Bankless - ROLLUP: What Grayscale's Win vs The SEC Means For The Next Bull Market

Episode Date: August 31, 2023

WRU 1st Week Of September ----- 🏹 Airdrop Hunter is HERE, join your first HUNT today https://bankless.cc/JoinYourFirstHUNT  ------ 📣 AAVE V3 is Here! http://app.aave.com/  ------ BANKLESS SPONSOR TOOLS: 🐙KRAKEN | MOST-TRUSTED CRYPTO EXCHANGE https://k.xyz/bankless-pod-q2     ⁠ 🦊METAMASK PORTFOLIO | MANAGE YOUR WEB3 EVERYTHING https://bankless.cc/MetaMask  ⚖️ ARBITRUM | SCALING ETHEREUM https://bankless.cc/Arbitrum  ⁠ 🛞MANTLE | MODULAR LAYER 2 NETWORK https://bankless.cc/Mantle  ⁠ 🦄UNISWAP | ON-CHAIN MARKETPLACE ⁠https://bankless.cc/uniswap    👾STADER LABS | ETHX LIQUID STAKING https://bankless.cc/Stader  ----- TIMESTAMPS & RESOURCES 0:00 Intro 5:24 MARKETS https://pro.kraken.com/app/trade/btc-usd  9:36 Layer 2 Check https://l2beat.com/scaling/summary  13:45 Anthony's Bullish Predictions https://twitter.com/sassal0x/status/1696162071715422442?s=20  32:41 Grayscale Beats the SEC https://www.bankless.com/grayscale-beats-the-sec https://www.docdroid.net/vrehbKf/dc-cir-22-1142-01208547571-0-pdf  36:53 Takes on the Case https://twitter.com/jchervinsky/status/1696544309699363201?s=20  43:27 Are NFTs Securities? https://www.sec.gov/news/press-release/2023-163  45:59 IRS Proposal for Digital Brokers https://home.treasury.gov/news/press-releases/jy1705  49:37 US HOSTILITY TO CRYPTO https://twitter.com/zkmattwyatt/status/1695190244516319564?s=46&t=2ZINVXJQKx6xO_6Wiiu_2g  https://twitter.com/AntonioMJuliano/status/1695160970111300053  54:29 Roman Storm Released on Bail https://twitter.com/brianeklein/status/1694779420731658700?s=20  55:26 Farcaster V3 https://twitter.com/dwr/status/1695187576003645873  57:41 Lido Almost 33% https://twitter.com/RyanSAdams/status/1696220879976284511  1:09:10 AMEX Gives out POAPS https://twitter.com/mamb0san/status/1695458362237034957  1:09:46 X Gets Currency Transmitter License https://twitter.com/BitcoinMagazine/status/1696587745089540494  1:11:47 DCG to Deliver Recoveries https://twitter.com/DCGco/status/1696506972781138275?s=20  1:14:28 Bitboy Crypto Boots Bitboy https://twitter.com/Bitboy_Crypto/status/1696184571279159401?t=R1qQjJ06kpariGkBKzbjrw&s=19  1:17:01 Instadapp Multisig https://twitter.com/Instadapp/status/1696537797916799035?s=20  1:20:56 Questions From the Nation https://discord.com/channels/615592155481767941/1058053004705669211/1145795932575760565  https://discord.com/channels/615592155481767941/1058053004705669211/1146193895345111162  1:31:13 Takes of The Week https://twitter.com/neerajka/status/1346836020927619077?s=46  https://twitter.com/cburniske/status/1695583389167075822?s=20  https://twitter.com/RyanSAdams/status/1696618835518857610?s=20  1:35:29 What Are We Bullish On? 1:39:08 Meme of The Week https://twitter.com/CryptoCred/status/1696041243061420108  1:40:17 Check out The Daily Gwei! 1:42:00 Moment of Zen ------ Not financial or tax advice. See our investment disclosures here: https://www.bankless.com/disclosures⁠  

What reinforces the harvening narrative is the ETF narrative, because if they do get approved, it's going to be relatively close to the harvening. So let's say they get approved in Q1, right? They all just get approved in Q1. It may be later than some people expect, but they all have to get approved together because if they don't, then the SAC opens themselves up to more lawsuits. So that is Q1. And then April 2024 is the harvoning. So you have ETF narrative into harvining narrative, which is going to, in my opinion, and be very bullish for the market generally. And then the flywheel starts from there. Bankless Nation, it is the last week of August.

And it is time for the bankless weekly roll-up I have with me, not David Hoffman today, but maybe the David Hoffman of the Southern Hemisphere. Anthony Sasano from the Daily Gway. Hey, Anthony, how you doing? Hey, Ryan, I'm going good. I've never been called the David Hoffman of the Southern Hemisphere. Are you insulted? Are you complimented? Or is it something in between surprise.

I think that was meant as a compliment, so I'll take it as a compliment. Hopefully bankless listeners will take it as a compliment as well. And of course, Anthony, you've filled in so many times this summer for us as we've been on holidays. David's out at Burning Man. So he's not climbing to a mountain this week. He's out and joining himself at Burning Man. And I have no idea what shenanigans they get up to there. Have you ever had a desire to go to Burning Man, Anthony?

No. If there's anything that is the complete opposite of a desire that I have to do something, that would be Burning Man. It's not my scene at all. I am not about that. But I think it's David's scene, definitely. Yeah, I totally see David fitting in there. But yeah, I'm like you.

It's not my scene. But Anthony, thank you so much for joining us today. We always learned something new about crypto, new about Ethereum, and maybe, if we're lucky, knew about Australia. So I told you I was going to be late to this episode, and you said, no wookas. I think that's how you pronounce it. No wookas. And you said, that means no worries.

Am I getting this right? So it's funny that you didn't pronounce it right. Did I, I, I didn't pronounce it right? No, so it said no wuckers. No wuckers instead of wookers.

Yeah, it's just weird Aussie slang that some people use. I don't know how widespread it is, but I say it to my friends sometimes. Like, yeah, no wuckers. No wuckers.

I feel like I had to explain that to you. Thank you. Thank you. All right. Well, we got a lot to discuss this week, including something bullish, which I'm glad you were here

for something bullish, Anthony. Gray scale, their court case. This is a U.S. federal court that rules that the SEC has no legal authority to block the Bitcoin spot ETF proposal. That is, of course, very bullish. We're going to talk about that. Also, X, formerly known as Twitter, obtained a license to store, transfer, and trade Bitcoin and Crypto. Should we be excited by this? We'll talk about that. Lido is almost at 33% of total staking market share. Anthony, I want to ask you about that if we should be concerned. and we've got some news about digital currency group. This is DCG. Apparently, they agreed to deliver

90% of the value back to Genesis creditors. I'm kind of wondering if we finally cleaned up the mess from 2023. So we'll talk about all of those items and more as we get in. Just want to set the tone here, Anthony. This ETF news will spend a lot of time getting into it. But does this make you bullish on the week? And how bullish? So I think generally I've always, at least for the last few months, kind of acted with the assumption that these ETFs are inevitable over probably the next kind of six to 12 months. So the gray scale win just further solidifies that for me.

And I think what it also does for the wider kind of audience is solidify that for them as well. It basically says, yes, okay, the ETFs, you know, they've been teased for so long now. Many, many years, there's been kind of like teasing of a Bitcoin ETF in the US. And now it finally feels like that actually really really. really going to happen this time. And I think that this, this recent win from Grayscale, just kind of like solidifies that for a lot of people. So definitely bullish. Short term, you know, the markets are going to do what the markets do. But I think that anyone doubting that an ETF is going to get approved at this point, you know, I wouldn't be taking that bet,

to be honest. Yeah, I totally agree with you. And we'll talk about that in a minute. And we'll also talk about how the markets reacted to that news, which was quite favorably. But before we get in a message from our friends and sponsors over at Avey, I know, Anthony, I'm sure you've used Avey. many times, like everyone in Defi, AVEV3 is here. They want you to know. And if that feels like old news for you, because that happened back in January, now AVE really wants to accelerate getting the word out because there is apparently $2.2 billion in AVEV3, but there's also a couple billion still in AVEV2.

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If you're a builder as well, they are subsidizing AVE grants towards their new stable coin go. So you can check that out at the AVEAGRAs. grants.org website. There's a link in the show notes as well. All right, Anthony, let's get to the markets. These are the charts that Cracken is showing us on the week. This is Bitcoin, and we are up on the week, my friend. Look at this glorious green candle right here. I think that happened around the time of the, the ETF court decision that we were just talking about. So let me read out some numbers. We started the week at about 26,000. We are ending the week, at least at the time of recording. at 27,300, so we are up 5% in Bitcoin price.

This green candle, is this all directly related to the court and the ETF ruling? Oh, it's 100% correlated and related to that. And I think that it's pretty much mostly traders driving this as well, because if you look at what the traders have been looking at over the last few weeks, pretty much all of them have been talking about the gray scale decision because it'd been teased that every Tuesday and Friday, people were checking the, I think it was the SEC's website, or maybe not the SEC's website, but a website that would show you the result of the lawsuit. And it wouldn't, it didn't come for like,

you know, last Tuesday, last Friday and a few before that. And then it finally came today. And yeah, every trader that I looked at was looking at the same thing. They're like, we're going to go down. Maybe if nothing happens, you know, if, if, if Grayscale loses their case, we go down. If Grayscale wins their case, we go up. But whether that actually results in any kind of long term sustained kind of upward price movement, at least for the short term. It's hard to tell because I think I've been on here before and said to you, last time we had a pump like this, which was the SEC case against Ripple, where Ripple won that case. And we had that massive kind of pump on not just BTC and Eath, but everything else.

And I said to you, if there's no follow-through, we're just going to sell back down. And the follow-through has to come from new money. Because if we don't have new money, it's just traders. And all the traders are going to do is it just going to short it back down. Because all they're looking for is that short-term profit. They're not looking to invest, right? They're not investors. They're literally playing a different game to investors.

That's funny. That was the SEC Ripple Court case happened another week while David was out. Every time he leaves, something bad happens to Gary Gensler. And I don't know what he's off doing. Maybe he's like hunting down horror cruxes or something. But yeah, we need him to stay away for another week and then maybe Gary gets fired. So you're just saying this pump is basically traitor action. And what were going into this court case, what were people thinking?

Like, do you think people were over or under grayscale beating the SEC? What were kind of the odds in the sentiment going into this? I really do think it was a coin toss for a lot of people. And I think a lot of people in crypto definitely don't have a very good read of the legal world. I think they basically learn about it because of these crypto cases. And myself included, to be honest, I mean, especially in the U.S. I mean, I don't live in the U.S., so I've never really had a reason to pay attention to it. So it's all new to me.

So I kind of looked at it like that. I was like, you know, it's a coin toss. It's 50-50. I've got no idea. But then the judgment came out and as we're going to talk about. And it really kind of was less than it was, sorry, it was much better than 50-50 in odds of gray scale. It should have been like 90-10, you know, 90% that were going to win, 10% that were going to lose just based on the kind of result there. But for traders, I feel like, you know, you can see over the last kind of like week or two, it was just completely flat and just pretty boring.

And that was because all the traders, I think, we're waiting for this signal in particular, which is kind of wild when you think about it. But at the same time, there's also not much else going on. As we know, there's not new money coming in right now in terms of market activity. The innovation side and the technical side of things is different. But market activity, yeah, it's really just a kind of trader game right now. Well, let's look at a few trader numbers, too. Heath is up on the week. I believe we're at 1715 at the time of recording.

That's up to two and a half percent. So up less than Bitcoin, as you'd expect. Bitcoin kind of leading this because this is about a spot Bitcoin ETF, but still up nonetheless. And total crypto market cap, 1.14 trillion on the week. By the way, this is about a, if we're looking at the one-year view, a 12% increase on the year in total crypto market cap. But here are the charts that you were referring to that maybe are even more exciting and not just for traders, but for long-time crypto settlers. This is L2 total locked value and the scaling factor for Ethereum. This looks at all of the interesting metrics around our L2s.

And you tweeted this out earlier in the week, Anthony. Ethereum layer 2 activity continues being up only, what bear market. And here you're looking at a chart from L2B, which shows the scaling factor, that is activity on Ethereum, at a multiple. of Ethereum mainnet of 5.24X, which is absolutely massive. And you can see, I don't know what the time, is this just the last, no, this is the entirety of the last year. And we've just had a 5x in transactions over the last year. Is that right? Yeah, exactly. Well, yeah, I mean, we're basically, you can see there's that blue kind of section there, the blue squiggly line. That's Ethereum L1 TPS,

which isn't going to go up because Ethereum L1 is already at capacity. And then you've got the red above it, which is showing all the L2s that L2B is tracking and their TPS just going up over time and basically being up only over the last year at least for sure. Anthony, that is an interesting question. It's like, so what is the capacity right now for this red line? So of course, main net, the blue line, has just 16 transactions per second. It's kind of the full capacity of Ethereum and then gas fees start getting wonky and, you know, we can't go over that.

But how about layer two's right now? Tell us about the pre-Protodank charting EIP-4844 world and then the post one. Yeah, so it's always a difficult thing when measuring TPS because not all networks are created equal, of course. And I think what L2B tries to do here is normalize the TPS as well because there are different kind of ways to measure it depending on the layer two that you're looking at. So that's what they've done in this chart here. I can't give you like an upper bound number of kind of total TPS across these L2s as it exists today, but I can say it's a lot higher than here. We're pretty much nowhere near capacity from what I can tell and what I've been able to research.

And then after EIP 4844 goes live, that goes up by at least 10x from kind of what I've seen here. And I also want to note about Ethereum L1. It's kind of funny when measuring TPS because the way Ethereum works is that, or at least Ethereum, L1 works is that it has what's called a gas limit, which is the block size of Ethereum L1 blocks. Now, this gas limit is taken up by various transactions, and each of these transactions has a different amount of gas that it uses. So, for example, if all of the transfers on the Ethereum, oh, sorry, all of the transactions on the Ethereum network were only ETH transfer, so transfers of ETH the asset to and from

addresses and things like that, not smart contracts, just to and from addresses, the Ethereum network could do, I think, upwards of 40 transactions per second, just, just, just, doing that. But because Ethereum L1 does a lot more than just simple eth transfers, obviously we have smart contracts, we have defy, NFTs, we kind of level out an average of, you know, 15, 16 TPS or something like that because those other things take up more gas, which means that the gas limit fills up quicker per block by those transactions, and that's how the TPS is measured. The same is true for a lot of L2s as well, especially the ones that are EVM compatible or equivalent. But as I said, because there are certain L2s that aren't, like Starknet, for example,

they're pushing like hundreds of TPS right now, but their TPS is measured in a different way that you would measure it on an EVM chain. And that's why I said that L2B in this chart tries to normalize it so that it actually is as close to equivalent as like an L1 Ethereum TPS measure as possible. That's a great point. Yeah, thanks for getting into that too.

It's something we often forget. This is also another screenshot from a new website that we just kind of uncovered. called grow the pie.xyz. And this is another measurement of the layer two metrics. This is actually built by someone in the bankless community. So it's really cool to see this. But another resource for you in addition to L2B. Anthony, let's talk a little bit about some of your predictions, actually, because this was a tweet thread that I came across and wanted to include in the market section. And now that we have you as a co-host this week, makes even more sense to talk about it.

You said earlier in this week, it was Monday. GM Bulls and happy Monday. I know that it may seem dark and gloomy in the markets right now, but there are always bright spots over longer time periods. And I'm here today to share some of them with you. And so then you go over some of those bright spots over the next 12 to 18 months. Here are the outsider bullish narratives. You mentioned the Bitcoin happening in April 2024, the potential ETF Bonanza, which may be that it's, interesting because that prediction is already coming true. You said this on Monday. Now, by Wednesday, we have this fantastic ETF news. ETH staking becomes very attractive to Tradfai because of the passive income yield. There's some positive U.S. regulatory stuff, maybe a stable coin bill,

which is kind of interesting because we've had a lot of bad regulatory news up to this point, I would say, and maybe you're saying that's going to start to shift. Tradfai companies keep playing with an adopting crypto visa and PayPal. Those are recent examples. Those are all of the outsider bullish narratives. Then we could get into the insider bullish narratives. But let me just pause. You're feeling bullish, it seems like, Anthony. Tell us about the big picture and then any of these outsider bullish narratives that you think are most relevant right now. Yeah, I'm definitely feeling very bullish for the next kind of 12 to 18 months, especially. I have kind of operated under the assumption for this year, 2023, that we're basically just replaying 2019 in terms of kind of market

action, general sentiment, all the stuff that happened in 2019 that laid the groundwork and kind of like the bedrock for the bull market of 2020 and 2021. And I'm feeling the exact same thing play out right now. So if you were to take that to its kind of logical conclusion, you would say that 24 is like 2020 and then 2025 would be like 2021, hopefully with a lot less fraud, because unfortunately there was a lot of fraud that ended up happening in in the last bull market led by of course SBF and some other kind of actors in the space. So I looked at the kind of the big picture here and kind of tried to articulate why I'm bullish and bucketed into two categories that you mentioned, the outsider bullish narratives, which are things that the outside

crypto people can get excited about, the things that are easily digestible, the things that we don't have to spend, you know, a whole hour explaining to people for them to actually understand what's happening. And then the insider narratives. Now, The cool thing about the outsider narratives is that the crypto natives can also get excited about the outsider narratives just as much as they can get excited about the insider ones. So we get like a double whammy by being crypto natives. But on the outsider ones, you know, I looked at the obvious things. The Bitcoin harvening, it's kind of a meme or a pretty strong narrative that after every

harvening the market pumps, right, BTC pumps. And then we get a bull market within basically six to 12 months of that happening. And that has happened every time so far, 2012 into 2013. 2016 into 2017, 2020 into 2021. So it feels like we're on track for that to happen again. But what reinforces the harvening narrative is the ETF narrative, because if they do get approved, it's going to be relatively close to the harvining. So let's say they get approved in Q1, right?

They all just get approved in Q1. It may be later than some people would expect, but they all have to get approved together because if they don't, then the SEC opens themselves up to more lawsuits. So that is Q1. And then April 2024 is the harvening. So you have ETF narrative into harvining narrative, which is going to, in my opinion, you know, be very bullish for the market generally.

And then the flywheel starts from there. So I think those are the two. Could you imagine, Anthony? So like Black Rock gets their ETF approved and into the happening and then they're starting to pump the happening meme? I mean, that's something that could happen, right, in order to attract capital to the new BlackRock ETF. The thing about the ETS is that is that they're,

there's not just one of them. And I think this is important for people to kind of keep in mind. There are multiple ETSs and they're all competing with each other. And the start of the product is the most important because they want to show that they get the most inflows, right? Like you want to show that you're the market leader. So what are you going to do to do that? Well, you're going to start now. You're not going to start when it's approved. You're going to start now reaching out to your clients, reaching out to your high network clients as well. And you're going to be telling them, hey, you know, there's this thing happening. There's this thing happening. The harvening, blah. And you're going to give them the bullish. pitch because you want them to put their money with you as soon as that ETF gets approved because you want to be the market leader so that you can just start that flywheel of getting more money in. That's a great point. I had not put that together. This kind of this stacking of timelines here, but you're exactly right.

It almost seems like it's orchestrated. Some people said that to me. They're like it almost seems like the whole thing's just manipulated and orchestrated. I'm like it does to an extent. But then you also need to consider that the four-year cycle is also the political cycle. in the US, right? Yeah. Next year is election year.

I actually think Satoshi did this on purpose, to be honest. Really? So, yeah, I have a thesis that's never going to be proven or disproven, obviously, because we don't know who Stoci is. It's timing with election years. I feel like the timing is on purpose because election years are always kind of, I guess, like a pretty fun year. Let's just put it that way.

I'm not going to get into politics here. And it just, it all lines up too perfectly to me. Fun is one word for it, Anthony. You could say that when you're not living in the U.S. Yeah, exactly, exactly. And I think that these other things around it just act as more positive narrative catalysts, because the narrative is what matters for the market, at least over kind of like the bull market period. The fundamentals don't kick in until like the longer term. And I think the narrative is going to be very, very strong next year, at least, you know, the outside narrative, but also the insider one. But that's my general view on the outsider stuff. Okay, that's the outsider stuff. Bitcoin ETF and the happening, a big thing here. We also talked about some positive U.S. regulatory headwinds, the stable coin bill could totally see that. And we've talked so much on the roll-ups about Visa and PayPal now has a stable coin. But this point on the outsider bullish narratives, I want to dig into you for one more second here.

Heath staking becomes very attractive to stratify because of the passive income yield. So everything you were just saying about kind of like the black rocks of the world and Wall Street getting on board here, that was all Bitcoin related. You also think simultaneously, they will start. to understand. Tradfai will start to understand ETH staking. I mean, I think I believe that too, but I'm wondering if you have any, like, evidence for that or any thoughts on why that happens. So I think that they're already kind of Tradfai players getting

involved with ETH staking, to be honest. They're definitely doing it through the providers that are KYCing them and things like that because they have to due to regulations. So you're not going to really see it. You know, they're not going to go with Rockapool, for example, at least not right now because they probably just legally can't. They may not even be able to legally go with Lido, for example. So they're probably going with these other providers, maybe Coinbase. There's Alluvial that recently got announced.

They're targeting more of the kind of like enterprise kind of stuff there. But just generally, Tradfai loves yield because they can sell that product to their customers very easily. Because customers love yield. There's this obsession that people have with yield. And I get it because it sounds nice. But I have my own opinions on yield generally, but I'll leave those on the table. But generally, I think when it comes to East State, What people forget is that in a bull market, the yield is going to go up because we're going to get more activity on the chain, which is going to result in more fees, which is going to result in more yield for all the stakers, which is going to result in a flywheel of people being like, holy crap, the yield's so high, I need to stake, right? And we're going to get such an inflow of ETH stake. And I do believe we're going to get an ETH as well. I don't know how long after BTC gets approved, we'll get an ETH one. I can't imagine it's going to be very, very long after that. And that number one selling point that these kind of

ATF issues are going to say about Eith is staking. They're going to pump the hell out of staking. I'm very confident in that. Yeah, it would be, it would be wild if we, Bitcoin ETF approved. Gensler out of office, you know, something happens with kind of the elections. And then 12 months later, you have an Ethereum ETF approved. Okay, let's talk about some of these insider bullish narratives. These are the ones for us that the outside world doesn't really know about. The overall four-year cycle timing is still playing out nicely and only maybe gets invalid. if 2024 is another crab year, in my opinion. That's your opinion. So what's interesting is you just think the four-year cycle, we're on repeat yet again. And some people, always the

criticism against that is like, it can't be that easy, Anthony. Like, come on, like that's just, we like to overcomplicate our investment thesis in crypto a lot and think we're very smart. And so they can't see history repeating what for the fourth time is this? You also say Bitcoin actually pumps again after the happening. Layer 2's continue taking off. We get a proper layer 2 summer. So we haven't seen a layer 2 summer is what you're implying. Decentralized social platforms.

Ethereum's drastically improved supply dynamics finally kind of like kick in in the way like we, we, I feel like they should have kicked in more and they haven't fully kicked in. And I think that's what you're implying here. Dex volumes. Eve Byrne goes nuts. Yeah. Give us the highlights from the insider narratives here. Yeah.

I want to hit on that kind of like. supply dynamic thing. I think that they have played out in the bear market, but they've played out in a different way than what people expected. So they played out with ETH going down only a little bit against the BTC, this bear market, whereas last bear market, ETH went down 90% against the BTC from its top, 90%. So if you put 10 BTC into ETH at the top, you were left with one BTC at the bottom, right? That is a substantial loss. The difference here now is that, ETH is only down 25% against BTC, this bear market, which is substantially different. Now, I chalked that up completely to ETH's drastically improved supply dynamics and its monetary

policy with the merge issuance reduction and the burn, which has further, and staking, of course, which has further strengthened ETH's store of value properties, which is all that matters for value accrual at that size. Store of value and money is what BTC and ETH have going for them. And ETH has proven this bear market that it has achieved a very strong store of value property. And it has not outperformed BTC, but only underperformed it by a little bit. I think that's a great point. So you're saying basically last cycle, and people don't remember this.

Last cycle, 2018, last bear market, ETH got absolutely freaking slaughtered. It got destroyed along with all of the alt-bitcoins, you know, the alt-coins, right, of that cycle. This time, it was alongside Bitcoin a flight to safety asset for crypto. Exactly. And it slurped in all of that liquidity. And that is so different from the last bear market. I don't think I properly took time to reflect on that, but you're absolutely right. Mm-hmm.

And then similarly in the ball market, when demand comes back, I really do think that's going to play out in a really positive way for ETH, because there's just not going to be that much ETH to buy. And the narratives for ETH are really, really strong. Obviously, BTC has a strong narrative with the ETF happening right now. But I think I like to bucket these into two different kind of things. I think the ETF narrative goes into my bucket of impulse narratives where it impulse happens, the news happens, the price impulses up.

But then it kind of fades away over time and it doesn't keep doing the impulses because people get over the news, right? It's kind of like whatever. The news is the news. We bought the news. Now we have to wait for new kind of news and narratives. And the narrative kind of loses steam. But there's another bucket, which is the fundamentals bucket, right, which is exactly

what ETH has with its changed supply dynamics. which play out over the longer term. And you can actually see this on ETH BTC, especially recently, you know, especially over the last 24 hours. I know this is short term, but this illustrates my point. ETHBTC went down because BTC impulsed up on the gray scale news, right? But then Eith BTC has just started kind of like cruising a little bit back up again since then of the last kind of like 12 hours because the impulse is kind of over.

And now we're just going back to the fundamentals. So if ETH is going up against BTC based on fundamentals, and the demand is just there when the demand comes. back in, you can imagine a world where ETH BTC just continues going up only over time. And even potentially next bear market, maybe ETH is the one that outperforms BTC, and BTC goes down against ETH. And ETH becomes that kind of like top flight to safety asset. The real flippinging finally happens.

Anthony, kind of the last point here on the markets that we want to touch is this idea of layer two summer. Okay. And so you're analoging this to the previous bear to bull cycle, right? You're saying this is 2019, right? And let's go with that narrative for a while. So we had our Defi summer in 2020

and that was kind of the year after, right? And you're analoging this and you're saying, you're analogizing this and you're saying now we might get a layer two summer in 2024. I think that's what you're saying. So Defi being kind of the new layer two is it's also interesting here where you talk

about decentralized social platforms. Well, maybe that becomes the new kind of NFT of the of the previous cycle here. I want to provide some maybe thoughts around this or other numbers that we see on the week. Base is the fastest layer two to 100,000 users. This is Delphi Digital Tweet.

This milestone was reached just 56 days after launch. So a lot of users flocking. This, of course, is measured by daily active, unique addresses, of course. This is Haseu saying, rule number one, you always underestimate the importance of distribution, even when you know rule number one and try to keep it in mind. Actually, not totally sure what he's saying there, but Fiscanti says, this is wild, given there was no expectation of anirdrop or base token.

That's what's very interesting about this rapid uptake, is that there was no token to provide juice, and yet it got to 100,000 users in record time. Do you think this sets us up for an L2 summer that is similar in some respects to Defi Summer? and, you know, tell me a bit about that, too. Yeah, so my whole kind of thesis on an L2 summer revolves around, I guess maybe two main things. The first thing is that L2s are finally here and usable, and we have big institutions like crypto institutions like Coinbase building their own and making it really easy to bridge into

these things. There's liquidity on them. There are apps on them. It really feels like the, you know, a lot of these top L2s are just like L1 in terms of liquidity, the apps that are on there. Obviously, there's more liquidity. on L1 still, but for the smaller players, definitely probably enough at this point on these platforms. And the second thing is just fresh money coming in. Now, fresh money can come from

various different sources. It doesn't just have to come from the outside kind of new money that's not in crypto right now. Maybe it's sitting in a bank account, earning some yield, and then they come back into crypto. Fresh money can come from other ecosystems and also from people who haven't actually come on chain yet. And that's my real bull thesis for L2. And this is the same thing that happened in Defi Summer. It brought people who had never come on chain. They were in crypto. Maybe they held some ethon in exchange. They held BTC on exchange. And they saw what was happening in Defy summer. And they said, I want some of that. Right. So they brought their eth on chain. They learned how to use MetaMask and other wallets. They learned how to put liquidity into unyswap pools. They learned how to

yield farm. They learned how to do all of these things. And we got the birth of Defi. And DeFi has just kept innovating and growing since then. And I think similarly with L2 is you're going to get the same thing. where people are going to be like what we saw recently with friend tech they're like i want a piece of that right i really want to get on chain and i want to get amongst this excitement that's happening right now and i think that just by the sheer number of l2s that we have going live and that are live right now the apps just scrambling to get on to get onto these things because i know that's where the users are going to be the ports of entry becoming a lot easier because obviously you know coinbase supports direct bridging into base is really cheap it costs like 10 cents or something that's going to get

cheaper over time. All of that is going to bring more money on chain and also the outside money is also going to come in and they're probably going to skip L1 and just go to L2. So I think that that's all setting it us up for when the market heats up and that new outsider money comes in, we could potentially see a proper layer two summer where things just go nuts. And we could potentially see new layer two's launching and within one day getting 100,000 users, not 56 days. There you go. A lot of reasons to be bullish maybe right now. The setup is, year. If you are both an outsider, you've got you've got some narratives. And if you're an insider, you've got some as well. But Anthony, we've got a lot more to talk about. Coming up, that big L for Gary Gensler

and the SEC, the U.S. court said the SEC was wrong to deny the grayscale ETF. We'll talk about that. There's also an SEC enforcement action against an NFT company. We'll talk about that. We'll talk about all that and more when we get back. But first, we want to take a moment to thank our sponsors for making this possible, including our number one recommended crypto. Exchange, Cracken, go check them out. Cracken Pro has easily become the best crypto trading platform in the industry. The place I use to check the charts and the crypto

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safe, simple custody from the most trusted team in Defi. Download the Uniswap Wallet today on iOS. There is a link in the show notes. Gray scale just won a monumental legal victory against the SEC and the entire crypto industry, including you and I, Anthony, we've got a lot of cause to celebrate. This was the fight for a Bitcoin spot ETF in the U.S. And this is not, we can't declare mission accomplished final victory, but this was a major step forward for Grayscale and crypto to get a spot Bitcoin ETF approved in the U.S.

Maybe just before we get into this some context, what's your take, Anthony, on why doesn't the U.S. already have a spreeks? spot Bitcoin ETF. I mean, Europe has one. Canada has one. I don't know if Australia has one. Lots of jurisdictions have one. The US doesn't. Why? So I think in recent times, it's because the SEC has just waged this war on crypto. And I think this, by recent I mean over the last kind of like few years, it seems. They typically have kind of cited concerns around market manipulation and things like that, which I don't think that holds much water. And then they would kind of cite concerns around

custody, but we have Coinbase as a custodian who has been operating like that for over 10 years now and has never been hacked, right? And they have the best in class custody you're probably ever going to get from a crypto custodian. So really, I don't think there's any reason for them to be denying these things outside of personal bias and just not wanting to see this happen. And that is pretty much, I think, what the judge has actually said here as well. Yeah, the judge used these words, arbitrary and capricious. to define what the SEC was doing and SEC leadership was doing. If you just need a definition of what capricious means,

given to sudden and unaccountable changes of mood or behavior, I love that, unaccountable changes of mood and behavior. And that's what the SEC has felt very much to, I think, the crypto community and a lot of retail investors is they're just not a... Like, everyone wants a Bitcoin ETF. I can't think of anyone who is a retail investor who doesn't want this. Just because the product exists doesn't mean you have to buy it, right? And so why are they restricting this choice?

I think I go back to and I agree with you, Anthony, that it's largely, why don't we have a spot Bitcoin ETF? It's because Gary Gensler doesn't actually want it. So this was a decisive ruling that happened. The judge of a D.C. Circuit Court of Appeals ordered the SEC to vacate its own order denying Grayscale's application. And what they were trying to do here, this was Grayscale applying to. convert their GBT trust into an ETF, which would also solve a whole number of other problems, right? Because there are a lot of retail investors who actually own GBT, and that is trading down and lower than spot Bitcoin. So it's a very inefficient market. And the SAC approved that product,

by the way. It doesn't make any sense. So anyway, this is a big setback, a big L for Gary Gunn. in the SEC and a big win for a gray scale in the crypto industry. This was actually interesting as well. Not only was it a pushback of the SEC. The court actually said the SEC violated the APA Act, which is the Administrative Procedure Act. If you look this up, Anthony, the APA is actually a set of laws that all federal agencies. So, you know, if you're like the EPA or the FTC or the CFC, not just financial, but all U.S. government agencies, they're required to abide by a set of laws in terms of their process for rulemaking, right? They cannot be arbitrary and capricious, right? They have to actually abide by a set of standards when doing this rulemaking, and the court said

they didn't. It's very rare for a court system to actually side with a lawsuit and find a regulator in violation of the APA. not only is this a big loss in this specific issue, I feel like it's a major drain on SEC credibility, right? And I've got to think, Anthony, that's going to come back to bite Gary Gensler. You have to start to wonder how long he's going to keep his job. This is Jake Chivinsky saying,

Gray Skills victory over the SEC is massive. He also echoes it's very rare for a federal circuit court to find that an agency is violated the APA by acting arbitrarily and capriciously. The DC court just delivered a huge, embarrassment for the SEC. And then he goes on and says, but the ETF isn't approved yet. Yeah, so what's your take on all of this so far? Yeah, I mean, the point about the SEC's credibility is a good one, because I would say that right now, the SEC's credibility is pretty much almost

zero, right? It's like Terra, Luna, after it crashed. It's just gone to zero. Because they haven't really protected anyone. All of the settlements that they do just seem like protection money that they're taking in, right? They'll, they'll sue someone for doing something. And then they won't go to court because that someone or entity will be like, well, it's better for us to pay this fine, which is normally less than the money that they actually raised from the alleged unregistered security sale, right? Then go to court. But it seems like every time that the SEC goes to court, they lose. You know, they lost the ripple case. They lost this case. Are they going to lose the Coinbase case? I mean, there's a very good... Maybe they like losing. I don't know. Yeah, yeah, exactly, exactly.

The SEC's credibility, I think, is very low right now. As you said, like, it begs the question, like, how long is Gensler going to keep his job? I think that it's a lot of politics going on, obviously, because Gensler is a Democrat appointee. The Democrats don't want to be removing one of their appointees, you know, like that, or at least firing one of their appointees like that during, especially during an election year, obviously, as I was saying before, next year, it doesn't make them look very good. But it could be kind of like a graceful exit thing where they kind of promote him to another position and basically saying that, oh, you know, he's being promoted and we're replacing him with someone,

you know, better or something, right? So, yeah, just generally, no one in crypto definitely thinks the SEC is a credible agency at this point with Gary Gensler at the helm. And I think outside of crypto, even the trad-fai people that I follow also think that Gary Gensler's war on crypto is based on nothing and is really against the law. Yeah, so as happy as it would make me for Gary Gensler to exit his position, that might not be what actually happens. But this whole, thing could cause him to pause and take a step back. Or he could completely go to war and double down. Maybe he has the political backing in order to do that. This is Jake Tervinsky again. One theory on where the SEC will go from here. One theory is that the SEC will just pick a different

reason to deny Grayscale's proposal and force more long and costly litigation. They could do that, Anthony. That's possible, he says. It's hard to understate the extreme hostility of the SEC leadership towards crypto. Will Chair Gensler really accept this loss? Maybe he'll feel like backed in a corner and want to double down on his position. But another theory, Jake says, is that the SEC will take the D.C. Circuit Court's decision and do a semi-graceful exit from their anti-ETF position. Jake says, I'm in this camp. It's the right move. We disagree, they could say, but we're following the law. That's a convenient excuse to back out of a losing battle. So hopefully they choose to, they're this place on the check and chess board where they're in check right now.

And hopefully rather than kind of like doubling down and losing the game, they actually just back off. Jake says there's also political pressure on the SEC to prove the spot Bitcoin ETFs, not just about grayscale. All of TradFi is ready for a Bitcoin ETF, including BlackRock and Larry Fink, who also, you mentioned the Democrats earlier, he throws some pretty heavy punches in Democrat circles, and political DC. Jake concludes this thread.

I have no doubt that we'll get a spot Bitcoin ETF sooner or later. The only question is how painful the SEC wants to make it on themselves. I strongly recommend the SEC picks sooner rather than later. We'll see. This is what we're seeing in mainstream coverage. This is ABC News. Bitcoin ETF appears to be on the way after court hands the SEC a stinging loss. That's what the normies are saying, Anthony.

They're saying this is a stinging loss and that the ETF is on the way. So they're seeing it too, I guess. All good news from here. And also to the point you made earlier, there are a lot of ETFs that have applied that are due for rulings in the coming weeks and months. So many, I can't even keep track of them, honestly. But there's Bitwise, there's Black Rock, there's Vanek, there's Wisdom Tree. I think there's Kathy Woods, Arkham Vest. There's just a whole line of them.

And, you know, these will come out. over the weeks to come. We had an expert on bankless recently. James Seffert. He is a research analyst at Bloomberg. He tracks all of these things. And his prediction was possibly by the end of the year we get this, but more likely in Q1 of 2024. That's when some of all of the dates kind of converge and the bill really comes due. And the SEC is essentially forced to either approve or, you know, finally disprove all of these applications. Yeah, and I think the thing that throws a little bit of a, I guess, like, what's the term looking for, a little bit of a kind of a spanner in the works there is that the ARC

ETF that you mentioned actually has a due date before Q1, like a final due date. I don't know exactly when that is, but it's sooner. So as I mentioned before, the SEC actually has to approve all of these things at once. They can't approve one and not the others because they're, from my understanding they're not allowed to be seen to be picking favorites and if they do pick one at like if they approve arc and not the others what ends up happening is that they open themselves up to massive lawsuits which they're probably guaranteed to lose and that's just even worse than the situation they're in right now so two outcomes the arc ETF gets denied so that arc has to refile so that

the SEC can approve all of the ETFs next year in Q1 as we just mentioned or they all get approved by the arc date. I'm leaning towards the former more just because, I don't know, it makes for, I think it's nicer just to prove them in Q1, fresh new year, right? Everyone's feeling bullish because it's a new year. Let's, let's do that. But it could happen at the arc date. But I think the funny outcome will be that the arc one gets denied and then everyone's like, oh my God, all the ATFs are going to get denied. But in reality, it's just because they want to approve them all in Q1. So that's another kind of little bit of a short-term narrative to pay attention to. That's a great point. More on the SEC.

to you. They just charged an LA-based media and entertainment company called Impact Theory, which I've never heard of, for unregistered offering of NFTs. I don't know if you took a look at this story. Yeah, I want to just quickly note the headline here. And I'd registered offering of NFTs as far as I know is not a thing. There is no way to register an offering of NFTs. Right. So what they're doing here is that they're trying to frame that all NFTs are securities by saying this, right? The headline should have read an unregistered offering of securities, not of NFTs, because the SEC has not been able to kind of like state or prove in law that NFTs are all securities. So they're trying to basically just do their regulation by enforcement thing here,

which is just crap. And I really hate the fact that they did this headline because it just speaks to the fact that they're still stuck in their ways. And I really want that to change. but we'll have to we'll have to see yeah the framing was wrong uh certainly hermani wang agrees with you this looks like a naked yeah i got it from her i got it from her actually i didn't know if you had this this thread here up but yeah she says the same thing yeah i um i think that's true now i will say that um this actual security offering disguised as an nfts or kind of tokenized as an nfts actually does appear to be clearly a security right i mean they raise funds i mean this is a really dodgy project that's yeah yeah yeah xb t

did a threat on this project in 2021. I'm not defending the project here at all. It was definitely very dodgy and definitely looks like a security to me based on the assertions that the SEC made here. But like, again, the headline is just ridiculous. And second, they paid $6.1 million in fines. They burned the NFTs that they owned and they raised $30 million. So do they actually come out ahead in the end? That's another great question. Well, Hester Purse makes the commissioner Hester Purs and her colleague, another commissioner from the SEC, make the same point that you're making is just let's make sure that this doesn't apply. I don't know if this is a dissent or just a thought piece from Commissioner Purs.

This matter raises larger questions with which the commission should grapple before bringing additional NFT cases. So, okay, Hester saying that this is a flagrant securities issue, but like, hold on, time out, before we carry this to all of the NFT cases, let's pause and actually consider this for a moment. I don't know if she'll be listened to. There was some other interesting regulatory news in the U.S. The IRS released a draft of proposed reporting rules for digital asset brokers.

The bad news here, Anthony, is they seem to want to treat everyone as if they're a broker and everything like it's a broker. And this could include the front end of uniswap or ether scan or any other defy-app interface. that you use today. And what they're saying is similar broker-level reporting requirements would come from them. So if you make a trade on Uniswap, let's say, then Uniswap has to cut a file to the individual who makes that trade with kind of all of the tax liabilities and the price-related data. And of course, this is not how any of this works. the IRS is presuming that there's some form of intermediary, like we're dealing with an exchange.

Anyway, this caused some concern, of course, in crypto and defi as well. And we'll have to see how that plays out. They just put together a proposed ruling for comments, so the industry is kind of commenting back, and we'll see where this all shakes out. But I think the big question to me is, what do you think about U.S. hostility to crypto? You actually implied earlier when we were talking about the bull cases for crypto that the U.S. might pivot its stance a little bit. And I'm increasingly feeling and seeing a lot of dumerism in the space.

So this is a tweet, all caps, proposed tax regs threaten U.S. blockchain access. Okay. And I think that's true. The proposed tax regs are regulations are pretty bad. This is Gabe Shapiro saying, in the end, our entire industry will just be run by Coinbase and a small number of others, they will all have government licenses and run some compliant KYC web app style sort of like an app store and all the DFI devs. They'll have to pay their VIG to them and SMP to get listed. All right. There's a lot of dumerism, I think, going on from

especially those that live in the U.S. This is Antonio from DYDX saying crypto builders should just give up serving U.S. customers for now and try to reenter in five to 10 years. It's really not worth the hassle or compromises. And then he goes on in this thread to talk about how ironic it is. He's an American. He's writing this from his office in New York City. And nobody in his company can actually use the product that he is developing. And he says it's effing ridiculous. And that is ridiculous. What's your take on this, you know, kind of doomism type feeling about the U.S. regulatory approach to crypto right now? So I think the Duma's going to always be kind of like very on the on the side of Dumerism for various different reasons.

And I genuinely take a much more kind of like, I guess hopeful approach to these things. I would say that Gabe's tweet is just being very kind of like out there with his assertion here that they'll just be government licenses and compliant KYC to everything. It's just what it's doing is it's taking like the worst case as if it's the base case. and then applying that and saying, this is, this is what we're going to get, right? This is the end state of the ecosystem, which I honestly think is a ridiculous take. The proposed things that you were just talking about, the tax regulations, yes, they are crappy. They're bad. They're unworkable.

But they're not law. They're not the regulations yet. They can be amended and changed over time. And I bet that they will be to the point where they actually get sanitized and look a lot better than what they do today based on feedback and things like that. And I also think that inherently a lot of this stuff is actually hard to understand for even people in crypto, let alone people outside of crypto. So how much knowledge do the people writing these things have about crypto?

If they've got nothing, then they're going to write it as if they understand it. Then they're going to solicit feedback and get comments in. Whether they listen to that is another thing. But that's kind of what happens from there. And then the final point with Antonio's tweet here, by saying that the crypto builders should just give up and leave the US is the worst thing. that they could possibly do. Because if you give up and leave the US, that means you're not fighting anymore, right?

And if you try to come back in five to ten years, we're probably living in Gabe's world where he said that everything's just K-Y-C, because no one was around to fight it. It's like saying that, oh, my house is on fire. I'll just go down to the McDonald's for lunch and then I'll come back and everything will be okay. That's not how it works, right? So that take to me is just kind of ridiculous, but it is also ridiculous that his own employees in the company, the software that they're building in the U.S., they can't actually use it.

Like, that is crazy, right? And obviously, D-YDX is not the only app that is going to, the only project that's going to suffer from this. So that needs to be fixed. But it's not going to be fixed by leaving the U.S. and coming back in five years. That's going to make it worse. Yeah, I agree. And some of this, honestly, Anthony is like cathartic for me to read because it's so frustrating, right?

So a certain amount of, I wouldn't say maybe Dumerism, but kind of alarmism, rally the troopsism, is actually necessary for us to kind of like take a stand and talk about how stupid it is that the U.S. doesn't have a Bitcoin ETF. Why? Because some regulators on a power trip. How stupid it is that builders, DeFi builders, like Antonio, are building a fantastic application that like benefits the rest of the world and his own company. He himself can't actually use it. Like how dumb is that? And I do think part of this is letting our voices be heard, well, not succumbing to kind of that dumerism that maybe Gabe's tweet suffers from. This is Mike Selig, a crypto lawyer we've had on the show. He says,

the SEC, CFTC, FinC, OFAC, New York Department of Financial Services, and now the IRS have all tried to regulate crypto out of existence. The U.S. is going to run out of regulators to throw at crypto pretty soon. The U.S. has too many regulators. Holy crap. It's just too many. I think that is a great point. We had to have been at some point of like seeing the worst at this point in times. Like all of the regulators have something against crypto and we are making some progress. We got a lot more to talk about. DCG agreed to deliver 90% back to Genesis creditors. That's big news. Also, Anthony, I want to ask you about Lido. They're almost at 33% of East staked. Is that a big deal? Should we be concerned? Oh, did you hear this too?

Bit Boy crypto fired Bit Boy. I didn't even think that was possible. We'll talk about all that and more before we do, we want to thank the sponsors that made this episode possible, including MetaMask. Go check out their portfolio app. Get your bull market battle station ready. Are you a Metamask user? Well, you're listening to Bankless, so of course you are. The wallet you know and love just got a whole lot better. Metamask portfolio is the ultimate one-stop shop for all of your crypto needs. It gives you a holistic view of your crypto portfolio across multiple chains and multiple addresses all at once. You can easily view and manage all your coins, tokens, and NFTs in one convenient place just by connecting your wallet.

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He is already out on bail, according to his lawyer, Brian Klein. So that is good news. Brian says, although I remain very disappointed that the prosecutors charged him because he helped develop software, their novel legal theory has dangerous implications for all software developers. He notes that Roman Storm is already out on bail. So that is some good news. Just a follow up from last week. There is a link we will include in the show notes where you can actually give Roman and other Tornado Cash developers their legal defense. You can donate to their legal defense if you want to do that. This is from the free Alex Persef website.

According to this has been vetted by several folks I trust in crypto. And it looks like the funds are going to flow to tornado cash legal defense. That's another way we push back. Anthony, this was interesting to me. We've been talking about Farcaster a little bit on bankless recently. Certainly Web3 Social has kind of picked up Steam. And Farcaster v3, their roll-up starts on Tuesday. Well, actually, it already started.

So that was yesterday at the time of recording. What's interesting about this is new users actually have to pay money to use this network. $5 per year to use the network. And that lets you store 5,000 casts, 2,500 reactions. and 2,500 follows. I was just curious, like, what do you think of this model? The idea that we're actually paying, rather than through our eyeballs, I guess, an ad model,

we're paying to use our Web3 software. Do you think this will be scalable? Do you think we'll see this elsewhere? Yeah, so I think Farkaster is probably the best attempt we've seen at something like this in and outside of crypto, basically making a social media platform that people will just pay for, right? Instead of, as you said, having our eyeballs kind of hijacked by ads and we become the product, we actually pay for the product and we get a certain usage out of it.

So it's basically just API kind of like reads and storage and things like that. But I think, you know, $5 a year, I think the price was definitely chosen by the Farcaster team purposefully and the limits they've put in place for that was also chosen purposefully. But I think that's going to cover most users. And I think that being able to get access to a decentralized social media network that you can kind of interact with and be on for $5 a year is an absolute bargain, right? especially when you can pay in crypto, which I'm going to assume is going to be available from from day one here.

I've been on Firecaster for a little while now. I've tried to engage. I mean, it's very hard to break my Twitter habit. That's for sure. And I don't want to kind of just be copying over everything I put on Twitter on Firecaster. But I've been on Firecaster for a while in the closed beta kind of in the closed beta period. And it's been really fun to kind of interact with it and use it. And it's really smooth.

I use the Warpcast client because you can use different clients on it. But yeah, I do think that this might. model has the potential to scale, definitely. But at the end of the day, also people need to understand that if you're not paying for the thing that you're using, then there are going to be ads, because that's the only way that you can actually finance it. Yeah, you are the product. Well, here's another question unrelated to Farcaster, but one I've wanted to ask you all week. So Lido is almost at 33% as one-third of all ETH staked. They are at 32.17% at the time of recording. And of course, having one third of all ETH in your protocol is certainly a milestone

when it comes to kind of consensus. How worried should we actually be about this? What's your take? So there is a lot to unpack. Yes, I'll try to keep it concise so I don't kind of like ramble on for people. I think when people see numbers like this, they automatically go towards, oh my God, you know, Lido 33%, that's a huge, as you said, like that's one third of the, of the staked Eath. That's a huge part of the network. You know, what if they kind of turn bad and wanted to do something bad on the network, right? So that's the kind of thing that people automatically go to. But what I want to unpack here, and I don't want to pick on kind of Lido because this could have

been anyone. It could have been Coinbase. It could have been Binance and it could be in crack, and maybe it will be in the future. You know, who knows. But with Lido, people need to understand that it's not like when you stake with Lido, all of that East, they keep going to one node operator, as we call them, one kind of entity that's operating all of the validator infrastructure. There are currently 30, I believe, node operators under the Lido umbrella. So there are 30 different entities that are operating underneath the Lido

umbrella, of course, but they're operating their own infrastructure. And most of these entities, as far as I know, are outside of the US as well, whatever that kind of like counts for here. So that fact, I think, should be talked about more, even though. some people will argue that, well, yes, they're separate entities, but they still exist under the Lido umbrella, and Lido governance can still affect what, you know, what they do. And yes, that's true. Lido governance, I don't know about right now, but they might be able to do this right now, but in the future, they could vote to remove a node operator or remove a bunch of node operators for no other reason than the Lido token holders wanted it to be the case, right? Or they could

vote to remove an operator because they were doing something like allowing transactions through that the rest of the Lido Nero operators didn't want to happen or something like that. So there are obviously centralization concerns here because Lido has that governance token, the LDO token, which governs the kind of whole Lido ecosystem. So I totally understand that. But the entities themselves are definitely kind of like separate. And it's not like if one of these entities was to go offline or get slashed. It wouldn't affect the other ones because they are distinctly separate.

And then the question falls to, okay, yeah, okay, they're distinctly separate. but let's assume that they're all going to work together and they're all going to collude together as part of the Lido kind of entity. What's the worst they can do here? Well, really, at 33%, you can't necessarily do anything like catastrophically bad. And I don't really see any incentive for them to do this to begin with. But what I think, and this is why I want to be concise here, I'm going to, I'm going to miss a bunch of context here.

But what I want people to understand is that the Ethereum blockchain is not defined by one entity. It's not defined by Lido. It's not defined by Cracken or Binance or Coinbase. It's not defined by you or me. The Ethereum blockchain, what Ethereum actually is as a network, is defined by its users, by its community, by its stakeholders. And these range from core developers to people that run validators to people building apps on top of the network. We all have a say in what the Ethereum network is.

And we have lots of precedent over this. Bitcoin in 2017 had a hash wall with Bitcoin Cash, where Bitcoin Cash forked off and said, where the real Bitcoin and they had like a minor hash war going on. But the thing is that the majority didn't believe that Bitcoin cash was the real Bitcoin. So the real Bitcoin remained the Bitcoin that we know today, right? And the same was true for Ethereum during the Dow hack back in 2016 where people were saying, well, no, Ethereum Classic is the real Ethereum. But no one, the majority didn't believe that. The majority believed that Ethereum was the real Ethereum. So if we're talking about attack vectors here, if Lido was to become malicious in any such way, right,

what ends up happening is that the rest of the community and ecosystem would say, while Lido is acting maliciously, then Lido is trying to basically make the network something that it isn't. So we're going to decide that Lido is basically a bad actor and we're going to essentially socially fork them out. Now, that's a messy proposition, of course, and that's not something that we necessarily want a point that we want to get to. But I just want to illustrate the point that a blockchain ecosystem is not defined by these sorts of things. and while Lido or any entity having a big percent of the market share is definitely a risk, yelling about it and kind of like being kind of, I guess, like infighting it and kind of being maybe duma about it is not going to move the needle.

And this is an unpopular opinion amongst a lot of my Ethereum friends, and they don't like it when I say this, but there was a proposal to different staking providers. I think it was last year, or it's been going on for a while, for them to self-limit the amount of stake that they would take into their kind of like protocol. And the limit, I think, was 22% or something like that. Lido's already over that limit. So what you're basically asking Lido to do is to reduce its market share, a for-profit business, mind you, with a token to reduce its market share to 22% just to satisfy whatever the criteria you've come up with here. And look, I understand why people wanted to do that. But that's not how you compete with these big ecosystems. That's not how

you reduce their market share. How you reduce Lido's market share is by building a better product, right? And that's exactly what other staking providers have tried to do, like Rockapool, for example, and other ones out there. They have tried to build better products to compete with Lido and compete in the free market, because Lido doesn't have any special privileges over the Ethereum network. It's not like the Ethereum network says to Lido, hey, you know, you're going to get more yield because you're Lido. No, the Ethereum network does not favor anyone. What happens is that the Ethereum network says anyone can build an LST on top of me, that's fine, and then you go compete in the free market. So when you look at it from that perspective, at least from the perspective I look at

it, you reduce dominance of any one player by increasing competition in the market. And also the dominance of any one player needs to be looked at under a microscope, under a lens of, you know, Lido is different to Coinbase. Coinbase is different to Rockapool. You know, Coinbase is different to Binance. You can't look at them as if they're the same thing. So as much as I understand the risks and understand the concerns around Lido specifically. I also am a realist, and I also believe that we can keep talking about it, as much as you want to keep talking about it, but what's really going to move the needle is competition.

Yeah, I think I find myself largely agreeing with all of those points, even though this is a very contentious issue. And we did an entire episode on Hasu, who we sort of put on the hot plate to kind of like answer for Lido. but, you know, he takes a very pragmatic approach to all of this. And I think my conclusion at the end of that episode was like, how concerned should we be about Lido having 33%. It's not ideal.

Let me be first to say. It's like, it's like not ideal to have this sort of situation. But it's better than Coinbase having it, right? One single centralized entity. And Coinbase having it would be better than like CZ and Binance having it from my perspective. So there's the scale of like, you know, not bad or good, but like good, better, and best, right? And this is better than some other outcomes, though, though it's still not ideal. I think the one thing that really concerns

me, though, about all of this, Anthony is actually more smart contract risk. So I'm less worried about collusion of those, you know, 29 to 30 entities inside of Lido and governance doing something bad. I think those are all concerns. And by the way, Lido's working in some ways to kind of mitigate some of those and decentralized elements of it, like giving STEath holders the ability to vote, that kind of thing, right? But I'm less concerned about that. I'm more concerned. What if there was like a bug in like the underlying Lido smart contracts, right, that

caused like a Dow style of like event, let's say? What happens then? But that also comes into play if we have a lot of ethically crude in sort of like maker or in sort of any def, or eigenlayer or any kind. kind of a large smart contract set of code that that manages a lot of ETH. And then there- That's table stakes, right? Yeah, it's table stakes. And there, back to your point, we have to revert back to the social layer anyway.

So I'm not really sure what we do there. But let me ask you this. So here's a little bit of pushback. Some people say in the community that, no, actually, Anthony, Ryan, you guys are wrong. People like you call them kind of Ethereum community members. and leaders, you have the responsibility to actually stop talking about Lido. Like, put Lido down in your education episodes, right? Tell people to go stake elsewhere.

And by the way, you know, we do tell people to go stake on Rocket Pool, run your own node, those sorts of things if it's within your... But, like, they think that the social leadership around Ethereum should be doing more. What's your take on that? I'm not sure how much more I could personally be doing. I mean, and also, also with bankless. I mean, we're both Rocket Pool O'Dow members, right? We're both part of the O'Dow.

We're both really big bulls on Rockapool. I'm the same as you. I honestly don't tell people to stake with Lido, but not because it's Lido. I tell them, don't stake with the top provider, right? Don't stake with the biggest entity. Stake with a small entity, help the decentralization of the network, because it's good for the overall health of the network. But as I was kind of alluding to before,

I don't think it actually helps us to put down Lido because they've gotten to the market share that they have. It's obviously the market basically saying that Lido is a good product and people want to use it. And as I said before, the Ethereum Network does not favor Lido. It does not favor any staking entity. So if Lido is winning, it's winning based on merit in my mind. And people may agree with that. People may say, oh, well, Lido does underhanded tactics or whatever. But at the end of the day, any protocol can do that.

It's not like, as I said, Ethereum is favoring Lido specifically. So I just revert back to my, look, you know, you and I are doing a lot to try and kind of push the needle forward here. As I said, I'm always trying to push people to others taking protocols. And that goes back to my point about just increased competition in the market. And that is a huge market share that, you know, the LST market share, I think is like, what, 80 plus percent for Lido? That's a huge market share that can, that competitors can come in and get for themselves. And they will naturally do that. And we've seen a lot of these competitors come online recently.

And even like Rockapool is is continuing to grow. They have a lot of really awesome plans coming along. And I've been a big proponent of them. So I think that rather than than shooting people and putting and kind of like going after the people and saying, you know, you should be doing more. You should be doing blah, blah, blah, blah. It just kind of need to understand and maybe acknowledge that people are doing what they can. At the end of the day, shouting can only get us so much.

Talking about it can only get us so far. There needs to be decisive action to match that as well. All right. There you go. Yeah, I think that's a good message. Moralizing can only get us so far. At some point in time, we have to, like, just build a better solution. Speaking of building great solutions, and this goes back to one of your bullish points

about fintech getting involved in crypto, apparently American Express has partnered with POAP to give poaps for attending certain Amex events. This is super cool. This is a tweet from Mambosian.eath, and they say, super cool. I hope this is just the beginning of Amex getting into blockchain tech. So not only Visa, but it looks like Amex with an integration here. I've not tested this out myself, but all the Amex terms and conditions here. It's kind of cool to see that level of traction.

This was also interesting, Anthony, on the Bitcoin side of things. This is a tweet from Bitcoin magazine, which doesn't often make it inside of a roll-up, but here it is. Elon Musk's X, that is, aka Twitter, obtains license to store, transfer, and trade, Bitcoin and Crypt. I'm glad they said in crypto, by the way. I think, you know, thanks for that. Did you take a look at this? It got community notes, though, like if you look before, it's not totally accurate.

It's just, as it says, you know, X obtained a currency transmitting a license in the state of Rhode Island. This license is required if X were to provide virtual asset-related services. There's absolutely no mention of Bitcoin in the licensing filing. Oh, no. Is this a big nothing burger? Not necessarily. I think that, you know, when it comes to payments,

I don't know why. So, okay, maybe you step back a little bit here and give some context. Elon did payments in Bitcoin for Tesla, right, quite a while ago. That went nowhere. Nolan wants to use their Bitcoin as money. Okay. And this was to be clear, you could buy a Tesla with some Bitcoin if you wanted to. And also, doge point.

Yeah, yeah, yeah. So, okay, well, then what, has Elon learned from that? Maybe he has. And what are they going to integrate into this payments kind of platform when it comes to crypto. Exactly. Stable coins. Stable coins. That's where it's at. And PayPal just announced their own stable coin. You know, you've got to think there's some movement going on there. So I definitely think that stable coins are the more likely candidate here. Maybe you will be able to do Bitcoin as well. But I highly doubt people are going to be using their Bitcoin for payments on Twitter. It's so funny to me. Your Bitcoin community is so funny. Like simultaneously, they've told us how valuable Bitcoin is, never sell your Bitcoin. And then they also want like Bitcoin to be used to buy a Tesla. I was like, I don't encourage any. to spend their ETH on anything. It is a store of value asset, all right?

We'll create a unit of exchange through some other mechanism, but don't sell your Bitcoin, don't sell your ETH. I don't know. It's funny to me when that sort of stuff comes up. This is interesting, though, Anthony, DCG, Digital Currency Group. Man, they've been at the center point of a lot of things. Most notably, I think, in retail investors' mind, there is an $800 million loan from Gemini, the Gemini Earned program that Digital Currency Group and Genesis basically owns

Gemini earned customers. They have not paid back. And here is a statement this week. I've not gotten in depth on this from Digital Currency Group. They're pleased to reach an agreement in principle with Genesis and the Unsecured Creditors Committee, which provides a framework for comprehensive resolution. Man, I'm not going to read all of this, Anthony. It's kind of legal speak. I think the TLDR is DCG has agreed with Genesis creditors to deliver recoveries of up to 90%.

Maybe that's the key word, up to 90%. So there's a lot of gray area from the numbers of zero to 90%. But some details are DCG plans to take up new debt facilities and a repayment agreement. This will include

328.8 million loan facility, two-year maturity, $830 million loan facility with a seven-year maturity. There's a lot of details here. And 70 to 90% recoveries for unsecured creditors in U.S. dollar's equivalent, 65 to 90% recovery of in-kind basis, depending on the denomination of the digital assets. I haven't heard from the Gemini side whether they feel like this meets their needs

or not. So the story is kind of not full yet. but I'm wondering from your perspective if you think this is kind of the last cleanup that we have to make from all of our sins in 2020 and maybe the sins of Barry Silbert and, you know, Suu and some of the centralized lending borrowing providers. Yeah, I think this is is one of the last ones, to be honest. I mean, there's still obviously the FTX bankruptcy process, which is just going to take forever and seems to be just draining money out of FTX credit. unfortunately the lawyers seem to be cleaning up there and there's a three ac case as well which i believe the gemini oh sorry genesis was involved with and that's why they kind of got got kind of stung with with some bad debt here uh but yeah hopefully this this ends in a in a positive outcome for for um gemini creditors there and jemini earn customers but you were reading all the legal speak and all the

up tos and everything it doesn't inspire that much confidence right um it really seems like this is going to take a lot longer than people would hope to kind of like get repaid here. What is going on here? Bitboy crypto is no longer employed, employing BitBoy. I even know how that Bitcoin. Yeah, I didn't know that Bit Boy crypto was more than BitBoy, but apparently there are other people that like were on some videos and stuff. I mean, obviously I don't watch the Bit Boy show. But I saw this and I'm just like, that's really ridiculous. He's been fired, right? That's what happened. Yeah, yeah. Like, Yeah, yeah. And I feel like the company is going to die because, I mean, the only reason anyone followed it was because of Bit Boy.

Like, it's such a weird thing. Can you explain this to me? Why did they even follow it? Even even like while, what is the appeal of Bitboy? I've never understood this. I don't. I don't. I don't know to personally. I think really the appeal is is that it appeals to the DGEN gambling side of crypto, the people who want to kind of like buy into these low caps and be told that it's going to go like 100 X and they're going to make life changing money. Um, but yeah, I've never, these kind of people have never appealed to me because that's not something that I'm about. Um, but yeah, it's got a lot, he's got a lot of subscribers, right? 1.5 million or something like that. It's just crazy. It's absolutely insane. Uh, even when you compare that to like bank lists or daily way, uh, it's just like he dwarfs us, uh, like in a massive way. And it's part of this, uh, do you remember this clip? This is from October of last year. I'm just going to play this. So for people who have no idea who we're talking about, this is, this is a flavor of, uh, how Bitcoin, uh, uh, uh, how Bitcoin, uh, uh, uh,

talks and how he speaks. This was him from October 22 of last year. But this guy right here, Ryan, Sean Adams, I don't know who the F you are. Because you're not important. But here he says, please, dear Lord, and any lawmakers or adults reading this tweet, just know, BitBoy doesn't represent this either.

Talk to Jay Shravinsky, talk to Miller, CWL, talk to Coin Center. You know what? We are tired of people that look like this guy trying to run stuff. I don't represent the people the fuck I don't. Yeah. I'm the one who does. It's me.

I'm the one out here. Put in the work in. Oh my God. It goes on. It's just an unhinged rant. And I think he actually got fired. At least they'd said that he got fired because of substance abuse. And maybe you can see that in this video.

But I don't know how true how true that is. But yeah, it certainly seems like he's unhinged. Yeah. And there's this weird populist rhetoric that, never kind of identified with and just, you know, sends tinkles up my spine. Anyway, good luck, Bitcoin, bit boy in the future.

Did you see this, Anthony? So Instadap is rolling out a multi-sig, and I'm wondering if this is going to be a safe competitor. Yeah, did you take a- Definitely a safe competitor, yeah, yeah. It's got like very similar features to safe, you know, the apps, the bridging, the stuff like that, obviously the multi-seg thing.

And I think we need competitors in the multisig space. I know it's a kind of scary thing, I think, for people to build because obviously multi-segis can be like huge honeypots for assets and stuff like that. But we can't just rely on one. I don't want safe having a monopoly over multi-sigs. I agree. Are you at the point where you, like, trust safe? Like you trust as well as a ledger or an EOA? Yeah, I mean, I'm definitely at a point where I kind of like trust safe.

I mean, it's been around for a very long time now. And I think that, I mean, I don't want to say anything definitive. but, you know, it's got such a large honeypot there that I feel like if there was a bug, it probably would have been found by now. But there's always, and I know, I don't want to jinx it. There's always the kind of, there's always the kind of risk with these things. But the multi-six stuff is actually more secure than a vanilla hardware wallet because you can have hardware wallets as your multi-six signers, right? So you can do like a three or five and then just have, you have one of the wallets, you know, two other trusted people have them. And then it needs all three signatures in order to do any

transactions rather than they're just being one. But yeah, it does come with the tradeoff, as we were talking before, about smart contract risks generally being prevalent in these things or being existing in these things. Yeah, 100% though. And by the way, the UX of these multisags like SAFE has gotten so good these days. It's just, it was really a pleasure to use. Guys, we got more coming up. Some questions from the nation.

A question to Anthony and myself, why on earth would there be thousands of chains instead of a winner-take-most type of market? We'll talk about that idea. And also, is staking ETH really risk-free? We call it the risk-free rate. Can we justify that? Stay tuned. We'll be right back.

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that provides milestone-based funding to promising projects that help expand, secure, and decentralize Mantle. 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. Question this week from the bankless nation, this is Lymez. What's the counter argument to L2's being a winner take most? What actually meaningfully differentiates individual chains and the OP super chain vision? Why would users and developers not flock to the market leader?

I think the question here is like there's this idea that we might have hundreds or thousands of chains. Like why? Why is that even an attractive notion? Why doesn't everyone just flock to like their favorite optimism or arbitram EVM chain? And it becomes kind of a winner take most or winner take all kind of network effect. Do you have a take on this? Yeah, I mean, I think the obvious take is probably that we get more scalability by modularizing everything, even though they may connect to something like a super chain where they share liquidity and stuff like that.

Still by modularizing it, we get just like more. more scalability than we otherwise would of. But I think generally this is actually an open question. And I actually don't think anyone has a definitive answer to this. If you want to take the kind of history here, we only have history when it comes to L1s. And really, L1s have been a winner-take most market, where Ethereum has taken the lion's share of L-1 activity. And that has been true for quite a while now. But we don't know how it's going to play out in the L2 world. You could make the argument that's going to play out the same way, but the L-2 world is a bit different in that We're going to have like, you know, the OP super chain.

We're also going to have Polygons version of the super chain and potentially ZK Synx version of it. And then those things may just connect together and share liquidity and interoperate. So the way I maybe like to think about it, if you want to use real world analogies, is that blockchains and L2s, they're just like nations, right? They're just like countries where you have big nations like the US and you have small like Australia. I mean, economically we're pretty big, but population-wise we're small. But they all trade with each other, right?

they all interoperate with each other. We have global supply chains, all those sorts of things. And that way, we have more scalable things like culture, which I think is very important and often overlooked, but more scalable kind of manufacturing, more scalable economies generally. So that's how I like to view it. And in terms of flocking to the kind of like, in terms of being a winner take most, I think in the long term it probably won't be because there's just so much opportunity out there and there's so much kind of money and activity to be had that the competition is going to be very fierce, and I know that liquidity begets liquidity, but the same could be said for really anything. And I don't think we see the real world play out as a winner take most

kind of thing. We do have dominant players, but there are also smaller plays that can bat above their average. As I said, Australia has a relatively small population, but we have a rather large economy because we have a lot of minerals that we dig out of the ground and sell to other countries. Same is true for L2s. Maybe they have something that they sell to people, not just block space, maybe they have unique block space where they let you program your smart contract in a language that isn't solidity or something like that. So there are these differentiations that can happen. And that's how I generally think about these kind of like altos. Yeah, I think that's a pretty good analogy. And by the way, it kind of fits because all of these chains and networks are kind of, they're almost like emerging economies. So you can think of kind of emerging nations. And yes, we do have hundreds of countries across the world.

but there is a G7 and then there's also a G20 and that is kind of disproportionately weighted towards the larger companies with, you know, larger economies as well. And so I think we'll start to see that. One interesting question, though, is whether that kind of breaks on the, you know, kind of the super chain level or the individual chain level or kind of like the main chain level. What I mean is, you know, will it be winner take most or winners take most on at the super chain level or like, you know, optimism and maybe a couple of other chains, like they start to accrue all of the value, optimism, Polygon, Arbitrum, or will it be at the

chain level? And that's something I also don't know. I don't know if you have a take on that. I mean, there's an argument that if everything becomes interoperable, it's actually the bridges that accrue a lot of the value. Right, right. You know what I mean? So there's that argument as well. And as I said, I don't think we actually have a definitive answer that could be given at this point in time. It's still too early. I've just given a slice of my kind of views on these sorts of things. But this is exactly why I'm personally investing in as many of the L2 kind of things as I can, because I don't know which one's going to win.

I don't know who's going to be the market leader. You know, and to use an analogy, up until recently, people thought that Arbitrum was the market leader, right? of the L2s, they thought that Arbitrum had just squashed optimism, had crushed it. But then optimism came back with this OP stack thing. They landed base and they're getting all these people building OP stack change now. And now suddenly everyone's changed their narrative and changed their tune. And they're like, you know, optimism's the market leader now. So this is what I mean by it's very hard to kind of pick a winner because the winners can

look like they're winning at one point, but then be like a loser or another point. I don't to say that arbitram is a loser or anything like that. But I'm saying that the rankings can change pretty quick. in this ecosystem. Except Ethereum, right, Anthony? Can we pick Ethereum as a winner? I mean, yeah, I think at this point, we definitely can for, for, I mean, too many reasons that I don't have time for on the show, obviously. But still, there's always that kind of like, you know, less than 1% in my mind risk that Ethereum loses its, it's kind of like market leadership. Totally. Well, here's a question about Eith, in particular to this idea of the risk-free

rate. So here's the question from Merkelroot.eat. I love the notion of staking as the risk-free rate internet bond. But when I seriously consider staking a meaningful amount of ETH, I get stuck. Is it truly risk-free? And does the 4.2% justify the risk? The poster goes on, talking about how they tried Geth and Prism. It was kind of challenging. It took 32Eth. LSDs. There's smart contract risk, worried about staking with Lido, all of these things. So the overarching question, this idea of risk-free rate, is it truly risk-free and 4.2% does that justify the risk? What would be your answer to this question? I mean, I probably wouldn't consider it risk-free under any kind of capacity here. I would say if you want to get as close to

risk-free as possible, you would be a solo staker, running it all on your own, running all your own infrastructure, running your validated keys yourself and the validators yourself and everything like that. that's as close as you're going to get. But even with that comes the risk. But the risk free, the term risk-free is probably being used in a different context, yeah, because what it means when it comes to kind of like treasuries, for example, is that it's as close as you're going to get to a security guarantee because the US government is guaranteeing that kind of like that bond

or that kind of like treasury note, right? Whereas with Ethereum, if you're solo staking, the Ethereum network is going to guarantee that as long as you follow the rules, it's going to pay out the yield that it's supposed to pay out to you based on the network rules and based on obviously other things like fear of renew and things like that. But it's not going to guarantee to you that you're not going to get slashed or that you're not going to go offline, right? And it's obviously not going to guarantee to you.

There's not going to be smart contract bugs if you're staking with Lido or Rockapool, whatever. So I think that the term itself probably doesn't map one to one. But if you wanted to try and map it one to one to one, I would say that solo staking on your own, completely on your own, is the closest you're going to get. Otherwise, yeah, there's risks with every kind of staking setup. Do you think it justifies it, running a solo staking to get 4.2% eth? If you feel comfortable doing it, sure.

I know that people don't feel comfortable doing it for a variety of different reasons. I would say that the risks of slashing are vastly overstated. You're most likely not going to get slashed unless you're trying to actually do something malicious on the network. And going offline is not very punishing at all. It actually is very forgiving if you go offline. So yeah, I would say that generally it's definitely worth it in my mind. And I have most of my ETH staked. And the reason why it's not all staked is because I don't have enough at times to spin up another solo validator.

Obviously, you have to get to 32 ETH. And also I want to have ETH for gas fees, obviously, as well. So keep some ETH for gas fees. Right. Yeah, you know what, for me too. And by the way, this is every investor, every, you know, ETH holder will have to make their own decision. and what your risk profile kind of looks like. For me, it also recently crossed that threshold where I, you know, I was not staking very much of my

eth, and now I'm staking the majority of my eth. And it recently kind of crossed that threshold to me because we're like, you know, a year plus into kind of the merge and all of these things. And so I'm feeling a little bit better about it. But yeah, I will plus one what you just said, Anthony. And this term risk-free rate is actually like a trend. Tradify term. Okay. So in the context of ETH, it doesn't mean that there's no risk to staking. There is slashing risk. There are other risks you have to consider. What it means in Tradify is it's

generally applied to like T-bills or, you know, treasuries, the U.S. Treasuries. And so like if treasuries are yielding a 5% interest rate, that's like considered in Tradify the risk-free rate. And the reason it's the risk-free rate is because if you're going to invest in anything else, if you're going to buy a property, if you're going to invest in a stock, if you're going to buy any kind of asset deal to return, it better damn well be above 5% or else what? Or else you should just park your money inside of a T bill and get that 5% yield. So that represent the risk-free rate. And then you evaluate all of your other investments and the other ways you'd spend your capital.

And they would have to exceed the risk-free rate, right? And that's, I think that is actually a helpful framing of how you should think about, you know, crypto and ETH. So if you're going to take your precious ETH, right, and you're considering diversifying, investing in anything else, well, that investment better exceed 4.2 percent, the risk-free rate of ether, if you're going to make that investment as denominator in ether, or else what, or else you're better off staking. And so I do think it's actually a useful paradigm, but not kind of apples to apples.

you really have to understand it. It's a trad-fi term. All right, takes to the week, Naraj here from CoinSetter. This was an old tweet, but I feel like it was pretty applicable on the back of the tornado cash. She says this. I'm sorry that your warrantless surveillance regime was built on the assumption

that people would always need intermediaries to transact. Well said, I think our entire regime, AML KYC, FinC, FinC is all built on this stupid assumption that really falls apart. And this is why they're fighting it so hard as well. and pretty much like all the regulations are built on the assumption that these intermediaries would be custodians of the assets, right, in one way or another.

And that doesn't apply to Defi, obviously, because there are custodians that can interact with Defi, but if you're a user and you're just custodying your own assets and playing around with these things, then every regulation or almost all of them doesn't apply to you. And I don't think that they like that. It's peer to contract. Exactly. Okay. So do you think, let me ask you that because this goes back to something we were saying earlier, do you think it's malevol? or do you think it's ignorance? I think it's a bit of both. I think it can't, you can't, so malevolence is a lot harder to kind of see

because obviously all this stuff is done like, not behind closed doors, but it's not like they're on live streams talking about this and, and, you know, telling us what they're thinking. But I also think that there's a, there's a huge chunk of ignorance as well

because, I mean, in the US, if you look at the average age of, of a politician, right, in Congress, it's not great, right? These people didn't grow up with, yeah, these people didn't grow up with technology.

And they certainly do not, not understand how crypto works. So I think that plays a big part in it as well. Take from Chris Brininski. Often newcomers to crypto investing want to put 1K to work, hoping to find the next Bitcoin and turn that 1K into $1 million in search of the quick 1000X. They don't realize they're wanting to gamble, not invest. And learning to invest through cycles makes all the difference. Keep it simple. Many quality, obvious names still have 10x upside. Tronch in, tranche out, fixate on perfection, and you'll miss. Don't get discouraged if you're down. Dig deeper. Find joy in what's being built and how attractively it's priced. Don't get drunk at the highs.

Some timeless advice, I think, there from Chris. What are your takeaways from that? Is this how you've approached investing? Yeah, I mean, it definitely is timeless advice. I think that's the perfect way to put it, because it applies to not only crypto investing, but just investing generally. And it will probably always apply to all types of investing for as long as we have financial markets, right? And I understand the people who want to find the next Bitcoin who want to turn a little bit of money into a lot of money because that's what the media reports on when it comes to crypto. They say, oh, this guy put in like 1K and he became a millionaire or this guy put in this and that. And that's what the people think that they can do. But the thing is, is that one guy does it and then a million people don't do

it. And that people focus on the one guy who did do it and won and the million people who didn't win and lost. And you're, you know, almost certainly going to be part of those million people who lost. So, I mean, my investing strategy for, for a long time now, not always, because I was definitely one of these people in 2013, but for a long time now, probably since 2017, was to just invest for the long term and basically keep it simple. But also do a little bit de-joning on the side, not with my whole portfolio, obviously, but with a decent chunk of it. And then slowly kind of, I guess, like, reduce that chunk over time as I accumulated more wealth. You know, go from wealth generation to wealth preservation mode.

Get rich slowly, I think, is the key for crypto. Let me ask you, though, do you think there's another 10x left in ether, the price of eth? Oh, definitely, definitely. Yeah, I mean, but the thing is, is that like, it's not going to happen for a while, right? And these people, they don't want to wait years for a 10x. They want a 10x in like a week, which you can still get, mind you, but that's gambling, as Chris said here.

That's not investing. You're throwing money at a meme coin, hoping for a 10x. That's like throwing money at, you know, at the casino. hoping for kind of like black or something, right? It's the same thing. Yeah, I know. And I think people don't realize how much risk has actually been boiled out of assets like ether at this point in time, right? Whereas like 10x is great.

Who cares if that takes like three to five to 10 years, right? I mean, it's 10xing your money. Where else can you get that at this kind of, you know, risk minimized sort of state that we're in? Anthony, got to ask you at near the end. So what do you bullish on these days? friend. Well, I mean, always Eath, of course. I think that's just like the table stakes answer to give. But generally, I'm bullish on watching the cycle play out the same way it's played out every cycle in crypto. And I know we talked about this earlier, but the reason I'm bullish on that is because

I think that there's always going to need to be a shelling point for the market to kind of rally around or any market to kind of rally around. And I think in crypto for the foreseeable future, while we're still not very deeply integrated with Tradfai, our shelling point has always been that four-year cycle, right, and that harvining narrative that applies to all of crypto. And I'm excited to see maybe it had one last hurrah. Maybe by the time the next cycle rolls around, we're too deeply ingrained with Tradfai and it no longer becomes a four-year cycle. But that generally is something that I'm just pretty excited about because I'm basing, obviously, a lot of my investing assumptions on this four-year cycle playing out. But I also think that it'll be good for the ecosystem for next.

year to be a good year so that we can actually get some fresh capital in and use all these new pretty toys that we've created over the last couple of years. Yeah, you know, I'm bullish on something we were talking about earlier in this episode. I want to make maybe a link near the end. So I think the Bitcoin ETF would be a big win. And we've talked about all of the reasons why, but I think one may be underrated reason, which some bankless listeners might be uncomfortable with and I'm somewhat uncomfortable with as well.

But let me kind of run through the calculus here. this gets Wall Street on crypto's side in a big way. If you are a cynic about the U.S. political system, you might say something like, yeah, the banks run politics, right? And like, I mean,

maybe there's some elements of truth in that. Maybe there's 100% truth in that. To date, Wall Street, like the big asset managers of the world, like the black rocks of the world, they haven't seen any big wins from crypto. Well, that changes when they get an ETS. Okay, then they have an actual product to sell. And when they have a product to sell, they'll sell that product into our legislators into Congress and all the lobbying required to get it pushed through. I somewhat see this as an unholy alliance, by the way, because let me be first to say, I do not trust the banks. You protect our peer-to-peer, defy, you know, privacy, like all of the decentralization, kind of the reason we're here. But they are.

a useful adversary at this stage in the game because one of our main opponents so far have been rogue regulators that don't want retail to buy crypto at all. And so this is like checkmate to Gary Gensler. And I think once you get kind of Wall Street and some of the banks on crypto side, then you get some wins. So the ETFs will fall next to stable coins. They will get on board with stable coins. That's another product that they can sell. They'll be very excited about that. we'll have to fight them later, I think, for some of our defy rights. But by that time, again, the market cap of crypto will be much larger and I think we'll be in a better negotiating and bargaining position. So that's sort of a hidden benefit of this whole Bitcoin ETF thing that I think people

fail to appreciate. Once we get the Bitcoin ETF, I think the politicians will start singing a different tune because of this effect. Definitely. Yep. Yep. I agree with all of that. And I think you hit nail on the head by calling it an unholy alliance because, yeah, I mean, I feel the same way. It's definitely not something that we ideally would want, but it is necessary, I think, at this point in time. We are playing the game, the Game of Thrones here. Let's end with the meme of the week. Anthony, this is something I picked up from one of our chat rooms, I think. GM fellow multi-cycle digital currency enthusiasts. We are looking at a sad wojeck in the center of a circle here. What are we looking at? Can you describe this meme for us, Anthony?

me? Yeah, I mean, this is basically the meme of investors always kind of missing the bottom to buy and then always missing the kind of like top as well. So this happens a lot, I think, especially first cyclers and maybe even second cyclers, where essentially they're like, oh, I'm not going to buy yet because the bottom is not in. And then the bottom actually is in. And then they wait for the bottom to be kind of like retested. It never comes, right? And then they're like, okay, well, we're going up, but I'll just wait for the market to pullback in order for me to buy now. But then the market tops out and you end up buying on the downtrend in the bear market. So this is a harsh lesson for people to learn, but I think people

need to learn it. Yeah, totally. And I can identify with this too. Even I get sucked up into this sad Wojack chap here. Guys, we've got a moment of Zen for you coming up at a song and Dayman talking about the Gary Gensler court case. I think we'll enjoy that. Also, I want to give another shout out to you, Anthony Sasano for coming on the show today. He just uploaded mid-episode the refuel, which is absolutely like on the daily must listen to content for Ethereum and crypto. Anthony, what have you been talking about recently on the refuel? I mean, a lot of the same stuff I guess we've talked about on the roll-up today, of course. I think that I've been trying to follow more closely along with the individual L2s themselves

and seeing what they're doing because I feel like a lot of them are coming into their own right now where they're actually defining their vision and what they actually want to build out for their own kind of platforms and ecosystems. So I've been trying to kind of relay that to my community there. But yeah, I mean, and core development too. I mean, EIP 484 is around the corner. I think it's going to go live in November of this year. That's kind of my estimate that I've been talking about for quite a while now. And it seems to be on track. So that's, those are the kind of main things I've been trying to focus on mostly for the show. But of course, covering the day-to-day news as well. Guys, there's a link to that in the show notes. And I recently saw that the refusers,

the refuel is now on Apple Podcasts. You can go catch that there in your podcast player. I'm going to end with risk in a minute, but first we disclose. I think the only thing to disclose today is I'm an angel investor in an Instadap. We talked about an application for Instadap today. Of course, you've got to know, both Anthony and I, we are long-term bullish holders of ether, but of course you already know that. We are long-term investors here at Bankless. We're not journalists. We don't do paid content. There's always a link to all bankless disclosures in the show notes. You can access that at Bankless.com slash disclosures. got to let you know too on the risk front

crypto is risky you could lose what you put in but we are headed west this is the frontier it's not for everyone but we're glad you're with us on the bankless journey thanks a lot to avoid arbitrariness and caprice administrative adjudication must be consistent

and predicted should be treated similarly and showed this