On The Brink with Castle Island - Weekly News Roundup 09/04/20 (Armageddon II, Activist token investors, emergent effects of high fees) (EP.121)

Episode Date: September 4, 2020

Nic and Matt return with deals and news of the weak. In this episode:  Nic and Matt happen to buy the same book Nic's article on why the US should embrace stablecoins and credibly neutral crypto-financial infrastructure Our theory on why NYDFS went after Tether Can the US successfully disrupt itself as the administrator of financial infrastructure? Coinbase IPO prospects Coinshares adds transparency to their Bitcoin ETN and the prospects for Proofs of Reserves How Proofs of Reserves can ward off regulation Arca takes an activist stance towards Gnosis What recourse do jilted tokenholders have? Publicly traded energy companies are mining Bitcoin with stranded natural gas Matt's suggestion for a Bitcoin-themed sequel to Armageddon The single most impactful way you can help Bitcoin Nic's theory about the effect of a fee-transaction count oscillation on Ethereum How fees are a regressive tax on users Content mentioned in this episode:  Nic in Coindesk, The Crypto-dollar Surge and the American Opportunity Larry White in Alt-M, Should the US Government Create a Token-based Digital Dollar? Electronic Frontier Foundation, It's Past Time for Coinbase to Issue Transparency Reports Nic in Coindesk, The Last Word on Bitcoin's Energy Consumption Coin Center, Are Regulators Poised to Demand Cryptocurrency Address Whitelisting? Probably Not Tyler Winklevoss, The Case for $500k Bitcoin

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 Concentive Easing. You print a couple trillion dollars, and all of a sudden, people start to worry.

So out of this worry, we have something called a Bitcoin. Welcome to On the Brink. I'm Matt Walsh. And I'm Nick Carter. You have some good microphone gear over there today. Yeah, we're going to make this whole podcast more kind of tech savvy. So I have a pop filter now like Joe Rogan. So we're kind of like moving up the podcast supply chain here. We've been asked about putting this on YouTube.

I think you're ready for it. I just have a kind of an empty office behind me. Yeah, you got to have a good setting for it to work visually. Well, you don't have to, but it would be ideal if we did. We do have that Bitcoin white paper art that you got me. That's some high quality art. That could go behind. You have a good bookshelf there.

Actually, shout out Teddy Fusaro. I don't know if you saw his piece on Bloomberg with Joe Wisenthall. He has a good bookshelf. Teddy's the C-O-O of bitwise. Yeah, he was looking magisterial on that appearance. He had a lot of books. You could tell he's like a learned scholar. It was dignified.

It was restrained. It wasn't a case where he'd, you know, you can kind of tell, you can do the service where you rent books or, you know, you just effectively buy generic books to put behind you. But those books seemed like they'd been handpicked by him. There were definitely books that he has read. was at someone's house once and I went to their bookshelf and I touched the books and it turns out that a bunch of them were fake. They were just like fake books that someone bought on like Amazon. Not everyone has a fully populated bookshelf. Some people are Kindle readers. Some people just don't like books. It's very telling. It's crazy. You tell a lot about a man by looking at his bookshelf.

It's funny. You and I bought the same book yesterday, right? Yeah. On the same day. Same book, the three. Yeah. I'm looking forward to, I read like 50 pages of the first one last night. Maybe we'll do a book report on air. I read the first chapter about the Cultural Revolution. Didn't realize that was going to be in a sci-fi book. Yeah, let's not forget what happened with the Cultural Revolution.

It can happen again. It can happen here. I'm pretty glad that that didn't happen here. I hope it doesn't ever. So that was talking books. Yeah, that was some highbrow. commentary to start the episode. We had some highbrow commentary about

Defi on the podcast this week. It was a Defi focus week. You know, there's been, we've got to keep up with the times. A lot of stuff happening in Defi these days. What percentage of our audience do you think is following Defi right now? Honestly, I'd say at least 70%.

Because you can't walk five yards in this industry without hearing about Defi. So you had a good podcast on Monday. Yeah, we had Adichip Lepu and Frederick Fortier. They are trying to create a fully decentralized orderbook exchange, so not an automated market maker style exchange like Uniswap, but actually a kind of bona fide exchange where the functions are decentralized to kind of an audience of validators called DRIVEDX. This is actually their first ever podcast.

It's always great having people that have never done a podcast. asked before on the show. That's my favorite. And you interviewed Kyle Davies, of course, from Three Arrow's. Yeah, that was a great episode. Kyle's really in the forefront here. I feel like Three Arrows and CMS are in just a lot of defy deals lately. And they're very well equipped both firms to do this. It's kind of a mix between hedge funds and venture funds. It's an interesting little niche. And Kyle, Kyle was super thoughtful. They've, yeah, I'm sure they've had a good year. And then let's talk about your article. You just had a good article that dropped on Coin Desk. So the crypto dollar surge and the American opportunity. This is a real USA,

rah-rah, the U.S. should embrace stable coins in public blockchain infrastructure. I loved it. Yeah. You know how, you know, some of the most patriotic people are not even from the country that's the object of their patriotism, like Stalin, for instance, was from Georgia, you know, it wasn't even from Russia. There's other examples like that. Alexandra Hamilton. Yeah, what was he like from the Bahamas or something? Like Caribbean.

Yeah, somewhere. Yeah, right. So I, as someone who's born a Brit, I've now been adopted into, you know, my new nation of the USA. And if anything, I'm more patriotic than, you know, many natural born Americans. I think, you know, I went through that whole process. I took a test and everything. You know, had to answer some civics questions.

Anyway, this is my pitch to American policymakers to basically embrace the crypto industry. And in particular, embrace stable coins or crypto dollars. And it's kind of a sequel to my other article in CoinDesk about stable coins. I came to realize that stable coins are actually somewhat antagonistic to the way that the U.S. dollar-based financial system is set up because they effectively attack New York's monopoly on dollar clearing, which is kind of probably why NYDFS went after Tether so hard, honestly. That's my theory. And the point I make in this article is that, yes, you know, this is a politically neutral technology,

which is going to dramatically affect America's ability to project power through the financial system, but they're going to lose that ability regardless, because all of their allies and obviously their competitors in the international sphere are totally sick of, being sanctioned or being hit with the threat of sanctions, even European allies are sick of this, and they're trying to route around the American financial infrastructure. So that's going to happen regardless. What would be better than to disrupt themselves

and embrace politically neutral financial infrastructure, so effectively crypto financial infrastructure, which is neutral by design? So that's my pitch, you know, disrupt yourself. although I think if you look at history that's kind of rare that that happens but here's hoping Well do you think we have a lot of Clay Christensen

Acolytes in the federal government that are down with that idea? We'll see I mean there's some very forward-thinking folks on the regulatory side I think right now and there's a lot of enthusiasm around the digital dollar but my point is that it can't just be an instrument of

state power because it won't meaningfully offer anything that's differentiated or useful. People want actual digital cash online. They want autonomy and they want privacy and their transactions. So if these digital dollars don't offer that, then you haven't really created something that looks like cash. Yeah. And it kind of made me think that the Bank Secrecy Act has not been around forever. So there was a world before that, you know, this current paradigm.

And, you know, a lot of people probably would argue that that world was actually a lot better. The Bank Secrecy Act is only 40 years old. The third party doctrine is, you know, 35 years old. That's the idea that your bank data held at your bank can be subpoenaed, you know, out of whim. That data effectively doesn't belong to you. And keep in mind that they never indexed to inflation that $10,000 limit for filing a, uh, cash transaction report, I think. So effectively, that limit has gotten smaller every year.

So financial privacy in this country has just been eroded over the last 40 years. So all we're asking for is just a restoration of cash. It's a great reminder to support Coin Center. There's a really good podcast that Jerry did with Peter Van Valkenberg. Jerry Bredo

did with Peter Van Valkenberg. Coin Center is this public policy group that is advocating for some of these issues, kind of like and EFF, the Electronic Frontier Foundation, kind of like what they are for the internet, Coin Center is for this industry. And they've really been at,

they're at the forefront of all these discussions, and I'm sure there's a ton of discussions that they're involved in that are, you know, never really see the light of day or get reported on. Yeah, they do amazing work. Their podcast that Jerry Brito did with Larry White, in particular, was excellent on CBDCs. I think Larry White's commentary on CBDCs.

CBDCs has been outstanding. He's written a couple of blogs about what it would look like, why retail facing CBDC would be difficult and the privacy considerations there. On that note of privacy, did you see that the EFF actually sent a note to Coinbase, published a letter, basically asking them or imploring them to publish more information about the types of requests that they're getting from law enforcement and to be more public with that? So it's similar, I guess, to what Cracken does. Cracken publishes that report around what types of agencies have asked for personal information about their customers and in which jurisdiction is, that type of thing.

Seems sensible to me, right? Yeah. So they're asking them to create a warrant canary or even more transparency around user information that has been subpoenaed or something like that. Basically just transparency, just, you know, what are. What are you giving, you know, to governments? You know, who's asking for what? What departments? What federal governments, et cetera.

All right. So we had a had a bunch of deals this week. Oh, yeah. Yeah. The market is roaring. So Pocod has officially launched. I think when I checked it was the fifth largest blockchain asset, which took me by surprise. So now you have all kinds of projects being built on Pocod already.

So Akela is a decentralized finance project built on PocateD. There is $7 million from Pantara, DCG, polychain, one confirmation, Arrington, XRP, CMS holdings, and autonomy. A testive, which is one of our portfolio companies focused on the insurance space, they use public blockchains to timestamp and notarized data. They received a strategic investment from borderless capital, which is affiliated with algorithm. So this one was interesting. You have Dusk Network, which is a security token platform. They raised a million dollars from iPhonex, which is the parent company of BitFenex.

And BitFinex did not strike me as one to back security tokens. But here we are. Hey, security tokens will be a thing at some point. I think what we need, at least in the United States, is a little bit more clarity from FINRA. We need to start to see some of these ATS venues. we need to start to see clarity from the SEC on what that definition of a good control location is for digital security. But they will be a thing.

It's just a matter of when. The next one is Do Doe Exchange. What a name that is. They raised 600K from Framework Ventures, Defiance Capital, Alex Pack, Robert Leshner. They're an on-chain liquidity provider. So basically an on-chain market maker. So many deals this week. We've also got Yellow Card, which is a Nigerian crypto broker.

They raised $1.5 million from Polychain, Andresen, and Sele. So Jump did an analysis of which jurisdictions were kind of most primed for crypto adoption, and Nigeria was right near the top of that list. Growing population tends to be relatively high inflation, very entrepreneurial, high internet penetration. highest smartphone penetration. They've got lots of volume on local Bitcoin, so definitely one of those places that's primed for lots of crypto usage. And the last deal of the week is Zero Hash, which was formerly known as Seed CX. They raised a round from Tasty Works with participation

from existing investors, Ban Cap, CMT Digital, and Trade Station. Big week. If you're looking for a job in the blockchain industry, as always. Pay attention to the deals. It's where we follow the money. Exactly. Although that said, all the coins are down today. I know, everything's down today. Stocks are down, coins are down.

Well, I guess they can't always go up. Can't always go up, but you kind of hope that at some point the coins would decouple from the stocks, but alas, that's not to be. So interesting news. So BlockFi, disclosure of portfolio company, they hired Tony Laro as the company's first chief financial officer. So he joined from Intermex, which is a publicly listed financial services company.

And previously was the CFO and or business unit CFO at a number of places, including JPM, merchant services, citizens, and Capital One. So congrats to BlockFi. That's a big hire. That's a high quality public markets tier CFO, kind of CFO that can take you public, dare I say. Speaking about going. public. So Coinbase did some reshuffling this week of their board and some people are thinking this might have to do with getting ready to go public themselves. So they added Mark and Driesen as a board observer.

He replaces Chris Dixon. And they added Gokul Rajaram. He's a DoorDash executive to the board. He replaces the DFJ founder Barry Schuller. And also Fortune reported this week that the company is exploring using a blockchain-based token as part of its eventual IPO, and that since there is some kind of regulatory ambiguity there, that might push back the IPO until middle of 2021. So what do you think of that? Well, I think everyone's expecting it. It's kind of the big catalyst, especially in the venture side of the crypto industry, in terms of opening the floodgates.

I think Coinbase would trade like a quasi-Bitcoin ETF style product. I think it would trade kind of in line with Bitcoin. So it'd be interesting to see if it goes public before we get an ATF. I guess that's actually probably looking quite likely at this point. Well, there's a couple angles here. I think you could look at some of these category defining companies like a draft Kings and look at how they trade. I mean, look at Tesla.

And you could make an argument that whatever the first really robust crypto infrastructure company to go public will be probably well received, I would guess, from at least retail public. The other angle here on the Coinbase news is that, you know, what if they do this tokenized security offering or whatever this Fortune article was sort of reporting on? I guess you could make an argument that that's a good thing that, hey, maybe eventually even Coinbase will be in the digital securities base. They have an exchange.

Maybe they'll be doing security token. So eat your own dog food type of thing. Now, the flip side of that is clearly the SEC under Clayton and kind of FINRA as well haven't really been on board with security token proposals yet. They've been super slow to approve ATS venues. And so this is definitely, if they want to go to this path, I just think it's going to take a little bit of time. So you can make an argument,

hey, you might, like you're missing the window here maybe if you wait too long. Well, we've seen a couple of those security tokens, SEC registered go live in the last couple months, with INX being the, the, the controversial one, I guess. They're built on a new standard on Ethereum, which allows for white listing. So there's precedent there. But the question is, of course, where can you trade these things?

You'd imagine that Coinbase would try and spin that up themselves. I mean, if anyone can navigate these regulatory waters, I'm pretty sure it's Coinbase. So they'd probably be doing the industry a big service by figuring this out. for everyone, I would argue. So obviously more to come on this, but you don't reshuffle the board like that if you're not getting ready to go public. So this was an interesting piece of news.

So coin shares, which is the asset manager that creates the XPT provider product, which is a exchange-traded note, not an exchange-traded fund. So it's actually a debt instrument, which tracks the price of Bitcoin very closely, actually. They're kind of one of the bigger, they're the biggest in Europe,

as far as crypto asset managers go. They have engaged with the accounting firm, Arminino, which we've actually had on this podcast before, and they're doing real-time out of stations as to the reserves that are backing these financial products. So it's not quite proof of reserves because there's no on-chain element. There's no on-chain out of station.

But they are using this go-between Arminino to kind of stake their reputation and say, here are the liabilities and here are the assets, and they match. So I thought this was actually really cool. Arminino has done the same thing for various stable coins, too. They've also done proof of reserve. for various exchanges, and now they're getting into the asset management game.

So I'm pretty optimistic that we're going to see more of this in the future, not just stable coins and exchanges doing out of stations, but also providers of financial products based on Bitcoin. Yeah, so just to drive home why this matters, so if you think about all of the really bad exchange hacks over the years, ranging from Mount Gox to Quadriga, I mean, there have been so many of them. A lot of these things really could have been prevented and the public would have been saved if you could see in real time that their wallets were draining or the gun fractional reserve or they'd been hacked. So, you know, it's pretty clear from the

crypto side that there's some major league benefits here. But also just think about traditional assets. I mean, what if you had a proof of reserve that, you know, Madoff didn't have the securities? A lot of people would have been saved a lot of time and money. So the beautiful thing about public blockchains is that you can do things like this. And I just don't see a world where three, four, five years from now, this isn't just an industry standard that anyone who's offering a custodial service, like, you just have to do it. Yeah. And keep in mind, this isn't fully trustless, right? And that's always been the critique when people like me talk about proof reserves. So fervently is that, well, you know, you can't make it perfectly trustless. And I totally concede that.

I just think the perfect is the enemy of the good here. And it's better to, to have something rather than nothing. So this is an intermediate step. I'd love to see this proceed to a full proof of reserve model. And I've obviously loved to see more exchanges adopt it. I mean, in particular with actually both Gox and Quadriga, both of them were insolvent for years. Gox was insolvent when it was sold to Mark Carpellis by Jed McCaleb.

That's a little known fact. It was already insolvent at the time of sale. And they never did really a true, full accounting of the coins they had. Quadriga was also insolvent long, long before it collapsed. It had been Ponzi-like for a long time. So any kind of formal attestation or proof reserve process would reveal that. So I think it's a very powerful self-regulatory measure. It's a way to ward off more heavy-handed regulation in the future.

that's always my pitch to exchanges, you're going to get regulated much more harshly if you don't engage in these self-regulatory measures. So hats off to coin shares. Really good job here. A couple other ones I noticed this week. So Bit Uda, which is a crypto asset focused broker dealer. They actually moved to Boston, a little known fact. They were in New York and moved up to Boston.

They announced a new division this week. They're going to be acting and advising as placement agents for DHS. digital securities, so traditional kind of security tokens. And they also opened up a line of business to broker secondary transactions for SAFs. So these simple agreements for future tokens, which obviously are securities. And, you know, so if you're trading them, you need to be going through a regulated entity. So I guess to my knowledge, Bado is the first brokerage firm to have such a compliant offering. And we had Tim Kelly on the podcast a couple months ago to talk a little bit about their vision.

So congrats to those guys. We're kind of gradually achieving saturation. Everybody, if you notice kind of the last five news items we've talked about, we've all had one of their representatives on the show. I mean, if you haven't been on this podcast, like, are you even in the news? I mean, you do 120 episodes of this. You're going to talk to a lot of industry people. But there's more.

Don't worry. we're never going to run out. Well, let's talk about a firm where we've also had someone on. So ARCA was in the news this week. We had David Nage, fellow podcaster, has a good podcast. Let's talk about this one a little bit. Arka and Nosis. All right.

So this was actually really cool. And to my knowledge, it's the first real kind of token activist investing that we've seen. I mean, we saw something somewhat similar with, Digixtow where effectively the Digixtow team allowed their token holders to redeem their tokens for a share of the Heath held in the treasury. But that wasn't really in response to that much external pressure. Here, ARCA is, well, I guess their deck leaked. It was in the block. So Arca's made a deck basically arguing that Gnosis should return some of their capital sitting on their balance sheet to investors. If you actually look at the price of the

Gnosis token, it's worth about one-third of the value of the ether sitting on Gnosis's balance sheet. And I think Arc actually has a pretty good case here because Gnosis didn't really deliver the product that they claimed they were going to deliver. I mean, they built a, I guess they built a proof of concept kind of prediction market, which was the original vision, but that never took off at all, and they kind of segueed into other things. So ARCA is saying they're feeling a little jilted here, and they're saying,

why don't you return at least some of the capital and then operate as a lean startup? So to my knowledge, this is the first case of real activist-style token investing, which is pretty interesting. This is really interesting. But couldn't, like, ARCA just sue these guys and say, hey, you did an unregistered security

and we're going to contest this in court? Is that something at their disposal? So I think that's actually the subtext. So if this doesn't go well, you might imagine that would be the next step because they don't have formal recourse here. They can't buy a bunch of tokens and then exercise shareholder governance or anything. The tokens don't come with that right. But they do have the implied threat of aggression.

So I think that would be the next step if they don't make any ground here. really interesting to see activist investing coming to crypto. I guess we a lot of people have been saying, I feel like Selkis has been saying that this has been on the horizon for a while. And here we are. Yeah, I mean, you can always do that analysis of the tokens whose balance sheet far exceeds the market cap of the token. It's just there's no formal linkage between the reserves held by the token issuers and the actual token itself. in most cases, there's no linkage whatsoever, but there is always the threat of lawsuit. And in this case, I think, would be a pretty compelling case, honestly. All right, so I want to transition to a very cool story.

So, Coin desk reported this week that Equinor, I think that's how you say it, it's a publicly traded energy company. They are partnering, it looks like, with Crusoe Energy. So this was like a weird thing. It was a leak from Equinor's internal website, their intranet. And it's basically showing that they're partnered with Crusoe Energy, which is, you know, startup backed by Bain Capital and Founder Fon, in that they focus on partnering with these energy providers and doing natural gas flaring.

And so the idea is that if you have a big oil field, you have to have a remediation system to flare off the gas so that it's not going directly into the atmosphere. And there's a lot of energy there. So why not throw some Bitcoin miners, some Asa, into the container. And if you've got this energy coming through, it's basically just free energy, so why not mine some Bitcoin with it?

And this is an awesome idea, and there's plenty of startup activity in this. Steve Barber, I think, was one of the first ones to get behind this. And now we have publicly traded companies that are partnering with startups to mine Bitcoin with stranded natural gas. This is just the coolest thing ever.

Shout out Steve Barber, for real. It just amazingly nice. guy and to my knowledge he was probably the first one to pioneer this and he's been doing it for a while now in Canada. I saw Jeff Lewis respond to this saying when I say narrative violation, this is what I mean. But it's just such a cool story. I mean, come on unlocking stranded energy, taking advantage of this otherwise flared natural gas, turning into Bitcoin. I mean, how freaking cool is that? That's amazing. Yeah, I mean, there's this big narrative around how Bitcoin mining is melting down the world. But, you know, the flip side of that is, you know, is it really? And, you know, maybe what we have here is just a global auction every 10 minutes for money, essentially, where you can compete to win that money if you have a really energy efficient way to mine Bitcoin. And so we're going to start to see people put these things at the bottom of waterfalls, I'd imagine.

Yeah, we've been expecting this natural gas. use case to eventually take over a greater and greater percentage of Bitcoin's hash. Honestly, if you actually look at some of the crackdowns happening in China right now with miners, maybe the flippinging will finally occur and will get more American hash rate. You know, I wrote like a piece which was kind of arrogantly titled the last word on Bitcoin's energy consumption, but this is the point that I made. I mean, Bitcoin optimizes ruthlessly for the cheapest sources of energy. and it seems like the cheapest energy might actually be energy

which would otherwise be wasted. And it's just a matter of instrumentalizing it. So I can't cheerlead this hard enough. It's such an exciting use case. And I hope it actually scales and works. Yeah, that piece, the last word, it turns out there was a lot of words after that. Yeah, this is my advice.

Never say that you have the last word on something because people have other words that they, they'll say more words for sure yeah so speaking we talked about coin center at the outset so jerry brito and peter van valkenberg in addition to having a really good podcast this week they had a blog post and they talked about the travel rule and so it was the title of the blog post is our regulators poised to demand cryptocurrency address white listing probably not so it's been a lot of kind of back and forth in the industry around these financial action task force uh report that have been coming out and what steps are going to be taken.

And there's definitely some folks in the industry that believe that some exchanges and brokerages are going to stop the ability to withdraw to hardware wallets and things like this. But Jerry and Peter kind of put the industry at ease here with it doesn't really seem like that's the way it's breaking. So I guess I can't emphasize enough that's just like support Coin Center. They're doing great work. Yeah, I think this was kicked off in response to a thread by Ari Paul, who seemed pretty concerned about it.

It certainly seems like things are changing a little bit. So my guess is that in a year or two, you will not be able to withdraw from an exchange without attesting to where those coins are actually going, which is actually the same way it works for banks. You can't just have any old person withdraw cash from your bank. It has to be you. So there's a permissioning element there.

So it's the same way it exchanges. Right now, you can just, just give an exchange withdrawal address, and it can be anyone or anything, it looks like the tides are turning, and you're going to have to say, hey, this is me that we're withdrawing to. But what was being touted here was the potential for full-scale white listing of crypto addresses, which the coin center guys are saying is unlikely to happen, because, I mean, it would be pretty catastrophic.

glad that that is their opinion at least. So I thought that your, you know, Coindex article was the most rah-rah thing I've heard in a while. But, you know, Tyler Winklevoss, I think, takes it for me this week. His blog post, the case for 500,000, for 500K Bitcoin. So I thought experiment here is to look at the market, addressable market of gold. And if Bitcoin takes that, it would be worth $500,000.

hundred thousand dollars per coin i mean sometimes you just read a blog post and you're just like yep punch the air like good post good good post tyler i like how they doubled down on the asteroid mining thing that's on brand for them yeah i mean i i'm getting ready for that movie it's going to be called armageddon two it's going to be bruce well it's actually bruce willis died so it's going to be Ben Affleck, he's going to get the gang back together. They're going to go up to the asteroid and they're just going to mine a bunch of gold. And it's going to be all about how they're big Bitcoin fans and they just want to go get more gold and destroy the market value for gold. Armageddon, too, just throwing it out there.

Revenge of the Bitcoin nerds. I don't get your reference at all because I think that's like a boomer movie or something. But I will say that. Can we just pause there for a second? Did you not see the movie Armageddon? I mean, I think it came up before I was born. So, like, how could I? All right, well, I have to set this up for you.

So there's an asteroid coming towards Earth. Okay. And so there's a critical decision to make. You can either, so you have to blow up the asteroid, right? So you can either go get a bunch of astronauts to do it, or you can go get a bunch of, like, drillers that are out, like, in the middle of the Gulf of Mexico to go, like, become astronauts.

Those are your two options. So inexplicably. You don't have any other options? That's, yeah. Nope. So they go and they get Bruce Willis and Ben Affleck and just a great cast of other people. I think Michael Clark Duncan might be in that, Steve Buscemi. And they train them to be astronauts and they go up and they drill down into the asteroid and they blow it up and they save the world.

Okay, I have a lot of problems with this. I have a lot of problems with this. So, all right. So first problem. it's harder to become an astronaut than it is to become a driller. So they really couldn't just train up astronauts to like operate a drill. That was too difficult. You just have to suspend disbelief on that part.

I agree. That one is a little bit hard to imagine. All right. And here's the second problem. If you blow up an asteroid, it's going to continue on its same trajectory. And you're just going to get like more impacts from some smaller, like a chain of smaller asteroids at this point. But you're still going to get hit by like.

a whole bunch of debris. I think if you get it early enough, you can get it on a different trajectory and they can be small enough pieces that they break up in the atmosphere. They're kind of like fireworks. I think what you want to do is use some sort of gravity slingshot maneuver

to subtly alter the trajectory so it misses the earth by like an inch. That would be my recommendation. That might have been part of it. It might have been part of it. I have to say, so this was like a Jerry Bruckheimer at his best type of movie. Arrowsmith

was very prominent. Liv Tyler was in the movie. Steven Tyler's daughter. Arwin from Lord of the Rings. You need to go watch this movie for Labor Day weekend. Well, it seems to have really made a big impact on you. It's every time that Tyler Winklevost

starts talking about gold on asteroids, I think about Bruce Willis. I will say that the most impactful thing you can do for Bitcoin is to unlock all this extraterrestrial gold. That's a very high leverage. thing to do. As Dave Portnose says, make the gold rain down from the heavens like sand. So if you can pull that off, great for Bitcoin. If you can do it, that's our challenge to you.

Yeah, I mean, you're betting against innovation if you don't think this is going to happen. I love how this, if you said this, like three years ago, you would have sounded like an absolute crazy person and now you only sound like a half crazy person. Yeah, I mean, gold's biggest strength is its atomic nature, but that's also its biggest weakness. We've moved on to the digital realm now. We're in a world of bits. Adams are obsolete. It's true.

So if you want to feel good about your place in this industry, go read Tyler Winklevoss's blog. All right, so I think that's about it. So apart from watching Armageddon this weekend, you know, any plans? You're going to be following the latest defy thing? Do you think we'll get any more like vegetable coins launched on DFI this weekend? So I actually have a hypothesis about Ethereum, which I don't know if I want to say it now because it's free alpha, but maybe I should say it. I was going to write it down, but maybe I also say it with words. Anyway, the point is, I think we saw this fee and transaction count oscillation happened with Bitcoin in 2017.

I would predict that we're going to see the same thing with Ethereum. So effectively, fees rise as transactions rises, block space utilization rises. Then at a certain critical threshold, users of block space kind of get fed up and they stop transacting for a while. It's not economical for them to transact. And so transaction count and fees drop. And then fees get cheaper, so people start transacting again, and the cycle repeats. And I think that's actually what we're going to get with Ethereum.

and I think if you look at the sell-off, it's probably partially due to that because some of these more retail investors that are using these on-chain exchanges, they're getting priced out of those trades. And if there's no retail investors, that's a lot of the uninformed flow that the smart traders trade against. And so I think there's an effect, a hit to liquidity generally when that happens. Kind of like how in poker, when all the, effectively the nobs in online poker lost money and gave up, you just said the sharks trading against the sharks. And then it basically died off after that. So you need that flow, that uninformed flow to keep the professionals happy. So that's kind of the effect of fees that I think we're going to see this oscillation between fees, transaction count, and on-chain liquidity all moving together effectively. I think we're going to see this like a sine wave going back and forth.

Yeah, what did you say this morning? No retail, no party. It's just not that much fun for retail if you have to pay $50 in gas fees to play on these things. And if those retail folks aren't there, then who are you trading against? Yeah, Maya Zahavi put it well. She said fees are a regressive tax because the fees are relative to the amount of computation. They're not relative to the amount of value being transferred. So if you have a lesser amount of value, you're still paying similar fees.

They're kind of fixed. So that's what makes them aggressive. Like sales tax is regressive. So effectively at a certain point, they price out retail. And you might not think that's a problem, but you need retail for the professionals to make money. Yeah. Well, we'll see. It feels like every weekend there's a new story in Defi.

So I'm sure we'll have something to talk about next week. Have a couple good podcast episodes next week. I don't know if we've decided which ones we're running it. Yeah, we've got one on the Venezuela situation, very geopolitical in nature, very timely, very exciting. All right, everyone, well, that's it for us this week. Everyone have a safe, long weekend, and we will see you on Monday. We'll drop an episode on Monday on the holiday.