Bankless - ROLLUP: What BlackRock's Bitcoin ETF Means For Crypto

Starting point is 00:00:00 I really do think that we could get a repeat of Defi, some are, if the timing's right. I think the timing will probably be right. Maybe just a little bit more commentary on alpha here. I do know of at least two startups that definitely was planning on releasing a token last bull market. And then the bear market hit and they were like, we're going to sit on our hands and release our token later. So there is pent-up airdrops that people are just waiting for bullish sentiment to re-emerge so that they can release their air. Bankless Nation, happy Friday.

Starting point is 00:00:36 It is the Bankless Friday weekly roll-up time where we cover the entire weekly news in crypto, which is always an ambitious endeavor. And yet again, we have Anthony Zazano tapping in to substitute teach for Ryan Chat RSA. Anthony, welcome back to the weekly roll-up. Thank you, sir. Always a pleasure to be here. Anthony, it was a bullish week this week, which is like the first bullish week that we've had in a long time.

Starting point is 00:00:58 We're going to talk about why. perhaps it's because Tradfai decides to enter crypto all at once, Black Rock, Charles Schwab, and the NASDAQ, we're going to talk about all of the things that just came out in the last one week, 10 days, that has changed the sentiment around crypto Twitter and crypto in general. Then we're going to get into Polygon proof of stake in how it has just submitted a proposal to turn it into a ZK roll-up, a Validium specifically. We're going to talk about, I'm going to ask you, Anthony, the nuances between that, and hopefully you can re-teach me something I learned forever ago and then lost.

Starting point is 00:01:31 And then finally, Zach XPT is sued and the crypto community is gathering to support him. And all of that is coming up as soon as I plug the Daily Gwe. Anthony, this is your YouTube channel, The Daily Gway. This is where I get my news and just has a big thank you. We gave you this plug at the end of last week's weekly roll-up last week that we had you on. But we're going to do it at the start this time. Anthony, who are you and what is the Daily Gway? Yeah, I guess just generally I'm an Ethereum,

Starting point is 00:01:57 educator, Theorem community member, been around for quite a while. And the Daily Way is an education ecosystem for Ethereum. So I do a 30 minutes or so video every weekday on the YouTube channel when it's available in podcast format as well, just recapping everything that's happened in the Ethereum ecosystem for that day and just giving my takes on things. And I'm actually going to be doing a regular podcast with Eric Connor again. We did one the other week. As you can see there, it's called the daily way drive-through. So we're going to be doing that regularly. And anyone who may have listened to a podcast called Into the Ether back in the day, that was Eric and myself as well. So yeah, it's going to be exciting for Eric to come back there. But yeah, mostly it's just like me talking on the daily videos.

Starting point is 00:02:39 But yeah, from time to time, there's other people as well. But hopefully going forward, Eric and I will be doing a regular thing as well. Well, it is a great service that you do for the Ethereum and broader crypto ecosystem. I often say if you, listener, can get to the point of understanding what Anthony Sizzano is saying on the Daily Gway, then you are in maintenance mode and you can just chillax and then just listen to the Daily Gway and you'll be fine. It's where I get quite a lot of my news in the crypto world. And let's see, how do I want to segue that? And it's where we get a lot of just news for the Bankless Weekly Roll-Up.

Starting point is 00:03:19 So a lot of this, Anthony is probably already going to have covered once before, at least in the last week or so. because like he said, he does this every single day. Moving forward, Anthony, I know I've been pestering you about this. I'm trying to get you to come to Permissionless. This is a call to action for the bankless listeners out there. We are less than three months away from Permissionalists in Austin, Texas, 11th through 13th. I've tried to get Anthony to come. I haven't convinced him yet.

Starting point is 00:03:46 We didn't get him last year. Getting him all the way out from Australia is going to be a little bit difficult. But Anthony, we're working on some extremely exciting topics. that I think I can get you for, but I will reserve and judgment until those topics come out. Yeah, I mean, I can't remember what are the exact dates for permissionless? September 11th through 13th in Austin, Texas. Yeah, I would have come if I can, but I don't think I can make it work. Not just the travel time, which is brutal, of course, but also I have prior engagements around that time already.

Starting point is 00:04:17 So unfortunately, won't be able to make it. But the lineup looks killer. I mean, I saw this earlier today. The lineup looks great. like really, really great work you guys have done with that. Yeah, and that's without a bunch of EF members and some other topics as well coming on to the lineup. There is a link in the show notes if you want to get a ticket. If you are a bankless citizen, you get 30% off of the permissionless ticket, which basically pays for bankless citizenship.

Starting point is 00:04:40 And so stay tuned. You can follow the permissionless Twitter account as more talks and things are scheduled. All right, let's get into the markets, Anthony. Like I said, it was a bullish week this week. So Bitcoin going up 15%. Look at that. We were at $30,05. Bitcoin started the week at $26,000, ending the week just above $30,000. 15%. It is not often that you get a 15% move in Bitcoin this week.

Starting point is 00:05:08 Ether, of course, also up, not as up as much. Starting the week at 1750, went down to almost below 1620, but ended the week up 8.5% currently at $1,900, 1893. And then, of course, what does that mean? for the ratio. The ratio is down about 4% down to 0.063, so kind of a big move downwards on the ratio. Anthony, what's your read on the markets this week? It's an exciting week for the markets. Yeah, it definitely is. I think it's pretty obvious why the markets moved over the past week for anyone who's been paying attention. But just to recap, a lot of noise is being made

Starting point is 00:05:43 around Bitcoin ETFs again, because BlackRock basically put in an application for a Bitcoin ETF. And for those of you who don't know, BlackRock is the largest asset manager in the world. are not a small player. For them to do something like this is actually a big signal. And then a lot of other companies and money managers and stuff like that, they followed as well and have reapplied or applied for a Bitcoin ETF. So, and I mean, on top of that as well, there has been a string of news coming out about different tradfired institutions,

Starting point is 00:06:11 getting more involved with crypto. We recently had Powell, actually just yesterday, I believe, give this kind of speech or answer a few questions as part of some committee, basically saying that they need to, kind of to pay attention to the stable coins, you know, stable coins should be regulated as money, and that crypto is kind of here to stay as well. So just a lot of positive news from, I guess, like outside of crypto. But in saying all of that, I think that while it's been a bullish week, I think that tempering expectations is also something that people should be doing as well,

Starting point is 00:06:42 because I think right now, this over the last week, what people are doing is they're speculating on future inflows of money, right? Like the existing money that's in crypto, the traders and everyone like that, they're basically saying, okay, well, this is a new narrative. this is something to latch on to, and there's potentially a lot of money coming in because maybe the ETF gets approved. Like, for those who don't know, there is no Bitcoin ETF. And every other application that has ever been put in has been declined. There is a pseudo-ETF known as GBTC, which is not an ETF. It is actually a pretty crappy product that trades at discounts quite regularly, so it's not something that people really want to buy. But yeah, people are

Starting point is 00:07:19 speculating on this one actually getting approved. So that's what you've seen so far. That's what you're seeing this week. Now, whether this kind of continues, this positive price action continues, I think is going to definitely rely on new money coming in. And absent that, I think it would just retrace because speculating that new money is going to come in can only get you so far, because if it doesn't actually materialize, you know, and what you're speculating on, then it's just going to go back down. That's my kind of read. So I'm not like bullish or bearish, I guess. It's more of like a neutral stance and just to wait and see. Yeah, I think that's, I think that's a smart take to have. I'll add on additionally that, yes, there are traders that have rotated

Starting point is 00:07:58 into Bitcoin. It's why the ratio is down. It's why Bitcoin dominance is up. On the news of BlackRock, the largest asset manager with over $10 billion of assets under management has proposed a Bitcoin ETF. That is traders that have, like, that is not, there's no new money there. They have just proposed an ETF, along with everyone else that's also proposed and also gotten denied a Bitcoin ETF. And so I totally agree that this is traders making the Bitcoin price go up. Yeah, also at the same time, I think what is real is that it is different when BlackRock does it. And also they are doing it in spite of the worst regulatory environment that crypto has ever had. And so yes, you could say that like there are a speculation of future cash flows going into Bitcoin so people are buying

Starting point is 00:08:41 it now. But also there's just like the crypto has gotten absolutely fudded in the last three weeks a month or so with regulatory concerns. And so I, I think there is a take that the BlackRock ETF is a signal that, hey, those regulatory concerns were the bottom, the bottom of regulatory FUD. And so now that BlackRock is here and Charles Schwab and Fidelity are here entering the crypto space, people are perhaps thinking that this will be the end of regulatory fud because now we have the trad players involved. Yeah, I think it's definitely a win change for sure.

Starting point is 00:09:16 And I guess my comments were more maybe the short term kind of stuff, definitely not. long term, but it also means that the foundations are being laid for the next crypto bull market. And I believe strongly that there are foundations being laid everywhere right now, not just with Tradfly coming in, but also in crypto foundations, such as all the development in the Ethereum ecosystem. Obviously, we had staking withdrawals go live, which opened or de-risk staking for a lot of people, and we've seen inflows there, layer two, stuff like that. So all of this is just part of those foundations being laid. So long term, yes, it's incredibly bullish that this is happening. It's a win change. I did actually tweet the other day that I thought that the regulatory

Starting point is 00:09:55 bottom was in. And I think that was before all this news came out, because it really did feel like the regulators overstepped, specifically the SEC, just overstepped their bounds here. And it doesn't matter, you know, how much support you think you have. If certain, I guess, players don't support you, then you are going to, you know, lose the support of the people that matter very, very quickly. So I think there's definitely a win change. And I'm actually, trying to kind of figure out or speculating on, you know, who's the SEC going to go after next? Are they actually going to do any more high-profile lawsuits or are they going to pause now that these big players have basically shot this, you know, shot and basically put this signal out there saying,

Starting point is 00:10:34 hey, you know, we actually think crypto is legit. We don't think this stuff should be, you know, killed in the US and, you know, basically you guys should stop. That's kind of my rate on it. Yeah, certainly, certainly. Really quickly, we have a $1.2 trillion market cap, which is up bigly. fell below a trillion dollars last week, but this just shows what happens when Bitcoin puts a 15% week in the green there. And then also, like you said, Anthony, staking withdrawals went live, and so we've seen the post-wistrals meta emerge on Ethereum. 23 million ether staked, seemingly up only and interestingly also, Ethereum staked, the supply of eth-staked, is ready to flip eth on crypto exchanges, which is just something you've got to love to see. Crypto-exchanges,

Starting point is 00:11:20 losing in their eth supply ownership percentage versus the beacon chain. So staking just really seems to be up only yet. 23 million ether stakes. Any comments on this, Anthony? Yeah, I mean, it's definitely not something that surprised me, but what did surprise me was the speed of which it happened. I knew that that staking withdrawals was going to be bullish. I just didn't think that we would see this much eth FOMO win. Because it's just, I mean, the validator Q's been over 90,000 for a while now. It's like, okay, why didn't these people enter before? Well, the obvious reason was is because they felt it was risky, right? They felt it was risky to get in before withdrawals went live.

Starting point is 00:11:57 And now that withdrawals are live, they're fine doing it now, right? Obviously, you know, the proof is in the numbers. And it's just been really amazing to see that. So, yeah, just generally, great to see that the thesis played out, that withdrawals was going to be bullish. And I believe that eat staking is going to be up only for a while. It will obviously slow down and taper off. I think there definitely is like a finite amount of of ETH that can be staked outside of the total supply of ETH.

Starting point is 00:12:25 And I think that I don't think it's going to get to like 70 or 80% staked unless there's like an outside incentive such as Egan layer, for example, or restaking generally. If it's just vanilla Eats staking, yeah, I don't see it going like too high because it's just the incentives aren't there for that. But yeah, generally it's pretty bullish. Yeah, we're looking at a chart here with two lines that are converging. the ether on exchange and one is the ether staked and we are basically at that flipping point. I love the caption here. It's not the actual flippinging. I think one kind of nuance to this chart that I know this isn't probably something people want to hear, but a lot of the eath stake goes through exchanges. So if they're staking it, it means it's not being counted as

Starting point is 00:13:08 their exchange balance, but it's still there's technically, right? Because they're staking it on behalf of their users. So I would like to see a more detailed chart breaking the that out, basically identifying which ETH was staked via a centralized exchange, you know, versus, but generally I think it's still fine because you have, I guess, like, ETH being productive rather than just sitting, you know, and securing the network. So obviously there's benefits. But yeah, I just, that's a caveat and nuance I thought I would bring up. Yes, yes, they're very, very important.

Starting point is 00:13:38 Yeah, there should be a third line, which is ETH staked on exchanges. And if we could get that line to also trend downwards, that would be great. You brought up eigenlayer, which I think this is important to bring up. Here is a graphic of just all of the different ETH stake derivatives, the staked ETH from Lido, R.ETH from Rocket Pool, and CBEETH from Coinbase being deposited into EGNLayer after Mainnet launch. And this happened in, this is an hourly time frame. So this is a very short period of time until the caps were reached, the caps of 32,000, ETH, 3,200, excuse me. And so like not only do we have ether staked on the beacon chain to watch,

Starting point is 00:14:15 but now we have ether staked on eigenlayer to also watch. All three of these things are capped. I think we covered this last week or last week we had you on, Anthony. But it's just fun to watch these ether being staked across all of the different staking utility ecosystems. Any last comments on eigenlayer before we move on? No, I mean, I didn't, I wasn't surprised by this. I actually kind of woke up to both the announcement and the pools being filled. That's how to. how that's how fast it got filled up here. But yeah, it's going to be interesting to see which ones kind of fill up and succeed,

Starting point is 00:14:49 like in terms of market share. Obviously, it's going to probably reflect the market share of each of these LSTs themselves, but will it actually change the dynamics? Like, will there be more R-Eth minted because the R-Eth cap, you know, won't be reached as far as the S-T-Eth cap is because it's just more S-T-Eth out there. So that's what I'm watching, the dynamics there between the different LSTs and how that drives the, I guess, dynamics of LST market share on the beacon chain itself. All right, Bankless Nation, coming up next.

Starting point is 00:15:18 TradFi enters crypto all at once. We're going to talk about each of the individual entrances into this crypto world, followed by the Polygon proof of stake chain set up to upgrade to a ZK Validium. And then, of course, the Zach XBT drama. The beloved crypto sleuth gets sued by a victim, and crypto Twitter arises to his defense. And then we have Goose Season from Three Ours Capital. We're going to have to talk about the goose and a few other NFT things. on Ethereum as well. But first, a moment to talk about these fantastic sponsors that make this

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Starting point is 00:17:11 If you want to get started working with the first Dow-led layer 2 ecosystem, check out Mantle at mantle.xyZ and follow them on Twitter at ZeroX Mantle. All right, here's a tweet from Delphi Digital that I think sums this up pretty nicely. Over the past two weeks, BlackRock files a Bitcoin ETF, NASDAQ launches a crypto custody service, Deutsche Bank Zeeks a crypto custody service, Soros's fund management says crypto's here to say, and then Citadel Fidelity and Charles Schwab launch a crypto exchange, finishing up with the institutions are here. And so this has been the theme of the last two weeks, I'd say, starting with, of course, the BlackRock submission of the I Shares paperwork for a spot Bitcoin ETF.

Starting point is 00:17:49 This was a rumor, like, oh, BlackRock is rumored to be close to be submitting for a Bitcoin ETF. And then about, I don't know, four to five hours later, it was confirmed that they did indeed submit a proposal to the SEC for an I Shares Bitcoin Trust. The Ishares is just their branding for BlackRock. And so Black Rock, the world's largest, it's either first or second after Vanguard, over $10 trillion, I might have said billion, trillion dollars in AUM. And interestingly enough, there's some stats I want to pull out. After the $10 trillion in AUM, BlackRock has received approval of 575 out of 576 ETF applications. They have only ever been denied their ETF applications once. So they've, A, done this a few times before, in fact, 575 times.

Starting point is 00:18:46 And they have gotten approval quite frequently, all except for once. And so this is using some crypto service providers. The custodian is going to be Coinbase. There is a Cracken subsidiary company that is providing the exchange data. And just everyone knows BlackRock plus Larry Fink, the CEO has a lot of political power. And so in combination with like, finally, we're getting a spot Bitcoin ETF, not the future's ETF that no one really liked earlier.

Starting point is 00:19:13 We also have the weight of BlackRock. And if you aren't familiar with BlackRock, in addition to all the context I just gave, BlackRock is the closest thing to the government while also not being the government. Like they own half of the equities in the United States of America. like it is part of the, it's an extension of the government itself. It's kind of a cynical, nihilistic take about the relationship between governments

Starting point is 00:19:39 and public and private markets. But that's my take. Anthony, anything you want to add to this? Yeah, I think just on that note about the ETS that they've approved, or have had it proved, and which ones have been denied.

Starting point is 00:19:52 I actually looked up the one that got denied. So it was one in 2014, so quite a while ago now, and it was denied because apparently it was just a blind trust. So you'd buy it, but you wouldn't actually know what was in it. So you would be buying something you didn't know. So obviously that's not something that you want to offer to retail customers especially.

Starting point is 00:20:11 So that was denied there. And again, that goes to that kind of stuff we were saying before about the wind change. I don't think we brought it up before. But at that point around the BlackRock seems to only file for ETS when they know with like 99.9.9% certainty that it's going to get approved. It has people speculating, okay, well, there is a higher chance of this. one getting approved, this Bitcoin ETF getting approved, then not this time, right? It's not like a, it's a 1% chance. It's maybe over 50%. So that's what people are speculating on, I think. I think that's right. Yeah. And there's just a lot of speculation going on. So Frank Shapiro

Starting point is 00:20:45 says, Black Rock Fidelity Citadel. They're all making big moves into crypto despite the Gensler crackdown. A tree of alpha response to this and says, you wrote despite instead of thanks to. And so the people with a conspiracy hat on, which I always love to put on, are saying, like, Gary Gensler and the SEC and the powers that be were just hammering the crypto-native companies, right? The Winklevoss ETF denied, right? Like all of the other crypto-native ETF proposals denied. And they're just, the claim, the conspiracy is that they were just biding their time for some of the bigger players to come in. And it's just interesting that Fidelity, Citadel, Black Rock, all of these trad institutions with trillions of, of dollars of AUM and strong political connections all seem to come into crypto at once right after the SEC and other regulators start hammering crypto-native orgs. And so just the timing

Starting point is 00:21:37 on this is curious. I don't, if I think if I talk to somebody like Jake Schrovinsky or somebody a little bit more measure, they would just say, yes, it's curious, but there's not really a there but I think everyone in crypto is like, yo, what the F is up with this timing? Do you have any thoughts on that, Anthony? Yeah, I mean, the timing is what I think. think a lot of people are latching onto when it comes to putting their conspiracy hat on, right? But there is another lens you can view this from. You can basically view this as these tradfai institutions had their hands forced by the SEC because the SEC went after, you know, Coinbase, the biggest crypto company in the US. They went after a bunch of different tokens

Starting point is 00:22:17 or used those tokens as evidence against Coinbase. Obviously, they went after Binance, which isn't US, I mean, Binance US, but obviously they're trying to extend that to Binance Global as well. So I think that maybe these tradfai institutions were already interested in getting into crypto. They just hadn't announced their plans yet. And then because the SEC went after the Coinbase especially, they're like, okay, well, we need to send a signal back now that we're actually wanting to play in this arena. And the SEC needs to calm down with whatever they're trying to do. Interesting. Okay.

Starting point is 00:22:47 So that's actually just like the pro crypto. It's like they were always ready to pull this trigger. But then they decided to like, hey, let's publicly stand in support of. crypto before Gary Gensler destroys the industry that we want to generate fees from. Yeah, pretty much. And like, I think not just Gensler, but all the high-ranking Democrats that have been anti-crypto, these companies probably like, well, it's time to put a stop to that, right? It's time to, if we want to be involved here and make money from it, we can't have all these regulators and these politicians trying to kill crypto in the US. And that's why I said it's a

Starting point is 00:23:18 wind change, where it was like blowing in one direction. Now it seems to be blowing in the complete opposite direction. Yeah, speaking of a win change, here's a meme that I thought kind sums this up. Larry Fink, the CEO of Black Rock, first initially said, Bitcoin is an index of money laundering. And then the meme is, you know, first they ignore you, then they laugh at you, then they fight you. And then they create a spot Bitcoin ETF. Yeah, all these comments from like, yeah, Larry Fink and like Jamie Diamond and their change of tune over time, I think, like a lot of times you can just chalk that up to, they've been around a long time, they've been around markets a long time. They're very experienced there. They've, you know, they've probably seen it all. And a lot of

Starting point is 00:23:58 these things that are these new things that come along end up failing, right? A lot of these new things people get excited about end up failing. So I think for them, crypto needed to, you know, exist for a long time and needed to become a much bigger asset class than it traditionally had been. I needed to affect maybe the political sphere as well and be conversational there for these tradfai people, these CEOs, to actually be like, okay, well, this thing's here to stay, let's focus on it, right? Because C. E.e. Euros have a million things to think about. And I doubt Jamie Diamond's sitting there every day being like, oh, crypto, I'm going to go look into what's happening with Bitcoin mining,

Starting point is 00:24:33 where I'm going to look into what's happening with Ethereum L2s. No, they're not doing that, right? They've got their own things they need to focus on. They need to run the business, the existing business, and their innovation arms or whatever will look into it. That's why Jamie Diamond was saying these comments while JP Morgan was making, I live that I'm making an Ethereum client or working on Ethereum client or something got to do with the EVM. So that's why I think these things happen. So yeah, I don't think that these CEOs really, you know, when they make those comments,

Starting point is 00:25:00 they're not making it from a position of being super involved with crypto or being like a believer. They're more from the sidelines. Sure. So yeah, certainly. And of course, this was not the only thing in the trad world about the crypto world. Fidelity, Charles Schwab and Citadel have launched a centralized exchange, a non-consodial centralized exchange titled EDX. I don't know what EDX stands for.

Starting point is 00:25:21 What is with these acronym-based exchange? I don't know. Okay, so EDX is launching. It's a non-consodial centralized exchange, which I think is interesting to the crypto world, but it actually is normal in the trad world. And so the EDX, the quote from the CEO, Jamil Nazar Ali, says, EDX's official launch allows our outstanding team to bring the crypto the same values and standards of competition, transparency, fairness, and safety that investors in traditional assets

Starting point is 00:25:50 expect and enjoy. And so, okay, so what's the big deal here? Ram Alwalia, who we've had on the podcast before, the non-custodial aspect of EDX refers to its settlement process. Unlike traditional crypto exchanges like Coinbase or Crackin that require customers to deposit assets into wallets controlled by the exchange, EDX just plans to use a third-party bank or custodians to hold customer assets. So you use a custodian, a custodian service. And this is how like the NASDAQ works. This is how the TradFi works. There is a custodian or a bank, and then there's just like API access. And so the trading happens on paper by this brokerage, by this trading service, and then

Starting point is 00:26:30 there's settlement after the fact, whereas crypto exchanges, Coinbase, Cracking, Gemini, anyone where you submit your crypto assets, and they are the custodian, and then they also let you trade, those things are commingled. And the Tradworld likes these things separated. And so this is just following the old model of separation of exchange. duties and custodian duties. And so this is being a hyper-compliant new form factor for an exchange. And so the website is edX markets.com. You can check it out. But you actually can't trade on there. It's not for you. It's not for retail investors. It's not like your Coinbase or you're cracking.

Starting point is 00:27:09 It is meant to be like a software service for trad custodians. And then trad custodians will allow you to trade. So I would imagine if you are, uh, are, uh, a customer of Fidelity, which you have Bitcoin or Ether there, that trading of if you press a buy button or the sell button or, I don't know, the Options button for Ether or Bitcoin, that information as an API gets routed to EDX and then EDX does the trading and then there's final settlement between the custodians later. And so this specifically is intended to avoid serving retail investors. Interestingly, Paradigm is an EDX. X investor and and also interestingly they only offer four tokens Bitcoin Ether fine

Starting point is 00:27:56 Lycoin and Bitcoin Cash interesting the Nazarari the CEO says we have a limited set of tokens because until there's more regulatory clarity we don't want to trade something that is potentially a security so hypercompliance fitting the old form factors of TradFi meant to serve TradFi institutions backed by Fidelity Charles Schwab, Citadel, interestingly, Nazarali, the CEO, is a former Citadel employee. Anthony, that's the summation of the details. What's your take here? Yeah, no, I think that's a great, great summary of everything. Before I dive into my take, I just want to point out that the E on the logo there is the currency symbol for Ether on

Starting point is 00:28:38 EDX. I don't know if that's intentional or not, but that's pretty cool. I'm pretty sure that's not intentional. No, probably not. So the assets that you rolled off, they're the ones that they're trading, right? You know, as you said, Bitcoin ether, no-brainer, that's fine. But Lycone and Bitcoin cash, I mean, like this is what's frustrating. Yeah, yeah, so this is what's frustrating about the SEC not giving clarity to anything, because it means that these platforms are very limited into what they can trade, and they literally will trade things that just are dead, right, that no one really cares about, right, that are kind of old coins, dinosaur coins, or dino coins, as we call them, in crypto. And, and, you know, and, you know, and, you know,

Starting point is 00:29:19 And they could trade all these other stuff if there was clarity because what they could do is that they could literally register with the SEC to trade securities. So even if these crypto assets were securities, they would still be able to trade them. But they can't do that because the SEC does not offer any way to actually do that. And contrary to what they've said around the Prometheum thing, which in my eyes, the Promethean thing is like an SEC plant, to be honest. I think that whole thing is just absolutely wild. But like, yeah, not even EDX can probably register with the SEC to trade crypto asset securities because there's just no guidance there. So it really does speak to the fact that the SEC, as I said, has overstepped completely and it's just provided absolutely no guidance to anyone. And I think that's super frustrating because it means that instead of actual crypto assets that people want to trade being on this platform, you have light coin and Bitcoin cash, which like no one cares about.

Starting point is 00:30:13 I mean, maybe some people do, but I think the majority don't, right? Yeah, it also just sends a bad signal to investors. It puts Bitcoin cash and light coin shoulder to shoulder with Bitcoin and ethers. It's just the wrong signal. Like, let's not legitimize Bitcoin Cash when, like, it's more of a nuanced discussion, but really there's just ever only going to be one Bitcoin. And very clearly, BTC has won that fight, and Bitcoin Cash has very clearly lost. And so I don't think there's the investors who are clients of Charles Schwab,

Starting point is 00:30:46 are sufficiently informed about the dynamics of what a hard fork is and what like blocks based competition is. And so like they're like, oh, Bitcoin Cash, it's cheaper. I'll buy it. Like, they're going to fall for that. And so it's just like it's a poor service, at least in my opinion. And I will say like, I don't have Ethereum classic on there. Yeah.

Starting point is 00:31:06 It's the cheaper Ethereum, right? Right. Yeah. And it's so like I, I know like neither are you nor I are necessarily bullish on like Solana, at least in comparison to Ether. you and I lean towards the ether camp, but I will be way more bullish on Solana than light coin or Bitcoin cash.

Starting point is 00:31:21 And I'm sure that's a sentiment that's shared by almost anyone that's going to have an account with some of these Charles Schwab fidelity types. One more comment from Nazar Rik, the CEO of this new exchange, left a comment for Coin desk. Regulators like the different approach. This is talking about the separation of exchange function in the broiler dealer function.

Starting point is 00:31:44 Investors want to trade through trusted intermediaries, and that is especially true post-FTX. And so this is also just naturally a, it's going to service a demand for the more conservative, cautious, trad investor who doesn't like any of these crypto-native companies, even the great ones like Cracken and Coinbase, that we in the crypto world completely trust because they've been around. But still, like to the Trad investor, you put up Coinbase and you put up FTCs, and people are like, I can't tell the difference.

Starting point is 00:32:15 just because they just aren't informed. Any last comments before we move on? No, I mean, I think that's right. And these other financial institutions have been around for a very long time. But as well, they're also like registered and regulated within the proper frameworks. And that's what crypto exchanges are trying to do in the US, but they just have no path towards that. But I would, I will say that Coinbase and Cracken, particularly Coinbase, is viewed very, very favorably by U.S. TradFi kind of people. I mean, as you said, EDX is using Coinbase as a custodian.

Starting point is 00:32:48 No, sorry, not EDX. The ETF, the Black, they're using Coinbase as a custodian. And to use someone as a custodian is obviously a huge deal because they have all the assets, right? So you only want to be using companies that are completely legitimate that you trust and that have good practices around this. And I would say that Coinbase's custody practices are the best in the industry. I don't think they've ever actually had a hack at all or an, exploit. Not to say they obviously won't. You can't ever say they won't, but that that test of time

Starting point is 00:33:18 that they've been around for a very long time. And through, you know, from the youngest days of crypto to today is a huge kind of deal for these, these more trad-fi kind of institutions. Yeah, that's a funny point where if like trad investors are like, hmm, I'm not really sure about these crypto exchanges. I don't really know about Coinbase. I'm going to use BlackRock. And BlackRock's like, well, we're going to use Coinbase. Yeah, exactly. All right. Okay, moving on to Polygon News, the other big news of the week, there is a proposal submitted by Polygon Labs to Polygon governance titled Polygon 2.0, Polygon Proof-Stake to ZK Layer 2. Okay, so a proposal was published to move the Polygon proof of stake chain, the big one with all of the trading

Starting point is 00:34:02 activity, the economic activity, to a ZK-EVM validity. So Polygon already has their ZKEVM. So this is a new chain. Well, it's the same chain. The Polygon Proof-EVM. of stake chain. They want to turn that into a ZK EVM Validium, which is a specific kind of ZK roll-up. So this is a core part of their whole Polygon 2.0 vision, where everything ultimately just becomes a ZK layer two. So the goal here is to upgrade the Polygon proof of stake chain, which is actually not people will throw a flag at the calling it a roll-up because it's technically a proof-of-stake side chain. So this turns it closer to being an actual roll-up. And this proposal, actually re-triggered the what is a true roll-up conversation on crypto Twitter because a

Starting point is 00:34:49 Validium is a roll-up and there's but there's an asteris asteris there so like we're going to get into some of that nuances but first just like what is the big difference higher security for users compared to the proof of sake chain again the proof of sake polygon chain is a side chain turning it into a ZK Validium actually does produce more final settlement on the Ethereum layer one itself there's better interoperability because of the ZE part of this component to the rest of the Polygon 2.0 ecosystem. All the applications on Polygon should continue, and fees should actually get much, much, much lower.

Starting point is 00:35:26 And so, okay, what is a validity? I'm going to briefly answer this, and Anthony, you're going to help me define this. Validium is a lower cost, high throughput sibling of a ZK roll-up. So the pros are that it fully inherits security of Ethereum except for transaction data, which is kind of actually an important part. So publishing transaction data to Ethereum is expensive and it limits throughput.

Starting point is 00:35:50 So a validity, it has similar security guarantees to a roll-up, but the transaction data is made available off-chain. So that will be made available by a proprietary polygon solution. And so much, much lower fees than a true ZK roll-up, a ZK-EvM like Scroll or ZK Sync Era. It doesn't consume Ethereum gas to store transaction data. so there's higher scalability. But the cons are, there is an external dependency.

Starting point is 00:36:18 The transaction data, the data availability for transactions is secured outside of Ethereum. So there is an extra dependency there. Anthony, what would you add to my limited definition of a ZK Validium? No, I think you covered it quite, quite well there. There is obviously a lot to unpack here. So I will offer a bit of just extra kind of context around this. So Validium was a term that was, I think, coined by Stark. where back a while ago, and it basically just describes a construction where the, as you mentioned,

Starting point is 00:36:47 the transaction data is not stored on the same, I guess, like, layer that the ZK proof is. So the ZK proof is, in this case, for the Polygon ZK Avium Volidium, will be stored on Ethereum L1, and that's the cheap component. That is very cheap to store on Ethereum L1, whereas the transaction data, which is the expensive component, will be stored on the existing polygon validators nodes. So they're a polygon. validator set consists of around 100 validators, and there is obviously staking with thematic token. They've got a depotus system or a delegated proof of stake system. So those validators will be where the data is stored. Now, what this does is that it enables

Starting point is 00:37:28 cheaper fees because storing the data with polygon validators is cheaper than storing it with the Ethereum validators, just by the virtue of how each of these networks work here. But in saying that, in a typical Validium construction, there is no kind of limit to where you can store your data. So you can store your data on anywhere, basically. You could store it locally if it allows you to do that, right? You could store it on another L1 altogether, or you could store it on a data availability network itself, something like Celestia or a veil, which actually spun out of Polygon or potentially eigenlayer data availability layers if those things get spun up. but it's all about the security guarantee, right?

Starting point is 00:38:09 Because what is the actual practical implication here of not storing your data on Ethereum L1, but storing it elsewhere is what happens is that there could be a withholding of data. So let's just say, for example, that the polygon validators all go offline, right, and the data's gone. Like, not gone, but inaccessible, right? You can't actually... So if you want to withdraw your funds from the ZKVM Validium, you wouldn't be able to do that because you don't have the data to allow for...

Starting point is 00:38:36 the cryptographic proof to basically say, well, you've got the proof, right, but you don't have the other part of it, which is the data, to say, hey, this is my funds, this is the state of my account, please give me my funds on wherever, Ethereum L1, wherever else. Now, that's the worst case scenario. They can't steal your funds. They can freeze your funds, but they cannot steal your funds because they do not have the proof that is tied to your address. At least that's my understanding of it. So that's the trade-off, basically, where you do get more security than the Polygon POS chain, but because the data is stored off-chain, you still rely on those validators in order to access your funds. So your funds would be frozen in that world. Now, obviously, that's not ideal, but that's the

Starting point is 00:39:17 trade-off for the cheaper fees. In saying all of that, post-EIP 4844, which is proto-dank sharding, which it basically creates a new transaction type for roll-ups. If the costs are low enough for Polygon, for what they want to achieve for their ZKVM, what they could do is they could, just store the data on Ethereum and still get the same fees as they would by storing it elsewhere. And that would make it a full roll-up. So a full roll-up needs its data and its transaction and its proof stored on the same kind of, I guess, like settlement layer, such as Ethereum L1 here. And another thing that they could do as well is that with the validity in construction, they can, as I mentioned before, allow users to store their data wherever they want. So if you store

Starting point is 00:40:02 your data yourself, you pay for it yourself, obviously. If you want to store your data on Ethereum L1, cool, do that, but you have to pay for it, right? And by doing that, you actually now have the same guarantees. You have the guarantees of a roll-up on Ethereum. And if the Polygon validators go offline, it doesn't matter for you because your data is actually on Ethereum. So you would still be able to get your funds out. But you can store your data anywhere, actually, as well, which is, I think a really cool kind of construction type here is where you could have a default stored on the Polygon validators, then give the users the choice to store it wherever they want. But we'll have to see. I think that if 4844 offers enough scalability for Polygon,

Starting point is 00:40:41 I think that they could end up defaulting to Ethereum L1. And then maybe in times of like high congestion, they change over to the polygon validators. So there are literally various different ways that this can be done, which is actually what's really cool about this. But yeah, that hopefully gives people extra context around this itself. But just the last thing I'll say, I know I'm going on a little bit here. But the last thing I'll say is that the reason why this is really bullish for Polygon is because the POS chain has a huge network effect, right? Yes, it's the side chain. Yes, it's obviously less secure than Ethereum and everything. It's not a roll-up or an L2, but it has a lot of activity, has a lot of apps, has a lot of users, has a lot of network effect. So converting this over to a ZKVM for

Starting point is 00:41:24 Lidium inherits all of that and keeps all of that and just gives it more security. And if it's a full ZK roll-up, then you've literally just converted what is essentially a separate L-1 into an L2 on Ethereum. And that right there, I think, is a playbook for other L-1s to potentially follow. Not to say that the other L-1s have as much activity as the POS chain, but at the same time, it shows that it can be done. It shows that it is possible and it shows that it works. Because from my reading, this is actually easy to do. In the proposal, the Polygon said, this is actually not a difficult thing to do. We can actually do this with relative ease, and then everyone, and there's no need for users to do anything. It's like the merge

Starting point is 00:42:05 on Ethereum. The merge was obviously not an easy feat, but it's like the merge where essentially it happens and the users don't feel anything, they just get the same experience. So, yeah, overall, I think very bullish, even though obviously there's a lot of nuance to the construction itself, but I think that once you understand the nuances there, you know, you have a better understanding of all of it. God, I'm so glad I have you this week to explain this one. That was so helpful. You talked about the size of the Polygon roll-up, over $2 billion of assets, tens of thousands of daps, and an average of 2.5 million transactions per day. That is in the current proof of stake polygon chain. And so just to really drive this point home about like this ZK Validium,

Starting point is 00:42:47 the ZK part of a ZK validium, the ZK part is the cryptographic proof that prevents the operators of this roll-up from stealing your assets. The trade-off is that you do not. have the same assurances of having your data, but at least they can't steal your assets. They can only prevent you from retrieving your assets. And so it's basically like what's left is a griefing attack, is they can only prevent you from withdrawing. So there's no incentive for them to do anything else because they can't steal it from you. They can only prevent you from withdrawing. And so there's a much significantly reduced attack surface area down to these circumstances of just like when a griefing attack by a layer two operator or set of operators would,

Starting point is 00:43:29 would be viable, which is just like, that's much less incentive to be malicious than if they were actually able to steal your funds. So the ZK part of the ZK Validium prevents them from actually being able to steal your funds. So what's left is just like they can withhold it from you for and be mean for some particular reason, but the reasons for doing that are much, much more reduced. And then on top of that, you also have the Maddox staking as well, which I'm assuming if they do this. If anyone griefs or, you know, censors your withdraws, then they have Maddoch at stake, which can't get slashed, which is an additional protection against this. All of this is correct, right, Anthony? I'm not sure. I don't actually know if Madic has, or the Polygon POS chain

Starting point is 00:44:13 validates have a slashing mechanism. And I'm not sure if that will be implemented as part of this move. I don't actually know the details of what they have there. But generally, what you're talking about is is the data availability kind of problem right where the thing this is a huge problem in crypto generally and the way Ethereum aims to solve it is by using some some really fancy cryptography that is beyond my understanding that is part of the dank sharding roadmap but so with the with the data stored if it's stored with the the POS chain validators it I don't know if all of them are going to store all of the data or how long they're going to store it for because they could say, okay, I'm going to keep it for 30 days and then discard it because it's too expensive for me

Starting point is 00:44:58 to, you know, to keep it, right? Or a portion of them will only keep the data. So maybe only like 30% of them will keep the data and the other 70% won't. So if 30% of, if they withhold the data, it doesn't matter that the other 70% don't. They don't have the data to withhold in the first place. So there's been all this research and development over data availability guarantees and how to actually do it in a scalable way because storing data is expensive and certainly, serving it is expensive because it's all hardware at the end of the day, right? You're storing the data. It's literally gigabytes or megabyte, whatever, storage you store on a computer. It's the same concept, but then you also have to serve that. And that costs money to do, right? You need to serve it

Starting point is 00:45:38 off of a good connection. You need to be online so the data is available. It's like running any kind of a node or validator or anything like that. So from that lens, when you're talking about the cost of this, the cost is always borne by the people storing the data. And if it becomes economically inefficient for them to do that, they're either going to discard the data or they're just going to shut down their validators. So that's where the problem of data availability comes from and how do you ensure that the data is always available, even if only a subset of validators have it. And that's where all the research that's going to dang sharding has come from, which uses all the very fancy cryptography, which obviously is way beyond my knowledge there.

Starting point is 00:46:15 I'm not a cryptographer. But yeah, I don't know exactly how polygones is going to construct this and which validators are going to keep it for how long. But that's why I think that they should, make it so that the validityam has that option to fall back to Ethereum L1, for example, if you want to, to pay there. Because, for example, big players who don't care about fees, they could use this chain and just post their data to L1 Ethereum. So they'll have no risk of their assets being frozen, right? Whereas smaller players, maybe it's not worth it to them to do that so they can just have it stored somewhere else. So again, giving the user's choice, I think, is very important. But yeah, this is a huge design space when it comes to research around this.

Starting point is 00:46:53 Yeah, the last thing I want to pull out is that interestingly in this blog post, they talked about like Polygon talked about why this is a good thing. And so they say upgrading the Polygon proof of sake chain to a ZK Validium would offer very high scalability and very low fees. Yes, we know this. It would be a great fit for applications that have high transaction volume and require low transaction fees. For example, Web3 Gaming, Social, and Micro Defi.

Starting point is 00:47:17 Interestingly, that they added the word micro because you wouldn't want to do a million-dollar transaction with constrained settlement assurances. So even they are admitting that, like, hey, this is great for micro transactions, micro defy, but for a, for large-scale defy services, you would want the full ZKEVM, which Polygon also happens to have supplied to the market. Okay, wrapping up the Polygon conversation, thank you for helping me navigate through that one, Anthony. Zach XPT writes a Twitter thread says, it's unfortunate that I have to write this thread, but I'm being sued by Mocky Big Brother for an article I published in June 2022.

Starting point is 00:47:54 Today, Mocki filed the defamation lawsuit. The lawsuit is baseless and an attempt to chill free speech. I intend to fight back and defend free speech. For bankless listeners who are not on crypto Twitter or not tapped into who Zach XBT is, he's a, I would call him a famous crypto sleuth. He has done a massive job, just like thankless job, just crawling through ether scan, tracing, transactions, watching crypto influencers talk a big game about crypto assets while secretly selling them on the other side and then exposing them on crypto Twitter and generating like massive

Starting point is 00:48:32 threads of research. And so I definitely call him a beloved member of the crypto Twitter community, the broader crypto community. Zach XBT was actually the one that exposed who was the, who was the Quadringa X founder that was also. Oh yeah, I don't remember the name. I don't remember the name, but yeah, that was the Canadian exchange. Right, they're the part of the Wonderland, Sifu, zero X-s-sifu, yeah, part of the Wonderland exchange was zero X-sifu, who turned out to be this ex-scammer, and Zach broke

Starting point is 00:49:01 that story, and so he has just done a number of jobs exposing fraud in the crypto space. And so he continues and says, my understanding is that Maki is very wealthy, I am not, he is using his money to try and silence me. I'm asking for your help so that this doesn't happen and the truth survives.

Starting point is 00:49:21 He also created a donation address to assist with legal costs. Basically, the story is that Zach accused Maki Big Brother, whose name is Jeff Hing, of launching over 10 failed pump and dumps and NFT projects, including Treasury Management Services from Formosa Financial. Formosa Financial co-founder George H withdrew 22,000 ether from the project's treasury wallet in June of 2018. And then all of this data, based on blockchain data, Zach XPD, concluded that these were Mocky, addresses. So Zach XPT blames Jeff Huang for draining of the funds as the eth inflows a private round funds into the multisig before the two 11,000 ether withdrawals were

Starting point is 00:50:01 made by both Jeff and George in June 22nd, 2018. Basically, Zach traced a lot of fraud back to Maki Big Brother. And then Maki Big Brother has sued him for defamation. And so I will say everyone gets their day in court. Maki Big Brother gets his day in court. He is suing Zach because he would like to clear his name from the record and say that he is, this is, none of this has happened. What Zach XVT is not correct. What Zach is claiming is not correct. And so he would like to have his name cleared because Zach is wrong.

Starting point is 00:50:35 And Zach, who published this article, is saying, hey, I am right. I also need help defending myself in court. And since Zach is so beloved by the broader crypto world, over a million dollars has been sent to the Zach XBT donation address. The last I checked it was over a million dollars. And so crypto Twitter has absolutely risen to the occasion to defend Zach XBT from Maki and kind of judged Maki is guilty, at least collectively, just because Zach's prowess in the crypto Twitter field is just so strong.

Starting point is 00:51:10 Anthony, what's your summation of all these events and what's your take? I mean, I think you summarized it all very well there. You gave all the relevant background. I will say that I consider Zach, for those who don't know, to be like Crypto's Batman, but he's not a billionaire, unfortunately. So he obviously had to set up this donation address, and obviously Crypto Twitter came out or Crypto people came out and donated to him and stood behind him.

Starting point is 00:51:35 I am not going to, you know, obviously say that Marky Big Brother is guilty or not, because I don't want to get sued. But the thing about this, suit is that what happens is there's a period of discovery and what that means is that everything's going to come out into the open about what Maki

Starting point is 00:51:53 wants to actually defend against and what Zach has accused Maki of. Now, if Zach is right and everything that he's accused Maki of is correct, then Maki is just opening himself up to lawsuits from other people that will now have all this evidence to go

Starting point is 00:52:09 after him with. So I don't know if this lawsuit is actually going to continue for that long. Maybe he thought that Zach wouldn't be able to defend himself and Zach would just basically cave and apologize to Marky because Zach has actually issued a public apology before to Ran Nu. I don't know how to say his last name. But he's pretty big in the Crypto-R-Man. Yeah, yeah. So he has actually issued an apology before because I believe Crypto-Raman or whatever his name was going to sue Zach. But this time around, Zach either wrongly or rightly feels he has a good enough defense and good enough kind of evidence here to to defend himself

Starting point is 00:52:46 against against maki so maybe maki miscalculated here maybe he will withdraw the suit but yeah it's great to see crypto to come out with huge support for zach and i think obviously if zach needs more money if he exhaust existing funds people are going to come out and help him with it anyway because he has done a lot of great a good work for crypto and billing scammers and grifters at great personal risk because he's not really an anon, right? People know who he is now. He started off anon, but then he was traced down, and obviously you can't put that back in the bottle once it's out.

Starting point is 00:53:20 So, yeah, he does this at great personal risk, and it's a thankless job, as you said, because, yeah, okay, he's gotten some donations from people here and there, but the risk that he takes on is huge. I can't even overstate how big the risk is, because if he goes after the wrong person, you know, that he's probably a scammer but is a bit crazy they could physically harm him not just sue him right they could be physical kind of violence involved here for him or his family so so yeah it's it's great

Starting point is 00:53:49 personal risk but it's it is a duty that needs to be done because there are so many scammers and grifted just just get away with things in crypto that we do need a batman at the end of the day yeah 100% and if you've been following zach's twitter account he has already published the death threats that he has gotten just from around the space and so this is this is not speculation this is a reality and I will say that even in the circumstance where Maki is correct and he was not doing the things that Zach believes that he was doing, I think still the public signaling from crypto Twitter of sending Zach over a million dollars to help pay for the suit is important because even if Zach gets this one wrong in that particular version of the universe, we still want Zach to do

Starting point is 00:54:31 the stuff he's doing because his track record is so strong. And so like we still want Zach around. I think we want to support him. Bankless, we sent him $25,000 just to help support him and kind of wrote a thread to talk about why we were doing this. And so, like, yeah, even in the event that, like, Zach misses one or two every now and then, like on net, oh, my gosh, he's such a valuable resource for the crypto world. So, again, all of these links are in the show notes, including the donation address for Zach XPT if you feel compelled to donate to Zach's defense.

Starting point is 00:55:04 Okay, all right, that was all of the big news. the week coming out next we got the three arrows goose gets sold for how much i will tell you and then there's nike's nftt platform dot swish continues to grow even though no one in crypto twitter seems to care metamask is going cross-chain we'll talk about that and more but first a moment to talk about these fantastic sponsors that make this show possible metamask has something new introducing metamask portfolio metamask portfolio is the best way to view your crypto portfolio from a holistic level see everything across all the chains all at once in your portfolio metamask The MetaMask will report the aggregate value of all the assets in your MetaMask wallets,

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Starting point is 00:56:43 app experience, but also the Ambire mobile wallet is coming soon for both iOS and Android. And if you want to be a beta tester, you can sign up at ambire.com slash app. And since you stay to the very end of this ad read, you should know that Ambire is air dropping its wallet token to early users for simply just using the wallet. So if you want to get started with the Ambire, all the last. links that you need are in the show notes. Is it a bull market? Is it a bear market? Or is it a goose market? Because apparently, you like that one, apparently it is a goose market because the goose, which is a ringer, one of the more famous art block collections that famously Three Eros Capitals Starry Night Fund

Starting point is 00:57:22 bought at the absolute top of the NFT market has been sold for $5.4 million. $10. Sue and Kyle, Suzu and Kyle Davis, of course, purchased The Goose. This ringer is known as the goose in August 2021 for 1,800 ether, about $5.8 million. And so I think the value of the goose in ether terms has almost tripled. August 2021, ether was definitely around high three to low $4,000. So $5.48 million when they bought it sold just now for $5.4 million. It was estimated to sell for $2.23 million. So basically double the estimation. And it got, oh, it got sold to Punk 6529, previous podcast guests and famous NFT

Starting point is 00:58:10 bull. Anthony, what's your take on the story? Yeah, I mean, I don't follow the NFT space too closely, and I don't think I'm someone that gets it. I mean, I get collectibles. I get spending lots of money on things like this, but I don't know. it never really clicked me like i look at this and i don't really feel anything it doesn't say anything to me i mean i see the goose obviously but it doesn't say anything to me there's no kind of excitement for me about this

Starting point is 00:58:39 it's not something that i would even buy for like ten dollars right um like that's just but that's just me because i have other things that obviously i'll you know i spend money my my money on that that are important to me but i think what this says is really that nfts are here to stay given even though 99% of them just trash, right, and it were created for no reason for money grabs. But the NFTs that survive and that continue to thrive and continue to hold their value, it's just going to really reflect the art market. And the art market has existed for thousands of years. And it's going to be a new cultural zeitgeist, I think. But it's going to take a while to play out. It's something that's going to happen overnight. DC investor talks about this a lot. He's big into NFTs.

Starting point is 00:59:24 He talks a lot about how this is like a multi-decade thing. This is not something that that's going to happen overnight. And the things that survive for that long, you know, that's the typical thing with art. If it retains its value and stays in the cultural zeitgeist for decades, centuries, then it is incredibly important and incredibly valuable just because of that alone, let alone all the other reasons why. So I think that maybe ringers is that, right? Maybe in 10 years, this goose is selling for like $50 million. Who knows, right? So I think that people are obviously speculating on which ones are going to survive and which ones are going to thrive and be culturally relevant going forward.

Starting point is 00:59:59 But yeah, me personally, I'm, uh, it's not something, it's not something for me. It's not my, my jam. Yeah, I, I've, I agree with you. I've, I've never really felt compelled to, by the R-Blocks movement. I mean, I think they're cool, but they're, they're priced to interest a person that is just, you know, beyond me. Um, but regardless, I will say that like a ringer, the ringer, this is now the ringer. There's the ringer collection.

Starting point is 01:00:25 I think there's, it's like a 10,000 art block. collection. It might be a different number, but it's like that. This is the ringer. And so like there's definitely a premium because it's the goose. It actually looks like something. There's also a moose. I think DC investor owns the moose. But like there's like art blocks or these like ringers that look like animals. And so they have a premium to them. But the goose is famous because of Furo's capital. Like they bought it because it was the goose and then they got liquidated because they spent, you know, money at the top. But so like this has like a legacy to it. But having a ringer be bought at $5.4 million in the middle of a bear market, I think absolutely

Starting point is 01:01:03 cements art blocks and things like this as valuable. Like these things aren't going to zero, there's always going to be a market for these. When the precedent is set that in a bear market, something will be bought for a $5.4 million. That's the culture I was kind of talking about, right? That's the story. Like the things that tell stories are usually things that are very valuable. but you know it depends on what story you resonate with you know what story resonates with a large crowd stuff like that so for for me for me personally you know i put value in things that obviously i personally experienced and like trading cards for example that i collected as a kid they're very valuable to me or in-game items when i was playing online games things like that those things

Starting point is 01:01:45 more valuable to me but other people who are into nfts want to own the culturally culturally relevant pieces and the things with with interesting stories behind them, then yeah, I totally get why someone would go for something like the goose here. But yeah, it speaks to, I think, the different kind of,

Starting point is 01:02:02 very different subjectivity there is in the NFT kind of market. Yeah, big agree, yeah. Okay, so moving on into dot swoosh. We covered this a little bit over a month ago, maybe five or six months ago or weeks ago.

Starting point is 01:02:15 DotSwitch is Nike's NFT platform. I think it's a playoff of dot-eath, but they have dot swish. So the headline here is that Fortnite and Nike have teamed up on NFT-gated drops. And so users can link their epic games and Nike.Swish account to get achievement NFTs that grant them access to first access to future dot swoosh AirMax virtual collections. And so definitely going to categorize this thing in NFTs and things that are meant for specific people who really care about Nike and that whole. like sneaker side of the world. But I think the interesting thing here is that

Starting point is 01:02:54 Fortnite is now being plugged into the dot swoosh ecosystem. And so achievements in the Fortnite universe are tied to their dot swish profile. Cannot be traded, sold, or exchanged. And so this is just the dot switch platform growing. The dot switch platform has attracted a lot of users. And these are all

Starting point is 01:03:13 not anyone that you would find on crypto Twitter or inside of Discord or in your telegrams or talking about the goose. These are completely adjacent communities that are, I'm assuming, enjoying their dot-swish virtual collection achievement experience. And the fact that this is like growing, this is Nike and Epic Games

Starting point is 01:03:36 are doing stuff with NFTs, and NFT-Gated drops, they've created their own words that aren't NFTs that are just like more suitable to them. They're not using crypto transactions. You can buy these things with your credit card. But all of this is totally happening

Starting point is 01:03:52 in a very crypto-native way. Anthony, do you know what chain this is on? I know nothing about this. I think this is like my peak boomer moment because I'm looking at this and I'm like, what's going on? I mean, obviously I know who Nike and Epic Games are. I know about Fortnite, but I'd look at this

Starting point is 01:04:09 and I'm like, wow, maybe 10 years ago, this would have been a thing that I looked at, but now I'm looking at it being like, I understand obviously why a lot of people are excited about this and why it appeals to us. certain crowd. But yeah, I'm Max Boomer when it comes to this. Well, that's the point, right? Like, it doesn't have to be for us. We are allowed to have products on our chains that are meant for other people, non-crypto people. But like, I think this might be on the Polygon POS chain.

Starting point is 01:04:34 This is on Polygon POS chain. This is on the POS chain. The fact that crypto people don't know that is hilarious. This is on the same chain that we do all of our D-Fi things on. Yeah, yeah. I mean, it's bullish for adoption, that's for sure. And I, I've long said that there's going to be a lot of things happening in crypto that I'm going to have no idea about and I'm not going to really be following closely, but are going to bring in a lot of users. Okay, moving on back into the crypto-native things. Metamask has integrated Connected network. And so here, what is Connected is basically a cross-roll-up bridge. It's a bridging service between various roll-ups around the Ethereum ecosystem.

Starting point is 01:05:13 So inside of Metamask portfolio app and the Metamask browser extension users can now bridge. And so there's a bridge part of Metamask. Connected enables trust minimized. What does that mean? One that doesn't rely on external validators, so should be more secure. Trust, minimized communication between chains and layer twos. So, ETH, main net, polygon, oh, even B&B chain, optimism, and arbitrum. And so the reasons why Metamask chose Connected, they cited recent and regular audits of the deployed code contract,

Starting point is 01:05:44 battle tested with time and volume on multiple main nets, high liquidity and reliability, robust handling of failure cases. So this is a pretty cool partnership. Metamask, of course, is a sponsor of bankless and also disclaimer. Both Ryan and I, and I think also Anthony are all investors, angel investors, into Connects network. Anthony, what's your take here? So Connects, obviously, as you mentioned, is like cross-chain, cross-L2 bridge. But I think what they want to do and want to evolve into and want to be more involved with

Starting point is 01:06:14 is doing kind of like cross-chain native applications. So basically, applications that are made are built with Connects that allow for native cross-chain things to happen. So not just the bridge between chains, but having apps that actually are deployed and kind of work on multiple chains and have that interoperability going on kind of between them. So it's cool to see Metamast supporting it because it means that any apps that get built using Connects technology, any cross-chain apps that is powered by it will also be available to Metamask users. and MetaMask as a wallet has more users than I think any wallet in the ecosystem still by far. In the bull market, they reported I think 20 million monthly active users, which was pretty big.

Starting point is 01:06:57 Yeah, yeah, right. But I think that's obviously come down a lot recently with the bear market, but at the same time, they have a huge market. So getting Connects integrated with that is obviously a huge win for Connected. And MetaMask already natively supports any EVM chain that you want to connect to, which is the majority of the ones that actually have anything happening on them. So, yeah, it's a partnership that I think is really, really bullish. Yeah, I remember during our episode with Olaf Carlson Wee from Polly Chain, a line he said that stood out to us was that it's all chains and bridges,

Starting point is 01:07:29 as in like even bridges are also chains themselves, as in like they also have state and apps on them, which I thought was an interesting perspective. Maybe state's not correct, but the idea remains that just like, you, bridges do very similar things to change themselves. And so that is, I think, with the world that connects is stepping into. Let's see. Do you have anything you want to say on that?

Starting point is 01:07:53 Do you want me to move on? I mean, I just kind of like generally agree, but it's kind of remains to be seeing how it's going to play out. I think that with the prevalence of all these new app-specific L-2s, the cross-l-chain thing is going to become more prevalent. But it remains to be seen if people actually want to use cross-es. chain native apps or they just want to use their apps on the different chains and the different app chains and just bridge between them.

Starting point is 01:08:20 Bankless Nation coming up next, we got questions from the nation. We got some questions I pulled out specifically to be more relevant for Anthony here. So we're going to go back and forth on these questions. Then we got some hot takes from crypto Twitter. And then, of course, we're going to finish up with what David and Anthony are bullish on. So we're going to get to all of those things and more. But first a moment to talk about some of these fantastic sponsors that make this show possible. You know Uniswap.

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Starting point is 01:10:22 Secure, fast, cheap, and friction-free. And we're back with questions from the nation. This one coming in from gleeman.eath. Anthony, this one I've specifically picked out for you. What Alt Layer 1s are most likely to pivot into being Layer 2s? This is a question I thought of while making sad trombone noises at my algo and atom bags. Anthony, what's your perspective here? So I have a lot of thoughts on this topic.

Starting point is 01:10:49 I know you do. I will try not to rant on too much about it. I think just at a high level, a lot of these L1s, they have founders who are very egotistical. And because of that, they really want to make their L1 be this thing, right? They want to grow this L1. They want to grow this ecosystem to be this big thing. They obviously want to grow it to be as big as something like Ethereum. And they have a lot of vested emotional interest in that happening. Now, if they were to pivot that L1 to an Ethereum L2, what they're doing is admitting defeat, right?

Starting point is 01:11:22 And I think you always have to look at the human element here, because this would be like someone who creates a company to compete with a big company, right? And then they get acquired by said company. Even though they stayed it all along the way that they wanted to compete with their company. wanted to kill that company. They wanted to be bigger than that company. And then in the end, they're just like, oh, well, we failed at that. We'll just get acquired or we'll kind of just pivot to being friendly with them or whatever it is, right? So I think that that's a huge disincentive and a huge point against a lot of these alt-l-1s becoming L-2s on Ethereum. Another point is that these old-tale ones, most of them don't have much activity to begin with. So them pivoting to becoming an L2

Starting point is 01:12:03 is probably not going to help with that. I think it would actually be worse for them because I think it would just show a signal that their weak ecosystems and they need to actually become an L2 on Ethereum to even have a chance of growing an ecosystem. And then they just have to compete with the existing L2s on Ethereum which obviously have all the favor,

Starting point is 01:12:22 have all the network effect, have a lot of goodwill within the community already there. And on top of that as well, they have their own native tokens where people believe that the value of these tokens, where people believe that the value of these tokens, for better or worse, and this is not something I believe, but people believe this, that the value of these L1 tokens comes from,

Starting point is 01:12:39 obviously, it's used as a staking token, but also it's used as a fee token. So would they pivot to being an L2 and then still use that token to pay for fees, or would they change to something like ETH? I think still using the token to pay for fees would hamper adoption, because a lot of people don't want to buy those tokens just to interact with the chain. And if they're coming in from ETH, they have, if they're coming from Ethereum, they have ETH. So you're going to have to accept ETH to be used as fees.

Starting point is 01:13:04 ETH is a better unit of account. It's much more liquid. It's a better money, right? So that's going to be the asset that dominates your ecosystem. So what ends up happening to your token? Well, you now have to pivot that token to being something else. Maybe it's a governance token. Maybe it's a staking token for sequences to accrue value there. But in saying all that, I don't believe that most of a token's value comes from its uses like paying fees. I believe most of a token's value, especially when it gets to like Ethan BTC's level comes from its moniness and its store of value, whereas a token can be equity like where it will accrue dividends, for example, from like from fees being paid on the network and that fear of when you're going to token holders,

Starting point is 01:13:45 but that's very different from the token accruing value because it is a fee token in of itself. So those are just some of the things. As I said, I don't want to go on too long about this, but those are just some of the things that I think may mean that pretty much like the vast majority of L1s will probably never become L2s themselves, but they may get forked. You know, there is already a project working on a falna, a fork of Solana, as an L2 on top of Ethereum. So maybe they get forked and turn into L2s by other people, but them actually pivoting themselves. Yeah, it remains to be seen.

Starting point is 01:14:16 Maybe one or two do it. I'm not sure which ones those would be. I don't think it's, unfortunately, I don't think it's going to be Cosmos because they have a pretty different ecosystem to other L-1s where the Cosmos thing is like the Cosmos like hub, right? And then you've got these spokes around. So you would have to coordinate the spokes to also integrate with it. It just wouldn't really work. And Al-Garan, I mean, admittedly, I don't know that much about Al-Garand, but it doesn't strike me as one that would actually pivot to being an L-2 either. So yeah, those are some of the reasons why I think for the vast majority, it's not going to happen.

Starting point is 01:14:49 Yeah, I agree with most everything that you said. And I agree in some sort of, circumstances with everything that you said. And then there are other circumstances, which I think the opposite is a worthy case to consider. I do agree with you that the ego and primacy of some layer ones gets in the way of them becoming layer two's. I think if you can name the founder of a layer one and you follow them on crypto Twitter and follow their tweets, that founder's not going to roll their thing into a layer two because there's there's like ego and audacity involved, right? Like layer ones want to be layer ones. They want to exist in of their own. right? So the major layer ones, the mayor players, right? The major alt layer ones,

Starting point is 01:15:30 I don't think we would consider it. I don't think we'll see those rolling up into layer two's because like what you're saying, it's admitting defeat. If you are a layer one, your asset is competing in the world of money, or at least trying to. And if you become a layer two, you are no longer competing in the world of money, right? You are, yeah, you're waving the flag and saying like, hey, the Ethereum ecosystem, the Peloton of the Ethereum ecosystem just going to outrace me and I totally understand that. Like a lot of layer, layer one founders The valuations depend on that not being true. Now, on the other side of things, there are layer one chains that don't have that demand or desire to be a layer one money.

Starting point is 01:16:07 And they are meant to do certain things that aren't necessarily be Ethereum killers, right? More like chain specific, more ecosystem, unique layer ones that, like, again, the founders aren't so egotistical. They are willing to work inside of a Peloton, but perhaps going inside. And what is a Peloton? A Peloton is like the line of bicyclists who are all in a line and they're all drafting off of each other. And that's my kind of vision for the layer two ecosystem. And people that want to join the herd, join the ecosystem, I think,

Starting point is 01:16:37 and might be compelled by all of the economic activity. They might be compelled to do that. And I don't want to only make it an egotistical thing. But also it's just like it is a tribal thing. And so if you are a crypto tribe and your tribe is centered around a layer one, that layer one pivoting into a layer two is against the social contract of that one ecosystem. Like they don't want to violate that social contract. That layer one tribe wants to be a layer one tribe.

Starting point is 01:17:03 And so making the choice to become a layer two is against kind of probably the will of the community. And also just like, go before it. Yeah. I was just on that point, the culture, right? And the reason why I bring up the egotistical founders is because if you have a founder that's egotistical, that's the culture that's set, right? That's the culture that the community adopts. That's the tribalism that they adopt.

Starting point is 01:17:23 And I think a good analogy here just to show what we mean by, you know, the how hard it would be for an L1 to pivot to an L2 as well is can you imagine, like, let's use the analogy of different nation states on earth, right? Could you imagine China becoming an ally with the US, right? And then the US effectively not owning China, but like China just admitting defeat to the US. Imagine the implications of that, right? And this is on obviously the extreme grand scale and grand side of things. But this is how to think about it, where you have your own.

Starting point is 01:17:53 culture, you have your own social contracts, you have your own ecosystem, your own community, your own tribe, and then you basically say, well, okay, we're not going to be our own thing anymore, we're going to get, you know, and we're going to get here. And we've seen this play out in real life for tens of thousands of years, but just by force, where countries invade other countries, they go there and they're like, okay, well, you're not part of our country. But the integration is very hard because there's different cultures, right? And there's different, there's different people that have different belief systems and different things like that. And that's why you've seen all the problems in the world around multiculturalism, right?

Starting point is 01:18:29 And I'm all for multiculturalism. I mean, I live in Australia and we're very multicultural here. But a lot of problems stem from that because of that clashing of cultures, because of that clashing of belief systems and social contracts and culture over thousands of years. So when you take that as an analogy and apply it to crypto, it's the same thing. There's different communities, not at the same scale. of course, but different communities, belief systems, you know, the Salana, for example, the Salana ecosystem has a very different belief system about what blockchain should be

Starting point is 01:18:57 to what Ethereum does. It's the polar opposite. Salana believes in the monolithic vision. Ethereum believes in the modular vision. You can't, you couldn't get Salana to integrate with the theory. Exactly, exactly. And if you try to, and if you try to cross-pollinate, it may work, but it's not going to work at scale, right? There may be some people that can get along with each other, but it's very different because you're going to have this tug-of-war going on, with the Salana community being like, no, you know, this is how it should be done. You know, this is the monolithic approach. We believe in this approach.

Starting point is 01:19:26 You can have the Ethereum people being like, no, this is how it should be done. So keeping those things separate is much better than putting them together and then progress being halted, basically, because could you imagine the Ethereum governance process being weighed down by people who just don't align at all with Ethereum values and what Ethereum wants to be? So, yeah, that's how I think about this thing. And this is like level 10 crypto stuff. Whenever we talk about this stuff, I always feel like I lose some people because it's such an intricate thing and such a nuanced thing, but this is what powers blockchain at the end of the

Starting point is 01:19:53 day. This is what forms strong chains. This is why Ethereum and Bitcoin, you know, given credit there, are so strong because they have this. They have these strong social layers. They have these strong kind of things. And these other ecosystems, they're always trying to grow. They're always trying to break out. They're always trying to form their own. But it's very hard, right? It is very hard and most will fail. Yeah. So going back to the original question from Gleeman, what alt layer ones are most likely to pivot to being layer two's. I think the answer is there are some that are more likely than others. There's the specifics, you know, impossible to tell.

Starting point is 01:20:27 I will say that I have a meeting on my calendar with a layer one leader, call it, that is interested in asking that question of like, what does it mean and what does it take and what are the pros and cons of pivoting to a layer two? So that conversation is not irrelevant. Like some layer ones are perhaps interested in joining the herd. and I will leave all of that alpha at that. All right, takes from crypto Twitter. Of course, we're going to start with Eric Wall.

Starting point is 01:20:52 He says the switch of opinion from a layer two must be EVM compatible or it's DOA dead on arrival to actually a layer two that doesn't take this chance to get far away from the EVM is kind of missing an opportunity. This is kind of a hard tweet to read. But he's saying that that take happened fast within me with no notice. and I just woke up and one day felt different. So let me just re-agurgitate, reiterate this take again. Eric Wall is saying that once upon a time,

Starting point is 01:21:21 he thought that all layer twos must be EVM compatible or else it's just not going to work. And then he switched his opinion to actually a layer two does need to take the chance of getting away from the EVM. And if they don't, it's missing an opportunity in that he switched his opinions very fast, very fast with no notice. He just woke up and one day felt different. So Anthony, again, we were in like level eight, nine or ten of Twitter,

Starting point is 01:21:43 crypto, Twitter terminology and conversation. But what's your take here? The conversation of like do layer two, should they just be as EVM equivalent as possible, or should they take a chance and be very, very different? And I'll just add one little bit more kind of context. I would say things like StarkNet are a layer two on Ethereum that is extremely different and extremely specified and away from the EVM. Also things like Aztec, very different, very unique and separated from the EVM.

Starting point is 01:22:12 And then you have optimism, which is like maximally EVM equivalent, arbitram to polygon, pretty similar. And so there's a different strategy here. So what's your take on these two perspectives? So my take is actually Eric's next tweet where he said the correct take is probably, let's try both and let the market decide. This is what I have always said. I've always said that the EVM compatible stuff is fine. It is obviously, it obviously makes a lot of sense for teams to do this because the EVM has a very strong network effect and it's very easy to. integrate with all of the existing infrastructure that exist, such as wallets and stuff like that.

Starting point is 01:22:48 But at the same time, there is an opportunity with L2s to do non-AVM stuff because you do not need to follow the rules of the Ethereum Layer 1 protocol. You only need to follow those rules to post your proofs and data down to it. But anything else, you can do whatever you want, right? You can build whatever construction you want. And as you said, Starknet is doing, Starkway is doing this with Starknet. AsTech is doing this with their new privacy. roll-up, which they've said and stated numerous times, that they couldn't actually do what they

Starting point is 01:23:17 wanted to do using the EVM. They have to build it from scratch. So I am all in favor of trying both and letting the market decide. And in saying that, I think the market so far has decided that the EVM stuff is very valuable, right? It's very valid. And not just within the L2 space, but within the L1 space as well, because the alt-L-1s that actually had any kind of economic activity, most of them were EVM-compatible, right? Like your Aval, subchain that was even compatible, your Phantom, a few other things. I think Salana, during the bull market at least, was not EVM and had a bit of activity there for a little bit, but hasn't really kept that, but neither have any of the other L1s to be fair, whereas the L2 EVMs

Starting point is 01:23:56 have gotten, you know, pretty much most of the activity. Starknet's going, you know, it's going slower because it doesn't have that existing network effect. It needs to build it. And then obviously Aztec will have that same kind of issue there. But at the end of the day, we're still very early in the game. There's still millions and tens of millions, hundreds of millions of people to onboard. So let's, you know, build those things. Let's see what people want to use, what they find to be most user-friendly, what they find to be the most value. And that's not dictate things. And I'd be probably like a little bit bearish on L2s if it was just EVM stuff. I would kind of be like, well, this is a missed opportunity here. We need to do more than that.

Starting point is 01:24:33 And, you know, it's not just starkware and Aztec doing it either. It's arbitram actually doing it as well with their stylus thing where essentially you can code up smart contracts in non-solidity languages. So basically any language that you want to use. So that's another part of it as well that plays into this, not limiting people to solidity, but letting them code their smart contracts in other languages. So yeah, I mean, as I said, let's let the market decide at the end of the day. Yeah, and it's also not just completely a binary choice of being EVM equivalent or very, very differentiated. I think ZK Sync is mostly EVM compatible, but there are differences that, actually do separate it.

Starting point is 01:25:10 And so it's nowhere near the specific specified end of the spectrum like Aztec or Starknet, but it's also not EVM equivalent like arbitral or optimism. It's mostly EVM compatible except for a few small nuances. And then the ZK Sync gambit is that those small changes produced outside, outsized benefits with what they can do on their chain. Like account abstraction, for example. Account abstraction, not EVM equivalent, immense benefits, right?

Starting point is 01:25:37 And so that's why platforms like ZK Sync and other ZK roll-ups begin with account abstraction out of the gate because people have elected that that choice is just a smart choice. All right, next take. This is from nixo.eath. And so this is retweeting a picture coming from the East take your subreddit. And the title of this post on Reddit is, Had enough, exited my validator.

Starting point is 01:26:00 And then continues and says, Sorry, the APY is way too low. Heath continually declining in price. And exchanges are being shut down or charging a fortune and fees. At this rate, crypto will be a back alley, a relic. I'd rather put the money into assets that appreciate and generate a decent return. We'd all love that. When crypto is this difficult to use, it will never see wide adoption.

Starting point is 01:26:21 And regardless the API is incredibly low for the effort and risk required. See ya. So validators exiting the service. And then Nixo retweets this picture and says, this is healthy in working as intended. The Ethereum proof of say consensus mechanism doesn't overpay for security like proof of work did. If there are more than enough validators, low yield encourages you to put your assets elsewhere. Validators are in service of Ethereum, not the other way around.

Starting point is 01:26:47 Anthony, help me interpret this. Yeah, so I gave a pretty long kind of take on this on the refuel the other day, but I can kind of condense it down a little bit just to give people the high level here. So firstly, the post that Nixor has shared, there's a lot going on in that post. It just seems like a very angry person. They're not just angry about, you know, eat staking. they're angry about other things and it's funny because I think this was posted like at the bottom before we pumped or something or the local bottom before we pumped so another another funny thing but generally I guess the point here is that the issuance curve and the APR of each staking is is variable right there's two sets of rewards there's consent to layer rewards and there's execution layer rewards they're both variable more validators come online less consensus layer rewards for for everyone and less execution layer rewards. for everyone assuming the same demand.

Starting point is 01:27:40 Now, executional air rewards are incredibly variable because they rely on tips and MEV revenue. So if gas is at 100 way, you're going to be making a lot more as a validator than if gas is at 20 way, right? But assuming same demand of 20 way, then as more validators come online, that APR is going to drop as well, because it needs to be spread out among those validators. So it remains to be seen at what point or what kind of, I guess, yield. percentage, people stop kind of crowding into eat staking. Like, is it 3%? Is it 4%? Right? I think if you do

Starting point is 01:28:15 like a backward-looking APR over 30 days, it's still like 5.5%, taking daily and weekly APR is kind of useless. Even monthly is not great. So, you know, because it's a yearly thing, right? You're extrapolating out a yearly kind of APR based on just like a day, which I don't think is very, very accurate. But it remains to be seen where people are going to stop kind of plowing into staking because it just doesn't become worth it. But that's the thing. If they leave, if people say, oh, crap, the yield's so low, I'm going to leave, well, okay, then it'll reach an equilibrium where people will be like, well, okay, I'm not going to leave because the yield's actually good now, because the yield goes up for everyone, assuming same execution layer rewards, because the contentious layer

Starting point is 01:28:53 rewards have to pay to less people, and obviously the yield goes up for everyone. So it's a balancing act. It's designed to naturally reach an equilibrium based on supply and demand dynamics and based on obviously preferences. Where there is a bit of a wrench that gets thrown into this is the extra yield you can get on things like LSTs. So for example, people have been talking about eigenlayer and saying that, okay, well, if the vanilla yield you're getting from the beacon chain is 1%, right, but when you restake and eigenlayer and they're paying 4%, then your yield is like 5%. Right. It remains to be seen if that yield is ETH denominated, but let's assume it is. Then you've gotten to 5%, but you're only getting 1% from the beacon chain. So,

Starting point is 01:29:34 that throws a wrench in things, and that might be something to worry about later down the line when it comes to Ethereum's consensus. And this is actually the main concern people bring up around eigenlayer. But generally, it's a balancing act, as I said. It's designed to reach an equilibrium. All right, coming up, last take of the week, this one's a short one. This is Chris Bruniske retweeting one of his own tweets, and he goes, his initial tweet is, when it feels like it'll never end, it ends. And I'm pretty sure he's talking about the regulatory fud, which just felt like an onslaught for like almost a month straight. And then he retweets it and goes, and so it begins.

Starting point is 01:30:10 I think Chris is just calling for a pivot in sentiment, which I definitely felt this week. Now it's only one week old. Maybe Gary Gensler's got another shoe to drop or something. But I think what Chris is really just saying here is, man, this storm felt really dark, but the night is darkest before the dawn. And all of a sudden you just need one or a few reasons to be bullish,

Starting point is 01:30:31 and all of a sudden it begins. Any takes here? I mean, it's amazing how fast crypto sentiment changes just generally, right? And I think that because of the speed at which it can change, it catches a lot of people off guard. So I don't think that the sentiment change of the last week is going to lead us to a new kind of ball market anytime soon. I still think it's going to take a little while for us to get to a full-blown crypto ball market from here. But at the same time, everyone's now like, okay, well, was that it for the regulatory stuff?

Starting point is 01:30:58 Are we actually entering an error of positive outside or external crypto institutions and people being positive on crypto? That's a speculation right now. I think we might be. As I said, I did put out my own tweet where I said it felt like the regulatory fud bottom was in because it felt like they're overstepped. But it remains to be seen. I don't like taking short-term things and extrapolating them out to the long term. I don't like looking at like one week's worth of data and saying, oh, okay, well, that means the next. next year is going to be amazing because that's how you very quickly, especially in markets and

Starting point is 01:31:32 investing, get yourself wrecked. So I cautiously optimistic. I see this. I'm okay, this is a positive change. This does feel like a wind change, but let's see if it actually continues. Let's see if it's not just something that happened and that's going to be short-lived and then we just straight back to the, you know, what we were at before. Let's wait and see and then, you know, we'll see how it all plays out. But this is also in when it comes to investing, this is where the maximum alpha comes from. If you can accurately predict the wind change or the sentiment change and accurately predict the timing of it, you can make a lot of money because you place your bets at the right time. But most people don't do that. They wait for confirmation, just like I was saying, you know,

Starting point is 01:32:10 you wait for confirmation. But at the point of confirmation, you might be buying an asset two or three times what it was at the point of a wind change. So it's like the risk reward curve just gets, you know, better and better as you go up. But the, sorry, the risk gets lower and lower. The reward gets lower and lower as you get closer to the wind, you know, to confirming that wind change rather than betting on it when the risk is still high, right? All right, Sazel, closing out this weekly roll up. And once again, thank you so much for coming in and substitute teaching. Last question for you. Where do you bullish on? Oh, man. Like, Eath, of course, obviously.

Starting point is 01:32:47 Like, that's not even a question. But there's generally I am, uh, but lately becoming, uh, very bullish on like just the app specific L2s just because they're finally becoming a thing, right? We didn't talk about it, but Zora Chain launched, I think today. Oh, I didn't have that in the agenda. What's up with that? Well, we did an entire podcast with that with Jacob from Zora. So, sorry, yeah. News of the week, Zora launches an OPE stack chain.

Starting point is 01:33:13 Sorry for not including that in the weekly roll-up. Yeah, yeah. So Zora Chain, Avo, which is an options. Chain built an OPE stack has been getting a lot of traction lately. So just these kind of app L2s I'm getting more and more bullish on because they're actually getting traction. They're actually going live. And I think that that's going to be a trend over the next few months at least. But then the pendulum might swing back to generalized L2s once base launches because that's obviously going to be a huge launch and going to bring in a ton of new people.

Starting point is 01:33:43 So yeah, that's kind of what I'm bullish on. But what about you? What are you bullish on? I love that you've learned that that's what you have. Can they roll up? You've done this enough times. I'm kind of back to the conversation we were just having, which is that sometimes bullish sentiment begets bullish sentiment, which is what you were saying. Sometimes the wins just change.

Starting point is 01:34:02 And I remember going through the 2018 to 2020 bear market thinking like, man, what is it going to take to get us out of this? We are so deep in this hole. And all of a sudden, crypto Twitter just woke up bullish one day. And I know you always tweet woke up bullish. One day the entire industry just decides to be bullish. Like, we're just done being bearish. And all of a sudden, the, I don't know, call it the bare colored glasses turns into bowl colored glasses.

Starting point is 01:34:30 And you see that, like, okay, we dumped off of the SEC news. But then we just rallied after, right after it, right? And so, like, what is, how is news impacting markets? Like, well, we saw a 15% rise in Bitcoin in the last week or so. And so we have capacity to go up. And I think as soon as the wins change, as soon as bullish sentiment comes, we can look back at the last year of innovation, all of the progress of layer twos, including the layer two that don't have tokens, you know, Koff, Zora network, the brand new one. And we can look back at all the things that we've built and be like, I'm not taking crazy pills. All of that is really bullish.

Starting point is 01:35:12 I would like to get exposure to that before, like, before anyone else. and all of a sudden, like, the desperation turns into hunger and, like, good hunger, right? bullish hunger. And so I don't know if this is that. Like you said, like, no one really knows when the winds change. We could be back to being bearish next week. But I do think that the time is running out of there's like there. I had, oh my gosh, and I know you had this too.

Starting point is 01:35:36 I had so much bullish fatigue at the end of 2021. I was like, I'm just done being bullish. I'm just so tired of this. Like we're talking about the next like Web3 gaming. Ponzi and NFT, like I'm done. And I feel like we're, I don't know if we're at that point now, but I'm kind of done being bearish, right? Like I'm fatigued of being bearish. And I think that works both ways. And so what am I bullish on is I'm bullish on the sparks, this embers of bullish sentiment, be getting further bullish sentiment. And so that's, that's what I'm bullish on.

Starting point is 01:36:10 Yeah, I mean, I agree with all of that. I think that, uh, yeah, I like that sentiment of being sick of the bull market, especially for us, multi-cyclers and being like, we want to break from this, you know, our bear market would be welcomed, even though we kind of forget, I think, how painful bear markets. Yeah, we definitely forget how painful they are, but at the same time, they're a necessary thing, they're a cleansing of the ecosystem, and just like the bear markets are necessary, so are the bull market. So, yeah, even if this wind change takes another 12 months to actually play out and to get us

Starting point is 01:36:39 into a new ball market, if we look back on this in 12 months and we can say, okay, well, that was when it changed. That's when the winds changed. That's when the sentiment changed. And that's what led to where we are today. Who knows? Maybe we will. Maybe we weren't. I'm looking forward to it. Yeah. And maybe one last piece of clarity on this or just commentary. The winds changed very clearly during the last bear market when compound released their governance token. It was the first utterance of governance token that we've ever had. And liquidity mining was a thing, which created yield farming. And that was a very clear moment. It's like, yo, the winds have changed. There are things to be bullish on is also when a national asset was issued like a hey we have a reason to issue tokens and

Starting point is 01:37:19 that was an endogenous factor whereas these this black rock et f f fide fide bullishness on crypto is more of an exogenous factor i do think we need an exogenous factor to truly spark a bull market because what every single bar market that crypto's ever had has become has come from an appetite for tokens an appetite for minting new assets i don't know if we have that yet i'm not sure about that I don't think we have that yet, but I have been saying over the past two weeks, especially that I think that we could potentially be gearing up for a layer two summer in the next 6th or 12 months, where that brings that back. Cheap, you know, places for people to play with.

Starting point is 01:37:57 Tokens will be launched. Base will go live being in a lot of new users. So, yeah, I really do think that we could get a repeat of Defi summer, if the timing's right. I think the timing will probably be right. It just maybe just a little bit more commentary on alpha here. know of at least two startups that definitely was planning on releasing a token last bull market. And then the bear market hit and they were like, we're going to sit on our hands and release our token later. So there is pent up airdrops that people are just waiting for bullish sentiment

Starting point is 01:38:29 to reemerge so that they can release their air drop. And so not only is they're like, okay, once we have a bullish catalyst, we have all these layer twos that can issue tokens. But there were other tokens that were going to be issued a couple years ago that have not yet been issued because people were like, okay, the founders were like, the market's not right. We'll release it in a bull market. And so you know that there's some kindling ready to light a fire when the sentiment, when bullish sentiment because bullish sentiment. Yeah, exactly. Okay. Anthony Sizzano, thank you so much for tapping in. Once again, of course, the daily gway is where you can get your daily dose of Anthony Sazano. 30 minutes every single day is where I get my new.

Starting point is 01:39:09 It's where so many others in the Ethereum ecosystem get their news. You can go to YouTube and type in Daily Gway. I get it on my podcast. Finding the podcast feed for the Daily Gway is a little bit hard, so at me on Twitter I can send it to you. Anthony, any last words about the Daily Gway before we sign off here? I think you covered it quite well. Yeah, if anyone wants to hear me rant about Ethereum every weekday for 30 minutes,

Starting point is 01:39:31 then the Daily Gway is where you will find me. Yeah, and you'll also find him actually on the weekly roll-up twice in July, this time with Ryan because I am taking my first ever vacation ever from Bankless. I think I need one of those. I need one of those. Well, if we're talking about a bull market starting, like I need to take a vacation before that starts because I'm not ready for that. Anyway, so more of Anthony coming, but if you can't wait for Anthony and RSA to have their

Starting point is 01:39:58 first ever weekly roll-up debut, you can go to YouTube and type in the Daily Way. Risks and disclaimers, Bankless Nation, you note the deal. Crypto is risky. D.Fi is risky. You can lose what you put in, but we are headed west. This is the frontier. It's not for everyone, but we are glad you are with us on the bankless journey. Thanks a lot.

Bankless - ROLLUP: What BlackRock's Bitcoin ETF Means For Crypto

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