Bankless - ROLLUP: Eminem's Bored Ape | Why Crypto Prices Are Down | OpenSea Freezes Stolen NFTs

Starting point is 00:00:00 Man, what would it be like if society totally broke down? And we lost electricity, lost internet. Like, how long could I last? Right. And that sort of a situation, the truth is like, not very damn long. Good morning, bankless nation. David, what time is it? Oh, Ryan, it's the Friday weekly roll-up time where we roll up the entire week in crypto,

Starting point is 00:00:22 which is always an ambitious endeavor, yet we do it anyways, nonetheless, because it's always the best show of the week, at least in my opinion. Happy New Year, man. our first show of 2022. How are you feeling about this year so far? God, already a very bumpy wild week for the first week of 2022. I'm kind of kind of thinking that 2022 is going to be way crazier. And I think we're, yeah, crazier all around. And yeah, yeah, I started, it started off that way, okay? Like market volatility. By the way, man, like my power was off for like two days, okay, 48 hours. You're right.

Starting point is 00:01:03 The AI was down. Yeah, see, totally down, man. Everything about me was down. And, yeah, so there was that. And then yesterday, so my internet turned off again midday. I ran downstairs to go check my router. I slipped and fell on my staircase and, like, fell straight on my back, got the wind knocked out of me.

Starting point is 00:01:23 And then I remember just like, in between my breasts being like, oh, my God, is this what 2022 is going to be like? Flat on my back, not able to be. breathe. Yeah. Gosh. Yeah, it has felt like that in so many different respects. Yeah, or maybe this is the worst week of 2022. It's all up only. We'll see. Up only from here. I don't know. We'll see. But guys, we are going to get into it. A few things on the agenda for today. We're going to talk about the Fed meeting. Okay. Jerome Powell strikes again. This time it's hitting crypto markets. We'll talk about that. That is the reason the markets are down in the dumps. Also, open sea.

Starting point is 00:01:57 Lots of stuff to talk about an open sea. A 13 billion valuation? but like one token, right? Also, there's some drama about OpenC maybe freezing NFTs. We're going to dig into that. And OpenC also had a comeback month in December. We'll talk about that a little bit too. So tons of stuff to discuss today on the roll-up. David, before we get in, we got to talk a little bit about our friends at On Juno.

Starting point is 00:02:22 They wanted us to get the word out about these magical checking accounts, these checking accounts for crypto natives. You've got to check this out. So, David, I, I, I, I know you're like me, right? So you have your Coinbase accounts, you have your Ethereum address, we do all your bankless things, but you still got your old-fashioned Wells Fargo account. You got a pay right.

Starting point is 00:02:41 And you have to, we're not fully bankless, right? And so you have to maintain a traditional bank account if you want to do things in the real world. But the problem with your traditional bank account is it sucks. It sucks in particular for crypto natives. Like there's no way in Wells Fargo for me to purchase Ethereum. or there's no way for me to receive a paycheck in Bitcoin or Eith. Or get any yield at all. Yeah, it's totally disconnected.

Starting point is 00:03:10 So on Juno is this cool, I guess, NeoBank that is very much connected to the crypto world. It's a bank account, a checking account for crypto natives, and there's lots of cool things you can do with it. The first is you could start to receive your paychecks in crypto, which that's a huge unlock. So you can earn paycheck with your paycheck in crypto. You can also save, get 4% yields using USDC. You can also invest. You can buy crypto at zero fees. This is my account.

Starting point is 00:03:42 I recently created one. And look, I mean, it has a portfolio tab here that you can check out. You also get a card with this too, like a virtual card with a debit card. So it's like this crypto-native bank account that straddles both worlds. and I think it's going to be a nice hybrid solution for me moving forward. There's some good news, too, for bankless listeners. I think there's a $50 incentive to open up an On Juno account. You want to talk about that, David?

Starting point is 00:04:09 Yeah, $50 if you use the code bankless to sign up with On Juno in your preferred crypto asset. And overall, like the UI on this on Juno is just exactly the UI I wish I had with my Wells Fargo account. Yeah, so pretty awesome guys. create that account. You guys could get started. There's a link in the show notes to that, and remember to use the code bank list to get that $50 off. Also, David, another PSA. The Ethereum research team is doing an AMA on Reddit tomorrow. I love those AMAs, man. There's so much learning that's dropped. Where's that going to be? Is there a link in the show notes or something? Yeah, people will have to go to the R-Etherium subreddit in order to get that done.

Starting point is 00:04:50 There's not a link yet, I do not believe, but it is happening at 1 p.m. U.T.C. time, which I believe is, I think it's probably just going to be going on all day. Today, the day of the listeners listening to this, if you are listening to this on Friday. But, yeah, this will be in the R-Etherium Reddit. I believe people are already asking questions. So in our Ethereum, yeah, there is already a link. We will have a link in the show notes. People already are asking questions there.

Starting point is 00:05:19 So we'll probably also pick out some of these responses, questions and responses, and cover some of the best ones in the roll-up next week. probably. But if you want to get your question asked or just read all of them, go ahead and go to the link in the show notes to check out the AMA. All right. Let's get to market, David. Bitcoin, Bitcoin time, the tumble, the sad music is playing. Bitcoin falls below 43K. It's even lower at the time of recording leads to 800 million in crypto liquidations. This is the headline. What's going on in Bitcoin world? Yeah, we had one of those big oof candles where we fell from the high, high price of $46,000 down to $42.5.5.

Starting point is 00:05:56 $1,000 currently at $43,000. Overall, down 7.5% on the week. I'm not a trader. We're not traders here, but there was a trend line that Bitcoin broke through. You can see it here on the YouTube here as well. We were really hoping to not break below $46,000 yet we did it anyways. So here we are. Traders are fearful, state of fear in the crypto markets right now.

Starting point is 00:06:20 Flat on your back in 2022. And how about Eith? What's going on with Eith prices? Looks like it went the way of Bitcoin as well. Yeah, same deal. Start of the week at $3,800, it fell down to the low price of $3,330. That's currently climbed and reclaimed $3,400, but overall down 7% on the week. So an oof week in the crypto markets.

Starting point is 00:06:43 Let's go through a few other metrics, and let's just talk about what this means after that. But let's take a look at the ratio. So the ETH to Bitcoin ratio, what's that looking like right now? Yeah, last week started the week at 0.08. we are at 0.079, so fell down below that 0.08 meme line. Nothing really much to a report there. Oh, we're also looking, okay. So looking them pretty good.

Starting point is 00:07:04 We'll have to monitor it. How about the bed index? So that's a third defy, a third Bitcoin, and a third ETH. What are we looking at on the week? Started the week at $144, currently at $127, down 10%, 10.5% on the week, which means that the DPI tokens took an even bigger hit. Bitcoin and Ether. Okay.

Starting point is 00:07:27 So what's going on, man? What's happening in 2022? Should we talk about some of the Fed minutes? Because I think this is, you know, you can't always attribute crypto market movements or even general market movements to stories. You usually cannot. But in this case, I think you definitely can. So Jerome Powell and the Fed had a meeting.

Starting point is 00:07:48 They talked about shrinking the balance sheet. They talked about getting a bit more hawkish. including reiterating that they intended to raise the rates this year. I think the shrinking the balance sheet statement was the one that caught the market most off guard. And stocks tumbled, crypto tumbled along with it. All the risk-on assets really went down as a result of this. Do you think this was the primary catalyst for the wreckage that we saw over the last couple of days? I think the timing is pretty hard to ignore.

Starting point is 00:08:17 It happened right at the release of the minutes. It happened at the same time as traditional equities markets, also took a tumble. So this happened across the board. This was correlated in all assets ever. And so just because of the nature of the money printer, all assets are kind of risk on assets at this moment. And so when the Fed says they're going to be raising interest rates,

Starting point is 00:08:38 all assets take a tumble. So that's, I think it's a pretty clear connection. There are other possible explanations. We're going to get into this later in the show. Kazakhstan had a massive power outage, which caused Bitcoin to lose, I think, 13% of its hash power, which is pretty significant. And that can stoke some selling pressure from miners. If 13% of hash power disappears, miners can go risk off themselves. And that can also

Starting point is 00:09:03 create downward pressures for the whole rest of the market if Bitcoin gets sold off in mass. So it could be other things as well, but I think this one is definitely the hawkishness from the Fed, the possibility of raising interest rates beyond what the market expected. It's got to be in the lead for the biggest reason why the markets took the tumble that they did. It's interesting. I think this is going to be a story to track all year, David. So talk about a theme of 2022. It's going to be, what is the Fed doing? Right. It's like last year, what were they doing? They were continuing to print money. It was kind of stasis. But this year, there's some inflation pressures. The type of inflation the Fed cares about is CPI. That's what everyone notices. That's what politicians

Starting point is 00:09:44 notice and it's been 7% here recently in the U.S. It's like 5% in the euro, the ECB. I read recently. So it's like inflation fears are causing central bankers to take a more hawkish stance. But they can only, like they can only do that so much because when the markets tumble like this in this way, that's also bad for the optics and also kind of against the principles that the Fed has of making sure that the economy continues to function. So it's kind of a rock in a hard place.

Starting point is 00:10:21 And I think that'll be a major theme for 2022. It's like how does the Fed navigate this? How do they string that line through the eye of the needle? 100%. 100%. It's going to be, yeah, you're totally right. Watching them now and like thread that needle is going to be, I kind of think it's an impossible needle to thread.

Starting point is 00:10:40 And so seeing how they do it is always going to be interesting, no matter what because it kind of maybe can't be done. So the fallout from that is going to be interesting. Absolutely. All right. Let's talk about this. Something that was up and everything else was down is Metamask users, active users been up. So 21 million monthly active users since April. And what's interesting about this from Lee, oh, Lee Jin. So she's coming on the podcast as well. We're going to talk about a number of things. Maybe we could bring this up. If you compare this to monthly active users of Facebook, it's close to 1%. It's 0.7% right now,

Starting point is 00:11:18 MetaMSca's versus Facebook. It's about 6% of Twitter's monthly active users, and it's about the rate of the number of internet users in 1996. Feels about right. What year is crypto in? Maybe it's 1996. Well, hang on, we've got to control for population inflation. And so it's actually got to be like 94-93.

Starting point is 00:11:39 Okay, 94-93. And this is like, monthly active users is only one measure, of course, of the usage of this thing. I think because this is an internet of value, also market cap and the value and, you know, the fact that we're at $2 trillion is another fantastic measure of this whole thing. But what do you make of this, monthly active users on MetaMask? Monthly active. Metamask is a great signal because everyone uses Metamask, except for the Solana ecosystem. Even if you're getting onboarded to Polygon, if you're getting onboarded to Avalanche, you're using Metamask. Pick your L2, you're using Metamask.

Starting point is 00:12:15 And so it's a pretty high signal of just very general rate of adoption. Granted, like, I have two computers, and so I have Metamask on there twice. I also have Metamask on my phone. Do I count as three, probably? But it's directionally always a pretty good signal. It's kind of like the Netscape of the Internet, if you will. That's really what MetaMask is in a lot of ways. Let's talk about this too, David.

Starting point is 00:12:38 There's this fantastic report from Electric Capital. And they do this every year. I feel like it gets better every year, more detailed in a lot of ways. And what they try to do is they go through the developer metrics from each of the ecosystems and track that over time. And so there are a few highlights from this that maybe we want to get into. I'll start with the first one that I saw. And that is this.

Starting point is 00:13:02 Web 3 developers are at all-time highs right now. now, okay? 18,400 developers. That's up, it's almost double from the start of 2021. So we kind of doubled the amount of developers in the Web 3 ecosystem in 2021, which is pretty crazy. David, why don't you talk about this one? Because this is super interesting. Why do the developers come in here? Is it like because they're excited? Why is it? Well, I think the line of show me the incentives, and I'll show you the outcome is really reached true here. When price goes up, when number goes up, it tracks everything. Everything always gets attracted to capital, and that includes developers.

Starting point is 00:13:47 And so when price goes up, developers also goes up. The interesting thing here is that, and this is why we always know in crypto, crypto's a one-way street. People don't come into crypto, and then they're like, nah, I'm going to leave now. When you come into crypto, you tend to stay. And so when prices go down, developers stay flat. So like bad prices means that we just don't get any new developers. We don't lose any developers.

Starting point is 00:14:11 We just don't get any new ones. And so when price goes up, we get new developers. When price goes down, we don't lose any developers. And so this is kind of why crypto is always a waiting game. Like you can zoom in on the markets and be like, oh, it's up 5%. Oh, it's up down percent. Down 5%. But like, it's just a waiting game.

Starting point is 00:14:27 You can just wait out the markets until the developers build out crypto into the vision of the future that we have for it. And then prices will be up. It's just how it works. You can just wait it out. Developers aren't going anywhere. Yeah, totally agree. And it's really interesting how that floor gets painted at like the peak of the last cycle becomes kind of the floor for the next cycle.

Starting point is 00:14:47 Chris Dixon in our podcast with him, he's like, I don't pay attention to prices so much. I'm sure he does a little bit. But he's like, I pay attention to the talent inflows in the space. And that's what I track. And this is an interesting way to track that. It's interesting, too, if you chart it by ecosystem as well. So you can compare some of the layer one.

Starting point is 00:15:04 ecosystems, Ethereum, Pocodot, Cosmo, Solana, Bitcoin, those are the five largest. Ethereum really far in a way in the lead in terms of its mind share and developer account. This is not just protocol development, but this is the entire ecosystem. Now keep in mind. Application layer too. These metrics aren't like full proof. So they're tracking GitHub. They're tracking open source projects primarily.

Starting point is 00:15:31 They're directionally correct, but the data. it doesn't always reflect the entire truth here, but Ethereum definitely cemented in the number one slot. Number two is actually Pocodot, according to this, which I found surprising. Then you've got Bitcoin, Cosmos, and Solana right behind it. Here's another graph of the same thing. This is if you compare the developer ecosystems from day zero, and you do sort of an apples-to-apples comparison of where they are, and you kind of track the numbers here.

Starting point is 00:16:02 what are some of your takeaways from this? Yeah, actually, if you go up to the very first graph, I really want to pay attention to, especially on graphs like this, the very first graph, the area under the curve is really, really important. And so, like, we have this blue line here of all of the developers, and it just now, just recently hit new highs, right? But it's so recent.

Starting point is 00:16:26 It's the area under the curve, this is an extremely rough science. It's the area under the curve that is the rate of a, rate of development because these so many new web three developers just came in they haven't built anything yet but now that this area under the curve is so large that every single day means so much more in terms of development than it did in july of 2017 for example i mean look at look at how much area under the curve there is in july of 2017 versus how much area there is under the curve in july of 2021 we are making like as an industry we are developing like three to four times faster than we were in July of 2017. And that's just what happens when developers come into the ecosystem.

Starting point is 00:17:06 And so while there's a lot of developers here right now, they just onboarded them, a lot of them are just, you know, experiencing their first apps, like building their first stuff. And so it's going to take six months for the area under the curve here to actually build out into the thing where we actually get a bunch of new, cool new stuff. But the point is we are accelerating development here, which is just super bullish. Totally. It's all happening faster. It's interesting here, again, this is a chart Ethereum of course far in the lead with 4,000 monthly active developers. You see kind of Bitcoin down at the bottom, and Bitcoin just hasn't really grown that much.

Starting point is 00:17:44 And that sort of makes sense for the type of developer count. That sort of makes sense for the type of network that Bitcoin is. But some of these other networks are like growing just as fast, if not faster, than Ethereum in its early days. And I think some of them benefit from the infrastructure that Ethereum has really built out already. So that's interesting to see as well. Yeah. Let's talk about this too, David. So, uh, NFT market. It feels like NFTs are back. All right. So after a lull, maybe for the last couple of months, kind of a minor bear market ish. Uh, correct. A retrosement. Yeah. You're showing some

Starting point is 00:18:23 signs of life. And this doesn't necessarily mean they'll, they'll return to all time highs or not. But what do you think this means? Yeah. Well, we had open sea just, you know, and, And an NFT volume at large just grew so fast, so quickly. We would, it's totally expected to see a retracement. And that's what we saw. We saw about four months of decreasing volumes. But December and also the first week of 2022 saw a resurgence in volume away from the decreasing downtrend that we saw in the last four or five months.

Starting point is 00:18:49 So board ape yacht clubs have really performed well, both in terms of floor price and also volume. And also just like celebrity adoptions. So many celebrities have board apes now. And then there were some other, uh, winners as well. Doodles are on the mind. X copies have gotten a ton of volume. So yeah, there's always a bull market somewhere. It's just a matter of finding out where it is. This is some NFT stats for 2021. Just a year in review. This is put out by Andrew Chang, I believe,

Starting point is 00:19:21 in the one confirmation team, Andrew Chen, that is. Some interesting stats of note. This is from Metaversal newsletter. Ethereum is still king. So 90, percent plus of all NFT volume was on Ethereum this year. And that includes also kind of Axi Infinity, its ecosystem, that as a side chain. There are a total market cap of NFTs past $31 billion in 2021, $31 billion, which is crazy. But it's still only 1%. Just adding up all the NFTs, I guess. Yeah, some of them, you know, maybe on OpenC, I'm not sure.

Starting point is 00:20:01 You could dig into the data here. But it's interesting, this is only 1.3% of crypto's total market cap, right? So remember all of the predictions that NFTs were eventually going to be larger than crypto? If that's the case, it's a long way to go. There's a lot of upside here, if that's the case. Active NFT users on Ethereum hit 2 million. Pretty crazy. Trading volume on NFTs passed 20 billion in 2021.

Starting point is 00:20:31 some pretty big stats here and then it goes through different segments of the NFT market like crypto art, gaming, marketplaces, collectibles and then some highlights of the things. Yeah, what are your thoughts on the year of 2021 that NFTs had?

Starting point is 00:20:48 Do you think we're going to repeat something like that this year? Yeah, I'm reminded of a tweet that Kane Warwick put out forever ago about the difference between technologies that fundamentally change the world but then are just not very loud technologies, and I think that's DeFi. Very, very just paradigm

Starting point is 00:21:05 shift in what it means to do finance. NFTs also a paradigm shift, but when it's only a $32 billion market cap versus how much exposure and like social and cultural acknowledgement there are around NFTs. It's punching above its weight class, isn't it?

Starting point is 00:21:21 It's making bigger cultural impact than Defi is at like one one thousandth of the market cap. Like absolutely insane. and it kind of just shows like how small the NFT industry actually is. $312 billion is, I mean, it's a plundit. It's more money than I have, certainly.

Starting point is 00:21:40 But like it's not a lot of money in the grand scheme of things. Yeah, it's still small. So I guess one takeaway's NFTs are early. But what do you think, though? Do you think they're going to have a crazy year in 2022? Oh, I think they have to. Yeah. I mean, crazy is such an open word.

Starting point is 00:21:55 Do I think prices are going to go up in 2022? For some. And I think 2022 will be another crazy year in the world of NFTs, and it's going to be crazy in a way that we can't expect right now. That's it. That's the key. It was crazy in 2021 in a way we couldn't expect, and it's going to be crazy in 2022 in a way we can't expect either.

Starting point is 00:22:14 So I expect to be surprised, and that is cryptic for you. There's also another almost companion report. It's a separate report, but I call it companion report. Chain analysis put this NFT report together, and it took a different lens on things. It was basically like, who's winning? Who won in 2021? So of that $30 billion or so in value, who made the money?

Starting point is 00:22:34 A few takeaways, at least from my mind, were OpenC data actually suggests it's really difficult to achieve outsized returns without being whitelisted on OpenC. So you kind of had to be on OpenC in order to get these returns. Another takeaway was, if you want to flip NFTs, don't buy the cheap stuff. buy the blue chips. It's interesting. The top 500 NFT collections account for 94% of all the flips. The top 100 accounts for 50% of the flips on OpenC. So if you're kind of scouring the bottom tier of the market,

Starting point is 00:23:13 just buying the cheap stuff, that's actually not the way, according to this report, that you're making real money on NFTs. And most people actually lose. This next chart, I think, is really, really insightful. And this is everything, everyone should listen up about this. This tweet says, you're probably not making money flipping NFTs.

Starting point is 00:23:31 20% of user addresses on OpenC account for 80% of secondary NFT sales while just 5% of all addresses account for 80% of profits made on secondary sales. And so, yeah, like this is, this reminds me of, Hazu made this comment,

Starting point is 00:23:48 I think, in a podcast a while ago where there was this big, big boom in online poker for a while. And everyone, everyone in their mother started playing online poker. And then the really, really good poker players just milked all of the nubes for all of their money. And then the, and then... They made a living on it.

Starting point is 00:24:05 They made a living on it. They got extremely wealthy. And then all of the, you know, the retail poker players put their tail between their legs and went elsewhere and did something else with their lads because they got worked. And then the world of online poker just hit like a quote unquote bear market because there were any players left because all the good ones took all the money from the bad ones. I definitely kind of think that's what's going on with NFT flipping. And that's definitely why. the best advice you can ever get about NFTs is you only buy something that you like

Starting point is 00:24:32 rather than trying to get rich on it because if you're trying to flip NFTs you've got to know what you're doing and one of these charts illustrates that in order to optimize for the best flipping potential it says a couple tweets down says arguably the most important stat

Starting point is 00:24:52 in the entire report for NFT flippers is that the top 5% of NFT flippers on average is paying 2.2-Eath more for their NFTs. So they're not buying four floor NFTs. They are sifting through trying to find the rare ones doing their homework, doing their due diligence, and then flipping that. They're paying premium. They're paying the premium. They're targeting their their selections. They're doing their homework. And if you're just buying a floor hoping to flip it, like you might get, you might get worked. You might get worked. I mean, I think the takeaway here, and by the way,

Starting point is 00:25:23 in my opinion, this goes for all trading, not just NFT trading. It's 95% of you listening to this should not be trading. Yes. Trading and flipping are the same thing. Exactly. 95% of you probably shouldn't be doing that. And that goes for NFTs too, according to those stats. Guys, we will be right back with some of the releases and raises and the rest of the roll-ups.

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Starting point is 00:28:10 All right, guys, we are back with the releases of the week. The first is this. Maybe some Alpha here from Zapper. What are we looking at? Yeah, Zapper is introducing what looks like notifications for NFTs. So if you do decide to flip NFTs, you might want to use Zapper because you can get notified about when your friends buy NFT stuff. You can actually see my profile picture will come up there. There I am. My notification is that I bought a Pledgey Penguin. There's a bunch of drama with the penguins right now.

Starting point is 00:28:36 I see me in this. What did I do? Yeah, what did we do? No, it's not real. It's just all the crypto Twitter. What are they saying I did? Yeah. What NFT did you buy? Oh, I received a Poap. Oh, you received a bankless style POAP. Lovely. Yeah. So you can just follow, get push notifications for what you and your friends are up to with regards to NFTs through Zapper. What did you do?

Starting point is 00:28:56 Kind of cool. I bought a punching penguin, allegedly. Oh, you bought a punching penguin. That's your punch penguin. All right, cool. Yeah, that's great. I love that functionality. It's more functionality from AVE, too.

Starting point is 00:29:04 Looks like they're building a mobile wallet that coming from Stani is the tweet. What do you think their mobile wallet might contain, David? Well, got to contain borrowing and lending. It's also got to be on layer two. So hint more on this later in the show, because there's no way that people are going to be, like, the only people that are willing to pay L1 gas, prices are also going to be the desktop power users.

Starting point is 00:29:27 So any mobile wallet, I think it's got to be an L2 wallet. So Argent just deployed on ZK Sync, right? Avey, do you think they'll do ZK Sync? Do you think they'll do an optimistic roll-up? Do you think they'll do Starkware or something like this? Well, I think we have an announcement later in the show round to talk about. Oh, really? Yeah.

Starting point is 00:29:46 I don't remember. Okay. We'll get to that scene then, guys. To be continued in the back half of the show. Let's talk about this, too. This is big. release, Bitco. They're now supporting index co-op assets. So this is the MVI data, the bed index as well in BitGo. BitGo, of course, is a qualified custodian. So it's kind of like fireblocks.

Starting point is 00:30:08 This is where the institutions store their money. So this is a gateway for institutions to buy index co-op products. And of course, these are all indices of other assets. Kind of think of them as defy's answer to ETFs. Really cool. that Bucco is doing this now, and that was just announced. You can learn more with the link in the show notes. Any thoughts on that? Big D. Defy Molet. Yeah, centralized custody provider in the front. A bunch of defy tokens from a DFI DAO in the back. Pretty cool. Big, greasy DFI model. That's what we got going on. Multidimensional EIP 1559. That's the title of this ETH research post. David, I haven't gone through this yet, but you have. What can you tell us about this? Yeah, this is a research post out of Vitalik Buehter,

Starting point is 00:30:54 himself talking about how we can use an EIP-1559 type mechanism to control for other network resources, mainly how we compute gas. So right now there are hard-coded values for all the different types of functions that go into gas computation. So like, are you multiplying a number? Are you dividing a number? Like, what are you doing to a number? And all these have arbitrary values, and that's how we manage the resources of the ecosystem. It's when we were talking about, like, increasing the gas costs of call data that we're talking about this number. And they change in hard forks, right? Basically, manually, rough consensus, we should change this thing, and then they get updated and changed.

Starting point is 00:31:36 Developers are like, hey, this resource needs to get upregulated or downregulated. So let's increase or decrease the price because we think that some resource is this is a risk or this resource is under price, etc. So it's manual changes. Vitalik Buteran is talking about taking every single thing that goes in. into the calculation for how gas is calculated and giving a control theory type mechanism to manage it, right? No way, that is awesome.

Starting point is 00:32:03 So Algo managed rather than people manage. Yeah, exactly. So if resources are underutilized, they will become cheaper. If resources are overutilized, they will become more expensive. And this goes back to one of the first big statements that I heard out of any developer in Ethereum

Starting point is 00:32:18 came out of mean Soleimani's mouth when he talks about no magic numbers, belong in blockchain design. And what's a magic number? A magic number is a number that's just arbitrarily determined by humans. Because we're trying to get away from human-controlled governance. And so we need to have these control theory, these equilibrium, these numbers that converge on an equilibrium organically, naturally,

Starting point is 00:32:45 in order to have a sustainable long-term equilibrium. Well, because what you're trying to do is you're trying to remove the dials from human intervention. You're trying to, like, so the whole start of this podcast, maybe the start of the year, was a magic number that Jerome Powell is talking about. He's got maybe two magic numbers. One is the interest rate. And the other is how much is on the Fed balance sheet. How much are they? And they dial those up manually.

Starting point is 00:33:07 There's like 12 people in a room who make these big decisions. Right. Totally. And so this is exactly in the crypto economic ethos, where we are trying to use crypto economic economics to manage our public goods resources. And so pretty interesting in-depth blog posts. There's a lot of, you know, Vitalic language in here. But overall, the comments from the other developers are like, hey, this is really, really cool. Big engineering lift.

Starting point is 00:33:33 Kind of scary. Kind of scary engineering list. And so we will see how well this gets received by the rest of the Ethereum researchers over time. It could be a long-term goal. It's really cool that's being thought of right now. Let's talk about this. From a Rays' perspective, moving on to Rays' open-stabes. is raising $300 million.

Starting point is 00:33:55 They've just announced that. And that's an evaluation of $13.3 billion. Wow. Okay? 13x unicorn now. They just became a unicorn last year. And now they're like a unicorn with 13 horns. That's crazy, man.

Starting point is 00:34:08 I guess it's not a unicorn that it has 13 horns. That's something else. That's a beauty. Okay. But so what's going on with OpenC? Is this just the valuation? How's, like, what do you think here? Dude, you might just,

Starting point is 00:34:21 well just call right now you might as well just call open c like the nfts store like it's the nfts store of crypto uh it's it's it's the apple you know store of crypto i guess right it's it's managed to strike a very interesting balance between a centralized web two company and a decentralized web three protocol that i think positions it pretty well uh and it's they've captured basically all the volume in 2021 is it is it like an nfts bank is that i would say No, I would consider... I would consider Coinbase's future NFT platform to be an NFT bank because this is still self-custody.

Starting point is 00:34:59 OpenC is still self-custody, but you still need to ask permission to sell stuff on OpenC. So it's definitely... We're going to get more into this in the show, but... Do you know what this valuation is based on, though? It's like OpenC is literally printing money right now. Yes, yeah. Right. For a 90-person team, the amount of revenue that they have,

Starting point is 00:35:16 like they are so incredibly lightweight for just the amount of ether just flowing into their coffers. Totally. there's some rumors floating around too. I don't know how substantiated this is neither David nor myself have any insider knowledge about this, but there's some talk that OpenC maybe plans to buy a wallet, like a Dharma Labs wallet. That could be in the works. I'm not sure we'll have to see how that develops, but like, what do you do with $300 million?

Starting point is 00:35:39 You're not going to hire that many people, are you? You have to make some acquisitions at least and execute on a growth strategy, I would think. You think we're going to see Super Bowl ads for NFTs, David? Oh gosh. I mean, I kind of think all ads are going to start to become crypto ads in the future. Okay, so I went and I saw the new Spider-Man, right? And there was the first crypto ad played as a trailer. Wow. It was a crypto.com ad. Yes. And it was like Matt Damon. Do you see that? I saw it on when I was watching Dune. Yep. Yeah. Okay. So like, yeah, first time, it's starting to invade. It's starting to feel normal. And I, you know, I think we'll see more of this. I mean, they're going to spend that $300 million dollars on. something.

Starting point is 00:36:23 Open C Super Bowl ad would be hot. Super hot. That would be pretty awesome. It's a lot of fodder there for graphics and such. But speaking of massive raises, of course, all of that money is going somewhere. It's going to jobs as well. These crypto companies, crypto protocols are looking for talented people. You can check out what jobs are available on the bankless job boards in crypto.

Starting point is 00:36:45 2022 could be, should be the year you get a job in crypto. Make that your new year's resolution. Resolve to get a job in crypto. Yeah, at least by the end of the year. You got 12 months. Clock is ticking. Here are some jobs. Senior full stack engineer, syndica, a senior software engineer from Gilded, a founding full stack engineer from Utopia Labs, senior iOS engineer, smart defy, community ecosystem lead, DYDX, crypto research analyst, NFT specialist from Bitwise, smart contracts, research analysts, BitWise, again, and a governance specialist from BitWise. A blockchain developer, you've got to be specialized in Rust at Solidix, a senior blockchain engineering

Starting point is 00:37:28 manager as well. There's a ton more on the bankless job boards. Go check that out. Also, subscribe so you get these sent directly to your inbox and make 2022 the year you get a job in crypto. Absolutely. It's the best industry to get a job in, certainly. Yeah, let's get into news. Totally.

Starting point is 00:37:45 It's always exciting. News. Let's start here. So the podcast that we did with Vitalik, and we put that out on Monday, that made some news this week in CryptoCycles, particularly this headline. Here's the article from Coin Telegraph.

Starting point is 00:37:59 We are 50% of the way there, says Vitalik on Ethereum development. He said that in a two-hour bankless podcast episode, and that was a fantastic episode, man. This is all about Ethereum's roadmap. 50% of the way there. What are your thoughts on this? Yeah, Vitalik Buterin, once again, reclaiming the number one most download episode in 24 hours.

Starting point is 00:38:22 Oh, really? He's had that title before, but he lost it a number of times to others. Chris Dixon was the previous holder, but now it's Vitalik Boutrin once again. Yeah, so Vitalik, it really did a great job to illustrating the rest of the Ethereum roadmap. And we talked about this in the debrief, which was one of the few debriefs that we actually gave out for free subscribers. we do a 30-minute debrief, for those that don't know, we do a 30-minute debrief for every single podcast. It goes out to the premium subscribers RSS feed.

Starting point is 00:38:51 But because this podcast was so good, and I thought the debrief was particularly helpful, we decided to release it for free. And we were talking about how the clarity behind the Ethereum roadmap is something that we've never had before that we have now. We can actually clearly see through what we call the crypto fog of war,

Starting point is 00:39:09 the unknown R&Ds of cryptography and consensus and all that stuff, for the first time we actually have a very distant vision of the future, which is something we've not had before in Ethereum. So that's what I've really enjoyed out of this podcast. We also talked about the rise of the alternative layer ones and what Vitalix Takea is on that, because he thinks that all cryptosystems will ultimately converge upon the same future. So regardless of what point on the blockchain scalability trillima that your blockchain has decided to compromise on, it doesn't matter because we're all handed to the same state anyways.

Starting point is 00:39:45 And so we unpack what that means and why that's true. So just a really educational episode. Yeah, I listened to it again this morning. Actually, David, well, actually, my first time this morning, and it just held up. It's exciting. I want to bring it back on the podcast again. Yeah. More questions, sir. Let's talk about this, too. AVE. They have just released Avey Arc. We talked about that before. That's kind of their institutional product. they whitelisted it with it's been whitelisted now with fire blocks which is kind of like a Bicco, a institutional custodian. What's the story behind this product, David?

Starting point is 00:40:21 Yeah, we just now have a kind of a siloed quarantine version of AVE specifically for KYC'd institutions. And so I think a lot of listeners, and Stani actually addresses this here in the article, people ask like, well, is that just antithetical to what DFI is? and Stani just goes, well, yeah, it is totally entithetical, but it's what we can do now in order to get retail and institutions closer to the same place. So it's necessary evil, but I have a different take, and I think this is actually the better take. And my take is that in the current financial world,

Starting point is 00:40:59 we have all the retails that are retail individuals, the normal people that just have their banking accounts, where they're getting 0.000-1% APY. and those people are quarantined away from actual finance. But in defy, it's the inverse. Because the defy has no limitations on the basic Ethereum address, it's the regulations of the nation state that are forcing or compelling people like Avey and compound to create a siloed version of defy.

Starting point is 00:41:26 And so where in the traditional finance world, the individual is cut out, in defy, it's the institution that's cut out because they have this gated, like neutered, siloed version of Defi when the rest of us get to go and do anything that we want. And so it's actually completely the inverse. And so this is actually retail taking the big W here because AVE and Compound and Fireblocks have to build out all this special stuff in order to allow for big institutions to become compliant. And so yeah, like it's the institutions that are taking the L this time. Yeah, I think that's a great take. And I do think Estani believes that too, right? So he says at the end, I think DeFi will forever be permission

Starting point is 00:42:07 and accessible to everyone as long as these networks like Ethereum are decentralized, right? And so what he's basically saying is like the Ave Arc product was built on top of AVE. It doesn't take anything away from the permissionless protocol that exists already with AVE. So, defy users who aren't institutions continue to use AVE the way they always have. But I think you're totally right in that in the traditional financial system, it's a two class account. There's like first class citizens and second class citizens. And retail are definitely second class citizens. Okay, the first class citizens are the bankers, the institutions, those in power.

Starting point is 00:42:46 And you're totally right that Defi completely inverts that. And institutions become the second class citizens. We have better, more permissionless access if we're just using Ave with our MetaMask wallet and our Ethereum address than through this permissioned pool via fireblocks. But all that to say, this looks. liquidity is going to be good for the ecosystem. One of my observations coming to this 2022, David, is I don't think crypto has yet seen what institutional FOMO actually looks like. The first decade of crypto was, I mean, institutions came toward the end of that, but it's

Starting point is 00:43:23 primarily retail driven, right? The institutions were still stuck on, yeah, oh, crypto, that drug dealer money, yeah, like terrorist money. Okay, we're not touching that stuff. We haven't yet seen institutions phomo in to this asset class. And I think over the next decade, we will in all areas. I'm talking like Web 2 companies coming to Web 3. I'm talking about institutional banks coming to DeFi. That is totally going to happen. And we're just starting.

Starting point is 00:43:51 Like we haven't seen the FOMO yet. And I think it's going to be a big space to watch over the next decade. I'm not sure how much happens this year versus in future years, but it's definitely a massive trend that I see. 100%. 100%. All right. Let's talk about this.

Starting point is 00:44:04 Oh, okay. Was this what you were referring to earlier? What's the headline here? Yeah, so AVE is trying to deploy on Starknet. And so this is a proposal in the AVEA governance forums about deploying AVEA on Starknet. So a proposal for progressive bootstrapping of the AVE ecosystem over Starknet, StarkWRAs, and decentralized ZK roll-up. And so with this would pair nicely with an AVE mobile app because Starknet is even cheaper

Starting point is 00:44:32 than an optimistic roll-up. It's super, super cheap, like less than a penny. And so less than a penny type transactions that are also instantaneous are kind of what it takes to satisfy people that are used to Web 2. And so without sacrificing decentralization, it's an important point. And so that's really, that makes sense. I think these things have to come in tandem. If AVE wants a mobile wallet, it's got to be on something like a ZK roll-up. So maybe we're putting some pieces together and we're seeing this tape shape, take shape an Avey mobile wallet on Starknet question mark. Maybe that happens. We'll see. What's happening with Polygon, though? So some issues, some hiccups along the way with Polygon. There's this game called Sunflower,

Starting point is 00:45:13 throwing a wrench in Polygon's gears. That is the title here of the article. What's happening? I think Polygon is having its Cryptokitty's moment where it had this first big successful game. And because of the just transactional capacity of this game, this game just involves a lot of transactions. it really just like crippled the Polygon network. So Polygon gas prices spiked to 410 Gway. That's not Gway in ether terms. That's Gway inmatic terms. But still pretty high in terms of gas consumption.

Starting point is 00:45:47 But this is kind of what happens when you allow a network to have really, really cheap transactions. People fill them. And so this has actually already been a problem for Polygon previously. They've already started to tackle some of this stuff. They raised the Gway limit from zero to 30. previously to start to mitigate some of the spam transactions. And so that eliminated some of the transactions that were just trying to get a penny of MEV out.

Starting point is 00:46:11 But now when there's a game, people are just like playing this game. They'll pay like five cents of transaction, 10 cents of transaction. And apparently that was still enough to completely congest the Polygon network. And so this is kind of what happens when you have a chain that has really cheap transactions.

Starting point is 00:46:26 If you get, if you optimize for cheap transactions, guess what? You get a lot of transactions. Like that's what happens. So this is something that not just polygon, but all chains that have cheap transactions have to deal with. And I am less worried about it at the layer two than I would be at the layer one. And what's interesting here is the same sort of thing seems to be playing out and has played out multiple times with Solana. So this is just, I don't know if this is the second time this has happened this week.

Starting point is 00:46:56 But the Salana network is also experiencing degraded performance due to high, transaction throughput. And this is because, as I've understood in the past, there have been a lot of DDoS attacks, right? A lot of spam-type transactions that have brought the Salana network to its knees, and even more than that, actually caused it to go offline for periods of time. Is this, I mean, are these two things related? Is this basically the same effect? You've got cheap transactions, so you get lots of spam, you get open security vectors for DOS attacks? Yeah, it's, there's a pretty, like, direct relationship. when you have fast chains, you compromise on stability.

Starting point is 00:47:36 And so slow chains are stable chains. Fast chains are unstable chains. And so this is why you were talking about the difference between an L1 that's fast versus an L2 that's fast. Because if your L2 is unstable, you can go back to the L1. But if your L1's unstable, you don't got anywhere to go. It's interesting that Paulineya wrote an article about this recently about the transaction quality Trilemma. What is this Trilema that we're seeing? Because I think we're observing it both in Polygon and also Solana and every other network that has very low gas fees. Yeah, so crypto loves its trilemas.

Starting point is 00:48:14 So Polynaia's transaction quality Trilemma puts the trilemma between spam, censorship resistance, and low fees. You can only have two because if you have low fees, but you don't have censorship resistance, well, then people are just going to spam your network. in order to get rid of spam, you can censor the spam transactions and keep your low fees, but then you lost censorship resistance. Like now you're a censored chain, et cetera. And so Paulinea unpack some of the tradeoffs here. And some of the tradeoffs aren't so bad. They talk about how Immutable X has used censorship to keep spam off of the chain while still keeping low fees. And so they just, they are, they have a centralized block producer, and they just, you know,

Starting point is 00:49:00 filter out all the spam transactions in order to keep all of the real transactions good and i i think this is an okay trade-off right like i know we like censorship resistance but again it's more everything about you these things are more important on the layer one and uh when immutable correctly censors the bad transactions however society deems bad to be bad and enable and continues to allow the good transactions however society enables considers good to be good well then that is in my mind is successful L2 because the L2 serving the desires and the needs of the people while also preserving low fees. And fees on Immutable X are like, they're free because they are so incredibly low that the block producers just, they just eat the costs. And he also talks about how the

Starting point is 00:49:46 ability to exit out of the layer two is also really, really, really important because if you think that Immutable X is doing a bad job of censoring transactions and perhaps they're censoring your transactions, but letting in other bad transactions, well, then you don't want to, you don't like that. So you leave. And the ability to exit out of an L2, a permissionless exit out of L2 is a check on the centralization that enables the censoring of spam transactions. Really good article, really good education. We won't unpack it too much more here. But there's a link in the show notes if you want to learn more. And you know what I think all this means is that it's such a false choice to say that a layer one long term will have cheap transaction fees because it can't.

Starting point is 00:50:27 You can't. Not while being a settlement layer, right? And if it does have very cheap transaction fees in the short run, those will just get spammed out of existence. What's interesting about spam is that spam actually accrues a cost to the entire network because people have to, nodes in the network have to maintain that state forever after, basically. So there is this cost imposed that's distributed over all of the nodes for this spam too, and that's not good. So layer one's long term, they have to have expensive, relatively expensive block fees, right?

Starting point is 00:51:04 It's like layer twos, they can be much, much cheaper when it comes to gas fees. But layer ones, I don't see a way out of long-term, layer one settlement transaction fees going up. I think that's a reality that too few are, like, accepting right now in this market. 100%.

Starting point is 00:51:22 And also consider this, right? Like, say like Solana, Avalanche, Polygon, all of these low transactions, fees, high throughput chains, if they continue to allow for spam, well, the spam just increases the fees to be until they're expensive. Exactly. And so like it just raises the watermark because the, because the spam is there. And so like it's ultimately converges upon the same reality at the end of the day. Here you go. Here's the take maybe to finish this off from Dan Elliser, why don't you read it out. Dan Elliser says, perfect example of why monolithic L-1s with low fees are not

Starting point is 00:51:57 sustainable long term. If you make global state and computation free, people will do stupid shit until it breaks or the price increases enough to make them stop. There is no TPS high enough for this. Because again, if you just increase the TPS of your chain, then people are just going to use more of it. Exactly. Well said, Dan. That about sums it up. Let's talk NFT World. So you got a story for us, David. What's a story? This is again related to OpenC. I feel like this is our OpenC roll-up episode, David. All right, so this is a story of a guy that, unfortunately, bought an NFT that was previously stolen.

Starting point is 00:52:35 So an NFT was stolen from some other guy's wallet. And then this dealer, the hacker, who managed to exploit, I don't know, with a seed phrase attack, put the NFT up for sale on OpenC, and then some individual bought that stolen NFT for 1.5 ether. And then it was reported that that NFT was stolen, and then the NFT was frozen by OpenC inside the new owner's wallet. So the new owner had no idea that it was stolen, just bought an NFT doing normal

Starting point is 00:53:05 NFT buying stuff, buys this new NFT, this illicit, you know, previously stolen NFT, and then OpenC freezes it because apparently it's OpenC's policy to freeze all stolen NFTs no matter what. Okay, let me just pause and recap here. So a guy buys, okay, so person steals an NFT, he steals it, then sells it, then sells it. to sell it in OpenC. Some person buys it, right? So this is like the, the dude selling open his trench coat and selling like fake Rolexes, right? Or like stolen Rolexes, okay? And sells the NFT to this buyer, and now the buyer has it. And then what happens to the buyer?

Starting point is 00:53:44 Clarify that for me. So the buyer's got this new NFT, this Rolex, doesn't know it's like, it's hot, it's been stolen. It gets frozen, did you say? Yeah, so OpenC froze the NFT because it was stolen. And apparently that is their policy that they freeze NFTs that are stolen. I think it's a legal restraint that they have. They have to freeze these things if they are stolen just to become just to stay squeaky clean on compliance and legal. And so it's a kind of, and what do you mean frozen? I thought these things were on Ethereum, right? They cannot be frozen, right? If it's an ERC 721. Right. So they are frozen on OpenC, not on Ethereum. Because you can't. You're totally right. Can't freeze anything on Ethereum. But

Starting point is 00:54:25 OpenC can choose to not accept any Ethereum assets through their contracts. And so, yeah, you can still take your NFT out and sell it on any other platform. But then the counter argument is like, well, all the liquidity is on OpenC. So like if you don't let me sell on OpenC, well, like, I can't access any of the liquidity.

Starting point is 00:54:43 So they basically blacklist it and they just freeze it like on the OpenC platform. And that's kind of enough to make it worthless or close to worthless right now because OpenC is so much volume? Knee capped at the very least. Knee cap, okay. Yeah, and this is even though they know that the current owner of the current of the NFT didn't do anything bad, they still have to freeze it because it's stolen. And so it's kind of just an unfortunate outcome where like the guy who had his NFT stolen takes the L, the guy that bought the NFT takes the L.

Starting point is 00:55:14 OpenC takes the L because they don't want to do this anyways. and the scammer, the victim, the hacker, exploiter, takes the W by getting the 1.5 free ether by selling this stolen. This seems like a bad incentive setup because like rewarding thieves and thieves getting away with it. And, you know, basically the second party, the third party buyers who purchase these things, they're the ones taking the hit. It seems like a bad precedent to set in general because what you might do is in more thieves and more stolen NFTs.

Starting point is 00:55:50 But like, what are the lessons learned here? What are the takeaways from your perspective? Because people think like, oh, Web 3, Web 3 NFTs. I'll go to OpenC, this Web 3 platform and buy my NFTs, and then realize that like, oh, OpenC is not actually fully Web 3. It's also not fully Web 2. It's somewhere in the middle, right? Because it's non-custodial.

Starting point is 00:56:11 You own your NFTs. You can upload your NFTs into OpenC. and but also in order to sell your NFTs it's permission like that you have to ask an open C for permission I mean they give you permission by default but then they can revoke it because they have that power so like open C kind of web 2.5 so open C is going to find themselves I think in an interesting spot in 2022 we definitely need alternatives to open C there's no reason why we can have to have all of the nfts markets all the NFT volume consolidated onto just one exchange and NFTs and open C is going to face a lot of competition and I think in 2022 we have on

Starting point is 00:56:46 the more centralized end of the spectrum, a completely custodial NFT, a coinbase NFT marketplace coming online. And then there's just the massive fight for a completely decentralized Web3, Dow-focused NFT platform. And so I think we're going to go like go the full gamut of, you know, the full centralized, full custodial to the fully decentralized, fully non-custodial, and then have open C in the middle. But people, I think, are just learning the limitations of a semi-centralized system like OpenC and kind of being bummed about it. I'm bringing on. Let a thousand flowers bloom, right? We're seeing some of the cracks in centralization, and I'm sure either OpenC or some

Starting point is 00:57:25 competitor will try to bridge those cracks. What's going on with board apes, though? They just crossed the one billion mark in total sales, totally crushing it, coming to the year pretty strong. That's one headline here, but there's also been some freezing of board apes as well. Again, is this a case of stolen board apes similar to the story that you just just told. Stolen board apes. Yeah. So if you've been on crypto Twitter and especially on NFT Twitter, you've definitely have noticed the memes about how board ape owners tend to get their

Starting point is 00:57:54 board apes stolen from them. How does this happen? Okay, so how does this happen by the way? This is not like somebody, you know, physically meeting someone in person and like, you know, wrench attacking them and taking their, their NFTs, right? This is all happening in, you know, Discord channels and Twitter DMs and people just giving up the private keys. Yeah, people are. like, hey, like, oh, are you having trouble with your wallet? Like, submit your private key here and I can help you with it. And then they do that and then they get their board ape stolen. Or like they get to, they get somebody to like, hey, Ryan.

Starting point is 00:58:27 They're just new to crypto. They're new to crypto. They don't know, right? Like, they think people are helping them. And then they don't like that. And then they, there were these very ironic kind of unfortunate tweets from very early board ape holders saying like, hey, I just had my board ape removed from my wallet. How do I contact like Ethereum customer support to get?

Starting point is 00:58:46 get it back like like like stuff like that they just don't know they just don't know and so like it's become a meme that like board ape like there was a meme that i saw as like name a better duo board ape yacht club holders and like giving away their private keys towards scammers yeah it's happened like a number of times very sad yeah so what happened in this case yeah so 2.2 million dollars worth of board apes had to get frozen by open sea um okay based off of the same things that we're just talking about like you know scammers managed to get their hands on board apes. OpenC is like, okay, well, we're not going to let you sell your stolen apes on our platforms. And, yeah, I mean, unfortunately, OpenC doesn't have the power.

Starting point is 00:59:24 Unfortunately, and also fortunately, depending on how you look at it, OpenC doesn't have the power to give those board apes back, but they can at least just restrict these sellers from selling them on their platform. What's this? This is maybe not a related headline. Yeah, this is completely unrelated to OpenCy. Unrelated. But it's still board apes.

Starting point is 00:59:43 I think this headline is absolutely hilarious. Okay, let me read it then. Yeah. Two NFT copycats are fighting over which one is the real fake board ape yacht club? What? The real fake? Right, yeah. So there are these funks out there, which are just cryptopunks, but mirror images of each other.

Starting point is 01:00:01 And now somebody has made the board ape yacht club version of those. So mirror images of board apes, except there's two of them. And so like these, both of them are board ape. clones and they're like, no, we're the real clone. Like, we're the real fake board apes, which is just hilarious. Okay, but so don't they, when it's talking, I haven't read anything past the headline, of course, right? So, but, um, aren't they fighting for this in the, the public square? Aren't they fighting for social consensus of what the true fake board ape really is? Like, or is this getting into like legal territory or something like this? I think this is getting into legal territory. Yeah,

Starting point is 01:00:39 because, because I think, I think, board ace job club has like copyright rights over their board apes and so when someone you know like yoinks all of their jpegs and does a mirror image of them and then makes a new nfts set like that that is a copyright infringement and so and and i don't think that like really the board apes team can really do anything there's not much power they have but the nfts marketplaces have to answer to copyright uh and so like they have to tussle with this which is even more insane so okay What's going on here then? There's a rarable.

Starting point is 01:01:13 Rarable, yeah. So, like, this is the fake board apes page on rarable, and it's banned. It says this user or item has been temporarily blocked from public access. This is Rarable doing it to you. It's a rarable, yeah. Rarable is also a hybrid web 2.5 type company in between Web 2 and Web 3. And so what's going on here with this DGN Spartan tweet? Yeah, DGN.

Starting point is 01:01:34 If you guys don't know who DGN Spartan is, he's just a kind of... A DGen. A DGen who's also a lone. Ranger kind of Chad type crypto Twitter character. And he goes, I minted five fake apes. I sold three, booked back my entire capital plus 100% profit. I kept two because I am my ape and my ape is me. He's kind of just making fun of board apes.

Starting point is 01:01:55 And I give it an 80% chance that Rareble shuts down the fake Apes Yacht Club. I don't know what P-H-A-Y-C stands for. MarketPied tomorrow, 95% by the end of the week. And yes, indeed, Rarable did indeed shut down the fake board apes. NFT craziness Eminem sporting A again meanwhile

Starting point is 01:02:15 unrelated but related Eminem Marshall Mathers has got a pretty sick Slip shady Yeah that's awesome That's the that's the slim shady cap right there That's the hat Is that custom or did the ape come with that?

Starting point is 01:02:28 Nope that's the normal ape Wow that's cool That's a big move Good for board of apes Getting celebrities in there He also on that on that train again, we don't know whether it's M&M or whether it's like one of the

Starting point is 01:02:43 M&M people, you know, the people behind Marshall Mathers, but M&M.Eth was just purchased. Are we assuming by M&M this was purchased or do we know about this? I don't think we know for sure, but I mean, it's at the same time that he got

Starting point is 01:02:59 by says, board ape, so it would make sense. 56K? Yeah. 15Eath for that purchase. Dot Eath names, I feel like as the original NFTs or one of the original NFTs, the celebrities are starting to support those more and more, right? And, you know, I think that's, it's going to be interesting for a lot of the people who've been sitting on nice.eath names when that title wave hits. Let's talk about this. Samsung is

Starting point is 01:03:25 introducing an NFT platform with its new smart TVs. So what is this? You get to display NFTs on your Samsung TV. Does this only come with some TVs? What are they doing here? Yeah, so there are certain Samsung products that are designed for art. I actually have, there's a Samsung frame TV, and that's the TV that I got to display my NFTs that I got from Nate Mueller. Shout out. And so, yeah, Samsung's leaning into NFTs. What it actually means to actually have an NFT platform integrated into a TV, I don't know. But is it kind of like, you know how smart TV, like Samsung has like smart TV type functionality. Other TVs have this where they'll embed apps like a Netflix or something inside of it?

Starting point is 01:04:07 Are they embedding like an open scene and NFT marketplace, some sort of TBD. TBD. I don't think we know, but we do know that Samsung is leaning into NFTs and just crypto at large. So more to more in the future. Related, Samsung is entering the Metaverse, entering its flagship store, 837 store in DeCentraland.

Starting point is 01:04:31 So, yeah, big consumer electronics companies coming to. the Metaverse too, coming crypto. By way of NFTs, not DFI. Yeah, it says the virtual Samsung 837 store will be open and decentralized and decentralizing for a limited time. What do you think you can do there? Like, do you go there to buy a TV? Because like, what? How does that work? I don't know. I don't know. It feels like they're just experimenting with it. But what's interesting to hear is you remember there was a lot of talk about Samsung back a couple years ago, maybe creating a crypto wallet to roll out on all of the Samsung phones. I do remember that.

Starting point is 01:05:06 Not much really happened with that, right? Like do you, like I didn't hear much about that, but now that I'm coming back with NFTs, right? So it's it's kind of, again, the conversation we've been having so much recently about NFTs creating additional surface area to onboard people into crypto and that includes companies into crypto as well. It's kind of, you know, doing what Defi could not. Let's talk a little bit about Bitcoin, though, David.

Starting point is 01:05:33 Some news from Congress that they are preparing an oversight hearing committee on Bitcoin mining's environmental impact. I feel like, David, Bitcoin is taking a full frontal assault from a proof of work perspective, right? Basically, every other layer one crypto network is migrating or has started with proof of stake. And it's going to be basically Bitcoin versus the world in. terms of justifying why proof of work mining is actually worth it. And I mean, you and I might agree and might say, yes, it's worth it, right? But like, Bitcoiners don't have to convince us. They have to convince Congress and the rest of society that the money spent on what society sees as environmental waste is well-spent funds. And this looks like it's kind of a committee in Congress that will

Starting point is 01:06:29 shed some more light on this and probably amplify the topic. What are your thoughts here? Yeah, this is going to be a big litmus test for so many different things. First off, the Bitcoin or narrative is that Bitcoin is good for the environment because it creates more energy and specifically leans in towards green energy. So the more energy that proof of work consumes for Bitcoin, the faster we can have a green society. A lot of people do not buy that argument. I kind of am compelled by it, but also at the same time, I think there's a very strong counter-arguer. to say that like, well, it's even more green just to consume less energy than to consume more of it. But that's a different story.

Starting point is 01:07:06 What I'm interested in hearing about the fallout of this is does, so Congress is, you know, supposed to do their research. So when they do their research and they sift through the thud of just, you know, sometimes just blatantly misinformation about the negative externalities of Bitcoin mining, they do exist, but sometimes they're just way overblown. What is Congress's opinion about Bitcoin mining after they actually do home? homework. Like what is on the other side of that? Do they actually find that Bitcoin does incentivize green energy production? To what degree do they find that that's true? Do you think they're actually

Starting point is 01:07:41 going to do their homework though, David? Or do you think they're just using to get another committee for like to score some political points, which is the entire purpose of this committee is, right? Yeah, it's popular to hate on Bitcoin. And so I can totally see an outcome as like, oh, we did our homework. Bitcoin, energy mining, bad. It's bad. That's, that's. That's our reports. It's bad. And then we actually progress now. And we should do something about it.

Starting point is 01:08:04 And we should do something about it. Yeah. And then Congress, everyone in Congress is like, oh, yeah, totally. It's bad. We should do something about it. I can totally see that happening. Well, one thing I'm glad about right now is, and this wasn't the case going into 2021, but it is the case going into 2022, which is, I think, mainstream and even in Congress,

Starting point is 01:08:21 the world of crypto is now larger than Bitcoin. There was a time where crypto and Bitcoin was kind of synonymous for a lot of people. Like Bitcoin kind of eclips the rest of crypto. That's no longer the case. Like I think even going into 2022, so we used to say Bitcoin is the gateway drug, teaching people digital scarcity is the gateway drug to crypto. I don't know if that's true anymore.

Starting point is 01:08:42 Yeah. I think like things like NFTs are becoming the gateway drug, right? So, and again, that's just teaching people digital scarcity as well, digital scarcity of a JPEG, which is interesting. And that leads them down possibly a path to start to understand some of the other crypto money type topics. But that is a sea change. I'm glad that's the case or else the rest of crypto would also be lumped into this argument. Not that I'm not sympathetic about the counter arguments that the crypto and the Bitcoin

Starting point is 01:09:10 community would have to support proof of work. I am. I just am glad that's a fight that not all of crypto has to fight. Yep. Yeah. Having options is important. Let's talk about this. You alluded to it earlier in the show, Kazakhstan, internet shutdown.

Starting point is 01:09:26 Okay, so there was like, I believe the, I haven't followed this very closely, but the government in Kazakhstan has just walked, basically walked away. There's lots of protests, you know, concern about the prices, gas prices, the prices of everything. It's kind of a revolt, a minor revolution, I guess, I would say, the protests in the street. And the government completely walked away. And this has caused downstream effects with, there's apparently a bunch of Bitcoin mining in Kazakhstan, right? now. They shut down the internet. So the internet's been shut down. And now hash rate, Bitcoin hash rate has fallen. What's, uh, what's the story here? 18% Bitcoin hash rate fallen. So like, that's a lot. That's a lot. I didn't know, I didn't know Kazakhstan had so much

Starting point is 01:10:12 Bitcoin, um, mining capacity inside of it. And, you know, it kind of just makes sense. Kazakhstan is like right next to China. And so when a lot of, uh, when China pushed out its Bitcoin miners, it went all over the world. But like a lot of them just went to Kazakhstan. Just went right next door. And so this is, well, now, now they're probably going to be moving out of Kazakhstan if this continues. And this actually just might be kind of like another microcosm of China. It's just like, well, we're just pushing out Bitcoin mining hash power further and further, probably west, probably into Europe, probably into America, where Bitcoin mining is just more dependable, more stable, and the inside of less volatile foundations.

Starting point is 01:10:51 And so it might be a long-term good just for the narrative of getting more and more high, hash power domiciled in countries that regulators with power like. And yeah, and this is also kind of some sort of speculation going on with this decreasing Bitcoin price. Because, you know, guess who has a lot of Bitcoins? Miners do. They are the kind of the source of Bitcoins. And so if they have elected, the big, big drop in May when Ether went from $4,300 down to $1,800, and I don't know what the Bitcoin price does because I didn't pay attention to it as much,

Starting point is 01:11:25 that was on the heels of China pushing out Bitcoin miners. And so we just saw another big oof candle, big oof candle. I'm going to just keep on saying that until it becomes in the dictionary or something. Big oof candle, followed by the news of a bunch of hashing power that got axed. And so miners, they are very conservative with their risks. Miners are generally pretty risk-reverse. And so maybe they sold a bunch of Bitcoin to fund an actual migration of hash power or just cover their costs or whatever.

Starting point is 01:11:57 I think that's a pretty reasonable thing to speculate on. It could be. That could be what's going on for sure. It's definitely interesting news. Also, as we look west, let's talk about some of the regulation coming in the U.S. markets. So the CFTC just fined polymarket, $1.4 million,

Starting point is 01:12:15 and asked it to wind down some of its prediction markets. The story is after a CFTC investigation found that Polly Market was offering illicit option contracts in the U.S. It's a very interesting story here because the question is, is this the beginning of other CFTC types of enforcement actions in U.S. markets? What happened here? And what's kind of your takeaway?

Starting point is 01:12:39 Yeah, my big takeaway is that this is the perils of a Web 2.5 company, a company that didn't make it all the way towards fully decentralized. This is what they have to deal with. I think the Polly Market has definitely been able to have a ton of success based off of the tradeoffs that they've made on the centralization to decentralization spectrum. But like when you have any amount of centralization, like you get the ire of nation state regulators. This $1.4 million fine, extremely reasonable.

Starting point is 01:13:07 This whole thing in my mind is reasonable. This is the CFTC doing normal CFTC stuff. This isn't the SEC being just hard-handed and kind of just overall a dick to our industry. And I think Polly Market more or less perhaps saw this coming. already had pretty decent limitations on their markets. And now I think what's as a result of this is that they are just going to probably do something like DYDX, which is not allow US IP addresses, not allow U.S. people to participate in the polymarket and just kind of move offshore

Starting point is 01:13:44 and be serving customers that aren't inside the United States. So you know who loses? Us. People in the U.S. people, U.S. users. We don't get to use polymarket because of the CFTC, because of nation state regulators. So is what it is. Yeah, it's kind of painful. I think it also, so like, I do agree with you.

Starting point is 01:14:04 This is not necessarily the CFTC being heavy-handed in terms of their touch. It doesn't appear like that is the case to me, as the SEC has been in the past. But it's also like there's a problem with our regulations in the U.S. from a commodity's perspective. And Brian Quintens, who is a former CFTC commissioner, actually came in the podcast and said this. Like, if you ultimately want change, that has to happen in Congress. Like, the legislative body has to change in the rules about what consumers, retail consumers, can have access to in the U.S. I mean, at some level, the CFTC is, unfortunately, kind of trying to enforce the rules on the books.

Starting point is 01:14:47 But the question is, what happens if the rules in the books don't make sense? anymore. What if they're wrong? What if they're old? What if they no longer apply? And I think that's definitely the case for polymarket. These are like prediction markets, right? So what are the chances that, you know, Democrats lose the next election cycle, that Biden gets reelected, all of these sorts of things, things that like consumers should have access to. And it's a shame that we can't do this thing. I mean, like, we're trading NFTs in the same way. Like, I mean, we're trading all of these different things, it's just that the letter of the law says a certain thing, and this causes a stifling of the market in the U.S.

Starting point is 01:15:27 And what's going to happen, polymarkets are going to be just fine. I think they'll continue operating. They might have to geo-fence, as you said. They'll probably move some of their operations outside of the U.S. and move it internationally. And who loses? To your point, David, the U.S. loses, right? So it's a shame that this is happening.

Starting point is 01:15:44 But if we want change, that's why in the U.S. we have to be involved in our political system as well, or we'll see more of this in the future. David, speaking of things that we're seeing more of, Tether just froze $1 million worth of USDT. I think that's just a PSA, like a reminder that Tedd can freeze USDT. That's the full story. We don't know why or who it is,

Starting point is 01:16:04 but there's a million dollars in an Ethereum address, I think it's on Ethereum, that got frozen. And so that's what happens. Don't do illegal things with Tether. Don't do illegal things. Don't do illegal things. But if you want to get away with illegal things, don't use tether. Well, but like, yeah.

Starting point is 01:16:23 And then, and then like, tether is not a censorship-resistant staple coin, right? That's also the takeaway. Some people treat it as if it is. Neither is China's digital wand. And that wallet goes live in the app store. It's going live in app stores in China in pilot mode now. And what's interesting to me is like all of this development has gone on with the digital one. and the U.S. has like basically done nothing.

Starting point is 01:16:48 They have no clue. They have no clue. Yeah, we watched it from the last like, you know, three or four years being like, oh, China's doing this. It's coming. They're investing in blockchain. They're like, and the Fed's like, yeah, we'll believe it when we see it. We don't have to do anything.

Starting point is 01:17:00 We'll have a meeting to discuss. We'll have a meeting to discuss the implications. We'll create a, you know, a paper. We'll have a congressional hearing maybe in the future, right? And then China is just like building it. Right. And now they're, now they're in pilot mode. It's like the difference between peer review.

Starting point is 01:17:15 and actually doing it in-life production. Totally. Or like the difference between a startup and a large corporation who just talks about doing things, right? And the startup's just hustling and building it out, right? And I do think that the U.S. is going to get caught very flat-footed on this China digital wallet thing

Starting point is 01:17:33 and digital blockchain thing. And another thing that's going to cost the U.S. Anyway, that's the take here. We've done a lot on China. By the way, we did that episode on with Richard Turin called Cashless. If you want to hear about the China digital currency story, go tune into that episode as well. Guys, we will be back with the takes of the week, but before we do, we want to thank the sponsors that made this episode possible. The Gemini Exchange has been my exchange

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Starting point is 01:20:07 it's time to switch to the Brave wallet. Download Brave at brave.com bankless and click the wallet icon to get started. All right, guys, we're back with the takes of the week. Here's Jay with a really interesting take on protocol mafias. What's the prediction here, David? Yeah, Jay of Rari Capital, which we just did a show, State of the Nation, with Rari Capital and Tribe, Faye slash Tribe, Joey and Jay,

Starting point is 01:20:31 about the merger between Faye and Rari Capital. There's a lot of synergies. These teams have been working together, and so they have decided to merge. So the two tokens, the RGT token Ferrari and the tribe token for Fay are merging into the same token, which is going to be tribe. And so Jay continues this thought and extrapolates it to the rest of Defi and talks about one of his predictions for 2022 is that protocol mafias are coming to life. And he thinks that there are already some like different defy apps that kind of have banded together. So you have the magic internet money, spell, ice is one mafia, one group of people. we also have the FAC stable coin, Olympus, and Sushi tribe, excuse me, mafia,

Starting point is 01:21:15 and then now we have the tribe, which is also already a part of Rari. So three tribes, three mafias, if you will. And I think there's just, there's a lot of like redundant overlapping apps in Defi. And so Jay is just predicting that these are going to consolidate and merge into the same organization. You know, we can be more powerful together. There's a bunch of competition out there. Defi's kind of ruthless these days. And so Jay is just basically just predicting that this ruthlessness naturally collapses into mergers.

Starting point is 01:21:45 And we have seen this before. This is what happens in normal businesses. Businesses merge when it makes sense. And Dow should be considered the same. And so this is a big prediction that I'm kind of on board with. If you want to hear more about this, we talked about this concept in our state of the nation. That show came out on Tuesday or Wednesday, depending on YouTube or the podcast. So you can check that out as well.

Starting point is 01:22:04 that's a really good prediction i you know i i think he's right on with that we'll have to see what happens in 2022 it might be the year of mergers defy here's a take from belaghi uh lawyer fees are the equivalent of gas costs for traditional finance every contract update requires transaction fees from jd's lawyer fees being like gas costs what do you think of this yeah and there's another tweet as well that talked about layer two is where layer twos are like the paralegals where so like you know layer twos prep everything and then they bundle it all up and they settle that transactions down to the L1, which are the actual lawyers that actually execute the transactions.

Starting point is 01:22:42 And this has always been, in my mind, the correct framing for what a blockchain is. A blockchain is just a system of courts, courts and appeals. But instead of subjective judges, we have the EVM. And so if you have a contract that your lawyer drafted up and you want to change it, you got to pay the gas costs to make the transaction, the contract update. and so and this is this is why like I know I know fees on Ethereum are high but in stark contrast the $500 like transaction fee on Ethereum is orders of magnitude than the $50,000 bajillion dollars that you would have paid a lawyer to do the same and then if that

Starting point is 01:23:23 ends up going to court you're paying 10 times even more than that right and so yes gas costs on Ethereum are high gas costs on other trains are low but But the point is that we are disintermediating an entire industry of extremely expensive lawyers and litigation and court. We have to remember what we are actually improving upon. And it's not, it's not, it's about the court system, the court of appeals, which is extremely slow, extremely laborious. And way slower than Ethereum, by the way. I totally vibe with this sake. I have maybe like a subtle change.

Starting point is 01:24:00 I feel like coders are the actual lawyers. Yes. In this case, right? So, like, you still have to pay coders to create the contracts, the smart contracts. And the transaction fees are actually, like, taxes. Right. So, like, that whole court apparatus that you're talking about, that is maintained by federal and state taxes, for example, in the U.S., right?

Starting point is 01:24:26 And, like, that is the court system. So, yeah, I, I, and, I totally agree with the takes of like we're automating a ton of that away and it's becoming much more efficient. In fact, what are the costs to maintain the U.S. legal system from like circuit course all the way to the Supreme Court's on up, right? Well, it's like military budget. The entire government infrastructure bureaucracy is required to maintain that system. And we're not only automating the lawyers out of the mix. We're also automating the entire like government system. of the mix. And how much more efficient is that? So I'd even take it a step further than Blasie's

Starting point is 01:25:05 tweet. But yeah, he's right on. That's essentially what we're doing. Smart contracts are the new legal system. It's, you know, code is law in a way. Let's go to the next take here, David. So this is a take from Suu. Maybe I'll read this originally, and then you can read the reply, which is the meat of it. So Suu says, I'm bullish on nearly all quality L-1s. But if you think that Saluna of X, that's Saluna, Saluna, Luna, and avalanche together are boomer coins. If you think they're boomer coins, you literally have the memory of the goldfish. And here's this reply, which is the real take here we want to get into.

Starting point is 01:25:44 That's all the current market is. Goldfish running from one side of the tank to the other is crypto influencers furiously tapping the tank to attract them to the other side with their bags to dump. Well, that's a bleak outlook on the market as it stands today. You think that's right? Yeah, I saw this reply get passed around in numerous different circles where everyone was like, oh yeah, this is a really good analogy. So like all the influencers are like, hey, pay attention to my bags. Hey, pay attention to my backs.

Starting point is 01:26:10 Tap, tap, tap, tap. Pay attention to my backs. And we saw this in Kobe's fantastic substack about how like crypto is a fight for attention. If you can't get attention on your bags, your bags will not pump. And so like, and I'm just going to self-shill us here. This is why some influencers that have not changed their tune for forever are perhaps worth listening to. When they are only saying the same things year in, year out about the same principles, maybe those guys are people that, you know, they're saying they're not tapping different spots in the tank. They're saying, hey, this is worth listening to and it was worth listening to last year and it'll still be worth listening to next year.

Starting point is 01:26:50 So I'm just going to just throw that out there. I just think, look, man, I think fundamentals last. fundamentals are stronger than the market's short-term attention cycles as well. Like, that's why we talk about them so much on bankless is because, like, if you're narrative investing, you care a lot about what Kobe was saying in his substack about, you know, the tension and whether the attention's on this narrative or whether this narrative. But if you don't care about narratives, if you're not narrative chasing, if you're investing in fundamentals, then all that kind of becomes noise.

Starting point is 01:27:25 And you can make longer-term plays. back to what we said at the very beginning, right? It's like 95% of you shouldn't be trading anyway. 95% of you shouldn't be following the influencers like a goldfish because you're going to get wrecked on the other side of that. The game is... So that's why we emphasize fundamentals. The game is to find the spot on the goldfish tank

Starting point is 01:27:47 that you think all the taps will converge to over the very, very long term and just wait there until all the taps start to show up. and hopefully you place your bets accordingly. Exactly, exactly. All right, let's go on. This is a related take, actually, from Anthony Sasano. You either die a D-Gen or live long enough to see yourself become a crypto boomer is the take. I think he wrote a blog post about this.

Starting point is 01:28:14 And the take in the blog post is basically like everyone starts as a D-Gen, right? When you get into crypto, you're kind of just here to make money, right? I don't know if that's true for everyone, but generally, a lot of people doing crypto for number go up. And then when the number does go up, you kind of lose touch with everything else. And you no longer care about the early, you know, DGen style games. But in these DGEN games, that's where a lot of the innovation is actually happening. So you kind of grow out of touch and become like a crypto boomer, according to Anthony. Yeah, what's your thought on this take?

Starting point is 01:28:53 Yeah, there's just always generations about. crypto and when people are coming in they're looking for they're coming in with their limited amounts of capital wherever they came from and they are trying to get that 10x that's what that's what people know the crypto world to offer 10x is 100 x and like you're not going to find a 10x 100x in the high caps like you're not going to get your 100x with Bitcoin or Ethereum anytime soon it's going to take a real long time to get 100x on ether it'll happen but it'll happen over decades and so if you want that 100 you've got to go down the D-Gen rabbit hole and start doing your investigations,

Starting point is 01:29:31 doing a super insane amount of research, like following all the discourse, doing all that stuff, and that's what, like that, you are living on the periphery, you are living on the edges. And once you actually survive that part of your crypto cycle, then you kind of graduate into something a little bit more stable. You kind of have developed what you are familiar with. You've gotten your feet under you. And then the crypto world moves on and starts to innovate and, different directions than what you're used to. And either you can choose to follow that

Starting point is 01:29:59 innovation, which is what Sazel is saying, you either die a D-Gen, as in you stay a D-Gen forever, and you're just following the narrative trades over and over and over again. Or you just like kind of call it quits and settle. And it's like, well, you know, I'm actually familiar with this part of crypto, and I'm going to stay right here. And so that's what Anthony's calling a crypto boomer. And so this juxtaposition, I think is pretty compelling. Yeah. Do you think that's totally right though? Like, do you think you either have to be a Dgen or you, you become a crypto boomer? And those are the only two choices. Like, I feel like there's a, there's another choice here, which is like, I don't know, it's kind of the like, buy what you use sort of Warren Buffett. Like, evaluate this based on its fundamentals, wait for narratives to prove themselves with some raw fundamentals and then invest in them. Like, but be open to new narratives. I feel like a, a total. I feel like a total. total crypto boomer would just be like, yep, I bought my thing and like, this is how it is, and I'm never going to change my thesis or my opinion. It's always this one particular way.

Starting point is 01:31:03 But like, I think there's some space in between being a full Dgen and being a crypto boomer. What are your thoughts on that? I think it's funny that you referenced Warren Buffett in your explanation as what's not a crypto boomer. It's like, oh, yeah, Warren Buffett long-term behavior. No, like it's the juxtaposition between the D-Gens and the non-Dens. Like if you're not a DGEN, you're there for a crypto boomer. Although, like, I do accept your nuance. Yeah, yeah.

Starting point is 01:31:28 I do think there's some nuance there, but I totally understand the point he's making. So here's a take out of Reddit, and this take is really just the headline. And this is coming off the heels of all of the gamers rejecting NFTs in their games. And the take here is that NFTs won't ruin computer games. Greedy game companies will ruin computer games using NFTs. I think that's a really good take. Technology is just neutral. It's really about the incentives of the game developers that can change.

Starting point is 01:31:52 choose to actually have helpful or harmful NFTs in the games. And so that's kind of what I would ask the gamers that don't like NFTs to consider, is that, well, maybe it's actually the studio that you don't like, not NFTs. Yeah, I think that's totally the case. NFTs are neutral technology. Why don't you take this take? Yeah, this comes from Altcoin Psycho Twitter account. He says, so many poorly designed Unlocks are all happening this year in 2022.

Starting point is 01:32:18 A lot of popular alts will likely get hammered. Unlocks is referring to angel investors, seed investors, getting their tokens and then their vesting periods ending so that they can finally sell their tokens. He continues, 2022 will be the year that humbles everyone who said fully diluted value or tokenomics are a meme. TA technical analysis won't save you from a shitty emission curve crushing your project.

Starting point is 01:32:43 So basically he's saying that like, yo, beware of the tokenomics. Like, or excuse me, beware of the vesting schedules. because when VCs have their tokens unlocked, they need to cash in and lock in some profits. And they got in on those tokens cheaper than you did. So you got to be aware. All right, David. So what are you excited about this week, man?

Starting point is 01:33:00 Tomorrow we record with Kobe, with Crypto Cobain. And so I think that's going to be pretty interesting. There's been some Twitter spats, friendly-ish Twitter spats between us and Kobe beforehand, before this. But he was amical enough to come on the show. And so we were recording with him tomorrow, and that episode comes out of that.

Starting point is 01:33:19 on Monday. I've already shared the agenda with him and he was like, oh, it's pretty good. And there are some hot questions in there. So it's going to be a fun show. You know, I actually think there's a lot of shared values between bank lists and Kobe. But, you know, Kobe definitely takes more of the, I'm a narrative investor. I'm a trader side of the spectrum where we take the more fundamentals long-term approach. So I don't think we disagree on as much. We just have different. Our dispositions are definitely different. Yeah. Our styles are very, very different. Maybe that's where and why we but heads. But overall, I'm looking forward to the conversation. Yeah, I do have a lot of respect for him, too, so that'll be fun. Ryan, what are you excited about?

Starting point is 01:33:57 Dude, I'm just excited to have my electricity back and my internet back. It was a mess. You mean, you yourself, be back online? Yeah, totally. Yes, yes, that's what I mean. But, also just like, I realize this is a first world problem, right? It's like being without the internet for 48 hours, okay, well, you'll survive, Ryan. And that's totally true. But, like, it also always makes me think, man, what would it be like if society, like, totally broke down? Right. And we lost electricity, lost internet. Like, how long could I last in that sort of a situation?

Starting point is 01:34:29 The truth is, like, not very damn long. And, you know, I thought about other things, too, it's like from a crypto perspective, you know, crypto really doesn't work when the electricity is off, of course. But the interesting thing about that is neither do gold ETFs, right? That's just your bank account. Like, just like nothing works. I know that's been an early critique over things like crypto. It's like, well, what happens if the internet powers down or electricity turns off

Starting point is 01:34:56 if you don't have crypto. Well, the truth is you really don't have anything when those two things happen. And in fact, if the internet turns off, like parts of the internet can turn off and completely cripple the banking system. Totally. We're screwed. And if only parts of the internet turns off, Bitcoin and Ethereum still are online. Exactly.

Starting point is 01:35:13 Next time, there's some internet connectivity. establish, you can kind of do it. So I sort of asked myself, like, what would I do if this was sort of a persistent scenario? This was a real disaster in this spanned like weeks or months or something like this. What would I want to hold? And it's not going to be gold ETFs, right? Because what use are those? It's like family, it's friends, and it's food. That's what you're doing in a real crisis. And a nice house. Yeah, shelter, right? And a nice house, ideally. So I guess it just impressed upon me that society is built on, you know, crypto is built on many different technologies, but like all of societies also built on top of these technologies. And I think

Starting point is 01:35:53 crypto is much more resilient than it first appears. It's at least resilient as just about everything else in society, right? Well, so it's supposed to be the most resilient thing on the internet after like SMT, SMTIP or whatever. Yeah. Yeah. After after like the TCPIP, core internet protocols, you know, there's crypto and that will pursue. So anyway, it's, I'm fine. Interance back up. I'm connected. Electric is here.

Starting point is 01:36:21 AI, back online. Yeah, AI back online. But it's good to go through that experience, I think, once in a while, right? It's like makes you think about things like this. Absolutely. You ready for me in the week, man? The meme in the week, yeah, absolutely. This is my meme this week, which I'm very, very stoked that I had a successful meme.

Starting point is 01:36:38 First, though, this is a meme that we talked about in the last show. And this was a Jack Dorsey anti-Web3. mean. Maybe we should talk about that one first. Yeah, so I wrote in Market Monday this week what Jack doesn't get about Web3, which I tried to summarize all the arguments that I could about why Jack is just basically completely backwards about Web3 incentives. This is Jack Dorsey, the co-founder of Twitter and also CEO of Square. Yeah. Jack thinks that Web3 is just this Silicon Valley VC marketing term because it's really, really hot and they can make a lot of money off of it. And so all these Web3 companies,

Starting point is 01:37:14 are just pouring capital into Silicon Valley VCs because all the VCs are giving them all their money, leaving very, very little for retail. So Web3 is a VC-led endeavor, is what Jack's critique of. And in my opinion, it's the exact opposite. And I know it's not perfect, but like, hey, let's think about Web 2. And here's where the meme comes in. So it's the same meme that, I need to explain the first meme for the listeners. So the meme is that there's this water pipe and it's coming out of Ethereum, and the water pipe is labeled Web 3, and this water pipe is just flowing water into the mouths of very fat and happy Silicon Valley VCs, while this extremely famished retail individual is just opening his mouth for these mere droplets that are just accidentally

Starting point is 01:37:58 leaking out of the pipe. And so that's Jack's claim on Web 3, is retail is just left in the sidelines. And so, again, I think this is completely backwards from reality. So I made this alternative version of the meme, where instead of small little droplets being dropped off and going into the mouths of retail, it's actually just hearts and likes coming out of the web two pipe. And so the web two pipe is flowing money into Silicon Valley VCs, as Jack says it was for Web3. But instead of retail getting droplets in Web2 world, you just get hearts and likes. Like here's, here's what you get out of Web 2. You get a like. I get to like your thing. Dopamine hits. Dopamine hits. Yeah, so no money. And Jack completely ignores, and I write about this in the article,

Starting point is 01:38:38 Jack completely ignores how air drops are a fundamental component of Web3 and people have gotten over a million dollars worth of air drops from Web3 endeavors. And how also I make the claim that like, Jack says that VCs, Web3 will never be able to escape VC incentives. I make the claim that Web3 platforms that put more and more capital into the hands of retail do better.

Starting point is 01:39:02 Think about ENS and how beloved ENS is. All zero VCs, all retail. And so I think that Jack just has this completely backwards. And so this is the new meme that I think is far more accurate of reality. Yeah, it's a good take. Look, so, you know, Silicon Valley VCs got very fat and happy off of Web 2. But I think the true genius of this meme is like, what did retail get out of the whole Web2 movement, right? Like likes and hearts and their attention kind of stolen, right?

Starting point is 01:39:31 And like dopamine addictions, that's kind of where we are in the cycle. certainly didn't get any equity, didn't get any token drops. So that's the meme of the week. That is the meme of the week. All right, guys, this has been the first roll-up of 2022. Welcome to 2022. We're glad that you're with us. As always, none of this has been financial advice.

Starting point is 01:39:50 Eth is risky. Defi is risky. So is Bitcoin. 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 bankless journey.

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