Unchained - Preston Van Loon on Ethereum's Merge and His Lawsuit Against Treasury- Ep.394

Episode Date: September 9, 2022

  Preston Van Loon, cofounder and Ethereum core developer at Prysmatic Labs, talks about the Merge, its impact on an environmental level, and why he is a plaintiff in the lawsuit against the Treasury Department over Tornado Cash.    Show highlights: what the Merge is on a technical level and what its impact will be  whether the proof of stake consensus mechanism makes the network more decentralized and secure what happens if the Merge fails and whether there’s a contingency plan why Preston founded Prysmatic Labs and how Prysm works what the next steps are for Ethereum and what the community is working on whether Preston thinks a proof of work Ethereum fork would succeed when and how Ethereum’s high fees and scaling issues are going to be resolved why Preston joined the lawsuit against the US Treasury over the Tornado Cash sanctions how Preston would celebrate a successful Ethereum Merge Thank you to our sponsors!   1inch Crypto.com Messari   Preston Twitter    Episode Links   Previous Coverage of Unchained on the Merge: Arthur Hayes, Former Ethereum Skeptic, on Why the Merge Makes Him Bullish on ETH With the Merge, Will Ethereum Take Over Bitcoin’s Title as Digital Gold? Why Kevin Zhou Believes Ethereum Will Have 3 Forks After the Merge Post-Merge, If Lido Becomes Dominant, What Does That Mean for Ethereum?   Lawsuit against the US Treasury: Coinbase is supporting a lawsuit against the Treasury Department by six users of Tornado Cash. Fortune article on the lawsuit Why Preston joined the lawsuit.   The Merge: Ethereum Foundation Merge announcement. Ethereum carbon emission reductions.   ETH Post-Merge Dynamics: Cumberland on the Ethereum dynamics after the merge  Miles Suter on the implications of the Merge The triple point asset   Learn more about your ad choices. Visit megaphone.fm/adchoices

Hi, everyone. Welcome to Unchained. You're no-hype resource for all things crypto. I'm your host, Laura Shin, author of The Cryptopians. I started covering crypto seven years ago, and as a senior editor of Forbes, was the first Mainstream meter porter to cover cryptocurrency full-time. This is the September 9th, 2022 episode of Unchained. Unchained Daily Bits are now on YouTube. Go to YouTube.com slash C slash Unchained podcast to subscribe. And catch up on. On the top headlines in crypto in 60 seconds or less. One inch is a top Dex aggregator that finds the best rates across multiple networks. Why use a single Dex when you can use them all?

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Link in the description. Today's guest is Preston Van Loon, co-founder and Ethereum core developer at Prismatic Labs. Welcome, Preston. Hey, happy to be here. At the time of recording, Ethereum's long-awaited market, merge is projected to occur sometime between Wednesday evening, Eastern time, and Thursday morning. This shift to proof of stake is certainly one of the most momentum transitions in Ethereum's history, at least from a technical perspective. And you, Preston, have been working on what is currently

the most popular client for the merge. How are you feeling? Oh, I'm feeling great, really excited. We've been working on this for many years, and the impacts and benefits of the merge are just, it's just amazing to see it's finally here. I think everyone's been waiting. Merge is coming soon since, I don't know, 2016. And finally, we're one week away. It's just incredible to see it. So let's make sure that all the listeners are up to speed on what the merge is.

Can you explain what's happening on a technical level? Yeah. So the merge in short is to switch from proof of work to proof of stake. Basically, how Ethereum comes to consensus on blocks in the blockchain. The reason it's called a merge is that we already launched the proof of stake side in another blockchain called the beacon chain. This is running alongside the proof of word chain and has been for, I think, about a year and a half since December of 2021 or 2020. a year and a half ago. And the reason we did it that way, so we really wanted to test it and make sure it works.

The proof of stake is a concept and the model that's been designed is really going to work. And now that we've been running it for a considerable amount of time and sort of got it up to a scale that has a large economic security with billions of stake, say, okay, now it's time to do the switch. So effectively, we will take the beacon chain and merge it with the proof of work chain. or the main chain of Ethereum and effectively remove the proof of work part there and use the proof of stake to come to consensus on the blockchain. So if Ethereum pulls this off, what impact do you see it having on Ethereum as well as the larger crypto space?

There are a lot of really important benefits to come to the switch of proof of stake. So the one that is probably the most evident is the efficiency gain, right? proof of work is very expensive in terms of computation, towards resources, hardware and energy. And now with the switch to proof of stake, there's not as much computational requirements. I like to think about it as if you wanted to be a block producer today, before the merge, you almost need an entire data center

or a larger of hardware, a fleet of hardware, to hash enough information to come up with the right answer for a block. You're doing a lot of work, the proof of work. the proof of work part. Well, now, you know, in proof of stake, it's, it's as simple as, or it can be done on something as simple as a consumer grade hardware, like a laptop. So a lot of us have been running on a Raspberry Pi, which is like an $80 piece of hardware that, you know, middle schoolers use to tinker with and learn about computers, right? It's really cheap hardware and costs nothing to run, effectively, essentially costs very little.

So that, like, that in itself is a really amazing. tradeoff or benefit that comes with this. And, you know, the energy, it's hard to quantify, but there is some like reduction in carbon emissions, which is really great. That's not really why we're doing it, but the energy efficiency has a lot of benefits to it. I think the other pieces that we like to highlight are that it makes it more decentralized, right? Like in the example I just gave, you would need an entire data center to be a block producer or people usually do as they join a pool and pool of resources with others. Well, now you as an individual with a minimal investment can be a block producer, can be a participant. We just really lower that barrier to

entry for for at-home stakers, for more individuals and, you know, make that pool of participants more decentralized because the decentralized future is not, you know, three or four large organizations producing blocks. It's a much larger group of people. Then the other part of this is that it makes Ethereum a bit more predictable when it comes to block times. With proof of work, the Ethereum has like a 13 second block time. And this is a probabilistic average. It's not guaranteed that a block is going to come every 13 seconds. Well, with proof of stay, we have more of a time-based issuance of blocks. Every 12 seconds, a block is due to be issued or produced by a validator. So not only is that a slightly shorter time, where you,

you get approximately 10% more block space per day, but it's also consistent, right? It's almost a guarantee. As long as a participation is high near 100%, then you're always going to get a block every 12 seconds, which nearly helps with estimations. Like if you are making a deposit and they say, oh, you need, you need 30 block confirmations. Well, you know exactly how much time it's going to take. And so earlier when you said that the environmental benefit isn't exactly why you're shifting to proof of stake.

Is it for these other technical reasons that you outlined or what is the main driver? Yeah, I think that when these cryptocurrencies were first developed and using proof of work, I don't think that we had or those, you know, that it was quite a picture the future, how big it would get and in terms of how much energy would be put in there. So when, you know, Ethereum was launched, it always kind of had this call to switch to proof of stake. And I think that at the time they weren't thinking about carbon emissions, just that this makes a bit more. sense in terms of energy efficiency. And even with like renewable energies, you know, you could argue those are, that energy is

better spent somewhere else. But really, like, we're talking about, like, what does Ethereum care about as a platform when it aims to be scalable and decentralized? And I think those aspects of switching to proof of stake are really the main motivators here besides energy efficiency is great. And that makes a lot of sense. But to lower the barrier to entry, increasing decentralization and increasing the economic security of the chain makes it more secure in that way. It's much harder to attack when you need

a lot more capital to do so. Obviously, there have been a number of successful test merges. So at this point, it looks highly likely that this will also be a successful merge. But just because we're not 100% sure, I did want to ask, what is the contingency plan if for whatever reason the merge does fail next week? Part of the process here is like building confidence. You know, what's taking a so long is that this this merge admittedly is very complex. It has a lot of complexity, right? And with complexity, there's more surface rate for bugs, more risk, more things that could possibly go wrong. But we have also kind of added in some insurance there. So things that could possibly go wrong or most likely would go wrong is that there's some kind of issue with the implementation

of the software of the merge. What Ethereum has done and the Ethereum community has done is that we've come out with five different implementations of the proof of stake side of things. So that being an insurance policy is that, okay, well, if one of those clients, let's say Prism doesn't work, that's the one that I work on. If it's just doesn't work for some reason that we'll switch, you know, you have an option, you can switch to another one. And the great part about this is that we can push an idea called client diversity, which means, okay, we have five clients and we're going to encourage people to use them

such that the distribution is not very high. So you have a larger diversity. You know, prison being the most popular client is just over a third of the networks. So I think like 35% something like that. So if it did completely halt, well, the chain could continue and people could, you know, quickly scramble to get to a new software, carefully of course, but you have that insurance policy there. Now, I think that, you know, this is pretty risky, right? And we have tested a lot.

And I really think it's going to go well. However, in the unlikely case of like, it just doesn't work at all. None of the clients work, like the stars align and the Swiss cheese aligns. And it just doesn't work. Well, you know, it's kind of hard to plan for that. But, I mean, you could, the proof of work side is still there. Like, it's just a hard fork, right? So it's not like we can stop anybody who continues to not to mine that and not upgrade.

So I guess, like in the absolute worst case, we just say, okay, well, it didn't work. Let's keep going on the prefore chain and sort of figure out what to do next. But again, it's so unlikely that all of the clients don't work in the same way, even after all this testing and even with the testing of entropy of doing like shadow forks. We have forked main net and done the merge many times, and including all of the chaos that comes with Ethereum. We've simulated that and even copied that into these tests. So confidence is extremely high.

There's not a bit in me that believes that it would get to that point, but you always say, like, okay, well, what if? If you don't ask the question, then you're not going to be prepared. You have to have a plan to get out of your house if it's on fire, even though you know it's never going to burn down. You just got to know how to do it. So we do think about that. And we've kind of thought about all these different avenues.

But, you know, since it is, like such a dynamic problem that you can't really formulate a concrete plan and you kind of just sort of say, okay, here's where we're at and we'll figure it out. And that's what Ethereum community is pretty good at. They've had plenty of times where things are not going well and they figured it out. Yeah. Just what you were describing reminded me of the DOS attacks from the fall of 2016, which I wrote about my book.

there were different attacks and sometimes one of the attacks would target like the guest client and then other times it would be the parody client or whatever. And so, yeah, they kept having to tell people, you know, switch to this other client. Very effective. It worked to, you know, help Ethereum survive that period. Okay, so in a moment we're going to talk more about Prism and Prismatic Labs. But first, a quick word from the sponsors who make this show possible. The most anticipated crypto event of the year is back. Join us at Mainnet. 2022, happening this September 21st to 23rd in New York City. Connect with 4,000-plus crypto builders and thought leaders for three days of can't-be-missed keynotes, fireside chats, demos, networking, and more.

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Spend your crypto anywhere using the crypto.com visa comm. Get up to 8% cash back instantly, plus 100% rebates for your Netflix, Spotify, and Amazon Prime subscriptions. Download the crypto.com app now and get $25 with the code Laura. Link in the description. Back to my conversation with Preston. So as we discussed, you founded Prismatic Labs and obviously you've been making Prism. Just talk a little bit more about what these clients do and what you've been working on and also what the future of Prismatic Labs will be. Yeah, you know, we've been working on this since the beginning of 2018. I first discovered Ethereum in 2017 and said, oh, this is a pretty cool idea, but does the scale very well, like token listings or people, everyone was creating a token

back then with their ICOs. And I was like maxing out the chain, gas prices were getting out of control. The crypto kitties is crazy. So we, I started asking questions, you know, and kind of saying, how can I help make this technology that I believe is really cool and impactful? How can I make it faster? So we formed, Raoul Jordan and I formed it in 2018. We kind of started working on just like a moonlighting project is saying, like I want to add sharding, sharding being the big scaling effort to increase throughput. I want to add that to the Go Ethereum client, which is something we were familiar with and

interested in. And that evolved into, okay, well, let's put a team together. that we met up in real life. So, okay, let's put a team together. We had got, I think there were four of us or maybe five of us. There were six of us originally. We never met before and never contributed to Ethereum in any way. We all just were interested when making impacts.

So we make prismatic labs, start working on a go Ethereum sharding, working closely to researchers. So like Battalic and Justin Drake and those guys at the EF that were really responsible for, formulating these ideas and we would help flesh them out and discuss it if they're practically implemented and then try to do that. So we started building, you know, Prism and it's written in Go. So it's very similar to Go Theory and was kind of made sense when we wanted to merge it with that.

But as the ideas evolved to say, okay, we're going to have to have two blockchains here, the Beacon Chain and Theory Mainnet. it became like a standalone client. And the ideas were, you know, we'll do proof of stake in its own, like, world and then have that like reach consensus and then also validate and secure the proof work side. The big problem we were having was that we couldn't figure out how to do proof of stake without paying gas within a theory main net.

And we were worried that, you know, if gas prices were going high, which they were doing all over the place, that that could mean a liveliness failure and that validators were not able to pay for the gas to validate transactions, to validate the blockchain. So I had to think of another model, and that's where it came up with this beacon chain idea. And so far, the beacon chain has been doing extremely well. It's not had any major issues, it's been live, perfect liveliness the entire time with this concept of finality, which is really, really nice. So I guess, like, what's the future, right?

Prism, Prismatic Labs, we still have a lot of work to do, we think, with the Ethereum Core Protocol. Theorem has this great vision to be, or possibility to be a global settlement layer to really be something we can all use. But I think to reach this scale, there's a lot of work to do. Primarily being, we still haven't done the sharding part that we've kind of set out to do four years ago. It's mostly been on proof of stake in getting things ready for that. Well, in the next, I'd say, like two to three years. So it's really what we're working on. There's ideas like dink charting, proto-danex charting,

EIP 4844, which is to do data availability sharding for roll-ups, and roll-ups being like layer two that can really bring this, you know, like scaling transaction throughput to Ethereum, where Ethereum's doing 10 transactions per second, well, roll-ups can basically 100x that, you know, guarantees that Ethereum gives you some data availability. So we give more data space. There could be more space for roll-ups and stuff like that.

That's kind of our immediate future the next couple of years. For Prismatic Labs to focus more on scaling and sharding? Yeah, and that's really like Prismatic Labs. And of course, there are a lot of other teams in the community, like a one or five that is the proof of stake site. But I think that's like the roadmap is coming up, at least for us, the Prismatic Labs is working on the scaling part again and sharding in particular. And how big is your team now?

because I know, for instance, after the initial Ethereum launch, then the teams working on the clients like, you know, Geth and Parity, they, you know, had to keep making upgrades and all that. So are you expanding in order to kind of take on this new task? Yeah, we have thankfully been funded from, you know, the Ethereum Foundation, others in the community, Gitcoin grants, right? People are, we're open source public goods project, and we've been thankful to receive enough funding that we're now 11 people. And being 11 people, it's enough that we can maintain the client in its state and also be working on the new features.

I think that we could always use more people, right? And we encourage open source contributors to come take a look, to break things, ask questions, to even just read the code. And if it's not making sense, there's probably opportunity to clean that up. But with that said, we're a pretty good team size and we've been working well at this size. I feel like once you get over 10 people, you start to have some scaling problems internally as hierarchy. And you need managers and on this kind of stuff. So we're at the sweet spot of the size. And we're feeling like, okay, we're not totally drowning in work.

We're still getting things done, shipping things on time. and yeah. Yeah, and one thing I wanted to say earlier, too, was I just love how, you know, with you and your co-founders, you guys had not really contributed to Ethereum before. And now obviously hugely important to this momentous shift happening in Ethereum, which is just something in general that I loved about, I love about the crypto space because, you know,

I think a lot of people get into crypto and, yeah, they have nothing in, it's very open space. And so people can really make something of themselves. One thing I wanted to ask you about was, I'm sure you're aware that there are these miners that are threatening to fork the proof of work chain. You mentioned that, you know, obviously it's still not clear whether this is definitely going to happen. But I just, you know, was curious for your take on that movement. I have been seeing that as well, ideas about like continuing the proof for chain, like purposely removing difficulty bomb, changing the way gas fees are burned or gas is burned, like EAP 1559.

I don't really understand. I guess they do understand some of the motives. But in general, like I just don't really see a future for it. Again, you know, I'm a core developer where I really understand like the code, the logic and the things that go with it. I'm not a trader investor or anything of that sort. So I can appreciate this. Some people might find some value in a chain like that. But I really don't, you know, see a long term, long term being a thing. But, you know, people said that about East Classic.

So I don't know, you know, what's what's going to happen. But, you know, I was looking at the code. they have like a fork of Go-Etherium. It doesn't look ready. I mean, there's still a week to go. And they're kind of, it seems like they're kind of planning to do their fork after the merge, like maybe a week after the merge. It also seems kind of strange.

You'd think that like it'd be an instantaneous, like when the merch happens, there's one chain and the other one's the other one. But they're almost like branching off of the, what the merge is branching off of and making a sort of like a third fork and calling it something else. So I would just say like, okay, well, if you, if the merch wasn't happening, if somebody did that, would you want to be a part of it? And what's happening to defy on there?

It's just going to be chaos. So personally, I won't use it or endorse it. But I can appreciate that this is a diverse space and people can do whatever they want. And that's really like blockchain and this kind of check is great because, you know, who can stop you? No one can stop you. So that's great. All right, last question.

For the users out there who are waiting for lower gas fees and more block space, what would you say to them? I would say that it's coming soon. Yeah, we would say coming soon for a long. But at the merge, you get like a very small improvement, 10% more block space. It's not really, you're not really going to feel it a whole lot. You're not going to feel much with the merge. It is top of mind. After the merge, we're thinking about withdraws, you know, validators have been.

at stake indefinitely since the beginning. So maybe it's time for withdrawals to be enabled, transfers. And then it's in around the same time, it's also like getting back to the scaling part. So making throughput faster and all these kind of things. But if you're looking for, I don't know, if you're looking for some relief right now, well, there are solutions through layer two. So there's a lot of great layer two options out there. there's a lot of great defy activity or an FT activity or really what you want to do on the main chain.

You probably can find the same projects have deployed to multiple of the layer two roll-up chains. And some of them have extremely low fees with the same security that Ethereum has. So definitely check that out. Yesterday news broke that Coinbase was funding a lawsuit against the Treasury Department over the Tornado cash sanctions, and it turns out that you are one of the plaintiffs. Can you explain what motivated you to do that and what you think that significance will be? You know, I can only talk a little bit about a Cicidissa active case, but the basis of it is that the code that powers tornado cash is speech. It's been established, the code of speech, and we think that the sanctions that

OFAC has put on here is effectively putting a sensor on free speech. I think that's wrong. So I've, you know, joined in this lawsuit with a few others and with the help of Coinbase. And our goal is here is to try to get that overturned. We're not really seeking any like bunny or anything. I do have some ether that's trapped in there. You know, I can't take it out or be faced for sanctions violations. But really the goal is to get that reversed and say, you know, COTUS speech and free speech is a constitutional right.

And so ideally then it would only be addresses that would be sanctioned rather than the contracts themselves, is that sort of the outcome that you're hoping for? Yeah, I don't know about that. I can't really comment on too many details. I've been told I can't say too much. But, you know, that's, we do think that the free speech part of it is important and really want to get that part of it overturned. All right. So before we go, assuming that the merge is successful, how will you celebrate? I think, yeah, if it goes really well, I'm going to have a really great nice sleep. I think that's going to be one of the first things. It's been a long journey to get here and I really wanted to go well. And yeah, we'll definitely have a drink or two and celebrate

and maybe party. But it, not right away, right? My vision is going to go well. And then like maybe after a couple days, I could really say, okay, it went well and it's still going well and things are good. So definitely looking forward to it. Okay. Yeah. I guess there's no fast finality for the merge. Yeah, yeah. And then it's like, it's kind of a long game too. It's like it has a lot of things that wants to solve that you can't even really quantify for for some time.

So yeah. All right. Well, good work so far. We look forward to seeing how it all plays out. Thanks so much for coming on Unchained. Yeah, thanks for having me. Don't forget. Next up is the weekly news recap.

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Trusted sports content, seamless sports betting. Download today. 19 plus Ontario only. If you have questions or concerns about your gambling or the gambling of someone close to you, please go to conicsonterio.ca. Thanks for tuning in to this week's news recap. Coinbase funds lawsuit against Treasury

over Tornado, As mentioned earlier in the episode, on Thursday, six tornado cash users, including Preston Van Loon, filed a lawsuit against the Treasury Department. Their legal fees will be covered by Coinbase. Coinbase's chief legal officer, Paul Gruhl, told CNBC, he is worried about the legal precedence that these sanctions are setting. He said, if this code can be designated without any limits imposed by law, any technology, any tool or system could be fair game. Ever since the sanctions, there's been uncertainty around what U.S.-based institutions will do after the merge, such as whether they would validate or attest to blocks with transactions involving sanction addresses.

However, this week, Gruel said that Coinbase believes validators are not compelled to censor transactions. The merge sparked some defy disruptions and new business opportunities. Ahead of the merge, Defi Protocol Avey, decided to temporarily halt loans of ether. The decision was made by the AVE community, which was worried that people would increasingly borrow ETH in order to receive any coins from a potential post-merge proof-of-work version of Ethereum. The excessive borrowing could cause a liquidity crisis. Decentralized applications are not the only ones moving fast before the merge. This week, Binance U.S. enabled high-yield ETH staking, offering a 6% API for U.S. users.

In addition, Swiss Cryptobank, SEPA, also announced its own Ethereum staking services on Wednesday for institutional investors. Ethereum miners are reallocating resources. With the merge, the Ethereum main net will transition from a proof of work to a proof of state consensus algorithm. But that doesn't mean that ether miners are going to have to waste all their computing power. For instance, crypto miner Hive blockchain is exploring other mining alternatives. The company which is reportedly mining $350,000 worth of Bitcoin and Ether Day is testing

other proof of work chains, but hasn't confirmed which one's specific. However, HUD-8 mining group decided to take a different path, as it will desist from mining and reallocate its resources to machine learning and artificial intelligence. This week, Ethereum Classics hash rate hit an all-time high, which indicates that miners may be shifting their computing power there. In addition, London-based firm ETC Group announced that it would support a proof-of-work version of Ethereum if one exists post-merge. Is the White House against proof-of-work?

The White House released a report called Climate and Energy Implications of Crypto Assets in the United States, in which it claims that crypto assets could hinder broader efforts to achieve net-zero carbon pollution, consistent with U.S. climate commitments and goals. The report said some crypto asset technologies currently require a considerable amount of electricity for asset generation, ownership, and exchange. Electricity usage from digital assets is contributing to greenhouse gas emissions, additional pollution, noise, and other local impacts, depending on markets, policies, and local electricity sources. It urged federal agencies such as the Environmental Protection Agency

and the Department of Energy, among others, to minimize the environmental impacts of crypto assets, ensure energy reliability, obtain data to monitor the impacts, advance energy efficiency standards, and other measures. The crypto market cap drops below $1 trillion, and Vatollick has concerns about BTC. On Wednesday, Bitcoin fell a low than $19,000 mark, dragging the crypto market cap down to less than $1 trillion once again. BTC and ETH hit a weekly low of $18,644 and $1,500, respectively, according to coin market cap. The ETH-BTC ratio, which tracks the performance of Ether against Bitcoin, reached a yearly high this week, showing that investors are more confident in Ethereum.

In an interview with economics writer Noah Smith, Ethereum's founder, Vatelik Boudarin, said he has two concerns for BTC. First, he claimed that Bitcoin can't rely solely on transaction fees to secure the network. This will happen when the block rewards are phased out sometime around the year 2140. He said Bitcoin is just not succeeding at getting the level of fee revenue required to secure what could be a multi-trillion dollar system. Bitcoin fees are about $300,000 per day and haven't really grown that much over the last five years. Second, he said that proof of stake is more efficient than proof of work, and he is worried that

the Bitcoin community doesn't want to make that transition. Was Celsius a Ponzi scheme? According to a filing from the Vermont Department of Financial Regulation, Cryptolender Celsius used new investor funds to repay old investors, a technique most commonly known as a Ponzi scheme. Celsius is currently going through bankruptcy proceedings, and the report from the Vermont Department analyzed how the company was managed. The filing said, during the course of the multi-state investigation, it has become clear that Celsius, through its CEO, Alex Mishinsky, and otherwise, made false and misleading claims to investors about inter alia, the company's financial health and its compliance with securities laws, both of which likely induced retail investors to invest

in Celsius or to leave their investments in Celsius despite concerns about the volatility of the cryptocurrency market. Furthermore, Celsius is being accused of manipulating the price of its token, CEL, to boost its balance sheet. Some Celsius borrowers are asking the bankruptcy court to appoint an independent examiner to look into Celsius's financials. However, they don't want one employed by the U.S. trustee office, as they are concerned about the delay it would cause in the resolution of the case. Celsius is expecting a cash injection of $70 million from loan repayments, according to Kirkland and Ellis, the law firm in charge of the company.

companies restructuring. These funds will help Celsius meet its operational expenses for 2022. Speaking of troubled crypto companies, Poland Wallet, the wallet service of one of the world's biggest Bitcoin mining pools, suspended withdrawals amidst a liquidity crisis. Kevin Pan, the firm's CEO and founder, assured users that the assets were safe. Crypto broker Voyager Digital will hold an asset auction on September 13th as part of its bankruptcy proceedings. The results of the auction will be approved. a hearing to be held on September 29th. Coinbase makes a controversial proposal on MakerDAO.

Coinbase, the largest cryptocurrency exchange in the U.S., offered MakerDAO a business proposal to access $24 million in yearly revenue. The company posted a governance proposal on the MakerDAO forum to have the protocol deposit $1.6 billion worth of USDC and Coinbase Prime, the exchange's institutional platform, in return for a 1.5% annual yield, which, should be about $24 million. The drama around this proposal is that it would push Maker further towards the centralization side of the spectrum, something that its own founder has been trying to fight. The community is divided on Coinbase's proposal, with some arguing that it would boost

Maker's revenue, while others saying that Die and Maker will end up in the hands of Coinbase. Finance removes USDC, but Circle is not worried. Binance, the world's largest cryptocurrency exchange, announced it will remove USDC, and some other stablecoins as tradable assets from its platform. On September 29th, the platform will automatically convert any USDC, USBP, and TUSD tokens into its own stablecoin, BUSD, at a one-to-one ratio to enhance liquidity and capital efficiency for users. Evgeny Gayvoy, founder and CEO of Wintermute, tweeted,

removing most stablecoin pairs is a good thing. It's not USDC delisting. it's another big step towards tether losing ground to U.S. native stable coins. Jeremy Allaire, the CEO of Circle, the issue of U.S.TC, doesn't seem worried. He said, given how limited BUSD usages outside of finance, this will likely benefit USTC as the preferred cross-CEX and D-EX stablecoin rail, unless finance can convince all their competitors to get behind BUSD. Unlikely.

The Fed wants stablecoin regulation, but it may have to wait. Speaking of Stablecoins, three different Federal Reserve officials, Federal Reserve Board Chair Jerome Powell, Fed Vice Chair for supervision, Michael Barr, and Fed Vice Chair, Lael Braynard, pushed for Stablecoin regulation at three separate conferences this week. As Powell said at Akito Institute conference, I think you need regulation.

If people are going to think something is money, it needs to have the qualities of money. I don't think you want to take money and make it into just another consumer product. However, a CoinDesk Regulation and Policy Reporter, Nicholas Day, wrote in a column that, although it had been expected that Stable Coin Regulation might be adopted this year, that's currently looking unlikely. A number of issues such as the role of state regulators and the possibility of a digital dollar,

among other items, remain to be ironed out. Time for Fun Bits A Violin Soundtrack for the Rainbow Model Over the past few years, there's been plenty of analysts trying to come up with models to predict the price of BTC. But there's one that's become a meme on Twitter. Eric Wall's rainbow chart, a mock model for the Bitcoin price. It is basically a rainbow, indicating when BTC is cheap to buy or, in the model's words,

basically a fire sale. Even though it is a made-up model, the price of Bitcoin has never fallen below the lowest band on the rainbow. While a crypto analyst and writer posted a hilarious video on Twitter, showing how closely the rainbow model was to failing against a clip from the movie Titanic. In this scene, the boat is sinking and the violinists play their last song. Because it looked like the model was just about to fail while superimposed the rainbow chart on top, a sort of anticipatory elegy.

Hours before the daily BTC candle closed, he tweeted, summoning a BTC USDA daily clothes that will save the rainbow. Moments later, BTC rebounded. And the model didn't break. Despite that, Wall's Twitter bio reads, You can't predict the price of Bitcoin with a rainbow, you idiot. Thanks so much for joining us today. To learn more about Preston and the merge,

check out the show notes for this episode. Did the Unchained Daily newsletter in your email and inbox every morning. Go to Unchainedpodcast.com to sign up. Unchained is produced by me, Laura Shin, with up from Anthony Youne, Matt Pilcher, Wandermanovich, Pamma Jimdar, Shashonk, CLK transcription. Thanks for listening.