Bankless - ROLLUP: Operation Choke Point | SEC Crypto Staking Crackdown | Genesis Earn Repayment | a16z Uniswap

Starting point is 00:00:00 In bad news, though, Operation Choke Point promises to take crypto bankless, but in the bearish way, perhaps crypto's biggest regulatory threat ever. Bankless Nation, it is the second Friday of February. David, what time is it? Ryan, it's the Friday Bankless Weekly Rollup where we cover the entire weekly news in crypto, which is always an ambitious endeavor, especially this week. An insane amount of shipping, some extra large fud, and we're going to cover it all on this rollup here and now with, of course, coffee. Coffee. As always, yep, in my ember mug too. So it's nice and piping hot.

Starting point is 00:00:37 David, you are back and your voice still hasn't fully recovered, although it's better than it was yesterday. So like how many days of recovery and what happened to you? Yeah, my voice is slowly coming back after going to the StarCware sessions Intel Aviv Israel and doing nine interviews, which the Bankless Nation will notice that the first four of is on their podcast feed. So you can go ahead and listen to those. If you just can't make it out to conferences,

Starting point is 00:01:01 Don't worry because Bankless has your back. I bring out an entire podcast studio with me, including three microphones. And I interview everyone who's founder, builder, developer of that particular ecosystem. This conference and choice was the Starknet world. And sometimes I put my voice on the line, too, to get that done.

Starting point is 00:01:20 And that's why you're going to be hearing a little bit raspy of a voice on this weekly roll up this week. Big sacrifices to make this happen. Many Gothams died for this information. A little Star Wars reference for you. David, I always thought you were just going to the conferences for me, man, but I guess it is about the listeners, too. Seriously, I appreciate that. That's one of the great things about people don't know the partnership between David and myself. It's just like a ying yang type thing where he does all sorts of stuff that I'm like, I don't want to go to a conference. David's like, I absolutely want to go to all the conferences. And so it's a really good fit. And David's like, I don't want to do accounting and bookkeeping and that sort of thing. And I'm like, oh, that's fine for me. I enjoy it in a weird way.

Starting point is 00:02:00 Weird. That's what makes this partnership work. Yeah. Anyway. Also, just like the disposition of who I am at a conference is like, I just want to talk with as many people as possible. But I also hate small talk and receiving pitches. And so in order to defend myself from getting pitched by everyone all the time, I schedule out interviews, longer form interviews. And I'm like, oh, I'm sorry. I'm busy.

Starting point is 00:02:23 I'm interviewing people. But not the small talk. Yeah. I'm like that too. Yeah. You know what's funny is I know you characterize yourself as an introvert. But I think if somebody met you at a conference, I don't think they'd see an introvert. Yeah, everyone is surprised.

Starting point is 00:02:35 Like I say, oh, yeah, I'm kind of introverted. And everyone's like, what? No, you're not. And actually, I have had to actually rethink that. Yeah, because there are true introverts that just really don't. Yeah, there are people who are more introverted than me. But also, like, coming into crypto, I have discovered that it has created a more extroverted, outgoing person in me. That is something I've noticed.

Starting point is 00:02:58 look, come for the money, but stay for the personality improvement? The psychological changes, which also happens to be the subject of my talk at Schelling Point in Denver. If you want to talk about the way that permissionless self-sovereign protocols change the psychological disposition of the societies that organize around them. If that talk interests you, definitely go to Shelling Point. David's been waiting years to apply a psych degree to crypto. And then the moment has come. Six years in the making. This is great.

Starting point is 00:03:28 Well, it's super unlike bankless to show its own content on the show. But you can tell, we've got a lot of hot content coming at you, David. And I've been looking at our podcast schedule, too. I mean, we're recording three podcasts over the next like three days, three working days with some real big names. Oh, my God. There's the, I think it's some of the hottest content lined up over the next like 10 days that I think we've ever had. This is in crypto ethics. We're talking about that.

Starting point is 00:03:54 A. A.I. Bigger Brain. We're talking about AI. And this isn't just bankless following the AI trend. This is... Yeah, this is not about AI tokens. It's not about AI tokens.

Starting point is 00:04:05 This is really AI. This guy's like a big brain. I'm... It's incredible. He's... These choosing to come on. And then Annie Jacobson. Oh, my God.

Starting point is 00:04:13 So excited for the Annie Jacobson episode. Can I take a moment to chill it really quick? Well, okay. But here's my take on it. She's going to tell us if we have to hide from our government, if the government is coming after people in crypto, right? Not. I wouldn't say that that's the most accurate way of...

Starting point is 00:04:28 the theme of the content. The Annie Jacobson content, Annie Jacobson is an author who does not really know much or care about crypto and doesn't need to in order to talk about what we're going to talk about. She's written books like the Pentagon's brain, which is an exploration into how the Pentagon thinks and how it's organized. And this subject matter is there have been, there are many intelligence agencies in the United States that, you know, the CIA, the Pentagon, etc. And there also, throughout history, has been a number of countercultural dissident movements, and there have been ways that these intelligence agencies have engaged with these countercultural dissident movements. Infiltrated, we might say.

Starting point is 00:05:08 Yes, perhaps is the correct word. And so while Annie doesn't have any specific knowledge about how the CIA might have been chosen to engage with crypto, the idea is that, well, we can talk about all of the different strategies that they have infiltrated other movements. And it's up to the listener to connect the dots and extrapolate this into how, how, you know, the CIA might have infiltrated, you know, the crypto world. The question is, how well do you really know your crypto podcast co-host? Like, how well do you really know that person? That's a question I intend to ask Annie.

Starting point is 00:05:42 Okay, well, so like the, I'll jump to the conclusion of that episode. We don't know the conclusion yet. We haven't recorded it. The punchline, I'm pretty sure. Well, okay, so Annie Jacobson spoke at the A16Z Founder Summit, which is a retreat, which is how she came onto my radar. And the conclusion is like, yo, if you are in the social networks of crypto, the VC networks, the media networks, the likelihood that someone is a plant is like that's looking back throughout history as how this has happened throughout other dissident movements is likely. And so like I look at myself, I'm like, oh, I moved to New York to be a part of the crypto socialite crew. I have one of the most extensive media networks in all of crypto.

Starting point is 00:06:25 Chances are you know the CIA really wants to be my friend. Well, maybe they probably already are then. Yes. And if they've wanted it, then they are. And there's someone who's my friend who I probably have already invited over to my apartment who's probably listening to this and is like, oh, fuck, they're onto me. Thanks, David. Paranoid increases 10x. You guys appreciate that.

Starting point is 00:06:46 That was like a whole eight minutes of shilling bankless content. I'm sorry. We got to get to the roll-up content today, all right? Is Biden Operation Choke Point? This Operation Choke Point we're going to talk about is it coming to kill crypto. We'll talk about that. What else we got, David? DCG and Gemini hug it out.

Starting point is 00:07:03 Maybe we'll get some of our money back. Perhaps a successful resolution. And so if you have money and Gemini earned, stay tuned to find out how much money that you may get in return. And also, Ryan, you've noticed this. I've noticed this. It is absolutely ship season. So many teams have shipped very cool things, very big updates in the last recent week. So we're going to cover it all. Fundamentals are up big. Also, A16D is a defy governance cartel, the manhunt for Doquan. NFTs on Bitcoin continue their exponential growth. Arx audacious Bitcoin price targets. This roll-up is absolutely jam-packed. I'm really excited for this one. So stay tuned for this all. You know what else I'm really excited about is more tools to help us learn about crypto and go bankless. Here's one of the best tools I have seen this year. It's called Metamask Learn. You're seeing on the screen says, welcome to Metamask Learn. This is like courseware to help you learn crypto. You can click here, you can say start course and you can get on the journey. Lesson one. What is Web 3? Maybe you're skipping

Starting point is 00:08:05 all the early bankless podcasts and you want a quick recap. This is a great way to do it. David, What else is in this courseware in this MetaMask Learn app? Well, you'll also be given an interactive and engaging way to learn how to open up a MetaMask wallet. So if you're family and or non-crypto friends are curious, this is a place for you to send them. Metamask obviously teaches you how to set up Metamask and what's going on when you write down these 24 words. But also just has some very important defy paradigms like digital identity, what self-custody is and why it's amazing. NFTs and creators, decentralized finance. So if you want to onboard yourself

Starting point is 00:08:42 or not have to onboard your friends, you can send them to learn.medamask.io. Really cool. This is really the next step to go bankless. Step one is you open up your crapto account. Your what? Step one is you open up your cracking account and deposit some funds.

Starting point is 00:09:00 You transfer that to Fiat and then you open up a metamask wallet. Step two. All right, David, let's get to markets. I think we got some happy news this week. again, it's, it's only happy news. What does Bitcoin doing on the week? It's not happy, Ryan. I don't know what you're talking about. We're down 5.4% of Bitcoin price. Where have I then? Yeah, where have you been? Wait, was yesterday happy? Uh, no, it's been, it's been, I mean, it's not been like super sad,

Starting point is 00:09:24 but it's been a down week. We started the week at $23,800. This is so embarrassing, guys. David puts these numbers in before the roll up, and clearly I don't even read them. And I am a so zen this year. I'm not even checking prices. Yeah. It's happening. Only being down 5.4% is apparently not down enough to be on Ryan Trader. Bitcoin currently coming in at $22,500. Oh, sad. Sorry for that. I wrecked you guys.

Starting point is 00:09:50 How about Eith? Is that down too, David? Don't tell me. Less down, but still down. Yeah, starting the week at 1675, 1,675, down 3.2% to 1620. Yeah, so down on the week, not overly bad, especially with like, so, we're going to talk about this banking fud, this operation choke point, and we're only down this much. I'm like kind of really optimistic about this. And so very rarely in the bankless weekly

Starting point is 00:10:19 roll up where we give a forward-looking market take. But I saw this here, and this is from crypto trader hornhairs, three weeks of compression and higher lows on the ETH price chart. And so you can just see this triangle wedge forming. And he's, and he is claiming that the resistance, the $1,700 dollar resistance, which we talked about last week, is perhaps fading away. And when that resistance finally gets chewed through, we go up and to the right. Now, this is the ether price we're looking at, but this is probably also true for overall market indicators. I think there are more bullish indicators in the market than there are bearish indicators in the market. And that is despite all of this banking flood that we'll talk about so shortly. Did we just do TA on bankless?

Starting point is 00:11:05 We just did TA on Bankless. We have done this like twice before in all bankless. We can roll up history. And now we have done this a third time. Let me click away. I mean, you said we don't do price predictions, but we actually do. They're just like really long term. Yeah, right. They're like the 10 plus year price predictions. ETH is going to 10K. It's absolutely going to 10K. How about Eith Bitcoin ratio? What's that looking like? Yeah, up a little bit on the week. We are up 2.3% on the week. We're at 0.07. David, look at these charts from Crackens. that we're showing. It's really good.

Starting point is 00:11:38 I want a charter. I want a charter. Yeah. So the URL for this, you know, pro.cru.crakken.com slash app slash trade, eth hyphen BTC.

Starting point is 00:11:46 You can actually just like delete BTC and type in USD if you want. You can type in trading pairs in the URL. So like, you know, I mean, you have it also pulled up in the fantastic modular UI, UX that Cracken has.

Starting point is 00:11:59 So you can look at multiple charts at once. So they're tabs. They're tabs. They're tabs. And but you can also drag and drop them and make the modular. can pull them out if you want to look at one. We got tabs and tabs right now. Tabs inside of tabs.

Starting point is 00:12:09 But you can also intuitively change the URL. Like, I don't know if other people do this when they navigate crypto, but it's just like if you want to type in any like ticker, you can do it straight through the URL to get what you want. I think it's great. Can I do the sole BTC ratio? What's that looking like? Let's see if they got it.

Starting point is 00:12:26 Soul BTC. Boom. There it is. Straight from the URL. That's pretty amazing. Yeah. Big screen. Love this stuff.

Starting point is 00:12:31 Yeah. Good job. Good job, Catherine. Look at that. Look at that. You're a trader now. Jesus, wow. Look at this.

Starting point is 00:12:36 Cracken is turning a trader out of Ryan. Wow. Never thought it possible. Maybe behind me. Live updates all the time. So I can keep track of freaking prices. Apparently I don't do that. Clearly.

Starting point is 00:12:46 Global crypto market cap. Are we above a trillion, David? $1.1 trillion. That's all I need to know. Slightly down on the week. That's all I need to know. Okay. Let's talk about some market stuff going on.

Starting point is 00:12:56 One is ultrasound money just keeps getting more and more ultrasound. Heath is at all-time lows in terms of deflation. Post-merge all-time lows. Yes, post-merge all-time lows. Ever since the burn started, no, no, ever since the merge happened. Yeah. I kind of consider all-ethe supply metrics before the merge kind of irrelevant now because this is, we are so close. Like, do we could- Oh, is that a good take, David? Maybe there's only, maybe there's only two dates in crypto. There's BM and there's AM. Before merge? And at least in Ethereum, if you want to be an eth-maxy about it, you can say for all of crypto, but at least in Ethereum. I kind of like it. I kind of like it. Yeah. So like all

Starting point is 00:13:37 Ethereum monetary policy kind of resets at the merge. And now like, and now we're at all time lows PM post-merge. Okay. And that's, so how much are we burnt? 14,000 ETH. 14,000 since the merge. 20,000 each sent since the top of the supply. So the top of the supply, when the ETH supply peak happened and not too long after the merge, it was at a little over 6,000 ether. plus positive 6,000 either, we are now at negative 4,400. When the burn starts, it just keeps going, David. I think that's what your take is here. Actually, let me read it.

Starting point is 00:14:14 I'll try in your voice. The 24-hour record for ETH burn was set on November 8th. The day FDX went insolvent. That's a fun fact. 3,600 Eth was burnt, fire emoji. Today we burnt 1,800 ETH. 3,600 Eth was burnt during crypto's worst crisis ever, and now we're burning 1,800

Starting point is 00:14:33 ETH on a Wednesday. That is on a Wednesday, folks. Just a typical Wednesday for ETH, and we're burning 1,800 ETH, Ethereum, ether. We're burning, like, an average, over 30-day period, we're burning like an average of like 12 to 1,300 ether per day. David, that must mean block space is in high demand.

Starting point is 00:14:54 What do we look at here? The space is in demand. That is an equivalent statement. Ether burn means block space demand. and this is Hildobby who's just got great gas analytics. He's pointing to a couple events here. The Ethereum Merge, the FTCX bank run, and the floor of gas prices is up only.

Starting point is 00:15:12 We haven't seen below 15 Guay gas prices in months now. And this is, to me, Ryan, like gas prices could go down. They could go back down to where it was. They could, you know, level out. But a crescendo-wing floor of gas prices is what a bull-marked. market would start with. Isn't this, okay, do you remember like 18 months ago when this was like the most bearish indicator ever?

Starting point is 00:15:38 Gas price on ETH was going up, therefore bearish for Ethereum. Do you remember this? Yeah, you mean 2021 with the triggering of layer one season? Yeah, this was like, I don't know, was it December of last of 2021 or that was kind of the peak of this, I think was a Suzu tweet where he created. criticized Ethereum for sitting around watching circle jerking to the burn. Is that what we're doing? We are currently doing this, yes. Okay. Well, but so are you happy about this? Are you sad about this? Are you like, is this, high gas fees are bad for Eith, aren't they? Or are they good? I'm confused.

Starting point is 00:16:19 Tell me. Tell me what to think. I will take Suu's point when he tweeted that and say that if all the Ethereum proponents who were talking about how awesome the burn was were perhaps not being sensitive to how much Ethereum gas costs were costing people that weren't able to buy ether at a cheaper price, of which it was cheaper, not like four or five, six months prior. So I'll take that point because at that time, layer twos of round Ethereum were not nearly as mature or developed or as cheap as they are today. today, layer twos are in production with blossoming defy and NFT ecosystems. There's not much you can do on an Ethereum layer one that you can't also do on Ethereum layer

Starting point is 00:17:00 two. So now when we circle jerk about the ether burn, there is also a way for all users to experience sub 10 cent gas fees and do all of the crypto Ethereum things that they would like to do on any of the layer twos that they choose. So now I declare that it is once again appropriate. for the ethmaxis to circle jerk about the burn. Okay. Well,

Starting point is 00:17:22 I declare that. Thank you for telling me that, David. Thanks for the clarification. You have permission. Because I needed that permission. What we're basically saying is, look, the cost of living in Manhattan is going up once again. But why don't you live in the suburbs? There's tons of cheap housing and affordable things to do in crypto on the layer two ecosystem.

Starting point is 00:17:43 David, this is the daily median gas price? Is this another view of the same thing from Hildobby? That's exactly right. just gas, gases definitely hit a floor at bottom in the September 2020 and has been up only since then. Do you know what? Ethereum block space ain't the only block space that's selling and going up. Let's talk about Bitcoin Blockspace. The ordinal effect. What is this? We love this. So this is Bitcoin Blockspace going all the way back to January of 2022 into February of 2023 where we are now. and you can see Bitcoin Brockspace breaking all time highs in terms of how much,

Starting point is 00:18:21 actually how much size they are. And so the Ordinol's effect have increased the total size of Bitcoin, the average mean of Bitcoin block space to highs that it has not yet seen before, which means, of course, Ryan, that more people are paying for Bitcoin Blockspace. It's bullish. And as we have been saying, Blockspace demand is bullish. And so, congrats Bitcoin is one of the,

Starting point is 00:18:44 strongest properties I've seen out of Bitcoin in a very long time. This is great. What this is, this is a marker of sustainability of the Bitcoin network. Of course, this is how it pays for defense in the future. And security in the future is through blocks base fees. So those blocks have to be worth something. Okay, we talked about what's happening, but why is it happening? So Ordinals, which there was a, we did a show with Eric Wall and Casey Rotemore,

Starting point is 00:19:12 who is the creative Ordinals. Eric Wall, I tap him in as my Bitcoin technical co-host. He's my Bitcoin. I tap him in when I need help explaining Bitcoin stuff. So him and I talk to Casey, who is the guy who created Ordinals. And this is what we're looking at, this chart, which is absolutely exponential as soon as Ornodles has come into the mainstream. Which is the NFT.

Starting point is 00:19:34 It's the thing that allows NFTs on Bitcoin. Exactly. Yeah. And it's actually pretty simple, like how it works. Basically, the Bitcoin UTX moment. model unspent transaction output is basically Ethereum has an account model as in you have your Ethereum address and you put all of your tokens in there. Bitcoin has a UTXO model which is that every single Bitcoin is actually like a unique

Starting point is 00:19:57 denomination like 13.7 Bitcoins is like a bill that's like $27.42 like a unique bill that's for Bitcoin. What Ordinals does is they turn, they make a bill out of one Satoshi which is the smallest denomination and then just append data to that. And that's what an NFT is. is on Bitcoin. And the minting of Bitcoin NFTs, Ordinals on Bitcoin, is just going exponential, has not slowed down. Did you ask them, why didn't somebody think of this years ago? They needed both Segwit and Taproot. So it was specifically a taproot thing. That's right. Which is relatively recent. But also at the same time, like, Bitcoin or culture isn't really one to, like, enjoy a lot of non-BTC use cases of Bitcoin. And so, like, this is why this is

Starting point is 00:20:42 controversy. And like some, like Luke Das Jr.'s or Bitcoin Coredev is like, people have lied and tricked the code in order to make this happen, which I think is one of the worst takes I've ever heard. You can't trick code. That's not how it works. But anyways, Ordinals, brand new demand for Bitcoin block space. Really quick. All right. So bullish Bitcoin, but how bullish are you, David? If you want to be Kathy Wood, bullish does Kathy Wood of Arc Invest, her bullcase right now is $1.48 million. per Bitcoin. In 2020, in 2030. By 2030, I should say, yeah.

Starting point is 00:21:18 It's not happening this year, according to Kathy. The bear case, I want to hear that most bearish possibility, Kathy Wood things could happen for Bitcoin, 258K per Bitcoin. Actually, I could see the bear case playing out. What do you think about these numbers, though, David? I gave my takes. I think that bull case is extremely bullish,

Starting point is 00:21:40 while Bitcoin perhaps might be able to tick that amount, I do not think it will ever be able to sustain a $1 million price. And the reasoning behind that is this math that is on the screen here. Bitcoin at $1.5 million in 2030 means that it's issuing $2.33 million every 10 minutes in block rewards. New Bitcoin being minted every 10 minutes is going to be worth $2.33 million. When Bitcoin hit its 2021 peak, it was issuing $400,000. thousand dollars per block. And so Kathy Woods bullish Bitcoin prediction would imply that Bitcoin would be issuing $2.33 million every 10 minutes. And that is why Bitcoin can't sustain a $1 million price tag because no bull market could ever sustain $2 million of flows out of Bitcoin miners

Starting point is 00:22:31 because they have to sell. Bitcoin miners have to sell. So that $2.33 million of issuance per block every 10 minutes comes out to $330 million a day of issuance for miners, which not all of it is sold immediately, but ultimately generally becomes sold, like 90, 95% over time ultimately becomes sold. How will anyone, how will any asset be able to sustain itself under $300 million a day of net sell pressure? That is, I don't think Bitcoin can ever sustain a $1 million price tag because of this math. eventually that block subsidy will drop to zero though. Yeah, but then so does the security, and that's a different issue.

Starting point is 00:23:13 Yeah, I think bankless listeners, hopefully you're seeing the way that bankless, David and I at least think about these assets. It's very much about how much. Yeah, it's about flows. It's about how much of block space, the product that blockchains create, are you selling versus what if this cost of the sale through issuance and through other kind of transaction fees. So that is Bitcoin. What about this other leg up, which we've seen, which is these AI tokens.

Starting point is 00:23:45 Here's a headline from CoinDest. The AI token search traffic spikes as crypto traders seek exposure. What in the world are AI tokens, David? And should I buy some? There are a certain class of tokens that are at various levels of relevancy to the world of AI. most of them are not very related to AI. Some people are looking for it. How do I get exposure to AI?

Starting point is 00:24:11 And so they're going and buying AI crypto tokens. The level of how much AI is actually integrated into these assets and actually meaningfully giving AI exposure to these assets is extremely suspect, which brings me to my take, which are some of these tokens though, like Singularity Net, Siscoin, Fetch.A.I. Deep brain chain is a 20. 17 ICO Darling token, which I have not heard since then. I mean, we're looking at seven days of about 160% for singularity net. Yeah. And so you're saying, like, it's basically there's a narrative, which is chat. GTP is really cool.

Starting point is 00:24:50 And so, so is crypto. And now these, like, AI tokens are kind of taking that narrative. Are you saying it's basically a narrative trade? It's basically a meme trade because this is a tweet that I put out. And I didn't really expect this tweet to get over a thousand likes. put this out there, but I guess it ticked the right nerve with certain people. I'll give you one too. Thank you. Let's make something clear is what I say. There is no material integration between AI and crypto. You cannot put AI into a blockchain. You cannot make a token that has AI in it. That doesn't

Starting point is 00:25:21 make any sense. AI and so I make the claim that AI's AI tokens are meme tokens. It is just a narrative trade. It's just a meme trade not too dissimilar from Deutschecone. There are ways like Numeri is a token that legitimately does use real AI to achieve its end goals. But it's the end goal that you should want exposure to, not the fact that it just uses AI. So are you saying, it totally makes sense. Are you saying this is a dumb market?

Starting point is 00:25:47 This is a meme trade. There is no such thing as a, it's a meme trade. You know, chat GPT for crypto. That doesn't exist. There's no chat. GBT on the blockchain. Okay.

Starting point is 00:25:55 Not saying AI is not cool. Or chain would, I'd, if at a certain value of... We're going to see that? Yeah. I'm sure we're going to see that this cycle. You know what is kind of cool, though, is a bright spot in the market, too, is NFT-Fi. It's processing record number of loans. So are people lending and borrowing against their NFTs now? I know that was

Starting point is 00:26:13 an idea that we started talking about about two years ago, and now we're actually seeing it in the numbers. 18,000 ETH borrowed in January. That's a lot of ETH, David. That's a lot of ETH. 444 million dollars in monthly volume in January from NFT lending. So this is using your NFTs as collateral. to borrow. Ben Dow had volumes of $36 million. $4,400 loans were made in January, which is almost double the previous peak. So, NFT lending coming into the world. The numbers are up bigly. I got to say, David, despite the detractors, NFTs are still pretty strong during the spare market. We're seeing an actual NFT-fi usage of NFTs. It hasn't collapsed the way some people thought it would. NFTs are doing pretty well. Well, there's a there's a huge amount of capital, quote

Starting point is 00:27:07 unquote, that's like locked up. Okay, so like there's a big difference between something like the United States and the legal system that we have in the United States and like third world countries and the legal system there. A lot of people in third world countries or, you know, countries with inadequate legal systems can't use their house as like as collateral. They can't get a mortgage on their house just because they don't have assurances. The legal system isn't set up. America does have that. And so people can use the value of their house to access capital. And this has been a huge boon of wealth for America. That's why one of the reasons why America is so great is because our legal system allows

Starting point is 00:27:41 to tap into capital. This is the same effect. I'm applying this to NFTs. Previous to now, the capital that's locked up in value of your NFT, your 100 ether crypto punk or your 100 ether board ape, you can't access that capital without selling it. With NFTI-Fi, you can access that capital without selling it. And so there is a wealth effect that is generated for all of the NFT holders

Starting point is 00:28:06 because they are able to use smart contracts to tap into the capital of their assets. And outside, importantly, this is outside the bounds of a nation state. So it doesn't matter where you live. You know, another way to describe what you talked about is kind of legal assurances. Settlement assurances. Settlement assurances. It's effectively what legal assurances are. and Ethereum gives us stronger settlement assurances too.

Starting point is 00:28:30 David, we got a lot more to cover. What's coming up next? Coming up next, did you have money in Gemini Earn? Because you might be getting your money back. Stay tuned. Yeah, Ryan, some good news. So Ryan, stay tuned. I'll tell you exactly how much you might be getting back.

Starting point is 00:28:43 In bad news, though. Operation Choke Point promises to take crypto bankless, but in the bearish way, perhaps crypto's biggest regulatory threat ever. And the manhunt is on for Doe Kwan. Meanwhile, Kyle Davies is ignoring the subpoena for the Three Arrows Capital lawsuit, bag boys, bad boys on the scene. All of this stuff and more as soon as we talk to some of these fantastic sponsors that make this episode possible, especially Cracken, which is Bankless's strategic sponsor for 2023, and has helped Ryan enjoy charting a little bit more this year. Thanks, Patkin. True, true story.

Starting point is 00:29:17 Cracken has been a leader in the crypto industry for the last 12 years. Dedicated to accelerating the global adoption of crypto, Cracken puts an emphasis on security, transparency, and client support, which is why over 9 million clients have come to love Cracken's products. Whether you're a beginner or a pro, the Cracken U.S. is simple, intuitive, and frictionless, making the Cracken app a great place for all to get involved and learn about crypto. For those with experience, the redesigned Cracken Pro app and web experience is completely customizable to your trading needs, integrating key trading features into one seamless interface. Cracken has a 24-7-365 client support team that is globally recognized. Cracken support is available,

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Starting point is 00:31:05 With Arbitrum, experience Web3 development the way it was meant to be. Secure, fast, cheap, and friction-free. David, is the Biden administration coming after crypto? What is Operation Chokepoint and what is happening? What's been the stir this week, as we've learned more about what the administration's doing? Yeah, Operation Chokepoint is a historical, something in history not to do with crypto that really just talks about how government institutions, government administrations can use the banking sector to debank industries that they find unappetizing. So Nick Carter is tweeting out, I don't want to raise the alarm. I don't want to sound alarmed.

Starting point is 00:31:42 But since the turn of the year, a new Operation Chokepoint type operation has been targeting the crypto space in the U.S. It is a well-coordinated effort to marginalize the industry and cut off its connectivity to the banking system and it's working. The original Operation Chokepoint was like an Obama era thing, you know, 2012 and 2013. And it was like targeted towards, you know, all the kind of gambling. Yeah. All the all the poker websites got kind of shut down almost overnight. Which is why they started to use Bitcoin. That was a big, big, impetus of Bitcoin adoption.

Starting point is 00:32:20 And then it was expanded later into other, you know, defarious industries, you know, the marijuana industry and others like it. So now what Nick Carter is saying is basically there's going to be an Operation chokepoint 2.0. Indeed, it's already begun. And this time in the target sites is the crypto industry. And he's brought some evidence to the table, too. So what are some facts that he mentions that are relevant to this case? Yeah. So he wrote it this fantastic blog post. and just I'll read some of the experts here, excerpts here to give the summary. See, he begins, what began is as a trickle is now a flood. And by the way, all of these events have happened in the last two months or so.

Starting point is 00:32:59 The U.S. government is using the banking sector to organize a sophisticated, widespread crackdown against the crypto industry, and the administration's efforts are no secret. They've expressed plainly in memos, regulatory guidance, and blog posts. However, the breadth of this plan spanning virtually every financial regulator, as well as its highly coordinated nature, has even most of these steely-eyed crypto-womeness. veterans nervous that the crypto businesses might end up completely unbanked. Stable coins may be stranded and unable to manage flows in and out of crypto and exchanges might be shut off from the banking system entirely. The Biden administration is now executing what appears to be a coordinated plan that

Starting point is 00:33:33 spans multiple agencies to discourage banks from dealing with crypto firms. It applies both to traditional banks who would serve crypto clients and crypto-first firms aiming to get bank charters. This effort includes the administration itself, influential members of Congress, the Fed, the FDIC, the OOC, and the DOJ. So there's intergovernmental agency coordination here. So then Nick goes on to list off some of the events that have shown this effort. On December 7th, Signature, which is an active bank serving crypto clients, announces its intent to have deposits ascribed to crypto clients,

Starting point is 00:34:09 which basically means they'll give customers their money back and shut down their accounts. Drawing its crypto deposits down from $23 billion at the peak to just under $10 billion as it's exited stablecoin businesses. I've had this happen to me, by the way. They just send you a dear John letter and say, yeah, we're cutting you a check. See you later. Yep. No due process. On January 3rd, the Fed, the FDIC, and the OCC, releases a joint statement on the risks to banks engaging with crypto, not explicitly banning banks ability to hold crypto or deal with crypto clients, but strongly discouraging them from doing so on a safety and soundness basis. January 9th, Silvergate stock, which is probably crypto's biggest bank.

Starting point is 00:34:46 one of the only banks in the West that would like bank the exchanges and such. Yeah, the stock falls to a low of $11.55 on bank run and insolvency fears after having traded as high as $160 in March of 2022. January 27th, the Federal Reserve denies Crypto Bank custodias two-year application to become a member of the Federal Reserve System, citing safety and soundness risks. Safety and soundness is a recurring theme here. 27th of January, again, the National Economic Economic and, Council releases a policy statement not explicitly banning banks from serving crypto clients, but strongly discouraging banks from transacting with crypto assets directly or maintaining exposure

Starting point is 00:35:25 to crypto depositors. February 2nd, Department of Justice fraud unit announces investigation into Silvergate over their relationship with FTX and Alameda. February 6, Binance suspends U.S.D. bank transfers for all retail clients. January 27th, the Fed issues a policy statement which discourages banks from holding crypto assets or issuing stable coins and broadens their authority to cover non-FDIC insured state chartered banks. On February 7th, that same statement I just talked about is entered into the federal register,

Starting point is 00:35:55 turning the policy statement into a final rule with no congressional review or public notice or comment period. And lastly, there's more. I'm just pulling out the big ones. As February 8th, Protego and Paxos's applications to follow Anchorage and obtain full approval to become national trust bank. banks are outstanding past the 18th month's deadline and appear likely to be imminently denied by the OCC. So hopefully this gives you just a flavor of how broad and

Starting point is 00:36:25 coordinated and intentsful this effort to debank the crypto industry has become. You can tell why it's called Operation Choke Point is because the banking sector that the state largely controls, the U.S. largely controls and the executive branch can apply pressure to is choking off the crypto industry. Nick says this too. In some, banks taking deposits from crypto clients, issuing stable coins, engaging in crypto custody, or seeking to hold crypto as principle, have faced nothing short of an onslaught from regulators in recent weeks, time and again, using the expression, safety and soundness, there it is again. They've made it clear that for a bank touching public blockchains in any way, it should be considered unacceptably risky. Do not touch

Starting point is 00:37:12 a blockchain banking industry or we will come after you. That is the message that the executive branch is sending right now. Yeah, the whole strongly discouraging them is basically just like, don't do that. Do you want to get investigated? Yeah, exactly. It's like not a threat that's also a threat. Jake Chavinsky, who is a lawyer that both Ryan and I trust very, very much.

Starting point is 00:37:36 Great, great guy. He tweets out, this is accurate, talking about Nick's take. Without new legislation from Congress, federal agencies lack the authority to comprehensively regulate crypto markets, so their fallback position is to weaponize control over the banking system to mandate discrimination against crypto companies. This must stop. That's what it is. It's mandated discrimination, isn't it, against crypto, against the industry. This is Senator Bill Haggerty, who tweets out regulators singling out business activities should alarm all Americans. It doesn't matter if it's crypto assets, firearms, or any other lawful business using banking

Starting point is 00:38:16 regulators to advance political agendas should not be tolerated. Yes. Thank you, Senator Bill Haggerty. Appreciate the take. That's great. I'm glad you're a senator. Look, I think this is apolitical, right? If it wasn't the Biden administration, then maybe it would be the Trump administration.

Starting point is 00:38:32 And obviously, people in crypto bankless would come down just as hard on that industry. This is about using the banking system to undemocratically control certain industries and to restrict us from the ability to freely transact with our money. That, I think, is a breach of American values of our constitutionally granted liberties and should not, cannot be tolerated. And it's seeping in. It's not a declared policy, but we can see the effects in the last few months. And I do think, David, look, SBF didn't do us any favors, did he? All of this kind of gave those who maybe already wanted to come after crypto an excuse to come do it. Yes. No one can stand in our way now. Crypto is, you know, clearly a scam that we have to,

Starting point is 00:39:24 we have perfect cover in order to execute this operation choke point. All we have to do is say SBF, the name FTX, and we'll get whatever we want. That's what seems to be happening. Yeah, there's absolutely no coincidence that this started right after FTX. And the powers that be were just asking for an excuse to do some of this stuff. And also, this should hit really close to home because what we're doing in crypto is building systems that intentionally cannot do this. Like, this is what we are trying to prevent. Freedom to transact. No political control over money and economics.

Starting point is 00:40:03 So this isn't just like, oh, they're coming for crypto. This is exactly what crypto is standing up to remove the powers of. And it was your take last week, Ryan, that I really, really liked. Separate government from money. Separate money from, separate finance from political powers. Thanks for that, James Madison. I got to give credit to that guy. I think he had some important things to say on the subject.

Starting point is 00:40:27 Yeah, so also this is sort of related, sort of unrelated, but it seems like local Bitcoins is closing down. That's certainly a shame. Local Bitcoins was a way for you to exchange Bitcoins using the internet as kind of a facilitator, but actually meeting up in person and doing kind of a swap in person. It was completely decentralized.

Starting point is 00:40:48 Craig's list for Bitcoin. Peer to peer, right? In the analog way. So it's like trading cash for crypto and you would meet up and somebody would give you cash and hit you, they would swap for crypto. So you would have to like meet with this person. And there are also like you could have a third party custody person if you wanted to have that as well.

Starting point is 00:41:06 But like, I mean, you can kind of get why governments don't want this. But also it's cash and we should be able to trade cash. Well, I don't know if this was, this is not related. This is just local bitcoins, I think, had to close. Oh, a while ago, a long time ago, there was government regulation specifically going after local bitcoins over maybe over two years ago. So local Bitcoins has been like in the crosshairs of regulation before. It's not only local Bitcoins.

Starting point is 00:41:35 It might be institutions that provide staking in the U.S. This just happened before we recorded this the day before our recording from Brian Armstrong. We're hearing rumors that the SEC would like to get rid of crypto staking in the U.S. for retail customers. I hope that's not the case, as I believe it would be a terrible path for the U.S. if that was allowed to happen. Brian goes on talking about how it will drive. staking offshore will not help the U.S. on its path towards becoming a more innovative economy. It will set us back, all of these things.

Starting point is 00:42:09 Again, the SEC is another branch of the executive. So this would fit into the whole narrative of Operation Choke Point. This is still a rumor, Brian Armstrong says, but the fact that he tweeted it means that he wanted to make a statement. He wanted to get the news out there. David, can you imagine if Gary Gensler and the SEC came after staking in the U.S. retail staking.

Starting point is 00:42:31 So that almost implies that if you're wealthy, you can stake. So it's basically like another discrimination. Discrimination against the poor. Sorry, you know, you're pleb. You're too poor to stake. But the rich institutions can. It also remains to be seen if this would extend outside of kind of the institutional staking of a coin base, for example, or a centralized exchange.

Starting point is 00:42:56 And would it extend to like a rocket pool, David? Would it extend to Elido? Would it extend to a home validator that you're running? Can you imagine that? What a breach of our liberties that would be if that happened in the United States. You must do it through an institution. Give me a break. I don't even know.

Starting point is 00:43:16 This is, again, it's rumor. And I feel like some of this is, obviously, Twitter is kind of optimized for maximum fud. It's probably not as bad as it all sounds. But it's clear something is going on here. and we need to brace ourselves. We need to be ready for it. Yeah.

Starting point is 00:43:31 When Brian tweets out something like this, when he starts a tweet thread and the thread says, we're hearing rumors that the SEC would like to get rid of crypto tech in the U.S., like Coinbase lawyers are connected. This isn't Brian just like, oh, I heard a rumor. This is Coinbase's lawyers who absolutely know something, who's like, Brian, we need to use your messaging and platform and Twitter account to broadcast this to the rest of the industry.

Starting point is 00:43:56 This is so like, we're hearing rumors. This is, the rumors are substantial. I can almost guarantee you that. This is definitely the U.S.'s loss. And people are saying, well, this is the end of crypto and the U.S. can choke off crypto. It actually can't choke off crypto. It can choke off the U.S.

Starting point is 00:44:12 The U.S. can't kill crypto, but the U.S. can kill the U.S. if it wants to. The age-old line is you cannot ban Bitcoin. You can only ban your citizens from accessing Bitcoin. There's a difference there. 100%. You're just doing a disservice. your own citizens. There's more from Gensler this week. I can't believe this headline. You want to read it

Starting point is 00:44:31 out? Yeah. So you think it stops at staking, Ryan? Gensler states that NFTs are a gateway token. Appearing before the students of George Washington High School, SEC Jerry Gensler called NFTs is a gateway token during his speech about the dangers of crypto. The talk was a one stop shop on a campaign called Just Say No to Crypto, bro, which Gens are designed to one younger generations about cryptocurrency. You didn't give me that time, David. No, I didn't get you that time. I read this in the agenda ahead of time. So what's this from?

Starting point is 00:45:05 This is not true. This is not true. Although, if you believed it, you would be remissed because other things that Gary Gensler have said has been like this. The gateway token. So if you believed that without noticing that this was a rug, congratulations, you got rugged. This is a product out of the bankless dial. The rug is basically the onion of crypto.

Starting point is 00:45:24 you can go to the rug.mere.xy Z. Last week, we just started doing this. Last week was the second time we did it. Ryan got rugged. And he's the one who pulls up the length in the first place. I know. Imagine that. It makes it even better. And so there's a bunch of other headlines. Check them out. They're really great. There's a link of the show notes. You can also collect this rug. This is a collectible rug. You can collect this rug. Remember kids? Just saying. I thought this was great. I thought this is awesome. Good one. Genesis versus DCG. David, am I going to get my money from Gemini Earn? how much, how soon, give me the deeds? The is not completely locked in stone, but people have done some math. They've done some napkin math and come up with a number of about 80% under the current proposal. Genesis creditors expected to receive 80% recovery under the current proposal. This decrypt article states that there's a Genesis Global revealed their new restructuring plan between Genesis and Digital Currency Group, their conglomerate, which enables creditors

Starting point is 00:46:23 to get their money back. So where are all the funds coming from? How is DCG and Genesis coming up with the funds to make Genesis creditors whole? Well, first off, Genesis, of course, has some funds. They didn't go to zero. They have some funds to start with. In addition to the funds that Genesis has, DCG is also selling Genesis global trading. And so they will generate some money for that.

Starting point is 00:46:45 In addition to that, DCG is also exchanging its existing notes amounting to $1.1 billion for stock and refinancing $1 billion of. loan, so it's getting money that way. And they are also moving to sell blocks of shares in the trust that they have. So they have a light coin trust. They have a Bitcoin cash trust. They have an Ethereum Classic Trust. I don't know why they have an Ethereum Classic Trust. They also have a digital large fund cap. And so they hold their own assets in their trust. And so they are selling their trust funds on the open market at a large discount, by the way. And so people are buying these trust assets for very significant discounts of the net present value in the actual trust.

Starting point is 00:47:24 And with all of this selling and an additional, Ryan, $100 million from Gemini to make its own earned customers whole again to pay for the fault of Genesis, all of that is coming up to about 80 cents on the dollar. So this is the napkin math that has been calculated. If you are a Genesis creditor and that includes Gemini earned customers, you are perhaps going to get 80 cents on the dollar. Probably not soon, but maybe, hopefully this year. Do you know what?

Starting point is 00:47:56 Look, this feels like a very adult thing to do. Everyone took risk. Everyone gets a little bit of a haircut, all right? DCD. Including customers. Including customers. I use Gemini Earn. It was risky.

Starting point is 00:48:08 You know, before I deposited, I knew I was getting into. I feel like I should get a haircut for this. Sure. Not 100% haircut. Please, please, crypto gods. How do you feel about that 20% haircut? Fine. I'm not going to say I deserved it.

Starting point is 00:48:21 But I kind of, like, it wasn't a bankless thing to do. The reason that I've used some of these centralized exchanges is to kind of test them and compare them versus defy. It's not a large amount of money for me. I think for some people, the lesson will be much more painful because they had a large portion of their funds inside of these accounts. They weren't using them in the way I was using them. And that does feel a little lopsided and unfair. But still, what happened was DCG is taking a big haircut, which they should. Gemini is acknowledging some culpability

Starting point is 00:48:51 and, you know, contributing to this and depositors take care of it. Much different than what's going to happen with Celsius and BlockFi. I don't know if you're going to get anything from Celsius. Well, no, because Alex Mishinsky

Starting point is 00:49:04 totally rugged you. BlockFi, you might get something. I don't think we're going to get anything close to 80% from either of those cases. So it's unfortunate, but I'm glad that both the Winkle Vosses and Barry Silbert could kind of come to terms on this and figure this out. There's a lot of back and forth publicly on Twitter before this

Starting point is 00:49:23 happened, but this seems to be a reasonably good outcome for depositors. So look, this was the last domino to fall, and it feels like now it's fully fallen. We dealt with 2022. Can we safely say that now, David? Well, now we have to deal with all the regulatory blowback, but the crypto side of things, I think it's coming to a close. I'll just say that the Winklevite twins and Gemini kind of get a lot of flack, but I mean, I mean, they don't have to put up $100 million, but they are anyways. And so I just want to give them some quick props. Yeah, that's good.

Starting point is 00:49:57 It was also probably a good business decision. I mean, they didn't come out of this looking clean. So that's maybe the cynical view of it. But yeah, it's good, good outcome. David, what do we got coming up next? Coming up next, Arbitrum enables devs to B-Y-O-L. What's B-Y-O-L, Ryan? Does that stand for Bring Your Own Language, David?

Starting point is 00:50:16 No, it doesn't. You just made that up. but that's what's happening. I wanted to say it, guys. Thank you, dude. Yeah, exactly. Lido v2 brings Lido's path towards decentralization. Maker Dow releases a financial performance report.

Starting point is 00:50:30 We're talking about the A16C governance cartel, as well as a number of other really cool stuff. Stay tuned for all of that. Very cool stuff and more. But first, a moment to talk to some of these fantastic sponsors that makes the show possible. Uniswap is the largest on-chain marketplace for self-custody digital assets.

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Starting point is 00:52:19 with automatic warnings for malicious transactions or fishing websites. Phantom has already saved over 20,000 users from getting scammed or hacked. So get on the Phantom Waitlist and be one of the first to access the multi-chain beta. There's a link in the show notes, or you can go to phantom. Dot app slash waitlist to get access in late February. B-Y-O-L, David. I'm going to say it again. Bring your own language.

Starting point is 00:52:40 That's what Arbitram is doing. At least that's what I interpreted. Can you talk about this big. development upgrade. I know some of the folks from Prismatic Labs now part of the Arbitrum ecosystem are very excited about it. But what's happening in Arbitrum world? So Arbitrum is announcing Stilis, which is what they are calling a next-gen programming environment upgrade for the Arbitrum chains, Arbitrum one and Arbitrm Nova. What is stylis? Stylus uses WebAssembly to prove all kind of programming languages and run smart contracts on Arbitrum using languages like Rust, C, C++, Haskell, P,

Starting point is 00:53:15 The move programming languages from Aptos and Sui will now, using Stylis, you can use that on Arbitrum. So the idea here is both Arbitrum and optimism have gone after what we call EVM equivalents, but that is really optimizing for solidity. What Stylus is, is perhaps like a sidecar, these attachments, plugins, that uses WebAssembly, and WebAssembly lets you use any programming language, which is why Ryan has created this term, Bring Your Own Language, which has never been stuttered before in the history of ever. Never. And so this is why Arbitrime is calling this EVM plus as an EVM plus literally every other programming. It's pretty awesome. This has never been done before. This is a very big deal.

Starting point is 00:53:55 This is awesome. If you're not a developer and you don't know that the Haskell and Python and C++ and everything that David mentioned, this is a really big deal. Like, Ethereum's been trying to do this for a long time. It compiles all down to the EVM. But you can bring your, you can bring your own language the third time I got that in. So it's pretty cool. I don't know if I'll be able to do it with like I've got a little bit of HTML experience. And you know, I think I can. Yeah, you think I can. Thanks. That's how old I am.

Starting point is 00:54:22 Where do you think I learned HTML is from MySpace? On MySpace? Yeah. I remember we were talking about GeoCities one time though and you're like, what's GeoCities are. I don't know where GeoCities are. Okay. The OGs, the internet OGs listing. No, know what GeoCities was.

Starting point is 00:54:36 Take my word for it. Yeah. This is how you can date Ryan and date David. That's the line. that is drawn. Yeah, I came in at GeoCities, David Giont during the Myspace Days, and yeah, well, here we are now. There's more going on in the dev ecosystem.

Starting point is 00:54:51 That is good news, though, too. Tell me about StarCware. They're open sourcing their Prover technology. That sounds like some geek speak. Please, bankless explain it to me, David. So ZK Rollups, which is what Starquare is, require Provers. Optimistic Rollups require fraud proofs. ZK. Reloets require Provers.

Starting point is 00:55:09 And Starware has announced their plan to open source their... Prover, which will allow individuals to review the code, detect bugs, transparency, all the stuff. This is one of the critical steps for the decentralization of our layer twos. However, it's kind of the step that is the most esoteric. And if more people didn't know about the Prover, that would be kind of okay because it's kind of niche. But it's still important nonetheless. Notably, they did not actually announce when they would do this.

Starting point is 00:55:36 They said that they would open sources at the time that they needed to decentralize Darknet. But they announced it. It's kind of an announcement of an announcement. They announced that they're committing to it, which I think we actually kind of assumed anyways. David, this was really cool. Maker Dow, they released a financial performance report on the protocol. All right. And this is all on IPFS.

Starting point is 00:55:58 This is so cool because it reminds me of like just like, you know how you look up a 10K or quarterly earnings report for your favorite stock? At least I used to do that back in the day. It's my favorite activity. Is it really? This is the equivalent. I mean, but like, it's so cool. Look at these key financial results for the Maker Protocol. This is all on-chain revenue that they're able to kind of generate these reports from

Starting point is 00:56:20 and then put it on IPFS. These are unstoppable organizations. It's what a Dow is. It's an unstoppable. I'll put in air quotes, corporation on Ethereum. Doesn't have a jurisdiction. I could go on about this. But what do you think was cool about it?

Starting point is 00:56:35 For the podcast listeners who aren't looking at the screen, what we're looking at on screen is a financial statement report that looks exactly like what a boomer would love to see. This is a speaking boomer talk, tradfi talk. This is a financial statement report for the maker protocol. Again, hosted on IPFS, which is pretty damn cool. And it is organized with just like in the way that an Excel sheet and like year ending, year over year, all of these terms, net operating earnings, total operating expenses, total net revenues, blah, blah, blah, blah, blah. all of these things that would make Tradfi able to understand what's going on here. Yeah. By the way, bankless listeners, for all the baby boomers listening, right,

Starting point is 00:57:21 when David says the term boomer, sometimes he's using that as a term of endearment. And that was such a case. David calls me a boomer when I do something like mature. Or I talk about like taxes or I talk about like things that adults need to do. And so I hope you took that as a. compliment. That is just, I'm doing some intergenerational translation here. Yeah, maturity. It's like people that require mature reports about what's going on in DFI would enjoy this. Adult things, right? Adult things, yes. All right. What do we got? A boomer things and adult things are mostly,

Starting point is 00:57:56 not all, but mostly synonymous. Here we go. A16 Z, they voted against a proposal to deploy the latest uniswap iteration on the B&B chain, flexing their token governance power. A lot of people were upset about this. Can you tell us about the controversy and some of the takes here? Yeah, so people are gearing this up as a VC versus VC governance war. So it's A16Z versus jump crypto. A16Z backs, and this has to do with a bridge that would, that connects the governance, the univote between the wormhole bridge. The wormhole bridge. So like wormhole is backed by jump. A16Z backs layer zero. But there was a proposal. There's a proposal. to put uniswap on B&B, and then there was some controversy over what bridge that they would use.

Starting point is 00:58:44 Is this right? This is what people are assuming it is being fought over. So ACCC and Z wants Uniswap to use the Layer Zero bridge, which is their product they have A invested in. Jump wants Unwiswap to use the wormhole bridge, which is what Jump invested in. And so now these AVCs are fighting over this. I don't actually, I don't think Jump Crypto voted with their tokens, but it was the wormhole bridge that was used in this proposal, which A16 and Z use. its governance power to veto. And so the debate about this bridge to use is partly about

Starting point is 00:59:14 security because we all know the dangers of layer one cross layer one bridges. A16Z use 15 million of their unitokens to vote against the wormhole bridge for the Uniswap V3 deployment. Do you have a take on this? Some people are outraged calling this an A16Z cartel. What's your take? Yeah. So I'll give my take at the end. This is Stevens tweet, Doge Toecee from the block. And a quote from the community that he's quoting says, if A16Z goes against the community vote and tries to tank it, I'd be shocked. That would be truly abhorrent. I don't think that they would go that far.

Starting point is 00:59:48 And then he follows up with, you know, narrator, they went that far because that's what they did. However, there is Eddie Lazaran, who I believe is at A16Z, who tweets out this. Seeing many false claims about A16Z's crypto's voting power in Unswap Foundation governance, let me clear it up. A16Z, we delegate 40 million votes to outside groups with no conditions on how they vote. We vote with 15 million tokens less than half of what we've delegated to others. So A16Z has given their governance power of the majority of their tokens to others, and they say that they don't have any influence over their vote.

Starting point is 01:00:25 And so the A16D used 15 million of their union tokens to vote on the proposal that they wanted, and that swayed the vote. And the thing is, they were the only ones that really voted for the no to reject. Almost everyone else voted yes, which is why this is controversial. But I mean, the vast majority of voters just tokens didn't vote at all. We should specify that too. Very good point. Like a minority of total voters.

Starting point is 01:00:50 How do I feel like this is a VC cartel? No, really. I'm kind of like man about this whole thing. What's your take? My take is similar. I think it's kind of like it's token voting. It's token vote. We're all clear on what that means, right?

Starting point is 01:01:05 Yeah. The protocol states that those with the, the majority of tokens win the vote. It's literally what it says. I think people need to realize that some of the decentralization and the token voting around these protocols is actually not pure decentralization. And the most decentralized part of uniswap

Starting point is 01:01:25 is the code that runs uniswap. That's it. After that, you have varying degrees of decentralization or centralization. This token vote is very similar to the governance mechanism for publicly traded companies or for any pool of capital that has kind of some sort of shareholder vote. So I've never exalted the idea of token vote in my mind and thought that this was somehow

Starting point is 01:01:49 some panacea and somehow more decentralized than shareholder voting models. I've always thought that, look, it's just the shareholder voting model that we've ported into crypto. We're not making that part of things any more decentralized. So am I mad? Decentralization, that's really the issue here. It's that A16 and Z win against the community. But everyone else.

Starting point is 01:02:12 They are, they are. They are the community too. They are the community. Yeah. Uh-huh. Like, that's the deal. And also to give the pro side of the A16 and Z argument, just another, one more line is like, yo, like, let's not discount how cautious and conservative that we should be

Starting point is 01:02:29 when it comes to which cross-chain layer one bridge that we should support. And if A16Z, who has the resources and manpower and technical capacities to vet the security of cross-chain bridges feel that the wormhole bridge is insecure, which has already been hacked once, by the way. Not to say that their bridge, Layer Zero, can't be hacked. But if that's what their expert opinion is, they have the resources in the world much more than the community, the retail of the world, to actually vet that bridge. And so I think we should actually appreciate some of their abilities to do. due diligence beyond retail due diligence. I think we should consider it for sure. And for those who are saying, oh, looking at Ryan and David are now, A16Z apologists.

Starting point is 01:03:11 No, that's not what we're saying. VC apologists. Like, the ultimate remedy for this is the ability to go fork the uniswap code and spin up your own uniswap. The decentralization of uniswap is that A16Z, no matter how hard they ever tried, cannot shut down the code and turn the thing off or ban you from using. Uniswap. That is the decentralization that makes Uniswap actually bankless. And so governance layer aside, I think there are far more ways to preserve the decentralization

Starting point is 01:03:43 of protocols that are built on crypto versus the real world. David, what's going on in the NFT world? I see a tweet here from Lincoln Park. What are we looking at? Yeah, they have a new music video lost, which is getting a ton of attention and hype. The reason why it's relevant is that the beloved artist People Pleaser, the artist that created the uniswap v3 x times y equals k uh nftt movie which created pleaser down which has already also done so much stuff people pleaser the artist created the directed the music video for lost for lincoln park uh congrats uh people pleaser is a dear friend of mine uh i think she's becoming probably one of the iconic nfti artists of this base uh the fact that she's working with

Starting point is 01:04:27 lincoln park i think is fantastic you know what else she's done ryan um before she came into the World of Crypto. She did the cinematic shorts for Diablo 4. No way. Yeah. Uh-huh. Diablo has some epic cinematics. That's amazing. Yeah. She does killer. So is there an NFT related to this at all? Sorry, is this going to be an NFT? I actually. Can I buy this? Oh, this is all about people pleaser. This is all about people pleaser. Okay. All right. So I don't believe that there is an NFT, but it's people pleaser and also her startup Shibuya, who's kind of like a choose your own adventure type of a production studio. So their community does have tokens, NFTs,

Starting point is 01:05:09 and using those tokens, you can choose the outcome of what this production company will make their story like. So Shibuya is also part of this music video for Lincoln Park. So just an overall success for People Pleaser and Shibuya, a crypto-Defi-NFT native team. So that's how it's related. David, so CoffeeZilla is somebody who exposes scammers. and has been doing a lot of scam exposing in the crypto space lately.

Starting point is 01:05:35 This is a tweet from Coffee Zilla just earlier this week. We just tricked Dylan Danes into promoting a fake NFT project. We paid him $1,000 to post. He didn't disclose it was an ad and posted copy that literally spells out S-K-A-M. That's not how you spell scam. That's not how you spell scam. How do you spell scam, David? You spell it with a K.

Starting point is 01:05:58 S-C-A-M. And a scam. The word scam, David. So he's promoting, he got, again, coffeezilla, told Dylan, Dan, says, hey, we'll pay you $1,000 to promote this. It's our NFT project. It's called Sowers, candies are moonbound, S-C-A-M. And then Dylan just tweets this out. Check this out.

Starting point is 01:06:19 Sowers, NFT, candies are moonbound. Hashtag not financial advice. And then SowersNFT.com. What this man did not do, Ryan, if you scroll down, is that he did not go. to the website. So Coffeezilla follows up and says the entire project is fake and if you mint it, it takes you to the website devoted to all the scams

Starting point is 01:06:38 that he has done in the past. He being Dylan Dennis, the guy that's tweeting this out. Who is this guy? Who is Dylan Danis? Some MMA fighter. Like not related, not relevant. All right. Just like an influencer. They made a website that is of all of these scams

Starting point is 01:06:54 that Dylan Danis has promoted and then they paid him to promote this token mint. And the token mint website was actually this website that was about how all of Dale and Danes has promoted scams. So the guy didn't even check the link. Wow. And he did it for a thousand dollars, Ryan. That's some poor de diligence. How much would you sell your reputation integrity for, David? At least two thousand dollars. Guys low-palling himself. I mean, what do you think of this kind of like honeypot activity by people like Coffeezilla? Like baiting the influencers and I think it's awesome.

Starting point is 01:07:28 Do it more? Yeah. Oh, yeah. Please. I will say this is maybe a good time to shill our disclosures. Bankless.com slash disclosures. I actually think we do a pretty good job of this, David, which is... I think we have the best disclosures in the crypto industry. I don't know if anyone who has more strict disclosures than we impose on ourselves. If you see somebody that's better, send them to us. Let us know because we'll beat them.

Starting point is 01:07:52 Yeah. We'll want to change it. We will one up your disclosures. We'll up the ante. Anyway, you could see all the sponsors for bankless. individual investments that we have, investments of people on our team, disclosures of bankless LLC, anyway, it's all there.

Starting point is 01:08:06 And I think this is really important to hold people who have influence in society to this type of a standard. And we don't have kind of the regulations or the ad police. Not necessarily, I don't necessarily want that either. But I do want disclosure to be a social norm across all of crypto. I think that's really important. David, FTX. Tell us about the bad boys.

Starting point is 01:08:28 So let's start with SBF. then get to Doquan. What's happening with SBF? This is just FTX debtors want their political donations back. So FTX debtors are sending confidential notes, apparently not that confidential, because we heard about them, to the recipients of donations from FTX as lawyers review $93 million in political contributions as part of the bankruptcy case. So they are sending out all of the political figures or entities or whatever to saying them, hey, that money that FTX donated to you, give it back. Give it back. Yeah, because it wasn't his. Politicians who received contributions linked to FTCS should return the money by February 28th.

Starting point is 01:09:07 Some political groups have already taken steps to return the money. The Democratic National Committee and Senate and House campaign committees have set aside a million dollars in cash and to return to bankruptcy lawyers as well as others as well. There is justice in the world, David. This is good news. Oh, and this is also, if you don't do this, that just means that FTCS is going to go to court to claw back the fund. So this is like, volunteer to do this now or we take you to court to clot back. So this is like- Do this the easy way, the hard way.

Starting point is 01:09:34 Exactly. That's exactly right. Yeah. There was a rumor going on earlier this week, speaking of FDX, that the Super Bowl was going to ban cryptocurrency TV commercials. Now, I don't think that's true. Yeah. That said, David, I don't expect to see many, if any, crypto commercials this year. And that was such a contrast. I remember last year at this time, this exact roll up last year. We were excited about anticipating all of the cryptocurrency.

Starting point is 01:09:56 It was, we had an article about it. Right. And just after it. And in fact, I hate to say this now, it sounds terrible. But you got to give FTX credit. At least whoever did their ads, they actually had the best ads from last year. I mean, it's on brand for the scam to have the best one. I guess so.

Starting point is 01:10:14 I mean, it was such a well done scam, wasn't it? I mean, you can't like, SBF pulled that part of it off. Anyway, but there's Coinbase. There was who else? There was E Toro. There's a whole bunch of them last year. None of that this year. Budweiser had shoutouts to crypto projects. They had the Nouns goggles, which was the most, what would I call, tasteful and just well-researched way of putting crypto into your...

Starting point is 01:10:38 I don't think we're going to see. It's a way that wouldn't offend Normies because they don't know what those goggles, the noggles were, the Nouns goggles. But all the crypto people knew. This is for those in the U.S. If you're watching the Super Bowl this weekend, if you notice a Super Bowl commercial about crypto, then tweet bankless. I want to hear about them. If you see anything something. The Super Bowl's this weekend? Isn't it? I don't know. Look, neither of us know, which is maybe tells you something. Maybe it's another fact check.

Starting point is 01:11:06 It's sometime in February. Oh, it is. Oh, my God. It's the 12th. What day is that? That's this weekend? I had no fucking idea. Big sports fans over here.

Starting point is 01:11:15 No idea. But you, do you know where Do you want? But the rumor was it was that crypto ads are, crypto ads in the Super Bowl are banned. They're not banned. Two companies... They just don't have any money. Yeah, all the money fell through.

Starting point is 01:11:30 So two other companies were on the one yard line, they said, a quote from the article, before the collapse of FTX, and then that created the NFL motivated to look elsewhere for their ads. And so it's not banned. It's just like all the deals fell through. Can we find this guy, though? Doquan, we talked about SBF.

Starting point is 01:11:47 Where's he? Unknown. And that is what Korean officials are, they're looking for him. So Korean officials traveled to Serbia. to the far reaches of Serbia last week to help seek out Doe Kwan, who was a fugitive. So a long time ago, an arrest warrant was issued. Yeah, dude, he's still tweeting, man.

Starting point is 01:12:08 They can't, like, somehow track an IP address and, like, figure out. I don't know, man. Are they trying? How hard to be trying? There's an international red notice out for his arrest, which means that, like, yo, all governments who are anything, if you find this guy, arrest him. So people are going as far as Serbia to find Doquan.

Starting point is 01:12:30 Like, there's only a matter of time. Like, we're going to get this guy. Soquan's going to jail. Yeah, real small world. Hard to hide. Kyle Davies is also hiding, David. What's this headline? Yeah, so a few weeks ago, we covered the Twitter subpoena because Kyle Davies was also

Starting point is 01:12:47 still tweeting. And so since they couldn't find the man, they just tweeted out his subpoena because they knew that he was still tweeting. And so a quote from this article, a quote from one of the attorneys, says, he is, without question, aware of the subpoena, having being tagged in 41 replies and 64 retweets. One of those was mine. And has once again chosen to ignore his duties to three errors capital, says Russell Crumpler and Christopher Farmer, who are overseeing the bankruptcy training firm.

Starting point is 01:13:16 Really? Yeah, well, Kaya and Davies was taking interviews, like at least a couple months ago. Remember, he's raising to build an exchange. I mean, he's just doing this blatantly. It's like, hey, all of the charges that I'm probably guilty for, I'm not going to answer to. Meanwhile, I'm going to stay in Dubai and raise for my new fun. And also, do you want to invest in my startup? Did I share my DMs with him with you?

Starting point is 01:13:43 He messaged me, dude. I'm going to pull up my DMs right now on my phone. Hold on. Kyle Davies, when did he message me? Monday, January 30th. Hey, David, hope you're well. Sue and I are launching open exchange soon. would be great to get your feedback if you're free this week. What does Kyle Davies expect from me,

Starting point is 01:14:01 dude? I am not your friend. I hope you told him you were free. And I would love to do a show. I won't respond. Well, it's not too late. Go ahead. I'd be curious. I would. I just be like, okay, so I was joking with a few friends. It's like, yeah, I'll do this. But I'm also bringing on five of my friends and we're going to roast you as you talk. But I don't think he'd be interesting. Yeah, it's probably not appealing to him right now. I think he wants to pitch his company. Meanwhile, this is going on. Consensus is fighting to get staking tax-free, essentially. They're backing a lawsuit against the IRS over taxing staked crypto. And here's the argument. Basically, some appellates are arguing the position that staking rewards should not be considered

Starting point is 01:14:45 taxable income because there's no employer that's doling them out. It's a protocol. It's not employer. It's just code. They should instead be considered effectively self-generated or created property. And there actually is some precedent for this, David. It's similar to a farmer who grows crops. Staking rewards are created by the protocol to incentivize participating in providing security for the protocol.

Starting point is 01:15:09 So created property is not taxed until sale. Right now, the tax treatment of a staked income, most people assume, or staked ether or any asset, most people assume, it's just as income. So you receive it as income, and it's taxable income the same way a salary might be in your job. Well, this argument is happening in the court system right now

Starting point is 01:15:31 is that it should be treated more like growing crops. And when you grow more crops, that's not a tax event. It remains to be seen whether this holds up in court, but that would be incredible if it did. That would mean all of the staked, all of the staked revenue that people receive is not actually taxable at the time they receive. I love those words.

Starting point is 01:15:55 Yeah, just when you sell. Just when you sell. Yeah. We'll see. I'm rooting for him. That makes too much sense. David, it's ship season. What are we shipping?

Starting point is 01:16:03 What do we got? Oh my God. So much. Lido v2, path towards decentralization. A new architecture for Lido that is supposed to be the architecture that allows for Lido to accept anyone to be a validator in the Lido system. It is a big step, is one of the biggest steps that Lido has needed to take for a long time to open up Lido to more permission list validations.

Starting point is 01:16:25 so anyone, not just a permission set of validators, can join the Lido Dow. This is also where technologies like DVT come into play. And this is also how Lido can become more modular and composable. So that is really cool. This makes Lido a bit more like Rocket Pool, yeah? In that direction. So this is much more similar to StakeWis design philosophy, but overall the same ethos is applied here. And so we like this.

Starting point is 01:16:49 This is more decentralization from what has previously been by some hardliners in the community. fixes Lido's two centralized nature. So there's that. Ave Go, G-H-O is their stablecoin, is now on the G-Rly TestNet. So another decentralized stablecoin is coming to play to follow after makers die. Curve stablecoin is also coming soon. There's Elements Hyperdrive. Element is an interest rate vehicle inside of Defi, totally permissionless. It has previously been plagued by having to pick a very specific term and having to fragment liquidity across all there's different pools. Hyperdrive is fitting into this theme that I've been noticing, Ryan, where a lot of these defy apps that have to segment liquidity and pick different terms like Libra Finance compels

Starting point is 01:17:36 into this camp, they have found a way to put and pool all liquidity together and allow for any term length, for any sort of market. And so much more, just much a better, stronger evolution of what Element is trying to do. Congratulations to Element. There is infinity pools, which Dan Ellitzer, who is, I got one of these gigabrains when it comes to just like cryptoeconomic on the app layer protocols. So infinity pools is out there. And Dan Ellitzer says, this is by far one of the most interesting things I've seen built on top of UNAV3. Any asset, unlimited leverage, no oracles, no liquidations, no counterparty risk. Nailing the U.S. will be tricky, he says. But this design is a very cool breakthrough in what I thought was not possible in

Starting point is 01:18:21 defy, I have not yet looked into infinity pools, but I definitely want to because Dan's something like this, I pay attention. Mean finance. Mean finance is a dollar cost averaging tool in defy. So dollar cost averaging without a bank have introduced their meta aggregator. So you know all the dexes, Ryan, uniswap, sushi swap, et cetera. Well, they have decks aggregators, right? Like matcha and one inch. Well, mean finance is a decks aggregator aggregator. so it's recursing one more time. If you want to connect to Metamask and try this out, yeah, go for it. So I just connect to my Metamask wallet here.

Starting point is 01:18:58 Let me do that. Connect. And this will allow me to dollar cost average in to crypto position. So I could. Mean finance. So that is the invest tab over there on the left. Yes. But you can also swap now with Mean Finances, Dex, aggregator, aggregator.

Starting point is 01:19:15 This is awesome. And this is, you know, in our opinion, the most foolproof way to, you know, build positions in crypto as to dollar cost average over time. Yeah, I believe mean finances on multiple networks, including Polygon, I think. It's fantastic. So rare. No, we're not done yet with the ship season. So rare. Partners with the Premier League, which I think is a big deal. Football fans check me on this. Premier League sounds pretty premier. So from the article, football fans from around the world can now collect buy, sell, and trade, officially licensed digital cards featuring every player from across the Premier League's 20.

Starting point is 01:19:49 clubs. I'm assuming this is like, well, the premier league of football. I'm assuming this is a big deal for football. I think it is a big deal, David. I definitely do. You know, I am striking out on my sports stuff. This is though, the tech behind this is Starkware, right? Stargats. So it's ZK technology behind this, which is the thing that you and I geek over about. The football, the sports stuff is kind of lost on us. It's a little more. But it means to an end. David, with all the shipping going on. That means there's been a lot of building. And to build, we need people in crypto. The bankless jobs board is popping. Been a couple weeks since we told you about it. But remember, bankless.com is where you can see some jobs. I'm going to shout some out. Uniswap Labs.

Starting point is 01:20:34 They're looking for a senior software engineer of a protocols. Bankless, we need a social growth lead. That's not tactical. And also at Bankless, which is dope. Needs a producer. We want a growth marketer, senior back end, TypeScript Engineer and Investment Associates. A lot of things we're hiring for. consensus is hiring. God. A director of engineering. Adidas? Are you kidding me?

Starting point is 01:20:51 Wait, we have Adidas on the jobs board? Global head web three strategy and planning? Bullish. Oh my God. I might. So bullish. I could do this.

Starting point is 01:21:00 Pre-Po, senior web three front-end engineers. There's a whole bunch of more. Go check it out. Bankless. dot pallet.com slash jobs. David, what's coming up next?

Starting point is 01:21:09 Coming up next. We got some questions from the nation. We're going to talk about ZK. EVMs as well as account abstraction, which has dominated my brain. and then we've got the takes of the week as well. So stay tuned for all of that and more. But first, a moment to talk about some of these beloved sponsors

Starting point is 01:21:24 that help pay for all of the goddamn content and all the conferences that I go to at the Bankless Nation. Thank you. Hey, Bankless Nation. If you're listening to this, it's because you're on the free Bankless RSS feed. Did you know that there's an ad-free version of Bankless that comes with the Bankless Premium subscription?

Starting point is 01:21:40 No ads, just straight to the content. But that's just one of many things that a premium subscription gets you. There's also the Token Report. a monthly bullish, bearish, neutral report on the hottest tokens of the month. And the regular updates from the token report go into the token Bible. Your first stop shop for every token worth investigating in crypto. Bankless premium also gets you a 30% discount to the Permissionless Conference,

Starting point is 01:22:02 which means it basically just pays for itself. There's also the Airdrop Guide to make sure you don't miss a drop in 2023. But really, the best part about Bankless Premium is hanging out with me, Ryan, and the rest of the bankless team in the Inner Circle Discord only for Premium. members. Want the alpha? Check out Ben the analyst's DGENPIT, where you can ask him questions about the token report. Got a question? I've got my own Q&A room for any questions that you might have. At Bankless, we have huge things planned for 2023, including a new website with login with your Ethereum address capabilities, and we're super excited to ship what we are calling Bankless 2.0

Starting point is 01:22:36 soon TM. So if you want extra help exploring the frontier, subscribe to Bankless Premium. It's under 50 cents a day and provides a wealth of knowledge and support on your journey west. I'll see you in the Discord. How many total airdrops have you gotten? This last bull market had a ton of them. Did you get them all? Maybe you missed one. So here's what you should do. Go to Earnify and plug in your Ethereum wallet, and Earnify will tell you if you have any unclaimed airdrops that you can get. And it also does POAPs and mintable NFTs. Any kind of money that your wallet can claim, Earnify, will tell you about it. And you should probably do it now because some air drops expire. And if you sign up for Earnify, they'll email you anytime one of your wallets has a new air drop for it to make sure that you never lose an

Starting point is 01:23:15 air drop ever again. You can also upgrade to Earnify premium to unlock access to airdrops that are beyond the basics and are able to set reminders for more wallets. And for just under $21 a month, it probably pays for itself with just one air drop. So plug in your wallets at Earnify and see what you get. That's EARNI.fI. And make sure you never lose another air drop. Guys, we're back. Questions from the nation. Here's one from Faro.E.th in the bankless citizen discord. As ZK. EVM's rapidly great, to new ecosystems on top of the theorem,

Starting point is 01:23:47 could you outline the major selling points for most prominent projects like Starknet ZK Sync, he said, as David, you've recently been to Israel for StarkNet. So tell us about the major selling points of Starknet, of ZK Sync, maybe even of Scroll, if you're feeling extra ambitious. Yeah, so it's really just there's a few areas,

Starting point is 01:24:07 a few frontiers of innovation that is specifically being hosted by the ZK roll-ups, specifically. Why ZK roll-ups? Because all the optimistic roll-ups out there, optimism, arbitram, are trying to be EVM equivalent, EVM-EV-EV-E-M-EV-EV-EV-EV-EVM equivalent, which means there are certain things that are not enabled. Ethereum does not have this thing called account abstraction enabled, which prevents all of our optimistic roll-ups to have what we call smart contract wallets, which are something I'm going to explain in the next question. But the frontier of account abstraction and smart contract wallets are absolutely happening on ZK roll-ups. And so, we'll

Starting point is 01:24:43 talk about smart contract wallets in a second, but eventually everyone's going to have a smart contract wallet, and that is starting on the ZK rollups. Argent bankless listeners might be familiar with, also Bravo as well. There's some other smart contract wallets that are out there. That's a big one, massive, massive field of innovation and opportunity there. There's also the world of on-chain gaming. We all know the term Web3 gaming, and this is generally known as like gaming but with assets. That's different and much small. smaller in my mind of an opportunity than on-chain gaming, which is where all of the logic goes on-chain. Why? Why not? You can put more composable components of your game on chain and allow that

Starting point is 01:25:27 like metaverse, if you will, to be organically built. And so this is a very limited example, but say like your chess moves go on chain, like night to F3, great move. And that can be composed upon for whatever goddamn reason that you can think of. And so just use your imaginations. Your like physical location in Minecraft is stored on chain and that can trigger if this then that statements. And so more stuff on chain produces games that we can't even think about. And it's the ZK roll-up technology that the insane levels of compression that ZK roll-ups have

Starting point is 01:26:03 enable stuff like this to happen. So you get more compression versus optimistic roll-ups. So that's what separates ZK versus optimistic roll-ups. Now we have ZK EVMs, but the difference between like Starkware versus something like scroll. My high level take on it is we have like four main ZK EVM types of ecosystems. One is the Starkware ecosystem. Another is ZK EVM from Matter Labs. Another is what Polygon is doing with hermes that they acquired.

Starting point is 01:26:34 And the fourth is scroll. Now I think on the far side of the spectrum, the most EVM equivalent, I probably put scroll. and the least EVM equivalent, that is, mirrors the Ethereum main net virtual machine environment. You could just port code from here to here is probably Starknet. They use even a different language. They use Cairo. Cairo rather than solidity. And then ZK Sync and Polygon.

Starting point is 01:27:02 Somewhere in between. Yeah, it's somewhere in between. That's sort of how I think about them. But it's like, you know, from a high level, if you're just sort of a user, you don't see a lot of the tradeoffs here. I think a lot of the tradeoffs are going to come from actually developers and the builders, and it will remain to be seen which of these ZK EVMs really hit product market fit and really nail it in what communities they attract.

Starting point is 01:27:27 And it's still super early to call any winners or to even understand which of these ZK. Evams, what niches they're going to exist in and dominate in. Yeah, I think that's right. And I think they're all going to find product market fit in their own particular ways. each one like optimism and arbitram are differentiating in what's being built on top of them and I think they're all they're all viable and they're just optimizing for different things and along with their be relevant BD teams at this stage use them all try them out see what you like here's another question from killjoy from the bankless member discord as well hey guys

Starting point is 01:28:01 I've heard you mention account abstraction there you go David team you up a lot but I'm wondering if you can explain it in more detail I'm not sure how to grasp what it unlocked in Ethereum that can't already be done with tools like NOSIS Safe. NOSAFE, of course, is a multi-sig wallet, fantastic wallet. We use it at bankless all of the time. Everyone uses this. What's different? Why is account abstraction better? You mentioned smart contract wallets. Is that part of the puzzle here? Yeah. So you said NOSA safe is a multi-sig wallet. Technically, it's actually a smart contract wallet and what that smart contract does, Ryan, is enable multisics. So it's like, like semantics, but important. It is a smart contract wallet and that smart contract is meant to be a

Starting point is 01:28:44 multi-sig wallet. Account abstraction is this term that is, it's one of these terrible words that we come up with in crypto and doesn't really help anyone understand it, but account abstraction enables smart contract wallets on the Ethereum layer one more natively. NOSA safe has kind of had to brute force it in a way. And so what is a smart contract wallet? What is account abstraction? Like I said, account abstraction enables smart contract wallets to exist, and it is perhaps like an EIP or technical standard that needs to be embedded in the actual protocol of a blockchain in order for native smart contract wallets to exist. So like I said earlier, externally owned accounts, which are like public addresses, public accounts, public wallets that are externally owned, externally being like a private

Starting point is 01:29:28 key, which is external to the Ethereum protocol. Again, another terrible phrase, another terrible word that this crypto came up with. But to apply a meta, here to get you to understand what the hell I'm talking about. If Bitcoin is to externally owned accounts, Ethereum is to smart contract wallets. Currently, an externally owned account is a dumb input output only, very primitive wallet. Let's just be clear. Whenever you're saying externally owned account, that is probably the eth address that you have today. Probably. Do you, do you use a metamask? Do you use a ledger? Do you use a treasurer? Do you use coinbase wallet? Do you have a private key? Do you have a private key? Do you have a private phrase? Yes.

Starting point is 01:30:07 of things, that means by these are all externally owned accounts, right? And that's what you're saying. Yes. Yes. Okay. And so Ethereum is smart contract wallets. Bitcoin is like externally owned accounts. So that's why this is kind of so hard to explain because a smart contract wallet is like a smart contract. It's a Turing complete wallet where your ledger or a metamask is just, it just signs messages. Your smart contract wallet can do anything. And so you can input any bit of code that you want. You can input rules. You can make it express. And so the UX upgrades that smart contract wallets will bring to crypto are going to eliminate so much of what makes crypto wallets difficult and unintuitive. And account abstraction unlocks the ability to have smart contract wallets like enshrined into the protocol rather than having to be built on top of it.

Starting point is 01:30:55 Do you know how I would explain account abstraction in just like the dumbest possible way is like you guys know how hard it is to use crypto wallets? Even good ones like MetaMask for instance or ledger. it's still really hard to use them. Account abstraction will make a crypto wallet like Venmo. As smooth as a Venmo, or maybe if you're in Europe, like a Revolut. Like the FinTech apps, we just log in, you get your face ID, you unlock it, you can set limits, you can transfer out, you're not paying outrageously high gas fees and hitting, clicking sign transaction, sign transaction, oh my God, did I just send to the wrong account?

Starting point is 01:31:32 It will smooth all of that out and to make crypto wallets. look like fintech. That is the bottom line. And we can't unlock account abstraction on Ethereum mainnet today, right? That we need to be implemented first. But we can start in the layer two environment. And that's what you're saying is ZK rollups are really doubling down, tripling down on account abstraction wallet. If you've ever used Argent, for instance, on, where's that deployed? Is that ZK sync right now? So Argent has two. They have Argent, which is the Ethereum main net smart contract wallet, which as soon as

Starting point is 01:32:12 Ethereum left its one way gas fee paradigm, like in 2019, it just broke so bad because we don't have account abstraction on the layer one. So while they've been maintaining their Argent wallet at the layer one, they've really been focusing on what they're calling Argent X, which is their ZK roll up smart contract wallet, which is dominated by on these Starknet, uh, starknet, uh, stark net, uh, that, that's going to be more what the experience, you know, will be for the everyday users. This is how we mainstream crypto. Right.

Starting point is 01:32:43 I don't have this tweet in here, but I tweeted, tweeted this out like, you are not using your imagination big enough to understand how big of a deal smart contract walls are. It is a zero to one moment in wallets. Ethereum was like, okay, let's put software into our tokens, software into our money. That's what an ERC 20 token is, like asset plus software. That's what smart contracts are. That makes it so cool. That's why we love it.

Starting point is 01:33:06 We have not yet had that zero to one moment for our wallets. Our wallets are still like just simple Bitcoin input outputs. We are not having the Bitcoin to Ethereum moment about our wallets yet in the Ethereum world. Yep, that's right. Huge improvements coming and getting closer. David, some takes of the week, all re yours. All blockchains are illegitimate in their early days. They have unknown founder.

Starting point is 01:33:29 alignment, poor token distribution, highest risk of bugs and exploits, unknown economic sustainability. Legitimacy is only gained by proof and time. David, you're saying a new chain has to earn it? New chain has to earn it. Yeah, and actually have a follow-on tweet if you want to keep on going. I'll go. This is why incumbent blockchain communities haze the newer ones.

Starting point is 01:33:52 Don't trust them until they prove they're here for the long term. Bitcoiners haze the Ethereum. Ethereum haze the Salonians. Did I say that right? So on and so forth. It's not maximalist behavior. It's a healthy immune response. How do you feel about that take?

Starting point is 01:34:07 Some people said that that was a pretty spicy take. I completely agree. I 100% agree with it. This is called the social layer is an immune system. If your social layer of your chain doesn't have an immune system, what happens? Imagine if your body didn't have an immune system, David. You had no white blood cells. You get eaten alive.

Starting point is 01:34:24 You get eaten alive by viruses, by malignant cells, by cancers. all of those types try to enter the social layer in crypto like scammers and grifters so you have to have some resistance against them that said david i think like protocols like bitcoin projects like bitcoin can develop an unhealthy immune system call it an immune system disorder where the white blood cells just attack everything autoimmunity yeah yeah and that's that's a big problem an autoimmune disorder um is that what you meant here uh i wasn't talking about the autoimmunity but yes the natural like all blockchains are illegitimate on day one and they slowly become legitimate over time. And I'll kind of give like a, if you are a single cycle blockchain, you have not yet earned your

Starting point is 01:35:12 stripes. You only earn your stripes by coming out of the inevitable bear market that you're going to go through and proving to the crypto world that you are able to make it through a bear market. Because if you haven't made it through a bear market, you're not legitimate in my mind. David, you know, I apply this to people now, too. Yeah. Yeah, it's a good take. Like, I just, I don't, does this sound bad?

Starting point is 01:35:35 Like, I don't trust people who haven't been through a cycle in crypto. Who didn't make it through one single cycle in crypto in the last cycle? Three hours capital got, got made all their money starting in 2019 and 2020 and then reaped, reaped it all, like just harvested so much in 2021. And then came crashing down in 2022. FTX was not here last cycle. crashing down in 2022. Terraluna, a single cycle blockchain did not. It crashed in April of 2022. It didn't even make it halfway. Don't trust the single cyclers. Single cyclers. Not to say that like, if you're a

Starting point is 01:36:09 single cycler, you're sharing that and you're like, oh, they're elitist. No, you can, you can become, you have to stay here for a while. You have to prove your stripes. Proof and time. Legitimacy is only gained by proof and time. That's what you said here. I apply that to people too. I apply that to projects. I apply it to exchanges. It's why we like working with Cracken. It's why we like other exchanges like Coinbase. How many cycles has Cracken been through? A long time. Literally all of them. Every single cycle. They haven't gotten insolvent yet. I mean, that's like Lindy effect there. And yeah, so I agree with that take David and just may I'd apply it to people too. All right. I guess we're just reading our own tweets out. Speaking of people. Yeah, this section has become

Starting point is 01:36:47 read our own tweets. Well, why don't you read it? So it's not that. This guy, Ryan, Sean Adams, tweets out, not everyone's opinion on crypto is valuable. A lot of smart people in other areas have absolutely no idea what they're talking about when it comes to crypto. Don't listen to them. Man, are we doing elitist takes this week or what? David, I got fooled by this in my early days. I thought, like, if you're an expert in something, then you must, like, know what you're talking about with crypto.

Starting point is 01:37:11 It took me a while, honestly, in my crypto journey to, like, start trusting my own instincts and my own opinions. But I've definitely come to that place. and I hope I don't over-correct and be like, I know freaking everything. Right. And like there's obviously that failure mode. But I mean, I was looking at this last week, right after the last roll-up.

Starting point is 01:37:32 Charlie Munger, notable investor. I've admired this guy his investment takes. He's like a Warren Buffett type. Wrote an opinion commentary. Why America should ban crypto? It isn't currency. It's a gambling contract with a nearly 100% edge for the house. He goes on, Charlie,

Starting point is 01:37:49 talks about the government of China, the communist government of China actually doing the right thing in banning cryptocurrencies because they wisely concluded that they would provide more harm than benefit. He thinks the Chinese communist leaders had splendid common sense. He says, obviously, the U.S. should now enact new federal laws that prevents crypto. He's calling for a ban on crypto. And do you know what, David, this guy's opinion doesn't matter at all. Just because he's an expert in other domains, maybe in stocks, maybe that sort of investing that he knows about, he knows nothing about what we're trying to do here and about the, like, the crypto movement or about these assets, he knows absolutely nothing about it. And so

Starting point is 01:38:38 if you're hearing his opinion, you're going like, well, what does Charlie Munger think? Or some notable economist with a Nobel Prize. Warren Buffett, it's like Bitcoin is, is this trash? Have they used uniswap? Have they looked into the fundamentals behind defy protocols? Do they understand why Ethereum is worth greater than $0? Do they understand why Bitcoin is worth greater than $0? If they don't, if they can't answer those questions, don't listen to them. Have they been through a crypto cycle?

Starting point is 01:39:09 No, they haven't even started. Yeah, my first introduction to this was John Feffer. You know John Pfeffer, right? I remember John Pfeffer. Yeah, he wrote this paper about how Ethereum ether is the velocity of ether is too high to be treated as a currency because it's all gas. We never accrue value. Never would accrue value. And when I read that, I took that personally.

Starting point is 01:39:33 And that is one of the main motivations when I was reading that paper to develop the triple point asset thesis, which is one of the earliest bankless thesis about how ether, no, is it not just this velocity gas coin. it is actually the world's greatest monetary asset that humans have ever produced. Same here. But I remember reading that paper. Yeah. He was very persuasive, wasn't he? Oh, no, I thought I didn't believe it at all.

Starting point is 01:39:59 I was like, this doesn't make any sense. I didn't make sense to me, but also, I was like, but he's a seasoned investor. Yes, yes. Listen to these arguments. Listen to like the white paper and the language surrounding it and the expertise and the credentialism flowing out of it. Dude, this is where I personally got over like,

Starting point is 01:40:16 imposter syndrome, where I was like, this doesn't make any sense. I'm going to write a thesis that counter argues this. And I'm just a no one, but I have differing ideas. And I think I'm right. And then I think I have been proven right. Yeah. Well, I guess the only reason you've actually earned some legitimacy, David, is proof and time. Because legitimacy is only gained it by proof and time. Thank you, sir. So it takes some time. Do you know the plank principle? What's the playing principle? It's pretty, it's really savage. It's paraphrases as society progresses one funeral at a time.

Starting point is 01:40:54 Well, this is very much true of like science. Isn't this what people say about science, right? Scientists clinging to like old ideas and a new generation has to totally disrupt it. Yeah. Like Munger, Buffett, all of these like very old, older than boomer like era people are like, crypto is bad. Like, well, yeah, you also missed the tech boom, Warren Buffett. So I'm not listening.

Starting point is 01:41:16 to you. Yeah. Well, someday we will be there, David, and when that day comes, no longer listen to us, as opposed. There will be some younger generations talking about how dumb we are. I'm hoping. I'm trying to preserve this open-mindedness as I get older. Maybe preserve some that wisdom. David, what makes you bullish this week? Well, we went through all of what was going on in ship season. And I've had this take last week. Markets are being resistant to bad news. And even though we are down on the week, we are down to 1620 ether price and $22,000 Bitcoin price. Like, we're still up pretty damn good on the year. Like, we started the year at like $11 or $1,200 ether.

Starting point is 01:41:56 And we had this bad, bad choke point news, which does threaten very much how this crypto world works. We've only dumped a little bit, dumped two and a half percent since that news came out. So I'm calling that still resistant to bad news. And I think, Ryan, if crypto prices and tokens bounce back from this and go back into the TA that I was talking about at the very beginning, which we don't usually do, and we go back up to like the high 1600s, maybe 1700s, that is the market shrugging off bad news and being very perceptive to bullish news. So that makes me bullish. If we can shrug this off, that's so awesome. And 2023 shipping so far has been like an order of magnitude.

Starting point is 01:42:41 greater than what we saw in 2019. And so like just what is being built right now, the fundamentals that DeFi protocols are going through is so bullish, man. Like this is what 2019 felt like. It's like you are watching the fundamentals grow at an accelerating pace around you. Meanwhile, just like everyone else that's not a crypto is not paying attention anymore. That's what I'm bullish on. I agree. You know, I would say I probably got nothing to add to that because like that was my that was also my take. It's ship season. I have the ability to rug your teeth. I know because you go first. But yeah, it's, we're in this bare market, but it's hard not to get bullish when you see the ship season, when you see all

Starting point is 01:43:22 the shipping. And you're right. This does smell like 2019, except 10x. All the building is going on in 2019. This is just so much bigger, right? The Arbitrum, multi-language support. You compile the EVM. This is so big for developers. The optimist. Sorry, we didn't say this earlier, but when Arbitrum develops stylus, like their EVM equivalent. That extends to the rest of Ethereum. Other people can take this and run with it. It's not just Arbitrum.

Starting point is 01:43:48 Optimistic, like the OP stack with Bedrock that's coming to. That's going to launch a hundred different chains. Like all of this stuff is happening now for builders. And we've got ZK EVMs right around the corner. The after shipping hard. The Starper sessions was so bullish. Everything's so bullish. I mean the building, right?

Starting point is 01:44:07 And it's not reflecting in price right now, but it is a little bit. So I don't know about your earlier take. I don't know if I read the TA, right? It could go up. It could go down. Yeah, I know you don't like TA. But it's all, it's build season, man. And it's just, it's huge.

Starting point is 01:44:23 It's, we've come so far. Feels great. That's it. All right, meme of the week. Before, before Meam of the Week, I remember Luke, the editor who was editing this right now, gave us when it was like officially the bear market. Like this was after like three hours capital collapse.

Starting point is 01:44:37 Luke was like, you and Ryan are like giddy about the bear market. You guys are so excited. And it's because of moments of the shipping that has happened in the last like since 2023 started. It's because stuff like this happens. Like progress happens. And the signal about progress is so clear because the noise is all gone. Yeah.

Starting point is 01:44:57 And so like this is what we're looking forward to. We don't have to wave our hands around. Be like, stop. Ignore this. Like look at this. It's just very clear. Now, I think we'll go months and, this and we'll be like, oh, I'm hungry for a bull market.

Starting point is 01:45:11 Can the tokens move, please? That's partially why. Tokens are moving, though. I know. That's why it's just like this is happening so quickly. I don't feel like we've embraced enough pain yet. But anyway, we'll see. Meme of the week, David, what are we looking at here? Mem of the week. We actually got two memes of the week. So this is some guy who's doing his one phone call out of jail and somebody in the background saying, hey, man, what are you in for? And the guy who's given the phone call says, I stayed teeth with Rocket Pole and now I have life sentences with no parole.

Starting point is 01:45:39 Oh my God. It's funny, but it's also scary. I know. Second meme, this was Ryan's meme. Nice job, Ryan. This is Bitcoiners when they discover NFTs. And what we are looking at is what looks like a retirement home. And I think, I'm pretty sure this is physical therapy.

Starting point is 01:45:54 This is like physical therapy. Gameified physical therapy. So they're playing all these fun games. But they're just like, you know, just puttering along. Do you know what? It's honestly, I've never seen. some elements of the Bitcoin community so happy with NFTs. Like other elements are seething in rage.

Starting point is 01:46:11 Everyone loves NFTs, dude. They do. They do. That's why this video reminded me of the good parts of the Bitcoin community. That's it. That's the show today. Thanks for hanging with us. Extra long one. But I hope you enjoyed it. A lot of news to download during ship season.

Starting point is 01:46:25 Risks and disclaimers. Gotta let you know. Crypto is risky. So is DeFi. So is Ethereum. So is Bitcoin. All this stuff is. You definitely lose what you put in.

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