On The Brink with Castle Island - Ask Me Anything 2.0 with Matt, Nic, and Ria (EP.222)

Episode Date: June 14, 2021

In our second OTB AMA, we field questions from Brink Nation. In this episode:  What other countries are good candidates to ratify Bitcoin next? What are the prospects for DeFi on Bitcoin? Is price to hashrate a viable ratio to use to value bitcoin? Will other countries follow El Salvador's lead in light of the pushback from the IMF? Who will win Euro2020? Are ransomware attacks good because they will get directors to add Bitcoin to corporate balance sheets "just in case"? Will users eventually hold their bitcoin through banks? What is missing to make lightning workable? Why do people allocate energy cost pro rata across bitcoin transactions? Matt's turkey update Stablecoin yields as an attractive product for corporate treasuries? Why doesn't bitcoin just increase the block size? Our takes on DAOs What govt action could turn bitcoiners into dissidents? Our proposed improvements for twitter spaces Sponsor notes:  Aave is a decentralized, open source, and non-custodial protocol where users can deposits and borrow digital assets, and earn interest on those assets. Head over to aave.com to experience and learn more about DeFi.

Hello and welcome back to On the Brank. This show is also brought to you by AVE, A-A-A-V-E. AVE is an open-source and non-custodial liquidity protocol where users can earn interest on deposits and borrow digital assets. It's a decentralized community-governed protocol. Learn more and more about Avey at AVE.com. Brought down by bad mortgage investments, Lehman, which has 25,000 employees, will be liquidated.

The federal government loans American International Group, AIG, $85 billion. This is a different kind of market, and the Fed is asleep. The federal government is stepping it to stabilize Fannie Mae and Freddie Mac, the two mortgage giants that have been threatened by the housing crisis. The Bank of England has pumped 75 billion pounds more into Britain's ailing economy with a new round of concentrated easy. You print a couple trillion dollars, and all of a sudden, people start to worry.

So out of this worry, we have something called the Bitcoin. Bitcoin. Welcome to On the Brink. I'm Matt Walsh. And I'm Nick Carter. And I'm Rea Batoria. And we have an AMA episode today. It's our first one in probably over a year. Well, we've done one previously.

This is the second one. There's a lot of questions. It's been a busy week coming off of Bitcoin Miami. A lot of people have questions. First question is, do you have COVID? What? So we'll go around the horn on that. Is that a question?

Yeah, that was a question. I don't. I do not have COVID. I got tested yesterday. I'm safe. I got my first test yesterday ever. What did it say? I got negative.

I know there's a lot going around in the press about Bitcoiners, you know, this being a super spreader event. I've proved the theory that you can shake 500 people's hands and not get COVID. Think about that. That's impressive. That is impressive. All right. Well, I'll kick it off with the first question.

What other countries do you think will follow El Salvador's lead? in adopting Bitcoin as currency, and at what point does the U.S. begin to pay serious attention to doing the same? That's from Mark over at Witham. Thanks for the questions, by the way, guys. So I think there are some interesting countries that in Latin America that could potentially be candidates to be the next Bitcoinized country. I mean, we haven't even seen fully what Al-Solvdor is going to do yet. So juries out there. But I think the dollarized countries are decent candidates. I think we might have said this on the podcast because they already don't have independent monetary policy.

So you'd be looking at like Ecuador and Panama. Ecuador already had a CBDC back in 2015. People don't know that. And so if you're used to not having monetary discretion, maybe a Bitcoin standard. or adopting Bitcoin Union reserves is more palatable. Ecuador has a big Venezuelan diaspora. We know there's a lot of Bitcoin denominated commerce. So that would be my dark horse.

Yeah, so the dollarized countries make a lot of sense to me as well. And some of these countries have only been dollarized for 20 years or so, right? So there's some precedent here. So it's not the craziest thing to think that they would at least introduce a second legal tender currency in the same way that El Salvador did. What was it? I think it was almost exactly 20 years ago that they became dollarized. Yeah, there was a spate of currency failures in the early 2000s.

And, you know, people wonder why these places are dollarized. It's because their prior monetary regime failed. So those failures loom large in the memory. People remember that. And, you know, that's why they decided we should, strip the power from the government and, you know, eliminate their monetary discretion. And that's how things have kind of persisted in, you know, good parts of Latin America. There were a number of Latin American countries that, you know, as a follow on to El Salvador

announced just interest in exploring Bitcoin adoption this week, right? I think Paraguay, Panama, Brazil were the three. Well, policymakers certainly. I mean, individual policymakers, right? So we don't know if they necessarily can move the middle. Yeah. But you don't see that many policymakers elsewhere openly signaling their affinity. Aside from, I was in a Twitter space today with a politician in Tonga who was talking about Bitcoin.

So it's happening. Well, that's actually a question here is what president are you most likely to hop up? on a Twitter space is with next. Yeah, unfortunately, you know, it's kind of up to them. I'm not in contact with any other presidents right now. Well, you weren't in contact with the El Salvadorian president either. Yeah, those are a very unique circumstance.

It would have to be a president of a pretty small nation that doesn't mind taking questions from random bitcoiners on a completely ad hoc, unplanned basis, while they're passing legislation. All right. The next one is from Friend of the Pod, Jake Trevinsky, a repeat guest of the pod. He is asking about defy on Bitcoin.

And actually, Nick, we talked at length about defy on Bitcoin in the erased podcast that never aired, the last tapes. Yeah, we said some really insightful stuff, I think. It was some great predictions. It's too bad that we can't remember them. Yeah, neither remember nor repeat. So I'm going to pass this one off to Ria. I feel like Greer's got some really intelligent thoughts on this.

I mean, I feel like there are a number of projects now. They're working on trying to bring defy to Bitcoin. Obviously, it's significantly harder to build automated smart contracts on Bitcoin than it is on other platforms that are purpose built for that. But I think that we're definitely seeing some more interest and traction on layer two and side chains. One thing that I think has seen resurgence is just this idea of atomic swaps. So one project that comes to mind is Laquality that's working on that. Yeah, I don't know if you guys have any other thoughts there.

I mean, I think Bitcoin is Defi, so I'll be the one to say that. This whole thing is about decentralized finance, decentralized commerce, whatever. I don't think any smart contract chain has a monopoly on the term defy. Any transaction involving Bitcoin is already disintermediated by definition. Also custody is disintermediated. There's a lot of non-custodial solutions for holding Bitcoin. Right. Yeah, like Kasa on chain, like multi-sig.

Multi-sig is obviously defy. A lot of, you know, capital D-D-D-Fi collapses into multi-sig arrangements. That's, you know, a Dow is basically a multi-sig most of the time. So if those are defy, then holding coins in a BitGo multi-sig or Kasa multi-sig is also defy. Not to be trite. I'll take the question from a little bit of a different. I do think we're going to start to see a lot more things built on top of Bitcoin that look more similar to Defy on Ethereum. I definitely think it's a good thing for Bitcoin.

I think a lot about just the fee market and what the fee market has evolved to in the Ethereum ecosystem as a result of Defi and how healthy that is for the security of the network. And I think about, you know, the block subsidy waning over time in Bitcoin and having things built on top of it, that are net settling down to the base chain, I think is a great thing. So I think defy right now is one of the most obvious, you know, use cases for increased fees on a layer one blockchain. So I'm bullish on it. I don't think that the ecosystem is anywhere near as vibrant, obviously, as the Ethereum defy ecosystem, but it's much more nascent.

Well, Bitcoin has just have a lower tolerance for tradeoffs in terms of trustlessness, right? So they're less willing to trade efficiency or complexity for trustlessness. Right. So that's why it's taken longer because, well, leaving aside the requirement of like a richly stateful base layer or whatever. Because Bitcoiners are virulently anti-trust holes and Defi in many, many cases, tends to introduce them. you're going to have a higher, you know, hurdle to clear in terms of a genuinely trustless system. And that's a critique. That was the whole debate we had around side chains, you know, with the original kind of 2015 era, you know, theory of side chains.

And then we later learned that, okay, well, miners can interfere with side chains. And so then side chains lost favor in the Bitcoin community because of that, because they're trust holes. So as long as those exist, you're not going to see as aggressive expansion on defy. That's fine. I think eventually Bitcoin, you know, like is Sphinx chat where we're, you know, paying by the second to listen to content on Lightning. Like, is that defy? How do you describe that? You know, like there's great and interesting stuff being built with Bitcoin.

I don't know if it necessarily fits under this like defy template. Yeah. All right. So I think we cover that one. Next one is since hash rate matters, why is price to hash rate not a commonly used ratio when comparing proof of work assets? Kind of like the way we have price to equity or price to book in equities. And why do we not have a price to GitHub commits is the second part of that question. Yeah. So price to GitHub commits is just way too gamable. And also Bitcoin's value doesn't correlate.

with a number of GitHub commits, like Bitcoin one day will ossify. I know people don't like us talking about that, but the pace of development will eventually slow as the protocol gets more concrete. So I don't see, you know, a metric that tracks, you know, code development as actually being that salient in terms of pricing the thing. And then price to hash rate, like to me, hash rate is a very binary variable or rather security. Like you either have sufficient hash rate or you have insufficient hash rate.

There's not a lot in between. You know, adding one marginal pay to hash of hash rate is not going to change anything with regards to Bitcoin security. And also Bitcoin's hash rate declined, you know, 20% over the last couple weeks as we've had this, you know, rotation out of China. Bitcoin is no more or less secure than it was. you know, I think that's a really big misconception is that, you know, incremental five or 10% changes in hash rate somehow change Bitcoin's security dynamics. So that's not true. Like, Bitcoin is overwhelmingly secure.

It's secured by the economic incentives of the miners. They own A6. The value of that AIC is a function of the value of Bitcoin. You know, it's impossible for any one entity to accumulate all these AICs and run them and get enough energy to run them in one place, things like that. So, you know, and then, you know, on the other side like the coins that are insecure are sort of generally insecure they're not you know gaining more security if they gained you know five percent

hash rate they're just fundamentally insecure so I see it as very very binary and you know hence not really that suitable to to you know construct a metric with I think one thing that's interesting about it is like looking at the price relative to the amount of security and how expensive a network is relative to the amount of security that's being provided. I mean, I think it's pretty generalizable over time. But like if you compare the price, for example, of like a Bitcoin cash or let coin to hash rate relative to Bitcoin's price relative to its hash rate, like that's an interesting comparison. Doesn't that just give you the issuance rate though?

What do you mean? I mean, if you strip the price out of the equation and you take the security spend to the market cap, doesn't that just give you the rate of issuance for the... No, I mean like comparing the price or a market cap of a network relative to the hash rate or security of the network. Like, if you compare it for Bitcoin relative to Bitcoin cash or like coin, those theoretically are overvalued relative to the amount of security as measured by hash rate. I just have a hard time reasoning about hash rate because it has this drift to it because you know the technology is always improving and so a unit of hash rate is not comparable across time. One dollar of investment into an ASIC in 2015 is going to yield a dramatically different hash rate from you know the equivalent amount today. So I like

hate reasoning about hash rate. It doesn't make sense to me. We have so many questions. I don't know if we're going to be able to get to them all. Do you think the incentives to follow El Salvador's suit in regards to Bitcoin strong enough to counteract a strong pushback from established institutions like the IMF? Well, I think the clear incentive right now is if you're thinking about this, you know, you should be building into a position. I would think that would be the clear incentive that if you're going to install Bitcoin as legal tender, you know, maybe start mining it before you announce that or maybe just start making some OTC buys. The IMF leverage here is an interesting one. I am not an expert on this, but, you know, I've read confessions of an

economic hitman. And, you know, I know that there are levers to pull here. So it's interesting. I think the sovereign debt angle is one that is particularly interesting to me, is how the IMF and the World Bank think about just the status of some of these companies from a debt perspective and whether or not covenants are coming into question here in a Bitcoinized future state. But that'll be really interesting. The IMF came out with some language that was a little bit murky. It was clear that they weren't psyched about this El Salvador thing. Oh, yeah.

I mean, I don't think the World Bank would necessarily have that much to say about it. I mean, their theory might, because the World Bank is more of a long-term investor, you know, or they lend to governments as well. But whereas the IMF is more sort of like you bring them in in a crisis kind of thing. So they may be concerned that this would increase local instability in El Salvador. Certainly the fixed income markets seem to be pricing that in. So the Salvadoran bonds got more the yields rose. So there's some jitters there.

IMF's clearly unhappy. Hopefully El Salvador is able to resist. Next question is who will win Euro 2020? What the hell is Euro 2020? Ria knows, right? 2020 though? Yeah, so Euros is every four years. It's 2021.

Yeah, but no, but we're having Euro 2020 this year because we had to do it. So it's a soccer. It's a European national soccer championship. Matt, very America-centric, so unaware of, you know, these foreign sports. No, I think soccer is the sport of the future, and it always will be. That's just, that take is completely just naive in the extreme. I mean, soccer is the number one most popular sport in the world. So it is a support of the present, to be clear.

American soccer may be the sport of the future. But, yeah, soccer is the number one most popular sport. My pick to win is England, of course. And I think they have their first game against Croatia tomorrow, maybe. Yeah, the euro is about to kick off in like half an hour, actually. So that's exciting. My pick is Holland. I have loyalty to Holland because they used to live there for a few years.

They have a good team. And I'll go with France. Future of France. Well, yeah, okay. That's a safe pick. Safe pick. Okay. We'll see what happens there.

This one crack me up. Are ransomware attacks good? Because company board members who are sympathetic to Bitcoin can use them as an excuse to preemptively put Bitcoin on the, their balance sheets just in case. I wonder, so I do think that's happening. And I actually have some knowledge of companies that are, that are unfortunately having to do this.

I guess, you know, depending on what side you think of, it's unfortunate or fortunate. But even some school districts that have had to do this. So I don't know, this whole ransomware thing just shows that there's utility. It's, you know, the people that are saying ban cryptocurrency is the result of ransomware. It's just so ridiculous. It's like ban highways because bank robbers are driving on them.

It's just the dumbest argument I've ever heard. Ban the internet because, you know, scammers have figured out how to use it. So, but I will say it's, yeah, it's not great. I mean, it's not great for the PR marketing side of this right now. Yeah, we're getting killed on the colonial pipeline thing, even though it was like, what, $4 million? It's like, come on, guys. Ransoms happen before Bitcoin existed, to be clear. Let's talk about all the time.

The Bitcoin is just a forcing function. Right. Yeah, cash being the kind of the number one laundering device. But it is a forcing function. You know, you wonder if some of these security vulnerabilities would have been found if it wasn't for cryptocurrency. It would have just been a lot harder for these hackers to demand a payment. And so for better or worse, it is exposing holes in cybersecurity of a lot of these companies that, you know, they should be patched up. Like, can you imagine if a terrorist were to get a hold of, you know, colonial pipeline or,

the water, you know, at a big city, the water department or something like that. So in some ways it's good that these things are being, you know, unearthed. Yeah, I've seen it just like, I've seen ransomware been described as a bug bounty for, you know, holes in IT infrastructure, which is being exposed in this aggressive way, you know, via, you know, Bitcoin payouts and things like that. But that's being done by civilians, you know. So if we didn't have that, if you didn't have bug bounties, then more catastrophic things happen down the line.

Yeah. So this is just a pressure now for IT departments to get their house in order. I have a question. Another question I saw was how do you see Bitcoin adoption happening at the consumer bank level? Will a Bitcoin account be available or just through an investment? investment product like an ETF, will local banks offer Bitcoin back loans? So this is one of the most exciting things that's happening in the industry right now, where you have banks really getting activated around this.

So you have big, large custody banks that are global custodians for other types of assets that are entering into subcustody arrangements with big crypto companies like, you know, Anchorage and Coinbase and Fidelity Digital Assets and NIDIG. And then you have, you know, longer tail. banks that maybe aren't custodians per se, but they're working on integrations with some of those same companies around white labeled workflow. So I'm really optimistic about it. I think it will take all different sizes and shapes where you'll have some banks that will build their own custody. Some will use a subcustodian. Some will potentially maybe explore a multi-sig. I think that would

be really exciting. Maybe that's a little bit further away. The one thing that maybe gives me a bit of pause here just on some of the big global custodians would be the Basel news this week around holding reserve ratios one to one with U.S. dollars. So if that were to happen, I think the movement from the big custodian banks would be a bit more tempered. So cautiously optimistic, I would say. But certainly if you think about where most U.S. citizens, at least access financial services, banks are a big part of that and credit unions even. So there's every, incentive in the world for these management teams to figure it out because their customers are asking for it and their customers are in mass onboarding with BlockFi and River and Coinbase. And, you know,

these companies are getting huge. And, you know, so why wouldn't you try to meet them with the products and services that they're asking? Another thing that we've been hearing from like traditional crypto lenders is that there's so much demand for dollar loans. And then there's no really big institution with a big balance sheet that's doing that right now. And I think, you know, all these announcements around custody of Bitcoin by some of these large institutions is a positive sign and like a precursor to them offering incremental financial services like Bitcoin backed and other loans to to individuals and businesses in the space. Yeah. The dollar part of this is really interesting. And my perception is that the demand for dollars in this market is driven primarily by two things.

One is just the growth of stable coins internationally, and there's an insatiable demand for U.S. dollars for people outside the United States as a savings technology and as a money movement phenomenon. I mean, the growth of Circle and USDC shows that. The other thing is just DFI. So, DFI is just sucking in a lot of dollars and the use case around Tether and USDC and, you know, and die even within DFI is driving a lot of this. And so there is this inefficiency where there's not enough dollars to go into.

the system. So right now, the banks are, the forward-thinking ones are kind of looking at this and saying, well, we can really make a play here. There's some money to be made. Yeah, I mean, as much as there is an opportunity there for banks, everything I'm seeing from both Congress and regulators and the bank lobby, most of the bank lobby is this desire to actually wall off cryptocurrency from the bank system. That's been the regulatory trend in the last couple months. That's what we hear constantly

from these international institutions. You know, we have to segment the two, keep them siloed off, keep crypto systems out of the banking system. So I'm actually pretty bearish on bank, quote unquote, adoption of cryptocurrency in the next few years, especially in the U.S. I don't think that holds everywhere, but I think in the U.S.

It's probably unlikely to happen in this current political climate. I'll take the other side of that. I think we're going to see a top five global custodian active in this market before the end of the year. Well, there's a difference between a bank and a custodian. Well, a custodian bank. I think we'll see it on the institutional side first. I think there's going to be a huge, huge resistance to allowing these financial institutions to integrate Bitcoin as much as it would make sense. All right, we'll timestamp these predictions.

This is good. We've got some divergent points of view here. All right. Why are altcoins so correlated to Bitcoin? Well, I would say they used to trade. They did use to trade against Bitcoin as the main pair. I don't know. It's a good question.

I mean, I would say because they're undifferentiated. for the most part. I mean, people don't buy all coins for their fundamentals or, you know, for their technology. I mean, there is some technology, of course, but ultimately people buy them, I think, for narrative reasons. And the crypto market, you know, rises and falls together. Although I will say that the correlations have been breaking down. I mean, there's more heterogeneity in the market. You have, you know, generic cryptocurrencies, then you have, like, pseudo equity, which increasingly trades on a, you know, valuation multiple basis where there's sort of underlying cash flows. So there is emerging segmentation in the market.

Yeah, I think it's largely due to the liquidity landscape, as you point out, and that some of the larger exchanges, only having, you know, a handful of assets, the Bitcoin and Ethereum being sort of the gateway drugs to some of the longer tail exchanges. So that would be my answer. But as you point out, it's sort of breaking. If you asked that question a few years ago, that would have been the answer, but it's evolving. I also think that, you know, this time around you do have certain project, non-Bitcoin projects that are seeing adoption and fundamental metrics. And you have some blue-chipped non-Bitcoin tokens. And people are kind of trading based on the fundamental of those.

But yeah, broadly agree with this idea of people investing in crypto as a theme. So we have a lot of questions about Lightning here. Given the recent attention to the Lightning Network, do you think that it's ready for primetime? Will most transactions still happen in a centralized manner between Lightning participants? What is missing to make it really workable for most people on a peer-to-peer? basis. I think it's evolving pretty quickly. I think wallet infrastructure remains sort of a bottleneck for most people. And so more and more wallet infrastructure. I do think exchange to exchange settlement is a

great use case for lightning that we will see much more of. I know there's many initiatives underway with exchanges right now looking at this. So it feels to me like it's picking up. It was in the troth of disillusionment maybe for past year or two. But we're seeing, we're certainly seeing many. more lightning-focused startups come across our desk. Yeah, one thing I'll add is that even if there are big hubs and lightning, that doesn't centralization at a second layer does not impair the decentralization of the underlying system whatsoever. And that's how you find efficiencies in finance through the creation of hubs.

So as long as you've recourse and you can make a vanilla base layer transaction, I'm not remotely concerned about quote-unquote centralization on a second on a second layer or on the payments layer. Another question that I saw. Why is it that for estimating the carbon footprint of a crypto transaction, people allocate energy cost pro rata, but they don't do that for things like public transportation or Netflix. I know, Nick, you have a bunch of thoughts and I have some thoughts.

Yeah. I think it's really because a handful of sort of activists popularize this metric. But it doesn't make sense. For Bitcoin, it's because Bitcoin's energy consumption is pretty transparent, easy to calculate, and a measure of transactional count is relatively easy to calculate, but also misleading. Whereas for public services like buses, it's hard to get the data on either side,

either the numerator or the denominator. So Bitcoin's transparency is a total vice here. People can use that against Bitcoin. So, but yeah, I mean, it's a completely contrived metric transactions themselves don't cost energy. Making an additional marginal transaction does not increase Bitcoin's energy output. And they're not linearly correlated, nor have they been historically. in the distant future transactions will relate to a greater degree to the energy consumption of the network.

But that'll mean that, you know, that energy is being put to good use because it's facilitating the settlement of transactions. So Matt, there's a question here about the turkeys. We didn't address this on our last podcast. What is the status of the turkeys? Well, the latest development is actually a very positive one. So I have an ally. So I have a neighbor.

and we have a bond. We have an understanding about the turkeys and the other guy who's the other guy who's feeding the turkeys. We have an understanding about him. I think we're coming up with a plan. And I don't want to get into too many details about what the plan entails,

but suffice it to say that there will be updates in the months to come. And I'd say, you know, my ally neighbor is very understanding that there's a big problem here. You can't have 20 turkeys. The other development is that there's more than 20 turkeys now. There's some very small turkeys that are running around.

So it seems like there's been some growth in the habitat. And there's, let's just say there aren't enough natural predators of the turkeys in this environment. So at this rate, if you just extrapolate this, I'm probably going to have about 300 turkeys if I don't do something here in the next two months. They're growing at an exponential pace. This is like a Malthusian case study or something. Yeah. It's like, I mean, what do you think? Like, they walk up to this guy's house and they just get fed.

It's like this. Do you think the pilgrims were feeding turkeys like this? Is your neighbor who's sympathetic and part of your alliance? Is your neighbor part of Brink Nation? I don't know if he's part of Brink Nation. We haven't really broached that yet. I don't know if he knows what I do. Well, what you're about to do is slingshots and turkeys.

Well, I didn't want to talk about it. I didn't want to get that detailed. but let's just say there's been a sign-off on certain tactics. You have moral license now. You have moral license from the brinkers. Yes, yes. Yeah, so that's a turkey update. Oh, that's exciting.

We're going to get some turkey jerky. That's going to be your greatest piece of merch ever. Ria, do you want to provide your own answer to the energy cost question? Oh, yeah, sure. Yeah, you know, as Nick said, it's, it's, inaccurate to allocate an energy cost to a transaction. Energy isn't being used to process transactions on the network right now. It's used to issue Bitcoin, but it's easy to use this metric because it allows you to

arrive at a really absurd number, and it fits easily into the narrative that Bitcoin is wasteful, so I think that's why you see it proliferating. So, yeah, and, and, you know, there's other elements of that analysis you can critique, like, what is a transaction? What constitutes a transaction? You know, people tend not to know that you can have 10,000 or more outputs or inputs, and that a transaction can scale into the literally billions of dollars. Yeah. So you're moving billions of dollars. I mean billions of dollars in gold, you put it on a steamship or, you know, put it on a plane. Like, certainly there's a genuine embodied energy cost there.

When the French wanted to reclaim their gold from the U.S. Treasury in 1971, they sent a battleship. Not like to intimidate the U.S., but to protect the gold on its way back to France. Yeah, and they also failed to collect that time. Oh, yeah. Nixon closed the window as that battleship was. arriving, all route. So if you're moving a huge amount of value, which Bitcoin can do with ease, probably makes sense for there to be, you know, an accompanying cost associated with that movement.

We have a lot of questions from Brooke. Some of them are really, like, difficult to answer. So let's tackle these. Given the currently high yields for USDC, should corporates be considering USDC for portions of their treasury? What are the pros and cons? Who's advocating for and servicing this functionality for corporates? Ria, as an ex-Circle employee, I'm going to let you tackle that one. I think Circle has talked about specifically targeting or creating products for corporate treasures.

you know, I don't know how sustainable the yields are in the long run, but I think it's a near-term opportunity for sure. And then just beyond yields, you know, I think that stable coins have the potential to really improve operations speed, cost of business-to-business settlements of corporation. So I think that's something that they probably are looking into. Yeah, I think the con would be that the yields are not guaranteed to stick around. The pros that the yields are pretty high. I'd say mainly if you trace the return, it comes from defy, comes from yield farming, comes from the demand for leverage, it comes from the issuance and new tokens. If you kind of trace it causally through.

So none of that is guaranteed to exist in a year's time. So you can't bake that assumption into the notion of getting yield on a stable coin. But given that, the yields are still really high. Who's advocating for this handful of providers haven't seen a ton on that side yet? more stable quote yeah I was on a panel an online panel with Jeremy and he talked a little bit about this and I think it's something that circle is you know definitely thinking about

so this is an interesting question on Lightning this is kind of something I've thought about a lot so Lightning quote gives up security in return for more and quicker payments if it were as secure as a base layer would be the base layer So if storage tech eventually evolves to let regular people run nodes, why not uncap the block size and just use the base layer? Kind of an interesting, subtle point. Oh, interesting.

I can address it if you feel like. Yeah, I haven't really thought about it. So Lightning does have a different security model from vanilla Bitcoin. Because you're getting near instant. settlement in the happy case, but in the case that something goes wrong and you have sort of a contested close, you do have to close the channel. So in the unhappy case, you get the same assurances as Bitcoin and the same, you know, constraint as Bitcoin, which is the relatively slower finality. In the happy case, you get better, you know, better time to finality. And so

it's a different model. It's a different model. Nobody's trying to conceal that, though. I wouldn't say it gives up security because you always do have that security of the base layer if you need it. So this is why some people will describe lightning, not as second layer, but near chain. You know, because what lightning actually is, is just a, it is a Bitcoin transaction channels. These are just exotic types of Bitcoin transactions. So uncapping the block size wouldn't really solve. anything there. It would make nodes harder to run. It wouldn't really dramatically increase the throughput of Bitcoin. I mean, it would be at best linear. Whereas a system like Lightning, which has

like kind of this deferred settlement model, gives you, in my view, like exponentially more throughput possibility. Whereas if you scaled up the block size to like eight megabytes a block or something that's a linear increase in transaction processing capacity. It doesn't make the transactions settle any faster. It just means that there's a lower likelihood of congestion. So it doesn't really solve much. It makes life much harder for node operators. And so I've always been a fan of creating more unique transactional contexts as opposed to just increasing the variable, you know, and adding like an incremental small, smaller, you know, incremental greater amount of capacity.

Also, the amount of, like, just given the historic debate around this, right, the amount of work it would even take to implement a change like this on a base, on the base layer is prohibitive in addition to all of, you know, everything you said. So we might have different answers on this. The question is simply your take on Dow's current and future. talking about DAWS earlier today. What do you make of DAWS, Rhea? I think there's a lot of interesting experimentation going on with DAWs right now. I'm curious to see, you know, how they expand beyond being like, it seems like the use of

multi-sig tech kind of to invest in new ways, to deploy capital in new ways. Definitely curious to see how it expands beyond that. But I think it's an interesting new phenomenon, an interesting new way to implement, you know, collective decision making and communities. So I'm excited to see where it goes, but I think in its current form, like there definitely needs to be more innovation. So I wonder if we're going to be able to get through all this, maybe not. Have you looked into BIP 300 at all? I wasn't even aware of this one.

No, what is Bip 300? I don't know. We're clearly not at the cutting edge anymore. I don't know what happened. I'll look into it for a future episode. What in your mind would be the U.S. government action towards Bitcoin that would serve as a catalyst for you to become a political dissident? I think this is a reference to something I said in that debate with Mike Green, which is that if Bitcoin is outlawed, I wouldn't just, you know, roll over and let Bitcoin die. I would just become a dissident. So I'll answer that. I think if, you know, the government made non-custodial transactions illegal, I would peacefully protest that, you know, nonviolent protests.

And just point out like, look, this stuff is regular for tens, hundreds of millions of people worldwide. You know, financial privacy is not a crime. It was the default for hundreds of years. It's only now that we live in this pseudo-surveillance state. And pushing back against that is completely legitimate and in line with what the founding fathers wanted. So that's probably when I'd turn into a dissonant. Hopefully that doesn't happen. Okay. All right. So Rhea, last question. We've actually, I think, exhausted most of these. What is your fix or proposed improvement to Twitter spaces?

I think my biggest fix right now would be the ability to listen to it on desktop because I feel like I come across so many Twitter spaces. And I'm just on my desktop and I can't listen to them. I've also tried to limit my consumption of social media on Twitter. are on my phone, so sometimes I'll delete Instagram, Twitter, etc. And then I'll see an interesting Twitter space and I have to read download the app. But that's just one thing for me. My biggest fix would be letting the creator of the room change the moderator to someone else because I'm not trying to host these things for like six hours continuously. That was the problem the other night. I had to close the room because I wanted to go to bed.

Oh, my God. Okay, well, that wraps it. Thank you for listening to our second ever AMA. We'll do another one, I guess, next year or something when we don't have an episode. Thank you, Maria. Thanks, guys. Thanks, Nick. Thanks, Matt.

All right. Until next time. See you next week.