Bankless - ROLLUP: Genesis Bankruptcy | SEC Crypto Crackdown | Kevin Rose NFTs Hacked | Aptos Token | BAYC Sewer Pass

Episode Date: January 27, 2023

4th Week of January, 2023 ------   Crypto Tax Calculator | Free Crypto Tax Calculator https://bankless.cc/CTCpodcast  ------  JOIN BANKLESS PREMIUM:  https://newsletter.banklesshq.com/subscribe  ------ BANKLESS SPONSOR TOOLS:  KRAKEN | MOST-TRUSTED CRYPTO EXCHANGE https://bankless.cc/kraken  UNISWAP | ON-CHAIN MARKETPLACE https://bankless.cc/uniswap  ️ ARBITRUM | SCALING ETHEREUM https://bankless.cc/Arbitrum   EARNIFI | CLAIM YOUR UNCLAIMED AIRDROPS https://bankless.cc/earnifi   ----- Resources: 0:00 Intro 4:20 MARKETS 9:00 Inflation https://twitter.com/NorthRockLP/status/1617593771222519811  11:00 Crypto Revenue https://cryptofees.info/  15:50 Aptos Mooning https://decrypt.co/120009/whats-going-on-aptos-price  18:20 dYdX Rally https://thedefiant.io/dydx-rallies-18  19:00 Optimism All-Time High https://www.coingecko.com/en/coins/optimism  24:00 Genesis Chapter 11 https://www.theblock.co/post/204035/genesis-owes-more-than-3-6-billion-to-top-50-creditors  27:00 Gemini Earn Users  https://twitter.com/cameron/status/1616298056097624064  29:00 SEC Ban Hammer FTX: https://www.sec.gov/litigation/litreleases/2023/lr25617.htm  Avi: https://twitter.com/secgov/status/1616531972020469781  Nexo: https://www.theblock.co/post/203983/nexo-pays-45-million-to-settle-sec-and-state-charges-for-failing-to-register-lending-product  34:55 Hester Peirce https://www.sec.gov/news/speech/peirce-remarks-duke-conference-012023  40:20 Kevin Rose NFTs Stolen https://www.coindesk.com/web3/2023/01/25/kevin-rose-says-nft-wallet-with-dozens-of-high-value-collectibles-hacked/  Bad UX: https://twitter.com/RyanSAdams/status/1618329248275795968  Behaviors: https://twitter.com/iamDCinvestor/status/1618351192358408194  48:30 Shanghai Shadow Fork https://decrypt.co/119851/ethereum-shanghai-mainnet-shadow-fork-goes-live  49:30 Uniswap v3 on Binance Chain https://www.coindesk.com/tech/2023/01/23/uniswap-poll-shows-80-support-decentralized-crypto-exchanges-move-to-bnb-chain/  50:30 Wormhole Hacker https://cointelegraph.com/news/wormhole-hacker-moves-155m-in-biggest-shift-of-stolen-funds-in-months  https://twitter.com/0x_Osprey/status/1617603687702224897  53:00 Doodles on Flow https://twitter.com/poopie/status/1618271090459160577  https://twitter.com/doodles/status/1618262941287211009  55:10 Pudgy Penguins https://twitter.com/pudgypenguins/status/1618288231552004100  https://twitter.com/cyounessi1/status/1618273523671396354  56:05 Sewer Pass NFT https://www.coindesk.com/web3/2023/01/12/bored-ape-collections-pump-ahead-of-upcoming-sewer-pass-nft-mint/  58:00 Yuga Arbitration https://twitter.com/flyabstractart/status/1616179578224926721  1:00:30 Porsche NFT Fail https://twitter.com/BcSmithHere/status/1617524649700757511  1:03:00 The Rug https://therug.mirror.xyz/biX_10PO0yD8nN_lN6ctr3tOa2X5CtFonDOtzl80dAY  1:04:05 Peter Thiel Sold BTC https://archive.ph/8XLr6#selection-1985.281-1985.356  1:05:20 Proof of Innocence https://twitter.com/RyanSAdams/status/1617999327867338753  1:08:15 Robinhood Wallet https://decrypt.co/119594/robinhood-wallet-metamask  1:10:00 QuickNode https://www.theblock.co/post/205028/quicknode-reaches-800-million-valuation-in-series-b-round  1:10:30 Questions from the Nation https://newsletter.banklesshq.com/subscribe  1:19:00 TAKES of the Week 1:20:00 RAI Mistake https://twitter.com/ameensol/status/1617582677833699330  1:24:50 No Bailouts https://twitter.com/RyanSAdams/status/1616536164621774849  1:26:10 Omnidimensional https://twitter.com/trustlessstate/status/1617734657759670276  1:28:00 What David’s Bullish On 1:30:00 What Ryan’s Bullish On 1:32:00 MEME of the Week https://twitter.com/icebergy_/status/1611153750432825350  MOMENT OF ZEN https://twitter.com/Xofee3/status/1618406659659038720  ----- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research. Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here: https://www.bankless.com/disclosures 

Kevin Rose has gotten his multi-million dollar NFT collection swiped, drained. So that's unfortunate news. We'll talk about that. And we'll also talk about how you can protect your NFTs from getting fished. Because if Kevin Rose can get fished, you can too. Bankless Nation, it is the 4th Friday of January. David, what time is it? It's the Friday Bankless Weekly Roll-Up, Ryan,

where we cover the entire weekly news in crypto, which is always an ambitious endeavor. Yet we persevere. nonetheless into the frontier with coffee. I've already had two cups. How many are you at? Four or five. You know, you know they answered this.

It's always the same. I'm pretty regular, you know? Like regular coffee drinking old chap is what I am. How's your ember mug? It's pretty good. It's retaining the heat. Yeah. Use it all the time.

This is not an ad? It's actually, it's not an ad. No. Actually, so what happened is my office is like right down the hall from my kitchen. and I would go from my office to my kitchen, like many times a day to heat up my coffee. The most frequent time you would leave your office is to go do that. Well, but think about it, right? So like three different coffee headings per, you know, cup of coffee times times five,

it's 15 per day. Anyway, my microwave button broke off, like completely, like disintegrated under the pressure of all of the clicks. So I had to order a 3D printer part. I'm just getting this image of this robot not learned knowing how to control its own strength and just like snapping off its microwave paddle as it tries to open the door. No, it's going easy on it. But yeah, it just wasn't built for that kind of, that kind of pressure.

Anyway, we're not talking microwaves or coffee today. What are we talking about? Topics of the week, David. What are we covering? Topics of the week, Genesis officially filing for chapter 11 that saga is coming to a close. So we discussed the fallout, of course. sadly in other news Kevin Rose has gotten his

multi-million dollar NFT collection swiped Ryan what else are we going to talk about we're going to talk about the SEC they came in with a big old banhammer this week Caroline Ellison Gary Wang nexto a whole bunch of action by the SEC

and we're also going to be talking about a fire speech from SEC commissioner Hester Perce stay tuned for that and doodles migrating to flow pudgy penguins migrating to Arbitrum uniswap migrating to BSC is everybody moving from

Ethereum, David? We've got to talk about that too. And of course, we've got to remind you to like and subscribe if you enjoy this episode. If you're on YouTube, hit that like button. Subscribe to the channel. If you're listening on the podcast player, then hit subscribe as well. David, before we get into this episode, got to talk for a minute about taxes. And you know, I've always taken the time to talk about crypto tax calculator during the last two weeks. This time is your time. I'm going to hand this to you. What do you want to tell us about taxes and crypto tax calculator, David? Okay, so if you're like me, you majored in a discipline that has nothing to do with money or finance or any, and your parents are same and never taught you about taxes.

And so you had to figure it out for yourself because crypto was your first entrance into the world of business and finance and also taxes. And that probably means you need something like the crypto tax calculator that we are showing on the screen right now because you don't know how to do taxes. And so you use something like the crypto tax calculator, which there's a link in the show notes to go use, to help you sort out your crypto tax nightmare, especially as crypto is getting more complex. First, you have ether, then you got staked ether wrapped staked ether on arbitram that is going to yield farm that is brand new. Well, crypto tax calculator can help you out with all of that. It's got all the layer ones, all the layer two's, many, many defy apps, 300,000 currencies, which I didn't even know we had that many. and it's as simple as just plugging in your Ethereum wallet, putting in your transactions, and they will do the rest.

There's a link in the show notes for 30% off for bankless listeners. That link, that code is bank 30, but if you are a bankless premium subscriber, you get 40% off from a secret code that is in the Bankless Nation Discord. So go there to get your tax off. How do you like that pitch, Ryan? That's pretty good.

Guys, take you from the psych major, not from the business major. I think you pitched it better than me, my friend. Of course, thanks to our friends and sponsors. A business business managers don't need a tax calculator nearly as much as the site meters. That's right. And I was too excited about it. That was actually practical advice.

Good job, David. All right. Let's get to markets then, Bitcoin as measured by dollars. We still measure Bitcoin in dollars. We don't measure it in Bitcoin. Dollar maxis. Let's see where are we at on the week? Up or down.

Big up. Almost two digits. Big up again. Start of the week at $22,200, up 9.2% to where we are now at 23. thousand dollars how are we doing this this is like it's great things keep going going up man ah i mean i'm going to start having to say bear market with a question mark at the end of it bear market like what's happening let's not get let's not get ahead of ourselves it's like four days we'll talk about that uh well i mean it's been three weeks in a row almost double digit up you're right

you're right uh let's talk eat the price too is that up to 1530 was where we were last week we're at $1,600, a hair above, oh, a hair below $1,600. We were above $1,600 a second ago, up 4.5% on the week. So only up half as much as Bitcoin this week. Does that mean Bitcoin gain some ground on the old ratio? That means we are down below 0.07 on the ratio, 0.069. So you mad about that, David? I mean, it's just noise, brother. It's just noise. Do you still have any bets outstanding on this ratio? I didn't know. Oh, yeah. My The BTC ratio is like that is a multi-year long position I'm holding.

How are you doing that trade? So like, that's compound. No, Avey, excuse me. Avey, okay. Okay, cool. Yeah, so you're betting that ratio and holding for the long run, right? What's your time prizing on that? Multi-year, you say?

Until the lappening, yeah. Until the, not the flippening, okay? The lappening, which is what, double? Two-X Bitcoin, yeah. Two-X Bitcoin in market cap. So even the- the third lappening, who knows? Okay, so what does that mean? Eth would have to appreciate by what? Is that 5x and Bitcoin stays? So if we, if Ether doubles versus Bitcoin, that's the

flippinging from, and then it doubles again versus Bitcoin, which is the lappening. So that is up 4x from current Bitcoin prices is when I will perhaps consider to unwind this trade. Perhaps. But then you'll feel like it's, you know, only going to go up from there. Yeah, exactly. Like I said, like Ether doesn't stop at the flippening. It starts lapping Bitcoin. That's, that's how it goes. Can you imagine this industry on the day that that happens, the flipping happens? Can you imagine what Twitter's going to be like? It would be the most healthy and progressive thing to ever happen to this industry.

I don't think it's going to sound very healthy on like your Twitter feed or my Twitter feed when that day happens. But I'll be feeling okay about it. All right, global cryptocurrency market cap, we above a trillion? Above a trillion and $1.08 trillion. Yes, that's right. That's a lot. That's a big number.

And it's pretty big for it. Like, are you hearing anybody saying, crypto is dead this cycle? Yeah, Jamie Diamond said it this last week. Yeah. Oh, okay. Well, Jamie Diamond's been consistently wrong in crypto from the beginning of time. That's right. There's less of that than there was last time around, I think. I mean, there's fewer people saying crypto is dead. Right. That was one of the best things that died in the 2020 to 2020, the 2020 bear market was like no one after crypto Ethereum, Bitcoin

came back from that bare market. That was the last time I heard like, it could all go to zero. Like, I'm sorry. Bitcoin cannot go to zero. that won't happen. Same thing. Same thing with ether. Like it's just not going to go to zero. I mean, a trillion is definitely not dead. This is very much alive. And yet it somehow feels like would we get to last cycle? Three trillion? Something like this? Almost four trillion. Yeah. No, just above three. Oh, just above three. Just a hair above three. It still feels to me like crypto hasn't had its big one yet. Like it's big, big run up. Oh, God. What do you think? I mean, like, if you think of the dot com bubble, for instance, and you kind of measure that in

in today's dollars. That was something like seven to nine billion, excuse me, trillion in terms of the... It puts crypto bubbles to shame, yeah. It was real big. And I don't think...

The stock market, yeah. Yeah, I don't think we're there yet. My mental model for this, and I'm, there's nowhere, I'm not going to be able to tell if I'm right on this at all, but just like, okay, so we had the 2013 bubble,

we had the 2017 bubble, we had the 2021 bubble. To me, this is like the crypto engine, like tumbling over. You know, you know, when you have an old car and it's like the cylinders tumble and it doesn't start and it tumbles and it doesn't start. Every single bubble is like a tumble. But these things are getting bigger and also kind of faster a little bit, TBD. But the idea is like we just

start to tumble and tumble and then the engine starts to rev and then crypto takes over the world. Yeah, well, that engine feels like it's revving, revving at any time. It's above a trillion for sure. All right. Let's talk about inflation. What is this chart showing us? Yeah, this is a chart from Hal Press, which is just inflation typically goes down as fast as it comes up. So the headline CPI inflation for 1980 peaked at 15% year over year, and then it slowed at the same rate that it went up for the next three years back down to 0.2%. So I asked Hal for a source on this one, and he said it's just like national economic data. So it's like pretty damn verifiable. The take here is that inflation goes down as fast as it goes up, which is while we're saying,

still in the early days of data of declining inflation does seem to track so far. So basically, we went up last summer all the way to 9%. And if we are kind of on the other side of the peak here, then we can expect of the next 12 months to fall back down to what is the question? This says 2%. That's what happened in the 80s. By the end of 2023? Yeah.

I don't know. I mean, are we ever going back to 2%? Sure. The question. Well, it's all relative. So like if we, if inflation went down to 2%, it would not mean that prices went back to normal. Like, eggs are still going to be high prices.

Just the rate of increases. The rate of increases now stable now, which is fine, because that is what we need. What we are doing with inflation is resetting the denominator and resetting the debt. So, like, debt is too large, and so we had to keep on inflating, and interest rates makes the debt too hard to pay for. And so what did we do? We just cut the value of the dollar in, like, half, and now debts are much more manageable. I still somewhat wonder if the new normal is going to be above 2% though.

I mean, like, it's been 2% for like the 90s, right? Sure. Kind of the existence of most people's adult life. I think it has to be above 2% because we have too much debt. I think the new normal will be like a 3, 4%. I think that's very possible. So we might not get back here. Too much.

Let's talk about earnings in crypto, crypto revenues. I love this. David, we haven't pulled up cryptofees. info in a while. That's why I wanted to put it on our weekly agenda. I don't know when the last time you looked at this was, but tell us what we're looking at for somebody on the roll-up who hasn't seen us pull up, cryptofees.info. What are we looking at? And what does this tell us? So there are two things that we're looking at here. There's pink and there's white lines on this

list of things that generate fees. Pink are applications like Uniswap Ave, GMX, Liquity. White, non-pink are Ethereum, finance, March, Bitcoin, or actually like blockchains. So there's different ways to measure this. The Uniswap fees, which are a seven-day average of $1.4 million. generated over a seven-day average. So that's per day, $1.4 million per day over seven-day average, is the fees charged by the Uniswap protocol to traders to go to LPs. Top-line revenue.

Top-line revenue. Ethereum and also Bitcoin and also Binance Smart Chain is basically gas fees, the fees it takes to transact on the network. Ethereum is making $4 million a day over the last seven days on average. Binance Smart Chain is the next closest profitable blockchain at half a million dollars a day, followed by Bitcoin at $350,000 a day. Wow.

Yeah. I mean, it's not a zero. Well, let's pause here. Okay, so when you say top line revenue for Ethereum, how is it generating this revenue? Gas fees. Reefreshes on that. Gas fees.

Gas fees, yes. Okay, so what's it selling? Block space. Block space. It sells you the space for you to put the data into the block so you can do your thing. Because, guys. blockchains sell blocks is what they do that's the thing that they do and somehow every single cycle we seem to forget this so what is the difference between so look ethereum is about four million

in sales per day that's how much block space it's selling per day bitcoin 356000 dollars worth of block space per day it's actually way higher than i thought it'd be that's higher than you thought but look at the delta here i mean the delta's got like a 10x yeah it's over 10x yeah it's actually yeah. Bitcoin looks tiny in comparison. That's the smart contract premium. Like Bitcoin is like, all right, I'll send you Bitcoins and then I'll also open up the Lightning Channel. Ethereum is like, what you want? You want to min some NFTs? You want to mint some tokens. You want to take some leverage. Like, what you want to do? Yeah. It's got more to offer. In other words, the utility or the value of its block space is worth more. Yeah. It's very high. And are there

any other layer ones on this? So we talked about B&B, which is that's always been a little bit weird because it's super centralized, but it is producing revenue. And then what do we have coming in to number four? We have an L2. Yeah, wow, that's the first time I've seen L2's on here. Optimism coming in at $40,000 a day, Polygon, $39,000 a day, Arbitrum 1, $28,000 a day. These numbers are super low, but we also have to remember

they don't have to pay for security by in the nature of layer 2 design. So coming in after Arbitrum, actually, depending on how you measure it, Solana made less money than Arbitrum yesterday, but it's made more money over the last seven days. I've never thought about it this way, but in a way, like if you look at a layer too, like optimism,

it's kind of like a reseller of Ethereum Blockspace. Oh, yeah, that's a good way to put it. Because it's basically, it's kind of like it's taking the Ethereum product block space,

it's making it more valuable, it's adding its value on top of it, and then it's reselling that to all the consumers. Free arbitrage. Yeah, that's interesting. But, okay, but the next, the next closest layer one, alternative layer one,

is Salana with 45, million per day. Yeah, making over the last, no, no, no, 45,000 per day. Yeah, making less money in the last 24 hours, less than optimism, less than Arbitrum, less than Polygon, yet it also has to pay for security. So the other website that we also go to is money printers. Dot info, I think, and you'll just see like the absolute rate of inflation on a lot of these monolithic layer ones.

We will hammer this into your head. Blockchain sell blocks. They also collect revenue. if they issue more currency than they collect in revenue, they are inflating and that's bad and for sustainability. Yeah. It's why it's like, here's the thing. Someone in the, I think it was YouTube chat the other day when we were doing a live stream

was like, why don't you guys talk about, why are you guys talking about these other alternative layer ones acting as if they should be valued far less than Ethereum? I'm like, because of this, go to this site. The discrepancy is insane. Their revenue is down. They are not selling their blocks. Their product is less valuable than even layer twos.

By definition, their product is to not charge. fees, which makes them fundamentally unsustainable over the long term. Like, the product, the structure is broken. Anyone can sell a product where you're losing money. Like, I just, I don't understand why this isn't more widely. I don't know. I don't know, dude. Okay. All right. Well, we don't. We are like, the, we're just dumb ethmaxis who don't understand. It's just economics. It's just science. What's going on with the price of aptus? That's a really good question. Well, do you have any answers for me? Did you know the fully diluted valuation of Aptos right now is at $16 billion.

I did know that, David. That is insane. Did you know? Did you further know? The fully diluted valuation of Coinbase, you remember that exchange, that little exchange, is 12 billion. Aptose. Oh my God.

It was $16 billion when I looked at it yesterday. It's at $18.6 billion. Look this chart. Coinbase, the exchange from 2011 or whenever it got started, is at $12 billion. Who the hell is buying this? I actually think it's $1.6 billion. I think the inflows are actually coming from Korea. This is a 6x from January 8th.

Unreal. It is an empty blockchain. There's nothing going on there. There's some stats here for you, David. The TVL, total lock value. Vanity metric, short, for Aptos, is $58 million. $58 million. That's with an M.

That's less than most DFI apps on Ethereum. The valuation is $18 billion. the total locked value on Ethereum is $32 billion. That's with a B. The valuation of Ethereum is 196. If you do that math of total locked value divided by fully diluted valuation, which you can do, that means aptos is 53x more

in terms of its value in the market than Ethereum. It seems like quite a hefty premium. I'm having trouble understanding why. Yeah. I'm not one to be so foolish to short anything in crypto because why would you ever short something where there are just apes involved? You just hate money. But man, is that really an enticing short?

You're going to do it? No. I don't even know how because it's not a token. If it was a token on Ethereum, it'd be easy. I don't know. I'd have to go do it in some centralized exchange. But like, would you do it if you could? If it was trivial for me?

Yeah, I'd probably throw some pocket change at a Napto short. Yeah. Just for the economy. Just as it. say I did it. Yeah, I just never like never short things because it's always, it doesn't matter if it's the most obvious short in crypto history because apes will liquidate you. Have you ever seen people do like these angry shorts? They're like, the market's wrong. Apto shouldn't be this high and they just like angry short it and they're just like freaking

wrong and they need money. But they're, but it doesn't matter because the volatility still liquidates them. They might be right like two or three years later. Right. Anyway, DYDX is also rallying. The reason why is because they postponed an unlock of tokens. That's basically it. That's the dumbest reason to rally. It's a pretty dumb reason. It's not what we... Do we know that this is true?

Because sometimes people just like to ascribe things for... Sure. It does seem like it's true because the news came out where they were like... The unlock will now begin December 1st rather than, I don't know, some other date. The details are in this article. Anyway, when that happened, then the price rose. So there you go. All right.

trading right now. Cool. Cool. An unlock. We can just kick that can down the red. But optimism is up too. Do you want to talk about that? Optimism is at all-time highs. OP token. I'm sure if Arbitrum had a token, it would probably also be, I'm assuming these things will trade in parallel with each other. Optimism coming in almost a $10 billion network, which is pretty damn crazy. It's hard to value these things because like optimism is still so new. What am I looking at here? This is coin gecko. This is just, this is not fully diluted evaluation. That's, that's market cap valuation. Yeah. So market cap is the discrepancy between the supply of OP tokens. There's not much supply on the market. Not much supply in the market. But that's just

a function of like how they're just slowly air dropping out their token, slowly releasing it, right? So like there's a lot of locked tokens. Market cap is something like half a billion, but fully diluted valuation is that 10 billion. So it's actually technically not unlike Aptos in that there's a very small float and a very high fully diluted valuation. But when you buy these things, you need to look at the fully diluted valuation, because that is the valuation that you are buying these things at. If you're a long-term holder, at least, which I hope you are. Yeah.

Yes. Yeah, yeah, yeah. But at least there's real actual innovation and activity. Like, VeloDrome on optimism is hitting volume all-time highs. So there's actually, like, justifiable. It is kind of, it's like a much more advanced AMM. It's a little bit, it's kind of a hybrid between Curve and Uniswap a little bit, but for any token, like, curve specializes in like to like assets.

where Velodrome is a little bit like Uniswap where it's not like A to B assets, presses assets that aren't supposed to be priced on parody. We did an episode with a few months ago. And then after we did the episode, the price absolutely mooned. I'm like, why didn't I buy it? Yeah, why didn't you, David? Because it's tradition. That's why.

Yes, it's tradition. The number of times I've done a show on something and I'm like, hmm, that's kind of bullish. And then I don't buy it. And then the show goes out. And then token prices goes up is that that's happened a handful of times. Definitely. be, by the way, guys, in case you're listening, if there was a purchase of anything that David made prior to doing a show, that would be listed in the disclosures on our website.

And also mentioned in the show. And also mentioned at the beginning of the show. Yeah. So even if David tried to fake pump and dump us, he actually couldn't. Yeah. Because we have that in place. Yeah. Also, that's like not what I'm interested in doing.

I don't need to do that. You don't want to pump a dump. You just want to hold for the long term and be boring. Yeah. How boring. Exactly. All right, what's coming up next? We got some non-boring stuff.

Got some non-boring stuff. Yeah, so Genesis filing for Chapter 11, so that is finally wrapping up. We'll talk about that. SEC coming in a hot. Ali Eisberg, the Mango Market Manipulator, got charged by the SEC. Gary Wang and Caroline Ellison charged by the SEC. Nexo charged by the SEC. Lots of things to talk about.

And then Hester Purse of the SEC comes and delivers a fantastic speech, which Ryan and I just absolutely gushed over. We'll talk about that. And then also a bunch of NFTs migrating, Uniswap migrating to Binance, everyone on the move. Lots to talk about. Oh, and we'll also talk about how to make sure that you don't get your NFTs fished, all that. And so much more, it's going to be a big roll up after we talk to some of these fantastic sponsors that make this episode possible. Especially Cracken, who is our strategic sponsor of 2023.

Cheers. Cracken has been a leader in the crypto industry for the last 12 years. Dedicated to accelerating the global adoption of crypto, Cracken puts an emphasis on security, transparency, and clients. support, which is why over 9 million clients have come to love Cracken's products. Whether you're a beginner or a pro, the Cracken U.S. is simple, intuitive, and frictionless, making the Cracken app a great place for all to get involved and learn about crypto. For those with experience, the redesigned Cracken Pro app and web experience is completely customizable to your trading needs, integrating key trading features into one seamless interface.

Cracken has a 24-7-365 client support team that is globally recognized. Cracken support is available wherever, whenever you. you need them by phone, chat, or email. And for all of you NFTers out there, the brand new Cracken NFT beta platform gives you the best NFT trading experience possible. Rarity rankings, no gas fees, and the ability to buy an NFT straight with cash. Does your crypto exchange prioritize its customers the way that Cracken does? And if not, sign up with Cracken at crackin.com slash bankless. How many total airdrops have you gotten? This last bull market had a ton of them. Did you get them all? Maybe you missed one. So here's what you should do. Go to Earnify and plug

your Ethereum wallet and Earnify will tell you if you have any unclaimed airdrops that you can get. And it also does POAPs and mintable NFTs, any kind of money that your wallet can claim, Earnify will tell you about it. And you should probably do it now because some air drops expire. And if you sign up for Earnify, they'll email you anytime one of your wallets has a new irdrop for it to make sure that you never lose anirdrop ever again. You can also upgrade to Earnify premium to unlock access to air drops that are beyond the basics and are able to set reminders for more wallets. And for just under $21 a month, it probably pays. for itself with just one air drop.

So plug in your wallets at Earnify and see what you get. That's E-A-R-N-I.F-I. And make sure you never lose another air drop. We said it would happen last week, and now it happened. Genesis filing for Chapter 11. Here's the story. Genesis owes more than $3.6 billion to top 50 creditors. The papers were released.

We got some more data on this. David Philison, what's happening with Genesis? Yeah, Genesis Global Files for Bankruptcy Protection and the U.S. Bankruptcy Court for the Southern District of New York in the filing. The company published a list of its top 50 unsecured claims. So if you are curious of that, it's a whopping $3.6 billion to just its top 50 creditors. $3.6 billion it's owed.

Are you on that list anywhere, David? No, I am not. Okay. I think I am by proxy. Yeah. Well, I think you are joined by many, many, many people who are owed that. Because, like, again, it turns out yield is just this gravitational black hole. And so all the yield that was created in the last two years ended up flowing back into Genesis.

It was the keystone of contagion. So the list of creditors are going to be large. $3.6 billion is owed. It does not say how much they have assets under management. That is not a $3.6 hole. That is a $3.6 amount owed. They have some amount of money and they're on their balance sheet that they do have. So it's not the whole size.

Where's some of the big ones? Marana Corp, 151 million. I don't know what that is. Babel finance, I've heard of them, 150 million. Van Eck, you know Van Eck. I went to their, big institutional players. I went to their talk about that not too long ago. Well, they're out of luck, $53 million.

It's a whole big list here. A lot of people affected by this. Genesis literally at the end of the row here. But, okay, so Genesis goes bankrupt, but not DCG, interestingly, which is kind of the parent company of all of this. Yes. So DCG is letting Genesis. go into bankruptcy without coming to save it because the hole is probably too big for that to be

saved. For them to want to do that. And so that's also why they are selling Coin Desk. They are, did you hear they're selling Coin Desk? Because they need to raise capital and like a parent. I heard like prices on Twitter of like 25 to 30 million. I would like to that be really corroborated. I think that's just a rumor. But the price, the speculation on Twitter was like the prices that are being offered for CoinDesk is $25 to $50 million, which is extremely low. I think that's low, too. But who knows how much it's hemorrhaging. Right. Yeah. I know CoinDesk has a ton of employees.

Would not be profitable? Yeah. Well, it turns out, we all thought the block is not profitable at all. I thought everyone was like, oh, the block, great company, like, turns out they're not profitable. Yeah. Like, anyway. I should. Imagine having an unprofitable media company.

All right. We'll earn get their money, their users money back. That's the big question. And I know Cameron Winkle Voss and Winklevoss twins have been all up in this. This is Cameron Winklevoss with an update on Earn. This is the big question. It means like $900 million, almost a billion dollars of retail funds in Gemini earned. Will investors, well, I guess investors, will people get their money back, David? So TBD. So quote from Cameron Winkvoss is that Genesis Bankrupt does not insulate Barry DCG or any other wrongdoers from accountability, said Cameron WinkleVos. Gemini is preparing to take legal action against Barry, DCG, and others for the fraud.

So the idea here is that they are saying that fraudulent activity happened. It's outside of Genesis. It's Barry and all of DCG. And so even if Genesis can't make Gemini earn customers whole, we are going to sue DCG and Barry Silbert for fraud to get the rest of the money back. So the Winklewoss twins continue to be coming in very hot with accusations of fraud. And we will only be able to tell what the truth is after everyone has their day in court. But Gemini twins coming in very hot.

This is interesting. I just ran the math here. So $900 million divided by 340,000 earn users, according to Cameron Winklevoss. It's about an average of 2,600 per user. So, I mean, these are smaller. detail types of accounts. And that could be somebody's like savings. They're crypto savings.

Hopefully not their life savings. Don't invest more than you can afford to lose and certainly don't lend it out to a crypto lender. Gemini laid off 10% of staff amid troubles, which by the way, is not a lot compared to like Cracket. That's a reasonable number. It's their third round of layoffs in the last eight months. But like 10% is a relatively normal,

especially when like other like Web 2, companies are laying off similar. Yeah, like totally. Like Google just did it massively. Coinbase is done it. All right. Well, we're going to continue to talk about this as it comes up. But we got more. The SEC Banhammer. What are they doing?

SEC charges Caroline Ellison and Gary Wang with defrauding investors in FTX. Absolutely no surprise there. In the press release, it's charged that Caroline Ellison manipulated the price of FTT by purchasing large quantities on the open market to prop up the price, again, which was the

collateral that much of Alameda and FTCS used to borrow with. Overstated the value of the collateral on the balance sheet, led to all of this explosion at FTX and over a crazy amount of risk exposure. The complaint stated that Wang created the FTCS back door, allowing Alameda to divert FTX customers' funds, and Ellison used misappropriate FTCS customer funds for Alameda's trading strategy. I think as these people go through the process of being in court, we're going to find out how much did SBF actually know because he claims that he had no idea that Gary Wang had the

back door between Alameda and FTX. How could he have known? How could he have known that? His exchange and his prop trading desk having a back door with each of? How could he have known? Yeah, I just, impossible to know, really. You got to feel for the guy. Caroline Ellison was the former CEO of Alameda, right?

Yes. And then Gary Wang was the CTO of FDX. Correct. Basically operating is the same. Very insestuous, yes. All right, so that's hit number one from the SEC. What about number two? Ali Ellsberg, the guy that manipulated the mango markets on Solana and then took that money

over to Avey to try and do a short squeeze on curve or something, but then he got liquidated, blah, blah, blah, blah. I think the ACFTC is going after him too, but the SEC charged Avi with market manipulation, which is what he definitely did. Ellsberg, Eisenberg, excuse me, is in federal prison, awaiting transport to New York City and the SEC labeled mango token as a governance token offered and sold

as a security on the crypto platform mango markets. So this is perhaps setting a precedent. What is the mango that you said mango markets? What are we talking about? I think it's like an Avey. Salana DFI. It's a Salana DFI thing. Yes. I think it's like a borrowing lending protocol. You know what's funny to me is I'm like

the headline is this guy apparently stole 116 million of crypto assets. I'm like oh that's not that much. Holy crap, it's 116 million. What has happened to me? Yeah. I'm like measuring things in the billions for the frauds of 2020. He was the guy that tweeted out, we just engaged in an extremely profitable trading strategy

and everyone was like, bro, you stole that money. It's called Stealing. It's called market manipulation and theft. And he tweets about it. Well, he had to. He did it out in the open. It was like it was a very profitable trading strategy. Yeah, like market manipulation is profitable.

Do you know like when YouTube influencers and stuff and like TikTok influencers, like will literally film the crimes that they're doing and like post it for clout this is what this guy was doing advertising his big wins and it was in the form of market manipulation so that's number two was this yeah same thing how about they hit someone else nexo nexo 5 million dollars settlement c charged nexo for failing to register the offer and sale of its crypto asset lending product uh its interest product uh nextos has agreed to pay the c 45 million dollars and have ceased the sale of the earned product to U.S. investors. This is why NXO said that they were leaving the U.S. market last December, citing a dead end in talks with U.S. regulators, which is kind of on par with conversations we've

already had. SEC charged Gemini Earn and Genesis last week for the same thing, also told Coinbase it would sue them if they've released Coinbase's earned product as well. And so this is kind of far in line with all the other things that the SEC is doing to be mean. I feel like, you know, lots of times bankless has a lot of scolding for the SEC. Yeah. Like, we're like, what are you guys doing? Stop doing. Like, what are you doing?

Can we be mad about some of these actions? I mean, the SEC taking on a market manipulator for the Mango token, the SEC taking on the FTC, FTC executives and doing that. I don't know about NECA, but like, even those two, isn't the thing we want the SEC to do is come after, like, the clear scammers and grifters? Yes. Like the BitConnect guy from 2017. Isn't that where where crypto is basically, hey, we could use some help in these areas.

So I almost feel like I want to praise them for this or like say thank you for some of these things. And yet, David, I'm like, I'm worried to say that because I don't know what the lines of demarcation actually are. And like it's kind of like, oh, you give them an inch and they'll take a mile sort of thing. And so I don't know how to really address this or how to talk. about it. I don't know if you have any takes on that, but yeah, what do you think? My take has been what it's always been, which is if it can be regulated, then it ought to be regulated. If there is a central Loki of power that the SEC has the ability to apply pressure to, and that works, that means that that thing that they're applying pressure to is sufficiently centralized to the

point where there is a discrepancy between public market information and private actors. That means there is a principal agent problem. And so it's a little bit kind of judging after the fact, if the SEC can apply pressure, then they ought to. But that's just what the nature of decentralization is. No, so I agree with that line, right? I agree with that line. However, like, so I think you almost have to get even more detailed there. Sure.

Because that's a guiding principle, but like, how do we know? Yeah. Ether scan can be regulated. It is a centralized company. Right. Could be regulated as a broker dealer. If we, or like, in Fuera, for instance, are we going to make, remember that was actual legislation material from SBF.

We should regulate all of the D5 front ends. Do you remember this? I understand that. Yeah, that's a good point. So how do we do this? I guess one of my takeaways last week was like a breath of fresh air. Hester Perce, who is a commissioner of the SEC, gave a speech at a digital assets conference at University Duke.

And this is just exact. I don't know how to articulate it the way Hester does, but the way Hester articulates the role of the SEC with respect to regulation crypto is exactly what we want. We should read some quotes from this. It's a fresh reminder of how things ought to be done by the nature of why they were created in the first place. Here's a quote.

Hester says, crypto's value proposition depends primarily on the builders of this technology, not on the regulators like me, who lack technical expertise, and stand on the periphery looking in. What a great posture to the space. Some of these lines are so great. What else you got?

My favorite line here was privately designed and voluntarily implemented solutions can be both more effective and more tailored because the people driving them better understand the technology and what they are trying to achieve with it.

Iterating and experimenting with private solutions is easier than it is with regulatory ones. Moreover, private solutions avoid the systemic risk that comes from an industry homogenizing because everyone has to fit into the same regulatory parameters. Like, my drop.

Oh my God. It's such a powerful line. It's so good. It's just also the principles of just like frontier innovation always happens when you let the free market do its best. And this is what I've seen, not necessarily the SEC at large, but Gary Gensler really getting in the way of is just like really pushing back the freedom of the frontier to explore and innovate.

Like, yes, we find trouble on the frontier. And then we route around it, and you're not going to do that, Gary. She also says this. Regulatory solutions, which tend to be inflexible, should be a last resort, not a first resort. I also appreciated how this speech was also directed to people in crypto. Said this, to us, to the bankless audience, I think. People who believe in crypto's future should not wait for regulators to fix the problems. Regulatory solutions, which tend to be inflexible, should be a last resort in our

On a first resort, I said that already, privately designed and voluntarily implemented solutions are much better at fixing things than regulators using their inherently coercive power to impose mandatory solutions. She says later, crypto is about solving a trust problem. How can you interact and transact safely with people you do not know? That is the core of it. Anyway, this whole speech is fantastic. And I just like the posture of a regulator really taking the time to understand our industry.

What's up? If you go to the footnotes, David, look these footnotes here, okay? Are you going to bring out, sorry, go ahead. Multiple bankless podcasts. Oh, yeah, right, yeah. Three bankless podcasts. What's up, Hester? Shout out.

Thanks for listening. Taylor Monaghan. YouTube video on the Brink episode. Yeah. She listens to all the same podcasts we do. That's great. I mean, this is what we've asked the SEC and our regulators to do is like, we don't bite, engage with the crypto community.

We want the scammers out too. Like, we want your help to do that. So can you take some time to understand to talk to us? Anyway, this speech made us once again so excited and so bullish. We reached out to Hester Perser's office and asked if she'd want to come to show. And I think that's in progress, right? She said I'd absolutely love to. So Hesda Purse, round two.

People don't know that the crypto industry have warmly dubbed Hester Perce Crypto Mom way back when for offering the stances that she's been put forth in here. Also, you know she's a regular listener because she cited our Is Everything a Security episode with Brian Fry. So you know, you know she's paying attention. Yeah, yeah. She actually mentioned the fifth prong of the Howie Test in the speech. Did you read that? Oh, no, I missed that part. Yeah, she did. She said, yeah, fifth prong of the highway test, some people have observed is does the SEC want to regulate this? Right. Which is like exactly from Brian. I mean, the only, the only prong of the how we test.

Anyway, I'm just, beg those listeners know, we give regulators a hard time sometimes, and I think a lot of that's justified, but we want to call out when they're right and when they're trying to do the right thing. And let's keep in mind, regulators are just people,

they're citizens. This is a layer zero type of thing. And when they're fulfilling their mandate for the people, then I think that's a much healthier place to be. So just hats off to this particular regulator doing this work, and we hope more of them

step up and do this and SEC, CFDC, all the government agencies in every jurisdiction around the world. And just to really drive this point home, the reason why we spent time to talk about this is like we talked about, okay, the SEC charged Caroline Ellison and Gary Wang with defrauding investors in FDX. Yeah, that's good. Charging Ali Ellysburg with market manipulation. Like, yep, that's good. NexO for failing to register. Like the facts and circumstances, it's a black box. We don't really know. But like the point is, it's like the SEC. Hester in this article said, hey, crypto is not a monolith. We need to judge crypto individually by facts and circumstances. And I think that's how we should approach the SEC. Facts and circumstances for every single

decision they make. And that is what we are trying to do here. That's right. David, Kevin Rose had a real bad day earlier this week. Here's the headline. Kevin Rose's NFT wallet with 40 high value collectibles was hacked. this was a fishing scam, David, that drained millions of dollars worth of rare tokens. A lot of very valuable NFTs on this list. What did Kevin Lute in this hack? Yeah, so 40 NFTs, like you said, one autoglyph, which hurts my soul. Autoglyphs are such a treasure. There's not that many of them.

25 chromy squiggles, which is the first... You lost this one? That's a chromy squiggle, yeah. Yeah. 25 of them, which is the first art block ever created. one QQL Mint Pass, which I don't know what that is, one admit one pass from G Money. I've got one of those.

A Cool Cat NFT, the currency NFT by Damien Hearst, oof, quantum key, several on-chain monkeys. But it was nice to see that he owned a zombie crypto punk, extremely rare, extremely valuable, and that one was saved. But all the other ones were sadly lost to a fishing scam. The way that this worked is a fraudulent website. He proved a transaction, that transaction,

bundled up all the NFTs that it was preparing to bundle up and then sent them outbound from Kevin Rose's wallet all in one go. So quite unfortunate. Sorry, Kevin. That is terrible news. And this is just part of the early days of crypto where we still need to work out some of these kinks. This is a problem that only we as an industry can solve. Do you know that line we say at the end of every show, which is you could lose everything?

Basically, this sort of thing can happen. this was a fishing attempt that got Kevin. This is my take on it, David, shortly after it happened. I said, it looks like Kevin Rose just had millions of dollars in assets stolen because he clicked the wrong transaction. And how brutal is that? You just click the wrong transaction. Imagine if swiping your credit card at the coffee shop put you at risk for getting your entire bank account drained. I think, David, this is really bad, UX, honestly.

It's something that crypto has to fix before it goes mainstream. some people say there's ways Kevin could have protected himself for this, 100% agree. Yet if he's a bit more careful, and yet he's a seasoned veteran, he's probably kicking himself now. But like this could happen to anybody we know in crypto, like a simple mistake of I'm signing a transaction that I think is legit from a wallet where I have a lot of different tokens or assets, this type of thing can happen. So how do we solve this?

Do you agree with me that this is up to the crypto industry to solve it? Like, it's a big U.S. problem. There are things that you can do today to make sure that you never fall victim to this. And it's just a matter of taking the extra time and energy to do the thing. D.C. put out this wallet best practice, which I thought was very, very valuable. And also, it's really the first two points that I think everyone can do. If you are engaging with a wallet that has a ton of value in it, you should consider that, when you do something, the rest of the things in your wallet might be at risk. And so what DC investor is

advocating for, and which is a great system is that have people in the NFT world do this quite frequently. You can see people's like vault address in their name on OpenC. Have a vault address. And what that means is like you put all of your high value NFTs into that vault address. You send it from your hot wallet to your vault address. Like cold storage. Cold storage, yes. You never ever approve any NFT for sale from the vault address. If you would like to sell that NFT, you send that NFT away from the vault address to a wallet that doesn't have much money in it, and then you approve it for sale from that wallet. And what this does is that it only approves things to be sold from that hot wallet. So, like, this is how, like, if you ever want to sell something on OpenC or any other NFT marketplace, you have to give a smart contract approval to access that specific NFT set.

This is how Kevin got fished. He said, I'll sell this NFT. I approve. What he actually was doing is... Not an open sea, right? Some other website. Some other fishing website, right. It's probably somebody was like, hey, Kevin, here's something for free.

I don't. Yeah. It could have been something like this. And so he approved an in bulk all NFT outbound transfers from that wallet, and then that smart contract did that. So what you do is that you only transfer one NFT into your wallet that you plan on selling, and then you just sell that one NFT. And then once you're done, you send the NFT back into the vault wallet.

So the vault wallet never ever. approves any smart contract ever permissions to move your NFT. And so one is literally Fort Knox. And then this hot wallet is the one that you can collect all of your, you know, smart contract STDs is kind of what some people call them. STDs? Yeah. Yeah.

So like, have you ever gone to like delegate dot cash? For example, this website, that DC Scott, it'll show you sometimes like you load up your wallet and it's like, I've allowed all of these smart contracts to access my money. Yeah.

Most of the time smart contracts are safe because they're not owned by anyone, but if you approve a smart contract to access your money, and that smart contract is controlled by someone, they can remove all your money. All right. Well, so let's double click on this. What is delegate.com. Should people go do this right now? Delegate.comash is a way to delegate a specific authority to have some sort of access to a hot wallet. There's also revoke. Try revoke.com. I think that's the one I think I was talking about. Yeah. And that can show you all the permissions that you've enabled for a specific wallet. and then you can unenable, unrevoke those. Yeah. Uh-huh. Yeah. Definitely some things that you need to do as an early crypto-native. We're settlers on the frontier here, right? We're basically beta testing all of these things for the rest of the world. And so we get the upside from that. We also get the pain when this sort of thing happens. So you need to protect yourself. It really is the Wild West right now.

And I think DC has some valuable ways to fix this. Also, though, David, back to kind of the point, it's still really bad U.X. It's bad U.S. Smart contract wallets. You need smart contract wallets. We need smart contract wallets. And I do think that this will be solved over time, but we're not ready yet. All right, David, what do we got? Coming up next. Coming up next for the rest of the weekly roll up, when withdrawals. When withdrawals, Ryan. I would like to withdraw my ether. Psych, no, I'm staking forever. But other people might.

Wormhole hacker is now the fifth biggest owner of staked ether. And Ethereum NFTs are going multi-chain as well as uniswap. It's going on to Binance. Crazy. All of this and more. as soon as we get to some of these fantastic sponsors that make this episode possible. Uniswap is the largest on-chain marketplace for self-custody digital assets. Uniswap is, of course, a decentralized exchange, but you know this because you've been listening

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When are people going to be able to withdraw their ETH, from the Beacon Chain. Still don't know, but we are one step closer. A MayNet Shadow Fork are in full dress rehearsal for system upgrades, which has allowed developers to test for flaws of the withdrawal contract. And so we have done a successful shadow fork of the withdrawalist contract for Shanghai. And so this is like one of the last big things that we needed to get done in order to actually do withdrawals on Maynett. So this means that we are still on track for a March, perhaps, delivery of,

of the Shanghai hard fork that is not official. Do not quote me. But we're looking good. David said March. You can quote me, quoting David. Okay, quoting David. Uniswap poll just shows 80% support for going to Binance, BNB chain, that is.

What is this? I can't wait for the headline to come out. I was like, Uniswap abandons Ethereum. We're getting a unik swap on Binance. So Binance is not a layer two on Ethereum, but it is a EVM clone, an EVM fork. which means it's relatively trivial to deploy Uniswap V3 there. Since Binance actually has real adoption, Uniswap is like,

yo, let's go to Binance. And so 20 million Unitoken holders voted yes, 6,500 Unitoken holder. So they're doing it. Yeah, voted no, and so they're doing it, yeah. Do you care about this? It's not bearish for Unit token. I think the only thing that's really relevant is for the Unitoken here.

It doesn't put Ethereum under any threat as well. They're not migrating and leaving. They're just adding. It's adding more. It's like Uniswap is on Arbitrum. It's on optimism. It's on Polygon. And now it's also on finance. A story on Coinbase, of course, with a Uniswap floaty here. I don't understand this image, David. It's hard to get images for crypto headlines, man. True, true.

Wormhole hacker moved $155 million in the biggest shift of stolen funds in months moved it. And then also staked a portion of this with Lido. Started doing some things with it. So refresh us on the wormhole hacker. It made out with like hundreds of millions of dollars in hacking this bridge protocol. It's still live on chain. We could track it, of course, moving from place to place. And now they're active again.

Yeah. So wormhole hack, third largest crypto hack in 2022. Wormhole is the bridge between Ethereum and Solana, backed by Jump. And so Jump actually filled that hole in wormhole. So they took it, they took the hit there to make people a hole again. 120,000 ether was stolen in February 22 during the hack. So the hacker has now transferred $155 million onto some exchange, then went on to swap that around in various defy protocols.

The latest on-chain activity has a 995,000 ether sent to open ocean. I don't know that ducks. And then converted into eath pegged assets like Staked Ether and RAPE Ether. And then what they did with all of their staked eth is they used it as collateral to borrow 13 million die, which they then swapped it for more steaked teeth, and then wrapped that steak to eat again, and then borrowed more dye. So they are leveraging long on their steak teeth.

They stole a bunch of eth, and now they're leveraging it up. So they are now the fifth largest holder of steak teeth. Yes. According to this tweet right here, which is pretty crazy. Is this threatening at all to eat a protocol like Lido? So let's say the authorities say,

hey, you can no longer interact. protocol can no longer interact with this specific ETH address. Why? Because it's a criminal. See, we find out the hacker is like North Korea or something like this. And it makes its way on an O-FAC sanction list, this specific address. Is this threatening to MAK or is this threatening to Lido at all? Yeah, so I put out a tweet. Can Lido

confiscate this ETH? It turns out the answer is no. And I'll go back to what I was saying earlier. If it can be regulated, then it ought to be regulated. And if it cannot be regulated, then it's fine. And so, hackers like Ethereum doesn't know the difference between a normal good person and a hacker. It's just everyone's freed it equally. And if no protocol has the ability to do anything about that, that's just the way that it is. And you can bet authorities are watching these funds move and waiting for this person to slip up so they can nail them in real life, which is fine with me.

NFT stuff. Okay, did Doodles just move to the flow blockchain? I think so. Here is a tweet from, I think, one of the founders of the... Doodles? The Doodles NFT project. So why did we choose Flow for Doodles 2? And he goes on, he states why.

What's the TLDR of why Doodles is moving to Flow? They think that they can get better customer user onboarding using the flow blockchain. They think the U.S. is easier. And so newcomers can just get better access to flow by all the various differences of the flow blockchain. My critique of this is always that, like, yeah, of course, things like flow are more. more like Web 2 and therefore easier for new users because they are Web 2 because it's centralized. But that's just my, that's my... Last time I heard about Flow is in the context of Topshots and even Topshots was kind of named

in this tweet. In fact, the Flow founder says, this is how Topshots got to 400,000 people. Newcomers can create a wallet by signing into Gmail and then buy an NFT with a credit card. It's like, yeah, it's like, doesn't... Okay, all right. So that, I mean, that is interesting, right? And you kind of wonder if other NFT projects are going to migrate. We've long known that they would migrate off of the Ethereum main chain, of course.

But the big question is, where do they go next? And it seems like the answer for Doodles was flow. I also somewhat wonder, David, if this was subsidized. I know many blockchains, even layer twos, but certainly alternative layer ones, essentially subsidized projects in order to kind of move to their chains. So I wonder if some of that was involved. there's a full letter to the community. Is there any takeaways from this?

Yeah, it's just like the Doodles community knows that they're going to offend a certain set of their cohort of their community because, I mean, Flow is just not crypto-aligned. It's not crypto-native. Yet, at the same time, as an Ethereum person, we should take this as a signal that our layer twos are not ready to do the things that they will eventually be able to do. And so other systems, ones that are more centralized and have compromised, have been able to adopt protocols like. this because they can just have better onboarding experience. I think it's great. Bring on the competition, right? Sure. Sure. Pudgy Penguins is doing something too. What are they up to?

Migrating to other ecosystems such as Arbitrum, Polygon, and BNB. So Pudgy Penguins using layer zero, which is a cross protocol into a communications protocol, has allowed for cross-chain bridging for Little Pudgies, one of the derivative projects, so that you can find little Pudgies across more blockchains. this is a take on all of these happenings from Cyrus UNessi, what's he say? Yeah, he goes, as an eth-maxi, I'm disappointed by this. I love the facetious self-labeling of eth-maxis, by the way. As an eth-maxi, I'm disappointed by this,

but every layer two builder needs to read this thread and figure out what type of onboarding and user experience they need to provide if they want to scale to the masses. It's just a fair, reasonable take. It's like, hey, our layer twos are not as polished as compromised layer ones, but they need to be. So absolutely. David, you told me this was big news, but I wasn't following a board ape community, uh, launched a new collection, apparently, uh, an upcoming sewer NFT pass. What is this?

No, it's, it's not no longer upcoming. It is released. Sewer NFT pass. It's a game called Duky dash released by Yuga Labs. And in order to access this game, users had to hold a sewer pass NFT that was free for all board ape or mutant ape holders. So a new NFT that was created that was claimable by board ape and mutant ape holders. that I can't remember what the the price for one of these NFTs started trading on the secondary market and was definitely trivial

and definitely non-zero was definitely a good price and so the game instructs holders to reach a score above zero to validate the superpass and then transforms them into a mysterious power source blah blah blah blah blah like the wealth effect

from board apes and Yuga Labs is absolutely insane because if you are a board ape holder you got to mint a mutant ape you got to mint a board ape kennel club you got access to like the other side You got the coin, the ape token drop. Now you got this NFT.

So like a lot of people who are outside like me, like looking in at the board apes, are like, why are those floor prices so high? How is the ape coin so high? Well, it's because the wealth effect. Like, Yuga Labs keeps on air dropping like so much value to the ape ecosystem. Yeah, but it seems like the community is really sticking around. It doesn't seem like some of these communities that. They're making them rich, dude.

But we're in the bear market. and if everybody was leaving, if everybody was pressing the sell button, they would no longer be rich. It seems like this community is here to stay. Right, because the dividends you get from holding an ape has been, it's like paid for the ape like five times over. Yeah, I'm saying like I'm bullish on any community

that is surviving and thriving in this bear market. And if that's what this community is doing, then it sort of makes me bullish. Not enough to buy an ape, but, you know, what else they do? This is a tweet. The Board 8 Yacht Club organization sets a huge legal precedent yesterday for the whole NFT space. What is this huge legal precedent?

This kind of went unnoticed, but you brought it to our attention. Yeah, so in the terms for this superpass, duke-y dash game, there was in the fine print by minting this NFT, I believe. They says, by accepting these terms, you are agreeing to resolve any dispute between you and Yuga Labs through binding individual arbitration rather than in court. So if I'm reading this, I'm not a lawyer, but they're saying, hey, by participating this, you remove your ability to take Yuga Labs to court for any dispute. And then they also finish saying, you also waive any right to participate in a class action lawsuit or class-wide arbitration against Yuga Labs. So that's new out of the NFT industry. What's your reaction to this, Rand? I, you know, the reaction is obviously before minting, you're going to hit with one of these gigantic terms of service.

agreements from here moving moving on yeah like every every project's going to have one of these uh to cover themselves and that makes sense but it's also just like okay well that's back to the legal system how many terms of services have you ever read before like clicking your iPhone update or you know whatever it is um yeah i mean i cool i guess this to me this is the private market filling in the holes that things like the f cc and the cfdc have left it's like they haven't given us any clarity. So teams like Yuga Labs are saying like, hey, in order to participate, you can't sue us.

Maybe. Or maybe it's just fine. That's fine for me. I'm okay with that. But do you think it's just them covering their ass? I mean, it's not like we've created a new governance structure for like board ape holders to settle their disputes amongst one another. They're just saying if you click, if you mint this thing, then you can't sue Yuga,

which covers them. Right. I mean, it's like you, it doesn't matter what asset, one NFT, what NFT, if people buy it and then it goes down in price. If it goes down enough, people sue. It doesn't matter like what the precedent is or like what the grounds are. They're like, oh, I lost money. I'm going to sue. Welcome to America. This is just Yuga Labs finding a mechanism to protect themselves from that. And this is the private market saying, like figuring out when there's lack of clarity or lack of investor protections, the people issuing the tokens get to get to determine what the protections are. Yeah. Well,

my only take here is I don't know whether it's good or bad, but I know it's going to be omnipresent from here on out in all NFT minutes, I'm sure. The Porsche NFT collection failed to gain traction. Man, what happened? People not into Porsche NFTs, David? Yeah, so Porsche NFT, Porsche, or is it Porsche, Porsche, release an NFT collection, I think like 10,000 of them for selling at a whopping 0.911 ether permit. And what does the NFT look like? It is a JPEG of a Porsche. It's a JPEG. Porsche. I love that. David and I. don't know for sure. Because, of course, I'm not a car guy. I don't know if you are. Are you a car guy, David? I've got, oh, I would love to tell you about my car. I know. Because I, people,

bankless listeners know, we're huge sports guys. But we've never had the car conversation. Oh, actually. I'm not a modern car guy. I am an old car guy. Just like, it's like your music, right? You listen to like a lot of old rock and stuff. Well, since we're talking about it, I'm going to go send you a photo and we're going to talk about my car real quick. Do I have to do this right now? Yes, you do because you brought it up. David, I drive a 2015 Honda Odyssey, okay? I'm not a car guy. Honda Odyssey was the car that I was riding in when I was being driven to soccer practice.

There's no shame in that, all right? It's a good car. I'm sending this to you on Discord. It'll take you from A to B. Guys, I am anxiously awaiting. Sorry for the interruption in this roll-up. I'm anxiously awaiting David's car picture. Wow, this looks slick, man.

This looks like something old James Bond would ride here. Can I find this? Let me. Yeah, right click it and there you go. Let me show the Bankless Nation. Look at that. What is this? That is a 1972 Volvo P 1800.

You still on this? Oh, yeah. Yeah, it's sitting in the garage of my house back in Seattle. In real life, NFT, guys. David Owenswere, I didn't know this. That car has been in my family longer than I have. No way. Yeah.

So this is a family, not a family car. I have a family car. It's called a Honda Odyssey. I don't know what this is a collectible. It's an heirloom. that's awesome all right guys well that was our car talk so um expect to hear more car talk from bankless in the upcoming episodes uh actually that'll never happen um what do we got next david back on track Porsche the nfti didn't work out anything else to cover there was a supply of 7,500 of them

I think they sold 900 total uh yeah so did not flop or did flop excuse me did flop huh big flop well moving on So made about 1,000 E's. David, some interesting news here too. I think you're going to have to tell us about it. Brand new headline. Trump, NFT holders have been airdropped classified Intel by Donald Trump himself. Actually, no, that's a rug.

That headline brought to you by The Rug, which is a product out of the Dow. This is something I think we're going to try and experiment with. But the rug is a weekly issue of a, it's like the onion of crypto. Aliens invented Bitcoin, Canadian government's sends Ukraine $45 billion of Shib, chat BT, can't write satire for shit. It is, some of the headlines are pretty damn funny. Gemini is suspected of being run by one or more evil twins. If you are not paying attention to the rug, there's a link in the show notes.

You can collect this post on Mirror, by the way. And so moving forward, the idea is that we are going to slip in a rug every single weekly roll-up. And we're going to read that headline at some point in the time. This is the rug this week. This is the rug. Yeah, y'all just got rugged. Trump NFD holders AirDrop classified Intel.

I think that's pretty funny. I think that was funny. Intel's in the news, man. Everyone's getting classified Intel. All right. What do we got next? Peter Thiel wound down his eight-year-long Bitcoin bet in March of 2022. So he sold pretty damn close to the top.

And a very early supporter of Bitcoin cashed out in March of 2022. Not long after being crazy on the Bitcoin 2022 stage, but that's the topic. for a different day. He, uh, he held his Bitcoin for eight years, though. That's a long-term holder. He made about 1.8 billion. He bought his Bitcoin in 2014 and then just sold it in March at the, like, good timing, March 2022. Yeah. And then went on a Bitcoin stage and talked about how bullish, he was on Bitcoin, later that year. Was it later that year? Was it, was it actually after he sold? Might have been at the same time. When was Bitcoin Miami's in March 22? Maybe he went, David, you think he went to that conference? It's like, these people are crazy. And,

Oh my God, it was in April. It was in April. Yeah. He sold in March and started chilling in April. What was he doing? I'd be a little mad at that if I'm more than, I mean, if he's going to buy back in at the bottom, that's fine. Like, you can't, guy held for eight years. He's held longer than most people.

Yeah, sure. Like, sold in March and then went to the conference in April. Oh, Wales. What are you going to do? All right. On releases this week, so somebody built a really cool protocol, I would guess, a protocol kind of extension. It's called proof of innocence. It's built on tornado cash. I think the best way to think about this is it basically enables a tornado cash user,

which of course, David and I are not because we're a U.S. citizens. And that would be illegal. I once was. David once was. And what it does is essentially allows you to cryptographically prove that you or your eth address is not on an O-FAC sanction list, even though you've interacted with tornado cash. So the builders are calling this a proof of innocence protocol. It uses cryptography to do this. I think it's brilliant, David, because... Of course it is. Basically, OFAC and Treasury, of course, OFAC is an organization under Treasury. There's a sanctions list, and what they did was they blanket banned everyone from using tornado cash. That is, if you're a U.S. citizen, you couldn't use it. And a whole bunch of people said, including us,

What about the legitimate uses of tornado cash? Are you saying no one who is an American citizen can have access to on-chain privacy? Are you saying all of us are criminals? And OFAC's response was like, yeah, basically that's what we're saying. Not only is that probably unconstitutional and possibly on its way to the Supreme Court, there are multiple lawsuits, one which includes my co-host David going on right now. Now we have a tool that we can use to cryptographically prove that we are not criminals. using tornado cash.

I think this is magic. You can view the details if you're interested in this. There's a medium post in the show notes. But my question that the Treasury is basically this. All right, can you unsanction the code now?

Right. Because if we've run this tool and basically prove that we are not some of the addresses that you suspect are North Korea or other sanctioned type addresses, that we are just average Americans

looking for crypto privacy. Or maybe or the question to Treasury is was this really not about protecting us from criminals and terrorists all along? Were you trying to do something else? That's the beauty about this whole thing. This is a statement of speech. I don't think it's really about the actual implementation of this code.

It's about making a point, which is that now users can access privacy tools while proving that they're not North Korea or any other illicit actor still have their privacy, which is their constitutional right, and then prove that they're not a criminal. And if OFAC doesn't remove this tornado cash now from sanction code, it just proves that it wasn't about North Korea in the first place. It was about making sure that they can spy on us. Thanks to the builders for building this. This is why we love cryptography. See, cryptography is both the solution, the problem and the solution to all problems. 100%. Yeah. You're cryptography maximalist around here. Oh, God, yes.

Robin Hood has just rolled out a new wallet, a new crypto wallet. This, they say, is going to be a competitor to Metamask, and they plan to onboard a million users this way. David, I think we've got a beta access to this. I haven't had a chance to test it out. But Robin Hood is very much known for their design. And I know we talked to Robin Hood's founder back in the summer and told us this was coming. Well, now it's finally here. I'm excited to have new wallet entrance on the scene because I think competition will drive better solutions to the market. So this is great to see. And you know those Robin Hood users are going to be super picky.

So they're not going to accept gas fees or anything like that. So this wallet has to solve that. Yeah. So this is built on Polygon right now. So they're also going to add support for Ethereum. And there's probably a way to get into some beta access. And then I think that will release to everyone later in the year. David, this is a new product from index co-op. What's this?

A diversified state-staked eth index. It's just basically all of the state-Eath tokens inside of an index. That's that. Well done. Some of them are risky. Some them are less risky. We've got some- Now they're all together. Now they're all together in one kind of packaged risk model for you. Diversified portfolio. That is D-5 for you. David, some raises this week. What's this first one? Centrofuge raised $252 million to add more power to the real-world asset revolution, which is a revolution I'm a big fan of.

Centrofuge is the system that helps put debt products on-chain, loans, et cetera. Been around for a while, long-term cooperation with both Maker and Avey to help take real-world assets and put that value of real-world assets into Defi, allowing Maker Dow to not just be the central bank of Ethereum, but the central bank of the whole entire world, which is why I'm bullish on it. We got this as well from QuickNode. Tell us about this. Quick node, $800 million valuation in their Series B, Series B raised $60 million.

Basically, crypto infrastructure firm providing blockchain development tools. Two record quarters in 2022, and revenue grew over 300% last year, which is, wow, 300% in 2022. Jesus. I know, pretty amazing. Good to see more blockchain infrastructure funding for sure. Quicknotes a good company doing great work. Guys, we have some questions from bankless citizens this week. the first one, let's see, who is this from? This is from...

Danton. Danton. Danton. Okay, Danton in Discord. I think we're looking at the question. A question on the staking derivative tokens, David. I'm going to throw this one to you. Why is there a premium on R.Eth that is a staking derivative for Rocket Pool and a discount on STEth, which is a staking derivative for Lido? That's the question. Is it purely that R.Eth is currently the most decentralized option and less reliant on a single point of failure? If all liquid staking derivatives, LSDs, are eventually one-to-one with ETH, then what is the benefit of buying or holding R-Eath? Essentially, what's the benefit of one over the other? And is there a benefit to R-Eth when the gains and staking rewards are essentially canceled out by the premium pay? Help us understand these staking derivatives and why they trade with different market prices.

Yeah, so Dantan's intuition was correct. Our Eth has a premium because the costs of decentralization are always higher. Lido doesn't have a cap on the supply of staked ether because you just come in, there's no bond from the stakers. So the Lido validators, the 29 of them, you can come in and you give them your ether, and they don't have to put up any sort of bond. That's what the role of the Lido Dau is. With Rocket Pool, the far more decentralized option, rocket pool stakers do have to put up a 16-Eth bond. So there is a constraint on the supply of rocket pool staking nodes, which limits how much external, can come into the system. And that is just the cost of decentralization. Decentralization tends to be

costly. It tends to be slow. And that is why the constraint on RE supply shows up as a premium on the secondary market. And the unconstrained supply of steak to ether from Lido shows up as a discount. So it's a little bit like the difference between die, which is a little bit harder to scale in USC, which is Coinbase can mint that to infinity. Right. That's exactly right. But what about this? What about this kind of follow-up question? So what if someone buys Art Eth? Is that a good idea? Or like, how does Art-Eath equalize to the price of Eth?

Is there some arbitrage opportunity here? Right. So if one-R-Eth is like 0.1-Ether, you pay, one ether will net you like 0.99 R-Ether. So you kind of lose 1%-ish at that rate. And so what the Danton is asking is like, okay, well, like, you lose 1% right off the bat. And at, you know, five. So why would I do this?

Why, five, six, seven percent returns a year. I'm backwards. Like, I'm back like six weeks or something. I have to pay six weeks of my time in order to make up for that. So why would I do that? Well, if you want to go and mint our ether by providing a node, you actually get that 1% premium. So you can... Rather than buy it, mint it.

Mint it, yes. And so you mint R. Instead of buying R.Eath on the secondary market, you go to Rocket Pool deposit your ether, and then you get REth in return. And then you can sell that REth for a 1% arbitrage. now that 1% is not that much, so you kind of have to do this at scale. But that's how you can do that. And same thing with Stakedith.

If you want to wait until withdrawals, which are coming in March in theory, you'll say Staked ETH is at 0.98 ether. You buy one ether worth of Staked ETH. You get 1.202 worth when you can later withdraw. But you are right that essentially the discrepancies between premiums and discounts and also APIs will eventually net out because of arbitrage. Here's our second question, David, from Danube. And of course, this question is in the bankless discord, which is where bankless citizens hang out these days.

A question about layer twos. The question starts this way. It seems that every layer two starts to create an ecosystem with a different value proposition. So you have defy on arbitrum and NFT community on Polygon is strong and optimism has its thing. Here's the question from Danube. Do you think that L2s would differentiate themselves in the future based on the value, of ecosystem rather than technology. So what is it? Is the differentiator between these L2s? Is it more on the technical side? Or is it more in kind of the community and the set of applications that are on top

of them? I absolutely love this question because this question is talking about Ryan, the relationship between culture and code. And that is the thing that I think is the coolest thing about this whole entire industry. So Danubi's, he's onto something. They're onto something that like Arbitrum is super defy focus polygons got this nfts community our optimism is really focused on this governance model and each one of these things has downstream effects as to who chooses to do what on each layer two so the culture behind the teams and what the teams decide to build their layer two as actually shows up in the communities that come to be built on these things so like our optimism is working on this optimism collective dual token model for for governance which i think is like the longest term most

bullish time horizon for what we can do in this space is like how can we re-architect human governance and so you'll get a lot of like the regenerative finance uh like public goods focused communities on optimism like the defy ecosystem on arbitram is super hot so you get a lot of the defy people uh and a lot of this ultimately comes back down to like how these different layer twos are constructed and so that's one of the bullish like cases for layer two is that we we have like the idea that every single chain is its own city, right? Like some people like LA, some people hate New York, some people want to live in Seattle. Like layer two all have their own culture to all facilitate any sort of demand for any sort of niche that needs to be, that needs to be expressed by the people that live on these things.

And so that is how I see layer two is differentiating themselves based on values rather than technology, even though these things have a synergistic relationship. It's a little bit of both, right? But I do think you're right. Over time, the technology itself will become the commodity. All layer twos, like just in the way that all cities in the real world adopted similar kind of standards around roads and kind of their transportation system and all of these things,

not really that much different from like Chicago versus New York. But there are some subtle things that are different. I do think all of these layer twos will kind of collapse on the same best set of technologies. You can even see some of that now with some of the optimistic roll-ups being like, ah, that ZK stuff. Yeah, we'll implement that when the time is right, not yet. but soon.

And I do think it'll all just collapse. And what you have left is kind of the culture. That's what makes Chicago different from San Diego, different from New York City, different from Austin, different from any, like, you know, that's the differentiator. So I do think that will become more true over time.

And this is why, sorry, finish with that. I was just going to say, I think in the short run, technology does matter. Sure. A good bit. And probably more than it will matter in the long, long term.

Yeah. And I'll take this moment to show, the OP stack. This is something that optimism is building. The OP stack is this skeleton. It's like a build a layer two workshop. And so they have all these modules that you can come and combine into a layer two. And so it takes the best of any layer two, turns it into a module, and you can build a layer two on it. And so the OP stack is allowing for the expression of any type of layer two. And if you build it on the OP stack, any sort of layer two that is built on the OP stack actually has synergies and composability benefits and just second order positive consequences that allow

these OP stack change to work together, which is what optimism is building for, like this massive Cambrian explosion of interoperable layer two's, layer threes that are all built on the OP stack that allow for different technology to come together to allow for some sort of expression on top. I'm so bullish. It's so awesome. It's so sci-fi. It's pretty exciting. By the way, I'm speaking of awesome things going on in the community.

What you're seeing now on screen is the Bankless Nation Discord. This is where we hang out. We talk about heading west. This is where we head west with bankless citizens, bankless community members as a group. Questions like this get asked all of the time. David, you are doing something, I believe, this Friday, a special event in the Bankless Nation Discord. Tell them about that. And how can people who are not part of this community join?

So at the time of me speaking, newsletters going out on the bankless newsletter that I wrote is called Ethereum, the Economic Engine, the Economic Machine. I'm super excited about this article. and tomorrow, which is actually today for the time of listening, if you are listening on Friday, at 3 p.m. Eastern, we're doing a little Q&A session for it. So everyone that's watched the video or read the article that has questions about the article. At 3 p.m. Eastern, we're all going to be, all the bankless premium subscribers, all the bankless nation are going to be in the stage in Discord. And I'll give a short little monologue about the article and unpack it a little bit. And then we're going to do a Q&A session. And so for anyone that's got extra questions about the article

or anything else, I'm sure we'll start talking about whatever. that is happening at 3 p.m. Eastern for every bankless citizen. The other cool thing, Ryan, that happened in the Discord this week, we made this channel called RSA slash David tracking if I want to click on that. How do we come up with all of the topics for the bankless weekly roll-up? Well, we put them into this channel inside of the Bankless HQ Discord, the centralized media company Discord. And then we've created this relaying channel into the Bankless Nation so the Bankless Nation can keep tabs on what we're up to and making sure we're still working. And so somebody, so somebody can get our information and fork our roll up and

come up with a different one, a better one. Exactly right. So everything that we talk about, we just take the link from Twitter, from Coin desk, wherever it is. We put it into our Discord, and then a bot relays it into the Bankless Nation Discord. And then you can comment on that and see what we're going to talk about. It's like you can, you can see what we're going to talk about seven days ahead of time just because we have this carbon clone copy of these two different Discord channels that goes. It's like, it's like a window into, HQ. That's what we're up to. A lot of cool stuff going on here. And if you want to become a, we're calling them Bankless Citizens. Upgrade to Bankless Premium. There's link of the show notes.

And what happens is when you join, you get a link to this Discord and you can catch David's talk tomorrow that's happening in the Bankless Discord. All right, David, we got some takes of the week. Here's the first one from Amin Soleimani. ETH only Rai, that's Rai, was a mistake. The ETH staking yield means that borrowing Rye against pure Eath will always have some percentage opportunity cost. The Rye redemption rate should almost always be negative to reflect this opportunity cost. Decentralization is expensive. People don't want to pay. All right, there's some context, I think. People should understand before reading this tweet. The context from my perspective is Rye was too much to call it a stable coin. It's not tracking the dollar, but we'll call it a stable coin,

kind of a crypto-native stable coin that doesn't have any off-chain value. So it's completely collateralized and backed by Eith. It uses some control theory to do this. It's sort of the original single collateral die model only fully realized. Amin is, he's been in the theorem space for a long time, he's kind of a co-father of this Rye protocol, right, which has been kind of exciting for crypto natives who want, like, we want our crypto only money, right? This is him kind of waving the white flag and saying like, hey, this method didn't work out. And I think that's a big deal, because he's been very bullish on Rye prior to this. So that's the context. I guess my question here is twofold. Why do you think Amin is waving the white flag on this Rye project? And what does this mean for the

future of crypto-native stablecoin? Does this mean we'll never get here? Because Rye was one of the most promising projects there. And it's just like, look at the market cap, David. It's down to like eight million or so. So this is like the supply of dye going down from like almost 100,000, a hundred million down to eight million. It's been down only. Man, this isn't working. People aren't using it. Yeah.

He actually follows up with a second tweet that has some elaboration. He goes, I tried to do some casual interest rate manipulation to this set, the redemption rate for positive. Basically, he's saying that, like, Rye doesn't work when there's only one collateral. And no one wants to take the opportunity cost of using that their ether collateral to mint Rye when ether is just going up and up and up and up and up. And so maybe Rye works. Wasn't he saying that maybe it works if you have staked derivatives in there instead?

Like if you have ST-Eth in it or like R-Eath, maybe it works better? Yeah. So he said that the Rye team has always been doubling, tripling, quadrupling down on ungovernance, as in no governance mechanisms, just pure raw cryptography that makes this system work, which is admirable and very something that we should always aspire to. But he's saying that they went so far down the ungovernance route that they were never able to swap out ether for something like staked ether or anything else because they made their system so rigid. And so I think the lesson here is like if you like there is some benefit to having human

governance like going so far down the ungovernance. You can't ungovernance too soon until you like are ready for homeostasis or ossification. Yeah. And that's what happened here. And so basically there's a massive opportunity cost for people depositing if it to back rye because it means they can't. stake it. Or do anything else, yeah. Or do anything else.

So it's a much higher cost of capital. It's just the economics don't make sense. It's also just like, tip of the hat, it's hard to admit you're wrong. So props to mean, we're waving the red flag and say, like the project I'm working on, we made a mistake. Do you ever admit you're wrong, David? When was the last time you admitted you're wrong? Oh, no.

It depends on the context. I've admitted that we were wrong about the Alt Layer 1 trade. but I only admitted it in the short term. I still write in the long term. I need to reflect on that one a little bit more. I got one. We admitted recently that we shouldn't have had an XO as a Q4 sponsor for six weeks. Yeah, yeah.

Okay, but also I'll say like we should be able to have centralized sponsors because centralized products, yeah, okay, blah, blah, blah, blah. There's always like, I would always like to justify it in some particular way. Look, the big takeaway here is I'm kind of worried we will never get sort of a crypto native backed stable coin. That's my worry. I guess frax is some combo of maybe it's just our hybrid options are the only things remaining for us. I think the decentralized enough approach is underrated.

Here's my take, David. I'll read it out. In crypto, when our banks fail, we don't bail them out. It's more painful in the short run, yet more healthy in the long run. Free market. This is kind of hard to just say coming out of 2022, right? Because a lot of people got hit by 2022, including us, including many bankless listeners. And yet there's an element of like that is short run pain.

But what it did was it detoxified a bunch of the things that were destined to fail anyway. And it's strengthening our market rather than the other method that we use in traditional finance bail out. Right. We didn't have to bail anybody out. The companies that were taking undue risk died. They paid for that risk. They paid for it. Isn't that the way it should be?

I think that's good. And I'm hopeful crypto can preserve this sort of thing in the future. We'll be much smarter next time around the appropriate people largely got hit with a penalty for the risk that they took. It's not perfect. Let me just say it's not perfect. But I think bailouts would be far worse. I totally agree. Yeah.

The comfort that is a bailout is toxic towards maturation and growth. If you don't have to deal with your consequences, you don't ever mature. Here's your take, David. The bull case for ETH staking is no longer that Ethereum will be the settlement layer for the internet. That's now the base case. The new bull case for ETH is that it's the security layer for the entire internet. East staking goes from one-dimensional to omnidimensional. I think you're talking about eigen-layer here.

Am I guessing that correctly? I will not specifically eigen-layer, but eigen-layer is the one that's pioneering this field of restaking, or what I kind of have called omnidimensional staking, where you can take your ether and stake it to Ethereum to secure Ethereum, but you can also take on additional slashing penalties to secure other things as well, and also get a yield for that too. And so, like, what do you want to secure? An Oracle, you can restake your eth. What do you want to secure?

A prediction market? You can restake your ETH. So, Ether, people think like, oh, yeah, Ethereum's going to be the settlement layer for the Internet. The yield on ether is going to be great. I'm going to stake and retire for the rest of my life. That's now the bait. I'm claiming that Ethereum is winning that and is going to win that.

And so that's now the base case for ETH. The new bull case for ETH is that you also get additional yields for other things that you want to use your Ethereum staking for. That gives you additional yields. And so it's rather than just being ether's only meant for ether staking, ether you can stake for anything. Omni-directional staking. I think that this could be, and this should be honestly a bankless article at some point in time because I don't think people fully understand this. Probably. Is the idea, I mean, it kind of transitions Ethan to kind of the ultimate story value.

In some ways. It's the asset. Yeah, you can use it to bond other entire networks as well. That's what we're talking about. It's like the unit of security for the entire internet. And I haven't fully walked through what all that means, but I think it's pretty cool. This is why this eigenlayer thing has captured the imaginations of many, many, many people. All right, David, what do you bullish on this week?

I'm bullish on this concept, which is the subject of my article, which is economic equilibrium. So, Ryan, the history of steam engines was that we figured out that steam has a lot of power, and so we tried to harness it for a while, and then it would just blow up because we couldn't figure out how to harness it. And then we figured out this mechanism called a centrifugal governor, which allowed a too hot engine to cool down and a too-cooled engine to heat up. And then that was this mechanism that allowed this steam power to go into actual productive output, created the industrial revolution that we know today. I am claiming that that same mechanism of control theory, the controlling of power, is what the combination of EIP-159 and proof of stake is for Ethereum, where when gas fees,

remember when gas fees were like 600, Gway? Like, all of that value went into proof of work. And we actually just lost that value. expended outwards out of Ethereum. With proof of stake in the IP-1559, the Ethereum economic machine can recapture that value, put it back into the Ethereum economy,

and actually move forward as an engine. And so this is the subject matter of my article. It came out yesterday for you Friday listeners. And it's also why I'm just so bullish on what I'm calling Ethereum triggering the industrial revolution of the internet. because all of this energy recapture, Ethereum block space goes into the value of ether.

Ether is the dominant collateral in Defi. When the value of ether and defy goes up, the downstream wealth effect for all tokens and supply of sable coins also goes up. And it's just this recirculating loop of economic activity that makes the internet industrial revolution on its way. That's why I'm bullish on.

That's cool, David. David Bullishon, steam engines. Steam engines. Internet seam engines. Cipherpunk to Steampunk. Ryan, what do you bullish on? I'm really bullish on this proof of innocence thing. Just code that we were talking about that earlier in the show.

All right. And just to recap, OFAC ban tornado cash. And they said anyone who uses tornado cash is obviously a criminal, we have to assume. And so what did builders do? They developed a way to cryptographically prove that people using tornado cash are not criminals. And that's just badass. That is like a jiu-jitsu. against authoritarians.

I think the authoritarian move is like, you can't ban it because bad people will do bad things with privacy, right? And the crypto builders are out there saying, like, well, no, we can use our math and our cryptography

to prove without divulging our privacy that we are not the criminals you think we are. That's why I'm bullish on. I just think that cryptography and builders and a community with shared values

is always going to be able to fight back using the internet against authoritarians and against this further encroachment of our freedom. And the reason I'm bullish on that is both because I see it happening. That's what the crypto movement is all about. And also, David, because honestly, it's our only hope as we transition to this digital era. We have to stay one step ahead of the surveillance state, the surveillance corporations, and those that would seek to kind of encroach and control. So yeah, it's so cool. when we see that sort of thing, and then you can kind of put the acid test.

You can throw it back to them and say, like, yeah, was this really about what you say? It was about protecting us from criminals and terrorists? Or was it about actually you controlling things? Right. And then that's where the strong community and the social layer kicks in. And it's like, yeah, tell us, like, show us. Like, that's why we've always thought of bankless and crypto

as more of a social movement than anything else. Anyway, that kind of thing just makes me bullish because I had no idea this sort of thing was feasible. And then just somebody spins it out and is like, yep, we release this open source code, go ahead and use it, extend it if you want. And then I could tweet like something to, you know, Janet Yellen in the Treasury, like, hey, can we, can we use tornado again because we can prove that we're not criminals? Anyway, it's cool.

Builders always like four steps ahead of, you know, archaic institutions. And for all the people that are suing the Department of Treasury, myself included, this is just a huge piece of evidence that we get to take to the court and be like, I think so. Look at this. Look, look what we can do. And so, like, it's a huge boon to all the people that are suing the Department of Treasury. Yeah, very cool. So thank you.

All right, David. The meme of the week. What are you going to do you want that? Meam of the week. Boom. Look at that casino, roulette table. This is the scene out of the hangover, except all the faces are, have been replaced, although the Wolfpack faces have been replaced by Kyle Davies of Three Airos Capital.

We got Sam Trebucho in the bottom left. We got Sam Bagman Fried rolling at dice. We got Doe Kwan, who is that in the back? Barry Silbert. Oh, of course, Suu, and then in the top right corner, we got Arthur Hayes. Wait, what happened to Arthur? He's doing okay. Well, I mean, after fighting the CFTC and paying a fine, I don't think the guy, the guy's in Singapore, guys not coming back to America. Each one of these things, each one of these people have an X over their face. They did not make it. Yeah, Rip Wolfpack of 2022. That's it for you guys. We got a moment of Zen. Okay, we have a moment of Zen. This is for

for YouTube only because it is only visual, and this is about the KZG ceremony that is currently going on. If you do not know what the KZG ceremony is, there is a YouTube video interview that I did with Trent Van Epps and Carl of the Ethereum Foundation. Basically, everyone needs to contribute entropy to this KZG foundation, and there's this period of time where really fun and cool mechanisms of creating entropy are kind of art, artful ways, tasteful ways of creating entropy. are also being added into Ethereum to unlock EIP 4844. If you didn't understand that, go watch the video. But here is a very fun and creative way of creating entropy to add to Ethereum,

and that will come after right after Ryan tells you all about how risky crypto is. Yeah. Yeah, guys, it's super risky. You could lose what you put in. But we are headed west. This is the frontier. It's not for everyone,

but we're glad you're with us on the bankless journey. Thanks a lot.