Bankless - ROLLUP: ETH Merge Soon | Yuga Labs Acquisition | ApeCoin | Raises & NEW Releases Galore

Starting point is 00:00:00 This is definitely the biggest event, the biggest crypto event of 2022. Maybe the biggest... I would say ever. Right? Other than the Genesis block of Ethereum itself, this is the most significant event since that. And so this is now, now we've got bullish David back, I think, for the moment. Plus one to the bullish side. We got three for the bear.

Starting point is 00:00:20 We got one for the bull. Hey, Bankless Nation. Happy third week of March. David. What time is it? It's a Friday Bankless weekly roll-up time, Ryan. Where we cover? entire news that happened in the last week in crypto, which is always an ambitious endeavor. And this

Starting point is 00:00:37 week is no exception. Uh, and this one is a little bit different this week, I'd say, just because, yeah, it feels like a merge week, Ryan. I don't know why it feels like merge week, but it does. Merge week. Okay, that's the theory of merge you're talking about. It's funny because that's still months away, but suddenly it was like everyone was talking about the merge again. Mm-hmm. Yeah, including us. People, it was us, yeah. Guilty. Guilty. people have decided that the next thing to focus on is the merge. Who knows? We have like three plus months until the merge actually comes.

Starting point is 00:01:08 So, you know, maybe this is just one week and then the topic of next week will be a different topic. But this week, the topic of crypto Twitter was definitely the merge. Yes, we're going to talk about that Ethereum merge week. Also, the biggest NFT M&A deal ever. Apes by punks. I'm going to talk. I'm going to interview a punk holder and see how he feels about. that one on today's episode.

Starting point is 00:01:31 Sure. Talking about you, David. Who are you an interview? Oh, me? All right. And then they released a coin, too. So I don't know what that means. We're going to talk about the ape coin as well. Zuckerberg, that's Mark Zuckerberg, also said NFTs are coming to Instagram.

Starting point is 00:01:43 Big surprise. Not really. We knew he was going to do it. How is he going to do it? We'll talk about that later. Also, Stripe the payment platform, fintech platform, jumping into crypto with both feet. Huge. Huge.

Starting point is 00:01:53 Yeah. I think this is hugely underrated and probably the biggest thing that happened this week. And we'll have to talk about that too. David, before we get in, we should talk about our friends at Xerion. Guys, I've loved Xerion since it launched. This is the way a bank user interface should be, except banks can't pull it off because banks are not connected to decentralized finance. You can bring your own assets to Zirion.

Starting point is 00:02:24 You cannot bring them to your Wells Fargo bank account, And this is what it looks like. David, they've just added a whole bunch of multi-chain features, some bridging features. Tell them what's going on in Zerian these days. Oh, yeah, especially as we get into this layer two world, which we have plenty to talk about this week in the weekly roll-up. It's going to require infrastructure to help manage your assets, not just the many, many more assets that you have in your Ethereum wallet versus what you have in your bank, but also in the many, many more chains that you engage with much more than just the Ethereum L1. So not only is the Ethereum-O-L-1 obviously available, but all of the Ethereum layer 2 is like Arbitrum and Optimism, and also the alternative EVM-compatible layer ones like Avalanche and the other ones. And so, depending on whatever chain that you are on, or whatever asset that you prefer, Zerion's the place for you to go and manage all of your crypto finance. It's just, you know, things that your bank could never do, Zerion does for you.

Starting point is 00:03:24 Really cool, too, as well, being able to bridge from one chain to another, If you want to go to ETH to Polygon in a hurry, you can do that in Zirion. You can also view all of your NFTs, lots of cool stuff going on Zerian. So, guys, check that out. There is a link in the show notes where you can connect your wallet to Zirion and get started. All right, David. This couldn't be your wallet, Ryan. That's way too sophisticated NFTs.

Starting point is 00:03:46 Oh, this is sophisticated, huh? These are really good. No, this is not my wallet, by the way. This is a demo wallet. But, yeah, maybe we'll get to some of my NFTs a little bit later. Yeah. You notice a little something behind me today? Just a little bit.

Starting point is 00:04:00 Yeah, yeah. I've noticed that it's a great-looking cat that's got a little bit more shine than my punk, and I'm a little bit upset by it. You know, it starts as a cat, and who knows what other animal could turn into? Maybe something with a shell? I don't know. We'll see a little bit later today. But let's first.

Starting point is 00:04:14 It started with turtles, graduated to MFers, and now is at cats. He's starting to get into the blue chips, folks. Yeah, I'm working my way up here. I'm learning, okay? Let's talk about the market. What's the market teaching us? What is the market telling us? Let's start with Bitcoin.

Starting point is 00:04:31 What's the price this week, David? Yeah, we got a happy Bitcoin this week, Ryan. It started at $39,000, went down and touched the low of $38,000, very briefly, and then recovered right back up and started climbing out of that hole to where it is now at $40,700, hit a high of over $4,000, $41,000. So overall, up 5% on the week. So happy week. Could also just be a recovery off of a very bearish week at the last week.

Starting point is 00:04:56 week. So, you know, who knows? I'm a little surprised about that. Are you surprised that we're actually going up this week? I am conflicted that we are going up this week. Okay, because it was all it was all about bearish David last week. I was very bearish last week. I want to know whether bearish David has returned again this week or whether it's a more neutral David or maybe the Bull David is back. No, it's not, it's not, it's, it's, it's, it's, both David's Full conflicted David, where we're going to be talking about this throughout the markets, where just macro has not changed at all and in fact has even, I would say, gotten worse. Meanwhile, like, the merge is just so bullish.

Starting point is 00:05:36 Like, how do I square these things? I just don't know. You just buy more ETH is what you do. Speaking of which, tell us what the ETH price is doing this week. Yeah, ETH started the week at $2,600, hit a low of $2,500-ish dollars, and then climbed right back. up out of that to where it is now at $2,800, especially in the last 24 hours at the time of recording. This is, we always record these as Thursday morning, by the way. So where it is now is up from 2,500, basically just 24 hours ago, or 2,600 to 2,800,

Starting point is 00:06:10 kind of climbing out of that hole that it's set. And then if you kind of just zoom out, Ryan, there's another chart that we have available. I don't know if you pulled it up. Yeah, this is the creator of these charts who drew these lines. lines would like us to inform you that these are just meme lines, and that's really all TA is. It's meme lines. But if you know bank lists, we know that memes are real. There's a triangle. There's a triangle here. And the 2,800 level of ETH price is poking through that triangle. And that has been a descending line from where it was at the start of the year for like three to four months of

Starting point is 00:06:45 the ETH price just descending on this line. And it's poking through. It's poking through, saying, hey, what's up on the upside of this line. So, who knows? It's trying to figure out what merge week means for the price of ETH. I mean, that's what's going on. But how about the ETH to Bitcoin ratio? Because this is our bull market, bare market indicator when ratio goes up. We're generally more bullish when ratio goes down, more bearish. And it's up this week. Yeah, it's up this week. And you can see that line that I was talking about that basically started towards the end of December where the merge hit the high of, or excuse me, the merge. The ETHBTC ratio hit the high of like what looks like 0.086. in December, and then it has had that linear line down, setting lower highs and just basically

Starting point is 00:07:29 for the last like four months. So started at 0.088 in like January is at 0.082, in February is at 0.075 to where it bottomed at basically 0.064. But since hitting that bottom of 0.064, we have climbed back out to 0.068. So, you know, like there's a shape being formed here. we actually got some charty chart stuff to look at with that too. So this is what was called a channel. And so we touched the bottom of that channel earlier last week, and we have bounced off of it. And so if you are perhaps a trader,

Starting point is 00:08:06 you are looking at how Ether is in the bottom of this channel heading back towards the top of this channel. So if it continues that, you know, bullish, bullish. What about this one? This is a triangle. We love the shapes. We love the triangles. And so, again, it's another thing.

Starting point is 00:08:22 The concept here is that as this triangle converges, something happens at the end of this triangle. Like, it's got to go up or it's got to go down. This is what traders look at when they look at these things. And this is a wedge, I believe. And if you'll notice, Ryan, that the wedge comes to a close right around July, right around when the merge would happen.

Starting point is 00:08:43 And so, things are lining up. Like, I don't pay attention to TA too much, but I do know that there are real reasons to look at, it. And when you see an inflection point happening around the same time as something very, very fundamental, that is interesting. That's an interesting thing to look at. Okay. So, so we're looking at TA, all right? We almost never do that on bankless. So I feel like we're looking at TA in this episode because you're feeling like conflicted as to what's going to happen next. This is when you pull out the like the horoscopes. I'm sorry, the TA, right? Is when you're,

Starting point is 00:09:22 you're like, what's the future going to hold? Let me look at the charts. Let me look at TA. You don't really know, and it could fall one way or the other. So what is it about this market that's so conflicting right now? Is it the fundamentals of the ETH merge happening in 2022? Yet in the backdrop, we have all of this macro bad news. We've got obviously war in Ukraine, commodities, price increases, shortages everywhere, still the tail end of COVID, economy, like inflation, the Fed just raised rates, which you're going to talk to is, all that macro stuff you're contending with, mixed with the bullish, otherwise bullish, specifically Ethereum news? Is that what's going on in your mind here? Yeah, that's a pretty good summary. I talked about this on last week where

Starting point is 00:10:09 there's so many things about the current crypto markets, talking just but crypto right now, that are reminiscent of the end of the cycle last year. Like, last, Last gasps of the mania for people to just grab their last amount of hype and attention so they can exit. You said last year, do you mean like last, like 2018? Like 2018, right. Yeah, like super cringy ICOs and people were just participating in them because that was just like the leftover energy. And like now we're seeing, we'll talk about this when we talk about the ape coin. But like people, when people run out of ideas, what do they do?

Starting point is 00:10:42 They issue tokens because that's the only idea that they have left. and ultimately that just becomes dilution, and that's bearish. And so, like, we're seeing just the attention just leave out of the whole play-to-earned gaming side of crypto. We're seeing attention leave out of the NFT side of crypto. We're seeing people just hanging on on these desperate attempts for attention. And so so much of the crypto industry just feels like it has lost the tailwinds. And on top of that, there's just all of the macro bearishness.

Starting point is 00:11:14 There's the commodity markets that just suck right now. We're going to look at the like an index of equity charts and just kind of looks, looks bad. Meanwhile, like, like, Putin is scared and in a corner and like that's volatile. And so, like, you know that meme, Ryan of like that, that building that's toppling over and there are like three steel beams that are holding it up? Like, that feels like the world and the beams that are holding it up are, is the merge. And so, like, there's an infinity number of like bearish things going home.

Starting point is 00:11:44 but the merge is so bullish and I don't know what to do about it. Well, maybe we'll find it out by the end of this episode once we go through the merge, how you're feeling at the end of this, David. But yeah, I understand the conflict here. Let's talk about the bed index because this is a nice blend. Defy, Bitcoin, and Eith. What are we looking at on the week? Yeah, start of the week at $101.

Starting point is 00:12:06 Ending the week at $103.78. So up like 4 or 5% on the week, 3 or 4% on the week. Modestly, yeah. Honestly, yeah. Let's switch to some of this macro stuff for a minute in our, and I guess our Fed Watch segment. So Powell came out this week. Turns out he is more hawkish than the market expected.

Starting point is 00:12:28 I don't know what I expected. I kind of expected him to be hawkish in the face of inflation. Hockish means looking to raise rates, looking to get a bit tighter on monetary policy these days. So the big news is they are increasing the Fed. is increasing its interest rate by 25 basis points, a quarter of a percent. I believe that's happening sometime in March. I'm not sure exactly. There's some other things we can get into, but what do you think this means high level? I thought this was expected. I thought the Fed

Starting point is 00:12:59 raising by 0.25% was like viewable from a long way off. So I kind of been confused as to how the hawkishness interpretation came about. Yeah, I guess maybe some people thought that given events in Ukraine that the Fed might sort of change their position, worried about like the R-word has been used recently with commodity prices increasing the recession word. And of course, they have to balance inflation with the threat and fear of recession. So this is also the first increase since 2018. I'd forgotten it's been that long. So that's a big deal. Yeah. So we were just, the Fred was just getting into raising interest rates post, I believe, 2008 or something and started doing that in 18 and then boom COVID and then they just craft those

Starting point is 00:13:49 plans and then now they're they were about to start to raise interest rates and then boom Russia invades Ukraine but now this time it looks like they are not stopping the raising of interest rates because of the invasion so maybe that's the hawkishness is like oh they didn't give us another free ride I guess that's the take so far apparently his languages they outline seven more this year. So seven more hikes this year and then four hikes, interest rate hikes in 2023, so next year. They're also planning to run down their balance sheet a little bit. So that's kind of equivalent to you another hike. Discharging some assets from the balance sheet. So discharging assets from the balance sheet was one of the reasons why the whole entire

Starting point is 00:14:31 market turned over in December and January. And we've been bearish ever since because people were like, oh, that's actually way more aggressive in terms of interest rates increases than we ever kind of accounted for. And the markets have been bearish ever since. Exactly. And, you know, people are, look, people are asking the Fed to do something about inflation. Like, that's coming from politicians now, too. But Powell also hinted that if they did 11 hikes this year, that that would not cause a recession. He used the words no recession because he said, aggregate demand is strong, tight labor market. There's a tight labor market and household balance sheets are strong. So he doesn't think that these rate hikes and this more like aggressive monetary policy

Starting point is 00:15:18 contraction will actually lead to a recession. That's an interesting take. And of course, look, the Fed can change its mind at any time. Like between this meeting and next meeting could be a totally different story. But this is a new message coming out of the Fed. Do you remember six months ago or so. The big story on the roll-ups about the Fed's action was like completely ignoring inflation. Like it's only temporary. Transitory inflation. And now this is a complete direction change, which is like, oh, inflation's here and we have to fight it. And not less than six months later, this is the new message coming out of the Fed. So that's interesting in and of itself. Well, I mean, it sounds like they've done their research. They've certainly done more research than I

Starting point is 00:16:02 have because I didn't measure like the average like cash on hand for the average American household. But at the same time, like, the game of controlling inflation and interest rates is such a game theory. So like the Fed is like, oh, yeah, we're going to raise interest rates like seven more times in 2022. But in the back office, they could be like, all right, guys, we're going to tell everyone that we're going to raise interest rates seven times in 2022. And maybe we're actually only going to do it four times. And so the market is actually also playing the game theory game. is like, all right, so that's what they said, but what do you think they're really going to do?

Starting point is 00:16:34 And like, it just throws everything into a ridiculous mess. And that is why people should not be in charge of the value of money. Anyways. Yeah, well, another story there. But this is what equities are doing. I think this is an interesting chart from a macro perspective. But what are you seeing in this chart? This is, I believe, this is a composite index from the NASDAQ, basically.

Starting point is 00:16:57 Looks like, you know, I don't know, 20 years or something, Long time horizons. Yeah. So every single candle is one month. So very, very long time horizon. I think we actually accidentally cut out the bottom of the chart. But you can see when COVID happened. And then you can kind of see when the 2008 crash happened.

Starting point is 00:17:14 Yeah, bad. And as you look very, very recently, like, there are three, maybe four examples of like a bunch of red on this chart. And one of them is in the last like four months. We've had like, I think I see four, three or four months. monthly red candles in the last four months. And when you look at how fast, this is a, this is a NASDAQ composite index. When you look how fast it's gone up in the last like two years, I see that. I'm like pretty fearful about how much room there is to go down.

Starting point is 00:17:45 And when like we've noticed crypto be super correlated to traditional stock markets and the rest of the macro markets. And so if that does like turn over as it's looking like it's currently doing without any sort of recovery, like that makes me scared. That makes me scared. Especially when there's a war in Europe. Yeah, equities could have a ways to drop is what you're saying. Yes, that's exactly what I'm saying.

Starting point is 00:18:09 Speaking of dropping, this is a chart we don't often look at. We used to. We used to look at this chart. Here's why we don't look at this chart anymore. Absolute demolishing. So we are looking at the D-E-P-I-Eth chart. The defy, the value of a defy aggregate in ETH terms. We used to look at this chart a lot, but it kept on going down.

Starting point is 00:18:29 every single week. And so it stopped being alpha and started being depressing. I think the last time we reported it was something in like 0.065 DPI per ETH and now we are down to 0.055. This is really since like DFI summer basically. Let me see if I can max this out. Well, you know, I had some recovery, I suppose earlier in the year. A little bit of recovery. And this is this is kind of the fake out. Like, you know, we thought DFI was back on the rise again, but it didn't happen, at least relative to ETH. And it's just bleeding. It's just completely bleeding out as compared to ETH right now. And ETH is retaining, sucking in more value. What do you think? Like, do you think this ever changes? I mean, now people go to the opposite end of the spectrum. 18 months ago, the narrative was, it's all about Difa. All you need is Bitcoin and DFI tokens. And no ETH, those are the things. that are going to accrue value. Now it's kind of flipped a little bit where people are saying,

Starting point is 00:19:29 ETH is forever going to gain value. And you don't need DFI tokens, right? And like, there's this fear almost that ETH has become so deflationary that it could suck out all of the value from the greater Ethereum economy and all of the defy tokens. What do you think?

Starting point is 00:19:45 Yeah, I think that's right. I think having, justifying like having your Ethereum exposure in defy tokens never made any sense to me because every time you add a token to Ethereum, you benefit ether because of EIP-1559. Like the economic activity that you create

Starting point is 00:20:00 by having a new token flows back into EIP-1559 via transaction fees. That doesn't work the other way. Like the value of ether going up doesn't benefit your token. It's only one way. Tokens benefit ETH. ETH doesn't benefit tokens.

Starting point is 00:20:15 And so you get exposure to every single token on Ethereum by just holding ETH. And so like when you look at the DFI bleed versus ETH, it's kind of what you would expect. expect, especially when a lot of defy has high issuance from yield farming versus ether, which is quote unquote deflationary, not in practice, but in

Starting point is 00:20:33 theory, and later in practice, this is kind of what you would expect. This is what happens when your base money is deflationary, everything else kind of goes to zero in relation to it. But do you think this will happen forever? Like, surely defy tokens will have a resurgence, won't they?

Starting point is 00:20:49 Yeah, they can have a resurgence, but then it can continue to still happen forever, Ryan. Like, we could have a bullish year for defy tokens and then once again it can resume its towards zero trend versus ether i think personally i think that what's going to shake out is you somewhat in the middle right it's like i think that now we're now we're on the other side of the narrative switch i just think i just think that like um we're like we go overboard on on narratives right so in one direction it was like eth is going to have no value and it's all defy tokens now we're probably on the other side of that

Starting point is 00:21:22 pendulum swing where everyone's like well eth is going to slurp out all of the value of defy, there won't ever be like defy tokens that are occurring value relative to ETH. And I kind of think that's the time you want to start looking at DFI a bit more aggressively, right? It's hard when you are denominating your returns in ETH to do that. But I do think there are going to be some real winners and some real champions on the DFI side that gain relative to ETH. But there's one, I think, compounding factor here that we have to figure out. And we haven't figured this out yet. And I think it's going to be an important, I guess, part of the investment thesis to figure out in 2022, which is like, will the new defy token winners be the winners from the

Starting point is 00:22:07 past, right? Like, there was this idea that we'd have a bunch of blue chip defy tokens that would continue to grow and expand. What if the turnover is a lot tighter? Like, what if the winners on Ethereum are not going to be the same as like the winners in the L2 ecosystem or the winners on alternative chains. What if they're all of these new separate winners and how do you like bake that into the calculation? Because even the DPI, it's just really the Ethereum blue chip tokens and the biggest tokens by value there.

Starting point is 00:22:42 So that's another piece of the puzzle I think to sort out. And I don't think the market has figured that out either, which is why the prices are are so depressed too. Yeah, yeah, and I have similar thoughts about the NFT ecosystem, is that like, NFTs as a whole can be bullish, but that's just because people are rotating from one NFT to another to another, and this, like, the NFT ecosystem is really just this shelling point game as to, which is the next NFT that's going to be hot, right? And we leave all the other previous ones behind. And like the aggregate defy market cap could certainly grow, and perhaps it can even grow faster than the ETH market cap. but that doesn't actually mean that that's instantiated into a single asset that you can purchase because the growth happens in new tokens. Or even a single index is hard to capture it all.

Starting point is 00:23:30 Right. And, you know, it's not capturing it all. That's what, you know, DPI is not capturing at all. And that's why there's always alpha on the margins of DFI because not even the indices are going to be able to capture the upsides from these new tokens, because for every good winner of a token, there's going to be 100 negative, like bad tokens, that the indexes, like, you can't just accept all of them. And so, like, that's always why there's going to be investment into defies because there's alpha at the margins. And then by the time it gets into the indices, like, you probably,

Starting point is 00:23:57 it's probably already taken. Yeah, absolutely. Well, there's more work to do here. And that's why you buy. And obviously more research to do. Yeah, that is the simplest approach. I mean, you do get an index of exposure to everything. Speaking of ETH prices, one price that, like, in Ethereum economy that is down,

Starting point is 00:24:14 is Ethereum gas prices. This is a fantastic dashboard on Dune Analytics created by Hildo... Hill Dobby. Hill Dhabi. Hill Dhabi. Yeah, and so this is showing us gas costs. We'll include this as a resource for you

Starting point is 00:24:31 so you can kind of see gas costs over time. Recently, they've spiked. By recently, I mean, like, in the past few hours, I believe. Yeah, 24 hours. I was looking at this chart earlier. 24 hours. I was looking at this chart earlier, and the prices to move, like,

Starting point is 00:24:44 were like, you know, a dollar or something like this. Now they're up to $5 on Ethereum. But what is this showing us overall, David, with the gas prices? Well, it's definitely showing us over the last few months or so that gas prices have kind of hit new lows. I think over the last like three months or so, the median gas price was 22 Gway, which we have not seen in a very long time. But you can also, this is just a very useful gas board because it shows you time of day

Starting point is 00:25:12 and where the spikes happen time of day. and also on days of the week. And so it's just actually a really useful resource. I think we're going to be keeping this in the roll up all the time. But like here it is over the last day, week, and months. Blue is in month. Over the past month, the average Gway price, if you take the peak of that chart, I think is something like 30 Gway.

Starting point is 00:25:32 And over the last week, it was something like 22 Gway for your average gas prices. Super low. Super low. Super low. But then like the market movements today, along with the board. AAP's token, which we'll talk about later. We definitely saw a spike above 175 way. So, you know, there's always life somewhere. But generally depressed gas prices, which is a plus one to the bare side of the argument, by the way. Let it be clear. Depressed gas prices are now

Starting point is 00:26:05 a bare market indicator. And I guess they always have been, although people have been saying that high ETH gas prices are bearish for ETH as well. Yeah, haters will say anything's bearish for easy. Visa versus Ethereum volume. Look at this. In 2021, Visa moved 10.4 trillion in payments volume. Ethereum moved $11.6 trillion. I think we've talked about this before, but it just warrants repeating that last year,

Starting point is 00:26:33 Ethereum moved more in payments volume than the Visa network. That's aggregate of ETH and ETH tokens and stable coins and everything. else on Ethereum. That's a pretty big milestone to cross in my mind. Yeah, and I think this is just taking into account stable coins. I think that's what payments volume must mean is stable coin transfers, which means it's it's apples to apples, folks. This isn't like ERC 20 defy token transfers versus visas settlement in the networks for dollars. This is dollars to dollars. So, you know, apples, apples comparison and ether Ethereum one. So, you know, nice job Ethereum. Let's talk about this.

Starting point is 00:27:19 Oh, Airdrops. That's what the topic is right now. So do you hold or sell air drops? Let me ask you, what's your personal strategy, the airdrops you received last year? Do you hold or do you sell? Or did it depend? Almost all of them I sold. Except for E&S.

Starting point is 00:27:33 Almost all of them? Yeah, almost all of them. Except for ENS.NS I still have. Because I haven't claimed it yet. If like that is the profitable move. and maybe this is obvious to people who have been paying attention to air drops over the past year or so. But like look at these charts. Oof.

Starting point is 00:27:52 Oof. What are we seeing here in these charts? The uniswap going and spiking from where it got claimed at $3 up to $40 and then down to $10. But $10 would, oh, that's where it is now. So actually, you know, technically it's still a winner depending on when you sold it. But what we're really looking at is like it's claimed, it goes up, then it goes down. Um, you know, and it usually goes up first and then down later. Um, so yeah, uh, things, but this is, this is just another articulation of what we were talking about earlier with the D5 versus Eath. Um,

Starting point is 00:28:26 but I guess this is actually versus dollars now, isn't it? Which is even worse. Yeah. Yeah. So I guess the message here is when you get an air drop, sell it immediately. No, no. I think, I think, usually it's safe to wait like, like, between like eight and 24 hours. Like usually it pumps. and then you sell it. I feel like that's fairly immediate, though, right? So like sell in the first few days or the first week has been the profitable move thus far. Have your finger over the sell button, yeah.

Starting point is 00:28:55 For self for Heath. I wonder if that ever reverses or ever changes if air drops will become. See, the thing is like, or maybe that's just the nature of an air drop. Are issuance and issuance is inflationary and inflationary is dilutive and that's all bearishness. Air drops are also a fantastic way to get your coin into every, like, crypto media publication onto everyone's radar in, like, Twitter, you know, Reddit. Yes.

Starting point is 00:29:24 You get one week of attention. Right. So you see these, like, they're almost like attention spikes, particularly for some of these really small market cap tokens. Like, I'm not sure what this is, but like, I think that happened like SOS. Do you remember that one? That happened in December, just a quick spike and then it's gone. whatever talks about attention spikes wow i'm gonna i think we should log that one because so many

Starting point is 00:29:46 charts in crypto are not chart just charts of the price but actually are just proxies for people's attention but they really are aren't they um three hours capital is putting some attention on eath right now right what's this uh transaction yeah because because three rs capital is so large it's very easy to figure out which addresses are there so they have basically everyone has their address is tagged. And one of their addresses added 40,500 Ether, about $112 million, about that 2 a.m. last night. So it'll be a little bit more than 24 hours ago from the, from the listeners' perspective when they are listening to this on Friday. So three hours capital, the rotators, rotating into ETH, ahead of the merge. Here we go. Oh, man. How long ago

Starting point is 00:30:33 was it the Ethereum's abandoning its user's tweet? Is that like four months ago? Four months ago? Four or five months ago. We're back in. Right on schedule. Unabandoners. Let's talk about this.

Starting point is 00:30:47 So a few things on Tara Doe Kwan, his list. Number one is he is buying, Tara is planning to buy $10 billion worth of Bitcoin for its reserves. 10 billion. What? Pretty impressive. How much does Michael Saylor? have?

Starting point is 00:31:08 I don't think he has 10 billion. No. There's no way he has 10 billion. I mean, that's absolutely massive. And how are they doing this? Of course, it's the value of Luna. Right. So, like, on one side, it's like, you're taking your Luna token proceeds

Starting point is 00:31:23 and you're diversifying into Bitcoin and using that as a reserve. Doquan says this is going to open a new monetary era of the Bitcoin standard. And it's, you know what this kind of reminds me of a little bit is actually, um, what EOS did. And people are going to like hate that I just compared EOS to Luna. And I'm not comparing them in all respects. But in this respect, EOS did.

Starting point is 00:31:48 They raised a whole bunch of Bitcoin and ETH. Um, they sold the vast majority of their ETH. They kept their Bitcoin. It's like billions of dollars worth of Bitcoin on reserve for EOS. And I'm not, I have no idea what they're actually doing with that right now. but it's kind of like a way to get cheap Bitcoin. How? The issuance of EOS.

Starting point is 00:32:10 They sold it when EOS was much higher than it is today. I'm not saying that's exactly what's happening here, but it feels a little similar. What's your take on this, David? So I'm not an expert in the dynamics behind the Terra ecosystem, but they have like the Terra USDA, which they are saying that this 10 billion in Bitcoin

Starting point is 00:32:30 is going to be like the backstop for it. Kind of like how the Federal Reserve has gold, and other foreign reserve assets to shore up the value of the U.S. dollar if the time ever comes to it, right? Like, they can use their treasuries to protect the peg or protect the value of the currency. What, in my mind, uh, this is just signaling a lack of confidence on the nature of your own asset. Like, why can't you use your own money to, to back, to back your stable coin? If you have confidence on the long term sustainability of your own ecosystem, and why do you need an alternative store of value to backstop the value of your stable coin?

Starting point is 00:33:05 And plus, like, if the value of UST, of Terra, USDA, depends on something external to the Luna protocol, that's an external dependency that is not cryptographic. That is trust. You have to have the security of your own network solved inside of your own network. You can't have an external money be the thing that props up the value of your stable coin. So to me, this just shows a lack of confidence. in the value of Luna because they have to go elsewhere

Starting point is 00:33:34 to have their store of value. And that's exactly... You know what? I guess it seems like to me is it feels a bit more like you sold stocks to buy some money, right? It's like this is why I've always thought that Luna and the Terra ecosystem

Starting point is 00:33:52 is a bit more on the like fintech side of the spectrum than like an Ethereum or Bitcoin are on kind of the hard sound money end of the spectrum, right? And I guess from terrorist perspective, if you don't think the Luna coin is actually like money, a monetary asset, then what you're doing is you're taking some of your equity, almost like some of your stock, and you are exchanging that for a real money, like a much harder money. And you're kind of doing the fintech play too because you're like sort of holding that

Starting point is 00:34:25 to backstop your asset. So I guess maybe it makes sense from that perspective. But that perspective itself doesn't make sense. I mean, we're not here for like new fintech. We're here for the cryptographic futures with no external dependencies. That's the bankless take. This is also interesting Doquana in the news. So there was a wager of some sort, a bet of some sort.

Starting point is 00:34:53 What was this bet, David? This was a bet created on Twitter. and so Doquan, you know, the founder of Tara Luna, and this Sensi Al-God, which is like a crypto-trader Twitter account, we're going at it about the future value of Luna. And so Do-Quan proposes a $1 million tether bets, U.S. Tethers bets, basically dollars, between Sensei Al-God and Do-Quan himself saying that in one year's time from March 14th, if the price of Luna is higher than $88, Doquan pockets the million dollars, and if it's lower than Sensei God pockets a million dollars.

Starting point is 00:35:34 You know, it's just always a great popcorn season to see the founders of layer ones bet about the future price of their layer one asset, like, especially after it just flips Solana, right? And so like some big, big, like, cockiness going on on Twitter right now. And then actually... Actually, it got raised, right? not raised by that particular person, but a second person came in with another $10 million offer to take the same bet, which Doquan also accepted. So Doquan has $11 million in exposure in the bet against $88 Luna on March 14, 2023.

Starting point is 00:36:12 So, you know, going back to the whole fintech thing, this kind of feels like Elon Musk when he tweeted out, don't short Tesla. Like, I'll wreck you? Yes. Yeah. And so, like, you would never, ever. see Vitalik making a statement like this. Can you imagine? Could you imagine?

Starting point is 00:36:28 Jesus. It's just a completely different culture. Yeah. Like culture and founder DNA there. And it does feel a bit more Elon Musk. Yeah. And it feels a lot less Satoshi. It feels a lot less vitalic.

Starting point is 00:36:42 Yes, very much so. It is what it is. I'm sorry, but when I see L1 founders making $11 million bets against the value of their assets in one year, I am bearish of the whole industry. That is a bearish signal. We are plus two to the bare side of the equation today. Well, we looked at that chart to you, the Luna chart in our conversation with Ledger earlier in the week.

Starting point is 00:37:06 And it's just an absolute massive chart. It's like from 30 cents all the way up to what is Terra right now or what is Luna right now? It is I was looking at a second ago. It is at $87. $87. $32 billion market cap. versus Solana at $29 billion market cap. How do you buy $10 billion of Bitcoin on a $32 billion market cap?

Starting point is 00:37:30 How much are you going to have to liquidate? You're going to send that thing down to zero. You do that very slowly, I think, is how you do it. I'm sorry, when Terra. But maybe quickly as well. When Terra was like 30 cents like a year ago and now it's at $87. And now the founder is saying, oh, we're going to market buy $10 billion worth of Bitcoin. how much bigger of a red flag do you need?

Starting point is 00:37:54 Like, where do you think that money's coming from? He's going to market dump Terra to buy Bitcoin. Like, fact-checked me on this, listeners. Like, maybe I'm wrong. Maybe it's coming from elsewhere. But, like, wow. I'm sure we will get fact-checked. But, yes, some of these definitely send the senses,

Starting point is 00:38:12 the spiky senses tingling a little bit. Guys, we will be right back with the raises of the week, the releases of the week. and of course, merge week. But before we do, we want to thank the sponsors that made this episode possible. Living a bankless life requires

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Starting point is 00:41:05 All right, guys, we are back with the releases of the week. We've got to start here. Stripe now supports crypto. This is a really big deal. Stripe is a payment processing company. Provide a whole bunch of APIs, basically the traditional banking system. We use Stripe on bankless. It's a pretty fantastic product overall.

Starting point is 00:41:24 I think these guys are doing $8 billion in revenue. They have 4,000 employees, and they are launching support for crypto businesses of all kinds. All sorts of things they're doing here. A crypto-powered Fiat payment API, I think what they're doing is basically connecting crypto rails to their existing set of payment APIs. So it's like crypto-to-bank bridge. if you will, an on-ramp, if you will. Really cool stuff here.

Starting point is 00:41:55 Yeah, when Ryan said Stripe is supporting crypto, very, like, high-level nebulous statement, right? Like, what does that even mean? They are supporting crypto in, like, every single way. K-Y-C, Fiat-on-Ramps, exchange, like, stable-coin exchanges, like, you know, credit card to stable-coin transfers, like native wallets. They're doing it all.

Starting point is 00:42:17 They're doing it. This is not just a little bit. This is a lot of bit. This is the full thing. It came out of nowhere. Came out of nowhere. She suddenly, bam, stripes here. And then they, like, all of these products, they just released, even NFT marketplace.

Starting point is 00:42:30 Right. Yeah. With an identity type of solution. Yeah. So payments and KYC baked in. Like, this is the type of release that gets a lot of, like, institutions and, you know, you know, businesses who are crypto-scared to start being crypto-enabled and start being crypto-curious.

Starting point is 00:42:48 Like, oh, we can, like, stripe. I'm familiar with Stripe. I'm familiar with their brand. They are big on compliance. They're big, like, heavily regulated. And they're letting me do crypto things. So I expect this to get a ton of adoption from a lot of businesses that maybe we're crypto curious, but didn't know how to do it.

Starting point is 00:43:05 Well, totally. And I think even an example is for us, David. So we use a platform for our newsletter called Substack. And, you know, if you want to pay in Fiat, you pay, Stripe is basically the platform that powers all of Substack. We've been asking Substack forever to take. crypto payments forever. It's so simple. Can you take E.R. C20s? Like, can you integrate that? And it's always just like it's too much work. Nope. Like we just use Stripe. Nope, nope, nope. As somebody who's

Starting point is 00:43:31 integrated crypto payments into a web app before, it's not that hard. It's not. Yeah. Well, so they didn't want to for whatever reason. Maybe it was regulatory. Maybe it was some additional. But now if it's incorporated, if it's part of Stripe, you can guess that's going to be a feature that Substack is going to add. And under the covers of probably so many of the services used, today, like the Shopify's where you like you buy, you know, clothes, all the retail stuff like commerce online, your software as service subscriptions. Stripe is behind the scenes there. And so now what you're going to see over the next few weeks and months is another like pay via crypto type button. And so just as you check out with Stripe, you can just pay via crypto.

Starting point is 00:44:12 Like that's what's happening. So this is a, this is a massive move because it's happening at kind of the like the base back end layer of the internet and how payments work on the internet for all sorts of different websites. And this is just, we call it the defy mullet thesis, right? This is just crypto, like getting in the back there and having fintech, you know, the stripes of the world be the front end for them. So it's really cool to see. Yeah, we are having the crypto lead at stripe on the podcast later in the month after. They said we wanted to get them on for this coming Tuesday state of nation and they were like no we still have a number of announcements and releases to get out the door so let's come in about in in one month's time after those get released so there's more coming

Starting point is 00:44:56 out of stripe there there is your bankless alpha more coming out of stripe that's super impressive speaking of impressive ave v3 they just launched what is included in aves yeah that deserves applause guys ava v3 is here what's it included David. Oh, it's got so much stuff, Ryan. A bunch of just like quality of life features and upgrades, I would say. So it's not like anything, it's still a money market. That didn't change. But like basically everything under the hood has gotten an improvement. So you can do cross-chain transactions. So AVE is going to be on basically every single EVM chain, whether it's a roll-up or another L-1. And you can go from Avey to Avey to Avey directly

Starting point is 00:45:41 through the web app through these thing called Portal. They also have what they're calling high efficiency mode, which just unlocks more capital efficiency, more borrowing power. Isolation mode, which allows assets to get listed that doesn't have second or third order consequences to the rest of the AVE markets. So maybe some high risk token comes in, but they don't want the collateral backing that thing to have contagion risk to the rest of the market. So they have kind of like compartmentalized markets. That's cool. More gas optimizations, which they say are reducing gas by 20 to 5 to 50, or 20 to 25. percent and additional like risk management tools and various things like that. So you can read more

Starting point is 00:46:22 in their blog and or just go ahead to use Avev3 on any of your preferred layer two's. It's actually not on Ethereum Mainnet yet though. That's kind of the last they're getting to. So their their deployment approach is super interesting. They hit all of the alternative layer ones that have EVM support. So the phantoms and the avalanches and the harmonies of the world. And then also the layer two is like arbitrarum and optimism and polygon, but they've not yet deployed on Ethereum Mainnet. They're almost using these other side chains and layer 2s as kind of a not quite a test environment, but their initial release environment before they deploy to Ethereum. But the cool thing about this too is right out of the gate you can access Avev3 on 1-inch

Starting point is 00:47:09 pariswop, Zerion, which you talked about earlier, Zapper, Dbank, any other interface you use. and wallet you use. So it's like a quick roll-up and a roll-out and deployment here, which is really awesome to see. But they weren't the only ones that just released a point upgrade.

Starting point is 00:47:24 So Alchemics, V2 is here. Yes. You like it. You like it. If we go into Alchemyx V2, V2, it's cool. Yeah, tell us. Because there's just more vaults,

Starting point is 00:47:37 I would say, I think, is the big upgrade. Like you have different possibilities with the collaterals that you want to put into Alchamix. So V2 allows for the arbitrary number of collateral tokens and also new yield strategies. So you get to pick your own collateral and you get to pick your own yield strategy so you can kind of custom fit how the Alchemics protocol works from you. Token adapters are written and audited for V2 and they can add an ever-increasing selection of yield providers for your deposits on Alchemics.

Starting point is 00:48:04 So Alchemics uses urine to get yield, but now they are also opening up direct markets into AVE or into compound. so you can source your yield from a specific part of Defi with a specific stable coin. And so just a lot more composability and a lot more just user power. And that's what these applications are supposed to do is bestow power upon the users. And that's what Alchemics V2 is all about. What's the high level for what Alchemics does for people who aren't familiar with it? Yeah. So it is a loan.

Starting point is 00:48:32 It's like you can get your interest payments paid to you up front. So you can you put stable coins in and then you can borrow stable coins. coins against your stable coins and the stable coins that you deposited earn yield and they just like it's kind of like a proxy for yearn right so like right now like urine like three percent you put like 10 thousand dollars into into alchemics and you get that three percent because it's yield farming your stable coins in yearn but then alchemics lets you borrow up to 50 percent of your deposited stable coins and so you put it let's put like 10 thousand dollars in you can uh borrow five thousand dollars and go do whatever with it while that $10,000 is earning yield and defy. What you can also do is you can take that

Starting point is 00:49:16 $5,000 that you borrowed from Alchemics and you can put it back into Alchemics. So you can get off of $10,000 of deposits. You can get like $15,000 worth of stable coin yield. It's a way to juice up your yield. You can also do this with ETH. But it's basically a way to get your, so that like $5,000 that you borrowed. I mean, you lock up, you lock up $10,000, but that's like technically $5,000. dollars of interest payments that are paid to you up front that you can go do stuff with. It's something you can't do in the real world, right? Because it's the ability to pull forward all of these interest payments and receive it in one lump sum and then go do whatever you want if that lump sum.

Starting point is 00:49:55 It's pretty wild. Pretty cool. Okay, so Coinbase, they are also testing fee-free trading. Yeah, this is actually kind of a big deal. Yeah. Yeah. So what's this subtitle here? I think is important.

Starting point is 00:50:09 trading fees have historically made up the bulk of Coinbase's revenue, but they're trying to diversify their business lines. So no longer being dependent on fees for trading and switching out their business model a little bit. What do you think this means? Trading fees, transaction fees on exchanges has always been the dominant source of revenue for everything. FTCX, Coinbase, Gemini, like basis points of fees on the trade. But I mean, the crypto industry is so hypercompetitive that these fees have compressed, actually more and more exchanges have come online and really competed with each other.

Starting point is 00:50:42 And so, like, what is the ultimate form of compression is going to zero, but then instead the way that you get revenue is by charging a subscription model. So this is a subscription model. You can now subscribe to Coinbase in order to get fee-free trading. This has actually been in the works for a while and they finally released it. But I bet you this is not going to be the last time that we see a subscription model for exchanges so you can get fee-free trading. That's kind of a hard thing to say.

Starting point is 00:51:09 I hope I don't have to say that too more time. It was hard to say, man. Fee-free trading. This is something new as well. Crypto-sloothing firm, chain alice. Sluhing firm. You've heard us talk about them before. That's a good term for what they are is basically they look at the blockchain,

Starting point is 00:51:23 all of these transactions. And then they mark on you. Deanonymize it. And yeah, they basically sell it to government agencies or exchanges, wherever else needs to know. They are launching sanction screening tools for defy for DOWs. Sanctions, screen. training tools, this headline makes me very uncomfortable.

Starting point is 00:51:42 I do not love this headline. Okay, so there's two products that they've released. One is on-chain, one's off-chain. So the off-chain one is an API designed for web and mobile apps and web servicers. Users can receive an API key, which they can check if an address of interest is on the sanctions list or not. So basically you get to automate, like, hey, this is Ethereum address just signed up for my web app. Is it on the sanctions list? And CoinBay or Chain Alicists can come back and say yes or no.

Starting point is 00:52:09 They also are offering an on-chain Oracle for smart contracts. So smart contracts can basically have the same check. It's like smart contracts. Like money just get deposited into a smart contract. That smart contract pings the chain alias on-chain Oracle and says, hey, is this address on the sanctions list? And the smart contract Oracle on Ethereum will ping you yes or no. How do you feel about that, Ryan?

Starting point is 00:52:36 I feel terrible. I think it's terrible. I hate this. I hate that this exists. Now, of course, like, protocols can, you know, protocols aren't necessarily integrating this, right? And there can be wallets that integrate it or choose not to. But I feel like this gives the surveillance state and, like, the sanctioned state, another way to basically mandate things in defy. So what if you can't really have a non-custodial, uh,

Starting point is 00:53:07 crypto wallet service, like a MetaMask located in the U.S., unless it is doing this sanction checking with chain analysis, unless it has that feature. And then it's very easy for, like, third parties, government states, to create a list of eth addresses that are blacklisted for whatever reason, right? Maybe it's for a good reason. Maybe it's not for a good reason. And once they do that, then that can be pushed out into some of the DeFi tools. that we have today. Of course, they can't get this at the base layer. They can't get this into the

Starting point is 00:53:42 smart contract code of a uniswap, for example. They can't get this into Ethereum. But it's not great. And it's not surprising to me that chain analysis would see this as a massive opportunity. But I guess AML, defy is coming this year. It's probably here. Sick. I'm looking forward to it. I'm joking. take for for listeners who want a hypothetical scenario take for example how people were asking crypto exchanges to de-platform russian customers in compliance with sanctions and then coinbase and others actually ended up doing it like in theory you could see that same thing where all russian users coming from russian IP address or have a russian kyc get added to a sanctions

Starting point is 00:54:36 list and like parts of defy are like oh are do you have a russian address because we know of that because how you signed up for the centralized service uh well now you're on the sanctions list so any sort of defy app that integrates with chain alysis is now giving over powers towards nation like nation state governance and so like the only way the only way around this i see david is privacy like on the base layer it's like privacy services or l2 privacy like it's the only way around this because if chain analysis can derive the identity of certain addresses, they will. And then they will propagate that into the rest of defy infrastructure. Yeah.

Starting point is 00:55:14 And I've always been conflicted about chain analysis just because, like, well, it's basically like the teacher's pet of the government. It's like the, the, the, the, the, the, the, the, the, the, the, the, the, the, reminds the teacher that they forgot to collect the homework. Like, and, but also at the same time, like, if not chain analysis, like, it would just be another different surveillance company. Like, the, the, the, the, the, the, the, the value. you of who's going to be the snoop of the blockchain is going to be captured by someone.

Starting point is 00:55:40 So there's like inevitable. You have public blockchains. Somebody's going to make a business around breaking everyone else's privacy about it. But that doesn't necessarily mean that we have to like it. Yeah. And I think that is the next battle that crypto will have to fight. It's privacy on the base layer and different solutions for that. Which we have plenty of. So I have no long-term fears. Yeah. Astech for one, I think a lot of this will be built out on layer two. Maybe that's some more content we'll have to put together in the future, David. But enough of that for now. Let's talk about Volz.

Starting point is 00:56:13 What are they doing with the Uniswop community? Yeah, Voltz is a defy primitive that is trying to bring interest rate swaps to defy. Kind of similar to element finance, but with a very different construction. But inside of the Voltz architecture is the need for something like Uniswap v3, concentrated liquidity. But Uniswap V3 has a license. And so they have offered 1% of Voltz tokens to access Uniswap V3 code inside of the Voltz architecture to which Uniswap governance gave an overwhelming support of yes. So, Voltz requested permission from Uniswap to use the Uniswap V3 license code for 1% of Voltz tokens and that got approved, which is kind of cool. Kind of cool.

Starting point is 00:57:00 That's kind of an interesting collaboration for sure. All right, Dave, Let's switch gears. Let's talk about raises this week. The first one, Coinbase, they just raised $450 million on a $7 billion valuation. This is mostly on the back of MetaMask, which just topped 30 million users. Pretty big valuation for consensus, though. What are your thoughts? I thought that's like the third raise of the year for consensus.

Starting point is 00:57:25 Like, they are just like pulling it in, like coming out of the depths of the bear market, like really turned it around because for those that weren't around during the bear market, the consensus laid off a ton of people because basically Joe Lubin was selling 20% or something, right? That's it? I thought it was more than that. 20, 30% something. Yeah, a lot. Yeah. I thought it was interesting that in one of their tweets

Starting point is 00:57:43 they said, like, in this raise, a lot of, some of this money is going to be saved to specifically buy ultrasound money is what they call it. All proceeds from this round will be converted to ETH to further build consensus's ultrasound money position as a

Starting point is 00:57:59 rebalance to rebalance its ETH to Fiat ratio in lines with consensus's treasury strategy. So they drained their ETH treasury in 2018 trying to fund the company and now they're buying it back. So like they were kind of the reason why ETH went to $80. But now they're buying it back at whatever the price is now, $2,800. Yeah. And they're doing some great work too with obviously with MetaMask and some of these things. So I'm glad they continue to be to be well funded. All right. Speaking of well funded raises, here's another one, optimism. They just raised at a over $1 billion valuation. I'm not sure how much the valuation is here, David,

Starting point is 00:58:38 but optimism, of course, a EVM compatible layer two, pretty awesome that they're getting funded as well. Oh, not just EVM compatible, Ryan, but EVM equivalent. A $1.65 billion valuation, paradigm in A16Z. And optimism is a, like I said, the EVM equivalent version of an optimistic roll-up, which has a bunch of tailwind effects because you get to strap into the network effects of Ethereum itself, because the difference between optimism and Ethereum is trying to be reduced down to the bare minimum. And they're also having a very public goods ethos-aligned culture with Ethereum itself. So here's a quote from Jing, the CEO. We are making revenue out of the sequencing for the optimism layer two. We're giving all of that revenue back towards

Starting point is 00:59:25 funding public goods on Ethereum. We don't want to say that we want to be to centralized. We also want to show the community that we're setting up our own incentives to be compatible with that. So they are innovating on this thing called retroactive public goods funding. And if you want to learn more about that, we actually did a show. I did a show with Austin Griffith where we unpacked public goods funding. So there's more details all about that there. Everyone's really hyped about optimism. Really nice to see them getting good the funding to take their project for the rest of the way because it's super, super ambitious and they deserve it all. Starkware next at six billion dollar valuation they just raised a let's see

Starting point is 01:00:02 a hundred million dollars after just receiving a 50 dollar a 50 million dollar valuation that was just a a few months ago at a two billion dollar valuation series C that was in November so layer two's continued to be well funded Solana based an NFT marketplace on Solana called Eden just raised a 20 $27 million series A. This feels kind of like the open sea of Solana. Filling that niche. Yeah, filling that niche, they've got like 90% of market share of NFTs on Solana.

Starting point is 01:00:37 What's interesting about this, I think, is the question of, will every single independent chain and ecosystem may be layer two? Well, they have their own category winners and sets of apps. Well, they have their own open seas, their own uniswaps, automated market makers, their own Aves that are separate and distinct from the ones that have won out on Ethereum. What do you think about that? Well, I know for a fact that OpenC shall be integrating Solana in the future. And so maybe there's like the niche NFT marketplaces, like the indie NFT marketplaces that are specific to the chain that like the chain loyalist like.

Starting point is 01:01:14 And then there's going to be OpenC. So you're predicting some kind of a convergence there then. It's like basically the category winners on Ethereum, the EVM ecosystems will go. tackle all of these other chains one by one and go to war with these uh you know these these local winners in every single chain yeah yeah interesting to see probably some consolidation there too as uh as that all plays out uh a new layer one has just been funded as well a 200 million dollar strategic investment led by a 16 z katie han multi-coin of course three arrows capital ftx ventures coin base ventures all

Starting point is 01:01:53 all in a new layer one called APTOS. This layer one has actually spun out of some of the initiatives. The early days of the Libra and Diem project from Facebook now called Meta, they were talking about releasing an entirely separate chain. And they actually developed a whole bunch, like put together a whole bunch of work. There's a whole project, open source projects about this, a whole tech stack. That project is now kind of end of life. but this team, this Aptos team, is sort of picking that up where Facebook left off and they're trying to bring another layer one to market.

Starting point is 01:02:31 How many times do you think this play can work, David, another layer one? Like, are we just going to have new layer ones pop up every couple of years or so? What's happening here? This once again reminds me of when people were still issuing ICOs like three quarters into 2018. after it was so obvious that the ICOMania was over. So, Ryan, this is three points towards the bare market thesis. It's too late in the cycle to be raising money for a new L1, especially one that came out of Libra slash DM,

Starting point is 01:03:06 which never even got off the ground in the first place. And so I think they're just raising money off that branding, but that is just my anti-L-1 take, I guess. I read Kyle Simani's post on Multi-Coin about this. And it was, it just, well, look, man, it reminded me a lot of his, uh, the pieces he's written about Salana and the virtues of Salana, which is interesting to me. And the one thing I will say is, I don't think any of these VCs or investors have a lot of chain loyalty. You know what I mean? I think that they are buying block space, buying L1 narratives, buying things that, that will

Starting point is 01:03:45 pump. Um, but all I would say is like retail beware. And of course, retail can't get in on this coin right now, but in the future, I don't know. Some of the supply like coin lockups and stuff, some of the, I don't know how sustainable this is. And we can't just have like layer one after layer one after layer one unless we get some real traction. Now, I don't know. So it seems to be just something we've, we see like a new layer one launches, a bunch of VCs pile in. It's going to be the future. Um, all. Although I will say in 2021, some of those chains did take off in big ways. Who knows?

Starting point is 01:04:27 Chain loyalty and VCs. Can those go together? I don't think so. I think they're not aligned. It's not compatible. Let's talk about this. Hex Trust. They just raised $88 million.

Starting point is 01:04:40 What is Hex Trust? Hex Trust. $88 million for a gaming ecosystem. $88 million for a brand new ecosystems, not a small number. found was co-led by Anno Mucca Brands and Liberty City Ventures and never heard of them before. Series B will use to scale

Starting point is 01:04:58 to Europe and Middle East to obtain additional licenses in gaming. Hex Trust currently has over 100 employees across offices in Hong Kong, Singapore, and Vietnam. And yeah, haven't heard of any of this. Yeah, neither have I. Moving on. Jobs time.

Starting point is 01:05:16 Jobs. It's our time to ask you whether you've gotten a job in crypto yet. And to remind you, if you haven't, there's a fantastic jobs board. I'm going to read out some jobs for you. The first is, wow, a bankless web developer. Whoa. We are looking for a web developer as well.

Starting point is 01:05:30 How crazy is it. We have some work to do. We don't have a website, Ryan. We have a website. I actually put it together and it's terrible. Aside from the newsletter, we have like a really ugly, terrible website. And we need a new one and we need a web developer to help. We also need an editor of the bankless newsletter,

Starting point is 01:05:47 a senior product manager, Bankless Academy, a senior product manager for super rare. We've got a quantitative analyst of risk at MakerDAO, a risk analyst at MakerDA as well, full stack engineer at Kizola, a product manager at Kizela as well, a whole bunch of more at the bankless jobs website. Look, if you're not into any of those specific jobs, the other thing you can do is go check out the bankless talent collective and submit your resume. So you just fill out a talent profile and you get connected with companies. If you're a company looking for talent, there's already 200 plus resumes, Web 3 resumes on the bankless talent collective.

Starting point is 01:06:25 You can tap into that as well if you are looking for talent and subscribe. This is a pretty cool new initiative that we've just spun up recently. Yeah. Bankless got both sides of the job market. We've got the supply and the demand. Coming up next out of bankless ecosystem, the bankless dating out. No, never. I don't know how much demand there will.

Starting point is 01:06:47 be. There might be a lot of supply, though. Let's talk news, David. Merge week. It's the moment you've been waiting for. Don't sleep on the merge. This is a post you wrote. So people are predicting the merge in three months. We didn't necessarily fully double down on a June date. But we're pretty excited. We're pretty bullish that June could be the month that the merge comes.

Starting point is 01:07:10 Part of this was a set of reasons given by Superphiz. It was very plugged into the East Staking community. and that world. What are the reasons why a merge could happen? The Ethereum merge could happen in June. And maybe, David, should we back up and just explain what the merge is for people who haven't been listening to recent bankless episodes? Yeah, sure. Okay. Ethereum, currently proof of work, has also 100% always committed to eventually transition to proof of stake. We have the proof of stake chain, that's what the beacon chain is, that's been running since early 2021. And that thing has just been chugging along, making sure that's totally fine. And one day, we will swap out the proof of work

Starting point is 01:07:51 and plug in the beacon chain, which is the proof of stake chain, to the current execution environment of Ethereum. And proof of work will go away, and proof of stake will replace it. That's the merge. We're merging the chains and stripping out proof of work. And so when this actually happens is completely unknown because it's only going to happen when it's ready. It's ready when it's ready. But we get to also observe, because this is an open environment, we get to observe the Ethereum developers and kind of hypothesize about when it might be ready. So that's what Superfiz did. He's pulled in five different tidbits of information that indicate the strong likelihood of a June merge date.

Starting point is 01:08:28 The first one being there's a planned difficulty bomb coming in mid-June. Difficulty bomb is something that's always been in Ethereum. Basically, we plan in the destruction of the chain because it forces us to make progress. Every now and then we have to kick it back. Actually, that's been basically Ethereum culture since the beginning of time, is we just kick it back by having a hard fork. It gives us an opportunity to add in new EIPs and stuff like that and kick back the difficulty bomb.

Starting point is 01:08:52 There's a difficulty bomb coming in June, which means we will be hard forking sometime by mid-June, regardless of the merger not, because we need to kick back the difficulty bomb. Danny Ryan, who's coordinating the ETH II, not ETH II, the transition from proof-of-state work Ethereum to proof-of-sake Ethereum has signaled that a delay in the bomb is not needed, which means that perhaps the merge can happen

Starting point is 01:09:16 before the bomb happens, which happens in the mid-June. There's also the merge-readiness checklist is getting more and more checkboxes in it. And also, there was a conversation in the all-core devs call about potentially kicking back some development in the merge by 10 days. And a lot of devs got really picky about that. They didn't like the delay at all.

Starting point is 01:09:35 And so devs are getting picky about the date. And last, but definitely not least, the kiln test net is actually testing the merge. So we are having test environments for, we are practicing the merge. The merge is being practiced actively. And so barring any significant, unforeseen issues with all of these little tidbits of data,

Starting point is 01:09:55 June looks like the most likely candidate for the merge, which I'm really excited about. Well, that's super cool. And, uh, yeah, yeah, I mean, stop doing that.

Starting point is 01:10:07 What would the merge mean, David? So like, What does it mean? You talked about the disappearance of proof of work, but what does it mean for issuance as well? I think that's part of the story. Yeah, so people who are staking their eth on the beacon chain, they're earning a very respectable 4.8% in ETH denominated yield,

Starting point is 01:10:24 not even stable coin yield, but ETH yield. And then once this roughly 10.5 million ETH out of the roughly 118 million total supply of ETH, once that staked ETH merges with the proof of work chain, that yield goes from where it is now at 4.8%. to somewhere between 10 to 15% depending on gas fees. So that's a 2 to 3x in yield on ether. And so that's a 2 to 3x

Starting point is 01:10:46 a stronger incentive to stake more eth. And so there's going to be a demand to take your eth, perhaps out of the secondary market, and to stake it to get that 10 to 15% eth denominated yield. And at the same time,

Starting point is 01:10:59 the new issuance of ether, this is one of the best features about proof of stake. The new issuance of ether is dropping by 90%. So currently, 12,000 ether is minted per day to spend towards proof of work mining. Proof of work very, very capital intensive.

Starting point is 01:11:15 It takes a lot of money to fund security and proof of work. But post-merge, that goes from 12,000 down to 1,280. So a 90% reduction in the ether issuance, but not only a 90% reduction, Ryan, but also a 100% reduction in operational costs because eth-staking and proof of stake costs nothing after you have an internet connection and a consumer hardware laptop computer, a normal computer. So we're basically, we're going from 12 ether in daily issuance to 1,2 and thousands and thousands of ether in daily cell pressure to cover the operational cost of proof of work down to zero. So the big questions that I ask the bankless nation, how much more ether will be staked as a

Starting point is 01:11:59 result of the increase in yield, the 2 to 3x in yield? Where will that ether come from since a lot of the regular selling pressure is going to be eliminated and what is the price going to do as a result? And all of these answers are likely coming in June because we all get to experience it for ourselves. Yeah. This is definitely the biggest event, the biggest crypto event of 2022. Maybe the biggest. I would say ever. Right?

Starting point is 01:12:25 I was saying ever. It's like, it's a triple happening. Other than the Genesis block of Ethereum itself, is this the most significant event since that? Right. And so this is now, now we've got bullish David back, I think, for the moment. Plus one to the bullish side. We got three for the bear. We got one for the bull. Well, I mean, this is incredibly bullish, but there was something that happened in the test net as well. There was a block proposal failure, some bug in the kiln test net. So that could set things back, possibly. That's a question to you. What happened with this bug? And, you know, what does that mean for?

Starting point is 01:13:04 merge date. Yeah, at the start of the article, I said, barring any significant, unforeseen issue, it's increasingly likely that we see the merge in June, and then three days later, there was a bug in a test net. What happened was that the Prism client, the way that the merge works is that people have to run both an Ethereum proof-of-work chain client and an Ethereum beacon chain client. So Prism is the proof of stake beacon chain client, and then Prism plus Geth and Prism Plus and Nethermine, these combinations stopped producing blocks, which accounted for

Starting point is 01:13:37 15 to 20% of the total block supply. Because Ethereum has a multi-client architecture, this actually did not impact the test net, but if it had been more than 33%, it would have. So 15 to 20% kind of dangerously close. Also, Prism in its current

Starting point is 01:13:53 implementation on the beacon chain, has more than 66% of total supply of the new blocks, the client that's responsible for or more than 66% of the blocks. So that is a concern. We need to get prism dominance in the beacon chain down for that to be safe.

Starting point is 01:14:08 The bug was relatively trivially identified and fixed, but it perhaps was indicative of more time and research needed to understand that this thing is going to be stable. The significance is going to be unpacked and talked about during the Ethereum All-Core Devs call, which is happening tomorrow, which is today for the listener, Friday.

Starting point is 01:14:28 And so if you want to tune into whether or not this actually does impact the merge, you can turn into the all-core devs call. Another, I guess, reason why we need multiple clients, because this sort of saved the test net in this case. But it's also a reason why we need client diversity on Maynet as well, and staking diversity across multiple clients. Hey, Ryan, can you name me a different blockchain other than Ethereum that has multiple clients? Well, David, I think there's probably none besides Ethereum.

Starting point is 01:14:55 That's exactly right. That's exactly right. That's the only one with a multi-client architecture. Which is ridiculous. We're supposed to be decentralized. We've got some more trivia here, too. This is maybe a question for you, even though you probably already know the answer to this.

Starting point is 01:15:09 How much newly minted ETH will validators be able to sell after the merge, but before the withdrawal's hard fork? So just to set up that question, newly minted Eith, okay? Not existing stake, because I'm fairly certain people know that once they stake their ETH, they can't withdraw it right now until there's a hard fork that adds some withdrawal functionality. But we're talking about newly issued eth. So that's after you stake your eth, you get some return denominated an eth that newly issued eth.

Starting point is 01:15:42 When will you actually be able to sell that newly issued eth, David? No, no. You know the answer to that. Wait, no. Actually, not when will you build to sell it, but how much, excuse me, newly minted eth will validators be able to sell post the merger? So let's say the merge happens in June, after that date in June and July and August, they're receiving new issuance of ETH.

Starting point is 01:16:08 How much will they be able to sell of that ETH, David? The answer is zero rhyme. Yes. You are correct. Ding. So just to unpack that a little bit. Right now, you can go stake your ether on the beacon chain. You send your ether to the beacon chain contract, knew that ether on the current chain is burned,

Starting point is 01:16:27 that ether on the beacon chain is made. minted, you stake that ether, you start earning that ether yield on the beacon chain. Then the merge happens, and then that beacon chain is then securing the Ethereum chain. Proof of work is stripped out. But withdrawals are not yet enabled yet. There is a new, there's another hard fork that needs to happen to enable withdrawals, and that's hypothesized to be roughly six months after. So after the merge, the eth issuance into the validators won't be withdrawal withdrawal for six months, which means zero new ether will be introduced into the for like six months after the merge zero what we're saying is to be clear eth

Starting point is 01:17:05 issuance doesn't just drop by 90% it drops to 100% temporary for some period of time for some period of time and that that like additional 10% issuance is almost like it's it's almost like vested it's locked up yeah it cannot be sold cannot be spent so we're actually going from like 4.25% 4.5% issuance to 0% issuance to 0% issuance to 0% issuance for at least six months plus plus the burn plus the burn okay but then

Starting point is 01:17:35 devil's advocate why are more people talking about this devil's advocate though because like we're just we're just locking up the rewards for six months while we just make sure that everything's okay and eventually it'll be get unlocked and then you might say like well then

Starting point is 01:17:48 then there's just pent up demand to sell because they've just been earning all this eth for six months and they're just going to sell it all at once but the thing is eith staking goes up to 10 to 15% and so all of the people people that have their ether on the main Ethereum chain that never decided to bridge over to the beacon chain and they, because they never wanted to spin up an eth one validator, that 10 to 15%

Starting point is 01:18:08 is going to cause a huge influx of more stake for people to get that yield. And so not only is zero net new ether going to come into existence, the gravitational pull of 10 to 15% eth denominated yield is going to pull in so much more. So even when the hard, the withdrawals hard fork is enabled, the incentive to still be staking is going to be so strong. I could totally see that that just becoming a non-event in terms of the ETH price and dumping on the secondary supply. Look, supply crunch is what this means. A massive supply crunch is happening this year, and I'm really shocked that more people aren't talking about it. You heard it. You heard it here. Now, that's going to happen potentially in the midst of this

Starting point is 01:18:52 like crab sideways crypto bear market. World War III. Right? Like, who knows? So it's going to happen in that context. It's not necessarily going to happen during like hype season of, you know, early spring 2021. So we will see how that plays out. Rocket Pool continuing to add more features and functionality here. They have a new staking interface with a bunch of improvements, including a wallet panel, transaction estimates, more intuitive exchange rates on the REath and a lot more. So go check that out. There's all sorts of great staking services as well if you don't want to run your own validator. Rocket Pool being probably one of the most decentralized.

Starting point is 01:19:36 Lido being another one that's a little less decentralized but is still doing better than staking in exchange. And you gave this tweet, you put out this tweet, David. the drum roll for the merge has begun. Is that what you heard this week? Was it the drum roll? Yeah, especially in the second half of the weeks. It's just like people are just,

Starting point is 01:19:56 the merge is getting a bunch of engagement on Twitter. That seems to be, in my mind, like the thing that has captured the attention of people. As the attention from the NFTs and gaming and all that stuff is gone, people have refocused on the fundamentals of this industry, which is the merge. So the drum role is, I mean, we're three plus months out, but like the merge is here.

Starting point is 01:20:18 The merge is, the drum roll's happening. And when you say, when you say people, we're talking primarily about crypto people, like crypto Twitter people. None of this is broken outside into mainstream yet. I mean, honestly, most of the crypto industry doesn't even understand this.

Starting point is 01:20:33 I totally agree with that. At least they're talking about it now. The drum roll for the merge is definitely started, at least with the inner circle of Ethereum people who really, really pay attention to the stuff and then also the people that pay attention to that. But we got three months to go. there's going to be a lot of conversations. There's going to be a lot of content. We're

Starting point is 01:20:50 going to be a very, very fun time, Ryan. Because I think it's going to be a very, very fun time, Ryan, because I think it's East season. I think East season has started once again. And it's been my favorite season. And we're going to talk about it every step of the way until the merge. Yeah, well, we didn't tell you, it's not only merge week, but this week lasts many months, right? So the next few months, we're going to be talking about the merge. It's just a huge deal. And inevitability in most people in crypto do not appreciate this. I think this is a massive alpha for you. Whether it's a bear market or a bull market in crypto, this is a massive event to watch.

Starting point is 01:21:28 Let's talk about L2s for a minute and the path to roll up decentralization. So something that not everyone knows is that every major layer two project right now, anyway, in its current state, has a trusted party which can execute protocol upgrades. rates, right? That is intentional. There is a backdoor to upgrade these layer twos in the event of a bug. And some layer twos have already used this to patch things before, like, before there was a catastrophic issue. And so this is sort of a feature at this stage, not a bug. But if it persists into the future forever, then it becomes a bug. Because as long as there is a trusted third party that can execute protocol updates, that layer two is not completely decentralized.

Starting point is 01:22:17 So the optimism team wrote a fantastic post about how roll-ups move forward, how they decentralize over time, how they get rid of these access keys. They use the analogy of like throwing the ring into Mountain Doom, throwing the keys into Mountain Doom so that it would be burnt up and no one could access it before any longer and the chain would be fully decentralized.

Starting point is 01:22:41 What would you say is the path, not just for optimism here, but optimism summary on what roll-ups need to do in order to get rid of this security hole in the future after they harden their chain? What's the path to making the roll-ups fully decentralized with no upgrade access for the core team? Yeah, no trust, no centralization, right? Earlier I talked about how optimism strategy has always been EVM equivalents, not just of EVM compatibility, but EVM equivalence. And there's also been like the narrative, just like EVM is kind of at the center of the universe.

Starting point is 01:23:18 You know, avalanche, all these EVM compatible chains, they're not Ethereum, but they are the EVM. And so AVM equivalence is really, really important. And so basically optimism, I think, is going to take a leaf out of Ethereum's book, of which it is a fractal off of, and kind of follow the Ethereum roadmap for decentralization. And that involves, rather than having one canonical client for optimism, having many, many clients for optimism. And then after enough sufficient multi-client architecture gets built out,

Starting point is 01:23:49 then it's just a matter of handing over, like, first off, calcifying in the same way that Ethereum is slowly, slowly having longer and longer hard force and longer updates. The same kind of thing needs to happen with optimism L2s, where just like things need to change less and less and less over time and give more and more power back to the community. I think it's going to be interesting to see if, like, optimism or optimistic L2s retain some sort of upgradable path via the token via on-chain governance in ways that Ethereum does not. But each, the nice thing is, is that you could spin up an optimism layer two and have one with on-chain governance and one without. But the idea is that Ethereum itself has kind of laid out the roadmap to how you decentralize. And layer twos probably are going to just have to take a leaf out of Ethereum's book and follow in that path.

Starting point is 01:24:37 Yeah, there's no shortcuts to this. I think it's the main message, but there is a pattern, right? It's like you have to ossify the underlying protocol. You have to have multiple clients, make it decentralized. You have to create sort of a specification that other teams can build towards. So that's one, not just one unified team. And once these things are in place, then you can toss those private keys into Mount Doom into the lava and burn them forever. But doing it before then is not a good idea. idea, right? We need that flexibility. We need that upgrade path so that we can solve these processes. All of these layer twos are basically in a beta version until that time. Let's talk a bit more about optimism. So they are releasing Canon, which is next-gen-fraud-proof architecture that's coming

Starting point is 01:25:26 soon. What does that mean? Next-gen, fraud-proof architecture. Yeah, the fault-proof architecture is one of the optimism's big missing components, which is no longer missing because they released Canon. And this particular fault-proof implementation, the way that it's designed is a reflection of the optimism's design philosophy. And I talk about this design philosophy, kind of summarized in a tweet where I say, optimism's design philosophy has always been reduce, reduce, reduce.

Starting point is 01:25:56 And what I really mean by that is reduce complexity, reduce the number of codes. And that optimizes optionality. When you reduce complexity, you can actually push complexity elsewhere. And so kind of like Ethereum itself, optimism is very modular, as in this canon faultproof is a modular component of the greater optimism layer two. And so this simplicity optimizes for modularity and efficiency, which ultimately creates security.

Starting point is 01:26:23 And one of the hotlines in this article is, oh, it also enables the theoretical minimum of call data gas costs, which is, you know, music to my ears when it comes to speed and gas efficiency on layer two. And so if you are technically minded and want to hear more about optimism's fault-proof canon architecture, you can go click the link in the show notes for more details. Reduce, reduce, reduce. This is also a leaf out of Ethereum's book where there's, you know, so many efforts to reduce the beacon chain specification to the minimum amount of code necessary.

Starting point is 01:26:57 It's definitely important on this journey as well. So is getting exchanges to on-ramp and off-ramp to your layer two. And Huawei Global, they just added optimism, withdraw functionality and features. So this is a path that all roll-ups are going to take. And it's cool to see optimism leading the way down that path too. All right, David, let's talk about the biggest acquisition in NFT history. The apes, but the punks, David. I don't know how you feel about that.

Starting point is 01:27:30 looking at a punk in your background right now, but Yuga Labs purchased all of the intellectual property, I believe, from the Cryptopunks holders, Larva Labs. Yuga and Larva, they purchased all the intellectual property from Larva Labs. Tell us what this means. So what is this purchase? What's the significance of it? And what does it mean for the NFT ecosystem and for the punks and the board apes community? Yeah, Carly Riley over at Overpriced JPEGs tweeted out a few months ago.

Starting point is 01:28:04 I wonder when NFT companies or NFT studios are going to start buying the IP from other NFT companies or other NFT studios. And I'm pretty sure when she tweeted that, she meant like, you know, some of the B-LIS NFTs, not necessarily the BORApe Yacht Club founders buying Cryptopunks, the OG NFT. So the magnitude of this is absolutely crazy. And not just Cryptopunks, but also Mebits, which also came out of Larva Labs. And so for every NFT project, there is IP associated with it. There's licenses.

Starting point is 01:28:37 And the Cryptopunks, again, the one that I have in back my living room here, the IP for Cryptopunk was actually not owned by the owners of the Cryptopunks. It was still owned by Larva Labs. So like commercial licenses was not something that you could do with Cryptopunks. That was actually one of the reasons that's always been the case behind Board Apes, is that the board ape holders had the rights to use their own board Ape. ape commercially if they so choose. This is Creative Commons Open or CCO, I believe, is what that's called.

Starting point is 01:29:07 But double-check me on that. And so now, Yuga Labs, which are the founders behind board apes and mutant apes and that whole ecosystem, struck a deal with Larva Labs to acquire the IP. And when they did, they gave the punk holders the rights to their own commercial licenses for their punk. So I can start going out and making merch and branding out of my Cryptopunk if I so choose. Like, I already have a brand around me and my Cryptopunk, because I put my Cryptopunk as my profile picture on Twitter.

Starting point is 01:29:35 But now I could go and start making, like, I don't know, a movie where my crypto punk is featured if I so choose. And I would have my own commercial rights to that. Why didn't Larva Labs do that? Larva Labs. Why'd have been holding it? That's a good question. I don't, Larva Labs has always been builders and not necessarily marketers.

Starting point is 01:29:54 They like on-chain experiments. They like fooling around on the blockchain, doing cool, innovative, new things. Like I said, they weren't just the founders of Cryptopunks. They also did Mivits. They also did autoglyphs. They are tinkerers and innovators at the chain level where Yuga Labs are brand experts and just like experts in growing the value of an ecosystem. And that's just something that Larva Labs was never really interested in.

Starting point is 01:30:20 So some punk holders are a little bit concerned because the climate and culture in Bored Apes is nothing like the culture around Cryptopunks. Cryptopunks kind of think the board apes are kind of cringe, and I'm definitely one of those people. But, and so, like, people are worried that Yuga Labs is going to give crypto punks the same treatment that they gave the board apes. Like, you know, yachts and things of that nature that are kind of against the crypto punk ethos. Like, it's really actually hard to tie down crypto punks. They're very, very decentralized. Different cultures.

Starting point is 01:30:54 Different cultures, yeah. And so some of the punk holders are concerned about that, as then we don't need. this company to promote the brand of the Cryptopunks. The Cryptopunks brand has always been about promoting itself. Like we don't need help or Cryptopunks. And we don't want help. But can I ask you this? This part doesn't make sense to me.

Starting point is 01:31:15 It's like it feels, look, I'm kind of an outsider, not part of either of these communities. So I'm just looking at it. But it feels a little bit like Larva Labs is just doing this as a cash grab. Like why couldn't they have just given Cryptopunk owners creative common license and like be done with it. Why did they have to sell to Yucal Labs all of this IP and all of these punks? Like I'm wondering if some members of the crypto punk community

Starting point is 01:31:37 feel a little bit, I don't know if betrayed is the right word, but maybe rug pulled. Well, so it wasn't the acquisition of the IP that I think was, that's only one part of the story. I think actually the bigger part of the acquisition is actually buying the treasury

Starting point is 01:31:55 assets of Larva Labs, which was 423 Cryptopun. And, you know, with a 60-Eth floor, that's a lot of value, and seven, over 1,700 me-bits. And so it was a package deal, right? Like, we'll buy your crypto-punks, we'll buy your me-bits, and give us the IP, and we'll make a deal. I don't know how much, like, I think, I think the Larva Labs just wants to kind of sunset their responsibility over the cryptopunks, because they weren't really using that to do anything to begin with.

Starting point is 01:32:24 And so, I don't know. I don't think Rugpole is the right to scripture. I think it was just like a passing of the batonks. Passing of the Torch onto a new, a new steward of the brand. And that's kind of where the Cryptopunk side of the community kind of is like fearful. Like they don't want a steward of the brand. The brand is its own steward. It does itself as a headless brand.

Starting point is 01:32:44 And so putting a head on the brand is kind of anti-cryptopunk culture. I'm optimistic in the Mirror Post from Yuga Labs. They definitely addressed how they have no intention of just giving the Cryptopunks the Bort Apes treatment. and that they will listen to the community before they take any action. So I'm optimistic about the outcome of this. I kind of think that the cryptopunks get the best of both worlds. They both get to have their headless brand that many, many cryptopunks will just give the middle finger to Yuga Labs.

Starting point is 01:33:12 And Yuga Labs will still have the incentive to promote the crypto punk brand. So long as they don't do it in any cringe way, like how they kind of did with Bored Apes, in my opinion, then I think we're good here. I think we're good here. Respect the culture. But as a punk holder, you feel. feel you're cautiously optimistic about it. I think that's a great way to put it.

Starting point is 01:33:32 There's some takeaways from William Pister, you guys ever. Now, Yuga Labs now has five of the top 20 NFT projects. They are an absolutely massive player and brand holder in the NFT space. Larva Labs is going to continue on with Web3 projects. You said they're kind of a builder hacker house and looks like they're going to spin up more Web3 projects in the future. it does beg the question of whether Yuga, what they do next. Will they launch an NFT marketplace, for instance, right?

Starting point is 01:34:05 Then they have the brands. Do they go, like, start being vertically integrated and become sort of an open-sea type of offering, getting to the exchange business? There's also some chatter about acquisitions, right? So, like, if Yuga Labs, board apes can basically buy crypto punks, then that also means somebody can buy board apes. right, buy all of that IP. So who's next?

Starting point is 01:34:28 Do the corporate behemoths enter the fray? Does Disney go and buy an NFT project? Maybe they are the future owners of Yucal Labs. I don't think the board apes is the right culture for Disney. So, but maybe it's someone else, right? It's like, like the idea of these things being acquired and purchased is sort of entered the conversation as well. When token, that's what we'll get to in a second.

Starting point is 01:34:55 It feels like there's a token conversation, play to earn games, some other things as well. But let's talk about the token really quick. So there was an ape token. Give me up to speed on that, David. I haven't honestly been paying attention too much to the ape coin. What's going on there? Yeah, so Yuga Labs minted and airdropped ape coin, I believe as of this morning. And ape coin is, according to them, a token for culture, gaming, and commerce used to empower

Starting point is 01:35:22 a decentralized community building at the forefront. of Web 3. Some people have, the negative take on this is like a token for culture, gaming, and commerce. Like, these things that are supposed to be unlocked by having the token. Wasn't that what, like, the apes themselves were supposed to be?

Starting point is 01:35:38 But, you know, to each their own. This is putting a currency into an NFT world. So now we have the fungible money currency that's paired with the holders of the ape tokens that got all the money. So what they're going to be doing with the ERC20 token, I don't know,

Starting point is 01:35:54 but you would imagine some sort of just like economy is growing. This is now like the nation of the apes, the planet of the apes, if you will. They have their own identity and their own currency, and now they have to build out their world. And this is just for ape holders. This isn't across all Yuga Labs properties, just for the apes themselves. Board apes, mutant apes, and kennel dog, doggy dog club, I don't know the name of that one. The dogs that go with the apes. So those three projects got the ape coinirdrop in different proportions.

Starting point is 01:36:26 Got it. Even more critiques came from the supply of the ape token that was given to Yuga Lab Lab founders because some amount was reserved for Yuga Lab founders, which is typical. But then some amount was also reserved for board ape founders, which they're the same thing. So like a little bit of a double dip right there. But we'll see. We'll see. We'll see. It's still in early days.

Starting point is 01:36:52 There's some takes. Here's one from Alexis O'Hanian, who's coming on the podcast on Monday, by the way. What's his take? Despite how bored my ape looks, I'm excited to share that ape coin Dow is adopting ape coin and that I'm serving on special counsel that will oversee the decisions of the community. So Alexis looks like is getting in the fray as a governor of some sorts. The exchanges are listing ape coin as well. They've been very quick to list.

Starting point is 01:37:17 FtX. I got a email from Gemini saying, we are now listing ape coin. So good BD, good BD from Ugal Labs. Yeah, they can execute. These brands can execute. And what is this tweet that we're looking at here, David? Oh, yeah, so this was interesting.

Starting point is 01:37:32 This has less to do with the actual, like, airdrop out of Yuga Labs and more with NFTX. And NFTX is like an index for various NFT projects. And so NFTX has a bunch of board apes in their vaults. And all of the board apes that NFTX has is claim, they're able to claim, the tokens. They're able to claim the airdropped, but no one actually owns them because it's owned

Starting point is 01:37:53 by a pool. So what someone did is they took a flash loan to buy the entire vault of all board apes, and then since they owned every single board ape, they claimed every single board apes from NFTX AirDrop, and then resupplied and sold back to

Starting point is 01:38:11 the NSAV vault, all of the apes, and then paid back their flash loan and was able to claim basically a million dollars of the ape token. So, I don't even know if I'm mad about that one. No, this is clever. This is clever. Like if NFTS didn't think about that, then that's on them.

Starting point is 01:38:27 Yeah, that's pretty clever in some of the downstream effects of these things. So summarize this for us. Overall, what do you think about the acquisition of punks by the apes and Yuga Labs moving forward? Acquisition of punks by apes, I am neutral to slightly positive on that. There's a decent chance that it just becomes a nothing burger in crypto puns or Cryptopunks forever and nothing can really change that. So that's my opinion on that with regards to the airdrop of the issuance of new tokens to generate excitement and to make money goes back to my thesis of how we are in a 2018 part of the crypto cycle

Starting point is 01:39:04 where people are just issuing tokens because it's the last gasp of opportunity to pocket some money before we go into the bear market. There you go. That's the take. That's what happened this week, guys. Let's move on to something else that was in the headlines in the NFT world, which is Mark Zuckerberg, CEO of META, formerly Facebook, just confirmed rumors that Instagram will get into the NFT game in a matter of months, I believe.

Starting point is 01:39:33 So nothing specific to announce other than Instagram is coming to NFTs. That's a big deal. It's like we all suspected it. But I do see this as some Zuckerberg capitulation. Now, I don't know what NFT platform he's going to. to deploy it on, but how could he not do something on Ethereum? He can't at this point in time spin up his own Facebook chain and start issuing NFTs there, right? So it's got to be with some of the existing platforms. And if that's the case, David, we're winning, man. We've got the biggest

Starting point is 01:40:04 social media conglomerate in the world now using NFTs as digital property on its social media platform. I think that's fantastic. We'll see what Instagram does with it. But look we've seen moves with you know tick talk we've seen twitter get an nfts space uh we knew instagram was coming and uh it looks like they're they're coming in the next few months zuckabberg has just confirmed it if only dm had worked out they'd be able to do this natively versus their own blockchain but nope yep that's right uh that's right and bend the knee zuckerberg regulation talk let's talk about a few things we'll be real quick though um okay so we've said for a while, Congress has got to do something to rein in the SEC and Gary Gensler.

Starting point is 01:40:51 In fact, we talked to Representative Tom Emmer on the Belknest podcast. About that. We're like, come get your boy. Come get your boy. Gensler is all over the place. Rogue. Unhinged. Gone a little bit rogue, you know, in crypto. And it's, it's unclear how much of, like, how much actual authority, enforcement authority he actually has in the SEC versus what he's actually doing. And this is a letter from Representative Tom Emmer and two Gary Gensler and a whole bunch of other representatives.

Starting point is 01:41:21 It says this, my office, that's Tom Emmer speaking, has received numerous tips from crypto and blockchain firms that SEC chair Gary Gensler's informational reporting requests and quotations to the crypto community are overburdensome and don't feel particularly voluntary. And they are stifling innovation. So, representative of Tom Emmer and company, querying the Scareing the S&S. SEC asking what authority they actually have over the crypto industry and maybe attempting to reign the SEC in somewhat. Good job. That's what Congress should be doing. It's what our legislative branch should be doing, the executive branch. The executive branch enforces laws.

Starting point is 01:42:06 They don't make laws. And when they get into the mode of making laws and crossing boundaries and... Being authoritarian? Yeah, exercising authority where they don't have it, that's when Congress needs to pull them in. Generally, Congress hasn't done very much, but now here's Representative Tom Emmer,

Starting point is 01:42:26 starting to do something. Great to see. This is just like, I think a great summary for this is that this is like when the teacher sends a note home with a kid to the parent. Like, you had to get Tom Emmer to write a note about Gensler and the SEC

Starting point is 01:42:41 to calm the F down and back off. That's really the message and kind of what we want. Let's not stifle innovation, guys. Some more good news on the regulatory front. The EU just voted down an anti-proof-of-work clause. So this was the econ committee of the EU Parliament. There was some legislative action to actually ban proof of work. Ban proof of work.

Starting point is 01:43:06 Didn't even know that that was happening. Right. So this was happening. I'm not sure how enforceable it is. I don't know all the details of how this worked. but that was kind of on the periphery. Well, it just got voted down. 32 against 24 in favor.

Starting point is 01:43:21 So this is Patrick Hansen on Twitter saying a big relief and political success for the Bitcoin and crypto community in the EU. Proof of work is not being allowed. It's allowed. Cool. As it was before. It's not disallowed. I mean, it does indicate the headwinds that proof of work as an industry has.

Starting point is 01:43:42 I don't think you're going to see proof of sake having to fight these battles. Right. And you understand some of the concerns about energy consumption, but proof of work has been sort of maligned and I don't think given a fair treatment either. This is a headline to you, Saudi Arabia considers accepting the wand instead of dollars for Chinese oil sales. Rout row. Yeah. Coming on the heels of sanctioning entire central bank, all of a sudden, a bunch of countries get scared. about allowing the dollar to have so much power.

Starting point is 01:44:16 So this is kind of the after effects of the pushback from our sanctioning of Russia. All of a sudden, the rest of the world, he's like, oh, look what accidental powers we gave the United States government and Federal Reserve. They can freeze all of our money. So now they are looking to the digital wand, or the wand in general, instead of dollars to process trade, which is bearish for the dollar. Yeah, I do think this is the beginning of the end for,

Starting point is 01:44:42 the dollar's supremacy as the world reserve currency on the back of these sanctions. Whether you agree with the sanctions or not, you've got to acknowledge that there are some tradeoffs here and some downstream effects. Let's talk about South Korea for a second as we're spinning around the world today in the regulatory news. Yeah, let me take this one, Ryan. Two candidates were running for President of South Korea. Both candidates were pro-crypto, therefore the pro-crypto candidate won. And apparently both candidates were using crypto as a way to onboard votes from the younger generations. So crypto society growing in South Korea, you'll love to see it. That's awesome.

Starting point is 01:45:23 It's all good news on the regulatory front. A16Z, they just appointed a treasury official as their head of regulatory. Fincent person. Yep. What's this coming out of Ukraine? Yeah, yeah. Ukraine signed a new crypto regulation law. This new law appoints that agencies will regulate the markets and establishes

Starting point is 01:45:42 rules around virtual asset ownership rights, among other things, according to a statement out of Ukraine officials. Ukraine and foreign-based cryptocurrency exchanges will be allowed to operate and banks will be able to open accounts for crypto companies. So crypto, giving the big thumbs up out of Ukraine. You know, when crypto comes and saves the day for your country, you generally tend to be favorable to it. Absolutely.

Starting point is 01:46:04 The last thing is... One bad thing. I've got to mention, yeah, the Dex Aggregator Macha, they just geo-blocked trades coming out of Russia. This is sanctions, you know, filtering down into crypto territory. This time on the DFI side of things, defy aggregator, macha, now geoblocking trades from Russia. You know, one inch is also geoblocking. Everyone in the U.S., for example. So this isn't new, but the aggregator layer seems to be a choke point for sanctions and censorship, and I bet we'll see more of that in the future. That's ironic. I actually forgot that one inch was geoblocking

Starting point is 01:46:41 the United States because they're out of Russia and Masha's out of the U.S. and they're blocking Russians. Everyone's getting blocked. Oh, God. I think they, I think, I think they're blocking the U.S. due to SEC, sorts of concerns. That's right. And this is not SEC. This is just kind of O-FAC sanctions type of thing, but it's, you know, all kind of the same, same rhythm.

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Starting point is 01:49:28 If you want to bridge your assets quickly and securely, go to across.com to bridge your assets between ETH, Optimism, Arbitrum, or Bova Networks. All right, guys, we're back with the takes of the week. Here you go. First take. Some Ponzi's are scams. Others are the basis of human society. That's quite a contrast. What do you think?

Starting point is 01:49:48 Yeah, I mean, we use the Ponzi word a lot at times here on bankless, and that's because of how this tweet is right, in our opinion. I think I can speak for you, Ryan, when you agree with history. Yeah. Yeah. Sometimes people are like, you guys use the Ponzi word way too much. No, Ponzi games. You don't use it enough.

Starting point is 01:50:04 You don't use it enough. Yeah. Everything is. based on the fact that other people value the same thing, which is the basis for human shared interest psyche value. So yeah, some Ponzi's are somebody's going to dump on you and then buy the more sustainable Ponzi. But it's Ponzi's all the way down. I just enjoy the take. Ponzi's are a coordination game. And the book that taught me that really more than anything else was Yuval Harri's book, Sapiens. Yeah, it's basically the thesis is all of humanity, all of our

Starting point is 01:50:35 civilization, all of our coordination technology. The reason we can do things that the animal kingdom can't is because of shared myths, stories. Shared stories, yep. Ponzi's are an outcome of these shared stories and shared myths. In fact, they're a result of it. And so Ponzi's are actually our coordination technology. That doesn't mean Ponzi scheme. Doesn't mean Bernie Madoff. That's not we're talking about. Anyway, once you understand that- people a story that's not actually true. I feel like this is a fundamental education block in crypto. You almost have to understand this before you understand Bitcoin and like the rest of

Starting point is 01:51:10 the monetary phenomenon and everything is going on. So that's why we're emphasizing it. Money is a gigantic Ponzi that doesn't pop. The good monies are Ponzi that don't pop. All right. Next take, DC investor take. What is he saying here, David? I am done building identities and brands which corporations can buy and sell without

Starting point is 01:51:26 paying me. and for me to go, to be expected to go along with a ride because my identity is attached to them. From now on, will only future art by independent artists and create CCOPFPs on this account. So this is in reaction to Yuga Labs buying the Cryptopunks IP from Larva Labs. And DC investors saying he only likes NFTs where he is the sole owner of the IP and because he doesn't want, you know, centralized companies buying the IP of an NFT profile picture that he rocks. So I will point out that DC investor now has an MFer as his profile picture because Sartoshi and the MFers are CCO and they give complete ownership rights of the IP towards the owners of the NFT. So that's pretty cool.

Starting point is 01:52:12 So is DC an example of somebody who is maybe not so happy? A punk holder is not so happy about the Google Labs initiative? He is cautiously pessimistic, I will say, where I'm cautiously optimistic. Are there some people in the crypto punk community who are there? or just like ballistic angry. I'm selling all my punks kind of thing. I saw one tweet about that, but no,

Starting point is 01:52:33 I haven't seen more than that. Interesting. I'm really, you know, enjoying seeing that play out. You know, it's just interesting to see that play out.

Starting point is 01:52:42 He says more on the CCO thing. Should we read that too? Yeah, clarifying my thoughts on CCO, CCO doesn't mean it's a better NFT. There's lots of garbage CCO NFTs. It's also possible

Starting point is 01:52:53 some corporate administered NFTs outperforms for many reasons. I simply to prefer to participate in communities where they can't sell my participation to others. So, some takes. D.C. Some takes. Indy.

Starting point is 01:53:05 He's an indie NFT holder. Let's talk about this. Your take. The narrative around ETH has evolved beyond my wildest dreams. That's you. And you're saying that you're quote tweeting this consensus tweet that says all proceeds from the round. This is the massive round that consensus just raised.

Starting point is 01:53:22 450 million is that how much it was. To further build consensus. the funds from the round will be converted to ETH to further build consensus Ultrasound money position. Ultrasound money position. You love to see it.

Starting point is 01:53:36 You love to see it. In order to rebalance its ETH to Fiat ratio in line with ConsenSys Treasury strategy. So consensus, picking a new unit of account to measure wealth in

Starting point is 01:53:47 and they're naming that unit of account ultrasound money. This was infeasible in 2017. Yeah, where did they get that from? Well, The podcast wasn't even out, like, at this time last year.

Starting point is 01:53:58 It just came out, so it wasn't feasible. Does this mean that $450 million of ETH buy pressure is coming? I don't know. It should be. It's what the tweet says. You got to buy back consensus. Buy what you sold to 80. This is my take.

Starting point is 01:54:13 You want to read it? The more you know, the less you diversify, Ryan Sean Adams. Yeah. That's it. That's the take, man. I feel like this is true for my own investment strategy. the more I know about a particular asset, the more conviction I have about a particular asset, the less I care about diversifying. And I do think that conviction holds concentrated portfolio

Starting point is 01:54:37 positions are the real way to build long-term wealth. I see so many people enter crypto. They don't really know what they're buying, and they'll do like a shotgun scattershot approach. It's like, get a little bit of this, a little bit of this, and some YouTuber recommended this, now I'm getting this. And I think that's because they don't know enough. I don't think that, like, it's, and I find that in myself, too, like, I don't know very much. Like, I don't look at individual equities very often. So if I ever participate in equities, guess what I'm buying?

Starting point is 01:55:09 S&P 500, right? But I don't participate in equities because I know about crypto. And the more I know about crypto, the less I want to diversify out of crypto as an asset class. So it also holds true from an asset class categories. Like, crypto is going to be the future. It's like it's so obvious to me. Why would I hold my wealth in anything other than crypto? Like, I don't feel like I need to diversify.

Starting point is 01:55:35 I mean, have some safety nets for sure. But like, like have a house, have, you know, some stable coins, have some dry powder. But like, I'm not diversifying out of crypto, man. It's like all in crypto. You know what rhymes with diversification? What? Capitulation. Exactly, right?

Starting point is 01:55:54 Yeah, right. Well, I guess, I mean, some people, when I tweet this out, some people made the point that, you know, a whole lot of people delude themselves on this, too. Sure. You get burnt, right? Yeah. And I do think that.

Starting point is 01:56:05 You're rewarded if you're right and you're punished if you're wrong. Why not? Why not live life like that? Yeah. All right, so you have a take on my take, though. What is it? Yeah, I think this is a great way to illustrate the difference in our dispositions as individuals where Ryan and Sean Adams very politely says,

Starting point is 01:56:20 the more you know, the less you diversify. And I just quote, tweet him, I say, here's what he really means. He means diversification is for the week. Have us fine, folks. Believe in yourself. I guess that is what I mean, David. You put it very succinctly as well.

Starting point is 01:56:36 All right, man. What are you excited about this week? Oh, God, Ryan. I am just excited for each season. If we indeed are going into the bear market, then at least it will be east season along the way. it'll be the one entertaining,

Starting point is 01:56:50 the one bright spot on the horizon of what is just like a crazy, crazy macro environment with the potential R word coming. Or none of that happens and it's still ETH season. Either way, it's Easeeason. So I'm excited either way.

Starting point is 01:57:04 Do you mean you're happy to hold on to Eith if it's going down as long as it's going down less relative to the rest of crypto? Sure, yeah. That would make you fine with you. But also just like ETH season means more than just like price price action but east price season yeah it's build season it's like let's

Starting point is 01:57:23 let's come back to our fundamentals let's come back to what's real let's get rid of the noise let's talk about my favorite topic ever which is ultrasound money like that this is when the crypto twitter discourse is talking about the thing that i care about other than some ridiculous nft t ponzi scheme or played or in game or whatever but yeah i i hear you that'll be actually be refreshing no matter what the price is doing at that point in time it's like we're shipping stuff for the future that matters a lot right like there's Merge is going to be absolutely massive. The biggest fundamental event, prices aside, who cares about prices?

Starting point is 01:57:53 I mean, this is history. Well, I care a little bit about prices. Well, we do. We do. All right, Ryan, we do. We do care a lot. I'm excited about the token frame I have behind me. So the folks at Token Frame sent me one of these is pretty awesome.

Starting point is 01:58:08 I, you know, look, I'm new to the NFT scene, okay? Like, I, you know, I don't know what I'm doing with it, but this is a digital frame. First one I've ever tried. and I really like how it works. So what's cool about this is you actually connect Metamask and they're verified NFTs, right? So this is not just a JPEG or a screenshot. It's actually pulling my cool cat from my portfolio.

Starting point is 01:58:32 It's also cool as I can change it around. Like, right, so like I could... I'm about to get your turtle there or your MFER. If I want to change. Boom. Wow, that actually is pretty cool. From cat to turtle. That's pretty cool.

Starting point is 01:58:44 Just like that. I'm so, you know, Learning, I also would like to remove the cord. I think I have to like poke a hole in the wall, do some more work and like put the cord behind it. But it's cool, man. Physical meets digital. It's been fun.

Starting point is 01:58:58 I think it'd be super, can you go back to your cat? I think it'd be super funny if you dressed up as your cat one day. Kind of like how we did with Halloween. Dressed up as my cat. Yeah, but like, you know, looks at a red flannel, a white t-shirt, a bowl cap. And what else is there? That's it. That'd be a good look.

Starting point is 01:59:12 It'd be a good look. Yeah, well, I'm holding my cat. I'm holding my turtles. You know, I don't know. Do you ever sell NFTs, David? Do you flip NFTs or are you just all always buying? When I buy, sometimes I buy one and the hype just doesn't sustain itself. And then I just kind of see it on its trend to zero.

Starting point is 01:59:28 So I'll sell some of those. But the ones that I shill on Twitter, I do not sell based off of principle. So that includes my Cryptopunk, my MFers. Are there any others? This is the thing. I don't know how to make money on the cats. On NFTs, David, because like whenever I buy an NFTs, like I don't want to sell it anymore. I get attached to it.

Starting point is 01:59:48 So I'm just like, well, am I the sucker here? Right. Like, am I actually buying an asset if I'm never going to sell it for real money? You're just buying a noun at that point. Yeah. Well, like, you know, at some point, though, maybe NFTs get integrated into broader defy economy, right? You can lend against it.

Starting point is 02:00:03 You can borrow against all sorts of things. So maybe I won't have to sell and can still be worth it. Anyway, that's what I'm excited about. Token Frame. Thank you guys for that frame. It's awesome. Let's get to the meme of the week, though. This is on theme.

Starting point is 02:00:15 you ready? Yep. There you go. It's Merge Week. This is the Ultrasound Money Twitter account saying issuance now, 15K eth a day,

Starting point is 02:00:25 issuance at Merge 1.5K eth a day. And then the meme is they don't know. They don't know. It's that dude at the party like sitting in the corner, right? Yeah.

Starting point is 02:00:34 But Bankless listener, you know. Because bankless told you. I know. I know. Guys, you also know none of this has been financial advice.

Starting point is 02:00:43 Bitcoin is risky. So is ETH. So is D. you could definitely 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. Thanks a lot.

Bankless - ROLLUP: ETH Merge Soon | Yuga Labs Acquisition | ApeCoin | Raises & NEW Releases Galore

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