Bankless - SotN #14 - FUNding with Kevin Owocki (Gitcoin #7 BEGINS, DeFi protocols compete 4 Gitcoin, StableCredit USD, CeDeFi = real or joke?)

Episode Date: September 16, 2020

STATE OF THE NATION #14 - Tuesday, September 15th, 2020 Watch on the Bankless YouTube Channel The State of the Bankless Nation is....FUNding It that time of year....GITCOIN TIME!!! Every quarter, 4 times a year, Gitcoin Grants rolls around. This is one of the few times where the money in your wallet means 10x more than it used to... IF... AND ONLY IF.... you donate to your favorite DeFi and Ethereum infrastructure.  We bring on Kevin Owocki, el presidente of Gitcoin, to discuss the role of Gitcoin in funding the DeFi ecosystem and the technology behind funding public goods.  -----  GO BANKLESS WITH THESE SPONSOR TOOLS: 💸 UNSTOPPABLE DOMAINS - HUMAN READABLE NAMES FOR ETHEREUM AND CRYPTO ADDRESSES 🌈 ZAPPER - ULTIMATE HUB FOR DEFI - ZAP INTO DEFI  💳 MONOLITH - GET THE HOLY GRAIL OF BANKLESS VISA CARDS  💸 AAVE - BORROWING AND LENDING DIGITAL ASSETS ON ETHEREUM - DID SOMEONE SAY YIELD FARMING?? ------ STATE OF THE NATION #14 - Tuesday, September 15, 2020 The State of the Bankless Nation is....FUNding Special Guest...Kevin Owocki @owocki on Twitter TOPICS: GITCOIN with Kevin Owocki 1) Gitcoin Round 7... START 2) This round is different... WE'RE IN A BULL MARKET 3) DeFi protocol, DeFi farms, DeFi teams are SENDING GITCOIN $$$  4) Gitcoin is out of the shadow of Consensys, the EF 5) Decentralized Identity, Sybil Resistance of Gitcoin StableCredit USD 1) Bankless Video was helpful... still need more help in understanding Andre Conje's new StableCredit USD system 2) Aave + Maker + Uniswap + Synethix = StableCredit USD (?) 3) Yearn needs a place to park its capital; it filled all the other protocols 4) Contracts done, UI soon BTC and ETH are the crypto monies that matter MicroStrategy Buys $175M More in Bitcoin, Upping BTC Holdings to $425M Bitcoin’s prisoners dilemma  ETH just passed BTC on total value transferred and that’s huge Fake DeFi doesn’t cut it (CeDeFi) Binance Smart-Contract Chainhttps://www.binance.com/en/blog/421499824684900933/Binance-Smart-Chain-Launches-Today 100m fund Binance Block Explorer https://bscscan.com/ Token Sets Introducing the DeFi Pulse Index on TokenSets | by Anthony Sassano | Set Labs | Sep, 2020 ----- Don't stop at the video! Subscribe to the Bankless newsletter program http://bankless.substack.com/ Visit the official Bankless website for resources http://banklesshq.com/ Follow Bankless on Twitter  Follow Ryan on Twitter  Follow David on Twitter Follow DeFi Dad on Twitter  ----- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research. Disclosure. From time-to-time we may add links in this channel to products we use. We may receive commission if you make a purchase through one of these links. We'll always disclose when this is the case.

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And it'll even let you make investments into DFI protocols right through this. their Zapper.Fi portal, making it really easy to compare and contrast different places as to where you can deploy your capital. Check them out at zapper.fI. Hello, Bankless Nation. Welcome to another episode of State of the Nation. This is episode 14. David and I have a lot to cover today. We also have a special guest, Kevin O'Waki, that will be coming on later. Really excited to be here. David, how you doing, man? How are things. Absolutely fantastic. It's that time a year again where I just get really optimistic about Ethereum's future, as if I'm ever not, but is kind of where the rubber meets the pavement. And so

when Kevin comes on in a second, we're going to talk about what it's like to fund the future of Ethereum. So that's what's going on this week. It's a Gitcoin themed week. I'm pretty excited to talk about it. Awesome, man. And I am seeing our production quality escalating ever since you've been full-time bankless, my friend. So these commercials are going great. This is going to be a special episode. Thanks for DJing. So if it's your first state of the nation episode, we do these weekly. And what Dave and I like to do is talk about what's happening, the events that are going on in the space,

and related to big picture themes that we talk about, the newsletter that we talk about in the podcast. We hope to always drop some insight and action items. This comes out on Tuesday, but we've changed the time. So now you can watch this live at 2 p.m. weekly Eastern time. So that's 11 Pacific time. And I can't do the other, you know, time stamp block times in my head. But you guys can figure out what UTC time that is. And hopefully this is a good time for all of you so you can watch live, get your

YouTube, get your questions into YouTube as well. And then on Wednesdays, we released this to the podcast. I guess a couple of announcements before we begin or things that are going on in the nation. We dropped a insanely cool podcast with Kane on Monday. David, what were your thoughts on that podcast, man? Like, I was blown away by the roadmap. What did you like about it? Yeah, I really liked going into Kane's personal background because no one has done that yet, right? And I've been obsessed with the idea that where there is code, there is social contract and where there is social contract, there is like a reason behind it and a personality behind it.

and Kane as one of the leaders of the synthetic movement kind of has his DNA written into the Synthetics Protocol. And so no one's really explored that side of things. And so that's something that we definitely were able to pebble back the layers on with Kane and with synthetic. So I thought that was particularly fascinating. Yeah, so check out that podcast. It's on your podcast feeds.

That came out on Monday. Also, David, you've been super busy, my friend. So you've been shurning out another show that we call Meet the Nation. Can you talk about what Meet the Nation is and a few of the other shows that you've covered so far? Yeah, yeah. So keeping up with Defi is difficult, right? Like every single week there's a new announcement. Every single week there's a new farm.

Every single week, there's something new, right? And so this is a place where people can, from Teams, can go and meet the nation, right? Like, teams will come on, explain what they do, explain why they're doing it, explain who they are, and explain what their, like, future roadmap is, right? There's a ton of innovation going on. And frankly, people like to learn visually and with auditory, whatever the sound version of that is. And so, like, YouTube is a great place for this, right? And so we're going to start churning out the Meet the Nations.

We have Bright ID coming on later today, which actually fits really well with this Gitcoin-themed week. Because Kevin will talk about it in a second. But Bright ID is this decentralized identity solution, which is really important for the space, right? Like, Ryan, you had a fantastic tweet that was super short, super simple where you said, the first phase of crypto is we take back our money and the second phase of crypto is we take back our identity. And we need a decentralized identity solution like Bright ID in order to do that, right? So that's going to be fascinating.

We also have the based team coming on. Maybe later this week, there's a little bit of complication there because the D5 founders are trying to remain anonymous. And so there's going to be a little magic going on behind the scenes there. Anthony Sizzano is coming on on Thursday to talk about the token sets. index, which is brand new, which I'm super excited about. We just have some great projects lined up. And so if you want some team, some project that you don't understand or just want to give them more exposure at me on Twitter, I don't ask for being added frequently, but if you want

to see somebody on the Meet the Nation, let me know, and we will get them on the books. Yes. And if you want a taste of Meet the Nation to check out the episode on Stable Credit with Andre that David put out on Friday. David is keeping his question. promise of going full-time bankless and like just churning out this excellent content so meet the nation is a great way to learn about new projects and what's going on we've got a lot coming on the podcast too including an episode with hugh carp that's going to ship next week an episode on nfts an episode on mollock just just a lot of stuff going on but david let's start with the question i always ask at the beginning of these state of the nation episodes what is the state of the nation

this week, my friend. The state of the nation is funding. Funding. We are having fun while we are funding things. And again, this is like the Christmas, except it happens four times a year. So thank you Gitcoin for making Gitcoin a four times a year thing. This is where, and especially this particular quarter, I think is going to be particularly fun because this is the first quarter that Gitcoin has been a thing during a quote unquote bull market, right? Like, and in addition to this, treasuries, DeFi protocol treasuries are also making money and therefore also donating to Gitcoin. So I think this is going to be a particularly fun time in Ethereum in Defi. This is when the Bitcoin Maxxies just get super salty that we are just being able to fund ourselves with our own

money. And I think it's something that everyone should kind of stop and reflect about Ethereum. Because the first thing Ethereum did was it made Ether, it made its own money, and then it made it valuable and now it's using its own money to fund its own projects, right? So like total self-sovereignty, like total independence from anyone else. Like don't need to ask permission. Don't doesn't need to go to the banks and say, hey, will you please fund me? We will do it ourselves with get coin. Yeah, super cool. All right, man. Oh, I think that's the perfect lead into our first topic then. We're going to talk about also stable credit again and then a grab bag of other interesting things that are going on in the space. But the main event is talking about

Gitcoin and what's going on there and the sustainability of Ethereum. So we brought on the best person we know to talk about this firsthand. So this is, you know, there's someone told me, David, there's an Apple event going on, right? So I think Kevin O'Waki is the Steve Jobs of open source grants. So take that Apple. I hope you're tuning in here, guys, instead of watching the Apple keynote. are you there? It's super awesome to have you on bankless state of the nation, my friend. How are things? Hi, hi, hi, David. Hi, Gavin. Hi, David. Thanks for having me. Welcome. Great to be here. Not very comfortable with the Steve Jobs comparison, but we'll roll. That it's just forgot my black t-shirt and my assholeish attitude, but yeah, we'll roll with it.

Things are good. Yeah, we just launched Get Coing Grants over the last 24 hours, round seven. got 360K of matching funding that we will be distributing to the Ethereum community. And we're going to be distributing it according to quadratic funding, which is a formula that optimizes for the poor and the many and not the rich and the few. So I'm really excited to enable the community to fund itself and to, and hopefully we can create some freelancers who just work for the open internet. I'm really excited to be facilitating that with Gickland Grants round seven. Well, that is awesome. We want to talk about all of that.

But first, have you got any sleep in the last 24 hours? I know it's like a ship day for Gitcoin. But how are you doing on the sleep side? I haven't gotten much sleep. And it's partially because of Gitcoin grants, but it's also because I have two kids. So used to no sleep already as well. So, Kevin, if somebody's new to the DeFi space and they haven't yet participated in Gitcoin, what is it? And why are so many Ethereum people so excited about it?

about it. For sure. Gitcoin started in 2017 and we never did a token. We never did an ICO or anything. It's just a place where you can get coins in exchange for doing software development. And so we've got a couple different ways that you can do that. We run a bunch of hackathons that allow you to get coins in exchange for working on hacks that our sponsors put up. And then Gitcoin grants is kind of like a crypto Patreon where anyone in this space who's doing work that is helpful to the community can create a Gitcoin grant. And then once per quarter, we put together a matching round of about 300K, and we match the contributions to those Gitcoin grants.

And what's cool about that is that as funding is coming in from your peers, the people who know you best in are funding it, the Ethereum Foundation and other people in the space are matching those contributions. So it's a really great way to raise some money once a quarter for projects that you're doing in the Ethereum. space. So far we've done a six and a half million dollars with a funding for open source in the last two years. So I'm starting to get to the point where people can quit their jobs and work for the open internet. And so in addition to going bankless, people on get coin are going jobless,

which I think is pretty cool. Yeah, that's super awesome. Okay, so maybe we could talk. So this is the seventh that you've done, the seventh actual grant round. And you mentioned something in the intro there, Kevin. You talked about quadratic funding. What is quadratic funding? How what like why is it unique and how does the funding process, I guess, get calculated in in these grant rounds? Sure. Yeah. With quadratic funding, so typical grant matching campaigns will be one to one, which means that if you give $1, then you're the matching pool will will match with a dollar. And quadratic funding is, Actually, can I use a visual aid? I'm not sure how many of the audience actually has,

has visual versus audio. Yeah, yeah. If you want to share your screen, we can do this. We are equipped for this. All right, sounds good. So one of the problems that I've had recently is that it's really hard to describe quadratic funding. And one of the things,

and like, because it's a math formula. It's basically this math formula that is the mathematically optimal way to fund public goods in a Democratic community, And this math formula is that the amount of matching that you receive is proportional to the sum of the square roots of the contributions, which is you kind of have to be mathy to really understand why that's powerful. but we released this this quadratic funding calculator at wtf is qf.com where I can just quickly demo to you that if I have a grant that is funded with $10 from one contributor and another grant that is funded with $10,1 contributions, then the matching amount of that second grant that is more democratically popular is going to be way, way, way higher than the one that raised

the same amount but from one person. So we have a matching formula that basically optimizes for the poor and the many instead of the rich and the few. And if you're trying to push power to the edges and remove intermediaries, that's the way you do it with small donations, not from mega funders and not optimizing for whales. So this is like splitting the difference between one person, one vote and one dollar one vote, right? And so like let it be known that the whole $1 one vote is as old as time. And maybe it's not formalized in any real democracy. but like purchasing votes is a real thing. And what Gitcoin is doing is just kind of formalizing this as a in relationship to one person,

one vote, right? And so the cool thing is if there are a bunch of people that all want to fund this one thing, but maybe for some reason this one thing is like giving money to poor people. It's like, well, poor people are really interested in that, right? And so, but they don't have the capital to fund that. But this Gitcoin is like the democratized. or the equalizer that allows for, you know, the people that can only throw a dollar, a couple dollars to have a much louder, much more amplified voice.

Yep, that's pretty much it. And, you know, in the blockchain space, I think that we're all about creating more digital democracy and pushing power to the edges, removing intermediary. So it's kind of walking, walking the walk, not just talking the talk. And I'm really super proud that the Ethereum community has started to fund itself this way, because it's a great way, it's a great way to get new people in the ecosystem that, that are just starting out, get them, get them wet their whistle on starting to do Ethereum stuff. In fact, I know that one of our bankless hosts maybe had gotten their start on Bitcoin grants.

No, that is for sure. Before I was bankless, I was an independent content producer. And I got, and like, for me, Gitcoin was the place where I got signal that my work was actually valued, right? Like, I would post my articles on Medium, and then I would get some claps and people say hey nice nice article but that's not really the same as like receiving five thousand dollars in git coin grants uh that's a different kind of signal right that that told that told me is like oh this is something that i can like sustain myself with right and so yeah i i actually recently closed my git coin grant because i no longer need it uh and and i kind of graduated i consider myself like a git coin graduate there we go we'll have to we'll have to mean that eventually

like a lot of stories like that Kevin or is David's case fairly common right so I've seen some startup teams even you know come out of this um uh zapper who's now a bankless sponsor is actually actually one i recall funding one of their early gitcoin grants and they've spun that up and now that they have an entire company is that a pretty common scenario yeah there's a there's certainly a handful of people that made it through the bear market partially on their or Gipcoin donations. One of the things that Vitalik is really passionate about is this idea of a quadratic freelancer.

So basically, once quadratic funding gets up to enough money, then there's gonna be this threshold where anyone making over X thousand dollars per quarter off of Gipcoin can just quit their job and work for the open internet. And that's kind of our mission is to enable people to quit their jobs and work for the open internet. And it's more important to be able to provide that funding

during a bare market, I think, than during a pool market where people are making money to quit their jobs off of their bags. It's about providing that sort of foundation for people to be able to quit their jobs because their peers respect what they're doing. And yeah, there's on the order of six to 12 people

that are get coin graduates. And then there's three or four quadratic freelancers right now. So I want to 10x that in the next three or four years. And I'd really like it if we can 10x the number of people who can come into the Ethereum space and do meaningful work because we have this funding mechanism. So still working on that, but right now we're doing about 500K per quarter through get coin grants. And my vision is to be able to do $5 million per quarter through get coin grants.

And you can do way more quadratic freelancers when that happens. Okay. Can we talk about this? So I am, I'm showing a tweet or I was showing a tweet, Kevin, where you were talking about the current, let's see, let me click over to it. The current, quadratic funders, I suppose, who are funding a lot of this activity and putting their money up front as part of it. And in previous rounds, you've had a couple of, I guess, whale kind of entities that have funded these grants. Consensus has been one. Also, the Ethereum Foundation has been another. But what is incredibly exciting to see, at least for me, is that this round, round seven,

we're starting to get donations outside of those two core entities. So we're starting to get them from D-Fi protocols. WIRED, we've talked about a lot on bankless, is actually allocating a percentage of, I believe, their entire capital pool to this. Can you talk about that? Like, how did all of this come about? Who are the current donors in round seven? And how much are we talking?

Like how much growth are we seeing? Yeah, for sure. Yeah. So when Get Coin Grants was just getting off of the ground, a lot of our funding came from the Ethereum Foundation. And a small amount of it came from consensus. I think people use those two interchangeably, but it's actually mostly been the Ethereum Foundation.

And the thing that has been really promising this round is that the mechanism is sort of validated. I mean, Vitalik's written four blog posts about it, and we know where the warts are. and it gets better every round. And so I think we reached a level of legitimacy in the community where it's like, oh, Gipcoin's not just talking about funding these public goods. Gipcoin is actually doing it.

And they've got this mechanism that's scalable and secure that can do it. And the other thing that has happened is that ETH is not an $80 anymore. So we actually have a lot of protocols that are doing pretty well financially. And so one of the things that I've been proposing in the governance, proposals of Wi-Fi and Yam and other D-Fi protocols is, hey, why don't you give back 1% of your treasury to Gitcoin? And not to Gitcoin the team, but like to Gitcoin grants. And so, you know, Andre is a Gitcoin alumni from Wi-Fi and several other people in the Ethereum community are Gitcoin alumni. And so there's an opportunity to to pay it forward

and to create the next generation of entrepreneurs who are going to be in the Ethereum space. and also to fund core infrastructure in the Ethereum space. And I think that that's a rational economic act, is if your bags are built on top of Geth and Parity and Lib P2P and Eth 1 and Metamask and all of these DFI apps that are open source and maybe some of them don't have business models, it's a rational economic act

to make sure that the infrastructure underneath your bags is funded. And so we started to see not only DFI protocols, but major whales in the space like Andre, Robert Leshner, recently donated to get coin grants. And so we've actually reached a threshold where more money is coming from the community to fund public goods than the Ethereum Foundation. And that makes me really, really happy because the Ethereum Foundation, as great as they are, is not going to exist forever. But the defy community is going to exist forever. And so if we can kind of create that altruism

as a standard, as a social norm in the Ethereum community, we could potentially fund our public goods in perpetuity. And so, So, you know, in a blockchain world in which there is no taxation in order to fund public goods. And I don't think there should be taxation. I don't think we should do coercive stuff like like tax people in order to fund their public goods. Then, you know, these donations from these DFI protocols and from these whales are a super important thing. And, oh, you've pulled up get coin grants and you can you can sort of see the fellowship of get coin of get coin funders. And so it's pretty exciting to see these people on on get coin grants funding the rounds.

Gurn Finance has funded 155K Future Fund, Defiance Capital, Mariano from Maker. All of these different people have been giving back with Bitcoin grants and it's been super promising. That's huge. And you mentioned some of the, I guess, social norms that are being created, right? So here is Kane from synthetics who said, let it not be said that, I'm susceptible to public shaming. Synthetics is in. And he is responding to Andre's lead,

who is inviting basically all of these DFI protocols that, let's call it what it is, have gotten rich in the past, their treasuries have gotten rich in the past six months, to go give back to the public goods that made all of it possible. So Andre kind of took some lead and threw down the gauntlet and said, you know, like, why irons in? we're doing this. It's past our governance, 1%. And now you guys should do it too. And he made the call to like Avey and Balancer and Robert Leshner and now Kane's jumping in. So it's starting to be sort of this

social, social norm, as you said, Kevin, that like, hey, if defy protocols are getting rich on top of Ethereum, then they need to give back. And it should be opt-in, right? It should be, it's not a forced taxation of public goods, it's an optional donation to these public goods. And that's been phenomenal to see. This is really, I think, correct me if I'm wrong, Kevin, but this is the first time we've seen that in such a magnitude. Do you think it's just kind of the bull market? People have more money to spend and they're now able to do that with the success of these D5 protocols? Yeah, I think that it's partially the bull market. People are feeling a lot more fortunate. And, you know, the bull market has not spread evenly.

I think there's a lot of assets from 2017 that are still in bear market, but the ones that are breaking new ground like Wi-Fi and compound are certainly doing well, and I think that they feel need to give back. And I also think it's just the legitimacy of quadratic funding. It's no longer just a paper by Vitalik and Glenn anymore. It's been proven to work in the wild. And so it's about having that scalable, credible, credibly neutral mechanism for funding public goods that I think is really important.

And, you know, we can get into how that scales later, but to the tens and hundreds of thousands of dollars, it actually has been working pretty well so far. Well, I just want to talk one second about the numbers here. So if we had every D5 protocol following Y earns lead of taking 1% of their treasury and periodically giving that back in the form of a Gitcoin type donation, right? I mean, have you done the math? like how much would that be as these protocols grow? Yeah, it's tough because, you know, the metric that everyone can track is market cap. And I think that for most of these proposals, what we're looking at is how much of their treasury would actually go to fund public goods. And I just don't know what the aggregate amount of treasuries are in the space.

But I think that it's probably quite substantial. And we're talking about the millions of dollars per quarter. So it's possible that I could get to my goal of $5 million per quarter. public goods just by using Treasury funding alone through these DFI protocols. But let's not forget, there are also founders who are D5 founders and DFILs who are contributing a stake. And that is not connected to any protocol related funding. And so there's other ways to pull donations for these things other than just the treasuries. It's just the treasuries that are really attractive because they'll exist in perpetuity, which creates, you know, that stable baseline, I think is really

important. One thing I'm really excited about is the fact that at some point, like we call these Gitcoin grants and donating to Gitcoin, but at some point, especially for the whales, it's straight up rational for them to fund things in Ethereum, right? Like if you are some like 10,000 eth plus whale, like at some point you need to make sure that the ecosystem surrounding your ether, making your ether more valuable gets funded, right? Can you talk about that a little bit, Kevin? Yeah, for sure. We're in a crypto ecosystem, which fundamentals increasingly matter. And so if you want Ethereum to have value, it's in your best interest to make sure that there are no Black Swan events that happen on the Ethereum in the Ethereum space with the infrastructure layer. But it's also in your best interest to make sure that new defy apps are coming out.

And because of composability, when you have this compounding value creation in the Ethereum ecosystem, And so if you're a whale and you want to see the Ethereum community succeed, giving to Ethereum public goods is a really great way to do that because it just prevents those Black Swan events and it helps those DAPs succeed. So, you know, Ethereum is growing for many reasons and community is one of them. And I think the community funding, the community is a really positive, bullish trend for the Ethereum space. Kevin, we have a question coming in from YouTube saying, Do projects need to get approved to be eligible to get into a Gitcoin grant round?

Is it up to the community to weed out projects that do not meet the requirements of a public good? Yeah. So Gitcoin is doing our best to not be a central intermediary that you have to curry favor with in order to be on the platform. anyone can submit a grant to to get coin and we'll probably take a look at it just to make sure it's not an outright fraud and and other than that there's not an approval that you need for me or anyone on my team and we do have a flagging system wherein people can say hey I think this is maybe a private good not a public good and and you can follow at get coin disputes on Twitter if you want to get out your popcorn and see where the disputes are on the platform form. A lot of the redact cut and dry. And so I think that maybe one of the things you'll see from us in the next three months is introducing some sort of governance layer in which the community community, particularly the community that has funded public goods on Bitcoin, can decide whether or not a grant is breaking the rules or not. But for now, you know, for now it's just we kind of keep an eye on Twitter and see roughly what the sentiment is. And if someone's doing

something that's an outright lie or fraud, then we'll remove them. But it's pretty thin from a governance and an approval perspective right now. That's because we don't want to be an intermediary. We want to be credibly neutral. We want the community to decide what to fund. And the great thing about quadratic funding is that it optimizes for what the community sentiment is. So it's already got that built-in, that built-in resistance to crappy projects.

So Kevin, talk about... Did you guys... Sorry, go ahead, Ron. Oh, I just a quick question on that. I was just wondering, Kevin, did you guys... I used to call it hate voting, right? Which was, you could actually give a negative. donation. Is that still in Gitcoin? I know it was in one or two of the previous rounds. Did that work

out or not so much? And maybe you could describe what that is. I'm sure you don't call it hate voting. Yeah. If I did, then I think we would have rebranded it by now. So the idea, so this is straight out of Glenn and Metallics paper for the quadratic funding paper. And it's called negative voting. And the idea is that the example that I showed you earlier is that if a grant gets 10 contributions from 10 different contributors, then its match will grow much higher. And so there's this problem where that can optimize for more controversial figures. Basically, like, if you're creating a bunch of noise and 51% of those people really love the work that you're doing, but 49% think that you're being an asshole, then there's no way for those contributors who are against you to express their

preference other than funding every single other grant on the platform except for you. And so basically negative voting is just an automated way to fund every other grant on the platform except for you. And we call it negative voting. The idea is that you could you could vote with your dollars against a grant. And the money that you pay with would go to the matching round and it would count against your match total. So those 10 contributions of $1 used in my example earlier, if they were 10 negative contributions of $1 each, then it would really reduce your match amount. And what that does is it dampens controversial actors, and it sort of weeds out from a mechanism design perspective, the people who are not only creating public goods, but creating

public bads, which is, you know, I don't know if Fetallic would approve of the word public bad it's something I just made up. But it turned out that in practice, like, people are emotional creatures in knee voting against you kind of goes against the spirit in the ethos of Gipcoin. And so we ended up removing it because of the, because it sort of violated the ethos of Bitcoin. And we haven't, yeah, it's still on, it's, it's still an unsolved question of basically how you dampen the controversial actors.

And I think you'll see us evolving our governance in rounds 8, 9, 10, 11, and 12. in order to figure that out. I can see psychologically how it just felt like that from a human perspective. Like you could receive 30 positive contributions like saying, hey, your freelance work is fantastic. And then that one negative comes in. And it just almost takes away from the 30, right? Like just in your head, it just feels like it hurts more.

Like somebody's actively trying to vote against you feels more painful for whatever. reason. I guess that's how we're wired. Yeah. And I remember there are some people who are like, it's, it's not like a personal thing. I just, yeah. But like, but then you get tagged in these Twitter threads and like everyone's debating it and it becomes like a giant thing. And so we just decided the overwhelming community sentiment was Kevin, please remove this. And so we haven't done it since round five. I'd actually like to express the opposite opinion where, gosh, I can't, I can't remember I was received the recipient of some negative votes last time and you know again like it hurts because like oh well that's money but also at the same time and what is a part of the ethos of you know

quadratic funding is funding via the market right and oh yeah well maybe I shouldn't I do remember the guy but maybe I shouldn't name his names but like I would consider him a friend and I really value the work that he does and he voted negative on me simply because he perceived the value that I was receiving to be above and beyond the value that I should have received in relationship to others, right? And so there was no ill will. There was just like, you know, I think the guy, the individual said that he thought that the market was overvaluing my work and that other work should be more valued. And I think that does kind of go in line with the ethos of quadratic funding because that whole

thing is trying to get the market to determine how much value should be sent where. So you can actually chalk me up as a pro on the negative voting. side of things. I'm sorry, I negative voted you that one time, David. But thanks for not doxing me. There were actually like three or four people. It wasn't. All right. So,

okay. So I guess, you know, how do you guys prevent some of the cartel activities that are going on? I'm seeing a bunch of questions coming on YouTube about that. Like, so there could be sort of a group that seeks to promote

only their cartel group members on Gitcoin and channel all of kind of the gifts through them. Has that been a problem so far? Or are you just at the scale where you haven't felt that kind of problem or do you expect it in the future? How do you take precautions against it? Yeah, well, let me answer your question with a question. Is the meta-cartel a cartel? Well, they have cartel in their name, so yes on that one. Okay. But so they're kind of named that in a fun way. But what I meant when I asked that is like,

are they doing cartel behavior as in like, when I think of cartel, I think of like trafficking drugs into the country. Whereas I think metacartel has done some pretty bomb stuff in the space. And so, you know, the question for me is like if there's a group of people who like consistently work together to produce value, is that something that the get coin grants formula should optimize for?

I should say that like the Metacartel grants do well every single round. And I think that that's a good thing, not a bad thing. And I think that the reason why the Metacartel grants do a really good job every round is because they're actually providing value to the ecosystem. And like I said, quadratic funding optimizes for the poor and the many, not the rich and the few. That's Metacartel. Metacartel is like other than ETH Global. That's like the entry point into the Ethereum space.

And so I think it's a good thing that Meta Cartel and groups like that are really done well in quadratic funding. But I do think it's really bad if there is a quid pro quo or some sort of collusion or bribery wherein person X could say to all of their Twitter followers, hey, I'll give you each a dollar and contribute 50 cents to my get coin grant. And we will and I'll give you, you know, you can keep the other 50 cents, but I'll get all this matching fund. And that actually happened two rounds ago. We saw that there was a grant that was rising in the rankings really, really fast, especially like relative to its social capital that it had in the ecosystem. And then we looked at all the transactions and it was just one Ethereum account funding 100 people than the money going back. And so we're like, oh, this is a collusion attack. This is a bribery attack.

And so we posted this whole long tweet storm about how we were going to consider each of those contributions or sorry, each of those actors to be one actor. We just collapsed the identity vector down to that one actor because it was just one person in funding them all. So that's like an example of a collusion attack that we aim to prevent. And we have some trip wires built into the system to prevent that. But we also have this thing called Paralyze bonding that Battalic came up with. And it's a automatic way that doesn't require, like Kevin can sleep through the night and Paralyze bonding just works without me having to think about it. Parwise bonding works is that it looks at every. group of end contributors in the get coin grants round. And if they are only contributing to the same

grants as each other, it realizes that they're colluding and it dampens back their their contributions. Whereas if everyone is contributing to different grants, like if there's entropy in that set, then it's considered to be more democratic contribution pattern. And so Paralyze Binding is a way of bonding contributors to each other and figuring out if they're only contributing to the same grants. And if they are, then dampening those contributions. So this is an ongoing area of research, but Vitalik is like galaxy brain dropping like pairwise bonding stuff on us. We're building a thing called civil rank and collusion rank where we can test which grants

are colluding and which ones are. And we're providing data back to the researchers in order to solve this problem. And the way I look at it is as an iterative problem. right now we can we can absolutely ward off unsophisticated attacks we're working on sophisticated attacks and then like the next level is like nation state level like north korea like stopping i don't think that we're doing enough money right now for north korea to care about get coin grants but like when we're doing five million dollars per quarter maybe we will be and it's about it's about every iteration climbing that civil resistance that clusion resistance stack and so we've

built some sophisticated technology to to take care of it i don't know if that'll satisfy all the questions that you're getting on YouTube, but we're definitely taking it seriously. And I think that that's that's the TLDR. Absolutely. Any, anytime there is a crypto economic protocol and I would consider quadratic funding and get coin one of those, there is a way to attack it. Right. And so this seems like your challenge.

So where does bright ID and decentralized identity fit into the get coin stack? Yeah. So bright idea is an investment that we made this round. And the exciting thing about bright ID is that it's really hard. to forge an identity. So if you remember earlier, I said that 10 contributors that are contributing $1 each to a grant will fare much better than one contributor who is giving $10 to a grant. And that, of course, creates a crypto economic incentive to make up new identities. And so basically, that new identity attack is a sock puppet account. It's called a civil attack. And so basically,

there is an ongoing effort to create what's called civil resistance. in these systems. And Bright ID is this really, this really, really cool mechanism in which you can have DIDs, decentralized identities, that verify each other. So basically, I don't know if you guys,

if y'all have Bright ID on your phone, but if you do, I could create a, I could give you my QR code right here. And I could say, hey, scan's QR code and let's connect to each other. And identity asserts that you. Your identity is real and your identity asserts that my identity is real.

Let me just take off my virtual background so that we can actually scan each other. And so it's about creating identity mechanisms that are not reliant on the government, that are reliant on decentralized technology in order to, in order to verify each other. So it looks like David's about to. Oh, you're so connected. Look at this. Look at, look at how clean, shave it and young. Oh, my God.

Before I got into the cryptos. Fun fact, I'm standing outside of the Wells Fargo Bank headquarters in downtown Seattle. In that photo, if you zoom out. One day we'll release the uncut version of that photo, David. There you go. I'm your first bright ID connection, David. So you've got to get your DID rolling. Well, we're doing the bright ID team and meet the nation later today.

So I'll have at least two more. I want to watch that, guys. Because I feel like Ethereum has talked about decentralized identity for a while. there have been a number of projects that have kind of come and not really gotten traction and kind of gone. Is Bright Idea kind of a different take on this? I guess we'll find out on Meet the Nation, right? But like, what's the what's the 30 seconds on it? Yeah, so Bright ID is an iPhone and Android app that allows you to just sort of assert that you vouch that someone's identity is a real identity. And so through the Bitcoin Grants round, we're going to be populating Great ID Social Graph with them.

by giving a match bonus to every person who verifies on Bright ID. And we're also going to be hosting Bright ID matching parties every single day in which you can kind of hang out with people talk about Ethereum and get each other's identity validated through the app. So I see this as I see Get Coin Grants as an opportunity to populate Bright ID's social graph. And I am really, really long on taking social graphs and pulling them out of Facebook and giving people control of their own social graph. And I think that it's actually a huge, huge, huge, huge investment in digital democracy to be able to tell the difference between humans and bots online.

And we can create civil-resistant dows and better digital democratic systems once Bright-I-D takes off. So I'm pretty pumped about Bright-D and the impact it could have as we go west, as we go more bankless. And I think that Bright-D is going to have a pretty strong social graph debt for this. Gickland Grants around. Okay. Okay, and so that social graph, the thing you just did with David, right? What that is doing is it's basically tying David's identity, which you have attested to, and maybe a number of others in the Shilzer graph attest to it, but it's tying that to an Ethereum address, right?

So it's saying this particular, like, decentralized bank account, bankless bank account is David's. He owns it. He has the private keys. That's what it's doing, right? So it's connecting what's called a DID to each other. and, you know, just because we don't want to dox bank accounts, like people can choose to associate their DID with an Ethereum address subject to like, Dick Coen will not ever publicly connect your Ethereum address to your DID address because we don't want to dox you. But, but yeah, it's a DID network. Very cool. Yeah, that's powerful stuff. Okay. So another, I guess, tech improvement that you guys have come up with this round, Kevin, is you started to incorporate some

layer two payment type solution. So, you know, we're saving resources. We're saving gas this round. Can you talk about that? Yeah, absolutely. So gas prices have been high on the Ethereum network for the last month or so. And one of the things that we really wanted to do was make it super easy to transact on Gitcoin grants this round. And so basically when you check out, like say you have a bunch of Gitcoin grants in your cart, you can go and we basically, we will give now two checkout options for you. You're able to either check out on layer one, just on the Ethereum network, or we allow you to deposit some funds into layer two, this technology called ZK Sync. And once you've got the funds in ZK Sync, it is almost free

to contribute on Gitcoin grants. And so I've been loading up 100 die at a time into ZK Sync, and then every time I check out, I can check out for pennies, which is really an amazing thing. And I don't think I think that when people complain about a theory I'm not scaling, they don't realize that layer two is here today. Like we integrated layer two without having a way for ETH two without having a way for sharding without having a way for proof of state layer two is here today. Ethereum is scaling today and we've proven it by putting ZK sync on tick-point grants. So yeah, check out once or twice with with each checkout option

and compare and contrast the experience. I think that the technology is ready today. And the cool thing about ZK Sync is not only is it faster, but it also has almost the security guarantees of layer one. These optimists or these zero knowledge rollups have like a pretty strong have a pretty strong security guarantee in them. So I'm pretty pumped on that as well. And this is all from the loop ring team, right? ZK Sync. ZK Sync is a zero knowledge rollup. And loop ring is another zero knowledge rollup protocol. We're actually planning on doing loop ring in round eight, which will be in two months. But they're different projects.

Gotcha. Okay. So I've got a screen up right here, Kevin. So can you kind of show how it works, how it's different? So EIP 1559, big fan. I'm a big fan, Kevin. I want to give some money to EIP 1559 because I want that sweet EIF scarcity engine to start getting activated. Do I just add this to cart?

And then I have an option to check out. Is that what I'm doing here? Yeah, that's right. If you click Add to Cart, then you'll see a little sidebar that will load that grant into your cart. And then typically people will go shopping and add a couple different grants to their cart. But when you're ready to check out, you click that checkout button right there. And then that should take you to the cart page in which you'll be given an option to do ZK checkout or bulk checkout. Okay. I think it's loading right now.

So I've just decided to give $1 to EIP 1559, which hopefully will get quadratically matched with tons of other Yeah. Likely. Likely. Very likely. Yeah. So this is actually a bad one to do as an example because I've been talking to Tim and he was like, we raised enough money in the last round. They were not going to be participating in this round.

So there is no CLR match for EIP 1559. Got it. But yes, in general, that's the general use case. It seems like your cart is a little bit slow, and I'm wondering if that's on our end. I've been doing a lot of performance hacking the last week or so, but you also have a lot of tabs open, so I don't know. Yeah, I do. And ZSlo's it down. All right, so we can maybe imagine, I'm getting a bad gateway.

So we can maybe imagine what happens. So anyway, I got to the cart, right? And then I'm just presented an option to either check out, like, you know, to do the transaction on main chain or ZK sync. And if ZK sync, then there's an initial fee, right? I have to pay some gas costs to create this new ZK Sync account. Here, let me actually, I'll maybe fund the bank this grant right here. And by the way, on that gateway that you got, I have to admit that I'm deploying something right now. And that may be why you got the gateway.

Anyway, so, yes, add a couple grants to your cart right here. I'm going to add ETH Hub and Crypto-Economic study to my cart as well. Of course, bankless, because I want more people to go west. And as I go to the cart right here, I will see the three grants that I added to cart right here. And I am going to tell Bankless great job, ETHHUB great job. And I'm going to tell Crypto-Economics study that I love the mission of their project because I love crypto-economics. I'm going to fund each of them with 15 dye instead of 5 die. And then as promised, I will have the option to check out with ZK Sync, which is the layer 2 technology.

Or I can check out with the standard checkout, which is the layer 1 technology. And so basically, the way it works is that if I check out with ZK Sync, which is the layer 2 technology, I just have to sign a couple messages. And these are just signatures. is there not actually Ethereum transactions. They're just me signing that I own the Gitcoin account. And then I click this donation transaction button, which is also a signature that is going to be going to broadcast to the ZK Sync network.

And so basically the estimated processing time for this transaction is under one minute. And I'm barely going to pay any gas because it's a layer two piece of technology. sending transfer one of four and it's going to take take less than a minute to do so yeah i think that that's the sort of the power of layer two is that i'm able to check out in a matter of 15 seconds without paying a ton of gas fee and this is of course live in the ethereum network today so pretty pumped about that that is awesome that sounds huge beautiful beautiful Kevin, if people want to go donate, where should they go? Just go to getcoin.com.

If you want to fund public goods in the Ethereum ecosystem and send us a tweet on Twitter at Kipoint. Thanks so much, Kevin. You know, last thing I just want to say about this is it feels like what you've created and what the Ethereum ecosystem is creating is a sustainable way to fund Ethereum development protocol, public goods, without issuance, without increased issuance, without a forced taxation. And it strikes me that entire Heath Killer projects have been born based on this premise, that there needs to be a mandated public goods funding process and kind of a dev fund as part

of the core protocol. Ethereum has always said, no, like, that would remove the credible neutrality of the system, right? We can't park, park issuance into a dev fund because then who votes where the money goes. And this is essentially creating an opt-in way to do that to fund public goods without increasing the issuance for supply of Ethereum. It just seems super like a big deal that this is happening all organically. What's your take on that? I think that you're right that it's a positive thing to fund public goods. without coercive taxation.

One of the things that I've been trying to do is sort of break, when people here, let's fund public goods, they think of, they think of coercive government taxation. And I think that that's a relic of the industrial era. In the information age, we're gonna be able to fund our public goods without taxation. Doesn't feel, it feels, it may feel organic from the outside,

but for me it's not like pushing a boulder uphill for three years. And like, thankfully we're finally starting to get over the hill, that it's starting to get some momentum with Andre and Kane and Ryan Leshner and all these amazing people donating to public goods on the Ethereum ecosystem. But yeah, I think it's a super positive thing that people are realizing that they're standing on the shoulders of giants and we're all building on top of open source software. And we're starting to support each other because that's the kind of community that I want to live in. I want to live in a world in which there is open source software that I can clone and download for free. And those other public goods that I'm just really passionate about, you know, clean air has been a real big one in the United States for the last, for the last couple weeks with the entire West being on fire.

I think that you don't realize that you don't have public goods until they're gone until you're breathing smoky air or, you know, you're stuck with Windows XP phone. You don't realize how much value you get out of public goods. And so I just want to make sure that my kids grow up in a world where public goods are well funded. and that's kind of what we're doing with Kipcoin. It's been a super satisfying project to work on. Kevin, I want to take a moment and tease our future upcoming episode on the bankless pod. We're going to bring you on to talk about meditations on Moloch and how human coordination failure is the biggest threat to humanity

in how Gitcoin and a couple other interesting strategies going around in the crypto world can offer a tool to slay Moloch. There is a lot of things I just said that we haven't, yet talked about on the bank list pod, but get used to it because we're going to be talking about these things. Also, Amin Soleimani, respond to my messages because we want you on it. All right, awesome. Kevin, thanks so much. Thanks for spending the time. So we have Bankless Nation. We have a couple more topics to cover, but before we do, we're going to get to some additional sponsor ads slots that David has put together. Cool. All right, thanks, Kevin. The Bankless Date of the

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Check them out at Unstoppable Domains.com. All right, David. That was just fantastic with Kevin. I'm super bullish on what the Ethereum ecosystem is creating there and its sustainability moving forward. You know, something else I'm bullish on, but I'm not sure exactly all of the, the details, but is this stable credit system that Wynne is rolling out? You did a video with

Andre from WIREN about this on Friday. I watched the video. I think I like, I 80% feel like I understand it, but not 100%. What is this thing? How would you like summarize it, David? What is the stable credit system that WIREN is putting in place? It seems like some kind of a stable coin. is it more than that too? Yeah, it is a whole bunch of things and that's why people are having such a hard time explaining it and I think we're not really going to know what it is until it's out in production, right,

until it's actually deployed on main net. But yes, at the end of the day, it is a new stable coin and it is a new protocol for generating that stable coin, right? And so it's kind of a, it's just a collection of many different primitives that we've all seen in the defy base stuck together, right? And this is the beauty of composability and open source engineering,

right? And so what it is, I've kind of in my mind considered it like a Maker Dow 3.0, right? Sorry to call it the new and improved maker, but it kind of is what it is. And so it's a new multi-collateral depositing system that balances assets organically using the bonding curves a la uniswap, right? And so it's like multi-collateral die in a sense that you can use many different assets to deposit into a protocol. And then that protocol incentivizes or disincentivizes assets that are under or over-utilized, right? And so if too many people have donated link and not very many people have submitted AVE,

it will incentivize a rebalancing of that. And as a result, it will produce. stable credit USD, which is a stable coin that is pegged to the dollar via the chain link oracle system. And so this is highly dependent on chain link oracles, which kind of makes me a little bit nervous, but so far so good with chain link. And so think of it like a combination of multi-collateral dye of a borrowing lending protocol like Compounder Ave mixed with an AIM utilization market that all. also produces a new stable coin using chain link oracles to price the stable coin.

So it's all three of these things all at once. Okay. All right. So I'm going to try to wrap my head around what you just said. So first of all, there's a stable coin that comes out the other side of this, like a die, basically. Right? And that stable coin is a asset backed stable coin like die. So it's, you know, it's not like a USDC.

which has actual dollars, U.S. dollars in a bank account somewhere that Coinbase maintains and owns, this is backed by other tokens, other defy assets in the same way that die is, right? Exactly. Okay. All right. So I'm with you so far. And then like multi-collateral die, you can put basically any asset that the protocol supports inside of it.

So I could put USC in. I could put ETH in. I could put Dye in. I could put Link in. whatever I want that is an ERC20 that the protocol accepts. Is that true? Yes, and the protocol accepts things that have chain link oracles. So you can't just mint your own brand new token.

You can't just randomly just mint shit coin and a trillion supply and then drain the whole system because that thing won't have a chain link oracle. So it needs to have a chain link price oracle. So it has that Oracle, I guess, dependency or weakness, right? But to be fair, so does die. It's just die is dependent on makers' oracle. system rather than chain link right okay so i'm with you there so we produce this this stable coin and it it's also a um a credit system i suppose so if i have some asset that i don't want to sell and i want to

borrow against that asset uh anything that chain link supports i can deposit that into a a collateral debt position a cdp right uh of some sort and i can um then borrow against that is that correct yes that's all right Okay. All right. And then the rates of this thing, like, how does that work? Like, so who determines what the, I guess, the interest fees should be? Is that all algorithmically determined by, like, Andre's money robots? Yes. It's algorithmically determined. And I think that's where the AMM style utilization ratio comes into play. And so it also uses uniswap directly, like the actual uniswap exchanges. I don't know how that works. That's kind of. of where I get lost, right? But it also uses this utilization ratio to incentivize depositing of one asset that's underutilized and not depositing the one asset if it's overutilized. And I'm assuming there's variable interest rates as we've grown to expect from compound and Avey integrated with that as well. But that's kind of where I'm a little bit confused as to how the whole system works. Okay. So I'm increasingly a big fan of this year in finance newsletter.

It comes around weekly. And it, It's almost a full-time job to keep up with everything that urine is doing just in and of itself. So this does a good job of that. And they described it as stable credit as a synthesis between what you're describing, synthetic debt, like a dye. But it's also like synthetics because it's all one, I guess, pool of collateral that you're borrowing against. It kind of synthesizes all of these things. It's also like a lending protocol that we talked about.

And it's also like there's an automated market. maker that comes embedded inside of it. So what's the source of demand for this new stable credit dollar system? Is that like adoption has been tricky for die? How is adoption of stable credit going to work? Is it embedded in urine in some way? So this whole stable credit system is actually totally agnostic from urine. So it doesn't have any specific relationship to urine, except for the fact that

Andre created it, right? And he created it because he needed a place to deposit all of Yerne's capital because Yern has been so incredibly successful that it's overflown all of the various places to like get yield from, right? And so Andre just solved this problem by making this stable credit system, except the whole point of the the, the U.S.D. new decentralized stable coin is actually a byproduct, an afterthought. It's not the whole. whole point of the protocol. The whole point of the protocol is to just be a place to submit assets and capital to, which is actually something that I just, I just think that's hilarious because like yearn finance is so incredibly successful that it has too much capital. So the guy that made

yearn finance just created his own protocol, a brand new protocol to submit all this extra capital to in order to further yield. And so, and again, I don't know where kind of these numbers come from. we'll figure it out when it's actually live in production. But with urine, this is now a fantastic, no-sealing place to submit capital, right? And so what was limiting prior was Maker Dow had a limited amount of diet can produce, which is why the dye price is so high. And so it couldn't leverage all that much capital, right? The Y-Eath fault received like $300,000 or $300,000 in like the first three days.

maxed out the utilization of MakerDow. And so Andre is like, well, all the, I've maxed out the utilization of all these other defy protocol. So I'm gonna make my own that doesn't have a cap on utilization. It only, the only cap is the balance. Okay, that's that, that feels like that's really a big deal.

It is a big deal. It is a big deal. Because the problem, the challenge with Maker and with die, to this point, aside from governance challenges and those sorts of things of like having people have, having sort of tweak knobs when there's, you know, demand or supply changes with dye. But scalability has been the

main issue, right? And you're saying that, you know, so the scalability of diet always has kind of a cap based on demand for CDPs, for instance. Right. But this doesn't have that. Risk parameters for Maker-Dow. Risk parameters for Maker, but this doesn't have that. Right. This doesn't have governance, which is an insanely awesome thing. There's no governance over this thing. just is. If it has a chain link oracle, it works. Okay. Okay. So, and the reason it can have no, it doesn't need governance is because it has this AMM embedded inside of it. Yes. That essentially, like, market adjusts everything on the fly. Yep. And, and, and, and, and, I mean, chain link to some degree is itself a governance platform, but also not really. And so, like,

all of these non-governance tools are all available to Andre, who just stitch them all together to create stable credit USD. Okay, so like, you know how we're always talking about? If only, if only we had a decentralized, highly scalable stable coin, like, that that would be the Holy Grail, right? Vitalx talked about this. And the key being that it would be also governance free, right, so that it would be more scalable.

Is that what this is? I mean, like, I think so. I think that's what this is. Again, I can't say for certain because I'm not a 150 IQ genius like Andre is, but like that's what it seems to be, question mark. I guess so. We'll find out. Wow. I mean, if so, that could be huge. And when we say we'll find out, the contracts, more contracts are already written and it just looks like they're already built. We're just waiting for the UI. It's insane, dude. Okay. So this could be a really big deal then. It's basically a new decentralized stable coin that has no governance. Its only dependency is this chain link oracle. But aside from that, which is somewhat apples to apples with Maker, just a different Oracle system, it doesn't have a ceiling in terms of its scalability. It can just kind of algorithmically injust and go up or go down. I guess the only scalability limiter would be the amount of ERC20s, essentially. essentially the economic bandwidth of the Ethereum chain, which is like aggregate of all ERC20s plus aggregate of the value of ETH. That's essentially the economic bandwidth of Ethereum.

And that's the only scale limiter. Now we just scale out the value of all of these. We have literally hit the internal capacity ceiling. There is no there is no ceiling other than Ethereum itself. That's pretty bullish, man. That's pretty pretty pretty huge. Like, again, I'm trying to contain myself because I don't want to, like, get a little bit out over my ski tips with, like, something I only understand, like, 80% of and maybe 80% is generous. But, like, it could just be, like, the biggest thing of the last, like, 12 months. Wow. Okay. We'll have to see. We'll have to see when it ships. That could be super exciting. I mean, it's been sort of the holy grail we've all been looking for in terms of a decentralized staple coin that didn't have a, you know, scalability limiter. And how it came about is just so incredibly hilarious. Andre was like, I kind of need this.

And so I'll just build it. Yeah. And what's cool, though, is it is, there's an element of standing on the shoulders of giants, right? Yes, very much. You're stitching together concepts that are in synthetics that die and maker pioneered and then also uniswap. Without those three components, this would not have been possible, right? It's back to that analogy of like you're in a video game and there's a tech tree and you have to like unlock these three things before you can unlock that other thing that comes later.

That's right. This is that other thing. That's right. That's cool. All right. It's hilarious. Yeah. Yeah.

Very good. Very good. I mean, all we have to do is just like, you know, track what Andre is doing. And that seems like the solutions just emerged from his brain. He's just like a melting pot of all that. All right. Cool. Let's talk about our last thing.

And this is like a smorgasbord of, I guess, a few topics that have come up recently. but one is this. So just this morning, micro strategy, which is a publicly traded U.S. company, they're in the business analytics, intelligence space, kind of a B-to-B company. They're piling on more Bitcoin on their balance sheet, right? So, of course, all of these publicly trade companies, they have balance sheets generally. They have like, you know, T bills, bonds, sovereign debt, some cash positions. This company and its CEO has to, decided to take that balance sheet and actually buy Bitcoin with it rather than fiat-based bonds and cash. That seems pretty crazy. Like, what's going on here? Yeah, the crazy thing,

this is the second time that this has happened with micro strategy, right? And so, like, maybe it was a month ago or so, kind of hard to tell during COVID times, but COVID and defy times, but roughly a month ago, micros strategy announced that they are going to put something like 300, $250 million worth of Bitcoin on their balance sheet is like 0.1% of all Bitcoins, right? And that was like the biggest news. And I wrote it a whole entire article based off of it. Bitcoin and Bitcoin's Prisoner's Dilemma, good article, go read it. And the whole idea is that like how many companies does it take to purchase 0.1% of all Bitcoins out there before there turns into be like a supply side liquidity crisis of Bitcoin, right? And like Paul Tudor

Jones did this and then and then micro strategy just did it and then before before we hear about a third company doing it micro strategy just does it again right they just added more onto their balance sheet of bitcoin right and so here here's what's going on is that the CEOs or the people in charge of this company micro strategy are just huge bitcoin bulls right bitcoin the mine virus of bitcoin is infiltrating companies and leadership of companies with balance sheets who are seeing the money printer go Burr and they are saying, you know what, putting Bitcoin on the balance sheet, buying 1% of all the Bitcoin's out there, those are ours, we're never going to give them up, never going to let you down. And then all, and then all, like, how many times does this need to get

repeated before there turns into just like a massive scarcity event of Bitcoin because all the, all the people, all the companies are having strong interest in protecting themselves from inflation. So it's this guy right here. This guy, Michael Saylor, who is, he is super bullish. So he, as you said, they already purchased a whole bunch of Bitcoin, but now they just added 175 million more for an aggregate total, 425 million. This is a publicly traded company that has decided to enter the game. That is the scarcity game, that is Bitcoin essentially. Like, you know, you might call it a Ponzi game, but it. I mean that in kind of a good way.

It's definitely a scarcity game. There's only 21 million. Everyone's kind of playing. Publicly traded companies are doing this. How soon until central banks start to do it, right? So this is maybe the first one that's starting to meet headlines. Other public traded companies may join. And then do we have small nation states that start to play this game too?

It's a game of musical chairs, sir. Whoever wants to go first. And it seems like I don't really think people, saw that publicly traded companies would be the first to go. I think that's kind of a surprise and that's kind of why this is big news. Because I think you're right. I think some people for some reason thought that nation states and central banks were going to go first. But no, I think it's a much more of a bottom up revolution, right?

And in that bottom up revolution, companies with balance sheets come before nation states and central banks, right? And I think they're going to be the last ones to buy Bitcoin, right? They're going to be the bag buyers who are buying million dollar Bitcoin, right? and companies with treasuries and balance sheets are just going to go first. They can move faster. They can move quicker. They can deploy capital sooner.

And so they're adding Bitcoin to their balance sheet. The Bitcoin is working its way up. That feels bullish. Feels bullish crypto. Feels bullish Bitcoin. All right. Let's talk about something else to you. So another metric that I've been monitoring for quite a while is this metric that

coin metrics puts together. So great analytics company, Bitcoin metrics, they have like charts you can go see. They're free, but they put together this metric for adjusted transfer value. And this is a comparison of Bitcoin in red versus ether in green. And adjusted transfer value, it basically just means the amount of Bitcoin that was transferred or the amount of ether that was transferred in the network in dollar value, right? So something interesting just happened recently that hasn't happened since, I think, briefly in 2018, like the first quarter of 2018, and that is the value transferred on the Ethereum network in

Ether, native units of Ether, has exceeded the value transfer on the Bitcoin network of Bitcoin. So the reason that is so huge is because this value transfer is happening without any bank, without any sovereign nation state, it is a pure, trustless transfer from like one, I guess, pure note, like one smart contractor, individual or capital pool in the network to another. And it's also with a non-sovereign store of value. So that's what Bitcoin is on its network and what ether is on its network. So it's essentially the most bankless value transfer, besides maybe like moving blocks of gold that can occur. And I think it's bullish for Ether that it is starting to exceed the adjusted value

transfer of Bitcoin here. And I'm going to continue to monitor that. But to me, that is the story of ethas trustless collateral fueling defy. That's why you're seeing a lot of this growth. This is the story that we talked about, a lot of bank lists of eth as money. in the same way Bitcoin is money on its network. So yeah, really cool data point to see, and I think bullish ether on this one. You can see the rise of defy, right? And right at the end of this graph here, you can just see it. And like that is the power of an internal ecosystem

versus an external one. Like Bitcoin is five plus years older than Ethereum. And so it has the tailwinds of people, of like companies putting it on their treasury. And, Ethereum's equivalent of that is its internal defy ecosystem with, you know, unsatiable demand for ether. Yeah. Yeah. We'll see how this plays out. It does, it does seem like some of the bankless thesis is coming through in the data here in the metrics here.

But here's kind of a bare case for Ethereum, I suppose, that's a narrative that's running rampant. I want to get your take on it. So, CZ, here's my take right here, but CZ, who is the CEO of Binetna. has created an Ethereum killer, right, essentially. So this is a Binance smart contract platform called the Binance Smart Chain, I believe. And it even has its own ether scan, basically, BSC scan, where you can kind of see.

It is run by, yeah, you can see like this looks just like ether scan, but it is finance chain. And CZ basically makes the RFC scan, argument that, hey, gas prices are too high. I'm going to put together a $100 million dollar ecosystem fund and go lure defi apps here. You've got yams. You've got, you know, all these, you know, games in the Ethereum world. You could just play those on Binance at a reduced price. And all you have to do is trust our 21 validators, right? 21? Yes. So this is these are the validators.

There can only be 21. So it's a delegated proof of stake style network where BNB, which is the Binance issued, I guess pseudo security loyalty coin, you might call it, is essentially the reserve currency asset and the thing that is securing this entire network. So CZ makes the case that you should come to the finance chain. It is a better version of Ethereum because it is more scalable. And I think he's making the case that essentially it's projects can be vetted. It's not bulletproof, but, you know, less, less frauds, less scams because CZ and Co.

vet it. And then you get like, I don't know, ultimate rewards because you could do something with staking your BNB and earn multiple rewards simultaneously. Hard to ignore, he says. What's your take on this, David? Yeah, so I don't want to, there is room for something like this. Like there's room for C-Fi and there's room for whatever C-D-Fi is. Call it in centralization theater, but call it just what it is. It's just a more centralized version of Ethereum.

Maybe it also has customer support too. So like, you know, people like that, right? And maybe this is what Tether is. Like somebody accidentally sent a million dollars to the wrong Tether contract or the wrong Uniswap contract. And then Paulo Arduino of Tether was like, yo, DM me. I will get you your money back, right? So there are advantages to see defy. It's just not going to replace Ethereum. It's not going to replace the whole, the actual real thing, right? Like for some, for some

certain use cases, I'm sure that it will be beneficial. But no, it's not going to replace defy. It's not going to replace, like, I often view this whole world as a landscape. And there are different peaks and valleys of value along this landscape, right? And so maybe there's a peak on some pseudo defi-ness with some like centralized backstops like being able to retrieve funds or or have have customer support or whatever. I'm sure there's value there. But according to the protocol sync thesis, which has literally never been wrong ever, the value peak at the defy end of the spectrum is just way too high to ignore. So like again, tip of the hat to CZ for building. He's done a, he's built something cool. And it's going to remain over there where the defy zone is.

isn't. So that's my take. Yeah, that, yeah, that's a good take. Yeah, it's kind of like the, I guess we've used the AOL analogy, right? So, but also, according to the protocol sync, like the way we would expect this to play out is it's basically a bank centric, a far less credibly neutral chain than something like Ethereum, right? So like our, I think the protocol sync thesis take would be that Ethereum remains kind of the base settlement layer, right? So if you're a, if you're a competitor to Coinbase, say you're a Gemini or if you're competitor to Binance, say you're a Gemini or you're a Coinbase or you're a Cracken, you are not incentive to build on Binance's Binance chain with B&B as the reserve currency, the money from the system. Somebody else is like equity token, basically.

Exactly. You want to. build on the most credibly neutral system. So like unless Binance kind of runs the world and is the only chain in existence, the protocol of sync thesis would predict that a much more credible, credibly neutral settlement layer will persist, right? We'll have to see how that plays out.

I guess the counter argument to that or the bare argument to that is that basically like, people don't care about decentralization, David. They care about like permissionless program money, whether that's BNB or whether that's something else, it doesn't really matter. They just want fast transactions, and they want to be able to build on top of it in the composable way that something like Ethereum has allowed them to build on top of. So that would be the bare cases.

I guess we'll have to see how it plays out. I mean, it's going to be, yeah, you're right. It's going to be a patiently wait and see. And we've been playing this game ever since, like, I think EO started it in 2017. where like the faster, quicker, slightly more, not slightly, significantly more centralized versions of Ethereum are going to come and take all of Ethereum's economic activity, you know? And like, I guess we're going to continue to, we've been waiting and seeing for three and a half years now. I guess we'll continue to wait and see for the next three and a half years. At some point, some further people are going to capitulate.

Like over the last like six months, a lot of Bitcoiners have capitulated to defy. and I think that a lot of Ethereum killers of the 2017, 2018, 2019 class have capitulated to becoming Ethereum's L2 or side chain. And I guess we have this new wave of Ethereum killers who I guess we're just going to have to wait and see. But like I've been waiting and see it for a while now, so I already know where I'm at. Yeah, it hasn't happened yet. So we'll have to see. Critical Sync thesis has held up pretty well so far. We'll see if that continues.

is, hey, last thing we should chat about is this really cool index that TOTOCET just came out with. So this is the DFI Pulse Index. So you talked about capitulation here. You know, this may help retail, I guess, and even institutional investors capitulate into DFI. Can you talk about what this is? Yeah.

Also, Ryan, your camera is frozen on my end. If you are sharing your screen, I'm not seeing it. but I'll talk about what it is. This is coming out of set protocol, and Anthony Sizzano is coming on the Meet the Nation on Thursday to talk about this. But this is something that I think is really, really cool and could be an asset that becomes foundational.

There we go. Now I see it. Could become like foundational to the rest of defy, right? A defy index token, right? And there's so many conversations to have about this. But like something that, a single asset, that tracks the general value of defy is fantastic. And in the same way that urine simplifies things for yield farmers,

I think this defy index will simplify things that, you know, people are hot on defy. I'm getting texts about defy from friends. You're getting texts about defy from friends. Now we don't have to tell anyone's like, hey, like this is what urine is, this is what ethel end is, this is what synthetics is, this is what compound is. It's like, you know, shut up, just go by the index. Like, you're hot on defy, go by the defy index.

is a product for you. And people are, people are used to like ETFs, right? Index funds, exchange trade funds in their brokerage. And this is basically a, a token that you buy. Here's the current price right now. It's $119. And it gives you exposure to all of these underlying assets. Is it according to David, the total value locked on D5 Pulse? Or is it according to the market cap of these respective tokens? Hmm, that is a good question. I think it's the market. cap of the token because I'm pretty sure AVE is number one on total value locked. I think it has double the amount of whatever urine has. So I think it's just an aggregate of the value of

the market cap of these specific tokens. Yep, that's what it's saying in the summary here. So it's basically like overweighing, 26% of what you'd be purchasing is Wi-Fi right now because it is 26% of the market cap of these top defy tokens. And you have Avey, you have synthetics, you have compound. It's just a great way to kind of buy the defy market in one fell swoop. This is, this is, excuse my wordage here, but this is such a big dick move from set because like we know that in like the S&P 500, like companies are like two fighting tooth and nail to get included in the S&P 500 because if you're in the S&P 500, that means you can be included in a lot more funds and a lot more investment strategies. If you're outside of the S&P 500, you're kind of like a

nobody, right? And so now there's like this curated list of approved defy tokens that everyone's going to be, I feel bad for Anthony or whoever's doing like support at token sets because they're going to be like, hey, people are going to be knocking on the door. Hey, will you let us into the defy token set like index? Because we want to be in there. This is going to be a hot commodity. And I would expect that that these specific tokens get some sort of a pump just because maybe over the long term, not over the short term.

but just the fact that this index includes these tokens is bullish for these tokens specifically. Yeah, you'll have a notice, for instance, a link isn't here. So I bet the link brains might have something to say about that. Spicy, spicy. We'll see. All right, David, well, we have covered a whole bunch of things today from Gitcoin all the way to micro strategy buying Bitcoin all the way to tokens. I think we should wrap it up for this state of the nation.

Absolutely. This was a long one, but absolutely jam-packed full of good content. So thanks everyone for listening to this week's state of the nation. This state of the nation is funding. We are having fun funding. All right, man. Risk in disclaimers. ETH is risky.

Of course, so is crypto. Defy is risky. Even assets like Eith and Bitcoin are risky. But so are smart contracts. You could lose what you're putting in. As Kevin said, we are headed west. This is the frontier. It's not for everyone, but we're excited you're with us on the bankless journey. Thanks a lot.