Bankless - SotN#7 - EXPLOSIVE, Special Guest: DARYL LAU (YFI TOKEN MAGIC, ETH PUMPED, DEFI RISK)

Episode Date: July 28, 2020

STATE OF THE NATION #7 - Tuesday, July 28, 2020 Watch on the Bankless YouTube Channel The State of the Bankless Nation is....EXPLOSIVE! The bankless boys discuss why. Plus a special guest...Daryl Lau a YFI token governor! ----- GO BANKLESS WITH THESE SPONSOR TOOLS: 💸 ARGENT - BEST ETHEREUM WALLET FOR GOING BANKLESS (we love it) - open one today! 🌈 AAVE - LEND & BORROW YOUR CRYPTO W/O A BANK - earn some interest! 💳 DEVERSIFI - DECENTRALIZED EXCHANGE FOR PRO TRADERS - use this exchange!   💸 AMPLFORTH - MONETARY EXPERIMENT FOR BASE MONEY - learn about this experiment! ----- Covered: TOPIC #1: YFI TOKEN MAGIC - w/ Daryl Lau TOPIC #2: ETH PUMPED TOPIC #3: DEFI RISK Announcements: Something big is coming next Monday! MINTING WEEK for Bankless Badges (new Minting on Aug 1) We show:  YFI chart (craziest thing I've seen) yEarn total locked value   yEarn Governance Article on YFI by Daryl --- Episode Actions: Just one - Keep leveling up weekly!  Also...subscribe to Bankless YouTube to watch State of the Nation every Tuesday! ----- Don't stop at the show! 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 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.

All right, everyone, welcome to episode seven of State of the Nation. So what we do on State of the Nation is we talk about what's happening in the nation. I'm talking about the Bankless Nation. Of course, we related to big picture stuff and then we drop some insights and action items. This show comes out on YouTube because we like to show the visuals when we can. It's all about the visuals, seeing David's face, seeing my face, seeing our special guest's face. being able to peek inside the graphs and some of the analytics behind the things that we're talking about. And we leave you with a list of resources in the show notes to check out. So this comes out

on Tuesday. So it's Tuesday when you're watching this on YouTube. You get it earlier when you subscribe to the channel. Make sure you do that. And then we release it on the bankless podcast stream on Wednesday so you can catch it via just audio that way. David, how are you doing today, sir? Absolutely fantastic. The bankless nation has a lot of energy in it. So it's been absolutely wild seeing that energy grow. And there's also just a ton of energy, not just in the bankless nation, in greater Ethereum and even in the greater cryptosphere at large. Lots of energy to talk about. So lots of topics to get through. Yeah, like you mentioned, we did bring on a very special guest to help us dissect where some of this energy is coming from. But we will get to that. Yes, yes, the secret intro. All right, before we do, and before I ask you the question, David, so get your answer ready, sir. We should talk about our fantastic sponsors. I want to start by telling you a little bit about Argent. So Argent is a smart contract wallet for Ethereum for all of these D5 protocols, these money, Legos that I personally use. David uses it. Everyone I know in the bankless community uses this wallet in some form or fashion because it is just dropped, dead, simple to use. You get easy access to AVE. You get easy access to compound, pool together, Khyber, token sets. You can do all sorts of things with it. It's secure and easy to use. So this is actually a great entry wallet for your friends and family. This is like a Venmo type experience.

It's all mobile. There's no seed phrase involved. You can even set up social recovery, which is key. It's non-custodial, most importantly. So this thing is ultimately bankless. You can check it out at the link that we will include in the show notes or you can go to argent.organt. link slash state for a state of the nation special deal. So that's argent. dot link slash state and check that out. Avey is a borrowing and lending platform on Ethereum. Definitely responsible for a decent chunk of that energy that I was talking about. So if you want to supply collateral and earn an interest rate, Avey is the place for you. if you want to borrow assets to participate in yield farming, liquidity mining, all of that energy,

AVE is also the place for you. And developers who are leading the charge, you can check out their flash loans protocol where you can borrow any amount of assets with zero collateral so long as you pay it back in the same transaction. There's a lot of potential here with money legos. There's the ideas and ideation that we can go to think about how you can leverage this thing is endless. So developers check them out. You can go and find out all about AVE at AVE.com.

One of my favorite features about AVE is their stable interest loans, which is such an important thing to be able to replace the existing financial system with bankless financial systems. Stable interest loans help people think in the long term. They help businesses make business decisions and they just will help the bankless nation go faster. AVE has just been climbing the charts on DFIPulse with value locked up in their contracts. So rip-roaring success. So tip of that to them for everything that has happened to their protocol in the last few months. So check them out at AVE.com. All right.

David, we've got some exciting things happening just in the bankless nation that we should maybe start with before I ask you the question. We had Joey Crew podcast that we released yesterday. that was absolutely fire. I know I say that this all the time, but it's one of my favorite podcasts that we've done. We've got Eric Voorhees coming tomorrow. So that's going to be exceptionally interesting. Eric, of course, is, you know,

he came from Bitcoin, but he's non-tribal, and he's very interested in things that are getting built in this bankless landscape. It's also Mint Week for the bankless badge. So bankless badge, if you've been keeping track, is something that we issue, to bankless members give some unique privileges and rights within the bankless ecosystem. We'll include a note there.

And then, David, we've got something coming next Monday, right? I don't want to talk about this too much. Maybe you should take over from here. What's happening next Monday? Yeah. So, you know, the crypto land has fertile grounds, right? The bankless nation is fertile. Lots of green pastures.

That's why we're so excited about this. lots of things that are potentially awesome things to do. And so we found one, we think. And so that's coming. A brand new wing of the bankless revolution is coming to the bankless door. I'm super excited. Next Monday is going to be awesome. And you find out about it first because you are tuned in here on Tuesday.

Next Tuesday. Make sure you catch that episode. We will show the big reveal then. David, let me ask you. the question. What is the state of the nation right now, sir? The state of the nation is explosive. Okay. Which is, you know, it's kind of a dangerous word to say in the world of cryptography and smart contracts. But right now, it's a controlled explosion. Okay. So hopefully we can continue to control it. I kind of see it as like a slow motion explosion. Is it controlled explosion? Is that a

demolition. Is that it? Hopefully not a demolition. We're paving the roads with explosives. And so that's what we're doing. Hopefully everything goes right. But, you know, ether has been in this long, drawn-out bear market. It's been hitting this descending line over and over and over again. And it finally broke through it just on the 22nd of July. And there seems to have been this massive pent-up energy in the ETH price.

And it seemed to have been kicked off. Like some people have been saying by the defy mania, which got kicked off by comp. So people have been saying this for a while. The comp token, new paradigm of tokens, all of a sudden there's more of them. All of a sudden there's liquidity mining. All of a sudden there's the yield farming. All of a sudden people get it. Defy tokens go wild.

Our previous state of the nations were bullish and then exponential. And now it's explosive. I think that these state of the nations have been pretty damn accurate with describing what is coming. Dude, we'll get to that because last, last Tuesday, I feel like you called it, man. I feel like you called it, but we'll get to that. All right. So explosive, that's what's happening. But not explosive in a bad way.

Well, I'm leaving that on the table for what is potentially explosive. But right now, like values of things are going up like really fast. And it's so far it's a good thing. We're successfully controlling the explosion. But, you know, there's always risk. There's always risk. Yeah, absolutely. And I think we'll get to the risk too.

But let's talk about some of the, that explosive behavior. Again, explosive, we think, in a good way. But we brought on a special guest to tell us a little bit more about a defy asset that I think is super unique, something we haven't seen before. And it's called YFI. If you've been tuned into bankless newsletter, even our podcast earlier this week, we talked about it. And we brought on Daryl Lau, who is a writer in the space. He's a researcher. And he wrote, I think, the best article that I read this week on YFI. He's also a, I don't know if you'd call this like a core governor of the protocol. Darrell, how's it going? There, there he is. Great to,

great to see you. Thanks for, thanks for all your work in YFI. You know what my first question is, is, what is this thing called? Is it, is it Yiffy? Is it Giffy? Is it, is it YFI? Is it WIFI? Is it Wife? What are we, what are we calling this thing. So I personally been calling it Wi-Fi. Like, I've got it, we've called it to like three or four people right now on calls. Okay. It's Wi-Fi then. For the rest of that episode, David, we're going with Wi-Fi. All right. I'm going to have to relearn that. Where should we start with this, you know, David? So, like, should we just talk about, like what it actually is, how it came about, like what the products are? Yeah, that's kind of what I struggle and why I want to bring Darrell on to help us describe us.

Where is the beginning of this whole project? Like, where does it start at? Yeah, so I guess it started in early this year, where Andre Conre, the developer, he launched this protocol where it's a yield aggregator protocol. So basically what it does is that it chases the best yields across BIDX, Compound, and Ave. So let's say compound is giving like about 10% APR

and Avey is doing like about 15% APR. Obviously, you want to move your funds over to AVE for that. So what the I earned did was that it automated the whole process. I made it a lot easier. So you just have to put your money inside and then you'll know that you get the best yield possible at that time. So that was the whole start of the whole project, I would say. Then it worked quite well. It worked quite well.

Got about 8 million AUM. and then in I think March there was this whole drama about Andre having holding the entire admin keys for everything so like quite a few people on Twitter were attacking him saying that he shouldn't have all this stuff and then he decided and at that time he didn't he couldn't even afford the audits because they were quite

pricey I think it was like 50k to 100k at least so he decided to like decentralize the whole thing burn the admin keys away and then from there he stopped he stopped working on it because it was at the time the project the whole product was complete like it had all the features you could ask for it automated rebalancing it had the best yields and had the most AEM across all the other projects that were doing the same thing so yeah then in more recently in about the last month he came back from self like he started to launch new products like a Y swap high leverage I trade on

all kinds of new DFI products, all leveraging on top of existing building, existing money that exists today. So Daryl, Andre, some people are calling him the Satoshi of DFI. Who is this guy? What do we know about him? Why are they calling him that? So I guess the comparisons with Satoshi and Andrea right now is because Andre decided to do a completely fair launch. Like he didn't he didn't mind any tokens for himself. He didn't have any tokens

allocated for a team for the team or any pre-sales or whatsoever. He just decided like I'm going to launch this protocol. Everyone has same rules and that's start basically. That's a start. Like anyone could add if you had read the post at the announcement you would have been able to start mining immediately with by providing tokens and there was nobody else that had a head start or hit from you except if they read it earlier. So yeah. Yeah, sorry. Yeah, so this is one thing that we talk a lot about on bankless where like the compound token like went public in a way faster rate than what like a traditional company would have gone public on a public stock market, right?

So there's one or two rounds of funding and then there's liquidity mining. And that liquidity mining is the way that instead of going public on the public stock market, it goes public on Ethereum via liquidity mining. But what Andre did with the Wi-Fi token is he just went straight public because he didn't have to worry about minting anything. He didn't have to worry about securities issues. He didn't have to worry about anything because he went straight to the liquidity mining first. And so that's why this is so incredibly elegant. He didn't mint any himself. He just went straight for liquidity mining for instant.

There was no instance of this token not ever being public. It was public first, which is absolutely insane. And he also didn't take any for himself. So how can they blame it? him and he said it was valueless if I'm recalling correctly. Yeah, so in his blog post he put that the fair value for the token was zero because there was no say it just don't buy it earn it. That's why he said in his blog post.

All right, so you know what I think is an interesting thing for our audience to see is the thing that Andre called valueless. Let's take a look at the value of it. So, Darrell, so first of all, let me just say, in all the time I've been in crypto, I've never seen a chart that looks like this. We've seen some pretty crazy charts, right? So when you were talking about the announcement was made, was that on a Saturday? Saturday, the 18th. They're on Saturday, yeah.

Okay, so this value was talking. That's when David was camping in the mountains. He missed all of it. Yeah, never take it. vacation in in defy that's is that what we're learning for yeah i would have been a richer man but it turns out yeah okay all right so all right so a value list token he said you've got to earn it so people started earning it but what they did of course some of them a subset of them um traded a market for this and because ethereum is a global permissionless system they listed

on exchanges like uniswap and balancer and that sort of thing right so we start at a price of $34, okay? And then, wow. Look at this. $3, $3, okay. Okay, all right. So this is like, the earliest coin gecko reports is $34, but this started at $3. All right. So, and then we're traveling up here and then look at this. Like, this is just crazy, crazy, right? So we top out at least locally, one week later at 4,000. $500. So if you're saying $3, right, we're talking over in a thousand percent gain in seven days.

Yep. Okay. Like, if you showed this chart to anyone outside of like crypto, they'd be like, okay, that's a scam. What's the scam? So let me ask you, Daryl, what is the scam here? Is there a scam? I guess basically like a lot of people are talking about how the token was considered cheap comparative to the total value locked.

So the whole theory is that any token, any governance tokens should be able to command evaluation such that is higher than the total value locks of protocol. Otherwise it could be, otherwise it could be easily manipulated and everything like that. But at the same time, like everybody wanted to get more Wi-Fee, so they kept depositing into the protocol. So the prices kept going up higher and higher. But yeah, it reached about a 400 million total. value locked.

Let's take around $150,400 million. So this is the total value locked. Before you talk about the total value locked, if you couldn't go back to the price chart, you said that you've never seen a crypto chart like this. And I actually think that you're wrong. I think you have seen one crypto chart like this before. And that's Bitcoin.

That's what exactly. This is so. Not in a week, though. Not in a week. That's totally true in different time frames. Because what we're talking about is like the token value started at zero because they didn't have a market for it. And then over, and so that's why this thing is so incredibly exceptional.

Like Bitcoin also started at zero because, and that's why we're calling Andre, like the Satoshi of Ethereum, because it started in the same way where you can only earn it. There was no pre-mine. And that's why this token value started at zero. And so like the pricing of Wi-Fi has only come from people buying it on the secondary market and not any sort of like perceived valuation. It's a great point. I do think obviously the time horizon, this is super compressed.

This is seven days. Bitcoin did not do that. But at the same time, Bitcoin did not have permissionless markets to list on, right? Like, it didn't, how could it list? It couldn't list anywhere. Yeah, they first got evaluated by like two pizzas. Exactly. But now we're in defy world and you list something like this without any founders.

And immediately there's an exchange, permissionless. Don't have to ask anybody. you don't have to pay an exchange fee, it's there. That's probably why price discovery happens a lot quicker. What do you think about that, Daryl? Is that sort of the right analogy here? Yeah, I think it's really fair. Like, we started off with,

we started off a near zero valuation, and then just pop up from there, from free market valuing it so much higher than it should be. And you were saying it sort of traveled the total value locked, right? Which has become kind of a metric for, relative pricing between various defy tokens. So explain this chart. Okay. We've got that Saturday. Let's see. The Saturday was the 20 what? Let's see. 21st. Saturday was the 18th, right? So on Friday, there was 9 million locked.

Yeah. So that's right before the launch. Okay. And then by Saturday, we've got 62 million locked. And then a week later, we've got 330 million locked. You said this topped out near 400 million locked. What's going on here? Why all of these funds is, you know, starting to pour into the Wi-Fi protocol? So I guess at the start, very start of the Wi-Fi mining, like when you were trading it around $20 to $50, the APR you would get for it was about 500% at least.

So areas of the, areas of the parling in and started buying up wife, buying up wife it to get the, in order to get some of the returns, which made the price go up even higher. And the returns are going up even higher. So at one point, it was about 2,000% APR at the very first or second day. So like when you saw the large price, the large price increase from 50 to 1,000 something, it was about 1,200, 2,000% APRs. So that I think if you You break that number down It's about 5% a day If I'm not mistaken Yeah 5% interest per day on your stable coins

Yeah And so this is just to distribute the YFI token Right This is how people got their hands on it And so we see that massive explosive rise In assets locks in the year in finance protocol But then it also fell off. It fell off a cliff.

So it hit almost 400 million. And now it's back down to 100 million. So where did all that go? Well, basically the whole distribution was based of 10K tokens distributed, 10K tokens distributed in each pool for one whole week. So there were triples. There's triples. And basically, the last sort of the triples ended their distributions yesterday. So that's why the whole total value lot.

drop so it dropped quite a bit. Okay, so let's go into that a little bit more. So there were 10,000 Wi-Fi tokens in three different pools. 30,000 Wi-Fi tokens total. 30,000 total. And so these pools, you could liquidity mine these pools at different times, right? So the first pool would run out and I would start the second pool and then the third pool. Can you explain what these three pools are and why they came in the order that they came in?

Yeah, so the very first pool was basically that using the Y-N protocol where basically when you provide liquidity to the tokens, you'll get a share token in return. So this share token is about somewhere around a dollar stable because it's based on a stable coin. So then what you have to do is just stick that token into the government's contract. And that was it. So you'll get your mine some YFIT tokens based on the time that you will stick inside the protocol relative to the share of your tokens. So let's say if you had 100K, for example, and the pool only had 1 million, you'll get 10% of all the Wi-Fi tokens at that time.

So that was the very first pool. Then I think the second pool launched like a few hours after that, where it was basically like a balancer pool incentive program. So if you provided 98% die and 2% Wi-Fi tokens as a liquid provider on balancer, you would get the balancer pool token correct. So then you just take the balance of pool token to get a share of the Wi-Fi tokens. So that's pool one and that's pool two. Then I think about two or three days, two days after that, those two pools launched. They launched the governance-staking contract. So what it does is that basically they wanted to incentivize voting on the platform

for government's decisions like the inflation schedule as well as the burning or staking, which I can get into later. essentially they just wanted instant devised voting so what they did was that you have to supply liquidity to a balancer pool of 98% of the YCRV token and 2% of Y-FET token

so then you get a balanceable token again and just take it that yeah so those were the three pools that were launched and those are the three initial distributions of Y-FB tokens for yeah for the whole 30K so the way the way I've been

I describe this in my mind is like this is like the tutorial of like some video game, right? Where like your user is like going through these steps to learn how to use the system. And then they're also and as they progress through the tutorial, they're getting like the equipment that they need in order to play the game. Right. And so the first step is to provide stable coin liquidity to the urine protocol, which gets you the if you token. And so that's like you got your shield, right?

Like first step, you got your shield. And then you go into the next pool and then you, supply the Wi-Fi token to the balancer pool and then that's the second pool of Wi-Fi tokens that are distributed out of the 30,000 now there's 20,000. So now you've got like your sword. And then if you're ready to move on to the next product, the final step in the tutorial, which is learning how to govern the protocol, which is staking your Wi-Fi tokens to the urine governance portal. So now you have your armor. So you have your three things. Now you're ready to play the game. And then that's also how the Wi-Fi token was distributed. And so it's like, it's both like,

fostering a community by showing them what they need to do in order to earn because these three things also come about as to why this thing is valuable at all later after all these tokens are distributed and it's also showing like the community how to do the thing and it's also distributing the wifi token all at once I thought it was genius it's like the scavenger hunt on Ethereum where you have to go do all the things so you can get the Wiifi tokens. Yeah, it was perfect when it started incentivizing users first and then started with incentivizing holders. and the third pool is just genius that incentivizes everyone to actively participate and actively participate and as well as reward them with all kinds of incentives like Wi-Fi, CRV, and Dallenser tokens. So, Darrell, we were talking about the market cap and the market cap right now is of Wi-Fi is based on a set supply of 30,000. Can you that sounds like a fixed cap, right?

So I guess maybe another Bitcoin analogy. But the difference is this can be changed via governance. Can you talk? I know you've been involved from the very beginnings in Wafi governance. Can you talk about why the 30,000 cap and some debate around that and how that sort of thing is decided? So right now, the 30K caps just basically from the distributions that already happened. So 30K was the max limit And then it stopped there

So the discussion after that was how do you want to incentivize future pools Right now if you if you were to maintain the same schedule as before They'll be giving out like more than $15 million in tokens in a week So that's not that's obviously not sustainable So basically the community decided to work for it like what kind of inflation schedule makes sense So yeah I wrote the first I would say the first I would say the first proper inflation schedule where I decided to use a synthetics model so about a 150% inflation rate and over a period of a few years with a trailing inflation so the problem there was

that synthetics started off their inflation schedule because very high because they wanted to attract users and the difference between Wi-Fi is that Wi-Fi has already attracted all the users like we've attracted 400 in AUM without without much marketing just the height of the So it really wasn't about the attracting the users, but it was really about incentivizing users to stay on. So the community like substrate and Delta Tiger, for example, who designed the original statistics inflation monetary policy, they decided to take a spin at it themselves. So they decided to work out around a 22% APR, 22% inflation rate, which should cap the supply at 50k instead.

So that's still being discussed on with the community, but I think we're going to launch the on-chain protocol, on-chain vote for that soon. Okay, so we've been talking a lot about the Wi-Fi token and how it's gotten distributed in the different mechanisms as to how that came about. But I think we kind of, we haven't yet talked about like what the urine protocol actually is. Like, what does it do? And so why is everyone so incredibly excited about this protocol? Like, what is unique about the actual system that has been developed, which, of course, then finds itself in the valuation of the token. But what is the urine protocol?

What does it do for its token holders? So there's basically two parts to this. Like, for example, if you're a WIFU holder, you'll get complete, you'll get to balance in governance of a protocol. And then there's also the fact that you can get a claim to the reward, to the fees distributed to the protocol. So WIREN has a bunch of different products launching. The first product was the iron yield aggregator. Then there's a few other products launching like the leverage stablecoin swap and leverage stable coin yield farming. protocol and a couple more upcoming.

So these are all different products, all based off of existing Deepai protocols. But Andre just made his own spin on things, like a single asset asset AM, for example, like you can see in balance, you can see in Bangor and a few other projects at a launch. So Andre took it, it's all spin at it and launched it instead. I need to launch it instead.

So one, so go ahead. No, keep going. And then I want to ask you a question about Andre. Yeah. So why fee holders, if you voted in protocol, for example, you would get a claim to the fees. And that's about, I think it was about 60K in fees alone for the first week. Wow.

So that was about, yeah, so that was about 10% return on a token, which was like 1,000 at a time. Okay, so there's this yield farming mania that's going on. And what the urine protocol does is that it creates this products to make it easier to yield farm, right? It makes it more formulaic, more algorithmic so that you don't have to like pull out your calculator and find out what is the best returns. You can just deposit your assets into the urine product and it will do that for you. And then the Yiffy token is this governance token slash cash flow ownership token because just like compound, just like balancer, it's a

governance token that governs over the cash flows. And so what Yiffy is is this token that is farming the farmers, right? And so it earns the fees that some of the farmers are earning the fees as well. So like people like me, I didn't really participate in the yield farming thing, like, you know, kind of over my head. I'm kind of way too busy. But now I can just buy the Wifi token and I can farm the farmers, right? And so like there's this three tiers of things where people are submitting, there, people are leveraging long ether by deposit. ether into compound, they're borrowing dye, and then they're buying more ether, and then maybe they're also sticking that to compound. And then they're earning the comp token. And then those are

just, that's like tier one, right? That's just normal people, like my friends doing this. Like, this is just the basic activities on Ethereum. And then there's people who are doing this with the intent to actually farm comp, right, or the intent to actually farm balancer. And so they're going recursive trying to find the best rates, they're borrowing bat, even though they don't care about bat, they're borrowing like tether, even though they don't care about tether, because they want to farm comp, right? And these people are using their calculators to try and find out what the best yield is. And so that's like tier two, right? And now tier three is you just submit your assets into the Yiffy protocol, the WIFI protocol, and it does it for you, right? And you

don't have to do your calculations, which is also fantastic, by the way, because then you don't have to pay for gas because the Wi-Fi protocol just pays for the gas for you. So you're already making more money that way as well. And then like tier four is just the Wi-Fi token itself where you can just like buy the Wi-Pi token. You don't have to worry about all these things. Did I get that right? Yeah, that's perfectly right.

Like Andre, when he first developed all the protocols, he decided that I've making all this so to make my life easier. Like before this, everyone was manually doing when we're checking the calculators and stuff like that, changing, changing products depending on rates. So, Andre just made these protocols to make it easier. And if you want to use it, you can use it. If you're able to use it. That's basically its entire logic and stuff.

Can I kind of make a, I guess, a comment here, or a couple of things that kind of pop into my mind as you guys are describing this. And David, I think that was a great explanation. That was like a deeper level than I think I understood it going into this. Well done, sir. So, okay. So two things. So two things here. First, I am like in awe, amazed that one developer from his garage, to use the analogy,

was able to come up with a D5 protocol incentive mechanism like this that works and grow it to 80 million in value in seven days. Like, that is the power of open finance defy. It blows my mind. And I think that's incredible. I think this is a, it's a real capital asset, right? At the same time, I'm somewhat terrified in a way, okay? And here's why. So Andre is a fantastic developer.

But he also makes no secret of he tests and prod. I'm looking at his Twitter handle right now. He's like, I test in prod. That's the one thing you shouldn't do with smart contracts, right? That's the one thing. Like, test in prod, no, maker doubt. You formally verify that shit, you know? Like, what are we doing?

Okay, so he tests in prod. Okay, so that's the one thing. The other thing is what David just described, wild genius, does something that I don't necessarily love, which is it chases yields, right? So yield chasing is okay. That's an efficient market. However, to look at the real yield, what you have to do is look at risk-adjusted yield. So it's very easy to see which of these various protocols are throwing off returns and to formulate a calculation, say, I'm going to go in that one because it's the highest return. However, it's hard to assess risk on that side of things. So one thing I worry about, little bit on the like more macro side of defy with all of these kind of lending protocols, which I love, by the way, is that we get into a habit of chasing yield. And then like we're not looking at the risk of these.

Some protocols have more risk than others. And we get trapped, right? Something catastrophic happens. And it's a great unwinding. And a lot of people who weren't aware of the risks are now pissed off and, you know, kind of tainted by it. You know, I'm not saying Andre is responsible for any of that. I think this experiment is fantastic.

I think the way he approached it is absolutely fantastic. And I think it's net super positive. But what are your thoughts on that, Darrell? So I guess the first thought about testing it pro. Yeah, that's what Andre's been doing in the past since the whole time he's been building the whole protocol. Like even before in January, when he was testing our iron protocol, he decided to launch it entirely on main net instead. So he burned about $30,000 to $50,000 in development costs alone because he wasn't familiar with how you could fork main net and launch your own instance of it.

So he burned quite a bit there, but just testing out everything in mainnet. And yeah, he always does put the disclaimer under risk saying that there might be risk involved, don't deposit all your money inside, you might lose it all, which is still, I'll say, good to see. Like some people just say, trust me, trust me with all your money. I'm 100% believable, but that's not true at all. Like, I don't trust everyone 100% of my money. Then for example, I would say, I just bring up an example from two days ago, I think. Two days ago, he launched this pool where you can deposit your USDC and it was supposedly get the best rates. Supposedly it will fund for you across all the other protocols. And he didn't even say anything

about the APR because he didn't want people to just randomly deposit money inside. But in less than an hour after he launched the protocol, that's about a million dollars inside already. Yeah. So that's the amount of crazy I would say that people are doing now to yield chase. Like they are just depositing a million dollars to something that doesn't have the documentation really written up properly yet. And if I'm, if I'm correct, I'd seem to recall that that thing

that he launched, the new thing actually had a fatal flaw in it that was discovered by a talented smart contract research analyst, which on the one hand, it's awesome that the community is like self-funding and self-like doing these sorts of audits. But on the other hand, oh my God, right? People putting a million dollars in this thing and it's not even audited and it's just you pushed it into prod without testing. Wow. You know. Yeah, this, like we responded the vulnerability pretty early on, like when he first launched it. But at that time, there was already about 300k, 300 to 500K inside it already. So we started warning everyone on Twitter and everything.

There's a vulnerability that might. But at the same time, like, when we found the vulnerability, we already told Andre about it. So he just fixed it almost immediately. Like, by the time the tweets were out, he already fixed it. He just hadn't updated the UIF. But the underlying part corrects already affected. So there's a conversation here that I want to get into where one of the beauty, one of the beautiful things about the Wi-Fi token and the urine system is that it doesn't depend on,

it needs DFI, it needs yield farming DFI protocols in order to work, right? But it doesn't need any one particular DFI protocol in order to work. Like compound could blow up and, you know, metastable could blow up and balancer could blow up. But there could just be the new yield farming DFI protocols that come and replace. them that the urine system could leverage, right? And so urine isn't dependent on compound. Compound can die and urine can stay. Like balancer can die and urine can stay. And so one of the beautiful things about it is like defy itself can come and go, right? Like we've seen different components of Ethereum like die off and be replaced. Like ether delta died and got replaced by uniswap.

Right. And like I think there's always going to be this replacement of protocols and churn over time as innovations come and the fantastic thing about yearn and the Wi-Fi token is that it will just be there for these new protocols and it can freely plug in or plug out of these protocols as they come and go. So to some degree, you know, the contract risk of compound doesn't actually impact the contract risk of urine. However, there are parts of the urine system that are completely dependent and can have to work and have to not blow up. Can you talk about which components of the urine system. First off, obviously it's urine itself, but I think also

Curve needs to work and can't go away for the Wi-Fi tokens to work. Is that right? And can you kind of just go into what are the core dependencies of the urine system? I guess for smart contract right side, for example, I don't remember, I don't know if you guys remember, but way back in, I think February and March when there was a this protocol called Depos. So they basically

they basically fought compound and there was this large vulnerability where they lost about 30, 40 million dollars, I think. So at that time, at that time when it happened, the IAM protocol automatically stopped deposits into the system. Like it didn't allow for any deposits into the system because it detected like a large, large amount of withdrawals and Andre was on top of things to check it out. But if you talk about like risk-adjusted returns, you would always be using the main protocols like D-YDX, D-YDX compound and AVE,

so those are quite, I'll say, quite good, quite good risk profiles because they've been audited multiple times already. And I guess in core dependencies, IAN doesn't really have

much core dependencies. Like, curve is just one interface to interact with the protocol. Like, you could use the IAN's main website itself to deposit and withdraw. rather than using curve.

Curf is just a popular interface to use. Yeah. Fantastic. This is so incredibly cool. One thing that this reminds me of is, it feels like the Dow 2.0, right? Where like the Dow 1.0 was this system that could pool capital together

and like as a distributed set of governors could elect which protocols or which things to invest in. But like at the time, it was way too early, right? There was like people, I think people at the time of the Dow, I wasn't in Ethereum at the time of the Dow, but people were like, okay, we're going to invest in like equity in companies and that's going to be part of the Dow, right? And like that doesn't work, right?

And they didn't even have a chance to try it. But like it was very, it was very much skeuomorphic, right? It was the wrong kind of system because it was just too early on Ethereum. But it was, it does resemble some of this. early yearn components where like there's this pool of funds and it's investing it into the greater ecosystem in order to get a return. And it's the great thing is that it's got this formula to always make the same return. And it's it's a little bit like central in the sense that like it's not a, it's a product of products rather than just being one product. Right. It's like it feels like a very

central token on Ethereum because the rest of Ethereum can come and go like the edges of Ethereum can come and go while the yearn Dow can stay in the same place. And the reason why the urine Dow works is because there's actually things on Ethereum to do now. Like in the 2016 Dow, there was nothing to invest in on Ethereum. Now the Dow model actually works because there's on-chain, you know, governance tokens. There's on-chain equity. Capital assets. Yeah, on-chain capital assets. That's the right word. I know I always use the word equity. I know that's not right, but it's a good metaphor. And so, like, this does feel like the Dow 2.0, like a revamp of the Dow in a way that works. Is that a fair comparison, Daryl?

Yeah, I would say that a wife wired protocol is basically like proving how composable the entire DFI ecosystem is. Because it leverages off of everything you can see online right now. Like it leverages off of compound, DYDX, Avey, and builds up so much more things that you didn't know it could exist prior to. and just writing up something and devying it and just proving that it's good work. So yeah, things can come and go. Things can just die off. But I'm really sure that why I would stay just because of how composable it is and how central it is to the whole ecosystem. So I want to, Darrell, this has been fantastic. I want to be end with this. I'm going to share my screen one more time and let's take a look at the organic community here.

These are, you guys can see my screen, yeah. Yes, sir. These are, this is the governance board for Wi-Fi. And the activity on here has absolutely blown my mind. Look at this one, you have 4.4, almost 5,000 views here on the issuance policy. That's about a big page views. It's crazy. That's crazy because there's only 4.5,000 people that own the Wi-Fi token.

right now. That's crazy. All of the tokens and projects that are doing kind of VC launches, they can't get a community like this. Like they spend millions on sort of marketing and like B2B conversations and salespeople and slick stuff. And this is really what you need to pull a product off the ground. You need a grassroots organic community. get that community, you have to reward them early and have a, have a founder's story and give them

a reason to participate. And that's what I think is the magic behind behind the wife token. The wifey token. Daryl, okay, so we actually put a governance proposal in here, didn't we, David, somewhere? Absolutely. Yeah, this is absolutely fantastic. It's going really well. So the governance proposal came as a result of like, we wanted to get Andre on the bankless podcast. And so I tweeted out him, Andre, come on the bankless podcast, and he didn't respond. And then 12 hours later, he sent out a text message saying, I've gotten a lot of requests for interviews. It's up to the token holders to determine if I go on an interview or not. Like, I live and die by the protocol. Like, the protocol

determines what I do, which I think is a fun experience. Yeah. And so I immediately rushed to the governance portal and be like, should Andre come on the bankless podcast, yes or no? We got 114 votes. I don't really know if he's going to force or request a actual on-chain vote with actual Wi-Fi tokens. The yes-to-no ratio is like 95% yes, 5% no.

How can I tell? Can I see it here? You would have to vote. Oh, I have to log in. I did. I voted yes, by the way. I logged in and voted yes because this was important to me. I didn't vote no. Yeah. So why do you,

if you can speak for Andre, if he does end up coming on the bankless podcast, which according to community sentiment sounds like he will be if that's how if that's how he listens to the token but can you comment as to why you think Andre wants to live and die by the token?

I mean essentially the token is like his baby I would say like he built the entire thing from scratch without much external help like yeah so it really is just like his baby like he wants he wants it to he wants it to fully control his life and then there's a

Well, I hope he comes on. I think it sounds like he is because 95% people said, yes, we'll see how that works out. I hope that we as a community, I'm a Wi-Fi token holder. I hope we find a way to reward this man because he took no reward, and he definitely deserves something. So I think that's something that I'm going to propose to the community. Do we know that though? Let me ask you.

Do we know that? So Satoshi definitely mined. Yeah. So Andre did not take, but if I'm Andre, just being a rational actor, and I'm not saying like, Andre is a different person than I am. I would not do things the way he did because he's like clearly doing this for altruistic reasons. But you don't think he liquidity mind? Maybe that's a question for the podcast.

The liquidity mind. He only mind about 200. I think he only mind two wife. tokens like he tweeted that out. Really? Yeah. I only mine two tokens. Oh my God.

Yeah, Daryl, you said at the beginning that he's not like this wealthy crypto investor. He's not somebody that got rich off Bitcoin or ether. So he didn't have like that much capital to deploy into his own system. Yeah, at the time like when Wyern first launched, he was, he broke, he took, he took, he spent quite a lot of his savings. He's just testing out Ethereum. It's testing out the entire protocol I made that, like I said. And he couldn't even afford the audits because they were so expensive.

Yeah. All right. Well, I take it back. I need to learn more about this Andre individual. It sounds incredibly interesting. I do hope he comes on the podcast. And yeah, I would log in and vote for a reward for Andre. Certainly, I'm sure he has tremendous community goodwill at this point.

So that would probably have no problem passing. Yeah. Yeah. So we're actually planning. We're actually planning for that. So like one of the inflation schedules that we are passing through, about 75% tokens we go to literally. by this, but 25% the locals will go to like a multi-sicle or Dow.

And then from there, we're going to decide how much percentage you're going to stream back to 100 because he definitely deserves it. He definitely deserves some kind of developer funding or anything. But yeah, that's all we're planning out in governance. And I just think that's great because like, obviously I think that's great because that's fair. But also at the same time, like it shows you that you can take zero, you can be like the Satoshi and you can take zero tax at the system. You can take zero founders reward and you can still get wealth.

be. Like if this does end up playing out, like, I hope Andre makes like a million dollars. And a million dollars is half a million dollars, two million dollars. I don't know. But like he can, he's still hopefully going to make a lot of money from generating this protocol. And the value that he returned to the community because he didn't take a founder's reward will be so much more. The total value created because of his actions is like a hundred X more than if there was like a VC backing this thing. Totally. Yeah. Totally agree. Cool. Daryl, thank you so much for coming on the bankless state of the nation. We really needed

the help in handholding learning about the urine protocol. So thank you for walking us through it. And you have been a great guest. So I appreciate it. We're happy to help. Just reach me out on Twitter anytime. Yeah. So if people want to find out more about you, like do you want to share your Twitter handle? How can people reach out if they have questions? Yeah, just reach out to me on Twitter. They're allowed TK. there are a lot of TK on Twitter, then I hang out a lot on the wire unofficial discord and but unofficial telegraphs. So yeah, it's just type me in there any time.

Fantastic. We will have your Twitter handle in the show notes, sir. So thank you for your thank you for your contributions. Thanks, Darrell. Yeah, guys. All right. Wow, that was, that was insightful. That was a lot. Yeah. Dave, we should talk about our sponsors. Okay. Again, our second set of sponsors. So why don't you start? Yeah. So Ampleforth is one of our fantastic bankless sponsors. Speaking of things that have been explosive lately, Ampleforth is a new monetary experiment, which I just think is totally fascinating. It's one, I can't really think of any other M-0 on Ethereum that's not ether other than Ampleforth. And that's where Ampleforth is trying to be. It's an experimental money

M-0 on Ethereum. The way that it works is that as price, changes every 24 hours the token quote unquote rebases back to closer to the value of 2019 US dollars but in the same sense that kind of in the same era as Bitcoin is non-dilutive right and so it will mince more or less but into your wallets if you own them and so there's no there's no dilution events so you will always own the same share of the ample currency which is what makes it an M-0 as it rebases up and down. So the thing slowly tracks a dollar over time. It never completely tracks its dollar over time. It's not a stable coin. But if I'm interested in how it becomes a defy denominated debt, right, you will always be comfortable denominating debts in Ampleforth, unlike denominating

debts in Bitcoin, because you don't know what Bitcoin's price is going to be in five, ten years, but you know the Amplforth price is going to be about a dollar in five to ten years. So that's why it's an interesting monetary experiment. So you can check them out at Amplored. simpleforth.com. Very cool. We are in a 100-gway plus world and gas prices show no signs of going down. That's good from one perspective. It means Ethereum is being used a lot. But it's bad if you're trying to get a trade done. Diversify solves this. Diversify is a new class of next generation layer two exchanges. It's non-custodial. So it's defy. It's secured by. the Ethereum, blockchain, they do some really cool things with roll-ups to do that. It's for serious

traders. The experience with Diversify is similar to using something like Coinbase, so they can support 9,000 transactions per second. They also have a governance token that's very interesting. It's called NEC. It gives membership voting rights, and it also gives discounts to diversify traders. So take a look at that as well. Neck and Diversify started the original liquidity mining. back in 2018. They've kind of perfected their exchange and their product and really excited to see you use them and for their success and to see layer two, DFI exchanges thrive. Check them out at Diversify.com.

We will include a link in the show notes. I've actually used the Diversify Exchange and it is as lightning fast as advertised, right? And the cool thing is, is like every time I make a trade, like I have to press a button on my ledger, which makes me feel good. that it's non-custodial, right? Like, I'm not just trusting somebody to do my order. I have to verify it first. So that just is fantastic. And like you said, it's like a centralized exchange experience, but it's also bankless, right? Because they will never, they can never do anything without your pressing of your ledger or your metamask or whatever. So it returns sovereignty to the user.

It is slick, guys. Absolutely. David, speaking of sovereignty to the users, can we talk about topic too. Price. Let's talk about price. So what happened with price? And what price are we talking about? Our show notes just say, talk about price. Talk about price. Yeah. So how can we not, right? So ether is at $320 right now when the last state of the nation, it was at, what was it at, 235, 245, right? And Ryan, you made this joke. We were talking about, how like defi tokens have absolutely mooned and one of our topics of the last state of the nation was like the ratio of the aggregate market cap of all tokens on ethereum all erc 20 tokens on ethereum to ether like the total market cap of all tokens surpassed the total market cap of ether

yeah and then you said something you said something security concerns we're talking about security right right right so like ether protects ethereum but now the things that it protects are higher than the walls that are protecting it so it's a risk and i and and and and and and So we were talking about like, does this invalidate the fat protocol thesis? Like, what is Ether going to track this thing? Like, is this insecure? And what I said was that, you know, like, sure, we can talk about the invalidation of the fat protocol thesis, but that just goes out the door the moment Ether like moons to $300.

I've got a chart up. I show the chart. Yeah, go for it. And Ryan, you asked me like, okay, so when does that happen? And I go tomorrow. And I was three days ahead of schedule. I was three days ahead of schedule. Yeah, okay.

I was not purposely doing that. I was accidentally right. Let it be clear. I don't think you should be modest, David. I mean, all of your predictions on state of the nation, to my knowledge, have come true so far. So why be not modest about it? I mean, you just call the place and then it happens. Yeah, so far so good.

Price on Tuesday when we published was 236. And then maybe you're moving markets. Maybe that's what you're doing because then a week later, 322 and you totally called it even oh close to the number right i think you said from 230 to like 300 or something like that in the last nomination um so well done sir i look forward to really reading the prospectus for your new hedge fund that you are initiating it could be exciting but yeah look it's been a good week i mean we've been talking about this uh for a while on bankless in general so um what we saw if we just kind of like like zoom out right well i still have the chart here right um let's look at the three months

month. So yield farming is only two months old right now at this point, right? And that's been a sort of a new template, a new catalyst for the entire defy ecosystem. That started around May, right? And then what we saw for May until like June was defy tokens absolutely take off and basically leave ether in the dust. So people were saying things like, well, does that mean ether is just used for gas, that it's not, it's not correlated to the success of defy. We could have defy worth, you know, a trillion dollars, and little ether is worth 16 billion still, you know, hovering at 200 per eth.

And then, you know, that was the conversation for the past two months. And now we're starting to see a bit of a rise that we've been talking about for a while. I do think that the bankless thesis is pretty bullish on ETH as a monetary asset, as the reserve currency for this entire defy experiment as the the lowest layer in the protocol sync thesis, the economic bandwidth for this space. If you've never heard those terms before, you've got to check out bankless material and take a look at the guide and read up on those terms, listen to those terms because it's kind of a core part of the thesis so far. It was good to see. I had a lot of fun with this one, David. So it's starting to start.

So every time the price went up $10, I just tweeted out like the price at this is hilarious. Because I do think it's hilarious. Even the price now, to me, is not commensurate with the value that Ether is bringing the growth of defy or even like the value relative to Bitcoin. I think it's all underpriced. I just kept doing it every $10. Every $10. Every $10.

And you can just dig into this. Look at this. Oh, man. Here's 283. I didn't have to do this. I miss this. You miss this? Oh, it's fun, man.

I was just like, you know, and people said I had a bot. I didn't have a bot. I was actually looking at things. It started with this, though. And that's kind of the core tenant when you dig enough. Staking plus defy is going to put more demand on ETH than ICOs ever did. This is about the scarcity thesis of ETH, right? And I mean, you wrote a fantastic article about that.

But that, I think, there's some market. validation that maybe this is coming true. Yeah, absolutely. And like the defy, absolutely the defy narrative caused this price increase. And I think Eric and Anthony on the ETHUB podcast called this a long time ago where they said the comp token may just kick off of bull market. And I think that that is exactly what happened.

And it wasn't necessarily the comp token itself. It's not just about comp token, although that comp token is a core component of this. It's the token model, right? the governance token model that governs over the cash flows of these protocols are valuable tokens. And like we've talked about with Chris Berniske, like we talked about with Dan Ellitzer, we can evaluate these things on the ways that we've always evaluated capital assets throughout time. Now, like, Defi has gotten to that point. So that's bullish.

And then the liquidity mining of people really striving to provide work to access these tokens, created their own mania. And then now this mania has just topped off with the urine protocol. which is still nascent, right? But like, it's all coalesced into, you know, this defy mania, this growth of, this growth of defy, which is just growth of finance, this new finance, this bankless finance. And finally, it's being reflected in the ether price. Like, ether price is always going to be a lagging indicator of what's going on on Ethereum.

And now after the defy tokens have mooned, now it's ether's turn. And more importantly, actually, I'm going to share my screen. more importantly we've had this massive drawn-out bear market where the ether price has just been suppressed, suppressed, suppressed over time. I'm not in the right time frame. Let me zoom out. I am not a charter. So hold this with a grain of salt.

But other people that I listen to and know are charters. And they have all been looking at like this line. And maybe their line is placed differently. But they've all been looking at this line. And this line is also present in Bitcoin. Right. And so like, you know, here is 20, the top of 20. 17, you know, two years ago. And over time, like, this line has just been bullying the ether price

up until like the 2020th of July. Wow. Look at that. Boom. We ripped right through it. Right. And so I'm not a charter. I'm not a savant. I'm not a guru. But like, quote unquote, out of the bear market. Like bear market is over. Bear market is. Wow. You're calling that. Yeah. Bear market's dead. And so like it's really a matter of like, does that mean, A, does that mean the bull market started? And if, you know, if yes, does that mean it started today? Or is this going to be a long drawn out? Because if you go back to the Bitcoin price coming from 2013 to 2015 to 2017,

that was a two-year crescendo before it really started to get bubbly. Right. So like, what's that like? I don't know, but, but Bear Mark is dead. I mean, we've talked about this being 2016, right? Which was basically how Bitcoin and Ether were sort of viewed then. It was a long, ruling bear market in 2016 coming out of that. There were signs of life.

It wasn't a full-on bear bull market yet, but there were definitely signs of life. This does feel, again, we keep talking about like 2016. I'll say another thing. Maybe it's early actually 2017 because you asked last time, last year the nation, have I gotten any texts yet? Yes. The answer this time is yes. Getting text.

I got two, right? So somebody's like, hey, let's go for beers. There's, you know, my portfolio is like, you know, and he gave details of portfolio like 2% XRP, like 5% EOS and like, you know, 40% ETH and like, you know, another 30% Bitcoin, something like that. He's like, how would you revise this? Pretty good as far as Normans go. Right. Yeah. I'm not bad.

So, you know, so there's that. I also got a text from a friend. This is really cool. He's like, you know, I want to buy this thing. It's an ERC20 token. How do I do it? Right. It was popping.

He's like, how do I do it? He's Coinbase, who talked about it before. And actually, within like 30 minutes, he figured out how to move his ETH from Coinbase to Metamask and complete a transaction on Uniswap and buy a token. And he bought it at a time, like, right before it moon. So now it's like prices up, I don't know, double since, I mean, he is DFI for life. Like, I don't think he's going back.

So the learning curve, I mean, people say it's steep, but it's a lot less steep than it was, I don't know, two years ago. You could figure out how to use, how to secure your private keys and figure it out in a couple of hours. And here's the thing, it's like the entire time when we were talking to Daryl about Wi-Fi, and you were like, you went on a camping trip and you missed it. All of the people who don't know how to use these tools,

right now. They don't even know this conversation is happening. You have to be here. You have to have to have been putting in the time to level up to actually understand these assets in order to get exposure to an opportunity like YFI. If you weren't here, if you weren't playing the game, like you just you didn't get that opportunity. That is why we talk about leveling up. It's not like, you know, it's not like a step gain from week to week. month to month. It's like you're investing this time and then suddenly something happens, some catalysts and you were there at the right time and you had the right information. And you leveled up. You had the skills. You could sort the BS from the like actual,

you know, assets that and then and then you made the move. You only had that ability because you had put in the time to level up or the past, you know, months. I'm sure Daryl, I mean, he's been in the space for for a while doing that with absolutely. no return. And then suddenly he's like, this thing could be big and I know it's big and I'm using it. And then bam. Like he knew how to liquidity money. And he was there. He was there. And this is just a leads into the conversation of user self sovereignty, right? Like you are learning the skills as an investment into yourself. Like the value of your own person is your greatest asset. Right. And learning these skills, learning how to operate in the decentralized finance

future. Like A, it's a long, it's a long bet that defy is actually real. actually going to be a thing. That's what we're assuming everyone listening to this has already taken that bet, right? Like we all believe that's real. And so now it's just a matter of honing your skills, learning how to think critically, learning how to evaluate defy risk, contract risk, and communicate that and then also take the opportunity when it presents itself.

Like, and this is going to come because you have invested your time and energy into the space in order to figure this out, right? Totally. That's the reward on the other side of that. We talk about that a lot. Okay, so last thing, David, we've gone on for a while. These shows just keep getting longer, man.

Should we start closing down? How long are we in here? Yeah, we are into this for about an hour. Okay, all right, all right. So let's kind of wrap it up. One thing I just want to say, and this can be a show notes thing to take a look at, is just to reemphasize the risk that we're talking about here. Some of the least risky assets you can purchase in crypto,

are probably going to be like Bitcoin and Ether, like Core Protocol type things that have established records. But even those are incredibly risky, right? When we talk about something like YFI or yield farming, you start to get into a place where you're compounding risk, not just risk on ether. Yeah, you're just stacking. Your money lagowing your risk, right? And people need to be aware of that when they go into these systems. It is the Wild West out there. we do say you can lose everything. Very important that people are aware that something could go wrong. Andre, one developer, could have a bug in his code that causes the price of Wi-Fi to collapse

or the thousands of dollars you put in liquidity to just evaporate into nothing. It's risky. Explom because the state of the nation is explosive. This is why we chose this word. Wow. Yeah, you know, full circle here. And so there is there is some good news, though, I would say is there are. are ways to hedge against that risk.

Nexus is one. We're actually putting out a tactic on Nexus today about, you know, staking with Nexus. And it basically ensures against one type of risk. There are several, but their one type of risk is smart contract risk. I saw with Nexus, they are ensuring about 0.4% of all of the value locked in DFI. Okay. So still super small. I mean, this is millions, this is millions of dollars right now.

but all of the value locked in defy only 0.4% of it is insured by Nexus. And of course, things could also happen to Nexus. Ideally, we'd have multiple providers of insurance in this space. All that to say, before you get in the stacking protocol, smart contract risk, and start chasing yields, know what you're getting into. If the reward is high enough, okay, maybe it makes sense. But I mean, Vitalik said this, right? If you're making a 3% you know, earnings on something like die,

then you're basically assuming that die doesn't have a cataclysmic event for decades, basically. And is that a good return for the amount of risk that you're taking? So question that. Insurance can help and take a look at Nexus and the tactic that we're putting out about that. Anything else you want to say on that, David? Yeah, the main, to some degree, DFI is speculation. and gambling to some degree. Like it's also finance and it's also like this new paradigm that we're all hoping comes

it comes about. But like it's speculation that it comes about. Like it's risk that it comes about. And to some degree that it's also gambling that it comes about. And the first rule about playing poker and the first rule about gambling is that you always position yourself so that if you get wiped out, you can still play. Like if you lose the hand, you can still play. And so that's that I think that is a rule of thumb that everyone should follow.

Like if you buy a bunch of yiffy tokens, wifi tokens, are you investing your entire net worth into it? And then if something goes wrong, are you effed? Or are you responsibly investing a amount that you can lose that leaves you able to stay at the table? Like always position yourself so you can stay at the table or otherwise it'll just be bad. It'll be bad. It's totally right on, man. And there are multiple tables. You've got your traditional world table.

Then you've got your entering crypto table. And then within crypto, there are levels of risk. Right. So, you know, ETH is less risky than ify. Yeah. One more comment on that. Right. So some of these, some of these listeners, maybe this is their first cycle. This is, I have not yet completed a cycle. I came in in June of 2017. So I feel like I can on the horizon, as we go full circle into these crypto cycles, I feel like I can see on horizon where I started in the last cycle. Some people haven't yet gone a full cycle. And let it be known that when prices go up, and you check your blockfolio and you're twice as rich as the day before, like your mindset changes, your psychology changes.

And you need to account for that and be cognizant of that. Who you are changes in a bull market and your risk appetite will change. And you need to watch yourself as that changes. And so be responsible, be introspective, be mindful, and make sure that as the bull market goes on, that you don't succumb to the mania and you stay rational. It's going and it's not easy. It is not easy.

When you see your blockfolio double in a day, you think you're a genius, but you also you're not. So you have to be mindful. You have to be cognizant. You have to be aware of your own psychology. Know who you are. Know your limits. Be responsible because you have to stay at the table.

Well said, sir. We need to do a tactic sometime on dollar cost averaging out. I think, I think people could benefit from that as this, as the bull market continues. This has been state of the nation, explosive. is the word. That's the state of the nation today. Guys, this is episode seven. Again, it comes out Tuesdays on YouTube. Make sure you subscribe. You get this and other videos. Last thing I'll say about risk, of course, eat this risky. Bitcoin is risky. All of the tokens we talk about are risk. Y-Phee is super risky. Yes, ultra-risky. Don't lose more than, don't put in more than you can

afford to lose. But we are headed west and we're excited that you're excited that you are on the journey with us. State of the Nation, signing off.