Bankless - ROLLUP: ETH Staking Withdrawals | Shapella Upgrade | Arbitrum Governance Controversy

Starting point is 00:00:00 The Chappella Hard Fork went live last night. People are withdrawing their ether. Stakers are withdrawing their ether. Bankless Nation, it is the second week of April. I'm back and we're ready for what, David? The bankless Friday weekly roll-up where we covered the entire weekly news in crypto, which is always an ambitious endeavor. Yet we persevere nonetheless into the frontier on the Friday bankless roll-up with coffee.

Starting point is 00:00:27 It's always going to be a little bit late for me while I'm here in Montenegro for coffee. Ryan, you got coffee? I got coffee. Look at it. Right here. Right here. Got my coffee. Beautiful.

Starting point is 00:00:34 Do you know, did people, since I was out last week on vacation and during myself, did people think that the April 1st, April Fool's thing was like legit? Yeah. I had to. We were not going to do this podcast any longer that there was so bad of breakup going on. Saturday, April 1st, we released on the bankless newsletter that we broke up. Tuesday, the state of the nation. Notice the date, guys.

Starting point is 00:00:59 April 1st. April 1st. Real important date. Tuesday on the state of the nation, I was solo. Friday with the weekly roll-up with Anthony. Also, you weren't there. But in the start of the Friday weekly roll-up, the first link I pulled up was this post

Starting point is 00:01:15 about how we broke up. Just to make it real obvious that no, Ryan is actually on vacation because Ryan actually takes vacations at times. Go figure. No breakup here. And, you know, but has David been replaced by an AI? Have I been an AI the entire time? We may never know.

Starting point is 00:01:33 Who knows? All right. Topics of the week. David, we just did a hard fork. We just got deposits. It's been hard fork week. It's hard fork week. Chappella, that's what the upgrade is called.

Starting point is 00:01:43 And ETH is over 2K for the first person when? We're going to talk about that. What else we got? The Arbitrum Dow drama continues, which Ryan completely missed all of this. Yeah, I'm glad, actually. The Bankless Nation is going to hear Ryan get downloaded about the Arbidge from drama in real time. Also the MEV drama as well. A new meta in MEV happened last week and that drama has continued. The exploiter, which again, semantics, don't know if it called it

Starting point is 00:02:13 exploiter or not, had their stables frozen by Tether. So we're going to talk about that. And then there's a new product launch. Ryan, you want to take this one? Dude, I'm so excited about this. It's called the Token Hub. So you know we're looking at tokens. And we've got some token analysts that are telling us what's bullish, what's bearish, and what's neutral. It's a new product for the bankless nation, for bankless citizens. We're releasing that today, I believe. It's released right now. So we'll talk yesterday for the listener. It's already out. David, we also, you know, it's the time of the year around April, I've got to remind you, how are you doing on your taxes, man? How's it going for you? Real good, because of their crypto tax calculator, Ryan. You used to crypto tax calculator,

Starting point is 00:02:56 don't you? In some of my wallets, but I pass all of the information over to the human accountant. Do you know who the human account uses? All the new wallets, because it's actually a nice way to like practice doing taxes with because like doing it yourself when you have a little robot buddy. So that's what I'm just saying. I know your accountant. Practice doing taxes.

Starting point is 00:03:16 And I know she uses crypto tax calculator as well. No shit. It's a badass tool. Yeah. That's totally what she uses. No way. And yeah. And it's a fantastic.

Starting point is 00:03:26 I'm just paying my accountant to use a crypto tax calculator. No, there's more than that. Come on. But it's a time saver for everyone. Like whether you're a trader, whether you're a defi-gen, whether you're an accountant, and you're like looking at all of your wallets and all of your NFTs that you purchase and all of this activity and you're getting the hot sweats because you don't know how to make sense of any of this.

Starting point is 00:03:50 You just plug those addresses into cryptotaxcalculator. I.O. and it sorts it out. They say they're built by DGens for DGens, and I really believe that because they picked up some transactions that most other tax calculator crypto applications don't and have not.

Starting point is 00:04:08 So I made the switch to them this year, and it's been fantastic. Also, David, there's a little bit of a bonus here. If you type in Bank 30, what are you getting? You getting some kind of a discount? Yeah, and that magic number is 30%. If you didn't figure that one out.

Starting point is 00:04:22 Bank 30 for 30%. If you are a bankless nation citizen, you are a premium subscriber to bankless, there is a different code for 40% off in the bankless nation Discord. So make sure if you're a premium subscriber to go in the Discord to go get that extra 10%. Yeah, because you're never going to guess what the code is without going to the citizen's not bank 40. It's not. It's not bank 40.

Starting point is 00:04:45 All right, David, let's get to the markets today, man. This is a good day for markets. I'm feeling pretty good. This is the happiest markets report we've had all of this year. I think, at least for me it is. It's a good week. Okay, it's a good week. So what are we looking at for Bitcoin?

Starting point is 00:04:59 Bitcoin has crossed $30,000. We are at $30,500. Bitcoin is up 8% on the week. Congrats Bitcoin, crossing the $30,000 mark. You love to see it. That's huge. So, okay, not only is this a $30,000, which is a nice round number,

Starting point is 00:05:17 and so therefore it's significant. We are also, what's not a meme, is this $30,000 has now, fully erased the three arrows capital liquidation. So when we broke above $24,000, we erased the FTX liquidation. Now that we are at above $30,000, we have completely erased the three errors capital liquidation. And so that means there's only one big step left to recover. And by that you mean, because I'm looking on, I'm a charter now. I'm looking on the cracking charts. Crack and Pro, by the way, thanks for, thanks for sponsoring this. And

Starting point is 00:05:50 thanks for putting the charts out that you've put in. It's a fantastic interface. You're talking about the last time Bitcoin actually hit the 30,000, actually dip below 30,000 was when May. So if you want to zoom into that, so we can blow that up in the big. Oh, look at that. Look at, oh, they just happened so fast. Yeah. So last May was the last time Bitcoin was at $30,000. And then we had the three hours capital liquidation that broke down below $30,000. That's what you mean. That's what this huge red candle down was in like June, toward the end of June and that destroyed Bitcoin. And we have it now you're saying we've recovered from that. Yes.

Starting point is 00:06:31 We're back to 30,000. Back to 30,000. Yes. But there's still support to you. We're above F2X. We're above three rows capital. The next step is to get above $40,000, which would get us above Terra Luna. And that would be the last of the big contagion events that really spawned this whole bull market. I'm going to say it's going to be really hard to get to $40,000.

Starting point is 00:06:52 That is pretty hard. But that is the next milestone to recover from. Don't you think it requires new buyers? It requires something a little bit different than what this market has built out so far. Are ordinales going to make it to $40,000, you think? Ordinals are not going to do it. Could we step into $40,000 without a mass influx of new buyers? It gets, I mean, the higher we go, the harder that that gets.

Starting point is 00:07:21 $40,000 is a big ask. Apology's bit signal. Is that going to get us there? Do you know what? Bid signal is not going to get us there. I feel pretty confident about that one. Sorry, apologies. David's calling it.

Starting point is 00:07:30 How about Eath? What is that looking like on the week? Ether, $2,000. $2,000 U.S. American dollars. So, started the week at the low, low price of $1,750. We are currently just above $2,000. I keep on checking it. sometimes we're above it, sometimes we're below it. I think we hit $2,08 today. I've seen it

Starting point is 00:07:51 down below back to 1997 or something, but yeah, above, above $2,000 right now. You know what? I'm ready to say something here is, you remember I was thinking that there was not a huge probability, but I'm going to call it 60% probability that we would dip back into triple digit eth. And that has not happened. No, it hasn't. And I had some buys set up for that. The entire time that you've said that. And I've been a patient little investor. I've been waiting for the triple digits again. I thought that we would hit some sort of, you know, like post-merge, just like the bear market hitting us, FTX. We'd have some rallies, then we'd go back into this chop and the chop would take us back to triple digits. It hasn't yet. And at 2K, I'm feeling pretty ready to capitulate on that.

Starting point is 00:08:43 Like, I don't know if we're going to see triple digits again. Hang on, let me put on my bare cap. Okay. Because, okay, can you switch in spots now? Yeah, we're searching spots. Can you put, can you pinch out a little bit? Yeah, okay, so, too far. Go back a little bit.

Starting point is 00:08:56 So go back to the three rows capital liquidation. Okay, so ether was at $2. Bitcoin, it's crazy how these round numbers happened. Bitcoin was at $30,000, then three euros capital liquidated ether. Ether was at $2,000, then $3 capital liquidated it all the way down to like the $18, excuse me, $870. mark, which was the low for Ether. So interestingly, Ether hit its low for the cycle at $870-ish the last May, the three-error's

Starting point is 00:09:25 capital liquidation. It did not hit a new low with FTX, even though Bitcoin did. Well, that was actually, it was a little later than May. It was in June. It was in June. On June 17th. Right. And so the three errors capital, before three-hers capital got liquidated, we were at where we are now at $2,000. We researched after three-er-house capital, Ether went from 2000 down to 870, back up to 2000 again pretty quickly in like August, I'd say. And then it, and so it hit that it was started there, fell down to 870, back up to 2000. Then it retouched something like the high 900s in the FTX liquidation. Yeah, we didn't get, oh, no, we didn't break that 1,000.

Starting point is 00:10:07 Triple digits again. And then, and so they hit 1,000-ish, and then we're back up to 2,000. we are not above the three hours capital liquidation point we are at the three hours capital liquidation point this is my bare cap we have not broken through we are hanging there and so while you are perhaps ready to capitulate there's plenty of people and then i think plenty of reasonable takes that this is we're just going to touch this and this is a local top and then we have another flat year between two thousand and one thousand dollars for 2024 or are the rest of 2023. That is the bear case. That is a bear take. No, I still think that that's a likely case for sure. I'm just getting ready to capitulate on us. I know. I'm just, well, yes, but also, I'm ready to capitulate on us going back below 1,000. Okay. That's like, because that's a 50% haircut from here. Yeah, yeah, yeah. And do you, how do you think that happens? Yeah. I think that that happens. The case for that is the case that E. E. I gave us on the weekly

Starting point is 00:11:11 roll up, which I don't know if you've caught up on. Recession? Recession. Recession. His take is that this depreciation from $4,800 down to $1,000 for Ether and Bitcoin from like $67,000 down to $20,000. He didn't call that a bear market. He called that a re-rating. He's saying the bear market is actually ahead of us. And this is an economic stock market bear market. Everything is getting re-rated. And that was 2022. And Etai is saying there's still a case to be made for an actual economic equities, S&P, NASDAQ, bear market, and that is potentially ahead of us. And so the case to why Ether and Bitcoin would have a 50% haircut over the next year,

Starting point is 00:11:55 plus is that this is just traders and this is a bounce, but we still have an actual bear market ahead of us, and that crypto assets are not going to be fun to hold inside of an actual bear market. I could see that. I mean, I think the real question there is you have two opposing forces, of people who think crypto is a risk asset and risk on assets will get, you know, destroyed in that type of environment. And then people who think crypto is a monetary hedge. And I think monetary hedge assets could actually do fairly well in that environment, right?

Starting point is 00:12:26 If the government, I mean, are we going to tame inflation? How are we going to combat a recession? Interest rates have to go up. Like, more money printing has to happen. And so these are some opposing forces. We'll have to see which one wins out. Well, maybe there's a chance for my triple digit. Ethan. How about this? Eith Bitcoin ratio. What's the ratio doing this week? Down on the week. Down 1%. We are at 0.6.5. Ether, since the Chappellella upgrade has rebounded significantly, but overall has just been down week and then basically bounce back up to zero for the flat on the week. There you go. And total crypto market cap looking pretty nice today. Yeah, $1.3 trillion. Nice to see that three number there. I don't think we've seen that three number yet.

Starting point is 00:13:11 cents breaking down below a trillion dollars. So 1.3 trillion. Not bad. Not bad. Yeah. All right. Let's talk about some of the signals from the market. So one is looking at layer two. We've had some new layer two entrance, ZK Sync Era and Polygon ZKEVM enter. Where are they placed on the board? Well, here they are. ZK Syncera number four on L2B.com board. This is ranked by total value locked inside of the layer two. And ZK. Sink coming at number four with $232 million locked inside of the first, I think they call themselves the first, ZK EVM to market, which is pretty good. Of course, still dwarfed by Arbitrum, which has a significantly... Abbotronchian, dude.

Starting point is 00:13:59 $6.4 billion versus $232. But ZK. Sinkera has just been out for a few weeks. He's also looking for Polygon, mentioned them. They are down. here at number 17, 3.72 million in total locked values. Interesting discrepancy. Yeah. Yeah, slower start there in terms of total assets locked. But, you know, with Polygon's biz dev team and all of the activity and everything that's going on and just the absolute massive size of their proof of stake chain, like that's going to go up over time. But still cool to see these new layer twos on the on the charts here. I mean, I think the real big story here is Arbitron 1 at $6.4 billion. The total locked value of all layer 2s is close to crossing

Starting point is 00:14:46 $10 billion. $9.7 billion. That's huge. Close to crossing $10 billion in layer 2's, Arbitron 1, clocking in at 6.4 billion of that. David, do you remember when we, this is at the beginnings of the bankless podcast, when we were so excited about DFI Pulse. That was kind of the polar And we hit 10 billion locked in DFI. The big day, the biggest moment. The biggest moment of celebration was one billion locked in defy right yeah oh my god there's one billion locked in defy i remember that yeah it's when the million turned it's when the m turned into a b and all the heath people just had an absolute blast on twitter that day well this was was this back in like uh 20 20 20 20 20 20 19 early 20 20 20 this was before defy summer yeah this was before anyone

Starting point is 00:15:34 thought defy was a thing right it was still neash barely had the term it was such a niche and we hit a billion for the first time. Wow. Incredible. Now we've got like almost 10 times that on layer two. Dude, we're old, man. We are old. We're going to have to rebrand this to crypto grandpa's. Like, that's what we're becoming here. Do you remember that day on Twitter? I can barely remember. Well, is it 10 billion or one? A16Z also put out their annual report, which I always enjoy. It's a 23 state of crypto report. David, what were some of takeaways from you in this report. I remember seeing this report and reports like it back in the 2018 to 2020 era. And it was one of these things that these, what these reports did for me was like

Starting point is 00:16:21 help me stay convicted during the bear market. I think the biggest takeaway is developers are so sticky. Developers don't leave. They go up in bowl markets and then they stay flat in bear markets. Actually, I do see a little bit downwards trend, but we'll ignore that. I mean, it's pretty much flat, though. Like, I think the point is some leave, but like, look, you're still at the, you know, late 2021 mark in terms of active developers building on crypto. So it's just gone down a smidge, but like it's hit sort of a, you know, a stable point. It's probably going to go up in the coming months.

Starting point is 00:17:00 Yeah, so since October, September of 2021, we have the same amount of developers. And this is really just how you grow utility, how you grow fundamentals. So I always like seeing the developer numbers. NFT volume, still good. Of course, it hit an absolute crazy high during the NFT mania. But NFT volume is like not anywhere close to zero and starting to see like much more organic signs of life. That one was very big. Let's see, layer two's.

Starting point is 00:17:32 There was a section here on layer twos. and then also there's a decent amount of focus on just the crypto perception in the outside world, which of course isn't totally great. And also talked about the different countries. US is losing its lead in Web 3. It should come as no shock to anyone here. We are scheduling right now with somebody from A16C crypto to come and walk us through this detailed report. So we will have more on that next week.

Starting point is 00:17:58 Yeah, that's really good. I mean, just to put some numbers around the active developers, 30K developers, contributed to or built on crypto, that's 30,000, and that's a steady increase of 60% over the last three years. So pretty impressive. And yeah, that point about the U.S. leading, it's losing its lead on Web 3, that was actually, like, that's killer to me. Between 2018 and 2022, the proportion of crypto developers based in the U.S. versus the rest of the world fell 26%. And I think that is because U.S. regulators are driving talent to other locations. Like anywhere else.

Starting point is 00:18:36 Yeah. I mean, I think, not good there. And you were just mentioning surveys, David. So this is from the Pew Research Center. Majority of Americans aren't confident in the safety and reliability of cryptocurrency. The quote here is, among the vast majority of Americans who say they have heard at least about cryptocurrency, that's 88%. So 88% of Americans have heard of cryptocurrency.

Starting point is 00:19:00 Three quarters say they are not confident in cryptocurrency. yet, despite this poor standing, crypto still pulled better than the U.S. government. So we got that going for us. Oh my God. That's a great way to follow that up. Okay, majority of Americans aren't confident in the safety and reliability of cryptocurrency.

Starting point is 00:19:22 I am as much of a crypto bowl as anyone in this industry. Can you really blame them? Because when you are an outsider and you don't know the difference between FTX and Coinbase. And neither did the insiders of this industry prior to FTX blow up, by the way. You don't know the difference between

Starting point is 00:19:41 Ethereum and Terra Luna. And again, neither did some of the crypto insiders of this industry either. And so can you really blame them? Yeah, I can't blame them. But that's why I think there's such a, you know, an opportunity here. Just an arbitrage opportunity.

Starting point is 00:19:56 Like I was telling you on a couple of roll-ups ago, just I own Ethan Bitcoin, and I sleep very well night, like in all market conditions. And, you know, I think people have invested in all sorts of other things. They don't understand what they've purchased. They bought at the tops due to FOMO, all sorts of other reasons why they don't have conviction in this asset class. And, no, I can't blame them. But I do think the antidote is us bringing more utility to the things that we're building and for us to educate so that people understand what they're actually buying and why.

Starting point is 00:20:29 It was a frequent conversation during the bull market where I would, you know, I talked about, oh, I'm in crypto, and then people would ask me, like, all right, so like, how much of your net worth is in crypto? I'm like, oh, 100%. And I'm like, what? How are you, are you worried that's going to, and then the inevitable question is like, but what if it just goes to zero? And I just, I feel like a dagger going through my heart because I'm not invested in

Starting point is 00:20:53 Terra Luna. I'm invested in Ether. Ether's not going to zero. And they think that it could go to zero. And that is that information asymmetry that just. It sounds the same because they've heard somebody. who is shilling hex or shilling Luna or something, and they say the exact same words that you say,

Starting point is 00:21:08 you know, Luna's not going to zero. Hex ain't going to zero. It's going to the moon. They can't tell the difference. They don't know why. They don't have that conviction. Yeah, the conviction, it takes time. So we have to just be patient.

Starting point is 00:21:20 David, what do we have coming up next? Coming up next, we've got to talk about Ethereum withdrawals. The Chappellea hard fork went live last night. People are withdrawing their ether. Stakers are withdrawing their ether. Cracking is withdrawing. a ton of ether. So it's Coinbase as well. So we're going to talk about all about the Chappellella upgrade. And then after that, I fill Ryan in with all of the drama around Arbitrum

Starting point is 00:21:41 Dow. And then what else? FTCs recovers $7.3 billion in assets and has started discussions about potentially restarting the exchange. Wow. Yep. All of that and more as soon as we talk about some of these fantastic sponsors that make this show possible, especially Cracken, our preferred exchange for 2023. So if you are a feeling unsure about your crypto exchange, perhaps Go sign up with Cracken, who's been here for 12 years, and I can only assume we'll be here for as many years as you are, bankless listener. Here we go. Cracken has been a leader in the crypto industry for the last 12 years.

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Starting point is 00:23:18 Ux to Ethereum and Polygon. If you haven't used Phantom before, you've been missing out. Phantom was one of the first wallets to pioneer Solana staking inside the wallet and will be offering similar staking features for Ethereum and Polygon. But that's just staking. Phantom is also the best home for your NFTs. Phantom has a complete set of features to optimize your NFT experience. Pin your favorites, hide your uglies, burn the spam, and also manage your NFT sale listings from inside the wallet. Phantom is of course a multi-chain wallet, but it makes chain management easy, displaying your transactions in a human readable format with automatic warnings for malicious transactions or phishing websites. Phantom has already saved over 20,000 users from getting scammed or hacked.

Starting point is 00:23:57 So get on the Phantom wait list and be one of the first to access the multi-chain beta. There's a link in the show notes, or you can go to phantom.app slash waitlist to get access in late February. The big Ethereum upgrade we've been waiting for, we can now withdraw ETH, any ETH that we have staked, for the first time that just happened late Wednesday evening, at least on Eastern Time. It's called Chapella. Withdrawals have been enabled. David, what are we looking at on screen? What just happened? We are looking at one of the Ethereum clients doing their classic ASICI art. How do you pronounce it? Asic-E-Art? A-6, yeah, I don't know. Anyways, so when the merge happened and was successful, there was this cute little, actually, I think it's like a snail. What is this animal? No, it's an owl. It's an owl. Excuse me. Withdrawals are on, basically. And so withdrawals have been enabled. Why this is so significant, obviously, is that if you are an ether staker, it's always been a one-way street, which is fundamentally unsustainable for blockchain security. The only reason why people have been going this way and staking their ether,

Starting point is 00:25:01 in this one-way fashion is because they've been trusting that eventually, at some point in time, they will be able to withdraw because that's what they are hoping would happen. It happened. So now the full loop is now available to do for anyone. And what do I mean by that is that you can take your ether that's in defy or wherever on Coinbase or in your self-custody wallet. You can go and stake it and then you can withdraw it the same day. You could do that if you wanted to. It sounds like a simple thing when you put it like that, though. Right. It really is kind of... It's always been like a one-way flow.

Starting point is 00:25:36 Yeah. And now it can go both ways. And you could deposit... Why did they divide it up like this? Huh? Why did they divide it up like this? Ah, right. Why did we not do enable withdrawals on, like, the moment of the merge? Yeah. Yeah. Because the merge was just optimized for the maximum amount of simplicity.

Starting point is 00:25:52 Merge was a pretty big deal. We didn't want to, uh, overdo anything. And so because withdraws was just one more step, then they took it out so that they could just keep it maximally simple. And so the proof of stake, Ethereum, the beacon chain plus the execution layer has been operating. When did we merge? Last September. September, yeah.

Starting point is 00:26:13 Yeah. And so it's been humming along, just fine. And so they now did the withdrawal hard fork. So now you can withdraw your ether. So there were a lot of questions coming into this. Like one question, which is very interesting, David. And we had the whole discussion with Justin Drake and Dambaco and Anthony Sassan. We never once posed the question of like, so is this going to work, guys?

Starting point is 00:26:36 I think the assumption was the hard fork would be successful just because the last whole bunch have been successful because the merge went so flawlessly. And this was lower complexity than that. And so we didn't even ask that question. Needless to say, it was successful. But there were some other questions going into this event, such as what would happen to ETH Price? Would there be a run on all of the staked Eith?

Starting point is 00:26:58 And everyone who had their ETH locked up in staking, 8th. million supply worth, which is how much, David, 18 million times the price of Eath. What does that equal? That is a whopping $36 billion. So $36 billion is now able to be withdrawn. And market sold and ether's totally going to zero. Except that's not what happened because we actually instead pumped to $100 post-breathdrawals. The ether Bitcoin ratio, which I know I focus on a lot, went from like 0.063 to 0.066. And so the people that have claimed that this is bearish for ether are slowly receding. Some are still holding fast that saying like the withdrawals happens over, the selling pressure happens over the next five to seven days, which is actually technically

Starting point is 00:27:45 true. Because there's a queue, right? There's a queue, yes. So a maximum amount of 1,800-ish validators per day can either deposit or withdraw. And so 1,800 times, 32 times 2000 is $115 million at current ether prices can be deposited or withdrawn inside of a 24-hour period because there is a restriction. There is a bottleneck for ether going between being staked or being unstaked. Why is that the case? Because we don't want to have Ethereum security being volatile. So this bottleneck constrains the supply of security to the Ethereum network.

Starting point is 00:28:26 just make sure that like these dumb apes that are like operating on top of it don't do anything too stupid. A little circuit breaker-ish. It's a, yeah, like it's a conductor. Yes. It's a transistor. It's a transistor. That's what it is. I don't know what it is. Danny Ryan is really excited about this.

Starting point is 00:28:43 What's his tweet saying? Proof of steak took a bit of time, but the loop is finally complete. Happy Chappellella, happy withdrawals. Congrats. Well done, Danny. If you want to scroll down and just get this awesome, awesome giff of Danny Ryan to say thank you. Thank you, Danny. We appreciate your service. And so here's a take also from Danny.

Starting point is 00:29:01 Danny says, withdrawals is a great time to catalyze a redistribution of stake amongst pools for a more secure Ethereum. Just like staker succeeded in making Ethereum more resilient by switching consensus clients from majority consensus clients to minority consensus clients, we can do so at Chappellella for pools. And so what Danny's saying is staking as a service providers like Lido. He's saying like, hey, if you are staking with a very majority pool, perhaps it's time to withdraw your ether from the majority pool and distribute it to a minority pool to help Ethereum be decentralized. Or be a solo staker. Or be a solo staker, which is now something that you can do. And if you decide to rage quit, you can rage quit because that's what we just enabled. Yeah, you're not locked up.

Starting point is 00:29:46 It does seem like a better environment for solo stakers. there was a little bit of suspense, I think. Yeah. At least you experienced this firsthand in the hard fork. I was laughing earlier about how we just expected the hard fork would work, of course. And those are probably the moments where you least have to, when everyone's expecting a hard fork to work, that's when you should be the most worried. Right. So what happened here?

Starting point is 00:30:07 What are we looking at? So I went to watching the Chappellea Hard Fork upgrade. I went to my first in real life Ethereum people meet up to all watch the hard fork together to celebrate the hard fork. that was totally going to be a complete success and no one thought anything otherwise. So we had this website pulled up on the screen and the website would show you the blocks inside of an epoch.

Starting point is 00:30:26 And so every six seconds, a block would turn green. And then we would see the block number of the Chappellea Hard Fork come. And so we're like one hour away, 30 minutes away, 15 minutes away. There was a live stream. And so this is a picture that was taken

Starting point is 00:30:41 of Vitalik's answering some questions on the live stream. And so we were watching the blocks come and then you see the block for the Chappellea Hard Fork come. And so the blocks, like, the way that it works is that there's, I think, 64 blocks. Each takes six seconds. So you watch it go across and it turns green. It turns green.

Starting point is 00:31:00 And then once a row of 64, all turns green, the most recent row of blocks gets justified. And sometimes not a- Is that called an epoch? Yes. And so sometimes you miss a block and that's totally fine because Ethereum is anti-fragile. It's just the block is red. and whoever is the validator just doesn't get the reward for that block. Like boo-hoo, time goes on. It's a problem when 66% of blocks are only green,

Starting point is 00:31:27 and 33% of blocks are red or missed or whatever. That's a problem. And so because the Ethereum blockchain is good, every single block turns green. And then when one row of blocks hits 66 or above, it gets justified, and then it gets finalized the next time another row of 64 blocks gets justified.

Starting point is 00:31:45 So it's a blockchain. is how blocking works. And so we're watching the chapella blocks come in. Then we hit the chapella block. You see the withdrawals activated. Everyone starts cheering. But then you see the first four or five blocks turn red. And then you get one green one.

Starting point is 00:32:04 And then you get like another red one. And then you get a few more green ones. And I'm like, no, that you run into math. The merge had less green blocks than that. I know the difference between red and green. And those are red. And no, they're not green. And you see, I see, and I'm sitting next to Vitalik, and I see Vitalik, like, looking at it.

Starting point is 00:32:24 And I see Tim Bako, like, looking at it. And we're watching the ghost. And it's like, okay, we get a few more green blocks. Like, the first bundle of blocks were, like, uncharacteristically red. And then Tim Beko said something along the lines of, like, yeah, there was a bunch of messaging that was actually kind of expected. We didn't really know about that. But, like, okay. But then, like, we're still more red blocks, dude.

Starting point is 00:32:45 Like, I don't, yeah, it's like more red blocks happen. I'm like, guys. And like, meanwhile, the live stream is like, withdrawals are enabled. We did it. And then Vitalik's like, hmm, let's make sure that the block finalizes, right, guys? And then I see Tim Baker pull open his laptop and starts typing to people. I'm like, guys, I don't like what's going on here.

Starting point is 00:33:10 Oh, God. Like, Vitalx. And, but as time went on, like, it got more and more green. And then, so then the row filled up, pretty heavy red on the left, mostly green on the right, the epoch. And then the epoch comes to get justified and it goes down. And then we start filling out the next row. And then so that row gets filled out. More green blocks are happening.

Starting point is 00:33:33 I think only two or three red blocks. So like we're good. And but then that one comes in and that one also justifies. But the hard fork block is not finalized. It's just justified. Oh, just hang there. We have two justified blocks, not finalized. Two justified epochs, you mean?

Starting point is 00:33:51 Epox, yes, exactly. Epox, which is, and one epoch is a bundle of 64 blocks. And, like, I'm listening to Vitalik start to make concern noises. And he's, like, looking on his phone. And I'm like, so Vitalik, like, I know he doesn't know what's going on. He's just waiting for more data. And it's like, I go, uh, Patak. So what's going on?

Starting point is 00:34:10 Meanwhile, while the live stream is happening and everyone's chatting. And he goes, oh, the beacon change. just being weird. And I'm like, what does that mean, dude? And then we, okay, and then we get to the next epoch. It's all green. Everything finalizes, and we're good to go. I'm glad your first viewing event was that fun because that's the way they should be, right?

Starting point is 00:34:32 You don't really know. They should be suspenseful. They shouldn't go without a hitch. But everything's fine, right? Guys, like, this is the simple one. What's going on? What was the reason for all of those red blocks? Do you find that out later?

Starting point is 00:34:47 I think two problems. One quick bug with lighthouse that got fixed pretty quickly. One of the EVE clients with Prism clients that got fixed pretty quickly and nothing was the issue. The thing is like, this is why we have multi-client architecture because that was Sala. That would have gone down. You had to bring Salana into this, didn't you, David? This is why you have five clients because it protects against. Stalana, any, any blockchain that has one single client.

Starting point is 00:35:16 Including Bitcoin. Including Bitcoin. You don't be like hard forks are very nerve-wracking. Very nerve-wracking. Okay, well, we made it. We made it. Okay, withdrawals over you. What's this?

Starting point is 00:35:26 What are we looking at? We've got some dashboards up here, Dave. Okay, so there are a bunch of dashboards. If you are curious to see stats of the beacon chain, Poshapela, there's a bunch of dashboards. So these, I don't know how to pronounce this. So I'm just going to lose. Are we up in terms of the amount of, is this locked?

Starting point is 00:35:41 Okay, this is total amount of eth on the beacon chain. Is this a staked eth? Has that gone up? 19 million? That's higher than I thought that it would be. Wow. Okay. Where'd that come from?

Starting point is 00:35:49 I don't know. Total eth. 161,000 round up to 162,000 ether has been withdrawn. So, 162 ether has been withdrawn. That's a pretty good amount. And so you can scroll down and see that circulating supply, just that green line of ether coming out of the beacon chain. So this is like the bear case, right?

Starting point is 00:36:08 This is like all of the eth that's like locked is being put, into the market, except no one's just not necessarily selling it because the price is going up. But yeah, like, ether is net flowing from the beacon chain to the main chain, the defy ecosystem anywhere, like not staked, basically. And so the circulating supply of ether is going up because it's being unstaked. So are we seeing a big exodus of staked eith like some of the bears thought we would? Obviously, eth price has gone up. And I think that's because we have another de-risking event. De-risking event, hard fork behind us, which is fantastic. So markets responding to that. But what about this idea of a run on the protocol with eth-stakers fleeing and exiting? Are we seeing

Starting point is 00:36:55 any early numbers around that? Yeah. So some of these dashboards are going to be able to put a nice visual behind the withdrawals versus further deposits. So I think it's either this one or the next one, if you keep on scrolling down. There is absolutely a net outflow of ether, as you would expect. This is not the hard fork that enables deposits. This is the hard fork that enables withdraws. So now that withdraws are happening, people are withdrawing their ether. Cracken, which had to shut down its staking platform because of the SEC, they're not going to keep it there. They're going to withdraw it. So they are withdrawing a bunch of ether. People are withdrawing C-B-Eth from Coinbase. And so Coinbase has a bunch of staked ether being withdrawn. And so people are starting

Starting point is 00:37:41 to squeeze through that 1,800 validators per day, 1,800 times 32 to get to the amount of ether per day. So there's a line. So you've got to get in line. That line will clear pretty fast, I think, in the next like four, three, four or five days. And then all of the ether that is queuing up to be withdrawn will be withdrawn. And that's the status of things now. Yeah. How about this, David? This is Eith waiting for withdrawal. Yeah. This chart. So what are we looking at here? Yeah, so Cracken is the set of the line of people looking to withdraw their ether. Cracken is 70% of that. Withdrawing 551,000 ether, which implies something like 750,000 total ether being withdrawn.

Starting point is 00:38:24 That's all in Q right now. It's all in Q. Okay. Yeah. Currently being processed, right? And so Coinbase is like coming in at a solid 6.5%. So, and then after that, who will be all these centralized service providers, which big fan of, big fan of. Well, but it's Cracken.

Starting point is 00:38:41 Part of the reason why Cracken is withdrawing so much is because the Gensler Banhammer has... Exactly. Like, they have to basically discontinue staking services in the United States. And so you have to imagine a large portion of the Cracken is as a result of this. But overall, we're not seeing this mass exodus of staked Eath, are we? It's just kind of... Well, so we're hitting the upper limit. Like, we are seeing the fastest withdrawal pace.

Starting point is 00:39:08 that you could see. It's just that is it being sold? Is it being deposited again in a different service provider? Is it being sent to defy? We don't really know. What we can actually assume is it's not being sold because ether price is up. Yeah. These are some metrics we're going to be looking at in the,

Starting point is 00:39:27 and I think the weeks to come is because I also think in addition to all of the withdrawals that we see, we're going to look at a week from now and see how many deposits, new inflows as a result of this derisking event will see. And I wonder if the number is going to be like over when we started or above. Like Justin Drake's prediction is basically maybe a small dip, but pretty much flat through this entire event. And then we'll resume the climb upward on a linear path to more and more ETH stake. So from 18 million to 20 million to beyond, he thinks. And we might get as high as like 30 million or a little bit above that is kind of his take on the final resting place.

Starting point is 00:40:05 So we'll see in the weeks to come what bears out. see on that last dashboard, the staking API has increased by 0.6%. And that's because fewer validators, staking API goes up. It's also worth noting there are two ways to withdraw. You can do a skim withdraw, which just withdraws everything above 32 ether. And a large supply of the withdrawn ether in the queue is people just withdrawing their rewards, not withdrawing their principles. That's a skim withdrawal. People call that a partial withdrawal as well.

Starting point is 00:40:39 You're just withdrawing the rewards. You're not disbanding the validator itself. Right. Yeah. And so a full exit, which is when you withdraw 32 ether, is what Cracken is doing and partially Coinbase as well. But most people are just claiming their rewards. Very cool.

Starting point is 00:40:56 As you would expect. I think I'm going to be staking more in the weeks and months to come. I've been sort of waiting for this moment. Some of the core devs celebrating as well, David. This is Peter from the guest. from death. Yeah. And if you want to learn everything there is to know about Chappella and what happens next, you know who put out a report. That's us. Bankless is you know who. And so bankless.com, how Chappellella pushes Ethereum forward if you just want to go further deeper into the subject.

Starting point is 00:41:25 All right, David, you got to get me up to speed real quick on this Arbitum thing. So I think there was a lot of anger last week from members of the Arbitum community and other communities who wanted to pile onto this about some Arbitrum's foundation. I was following this at high level. I know you and Anthony covered it on the last roll up a little bit. Why don't you get me up to speed on what happened? And then let's talk about what happened this week, which was there was a new proposal that was basically saying in this Arbitrum proposal 1.05 that the foundation should return all of those funds, 700 million ARB tokens back to the Dow. That's a new foundation that came into play. and I believe it's being voted on right now.

Starting point is 00:42:08 But just tell me what happened while I was out. Yeah, so the first ever snapshot vote for Arbitrum was a ratification of AIP Arbitrumb Improvement Proposal 1. It turns out the community decided to vote no against it because the foundation was to receive 700 million, 750 million ARB tokens about a little bit over a billion dollars. And the community voted no. But then Arbucharme was like, this was just a, this was not, this is just a ratification.

Starting point is 00:42:43 This is not a vote. This vote doesn't matter because the way that AIP is, is the way that AIP one is going to go. Because that's how it's going to be. And so the Dow was like, well, what does our vote even matter? We vote. You guys put this thing up for a snapshot vote. We voted no, but it's going through anyways. What the hell?

Starting point is 00:43:03 So like the conclusion that I have is that this was a major. just comms miscommunication, a major comms F up by Arbitrum. They kind of just assumed that people would vote for this because why wouldn't you want to give a bunch of money to the foundation when the foundation has the best interest of Arbitrum at their heart, which is an assumption. And I will totally say I agree that that's an assumption. Maybe the Dow is like, F the foundation, give us the tokens, we'll decide what to do with them. But because of legal constraints that are very significant for the Arbitrum team and the way that these things get set up. And also just because of the foundation can be a more centralized, perhaps more effective entity than a distributed decentralized Dow,

Starting point is 00:43:45 people like, the Arbitrum team was like, yeah, just give the tokens to the foundation. Well, to me, doesn't this all hinge upon whether like Arbitrum had already made this decision beforehand and was, like, had already kind of communicated that to the community and had put this proposal out as a snapshot vote and saying, you could vote for this, but it doesn't really matter because we've actually already made the decision as part of the initial distribution. That would be like one way this actually happened. The other way that it could have happened

Starting point is 00:44:13 is if they put it out to vote and they had meant for the community to vote it, but they didn't like the outcome of that vote. And so they were like, nope, just kidding. Wasn't an actual vote this time. I mean, the difference between the two is a pretty big deal in my mind

Starting point is 00:44:32 and kind of like would inform me on on who who is kind of the the good actor in this case. Yeah. That's actually a really good point that I actually haven't considered the fact that like, but I'm, just because my memory doesn't work to that level of granular detail, I'm pretty sure in the AIP and in blog posts, they said like this is what's going to happen. Also vote on it.

Starting point is 00:44:59 So I guess there was shouldn't have put the vote out. confusion to begin with. They just should never have put the vote out. If that's the case, they shouldn't have put the vote out, and that's kind of caused this whole confusion. Okay, so what happened this week? There's a new AIP proposal that is... There's a new proposal that says, give the money back to the Dow, and then resubmit AIP1, and the Dow will execute the transfer of the funds, not you guys. And so that proposal was placed forward to say, like, show a, the Dow was, as a voice, as a collective, the Dow was like, show us that we have the power.

Starting point is 00:45:33 Like, show us that we can do this. So how is that vote going? Well, that vote just was voted against it. So 108 million ARB tokens, 83% to 15% voted against like none of this. Just don't, like not even bother. It is what it is. Let's move on is the way that the Dow has collectively voted.

Starting point is 00:45:52 I bet you there's probably some conversations as to like large whales voted against it and maybe retail voted for it. But overall, As an airdrop receiver, I voted against this because I think this thing is mostly just drama. And I got flack for that take, by the way. Why did you get flack? What, what, what, what, people like, so, um, one thing that's interesting about a Dow vote is we've,

Starting point is 00:46:18 we've made this point before. We've had Hasu on. We talked about kind of the, the faults in Daos and all of these things is there's no, like, legal obligation here. There's no, like, settlement layer to ratify a Dow vote. and for kind of arbitram the company or any of the other arbitraim stakeholders to actually carry that vote forward.

Starting point is 00:46:38 It's almost like a gigantic social signal, if you will, but there's not like anything close to shareholder rights, which is sort of settled in a U.S. court system. So as part of that is, like, what does a Dow vote actually entitle you to? And as an ARB token holder, like, is this all window dressing? Is governance kind of window dressing or do you actually have rights?

Starting point is 00:47:04 And I do think that is a valid concern, but it's not just a concern for arbitrum. It's a concern for all any sort of squishy governance that can't be settled on chain, of which like most DAOs have this, don't they? Yeah, I do think this is a bunch of window dressing. What my frustration is that the inception, the initialization, the bootloading of a foundation and a DAO, how that exists, how that comes to be, is an exceptional moment. And it warrants exceptional circumstances because of Gary Gensler and jail time and fines and stuff. Because of that reason.

Starting point is 00:47:46 And so we need to- You just think there should be a grace window, particularly at the very beginning. The first initialization, the first creation of the whole system should actually be outside of Dow governance. it should be because of efficiency, capital efficiency, but it has to be, though. It also has to be that way. And so then every other proposal after that

Starting point is 00:48:07 should have the full faith and might of the Dow behind it. But the initialization is a special circumstance that we need to have some sort of grace period just for conditions. You want to give them a mulligan for just this one time. But if they do it again, then you'd have a bigger problem with it. If you do it live in production, then let's get the pitch I see. Look, I don't have a real strong take on it. Now that I've heard like all of these

Starting point is 00:48:31 sides, I just, we probably didn't have too much to talk about last week. And so we were really focused on this this week. But here's a take from Eric Wall. It's a lot. But could you summarize what his take is on this whole ordeal? Yeah, it's basically a summary of what we've said just so far. It's basically there's this interesting proposal that's out there that says, hey, give it back to the Dow. And it's basically a summary of what we've just talked about. Eric Wall says, as a delegate, I control basically half a million ARB tokens and I will probably vote, not vote against it, even though it worries me a great deal to see the Arbitrum Foundation in such a risky seat. And despite knowing how important their work is to make sure that Arbitrum

Starting point is 00:49:09 prospers and stays competitive with other layer twos with functional foundations. And so Eric Wall is like balancing. He's like, well, he's a big delegate. He understands the value of a foundation, but he's not going to vote against it because he wants to see the trial of governance play out. but the thing didn't pass anyways. All right, David, so we've covered Chappella, we've covered Arbitrum, what's coming up next? Coming up next, the last and final update on Euler.

Starting point is 00:49:36 I actually did say that last week, but this is because there's one last step, which is people get their money back, and then there's no more conversation about it. So there's that. FTCS recover 7.3 billion in assets and has started discussions about how to restart the exchange. We will discuss whether we even want that or not.

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Starting point is 00:51:59 All right, we're back with Euler. So it sounds like Euler got all of its funds from the hacker back, which seems like a miracle. And that's amazing. But now there's a process for which people who had deposited funds in Euler have to redeem. And just an extra process is that what we're talking about right now? Yeah, so because Oiler is a money market, when people deposit money into Oeuler, they have a position. That position was rugged from them by the attacker. I guess that's not the appropriate way to use rugged.

Starting point is 00:52:30 But the exploiter stole the money, but people had it in positions. And so who gets how much money back had to do these calculations to make sure who gets, you can't just put the money back into the vaults. Got it. And so Oiler has run the computations, done the math, and, created a claims page. So if you are... It's great news though. Right.

Starting point is 00:52:51 No one lost it. If you are an oil or victim, there's now a button that you can go press and you can press that button and you can get your money back. So go press the button. Do we know anything about this attacker? Why? His name's Jacob. He says his name's Jacob, right?

Starting point is 00:53:05 So he just, but basically we don't know motives. We don't know who this individual is. They stole the money and then they said they were sorry and then returned the money. It's basically the full circuit here. Yeah. Well, isn't that great? I'm going to assume that law enforcement put some heavy pressure on this person. There was probably some pressure to do that.

Starting point is 00:53:26 I'm going to guess that. I wonder what this person is doing right now. Can you just be like, oops, accident? It was just a prank, bro. And then you're fine? You are no longer in trouble with law enforcement. Is that how this works? I don't know how this works.

Starting point is 00:53:39 Jacob would have to tell us. For some reason, I'm just picturing like some high schooler in his, like, mom's house. And he's like, oh shit, what did I do? I didn't think this would work. The police showed up at my house. Wow. That's crazy. All right, Bitcoin stuff.

Starting point is 00:53:58 Light Spark is a competition for the Lightning Network. This is David Marcus, who formerly ran the Diem program, which is called Libra DM at Facebook. One of the original Facebook, not a founder, but early to Facebook, certainly. David Marcus, very excited about the Lightning Network and Bixieckis. He says he's thrilled to unveil the light spark platform today. We believe the internet badly needs an open payment protocol, one that works 24-7, settles in a near real-time. This is basically a startup, an application built to expand lightning to the masses. What's your take on this? It is probably the biggest effort to build out lightning infrastructure from somebody who's

Starting point is 00:54:42 already done something very big in this world that I've seen. Is this the one? that is different? Well, I forgot to mention David Marcus was also a former PayPal president, so he knows a thing or two about transactions. And his comment was, much of lightning's potentials being held back by the clunky and time-consuming process

Starting point is 00:55:00 of node management engaging with the Lightning Network. He's like, the U.S. is bad, so I'm going to fix that. One thing that's interesting, at least my take on this, is I agree with him, the U.X is bad. I don't think that will solve the problem

Starting point is 00:55:14 because I think the U.S. still remains bad, as long as you have Bitcoin as the unit of account. Because people don't want to spend their Bitcoin. I don't want to spend my ETH either. I just don't. I want to spend stable coins. I spend my die.

Starting point is 00:55:30 I spend my USDC and I hold my ETH. I mean people pay me in ether, but I pay them in USDC. Exactly. And that's the thing that Bitcoin advocates have been preaching for a very long time. And so I don't know if you can get over that from a U.S. perspective, you know, particularly lead to the masses. Maybe, maybe if you had hyper-bitcoinization, large nation-states will do settlement between each other in Bitcoin, like Bitcoin transactions, but I don't know. Hold your Bitcoin. Sell your fiat. That's the U.X problem, in my opinion.

Starting point is 00:56:06 But it's great to see more development on lightning and certainly on Bitcoin. David, more news on FTCX. Bankrupt FDX has recovered $7.3 billion in assets. And here's here's the kicker and is considering relaunching the exchange in Q2. Okay? What's your take on this? Just to make it really clear, Q2 is now.

Starting point is 00:56:30 It's this quarter. Why? So 7.3, part of that number has come from the rise of crypto asset prices since FTX, right? And so that number is going up because Bitcoin and Ether and Solana

Starting point is 00:56:45 and these other tokens are going up. in price. If you wait long enough, everyone will be made whole. But not actually because a lot of the people lost Bitcoins. And so Bitcoin denomination has not gone up. No. Anyways. Okay. So total recovery of these assets would have been $6.2 billion from crypto prices in November of 2022. So we've gained $1.1 billion, thanks to crypto asset appreciation. In legal proceedings, it was discreet the potential to start, restart the crypto exchange. In these legal proceedings, however, it said that FTCS would need significant capital to restart its crypto exchange because the existing customer interface had little connection

Starting point is 00:57:32 to the movement of money behind the scenes, the lawyer said. Remember Ryan, a very big topic of conversation was how good of a product FTX was? How fast it was. It was so good and fast. The U.S. was amazing. It really makes a ton of sense that this thing that was a fraud behind the scenes, had this very polished and sleek front end because it didn't matter. You didn't have to connect those things. The numbers weren't real. They weren't real. Just generated numbers. It wasn't even

Starting point is 00:57:58 connected to like the back end and what was actually happening. Well, that is really makes Sam Bankman-Fried's Excel docs of accounting just hit a little bit differently. Wow. Let me ask you this so, David. FDX say it relaunches. Would you ever use the new FTCX exchange? I never even use the old one, dude. Okay, but like, you probably thought about it. Yeah, I probably thought about it. I'm just saying... I don't need any more centralized exchanges.

Starting point is 00:58:28 But, like, who is going to use? Maybe not you. Who is going to use the FTX exchange? Are people just going to be like, oh, it's rebranded. It's under new management. FTCS 2.0. Sounds great. Let me put all of my money in this thing. Why don't you just let it die, guys?

Starting point is 00:58:44 This is a bankruptcy proceeding. I don't understand a need to or an interest. I guess shareholders are probably like relaunch. Relonced, let's mint a token and see if we can get some of our money back. That's probably what it is. But like, I don't know that this is a consumer product that

Starting point is 00:59:00 will ever work again. Okay, so all of the exchanges out there that have been proven to be good, I know the names of these leaders. Brian Armstrong, Jesse Powell, and CZ. Who is going to

Starting point is 00:59:16 lead FTX and have somebody rise to the shoulders of these other giants and can actually like command trust. Who's going to do that? Who's going to step up to the plate? No one. Jamie Diamond. Jamie Diamond purchases FtX, relaunches the exchange. There you go. We're done. We're done here. Look, I know the 2022 simulation was pretty crazy. Well, I'm just surprised they're actually reconsidering launching this. So that's, that was not on my list. Also not on my list. Japan, doing big things in crypto, appearing more crypto-friendly, it seems.

Starting point is 00:59:51 We've got an article written in Japanese, so I cannot read this, David, but what is the saying? The next link is what you want, Ryan. Okay, here we go. So Japan's Liberal Democratic Party and its Web 3 project team released a white paper to push crypto-friendly initiatives in the country.

Starting point is 01:00:08 This is part of Prime Minister Fumio Kishiatas. God, I'm such a... Not bad, though. of white person. Strategy of promoting technology, a project they've called Cool Japan. They have a project called Cool Japan that includes Web 3 initiatives. That is cool. Yeah, we do not get Cool America. Yeah, we do not get Cool America. We got 90 pages of FUD in a Biden administration economic report on crypto and Japan. Not cool. Yeah, that's not very cool of us. A quote from this white paper, after crypto winter, Japan may be the first to welcome spring.

Starting point is 01:00:44 In order to promote blockchain-related businesses in Japan, it is necessary to develop an environment that facilitates investment in tokens. So here's some high-level details. They want to see tokens as fundraising tools for Web3 startups instead of speculative assets. They are looking at tax reforms that favor cryptocurrencies, which should be considered alongside existing accounting tools. And also DAWs that can be established in the same way that LLCs can be established. Wow. Cool Japan.

Starting point is 01:01:13 That is cool Japan. I'm just jealous, but I'm very excited that Japan is doing this. This is very good. And it's clearly there's some land grab of like, okay, America's not going to take lead of this. Then we'll jump in because we're also seeing this in Hong Kong. Hong Kong's finance chief pushes for Web 3 adoption. This is Hong Kong's top financial boss saying that now is the time for the economy to push Web3 adoption. they want to be basically the Fiat Banking Center for crypto and doing that in Japan.

Starting point is 01:01:44 So again, this is more indication that America's got to catch up. So does Europe, it seems like, for that matter. Ryan, can you scroll down a little bit and then see the permission list, 2023? You want to just go ahead and click. They join us in Austin, Texas link right there. Oh, hey. Because permissionless in 2023, September 11th through 13th, Dave Dow has officially challenged

Starting point is 01:02:06 Ben Dow to a dodgeball tournament. This has nothing to do with Japan or Hong Kong. That's nothing to do with Japan. This is a hard pivot here. I have moved on. I have completely moved on. I'm doing my best to convince Mike and Jason at Blockworks to carve out a part of permissionless in the event center to host a dodgeball tournament.

Starting point is 01:02:25 And I want all of the rivalries to come forth. I want optimism versus arbitram. I want ZK. Singh versus Polygon. I want Ben Dow versus Dave Dow. I want A16 Z crypto versus paradigm. I want people to assemble their squads. Can we do crypto-natives versus regulators, please? Well, the regulators aren't coming. They're not invited. Well, I get easy win then.

Starting point is 01:02:51 Anyways, so if you are interested in your dodgeball tournament and want to help me meme this into existence so that Jason and Mike are compelled to host a dodgeball a part of a permissionless, then go get your permissionless ticket. If you're a bankless citizen, you get 30% off, which is like hundreds of dollars because the tickets go up in price every two weeks. So link in the show notes to get your permissionless 2023 ticket. Crypto is tribal enough, David. I think we can get our tribal rage out on the Dodge Ball courts here.

Starting point is 01:03:19 From Dodgeball to Token Hub, this is it. This is the bankless token hub. It is now available for bankless citizens. If you are not a citizen, you should definitely upgrade. You get so much in your citizen package, including a premium RSS feed. And also now the Token Hub. David, have you checked this out, man? is neutral, bearish, bullish positions on 28 different tokens from the bankless analyst team.

Starting point is 01:03:45 It gives our rating. We're putting it out there, not financial advice, entertainment only. But this is what some of the best analysts that Dave and I have found are actually rating these tokens and evaluating them, evaluating them based on some catalysts. So if you're like, oh, you know, boomer David and Ryan only talk about ETH and some of the core assets. and all the blue chips, and it's not exciting enough for me. Let me tell you, we go down the stack in the token hub,

Starting point is 01:04:12 and it's not our opinions, it's our analyst opinions, but did you also know you can mark some of these as your favorites, as some of these tokens, mark them as your favorites? And also, let me ask you, like Uniswap, are you, what do you think about Uniswap, unitokin, bullish, give me a rating?

Starting point is 01:04:27 I am just, the answer is obviously bullish. Why am I bullish? Because it has a monopoly on volume. It is wherever it goes. Because Uniswap, it's on ZKSync. It's on Polygon. Optimism, Arbitrum. It's on every layer two.

Starting point is 01:04:43 It's always a dominant exchange. So even though there's no fee switch that's turned on, you just got to turn it on. So I'm bullish. You can see what the other citizens think. So 41% are also bullish on Uniswap, but 47% are neutral and 12% are bearish. Lots to unpack here.

Starting point is 01:05:00 You guys can find it at bankless.com slash a token hyphen hub. Or just go to bankless. become a citizen, and you'll get connected right into that. Oh, by the way, explicitly, our ratings, these neutral bullish-barish ratings, are versus Ether, not the Bulls. That's a very important point. That is important because Eth is money, and that's how we denominate our portfolios.

Starting point is 01:05:23 It really makes the game a little harder when you're dishing out token ratings and you're bullish, because it's not bullish relative to Fiat. That's easy mode. We're going hard mode here. Bullish relative to Eith. Ooh, be tough. Yeah, now we can lose money together in new ways. If you want a token to be rated by the token ratings on the token hub,

Starting point is 01:05:44 you can say so inside of the Bankless Nation Discord, which you can only get to if you're a bankless citizen. You could just say whatever token you want, and Ben and team will go do it. You can just yell it. Don't encourage that. Did you know, Metamask, by the way, our friends and sponsors, they have just launched a really cool feature on their portfolio Dap. This is the part of Metamask that adds new features even faster than the main wallet.

Starting point is 01:06:07 And you can find that in Metamask at Portfolio. Metamask.io. They have this buy tab now where you can really easily buy directly from Fiat by crypto assets, all sorts of different. ACH transfers, bank transfers, all sorts of different like buying mechanisms. So you can Fiat onboard directly through your wallet, which is really cool. It's great to see new ways to onboard. And they've added that there. be a link in the show notes for you with that feature. And David, did you know this? Okay, I think you

Starting point is 01:06:37 did know this. But, you know, one thing that can happen over time is if you're doing a lot with your eth wallet, you approve all of these various smart contracts. And some of the security around these smart contracts are the things that you do in Web 2, all the crazy D-Gen activities you do. Sometimes smart contracts go bad. And so you may have opened the door, but not shut the door. You may have approved access to your keys to do some specific function in a wallet and forgotten to revoke. EtherScan actually has a tool where you can look at your address and you can revoke access to. It will tell you what you've given access to specifically rather than just like not understanding. And it'll tell you like you've given access to all of these contracts.

Starting point is 01:07:26 Do you trust these contracts? Do you know who these people are? I didn't know EtherScan was doing this. Yeah, we've had this for a while. I didn't know. I was using another tool for this, but seeing EtherScan, a tool I trust and already use every day do this is pretty awesome. So that's probably a security tip. Like go through some of your addresses that you use for DGen activity and make sure you are revoking access to the things that you don't trust.

Starting point is 01:07:51 Why leave access open? There was actually an event earlier this week that happened in sushi, I believe, where some people got their wallet strain because they did not revoke access. Well, they gave access to a router that was exploited. And then people had to go revoke access because that router was proven to be bad. Like other contracts, like the wrapped ether contract, you're never going to have to worry about that one. That thing is rock solid.

Starting point is 01:08:17 The die contract, like generally rock solid. Some things without names that you can't remember why you gave it permissions in the first place. Maybe you want to revoke that one. Yeah, you want to revoke that one. All right, David. What do we got coming up next? Coming up next, we got some questions from the Bankless Nation, as well as some takes of the week, followed up by, of course, what Ryan and I are bullish on.

Starting point is 01:08:38 And lastly, but not least, the meme of the week, because that's how we end the show. But first, a moment to talk about some of these fantastic sponsors that makes the show possible. Arbitrum 1 is pioneering the world of secure Ethereum scalability and is continuing to accelerate the Web 3 landscape. Hundreds of projects have already deployed on Arbitrum 1, producing flourishing defy and NFT ecosystems. With a recent addition of Arbitrum Nova, gaming and social daps like Reddit are also now calling Arbitrum home. Both Arbitrum 1 and Nova leverage the security and decentralization of Ethereum and provide a builder experience that's intuitive, familiar, and fully EVM compatible. On Arbitrum, both builders and users will experience faster transaction speeds with significantly lower gas fees.

Starting point is 01:09:20 With Arbitrum's recent migration to Arbitram Nitro, it's also now 10 times faster than before. Visit arbitram.io where you can join the community, dive into the developer docs, bridge your assets, and start building your first app. With Arbitrum, experience Web3 development the way it was meant to be. Secure, fast, cheap, and friction-free. Bankless is launching the Bankless Token Hub. At Bankless, we've been studying the crypto markets ever since 2017, and all of our research has led us to this. The Token Hub, you're a one-stop shop for Alpha to help you navigate through the crypto markets. Have you ever wished for a trusted resource that would share their thoughts, ratings,

Starting point is 01:09:55 and their opinions about tokens, boy, do we have the product for you. The bankless token hub is where we provide bankless citizens with the alpha on the hottest tokens in crypto. We do the research so you don't have to. The bankless token hub includes the token ratings, where our team shares their research and outlook on the hottest tokens in crypto. Also, the token hub includes bankless bags, our own internal investment club. Bankless bags is where we put our money where our mouth is.

Starting point is 01:10:20 And for the bankless power user out there, you can access the analyst team 24-7 inside the Bankless Nation Discord. You can ask them questions and learn from a group of people deep in the weeds of crypto investing. The last feature of the token hub is the ability to upvote or downvote token ratings. The bankless token hub lets you learn from your fellow citizens to rate these tokens yourselves. The bankless token hub is launching right now and has already been beta tested by your fellow bankless citizens. So stay tuned in the bankless Discord for updates. And if you're not a bankless citizen, well, you better sign up if you want access because this corner of bankless is available for citizens only. I'll see you in the Discord.

Starting point is 01:10:56 Back with questions from the week. This one from Oren. I'm going to read the whole question, David, because there's a story associated with this. After 14 months, I finally feel like I'm in crypto for real. I lost 1.1-Eath to a scam. It was my own fault. I clicked a link from a trustworthy source without reading the

Starting point is 01:11:11 accompanying text, an opaquely worded confirmation letter, and I'm down 1.6K pounds. Why didn't I read the text properly? I was mentally juggling. Suiting a grisling baby, work emails, and the myriad other daily life tasks that take up brain space, all the while trying to stay up to date with opportunities in crypto. It made me wonder when and how we're going to get crypto to a stage

Starting point is 01:11:34 where it can be trusted by people who can't always focus their whole attention on it, the casual retail users. Surely without them, the room for growth in industry is limited. I know crypto is risky and I can lose what I put in, but having some arse outright steal your fund hits so differently from taking a punt on a D-Gen token that goes to zero. What are your thoughts on what we can do to combat the constant scams that reinforce the negative view of the industry, limit growth, and give more ammunition to Elizabeth Warren's and those like her? I love the roll-up.

Starting point is 01:12:06 It's been a godsend and keeping us up to date with the industry in the limited time I do get. This is a very sincere question from Oren. And I got to say, I really resonate with this. Like, how does a normal person possibly have time to determine and figure out what's a scam and what's not? This is certainly the Wild West, David. Are we ever going to graduate to something that feels a little more safe? Like, one thing when the DGEN tokens go to zero, another thing when something unexpected happens as it happened to Oren here, clicking a link from a trust, what he thought was a trustworthy source, and then getting 1.1 eath stolen.

Starting point is 01:12:46 Yeah, and I'm sad to say I don't really have a silver bullet here. I think this more or less comes with the territory of self-custody crypto assets. We have the power and the responsibility of being able to control our own money. Wells Fargo will never let you send your money to a scam because of how cumbersome it is that scammers don't even bother to try. So thank you, Wells Fargo, I guess. They can always. also totally confiscate your money, capital controls, all of those bad things. And so this is just the double-edged sword, I would say, that is crypto. How do we prevent this? Well, one part is, of course, just education. We're never going to be able to get rid of scammers in the way that the traditional finance world just doesn't have to deal with scammers because scammers just can't operate in traditional finance.

Starting point is 01:13:42 Simultaneously, there's like ways to win in this space because of those same properties, right like you get air drops uh you get to invest in things that you otherwise wouldn't have gotten to invest in and so like you there's there's upsides and there's downsides and now we're talking about one of the downsides i think sadly another unsatisfactory answer is that like the kids that are raised with this financial system are going to become extremely fluent in this natively whereas people that are older that have to learn this thing just from top down just because we were faced confronted with this while trying to learn it manually, that we are the more vulnerable people.

Starting point is 01:14:20 Because once upon a time, we learned how to do Venmo and ACH transfers and all that kind of stuff. And we never had to worry about this kind of thing, which is why it's easy to fall victim to a trap when a trusted source sends you a link. And so the one part is just like, it's just going to take time.

Starting point is 01:14:36 There's also innovation to talk about. This is a problem. And problems inspire problem solvers and problem solvers that create useful solutions, get investment to scale those solutions out to the world. And so sadly, I don't really have a silver bullet here, but that's because there's 10,000 different answers that are all kind of good and kind of bad.

Starting point is 01:14:56 But when you put them all together, we have a solution, and sadly it just takes time. I want to echo, I think you said, made many of the points I would have made David with kind of competition and time and innovation and also upside. we are on the frontier. This really is the bleeding edge frontier. And I think some things that used to be more bleeding edge frontier are less frontier. So we can look at the past. It's much safer

Starting point is 01:15:23 to hold ETH in 2023 than it was in 2016. And to use a multi-sig in 20203 than it was in like 2017 or like to use uniswap. We've come a long way. And the way we've like the only way that's happen is through time and sort of like Lindy playing over time, which means like large amount of value and smart contracts. They don't get hacked over time and sort of risk boils out. So I do believe we're just in the Wild West right now. This is definitely the frontier. And that is bad because there's risks. I think it will get better over time. But there's no silver bullet. There's no immediate fix. But it also, on the flip side of that, once all the risk is boiled out of the system,

Starting point is 01:16:10 means there's going to be not very much upside left. So you, Oren, you're here in the early stages. You just had an event happened to you. It's happened to many in this space.

Starting point is 01:16:24 Sorry, right? Like, deeply. Like that, these types of things hurt. And yet, I think this is a short-term setback because the most fundamental thing is you are here, you are on the frontier. You're going to use this as a learning opportunity.

Starting point is 01:16:38 and you're exposed to so many more opportunities than the people with their money in Wells Fargo and the banking system are going to be. They're not going to receive the airdrops. They're not going to have the opportunity to buy ETH at 2K. They're not going to have the opportunities that you have right now because you know about this stuff.

Starting point is 01:16:55 So once it becomes less risky, it's also like the upside is not going to be there anymore. And that's just the tradeoff that we're dealing with at this point. There we go. David, we've got to take this week. And I think this is going to be the only take. that we talk about because it's a big one. It's a tale of two agendas. What is the first agenda here?

Starting point is 01:17:14 And then what is the second? Yeah, so these two takes juxtapose with each other. So here we have Shamath Polyapapatia, polyopatia from the All In podcast. And he tweets out, if you invent a novel drug, you need the government to vet and approve it, the FDA, before you can commercialize it.

Starting point is 01:17:31 If you invent a new mode of air travel, you need the government to vet and approve it, the FAA, before you can commercialize it. If you create a new security, you need the government to vet and approve it at the SEC before you can commercialize it. More generally, when you create things with broad societal impact, positive and negative, the government creates a layer of review and approval. AI will need such an oversight body.

Starting point is 01:17:52 The FDA approval process seems to be the most credible and adaptable into a framework to understand how a model behaves and is counter, and it's counterfactual. Our political leaders need to get in front of this sooner rather than later and create some sort of oversight before the eventual big, avoidable mistakes happen, and the genies are out of the bottle. That was the first take. Let's go ahead and go to the second take. Here is Naval.

Starting point is 01:18:17 Much of the innovation in the last few decades was in search, social, crypto, and AI because pure math is the last unregulated frontier. Invite the regulators in, and they'll freeze innovation here just as they did in healthcare and energy. That's the other side of the take. Ryan, which of these two takes do you like?

Starting point is 01:18:39 You know, I'm going to say the second. I was, I thought Chimoth's take, he was like, if you want to go back to the other one, it's like, the government, they've got, they've got securities, you've got to get proof, you've got to ask permission, aviation, you got to ask permission, drugs, you got to ask permission. I thought he was setting up for like, we live in a permission society, it all sucks. but then he goes full status and he's like, let's do it for AI.

Starting point is 01:19:09 And I'm like, what? I thought you were going the opposite direction, dude. I think that there is a mistake here in that, like, so what I think the mistake is, there is some, a little bit of truth in the middle, but it's like I'd still more veer towards Naval. Because I think the assumption that Jamath is making this tweet is that it's not like the full libertarian,

Starting point is 01:19:30 like a super hyper libertarian assumption of like, we don't need any institutions. The free market will. solve everything, right? It's like, I don't agree with that. But I don't think that the only regulatory institution has to come from the nation state, from a bureaucracy, right? I think we can develop other regulatory institutions outside of the FAA and the SEC and the FDA. And indeed, we are doing that in crypto in various ways, right? So I think that there is a lack of imagination when And there do need to be standards and harmony and sort of like institutions in place.

Starting point is 01:20:11 But they don't all, and coordination apparatus, but they don't all have to come from big government nation state. And I think Naval is right on when he says that sort of quelches innovation and like puts us further behind. But if Naval was to go as far as to say like, and therefore we don't need coordination, we don't need any sort of. institutions or like regulate and it's sort of just every every person for themselves then that is sort of a bridge to fall from far from me so I think what we are doing in crypto is really creating new institutions here and they're in their proto phase and they're very early but like defy open source code Ethereum as an institution that's more of the innovation I'd like to see and I think that doesn't come with the tradeoffs where you know you get big G to come in and they just totally squelch the thing and kill all innovation What do you think about that? Yeah, I think that's right. I think if Chamath's take, instead of saying, and we're going to need that for AI too,

Starting point is 01:21:12 was instead you can bet that that is coming for AI, I would have been like, yeah, that makes more sense. Well, but would you go as far as to say, okay, so let me ask you this, though. David, are you saying that we don't need any regulators? We don't need any, like, like coordinating bodies or institutions. are you just living in sort of a, you know, a libertarian anti-establishment, like utopia, Wonderland that doesn't actually exist?

Starting point is 01:21:42 I would say that all of our examples of regulators are in these pendulum of incumbent protecting corruption institutions on one side of things versus effective regulators. They're too far along. All of them are too far along on the incumbent. incumbent protection corruption machines. Even like the FAA? FAA, probably not that one. That one's more niche.

Starting point is 01:22:08 FD. So I've been talking to a ton of synthetic biology and longevity researchers, and all of them say that the FDA has held back their industries by decades. And they just can't do what they aspire to do because of the FDA. It's like, I don't know. The first time, the FDA. No, you said it correctly. But like, yeah, I don't. I think every regulatory institution has gone through the kind of this path.

Starting point is 01:22:35 Some are on the other side of corruption, right? So I have personally generally neutral to maybe positive feelings about the FAA, for instance. Yeah, FAA, we like you guys. I mean, it is safe, right? But maybe that's just because I don't know enough about the airline industry to be like, oh, they're blocking all of this innovation. I just don't know enough about it. But I do know it.

Starting point is 01:22:56 It's just like flight in general. Like the SEC, man, they are screwing up royally. They have abandoned their mission, right? And the FDA, I'm like learning a little bit more about it, but it sounds like those in various life sciences spaces will say they're just totally shitting the bet as well. Well, they delayed the COVID vaccine by like months.

Starting point is 01:23:18 And so our like, I mean, Chimoth says we need this for that for AI. Like, you want a Gary Gensler of AI? We don't even know that we need it yet. What would he do? like exert power, exert control? I mean, it sounds terrible. I bet you even Eliezer would be like, they're not going to do anything.

Starting point is 01:23:37 All right. Takes of the week. What do you bullish on, David? I am bullish on the future of ETH staking, this ETH staking industry. Okay, so with the Chappellella upgrade, we have the loop, correct? And so this is like staking 1.0.

Starting point is 01:23:50 The staking project is not done, but the foundations are set. So, like, you have ETH staking. You have withdraws. You can stake at home. It's only 32 ether. There is so many more new layers of innovation that come along in a stack to take e-staking from its existing but still primitive state to what we and I have always seen, which is

Starting point is 01:24:13 the global internet bond market. And so we got eigenlayer restaking. We got distributed validator technology. We got more competition in the long tail of liquid staking derivative tokens. We have interest rate swaps. We have all of this other stuff. We have MEV capturing Proposer Builder separation. The maturation and growth of the ETH staking industry is going to be so cool to watch.

Starting point is 01:24:40 And that is one bullshone. I agree. There's another point. This is an Anthony Sassano tweet. DVT on test nets and mainnet. And in our episode earlier this week, I think you actually coined this phrase. And I hope it catches on. Squad staking.

Starting point is 01:24:51 So you don't have 32Eth, but you want a solo steak? Grab some friends. Well, it's not solo at that point. It's squad staking. It's squad staking. Grab some friends and you make a squad staking unit. This is actually possible with some new technology that is here, but also early, called DVT, distributed validator technology.

Starting point is 01:25:11 This kind of allows that. So I think we've just scratched the surface. We had to get through withdrawals in order to unleash kind of the next phase of innovation. And I also am very excited about the future of staking, the future of eat staking in particular. But what else are you bullish on? But what else am I bullish on? Look, just Ethereum shipping, David. So we went just over six months,

Starting point is 01:25:34 I think closer to seven months from the September hard fork. We got another hard fork. We have withdrawals. And I think the next hard fork is probably, I don't want to put dates on anybody, but it's probably like another six to eight months away. Maybe that's a little optimistic.

Starting point is 01:25:51 But that's EIP 4844. And so at that time, we'll have proof of stake, we'll have cheap layer two block space and we'll have like we already have um ZK EVMs and layer twos are like blowing up so we have cheap block space we have proof of stake and we have layer two's firing

Starting point is 01:26:08 that is like what Ethereum has promised I think and that will be the fulfillment of the first set of promises that Ethereum really made the big core revolutionary promises that you and I signed up for in like 2018 Yes. It will feel like finally promises kept, promises fulfilled.

Starting point is 01:26:30 And I'm just excited how fast Ethereum is shipping. I think morale has never been higher. So very cool. What do we got for meme of the week? Meme of the week. This is a meme that you gave us. Her, this is one of those her memes. It's her.

Starting point is 01:26:44 Are you religious? Me, and there's this child, religious-looking kid in a white button-down shirt and a tie holding the Bitcoin Standard book. Have you ever read the Bitcoin? standard, Ryan? Of course I have. I love the Bitcoin Standard book. Why do you love it? Just the writing style? Just like the absolute like Safedine is a toxic character, the author is a toxic character who has to be blocked on Twitter, which is a big shame because like a lot of his ideas.

Starting point is 01:27:12 You're a huge fan of this book? Yeah. You would turn you away at a book signing because you're in theory. Okay. So I actually have a signed copy of the Bitcoin standard from Safeedina and I shit you not. CK from Bitcoin Media got it for me. And it has something in written in it. I can't remember what it was. But CK gave the book to Safedem's like, Hey, can you sign this for my like my Eith head friend?

Starting point is 01:27:37 And then Safedine wrote something along the lines of like Bitcoin, Bitcoin will be ready for you when you, when you come to it or something like this. That's hilarious. There's a lot of, there's like a lot of cool. Like the whole topic of like Fiat culture, I'm just a huge, huge fan of. I get it. But he, he, so I get it. And I also enjoyed that book, to be honest.

Starting point is 01:27:56 Like, I read it, like, all the way through. I didn't hate it. But I, it, when you turn it into a holy text, right? And like, I think- It is absolutely a holy text of Bitcoin. Well, that's the thing. That's where it's just, it gets weird for me. Because I see the point of, like, fiat culture means kind of, like, you know, like,

Starting point is 01:28:14 the concept of, like, fiat art, things don't, we don't spend as much time on things anymore. It's all sort of this product of, you've got some great underlying points. but that's almost turned into sort of a, like a religion, where anything fiat is... A little bit too religious religion. Like, I kind of consider all blockchains as like these sort of religions, but bitcoins have taken, parts of the Bitcoin community have taken this way too far. Anyway, that's, yeah, I laughed out loud when I saw this. So we're sharing that.

Starting point is 01:28:46 That's the meanly week, guys. None of this, of course, has been financial advice, including the token hub. We really have no idea what tokens are going to go up or down. Crypto is risky. But our analysts might, but it's still for entertainment of value, though. That's right. And so was this episode, as always. And 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 Staking Withdrawals | Shapella Upgrade | Arbitrum Governance Controversy

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