Bankless - ROLLUP: First Week of December

Starting point is 00:00:00 We're looking for a mobile wallet to hold and access your crypto assets. You need to go to argent.xyz and download the Argent Smart Contract wallet onto your Android or iOS device. Argent is one of the most secure ways to hold your crypto assets on your mobile device while still being able to access all the Defi products and services that we know and love. Argent has enabled one tap access to all the Defi applications that we all use the most and recently onboarded into the Argent app is the YERNs. vaults. You can now access yield from a specific vault from Wynne, and then Wynne handles the rest. Also new to Argent is Balancer and being able to supply liquidity to balancer pools and also receive

Starting point is 00:00:43 BAL rewards for doing so all from your Argent wallet. One of Argent's newest features is the ability to route trades and swaps through the various liquidity pools in the ecosystem, ensuring that you always receive the best rates when you trade inside of Argent. Argent has done a ton of effort into making sure that your assets are as safe as possible. They have social recovery options with their guardians feature, making sure that any trusted friend or family member can restore your access back to your Argent wallet if you were to ever lose or break your phone. And there's also some simple account features,

Starting point is 00:01:17 such as sending limits and whitelist accounts, making sure that your money doesn't ever do anything that you don't explicitly approve. In order to see the Argent wallet in action, go to argent.link slash bankless and download the app. We're also brought to you by Monolith. Monolith is your cool new Defi account, your Defi savings account, your Defy checking account, except the cool thing about the Monolith defy account

Starting point is 00:01:43 is that it gets software updates, right? You actually get to increase the usefulness of this over time. So here are some of the features. Monolith is a smart contract wallet with a lot of the features that you would expect if you've come to know Defi and what it is, You can add money to it. You can put that money to work in compound and accessing yield.

Starting point is 00:02:02 But you can also swap through uniswap. What was cool with Monolith is that they will send you a very sexily monolith visa card that connects to your Monolith smart contract wallet on Ethereum. So it's a really awesome tool to live a bankless life with a savings account that gets software updates. So this is something that you're never going to find out in the real world, but you can still do real world things with real money like buy your groceries. So that's just fantastic. Coming soon to Monolith, actually already here to Monolith is now you can buy,

Starting point is 00:02:35 die and get it sent to your wallet directly, right? So it's also being an on-ramp. So you don't have to go through your centralized exchange like Coinbase or Gemini or wherever. You can just go straight from your bank account right into your Monolith checking account smart contract wallet. So check them out at Monolith. thought XYZ. Bankless Nation, it is the first week of December. It is Friday morning. It's time for your weekly roll-up. What are we going to do today, David? We're rolling them up. We are rolling them up. We bring this to you every Friday morning, and this is our best attempt at taking everything that

Starting point is 00:03:10 happened in crypto and consolidating this to about 25, 30 minutes. We do this in five sections. We hit market. We hit releases. We hit news, some hot takes, and then we end with what we are both excited about. This comes out, as I said, every Friday morning on both the podcasts and YouTube, so you can check it in both places. David, you ready to get started? It's an ambitious endeavor to try and roll up the week of crypto, and especially this week because so much happened,

Starting point is 00:03:40 but we are about to attempt just that. So let's dive right into this. Okay, we are nothing, if not ambitious, David Hoffman. So let's go. Bitcoin price. We're talking markets. What happened in Bitcoin price from this week to last, my friend, from last week to this, I should say. So according to certain exchanges, we've actually passed previous all-time highs.

Starting point is 00:04:02 However, there hasn't really been that fanfare. And from what I can gather from the Bitcoin community, they don't really count all-time highs until we break $20,000. So while some exchanges have recorded all-time highs, I think everyone is holding off the big celebrations until 20K is breached. That's funny. So that price is just like tempting us, right? I saw some, I think it's like maybe Fortune or Forbes.

Starting point is 00:04:24 I saw some mainstream media report the all-time high, but I didn't yet see crypto Twitter really celebrate it. So that must be why, right? It didn't quite get there. It just, just the tip. Interesting feature of the crypto world that like, you know, each exchange has their own reporting of the Bitcoin price. Therefore, there's not one central place of what is the price of Bitcoin.

Starting point is 00:04:44 And so there is no actual, like, truth of what the Bitcoin price is. So we don't actually know what the all-time high is. And so people are just using like, all right, we'll just call it $20,000. Only a matter of time, though, when you said, like, we're just creeping right up there. Okay, Bitcoin on Ethereum, is that up or down? That is down. That is down a pretty big amount.

Starting point is 00:05:01 3,300 BTC left the Ethereum ecosystem. We are now at 140,000 and 400 of Bitcoin. People sell them their Bitcoin buying ether, David? What do you think? Well, even if they did it, it would still stay on Ethereum. That's true. All right. Let's talk ether price.

Starting point is 00:05:17 I had a pretty good week. as well and had a good week on the network side. We're going to talk about that, but from a price perspective, we moved from about 500 something, like the low 500s, 504 on the Smasari chart, to 612 right now. Who knows what it'll be tomorrow morning, but possibly in that area,

Starting point is 00:05:39 that's a big move. Yeah, Ether rejecting the 500s pretty, pretty hard, but also not necessarily being accepted by the 600s. Ether price has been really, really volatile. It's gone from 620 down to 570, like three or four times lately. And it's just bouncing around. But like to me, to me, it looks like it's just a matter of time. It could be any minute now before like the low 600s finally give way.

Starting point is 00:06:03 And it's just clear skies ahead of us. But what's going to happen? Is it going to follow Bitcoin? Does it need to wait for Bitcoin? Or is it off on its own crusade? The second one. The second. Usually I wouldn't have such a clear answer.

Starting point is 00:06:16 But December is the best month for Ether. historically five out of five times ether pumps in December and it also pumps versus Bitcoin in December. And it is now December 4th. Sometimes that historical price movements have started earlier in the last weeks of November. Sometimes it's actually been later into the first weeks of January. But historically, the last parts of the year are really, really bullish for ether. All right. You heard it here, folks. Ethe Price going to launch in December or so David Hoffman predicts it's not going to follow Bitcoin. It's going to forge its own. territory. This is such an interesting graph that I saw this week from, who is it? I am

Starting point is 00:06:55 Crypto Wolf. I know who this anonymous account is. He's a decently known crypto trader account. Yeah. Okay. Fantastic. All right. On the bottom is the Bitcoin price from 2015, 2014 to about 2017 into 2018. So like the last bolt run. And you can see kind of the pattern that it makes like from a crash all the way back to a recovery. And then in the top, you see Ether. And this is more recent. This is from like the crash of 2018, 2019 up until now. And this looks like a very similar pattern, right?

Starting point is 00:07:32 We've talked so much about crypto market cycles happening in these fractal patterns. I guess the interesting question here is, is Ether Bitcoin, circa 2016, 2015, 2016, and is it going to repeat this kind of price move? What's your take? Yeah, I've always been a fan of this theory. People would say that maybe that's like overly simplistic or overly reductive, but I think at the end of the day, like there's a common denominator. This industry moves in cycles. Ethereum has been one cycle behind Bitcoin, its entire lifespan. Well, I do think Ethereum moves at an accelerated rate compared to Bitcoin simply because it's kind of drafting in Bitcoin's wake, I think it's totally valid to like kind of compare

Starting point is 00:08:18 Bitcoin's previous cycle to Ethereum's current cycle, which means that we are just like ready to lift off on ETH price. But that also means because the numbers were similar, of course, market caps are different, but the actual unit numbers are similar. I mean, Bitcoin went from like 200s to 20,000 in the last bull run. So, I mean, if we repeated that in Ethereum, right, we'd be. we'd be going from like 300, 400, where we are now to 20,000 possibly. Well, yeah, the depth of this last bear market for ether was like $100-ish, right?

Starting point is 00:08:56 And so maybe, maybe, you know, that kind of plays into the 10-K meme. I think we're going to blow past 10K and, but maybe not for that long. But yeah, that puts us in the right range if we want to compare cycle for cycle. That is super bullish. And that would also be very crazy. These market caps are much higher. But this is something I found interesting. This is the new token terminal screen.

Starting point is 00:09:17 And if you sort by, most people sort by market cap, but I like this metric, David, which is price to sales metric. And if you look at all of the crypto assets from a price to sales perspective, this is almost similar to a PE ratio. There's also price to sales ratio in stocks. Ether right now is about 86, 86x, price to sales. Zoom. I was interesting like Zoom stock. We're using Zoom right now to record this. It's at about 90. So it has a higher price to sales ratio than Ether and then Ethereum right now. And by the way, this means that Ethereum is like for your dollar invested in Ethereum, it is producing more fee revenue than Zoom shares right now. Plus it has all of these other attributes like being

Starting point is 00:10:08 an actual collateral money, bling like a global money system growing like crazy. It just still, at this price point, feels incredibly overvalued by these sorts of metrics. What's your take there? You mean undervalued? Undervalued. Yeah, you heard a few of from Ryan, sell your Zoom stock. Buy. Yeah, that's what I meant.

Starting point is 00:10:29 That's what I'm saying. Exactly. Total lock value in DFI. That had a bump last week, right? What was the change? Yeah, 600. 14.1 billion to 14.7 billion in the last seven days. Meanwhile, DPI, also DFI Pulse's product, has gone up from $108 to $116.30. Pretty impressive. All right. So, Defi had a good week as well. How about, let's see here, should we talk about stable coins a little bit? We've now got 20 billion. We hit the 20 billion milestone in terms of the amount of stable coins.

Starting point is 00:11:07 in crypto, the vast majority of that on Ethereum right now, that's a 300% year-to-date surge. Yeah, the best thing to take away from this is like this is stable coins, the rise of stable coins on Ethereum and just using crypto payment rails is indicative of the value of the technology in its purest sense. Like people, people that were like, you know, blockchain, not Bitcoin or like infrastructure, not non-sovere sovereign money. I mean, first off, they were wrong, but they were still right about the technology. And the $20 billion of stablecoins using this technology is indicative of how incredibly valuable this is simply as like payments infrastructure.

Starting point is 00:11:46 Let's just get dollars onto crypto payment rails and use them. And then the second to third, fourth order consequences of this is just like more liquidity for ether, more liquidity for Bitcoin, more tools in your financial tool belt. Bolish. Absolutely. Last thing that's bullish, we got to move on. Defy lending is at an all-time high as well in terms of loans. originated in compound in AVE, from last month to this month, there was an 88% month-over-month increase. So defy loans, defy protocols, continuing to attract more capital and get larger and

Starting point is 00:12:21 larger and larger. David, we spent a lot of time on market today. Let's breeze through releases. What was the first release we should talk about? I don't know. Did something happen this week? I felt like something big happened this week. I think something big happened. Yeah, it was a big release. Oh, yeah. Ethereum. Yeah. Yeah.

Starting point is 00:12:39 That was it. Eat too. The thing we've been waiting for for like the last five years actually shipped, actually happened. This is the first block that we're showing you on screen. What about this? Not quite as inspirational as the Genesis block of Bitcoin, but certainly reflects the permissionless world of Ethereum.

Starting point is 00:13:01 Somebody in the Genesis block wrote this. Mr. F was here. Yeah. In each block in ETH2, you as a validator have the ability to graffiti something. So you get to write a short little snippet. In the first block that was mined in Ethereum 2.0, Mr. F was here was graffied. Apparently, this is a reference to Queen. Mr. Fahrenheit is something that, like, Vitalik signed a piece of paper for, like, forever ago.

Starting point is 00:13:23 I don't know the full story. But yeah, it's definitely already a meme. I'm looking forward to this meme, like, growing and maturing. Not quite as inspirational as Chancellor on the brink of a second bailout. But here we have it. We've launched Ethereum 2.0. It's what it is. It is what it is.

Starting point is 00:13:41 Okay, let's talk about Ether Capital. This is super cool. I stumbled across this. And actually, David, we're going to have Ether Capital on the podcast. I think we're recording next week. So sometime of December, you guys will check this out. But this is a publicly traded company that is primarily a holding company for Ether. So they're on the,

Starting point is 00:14:04 Toronto stock market exchange. So basically it's a Canadian publicly traded company. And you can buy them. And generally, they're just holding ether on their balance statement. They do a few other things. But it's a way for investors to get exposure in their traditional legacy brokerage accounts to ether of the asset just by buying this stock. And they are raising another 125 million in common shares. Guess what they're going to do with David Hoffman? I think they might buy ether with it. I think they might. The last time they purchased was, I believe, in like 2017, 2018,

Starting point is 00:14:44 they bought at kind of a different price range, but they're gearing up to purchase and hold more ETH. What's really interesting about this report is they actually go through and define what is valuable about ether the asset. And do you know what the core thesis is, David? Tell me, Ryan. It's triple point asset. Oh, weird.

Starting point is 00:15:08 So we see some of these Ethereum narratives bleeding and making their way into institutional investment circles, into publicly traded companies. This is almost like the micro strategy of Bitcoin, right? Like I don't know why this doesn't get reported, but there's a publicly traded company that only has ether on their balance statement. And they're creating more common stock to go buy more ether. and they've got a great value proposition, like delineated out, including like risks and upside and all of these things for investors in a public report. I think that's pretty cool, man. That is super cool. And it has off to these guys. They've been around. Like they've, they've went through the bear market with the rest of us, relatively quietly, I would say.

Starting point is 00:15:53 I mean, they're not really anyone. Yeah, they helped. And super looking forward to having them on the podcast. There's about to be a ton of just overall bull case for Ethereum podcast episodes coming out. So definitely stay tuned for that one. I've already sent this prospectus, I think is what this is, to a few people in my circles who just would appreciate specific content that kind of fits like the legacy mold of what a report looks like. This report, plus the Missouri report on Ether, like, is really indicative of the different

Starting point is 00:16:26 narratives and different just models of Etherium that has really just come to be known as canon truth. And that is something that I'm really, really excited about. Yeah, that's part one of the story. Part two of the stories are actually staking to. So this is the first publicly traded company that is actually taking some of their ETH and staking it. The internet bond concept turning ether into a productive asset.

Starting point is 00:16:49 Well, these guys are doing it. I don't think this will be the last publicly traded company to stake ether. I think in the future, there could be a time in the future where we see most financial Fortune 500 companies and certainly tech. companies with ether staking nodes. That is a future. I would not be surprised. In the office.

Starting point is 00:17:08 Yes, I would not be surprised to end the decade with that as an outcome. So I'm sure that there'll be more there. Let's talk about some of the staking rewards. So the exchanges are getting into the game. We've got Coinbase announcing the launch of Ethereum to staking as well. And Binance, of course, they had to one up Coinbase. And they're like, yeah, give us. your eth and we will double your rewards, your staking rewards, I'm not quite sure how they're

Starting point is 00:17:37 going to do that. But what's your take on this game? I mean, we knew this was coming. Centralized staking as a service provider. I mean, like, there's just too lucrative. It's too easy to make money. It's basically a free money service that, like, especially with things like Coinbase and finances, using infrastructure that they already have set up. It's, this is like, you know, one part good for Ethereum because this is just how Ethereum becomes adopted, right? Like, we want Ethereum to be easy to use. It triggers my defensive reflexes. You know, if too many centralized staking as a service providers crop up and start staking too much ETH, that's not ideal. But for now, like, I'm, I'm happy to see, like, that this staking of ether is becoming, like, industrialized and institutionalized.

Starting point is 00:18:20 It's still important in the long term, for sure. Yeah, absolutely. As long as there is a healthy balance, we will be monitoring that. Speaking of health, I guess this is a metric for health of network, we've been talking a lot about Ethereum's future scarcity engine, EIP 1559, which improves the gas markets on Ethereum, both in ETH2 and in ETH1, but also burns ETH as blocks are used. It's going to be a really cool mechanism. There was a report put together, a whole economics analysis study on EIP 1559 by somebody, I believe, maybe... Tim Ruff Garden. Okay. Tim Roughgarden from Cornell. Anyway, what's the TLDR of this report? The report just came out. Like, we've been waiting for it for several months now. What's the conclusion?

Starting point is 00:19:13 Yeah, Tim, Tim Ruff Garden is an expert in his field. And so this has been a highly anticipated report that a lot of people that were putting on the brakes in EIP-1559 were like waiting to see this report until they took off the breaks, right? A lot of people who were more cautious and wanted to just like make EIP-1559 just go through a few more hoops. This was one of the last hoops that they were waiting for. So now that this is here, that we have just a lot more confidence that, you know, EIP-1559 is going to do the things that we want it to. And so, you know, it's just full steam ahead, take off the breaks on EIP-1559. Yeah, the summary that Tim came out with is basically, yes, it does what it sets out to do and tends to do. from my analysis and some prominent folks in the Ethereum development community saw this report and are saying the same thing. Yes, this is exactly what we needed. Full steam ahead,

Starting point is 00:20:11 it seems like, with EIP 1559. That is good news. Speaking of full steam ahead, Vitalik put together an updated version of an Ethereum roadmap here. And it's good to see a number of these things with progress bars this time. In particular, you might see sort of the this green circle here, phase zero launch, that has happened fully. But you can get like a bird's eye view of all of the different work streams that are going on across Ethereum and their progress toward completion. The next really big, I think deliverable, of course, is going to be phase one. But after that, the one I'm most looking forward to is this eth one to eth two merge. But in addition to these major milestones, all of this work activity is happening to continue to improve the

Starting point is 00:21:00 Ethereum network. What's your take on this roadmap, David? Yeah, this is how you understand Ethereum in all of its glory. Like every single component of Ethereum that's being in development, being worked on, being integrated is here. Vitalik's made it for you. Check out the link in the show notes if you actually want to check it out. It will be made available to you. The inclusion of the progress bars is just a nice little thing for people who don't understand all of these things, like, you know, I don't understand like 50% of these things. The progress bars is nice. Like, no, cool.

Starting point is 00:21:30 I actually know exactly how far along we are in these things. At least according to Vitalik's relatively unbiased head. Yeah, it's also crazy the construction process that you see here because we're literally building a trust computer and we're doing it across all sorts of time zones and teams and geographies and decentralized ways. It's just amazing how this thing is being built. Just a crazy, cool, decentralized, bizarre way. that it's all coming together and I love it.

Starting point is 00:21:58 All right. Speaking of releases, David, we should talk about the Ave V2 on Mainnet. If you want to live a bankless life, you need to get a hardware wallet. There is no alternative for storing your crypto in a self-sovereign fashion. That's why I have four ledgers that I use

Starting point is 00:22:16 to manage my different crypto assets using the Ledger Live account as well. Ledger Live is like your home base for managing your Ethereum, defy and crypto accounts. It does a really good job of aggregating all of your different Ethereum wallets if you are the type of person that uses more than one, but you can also add other cryptocurrencies like Bitcoin or Cosmos or whatever your preferred blockchain is and then it will display an aggregate portfolio of

Starting point is 00:22:42 all your accounts at the main page. One thing that Ledger is doing a really good job of is enabling all the money verbs that me and Ryan talked about with the Bankless Gilcube enabled in the Ledger Live app. So right now in the Ledger Live app you can buy, sell, lend, swap, and stake your crypto assets, which is doing a really good job of fulfilling all of the money verbs in the bankless skill cube. Something that's new to Ledger Live is Ledger Swap, where you can swap assets one for another directly inside the Ledger Live application, ensuring trustlessness in your financial activity on Ethereum and on Bitcoin. If you want to learn more about what you can do with the ledger, go to the blog post The Power

Starting point is 00:23:21 of Ledger Live on the Ledger website, where they share some of the more advanced. things that you can do with your ledger that you might not have known about. There's a link in the show notes that will take you to the ledger shop where you can get your preferred ledger hardware wallets. I personally like the ledger NanoX, but I also have both. They're both great options. When you own a ledger, you own your own assets in the way that they have been designed to be held by the user and the user alone. So go get your ledger today to make sure that you are as self-sovereign as possible. The bankless state in the nations are brought to you. by WIRN. WIRN is Defi's first self-building community-run project, which I just get really,

Starting point is 00:24:01 really excited about. Wynne is a system that seeks out yield in DFI, and it does that in a number of different ways. A very aggressive way is with the vaults where you can deposit your preferred asset of choice, and different DFI experts will come in and generate a strategy for what to do with your deposited token, right? And so it'll go find ways to get yield in that deposited the token in Defi. For those who want to just earn yield on their stable coins, the Earn system is for you, where you can deposit your preferred stable coin, and Y-Earn will go and figure out which money market on DeFi in D-Fi is producing the best interest rate, whether it's D-Y-T-X, it's compound or AVE. It looks around DeFi to see where the yield is coming from, and it directs stable coins

Starting point is 00:24:45 automatically so you don't have to. Check them out at y-earn.finance to get started, and also check out the stats page to see what other people are doing. about the AVE V2 on Mainnet. So AVE has been an important lending borrowing protocol. And they just went live on mainnet. This team never stops shipping. Any highlights on V2 that you want to emphasize, David? Yeah, this is where the AVEA protocol goes from being, you know, kind of backstopped by a centralized team to really being backstripped by the community and specifically backstopped by the Avey token. And the most important thing I think about V2 is the inclusion of just like being able to stake your AVE to bear the risk of the protocol but also

Starting point is 00:25:27 receive extra rewards. And so like that that's a good token model in my eyes. Tocons that have risk in them should also have rewards and that's how the AVE token is changing in this particular B2. That makes me excited about just like you know overall good mechanism design in the space. Yep. Big release from the AVE team. All right, David, we should conclude releases and jump over to news. Some big news this week, too. The first is not the fact that Ethereum 2 is launched, but the fact that the Ethereum 2 launch actually made mainstream media, CNBC. I've actually never seen a technical launch like this, make mainstream media. Now, it wasn't like front page. I'm not sure that it was reported on TV or anything, but this is some at least mild exposure

Starting point is 00:26:15 to what's going on. What's your take here? Yeah, it's interesting they didn't include Ethereum in a title, the title of the piece is the world's second biggest cryptocurrency is getting a major upgrade. Here's what you need to know. But I mean, headlines or headlines. Like, you know, you read that, but you see Ethereum. Yeah, absolutely. I think the biggest news this week is this, though, David, Visa partners with, this is in Forbes, Visa Partners with Ethereum Digital Dollar Startup that raised $271 million. When you get into the body of this, what this is actually saying is Visa is partnering with Circle to allow USDC Circle Stablecoin that is primarily settled on Ethereum today.

Starting point is 00:26:59 They're connecting, visas connecting at 60 million vendors, giving them the ability to essentially settle payment, settle receivable transactions using USDC as a stable coin, eventually maybe issuing Visa cards against it as well. This is a huge win for stable coins in general, for USC and Circle specifically. But all of this is going to be using Ethereum as the final settlement layer because that's where USDC's liquidity lives, which is super exciting because I think it's part of the trend that we're going to continue to see, which is large payment processors and fintech companies, are slowly migrating out existing banking infrastructure and swapping that out for

Starting point is 00:27:46 crypto-based infrastructure with ledgers like Ethereum. What's your take here? Yeah, I don't think that when Visa is running USC through its credit cards, that will be making a transaction on Ethereum. I think it's going to be like its own off-chain like L2, but ultimately at the end of the day, the balance of USDC is held on Ethereum, right? And so like maybe different claims about one particular balance of USC on Ethereum

Starting point is 00:28:13 is being shuffled around in the Visa network. and that doesn't make it to Ethereum, but like the overarching balance of USDA is still determined by Ethereum. So I don't know if that's, do you know what the actual nature of this is? Yeah, so I mean, basically, they will continue to do a ton of USDC transactions on their own private ledgers, right,

Starting point is 00:28:34 sidechains, like in their own databases. But ultimately, the USDA lives on Ethereum. So if you ever want to settle between Visa and someone else, you might use something like Ethereum, or you could just buy that and use, you know, trusted side chains, if you will, like Coinbase, like Circle, like USDC. Or like- It's claims for USDC in a specific Ethereum address.

Starting point is 00:28:58 Exactly, right? So the primary, the primary, I think the cool thing about this is essentially it's a swapping out of using existing financial banking infrastructure for assets that ultimately get settled on Ethereum, right? And of course, you could still do these in your own private ledger and a lot of that transaction. They're not, not all of these transactions will happen on the Ethereum network, obviously. That would totally bog down the network. We don't want that.

Starting point is 00:29:27 But ultimately, they can settle on Ethereum. What this also does is it gets Visa into the Ethereum and crypto world. So now that they can support an ERC20 like USDC, what other ERC 20s can they support in the future? What does this continue to unlock? So it's a baby step, but I think it's a super important step that in 2017, I mean, something like this would be like absolutely mind blowing. And now it's starting to happen. And I don't think the world has yet noticed. No.

Starting point is 00:29:59 The other thing it did is Ethereum always wins this thumb war, right? Like Ethereum got put under Visa, right? And what does that remind you of? Like that's the protocol sync thesis. Yes. So, you know, Ethereum, Visa is now built on Ethereum. Congrats Visa. Yeah, well, it's, yeah, absolutely. And I think more and more that will, that will be the case with some of these fintech companies. David, another exciting development. I'm not sure if I have a link about it. Oh, I've got my own tweet. It's not self-serving. All right. SMP, the S&P, so standards and in PORs, they have this S&P 500 index and they also maintain the Dow Jones Index. Well, in 2021, they're actually going to launch a crypto-specific index. I think that's pretty big.

Starting point is 00:30:43 big. That is piercing into the mainstream financial indices of the world, David. It's an important signal that mainstream finance is starting to take notice of what's going on in crypto. Any thoughts here? No, I'm bullish. I'm bullish. We should talk about bad gov and good gov. I feel like we have some things that the government is messing up or some actions that are maybe negative for crypto, but also some things that are positive for crypto going on almost every time when we do these roll-ups. The first one, this is probably a bad gov thing, is we've got this stable act, it's called, legislation that's just a bill right now.

Starting point is 00:31:25 I'm not sure that it has a chance of passing, but can you describe what this bill is? This is a U.S. bill in Congress right now. Yeah, this bill, the reason why it's bad is, first off, it fundamentally misunderstands how these systems work, right? And so like the maximum extent of this bill would hold any node providers or valuator nodes or anybody doing any mining of Ethereum to be responsible for any sort of like a stable coin financial activity that goes against the laws, right? So if somebody makes a USDC transaction that quote unquote breaks the law, like you as a node operator of the of the Ethereum network in the most strict sense of this interpretation of this bill could be liable for processing that transaction. So like, what the fuck? Like, totally ridiculous.

Starting point is 00:32:12 Like, that doesn't make any sense. And it's also totally arguable that, like, even with this legislation in place, this doesn't actually do anything. Just a pure example of just bad regulation. And, like, it's disruptive of innovation and doesn't actually do anything good. Yeah. Well, I mean, I think the big thing is the whole notion of this bill is very couched in. We want to help, like, those who are in lower socioeconomic,

Starting point is 00:32:40 economic classes because stable coins are predatory towards them. And I'm not sure that that is really, like I'm not sure that anybody in like lower socioeconomic classes are actually using stable coins today. I mean, there are things like short term loans and like, you know, payday lending, that sort of thing. There's like lottery systems that I think there's a strong argument that those things are predatory, but not stable coins. I mean, staple coins are just being used by a bunch of crypto geeks today like us, right? Yeah. Field farm.

Starting point is 00:33:13 So there's that piece, but the other piece is in order to help this group of people, the legislation is actually saying that any stable coin issuer would have to register as a bank. You have to get a bank charter. So you have to essentially get the Fed's permission. This includes protocols like Maker Dow, which is also ridiculous. Absolutely. And of course, banks themselves have been known to,

Starting point is 00:33:40 restrict access to all sorts of people in the United States and obviously across the world and discriminate against them actively. And something like Ethereum, getting an etherdress, all you need is a keyboard and an internet connection. And there's no bias. Like it's completely credibly neutral. It doesn't care how much money you have, how much you make, like what color your skin is, anything. And you can get a bankless bank account. So I don't know, David. Do they just not understand what's going on or is this like malicious? This bill is not bankless. That is not what that is. All right. I kind of want to do a quick shill here of Gitcoins around 8 just started and the center, which is basically the protective shield around the crypto industry from bad legislation like this.

Starting point is 00:34:29 They've already made a blog post about how terrible this bill is. So go read that. I'm also going to include that in the show notes and also consider donating to CoinCenters get coin fund. Yeah, absolutely. They're doing important work in D.C. Let's talk goodgov because, you know, we've often said almost every week we see a new central bank talking about going digital. And I think this is going to be a boon to crypto. Of course, this is not the same thing as crypto, but moving into the digital world is probably going to have a strong link with crypto. The latest is the Bank of Canada that is accelerating its digital currency plans. You know why they're accelerating, David. it's really because COVID. So the pandemic has kind of accelerated plans for all central banks to become a bit more digital. And that moves all central banking systems a bit more towards digital currency and ultimately

Starting point is 00:35:23 towards cryptocurrency. Any takes here? Yeah. No, to be expected, there's going to be a constant massive reorientation of the financial system over the next one, two, five, ten years. I saw a meme recently. I won't try and describe it, but basically there is the central banks of the world are going to go and just route around the commercial banks of the world by issuing their central bank

Starting point is 00:35:46 digital currencies. And then the meme I saw was like, well, then the commercial banks are just going to adopt like cryptocurrencies, right? Because they're allowed to do that. And so like there's going to be just a massive reorientation. And that's kind of the path that I see ahead of us. Yeah. And it does feel like all of the institutions are scrambling to figure out where.

Starting point is 00:36:04 their new seat at the table is. And some of them don't even realize there's a new table set up. So I haven't even begun to scramble. But they will find out soon. And a last thing we should talk about is this. In China, do you remember that major crypto Ponzi scheme called plus token? Okay. So the Chinese police have seized $4.2 billion. This is all funds from the Ponzi scheme, plus token. They cracked down, they found the people behind it, and now they've confiscated the funds. How much Bitcoin and Ether is this, David? Yeah, the Chinese government sees 194,000 Bitcoin and 833,000 Ether. So, like, the majority of this value dollar-wise is Bitcoin, like roughly 75%. And then the remaining, like, there's like 20% of that is ether. And then there's some, like, you know, ghost chain coins as well.

Starting point is 00:36:57 that's a lot of Bitcoin. That's also a ton of ether. It's more ether than the Ethereum Foundation has. That's not good. That's crazy, but where's it going? This is a crazy part of the story. Where's it all going? It's going to the balance sheets of the Chinese government. Yeah, it's going to their national treasury. Yeah, right, let's put that one in the bank and like, all right,

Starting point is 00:37:17 staking on ETH too, right, guys? Wow. So now the Chinese national treasury has more funds than the Ethereum Foundation. I wonder how this all shakes out. Do they keep it? Do they sell it? I want to know how privy are they to like the world of crypto? Like are they like, all right, cool, let's fucking dump this shit and get our cash run? Or are they like sweet?

Starting point is 00:37:38 We own part of Ethereum. Like, what's their knowledge like? There's probably a crazy story behind how they got the private keys to. Don't want to know that one. I don't want to know that one either. Anyway, moving on. Okay, that's news. Hot takes, David.

Starting point is 00:37:53 What do you think about this week? Yeah, I was kind of alluding to it just now with the Chinese bank digital currency, but like the world of crypto feels like this asteroid that's coming to the world of finance, right? And like everyone sees it. The central banks see it. The commercial banks see it. The payment processors see it.

Starting point is 00:38:10 The people see it. And like we're all reacting differently. It's like, all right, how are we about to like absorb this asteroid? And I feel like for the people, the easiest answer and the easiest option is like, oh, we just buy Bitcoin. We just buy ether. Like we just hop on board the asteroid. Like that's how we like absorb that shock. Central banks are trying to absorb that shock by pivoting to central bank digital currencies.

Starting point is 00:38:31 Payment processors are trying to absorb the asteroid by like paying like using crypto assets on their payment rails. Everyone's responding differently. But like what we do know is that the entire financial world seems to be like bracing for impact for this massive just like collision of two worlds that everyone thinks is going to happen over the next like one to like four years. So like that's that's my take. So it's an asteroid for some is your take, but it's not an asteroid for everyone. It's not a destruction asteroid. It's a just a big deal asteroid. It's okay. It's just going to shake things up and change everything. It's going to be a reset in the way that the internet was a reset for a whole bunch of countries and nations and

Starting point is 00:39:11 that sort of thing. Okay, gotcha. Yeah. So I mean, do you think all of them see it coming or some just like, you know, the dinosaurs are just like walking around doing their thing and you know, suddenly the sky's on fire and all your friends are dead. Yeah, totally. There's definitely going to be a spectrum of like institutions that are like doing a good job preparing for this or like totally naive. And the ones that are naive about crypto at this late in the game, like the ones that are just putting a blind eye, like they're not going to make it.

Starting point is 00:39:41 They're not, they're not ready for this for what's coming. Yeah, absolutely. All right, Ryan, what's your take? Okay, so I was struck this week by, again, by the inevitability of, of crypto, right? There's obviously demographics in favor. Like, who under 35 do you know favors gold over, over crypto, right? Not a single person. Like, not a single person, right? So, I mean, there's just this inevitability about it, but the pandemic that happened this year, I feel like moved up the timeline by about three to five years on all of these things. And someone asked me,

Starting point is 00:40:19 like, I tweeted something like that out. And someone asked me, well, like, why? What were the, what were factors. And I think it comes down to four things probably for me. The first is the pandemic caused everyone to go a bit more digitally native than they previously were. Like David, we've talked about before. You and I have never met in person. Never. Never. Right? Like, but we're able to accomplish everything we need to for bankless and for our work and for collaboration. Pretty high functioning of individuals. Yes. I mean, but I spend more time on screens than I ever have. So do so do so does everyone I know basically. It's like we're all more plugged into the digital. And so things that are digital will obviously benefit from that. Tech companies for sure. But digital currencies and

Starting point is 00:41:04 digital nations and digital worlds will benefit from this metaverse that we are starting to plug ourselves into it. So that's number one. The second is this decreased trust in institutions, right? There's this overall perception that governments failed with COVID, right? Whether, like, to what degree that's true versus not, there's still the perception that our institutions totally failed us, right? And so we don't trust government anymore. And that was true before COVID, too. True before COVID. But all of these things act as an acceleration, right? The digital was true before COVID. But we've probably moved up the timeline for crypto three to five years because of the pandemic. Yeah, totally. The third is this, this illusion of money. And that's all money is. I'm reading

Starting point is 00:41:48 that Jacob Goldstein book that you recommended to me, David, on money, right? We're going to ask him to come on to the pod in the future. Oh, he needs to you, man. But his basic premises from the very beginning, he goes to the history of money. It's like, oh, money is just a belief system, right? It's something we said often on bank busts, and it is. Well, what happened in COVID is the illusion of money just became less real. Why? Because we're getting helicopter money. We're like, we're printing it. We're getting checks. And it's like, oh, this scarce asset that we thought you had to go work to earn. Well, now the government is sending us checks for this money. And they can just print it at a whim. And so we start to think of ourselves, well, maybe it's not that scarce.

Starting point is 00:42:26 And like, why are we paying taxes? And then we start to think too, we start to think too much about money. And when you start to think too much about an illusion, it's like a magic trick. Right. Start to think about that illusion. You're like, well, you know, it's gone. It's not real. Like the magic leaves. So there's an element of that. We're thinking more about money. And so the illusion is sort of dissipating into this mirage. And that's going to corrode the fiat system, I think, in favor of crypto. And the last is this, an acceleration of central bank digital currency.

Starting point is 00:42:59 And the reason they're doing this, of course, is because modern monetary policy requires it, right? In order to get all the dials you need, like negative interest rates or the ability to incent people to spend money or save money, it's really valuable to have a centralized bank digital currency. where you can tweak those styles a little bit. Like we're at QE maximum.

Starting point is 00:43:25 We can't even like do any more QE. So that as a monetary policy measure has kind of extended its life. And the only thing we can do now is digitize all of our, all of our Fiat money and effectively play with more of the dials. So that if you own central bank digital currency in your digital wallet, let's say, well, this particular month the Fed has dictated that we're actually actually going to like decrease rates by 1% and you're going to get negative yield and there's kind of nothing you could do about it. The Fed really needs these types of knobs to do what, you know,

Starting point is 00:44:02 helicopter money to change kind of yields in the way that they need to in the future. So all of this, David, I feel like has totally hit the accelerator, hit the gas pedal on the coming of crypto. Like without COVID, like without COVID, and I'm not saying COVID's a good thing. I'm just saying this is what's happening, crypto would probably take another three to five years to get to the place where I think it's going to be in the next couple of years. Right, yeah, that makes sense to me.

Starting point is 00:44:30 And I'm reminded of our episode with Ben Hunt, which we labeled like the people's narrative. And what he talks about with his newsletter, Epsilon theory is he talks about like the alpha and beta of markets, which are like the fundamentals. But the Epsilon, which is what he claims to be equally important as part of markets, is like people's perceptions of what's valuable, people's thoughts about what's valuable.

Starting point is 00:44:51 And I'm also reminded of a lot of the work that Brandon Quidim has been putting out lately called Bitcoin and the Fourth Turning. Fourth Turning is this book about how there's this time period called a seculum of 90 years long. And it's basically one long lifespan. And how there's always this turning of the wheel like roughly every 90 years. There's this big just shift, this cataclysmic change in perception, usually correlated with some events, but not always. but it's just a complete restructuring of how people think about the world.

Starting point is 00:45:20 And that's what I'm seeing with like money managers like Paul Tudor Jones who are waking up to Bitcoin. That's people understanding that like Ethereum is the last bastion of yield in the world. And then exactly what you were talking about about like moving digitally like sooner, faster, quicker. The world perception is reorienting now. We're losing trust in institutions. We're gaining trust in cryptocurrencies. And just all at once, people's focus. and attention. If like you like we keep using that saron image of like the eye of saron,

Starting point is 00:45:50 if the eye of saron is like one amalgamation of everyone in the world, like it's redirecting focus into different places, different solutions, different financial systems, different monies, different realms of existence in the metaverse and the digital world. And it's all happening at once. And so I'm I totally see it too. Paradigm shift. All right, David, let's talk about what are you excited about these days in crypto? Yeah, in the same vein of like things moving online. I'm really excited for new friends to come into the world of Ethereum over the next one to two to three years. Like this is the time where people, where Ethereum as a community expands. This is where we like welcome in new people into the world.

Starting point is 00:46:31 Right. And so I'm excited to see all the new people come. I really want to meet them. I want to see who they are. Why are they coming to Ethereum now? Like what is their perception of Ethereum like as a newbie? You know, crypto has a little bit of for everyone and like as COVID rears its big ugly head, like yet again in this big wave. Like, we're all stuck at home now.

Starting point is 00:46:51 And like not only does like crypto provide you financial tools, but it also does a lot of other stuff too. There's a lot of positive second, third, fourth order consequences that are comes with like stuff on Ethereum. That's that's community. That's like collaborative projects. That's mutual endeavors. And like it's doing it in an online like no contact environment. So like as people are shut in like they're going to learn about Ethereum and they're going to find their niche in Ethereum. They're going to join the community. They're going to join the conversation. Our community is going to be richer as a result of that. And I'm excited to just with open arms, everyone that comes in and say hi. That's so cool, David. I mean, it could be the case of the

Starting point is 00:47:30 smartest people in crypto haven't even joined crypto yet. And they're coming, like in the next generation, a bunch of interesting people are going to enter this space. Very exciting stuff. Yeah. What are you excited about, Ryan? All right. I feel like I'm excited because we are so early. three most important events, in my opinion, crypto, January 3rd, 2009, the launch of Bitcoin, right? July 30th, 2015, the launch of Ethereum. And then just this week, December 2nd, 2020, the launch of ETH2 and the ether bond. And the last one, at each of these events, they were barely noticed by mainstream media, including the last one, right? There's 5,000 people on the live streams that we did for the Genesis block, just 5,000.

Starting point is 00:48:15 I mean, if people knew the significance of this, it would be broadcast across CNBC and CNN and all major media. And it wasn't, which makes me all the more bullish because neither was the launch of Ethereum. Neither was the Satoshi White Paper and the launch of Bitcoin. So number one, we're early. That's pretty exciting. The second thing is the truth is now out there, David. We talked to Masari. They got the narratives right.

Starting point is 00:48:40 Mainstream crypto media is actually starting to get Ethereum right. And what do I mean by that? Well, there's, like, they're starting to understand ether as an asset. And I feel like that seed has been planted from the Misari report. We did a state of the nation on it. Here's a quote. It is very likely that once ETH one merges with ETH2, Ethereum will not only become the most secure blockchain, but also the one with the most credibly low monetary policy, right?

Starting point is 00:49:05 A scarce asset. ETH is money. That's what we've been saying for the last two years. And the narrative seed is now planted. We don't even have to do anything. That seed is planted. It's just going to continue to. grow and it's almost inevitable going back to that so we've launched we're early the seeds planted

Starting point is 00:49:22 it's in I feel like the future is now inevitable it's just going to continue to grow and I'm excited to be part of it along for the ride as they say we're going to do our little part but so much of this is just going to grow just based on like that that wheel you're talking about like nothing it's kind of unstoppable at this point yeah and and this is why community in crypto is so incredibly important. Like Ryan, you were beating the drum. I was beating the drum. Anthony was beating the drum. Eric Connor was beating the drum about like how some of the economics of Ethereum are going to turn it into the coolest blockchain ever, basically. And that is that is like the eth is money narrative, the eth is bond, like the security of the

Starting point is 00:50:05 Ethereum network, all these things that we've been beating the drum for the last two years, finally coming into reality, as we said they would. And now, now that you like you said, that's bubbling up to like places like Missouri. And so like we couldn't have done that without a community of people like all saying the same things. Like that's where that came from. And so if you ever in the depths of the bear market said, you know, like eth is money or any of the other things like triple point asset like secure most secure blockchain,

Starting point is 00:50:31 reduce issuance for proof of stake, reduce issuance via EIP 1559, you had a part in that role as well. Absolutely. All right, David. I think we went a little bit over. But there's just so much happening this week. You guys needed to know. We roll it all up for you as we do Friday mornings.

Starting point is 00:50:46 Hope you're enjoying yourself and you enjoy the weekend. This has been the weekly roll-up with David Hoffman and Ryan Sean Adams from Bankless. December's the best month for Ether. Fucking send it.

Bankless - ROLLUP: First Week of December

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