Bankless - ROLLUP: U.S. Crypto Task Force | Ethereum L1 Is Scaling | Microstrategy's Record BTC Buy | Uniswap v4 | Berachain's Massive Airdrop

Episode Date: February 7, 2025

This week on Bankless Weekly Rollup, we explore major crypto updates from Berachain’s mainnet launch and the rollout of its BERA token, to Uniswap V4’s new features and hooks that are shaking up decentralized trading. The episode delves into market dynamics including SEC moves led by Hester Peirce, Microstrategy’s rebranding, and the impact of US tariff actions on global trade. We also unpack Ethereum’s scaling upgrades and discuss the innovative strategies behind emerging DeFi protocols. Tune in for an in-depth look at the evolving crypto landscape and the key developments driving the space. Thanks to Mike Ippolito for joining us: https://x.com/MikeIppolito  ------ 📣 MORPHO | GO-TO LENDING INFRASTRUCTURE https://bankless.cc/Morpho ------ BANKLESS SPONSOR TOOLS: 🪙FRAX | SELF SUFFICIENT DeFi https://bankless.cc/Frax  🦄UNISWAP | BUG BOUNTY PROGRAM https://bankless.cc/Uniswap-Bug-Bounty  ⚖️ARBITRUM | SCALING ETHEREUM ⁠https://bankless.cc/Arbitrum  🛞MANTLE | MODULAR LAYER 2 NETWORK https://bankless.cc/Mantle  🌐CELO | BUILD TOGETHER AND PROSPER https://bankless.cc/Celo  🎮RONIN | THE FUTURE OF WEB3 GAMING https://bankless.cc/Ronin ----- ✨ Mint the episode on Zora ✨ https://zora.co/collect/base:0x4be6cd4d402fed49eb2de95fbc8e737e8ffd3e7f/29?referrer=0x077Fe9e96Aa9b20Bd36F1C6290f54F8717C5674E  ------ TIMESTAMPS & RESOURCES  00:00:00 Start 00:03:57 Why We Dumped, Again https://www.whitehouse.gov/fact-sheets/2025/02/fact-sheet-president-donald-j-trump-imposes-tariffs-on-imports-from-canada-mexico-and-china/ https://x.com/benbybit/status/1886393172152156604  https://x.com/KobeissiLetter/status/1886373316249649437  00:15:33 L2 Updates https://x.com/ak47ink/status/1882228296626458970  https://blog.kraken.com/product/staking/new-us-staking  00:18:06 Microstrategy Rebrands to ‘Strategy’ https://www.bankless.com/read/microstrategy-rebrands-to-strategy  https://x.com/saylor/status/1887229546199462309  00:19:28 The $20 Billion Dollar Bid https://x.com/MikeIppolito_/status/1887274787677913457  https://www.tradingview.com/chart/V7YvdegA/?symbol=NASDAQ%3AMSTR  https://x.com/SemlerEric/status/1886764609924948349  00:26:31 US Lawmakers Plan For Digital Assets https://x.com/BanklessHQ/status/1886876049113588156  00:28:06 New Stablecoin Bill https://x.com/SenLummis/status/1886887005113790866  00:35:07 SEC Creates Crypto Task Force https://www.sec.gov/newsroom/speeches-statements/peirce-journey-begins-020425  https://x.com/HesterPeirce/status/1886864054477815861  https://x.com/AlexanderGrieve/status/1886869439293067404  https://x.com/EricBalchunas/status/1886910308762980788  https://www.sec.gov/newsroom/press-releases/2025-36  https://x.com/NateGeraci/status/1886870066924245297  00:42:42 Uniswap V4 Is Live! https://x.com/Uniswap/status/1885329579495080248?t=Twla8zs17AxKhHl4DKSkQA&s=19  https://x.com/TrustlessState/status/1885349829091459354  https://x.com/angstromxyz/status/1885011791761068427 https://x.com/flaunchgg/status/1878879274566107323  https://x.com/whetstonedotcc  00:49:41 Berachain Token Launch https://x.com/berachain/status/1887178672995537236  https://www.coingecko.com/en/coins/berachain  00:57:51 ETH To Increase Gas Limit https://x.com/data_always/status/1886573645687935463?s=46  https://x.com/VitalikButerin/status/1886579901039337759  01:01:38 Loss Of Ultra Sound https://ultrasound.money/  https://x.com/drakefjustin/status/1887108667675124174  01:08:02 Thanks To Mike ------ Not financial or tax advice. See our investment disclosures here: https://www.bankless.com/disclosures⁠ 

Bankless Nation, welcome to the weekly roll-up where we cover the weekly news, drama, and developments in the crypto space. This is the second week of February. And today on the show, I have the pleasure of being joined by Mike Epilito, co-founder of Blockworks and another relentless podcaster. Mike, how are you doing, my man? Doing very well. Thanks for having me, David. Yeah, yeah. This is going to be exciting.

Before we get into the details of the week, maybe just give me your vibe of the week. Give us a vibe check-in. How did this week feel for you? I feel like right now the vibe for crypto in general is a little bit. split. You know, there's, you know, I feel like the word of the last couple months has been dispersion and people are describing this is a very dispersed cycle in terms of returns. There are more coins than there have ever been. And for the first time, really, outside of these in sort of the history of crypto cycles, there are big winners and big losers after this last cycle.

And people are pretty split in general if this is the top, you know, if we're down only from here, if this is the beginning of a golden bull and, you know, a new era of defy and crypto in the United States. So I think there's a vibe of general uncertainty if I had to try to put my finger on it. Yeah, maybe to say that another way, there's so much more noise. And maybe each, like, you can parse apart that noise into many different bits of signals, but the signals are conflicting with each other. And I think this is probably just a sign of the fact that there's a lot of market participants and there's a lot of different sectors of crypto to focus on. And I feel like this is what you would expect if crypto were to keep on growing. It would grow to.

just so large that the market itself of crypto becomes, like you say, very dispersed. I feel like that's healthy, though, as well. You want some amount of dispersion and you want certain sectors to be able to outperform. There's been a very strong beta correlation of, you know, everyone who's been in crypto for a long time notes, Bitcoin runs first and then ETH and then the new L-1s and then Alts and then Finn for the cycle. And, you know, that implies a not super healthy market structure or people aren't allocating capital truly on the basis of performance. They're allocating it on the basis of just risk. And I think it's actually very healthy for there to be more dispersion and, you know,

for you to have asymmetric outperformance. And yeah, just more coins probably just means more of that going into the future. I think that's right. And speaking of more coins, Barra Chain has finally launched its main net. Q5, maybe. I don't know what Q5 is. So that's going to be one of the questions that I ask you. I think many of the listeners are probably also asking what is Barra chain, what's proof of

liquidity? And then also there's an airdrop. So who is eligible for Barra? That's going to be one of the topics of the week. Hester Purse is making moves with the SEC's brand new crypto task force. There's a new website and a new statement from Hester. It gives us some insights as to what's happening over there as it relates to crypto and the SEC. Micro Strategy is now just strategy.

Drop the micro. It's cooler. And also, Mike informed me of me of this this morning. Did you know that half of all micro strategies Bitcoin that it owns that has on its treasury was bought in Q4 of 2020? We'll talk about the implications of that. Uniswap v4 is live. UniV4 hooks are bringing a bunch of new toys to the yard. Will it bring all the boys to the yard too?

Mike and I will discuss that. And then lastly, Ethereum is scaling the layer one. Validators have signaled that they are pushing the gas limit up to include more transactions into Ethereum layer one blocks. Ethereum layer one blocks are bigger than they've ever been. So that and a bunch of more topics as well. Before we get into all of that, a message from our friends and sponsors over at Morpho. if you are a user or a builder interested in lending, borrowing lending, you should listen up

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taught CC slash morpho if that just peaked you. Mike, let's start with Monday, the markets on Monday, which saw a bunch of liquidations, multi-billion dollars of liquidations on the back of Trump's 25% tariffs on Canada and Mexico and 10% on China. We thought we were going into a trade war. That trade war ended very, very quickly when both Canada and Mexico just folded. And Donald Trump said that he's going to pause his tariffs for 30 days. And then things rocketed back up. But not after liquidating over $2 billion in the crypto markets. Cryptomarkets fell, I think, by something like $600 billion in total crypto market cap. What was your read on the situation on the markets on Monday?

How did you interpret things? Yeah, I think that the last couple of weeks, we've had a couple of spooks just in more traditional markets. So we had the Deep Seek scare, which led to a one-day sell-off of Vividy of, I think, 17 or 18%, which was $600 billion worth of value, a.k.a. one Ethereum and one Solana combined, which is the largest sell-off of a single stock in absolute terms in the history of the stock market. And then you also had these fears of trade wars that Trump sprued. So the question that I think that people were asking was, is this a posturing tactic? People who have read the art of the deal know that, you know, I've heard his strategy described as madman theory, which is if you think your opponent is crazy or irrational, then you

might actually be more, concede a little bit more than you otherwise would. And it seems like within 24 hours, there had been, you know, joint tweets from the President of Mexico and Justin Trudeau up in Canada that there was going to be at least a 30-day pause on tariffs. So, you know, I would say that you have to treat Trump and AI relatively similarly here in the sense that you really just don't know what either of these, what the impact of either of these things are going to be. And, you know, there could be some new weird open source model coming out of China tomorrow that will take the wind out of the sales of InVIDIA, which has been a bellwether for the S&P. And same with Trump.

It's very difficult to know how he really feels about tariffs long term. There was a great piece by a guy named Joseph Wang, Fed guy, why he thinks that Trump has not been posturing about tariffs, but 24 hours after that, you know, we actually had him make some pretty early concessions. And it seems like the stock market has been appeased. So I think this is just going to be something that makes, there will be some noisy headlines about this, which will lead to some selloffs. But until you get much more, a much stronger signal that this is going to be permanent, I would. probably, I don't know, feels like a dip to buy. Yeah. Yeah.

Do you have any opinions as to whether, like, who came out on top here? Like, China, excuse me, Canada and Mexico both made some concessions with regards to the border. But they also responded with threatening their own tariffs as well. Trump, I think, will wave his flag saying that he, like, got a victory here. He got a W here. But he also just immediately paused his plan to actually follow through on the tariffs. Do you have any indication as, like, who actually came out on top? or like what was the actual like fallout of this tense negotiation?

It's probably a little bit too early to say now. It's hard to say that certainly Mexico or Canada came out on top here, especially if you're Canada. I think the, you know, the imbalance of trade is, you know, Canada is an exporter and they do an enormous amount of trade with the United States. And, you know, I saw estimates that if Trump were to enact the tariffs that he was discussing, it could lead to, you know, a massive, a 2% decline in GDP, which is sort of recession territory for Canada.

And so just imagine you're a Canadian. So Donald Trump has been saying he wants to make you the 51st state. He's publicly bullying your prime minister on Twitter. And there's an immediate concession and they appointed something called the fentanyl Saur. And if you've looked at the data, the amount of fentanyl coming from Canada is absolutely de minimis. So you can't really be feeling too good as a Canadian here or feeling like this was a big win for your PM, I don't think. Interesting. Interesting.

All right. Let's get it into crypto prices. Bitcoin down 7.5% on the week. This was largely caused by that Monday market sell-off that we talked about. Started the week at $105,000, ending the week at $97,100. ETH, doing something even worse starting the week at 3,260 town, 16% on the week to where it is now at $2,720. In the middle of the week, I think if you measure the very bottom, if you go to, some of the centralized exchanges like Cracken or Coinbase, Ethereum even wicks it down to something like $2,200. There was a bunch of analysis on the on-chain markets and just the centralized exchange markets, too, about ether and heavy shorts were laid on ether in the middle of that sell-off. And so in addition to global crypto market sell-offs, there are some actors who are shorting ether and selling ether.

And so ether just took a brunt of the market sell-off and did not rebound to the same. degree as other crypto assets did. Bitcoin, Bitcoin got back above $100,000 after the market sell off pretty quickly. It's since, you know, falling back down to $97,000. But on Tuesday and Wednesday, it was over $100,000 after the sell off. Heath has not since recovered, which of course brings us to ETHBTC, which is at lows that we have not seen since January of 2021, which is basically as bad as it gets. That is erasing the entire gains on. on Bitcoin that it made throughout the 2021 bull market. And so we are now into territory that we haven't seen since I started to get into crypto.

At 0.023 is where it touched. I think we're at 0.026. Mike, commentary on Bitcoin price, ETH price, ETH-BTC ratio, anything that comes to mind. Yeah, I think the story here is Bitcoin strength. It's been pretty remarkable how long into this last cycle, Bitcoin dominance has extended its gains. And there was a massive wick during the sell-off of like a 10-1. percent wick here in Bitcoin dominance, how to get peaked at 65 percent or something like that. And, you know, I think part of that story is Bitcoin's acceptance as a global macro asset.

I think we'll talk about it a little bit later. I think a huge part of this, which I didn't understand until I looked at these Q4 results for micro strategy is just exactly how much micro strategy has been buying here. So that's probably a huge part of the story of Bitcoin's outperformance. And then, yeah, I think ETH's, you know, you got to call a spade of spade. I think this was a tough last week for ETH, you know, pretty massive sell-off. There wasn't the bounce that you would have hoped as an ETH bowl. I'm not 100% sure what's behind that story, but I think it's basically kind of a good

week for Bitcoin, maybe a little bit of a tougher week for Ethereum. It was a tough week for Ethereum, but inside of like a tough almost coming up on like three years for Heath B, as it relates to Bitcoin, my attitude here was like the market volatility that really happened on Monday, really just sped up. time in a way, it brought forward time. And so it's just a hasten some of the continuing trend that we've seen with ETH BTC. And for some reason, somebody just decided to pile on a bunch of shorts right in that moment. And those shorts have been working out. Has Udi done another death of Eith party so that we can finally reverse this trend? I think he has. But the thing is, it's like, now it came true.

If he did do it. I think he did it at 0.03 and we're at 0.026. And so if he did a death of East Party. Like, he's still, he's currently on the right side of that history. All right. Well, we would have hoped for a jinx at the death of the youth party, but the ETF inflows to tell a little bit of a different story. We had some very strong days. And especially on the 4th of February for the Ethereum ETF inflows, $300 million on the fourth alone, $500 million, almost $500 million in the last five days. The Bitcoin ETF also pretty strong as well. The, it's had one day of red. in the last seven, and we can kind of more or less count one billion dollars of inflows into

the Bitcoin ETFs. And then last thing on the market section, when we talk about tokens, movers of the week. We usually talk about tokens that went up, but now we're going to talk about tokens that went down. So this is going to be losers of the week. Athena, down 35 percent. Official Trump coin also down 35 percent, and it's been about 35 percent, down 35 percent ever since it launched. And then I'll call out those two as the big, big, losers of the week. But Tia, maybe one last one is Tia down 32% of the week. Tia has almost erased all of its gains that it had since its launch in November-ish of 2023. It launched at like a $2, $2.5.5 price went up to $20 in February, 2024. And we are currently below $3 for Tia.

Mike, what do you think about Tia at $3? I mean, not financial advice. I'm not a trader. You shouldn't listen to what I say. But I like Tia. You know, I think. I've been listening a lot to Chris Berninski's takes. And I think Tia basically, one way that you could look at Tia is I think they're doing a lot of the stuff that people would like to see from Ethereum and that they've got single slot finality. They are laser focused on larger blocks, a pack full of data. And it's still very early days. And people are trying to back into numbers of how much can you really charge for DA over time. But at least the number is going up.

And I think that people will eventually see that over time, if you even at very low transaction, fees if you get enough volume. There's a compelling amount of fees that Tia can generate. And yeah, it's obviously in a little bit of a challenge situation here. But, you know, if you want to take a punt here, this feels like a pretty good, pretty good level. I got a question for you, David, on the Trump loser of the week. What do you think in the alternate universe where Melania didn't launch her coin? Where would Trump be at the current moment? Because that thing had so much momentum behind it. And now it's just been an absolute stinker. And it feels like it's going to be pretty tough to recover from here, but I'm curious where your take is. I agree with you that it is down only from here. I

much desire to be in that universe where Melania was never launched. Because if you look at the Melania coin, it is pretty damn terrible. Is this the one? I think maybe this is the one. Yeah. $1.5 billion fully diluted valuation on the Melania coin with a $225 million market cap. I think as Trump was launched, there was this Strodinger's position of this is the president adopting crypto. He's the crypto president. He's going to promote this meme coin. It's going to be great. Sure, he gets to make money, but this is really good for our industry.

Solana jumped by like 33%. Bitcoin jumped by like $3,000 or $4,000. And so there was this like harmony between, well, you know, maybe it's a little bit of a grift, but it's really good for the entire industry. And then as soon as Melania launched, all like, all the rosy color glasses just came off. And we're like, this is, this is a grift. The momentum is gone. Now, I don't want to play this game anymore. And like, I don't know why they did it because no, like Melania, I'm sure she's a great lady.

no one cares about Melania. Donald Trump is the meme. Melania is not the meme. And so they destroyed tens of billions of dollars of capital by trying to launch the Melania coin. That's kind of my take on it. Yeah, I would agree. I think the whole market said, okay, this might be a grift, but it's at least probably

good and that good for crypto. And then the Melania coin launched. And then they were like, ooh, it's an incompetent grift. So less good. An incompetent grift. No one, everyone hates an incompetent grift. Yeah. Yeah, not the best.

Real quick, a layer two update brought to you by our friends and sponsors over at Cracks. Crackin Inc. has officially launched at stage one. It's already at stage one. They have one last red slice on the layer two beat on their exit window. And so the Cracken Inc. layer two is at stage one. I think it's becoming more and more commonplace for roll-ups to launch at stage one. The unichane is launching day one at stage one. And so being a stage zero roll-up is now pretty inexcusable these days.

The threshold to be is stage one. And then also speaking of Cracken, they have reintroduced Staking, ETH Staking, a staking product for their U.S. clients. And so this was, of course, a very famous United States company Cracken versus the SEC, the SEC bully Cracken out of their United States staking products. So they had to shut that down. And they have brought it back. So a sign at a times. Any comments on these two things? Yeah, I think it's great that they're bringing staking back in general.

And, yeah, it feels like they were unfairly bullied out of that line of business. that feels good. On Ink, I'm very curious to see what they ultimately end up doing with Ink. You know, I think if you're launching an L2 today, obviously, base has done extremely well. I'm sure Cracken is trying to replicate some of that success. And Ink has a leg up on anyone that's launching an L2 because they have a massive, massive distribution through the Cracken sex. But I would be curious how they're thinking about where the L2 sits in relation to their legacy business and what they're going to try to encourage in terms of activity. So on the one hand, I could see basically one of the advantages that Dexes have had over this last cycle is that,

you know, there's been a massive amount of tokens that have been brought to market. And the frictions of issuing onto a Dex are, you know, two orders of magnitude lower than issuing onto a sex. And so you've actually seen Brian Armstrong of Coinbase come out and say, we need to think, rethink, bottoms up what our listing criteria is in light of the amount of assets that are coming online. And so I could see the ink, ink, basically being a place where there's a decks and they're getting some amount of sequencer fees before that they can actually list on the main platform.

I also saw a couple of weeks ago there was an Apollo distressed debt credit fund, which is getting issued on the mix of Solana and Inc, actually. So I'm unsure really of where that sits in their strategy. It's probably good to have some, you know, more stable, you know, trad-fi-based collateral, right, for big defy apps that might want to deploy onto Inc. But I'm a little bit curious to just understand what Inc. strategy is, and I'm very hopeful. that'll be something cool. Yeah. Yeah, totally agree.

Let's get into micro strategy, which is now just a strategy. They had an official rebrand, and Michael Saylor tweeted this out. A picture of him in front of just strategy. So this is the micro strategy offices, which, again, is now just strategy. But a strategy with a B, strategy with a little Bitcoin, a superset Bitcoin right at the end. So they are formally integrating the Bitcoin logo into the strategy logo. And then this is a tweet from you, Mike. I'll go ahead and read it so you don't have to.

Just learned that micro strategy almost doubled their Bitcoin holdings in Q4, 2024, acquired $20 billion of new bitcoins, bringing their total up to $44 billion. Seems like this might be the real reason behind the Bitcoin strength. Now, it's hard to say how much $20 billion of buy pressure actually impacted the Bitcoin price. Certainly it was good for the Bitcoin price, but how good, I think, is up for analysis this up for debate. I think you're on the side of things that it represented a very large chunk of the Bitcoin price action, the positive Bitcoin price action, especially in Q4. I will say in addition to that, there's probably a lot of social posturing that $20 billion of Bitcoin buys

that creates probably much more than $20 billion of follow-on buys, like people phomowing into Bitcoin as a result of micro strategies being very loud about it. What was your analysis here on this take? I guess I was just blown away by how much buying they've actually done. done over a relatively short period of time. And if you had, I guess now we spoiled it for people, but if I were to just ask you to close your eyes, and I did several people yesterday, and try to estimate how much Bitcoin do you think micro strategy might have acquired in Q4. The numbers range from on the low end, one billion to on the high end, maybe five billion. But I don't think many people knew they had bought just this much. 20 billion. Yeah, 20 billion dollars.

It's also something that's a little bit funny about micro strategy is, I don't know how often it is, that you have the largest buyer of Bitcoin outside of the ETF complexes directly announce their plans to buy. It just seems like a very easy front running opportunity, especially when there's such a large part of the market still. And I also saw that Micro Strategy introduced a couple of new KPIs, which is BTC gain, which is just the amount of Bitcoin that they have at the end of a period versus the beginning in Bitcoin terms. And then there is the dollar amount gain as well, which you kind of just have to laugh at. That's going to be the noisiest KPI of all time, I would imagine,

because they had a great yield on it this last year. But, you know, it's going to be tough just based on how volatile that asset is. And the rebrand to strategy is interesting. There's a lot of jokes that you could make there. I'll stay away from the jokes. But I am curious as to why they thought it was necessary to do. I was talking with one of the guys over at Van Neck, Patrick Bush, who theorized that this would make it easier for them to sell BTC,

treasury management services to other companies, just strategy, which ultimately I could see. You know, I don't know too much about Bitcoin or Micro Strategies legacy business, but you know, they're not, you know, my understanding is that they're a sort of a middling or plateauing software company. They did about 120 million of top line in Q4, and they're sitting on 300 some million in cash. So it's not like the legacy business is throwing off a ton of cash or it's a huge revenue business. They're entirely valued at this point off of their Bitcoin buys. So, yeah, I mean, this is Michael Saylor just doing what microsailer does, right?

He's also gathering headlines, which has, it's got to be positive for strategy. For strategy. Yeah, it's going to be hard to not say micro strategy. Yeah. It does seem just like a formal bookend of the micro strategy side of the growth of the company. Micro just would refer to the actual, you know, software product line that they, that they have. And also, you know, Bitcoin, it's not micro. It's definitely macro.

Macro strategy would have been a good name too. Macro strategy would have been a great name. But I think that you have to probably look at some amount of Bitcoin's strength here, which has been the story that everyone's been very focused on for the last couple months. A huge portion of that, right, has been sailors buying here, which, yeah. Sailor's buying directly, but then also, like I said, his posturing. I saw this very micro strategy, not strategy, styled graphic of an announcement of a company buying Bitcoin, but it's not micro strategy.

It's similar scientific. And so this might as well have been copy and pasted from a previous Michael Saylor tweet about a micro strategy purchased a Bitcoin, but the company and logo have been changed to reflect this new company, similar scientific, acquires 871 bitcoins for $88.5 million and has generated a Bitcoin yield of 152% since July 1st, 2024, now holding 3,192 Bitcoin. And then there's a graphic that, again, is a micro strategy-produced graphic, but it's not micro-strategy, it's similar scientific. And so we have this company, and maybe you're asking what is similar scientific.

It is a healthcare tech company. I don't think the healthcare tech-tech company side of the thing matters. It is now a copycat, a micro-strategy, now strategy, copycat doing the same exact thing. announcing their Bitcoin purchases. And so while one side of the equation of strategy announcing all of their Bitcoin buys is like very front runnable, if it generates, if the hype generates a herd, well, then that's exactly what micro strategy Michael Saylor wants from that dollar KPI, the dollar KPI that he's trying to measure for.

Like he needs to generate like a stampede towards Bitcoin. And so being very loud about it is doing stuff like this. and clearly it's working, at least for similar scientific. Yeah. I don't know about the whole strategy of holding Bitcoin on company treasuries, which I know is sacrilege to say in crypto, but I just think that an asset that that's that volatile, the whole point of treasury management of a company,

I think the finance function is to support the operating function of the company. And generally, the people that control the treasury of companies are super risk-averse, and you're basically just holding, you basically just want to not get diluted through inflation for the most part. You're not really trying to generate much of a return there. So I just, my gut says that Bitcoin is not super well suited for most public company treasuries. Also, you get these crazy swings on your P&L based on the appreciation or, you know, depreciation of Bitcoin over periods of time. So, but it's been working for micro strategy or for strategy.

All right, guys, that's the market section. Coming up next, David Sacks announces the priorities for digital assets in the United States. Hester Purse has shown some details about the new crypto task force. And Uniswop v4 is now alive on 12 chains. We're going to get through all this and more. But first, a moment to talk about some of these fantastic sponsors that make this show possible, like Uniswap, which you're going to go hear from right now and later when we get back. Are you ready to swap smarter? Uniswop apps are simple, secure, and seamless tools that crypto users trust.

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Season 2 is currently ongoing, allowing users to earn staking, restaking, and AVS yields, plus rewards in Cook, M-Eath Protocol's governance token, and more. Don't miss out on the opportunity to stake, restake, and shape the future of M-Eath protocol with Cook. Participate today at M-Eath.mantle.x. AI and Crypto-Zar Davis-Sax called Digital Assets, some of the most important opportunities of our time. He gave a statement, a speech, a four- or a five-minute-long speech on Capitol Hill about his plan as CryptoZar. proper regulatory clarity, stable coin protections, many, many other things. But in addition to that, the chair of the House Financial Services Committee, Representative French Hill, announced that lawmakers in four House and Senate committees

will also be part of a working group on a bicameral basis to move forward with legislation on a crypto regulatory framework and stablecoin. So this is, in addition to David Sachs CryptoZar working group, a second bicameral members from both House and Senate from four different committees, will come together to make some priorities. And so what can we expect from this new group? They want to finalize Fit 21, which the House passed in 2024, and support a stable coin bill introduced by Senator Haggerty,

which we will talk about in a minute. So those are the top two priorities in addition to other things. David Sachs, again, on CNBC and talking on Capitol Hill, talked about how they are very committed to moving legislation through the House and Senate this year, moving legislation through Congress takes time, but I think it is something that we can do in the next six months, he said. And then I think the thing that the crypto industry was looking for the most is

details around a Bitcoin Reserve, a crypto, reserve a crypto stockpile. And then he said that the team is evaluating this, which I think is just a big old punt down the road saying we're not going to make any moves anytime soon. So let's talk about this new stable coin bill. This is the Genius Act. Cynthia Lummas tweeted out, creating a bipartisan regulatory framework for stablecoins is critical to maintaining the United States dollar dominance in promoting fiscal responsibility and innovation.

This legislation goes a long way towards protecting Wyoming's regulatory framework for digital assets and ensure stable coin issuers have a real choice when it comes to a state or national charter. Here is a tweet from Eleanor Territ who tweeted out some of the kind of the main points of the Genius Act. it defines stable coins as digital assets pegged to the United dollars. It establishes licensing and reserve requirements for issuers and it applies federal regulation rules for issuers if the supply of the stable coin is above $10 billion, but only states rules for if the supply of the stable coin is below $10 billion.

And so in addition to that, I'll also read out some of the comments from Martin Krika from Mountain Protocol who's intimately aware of these things. He says, in short, some of the good things here is that this mirrors a two-tier banking system. You can be regulated by federal or state regulators, depending on the supply of the stable coins. It provides clear outcomes in the case of insolvency. Reserves for stable coins are held on pristine assets that we know work, which are T-bills, insured bank deposits, overnight repos, which are no risks to users. And then also, interestingly, no banning on yield-bearing stable coins, which he says we can allow issuers to compete on distribution

and features, it doesn't make sense to ban yield if it does not add risk to the stablecoin. Paying yield to distributors versus holders does not make a stable coin riskier. And for maybe added context on that, there have been attempts to pass on the treasury yield to stable coin holders, but passing it on directly to holders has previously made that stable coin a security under the eyes of the SEC. This is removing that fact. And so we are opening up larger conduits between the treasury back. things like tether or things like USC or things like Mountain and the ability to give that to

stable coin holders on chain in a way that doesn't make this a security. And so I think we're going to watch this bill quickly move through Congress that says being given a loose thumbs up from people and they know that both the Senate and the Congress are behind this. But we actually will need to watch that move through to confirm. Mike, any comments on this? Yeah, I think that what the market really wants to see and what will probably have a bigger impact over price, especially of Bitcoin in the short term, as these ideas of a strategic Bitcoin reserve slash stockpile, or there's a new sovereign wealth fund, which is getting Trump signed an executive order to create a sovereign wealth fund for the United States. We can debate about whether or not that makes

sense being, you know, in a persistent fiscal deficit. Yeah. So not really sure if that makes 100% sense, but a lot of people are excited about it. I saw Senator Cynthia Lummis tweeted out, tweeted out that there was a B, what are we going to buy with the Bitcoin B, and Howard Lutnik is going to be involved in that alongside Scott Besson. So, you know, very pro-crypto individuals. Pro-cpto, yeah, he went on Anthony Pompliano show this week and mentioned that he had hundreds of millions of dollars of exposure to Bitcoin. Again, you can debate if that's a conflict of interest, but you might imagine that some

of that, you know, they're certainly trying to hint at something there. And I think that's what the market cares about in the shorter term. In the longer term, I think that what we're talking about here with this genius act and the fit bill is much more impactful, but it's the type of thing that's probably not going to be reflected in prices anytime soon. I think it's significant that they committed that the fit bill,

they were going to have something passed by end of year. I think the devil is going to be in the details there. So, you know, the crypto industry for a very long time has been asking for clear rules of the road and regulation. We are most likely about to get those in the next year, and it's very possible that some of that stuff we are going to like and some we are not going to like. quite so much. And so I think it's very important to just, there might be a little bit of a,

I think it's overall a massively positive net good, but it's probably important to be plugged into things this year. And a coin center and the Chamber of Digital Commerce, you know, etc., do a really good job of basically being, advocating for the crypto community, what is being talked about these bills. And you might have to call your senator or congressperson or whatever it is throughout the course of the year. In terms of the Stable Coin Act, I think this is, extremely positive, right? There's still, there's a lot of, they're basically keeping their two-tier system of banking that people are used to in the United States. It seems like they've solved a lot of the pain points. And this is sort of the easiest, this was the most straightforward part of the

crypto market to regulate probably. And I think what you will see from this is you'll have a bunch of new fintechs and more traditional, you know, more trad-fi issuers try to bring stable coins to market. And, you know, you've seen, I'll just pull out two examples. I think the types of companies, companies that will have success here are the ones that have distribution. So it's interesting that PY, USD, so PayPal's stablecoin hasn't really done all of that much. Whereas if you look at the stable coins that have worked in the past in crypto, USDC and USDT, they essentially leveraged centralized exchange distribution. So that was the center consortium in the partnership with Coinbase for Circle. And for Tether, it was really most of these centralized exchanges where there was a ton of

trading activity, you know, Tether was kind of this actually ironically neutral kind of dollar type stable coin that people could trade. So I think that in order to, you know, make a dent in the stable coin game, you're probably going to need some form of distribution. Yeah. As it relates to the compromises that we are going to probably have to have in order to get this legislation through Congress, that's normal. I don't, I don't, any sponsor, writer, creator of a bill has to make compromises in order to get that thing through to the finish line. So I'll say that's a normal part of the process. So I don't think we should be too disappointed about that.

And nonetheless, you can still call your senator and make those compromises not as big and more favorable to us. But I think it's pretty expected that we're going to have to acquiesce something here and there in order to fit into the traditional world. Well, I wonder how David Sachs is finding working in a government administration here because he's very used to the world of private markets and Silicon Valley and move fast and break things. And then he has, you know, just started out in D.C. And I was excited. I actually watched this press conference. And I kind of walked away saying, okay, we've got a committee of committees here.

And there's a new bicameral committee. But I think that's just the pace that things generally happen in Washington, D.C. Although, I will say this administration seems like they're moving at a pretty breakneck pace. There have been a lot of executive order sign. It seems like they're trying to, it seems like there is genuine momentum. I also think the, the perception of momentum is extremely important to President Trump. So, yeah, I mean, it'll just be interesting to see at the pace that all this stuff continues out. Something that I think is right alongside that is the pace of the SEC's pivot towards crypto.

And so Hester Purse put out this tweet saying the Crypto Task Force webpages live, join us for the drive toward crypto clarity. And so she made two links, one to the actual webpage, but then also another one to a speech, a statement. I guess it's a statement because she actually never gave the speech, but we all read it. It reads as a speech. And it's a very long speech, and anything that Hester Purse writes is always just a pleasure to read. So I highly suggest that everyone go and actually give this a read. But I'll give you the spark notes here.

It's basically she acknowledges past regulatory uncertainty in crypto and presents the newly formed crypto task force as an effort to bring clarity structure and investor protections to the space. She's using this road trip analogy, like we're going on this road trip. that in the past, this trip that they were on, the SEC's relationship with crypto, was chaotic and enforcement heavy, while the task force aims for a more practical and transparent regulatory framework. The statement emphasized collaboration, legal precision, and balancing investor innovation with investor protection, and then also signaling a shift towards structured engagement rather than reactive enforcement. However, at the very end, she also warned that this process will take time because she has been left a mess. and that the crypto market should remain diligent. In addition to all of that, Eric Balchunas tweeted out. The SEC is scaling back its crypto enforcement unit.

Some in a special unit of 50 lawyers and staff that have been dedicated to bringing enforcement actions are being reassigned to other departments. And so we're dissolving the Crypto Task Force, the Crypto Task Force 1.0, which was to go after Crypto. And then Hester Purr is creating Crypto Task Force 2.0, which is to help collaborate. with crypto. And maybe one thing that really emphasizes this is that there is a contact email, crypto at sEC.gov. So it seems to be that it's very real that the SEC is opening the doors to crypto by creating dedicated conduits of conversation between the crypto industry and the SEC. And then one last thing, acting chairman of the SEC, Mark Ueda, announced its executive staff

and other appointments. A bunch of senior advisors to chairmen's have been appointed. So we're getting maybe a new advisory board, but specifically one individual person came from CoinCenter. So Landin Zinda has joined the commission as counsel and senior advisor to the Crypto Task Force, which is a lawyer that came out of CoinCenter, which if there's anyone who I want to represent crypto in government or in a regulatory body, I think it's CoinCenter. Mike, any comments about all of this? Yeah, I think just imagine that you've been working at the SEC over the last four years. imagine the types of morning meetings and standups in the culture that Gary Gensler created, the mission that he instilled, and then imagine the sea change that has happened over the course

of the last couple of months. And maybe you've seen the writing on the wall. There has been an exodus of SEC employees, but man, it is just hard to overstate what the whipsaw effect must be like if you're working at the SEC. It probably feels like an unclenching. Yeah, I think it probably does. I think it probably does. It probably does. And there's clearly been a change in the winds and, you know, you've got the appointment of the new chair, but also you've had voices that have persistently been around the SEC like Hester Perce get elevated. And, you know, there are a couple of other passages, you know, from this, you know, from this document that she put out recently, which stood out to me. There's a great quote here that I really liked, which was in this country, people generally have a right to make decisions for themselves. But the counterpart to that wonderful American liberty is the equally wonderful American expectation that people must. decide for themselves, not look to mama government to tell them what to do or what not to do, nor to bail them out when they do something that turns out badly. And that is just so absolutely different from the nanny state sort of bland idioms that you

would get from the previous administration. And look, it's just completely in line with my own personal ideology, which is you treat people like adults, both in the sense that you allow them, you know, to take risks, but also you don't bail them out when, you know, when they inevitably do stupid things as well. So I think it's a very welcome shift away from the previous administration's posturing towards how involved they wanted to be in terms of letting people make their own decisions. And then I agree. I think a lot of this stuff in government is just ultimately, right now, everyone is very

encouraged by the words and the posturing, but I agree with you that it's just going to take a certain amount of time here. And she indicated that there's been a lot of, you know, there's been this wave of requests for non-enforcement and things like that. And she just said, please be patient. it's going to take a long time to process all that stuff. Yeah. Yeah.

I actually record with Hester Purse on Monday for an episode that I think will come out the following Tuesday. So HeserPers is going to speak directly to the crypto industry on Tuesday. So you will hear from her then. All right, fam, coming up next, Uniswap V4 is live and new applications are already taken root. So we're going to, Mike and I are going to go through some of the applications that we think are cool.

And then we're going to also talk about the Ethereum Layer 1. Is it actually scaling layer 1 blocks are bigger than they've ever been before? What happened and what are the plans for? scaling the layer one even more. We're going to get to these two topics, but more as well. But first, we're going to talk to some of these fantastic sponsors that make this show possible. Starting with Frax and the Frax USD stable coin, which offers some of the best yields in DFi. It's like if Circle, Athena, Maker Dow had a baby, but then also a layer two called Fract Stole.

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Follow Cello on X and witness the great Cello happening, where Cello cuts its inflation in half as it enters its layer two era and continuing its environmental leadership. And we're back, Uniswap, V4 is live. This is a pretty highly anticipated update from Uniswap to go from V3 to V4. I think the big feature of Uniswop v4 is the V4 hooks, which we'll talk about in a second. But there are some other things as well. Cheaper fees. Pools are now 99.99% cheaper to create native ETH support as well. And so what this does is that swappers can probably expect a very significant savings from going in multi-hop swaps.

So finding and routing liquidity through uniswap pools becomes just a much cheaper because there's no additional gas cost for adding new sources of liquidity. But really, it's all about the hooks. It's all about the hooks. Hux, Uniswap hooks, are kind of like smart contract plugins that allow for anyone to customize parameters around Uniswap. Customized pools, customized swaps, fees, LP positions. For example, a hook could dynamically adjust swap fees for whatever reason. It can lend unused liquidity for added yield for whatever reason,

MEV protection strategies. And I think hooks have really opened up a bunch of new possible white space for building. And so these are the new toys that I think everyone is very, very excited about. These are the three toys that I've highlighted that I think are very a big deal. Doppler is one that comes from inspiration from Mike here. So I'll let Mike talk about Doppler. But in addition to that, there's also Flanch and Sorella. And I'll say all three of these different apps, which again are Uniswap V4 hooks, are doing very different things. So Flonch is a meme coin token launch pad with a couple extra bells and whistles to make it more than just something that's an inert meme coin,

makes it a little bit more of a live project. Sirella is MEV protection for Uniswop LPs to help them not get eaten away by MEV, but actually to be able to capture MEV to increase the liquidity of uniswap. And then Doppler. Maybe we'll stop with Doppler. Mike, what's Doppler and what about it gets you excited? Yeah, well, maybe just let's back up for a second and just trace the history. of Uniswap and how we got to V4 because I think it's a super interesting trend which is happening

outside of Uniswop as well. So the history of Uniswap is transitioning from an application with a very simple user interface and one type of customer that they were serving well to much more of a platform play where there's much more complexity. So Univ1, you had ERCs trading against ETH. Then you enabled with a couple of other things as well, ERCs trading against other ERCs. And then for V3, ultimately they allowed you to provide something called concentrated liquidity. So much more active management for LPs. Also much more complexity in terms of use of LPing on UniV3. And now on V4, you essentially have this platform where they've allowed any new AMM designers to come in and build whatever type of AMM they want.

And on top of that, they've got their front end. So they've got the web app and they've also got the wallet, which they're going to route liquidity and traders through. So, you know, the advantage if you're building a hook is that already you don't have to worry about security, audits, anything like that, and the audit process and the, first of all, the cost of doing that, but also just the time that it takes to do that is massive. And so there's a huge advantage to building a hook versus building your own AMM. And what UNISWOP is unlocking here is rather than trying to guess at one type of customer or a couple of types of customers are building an AMM in-house, they essentially can create competition and inspire a whole new generation of AMM. m-m designers to come in and build very cool stuff. So yeah, Flaunch, Sorella, and Doppler are all solving very different things. So Sorrella has been pretty laser-focused on preventing LVR, which is basically sex-to-dexarbs in between the price of Binance and AMMs, which are generally stale

because of Ethereum's 12-second block time. So Sorrella's running this very cool auction to return some of that value to LPs, which is very interesting. And Doppler, is taking a look at is actually you can think of it maybe a little bit in contrast to Pump Fun where Pump Fun is designed for a very specific type of meme coin creator, right? Where you basically, it's very low friction to create a meme coin and it's going to go up, but there's probably not the expectation of long-term value there. So the way that it actually works on the back end of Pump is that there's a bonding curve. Once you get to, and you put a very small percentage of the token supply into that curve,

it gets filled immediately by sniper bots, and then it gets transferred over to radium on the back end. It actually migrates. And so that's why you get these crazy, like crazy, you know, exponential price charts, especially in the beginning. And so that's very good if you're just, you know, you don't have much technical savvy. You don't have a long-term plan to create value. That's good to just create something very easy to punt. You just buy the picture. Right, exactly. But if you're a team that has a very different, you know, if you're a team that has a plan for longer term value creation, then that's a bad market structure ultimately for you. So Doppler has a much more sophisticated strategy of how they LP in the beginning.

They basically release tranches of supply onto the market to try to control for that crazy, you know, that crazy price appreciation that you see in the beginning. So, yeah, I mean, you're, you're kind of, Doppler is kind of solving for long term value creation. It seems like Flonch is an upgrade or, you know, different take on meme coins. And then you've also got Sorrella, which is lever mitigation. So already, right, with those three kind of headline hooks, I'm sure there are many, many more that are waiting in the wings. Yeah, it's a super cool platform.

And it's a design pattern that you see across other. So LidoV3, maybe to tease that a little bit, is coming out that's going to kind of adhere to a similar sort of philosophy. You've also got morpho on the lending side of things, which as opposed to kind of a one risk return profile of Avey, it's a much more modular product, which relies on curators to create different vaults. So I feel like this trend of being more modular to accommodate different customer types and becoming more of a platform is going to be a massive trend within Defi over the course the next couple of years. Yeah, I think that's right. The trend is pushing complexity to the edges by opening up as a developer platform rather than more of a top-down rigid protocol and just opening up endpoints for developers to get creative with, which to me is very exciting because then there's, I mean, there's more toys to build. more things to do. And, you know, when we can migrate things towards becoming a platform, that just means that there's more and more surface area to build cooler and cooler things.

And ultimately, that means more startups, more jobs, more casino games, if you're a D-Gen, more fundamental, like, sustainability about this whole industry. And so I think we're all pretty excited about it. So congrats to Uniswop and Uniswop Labs and Hayden and all the other people that contributed to Uniswap v4. All right, Mike, you ready to talk about it. about a subject that neither of us know anything about. Let's do it, David. All right, Barra chain enters Q5 and announce their mainnet and also the Barra token

air drop. Q5, I do not know what that is. That is just the notes that are in the agenda that I'm reading that Chrissy puts together for me every single morning. Thank you, Christy. What the hell is Q5? I think Q5 is a little bit of self-deprecation that it's taking them longer to launch than they thought they were going to.

I think there was the idea that they were going to launch. It's like quarter. Q4, yeah, so it's quarter four, and now it's actually Q5. So quarter five never actually comes because you never get to Q5. Yeah. So anyway, I'm not 100% sure with the references, but I think it's a little self nod to that. It took a little longer that they ultimately would like that. That's bullish, as we know in crypto.

It is bullet. Okay. So the layer one, the main net is up and running. 80 million barra tokens will be distributed to users. So, okay, what is Barachain? Barachane is a high performance EVM identical layer one, so EVM equivalent, that utilizes is what they call proof of liquidity, which, you know, there's proof of stake, there's proof of work, Barra Chain is proof of liquidity, which is, I'm going to call it similar to proof of stake,

but instead of staking, you have to provide liquidity, and that counts the staking. And so it helps bootstrap the liquidity of the layer one. There's a two token model. There's the native gas token, Bera. So that's like the ETH of Barra chain is Barra. That's for used by validators who secure the network. and then a sole bound governance token, BGT, and that is awarded to users who provide liquidity.

And you can provide liquidity using protocols like Bera swap and then receive tokens, receipt tokens, the BGT token as a proof of contribution. And then as BGT token holders accumulate, they delegate them to validators to directly influence the validators boost, which I think is where the edge comes from, the yield comes from. Okay, so with 80 million tokens, air dropped,

to the community. Well, what does that mean? There is a total supply of 500 million bear tokens with 10% annual inflation. The core contributors are getting 17%. Investors are getting 34%. And the airdrop holds 16%. 16% air drop. I would call that a sizable air drop.

Test net users are getting it. Barra chain NFT holders are getting it ecosystem NFT holders, social supporters, and then applications and more. Claiming starts today this Thursday. TBD on when the final claim deadline is up, even if there is a final claim. I'm in the United States, so I'm not available to claim an airdrop. I didn't even know if I got one. But you can also use bankless.com slash claimables to check your Barra Chain air drop as well.

Mike, comments about Barra Chain. We're coming in at $9 a token that gives it a fully diluted valuation of $5.3 billion with a $1.1 billion market cap. We are in the first like just six hours of trading. So price discovery is currently happening. Any broad takes, broad strokes. Yeah. So in terms of the token debut here, it's too early to make any long-term claims.

I would say within the first couple hours of trading, it's a success. I think that most people probably would have taken the under on a $5 billion FDV out of the gate. That could obviously go way down or way up from here. But I think overall opening hours of trading, that's not bad. I think the proof of liquidity mechanism that you just described, I'm not an expert on the mechanism itself, but I think they're tackling an interesting problem, which is in proof of stake blockchains, what is the right amount of stake that you want locked up? Because you can view it as inert capital. And this was actually an issue with Cosmos chains where there was native stake delegation and you had extremely high stake rates on most Cosmos chains. You have the same thing with Solana, same thing with Celestea as well. And so you're starting to see people actually and liquid staking is penetration is much, much lower on those networks as opposed to something like ETH where there's no in protocol delegation. And so what you're starting to see is people realize that there's a tradeoff in between the amount of capital that gets locked up to

stake and secure the network and the amount of yield that gets paid versus if that capital were out in the open, it could be flowing into DFI protocols, etc. And so you actually saw similar motivation, Celestia this week. There was a proposal by Dean Eigman and someone else who I'm blanking on I know to reduce the inflation and disinflation rate of Celestia by 33%. And part of what they cited there outside of just overpaying for security was that TIA right now is just being staked. It's not doing anything. They want it out in the ecosystem. And so I think this is an attempt to maybe obviate that tradeoff.

And it's clear that the bearers want people actually doing things in defy. And then lastly, I think that bearer chain, together with mana, these were the two big L-1s that were going to come to market end of year. I might my gut sense is that there's not many new flows coming into crypto at the moment so if berra does well it'll probably be at the expense of something else you're kind of just at the pvp hotball of money rotating into different things um and so i think it's going to be a probably my guess would be that it's going to be a little bit challenging for berra and monad when it launches to sustain that amount of momentum so but it's also interesting to just understand how the the bd and marketing meta has has changed over the years as well. If you look at the amount of coordination and how Bitcoin obviously did, there's no centralized marketing entity whatsoever, basically same with Ethereum.

And over the years, the BD and marketing function has moved up and up and up and now happens far before there's any network launch or token that goes live. And both Barretchen and Monad here, I think have been building communities and they've been doing parties and obviously a lot of very legitimate developer activities as well. But we'll see how effective that BD

push has been. Yeah. I think that is the sign of a theme that's been going on is just like BD ahead of, I mean, even for Monad before the test net is even launched. I think Monad released the date of their test net, but right now it's been in like a closed devnet for a while. But nonetheless, Bear Chain and Monad had generated enormous hype as just communities before the chain even launched.

Haseeb tweeted out this. I'm officially declaring February to be international EVM month. I'm pretty sure what he means is both Barrowchain Mainnet and Monad TestNet. It's interesting to see Baruchin Mine Chair has flipped Solana in the layer one sector. I mean, that makes sense because it is the day of theirdrop. And so this is going to be a local peak of MindShare. But Barra Chain is really just entering into the Layer 1 competition game pretty aggressively. And we will see if it can hold on to that.

There's a funny, so I actually had sort of forgotten about this, but one of the early things that Baratian was known for was this collection of NFTs that they dropped the Bong NFTs. And there was a mechanism there where you could rebase your NFTs. And if you had held, I'm looking at a post here, so I haven't verified this myself, but from RenGMI on Twitter, where if you had held on to your Barra and you, or your Bong NFTs and you had rebased every single time. then you would have returned 3.86 million, assuming a 7.5 billion FDV, so just under 3 million per NFT at the moment. So pretty wild. Yeah, I guess that's a pretty decent reward for some of the early, you know, totally insane hodlers who've been holding onto your long NFTs.

So that's the, that's the airdrop that you would have gotten in Barr. Right, right. Okay, so if Barra chain is coming in at $5.3 billion valuation, where do you think Monad comes in at. It's, oh, man, if you make me, I'm just going to sound like an idiot here. It's so hard. Yeah, I would guess roughly the same, probably. And a lot of it depends on what there is to do on the chain in the beginning and like how many different apps that they launch with. It also obviously depends on the tokenomics, how they've structured the air drop, etc. But probably roughly the same. All right, let's get into some Ethereum topics to round this out. The big topic of the week is

Ethereum's gas limit, which is basically the size of layer one blocks. is poking above 32 million, 32 million gas. Gas is just this unit of measurement for like basically throughput. It's been at 30 million, 30 million gas for a very long time. But recently there's been this push to increase the capacity of the layer one. And the way that this works is that layer one validators actually get to vote on the size of layer one blocks that they think is appropriate. And so it turns into a wisdom of a crowd, a wisdom of the crowd mechanism.

So we are now poking above 32 million for the first time. This has been celebrated by a number of people, Dunkrad, Vidalic, Justin Drake, have always commented on this. Vitalik tweeted out, Layer 1 is scaling. A big shout out to all the developers working on EIP 4444, statelessness, client efficiency upgrades, and other features that will make higher Layer 1 gas limits decentralization friendly. So Vitalik both supporting Layer 1 scaling while also supporting Layer 1 scaling under the constraint of being decentralization friendly, very true to Ethereum. And then overall, I think Dengrad is aggressively asking for $45 million in the gas limit. So going from 30 or 32 is great.

Dancrad wants 45. And then Anthony Sizzano put out this update about Pectra, which is apparently scheduled to go live in mid-March. This will be one of Ethereum's largest upgrades in terms of the sheer number of EIPs and features that get included. and I think what we're really asking for is an increase of blobs, but I do not think we get more blobs in Pectra. So we're still waiting for further updates to Ethereum to get more blobs. Mike, any comments about Ethereum layer one scaling? I think it's great.

I think it's really positive. I don't have many unique takes here. I think one of the things that I would love to see is, I think Jesse at base does a really good job about this, which he's laid out his sort of Norse-style goal for base in terms of scaling, which is gigagas, and they've committed to regular incremental increases. And I think that's probably what the Ethereum community would want to see here. I think there's a lot of broad-based support, both bottoms up from the community, from

stakers and from validators, rather, and then also from the leaders, the spiritual leaders of the Ethereum community. So I think the next step here would be these changes don't have to happen overnight, but committing to some sort of, you know, just giving the community, like a little more transparent signaling about when these increases are going to happen or when they can expect that would be the next step. I need to issue a correction from what I just said. There will be increased blobs.

So the blob count will be increased from three to six as the target. And then the max blobs will be increased from six to nine. So there will be a doubling, a doubling of blobs, which is pretty damn cool. We are already at capacity with blob consumption from layer twos. One thing as well, by the way, just to add there, because there's been talk about introducing some sort of tax or tariffs on EthereumL2s. Non-sensical. I think it's not, I just, yeah, I don't think it would work.

That's not a real concept. Not a real concept. I think that the, I think that you might get some very different results if you were to do that, right? Like ultimately, you know, in the roll-up-centric roadmap, you want to make scaling as cheap as possible here. So I just, I just view it as a pretty, I don't agree with that as a concept, basically. I have, I'm pretty sure that is a sci-op.

I'm going to call that a sci-op. high up. I think Justin Sun was the first one who introduced it when he threw his hat in the ring to be the head of the Ethereum Foundation. I don't know if you saw. Oh my God. All right. We're just going to leave that one there. One of the reasons why people are talking about tariffs on layer twos, though.

Mike, this is going to be a very big moment in the arc of Ethereum. The reason why is because ETH has been inflating ever since we introduced blobs, EIP 484, into the Ethereum main net and a bunch of scaling moved off of the Ethereum layer one and onto the Ethereum layer two. That happened around April, I think, April 2024, maybe March 2024. So we're coming up on one year of blobs and the ETH supply has been inflating ever since. Yesterday, the ETH supply has been net inflationary since the introduction of proof of steak. So proof of stake went live in September, mid-September of 2022 and we aggressively started burning ether because of EIP 1. 1559 and the reduction of proof of work and the eth supply ended up burning almost half a million

ETH. We have reissued over half a million ETH now and we are net inflationary. ETH ultra, quote unquote, Ultrasound money is net inflationary at the rate of 0.001% over a two-year 145 day basis. So ETH is, you cannot really say that ETH is deflationary anymore. Well, in my mind, Ultrasound money is a mechanism. We have to say that ETH has inflated 0.001% of its supply over two years and 145 days. Mike, what's your take on this? Well, I think there's a take here, which is, you know, there's this kind of ultrasound money meme, which it seems like has gone away.

And there's, there's been a lot of comparison. I know Justin Drake did a long thread or long post this week as well, maybe expressing some concerns. I can't remember the, yeah, exactly all of the thread. But there was a comparison, Eith versus Bitcoin. here, and he was specifically, you know, bringing up this security budget debate, which people have long worried about when it comes to Bitcoin. And, you know, he has correctly pointed out that the vast, fast majority of issuance that get paid or the fees that are, that go to Bitcoin miners is

from issuance, not from transaction fees. However, I do, and I do think that Bitcoin's monetary policy here is in the sense that you know what it is and it's not going to change. I think that the actual amount of inflation that Bitcoin has, which by the way is far, far more than all of the other L1s combined just in dollar terms because of its market cap, but also because of its inflation rate. But people care about that a little bit less than understanding when these changes in inflation are going to happen and that they're going to be persistently low. So I think this was always a little bit of the criticism of the ultrasound money idea, which is it's less important for there to be net, like a disinflation, right, or deflation,

that it is for you to just know what the monetary policy is going to be. And this is probably, this week shows a little bit why that is, because even though it looked for a long time that it was going to be deflationary, we sort of swung back to inflation. And I also think in terms of goals for Ethereum here, just reminding back to how people originally talked about the roll-up-centric roadmap in general is I think it is good for Ethereum to target, you know, a deflationary, to be deflationary in general. Like you hear TradFi folks talk about this a lot. I think it's going to be a big selling point.

So, yeah, I think the goal should basically be to scale the amount of transactions and blobs that roll-ups are consuming back to a point where Ethereum is deflationary. That and making the L1 usable enough that people that don't want to migrate up to L2 is ultimately end up doing that. But I don't have many takes up than that. What do you think? Yeah. I think there has been this focus on ETH being money and moneyness. And this is something that I was like inherently interested in just as a concept. In 2021, I think people came into crypto with a focus on crypto as tech.

And then me and Ryan, I were like, but also no, it's about money. And money is like the largest, one of the largest hams that exists. And if you fix the money, you can fix everything else. And an inherent focus on moneyness as like a big concept. And I think there's been a push back against that. Whereas, like, well, I think younger, the money-ness conversation and being attracted towards money-ness, I think is more of like a Gen X older crypto side of things. And the younger crypto side of things, like the Zoomers, are really interested in crypto as a technology. And they don't really necessarily care about, like, these money-ness conversations.

And they just want to, they just want to have useful apps and make things go fast and have useful blockchains. And they don't really care about, like, the connection between the tech. in the money. And I think they're totally satisfied with Bitcoin in the $21 million, even though like you can poke open the hood as Justin Drake loves to do and poke holes in it. I think the market cares less than what I expected two or three years ago. Yeah. I think that it, look, who knows what can happen in the future? Anyone that speaks really definitively about this, I would say that the only coin right now, which is verging on this moneyness use case, is BTC. That does not necessarily mean that that's going to be the case into perpetuity in the future. And it's very possible that

these L-1s, the ones that are sufficiently decentralized, become a type of new category here that we haven't necessarily seen before that doesn't neatly fit into the bucket of a tech company versus a money. So, you know, I think that people like to Hem and Haw about, is it money, is it not money? Because you would naturally fit into one Tam versus the other. I would just say, you know, I think the L-1s that are going to do really well are focused on providing with users what they want. But I do think that we should stop, we should question, and the verbiage is important about using words like moneyness and collateral or like settlement and things like that.

I do think it's important to be laser focused on why people are actually using Ethereum today, why L2s are actually building on Ethereum today, or banks and trad-fi institutions might spin up their own L-2s and its users on liquidity. And maybe over enough time, if Ethereum generates a healthy yield on top of, you know, for stakers, then it could become a monetary, like, asset in the future. But I don't think it's the right thing to focus on that today. I think the right thing to do is to focus on what users actually want. Yeah.

Moneyness has always been a concept that emerges rather than is built. Right. I completely agree with that. Yeah, well, son. Mike, that is the end of the roll-up. Thank you so much for taking time on your day and helping the bankless nation, digest everything that happened this week. Really appreciate your time, man.

Always, my friend, always. We'll have to do it on that bell curve real soon. Yeah. Yeah, I was going to ask, if people like your takes or just like the sound of your voice, where can they go hear more of you? A sound of my voice, yeah. You can listen to.

I host a podcast myself called Bell Curve, so head over there, check it out. Yeah, we'll put a link in the show nights. Bankless Nation, you guys know the deal, crypto is risky. You can lose what you put in. But nonetheless, we are headed west. This is the frontier.

It's not for everyone, but we are glad you're with us in the bankless journey. Thanks a lot. Okay, thanks for having to do it.