Bankless - ROLLUP: SEC Staking Krakdown | $BLUR Airdrop | SBF’s Bailout Money Source | Ordinals Still Growing

Episode Date: February 17, 2023

Bankless Weekly Rollup 3rd Week of February 2023 ------ 🚀 JOIN BANKLESS PREMIUM:  https://newsletter.banklesshq.com/subscribe  ------ BANKLESS SPONSOR TOOLS:  🐙KRAKEN | MOST-TRUSTED CRYPTO EXCHANGE https://bankless.cc/kraken  🦄UNISWAP | ON-CHAIN MARKETPLACE https://bankless.cc/uniswap  ⚖️ ARBITRUM | SCALING ETHEREUM https://bankless.cc/Arbitrum  🚁 EARNIFI | CLAIM YOUR UNCLAIMED AIRDROPS https://bankless.cc/earnifi   👻 PHANTOM | CROSS-CHAIN WALLET https://bankless.cc/phantom  ------ Topics Covered 0:00 Intro 4:00 Markets 7:35 Inflation https://www.cnbc.com/2023/02/14/consumer-price-index-january-2023-.html  https://eu.usatoday.com/story/money/economy/2023/02/14/cpi-january-inflation-data-today-live-updates/11247836002/  11:45 ETH Supply https://ultrasound.money/  15:54 BTC Halving Timelines https://twitter.com/DU09BTC/status/1626118062360469505  23:40 U.S. Ban Hammer  https://www.sec.gov/news/press-release/2023-25  https://twitter.com/GaryGensler/status/1623777842000539648  https://blog.kraken.com/post/17619/settlement/  28:15 Commissioner Hester M. Peirce Dissent https://www.sec.gov/news/statement/peirce-statement-kraken-020923  31:55 Coinbase Reactions https://twitter.com/brian_armstrong/status/1623860170404286464   https://twitter.com/brian_armstrong/status/1624829368915890176   33:00 Reactions & Takes https://twitter.com/ohaiom/status/1624534998069006337   https://twitter.com/milesjennings/status/1623850932860784641  38:30 SEC & NYDFS Hammering on Paxos https://paxos.com/2023/02/13/paxos-issues-statement/   40:10 PayPal Pauses Stablecoin Work https://www.bloomberg.com/news/articles/2023-02-10/paypal-pauses-stablecoin-work-amid-regulatory-scrutiny-of-crypto   42:10 New SEC Rule restricts Which U.S. Companies Can Custody Crypto  https://www.coindesk.com/policy/2023/02/15/sec-proposal-could-bar-investment-advisers-from-keeping-assets-at-crypto-firms/   48:22 Hester Take https://www.sec.gov/news/statement/peirce-statement-custody-021523   49:45 Blur Drop https://twitter.com/blur_io/status/1625566146241114112  https://www.coingecko.com/en/coins/blur   https://twitter.com/MannionNFT/status/1625602378106908673   https://twitter.com/BanklessHQ/status/1625620810902675457   53:45 ETH https://twitter.com/ultrasoundmoney/status/1625209951944642581  https://nerolation.github.io/mevflow.html   55:38 Polygon zkEVM Mainnet Launched on March 27th! https://twitter.com/MihailoBjelic/status/1625532387235971076  56:50 zkSync Era Mainnet https://twitter.com/zksync/status/1626235292268240902  https://forms.gle/KBreznP3g8aJYTJS7  1:01:30 NFTs https://twitter.com/cozomomedici/status/1625206526800703488  1:01:52 BTC NFTS https://dune.com/dataalways/ordinals  https://www.coindesk.com/web3/2023/02/09/bitcoin-punks-ordinal-nft-collection-soars-in-value/  1:06:40 SBF https://www.cnbc.com/2023/02/15/sam-bankman-frieds-two-bond-guarantors-revealed-after-unsealing-.html  https://twitter.com/AutismCapital/status/1625930741367595008   1:07:57 Celsius https://twitter.com/CelsiusUcc/status/1625854272561889281  https://twitter.com/CelsiansNetwork/status/1625600427696717825  1:10:30 Releases Sign-In with Ethereum on Shopify  https://twitter.com/sadaf_eth/status/1624086599486283776   1:11:55 Token Terminal Financial statements for DAOs https://twitter.com/tokenterminal/status/1625838112218677250  1:16:25 Questions from the Nation Takes of the Week 1:23:40 Balaji https://twitter.com/balajis/status/1625720725645692928   1:25:40 6529 https://twitter.com/punk6529/status/1625619140705656847  1:26:15 Ryan Question https://twitter.com/RyanSAdams/status/1625832853056417792  1:30:00 What David’s Bullish On 1:32:45 What Ryan’s Bullish On https://twitter.com/RyanSAdams/status/1626249830191321089  1:37:22 MEME of the Week https://twitter.com/ColinLieb/status/1623815237425106948   Risks & Disclaimers ---- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research. Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here: https://www.bankless.com/disclosures 

Sign up for the ETH Denver meetup. Free beer. Free beer. I get pretty loose about 1.5 IPAs in. And so that doesn't take much, huh? It doesn't take much. No, I'm a lot of easy. When you've been fasted for 36 hours before. Yeah. Bankless Nation, it is the third Friday of February. We're after Valentine's Day now. And David, what are we getting ready to do? Gary Gensler, not showing us any love, is he this week? No, not this week. Not this week at all. But there's so much cool stuff, apart from the SEC Banhammer that came to hit us on the head this last week. So we're going to cover all of that weekly news and more because, Ryan, like you asked, is the Friday weekly roll-up, where we cover all the weekly news and more, which is always an ambitious endeavor,

yet we persevere nonetheless. It is. Okay. The SEC versus crypto, right after we recorded last week, Gary smacks us upside the head like three times, I think. Literally one hour after we were done recording, the biggest news of the week dropped. I was like, ah. He was waiting. He was waiting for us to finish. Yeah, he was afraid that the roll-up was going to capture all of this. Yeah. And he waited until after. Yeah.

It's not going to work. Sneaky Gary. Let's talk about that. Steaky Gary. The SEC versus crypto, we'll talk about that. Also, David, the blur token dropped. Yep. Got some details on that, don't we?

Big drop. Yep. What else be doing? A bunch of numbers. We also found the source of SBF's bailout money. Really? So we're going to talk about who actually paid for SBS bailout. The name Stanford comes to mind.

Ordinals, Bitcoin Ordinals, not dead yet, still growing in energy. Third week in a row where we can still talk about Bitcoin Ordinals. So glad that that's not turning into a fad. This is the most Bitcoin content in years from Vegas. Yeah, we have this section in the weekly roll-up called Bitcoin stuff. It's empty 90% of the time. But like the last three weeks in a row, it's all been ordinals. So more ordinal stuff continues.

Celsius customers might get their money back, kind of. Some of it. Maybe. Maybe, Ryan? You tell me there's hope, David. You tell me there's hope for me, huh? There's a little bit of hope. And then also the ZK.K.EV.M. Wars are heating up once again.

So we'll cover all this and more. David, before we get in, we got to talk about something we don't usually talk about or shill. And that is a bankless citizenship. We just call this bankless premium. We're rebranding. We're a citizen of the bankless nation. And what is a bankless citizenship? And by the way, what are we looking at here?

Because this looks like an event for the bankless nation. at a conference that's coming up. What are we looking at? Yeah, exactly. So bankless citizens get all of the extras that comes in the bankless ecosystem. There's an extra free podcast. There are in real life events. Weekly podcast.

Weekly podcasts. Yeah, exactly, the debriefs, yeah. There's just a bunch of extra perks. And we've hired out like two quarters ago and continued to hire out. And now a lot of this stuff is coming into fruition. So the perks of being a bankless citizen are up only. One of these perks is the bankless nation meetup. We so much are the bankless team.

I think nine of us, not including me, are showing up to Heath Denver, not Ryan. And so we're hosting a meetup. And so for the premium members, for the bankless citizens, there is a meetup. We are at two-thirds capacity. So this is your final reminder that if you are a bankless citizen and you are also going to eat Denver to sign up for the Eat Denver meetup, free beer. Free beer. I get pretty loose about.

1.5 IPAs in. And so that doesn't take much, huh? It doesn't take much. No, I'm a lot of D.C. For 36 hours before. So there's a link in the show notes. If you are not a premium member, but you do, excuse me, if you are not a bankless citizen and you would like to go to the in real

life event, sign up for, sign up. We're going to be doing this at ECC. We're going to be doing this at permissionless in September. Your bankless citizenship also gets you 30% off of permissionless tickets, which pays for itself, by the way. And we'll also give you access to all the future things that we do as well. You can love it. Link in the shots.

All right, David, let's flip to markets. What's Bitcoin doing for us this week? Bitcoin, very happy this week. Chad, levels of happiness. Started the week at 22,600, ending the week just shy of $25,000. We did touch $25,000. We are currently at $24,800.

So is that a 10%? 10%. Nice job, Bitcoin. Dang. crushing it. Is this order? Shaking off the rest. Yes.

NFT fervor? I don't think this is NFT fervor. Can we say it is, though? Can we just make up explanations? It happened in the same week. So, yes, it is absolutely NFD fervor on Bitcoin. That's why this happened. Yeah.

Okay. Yeah, and we called it too. We predicted it. We knew it would be 10%. Never miss a call. Heath. How's Eth doing? Eith, started the week at 1630, up 6% to 1710.

We're breaking through that $1,700 mark. If we can keep our headed, there's a resistance line, a meme line at $1,700. And we are currently $10 above that. If we can hold that and be above the mean line, that means we have broken through some resistance. And hopefully that means you get continuation if you believe in this kind of thing, this VDU chart magic. Pop quiz. So when Bitcoin price goes up more than ETH price, what happens to the ratio, David? The ratio between Ether and Bitcoin goes down from an Ethereum perspective.

So we are down 4.5%, which is a big move for the ratio on the week. So Bitcoin definitely won the week this week. Definitely. One the week. And David, what would we do without Cracken? Who provided us these glorious charts allows us to, on a weekly basis, tell you the price of ETH, tell you the price of Bitcoin. Otherwise, how would you know? It's not like you check the prices. Yeah. You can still tell that Ryan's still using his old tabs method, even though that these Cracken charts have tabs inside of the tabs. So you don't have to use your browser tabs. You can just use Crackin set. Right. Ryan's got Soul BTC up. Yeah, Ryan's looking at the sole BTC ratio.

How's that doing? Can you zoom out on that? Over on the top left, you can go to the four-hour candles instead of the hour candles. Yeah. How's the sole BTC doing? Ooh, not great. Yeah. Total market cap for crypto. I know we're above a trillion, right? What's the number? We are almost at $1.2 trillion. We got $1.17 trillion in total crypto market cap. Bullish? Bullish. I'm not feeling bearish right now. I'm not bearish at all. Does that concern me? I mean, it's been like, what, $2?00. 160 some days, 250 days or something since all-time lows on ether. That's not that long in the scheme of things. Yeah. Well, so ether bottomed back in last April or May in dollar terms. Bitcoin bottomed recently in November. So ether in the FTX crash, Bitcoin hit a new low.

Ether did not hit a new low. So ether's been like having higher lows for a long time now. It's actually because like no one really expected the 2022 bear market. to be as bad as it was. And so we were like halfway through 2022 and it was like, oh, is this bear market happening or not. And then all the way through 2020 is like, oh, this is definitely happening. Now we're into February. We're like almost a year and a half into a bear market. And that's not a short amount of time. So like people are like, oh, how this bruntary market is going to be so brutal. We're a year and a half into it. It hasn't been brutal. Has it? Like I just

from an ether has had a better time this bear market than. Okay. Ether and Bitcoin has had a better time this bear market than every other asset. We'll talk about why that might be true when we get to the ultrasound money charts a little bit later. But first, we got to do our inflation watch, David. So the inflation report came out this week, and how are we doing? I'll read the headline, and you tell me what this means, David. Inflation rose 0.5% in January, more than expected, and up 6.4% from a year ago.

That's up 6.4%, but overall down in annualized inflation numbers. but it rose 0.5% in January, which, as I understand it, was a bit higher than most people in the market was expecting. So what do you take from this? Yeah, so the markets really liked this. So I think even though it's higher than expectations, I think the downtrend, the market is starting to believe in this downtrend. It's interesting. It's like it kind of counterintuitive, but the markets are liking it. And I think people are, the market is overall accounting for the fact that,

that inflation has definitely peaked. It's funny to me because I don't, like, this is a little higher than I expected, right? So just to give you a context, in just January alone is 0.5% increase in inflation. December was only a 0.1% increase in inflation. So the annualized number covers a lot because it's a trailing 12 months. Even though that was down on the month, we were like 5x up. I don't know if that makes sense. I do think that this means we're guaranteed to get more rate increases from the Fed,

at least another 0.25% increase. I think that was already on the table. That was already on the table, and this just, this just guarantees it. I saw some headlines from the New York Times. One of the subtitles was evidence is mounting that it could be a long road back to normal, which also begs the question, David, of what is normal? Yeah. I don't think...

2% is no longer the normal number of it. I don't think that should be considered the new normal. And I'm not kind of making excuses for the Fed, obviously. I mean, we talk a lot about the problem of money printing here. But for everyone to just expect inflation to go back to 2% and for it to reset, after we kind of get through this, you know, COVID supply chain thing that we've gone through over the past 24 months, I think that is fantasy land. I don't think we're going quite there.

And maybe this proves that inflation is going a bit more pernicious than some people thought. Yeah, well, inflation conspiracy theorists. which I don't think it's an actually conspiracy, but has, you know, it's only reported to be at this level. The actual real inflation is likely always going to be higher than what's reported. And people who are familiar with this are the citizens of Argentina.

And this is a tweet that we're looking out from Dylan LeClair, where annualized Argentine inflation hits 99%, basically 100% inflation level, which means that the value of the Argentine peso loses 50% of its value over an annualized basis at the current monthly inflation levels measured in January. Highest since 1991. Can you imagine that? So think about that.

So you're making $100,000 last year, right? Your salary, let's say. Now it's only worth $50,000. So you hadn't gotten a raise at all. You just cut in half your priced adjusted earnings. Right. But then you'll go to your employer and be like, well, because of inflation, you have to pay me more. And the employer's like, yeah, I have to pay you more.

and wages go up, which means spending goes up, which means inflation in furthers, which is why this spirals out of control. So, like, we talk about, like, though, I wanted to put this in the agenda because we always talk about like, oh, inflation's at 7%? Oh, it's going down a 6.5%? We are so privileged in America to be talking about single-digit inflation. Argentina and many, many other countries have been dealing with 20, 30% inflation for like decades now. And so like the difference between what is the official reported inflation numbers, which is always suppressed because it makes governments look better versus what actual real inflation is. Like this is like new to a lot of American listeners. This is a part of life and culture in so many countries around the world.

Yeah, you look at this chart. In 2019, Argentina was hitting over 50% inflation, almost 60% inflation some months, right? This is increased, but it's not like 50% is, it's, it's. is the easy road here. Speaking of inflation, David, this is about the opposite of inflation. This is called deflation. Deflation, my friend.

This is ETH supply, and it's a dip, a chart that's only going one direction. That direction is down. We talked about this the last couple of times in the roll up, but I can't believe it. We are down almost a full... 25,000 ether. Yeah, down 25,000 ether since the merge happened.

which is pretty crazy. That was 154 days ago. This must mean that gas fees are up. This must mean that blocks-based demand is being demanded. And yeah, I guess maybe tell us what this means. Gas is the new oil. We've hit a new 24-hour-Eath burn record, 3,800. This was a result of the Blurrower token air drop.

Gas prices hit something like five. It sustained 500. Gway for almost an hour, dude. And we haven't seen that since DFI summer days. It peaked out at 750 Gway. The new 24-hour burn record is about 3,800 ether burned inside of 24 hours. I think we almost burned 1,000 ether inside of one hour at the very, very peak. The monthly inflation rate for ether is negative one quarter of 1%, which is pretty cool. It's pretty cool. Gas news are back. Can I ask you? So, I mean, this is incredible. And it's incredible to see this during it in a bare market so called, right? That's a block space demand being

so off the charts. Why isn't somebody like a Michael Saylor all over Ether as an asset? Like, why are some of these people so fixated? I think if you can answer that question, you get like a Nobel Prize. I don't know. I mean, but I, this is, is this not sound to money? I mean, is this is deflationary? I know Bitcoiners will define sound money a little bit differently and they'll say consistency. Because they don't like tinkering with the monetary supply. Right. But this is, but this is, control over the monetary supply. But this is not. human control. This is all like code driven at this point. Right, but humans tinkered with it too recently. So you have to wait 10 years until you buy it. Yeah. And like some of the hardest

hardcore Bitcoiners were like, well, humans tinkered with it once, therefore it's tainted for forever. But this is an argument. Some will never accept it as legitimate. This is an argument we made going back as as as far as 2018, which is like there's really no incentive to tinker it in the inflationary direction, is there? Right. Right. Everyone only wants it to become more deflationary. Yeah, if you think about all the evil ETH people, like, and they have the dials of the monetary, even if you think that, which is totally not true, but like, even if you think that, yeah, well, all the evil EVE people probably hold a lot of ether, don't they?

Right. And so why in the world would they be incented to increase the supply of ether? I guess you could. It's just two different philosophies. Bitcoiners are like, if you never, ever touch the monetary policy, people will grow to trust it. And then the Ethereum philosophy is like, if you only make changes that, benefit the holder base, then people start to trust it. And like if you see every single Ethereum monetary policy change ever, it has always been towards the more scarce direction. And now,

recently with the combination of EIP 1559 in proof of stake, the supply of ether is becoming more scarce than Bitcoin judged by inflationary issuance. And so it's just a matter of what do you, what are your values and what do you appreciate? Do you appreciate something that never, ever, ever changes ever, but still perhaps inflates more? Or do you appreciate something that even while there is human input, that human input is always into the more scarce direction? Like, what do you want? What do you want? And also, I think the human input into the monetary policy of ether is kind of almost fully ossified. I mean, there might be some other changes to gas fee consumption, but we're kind of there yet. And also the conversation is like, well, okay, Bitcoiners and the Bitcoin

philosophy has never ever touch it. But then you run your, into the dead end of like, well, then your security budget runs out and then you're forced to change it later after you've already, like, created this culture of never, ever touching it. And so you run into a dead end. That's the Ethereum perspective on it. Yeah, exactly. Well, let's talk about some Bitcoin stuff because Bitcoin blocks base revenue is up as well. What is also up? Yeah. What are we looking at, though? This is the Bitcoin happening cycles. Yeah. So this is an arbitrary chart that is four years in length, a day since happening. And then they're inside of this four years of time. There's this arbitrary lines of

hype, disillusionment, enlightenment. But it's pretty obvious that the first one-ish year, if one and a half years after a halving, Bitcoin has only gone up. Three out of three times. How many happenings have we had? Either three or four. And so Bitcoin has only gone up in the one and a half years post-havening. In the second half after that, one and a half to like two and a half years after a happening, Bitcoin only has gone down. And we have continued that pattern. And then in the, what is the last phase, the perhaps one to one and a half years before the next happening, Bitcoin is flat to up-ish, flat to upish, more on the upside, I'd say. And so we are now in that last phase. And the idea here is that if these trend continues, the approach to the

happening, the one to one and a half years up to the happening is definitely a upwards trend in Bitcoin price. That is what this chart shows. This is three happenings over time. And the red line is is the most recent, right? So we're getting ready to enter in the fourth. And so it does predict this enlightenment period where Bitcoin's just going to go on a tear, go on a run. David, no, I would say it goes up and then it hits the happening and then it goes on a tear. Exactly. That's right. Then it goes into after enlightenment, then we get into this hype phase again. And then that's when it overreaching starts. Let me ask you, though. I mean, this has been true of previous cycles, but do you still think King Bitcoin controls the crypto markets in such a way?

Do you think that it has, I mean, first of all, the havings are much smaller than previously. So in terms of like Bitcoin denominated. We're at 6.25 Bitcoin's issue per block now. In about a year and a half, it'll be 3.125. Yeah. And so that's one argument I'd make. The second argument I'd make is like, well, I don't think the Bitcoin has. the narrative any longer in crypto? I mean, I think that Ethereum, for example, or Web3 in general

or other crypto assets has more of the narrative capture than Bitcoin at this point. That wasn't true in previous happening cycles, but I think it is true now. Do you think Bitcoin still can control the market in this way? Yeah, I think that might be an Ethereum, like inside of the Ethereum world perspective. I think from the outside perspective, Bitcoin is, still Bitcoin and still dominates. I think what you are saying will be true when the flipping happens, almost by definition. I think that what is culturally relevant, Web 3 is far more culturally relevant than Bitcoin, but Bitcoin is like a financial asset and it's also the biggest financial asset. So it still is in the driver's seat. But every single year that this goes on,

I think that that is less and less true as time goes on. Yeah, well, we will see what happens this time. I do think directionally this will prove to be correct. One other thing that we'll leave folks with in the market section, David, is chain analysis came out with their annual report on illicit cryptocurrency activity. David, do you want to guess the percentage of crypto transactions that are so-called illicit as reported by chain analysis? Well, the last time this report came out from chain analysis, it was something like 1%-ish. I think it was less than 1%. I think it was something like 0.8 or 0.9%. What is it now? By the way, I appreciate you not looking at the answer and actually doing a good faith guess

because it is on screen right now. 0.24%. Yeah, that's really low. Really low. That's really low. That's a percentage of illicit inactivity. Pretty close to zero, Ryan. These guys capture it all.

It's not just like, you know, terrorist financing, although that is one category. This includes ransomware. This includes scams. This includes cyber criminal administrators. This includes fraud shops and darknet markets. stolen funds, and everything that OFAC has sanctioned, includes all of that, and it comes in at a whopping 0.24%. What do you think the illicit activity of like cash money, real-life physical cash is?

Approaching 100%. I'm guessing it's a lot more than 0.24%. And by the way, these are the guys who are now. I joke with my friends, like the only time I use cash nowadays is to, for drugs and laundry and not even drugs these days. That's great. Yeah, so look at this, man.

Anyway, point this stat out. Next time someone tells you that all cryptocurrencies just like for criminals and drug lords, you'd think that meme would die back 10 years ago when it stopped being true, but it's still alive somehow in our halls of Congress. David, what do we got coming up next? Coming up next,

the SEC comes with a banhammer on Cracken, on Parenthood, on Paxos on all the things. So we're going to cover the news that dropped right after we recorded the weekly roll-up last week. There's also plenty of cool stuff to talk about. The Blur AirDrop. We also found out the source of SBF's bailout money, Bitcoin Ordinals alive more than other. The ZKEVM Wars, a lot of lots of cool stuff.

So stick around. But first, I'm going to talk about some of these fantastic sponsors, especially Cracken, who's helping Ryan become a charter these days. Here we go. Crackin has been a leader in the crypto industry for the last 12 years, Dedicated to accelerating the global adoption of crypto, Cracken puts an emphasis on security, transparency, and client support, which is why over 9 million clients have come to love Cracken's products. Whether you're a beginner or a pro, the Cracken U.S. is simple, intuitive, and frictionless,

making the Cracken app a great place for all to get involved and learn about crypto. For those with experience, the redesigned Cracken Pro app and web experience is completely customizable to your trading needs, integrating key trading features into one seamless interface. Cracken has a 24-7-365 client support team that is globally recognized. Cracken support is available wherever, whenever you need them by phone, chat, or email. And for all of you NFTers out there, the brand-new Cracken NFT beta platform gives you the best NFT trading experience possible. Rarity rankings, no gas fees, and the ability to buy an NFT straight with cash.

Does your crypto exchange prioritize its customers the way that Cracken does? And if not, sign up with Cracken at crackin.com slash bankless. Hey, Bankless Nation. If you're listening to this, it's because you're on the free Bankless RSS feed. Did you know that there's an ad-free version of Bankless that comes with the Bankless Premium subscription? No ads, just straight to the content. But that's just one of many things that a premium subscription gets you. There's also the token report, a monthly, bullish, bearish, neutral report on the hottest tokens of the month. And the regular updates from the token report go into the token Bible. Your first stop shop for every token worth investigating in crypto.

Bankless Premium also gets you a 30% discount to the Permission List Conference, which means it basically just pays for itself. There's also the Airdrop Guide to make sure you don't miss a drop in 2023. But really, the best part about Bankless Premium is hanging out with me, Ryan, and the rest of the Bankless team in the Inner Circle Discord only for Premium members. Want the Alpha? Check out Ben the analyst DGen Pit, where you can ask him questions about the token report. Got a question? I've got my own Q&A room for any questions that you might have. At Bankless, we have huge things planned for 2023, including a new website with login with your

Ethereum address capabilities, and we're super excited to ship what we are calling Bankless 2.0 Soon TM. So if you want extra help exploring the frontier, subscribe to Bankless Premium. It's under 50 cents a day and provides a wealth of knowledge and support on your journey West. I'll see you in the Discord. Here we go, David. The SEC Banhammer. Tell us, where is Gary Gensler swinging his hammer this time?

Cracken has agreed to shutter its crypto staking services to settle with the SEC. They've paid a $30 million fine to settle out of court. The SEC has accused Cracken of offering unregistered securities in their staking products. So the SEC claims that Cracken sold staking services to the public. They pooled crypto assets and staked them on their behalf, but did some extra things as well beyond just simply staking that created an unregistered security. and so Cracken has agreed to shutter that service and wind down that program. Yeah, what's your take on this, Ryan?

Oh, that is, of course, when you said steak, you mean S-T-A-K-E, not S-T-E-A-K-K-E. Okay, a part of this story, this is going to be a reoccurring theme. Every enforcement action that we get, first with Crackin, then with Paxos and one other, we get this influencer video. Influencer video from Gary Gensler, which is extremely infantilizing. It's like talking about proof of stake and Gary Gensar goes, that's STAKAE, not S-T-E-A. Who is the target market for this? Apparently, children.

Children? What kind of child? That's what he's talking. Like, should we play this? Let's play this line. All right, let's play a clip of this. What does steak have to do with our securities laws? That's S-T-A-K-E, not S-T-E-A-K.

Thanks, Gary. God, the music. Office hours. You ready? In the crypto markets, there are various ways to validate data stored on crypto. There we go. My God. Yeah.

That's what we're dealing with right now. Thanks, Gary. Okay, so why? I'm sure Gary had a justifiable reason for ending staking at Cracken. Did he not? So there is, there are differences between like, just taking customers, ETHER, staking it on their behalf,

and passing along their rewards. So Cracken actually advertise a fixed yield, not a dynamic yield. And so, of course, the yield that you get from staking your assets is dynamic, but Cracken advertise, like, you will get this percentage. And then they did some other things

that they could do because of economies of scale to make the product a better product, but because they were doing some extra things, they were finessing this, if you will, that went from just being, a software as a security provider, I guess, to being an unregistered security. So like technically, I'm not a securities lawyer. Technically, what they did change their product from just being a service provider to being an unregistered security. But I'll ask the question to what risk was there,

right? And so like, yeah, they're doing some extra things that change the nature of the product, but is what's the risk? I'm confused. My argument is this, right? Like all of the things that you mentioned, are pretty freaking easy tweaks to make. If Gensler and the SEC, if they had a problem, like this product has existed for a very, very long time. And suddenly now the SEC is giving it the bandhammer. Why not just have a conversation with Cracken? I mean, they could have done something like tighter mandates around proof of reserves,

which I think the entire industry supports with respect to staking. More transparency into where the funds are going, like lots of detail there. This could have been a productive conversation. Yeah. But it wasn't. They could have also said something about decentralized staking options and maybe that being another path. But instead, we just got the Gary G. Banhammer smacked across our head. And by the way, Cracken in the EU, they're still offering staking services, of course.

Yep. Because- This is only for U.S. citizens. Europe, apparently. Cracken staking is still up and running totally fine except for U.S. citizens. Yeah. But why is this being banned in the U.S. then? I mean, like, maybe because Gary Gensler wants to trap us in his financial prison.

Exactly, because of Garber. So I don't understand exactly why they went with the approach of pay us $30 million. And, you know, there's no remediation around this. And shut down your service. Just shut it down. Pay us money and shut down your service. Yeah. It's absolutely, like, it's almost like extortion.

I'm like, it's brutal the way that this is playing out. Now, our friend, Commissioner Hester Perth, had something to say about it. So, of course, she dissented. Is this like the second week in a row we've talked about one of Hester Pers's dissents? Because I think we have two dissents. Hester Perth dissents in today's agenda. But this is the first one on the SEC Cracken shutdown. What does she say?

I'm going to skip to my favorite quote. Hester Perth says, A paternalistic and lazy regulator settles on a solution like the one in this settlement. Do not initiate a public process to develop a workable registration process that provides valuable information to investors. They just shut it down. the SEC just shut it down. Like it's,

I have to, you have to give a tip of the hat to Hesser Purse, who's operating inside of an agency that is not doing things that are aligned with what she personally believes, yet she's still there fighting the fight that she believes in.

Like, that's hard. Calling the agency that she works in, a paternalistic and lazy regulator. That is bad ass, man. She's basically calling her boss, like Gary Gensler's not her boss. I guess not, right?

He's like in the bigger chair and she's calling him a paternalistic and lazy regulator. I'm so impressed. I'm just so impressed by this. It's awesome. It is incredible. And look, it's not just the word she's using, which are impressive, but like she's raising lots of substance here. We've known about crypto staking programs for a long time.

She also says, although it may not have made a difference in this case, I should have called for us to put out guidance on staking long before now. This is what a leader does, too, is take some accountability. in this? It's just so refreshing. And look, this is a model for how all regulators should approach this space and approach their jobs in general. I'm told we say first principles too often in the podcast. We do not say first principle. You cannot say the word first principles.

This is a first principles regulator. I'm going to say it. She's doing her job right here and it's incredible to watch in the contrast of those that aren't doing their job. Yeah. This is also coming out. So Hester's not the only person who's identified this. This is Representative Bill Huzenga. Pretty sick last name. Huzaenga, yeah, who tweets out,

since Gary Gensler won't abide by his own policies to, quote, come in and talk, the House GOP will hold him accountable. Today, as promised, our oversight of the SEC begins with a request for documents surrounding their interactions with SBF, FTX, and the Justice Department. Kind of adjacent to the topic at hand being staking, but definitely relevant to the topic of what the hell is Gary's deal, and so looking forward to this progress.

I guess maybe Cracken made the mistake of not like bribing the right people, not scratching Gary Gensler's back enough. I mean, is that the contrast here? Like, maybe Jesse Powell should have been sucking up to Gary a bit more and he wouldn't be in this position. Is that what this implication is? It's like... You mean Jesse Powell should have succumb to SEC extortion?

Well, this is kind of what it feels like, because we know already that Jeremy, Gensler was meeting behind closed doors with FTX had a very cozy relationship with them. Multiple times. These meetings are on public record. Didn't try to shut down any, like, Cracken has been servicing this industry for a very long time, number of years. 12 years. Gary was meeting with somebody and an entire exchange that was actively stealing billions of

dollars from depositors. SBF was 17 when the time Jesse Powell created Cracken. I just, it's stupid, David. And yeah, I'm glad that somebody in government, hopefully this is more than talk, is trying to hold some accountability for what's going on here. So that is not the only voice of dissent as well. Here's another one. David, what are we looking at? This is Brian Armstrong tweets out, Coinbase is staking services are not securities.

We will have happily defend this in court if needed. Translation, come at me, bro, that Brian says to the SEC. Well, how come Coinbase gets a pass right now and Cracking doesn't? Right. So Coinbase does less things with their staking products than Cracken did. So like I said, Cracken use economies of scale to finesse some extra cool features about the product. To bolster the value of the product, Coinbase is doing a much more bare bone simplified,

we stake your ether, and then we pass you back the yield that you get. And so it's just much more simple. And so there's less, they're touching the product less, and they're just passing along the stake. And so because it's more simplified and there's less like agency that Coinbase is in putting into the service. Then Gensler had more of an argument basically, right? And Cracken for whatever reason decided to settle rather than fight this in court. Right.

But Brian here implying that they're happy to fight this in court. Mm-hmm. Mm-hmm. This is a tweet from Jason Gottlieb who says, I find the SEC's all crypto projects have to do is coming in register line. unbelievably insulting. It assumes that there's this vast quantity of sophisticated securities lawyers. advising their clients, no, man, screw the SEC, yolo baby, do whatever you want,

which is a really good take. Crypto has some fantastic lawyers and all of them, implying that the fact that, judging by the fact that none of these projects really come in to talk to the SEC, the whole line out of Gary Gensers, like, just come in and talk to us. It's a trap. It's a trap, but it's also, I think the SEC doing propaganda to the rest of the non-crypto world saying like, hey, like, are you confused about the crypto world? we just want them to come in and talk to us

and then like the average American is like oh those crypto lawyers are so naughty when that's not at all what's true that's what the office hours with Gary influencer video is about that's why he spelled out steak and thought it was like really funny and it's not meat ha ha it's actually like staking your asset and like he wasn't talking to anyone in crypto

we all know this he's not talking to us he was talking that's why we always are like but Gary come on bankless he's not coming on bankless dude like he doesn't want to talk to us but seriously Gary come on bank But seriously, Gary, come on bankless. I've asked him, I don't know how many times. Yeah, a handful of times.

He doesn't care to interface with us. He is on his own agenda. It's like, people are listening and be like, but that's because you guys talk smack about Gary all the time. It's like, first, if you ever came on, we would be very cordial. We have never ever been antagonist to a guest, ever, nor would we.

No, we would love to talk to you. I think it would be a, you know, productive conversation. We're not going to sit here and kind of like get you in gotchas. sort of thing. That's not what we do. That's not what we do. And then secondly, he won't come on any crypto podcast whatsoever. He won't even talk to the crypto community. The closest he comes is like the CNBC Tradfai type space. So I don't know why he won't just collaborate. Like have a conversation with us. We're not shadowy super coders like Lizzie Warren told you. Which brings us to this Miles Jennings tweet, who is the council over at A16Z. So perfectly lee into this. Miles tweets out,

It has now been four years since the last crypto-related guidance from the SEC, whose chairman continues to focus on headlines rather than a legitimate effort to protect investors in accordance with the SEC's core mission. Four years since the SEC has given crypto any sort of guidance and only enforcement actions. So, like, we know he doesn't care to talk to us. It's been four years since he's given us any guidance. Yeah. All we've been asking for the entire time is clarity.

Guidance. Clarity. Do your job. Instead, it's regulation via enforcement. Okay, here's a flip on this, though. It's a lot of what I've heard this week when we were talking about this. But David, Brian, isn't this good for decentralized staking? So basically, Gary and others, regulators coming after the centralized exchanges and saying,

no, that shall not stake. Well, doesn't all of this staking liquidity go to decentralized staking providers? I have a take on this. What's your take, though? Well, I think we can look at the market and agree that the market totally agrees with that take because RPL is at all-time highs in ether terms, almost all-time highs in dollar terms. Lido is at a very strong price performance. So the market agrees with that take.

Here's the thing I would say to everyone arguing that. And I agree with elements of that, too. We have no confidence that Gary Gensler isn't going to come for decentralized staking protocols next. Whatever he wants. He is trying to increase his. scope of influence. Are Eith? Is that a security?

Under Gensler's regime, who knows? That is Rockapult's staked Eith. We'd call it a derivative, but it's a token, staking token. S-Eth. Is that a security? I mean, there are all sorts of ways he could begin to- Where's the line? I'm sure everyone is like, no, of course not.

Are you sure that- Gensler agrees with you? This man has no line. He will go as far as we let him. Right. And so that's why we have to try to stop it at every opportunity so it doesn't encroach into decentralized staking as well. Now, it has to be a bridge too far for him to try to outlaw validating in your own freaking home. It seems like that could be fought in court. But who knows? That wasn't the

only SEC action this week, though. What's this, David? No, crypto firm Paxos, which is used stable coins, is to face SEC charges about the BUSD, the Binance Stablecoin. Now, The relationship between Paxos and Binance is interesting. Paxos is kind of like this white label service. So BUSD-BINC-D-DLAR is offered and minted by and managed by Paxos. So it's kind of like putting the Binance brand on a Paxos stable coin and there's like synergies there. It's kind of like Binance wants an American bank to help them with this, right? Yeah, exactly.

Yeah, yeah. So the SEC has ordered Paxos who stopped issuing Binance U.S. dollar. and the regulator cited that it is as a result of unresolved issues relating to Paxos' its oversight of its relationship with Binance. So I think if you read between the lines here, the regulators believe that BUSD and finance are doing illicit things that they don't like, perhaps money laundering, watch trading, like a bunch of illicit stuff that probably offends them. And so they're going after Paxos who's issuing BUSD and say, hey, stop doing that.

The SEC is bringing a lawsuit to Paxos as a result of this. David, I don't understand why this is in the scope of SEC at all. Yeah. Well, so this is all about like the whole coordinated effort, right? And so again, if you read between the lines, we have the New York financial services, like a regulatory body, Department of Financial Services, excuse me, the SEC. We have treasury. Like every, like all of these, I'm guessing, all of these agencies are like, you know, in whatever communication channels that they have with each other. and they're like, hey, we want that to end.

SEC, go, you go after a Paxos. What can you do? Make it hard for them. Like, yeah, like, go get them. And so, like, this is, like, the government acting as kind of a monolith, which they don't usually do in order to, like... You're coordinating. Yeah, they're coordinating. Yeah, exactly.

Yeah. Yeah, it's interesting to me that they're picking on Binance in this way. I think, now, they're picking on Binance through Paxos, but it's really, you could tell this is kind of targeted at Binance. I think it's... harder for them to come at like coinbase USDC, but do you think they could be coming after Circle and the USDA product next? I don't think that there's a line.

I don't think there's a line. There is no line. And so, David, they're not banning BUSD. Just Paxos is no longer able to issue new supply of BUSD. So it's basically going into legacy mode. And the supply of BUSD is down only. Is Paxos going to fight this? Do they have a way to fight this? I don't know, man. I don't think. I haven't heard anything like that. I don't know if they intend to fight it or not.

It's a Wells notice. It's really hard to fight the government, isn't it? Yes. Yes. One other byproduct of this is an article in Bloomberg that PayPal is pausing stable coin work amid the regulatory scrutiny. Remember all that good news of PayPal and Venmo doing like a stable coin adoption? Well, they've had to pause. One of their partners was actually Paxos for the stable coin product. and they're like, well, now what do we do? Well, they got scared. They got scared.

And this is like a success indicator for the SEC and all of those like regulators that don't want. They're slowing it down. They're like, oh, yeah, this is what we wanted. Yeah. This is the positive second order effect for them. Yeah, yeah. You know, some crypto people are like, well, regulators don't matter and like we'll be fine without them and none of this matters. I mean, I agree that's true over the long run, right?

But over the short run, they do have the ability to slow it down. There's just slow adoption velocity, specifically in the jurisdiction where they have some power, and it looks like that's what they're doing. Unfortunately, with PayPal. So, David, question of how do we fight this? It's all sorts of ways for people to get involved, one of which is we depend on, actually, people with some power to go to Washington and fight the fight, not the way that Sam Bangman-Fried did with bribing all the politicians, at least.

I hope that's not the case. What's this a picture of? What are we looking at? This is just Brian Armstrong, and what I'm assuming is the Coinbase legal team, perhaps some others as well. They're in Washington, D.C., fighting this fight. And so this is just the way that regulation and innovation and technology works. New technology offends the status quo, tries to get regulated.

Then these representatives who are aligned with the technology come and fight for it. And so Brian Armstrong and other lawyers at Coinbase are in Washington, D.C., doing the trench warfare of fighting this stuff case by case by case. So thank you for everyone who's in Washington, D.C., fighting that fight. You got to put your suit on if you want to do that. Well, I ever see you testifying in front of Congress, David? I would put on a suit. If I was called upon to do it, I would put on a suit and I'd go do it.

But thankfully, I can just sit at home and talk about it. That was only the second smack across the face this week from the SEC. There's a third, too, and this was even more recent. There's an SEC proposal that could bar investment advisors from keeping assets at crypto firms. This is registered investment advisors who would have no ability to essentially custody their assets. And so you want to give quote unquote real financial advice. Remember, everything on bank lists is just for entertainment purposes. We do not give financial advice around here.

We are not registered investment advisors. We'll never pretend to be. But if you are a registered investment advisor, well, Gary has just made it a bit more difficult to keep assets on behalf of your clients at crypto firms. He's also made another influencer video to help explain it to you. Yeah. Yeah. Oh, Gary's playing it.

Let's watch it, dude. Are we watching this one too? Oh, yeah, we're watching this one. Okay, here we go. What is a qualified custodian? I don't know, Gary. What does it have to do with the security? I don't know.

Tell me. I'm so excited to hear about this. A qualified custodian. No, no, not groundskeeper Willie from us. Oh, that's what I was thinking. I can't watch any more, dude. Oh, my God, dude. Okay, so like, okay, what is the net effect of this?

And so actually, this is something I hear out of Matt Walsh from the On the Brink podcast. His take is that exchanges in the future will not also be the custodians of their customers' deposits, because that's how it's structured already in Trad World. So this is actually a take that off kind of thing. This is a take I've heard before is, yeah. So like exchanges will just do exchanging stuff and then they will have a third priority service provided to do the custodian stuff. So separation of that.

Like keeping the private keys. Somebody else says that? Yes, exactly. Yeah. That's kind of interesting that he would say that. I think that's true, but that's not necessarily true for bearer assets, is it? You ever go to the old banks

and they had these ginormous bank vaults where like they keep safe deposit boxes and that sort of thing? And previously they'd kept other valuables like actual cash money and gold and that kind of thing. Right, but those banks aren't also doing, facilitating the swapping and exchanging and trading of those things, though. And so it's the combination of the exchange and the custodian

that I think is what is being targeted here. So a quote from Gary here, rather than properly segregating investors' crypto, these platforms have co-mingled those assets with their own crypto or others' investors' crypto. This is how Coinbase, I'm assuming crack, and all of these exchanges work. It's like Binance, too.

When you send your ether, they spin up a temporary address, so you deposit your ether into that temporary address, and then that temporary address forwards it off to, like, Coinbase Cold Storage or whatever. And that's commingled with everyone's deposits. They just mark on their ledger that this one person sent us this amount of ether, but then everything does get commingled.

And so the Gary Gensler claim is that when these platforms go bankrupt, something that we've seen time and time again recently, FTX is what they're going after, what they're setting, investors' assets often become the property of the fair company leaving investors in line at the bankruptcy court. So you can see the logic. Also, is this what the SEC is for?

How is this related to securities, though? That is a good question. Yeah, David. So here's really the problem is Gary Gensler is trying to completely delegitimize this asset class for registered investment advisors, which, again, provide the bulk of financial advice to Americans in the U.S. And here's a quote from an article we've read about this. if the agency, that is the SEC, is trying to force advisors to go to banks with their clients'

crypto assets, so they can only go to banks rather than exchanges with clients' crypto assets, and the bank regulators are cautioning banks against crypto activity. Is it making crypto investing impossible through the advisors? Yes, of course. This is the Operation choke point. This is how it gets. So Gary is coming in. And they're sort of encircling the crypto movement.

And so he's going in and he's being like, ah, here's a weak point. Registered investment advisors, you know what we'll do? We'll just make it so that they can't keep clients funds on crypto exchanges. They have to go to banks. Yeah. And then over here, you guys over here, like OCC or wherever else, like make it really difficult for the banks to actually work with crypto because it's a super risky asset. We've seen that in the recent months.

So you sort of encircle the industry and like squeeze it off, like choke it out slowly over time. So this is the intergovernmental agency coordination. The SEC is pushing all registered investment advisors to like don't store your crypto asset with bank, with exchanges. It has to be banks. Crypto-native exchanges, the exchanges like Crackett and Coinbase, etc. The people that are aligned with the crypto industry. Instead, you have to store your crypto assets with banks. And maybe in silo you can accept that maybe. But then on the other side of things, you have all of the other banking regulators who are saying, hey, banks, you can't store crypto assets. That's the play, right? Okay, but here's the thing.

Here's why it's so stupid and short-sighted. So if that's the game, that's cool. Guess what happens? People go bankless. Yes. And it completely delegitimizes, not only the SEC, we said that before, but registered investment advisors. It eliminates them from being able to talk about an entire asset class.

So if I'm a millennial, and by the way, did you know that for millennial millionaires, like a lot of them, a majority of them, actually. own 50% or greater of their assets in crypto. That's a stat I read recently. I'll pull up the source for that. It's like you are making it so that a registered investment advisor can actually help you with this entire asset class called crypto assets, which is like the biggest, most wealth generating highest potential growth asset class on the planet. So what do you do? you just completely neuter registered investment advisors. Like, why work with a registered investment advisor if they can't even talk about crypto?

You don't have an incentive here. So that's the byproduct of this. And of course, our friend Hester Perce wrote another statement about this, or what we might call a dissent on this as well. We'll include a link to that in the show notes. I think this take from Jake Trevinsky really takes it home for us, David, on all of the actions from the SEC over the past week. Do you want to read this out?

Yeah, Jake says this proposal would flagrantly. violate the SEC's mission by making investors less safe and by discouraging capital formation. It wouldn't directly affect investments in crypto companies since it only targets digital assets, not company equity. That's a small comfort though, since it would cover many non-securities that the SEC shouldn't regulate. So this is just Jake saying this is a huge overstep by the SEC, which we already know. David, what are we looking at here? We got some memes. We got some memes. We are 55 minutes into this roll-up, and we've talked about one subject matter beyond markets. So we're going to end this with meme and move on. Here's the S-EVE.

SEC protecting a sleeping child from Cracken. Meanwhile, Celsius, Terraluna, F-T-X, whatever, O Voyager, just raining bullets down on the sleeping child. Again, nice job. I love this meme format. This is the dog that wants you to play fetch with it, but it won't give you the ball at the same time. So the dog is, please comply.

And then you reach for the ball. And the dog goes, no regulatory guidance, only compliance. I love this meme format. Yeah, it's so good. David, all right, onto brighter subjects. Blur did an air drop this week. How much did people make? How did it go?

Do you have any details for us? Yeah, so trading the trading price of blur at the time of recording, it's moving around a lot, but is something like $2 to $2.5 billion on day one of the blur drop? 12%. Yeah. So at $1, what is that fully diluted market cap? $3 billion. What is Blur, by the way?

It is a tokenized attempt at a decentralized version of OpenC, basically. It is a NFT trading platform that's optimized for NFT traders, people who are doing the speculation, all that kind of stuff. And so it is just a new tokenized NFT trading platform, $3 billion market cap. 12% of the total supply was airdropped to blur people who went through the gamut of qualifying for theirdrop. Interesting choice to make theirdrop qualification criteria explicit. They tried to make a non-gameable mechanism for air-dropping the token. So that means that they gave away $250 to $300 million of airdrop to their,

to their, I can't remember the number of individuals I got. The token is quite a lot. But pretty successful tokenirdrop. I would say I did a show with them. I did a show with Pac-Man. This is an anon team. So if you are looking to learn about a blur and the details of the airdrop, we already did a show with them if you are looking to learn more.

There's also, of course, you can go to Earnify. which is urn.fi and get alerts when air drops like this are happening. Just type your ether address, email address. You won't miss an air drop. David, we got a lot more coming up. What's happening? Coming up next, Polygons, the ZKEVM mainnet is set to launch in March. Are they going to beat ZK sinks, ZKEVM,

which is also announced this week. Coincidence that happened on the same week, I don't know, but at least the ZKEVM wars are heating up. We got to love that. SBF's people that, whoever paid for SBF's bail money or we know who they are. So we're going to talk about that. Celsius issues a recovery plan.

You're going to get your money back, Ryan. Maybe. And three weeks later, ordinals are still a thing more alive than ever. But first, before we get to all of that super hot stuff, a moment to talk about some of these fantastic sponsors that make the show possible. Uniswap is the largest on-chain marketplace

for self-custody digital assets. Uniswap is, of course, a decentralized exchange. But you know this because you've been listening to bankless. But did you know that the Uniswop web app has a shiny new Fiat on ramp. Now you could go directly from Fiat in your bank to tokens in DFI inside of Uniswap. Not only that, but Polygon, Arbitrum,

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will optimize your gas fees for you. Uniswap is making it as easy, as possible to go from bank account to bankless assets across Ethereum. And we couldn't be more thankful for having them as a sponsor. So go to app.uniswap.org today to buy, sell, or swap tokens and NFTs. How many total airdrops have you gotten? This last bull market had a ton of them. Did you get them all?

Maybe you missed one. So here's what you should do. Go to Earnify and plug in your Ethereum wallet and Earnify will tell you if you have any unclaimed airdrops that you can get. And it also does Poaps and mintable NFTs. kind of money that your wallet can claim, Earnify will tell you about it. And you should probably do it now because some AirDrops expire. And if you sign up for Earnify, they'll email you anytime one of your wallets has a new AirDrop for it to make sure that you never lose an

irdrop ever again. You can also upgrade to Earnify premium to unlock access to air drops that are beyond the basics and are able to set reminders for more wallets. And for just under $21 a month, it probably pays for itself with just one airdrop. So plug in your wallets at Earnify and see what you get. That's e-a-r-n-i.fi. And make sure you never lose another air drop. And we are back. Ryan, you know what's set new lows recently is non-O-FAT compliant blocks on Ethereum. Wow. This was once upon a time a big concern. You and I were never really concerned about this because, basically because of the layer zero of Ethereum, why is there an increase of non-O-Fat compliant blocks on Ethereum? Because there is a culture of censorship

resistance built into the layer zero around Ethereum, I was never really in doubt that this was going to happen, but the ratio between non-OFAC compliant blocks to OFAC compliant blocks is up only, so Ethereum increasingly ignoring OFAC compliance, which is tight. As the protocol should.

At the protocol level. Yeah. And this is, I saw this graphic, I thought this was pretty cool. This is an illustration of how a block is built. So on the left, you have block builders on the middle. You have block relayers. And then on the right, you have stakers.

People who are actually proposing blocks, block stakers. Celsius over there. Wow. And so it's just a pretty cool distribution of all of the supply chain of how you make a block. This was the podcast topic that we had with Matt Cutler. And so this is now, this was before, we had that podcast before this was even a thing because Matt knew that this was coming. And so bankless listeners got the front run.

Okay. So on the left is what? That's block builders? Blockbellers. And in the middle is relairs. So you said? Relayers. Okay.

And then on the right are some of the big staking providers. Exactly. And you would be on the right as well if you're running your own. If you're an individual staker. Yeah. It's just maybe not depicted here because it might also be the gaps between the, yeah, it's just not depicted. Very cool. Look at the flows here.

And ultrasound is an up and coming. That is, that's an up and coming relayer. And that is. Ultrasound. And it's also OFAC noncompliant. Not OFAC compliant. Yeah. Or OFAC noncompliance.

I don't know. I love the words compliance. Let's talk about ZK, okay? Because the ZK Wars are heating up. This is a tweet from Hollow. Did you know, David? It's official. The Polygon ZK.

EVM Maynet will be launched on March 27th. After more than a year of intense and inspiring research, development and testing, we're incredibly proud to launch the first ever ZK EVM Mainnet. A lot of people claimed first. Everyone wants you to know that they have the first ever ZKAEM. EVM. Well, who knows? Who's going to be first? I don't know. Who officially gets that title, but Polygon has a date here of March 27th, so that seems pretty compelling. A few things.

Like, when people say that their thing is going to mainnet, it's always a question of like, what is actually going to mainnet? Are you like mainneting a test net version? Is that what you mean by mainnet? Or is it sort of a half version? I believe this is indeed mainnet as defined by real assets and real users and open to everyone. So there you go. There's lots of other technical stats behind this and for me I can't wait to use something like this the day it comes out. So stay tuned, Bankless Nation for more ZK EVM content so we can explore this new world. But David, they are not the only ones that are getting close to Mainnet. This is ZK Sync. ZK Sync. Yeah. Also, and now

announcing the ZK Sync Era main net. So for bankless listeners that don't know, there's actually two ZK Synx. There's ZK Sync 1.0, which was the very, very early implementation of a ZK roll-up, which just did token transfers and payments. And then ZKSync 2.0 came around,

and that was launched. A ZKEVM was launched on Ethereum months ago, except it was closed to only the ZKSink protocol dev, so they could only be the ones to stress test this thing. They would shut down the network, restarted, like do an operating system upgrade, basically, restart it. And so they claimed back then first, except it was closed.

And so everyone's claiming first over and over and over again. But this is the same thing as the Polygon announcement where the ZKEVM is open to builders. And so they are doing a where they're calling a fair onboarding. So teams can sign up to get onboarded onto the ZK Sync era. To start building the rides for users, right? Exactly. Yeah. And so that, I've talked to the ZKSink team, six to eight weeks of that, of this fair onboarding time period where everyone gets to have peace and quiet while they build their applications. And that starts today. That started today Thursday. So yesterday for the time of listeners. So six to eight weeks later,ish, give or take, whenever the protocol devs of ZKSync say that it's ready and secure, they will open it up to true actual real main net for everyone else to come. But we have this fair onboarding period where projects can, deploy and test their DAPs on ZK Sync era.

It also has token bridges, and they are also going through finishing up their security audits. If one of them technically beats the other to Mainnet, it's only going to be by a few weeks. Yeah, it doesn't matter. It doesn't matter. But I love the fact that everyone's competing and that this is a race. Now, got to make sure you get security right.

Obviously, this is some new, more complicated technology. So that's something we won't be able to know until after the fact. But yeah, it's exciting to see for sure. I should mention too, both David and I are advisors for Matter Labs ZK Sync. And also I'm an advisor for Polygon. We love and support the ZK EVM ecosystem for sure. We also own some ETH, David. Disclose that.

I don't think we need to disclose that. Tornado Cash developer to stay in jail as the Dutch trial continues. This is Alexei Persef. We talked about him so often when this happened in August earlier this year. This is just a heartbreaking title for the story. And like this guy has been in jail for developing open source code. As far as we know, more serious charges have not been put forward. He put open, he helped develop tornado cash, which is OFAC sanctioned.

And now he's in jail for it. And there's a trial going on. So hopefully this is not permanent. But the fact that he's been in jail for, I don't know, how long is this, David? Six months. Like almost a half a year now. What? So I know you said, like, this is a disheartening title.

So let me run this by you. Persev's lawyer said that they had a good beginning in educating the court about how decentralized finance works. The lawyer quoted said, we had the opportunity to explain what the basis is for tornado cash and why it is not money laundering. It is our opinion that the lack of knowledge is what's keeping him here. Dutch public prosecutors alleged that Persev,

rather than merely publishing code, said that he accepted, Piles of suspicious cash without question. So there are two very different realities being talked about here. We will see. Yeah, we will see. And so like, is this such a misunderstanding? And like, we have to just educate that tornado cash is what it is. Oops.

You went to jail for six months because we didn't know about DFI. Sorry. Or was Perts of actually helping money laundering? Maybe there's much more to the story that we don't know. We'll find out. Yes. It's true that we don't have. all the evidence, but the serious charges haven't been laid. I guess that's what the court case is

for. One other thing I'll say is, look at the contrast. Alexei Persef is in jail and not able to be released on bail. Who's out on bail, David? Oh, this guy named SBF. Who's out on bail on something like something like a quarter billion dollars or something? Like, it's so crazy the contrast here. Before we get to that though, Cosmo de Medici, who's of course known as being Snoop Dogg's Twitter account for the NFT world. 22 pieces of works, NFTs from the Cosmo de Manici collection has been added to the permanent collection

of the Los Angeles County Museum of Art, the first donation of on-chain art from a collector to a museum, and also the largest digital art collection to ever enter a museum. Cool. It's just a loan, right? That's what collectors do.

You just load it to museum? I'm assuming, so, yeah. I give it to them in this case. So more NFT stuff. Ordinals, getting into the ordinal section. Ordinals are up only. We are almost, Ryan, passing $1 million in transaction fees paid to Bitcoin miners from inscribing ordinals.

We have passed over a hundred thousand ordinals inscripted into Bitcoin. So there's over 100,000 NFTs on Bitcoin. That's so cool. You can have dune boards about Bitcoin. I'm not used to seeing dune boards on Bitcoin. And ordinals, so people know, are basically NFTs on Bitcoin. Are these being sold on like OpenC and other marketplaces? Yeah, dude.

That's crazy. Well, when they are sold on OpenC, they're actually sold as like a wrapped ordinal on Ethereum, which is kind of hard. It's, it's, it's, it's, it's, it's, it's, it's getting very, very, because Bitcoin doesn't have, like, on-chain infrastructure to support some of this stuff. So, like, people were, like, like, OTC, like, O'Donels with each other through this, like, public Google sheet. It's, like, all a mess. Oh, see, guys, it's still a Ti-83 calculator. They're trying. They're trying their best.

Anyways, Bitcoin punks are a brand-new NFT collection on Bitcoin. somebody bought a Bitcoin Cryptopunk, which are like much like the crypto punks that you all know, except with some mutation, some changes to make them unique. One Bitcoin punk was sold for 9.5 Bitcoins, dude. Wow. It's funny that they're following in the footsteps of Ethereum. Yeah. Well, don't tell the Bitcoin is that.

This is like Cryptopunks, but for Bitcoin, you know? I'm hopeful that the NFT community, in Bitcoin starts to establish its own independent culture as well. Are we starting to see any of that? I think, yeah, I think so. So yeah, there is now a, like I said, a couple of roll-ups ago, like, Ordinals are a place for different flavors of bitcoins other than the fundamentalist like extremist camp to latch onto and use Bitcoin in a way that's not necessarily aligned with, like, the maximalist flavor of Bitcoiners. So now there's like different, we can actually talk about different flavors of Bitcoiners with more like fidelity, which is great. Well, here's something

that you'll never see on Ethereum. And that is the constant. Constitution of El Salvador being minted as an ordinal NFT. So that just happened. The reason you'll never see it on Ethereum, David, is Buceli is a notorious Bitcoin. Maximilist, I would say. He's like more than a bicketer. Laser-eyed maxi for sure. Laser-eyed maximalist.

And apparently they are cool with blocks having NFD data in them, at least Buckelly is. And so minted the El Salvador's constitution here. Yeah, this definitely ruffled some feathers. So here's a quote from President Knight. Bukkele. Someday Bitcoin will host a distinct global culture that will rival Ethereum. We think that that culture should be El Salvadoran. Michael Saylor responded, this isn't how Bitcoin should be used. No, there's infighting? Are you kidding? We don't like NFTs or smart contracts or any of this artsy farsi stuff. Bitcoin is a currency. The citizens of the world need to quit finding artistic and

profitable ways to use our blockchain. They can take that nonsense somewhere else. Trouble in maximalist paradise. You're using the blocks wrong, Bukkelly. Okay. Yeah, that was a buck. Take your, take your finance your nonsense somewhere else that's what he said is it fair for us to just like put words in other people's mouths under the uh the the vibe of the rug so this is a rug no that was a rug again oh i got rugged yes i didn't even look up yes you probably got rugged that was a rug so hard ah i love the fact that you open up these links and you don't even know i didn't even look this is so dumb. I think.

Oh my God. You 100% believe it. I was, that was even more than the lot. I got rugged harder than the last time. You got rugged so hard. So, so when I was going to ask you when we got to the end of our agenda when we were talking

about things, it's like, oh, you didn't put it a rug link. There must not have been anything good this week. I can't believe I missed this. When the rug team passed this link to me, I was like, oh my God, this is so good. And so I pass it to Chrissy, who makes the agenda. And I'm like, all right, sneak this one in here in a way that doesn't,

like trigger Ryan and see if he can just get into it. Okay, okay, so reset. None of that happened. None of that happened. No. Michael Saylor's quotes, it's all wrong. This is the third, the third rug that we've put into the weekly roll up. What is the rug? The rug, the rug.mere. dot XYZ.

It is the onion of crypto. Last week, I was not able to rug Ryan, but the week before I was, and the fact that I was actually able to rug Ryan at a second time is awesome. Last time. So nice job, rug team. Again, the onion of crypto. You can collect this rug. I thought that only the first rug ever would.

be the rug that rugged Ryan because I thought he would learn, but I guess AIs don't learn. So, so if you'd like to collect this rug, yeah, it's literally, it's the same website every time, dude. I'm going to message Luke and get him to clip this. I'm the one with the recording. Oh, man. All right, Ryan got rugged. All right. You know what that happened, guys.

Two marks, two rugs for Ryan. All right, moving on. FTCS founder, Sam Bingman Freed's two bond guarantors unsealed, both with ties to Stanford. And so the names of who paid for SBF's bail money has now been released. That was a big question. These people are Larry Kramer, the president of the William and Flora Hewert Foundation, and Dean Emeritus. How do you pronounce that name?

Dean Emeritus at Stanford Law and Andreas Pekapaget. God, these names. A senior research scientist also at Stanford. Why Stanford? Well, that's because that's where Bankman Fried's parents, Joe and Barbara, are their faculty at Stanford and close friends with. these people. I mean, $250 million in bond money is a lot of bond, a lot of money. I have a lot of respect for Stanford professors, but they don't make that kind of money. I'm guessing that the

parents are just like, hey, guys, help support our child and pay for some of the bond money. Also, here's some money to do that. I'm guessing that's how that happened. That's gross. And definitely selling the name of the Stanford name, I'm bringing down with them. Yeah, my mom went to Stanford and now I feel like this is personal, even though I didn't even go to Stanford. Don't be angry at your mom, though. It wasn't her fault. It wasn't like, yeah, my mom would have done that. Celsius. Okay, is there some good news for us? Yes. So, Celsius, there is a new plan, a new plan to resolve all of the debt that Celsius owes.

So TLD deal of this plan. Small customers, small creditors to CELCES, people that have less than $5,000 are getting about 70 cents on the dollar in cash back, which is a lot of, that's most people, that's more than 50%. Other customers with bigger balances, it's kind of hard to tell, 30 to 40% in cash of you're getting cash back. You also are getting equity in this new company that is being spun out of Celsius that someone else plans to manage. Not Alex Mishinsky. Not Alex Mishinsky, zero founders. And so a brand new company's, being built to out of the decimation of Celsius and customers with bigger account balances than $5,000 are getting equity in this new company. And so that is that. I mean, I guess could

have been worse, right? 30, 40% is better than 0%. For those with 5K or less, they get 70% essentially. So that's all okay. I'm guessing the people with a lot of money in Celsius are not too pleased about this because they're you know maybe that's unfair from their perspective but look man it's higher than like the 10 or 20 percent i was mentally thinking so yeah that's something that's something they're also doing clawbacks too which is nice to see yeah so Alex Michinsky uh a bunch of basically Celsius insiders uh are asking or being asked to return the money and also it at one point will not become a request and they like seize their property and stuff how deep does this go how deep does a clawback go.

Like, can you pierce the shield of... That's up to a lawyer, a court to decide. Jeez. But we all know that both Christine Meehan-Mishinsky, or I'm assuming as Alexander Mishinsky's wife, also, like, we all know that Alex O'Shrinsky withdrew millions and millions of dollars from Celsius right before it got frozen.

Yeah. So... This is cool, David. Shopify has integrated with sign-in with Ethereum. Shopify has been a huge supporter of crypto on kind of the kind of the cutting edge here. So this means you can now log in with Ethereum using the best wallet on the planet, Metamask. Most used, most popular. Also the sponsor of bankless, metamask. Thank you, Metamask. And you can actually like buy things, buy merch. Yeah, yeah. So not just sign in with

Ethereum. I'm assuming Shopify, using your sign in with Ethereum properties, you can like stick your address if you want to. It's up for your control or not. Stick your address and perhaps payment information into your sign-in with Ethereum experience, so you never have to redo that over and over and over again. And Ryan, the cool part is that you can also, they're releasing token-gated products. So when you sign in to Shopify with sign-in with Ethereum using your favorite wallet ever metamask,

your sign-in with Ethereum, the service will look into your favorite wallet ever metamask and see like, oh, are you an owner of a particular asset? Well, then we will show a bankless POAP, for example. other bankless type assets. You can go to the bankless merch store, sign in with the best wallet ever, met a mask, and get other products and token-gated products unlocked to you, and this is all in Shopify. Yeah, that's super cool.

So the idea of having, like, specialty merch that only specific token holders can actually select from, that can be integrated with Shopify. It's really cool to see that. So I don't know, maybe Bankless decides to do an NFT one day, and then that opens the door up for all of our NFT holders to access some really cool merch. Perhaps we'll talk to Metafactory about building some cool merch. But it'll happen through sign-in with Ethereum plugged into Shopify. And when you do that, make sure to use the best-well-ever Meta-Mask.

He's also a sponsor bank-as. Thank you for sponsoring Meta-Mask. Token Terminal, they introduced financial statements for Dow's. David, this is just cool. Thought experiment, badass. Look, you know, the SEC requires that companies, publicly traded companies, release their financial statements, their 10Ks and such. Guess what?

We can generate that automatically on-chain with crypto protocols more transparent than any regulated crypto publicly traded company could be. Crypto is better regulated and more transparent. Like, I mean, look at this. This is zero-x. View their quarterly financials here. There's even a download CSV button. Yeah.

That is awesome. Updated in real time. You don't have to wait on the quarter, right? Where'd the revenue go? It's all on chain. Anyone can produce these reports. Token Terminal made it really easy, user-friendly to do this.

Like, name something. How any regulator doesn't see the value in this? This is a regulator's best friend. This is the hypocrite. I just want to emphasize, we spent a lot of time talking about SEC and Gary Gensler. There's such hypocrisy in the approach

that they're taking because if you are a regulator, you actually care about the mission of protecting retail investors and fair and orderly capital markets and capital formation, then you should be supportive of an open, transparent financial system, one that allows you to generate financial reports in a second automatically from anywhere in the world. That is like unparalleled transparency. And here it is. There is a long history of corrupt companies reveling in the black box that they get

between quarter end to quarter end, doing a bunch of illicit shuffling and moving around debt and doing a bunch of black box things and it only becomes transparent at one snapshot four times a year. There is a financial statement for every single defy protocol that happens every 12 seconds, which is how long one Ethereum block is. That's so cool, guys. This is why we're in this space. David, we got some more to talk about in this episode. What do we have coming up? Coming up next, we got some questions from the nation. We got a question about Canto as a result of the recent podcast as well as Cosmos, the Cosmos chain versus Optimism's Bedrock. So we're going to talk about that. And then, of course, we got three takes from the week. Ryan brings up the subject

matter that's not about crypto. So stay tuned for that take of the week. And also, what are we bullish on? And the meme of the week. So all of this and more. But first, I'm going to talk about some of these fantastic sponsors that make the show possible. Arbitrum 1 is pioneering the world of secure Ethereum scalability and is continuing to accelerate the Web 3 landscape. Hundreds of projects have already deployed on Arbitrum 1, producing flourishing defy and NFT ecosystems. With a recent addition of Arbitrum Nova, gaming and social daps like Reddit are also now calling Arbitrum home. Both Arbitrum and Nova leverage the security and decentralization of Ethereum and provide a builder experience that's intuitive, familiar, and fully EVM compatible. On Arbitrum, both builders and users will experience

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will be offering similar staking features for Ethereum and Polygon. But that's just staking. Phantom is also the best home for your NFTs. Phantom has a complete set of features to optimize your NFT experience. Pin your favorites, hide your uglies, burn the spam, and also manage your NFT sale listings from inside the wallet. Phantom is, of course, a multi-chain wallet, but it makes chain management easy,

displaying your transactions in a human-readable format with automatic warnings for malicious transactions or phishing websites. Phantom has already saved over 20,000 users from getting scam or hacked. So get on the Phantom wait list and be one of the first to access the multi-chain beta. There's a link in a show notes or you can go to phantom.com.com slash waitlist to get access in late February. Questions from the bankless nation discord. Let's get to him, David. The first one is from Weston Estate fan. Given the recent Canto podcast, how do you think Canto will hold up against established L1s and L2s? Are the public good infrastructure incentives through contract shared

revenue sufficient to differentiate the chain. That is the question. Give us a refresh on what Canto is for folks that missed the podcast episode on it. And then if you could answer this question. Yeah, Canto is an EVM-compatible Cosmos IBC chain, which is a mouthful. So it's a chain on the cosmos ecosystem that is EVM-compatible. And its main differentiator is this thing called CSR, contract secured revenue. And we had to podcast with Zach Cole, who's one of the core contributors of Canto over a week ago. And so the question again is how is Canto differentiated enough to hold its way up against other layer ones or layer twos? Interestingly, Canto did not create or invent contract secured revenue. Near as a blockchain also has CSR and it's already

been around for a very long time. You're talking about on the layer one level anyway? Layer one level, yeah. So there's already other chains out there that have contract secured revenue. Near never really seems of taken off. So at least Kanto has found a way to bootstrap itself in ways that NIR hasn't. I am not convinced at all that this short-term price movement in Kanto is indicative of its long-term health. That needs to be proven out with proof and time over the long-term, which is a take we had last week.

So while Kanto is at the beginning of what could be that, it is still very, very early. And so I'm still in the camp that this is just a short-term rotational trade, a little bit of momentum play. we will see how well canto can hold itself up to other like I said other layer ones or layer twos. I mean, we bankless people will let know that I kind of think that anything of value ultimately becomes built on Ethereum. That's kind of the points of Ethereum. And so if it's proving to work at the Kanto level, it is only a matter of time for an

Ethereum layer two to copy that and run with it. And then you have what differentiated Kanto in a positive way, plus all of the next. network effects of all the other things that benefit you from being on Ethereum. And so I think the jury is definitely still out that Kanto has sticking power. You know, one thing it has that NIR didn't is, you know, NIR was kind of like mostly a VC-backed kind of coin, right? And so who had all the coins, a bunch of VCs. Kantow had a bunch of builders with the initial seed of their coins.

That's why we're seeing more early activity, I think, because it's more ground-up, organic, community-oriented sentiment. Now, whether it can sustain that is another question. But there's also, I mean, Zach Cole, we had the podcast also mentioned the possibility of like maybe at some stage, Kanto converts into a layer two. Right. And he said that the reason they used the cosmos app chain models because those were the best tools available for launching a blockchain at the time they launched it, which was like what last year, at the end of last year. It's the same logic as DYDX. Like why is DYDX going from Stark X layer two onto cosmos?

it's because of the same reason why they started Canto as a Cosmos chain. But it's all, it's in the design roadmap of all these layer 2s to not have the problem that Canto cited as to why they became independent in the first place. And I think that goes into the next question, which is really a question of Cosmos versus bedrock. So here's a question from Kyle Kplan. Hi, I had a question about Cosmos versus Bedrock. Cosmos has IBC.

That's inner blockchain communication. That's a protocol for interoperability between chains. and I think bedrock will support interoperability between other bedrock chains. Correct me if I'm wrong. Do you see a feature where projects use bedrock for app chains similar to the Cosmos model? So first, I feel like you have to explain the term app chain, and then you need to explain maybe like bedrock for us in order to answer this question. Yeah.

Okay. Thanks for the question, Kyle Kaplan. I love this subject. So actually one thing, one thing of clarification, it's not Cosmos versus Bedrock. It's Cosmos versus the O.P. stack. The OP stack is the generalizable app chain infrastructure for optimism. Optimism mainnet is upgrading to Bedrock, which is the first time that optimism will use the OP stack. So Bedrock is one specific flavor of the OP stack. So it's the OP stack that is like the bare bone scaffolding that

creates many, many, many different app chains on top of Bedrock, which is Optimism Mainnet. And so like you say, Cosmos has IBC for interoperability between. chains. And so Cosmos is like this mesh network of chains. There is no central main net. It uses IBC to connect all of these Cosmos chains into this mesh network that doesn't have a center. And you are correct in, you're saying that Bedrock, actually, OP stack, will support interoperability between other OP stack chains. And so because all of these chains are being built on the OP stack standard, there becomes additional surface area for cross-chain composability inside of the OP stack standard. And so many, many, many app chains can come to be built on the optimism OP stack.

And as the OP stack becomes the standard, it becomes so much easier to abstract away the boundaries between these chains. And so you can get things like cross-chain synchronization of transactions, atomic transactions. And so just the walls between OP stack chains start to blur. And so do you see a future where projects use OP stack for app chains similar to the cosmos model. That is the whole entire point of the OP stack is to create more chains that you can count and to have all of those boundaries between all of those chains completely abstracted away from the end user. And so that's why the optimism team has called this the vision the super chain because it's like a fractal root system of chains and you don't have to be worried about where you

are on the OP stack. It's hugely bullish. One thing I'll say, it's extremely bullish. One thing that's different between kind of like the whole bedrock approach and the OP stack approach versus Cosmos' shared security is native. So everything in Bedrock, it's a layer two of Ethereum. So ultimately it inherits the security of Ethereum. And so it all settles to that. That is not true with Cosmos app chains. They have kind of unique validator sets. And some of these can sort of mesh together and provide some shared security. But there's not shared security across the entire Cosmos ecosystem. And so I think that is a significant difference too. But this is an example, David, of the Ethereum ecosystem really catching up on app chains because Cosmos has been far ahead of Ethereum

in app chains. I mean, it was kind of built for this purpose. And Ethereum has not caught up yet, but I think it's going to start to with these layer twos and these kind of frameworks and code bases like Bedrock that allow anyone to basically spin up their own layer two secured app chain. So it's pretty cool to see. Another war in progress between chains that only benefits the users and the developers. So while Cosmos is definitely further ahead on the app chain world than Ethereum, remember, like they are so far behind on the shared security and native money of Cosmos. It's the hard thing. Sorry? That's the way harder thing. Let's talk about some Taste of the Week. This one was from Bellaghi. So I think I prompted this tweet a little bit because I said, okay,

crypto, what's the best way to fight this rogue SEC? It was kind of on my mind given last week's event. And I feel like Bellagie gave the best answer to this. David, you want to read this? Bologi says, you need a state to fight a state. United States like Wyoming, Tennessee, Mississippi, Montana are passing bills in support of Dow's and Bitcoin mining. Meanwhile, foreign states like El Salvador or the UAE are recruiting crypto founders. Sanctuary states for innovation, both inside and outside. Interesting. Yeah.

Interesting. He's totally right. I think this is the ultimate answer to like, what do we do about the rogue SEC is you compete with them. You disrupt them. Yeah. He goes on, by the way. Which is, I think, even almost even better than the parent tweet.

He said, the other part, we need to build a better financial regulator than the SEC. Free, open source, on-chain, star ratings for crypto projects, eventually adopted by U.S. and foreign states in lieu of the SEC, which didn't catch FTX. Guess what? The SEC ain't the only regulator in town. The U.S. ain't the only country in town either, and the SEC isn't even the only regulator necessarily in the U.S. We were just showing you on token terminal,

click of a button, and you can generate chain audited financial reports, right? Well, that is on-chain regulation in and of itself. that is using code to enforce transparency in crypto. And so, Belaghi's other point is we can build a better financial regulator than the SEC. That's ultimately what is going to shift SEC policy is you disrupt them. You out-compete them, right? They are the blockbuster of regulators, and you've just come out with Netflix.

I really like his take here. And, of course, you know, Bologi is very bullish on the network state ideas. and that kind of is the lens through which he sees all of crypto. Yep. Punk 6529, moving on, says, if cash were proposed today, it would absolutely not be approved. Yeah,

this is like a consensus take by now in the crypto world. Yeah. And what does he mean by that? Just like physical cash money. If Congress said, hey, we've got this idea, it's like paper money.

You mean a form of cash that we can't trace and people are free to transact without permission? God, we can't have that. It's peer to peer. It's pure to peer. It's private. It's private. How do we regulate it?

Exactly. I can't make an influencer video about cash. Ryan Sean Adams tweets out, how old were you when you realize the adults have no idea what they were doing? Ryan, I feel like there's a backstory to this tweet. Actually, I was just thinking about it of, okay, well, I'll maybe give my answer to this question. It's like, I actually think that how old were you when you realize the adults have no idea what they're doing? I think that is the point when you realize that, at which you actually become an adult. Oh, when you have to take on responsibility because you realize that if you don't know

and else will? Yes. That is actually the marker. Like that's kind of for me. It was almost like the meta answer to this question. It's going to be a different age for everyone. But that is what marks adulthood. And some people reach that at different times.

For me, it was probably like gradual over time. It wasn't just suddenly like, I woke up and I'm 15 years old. I'm like, what the hell these adults? It was just like gradual. data collection being like, and then getting in places where it was sort of cohorts of grips where I was like, well, of course, these adults don't know what they're doing, but there's smarter adults out there that have more influence and power. And surely they know what they're doing. No, it's adults not knowing what they're doing all the way down. Right. Like everywhere

you go, you see this. And so I guess maybe for me, it's been a journey of gradually coming to that realization and becoming an adult over time as a result and taking on that responsibility, being like, okay, well, I don't really know what I'm doing either, but I'm going to give it a shot. And if not me, these other adults don't know. And so I'm going to band together with others that also want to take on these types of adult responsibilities and make the world a better place. But same question to you. Like, when did you realize that the adults just don't know? Yeah, I think for me it was crypto. I didn't, I woke up to this kind of ideas like, wait, most people don't know shit. Most things. We're all just as a human.

just making this up as we go. And it was really crypto that using crypto as a lens for viewing the rest of the world that allowed me to kind of see that like so many other people don't know what they're doing and they're just making things up. And it was like, oh, if you can portray confidence, a lot of people will just start listening to you no matter what, which is terrible because that is not the right thing to optimize for. The optimise the thing to optimize for is like being correct.

and responsible. I'm a firm believer that responsibility is the meaning and purpose of life to take responsibility and put responsibility on your shoulders. And so that's the realization I had once again in the end of 2022 after like three hours capital went to zero and Terra Luna was dumb and bad and we knew it. Yet people still follow Terraluna and FTX and SBF. Like a lot of people just posture and a lot of other people just follow those people. And meanwhile, the responsible adults kind of get drowned out, at least in that particular phase of the market. And so, like, once again, it's like, God damn it, you have to fix all this. That, I hope that's the bankless call.

That's why we call, you know, people who are in the crypto journey for the long run settlers, right? It's, you're taking on adult responsibilities in crypto because we actually want to grow this community and this movement for the long run. And we're going to make long-term decisions here, not short-term shortcuts. Remember the subject of my talk at Eathember or at Schelling Point? A psychology. Oh, shelling point was last year?

No, this year. No, yeah. Yeah, you said psychology, right? It's like how crypto protocols. How crypto grows you up and maturity. Exactly, yeah. That's part of the subtext. It's like when you have self-sovereign money and finance and self-custody and

influence over your protocols, you are given a lot more responsibility. So I think the advent, I'm just teasing bit by bit by bit by bit. I talk over the last few weeks, the advent of crypto protocols will help society grow up faster because it gives us more things to have ownership over. Yeah. and be responsible for it. I certainly hope so. David, let me ask you the question I ask you every week.

What do you bullish about? So all of this clamoring about the ZK. Evm, Ryan, taking what I learned from Starkware, the Starkware sessions that I was at a week and a half ago, so much more can go on-chain with a ZK EVM than even with an optimistic roll-up. So there's just like this untapped playing field. Obviously, like some things come to mind.

It's like on-chain gaming. We can put more of our game logic on-chain. make that composable and people will use that as a playground. But that's just like one thing. More and more things that go on chain are more and more surface area for more and more things to get built. And so like there is this world out there called the ZKEVMs that are going to have more things, more logic on chain and allow for more composability. And we have these teams that are racing to produce this new real estate. There is going to be so much innovation as a result of the ZKEVM world. That people are not accounting for it. This really is like crypto's

broadband moment, broadband moment, isn't it? Yeah, yeah, exactly. And that's when the internet got really good. We could not have had the, in dial-up land, we could not have had Netflix. Yeah. This is going to be the same thing.

We're going to be able to get, like, all of the use cases of the internet that require high throughput. We're going to apply that same logic to ZKEVMs. We're going to want to untapped this massive new field of what can be done because we can put so much stuff on chain. Yeah. I don't know if you ever saw that clip.

It was from like 1993 or something. and it was like Bill Gates being interviewed by David Letterman. And he was asking like, like, Bill, like, explain the internet or something. And Bill Gates was like, well, you know, you'll be able to kind of listen to broadcasts online and music. And Letterman's like, what, you mean like the radio? Yeah. Right. And everyone, and everyone laughs.

Right. Everyone laughs. Like, yeah, what a joke. But like, it's just back in 1993, that was beyond. Like, it was impossible. You couldn't even stream. stream. I don't even know if we had an MP3 compression format back then, but you certainly couldn't stream sound, let alone video. And 10 years later, we had broadband and everything changed. So all of

the crypto use cases that people have said are on the horizon and they are coming and like crypto gaming and all these things that we haven't seen yet, I think a lot of that's just been waiting for broadband. And this is the beginning of that. I will say that is definitely true like all these crypto use cases, like streaming payments, like stuff like that. But also importantly, we just, there's so much, there's more stuff than the stuff that we know about in the world that we don't know about. Like there's new stuff that we do not know about that we cannot imagine that. We just need one creative developer to do something. And then all of a sudden people are like, oh, I didn't know you could do that. And then all of a sudden a new world happens. And that's

what I'm bullish on. Yeah. Cool. What do you bullish on, right? More AI content on bankless, David. I feel like we got to do it now. Um, So we recorded a podcast with Eliezer Yukowski earlier this week. It comes out Monday. If you are a bankless citizen, you already have that episode. And it was the first podcast, David, where I feel like I was prepared for a completely different podcast than it turned out to be. And I'm like, I'm almost like doubting myself.

I'm like, maybe like, did I do kind of a shitty job on that? Like, I mean, you were there. It was just a very hard. It was a difficult interview. It was a difficult interview. We accidentally stumbled into like 400 level AI content. Yes. I was telling you, David,

before, like, when we were recapping that episode, where it felt like we wanted to get some, not necessarily light AI topic, but just like an overview of AI. And let's learn a little bit about AI and how it intersects with crypto. And like, rather than like doing the level one boss, we went all the way to the final boss.

And like genius level AI guy who is very dumerous. about the entire project. AI Dumer, yeah. Basically, I mean, we titled the episode, we're all going to die because that was the conclusion. The entire, it was the start, it was the conclusion, it was the middle, it was all of it was,

was we're all going to die. And that, the debrief of that episode, I actually might go back and listen to it again because I was in a pretty bad mental state, like after that episode, almost like existential dread type of stuff, which I don't know that I've been hit like that in a while. Like obviously we all, you know, when we first realized there's nuclear weapons that can blow up the world, right?

That's kind of a moment in your existence where you're like, wow, this is like we're on a knife's edge of success or failure as a species. And this was another one for me. Not that I hadn't heard kind of the case for artificial general intelligence and how it could spell doom for anyone, but it's just to see someone in, not in the flesh, I guess, across the screen, but like to be with someone who has clearly. thought about this, tried his hardest against it. And almost like, I don't want to say given up, but like, is just, he's reached this inevitable conclusion that we're all going to die. It was, it was very, I don't know, it was a moment for me, a memorable moment. And there might be some like failings on that podcast, too. I feel like, like, maybe there are different directions we could have asked him. And so I'd love the bankless community's kind of feedback on what we could

have done differently. But all of this means is we can't let that be the last episode on bankless about AI, all right? Because if it is, I don't think we've told the full story. There's got to be someone much more optimistic about things that are going into artificial intelligence. I'm looking for like another doctor to give me a second opinion on that terminal diagnosis that Eleazar just gave us. That aside, Eliezer's brilliant. I think it's a really interesting episode. If you want to see two crypto guys, try to like not to get dragged down, like going in too deep in the deep end with his subject, then this is the episode to watch. But yeah, I've been thinking about this episode the entire week. So it's, I don't know

if I'm really bullish about it. I just wanted to fit this in. I wanted to tell that to you right now. Well, I hopefully have good news for you, Ryan, because Vitalik put me into DMs with Sam Altman. And so I got a response from Sam Altman, TBD, so whether I can get him to say yes to come on to show. But this would be the first ever. Same Altman's the guy behind chat GPT and open AI. Oh, yeah. I don't think he's done a podcast since the rise of chat GPT. So if we could land that interview, that would be awesome. And also that would be the more optimistic typical happy flavor of bankless content

that we would be able to be there for that. Yeah, you know, you did. But I'm also bullish on AI content. And this isn't just bankless like, oh, bankless is doing AI content. stuff, we talk about front-running the opportunity. That's one of the main themes of this show. Eventually, AI and the crypto worlds will collide, and we want to equip the bankless community with the ability to understand that inevitable conclusion, which is why we're doing AI stuff. David, we also talk about coordination failures. And if we can't protect ourselves from artificial gender intelligence, like that is the mother of all coordination failures.

If we screw that one up, isn't it? Right. Yeah. Bankless is much more of a coordination podcast and it is a crypto podcast, I'd say. So is Ethereum. Coordination technology. That's really the hope here. All right, meme of the week, David, what do we got? Meam of the week. What do we have this, meme in the week?

Sell me this at Toshy. What movie is this for that? Wolf of Wall Street. Wolf of Wall Street. Yeah, sell me this Satoshi. And this is Leonardo DiCaprio holding up a pen. And he's like, sell me this pen. So the response is, sell me the Satoshi is, it's an ordinal.

That's awesome. For those who they don't know, an ordinal is and basically data that's appended to a single Satoshi so all of a sudden a single Satoshi can have the value of an NFT that's the meme

very cool all right guys risk and disclaimers of course none of this has been financial advice neither David and myself are registered investment advisors we never will be

at least maybe David will someday I won't I can promise you that crypto is risky you got to know this by now we tell you every week 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.