Bankless - ROLLUP: Tesla Sells Bitcoin | Minecraft NFT Ban | Polygon zkRollup | Genesis 3ac | Ethereum Merge

Starting point is 00:00:00 Is the bear market over? Happy third week of July, Bankless Nation. Are you ready for it? I hope you are. It's another weekly roll-up where David and I download the week. And David, today you are coming in from Paris, France, right? Yeah, yeah. So at ECC, where it all began, meaning a year ago, ECC a year ago, was like the first conference that really kicked off conference season

Starting point is 00:00:26 and then just like a mania of conferences after that. But now it's a year later. And it's crazy that it's only been one year since the last ECC, which really, it kicked off in real life crypto for so many people, all the conferences and conference goers of the world. So much has happened in the last year. Vitalik had his talk about non-financial use cases of blockchains a year ago. And then like about six months later, we have things like Lens Protocol gets shipped. And then like soulbound tokens captures like everyone's attention. And we have like verifiable credentials.

Starting point is 00:01:00 And so he just had a talk today. I actually didn't listen to it because I had to come do this. But I was talking to him in my quick little interview, which we'll talk more about later. I was like, Fatalek, what are you going to talk about this year? What are we going to be focusing on in about six months as a result of this talk you're about to give? And so I asked that question in a little interview. Imagine the power to speak things into existence. You're just like, I think it would be cool if we did this.

Starting point is 00:01:24 And then boom, stuff starts happening. But I know you brought a lot of content home with you from ETHCC. And the great thing about it is, guys, you know, bakeless, I don't get out as much as David. Of course, you guys know this, right? So David hits all of the conferences for me and for all of us collectively because we can't go to everything. And I think you've brought home like two hours of content or something like this, a whole bunch of interviews.

Starting point is 00:01:48 I haven't even seen some of this stuff. Yeah, you're going to have to wait in line like everyone else, Ryan. Are you going to tell us about that now? Are you going to tease that and talk about it toward the end of this episode? I'll just say I interviewed eight people. from across the ecosystem. We'll talk a little bit more about some... Okay, here's one.

Starting point is 00:02:04 Here's a little bit. I asked Kane about his fight with Suzu, and so that was pretty fun. And then I also asked the Starkware team if they would ever move Starkware of the layer two into Starkware of the layer one. So, you know, things just have a little bit more spiciness in real life, so I enjoyed that angle.

Starting point is 00:02:24 I love that. Thanks for being spicy, man. These are the questions people want answered. But guys, we have some of the top. that I think you're going to want to hear about because the roll up, the purpose of this show that we do, every single Friday, and I hope you're enjoying your morning coffee. People are like, why coffee? Why not herbal tea? Whatever your hot beverage of choice is, I hope you are enjoying it. If it's only black coffee, it's coffee. If you add anything to it, is a beverage.

Starting point is 00:02:48 See, like more of this carbs minimalism coming out of David. I don't know. But we've got some topics to cover. We're going to get through them in just a minute. The first is the question on everyone's mind, I think is, is the merch being priced in? Okay, ETH prices are way up from the bottom. But was that the bottom? The question is, was this the shortest bear market ever? What else we're going to talk about this week? You know, not too long ago, Ryan, there was the phone wars week where, like, Solana launched

Starting point is 00:03:15 itch phone, and then we had, like, three more, like, phone things get released all in the same week, like weird that happened the same week. Well, this week, it's ZKEVM week. So Polygon just announced their ZK, EVM equivalent. so did ZK Sync and then also scroll. Also another ZKEVM also announced their ZKEVM announcement. So I guess this week is just ZKEVM week. And so we'll talk about why everyone's so excited about the ZKEVM.

Starting point is 00:03:43 There's also we get to actually get super detailed report as to what actually backs a USDA. So we'll talk about that. And of course, it's never ending, Ryan. The Three Arrow Saga continues. I probably will next week and the week after. the week after, I bet. Guys, quick PSA for you as well. Did you know you're listening to Bankless on Spotify?

Starting point is 00:04:04 You can also see Bankless on Spotify. This is a new feature that they just launched. They pick Bankless as a podcast that they're co-launching this with where inside of the Spotify app you actually get video. So go check that out on Spotify. I watch some of the podcasts I enjoy this way as well. It's kind of a cool format. And it gets some distribution outside of YouTube.

Starting point is 00:04:24 So we've got a few different ways we are distributing bankless visual. content. And we do have some visuals in the show, so it can be useful to go check that out. David. Did you know Ryan that on the road, people that listen to the podcast often think I'm Ryan because they don't know what we look like? No way. Yeah. Very frequently, like, oh, Ryan from Bangladesh. I'm like, no. Because they've never seen your face. Yeah, they don't know what we look like. Guys, if you don't know what David or myself look like, you know, I promise. You're missing out. You've got some pretty faces. You're missing out on at least one. of us, okay?

Starting point is 00:05:00 But go check out Spotify. Just catch a glimpse. So if you see if us in person, you'll know who's David and who's Ryan. We have nice cameras, guys. Yeah, we have okay cameras. That's right. David, we got to also talk about our friends and sponsors, RhinoFi. This is the company that used to be called Diversify.

Starting point is 00:05:17 This originally was a fantastic decentralized exchange, doing it the right way, completely non-custodial, completely bankless, built on starkware technology. So built on a layer two, just like D-Y-D-X. Now they are expanding. So they're rebranding. They're going like, I guess it's grabbed D-Fi by the horns. Is that a slogan they're using? If not they should.

Starting point is 00:05:38 Yeah, I'm pretty sure you're using it. It's Rhinify and it's no longer just trading. We've got some other money verbs in there that you can do. David, I'm going to pop this open so people can see what's happening in Rhinify and tell us what else you can do in the Rhinify app right now. Rionify is just obfuscating or abstracting a lot of the complexity of the multi-chain universe. We all know that that's where we're going,

Starting point is 00:06:01 whether you believe it's multi-layer one or multi-layer two or both. Rhino-fi just abstracts so many of the layers. So you can do your defy things, regardless of what chain it's on, because honestly, sometimes you just don't really care what chain it's on. You just want to do the thing.

Starting point is 00:06:16 And Rhinofi lets you do the thing without having to think about the chain that's behind the thing. And so you can invest and get yield, as we all do and know and love. You can put money into LPs. You can just do the basic trades and swaps. So you can check it out.

Starting point is 00:06:31 There is a link in the show notes to go there. Yeah, I really feel like this is worth bookmarking because it's going to be an app that's going to get better and better. And of course, because you're on layer two, you get to save on all of the transaction fees. You can also sign up to hear about Rhinify's mystery airdrop. It's going to be coming. They're dropping some cash with that.

Starting point is 00:06:50 $5,000, something to this effect. So go click the link in the show notes, sign up for that. so you won't miss out on another air drop. David, let's get to markets, man. Bitcoin, we got the happy music playing. We should play some happy music in the background because we're up a little bit on the week. Let me share the Bitcoin charts

Starting point is 00:07:08 and you tell us what's going on. Yeah, Bitcoin up about 11% this week. It started about $20,200, and we are up to $22,600. 11%, double-digit percent. You can't be sad about that. That is a good week. I'm not sad about that.

Starting point is 00:07:23 I'm very happy about that, actually. and Heath tells a similar story. What are we looking at here? More than 11%, Ryan. Eth is up 31%. Going up from about 1,150 to where it is now at 1,500, it hit $1,650 at the peak, which is pretty crazy. That is pretty crazy. That is a good week.

Starting point is 00:07:45 There's not very many weeks that you see 30% in a blue chip like Eith. No, that's huge, right? And so let's get into it because the question on everyone's mind I think is twofold, right? So we had the first question of, is the bear market over? And everyone always asked this, right, question. But the truth is, ETH is up 73% from the lows. At least it went up that high. Heath lows, if you recall, look at this, David, 897 was the low.

Starting point is 00:08:14 We got into triple digits. We got like. That makes my $904 buy feel really good. Yeah. We just, wow, you got one of those? I got a $904, yeah. I hope it was a big one. You may have timed the bottom.

Starting point is 00:08:27 But that was only a month ago, guys. Right. All right. And now, of course, because price drives narrative, as we all know, price drives sentiment, as we all know, a bunch of people are asking, is the bare market over? Crypto's up. It must be over. Crypto market cap is over a trillion dollars.

Starting point is 00:08:43 So that's one question. The other question is, well, it seems like ETH went up a whole lot more than Bitcoin this week. Is news of the merge finally getting? being priced in. Let's take those questions one at a time. So first, bullish David, is the bear market over? What's the case for that? What's the case? Whatever you say, I'll make the case for the opposite case. So why why you tell us about the bear market? I think it's actually worth going back and to the 2022 predictions post that we made at bankless. I said one of my predictions was that the merge would happen in 2022 and that ether will know.

Starting point is 00:09:24 not be in a bear market about three to six months post-merge, as in like the effects of the merge would cause not necessarily a bull market, but like we would be out of the bear market as a result of the merge. And you're starting to see that being priced in like right now. Like this is clearly and unequivocally, absolutely, the merge having a price impact on ether of the asset today. We go for, you like not very, even in a bull market, even in a mania, it is not, it takes a lot for something to go up 30% in one week. It takes a lot more for something to go up 30% in a bear market. But it's okay. Granted, we bottomed at 900 and things generally bounce off of the bottom no matter what.

Starting point is 00:10:04 So if that was the bottom, then you definitely get a bounce. But like a bounce up to like 1100, 1200, 200 is a good trade. What is that? Like 30% off the bottom. But we went 30% more off the bottom up to where we are now at $1,500. Is the bear market over? Bear market is like, it's kind of a sentiment. Like you're only in a bear market if you feel like you're in a bear market, but I will say, for me, Ryan, $1,500 does not feel like a bear market. Like, in the grand scheme of things, like, $1,500 is actually pretty expensive. Like, that's, that's, that's, that's four digits. There's four digits in there.

Starting point is 00:10:36 So I think what people are asking when we're in the bear market is, is this just a temporary blip up before we take another plunge down to new lows? That's really the big question. Are we going to hit new lows? And so, you know, first of all, I'll kind of address your question, your, your, you, you thought about the merge being the ether. effect, the ETH price jump is because of the merge. I completely agree with that, actually. And I don't think I've ever seen the market price in some fundamentals in the way that I saw

Starting point is 00:11:04 that happen this week. Like, the market is kind of, to be honest, a short term dumb. Like it doesn't, I guess because in this case, the merge as a fundamental is also a narrative. The market only kind of prices narratives. And so now we see, look at this difference, down from all-time high. We were at like 83% or something for ETH and low 70 percentages for Bitcoin. ETH is just caught right back up. It's only 68% down from all-time high number, and Bitcoin is 67% down from all-time high. And you can also see, I mean, look at this jump on the ETH Bitcoin ratio. We're up like 22% on the ratio. So relative to Bitcoin, ETH has gone up 22%. And That has to be the merch.

Starting point is 00:11:52 So I'm with you on that. I think the merge is starting to get priced in, and it's just starting to get priced in. All right? So, like, maybe there's more to that to come. But let me give kind of the bare case of, like, why we may not have hit the bottom yet, David. And I don't want to hear it. No, you got to hear this, okay? And, like, I think some of the reasons that you say it, you make the argument for the bull case.

Starting point is 00:12:18 But what scares me most probably is, is macro, the macro setup. We had Luke Gromman on the episode last week. He's the worst he's ever seen in his career. We had Travis Kling on earlier this week, and he talked about the macro setup. And what happens if something breaks in the broader macro environment? The Fed raises rates too quickly. Bond markets break. What's happening with the euro? What's happening with the yen now? Like, everything in macro is feeling kind of shaky. And merge or not, if something breaks or something gets really shaky and macro, like, we're going down. And we ain't seen the bottom yet, in my opinion. I don't think the merge can save us if that is the setup and

Starting point is 00:13:05 if that's what we go to. And I would also say, recall, 2018, all right? We go down 80%, something like this. And then we'd pop back up and everyone be like, oh, it's over. That was the dip. I hope you bought the dip. Did you buy the dip? And then back down again. And the plunge was even lower than the previous. So this is also the nature of a recovery. It's like a staggered recovery where you go up and you go down and you go up and you go down. And it's like a staggered plunge as well on the way down. We still might be in that staggered plunge area. And if you were to ask me, I'd still probably I'm probably 50-50 on it, David. That's probably where I am.

Starting point is 00:13:48 It's like both are kind of equal probabilities, one that we're done, that we've hit the bottoms, and the other that we've still got a ways to go. What do you think about this? Yeah, I think that's all a bunch of BS. I think we had the bottom. You ready to call it?

Starting point is 00:14:02 You're buying in now? I mean, okay, so like this falls into the same category that I see a lot of people doing. It's like, oh, let's like retrofit 2018 and apply it to 2022. to some degree like manias and bubbles and when prices get out over their ski tips it's all going back to the same pattern which is like the human psyche so like yeah of course it's going to repeat it's the human psyche that is making like bubbles happen but that's actually different this

Starting point is 00:14:30 it's quote-o-quote is different this time because of the actual merge like the merge is the most it's the biggest catalyst in crypto ever like you would expect it to be different and the whole point of it is that it is different proof of it there I'm moving to proof of sake is unlike any other proof of sake network. The fundamentals behind ether of the asset are unlike any other fundamentals. And like, so like this is this is not just some like narrative. This actually this is supposed to show up in the charts. Let me ask though.

Starting point is 00:14:57 Do you think it could overcome catastrophic or very bad macro news? Macro. No, I don't think, I don't think that it will. However, also on our show with Gromman, we also painted the picture of like, okay, Macro could break and everything could go to zero and that'd be bad. Things go to zero would be bad. But also there's the inverse side where like there's like a needle to thread where like the Fed could turn on the money printer at the same time of the merge. And that's uber bullish.

Starting point is 00:15:24 And so those things cancel each other out. And so I think you just like don't consider that at all and just like take it for what it is. And what I see is the merge being priced in. You know, I actually think Arthur Hayes of Bitmex made the best case for that this week. We're going to get into that in a little bit. So guys, stay tuned. Anyway, this is the debate, and the market is absolutely having this debate. Bare market or bull market, not too sure, but we do know that the merge is a positive catalyst.

Starting point is 00:15:48 I rattled off the market cap numbers, but we're above a trillion now, aren't we? That's good news. Oh, hooray. I feel like that's a pretty safe bull bear market line is one trillion dollar market cap. Yeah, it's definitely a good meme line for sure. Jumping to this chart for a second, this was interesting. I saw this on Twitter this week. This is Macro Elf.

Starting point is 00:16:07 200 years of inflation-adjusted returns for different asset classes. We're all dead in 200 years, but still quite interestingly showing a chart of assets over time here, David. And this goes all the way back to the 1800s, right? So you kind of want to answer that question of everyone's asking, what is the best asset class to hold for the long run? Even though things go down, things go up. If you're a long-term investor, you want to know. And you look at this annualized return over 200 years. Stocks, 6.6%.

Starting point is 00:16:36 Bonds, 3.6%. T-bills, 2.7%. Gold, 0.1%. U.S. dollar, negative 1.4%. And I thought this was very interesting. I have a caveat to this and a very important caveat, but I want to get your reaction first. What do you think this is telling us?

Starting point is 00:17:00 Well, my first thought is that if crypto is on this chart, its line would be like way higher than like 45 degrees. It would be like 50 or 60 degrees. Yeah, it's invisible on this chart. It's 10 years old. We don't, yeah, we did not have crypto in 1802. So, you know, but like the annualized return of the crypto industry is it's something like 50% year over year, which is absolutely insane. And it's been like that ever since, you know, Bitcoin started in 2009. That's really the only thing that I thought about when I saw this right. Do you know, I think the takeaways for many people in the traditional finance space are like, oh, this is why you should always hold stocks forever. And gold is such a scam. Like gold is,

Starting point is 00:17:38 but here's the problem with that. And by the way, everyone will agree holding Fiat is a bad, bad idea. Do you remember the Ray Dalio book that we just read? Changing world orders. Changing world orders. Okay. Yeah. It's not the exact title. Close enough. This is just U.S. assets. All of these are U.S. assets. And the U.S. has massive survivorship bias in that it basically became the world empire in the last 200 years and survived wars, all sorts of macro events. This is like an example of a successful economy and empire. Go look at Germany or how many times did they like reset their currency? How many times did their stock market like go to zero basically? Go look at Russia.

Starting point is 00:18:27 Go look even at the U.K. and you have a vastly different picture. So I think it's a complete mistake for people to look at this, especially when we're dealing with changing world order, right, to look at this and to say, oh, I should always hold all of my assets in U.S. stocks. This assumes a lot about the U.S.'s position of dominance in the future, and you might not want to make that assumption. And anyway, it's just a fallacy I see when people throw up these charts,

Starting point is 00:18:58 because if you were in Germany, for example, you had no access to stocks. Germany during one of the intervening periods where the currency dropped to zero, stocks went to zero, et cetera, then gold was like the best option for you. And so massive survivorship bias in this chart is what I see. Yeah. For the viewer, you can just like imagine more or less like a wave. And this is how Ray Dalio illustrates these things. It's like we are stocks, bonds, bills, gold, not gold.

Starting point is 00:19:28 are riding the wave of the U.S. economy. And empires come and go. And so this can be like, in theory, could be like the peak of a wave, right? And now we're on the decline. You just have to broaden your horizons and sometimes realize that things in the global order, like they only change every like few hundred years.

Starting point is 00:19:47 And so you have to, you have to consider where you were in that wave. Yeah, we're kind of in that phase. Speaking of which, let's talk about the dollar. So the Dixie is still crushing it. Super high. DXY is up. I know we asked the question of what is it composed of, the DXY composed of. We've got a table of what it's composed of.

Starting point is 00:20:07 So what's in the DXY index? Why is it a measure of dollar strength? And what is it measuring dollar strength against? Yeah, 57% euros, 13.6% Japanese yen, 11.9% British pound, 9% Canadian dollar. And we got tiny little bits of the Swedish corona. Okay. And this switch frank. And so, yeah, this is what the DXY measures.

Starting point is 00:20:28 against it's the strength of dollar against all of these things but it's basically the euro 60% the euro yeah absolutely so no wonder it is rising uh and i think that uh paints the picture and tees us up for arthur hayes take this week um did you read this article david i haven't read this one so you have to walk me through it oh it's so good okay so it's titled uh a samurai a knight and a yankee um can you guess who those characters are uh i'm gonna go ahead and guess that is japan um uh british Britain and the United States. Yeah, right. Nice.

Starting point is 00:21:00 So, you know, the Samurai is the Japanese Central Bank Authority. The Knight is the Euros, Christine Lagarde, and the Yankee is Jerome Powell. Anyway, he kind of walks through them all kind of meeting in this in this inn and talking. Anyway, that's his narrative to you. But the summary of this article, I'll read a quote from it. Arthur Hayes says, I will argue that the only solution, left for any governments of countries that are not productive is to pay back their debt loads by inflating them away. Any country that is not productive has to pay off its debt load by inflating it

Starting point is 00:21:37 away. All right. And he goes through the reasons why the U.S. is not nearly as productive as it once was for every dollar the government spends. Neither is Europe, neither is Japan. And so they're stuck in this position of having to inflate their debt away. Similar themes, we talked about the Lin-Alden, themes of Lou Grom and all of our macro podcasts, and of course, Ray Dalio, but then he goes into the setup right now, the macro setup right now. And so his first piece is Europe and Japan, all right, from an energy perspective, they're in a bad place because they basically import all of their energy from other countries. They don't have much internal energy production. The U.S. is in a different place from an energy perspective, in that the U.S. has a lot of its own

Starting point is 00:22:26 natural resources. It's a net export, or particularly natural gas is a strength. And then he goes through, the problem with what the EU and Japan are doing is they're inflating their currency. They're effectively going into like yield curve control mode, and they're inflating it against energy. So they're issuing more of it. And this is causing massive inflation for their people. This is like a Weimar Republic type of play. And I know Luke Gromman had talked about this, But they can't get cheap energy from Russia because the war in Ukraine, the U.S. doesn't want them to. And so they're stuck in this rock in a hard place between their population is clamoring for, like, lower prices on all of their consumer products, specifically energy and food and some others. And yet they can't release the pressure due to like geopolitics.

Starting point is 00:23:23 the U.S. doesn't want them to, maybe to some degree, they don't want to as well. So what's going to happen is the DXY is going to continue to rise. The dollar is going to continue to get stronger relative to those currencies. We just talked about that basket of currencies. And inflation in Europe and Japan will continue to rise until there's a breaking point and the population says enough is enough. But the problem for Japan and for Europe is do they go back to Russia? and try to get some cheaper energy, right? And like, the U.S. doesn't want them to do that. And so maybe U.S. says no, there's some political tensions,

Starting point is 00:24:02 but they can't stay in their current state of continuing to inflate their currencies against energy and against the dollars. So what do they do? They have to go to the Yankee. They have to go to Jerome Powell, the U.S. government. They have to go to Treasury, and they have to say, hey, you guys have to help us.

Starting point is 00:24:18 If you want us to continue sanction this hard, you guys have to help us out. And so what Powell, what Treasury is going to have to end up doing, is going and buying bonds, buying Japanese bonds, buying Euro bonds, and effectively devaluing the dollar relative to these currencies, making these currencies stronger. Okay? What that's going to do is massively inflate the balance sheet of the Fed. Now, not only with, you know, U.S. debt and U.S.

Starting point is 00:24:52 bond debt, but also other sovereign countries debt, particularly its allies. That is kind of the way out. And so what Arthur predicts is going to happen is on the one hand, Powell is going to say, yeah, we're trying to crush inflation, we're going hawkish on this, we're increasing interest rates by like 0.75 percent, yet again, we'll continue doing it. We're going to break the back of inflation. I am Paul Volker reincarnated, watched me do this. And the other other hand, he expects behind the scenes like Treasury and the US government to actually be issuing more currency in order to buy the bonds of its allies. That's the backdrop here. If you play this out, that's what Arthur is predicting. But what this means, David, net net, is probably

Starting point is 00:25:40 very bullish for cryptocurrency, particularly ether, particularly Bitcoin. Because whenever the money printer turns on, that's when these assets climb. That is the correlation that's been preserved from the beginning. And right now, we're in this phase of money printer is off right now, temporarily. There's some quantitative tightening going on. But Arthur predicts that it's going to have to be turned back on in order to bail out U.S. allies. And once that happens, crypto will resume its assent and take off. So that's the thesis.

Starting point is 00:26:12 And to me, it's kind of an aggregation and consolidation of much of the macro discussion we've been having on bankless. and I think it's a pretty reasonable prediction. Yeah, and that maps onto just like the general thesis that a lot of just, I would say, Bitcoiners have about the state of fiat currencies in nation states is that you end up in debt and sure there's volatility, sure you have bare markets, but the long-term conclusion of the U.S. dollar

Starting point is 00:26:39 is to inflate away to zero. And all fiat currencies inflate away to zero. And in that world, it's just like bullish for like all assets. Absolutely. We'll talk about another blue chip or another question that we have, which is, is Defi back? All right? So some Defy blue chips.

Starting point is 00:26:56 I'm ready to be heard again. Are you ready to be heard again? Defi blue chips have been climbing, so particularly AVE looking good, uni looking good, MKR also looking good. And they've been climbing even relative to ETH lately. I know we have a chart up here. What are we looking at, David? Yeah, that's the ETH DPI chart since Chenesis back in October of 2020.

Starting point is 00:27:17 and in ETH terms, it's like down only. But it's been up since May. And refresh people. What is DPI, David? Yeah, DPI is a DFI pulse index. It's just an index of a lot of DFI tokens. And so I think AVE, Uniswap is like the biggest one, but there's, of course, there's Maker Ave sushi swaps in there, a few other ones.

Starting point is 00:27:39 It's the blue chips. Just like all the DFI blue chips, right? And we've talked about the DPI before, but we stopped including it in the weekly rollup. like every single week it was like down. It got sad. And yeah, there was no news. It was just like, yeah, it's just down all the time.

Starting point is 00:27:52 But not in the last month or so. Ever since May, it's been a little bit up. So the ETH to DPI ratio was about 0.04. We are currently at 0.062, which is a healthy percentage increase. It topped out in the local high at the beginning of January at around 0.075. But Ryan, we're still down very bigly versus Eath because it started in 2021 at about 0.26. So one quarter of an eth was one DPI, but now it's just 0.06 of an eth is one DPI. But we know that DFI protocols are super bullish because they keep on earning all the fees.

Starting point is 00:28:28 And so you can see on crypto fees, just like there are meaningful days where synthetics and Uniswap are beating Bitcoin in daily fees. And so in this particular day with this screenshot, synthetics was behind Bitcoin. But synthetics is from, if I'm recalling correctly, earning more fees than Bitcoin. most of the time. And that is a lot of fees. Uniswap, just sweeping the floor of absolutely everything, getting more protocol fees than Ethereum is, which is nuts. And so, like, yeah, like, defyte tokens are down bad,

Starting point is 00:29:00 but they're all just, like, one fee swap, fee switch away from just, like, earning a ton of money. Yeah, I totally agree. And, David, I know we've got some content coming on bankless on how to fix the economics and the governance of these defy tokens, because I feel like we've got product market fit, We've got, like, successful protocols generating millions in cash. Now, we just got to figure out that fee switch component, and then we're off to the races with defy tokens,

Starting point is 00:29:26 and I expect, like, much more of a recovery. Uniswap made $4.6 million in one day on the protocol. That is nuts. Yep. Want $4.6 million a day. Pretty much all profit, too. It's, like, not a lot of operating expenses. Tell me to shut up.

Starting point is 00:29:44 That's fine. Tell me to tune into the roll-up tomorrow. and they'll understand why you're yelling. I saw this chart this week on Twitter, so I thought about including it. It's an analysis on an Ethereum address. What do they do first on Ethereum? Do they do a Dex trade or do they buy an NFT? And the Dex trade used to be in the lead for the majority of 2021,

Starting point is 00:30:04 but it looks pretty clear that the recent trend is your first activity is more likely to be buying an NFT than it is interacting with a decentralized exchange. I mean, we kind of know this. NFTs are for everyone. There's always an NFTs out there for you, no matter what. But if you haven't found, if you don't like NFTs, you just haven't found that one yet. And defy exchange stuff, not necessarily for everyone. You know, NFT is about the culture and defy is about finance.

Starting point is 00:30:27 Do you think we can just extrapolate this? And like, NFT is going to continue to lead defy as the way people access the space for the first time. Do you think that's true? Yeah, I think that's right. I mean, Andrew Steinwald said it right. Like, ERC 20 tokens or currencies are meant to value stuff. There are a measurement of stuff. but NFTs are the stuff.

Starting point is 00:30:48 So, yeah, there's going to be a bigillion NFTs and only a handful of ERC20 tokens that are sustainable. I guess in the real world, there is much more non-fungible property than there is fungible property so that kind of mats to the bits map to the atoms in this case.

Starting point is 00:31:02 And I have noticed, David, by the way, that, you know, the blue chip NFTs seem to be doing okay. Like, they seem to be holding up relative to ETH. I think the Cryptopunk floor is like 80 80, right now, 80th, something like that. Feels good.

Starting point is 00:31:16 That's not too bad relative to ETH. Relative of the Fiat's, it's down pretty bad. And like the ape floor is holding. It's like in the 90s, something like this. So the Blue Chip NFTs, you would, I think some people would have expected them to like really get crushed in ETH terms. And they just haven't. Well, yeah, because you can't, well, first you can't take leverage on NFTs, so they're immune from that. But also, like, if you're in a pinch, you can't really sell an NFT in a pinch.

Starting point is 00:31:41 So people don't. Like, people are kind of like, buy it and hold it for life. That's a really interesting take. Yeah, I guess they're not selling. Maybe they're not for sellers, too. Maybe it's a different type of individual holder. What do we got coming up next? You will be able to leverage up on NFTs later.

Starting point is 00:31:56 That is a financial innovation. That is definitely coming. That's going to unlock some absolute degeneracy in this industry. Guys, coming up next, we're going to talk about merge dates. Has the merge date been announced? Maybe, kind of. Not really. But it's getting close.

Starting point is 00:32:10 Maybe. We're going to talk about that. Also, it seems clear that it's ZK roll-up season. But the big question is, who's going to be first to market with the first ZK EVM rollup? That is Ethereum equivalency. And also, we're going to talk about the three errors capital. Again, the saga continues. More important documents released.

Starting point is 00:32:29 We're going to dive into what all of that means. But before we do, we want to thank the sponsors that made this episode possible. Lens Protocol is an open source text act for building decentralized social media applications. It is the new era for social media. We all have toxic relationships with our Web2 apps. We want to break up with them, but we can. can't. These applications own our digital lives and all the relationships that we've made. We need to break through to a new paradigm of social networking applications that we control

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Starting point is 00:33:25 Enter that code word in the Google Forum links, and you'll be well on your way to entering the world of Web3 social. ZK Sync is an Ethereum Layer 2 network that is pushing the frontier of high-performance blockchains that don't compromise on security or decentralization. ZKSink has combined the power of zero-knowledge roll-ups in the Ethereum virtual machine, enabling developers to build the greatest web three projects possible, ones we haven't even seen yet. Crypto needs its killer applications to onboard the world, but crypto killer apps need ZKSink as a platform to build on first. It's generally accepted that zero knowledge roll-ups are the conclusion

Starting point is 00:33:57 of crypto blockchain scaling technology, and ZKSink is leading the charge into the final frontier of crypto economics. So if you're a developer who wants to build your app on a future-proof foundation, which gives your users the best UX possible, check out ZKSink's website at zKSink.io. there's also going to be a token, so give them a follow on Twitter 2 at ZK Sync. The merge is coming. The merge is coming. Ryan, the merge is coming. We kind of have a date, maybe, question mark. It is a actual date, but also with a question mark. It's a maybe date. We are thinking about the 19th of September for the merge. And so here is Superfiz, who pays attention to these things, his tentative timeline. This is also Tim coming out of the

Starting point is 00:34:36 Alcore Devs call. Okay, so the goarly test net gets merged on the 11th of August. and we are live streaming that on Bankless, so tune in for that. And if that goes well, the All-Corp deads call after that, I believe on the 18th, we'll plan the next merge. And that will trigger like the Bellatrix and that other name of that test site that I can't remember. That whole client will get released, all those client software that I don't really know that.

Starting point is 00:35:03 I can't really remember. Go watch the episode with Tim Bako if you want those details. That will happen two weeks after the August-Gorley merge, and then we will merge two weeks after that. So August 18th is the all-core devs call to pay attention to, but it is tentatively looking like possibly September 19th, two weeks after that call. Again, this is not official. This is speculation, but the dates are becoming more and more clear. Everyone is super hungry for this, including the developers. So merge date, question mark. Yeah, that's it. And so you'll find out more. We'll know more after the August 18th, whether the Gorl

Starting point is 00:35:41 TestNet was successful or failed. The previous dress rehearsals have been successes. You kind of expect this one to be. And if it is successful, I've heard people, the hell presses of the world, talk about the merge probability as high as 95% in September. So this is the next key event, and we'll know much more in the next two to three weeks about this.

Starting point is 00:36:02 So obviously the whole entire industry has their eyes on the ETH price because of the merge. But like, if you really want to lean into this, like there's plenty of derivative tokens that are going to have plenty of merge exposure. Lido and Rocket Pool being the obvious ones, but there are also some extremely undervalued staking as a service tokens that are out there. We were actually going to be doing an article on this on bankless. But if you want to do your own research and get ahead of the game, there's your Alpha.

Starting point is 00:36:30 You're welcome. Yeah. And by the way, Alpha, go subscribe to Bankless Newsletter if you're just a podcast listener so you get this stuff in your inbox. All right. Also, let's talk about the second thing, which is it feels like ZK roll-up season. It feels like all of the roll-ups are competing for us as Ethereum users. And I got to tell you, that feels good. The big question, I think, is who gets to claim the release of the first ZK EVM?

Starting point is 00:36:57 That is a fully Ethereum-compatible EVM chain in a ZK roll-up. And before we read out this tweet, David, can you just give people some context on why are ZK rollups so cool? What's neat about them? And like, I know people have probably heard us talk about rollups a lot and layer two in the scalability strategy, but let's get beyond that. Rollups are the way Ethereum scales. We know that. Why are ZK rollups special specifically? And why within that are ZK EVM roll-up special? Okay, quick, quick roll-up, TLDR speed run. We got optimistic roll-ups. And optimistic roll-ups. And Optimistic roll-ups are secured by like there is potentially, say that there's an imposter

Starting point is 00:37:44 in the building. And if you find the imposter, you can go and you find them and then kick them out. And then you have this like assurance that you can kick them out of the building that you don't want the imposter in. But the imposter can get in the building in the first place. And you have to go and like do the thing to kick them out. A ZK roll-up is secured by like, no, you can't even, an imposter can't even enter the building, just kind of an interesting metaphor.

Starting point is 00:38:07 Another way to describe this is optimistic roll-ups. You know, they're a blockchain that bundle up a bunch of transactions and settle it down to the layer one. ZK roll-ups are another layer of compression. So it's basically compressing everything by putting into one bundle, but then the ZK side of things is like another cryptographic compression on top of that. So we're aggregating a bunch of transactions, compressing that, and that gets put down to the Ethereum layer one. So the combination of the security model of ZK roll-ups, which means that you don't have to wait. For example, like the outbound bridge out of Arbottram and optimism takes seven days for your ether or other tokens to clear. Because they want to make sure the security guards can go find the bad guys in the buildings.

Starting point is 00:38:52 Right, exactly. And so that has some cost to it. And then there's ZK. Roll-ups, which because of that security model, all transactions have instant finality. And so that makes them faster and cheaper. But they also makes them less expressive. So this is why we have had Stark X's, which is like more proprietary app player chains like DYDX, which is now moving over to Cosmos, but still in the Stark X ecosystem. There's also a mutable X, which is a Stark X chain.

Starting point is 00:39:21 These are all proprietary, like custom-built ZK chains for these specific use cases, which brings us into the concept of ZK EVMs, which is a generalizable ZK roll-up. which is so like we have optimism and arbitrage, which are super generalizable. They're just like Ethereum. They can do solidity. They have the virtual machine. You can write an arbitrary code. You can build whatever.

Starting point is 00:39:42 With ZKs, up to this point, you haven't been able to do that. You would have to custom build your own chain, and it would be a ZK roll-up. And with the ZK EVM, we are bringing customizable ability and expressivity to the power of zero knowledge cryptography, zero-knowledge roll-ups.

Starting point is 00:39:55 And we generally conclude, everyone says, even Fitalic, especially Fitalic, is the one that says this, actually, is that we long-term conclude in a world of ZK roll-ups. It doesn't even matter if we're talking about Ethereum. Like, Cosmos will eventually be a ZK ecosystem.

Starting point is 00:40:08 Avalanche, if they get it right, they'll do be a ZK ecosystem. Even the optimistic roll-ups will probably start incorporating ZK roll-ups. Even an optimistic roll-ups will eventually become ZK roll-ups, and that is an explicit strategy stated out of optimism themselves. So everyone's going to ZK at the end of the day. And so this is why the fight for the first ZK EVM is such a big deal, because you have the best sort of scaling compression technology in the world mixed with the EVM,

Starting point is 00:40:31 the biggest, you know, tech stack of smart contracting languages. And so the ZKEVM is a huge fight. And so this is where we'll get into this tweet that we're showing on screen where John Adler says, congrats to scroll, Polygon, and ZKSing for each announcing the first ZKVM because it all happened this week. I do think that, I could be wrong on this, but I'm pretty sure I'm right. I do think the credit goes to ZK Sync. I think they had like this stuff out like a year ago.

Starting point is 00:41:01 Yeah, I will say that. Yeah. But the Twitter army can fact check me on that one. I don't even know who's first. What I love to see, though, is like them competing to be first. It's so good to see because they are also so nerdy. It's so nerdy, but they're competing for Ethereum users, and they're all competing to scale Ethereum. This goes back to like the strategy of Ethereum, which is kind of genius retrospectively,

Starting point is 00:41:27 which is to like basically outsource. its scalability to a massive number of teams and companies. And so they can expand all at once in like multiple directions, right? It's almost like, reminds me of kind of like some kind of an organism, like, you know, a fungus or something or some kind of a spora that's just like simultaneously expanding in this decentralized way in all of these different directions. And you can really see the genius of it because it's brought competitors to play. And so let's go through each of these one by one, David, because I think it's worth talking about. So Polygon released this week its ZK EVM solution. So of course, Polygon has its proof of stake chain, but they also acquired a technology

Starting point is 00:42:14 called Hermes. They did that about a year ago, if I'm recalling correctly. And Hermes had a whole bunch of ZK EVM tech already built. And now they are taking that, repackaging that under Polygon, getting kind of the Polygon, business development effect and rollout marketing around it and launching that. And apparently what they're launching is something that they say is EVM equivalent, which we could talk about that. It's open source.

Starting point is 00:42:41 It fully uses Ethereum, of course, that's its layer one. And it's an implementation only. So they got the GitHub, they have the code, it's an implementation, not TestNet yet. They didn't announce a TestNet. They said that that is going to be next, but they're not at the TestNet phase. But this, I think, is pretty big news because it's Polygon. And Polygon, I mean, we've been talking about the last few roll-ups, has onboarded so many different, like, companies and solutions.

Starting point is 00:43:09 Like, their business development arm is absolutely humming. So that is the first solution. Is Polygon ZK, EVM, maybe EVM equivalent? I'm not actually sure, like, how equivalent it is versus compatible. These are two terms that we're going to talk about. What is the difference between EVM equivalent and competitive? compatible, David? Or is this something that we have to just do more research on to figure the differences out?

Starting point is 00:43:33 I understand it actually pretty well at a conceptual level. It's the nuance of the more detailed stuff that I don't understand. Basically, the EVM isn't one thing. It's not like something that you can point to. It's like a set of standards. And so like there is an EVM tech stack that includes many, many different things. And at some point in that tech stack, you can fork away from the EVM and then do something different on all parts, all things above the stack that you forked away from. So like think of it as like a multi-layered cake. And like you can fork away from the EVM standard at the top and be mostly EVM equivalent

Starting point is 00:44:13 but not completely. Or you can fork away something at the very, very, like, bottom and be very, very divergent from the EVM, but only be a little bit like the EVM. And why does it even matter? Right. And so there is an entire ecosystem of like dev tooling is the big one. And this is where I'll start to get stressed in my knowledge, but like dev tooling, like solidity, like compilers, like technical speak, technical speak, technical speak. But there's a bunch of just like peripheral infrastructure that is all built around the EVM.

Starting point is 00:44:42 And so being completely EVM equivalent rather than just mere EVM compatibility also enlocks the complete suite of infrastructure and compatibility of all the dev dev tooling and surrounding like, again, infrastructure that has been built around the. EVM standard. And so if you are EVM equivalent, you will like ride in the tailwinds of all of this open source development. And so if you are, if you fork off of the EVM standard too soon, you like are going solo. And you have to build your way where like you, like think about like a peloton, right, like a bicycle line of bikes, super efficient if the bigger group it is. But if you fork away, you're kind of going on your own. It's like, it's more headwinds. Although you can like do it for very good reason. The EVM is by no means

Starting point is 00:45:28 like a perfect set of technology. It's just the set that we have. And so you can, you know, go solo and do it for the right reasons and like, you know, just build super like a highly optimized thing. But then you also just lose the drafting speed of complete EVM.

Starting point is 00:45:42 And this is the point of equivalence and also compatibilities. You take all the stuff that's been built on the EVM and you have the ability to just port it, port it with minimal work. In some cases, zero work. You could take all the uniswap code, all the AVE code,

Starting point is 00:45:55 everything in DFI. everything in NFTs, and it just works out of the box. That is the point of all of this EVM compatibility and equivalency. Talk about the second one, ZK Sync. So they've just also announced something this week, and their take on a ZK Sync, ZKEVM, what did they say? Yeah, they're doing the same thing that Polygon did. They say, today we're happy to announce ZK Sync 2.0.

Starting point is 00:46:21 The first ZKEVM rollup will be live on Maina in 100 days. that is about the same roadmap as Polygon. And so I was actually, I had in my very many set of interviews that I've done at ECC, Mihalo was one of them where we talked about this. Mahalo from Polygon. I also talked to Alex from ZK Sync yesterday as well. We were talking about some of this stuff. Everyone's like, again, the timing of this is just so funny.

Starting point is 00:46:48 Everyone's about on the same timeline with like launching. Well, they're rushing. It's a roll-up rate. basically. Right. Yeah, big time. Now, one difference, though, is this is going to unlock some some cool stuff. ZK Sync, I believe, they've had a test net for a while. I mean, to the point you made earlier. And I don't think Polygon ZK. Evm has had a test net yet. And they don't, as yet. Correct. And they're throwing down dates, David, 100 days to main net. I don't think, I don't think scroll or. That is a specific number. That's a specific number. We'll be counting this

Starting point is 00:47:17 down. But yeah, that would be great. And it's a similar solution, right? I mean, what are the, I mean, should probably do a whole episode on the differences between these things. All the, all these ZKEVM competitors, let's just put them all in the same Zoom and see what happens. Seriously, though, we'll just ask questions of them and let's kind of see what happens. Okay, now here's the third. So who's going to be first, guys? Yeah, here's the third that announced.

Starting point is 00:47:42 So this is, the third is scroll. This is, I'll read the tweet. After over a year of building, our ZKEVM-based ZK roll up in close collaboration with the privacy scaling group at the Ethereum Foundation. A little flex there. We are releasing the pre-alpha version of scroll for external testers. Okay, so they have something that sounds similar to Polygon, but they're calling it a pre-alpha version.

Starting point is 00:48:06 It seems like there needs to be a test net still before we get to main net. But again, you know, order of magnitude around the same timeline as these two other ZK roll-up solutions. Yeah, like, Ryan, watching Arbitroman optimism, like have their like, competition, that's been fun. The ZK EVM competition is going to be so fun. Yeah. As a media person, I'm just going to sit back with my popcorn. It's going to be great. Yeah, it's going to be great. And like, as David and I have said before, like, we want, we love all of our children equally. Like, we, we are very excited about this. All of these technologies are maximally decentralized technologies, right? That are prioritizing security and decentralization. If they are designing a ZKM, a ZK roll up correctly, That's what they're doing.

Starting point is 00:48:54 So they're scaling the values that we care about most, which are decentralized bankless values. And so we're cheering all of you guys on. Well done. You know, keep running in this race. I hope you each win. Exactly. All right, David, let's get to the three hours capital. More C-Fi drama on the way.

Starting point is 00:49:15 This time, I think the leading news is there was an affidavit that was released. Remember, we talked about so much, all of this would be settled in coordination. documents. This is like a thousand-page court document that like people- That does not scream efficiency to me, Ryan. No, it does not. I mean, this is not written on chain anywhere. It's- One thousand, one hundred and fifty-seven pages of legal documents. Imagine how much- Who's going to read that? How much money did it cost? Like, ignore kind of the court system and all of the infrastructure, but like just to create a document like this and gather all these facts. Anyway, we've learned some things from it. One of the things we learned is that

Starting point is 00:49:48 the crypto-lender Genesis, which is an absolutely massive crypto-overed. OTC firm. They lent three euros capital $2.36 billion. That's a lot, David. If somebody, if you have a bajillion dollars, and somebody comes knocking at your door and says, hey, can I borrow $2.3 billion? I don't think there's, I'm not in this business, so what do I know?

Starting point is 00:50:13 But I don't feel like you say yes to that question. You don't lend $2.3 billion. Well, it's close. No one who needs $2.3 billion is in a good spot. Well, it's collateralized, right? So there's a portion of risk that's removed because it's collateralized. The Genesis loans three rows capital had a margin requirement of over 80%. And it did sell some of the collateral when three hours capital failed to maintain that.

Starting point is 00:50:39 But you definitely get the sense that there's a delta. And I'm not sure if the numbers are named here of how much three arrows capital actually owns Genesis. I pretty sure Genesis is going to be fine. They're absolutely massive. I think they had better risk management, certainly than the Celsius's of the world. But I'm sure this also still hurts, and that is why they're more junior to the D5 protocols.

Starting point is 00:51:04 Let me say that. Three O's Capital had to pay back all of its, as did Celsius, as did block, all of the D5 protocols. But it looks like there's still out some money here, David. So it's kind of a... Yeah, so I just did the math. 80% of 2.36 billion is $472 million.

Starting point is 00:51:21 They probably got less than that. So they're probably at least $400 million in the whole. That's more money than I have. That's painful, right? I think all of CFI is learning about risk management again. And I think they'll be much more cautious moving forward. At least you hope so. But we don't know.

Starting point is 00:51:37 We don't know for sure. This is another one. Three hours capital total. They owe their creditors at least $3.5 billion. I would love to see a leaderboard, a high scoreboard of who got hurt by Three O's Capital the most. I think this is number one, I'm pretty sure. The pain dashboard.

Starting point is 00:51:57 Oh, Voyager. Oh, well, this is everybody, David. The $3.5 billion is everybody, right? And so, like, they, like, Voyager's up there. Oh, yeah. Pretty high up there at $660 million. I think this comes in at number two, like, roughly $400, $450 million. I would just love to see that list of just like, you know, all the, the containers.

Starting point is 00:52:16 Metsalces is on there, 75 million. Of course, Celsius now defunct and coinless services. A lot of this is, man, a lot of this is retail money is the tragedy of it. I always forget that. And I'm like, oh, yeah, wait, and this is sad. Yeah, it is sad. We'll talk about Celsius in a little bit. But like the audacity of this.

Starting point is 00:52:38 Here's another headline for you, David. Suzu, Three Ro's Capital, the co-founder. He just filed a $5 million claim against his own firm. while he's on the run. Okay? I feel like they should just like, yeah, sure, you can have your money. Come get it inside the United States of America. We'll give it to you.

Starting point is 00:52:56 We'll give it to you over here. That's waiting for you here inside the U.S. Here's the quote. I've just seen the list of creditors to Three Heirs Capital and noticed that Sue Zhu has filed a claim for $5 million. Well, being on the run, he has somehow found the time to diligently and ruthlessly fill out forms to pursue a claim against his own fund. well, you find time for that, Suu, but

Starting point is 00:53:18 not to tell us what's going on with Three Years' Capital. Sue, come on the podcast. Oh, God. What would we even say? Oh, I've got some thoughts. Celsius. This is going back to Celsius and some of that retail money, but we have some new news as to what the gap might be. It looks like Celsius has a $1.2 billion balance sheet hole. Okay, that's the size of the bullet wound.

Starting point is 00:53:42 It's just a $1.2 billion fund. a hole. And that they have, let's see, Celsius has 5.5 billion in liabilities. That's the bad stuff and $4.3 billion in assets. So you can see where we get the delta of $1.2 billion. Yeah. Yeah. Kind of painful. And again, retail will be one of the debtors, essentially, that bankruptcy has to pay back. But it just matters in order of operational. where they fall, right? So like more senior debt holders to Celsius could be far above them and get their $1.2 billion back before retail does. So I don't know, David, what the status of my Celsius account is. My 100% down or only like 50% down, and I guess we'll see in the

Starting point is 00:54:37 court documents. I think you get like 70 to 80% back. Yeah, we'll see. I mean, in like a year. What's so interesting is like, again, I don't have to, like, but defy has not had this problem whatsoever. Like, we're going to watch this play out over weeks and months and years as we have in the roll-ups. I'm already almost sick of talking about it. It's just. Oh, we're talking about it next week. All right. But, like, defy just happens so quickly and everything's on chain.

Starting point is 00:55:04 Like, all of the pain is over basically instantly, 24 hours. I have to go to courts. We don't have to have a thousand page documents. that in itself is a beautiful thing and certainly much more time efficient. What else we got in the roll up, David? What are we going to talk about? All right, coming up next in the second half of the show, the ENS markets continue to be super hot.

Starting point is 00:55:26 Somebody accidentally bought something for 100th and they didn't mean to. An EMS name, Jesus, Ith. We'll go in that. That's a fun little story. Also, what exactly backs a U.S.DC? Now we know. Now we know. And also, there's a new token coming.

Starting point is 00:55:39 It's a bridge token. But I'm not going to say which, because I'm going to tell you as soon as we get back from some of these fantastic sponsors that make the show possible. Juno is bringing crypto-friendly banking straight into your checking account. With Juno, you can send money from your Juno checking account

Starting point is 00:55:51 straight onto a layer two, like Polygon, optimism, arbitrum, and they have ZK Sync and StarkNet support on their way. You can skip the ACH wait times, you can skip all the gas fees, and go straight from your checking account to an Ethereum layer two in seconds. Inside Juno, you can buy and sell crypto

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Starting point is 00:56:28 And inside the Brave browser, you'll find the Brave wallet, the secure multi-chain crypto wallet built right into the browser. Web3 is freedom from big tech and Wall Street, more control and better privacy. But there's a weak point in Web3, your crypto wallet. And most crypto wallets are browser extensions, which can easily be used. boost. But the Brave wallet is different. No extensions are required, which gives Brave browser an extra level of security versus other wallets. Brave wallet is your secure passport for the possibilities of Web3 and supports multiple chains, including Ethereum and Salana. You can even buy crypto directly inside the wallet with RAMP. And of course, you can store, send, and swap your crypto assets,

Starting point is 00:57:01 manage your NFTs, and connect to other wallets and defy apps. So whether you're new to crypto or you're a seasoned pro, it's time to ditch those risky extensions and it's time to switch to the Brave wallet. Download Brave at brave.com slash bank lists and click the wallet icon to get started. And we're back. Jeremy Aller tweets out. Jeremy Aller of Circle who runs USC says, as a part of our commitment to increasing transparency and disclosure around USC

Starting point is 00:57:22 today we are publishing our first monthly breakdown of the USC Treasury Reserve assets by each and every treasury bond and list of cash reserve custodians. They even have something Ryan called the CUSIP which sounds like a serial number for our particular treasury or something.

Starting point is 00:57:38 So they're down to the serial numbers of their assets and the value. So, like, this is the most amount of disclosure that I've ever seen any bank or any financial institution. Nice job, circle. Well done. Well, yeah, it's great. And so what is backing your USDC?

Starting point is 00:57:52 Well, it's almost all U.S. Treasuries. So 42 million of the 55 is Treasuries, and the other 13 million is cash in the bank, in actual bank accounts. That's what's backing it. So mostly Treasuries, and then some dollars in a bank account. So that's pretty much digital bank account dollars. It's pretty much your Wells Fargo dollars, some treasury, except tokenized.

Starting point is 00:58:18 That's what a USDC is. Aren't treasuries bullish in high interest rates? So isn't interest rates going up good for the USC business model? I mean, treasuries, well, I don't know. I mean, the interest rate is really the treasury yield, right? So what's the interest rate, like 1.75, something like this. Right. So it's a little bit, it provides a slight.

Starting point is 00:58:40 higher return than pure cash. But I mean, I guess that could go up. They could, I mean, it's pretty much a dollar, though. It's just like when you put, you know, your funds in a Wells Fargo account or, you know, it's called a certificate of a deposit or something like that. That's ultimately on the other side going to treasuries, generating some nominal yield, kind of like that. It's a savings account.

Starting point is 00:59:02 It's a bank account. It's a bank dollar. What about Ave, David? They're doing something with balancer, a token swap. What is this? Yeah, they did a Dow token swap. Alve balancer token swap proposal was passed and now also has been executed. So about $1.1 million worth of AVE was swapped for about $1.5 million worth of Balancer. I don't know why they had a discrepancy, maybe just a liquidity premium. So now Avey owned some Pell and BAL own some Avey. We did a show with them forever ago about how balancer would use Aver in the back end to increase the yield for a lot of the assets deposited into Balancer LPs. And that goes into Avey. And so this partnership has been long and strong, and now there's a formal token swap.

Starting point is 00:59:43 Why do they do this? Just to cement their friendship. Yeah. Yeah. It's a Dow handshake. Yeah, we're now more aligned than we were previous to this token swap. Yep. That's interesting.

Starting point is 00:59:53 Curve is also announcing, or there's rumor that Curve is going to be releasing a stable coin, CRV-US dollar. Do you know anything about this rumor? I saw this tweet that was worth talking about, but I haven't seen anything substantiated yet. I don't know much about this rumor, but, We had the phone releases, then we had the ZKEVM releases, and then AVE release a Sablecoin at decentralized stablecoin, then Kerr released a decentralized tablecoin.

Starting point is 01:00:18 Some really cool developments coming out. I would love to cover this when the details are out. Let's get into the NFT scene right now. First, some bad news. OpenC lays off roughly 20% of its staff. And this is Devin Finser. He cites unprecedented combination of crypto-winter and broad macroeconomic instability.

Starting point is 01:00:40 Have you heard anything about this, David? I know a lot of crypto companies are laying people off Coinbase, obviously Block 5, but many of them, is this just another? Yeah, it's just like the big entrenched people. I guess I wouldn't call OpenC2 entrenched, but the bigger players seem to be laying people off

Starting point is 01:00:55 and the smaller players seem to be scooping people up. So I'm sure these people are just hopping into another job. Absolutely. Also in NFT news, Kevin Rose, his proof project has just acquired an Ethereum NFT team called Divergence. Looks like this is kind of an aqua hire, engineering aqua hire, but Kevin and Proof definitely have big plans to expand Moonbirds ecosystem, the proof ecosystem into his social universe.

Starting point is 01:01:22 And David, we had Kevin on the podcast a couple of months ago, and he basically dropped the game plan to us of how to actually do this. Any creator can kind of, with a little bit of this and a little bit of that, create a NFT community, membership driven community for their fans. And so he already gave us

Starting point is 01:01:44 the blueprint. Now it looks like he's going a few more steps down it. I'm really excited about what he's doing because I think it's paving the way for many others to follow. Yeah.

Starting point is 01:01:53 Yeah. He said he was very committed into seeing this thing. It was fully committed to this whole thing. And like it definitely has shown up in stuff like this. The proof ecosystem,

Starting point is 01:02:03 like you said, kind of just got giving people a blueprint to do similar things. I hope they do. I think we are learning some lessons from it as well. I think we are. In bad NFT news, though, did you see David Minecraft just issued a ban

Starting point is 01:02:19 on NFTs in its game? And of course, Minecraft is a infinitely modable type of ecosystem and probably the biggest and most well-known virtual worlds out there. But I want to give you the reason why, because I was very curious as to like, why would Minecraft do this? Like, what are their stated reasons?

Starting point is 01:02:38 And I think this is a reason I haven't heard quite articulated this way. But let me read it from their notice, where they said NFTs are now banned from Minecraft. Each of these uses of NFTs and other blockchain technologies creates digital ownership based on scarcity and exclusion, scarcity and exclusion, which does not align with Minecraft values of creative inclusion and playing together. NFTs are not inclusive of all our community and create a scenario of the haves and the haves knots. The speculative pricing and the investment mentality around NFTs takes the focus away from playing the game and encourages profiteering, which we think is inconsistent with the long-term joy and success of our players.

Starting point is 01:03:22 I got to admit, when you read that, it is a reasonable take at the high level in that. It's like values base. It's not just. It's not just like NFTs are like bad and they never work and they're just a bunch of scams and they're always stupid. It's it doesn't align with our values. We want our economy to be basically completely free, purely open source. We don't want digital property rights in the Minecraft universe.

Starting point is 01:03:50 We want everything to be copy and paste. We don't want digital scarcity. Like at the very bottom found, so what do you think of this argument? Because I think it's an interesting like philosophical argument for games. you do inject private ownership of digital property, it does change the dynamics of a virtual world. Certainly. And it definitely is reflective of the last like two years of NFTs, but we have to remember that NFTs are just a token standard. It's the people that are like choose to manifest those NFTs in a particular way. So it's the people that are creating scarcity and exclusion.

Starting point is 01:04:27 And that is a definitely a downstream byproduct of a bull market mania where prices go. up. NFTs do not have scarcity and inclusion built into them at the protocol level. Like, yeah, like only one person can own a token, but we can still mint infinite NFTs. And so there are plenty of ways where NFTs can be consistent with the values of Minecraft. You would just have to build it that way. And right now, like, NFTs have this branding of scarcity and exclusion. So it's really just going to take some more open-minded game to really have success with integrating NFTs to really change the minds of people because people are just scarred, like the external world world is just scarred of like the mania of the nftsia of 2021 i'm kind of interested in digging into

Starting point is 01:05:09 this deeper philosophy of like is digital scarcity a good thing right like i i think there could be some people who say no this is contrary to open source values and technology where everything is free and everything is shareable and we want a world in in our digital landscape where everything is kind of equal we don't have the halves and the have knots and you can just give NFTs out to everyone. You can build it. You can do whatever you want it. At first, but then it converges into

Starting point is 01:05:39 basically people who are really good at the property game. They add to their virtual property. They become kind of entrepreneurs. You know, they trade up. They leverage. Like, it's through their maybe meritocratic efforts, they actually become better at the whole game of capitalism.

Starting point is 01:05:56 And there does... So what? Minecraft is just like communism in a game? No one owns anything. Everyone is for everything. Yes. Yes. This is kind of what I'm getting at. And I do think that there's going to be this dichotomy

Starting point is 01:06:09 between people who start saying, no, private property ownership or the concept of ownership is not a good thing on the internet. And maybe Minecraft is taking that stance. Anyway, deeper philosophical conversation. We don't have time to get into. But this person makes the point, Minecraft completely rejecting NFTs

Starting point is 01:06:27 and what they represent is a big deal. Minecraft is the most successful video game in virtual world in history and was a big target for NFT or racketeering. Minecraft has decided NFTs have no place in its future. Here's another tweet. Somebody who built like NFT worlds, I think, on top of Minecraft, like kind of an NFT mod extension on Minecraft. And, you know, rest in peace,

Starting point is 01:06:51 it's no longer going to work. They're banning that completely. So it does set the precedent for the entire virtual world gaming community if Minecraft is taking the stance of now we don't want private property in our games. Right. Well, I mean, eventually they will come around because that's where incentives lie.

Starting point is 01:07:09 Yeah. It's just up to us to not be degenerates with our NFTs. Why don't you breeze over this, David, but notice some of the top five on OpenC. Yeah, so a while ago, I got very emotional about the Nickelodeon NFTs that were coming out

Starting point is 01:07:23 because they're going to eventually release a SpongeBob NFT, and I'm going to buy it, and none of you will, because I'm going to buy it. No matter the price. No matter the price. Take all of David's Eith. Yeah, take it all.

Starting point is 01:07:33 Every single one. But the SpongeBob entity is not out, but the Rugrats and Hey Arnold NFTs are out. And so there was 342 Eth worth of volume in 24 hours on these Nickelodeon NFTs. These are actual real Nickelodeon IP NFTs issued by Nickelodeon. So cool. Cool. It brings out the 90s child to me. All right.

Starting point is 01:07:55 So 90s child. Like what SpongeBob character is your thing? Like, would you buy actual SpongeBob? You're buying like Squidward or someone else? Well, you gotta think hard about this, man. Yeah. I could get it Gary. Get a Gary?

Starting point is 01:08:09 I could get it Gary. There you go. David's buying the Gary. Don't front run them. Yeah. All right, what's happening here in .eath world? Amazon. DotEath has a one million USDC bid for it.

Starting point is 01:08:22 It has not been accepted. That bid expired. So no deal, no deal. But some other NFTs are going strong. God.eath, what's this? Well, yeah, so this also was, I don't think it was accepted, but somebody put 700-eath bid on god.eath. I don't know if that was accepted or not.

Starting point is 01:08:43 Jesus.eath was put up for sale for 1,000 eth. I would not value it that much. I think that NFTs, or sorry, dot-eats are getting a little silly right now. Is that what it feels like to you? A little bit, a little bit. But, I mean... What's this story? I mean, God, Eath?

Starting point is 01:09:00 Like, that's, that's a gem. That's a gem. Yeah. How can you hate that? Yeah. There's a fun, quick little story. People are, like, also minting, like, sentences as their, like, EMS name. Not, they're probably not using it.

Starting point is 01:09:14 It's more of, like, a meme. So somebody minted, stop doing fake bids. He's honestly lame, my guy, dot Eith. And because people were putting a fake bids onto their NFT. And then that person, put a 100-eath offer on it, or somebody put a 100-eath offer on it as a fake bid, right? But then that person sold their NFT for 1.8th, which was a real bid, but then they forgot to cancel the 100-eth bid that they-offer that they put on. And so the new buyer bought it for 1.8th, and then accepted the 100-eath bid.

Starting point is 01:09:50 And so the person got their Ith got their original EMS name back. But then they lost 100 ETH because they forgot to cancel their 100th offer. Wow. Oof, that's a big oof. Yeah, that's a 98th loss there. Yeah. Just fooling around with the tight Eth being funny. Do you know one of the stories this week as well was the Tesla balance sheet?

Starting point is 01:10:13 It basically discarded a whole bunch of the Bitcoin that they had been holding. Do you remember when this started happening? Right. when there was big news in the crypto community that Elon and Tesla were buying Bitcoin. Well, apparently they sold 75% of their Bitcoin at an average price

Starting point is 01:10:29 of 28K, almost 29K, which is nearly a 9% discount from their average entry of 31K. They did not have the conviction to hold the dip, David. Look, they just bought, like it went down 10% from their purchase price,

Starting point is 01:10:45 and they were like, oh, panic, got to sell. And they sold. We went off. No more. We want to off this ride. But what's crazy about that? So, of course, like one narrative is, do you remember when the popular narrative

Starting point is 01:10:58 is probably a year ago? It's like all of the companies, all the Fortune 500s were going to start buying Bitcoin for their balance sheet. Right. That really didn't happen. Not really. And what you're seeing now.

Starting point is 01:11:11 Yeah, it was just, it was pretty much just Sailor, a few others. And even Tesla, when they got in, they just sold. And so there's that piece of it, but there's all. also this point, David, that Calio makes. Right. So the Calio says on Twitter, Loll, so Elon basically liquidated three hours capital

Starting point is 01:11:27 because this happened a while ago. This wasn't like in the last week or so. The news of this came out because of like a quarterly fire lease or something from Tesla. But the point, the price at which they sold their Bitcoin at $28.8,000 was like right before the big leg down for Bitcoin between like $29,000 and where it bottomed out at like $1,800. dollars and so like the meme is that Tesla sold 75% of their Bitcoin causing the price to go down

Starting point is 01:11:53 which caused three rows capital to get liquidated that's crazy uh I don't know ironic very very strange I mean I'll never cease to be surprised in crypt of what's going on coming up next we got a new token here's that bridge token that I promise across across protocol uh they tweet out when alpha now is the alpha the first stage of the across token launch is live today they're launching an across referral link program. And there is a bunch of, it's like a referral program. Like you get your own link and then you send people. And if they send people there and if they use your link to go across the across bridge,

Starting point is 01:12:28 you get ACX tokens as a function of how much fees that you paid for the protocol. I think if you pay like $1 in fees, you get like 80 cents worth of a token. Seems a little gable, Ryan. So I'm a little bit concerned about that. but I'm sure that they know this. I actually just saw Heart Lamber of Yuma, which is the team behind a cross

Starting point is 01:12:54 earlier yesterday. So here are the tiers. I don't know what this rate is, maybe 40% of the fees. I think we got copper, bronze, silver, gold premium. Copper, you get a 40% rate by just like creating the link. Bronze, 50% rate. If three unique referral transfers or $50,000 in volume, and then that scales up to platinum at the very top, 80% return rate, 20 unique referral transfers

Starting point is 01:13:17 or 500K in volume. Damn, we should have our link, our referral link, but we don't. We've got to create that. Good opportunity there. And innovative ways to earn tokens, I think, this cycle. This is kind of the way air drops are moving is you have to do some things to earn your air drops in the future. Only raised this week is this one.

Starting point is 01:13:39 NFT fraud fighters optic, they raised at $11 million. seed funding round. This seems to be a way to authenticate the, basically the authenticity of an NFT. Copiments, apparently, are an ongoing problem in the NFT space and community. And so using some AI technology to identify the copycats and I guess,

Starting point is 01:14:02 authenticate and whiteless the good NFTs and the pure ones. So interesting raise there. That seems to some straightforward. Yeah. Getting into jobs, Dave. Crypto is still hiring, as you say, it's specifically the smaller companies this time around. Should I read out a few?

Starting point is 01:14:17 Yeah, let's do it. This is your reminder to get a job in crypto. Now's the opportunity. Fair Market can be completely ignored because the job market is hopping. Streams is hiring a financial analyst. Steakfish is a smart contract software engineer. Steakfish, again, a back end full-stack software engineer, also a blockchain marketer. It's not a technical.

Starting point is 01:14:38 You're a front-end software engineer, a DevOps engineer, Ethereum Ethereum, Ethereum, Uniswap Labs is hiring, Are You Generis is hiring, Chainlink Labs, a whole bunch of companies and projects hiring right now. You can go check out that list at the banklist.pellet.com board. I also sign up for that. That was the worst dancing that I've ever done. What's coming up next? You're in Paris.

Starting point is 01:15:03 It's like in the 90s. You're tired. You've been going all day. What time is it for you? Did you? It is, oh, yeah, 630. I saw the Rave on your calendar, too. Are you starting to hit that tonight?

Starting point is 01:15:14 Oh, yeah. Yeah, after this, taking a nap, and going and getting dinner, and going to the Rave. Yeah, make that a long nap, man, because you got to catch up. You got to catch up a little bit. What's coming up next, though? Questions of the week.

Starting point is 01:15:25 We got a couple questions of the week. Two of them will talk about it. I believe it's a question about Rocket Pool and then also fraud proofs and the A6 that are eventually going to come with fraud proofs. We're going to talk about that. And also some hot, spicy takes. Ryan, I'm fighting with this Bitcorner.

Starting point is 01:15:40 I'm trying to fight him and get him on the show and then fight him there. Well, I don't think that's going to be a take of the week, so I guess I'll just say that. But that's all coming up next right after we get to 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 DFI and NFTs. Some of the coolest new NFT collections have chosen Arbitrum as their home, while Defy protocols continue to see increased liquidity and usage. You can now bridge straight into Arbitrum for more than 10 different exchanges, including finance, FTF, whoobie and crypto.com. Once on Arbitrum, you'll enjoy fast transactions with cheap fees, allowing you to explore new frontiers of the crypto universe. New to Arbitrum, for a limited time,

Starting point is 01:16:16 you can get Arbitrum NFTs designed by the famous artist Ratwell and Sugoi for joining the Arbitrum Odyssey. The Odyssey is an eight-week-long event, where you can play on-chain activities and receive a free NFT as a reward. Find out more by visiting the Discord at discord.g.g.orgorg. You can also bridge your assets to Arbitrum at bridge.arbitrum.io and access all of Arbitrum's apps at portal.arbitrum.1 in order to experience defy and NFTs, the way it was always meant to be, fast, cheap, secure, and fiction-free.

Starting point is 01:16:45 Rocket Pool is your friendly, decentralized Ethereum staking protocol. You can stake your eth with Rocket Pool and get our ETH in return, allowing you to stake your Eth and use it in D-Fi at the same time. You can get 4% on your Eth by staking it with Rocket Pool,

Starting point is 01:16:58 but you can get even more by running a node. Rocket Pool is the only staking provider that allows anyone to permissionlessly join their network of validating notes. Running a Rocket Pool node is easier to set up than running a solo node and you only need 16Eath to get started. Why would you do this? You get an extra 15% staking commission on the pool to eat so your API is boosted. So if you're bullish east staking, you can increase your API and get some extra tokens by adding your

Starting point is 01:17:20 node to the decentralized rocket pool network, which currently has over a thousand independent validators. It's yield farming, but with Ethereum nodes. You can get started at rocket pool.com. And also join the rocket pool community in their Discord. You can find me hanging out there sometimes in the chat. So I'll see you there. All right, guys. We are back starting with the questions for myself in the weekly roll up, just a reminder, if you have a question, go follow Bankless HQ on Twitter, and we are tweeting out a, we're asking you for questions once a week, and you can respond to that tweet thread and get your question in. This is the first one from top. In the past, you have mentioned that Bankless spun up X amount of mini pools via Rocket Pool. It's true. We are

Starting point is 01:17:59 staking via Rocket Pool right now. What are the benefits of having multi-minipools versus a full node? I think people are asking these questions because they're getting excited about staking David, but what are the benefits of a multi-mini-pool versus a full node in the rocket pool ecosystem? I love this question. This is basically the why rocket pool question? Okay, so why rocket pool? So in rocket pool, a node operator, and the normal node operator is 32-Eath on a node that you run and then you just stake your Eth and run the node and that's what you do.

Starting point is 01:18:30 With Rocket Pool, you spin up a rocket pool node, which basically is a node that is also part of the rocket pool network. Instead of putting in 32-Eth, you put in 16-Eth, and then you allow other people to come and fill up the rest of the node. And so you put in 16 as like your half of like the bond. And then other people can, like somebody puts in one, somebody puts in three, somebody puts in four. And then boom, you have 32-Eth. And you've let other people stake their Eth using your node, but you put in 16-Eth because that's like the bond that you need to have in order to not be malicious. It's like, you're not going to do anything crazy because. you have your own eth in there. What are the benefits of doing that? Well, first, I mean, we can just

Starting point is 01:19:10 talk about the altruist part of it. It was like you allow other people to stake their eth, which is nice, good job, good for you. But there's also the profit side of it. And we all know humans like profit. And so in addition to getting the ether yield, you as a rocket pool node operator also get 15% of the staking commission of the other half of the yield. So if there's like a 7% ETH yield, which is about expected post-merge, you get 15% of that 7% of the 16-Eth that is in the other half of your rocket pool note. So you get a boost in your ETH API. You also don't need 32-Eth.

Starting point is 01:19:47 You only need 16-Eth to get that started. But in addition to that, you also get RPL issuance. And so if you run a rocket-pool node, you get RPL distributions because you also need RPL as a bond to also bond that to your rocket-pool node to make sure this thing is super secure. So you get more ETH yield by running a node with Rocket Pool. You also get RPL token emissions as well. Yeah, exactly right, David.

Starting point is 01:20:13 Well said, that's why we're running some nodes and it's going pretty well so far. Very exciting to see that. I think we've tested three blocks so far. We're up to three blocks. That's not bad for like three weeks, four weeks we've been used. So if anyone pays attention to the graffiti on the beacon chain, you'll know it when you'll know it when you get a block because our graffiti as bankless was here. next question this is a question from incognito are zK roll-ups just like proof of work

Starting point is 01:20:41 especially in terms of energy consumption good question we've been talking about zK roll-ups the entire time i mean from here and he includes a link it says off-chain transactions are being bundled and generate cryptographic proofs not really sure but isn't this just like proof of work and needs much energy so the question of you know um all of still some sequencers are required A tech stack is required, and A6 are essentially required to run ZK roll-ups, right? The question is, are these going to be as energy-intensive as proof of work?

Starting point is 01:21:13 And so have we just shifted the problem to roll-ups and now it's a Z-K problem? What's your answer to that question? Yeah, the very simple answer is that proof of work is a race. And so you are incentivized to consume as much electricity as possible because you need to be first. With ZK roll-ups, like ZK roll-ups also can benefit from ASA. to make their proof generation faster, just like a proof of work runs on A6. But it's about the economic model where, like, with a ZK roll-up, you don't need to be first to generate that proof.

Starting point is 01:21:43 You just need to generate the proof. And you don't really get, like, there's no, there's no reward for doing it. You just need to run the proof. So, like, one ASIC can support an entire ZK roll-up, for example. And so we don't need warehouses and warehouses and warehouses of ASICs to, like, secure a ZK roll-up. you just need to generate the proof. And so because there's only one machine doing that or a few machines, like, no, absolutely not.

Starting point is 01:22:08 We will definitely not get anywhere near the level of electricity consumption. It's basically zero. There's basically zero energy consumption to generate a proof. It's like running a program on your laptop. It's not that hard. Exactly, yeah. Proof of work is pretty unique in its energy consumption profile, I'd say. All right, last question of the week.

Starting point is 01:22:29 Magg80.Eath says, Pologon is killing it, but do develops like the ZKEVM benefit the ETH token, or do these developments benefit or increase the value of just the Matic token? Do you think there are any merits to seeing Polygon as a competitor to Ethereum? So yeah, this is the classic alignment question. Are roll-ups aligned with the layer one? And the answer isn't holistically absolutely yes. Because it is actually a different blockchain, it is not Ethereum itself, therefore it has

Starting point is 01:22:54 a different level of alignment. Now, is that alignment like misaligned or aligned? It's a spectrum. you can be highly, highly aligned with Ethereum. I would put optimism in this camp. They were going after EVM equivalents very, very early. And EVM equivalence is, I would say, strong, strong Ethereum alignment. In addition to that, they don't use the OP token as their own native currency token.

Starting point is 01:23:18 They use ETH. So that is strong Ethereum alignment. So I would say optimism is like highly, highly aligned with Ethereum, not just at the protocol level, but also in like the philosophy and values level. On the very other side of the spectrum, I might put something like the Starkware ecosystem and Starknet, where they announce their token is a native payment token rather than ETH for the Starknet. And they also have, like, layer three's on top of the layer two. They also have their own coding language.

Starting point is 01:23:45 And, like, culturally, I wouldn't compare them to sharing the same values of Ethereum, at least not as much as I would with optimism. So there's a spectrum here of, like, alignment. So Polygon killing it, but do the benefits benefit or increase the value of ether or jasmatic? It's both. There is a little bit of a misalignment, but that is just the bargain that you make when you produce a different blockchain. You have to optimize for something different. You are not the Ethereum layer one. But I would definitely say absolutely all things on all layer two is that settle on the Ethereum, layer one, always ultimately benefit Ethereum.

Starting point is 01:24:17 The mere concept of just buying block space and using Ether to do that and burning Ether is like the minimum level of alignment required to have a mutually aligned system. And so the answer is both. Yeah, and I think across that spectrum, as you said, they outsource monetary supremacy differently to Ethereum, right? Arbitrum optimism, they use ETH completely. With Polygon, they're using ETH as the gas token, and they're using Matic for staking.

Starting point is 01:24:48 And with Starkware, as you mentioned, they're using... No, it's not. Not for the, not for the ZK EVM. Oh, yeah, for the ZK, yeah, yeah, yeah, yeah, yeah, yeah. Just mentioned this and kind of confirmed it because people were asking questions about that. And then Starknet, as you said, that's going to be completely using its own token. And this kind of reminds me, if you know how we use the, I'm just obsessed with this analogy

Starting point is 01:25:13 of like federal government versus states. I just love this analogy, right? And it's like if you look at kind of the early United States, you know, many, many individual states had their own currencies. And that actually stopped when the Constitution started being enforced, was written and put into law into practice. Because in Article 1 of the Constitution, it says Congress gets the power to coin money and regulate the value of foreign coin. And it also says no state gets the ability to coin money. So that was embedded in Congress in the Constitution on Ethereum, that is not embedded in the Ethereum Constitution.

Starting point is 01:25:55 So if you are a roll-up, if you're a consumer of Ethereum block space, there is no protocol mandate that you must use the Ether token. So it's a bit of a different setup. On the layer two, it does mandate it on the layer one. So you do have to use the currency at the layer one. That is completely true. And so on the layer one, to your point, if any blockchain is a roll-up and they are paying for Ethereum block space,

Starting point is 01:26:19 they are net consumer of Ethereum block space, then they are net accretive to ether. And some of these states might want to preserve their own currencies as well. So they might use ether plus their own currency. There is a world maybe where one of these states become large enough that they decide to fork off from the union entirely. Right? So Texas, okay?

Starting point is 01:26:45 They become so large, your economy is so great. They start to say, we're better off without just Ethereum, and we want to kind of launch our own chain as a layer one and fork off and leave Ethereum. We'll still have treaties with them and alliance, but we won't have the monetary union that would...

Starting point is 01:27:03 And that is possible. So I think we'll see lots of different outcomes, and I guess the bottom line is none of these roll-ups are positioned in a way that make them a layer one settlement for other roll-ups, and for foreign governments, we'll have to,

Starting point is 01:27:21 and for other roll-ups, we'll have to see how that changes in the future, but each of them are taking a different approach. Anyway, that's that. Takes the week, David. On to the takes. Let's do it. We got one from Block 5.

Starting point is 01:27:32 This is Ryan Selkis. What is he saying? Yeah, so Ryan Selkis says, the paths taken by Block Fy and Celsius leadership teams this past months are as divergent as it gets. I don't really know what he meant by that, so I asked him if he could elaborate. And Ryan Selkis continues saying,

Starting point is 01:27:46 Celsius fought to the last minute to save themselves and they put user funds at risk. BlockFi fire sold to a bidder that would protect user funds at all costs. Thank you, BlockFi. Nice job. Also, Celsius, F off. You did a better job. It's another spectrum, David. There's so many spectrums here, right?

Starting point is 01:28:04 Like, both careless with risk management, but Celsius was just far more careless. It was just ludicrous, how terrible they were. BlockFi, they made some mistakes, but still, you know, preserving. And then other crypto banks are even healthier. People are talking this week about Coinbase bankruptcy again. And like, I don't see that at all. Like, that is not in the card. That would be a surprise.

Starting point is 01:28:26 That would be a massive surprise. Coinbase did not loan through his capital any money. Anyway, so different crypto banks played this very differently, had different risk management in effect. Ryan, Ryan Tran Adams tweets out, you have to realize that blockchains have two social layer, two layers. The tech layer, the layer one, the social layer, the layer zero.

Starting point is 01:28:44 Also in the name of my podcast. on layer zero the code is memes brains are the validators shared belief is the consensus the social layer matters even more than the tech but they interact in a perpetual feedback loop Ryan I feel like very few people

Starting point is 01:28:59 or very few communities outside of Ethereum understand this I think the Bitcoin or ecosystem understands this I think that's so true and I think that is the single most unappreciated part of the crypto story

Starting point is 01:29:15 and blockchain story of like the value of the social layer, right? So the social layer does have code. It's in narrative form. It's in meme form. It's articles. Okay. It's podcasts. We are forming the social layer now on bankless as we speak.

Starting point is 01:29:30 This is part of it. It's very important. Brains are the validators. So everyone's individual brain, their belief, their orientation on something has the ability to accept what an article is saying, what a meme is saying, what a narrative is saying, what a podcast host is saying as true or false. They're checking it. Their brain is kind of the fact finder.

Starting point is 01:29:52 And then shared belief becomes kind of the consensus of the layer zero chain, right? And ultimately, David, that's what all of the technology rests on. And there's also this feedback loop between like the layer one and the social layer in that some social layers attract, well, some tech layers attract different types. of social layers due to the choices that they've made. And you can kind of, I just, I think the anthropology of these systems is probably the most fascinating part. It's like, the economics is super fascinating.

Starting point is 01:30:25 The technology is super fascinating. But like the culture of these layer zero ecosystems of Ethereum versus Bitcoin versus Solana versus some other chain, that's the most fascinating part for me. And it shows you that this is a coordination technology and a social technology. And I think almost no one is looking at blockchain deeply through this lens. People like Josh Rosenthal are on our pocket, a few others are doing it, but is the most interesting way to look at crypto technology and the whole thing that's happening in crypto. And the big lessons I like to pull from this is like, it was something that was really

Starting point is 01:31:02 interesting is Danny Sesta from Wonderland becomes like super egotistical, like very, very populous tactics, and then, like, goes after MakerDAO and says, oh, we're going to be better than MakerDAO and make the next stable coin. And then, like, and then we get in a fight with him because I didn't know who he was. I get attacked by his fraud community. And then Danny Sessa and his icoricing blew up, like, a month later because of the whole Wonderland drama. Fast forward about two months.

Starting point is 01:31:33 I get in a fight with Doe Kwan on Twitter. Doe Kwan says, by my hand, die. The stable coin from Maker Delle will die. And then I get in a fight with him. and then we become enemies, I guess. And then he gets like super egotistical and like self-centered and just like pumping and chilling and telling you, Ryan, that you don't know anything about blockchain. And then like just becoming crazy and then, you know, blows up about a month later. So like there's this pattern of like when the social layer incentivizes like this like populist maniacs to like run a protocol.

Starting point is 01:32:05 And then they also happen to go after Maker Dow. They blow up. And that's because the code of the layer one, the layer. zero works its way into the tech stack on the layer one or the app chain. And so like you have to understand who your leaders are because the culture that these people surround themselves with interact to certain people and create the actual fundamentals of the actual technology themselves. Yeah. And the other side of that is true too. It's like I think less, um, a lot of people looked at the, the Terra design itself from security model on upwards to like the Algo Staplecoin

Starting point is 01:32:36 model. And they said, oh, I'm not touching that. I'm going to build on a different eco, ecosystem. And so the design of the layer one tends to attract a different layer zero. People who are just in it for kind of like more temporary, not thinking about these things, not thinking about the long term in that way. One of my favorite contrast, though, is like Bitcoin versus Ethereum. Oh God, we did. We did bring in the court. These are the two longstanding communities. What is this clip that we're showing right here? Yeah, so this is the end of our Luke Groman podcast where he basically gives the Bitcoinser line that like proof of stake represents like fiat systems. This and it's like a fiat system, which just makes no sense.

Starting point is 01:33:18 And like, you know, a lot of macro experts, they're, they're knowledgeable in macro. I put Lin Alden here. As soon as they start talking about like crypto stuff, like it kind of breaks down. And so like just conflating governance with proof of stake like all bitcoins do. And then Corey Clifson, who I've actually had on my other podcast, POV Cryptow Ryan, I have hosted them on that show once. know him at all. Yeah. He tweets out, imagine having a show and every time you finally get a smart guest to come on, they tell you your life's work is meaningless. It's so sad to watch over and over and

Starting point is 01:33:50 over and over. They're talking about us. They're talking about bankers. I thought about you and me. Because Luke is to be clear in this clip, he was saying, no, no, no, I'm not into crypto. I'm into Bitcoin specifically. That is the only crypto. Like, stop talking about other cryptos. My focus and the value here is actually Bitcoin. Corey, let's fight. Let's fight. Let's fight. What do you mean fight? Come on the show. You want to bring one on the show? Yeah, we'll host them on the show and we'll yell at each other.

Starting point is 01:34:16 There you go. That's, uh, you know, so I, I tweeted this out early in the week because I was feeling a lot of like a whole bunch of people piled on and talked about, um, how dumb we are and all sorts of things, right, which is pretty typical on Twitter. Um, but the weird thing about, I think, going back to the anthropology and the social layer, the layer zero here is you can't apparently in like, particularly the Bitcoin Maximus community, we got into this with Nick Carter a little bit. you can't be a Bitcoiner who likes Ethereum at the same time.

Starting point is 01:34:43 Right, right. Apparently, and so I tweeted this out, I'm a Bitcoiner who likes Ethereum more. Is that allowed? And, you know, some people, of course, are saying, yes, that's allowed. Your tweet was like, no, you must sacrifice everything, kind of tongue and cheek here. Well, I'm, because that, take that seriously. That is the, okay, connecting this to the economic model of Bitcoin, Bitcoin is a faith-based blockchain.

Starting point is 01:35:06 The security budget runs out. And so you have to just operate on faith that this thing works. And the only way that it works is that if Bitcoin literally goes to infinity, and that's the only way of the sustainability of the ecosystem if Bitcoin pumps forever. So you have to have faith that that Bitcoin price doesn't go so low that the blockchain becomes unstable. And so if you were not allowed to believe in any other crypto asset, because you must have the shelling point of you have to believe in Bitcoin. Bitcoin is a faith-based, a faith-secured blockchain.

Starting point is 01:35:40 As soon as the issuance runs out, it's insecure. And so you have to have faith that it works. And what's interesting is, I mean, we've emphasized the social layer to being so important, right? Like Ethereum's social layer is very important to its success. It would be maybe a lot less faith-based, I would say. But there is some sort of underlying beliefs here. But that's exactly what you're saying. It's like the religious aspect is the thing that's so interesting.

Starting point is 01:36:03 And so do you know Dennis Porter? Yep, I've also, we've hosted them on the show, actually. Oh, yeah, we've, I don't think I was there for that show. I think it was like you and Justin. Anyway, so he answered the question from, I think, the Bitcoin maximalist position. I'm like, I'm a Bitcoiner who likes Ethereum more. Is that even allowed? Dennis Porter goes, that's like saying, I'm a Green Bay fan, but I like the Bears more.

Starting point is 01:36:22 Okay, football reference, right? It's like, these are mortal enemies. I don't get that reference. Okay, so I was like, so it's not allowed, right? And he's like, some people think owning Bitcoin is enough, and I wish we all live in that world, but we don't. And never be accepted as a Bitcoiner until you sell your eatbags, because you've attacked Bitcoin so much. And I think they would classify what you just said as running out of an attack on Bitcoin. I just attacked Bitcoin. Yes, that's an attack on Bitcoin. It's an attack on the faith.

Starting point is 01:36:48 Yes, it's an attack on the faith, a heretic, basically. It's monetary warfare and you chose a side that's opposed to Bitcoin. Right. I was a little snarky tongue-in-cheek. I also own a house. Do I have to sell that too, Dennis. He told me I had to sell all my E, if in order to be a bitcoiner. No, Ryan, here's the key. Here's... It's not just a back and forth. Part of this is like, I'm just so fascinated

Starting point is 01:37:12 by the social dynamics here. And like, I really feel like we are witnessing the birth of not just a social movement, but like, almost like techno religions here, David. So, you guys like... Blockchains are like omnipotent gods. Like every single blockchain, every single layer one is a god. And like, you all... And there are

Starting point is 01:37:29 That's why this crypto is so tribal. Algo's being religion. So here's what I said. I also own a house. Do I have to sell that too? Dennis goes, no, Ryan. It has nothing to do with your holdings. Okay.

Starting point is 01:37:40 Distinction. You and David specifically go after Bitcoin. You still have the ultrasound money emojis in your name. That's the, we like Ethereum more part. You also challenge the energy use of Bitcoin. These are both attacks on Bitcoin. No, they're fair and valid critiques. Right.

Starting point is 01:37:58 But by the way, they can't accept that. I am bullish on Bitcoin. I like Bitcoin. The number is going to go up. Like, I'm a Bitcoin. I hold a Bitcoin. I own some Bitcoin. I just like even better for many of the reasons we just said.

Starting point is 01:38:09 Well, you've gone the other way. But like, I'm a Bitcoin or if I own Bitcoin, right? No, according to Dennis, because you have attacked the faith. And so this is where I think it gets religious. I go, I think all this would be plainer if you guys put out a statement of faith. Like the core beliefs of Bitcoin. What does it take to be a Bitcoin? Yeah.

Starting point is 01:38:28 something simple. And like Christians did this in the early days with Nicene Creed. Anyway, we go back and forth. I just think the religious parallels here are very interesting. He goes, that's impossible, Ryan. You know that. Some of the folks you say holding Bitcoin is enough could be right. I've thought deeply about it. But you're making me realize that someone can't attack Bitcoin and be a Bitcoiner. So Dennis goes, it's impossible to write a statement of faith because that would be like more centralizing. I think it can be solved. I think if the Bitcoiners, wanted to come up with a statement of faith, like the maximalist,

Starting point is 01:39:02 of what it actually takes to be a Bitcoin maximus, and say things like, thou shalt not attack Bitcoin. I, as a bitcoiner, will not attack Bitcoin. Instead, I will support it in all of these ways. And that makes me a bitcoiner. It would be much more simple.

Starting point is 01:39:16 But I'm super interested to see how this evolves over the decades to come. Because, David, Bitcoin still ain't going anywhere. Not with this level of unshakable belief that people have, even if and when we think it's very likely. The flippening happens, whereas ETH is larger in market cap.

Starting point is 01:39:33 You're not going to shake this community, David. Look at how strongly they believe. They're going down with a ship. And so where does it? Cyberhornets for a reason. Well, where does it go, right? It's like, okay, you start to create like statements of faith. You start to say like, you know,

Starting point is 01:39:44 Satoshi being kind of this anonymous person who just faded, like in the decades to centuries to come. Like, how does this evolve? Right? Is Satoshi like the God who left Earth? Like, I don't even know. it gets weird, but I literally, I think that we are seeing the birth of a religion. And so it's not just an asset class that we're investing in. And people don't understand these social dynamics at

Starting point is 01:40:07 play, but that, to me, is the lens through which we have to view this space. Anyway, a little bit of trolling with Dennis and some back and forth fun, but honestly, I'm 50% it's just pure fascination that, like, this is how people see things. Well, this is kind of, like, why I'm generally bearish on Bitcoin in the long term is that the culture around Bitcoin is that Bitcoin has no flaws. Its current state is absolutely perfect, you know, immaculate, immaculate conception of Bitcoin. It's, it was perfect from day one, and therefore we don't need to improve it. And I'm like, yeah, Bitcoin's got some flaws. It's like, it's not perfect, guys. You've got to fix some stuff. Like, you can secure a blockchain without proof of work.

Starting point is 01:40:44 And no, proof of work is not the most fair consensus mechanism. It's actually highly centralizing. God damn. Yep. There we go. Back to that. Let's see. last thing is your take here. David Hoffman says, born too late to explore the globe, born too early to venture into space, but born at the perfect time to watch ETH become the greatest asset

Starting point is 01:41:04 the world has ever seen. That's a pure pump tweet, David. I feel like I've read something like that before. Yeah, can you retweet that? I'm trying to get more likes in Sazel. So I have the canonical most liked version of this copy posit tweet. You already won.

Starting point is 01:41:19 No, no. He has, okay, that's what I said, but then he's got another one because he's tweeted out three times or whatever. one that has like 900 likes so I need to get 100 more like time. These are the tweets that perform, all right? I'll work on that for you. What do you bullish on this?

Starting point is 01:41:32 I will take this more. Do you have a point here? Yeah, right? And so like there's always like the frontier used to be, you know, in the era of the 1700s of gold, God, and glory, right? God-themed episode today. Like getting on the ship and exploring the frontier of Earth. Well, I mean, but it's also too late to explore the final frontier of space.

Starting point is 01:41:51 But at least we get to, Ryan, explore the crypto-economic frontier of Ethereum. Yeah, I'm totally with you. I think this is the most exciting white space available for people. All right. What are you excited about this week? Tell me. I've teased it out a little bit, but I've done eight interviews between 20 and 30 minutes each, all at ECC.

Starting point is 01:42:11 And I'm just like really leaning into the in-person interviews. I really, really like these. But also just like the state of bank lists, like I feel like we get to ask cooler questions. And so like I asked. Give me some highlights. I ask this darkware people as to whether they will ever fork off of Ethereum and settle on a different chain or whether they will

Starting point is 01:42:29 just make their own layer one. I am of course not leaking the answer at all. I remember when Kane Warwick and Suzu got in a fight on reasonable size houses on crypto Twitter? Well, I talk about him with that. So I'm asking all the fun stuff and it's kind of cool. I heard there's something

Starting point is 01:42:47 about Vitalik as well. Oh, yeah. Well, he's the number one. Yeah. I asked Vitalik about like the general morale of the Ethereum developers and how that's tracked over time. Yeah, some questions that I don't really think anyone could really ask. So I'll run through it. We got Vitalik, we got Stani

Starting point is 01:43:03 from Ave, Kane from Synthetics. We got Kevin O'Walky and Austin Griffith as a duo. That was fun. That was super comical. Evan McMullen from Disco, I'm definitely going to miss some people. Mahalo from Polygon. We did Sunny from Cosmos. I'm also getting

Starting point is 01:43:19 super interested in Cosmos. I actually got super interested in Cosmos back in 2018 when I first learned about it and then just got sucked into Ethereum. This is like a taste of ETHC though, right? Yes, an ECC experience, but also just like sub micro podcasts. Because I asked, you know, I asked Sunny about Cosmos, right? I asked Evan about decentralized data. Yeah.

Starting point is 01:43:38 And so in addition to like, all right, like House Paris, it's also like, okay, let's like talk about like what you're up to. All right. So this is the ETHC experience episode, I guess. At least that's what it'll be for me. And when does that come out, David? That's going to premiere 11 a.m. Pacific time. 2 p.m. Eastern Time on Tuesday.

Starting point is 01:43:54 So I just threw all of these very high-deaf, 1080P, local microphones, audio quality should be great. It's coming out on your YouTube this coming Tuesday. So stay tuned. And also a Spotify video. Also on Spotify. Also video on Spotify. Also video on Spotify. So go check that out.

Starting point is 01:44:11 Cheers. Ryan, what are you bullish on? David, I got to say it, man. I'm so thankful you didn't steal mine because you're at ETHC. I'm bullish on the merge, my friend. We have a date. We're all bullish on the merch. That's the entire market section of this podcast, Ryan. All right. That's the next like a few weeks.

Starting point is 01:44:27 Like the next two months, I'm going to be bullish on the merge. Maybe the rest of the year. I'm bullish on the merge, okay? I just don't need to ask you this anymore. We'll just pull the same tweet over and over again. It's so exciting. I mean, this has been such a long time coming. But the timing is what strikes me.

Starting point is 01:44:42 And I tweeted this out. Theorem is about to become the world's only deflationary monetary asset at a time of historic monetary inflation. What a contrast. What a contrast as... I'm jealous that you tweeted that out. Look, man, that's like... Maybe I sold this from Anthony Sassano back of the day.

Starting point is 01:44:59 No, I said this first. No, this is unique. I was the one making this connection. The internet bond is the connection to make here, right? Which is like, ETH as an asset is becoming like a sovereign bond, essentially. And so you can buy Japanese bonds, you can buy U.S. treasuries, you can buy Euro bonds. But why would you, when you know you're going to be... be the sucker on the other end of that table, and it's all going to be inflated away. And your real

Starting point is 01:45:26 returns on those assets will be negative. Well, guess what? Your real returns on ETH as a bond will not be negative. You know how we know this is because it's a deflationary asset. As ETH is used, as Blockspace is used, it gets burnt. A portion of ETH gets burnt. So the supply goes down. Even now in these low gas fee economic times, we're still burning like 0.2.2.000. percent eth per year. If you go to ultrasound money,

Starting point is 01:45:55 you can go see that. So a deflationary asset. That's what's coming. I'm really excited about this. This is, you know,

Starting point is 01:46:02 we've been talking about ultrasound money for like over a year. I think that episode of Justin Drake came out probably. I think it was July of last year. Yeah.

Starting point is 01:46:10 No, it might have been earlier than that. 15 or 16 months ago, right? It's like over a year ago and now we're finally here.

Starting point is 01:46:16 We're about to get into ultrasound money and I'm very excited about the economic benefits. Not going to scale eat yet. That comes later.

Starting point is 01:46:22 All the ZK stuff we've been talking about, that's a scalability strategy. But this is a massive economic upgrade. Not to mention, we get all the benefits of proof of work going away and the environmental narrative, all of these things. You're taxed Bitcoin again. I attack Bitcoin again at the end.

Starting point is 01:46:39 Apparently I'm not a bit coiner. I do not subscribe to the faith. It's going to be really sad when like, there's a couple of roll-ups ago. I had that tweet is like, how to become a millionaire, stick around during the bear market. Well,

Starting point is 01:46:50 it's going to hit different when like is because we're all millionaires because the dollar got turned into like, you know, got turned into nothing. And so one ether is a million dollars because the dollars is with a penny now. Like not like this. Like, not like this. Please. Please God. All right. Meem of the week. What do we got this week? Me of the week. Song of Day Man, Jonathan Mann, who I've also had on the podcast. I've had goddamn everyone at the podcast at this point. He did a song with our job section. So he made a song about getting a job in crypto. And that is going to come up right after Ryan. gives us the regular disclaimers that we usually do. Guys, if that doesn't pump you to get a job in crypto, then nothing will enjoy this song from the song of day man. Of course, before we get there, though, I have to say, risk and disclaimers. Crypto is risky. Eith and Bitcoin are absolutely risky.

Starting point is 01:47:37 You could lose what you put in. You just said Bitcoin's risky. That's an attack on Bitcoin. I just attacked Bitcoin there. But I also attacked Ether in the same sentence. But we are headed west. Yeah, well, at least Ethereum isn't insecure and can take criticism. Stop.

Starting point is 01:47:48 Stop this. This is the front. It's here. It's not for everyone, but we're glad you're with us on the bankless journey. Thanks a lot.

Bankless - ROLLUP: Tesla Sells Bitcoin | Minecraft NFT Ban | Polygon zkRollup | Genesis 3ac | Ethereum Merge

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