Bankless - SotN#19: DRUMROLLING! w/ Jacob Cantele from Metamask, Q3 Token Report, Gradually then Suddenly

Episode Date: October 21, 2020

🚀 SUBSCRIBE TO NEWSLETTER: http://bankless.substack.com/ ✊ STARTING GUIDE BANKLESS: https://bit.ly/37Q17uI ❤️ JOIN PRIVATE DISCORD: https://bit.ly/2UVI10O 🎙️ SUBSCRIBE TO PODCAST: http://podcast.banklesshq.com/ 👕 BUY BANKLESS TEE: https://merch.banklesshq.com/ ----- GO BANKLESS WITH THESE SPONSOR TOOLS: 🌐 UNSTOPPABLE DOMAINS - HUMAN READABLE ETHEREUM & CRYPTO ADDRESSES https://bankless.cc/unstoppable 🌈 ZAPPER - ULTIMATE HUB FOR DEFI - ZAP INTO DEFI http://bankless.cc/zapper 💳 MONOLITH - GET THE HOLY GRAIL OF BANKLESS VISA CARDS https://bankless.cc/monolith 🤖YEARN - YIELD-SEEKING MONEY ROBOT THAT FARMS DEFI FOR YOU http://bankless.cc/yearn ------ SotN#19: DRUMROLLING! w/ Jacob Cantele from Metamask, Q3 Token Report, Gradually then Suddenly MetaMask Exceeds 1 Million Monthly Active Users https://medium.com/metamask/metamask-exceeds-1-million-monthly-active-users-9da72a1e915d - How was this data collected? - How has this impacted or changed MetaMask’s priorities with its product? Introducing MetaMask Swaps https://medium.com/metamask/introducing-metamask-swaps-84318c643785 - MetaMask is aggregating the aggregators! - 0.875% fee for MetaMask saving you up to 5% on your trade! Then, we turn to the Q3 Token Report from Lucas Campbell! Bankless Q3 Token Report: https://bankless.substack.com/p/bankless-q3-token-report Rise of the Ownership Economy Lastly, David and Ryan discuss 'gradually, then suddenly' in the crypto revolution https://bankless.substack.com/p/gradually-then-suddenly-market-monday Five-star reviews to help grow the Nation! ------ 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 https://twitter.com/BanklessHQ Follow Ryan on Twitter https://twitter.com/ryansadams Follow David on Twitter https://twitter.com/TrustlessState Follow DeFi Dad on Twitter https://twitter.com/DeFi_Dad ----- 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.

The bankless state in the nations are brought to by WIREN. WIREN is DFI's first self-building community-run project, which I just get really, really excited about. Wynne is a system that seeks out yield in DFI, and it does that in a number of different ways. A very aggressive way is with the vaults, where you can deposit your preferred asset of choice, and different DFI experts will come in and generate a strategy

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other people are doing as well. We're also brought to you by Monolith. Monolith is your cool new defy account, your defy checking account, except the cool thing about the monolith defy account is that it gets software updates, right? You actually get to increase the usefulness of this over time. So here are some of the features. Monolith is a smart contract wallet with a lot of the features that you would expect if you've come to know defy and what it is, you can add money to it. You can put that money to work in compound and accessing yield. But you can also swap through Uniswap. What was cool with Monolith is that they will send you a very sexily monolith visa card that connects to your Monolith smart contract wallet on Ethereum. So it's a really awesome tool to live a bankless life

with a savings account that gets software updates. So this is something that you're never going to find out in the real world, but you can still do real world things with real money. and like buy your groceries. So that's just fantastic. Coming soon to Monolith, actually already here to Monolith is now you can buy, die, and get it sent to your wallet directly, right? So it's also being an on-ramp. So you don't have to go through your centralized exchange like Coinbase or Gemini or wherever. You can just go straight from your bank account right into your Monolith checking account smart contract wallet. So check them out at Monolith.xYZ. All right, welcome everyone to State of the Nation.

Thanks for joining us. This is State of the Nation episode number 19. If you are new to State of the Nation, David and I do a couple of things. First, we talk about what's happening generally in crypto. Then we try to relate it to the big picture stuff that you're about in the podcast and you read in the newsletter. And finally, we try to drop some hot insights. and action items for you.

Of course, this comes out live Tuesday on YouTube, and you could watch it there. You can also get it on the podcast stream if you're an audio-only type of person. We release it in both places for you. David, how are you doing today? Absolutely fantastic. There is always, as always so much to talk about,

the space continues to move at a mile a minute. And so we are going to get into some of the things that are on our minds in today's day. of the nation. Yeah, David. So there's three things we're going to dive into. The first is Metamask. So Metamask recently hit this massive milestone over a million monthly active users. And we've brought Jacob Cantell on to talk about it. He's from product at Metamask. That's going to be pretty exciting. What else we do in, David? We are going to talk about the bankless Q3 token report, which like I've been saying, Q3, it looks like it looks different from all the

other cues. And so we're getting the author himself, Lucas, onto the state of the nation, after Jacob, to talk about the Q3 token report. And then after that, go ahead. Oh, yeah, I was going to say this is a token report that we put together in-house. So Lucas Campbell is a fantastic editor and analyst on the bankless team. He puts this token report together once per quarter. And there's some fantastic insights there that we'll get to a bit later in the show. And what's the last thing, David. Yeah, last thing is kind of what I was alluding to is, and what I wrote in this week's Market Monday is this like gradually, then suddenly idea of crypto adoption, right? First, it happens slowly. First, progress seems to take forever. And then all of a sudden, like,

adoption arrives, right? And it's like, we're there, right? And so there's this very, like, you know, mentality of this is going to take forever. And then all of a sudden it's here. And I, in my mind, on the gradually then suddenly timeline. We're at the then, right? We're past the gradually part. We're not at the suddenly part. We're at the Venn. And that's kind of what it feels like.

Yeah, absolutely, totally great. All right, can't wait to dig into that. We should also talk about some of the things that are going on in the bankless nation. David, we just dropped this epic two hour long episode with Vitalik on Ethereum and ETH2. And that really struck at like not so much the when-eath or the half. ETH but the Y ETH what were your takeaways from that yeah yeah my my big takeaways is that some of the very original OG design decisions that were made around Ethereum and specifically Ethereum 2.0 were fundamentally the correct

choices like no matter what blockchain no matter what ecosystem like there are some some design choices that are going to be correct like no matter what and that's kind of the the subject matter the through line of that particular podcast with Vitalik. Like, why are we so committed to proof of stake? Why are we so committed to sharding? Like, why didn't we pick a different, like, version of consensus mechanisms or, you know, blockchain scalability? And then on the other, on the flip side of things, a lot of things have happened in Ethereum that, you know, no one could have guessed back in 2015 when Ethereum was really being, like, kind of architected or designed in the first place. And that's stuff like

roll-ups and EIP-1559. So to me, my big takeaways was that, you know, there, there were some choices that we knew were correct at the very beginning, and there were other choices that we, you know, that we discovered through R&D that came out in the last five years. And what Ethereum 2.0 is looking like it's turning into is like an elegant combination of, you know, very early primitives that we had strong convictions of choosing along with some of the stuff that we are indeed along the way. Yeah, absolutely. And a perfect follow-up, I think, to that Vitalic episode that sort of spells out the Y Ethereum and the high level is our Ask Me Anything for the bankless community with Danny Ryan that's coming up this Thursday. So this

Thursday, 12 p.m. Eastern, you can catch it live on YouTube. We'll also be publishing that to the podcast. But that's really an opportunity for the community to ask the more intricate details of Danny Ryan. Like, when is the actual E2 staking contract going to drop? How about the various client implementation teams, perfect opportunity to get into ETH2 there. It's really become sort of an ETH2 week, I think. And then finally, David, we've got this new show. And we put it out every Friday morning. This is called our weekly roll-up show.

That's really kind of another cool way to plug into what's going on to crypto. Can you give folks a preview of what that is and why that you'd catch it? Yeah, weekly roll-ups. So this is something that me and Ryan will always plan. plan like seven days, you know, the up to seven days in advance where like something gets shared on Twitter, something gets shared on Reddit, something gets shared in the bankless discord. We grab the link, we stick it in the dock, and then on Thursday we run through every single link that we grabbed for the prior seven days, right? It's a roll-up, right? And so it's about rolling things up into

bite-sized chunks so that, you know, if you have a full-time job, like not in the in the crypto world or you just, maybe you're on vacation, how do you get, how do you sink your note over the last seven days of information, especially when information in the crypto world moves so fast. So that's what the weekly roll-ups is for. We are rolling up a bundle of packets of information and injecting them right into your head. Yep, five topics, 25 minutes. If you've got 15 minutes, you can listen to it on 2x speed and be done. Get crypto downloaded into your brain the last seven days of it in 15 minutes. A super cool show. So that's coming Friday mornings, both on the podcast and YouTube. David, let's start with the question I always ask you at the beginning of state of the nation. What is the state of the nation

today, my friend? The state of the nation is drum rolling. We are drum rolling. And once again, this has so many different meanings to so many different parts of the crypto world, right? You know, Ethereum 2.0 seems to be like right there. It seems to be right next door. Some people are just waiting for the deposit contract to get announced. And at that point, in time, like it's off to the races with getting the other phases finished and finalized. Meanwhile, in Bitcoin land, like the conversation around like money printing and MMT and Bitcoin as the asset that's diametrically opposed is really picking up steam, right? And so there seems to be just a lot of preparation and anticipating excitement around what it seems to be coming around

the corner. So some things kind of just need to come to pass so we can get them in our rear view mirror. The U.S. election comes to mind. especially then this is kind of using a cryptocentric uh viewpoint of the world but like some things just need to come to pass and then we can finally get to like the climax that we have been looking for at least that's what i feel like all right so this is like the drum roll before the before the charge or like the the drum roll intro before the band starts playing that that kind of thing that's what you mean right that's exactly right yeah very cool all right well let's dig into uh some of that drum rolling in today's episode, but before we do, want to talk about our fantastic sponsors that made this state of the

nation possible. We already did sponsors. We already did sponsors. Oh, sorry, David. Unless you want to talk about diversify. Well, you know what? We should talk about diversify, but let's get to that. So one sponsor, I probably had that in my notes, that we should talk about is diversify. They actually made the token report possible that we're going to get to a little bit but we'll reserve time for them when we get to the token report. So my mistake, you know what we should be doing instead is we should be introing. Jacob can tell from Metamask. He is on the product team at Metamask.

Jacob, it's great to see you. How are you doing today? I'm doing great. Thank you so much for having me, Ryan, and David. I really appreciate you guys. Welcome, welcome. Well, it's awesome to have you here. We are obviously huge fans of Metamask, both ourselves, of course.

you know, super users maybe, like use it every day. And also the bankless community, I know, is composed of a whole bunch of people that are daily active users of Metamask. But I want to talk about, like, first, this impressive milestone that you guys recently reached, which is you have recently exceeded over a million monthly active users on MetaMask. Can you kind of break down, what that means for Metamask and how that data was collected, Jacob? Yeah. So thank you so much for saying that, Ryan. So I think a lot of people remember just a little over a year ago, we very first hit a million total installs. And that was just in general installs. We've been seeing compounding growth in MetaMask, especially towards the end of 2019, we saw a lot of growth of users who are using DOWs and who are playing games using Metamask. And then this year, the DFI space has also taken that previous growth and is compounding it again. And really what you see is when a user onboards into one site, they start using one app that compounds

and the value for the entire ecosystem grows. So we sort of think of ourselves as a universal solution that's serving the entire ecosystem. We're not just a gaming wallet or a D5 wallet or a Dow wallet or a payments wallet. we're all of those things and people are compounding into one or joining into one use case and then they're going and discovering value and all these other things and we think it's the same kind of feedback loop that you get with the internet generally so you know like there's certainly a place for niche apps that focus on one use case or another but we think that by by creating

the most value possible for our users and the most universal and most interoperable solution that we're going to be able to do the best for the developer ecosystem and and for the community itself to start discovering all these sites and apps. Yeah, you were just showing the countries. Those are on our on our mobile growth. I just want to point those out. We're seeing a ton of growth, especially in developing countries where people are using this for payments. They're using it for daily survival. They're using it also to try out defy and games and daps. And we're super excited to be able to provide those kinds of financial services to people who are,

who have historically been locked out of the traditional financial system. So for people in the podcast who can't see what we're showing on YouTube, the top four countries in terms of Metamask Mobile volume where first the United States, but second, India, third, Nigeria, and fourth, the Philippines. These last three are pretty surprising

and I think maybe that demonstrates exactly what you're talking about. Yeah, there's huge community growth and there's especially like mobile in a lot of those countries. Most people principally are using a cell phone. They're not using a desktop computer or something like that. So there's a lot of people who've been waiting for this to really start joining the ecosystem.

And our mobile launch has really really helped with that. It's also worth saying that the mobile app in its first month past the peak of where the extension was for the whole of 2019. So we're really excited about that growth. this chart you're showing here. This is showing just the constant month-over-month growth that we're seeing and the compounding value that we're seeing for the ecosystem. It looks a bit like a hockey stick, I'd say, Jacob. You asked a little bit about how we get the data.

Yeah. So we're not using on-chain data. I want to be super clear that there's not duplicates or something like that. Some people were like, well, one person, it's probably just people making a bunch of accounts or something. We have an opt-in consensual thing that we call metametrics. If people Google metametrics, you can read in detail about our methodology for how we do analytics. We let the user opt-in to analytics directly. We don't, even on the users who opt-in, we don't track IP address. We're very serious about privacy. and protecting the privacy of our users.

We want Web 3 to be an alternative to these companies like Facebook and Google that are treating people like products and that are treating data as a commodity. And instead, we want, you know, our mission is to democratize access to the decentralized web. We want the decentralized web to be available to everyone. We want a transactional layer on the internet that allows people to consensually have interactions and permissions and privacy and to create a better internet. And we want to transform the internet and the financial system. So our metrics solution, we take those who have opted into the metrics, and then we also

track those who have opted out of metrics. we get one tracking event that tells us that someone has that someone tracked that someone opted out and then we don't track them any further so we have ratios about about how many how many total or what the percentages of people who are opted into the metrics are and then we use the data that we have on people who have opted in and then we project that to the total number to arrive at a real monthly active user number. So do you know what percentage of people opt in? So like what's the sample size that that is of the whole? So it changes month to month. When we very first rolled it out, the people who opted out was a higher proportion. It was like around a little higher than 25%.

And today it's it's around 18%. And we sort of grouped together the, the last, last six months of data, six months of data to get an accurate number of where we're at today. So sometimes historically, it's really hard to like calculate how many people use defy, right? Because I have, I have at least 10 wallets that I've used, you know, in the last like two years in Ethereum, right? However, I think Metamask, it's actually a little easier to get rid of some of the noise because with Metamask, it's really just the number of devices you have rather than the number of wallets you have, right? And so inside of Metamask, I could have 10 wallets, but I would only have one Metamask, right? And so my intuition is to assume that some of the data that's

coming out of Metamask is a lot less noisy than like somebody that is looking at like unique addresses that have used compound or MakerDAO or Uniswap. Is my intuition correct there? That's right. So we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, we're, When a person opts into Metametrics, we're just getting one event for all their accounts. So these are much more accurate. We're not tracking like, oh, you have 10 accounts, so that's 10 users. No, but we're trying to do real data and make this available for the ecosystem. And we want to use it to benefit the ecosystem.

Cool. Okay, just one last little nuance on there. So like the Metamask was like my first wallet, right? So I've had my metamast seed phrase basically since forever. And so I've actually put that metamast seed phrase in a couple of my devices. Would you guys count those as one user or like one, still one user per device? So we don't, we will, for privacy reasons, we will not associate a, the consensual tracking cookie with your seed phrase across multiple devices.

Okay. So if you did use, you know, two different devices that would count as multiple monthly active users. Most people don't do that, although we do see a lot of people that have the extension in mobile. So there is some element of duplication there. And, okay, so what were you surprised about when you got some of this data? Was any of this data, like, shocking? You know, if you ask me, like, oh, Metamask, you know, one million monthly active users coming, hot on the heels of defy yield farming, I would have been like, well, yeah, that's because of the

defy yield farming. But you're telling me that there's some extra stuff going on. So was that surprising? Was that new information for you guys? And like, and also how has that kind of change the trajectory or priorities of what you guys are working on at MetaMask internally? So we do get numbers on the DAPs that people are using in a given month. So we have, we have not that an individual is using, but we get aggregate metrics about which DAPs are more popular and stuff like that. So we, you know, the month over month changes of what DAPs people are using very wildly. Like every month, and actually it's really fun in my role to like go in, I can just see like, oh, what's the top 10 this month and go and try all of them? It's been really, really fun for me.

But, you know, most months, the most popular thing that people do is send payments to one another or just send transactions to another wall or something like that. After that, the Dex category tends to be the most popular. than in most recent months it's that and then the defy use cases are number three and then and then games and then douse and within each of those categories the sites that are the most popular they vary wildly the the space is just growing so rapidly and there's so many new use cases and new sites and new platforms that there's not just like a consistent of this is what people do in MetaMask. And I think that by trying to be permissionless and give people a platform

for innovation and to empower the developer ecosystem, we're best positioned to serve those many use cases. Another really cool thing, Jacob, about this metric is this is this is a very common web 2 metric, right? Like if you look at like annual reports of a Facebook or any social platform, they're going to report out in monthly active users and daily active users. And that's exactly what this is. They don't quite understand the other metrics that defy use, such as like, you know, maybe active wallets or amount of value, total locked. So that's pretty cool. But I'm also like, I just want to step back and think about one million users. of a defy, a bankless defy wallet product.

That is a fantastically huge milestone. I remember in the quarter one, the first quarter of this year, we were talking about like, what's the size? What's the population of everybody who uses defy? And the numbers came out around, you know, 250,000 to 300,000 people, right? So the size of a small U.S. city, you know, like a Richmond, Virginia, or something like that. Now, here we are. months later. And we've got metrics that are telling us there are one million monthly active

users in Defi. Well, now we've grown from a city the size of a Richmond, Virginia, and now we're a San Jose. Now we're in Austin, Texas. That's a major metropolis at this point. I can't wait to see as we extrapolate that hockey stick forward how it grows. Well, you know, how long until we're larger than a small nation, for example, and then how long after that until we're larger than the United States of America? So it's very exciting to see these numbers. And congrats to your success for helping to onboard the world into a bankless money system. We really appreciate what you guys are doing at MetaMask. I want to transition to another exciting element, I think, that's coming out with MetaMask is you guys are, you drop the mobile wallet, which is super cool. A number.

of us, particularly, I would say the Defi super users among us, really love the desktop version. And we love the desktop version because it's so damn versatile. You can do anything with it. So any Defy app, it just kind of works out of the box natively. You can do things like connect your ledger hardware wallet to it. So it feels like if you're prioritizing security, It is one of the most secure ways to actually use defy. You don't have to trust a smart contract wallet, which they're coming along, but they're somewhat new. So like Metamask is fantastic for that. And you guys are starting to add some more features.

I think I'm seeing to the desktop version as well. And that's starting with this idea of Metamask swaps. Can you talk about Metamask swaps? And in general, what's kind of in store for the feature set of the desktop version here? Yeah, I'd also love, you mentioned hardware wallet, so I'd love to talk a little bit about that too. Yeah, please. I'll come back to that in a minute. But so we've launched this new Swaps product.

It is, it's funny, I'll tell you the whole story of it. So we started out with just the idea, let's pick a Dex aggregator that pulls in a bunch of liquidity source. and bring that to Metamask. So there's a few decks aggregators in the space. There's some really great ones. And we went out and we actually, we tried all of them. And we did a study internally on which was the best one that we were going to pick. And we ended up with this split that was like all of these basically almost evenly

compete with each other in different scenarios. based on the order size, based on the specific token, based on their own unique approaches to gas. And so a team member made this like weird app called aggregator aggregator. And I was actually just looking at an old screenshot of it. But it took all of the decks aggregators and it pinged them individually. and it allowed us to get the best possible price for the user and then to route the order through the specific decks aggregator or direct decks that made the most sense for the user.

So we've rolled this out now and obviously it's a lot more robust and beautiful than the original aggregator aggregator was. So we've rolled this out. we're aggregating many different Dex aggregators. We're aggregating APIs that are not as readily available to people. We've also got private market makers who are providing liquidity to it as well that wouldn't necessarily be available otherwise. And we're bringing this to, to India.

users and trying to really take that million monthly active users that you mentioned, many of whom have never even done deck swaps, like they onboarded into Metamask to play games, to be a part of a community, all kinds of different use cases, and to make that feature set more available, to them to make it more convenient, and then also to give them confidence that when they make a at that swap that they're actually getting a fair price for the swap. So that's now available today in Firefox. We're looking to roll it out to Chrome very, very shortly, I think, next week, plus or minus.

And we'd love to bring this to mobile as well. Fantastic. That was actually a YouTube question. Hey, when is it going to release to their browser? So it sounds like next week for Chrome. It's fantastic news. And Jacob, you wanted to say something about hardware. Don't want me to that date, by the way. That's speculation and affirmation. Never. Not in this. But yeah. Well, did you want to talk, ask me more about this? And we can go to the hardware wallets in a second. Well, okay, I guess so swaps seems pretty straightforward, but basically, maybe to summarize, and you can correct me if there's, you know, anything wrong, you open the extension, basically, and within the metamask wallet itself, there's some functionality that allows you to move from one

asset to another, and it gets you the best price using that aggregator of aggregators type of formula. So I could move from ETH to a dye or a dye to a, you know, wifie or something like that, just with a couple of clicks. Is that kind of it? Yeah, yeah, that's a good summary. Very cool. The reason why I think this is such a big deal is because historically, at least from what I've seen, Metamask has been a product that has pushed complexity out to the edges, right?

It lets the websites take care of crazy logic, and MetaMask just operates as this like coupler between your wallet and that website, right? And so this is like the first feature I've seen MetaMask rolled out. rollout that has complexity on the inside of MetaMask, right? Which is kind of a big step for Metamask outside of its previous, you know, keep things simple on, keep things simple and secure and then just, you know, make everything, you know, ask the user for permission if they want things to be more complex. So what was the thought process with, you know, adding in complexity into MetaMask natively?

So I think the way that we think about it is we want to be a wallet that, serves the whole ecosystem and the whole community first. And we're definitely principally still focused on being a universal wallet. That has not changed really at all. We're providing some additional, where we see clear adoption of a specific use case, where we can make it easier for people to do.

We are bringing some of those features into the wallet. You mentioned swaps, but there's also another example of that. On mobile, we actually launched an aggregator of on-ramps. So a Metamass mobile user can purchase crypto through Metamass Mobile and be routed through the appropriate on-ramp to the country that they're right. So we're aggregating wire, we're aggregating Transac, which is itself an aggregator of other on-ramps. And bringing those two together. And so we're trying to make it easier for people to get ETH, to get Dye, and to do so in whatever country that they're based in. So I think that, you know, we want to make those kinds of things available.

while principally we're still focused on serving the entirety of the ecosystem. Very good. Yeah, so maybe jumping to that hardware question. So the reason this is, I think, important is, you know, the reason Defi super users love your product, again, is because it's so versatile. It just works with everything. But also, if you are doing things with larger capital amounts, larger capital pools, you know, you're most comfortable probably holding your own keys on some sort of a hardware device or some sort of multi-sig, right? There might be a handful of smart contract wallets that are mature enough to be trusted, maybe a NOSIS multi-sig, maybe an

Argent wallet getting closer, right? But if it's large amounts, the safest place to do it is directly like self-custying, not in a smart contract wallet. We've seen issues like the parity hack in the past. So can you talk a little bit more about hardware support? Because that's been kind of a killer combination, I know for many folks in the bankless community, you take a hardware wallet like a ledger or a treasurer and you combine that with Metamask and now you have your own self-sovereign banking interface and can do anything in Defi in a very secure way. Yeah. So thanks for that. So a bunch of, we have a bunch planned on the hardware wallet fronts. And we're, we're, this has been one of the, the most popular things that we do, but it's also been,

one of the more finicky things in some ways because of third-party APIs. So a lot of the, a lot of hardware wallets were built around U2F and Webhead, which are APIs that force or that give the browser or the operating system in different circumstances. They're dependent on those APIs. So you'll have some challenges for some users like on Windows. There's annoying pop-ups to use those APIs. So we're working together with the ledger team on a better

a better flow for that. I don't have anything to announce yet, but we'll have a much more versatile and universal solution there, I believe. We also have have a pull request that you can find where Metamask is potentially going to be supporting QR code based hardware wallets, air gaped hardware wallets. So we'd love to, you know, someone can use a device that doesn't go online anymore, an old phone without a SIM card in it. You can use that as a hardware wallet and use the camera on your phone. There's other hardware wallets that's

that are coming out with cameras and screens that are air gapped. We'd love to be able to support a broader diversity of things and things that aren't dependent on third-party APIs. We are also coming out with a plugin system that's going to allow the addition of additional hardware vaults. So any hardware wallet manufacturer will be able to add their hardware wallet to Metamaps through a snap, SNAPS, they get installed during the Connect flow to a site.

So, you know, the user could go out to the hardware wallet site, install plugin that will allow support for that specific hardware wallet use case. And we'd love to lower the bar of entry for hardware wallets. And we don't want to be the gatekeeper of which integrations are in Metamask or which ones or not. So we're increasingly moving towards this sort of permissionless platform for innovation and extension of Metamask itself. Jacob, one thing that really excites me is that Metamask really offers this obfuscation layer,

which maybe in different words is kind of like this user aggregation layer, where you guys are, at least with this new swap feature, you guys are the aggregator of aggregators, right? And so there's a lot of defy protocols that are operating behind the scenes to make the Metamask swap feature work, right? So, you know, Metamask looks to Uniswap for its price. It looks to Dex Ag for its price. When Dex Ag looks at Khyber for its price, to me, what I'm seeing is a manifestation of the protocol sync thesis, which if you're familiar, the protocol sync thesis is protocols that are just, you know, operate as infrastructure, agnostic, credibly neutral infrastructure fall down to the bottom and then surface layer surface level

interfaces things like metamask tap into those protocols in order to offer services to its users and what you guys are doing is really clever is you're adding on a 0.875% fee onto the swap for it to add to that surface which to my knowledge is metamask's first big step into actual monetization of the product from from what i can tell so are there future uh, future uh, like kind of, you know, value-added features that you guys are thinking about, where you guys also take your guys' fee, your cut to help support the Meta-Masque business and maybe grow this thing into something, you know, massive? Are there future products coming down the line that kind of fit in the same pattern?

Yeah. So we don't have any other value-added services to announce yet, with the exception of the other one that I, the other one that I mentioned was the on-ramp aggregator. So we have that on mobile today. We make a small revenue from that as well. And we've historically had just wire and a couple other solutions on the extension.

But so the two ways that we do make money are from the on-ramp aggregator and from the swap teacher. I don't know what the long-term pricing of the swap feature will be. We had originally announced a .3% to a .875% depending on swap size and different things like that. We haven't rolled out the dynamic pricing to the Firefox version yet. And we're looking at a lot of data, thinking about what the best the best way to approach it is. We did intentionally set,

we did a lot of research on how much money we were gonna be saving people. And so it varies a lot depending on swap size, depending on different scenarios, but we've seen swaps where we're saving people 5%. We're able to really save the end user a lot of money. And it varies a lot based on the order size, based on different scenarios, but we feel really good that we have a really strong value proposition

and that we're saving people money. We're not trying to do this as like fee collectors. It's not just like, I mean, convenience is a part of it, but we want to give people confidence that they're getting the best swap price. And so our fees are sort of built around that. Very cool. All right. I want to talk about this last maybe major feature set that we're starting to see roll-ups actually come into existence. in a big way in Defy. Even starting to see Ethereum roll-ups, actually projects deploy on Ethereum roll-ups first

before they deploy on Mainnet, which is super exciting. Right now in Metamask, you can kind of change from Mainnet to a test net to something like Ribston or some other test net very easily. Yeah, X-Di and just like a click of a button. Can you do the same thing for a roll-up? Let's say this Optimism Roll-up,

synthetics and with uniswap comes into existence, will that be, you know, able to natively plug into Metamask as easy as a click of a button and you're on this new network? So, so I'll, so a few things that we have announced today. There's lots of, lots of things talk about. But so we've announced our plugin system late last year. There was a developer preview of the plugin system that's available today. And that can support both EVM compatible custom blockchains and it can support non-evim compatible custom blockchains, layer 2s.

Like for example, Starkware, you can just add Starkware as a custom network today. You need a wallet that's compatible with its name. So we're building this plugin system that allows the user, during the connect flow to a site to add a custom blockchain and to have that as a part of their METAMS wallet. There's a lot of security things that we're figuring out with it. We're also, we're doing some other exciting stuff with complementary blockchains. They're being used for file storage. So yesterday you might have seen got announced that

file coin is doing us a plugin and snap together with MetaMask. So you'll be able to do data storage and stuff like that from MetaMask. So we really want MetaMask to be deeply extensible and to allow the developer community to start extending what MetaMask can do. We also So we want to have contract account APIs. So a wallet developer of a specific contract account standard can create a contract account wallet. You can import your contract account wallet into Metamask.

So even if you were using a different, you know, using a specific contract account. Say like a NOSIS multi-sig for instance? Yeah, exactly. You'd be able to import that with the plugins. So we're really committed to that. It's very important to us. It is technically challenging. We're doing a lot of really interesting stuff with security as well to make it work.

So we've got this product. It's a library called Lavamote that sandboxes all of the open source dependencies to the wallet. So we're really excited and proud of that. of that. We take security extremely seriously and so we're doing a lot of innovation in the space. Lava mode also uses something called CES or Secure ECMOScript, which is a JavaScript sandboxing method. The in terms of what will also have some other some other announcements short of the of snaps to announce in the coming few weeks, but not right yet.

Sounds like you guys have a ton of stuff in the back pocket. Yes. Absolutely. Well, that's great. Well, Jacob, thanks so much for your time. It's been a pleasure to have you. There's so much more we could get into. We haven't even talked about like in Fuera and or Metamast token or other future things.

But we'd love to have you guys back on Stay the Nation to talk more about that as those exciting announcements come in. And thanks for joining us, Jacob. Yeah, thank you guys so much. That token one is a very popular request. I bet. So anyway, thank you guys so much, and I really appreciate it. Well, fantastic. Take care, Jacob.

All right, David. Now, this is the point time where I'm supposed to announce sponsors, basically. So to the sponsors that made this possible, thank you very much. We're going to show a little bit about their tools in just, second year. And then we'll be back talking to Lucas Campbell about the Q3 token report that we just do three token report. Stay tuned. Here we go. Zapper is this new tool that I use to check out all of my assets in DFI. As you guys have known, DFI has absolutely exploded recently. And so managing your assets is getting harder and harder because there's so many different places and so many different

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explore feature. So it's got some assets deposited into Uniswap. It's got some assets deposited into Bouncer. And also with Zapper, you can just exchange straight from the Zapper interface, right? So this is just another layer on top of Uniswap or other exchanges on Ethereum that allow you to swap assets, right? So check them out at zapper.fI. It'll give you a nice clean portal to invest your assets in DFI. And you can also connect to multiple wallets if you use multiple wallets all at once,

and it'll give you an aggregate of every single wallet that you own. Check them out at zapper.fI. Also, this is definitely not my wallet. Unstoppable Domains is helping the world become censorship resistant and permissionless. If you are looking for a censorship resistant website that no one can take down, go to Unstoppable Domains.com and type in the domain that you think that you want. So I'm going to type in the domain that I think that I want, trustless state, and it's going to tell me some of the options that I can get to get a permissionless domain.

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where wallets can resolve to your human readable name. So you can tell bitcoins to send you Bitcoin to trustless date. crypto or your name here.eath. Check them out at Unstoppable Domain.com. All right, Bankless Nation. We are back to talk about the Q3 Defi Token Report. And we are joined by Lucas Campbell, who is a bankless editor and analyst on our team, puts out these fantastic reports every quarter. Lucas, how you doing, man? I'm doing great. Thank you guys for having me. Oh, well, it's great. It's great to have you, my friend. So we want to dig into to this token report. And of course, aside from yourself, the other party that really made this

possible is our token report sponsored, Diversify, which is a killer decentralized exchange for serious traders. It's private transactions, instant settlement, all the bankless way. They're doing some really cool stuff with layer two, particularly starkware, to make all of this really fast. With solutions like Diversify, I feel like you don't even need a central crypto exchange anymore. We will include a link to diversify where you can start trading on it in the show notes and just want to thank them for making this report possible. One of the first companies to really get onto a layer two up and running. And I use their exchange like really quickly when they first like launched and like the UI was pretty pretty simple,

pretty pretty easy to use. But then it's all already like so become so polished over the last like two, three, four weeks. So big time. You can't even tell they're a decentralized exchange. There was a time where you could like tell, oh my God, this is a decentralized exchange. Like, you know, brace yourself for a clunky user experience. It's not like that anymore. All right, Lucas, we've got the report open. We want to talk about some of the highlights, man, that you saw. So this is the report that we issued on bankless. We've got it, of course, in a web version, but also this cool institutional Wall Street grade PDF version. And you've called this report, Lucas, the rise of the ownership economy. Can we dig into that name? So why did why did you call it that? Yeah. I mean,

I think that's a great question. So you guys talked about this a lot last week with Jesse Walden and the ownership economy. But really the name came from this mania, this yield farming mania that happened in Q3, where the core idea was give ownership to the users, right? So it would be like the equivalent of like, let's say Uber distributing equity to anyone that gave a gave or took an Uber ride or let's say like Google giving out shares to anyone that use that search engine. So like the equivalent of this in DFI is how compound gave comp tokens, which you know pretty much kick started the whole the whole mania. He gave comp tokens to anyone that provided liquidity or borrow assets from the from the protocol and that pretty much just kick started this insane insane quarter

that we can kind of just see in the data but uh yeah i mean the rise of the ownership economy is really just this core notion of giving ownership to the users and making them um you know the stewards of the protocol over the long term all right and it was an insane quarter you know what let's let's just get right to the quarter i want to come back to the shift uh from price to earnings PE to price to sales because I think that's important just as far as a takeaway. But let's get into this insane quarter that we saw. And here's kind of like the, you know, the money headline here. But we saw a quarter to quarter revenue increase for these defy tokens. We call them capital assets because they're similar to stocks in their ability to potentially in the future produce

cash flows. They can be valued as such. But the revenue increase, was 26x from last quarter, right? So this is the graph. These are all quarters here, Q1, Q2, Q3, Q4, and then, oh, my God, here's Q3. It's like massive. So we went from $3.9 million in revenue created by these DFI protocol tokens to a hundred and eight million revenue created by these DFI tokens in Q3. Is that the ownership economy, the yield farming mania that you were talking about, as much of the growth as a result of that?

Yeah, I mean, definitely it was a lot of that. I mean, UNISWP was like a big contributor to that. So a lot of people were, you know, trading defy tokens, were swapping in and out of tokens. You know, a lot of the yield farming protocols, like featured UNISWOP LP tokens. So like Uniswap is obviously like the biggest contributor was $67 million in that quarter alone. own distributed to liquidity providers. Wow. Wow. Okay.

And then who are the big token winners for the quarter? I guess is this a graph of, this is still a graph of quarterly revenues? Is this a change from previous quarter? Or is this just, you know, in general, what's this gap again? Yeah. So that is the defy price performance or the token price performance throughout the quarter. So between July 1st and September 30th. AVE was the biggest gainer with 300% increase.

I will caveat that was saying that YFI was probably the real gainer, but it effectively went from zero to a billion. So it was like an infinite gain. So I couldn't put that on the graph. But yeah, AVE kept its lead. It had a really awesome quarter in Q2 as well. And it just kind of kept going off the back of the Avanomics upgrade, which is like this major overhaul to the token economics

and introducing decentralized governance and some yield farming mechanisms and a whole bunch of other stuff. So AVE, again, with 300% revenue growth in their DeFi token, what were a couple of the others? So there's two more that are above 100% growth. What are that? Yeah, so the other second biggest one was loop ring,

which I think a lot of defy investors were kind of getting tired of the gas fees on Ethereum and we're definitely looking towards like layer two solutions. So like I think another notable one that wasn't necessarily depicted on the graph was like Omisco, OMG had a really awesome quarter from what I remember. So I think like a lot of defy investors

were looking towards layer two as like an opportunity to like capitalize on like the increasing gas fees and just like the lack of usability for Ethereum during that time period. I don't know if you guys remember that, but like you were paying you know hundreds of dollars in gas fees to get in and out of like, you know, different yield farms. Absolutely.

The last one was synthetics there with 155% gain. And, I mean, synthetics is always just pushing out new stuff. They're constantly, you know, releasing upgrades. They were the best performing token last year in 2019. They had like, you know, a meteoric rise. And they're just kind of piggybacking off that momentum and keeping the train rolling here. And also one of the first apps to also leverage layer two as well, right? So like loopering itself is a layer two, but synthetics is an application, but is now kind of

pushing the envelope with getting applications onto layer twos. So interesting to see like, you know, no one's going to, no one's going to point at some price increase in synthetics and say that's not because of exactly what synthetics deserves. But also what they deserve is, you know, because they are the ones that push the envelopes and move really fast and get on to L2. choose as fast as possible when it's necessary. So tip of the hat to those guys. Yeah, I mean, they're definitely testing the optimism test net right now.

And you can stake on it right now. And they're incentivizing it the whole work. So definitely check that out and see if you're eligible. It does feel like the tokens that are building more are doing better in general. Like Avey, that team, just like always building, always releasing things. Same with synthetics. So I mean, the builders have really won over the past year. Really quick before we kind of talk about ETH as a defy asset as well and then break it down these defy

tokens by segment. Let's talk about the shift from price to earnings to price to sales and what that sort of means, right? So when you're evaluating a capital asset like a stock, investors tend to use this price to earnings ratio, which basically tells you how much you are paying when you buy that stock for every dollar of earnings. So a Netflix might be around 80 price to earnings ratio. That means you're paying it around $80 for $1 of earnings.

So you're anticipating that it's going to continue to grow in order to justify a price to earnings ratio of 80. And we've done a lot of work in the past kind of looking at these defy tokens from that lens because it can be evaluated from that lens. How much money are you paying for every $1 earned in buying? the AVE protocol, for instance, right? And that can be a relative valuation metric that's useful. But there is kind of an asterisk there in that a lot of what we're looking at is not like bottom line earnings, like profit. But when we're talking about revenue for these defy tokens, we're actually looking at top line revenue. Actually, their sales revenue. So that's sort of the lens. It's not so much price to earnings. It's really priced to top line sales because there can

be other costs, you know, before you get to sort of the bottom line revenue. Is that a good way to summarize it, Lucas, or like, what would you add on that concept here? Yeah, I mean, exactly. I would say, like, I think the best way to think about it is like price to earnings is the profit that is accrued to the protocols token. Because price to sales is really just the revenue generated from like usage of the protocol. Right. So I think like a really good example of this is Kyber. So the liquidity protocol, you know, generated, I think it was like $10 million in revenue off of like a 0.2% trading fee. And right now governance dictates that 73% give or take is accrued to K&C holders via like ETH dividends and then a small amount of it's burned.

Whereas the remaining 26.5% is distributed to like reserves, which are kind of like their but Khyber's like liquidity providers almost. So you kind of see that distinction, whereas Khyber's price of sales is 21, whereas their price of earnings is a little bit higher because only 73% of that revenue is accrued to the token. So the price of earnings is 29. That makes perfect sense, right?

But on that, so we've got a price to earnings of 29, a price of sales of 21, a little bit lower, but price to earnings of 29, by the way, that just seems super low. right like high flying tech companies right now on the NASDAQ are going for PE ratios of like you know 80 Amazon's like 160 170 I don't know what Zoom is what's Zoom Lucas these days from a price to earnings perspective um like 411 right now that's that's the you know the zoom stock that we're using Zoom so fantastic um for them but that's a pretty high valuation metric Using their product to tell them the valuation is really high. Right.

Well, the product could be great, but the stock price could be high relative to what it's worth. But anyway, are we seeing a lot of very low price to earnings ratios like Khyber? I mean, that seems super cheap still for the potential growth of defies. Is that the case? Yeah. I mean, I would say so. I would like, there's a couple that are like a little bit more nuanced. like uniswap and compound and like you know a few others aren't actually like generating any

earnings for token holders it's all revenue with that like maker was another notable one where right now they're generating like you know $80,000 per day and they don't have the DSR on so they don't have that die savings rate so all of those revenues are being allocated or directed to MKR burns right so I think in the report it was like you know they're at a new low of a P.E ratio of like 30 or something so you're definitely seeing like the protocols that do accrue value to token holders that have like that mechanism you know they're definitely hitting you know new lows or they're on the lower end you know especially when we're looking at some of these other tech stocks that are you know valued at like sky high valuations you know was there a place in the report Lucas where the

PE ratios are that we could see are the price to sales ratios. There was a price to sales ratio. I did not do one on the price earnings, just because it was like a lot more nuanced to where's the price to sales? What page? Um, should be, let's see, scroll up. It was in that first section, like the defy overview. Ah, less than miss it.

Okay. So what does that mean? I'll scroll up to find it, but what does that mean for a token like, like you to swap for instance. It's almost like a uniswap is clearly there's value there, but it's almost like pre-revenue. It's almost like Facebook while it was building network effect and acquiring users, but it hadn't yet turned on its ad modules and started making money. Is that kind of how you'd think about it? It just all it needs to do is sort of flick a switch and then, you know, they could start channeling some of the fees to users and then it could be a capital asset that.

that's generating actual earnings. Yeah, so Uniswap is actually a really interesting example, because if you remember Uniswap and Uniswap v2 introduced this protocol charge with like an on-off switch, which is governed at the time with some like ambiguous governance thing, and now it's like, oh, it's governed by uni holders, right? So the protocol charge is switched on. The 0.3% swap B, 0.05% of that. So quarter, quarter basis point or point two five percent and then point zero five is directed to,

um, a protocol treasury. So really what that money can be used for is really up in the air, right? That right now at the current earnings or the current revenue was about 45 million dollars um, an annualized revenue to that treasury. If the protocol fee was switched on. Um, And you could use that in theory to burn or like distribute eat dividends or whatever you wanted to do. You could, you know, accrue that, that capital to the token holders.

But that's not necessarily what's in like that social contract. I think like a lot of it's going to be used to like fund and incentivize like community contributions and the long term development and growth of like unioswap at large. But what's interesting is like Khyber almost set a precedent there where like, Like it did distribute over 70%. It is distributing over 70% to actual K&C owners, right? I wonder if Uniswap will follow a similar path. They'd at least have to be competitive with some of these other protocols in terms of what they distribute.

Here's the price to sales, by the way, that I was missing earlier. And Uniswap right now is a 12 price to sales ratio, which is absolutely crazy. When you think of a Zoom at 411, not quite apples to apples, but like, kind of close. That's crazy. All right, well, let's break this down by Sector a little bit, Lucas. So maybe we'll come to Eath at the end if we have time. But decentralized exchanges, how did they do? I guess what are the sections that you outlined in this report? And then maybe let's start with decentralized exchanges. But like that's the first. What are the other sections? You got like derivatives and something else, right? Right. Yeah. So we did.

Dex's lending derivatives, and then we did some miscellaneous highlights, namely Wi-Fi and the Nexus Mutual. Okay. So in terms of like the deck sector pretty much led the charge, right, in Q3. I think overall, the deck sector aggregated over $40 billion in volume in Q3, with the Uniswap, you know, comprising of like $25 billion of it. So a really solid portion of the revenue or the volume in Q3 was from Uniswap. I think like Curve was in second with $8 billion and then balance there with $2.7 billion in quarterly volume. So the deck sector really led the charge. They killed it.

A lot of the revenue is attributed. You know, a lot of the defy revenue at large is attributed to the deck sector. I can't remember what the specific number was. Yeah, $91 million of like the 108 was from Dex's. Wow. They crushed it. Mm-hmm. Do you want me to keep going on the dexes here?

Yeah, anything else on the dexes before we popped a lending? We kind of talked about the uniswap stuff. So that was kind of like my sector highlight, which was just talking about uniswap and how that protocol fee can be allocated towards like accruing earnings for token holders. So that was really the majority of it. Balancer had a really awesome quarter. I think they generated like $16 to $18 million in revenue to LPs,

which given the launched back in like March, April, you know, spring of 2020. You know, that's pretty, pretty impressive given the short time span. But yeah, I mean, Dex is crushed at this quarter. Unswap and Balancer. So it seems like even in the Dex sector, it was automated market makers that really dominated in terms of revenue. Exactly. Very cool.

All right. Let's jump to lending. Yeah, lending had a comeback quarter here. So let's see compound. I will say that like compound and Avey, the way that the token terminal, who's the people that provided the data, the way they calculate the revenue is the interest accrued to suppliers, right? So it's kind of a nuanced thing where a lot of the revenue is really just going to people

that's applied assets to the protocol, you know, through interest. You know, with that said, there's obviously an earnings mechanism that could be implemented that there were like a portion of that interest is crude to token holders, right, of AVE token holders or comp token holders. That's not the case right now, but I think that was just an important nuance to kind of understand about lending revenues. With that, I think Maker was kind of the biggest highlight. The ended up turning on the stability fee after multiple months following like Black Thursday,

they have zero percent stability fee, not earning anything. MKR was diluted. it was a tough past couple months for mkr but you know they're back on track now there's nearly a billion dollars of dye in circulation right now they're earning you know somewhere around 70 to 80 thousand dollars per day with the entirety of that being accrued to mkr holders right because the DSR is not online so all of that is going to earnings die or mkr is kind of you know back on track to say the least which is which is a good sign david just on that do you remember when we had Mariano Conti on a few months ago.

This was back in April or so. And he made the bold, crazy prediction that Die would hit one million, or one billion, excuse me, in circulation this year. And that seemed absolutely outlandish and crazy. Right. And now here we are. Here we are. Well, we're not there yet, but we are so close.

You can taste it, right? So close. Very impressive. And I do want to make that distinction between Maker and the rest of the DFI protocol, you know, defy yield farming, it was really a thing because of token issuance, right? And, you know, while there is revenue going through these protocols, the reason why there was this defy mania was that because, like, there was just a lot of issuance of valuable tokens, right?

And I think what was going to come is a lot of those tokens, as Lucas just kind of alluded to, a lot of those tokens don't capture the revenue of the protocol. A lot of the revenue, like the Uniswap versus Khyber example, Like Uniswap captures a lot of revenue and then redirects it to liquidity providers, not necessarily to the Uni token. And Maker had their token economics knocked from like day one where like revenue from the protocol went into the token itself. And it's really exciting to see that get turned back on. So like Maker as like a leader of the protocol that is both generating revenue and also it accruing to the token, which it's supposed to be designed for, is like the exemplar model that I think a lot of other Defi protocol. calls are either going to get to this point or not go anywhere at all.

Yeah, it's got like two, two to three years of maturity on these other tokens. And you can kind of see that with it's going through its own cycles. I will rip on Maker for a second though. Like, I feel like their token economics is a little outdated. Like you don't, they didn't, yeah, I feel like you could improve a lot on it. Right. Like, you could be implementing MKR rebates for paying stability fees. Kind of like that yield farming mechanism for opening a die CDP.

I feel like the auction, like the MKR auction for burning is like kind of not great. I feel like if they had a univorpe of the kind of liquidity, like implementing open market buybacks and stuff like that would be like much more effective. But that's just like my personal opinion. And like I would love to see interest rates being set algorithm fee rather than buy MKR governance. So they're definitely killing it. All good points. I got.

All good points. Yeah, they are taking this conservative approach at the same time. All right, let's talk about derivatives who are not traditionally conservative types of assets. So what happened here? Yeah, so the derivative sector, just in terms of the data that we had, was largely almost entirely synthetics. Which they made a comeback. Their previous record of $1.9 million in quarterly revenue was kind of disproportionately reported due to front-running issues. Yep.

But they fix that back in Q2, which is why you see that huge dip. And now they're kind of back on track. They almost exceeded that previous record almost all organically. And with that, like you saw like a pretty substantial increase in the outstanding SUSD, which is Synthetics's native crypto dollar. But yeah, I mean, synthetics pretty much killed it. I will say like Auger v2 launched. And then UMA has been doing pretty well.

We don't have the data on that, but just from what I've seen personally, like, UMMA's been definitely doing some interesting stuff out of that camp. Yeah, I wonder how UMA token, UMA token looks from a revenue perspective. There's a few other things that I hope we get more data on the future with token terminal, which is like MC Dex, which they did something last quarter, and they have their token as well. And then also, I kind of wonder what DYDX would look like if they actually had a token that accrued some of the value of their derivatives platform because they're definitely doing a large amount of volume. So maybe we'll see DYDX. I feel like Antonio maybe hinted about that on our AMA with him, David.

But yeah, we'll see when these other new derivatives platforms get added, how synthetic shapes, shapes, up because right now it's just dominating everything. Yeah, we'll put a pin on the DYDX thing. I have a feeling they'll come out with something, but we'll see. All right. So now we've got yield aggregators. Of course, we just got to talk about Wi-Fi. They just had a killer quarter.

Some of those data are not in the data set that we were looking at. But what do you want to touch on with Wi-Fi? Yeah, I mean, Wi-Fi pretty much had this meteoric rise in D-Fi pretty much went from nothing in terms of like token value to over a billion dollars in less than two months was pretty wild to say the least. And I think the most notable thing out of that was it kind of kick started or built upon the Fair Launch movement, which we talked about in a newsletter post before. But it's essentially this token distribution mechanism where you're kind of just building

off the altruism of Satoshi Nakamoto and Bitcoin and where everyone, just has equal opportunity to earn the tokens. Like there's no founder allocation, there's no VCs, there's no, there's really no, favorable, you know, token, token allocation. It's really just equal opportunity for everyone. And I think that that fair launch movement kind of got kick started and you kind of saw like EM Finance and all these other fair launches where there was just, you know, equal opportunity for everyone to kind of get a portion of that.

token supply. And YFI is definitely a capital asset. We don't have the numbers in this specific report, but it is printing money, basically. And I can't wait to see as those numbers get incorporated, how much revenue it's actually throwing off to its holders, basically. All right. The last one is NXM. So this is Nexus Mutual.

So they had a massive quarter in terms of premiums paid. Wow. That graph is up and to the right. Yeah. Yeah. Nexus Mutual killed it. It was actually interesting because right at the beginning of Q3, like on July 2nd or 3rd, the launch pooled staking,

which is like this new way for NXM holders to stake against contracts and earn those premiums that are depicted on that graph. And that had this, you know, transformational effect on Nexus Mutual. And kind of what you saw was this massive, you know, run up in active covers and premiums paid. I think one of the interesting takeaways from that, is Nexus Mutual right now has earned over $2 million in premiums from selling like insurance. And it's only paid out $35,000 in claims.

So like that is insurance right there at its finest. If you were like wondering how how the hell like insurance companies make money like this is the math right here. Like millions of dollars made only a few thousand dollars paid out in claims. And I think that's really interesting, a really interesting takeaway when you're looking at Nexus Mutual. Yeah, that's going to be exciting protocol to watch. I'm pretty bullish about its future, specifically having talked to Hugh Carp, who's the founder of Nexus, a few podcasts ago. All right, so there's also a number of untokenized protocols and applications.

We mentioned DYDX, but there's also Instadap, which doesn't have a token, open, set, Zapp, or Zerion. What do you think, over, under, on whether some of these protocols are going to launch tokens, yes or no, what do you think, Lucas? I would say I'll take a while I mean do we count index for set protocol I do I think I would set launched a token in Q4 2040s we can cross that one off the list one already has I would assume D YDX would I would put it like a sure bet I'm not going to say that but I would I would strongly you know think that D YDX would put out a token

is to get competitive just because he lost a lot of the market share in Q3 to like Unuswap and all these other dexes. I'm interested to see how the asset management platforms kind of play out. Like insidab, Zap, or Xerion, like there's not like some sort of set model, token model for them yet. So I'm very interested to see what happens there. And then open, we'll see. We'll see on open.

It's basically like to be competitive, a token needs to be part of the incentive. mechanism, it seems like. That's what Q3 really showed us. Conclusions. Okay, so killer quarter, absolutely phenomenal quarter, but now we're down 50% on Defi assets. So people are like, oh, it was a mania as a one-time thing, bubble burst, bye-bye Defi. Now we're really excited about Bitcoin and everything else and again on Defi for a while. So did the bubble pop, Lucas? Or is Defy kind of did it do its thing and now it's dead? I will say, what I will say, and I kind of outlined this in the report, is that this is a multi-year market cycle.

Ethereum in the last market cycle had, you know, over half a dozen, 30, 40%, 50% drawdowns. Defi has only had one so far after this massive run-up. So I would say that if you are, you know, if you subscribe to that thesis that, we're, you know, at the beginning of a bull run, I think D5 is like pretty much cemented itself that it's going to be, you know, a critical part of this bull run. You know, that said, you just never know. I think there's a lot of, you know, profound and valuable mechanisms and distribution stuff. Like, as we talked about at the beginning, the rise of this ownership economy, I think we'll have, you know, profound effects beyond. just defy and crypto at large. So I think this is just the first drawdown of many to come after multiple runups. So we'll see. Very good, Lucas. Well, you crushed on this report,

my friend. This, I think, is one of the best reports, if not the best reports on defy in the space right now. It is institutional level. So you could send this to your investor friend who's tinkering with stocks. And they should be able to understand. and the terminology. Once again, you can get it on bankless. Just type in Bankless Q3 Token Report in Google and bankless.substack.com. Lucas, thanks a lot for walking us through that, my friend. Of course, this is awesome to do. So thank you guys for having me on. I appreciate it. Looking forward to Q4. All right. Appreciate you guys. Thank you. David, Killer Quarterman. And last thing we want to talk about is something that relates to that, because you know what that felt like is we did

we did we did years of defy right and then we did a q1 of defy in 2020 and then a q2 and it felt very gradual right and then suddenly oh my god q3 it explodes it's it's back to the gradually then suddenly mean that we're about to talk about right right yeah that's exactly right and kind of defy to me kind of seems like a harbinger of things to come right uh what we just witnessed in this last quarter uh and there's a lot of other like meaning and significance that we can pull out of what happened in defy in q3 2020 but i think the the main point that i think that defy triggered was that you know these markets are so reflexive and that's exactly what lucas was kind of alluding to at the end is like what once once more the the uh morale of a market shifts and it goes from bearish

to bullish it doesn't just swap back it doesn't just go backwards like we're like oh we're down 20, 40%, like, oh, damn, turns out that wasn't the thing that got us out of the bear market. Like, no, like, it's shifted. Like, we are now in bull market mentality and bull market mode. And I think Q3 was kind of the spark that lit the fire under the rest of the crypto market. Yeah, absolutely. All right. Well, let's talk about this gradually, then suddenly mean because you wrote about it earlier this week.

And maybe first talking about, you know, in 2017. you contrast, there's this euphoric mania around ICO tokens. And people probably, a lot of people in mainstream probably last remember crypto from hearing it on CNBC. And all of these ICOs do schemes and scams and that sort of thing. And a lot of people haven't thought about it until then. But there've been a ton of major changes, right? Even in the past few months, you outline three of them. What are they? Yeah. So this goes along the lines of like, you've been. Back in 2017, and any sort of mania, you tend to feel like the world is about to enter this new paradigm, right? And as somebody that came into crypto in 2017, like, I definitely felt I succumb to that mental model.

So I, you know, I owned like 20 shit coins, which I can't name anymore. And I thought that all of them were about to totally reorganize the way that humans, like relate to each other. Like right away. Like right away. Like next year. Like all of a sudden, like my mom, my sister. my friends are all going to be like having a wallet with tokens inside of it to like buy their electricity or something like that uh that was that was grandiose thinking that was euphoric thinking

and there's that bill gates quote where you know he says we overestimate what we can do in a year but we underestimate what we can do in 10 years and we're just three years away from that that moment in 2017 maybe three and a half and china is rolling out a central bank digital currency right like run of the square, the biggest payment processor in the United States is making an absolute killing of revenue from Bitcoin sales and no other like sales company is doing that, right? And also, commercial banks are okay, given the green light to custody crypto. And there just seems to be like, you know, that quote I just said where, you know, we overestimate what we do in one year and underestimate what we can do in 10. Well, I think with crypto with a rate of development, it's like

we can shrink 10 down to like four, right? Like, if things, are really, really moving quickly. And all of a sudden, it seems like we are crescendoing into kind of the products that we are indeed back in 2017, 2018, are starting to come to market. And not the little products, the big products. Yeah. So this is that gradually segment where all this stuff that mainstream doesn't see because they've been checked out of crypto for a while is being built. And all of this infrastructure is being laid and all of this has been happening. And there's also this global macro trend, right? Like, it seems like, you know, COVID may have accelerated this even.

But government, central banks have, they're running out of options, right? So interest rates down to zero percent. QE, they've done rounds of QE already this year, right? And it's having diminishing returns and it's increasing populism because it's increasing wealth inequality. We've talked about the Cantillion effect, right? So now they've got like one. option left. And that option is modern monetary theory, something we call it MMT, which is basically

like printing money through fiscal policy and air dropping to people, right? Exactly right. Yeah. So what happens in that world where central banks only have one option? Yeah, like what happens? Yeah. I think in order to start that conversation, we should ask ourselves like what what doesn't happen if they don't do that right like what if they sit on their hands and they say like you know what the dollar it's going there's no more dollars like whatever however many dollars there are out there that's how many there are and we're so jrm Powell gets real austrian all of a sudden real austrian like jerome power turns into a bitcorner and be like you know what you know what would make the dollar gold bug to be hard hard money right imagine in that scenario a number of

absolutely terrible things happen, right? You know, businesses don't get support during a crisis, right? You know, there's no further unemployment support. We only can give out as much employment as we collect in taxes. You know, revenue for all states and federally, the revenue from taxes is down because the economy is like 50% shut off, right? So we don't even, we can't even support ourselves. And, you know, and then, you know, no more, you know, $1,200 checks for COVID stimulus. And all these things are terrible. And so as a result of, you know, the decision of the Federal Reserve turning super Austrian, society basically crumbles, right?

Civil unrest happens because, you know, the people are under, there's too much wealth inequality and the wealth isn't being spread around. And so, you know, if we want our economy to not crumble, if we don't want civil unrest, we have to print money, right? Like, there's basically, if we want to retain the status quo, basically the central government, or the Federal Reserve and the central government have to create money and push it into the economy one way or another. They have no choice. They have no choice.

And also, there's no significant reason as to why it's really going to be long-term effective. This is just consistently a short-term solution, followed by another short-term solution, followed by another short-term solution, which is money-printing after money printing after money printing, right? And so Bitcoin as an asset that is diametrically opposed to MMT along, with how people are just going to become okay with crypto throughout their by increased understanding of what it does, I'm seeing, I'm hearing like a very loud crescendoing drum role of like people clicking as to what this whole crypto thing is really for and what it does and it's in its role in the world. Non-sovereign assets that aren't dependent on those things. That's the thing I

think people maybe don't understand, right? So let's say you and I are hardcore Austrians and our solution to Jerome Powell is just like, stop the money printing, buddy, right? The problem with that kind of simplistic approach is basically like it's almost not even Jerome Powell, Jerome Powell's decision anymore. It's almost not even, you know, Donald Trump's decision or, you know, V2 Donald Trump or Joe Biden's decision

because they only make decisions on like a four to five, six, you know, eight year basis, right? They're trapped in this cycle. They're trapped in the wheel, and they can't really get out of it. There's an element where, you know, what else do you do? They're living with the decisions made by Nixon, getting off the gold standard in the 1970s, right?

And there's absolutely no other decisions that are politically tenable that they can actually make. So MMT is happening regardless of which party wins, regardless of the way the election plays out. And it's not just happening in the U.S., It's happening every country throughout the world. Every country with a money printer is printing money, right? And that's why they're so based off of like Nixon's choices.

Like Nixon's choices to get off the gold standard happened because he was printing money. Like that's how it happened. Exactly. Exactly. All right. So that's the Bitcoin story, right? And the macro story. And, you know, not only Bitcoin, of course, but we think ether is a non-sovereign asset as well.

And it can be subject to these same headwinds as we're seeing. But let's talk more about Ethereum because that is also sort of a gradually than suddenly type of story. So what's building there? Yeah. To me, the first part of the Ethereum story, which is maybe the smaller of two stories or maybe the legacy of two stories, the legacy markets, is the supply of stable coins, crypto dollars on Ethereum. And while we were just talking about money printing and the dollar and how the dollar is weakening, it's actually being. incredibly strong versus other currencies, right? And so, you know, you would never, the last thing you would want to be is to be like a third world nation's fiat currency, because especially in a world

where more and more crypto dollars are available and becoming liquid on Ethereum, because the Ethereum payment rails for dollars extends into every single country that has internet, right? And so, you know, but before you, you know, if you are the Argentine peso or, you know, you know, insert your, you know, not very large fiat currency here, if you are that, you want to be traded as a, your, your constituents of your country want to trade you for dollars, not Bitcoin, right? You know, Bitcoin, the narrative behind Bitcoin is great. But if you are from, like, if you are a holder of the Argentine peso, you want to go into dollars because that's dollars are king. Cash is king, right? Dollars are the most, you know, liquid asset in the world. And Ethereum is transporting, you know, incredible amounts of U.S. dollar around its network every single day.

And the amount of stable coins on Ethereum to support that use case has just exploded, right? And even with Defy yield farming mania coming to an end, we are still seeing an absolute rise in stable coins. And especially with Die being off its peg, I think that's also always something that's useful to pay attention to. Yeah, I think it's interesting that, mentioned dollar, you know, dollar dominance versus other currencies. It is the strongest of all of the weak fiat currencies. Like an example of this is like, why are there no euro stable coins

right now or Chinese, you know, remember, there would be if there was market demand. Of course, we'll see those in the future. But the fact that we're not seeing them competing with the crypto dollar on Ethereum is pretty amazing. We're almost at 25 billion. There's almost no crypto euros to speak of. It's all dollars. That is the preferred. reserve currency, at least in Fiat land right now, it seems clear. But so how does that tie into Ethereum, though? Yeah. So then we can, well, that's, that's how Ethereum relates to like the global macro environment, right? Like, that's how the relationship between Ethereum, COVID, and MMT kind of fits in. But also there's its own, you know, its own narrative, its own track,

which is the development of Ethereum 2.0, right? And so, you know, if you're watching from the sidelines, and maybe you are thinking like, you know, I'll check in with Ethereum 2.0 every now and then. And you hear this phase zero thing followed by phase one, phase two. You kind of think like, okay, well, we're going to, you know, first we're going to do phase two, and then we're going to do phase one, and then we're going to do phase two, because that's how numbers work, right? Feels five years away. Yeah.

And so like, okay, great. Like the Ethereum people are finally getting to phase zero. And so phase zero can finally start. That's actually not how phase zero, one, two, and to work, right? These are actually things that go in parallel. And like, yes, we do need phase zero to get finalized before we can start on phase one. But the R&D behind phase one and the development behind phase one has been happening as long as it has for phase zero. Right.

These things are being parallelly. These things are going to be processed in parallel. Right. Yeah. So phase one, phase two and phase zero are all being worked on in tandem. And so what I think is about to happen is some sort of compounding progress with the theory. Ethereum 2.0. Like as soon as phase zero gets rolled out, like phase, phase one is not far behind it. Yeah. And the really interesting thing. I think this was a huge takeaway from our conversation with Vitalik that we put out earlier in the week is basically like in parallel to what you're seeing here on the timeline with phase zero one and two. There's there's work on Ethereum that had like scalability work on Ethereum. If the goal of Ethereum and phase two is scalability, right? All of this technology that's,

being developed and has been created the past two years around roll-ups and ZK roll-ups, optimistic roll-ups, and, you know, even plasma with OMG and some of these things, they're going to feed into the, you know, the Ethereum 2 roadmap. So like that's going on concurrently with all of the ETH2 stuff so that we can get to like a phase one and actually have all of the scalability or close to all of the scalability promise that that, we need that that would have only been available in phase two if it was just the eith two roadmap right because that makes sense like you got all this stuff on existing eth one scaling out Ethereum at the same time as this ETH2 roadmap is being

developed and those things are going to converge in probably a pretty sudden way in very sudden right way right and as soon as people start to realize this and you know what's also going on in behind the scenes is that you know there's there's been the depression of the ETH price based on the bearishness of ETH 2.0, right? That's been, that's been a thing ever since, like, we started going downhill in 2018. At some point, that's going to turn around because it's not like the triple point asset thesis is like a curiosity. Like, no, those are three really good reasons for why ether price is going to go up, and two of them are required by Ethereum 2.0. And as soon as all these things get locked into

place, I think the ether price is going to do some. something that is sudden, not gradual. Yeah, I think you've summed up really well in this fantastic sentence. Gradually, then suddenly the price of ETH will begin to reflect the thousands and thousands of labor hours that have been poured into Ethereum 2.0 these last three years. So all of this work, it's been very gradual. It's felt very gradual, but that will all pay off in ETH price, you think, when it suddenly ships and silences all of the critics who said.

Ethereum 2 isn't a thing, it'll never ship, it'll never work once again. Looking forward to seeing that, David. Anything else on this? Yeah, just to continue this conversation, I think everyone should tune in to the Thursday AMA with Danny Ryan, where we exactly talk about where all the progress is on phase 0, 1, and 2. Danny did a fantastic talk at the ETH online event where he kind of said, you know, ETH one, ETH2, these are kind of misnomer's. It's not, there's not two different separate blockchains.

One just kind of gets rolled into each other. It's actually more accurately reflected by two, two different places on the same tech stack. That's a really good talk. And so I would recommend to listen to that and then to tune into the AMA live stream with Danny Ryan on Thursday. Yeah, I do think Ethereum is going to prove to be in the next decade the most important open financial network in the world. So we are here early and we're watching it. it emerges. It's such a privileged position to talk to some of these folks like Vitalik and Danny about its development at the time it's being developed. So tune into that. All right, guys,

this has been state of nation. Number 19, we talked to Metamask and one million users. We talked about Q3 and the explosive token appreciation and revenue that it saw. And then finally, we talked about gradually, then suddenly, with respect to the ether price, risks and Of course, the defy capital assets we talked about are risky. So is ETH. 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.