Bankless - ROLLUP: Solana Wallet Hack | Nomad Bridge Hack | Ethereum PoW Chain | DeFi Tokens | Coinbase ETH Staking

Starting point is 00:00:00 There's just the bridge risk. People understate the bridge risk. And events like this kind of highlight what a mistake it is to understate the bridge risk. Bankless Nation, happy first week of August. David, it's Friday morning. What time is it? Oh, Ryan, it's the Friday bankless weekly roll-up time where we cover the entire week of news in crypto, which is always an ambitious endeavor. Yet we persevere. On into the frontier, nonetheless. Into the frontier. That's right. And I got to remind you, you enjoy this roll up with a cup of coffee. David, you said you got a coffee upgrade earlier this week and I forgot to ask you about it. So, you know, how's coffee at the apartment in New York? You know, coffee is a tough thing. I was making my coffee with an aeropress, which I love.

Starting point is 00:00:47 That is good. But it's time consuming. It's a little time consuming. It's a little laborious. It's really meant for like camping or just like things when you're in a pinch. So I got a chemex, which is, you know, definitely like a standard. It's not nothing special. Is that drip? Chemics? Yeah, it's a pour over. Yeah. It's more suited to like the particular ground that I have and then the kettle that I have.

Starting point is 00:01:10 So definitely got an upgrade, but still lots of work to be done on my coffee setup. So I'm looking forward to that. I'm glad you're in better shape. And I know it's a continuous improvement. Just like all. Just like all things. Yeah. Or it becomes a beverage.

Starting point is 00:01:24 All right. We're not talking about coffee today. We're talking about crypto and a lot happened as usual. What's the first thing we're going to cover today? Yeah, it's a bad week for crypto this week, some exploits. Another bridge hack. So reset the clock on that one, zero days since our last accident. Nomad was hacked for almost $200 million on a smart contract exploit. So we'll go into how that happened, because it's very unique, actually. The hack, first of it's kind of a hack. And so we'll talk about that and kind of what it means for the whole like multi-layer one thesis. Speaking of hacks, all right, almost 10,000 salana wallets were just randomly drained this week as well. Also a unique hack. That's not supposed to happen.

Starting point is 00:02:07 And a lot of the week was spent with people trying to figure out how in the world this happened. So we're going to talk a little bit about that. And the conclusion of what happened with this wallet hack, pretty alarming. What's the other thing we're going to cover? And lastly, there's just been a bunch of hubbub, a bunch of drama about the Eith Pow chain, the ETH proof of work chain that is probably going to come out of the fork. Once we merge, we're going to leave a proof of work chain behind. And so some people are descending upon that proof of work chain as a shelling point.

Starting point is 00:02:38 Are you, listener, about to get some free Eith pow, pow, Eith? Please. Yes. Yeah, well, personally, I wouldn't get your hopes up. We'll talk about that. Well, I don't know. I'm a little more bullish on it. We'll definitely talk about that.

Starting point is 00:02:51 And of course, if you like the weekly roll-up, you like bankless content, make sure you like, subscribe, rate, and review. If you are listening to this on a podcast channel, on Spotify, especially, you can now get this in video format. There's always better in video seeing faces along with the words. David, before we get into it, got to relay a quick message from our friends and sponsors at Florida. Did you know in 2021, that was just last year, speaking of hacks, we were talking about hacks in the intro. there's $2.3 billion in crypto web 3 related hacks. And Florida has something to help with this.

Starting point is 00:03:30 What is Forda doing, David? Forda is a live smart contract monitoring service. And so what they do is they monitor the mempool. And so, you know, there's plenty of things that you need to do as a smart contract dev, like, you know, go through audits, do formal verification. But there's still plenty of stuff you can also do while your smart contracts are live, in the wild, live. production. And there are types of transactions that can be detected that are incoming that are known

Starting point is 00:03:56 to be like malicious. Like they drain treasuries, they hack bridges, you know, they mess with your governance or whatever. And so Florida, there's that like video game that way back when in the 90s, like this meteor game where the meteors were coming in and they would shoot them before they hit the earth. So like they would zap the incoming meteors. This is what Forda does for incoming malicious transactions. And so you can identify a set of transactions that if they do this, then you know, you know they're malicious, and Forda will zap them before they get into your smart contract. And so there's over 36 billion in TVL monitored by Forda's decentralized network, including protocols and applications like DYDX, compound, balancer, Maker, Lido, Yuma,

Starting point is 00:04:37 not nomad, not nomad. Maybe they could use Florida. Yeah. There's a link in the show notes if you are interested in learning more about getting a smart contract exploit zapper on your, on your squad. One thing I know is you don't want to find out that your smart contract has been hacked on Twitter. You want to receive some alert and have a defense system set up. So Forda monitoring is there for that. And of course, Florida, thank you for sponsoring this message. Ryan, shall we get into markets? Yeah, let's do it. What's Bitcoin showing us this week?

Starting point is 00:05:09 I'm going to show some charts. Yeah, got some new charts on the screen. Bitcoin, we are down a whopping 0.9%, which I would consider flat. I would consider that flat on the week. Started the, start of the week at $23,100, ending the week at $22,900, flat on the week. Just flat on the week, okay. Neither up nor down, just tepid, just flat. How about ETH? Same thing?

Starting point is 00:05:31 Yeah, start of the week at 1640, ending the week at 1620, down 1.5%. Again, I would just consider that flat. That is a flat week. All right, David, how about the Eith Bitcoin ratio? What's that looking like on the week? Yeah, super flat on the week. down half of a percent at 0.0707. So nothing. Nothing. Mark, it's still deciding. Bitcoin or Eiff. Blue chips are flat. Tokens, Ryan, up bigly. We'll talk about that later in the show.

Starting point is 00:06:01 But tokens are like defy tokens? DeFi tokens, yeah. They're on the move? Yeah, they're on the move. Well, we will cover that in what I am bullish on at the very end of this podcast. Is it time to bring our DPI chart back? Oh, God. I'm not ready for that. Not not quite that bullish. Just specific tokens, please. please. How about a global cryptocurrency market cap? Are we at a trillion yet? Yeah, we've been at a trillion for a while. We ended last week at 1.14 trillion. We are at 1.11 trillion. So down 30 billion dollars. Again, if it's less than one terra of downwards, that's flat. Less than one terra. Wow. Too soon, David. Gas markets. Gas markets in real life kind of suck, price of the pump. But price at the Ethereum pump

Starting point is 00:06:48 still kind of good. Is this nine way? This week did it hit as low as nine way? Yeah, you can scroll down to get that chart a little bit. Yeah, so last week it was keep going down. God, every single time you miss this. There we go. Okay, green chart, green chart and green.

Starting point is 00:07:02 Top right. Yeah, so the average, well, we'll start here. The average total transaction gas distribution, the peak was at nine way this week, down one way from last week. Seven, Ryan, is the number we got to be to be deflationary in the merge, and we are at nine. That's too close for comfort.

Starting point is 00:07:20 All right. That would be so disappointing. But let's take a look at Bitcoin and ETH from all-time high perspective. Bitcoin down 65% from all-time high this week. Heath down 64%. And the difference between ETH and Bitcoin from their respective bottoms is ETH is up 76% from its bottom, and Bitcoin is only up 26% from its bottom. percent. So, ETH took a harder crash, harder dip than Bitcoin, but it has recovered much faster.

Starting point is 00:07:53 And now it's kind of neck and neck on the percent down from all-time high. What do you make this? Yeah, I mean, this is definitely the merge trade. Like, it's very infrequently that I feel like we can confidently say what is making the market do the things that it's doing. But right now, I have some of the most confidence I've ever had that this is the merge trade. This is what this is. Yeah. Yeah. Merge is bullish. Let's look at the other percentage tokens down from all-time high. So besides Bitcoin and ETH, how about Binance chain?

Starting point is 00:08:23 What's that looking like? Yeah, Binance chain, B&B always does very, very well. And honestly, one of the reasons is because it's one of the few tokens that actually has cash flows embedded in it. Like, it's kind of got this like manual EIP-159 buyback and burn because that's what Binance does with its revenues. It buys B&B and burn it. It's a massive exchange, which is a cash cow in bull markets and bear markets.

Starting point is 00:08:43 It's still a cash cow and it's still sort of. backing the finance chain. Always has been. Or sorry, B&B chain. BNB chain, yeah. So it's down 56% compared to Bitcoin and ether's down 66%. So definitely better than those two. XRP down 88% Cardano, down 83% Salana, down 85%.

Starting point is 00:09:00 Pocateau down 85%. Dogecoin down 91%. Polygon down 69%. Nice. Avalanche down 84%. Uniswap, only down 28%. Wow, uni only down 28%. That's pretty good.

Starting point is 00:09:15 I got to admit, David, I look at the start, and I see a little bit like nature is healing. Yeah. I mean, this makes more sense to me than the bull market. This makes complete sense to me, but like it's still more reasonable than things in the bull market. Let's talk a little bit more about the bullish-eath narrative. It's kind of going mainstream. You know Joe Wisenthall, right, from Bloomberg? Big time.

Starting point is 00:09:39 Yeah, yeah. He has a podcast. I listen to you. Occasionally he also has a newsletter. and in his newsletter this week, Joe Wisenthall, who's never really been an Eith bull at any point in time, any of my reading of his, he just wrote why Eith is taking over the narrative and why Bitcoin's narrative is busted. And yeah, I think this is starting to escape into mainstream is probably the takeaway here that Eith, like surpassing Bitcoin on the narrative front is a real thing that's happening right now. now. Yeah, and there's two reasons for this. I think if you're inside of the crypto industry, you are bullish eth. If you are bullish eth over Bitcoin, then it's because of ether being

Starting point is 00:10:25 deflationary post-merge. But if you're outside of the crypto industry, you think that Ethereum is going to be in a better place than Bitcoin because of the ESG, like green energy narrative. So like, it's kind of pick your reason, but we got two of them as to why people are trending in favor of East lately. Ryan, really quickly, I just talked about how Uniswap was only down like 28% 29% that didn't feel right it's actually down

Starting point is 00:10:47 70 it's down 80% I just checked on it on trading yeah that was weird yeah it's actually down 80% the miscarry chart

Starting point is 00:10:53 is that wrong here I don't know where that came from yeah thanks for that correction yeah but but to your point and the two reasons to be bullish

Starting point is 00:11:00 when you're inside of the space you're kind of bullish because of the the structural cell pressure right that just decreases in my mind the correct reason

Starting point is 00:11:10 for being bullish I think so yeah I mean like the The narrative side, we knew proof of stake, we knew proof of work was going away and Ethereum was becoming ESGs like kind of forever. Right. But I think this is less well known, but this has a greater, more immediate impact.

Starting point is 00:11:26 What is the chart that we're looking at on the change in theoretical, annual structural cell pressure with the massive issuance reduction, all of the proof of work issuance is like 4.1%, something like this, it goes away completely the day of the merge. What are we looking at in this chart? Yeah, so we are looking at a bar chart that's titled Reduction in Theoretical Annual Structural Cell Pressure. And what that means is that some chains, some bigger chains, have gone through changes in monetary policy throughout their history. Ether used to be issued five ether per block at Genesis that got reduced down to three in 2017, and then it got reduced down to two in 2019 to where it is now. Other other blockchains have also done similar things like the Bitcoin happening famously.

Starting point is 00:12:13 there's a 2016 Bitcoin happening, a 2020 Bitcoin happening. And the sizes of these bars are a function of how much cell pressure is getting reduced. So when Bitcoin goes through a happening, you take how much Bitcoin would have been issued in a year, multiply that by the USD price, and then take away like how much is not being issued as a result of the happening. And so the 2020 Bitcoin happening reduced $3 billion in theoretical annual cell pressure that got reduced from the happening. The ether reduction from 3-Eth to 2-Eath and the proof-of-mining, proof-of-work mining reward in 2019 removed 500 million in yearly annual cell pressure. But reminder, that's when ether was like one or $200. And so if you multiply that by 10 or 20 to get where we are now, that would control for that. On the very far left, we have two upcoming changes. We have the Bitcoin happening in 2024, which if you, again, multiply the amount of Bitcoin being issued versus its current price where it is now at $23,000, you, Bitcoin will receive

Starting point is 00:13:18 almost a $4 billion reduction in annual cell pressure. This is why Bitcoiners like love, love the happening, right? We've reduced cell pressure. This is why the happening celebrated like scarcity coming in. And it's scheduled every four years. You know it's coming. Right. And, and then in the ETH merge, the ETH merge, which is upcoming very, very quickly, is going to be a theoretical reduction in $7.5 billion of annual cell pressure. And And so almost double the annual reduction in annual cell pressure from ETH to Bitcoin, which is also saying something when it's when it's double a reduction in U.S. dollar cell pressure. But the difference in market cap between Bitcoin and Ethereum is about 2.5x. So the Bitcoin market cap is $440 billion. The Ethereum market cap is $195 billion. Call it, call it 200. And so the Bitcoin market cap is 2.5 times larger than Ethereum's.

Starting point is 00:14:12 But the Ethereum US dollar cell pressure reduction is twice as big as Bitcoin's. And so this is why, like, this is so incredibly bullish. It's such an outsized reduction in cell pressure versus the much smaller Ethereum market cap. Yeah. Another way to say this, too, is in a post-merge world, Ethereum is going to have to find, in order to stay flat, in order for prices not to explode upwards, Ethereum is going to have to find $7.5 billion in new sellers. Right.

Starting point is 00:14:44 And if it doesn't find those new sellers... Won't be finding it here, Ryan. If it doesn't find those new sellers, has no choice but to go up. It has no choice but to go up. That's why the economics of the merge are so interesting and so attracted, and I think why the market is starting maybe

Starting point is 00:14:59 to price this in, though I don't think they've fully priced it in. You know, of course, we'll see what happened. The merge is literally like, checkmate sellers. I just don't... Why would you say? sell. There's like, there's two times you can, you know, buy or sell ETH, right? One is before the merge and the other is after, right? I'm definitely a buyer before the merge. I think it's a historic opportunity. Anyway, not financial advice. Okay, but the second reason, the reason maybe mainstream

Starting point is 00:15:26 thinks this is interesting as well is the whole ESG narrative. So this is the energy reduction narrative when Ethereum transitions to proof of stake and gets rid of all of the energy inefficient mining that happens. What tweet are we looking at here, David? Yeah, so we're looking at just a chart of Google searches for ESG overtime and it's like a hockey, it says on the beginnings of a hockey stage, hockey stick it looks like. What a popularity of Google searches for ESG overtime. I don't really know what this X axis is. Maybe it's arbitrary. But we are roughly three times higher than we were in 2020 if that is any sort of an indication. So we're extrapolating here and saying just like ESG as a concept,

Starting point is 00:16:07 which is just like in sustainable investing, both in ecological standpoint, but also like a political and governance standpoint. And so implying that ESG is in vogue, and so a reduction in energy usage by a leading blockchain will be a very popular move with people because ESG is in vogue. Now, personally, I don't really enjoy the EFECD,

Starting point is 00:16:34 ESG, I think it's just adding a political element to investing, but that is just a political take, I guess. I think there's better ways to optimize for investments, but it's what the people want and the people want things that are green, and that's what Ethereum's doing when it goes to the merge. You definitely have to track it as a narrative. And the bottom line here, as the tweet said, is Bitcoin has decided to ignore the ESG issue entirely, whereas Ethereum is unlatching itself from proof of work. And that's the narrative going forward.

Starting point is 00:17:01 and I think people are buying into that narrative as well. David, people are also buying into ENS. We just got the July 2020 stats and ENS is an NFT that just is doing very well in this spare market. What are we looking at for the high level stats here? Yeah, let's go through some of the numbers. 378,000 new. New.Eath registrations bringing the new total to 1.86 million Ns names that have been minted. That's $6.8 million in protocol revenue going to the Dow. that's 5,400 ETH in revenue, with 48,000 new ETH accounts, new Ethereum addresses that have at least one ENS name in it. And I never have understood this last metric, greater than 99% of open-sea domain volume. Does that mean ENS is dominating open-C volume by 99%?

Starting point is 00:17:51 There are other domains. There are other domains besides.Eths and ENS. There are dot-cropos or all sorts of other dot names. Okay. Oh, so it's a market share. Like ENS phones. Well, that makes sense. The domain space is like a monopoly game. So that makes sense. ENS definitely has won that game.

Starting point is 00:18:06 It's kind of feeling like it's the dot com, right? At least. Yes. Yes. Yeah. This is really interesting. And all of that protocol revenue goes to the Dow. Yeah.

Starting point is 00:18:15 6.8 million protocol revenue. That was 6.8 million for the month. Just one month? For the month. Yeah. What? Yeah. That's a cash cow.

Starting point is 00:18:23 Right. And like I can't imagine the Dow has all that many expenses. Okay. What is the token price? You're going to. Yeah. A&S. That's a good question.

Starting point is 00:18:34 How's that doing? Remember the E&S token, you got some air drop? Yeah, which I couldn't claim because my Argent wallet lost my private keys, my Argent wallet. It's off the bottoms here. Yeah, it's off the bottoms for sure. It's still climbing. Bottom around nine.

Starting point is 00:18:48 The ENS is a good buy. It's a good buy. It's double from the bottom. Yeah. But, I mean, if you go to cryptofease. info, just talking about the Daps, uniswap, $1.5 million in revenue in one day. a 0.6 million dollars of revenue in one day GMX, which is an app that's spitting out ETH to its token holders. 0.2 million. Sushi swap 1.1.16 million. ENS coming in in 1, 2, 3, 4,

Starting point is 00:19:15 coming in 5th at 1.15 million dollars per day, 150,000 dollars per day in revenue. Still three times more than Solana. I don't know what to say about that. It's not a fair comparison because Solana is like explicitly like we won't collect. any fees. We will not have economic sustainability, and that's how we'll just like onboard everyone by collecting zero money. Yes, but I think it's more of a fair comparison than people actually think. Yes, it should. People should think this, yes. We actually get into this conversation with, I was going to say, Pollynia, Pellania. Pellania. Yeah, so David and I did an Anon interview with Pellania last week. We talked a lot about. Previously known as, the anon previously known as

Starting point is 00:20:00 Paulina. It turns out we have not been pronouncing that name correctly at all. Anyway, it's not coming out this Monday, but the next Monday, we talk all about alternative layer ones versus Ethereum and layer twos and where the value accrual is going to lie. And anyway, don't miss that episode is all I'm saying. We get into this discussion around fees and how it impacts valuation. David, what else we got here? Speaking of ENS names, OpenC, bought OpenC.death for a 165 thousand dollars. Wow. Yeah so nice payday for whoever minted opencd.eathe. Congratulations. Oh, that's basically 100th. Well done. I'm glad we got bankless. Uh, eat back in the day, David.

Starting point is 00:20:40 Yeah. Before this. Could you imagine how much we'd be gouged if we hadn't gotten bankless dot eath? It'd be so sad. I don't know if I'd do it. What do we pay for that? We pay like $2,000 for that. Like, goodbye. We paid for it. So you have to translate that into each terms. Maybe it's worse than that. Who knows? But eat this down. I don't know. No, we're probably okay. I'm going to go, what the, I'm going to go, I'm to go find this out right now. Ryan, we bought bankless.com, August 2nd, 2020 for 5.15Eath. That's, that's more than $2,000. Sad. Yeah, that's very steep. What is that? Right now, yeah, that's like $8,000. $5.15, you said? Yeah, 5.15. Yeah, you know, under 10,000. 8,250. Yeah.

Starting point is 00:21:24 I mean, it's still over the long term. Yeah, over the long run. I mean, we would have paid, we would have had to pay a lot more for it now. An egregious amount. And by the way, we caught this when it, somebody let it expire. So somebody had purchased it and then they let it expire. We came in and sniped it in the bid process. Wait, how did we, if it expired, why did we pay 5.15 Eve? Is there because, there was like this bid process that they had in place with some expired domains where it started very steep. And then over the next 30 days, like it descended in price. Oh, but anyone could buy it. Anyone could buy it. But like we bought it right away. Oh, yeah, yeah.

Starting point is 00:22:00 So we bought it kind of at the top of that because not taking the risk. Anyway, guys, coming up next, we're going to talk more about the hack season that seems to be happening. It's sort of a bad week for hacks across crypto, especially if you were using the bridges to some of these other ecosystems, a $200 million hack, and then this Solana private key hack. We're going to talk about that. And then also, David, you're to tell us whether proof of work, Eith, a fork of Ethereum, if that's a real thing or fake news.

Starting point is 00:22:29 And I'm still hoping for my ETH forked tokens that I could sell for more ETH. Don't hold your breath. We'll see. Guys, we'll be right back. But before we do, we want to thank the sponsors that made this episode possible. MakerDAO is the OG Defi Protocol. The first Defy protocol to ever exist, even before we called it DFI. MakerDAO produces dye, the industry's most battle-tested and resilient stable coin.

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Starting point is 00:24:18 Discord. You can find me hanging out there sometimes in the chat, so I'll see you there. All right, guys, we are back with another big bridge hack. This time, a bridge called Nomad was drained of nearly 200,000. million dollars in an exploit. This was a code type exploit. So a technical exploit. David, you want to tell us what happened. Yeah. So cross-drain bridge, nomad, it goes to a number of different ecosystems, avalanche Ethereum, EV-E-M-OS, EVMOS. Cosmos, yeah. Cosmos, yeah. Right. Milcomoda and Moonbeam. And so, like you said, it was a smart contract exploit as opposed to like an economic or

Starting point is 00:24:54 Oracle attack, we lost almost $200 million. And the person that really unpacked this, the best, is a Sam C. Sun who put a thread together. And so we'll go ahead and read out the thread because it's not too long. So Sam says, Nomad just got drained for over $150 million in one of the most chaotic hacks that Web3 has ever seen. How did this happen exactly? And what was the root cause? Allow me to take you behind the scenes. Please do, Sam. And so he says, it all started when somebody, a Twitter, a telegram account shared another telegram's account, or Twitter accounts, tweet in an Ethereum security telegram channel, although I had no idea what was going on at the time.

Starting point is 00:25:30 The sheer volume of assets leaving the bridge was clearly a bad sign. And he shows a tweet of 100 WBT leaving the Nomad Bridge, like transaction after transaction after transactions, 100 WBTC, 100 WBTC. And somebody says, Nomad Bridge getting rugged looks very, very suss. Sam says, my first thought was that there was some misconfiguration for the token's decimals. After all, it seemed that the bridge was running a send point zero one WBT, get 100 WBT back promotion. And then here he's showing a tweet where somebody was sending in literally 0.01 BTC, but hundreds of WBTC were going out. That's a bad promotion.

Starting point is 00:26:06 It's a bad promotion. Sam says, however, after some painful manual digging on the Moonbeam network, I confirmed that while the Moonbeam transaction did bridge out.01BTC, somehow the Ethereum transaction bridged in WBTC. Further, the transaction bridge in the WBTC didn't actually prove anything. It's simply called process, like a function process directly. Suffice to say, being able to process a message without proving it first is extremely not good. And so what they mean is by proving it is that there's a thing called a prover. Maybe this is what we're talking about. But basically, like, anybody can send a message to a bridge, but the message needs to be correct.

Starting point is 00:26:46 And that's part of like the functionality of the bridge. At this point, there were two possibilities. Either the proof had been submitted separately in an earlier block, or there was something extremely wrong in the replica contract. However, there was absolutely no indication that anything had been proven recently. Again, this is like terminology about like how, like, contracts need to be receiving messages about that are correct to whatever degree that the smart contract in that bridge deem something correct.

Starting point is 00:27:13 It's like kind of up to how the bridge is constructed, but a correct message would be something that is like coming from one one chain to another and like a proof is generated that is correct or so. Sam continues and says, there's only one possibility left. There was a fatal flaw in the replica contract. But how? A quick look suggests that the message submitted must belong to an acceptable route. Otherwise, the check online 185 would fail.

Starting point is 00:27:38 Fortunately, there is an easy way to standing to check this assumption. I knew that the root of the message, which had not been proven, would be 0x00 because message brackets underscore message hash bracket would be uninitialized. All I had to do is check whether the contract would accept that as a root. And then the next one is, uh, oops. That's the only thing the tweet says. It says oops. Sam just put in zero X zero zero zero zero zero as an address and it comes back true, meaning that every single thing will come back true, meaning that like the bridge is like an open vault. Everything is true. The contract returns everything true. And so, so that means anyone could go call the function and pull funds out.

Starting point is 00:28:18 More or less. Of the bridge. Yeah. And so Sam says, it turns out during a routine upgrade that the nomad team initialized the trusted route to be 0X-000-0. To be clear, using zero values as an initialation values as a common practice, unfortunately in this case, it had the tiny side effect of auto-proving every message. So every message, every possible message was approved, as in like, hey, can you send me 100

Starting point is 00:28:43 WPTC approved approved and so Sam says and finishes this is why the hack was so chaotic you didn't need to know about solidity or Merkel trees or anything like that all you had to do was find a transaction that worked find and replace the other person's address with yours and then rebroadcast it so not every single transaction works that you have to have a certain hash but it's just you need to find a transaction that starts with zero X zero zero and you can go find that by going to a previous bridge transaction and then copying that transaction and just replacing it with your outbound address and then sending that. And so, TLDR, a routine upgrade marked the zero hash as a valid route, which had the effect of allowing messages to be spoofed on nomad. Attackers abused this to copy and paste transactions

Starting point is 00:29:26 and quickly drained the bridge and it frenzied free for all. So once one person realized it, everyone realized it, that the gates to the vault were open. There was an open vault and all the money was just like sitting there. Somebody realized it and then as soon as one person realized it, everyone realized it. That's the analogy, right? So this nomad bridge had code that essentially vaulted off massive amounts of money, hundreds of millions of dollars in value here, so like close to $200 million. And then they issued a update to this vault and the door swung wide open and they didn't even realize it. And then, you know, people- No one realized it for 43 days. So this vault has been open for 43 days in a row.

Starting point is 00:30:11 Only, only like two or three days ago that somebody was like, hey, there's money there. There's money there. There's no one stopping me from going and getting it. And so they went and the first couple people grabbed the money. Yeah. And then an entire crowd assembled to go pick up the money from the vault and like, you know, stuff it under their trench coats and run home with it. Yep.

Starting point is 00:30:31 Wow. Are these white hats, David? Yeah. So, I mean, so not everyone who's doing this is evil, of course. There are a number of people that just went and grabbed the money because if they, didn't grab the money, then somebody malicious would grab the money. So like if you're a person saying, well, that money is free, everyone's taking it. I'll be a good person and I'll take the money and I'll return it. Before someone else does? Before some, an evildoer does it. And so like, it's kind of like

Starting point is 00:30:54 a little bit like game theory. If you know that you are going to return the money, then you can safely go get the money and return it to the people later. So somebody who made a transaction to go get this money and knew what they were doing, they write in the message field in their transaction saying, I'm returning this money. FBI, please calm down. No, I didn't plan to seal it and yes I know this address is diced. That's amazing. Just leaving a message for the FBI. My hands are up.

Starting point is 00:31:19 My hands are up. Like don't shoot. Don't shoot. David. Did you see this? That was a super funny tweet where somebody says, accidentally exploited the Nomad Bridge for $17,000. Real return the funds.

Starting point is 00:31:29 Did you see this clip of like the monkeys? Yeah. So this is a tweet from a Haska trade saying the nomad hack explained. And here's just like a plastic bin of a bunch of bread. and then there's like a hundred monkeys coming in there all grabbing the bread out of the basket. I mean, this is kind of, you know, of the $190 million, apparently $9 million has been returned. So there's $9 million worth of white hacks that are actually doing the right thing and returning these funds. But that's quite a gap, man.

Starting point is 00:32:02 That's like $180 million that has not been returned. And what's that? 5% was captured by white hackers? Yes. It's not zero. I mean, the big question is, do you remember the wormhole hack that happened? Man, it feels like another lifetime ago, but honestly, it wasn't that long ago. But that got a bailout from Jump Capital.

Starting point is 00:32:21 The question is... Wasn't that a billion dollar bailout? Yes, something like that. It was a lot of money. I can't remember it. I don't know if it was quite a billion. But I don't know if the deep pockets are coming to rescue the bridge this time. Right.

Starting point is 00:32:35 What do you think? Right. Well, there's also a lot less money in the ecosystem now. $320 million is what it was. $320 million. Yeah. So this is a pretty big one. Plenty of people have hundreds of millions of dollars in the top of the market.

Starting point is 00:32:48 Fewer people have hundreds of million dollars in this current state of the market. I mean, I think Nomad has recently been funded as well by VC. Yeah, but not for $190 million. They raise like $22 million. Even close. Not even close. So what are you going to do? And that's they're like operating money.

Starting point is 00:33:04 They have to pay employees with that. What's also interesting is this was a bridge to many kind of, of the like alternative layer one ecosystem. So as you said, avalanche, the cosmos, uh, Milkometer.

Starting point is 00:33:16 Milcomoda. Milcomoda is, um, that's Cardano. It's Cardano. It's Cardano. And what's moonbeen. You know what moonbeen is?

Starting point is 00:33:23 Moonbeam. I do not know what moonbeam is. Yeah, neither do I. Um, so what do you think this means? I believe it's a very powerful, uh, dragon,

Starting point is 00:33:30 fly, a dragon type attack from Pokemon. Really? Okay. Your Pokemon lore exceeds mine, my friends. Um, all right.

Starting point is 00:33:38 It's a poca dot platform. The question is, it's Pocodot? Yeah. Okay, so it's not Pockemon. Nothing to do with Pokemon. So the question is, are all bridges susceptible to this? Yes. So, you know, like, banklets, we're very excited about layer twos, obviously.

Starting point is 00:33:56 Yes. Optimism. Also has had bridges. Arbitrum, the ZK, EVMs, you've heard just talk about these before. And they also have bridges, to David's point. These bridges are not susceptible to, economic attack, which is one category of attack, and probably less susceptible to Oracle attack. We haven't delved into that in all the details, but is susceptible to similar kinds

Starting point is 00:34:21 of technical attack as we saw with Nomad. So does that worry you that like, hey, anytime we bridge from Mayna Ethereum, there's some smart contract risk here on any of these layer two ecosystems. Do you think that'll be an inhibitor to scale? Yeah. So, uh, layer two, layer twos are bridges that have less attack surface area. Like you said, there are, you can't do an economic attack on a layer two bridge. Uh, and you also cannot do an oracle attack on a layer two bridge of if that bridge has an oracle. But, you know, smart contracts are smart contracts. And bridges are smart contracts. And so a layer two bridge to optimism, ZK sync, you know, arbitrum, these are all have bridges that all have smart contracts. But, you know,

Starting point is 00:35:08 and those smart contracts can be exploited. There is one major difference for optimistic roll-ups, in that optimistic roll-ups have a seven-day withdrawal window. And so if you have a bunch of ether on optimism or arbitram, and then you exploit that bridge, it's going to take you seven days to get back to the Ethereum layer one. But I guess that's only true if that smart contract exploit happens on the layer two side,

Starting point is 00:35:34 because that ether does exist on the Ethereum layer one inside the bridge contract. So if the Ethereum layer one bridge contract is exploited, I guess you could just get it out immediately. So smart contract risk is always going to be smart contract risk. The spicy hot take that I'll have is that if you are building a layer two on Ethereum, one of the core reasons why you would choose to do a layer two on Ethereum rather than alternative layer one is that you prioritize security utmost.

Starting point is 00:36:01 Like if you are doing your own blockchain, your own layer one blockchain, you have to build your security from scratch and you're going to be inherently, less secure than the Ethereum Layer 1, because that's what the Ethereum Layer 1 has optimized for. So if you are layer 2, you are prioritizing security that is in your culture as a team. So if you are a team that prioritizes security in your culture, you're likely also doing a much higher effort on securing your bridge and your Bridge Smart contracts than you would if you are a team that doesn't prioritize security as much. And teams that don't prioritize security, don't build roll-ups, they build alternative layer 1s.

Starting point is 00:36:35 Is that a fair take? I feel like that's a fair take. I think that's a fair take, but also at the same time, I mean, it's nice to say, right? But like, I don't know. It's kind of verify I don't trust. Sure. It's not great to be in the position of having to trust the expertise and the skill level and the security, like the consumer security profile of devs of a particular bridge.

Starting point is 00:37:00 So, yeah, I would say I am moderately worried about this. and it's not something that we should take lightly. Like the good news, I think, with all of these, you know, bridges in the roll-up ecosystem is they're upgradable. So we haven't like turned off. We haven't removed the upgrade button from any of them. So if something goes wrong, you know, a patch could go in quickly. But yeah, I think there is some risk.

Starting point is 00:37:25 And we should be real about that when people are bridging to even layer two ecosystems. They have this risk. Now, I think that risk, will decrease massively over time. There was a time, David, where I was too freaked out to put any funds inside of a multisig. Like the NOSIS multi-sig wallet, for instance. And do you remember there was a NOSUS multi-sig wallet,

Starting point is 00:37:47 kind of a V1, and then they created a V2, and you sort of reset the clock back to zero when a new upgrade is kind of issued. And now I'm not. Like, NOSISM multi-sig holds, you know, tens of billions of dollars at this point. It's been around for, years has a very strong lindy and i think the only way around kind of um the the bridge hack

Starting point is 00:38:12 concern is you have to have bridges that have been in place without being touched for a long period of time securing massive amounts of money and this is going to take time so i don't know i i'm not putting all of my funds on a layer two as a result of this because it's still in the early phases. Do you think that's a fair take? I definitely think that's a fair take. And just to the, I think we should definitely take some time on this on this topic because the bridges is, you know, always has been a huge theme of the last 12 months. This is a bar tech thread from layer two B. Layer 2B is doing a fantastic job just putting in risk frameworks and helping to define the risks of bridges and layer 2s. So Bartek puts this thread together and he says with the recent hack of

Starting point is 00:38:58 nomad, I think it's time to reflect more broadly on bridge security as by now they have have become far more, the most critical piece of blockchain infrastructure. Here are some things to consider. Externally validated bridges, as in bridges that require a kind of multi-sig to process messages, can obviously be drained by the key owners and the keys might be compromised, but the smart contract there is very simple to implement audit and independently verify. As in your trade, there's a trade-off here. Your smart contract is more simple because you've exported a bunch of risk to the multi-sig. And sometimes, especially in the beginning stages of a bridge, I would definitely advocate for this model.

Starting point is 00:39:36 Let's just like remove all the complexity and just trust the founders, trust the multisig for the beginning stage. This is similar to the Polygon bridge to the preface stake chain. Granted Polygon has an extra layer of defense because it has Ethereum side mattock staking, which is a very meaningful difference than like your typical side chain or cross layer one bridge. Bartek continues and says there is downside, of course.

Starting point is 00:39:59 With that bridge, you need to trust the off-chain code, which is completely opaque. Who knows what's going on there? Shout out Ronan bridge with the Axy Network. Bartek says, Nomad is way more complex and it fell due to an obscure bug in a smart contract code, not an architectural flaw. Compared to Nomad, optimistic roll-ups are still more complex.

Starting point is 00:40:18 Compared to optimistic roll-ups, ZK roll-ups are insanely complex. You do the math. It makes sense to let the bridge code ossify with time before you move bigger funds. But after the upgrade, the ossification timer is reset to zero, as the upgrade may, introduce a critical bug as it happened with Nomad. This is what happened.

Starting point is 00:40:37 They upgraded their bridge contract. It was fine previously. Right. And so, yeah, it was fine. And they're like, okay, cool. Let's up the security. Let's up the hands-off nature of this bridge. And that upgrade was the thing that introduced the risk.

Starting point is 00:40:50 Whoops. Bartak says, Nomad is also permissionless. Anyone could process messages and bridge. The bridge cannot be stopped. No central actor to trust. Which, like, yay, we like that in a bankless world, but also, ooh, scary in the early days.

Starting point is 00:41:01 this removed power from nomad team but also left them helpless watching the bridge being drained. As noted many times before, this base critically needs a solution for a design that is trustless and secure against critical bugs at the same time. Seven-day delay windows in optimistic roll-ups gives an honest actor, an honest operator, plenty of time to stop withdrawals, hence it makes it virtually impossible for an attacker to exploit the bug in a smart contract. So the operator could pause things. Operator could pause things.

Starting point is 00:41:29 And I actually think that that actually does protect against ether deposits on the layer one from being revoked or like exploited from the bridge contract because that contract has a seven day window on it on the Ethereum. Yeah, totally. That actually makes me feel better about optimistic roll-ups. Yeah. Therefore it may be. And so what he's saying here is there, there's a balance here with like the seven-day window. We can make things trustless and smart contract base without it being a multi-sig. but you see but you also have like the if if it comes down to it like an operator can step in and do

Starting point is 00:42:01 something inside of that seven days famously this is what saved ethereum during the Dow hack right and same with the upgrade ability while that is like a knock against you know it's more centralized for a optimistic roll-up team to have upgrade ability the fact that they have that sort of makes the funds more secure if you you know have some trust in them to be an honest actor yeah last few tweets from Bartek hence it makes it virtually impossible for an attacker to exploit the bug in a smart contract because of that seven-day window. ZK roll-ups, if they contained a bug, might not be so lucky as there is no delay window there. Fun fact about ZK. Roll-ups, you can go in and out of ZK. Roll-ups instantaneously, but then you

Starting point is 00:42:37 lose that seven-day window protection. Bartek continues and says, therefore, it may be good to have a delay for big withdrawals and a cap on fast withdrawals to limit the potential damage. This is the approach that Maker Dow is taking with its teleport for canonical multi-chain die. They're making, MakerDAO's making wormholes for dyes across layer two's. So this is relevant there. BARTEC says, if the fast withdrawal infrastructure is breached, MakerDAO, not die users, will take the loss, but up to a predefined limit. It's a risk that the Dow may be willing to take. The risk is no different than issuing a bad loan. If this is one bad loan out of a thousand good loans, this is okay. You can be even more fancy and have more complex risk framework taking advantage

Starting point is 00:43:16 of architectural properties of a given out layer two, to which you want to bridge to, check out this proposal if you want to dive deeper. And then last couple tweets, one prominent project that limits deposits is Starknet, openly admitting to still being alpha is one thing, but users typically ignore that. Deposit limits. Keep Starknets TVL artificially low, but this is good and responsible. We still need to look for the perfect bridge design and the cost of mistakes for the whole space is massive. In the meantime, users should be reasonable with how much funds they're moving out from the blaze layer. I just want to go back to my culture statement. Bartek, previous at MakerDAO, which, uh, which is one of the DAOs that has

Starting point is 00:43:52 been optimized for security since before this whole like multi-chain like world. Like, MakerDAO has been so risk focused in its culture. And so like that has now extended to Bartek and what they're doing at layer two B and all their, uh, risk frameworks for layer two's. And now all these layer twos are like, uh, uh, also focusing on like the layer two beat risk framework coming from this very conservative layer two beat team that's optimized for security the most. I will ask you if you are a, if you consider yourself a citizen to be a citizen of a different chain, layer one chain, whether it's avalanche, Solana, like, you know, pick your chain. Is there a culture of security in those chains that it resembles the culture of security that happens on Ethereum? Because this is the thing that

Starting point is 00:44:35 has saved Ethereum from all of these bridges, from all of these exploits that you see happening elsewhere. There's a reason why so much exploits is happening external to Ethereum. Only the Paranoid survive. Only the paranoid survive. That's a great way to put it. So this culture of, this culture of security is why, is why so fewer exploits happen inside of the Ethereum ecosystem. But also knock on wood there, David.

Starting point is 00:44:58 Oh, I can gladly knock on wood. We can also compartmentalize out parts of the Ethereum app layer, like Wonderland, for example, very risk-taking. There's many defy apps on Ethereum that are very, very not risk-adverse. but that's different, it's different from being risk averse on the app layer versus risk adverse on the protocol layer. You definitely want to prioritize projects that, you definitely want to lean into projects that prioritize security over speed, right, in this case.

Starting point is 00:45:27 And there are many shortcuts to make on the speed front of things, Mr. Kyle Samani. But we're dealing with a lot of money. This reminds me to what we always end bankless with, which this is the frontier. You could lose what you put in. It's not for everyone. the frontier is kind of moved from main net Ethereum into the layer two space and into the side chain space. So now in order to bridge funds to a side chain, you know what, David, I need to receive a bit more return on my investment because it's a bit more risky over there than on main net. So these are all considerations as you're thinking about your journey, your bankless journey and your journey into crypto.

Starting point is 00:46:06 I'm confident, though, over time these kind of like technical challenges, the code, will become trusted, cemented, ossified. And that's really going to say, that's kind of similar to a NOSIS safe. I was skeptical of that in the early days. Now I'm not. Like, I'm fine putting, you know, a lot into inside of Nosis Safe.

Starting point is 00:46:27 But I do think, this is back to kind of a sad prediction that we made, Bankless made, the beginning of 2022, that there will be more of these monster bridge hacks. So this is what we said. There will be some monster bridge hacks in 2020. we're starting to see them that will make people question their multi l1 chain thesis and here's

Starting point is 00:46:48 also what I mean because over time you can get rid of and reduce the risk the technical risk and the code risk but you cannot reduce the economic risk and the Oracle attack risk okay and unless you're on a layer two unless you're you know um doing some level of a roll up strategy in the side chain strategy we've got that like, you know, networks of side chains, you will always have the economic risk of bridges. You will always have the Oracle attack risk of bridges, and that ain't going away. And so this is a reason why I am much more bullish on kind of the Ethereum roadmap pooled security vision than on kind of like there will be many chains and like there's no real settlement

Starting point is 00:47:35 platform of shared security between them. And because there's just the bridge risk. People understate the bridge risk and events like this kind of highlight what a mistake it is to understate the bridge risk. Anything else on this story, David? Yeah, just to finally tie it off. Like this industry is built on top of settlement assurances, which is basically property rights. Are you in a bankless paradigm where you own your own assets and no one can revoke those assets from you? Like that is what this industry is built on. Everything is built on strong settlement assurances. And so By the same way, it's the same vogue that the strongest, most secure layer one will always end up winning out. The most secure and strongest bridges will also be winning out.

Starting point is 00:48:20 And this is why bridges that have the least amount of risk surface area will win over the bridges that have more surface area. And those bridges are always going to be roll up cryptographic bridges. There, there's your bridication there. I think we've covered that thoroughly. Let's talk about the mysterious Solana wallet hack too. So that was crazy. Unrelated to bridges, however. Unrelated to bridges, but it was crazy this week.

Starting point is 00:48:43 It's something there's like 5,000 wallets, upwards, maybe closer to 10,000 wallets. Basically, salana wallets, people looked inside of their wallet and they were like, oh, my God, my money is no longer there. How could this happen? And I'm not talking about centralized exchange wallets. I'm talking about sort of you have the private key to your wallet. It's in, you know, Phantom or some sort of, you know, metamask, for instance. And then all of a sudden, the fees are, like the, the funds are, uh,

Starting point is 00:49:09 withdrawn. How could this even happen? That was the question. So like a lot of Solana users, for those that don't use Solana, it's like they opened up their Meta mask and like there was no money there anymore. Yes. It's all gone. It was all gone. And so big question of how does this happen? And how did it happen? Because there's kind of like a Sherlock Holmes, you know, the entire community, Ethereum, Solana, the entire crypto community was trying to figure out how this mass wallet drain actually happened. Fortunately, not a lot of money. But there's a It's like $6 million or something like this, but a lot of wallets were affected.

Starting point is 00:49:43 You want to tell us the story here, David? Yeah, so here's the tweet thread. I'll just explain it better than I can. It says, $6 million of Seoul and USC have been sold in from over 8,000 Solana wallets. The hacker used private keys to drain user funds in what has been one of the craziest and most mysterious hacks in recent times. It all started when a few people noticed that some unusual outflows were happening from Phantom wallets on Solana.

Starting point is 00:50:04 Phantom, I think, is the most popular wallet on Solana. Numerous reports started to pop across Twitter, and this. court of users having fun drains from their wallets. Phantom wallet was quick to issue a statement saying that they do not believe that this is a phantom specific issue. Interesting. Interesting. And so developer and auditor X Fubar found that the attacker was stealing both Seoul and U.S.E tokens from people's slope and phantom wallet, slope another wallet in the Aslana ecosystem. The most logical thing to do like this is to revoke any access to any debts, as in like, you know, undo all permissions. But Avalanche co-founder Emin asserted that it's likely that

Starting point is 00:50:39 the attack acquired access to private keys. How did they do that? How did they get the hands on 8,000 different private keys? Not supposed to happen. Not supposed to happen. And so this means that the only way to protect your assets is to move them onto a hardware wallet or onto a centralized exchange. So this was a hot wallet exploit. Solana finally responded after hours of speculation that stated that over 7,767 wallets had been affected by the exploit so far. But what was soon made matters worse was that RPC nodes started pinging as offline. This indicated that the Salana network was down, causing more panic across Twitter. It was theorized that the nodes were being purposely deduced by developers in order to slow down the hackers. This backfired as it caused

Starting point is 00:51:22 additional confusion. Oof. Supposedly, the DDoS attack was aimed at the hacker, which subsequently resulted in RPC nodes failing. Oh, God, what a mess. Okay, keep going. The most concerning part of the lack of clarity surrounding the root cause of the issue. Even Solana co-founder Anatoly couldn't offer verdict despite, despite alluding to iOS imported wallets being the key target. He and other key Salana figures surveyed their audience for data trying to get down to the bottom of the exploit, almost attempting to conduct an on-the-go porous modem. This indicates, to me, that we are dealing with a highly complex exploit.

Starting point is 00:51:59 As of now, the issue is still being investigated. Solana's latest update says that they continue. to investigate the root cause and it does not appear to be a bug within Solana core code. We do know the root cause though now. I think this tweet, this tweet thread kind of trails off at a time when we didn't know the root cause. Do you have any information on the root cause, David? So in a different tweet, Zero X Fubar, who is apparently really good at deducing stuff like this, says it looks like the slope wallet sent plain text seed phrases to external integration partners. I'm sorry, what? What? It's not mysterious at all.

Starting point is 00:52:33 like another new mistake. They just sent, they, okay, so that's like if, you know, Metamask, it gives you your seed phrase and like it lets you, it makes you copy it down. That's like if Metamask was sending that same seed phrase to like Infura. And Infura was just like logging that. And so that's absolutely crazy. Compromise phantom wallets came from seed phrases importing imports used in slope. Compromised ETH wallets were also from seed phrase reuse. So I guess some, some Ethereum wallets were even compromised for people that generated their wallet using slope. This is not a blockchain or a randomness issue. This is a terribly irresponsible service provider issue. Fubar then later issues a correction saying the slope wallet did not send seed phrases

Starting point is 00:53:14 to external partners, but may have logged them in their own centralized servers. Okay, well, then they're the external partner. Apologies for getting a bit ahead of myself, Port Mortimer, I'm still in progress. Whether they sent it to a third party or not, the fact that they were logging seed phrases in the database anywhere in plain text, where it could be hacked, that is a massive problem. That is terrible. Don't save other people's seed phrases. Nothing mysterious here. It's just a really bad wallet provider, basically. It's a really bad wallet provider. I mean, people were worried that there was like a blockchain issue, a randomness issue.

Starting point is 00:53:47 It's like quantum computers. It's like hack people's private keys. Something like this. It was so mysterious. And it turns out it was just average, every day, sharing private keys via plain text. And that's what screwed it over. So mystery solved, I guess, David. Do you have any private key advice for us, though? I do have one. But actually, before I do that, I would like to actually just chill the Coinbase app. I don't have, I'm not logged in because I don't have a Coinbase account. But they have a multi-party computation wallet.

Starting point is 00:54:15 So you can go and use your Coinbase app as like a centralized exchange, like as everyone does. But you can also go and like trade specifically on Uniswap or do stuff on MakerDAO or pull together because Coinbase has a multi-party computation wallet built into their app. So not only is it like a centralized custodian with a, you know, exchange built in like we know, but it's also a self-sovereign wallet with multi-party computation, meaning that they have a shard of your private key. Your phone also has a shard of your private key. So they can restore your private key, but they don't have your private key.

Starting point is 00:54:48 That's crazy. So like, Coinbase doesn't get enough credit for that. And so Coinbase, Coinbase app. And this is not even Coinbase wallet. This is the Coinbase consumer app. So like, I want to go find out more about that. wall because that is a really cool feature. We talked about it on a roll-up, but like remember they they came out with it at the permissionist conference? Yeah, I didn't know or didn't realize they had

Starting point is 00:55:08 already rolled it out to the main core consumer app. Yeah, it's great. It's great. It's like, you know, there are some piece of the design that are a bit more centralized and say smart contract wallet, but it's like this nice place in the middle where it's a cool compromise. And as you said, they're getting it out to users right away. It's much better than a completely custodied centralized wallet provider. But anyway, what do you do? Wait, before that, though, we had a guest on who was like, they were explaining, maybe it was Mark Cuban. Yeah, it was Mark Cuban. He was talking to his friends and like, I downloaded Coinbase and like, I couldn't find like the Defi tab. There is now literally a Defi tab in the Coinbase app and you can do defy things. And from the user perspective, they get private keys, but they don't even know it.

Starting point is 00:55:51 And they can't lose them. It's great. It's great. Anyways, so here's what I say. This isn't the best advice, but it definitely works. It's a little bit of a brute force method. I say every six months or so, I generate a new set of private keys and I rotate my wallets. And this removes all buildup of smart contract approval risk. And so I generate my own private keys using my ledger. And then every six months ago, I just take my assets and I plop them into the new address. There are ways to achieve these same results. If you're worried about approval risk, you can just manually unapproved things. Approval risk is another thing to worry about.

Starting point is 00:56:27 It's not at play in either of these two hacks. It's just yet another thing. you have to worry about. Yes. If you approve a contract that sets permissions to all, like that contract can do whatever you want with all of your money. But you can manually revoke those. So you like you can get security that way. But this also removes like any sort of like accidental internet exposure to my private keys. There's been one times, I have like a piece of paper. I don't have it with me. I keep it elsewhere. Careful. Opsack, sir. But I have like a piece of paper with every previous seed phrase that I've

Starting point is 00:56:56 ever used either, whether I've generated it with MetaMask, whether I've generated it with ledger. It's got all my historical private keys on it, and it's somewhere in the world. I'm not going to say where. It's not with me. It's not where I live. But the reason why I keep that is for air drops, right? Sometimes some air drop happens, and I'm like, fuck, I have to go, like, type in all of these old seed phrases to go check out which one of these addresses is relevant to the airdrop. And I typed them into MetaMask, and so what was previously a ledger seed phrase becomes like a metamasked phrase, making it a hot wallet. Do you know what? Hang on. I'm basically like putting all of my previous ledger seat phrases into my metamask, making it exposed to the internet. And so what I do is then I generate a new set of private keys and then, you know, in the appropriate way, not released to the internet. And then I make it find a new address and I send all my assets to that brand new address. And so it's like always like a rotation of just like, you know, can't find me, can't catch me. Can't catch me? I do not do any of those things. But I'm not sure if your method is like better than what I do. What do you do? Well, it's, you know,

Starting point is 00:57:59 Yeah, I'm not going to disclose that, David. This is the beautiful thing about this is like, I can tell like about my private key management because it doesn't matter because it's always changing. Yeah, so I do think we should have an episode that is just all about like best practices for OPSEC and private key management. Like on the bankless journey, just, you know, it's not somebody that needs to disclose what they're doing, but it's like what are the best practices, 10 best practices, different methods, It's practical, real world.

Starting point is 00:58:29 Because, like, this stuff's hard. This is we call it the bankless journey for a reason. And bad things can happen to you. Like bridge hacks, like Oracle attacks, like economic attacks. You have to be careful what you use. And suddenly one day, if you use the wrong wallet, all your money gets stolen. Like, this is not easy stuff. The rewards are great.

Starting point is 00:58:48 On the other side, as we always say with, you know, kind of going bankless. But so are the risks. The risks are great as well. Anyway, that's your strategy. That's David's strategy. It's a nuclear of a strategy. There's definitely other ways to achieve the same ends. But it's what I do. It's interesting. Yeah. It's definitely cool. All right. Are we going to get any tokens, David? Last thing. Are we going to get any tokens from a new ETH proof of work chain? Do you think? Some free forked ETH before the merge? No. No, you will not. Yes. I mean, yes, you will have ether proof of work. No, it will be worth pennies. There's like a bunch of like, people on Twitter are talking about, oh, the proof of work chain, the proof of work chain, we're going to fork Ethereum and get all the extra tokens and extra eth. Like, no, no, you're not. What's going to happen is that some people are going to, are writing, already writing transactions right now that are going to be sent in that very first or second block on the Ethereum proof of

Starting point is 00:59:44 work chain that sells all of their tokens for ether and uniswap. It removes all of their ether from compound and maker. Basically, there's going to be a massive run on the bank, except the bank is proof of work ether. So every single token is going to go to zero. And there's actually a thread that we should read. So let's go to the thread by Lemonscape. And this is Mark Zeller from Ave and goes, a short thread about ETH proof of work and was quite likely to happen. Overnight with a fork. A carbon copy of the full Ethereum ecosystem appears. You have 10th, well you also have 10 ETH proof of work. You have a position in Avey. Now you have that same position on proof of work AVE. So let's begin with the big simple consequences. ETH proof of work means no proof of stake.

Starting point is 01:00:24 So Stakes-Eath is now worth zero because it'll never be redeemable because it's on the Staked Eth chain. On AVE proof of work, that means there's a $1.5 billion hole in the book because Aave accounts for the value of staked Eith, but the proof of work, take to Eth is goes to zero. On Maker proof of work, that's $100 million of die backed by zero. That is absolute mayhem, by the way. It's absolute mayhem. Yeah, all of a sudden, all the collateral and all the lending apps goes to zero. You can't have any Fiat back stable coin doubling the supply obviously overnight, so USC and USDT proof of work supply goes to zero. So also collateral and MakerDAO and elsewhere. Circle and Tether can perhaps later support ETH proof of work, but the only

Starting point is 01:01:02 way is to issue new ERC 20 tokens and forget the old ones. That's an additional $1.7 billion hole in Ave proofs of work. That also means that 73% of MakerDAO collateral overnight is worth zero. So sorry to say, but this means that die proof of work and MKR proof of work are now also worth zero because MKR needs to get minted to cover debts in the MakerDAO system. But when your debt is billions of dollars and that brand new MKR token on the proof of work chain is already worth zero. So like, you know, you have to inflate your token that's already worth zero by infinity, making it worth zero even more. And so like just massive holes in collateral because like none of these tokens are worth anything on the proof of work chain. Basically what's happening is

Starting point is 01:01:43 the token ecosystem, the defy app layer, is going to be complete mayhem. The application layer of the proof of work chain is dividing by zero. It is imploding on block number one. And so this also happens for like uniswap, sushi swap, all your favorite protocols. All tokens become worth zero because there's nothing there. And so if all the tokens are worth zero, what happens? And this is where like the whole run on the bank metaphor comes from. the agenda for

Starting point is 01:02:13 yes conclusion defy proof of work is dead on arrival and so here's what lemon's gate says the agenda for eth proof of work shills AMM liquidity will still be around because there will be like uni versus eth pairs on the proof of work chain

Starting point is 01:02:27 but if you have any uni tokens you're just going to remove them all and buy as much ETH POW as possible you have stakes ETH tokens ETH POW is the new ether it's kind of the leftover ether yes and not unofficially

Starting point is 01:02:39 it's just what people are calling it So do you have any staked ETH tokens? Because those are worth zero. So you go to Curve, the proof of work curve, and you dump those for ETHPOW. Until AMMs are full of tokens and empty of proof of work ether. So all tokens are being immediately sold for ETH proof of work ether because it's the only token that has any feasible semblance of having any value whatsoever. The plan is to collect as many ETH proof of work tokens as possible while shilling it

Starting point is 01:03:03 on Twitter as like the one true ETH. That's what people do. That's what our opportunists do. and then they wait for Tier C centralized exchange listings like Poloniacs deposit it there and then try and dump it on like victims trying to buy this chill. That's the plan. Everyone knows it. People have been talking about this for years.

Starting point is 01:03:20 We've known this is going to be a thing for years. And so if you are a listener who's like, ooh, yay, I did like proof of work ether. I get some extra ether. Are you going to be the bot that writes these transactions? Because there's going to be a war on the first and second block of the proof of work Ethereum chain to do all of these things and it's all going to be over in two blocks. Are you, the listener, capable of fighting that fight and getting your transaction in first ahead of the bots?

Starting point is 01:03:46 Because if you are not, then you are not getting anything. That's the end of story. I still think. So, yes, that is one. Get out of here. Ryan, what do you still think? What do you still think? What do you still think?

Starting point is 01:03:56 What I still think that what could happen is some narrative spinner rises up, you know, the Craig Wright of POW Eath, the Roger. Revere, the Heathpaw Jesus, rises up and says, I will bring you a new narrative for this, for this asset class. This is the true thing. And like, we've just seen this happen so many times, David. Yeah, there have been a lot of Bitcoin forks previously. Most of them have completely failed.

Starting point is 01:04:26 But a few of them have had some actual like multi-month, multi-year shelf lives. And those are the ones that are led by kind of some benevolent dictator, cult figure, sort of religious figure. That's ultimately, I don't know about in Roger Rivera's case, but Craig writes case very clearly, manipulating the community and trying to kind of like exit, exit scam, exit dump them. I know it's more complicated than a Bitcoin fork

Starting point is 01:04:51 because Ethereum has this massive defy app layer. But as you said, that's going to sort itself out. It's going to be completely drained. It's all going to go to Heath Powell. There could be a figure that rises up and says, I'm going to take this narrative, I'm going to push it forward, I'm going to create a developer roadmap. I'm going to gather some funding. I'm going to get the help of Eith POW miners. And the narrative could have a shelf life longer than a week, maybe multiple months.

Starting point is 01:05:16 Again, I really don't care in either case. Like, if that happens, then maybe there's some Eith POW I can later sell. And that's a great thing. But all I would say is, I think that is also a possibility. Possibility, this thing fades out in like a day or a week. It's also possibility because we've seen it before. some cult leader rises and brings a narrative to this chain and gives it some some level of life because we've also seen that before. Is that going to be you, Ryan? You're going to be that cult leader? It's not me, Dan. It's not me. I mean, like, I do not have that will and, uh, no interest in doing that. But, um, so there's a, there's a video that I like that I think resembles what's going to happen and blocks one and two of, uh, the proof of work chain. And

Starting point is 01:06:02 here's a video of a San Diego fire, a 4th of July, where they accidentally had like a computer exploit, a computer bug. And instead of having a 45 minute fireworks show, every single firework just went off at once. So we had like 45 minutes worth of fireworks all going down in like 30 seconds.

Starting point is 01:06:21 And that's basically what's going to happen to this proof of work out player. You think it's just going to be short. Very short show. And then it's over. David, what's coming up next? All right, coming up next, Sailor, stepping down as CEO of

Starting point is 01:06:32 micro strategy, to do what? To do what? Perhaps to buy more Bitcoin, probably. And also, Tiffany's selling Cryptopunk jewelry? I have a Cryptopunk. Will I be getting a Tiffany's crypto punk necklace? Stay tuned to find out, but I think you already know. But if you don't, stick around to find out. We'll be right back right after we talk about some of these fantastic sponsors that make the show possible. Arbitrum is an Ethereum layer two scaling solution that is going to completely change how we use Defi and NFTs. Some of the coolest new NFT collections have chosen Arbitrum as their home, while Defi protocols continue to see increased liquidity and usage. You can now bridge straight into Arbitrum for more than 10 different exchanges, including

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Starting point is 01:08:19 higher capital efficiency, layer 2 to layer 2 transfers, and a brand new chain with Polygon, all while prioritizing high security and low fees. You can be a part of Across's story by joining their Discord and using Across for all of your layer two transferring needs. So go to across.com to quickly and securely bridge your assets between Ethereum, Optimism, Polygon, Arbitrum, or Boba networks. All right, guys, we're back. And speaking of bridge compromises again, Avey seems to be stepping back from its multi-chain strategy. And why? Because of some of these bridge compromises that have been happening. So Avey's stepping back from Fancy. I believe, which is sort of an EVM fork chain.

Starting point is 01:08:57 Mark Zeller, we were just talking about, said this. LemonScape, yeah. Yeah, LemonScape is the rationale is after the Harmony Bridge event, the recent Nomad Bridge exploit, the AVE community should consider the risk benefits of keeping an active Ave V3 market on Phantom, as this network is dependent on any swap multi-chain bridge. Zeller actually in the tweet thread as well, he said he was wrong. He said, hey, I was wrong to be so aggressive on kind of the multi-chain strategy. And yeah, that was just really, really interesting to hear from him.

Starting point is 01:09:32 And it's like, not wrong in a big way, but maybe a bit more aggressive during the bull market and now seeing that, hey, some of these risks are real. And by the way, kudos to anyone who ever admits they're wrong in crypto. Certainly. Because that is a rare event in and of itself. Yeah. I mean, basically, this is a classic cost benefit calculation. is how much fees is AVE generating on Phantom and how much is that risk of that multi-chain bridge?

Starting point is 01:09:55 And AVE governance, this isn't a formal thing. This is a governance proposal. But the proposal is saying, hey, the cost of rewards is just not there. So let's just trim Phantom. I mean, it makes sense in a bear market where like, you know, some chains don't really make it. So Phantom, not doing so hot. All right, moving on, sushi swap, new head chef is asking for one third of all the tokens that are paid to the staff, which is a very contentious proposal,

Starting point is 01:10:20 but there's a Dow debate with Sushi Swap about how well compensated the Sushi Swap head chef should be. I kind of think that Sushi Swap needs some sort of like highly competent, highly centralized leader to like kind of steward this ship, especially as we're seeing things kind of like drift off

Starting point is 01:10:36 in the bear market. But Sushi Swap, going through some governance debates right now. That's like executive compensation debate in DOWs right now. That's kind of interesting. Here's a great thread out of optimism about optimism,

Starting point is 01:10:47 Bedrock, in Bedrock coming soon, TM, and when it does, it will change the roll-up game forever. It will lay the protocols foundation for years to come and serve as the model for roll-up architecture. Its name is Bedrock for good reason. There are a few awesome things that this bedrock architecture does for optimism. It reduces the L1 to L2 deposit time by 4x, and it also slashes the cost of data submission by 20% making fees 20% cheaper. But those are all really cool things that all the users can understand. But really, the really bullish thing is this third thing, cuts the difference with geth down to a slim 500 lines of code. And so Kevin Filchner,

Starting point is 01:11:26 who is on the optimism team, he puts this tweet together and goes, Optimism's Bedrock Design is the most advanced roll-up architecture ever built. It's not a competition. Bedrock is close to theoretically optimal on every front. Optimal transaction fees, optimal diff, difference, optimal networking, optimal block production. And what they are mean by optimal is related to this 500. fee difference between optimism bedrock and get as close to Ethereum equivalence as possible. And so when we talk about bridge risk and all of these smart contract risk, when you reduce the lines of code down to something like Geth, which has been tried and true in Ethereum for eight years and running now, then you have stronger and stronger assurances that there's less and less

Starting point is 01:12:10 attack surface area. And so when I see these words like theoretically optimal on every front, I get like really hot and bothered Ryan because I love things. things that are theoretically optimal. And so the fewer lines between Geth and the layer two, the more secure you can feel about using these layer twos. And the other thing I'll say about this is when you have something that is closer and closer and closer to Geth, the software that we've already been using Ethereum for years,

Starting point is 01:12:36 you can, like, bedrock can become like a foundation for a thousand roll-ups to bloom because it's not that complicated. It's so simple. It's so close to this infrastructure that we've already had. So the forkability of bedrock to, allow a thousand secure layer twos to bloom is like off the charts. So I'm just super bullish about that. Yeah, I am glad that optimistic roll-ups are innovating. And of course, Arbitrum's Nitro is coming up to. So it's like Bedrock versus Nitro and they're both kind of competing for attention.

Starting point is 01:13:04 Nitro also, also something that is trying to emulate Geth as well. These are the same design structures. Yeah, very, very similar design structures and patterns. And I'm just happy to see them wearing it out for users. David, did you know the Ethereum chain is seven years old? Happy birthday, R-Sad 8. Happy birthday to Ethereum. Yay. Here's a picture of Italic and his dad. Unrelated, actually, from Ethereum's birthday.

Starting point is 01:13:30 Definitely related, father-son. Yeah, sure. Yeah, great to see them on Ethereum's birthday. Moving into some Bitcoin stuff. Yeah, Michael Saylor leaves the CEO role to assume executive chairman role. So Michael Saylor no longer the. CEO of Microstrategy, a step down while a different individual stepped into the CEO of Microsth Strategy, which makes sense.

Starting point is 01:13:54 I mean, he's become so interested in Bitcoin. He's much less interested in, like, you know, micro strategy is a business analytics company, you know, kind of software for like business dashboards and stuff like this. Things that are unrelated to Bitcoin, yeah. Yeah, so he's very interested in Bitcoin. He has like 70% voting majority over Microstratory. So basically he governs Microstratory. Now has decided to step down to pursue Bitcoin initiatives.

Starting point is 01:14:20 To buy more Bitcoin. I guess. I guess that's what he's doing. There's a take from Nassim Taleb here. What is he saying? Yeah, Nassim Taleb, who's famously anti-Bitcoin says, how much of the 120,000 Bitcoin will they have to sell? Another nail in the coffin to the will never sell.

Starting point is 01:14:34 I actually don't think there's any precedent. Like, no, like actually they're leaning into buying Bitcoin, not trying to sell, but it's just funny. You mean microstratage? Microstratory, yeah. You don't think, like, Saylor was kind of like asked. to leave or something and go focus on Bitcoin if that's what he's so interested in. I think that is what happened. They're like, Sailor, like, this micro strategy company still needs to do its micro strategy

Starting point is 01:14:55 things. You become like the chairman of buying Bitcoin. Bitcoin CEO. Yeah, Bitcoin CEO. Yeah, but no, Nicholas just wants a grave dance, even though there's no grave to dance on. We'll see. I don't know. They might sell more Bitcoin as a result of this, but hopefully not in the bare market.

Starting point is 01:15:10 I still, I still contend. I think micro strategies, Bitcoin buys are going to pay off for them. and like these kind of tweets will not hold up well because Bitcoin is going to go up in price. That's still like the bottom line to me and just people are impatient. They always like to point when things are down and say, oh, it'll never work out. And then they never come back and correct themselves. But Tiffany's, what are they doing in the NFT space? They are doing NFTIFs, NF Tiffany's, I guess, releasing on August 5th.

Starting point is 01:15:37 Is that tomorrow? Yeah, that is tomorrow. 250, I believe, Tiffany's, Cryptopunk, NFT necklaces, jeweled necklaces, are being released at the low, low price of 30th. $250 limited edition Cryptopunk necklaces being sold for $51,000 at the price of 30th. What's the crypto punk necklace? Yeah, so here's the video. It'll play out.

Starting point is 01:16:05 Wait, how much is this? What are we looking at? $51,000. So like a bunch of... This is just an NFT. So you can't have your crypto punk wear it. It's a real necklace. It's a real necklace.

Starting point is 01:16:15 It's a real necklace. It's a real necklace. Real diamonds, real rubies. Yeah. What's the NFT part? It's your, so you can't mint any cryptopunk. You can have Tiffany's necklace of your crypto punk for 30th. Is this something that is wanted?

Starting point is 01:16:32 Like what's the market for this, David? Well, there's only 250 of them. And it's one of these things where like if you are somebody who's going to buy one of these things, you're going to confuse all the other people who are like, why the hell are you buying it? Like, it only takes 250 people to be like, yeah, fine, I'll buy it. one of those. Fifty thousand dollars. Here's a take from Aubrey Strobel. Imagine your boyfriend gives you a Tiffany box and you open it up and it's a crypto pump. I'm sure that they would just love that. That would be so great for them. I'm sure they would just be overjoyed. There's someone out there,

Starting point is 01:17:04 though, that's going to buy one and be happy to receive one. May you just have to find that special someone, David. Yeah, right. Yeah. All right. Keep on looking. Magic Eden. Oh my God. They changed their Twitter handle to Magic Ethan. First of all, what is Magic Eden? Yeah, it's a Solana NFT platform. It's like the OpenCy of Solana. What are they doing? They are now becoming the Magic Eden of Ethereum.

Starting point is 01:17:26 So they are integrating Ethereum into their NFT platform. Seems like wise expansion strategy. Yep. What do we got here, David? It's Jack. Yeah, so this is like, of course, I'm sure triggered some of like the Salani Maxis out there.

Starting point is 01:17:40 I was like, oh, you guys are abandoning these Salon. They're going to Ethereum, even though they are just trying to make the best NFT platform that exists. And Shaq replies to the suite, Shaquille O'Neal replies to the suite and says, I wonder, and people wonder at why I took dot soul out of my name. I didn't even know Shaq had dot soul in his name. Ryan, Ryan commenting saying, but you didn't add dot, eth. 1700 likes on that. Is shack wearing what it looks like some sort of like ape as his profile picture of basketball ape. What do you think he's saying? This is not clear to me. Why did he take dot soul out of his name? Is it because? You can scroll down and it There will be a little bit more of a conversation. He says, there's no point in picking a side anymore. Everyone needs to stop tearing each other down.

Starting point is 01:18:21 Okay. Well, I take that to be back. And then Evan Van Ness says, no one needs to tear Solana down. It's always down. Oh, geez. Man, bird culture in crypto Twitter is great. What's Rainbow doing? The wallet, NFT wall.

Starting point is 01:18:33 Yeah. Speaking more NFT stuff, now supporting NFTs on main net, Polygon, Arbitrum, and optimism. For some reason saying thank you, Treasure Dow for the gift. I wonder, oh, they got a little. some small, the Treasure 1000 ecosystem, NFT ecosystem on Arbitrum. Anyways, NFTs on Rainbow Wallet.

Starting point is 01:18:52 That's cool. Optimistic NFTs, Arbitram NFTs on Rainbow Wallet. And what do we got here? Aspect. Stocknet. Mainnet? Is this NFTs for Starknet? Yeah, NFTs on Starknet.

Starting point is 01:19:05 The generalized ZK Rollout platform out of Starkware. So cool. That means super cheap, NFTs. Super cheap, super fast. regulation. Let's talk about this really quick. So Robin Hood was just fined $30 million from the New York State Department of Financial Services, NYDFS. And why were they charged for this? It looks like some sort of money laundering issue. What did they do? Yeah, they said the NYDFS charged Robin Hood because they were inadequately staffed, didn't have sufficient resources to address risks, and failed timely transactions. from a manual transaction monitoring system to one that was adequate for its user size

Starting point is 01:19:47 and transaction volume. Basically not adequately monitoring like AML and money laundering shenanigans. I have no takes on this. Kind of... You know, New York State Department's always a bit crypto-unfriendly, I would say, so I wouldn't be surprised if they're blowing a big

Starting point is 01:20:04 small thing out of proportion, but also I do not know. But this is cool, David. A Senate bill that would hand Bitcoin and Ether oversight to the commodities regulator, the CFTC, basically institute by law and say that ether and Bitcoin are commodities. It's kind of a reigning Gary Gensler in the SEC back. I know there's like the SEC has never given us a super straight take on whether ether is a commodity or security or how they view it. They've been a bit more clear on Bitcoin as being a commodity, but we sort

Starting point is 01:20:35 of need this legislation, it's a bit of reining in from the SEC to at least say these two assets we know clearly are commodities. Right. And this follows. from, I think Hester Perth and a few others takes of saying, like, good crypto regulation is ultimately going to come from Congress, not these three-letter agencies that we do not elect. And so if Congress could go ahead and please approve this one, that would be great. Gary Gensler, niner-near-boo-boo, get your hands off our commodities. And yet, I got to give credit where it's due. The SEC this week charged a group called Forsudge.

Starting point is 01:21:10 Forage. Forage? Forage. Forage. Forage. I don't know, Forge. This was a $300 billion crypto Ponzi scheme. And I vaguely remember this.

Starting point is 01:21:19 It was just blatantly a Ponzi, kind of BitConnect level stuff. And this is the sort of thing that we want the SEC to do. It's like there's so many bad guys and clear scams in the crypto space. Please help us. Go catch them. Right. Like go after them.

Starting point is 01:21:34 Give us clarity. Give the good actors in the space, sandbox a playground, and go chase after the clear scammers because there's enough of that work to go do. And this is an example of them doing that, doing the right thing, going after a clear Ponzi scheme. Well done. Thank you, Gary. You did something great. David, can you believe this is still

Starting point is 01:21:52 happening? So like, add insult to injury. What's happening here? Celsius admits customer emails linked in third party data breach. So not only did you lose your money, but you also lost your privacy with Celsius. Two for one punch. Thanks, guys. Babel finance, $280 million loss. Bable finance is a C-Fi crypto lender. We've seen them. before, lost $280 million in customer funds doing trading. They're trying to trade their way into

Starting point is 01:22:20 profit, but they traded their way into losses. With their customers funds. This is another C-Fi company more popular in Asia. David, some good news on the releases front. Coinbase Prime is now offering Ethereum staking to institutions in the U.S. More staking heating up. What is the Swell Network here, David? Yeah, Swell Network is also part of the Ethereum staking world. Lido, Rocket Pool, Steakwise, a few others, but also Swell Network soon. This is kind of a hotly anticipated staking as a service like Dow, kind of like Lido, but also a little bit like Rocket Pool. Mainnet release candidate is now live, which means that they are only one step away from Mainnet Go Live. So I'm very excited for Swell.

Starting point is 01:23:05 Also, we know that GameStop has been working with Immutable, but now that relationship is formally intertwined with a GameStop wallet. And so the GameStop NFT ecosystem and the immutable layer two system are now integrated. And so you can only imagine that like the immutable X layer two is going to be facilitating the marketplace for GameStop. I'm getting a little bit closer to that here. I think the wallet has been based on loop ring. So it looks like they're using multiple layer two as their strategy, not just loop ring, but also. Both ZK roll-ups though. Yeah, absolutely.

Starting point is 01:23:36 David, on the raises front, variant fund, this is a fund from Jesse. Who else is on this phone? Jesse Walden, Legion. Yes, LeGen, of course. $450 million to support the leading founders in Web3. This is kind of the creator economy type of investment, and they just raised $450 million. So impressive raise.

Starting point is 01:23:59 Gary V from V Friends just closed a round with A16Z crypto. So this is a $50 million round, I believe. That's a lot of money. That's a lot for Gary V's NFT project. Yeah, kind of impressive value. valuations happening during the bear market still, too. So I guess there's money, there's raises. What does that mean for jobs, David? That there are jobs. If there's money and there's raises, then there are jobs. That's how it works. Let me read a few out. The first from boardroom labs are looking for

Starting point is 01:24:28 a software engineer over Dow governance, Mantacore Games, a manager of crypto marketing. That's on technical. We're looking for threadors. You can write a good Twitter thread. Vertex protocol. Yeah, like as we are, but apparently we don't have time to rate. enough threads. Vertex protocol, a marketing coordinator. That's not technical. Bankless, we're looking for a UXUI designer. Bankless also. We need a senior newsletter. Best job in crypto. Streams, a financial analyst, Steakfish, smart contract software engineer, also a backend software engineer, also a blockchain marketer. Also, a DevOps engineer and the Bankless Academy is hiring a product manager. There's a ton more jobs here. You can go find them at the bank's job. Wait, wait, wait. There's a head of marketing

Starting point is 01:25:09 at Pleaser Dow. I just want to shout that one out. also got to be a very, very cool job. 100 to $200,000 salary, head of marketing at Pleaser Dow. Come join the Dow. Pleaser Dow is the people's Louvre and the 21st century and a Willie Wonka factory combined. That's very attractive. Only in crypto.

Starting point is 01:25:30 Only in crypto. All right, when we get back, some questions from the bankless nation, what's the safest token to dollar cost average into over the next 12 months? Also, the best advice for actually getting a job in crypto. and some hot takes from crypto, Twitter, as usual. We'll get right to those things. But first, we want to tell you about the sponsors that made this episode possible.

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Starting point is 01:27:16 Defi apps. So whether you're new to crypto or you're a season pro, it's time to ditch those risky extensions, and it's time to switch to the Brave wallet wallet. Download Brave at brave.com slash bankless and click the wallet icon to get started. All right, guys, we are back. And just a reminder, if you have a question for David myself to read out on the roll-up, make sure you follow Bankless HQ on Twitter. Every Wednesday, tweet goes out and asks for those questions. Here's the first question from magh80.eith. If you had to monthly dollar cost average into one asset for the next 12 months, what would it be, except ETH? I'm thinking RPL, that's the Ruckpool token, and uni.

Starting point is 01:27:50 Of course, I've got to say, none of this is financial advice. Of course, I'm asking David's personal opinion from an entertainment perspective. I'm not the entertaining answer. I want, yes, I want the real answer, but also it's fine if it's entertaining, David. I actually genuinely want to know what would you buy besides ETH right now. I think Madge is on to something with Uni. I think that is, if we're not talking about Ether and we're not counting stakes Ether, which I'm assuming we're not, then the Uni token definitely comes next.

Starting point is 01:28:19 And the reason why it's, I feel like very arguably the safest is because it's generating the most fees. And so that I feel like is a great definition of safety. Like right now, Uniswap generated $1.1 million today in 24-hour fees. and there's already discussions on the Uniswap Governance Forum about turning on the fee switch. So, like, we're getting there. And so if we're going to define, like, what is the best asset for the next 12 months to buy? It's the one with fees. The ones that come after that, like AVE, GMX, also surprisingly up there.

Starting point is 01:28:54 And so, like, you know, tokens with fees are bullish. And so there's probably some analysis to be done about, like, how much fees is the protocol generating compared to how big that market cap is. with a controlling function of how much revenue, how much percentage can that protocol capture as a result of those fees. Some analysis to be done there. Rocket pool, great token because the merge trade, but is the merge trade going to last for 12 months?

Starting point is 01:29:21 I'm not sure, but Uniswap fees will definitely last for 12 months. Yeah, I kind of agree. So it's like, I'm going to ignore Bitcoin because I actually think I would still prioritize defy tokens right now over Bitcoin. And maybe that's for the first time, ever. I would have, generally my answer is

Starting point is 01:29:37 Ethan Bitcoin. Those are the assets to dollar cost average into you. But if you're going to ask my personal opinion, it would probably be some of those blue chip defy assets. I like Uni and Ave know they're going to be around very strong. Although I also like a lot of the

Starting point is 01:29:53 strong layer two projects that have tokens right now. I feel like that's a decent bet. And I would pick those over the alternative layer one bet, even though like Slon is going to survive obviously Cosmos, they're all going to survive, but I still feel like layer two is being underpreciated.

Starting point is 01:30:10 So you got Maddoch, you got OPE, some of those things as well. I would consider dollar cost averaging into some of those as well. But, you know, this isn't necessarily the question that's like, what's the token, the asset that you're going to make the most money on over the next 12 months? This is more the one that you're going to kind of buy and hold. Yeah, risk from a risk reward perspective. Good question. I do think that even it's like RPL and like LID

Starting point is 01:30:34 and stakewise are all benefiting from, like, the merge trade. I think general defy tokens that, like, Uniswap and synthetics, are also going to benefit from just, like, the beta of the merge. Like, Ether goes up, Staking as a Service tokens goes up. But then Ethereum apps are also going to go up. It's going to be, like, an Ethereum rotation. So I think the beta is in heavily favor of the Ethereum ecosystem at the moment. Yeah, I would say that, too.

Starting point is 01:31:00 And I do like some of those staking tokens as well. I start to classify them as close to Blue Chip. All right, here's another question, David, from Patrick Dudley. What advice would you give a college student looking to get a job in crypto after they graduate? I'm going to my senior year at SDSU and really want to pursue a career in crypto. Yeah, definitely the unequivocally best advice for getting a job in crypto. If you want to get a job, the formula is as simple as this. Write really good threads on Twitter.

Starting point is 01:31:28 People are doing this. If you want to get a job at a fund, funds will notice you on Twitter. If you want to get a job at Bankless, we are literally, hiring a tweet thread over. People that can write threads and get like a thousand likes and just generate a following and capture attention on Twitter, if you can do that, you will be handed a job on a silver platter. Okay. For people who aren't on Twitter, though, like what does it take to actually write a thread, David? What does a thread do on Twitter? Right. So it distills information down. And the reason why Twitter is what it is in this crypto space is that it forces big

Starting point is 01:32:02 ideas to be like condensed and collapse and concentrated down to into a very short, a single tweet, 280 characters. And so what you are doing when you are writing a tweet thread is you are learning how to communicate and explain things with extremely small packages. And so that's just good efficient communication. So it's basically like a litmus test for can you communicate very, very well. If you can thread well, you can communicate well. If you can communicate well, that's like the meta skill. And so people are judging other people's like abilities to like do good work by their ability to write threats. Yeah, I'm a plus one that also forces you to go digest some complicated information and

Starting point is 01:32:38 break it down atomically. So you have to really understand it if you're going to publish a thread. And then, of course, because Twitter is a social network, it's basically your online resume. You can tweet people and be like, yeah. Get off of LinkedIn. Get onto Twitter. Totally. That's where crypto is. That's where you get noticed. I've seen so many people launch their career by doing that is, you know, becoming threaters. And you start to write. in other areas or you get hired by a VC company or, you know, whatever your, whatever your main skill set is, that's the way to launch. Both me and Ryan, like, launched our public personas on Twitter, and then we found

Starting point is 01:33:13 each other on Twitter, and then we started bankless on Twitter. And now we're hiring tweet threaders for Twitter. It's like, there's just such serendipity to it. You've got to be part of it. You can't ignore Twitter right now. All right, David, let's get to some takes. First from Bellagie. This is, I'm going to read it out from Belaji,

Starting point is 01:33:33 Shrina Vosin, actually podcast episode coming with him on Monday. That is a do not miss episode. We talk about concepts like this, but here's what he's tweeting. The real lining from red versus blue to orange versus green. Decentralized network versus centralized state. Internationalists and capitalists versus nationalists and socialists. The cloud versus the land and Bitcoin versus the dollar. And he's showing that political compass square.

Starting point is 01:34:01 Maybe you can describe this image for us what we're seeing here, David. Yeah, the political compass is on the left. You have the left. On the right, you have the right. So liberals on the left, conservatives on the right, politically. But top to down, you have authoritarianism versus libertarianism. And so, like, we've said on bankless. Bankless isn't a left or right movement, but it is an individual versus, like,

Starting point is 01:34:22 versus authoritarian movements. So we lean down towards, like, the libertarian side of things. although we do appreciate structure. It's definitely like prioritizing the individual over like the state. And so what Blasji is saying is that what is previously like a red versus blue, left versus right phenomenon is slowly turning into a 99% versus 1%, which he's resembling as Bitcoin versus the dollar. The dollar being the state, Bitcoin being the people. And so I think that makes sense, especially as we've been putting this into a context of the end of the end of a cycle. of nation state power where like the nation state is no longer concerned about like do we want to be

Starting point is 01:35:01 conservative or do we want to be progressive we are now just like all right who's capturing all the value is it the individual or is it the the incumbents and so uh this is this is the instead of left versus right belagia is saying it's top versus down yeah and this goes into his idea a book he recently come up with it that we as we talk about at length is a book called the network state and he's really pinning this as it's kind of the authoritarian nation state versus the people's network state. Anyway, really fascinating conversation with him. Stay tuned for that on Monday.

Starting point is 01:35:31 David, a tweet from Sassel. Anthony Sassano, what's he saying? Yeah, first, he says, first, layer twos won't work and are useless technology. And now it's, if layer twos get big enough, it will become its own layer one and abandoned Ethereum. If this is the first time you've heard this take, it means you need to get on Twitter.

Starting point is 01:35:46 And Sazil finished it's saying, when you see the goalposts move like this, it means the critics never actually knew what they were talking about in the first place. Do you know what this also means, I think is I think the rotators are rotating into layer twos or they're getting ready to. And that's why they're seeding this as the next kind of narrative. I think the Alt 1 trade is somewhat dormant right now, somewhat over for the time being.

Starting point is 01:36:08 And now the L2 narrative trade is on. So what do you have to do? You have to prop up layer twos and their value accrual mechanisms from a narrative perspective and put down ETH in order to get that trade going. So I think they'll probably be effective. and I'm starting to see some of the rotators rotate in. Of course. Rotators are going to rotate.

Starting point is 01:36:28 Always going to miss Suu in three hours capital, the ultimate rotators. Not going to happen this cycle, though. This is a Vidalek tweet. What's he saying? Yeah, Vitalik says, call out scammers. You get hate in the moment, but time vindicates you. Even if you're some CEO with, quote, reputation and need for, quote, professionalism, do it anyways, and be savage.

Starting point is 01:36:48 People look up to you and your warning will be taken seriously. Is this Vitalik speaking? Be savage. It's Vitalik. Yeah, B Savage. It's a new Vitalik. So Vitalik called out the Force Age people, the people that just got charged with the SEC forever ago. And then he got attacked probably. I think this is a Chinese community, Chinese project, maybe, I don't know, which is why I didn't really hear about it.

Starting point is 01:37:10 But he said he's alluding to how he got attacked by the Forage community, probably. But now, now they're being charged with running a Ponzi scheme. So who's laughing in the end? He said this about Forage back in 2020. Please leave and don't pollute the Ethereum ecosystem in the future. Thank you. Thank you. Very metallic thing to say.

Starting point is 01:37:29 What do you think about this? Is it incumbent on the community to call out scammers more often? One thing I struggle with about this, David, is sometimes the term scammer gets overused, right? I think in this case, it was very clearly a scammer. So maybe when something is very clearly kind of black in the black category, there's no gray about it, that's the time to pile on. But it was not clear to me, for example, if we start putting

Starting point is 01:37:56 like Luna and Terra into that category, whether Luna and Terra was a complete scam at the time. I thought it was like a flawed mechanic and like a very risky broken thing to invest into and I didn't think it would work long term. But I can't necessarily call that a scam. I don't think that Vitalik is talking about that category of things, is he? I think so.

Starting point is 01:38:17 Like, it's definitely one of the things that I learned out of 2020 is that like my intuitions are better than I thought they were. And so like, you know, I got into that fight with Danny Sesta from Wonderland. And then like his army like descended on me and like made me put my tail between my legs because of like Twitter drama. And then and then he blew up. And if I had been like a little bit more like confidence and conviction, it's like, yeah, this is not right. I might be would have said something. Same thing with Doquan.

Starting point is 01:38:42 Just repeated it. It's like, God attacked by Doquan. It's like, damn, their army is really loud. I don't really want to, don't really want to like pick my head up. And then boom, they blow up. And if I had a little bit more of just like, I don't really give a fuck about you, I'm going to be proven right in the long term,

Starting point is 01:38:55 then I think I would have gotten more credit than we did. Even though we did, like, call out, call out terror. I think decently, I think we could have done it better. So maybe David's going to lean into that a little bit more. I'm still probably going to be a bit more conservative. Like, I think, I think Vitalik's right for calling out something like this. But sometimes I am wrong, right?

Starting point is 01:39:13 Like, sometimes it's not, like, the mechanic does actually work in the long run. I think there's time for me, at least me personally, like a period of skepticism before I start using the S word. But then there are things that are very clearly scammed. Like, for example, Celsius. Some people were saying Celsius was a scam. I just didn't have enough information to know whether it was or not, right?

Starting point is 01:39:35 But like, it turns out it was. I don't know, stuff like that. There's a lot in the gray area. Is it a scam? I thought Celsius is just egregiously mismanaged. I think that verges on scam of like Alex Mishenski calling himself a defy bank and then taking funds. Right, right. Yeah, it's calling himself DeFi and not a banker. Yeah, yeah, yeah. All right. What take from me? I say this. It's true. People don't care about decentralization. There's a lot of talk about that this week. A lot of talk about people not caring about decentralization. And I said, it's true. People don't care about decentralization until they get Mount Gox or Suzued or Doquand or Machinskyed. They don't care because they're new and haven't been screwed yet. Eventually, people care about decentralization.

Starting point is 01:40:19 When I got into crypto in the very beginning, I didn't care very much about decentralization. You know what I cared about, David? Number go up. Number go up. Like, it was like, I cared about other things, this idea of Bitcoin, you know, sovereign money. I didn't understand the intricacies of like why decentralization matters until I started to see things in the crypto space. I, you know, read about the Mount Gawks, see kind of the centralization vectors.

Starting point is 01:40:45 And I do think people start to care about it over time, but they don't. start with that position as their default, they have to kind of learn it sometimes by being in crypto for a period of time. Of course, as one does. That's my take. What's yours? I think this was my take last week, but here's my take. The best thing that could ever happen to crypto, a fees-driven bull market, aka a sustainable and rational bull market. Is that like too much to ask? It's a rational bull market. Why is that more rational?

Starting point is 01:41:16 Because if it's fees-driven, it means it's revenue-driven. I mean if it's revenue driven, this is how we've been like measuring assets since like the beginning of time is fundamentals. It's asking for a fundamentals driven bull market. Can we have one of those please? Real people are paying for the service. Yes. And it's actually providing real profit. It's not based on speculation. Owners of the asset. Yeah, that would be pretty healthy. That'd feel pretty good. I would like that. You think we're going to get it? Can I have this please? Is it? Is it that crazy? David only wants one thing for Christmas. Yeah. Some people think it's cringe, Ryan, that we read out our

Starting point is 01:41:49 on tweets as takes of the week. No, really? Yeah. Well, maybe... Some people think it's great. Whatever we do is cringe. I should read out your tweets and you read out my tweets. Is that less cringe?

Starting point is 01:41:58 That's what we usually do, yeah. I'm they're called takes of the week. So, we have takes sometimes. Yeah. Yeah. We have good takes. Sorry for the cringe, guys. Udi, I'm sorry for the cringe.

Starting point is 01:42:08 David. People don't know that metaphor. What are you excited about this week? I'm excited for tokens, Ryan. There's a bunch of tokens. This is my coin gecko watch list. And so these are the tokens I'm currently looking at, and there's a bunch of them that are up bigly. Stakely is up 107% in seven days.

Starting point is 01:42:26 Optimism up 90%. Uler up 69%. Yern up 51% again about fees. GMX up 42%. I don't own any of that, but perhaps I should look into how much fees it's making because it's making a bunch of fees. Rocket Pool and Lido both up 32 and 37%. Immutable X, a layer 2 up 30%. Uniswap up 10%.

Starting point is 01:42:45 I just feel like it's ETH Maxi token season. right now, and it's just making it feel really good. And there's like almost an oxymoron about ETH maxi token season, because like if you're an ETH maxi, then you only buy ETH. But that's not exactly true because if you're an ETH maxi, quote unquote, then you also must believe in the tokens in the ecosystem. So when I see all of like these tokens that are heavily aligned with the Ethereum protocol going up, I'm like, nice. Are you going to sell, like, how much of these would you sell ETH for in order to get in though? That's the harder part, right? Fiat's easy, but which of these are going to continue to go up in ETH denominated terms?

Starting point is 01:43:17 It's always hard. That's the hard part. I thought it's hard. I don't know. Whenever I get to that point, I'm like, I don't want to sell my ETH. Ryan, what are you bullish on? I am bullish on the Ethereum roadmap.

Starting point is 01:43:28 So we obviously have like, if you zoom out, we have the merge coming up, right? That's an economic upgrade. So we get 90% issuance reduction, more security. We talked about that. Our discussion with Pellenia around EIP 4-844

Starting point is 01:43:43 this past week made me excited about kind of the next upgrade of Ethereum. first we have an economic upgrade with the merge, but hopefully, fingers crossed. The hard fork after that will get something like EIP 4844, which makes roll-ups a thousand X cheaper potentially when you add all of the roll-up compression techniques with EIP 4844, you get a thousand X cheaper roll-ups, according to Pellenia. That's big.

Starting point is 01:44:14 So we got first an economic upgrade. Yeah. And then we got a scalability upgrade. And then David, we just had a conversation with Stefan from FlashBots this week about MEV, that's maximum extractable value mitigations. And that is kicking in right after the merge. It's a long story, but FlashBots has a project called MEV boost that all validators will use, that also generates more returns for anyone who uses it as a staker.

Starting point is 01:44:40 But I'm actually really excited about the MEV protection that's going to be baked into Ethereum at the protocol level as well. This is called Protocol Builder Separation PBS. And that is coming sometime after EIP 4-844 in the future. All this to say, I'd probably never been more excited about the Ethereum roadmap. And the reason I'm most excited is because I feel like we finally got our shit together on it. Like from an... It's actually defined.

Starting point is 01:45:08 There was a while where, like, honestly, Ethereum didn't have it together. Right. From a roadmap perspective. I would say late 2019 was when it finally came together. Yeah. We didn't have... Like kind of the monetary policy was like, I don't know, we'll wait for proof of sake. We have that figured out with a merge.

Starting point is 01:45:23 Scalability? I don't know. Plasma, state channels. What's it going to be? No, now we have a path, roll up centric roadmap, EIP 4844. Like that's within sight. How are we going to solve this MEV problem? MEP boost, PBS?

Starting point is 01:45:37 Like the roadmap's looking good these days. I'm pretty bullish on it. Yeah. It's looking good. And it also makes like fundamental sense. It's kind of like going back to what Kelvin Finchner were saying about the theoretical, like, maximum. Like, there are things about the Ethereum roadmap, the design philosophy, that is just,

Starting point is 01:45:54 like, the theoretical best way to execute an idea. And I don't have enough time to go into that right now, but I'll tease an article that I think is coming out next week, which is what you're alluding to, which is about the blockchain supply chain, as in, like, how a block becomes produced on Ethereum and where the value goes in that supply chain and how it ultimately always converges down to the East Stakers. And so I think we are bullish on the same thing, brother. All right.

Starting point is 01:46:19 What's the meme of the week this week? What are we looking at? Meme of the week. Meme of the week. This is a top gun poster. Top Gun Maverick. But instead, we got Nancy Pelosi in this F-18 zoom in her way to Taiwan. Why?

Starting point is 01:46:34 For people who have been watching the news, what's the context for this? Yeah. Nancy Pelosi went to Taiwan of her own accord. Interestingly, after her husband bought a bunch of calls in Taiwan semiconductor businesses, right before a bill went to Congress. So that's a different story. But then Nancy Pelosi, of her own accord, not as a part of her job as Secretary of State

Starting point is 01:46:53 or whatever she is, Speaker of the House, decides to go to Taiwan and thoroughly pisses off China, who is now, as a result, doing military exercises in that region as well. So Nancy Pelosi, just go in rogue, top gun maverick style, getting herself into Taiwan

Starting point is 01:47:10 and pissing off the two biggest superpowers, or one of the biggest superpowers in the world. Nice job, Nancy. Well, the 2020 is geopolitical tension. That's going to be fun. I feel like we need to do an episode on that in the future. Guys, as always, it's been great to have you. Of course, crypto is risky.

Starting point is 01:47:28 You could lose what you put in. But we are headed west. This is the frontier. It's not for everyone. But we're glad you're with us on the bankless journey. Thanks a lot.

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