Bankless - ROLLUP: First Week of January

Starting point is 00:00:00 What time is it? It is roll up time. Ryan, what are we doing? We are rolling up the week in crypto. This is the fastest way to get your week in crypto news. What do we cover, David? We cover the market. What is the market saying?

Starting point is 00:00:30 It's saying a lot this week, by the way. Then we go into releases what got released in the last week. Then we go into the news, what's happened in the last seven days of news. Then we share some takes from friends in the ecosystem that. that we think is interesting. And then lastly, we finish up with what David and Ryan are excited about. Awesome, man.

Starting point is 00:00:50 So this comes out every Friday morning with your morning coffee. So please enjoy it on YouTube or on the podcast feed. David, you ready? Yeah, let's do it. There's so much to cover this week. It's the first week of the year. And there's just the most amount of news we have ever had on a weekly roll-up. So it's going to be jam-packed this episode.

Starting point is 00:01:09 All right, happy-night is the world's most trusted cryptocurrency exchange. I've been a customer of Gemini since I first got back into crypto back in 2017, and it has been my main exchange of choice to make my crypto buys and sells. Gemini is available in all 50 states and over 50 countries worldwide, and on Gemini, there are markets for over 30 various crypto assets, including many of the hot defy tokens like Wi-Fi, Avey, Uni, and also they are one of the few exchanges that has liquid dye markets. Having both the option of logging into the Gemini.com website,

Starting point is 00:01:43 or instead opening the Gemini mobile app has allowed me to be able to access any and all exchange and on or off-ramp services that I've needed to on a moment's notice. With instant deposits and fast withdrawals, I'm able to make my money do the things I want it to when I want it to. You can buy crypto safely and securely on Gemini with the peace of mind of knowing that your investments

Starting point is 00:02:04 are insured and protected with industry-leading cybersecurity. You can open up a free account in under three minutes at Gemini.com slash go bankless. And if you trade more than $100 within the first 30 days after sign up, you'll be gifted a free $15 bonus. Check them out, Gemini.com slash go bankless. Synthetics is Ethereum's decentralized derivatives liquidity protocol. What does that mean? Synthetics is a platform for creating and trading synthetic assets, which are assets that are priced via an Oracle rather than bids or asks. Traders can use the Quenta Exchange, which hosts and trades all of the synthetic assets created by synthetics.

Starting point is 00:02:48 Traders on Quenta can trade synthetic tokens like SBTC, S-Oil, or S-D-Fi. Because Quinta is powered by synthetics, traders experience zero slippage on their trades. No, I didn't mean low slippage. I meant no slippage, because that is the power of the synthetics platform. No slippage on your trades. You can also easily short assets with I-Synths, which are synthetic-assified. assets that move inversely to their target asset. Synthetics isn't just for traders.

Starting point is 00:03:15 Developers can build on synthetics to access the infinite liquidity offered by synthetic assets. Or investors can stake collateral to the protocol and earn fees that the protocol collects. If you're a trader and you're looking for a trading platform not found in the legacy world, check out quenta.io. If you're a developer or you just want to earn yield on your collateral, go to www. where you can stake your SNX or ETH and earn fees from synthetics. All right, happy 2021 to everyone. Let's start with Bitcoin.

Starting point is 00:03:49 Dude, it just hit 40K as we're recording this. Yeah, like 20 minutes before I recorded. And then it was actually like $3,000 right afterwards. But it's still up there, still pretty close to 40K, which is pretty insane. Bitcoin has doubled its market cap in the last like three weeks. That is crazy. That has never happened before ever. Wow. That is like absolutely we are in the bull market. And if you look at all of 2020, this was an interesting headline this week. Bitcoin actually closed 2020 as the best

Starting point is 00:04:23 performing asset of the year. No, of the decade. Wow. Incredible. So there is, I feel like at this point there is, I don't know what the line is, but you never get fired for investing in IBM. This is the point where like Bitcoin, people like won't get fired for investing in Bitcoin. I feel like we're crossing that bridge. The best performing asset of a decade is unignorable asset managers, money managers. Like there's now like stronger deniability with investing in Bitcoin at this point, which I think is just really strong tailwinds.

Starting point is 00:04:57 It's definitely on the radar for institutions everywhere. Even J.P. Morgan. So J.P. Morgan's at a long term, a price target. at Bitcoin of Bitcoin just this week for 146K. David, you think that's bullish or bearish coming from JP Morgan? My price target is higher than that, but JP Gordon, a bank that used to be bearish, Bitcoin, now saying that Bitcoin's going to reach almost $150,000. I don't know how they came to such an accurate number, $146,000.

Starting point is 00:05:27 That's very specific. I haven't read the article. Maybe I should have read that before we got into this. But still, like banks setting extremely. high price targets for Bitcoin. I think the coolest thing about this is that banks are understanding or legacy institutions are understanding that this industry moves in exponentials. It's not that Bitcoin is at $40,000 and then next year it's going to be $55,000. They understand that Bitcoin is going to put on five times or something. It's market cap. Absolutely. Okay. Speaking of exponentials,

Starting point is 00:05:57 ether, the price of ether has been on a tear lately. Wow. What did we do for the last seven days? Yeah, we over the last seven days, we have climbed from just $750 to just under $1,300. Mind you, the all-time high price for ether is $14,020. We still have a little bit to go. This kind of feels like when Bitcoin was hovering around the 9,000 mark, really flirting with all-time highs, but, you know, making sure it really milts the, you know, crypto-twitter and all of our attention out of it saying like, when's it going to break all-time high? wins again for the all time high. Now Ether is doing that same thing, just dancing right under all-time highs.

Starting point is 00:06:37 That's going to be a really fun day when it finally breaks. Ether's just teasing us, guys, but it did break something. It broke its market cap all-time high, of course, which is $145 billion or so. And of course, market cap all-time high is different than price all-time high because over the last couple of years, ether supply has increased at a rate of about 4% or so per year. So we've already broken that number, David. And the only thing left is that magic number of 1420. So, guys, 1420 is the all-time high number to beat. And as you talked about on the City of the Nation last week, David, do you remember 2018, 2019 bears when everyone was saying Ether would never hit its all-time high?

Starting point is 00:07:19 Again, it was just a flash in the pan, a brief moment in time with the ICO search. And now here we are, David, right on the cusp. Pretty exciting. And I feel vindicated. because we've been talking about this for the last two years, right? Yeah, you know what I was doing when Ether was like $100 and people were saying that ether is going to go to zero? You know what I was during that time.

Starting point is 00:07:41 Were you crying, David? Or were you like? No, I was pulling out my calculator and I'm calculating how much ETH I had and how much money I would have if Ether made it back to its all time high. That was two years ago. And now we're almost at that point that I envisioned when I was pulling out that calculator. For sure. It's pretty exciting times for all.

Starting point is 00:08:00 of crypto and especially for those ETH bulls who've been hanging in the trenches over the last two years. Also for the DFI bulls. So the DFI pulse index just hit 180. That's an all-time high as well, right? Yeah, defy tokens are heating up, right? They still really haven't had their day. Today, actually, YFI, one of my favorite assets, finally broke through. It's like 24, $24,000 mark to jump all the way to $35,000. Avey is at an all-time high of $120-plus uni. is moving up to $6.5.5. So defy tokens are really strong, but still haven't stolen the show yet. And that is something that we'll talk about later in this weekly roll-up. I think that that is coming. You know, what's interesting about the Uniswop market cap is, right, is like somewhat people are

Starting point is 00:08:47 going to start benchmarking that with the Coinbase IPO market cap because like Uniswap at brief moments last year surpassed Coinbase as far as exchanged volume. So you have to wonder what's a better buy at these prices. Is it the Uniswap token or is it the Coinbase IPO? I guess we'll see. Yeah, there is such an easy comparison between Coinbase, which is going public on a stock market, which with Uniswap that's already public in Defi, right, and doing comparable amounts of volume. If you are trying to get into and gain exposure to the Defy ecosystem to leverage all the principles that Defy offers, Uniswap is a perfect asset for that with a legacy comparison. And that legacy comparison is theoretically going to go public at $50 billion where uniswap is under

Starting point is 00:09:37 $2 billion in market cap. There is some alpha there. There is possibly some alpha. Now there are, you know, some critics of that sentiment would say, hey, it's a governance token. It doesn't have the cash flow guarantees that something like Coinbase would have and fair enough. But as we've talked about before, these are emerging as defy capital assets. So we think that comes into play soon. You know, the other thing, when we talk about bull markets and how it's face melting, this is the kind of thing we're talking about. Like, I didn't even know. We hit 22, over 22 billion in total locked value in defy. And I didn't even notice. David, it seems like only yesterday we were celebrating one billion total locked in defy. Here we are at 22. Just last week, it was like 15. What's going on? Dude, my face is getting melted. Yeah. For listeners who listened to last week's weekly roll up, we were at 14.4 billion locked in defy. today we're at 22.8 billion locked in defy.

Starting point is 00:10:33 And I remember making a tweet, something along the lines of in 2019 that, hey, like, value locked in defy just hit $10 billion. And that was last week and no one noticed. And like the same thing's happening with $22 billion. No one really seems to be surprised.

Starting point is 00:10:49 I think the next stop is really going to be $100 billion, just like, there's a conversation we're going to have later in the episode, but things move in exponentials. Yeah, I was feeling nostalgic, right? is like the only time we celebrate this stuff going to be like from one we celebrated that in a hundred billion maybe we'll have to see if that's the case the another thing to celebrate i suppose is this one

Starting point is 00:11:10 was passed me by too we have one trillion market cap if you look at all crypto asset market caps in total so this includes ether this includes um bitcoin this includes all the defy assets some other things to you thrown in one trillion market cap the world's got to be paying attention to an asset class that has grown from 11 years ago to $1 trillion, don't they? Yeah, and $1 trillion is a big number. Nothing more to say about that. Okay, we've got a few other things that we could talk about. One is a 2020 asset returns summary.

Starting point is 00:11:43 If you look at just like 2020, the standout assets were Bitcoin and Ether. So Bitcoin was up 300% over the year. Ether was up 469%. The NASDAQ had quite a good year, but that was 44%. right so again low numbers low numbers gold had a good year at 25 but we're in crypto and we're like oh you know 460% that pretty good year man yeah it's funny to see the comparison yeah anything below 50 is bearish in my mind that's because i'm spoiled and i'm in crypto all right um we also have ether like just chewing up um gas fees like all time all time high in terms of transaction revenue we'll talk

Starting point is 00:12:25 about that more a bit later but like one day fees for a day last week. It's driving 20 million in a transaction fees, right? So like, give me EIP 559 so we can burn some of that ether and make ether a better store of value. Another interesting thing I think in the context of like number go up, price go up, number go up is good for security, right, David? Number go up is Ethereum's security mechanism. That's exactly right. according to this tweet, if you are watching on the YouTube, it costs over a billion dollars to obtain a 66% stake, which is how you, if you want to be at the helm of Ethereum, that's how much it will cost you. And then you also have to be willing to burn that money.

Starting point is 00:13:08 And again, as ether price goes up, that number just goes even higher. Ethereum. As, as number goes up, Ethereum becomes more secure. What a great safety mechanism. Yep, becomes more secure, more healthy. Also, more trustless economic bandwidth. as we talked about before. Okay, that's market. Let's get to you releases. This is an interesting one. What's going on with ShapeShift? Yeah, Shapeshift run by Eric Voorhe's, a pretty prominent libertarian. Shapeshift used to be this platform where you could set up a trade where like you want to send Shapeshift, you know, one asset and then Shapeshift will send you back a different asset. Very much like a centralized exchange. It is a centralized exchange, except the cool thing about it is

Starting point is 00:13:50 it doesn't never ever hold onto your funds. So it's relatively atomic. So like if you want to want to trade your Bitcoin, they would give you a Bitcoin address. And then you would also put your ether address and you would receive ether from the exchange. So you never actually had to deposit anything. And because they weren't storing users funds, they didn't take K.YC. The SEC didn't like that. And so they made ShapeShift take KYC, which kind of was kind of killed their business model. So it wasn't the SEC or was it more FinC said? I don't know where it came out of. Listeners, double check me on that. Anyways, top down regulators. said, you must do KYC.

Starting point is 00:14:26 Therefore, he's a famous, a famous libertarian, didn't like that, but complied regardless. And so now they are pivoting to something different that allows them to remove KYC once again. They are going from an exchange, a typical exchange, into a Dex aggregator, which doesn't, which doesn't require KYC. And so shape shift, once again, not a KYC exchange. Cool. Yeah. And what's neat about this is, like, they're basically going to be a Dex aggregator like a one

Starting point is 00:14:54 inch, right? And this is another example of protocol synch thesis, right? So now that these D5 protocols are available, exchanges are deciding to build on top of them. And in the case of shape shift, they're like, we're getting rid of what we did before and completely switching out our architecture. So pretty exciting. We're going to have Vorhees on actually next week, right, David? Yeah, Vorhees is coming on the Tuesday state of the nation. We're going to talk about this transition from a exchange to a Dex aggregator. And then we're also going to talk about regulation because I know Eric has very strong opinions about that. Yeah, absolutely. Okay, another interesting thing that's going that's happening is Van Eck just proposed an ETF, a Bitcoin

Starting point is 00:15:35 ETF once again, if you recall, many of these Bitcoin ETFs in the past have been, have been shot down by the SEC in one form or another. But now what's different, we have a new SEC chairperson. So taking the helm and also a number of these more. nefarious, these gray sort of exchanges have been actually shut down by the SEC, right? So Bitmex comes to mind, of course. So, you know, this might be the timing, I guess, is what I would say. And wouldn't it be ironic, David, if this bull market ended with a Bitcoin ETF just in sight, right? That was like close to the top. I don't know. It's possible. What do you think? I think the, so you're exactly right. One of the biggest reasons why we haven't had

Starting point is 00:16:24 a Bitcoin ETF yet is was cited because so much of price discovery happens in offshore exchanges. That was the explicit statement of the regulators as to why they are not approving a Bitcoin ETF. But that was statements made before Bitmex was shut down. And I don't know if you've noticed, but ever since Bitmex has been shut down, there have been very few barts. The market has been very, very stable. Wait, wait, wait, tell someone what a bard is. A bar is when like Bitcoin or Ether just jumps like three years. thousand dollars up or down what what the sent the speculation as to what was happening is that people

Starting point is 00:17:00 would use bitmex very large wealthy individuals whales would manipulate the market they would go what's called sniping for leverage longs or leverage shorts if there were too many people leverage long they would take their bitcoin they would dump it they would collect the liquidation penalties of people on bitmex and then they would just buy it back right and so they would pocket themselves you know 5% 10% on their bitcoin extremely shaped crazy stuff, extremely non-desirable for retail and extremely undesirable for an ETF. That ended when Bitmex went away. We haven't seen any BART activity since Bitmex went away. The market, the price discovery is happening more and more inside of

Starting point is 00:17:39 US regulated exchanges. That makes things like FinC and the SEC and CFTC much more secure in a decision around the ETF. So this is the first ETF that's been proposed since that has happened. That is a big difference here with that. And I'm optimistic that this is going to happen. Dave, the SEC's got to do something, right? Because there's no way for retail to get in on this market. If they have like funds, there's a retail protection story. It is because if you look at the price of like the, the trust products from Grayscale, which you talked about before, right? They're completely out of whack. Yeah. Did you notice the, the Grayscale Ether price in the last week? Yes, I did. It's crazy. it went down while ETH price went up, which is absolutely insane.

Starting point is 00:18:23 The price almost doubled, yet the ETH, E price, the trust out of Grayscale, went down in price. I know. So like due to the SEC's inaction, retail is getting ripped off because we don't have good ether and Bitcoin ETFs, right? It's it's absolutely crazy. Guys, you guys can avoid this, of course. We recommend that if you have like an IRA or something that you like use a self-directed IRA, something like Rocket Dollar can help. You could try that.

Starting point is 00:18:50 For most of mainstream, like, they're buying these crappy products because the SEC is forcing them to buy them. Right. They're buying a product with 150% premium, which means they're paying $1.50 to access $1 worth of ether. And like, this is no fault of gray scale. This is just normal market activity because there isn't an ETF. So come on, regulators. Let's start protecting retail here. Yeah, please, guys. Okay. Future swap, V2, beta. So this is more options. more futures on Ethereum. This is a product that came out of the summer due to overwhelming interest. They actually shut it down and they wanted to make sure that they had security intake and

Starting point is 00:19:30 they're launching. David, you think this is the year for options and futures products on Ether like Defi Native ones? On-chain futures, on-chain options. That's exactly right. A little known story that I think is underappreciated. Future swap opened up their alpha on-chain. And they also had this one of the very first year. yield farms before it was called yield farming before comp was even issued. The future swap was the

Starting point is 00:19:56 initiation of yield farming and it was a very dampened story and the reason why it was so dampened is because so many degenerates aped in like $10 million. That's right. Which future swap was not ready for and so they prematurely shut it down because people wanted the future swap governance token. Again, this was before comp was even issued. And so because people yoloed into all their money into FutureSwap in order to farm the Future Swap governance token, received like a crazy amount of success. And then they said, like, no, no more, this is crazy. We don't want this much money.

Starting point is 00:20:29 These contracts are unaudited. They shut it down. And that was before Defi Summer. Now they are finally releasing their product on-chain with FutureSwop V2. Again, part of the story of 2021, I think, is that on-chain futures and on-chain options is going to be a thing. And this is that story unfolding. Also, kudos to them for shutting things down.

Starting point is 00:20:49 something that is more responsible, right? A little bit of self-regulation there, I suppose. Capping the degeneracy, yeah. Yeah, absolutely. Okay, Yam is a food token, speaking of degeneracy, a food token that has now pivoted into a fully fledged Dow. It's pretty exciting because they're actually releasing products. Here's one of them.

Starting point is 00:21:09 Anything else you want to say? Umbrella is one of them. It's an insurance product, sort of similar to Nexus Mutual, I suppose. Anything else you want to say about the Yam Dow story, David? Yeah, I actually haven't researched this product too well, but the people that I trust have, and they say that this is an insurance product that is uniquely different from Nexus Mutual, a viable competitor. And I do agree with you. The interesting story about this is not only that there is a new viable competitor for insurance in Defi, but that it is a new protocol that is

Starting point is 00:21:39 owned by another protocol. That is pretty cool. Absolutely. Let's talk about this to you. this is a transaction builder that someone came out with, which I think really illustrates, right? So like, David, you were responsible for coming up with the Money Legos meme, right? Like, a little known fact, guys, David doesn't like to brag about that, but like he came up with the Money Legos meme, and now we see it everywhere. Yeah, it's an open, as all memes are. And this is an example of somebody actually building a product on the Money Lego meme. It's called Defi Legos.

Starting point is 00:22:11 And what does it allow people to do? Yeah, I think the UI is a little bit simple and I think it's going to get built out. But basically, I think the long-term vision of this is like drag and drop transaction ordering and transaction creation. And so it has a number of different options, right? You can deposit from AVEA, withdraw from Aze, flash loan from insidap and do a bunch of other things, trade on uniswap. And it allows you to construct a transaction all at once. So if you want to execute these things all in one transaction, it allows you to do that. And that used to be a, you a ability that only the solidity experts were able to do. And now this is a UI for people to recreate a complex transaction just by filling in some fields. I think that this is a really cool, really underappreciated possibility. I think there's going to take some time to really refine how this works. Austin Griffith has another product that's kind of similar to like this that's literally like kind of like Microsoft paint and then you like drag and drop in different like features and options saying like, well, I want this to connect to this. And then I want

Starting point is 00:23:13 want this to happen if this happens. It's kind of like an if this than that builder. I'm really bullish on like drag and drop money Lego transaction builders and that seems to be what this is. Super cool. Programable money guys is super cool. Speaking of programable money, this was an interesting post that came out from Coinbase about some programmable functionality that they added to USDC. They did this actually, I believe in like August or September, but this article sort of talked about how they did it, how they made it upgradable. What do you think the takeaway is here, David? Yeah, yeah, the really cool thing about contracts on Ethereum is that they are upgradable. And as we come to understand what we can do in Ethereum, what solidity is able to do in the code,

Starting point is 00:23:56 we come up with new and better things that we want to be able to execute on, which means our old contracts become outdated. However, whoever deployed the contract at USC deployed an upgradable contract and they actually finally used that upgradable contract to add in some new features. And so literally the US dollar on Ethereum got a software update. There are now like larger and more diverse buildable surface areas on USDC. And so I think that's something that is uniquely compelling about Ethereum is that assets can get software updates and still be the same asset. That's pretty cool. Yeah. I mean, think of an in update. So like the technology that we use for paper money, is basically paper, right? It wasn't always the case. There was a time where we used coins,

Starting point is 00:24:43 but like when we switched to paper, that was sort of a software, I guess a real world update of some form. That's a hardware update. A hardware update. This is kind of like similar in that we can change the medium around. We can add features to our stable coins and to our money on the software layer. Super cool stuff. All right, David, let's talk releases, my friend. Actually, never mind. scratch that. We just did that. Let's talk news. So the big news of the week is this OCC news. So this is the Office of CompTroller of Currency. So this is like a big banking regulator in the U.S. that Brian Brooks now runs. The big news of the week is that federally chartered banks, so these are all U.S. banks right now. The OCC clarified that these federally chartered banks

Starting point is 00:25:36 can now facilitate stable coin transactions, payments on their own using public networks like Ethereum. Translate this for us, David. What does it mean? Yeah. Yeah, this just means that banks can use USDC to settle payments between each other. I think that's going to be just a boon to efficiency and money transmitter services. I think it's just the logical conclusion of this industry. This is the entire thesis of like this crypto economy is that we can use blockchains to do our old things better as well as new things. I have a prediction coming out in the bank list newsletter, which everyone should tune into. It's coming out tomorrow, 2021 predictions.

Starting point is 00:26:18 I think plenty of banks will adopt this service in order to facilitate payments between each other. But my spicy part of this prediction is that none of the efficiency and none of that value capture, the increased value of being able to do this is actually going to be passed on to the end user. I still think we're going to be taking one to three days to pass money between each other and there's still going to be limits. And that's just going to be a boom for retail adoption of this industry. That's my prediction. So you think banks are going to continue to be rent seekers, even as they deploy stable coins. And not just use USDC. Of course, they can deploy any stable coin they want on these banking networks. The regulator clarified it for them. I think what's

Starting point is 00:27:00 happening here, David, is that like our prediction, our bankless prediction of banks becoming Ethereum side chains, like ledgers off of Ethereum is starting to come true, using Ethereum as a settlement layer for this sort of stablecoin transaction. So super exciting, possibly the most bullish news. I'll say of the year, right? Because this is a short year. It's definitely the most bullish news of the year. Bullish stablecoins, bullish Ethereum as a settlement layer for them pretty exciting, I think, overall. When will a bank ledger turn into an optimistic roll-up? Now, that is an interesting question. Yeah, and who will be the first? I can guarantee you it won't be J.P. Morgan and friends. It's not going to be Wells Fargo either. Exactly. We were speaking earlier about

Starting point is 00:27:47 gray scale. You know, like at some level, the products that they have, I'm glad that they are available to retail because it's better than nothing. But Barry Silbert, you know, Grace, Grayscale's kind of founder, talked about the growth that they've seen in 2020, from $2 billion to over $20 billion in assets under management. And the cool, the interesting thing about this is he expects another 10x this year. $200 billion in AUM. Wow. Wow. That's a big prediction. And I'm with it. I think that's an accurate prediction. Yeah. We have. had Michael Sun and Shine CEO of Grayscale on the podcast if you want to learn more about that. And yet, again, to no fault of their own for Grayscale, like it's kind of ripping off

Starting point is 00:28:34 retail, but that's a result of market dynamics. And it's specifically a result of the extreme demands. The fact that like if you buy one, you need to buy $1.50 worth of the ETH E trust to get $1 worth of ether, that's not because of Grayscale. That's because ether, the ETHE trust is in such high demand. That's just how that works. And so it's kind of market forces that's ripping off retail. So again, no fault to their own free gray scale. Congratulations for getting $20 billion. It's a pretty good business. Well done, Barry. Pretty good business to be running right now. All right. Let's talk about the Biden administration. So we've been talking a lot on bankless about this proposed rule that was coming out of FinCEN. Mnuchin was behind that, of course,

Starting point is 00:29:20 Secretary of Treasury, who is not very fond of crypto. But if like what could happen is that this entire proposed rule could be like just paused indefinitely, right? And why? This is just new administration stuff. Is that kind of why? Yeah. So any any proposal or rules that have not been formally integrated into law by the time

Starting point is 00:29:47 the Biden administration comes into office in January 20, Biden says none of them are going to happen. And I don't think Biden specifically cares about the law or regulation that we care about, the FinCEN rule. However, it just falls into the category that if it's not finalized by the time Biden gets in, he's cutting it just because he doesn't agree with Donald Trump's decision making or any of his friends, Steve, like Steve Mnuchin, fine. That's a win. I'll take it. Yeah. So that means Mnuchin has to get this in before the 20. or it's not going in or it's dead in the water. But if he does get it in, I'm a little bit concerned that it stays in, maybe, David. However, there are over 6,000 comments that they, by law,

Starting point is 00:30:32 have to review before they can get this in. So there's a lot of time that they need to spend to review all those comments. So we're optimistic it doesn't go in. The crypto industry maybe spam attacked them and that'll delay it. Well done, guys. We did it. We'll see. Also, not, it's not good. news again and kind of like the the crypto banking side of things a crypto bank called bitrex which is exchange just delisted their privacy coins minero dash and zcash i'm not sure if they were getting pressure from regulators against privacy coins or this was just like uh just in case our lawyers advise us to delist um but this is not good david yeah bitrex isn't the biggest exchange so i'm kind of curious as to why they decided to become first to delist

Starting point is 00:31:20 privacy coins. I actually don't know if, if, I know Zcash is on Gemini. I'm pretty sure it's on Coinbase. I'm pretty sure Minero is not on Gemini or Coinbase. Dash, we don't have to talk about Dash. I don't have strong opinion about Dash. But yeah, it seems weird that Bitrex is, kind of going first with trying to deal this these, these things. I feel like there, you are right. There is a story behind the scenes that we don't know. But overall, I don't like that. I don't like that this industry is taking action to protect themselves against regulators that also removes choice from users. This is why we need defy, guys, because guess what?

Starting point is 00:31:58 Uniswop cannot, does not have the power to delist your coin. It's permissionless. Anyone can list anything. They can't shut it down. That's why we need these solutions to preserve our freedom. Of course, Jake Trevinsky, our favorite crypto lawyer, reminds us that in the U.S., actually, privacy is a constitutional right. So we do have some of these freedoms baked into the constitution.

Starting point is 00:32:22 It just remains to be seen whether these exchanges, which are private businesses, will follow them or not. It's definitely disappointing if centralized exchanges start to mass de-list these privacy coins. But do you know what's interesting is the workaround? Once again, is defy. Ethereum, for example, is developing a privacy layer. Some technologies like Aztec, for example, they can be used. to make a transaction, a die transaction private. So we don't have privacy on the base layer of Ethereum,

Starting point is 00:32:56 but we do have protocols that can add that privacy back in. And that might be a nice backdoor to preserve this monetary freedom that large governments are seemingly trying to take away. And maybe exchanges are trying to take away as well. Yeah, I've never really been compelled by the need for privacy to be integrated into one specific asset like we are seeing with Zcash or Manero. I've always thought that privacy is a service, not a not an asset, right? And I would rather have the ability to have my, my ether or my die go through tornado

Starting point is 00:33:29 cash or Aztec if I wanted privacy. So then I can keep my exposure to ether or my exposure to the US dollar and have that be private. To me, that just makes more sense. I don't understand why I need my own L1 to have privacy. But again, that's a different conversation than what's going on here. Yeah, absolutely. It's a good conversation. though. Speaking of DFI, Uniswap had an incredible year. I mean, if you were to name one breakhead DFI protocol that was just like amazing, it's got to be Uniswap. They just did everything right. Liquidity on Uniswap just passed a $3.1 billion. That is approaching an all-time high. The cool thing here is now they're doing it, David, without these uni liquidity mining incentives.

Starting point is 00:34:13 right? So like a lot of DeFi Summer was different protocols turning on the juice by providing governance tokens. Uniswap's not doing that and they're still approaching their all-time high. Pretty incredible story. Yeah, I wrote a article that a very short article in CoinDust recently. That was all about how yield is only, basically only existent in Ethereum. A 30-year treasury note is below 0.9% APY. AAA corporate bonds are below 2% APY. Except if you are interested, it in digital assets, a hybrid 50-50-Eth U.SDC position, and then of you a 35% APY over the year of 2020 if you were providing liquidity in uniswap. That's why they don't need uniseptives, because they're still getting 35% on their USC ether position. That is a lot of

Starting point is 00:35:03 APY. You know what's embarrassing is that banks still call them savings accounts, right? Like savings accounts? What are you talking about? I'm making like 0.1%. It's not a savings account. Yeah, numbers stay the same account. No one's saving their money in those things, not seriously. All right, David, Iran is closing down some mining operations. Why does that matter? What's the story here? Yeah, we've previously talked about Iran on the weekly roll-ups. Previously, they were forcing mining operations to sell the Iranian government their BTC. So the Iranian government wanted a monopoly on the ability to purchase BTC from mining operations. And the thought there is that BTC is permissionless.

Starting point is 00:35:47 Iran is not able to use the US dollar or global payment networks due to sanctions. And so they need the Bitcoin. And the only way that they can really get their hands on Bitcoin is through their own miners. I'm going to go ahead and guess that the illegal mining operations are ones that were not following this rule. I think the country of Iran is just going, they probably claim these for themselves. This is probably now, at this point, the Iranian government is straight up mining Bitcoin so that they can fund their own balance sheet because they don't have any other way. I think that's what the story is here.

Starting point is 00:36:22 So do you know what else is interesting too? It goes back to our conversation that we had. We put out a podcast just this Monday with Vitalik, right? And he talked about one difference between proof of work and proof of stake is actually proof of stake can be, more censorship resistant. Why? It doesn't have this massive energy profile. At the end of the day, who controls the electricity grid? Like, the nation state has a role in that. We can see that you are, like, you have a grow-op, right? Or we can see that you are mining, like, massive amounts of BTC. You don't have a light profile there, right? Whereas with proof of stake, we can run it on a

Starting point is 00:37:00 consumer laptop, right? So I do think that is a hidden benefit, possibly, of proof. of stake versus proof of work. And it's bearing out here. Like if a nation state has mining that's going on that it wants to control, it can identify who the miners are and shut them down if it wishes. Yeah. Proof of stake does not have a real world footprint. That's the takeaway. That is the takeaway. All right. Let's get into some. If you want to live a bankless life, you need to get a monolith defy visa card. Monolith is a one-two punch of both an Ethereum smart contract wallet and an accompanying Visa card that lets you spend the money that you have in your Ethereum wallet everywhere where Visa is accepted. When you swipe your monolith visa card at the

Starting point is 00:37:45 grocery store or at a restaurant, it actually makes a transaction on the Ethereum blockchain that spends some of the money you hold in your Monolith wallet. It's insanely cool and it's one of the best tools out there for living a bankless but still normal life. Monolith also offers on-ramp services for getting your Fiat money into the world of Defi. So it's a It's trivial to top up your monolith card if you ever need to, and your deposited money goes straight into your non-custodial wallet, so your money is never held by a centralized intermediary. Because Monolith is native Ethereum infrastructure, the money you hold in your monolith wallet

Starting point is 00:38:21 still has the power of Defi behind it. Swapping assets on uniswap or earning yield in Defi is at your fingertips. Go to monolith.xyz and sign up to get your Monolith Visa card today. is a borrowing and lending protocol on Ethereum and just recently released AVE version 2, which has a ton of cool new features that makes using AVE even more powerful. With AVE, you can leverage the full power of defy money Legos, yield, and composability all in one application. On AVE, there are a ton of assets that you can deposit in order to gain yield, and all of those same assets can also be borrowed from the protocol if you have deposited collateral.

Starting point is 00:39:03 Here you can see me getting a 200 USDC loan against my portfolio of a number of different Defi tokens and ETH. I'll choose a variable interest rate because it's a lower rate than the stable interest rate option, but I could choose the stable interest rate option if I wanted to lock that interest rate in permanently. One of AVE's V2 features is the ability to swap collateral without having to withdraw your assets, trade them on Uniswap and then deposit them back into AVEA. Avey does all of this for you all in one seamless transaction, So you don't have to repay loans in order to change the collateral you have backing them.

Starting point is 00:39:37 Check out the power of AVE at AVE.com. That's A-A-A-V-E. All right, let's get into some takes. This is a first, this is a strong Ethereum. I don't know if you call them an Ethereum maximalist. If he is, he's like one of the few Ethereum Maximus, I know. But what is this take from Antipro? Anti-Pro, yeah, says,

Starting point is 00:39:58 Ask 10 different people which blockchain they think is second to Ethereum, and you'll get 10 different answers. That right there is why Ethereum has already won. I haven't heard this take before it. I really, really like it. What Ante is saying is that there is no consensus on a second place to Ethereum. Therefore, whoever would be included is probably like a fourth or fifth or six. There is no runner up to Ethereum.

Starting point is 00:40:23 Ethereum has the lead and it's probably going to keep it because there's no other viable competitor. So speaking of Heath Bulltakes, this is the week. for Heath Bull takes. Let's do an Heath Bull take from our friend Raul Paul. What's he, what's he saying here? Yeah, Raul Paul is comparing ether this cycle to Bitcoin last cycle, saying that the prices are really similar. And he thinks that as a result of that, ether is going to follow Bitcoin in price leading up to Bitcoin, perhaps are ether, almost touching 20K, I think is the takeaway here. Really interesting to see Rao Paul being specifically really bullish ether. He has a huge following. And a lot of people listen

Starting point is 00:41:02 to what he says. Absolutely. And he's been particularly harsh on Bitcoin maximalists lately, who are basically saying, hey, Bitcoin is the only asset that will ever appreciate and value. And Raul Paul is just looking at it more objectively. And he's saying, that's not what's happening. That's not what's happened historically. That's not what the price charts are saying. That's not what sort of the, he even looks at like active addresses versus ETH price. And he shows like a similar correlation, actually like a higher growth rate of ether versus Bitcoin. So his conclusion is basically more objective. He doesn't have a religious preference on this. He isn't even like bankless. He doesn't even care about being bankless, right? He told us that on the podcast. He's just looking at it

Starting point is 00:41:46 and being like, oh, ETH to me looks a lot like Bitcoin in 2017. Sorry, Maxiblus. Yeah. At the end of the day, it doesn't matter what your religious beliefs about crypto are. The fundamentals behind Ethereum speak for themselves, and that's what Raul is tapping into here. Absolutely. Here's another take from DC investor, and I really like this take. He's comparing ether market cap today to a bank market cap. What's he say here? Yeah, he says, ether at one, $140 billion market cap, just past city groups market cap at $135 billion. Just one bank. Ethereum is a permission. in this protocol that will eat all banks.

Starting point is 00:42:27 Ether, the market cap of Ether equaling one single bank in the United States means that, to me, that the market cap of ether is extremely undervalued to this day. I expect Ether to be worth more than one bank in the future. It's kind of an interesting conversation of like how you define the total addressable market size of a thing, right? There was a time where we thought like the total addressable market size of Uber was like maybe all taxis, all taxi fares in the world. But it turns out it's far beyond that.

Starting point is 00:43:02 It's a multiple of that. It is a multiple of that. And the reason is because like people can start using Uber more than they ever used taxis, right? Like I'm going to get rid of my car and just use Uber. So it turns out at lower costs. So this is also what DC is saying, I think, that like, hey, the way we think about the market cap of these things.

Starting point is 00:43:24 the total addressable market cap for Ethereum is obviously many multiples of the bank. It's not even valued at a bank stock right now. So he's making the case that it is undervalued for sure. You made an interesting case this week, too, in the opening note on Monday in Bankless, where like you talked about, and this is probably from your experience living through 2017, right? We talked about the reflexivity. This is a term from George Soros, I believe, that really resonates, I think, with what goes on in crypto markets. Can you tell us what reflexivity is and like what's just happened?

Starting point is 00:44:04 Yeah, reflexivity is people reacting and making decisions based off of other people's reactions and decisions, right? And so this is when the crypto markets, this is why crypto markets generate like these hype cycles and bubbles that ultimately do burst, right? It's because people are basing their decisions on other people's decisions and not about fundamentals. And that's what happened when Bitcoin blasts through $20,000. We lose the ability to like chart and do technical analysis, if that's what your deal is. We lose the ability to measure fundamentals. People price in future growth extremely aggressively. And we just kind of lose ground with reality, right? And maybe to use the moon metaphor, we are perhaps launching into space, but in space, you have no

Starting point is 00:44:50 foundation, you have no footing, you are kind of floating, you don't know how to evaluate these things because no one else knows how to evaluate these things. So everyone's kind of just using their best guesswork. And because things are disconnected from reality, fundamentals are irrelevant and reflexivity takes over. And that's actually partly why something can go and become really, really bullish is because we've lost reality with the fundamentals and because there's almost nothing stopping ether from doing something insanely. I'm going to say stupid and going to 10K because I'm going to tell you, ether's not worth 10K.

Starting point is 00:45:26 But that doesn't mean it's not going to go there. I don't think the fundamentals back it up, but it's still probably going to go there because reflexivity is in and fundamentals are out. Interesting. And crypto market cycles, of course, are reflective up. There are also reflective down. If you lived through 2018 and you saw 2019 and you saw an ether price,

Starting point is 00:45:47 decline of 95% you can attest to that they are reflexive they go way under what they should be priced at as well so you're saying we're going to see that and we've already entered maybe the early stage of this reflexive market so what what people tend to do in the early stages of a bull market I think are they actually like undersized how big this thing could get and that's what you're saying here like wait for it to get stupid because it has every other market That's what reflexive markets do. They get really stupid. Yep.

Starting point is 00:46:17 Yeah, that's exactly right. All right. David, let's go to what you're excited about. So what are you excited about this week? Yeah, what am I excited about? I'm excited about alt season. I'm going to say it. The cycle to me, and this is not something that people should plan on,

Starting point is 00:46:35 but if we want to be extremely rough, the cycle goes, Bitcoin goes up, then Ether goes up, then tokens go up. And then maybe there's a correction. I think we are about to enter the phase where tokens go up. And that's the other half of this take is that the crypto market cap just past $1 trillion. When people see that, their reflexes will tell them, wow, FOMO, I want to get in. And people, I think, have a hard time understanding exponentials in this world. We tend to think in linear growth.

Starting point is 00:47:05 You know, the S&P grows at 7% a year. Well, you know, Bitcoin and Ethereum, they average 1 to 2% per day. so on some of their years, which is pretty insane. That reflexivity, I think, is going to kick in. Now that we just pass $1 trillion in market cap, the next stop isn't two trillion. The next stop is $10 trillion. This industry grows in exponentials.

Starting point is 00:47:28 And part of the way, that implies a 10x growth and the assets across the board, right? I don't think Bitcoin is going to do a 10x. That would put Bitcoin at $400,000. I don't think Bitcoin's going that high. And I think the way that we get from a, $1 trillion market cap to a $10 trillion market cap is growth in alt coins in low market, low market cap coins that go from something like $10 million and then they grow to like $200 million.

Starting point is 00:47:56 That's where I think the bulk of this market cap growth is going to come from and how we get to a market gap growth that's $10 trillion, it's all season. I think all season is coming. That's going to be pretty fun to watch. Also, hold on to your pants. I agree with a lot of what you said, David, but I've got to say I hate the term alt season. I know you do.

Starting point is 00:48:17 You know I do. So my question is like, is Ethan an alt to you? No, Ethan is not an alt to me. To me, alts are... Do we have to use this term anymore? Like, yeah, I think we do. Why? Because they all tend to move as a group, right?

Starting point is 00:48:34 And they is like the assets and coins that maybe, maybe the category is like certain market cap. So maybe it's like, and I wouldn't say like uni is an alt or Wi-Fi is an alt. Like I think we could be more strategic and precise about how we categorize them. But if they all start moving at the same time and they're distinct from ether and Bitcoin, then we need to categorize them at some point in time. And I know you like to categorize them and I'm totally agree with you as like capital assets

Starting point is 00:49:03 or store value assets, but the capital assets or store or whatever assets, those type of categories, don't categorize the kinds of tokens that all tend to pump together. And it's usually just, I don't know how else I categorize it other than alternative to Bitcoin and Ether. I get, so I get what you're saying there from like a trader's perspective, right? If you're saying, hey, like I'm looking at cycles and then this happens generally and then this pattern happens, and then that happens, right? So like there's some seasonality in cycles. So I guess I see it from that perspective. Where I think it's misleading and where I think, particularly like maximus overuse the term alt is they tend to think of anything that's not

Starting point is 00:49:44 Bitcoin is an alt, right? And what they mean is like kind of like a fake Bitcoin, something that is like scammy and won't accrue value long term. And the other mistake they make is like so ether is not an alt of Bitcoin. Like alt was a term that came in like 2013, 2014 where you had like light coin and all of these Bitcoin forks, right? And I think that's still a good term for Bitcoin forks, but it's not a good term for Ether. Ether has an entire economy behind it. It's also not a good term for defy tokens. Defy tokens are like capital assets, as you were saying, right? So it's like it's not even competing with Bitcoin as a money. It's more competing against like stocks, right? So that's why I hate the term alt, but I understand using it for like the seasonality cycles.

Starting point is 00:50:33 As long as people like understand that there are these distinctions there, I'm good with it. Calling uni or calling Wi-Fi or comp or whatever, calling them an alt-coin definitely does not do them justice. And it definitely doesn't do anybody who's trying to learn about this ecosystem, any justice at all. There's a much bigger picture behind the scenes. But again, at some point in time, when the bull market comes, those fundamentals don't matter because reflexivity kicks in. And reflexivity is going to kick into lower-cap market-cap coins. And I guess we just call them alts. Yeah, I got you.

Starting point is 00:51:05 I hear you on that. Okay, Ryan, what are you excited about? I'm excited about like right now it's hard not to be excited about price, right? Like Ether Bitcoin exceeding all-time highs, people said it was dead, would never happen. Ether on the cusp of exceeding all-time highs, right? People said it was dead. People said it would never happen. That's what's really exciting right now in the market.

Starting point is 00:51:26 But it might not always be the case. So like I guess some thoughts as we're entering a bull market. I know you've given some good advice on this recently, which is like have some sales, targets too. Okay. So like what David just said about market cap going up to 10 trillion is not a certainty. It's not a for sure thing, right? Like we don't know. So don't put all your eggs in that basket. Don't do stupid things like get in over leverage or like, you know, get into kind of margin positions that you're not comfortable with. Have some sell targets and stick to it. But one of the most important things I think that you could do this bull market is be.

Starting point is 00:52:07 comfortable holding through some temporary pullbacks as well, right? So what can happen in a bull market is you can get like a few weeks or a month and you can get like 40%, even 50% pullbacks, right? That doesn't necessarily mark micro bear markets. That doesn't necessarily end the entire bull market, but it does shake out a lot of the people who are there like, that just kind of FOMOed in and now they think the bull market's over, so they're gone. So if you want to participate in this entire cycle, you've got to be comfortable as well holding through a 40% drop. Don't sell just because you see something to that effect.

Starting point is 00:52:54 So this is kind of a mixed message here. If like you got to keep to your, you sell plan, make sure you have a number and stick to it. But also be ready. Expect 40% pullbacks. doesn't mean we are knocked out of a bull market yet. That's what I would say to kind of end this. David, anything else? Yeah, definitely.

Starting point is 00:53:13 In 2021, all the listeners here, if they plan on sticking through crypto through 2021, you will experience pain. Your portfolio is going to go down multiple times. We are experiencing perhaps a version of euphoria right now with Bitcoin at 40K and ether just below all-time high. It feels great. We are going to feel the inverse of that. You need to know that that that.

Starting point is 00:53:35 is coming. It's naive to think that it's not. So be prepared for it. Pain always comes. And you can definitely get out over your skis if you are not ready for that. So make sure that you know exactly what you're doing and you are prepared for pullbacks. Absolutely. All right, guys. So of course, we say these things, but none of it is financial advice. It's just kind of based on our experience. Bitcoin, Ether, Defi assets are risky, but we're glad you're with us on the bankless journey. This has been our weekly roll-up. Thanks a lot.

Bankless - ROLLUP: First Week of January

There aren't comments yet for this episode. Click on any sentence in the transcript to leave a comment.