Bankless - ROLLUP: Silvergate Liquidate?! | Elizabeth Warren vs. Binance | Bankless 2.0 Announcement | SEC Taking Ls?

Starting point is 00:00:00 We got something called Bankless 2.0 that's just dropping at 12 p.m. today, Eastern on March the 10th, 20203, a whole new website, a whole new experience for members. A whole new bankless. A whole new bankless. A whole new era. My God, it's a whole new everything, whole new media company. What else, David? The bull market starts today. Bankless Nation, it is the second Friday of March. David, what time is it? Ryan, it's the Bankless Friday weekly roll up where we cover the entire weekly news in crypto, which is There's always an ambitious endeavor, especially in this economy, yet we persevere nonetheless because we've got coffee with us. We have coffee.

Starting point is 00:00:40 We've got news. We've got crypto. What more could you ask for this morning? We've got some topics of the week, too. The Silvergate liquidation event. We've got to cover that. This is Crypto's Tradfied Bank. Did the politicians cause a bank run here?

Starting point is 00:00:54 We're going to get into that story. What else we got, David? Elizabeth Warren versus Binance also on the table. Liz Warren on a rampage. It's not Gary Gensler this week. It's Elizabeth Warren. And then after that, the SEC taking an L.

Starting point is 00:01:10 So as Elizabeth Warren comes into the main character, Gary Gensler, taking a back seat. Maybe two L's. Is it too good to be true? We'll talk about all of that and more. And perhaps the biggest news of the week, Ryan, which I know you're excited about.

Starting point is 00:01:25 Tell me about it. Tell me what's the biggest news of the week this week. We got something called Bankless 2.0 that's just dropping at 12 p.m. today, Eastern. All right, so listen to this on a Friday morning, maybe later. If it's later, this thing has dropped already, 12 p.m. Eastern on March the 10th, 2023, a whole new website, a whole new experience for members. A whole new bankless. A whole new era. My God, it's a whole new everything, whole new media company. What else, David? The bull market starts today. We're calling it. The drop of bankless 2.0. Guys, we're

Starting point is 00:01:59 super excited about this because we've been working on this for a while. This is a new experience for our free members and then for those of you who are bankless citizens to upgrade. So go check it out. Bankless.com. We'll talk about it a little bit more in the episode. David, before we get in here, got to talk about our friends at Rhinofi. Tell us about the Rhino, David. Rhino, it is the one-stop DeFi app to do all of your layer two things. So if you don't want to do any more bridging, if you don't want to do any more network switching, if you don't want to deal with native gas tokens, but you still like doing defy things like trading, swapping, investing, pooling, and generally earning yield wherever yield is available in Defi. Rino is available for you.

Starting point is 00:02:42 It gathers all of the best multi-chain opportunities and puts it all into one specific, beautiful interface unless you do your defy stuff in a bankless way on layer two's without all the layer two complexity. There is a link in the show notes to get started. You can go to app.riano.f.f.i to check it out. That's the key in a bankless way. So don't have to depend on the block fys or the Celsius. This is all bankless technology. This is all defy chains. All the chaniness. We want to support this without all of the surface area for, you know, having to deal with what chain you're on. All the chainingness. All the chaniness, zero of the Michinskyness. We got to work on this. All right, markets. What are the markets this week? Bitcoin. Bitcoin down. It's a, it's a

Starting point is 00:03:28 sad week and we're going to talk about Y's shortly. Started the week at $23,500, down 8.7% oof, down to $21,500. Did the Fed do this? Is this one? The Fed did this one. The Fed did this. I'm not some sort of market guru,

Starting point is 00:03:44 but my sentiments were like, bully, bully, bully, and then the Fed came and it was like, no, no bully. You can't have that. Not this week. Not yet, not yet. You're telling me Powell doesn't care that Yeth Denver was going on and he was just strike us down anyway.

Starting point is 00:03:57 He's not coming off. the high of Heath Denver and he's just like pushing down crypto prices. Can you do that to us? We were just having way too much fun out there. He's like, that is an illegal amount of fun. So I'm going to raise rates. That's what happened. How about Eith Price? We got to affect the year. Eiff Price, also sad. Started the week at 1650, down 7.3% to where we are now at 1525. Well, you know what? We had, what did we have? Three, four good weeks in a row? It was a pretty good, we had a good attempt. It was fun while we lasted. we're back down to Goblin Town.

Starting point is 00:04:30 Down we go. This isn't Goblin Town. I'm just saying we're going now. Well, like, what is Goblin Town to you right now, this phase of the market? If we get down to 1,200, maybe below 1,300, I will say we are. Bitcoin. No, Ether price. $1,200, $1,200,000, okay.

Starting point is 00:04:49 Oh, God, if we're a $12,000, Bitcoin price. We are in the nine circle. We did something wrong. Yeah, right, so this is maybe this is the run up to like $1,700 that Ether had and like whatever Bitcoin got to, $25,000. Maybe that was the mid, the year high. Maybe. Look, man, I still think it's the same people. It's still the same people that are in.

Starting point is 00:05:15 So like if you were holding three weeks ago, you're holding last week, you're holding the week before, you're still holding now. I feel like this is the same crowd. It's not like. Yes. There's no. Yeah, right. A minor run up. and we're like, oh, crypto's back.

Starting point is 00:05:27 That has not happened yet anyway. So we're just grabbing with the same people in the market. And I'm not surprised. I think this is just part of the build market that we're in. Here's my take is that I'm always, I'm the pervable. We're both peribles here. I think that there's like regulatory fud that keeps on hammering at us. And crypto is scared of that.

Starting point is 00:05:50 And it's always been scared of regulatory fud. Like regulatory fud comes in, crypto dumps. And it dumps. for like a day or a week, but it never is sustained. It's always a short-term blip. My bull case is that that is also true of this rising interest rate fears. It's like, yeah, crypto's like, oh, no, interest rate's still not over yet. And then we're like, we're ready to move on from all of this shenanigans. And so it's going to, we're going to keep on taking these blows, but they're not systemic blows. They are short-term blows. And so so long as the blows keep on coming,

Starting point is 00:06:22 the prices are going to be suppressed, as soon as they stop. coming, Ryan, I think it's bullish. So like there's, yeah, Chris Berniske put out the sweet not too long ago. It's like, Bitcoin is a beach ball that's trying to like rise to the surface. As soon as the Fed and soon as Elizabeth Warren goes away, that ball is poking right up. But right now they're doing a pretty good job of pushing it down. But it's like beach ball underwater. Underwater, excuse me.

Starting point is 00:06:45 The beach ball is underwater. Yeah. And so crypto wants to rise. It just keeps getting pummeled. But the point is the equilibrium is that crypto wants to rise. It needs external forces to keep it suppressed. That's my take right now. Good take.

Starting point is 00:06:58 Good take. I support that take, David. I made that one up just now. How about the Bitcoin Ether price? What do you think? We are up 1.5% on the week above 0.07. For the first time in a while, we are at 0.071. I want to thank Cracken for providing these incredible charts.

Starting point is 00:07:14 This is all by way of Cracken Pro. And let me remind you, Cracken was a crypto exchange and a crypto platform that did not fail you in 2022. These are one of the good guys, one of the OGs that have been with us from the beginning, doing things the right way. And putting out some great charts that even allows an amateur like me. If you want some history, like go back a year from and now on the weekly roll-up, like go to a 2021 weekly roll-up and see just Ryan floundering on the charts. Sorry. And now look at him, man.

Starting point is 00:07:45 Look at me go. Now look at how good these charts are. I got candles. I got ratios. Look at that nice little green candle at the end. Man, that's just great. I got the sole Bitcoin ratio if I want that. How's that doing?

Starting point is 00:07:57 It's down. Still not great. It's still not great. No, I don't, but I like to keep it there just for fun because I can. Crypto market cap. Are we above a trillion? Yeah, but not by much. We are at 1.02 trillion.

Starting point is 00:08:11 Just holding it there. Yeah. Below a trillion is starting to feel bearish. It's starting to feel not Goblin Town. Goblin Town for me is like 600 million. I don't think we got to. I've got a 600 million. 800 million is Goblin Town.

Starting point is 00:08:25 What did we do? Let's look at it. I think we got down to the high 700 million. What do I have to do, max? See, this is not a nice... This is not Cracken level charts. Let me see. Their charts are not charts.

Starting point is 00:08:38 I can't see it here. Yeah, you're fine. Oh, actually, whatever. I've given up on this chart. Cracken, can you guys do a total crypto market cap chart? Please, Cracken. Please. Let's get into some market news.

Starting point is 00:08:49 Okay, so we alluded to this, but here's a Reuters. headline. The Fed Powell's previews, the Fed's Powell previews tougher rate hike path starting soon. Here's a quote from Fed Chair Powell, who controls all things. Marcus, of course, we know. He is the god. The dollar is God. And Powell is the word of the dollar. High priest. Powell's the post. Yeah. The Pope. Nothing about the data suggests to me that we've tightened too much. Indeed, it's just that we still have work to do. It's getting a getting hawkish on the rate hikes there. It's hard to make the case that we've,

Starting point is 00:09:26 that we've overtightened means we need to continue to tighten. That's what he said. There was a, I saw this clip, David, and I want to play it for you. I don't know if you've seen this, but this was Warren versus Powell on this very point. And as we get into this clip, basically Powell is saying,

Starting point is 00:09:42 hey, we need to fix inflation. Here's how we have to do it. You keep tightening until inflation is fixed. And Warren is saying, but what about a recession? What about the jobs? What about the voters? Right. So let's play this. I'm going to get your reaction to this. You ready? I haven't seen this. Okay. Putting two million people out of work is just part of the cost and they just have to bear it. Will working people be better off if we just walk away from our jobs and inflation remains 5, 6 percent?

Starting point is 00:10:13 Let me ask you about what happens if you do this. Since the end of World War II, there have been 12 times in which the unemployment rate has increased by one percentage point within one year, exactly what you're aiming to do right now. How many of those times did the U.S. economy avoid falling into a recession? You know, it's not as black and white as very, very infrequent. Just looking at the numbers. It actually is pretty black. Alan Bliner's written a book on this. There have been 12 times that we've seen a one point increase in the unemployment rate in a year. That's exactly what your Fed report has put out.

Starting point is 00:10:55 the projection and the plan based on how you're going to keep raising these interest rates, how many times did the economy fail to fall into a recession after doing that out of 12 times? I think the number is zero. I think the number is zero. That's exactly right. So there you go. She's like trying to do a checkmate on on Powell. Gotcha. We're going to lose jobs. You're going to send us into a recession and Powell's responses, inflation is worse.

Starting point is 00:11:25 Inflation is also not good for American citizens, nor workers, nor there's two million people. It erodes. And Warren is saying, but you're going to cause a recession this way. And then he says, yeah, you're right. And she's like, gotcha. And he's like, you idiot, read a book. I feel for him because he's like trying to explain himself, but she won't let him. And when I see this clip, I just see like, this is the politician playing the politician game.

Starting point is 00:11:54 And it's so cringe, man. It's so cringe. Let's remember that politicians are definitely influencers, and they are happy to throw anyone under the bus, including central bankers, if it scores them influencer clout points, right? This is the state trying to politicize the money. This is what this is. But the fact that obviously this is working, because we just played the clip. Like, it was just, that's the exchange. But I do think that there is a pressure from Congress coming to Powell saying, you can't cause a recession, Powell's going like, well, what are you guys going to do about inflation? What's interesting to me, David, is Congress doesn't, they don't have answers to what we're going to do about inflation. In fact, I would argue that a lot of the consumer CPI inflation is

Starting point is 00:12:38 actually not Powell's fault. You guys know we are not Powell Sims at bankless, right? There's a lot of things that central bankers do that are not awesome for like all sorts of things, right? They definitely have their hands on the money printer. You know who else? does fiscal policy, Congress, our executive branch, they can also print money and they did a lot of that fiscal spending during COVID. They only print money. That is up into the right chart. I think you can say central bankers are largely responsible for massive wealth inequality, massive asset price inflation since like the bailouts of 2008. It's been a flawed policy from the beginning. But I don't think you can point to them and say, hey, you are the sole reason for the last two to three years of CPI

Starting point is 00:13:22 inflation. You can't. You have to take responsibility for fiscal policy and the fact that countries are overspending relative to the tax earnings. And so you have to either increase taxes or you have to not spend as much. And there is no accountability on Congress to actually do. So I feel like they're kind of throwing Powell under the bus. And I can't believe I'm defending Powell right now. I said the same thing. It's like, wow, I'm on Powell's side on this Elizabeth versus Powell debate. My gosh. Anyway, like what does this mean for crypto? look, battles back and forth. It means that fiscal policy

Starting point is 00:13:57 and the money printer will continue to go burr. I think no matter what. I think some of that's going to come from Congress, some of that's going to come from central bankers. The political influence of aggregate congressional members is significantly more than what the Fed can probably withstand. Right. And no one wants to pay.

Starting point is 00:14:15 We don't want to swallow the difficult medicine. We don't want to get off the morphine trip. We don't want to reduce our quality of life. Because that's ultimately what this means. It's like, do we want to pay back our debts? Do we want to increase interest rates? Well, we all need to start consuming less. We all need to start being more efficient.

Starting point is 00:14:30 We all need to stop having this extravagant American lifestyle that we're used to over the last 50 years. And no one wants to hear that. Especially not the boomers. Let's talk about that. Sorry, boomers. Debt. What about the debt here? Read this tweet out.

Starting point is 00:14:42 The U.S. now has a record 16.5 trillion in household debt. A record, 11.9 trillion in mortgages. a record 1.6 trillion in auto loans, a record 986 billion in credit card debt. This is what I was talking about. This is the extravagant lifestyle. We're beyond our means as a country. We have been for my entire life, probably all of these listeners and tires lives. Total mortgage debt is on double the 2006 peak right before the 2008 crash. Meanwhile, 30% of Americans have more credit card debt than savings with balances rising at the fastest pace since 1999. This is all while mortgages rates just hit 7.1%. and credit card debt hit a record 25%. We are fighting inflation with debt. This cannot end well. Wow, that's a long tweet. Yeah, okay.

Starting point is 00:15:29 By the way, how long can tweets be now? That was a really long tweet. My gosh. Like, you can keep going. It's not only whatever. They're almost limitless, dude. Limitless tweets. I don't know if I like that, but it's not a list.

Starting point is 00:15:41 You know, we're inflating. Inflation is the name of the game these days, including tweet length. Got to inflate tweets. It's like inflating our tweets. The Twitter money printer keeps going to burn. stable coin check in let's talk about crypto markets for a second though um us d t is on the rise it's the highest level in 15 months that is of course tether david why is tether going up it should be going up as a result of outflows from b usd right so b usd going down usts going up right that's got

Starting point is 00:16:10 be the conclusion here i think that's what's happening yeah tether's gain came mostly at the expense of b usd after the paks of announcement we talked about that last week announcing they were halting new minting of BUSD, and it's grown 5.3 billion to a total of $71 billion in Tether, which is Tether fully backed? We think so, kind of, mostly. I don't know. That's not Tether's product, brother. Tether's products is being an offshore stable coin. That's right. And that's what BUSD was maybe filling part of, and Tether is just going to take that. So the U.S. system has no ability to go find hunt down Tether. Can they do? that? I mean, this is outside of the bounds of U.S. jurisdiction. Right. But the U.S. does have

Starting point is 00:16:56 jurisdiction over some other things. We're going to talk about that when we come back. David, what are we covering next? Silvergate liquidate was the only two words I'll say about that. Elizabeth Warren returns versus Binance. And the SEC taking an L perhaps too is the tide turning against the SEC. And we'll probably talk about some Yth Denver chatter as well, among other things. Also, of course, beyond all. of that, the biggest news of the week, Bankless 2.0, you know that's coming. So we're going to get to all of that and more right after we talk to some of these fantastic sponsors that makes this show possible, especially Cracken, our strategic sponsor for

Starting point is 00:17:31 2023, who supplies this market section of the Bankless Weekly roll-up with the most beautiful charts that you've ever seen. Here we go. Cracken has been a leader in the crypto industry for the last 12 years. Dedicated to accelerating the global adoption of crypto, Cracken puts an emphasis on security, transparency, and client support, which is why over now, 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

Starting point is 00:17:59 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,

Starting point is 00:18:19 by phone, chat, or email. And for all of you NFTs 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?

Starting point is 00:18:36 And if not, sign up with Cracken at crackin.com slash banklists. Learning about crypto is hard. Until now, introducing Metamask Learn, an open educational platform about crypto, web three, self-custity, wallet management, and all the other topics needed to onboard people into this crazy world of crypto. Metamask Learn is an interactive platform with each lesson offering a simulation for the task at hand, giving you actual practical experience for navigating Web3.

Starting point is 00:19:02 The purpose of Metamask Learn is to teach people the basics of self-custody and wallet security in a safe environment. And while Metamask Learn always takes the time to define Web3 specific vocabulary, it is still a jargon-free experience for the Crypto-Curious user. Friendly, not scary. Metamask Learn is available in 10 languages with more to be added soon, and it's meant to cater to a global Web3 audience. So, are you tired of having to explain crypto concepts to your friends? Go to learn.menomask.io and add Metamask Learn to your guides to get onboarded into the world of Web3.

Starting point is 00:19:35 Crypto Bank Silvergate announces voluntary liquidation. David, why would you voluntarily liquidate? What's happening here? You would voluntarily liquidate when things look so bad that you don't see any bio-evalued. paths forward. And so crypto-friendly Silvergate Bank, of course, has said that is going to unwind its assets and wind down operations of Silvergate Capital Corporation. A quote from Silvergate, in light of recent industry and regulatory developments, Silvergate believes that an orderly wind down of bank operations and a voluntary liquidation of the bank is the best path forward.

Starting point is 00:20:10 The bank's wind down and liquidation plan includes full repayment of all deposits. So that's good news. all deposits will be fully repaid, according to the liquidation plan. The company did not say how it plans to resolve claims against its businesses. Silvergate, as a crypto bank, is one of the two main banks for serving crypto companies, along with New York-based Signature Bank is the other main one. Just as a size comparison, Silvergate had over $11 billion in assets compared with $114 billion at signature banks. Oh, I didn't know that. Yeah, that's new to me.

Starting point is 00:20:44 Yeah. Much bigger, yeah. Okay. The FDIC was in urgent talks with Silvergate to find ways to save the crypto-friendly bank from shutdown. FDIC examiners arrived at the firm's headquarters last week and have been since reviewing the firm's books and records. The department is evaluating compliance with all financial laws, as well as safety and soundness obligations, and is working closely with irrelevant federal counterparts. So I think there's probably a big question out there is like, was it Silvergate's fault or was it external forces that have caused this?

Starting point is 00:21:14 I don't, we'll have to find out. I don't know if there's any reason to suspect Silvergate of anything, but I guess we're going to find out either way. Do you have a take on this, Ryan? Well, a lot of people in crypto are saying that this is basically a run on the bank. Sure. Perpetrated by people in power, those regulators and politicians going on the megaphone and saying, like the Operation choke point sorts of measures.

Starting point is 00:21:41 People like Elizabeth Warren, for example, broadcasting. this and saying withdraw funds from these crypto banks, these crypto companies. And I would say the broader point is like, remember, guys, we live in a fractional reserve banking system. That means any bank, whether it's Wells Fargo, bank of them, any commercial bank that you use operates on faith. And so if there was a run on the bank and you decided to withdraw, all of us decide to withdraw all of our money at once, that's it. We can't all get it. It doesn't exist, guys. It doesn't exist.

Starting point is 00:22:16 It's a figment. That's how the system works. Yes, it's a figment of our imagination. It's all kind of on the ledger and it all works as long as everyone trusts it. And the FDIC has a 250K guarantee and all of these things. So there is some element, David, where, yes, they probably were sloppy in areas. This is kind of my take right now, based on the evidence I've seen. Yes, Silvergate could have done additional AMLKYC in places.

Starting point is 00:22:42 They could have had some, you know, tighter. risk policies. But I don't think, this is not an FTCS type situation, right? I don't think that there was anything incredibly nefarious going on. At least the evidence hasn't borne that out yet. But what I do know is there has absolutely been a run on this bank and perpetuated in some cases by regulatory congressional influencers who are pushing Sildergate towards the edge.

Starting point is 00:23:11 And to that extent, I mean, I would say that is extremely irrisome. responsible. Right. Just to start this from the beginning of like a run on the bank is a fear and emotion based phenomenon from all bank, from all customers, clients, depositors of that bank. And so if there is this run on the bank that's happening and the reason why Silvergate is shutting down is because there's just so much net outflow out of the bank because everyone is fearful that Silvergate is going under and that fear perpetuates, right? It turns into a mind virus. we have to ask ourselves, why did that fear happen in the first place? Yeah.

Starting point is 00:23:47 What is the patient zero or the trigger of that fear? Do you have an answer for me, Ryan? I mean, I think obviously the entire market is incredibly jittery coming off of FTX. I'm not sure who exactly the patient zero is or what. I do know that the White House is making some comments on the back of this. This is the Pressure Secretary at the White House. In recent weeks, banking regulators have released guidelines and how banks should protect themselves from risks associated with crypto.

Starting point is 00:24:19 As you know, this is a president that is repeatedly called on Congress to take action to protect everyday Americans from the risk posed by digital assets, and he will continue to do so. The risk by digital assets. So that's what's being thrown under the bus here is crypto, is digital assets. This is Senate Banking Committee, a friend of banks, I might say, Sherard Brown, saying, as the impover. impact of FTX's collapse continues to ripple outward, today we are seeing what can happen when a bank is over-reliant on a risky, volatile sector like cryptocurrencies. So whatever is happening, David,

Starting point is 00:24:52 whether this is a bank run and kind of Silvergate is somewhat a victim in the situation, or whether Silvergate did some things that were irresponsible and they're not a victim, they are responsible. We do know that politicians are definitely ready and eager to throw crypto under the bus and throw crypto banking under the bus. And to me, this is just like the continuation of the operation choke point we've been talking about for the last, like since the beginning of this year. Right. Yeah, this is such a nefarious line. As the impact of FTX's collapse continued to ripple outwards, today we are seeing what can happen when a bank is overreliant on risky, volatile sector like cryptocurrencies. FTCX was not

Starting point is 00:25:34 cryptocurrencies. FTCS was a bank that was pushed offshore and with all of those quality products that drove people into FTX not enabled to be held onshore by onshore banks. This was not a cryptocurrency problem. As we know, as we've reporting on bank lists for quarters now, every single DFI app in the crypto world held up completely solvently. FTX, which is a bank, which was ignored by the SEC, and all of the onshore regulated entities were hamstrung by onshore regulation. And so the FTC, FDX incident explodes, comes back to hit, this is a banking crisis. This is, it happens that there are crypto rails. It is a banking crisis. That is the center of this whole thing. The public

Starting point is 00:26:20 opinion, the public's not going to understand the details. Maybe people in the crypto community will, but like, they're going to paint this as a problem with crypto. I mean, Sherrod Brown continues. I've been concerned that when banks get involved in crypto, it spreads risk across the financial system, and it will be taxpayers and consumers who pay the price. when banks get involved in crypto, what do you think that means? They're going to continue to choke the banking sector from touching this whole asset class of crypto. That's very disturbing to me.

Starting point is 00:26:49 David, we have an Elizabeth Warren tweet here. What does this say? Oh, boy, my favorite. Elizabeth Warren says, as the bank of choice for crypto, Silvergate's bank's failure is disappointing but predictable. I warned of Silvergate's risky, if not illegal, activity and identified severe due diligence failures. Now customers must be made whole and regulators should step up against crypto risk. So in my mind, Ryan, I'm just saying regulators putting undue burdens upon the crypto banking

Starting point is 00:27:17 sector and then as a result of those burdens and perhaps, you know, also other things, FTX and interest rates, but also as a result of what Elizabeth Warren is doing here in this tweet, putting undue burdens upon the crypto banking sector, then the big crypto banking sector fails. And then she's like, I told you so, even though she's part of the problem. that caused it to not be a well-service industry in the first place. Remember Tyler Cowan's caution? He wrote an editorial about this, came on our podcast, and he was like, hey, I'm most worried that regulators and those in Congress will backlash

Starting point is 00:27:48 far too far. And yes, there was problems with FTX, but you're really going to try to choke United States citizens, U.S. citizens from this entire asset class. I worry about that. That's what's going on. I think Nick Carter had a fantastic take here on Silvergate. He said this, about Silvergate, about the. situation we were just talking about. The politicians are now telling us that because a single bank

Starting point is 00:28:11 peaking at 16 billion in assets, that's Silvergate, wound down in an orderly manner, making deposit's whole, no one lost money here, David. No deposit lost money. Effecting no one but shareholders, causing no knock on effects that crypto firms must be shut out of the banking system. Right. Those holding equity, the shareholders of Silvergate lost in this. That's how it should be. That's how this works. It's a risk asset. Holding equity is a risk asset that the company is going to go bankrupt. Of course. So in that sort of situation, equity holders get liquidated. No one that deposited funds in Silvergate has lost anything. So like a bank wound down in a correct and orderly fashion and Elizabeth Warren is like grave dancing.

Starting point is 00:28:58 Yeah. Is that what's going on? I think so. I mean, Nick Carter, Nick goes on and says, they cry out safety and soundness will chipping away at the foundation and then act of vindicated when the structure starts to crumble. I think that's what's going on here. Yeah. Here's another take. Yeah, so this is a take from a Mike from Blockworks. Liz Warren has a $67 million net worth, even though her salary is $285,000 per year. Either she saved 100% of her earnings for 235 years, or she's making money another way. I love this. Why do you love this? Well, this just calls into question the legitimacy of what she's doing, right?

Starting point is 00:29:37 She's an influencer who is talking against other people's bags, our bags, our crypto bags, and then she's, what Mike is implying here, is making money in ways that we don't understand. And so as an influencer of this state, he is calling into question the legitimacy of where she has made her money. I think that's a good thing to call into question.

Starting point is 00:29:58 Yeah, I get it. I think if, and if people think that that's below the belt, I think that what Lizzie Warren is doing is below the belt too. I don't necessarily think it's below the belt. I do worry a little bit about the kind of the, just because someone's wealthy doesn't mean they made it in like nefarious ways. We don't know the source of her wealth. But yeah, I, yeah.

Starting point is 00:30:20 67 million dollars, brother. It's a lot. That's a lot of wealth. Let's talk about this. Binance under scrutiny as well. That is happening this week. This is a letter sent yesterday by, wow, Senator Warren. I guess this is the Senator Warren episode.

Starting point is 00:30:34 Senator Warren is the main character of this week. Van Holen and Marshall to Binance and Binance U.S. It's absolutely devastating, this tweet says. They are flat out accusing Binance of fraud and money laundering. This is not good for CZ. Have you read this letter? What's the TLDR here, David? Yeah, basically, well, it's a pretty damning accusation of CZ and Binance's operations,

Starting point is 00:30:57 basically saying that Binance has knowingly enabled money laundering, reduced KYC compliance checks allowed for higher and higher limits of non-KYC accounts in order to trade on Binance in order to just like make revenue, right? Like that's their business model. It also says that accuses them of creating Binance US as like the compliant distraction

Starting point is 00:31:21 so that Binance itself could grow larger offshore and do all of its perhaps illicit ways of, you know, generating revenue. That part's true, right? We all saw that. That's probably true. Yeah. Now the thing is like, I wouldn't necessarily rush to the defense of Binance here.

Starting point is 00:31:39 I think also we know that S.E.Z. And Justin's son are buddies. And we know that Justin's son used his ownership over Polonex. Remember that one article? Justin Sun was like, just pass any KYC check. Always pass. Never fail.

Starting point is 00:31:56 Always pass. Doesn't matter. Remember that? That's the story that came out, right? And so, like, they're very close with each other. This is kind of, I don't really think anyone's really going to rush to the defense of finance here. So it's tough. You know, it's tough.

Starting point is 00:32:09 Well, so is this the big, that's different than fraud. Is that the big charge here that they were bypassing AML KYC? Yeah, basically they were negligently enabling, like, money laundering and illicit use of finance. Gotcha. Whether or not they were the ones actually doing it is a different story. I don't know if that's what this is charging them, but yeah. This is the Wall Street Journal. breaking some things about Binance too.

Starting point is 00:32:31 What does this say? This says text from Crypto Giant Binance Reveals Plan to elude U.S. authorities. So this was messages revealed from CZ and Binance leadership saying, hey, we're totally going to do our best to circumnavigate, evade U.S. regulations. We're going to spin up Binance U.S. in order to prop that up and have that be like the fall, you know, the subject of their scrutiny and that thing is going to be totally compliant. But meanwhile, we're going to do all the shady stuff. from the back. And apparently that has been explicitly made in text form and leaked to the Wall Street

Starting point is 00:33:07 Journal. So what's the take here? Then are we back to like, okay, is this all true? Are the regulators right? Are they right in stamping out this entire industry from the United States because it's only full of scammers? Is that what Binance is doing here? What do you say to this? I say this is all just so tiring, man. What part of it? I got it. I got it. I got nothing. It's like, damn it. It's like, we need to have regulation, but our regulators are being shitty at it.

Starting point is 00:33:37 Like, it's, there's, it's a double-edged sword. Bad people on both sides? Yes, it's like, no one's got it right, dude. I just, I don't, it's like, I don't, we don't know enough to, to know what CZ's doing. I do know he's smarter than SBF. That's for sure. Just don't know.

Starting point is 00:33:54 And how would we know? It's a centralized exchange. We just don't know. It's, by nature, it's, trust-based. But we do know that no one is talking here about like, okay, centralized exchanges are failing us in a variety of ways. Here's how we could shore up the regulation for centralized exchanges, right? And by the way, isn't it cool, American citizen, that crypto has also provided a self-sovereign option called decentralized finance, which you can audit on chain.

Starting point is 00:34:26 we never have to question whether it's a fraud. We never have to question whether it's fully backed or has reserves. It's proof of reserves built in. They're not pointing people in that direction. They're saying the whole crypto thing is a fraud, is a scam. They're not engaging with the members of the crypto community who are like, yeah, we hate FDX2 and SBF. And by the way, we've been saying that for a long period of time that, like, we're worried

Starting point is 00:34:55 about centralized exchange as an attack vector, they're not engaging with us at that level. So it doesn't feel collaborative. So I share your frustration. I don't like, but they've got us in this spot where they can just point to like five to ten scams last year in crypto, bad things that happen and say, look, I told you. Like Elizabeth Warren.

Starting point is 00:35:17 Crypto bad. I was right. I was right. I predicted this. I told you this was going to happen. It's a difficult situation. Yeah, I'll put on my libertarian free market anti-state hat and say that Binance has banked more people than any, with his technology and its crypto rails and Binance smart chain, for that matter, has banked more people using crypto technology than any nation state has ever done ever with a CBDC or any of their legacy traditional financial system. So I'm sure there's nothing, I'm sure there's a lot of skeletons in the closet of Binance.

Starting point is 00:35:53 I'm sure there's money laundering happening. I'm sure Ciz's aware of it, probably. I don't know any of this stuff. But I'm sure there's a bunch of stuff that pisses off the state. But my Eric Vorhe's raw human perspective is that binance is unequivocally a net positive for the world in terms of banking the unbanked and allowing financial freedom to proliferate.

Starting point is 00:36:14 That's my take. I think there's a way for regulators in commerce to cooperate with the finances of the world rather than just attacking them trying to stamp this thing out of existence. David, this is somewhat related. The SEC snubbed as Voyager wins court approval for the sale to Binance. It's a Voyager that defunct, I guess, crypto bank,

Starting point is 00:36:32 crypto lending and borrowing platform is trying to sell to Binance U.S. And is that going through? Well, it looks like it. The Voyager is the one that lent out that unsecured $660 million loan to three hours capital, which I'm assuming they haven't gotten back. It's safe assumption there. But approval was granted by United States bankruptcy. Judge Michael Willis, Whales, which came four days after arguments presented by Voyager and the United

Starting point is 00:36:59 States Securities Exchange Commission were processed by that judge. Judge says, this can proceed. And so this is actually really good news for anyone who's lost money on Voyager. This article is claiming that if you are a Voyager customer and impacted Voyager customer, you are going to get back approximately 73%. Wow. approximately 73%, which is a very precise number for saying the word approximately. So that's great news. That's great news. That is great.

Starting point is 00:37:27 Definitely. This judge's decision comes over a week after 97% of the 61,300 Voyager account holders were voted in favor of the current Binance U.S. restructuring plan, according to a February 28 filing. That's pretty cool. That's what shareholders want. It sounds like. Brace Gale versus the SEC. David, this next story is, I think, a win.

Starting point is 00:37:50 If you were asking yourself in the last two stories we were talking about, like, where are the checks and balances here? How do we stop this type of activity? I think the court system is one possible solution to that. So this is judges that are skeptical of the SEC's argument in the gray scale versus Bitcoin ETF hearing. Can you tell us about that, David? Yeah. So this is a court that has reviewed the facts and circumstances of the grayscale Bitcoin ETF application. We want the Grayscale Trust, the GBT Trust, to fold into elegantly and cleanly a Bitcoin ETF, a spot market Bitcoin ETF. We have a Bitcoin Futures Market ETF. Why not a Bitcoin Spot Market? Why do we want that? We want that, Ryan, because right now, the GBTC asset trades at a 45%

Starting point is 00:38:42 discount to actual GBTC. And so of all the Bitcoins that are in the GBTC trust, locked in there one way can't come out. They are worth only 55% of their actual real value because there's not enough demand for GBTC, partly because of the whole like gray scale three hours capital like loop. So retail is getting screwed basically. Yeah, so there is like how much is the gray scale GBT trust? Let me go look that up real quick.

Starting point is 00:39:10 And so as a result of that discount, there is a $4 billion gap. And what that means is that GBT owners collectively are short four billion. billion dollars. There's four billion dollars of wealth that could be created if the SEC allowed for a spot market Bitcoin ETF out of gray scale. They could make four billion dollars just appear out of thin air if they did this. And so the judge is like, hey SEC, why aren't you doing that? Why aren't you like, which is a really good question. Why aren't you protecting investors? Right. This is like the second judge. Facilitating capital markets. Yeah. You know,

Starting point is 00:39:47 the whole vision on your website thing? You can make $4 billion. Why aren't you doing it? For retail, the people that you're supposed to protect. This is the second judge saying this, who's skeptical of the SEC's decision to approve the future's ETF, but not the spot one, not the one that we all want. The SEC hasn't offered any information that the petitioners are wrong, the judge says. SEC has to explain why they're wrong.

Starting point is 00:40:11 Yes, they do. Thank you. Some accountability. David, you and I can say it all day. Crypto Twitter can say it all day. A judge is requiring them to answer that question. And that is a nice check and balance that's a product of our system. And I'm glad that we have it right now.

Starting point is 00:40:27 Gary Gensler's like, well, well, so you know how. Office hours with Gary. Office hour. Yeah, turn it into influencer video, Gary. Yeah, so that's what's going on there. And maybe some hope for the future there. Some of this power gets checked by the court system. David, what do we have coming up next?

Starting point is 00:40:46 Coming up next, we have an onslaught of Coinbase news. All of it good, thank God. So there's like four things that we're going to talk about all related to Coinbase. Tornado Cash 2.0 pulls a jiu-jitsu move against privacy haters. We're going to talk all about that. We got Uniswap wallet. We got our ETH supply.

Starting point is 00:41:05 And most importantly, Ryan, the biggest news of the week, which is Bankless 2.0. So all those details and more coming right after we talk to some of these fantastic sponsors that make Bankless 2.0 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 Defi inside of Uniswap.

Starting point is 00:41:37 Not only that, but Polygon, Arbitrum, and Optimism, Layer 2s are supported right out of the game. But that's just Defi. Uniswap is also an NFT aggregator, letting you find more listings for the best prices across the NFT world. With Uniswap, you can sweep floors on multiple NFTs, and Uniswop's universal router 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,

Starting point is 00:42:03 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.

Starting point is 00:42:20 Go to Earnify and plug in your Ethereum wallet, and Earnify will tell you if you have any unclaimed airdrops that you can get. And it also does POAPs and mintable NFTs. Any kind of money that your wallet can claim, Earnify will tell you about it. And you should probably do it now because some airdrops expire. And if you sign up for Earnify, they'll email you anytime one of your wallets has a new irdrop for it to make sure that you never lose anirdrop ever again.

Starting point is 00:42:42 You can also upgrade to Earnify Premium to unlock access to airdrops that are beyond the basics and are able to set reminders for more wallets. And for just under $21 a month, it probably pays for itself with just one airdrop. So plug in your wallets at Earnify and see what you get. That's E-A-R-N-I. And make sure you never lose anotherirdrop. And we are back. But first, watch this sick promo video for Bankless 2.0.

Starting point is 00:43:09 It's loading. That's great. I love that. That gets me going, man. Here it is. Bankless.com. Bankless 2.0. It's here. It's our new website. We have fully migrated from Substack at this point.

Starting point is 00:43:40 Peace Web2. We are doing this so that we can start being much more of a crypto-native media company. And you know what's cool about this, David, is I'm not sure we entirely know what that means. All right? The point is, we can find out. We're going to explore our own frontier. We have our own frontier now. Are we going to front run the opportunity here?

Starting point is 00:44:03 We're a front running the opportunity. Yeah, bankless is going from just like, you know, being all web 2y to we, I think we have one of the best platforms to experiment and innovate and iterate about Web3 things natively because now we have our own settlement. This is our settlement. This is our home. This is our home on the internet, on this protocol that we call home. Everyone's welcome.

Starting point is 00:44:25 What are we doing here? We're obviously we're posting the podcast. This roll up that you're listening to will appear here. here. We're posting our articles, everything we write. We have this thing called a daily brief. If you only listen to bank lists and you don't consume it in your inbox every day, you should start consuming it that way as well. It's a daily brief. It's a guide to crypto for every day. We're posting that here. There is a fantastic ability to search for different guides, David. If you want... You can tag your interests.

Starting point is 00:44:54 Tag your interests. If you want a guide to investing, all of our how-toes, if you want to get into kind of opinion pieces, guide to arbitram, guide to optimism, guide to polygon. It's all here on the website. The crypto-native features, all right, we had the hardest time. In fact, substack would never integrate this for us, which is our previous platform, just paying via crypto. Right. So people would be like, I'm trying to like sign up for bankless, but you're making me pay with a credit card. And we're like, oh, well, there's this separate link. We can send it to you. It's manual. It's quite much commerce. It was never. It was. It was. It was never really connected. And so now it's all connected. Now it's all seamless. Now it all works. You

Starting point is 00:45:34 pay via crypto. That's just a simple thing. But you can also, we're going to add the ability to log in with Ethereum. Right. So you can access this function. We're adding podcast NFTs to the post. Obviously. Other things that I can't speak about right now, but that are coming soon that we are super excited about and bullish on. And in general, we just want to grow this movement and grow this community in crypto native ways and push forward into the frontier. So that's what we're up to, man. Yeah, that's exactly right. And if you look on that far left, you have, you know, home, listen, read tools for little icons, for little tabs to explore different places. The number of icons there can grow as we grow the number of products and tools and things to do on bankless.com.

Starting point is 00:46:19 There's also native poap minting. So if, yeah, this is, we have built the best native in the browser, in the website, Poap minting apparatus that I think exists. And so there is a Poap to mint for those that are already bankless subscribers. We sadly can't open it up to everyone because we can't like spam attack Poap or allow Poap to be spam attacked. But if you are already a bankless subscriber, including free subscribers, you can go mint the inaugural ship Poap because we are ship.

Starting point is 00:46:54 We're sailing west. We're going into a new world. ship season. So go mint that po-app. That's a big call to action. Go do that. Bankless.com, guys. Thank you. Thank you for all the support. Thank you for everyone who got us here. Thank you for listening to all the ads that helped finance the building of this website. It's important. We got to build our settlement. So that's how we're doing it. Anyway, so much more we could talk about. David, speaking of bankless content and cool stuff, you've got some Heath Denver video, a whole series that will make you feel like you went to Heath Denver and hung out with David. and listened into all the conversations that he was having,

Starting point is 00:47:30 except for that one conversation last week with the lawyer, where you talked about Lido. Not that one. All the other ones, though. All the good ones, yeah. All the good ones that bring back to the nation. All right. Well, so what is this?

Starting point is 00:47:41 Give us the highlights. So this is part one of two parts. Every other time I've done this. And this has been a recurring theme of, like, what I do when I go to conferences, is I interview people and I bring back interviews, like 20-minute bite-sized interviews, so you can feel like you were there. This is, I did that twice, right, two times at September.

Starting point is 00:48:00 This is, so this is part one. This is at the Axelar Interoperability Conference, which was like a who's who of interoperability. Builders, right? Builders, yeah, all the builders. I was trying to understand like, all right, because like there's Ethereum layer two's and layer threes here. There's Cosmos people. There's the Axelar team.

Starting point is 00:48:15 There's like all of the people doing like Omni Chain and Layer Zero and all that kind of stuff. Like, what is the theme of this conference? Like clearly it's interoperability. when I was writing about this for the newsletter, this is also going to turn into a newsletter on the bankless newsletter coming out today. So you will already have that in your inboxes.

Starting point is 00:48:32 The theme, Ryan, is like literally everything that's not the Ethereum Layer 1 or Bitcoin. That was the theme of this conference. Anyways, so like Layer 2 content, eigenlayer content, Cosmos content, Axler content. So that's part one. Part two is me and Luke running around

Starting point is 00:48:51 with a microphone at a shelling point, and Heath Denver, just randomly ninja interviewing people. We got Kevin Awaki and Simonea Pop from Shelling Point. We got Jesse from Base. We got Victor Bunin from Coinbase Cloud. We got Lisa from Aztec. So many different interviews of people actually out at East Denver. That is part two.

Starting point is 00:49:11 That is coming soon, TM. Absolute Chad of a production team that is pushing this content out within one week post East Denver. They helped me film it. They helped me get the audio. They're processing. tip of the hat to the bankless pod squad tip of the hat absolutely and of course you can go find all of that content right now at bankless.com.com. Bankless.com. Bankless.com. Bankless. Bankless.com.

Starting point is 00:49:35 Bankless. Coinbase is doing some things too. Not just bankless that's been building. Coinbase has been building some things. Today we introduce wallet as a service. What is wallet as a service? This is a coin base offering now that makes it seamlessly seamless to onboard users to web three. What is this, David? Yeah, so it's an API. A wallet inside of an API. I never really thought that was possible, which allows companies to create and deploy

Starting point is 00:49:59 fully customizable on-chain wallet. So users can create access and restore, mainly their wallets with authentication as simple as a username and password without needing to worry about seed phrases. So they have built a way to allow, I'm assuming, the rest of Web2 to easily spin up a wallet on demand, on notice.

Starting point is 00:50:18 And like, I think the most obvious use case that I'm just going to imagine, imagine off the top of my head, Ryan, is like, you know, the digital collectibles in Instagram? Yeah. What percentage of Instagram users have a wallet? Not zero, because there's some, but very... Less than 1%. Yeah. Less than 1%.

Starting point is 00:50:32 Less than 0.1%, I would say. So say NFT creators who are now able to promote and share their NFTs on Instagram, that is a feature that is all throughout Instagram now, say one of their fans wants to buy that NFT. And that fan does not have a wallet. Well, Instagram could just ping the Coinbase wallet API and be like, serve this, serve this user a wallet because they want to buy that NFT. And they could buy that NFT with Trad payment rails, like with Striper whatever. And all of a sudden, there's a wallet inside of Instagram that is accessible by the Instagram

Starting point is 00:51:06 authentication service that's already built in. I think that's really what this is. Guys, that's a bankless wallet. That's, yes. Non-custodial. This is multi-party computation technology to make this non-custodial. It can be non-custodial. and it can also be custodial. It's customizable for both. It is really the wallet infrastructure that

Starting point is 00:51:24 we need to be able to push wallets into every single corner of the internet. This is insanely. It just makes crypto adoption so easy. It lowers the barrier for getting a wallet down to at the absolute minimum. We got Stripe for crypto wallets. They also, Coinbase has also acquired One River Digital Management. Now we just released our episode with Eric Peters. He's the CIO of One River. He is kind of the institutional crypto, guy. I mean, all the kind of the billionaires with with a lot of money, respect Eric Peters, and Coinbase has now acquired their company as, I guess, a bridge to institutional investors increasing that. Do you have any other takes on that?

Starting point is 00:52:04 I, it's just, they're doing everything, man. They're going in every single direction it was. It's pretty cool, including the direction of public relations. And I think repairing crypto's image, their brand image. I know, David, you wanted us to take a look at this commercial. I think this is just good content. So we're going to watch this Columbia commercial. They don't even pay us for this. What is this archaic system?

Starting point is 00:52:30 Mother's maiden name? Eboid. You're telling me, this guy is how things get verified. That's my job. I'm just saying, you shouldn't have to buy $10 worth the gum if you just want $79 worth the gum. Why do you get charged your money to take your money from your account? And if you're out of money, they charge you for being out of money?

Starting point is 00:52:51 What? An overseas transfer takes five days. Business days. Why? What are they used? A Zeppelin? I deposit the check Monday. But money was a big holiday.

Starting point is 00:53:01 Why is this the way it is? A bank holiday? This system makes a bank holiday. This makes no sense. This makes no sense. Who desired this system? Mayup. Is this really the best we can do?

Starting point is 00:53:16 Hello? We deserve better. Nice. It's time to update the system. It's a Coinbase ad, obviously. It is the best PR, one minute of PR for the crypto industry as a whole that I've ever seen. It's basically the bankless, it's basically banks suck. Yeah.

Starting point is 00:53:39 And we can do better. Finance sucks. Let's use crypto to update it. That is the message. And it's a much better message. I feel like then the 2022 message that crypto was sending, which was come here to get really rich. And because we have, come get yield.

Starting point is 00:53:53 Yeah. And because we have like social boosting NFTs, which yeah, sure, but this is the message. This is the better message. This is the long term message. We also are coming out with a podcast with Brian Armstrong. So we just talked to him earlier this week. I think it's a good kind of recap on everything that crypto is doing. You know, we spend a lot of time on regulatory in this episode, David.

Starting point is 00:54:13 And I think that's because that's where crypto is right now. That episode comes out Monday. but if you are a citizen of the bankless nation, that means you are a premium subscriber, you should have access to that episode right about now, early access. On bankless.com. There you go. On bankless.

Starting point is 00:54:30 That's what we were waiting for. David, some cool news with tornado cash, which is an illegal and not crypto privacy anonymizing? It's on the OFax. No, no, no. It's not illegal. It's just illegal for us as U.S. citizens. Okay.

Starting point is 00:54:46 It is illegal. It is an agnostic neutral piece of technology. It's just illegal for you and me. Well, what do they do? So, well, this isn't anything to do with tornado cash specifically. This is not the tornado cash team. This is Amin Soleimani announcing privacy pools V0, which he is calling the sequel to tornado cash, also similarly branded as tornado cash.

Starting point is 00:55:09 I think the TLDR is, it's tornado cash and this additional fun little mechanism that lets you prove the specific anonymity set. What does that mean? You can prove that you are not a tornado cache user who is of a certain address, as in your, you can achieve privacy versus with this brand new tool without being associated with any other specific address

Starting point is 00:55:34 that you determine, aka one on the OFAC sanctions list. So you can prove that you are not and are not interacting with an address on the OFAC sanction list. So let's say, The OFAC FinC-Finson identifies this particular set of addresses. This is North Korea. This is a well-known terrorist group.

Starting point is 00:55:55 These people are bad actors. You can prove your innocence, essentially, using this tool now. And so this should defang all of the reasons that the code itself, and let's remind people, the Tornado Cash code itself, the smart contract on chain, if you live in the U.S., OFAC, Finson, the U.S. has made it illegal for you to have on-chain privacy because they're saying, you might be one of these bad actors, but now you can prove your innocence. So doesn't this, David, defang the whole like, I guess, front of Finson saying, yeah, this is because terrorists and criminals

Starting point is 00:56:34 and it takes away the whole entire premise of making the tornado cash smart contracts illegal in the first place. There you go. Your move. Your move. I think, I mean, I mean, everyone, people who I listen to bankless know I have, like, infinite respect for Amin. He's the guy that will go toe to toe with the, with Goliath, uh, in a heartbeat without things a shit disturber, man. Yeah, he really, oh, he's a sower of chaos in the best of ways. Like chaotic, the embodiment of chaotic good. Um, I hope he deploys it on base. On base. On base chain? Yeah. Privacy pools on base chain. That'll be fine. I'm sure, uh,

Starting point is 00:57:09 coin base compliance and legal has really appreciated that you just said that, David. I, well, permissionless code. You know, they made. They made their chain permissionless. They know what they signed up for. Let's see. Let's see how it goes. I mean, we want a free permissionless open internet. So let's push that boundary.

Starting point is 00:57:22 Here's privacy pools. Yeah, privacy pools.com is the place to go. There we go. All right. Also bankless. com. Also after bankless. com.

Starting point is 00:57:30 Yeah. Make that your next visit. Uniswap Labs. They introduced a mobile wallet. David, you and I got a chance to stand with Cal, who is kind of the lead product design of this wallet. It's pretty cool.

Starting point is 00:57:39 I really liked it. I'm very bullish. It's Apple has blocked them from launching in the app store right now, but it is available on test flight. Unfortunately, we don't have an access code for you. In order to get that, you had to be listening to the conversation we had earlier this week,

Starting point is 00:57:56 and there were about 100 of them. But here's David, he's showing off. I got $48. $87 and a crypto coven. Well, that's worth something. And the access code itself is worth something because it'd be pretty cool to use this wallet. I don't know.

Starting point is 00:58:11 I'm pretty bullish on the future of this. I really like the design. It's nice and clean. I think Uniswab is dedicated towards iterating on it. A lot of cool things in store and bullish wallets in general. Wallet innovation in general. Certainly. Moving on to Rocket Pool is set to launch their eight ether mini pools.

Starting point is 00:58:30 Okay, how does Rocket Pool work? You have the node operator who spins up a node in the decentralized Rocket Pool network. They need to put up a bond to make sure that they don't do anything funky with the other people who come and deposit Ether into their node. So what do you do? you put in 16 ether, one half of what it takes to spin up a node, other people backfill that with 16 more ether, and boom, you have a rocket pool mini node, and 16 our ether is minted and distributed into the wild.

Starting point is 00:58:54 That is a capital-intensive way to produce a staked eth token, and while that is the capital intensivity is how we get decentralization and security, it is still capital-intensive. Rocket pool has created this system called mini-pools, which actually lowers the collateral requirements, down to eight. So instead of putting up a 16-eath bond, you put an eight-eath bond. And instead of that being a one-to-one ratio of your ether to other people's ether, it is a one-to-three ratio where you put in eight ether and then 24 ether comes in to create three different rockerpool mini-nodes. And so

Starting point is 00:59:32 the capital efficiency of RPL doubles. And then also, if you are a node operator, you increase the amount of fees that you charge the people who use your node to stake as well. So you, if you are a node operator, you're getting more yield and the total supply of our ETH goes up. This is a very long awaited upgrade from the Rocket Pool community by Rocket Pool. It's actually not launched yet. It's coming. It's in no later than early April, which is one month away. So that's pretty high, very hype. This is Rockapole getting more capital efficient, which is bullish. And also, our Eath is now on Euler, which is a lending and borrowing marketplace, a permissible,

Starting point is 01:00:12 lending and borrowing marketplace. Similar, I guess, to AVE and Compound. It's cool to see liquid staking derivatives saturating all of our defy lending platforms. Yeah,

Starting point is 01:00:23 our friends at Coinbase staking and others liquid staking tokens, I would have requests that you call them liquid staking tokens, not liquid staking derivatives because derivatives

Starting point is 01:00:32 have a very specific legal meaning. Somebody's going to slap me. Yeah, someone's going to slam me. Yeah, but no worse. Disclaimer. Sorry. They are derivatives, though, for real though.

Starting point is 01:00:42 Sure. Semantics. Semantics. Yeah. Disclaimer. Bankless holds a bunch of RPL, and we also run Rocket Pool mini nodes. And then Ryan and I are also angel investors into Euler. And Bullish Heath.

Starting point is 01:00:55 Certainly. Polymarket tweeting out here, David, looks like someone knows something about the Arbitrum AirDrop. What is this? What is this graph we're looking at? Polymarket is a predictions market that allows people to gamble about the probability of future events. and the theory behind prediction markets is that if one or a very low number of people know something, that they can sway the entire market because they can make a gamble.

Starting point is 01:01:19 So if they know that the arbitram air drop is coming by March 31st, they would go to this polymarket market, and they would bet that on the knowledge that they have. And so as of recently, the probability that an arbitram air drop comes by March 31st on polymarket has moved to greater than 50% chance. and so the implication here is that someone knows something and has taken a bet on that market. I took this tweet into the Arbitrum our telegram with the Arbitrum team Ryan

Starting point is 01:01:48 and I was like, hey, you guys, you guys wouldn't drop a token without scheduling a live stream with us first, right? And they were like, they didn't say anything. They didn't say anything. They said, you never know, but you'll be first to know when we do, if we do, that kind of thing, right?

Starting point is 01:02:04 Yeah, exactly, yeah. As we'd expect. So here's something that is not news, but it's perhaps news. We don't know. Another rumor, David? Another perpetuating? Thank you, Ryan.

Starting point is 01:02:16 More rumors of rumors. Koso's governance. They gave the green light to interchange security. I remember Zaki telling us a little bit about this when we had them on the episode for the Cosmos thesis. If you want to hear about that, you can go listen to that episode in the archive at where, David. Where can they go find that? Bankless.com?

Starting point is 01:02:36 That's it. Bankless.com. That is at it. Bankless.com. Go there right now. Yes. Anyway, they're actually doing it. So what does this mean?

Starting point is 01:02:44 What is interchained security? Right. So Cosmos is the app chain mesh network vision. It is basically the Ethereum layer two, layer three vision without the layer one. So if you take out, if you only have networks connected to other networks and you don't have the single shared security model of Ethereum, that's Cosmos. It's a mesh. It's a mesh.

Starting point is 01:03:06 Cosmos has given the green light to interchained security. That is Cosmos becoming more like Ethereum. So they are starting to enshrine Cosmos Hub as the central security provider for the rest of all app chains that opt into that security. Which is kind of like the Ethereum L2 thesis. And so Adam is starting to fill these shoes that Ether is for Ethereum. That's a token. It's a Cosmos token. Cosmos token, yes.

Starting point is 01:03:34 Yes. Exactly. And so like when I was talking to something, sunny Agarwald about this forever ago. He's like, yeah, the Cosmos and Ethereum long-term conclusion of that design pattern is actually the same pattern. They have just started at different paths. Arbitrum, excuse me, not Arbitrum. Cosmos, got an arbitram token on my mind. Cosmos has opted in to prioritize the app chain mesh network vision first, shared security later. Ethereum did the shared security layer one first, also ETH's money first, and now is now moving

Starting point is 01:04:06 into layer two's and layer threes. The conclusion is the same. This is as the Ethereum layer two, layer three, super chain, hyper-scaling vision starts to unfold. Cosmos is also doing shared security and atoms as the reserve asset of Cosmos if the market wants it. And I think this means if you're launching an app chain on Cosmos, rather than bootstrap your own validator set, you just get to hire the atom holders as mercenaries. For a fee. For a fee. For a fee. Right, you hire them. gas fee, perhaps. They're mercenaries. Use their military instead, but you've got to pay them because they're mercenaries.

Starting point is 01:04:42 So that's cool to see. And I think his value accrual related to Adam the token, at least it should be on the fundamentals. In theory, yeah. Let's talk about another token that started this whole crypto thing off. It's called Bitcoin. Bitcoin. Bitcoin's a token. You just offended every single Bitcoin Maxi that listens to bankers.

Starting point is 01:05:00 It's a token, guys. They're all tokens. No, no, no, no. It's a coin. I say Bitcoin's a token. the difference between a token and a coin? A token is a asset that is issued on top of another blockchain. A coin is the asset that is the native currency for the crypto economic system. Ether, Bitcoin is a coin. Uni token, any ERC20 token is a token. Coins are innately related to

Starting point is 01:05:28 blockchains. You can't have a crypto system. You cannot make a blockchain without creating an economic security model. And so therefore, every single, you know, crypto economic system has to have the, you know, the economic part, the security part, which is the coin, the currency, the gas, ether, Bitcoin. I feel like this is a simple answer. You win this round, David Hoffman. You win. You got that.

Starting point is 01:05:50 That was a good answer. Maybe I was teeing you up for that fantastic answer in a bankless explaining. We just wanted to teach a quick lesson. All right. So this is roll kit saying you can now run a sovereign roll up on Bitcoin. Wait a second. I didn't know Bitcoin could have a roll-up. Is that possible? What is this? Apparently, it's been possible for a very long time. Just no developer has wanted to actually do it.

Starting point is 01:06:14 Yeah. So sovereign robs on Bitcoin. Now a thing. This is a tweet out of a roll-kit dev and modular framework for roll-ups. And so this is a toolkit to produce sovereign roll-ups on Bitcoin. Okay. Why are we emphasizing this sovereign word? A sovereign roll-up is different from a side chain, which is a chain that just, what is a side chain actually? It's just like a normal independent blockchain. It's own validator set that like checkpoints to a different blockchain kind of. It doesn't have to. I mean, it could just checkpoint to itself.

Starting point is 01:06:46 A sovereign chain, a sovereign roll-up is a roll-up that puts all of its data on a dominant chain, a bigger chain, and all of the data that it puts onto that chain can be used to reconstruct the roll-up state. So it is much more trust-trustless than a side chain. So Bitcoin has advanced in the layer two, trustless layer. two phase well beyond liquid god all the ass hats at liquid i hope they're just embarrassed i know they're not though that anyway can i ask though can we call this give me give me the case for why we can call this a roll-up i understand it's a you're saying it's a sovereign roll-up but is it really a roll-up and

Starting point is 01:07:21 this is a tweet where uh that that i'm going to read where i think somebody was asking eric wall that question let me pull it up this is maha'halo asking eric wall like commenting on his tweet being excited about this and Mahalo says that is not a roll-up though there are no fraud ZK proofs you're not actually doing the fraud ZK proof on the layer one you're just doing the data layer

Starting point is 01:07:45 the data storage on the layer which does that make it a roll-up David or is this something else I'm going to answer your question with a really annoying response a ZK roll-up doesn't have ZK proofs Ryan what do you mean

Starting point is 01:07:59 a ZK roll-up does not use ZK knowledge proofs no fraud or ZK proofs. I'm going to, I'm quoting Mahalo here. So, okay. Sure. Validity proofs is what, uh, a ZK roll up actually uses. This is somebody who went to eat Denver and I did not. Actually this one, that, that little bit of knowledge came from Starkware sessions. Um, well, look, there's advantages to being a conference war. Yeah. Uh, this is going to break my brain to try and explain. This is one of those, I have to like go back to basics about like,

Starting point is 01:08:27 okay, how does it work again? Oh yeah, this works like that. I don't know. I ask me hollow, Ryan. I think we lose something here, and I'm not sure what we lose. As far as settlement assurances, I don't think that this is quite the same as a ZK roll-up or a optimistic roll-up on Ethereum because it's not doing the fraud and validity proving on the layer one. But I'm not sure, like from a user perspective, what we've lost here, what security guarantees, settlement guarantees we've lost. I'm going to let you be the negative Nancy of Bitcoin of this episode. I'm going to say, I am just happy that the pendulum in the Bitcoin ecosystem has moved very quickly away. That they're even having these conversations. Yes, exactly, that this is happening.

Starting point is 01:09:12 Right. The fundamentalist Maxis are losing their control over the Bitcoin narrative. And the builders and innovators and optimists of the Bitcoin ecosystem are getting pigeonholes to finally grasp onto and take back Bitcoin from the crypto bloodites of the world. That's it. Build back Bitcoin. Yes. Take it back. Maybe this is happening. Maybe the builders are coming and taking it back. Yeah, no, I'm not going to be bearish on that. I'm actually very bullish that these types of conversations are happening. I was just wondering like what the difference is. So we'll flag that. Maybe I'll ask Mahalo or somebody else who could tell me. It's not some magical cool new roll-up that's any better than you can do on a smart contracting layer. That's for sure.

Starting point is 01:09:54 Yes. And I think it might be. But it's something. It's something. It's huge. Good for Bitcoin. I'm very bullish about this. You go. Labs. This is also maybe good for Bitcoin. Yucal Labs just made $16.5 million in the first Bitcoin NFT auction. What is this, David? So they have created a set of NFTs on the Bitcoin Ordinals Protocol. They did this funky little auction mechanism where they took in Bitcoin deposits from people and then took in their bids for what those Bitcoin transfers would be. And then they said, okay.

Starting point is 01:10:29 And then they did the auction and then they returned. and then they returned all the extra bitcoins that people lost. And so $16.5 million in revenue for Yuga Labs for their 288 NFTs that they minted. The top bids were 7 Bitcoin and 4 Bitcoin, which was insane. And they made $16.5 million in 24 hours. Were people upset at how this was done? Extremely upset. Really?

Starting point is 01:10:54 Why? Because of the auction mechanism. Basically, they were their own, I don't even know what to call it, custodian. So people would say, they would say, hey, send us your Bitcoin and your bid amount. And then we will run this auction in our like private black box closed environment. And then we will determine the winners and spit back out all the money to the auction. Oh, that is terrible. That is not decentralized nor credibly neutral at all.

Starting point is 01:11:19 Hence the limitations of a blockchain that doesn't have a native smart contracting layer on it. Yes, it's very not bankless whatsoever. The auction mechanism itself. But the actual NFD storage. was bad and broken. Yeah. I mean, I don't think

Starting point is 01:11:32 there did anything bad or anything, but the point is, is that like... Well, we don't know, do we? This is, here's tweet, which is

Starting point is 01:11:38 extremely spicy. Dear Yuga Labs, this Ordinol's Twitter account that he's retweeting is correct. Actions like this prove that for some

Starting point is 01:11:46 entities and for people once a shit coiner, always a shit coiner. If I, personally, Casey, Rotamore, ever see you, Luga Labs,

Starting point is 01:11:53 the entity, fuck around with degeneration bullshit like this, again, I will wash my hands of you forever and encourage others, including those

Starting point is 01:12:00 close to me to do the same. Get effed, you highly regarded morons, Casey Bordamore. Wow. Who's this guy? Who's Casey Rotomor? He's, he's, I had him on bankless with Eric Wall. That's, oh, it's that case. This is the creator of the Ordinals protocol, bro. And he is really pissed that they're using it in this way. Well, I don't think he really cares about, like, them being bad. He thinks that they are setting a precedent for spammers and attackers. Like, see any bad person who sees this model. He's like, oh, I can just, like, copy what. what Yuga Labs did and people will send me their bitcoins and I'll tell them I'll just, you know, give back the losers, but then I'll just run off with it. It does set a bad

Starting point is 01:12:36 precedent. Do you know what? I, I wasn't on that episode of Casey, but I listened to it. I really like this guy. I respect this guy. He's a new class of Bitcoin builders and look at him taking a stand against like faulty auction mechanics. He's got like the spicy sharp edges that Bitcoiners have and he's also got this like builder. It's like it's a new character arc of Bitcoiner. You're totally right. I like it. And of course, a whole bunch of Bitcoin fundamentalists hate him for even doing this. Certainly. Yeah, but I'd have never aligned with the fundamentalists ever. Okay, so here is the update of Blockspace, Bitcoin Blockspace fees.

Starting point is 01:13:13 Because of the Ordinals, Bitcoin Blockspace demand was up for four weeks in a row. It then became down for two weeks in a row. And that was last week. In the last 10 days or so, it is up very big. I'm pretty sure that spike in the very far end has got to be this Yuga Labs ordinals demand. but the power shifting back into the favor of ordinals are here to stay. So we'll see how this pendulum shifts left and right.

Starting point is 01:13:37 But we had some very big weeks in Bitcoin blocks-based demand in the last week or so. I like it. I love this. This is so fun. Yeah, it's been a while since Bitcoin put a big smile on my face. But like, it's doing some cool stuff. I'm enjoying this arc. I'm loving the pluralism coming out of Bitcoin.

Starting point is 01:13:52 I like this new season of Bitcoin. Yeah, 20203 season is great. Good job creators of the show. Bankless listeners are like, I never thought this was possible. They just had to do stuff. Yeah, they had to enable builders, man. This is Amazon news that hit crypto this week. Amazon NFTs will be tied to real world assets.

Starting point is 01:14:11 Tokens are possible. Amazon stepping into the NFT world, it sounds like. Yeah. We're not exactly sure what this means. What do you make of this? Do we have any details? I don't have too many details. They are working.

Starting point is 01:14:26 Here's a statement. For instance, people would be able to purchase a fashion-oriented NFT tied to a pair of jeans. So I think this is real-world high-value physical items paired with an NFT. How they managed to do that? I don't know.

Starting point is 01:14:43 It's not clear what's going on here, but it is clear that something's happening. My take here is that someone is advising Amazon on what to do and how to do it. Or maybe do you think there's a small skunk works team working inside of Amazon that are like bankless listeners and are hearing this and give us some tips and hit us in telegram and someone hit us up give us some details so that we know more about this yeah but not break any nDAs of

Starting point is 01:15:10 course of course of course not yeah it's cool i'm not journalists we're not journalists we're thesis driven media company that's right not journalists at all yeah that's right bankless dot com we keep we keep secrets let's find let's let's uh monitor that as we get new news david multi-coin capital their hedge fund loss 91% in 2022 that was Last year, of course, big loss. Is this a big loss or is this just like the average crypto investors portfolio? What's your take here? It is a big loss.

Starting point is 01:15:38 It's certainly worse than the average crypto person's portfolio. I've been known to be a multi-coin disagreeer at the very least. I was initially like ready to like grave dance, but then I looked at my portfolio. I was like, well, okay. You're down, you're not down 91%. I'm not down 91.4%. Not nearly that bad. But you can like,

Starting point is 01:16:04 20202 was a bad year. Multi-coin had very significant exposure to both. I'm assuming FTCS, I think. Rumors on that one. Oh, they lost, David, they lost funds in FTAX. Oh yeah, they had money in FTCS. Yeah.

Starting point is 01:16:17 Right. The old-fashioned way, they got scammed by SBF. Had a ton of exposure to Solana. And so like, yes, multi-coin capital down 91.4%. That looks pretty damn bad. That sucks. They should have sold more, obviously.

Starting point is 01:16:31 But also a reminder, like, 2020 was a very bad year. And they were probably up decently big in 2021. Oh, yeah. Yeah. Do you remember Ryan Selkiss? You fly very high. You fall very fast. Ryan Selkis' end of the year report, Multicoin were like the big winners of 2021.

Starting point is 01:16:49 Yeah. I would just like to talk to some of the multi-coin LPs and investors because, Like it's really the real signal here is like are they happy and I would like to Hear more about that I've heard my rumors I've heard that people are upset I haven't heard anything more beyond that yeah there there's also rumors should we get we shouldn't say any more rumors Rumors we let we got slapped last week but you know when hedge fund founders sell the top as well It tends to leave a bad taste in everyone's mouth and also calling this thing don't take a zoom call and a Ferrari Don't do that that's not a rumor that did happen

Starting point is 01:17:24 By the way, that did happen. That is confirmed. Yeah. It's, it is, I think, odd sometimes when people hear the term hedge fund, which is supposed to hedge you against risk. And they see a 91.4% loss. It's really not how these funds operate in crypto. They're more like just liquid VC firms almost. I don't operate a hedge fund. I don't intend on operating a hedge fund. I think if you are up some bajillion percentage points and at some point it's your duty to hit the sell button. Is it? I wish I could take my advice. I don't do that personally. I never hit sell. Well, you're not operating a hedge fund. You're operating a media business. True. David, what's this story?

Starting point is 01:18:03 This is crazy. I think this is a follow-up to our story last week, right? Yeah, so last week, a judge ruled that rocket ship, upward chart, and money bags emojis are, can be construed at as financial advice. A second judge has ruled that the shruggy emoji completely nullifies all previous emoji. Are you serious? This is great news. Yeah. So you can just say whatever you want and then you end your tweet with a shrug.

Starting point is 01:18:27 Wow. Not financial advice. Yeah. That's all you have to do. That's a disclaimer. So a shrug can be a financial disclaimer, not financial advice. At least this is according to the rug. Dot mirror.

Starting point is 01:18:38 XYZ. I'm getting the sense that Ryan did not get rug this week. No, I saw the agenda. It almost got me and then I clicked it this time. Yeah. All right. This is a pretty good one. So, I mean, I think that's a, I think if you can, I think this is actually a pretty good.

Starting point is 01:18:52 This is a fair take. fair. This is a fair take. I think that if a rocket emoji means you're you're pumping your bags and you are soliciting or its financial advice, then a shrug emoji should mean you are not doing those things. Yeah. So there's that meme out there where he's like the crypto investor just tells his friend, you know, totally buy this token and it's going to make us rich. Yeah. I don't know though. You always finish up with IDK though so that you don't ruin their life. That's what the shrug emoji is. Oh, that's great. All right. I don't know, though. Perfect. We have a new disclaimer, actually, at the end of the bankless podcast. We'll just replace it with, I don't know, though. The Shrug. Thank you for bringing a little levity to the situation here. What's this? Invest in music. Welcome to invest in music. Fans become collectors. That's cool. Sounds cool. What is it?

Starting point is 01:19:44 Yeah, this is a brand new podcast. New podcast on the scene for people who want to consume more podcasts than what bankless can offer you. Although that's probably a surprise. if you are into the world of music NFTs, this is a podcast out of Cooper Turley. And so if you want to keep up with the world of music NFTs and the growing economy that relates to investing in and sharing Web3 music

Starting point is 01:20:03 and other things of that nature, invest in music is the new podcast for you. That's a good idea. Very cool. All right, on the raises this week, there have been a bunch, but here's the one notable one. Ethereum layer two scroll,

Starting point is 01:20:15 which is a ZK EVM layer two, reaches $1.8 billion in valuation. in their new funding round. That's a big valuation for a bare market. Yeah, that's right. They raise $50 million. So $50 million in the bank at a $1.8 billion valuation.

Starting point is 01:20:32 And disclaimer, Ryan and I are angel investors into Skull. You said it in the bank. What bank do you think they use? Hopefully it's not Silvergate signature? Oh. Who knows? I mean, that was the metaphorical bank.

Starting point is 01:20:42 I bet you was USDC. Yeah. When we invested in Scroll, we said USC? When is our language going to adapt to, like, rather than say in the bank or like I still catch myself I say we got money in the bank or like I'll write you a check and I'm not literally writing

Starting point is 01:20:58 a check anymore it'll take some time to kind of catch up I think we still use the words it just means it starts to mean something different okay okay yeah it just landed in my account because you sent it five seconds ago yeah that feels a lot better and I didn't have to wait

Starting point is 01:21:13 jobs this week of course we got companies raising that means we got companies hiring big one to point out this week Bankless is hired a course, but I want to point this one out. A mutable wants a protocol blockchain engineer. This is layer two. It's a very technical. Yeah, fantastic.

Starting point is 01:21:30 Work in gaming, gaming, infrastructure, gaming platform. Go check this out. There's a whole bunch more jobs I could list, but I won't right now. Go check that out of the banklist. com job support. David, what do we got coming up next? Coming up next, we got questions from the nation, as well as the hot takes of the week,

Starting point is 01:21:48 as well as the meme of the week, as well as what Ryan and David are bullish on. We'll probably chatter about some ETH Denver stuff as well for those that want to stick around after all the news and just hear about what Eith Denver was like. So all of that and more coming up as soon as we talk to some of these fantastic sponsors that make the show possible.

Starting point is 01:22:04 The Phantom wallet is coming to Ethereum. The number one wallet on Solana is bringing its millions of users and beloved U.X to Ethereum and Polygon. If you haven't used Phantom before, you've been missing out. Phantom was one of the first wallets to pioneer Solana staking inside the wallet

Starting point is 01:22:18 and 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,

Starting point is 01:22:39 displaying your transactions in a human-readable format with automatic warnings for malicious transactions or fishing websites. Phantom has already saved over 20,000 users from getting scan, or hacked. So get on the Phantom waitlist and be one of the first to access the multi-chain beta. There's a link in the show notes or you can go to phantom.com slash waitlist to get access in late February. 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,

Starting point is 01:23:15 gaming and social daps like Reddit are also now called. Arbitrum home. Both Arbitrum 1 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 faster transaction speeds with significantly lower gas fees. With Arbitrum's recent migration to Arbitram Nitro, it's also now 10 times faster than before. Visit Arbitrum.io, where you can join the community, dive into the developer docs, bridge your assets, and start building your first app. With Arbitrum, experience. Web 3 development the way it was meant to be. Secure, fast, cheap, and friction-free.

Starting point is 01:23:53 Question from Siogi this week from the bankless discord. Here it is. Is there some economic or technical reason that chains cannot use a stable coin as the native token for gas? I know Tara did, but that was a unique setup, which didn't work. Yes, it didn't. Why is there no chain using a fully collateralized stable coin as gas and providing non-inflationary staking rewards based on these for block space? Seems like a good idea. interesting question. Yeah, I really love some of these questions that really illustrate to me where the question asker is on their journey down the crypto rabbit hole. This person is that like the very like starting to get into some like really technical like level questions. Like why can't we use stable coins for gas? Yeah, it's a good place to gas. It's a good place to gas. Thinking of novel ideas here. Right. Yeah. Um, asking why can't we do this is a great way to learn. Okay. So great question. Uh, why can't we use a stable coin for gas? Tara did. Uh, and so they said, is there some economic or technical reason? And the answer is yes. Both. Going back to when we were talking about tokens versus coins, Ryan, we need ether, the coin of Ethereum to be the gas.

Starting point is 01:24:57 Why do we need that? Well, because in proof of work, so this also applies to Bitcoin, you need ether and Bitcoin to have value because they are the things that economically secure systems. The outside world calls the crypto industry like blockchain. These are blockchains. A blockchain is actually just one part of a grander system of technologies that combine. together create what we know as like Bitcoin or Ethereum. The way that Vitalik and I've been using this language have called these things, crypto economic systems. And so it's a semblance of

Starting point is 01:25:28 cryptography at blockchain for a database and economics. You must have a native currency of a crypto economic system to be self-sufficient and independent and autonomous. Because that's what secures the thing. That's what secures the thing. Miners don't mind Bitcoin unless Bitcoin has value. stakers don't stake ether unless stakers have value where does that value come from it comes from the enshrined relationship between the economics of buying block space from bitcoin and buying box block space from ethereum using the native currency if you don't have that relationship between block space demand and currency of the chain then why does that currency exist at all that that that has to be intrinsic that that relationship must occur that has to be and therefore on the ethereum layer one we cannot

Starting point is 01:26:16 use dye, for example, to pay for gas because we must enshrine the value of ether. So that is the economic reason. Also in EIP-1559, this made this formal. So before EIP-1559, people were talking about like, oh, you can just like pay miners, you know, OTC. You can like Venmo them to process your transactions. And that could have worked. And actually, actually still is true for Bitcoin, actually, not enshrine. Miners can put things into the blockchain for, you know, zero Bitcoins. pay them in the pocket. So that's still a thing for Bitcoin. In EIP-1559, it formally enshrined ether as the native currency of Ethereum. So you can't route around ether. Ether must be burnt in order to make a transaction on Ethereum. So that is the technical reason that you can do

Starting point is 01:27:03 this. Now, what's cool is that that is true of the Ethereum layer one. That is not true of layer two's. You can use any token that you choose on a layer two to pay for gas. However, that layer two must pay for ether for layer one block space, but any layer two could use a stable coin or any other type of asset for that matter as gas. Coin base chain, they would be violating securities laws, could tokenize the coin security and the coin equity, turn that into a token on base, and that could be the gas token for base. That's not what's happening. I just made that up. By the way, that would make a theoretical possibility. Make way more sense in my opinion. Like securities laws aside, that would be like a much more aligned kind of ecosystem.

Starting point is 01:27:49 That would be very, very bullish for the coin asset, except for the fact of violating securities laws. That part would be bearish. Yes. Now, okay, so tell me about, by the way, that was a, I think that was a great answer. Thank you. A couple of things this triggered for me, but like, tell me about this new account abstraction ability where through a smart contract wallet, I actually don't have to pay for my Ethereum gas fee with ETH the token. Is that a thing that's happening? Is that part of what you meant by kind of the technical reason you can't? Okay.

Starting point is 01:28:22 Now we're now onto new horizons. Now we're talking about wallet design and account abstraction. What account abstraction does is that say you've got a brand new wallet and you throw 25 U.S. DC in there. There's zero eth in there so you don't have any ether to pay for gas and you would like to send that 25 U.S. etc. or do something with it or deposit into pull together.

Starting point is 01:28:41 But you don't got any gas. Yeah. Wouldn't it be nice? It would be nice. Wouldn't it be nice? Yeah. So with account abstraction. you can have a different wallet

Starting point is 01:28:48 to pay your gas fee. And so you actually never have to have ether inside of your wallet and you can still do crypto and defy things. Someone else on your behalf pays for your gas, but that person is still paying for gas.

Starting point is 01:29:01 Yeah. The economic rules of you must use ether still apply to someone somewhere. But with account abstraction, you can change who's responsible for those rules. A relator could pay for it. The smart contract wallet could kind of provide some reason to pay for it.

Starting point is 01:29:15 all of those things. You know, that was a great answer. Do you know the other thing that kind of reminded me of is when you were talking about, yeah, in Bitcoin, this is still an unsolved problem, that somebody could go in a telegram group and send someone money out of bound in order to reward them for, you know, processing their transaction in, like, first before everyone else. This is the problem of any MEV, minor extractable value. And we could call it minor extractable value in the case of Bitcoin.

Starting point is 01:29:43 All this kind of throws to me is, like, With Bitcoin doing this ordnals thing and with blocks case demand going up, my God, they're going to have to go solve all of the same problems that Ethereum has had to solve or the past three to four years, including challenges with their monetary policy and enshrining Bitcoin as the asset for block space. And also including, like, issuance. And like, they're going to have to follow this exact same path and solve it, whether they know it or not. Why? Because if your block space is demanded in the same way that Ethereum, is, then you're going to face the same challenges that Ethereum did. It's hilarious to me, like, in a good way.

Starting point is 01:30:22 Like, oh, that's, like, that's sweet. You're growing up. Yeah, they're doing it. You're doing it. Yeah. Anyway, they'll figure it out, I'm sure. Okay, so that brings us to the take of the week, which, because you've said that, I'd like to skip to the last take of the week, and we can go to the other ones first.

Starting point is 01:30:36 This one from, from, from, uh, Wong, John, Ian. Thank, sorry for, for butchering your name, apologies. who tweets out Ethereum culture and technology is influencing Bitcoin culture and technology. Now, for people that have been around for a last bear market, Nick Carter says this. I believe Hasu also says this,

Starting point is 01:30:54 or previously said this, is that Ethereum culture is downstream of Bitcoin culture in that Bitcoin, Bitcoiners, Bitcoin, is at the spearhead of the crypto movement and everything else is downstream of Bitcoin, including Ethereum. That was very true.

Starting point is 01:31:08 You and me, Ryan, being like in Anthony Sizzano and all the others, seeing like, ETH is money. That was us like being downstream. Trying to catch up. Trying to catch up, right? Block space demand, security, all of that kind of stuff. I learned about settlement insurances as well as you did from Nick Carter. Exactly. Right. And so so much of what is Ethereum today, we learn from Bitcoiners. Bitcoiners have stalled out, man. And now I think the tables have turned. And so

Starting point is 01:31:34 ordinals, all of what you just said, just like Bitcoiners have to learn about like enthrining the value of BDC, all that kind of stuff. Now they have to do all that. hard work that Ethereum has done over the last five years. And they haven't done any of it because the fundamentalists have been in the lead. They've had, they've had control. And so like now, like now, now, like now we're finally bullish on Bitcoin builders, but it's also now bearish because they now realize how far behind they are in this conversation. It's going to require some protocol upgrades. And do they have the social layer, the layer zero that can can adapt and sustain that. I don't think they do. Right? It's going to be an uphill battle and a challenge, but it's,

Starting point is 01:32:09 it's definitely cool to see. We've got some other takes of the week. This is one for Mike Dutus. Mike Dutis is retweeting two of Paul Kroogman's very old tweets. One goes back to January of 2018 where Paul Krookman says, cryptocurrency lets you make electronic transactions, but so do bank accounts, debit cards, PayPal, Venmo, all of these other methods involving trusting a third party, but unless you're buying drugs, assassinations, that's not really a big deal. And so kind of disqualifying crypto as a payment.

Starting point is 01:32:37 All crypticers are criminals, aren't they? So fast forward to his tweet just now, so five years. later. I've been using Venmo for years, says Paul Krubman, but now it won't allow me to make payments. I spent a long time in chat with representatives. They told me they can't explain why or fix it. The software has taken control. Mighty how to turn tables in five years. Oh, Paul. You know, sometimes you don't realize it until it happens to you. I mean, like, Paul Krugman is an economist, of course. He's said some pretty anti-crypto things in the past,

Starting point is 01:33:11 not seeing its utility, but until it happens to you in the country where you live, when the situation that you have in front of you, you actually don't appreciate the value. It just always brings me back to my like two mental models of people in the world. There's people that see crypto for what it can be in the future and then therefore believe in it today. And then there's people who see it for what it is today and see just like a fucking mess. Yep. Those are the two camps. I totally agree.

Starting point is 01:33:37 Mark Andreessen, this is somewhat related. He said this. I can't convince you to want freedom, but if you do want freedom, it can't come to you in the form of a centralized system, whether that's communism, backdoored cryptography, or centrally controlled AI. That was a good take. You want freedom. It can't come built on top of centralized systems. Love it. Very true. It cuts so deep for like what we're trying to do here. Yeah. Like crypto's here to set you free. Absolutely. David, what do you bullish about? Oh, God. I am bullish on the bankless nation, man. Are you? So people who listen to Bankless will know that I'm very, very bullish on Heath Denver as an event.

Starting point is 01:34:16 Because it was the place that I decided that I'm going to just yeat myself out of my previous life and do whatever this crypto thing means. So I was like alone going off to East Denver with zero friends. I just like awkwardly ask this strange. Oh my God. It is the first day in school picture. I didn't know anyone at Heath Denver. So I just gave this person my phone like, hey, can you take a photo? of me in front of this sign.

Starting point is 01:34:42 And here's that photo. Fast forward five years later, we're at the first ever bankless meetup. And there's 150 people here, and we had to keep it a secret because we knew that it was just going to be overwhelmed. So shout out to everyone that came for the bankless meetup and had the free beer at the brewery.

Starting point is 01:34:58 It was a fantastic time. I enjoyed meeting absolutely everyone. Ryan, I got up on stage, grabbed a microphone, zero plans whatsoever, and just started talking for a little bit and ended up just like thanking all of the HQ team for all of this support. It's cool. It's great to have company. It's dangerous to go alone. And the fact that 150 people want to show up for the same movement that I saw five years ago.

Starting point is 01:35:20 It's just incredibly humbling. Yeah, it is. It's super humbling. This is the other how it started, how it started, how it's going. Only in like a positive way. It's going pretty well. That's awesome. Yeah. So that's what I'm bullish on. What are you bullish on, right? Look, I'm going to say it again, bankless.com, bankless 2.0. I just want to take a moment because we talked about it already so much about why we're doing this, I think. And the big reason is because it was time to get more freedom, David, and kind of... Time to set sale. Yeah. At a high level, I mean, substack is, it's kind of, it's its own platform a bit more, that's the platform we were using for our newsletter and for bankless premium membership and that sort of thing. It was

Starting point is 01:36:04 constraining. We couldn't build crypto features on top of it. So, We set sail. We created our own path. We created some more white space. It's been a tremendous effort. This is just the beginning, though. That's what excites me the most because now we can start building on top of this platform. And I just want to take a minute to thank the entire bankless team that has made this possible. In particular, I want to thank Jason and James, who are our key web devs and front end experts that actually brought this to fruition. And of course, our entire newsletter team, Alpha team, and the pods. squad for populating all the content. It's a fantastic job. And I want to thank you, bankless listener. We appreciate you guys, like a lot. Like, the picture that David was just showing earlier, like, to have, I think you, I was asking David, like, oh, so how is, how is the bankless nation?

Starting point is 01:36:57 When you meet people from the bankless community, how are they in, in person? Are they, are they cool? Like, do they have good vibes? It was like, it's like. Do they like us? Yeah, it's like, these are all united people, like, with a share. set of values and it's so cool. They're instant friends, right? Right. And we would not be able to kind of launch this and carry this movement forward. We really consider ourselves in this whole

Starting point is 01:37:19 headless brand of the bankless movement, just torch bears. We're just trying to set the path. Just trying to show the way. Yeah, bankless is for everyone. And now we have more resources to do it. And we have those resources because you tune in every week on to this show and support us because some subset of you have become bankless citizens and are taking that journey with you, with us, and we just appreciate you all. It's just fantastic. So thank you, thank you to everyone who made this possible. This is just the beginning. Yeah. We've been wanting a website for a while, but we've wanted to also do it right. And this is finally a website that we just feel so damn good about. And like Ryan said, it's just the beginning and meaning that now we have our own

Starting point is 01:38:04 vehicle, our own ship, our own structure to do cool things on top of. David, did you just send me a cool thing? I just sent you a cool thing. And so the first thing that you can, you can already do something, Bankless Nation on the Bankless website, which is if you are a, if you already are subscribed to Bankless, if you already have given us your email address to receive the newsletter or the podcast or whatever, you can go mint a Po app. And Ryan's about to show the Poe app on the screen because it's ship season because we are sailing west. So this is the, the, you know, the inaugural Po app for christening, if you will, the Bankless website is a ship because we're sailing west. It's a ship because it's ship season. And it's just really just a badass looking ship.

Starting point is 01:38:44 It's the first time I've seen this, man. I love this. Shout it to Logan who produced this for us. On his birthday, by the way. Sorry for making that request, Logan. Thank you. And look, we got the black flags at the top. You see that? It's so good. Yeah. So if you want to mint the Poap, you go to bankless.com, sign in with the email address that you've already created an account. If you have not yet already created account. I'm sorry, you can't mint the POAP because of anti-cibil and spam mechanisms. We have to gate it to people who have already given us our email addresses. Otherwise, people will attack the system. Go with the POAP and celebrate us. Sailing westward. We're going

Starting point is 01:39:16 west. This is awesome. All right, David, let's end here. Meme of the Week. What are we looking at this week? So this was the toilet paper at Yth Denver. It was a roll of toilet paper. Was this everywhere? Are you serious? Quite a lot of places. Yeah. Wow. This is Sam Beckman-Fried on toilet paper. So if you ever took a number two, you wiped your butt with San Bakeran Fried's face. Did you get the opportunity, David? Or is that a personal question? I'll leave that up for the Bankless Nation to wonder about. For the imagination? Oh my God.

Starting point is 01:39:46 Please picture that. That's been the end. That's it, guys. We've got a cool moment of Zen for you. Again, celebrating the new bankless 2.0 website. If you're listening, it won't really make sense. So watch the YouTube. Yeah, watch YouTube. Risk and disclaimers, guys. crypto is risky. You could definitely lose what you put in, but we're headed west. This is the frontier. It's not for everyone, but we're glad you're with us on the bankless journey. This has not been

Starting point is 01:40:10 financial advice. Shrug emoji. Shrug emoji. And I saw that house for the first time in my wildest dreams, I never could have imagined something so gorgeous.

Bankless - ROLLUP: Silvergate Liquidate?! | Elizabeth Warren vs. Binance | Bankless 2.0 Announcement | SEC Taking Ls?

There aren't comments yet for this episode. Click on any sentence in the transcript to leave a comment.