2b9da21d  54:33 JOBS https://pallet.xyz/list/bankless/jobs  55:34 NEWS 55:40 Merge Won’t Be in June https://twitter.com/timbeiko/status/1514010098145759232  57:50 Maple x Maker https://maplefinance.medium.com/maker-x-maple-a-partnership-to-scale-the-digital-economy-38f6ce0fce1b  58:35 Meta 50% Commission on NFTs https://twitter.com/banklesshq/status/1514333528292536328  1:00:05 The BAYC Brand/Restaurant https://twitter.com/BoredNHngry/status/1513599188243652610  1:02:30 Coinbase Interactive 3-Part Film - BAYC the Movie https://twitter.com/coinbase/status/1513589848048689152  1:03:52 Jack Dorsey NFTs Not Rare? 1:06:23 ETH NFT-Backed Loan Market https://decrypt.co/97190/ethereum-nft-backed-loan-market-heats-up-as-cryptopunks-owner-borrows-8-3m  1:07:13 Elon 1:07:30 Not Joining Twitter Board? https://www.theblockcrypto.com/linked/141437/elon-musk-reverses-decision-to-join-twitters-board  https://twitter.com/elonmusk/status/1514564966564651008  1:09:38 Axie Infinity 1:09:45 Hacker Launders 7.5% of Stolen ETH https://twitter.com/watcherguru/status/1512819830927376384  1:15:36 $NEAR Launches April 20th https://twitter.com/Route2FI/status/1512166993671168003  1:15:48 REGULATION 1:15: 50 USDC Stablecoin Issuer Hires Execus to Oversee Regulation 1:16:11 Celsius No More Deposits 1:17:00 Uniswap Labs Being Sued 1:23:11 TAKES 1:23:46 U.S. Taxes https://twitter.com/DanPriceSeattle/status/1513552893688827907  1:24:22 Local or Global DeFi Winners https://twitter.com/RyanSAdams/status/1513865713739608076  https://twitter.com/hildobby_/status/1513874645371559936  1:27:20 Who Could’ve Foreseen This? https://twitter.com/ercwl/status/1513681327354171403  1:29:30 This is Why We Fight https://twitter.com/TrustlessState/status/1514356560516030464  1:36:52 What David’s Excited About 1:39:00 What Ryan’s Excited About 1:41:35 MEME of the Week https://twitter.com/Pollo2x/status/1514335011461218307  https://twitter.com/TheRugNews/status/1514615385806426117  1:42:55 Closing & Disclaimers 1:43:08 Moment of Zen https://twitter.com/songadaymann/status/1512141935959494656  ----- Not financial or tax advice. See our investment disclosures here: https://newsletter.banklesshq.com/p/bankless-disclosures 

Question for you, Ryan. Just like, just gut take. How do you feel about the market? Just general sentiment. No, no charts, no numbers. General sentiment. Can I be honest for a minute? Sure. I'm feeling real good about the market. Yeah. Hey, Bankless Nation. Happy second week of April. We got a hot week for you. Really excited about what we're doing today. And David, what is this episode called? Tell them. Oh, Ryan, it's the Friday Bankless weekly roll-up where we recap the entire week in crypto, which, like I said, Ryan is always an ambitious endeavor, yet we persevere. Nonetheless, through the gamut of the news, we pack it apart, we pull it apart, we distill it for you, digest it for you, and download

the entire week of crypto all in one episode. Some nice digestion for you, some pre-chewed meat for you. Am I being gross? Am I being gross? Hey, look, welcome to the East Coast. That was a subject change. How's the East Coast time zone for you? Enjoyed this? It's been a little bit of a shock. All of my West Coast friends aren't up in the morning. So I want to, like, get up and start shit posting in Discord, and they're, like, not awake yet. But then, like, you know, we get to start the weekly roll-up a lot earlier. This is the earliest weekly roll of you've ever done, Ryan. Yeah, it is.

Yeah, I can't believe. This is, like, the crack of dawn, I guess, in comparison. But I love being on the East Coast because I feel like we get a jumpstart on all of the West Coasters. Right? So by the time you've woken up, I've like, I'm already in work. mode. And I'm like just, although you do wake up really early, so you're pretty close. But like, it's nice. You got, you get kind of a jump start on the day. Yeah. What I've noticed about Brooklyn is like coffee shops don't open until like 7.30 or eight. And so I go out in the morning

and then like, I'm waiting for the coffee store to open. This is ridiculous. Yeah, I'm not sure why that's going on. But anyway, guys, we got a hot week for you on the recap. We're going to get it back to crypto topics of the week. First of all, inflation, 8.5.5.com. percent? WTF, this is the highest, like, in 40 years or something, David? And when it's reported at 8.5 percent, you know it's a little higher than that, Ryan. Oh, yeah. You know it's double digits already. We're going to talk about that. Also, Elon Musk, last week we told you he was going to be on Twitter's board. This week, no, he's not, apparently. But now he wants to buy all of Twitter 100%. Okay, we'll talk about that.

Also, the Merge, the Ethereum merge, sad face, not happening in June. So we're going to talk about that. Some people are calling this a delay. I think we have a different take on this. also Zuckerberg's Metaverse You know he's working on this Metaverse thing Renamed his company You will be shocked At what markup he is charging on NFTs You know I don't think I will Ryan

I think I won't be shocked at all Well Yes probably listeners will not be shocked But it is a it is surprising I will say Also tax memes Okay just to make you feel good Yeah I know because this is coming out in the 15th

and taxes are due either today or the 18th. I can't remember. So we want to just make you feel good about the pain that you just suffered compiling your crypto taxes. We got some memes in store for you. We're going to get right to it. Before we do, though, guys, we should talk about the thing that we said would happen, which is these Keith Herring NFTs.

You know it was National HIV AIDS Awareness Week, and MAC and Consensus NFT partnered up to issue these fantastic NFTs. A whole bunch of them are sold. They're sold already, David. I managed to snag this red one. There might still be some red ones left, I'm not sure. And the experience of buying it.

Okay, so the experience of buying it was really cool. So all I had to do, this is it in my open sea wallet, one of my open sea wallets. All I had to do was put in my credit card. So no transaction fees. I didn't even have to spend Fiat on this, or excuse me, ETH on this. I could spend Fiat, right? So you didn't even have a taxable event? yes exactly now you're thinking like me i got them

this is the only time of year i'm going to be into these like tax memes that's the second thing you've said to me today that i'm like god damn david is tax savvy now anyway so you pay with fiat uh and there's no transaction fees it's issued on polygon they send you an email you click it you get it minted and you're all set so pretty cool and of course as we reminded you uh the last week 100% of the the proceeds, even resale value, goes to support youth affected by HIV and AIDS. So you'll want to check this out. Yeah, there's 5,000 total red NFTs left. They are the comment here, if you will. But you'll notice that they're going for $25 each with your credit card, but the floor price is $82.

And so as soon as those sell out, you know, that's, you know, what happens next? I don't know. I don't know. NFTs for charity, but maybe also some alpha. Kind of cool. Let's talk about markets though, David. Let's see. Oh, by the way, the link of the show notes to that if you want the easy button. Markets, though, Bitcoin price. We up. We down. We down. We're down. We're down. We're down. We're down. Forty-five thousand dollars. We fell down to a low of $39.5,000. So broke through that $40,000 number, which is a good number to not break through. But we are back above it. We're back above it at where we are now at basically $40,100. Defending that $40,000 number, if we could keep on defending that pretty well, that would be nice.

You know, dangerously close to below $40,000. It's an interesting week to look at crypto prices, right? Because we're going to get to it. The 8.5% inflation we were talking about, that happened this week. And so it's been interesting to see how Bitcoin and Ether and other crypto assets respond to this. But how about Eith? How has it responded to some of this news? And I think the news came out like, was it Monday-ish?

Yeah. About inflation worries, Monday, Tuesday-ish, something like this. Something like that, yeah. You can see, down. We're down, but what's ETH for the week? ETH is down 2.5% this week. Bitcoin is down 5%. ETH is down 2.5%.

I wrote these numbers in they actually might be down a little bit more than that. So it might be something like 5.5 and 3% Bitcoin and ETH. Ease started the week at $3,200, hit a low just below $3,000. Just like Bitcoin is defending $40,000, ether is defending $3,000. We are currently at $3,020, keeping our head right above water. not terribly comfortable, but defended nonetheless. That's a good day for above 3K. I'm going to say it every time, David.

ETH Bitcoin ratio. What's the ratio looking like? Yeah, ETH Bitcoin ratio up two and a half percent. Yeah, so we are at 0.0555. Or excuse me, what I have to say? 0.07555. Okay, up two and a half percent. I'm not like, you know, bold market appetite still on the table.

Yeah, it's definitely on the table. I'm going to look at the six month here. What are we looking at in the six month? Go to the one year. Go to the one year. Not the year to date because it's still so early. Go to the one year. Yeah, like, you know, you know, trending higher, trending higher.

We're cool with it. Interesting. All right. So the market's not saying bear territory right now. The market's kind of undecided, which is super interesting. How about the total? Question for you, Ryan, just like, just gut take. How do you feel about the market?

Just general sentiment. No charts, no numbers. General sentiment. Can I be honest for a minute? Sure. I'm feeling real good about the market. Yeah. I am.

I'm feeling really like maybe like, maybe I'm too bullish. And that that worries me a little bit. Like the fact that the fact that inflation and kind of these Fed shocks, like the news has sunk in. I mean, the Fed is going to take some pretty drastic action here in the coming months. They're going to have to raising rates. They're going to start selling their bonds. We got into a whole episode with us about crypto. with Dan Moorhead where we talk about this.

That episode is coming out, not next Monday, but the Monday after. Right, because Vitalik's coming out next Monday. So, you know. Yeah, you know, Vitalik gets the spot first. But the episode with Dan was fantastic as well. Anyway, I think that I would have with Crane, with all of the macro things happening this year, I would have expected it to tank hard.

And it's not. It's actually becoming a little less correlated. with the stock market, right? So look, there could be some other shocks in store for us this year, right? You know, a big, a big hit on some events. Something could happen with the stock market and the bottom falls out of that. Who knows? I think it will take crypto down with it, but I think our recovery might be stronger and faster. And it's not certain that all of those things will happen either. So I'm feeling pretty good about it. And I don't know if I trust my my instinct or feeling on that. But like, look, don't listen to me. I just, I'm a long,

term holder about these things. So I get less worried about what happens in the week to week and the month to month. What's your take? Yeah, I would agree. Like the longer post, you know, the market has definitely internalized and accepted the Fed's actions from what I've gathered. Like we've had like basically the whole entire year to come to terms with the Fed is going to raise interest rates and offload their balance sheet. And so even like, and the news this week was that like, oh, inflation was even hotter, the Fed is going to even more aggressively offload their balance sheet. And so we went from where we were at like 3,500 down to 3,000, more or less, or something like that in the last two weeks. And so like, you know, if that's what it's going to be when we find out

that it's going to be even faster than it is, then fine. Like, we'll take it. Like, is that all you got? Yeah. Like, I'll take a gut punch of 3,500 down to 3,000. Like, if this is how we are reacting to an acceleration of the bearishness, then like, that's fine. Like, 3,000 is cool. Because here's the, here's the other thing. Macro is the only thing holding crypto down at the moment. I firmly believe that, right? That's why we are kind of in this crap territory. If everything was going swimmingly from a macro perspective, I think we would be hitting higher highs over all-time highs right now. Yeah, I definitely agree with that for sure. Actually, it's, the, episode that we did with Dan Moorhead is just really timely because Dan Moorhead was a macro

investor before he came a crypto investor. And he realized in 2013 how macro of a conversation crypto is going to be. So he pivoted Pantera from a macro fund to a crypto fund. The timing for that episode couldn't be better. But we got to put out Vitalik first. But if for those who subscribe to the premium feed who are paid subscribers of bank list, you'll get that early access earlier in the week. Yeah. Let's see if we can do that earlier. Like earlier in the week next week. Yeah. Monday, Tuesday, Wednesday. Yeah. Thank you bankless editors. Well, let's take a look at the cryptocurrency global chart.

We don't usually do this, but I think we should start doing it from now on, David. So what is the crypto market cap total this week? Yeah, yeah, we started the week at 2.08 trillion, and we are currently at 1.96 trillion. So quick math, we lost a little bit over $1 trillion. Yeah. A little over $100 billion. Was that a quarter of an Elon? We lost one quarter of an Elon.

Oh, that is a quarter. He's so rich. Am I right? Oh, my God. I think it's close. I don't know. I think it's pretty close. I wrote down these numbers right before, like, we lost another, like, 1% in the market.

So I think the markets are down. The total crypto market cap is down a little bit over 4%. Writing down how fast these markets move, like the numbers get inaccurate from when I write them down 40 minutes ago to where they are now. Should we start, like, talking about these in terms of how many Elon's we lost? God, nice. Well, the U.S. dollars becoming a terrible frame of reference, so you might as well. Elon, come on the show, though, seriously. Anyway, ETH gas.

That's gone down a little bit this week. Am I ready about that? Last week, the average gas price was 45-gway. We are down to 38-gway. Again, always correlated with prices. Prices go up, gas goes up. Prices go down, gas goes down. Price at the pump going down.

Well, let's talk about what that means. Here's some market insight from DOM. Have you ever thought about what gas price would make ETH actually deflationary in a post-merge world? I hope you understood what I just said there in the post-merge, because David and I have been talking about it for so long. If you don't, go check out a YouTube video that we released on kind of what the merge is. But anyway, Dom says there is an easy way to calculate when at what gas price, ETH is deflationary. And to do that, you take the number of active validators in the beacon chain. You calculate the square root, multiply that by a number, 0.0239.

Those don't matter. What's really interesting is these numbers right here, which is, depending on the number of validators you have, the more validators you have, I guess the higher gas fees need to be to make it deflationary, but they're all still super low. and I think we're at about 3,600 validators on the beacon chain. 360,000 validators. Oh, 360,000 validators, excuse me. And then 13,000 validators more are coming in the queue as well. Which means about any time gas fees are, yeah, 14, 15, Gway.

Above 14 or 15, Gway, we're burning ETH. That's the threshold. In post-merch, in post-merge. In post-merge world, not current state. So that means any time gas fees are above 15 guay, we're burning. If they're ever below 15 quay, then we're not burning eth in a post-merged world. But my God, they're always going to be above 15 quay, aren't they? Yeah, for sure.

And according to the Ethereum researchers, they all feel comfortable with about 20 to 30 million ether staked for maximum Ethereum security. And it's like final form. Like 30 million east stakes, it's going to be really nice when we have a very large layer two ecosystem because they're all going to need that security. So like 20% ish of all eth supplies. Yeah, exactly. Like 30 million eth is going to be about what you see on the screen at one million validators, right? Like one million validators times 32, three, like 3.2 million ether staked.

No, 32 million ether stakes, excuse me, which is like 25-ish percent of all ether. And so as for just for people that don't know, the more ether that is staked to the proof of state network, the Ethereum protocol issues a little bit more in total. Aggregate yield goes down because what is issued gets spread out by more people, but the Ethereum protocol ramps up a little bit the total amount of issuance just to have a balance, just to have an equilibrium. So at maturity, what this means is that we're looking about 24-Gue, perhaps for that threshold in the long-term equilibrium of Ethereum.

24-Guei is the burn ratio over the long-term. It's always going to be over 24-Guea. We're going to be burning. We're going to be burning all the time. Sometimes we're going to be burning massive amounts because we predict gas fees on the Ethereum main chain to go up and up and up and up. Because we are on this progress of first gas is being consumed by users,

then gas starts getting consumed more by smart contracts. Eventually, gas will be entirely consumed. Ethereum block space will be consumed by layer twos. As the model here is we won't actually have users, individuals like you and I, on the Ethereum main chain unless we're like Super Wales. We'll be doing our stuff on layer two and posting, the layer twos will be posting and purchasing gas from Ethereum. So gas fees are just going to go up.

So always going to be burning in the future. Even the Ethereum whales probably won't be on the Ethereum L1 because all the utility is going to be on the layer twos. Totally, totally, exactly. We're going to be moving to Brooklyn, way from Manhattan. Right, David? Nice, nice. Okay, itchy token. There's an itchy token collapse.

I don't know why we're talking about this other than. then it's just a big like 99% defy debacle. Maybe there's a lesson here. What are the lessons here? It went from 650 million market cap to 10 million in 12 hours. That's pretty painful. What happened? Yeah, over half a billion dollars just got deleted in 12 hours.

So this was a brand new token that was coming out, which was going to help produce a bunch of new stable coins, kind of just like kind of democratizing the ability to produce new stable coins. and what happened is that there was a Rari fuse pool, fuse pool number 136, that was made for the Ichi token. And the Ichi token, the team that was managing this Rari fuse pool, because as this Ichi token was like mooning, basically, it went from like zero to 600 million plus a market cap in like a month or so,

maybe a little bit less, since March. So yeah, yeah, about a month, actually. Like this chart. Very strong price action up until the time it went to zero. But basically, okay, the team with the Rari Fuse Pool, they made a Fuge pool so they could borrow against the ICHI token, kind of like being able to use it in Compound, right, but for Fuse. But compound doesn't allow you to do this because of risks. And this is going to be a great example as to why compound doesn't allow any asset to come on to its collateral.

They increased the loan to value limit on the Itchy fuse pool to 85%. So if you put in $1 million worth of ECHI token, you could get $850,000 in Stable Coins back, which is a very large loan to value ratio, which is largely reserved for only the most liquid of assets, Bitcoin and Ether, basically that's it. And even with Ether, I'd say 85%, and still a large amount, even with Bitcoin, kind of reserved only for stables, really, if you want to be hypersecure.

But this very illiquid, very brand new token that has just recently had a very large run-up in price was given an 85% loan to value ratio. So some users were making significant loans and allowing them to buy. Borrow stables, buy Ichi tokens, put Ichi tokens in the fuse pool to buy more stables, basically leveraging up on Ichi tokens. And so there was a ton of leverage of Ichi tokens with outstanding U.S. dollars being borrowed.

And it's really important to note that just because you are leveraging up on Ici tokens doesn't mean that there's significant amount of liquidity there. So there's very little ability for, if a sell event were to happen, for that price to stay stable. There's no liquidity on the Ichi tokens. And so as soon as there was a blip in the downwards price movement of the Ichi tokens, a massive cascading liquidation happened. And so as soon as the price of Ichi moved by 15% from the highs, the protocol liquidated basically every single Ichi token that it had in its results, which is how it went to zero, right? There was not enough liquidity to repay the pools.

And so the ECHE token went down to zero. And so there's a lesson here. there's a lesson in don't take too much collateral or don't take too much leverage especially on an ill-liquid brand-new token with very little price discovery but also like in theory like this itchy token, this democratization

of the ability to mint stable coins that could, that's a viable product that could have worked just fine but what happened was that there was a very irresponsible team and a D-Gen community that caused the token price to implode causing the project to implode. So on one hand we have this viable project

and then on the other hand, we have these irresponsible team and DGEN traders that blew up the project. And so my lesson, I love this lesson. The lesson here is culture matters, Ryan. If you have a fundamentals of a project,

and the fundamentals of the project are strong, but you have an irresponsible team and a DGEN community, it'll wreck the project. Culture matters. And that is my takeaway. Look, man, they basically burnt down their own house. Right.

And what's interesting about Fuse is different than compound, is like fuse is really a power tool. Like there is no risk to the fuse protocol for these shenanigans. Right. I'm stealing that word now. But like, uh, because it sort of isolates the risk to individual pools. So any community can spin up their own pool with whatever risk parameters they want.

And this community just created this extreme over leveraged, uh, terrible pool. And, uh, this is the outcome and, uh, probably destroyed the project. I don't know, it's trading a little bit higher now, but, um, this is, definitely shaking the fade. So fuels, fuse as a power tool, you know, like be very careful how you use it.

Yeah, definitely. It's just like, you know, shop class again. All right, let's get to inflation. That's a big story this week. So we said 8.5% inflation. This is the White House. This is a spokesperson for the White House, calling extraordinary inflation extraordinarily

elevated. Extraordinarily elevated. That was hitting headlines. this week. I guess a few stats for us. So inflation apparently was a 40-year high. This is a 40-year high, so we haven't seen this since, I guess, 1981. This is after a decade of inflation in the 70s. It's kind of the high watermark. And really the energy and food costs are spiking up. They're hitting consumers the most. It's likely that the Fed is going to meet in three weeks time. They're going to increase rates, interest rates, by probably about 50 basis points, so half a percent.

It's absolutely crazy what's going on. These are some of the inflation stats individually. Gasoline, gas is not eat gas. Regular gas is up 48 percent. Used cars up 35 percent. Meat, fish, eggs, up 13 percent. Read protein, because that's like meat, fish and eggs, that's protein. Energy.

Human energy. Food, yeah. Yeah, absolutely. Food at home is up 10%. Like, I don't know, man. Went to Costco this week, and our grocery bill has never been higher. That is all-time highs. Yeah, absolutely.

And I think everyone's feeling this. Like, everyone is noticing. It's very visible. I mean, you're not like 2% to 3% inflation per year. You barely notice, right? 8.5%. Then it's like, on a monthly basis, you're just like, wow, everything is spiking in price. Right.

Who could have seen this coming? Gosh, I don't know. I mean, they used to call it transitory inflation. That was last summer, and we were kind of making fun of that. But look at this. Look at this chart, David. This is kind of a data's beautiful sort of thing where you can kind of see rates from 1995 on. And we've just had decades, literally, of low inflation, you know?

1.4 is the lowest number that I see. The highest number that I see is four. back to 1990. In 2009, it was inverse. The dollar was deflationary. 2009, and I see a negative 2.4% inflation rate. Yeah. Yep.

You're not seeing, like, 2008 was kind of a tricky year, of course. Well, that makes sense because that's right before the housing bubble. That was the peak of the housing bubble when there was so much capital flowing around. So that actually makes sense. And then we retraced it, right? Like, oh, the 5% inflation rate happened too much, and then the housing bubble crashed, and we re-corrected that. healthy-ish, at least CPI,

asset price inflation, different story, not healthy, but like healthy, healthy, now look at this. Bam. Right? Like 6.2%. Wow. Bam. 7.5%.

You see it in April of 2021 is when you really start to see it, and it starts to really change the parameters, which makes sense because that is the first summer post-COVID when people decided that they were done and they were getting out and getting to enjoy their lives again. It was all, this is all COVID, man. Wow. Wow, that 8.5 number is a dark square.

Oh, man. So there's many, many more unfilled months for the remainder of 2022, and that's really going to be the story. It's like, how dark are those squares going to get or are they going to return to normalcy? That is, I think, the big story of the remainder of 2022. How bad will inflation get? I think we're headed to double digits. You had a take here.

What was your take on this? Yeah, my take was inflation and distrust in government are highly correlated when they're they break our money, they break our faith. This is why in the crypto industry, we like to talk about the separation between government and money, the separation between money and state. Because the government is responsible for the money, and because money works, because we all believe in it, when our faith in the money breaks, our faith in government also breaks. These are the same size of two different coins. No, two different sides of the same coin. Thank you. Yeah, yeah, absolutely. And I think that inflation is the thing that everyone notices. I would argue that markets have been broken for a while.

Just the last like 15 years asset price inflation has been absolutely insane. But now everyone's noticing it because everyone pays for things denominated in dollars. And now that's going off the rails. And it's not clear that the Fed has a plan that's workable to correct this. Like it's kind of, you know, we use that term, Powell is just the Jesus take the wheel approach. I don't think they know what they're doing. I mean, a year ago, less than a year ago, they were calling all of this transitory. Does this look very transitory to you? We have a clear escalation in inflation rates.

It's getting worse, not better. And how do you dial this down? They're barely taking action right now, and it's unclear that they'll be able to get this genie back in the bottle. So TBD on that. It's hard to see inflation getting worse than 8.5. But also, what do I know? I was born in the 90s. I don't know anything.

Well, yeah, it did get worse, and it can get worse. And what's different than the 1970s is that the Fed has far more, like the balance sheet. It's far more leverage. I mean, they weren't like buying bonds in the 1970s. And they have been. If there's a massive amount of bonds on the balance sheet. And our debt is higher than ever. Anyway, again, Dan Morehead episode, if you want to hear more about this.

Yeah, the reason why Ryan just skipped to the 70s was because that's we talked about in Dan Moorehead. So let's contrast that. All right. We've called Ether, Ethereum, Ether the asset, an internet bond before. And we think that this is especially true. Of course, we're staking out in a post-merge environment. You know, Bloomberg has been really increasing their coverage on Ether as an asset.

And, you know, getting increasingly bullish on it. They have a few analysts over there that are doing this. This is a Bloomberg estimate. Bloomberg is estimating post-merge, a 9% eth staking yield and a negative 2% issuance reduction annually. They're actually estimating ether's yield as an internet bond and its supply. This is the type of stuff that we were hoping financial analysts would start to do on Wall Street. That only like crypto people were doing, the only like guests on the bankless show and the bankless newsletter were doing.

and now we have Bloomberg doing it, not just bankless. These estimates are pretty good. I mean, it's based on some stuff. They've done their research. They've done their due diligence. I'm not sure if it's going to be like 9%. I actually would err on something higher than 9%. Yeah, and it's probably like with MEV and such.

You're probably like maybe 12 to 15% is what I would say. This 2% issuance reduction sounds about right, but it's just so cool to see Bloomberg covering this. And also contrast that with what's going on. In the yield markets, where you are making, like, if you buy a treasury, a government bond right now, in real terms, how much are you losing per year? Like 2%, 3% losing per year? What a contrast in buying ether ads in like an internet bond versus the sovereign bonds that you can get in fiat economies. Dude, I mean, think of what it, like how magical this must look like,

and honestly why people probably look at this with skepticism. how can there be a net issuance reduction of 2% negative 2% deflation in the monetary supply rather than inflation of the monetary supply and investors be getting yield? That has to just boggle people's brains until they understand the relationship between blocks based sales, EIP 1559, all that stuff. Okay, so on one hand, you have a currency that is inflating in supply, so your real terms are going down, and the yield that you get in the, in the, bond market is because of

treasuries and issuance from the United States government is less than the actual real terms of value. So you have inflating supply of the currency base and the yield for your bonds is less than the actual inflation. On the other side of things, you have a deflating

currency base, but the yield that you're getting on that deflating currency is higher than the yield that you would get in the bonds. I know, man. It's insane. It's also, look, the narrative is too good here, too. Right? It's just forget digital gold. Like, we're going after the bond market.

Right. The sovereign bond market, right? Not $8 trillion in market cap. It's like $50 to $70 trillion in market cap. Peter Thiel, when he was talking at the Bitcoin conference, he made the comparison between Bitcoin and Ethereum, and he compared Ethereum to Visa. And he was like, all right, well, here's Visa's market cap as a payments network.

But then Bitcoin is going after the much larger market cap. half of gold. And like gold has got a seven trillion dollar market cap and visa is only like, I don't know, half of, I don't know, whatever visa is. And I'm just watching Peter Thiel talk about how comparison Ethereum to Visa. I'm like, bro, we aren't, you guys are taking the smaller market cap is going after gold. We're going after the bond market, bro. I don't even understand, like, I don't even understand. Like, ether is just as much a non-sovereign store of value as Bitcoin is at this point. And to compare it in that way, just feels like you're living back in 2017. Whatever. Look at this chart, man. Fiat issuance 12%, right? And then we have Ethereum over here

postmerged to negative 2%. negative 2.2%. So it's almost like Apple stock buybacks, right? Right. It's like Apple stock. You get a negative 3 to 4% issuance rate in kind of buybacks. That's essentially what you're getting with Ethereum. Anyway, I don't think the bond market going to know what hits it. Once this narrative comes out, okay? It's just like, realize it's just come from kind of the Ethereum community. Bankless is very like bottom layer of the tier here, right? So like we basically, we learn from researchers and we try to understand the protocols as

best we can. We get it direct from the source. And then we bring it a level higher to help more people understand it. But like mainstream does not tune into bankless in the way they tune it. But Bloomberg tunes into bankless. So then Bloomberg gets a hold of it. And then pretty soon other analysts take a look at this thing. They're like, what is this?

What is happening here? Consentric models of information. This is what's happening. If you're listening to Bankless, the good news is you're still early. Like, no one knows about this, David. No one knows about this. Right. Even half of the crypto, more than half of the crypto industry is not appreciating this.

I'm sure that the Bitcoiners, the anti-etherium skeptics would love to say, like, but you guys, the merge just got delayed. Okay, fine. like more time to more time to stack eth that's great yeah let's talk about that we'll talk about that coming up but guys we want to get to a few more things some releases first before we do all of that we want to thank the sponsors that made this episode possible arbitram is an ethereum layer two scaling solution that's going to completely change how we use defy and nfts over 300 projects have already deployed to arbitram and the defy and nfti ecosystems are growing rapidly some of the coolest and

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tax advantages of an IRA. They make it easy to fund your alternative IRA or crypto IRA via your 401k or by contributing directly from your bank account. There is no setup or account fees and it's all you need to do to invest in crypto tax free. Let me repeat that again. You can invest in crypto tax free. Diversify like the pros and trade without tax headaches. Open an Alto crypto IRA to invest in crypto tax free. Just go to alto IRA.com slash bankless. That's A L-T-O-Ira.com. That's A-L-T-O-I-R- IRA.com slash bankless and start investing in crypto today. All right, guys, the releases of the week, Robin Hood, you know them, big fintech platform, a lot of the meme stocks trading there, they just enabled crypto wallet transfers. So on Robin Hood, for a long time, you've had the

ability to buy like crypto assets, right? But Robin Hood was always custodying them. And this annoyed us to no end, because that is the antithesis of the bankless vision, which is you should have the option to take sovereignty of your keys if you want to. Robin Hood would never previously had not enabled withdrawals to private keys well now they are so they're enabling the withdrawal from the Robin Hood platform to crypto wallets which is fantastic well done robin hood I think they are also adding some other crypto features this is sort of what we've been told that are even more kind of you know self-sovereign and bankless in the future too so I think this is a sign of Robinhood getting on board what's your take here yeah they say from the

article. The rollout began in September to a select group of users, as reported at the time. And in December, the company inked a deal with blockchain analytics from chain analysis to prepare for the offerings wider rollout. So they probably didn't want to, if I'm reading, reading the writing on the wall, they probably didn't want to allow users to have complete self-sovereignty over their being able to take custody of their own funds because, like, securities regulations is different than crypto asset regulations. And so like giving them the ability to freely exit is like concerning for them. But that is the way the industry is moving.

We have the power to take over our money, so we will. But they've onboarded chain analysis, like the IAvSauron of the government, the tech extension of the government to surveil the incomings and outcomes of going out of Robin Hood to help protect them. And so do be aware if you are using Robin Hood, the chain alias, which has way better data about blockchain analytics than you do, is watching you. They're probably watching you anyways. So there's that.

But this is Robin Hood trying to keep up with the rest of the industry and allowing us to do all the things that crypto allows us to do. So thank you, Robin Hood, for getting to this point. And I'm looking forward to the further increase innovations that coming out of you guys. I think layer two is next. Look, they're adding the Bitcoin Lightning Network, apparently. And I expect other Ethereum layer twos will come after that. So very good. Also, Polygon.

This is maybe, they're doing some more liquidity mining, just to incent use of their protocol. What's going on here? Yeah, this isn't just like another liquidity mining. program. They're actually, I think, really pioneering, innovating, trying to make liquidity mining get the KPI's that they're really looking for. They actually are literally calling it KPI liquidity mining, first ever KPI liquidity mining 2.0. So rather than just like yeating out, spraying out magnetic tokens to incentivize the adoption protocols, they're doing things that are more surgical, more targeted to make sure that those issuance rewards are actually producing the outcomes that

they're looking for rather than just being like liquidity mine to death rather than just being farmed and dumped. So there's two parameters that they're really looking for in this 2.0 version of liquidity mining, total value locked and weekly average users. Total value locks really benefits the whales, which is good because you need liquidity, but weekly average users also benefits the small guy, like the little fry, the individuals. And so I like this model. If they can get this right, I think this is a great just like experiment for the industry to understand. Even anon teams can apply for the campaign. Every single month, distribution is manually evaluated,

which I think is actually a great just tool, just manually evaluation. It's a little bit harder, but you get a lot more bang for your buck. And applications that have worked harder to get the KPIs out the door, get more and more allocation for the next month so long as they proved it. Projects get to choose, the individual projects get to choose where they send the funds, of course. And then there's this graph that Ryan's got on screen, which is showing all the eligible applications on Maddo on Polygon that are receiving distributions, things like Avegachi, Steak Dow, and then a bunch of other things that I'm actually not familiar with. Yeah, this is really cool. So less gamable.

And the bottom line is more tokens if you are using these layer two protocols. And so be aware of that and get involved. We encourage you to just use all of these protocols, guys. You got to get there. What is this? This is Umbra. Oh, yeah. This is a privacy payments type of protocol.

What's going on? Yeah, privacy payments on both optimism and arbitram. They call them stealth payments. I don't know if that's a technical difference from like privacy payments like Aztec or what stealth payments are. But I would imagine it's net the same. So yeah, privacy payments on layer two coming with Umbra. That's really cool.

Good to see that. Privacy is also expensive because it's computationally expensive. But when you put it on a layer two, it becomes a lot more viable. Right, which we need. Man, so the I of Soron can't invade everywhere. We still are able to preserve our privacy as we are in the physical world. Uniswap Labs, they just announced, and they just launched, excuse me, a swap widget. This looks really cool.

What is this? Yeah, so as we know, the front ends for applications are centralized, especially like app. dot uniswap. finance or whatever it is. I don't know, it auto loads into my browser. That's the Uniswap Labs. operated front end. That's the thing that like, you know, restricts based off certain geolocations.

They're building a widget to put different Uniswop Labs front ends wherever there needs to be exchanges. So maybe it's like an eye frame if I'm remembering my web dev history correctly. But like you can basically inject a uniswap trading widget. Add it to your website. Add it to your website. Like yeah. Like just click, click button, deploy, allow for your tokens, right? So I don't know, maybe you have like a token gated website and somebody comes to your website and wants to access your whatever's behind your token gate, but they don't have your token. You could just put your uniswap widget on your website so that people can get your token. It's basically like you have to have 10 tokens to become a member. You know, you embed the uniswap widget. Click here. Bam, you're

a member, right? Because you're just buying any uniswap. Or any use case or any of that needs a swap, right? Like so like, oh, I got to go buy the token to do the things. Well, I got to go load up uniswap. Well, if you just put the widget into the website, it's easier. Yeah, it's super cool. It's going to become a pretty is pervasive in all of that liquidity, of course, that Uniswap has, bring to bear, decreases the price on that stuff. So it's cool. Avalanche Mempool, what did you want to tell us about this? Are they opening up?

What's happening? Yeah, so this was something I was actually talking with David Mehow, who runs the crypto, like crypto fees, moneyprinter. Dot info. We use his websites a bunch to display metrics. And I was talking to him about how the avalanche mempool is actually not available for public view. This is something that they have closed.

and only available to people who stake AVAX tokens, which I have concerns with because M-E-V is something that makes the D-Fi ecosystem for your chain extremely efficient and extremely solid, right? Very rapid liquidations. It prevents cascading liquidations when there shouldn't have to be. I think, David, there might be some people don't even know what that M-PAL is, though, right? Oh, yeah, wow, you're right. Yeah, what is that?

That's like a holding tank area, right? Where transactions are queued. So, yeah, if you're on Ethereum, the way that I'm familiar with the M-Pool, Like you go submit your transactions and then you go click the link to EtherScan and it shows like, oh, your transaction is pending and you've got the loading screen and then boom, it's confirmed. Before it's confirmed, it's in the Mempool. So the Mempool stands for Memory Pool. It's like a memory bank of transactions.

And so like while your transaction is pending and not yet in the blockchain, it's in the Mempool. And the Mempool is where MEV arbitrages, people that are reordering transactions to benefit themselves, are taking all these transactions and ordering them so they can extract some sort of value, like some arbitrage on uniswap or they can get first to liquidations. Avalanche does not give that mempool out to the public. It keeps it contained for the Avalanche Dakers because that makes the Avax token, if you want to access the rewards of MEV, you have to own Avax, right? It's a little bit reminiscent of ordered deal flow from Robin Hood to Citadel,

which got people very, very upset earlier in the days. and it's always been a very big concern of mine that they don't open up the mempool to the public. The men pool is a public good. It's a public resource. And having a publicly available men pool just makes the whole system very, very strong and anti-fragile. Because as we saw in the Robin Hood case, the ability to order transactions or process them in whatever order you wish is a very powerful feature, especially when you're dealing with large amounts, you know, anything financial. It's a very powerful superpower. Oh, it's arguably the biggest power in Defi.

If you have God mode, basically, over that one block because you're the validator, you have momentary God mode for that one block. So you can order the transactions as you see fit to best benefit yourselves. Okay, so previously, and actually still, the Avalanche Mempool is not available to the public. But this ChainSight Labs organization, they put out a tweet announcing that they are opening up the Avalanche MMPL because they are an avalanche staker, and so on avalanche's behalf, they are broadcasting the mempool

because they have access to that data. So they tweet out for too long, MEV on avalanche has been gate kept and siloed from the masses due to Avax not gossiping the mempool. But no longer, today we release the web app to SnowSite an Avax Mempool service. So you can access, finally,

the Avalanche mempool at avax.ch.comptych.dev. And you can now tap into the mempool. And so what should be a public good has actually now been captured by ChainSight because Avalanche hasn't released it. And so now ChainSight is like the broadcaster of the Mempool. I mean, in my mind, Avalanche should just open it up anyways. This is going to, this is the logical conclusion for the Avalanche Mempool. But between now and then, ChainSight has complete monopoly over the broadcasting of the Avalanche Mempool. But also thank you to ChainSight for opening that thing up.

Again, the menpool is a public good. It should not be privatized. Absolutely. Let's switch to raise this. Epic games, they just got $2 billion to do what?

To build an avatar-filled metaverse. So the makers of Fortnite now get $2 billion to go create a whole bunch of avatars in whatever the metaverse means to Epic games, which you know it's going to involve

NFTs of some form or fashion. That's pretty big news, man. This is like a major gaming studio entering in a big way. What are your thoughts? Yeah, there's also Lego is involved. Yeah, Lego, I guess Lego has kind of always been like a Metaverse-esque type of organism, type of brand. 2 billion in raw funding, that's pretty insane.

This kind of feels very similar to the Microsoft acquisition of Activision Blizzard, you know, game companies being acquired by or just funding and other things of this nature. or like, you know, trad, phi, Web2, trad organizations coming into the Metaverse in their own particular way. Okay. All right. Let's talk about Uniswop Labs Ventures. We're just talking about Uniswop in general, but it looks like they've spun out a VC firm or a VC agency, I guess, and they are going to invest in Web3 organizations, I imagine, Web3 projects. Here's a list of the projects they started with, Tenderly, Layer Zero, Bridge, Prud. maker Dow apparently, Avey, compound protocol, whole bunch of others. What do you make of this?

Sort of DFI projects, DFI protocols now launching their own capital pools as becoming venture capitalists. I think it's a logical conclusion. It's not like they are making a particular strategy or they are doing anything unique. They have capital and if you are somebody who owns capital, you need to put your capital to work for you. And so this is the logical conclusion. This is the theme of the space is like all Dow's have turned into VCs, all DFI projects have turned into VCs. Like Coinbase ventures started up forever ago.

Coinbase is an exchange. But, you know, the industry is so ripe and young and fertile that they should take some of their capital because it's logical to and invest it in things. So any defy app with a token that has a significant treasury, you're going to see them turn into VCs. They're also investing in things that kind of benefit the Uniswap protocol. call, I would imagine the same way that, you know, FTX and SBF is investing in things that that benefit FTX. So I imagine we see more of that. It's interesting. Yeah, I don't know

quite how I feel about it, but Spencer Dune has an interesting take about VCs in general in the entire model. He says this, protocols are launching funds, Anon's are Angel investing, Dow's are raising millions per day. Some projects don't even raise private dollars anymore. BC, as we know it, is probably dead by 2030. It's so funny because do you remember when ICOs were going crazy in 2017, that's what people were saying? It's like, oh, the VC model is dead. It's dead.

And the VCs would fight back and they're like, what are you talking about? These ICO tokens are nothing. They're futility tokens. This isn't real. And they proved to be right. But I bet they are not going to be right over the longer time horizon. I think we have a massive disruption force in the typical VC model. we're never going back to like the 1990s and the 2000 era of VCs.

I think this crypto is going to completely disrupt what's happening. What are your thoughts? Yeah, just one nuance. And I think Spencer got it right. Like VCs, and you said it too, VCs as we know it. And so you talked about how the VCs of the 90s and 20s are dead. And I think the crypto industry has already shifted the overton window of what a VC means. What VC is is changing.

But I do think there, the one thing that will never, ever go away from whatever you call a VC is always legitimacy and brand and trust, right? Like, that is what a VC is. When I did my episode with Haseeb Qureshi from Dragonfly, we dove into these subjects. And he made a very strong case as to why VCs will never go away because, like, you know, the opposite of VCs is retail, right? And so when you say retail, what you're really talking about, what you want to be talking about is just like the average hobbyists who care and have the shared values and and

legitimacy but it's hard to target those people so what vCs do is they like like centralize and collapse all the legitimacy into one organization and that and they have their network right you're never going to get away from that no there is a need for the function that that vCs provide it's sort of like we're not trying to get rid of banking there's a need for banking but we're trying to get rid of banks. Like that's what's happening. So you still need to lend, borrow and, you know, pay for things. You just don't need the, you know, 150,000 Wells Fargo employees to go help you do those things and the bank branches and physical locations. So yeah, I think that's what's happening here for sure. Plus, there's plenty of toxic individuals out there. And those toxic individuals

definitely don't become part of VC firms. Right. Circle just announced $400 million funding round. So they're getting funding. I think the big news is it's BlackRock, if I'd like some really big institutional finance names now coming into Circle. Circle, of course, creators of USC, the biggest, not the biggest, but the biggest, I guess, most legitimate stable coin in the U.S. Also, Avalanche developer just raised $350 million. So Avalanche developer. Does this just mean Avalanche, the ecosystem, is raising $350 million? What is this, David? Yeah, that title is certainly odd. This is definitely the Avalanche ecosystem. Now Ava Lab, The main, okay, here's what they mean.

The developer of Avalanche, Ava Labs. Oh, I see. To say Avalanche. It's not an individual developer. It's the studio behind it. Yeah. So, report raised $350 million in a new founding round valued at $5.25 billion in valuation. The way that that works, because the Avalanche token is actually liquid, right?

So what they did is they probably just like discounted it. So the, wow, the actual, the market cap of Avalanche is $20 billion. Does that mean that they got a 75% discount on the token? No, no, no. I mean, so there's the market cap of the token, right? And then there's Ava Labs, the entity that likely owns a whole bunch of the token on their balance sheet. But it's the development. This would be akin to like the Ethereum Foundation getting funded, for example.

Because they have a balance sheet of ether on the table. Yeah, and because they're producing Ethereum type stuff. It's really interesting. I don't know the structure of Ava Labs, but I imagine it's, you know, it's got to be a commercial entity, right? It's got to be like a private entity, which is very different than the EF, which has always been nonprofit. It can't get funding like that and plans to dissolve over time.

This is much more commercial, definitely different than the vision that Vitalik had when he had this fork in the road of do we go nonprofit and become sort of a public good, or do we go, like, raise money from VCs and go the Charles Hoskinson route that he was advising. And he decided to stick with the nonprofit foundation, which is the EF. But many other layer ones are going in the complete opposite direction. Yeah, the cultural difference, I think, couldn't be more clear here. The idea of dissolving the thing that helped birth Ethereum rather than making that entity larger over time has significant impacts to the ecosystem as a whole.

And the money that came from this was from three or three. Caros Capital and Polychain. Interesting. Some people see this as a strength. Others see it as a weakness. It depends what side of the spectrum you're on. I have my own takes, David. I know you do as well. I don't think the listeners need to guess.

Ignite. Formerly, Tendermint, they just launched 150 million dollar accelerator for Web3 projects. So this is from the Cosmos ecosystem, really. And Tendermint is being used everywhere. That's the consensus, the consensus, you know, platform structure behind Luna. Also behind Matic.

Tendermintment is being used in so many different places. I've heard so much praise for the actual technology of tendermint.

Yeah, it's really cool. People have said that it's been rock solid for years. Yeah. It's open source and you can take it

using their project. It's definitely a net accretion to the industry. Actually, we're getting Ethan, who's one of the original creators of Tendermen on bank lists to come on,

tell us a few things about it. And the Cosmos ecosystem It might be sort of a back-and-forth debate structure. We'll have to see. Goldman Sachs, they are investing in blockchain security firm. CERTIC, an $88 million funding round. CERTIC, are they like auditing, smart contract auditing type stuff?

Yes, yeah. So they sort of uses from what they claim AI technology to monitor blockchain protocols and provide security audits for smart contracts. So like I think one part chain analysis, but then also a little bit of just like automated auditing. They also have launched KYC and Fraudev investigation services. So a combo of smart contract auditing, but also chain analysis type stuff as well. Yeah. Nice.

Nomad as well, $22 million to seed round for security first interoperability. So another bridge type interoperability play. Really cool. All that money going into the space. Speaking of all that money that's pouring into crypto, a lot of job opportunities pouring into crypto as well. We've got a ton of them listed on the bankless jobs board. This is our time of the week to remind you to get a job in crypto if you already haven't.

It's the best place to work. It's fantastic. Let me read out some jobs. I don't know what David's doing. He's leaving his desk. I think he's afraid to dance. No, he's doing the background dance. There we go.

Jobs. Bankless newsletter, editor. Number one, content manager at Talley. A director of developer relations at Valis to Solidity Architect Alu. A marketing manager at Misha. A U.X designer, Prometheus Research Labs, a community manager of DGEN Dogs Club. God, that sounds cool. co-founder for an innovative

Omni-Chane D-Fi protocol TBD mystery project blockchain engineer Massari software engineer Misari operations manager syndica senior product designer smart defy senior go rust engineer syndica senior full stack engineer

syndica senior software engineer air drop labs oh my god there's so many product manager crypto Nori a bankless web developer at bankless go check him out man that was a lot David you come back now

we got through all the jobs we can move on now. People getting hired in crypto. It's a beautiful thing. You want to get to news? Here's the sad face news. I should have been expecting it. I get optimistic every single time.

But the merge, according to Tim Bako, won't be in June, but will likely be a few months after. Of course, no firm date yet. There never was. You can't call it a delay because there was never a date in the first place. People will call it a delay, though, just because

there are expectation. People are like, Ooh, June, June, June. And then Tim's like, nope, still not June. And then get kicked out a couple more months. And so August? August? I'll do it again. You say in dates because you have to?

I mean, there is no date, right? It's going to happen this year, though, isn't it? 2022. It's going to happen this year. Right, Tim? I got the Gandalf meme here. Ethereum devs right now with Gandalf face. The merge is never late.

It arrives precisely when it. means to. I think that's what the devs are. Like, that's what the devs are communicating. It's like, hey, guys, don't ever say a date again. Okay. Don't, and I feel like, um, dates work through social consensus as well is somebody says, oh, these things lead me to believe the date is X. It never, never comes from developers who are saying these dates unless, unless it's like imminent. And then the community rallies around that date and is like, yeah, it must be date X. And then someone gets a hold of it and it gets projected out further and further like and then everyone's saying June before long but to be fair developers never said June in the first place it's only

to social air they do not they do not give dates um but of course we always like to ask and uh i don't know it feels like what did tim say what did the exact words let's parse through this like a a trump power thing no firm date yet but we're definitely in the final chapter it won't be June but likely in the few months after. A few months. What's few to you? Is that three? Yeah, three at best.

You probably got to lean. You got to add. So it's not two. Four? Four. Four. Yeah. October.

October. So much time to stack up to eat. Going to launch on Halloween, guys. Anyway, is what it is. Keep moving forward. More time to stack Heath. All right. Maker and Maple, a partnership

to scale the digital economy. What is this partnership, David? two D-Fi protocols teaming up. Yeah, this is super simple. The Maker Dow's D3M, the Dye Direct module, allows Maker to mint dye in specific liquidity pools. They have this with AVEA. So AVEA has the power to mint die directly as needed. This ability is now being extended to Maple Finance.

Maple Finance is a under-collateralized institution lending defy app. So money, like liquidity for institutions, trusted institutions who use their reputation as collateral. and now is being hooked into Maker so they can go and straight and mint dye straight from the Maker Protocol. Nice. Good protocol mashup, good team up. NFT news. I'm going to start here. Do you know Mark Zuckerberg?

He's creating this Metaverse thing. He wants to charge people 50% commission on NFTs sold in the Metaverse. It's actually like 47. something percent. And this is basically the kind of the App Store model. You know, Apple charges 30% and everything. It seems like meta, And Mark and the team over there think they can just port this model over to the Metaverse and over to NFTs. And I don't know how he can think that.

We definitely do not pay 50% commission to an intermediary on the things we use in crypto and NFTs. Granted, we do pay 2% to OpenC, 2.5%. Right. So that's something on purchases and that's probably worth it. but can you command a 50% margin? And even OpenC, you got to anticipate as competition enters its prices will erode because OpenC doesn't actually own the NFTs, right? It's all, like, registered on chain.

So it's going to erode over time as well. What do you think of this? Do they just not understand the business model of this Web3 thing? Maybe there's part of the story that, like, we're not familiar with, but also, like, maybe just people are like, oh, yeah, like, I'll pay 50% to not get scammed by Web3. maybe that's the take here but like at the same time

all this whole like web two doing web three things is going to as people get more more comfortable with it they're going to realize like why am I paying Mark Zuckerberg such high rent I'm going to go do it for free in Web 3

and maybe this is going to be a positive PR move for Web 3 over time maybe yeah we'll have to see how that plays out it just feels like that is so in Congress to yeah egregious it just doesn't

it doesn't match it's a mismatch 50% rent on anything is egregious. Yeah, absolutely. I can't believe we still pay 30% in the App Store. This is cool. A Bored Ape Yacht Club restaurant was just launched. You know what's cool about this?

So this is the restaurant itself. You know what's cool about this is this guy, I presume, owns the Bored Ape himself, right? Sure. And what I was thinking about is the license guarantees to the board ape owners. Basically, they get to profit on use of, their ape in whatever they choose. You could put it on a t-shirt and profit that way. You could

open up a restaurant and profit that way. You could sell, like, sell license to it in a movie. So what's cool about this is it kind of an entrepreneur gets use of the NFT that he purchased for some sort of commercial gain. And this is different than the Creative Common license, right? Because if you have Creative Commons, anyone can do this. Like, your MFers, my MFers, anyone can launch a store, put your MF or in a movie without asking your permission. Because that's Creative Commons. Please do. But board apes are more restrictive.

And they provide like the owner of the NFT themselves with the actual license ability and rights. So it's different. It's just like I like how these two experiments are playing out. Like I have probably preferences and I think some models will be more successful than others. But you've got to admit that this is kind of. of a cool use of an NFT? Yes, I guess, but also at the same time, what does the ape have anything to do with a restaurant, right?

Oh, I have no idea if the restaurant will be successful. If you're looking at like, all right, where do I want to get lunch? I'm hungry for cheeseburgers. Does the ape aspect thing have anything to do with your decision making? Like it doesn't, I'm not sure it boosts the value of the restaurant, though. Yeah, it's probably, this is like the restaurant itself. This may be sort of a strange pick for this, but like, I don't know. know, plush toys. I don't know. Something could hit. I don't know. I guess so.

Let's talk about this. The story does not end here. Yeah. So what's happening? Yeah, Coinbase is creating an interactive three-part film featuring the board ape yacht club and ape coin communities. So a film about apes and the ape universe with Coinbase called the D-Gen trilogy. Interactive film. Maybe that's like the whole choose-your-own adventure type film that Netflix did not too long ago and also Shambuya from People Pleasers building maybe that's what's going on here

but yeah again the ape brand like that's what people should I really think should take away is that you know basically NFTs are just brands that's what they are the ape brand is really really strong so now there's a restaurant ape brand

and now there is a movie eight brand it's basically a brand brand manager a community and some capital that's to me what an NFT is like an NFT community is. But also like my bare case for that

is this like for anyone that doesn't own an ape, NFT, they're not incentivized to go watch the movie. They're actually kind of disincentivized a little bit because they're in the out group. You kind of cringed out by it a little bit. A little bit cringed out. I don't care. I don't have an ape. Yeah, right. Like I don't care about your community. Like I'm not going to go watch your stupid movie.

That's true. I do think that some of these things could actually flop in weird ways. Like I don't know. It all depends on the brand management of it. There's a lot of dependencies here. It's going to be really interesting to see these things play out. Here's an experiment that didn't play out so well. Oh, God.

So this guy, a crypto entrepreneur, purchased Jack Dorsey's first ever tweet. So the first time Jack Dorsey logged on Twitter in 2006, he tweeted something. He purchased it as an NFT for $2.9 million. A JPEG of the tweet. I wonder if you could see what it looks like. Actually, let me pull it up in the report. The tweet was from Sent, and the tweet was. something along the lines of just trying out my Twitter account tweeted from Jack.

It was the first tweet ever. Just trying out my Twitter account. Anyway, he paid $2.9 million for it. And then David, he went to go sell it. So he's like, ah, I kind of want to sell it. I'm going to auction it out. I'm going to give some proceeds to charity. He thought he'd be able to sell maybe $25 million.

NFT space. I bought it for $2.9. It's got to appreciate any value. I guess the closing bid, the last bid he got, $280. For an NFT he paid $2.9 million

for. What's the multiplier or the oh god, that's like down point 99.99%? That is some tax loss harvesting, my friend. That's a down bad right there. That's a real down bad. Now, he's probably not going to sell it for that,

but it just goes to show you like, man, you can really get wrecked by NFTs. And I think a lot of the success that we read about NFTs, for every success you see, if somebody making millions of dollars, it has to be like 99, at least failures, probably 999. It's just the survival bias where we always hear about the guy who just made, you know, $5 million on an NFT flip. Right. Yeah, well, I had a take about this. Remember when somebody bought the Beeple NFT for $69 million? Yes.

How do you think that's, what do you think that's doing on the secondary market? Oh, I have no idea. I have no idea. Over or under $1 million. I'm going to say I would not have departed with my ETH for that purchase, okay? I would just kept my ETH for that purchase because I think it's an asset that's going to appreciate more than the Beeple. But, you know, who knows? That's right. That's right.

Okay. People sold his Eth from that, too. A whole big chunk of it. Yeah. At what price? I don't remember. I don't remember. Yeah, I guess he thinks he's up.

Maybe he's okay. I don't know. I'm sure people's going to. I think Beeples doing just one. Yeah, I'm sure he's going to be okay. What's this? There is people taking loans on their NFTs now. We've talked about that for a while.

It looks like it's happening. This is the biggest one I've seen. Somebody borrowed $8.3 million on their crypto punk, the value of their crypto punk? Yeah, remember that story of the Cryptopunk lot that was going to Sutherby's? 104 of them. And the guy, like, the hours before the lot, because the crypto punk floor was, like, plummeting at that time. And he was going to sell 104 cryptopunks.

And then he just changed his. He changed his mind last minute. Well, he got liquidity in a different way by borrowing $8.3 million against his 104 Cryptopunk loan collateral. You know what? That is tax-free liquidity, my friend. Another pro tip for you. It's the tax edition of Bankless.

Don't get liquidated. Yeah, just don't get liquidated. I'm sure he's fine. So that was a batch of 104 cryptopunks, not just one, obviously, which is why he's getting so much. And a die-denominated, which is kind of cool. All right, let's get to the Musk watch. Elon Musk, he was going to join the board of Twitter last week.

Now this week, he's quitting that. He's not joining the board any longer. Something happened. Do you know what happened? Yeah. Elon, this morning, I believe, yeah, this morning, Thursday morning, tweets out, I made an offer and then links to an SEC filed document, which is an offer to buy Twitter, not buy shares of Twitter, buy Twitter.

The whole thing? The whole thing for an average for a share price of $54.20, which is a 54% premium over the January 28th closing price. I don't know. I'm not sure why the January 28th closing price matters. But yeah, valuation of $43 billion. Wow. Made an author to buy Twitter. How crazy would that be if that happened? So how much is this total? Do we know how much this is?

I don't know. Oh, $43 billion, David. It's $43 billion. So it's only like an eighth of a musk. That's not very much. Can't he like, I'd really like him to stick to the whole rockets and electric cars thing. I don't think Twitter's as important. Some people think he's going to be really good for Twitter, David.

Like, you know, promoting through speech. I think Elon Musk has the potential to be really good for planet Earth. And Twitter doesn't really have that same potential. Interesting. As a Twitter power user yourself, are you, like, not bullish on Twitter? I would like the planet to not dive climate change and also for humans to become an interstellar species

and Twitter's not doing anything in those regards. Stick to what you know, Elon. That's what David's saying. Like, you're really good at some things. Go focus on that. He does tweet a lot. But he'd have to outbid Justin's son. Apparently, Justin's son is offering $60 per share.

Is this real? Is this a real tweet? Yeah, this is a real tweet. for Justin's son is a one-upping Elon Musk. I tweeted out Justin's son, the Me Too founder of the world. Just like, oh, notice me offering $60 a share. I don't know if Justin's son has that much money.

Pretty sure he doesn't. If he does, it makes me very sad because I know. Yeah, but that's a please notice me type take. Anyway, we'll see. We'll see if that happens. Next week, it could totally change. You know, next week maybe Elon's buying Facebook or something. We'll have to see.

All right, switching gears for a minute. we got to update you guys on the Axi Infinity Hacker. Remember the hacker that stole hundreds of millions of dollars worth of ETH from the Axi Infinity bridge to the Ronin side chain? Well, we're curious what he's doing with all of that money. How this hacker, he, she, they are exiting the system. This is a tweet from watcher.orgoo, somebody watching all of these accounts. Axi Infinity hacker has so far laundered 7.5% of the stolen Ethereum using tornado cash, tornado cash to launder it, which is of course a sort of a privacy coin mixer, I might say, Tumblr, on Ethereum. So what does this mean, David? Yeah, so when you put your

ether into tornado cash, you can do it, I think in lots of one, 10, and 100 ether. And then all of those get bundled up together. And then you sit and just like let it steep and stew because people are putting in ether, people are pulling out ether. So like you wait some period of time, and then you pull it out the other side and no one really knows who you get lost in the crowd basically. You get lost in the crowd, right? 7.5% of that, one of the largest hacks in Defi ever

is a significant amount of ether. And so I asked the question to Twitter is like, well, like, imagine, for example, you put in like 50% of all the ether inside of tornado cache. We know exactly how much ether is in tornado cache. We just don't know whose it is. So I tweeted out,

can some Dune Analytics Wizard tell me what percent of eth in tornado cache this is? Because if the half, hacker puts all their ether into tornado cash and then your wallet withdraws eats from tornado cash, you could be like pins like, oh, maybe that's, maybe you're the hacker, right? Because so much of the ether is tainted. But as it turns out, the Ronan hack was 173,000 ether, 375% of that, the deposited ether from the hacker is 13,000 ether. Total ether in tornado cash, Ryan, 180,000. So that's about 7.5-ish percent of all

tornado cache ether. So actually, like 7.5% of that hack is actually pretty like below the threshold. There's a nice graph that actually shows the very large deposit into into tornado cash. You might have it pulled it up in the next tab. So yeah, you can see all the inputs and outputs, the red spikes, the green spikes going into tornado cash. And it turns out, tornado cash has enough liquidity to hide a pretty sizable amount of ether. And so tornado cash is averaging 6.6,000 ether per day in withdrawals, which is up significantly from, according to this tweet from where it was a couple weeks ago. But yeah. Well, what do you think about this? Do you think, like, I'm surprised we haven't heard the Elizabeth Warrens of the world, you know,

talking about this, maybe Ethereum, bucketing Ethereum, the whole mix as basically a money laundering protocol and see this is how criminals, you know, can escape with cash, right? And, you know, privacy on-chain privacy is bad, and the chain analysis of the world, maybe they can see into this thing, but maybe they can't. What do you think about that? Privacy is a human right, but this is also a money laundering tool, so there's that. Mixed, right? Mixed reviews here. Technology is inherently neutral. It's about how it's used, but privacy as a human right comes before. anti-money laundering efforts.

You kind of have to, if you choose to prioritize privacy, then you kind of have to take the good with the bad. Isn't there just a fundamental trade-off here that society has? And by the way, this is not a crazy trade-off. We've had this in cash forever. And this hasn't caused the downfall collapse of society, right? It's still the ability to find these criminals via other means without eroding the privacy of every individual citizen

and knowing exactly what they own and exactly who they are. So it's something I feel like the crypto industry has to get stronger on, but I do also feel like it's a losing battle in the political soundbite game. We're somebody to be like, oh yeah, and then they just laundered all this money through Tornado Couch, the money laundering tool. And then pretty soon everyone who's ever used Tornado Couch just to obfuscate their identity for like legitimate reasons, non-criminal reasons, they're painted in the same brush. So if you're using a privacy protocol at all, well, you must be a criminal rather than you just. just want to preserve your actual on-chain privacy. And, yeah, this is slippery slope because then then exchanges start blacklisting any address that's interacted with tornado cash.

You can imagine something like this happening. And then the only outlet for you is decentralized defy-type protocols that have no ability to blacklist, right? So this is why all of these things are very important, I think, but it's a complex subject. Yeah, Bitcoin has proof of work as its big Achilles heel and it's narrow. I think privacy on Ethereum, because tornado cache is actually a pretty inferior form of privacy. Aztec technology, ZK. Roll-up, which is not just, not ZK. Roll-up, but zero-knowledge proof technology, like the Aztec layer two is going to be a completely private layer, too.

Like the technology, the privacy tools on Ethereum are only going to get orders of magnitude better, more secure, more private, and more usable. This is going to be our narrative, Achilles heel. Like, this is going to be the attack vector for Ethereum, is privacy. I think it's privacy in general. And yes, and Bitcoin has no privacy. In fact, there's a whole really interesting discussion. I don't think crypto could have gotten as far as it has gotten to this point without like nation state kind of choking the baby in the crib if it had privacy on the base layer. There's a reason why Minero is not on any exchange. But also, Lightning Network, Ryan, is private. That's a private technology. I wait. That's definitely a trade-off and something that we're going to have to discuss with regulators in the future. All right, guys, we're going to burn through a few more things.

Near there launching an Algo stable coin on the 20th of April called USN. This is going to be like UST for Terra. So other alternative layer ones joining the space there to compete for Tara. David, what's this? A hire? Center, an organization consortium or a between circle, between with USD and also Coinbase, has hired two executives to oversee regulation operations. These are kind of one of our spearheading entities helping us fight the fight in regulation. So we like to see that. More regulatory firepower. Also,

Celsius. So this is a centralized lending and borrowing project exchange, I guess, crypto bank, you might call them. Yeah, app. Similar to BlockFi. They have now made it such that non-accredited investors in the U.S. will not be able to deposit new assets into their account. So this happened with BlockFi in February. This is the SEC coming down on these custodial crypto lending and borrowing protocols and saying, nope, can't do that. Not here.

Not in the U.S., not to unaccredit investors, not to people who have less than $1 million in assets. So where do we go from here? We move to Defi and also the Celsius and the Blockfyes of the world seek to become regulated entities so they can start doing this sort of thing. David, let's talk about some more regulatory pressure, and this is coming from an interesting place. A series of class action lawsuits, and this is a new one that dropped to our attention this week. This is a class action lawsuit from a Uniswop user.

Are you a Uniswap user? If you're listening to Bankless, you probably are, right? You may have been in the past. This is a Uniswap user that is accusing Uniswap Labs of allowing fraudulent activity on its protocol. Okay. And non-registered securities, other fraudulent activity. Apparently this user, and you can read the entire plaintiff and the complaint, the class action complaint here. This user bought a whole bunch of uniswop gems, right? Some might call these shit coins. In last year, last summer. So like, you know, June, May of last summer, like stuff like, you know,

the classics, like good old Ethereum Max. Oh, I love that one. Matrix Sam. and Rocket Bunny and Boombaby.io. And if you read the complaint, about 10K was invested in these things. And almost all of them went to zero, near zero, right? And so the complaint is that Uniswap allowed this to happen. And so we named in the lawsuit is Uniswap, Hayden Adams, investors in Uniswap labs, like A16Z, basically everyone they could think of. This is so crazy to me, David.

I have some reactions to this, but I want to hear yours first. What do you think about this? This feels malicious. This feels like they were doing this with intent in order to like smear uniswap, right? This is not just, in my opinion, there's perhaps a case to be made that this is not just some, you know, innocent person who got some Uber driver tips to buy Ethereum Max or Rocket Bun. but instead are using this as a way to

and get into start targeting defi legally. It's not the first time we've seen this. Ryan, you're a member a number of months ago, somebody deposited $10 into pool together and started suing, and then class action lawsuit had pooled together for losing money because of the gas fee, Ryan. Not because they lost me, the gas fee?

Because they lost money because they paid the gas fee. Class action lawsuit against, pool together. This effort is still going on. Now this happens. Same thing. Clax action lawsuit against some obvious, like personally, Ryan, if I lost all my money in Rocket Bunny and Ethereum Macs, I think about my life choices. I wouldn't publicize that. I would not, I would not go publicly with that. And so I think that there's something insipid, insid, insidious? What's the word? Insidious, yeah. Insidious, yeah, going on behind the scenes. And I think the story is going to have to be unfolded a little bit more. You think this is a take down an organization?

organized a D-Fi take-down, possibly? I think this is, there's something bad going on here. Because, like, how can you possibly blame Uniswap, which is a permissionless, decentralized exchange that does not control asset listings at all? Individuals do. How can you possibly blame smart contract code, the developers of smart contract code? This is to me, this is like, you know, blaming the developers of TCIP for what just happened here.

I mean, like, you may as well. who originally created the TCIP protocol that all of the rest of the internet transacts on. Maybe we can hold them responsible because I lost money on uniswap. Or I was scammed from a Nigerian prince email or something like this. Or somebody made me mad on Twitter. It's just absolutely ludicrous.

And what I'm worried about is that there might be some, I guess, court precedent that negatively impacts defy. And like, I guess even best case scenario, man, these defy projects, get tied up in these class action lawsuits. Anyway, that's why we do what we do. We've got to talk about these protocols more and the value of them.

Guys, we're going to get into some hot takes of the week. But before we do, we want to thank the sponsors that made this episode possible. The layer two era is upon us. Ethereum's layer two ecosystem is growing every day and we need bridges to be fast and efficient in order to live a layer two life. Across is the fastest, cheapest, and most secure

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All right, guys, we're back with the takes of the week. This is one from Dan Price about taxes. That's the theme of this episode, David. What's the say? Yeah, Dan Price says, every other country, here are your taxes. Does this look okay? America version. Turbo tax in H&R Block lobbied Congress, so you have to pay them hundreds of dollars and pull together all of the paperwork the government

already has on you to file your taxes manually. Remindor that this is the state that we are in. Yes, it's sad. Sick. Everyone that is stressing out over taxes, you can thank TurboTax on H&R Block. Thank you. It's well as IRS and Congress, I suppose.

This is a question I've had in my mind, David. I'm going to just ask, but it's really this question we've talked about in some bankless shows. But are there going to be local or global winners for defy? And a global winner is like one kind of lending and borrowing protocol that establishes some sort of power law network effect. Like say, Avey, it gets deployed across, you know, all of the chains, for example. Polygon, Avalanche, phantom, whatever. All of the chains, right? And it would be Avey.

This is the winner of lending and borrowing, for example, or compound or something like that. The local version of things is, no, every single chain ecosystem will have its own, its own automated market maker and lending and borrowing protocols. So like on Avalanche, they'll have Trader Joe and on Ethereum, you might have uniswap. And on Polygon, you might have like a quick swap or something like this. This has been a big question in my mind because it's like the question of how do you invest? Do you invest with the big ones or do you have to look for like winners across every single chain? So I asked this question, do you guys think there will be local? winners or global winners. A few good responses here. The majority seem to indicate that

global winners would win, which was kind of my inclination. But this guy, Hildobby, actually provided some data behind this. You want to read this tweet out? Yeah, stats following Uniswap's arrival on Polygon leads me to believe that user stickiness will lead to global winners. In my opinion, the average user sticks to what he or she is familiar with, but it will be interesting to see how things develop. And then he's he gives a graph that shows how much, how dominant uniswap is across all the dex is on Polygon. One core, one asterisk on this is that if you're using Polygon, you're more likely to be an Ethereum user.

And if you're an Ethereum user, you're likely to be a uniswap user, going across a different ecosystem to Solana or Avalanche, especially Salana, because Solana is not EVM. Avalanche is the EVM. Like, maybe there's a different taste because it's a different, very different user base rather than just a slightly different user base. So how do you think this shakes out? I think the Uniswap branding is very, very strong. Also, that technology is very, very strong as well.

Like, Uniswop V3 is robust, right? Like, it's hard to compete with that. And so I think that lends itself to global winners. I think we might have, like, a combo, too. I think we'll have some major... But you know how, like, in countries, right? There's, like, sort of the, you know, the Google of China, for example, for various reasons. Like, some countries have their own flavors of this.

I think you'll see some of that, too, but then you'll also see some big global power law winners. Like there might be some geographic boundaries in these chains here that we don't see. Like maybe EVM versus non-EVM is one of them. I think that's right. It'll be interesting. Leaning towards global winners. Yeah.

This is an Eric Wall. I can see like there being global winners amongst all EVM chains and all non-EVM chains having their own local winners. Yeah, that's one possibility for sure. There's an Eric Wall tweet. What's he saying here? he's taken a screenshot and the screenshot is of other tweets and the first person says the gas fees on avalanche are getting ridiculous somebody follows that up saying yes a transaction previously cost me six cents and now $6 and $0.50 that's a 10,000% increase I'm not sure on the math on that one and then Eric Wall retweets this saying obviously the solution is an EVM fork which poses the question what is the model of scaling that the that the crypto industry is going to have every time a layer one blockchain gets full are we going to to a gets expensive gets it gets expensive get full same same um are we going to a one to spin up another

layer one blockchain that's an evm fork like another geth fork spin that out this blockchain raise a bunch of ecc cash or when a layer one blockchain gets full do you to spin up another layer two um which model of scaling is the industry going to go in and lots of people in this and this is i feel like the question of 2021 and now going into 2022 how will the crypto industry scale will we put out more layer ones or will we put out more layer twos? Yeah. I do think that these are the two models, David, and I want to get to your

post that you published this week about one of the models. But basically the two models are, are we going to live in this world of interconnected sidechains with their own validator set? So none that are really like market dominant, just a whole bunch of new side chains that we keep spinning

up, all with their own defense and security spend. Or are we going to live more in a world of like something like Ethereum, where there's one modular chain that kind of provides economic security for a whole bunch of other layer twos. And the dichotomy here that I've heard, which is kind of an analog to the real world, is will we live in a world of like many nation states with providing their own security, or will we live in a world with empires and maybe some dominant empires, some modular blockchains that kind of provide security

for like spheres of influence, if you will, territories, states and provinces and alliances with other countries. So you wrote about this, I think, in your post, the empire model for blockchains. And what's the argument that you're making? Yeah, the argument that I'm making is that if you are not playing to be the number one spot, then you are not playing. And I think the evidence for why this is going to be an empire model of a blockchain network rather than, you said nation states, Ryan, but I think the alternative model is like

many, many city states. Oh, yes, that's what I meant. City states, not nation states. Yeah, so, like, rather, like, one dominant, like, nation that blankets the whole, like, world with their blockchain, right? Like, I think the Ethereum Empire model, the many, many layer two's model is going to be the dominant one. And the interoperable side chains, a network of side chains where avalanche is the side

chain to Ethereum, which is a side chain to Solana, which is a side chain to avalanche. And there's a mesh network of sidechains. Like, that doesn't make sense. And people know this subconsciously in the tribalism and the fighting that happens on crypto Twitter. The reason why we fight, the reason why crypto Twitter is tribal is because we all, at least subconsciously, some people consciously know this, and I'm trying to get people to consciously know it, which is why I wrote the article. We subconsciously know this is true, and that's why we are tribal, because we all want to be the number one spot.

We all want our blockchain to be the number one thing. We all know we're playing the empire game. We are all playing the empire game. liquidity begets liquidity capital begets capital network effects begets network network effects and the number one blockchain claims all of these things and so like and there's this is also just completely rational when in game theory because if you aren't if you're fighting to be a good side chain for it to be interrobable with other good side chains you're going to lose to the blockchain that's fighting to be the empire and there's a and we in the last six months over a billion dollars has been hacked ryan

what? In cross-chain bridges. Insecure bridges. Bridges are going to be the next big attack vector, and layer two, cryptographic bridges are always going to be more secure than cross-chain multi-sig bridges. And so a empire model where there's one layer one with many, many, many, many layer two that come to blanket the earth is fundamentally more secure than a poly cross-chain layer one model. I think you know, so first of all, I would say Bitcoiners acknowledge that. this and realize this about Bitcoin. This is why they fight hard. I think the Ethereum community doesn't so much. And I don't think that I think they might like, um, cringe a little bit in the framing of this. And I think the reason, spicy wood. I think, I think the reason they do,

though, David, is because they're used to empires the, the nation state analog of like, empire by conquest. Like, that's how you go build an empire in the nation state world. You have to go, like, conquer another set of peoples and take from them. But this is not empire by conquest. This This is Empire by Opt-in, not conquest, opt-in, right? And so basically the model is, oh, rather than spending, if I'm a side chain, you know, a question, rather than spending for my own economic security. And spending, by the way, I just have to inflate my token supply. Like, it's really expensive. People don't look at this very often, but I know you and I look at this a lot, which is how much are chains actually spending in blockchain issuance for their security. And it's a whole lot of money to maintain that level of security instead of doing that. Why don't I just outsource my security? Want to opt into the Ethereum Federation. Yeah, I'll just have Ethereum protect me. Yeah. And, and, you know, I like that ecosystem anyway. I'm EVM, whatever. Like, there's a lot of network effects. So let me just build that bridge and I'll become a roll-up rather than a side chain, right? It seems to me, and again, it's not

opt-in. No one in Ethereum, like, went and, like, conquered that side chain. It was just basically like, oh, I'm looking at the economics of this. And I'm trying to, you know, to make the most rational decision. And so I'm going to become a subsidiary of Ethereum. Now, I do think that that model has got to be, like, that's sort of the model that we've seen play out in the conquest world of nation states, where we don't have a whole bunch of Singapore's and Hong Kong's. It's like former Hong Kong.

Like, we don't have a bunch of city states. We have some pretty dominant nation state empires. Maybe we have multiple. That could also be the case. And it is the case now. but there will probably be some eras and power law winners and in more like dominant empires. And I do think that is the quiet part

that the Ethereum community doesn't say out loud. When you enter the, we're fighting for monetary premium game, you necessarily enter that game of like, I guess, opt-in empire building. And there's so much evidence that's why this is the right model because this is the model of coordination

ever since humans stopped being hunter-gatherers and we started being settlers and we actually created civilizations with property, we started this coordination game of who pays taxes to who, right? Like who can have the monopoly on violence? And in the blockchain world, it's who can have the strongest security. But like, you know, in the physical world, a monopoly on violence is like, all right, whoever has the largest military gets to control the global reserve currency.

In the blockchain world, it's whoever's, whichever blockchain has the best security, has the best money properties of that layer one. Okay, I would just also say to that, though, what you just said and what I just said, nine out of 10 VCs disagree with that. Yes, yes. Because they're incentivized for as many layer one blockchains as possible because it's VC service areas, VC playgrounds. Maybe.

So, yes, that's what you might say. But like, let's flip that around. Like, I think it's worth steel manning their argument. And basically more the steel man is, they don't believe that security. and, like, defense, economic security of the chain is kind of the number one property. Like, they would prioritize user experience, for example, far higher. And user experience is associated with low gas fees as well. Like, and if you have to make lots of tradeoffs on security, decentralization security,

you know, people forget what decentralization is. Like, it's good to remind people. It's an anti-corruption technology. So it helps. preserve, it helps keep the cancer at bay. It's like the white blood cells fighting the cancer in the spread in the body of the system, okay? And like, they'll make some tradeoffs there where they'll introduce more potential for future corruption in exchange for usability. And they'll say that, like, that's what users actually care about. It's the user experience. It's not the security.

And so it's not the highest, like people don't care, you know, one VC put it this way. people don't care about like what chain they're interacting with for security reason. They care about risk more. It's like what's the risk? And so risk and security are related, but it's not one to one. There could be, you know, secure chains that have risks in other ways. And so they want to minimize risk over the long run. So I think a VC would push back on that and be like, hey, it's not actually a battle

for maximum security, David. It's actually a battle for network effect and utility and user experience. because that's going to drive the most users and the most liquidity over the long run. Yep. And I highly, highly encourage people, please go read this article. It's one of my favorites that I've written in a long time. Link in the show notes. That's cool.

All right, man, those are the takes, but what are you said about this week? You like in Brooklyn? Is that exciting? Dude, I'm loving Brooklyn. There's a Dow meetup that I'm going to later today with just like, seeing just a list of the invitees. Like, oh, these are all my friends. This is great.

Oh, gosh. Like, I never had this in San Diego or really any. other time ever. And so it's going to be in where Dow's are being built, where the Metaverse is being built here at the epicenter of it all, which is Brooklyn, Williamsburg, is really very exciting. There's a boys club meetup that I'm going to later today, Ryan, which is also going to be lovely. And they're at the same time, so I have to like party hop, and it's a Thursday. So that's going to be really exciting. I'm still like walking around Brooklyn deciding what part of it I'm trying to find an apartment in. But you're

definitely doing it. Oh, I'm doing it. Oh, I'm doing it. Yeah, for sure. In less, look, next week, though, you're going to Amsterdam. What if you fall in love with a different city? Oh, gosh. I don't know. I could fall in love with Amsterdam. I still love America. I mean, Amsterdam's got Web 3 people, too, but nothing like Brooklyn and Williamsburg, right?

Like Williamsburg is the epicenter of the Metaverse. It's like where the Metaverse find has its, like, link to the real world because everyone that's building the Metaverse lives here. And so it's like the Metaverse instantiate in Williamsburg. David's starting to sound like a Brooklyn maximalist here. I never ever, Ryan thought I'd ever live on the East Coast. But here I am. That's funny, man.

But then you're also, yeah, off to Amsterdam on Saturday for DevConnect. I said this couple, like, last roll up, probably the nerdiest conference that I'm ever going to go to. We're going to talk about. Is this nerdyer than, like, what's it called? I'm thinking of the interim conference. Heath Denver? No, no, no. DevCon.

Oh, well, I've never been to a DevCon. Oh, you haven't? No, I've never been to a DevCon. Are you going this year? Yeah, yeah. Columbia in October. I will be excited for that one on a future roll-up. But this roll-up is as DevConnect in Amsterdam.

Going to be modular blockchain talk. There's going to be eat staking talk. There's going to be a shared secret validator from the Obel Network talk. Oh my God, I'm just going to just geek out. It's going to be great. A lot of geek energy. A lot of geek energy bigly. And also I get to see Anthony Cizano.

It's going to be great to see him. That's good. Ryan, what are you excited about? Okay, so bankless registered for a trademark of the bankless name about a year ago. We finally got that back and we have the trademark. I don't have my soundboard, but boop-p-to-boo-do-boo. It's pretty cool. So what's neat about this is I'm actually, when we get some time, I'm excited to try some like on-chain experiments with this thing. Right? So what is a trademark? It's just a registration in a country, in a nation state,

or a set of countries that no one else can use this mark for a particular purpose. Like no one else can use the bankless brand for particular purpose. Bankless has always been somewhat of a headless brand. You know, you and I are kind of spearheading the movement a little bit. I'm really excited about how we could like bring this trademark maybe on chain and set the Dow loose on it, right? So what if you could, you know, basically create a non-revocable license for the Dow and participants of the Dow to use this trademark? So for example, what if you could create a smart contract that was controlled by a snapshot vote. And the snapshot vote could vote on which new entity would get rights to the trademark

and be able to use the bankless brand or not. You could like revoke that or approve that via a bank Dow token snapshot vote. Like how cool would that be? Or what if you had to hold a certain amount of bank tokens and stake them or do something like this in order to use that mark, use that trademark? I don't know. There's a lot of cool things. and I'm excited to like, because what is, what is a trademark?

It's just a, it's just like a nation state, smart contract. It's a contract like with the nation state. And so can we tie that into, yeah, it's an NFT. So we can, can we create that instantiate that on chain, create kind of an integration layer here. So anyway, that's kind of nerdy stuff. But I'm excited to talk to some crypto, smart contract experts and see what we can do there. Yeah, there's a lot of potential there.

For those who don't know, like go to Instagram and type in bankless, Bankless HQ will show up, but so will like 50 other flavors of bankless, Bankless Brazil, Bankless Brazil. Those guys are killing it. Bankless Russia. Like bankless, like, Romania. Like, even in some relatively small countries have like a bankless social media account. There's podcasts in Portuguese, like under the bankless name, all sorts of things.

And I would love to kind of usher them into the bankless family, like even more officially through use of this. Yeah, totally. So nice find. Nice, NF2 find. It's cool stuff. Thank you, U.S. government. Cheers. But you know what?

Mean of the week, I guess thank you, U.S. government again, or maybe not so much. Taxes were brutal, man. It's tax week, so we've got to end with these. What's this tweet that we're looking at? This is a relatively niche tweet, but it's one boxer standing up ready to go. We're like, okay, all right, I'm going to file these taxes. Let's do this. And then the next scene is him sitting down drinking water.

It goes, damn, filing that extension was easy. You can get an extension to our first. October. You can file those. But only for filing taxes, you've still got to pay. Yeah, you still got to pay. You can't file extension to pay later. That's awesome, David.

You were schooled up on all this stuff, man. This is another IRS meme. It's amazing. How do you think I know these things? Yeah, you've been hanging out with me a little bit, I think. I've come a long way. All right, this next meme is coming from the Rugged News. It's the onion for crypto. You should be

following it because the Twitter account is hilarious. IRS, Web3 Community Employees Tax Strategy. We're finally getting guidance from the IRS. Their guidance is, you'll figure it out. So true. All right, guys, this has been the weekly roll-up. This somehow turned into tax week. I don't know how, but we won't be talking about taxes for at least another year, right, David? One more year, yeah. All right, we're going to leave you with one final moment of Zen, but before we do, got to tell you this. None of this has been financial advice. It never is. ETH and Bitcoin are both risky. So is defy. You could lose what you put in. But we are headed west. This is the frontier. It's not for everyone, but we're glad

you're with us on the bangless journey. Thanks a lot.