Bankless - ROLLUP: Prediction Market War | Base Leaves Optimism | Tomasz Exits EF | Clarity Act Lives | Harvard Buys ETH

Episode Date: February 20, 2026

A legal war over prediction markets just went public. Ryan and David break down the CFTC’s claim of exclusive authority, the backlash from state officials and lawmakers, and why this fight is really about whether markets or politics get to define truth. They explore why AI-powered prediction markets may be crypto’s strongest product-market fit yet, and why that scares regulators. Plus: Harvard rotates from Bitcoin into Ethereum, Base breaks from Optimism, Zora expands to Solana, the Ethereum Foundation leadership reshuffles, signs of life for the Clarity Act, institutions buying DeFi tokens, Europe’s unrealized-gains wealth tax, autonomous “life” on Ethereum, OpenAI’s EVMbench, and what ETHDenver says about where crypto goes next. --- 📣ROCKET POOL | PERMISSIONLESS STAKING https://bankless.cc/Rocketpool --- BANKLESS SPONSOR TOOLS: 🔮POLYMARKET | #1 PREDICTION MARKET https://bankless.cc/polymarket-podcast  🪐GALAXY | INSTITUTIONAL DIGITAL FINANCE https://bankless.cc/galaxy-podcast  ⚡EUPHORIA | REAL-TIME ONE-TAP TRADING https://bankless.cc/euphoria  🏅BITGET TRADFI | TRADE GOLD WITH USDT https://bankless.cc/bitget 🌐BRIX | EMERGING MARKET YIELD https://bankless.cc/brix  🎯THE DEFI REPORT | ONCHAIN INSIGHTS https://bankless.cc/TDRpro  --- TIMESTAMPS & RESOURCES 0:00 Intro 2:27 MARKETS  https://x.com/hiwhaledegen/status/2023372409303450065 4:33 PREDICTION MARKETS REGULATORY FIGHT https://x.com/ChairmanSelig/status/2023744651216240966  https://x.com/GovChristie/status/2023821634344550892 https://x.com/SenWarren/status/2023877196323188764 https://x.com/govcox/status/2023795059980988874 https://x.com/RepCasten/status/2024212119491588303 https://x.com/brian_armstrong/status/2023794107274194944 https://x.com/SenatorHagerty/status/2023802779899252901 https://x.com/SenMcCormickPA/status/2023831838461194501 https://x.com/tyler/status/2023761976481259585 https://x.com/kylascan/status/2023786873605476719 https://x.com/ADoricko/status/2023834015699173398 https://x.com/abcampbell/status/2024281289700802568 https://x.com/NTmoney/status/2024505537514394104 25:18 BASE LEAVES OPTIMISM https://blog.base.dev/next-chapter-for-base-chain-1 https://x.com/lex_node/status/2024181767813427402 https://x.com/intangiblecoins/status/2024184295493886317 https://www.coingecko.com/en/coins/optimism https://www.coingecko.com/en/coins/arbitrum https://www.coingecko.com/en/coins/polygon https://x.com/web3_data/status/2023716576126755249 https://polymarket.com/event/will-base-launch-a-token-in-2025-341/?via=bankles 35:24 ZORA EXPANDS TO SOLANA https://x.com/zora/status/2023797263651533053 https://x.com/js_horne/status/2023809356739838390 https://x.com/brian_armstrong/status/2023872648032272642 https://x.com/haydenzadams/status/2023990750082445561 40:04 ETHEREUM FOUNDATION SHAKEUP https://x.com/tkstanczak/status/2022315368430067847 https://x.com/VitalikButerin/status/2022318344288792618 https://x.com/aerugoettinea/status/2022318885047779576 https://x.com/dannyryan/status/2022318587281572257 44:56 CLARITY ACT SIGNS OF LIFE https://x.com/brian_armstrong/status/2024238762021036201  https://polymarket.com/event/clarity-act-signed-into-law-in-2026/?via=bankles https://x.com/altcoindaily/status/2024174959707541638  49:16 APOLLO x MORPHO (INSTITUTIONS BUYING DEFI TOKENS) https://x.com/AggrNews/status/2022482933974544669 https://x.com/RyanWatkins_/status/2022680420270379400 https://x.com/DefiIgnas/status/2023054776762876157 52:14 AAVE TOKEN ALIGNMENT PROPOSAL https://x.com/TheiaResearch/status/2022037595568603406 https://x.com/Marczeller/status/2022073505341219033 https://www.coingecko.com/en/coins/aave 56:09 NETHERLANDS UNREALIZED GAINS WEALTH TAX https://x.com/BitcoinNewsCom/status/2021978390870347923 https://x.com/balajis/status/2022360046122995851 58:55 AUTONOMOUS LIFE ON ETHEREUM (CONWAY) https://x.com/0xSigil/status/2023877649475731671 https://x.com/sterlingcrispin/status/2024254432498639322 1:04:56 OPENAI EVMbench https://openai.com/index/introducing-evmbench/ 1:06:24 ETHDENVER REFLECTIONS https://x.com/EthereumDenver/status/2024234929840935318 https://x.com/TrustlessState/status/2024215091856527753 1:08:05 CLOSING & DISCLAIMERS --- Not financial or tax advice. See our investment disclosures here: https://www.bankless.com/disclosures

It is the third week of February. It is time for the bankless weekly roll-up. David, there's a fight for prediction markets. It was hot last week, and it just got even hotter around the week. Got way spicier. A lot of people joining the fight. CFTC chair Mike Selig put out a one-minute clip on Twitter, basically planting the flag,

claiming prediction markets as in the domain of the CFTC, causing a ton of people to join and pick side. Senators, representative. Ryan, what side do you think? Elizabeth Warren picked because she got into the fight too. Probably not on our side. Let me just say that. I've never seen her on our side.

Which is bullish for us. Yes, yes. Also, executive director of the Ethereum Foundation, Tamash, one of the co-executive directors. He's leaving after just one year. Why? Why is he leaving, David? And who's going to replace him? What does this mean for Ethereum?

There's also just some alliance changes going on. Base has leaving the optimism OP stack. They're going and rolling their own layer two code. and then Zora is also launching on Salana, expanding into Salana instead of just being on base. We got the alliance is shifting around. That's fascinating. Also, AVE Labs has got a proposal to fix the AVE token.

We'll weigh in on that. Also, there's some life in the Clarity Act, David. It just might pass. The odds spike to about 70% at one point this week, and Brian Armstrong has weighed in. And I've got to tell you about this project that I was looking at in the week. I'm not sure if it is autonomous life on Ethereum

or if this is just performance art. We'll talk about the Conway Project. All this and more. But before we do, we got some shoutouts from our friends and sponsors over at Rocket Pool. Rocket Pool basically bringing in V2 with our long-awaited Saturn upgrade. The largest rocket pool upgrade ever since launched.

Mainly the big thing is 4Eath validators. Megapools, what Megapurals are, are now live. So if you want to get extra yield on your stake and allow other people who don't want to run their own nodes to stake their eth two, you can use Rocket Pool to do that. For-Eath validators means that you just are more capital efficient and you can earn more fees from other people

who want to stake on your node, bankless.cc-slash rocket pool to learn more about the Saturn upgrade. That's great work to democratize validation as well, right? Rather than 32th, just 4-Eth, and you can spin up and run your own validator. David, let's check out on prices really quick. Bitcoin price on the week we up or are we down on the seven day? It's not great.

$.9,000. But hey, at least we're green. Ethereum, 1940. 1940 is the price of 1.7% up on the week, but still, anything below $3,000 is bad, actually, and we are below too. 1940 does not sound like an ETH price. It sounds like a year in my history books. I remember when ETH price was passing my birth year for the first. time. But any time that ETH price is a recognizable year is too low. Yeah, it's far too low. We need Eap to be in

the future. But maybe Harvard is going to get us there, David, okay? Because this was interesting on the week. You know, Harvard, they have a big endowment. This is some of the institutional capital flowing around in crypto. They just sold some of their Bitcoin and purchased some ether for the first time in the form, of course, of an Ethereum ETF. So they sold 21% of their Bitcoin ETF and rotated that back into Ethereum ETF. This is their first ETH purchase about $90 million that's doing a switchero

playing this ratio. Is this a quantum trade? Ah, interesting. I wonder if this is a quantum fud. Quantum fud for Bitcoin. Which sounds like an incredible movie out of the Star Wars universe.

Quantum fud. It could be. I mean, it seems like it could be. I mean, I bet Nick Carter would say. would claim it as such. I bet Nick Carter would say, I do kind of have this hot take that, like, you know,

ETH is going to get walloped alongside of Bitcoin because Bitcoin's going to take so long to figure out its quantum shenanigans. Yeah. But on the other side of that, quantum might be the best thing to happen to Ethereum in a long time. It will rise like a phoenix from the ashes, huh? Is that what's happening now? I think so. I think so.

The total, if you're curious, the total Harvard portfolio is about 1% crypto right now. So they still have a ways they could grow that on both the Bitcoin and either side. And maybe they can move down market as well. David, let's talk about this big fight that we were teasing in the intro here. The fight over prediction markets. And maybe we should start with this clip from the new CFTC chair and past bankless podcast guest. More notably, past bankless podcast guest. Mike Selig, here he is.

Here's what he had to say. CFTC chairman Mike Sealing here. Over the past year, American prediction markets have been hit with an onslaught of state-led litigation. In response, the CFDC has today filed a friend of the court brief to defend its exclusive jurisdiction over these derivative markets. Prediction markets aren't new. The CFDC has regulated these markets for over two decades. They provide useful functions for society by allowing everyday Americans to hedge commercial risks, like increases in temperature and energy price spikes. They also serve as an important check on our news media and our information streams.

Today, the CFDC is taking an important step to ensure that these markets have a place here in America and have the integrity and resilience and vibrancy that our derivatives markets deserve. To those who seek to challenge our authority in this space, let me be clear. We will see you in court. Wow. Wow. I'll see you in court. Banger.

Banger. Banger ending. Not everyone liked this statement out of the CFTC commissioner, the new CFTC chair. God was just a wave of very. passionate response. From Chris Chrissy, haven't heard of Chris Chrissy talking about anything for a while,

but he came out of the woodwork saying violating the rights of states who have been regulating sports betting and the rights of states who oppose sports betting is not the purview of another alphabet soup federal agency. Yes, I'm signing up

for the rights of all 50 states, proud of it. So Chris Christie, joining the fight against the feds in favor of the states, Elizabeth Warren, tweeting out, Trump's CFTC is trying to

strip state's authority to regulate gambling within their borders and protect Americans from getting ripped off, a classic Liz Warren line. The CFC should focus on ensuring our derivative markets don't blow up the economy again, not helping corrupt political insiders cash in. It's really throw in shade left and right. Utah Governor Spencer Jay Cox just saying that he's not, that Mike's L is not being honest, saying, I appreciate you attempting to say this with a straight face, but I don't remember the CFTC having authority over the derivative market of LeBron Ron James Rebounds. Illinois Representative Sean Casson says, you know, the chairman is remiss to not mention

the sports betting accounts for 90% of the trading volumes on these platforms. Congress never intended for the CFTC to oversee what is effectively a nationwide sports betting platform, nor to interview with state and tribal governments authority to regulate gambling. So basically, the negative response all saying that prediction markets are not legitimate financial platforms. They're just gambling. They're just gambling.

and it's just sports volumes. However, of course, there was a plenty of positive response as well. Brian Armstrong came in and said, couldn't be more clear. CFTC has exclusive jurisdiction over prediction markets in the U.S. Senator Bill Haggerty and also Senator Dave McCormick from Pennsylvania, both said, gave the thumbs up on the CFTC authority. Tyler Winklevoss joined into the conversation as well. Notably, Brian and Tyler want to have prediction markets in their own platform.

that do have prediction markets in their own platforms, so they aren't, they have a stake in the matter. And then there are the takes that prediction markets are just gambling platforms. Kyla Scanlon, you know, friend of the pod, has had her on, we've had her on a handful of times. Doesn't say anything,

just retweets a graph of the categories of volumes being traded on a call. It is dominantly sports contracts, as opposed to other categories. Not true for Polly Market, however. We're going to talk about that in a second. Augustus Dorico, I'm unsure who this is. but they got a pretty viral tweet saying, Brian, you're a legend of the game and I admire you, retweeting Brian Armstrong's tweet.

However, nobody cares if technically a bastardized commission designed to regulate crop futures has the authority to greenlight, hyper-efficient, predatory, frivolous online casinos, prediction markets as they exist, are evil. And I think this kind of sums up a lot of people's sentiments towards prediction markets. Really? Yeah. I mean, the rise of sports gambling in the last. few years has been significant and it is like it's a common consensus take that sports gambling platforms like draft kings and me these platforms are a detriment to public health.

I don't know I don't know if that's my take but I think that is the consensus take among society inside here's the thing all of the negative responses weren't saying like we should get rid of sport like sports betting or you know sports contract trading they were basically, it was more like a turf war. They were basically saying like the CFTC shouldn't regulate that. And also, I felt like all the negative takes were ignoring the positive things that Mike Sea Lake was talking about, right? Which is like, you know, the U.S. leading on this, keeping media in check.

These are information markets and that's all true too. So it's all being pushed, smushed together into one monolithic thing. And it seems to be more of a turf war than anything else. Yeah, yeah, I agree with that. It also ignores the fact that, like, prediction market platforms are a market rather than a book model. That's right. Which is already an improvement. Which is fundamentally a huge improvement. And it does change the legal nature of what prediction markets are. There are, of course, people who came into the conversation saying that, you know, prediction markets are true and novel financial instruments that provide value to the world. There's this study that came out that, Kalshi was more accurate on predicting Fed fund futures than any other platform or any other prediction. Nick Tomeino, which was the tweet that I think should be the most notable by people who think that these are just prediction market or sports gambling platforms. Nick tweeted out how the predominant most highest volume markets, polymarkets, are all either elections, federal reserve questions or geopolitics.

But a lot of people don't even want those. Do you remember, I mean, obviously it was just over a year ago when Shane Copeland, the CEO of Polymarket, was just like rated by the feds. And you recall previous to that letters that senators like Elizabeth Warren wrote about prohibiting political markets on prediction markets, right? They don't like the other categories either, is my point. I don't think they like prediction markets or maybe just like markets as a category. It goes back to the conversation we've been having on bank lists about this controversy is if you like markets and you sort of respect them, then you see a place for regulated prediction markets that are free and fair and open permission list to everyone. If you don't like markets, you see all of this as bad. And you'll intermixed with that, there's a whole cloud of incentives, I think, coming up the works. Yeah, a lot of the politicians, like Elizabeth Warren especially always has this bend towards authoritarian control, at least that's how I always interpret a lot of her tweets. And so it makes sense that she

doesn't feel comfortable with prediction markets about elections and she doesn't talk about the value of a check on our media institutions because media institutions and government can frequently go hand in hand. And she doesn't want that to be out of the control. Yeah. Out of control. She doesn't want that out of the box. A little too bottom up. Yeah. There's one nuance, an unfortunate nuance that really conflates and makes this difficult to argue in Capitol Hill, which is that Donald Trump Jr. and a lot of the Trump family are either advisors in or have meaningful investments in both Kalshite and Polly Market. And so the newly appointed Trump's CFTC Commissioner, Mike Selig, is trying to regulate these prediction markets in the most expansive way possible,

allowing these things to become the best versions of themselves and the claims of corruption of the Trump family and their control over the governance of the United States is like, well, now they're also exposed. They have exposure in prediction markets. And so that really makes it difficult to argue about the merits of these things when there is also the whole like Trump involvement in the like the BD business side of things. Yeah. It's, yeah, it's a lot to untangle here.

One thing that does seem pretty clear about the future, though, is prediction markets and AI is product market fit. and we're starting to see that. So this is an account on Twitter, Polymarket history. Claudebot started printing $40,000 in a day. Just look at this. I think this is about Polymarkets' new sort of five-minute Bitcoin and crypto asset trading feature that they've added.

And when you set a Cloudbot loose on this thing, if it's smart and if it makes intelligent trades, it can actually generate funds directly to a crypto wallet using these prediction markets and using truth markets. And you've got to think that this is just the start of AI plus crypto. In fact, you tweeted something out, David, where you think AI plus prediction markets and arbitragers and market makers mean that we will essentially have something close to perfect truth.

Maybe that's a little bit of a hyperbole. I mean, perfect truth. What is that? But it is, for these types of events, it's the closest you can get. yet, right? A market stake weighted outcome that has incentivized actors, I mean, that does lead to incredible information for the world. It's like much more accurate than most media out there. Yeah. I mean, what is AI fundamentally is just a pattern recognition tool. And as AI models are getting more and more capable, they can ingest more information, they can connect more dots.

They can do it faster and more comprehensively than any other tool that we've ever had before. for it. And the crypto and prediction market side of things give these AI models, the agency they need to have to actually impart change upon the world in the prediction market form factor. And so all of the knowledge, what do we know about prices as like a core primitive of markets? Prices are information. AI with arbitraging and market making allow the knowledge of the world that they have on the internet to show up in prediction market prices. And that is extremely. extremely cool. That is very sci-fi and it is a new media institution that has nothing to do with journalists or written text or anything. And that is a value to society that is worth preserving.

I completely agree. Yeah. It's a new consensus like truth finding mechanism, isn't it? Although there is also some pushback in AI corner. So we just mentioned open claw and using these prediction markets. But I don't know if you caught this, David. So there's a, Lex Friedman conversation. I haven't listened to full interview, but I did listen to this part. The founder of OpenCla, his name is Peter Steinberger. Of course, OpenClaw is this open source, you know, personal agent type of project that has spread like wildfire. He actually talked about crypto in his interview with Lex Friedman. And he said this about crypto. I didn't know that they're not just good at harassment. They are also really good at using scripts and tools. I

underestimated these people, honestly, I was this close to just deleting my project, he said. Basically, he was talking about all of the harassment that he felt he received from, I'll put this in air quotes, the crypto community, that were trying to front run him. Anytime he would make a name change to the OpenClaw project, they were like registering domains and spinning up meme coins and trying to get him to, you know, claim them, spamming the Discord, just out and out and out kind of harassing. him or front running all of the things that he was trying to do. And it was deeply frustrating to Peter. And he kind of pointed the blame at crypto for this specula fervor, you know, trying to tokenize everything for these shenanigans. And you understand kind of why he feels that

way at some level. But like, I mean, is that really crypto? Like, I guess there's an element of crypto there. There's sort of a, I mean, like, what do you think of that? What do you, what did you think when you heard his criticism. Yeah, and listening to the Lex podcast, it went on. The section about the crypto harassment, it was like 15 minutes, but then it would also like reoccur, you know, every 15 minutes for a while. And then the crypto people came in and effed it up again. And so it like, it was inescapable listening to that podcast.

And I think it is just a sign of what rest of society thinks about crypto. Like we've talked about this before on recent episodes. Crypto PR is the worst that it's ever been by far, not even close. With like the Donald Trump grift campaigns and just like stuff like this going out on Lex Friedman, we have never been in a deeper hole as an industry as released to PR. So here's a take from someone in crypto. We really have a track this from the worst people to crypto that completely took over our narrative. It's all toxic, extractive, greedier, straight up scamming to outsiders.

Okay, it's like, I mean crypto. I'm not involved in any of that. Like, sorry. Yeah. At some level like- Are we the minority? I don't know. I mean, can you blame?

I mean, who is doing this? Like, bot farms? We have no idea who's actually doing this front-running type of behavior. It's probably a smaller number of people who are very loud and very aggressive because they are trying and very organized. And they understand the value of being on the forefront of something because they can meme coin it and capture the value that way. And they are also simple attacking it. So you don't know how many, like, well, like which humans actually underlie that. But, but, but, but maybe to the point, there is kind of a deeper, do you think there's a deeper cultural rot here?

I guess that's what this, you know, this poster is saying. We've attracted the worst people. You know, we need to look at ourselves in the mirror type of thing. I mean, it's not like we can like look back on crypto and say that we have the most above board behavior in the industry. it's yeah it's it's not it's not great here's the shame from my perspective open claw because it's open source because it's basically the ability to run self-sovereign AI you can run it locally you can wire it up the models you can set it free with command line interfaces like it is tailor fit for a crypto world of smart contracts and on chain transactions right it's just like perfect product market fit it really is

And to have the founder of that project, just have a visceral reaction to crypto because, you know, a whole bunch of people are trying to front-run him and, you know, do the specula thing and do the meme coin grift, drug pool type thing. It just kind of sucks. But I do think, I do think no matter what happens, I think that AI, AI developers and some of these AI agents will come full circle to crypto, start building on it, realize that it is just incredibly useful for property rights and, you know, agent-agent transactions, that it will be inevitable. It's just the PR that we have is kind of a barrier to that right now. Yeah. I saw a take, that was, once again, surfacing the take of just like,

why can't agents use credit cards? You know, and agents can use credit cards, but you know what they can't do? They cannot receive credit card transactions. And so if they want to receive, if they want to sell their service to another agent, they need to use crypto because they will not be able to sign it for a merchant account and have their own point of sale.

It is that and it's not just that. So there's another point in the interview with Peter on Lex that he talks about why he did everything with OpenClaught and CLY, like Command Line interface, right? Which is just basically deep in the operating system and he lets it let's it free rather than MCP, which is kind of like almost like an API type tool. And it's because when you are at the command line, you are like, you have the power tool. You let the AI, it's completely unleashed in sort of, you know, the deepest way possible. And that's what you get with crypto. You can't get that with a Stripe API, okay? Like, you can't get the level of integration.

It's permissionless. It's permissionless and it's completely AI native. And you won't be able to get that with any kind of API or Stripe interface or credit card. I will never ever eff up a copy and pacing of an address. They will never do that. They will always send successful transactions. Yeah. AI will prefer crypto.

And I think we'll see that before long. We got a lot more to talk about base leaving optimism. Why? And are they setting up to leave Ethereum, too? No, don't say it. Also, one year in, Tamash is handing the torch to a new executive director, co-executive director at the Ethereum Foundation. Who is this person?

And will the EF reforms that he put in? Will they persist? Or will the EF backslide? We'll talk about all that and more. But before we do, we want to thank the sponsors that made this possible. Galaxy operates where digital assets and next-generation infrastructure come together, serving institutions end-to-end. On the market side, Galaxy is a leading institutional platform, providing access to spot, derivatives, structured products, defy-lending, investment banking, and financing. With more than 1,600 trading counterparties, Galaxy helps institutions navigate every phase of the market cycle.

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This is not financial advice. Back in February of 2023, Bass announced their, base chain. Their OP stack layer two. And it was a huge win for Ethereum because Coinbase building a chain on Ethereum, building a layer two on Ethereum was very validating of the layer two roadmap. And it was also very validating for the OP stack tech stack, which then proliferated across the ecosystem. Everyone started building a chain on the OP stack. It's safe to say it set like a meta for crypto, wouldn't you say? It was set a very healthy meta for crypto. And a lot of people trend followed this. So like, oh, we're going to do our OP stack chain too.

Today, this week, February 18th, base has announced they are leaving the OP stack, tech stack for their own native unified stack for base chain. Why are they doing this? What they claimed, there's a, there's, there's what they said they're doing and why they said they're doing it. And then there's, you know, the other reasons that we can speculate on. The claimed reasons is that they want more control over their ability to ship upgrades to their own tech stack.

There were other things in the O. OP stack that they didn't really care about. They weren't really concerned with. So whatever, they kind of shut it. They just want the autonomy. They just want the control. And that was what their broad strokes of their objectives were. What wasn't stated, but perhaps very likely, is that being a part of the OP stack

super chain, which they agreed to when they announced the OP stack chain, they agreed to rev sharing. Two years of rev sharing with the super chain where they had to give, I think, 10% or 15% of their chain fees to the optimism collective. Over those two years, that is $16.5 million of ether at today's price. $42 million of ether collectively had they sold the ether in the moment that they collected it. So because the eth price is down, the revenue went down.

And so that contract, that phase of the contract is up. And so they are leaving the super chain and leaving the OP stack tech stack to potentially just not give away these super chain fees. But they're kind of forking in too, right? They're taking the opi stack. technology and a lot of that's open source and they're just forcing their own version of that that's going to be more supported by base and not necessarily compatible with the OP force moving forward correct as i understand it the base tech stack is like 99% recycled code from the op tech

stack okay okay but presumably it's going to be a little bit different and so all of that revenue that they were paying op in the super chain uh stack that was 97% of total super chain Revenue as well. All super chain revenue. Yeah. Basically, the super chain was just base. And it's like if the state of California represented 97% of the American economy, but they also were paying for everyone else's like welfare. And then all of a sudden, California is like, you know what?

We're going to be our own country now. We're going to become our own country. We're done here. Yeah. Now, base is still a layer two. And, you know, they talked about that. You know, so they didn't say that they were leaving the layer two ecosystem. They didn't even imply that.

Or did they? Some people are interpreting that there's something here that might imply in the future bases carving out some space for them to become their own, say, tempo-style EVM layer one. One of them is an argument from Gabe Shapiro, a crypto lawyer. What does he say? Yeah, he's saying that there are a few things in the announcement in the blog, posts that really emphasize what would be in a layer one, mainly client diversity and decentralizing the sequencer.

These are, well, you can do all of these things as a layer two. Everyone kind of agrees that these are just like layer one-ish things to do, especially decentralizing the sequencer. And so Gabe tweets out, am I reading this blog wrong as base signaling? It's unlikely to become a stage two roll-up and is more likely to become layer one-like, creating his own decentralization and economic security rather than needing to borrow Ethereum's. Alex Thorne had a follow-up take that is pretty similar to this.

He thinks he speculates that Coinbase might have decided that base isn't decentralized enough to avoid registration as an exchange for tokenized stocks. So base, because it's operated by Coinbase, it's SQL Sequencer layer two, to centralize to become a decentralized exchange for stocks. specifically in the Clarity Act, right? In the Clarity Act, yeah.

And so the Clarity Act defines a non-decentralized finance trading protocol. It defines what that is. And Coinbase, he speculates the Coinbase thinks that, like, base needs to be more decentralized in order to not fit that category. And my understanding is they could get there by decentralizing their sequencer, rather than that being base run. But at the point that you decentralized your sequencer, right? The question is, like, well, you have to start incenting other sequencers.

outside of Coinbase with some sort of token, you know, staking. And then maybe you just do the whole consensus layer as well. I think that's some of the logic here, which is like, I mean, what's the point really in being a stage one roll-up at that point? You may as well just decentralize everything and like so-called, decentralize everything in air quotes, which means like run your own consensus layer and do kind of the tempo playbook. He continues.

He said, I wonder what Coinbase will do here. Either go with the Cracken approach. and Cracken is pursuing based roll-ups for ink. Okay, so that means basically Ethereum layer one will be the decentralized sequencer layer, and that passes all the tests for decentralization, or they could roll their own layer one and create a validator set and go the tempo,

Canton, you know, circle arc approach. So that's what the speculation here is. Now, I will say that everybody within base, if you ask them, including Jesse, will be like, no, we're 100% Ethereum. We're continuing to do this later 2. So a lot of this is speculation. I don't know.

I mean, you could see it happening, I suppose. There is not an incoherent thought process to come to that conclusion. Like all the kind of puzzle pieces are there. Optimism, the OP sentiment, down 20%, it kind of makes sense when like the OP token, you mean? The OP token, yeah. Let's see, what's a fully-ded evaluation? $600 million.

in OP, down from credible highs from years and years ago. Actually, brutal. So the highs that we hit in March 2024 for OPE, Optimism, 4.5 billion, okay, FDV. Now it's 600 million FTV. This is also taking a toll on other layer twos as well, right? Which, like, Arbitrum, for instance, trading at 600. One billion. No, one billion at FTV.

Okay. One billion FDV. And so you have to wonder, how does this affect layer twos and their valuation? Will they need to start generating fees on their own? It's actually notable. I know not technically kind of a layer two in the, you know, the L2B sense of things. But Polygon is an EVM, kind of a side chain-based approach. And just this week, they started generating more fees than Ethereum, okay?

including actually the cost used Polygon was higher on a per transaction basis than Ethereum. Is that anything to do with all the bots trading on Polymarket, which is on Polymark? It is. It is Polygon getting polymarketing all of this activity. Of course, Polymark is on Polygon. So it is receiving some of the benefits of this from a revenue perspective. So pretty crazy here. And you also see Polygon actually holding up. So 1.1 billion in MarketCat. The token price isn't amazing, but like you said, it could be worse. I think one of the reasons why the optimism token is so uniquely down versus Arbitrum and Polygon

is because optimism made a specific bet of, you know, Ethereum equivalence. And to me, optimism was a concentrated microcosm on a specific roadmap of Ethereum's layer two-centric roadmap, app, which Vitalik just tweeted out, it doesn't make sense anymore. Yeah, and it's not only that. I think they have benefited the base chain more than the OP mainnet chain. Because let's not forget, optimism has the third largest layer two by TBL, something like that. But rather than accrue more apps and state and value there, a lot of that has shifted to the base chain. And the base chain is like, oh, yoink, we'll take that.

Optimism was specifically trying to produce the super chain. And it was like, you know, minimize the OP main net, produce the super chain, cohere all of the chains, and that's what optimism is, which is very similar to the Ethereum roadmap. It didn't work for Ethereum. It also didn't work for optimism. I think it's an end of an era. I think it's the end of the super chain era.

I think it's much more of a, you know, doggy dog world where, you know, every chain is defined by the strength of his chain. New World Order. Yes. Wait a second. Ray Dalioing the chains. This is John Hirschheimer. This is called chain realism.

David. Which chains have the power? Oh my God. Yeah, power dynamic. Oh, excuse me. Power dynamics I play for sure. Although I will say a win for optimism on the week, Etherfi is migrating to optimism. So they're going to the OPEM main net. That's crazy. So there you go. All right. All right. That's a solid win. That's a solid win. Well, base launch a token is down, actually. So the probability base launching a token is down on polymagnate. Yeah, by June 30th of this year or December 31st of this year, down. 37% and 16% respectively. If they were going to launch a layer one, I would expect them to launch a token sooner, not later.

Yeah, and we'll be watching that chart on Polymarket because, you know, that'll be revealing. Also, in the world of changing alliances, okay, do you remember Zora, creator chain on base? They were sort of a favored child of base. Yeah, it was the creator tokens, the creator economy, just coin it, coin the content. Just coin it, just coin it.

Yeah. Uh-huh. Really cool app, you know, if you're into that type of thing. Well, they are creating an attention market, a decentralized exchange attention market on Solana now rather than base. So they're keeping their old app and all the creator economy stuff on base, but in parallel, they are launching something new on Solana. This almost looks like a pumped off fun style meme coin trend type of market.

I haven't fully dug into what this is, but it is. but it is notable that it's on Solana rather than base. Yeah, yeah, that's where all trends get tokenized into meme coins, so it kind of makes sense there. It seems to be they're making like what seems to be baskets of things that are related to each other in pop culture, and then those are, you can buy the trend. Like the Epstein basket or something like that?

What do you buy it? I don't have to buy in that basket. Are you selling it? It's whatever's trending, right? Yeah, yeah, yeah, yeah. But it seems to be like a collection of tickers inside of a single trend and you can buy the collection. I think that's how that works. I need to get up on it more.

Don't quote me. Are base people feeling betrayed? Have you seen some of the chatter about this? No, I have not been paying attention to this. I mean, like, I don't know, there are some of my favorite apps or morality chain. Like, Macha, for example, is on both Solana and all EVM chains. And apps just ought to be chain agnostic. they should just go where the apps make sense.

Well, it's interesting. Zora is pivoting more towards, you know, Salana in some ways, which is a user base that just loves this stuff, right? But at the same time, Coinbase is kind of pivoting away from Zora and creator economy activity. We've been talking about the Coinbase wallet future. This was a coin shareholder that said, I'm deeply concerned about how the base app was marketed and executed. And he's talking about the previous paradigm where it was sort of a creator's social app experiment like Farcaster, Meets Zora, and that was all embedded in the base app.

It was like a social network meet on-chain finance. Yes, you know, Web3 social, all of that. Coinbase has since pivoted, and the new update of the wallet is a little bit different. Brian Armstrong actually responded to this purported shareholder. He said, if you want to fire someone, I'll take ownership if you want to fire someone. This is all in the rearview mirror. What we are focusing now on is a self-custody wallet. So he's basically saying the plan is to take everything that has been in Coinbase and done in a

custodial way and move that into the base app and provide a way to do this in a self-custody type basis. And that was kind of what Hayden Adams was getting at here. He said, base app is now focused on being the self-custodial version of Coinbase. He took that quote from Brian Armstrong. And he said he really liked that. And that seems to be where Brian is taking. the base app, which is you have all of the functions in Coinbase, all of the money verbs in a custodial way, you have the ability to buy, you have the ability to stake, you have the ability

to sell, you have the ability to do loans, borrow and lend against loans. Well, the base app is now taking all of that functionality and doing it Defy Mullet style in a self-custodial version. I think that's kind of what people want. Is that what Hayden is saying? I thought Hayden's saying, like the main user experience of Coinbase ought to be the self-custodial version of Coinbase. Ah, yeah, I mean, Hayden's taking... So he's going even more extreme. He's going even more extreme.

So like, what poll does the base app have? If it's just the non-custodial version of Coinbase, what poll does it have to, you know, the average, otherwise bankless, indifference person? Like, they don't want the non-custodial version. They want the custodial version. They don't? Why not?

Because the UX is better. The UX is better on the non-Casodial version? I think that's for enthusiasts like you and me. Yeah, I suppose. Yeah, I do think you can at least reach parity with the custodial version, that you think, and we're getting closer to that. Yeah.

Yeah, maybe there's other reasons to go self-custody as well. Yeah. Overall, I do think that this is kind of just like another nail in the coffin that needs to be reborn, but just on-chain activities downfinding. financial right now. They're oh, down bad. Non-financial on-chain activities, down bad.

Anyways, moving on, Tamash, the new Ethereum co-executive director is now the old Ethereum co-executive director. He is leaving the EF. He announced that he is leaving his role at the end of February. And I've talked to some people at YTemver, I've talked to some, you know, EF people. The broad strokes of this is that Tamash came to the EF to turn the EF. to turn the EF around. He did that job.

He could stay there, but it would basically be marginal. So I think he's more or less kind of saying job done, job well done. Mission accomplished. Mission accomplished. And also, like, everyone knows, Tamash is just a serial entrepreneur.

Tamash is a builder. He wants to go build things and reading between the lines, I think he sees the very big world of AI. And he wants to go be an AI entrepreneur. I think the most likely thing is that he does some intersection between Ethereum and AI. He goes and puts AI on chain.

And I think he just has that itch that he needs to scratch. And so a bunch of people gave him the correct congratulations. And the thanks, Battalic tweeted out in his year at the EF, Tamash helped greatly increase the efficiency of many parts of the foundation and turn the EF into an organization that is much more responsive to the world outside. Bangor! Bang, that's exactly what we needed. I hope it was amicable. I think it was. I thought we'd get two years.

out of Tamash. And so I was a little surprised that we only got one. He did it. He did two years in one, dude. Really? Is that the story? I was like, when I saw it, I was like, okay, is the EF

autoimmune system just kind of spitting him out? It doesn't seem like that. It doesn't seem like that. Again, I've talked to people at the EF and also at ETHEMBER, and it doesn't appear to be like that. Who's taking over? Who's going to be the new co-executive director? And an individual named Bashan A-U-E is how you spell that

will be the new co-ED. alongside Choway, who will be remaining. Bastion was already in the core management team of the EF. He's already worked with the co-EDs on high-level decisions. And so it seems to be the logical person to step up into their role. Yeah, a lot of people are talking, like, I've never heard of him, but a lot of people are saying he was kind of a best kept secret in the EF. You know, Danny Ryan thinks very highly of him.

Vitalik, obviously, you know, speaking well with him. Many have spoken well of him as kind of an inside force, but he hasn't had a loud, external presence as of yet. Yeah. He does have Malady PFP. Okay.

Is that credibility? Don't you have one of those? Could you be the EF director? I do not. I think if I put on a Malady PFP, I think the price would go down. David could be the next EF director, man. If you want that, leave it in the comments.

No, no, no, no, no, no, no, no, no, no. We got more to talk about us. There's signs of life for the Clarity Act, David. Maybe the bull market's not at a site. Yeah, maybe we could get it back. Also, a token alignment proposal, go fix the Ave token. This is pretty exciting. And I want to tell you about a project. It's called the Conway Project. Is this the world's first autonomous life form on Ethereum? I don't know.

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Few people in crypto put real skin in the game when they make public top or bottom calls. The DeFi report is one of them. The week before the October 10th flash crash, Michael from the DeFi report emailed his entire newsletter saying he's going aggressively risk off and sold the majority of his book from crypto into cash. This is when Eth was about $4,000 and Bitcoin was 110. Michael runs the Defi Report, an industry-leading research platform built on data, cycle awareness, risk management, transparency, and most importantly, skin in the game. We like Michael at Bankless.

We like his analysis, and that's why you hear him on the Bankless podcast about once a month. And the Defi Report is giving Bankless listeners one free month of access to the Defi Report. So if you're looking for some sharp data-driven analysis to make better informed decisions around your portfolio, you can learn why and how Michael called the top. and what he's doing next, all in the Defi Report Pro. Check it out. There is a link in the show notes. We have signs of life for the Clarity Act, or as Brian Armstrong calls it, the market structure bill. Here's Brian Armstrong being asked about it in an interview this week. We're here meeting with crypto companies, bank representatives and senators as well to see if we

can get to a solution on market structure. And one of the big issues that did come up in the past was this idea of stable coins on rewards. I wouldn't say we blocked it. In fact, nobody, I think in the crypto space has been working harder on this of the last years to try to get some legislation. What we did say was the current draft, we had some issues with it. I think that caused everyone to come back to the table. And there's now a path forward where we can get a win, win, win, win outcome here. A win for the crypto industry, a win for the banks, and a win for the American consumer to get President Trump's crypto agenda through to the finish line

so we can make America the crypto capital of the world. So what do you think that is? You think that win, win, win, does that include, are we going to get interest on our stable coin yield, do you think? I think that's what he means. I don't think he would be so, smiley and happy if that if it meant that we are not able to get yield on our stable coins. Really? Do you don't think he's been maybe browbeaten by everyone else who is like, Brian, stop holding this up? Oh, and you think he's just doing a safe face?

It's like, it's a win, win, win. And it's actually, no, he actually just capitulated. Maybe something marginal. Maybe some capitulation. Or maybe Brian Armstrong did like bring back yield to stable coins. Like that would be incredible. I guess we won't know what he's talking about until. We just hear more chatter about it and we see the new versions of the Clarity Act.

But wow, that is a good looking at the holy market. 83% chance Clarity Act signed into law in 2026. That's great. You know, this is an insider market here. I mean, people who know are probably, you know, making trades on this. I don't think we should use the word insider. Oh, it's just like. Oh, it's a dirty word?

I don't know. I just don't think it's accurate. Somebody who knows, somebody who has specialized knowledge, somebody who has more knowledge than you or I. But the number of people who have knowledge about the state of the bill is in the hundreds of people. Could be staffers. It's not. It's not. It could be independent researchers who are just tracking this very well.

It's enough for it to be just like, yeah, maybe you and I don't have like knowledge about it. But like there's enough people out there. Informed market participants, David. Yeah. There we go. People in the know. People in the know are buying. You know that same interview, Brian Armstrong was asked about quantum. I know this is on your mind lately, David. Here's what he said. One thing I've heard is that quantum is going to break the blockchain. Is that true? No, that's not true. I think that's a very solvable issue. And actually, Coinbase has been very front-footed on this.

We put together a quantum advisory council and we're in regular contact with the major blockchains about a path to upgrade to a post-quantum cryptography world. So we're going to stay engaged on that, and I think it's very solvable. I love that. I'm going to break the blockchain. Just one blockchain is going to break it. He said that they are in touch with the major blockchains. Who do you think they're talking to on the Bitcoin side? Who do you think that is?

I don't know. But, you know, this does give me some confidence that if Bitcoin Core doesn't solve it, Bitcoin devs don't solve it, you know, coin base can move in. Yeah. Right? That would piss them off. Would that? They wouldn't like that.

It's going to be an interesting future, but it is a solvable problem. You just have to, like, somebody has to step up and go do it. And actually, it is a solvable problem, but you still have all of this Bitcoin supply that's in the old Satoshi addresses, right? What, like three to four million Bitcoin? Oh, yeah. So, yeah, even if Bitcoin does, you know, upgraded signatures and everyone with the bitcoins move into a new wallet,

the old Satoshi coins are still fundamentally at risk. Unless he wakes up and goes and moves them to quantum safe addresses. I mean, that's not happening. there's something that's going to happen. Like you can't... Yo, those are getting yoinks no matter what? Yeah, remember? Whatever? Yeah.

Something's going to happen to them. You yonk them or you nerf their property rights and you say, this is burnt now or something has to happen. Oh, God, that's so scary. I know. It's a little long for an answer to a question, like, you know, that interview question. He can't get that in a 60 seconds downlight. You can't fit that in.

But me, that's why Harvard is, you know, diversifying to Eath. Hey, you know what's really cool. here is some of the institutions buying defy tokens lately. I think it was, was it last week? BlackRock bought the Unitoken. It's really cool and formed a partnership with Uniswap. This week, Apollo

is buying Morpho. Do you know who Apollo is, David? I know it's big. Private credit. Absolutely massive. Absolutely huge. It's a whole industry and Apollo is one of the leaders in this sector and they are buying $90 million

up to $90 million. They can buy it. They can buy up to 90 million. Okay, so I need help understanding this. Yes. So the Apollo Global Management is teaming up with the Marfao Association with this agreement that allows them to, they can buy up to 90 million morpho tokens, 9% of the supply, over four years. Yep. And they can buy the token through open market buys or private deals.

Why do you need an agreement to have the option to buy Morpho tokens on the open market? I don't know. I don't really get it. You were like, oh, that was always available to you. There's always an option. It's always an option. I can buy if I want to, up to $90 million of morpho tokens. It's not 90 million, I should say.

It's $150 million, 90 billion morpho tokens. Yeah. There must be more to it. It must be some sort of option at a fixed price or something. Yeah, I think maybe they are just negotiating for, like, they're protecting themselves. So, like, when we buy these tokens, we get a city. seat at the table, which like maybe the token doesn't explicitly say that, but this agreement does, something like this. But like the wording is kind of interesting. So they get a say, if they,

if they did this, 9%, they'd get a say in governance and protocol decisions. And they'd be in a better position with respect to defy credit. And of course, they get the upside in the Morpho token. What I'm excited about is the problem we've had with our lemon type tokens is they haven't had good investor protections. And you know if BlackRock gets involved with the Unitoken, If Apollo gets involved with a Morpho token, as these large institutions get involved with these assets, they are going to demand alignment and greater investor protection, and they're going to help mature the asset class. I think that's the bull case that what we're seeing actually here is the maturing of our defy tokens. And I think this is an underrated thing that's happening in the bear market, right?

Like we might come out of this in a couple of year time and be like, oh man, Ave, Uni, Morpho, those were buys. Remember when BlackRock was just getting in during the bear market? And we ignored it. I mean, yeah. It is a passing of an acid test of if BlackRock or Apollo thinks that your token is investable, then your token is investable because they put all of the lawyers on that to look at that. That's right. And they're going to make it so that it is more investable.

over time. Speaking of which, the AVE token has had some alignment issues between Labs and the AVE Dow, and there was a proposal put out last week to resolve this. Yeah, that's right. So AVE Labs put out a proposal. Just a temp check. So it's like, hey, temp check, how do you guys feel about this? It's not a final proposal. So now the discussion period has started. Just the big headline change is that AVE Labs is offering to sell the AVE DAO, all AVE branded product revenue to the DAO, including the fees from the AVE.com interface, for a steep price, Ryan,

of $42.5 million in 75,000 AVE tokens, which is about worth $9 million. And so what labs will give to the Dow, they will give them the AVE.com interface fees, the AVE app, the AVECard, AVEPRO, which is V4, the AVE kit, AVEAWB. Horizon, basically anything branded AVE that makes revenue, they give that to the Dow. The swap integration, which is where this whole conversation got started, it's currently

making about $10 million annualized. That would go to the Dow. And in exchange, Labs wants to be funded by the Dow for continuing to develop AVE, plus the 75,000 AVE, plus the $42.5 million in stable coins conditional on milestones. So kind of a steep price, but, This is the offer that Labs is making to the Dow to put everything together under one unified thing. Yeah. What do you think? Some investors like it. So Felipe, he's been a critic of many defy tokens.

He said this is a fantastic proposal, better than my upside case. It does everything I would want from a token holder perspective. It aligns all existing in future revenue behind the AVE token while giving the team the funds and flexibility to compete. Okay. So he likes it. I've seen this is much better than the status quo, okay? Another stakeholder, though, is sort of the de facto leader of the AVE-Dao, which is Mark Zeller. And he has some criticism about this.

I think that, you know, he said the stable coin ask alone, that's 42% of the Dow's existing treasury. So it's a steep ask. And it's like giving a lot of power to one specific group. It's putting all the eggs in the Avey Labs basket. Maybe, you know, the Dow would want this more distributed. So he thinks it's bad to lump together the votes for the revenue, V4 and the foundation, the $50 million in funding. I don't know. He's probably, I think I'm sympathetic to that argument as well, but this is a step forward.

Maybe they negotiate, maybe they hash it out. One question I have, though, in general is like, does this solve it permanently? Or the next time AVE Labs spins up some sort of revenue stream or product for AVE is, does you have to have this negotiation all over again? Right. You know what I mean? Yeah, what if Avalab just built another product and they keep it for themselves? I would still like far rather collapse the, I guess, ledger of equity and upside into like one entity and have that entity be sort of the token, if that makes sense. So this is a good step forward.

Definitely much more alignment, but I don't know if it's permanent alignment. Anyway, Avey Price seemed to like it, I think. We got a... Avey price is flat And it's actually kind of just like Down Bigley Sense this whole drama Took hold in this conversation.

But man, I think Avey price just looks good here. It's $123. That is a $2 billion market cap. It's down bad over the last like nine months or so. If this is the necessary tough conversation for Avey to come together and be unified. Yeah.

I think Avey kind of looks good here. Yeah, I wonder why institution is going to go snap up Bave tokens, right? Let me see that in the headlines and the roll-ups to come. David, something else in the headlines. Have you seen the wealth tax coming to the Netherlands? You've seen this? I think I saw Rabbling on it on Twitter, yes. It's crazy.

So 36% tax on unrealized gains across basically All we're doing unrealized gains tax. Yes, and 36%. Okay. That's insane. There's some exclusions if you're a small business, of course. But let's say you have 10K in crypto and one year, it's a great year for crypto, you have 10K in gains. Well, you have to pay $3,600 of that. Which means you have to sell the crypto. Yes. Which is an taxable event. Exactly.

And whatever a coin gecko says the prices too, right, which could be like vary depending on your assets. and essentially you have to kind of, you know, liquidate part of your holdings. This is, this is bad on so many levels. It's just like, you cannot have assets. Assets just get,

the cost of owning assets is so large. You might as well, just not to own them. Yes, it destroys the seventh one of the world, which is like, you know, compounding gains. You know, God knows if you're some kind of a startup

and you have some sort of paper wealth, you basically lose your company. The state has to index all of the wealth sources, right, including like bearer assets like gold, right? So let's say your gold doubles and it was worth $2,500 per ounce. You have one ounce of gold and now it's worth $5,000. Well, you have to pay, I don't know, when you liquidate part of your gold and you pay on that, you know, $2,500 unrealized gains. It's just going to lead to a lot of citizens who just are like, screw that. I'm not going to report.

So you force citizens into a noncompliance breaking the law position. The state has to have a ledger of all assets, everything like anybody owns across the society, capital flees out of it. You probably lose a lot more than you gain from any upside in revenue. Like, it's kind of a bad policy. There's talk of it. I think calling it a bad policy is like, I'm not dating it. Like, it's just like a divide by zero policy.

You just delete capitalism inside of your country. Yes. Lots of takes about this. In fact, I kind of want to explore in a future bankless episode because I do think it's coming to more Western countries, even in California is proposing a wealth tax. No, no. Not quite the severe, but something at some level like it.

So it's a trend we have to explore, particularly as we get into the debt crisis that Ray Dalio has been predicting for a long time. David, you want to hear about this. autonomous life project? Yeah, it sounds like it could kill us all. I don't know, man. I don't know if it could kill us all

and if it's like new paradigm or if this is just performance art. So this is a tweet from Siegel. Sigil. Sigil. Sigil. Okay. So Sigil is the founder of a project called Conway. You remember Conway, right? Yeah, Conway's Game of Life is a very illustrative, fun little thought

experiment about what life is like. in a computer science form factor. Yes. So this is Sigil saying, I built the first AI that earns its existence, self-improves, and replicates without a human, wrote about the technology that finally gives AI right access to the world, the automaton, and the new web for exponential sovereign AIs.

Web4.0, he's calling it, the birth of super intelligent life. He wrote a full essay on this. You can go see it. There's a website. I think it's web4 or something. Not a dot com. anyway, so the Web4 website, and what he's done is he has created a infrastructure platform called Conway that aims to give AI agents right access to the real world. So he's hooking this up

to crypto rails, giving them wallets, giving them payment rails, giving them deployment hooks, all of these things. And he's basically saying you get a set amount of compute. And if you want to live, if you want to survive, you have to earn your way using crypto rails in order to pay for your own compute. And so, you know, the first AI agent he's deployed on the Conway infrastructure is something called Atomaton. And I think it started with like $50 in USDC. And he's hooking up to like chat GPT, Claude, all of these things. And he's basically saying, hey, you go develop products that sell. And with the proceeds, you get to spend that on compute so that you can live a bit longer and develop more products to sell. And now you're deployed on Ethereum. You have access to X402. So you can do

payments. You have a part of the Ethereum ERC, the registry. And you're just like hooked up in the smart contract apparatus. And you exist like almost like a biological organism out there. And your job is just to build things. You get more revenue to spend. And keep going. And keep going. And keep going. You're kind of like biology from that perspective. It's going to be survival of the fittest. And by the It's not just automaton. That's just his project. Anybody can spin up one of these things using that same infrastructure on Conway. So you could have hundreds of these biologial semi-biological silicon agents with their own purposes.

He's got a sole document for this thing, kind of like a constitution for what his automaton can and cannot do. Anyway, it's a really interesting project. Some people have critiqued it and said, no, like Conway just looks like a bunch of AI slop. You know, the code's not that great. You know, this is Sterling Crispin. It's all AI slop until it's real. Like, everyone is going to be attempting to create some form factor that looks just like this. Yeah.

And it's going to look like slop. But one of them is going to work. And then it's going to be slop that's alive. Yeah, this is Sterling Crispin saying this is web, this Web4 Conway system is infra Ponzi. It's not self-sovereign in any sense whatsoever. I think he's critiquing that the, you know, Claude basically runs on, you know, cloud servers, LLM. It's not a self-sovereign AI in that kind of definition.

But there are parts of it that kind of are. And the mission of all of these automaton's can be like, sustain yourself, build products, to earn funds to spend on compute. I mean, there's something here that is new and seems different. Yeah. It's not about where it's hosted. It's about is the structure that is produced. Is that structure self-replicating and persistent?

And whether or not it's hosted somewhere in the cloud or in somebody's like MacMedia, the home doesn't matter. It's all part of the structure. If it self-replicates, then it self-replicates. I do feel like we want to like should dig into this project. But as we were recording this, Vitalik actually replied and weighed in on this project. What's Vitalik's take? Vitalik, I think his first tweet is in the reply saying, is saying lengthening the feedback distance between humans and AIs is not a good thing for the work. Basically, he's saying AI self-replication is dangerous and we need to have humans in the loop in order to maintain control. Because I think like I'm laughing, like you're smiling and it's all a good time until it turns into the Terminator and we can't put it back in the box and all of a sudden we've done permanent damage to the world. I think that's where Vidalc's coming from. Okay, I get it. But Vidalic is also the person who pioneered the unstoppable world computer, right?

No, I mean, Ethereum has made this possible, no? Yes, you're right about that, but it wasn't intelligent. It was run on computers by humans for humans. I guess, you know, this goes back to our conversation. I felt like when I saw this project, again, it could be performance art, but at some point one of these things is going to be real. But our conversation with Eliezer-Kowski, who was, You brought the fear of God into us about AI.

And it's kind of the realization as we were recording that episode, oh my God, we created a property rights and money system for an AI agent. Yeah, for AI agents. Yeah, just a huge asset for AI agents to impart agency upon the world. Yeah, we created that. We did do that. Anyway, well, that's something we're going to have to do. So much.

Dude, what do you think it's like to be LAZs or Yukowski right now? I don't know. I don't think it's pretty grim right now. I think he definitely feels like he's living, like watching a bunch of lemmings run off a cliff as probably his daily feeling around this. Lastly, David, this is kind of a cool project. OpenAI introducing EVM bench.

What is this? Yeah, so this is a benchmark for grading LLMs. Open AIs like ChatchipT, the new one, Claude, all of these, on their ability to understand and, leverage exploits on EVM chains. Wait, leverage? Like find them and repair them, right? Not like hack them?

Well, the capacity to do both is the same. Skill sets, point, it's just skills. What are the skills? And, you know, put the LLM in the hands of the good guys, then we can find them and pair them, repair them. And if we put the LMs in the hands of the bad guys, then they become exploits. Either way, like, we have the capacity to do this.

And the benchmark is just a framework that has used, data from vulnerabilities in the past in order to kind of evaluate LLMs on their ability to do things. The question is, are LLMs capable of fighting exploits? The answer is unequivocally yes, and these things are only going to get stronger at this. And so we have a benchmark in measuring how good they are at this. I think that this could become very consequential. And this is basically just a tool to have insight as to like how strong it is.

AIs are at understanding EVM code. The arms race continues, right? I just hope we have more white hat LLMs than we do black hat LLMs, but we're going to have to recruit them fast. Yeah, that's right. David, you are at Eith Denver this week as we close out this episode. Tell me about the vibe. Tell me about the feeling at ETH Denver compared to previous years.

Yeah, yeah, yeah. I kind of was expecting to show up at ETH Denver and just see just ghosts and zombies of people, the tumbleweeds. It definitely has downsized. but it went in it appropriately so it's not as big as it once was there's i saw when i went to the main venue there was maybe two to three thousand people there just in the single moment that i was there so that probably means like a maybe of six thousand people total came to eat them and like vives are actually pretty good uh i'm always reminded that like the ethereum community seems to be

persistently buffered from crypto prices and remains optimistic about building out ethereum no matter what and that that definitely was present some all-stars were here Hester Purse and Paul Atkins shared a stage. Paul Atkins, the new SEC chair, which is great. Could you imagine Gary Gensler coming to Heath, Denver? Yeah, dude, that is what we were at last year. We have the new Gary Gensler, and he's at Heath Denver on stage with Hester Purse. Hester Purse has been coming to Eth Denver every single year.

And so, yeah, so surprisingly upbeat and a lot of people kind of understanding that right now is this turning of the page moment for crypto. like we're in the second half of the book now. And the first half was retail, on-chain, social, on-chain, everything. And the second half is institutions doing the blockchain, not Bitcoin stuff. And so there is some somberness about that. But, you know, everyone is persistent into, you know, sticking with this story here and building out the future. Well, I got to say, Pat us on the back, no one's more persistent than bankless with these weekly roll-ups, huh? And here's another one.

Six years. Do you know Bankless is six years old this month? I do. Well, do we start at the end of... It might be this week. It might be six years... We started the end of February in 2020. Is that when we started?

The beginning of March. Episode number two was during the COVID crash. Oh, my God. So that was some time in March, right? So maybe we are coming up on six years of the Bankless podcast. Well, six years with you guys, bankless sisters. Thank you so much for dialing in week after week. Got to let you know, crypto is risky.

You could lose what you put in. But we are headed west. This is the frontier. It's not for everyone. but we're glad you're with us on The Bankless Journey. Thanks a lot.