Bankless - ROLLUP: M2 Money Supply Flipped Bullish | Robinhood Wells Notice | Trump Supports Crypto | Friend.tech Token

Episode Date: May 10, 2024

Bankless Friday Weekly Rollup Second Week Of May ------ 📣 TRANSPORTER - SECURED BY CHAINLINK CCIP | TRY IT OUT https://www.transporter.io/  ------ Bankless Premium | Use Code "FEED10" https://bankless.cc/FEED10   ------ BANKLESS SPONSOR TOOLS: 🐙KRAKEN | MOST-TRUSTED CRYPTO EXCHANGE https://k.xyz/bankless-pod-q2  🔗CELO | CEL2 COMING SOON https://bankless.cc/Celo      ⚖️ARBITRUM | SCALING ETHEREUM ⁠https://bankless.cc/Arbitrum  🛞MANTLE | MODULAR LAYER 2 NETWORK https://bankless.cc/Mantle  🏠 CASA | SECURE YOUR GENERATIONAL WEALTH https://bankless.cc/Casa  🗣️TOKU | CRYPTO EMPLOYMENT SOLUTION https://bankless.cc/toku    🌐 CARTESI | APPLY FOR A GRANT https://bankless.cc/CartesiGovernance    ------ TIMESTAMPS & RESOURCES 00:00 Intro 01:28 Markets  https://pro.kraken.com/app/trade/btc-usd  https://pro.kraken.com/app/trade/eth-usd  https://www.coingecko.com/en/global-charts  03:40 M2 Money Supply https://twitter.com/thomas_fahrer/status/1786196603931644086  08:18 GBTC Inflows https://x.com/JSeyff/status/1787506564267393037  https://twitter.com/JSeyff/status/1787610459413102688  09:49 Stablecoin Mkt Supply https://twitter.com/alpha_pls/status/1787405833279545393  10:55 Bullish for Solana https://twitter.com/smyyguy/status/1787892675145781611  18:43 Robinhood Wells Notice https://newsroom.aboutrobinhood.com/robinhood-response-to-receipt-of-wells-notice-from-the-u-s-securities-and-exchange-commission/  https://x.com/vladtenev/status/1787595555981668751  https://twitter.com/BSCNews/status/1787811373361107092  22:32 Gary's Take https://x.com/RyanSAdams/status/1788313202024915178  28:27 Biden Administration Against Crypto https://twitter.com/BitcoinMagazine/status/1788274505753755836  https://twitter.com/jchervinsky/status/1788281811086221646?s=46&t=2ZINVXJQKx6xO_6Wiiu_2g  https://x.com/RyanSAdams/status/1788289854574322049  34:09 Trump Response https://twitter.com/frankdegods/status/1788359051031761269?s=46&t=2ZINVXJQKx6xO_6Wiiu_2g  42:16 FTX Creditors Make 118%? https://www.bloomberg.com/news/articles/2024-05-07/ftx-has-billions-more-than-needed-to-repay-bankruptcy-victims?cmpid=BBD050824_MONEYSTUFF&utm_medium=email&utm_source=newsletter&utm_term=240508&utm_campaign=moneystuff  44:42 Friend.Tech Token https://x.com/friendtech/status/1786573081240297926  47:06 Eigen Stakedrop Update https://twitter.com/TrustlessState/status/1786172333717066237  https://x.com/BanklessApp/status/1786055564629348383  48:28 $MODE Token https://x.com/modenetwork/status/1786115439212294386  49:43 Optimism L3 https://optimism.mirror.xyz/6idqs2nEDLdezbSynrYsakliSCm3VyzA3WWj6esBbbM  51:29 BOB Bitcoin Chain https://twitter.com/build_on_bob/status/1785601054966771970  52:10 Autonomous Worlds https://twitter.com/redstonexyz/status/1785715921014960188  54:48 Nigeria Banning P2P Crypto Trade https://www.bloomberg.com/news/articles/2024-05-07/nigeria-to-ban-person-to-person-crypto-trade-in-battered-naira  57:05 Revolut X https://www.revolut.com/blog/post/revolut-x-launch/  57:59 Meme of The Week https://x.com/jonwu_/status/1787512817303629962  ------ Not financial or tax advice. See our investment disclosures here: https://www.bankless.com/disclosures⁠ 

Bankless Nation, it's the second week of May. David, it is weekly roll of time. You ready for this? I'm absolutely ready for this. And we're going to go super fast this week because that's kind of the week that it is. First up, Gary sends his fifth Wells notice this week. Who got the nasty gram this week? It's not a crypto company. So the crypto army is growing by one. Biden. Joe Biden says he will veto extremely important crypto legislation right before election season. And Trump has a thought on that. Bold strategy coming out of the Biden administration. And also, we got a number of signals to say that the bull market is not over. We have some tides that are turning in the bullish favor. So we'll talk about that. And also, Frentek launched their token.

Mode network launched their token. A roll-up spans between Bitcoin and Ethereum. Got a bunch of new network launches this week. And we're going to get to all of these details and more. But first, before we get into prices, we've got to talk about our friends and sponsors over at Transporter, a brand new bridging app called Transporter. using ChainLink's CCIP in the background to help you securely transfer your assets, ETHLink, USC between all of the different chains, of which there are three more this week.

So you can try out Transporter.io link in the show notes if you want to securely transfer and track tokens across all of your blockchains. This is like Jason Statham, taking your assets from one chain and putting them on another chain. That is such a niche reference. Someone out there got it. All right, let's get to the prices. Thanks to Cracken for providing these glorious charts, the beautiful charts, but the direction is unfortunately a bit. Wait, are we up or down on the week?

Bitcoin's up on the week. Wait, really? $5.3% on the week. See, I don't feel happier this week, David. It doesn't feel like it should be up. Hang on, we haven't got to ETH yet. We haven't got to ETH yet. Bitcoin started the week at $59,000.

It is currently at $61.5,000 up 5.3% at the week. Eith price, basically flat. started the week, it's 2,950. We are ending the week right below 3,000, up half a percent, counts as flat. And of course, the total crypto market cap, $2.39 trillion, under $2.4 trillion. Would you say this is still feeling doldrums-y? Like, it feels like it's kind of, you know, there's a malaise on the market right now. So, before we've got like six weeks of just like not exciting down flat-ish. So while this general malaise is going on, the layer two projects continue to build. And

Thanks to Mantle for this layer two update today. David, do you know there's now 95 projects on L2B? And that's just the ones that we know about. 95 different layer twos. And you're absolutely right. That's just the ones that we know about. This is Chow saying, in other words, there are probably at least several hundreds,

possibly thousands of layer twos right now. And I think there's a big question for crypto is, is this just like an infrastructure boom? Like how sustainable are all of these layer twos? I know you and I have always taken the vantage point that like they answer the question of how many layer twos will there be is it's sort of similar to trying to answer the question how many websites will there be it's like many blogs will there be yeah yeah exactly as many as the market finds like useful and deems fit uh what's your take on these numbers here do you

think this is sustainable uh well in the short term no in the long term yes uh and i think there's going to be a theme especially when we get to the announcement section of this roll up is like well we are getting more roll ups this week but we're also getting more specialized rollups and so One of the reasons why there will be like n number of roll-ups is because they are learning to become extremely niche and extremely specific and finding different corners of the internet in which a roll-up is actually useful and justified. So, yeah, we'll talk about that. Let's talk more about the markets again and see how long these doldrums will last because there's actually, David, some bullish signs on the horizon. You called it in the intro, the tide is beginning to change. So a few things that are different that we should emphasize this week.

Number one, I don't know if you saw this chart. This is Thomas. I love this chart. M2 money supply has flipped positive. Here it is. What are we looking at? And can you describe this for like bank list listeners and viewers on YouTube? What we're looking at and what M2 is actually measuring.

So we are looking at a chart from 2019 up until this very moment right now of the percentage growth of M2 money supply. So when there is a tiny blue bar that's above the line, that means we are growing by a percentage. And then if it's below the line, it actually means that M2 supply is decreasing. M2 money to supply is called broad money supply. So like if you pull out your wallet and you have like a $1 bill, that is M0. M2 is after all of the, you know, 10 to 1 fractional reserve of the commercial banking sector. It's after all of like private money has been created. And so it's a very broad measure of circulating money.

And it's generally why it's important. it's generally the underlying common denominator that frequently prices capital assets. Yeah, it's like, you know that meme where you see Jerome Powell on the money printer? Yeah, that's M2. That's what M2 basically is. Well, when Jerome Powell on the money printer prints $1, that turns into like $10 in M2. And so it's like leveraged just because of like the leverage of the commercial banking system. M2 is like where people get the money in their in their accounts to go buy assets.

that M2 money supply flipped negative at the end of 2022 because of the Federal Reserve hiking interest rates and all the capital destruction in both like Bitcoin crypto, stock market, all the capital assets went down, right? And before that, for people who can't see, before that, it was mega-bubble. It was big. It was extremely big. It was very, very big. So like M2 money supply was growing 25% like on a, for a year, which is large, which is very, very large.

And so M2 money supply was getting smaller basically throughout 2023 and into 2024. In the last week, M2 money supply flipped positive, as in the supply of money out there is growing for the first time in like a year and a half of 18 months. And Bitcoin generally, crypto assets generally are debasement hedges. And M2, the growth of M2 money supply is basically the thing that props up, actually the long tail of assets out there, which is definitely what crypto is. So for the first time in a couple of years, M2 has flipped positive. The money printer is on. You remember that take?

I was telling you from Arthur Hayes, I think a couple of roll-ups ago where he was just basically like, April's a wash. I'm going to sell. Like, it's just like, we're going down in April. And he called this like at the end of March and beginning of April. He has now flipped bullish. Oh, great. It's like one month later.

It's May now. Part of the reason why is he says, does this. Make no mistake by reducing the rate of quantitative tightening from $95 billion to $60 billion per month. That's a thing that happened, by the way. They've reduced quantitative tightening. The Fed is essentially adding $35 billion per month of dollar liquidity. Okay? So quantitative tightening has eased. And in other words, this is quantitative easing, money supply expansion by another word. And this is part of the reason that Arthur has flipped bullish. He's not saying it'll happen overnight, but he's basically saying we're back to more

liquidity, back to money printing, back to like how things were trending in 2020. Of course, we're probably not going to see a COVID level stimulus, but that for Arthur makes him very bullish on the crypto asset class. If you look at the total supply of M2 money out there, not just the change in direction of its gross. M2 money supply grew just absolutely massively post-COVID. That's like really what the effect of COVID was. It was a massive growth in M2. And then we jacked up interest rates and all that money went into money market funds. But if you look, like the supply of M2 money didn't go away. There's still a ton of M2 money out there. There's just not in the long tail. As M2 money is growing now and people going on risk on,

like all of that money that's still print, we still printed a bunch of money. It's still out there. Now it's giving like more and more permission to go out on the long tail. So that's like the first changing of the tides. Second, pretty unrelated to M2 money. But gray scale, GBT saw its first ever inflows last Friday. And so the actual amount of Bitcoins in the Grayscale GBT-E-T-E-F went up, which is crazy because there's so much already Bitcoin in there. The fees are super high. Why people are still trying to figure out why there's more Bitcoin in Grayscale than

typically what would be expected. People are learning like, why are people buying Grayscale over anything else? I still haven't found that answer. The crazy thing is, It also went up on Monday as well. So Grayscale had two days in a row of inflows into the Grayscale GBTC ETF. So I kind of want to ask the question, though. What about just a global Bitcoin ETF inflows, right?

So like I don't know if we can really explain why Grayscale had an up week, but are we getting an up week on just global Bitcoin ETFs? Last week we definitely had net outflows. Kind of like one of the biggest net outflows. This week we have pretty strong net inflows. kind of hard to measure it, but looking like maybe $50 to $100 million a day of net inflows into the Bitcoin ETFs. Last week, there was a very large net outflow of $570 million.

So the average day this week has been like $100 to $200 million of net inflows. So this week net inflows, last week net outflows. The week before that net outflows, the week before that net outflows. And then before that, it was all inflows. So yes, this week there has been a turning of the tide of net inflows into the Bitcoin. UTFs. The last tide turning I think we want to talk about is stable coin market supply is going up.

And this is something that Jim Bianco is like one of his theses he turned you and I on to, which is basically we're not going to get a bullish crypto market until you start to see stable coin market cap and stable coin supply going up because that's a representation of how much liquidity there is flowing from the fiat system into crypto. And sure enough, the market cap of stable coins was down, down, down. during the bear market. And now it is starting a trajectory and ascent up. We're out with the striking distance of all-time highs of stable coin supply. Yes. Here's the tweet around this. This is exactly what you want to see and it's very

important metric to monitor. As long as we continue to see stable coin inflows, our coins will go up. The stable coin market cap is grown by 30 billion year to date and is now about 19 billion away from last cycles peak. So this is another bullish indicator. Don't sleep on this one. This is a nice gradual kind of assent that you'd expect to see. And as long as that number is going up, I think the crypto bull market is still on. More changing tides here, but this was more specifically for Solana rather than the entire macro market. This is a tweet out of Dan Smith from Blockworks Research, who's talking about the fees being paid to the Salana layer one. And Solana M-EV over the last like month or so has actually surpassed Ethereum M-EV. Total economic value

of transaction fees. Solana is still below Ethereum, but still putting it, like, you actually can see it on the chart, which is like, that's the first time for Solana.

This started, of course, in December of 2023 with the rise of, like, Solana summer. But you can definitely start to see like Solana showing up on the charts with fee supply, fee structures.

So the fee market in Salana, very, very strong. This is something that like we were saying, like, last cycles, like, like, Solana has to get to the point of having like sustainable fees.

And this is, this is what this looks like. Yeah, I'm not going to lie. This number impresses me because something that you and I have said from the very beginning, which I think is true, and we should evaluate more layer one chains. This is blockchain. What do blockchains do? Blockchain sell blocks. So how do you know whether someone is purchasing the blocks? You have to look at the fee revenue. And the fee revenue comes from two sources, either transaction fee revenue. Right.

Or the ordering of the blocks, which is M-E-V. And so Solana is just not making that much with respect to like fee revenue itself, but it's making a ton with respect to ordering of the blocks. And that's actually impressive. I think if they can sustain this moving forward and how long they can sustain this, this is kind of like flipping into a big bullish indicator to me from a fundamentals perspective. A few things that I like would look for next as Salana continues to mature. It's like one is what's the sustainability of this?

Right. Free revenue to issuance ratio, right? Well, first of all, sustainability, not profitability of block space, but I'm just saying like there's going to be a lot of high throughput blockchains that will compete against this basically. So you've got your, you know, Monad coming online. you've got the move ecosystem, you've got other layer twos that are going to like maybe try to commoditize this. Contested a corner of crypto, yeah. Yeah, but then I think secondly, yeah, fee burn, right? Because just like what you want to see is that the fee revenue, the blockchains that you're selling exceeds the cost, which is like issuance.

In our world, that's issuance. I know some people disagree with that, but issuance is kind of like a cost if you're not staking in the network. So ideally you have profitable block space. and they implement some sort of fee burn that delivers this MEV back to the holders of soul. It's sort of there to stakers, right, with Gito and that sort of thing. Like you can get a portion of this MEV,

I believe, but it's not quite as clear how this MEV flows to kind of like the average ordinary Salana staker or sole holder. And then lastly, I actually think MEV can become a problem for networks too, right? If it gets distributed. Right, unaddressed MEV, yeah. if it gets distributed to kind of like a

MEP, unchecked MEP is a massive centralization force. It can be, right? And so that's another thing that will want to monitor long term, but good signals, I think, for Solana. Yeah. So if I wanted to move the goalposts, MEV, the validators, very, very strong. In Solana, I would like to see how MEP per transaction or the efficient, because there's an efficiency of MEV, right? Right now, like in Solana, if you just like slap market sell or market buy on a Solana Dex and you have like a very high slippage tolerance.

Like we know that this has been a problem with Solana MEV because people are just like dumping into into a decks with very high slippage tolerance and then MEV validators are taking a very large cut. I would like to see some sort of like MEV efficiency because if MEVs are taking pennies over a large number of transactions, that's good. If they're taking like hundreds of dollars over a low number of transactions, that's bad. Why is that bad? It's bad for users?

Super bad for users and it's just not sustainable. That just means that's an inefficient market. I think that's kind of like a leading indicator of what will happen if like users feel like they're getting jacked up over MEV costs, right? And they're being sandwich attack, that sort of thing. Like my theory is they just go to another chain where that doesn't happen, right? As part of the kind of the commoditization type story, which would kind of happen. But the meme coins have to move there because the users will follow the meme coins.

Yeah, that's true. And that, I think, accounts for a lot of this is Salana has absolutely dominated the meme coin narrative this cycle, which has been super, super hot. All right, David, we got a lot more to cover. What's coming up? Coming up next, Robin Hood receives a Wells notice, but they're not giving up. They're joining the pro-crypto army. Biden's got a veto vote for crypto coming, but Trump has taken the opportunity to push back. Crypto is becoming a pretty partisan crypto issue this election cycle.

And then Gary is on CNBC talking smack. So we're going to play those videos and comment on them. So you're going to hear all of that and more. But first, a moment to talk about some of these fantastic sponsors that make this show if possible. If you want a crypto trading experience backed by world-class security and award-winning support teams, then head over to Cracken. One of the longest-standing and most secure crypto platforms in the world. Cracken is on a journey to build a more accessible, inclusive and fair financial system,

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Cartezzie's grant application page to apply today. And if you're not a developer, those with staked CTSI can take part in the governance process and vote on whether or not a proposal should be funded. Make sure your vote ready by staking your CTSI before the vote's open. Robin Hood receives a Wells notice from the SEC, and they are joining the ranks of all the other crypto companies who are now also fighting the SEC. Robin Hood says they're just not going down silently. They are going to fight the SEC in the courts. And so Dan Gallagher, Robin Hood's CLO's chief legal officer says, after years of good faith attempts to work with the SEC for regulatory clarity, including our well-known attempt to come in and register, we are disappointed that the agency has decided to issue a Wells notice relating to our U.S. crypto business. Vlad, the CEO and co-founder says, while we strive to maintain positive and productive relationships with our regulators, if necessary, we will use our resources

to contest this matter in courts with the intent of both defending our crypto business and establishing regulatory clarity with the United States for the benefit of our customers. So Gary Gensler and the SEC coming after Robin Hood's specifically crypto side of the business, Robin Hood, of the most compliant and rigorous and constrained crypto suppliers. and cautious and conservative than Coinbase and Crack. There's only like 20, 30, like, crypto assets on Robin Hood, and they got served to Wells Notice. And so Robin Hood, a very, like, large and well-resourced company is, once again, like,

joining the crypto army to fight the SEC in court. So, LFG. It's interesting. So this is number five, right, of like the kind of the big, big names, U.S.-based companies, right? So we've got Metamask Consensus, of course. We've got Uniswap. We've got Cracken and Coinbase and now Robin Hood.

What's interesting is all of the... the other four companies came directly from like their crypto native companies, whereas Robin Hood is fintech and they're trying to expand into crypto and have done so quite successfully. It's also interesting. Robin Hood has a non-custodial wallet. So I bet that's on the docket for the Wells notice as well. But how did investors react to this, right? Because Robin Hood is a publicly traded company and probably has a lot of traditional trad-fi types of investors. Did that spook people? Yeah, so Hood, the equity of Robin Hood, had a tiny little blip.

I think it went down from $18, down to $17.60, and then right back up to $18. And so there's market fatigue about the SEC Wells notice. Like, the market actually doesn't care about the Gary Gensler and like SEC attack on crypto. Like the market's pricing it in, basically? It's nerfed. Or it's pricing in nothing because they're saying that this is bullshit and it's not going to affect the market. I mean, Jose says this is the debasement of Wells notices. The Bessing of Wells.

That's what happens when you issue Wells notices like candy. Oh, this is what Jake Trevinsky says. The SEC just sent a Wells notice to Robin Hood. The number they've sent about crypto in recent months is astonishing. It's hard to imagine they would or could bring so many enforcement actions at once. It seems like they're abusing the Wells process as a scare tactic now. This is pretty much unprecedented. I mean, think of all these Wells notices that have been recently sent.

We don't even know if we're done. My question, David, is what's the legal theory of this? Like, the SEC is, as you said, dishing out Wells notices like candy, but don't they have to win a case? Like, isn't the correct order of- No, technically, no, they don't. Like, wouldn't the correct normal order of operation be like, do a Wells notice for one company, see if you win in court based on all crypto assets are security and non-custodial wallets or non-compliant? All of these charges are very similar for each of these companies, right?

And then based on that, you'll get a reaction from the market. They'll stop doing it or whatever. And then take the offenders to court. They're not doing that. It's just like a blanket D-D-U-S attack, which like makes me think that this is not about winning in court at all. This is about creating a chilling effect. This is just about doing it. They don't care about the outcome.

They just want to do it. I don't think winning a case is the point here or maybe it was never the point. So David, Gary is doing appearances. Whenever he does something like this, he makes an appearance on CNBC on Squatbox. So they want to talk to him about-crylinson. Did you get this a whole six-minute video? And it will both enraged you, but kind of captures mindset. Here's how it opens.

I'm going to play this. One of the things I wanted to ask you is when you look at the headlines today around what the SEC is doing and what your priorities are, it's hard to tell how much of your focus today is on the stock market writ large versus the world of crypto and trying to figure out the future of Ethereum and other things. How do you see it? Well, I see it this way. We oversee a $110 trillion capital market. About half of that's the stock market. Half, as you might know, is the bond markets and other markets. Crypto is a small piece of our overall markets.

But it's an outsized piece of the scams and frauds and problems in our markets, because without prejudging any one token, much of this field is non-compliant with the protections of our securities laws. And so thus, you end up with like an outsized ratio of journalist questions and cryptojournalists to market cap. But is that a function also of the fact that that's where your attention is to? No, it's a function of where your attention is. Think about it.

I've been on your show what? A dozen times. And every show you ask about crypto. And my guessing is this will be a majority crypto interview. while the capital markets are 110 trillion. So it's also about where the financial media is going. Gaslighting. Yeah, this is like, this is the tenure of the entire interview, David.

And basically, Gary is very triggered that he's being asked crypto questions. And the interviewer's like, you're being asked crypto questions because you're dropping Wells notices. Yeah. Like, the SEC doesn't usually do this. And you just dropped one on Robin Hood. So he goes on to quote what Vlad, the CEO of Robin Hood said against the SEC. and Gary is just like increasingly frustrated this entire time that they keep focusing on on crypto. But it's because he is disproportionately focusing on attacking crypto.

Dude, this is just like, you know, the Leslie Nielsen gift from Naked Gun where there's like the exploding building behind him. And he's like, nothing to see here. Please disperse. All right. This is an insane level of gaslighting. I want to play this other clip from the interview too because I think it's relevant. Here it is. It's a Gary on disclosures in crypto. The field of crypto assets, without prejudging any one of them, many of those tokens are securities under the law of the land as interpreted by the U.S. Supreme Court.

So we follow that law. And you, the investors, are not getting the required or needed disclosures about those assets. And so, like, this is earnings seasons right now, Andrew. And everybody's asking about what's the earnings release and how many companies are beating earnings or falling behind and so forth. Where is the disclosures from these crypto tokens similar to? I don't know how many times we have to say this, but the catch 22 of Gary Gensler saying there's no like all of the investor protections around crypto assets are terrible.

Like there's no disclosures around crypto assets. Investors are getting the raw end of the deal. That's what we're saying about the mess. meta, the points meta that people have been forced into, cornered into, because you cannot come in and register. He is creating the reality that he is complaining about. This whole line of, without prejudging any one of them, many of the tokens are securities under the law of the land as interpreted by the Supreme Court. No, bro, as interpreted by you, you're just using the Supreme Court as your escape. The Supreme Court is saying this.

Like, no, you're saying this. David, David. And then he's saying, like, there aren't sufficient disclosures from these tokens. what the actual F if any team actually made any sort of disclosure about like here's what a token gets you here the right side of token gets you they're going to get the bandhammer from Gary Gensler

it's just the biggest most gaslighting catch 22 that I've ever fucking seen excuse my language it's so gaslighting and it's even worse than what you're saying he's not acknowledging the superior disclosures that crypto already has the interviewer goes on to ask him about Ethereum right and of course he doesn't

like answering any questions well let's talk about Ethereum Gary says Ethereum and all crypto assets don't have disclosures. Here's the reality. Ethereum issues a decentralized earnings report. He was talking about earnings season, a earnings report every 12 seconds. Okay? You can see it all.

And anybody with an internet connection can audit this. Anyone can access it. It's completely open source. You can see literally how much revenue is going to validators and like the profit on this revenue. This is also true of many defy protocols that you can see that the cash flows on chain. This is better than a quarterly earnings report. It's like real-time data. And instead of the SEC going to Ethereum, just connecting, they have this database for all of those disclosures. It's called the Edgar Database, right? All of the filings are listening for a company, if you're a security,

you have to disclose there. Why don't they just go connect the Edgar database to an Ethereum node, right? The disclosures are freaking there. It's like this is the gasoline, David. It was never about disclosures. It's just not about disclosures. It's not about disclosures. It's not a about protecting investors. It's about control. And it always was about control. Suppressing the industry. And he might think he can gaslight kind of like the trad users who just don't, have never been to doing analytics, like can't actually go to token terminal. Can't see it. Oh, frauds and crypto. Oh, I've heard of those. He can't gaslight us though. I'm like, I prefer these earnings reports to the quarterly things that I get from the SEC. It's like real time's open source. Oh, wow. We could go on, David. But that's not all this

week. It gets worse. The Biden administration has made a statement of administration policy saying that they strongly oppose the passage of House Resolution Bill 109. Ryan, what is this? What's 109? What's going on here? Yeah, basically, this is, this is Biden saying that they are going to veto this House resolution bill. Okay. So there's a bill in the House. Yeah, this is a bill in the House. We'll get to that in a second. But I think that this is the most explicit FU that we've seen from the Biden administration directly against crypto. It's like most of the time it's been through kind of like the SEC or FinC, or FinC, Treasury, all of these things. This is Biden actually saying, hey, if this legislation comes to my desk, I will veto it. So let's talk about it. Let's give some background on this,

because House Resolution 109, like what is this? Okay, so the background context right now is today, in today's environment, U.S. banks can't really custody crypto. The reason why, I don't know people know this, but it's because about two years ago, so this is March in 2022, the SEC, again, it's Gary, the SEC pushed through an obscure accounting rule. This was called SAB 102. And in the words of the banks, this is the bank saying that, this is not me, Saab 102 effectively precludes banks from offering digital asset custody at scale, since placing the value of client assets on their balance sheet will impact certain capital, liquidity, and other prudential requirements. It basically means

no U.S. bank can custody crypto because if they do, they have to like house all of the reserves. It messes up their accounting. It basically is a loophole to make it impossible for banks to custody assets. And there's two notes on this that are important going into this. This is not how any other asset is treated. For custodians, there's all sorts of, you know, like custodial assets out there from like property, rentals, you know, securities, all of these things. This accounting requirement is not required for any other thing other than digital assets. other than crypto, right? Because that would be crazy. It's like the custodial service is sort of a known thing. So this is an exclusion for crypto. And also, the way they SEC did this back in March 22

was sneaky, like over the top sneaky. They didn't do administrative procedural rulemaking. You don't rulemaking with commentary. That's what the law requires, right? They didn't like sneaky a backdoor way and they just pushed it in. So what's happening right now, David, in real time, Congress caught wind of all of this, the SAB 102 thing, because they didn't really realize what was going on. You know, they're busy. They're focusing on many things, I suppose. And they're trying to reverse it.

Okay. So they're trying to reverse SAB 102. That's the House resolution that you just mentioned. And that's what's being, that's what's in front of Congress right now. And then this is Biden saying, hey, if you guys pass this in Congress, if it gets through the House and Senate, I will veto it. And the Biden administration says he would veto it because it would disqualify. disrupt the SEC's work to protect investors in crypto assets markets and to safeguard the broader

financial system. So that's the reason he's giving to veto it. So what's happening right now is this bill is in the house. It actually, just as of yesterday, it passed. So it passed the house. You've got to pass the house. And then it goes to the Senate. And we want it to pass. We like passing. That's good for us. We want it to pass just because like banks are private institutions. They should have the ability to custody crypto assets as well. What do banks do? Banks do? Banks custody stuff. Yeah, I mean, obviously we favor bankless, you know, custody of your own keys, but there are situations where you want a custodial service to house your private keys, and that's okay, too. We don't want an Operation choke point type of situation. Anyway, this passed, and look at the

numbers here. 207 Republicans in the House and 21 Democrats. What's significant is actually the number of Democrats that voted for this because they have to go very much against the Elizabeth Warren party line. It's 21 Democrats that defected from the party lines of the establishment Democrats. Yes, basically. This is Jake Zervinsky who's commenting, Sab 121 is illogical and illegal. The SEC adopted it in violation of the CRA and APA for no reason other than to harm the crypto industry. The White House should have walked away from this mess instead of doubling down on attacking U.S. companies, not smart in an election year. So this goes back to our episode that we did with a lot of people gave us great feedback on this one episode with Joe Lubin and the consensus.

case against the SEC, where Joe Lubin is just putting on, just like saying the quiet part out loud. Like, this is a conspiracy to just completely suppress crypto out of the Biden administration. And in an election year, Biden is saying, hey, like, just we're doing, we're doing the full suppression. Like, no, you don't enter crypto assets into our traditional financial system. Banks, I know your guys' is one job is to custody stuff, but you can't custody crypto. We are enforcing that choice upon you. And then meanwhile, Gary Gensler, like an arm of the Biden. administration is issuing Wells notices to any company that touches crypto. So it's just a full suppression of the industry. Well, and here's the crazy, here's the thing that doesn't make

sense to me is why are they doing this before November? Right. Even if Biden loses the election, I mean, he's still in office after November. Why not like pass it then? Yeah, because like, who is the marginal voter that's like, oh, Biden is suppressing the crypto industry? I'm going to vote for him because of that. Exactly. Who is that voter? So I asked, I asked Jake Trubinsky this question. Like, what are they thinking over there? Why are they going full Kim Jong-un on crypto before November? Like, how does this make sense? And Jake's take is it's an exercise in partisan wagon circling.

The administration can't admit the SEC has done anything wrong and the Democrats have to oppose the Republicans. So. So dumb. It's super dumb. So let's get into the Trump response to this because Trump was asked a crypto question about, like, how his approach to crypto is. And you can just tell it is a direct response. Like, oh, the Democrats don't like. like crypto? Well, therefore I like it.

Yeah. And you should vote for me because of it. Let's play the video. Yeah. Biden doesn't even know what it is. If you ask Biden. Sir, are you for or against crypto? What's that? Get me off the stage. You say, get me off the stage. No, he has no idea. But look, against her is very much against it. The Democrats are very much against it.

And I say this. A lot of people are very much for it. Probably a lot of the people in this group. and I'm fine with it. I want to make sure it's good and solid and everything else, but I'm good with it. And if you like crypto in any form, and it comes in a lot of different forms, if you're in favor of crypto,

you better move for Trump. So, David, what that does is this makes crypto an election issue. Yep. And this is back to it. And they just gave Trump the silver platter of like the crypto single issue voter. If you are a crypto single issue voter, like Biden wants to ban it. Gary Gensler wants to ban it.

it. Gary Gensler is Biden and Trump just said like, well, I'll, I don't, he doesn't even have to follow through on supporting it. He just has to not ban it. A hundred percent. It's just the game theory of it. If the Democrats are saying one thing for the for the Trump administration, he's going to go to the other side and try to get votes and try to appeal to this demographic. And the question of can you Trump, can you trust Trump or not to like follow through this promise? It doesn't matter. It doesn't even matter at this point in time. It's become an election issue and it's going to be a piece of it. I mean, this leads to the question that a lot of people are asking is like, okay, what happened here? Like, do the Democrats hate crypto? We've kind of seen

the trajectory of this a little bit. And one thing I'll just say to people is like, not all Democrats hate crypto. You can actually go to the Coinbase Stand with Crypto website, which is fantastic. And you like sort by Democrats and their stance on crypto as like pro-crypto. And you can see a lot of folks here. Like a lot of, like we've talked to members of Congress, Richie Torres is a Democrat who is in favor of crypto. So it's definitely not all of them. But it does seem to be a strong contingent, particularly with access into the executive branch of the Biden White House, the anti-Crypto army led by Elizabeth Warren that are really pushing down these positions. So do we- It's the establishment Democrats. It's incumbent Democrats.

I just, I don't even know if we know where Biden like truly stands on this issue. I don't think Biden cares. I don't think he has an opinion on it. So in the absence of not having a strong opinion, right, that decision kind of gets delegated to the Elizabeth Warrens of the world and the anti-tripto army, right? And this is where Joe Lovin says the banking sector of the incumbents have found their wedge into the political sphere through the Elizabeth Warren incumbent Democrats types who have the ear of Biden. That's right. And it is a interesting you say wedge because it is a wedge issue. I think some people will just say, well, like, okay, sure. The bankless podcast cares about these issues. and there are like some, like greater than zero percentage of single issue crypto voters. But really, it's not going to swing any election, right? This doesn't matter.

And that's why they're doing it. So like they can do all of this stuff because they know crypto voters don't participate or don't care or there's not enough of them. There's actually some interesting data on that that's been put out last week by a paradigm. Really interesting poll that fills in some blanks. Basically, 31% of voters, this is a poll for just swing states, like the states that matter for Biden. If 31% of votes in the swing states are crypto positive and 40% of them say it's a major issue.

So if you kind of distill that, that's about 12% of the electorate overall that is crypto positive and also says it's a major issue for them. So 12% is not small, David. No, that's huge, dude. I kind of didn't expect that. This is a poll coming out of the blockchain association, so there's a conflict of neutrality there. For sure. But like still, if that is at all direction, correct.

What if it's like, exactly? If it was five percent, I would still be impressed. Well, because some of the elections in some of these swing states are going to be so tight. So to me, this is like a complete cell phone move. This is a huge letter. By the Democrats. And wow, I guess crypto just became an election issue and we'll see how that plays out. Yeah.

Yeah, these are facts and circumstances that I will not be bringing up with my family. What do we got coming up? Coming up next, token launches, friend tech mode, all launch their token. We got an update on the eigen layer stake drops from the new details there. And then, did FTX creditors do better than holding ETH this cycle? No, because they're getting... Say it ain't so.

Say it ain't so. We'll talk about what the hell that meant. All of that and more. But first, a moment to talk about these fantastic sponsors that make the choice possible, especially Mantle, a preferred yield-bearing layer two. If you haven't explored the Mantle ecosystem, there's a leak in the show-out so you can get started. Mantle, formerly known as BitDAO, is the first Dow-led Web3 ecosystem, all built on top of Mantle's first core product, the Mantle Network,

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Visit Arbitrum.io and get your journey started. in one of the largest Ethereum communities. FTCS creditors will make 118% on their dollar of their claims. Really? Yep. That's right. Yeah. So if you lost $1 in FTX, you'll be getting $1.18 back. Did you be ethys cycle? No, but it's kind of a joke because you probably got pretty close.

And so because of the asset appreciation and because of like the actual strong recovery of assets by the, just like the new administration of FTCS, they are getting more money than what they owe creditors. And so if you're a creditor, you're getting an extra 18 cents on your dollar. You know, it's crazy is, you know, the people administering this bankruptcy, they find this unbelievable. They're like, this never happens. How is this even possible, right? Like the bankruptcy procedures are basically. Only in crypto.

Yeah. How do you dispense your cents on the dollar to all of the creditors? And in this case, they're able to give 118%. And the reason it's 118% is because with interest. And of course, what this means is, like, are you making your money back? You're making it back in Fiat terms. So it's as if Sam Begman-Fried in November of 2022, if you were a deposit into FTX, he just markets sold all your assets. And you're getting the proceeds of that back. So, but you're not getting like if you had sole or if you had EJ. Do you have to pay taxes on the appreciation of your claims? Yeah, 100%. Yeah. You always have to pay taxes, David. But if you had your money stolen from you and then it returned at a tax,

higher level. Do you have to pay taxes on the difference? Yeah, on that delta. It's net income to you. Yeah. Unless you have a boating accident. We don't have this in the agenda, but there's something about this FTCS case that has caused ruffled feathers is that the lawyers, the people managing the estate of the FTCX are being paid $1.5 billion in fees. Oh. And so like there's a conspiracy here. Is that like they are touting around like, yeah, we're giving 118% of like clean people's names back. Sure. Sure. Good job us, but also we're paying ourselves. Well, yeah, I don't know what to say about that, but they have sort of treated this as a hedge fund in a way.

Like, it's all about timing. I mean, look, bankruptcy proceedings are slow, but if they had sold the assets, say, sometime in 2023, you wouldn't get this kind of outcome. So they've been, like, strategically selling the assets and, like, managing it fairly well, I suppose. Like, it could be worse. I don't know if that's worth $1.5 billion, but I guess that's the nature of crypto. That's a hot take. All right, moving on to Frentech. Frentec launched their token last week,

kind of just coming back after being pretty quiet for a number of months since the Frentec mania kind of ended. Along with a token Frentec V2 with a couple of new features. Clubs. So there can be a club now, so instead of owning the keys of one particular person, keys of a club can be made. There's a native decks inside of Frentec.

So they have a Frentec native AMM, which is where all of the Frentec token is getting its liquidity from. And then, of course, inside of the app, liquidity providers who provide ETH and Frentec liquidity to this AMM are getting 1.5% in fees as well. And so what's interesting here is just like you're seeing the vertical integration. This is all on base. But Frentek, the app, is also got its own decks. And so it's getting some just more infrastructure.

Frontex token coming in just under $2 right now. That brings it to a fully diluted valuation of 178,000. million, which I think is pretty like not, it's not over at ski tips, 178 million in comparison to like the high FDV low float tokens that are out there, pretty damn fair. Well, because what, 100% of the supply went to users, basically, the community. Is this true or not? Yeah. I, I, there aren't, there wasn't a blog post. I couldn't really figure out like the distribution, but apparently 100% of Frent tech tokens got sent out to the people that, of users of FrenTech. I claimed mine and it was okay. It was kind of a,

clunky experience, I got to say, but it was okay. But I do think that this token, this chart is one to watch of like Front Tech because this is almost going to be a bell weather for other social-fi types of applications and the narrative around it. So it's definitely an interesting one to watch. Yeah, certainly. The other thing that's interesting about this is that there's, friend tech has been very popular with like the trader influencers out there. But when you claim your friend tech tokens, it goes to an account that everyone knows is yours. And so everyone can see people when they choose to sell their friend tech. And so, like, there's been this, like, people, people are shilling their friend tech,

but then they're also dumping it at the same time. Oh, wow. And now for the first time, people can see the relationship between- Their favorite influencers dumping on them. Their favorite influencers, what they're saying in public versus what they're doing in private. Now we totally know this. So that's been a fun game to watch.

Disclosures, Gary Gensler. We got them. We got them. Okay, moving on to the eigenlayer steak drop update. This happened on the Friday right after we recorded last week. So 100 additional eigen tokens are being allocated to every single wallet. So every single wall is getting 100 eigen tokens. The minimum that you could have gotten before this update was 10.

And so in addition to this 100, now the minimum you're getting is 110. Raising the floor. Raising the floor for everyone. Yeah. Also, just some clarity. Investor vesting, I said this last week. So roll up, this was just like a miscommunication. People made an assumption that investor vesting started before eigentransferability started.

did not that's not true and they just made a clarifying statement that investor vesting of the eigen token does not begin until eigen is transferable and then they provided some more clarity about the transferability targeted date which is around September. Claiming will go live the day that people are listening to this Friday the 10th of May so we're going to start to see like how many people if they are motivated to get around the claiming VPN block but all of that information is going to be surfaced on crypto Twitter for people who are watching. Yeah, I don't have any more takes on this. I feel like we've talked this one to death. I will just notice that people seem pretty happy about this. Yeah, the response was good. Yeah, like the anger about this has completely subsided. Like, portion that was real of that anger and also the portion that was maybe like, um, uh, air drop farmers.

Yeah. Yeah, yeah. And not the only token. So, uh, mode introduce its token. Mode network. It is an OP stack super chain chain. Uh, if you aren't really familiar what MoP mode is, It's basically like a super chain version of Blast. Blast also an OP stack, but not inside of the super chain. Mode is inside of the super chain. And so there's just a bunch of like incentivized gross. David, being in the super chain, does that provide you any like benefit right now? Or it's more of a social benefit with the promise of future integration benefit, yes?

The biggest benefit is you get involved inside of optimism, OP, retroactive public goods funding, which is like people right now on blast or farming blasts gold but mode as a part of the super chain like doing things on mode rewards you with like OP grants and a variety of different things. But the hope is for more than that.

The hope is that the super chain becomes more of an economic zone right where everything is composable and synchronous and that's got to be what optimism is working towards, yes? Yeah. They haven't released details yet but like I think there's some like

people are kind of flying under the radar I think optimism is not like immediately soon, but they're going to drop some like pretty damn cool, like scale, both the scaling and composability innovations. Well, I actually just want to skip ahead while we're talking about optimism. I saw this post. Didn't get a chance to get into it from optimism. Welcoming L3s to the super chain. This is from optimism.

Like, what are they saying with respect to L3? So there are already L3s built on the super chain, right? We've talked about D-Gen, which is kind of built on base. It's built on top of base. And base is a part of the super chain. I don't know if DGent is because DGEN is built using Arbitrum Orbit. And in order to be part of the super chain, you need to be under the same tech stack. You need to be using the OPE stack.

Okay. So what is this? What is an L3 on the super chain? Yeah. So they're giving their like roadmap to how you can be an L3 on optimism and also be a part of the super chain. So there's two main different like innovations here that are differentiated from just a typical OP stack fork, which is like mode network and base and all the other ones. So there's this thing called plasma.

mode, which is like an alternative version of a data availability layer. They've been working on plasma, which is a very old technical innovation that is being resurfaced as a data availability layer. Extremely cheap. I think probably like theoretically minimum cost for data availability. And then also custom gas tokens. So famously DGEN, the DGN chain uses the DGent token as a gas token. And so these are the new features that are being brought into what could be a layer three construction to really allow for a very strong layer three construction. Like if you're going to build a layer three, you need to be super, super fast, super, super quick.

And then you're also going to want to use your own token as a gas. And so these primitives are being standardized so it can be brought into the super chain. David, also something we've been covering is Bitcoin Layer 2. We did this episode with Eric Wall, which I absolutely love. If you want to go deep on Bitcoin Layer 2's and what's real, what's not, you've got to go check that out. But something released last week that we didn't catch or we didn't include in the roll-up and this is a bob, the bob chain, build on Bitcoin. It's a layer two in air quote.

So it's not quite a layer two, but it is using the OP stack. And the social commitment is to transition to being secured by Bitcoin when BitVM as a technology matures. And they're able to do that. So they're growing this with, it's like a platypus because they're growing this with Ethereum, in quotes, technology, like fork of the OP stack. And then eventually they want to use Bitcoin as the size. settlement layer. I think we're going to see a lot of experimentation in the Bitcoin layer two world around this, and it's pretty exciting. Also, I haven't had a chance to listen to your episode. It's right now. It's on the bankless premium feed. So if you're a bankless citizen, you already

have this. It's in my queue to go listen to. But this is around autonomous world, something that you are super excited about. I did notice that there was this chain called Redstone that was deployed. And this is a layer two, but it's focused on. on autonomous worlds. Tell me about Redstone and just pill us on the autonomous world's like concept if you can. Yeah, so now actually we're moving back into the OP stack and the super chain. Redstone is an OP stack layer two. It's actually developed downstream from the actual first ever forking of the OP stack. If people remember OP mud or OPOP craft, which was a Minecraft version of and like it's an, it was an

OP stack fork that ran Minecraft. autonomous worlds is a category of Ethereum development that I actually think is Ethereum's main quest line, which is why I'm so bullish on it. You think it's super big. This is like the logical conclusion of where Ethereum goes. Ethereum, when it starts, it first starts at defy, it ends at autonomous worlds. And so this is what this episode about is about with Justin Glibert from the lattice team. Latus is an OP stack construction. Think of it like an operating system for building autonomous worlds on.

an OP stack chain. An autonomous world is kind of synonymous with a fully on-chain game. So a game with all of the logic put on chain. No logic is left external. Like there's no external dependencies, physics, assets, like the laws of the world are all coded on chain. And this is why they need that plasma mode that I was talking about earlier with just like extremely cheap, basically zero data availability costs. And then also they have like an operating system that they're calling lattice that they're building on top of Redstone. And so this is so experimental. This is so early in this whole like autonomous worlds thing. But like the degree of which I think this is, it's hard to understate. This is the main point of Ethereum. This is the logical conclusion of Ethereum is

basically what is actually really the promised metaverse. But I'll let people who listen to the podcast episode like unpack that take when they listen. Well, in order to get that episode, you got to be on the bankless premium feed. And by the way, and we are glowing up the bankless premium feed. It's now available on Spotify. It's awesome. It's some bonus exclusive episodes further in the frontier. There's actually a code that I want to give today. It's in the show notes, but feed 10. It gives you a 10% discount on a bankless. Yeah, feed. F-E-E-D-10. I don't know how long that's going to last, but go check out that episode as I'm going to. It's in my queue. Okay, we're hopping around and left and right this week. Now we're back into

the world of nation states and their relationship with crypto. But this time, not inside of the Sorry, this time we're talking about Nigeria. What's going on in Nigeria, Ryan? And why is this relevant to crypto? Well, David, it seems like some capital controls are hitting Nigeria. So Nigeria has a version of the SEC and they are proposing some, they've been, there's been a crackdown on Binance right now, just like in general crypto and exchanges. Now there's some legislation like that they're looking to pass that would actually ban peer-to-peer crypto transactions. And why? It's basically because the threat of like crypto trading against the Nigerian currency.

And I say this to say, like, you know, people hearing this will say, well, that's in Nigeria. Like I live in, you know, someplace in Europe or I live in Australia or I live in the U.S. Like, how's that going to affect me? I feel like the example that we're seeing in Nigeria of capital controls is just kind of like front running what is possible in your, you know, local liberal, Western liberal democracy with like a mature, like, you know, system. when you get into a situation where the local currency is under threat from money printing. We talked about this at length in an episode that we just recorded.

I think it's coming out on Monday with Lynn Alden. There's an entire section there on capital controls. And what could happen when a country gets into a situation like the 1930s in the U.S. and like, I guess worldwide where there are threats to the nation-state currency from some sort of non-sovereign asset. In that case, it was gold. The next case, it could be crypto. So I feel like I'm watching this in Nigeria.

You're saying this is a canary in the coal mine. It's a canary in the coal mine. I feel like they're front-running, something really ugly that could happen in other places around the world. I would actually be interested in talking to somebody from the crypto community in Nigeria. I do a bankless episode to just see what it's like on the ground

because I think this is incredibly important to be track of. You're saying the weakness of a fiat currency is going to be a harbinger of capital controls for any. So, like, if you are living in a country with a weak currency, you're likely to see capital controls around crypto sooner rather than later is what you're saying. That's what I'm saying, David. But let's not end on that, okay? Let's end on some good news.

Yeah. This is actually kind of a big deal. Revolut, which is a very big payment provider, I think mainly focusing on Europe, has introduced Revolut X. I guess we love naming things X these days. A cryptocurrency tailored exchange. So Revolut, a trad European-based payment provider has introduced a crypto exchange to, I would assume, to help facilitate foreign exchange transfers and actually exchanging currencies.

It's really cool. Have you ever used Revolut, David? No, I have. Not even forever, no. It's just, it's like Venmo. It's kind of a Venmo type of experience. Only it's, you know, like much, much more European-focused. And much bigger, right?

Like, much more of like a kind of a common standard to use in Europe. Yeah. I think it's a very big deal in many places in Europe. So expanding into crypto the way Robin Hood did. Yeah, that's a pretty big deal, especially for European listeners. So congrats on the dub European listeners. Bankless Station, that was the weekly roll-up. Thank you for running through the weekly news with us.

We got a meme of the week to leave you with. This is from John Wu, which is the classic bell curve meme, but I actually helped. I think this is a great synthesis of what the bell curve meme actually is. Of course, you have the left and the right side of the curves, and then you have like the frustrated man in the middle. The left and right side of the curves labeled as practice here. And then the frustrated man in the middle labeled as theory. I actually really appreciate this because I think like the whole point about being on one,

on the margins of the curve is actually you're putting your money where your mouth is and you're not just theorizing things, but you're putting things into practice. You're actually like you're actually taking risk. You're actually like in the trenches. You're actually taking real learning lessons, not just theorizing about stuff. So appreciate the mean. 100%. And that is a timeless lesson from bankless, of course.

We've always encouraged, like, in order to understand what to invest in in crypto, you actually have to use the apps. You have to use the system. You have to be on the frontier and do stuff in crypto. And crypto pays you to learn about crypto, not just an air-gops. Even if you lose money, you gain lessons. 100%. 100%.

This is like timeless. Which is not cope. How come I'm always stuck in the middle on, like, being frustrated with theory, though, this is not cope. All right, guys, we'll end with this. Wrists and Disclaimers, of course, You know, crypto is risky. You could lose what you put in. But we are headed west. This is the frontier. It's not for everyone, but we're glad you're with us on the bankless journey. See you later.