Bankless - ROLLUP: SBF vs Caroline Ellison | Sam Altman on Joe Rogan | ETH Predictions

Episode Date: October 12, 2023

Bankless Weekly Rollup 2nd Week of October ----- 🎁 Check your wallet with our brand new tool: Claimables  https://bankless.cc/GetClaimables  ------ 📚 a16z Startup School | Applications are now open! https://a16zcrypto.com/crypto-startup-school/?utm_source=bankless&utm_medium=podcast&utm_campaign=css_london&utm_id=css  ------ BANKLESS SPONSOR TOOLS: 🐙KRAKEN | MOST-TRUSTED CRYPTO EXCHANGE ⁠https://k.xyz/bankless-pod-q2  🦊METAMASK PORTFOLIO | MANAGE YOUR WEB3 EVERYTHING ⁠https://bankless.cc/MetaMask  ⚖️ ARBITRUM | SCALING ETHEREUM ⁠https://bankless.cc/Arbitrum  🗣️TOKU | CRYPTO EMPLOYMENT SOLUTION https://bankless.cc/Toku  🦄UNISWAP | ON-CHAIN MARKETPLACE ⁠https://bankless.cc/uniswap  🔗 CELO | CEL2 COMING SOON https://bankless.cc/Celo  ------ TIMESTAMPS & RESOURCES 0:00 Intro 3:30 Markets 6:30 Inflation https://www.cnbc.com/2023/10/12/cpi-september-2023.html  11:00 Why Americans Have Crypto https://twitter.com/jp_koning/status/1711714224664186943  14:05 ETH Validator Queue https://www.validatorqueue.com/  16:45 Friend.tech Surpassed Bitcoin https://twitter.com/tokenterminal/status/1710024292992163889  17:45 Tron vs Bankless https://www.bankless.com/tron-trx-bull-bear  22:00 ETH Predictions https://www.theblock.co/post/255860/ethereum-eth-price-standard-chartered-bank  27:00 SBF Trial https://compote.slate.com/images/c8708922-4b13-418c-a8be-af557e45079e.jpeg  28:20 Gary Wang https://twitter.com/emilydparker/status/1711797258302243182?s=46  33:00 Caroline Ellison vs SBF https://www.nytimes.com/2023/10/10/technology/caroline-ellison-sam-bankman-fried-trial.html  41:30 Thai Escorts (Not Taiwanese, David!)   44:05 SBF’s Ambitions https://x.com/innercitypress/status/1711806222117027840?s=20  https://twitter.com/byzgeneral/status/1711864012567093287  47:45 Hamas Crypto Accounts https://www.theblock.co/post/255679/israeli-authorities-have-frozen-hamas-linked-crypto-accounts-report  https://www.wsj.com/world/middle-east/militants-behind-israel-attack-raised-millions-in-crypto-b9134b7a  50:22 Critical Context https://twitter.com/samlyman33/status/1712209368450511162?s=46  51:33 Getting Drafted https://twitter.com/AmMuroch/status/1711980124021669941  52:30 Ray Dali on War https://www.linkedin.com/pulse/another-step-toward-international-war-ray-dalio/  53:30 Farcaster Goes Permissionless https://twitter.com/dwr/status/1711828728865849505  54:00 Five Shades of Lido https://notes.ethereum.org/@mikeneuder/magnitude-and-direction  58:10 Sam Altman on Joe Rogan https://ogjre.com/episode/2044-sam-altman  1:01:05 Trader Joe Getting Sued https://twitter.com/Blockworks_/status/1711705702287200497?s=20  1:02:00 Uniswap zkEVM https://x.com/okutrade/status/1709916468219981977?s=20  1:04:30 Questions from the Nation https://bankless.cc/GetClaimables  1:08:10 When to Sell https://twitter.com/cburniske/status/1711064578212475360?s=20  1:10:10 Cars vs Shoes https://twitter.com/0xMidnight/status/1710409447187632611  1:10:50 What David’s Bullish On https://www.bankless.com/vampire-season-diva  1:15:50 What Ryan’s Bullish On   1:21:00 MEME of the Week https://twitter.com/Crypto_McKenna/status/1711851523657830561  ------ Not financial or tax advice. See our investment disclosures here: https://www.bankless.com/disclosures 

David, look at her surrounded by all these reporters. Yeah, that's crazy. That's intense. Absolutely circus. Very intense. So Caroline Ellison is like the only person closer to Sam Bakeman-Fried, dang Gary Wang. Like not only was she in charge of Alameda,

but like Sam Beckman-Fried and her were dating. They were sleeping together in 2019. They were dating in 2021. Then they broke up, but they were still together. Yeah. And so like, you know, very incestuous, business dating, sleeping together relationship. Incestuous.

So in the Bahamas is like, well, the business relationship. Everything is a mess. They're not related, though. Let's just clear that out. They're not related. There's many other things. Like, a lot of convoluted paths. They're not related.

Bankless Station, happy Friday morning. It is the second Friday of October, or should I say flat tober, David. It's looking pretty flat out there in the markets. It's down. No? It's sad. Well, I haven't looked at the markets. You just put them in the prices in.

But we'll get to that. What else we got on the week? topics of the week. The SBF trial of FTCS continues on to week two Friday of last week before we were able to cover it. Gary Wang, the CTO of FTX, testified. This week Caroline Ellison testified for two

days straight. There's a lot of juicy stuff to unpack there. Two days? Two days. Twenty-eight hours of testimony? One day was like eight hours straight. So she just kind of dumped it all about Elamita on the table. Little did I know that Thai prostitutes would be involved with this story.

Did you hear about this? Uh, no. Okay. Like, oh, you haven't heard about this at all. Oh, you're about to get this fresh. No, I haven't read any of this. Thai prostitutes have entered the FTX arena. Entered the chat. Enter the chat. The arena. He's funny you say that. They used to have an arena, didn't they? We also have Sam Altman. He's talking about crypto on Joe Rogan show. What did he say? Was it good? Was it bad? Did he mention WorldCoin at all? We'll get to that too. David, what else we got? Why do Americans own crypto? The Fed, the Fed did a survey result. So we'll talk about that. Also, the vampire attack on Lido. I got some takes that's at the very, very end. And then apparently, Ryan, we're giving our price predictions for Eath. Why are we doing this?

You didn't know that? I did not know. I did not sign up for this. You better be thinking of a number, okay, because we're getting to it. But before we get in, we've got a message from our friends and sponsors over at A16Z. You know A16Z, CryptoVC firm. Well, they're telling you, they want you. you to go back to school. That is crypto startup school. What are we looking at here, David?

At the A16C crypto startup school, it is that time of the season where you can apply to join and get accepted by the crypto startup school. It's a 12-week accelerator program to make you into a crypto founder. So cue the Moulon music. We're going to make a founder out of you. That's what A16C is going to do. You're going to work with some of the best and brightest mentors in the crypto space, including some of the A6C partners and sometimes just like external founders come in and just get involved. The A16 and Z startup school 12-week program, March 27th through June 11th in London in the UK. So you will be there.

This is on site. This is on campus. And yeah, it's great. You get to work with some fellow founders, work with some great mentors. You need to apply. October 20th. That is in eight days from recording seven days if you're listening to this on Friday, which you should be. So applications are open.

Make sure you catch that deadline. We've got some videos from Chris Dixon there. He's going to be providing some mentorship. also Jin Wang from optimism. Some fantastic people there. So yeah, go check it out. Become a founder. David, all right.

You said it wasn't Flattober. But it's not October, is it? Does that mean it's the other direction? That means it's the other. Yeah, the other, it's the bad direction. It's the down direction. Yeah, a little bit. What's Bitcoin in the week?

It's accelerating to the downside a little bit. Started the week of 27,900 down 4.5%. We were asking for bigger moves last week. We kind of got them. 26,600 is where we are. this week. 700, excuse me. Okay, I guess it's better than flat?

No, I don't know. Is this what we wanted? I don't know. I don't know if this is what I've wanted. Let's give me some eth charts so I can decide. What are we looking at? Start of the week at 1630,

down 5.5% to 1540. 1540. Oof. I didn't want that. No, I didn't. I didn't feel good. I mean, I bought this week. Did you?

Yeah. Yeah. That's the upside, actually. It's like, what a fantastic buying opportunity. I've got to take about that at the end. And, course we're going to get to price predictions, but I guess it's not October, huh? We got, we got, we got, we got half the month yet to redeem ourselves.

Right. Yeah, it's only the 12th. It's only the 12th. Yeah. Well, it was, tomorrow's Friday the 13th. Congrats to all the bankless listeners who are listening to us on Friday 13th. Everyone brace your sides. Should we do something spooky, David? Eat, Big Point ratio. Oh, dude, Halloween's coming up. We're going to have to get our costumes. I haven't even thought about that. I don't care anymore. I'm not doing a, are you doing a costume this year for I really love it. The listeners love it. We got to do it. Do they? We got to do it. I think you and I like it. Last year, last year for bankless listeners who are new, the five new bankless listeners that have come in the last year, uh, Ryan dressed up as Bit Boy. And I dressed up as a crypto dick butt. Yeah. Oh, dude, I'll be SBF and you be Caroline.

Oh my God. That's not what I've signed up for. I already kind of have my, my, my, well, I haven't got my costume, but I've got my idea. Really? Yeah, I've got my idea. Is this a thing where you're not going to tell me? I don't have much time in prep. We have not told each other. This has been the deal. We reveal. I know.

Okay. Do we do the real camera's off until we hit record? All right. I'm just, I'm saying, year one, I was my crypto punk now, now behind me.

Year two, I was my crypto dick butt. Year three, if you continue the trend, it'll be an NFT, perhaps. Perhaps. Perhaps.

An NFT? One of your NFTs? My NFTs, yeah. I think that's my rule of thumb. It's like, I'm going to go skin you wallet. It's for, For some bankless listener, go track down David's wallet.

And let's see if we can predict. It's David Hoffman. Dottie. That's where I keep my NFTs. Super secret location. All right. How about the Eith Bitcoin ratio? It's spooky. It's bad. 0.0577.

Yeah. I was going to ask you to give it to me straight and you just did, huh? So we're down 1.5% on the week? 1.5% on the week. Yeah. Total crypto market cap, $1.08 trillion. So it's not great. Can we move on? Yeah, we can. Thanks to Cracken for those charts. We appreciate the charts at least. Make them look better. Make them go up. You can make them look pretty, but can you make them go up?

Hey, Cracken, can you help us with that? All right. What are we looking at? Here we go. CPI. That is the consumer price index. Inflation reports came in for September. And guess what, David? It's not dead yet. No, inflation is still here. There's actually a little higher than most analysts expected. So it was up 0.4% in the month of September. So it was not flat timber. It was up timber a little bit for inflation. And if you extrapolate that, yeah, I'm working the months in this show, David, 4.8% annualized. That's what inflation would be. That's starting to feel like 5% actually. That's annualized. That's if you take 1.4%, multiply that by 12 months, right? But if you look at historic data.

We are at 3.7% annual. So no, it's not dead. You see this bump? That's bump up. It's bumped up a little bit. You know what's interesting is you and I just did a recording

with Lin Alton. So good. It was fantastic. Guys, that episode is coming out soon. Actually, I still have her book right here. Broken Money, David. Anyway, the contents of that book is in the episode.

And it's absolutely fantastic. But one of her takes was, what if inflation just becomes like background noise for us? High background noise. Well, I mean, inflation is always background noise, but what you mean to say is like, it's, the volume is increasing. Still background, but higher. What I'm saying is, like, what if we don't go back to the 90s? What if we don't go back to the 2000s, right?

What if, what if now it's just a sustained like four, five, six, seven percent spikes up, maybe tiny spikes down? Like, what if it's in the background? And, you know, Lynn's comment was that's how a lot of countries live right now. I'm talking about kind of in Western developed nations, right, in Europe. What if this is the new normal? In Canada, in Australia. What if this is the new normal?

In the U.S., what if this is the new normal? She mentioned she was just in Egypt, 30% annual inflation. Okay, and people just live like that. And so what do you do when you're in a high inflation type of environment? Well, you tend to spend more. You might be willing to take out more cheap debt if you can find it in fiat that's nominated in fiat. You might want to hold your money in other things.

You know, real estate in a lot of emerging countries that don't have strong capital markets like the U.S. Stocks for, you know, Western developed countries like the U.S. maybe. Crypto. Maybe you start to think a bit more short term about your spending habits as well. This is very interesting if this is what the next decade holds for us, is kind of sustained high inflation rates. What do you think about this?

I was talking to Mariano Conti, who lives in Argentina, who bought a car maybe a few years ago, and he got a 20% interest loan in Argentine peso. So he's paying 20% interest. Terrible loan for a car loan, for a one-year car loan. Yeah, it's terrible. His first, but Mariano Conti lives on, dollars like most people who do in who live in Argentina.

So his first, his first loan payment that he had to pay to pay back the loan was most people who can, I would say, in Argentina live out dollars, yes. Dollars are like, most everyone in Argentina, almost everyone has a person that they exchange dollars with. So it's not just like, oh yeah, no, it's the dollarization of Argentina is like very well permeated. It's not like an elite. But it's all great market, right? It's all great market.

It's all great market. And it's like totally social, culturally accepted. Right. Everyone has like the guy that comes and swaps currency. Your dollar guy? Yeah, your dollar guy. Yeah, it's not like an elite only thing. It's just like everyone.

Anyways, his first car loan payment was $1,200. So he converted $1,200 into pesos to pay his car loan. And his most recent car loan payment, he told me, was $580 because it only took $580 to acquire the same amount of pesos that he would need to pay back his car loan. So like when he takes like a $2.000. 20% peso, 20% interest rate loan on a one-year loan, which is a dumb loan, it actually works out because it's inflating so goddamn much. It doesn't matter. Do you know an elder millennial flex is just to be like, yeah, I got a mortgage at 3%. Yeah. Yeah. Yeah. Like that's a huge,

like that, what a gift that was. I can't get that nowadays. And you know, you're basically making money on that because inflation is higher than your interest payments. Um, So the Fed has an idea on why people are buying crypto, and it's not necessarily inflation. So apparently, David, every couple years, the Fed puts out a survey on why people buy crypto. They must be interested. I don't know if they're worried or just... How many times have they done this? Generally interested.

At least since 2019, first, guess what percentage of Americans the Fed says owns crypto? What do you think? Well, Coinbase said 50 million, and there's like over 3,000. 300 million citizens. So like, what was that number? Like 20%, quick math? 20%. 50%. 1.5 kind of thing. The Fed reports less than that. Okay. So this is a survey of about 400 Americans, and they say 8.1% in their survey of Americans that own crypto, which is not nothing. It's not coin-based numbers. But interestingly enough, this was up from 1.9% in 2019. 2019. 1.9% now 8.1%.

Directionally, I love that number. It's a great, it's a great, like, that's a great multiple, right? It was a little 4x for us. And I think these numbers are actually 2022 numbers. So, you know, although no one's really buying 2020. Probably selling. But one of the questions they asked in this survey is, why do you guys, why are you guys buying crypto?

Why do you own crypto? All right? You want to know the number one reason why 67% of America, Americans own crypto, David? You want to guess what that is? Number go up? Yeah, it's number go up. As an investment, as an investment, was number one, with 67%.

Number two was curiosity about the tech. That's 21%. I'm in it for the tech. There's always those tech. Those are the ones that are down on their bags. They're just in it for the tech. And then other, interestingly enough, was 10%. You know what got no mentioned was remittances,

payments for goods and services. so no one using this as a payment in their study, or number, the last one, most disheartingly, almost at zero, because they don't trust banks. Well, duh, you don't, as an American, to buy crypto for remittances. Well, okay, I guess if you're an American citizen and you are sending crypto abroad,

then I guess you are, if you're like a... If you have family abroad, if you've recently immigrated, that sort of thing, you know, you know, maybe, maybe. You're probably doing like, you know, stable coins, I would expect. Yeah, but the big use case of the 80% is investment. His number go up. So anything surprising there for you, David? No, that checks out.

Well, I know you're in it for the tech, man. So I'm in it for that 20%. I'm in it for the memes. Here's a number. That's all we got at this point in the market. Christ. Okay. Here's a number that is straight down.

It looks scary. Is this a good chart or a bad chart we're looking at? This is the validator queue. Explain it. Okay, so this is, okay, now we're talking about crypto. That was a hard pivot. That was a hard pivot. Okay, this is the Ethereum proof of sake validator queue.

Okay, so quick rock through memory lane. We enabled withdrawals. The supply of ether in the beacon chain went down because people withdrawn. And then the rate of inflows into the beacon chain like accelerated bigly, like three-xed. Beacon chain is just people who want to stay. The proof of steak. The proof of steak. Yeah.

There was like a 45-day wait queue to get into the beacon chain to stake their eth a while ago. We have finally approached an equilibrium. That acceleration of people depositing into proof of stake has finally started to come down. And so it's currently less than 24 hours to deposit your eth into the beacon chain staking contract and get your ether staking. And so this is, this is, we, this inevitably was going to, this was never going to be up only, of course, like, you know, not at all ether is going to stake. And so we have found the equilibrium. That equilibrium is around 27.3 million staked ether. That's 22.7%, which is about the 20 to 30% range that we predicted. So about 3.5% APR is about what the market wants. And if that goes down, then people won't want it anymore. And that's, This is the equilibrium that we have finally arrived at. Cool. It is cool.

A bullish, bullish? I don't know. It's just straight neutral. As a staker, I was, you know, wanting to keep that number above 3%. Right. Certainly. Right. So I didn't want the queue to stay full and the demand to be kind of perpetual.

Yes. And so as a staker, it's good to see that number go down. You are not alone. Everyone would like that number to go up. Yeah. Everyone else should unstake. Please unstake. I think it was it, why was it, why did it get so high? Because 45 days is pretty high, right? For all these people

wanted to get in the, in the beacon chain club and stake their Eith. I think it was really because once withdrawals went through post-Shanghai, people just saw like lower risk. I mean, maybe I'm extrapolating, but that was true for me. I was just like, okay, it was so obvious. I was arguing with Bitcoin Maxis, as well, like, as soon as withdrawals or enabled, Ethereum's going to collapse because everyone's going to unstake. I'm like, you're an idiot. That's not how it's going to do. Why do you do that to yourself, David? Why do you still argue with Bitcoin Maxis, huh? Because people are wrong on the internet, Ryan. Oh, okay. You can't sleep. Can't sleep. Someone's wrong on the internet. Token terminal, speaking of Bitcoin. You want to get all your, all your angry

takes out about Bitcoin. Friend Tech just surpassed Bitcoin in 30-day fees. Okay, friend tech is making more money selling each other's friends, friend shares. Sorry, they don't call them that. Friends. Keys. Friend Keys. Friend Keys. than Bitcoin is making selling block space. That's what this means. That's a layer two app. So not even a layer one app on Ethereum. A layer two app is making more money than Bitcoin is.

Yeah. And paying ether very little for security because it's on layer two. FrontTech revenue, 28 million. Bitcoin revenue, 26 million over the last 30 days. Ether revenue, 90 million. Tron revenue. 87 million. The Tron revenue is actually such a dark horse.

Turns out Tron has very similar economics to Ethereum, and it's super duper used for payments. You should be careful saying Tron, okay, because that old Justin Sun guy is kind of litigious. So you should be careful what you say about him. Are we going to open up the store? Okay, can you open up the article then, if we're going to open up the store? What article? Okay, bankless released a Tron bowl versus bear case. Let me find this.

Inspired by, at least for me it was inspired. I didn't write it. It was inspired by Paul Enya's article about the economics of Tron and how they're like, their mimics ether and they're kind of bullish. And so we published this article. Jack wrote it. Great article wrote the bear case and then the bull case. And so there was a, when talking about the bull case for Tron is already super dubious.

Why is it dubious? Well, because the founder, Justin Sun, I, in my opinion, is a morally bank. corrupt character. And we elude, you know, I, it's just my opinion. It's my opinion. You could say that. We just, the article gave that disclaimer. It's like, hey, the bear case for Tron is that, you know, Justin's son is dubious.

He's, there's allegations of fraud. And then the author and the newsletter editor of Bankless got pulled into a telegram group with Justin's son's lawyers for Tron. And they submitted a cease and desist for talking shit. They threatened legal action against bankless for publishing. By the way, this wasn't just the bear case. It was the bear case and the bull case. Because we just actually said there is kind of a weird bull case about Tron,

which is that it's generating a lot of fees and it's burning those transactions. Okay, it's completely centralized. It's completely part of the Justin's Sun empire. But it is actually producing revenue. Number two, behind Ethereum. Yeah, we got sent this cease and desist from, Tron. And we talked to our lawyers. Here's what they say. Wild assertations like Tron's primary function is to enrich its insiders and participating in the zero-sum game is a mistake that you will invariably

regret. If you want to live on a chain wrought with fraud and deception, then Tron might just be the one for you. God, I'm so proud of Jack. That's what, that's what Jack put in the post. But yeah, the Tron's lawyers disputed that. They didn't like that. They sent us a cease and desist. We talked to our lawyers and they said, you look, you got First Amendment rights. You get to say whatever you want. Yeah. But do you really want to get in a pissing match with Justin? We said, yeah, he can spend us.

We already shipped the newsletter. So we'll just strip that from the article. So we have stripped it from the record because I don't want to go up against a billionaire who's got way more money than me. Unless he's going to be a total bully. And then like, I mean. And then we might talk about it on the podcast. Yeah.

Yeah. Just our opinion. Just our opinion. It's just my opinion. not anyone else is, that Justin's son is morally bankrupt and probably so are the lawyers who work for him. There you go. Just an opinion.

Just an opinion. Okay. So back to the fees, though. We're talking about Bitcoin fees 30 days. I mean, I don't know, David, the quick take is I don't think this is great for Bitcoin. And, you know, we've said this for a long time since 2019 when it was a lot less popular to talk about the sustainability or the lack of sustainability of Bitcoin's monetary schedule and model. And, you know, it's starting to pop up again. It still won't get really bad.

I'm looking at the graph that you have on the screen, which is just the token terminal like graph of who's making money. Ethereum number one, Tron number two, bullish. Lido number three, friend tech number four, Bitcoin Uniswap. Where's Solana? There's 25 apps on here. No, Solana doesn't make money, too. Not that not the, not the, not the, traditional way. It doesn't even make the top 25 in fees. No, it doesn't. It doesn't. It doesn't. But, you know, everyone values things differently. But the bull case for Solana is fees. That's what they say. They make it up in volume. Like low fees, I think, I think, I actually, I think the bulk case for Salana is a fees, but MEV. It's selling, you got to sell the block ordering at some point.

MEV extraction. It's going to be less the user fees. Yeah, it's MEV extraction. For sure. Not our rent extractors. They are rent extractors. Hey, semantics. You know what? We promised the last thing here is... God, tribal warfare coming out left and right in this. Price predictions, though. Okay, so this was a price prediction from standard charter bank.

Don't know the standard charter bank. My favorite bank. That your favorite bank? Yeah, uh-huh. Okay. Well, they're analyzing ether. And according to their analysts, ether could reach $8,000 by the end of 26.

Okay. So, but that's not their top side. The top side at the end of the journey, the long-term range is 26,000 to 35,000. All right? Now we're talking. And I don't know what timeline that is, but that's probably in the fullness of time. It sounds like, you know, something like this, final destination. The equilibrium of ETH prices.

Yeah, the equilibrium. So I don't know what, like, backs their analysts, but I know, David, you have some takes on the price of Eith. Do I? I don't know what I do. At this point in the episode, when I teased you, just like 15 minutes ago, to get your take ready, because I'm going to ask you, what do you think the top is for this bull cycle for ether?

What's the top? Give me a number. Call the top for the next cycle. I mean, my gut, my heart says 15K. 15K. So we had 10K was the mean price last bull market. And we got to 4,800, which in logarithmic terms actually isn't terribly far off from that. But, you know, still a 2x or away from the top.

So increasing last cycles call from 10K to 15K I think is appropriate. So and what do you think? Are you willing to time box that? Are we talking 24, 25, 26? Longer? Assuming four-year cycles play out, then yeah, end of 26 by the end of 26. What year is it? 2023. 15K by 2026 is what you're saying. 15K and 15-10.

two years. That's starting to get real specific. That's making me a little scared. There you go. Those are some specific numbers in times, which I am just pulling from my absolute, you know what? I don't know. I mean, you know, that's only double what standard chartered bank said. So you're in good company here. Yeah. Right. Okay. All right. Well, wait, what's your number? You say a number. You want to know my number? Yeah. I was going to go 12,500. Okay. But in honor of Friday the 13th, 13,000. 13,000. This is me saying that's the top. That's the ETH price top for next cycle, 13,000.

I'm just a little bit under 15,000. My rationale is we're looking at it like a... Dave is too bullish. Yeah, my rationale is take anything David says and then discount it by like 20%. Because that's what we do in this podcast. Anyway, those are our numbers. Those are our numbers. David, what do we have? coming up in the episode.

Coming up next SBF trial week to Gary Wang. We got to talk about him because he was last week, but we didn't cover him because he was on Friday. Caroline Ellison, this week, kind of a climactic, cinematic moment in the trial. There's a lot to cover, including Ryan, don't forget about the Thai prostitutes. Got to talk about them. Okay, wow. You're weirdly excited about that part. I don't know.

Also, crypto is playing a role in the story of the Israel-Hamas conflict, so we'll discuss the details there. And, of course, there's always just going to be the regular old news of the week. some new chains coming to Polygon. Remember ape coin, now ape chains. We'll talk about that. Farcasters going permissionless. All this stuff and more. But first, I'm going to talk about these fantastic sponsors that make this show possible, especially Cracken, our preferred exchange for crypto in 2023. If you're not having an account with Cracken, then consider clicking the link in the show notes to get started with Cracken today. Cracken Pro has easily become the best crypto trading platform in the industry. The place I use to check the charts and the crypto prices,

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and start building your first app with Arbitrum. Experience Web3 development the way it was always meant to be. Secure, fast, cheap, and friction-free. Here it is SBF trial. It's week two. David seems like only last week it was week one and that's because it was week one last week. And so now it's week two. Some new characters, new testimony. Well, you give me the analysis. So I have absolutely no idea what happened. I saw some illustrations, like the one that we're looking at, which is Caroline

Ellison looking at Sam Beechbend-Midt, looking absolutely bewildered, you know, sad. Here's another one, by the way. These illustrations did the characters just zero. favors. So, okay, my hot take is, I feel like the illustrator here, this is more art than actual, like, what these people look like. My take is that the illustrator here is going to sell these for NFTs later. As an FTAs, as iconic NFTs. As a hot take. I'm assuming the illustrator works for the court. So if I don't know how this works, but that's property of the court. Really? Which I, I don't know. I don't know. Maybe the court can issue an NFT? I don't know. My tinfoil hats off. So tell us what happened.

What happened in week two of the SBF trial? Some bombshells, I'm sure. Well, first we have to start with last week, Gary Wang. We need to cover what he talked about on Friday. Gary Wing, the CTO of FTX. And this is the illustration of Gary Wang. Smart glasses he's wearing here. Okay, so what was, the big punchline was that, you know, the story goes that we understood as crypto Twitter, crypto people, was that Tara Luna collapsed, wiping out $50 billion. followed by three arrows capital, another like, you know, X numbers of billions of dollars. And that's where the whole in the Alameda FTX balance sheet occurred because they had exposure. Yeah, that was the common narrative.

That's what I thought. That was what we understood. And, you know, kind of makes sense. Turns out that the whole in FTCS's balance sheet started at Genesis, with their very early relationship with Alameda. Alameda. Genesis of what? of the whole thing.

FTX, Alameda in 2019, had a convoluted relationship that allowed for Alameda to borrow funds from FTX starting in 2019. It did not begin in 2022. This started from Genesis. FTX was a fraud from Genesis.

And that was the big learning moment that we got out of Gary Wang. The way that it started was that I think they, Alameda just wanted, to be able to do some things. And so at Sam's direction. And so both Caroline Ellison and Gary Wang,

who testified this week, it's understood that they have entered plea deals with prosecutors. And so both of them thematically would use these words at Sam's direction. So Gary Wang... They kept saying that. They kept saying, I did this at Sam's direction.

Or this was conducted at Sam's direction. In 2019, Gary Wang, at Sam's direction, according to Gary Wang, allowed for Alameda to borrow customers' funds using the Alameda back door that Gary Wang coated up himself. And it started off. It was just like, I think like, you know, something not terribly crazy in the grand scheme of things,

like a $10 million line of credit, which went up to $100 million line of credit, which went up to a billion dollar line of credit, because Alameda kept on maxing it out, I think like just straight up losing money. And also some other shenanigans. But like the idea of Alameda, the myth around Alameda was they were just printing money

and they were just like extremely lucrative prop trading shop. Wow. Yeah. So it turns out they were shit traders because they were kids at the wheel and they didn't know what they were doing. And Alameda would like keep on tapping into FTX's customer deposits and they would have, there was like a number. And the whole premise here was that Alameda FTX allowed Alameda's trading account to go negative.

And this is, this is just giving. them a line of credit. FTX was giving Alameda a line of credit. This is not unheard of in the world of exchanges. Like, you can enter line of credit with crypto exchanges, but they're like small. They're like $1 million. But they're, two million dollars. They're also separate. They're also separate entities. Right. That seems to me that is a business relationship. Well, if you tell me that 2019 is when all this started, right? Like, that seems like it's an original sin. Yes. You have this trading firm, this fund married with your exchange. Like those two things being one in the same owner seems like that is from inception.

Right. A problem. A sin. An original sin, I guess. Right. So Alameda just kept on pushing up that line of credit. It got to $1 billion. It got to $5 billion.

It got to $10 billion. And then Gary, when he testified, he was like, at some point he's like, F it. I'm not, stop bothering me to increase a line of credit. I'm just going to max it out. I'm going to enter effectively infinity line of credit for Alameda from FTX. The actual number was $65 billion, but that's effectively infinity. Because Alameda kept on top, like, topping it up.

There's this one moment inside of the court case where the lawyer asked Gary Wang, are you aware of the difference between solvency and liquidity and Gary Wang? I'm sure this was hilarious in the moment. Just responds, now I am. Wow. A little bit late. little bit late. Okay, so that's, that's Gary's take on it, which is, you know, the number, one of the major witnesses in this case. But the second line here is that Sam Bankman-Fried

told Gary Wang to code up the ability for the Alameda to have the back door. And he was also telling them, he was also the guy telling Gary Wang, hey, increase Alameda's credit limit. Increase Alameda's credit limit. Gary O'Ling was like, you know, okay, fine. That's what's, that's what he's saying to do. Okay, boss. Right. How about Caroline? She is the other witness here that is The key to this whole case. Yes. Okay. So this is kind of like the big moment of the trial.

Because Gary Wang was very close to Sam Bankman Fried. David, look at her surrounded by all these reporters. Yeah. Yeah. That's intense. Absolute circus. Yeah. Yeah.

Yeah. Very intense. So Caroline Ellison is like the only person closer to Sam Bankman Fried than Gary Wang. Like not only was she in charge of Alameda, but like Sam Bakeranfried and her were dating. They were sleeping together in 2019. they were dating in 20, 21, then they broke up, but they were still together. Yeah. And so, like, you know, very incestuous, business dating, sleeping together relationship.

Incestuous. Also in the Bahamas, like, well, the business relationship. Everything is a mess. They're not related, though. Let's just clear that out. They're not related. Yes. There's many other things.

Like, there's a lot of convoluted paths. They're not related. Gross. Okay. Again, Caroline also frequently use the words at Sam's direction. The main focus of the Monday testimony, I believe it was Monday, was Alameda's financial documents that they were going, that they showed to Genesis, Genesis Capital, in pursuit of a line of credit from Genesis. So Genesis asked Caroline Ellison if she could provide documentation of Alameda's financials, just doing proper due diligence. Ellison said that she was worried that providing accurate financials would show that Alameda was far too risky to be able to lend money towards.

So the pair, ERIS and SBAF, devised strategies to improve the looks of Alameda's financial positions. So at the direction of SBAF, says Caroline, she produced seven different balance sheet reports. So like seven different versions of looking at the truth. There was, and these were titled Maine, which was truth. And then Alt 1, Alt 2, Alt 3, 4, 5, 6, 7. Oh, this is a crypto principle. you just fork things. We get all these alps.

All balance sheets, huh? Yeah, yeah, yeah, yeah. Uh-huh. Okay, so it was agreed upon between SBF and Caroline that Maine could not be shown to anyone. It because, like I said, it would cause, duh. That's the truth. Yeah, hide that one. So they, they, SBF was shown, like, here are seven different balance sheets reports,

and SPF chose seven. Number seven. Number seven. Yeah, yeah. I'll make the assumption here as, like, one was like the most, truthy and seven was the least truthy. This is uncorroborated. This is me shooting from the hip, but I mean, he chose

number seven of seven. I'm going to go with you. Knowing Sam and knowing what we know in this trial, he chose the least truthy one. But it's kind of kind of feel truthy. It can't be like all rainbows and unicorns, right? It has to deceive some creditors here. Anyway, go on. Are you ready for the alchemy that has ensued

in Alt 7? Okay. The main punchline is that Alt 7 obscured the fact that Alameda borrowed $9.9 billion from FTX. Of course. That's the punchline. FDX did not have $9.9 billion in profits, and so they need to cover up that hole. Interestingly, $4.5 billion from Alameda's balance sheet was made into venture investments by executives. So that's SBF, that's Caroline Ellison, that's Gary Wang and like, I think, one other. $4.5 billion. Why do they do it in their own personal names, uncertain, perhaps tax advantage reasons, uncertain.

So the Alt 7 report labeled this $4.5 billion as, on their balance sheet, as a long-term asset, not risky venture capital investments, they just wrote it off, like, hey, we invested $4.5 billion. These are long-term assets. Ler mean venture is long-term. It's dubious to call venture investing a long-term. asset, but I guess if you spray and pray $4.5 billion, you're going to get something out of it, which is also a story for the show. We'll talk about Anthropic. Anyways, that $4.5 billion of venture capital was subtracted from the $9.9 billion of customer funds from FTX. Oh, I also missed the line. In Maine, in the main report, there was a line item called FTX Borrow's.

And it was $9.9 billion. That's the thing that they were like, well, that can't, that can't be showed. So they took this $4.5 billion of illiquid venture capital investment, subtracted it from the $9.9 billion to get $5.5. And then the Alt 7 report renamed this line item to long-term loan. So instead of $9.9 billion of customer liabilities, which are at risk of being called forward at any moment, because again, if you're running exchange, you're supposed to be fully liquid, it instead turned that into a $5.5 billion long-term liability. So this is kind of the big punch line, and this practice was basically rinsed and repeated over certain aspects of the balance sheet and overtime as well. David, this is just good old fashioned cooking the books, isn't it?

And I, you know, one thing I scratch my head, I'm like, where are the accountants here? Didn't they have any CPS? Like, isn't somebody auditing their books? But, okay, I guess you can just like fork your balance sheet and make it say whatever you want. It's such a Google Doc, right? Okay. Okay. Okay, so what is being testified in court is that Caroline is that.

is saying that Sam reviewed and approved this. She doesn't have any proof of this. So this is Caroline versus Sam. Caroline is saying Sam told me to do this. He is the one that selected number seven. It was at Sam's direction. This is Caroline's word versus Sam. A lot of this information and analysis I'm getting from Carly Riley,

who, you know, overpriced JPEG's, who was in the courtroom listening to this. So Carly's going to all the sessions. So, like, Carly's opinion is that she totally believes Caroline. And she, again, she watched this testimony in person. So there's some... Has she done a body language analysis? You know, the whole thing you gotta end.

I don't know. Okay, so that is the Alameda balance sheet conversation. So any questions about that? You ready to move on to other... I'm ready. It sounds pretty clear cut, honestly. Not great, yeah. Okay, so then there's conversations

around SBF's morality and worldview. So Caroline recalled how SBF had said that lying and stealing money were permissible in his worldview. Caroline said... So that's what the prosecution was going for. like they're not only, like the facts of the balance sheet and forking the balance sheet. And then how does this person think was at play in the courtroom? Yeah. So Caroline talked and reflected about

her own moral compass and how Sam's like conviction about utilitarianism warped her own sense of morality that lying and fraud were acceptable to, more acceptable to her than she would have predicted just a few years prior. Thanks to the influence of Sam Banking. Now, can I just pause? Of course, the person on the stand is going to play the victim card, right? Oh, little old me. It was all Sam. Like, that is a common kind of trope that is going to happen. So we should filter it through that sort of a lens, too.

Yes. And the defense, Sam Bankman-Fried's lawyer, the defense, is poking at that. They're saying, well, jury, please be reminded that this person has very likely entered a plea deal and is influenced about that. So that's what the defense is saying. Courts are great. They really like, they're great. This is a great way to kind of get all the facts on the table on both sides. Okay, continue, yeah. Yeah, she also said that it was a large part of Alameda and FTC's culture to not put anything into writing and to use signal with auto-delete settings turned on.

That was a part of the culture. Kind of implicitly. Everyone kind of knows we're committing fraud here. So that's that. That's morality and worldview. There's a section of Sam's, like, his maintenance of his own public appearance. So Caroline said that Sam wanted to look sloppy. She said that...

He succeeded very well there. Yeah, she said that press and investors frequently took Sam Bankman-Fried's appearance as a sign that he was a typical Silicon Valley nerd who knew how to code but didn't care much about fancier designer clothes or cars, which was exactly the image he wanted. Quote, he did not cut his hair often. We actually don't need that.

We know that. That is evident. Sam said that he often got higher bonuses at Jane Street because of his hair, and he wanted to lean into his hair because it was a very, like, valuable part of his brand. SBF's hair is like part of his vibe. Yeah, so, yeah, there's definitely some iconic hair there, David. You got to hand it to him for that. It's hard to miss. Are you ready for the Taiwanese prostitutes? Yeah. Oh, yeah. I almost forgot about that. Okay, what happens now. Okay, so Alameda had funds stored on Ok, PX and Huobi, both Chinese exchanges. In 2021, these accounts were frozen at the direction of Chinese

officials due to a money laundering investigation of someone who traded with Alameda. SBF and execs who kind of need every single dime that they can get their hands on because they're levered to the absolute tits. We're like, well, this can't, this can't be. They had a billion dollars of locked capital on these two exchanges on their trading accounts. And so they really needed to get this capital off. And so they just like slammed heads and was like, how do we get this, how to get our money back? So one idea was that they would make further OKX trading accounts, fake trading accounts, using the ID of Thai prostitutes.

So somehow they got a bunch of Thai prostitute IDs and they made trading accounts. And the strategy was that Alameda would both control their own account. They could trade on the exchange. They just couldn't withdraw. So they could make trades. They just couldn't withdraw the money. And so they made some fake accounts using these Thai prostitute IDs. And their plan was to make just out.

absolute dog shit trades. And then the Thai prostitutes would take the other end of that trade and it would effectively be a transfer of capital from one account to the another and they would be able to withdraw. That didn't work. Surprise. But they legitimately tried to do this. Another Chinese employee of FTX attempted to broker a connection, a deal between a Chinese

official who they could bribe with $150 million, which they ultimately went through with. And this showed up on the Alameda balance sheet. as a negative $150 million line labeled, quote, the thing. Because Caroline did not want to put these facts into writing that they were read. No one's going to suspect it if we just label it the thing. Wow. But that's how that works. $150 million, the thing.

So Chinese authorities can just freeze accounts. And the way to get that unfrozen is $150 million. You know what? I mean, $150 million can do a lot of things in this world. This whole, I wouldn't know. I wouldn't know. This whole thing, though, is just like, it's the underbelly of crypto exchanges as well. I'm not saying all crypto exchanges, right? But like some of them at least, wow, I mean, get this to defy as quickly as possible is one of my reactions here.

Okay, so what else we got, David? Okay, I think this is a nice way to just wrap this whole thing up. This kind of talks about just the absolute lunacy that is Sam Bankman Fried. And so there was one quote that really stood out for the entire trial. And so this is a Twitter account kind of going back and forth on the questions. Starting with just, it injects this conversation to a weird spot, but we're going to skip past that. So Ellison says, we started sleeping together on and off in the summer of 2020. We dated and we broke up.

And then the attorney says, what did the defendant tell you about his ambitions? and Ellison said that he would be president. And the attorney says, of what? Ellison says, of the United States. Wow. So Sam Bankman-Fried had aspirations of being president of the United States of America. Wow, absolute delusion.

There it is. So that all makes sense then. It's that level of Megalumania that causes you to like fall the way he fell. I think the big revelation here is since 2019, this has been going on. And you just got bigger and bigger and bigger from there. It was a fraud from the get-go.

No kidding. All right. Well, that's FTX and SBF this week, David. So I guess stay tuned for next week, week three. How many weeks do we have this? Who's left to testify? SBF, right? They're going to put him on the stand, aren't they?

Oh, yeah. Oh, yeah. That's going to be fun. We'll see if they make them cry. We'll see. All right. Make him cry. What do we got coming up next?

We're going to talk about crypto during wartime. We're going to talk about Farcaster, going permissionless. We're going to talk about so many other things. Ape Chain. Everyone wants to talk about ape chain. We'll talk about the five shades of Lido. Really good article from climbing buddy, Mike Nuter, as well as so many things and more. But first, a moment to talk about these fantastic sponsors, especially MetaMask and

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an absolute tragedy last weekend. And I got to say for myself, I've been doing a lot of doom scrolls. here lately. Doom scrolling is in. Absolutely heartbreaking. And I don't think that bankless listeners want David Remy's take on the events that are unfolding.

Right? It's, you know, we'll stay in our lane and focus on crypto here. But there is something that is related to crypto, at least, that was making the news this week. I'm reading a headline here. Israeli authorities have frozen Hamas-linked crypto accounts in a report here.

What are we looking at, David? Yeah, so a Tel Aviv-based news company organization reported that Binance also assisted in the shutting down of Hamas linked accounts. So these are crypto exchanges. Quote here, with the outbreak of war, Hamas launched a fundraising campaign on social networks, asking the public to deposit cryptocurrencies into its account. So the cyber unit acted immediately to locate and freeze the accounts with the assistance of Binance crypto exchange in order to forfeit the funds to state authorities.

And actually, this story doesn't even begin with the conflict. Hamas apparently has been raising funds using crypto for a number of years now. And so it is a Wall Street Journal article that came out with a headline, Hamas militants, scroll up, scroll up. Hamas militants behind Israel attack raise millions in crypto. Digital currency transactions highlight how U.S. and Israel have struggled to sever the access of Hamas and Palestine, Islamic, jihad, and Hezbollah from foreign funding. So the story here is like a

A hit piece though. Cryptoterrorist financing is really what's going on. And well, like there was multiple millions of dollars throughout 2021 into 2023 of Bitcoin of Bitcoin transfers towards Hamas military group. I think something like $10 to $20 million, which is a lot. In the article it says it couldn't be determined whether the crypto that they received was directly used to finance the assault.

researchers, I don't know who these researchers are, but this is what the article says, said that it would have likely have been a very small percentage of the overall amount that funds flowed through to finance the assault, but again, I don't know how they came to that conclusion. But something very important was left out of the report that came from Sam Limman analysis of my Twitter account Sam Linman. Ryan, what does it say? A critical context was missing from the piece on Hamas and crypto. In April 23, Hamas warned its donors to stop sending Bitcoin. Why? Because the transparent nature of the blockchain had Western intelligence following their every transaction like bloodhounds. Hence, the sudden drop on the chart.

There's a reason money laundering via Bitcoin has been called a classically dumb crime. It shines a spotlight on everyone involved. Remember this as the usual suspects ramp up their anti-crypto rhetoric in the weeks to come. That's what I think this was. David was anti-crypto rhetoric. Right. I'm I don't think that crypto or Bitcoin is a good way right now to raise funds for terrorists. It is open. It is a public. It is transparent. And it does have Western intelligence bloodhounds.

Some of them are companies, very sophisticated companies, following every single transaction. As much as we tease chain analysis for being narcs, they also prevent terrorist financing. So this Twitter account takes a screenshot of the chart and points to where Hamas says, hey, stop sending us Bitcoin, everyone can see it. And then the Bitcoin flows just drop to zero. So, you know, important context. Yeah. I think so. David, some other contexts, a lot is going on in the world today. This is a tweet from crypto founder, Alon Maroc. I got drafted. Situation on the ground is significantly worse than described. Massacre is the only word that comes to mind. 90% civilians, families. Wow, this is somebody who just got drafted.

who's the founder of the SSV network, shared secret validated network, kind of basically DBT. It's definitely crazy. It's like in my network. I don't know if in yours, but people are getting drafted, right? Yeah. I was in Tel Aviv in February and met a bunch of people who I've heard now have both been called into the reserves, which being called into the reserves is apparently much better than being on the front lines. But yeah, I mean, like there's just a lot of crypto founders in Israel. Like Starcware is all in Israel. Just like this is extremely disruptive to parts of the crypto industry. Like we have a large footprint in Israel. There's that.

And then there's the other context. Like you ever want to read a pick me up? Go read Ray Dalio. He just sent this email, David, and I just saw the headline here in the first paragraph. What happened and is happening between Israel and Hamas? Like what happened and is happening between. Ukraine and Russia should raise revulsion and fear in everyone.

This is true, both because these conflicts reveal the unimaginably terrible and revolting ways people can and do treat other people, especially innocent civilians, and because no one anywhere can be sure that they won't someday find themselves in some horrible war. That last piece, because no one anywhere can be sure that they won't someday find themselves in horrible war. Absolutely crazy decade, I feel like we've entered, and there's not a lot of certainty and it feels like these sorts of things are hitting closer and closer to home. So, yeah, it's been a rough week for that stuff.

Yeah, yeah. Like I said, doom scrolling is in. There's no really good way to talk about, to pivot out of this. Yeah, there's not. There's not. But we are talking about Farcaster next. So we're going to talk about Farcaster now. All right, let's do it.

Hard pivot. Farcaster. Tell me about Farcaster. Now 100% permissionless. So you know more invites. You can now sign up directly. through OP Mainnet. Users can choose any client of their choice.

There's zero dependencies on Warpcast, which is the first Farcaster client. Devs have full access to data and API via hubs. Farcaster, stepping into the arena, the permissionless arena. That's big. That is brilliant. David, you ready to talk about Lido again?

Yeah. We got to. Okay. This was actually a great post from David's rock climbing buddy, Mike Nudor. Mike Nudor. I love every time we say Mike Nuter, we've got to add David's Rock Climbing,

Okay, five shades of gray. I'm gonna say 50. Five shades of gray. You would be excused from saying that if you did. What is this post about? What's the TLDR? Maybe I'll just back up and provide context from our perspective, bankless perspective.

Once upon time, we brought on Lido to give, in defense of Lido, the episode that says, hey, Lido's good, and we should accept it, and it's great. And to be clear, the guest was saying this. The guess was saying this, yes. Just one side of the Lido, the Lido debate. The other, then we recently had on Danny Ryan, it was saying, hey, Lido's bad.

It's too centralized, is too, we should be concerned about Lido going over 33%. Right now. It's an attack, right now. Perhaps it's an attack. Right now in Ethereum, this is like kind of the bear market fight that we are currently going through. Is Lido good or is it bad?

Like two factions fighting. And even like internal EF members don't have homogenous views about this whole thing. Like I think Danny... Very much Ethereum-aligned community members too, right? Yeah. Don't... Like, it's pretty...

There's a diversity of views, right? I don't think there's a clear cut. Yeah. And so, yeah, yeah. Mike Nudor, also at the EF wrote this... David's Rock Climbing Buddy. David's Rock Climbing Buddy, yeah. Also works at the EF, wrote this post

called the Five Shades of Gray Lido edition, which talked about some of the potential risks of having Lido have over 33% control or even theoretically 100% control and what those risks actually are. So we have Lido, or we have Hazu saying, here's the case that Lido's good. Here's Danny Ryan saying, here's the case that Lido's bad. And now we have Mike Nuter saying, well, like, let's be pragmatic and practical about these risks. Let's say that, like, so he gives like five different variables here. Shades of gray. Shades of gray. So on one hand, Lido's roadmap clearly prioritizes decentralization. It is going to be a decentralized protocol. On the other hand,

Lido financially benefits from the centralization of stake. So that's one variable. On one side of things, Lido can launch an attack on Ethereum consensus. But in reality, the outcomes are that Ethereum survives and Lido dies. Another variable, Lido is composed of 30 plus node operators, which is decentralized, that's distributed. but also Dow governance is a tool to coordinate cartel behavior. So Dow governance is the one centralizing factor. Next, some amount of moralistic pressure may be unavoidable. So like the anti-Lytofaction is just going to exist. But also leaning too hard into altruism and social enforcement is damaging. Social enforcement, I think, is perhaps one way to view a violation of credible neutrality is a way to articulate this. And then lastly, there's a willingness in Ethereum.

to improve the LST foundation, the Liquid Saken token foundation, with layer one changes, changes to the layer one, aka protocol enshrinement type. Entrinement, yes. And then on the other hand, pragmatism while considering the effects of enthrinement. This was like Vitalik's recent post

about like how do we choose to enshrine something. Yeah. So Mike is just like talking about the various attack vectors and the reality and the pragmatism about like, okay, sure, Lido could totally attack Ethereum. But why would it do that? That would be dumb and bad for Lido. Like kind of nuanced stuff like this.

Great post. Yeah, I think it's a great post. There's definitely some shades of gray. You know, the cleanest thing, though, David, and I think this is going to be a take of yours later. If I'm predicting your takes later, is actually to have some competitors into the ring. Some vampire competitors.

Where are they? Where are they? I will invoke the words of Danny Ryan. Where is the vampire attacks? Maybe you got one. So stay tuned for that, Bankless Nation. David's got an update on that. Did you see Sam Altman on Joe Rogan, dude?

I did not actually. Okay, neither did I. It's just some long episodes here. And, you know, Bankless is my only podcast I listen to. Everyone must listen to all Bankless weekly episodes before they go out of the extra friculars. But there was some crypto takes here. So this is Sam Altman speaking about crypto. He's not talking about World Coin here.

He's just talking about crypto in general. I'm going to play the clip. Here it is. Studied the world more and had to work in more places in the world. Like, it's amazing how much corruption there's. still is. But the shift to a technologically enabled world, I think is a major force against it because everything is, it's harder to hide stuff. And I do think corruption in the world will keep trending down. Because of its exposure. Yeah. Through technology. If, I mean,

it comes at a cost and I think the loss that like, I am very worried about how far the surveillance state could go here. but in a world where payments, for example, are no longer like bags of cash, but done somehow digitally, and somebody, even if you're using Bitcoin, can watch those flows. I think that's like a corruption-reducing thing. I agree, but I'm very worried about central bank digital currency and that being tied to a social credit score. Super against. Yeah, that scares the shit out of me. super against and that the push to that is not that's not for the overall good of society that's for

control yeah i think like i mean there's many things that i'm disappointed that the u.s government has done recently but the the war on crypto which i think is a like we can't give this up like we're going to control this and all that that's like that's a thing that like makes me quite sad about the country. Wow. War on crypto is a thing that he's most disappointed about for the U.S. You could take here. I mean, I can't disagree with that. I also agree. I think he probably just sees crypto as just like writing on the canary in the coal mine for what's about to happen to AI. These are synonymous fights. There's also a later Joe Rogan take on Bitcoin itself. I mean, the real fascinating crypto is Bitcoin. To me, I mean, that's the one that I think has the

most likely possibility of becoming a universal viable currency. And it's, you know, it's limited in the amount that there can be. It's, you know, people mine it with their own companies. It's like, that to me is very fascinating. And I love the fact that it's been implemented. There you go. This is the classic using the idea of Bitcoin more than Bitcoin specifically. Yeah.

But what a powerful idea it is. And you could argue that Bitcoin is certainly enshrined itself in the meme wars here. Yes. David, here's something weird. You know that exchange that started on avalanche. It's called Trader Joe's. No, no. It's called Trader Joe.

Trader Joe. Okay. I've always wondered how Trader Joe got away with calling their exchange Trader Joe when there is a Trader Joe's grocery store that, like, I go to on like a weekly basis. Trader Joe's guy. Oh, yeah. I'm a big Trader Joe's guy.

I like, I love the culture. I love the vibe. I don't know. I'm a big fan. And apparently Trader Joe's, the grocery chain store has said no more. U.S. grocery chain, Trader Joe's is suing the crypto platform that's matching their name. So there you go.

It's happening. Not just Gary Gensler coming after us. This week, man. But this is kind of cool. Uniswap. It's getting their first ZK. Evm. What's going on here?

Yeah, Uniswap has been deployed to ZK Sync via Oku Trade. We've seen Uniswap be deployed everywhere, but this one is the first ZK roll-up version of Uniswap. So pretty cool. David, what's coming up next, my friend? Coming up next question from the nation. Are you guys seeing bottom signals yet? God damn it, yes, we've been seeing them all year.

We'll talk about them. Chris Berninski gives his ultimate sell signal for next bull market. You know, we all have to remember to set up a plan while you're sober. you have to press the cell button and think about selling the press to sell button when you are sober, if you do plan on pressing the sell button. Chris Binniski gives you his cell signal, and we'll talk about that.

As well as, of course, what I'm bullish on, which is the vampire attack on Lido, and what Ryan's bullish on, which I don't even know about. We'll get to that and more, but first a moment to talk about these fantastic sponsors

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NFTs, and you can also explore Web3 with the in-app search features, market leaderboards, and price jars or use wallet connect to connect to any web three application. So you can now go directly to defy with the Uniswop mobile wallet, safe, simple custody from the most trusted team in Defy. Download the Uniswap wallet today on iOS. There is a link in the show notes. Questions of the week, this one from Bankless Citizen Caesar Severus, Xerox Caesar Severus, of course I should get that right. So many TradFi and crypto bottom signals out there, how do you contain your excitement? Ten year and two-year yields look peaked. B-O-J, that's the Bank of Japan, switching gears.

ETH Bitcoin, TA, looks near bottom. I feel like I'm ready to dance every time I check. Man, that's the kind of bullishness I need in my life, David. I love that. It's not even a question. Well, it kind of is. How do you contain your excitement? It's the official question, actually.

Well, this felt more like a comment question. What's your reflection on this? How do you, David Hoffman, contain your excitement right now? Yeah, yeah. So I'm just, we've just been getting 2019 vibes for the past like four months or so. The, uh, the contrarianism that is crypto is peaking. Like it is so contrarian to be a crypto investor to be in crypto in this present moment, while prices are just going down, down, down, down.

Uh, and so like the bullish signals, uh, we've had Eric B on talking about, uh, the Bitcoin and Ether ETFs, which TLDR, he just said soon TM, like 75% chance of Bitcoin ETF before the end of the year. and the ether ETF as a fast follow. Wow, was not expecting that level of bullishness. Crypto prices are down. Like so many things are happening. Like all, like the risk to reward for crypto

is like been up only all bear market. And especially with prices like in the absolute like doghouse. This is, this is I am so bullish. However, you can't just be bullish all the time. It's fatiguing. It's very fatiguing. and you need to like the market will be weird and against your opinion for longer than you will be able to have like over outsize exposure to crypto. So just because we all think it's going to be bullish season sometime soon, like you have to be patient.

The cool thing that was the bull market of 2020, pre-2020, is that anyone who was in crypto in 2019 saw the 2021 bull market happening in 2020. We had like six months of crescendoing excitement and activity that was defy summer that led into NFT mania. And ETH price, the blue chips, Bitcoin price almost didn't do anything. They really didn't do anything. They kind of went up. Like Bitcoin, Ether broke above $360 and went up to $480, which like we all knew was like, yo, it's on. Like we haven't seen $400 in two and a half years. It's on.

And then like two months later, we were at 17. $100 or something, where we are now. But we had six months of, like, very strong indications of crypto is in before the blue chips ran. And so, like, I think what I'm saying is, like, you know, be excited and be patient. It will take time. It'll probably take more time than you think. But things will get exciting again before prices move if we are pattern matching between 2019. Does that make sense?

Do you agree? Yeah, but that wasn't the question, David. The question is, how do you contain your excitement? Oh, I'm telling them to not get too excited. Like, spread it out. So you dampen it. Spread out your excitement. Yes. Okay.

Yes. That's a good answer. I don't have anything better. I just doomscroll, I guess, to contain my excitement. That's what I, that's what I've been doing lately. Takes in the week, here we go. The first take from Chris Berninski. David, I've always wondered, next bull cycle.

We know it's common. How will we know it's the top? How do we know when to sell? What's the cell signal? Is it Katie Perry's nails? Remember that was like 2017? Yeah, that was a great 2017 top signal. That was like an Instagram.

She put different cryptoceros as her fingernail paint. Yeah. That was 2017. I think Iota was on there. We should have known in 2017. Cardana was on there. Okay. How about how about 2022?

What was the? FTX buying Miami Heat Arena. Oh, that's a good. That's a good one. All the arena is being bought. Yeah. Okay. So what's going to be the next top?

signal. Well, Chris Berninski has the answer. What are we looking at here? Okay, so this is, this has been going around in just like normal culture. This has been in vogue. There's this big structure in Las Vegas. It's a dome. It's a very big dome and it's all LEDs. It's a complete, massive dome of LEDs. And right now we're looking at this massive smiley face on it. I've seen it be a basketball promoting some like basketball game. I've seen the inside of it and it's like one of the coolest looking concert arenas of all time. Really? And advertising on the sphere will cost $450,000 a day or $650,000 a week.

The sell signal is when you see some dumb startup exchange, call it, call it some like letter FTX or something. It's not going to be an exchange next cycle, David. It's going to be something new. It's going to be something different. Maybe. Some cool new crypto thing that. has never existed before. It's probably a fraud is buying advertising space on the sphere. I think that is just a good take. All right. So I guess we're not doing this on 2024. We're not putting the

bankless podcast on this thing. Will you see NFTs on the sphere? Yeah, you need to sell those NFTs. Okay. There we go. We got our top signals prepared already. This is a take from Justin Leroux. What are we looking at here? It looks like ads in the paper. What's he saying? Yeah, we're looking at the Argentine paper and then also Argentine Nike's. So you could buy a car in 2006 in Argentina for 31,000 pesos. 31,000 pesos. Brand new car. Brand new car in 2006. In the year

2023, you can buy a pair of sneakers for 36,000 pesos. Wow. So from car to sneaker from 2006 to 2023. Wow. That's absolute currency. That's inflation. That's what looks like? Yeah. Okay.

There we go. David, what do you bullish on this week? Don't tell me it's the Argentine peso. It's not the Argentine peso. No, I'm bullish on vampire attacks. You know what a vampire attack is, right, Ryan? I do.

But tell me, refresh our audience. Okay. Before I go into this, I'm going to disclaim. I am an angel investor in the thing that I'm talking about right now. So you're shilling us right now. I am full chill, committing the sin. I am the worst,

etc., etc., etc. You can see full disclosures at banklist.com slash disclosures. Tell me, dirty show. What do you got? Okay. We're doing the vampire attack. Okay, so Lido's got $14 billion of TVL. That is vampire attackable.

One thing that Danny Ryan was talking about in his podcast with us and the other, it's just like, where's the competition? Where's the vampire attack? He literally said, where's the vampire attack. Staking providers actually trying to eat into Lido's market share is what you're talking about. Exactly. So how would a vampire attack work? We saw this with sushi swap versus.

you need any swap, you take ether or staked ether from Lido. So you buy Staked Ether from Lido, and then you go over to Diva, the protocol in question, and you deposit it in the Diva vaults, and then you get rewarded with Diva tokens for putting TVL into the Diva vaults, and then Diva swaps the staked ether for Diva ether and gives you back tokens. So it's incentivizing, it's an economic incentive for you to take Lido's TVL and put it in Diva's vaults, and you'll get Diva tokens for it. Why would I want, besides the token incentive, why do I care? Like, why is that better than MIDA? Okay, so that, okay, why is Diva?

What is Diva? What is Diva? Diva is a LST protocol, which if I wanted to encapsulate what it is in a meme, in a very short sentence. So, you know how like layer twos are going after EVM equivalents, like optimism, arbitram, are trying to go after EVM equivalents? They are trying to be one-to-one compatible with Ethereum. That's kind of their strategy.

Diva is doing something very similar with Ethereum. staking. So it uses a lot of the same infrastructure of Ethereum staking as a microcosm of Ethereum. So it's like a fractal spin-off, a mini version of grander Ethereum proof of stake, inside of the diva vaults. What do I mean by this? How does it work? Deva uses DVT distributed validator technology, aka squad staking. And they make a, and they have the diva contracts, and you as a validator who can run a node can permissionlessly, unlike Lido, permissionlessly enter the diva registrar with just one ether. as collateral and you run a node and using DVT,

you band together with others to produce a staking a validator when it's time for diva to produce a block. And so there's this band of diva validators that have at least one ether of capital and they register with the diva contract by submitting the ether into their contracts and then using DVT when diva is called upon to produce a block for Ethereum.

16 independent validators come together to create a virtual node. this is how DVT works. And then they produce the block. And then that is the diva produced LST block. And then just in time, at the time the block has produced the 16 come together. Like randomly. They're randomly selected.

Randomly selected. How are they randomly selected? They use the beacon chain RANDOW randomness, which is how Ethereum proof of stake also selects for Ethereum validator. So it's repurposing and reusing components of Ethereum staking to produce diva staking with this one very core piece of unlock. technology, which is DVT. And so Lido curates professional validators that have their one job of having high up time. And it's curated and commissioned to professionals, to the experts.

DVT is that technology that democratizes that power to the masses, where if one of the 16 people that come together or three or five of them are down because they're amateurs, because of DVT, you only need parts of that squad to sign off and everyone is up. And so it's, it's how you get 99.999% uptime because you have redundancy without dual slashing risk. So it is a technically, in my mind, my opinion, technically superior protocol that is also executing a vampire attack upon Lido, which is why I'm bullish. So you think it has a credible chance at points of this market share away and is more decentralized than some of the

alternatives out there. That's very cool. Well, another disclaimer, I'll add for you as well, is this is a very new protocol, of course. I think you're writing a post about this, which is why I know, but smart contract risk is the key thing you have to worry about at this stage of the game. Like all protocols.

Well, there you go. All right. Well, thank you, David, for your Shill Fest there. Absolutely. The worst. I am the worst. I mean, it's good to have some competition. and in the ring for sure, and this is a credible attempt at it. And there are others coming down the pike, too,

but I'm excited to. Overall, I'm just a fan of the drama. I know you are. I know, you just step right in, don't you, my friend. I'll guess. All right. You got to ask me the question now.

Ryan, where do you bullish on? I'm bullish on the price of Eith. Speaking of Schillers. It's like a really good price right now. It reminds me of, do you remember 2019, 2020, floating in this range of between it was like 150 and like 200, 250 type that range and it felt

like we were there forever. 1600 is like the new 200 to me. Well, we're at 1530, so we're well below 1600. There you go. This whole range, right? The whole range, think of like 1,000 to like 1600 is kind of the range. I feel like 1,000 to be a bit low. But that to me is parallels between like 150 and 300 where it felt like we were floating there forever.

And like I think when you're evaluating the price of Eath, you have to ask yourself of like, is it going to go down again, right? And the answer to that is, yeah, it could totally spike down. I mean, we could get to a thousand. We could go even below a thousand. Macro could go crazy as well. But I guess I'm just feeling echoes of the last fractal pattern of the 200 to 300 range, except this time there's no existential like, are we going to make it type of crisis. there's like more building, there's more block space. There's more money printing going on than ever before. And yeah, I think it's a very bullish good time to start, if you haven't already,

buying ether. And I remember like a series of tweets I started making within this price range of like, eth that 200 is hilarious. And I kept like tweeting this out as it would hit 220 and, you know, it would go higher and higher. I'm almost at that stage where I feel like the price of ETH is just very low relative to the potential. Almost there. It's almost stupid. It's almost stupid.

One other thing I was thinking of with ETH in general is, are we investing in ETH, David, because we're Uber optimistic or because we're Uber pessimistic? Or are you going to bring that existential question into this end of the weekly roll-up? And I was just like... A buzzer-beater, 50-minute question? I forgot. right? It's like, for me, it's a little bit of both. It's 100% both. Yeah, what's your take on that?

World's falling apart, and we're putting it back together. So there's some optimism and some pessimism there. The pessimism is the world's falling apart. The optimism is we're building something. We have the solutions. If we didn't have the solutions, then it would just be pessimism, but we have the solution. So it's a weird place to be, right? when you look out and it's, I mean, really shitty week for the world.

Right. So I gave this take during the Linaldon debrief that only goes out to bankless premium subscribers who subscribe to the ad-free RSS free. There you go shilling. There you go shilling. The ad-free RSS fee. So if you never want to hear another bankless shill about other people's products who can just hear me show out my products.

So this is a take that I gave on the premium feed. Like I think we, during 2021, you and I were just like ultrasound money, ultrasound money, burn, burn, burn, burn, burn, burn, burn. Maybe we kind of over indexed on that. maybe that was exhausting for the listeners. Why do we focus on the burn so much? Is it because when the eith burn, it number go up and that's what we want

because we're here for the money? Or are we looking at the Argentine peso inflate at 150% a year? The Turkish lira inflate over 100% a year. The United States dollar has a destiny to inflate. And we are just looking at people's savings being eaten away, either slowly inside the United States

or extremely rapidly everywhere else. We're watching just the GDP of global economies fall apart as a result of this, entering low trust societies as a result of fiscal mismanagement at best and corruption at worst, which leads to more inflation. So when we see Ethereum, the protocol,

having economic surplus and taking that surplus and putting it back into the money via the burn, and we are increasing the savings of the user base, the holder base of ether, as a direct inverse relationship to the decay of people's savings and the decay of the fiscal situation in the United States,

that is why we celebrate the burn. It is the same reason why we shit on inflation is why we celebrate the burn. It is a benefit to the savers, to the widest possible distribution of the Ethereum network, the ether holders. It is something to celebrate. It is something optimistic.

It is a reason to be optimistic about the future. We are strengthening our economy. And so it's not just number go up. It is the inversion of the things that we are bearish about in society. That's why we celebrate the burn. Well, that is well said, my friend. That is the most spiritual reason to support the burn ever. Right.

You know, not just number go up. Yeah, I agree with you. Yeah, that's part of it true. Come for the money, save for the tech. Come for the tech, save for the money. Doesn't matter. Just stay. Please stay.

Number is not going. up though right now and that's the meme of the week look at this uh what are we looking at here the week uh the the meme line is the sellers are getting exhausted and then we have a picture of the sellers i don't know if if i should know who this person is but he looks like he could run three marathons in a row they are not exhausted they are not exhausted at point in the market um there we go disclosures uh we mentioned david and i i i didn't mention myself i am also an angel investor in diva maybe that's why I let you go on so long about it. We've got all of our investments on the bankless.com

slash disclosures pace. Just a reminder, we don't do paid content. We're not journalists. We are long-term investors. Recent disclaimers. 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.