Bankless - ROLLUP: Goerli Merge | Tornado Cash Ban | Coinbase BlackRock Deal | Fake Solana DeFi?

Starting point is 00:00:00 Merge is scheduled. Inflation down. Now, hopefully that continues. L2 tokens are up. Fee tokens are up. Not only is ETH bullish and proof of stake bullish, but tokens are also bullish. Bankless Nation, happy second Friday of August. David, what time is it? Oh, Ryan, it's the Friday Bankless Weekly Roll-up Time, where we cover the entire week of news and crypto, which is always an ambitious endeavor. Yet we persevere nonetheless. Ryan, it was a good news week this week. Well, actually, it was very mixed. It was very, it ended up. Week started on a bad note, ended on a very, very high note. Yeah, exactly. And so, like, I missed a lot of the week. So I was over in the UK with my family for vacation. And, uh, you know how I usually say grab your morning coffee?

Starting point is 00:00:43 In the UK, David, I discovered that coffee means something different than it does in the US. What? At least it was like, it was more like, uh, when I would ask for a coffee, you'd be like, okay, what type of coffee would you like? And the options are like espresso, cappuccino macchiato like it's like an array of coffee beverages wait that feels normal not for me though like in the u.s if you're like hey i want a coffee then it's okay regular coffee it's not an espresso americano yeah americano was was generally the only option maybe this was just like where i was in um the in in the in the uk or i don't know well you're from seattle that's coffee capital of the u.s is that what coffee really is

Starting point is 00:01:26 Yeah, I think, well, I think if you go into a coffee store in Seattle and you ask for coffee, then they will continue like, yeah, what kind of coffee do you want? Yeah, I think that's normal. It's probably actually definitionally correct, but like here on the East Coast, David, you can go into any place in the U.S. and be like, I'll take a coffee and they won't ask you like if you want an Americano or espresso. They give you a burnt, black drip coffee. Yeah, burnt. And then they will make a beverage by putting cream and sugar in it. Yes, they will. Anyway, bankless station. Grab your bankless coffee. beverage, if you will, and join us for some topics of the week. Number one, David, the merge, the Ethereum merge. It has a date.

Starting point is 00:02:05 Woo! It has a date. We're merging. We're merging. What's the date going to be? Oh, we'll tell you later. We're not going to tell you right now. Yeah, we're not going to spoil that.

Starting point is 00:02:15 Also, there's some big stuff going on with tornado cash. Yeah, that's the bad part of this week. What do they do? What's happening there? Tornado cash. The first ever smart contract on Ethereum is now illegal. There is now an illegal smart contract for U.S. citizens. So if you are a U.S. citizen, congratulations.

Starting point is 00:02:31 There's like 40 or 50 smart contracts all associated with tornado cash that is legal for you to touch. I didn't know that smart contracts could become illegal, right? That's news to me. Yeah, it doesn't feel like they could do that constitutionally, but we'll get into the arguments there. The last thing is coin base just landed a $10 trillion client. Wow. We'll tell you who that is. But of course, you're going to do the roll-up with us.

Starting point is 00:02:53 And if you like these roll-ups, you got to make sure you'll love. like, subscribe, rate and review. So like and subscribe if you're looking on YouTube, watching this on YouTube, or rate and review in your podcast player. If you're on Spotify, by the way, this comes in video form now. So you can get bankless via video, which is the best way to do a roll-up is to watch a roll-up, not just listen to it. But of course, with Spotify, now you can do both.

Starting point is 00:03:16 So that's pretty cool. Ryan, did you know that this last week we received our 2000th five-star review and then this same week the merge gets a date? This is not a coincidence, sir. It couldn't be. Who was that 2000th of reviewer? I don't know. I'm sure they said something green. It's probably Vitalik. It's probably Vitalik. Thanks, Italic. All right, before we get into it, though, we got to talk about really a quick message from our sponsor and friends at Florida. There have been so many hacks recently and last year there were a ton of defy crypto related hacks. But I think Forda helps with that. What are these guys all about? What do they do?

Starting point is 00:03:54 Yeah, Forda does real-time mempool and transaction monitoring. So there might be a transaction that is coming for your TVL. If you built a defy app with TVL in it, there can be ways to exploit that. And so Forta can, you can set up a list of parameters for Forta to listen to. And if transactions come in that trigger one of these things that you don't want to be triggered, Forda can zap that transaction. It can front run that transaction and save your contract, your NFT or your governance, whatever. So real-time security and operational monitoring for over $36 billion in TVL, things like MakerDAO, bridges, all the things that we use, UMA finance, Pauly Network, compound balancer, liquidity, of course.

Starting point is 00:04:35 There's a link in the show notes to get started. So, you know, not only do you need to get your smart contracts audited, but you can have an extra layer of defense with something like Florida. Yeah, it notifies you in advance. You do not want to find out your smart contract has been hacked for millions of dollars on Twitter. Okay? Ford can notify you of that in advance. so you could do something about it. So go check that out. David, let's get to markets, man. What are the markets saying to us today? Let's talk to Big Daddy Bitcoin. Markets are happy. Bitcoin's happy. Up a very impressive 8.3%. Started the week at $22,400, where we are currently is $24,300. So almost up $2,000.

Starting point is 00:05:13 Okay, so we're happy. Up $2,000 in a bear market. That's feeling good. And tell me about Eith. Wow, this starts looking bullish. Yeah, that's a, that's an 18.7% up in one week for Ether. Started the week at just under $1,600, $15,092, and we are currently at 18,090. Yesterday, Ryan, right after the goarly merge, which was a success, we hit 1950, 1950, wow. The goarly merge, by the way, is a test net merge, the last remaining test net.

Starting point is 00:05:45 We're going to talk about that in a little bit. So do you think the market's just responding to the merge news? So that makes me bullish because like the market actually responding to fundamentals is a thing that is relatively rare in crypto. At least I found it rare. Maybe that's my cynic point of view. The market just generally responds to stupid things all of the time, narratives or like fake partnerships or just dumb stuff that happens.

Starting point is 00:06:09 It's rare that you actually have a market event that's affecting fundamentals and the market, you know, digest that and immediately responds with upward or downward price movement. What do you think? Yeah, the thing I've noticed about the market lately is that it's been responding positively to positive news, and it's not been responding negatively to negative news, which is generally indication of what the mind shift, like the mental state of market participants. That's not a bear market. That is not a bear market.

Starting point is 00:06:38 Because bear market, even when there's really good news, and it can be fundamentally good news, nothing happens. Right. Or it could continue to drop down. But now we're seeing good news and good things are happening to price, and that's following fairly rapid. after the good news in a timely, orderly way. Smart market now and not a bear market. Maybe? Yeah, I don't think you can say $1,900 ether is a bear market.

Starting point is 00:06:59 I don't think that's... You're right to say that? Yeah, I don't think so. All right, but still, I think most people, if you ask the average crypto investor, they would still say, we're in a bear market, but this is starting to feel a little bit different. I guess we'll see what happens.

Starting point is 00:07:14 But, you know, when ETH is doing things relative to Bitcoin, we start talking about the flipping again. And let's take a look at the ETH to Bitcoin ratio. And I'll go back to that flipping chart to see where we are. So what's the ratio shown today? Yeah, the ratio is up 10% in the last week going from 0.075 to 0.7777. Actually, on screen is 7196. But, you know, a lot of sevens.

Starting point is 00:07:43 And sevens are lucky. I've heard sevens are lucky. Which means your boys back in the green. and is Heath BTC trade. Look at that, look at that spike down and then back up. It's like, oh, yeah.

Starting point is 00:07:51 It's like, if you just erase those months and, like, act like nothing happens, like, look, we're back in that trend line. This is great. Yeah.

Starting point is 00:07:57 That's great, too. I think we made some bankless purchases around the $1,900 range, too. And I was like, David, it's going to drop further. And it did. We got,

Starting point is 00:08:06 I'm so bullish. The merge is coming. We got to buy it in 1900. We got to buy it again. 1900. Let's go back to that opportunity that Ethan afforded us two months ago.

Starting point is 00:08:15 But anytime the ratio going this direction, like, it starts to be a good time to look at the actual flippinging metrics. And this is ratio gang.com. We are 50% of the way to the flippinging. 48.9. So what is the definition of the flippinging, by the way? That is Eath's market cap exceeds Bitcoin's market cap. And that's never happened in history. It came very close in 2017. There was a prophecy, right? It was like in 2017, it got to like 70%, something I think higher than that. It was above like 85%. Did it? Okay.

Starting point is 00:08:48 So it was really close. And it was maybe a brief spike. It was a wick of a candle. Yeah, I did not say there very long. All right. So what do you think? There are various events that have been predicted for a possible flippinging. I know you are a believer in the eventual flippinging at some point in time.

Starting point is 00:09:04 I am also a believer in the flippinging at some point in time. The difference, I think, with hardcore Ethereum bulls, of which David and myself would call ourselves for sure is when they think that will happen. One of the catalyzing events, people have said, could be the actual merch on the back of the Ethereum merge. Maybe the flipping happens, you know, someone in the next few months, potentially. What do you think? I think if it happened in 2022, that would be way faster than expected. Although crypto is known for doing things faster than expected, like recovering out of that bear market, allegedly, knock on wood.

Starting point is 00:09:44 I think the odds that it happens in 2023 are over 50%. Wow. In 2023, that's next year. So not 2020. What do you think? What are the odds that happened this year? 2022. 10 to 50%?

Starting point is 00:09:59 15% seems really high. Odds that happens by 2025. Oh, gosh. Okay, well, see, the time is always in Ethereum's favor because of the significant reduction of issuance and a significant ethereum, which we've talked about on the show, an infinite number of times. But it's like Ethereum at that point,

Starting point is 00:10:18 and a post-merged Ethereum, Ethereum just has to wait it out. And eventually, unless some other blockchain is generating more blocks-based demand than Ethereum, which has never been, no one's gotten anywhere close. Ethereum is just a waiting game in Ethereum's favor to take the number one spot.

Starting point is 00:10:34 So like as we go beyond 2023, the percentage that it becomes the number one asset in the world, in crypto is like, an approach is 99%. Are you ignoring the bull catalysts for Bitcoin, though, of which there's at least one happening there. So 2024, there's going to be having. Yeah, but it's the same bulk.

Starting point is 00:10:53 Like the happening and the merge are the same catalysts. And the merge is objectively more powerful by like three orders of magnitude. Not just that central bankers, like central banks, maybe El Salvador is one. You know, sailors can keep buying. I don't know. There's some other things that could happen with Bitcoin. Those are not catalyst that Bitcoin has a. monopoly over, sir.

Starting point is 00:11:14 So I agree. The probability is very high before 2025. I don't know if I'm ready to say like 50% in 20, in 2023, because one of us has to be, you know, the more conservative one, I guess. But like by 2025, David, I'm putting this at like 90%, 95%. I'll go conservative though, and I'll say 90%. And then by the end of this decade, like, unless... It's 100%.

Starting point is 00:11:41 I mean, unless we're completely wrong. Discounting some weird disaster merge scenario, which I guess you have to do. David and I will quit crypto. Yeah. If we're wrong, we just leave. Yeah, we just leave. Sorry, guys, we were wrong. Bankless is over.

Starting point is 00:12:01 We're done now. All right, so we talked about that. Total crypto market cap, though, that's adding some money, right? Yeah, up a $100 billion. dollars. So last, last week, it was at 1.1 trillion. We were at 1.2 trillion. So 100 billion dollars on the market cap for crypto this week. That's pretty nice. A lot of billions being added in the week. Two tariffs. Two tariffs. Here's a thing. Here's a tweak on it, okay, on the ethible case. Gas prices are down, my friend. Down bad. No, this is right, isn't it? No, what's the medium gas

Starting point is 00:12:34 price this week? It's that purple one that you want. Oh, wait, no, it's the green one above that, that you want. This one, median gas price for the week. No, it's gross. up, scroll up, that green one. Oh, distribution. Yeah. Okay, okay. So what is the transaction distribution for gas? Uh, yeah. Ten, we're back up to ten. We went from nine to ten. That was that, that, that, that's the distribution of the average. The average day, gray free for the last seven days is, uh, like 10-ish way. Okay, so block space demand down for Ethereum. Overall, yeah. Bear case. Right. All right. There's the bear peek and it said. Why is it down, David? Uh, because it's a bear market. Like, people aren't

Starting point is 00:13:10 doing their shenanigans. And also we're getting better at scale. Like simultaneously, things are scaling. More people are on more layer twos. And NFT volumes are super low. And so like less layer one block space is being consumed. So yeah, things are just quieter in the in the smart contract space. Okay. So let me throw that bear case by you again, right? Because like, you know, block space is only going to get more efficient on Ethereum. We have rollups. And then in a post EIP 4-844 world, of which, by the way, we talk in depth with Polly. Pelania. With Pellania, excuse me.

Starting point is 00:13:45 The pseudonymous persona on Twitter, who knows so much about roll-ups. That episode is coming out on Monday. There is a world where, like, block space becomes very cheap, essentially, the data layer on Ethereum, and we're not actually burning as much ETH as we thought. And I guess maybe getting back to that, what price point for Gway are we actually burning eth? Like what is kind of the break-even burn rate here? Yeah, so we've been saying for the last two weeks that the number is seven. And I think that number came from a historical number when less people had staked their ether. As more people stake their ether, the amount of ether issuance

Starting point is 00:14:25 actually goes up. So somebody corrected us and said, it's actually 15. And I verified this with Polenia and so a few others. Fifteen, Gway, it's the ultrasound barrier. So, Ryan, if we merge today we would actually not be ultrasound. We would still be issuing ether. We're still inflating more Ethan than we're burning. And so we're at 9. So this has to go back up to 15 in order for us to start

Starting point is 00:14:47 the burning process. So fire up the pornises. Can we get some Ponzi's back? Can we have just one Ponzi? Just all we need. Just for a few days anyway. Like post-merge. This is the math behind that, by the way. Anything you want to say about that from Dom? Yeah, here's the math if you just want to check it

Starting point is 00:15:03 out. You take the active number of active validators on the beacon chain, and then you calculate the square root of that and multiply that by 0.0239. So that's how you get the number, the ultrasound barrier number. There you go. Bankless is backed by math.

Starting point is 00:15:20 Yeah, this is an article from the defined. Ethereum gas fees fall to the lowest level in two years. Did you know that? Two year lows? Yeah. So two years ago, 2020. Well, the bull market lasted about two years, so that makes sense.

Starting point is 00:15:31 Yes. I guess it's not as dire as it seems as it sounds. I think gas fees will go right back. Oh, yeah, they definitely go back up. This is kind of a short-term thing and probably in post-merge world or even like leading up to the merge. We'll see some increase.

Starting point is 00:15:44 But okay, markets up this week saw a lot of green candles and Bitcoin and Ether. And it seems like the reason for this is maybe decent CPI numbers. On the face of it, it doesn't look decent. So here's breaking from Bloomberg. US consumer prices rise 8.5% in July

Starting point is 00:16:02 from a year earlier. that sounds bad, then they also had slower than estimated. So maybe good? Maybe good? Okay, so the trick about this is that actual July inflation was actually reported at zero. So there was zero inflation in the month of July. We have the prices are the, like consumer prices or whatever, are the same that they were one month ago. And so it's 8.5% because that is a 12-month lagging indicator.

Starting point is 00:16:31 And so that's actually the really, really bullish. news is that inflation seemed to have like ran up against a wall and has not gone higher for at least 30 days in a row. So I mean, I would love to see this continue for another month just to have another data point. But like this is the news that you want to see if you want to get bullish. So I think the average analyst expectation was 8.7% inflation, annual inflation. And it came in at 8.5%. And as you said, there's no month to month increase, at least that's what it seems like. So let's declare victory. What are we looking at here, David? Yeah, this is the squid game's a guy where on the left, he's looking just like disheveled and like fearful like 10,000 yards

Starting point is 00:17:13 there. Yeah, fetal position. And the caption is March, March of this year, inflation at 8.5 like, oh my God, inflation at 8.5%. And now we're in August and we're at inflation's at 8.5% and we're dancing. Like, all right, it's coming down. I guess that's what it is. And markets really like this as well. It's not just crypto, but traditional, you know, risk-on assets, let's say, including stocks. And the Trat-Fi markets seem to be telling us that this is like a mild recession only, that we already kind of dipped, and it's looking kind of mild. And Powell does not need to be Volker in order to curb inflation. Volker, of course, tightened the monetary policy pretty excessively in the 1980s, and Powell maybe doesn't need to do that. And the soft landing is

Starting point is 00:17:58 within sight. It's even possible. So the S&P, is up. It's a 50% retracement from the June lows of 4,227. And the NASDAQ just bounced 21% from its June lows. This is the moment that the crypto markets also just shot right up. Like Bitcoin went from $23,000, and then like half a day later, it was above $24,000. And then that's when Ether was at $1,700. And then as soon as this thing was announced, it just shot up to $18.50. I mean, some people are saying, David, that the NASTAC, as of yesterday, actually entered bull market territory. Wow, we're using the bull market word? Wow. People are actually using that term.

Starting point is 00:18:40 And I can't tell, you know, the statement that always remains true, no matter what part you're in the market cycle is sentiment follows price. Right. And so now we've seen price increase a couple months in a row, and now the sentiment feels completely different than it did just six weeks ago. And so you wonder how much of that is going to happen. I'm not ready to say we're out of the woods yet, but I don't know, I'm just feeling pretty bullish this week on the merge. Yeah, I mean, we get lower inflate, like, remember we had our conversation with Luke Gromman and also, um, Lin Alden.

Starting point is 00:19:14 Lin Alden, yeah, there's all of our, like, the takeaway from all of those is that like, yeah, wow, things are looking really bad. But there's like this needle that we can thread that the macro actually turns bullish at the same time that the merge happens. And this so far is the reality playing out, Ryan. They also said that we're going to have multiple dunks in the tank. I remember Lynn Alden making this pretty clear that it'll look like inflation recovers for a period of time and everyone will celebrate and be like, hey, it's good. We're fine. We're back to the good old days again. And then we'll get dunk back in the tank again.

Starting point is 00:19:46 And inflation will be back. And this will happen a few more times over the next decade. So I'm also conscious of that. But I don't know. It's hard not to be bullish and crypto right now. If you shorten your time frames, Ryan, it's really bold. Whatever. Just buy and hold, okay, people?

Starting point is 00:20:01 Forget this. Why are we even talking about this week to week, David? But this chart also looks good. What are we looking at here? Yeah, this is the TVL chart on layer twos. And so it is also having a bull market. It's been up 40% in TVL on layer twos in the last like two weeks or so. So kind of just like the ETH-BTC ratio.

Starting point is 00:20:17 Like it went down bigly. It went from like six or seven billion in layer twos down to like under three, under four billion. But now we are up to $6 billion in layer two, within striking distance of new highs. And TVL, of course, is like, what, assets, the total value of assets on these layer two? All value deposited, yeah. Yeah, so it's like assets under management, I guess,

Starting point is 00:20:38 like AUM of these layer twos. That's what it basically means. More talk on TVL, a little bit later in this episode, by the way. There also appears to be a lot of money sitting on the sidelines, David. This is a list from FinTech Frank of sideline capital, $23 billion worth. What are we looking at here, David? Yeah, we're looking at a list of all these funds

Starting point is 00:20:58 that raise a bunch of money that have not yet deployed it. So A16 Z coming in at the top at $7.6 billion in cash. That's a lot of cash. Paradigm 5 billion. FtX Ventures, 2 billion. Katie Hahn Ventures, 1.5 billion.

Starting point is 00:21:10 High mine, 1.5 billion. It keeps on going. There's a lot of cash out there. This is all crypto cash. These are crypto funds. Yes, but they are not necessarily meant for like Bitcoin and Ether. I think they're meant for like startups and investments.

Starting point is 00:21:26 So, I mean, in my mind, I look at this and I'm like, oh, job security for startups. Like funding, funding is not yet secured, but there's funding out there. That's one thing I think. The other thing I think of is, oh, my God, private equity valuations are not going down anytime soon, right? So that's good if you're retail and you can't get in these private round deals anyway. It's like there could be a lot of value on the public side relative to private, which is pretty good. Like Bitcoin and Eath might look like good purchases or other defy assets that have been tokenized. All right. Did you know we just passed the birthday of EIP 1559?

Starting point is 00:22:07 One year of EIP 1559. As a result of EIP 1559, 2.1% of the total ETH supply has been burnt in the last year. So that's 2.5 million ether. It's a pretty good amount of ether. That's a huge amount. That's great. That's great. So like, you know, ultrasound or not, EIP-159 is kicking in. It's always going to be bullish.

Starting point is 00:22:31 Burning 5Eath a minute last year. Wow. That's kind of the average. Okay, so the most famous EIP in existence, how many people do you think, though what EIP 1559 is, 1559, how many people out there, even just like, let's take crypto people.

Starting point is 00:22:46 You mean a percentage of people, like people you think that have a crypto asset, that know that, well, what this EIP is and its significance. I think a good 20 to 30,000 people know EIP 1559. Really? 20 to 30,000 people, that's it? That might be a little high, actually. You think that's high?

Starting point is 00:23:04 Yeah, I think that's high. We have more bankless listeners in 20 to 30,000. It's got to be more than that. It doesn't mean they understand it. Come on. I listen to a lot of podcasts with only half my brain. Okay, so like, I don't mean like understand it to the depth that the talent understands it.

Starting point is 00:23:20 Yeah, I just mean understand. Yeah, this is what I mean, David. I mean that, like, just like Bitcoin has meme, like, memed that the have... 21 million hard cap. Yeah, it's in 21 million hard caps. And those core numbers, how many people do you think... I have no idea. I have no idea.

Starting point is 00:23:36 I think it's still probably, like, 10 to 20% of all crypto buyers. Oh, that's low. I think it's that, though. Wow. Of people that own crypto. There's a lot of people that own crypto. I mean, they bought, like, Dogecoin and stuff. Yeah.

Starting point is 00:23:51 Like, they just don't know what EIP 1559 is, what an EIP is, the significance of like, ETH is burning. What does that even mean? There's a lot of, there's a lot to this stuff. It's, it's not simple to understand. I think as you have more capital, you likely know what EIP 1559 is. So on an individual per person basis, sure, but I think a percentage of, I think over 50% of all capital in the crypto industry understands EIP 1559.

Starting point is 00:24:18 That's cool. And what's the next EIP, the second. most famous. 4-4. Yeah. How many people know that is. Yeah, we'll get there next. So there's also this really cool chart of EIP-1559 before and after it was included and just shows

Starting point is 00:24:32 a really good mechanism design. Like, this is what EIP-1559 was supposed to do. Like on the left side of this green line before EIP-1559 was introduced, like the estimated gas for inclusion on the Ethereum blockchain, it was all over the place, super volatile. And on the right side, it's just way more regular, way more efficient. Yeah, there are a few spikes of the upside because of NFT drops, but it's just a much more stable mechanism. And overall, it has led to an actual reduction,

Starting point is 00:24:58 like I think a 10 to 15% reduction of perceived gas prices as in people overpaying for gas. Really cool chart here. A lot less volatility, you can see, a lot more stability. It's really great. David, what's coming up next? Coming up next in this show, we're going to cover the merge. We're going to tell you when exactly the exact number

Starting point is 00:25:18 that the merge will happen at. We finally have it. So that's going to come up next. We're also going to talk about tornado cash in the first ever illegal smart contract and how 7.5 out of the $11 billion of TVL on Solana was fake, question mark? Wow, what a story, what a claim.

Starting point is 00:25:36 So we're going to get into all of these stories and more right after we get to some of these fantastic sponsors that make the show possible. Rocket Pool is your friendly, decentralized Ethereum staking protocol. You can stake your ETH with Rocket Pool and get our ETH in return, allowing you to stake your ETH, and use it in Defi at the same time. You can get 4% on your ETH by staking it with RocketPool,

Starting point is 00:25:55 but you can get even more by running a node. Rocket Pool is the only staking provider that allows anyone to permissionlessly join their network of validating notes. Running a Rocket Pool node is easier to set up than running a solo node, and you only need 16Eth to get started. Why would you do this? You get an extra 15% staking commission on the pool to ETH, so your API is boosted.

Starting point is 00:26:12 So if your boldish E's staking, you can increase your API and get some extra tokens by adding your node to the decentralized Rocket Pool network, which currently has over 1,000000 over a thousand independent validators. It's yield farming, but with Ethereum notes. You can get started at rocket pool.net, and also join the rocket pool community in their Discord.

Starting point is 00:26:27 You can find me hanging out there sometimes in the chat, so I'll see you there. Maker Dow is the OG Defi Protocol. The first Defy Protocol to ever exist, even before we called it DFI. Maker Dow produces dye, the industry's most battle-tested and resilient stable coin. Using Maker, you don't need to sell your collateral

Starting point is 00:26:42 if you need liquidity. Instead, you can spin up a Maker Vault and use your collateral to mint dye directly. With Maker, the power to mince new money is in your hands. And there's something new in the Maker Dow ecosystem. Every time a new Maker vault is opened, the owner can claim a POAP, which contributes funds to one tree planted, an organization with ongoing global reforestation efforts, creating a world where digital participation and the health of our environment can live side by side. Soon, Maker will be present on all chains

Starting point is 00:27:07 and layer two's, bringing the biggest and best DeFi credit facility to everywhere there is DFI. Today, you can mint, mint, die on oasis.app, Dify saver, or other Dify protocols that you use. So follow Maker on Twitter at MakerDAO, and learn from the oldest and most resilient doubt in existence. All right, guys, we are back, and we're talking about the merge. There's been some major updates this week, including we have a merge date. We're going to get to that in a moment. But first things first, David, while I was out in the UK, the goarly test net merged.

Starting point is 00:27:35 So this is sort of, we've called it kind of the pre-show or the dress rehearsal for the main net Ethereum merge. And it happened this week. You were actually on the call, I think hosting the call, bankless U-teach. when it happened, so tell us what happened this week. Yeah, there was like 50 people on the call. It was a live stream. You can go watch it on the YouTube. But basically, we were all sat on Zoom and watched the goarly test net merge.

Starting point is 00:28:01 And then it merged. And then we were like, okay, we waited. It's a little bit like all these merge merges are like a little bit like Y2K. You know it's going to happen. Nothing's going to break before that moment. It's the moment afterwards that everyone's interested in. It's like, all right, is there any damage? Like, is everyone okay?

Starting point is 00:28:15 Is that anything broken? And so it took a while for us to figure out if anything was broken, And there was a, there was like an oh shit moment. And so like when this thing like wasn't, wasn't finalizing or something, but it turned out to be a nothing burger. Turned out to be just like false reporting. And so after like four or five or six hours, people kind of realize like, yo, nothing broke. Nothing. Everything is good.

Starting point is 00:28:33 Some people were saying like that I saw some chatter on this. I didn't see any of it live because I was traveling. But like, um, devs look scared or something at some point. Yeah. Right. So like it wasn't, there's like something that wasn't finalizing, but it actually was finalizing. It just wasn't reporting that it was finalized on the front ends. something, it was something like this, some technical thing that I can't. So like for a while,

Starting point is 00:28:51 it's like, oh, it's not finalizing. It's not finalizing. And then people are realizing, no, no, it is finalizing. So overall, it was like successful. Like, just like previous merges, no issues whatsoever. No significant issues whatsoever. And then what happens next, this morning, to Thursday morning, there was a consensus layer call with all the core devs where they decided the TTD for the real merge. The TTD is the total terminal difficulty. It's basically like a block height. But it is effectively the date. So the merge date has been decided. The emerge has been officially announced. It's coming in at a TTD number that's very, very large, but effectively puts us at the trajectory of September 15th to 16th. There it is. That's the date then. September 15th to

Starting point is 00:29:38 16th. Okay, so back us into that again. So we have got this very large number, which is the TD. And that stands for what? Total terminal difference. It's basically a number that is, it's basically a number that we're going to approach as the miners do their thing. It's, it's the reason why it's done this way, you want to find out there was an episode we recorded with Tim Baker forever ago. But once we hit a terminal, total terminal difficulty of that very large number, which doesn't really make any sense, is basically approximately September 15th to 16th, Thursday or Friday of that week. Okay. So has the code been activated yet? It's just been selected right now, right?

Starting point is 00:30:17 Right? The TTD. And then it gets activated at what point in time? Yeah, there's these two software updates that will go out for the consensus layer and the execution layer. And then once those nodes get updated, people will update their nodes to follow the merge and merge at that particular time. And okay, and so that is approximately September 15th, the 16th. So how likely is it to fall on one of those two days versus outside of it? Are we like 90, 95% probability that we're going to be the 15th, 16th? We don't know. know the time, the exact time we will as it approaches, but we don't know exactly when, but it's going to be the 15th or 16th if this TTD number holds up. Yeah, it has to do with hash power. So as hash power fluctuates up and down, it will change the actual arrival of that TTD number. We saw the goarly estimated date, like, time jump around actually kind of quite a lot.

Starting point is 00:31:11 So it started at 6 p.m. It went as far as late as midnight, and I was like, damn it, I have to host this thing at midnight. And then it came forward to nine and ended up happening at like 940. But like we're talking about fluctuations of hours. I don't know how well that the goarly test net translates to the actual proof of work main net. But I don't think there's going to be too much fluctuation here. Dude, I can't believe. So September 15th to 16th, it's going to happen.

Starting point is 00:31:35 We don't know what time of day. We do know we will be on a live stream somewhere watching this happening. I'm going to be sipping a Vitalik Butrin. Of course, green tea mixed with red wine. all mulled together in some concoction I've never tasted before. But that's it, man. It's going to happen in September.

Starting point is 00:31:52 I'm going to enjoy it. And I'm going to enjoy the merge. What? Are you expecting? Like, do you think anything could go wrong here? I mean, there's always a chance. I just don't think so. This is something that has been planned for so long.

Starting point is 00:32:04 It's like, the miners aren't like, oh, they're finally merging. Now let's like mess with them. Like, no, the miners have known about this too. There's not going to be any big shenanigans. We've tested this how many times. We've tested this a bazillion time. I'm thinking the drama is relatively minimal here.

Starting point is 00:32:19 So a successful merge, 15 to 16. Call on the successful merge, yeah. That's incredible. So there you go, guys. That's the date. And make sure you tune in to watch, I think, what will be the largest event in crypto history since Ethereum was launched. I think this will stand out as one of three events that we've seen so far.

Starting point is 00:32:40 Launch of Bitcoin, launch of Ethereum, and then merge, which means getting red, of the proof of work, Ethereum chain, and merging to the new proof of stake consensus layers, the third largest event in crypto's history as far as I'm concerned, and I think will be viewed historically through that as well. So significantly. Don't miss it. It's a good time to be in Ethereum. Yes.

Starting point is 00:33:04 Other than this, other than this. Yeah, this was, I saw this come through. Of course, when I was in the UK, it's just like, but I couldn't believe this was happening. So tell us the headline. The Treasury apparently has sanctioned the virtual currency mixer tornado cash. This is a press release from the U.S. Department of the Treasury website. Can you give us the story? What happened here, David?

Starting point is 00:33:28 Yeah, so Treasury, OFAC, the Office of Foreign Asset Control, which is part of the Treasury, put the tornado cash smart contracts on like especially designated like persons list, which is weird because it's not a person. So this is the first, pretty sure this is the first person to go on like a sanctions list. That's not a person. These are like specific eth addresses that they're naming, right? Yes, specific Ethereum addresses, yep. Maps to an eth address and they put them, the eth addresses themselves on the list.

Starting point is 00:34:02 Right. And what's also weird about this list is that it's on the responsibility of the individual to make sure that they are not transacting with somebody on this SDN list. And so if you go out on the street and like hand somebody some cash, it's on your responsibility. It's your responsibility to make sure that that person that you're handing cash to is not on the OFAC list. Because your responsibility as an individual. Who's on the OFAC list? It's like terrorists, terrorizations.

Starting point is 00:34:30 Yeah, like yeah, exactly. Like North Korea, Iran, probably. And it means of the state. Right, exactly. And now also tornado cash. And so they can't turn off tornado cash. So what they did is they said, hey, any U.S. citizen that is interacting with tornado cash is in violation of the OFAC SDN list. And that can result in criminal penalties.

Starting point is 00:34:52 Ryan, did you know that you and I have both interacted with the tornado cash contract address since this went on the OFAC list? Well, how so, sir, because I haven't touched any buttons on anything while I was way traveling. Right. Somebody sent us point, and bankless.aith, 0.01 ether from the tornado cash, uh, Smart Contract. So they, the tornado cash smart contract sent, sent David Hoffman.D.Eth, RSA, dot, eth, and bankless. Dot ETH. And, uh, point zero, uh, ETH. And, uh, and now, and as a result of that, we have violated OFax SCN list because we have engaged with that contract. How could we be violating when someone sends us right? Right. Right. Right. And by the way, it wasn't just us, of course. As I read it was like, you know, A60s. It was Logan Paul. Yeah. Italic Beulin. Jimmy Fallon. Like, like,

Starting point is 00:35:41 Like somebody, I guess a troll or somebody trying to make a political point, which I understand kind of the motivations, went through and sent tokens from tornado cash to all of these addresses. Is that what happened? Yep. That's exactly right. Yeah. So every person that received the money violated OFAC. And the reason why this works is that like, okay, if North Korea sends you a check, you don't cash it. You don't cash that. And it says like from North Korea. You don't cash that thing. But North Korea can. send you money to your Ethereum address with or without your permission. And so this is why this gets incongruent with like other mechanisms of payment that we've had previously. But if North Korea sends like cash in the mail to my address, right? Then you violated OFAC. Yeah. If I open up my mailbox or if I do what or if it's in my mailbox, they sent it to me. I guess so, yeah. That's kind of the parallel here. And the challenge with it is because ETH is completely fungible. The point 0.1 eth just merges with all of the other ether that you have in your wallet. Yeah. In your wallet. So it's not like he can segmented.

Starting point is 00:36:48 The 0.1.E. that went to bank was out of it. Is that? I am not touching any of it. I'm not like, but I don't know how to not touch. I don't know what to do, David. Someone help me. I don't know what to do. I'm just trying to be like, you know, a good citizen and not go to prison. Right. So like what? Here's maybe we should read the tweet out from Secretary. Blinkenne Blinken when this happened. What's he saying? in here. He says, we'll continue to aggressively pursue actions against currency mixtures laundering virtual currency for criminals. Today, U.S. Treasury's sanctioned virtual currency mixer Tornado Cash, which has been used to launder money for U.S. sanctioned

Starting point is 00:37:23 North Korea State-sponsored CyberHapking Group. I did a full show on this, about a 30 to 35-minute-long show. A new format, actually, where I interviewed Jerry Brito from Coin Center and Collins, a fantastic crypto lawyer. So if you just want the full story on this, Ryan was out of town, and so I had to

Starting point is 00:37:41 do the state and nation by myself. But instead of doing the typical, just like interview format, I kind of tell the story myself and go in and out of interviews with Collins and Jerry. So the full story is available on the bankless YouTube. Crazy story. Crazy story. Okay. So the follow up for this, tornado cash contracts get listed in the O-Fact list, right?

Starting point is 00:38:02 Side story is, you know, some trolls, somebody trying to prove a political point, goes and sense a bunch of ETH to specific kind of influencer type Ethereum. addresses, including, by the way, all of the crypto banks and such. It's just like everybody got this. Everybody who has an ether address who has a large account. That's a side story. Then there's some follow-out from this as well. So Circle, they froze all of the USDC belonging to the unsuspected tornado users.

Starting point is 00:38:33 So, yeah, tell me about this. People put USDC into tornado cash because tornado doesn't only work with ether. It also works for USDC. And so people deposit ether or USC into tornado cash, wait a little bit while it gets mixed up and then withdraw out later. But you have to wait for a while or else it doesn't work. So like all this USC is sitting in tornado cash. And so at the moment that USC froze that address, 75,000 USC was frozen in tornado cash. And so like, yeah, like USC regulated domiciled U.S. entity.

Starting point is 00:39:05 They're not going to like, they're not going to go up against OFAC over $75,000. So they just bent the knee. And like, it's the logical thing to do it. People were mad at Circle and, you know, Circle for doing this for freezing the USC. But it's, like, completely obvious that this is what they would do. It's either freeze the account or shut down their business. Yeah. Uh-huh.

Starting point is 00:39:24 It's like, it's an obvious trade. Right. And they're going to have to do this because they're kind of regulated in the way that they're, that's what USC the product is. And so if you didn't realize that about USC, by the way, that is kind of a regulated, stable coin. It's not at all like ETH in that way. Then kind of now you know.

Starting point is 00:39:40 the effects of something like this. And also there's something to do with GitHub as well. So is this a tornado cache? Yeah, Roman Seminoff, he's a tornado cache developer who published a lot of the tornado cache open source code. His GitHub was suspended. And so the tornado cache open source code was pulled down from GitHub,

Starting point is 00:39:59 which brings in like first amendment questions as to whether or not this actually violates speech because after all, code is just speech. We learned this in the Crypto Wars of the studies in the 70s and 80s, And by the way, there are court cases establishing code and speech together. There's Coach Bernstein, I believe, versus the U.S. in 2000, the kind of established code of speech. So this is also U.S. legal precedent as well. Maybe you should go through the summary thread.

Starting point is 00:40:27 Yeah, this is a great summary thread. I'll go ahead and read it. This is from Seth Hurtling. I'll try and do this as fast as possible. This week, U.S. Treasury Department did something that's never done before. It's sanctioned a piece of code. Weird, right? Specifically, Treasury out of the tornado cash.

Starting point is 00:40:40 URL and smart contract addresses to the specially designated nationals and blocked persons list. Tornado Cash is a crypto mixer that allows people to maintain their privacy online. Prior to tornado cash sanctions had only been levied against persons. It's illegal for Americans to transact with any person on the SCN list. Due to the legal doctrine of corporate personhood, formal business entities can also be put on the naughty list. However, computer code is neither a natural person nor a legal entity. Code is speech, Bernstein v. the Department of Justice.

Starting point is 00:41:09 similar money of speech or more precisely what you do with your money is speech. And then he cites two more court cases as well, Buckley v. Vallejo and Citizens United versus the FEC. The legal doctrine of prior restraint holds a preemptive government censorship is almost always unconstitutional. And even government acts that have been substantial have a substantial chilling effect, which I've learned is actually a legal phrase, on speech may be unconstitutional. And then he cites another legal court case. Sanction law is a strict liability regime, meaning that if an American transaction with a sanctioned person without intent or even the knowledge of having done so they can be sentenced to 30 years in federal prison. Ryan, you and I might be sentenced to 30 years in federal prison.

Starting point is 00:41:47 You're smiling when you say this, but this is not a smiling matter, David. Why are you smiling? Why are they going to send all like 200 of us to federal prison for receiving money from tornado cash? I don't think so. It sounds absolutely ridiculous, but that is what the letter of the law actually says, does it not? I will not be going to jail, Ryan. You'll drag me in kicking and screaming. Anyways, the threat continues. Beyond the likely First Amendment violation, this action also raises significant due process concerns and that the code was not afforded adequate notice or opportunity to appeal and individuals may be implicated without the means to comply. While this law does not seem to be in the Treasury's favor, litigation will take years to

Starting point is 00:42:23 play out. Treasury knows this. Now, I've seen a lot of discussions essentially saying tornado caster is used by criminals and hackers, so it deserves to be shut down. While I don't support either, let me explain why this reaction misses the point. This is where we get into free speech stuff. If Treasury had sanctioned the criminals and the hackers that used tornado cash note, problem. But tornado cash is an open source code, meaning it's not owned by anyone and is freely available to everyone. It is thus a public good. We enjoy the benefits of public goods and infrastructure every day. The internet, wireless networks, money, banking system, roads and highways, transportation infrastructure. Guess what? Criminals use these every day too. Of course, we should pursue criminal

Starting point is 00:42:59 persons who misuse public goods, but we don't sanction SMTP because hackers send fishing emails or I-95 because drug dealers drive on it, or cell towers that route terrorist calls. These are not persons, neither is tornado cash. Like emails and highways, tornado cash has been misused by criminals for criminal ends. However, tornado cash is also a tool that enables law-abiding citizens to maintain their privacy on the blockchain for a host of legal purposes, including political speech, like political donations. Taking this to its logical conclusion, if Treasury can sanction tornado cash and can sanction any code, no software is safe. If sanctions are no longer limited to persons, what other objects or information can the government summarily

Starting point is 00:43:37 jail you for 30 years for interacting with. Ultimately, there is no freedom without privacy and there can be no democracy without free speech. Privacy and free speech are the bedrock of free and open societies. Make no mistake. This is what Treasury has sanctioned this week. Great threat. Great threat. Great summary. We put this together. I think it's the legal counsel of ledger. Oh, well done. Well done. Well done. Well done. Seth Hurtlein. Maybe you get him on the show. This was a fantastic thread and went through all the issues. I mean, I think we have some more to talk about this, David. But before we do, this also had some impact on Maker, potentially.

Starting point is 00:44:12 There's some chatter in the Maker governance forms about an emergency shutdown. Other D-Fi protocols are asking, what if they get put on the OFAC naughty list? What happens to them? So it's one thing for tornado to be put on it. But what if Maker's core contracts were put on the OFAC naughty list because a bad guy decided to use die for some purpose that the U.S. did not like? So what are the implications of this? What's actually being considered by Maker?

Starting point is 00:44:38 Yeah, so there's a nesting doll of trouble here. So USDA is now frozen in tornado cash. Can't use USC in tornado cash. You can put USDC into Maker Dow and mint dye, and then you can take that dye and put it in tornado cash. Right. So, RU.ROTRoh. Uh-oh.

Starting point is 00:44:56 And also there's like 40% of outstanding die that's backed by USDC. So if Circle was told by Treasury that in the, they need to blacklist the MakerDAOUSC address. Because it has something tainted from tornado cash? Yeah, yeah. Or it just enables usage of it, right? Wow. So, like, it's kind of similar to, like, I could spin up a contract.

Starting point is 00:45:19 I could write a contract that interacts with tornado cash on my behalf, and then I could send my ether or die into that contract, and then that contract can go talk to tornado cash, and my address is haven't touched tornado cash, so I'm free and clear. but the proxy address did go touch tornado cash. That's basically USC and MakerDAO is you can take USC, go to MakerDow, just use Maker Dow to talk to Tornado Cash. It's the same same.

Starting point is 00:45:44 So is Treasury really going to let that go? Like Rutro. And so this has been a great cause of concern in the Maker Discord. And so they are now like more aggressively prioritizing how to become much less dominant of USC lately. Yeah, including I think. So there's, yeah, how much. How much dye is backed by USC, David, right now? There is $3.56 billion of USC in Maker-Dow.

Starting point is 00:46:10 Which is like, it would be one thing if it was just, you know, a smaller amount, but it's hard to like, you know, swap out $3.5 billion. This has been a known challenge that the dies had, right? Which is like it's trading off some scalability for some decrease in censorship resistance. Yeah. And the way to get pure censorship resistance and scalability on Ethereum is you actually have to use ETH, which is the only, you know, the most unsensurable store of value asset in order to back all of your diet. Of course, they went the multicilateral route, which makes sense for the product,

Starting point is 00:46:45 but you could swap something else out if needed. So I guess, what do you think about this? First of all, why do you think Treasury is doing this? Do you think this is partially because North Korea essentially has hacked. They've been involved implicated in a number of bridge hacks recently. And they have used tornado cash to try to anonymize their ill-gotten gains. And so now Treasury,

Starting point is 00:47:15 now U.S. national security apparatus is taking a very close look at tornado cash. And so they've just said, no one can use this for a U.S. citizen. You just can't use these contracts anymore. Is this where all of this iron is coming from? Because Tornado Cash has been in existence for like, kind of three years, something like this. And Zcash even longer, which is privacy-enabled cryptocurrency.

Starting point is 00:47:37 Yeah, the implications of this are significant. And people are mainly asking, right, where does this go next? How many more smart contracts are going to become, like, quote-unquote, illegal? It's kind of unfortunate that Tornado Cash, I asked Alex Svanivik from Nansen, like, how much of Tornado Cash funds is, like, illicit, deemed illicit. And he came back to me with a number of 35% of funds going through tornado cash is stuff that we know came from like bridge hacks, some sort of hacks. But Ryan, that's just what we know about. So like could be as much as 50% of the money flowing through tornado cash is like illegal or illicit, which makes it really hard to defend. So it's not that they're

Starting point is 00:48:16 wrong that it is, there is some illicit activity, illegal activity on it. There's more than just like a little. There's like quite a lot. But the precedent that this set. And the implication that anyone using tornado cash is guilty. I mean, at its core, tornado cash is just a service that allows you to have privacy. I had to take as I was thinking about this a little bit and the implications of how I feel as somebody who received some funds from tornado cash that would just send to me is they're trying to make you feel like a criminal for wanting basic privacy. At its core, that's what tornado cash is doing. And I don't think that's a radical thing for us to want the same sort of privacy anonymization that we have in the real world with cash. If I were to pay you a cash payment, David, like no one needs to know about that.

Starting point is 00:49:10 The government doesn't have to record that in a ledger, the amount that I gave you. You don't have to identify yourself to me. I don't have to identify yourself to me. If I give you some gold, there's no sort of registry that needs to be created. and it's not radical for us to want digital privacy, privacy on our digital transactions. What I do think is radical about the way Treasury has gone about doing that, this is that an unelected surveillance bureau,

Starting point is 00:49:35 that's what Treasury is, the executive branch, they're unelected, and they are a surveillance bureau, and they can make privacy illegal. I think this is normalizing Turing, if we let this go, because what privacy tools do they suggest we use? If not public good code like tornado. If I want to have some sort of privacy

Starting point is 00:49:59 on my crypto transactions, what tool do I use, Treasury? Are they just saying we can't use any of it as an American citizen? Sorry, privacy is not knocking for you. More or less, it's exactly what you're saying. How is that defensible? The reason why tornado cash is being used by criminals

Starting point is 00:50:15 is because it's really good at offering individuals' privacy. And so it's not like criminal would be able to use tornado cash in silo, right? If only criminals were using tornado cash, you would just like, okay, well, it's criminals going in, therefore criminals going out. But it's because tornado cash is useful to individuals, and it's because it does provide privacy to individuals, that that's actually what enables the fact that criminals and, you know, hijack hackers can use this. Because they can't use tornado cash without there being a crowd to hide in. So it's a very important order of operations. As the individuals, just like you and you and me

Starting point is 00:50:53 and people who don't want to have the eyes of the world upon their financial history to like see what they're up to, they use tornado cash. And that gives the option of criminals to use tornado cash because they couldn't use it without, you know, normal people also using it. But the normal people come first, which makes that ours, Ryan, in my mind. Yeah. And the other piece about this, of course, that's indefensibles is the breach of First Amendment rights, which is, you know, free. freedom of speech, right? And so if governments can start shutting down GitHub repos of developers for writing code, that's a scary prospect. That brings up some dystopian ideology. So I'm still kind of trying to figure out what we do as a crypto industry to react against this. Have you identified

Starting point is 00:51:42 any sort of action steps, things we can do? I mean, is Treasury going to get sued at some who can sue them for this. I guess we have to settle this in courts. Yeah, also in courts. Legislation, crypto-friendly politician. Politicians that want to respect and embed in our legal protocols a basically digital rights, which is a thing we, I think, as Americans, probably everyone across the world, do not have embedded in our legal protocols.

Starting point is 00:52:13 We have no digital rights at this point. We have to ultimately find politicians, support politicians who will, right laws in order to protect and enforce our digital rights. But for now, like, we have a First Amendment, at least in the U.S. with freedom of speech, and this should fall under that. So what do we do with all of this, David? The good thing is that we've done this before. The cryptography wars of the 70s and 80s was more or less the same fight, where the United States of America wanted to make code illegal, and the cryptographers won the fight by saying, no, code is free speech. We're basically revisiting the same exact. There's already legal precedent for this. The only different

Starting point is 00:52:48 now is now there's money. Now it's not cryptography. Now it's cryptocurrency. So we're going to like, you know, Ryan, we speed run the history of money and finance and now also law. And we've done this before and we'll do it again. It's just going to be like, yeah, we're going to have to like every time they take away our rights, we're going to have to fight for them back. But crypto people fight for their territory, right? This is our home. So are you, are you optimistic that we'll be able to kind of like this and give this sort of stuff overturn in the same way that, you know, we did with the previous crypto wars? Or do you think the U.S. has passed that point when it comes to finance and money transactions.

Starting point is 00:53:21 Like, because every single democracy, Western liberal democracy is going to have to contend with this. Because these privacy tools are not going away. Right. And that's the other thing is like so many privacy tools are going to, like, it's going to be whack a mole. What do we're not going to be able to ban them all? Aztec layer two, complete, layer two, which is, I believe it's EVM compatible as well. And privacy is not. It's not quite. But like privacy for, everything you put inside Vastak. Is that illegal? Are Americans just banned from legally using crypto privacy tools? How is that? Right. The only way for them to make a ruling that satisfies

Starting point is 00:54:01 their actual desires is just to say, like, all transactions on a blockchain need to be fully traceable. And at that point is like, well, you're banning Ethereum. Yeah, you're banning. Which goes to the question of where does this stop, David, right? Because like today, we find the tornado cash smart contracts on the ban list. Tomorrow is it uniswap? Right. For the SEC, yeah, sure. I mean, like the SEC or OFACs is, let's say, let's say North Korea uses Uniswop for some

Starting point is 00:54:27 transactions. Sure they do. In fact, on the back of this, just to cause more chaos, maybe they will. What if North Korea became like the dominant LP for like die or like uniswap or uniswap or Uniswap LP for Ether and USC? Yeah. What if they had 50% of the liquidity? So like all of your counter trades are.

Starting point is 00:54:46 North Korea. They could be listening to this podcast and getting these types of ideas. And be like, oh, that's a really good idea. For real. And so, when does the bank this podcast illegal? This is, these are the questions I'm asking, right? Like, we're going down this path. And this is a very dystopian path. I feel like we're going down. It's the first time I felt like that with crypto. It's like, oh, okay, we've entered a new territory now. Nation states are actually attacking what we're trying to do in this space and attacking the freedom of individual citizens as a result. And I think, think that's different. This week has felt different. Right.

Starting point is 00:55:18 Starting pistol on all of this, David. We got to move on, though. Are you sure? If you want the full story, you've got to go watch the YouTube video that's already out on the YouTube. It's hard to move on. Okay. The fake team that made Solana Defi look huge. What is this story?

Starting point is 00:55:34 Let's speed run this one. Okay, so there was this ecosystem on Solana that had a bunch of TVL. It was Sabre and a few other, like, protocols, Sunny, aggregator and there was a dev team behind it and it had like 10 or like seven billion dollars out of the 10 or 12 billion dollars of Solana TVL. But as it turns out, instead of like a suite of devs and a big community, it was actually just like one guy and his brother with a bunch of sock puppets, Ryan. He's just faking different online identities. Yeah. And so I'll read some quotes out from this article. Coding as 11 purportedly independent developers,

Starting point is 00:56:16 How do you pronounce this name? Pena Eon McAleano, a 20-something computer whiz from Texas, created a vast web of interlocking DFI protocols that projected billions of dollars of double-counted value onto the Sabre ecosystem, that temporarily inflated the TVL on Solana as the network was racing towards its zenith last November. The DFI faithful regarded TVL as the barometer of on-chain activity, of course. So a quote from a blog post that was unreleased,

Starting point is 00:56:44 which is how this all of this news came about. says that Ian set wrote, I devised a scheme to maximize Salinas TVL. I would build protocols that stack on top of each other so that a dollar would be counted several times. Yin's ploy worked for a while by his count, Sabre and Sonny compromised seven, comprised 7.5 billion of Solana's 10.5 billion TVL at their peak.

Starting point is 00:57:04 Billions of those dollars were double counted between his two protocols. And so there's also the component of fake friends. In public, Ian and his brother Dylan called their anonymous personas friends or friends of friends. Any quote from Ian, I wanted to make it look like a lot of people were building on our protocol rather than

Starting point is 00:57:21 ship 20 disoriented programs as one person. So they just like spun up 10, 20 developers about on the same protocol. And so this whole entire thing created this narrative that has a substantial role in driving the Salonan token price from under $40 in July to a peak of 259 in November

Starting point is 00:57:38 of 2021. A significant portion of bullish Salon in narrative now seems to be based on a series of deceptions, wrote Coindex. So TLDR, This guy, Ian and his brother, built an interwoven defy ecosystem on Solana, spun up a bunch of Twitter sock puppets to make people think that there were a lot of devs, attracted a small amount of TVL that would then double, triple, quadruple be counted in the overall TVL of Solana. And really what this whole entire story reveals is that, you know, less than a small handful of people with dishonest intentions can produce, like, significantly distorted, like, realities in the crypto markets. Absolutely crazy. They did.

Starting point is 00:58:14 This is 7.5 billion. of Salana's 10.5 billion TVL at their peak. It was basically faked by this one dude and all of its sock pockets. And his brother. And his brother. Two people. What's crazy, I guess the implications of this are,

Starting point is 00:58:31 we were talking about the beginning of this episode, the TVL on layer two. It's very important not to, very important to know that TVL is a very gamable metric at this point. And there are people who are actively trying to game it. It isn't. It's just, it's not,

Starting point is 00:58:46 When you put ether into... Is it's what I mean. Well, not necessarily that, too. When you put ether into Arbitram or optimism or whatever, that is TVL. It's how you count it. That's the... People just forgot to stop double counting all this stuff and really didn't look under the hood. Yes.

Starting point is 00:59:02 So sloppy counting of it and TVL is only one metric among many, I think, is... And I guess the other takeaway are, and be careful who you trust online. I don't know. And on devs are always dubious. Well, it's not all, like, Satoshi is an Anon Dev, right? It's like, not always dubious, but like they're not, they're more dubious than a non-Anon dev. They can start with a clean slate, clean reputation every time.

Starting point is 00:59:28 So I think it's worth saying that it, it should take them longer to establish, you know, trust than a person in the real world who basically you establish your trust over multiple cycles of doing good things. And that's how you create your, your reputation and your name, a name for yourself. And Anon can just like have one reputation for one account, another, for another. So yeah, we have to be careful who we trust, I guess. That is the end state. The next CoinDest article about this concludes with something really, really funny. Quote from the article says, further, users have now seemingly been abandoned with the McAlino's

Starting point is 01:00:02 announcing that they're shifting projects, shifting their focus towards new projects on the upstart Aptos blockchain. So they was rotating to the new, like, faster blockchain. They did it with Salon, and they're playing the same trick with Aptos. So be wary of that. Crypto Nation, beware that. Coming up next, Uniswap is getting a new foundation? All right. Question mark. Tell us about that, David. Also, a brand new Arbitrum train.

Starting point is 01:00:26 Arbitrum 2? Is adopting it, it seems like. Vitalik gives a statement and idea on theory crafting. We'll talk about that as well. It's all coming at you, but first, we want to thank the sponsors that made this episode possible. There is a brand new staking feature in the Ledger Live app today. We all like staking the assets that were bullish on, and now you can stake seven seven different coins inside the Ledger Live app.

Starting point is 01:00:48 Cosmos, Pocodot, Tron, Algorithms, Tesos, Solana, and of course Ethereum. With Ledger Live, you can take money from your bank account, buy your most bullish crypto asset, and stake that asset to its network, all inside the Ledger Live app. Through a partnership with Figment, Ledger also lets you choose which validator

Starting point is 01:01:05 you want to stake your assets with. And Ledger is running its own validating nodes, offering a convenient way to participate in network validation, and it even comes with slashing insurance. Ledger Live is truly becoming the battle station for the bankless world, so go download Ledger Live. If you have a ledger already, you probably already have it and get started securely staking your crypto assets. The Layer 2 era is upon us. Ethereum's Layer 2 ecosystem is growing every day, and we need Layer 2 bridges to be fast and efficient

Starting point is 01:01:31 in order to live a Layer 2 life. A cross is the fastest, cheapest, and most secure cross-chain bridge. With a cross, you don't have to worry about high fees or long wait times. Assets are bridged and available for use almost instantaneously. Across's bridges are powered by Uma's optimistic Oracle to securely transfer tokens between Layer 2's and Ethereum. Across's critical ecosystem infrastructure and Across V2 has just launched. Their new version focuses on higher capital efficiency, layer 2 to layer 2 transfers, and a brand new chain with Polygon, all while prioritizing high security and low fees. You can be a part of Across's story by joining their Discord and using Across for all of your layer 2 transferring needs.

Starting point is 01:02:07 So go to Across.TO to quickly and securely bridge your assets between Ethereum, Optimism, Polysis. on Arbitrum or Boba networks. And we are back. Coinbase lands a $10 trillion client in BlackRock, providing Aladdin clients access to crypto trading and custody via Coinbase Prime. So Coinbase is going to be the crypto back end by BlackRock, which is the biggest AUM institution hedge fund ever in the world. 10 trillion?

Starting point is 01:02:34 You can't catch a bigger fish than that. Yeah, the biggest fish, I guess entering crypto is the bottom line here. So the Coinbase Prime will provide crypto trading, custody, prime brokerages, and reporting capabilities to Aladdin institutional's client base who are also clients of Coinbase. I don't know what Aladdin is, but something associated with Black Rock. Anyways, coin, the equity for Coinbase, up 15% on the news, bouncing off the low lows, the low lows that it set a couple months ago. That's good because it's been down bad lately. You've been really down bad. Yeah. A bit of bullish news. Also got this, David. This is a tweet from Arbitrum. A New Dawn is upon us. Arbitrum Nova is now live and open to the public. Nova, this is a definition.

Starting point is 01:03:15 It's not like Arbitrum 1. It is a new train built on the Arbitrum Any Trust Technology and optimized for social and gaming applications that require ultra-low fees and high security. So this is another instance of Arbitrum. It is not the Arbitrum 1 chain. Arbitrum, when they came on the podcast about a year ago, and they were launching the very first Arbitrum chain,

Starting point is 01:03:35 they said they could do this. They said they could launch other chains as well. It's kind of implied in the Arbitrum 1 name. You know, one kind of implies two. This is not two. This is Nova. Yeah, but it is the second chain, though. Arbiturban Nova.

Starting point is 01:03:47 Nova means new. So it's a new chain built on Arbitram. And it is for social and gaming applications that need ultra-low fees and also high security. That's part of the news. The other part of the news is coinciding with the launch. Reddit. Reddit will be migrating community points onto Nova. So, of course, Reddit.

Starting point is 01:04:06 400,000 some on daily active users of which I'm one, big fan of Reddit as a social media entity, they are going to be deploying on Nova as well. If you pop the hood on Nova, this is the website. What actually is it, David? So it's a new chain from Arbitram Technology, so it's definitely a roll-up for game developers and social projects.

Starting point is 01:04:27 We know that. The main difference is that the Arbitrum One chain post all of its data to the main Ethereum chain, and the main Ethereum chain is like where you get a lot of cost for roll-ups. So Arbitrum Nova has kind of created a committee of entities like Coinbase Cloud, I think is one of them, and there's others as well, that instead of the Ethereum blockchain, they're going to post data to this committee, right? So Reddit is one of these people, Consensus, FTC, Google Cloud, Offchain Labs, Quick Node, P to P. And so instead of posting it to Ethereum, they're posting it to all of these entities that can kind of use databases.

Starting point is 01:05:04 So it's more centralized, but for gaming and social applications, it doesn't really matter because they're not financial applications, so you don't need as much security. And the costs are just probably many orders of magnitude cheaper. So faster, cheaper, like basically zero transaction fees, I would guess. Consensus is still secured on Ethereum. So consensus is still Ethereum. That's what makes it a roll up. But data is now not being posted on Ethereum. It's being posted this data availability committee run by this set of organizations.

Starting point is 01:05:34 Right. So it's almost as secure as Ethereum, but the data part is not quite as secure. So there's a bit of a tradeoff. But in exchange for that tradeoff, you get a pretty great chain that's very cheap for social and gaming type applications. That's what Reddit's going to use. You get a chain that emulates and has the U.S. of Web2. So it's a great place to start for like Reddit, like points, for example, that, you know, you don't need to have like metamask pop up and ask for approval.

Starting point is 01:06:00 This is kind of like if you're into like roll up terminology, it sounds kind of like a Lidium. There might be some differences here, and we should probably have Arbishop tell us more about it at some point. But yeah, it's pretty cool and good to see Reddit adoption for sure. This is, by the way, Nova on layer two beat. And so look at that TVL of Nova. Well, from zero to $8,000 inside of seven days, so kind of technically up infinity percent. Yeah, infinity percent. Still under a million dollars. So it's like, you got a way to go. A million dollar TVL in seven days is great. Not a all TVL is fake, David. How can we trust TVL anymore?

Starting point is 01:06:37 Did we just talk about that? How about Uniswap? What are they doing? Yeah, Uniswap's making a foundation. And so a foundation has always been missing absent from the Uniswop ecosystem. There's Uniswap Labs, but that's a for-profit company

Starting point is 01:06:49 that doesn't have complete and total alignment with the Unitoken. Uniswop Labs is the thing that acquired the Genie NFT aggregator, but the value of that Genie NFT aggregator doesn't go to the Unitwap Laps. So we need this Uniswap Foundation to kind of put like a set up

Starting point is 01:07:04 central thinking head upon the uniswap Dow. And so this Uniswap Foundation has been proposed. And so this is just a temperature check, but I'm pretty sure this is going to go through. This isn't a direct one-to-one link, but I think something like this is a necessary step to turning on the fee switch because the Uniswap Foundation can have the best interest of the uni token holders at heart. And the labs can't because of SEC regulations. So bullish. We're trying to fix our governance tokens here right now. How about Maker Dow, this is a pretty interesting news that happened last week as well. Yeah, there's a HVB bank minted $25 million in a single transaction. So Maker Dow really leaning into the real world asset, real world collateral, which I've always been bullish on. So congratulations to them.

Starting point is 01:07:50 I wonder if this week changed any of that. I know, no. It didn't. It didn't. It didn't. It didn't. Everyone tries to conflate these things, but it didn't. It's interesting, though, if like, if the U.S. government goes agro on DFI, what the fallout will be. I don't think that's where the, I don't think we're there yet, though. The U.S. government isn't like a monolith. It's not, it's like, oh, the government's going to come from Akerdao. Like some specific agency has to get offended by this, and I don't think there's, there is one. Plus, again, real world, collateral is not like this centralized thing. It's, it's also decentralized. It's just decentralized in meat space, not in crypto space. And so. I mean the fact that these banks could be from any

Starting point is 01:08:29 jurisdiction in the world. Any jurisdiction. Yeah. Like, right. Yeah. And like, there's not one like contract to rule them all. So if you, if you shut down one contract, all the other ones are still standing, right? So you have to go one by one by one and fight each one in court. It's a different level of different kind of decentralization. The other thing I think that makes this bullish and going after real world assets is now you have HV bank that knows about defy and it's an advocate, right? And it's also going to stand up and fight on the side of crypto. Big time. In any battles that are to come. See, you're getting it. You're getting it. Real world assets. It's so. bullish. It is. And I'm so glad we have all of these experiments playing out at once because I think

Starting point is 01:09:04 Ethereum crypto is a very big tent. Some news from meta, David. What are we looking at? Instagram has rolled out its NFT support to a bunch of more countries, 100 more countries, and also the float blockchain. Yeah, Instagram rolled out with their NFT support forever ago. I haven't really seen anyone been using any of that. But maybe it's because we haven't had 100 more companies do stuff with it or countries do stuff with it. Yeah, I don't know. It's a slower rollout. we'll see. I think they've got some bigger things planned. David, do you remember all those bankrupties? This is some news from the bankrupt crypto broker Voyager.

Starting point is 01:09:38 They just approved to return, they've just been approved to return $270 million to their clients. I guess if you're a depositor or maybe a debtor to Orgy. Like a customer, yeah, like a normal customer. You're getting some money back. Maybe cents on the dollar. I don't think you're getting all your money back, but I don't know the details of this. It specifically is returning $270 million to affected customers.

Starting point is 01:09:58 And so I think. think that means retail is getting this before like other creditors or debtors or whatever. I hope so. We'll see. But it's like it's going to work its way out over the months to come, as we said. So we'll see more of this as, uh, as they wind out. This is some news from Immutable as well and the GameStop partnership. What's happening here? Yeah, yeah, we saw this coming from a mile away, but Immutable X, the layer two and also GameStop wallet, the wallet, are now integrated. So this whole like immutable GameStop asset gaming ecosystem, it's, moving pretty fast. We're liking what we're seeing here. David, a tweet from Vitalik this week,

Starting point is 01:10:34 some quick theory crafting. That's a great word theory crafting. How much data space we could say by improving compression. So this is Vitalik talking about compression of various ERC 20 tokens. And there's a lot of detail in this slide, but can you dumb it down for us? What are we looking at? Yeah, basically there's a bunch of bars and each bars cut up into sections. And it's basically anatomy of a transaction. So you have the nonce and how much data that consumes is like one one section of the bigger bar. You have the priority fee and how much data that is, the gas and how much data that is, the token address and how much data that is. The signature is a really big chunk of this overall data. And you can kind of just see the way that Ethereum scales is not

Starting point is 01:11:17 necessarily like adding bigger blocks or shards or more block space. That is one way, but it's also by compressing all the transactions into a smaller packet of data. And so I just thought this visualization by Vitalik shows how much scalability there's left in Ethereum for just a normal ERC20 transfer. So for the viewers on the YouTube, if you're looking at the top, that's where we are currently. It's this bar that spans the whole entire page. And then at the ideal stateful compression, it goes to a much smaller bar. And so we're at 188 bytes currently for an ERC20 transaction.

Starting point is 01:11:50 And then the ideal stateful compression is 23 bytes. And so in the future, with all of these optimations, how much? How many times can you fit 23 into 188? Quick math is 8.7 or 8.2 times. And so with all of these compressions, which have nothing to do with the actual protocol of the blockchain, the actual block space of the blockchain, we can get eight times more scale in a basic ERC20 transfer. So I just like this visualization. It's a great visualization, by the way, in that Plenia episode, we talk about scalability in compression, right? And he thinks, sorry, they think with the introduction of EIP 4844 plus compression, this is the compression. the Pellania was talking about, we're going to get in a thousand X increase in roll-up transaction throughputs and Ethereum transaction throughput. So that's what all this leads to. And compression is an important part of that story. You know, it's another important part of the crypto story is the jobs market in crypto. Jobs. Jobs market still going strong. David, this is our time

Starting point is 01:12:49 to remind the Bankless Nation to do what? To get a job. And actually, you should get a job at Bankless because Bankless has more jobs on the job board. Look at that. Podcast editor. We're throwing out more podcast content, so we're going to need a third editor to add to the team. Also, if you know how to make defy tutorials on YouTube, if you're good at whatever those, like Adobe,

Starting point is 01:13:09 that's whole suite, and you can make good tutorials, we're definitely looking for that. Media operations also at Bankless. Bankless is hiring so many. God, we're hiring so much. Jesus, this is crazy. Yeah. Oh, wait.

Starting point is 01:13:19 I'm reading off the jobs right now. That's not what I do. Yeah, no, you're supposed to be dancing right now. So I get to dancing, sir. Border Room Labs. If I read out the drops, does that mean you dance? No, it doesn't. It's not bidirectional, all right?

Starting point is 01:13:30 It's unidirectional arrangement here. Border Room Labs, they are, I better start this before I'm asked to dance again. Software engineer Dow Governance, also Mantecor Games, a manager of crypto marketing. What is that, David? Oh, gone technical. Thanks. Bankless, we're also looking for a writer, Vertex Protocol, a marketing coordinator. Still want a senior newsletter editor for Bankless Streams, Financial Analyst,

Starting point is 01:13:53 Bankless Academy product manager. Wow. I guess it's all bankless jobs this week, but there are plenty of others. Actually, I shouldn't say that. There's a head of marketing, pleaser Dow. The sandbox wants a business dev manager on Juneau. Theorem Foundation wants a front-end developer. There's a ton more. Go to the bankless. dot pallet.com jobs URL to get access to those jobs and make sure you sign up to get these jobs via email. Guys, we got a lot more coming up. David. Tell them what's coming up next. Oh, we got the questions from the nation. How to get the ETH proof of work token. if you think that token is valuable. I do not think it will be, but if you

Starting point is 01:14:27 do, we'll tell you how to get it. You're going to get it either way, whether it's worth zero pennies or whatnot. Also some bridge risk stuff, and of course the hot takes out of crypto Twitter. So in order to get some of that stuff, you've got to go like and subscribe. You're going to get it anyways, but you should also like him to subscribe anyways.

Starting point is 01:14:44 And we'll be right back after we get through some of these fantastic sponsors that make the show possible. Arbitrum is an Ethereum Layer 2 scaling solution that is going to completely change how we use DeFi and NFTs. Some of the coolest new NFT collections have chosen Arbitrum as their home, while Defi protocols continue to see increased liquidity and usage. You can now bridge straight into Arbitrum for more than 10 different exchanges,

Starting point is 01:15:03 including finance, FTX, Whoobi, and Crypto. Once on Arbitrum, you'll enjoy fast transactions with cheap fees, allowing you to explore new frontiers of the crypto universe. New to Arbitrum, for a limited time, you can get Arbitrum NFTs designed by the famous artist Ratwell and Sugoy for joining the Arbitrum Odyssey. The Odyssey is an eight-week-long event, where you can play on-chain activities and receive a free NFT as a reward.

Starting point is 01:15:25 Find out more by visiting the Discord at discord.g.g.g. You can also bridge your assets to Arbitrum at bridge.arbitrum.io and access all of Arbitrum's apps at portal.orghum. In order to experience Defi and NFTs, the way it was always meant to be, fast, cheap, secure, and fiction-free. The Brave browser is the user-first browser for the Web3 Internet, with over 60 million monthly active users. And inside the Brave browser, you'll find the Brave Wallet,

Starting point is 01:15:50 The secure multi-chain crypto wallet built right into the browser. Web3 is freedom from big tech and Wall Street. More control and better privacy, but there's a weak point in Web3, your crypto wallet. And most crypto wallets are browser extensions, which can easily be spoofed. But the Brave wallet is different. No extensions are required, which gives Brave browser an extra level of security versus other wallets. Brave wallet is your secure passport for the possibilities of Web3 and supports multiple chains, including Ethereum and Salon. You can even buy crypto directly inside the wallet with RAMP.

Starting point is 01:16:18 And of course, you can store, send, and store. swap your crypto assets, manage your NFTs, and connect to other wallets and defy apps. So whether you're new to crypto or you're a season pro, it's time to ditch those risky extensions and it's time to switch to the Brave wallet. Download Brave at brave.com slash bankless and click the wallet icon to get started. All right, guys, we're back with some questions from the bankless station. That's questions from you. And if you've got a question for the weekly roll-up, make sure you follow Bankless HQ on Twitter. We post a request for questions once a week. And you can get your question answered if you post there. Number one, from nobody. If there's a proof of work fork at the merge,

Starting point is 01:16:53 will you receive the air drop to a ledger wallet? I think that's a ledger wallet specifically, wants to know if the user wants to know if they will receive a part of that token, ETHPOW token, will they, David? Well, you will absolutely, because a ledger wallet means that you have your own private keys. So it's actually less about the ledger and more about do you have your own private keys. And because you have a ledger, you have your own private keys. So the answer is absolutely yes. If you have your own private keys, then you will get that you will be able to access your ether on the proof of work chain. If you have that ether, though.

Starting point is 01:17:28 Okay. So what happens if you have your eth at somewhere like Coinbase? Well, so that means you don't have your private keys, which means that is up to Coinbase. And historically, Coinbase has honored forks. And we've seen that happen before. That happened with Bitcoin Cash. So when Bitcoin forked off into Bitcoin and Bitcoin Cash, Coinbase gave all Bitcoin holders they're owed Bitcoin cash.

Starting point is 01:17:51 But blockchain's forked many, many, many times. And so there have been other forks where Coinbase was like, that's too small of a fork. We don't care about that one. So you didn't get those other forks. And so, I mean, Coinbase hasn't really taken a position. But if there's enough of like a movement behind the Heathproof of Work train, you could see Coinbase listing that chain, excuse me.

Starting point is 01:18:11 And then they would give you your Heath Proof of Work token if they choose. But you're beholden to Coinbase. It's up to Coinbase because. you know, you trusted them with your keys. I think some other exchanges have signaled that they would support a trading pair. All the trash exchanges. They will. But as long as someone does it, then you could sell.

Starting point is 01:18:29 That's how that works. If you want to sell, you can sell. And by the way, that's taxable income. Apparently, if you receive an air job. Sick, taxable income. Taxable income for your air drops. Sell it quickly. Second question from avigupta.eith.

Starting point is 01:18:44 I don't even remember the bridge I use to transfer. from my funds to layer to you. But once funds reach L2, am I still exposed to bridge risk or just the risk of smart contract for L2? So once you bridge. It's a great question. It's a great question. Once you bridge, you still have the risk of the bridge on your assets lingering forever. Yeah, Ryan, can you go to bungee.com exchange real quick? Okay, so this is bungee.com. It's like a bridge aggregator plus also a Dex aggregator. So Ryan's got Ethereum to Optimism. He's got 0.04Eath. On one side, on the Ethereum chain, asking for 84.8 USDC on the optimism chain. And so here's all these bridges. On the top one,

Starting point is 01:19:25 this thing automatically selects the bridge that gives you the most value on the other side. And so that is a currently hop for this current transfer. It tells you how much you're going to pay in gas, how long it's going to take. The next best bridge after that is the actual canonical optimism chain. Below that, you have hyphen bridge. Below that, you have a cross. Below that, you have multi-chain bridge. There's all these different bridges, all like so many different ways to get to optimism. It does,

Starting point is 01:19:52 does the security of your assets on optimism depend on any of these bridges that you take over there? The answer is no. No, it does not. The only thing that matters is the canonical optimism bridge. Because once you get over to optimism, the only security dependency that you have is the actual canonical optimism bridge. And so once, once you have ether on optimism, the bridge that you use to get there can break and you still

Starting point is 01:20:20 have ether on optimism is not beholden to that particular bridge. And this is only true for layer twos on Ethereum. This is not true for cross layer one bridges. If you are a cross layer one bridge of a multi-sick bridge to like Ethereum to Solana or Ethereum to Avalanche, then you are beholden to whatever bridge that you use to get there. But then you could, so you could bridge your ether from like Ethereum to like Avalanche. And then you could trade that ether from. the A-Vax token. And then you are no longer beholden to that bridge because you sold that risk off to somebody else.

Starting point is 01:20:50 And so this is a really good just like lesson in just like bridge risk. For all layer twos, if you're on arbitram and you have your arbitram ether, you only are at risk of the canonical arbitram bridge, not the bridge that you use to get there. That's really cool, David. So like, yeah, good overview here. So you can cross with whatever, like you can cross with whatever janky bridge. Right. like you need to.

Starting point is 01:21:14 It could be any bridge entirely. As long as the optimism bridge itself remains intact, you are fine. There is still bridge risk in that the optimism bridge itself, the canonical bridge, could go down. But if you cross over to the island, on some bridge that looks like something like this, this janky sort of like, it's got holes in the middle of it, and it's just rope and like pieces of wood. As long as the main optimism bridge stays intact. all the other bridges could collapse, you will be fine.

Starting point is 01:21:46 Right, exactly. And there is bridge risk. So if you're using hop to go from Ethereum to optimism, there's bridge risk while your assets are like in flight, while they're out of your Ethereum wallet and they have not yet landed in your optimism wallet. Yeah, 20 minutes or less.

Starting point is 01:22:00 Usually it's less. Once it lands on optimism, then the only bridge that you have risk to is the actual canonical optimism bridge. Very cool. There's another question. If I stake one minute after the merge, am I allowed to unstake whenever I want

Starting point is 01:22:11 or am I subjected to the same waiting time to unstake of who staked before the merge? You, sir, or yes, sir, Matt, are beholden to the same wait times. Withdrawals are not enabled for anyone staking their ether for six to 12 months after the merge. So even after the merge happens, if you begin staking, then you do not, you're not able to withdraw. You are still stuck like everyone else. Six to 12 months, and then there will be some sort of software upgrade, a fork. And then everyone will be able to unstake. at once.

Starting point is 01:22:42 But until that time, nope, no, they will not be able to all unstake a once. There's a queue. Yes. But like everyone can start the process of unstakey at once. Everyone can enter the queue to

Starting point is 01:22:51 unstake, yes. That's a good clarification. So we're all in the same boat together. We're all like staking until that next fork happens, which by the way is pretty bullish for Eith Price. It's a one-way ticket. Speaking of one-way tickets, fan.

Starting point is 01:23:04 All right, let's get some takes of the week. Takes of the week. This one from Pellania. Pelania coming to the podcast again on Monday. But what has Pellinia saying here. This is a governance post. Yeah, so Pellinia actually produces a governance post per optimism. This is one of the few governing things that Pellinia does and says they introduce a proposal to pause governance funding voting cycles until some level of optimism layer to decentralization

Starting point is 01:23:31 has been achieved. So what Pellinia is really saying is that we should stop distributing the O.P. token, stop doing rewards, stop doing governance proposals until optimism is more decentralized. And they cite regulatory risk as one of the big reasons behind this. So they're just saying, hey, let's make sure the actual thing, optimism, is more decentralized than it currently is before we start paying out OP tokens as like reward incentives. So, you know, kind of a contrarian take, but this is kind of why we appreciate Pellania because they are very just clear and sober-minded. And Pellania being a good governor, too.

Starting point is 01:24:07 This is a pretty detailed post about this, too. I think I am staking to Plenia on the optimist. As a mic. As a mind. Cool. This is a take from Ryan Anderson. He says, the NFT space is like cavemen inventing the wheel

Starting point is 01:24:21 and then only using it for roulette. And then there's a valid use of a wheel. Yes. Do you think there will be some non-speculative NFT cases, use cases in the future in the next bull run? I know a project that's working on right now, Ryan. Utility NFTs, baby. Yeah, utility.

Starting point is 01:24:39 I was like token-gated access. Do you remember when ICOs were just basically speculative tools? Right. And like, I remember when ICOs were the future. Tokens were, right? Tokens did nothing. They were completely stupid and useless in 2017.

Starting point is 01:24:54 And it was only during the bear market. By the way, are we at a bear market still? Do we still say that? I don't think so. I don't think so. The bear market didn't last very long. No, it really didn't. We're trying to brand this thing, the build market.

Starting point is 01:25:04 And like, if we're already done, then I guess all that work is over. Yeah, that's actually a good point. We should have, we should, it'd be nice to have the bear market for a little bit longer, just to really put a fine in people's ass. I don't think we'll full bull yet. I think we'll crab for a while. I think emerge will be capitalists. Yeah, crab between three and two thousand. The crab market's not, doesn't sound well. Good, though. It's either bull or bear. There's no in between. All right. This is another take. I can't read my own takes. Ryan, Sean Adams, classic take. Ryan says, I hear bad people use the internet. Let's just ban TCPIP and SSL and be done with it. And a funk. 9-Evan 9-871, a funk is a backwards punk. They say, especially SSL. Do you know what SSL stands for?

Starting point is 01:25:47 Secure Sockets Layer is a standard security technology for establishing an encrypted link between a server and a client, basically a website. Okay, cool. Okay, so Funk 9871 says, especially SSL, you can have military-grade encrypted communication with servers, scaredy face.

Starting point is 01:26:01 Imagine what could be wired there. Pedophiles, instructions for bomb building, conspiracy theories, hate speech. We need to censor this. Yeah, also your transaction. and credit card data. Let's make sure that that stays like open for all of the internet to watch. No thanks. Exactly. Exactly the point. So it's like what do we do? You just ban everything. I mean, we need privacy. We're going to have digital crypto technology. By the way, what is the say for the central bank digital currency, right? Do you think Treasury is going to want to enable privacy by default on that thing, the central bank digital currency? No. They're not going to give you privacy. They're going to want to backdoor into everything.

Starting point is 01:26:39 This is why in a CBDC there would also never be like a public accessible virtual machine because then you could build tornado cash on it. Exactly. Right? So they're going to hamstring the whole thing, which is I guess the bouquets for crypto. But I guess your take is David, it's all going to work out okay, right? It's all going to work out okay. Have faith.

Starting point is 01:26:57 All right. This one's great. You zoom out a little bit. Is this a meme of the week? No, we're not in the meme stage yet. Well, we had two memes of the week and this is the one that we put in the take section. The tweet says, inflation is down 0.2%

Starting point is 01:27:12 to 8.5%. Second worst recorded inflation ever. And then the picture goes crypto MFers. And then it's the picture of the hangover and they're all gambling at the roulette table. So excited.

Starting point is 01:27:24 Yeah, inflation's down 0.2%. Let's go to the casino. I'm surprised the market reacted so bullishly to this like spec, tiny, tiny micro speck of good news. But such is the market. All, David, close us out, man. What do you bullish on this week?

Starting point is 01:27:39 Can I really say anything other than Ethereum right now? Like we just scheduled the merge, bro. Okay, so this is something I always think is super ironic. In 2017, that bull market got, the Ethereum bull market was partially catalyzed by everyone wanting to buy ether so they could stake it. And that was me. It was like, oh, got to get as much ether as I can get. Passive income, baby.

Starting point is 01:27:58 Yeah, passive income because they're going to go to proof of stake in 2018. And then 2018 came and like the roadmap just like was not defined. And then we went into a bear market. And then like, DeFi Summer hit. and it was like, oh, yeah, like, proof of stake by the end of 2020. Like, oh, my God, I got to get as much easier as I can. So, like, so I can stake it at the end of 2020. And then, like, that came and went.

Starting point is 01:28:16 And then, like, now we're into the second, the last part of 2022. And we actually have it scheduled. That's actually real this time. It's actually having. Now, so instead of, like, being the catalyst for, like, a bull market that's actually happening right now, it's a catalyst for a bull market that is completely proof of, like, Ethereum proof of stake being driven right now so far. No, to be fair, though, David.

Starting point is 01:28:37 But you could stake when the beacon chain went live. True. Right? Which is a long time ago. But have you been waiting with the bulk of your ETH for kind of the marriage? No, the bulk of my Eth is not on the beacon chain. Are you going to start staking, like post-merge? Is that your catalyst?

Starting point is 01:28:52 Are you going to wait for the next fork where you can actually withdraw? That's a really good question. I have not seriously considered that. You haven't thought about what you're going to stake or how much. You know what we need, David. Do you remember that episode we did on how much ETH can you retire on? a long time ago. Right, right.

Starting point is 01:29:08 How much was that? I think it was like, I think it was like a little over 100th. I mean, to get a $60,000 a year salary off of a hundred Eth. This was before we had two years of like 20% each year inflation, but or like massive inflation. So maybe it's a bit higher.

Starting point is 01:29:24 That was also assuming a $5,000 Eth price as well. But we'll get there too. Okay. Yeah. Anyway, how much is the conversation is back, baby. Yeah. Okay. So like the merge is scheduled.

Starting point is 01:29:36 Inflation down. Now, hopefully that continues. L2 tokens are up. Fee tokens are up. Not only is ETH bullish and proof of stake bullish, but tokens are also bullish. Tocons are having a great moment right now. So, like, people are feeling good about stuff. And I'm hoping, Ryan, that that makes people feel better about stuff in the future.

Starting point is 01:29:57 And then we can have a bull market. There's a picture for you. Which of these people are you, okay? The one missing the tooth. I'm showing the hangover picture again. That's it. That's us right now. Which tokens have I put my bets on?

Starting point is 01:30:15 Ryan, what do you bolsh on? I was listening to the Blodgy episode again, the episode that came out this Monday, the one on Nations. And then like in the backdrop of an actual nation state banning a privacy protocol, banning code, banning effectively speech, right?

Starting point is 01:30:32 It went back to like, What am I bullish on? Nations. And the way Belaji defined it is nation is different than a nation state. Nation is a community. It's a tribe of people. The Wikipedia definition is

Starting point is 01:30:44 a community of people formed on the basis of combination of shared features such as language, history, culture, territory, belief, nations. What are nations? They are communities.

Starting point is 01:30:57 That is not the nation state. But I feel like the nation state has kind of conflated those two together and they want the word nations to actually mean this nation state type thing. And it's different. It's different because we can have these things that are internet nations, digital nations. And I think this unlocks something big for communities, for societies,

Starting point is 01:31:20 for groups of individual with shared beliefs. And this opens up an avenue for humans coordinating outside of the nation state. At first, the nation states are, I think, going to feel a little threatened by this. We're starting to see some of that. Like, feeling threatened. We don't know what to do with this new thing. You're not a nation. You don't have a flag.

Starting point is 01:31:40 You don't have rights. You're creating your own money. That's not real money. It's fake internet money. And like, you're not, and it'll take time. But the things that we will build in this new digital nation, internet nation, will be different than the nation state. And I think we'll be complementary to it over time.

Starting point is 01:32:00 And I can't wait to start unlocking. some of those new things. Blaschi said in our episode, he was like, the 2010s, we discovered internet money. The 2020s are going to be about discovering internet nations. And I think that is a big thing.

Starting point is 01:32:16 We're going to define and uncover and start to see use cases for this decade. People have a hard time, I think imagining this right now in the same way that was very difficult to imagine a crypto internet money back in 2011. You have to have like a big, broad imagination.

Starting point is 01:32:31 but I think that's it, man. We're in the process of defining. And like, what I love going back to is, like, you remember Blashe was talking about, sometimes you have to go back in order to go forward. Right. I find myself being very attracted to, like, some of the founding principles of nation states, right?

Starting point is 01:32:48 Like, you go back to kind of like the Federalist Papers and, like, the United States Constitution. And, like, those are the base principles for how humans want to live. They got that right. And they built a protocol called a state around that. And that's cool. But like some of these base principles, we can manifest the core base principles of life, liberty, and the pursuit of happiness in internet protocols.

Starting point is 01:33:12 And what does that look like? Anyway, I think we're in this new era of nation builders. Yeah, I think you're saying you're bullish on nations without states. Yes. Nations without states. Very careful not to stay nation states. I'm bullish just on nations and specifically internet nations. Right.

Starting point is 01:33:31 That is bullish on small communities of people. Yeah. I think that just means you're bullish on Discord channels. Yes. Discord channels. I mean, I said I was bullish on tokens. I think you just said what I meant in a different way. Yes.

Starting point is 01:33:45 Well, you're bullish on their assets, all right? I'm bullish on the abstract. But they do have tokens. I think Volaji just nailed it, man. It's a good episode. Anyway. But what do we got for meme of the week? Meam in the week.

Starting point is 01:34:00 Let's do it. It's cooking it up. I am sharing a picture of trains and Godzilla. Yeah, so this is my, the reason why I love this train, Godzilla, where did you get Godzilla? I don't know, it's blurred. What is that thing on the track? That's one of those things that like ends a train from going off the track. What?

Starting point is 01:34:17 That's not like a Balrog or a winged beast thing? What are you looking at? Man, did you watch this bunch of Lord of the Rings with your kids on vacation? Actually, it's just like a barrier. It's like a wooden barrier because that's the end of the train track. Okay. This is a back to the. future movie where they go back and is this back to the future number one I think it might be

Starting point is 01:34:35 it may be number two I can't remember anyways this is when they have to get their car up to 88 miles an hour using a train yes it's three and so back to the future three that's back to the future three okay so then they get they get the delorean up to 88 miles an hour and so then it disappears and goes back to the future and that is the merge the merge is when like the Ethereum chain disappears from the proof of the big slow chunky proof of work train and then they disappears and then it goes to the proof of stake chain, which is the future. And then the proof of work train literally goes off of the track and crashes and burns. And this is why I've been calling the defy ecosystem on the proof of work chain is dividing by zero. Once the Ethereum

Starting point is 01:35:14 chain leaves proof of work and goes to proof of stake, the proof of work chain crashes. It goes off the bridge. It dies. And this is a great meme that encapsulates this. There you go. It's back to the future. Nothing to do with dragons or Lord of the Rings or whatever else I said. But this does look like it's from a video game. Am I right about this? Or these actual scenes from a movie? 80s animation, bro. That's 80s animation? It looks so terrible. It's the back to the future come out. It's 80s, yeah, for sure.

Starting point is 01:35:39 1985, yeah. Man, all right. How time flies. That's it for this week, guys. As always, none of this has been financial advice. Never is on bankless. It wasn't legal advice either. It wasn't legal advice whatsoever,

Starting point is 01:35:53 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. Hey, we hope you enjoyed the video. If you did, head over to Bankless HQ right now to develop your crypto investing skills and learn how to free yourself from banks and gain your financial independence. We recommend joining our daily newsletter, podcast, and community as a bankless premium subscriber to get the most out of your bankless experience. You'll get access to our market analysis, our Alpha Leaks, and exclusive content, and even the Bankless

Starting point is 01:36:26 token for AirDrops, Raffles, and Unlocks. If you're interested in crypto, the bankless community is where you want to be. Click the link in the description to become a bankless premium subscriber today. Also, don't forget to subscribe to the channel for in-depth interviews with industry leaders, Ask Me Anythings, and weekly roll-ups where we summarize the week in crypto and other fantastic content. Thanks everyone for watching and being on the journey as we build out the bankless nation.

Bankless - ROLLUP: Goerli Merge | Tornado Cash Ban | Coinbase BlackRock Deal | Fake Solana DeFi?

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