Bankless - ROLLUP: NFTs Are Hot Again | Macro is Breaking?! | CFTC Prosecuting DAO Token Holders

Starting point is 00:00:00 Everyone has mistakes in crypto. Burry those mistakes deep down. Never think about them. That's my strategy for coping. All the things I've missed, David. How many things have you missed? Oh, my God. I've missed so many things in crypto.

Starting point is 00:00:09 I've missed zero things. There's not a single thing that I've missed. Well, bring that alpha to me, man, because I miss a lot over the years. Bankless Nation, happy 5th Friday of September. September 22. That is, David, how are you doing today? Absolutely fantastic, Ryan. How are you?

Starting point is 00:00:29 Good, man. What are we getting into today? So you know how, was it last week that was like the Cope bear market weekly roll up? Yeah. This one's good one. NFTs came alive this week in a very unexpected ways. So the theme of this week is that NFTs won bigly. So I'm pretty stoked about that.

Starting point is 00:00:50 So is this a glimmer of hope in the midst of the bear market that NFTs had a crazy big week? Oh, I don't really think anyone who's still at this point in this market now is doubtful. about the future of this industry. And I think this is a great example of a build market. Prices are down, but things are moving. There are tectonic shifts happening both in the layer two space and also in the NFT market. And there's like five different massive things that happened.

Starting point is 00:01:18 And we're gonna talk about all of them because Ryan, it's a Friday weekly roll-up where we cover the entire weekly news in crypto. There's always an ambitious endeavor, yet we persevered nonetheless into the frontier with a cup of coffee. Yes, I have my cup of coffee. I have my cup of coffee. I do.

Starting point is 00:01:31 I know it's a little late for you. And by the way, David, the other reason bankless listeners, David is David is bullish today on today's episode is because he just told me he had a fantastic night of sleep. All right? It's a rare occurrence. Yes. And David with like nine plus hours of sleep in him is a different David. He is a bull market David.

Starting point is 00:01:49 Is that fair? Yeah, people who pay attention to know I have troubles with sleep. So when I wake up at somehow 9 a.m. after sleeping all the way through the night, I get real excited. Well, we got some huge wins across the board in NFT to talk about Christie's doing some stuff. Also, the Fidenzer creator just sold out a new batch of NFTs. Yeah, what else in the NFT world, David? New England Patriots football team are going Web 3. What the hell does that mean?

Starting point is 00:02:17 And a massive crypto punk sale. Again, and that's just the tip of the iceberg for what happened this week. Of course, some bad things did happen as well. CFTC going after Dow token holders, joining the ranks of the SEC, doing the regulation by enforcement strategy. We thought the CFTC were the good ones, sad. But we'll get into all these details and more as we go throughout the weekly roll-up. Before we get in, I want to tell you about our friends and sponsors at Swell Network. David and I are angel investors with this product too, because we think it is really cool.

Starting point is 00:02:52 It's decentralizing Ethereum staking. David, tell them about Swell and how people. people can get involved. Yeah, as well is joining the ranks of Rocket Pool and Lido as a decentralized staking as a service Dow. It's permissionless like Rocket Pool, so any node operator can come join the network with a 16-Eath bond, but it's also permissioned, like Lido, where the Dow votes on who is allowed to run a validator node without a bond.

Starting point is 00:03:17 So both trustless and trusted at the same time, trying to go after the best of both worlds. Community owned and operated Dow, they want you in the Discord so that you. They can grow this network out. And so there is a link in the show notes for you to get started with that. I just noticed Mark Cuban's involved in this too. Oh, wow. Wow. Angel Brothers with Mark Cuban.

Starting point is 00:03:37 All right. What's up, Mark? Trying to decentralize staking right here. Yeah, definitely check out that Discord. Get in on the ground floor of this community. They're building something really cool. All right, David, let's get to markets today. Got to start with King Bitcoin.

Starting point is 00:03:49 It is still the king right now. What's it trading at this week at the time of recording? I think this week, Ryan, the price is it. this week set an all-time record for the most flat weeks. We are literally at the same prices we were seven days ago. I think Bitcoin is down 0.15%, which if you're going to call anything flat in crypto, it's that. So start of the week at 19,300, ending the week at 19,300.

Starting point is 00:04:14 We're flat in Bitcoin. We also flat underneath, David? Same story. Start of the week at 1320, ending the week at 1320. Wow. Okay. Flat week. Crab market, as we've called it before, I guess.

Starting point is 00:04:25 the last seven days the crypto markets don't know what to do. How are we looking on the ratio, David? Is that giving us any signal in this? This is the eat the Bitcoin ratio. Well, no, because everything else is flat too. People noticed last week, Ryan, when we skipped over the ETH BTC ratio, we started talking about something about like the eth gas markets, and then we just decided to skip the ratio.

Starting point is 00:04:43 And people were like, oh, yeah, super convenient of David to skip the ratio on like the bad week. Well, were they wrong, David? They might have clued into something, perhaps. But yes, over the two-week period, The ETH-BTC ratio is down. We are down to 0.069. Nice. But this week, it was flat.

Starting point is 00:05:03 This week is flat. Other week is down. Kind of weird to see it down post-merge, I guess. Maybe are you surprised about that? Yeah, I guess it's the merge unwind, but also the bear market. Again, the merge trade is never about the week after the merge or the month after the merge. It's about the year after the merge. And a year from now, David's going to be saying,

Starting point is 00:05:25 The next three to five years after the merge. Not yet. Not priced in yet, guys. Give a time, all right? Give that supply burn some time to activate fully. Are we a good burn day today, by the way. We'll talk about that. How about cryptocurrency market caps as a whole? Are we above or below a trillion dollars? We are below a trillion dollars. We're up on the week though. So where Bitcoin in Ether were the blue chips, were flat, we're actually slightly up on the total crypto market cap, 0.094 trillion, up to 0.097 trillion in the last seven days. So we went up $30 billion in seven days. So that means somebody, some tokens in the low-cap gem categories got an increase in valuation. 30 billion in value created just like that. Wow. Oh, boy. I remember when the crypto market

Starting point is 00:06:14 cap as a whole was less than $30 billion. Now we're just talking about 30 billion. 30 billion. movements, yeah. Yeah, a minor movement from week to week. All right, let's talk about the dollar for a minute because I think. That looks like a bullish chart. Yeah, this is a bullish chart. I kind of wish this was the Bitcoin or ETH chart, but it's not. This is actually a chart for the DXY.

Starting point is 00:06:39 This is the dollar relative to a basket of other fiat currencies, primarily I think the euro. Yeah, the Dixie and the yen. And it looks like it is pumping. Yeah, that's a problem. below right there. Yeah. So yeah, the dollar is just, and other currencies, of course, are going down versus a dollar. The British pound fell off a cliff recently.

Starting point is 00:06:59 That was a big topic in the macro world. The euro is down to like 96 cents on the dollar. The dollar. Everyone wants dollars. Dollars are in. So dollars are pumped. So if you are a dollar holder, it's as if your chart is going up versus like the rest of the world.

Starting point is 00:07:14 So congrats to all dollar holders out there, you fiat trash monkeys. Hey, I'm a dollar holder. Don't call me a trash monkey. Don't you have dollars? You're a trash monkey too. What are you doing? But I will say that this is a parabola, right? And so that's unsustainable.

Starting point is 00:07:33 Have we topped out on this parabola? I don't know. Well, so why is the dollar a wrecking ball? There's this kind of the dollar milkshake theory at play. Who's the gentleman behind the dollar milkshake theory? His name escapes me at the moment, but I know we've had a month. It is. Brett Johnson.

Starting point is 00:07:47 Brett Johnson's the guy. Yeah. Brett Johnson. So this is Brett Johnson basically theory playing out. So markets are down. Half of it. Half of it. What's the other half? The first half is there's demand for the dollar. Okay. The second half is there's the collapse of the demand for the dollar. So like if the dollar pumps, it keeps ongoing. Order of operations. You mean his his dollar milkshake theory has two parts to it. There's a part one. The dollar pumps, pumps, pumps. And then there's part two where it collapses. Correct. Yeah. There's a the anti-dollar milkshake. theory is that the dollar pumps and it doesn't collapse, which I actually think is a pretty fair

Starting point is 00:08:23 take. And when we talked to Noah, unreleased podcast, no opinion, he was like, yeah, everyone really wants dollars right now. And so you could see a world where the dollar grows in relative strength versus all fiat currencies and then doesn't lose that. And it just is the last standing fiat currency. Like, I think that's a... It's what's always interesting is there doesn't seem to be another fiat currency that is like contending the dollar right now, not even close. But, But you're seeing all of liquidity from the other fiat currencies being sucked out. Have you seen those images, David lately, of Hurricane Ian, like Tampa Bay? We're just, like, looking at kind of the coast of Tampa Bay, and all of the tide has been sucked out for the hurricane.

Starting point is 00:09:04 This is like liquidity getting sucked into the dollar. That's what's happening right now from other assets as other assets are going down. We'll talk about bonds in a minute. This is Jim Bianco, though, talking about the dollar. And he says this, the U.S. economy is about 25% of one. world GDP. All right, Americans? Your economy is 25% of world GDP. So you got about a quarter of the GDP. But the dollar is 85% of world trade. 85% of world trade is priced in dollars. So you got a GDP worth about 25% but you have this exorbitant privilege Bianco is talking about of 85% of the world

Starting point is 00:09:41 trade is priced in dollars. You just look at that. The dollar is the absolute champion right now in the fiat currency world. And David, this is a graph I saw actually on Reddit. Look at these numbers. This is year to date of the dollar and all of the other world currencies falling relative to the dollar. You could see the yen in there, down 20%, the pound in there is probably worse by now,

Starting point is 00:10:03 but down 20% at the time of this recording. So the dollar is actually operating as a wrecking ball and sucking all of the liquidity into it. At the same time, David, the bond market, seems to be getting torched. The bond market, okay? These are treasuries and sovereign bonds. This is another tweet from Jim Bianco, I think.

Starting point is 00:10:25 The bond market is very big, very opaque, and very complicated. This is why it blows up regularly. GFC 2008, the repo 2019, COVID-2020. Now? Question mark, question mark, question mark. Is that what's happening now? What have been the warning science trouble is brewing, Jim, goes through some of the tweets above.

Starting point is 00:10:48 But look at this, David. This is year-to-date bond market, okay? The absolute worst. That line looks different than all other lines in there. This is a scary line, okay? And this is good a day total return. Technical analysis by bankless. It's scary.

Starting point is 00:11:03 This looks scary to me. Bloomberg Global Aggregate Index, all right? And we are down in the bond market, down about 20% year-to-day. Look at all of the other, like, starts of years that were bad. The second worst in 1990. which around this time was down about 5%. He where you are in the bond market, down 20% year to date. So bond's not doing too well.

Starting point is 00:11:27 I remember when we had Jim Bianco on, it was about at that first mark, I believe, in the blue line there, that first dip around June. And my mind was like, oh, okay, it's really, really bad. How bad can it get? Can it really get much worse? Maybe it reverses here. And then it got better.

Starting point is 00:11:43 And then it got a lot worse. So this thing has continued this. This line has continued to diverge from all other previous lines. Again, some high-quality technical analysis, not technical analysis, and high-quality market analysis by bank lists. Lines looking different. Lines are different. Lines looking different.

Starting point is 00:11:59 Lines looking bad. Lines going down on the bond market while line going up on the strength of the U.S. dollar. This is another line. This looks scary as well. Here's a great line. This is the tweet, no words. And this is depicting the drawdown in total market capitalization of U.S. equity. and fixed income, of course, fixed income is primarily in the form of bonds, U.S. equity.

Starting point is 00:12:22 We know what those are, that is stocks. And look, we are down 57.8 trillion on the year-to-date basis. What does that mean? Can you explain like on five? This is the total market cap of stocks and fixed income, stocks and bonds, down 57.8 trillion from their all-time highs. Wait, so 57.8 trillion. dollars of wealth is gone in the last like half of a year from all time high yeah from all

Starting point is 00:12:53 time highs that's a that's a lot from whenever the all time market cap yeah it's big the crypto total market cap is uh under one trillion so we've lost we've lost 58 crypto industries in 2021 2021 22 there you go when you put it that way it'll feel so bad david i can not doing great uh mike novagrats makes the comment that this is three x GDP. That's what we're talking about. $57.8 trillion is three X GDP. All right. So if you have your money in equities and you have your money in bonds, which most pensions do, you're feeling a wee bit of pain right now. Like this does not feel good. This does not feel, this does not feel healthy, certainly. And we are actually maybe starting to see signs of pensions get into hard times. Pensions going

Starting point is 00:13:43 bust question mark i don't know too much about this story how it's developing but this is the headline from the wall street journal uk pensions push into hard to sell assets expose them to a cash squeeze that headline sucks yeah that that headline's pretty bad what it means UK pensions push into hard to sell assets that means previously UK pensions bought hard to sell assets and that exposure to them has put them into a cash squeeze Wall Street journal improve your headlines but basically pensions have a bunch of illiquid assets and they can't sell them because of illiquidity crisis. Get advice from bankless headlines, okay? Lines going down. All right? That headlines are terrible. Break it down so that people understand. All right, Wall Street Journal. So that's what's going on.

Starting point is 00:14:30 And I guess the, you know, the macro take here is, it's always been the take as we had sort of that macro sprint back over the summer of just trying to understand what's going on, right? Strengthening dollar bonds getting worse. The question is, how long will bondholders be holding the bag for all of the inflation costs, right? And so the question in my mind and the question that Bianco, another macro analyst that we brought on bank lists have always brought up is how long will the central bank will Jerome Powell continue to tighten? And the answer has always been until things start to break, right? Are these signs of things breaking? I mean, bondholders cannot be happy at this point in time. We have UK pensions, maybe feeling some pressure in a squeeze. Are things

Starting point is 00:15:17 starting to break? Are we starting to see early signs of a fracture? And yet the Fed continues to tighten. So this is the question. And I almost think, David, I want to get some more macro voices on bank list to answer this question of how far can the Fed actually push the markets before things break. Well, it seems to be it's breaking in a number of different ways all at once. There seems to be a number of things that seem to are on like the precipice of breaking the bond market i guess that pushes the pension plans into bad spots stock market's bad down bad like people are going to start to go installment in the stock market uh i mean it's now it's a game of like no wait wait what's going to break first like because there's many different fractures including there's talk of like you know

Starting point is 00:16:01 inflation being sort of a lagging indicator and maybe we're actually entering deflationary territory And, I mean, that could be worrisome because if you tighten too hard too fast and you're only responding to lagging indicators, what if you turn the entire economy into worse than a recession into a deflationary depression? I think the idea that we have a ton of inflation because the Fed was too slow to increase interest rates, followed by now we have a bunch of deflation because the Fed was too slow to pivot and reduce interest rates seems like a reasonable future scenario to have. Seems too simple, though. They've got to see that, right? Let's not, if you're Powell, you're just like, let's not make the same mistake we made by responding too late to the thing. You would hope. Okay.

Starting point is 00:16:46 Are our central bankers smart or are they dumb? I've never been able to answer that question. I've never been able to answer that question. Because sometimes I wonder if they are smart, but they're acting dumb. That could be part of the game too. That whole angle really throws a curveball into the whole analysis. I think they're actually smart. I think they're smart.

Starting point is 00:17:05 dumb. And sometimes they play dumb. I think that's the case. And sometimes they're just dealing with the cards they were dealt. And like kind of the political, yeah, the tools at their disposal as well. But let's talk about the crypto economy, an economy that we understand a little bit more. Ultrasound about money makes me feel so comfortable. I understand everything on this page. So do I. I understand this page. It all makes sense to me. It's just like, I don't have to worry about like it's all algorithming. The lines on this page look good. Yes, the lines look good. All right.

Starting point is 00:17:40 So we are actually not ultrasound though, David, post-merge yet. So we looked at this last week. I got to look at it again this week. We have increased supply of eth, 8,500 eth worth of supply. However, I'm going to click this button. This is a fun button. If we didn't merge, we would have been, how much, David, you said? 180,000.

Starting point is 00:18:03 So 8,500,000. versus 180,000 ether issued. Yeah, that's different. So, eth issuance hanging at about 0.18%. That's the annual issuance as of now. But that can change quickly. And David, maybe we go through that in a few tweets. What's this first tweet we're looking at? Yeah, so this was an interesting take that actually a lot of people in my circles were like, oh, I didn't think about this. This tweet says, minor payouts artificially increase the gas price. Now there are 500,000 less of such regular transactions, I think they mean that, I don't know what on a time frame that is,

Starting point is 00:18:42 maybe on a daily time frame. But basically, here's how this works. Minor pools, if you are an independent miner mining at home or you have just like you're not a massive, you're not massive. You generally join a mining pool. Almost everyone joins a mining pool. You just smoothed out your payouts that way. You group together so that instead of like once a year,

Starting point is 00:19:01 you receive two eth. you get a regular payout of like 0.1-Eth every bit of time, every time you accrue a balance. And so I remember doing this when I was, I would mine with a nanopool. And so I would get every time my threshold, my like balance would hit 0.2Eth, I would get a payout.

Starting point is 00:19:18 It would go to my wallet and nanopool would pay me out. They would mine the block. They would get all the rewards and they would pay me for my hash power. That's how a mining pool works. And so all these individual miners are getting paid smaller micro-transactions. On chain. on chain as they as miners are paid out and so this was a huge part apparently of Ethereum block space consumption of just regular ether payments to miners all over the world as they comprise

Starting point is 00:19:41 these mining pools so eliminating the proof of work mining also eliminated all of these highly regular micro ether payments to all these miners all across the world and so that's a big reason as to why gas prices have been down so much post-merge is because we are no longer paying out like thousands and thousands and thousands of miners all at once all over the world people forgot to consider this. So the take here is the merge made Ethereum transactions cheap? Yeah. What is the gas price right now, David?

Starting point is 00:20:10 15 quay. 15 quay. Yeah, we actually had a huge spike an hour ago. Actually, I think I put that into the week ago. Yeah, you're about to click on that tweet. So we had an NFT drop, I think, I believe. Gas price hit 100 guay. It was between 60 and 100 guay for a good, like, almost hour or so.

Starting point is 00:20:26 And the cool thing is, is that we burned about eight hours worth of Ether. inside of 40 blocks. So, like, in five to 10 minutes, we burned eight hours worth of ether issuance. And, like, this is a point I've been trying to drive home. We could go, like, a year of inflationary ether. And then if another NFT market or NFT bowl or DFI season, whatever, happened, we could burn all of that inflated issued ether for the last year inside of two weeks if the gas markets pick up again.

Starting point is 00:20:56 And so, Dom, a shout out to Dom, but I'm going to, this is going to be the last time I shout this out because I'm totally going to take. all future credit for this. Dom in my replies said, capped issuance, uncapped burn. Nice job, Dom. Caped issuance, uncapped burn. And so that's a great way of illustrating the monetary system of ether. And Dom, every time David tries to steal that from you, I'm going to remind folks where it came from, okay? That's yours, Dom. Take that. The other interesting thing I saw this week is back onto that ultrasound money supply growth chart. You can actually flip back to the actual website. You can see the days of the day's

Starting point is 00:21:30 of the week in the ether issuance. And so you see in the left hand of that curve, that, that waviness where like, you know, the mornings people wake up and they, you know, do some transactions. And then the weekends, ether gets issued because like gas markets are depressed. It's suppressed. This week was almost an ultrasound week. Like that, it looks like it's capped over the last like five or six days. So there hasn't been much issuance over the last five or six days.

Starting point is 00:21:56 And it's the difference between the weekends where the wavy parts where you get the congestion, the rush hour, if you will, of Ethereum, versus the weekdays. Excuse me. The weekdays are where you get the rush hour. The weekends are where you get the supply growth. Wait, wait. You say on Ethereum, we're bankless, yet we're keeping banker hours? Like, we don't do gas transactions on weekends?

Starting point is 00:22:13 The society organizes around human economic activity. Okay. And so, like, yeah, like... Take holidays off. Exactly. The express ways on highways go point in certain directions based on user demand, right? And so I just think it's cool that Ethereum is such a finely-tuned mission. that you can see the days of the week on the supply growth chart, which I think is illustrative

Starting point is 00:22:36 of a great system. Great system. Great system. Really cool. David, let's talk about one of the other pieces of meta we think might exist during this bare market season that we're in, and that is an emphasis on protocol profitability. Love it. This was a really good dashboard put together by the folks at Token Terminal.

Starting point is 00:22:58 and it shows the earnings of all sorts of different defy and layer one protocols. I think actually only Ethereum, Ethereum is the only layer one here. I haven't been able to see the others, but you can actually look at this on a 24-hour day, time horizon, a seven-day, time horizon 30, all the way out to kind of max, and see, let's look, over the last week, Ethereum earned negative $5 million. Negative $5 million. It's not profitable, but that was a lot worse previously when it was issuing so much. So the way you get profits, of course, is like what are the revenue?

Starting point is 00:23:37 What's the revenue of a blockchain? Blockchain sell blocks, as we've said so many times. So the revenue is burnt eth essentially and fees as a result of payment for blocks. And the cost is the issuance itself. And so the earnings over the long run of Eath look, real bad, negative $21 billion in ETH issuance. That went to miners. This is why miners are so toxic.

Starting point is 00:24:05 Sorry to cut you off, but this is $21.7 billion that got handed to miners. So miners got all that money. They got all that money. It was very expensive, is what we would say. It was like a combustion engine relative to a new engine that gets far more electric. And so we have other DFI protocols as well. And you can look, the last seven days, OpenC, made 2 million in earnings.

Starting point is 00:24:29 D-YD-X, we've got Meta-Mask here, we've got Magic Eden here, Lido Finance. What do you make of this dashboard and earnings in general, David? So the first thing I'm noticing on the right side, the earnings is like there's a lot of red. Ethereum negative $343 million over the last 30 days. That's because a lot of the last 30 days had proof of work issuance. But Uniswap, negative $302, I mean, $302, whatever.

Starting point is 00:24:54 OpenC made $904 million. that's why it's a good business. Lido negative 5.9, convex finance, negative 2.8. Ave negative 72,000. So not that that much. GMX, negative 3.4. D-Y-D-X, negative 3.8 million.

Starting point is 00:25:08 Lots of negatives. Lots of negatives. They're all red. The next era of crypto, and crypto is going to die if these things don't flip green. They have to flip green at some point in time. And I think we're going to, I think this is going to be the crescendo of the next bull market,

Starting point is 00:25:24 is that slowly one of these orgs figures out their issuance, their costs, their revenues, and it flips green. And then the next one flips green. And then the next one flips green. And this is going to know it trigger the next bull market, is that these things all start to flip green, and their earnings outweigh their costs. We already have a decent number of things that have flipped green.

Starting point is 00:25:45 OpenC, Metamask, there's centralized companies, so they don't have like protocol issuance. But Maker Dow, green. Perpetual protocol, green. One inch, green. Arbitrum, green. Magic Eden, green. But then if you keep on scrolling down, it's just like red, red, red, red, red,

Starting point is 00:25:57 token issuance, yield farming, like Dow payments, yields incentives, blah, blah, blah, blah, blah. Make it green. If you're part of the Dow that's red, go into your Dow and start making it green so we can have our bull market back. That's what you need to do. Go find profit. I think there's some gems here, too, to be looking at from the investment perspective is investing in profitable protocols might be some alpha.

Starting point is 00:26:20 David, you got to- Crazy alpha. Could you imagine investing in profitable protocol? A crypto protocol that actually makes money. David, we get a lot coming up next. Number one, the CFTC is attacking Dow's next. Sad. Did our good regulator just turn bad? Did they go the way of the SEC?

Starting point is 00:26:38 And also, we're going to talk more about the NFT industry, how it's exploding inactivity. Guys, we'll be right back with the rest of the rollout. But before we do, we want to thank the sponsors that made this episode possible. Juno is bringing crypto-friendly banking straight into your checking account. With Juno, you can send money from your Juno checking. account straight onto a layer two, like Polygon, optimism, Arbitrum, and they have ZK Sync and and stark net support on their way. You can skip the ACH wait times. You can skip all the gas fees and go straight from your checking account to an Ethereum layer two in seconds. Inside Juno, you can

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Starting point is 00:27:56 into the final frontier of crypto economics. So if you're a developer who wants to build your app on a future-proof foundation, which gives your users the best UX possible, check out ZKSync's website at zKSink.io. And yes, there's also going to be a token, so give them a follow on Twitter 2 at ZKSink. The CFTC charges Okie Dow

Starting point is 00:28:16 for an illegal offering of off-chain digital asset trading, registration violations and failing to comply with the Bank Secrecy Act. All normal things to charge something for if they did all of that stuff, but they charged a Dow, and they're going after token holders, which is very new and very different and puts forth an interesting premise that the CFTC will actually have to prove in court that Dow token holders did these things, but that is exactly what the CFTC is going to try and do apparently they are trying to sue a Dow. How that is going to work will be interesting.

Starting point is 00:28:56 I was pretty stunned by this last week when I saw these tweets, David. Pretty disappointed. This is the filing itself. And so the CFTC, which is the Commodity Futures Trading Commission, of course, they regulate commodities in the U.S. And their, I guess, their brother organization is the SEC, which regulates securities. They just issued an order in a filing to charge B0X. BZX, also known as Okie Dal.

Starting point is 00:29:22 It's one of the same thing. I guess they rebranded. And so they are charging the founders, Tom Bean and Kyle Kistner, for a legally offering leveraged and margin retail commodity transactions in digital assets, engaging in activities only registered futures CFTC merchants can perform, and failing to adopt a customer identification program as part of the Bank Secrecy Act compliance program. So these are the charges laid. That in itself is somewhat surprising.

Starting point is 00:29:54 I'm not sure exactly what B0X was into and up to. And the most surprising part about it was not the charges, but who the charges are laid against. This is a tweet from carlo.eath. Yesterday, the CFTC filed a declaration informing the court that it seeks to essentially charge every voting member of Okie Dow via its chat bot and foreign posts. So the CFTC filed a lawsuit against members of the Dow itself.

Starting point is 00:30:23 This is a stunning new development for the space because if approved by the court, it will create legal precedent allowing regulators to claim proof of service of a legal action against every member of the decentralized entity, every member of the Dow via notice to its website. The CFTC claims that it got confirmation that members were served by monitoring the chat posts between Dow members. It remains to be seen how the Dow members. members will mobilize and fight and respond. Stay tuned for more. So the CFTC was actually monitoring chat posts between Dow members, and they are not only charging the founders of this protocol,

Starting point is 00:30:59 they are charging individuals inside of the Dow, particularly those individuals who voted in governance of this protocol. That to me, David, is absolutely stunning, and it is completely unclear that they have jurisdiction over this. This is really a regulation by enforcement type of move by the CFTC. What's interesting here, David, is as you were alluding to earlier, the CFTC has traditionally been kind of crypto-forward, crypto-friendly, curiously innovative. Well, it seemed like the SEC to date has been much more aggressive, you know, like a much more aggressive and hostile and unclear take on the crypto industry, writ large. We haven't previously seen that from the CFTC. And so this is a kind of a stunning move.

Starting point is 00:31:47 And I was very surprised to see it. Yeah, this is this is going to take a while to unpack. There's a lot of things to think about here. I'll always stand by what I say, which is if it can be regulated, then it should be regulated. And so it's interesting to watch the attempt of the CFTC to regulate a Dow. Just because something is a Dow doesn't mean it has immunity, right? And so if if the DAO is doing illegal stuff and those members of that DAO are like KYCed and identified and known to the CFTC, that gives the CFTC kind of the surface area they need to go after the BZX entity, like the DAO itself, if they're going after the individual members. So they're not like taking the BZX like LLC to court because that's not an entity. That's what a DAO is. But they are taking individual members in leadership of the DAO and going after them, which kind of effectively is the same thing.

Starting point is 00:32:41 kind of even scarier if there's no limited liability corporation protecting these individuals. All I see here, Ryan, is like there's probably members of the Dow that are anonymous that the CFTC can't go after because they don't know who they are. All this is doing is promoting and incentivizing anonymity, which is probably bad. I think it's pushing anonymity. It's also pushing defy innovation outside of the borders of the U.S. because why would you do this as a U.S. citizen? This is Jake Trevinsky's take, the CFTC's BZX enforcement action may be the most egregious example of regulation by enforcement in the history of crypto. We've complained at length about the SEC abusing this tactic, but the CFTC has put them to shame. Wow, strong words coming from Jake. He continues,

Starting point is 00:33:25 it's deeply disappointing to see the CFTC damage its own reputation like this among those who care about the future of crypto in the United States, especially at a critical moment, while it pitches itself to Congress as the right agency to regulate digital commodity trades. This is kind of like, you know, the Obi-Wan and Anakin meme of like, you were the chosen one. Yeah. And the CFTC has previously almost promoted itself to Congress and legislators as the group that could both support the regulatory ambitions of the U.S. but also foster innovation for crypto. And it feels like we're almost trading one devil for the other if this is the kind of action

Starting point is 00:34:05 they're going to take against the crypto industry. But here's a bright side, David. I want you to read this tweet from wchues.eath. Sure. He says, a court has to agree with the CFTC for these theories about Dow liability for a token to be meaningful. Basically, if you own the token, are you a Dow member, Dow leader, Dow executor?

Starting point is 00:34:29 The bill continues and says, that's not going to be an easy fight for the CFTC. Chill out everyone. The world hasn't ended. So this is opening a door, but there's still so much left to unpack what is behind this door. So this is going to be an ongoing saga. It's another example of this all gets settled in courts, I guess. We're seeing more of more of that.

Starting point is 00:34:50 I love it when my industry gets settled in courts. Right. There's also a silver lining that there was a commissioner, Summer Mercinger, who dissented. And Hester Purr-style, she wrote an entire dissent on the CFTC's action. And of course, she is a commissioner. So she is representative of the CFTC. But why don't you read her statement here, David, is basically under the headline,

Starting point is 00:35:14 it didn't have to be this way. And she's talking to her own organization by saying that it didn't have to be this way. What does she say? Yeah, basically she says, one small paragraph in the longer dissenting statement says, unfortunately, I cannot support the commission's approach to this particular matter.

Starting point is 00:35:31 Well, I do not condone individuals or entities blatantly violating the CEA or, or our rules. We cannot arbitrarily decide who is accountable for these violations based on an unsupported legal theory, amounting to regulation by enforcement while federal and state policy is developing. For these reasons, I am respectfully dissenting in this matter. Thank you, Summer. Thank you.

Starting point is 00:35:50 Appreciate it. This was surprising out of the CFTC, like we said, like CFTC has always been like the good guy in stark contrast to the CSEC. So I'm kind of hoping this is a little bit of like, not a mistake, but just like, Since it's out of character, the CFTC has like more like, we know Gary Gensler's coming after us. This could be an anomaly out of the CFTC. And that is like perhaps my fingers crossed silver lining. This is an anomaly.

Starting point is 00:36:18 I think that's a good take and that's a hopeful take. I also wonder, I have another take on this and this might be a more pessimistic take on it. And that is that the CFTC is getting drained of its crypto-friendly advocates. So Brian Quintens left the CFTC. He was formerly, you know, a commissioner in the CFTC. Now works in crypto. He now works in crypto. We've also had Christian Carlo, who's the former head of the CFTC on the podcast.

Starting point is 00:36:48 He was very crypto-friendly. He kind of consults and works in crypto. And so I wonder if the only regulators that are left standing or soon to be left-standing will be crypto-unfriendly regulators. Because those that have kind of caused. the crypto bug and see the vision for this thing are just like, I don't want to stick around this agency. I don't want to miss the boat. It's prosecuting crypto. I'm going to get into. So I, I wonder if that's partially what's happening as well. This is, of course, just Ryan's speculation, but that would be a

Starting point is 00:37:20 more pessimistic reading of what's going on. I can definitely see that take. That it seems like a very reasonable take, which is extremely bearish. It's kind of like, do you remember? Crypto is so bullish and such a magnet for talent that it takes all the people that see it away from the regulators where we need them to be. Well, there's this warped view, I think, among regulators too. Do you remember when they were talking about like preparing the White House reports on crypto? And anyone who owned crypto assets actually had to recuse themselves from that. And so it's like that means all of the people who actually understand crypto, like all of the crypto balls. If you understand crypto, you're probably going to want to own some crypto, right? I mean, by nature.

Starting point is 00:38:01 it works. That's kind of the way it works. But now everyone who understands crypto and holds crypto has to now recuse themselves in the process. I mean, it's almost to me, it's just like asking everyone who holds dollars to like recuse themselves from some sort of legislation impacting dollars. Like it's just, you're going to eliminate everyone that kind of understands how the dollar system works. Anyway, that might be what we're up against. But let's move on to some more optimistic takes, David, NFTs, are back, baby. What's going on with Fidenza? You remember the name Tyler Hobbs, Ryan? Tyler Hobbs, the creator of Fidenzas.

Starting point is 00:38:36 I don't remember him, but I do remember Fidenzas, certainly. Yeah, so he, the creative Fidenzas, coming out with his second generative art collection, 900 new NFTs, and he just finished a sale at 14 each. So he raised, raised, revenue, made money of 12,600 ether inside of the sale, 17.6 million. dollars in a bear market and Ryan they are beautiful they are beautiful NFTs uh if you are into this game of generative art oh that one is great they're looking like kind of like patterned embroidery like seashell art kind of thing for the podcast listeners out there but there is some new mechanisms at play here and so this isn't just another art blocks drop that somehow did very very well this is a brand new

Starting point is 00:39:24 style of drop where there was a something called like a strike price where you could bid how much ether willing to pay for an NFT. And then there would be one price selected after the fact. And everyone would pay that same price. And if you overbid, you got some of your ether back. So that was a cool mechanism. And then also, you get to mint your own NFTs. So the people that bought what these things are,

Starting point is 00:39:48 they actually bought a mint pass, not the actual NFT themselves. And so minting will start soon. But if you have a mint pass, you can go into like this kind of create your own, build an NFT algorithm workshop. So the mintor and the artist and the algorithm are all having like this three-way relationship. And so if you, as a MintPass owner,

Starting point is 00:40:09 you can start to tinker with some dials and make your NFT look a particular way and then you get to mint it, which is kind of cool. But overall, I think the big takeaway is that Tyler Hobbes, creator of Fidenza, had an absolutely massively successful NFT drop with this QQL art drop.

Starting point is 00:40:26 That's what it's called QQL, raising $17.6 million in the middle of an era where people thought that art blocks, specifically art blocks, were dead. That's really impressive.

Starting point is 00:40:37 I would not have guessed it. Not in this economy, David. How about Christie's? They're doing something with NFTs. Yeah, Christie's. They were the place, the auction house that sold the Beeple art for $69 million.

Starting point is 00:40:50 Remember that, Ryan? Yes. This is awesome. We're just recapping the bull market right now. Chris's announced the first ever global auction house to host fully on chain sales on Ethereum. So according to Chrissies, all transactions on this new platform, including after an auction will be recorded on Ethereum. And all requisite transactions and compliance tools also integrated streamlining the process that it was at times a strange hybrid of crypto tech and 20th century bureaucracy in the early days of the NFT boom. The launch of Chrissies 3.0 can be seen. I'm reading from the.

Starting point is 00:41:25 announcement here. The launch of Christie's 3.0 can be seen as a direct result of the people sale in which Christie's accepted cryptocurrency ether and allowed buyers to transfer the crypto to the auction house directly from their digital wallets. That sale was orchestrated in part by Chrissy's specialist Noah Davis who subsequently left this firm to go work for Yuga Labs now pioneering the crypto punks. And then also from the Chrissy's website, here's where it gets really, really cool. Straight on the website. What is Chrissy 3.0? Chrisi 3.0 is an on-chain auction platform dedicated to exceptional NFT art, whether you're new to NFTs or already a committed member of the community, discover and bid on exclusive drops curated by Christie's. And then there's the question

Starting point is 00:42:06 like, how do I buy? To bid on Christie's 3.0 auctions, you need to connect a digital wallet. For the best experience, we recommend connecting via a desktop browser using a browser extension such as a MetaMask or Coinbase. After you connected your wallet, you can then set up a Christie's 3.0 account. If you're already a Christie's client, you'll be able to bid without further identity verification. If you're a new user, it will ask you to verify your identity. Once verified, you are good to go. So metamask, Coinbase integration into Kriskis, add some KYC, and boom, you are making bids on the Christie's virtual metaverse auction house. Wow. That's pretty cool. And also the website looks fantastic. This is just like right in the art world, right?

Starting point is 00:42:48 Christy says probably at the center of the art auction house world. And they're basically pivoting and they're saying, stake in the ground, our new auction house, all of our resources are going to be in crypto based on Ethereum. Look at this question from the FAQ's David. What currencies can I use on Christie's 3.0? Christy's 3.0 accepts Ethereum, eth. That's it.

Starting point is 00:43:10 That's the whole thing. This is like NFTs being denominated in ether once again. And blows my mind. if we didn't just live through a crazy NFT bull market and you had told me two years ago that there would be such a website and this would be in that Christie's FAQ, I would have been over the moon excited about the adoption and because I think this is happening during a bear market no one really notices, right? Life goes on. So Ryan, this to me, here's the most bullish scenario for this. The normal Christie's business continues to go on. The regular Fiat like paintings,

Starting point is 00:43:43 physical paintings, you know, analog art. That's still going to go on. But there's also infrastructure for normal analog art to receive a digital correlate, a digital like version of itself. And the reason why this is so bullish for Christie's like this auction house is because the internet is global, right? You have more market market participants

Starting point is 00:44:04 because they don't have to leave their own home. They use internet rails like Ethereum to get money into Christie's. Who can participate in this in Christie's 3.0 versus the actual physical Chrissies is an order like orders of magnitude the scale of the internet right and so you can totally and easily see analog art starting to be auctioned off on Chrissies 3.0 because of the global liquidity of ether and accessibility and so I think you know this is going to start as normal NFTs as we know them but it's going to also start to bleed into like regular boomer analog art also auctioned off on this platform and eventually the art market the physical art market is just

Starting point is 00:44:40 going to be consumed by the digital art market because that's how the that's how technology works. Software eats everything. Yeah, totally agree. Guys, more hot NFT news coming up next. This has been NFT week, NFT Bull Week, I think. Disney's doubling down on NFTs. And so they've just revealed some big things we're going to talk about. Also, Apple wants a ginormous cut of all NFT sales.

Starting point is 00:45:02 What are they talking about? Tim Cook. What are you doing? We'll talk about that. There's so much activity. Guys, we'll be right back. But before we do, we want to thank the sponsors that made this. episode possible. Rocket pool is your friendly decentralized Ethereum staking protocol. You can stake

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Starting point is 00:45:50 It's yield farming, but with Ethereum nodes. You can get started at rocket pool.net, and also join the rocket pool community in their Discord. You can find me hanging out there sometimes in the chat, so I'll see you there. Lens Protocol is an open-source tech stack for building decentralized social media applications. It is the new era for social media. We all have toxic relationships with our Web 2 apps. We want to break up with them, but we can't. These applications own our digital lives and all the relationships that we've made. We need to break through to a new paradigm of social networking applications that we control rather than them controlling us. Lens isn't a social

Starting point is 00:46:20 media app. It's a protocol to let 1,000 Web3 social apps bloom. Lens is a permissionless and transparent social graph that is owned by the user. In crypto, we say not your keys, not your crypto, and on Lens, we say not your keys, not your profile. With Lens, your followers go with you to whatever social media application you want to use. And instead of being by an algorithm chosen by that app, Lens lets you choose the way you want to experience your social media. Lens is the last social media handle that you'll ever need to create. So in order to get started, there is a secret code word in the show notes. Enter that code word in the Google Forum links, and you'll be well on your way to entering the world of Web3 Social. Disney is revealing

Starting point is 00:46:56 some of its intentions with a job listing because they are looking to hire a principal council specializing in NFTs, the Metaverse, blockchain technology, and decentralized finance, to guide the company through what appears to be its coming and aggressive push into Web3. So there's a job posting for this position explaining that the attorney, the name of this position, will provide legal advice and support for global NFT products, made in collaboration with Disney media and entertainment distribution, as well as Disney parks, experience, and products. Ryan, to me, that sounds like the full thing. That sounds like the whole of Disney.

Starting point is 00:47:36 Marvel, Disney. The princesses. It's all of it. And additionally, the announcement continues or the article continues. The principal counsel will provide day-to-day legal advice to Disney legal and business teams on NFT and cryptocurrency related matters and issues and provide thought leadership and strategic direction on products involving digital currency and blockchain technology. Wow, that doesn't sound like a, hey, who's some Zoom or millennial kid who knows about NFTs. This sounds like, hey, who is a. an operator who's done some awesome bang-up job in the Web 2 space that is all super

Starting point is 00:48:11 knowledgeable about NFTs and wants to lead the entire Disney company into this NFT thing. So this is going to be a huge hire. Congratulations ahead of time to whoever lands this job. It's going to be some Chad, probably. And wow. I mean, think about the surface area between Disney and NFTs. It's got to be infinite. Yeah, I think one thing, you know, we've been talking so much about like building the,

Starting point is 00:48:36 through the bear market, right? And when I think of builders, I think of like just all of the DFI builders that we've had on the podcast, you know, the Hayden Adams and the, you know, the Stonis and the cane, Warwicks and all of these people, of course. But this season of the bear market, it's actually companies. It's actually corporations that were like, huh, that NFT thing was incredible. And we know it's not over. And so then we just saw Christie's open up their auction house in the bear market. Now we're seeing Disney doubling down and hiring a,

Starting point is 00:49:07 strategic position to guide all of their global NFT efforts during the bear market, right? These companies are building during the bear market as well. And I think we'll see the fruits of that on the other side when things get frothy again. Ryan, I remember your take that NFTs are less threatening to the Web 2 traditional world than Defi is to the banks. Defi disrupts the banks. NFTs enhances the rest of the world. and I think we're definitely seeing that take play out.

Starting point is 00:49:39 And now as a Defi bro, I'm like, damn, those NFT people are having a lot of fun. I'm sorry, you're an NFT bro too if you want to be, David. What's this? The Patriots with NFTs? Yeah, the New England Patriots for the international listeners, that's a football team. Sorry, an American football team. Yes. Headline reads, well, no, not soccer.

Starting point is 00:50:02 Yes, not soccer. Yes. NFT software company Chain inks four-year deal with the New England Patriots, a deal with Kraft Group, which I'm not familiar with, who makes Chain, the official blockchain and Web3 sponsor of the Patriots, the New England Revolution, Gillette Stadium, and Patriot Place. So the Patriots football team has a official blockchain and Web3 sponsorship in the Craft Group. David, who's your favorite player in the Patriots, huh?

Starting point is 00:50:31 is Tom Brady on the Patriots? I'm going to say yes because I have no idea. Well, first off, he's definitely not my favorite player. Is Tom Brady on? It's just the only one that David can pick up. Who does Tom Brady play for? Huge football fans on Bankless. He plays for, oh, he's now on the Tampa Bay Buccaneers.

Starting point is 00:50:51 What the hell did that happen? We're about to get destroyed in the comments. Oh, we are going to get absolutely destroyed. Should we cut this? Hang on, can I make sure that he was actually on the Patriots? He better have been, or we're definitely cutting this. this is not making a show for this wrong? Yeah, it was a Patriots.

Starting point is 00:51:06 It was a Patriots. I got that one. I knew it. We just so keep up with football all the time since crypto. That's all it is. You want to hear a fun fact, Ryan, about football? Yeah. I played on my high school's football team.

Starting point is 00:51:19 You did? Yeah. Cool position. Wide receiver and kicker. Wow. Like, was it fun? Were you good? No.

Starting point is 00:51:26 Oh, I was a good kicker. I was super good kicker. I was called. I was called kicker. That's what they called me. That was my name on the team. They called me kicker. It wasn't endearing, let me tell you.

Starting point is 00:51:38 Kicker. Get the water for us. That's awesome. David, punks are still hot too. More NFT boldishness. A Cryptopunk 2924, aka an ape hoodie punk. If you're in the punk world,

Starting point is 00:51:53 you know both apes are extremely rare and a hoodie is a well-sought-after property was sold for $4.4 million. casual, casual crypto punk sale. I will say, like, when I bought my Cryptopunk, it was like, all right,

Starting point is 00:52:06 I'm not that much of an NFT bro, but I want to have exposure, so I'll just buy this Cryptopunk because it feels safe. It feels like buying Bitcoin after its second bubble, which is way safer than buying after its first bubble

Starting point is 00:52:19 because you don't know if it's ever going to come back. So yeah, now Cryptopunks have the Lindy effect. And so I can't wait for the third bubble of cryptox. Well, I bet you're like, this is the kind of headline

Starting point is 00:52:28 straight from the bull market. It almost feels like an anachronism. It almost feels completely out of place here, right? Yeah, except that 3,300 ETH in the bull market would have been like $20 million, not $4.4 million. That is true. There's still a lot of ETH, right? And if you're buying for ETH denominated returns, like, Cryptoponings haven't gone down that bad in ETH denominated terms. There's a small chance that that 3,300 ether sale was also simultaneously a tax loss harvesting event for the buyer.

Starting point is 00:52:55 Okay. So this might not be as bullish as it appears? No, I'm kidding. By the way, I love that you have no idea what team Tom Brady plays for, but you can tell me about a hooded crypto punk and why it's valuable. This is bankless in a nutshell. What about this? Is this another?

Starting point is 00:53:12 Yeah, I saw this tweet. Yeah, so Pablo Pekonso.eath, great name, by the way, retweets the sale of this crypto punk and says five years ago, I sold this crypto punk for $1,400. Ouch. Wow. No. I mean, I mean. Sorry, Pablo.

Starting point is 00:53:28 No, okay. But he's got a crypto punk in his profile. He's doing okay. He's got a great punk in his profile. Yeah. But like, remember, you can't really hate on when you sell something five years ago. Plus, you don't know. You can't hate on it.

Starting point is 00:53:39 But Pablo, that's a fun fact. Yeah. I hope you feel good about it. Everyone has mistakes in crypto. bury those mistakes deep down. Never think about them. That's my strategy for coping. All the things I've missed, David.

Starting point is 00:53:49 How many things have you missed? Oh, my God. I've missed so many things in crypto. I've missed. I've missed. There's not a single thing that I've missed. Well, bring that alpha to me, man, because I miss a lot over the years.

Starting point is 00:54:00 But you didn't miss this on Instagram. This is from your Instagram. I think this is a recording. What are we looking at? Yeah, this is one of my friends who I, this is the first time I saw this. We reported on NFTs on Instagram a while ago, but it was with very select artists. And so this is the first NFT that I've seen in my own personal Instagram feed, in the wild, yeah. And so it's nice because it's a cool cat.

Starting point is 00:54:21 So we're looking at a cool cat here. But you know it's an NFT because these NFTs and Instagram, have a little shine to them. They like, they kind of like shine. They gloss over a little bit. Yeah. Is this the gradient you're talking about? Is that the shine?

Starting point is 00:54:34 Well, you need to play it because this is a video. So you need to play it. But here, there it is. Oh, I see it. A little shine. Yeah. A little glimmer. Yeah.

Starting point is 00:54:39 Only NFTs get that. Only NFTs get that. Yes, exactly. That's right. This is a screen cap recording. So we can't do this. But there's a little digital collectible tab in the bottom left of the NFT. And if you tap on that, it tells you what Ethereum.

Starting point is 00:54:52 No way. What chain it's on? Ethereum. Yeah. Really. Yeah. and who owns it. Yeah.

Starting point is 00:54:56 This is still like, I think, beta launch. So it's not available to everyone. Nope, it's available to everyone. Yeah. So I was going to screen record my profile of like you can go down. Okay, so here's how you do this. Everyone pull out your Instagram and follow along. If you have an Instagram, you go and you go to your profile, the bottom and the bottom

Starting point is 00:55:15 right. And then you hit the menu. I'm doing it on my phone so the listeners and viewers can follow along. Your profile. And then the top right, the drop down menu, the menu button. And there is a. Digital collectibles. I see it.

Starting point is 00:55:27 Oh my God. Digital collectibles. It is rolled out to absolutely everyone. Share digital collectibles with followers and fans. Connected digital wallet. So I click Get Started. I hit to tap, get started, connect.

Starting point is 00:55:39 Oh my God. Metamask. Dapper. Metamask rainbow. Yeah. What? How awesome, dude. This is bear market stuff, man.

Starting point is 00:55:47 I was just saying corporations are building. This is meta. How many billions of users they have? Like two points something. All of them. They have almost all of the humans at this point in time. I'm literally connecting my metamask and you see this panda behind me. Yeah.

Starting point is 00:56:03 Oh, you have it on your metamask? I was going to do this with my crypto punk, but my crypto punk is not on a hot wallet. Here's the thing. I'm super private with my Instagram. Like I have it locked down. Yeah, you don't even have me on there. I don't. I've noticed.

Starting point is 00:56:17 It's super locked down. So is mine. That's why I didn't put up. That's why I didn't put up mine. own Instagram account or follow David. Don't follow me. Don't follow me. I delete it. I have less than 500 followers because I delete everyone. Well, when are you going to change that though? Now you can be an NFT influencer on Instagram. Nope. Not going to happen? Nope. It's Twitter only. Twitter is for like business is crypto. Instagram is for friends. That's just my life. That's the way I decided to do it. My Instagram is

Starting point is 00:56:45 specifically for people I have met in real life. Yeah. There you go. And like the last time I talked about that's on bank list, I got roughly like 300 follows on my Instagram account. I was like, you guys didn't fucking listen, Skari. No, no, no, no. This is the thing with crypto. You tell people not to do the thing, and then it makes them more bullish about doing the thing. Don't buy my token.

Starting point is 00:57:06 Don't buy my token. Or it's every time. But you know what's crazy about this? Meanwhile, so we've got one tech giant, which is adding NFTs to their social media profile. Meanwhile, Apple wants to charge a 30% cut on all NFT sales. Shocker. If there's an app, like say, open sales.

Starting point is 00:57:24 for example, I'm imagining, that you download from the Apple store and put that app on your iPhone, they want 30% of all of those sales. Like, that just doesn't work in crypto. What are you guys talking about? That's not going to do it. The fact that this was even, OpenC charges 2.5%. Looks rare charges 2%. Like, how did we ever become okay with 30%?

Starting point is 00:57:53 How are we ever? okay with that. Your take rate is my opportunity, right? That's the whole thing around crypto. Like these margins, these 30% margins can't last, not in Web 3. We'll just bypass Apple somehow, I suppose. The Salana, well, the Salonophone, that's what this was for. I guess I don't really know a viable way aside from using the open internet, right, rather than app stores to kind of bypass these sorts of fees. But this can't continue. But Apple thinks it can. They think they've got a monopoly on the Web 3 NFT space.

Starting point is 00:58:24 30% will follow that. They're just going to foster more and more innovation faster. Have you been following Epic? Epic games? No, I haven't been following it. Well, Tim Sweeney has been taking shots at Apple for a long time. There's been some beef between Epic and Apple.

Starting point is 00:58:41 I remember. I remember, yeah. This is Tim Sweeney tweet about this 30% NFT charge. Now Apple is killing all NFT app businesses it can't tax, crushing another nascent technology that could rival its grotesquely, overpriced in-app payment service. Apple must be stopped. Tim Sweeney says Apple must be stopped. Spicey. Well, it's hard. I mean, you talk bad about Apple, right? And what do they do? May they'll

Starting point is 00:59:04 delist your app, de-platform you. Bad to get deep-platform from Apple. Yeah, you don't want that. Yeah, that's another, another web two company. We have to route around in order to make this work, make this happen. Meanwhile, David, what is the Fed doing with their central bank digital currency? I love how the block, this is the block that tweeted this out, they added breaking. Breaking. The Fed has decided to not proceed with a digital dollar, says Powell. Breaking. Which was not exactly breaking news.

Starting point is 00:59:35 This has been the meme that we have been laughing about on bank lists the entire time. Federal Reserve Chair Jerome Powell says he will not push forward with a U.S. Central Bank digital currency. In the coming years, he says the coming years are focused on research and building public confidence in CBDCs, which is the same thing that they said last year, which is the same thing that they said the year before. Meanwhile, China keeps building. Yeah, exactly. I mean, but also, they don't even know this yet, but they should be saying, thank God for USC. Because that is the CBDC. This is, this is the take, I think, which is then if they're deciding not to do a central bank digital currency, then de facto, they're adopting a ERC 20 stable coin. They're adopting a USDC.

Starting point is 01:00:20 and something that's bank regulated, and they're turning it over to the private sector because the private sector ain't going to stop. So it's all fine with me, but I think that's what they're de facto doing is the U.S. will not have a CDBC anytime soon, or its CDBC will effectively be USDC, and we should start thinking about it in those terms.

Starting point is 01:00:41 David, Cosmos is revamping its Cosmos hub and the atom token economics. I haven't read this full paper, but I do know we are having, having the Cosmos folks on the podcast recording tomorrow. I think that episode's going to come out in a couple of weeks or so. So I don't know the details here, but I'm actually pretty excited about what the Cosmos ecosystem has been building lately. Do you have any takes here? Yeah, we're recording with Sunny and Zaki from the Cosmos ecosystem. And I talked to Sunny at

Starting point is 01:01:09 ECCC, and he gave me the line that the Ethereum and Cosmos visions converge upon the same end game. And so where Ethereum has really prioritized security, and, you know, in the community has emphasized ultrasound money. The cool thing about Ethereum and one of the big reasons why I think Ethereum has done so much better as an ecosystem than Cosmos is because we had Ether to focus on as like an intentional focal point. And Cosmos never really had that because they focused on app chains. And so we as a layer two ecosystem on Ethereum are now focusing on like layer threes,

Starting point is 01:01:43 which are like the equivalent of app chains and Cosmos. But Cosmos has already figured out the app chain. They figured that out forever ago. So Ethereum is playing cat. up on the app chain world where Cosmos is now playing catch up on the monetary properties of the Adam token shared security model yeah and so uh really going to be an interesting podcast I'm really looking forward to that I don't know much about the economics I'm gonna have to dive into this before we do their podcast of Adams. Stay tuned. I see of Adams yeah yeah super inflationary it never

Starting point is 01:02:10 meant to be money it's very interesting I was an old um Cosmos staker from way back and uh yeah I want to talk to him a little bit about that but a lot of building going on this space and these new economics look interesting. I will say that I judge a lot of protocols by their names, and Ethereum and Ether, oh my God, it's such a good name. Cosmos and Adam can definitely give Ethereum a run for its money. Do you like that? Great.

Starting point is 01:02:34 I love the names. I love the names. It's Cosmos and the atoms or atomic units. Is this why? Yeah, sure. Yeah. Yeah. It's kind of cool.

Starting point is 01:02:43 All right, here was something that happened over the weekend. Talk of reversible transactions. Imagine an ERC 20 transaction, David, that you could reverse after the fact. But I thought blockchains were for immutability. Not the case. This is the case by Cali.eat. Billions in crypto stolen. If we can't stop the thefts, can we reduce the harmful effects?

Starting point is 01:03:06 Over recent months, a couple of other Stanford researchers in Stanford, as in the university, Nigerian prototype ERC-20R slash 721R to support reversible transactions. on Ethereum. So an NFT standard and an ERC20 token standard that supports reversibility of transactions. There was a lot of, I guess, back and forth about this because there's a camp that says, like, immutability is part of crypto. What do you guys talking about bringing reversibility into our ecosystem? Like immutability is the whole point. And there was another take that said, hey, this is just an option. Use it or don't use it. You can do either. Where do you fall on this spectrum. I initially was compelled by like, you know, this is open to our software,

Starting point is 01:03:52 Turing complete. We can write whatever code that we want. This is just another tool and a massive tool belt of what we want to do with stuff. So I was initially in the option like, sure, like whatever. Like people might use this. They might not. I don't really, I would never see a reversible transaction being, a token being collateral inside of like AVE or, or compound or something, because you need settlement assurances. But then I've thought about it more and more and more. and Eric Connor helped convince me is that it's just like a Trojan horse for so many bad things

Starting point is 01:04:20 and a reversible transaction belongs in the centralized layer of things. Put reversible transactions where there are central authorities to arbitrate. Reversibility requires arbitration. Arbitration requires centralization. And so it doesn't make any sense.

Starting point is 01:04:34 It requires humans. So reversibility doesn't, should not be at the bare metal, right? And so be sure anyone can build this, anyone can use it. I don't support it. But you would be upset if all the tokens from here on now adopted it, for example. Oh my God, that would make it C-Fi. That would break the whole entire point of Ethereum. That would be terrible. Right. Yeah, that's bad. Yeah, so I get the duality

Starting point is 01:05:01 of these takes. Like, to me, it's fine to have as an option, but I don't want it to be the de facto option on Ethereum, certainly. We'd have a problem if that was the case. Interesting standard, though. David, what's going on with Zach XBT? Yeah, Zach XBT. He is this famous, what would you call him? Investigator, I guess. Private detective, almost like a private eye. Yeah, but vigilante.

Starting point is 01:05:23 He works for himself, right? He's not hired by anyone. Yeah, I would put him shoulder to shoulder with Samsy Son. Samsy's son is a white hacker. So when there is an exploit that needs to be patched, Samsey's on his first. Zach is, not, he doesn't do that, but he like discloses people that aren't disclosing their things. He's the guy that, um, he finds out all the dirt.

Starting point is 01:05:43 little secrets on chain that people don't want you to see. He's the guy that revealed zero X-sifu to be the Quadringa CX, Gerald Patton or John Patton, that guy. So, Zach BXVT is renowned for showing who is pumping and dumping what. And so Lark Davis, the Crypto Lark, is the next person to have been found out as a pumper and dumper. And who is the Crypto Lark? Just kind of an influencer, right?

Starting point is 01:06:08 He's been around since 2017. I remember listening to his YouTube videos in 2017. He's kind of this just like un-intimidating white crypto-yutuber dude who has just a big following. Friendly looking face. Yeah. And turns out he has more or less explicitly been like pumping and dumping on his followers. So, you know, I was on a work show. I think 2019 or 2020.

Starting point is 01:06:35 Yeah, he invited me on the show. I didn't know him very well. And he was just like, come on and talk about Ethereum. You seem to know a lot about it. So I went in and I talked about my bags, David. Ether. Yeah. Yeah.

Starting point is 01:06:44 Ether. And I dumped them on Larks followers. You sell ether? I don't sell ether, actually. I mean, very infrequently. I'm a fine collector of ether. A fine collector of ether.

Starting point is 01:06:56 Yeah. I think, okay, it's tough. And this is one of the, when I talk about the Genesis story of Bankless Ryan, I say like, hey, the crypto media world was starved for a trustworthy media institution

Starting point is 01:07:09 that's business model isn't dumping. The bar was low. The bar was in, extremely low, dude. This was our competition. We don't dump on our followers. That's all. Like, that's all you have to do.

Starting point is 01:07:19 Let's make a media institution that instead of dumping on followers has ads. So for all the people that hate on the ads, like pick your battles. Yes, we don't. I do think so. I mean, you can go through all of the details of what Zach XPTC uncovered. But it's basically like low cap tokens. pump them up, show them near followers, and then dump, make millions of dollars. Receive them for free, yeah.

Starting point is 01:07:47 Right? This is a certain breed of crypto influencers, a business model. It is not the bankless business model. I mean, we get paid through premium subscribers and also through advertisers, not by dumping on you. And we're also long-term investors. And I also kind of suck at low-cap coins and, like, dumpage anyway. But one thing I will say is I think the entire crypto industry, particularly

Starting point is 01:08:11 like crypto media entities like us have to do a lot better when it comes to disclosures and transparency. And so on the back of some of this stuff from Zach XPT, we've had internal meetings about, okay, how can we like rapidly, how can we drastically increase the transparency of anyone who works on content within bankless and kind of what they're holding? So we're actually looking to roll out a new page with all of kind of these stats and all of our holding, all of our angel investments, everything we have, starting the beginning of next month. So we'll be including that in a link in the YouTube show notes and the podcast show notes for all of our listeners.

Starting point is 01:08:51 And I think there are other organizations that do this well, but we also want to, like, you know, carry the flag. And because we recognize that it's a problem in the space. And if you're asking why, having we done this sooner, we have, we do have a page that is like this, but we haven't had a website. So when Ryan says we're rolling out a site, We're actually rolling out an entire website as well, unrelated, and because of that website,

Starting point is 01:09:15 we have a landing page for disclosures. We've had our disclosures out for a while. It's just they're not easy to find and easy to get to. Not as much details we now have, look at this detail. So it is all getting glowed up, gloat up. We list our wallets, our public walls. Yes. Not our dumping wallets.

Starting point is 01:09:33 David, don't even joke, man. Don't even joke. Hey, Zach, XBT. I mean, come look at our accounts. He would find. me out in a heartbeat. I'm so bad. I'm too fearful of Zach. Now that tornado cache is gone. I can't. It's not gone. It's still there. It's just you're not allowed to use it. This is cool in releases this week. Robin Hood selects Polygon to launch its web three wallet beta. Do you remember when Vlad, the CEO of Robin Hood,

Starting point is 01:09:59 we had that conversation with him at a permissionless, I believe, and he told us this was coming. Here it is. Now it's based on Polygon, which is pretty cool. And you know Robin Hood has great U.S. wallets, right? So, like, he was talking about the haptic response. Do you remember this? Yeah, I remember that. When you press a button, you just feel kind of a vibration on your phone, bounces back at you. Bounces back at you. Gives you nice pleasure sensations. I don't know what this is, but does something to the endorphins. Anyway,

Starting point is 01:10:25 I'm looking for a really cool U.S. Wallet. And David and I are hoping to get on the beta program so we can test this out for you guys too and tell you what we think. Yeah. There was always a large number of questions. is how Robin Hood plans on releasing some of their promises, like gas-free trading, et cetera. So we're starting to get some clarity on that. Yeah, that's good. Cool. Safe tokens and Safe Dow are here.

Starting point is 01:10:48 This is safe from NOSIS safe. If you have a multi-sig or if I had a multi-sig or operated a multi-sig, you might have gotten an air drop. There's a link in the show notes to go check that out to see if you got some tokens. I think we got to claim some tokens, David. We do have to claim some tokens. We have a NOSIS safe, don't we? Yeah.

Starting point is 01:11:05 Also, coming out of OpenC. excited to share that optimism is currently live on OpenC. Really, actually, I think OpenC is live on optimism, since optimism is the actual platform, but semantics. Yeah. So OpenCCC and optimism, now working together, so that's pretty cool. Tailwagin the dog there. Sound protocol, sound protocol, sound.com, what is this? Sound.com, XYZ, aka music NFTs, is now, they are announcing the Sound Protocol. Permissionless bass layer, artist owned and non-upgradable song contracts, permanent and decentralized metadata custom-int formats and payments with end-to-end royalties. Cooper Turley's music NFT thesis, slowly but surely, playing out.

Starting point is 01:11:45 Are you sound to NFT-pilled yet, David, a little bit? I am music-NFT-pilled. Music-N-FT-pilled. I am music-NFT. It could be any sound, though. Yeah. I mean, when bankless intro music, NFT, we should do that sometime. This is cool.

Starting point is 01:12:00 Circle expands USDC stable coins to support five new blockchain. So Circle getting USDAC everywhere on Cosmos, near optimism, and Pocodot this time around. And Arbitrum. And Arbitrum. Oh, cool. And they just announced that at their Converge 22 conference, which of course we've been talking about for a while that conference. David, let's get to raises. Wait, USCC is not on Arbitrum?

Starting point is 01:12:21 Yes, it is. It definitely is. What does that mean? I don't know what that is. I literally own USDC on Arbitrum. I own USC on Arbitrum. I hope it's the right USC, David. Oh, go, no.

Starting point is 01:12:32 Well, maybe they're doubling down on their support. Maybe it's a different Arbitrum network, right? Like, you know, one of the... Arbitrum Nova, yeah. Not Arbitrum Nova or something like this. Yeah. What's going on in the world of raises? Rases.

Starting point is 01:12:43 Rayses. Coinbase Ventures backed crypto firewall provider, Harpy. Harpy $4.5 million raise. Cool. There we go. Pantera, our friend, Dan, from Pantera, is launching a new fund, potentially a $1.25 billion dollar fund.

Starting point is 01:13:01 Couldn't resist. with these bare market prices. You got to deploy some more capital. So that's what Pantara looks to be about to do. David, FtX and CZ from Binance. They were both bidding for Voyager. Guess he won. Guess you won.

Starting point is 01:13:16 Place your bets right now. If you are listening to the podcast, not viewing it, place your bets. Here we goes. Sam Bankman-Freed won. Yep. $1.4 billion bid. SBF wins.

Starting point is 01:13:27 It kind of make that sense. Like the, yeah. I feel like that was the logical one. Sorry, ZZ. Do you know, SBF is kind of like the Morgan. I was going to say Morgan Friedman. No, not the Morgan Freeman. The JP Morgan of the era and buying up all of these kind of underwater banks

Starting point is 01:13:43 and coming out stronger on the other side. I think both Z and SBF are going to be an absolute force to be reckoned with on the other side of this bear market. By the way, the Celsius token just jumped. As SBF said, he is maybe eyeing buying Celsius next as part of his buying spree. So Celsius token owners excited about that. Not much to be excited about if you're Celsius token owner, but I guess that little whiff of... Also don't know why that that's bullish to begin with.

Starting point is 01:14:10 I don't know that it is either. I guess some bailout was bullish. What else we got? Because Celsius token holders, there are no rights. So like Sam could be like, well, we're buying Celsius. I don't give a crap about the sell token holders because they have no investor rights. Like, ignore them. David, give them something to be excited about, okay?

Starting point is 01:14:29 they've had a pretty hard year, I think, if you're a Celsius token owner. Are you a Celsius token holder, right? I still have funds in Celsius, and I think they were giving me Celsius tokens, too, but that's the least of my concerns right now. I want my ETH back. Alex? Do you know Alex? Now you have to ask Sam.

Starting point is 01:14:46 I have to ask Sam for your Ease. Well, we've had Sam on the podcast, so maybe I can. It's not his problem, though. He's going to buy the assets. He doesn't discard all of the liabilities. It's going to be a bankruptcy court's problem. that probably Alex Machinsky resigned this week by the way

Starting point is 01:15:03 I can't believe he was still in charge but yeah he resigned from Celtsius so I just finished a so remember remember my boarded my bulletin last week Ryan it was the bankless YouTube like short form eight to 20 minute long videos

Starting point is 01:15:17 I just finished my video on crypto grifters why is why is crypto full of scams and I say the word the name Alex Mishinsky a few times yeah he's one He got in your top five grift list?

Starting point is 01:15:32 Yeah, top three grifters, yeah. He'd definitely be in my, well, I could guess the other ones. Doquan, the Three R's Capitals, boys. Yep. Those top three? Nope. No, they were not grifters. No, well, because they just took, yeah, they're not grifters because they,

Starting point is 01:15:45 they didn't like take in users' deposits or. I guess there are levels of grift. I mean, they were super irresponsible, right? They're very, very irresponsible, but they were irresponsible with, I guess they were irresponsible with other people's money. but like, what's a grifter, anyway? What's a grifter among friends? Anyways, you got two out of the three, so we'll save the third for the video.

Starting point is 01:16:05 There we go. Jobs time. This is our reminder. Even though it's a bare market, there's tons of companies doing tons of hiring because they have a lot of money that they've raised during the bull market. David, should I read a few out? Are you going to dance? Please do.

Starting point is 01:16:17 I'm going to dance. Uniswap Labs. Hey, they're on here. A developer relations lead. What is that? Non-technical, right? It seems non-technical. You're talking to technical people, but it's absolutely non-technical.

Starting point is 01:16:28 Senior front engineer at Uniswap Labs, senior back end engineer for their trading platform. Uniswap Labs hiring a lot. Solid World Dow. Senior Web 3 developer, Ribicon, smart contract engineer. Bankless needs a social lord for socials. Non-technical. Molecule needs a head of engineering. Bankless also needs a growth marketer. Economia needs a lead designer, silent protocol, a full stack, smart contract engineer. Get your job in crypto during the bear run. The way you do it is by logging on to banklis.com. Put your email address in. You get these alerts via email. That is the way to do it. David, what do we got coming up next? Questions from the nation? Got a nice spread of questions and also the takes of the week. The Five Horsemen of Defy, Mr. Wonderful's investment strategy, aka Kevin O'Leary, which I thoroughly disagree with.

Starting point is 01:17:19 So we'll talk about that. And why you don't cut corners in crypto as well as what Ryan and I are bullish on. So all of that and more right after we talk to some of these fantastic sponsors that make the show possible. And so we don't have to dump on you. 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, 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.

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Starting point is 01:19:08 and access all of Arbitrum's apps at portal.arbitrum.com. In order to experience defy and NFTs, the way it was always meant to be, fast, cheap, secure, and fiction-free. Got a question for the nation? Here's some questions we have coming up. As always, you can follow Banking HQ on Twitter. Every Wednesday we tweet this out, a question from the nation. You can put your reply here,

Starting point is 01:19:30 and we may read it on the roll-up. This is how we interact with the community. Here's the first one from Wesley Tate is asking this question. I'm going to tee you up for this, David. What are some examples of layer three apps that you guys can envision for the future of ZK Sync or other ZK roll-ups? And do you have any thoughts on whether or not optimistic roll-ups will successfully reach layer three without sacrificing ease of use, cost, most importantly, security. I can hear in some people's reading of this question, like another question, which is layer three? What you guys just been talking about layer two?

Starting point is 01:20:03 What is layer three? Is this some new marketing mumbo-jumbo term? What is layer three? I could tell Wesley Tate listen to the bankless podcast because that came up in our earlier State of Nation episode with ZK Sync. But tell us really quickly what layer three is and then attempt to answer Wes' question here.

Starting point is 01:20:20 Yeah, so I mentioned earlier about the app chain model of Cosmos versus the layer threes on Ethereum. So we have layer twos. We have generalized layer twos, which kind of feel and act like Ethereum itself. It's a generalized platform. You can put any code on it. You can deploy anything. But even those things can actually approach some level of saturation or congestion. Now, the difference of Ethereum being congested is like the transaction fees go from $5 to $100.

Starting point is 01:20:50 a layer two gets congested and it goes from one penny to maybe a dollar. But even a dollar is like too high of a transaction fee to pay for like so many use cases. So many use cases require like 0.1 cent transactions or less to really be unlocked. And that and that is where we go from, you know, a lot of scale to infinite scale. And layer three is where we get that done. So not only are layer three is the ultra super, super cheap, super fast layers, but they're also the more expressive and like customizable and specific layers. Going back, so when DYDX Ryan left Ethereum to go to the Cosmos ecosystem and become an app

Starting point is 01:21:32 specific chain, that was in contrast to what it could have done, which has become a layer three on on Ethereum, either on top of like ZK Sync or Starcware or something. But the layer three ecosystem just wasn't ready yet. But it's really starting to be, especially with ZK Sync mainnet coming right around the corner. And so what are some examples of layer three apps that we can envision for the future of ZKCink or other ZK roll-ups? Let's think about things that are going to be crypto-enabled, but also want to be domiciled of one specific use case. And I can see like if we have like a big AAA game, for example, World of Warcraft, where Ryan and I use this idea of just like we kill a boss and like a sword falls on the ground and that sword is an NFT. And if you pick it up, that NFT goes into your wallet.

Starting point is 01:22:17 First, that NFT needs to get minted when the boss gets killed. Then it needs to get transferred into your wallet when you pick it up. Then you have a taxable event. But we need these cheap, free transactions to really make this possible. But also at the same time, say this is World Warcraft or Blizzard, Blizzard doesn't want to share a chain with like a competitor or another games or anyone else. They want full control over what that chain looks like. And by the way, if they want your reversible transactions, that's the way they could put it in.

Starting point is 01:22:47 And so layer threes are going to be like one chain for one thing at a time. Reddit is on top of Arbitrum using Arbitrum's any trust model, which is actually a layer two, an optimistic roll-ups strategy of going on over this app chain model. And I could actually even see like a specific subreddit, which somehow becomes really, really crypto-enabled. Shout out Areth finance. This would probably be the first one where that activity, those rewards, upvotes, updutes, like wards, whatever.

Starting point is 01:23:17 all of those things become like economic assets on a chain. Maybe they're all worth pennies, but when the transaction fee is 0.001 pennies and your upvote is worth a penny, that's economic activity. And so those are the two ones that come to mind. But it's really like any sort of like coordinated community on the internet could find a layer three.

Starting point is 01:23:39 And there's a lot of communities on the internet. I think one way to think about layer threes is chains on chains, right? So Ethereum being the, the base chain, the layer one, and then ZK EVM, for example, being a layer two, and then you can actually stack chains, sovereign chains on top of the ZK EVM, and that becomes layer three. And these, as you said, can be app-specific, but they get to retain their full sovereignty. So, D-Y-D-X is a great example of this. I think there could be other defy applications, maybe big D-Fi applications that adopt this as a

Starting point is 01:24:09 strategy. I don't know if you saw the article this week, David, from Dan Ellitzer, but he talks about Oh, Danny Elliser wrote something? Yeah, he, basically the title of the article, I can't, I'm paraphrasing here is, but Uniswap will have a chain is the title of article. Oh, yeah, he gave out that tweet forever ago. We included it in the weekly roll-up. And then I went over to Uniswap headquarters in Soho. And I was like, yo, Hayden, what's going on?

Starting point is 01:24:36 So, like, you know, I mean, Dan Ellister's making the case that Uniswap will need its own chain at one point in time. And you could imagine that being a sovereign chain of some sort, maybe a, a lot of, layer three of some sort. So these are the types of applications that we might see in the, in the higher layers of the stack. Let's go to the next question. Great question. Yeah. When talking about Luna, this is from DiscoverCrypto.eathe. When talking about Luna, we often use phrases like 50 billion deleted. I think that's a verbatim David Hoffman quote. Yeah, that's, that's a amazing What does this really mean? Was the money actually burned or is the money still existing just in the pockets of early lunar adopters and or shorter. What are we talking about there? It's like,

Starting point is 01:25:16 I think there's like 50 billion deleted. What do we actually mean? It's like, where does that come from? Yeah. So this is, it's a facetious kind of sadly funny, some funny, sad way of saying capital destruction. There's capital creation and then there's capital destruction. So say, say like somebody makes a company, five, ten people all start working on this startup. and then they go public. And then all of a sudden there's equity on the public market and that company has a market cap valuation of $500 million. $500 million just got created out of thin air

Starting point is 01:25:54 because the market values whatever startup they had at $500 million. So that was a capital creation event of $500 million. Now, when economies are good and they have stable foundations and people are innovating and exploring and building, capital is created. Yet when economies are bad, when we've invested, we've made bad investments, interest rates have to go up, capital gets destroyed. And so capital is largely a story that humans tell each other. And this is why we emphasize

Starting point is 01:26:24 like hard assets sometimes, the dollar, the gold, base layer assets that things collapse back down into when times are bad. And then there's risk on assets, which where people buy when times are good. But capital is just a story that we tell each other as to what this thing is worth. So we can't sell the entire market cap of Apple and Amazon and like Netflix. Like the Apple market cap is like $3 trillion. If everyone sold all of their Apple stock all at once, there would not be a transfer of $3 trillion from buyers to sellers, right? It would destroy a ton of capital because Apple stock would basically go to zero because

Starting point is 01:27:05 there's not enough buying, like there's a pretty, Apple's super illiquid, but it's not $3 trillion worth of liquid. liquidity. And so when we talk about Luna and use a phrase $50 billion deleted, it's because the bid for Luna evaporated. And so one day, Luna was worth $50 billion. And then the buying pressure for that Luna asset went to zero. Therefore, $50 billion of capital, which existed because there was once enough buying, there was enough of a story to buy Luna, once that story ran out, once the bid evaporated, all of a sudden the $50 billion that people had on their network, worth balance sheet turned into zero. And that is what I mean when I say $50 billion was deleted.

Starting point is 01:27:45 Yeah, I think that's a good, I think that's a good way to think about it is like the story was deleted essentially, right? And like it's important. I think I like that you brought liquidity into the picture there because we have to remember what how is a market cap determined? Well, you just take the most recent price someone bought the thing and multiply that by the existing supply, right? That's it. That's all the market cap is. And you have to look at kind of, like, like liquidity of if, you know, how many, how much is available in the market to actually sell or like actually buy and how, how resilient is that market cap to sell pressure? And Luna was not very resilient to sell pressure. Something like gold has really good liquidity. Something like

Starting point is 01:28:31 the US dollar has a lot of liquidity. There's a lot of trading volume every single day in the dollar. It's a much stronger asset. And I do think, you remember we did that episode way at the beginning of bankless about liquidity and how liquidity is actually a pretty good definition of of money because that's kind of the I guess it shows the resilience of money. Assurances that you actually have the asset. Yeah, exactly. And that it's priced for what, what, you know, you think it will be priced. Let's go to this question from Sean Gill 23. Will we ever see high APR liquidity pools like DFI summer 2021? Can we go back to the good old days, David.

Starting point is 01:29:09 Yes and no. Mostly no. I think the high liquidity pools of Defy Summer were the phenomenon of the bull market. And the same way, like, we don't really see ICOs anymore, but we do see token creation events.

Starting point is 01:29:26 I don't see, we're not going to see high liquidity pool twos of Defi Summer. I think that was the high water mark. We will see high yields. We will see yields return. Some way, somehow. It won't be as big or grandiose or risky as we saw in defy summer it will return um it won't be that crazy it'll be much more sustainable and much more pragmatic i think particularly in the frontier right that'll move to

Starting point is 01:29:48 like the frontier to layer two is to new defy protocols to risk your things there is like a risk of return tradeoff here where you see the higher APIs they're probably going to be more risky and so keep that in mind as well uh all right david let's get to some takes here's one for me why don't you read it Ryan shot adam says the u.s government literally sending our crypto developers into hiding right now. Imagine if we sent our internet entrepreneurs into hiding in the 90s, I guess we're happy to let China fill the vacuum while we regulate the open internet out of existence. And Ryan, you are retweeting an individual under the Twitter handle one-way function who says, I've removed all of my crypto-related code I've written from

Starting point is 01:30:26 GitHub about seven years worth of contributions to the space and will no longer be contributing code to the space under my real name. All future code contributions will happen via a pseudonym. Oof. This, David, I just wrote this tweet out of pure frustration. We are literally, I'm angry at the U.S., I'm angry at our regulators. We are literally sending our crypto internet entrepreneurs into hiding in America. That's what we're doing. I can no longer, imagine this, imagine the early 1990s.

Starting point is 01:30:57 We set, you know, Mark and Dresen into hiding because he was trying to hack on Netscape, and he had a vision for this Netscape navigator browser. and there was some kind of regulation against, I don't know, encryption technology. And we said that was illegal in the U.S. And Driesen had to go into hiding, become an anonymous developer in order to do it, had to maybe move to a different country or deploy this stuff. Like that's what's at stake here. And I'm angry that it seems like inaction by legislators

Starting point is 01:31:27 and reaction by regulators is making this happen in the U.S. We are losing a generation of crypto. entrepreneurs. It's maddening. It's frustrating. It's completely unnecessary. I go back to Commissioner Summer from the CFTC, her line from her dissent. It didn't have to be like this. It doesn't have to be like this. This is so stupid. We're shooting ourselves in the foot. Crypto is going to be fine. I don't know if America is if it continues to persist in trying to regulate itself out of innovation and insist its population live in a financial. prison.

Starting point is 01:32:08 Dun rant, David. What's next? Thank you. Thank you. Zero Xtuba says, I would say that these are the five horsemen of Defi. I don't think any other protocol comes close. And it's a screenshot of MakerDAO, Lido, Curve, Avey, Uniswap. Zero Xtub is saying these are the five Chaz of Defi, the five Defi apps that aren't

Starting point is 01:32:28 going anywhere that are probably relatively low risk bets is what Zero XTuba is saying. Would you agree with these five? I like this list a lot, actually. Yeah. Yeah. I think people are going to take offense to Lido being in there, but it's hard to argue with. They have a lot of ETH in their in their contacts. I certainly like Maker, Curve, and Uniswap.

Starting point is 01:32:47 And what I'll note is this is all very like class of last bear market. This is very class of 2019, 2020. Do you see Plenia had to take this week, which is like, hey, all of the innovation actually happened in 2019 or 2018 and 2019. And not a lot has. happened after that in terms of like apps that we've built that are valuable and persistent. I mean, you could point to NFTs, but beyond that, I mean, what else have we built? Right.

Starting point is 01:33:15 I mean, I think that answer will come out as more and more DFI 2.0 apps do make it through the bear market. Not all will. But I'm reminded of one of my favorite Van Spencer tweets saying, stop asking for new narratives. We are 1% of the way through the current narratives. Like we still like un-swap. Uniswap is enough.

Starting point is 01:33:37 You're like being able to mint your own token and put it on uniswap instantaneously. Incredible. Is huge. Like don't forget about how massive that is. Yeah. Don't fade the OGD-Fi protocols. That's for sure. Kevin O'Leary says,

Starting point is 01:33:49 my investment strategy for crypto is the same I've learned from stocks in all caps. Diversify. I own positions in 32 different coins and tokens. Ryan, what do you think about this week? I think that's the opposite. of what I do. I do not. I mean, I think,

Starting point is 01:34:08 personally, I think this is terrible advice. No disrespect to Mr. Wonderful. It seems like you're just random, like you could find yourself randomly shotgunning into a bunch of different tokens that are actually highly correlated or basically the same thing and calling that diversification.

Starting point is 01:34:25 That's not really diversification in my mind. But what's your take on it? My take on this is that... Did you reply, by the way? No, I quote tweeted him Oh, you quote tweeted. Okay, here it is. Can I read it? Sure. Guys, this is David's take.

Starting point is 01:34:39 ETH is a diversified index. It's an index of the aggregate tokens and economic activity on top of Ethereum where 90% of DFI is located. ETH is diversification. Few. Tell us what you mean. So, many, I don't, maybe there are 30 tokens out there

Starting point is 01:34:55 that are quality enough. And maybe Kevin O'Leary has like a very beautifully diversified portfolio. You could. I just, I think, I think, over two-thirds of his tokens are going to go to zero over the long term just by the nature of tokens. And the cool thing is, with tokens on Ethereum and EIP-1559, ether gets the benefit of that. So every token that comes, attempts and then dies, that token went to zero, but it burnt some ether along the way. And so this is why ether is such a nice asset, even in bull markets,

Starting point is 01:35:26 when there are all these Ponzi's and all these stupid tokens getting minted and all these tokens are going to zero, is burning ether along the way. And then there's a lot of the way. also the tokens that will work. Maker, Uni, Avey, compound, curve. Those tokens are good tokens to have, so maybe diversify amongst those, but even those tokens also add to the aggregate economic activity on Ethereum. And so Ether, the asset, as the index of the aggregate Ethereum economy, nothing better will do a awesome job of representing the Ethereum economy as a whole than Ether, the asset. And Ethereum in the economy is where like 95 plus percent of all NFT activity is.

Starting point is 01:36:03 95% plus activity of where all defy is. And so Ether is a beautiful index of some of the most alive parts of the whole entire crypto world. And so the whole like pulling in diversification, even the S&P isn't actually a very good diversification tool. So you have to diversify amongst that. But this is something that like older boomer investors don't understand about crypto. And that's why you can't just take stock strategies and apply them to crypto.

Starting point is 01:36:30 It doesn't work. I feel like you're about to dump on us, David. Are you about to dump all your eth on us? After that. Because I'm the person that can move markets of ether. Jesus. Do you know what I don't hate though? I actually don't hate, like you know the Cryptex approach,

Starting point is 01:36:44 which is just a straight index of the top 30 by top X, I can't remember. Top X, let's call it 30 by market cap. No, it's the whole market cap. The whole market cap. It's the whole market cap. Okay, the whole market cap. I do not hate that at all.

Starting point is 01:36:57 That's similar. If you're talking about, that's great, that's great. If you're talking about diversification, because I agree with you about ETH, and of course we're like, you know, permalish Eath. What that doesn't capture, though, is like growth of B&B, for example, outside. Growth of cosmos outside of, it doesn't capture growth outside other ecosystems. You could buy the entire crypto market cap and you get all of that. That is like, that's definitely definitionally perfect diversification. Rather than go like rando pick 30 coins, you're bullish on and call that diversification.

Starting point is 01:37:26 I think people get into trouble that way, but maybe not Mr. Wonderful. I'd love to see Kevin's 32 coins because I would probably make fun of them. Well, let's David's portfolio against Kevin's portfolio. Throw it down. You guys should make a, you know, Warren Buffett-style bet. Let's go here. In almost all cases, it's a mistake to try and speed up adoption by compromising on cryptocentric product design. That is Punk 4156 saying this. What does he mean? He's saying don't cut corners. And so compromising on cryptocentric product design, I would call this what Luna did. I would call this what Wonderland did. There are like certain properties or ethos of crypto that you can ignore if you build a DFI project.

Starting point is 01:38:09 And then as that DFI project gets stress tested, it accidentally becomes a Ponzi scheme, whether you're intended it to be that or not. And so the call to action here is build something that doesn't cut corners and is cryptocentric. And this is also a topic in my Gryfters video that will come out next week. Do you know what's an interesting rule of thumb?

Starting point is 01:38:29 I wonder how well this applies is like, don't buy anything that was built during the bull market. Yeah. Yeah. Because you can't really trust it. Where you don't know. You don't have the signal. It needs to weather the downside, yeah.

Starting point is 01:38:42 Yeah. Buy the thing that was built during the last bare market and survived. Anyway. All right, David, what do you bullish on this week, my friend? I'm bullish on New York. The city? I've been having a great time, man. I don't really know much about New York the state, but New York, the city, has been amazing.

Starting point is 01:39:00 It has fulfilled all of my hopes and dreams after moving here. So this is my call to action for people who are curious about going full-time crypto society, not just crypto work. If you want to have the maximum exposure to the crypto industry, you've got to move to New York. It is the best. I am having a fantastic time. Sponsored by the New York Tourism Bureau. So David doesn't have to dump his ETH on you. That's awesome, man.

Starting point is 01:39:27 This is a burning joke. You've lived in some great places, though. You've lived in, you know, Seattle. That's a great place, nice place. You've also, San Diego, people moved from all over the, like, country to get to San Diego. And you, like, New York. And it's because of the people. Because it ain't the weather, my friend.

Starting point is 01:39:44 Yeah, well, that's not so bad. But it's definitely the people. The people that are, Williamsburg specifically where all the crypto people are, it's so awesome just to have everyone around. And there's something just, magical about the crypto people that want to be around other crypto people and talk crypto, the people here, in New York specifically, attracts very interesting people. And then there's crypto side of New York that, you know, you add another layer of crypto-interestingness on top of that.

Starting point is 01:40:11 And it's just a fun time, man. I mean, having a great time here. One day. I'll take the northbound train, come up to see you one day. Oh, yeah. Yeah, we can do that later. I'll track it up. Yeah. Definitely. All right, Ryan, what do you bullish on? ZK sick, my friend. The ZK. Evm. I'm. I'm. I'm. I'm. I'm It was a great episode that we did, but just in general, ZK technology. It was really cool. I mean, coming off the podcast with Vitalik, where he said a few things, he said, ZK is as fundamentally important as blockchains themselves, ZK technology, ZK cryptography,

Starting point is 01:40:43 as fundamentally important as blockchains. He said they plan to in the future, the theorem roadmap plans to ZK snarkify the EVM. I don't fully even know what that means, even after an episode with Vitalikaze. I feel like we need a deep dive. Like title of the episode, if anyone downloads it, ZK snarkifying the EVM, like just that, because I want to learn. So that's cool. But then also he said, I'm surprised at the progress of the ZK EVM.

Starting point is 01:41:11 And now in less than 30 days, we're going to have the first ZK EVM on Maynet. Now, it won't be accessible to users. But like, I was mentally probably two years ago thinking that ZK EVMs were five years out if they even happen. The whole issue was. I was kind of preparing myself to just say, oh, this is going to be like another plasma thing, going to be like a state channel thing. They'll get far enough along the design and just something won't work and they'll have to pivot.

Starting point is 01:41:39 And yet here we are. So that's what I'm really excited about. And this has been called the Holy Grail. I mean, you have to launch the thing and kick the tires and actually test it before we know for sure. But I think it's the most exciting thing happening in crypto right now, like in the post-merge world. What's next? ZK EVMs or what's next. Yeah, I can't emphasize how awesome that State of the Nation was this week with Steve from ZK Sync.

Starting point is 01:42:05 It was definitely longer on the longer side for a state of the nation, but it was just so good. It's so good. The YouTube comments loved it. That's awesome. This is Ryan and David dumping on you because we are advisors to ZKSync. So disclaimer there. That's true.

Starting point is 01:42:19 We are advisors to ZKSink. And you'll find that in the advisor page, but that's actually not why I'm excited about it. I don't know if anyone believes that. I'm like, I'm here for the tech, bro. Okay? ZK. Evams. All right, what's the meme in the week, David? Name in the week.

Starting point is 01:42:32 Here we go. This is, uh, trustless state and Ryan Schott Adams on Trusel State. When the ether is getting burned more than it's issued. I actually don't know where this meme is, but I think this is two people, what, two people are professionals. These are sports. These people play sports. They play sports.

Starting point is 01:42:50 They definitely play sports. It looks like the Olympic team, but the Olympics are not going on. Well, yeah, maybe it's soccer. but the guy has a Europe sure anyways it's two dudes who are definitely playing sports watching something happening they are just holding hands looking like looking on the edge of tears they're they're just broken at the just the feeling of euphoria of east that that was my exact face that guy in the right is my exact face when wait so are you the guy in the right I don't know is that is that how you identify because I did identify myself as the guy on the left oh wow there you go yeah

Starting point is 01:43:19 I'm the guy in the right my face contorts in that way when I'm very emotional like that's definitely me. You get you see the hair. It's a little patchy, you know? Like, that's me. I'm the guy on the right for sure. Oh, maybe it's the hair. Yeah, I have the hair on the guy on the left. Yeah, that's right. It's accurate, right? People would have said it. I may as well claimed it. All right, guys, wrist and disclaimers. Of course. Got to tell you once again. First, no. We have a fantastic moment of Zen coming up after Ryan gives. It's one of my favorite moment of Zen's. It's an interview on Capitol Hill of bankers and Congress. And then it also cuts to, whereas that movie, the big short as well, so you know it's good. So pay attention to

Starting point is 01:44:00 that cut, otherwise you'll get confused. But first, Ron, it's going to read you some disclaimers. None of this has been financial advice. Eath is risky. So is Bitcoin, so is defied. Always is. You definitely lose what you put in, but we're 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. The gentleman from Indiana, Mr. Hollingsworth is now recognized for five minutes. Well, good afternoon. I'm excited to be here with each of you. Before I get started on my questions, Mr. Moynihan, I wanted to let you know. Sir Ruthie, raise your hand, Sir Ruthie. She has been my team member for a couple of years now, but on Monday she becomes a Bank of America team member, about which she is very, very excited. So I hope you'll take good care of her and know and recognize the talent that she has shown already in our office. I'm sure she'll do the same at Bank of America. We will do that, and her father already works for us, so he'll take care of it. You should have called us. Well, I appreciate the opportunity to chat about some of these issues today.

Starting point is 01:44:58 What I'm really interested in is the state of the economy. How are you floating your resume to big banks? I mean, you're supposed to be the ones, you know, policing the big banks. Grow up, Jamie. There must be some kind of law against working for a financial institution right after you've been working in financial regulation, right? No. No. Hey, come over here.

Starting point is 01:45:24 What are you doing at Cesar? He's a cold man. Your father already works for us, so he'll take care of you. You should have called us.

Bankless - ROLLUP: NFTs Are Hot Again | Macro is Breaking?! | CFTC Prosecuting DAO Token Holders

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