ROLLUP: Google’s Quantum Warning | Trump’s Iran Speech | Ethereum Economic Zones | Drift Hack

TRANSCRIPT

Ryan Sean Adams:
[0:03] Bankless nation welcome to the first week of april it's time for the bankless weekly roll-up google released a major quantum warning directed squarely at us david not you and me but at crypto let's say they have an algorithmic breakthrough that just 20x progress towards cracking ecdsa and some of the crypto signatures that underlie Bitcoin,

Ryan Sean Adams:
[0:28] Ethereum, and basically everything we do here. How bad is it for crypto? I think it's pretty concerning. Some might call me a panicking though. We'll get into the paper and see what Bankless listeners decide.

David Hoffman:
[0:39] It's certainly worse for crypto when we can't seemingly come to consensus about how big of a deal it is, which makes it an even bigger deal. It's like a little bit of a coordination problem, if you will. Meanwhile, back into the Trump side of things He addressed the nation last night About the state of the Iran war The state of Operation Epic Fury My take was that it was a 19-minute speech basically to deliver the bad news to the markets that we are in this for three more weeks. He said, we're going to talk about that, all that and more. He said the straight and more moves will just open up naturally. Gas prices will come down and stock prices will go back up, but not before three weeks from now, at the very least.

Ryan Sean Adams:
[1:20] We'll see if the market is reassured by that when we get into it. Also, did Ethereum just come up with a plan to finally unite all of the Layer 2s? They're called Ethereum Economic Zones. We'll spell out what that means. Aave V4 just released. What's new in that? Also, the biggest hack, I think, in Solana history, a $300 million hack, the Drift Exchange.

Ryan Sean Adams:
[1:40] This is a purpose exchange was hacked. What happened and what can we learn? It's all about the lessons we learn along the way, isn't it?

David Hoffman:
[1:47] Before we get started, Ryan, can I tell you a fun fact?

Ryan Sean Adams:
[1:50] Yeah, it genuinely needs to be fun, though. I don't want any of your not fun facts, okay? This needs to be a fun one.

David Hoffman:
[1:56] It's fun because it implies good buying prices.

Ryan Sean Adams:
[2:00] Okay. Yeah. Okay. It's a bearish fun fact.

David Hoffman:
[2:04] Yeah.

Ryan Sean Adams:
[2:04] Tell me.

David Hoffman:
[2:05] We just survived the worst Q1 in Bitcoin since 2018.

Ryan Sean Adams:
[2:10] Oh my God. This was it?

David Hoffman:
[2:11] Can I give you another fun fact?

Ryan Sean Adams:
[2:13] Wait, how, like what was the percent down?

David Hoffman:
[2:16] I mean, down 24% in Q1.

Ryan Sean Adams:
[2:20] And that was the worst Q1 we've ever had since 2018?

David Hoffman:
[2:24] 2018. Yeah.

Ryan Sean Adams:
[2:24] That wasn't that bad.

David Hoffman:
[2:25] Great. 2018, like the market topped December 2017, and then it fell like, I think, 60% in Q1 2018. I remember that Q1 very, very well because that was a foray into crypto. But my second fun fact for you, Ryan, is that Bitcoin had five red monthly candles in a row. But March, which the March candle finished two days ago, eked out a green candle.

Ryan Sean Adams:
[2:49] Is that it? Is that that tiny thing?

David Hoffman:
[2:51] So we have the monthly candle for the month of March was green after five red monthly candles. Five red monthly candles in Bitcoin is, I don't, I think that's happened a very low number of times.

Ryan Sean Adams:
[3:02] David, I got to say that is a tiny green candle right there. That is a candle for ants.

David Hoffman:
[3:06] But it is green.

Ryan Sean Adams:
[3:07] Okay, it is green.

David Hoffman:
[3:07] It's a tiny green candle, but it is green.

Ryan Sean Adams:
[3:10] The smallest green candle, I think, on this chart, maybe. But it was green in March. That's good news. You mentioned in the intro the Trump speech that happened on Wednesday night. So he said he was going to address the nation. I think he gave some 24 hour advance notice. All TV networks have to broadcast it. What was the news? What did he say? Yeah.

David Hoffman:
[3:31] So 19 minute speech about Operation Epic Fury, the war in Iran, after a week of just like posturing from Trump, two weeks even about posturing about negotiation talks, how the negotiation talks are going well, talking about how he's kind of done with Iran and de-escalation.

Ryan Sean Adams:
[3:48] Like weird stuff. Like it was hard to know what was really going on, right?

David Hoffman:
[3:52] I would say he was firmly posturing and signaling to the people in the market that like we're kind of wrapping this thing up. Yeah. Right. We're like, we're getting, we're getting off this.

Ryan Sean Adams:
[4:03] Yeah, but he was doing it Trump style. Like, I got a prize, you know, from the Iranians. Like, some strange, it was hard to know, actually, to sort the signal through the noise. So, was this the signal?

David Hoffman:
[4:13] So then, yes, this is a very formal speech. So he's like, this is this is the speech. These aren't my true social posts. This isn't Mark Rubio.

Ryan Sean Adams:
[4:23] I prepared this.

David Hoffman:
[4:24] This is the this is the speech.

Ryan Sean Adams:
[4:26] OK.

David Hoffman:
[4:27] And so the market was going into this thinking like, OK, this is Donald Trump, like tying a bow on this thing, kind of giving us the exit plan, wrapping it up, you know, concluding it. That was, I think, my interpretation of both Marcus' anticipation, Twitter's anticipation.

David Hoffman:
[4:43] Instead, I think what came out of this, my take, is that the whole purpose of this talk was to drop this one line. And I'll read that line that I think was the whole point right now. We are on track to complete all of America's objectives very shortly. We are going to hit Iran extremely hard in the next two to three weeks. We are going to bring them back to the Stone Age where they belong. I think the whole 19 minutes was basically to inform the public that we are in this for three more weeks. And the market reacted appropriately right after he said those lines. The oil markets shot up 10 percent. Brent crude went up 10 percent. WTI went up 12 percent. Futures, the Nasdaq and S&P 500 futures dropped half a percent. He said a few other things as well. He said that the stock market didn't really go down all that much. He said that the stock market was, he thought it was going to go down more than it actually did. And so we're going to be down a little bit longer. And then they're going to go back up like never before, he said, after this three-week period. That's a direct quote. That was a direct quote. That's right. That's right. That's right. Yeah. And so the market is currently digesting this as of right now. This is the morning after that speech. But this is my take. It's like he basically just gave a 19-minute speech about why we need to be in Iran for three more weeks.

Ryan Sean Adams:
[6:03] Wow. That line, we're going to bring them back to the Stone Ages where they belong. That's so Trumpium. Yeah.

David Hoffman:
[6:09] Not the first time he said that.

Ryan Sean Adams:
[6:11] Jeez. Okay. He didn't say we're going to leave in two to three weeks. He just said we're going to hit them hard in the next two to three weeks.

Ryan Sean Adams:
[6:21] And you think the market is interpreting that as we're also going to exit in two to three weeks?

David Hoffman:
[6:27] No. I think the market was interpreting that we are going to exit like this week at the end of this week. We're done with this thing. And then Trump is telling them, like, no, no, we got two to three more weeks. I think it's safe to round up to three on that scenario. But to your point, I think you're right. He did not say that we're out in three weeks either.

Ryan Sean Adams:
[6:47] This is a polymarket on U.S. forces entering Iran by a specific date. And by April 30th, polymarket is showing on 18 million in volume. There's about a 60% chance that U.S. Forces enter Iran. That means boots on the ground, does it not?

David Hoffman:
[7:04] Yes, I think boots on the ground. By the end of this month, Polymarket is giving a 60% chance.

Ryan Sean Adams:
[7:10] Probability on Polymarket for U.S. and Iran's ceasefire by a specific date, 60% by June 30th, 47% by May 31st. So end of May, almost a 50% chance into the summer. December 31st, a 73% chance. So, I mean, that's like a 27% chance that this isn't over by the end of this year.

David Hoffman:
[7:34] All year, yeah.

Ryan Sean Adams:
[7:35] Are the markets pricing that in?

David Hoffman:
[7:38] I mean, we can talk about the efficient market hypothesis.

Ryan Sean Adams:
[7:41] Markets always price everything in.

David Hoffman:
[7:42] Don't they? They're super efficient.

Ryan Sean Adams:
[7:43] They always work. All the time.

David Hoffman:
[7:44] That's right. Like, Pete, the growing conversation is around midterms, the midterm elections that are coming up later this year. So I think we have like just under six months before the midterms start to become, are here. And I mean, who knows what Trump is thinking? I certainly don't. But it's it's to be argued that there's no way that Trump wants the Iran war at all to be proximate to the midterms.

Ryan Sean Adams:
[8:10] He doesn't want that. Now, does Trump always get what he wants?

David Hoffman:
[8:14] You know, we don't we don't really know.

Ryan Sean Adams:
[8:16] Well, but there's also a question of like once you once you are in it. Right. You know, there are some forces that like he doesn't control.

David Hoffman:
[8:23] He doesn't control the universe.

Ryan Sean Adams:
[8:25] Exactly. Including the Straits of Hormuz. So looking at some charts, I mean, this is volatile. So things are changing in a hurry, but Brent crude up by 10%. So this was directly after the speech, oil shot up. Bond markets, the 10-year T-bill note back on its way to $4, or sorry, 4.4% yield, right? Remember we talked about, I think it was last week, as those yield numbers tick up on the 10-year, that's more pressure on Trump. And you kind of saw them back in the tariff scare of last year, 4.6%. That started to feel very uncomfortable. And Trump walked back his tariff language. So this is another pressure on him. Of course, crypto prices, what are we doing here, man? So Bitcoin down 4%, ETH down 6%. Hard to know if that is... Swirled up in all of this or what's going on but now the S&P is trading kind of like neutrally is that the case.

David Hoffman:
[9:28] Yeah so S&P dropped futures dropped by half a percent and now at the time of recording the S&P is actually flipped green marginally green so we are actually at the same stock market prices at least in the S&P as we were before the Trump speech I have a take on this which is that the longer that the market has to digest the news, the news being the war, the whole entire Iran war, the more it kind of comes normalized. And we saw this with the Liberation Day tariffs. Markets reacted violently at the very beginning. And every single time there was another tariff day tweet or posturing against China or announcement on further tariffs on China, The market reacted, but it reacted in a more muted fashion as time went on. And I'm seeing that with Iran here, too. Like, the market is reacting, but it's starting to shrug it off quicker and quicker and quicker. And we all kind of remember what happened with the liberation deterrence. Like, eventually, the market just stopped carrying, and then we went to new all-time highs. Every single new crisis is facts and circumstances, so we can't really say that's going to be repeated. But with the S&P being green as of this morning, after Trump told us that they're going to strike Iran hard for the next three weeks and the stock market comes out green, I'm kind of interested in that pattern.

Ryan Sean Adams:
[10:47] I mean, I guess it's hard to know what the market is thinking, but there are some forces that have to impact the market, which is like one of which is oil. And so if Strait of Hormuz is closed for longer, oil prices spike. Here's an analysis from the Kobayashi letter. As oil prices rise above 112 per barrel, our models indicate that if current levels are sustained, so if you have that oil price another two months, U.S. CPI inflation will rise to 3.6 percent. So energy costs are going to affect inflation. And of course, that's going to affect what the Fed does. Michael Nadeau makes the point that that could spiral into lower growth in the U.S. And the possibility of a recession is actually up on the air from like 20% to 36%, according to Polymarket. And you also have Lynn Alden, who is talking about this. Some people ask me when I'll be chill about energy. She said, I'm looking at my oil quant guy, and he's not chill. He has to become chill again, and he is the opposite of chill right now. She is posting a tweet from Rory Johnston, who I presume is Lynn Alden's oil quant person. And he is talking about a scenario which he calls the air pocket scenario, which as supply is restricted from the straight-up Hormuz, it's like a scarcity air pocket that affects energy. Different geographies.

David Hoffman:
[12:07] That takes time to get there.

Ryan Sean Adams:
[12:09] That takes time to propagate, right? So it might take, if that happens right now, deliveries could stop on April 15th in North America, but they stop far earlier in Africa and place it in Asia. And so this is like an air pocket that makes its way throughout the energy economy. So I don't know. It still seems to depend on the Strait of Hormuz. Some of these factors are not in Trump's control, but it seems like he's getting the narrative right, at least for the market right now. They're believing him.

David Hoffman:
[12:38] Yeah. Yeah. And this all is going to show up in inflation. Like what does oil have to do with the bonds? Well, higher oil prices makes everything cost more domestically in our neck of the woods. If things cost more domestically, that means inflation is going up. That means the Fed's going to hike interest rates. And we just had this clip, this statement out from Powell, basically saying that the United States national debt is growing substantially faster than the economy and it's not sustainable. And so that goes into, can the United States serve its own debt? And so the cost that Iran knows that is posting to America through the closing the Hormuz, Strait of Hormuz, is that we can't pay our debt. I actually thought this clip from Fed Chair Jerome Powell was actually pretty interesting. Let's go ahead and watch it.

David Hoffman:
[13:22] What's clear is that our debt is growing much faster. The federal government debt is growing substantially faster than our economy, and that ratio is going up, and in the long run, that's kind of the definition of unsustainable. The level of the debt is not unsustainable, but the path is not sustainable. And so it's really important that we get back to, we don't have to pay the debt down. We just need to have, you know, primary balance and begin to have the economy actually growing better, growing more quickly than the economy. It will not end well if we don't do something fairly soon. This is not the Fed's job, of course, and I pretty much limit myself to those high level points, which essentially everyone ignores.

Ryan Sean Adams:
[14:11] He limits himself to those points that everyone ignores. It will not end well if we don't do something fairly soon. He can't say more, but he's basically blaming deficits. He's blaming fiscal on this and general overspending coming out of the federal government.

David Hoffman:
[14:27] Yeah. So all of this is to say that there's a lot of evidence for why this war can't sustain itself over a long period of time. I think the speech that we got from Trump last night is like, I've got three more weeks. I've got three more weeks before this really hurts.

Ryan Sean Adams:
[14:43] You think that's him acknowledging, I have maybe three more weeks.

David Hoffman:
[14:47] I think he, maybe not in that speech, but I think he knows that. He knows he doesn't have forever.

Ryan Sean Adams:
[14:52] He definitely knows that. I mean, he definitely knows that. He's probably seen these sorts of stats too. This is from Nate Silver, which is Trump's approval rating. It just fell below 40% for the first time. And you could see Trump's numbers on a trend down from the liberation tariffs and some of these other milestones that government shut down, Renee Good killed, the Iran war starts, And it's been on a steady trajectory down, which is not great when you're in a midterm year. And this is showing up in probabilities for the election. So ever since, let's say, well, ever since November, but there's been a steady trickle up as Trump favorability goes down. The odds that the Democrats will win the House in 2026 are going up on poly market right now. That's 86 percent.

David Hoffman:
[15:39] On $4 million of volume, which isn't super high, but definitely not low either.

Ryan Sean Adams:
[15:44] Yeah. And the Senate is more up for grabs. It's about 50-50 right now. So there's some political constraints, there's some economic constraints, and all of this is getting factored in.

Ryan Sean Adams:
[15:54] But so far, I don't think we've really felt the shock in the markets. I mean, crypto prices is down and that aside, but I don't think the NASDAQ has gotten hit to the degree that some have thought it might, and it may still soon.

David Hoffman:
[16:08] Yeah, that was actually an explicit point that Trump was making. It was like, he explicitly said a number of times in his speech last night, it's like, we don't need the Strait of Hormuz. We've got our own oil. We've got WTI. We've got West Texas International. And then he also did the whole thing. It was like, Europe, this is your guys' problem. You guys need to step in here. But he explicitly says like, we've got our supply of oil, like our economy is going to be fine. And we also do see that in the global stock market indices. It's like the domestic United States markets are doing much better than the international markets.

Ryan Sean Adams:
[16:40] So let's leave it there for the week. Coming up next, we've got to talk about quantum. Is quantum getting ready to come in and just wreck Bitcoin, Ethereum, all our cryptocurrencies? Or is this just FUD, David? Are we being alarmist here? We've got to get into the quantum papers, the research released this week by Google and one other. There's so many details to cover. We'll talk about that when we come back.

David Hoffman:
[17:00] So on Monday, a quantum bomb was dropped by two different papers, one out of Google and another out of a bunch of academics. We'll call it the second one, the Oratomic paper. Ryan, I know you were paying attention to this. How would you summarize the significance of these papers?

Ryan Sean Adams:
[17:16] Oh, my God. Incredibly significant. I think calling it a Q-bomb, a quantum bomb is probably right. It's the biggest.

David Hoffman:
[17:23] Nice, I just made that up on the fly.

Ryan Sean Adams:
[17:24] Well, everyone in crypto was talking about it. Mainstream news was talking about it. We have a lot of commentators outside who have weighed in. It was basically the news of the week and deservedly so. I think we should start here with Justin Drake, some of his comments. He said, today, he's talking about when these papers dropped, today is a momentous day for quantum computing and cryptography. Two breakthrough papers just landed. Both papers improve Shor's algorithm, infamous for cracking RSA, not Ryan Sean Adams, the other RSA, and elliptic curve cryptography. The two results compound, optimizing separate layers of the quantum stack. The results are shocking, he said. I expect a narrative shift and further R&D boost towards post-quantum cryptography. He goes on to say his confidence in Q-Day, which is the day at which some quantum computer can crack Bitcoin or Ethereum cryptography, 10% chance by 2032 and dropping for Justin Drake. So Google in this paper is strongly recommending that all of crypto take notice and be on notice and to upgrade to post-quantum by the year 2029. In fact, that's what Google is doing internally.

David Hoffman:
[18:39] Wait, so Google made an explicit statement towards the crypto industry.

Ryan Sean Adams:
[18:44] This whole paper, David, was specifically written for the crypto industry.

David Hoffman:
[18:50] They're like, hey, crypto bros, this one's for you guys?

Ryan Sean Adams:
[18:54] Completely. Wow. And the knowledge- Nice to be heard. Yeah, it is nice to be heard. It was nice. Like, this is coming from Google, right? Yeah, yeah, yeah. And you don't expect them to be as cryptocurrency literate as they were indeed. But this paper, I mean, it's 30 to 40 pages. You guys can go through it, run it through your AI bots if you'd like, but- It is directed towards cryptocurrency. They go through specific solutions and problems for Bitcoin, Ethereum, and a list of other chains as well.

David Hoffman:
[19:21] So what was the actual innovation?

Ryan Sean Adams:
[19:23] Yeah, I think that's important. And the way Nick Carter frames this is, you know, Google, I think we reported a couple of weeks ago, did drop their internal quantum deadlines. They want to be fully quantum resistance by 2029. And that seemed to come out of nowhere. And the question is like, what did Google see? Why did they drop these dates? Because NIST and other government agencies were talking 2032. By 2035, it seemed like we had more time. And then Google's like, hey, guys, we're doing it by 2029. So what did they see? This is what they saw. The Google paper is talking about a reduction of 20x and an improvement in Shor's algorithm that could break Bitcoin and Ethereum's cryptography. When I say a 20x improvement, I'm talking about the number of physical qubits required to actually break ECDSA, which is the signature scheme for Bitcoin and Ethereum.

David Hoffman:
[20:15] And physical qubits is like, this is the hardware requirement. Exactly. So when we're building a quantum computer, I kind of think of qubits as like... Just like the flop capacity of a CPU. Like how powerful is this computer? And so if we have a reduction in qubits, it means the computer is simply not as powerful, but can do more powerful things.

Ryan Sean Adams:
[20:36] That's right. And previous estimates were it would take, you know, tens of millions of qubits to do this. Well, they just released an improvement to the algorithm, to Shor's algorithm, that now make it take only 500,000 physical qubits. And so in a runtime of about nine minutes, if they had the appropriate hardware, again, those 500,000 physical qubits, it would only take nine minutes for them to go attack Bitcoin or Ethereum and yoink the keys. And also, this is not just limited to grabbing quantum vulnerable assets from Bitcoin or Ethereum or other chains. It also enables on-spend attacks. So they can intercept transactions before they confirm. Within the block time of something like Bitcoin, within nine minutes, they could intercept a transaction. Say I send Bitcoin for myself to you, a quantum computer with this amount of hardware could go and yoink and intercept that transaction. So this breaks Bitcoin, basically, and also breaks everything else. It breaks Ethereum. It breaks everything in crypto if we had that level of hardware.

David Hoffman:
[21:46] Right. If we had the level of hardware. Now, to my understanding, that is still the unknown thing is whether we can actually get to that level of hardware. Right now, we have the The best machines that we have today are like 1,000 to 1,500 physical qubits, and that creates 50 logical qubits. These are all... These are all deep quantum scientific stuff.

Ryan Sean Adams:
[22:08] That's right.

David Hoffman:
[22:09] But it's still an unknown if we can get to a meaningful level of logical qubits. That's right. We're at 50. We need a lot more. But what this innovation does from this paper is just simply an improvement in the software, an improvement in the algorithm. That means we don't actually need a whole lot more qubits. We definitely need way more qubits. But the amount of qubits that we need is now down because we have a more efficient piece of software.

Ryan Sean Adams:
[22:34] That's exactly right. Right. That's the thing to underline is this is an algorithm improvement that reduces the amount of hardware required to go attack these systems. And so it is still an engineering problem. Actually, the, you know, like I was wanting to ask this question of like how big of an engineering problem is it? Is this like is this something like fusion, which like that's an engineering problem, but we have no idea how to solve fusion. It's always like 15 years away.

David Hoffman:
[23:01] It's always theory, never practice. Yeah. And as I understand it, quantum is still theory, not practice when it comes to qubits. We do have some qubits.

Ryan Sean Adams:
[23:11] We do. We have 50 logical qubits right now. And the question is, can we scale that up? And I don't think it's not like it's not like fusion, like which is just like, oh, there's a lot more research to do. This is purely an engineering problem. Now, can we resolve the engineering problem? I don't know. But it seems more like AI scaling, which is you just throw more hardware at it. You just scale it up, then it does fusion. It's almost like an analog is in the 1960s, transistors worked, they were discovered. The question at that time was, could we pack millions on one chip? And that was the engineering problem. That's similar to what the engineering problem is now. So their conclusion, Google's conclusion, we urge all vulnerable cryptocurrency

Ryan Sean Adams:
[23:52] communities, which is all of us, to join the migration to post-quantum cryptography without delay. Didn't mention, but the other paper, the Oratomic paper, it's actually... They have a different architecture and a different style attack. There's a fast attack, which Google was talking about in a slower attack that would take days to go attack a key. But with the slower attack in their message, in their method, they improved Shor's algorithm by 50x. So in this configuration, it would only take 10,000 reconfigurable atomic qubits to attack. So there's multiple attack vectors. And at some level, the oratomic paper.

Ryan Sean Adams:
[24:35] Yeah. And the oratomic paper was even more concerning. So flashing red lights, you'd think.

David Hoffman:
[24:43] Yeah, I think it's definitely a flashing red light for ecosystems that aren't addressing the problem. But Ryan, we're smart, logical people in crypto, right? We're addressing the problem, are we not?

Ryan Sean Adams:
[24:56] I'm not so sure. I mean, so let's talk about Bitcoin, right? Right. So one of the big problems we talked about in the Justin Drake episode, we've mentioned a lot, is even if Bitcoin is able to adopt post-quantum signatures, which would significantly slow things down from a performance perspective, and that's a problem in and of itself. In fact, the paper talks about this could be at the level of change that led to the hard fork that created Bitcoin Cash. Because if you drop performance with new algorithms, then what are you? Are you a big blocker or a small blocker? There could be two sides to that debate.

David Hoffman:
[25:31] Yeah. So just to trace over that again, quantum signatures, post-quantum cryptographic signatures, the ones that we need to upgrade to, are beefier. They're heavier. They take more space, require more compute. They're slower. And Bitcoin has already gone through its block size wars and these small blockers won, which is fine. Maybe that was the right choice for then. What potentially happens now is that with even bigger transactions, Bitcoin TPS is going to go from three transactions per second to, if it makes the transition to post-quantum, 0.3 transactions per second. And do we need to even hash out the big block, small block war again? Right. Maybe not because, yeah, I could say it just like you just actually just don't need to transact on Bitcoin. You just need to hold the Bitcoins. And maybe this also solves the Bitcoin fee budget with 0.3 transactions. Oh, yes. Great for fees. I think there's an argument for the small block side of things.

Ryan Sean Adams:
[26:32] If only that was the only problem. The other, I think the main problem as well. I don't know. all main problems is you've got 6.9 million Bitcoin, a third of all supply that is vulnerable to quantum attack. Now, some of that can be migrated except for the 2.3 million or so, which is 10 to 15% of all Bitcoin supply. That is Satoshi's keys and lost keys and keys that haven't been touched.

David Hoffman:
[26:54] These are assumed tokens that will never move because the owner is gone or dead or the private keys are lost. And so the only way that they will move is that these wallets are going to get exploited eventually by the incoming quantum computer. And then whoever has that quantum computer gains access to 2.3 million out of the 21 million Satoshi coins. And that is the guaranteed number that is available to the quantum computer. And then there's the 6.9 million, again, of the 21 million total Bitcoins that is Bitcoin that is vulnerable that needs to be migrated. And we do not know to what degree that those coins are also lost at least some.

Ryan Sean Adams:
[27:39] And so what do you do with the dormant coins? Actually, Google delved into this as well in their paper. And they're like, there's four options you guys have that we see. We are Google and we see four options. I should say there were other co-authors on this paper, one of which was Justin Drake, interestingly enough. So the Ethereum Foundation, Justin Drake named. But anyway, they said the four options are, you could do nothing, just let the quantum attackers take them. you could burn, you could take this whole dormant supply, figure out what, you know, get consensus on what coins are dormant and burn them all.

David Hoffman:
[28:07] That would require a hard fork.

Ryan Sean Adams:
[28:09] Yes. You could do an hourglass approach, which is a scheme that they developed to limit the rate that dormant coins could be spent. So you slow the drain. Or this was also a Justin Drake idea. They called it bad side chain, where you'd have this pegged side chain. You'd put all the dormant coins on that. And then owners would have to submit some ownership proofs. And if they submitted the right proof, they could get their coins restored to them.

David Hoffman:
[28:33] I see. So that is kind of, that is the burn, but with a escape hatch for people who actually do have the private key.

Ryan Sean Adams:
[28:42] That's right. Yeah. See, I like that one. I would do that one.

David Hoffman:
[28:45] I do kind of like that one. But I do kind of like that one. I don't get to decide. That requires the most coordination, which is the biggest challenge for Bitcoiners. Yes.

Ryan Sean Adams:
[28:53] Now, CZ has weighed in, at least at this early phase. And he said this about, you know, number one, don't panic. Some people are panicking about quantum. Don't panic about that and its impact to crypto. Number two, what do we do with the Satoshi coins? Well, if they don't move in a certain period of time, it might be better to lock or effectively burn those addresses so they don't go to the hacker who cracks it. That's it. Just lock them or burn them. And I was like shocked at how nonchalant this answer was from CZ.

David Hoffman:
[29:24] Burn three million Bitcoins.

Ryan Sean Adams:
[29:26] That's a big deal, right? That's property rights. That is the reason that Bitcoin exists, I thought. Yeah. They also talk about Ethereum, of course. So the TLDR for Ethereum is the attack surface is much larger than Bitcoin, right? And so it's like a harder problem to solve because not only- It's a harder.

David Hoffman:
[29:48] Engineering problem to solve.

Ryan Sean Adams:
[29:50] Yes. You're not just dealing with execution, ECDSA, signatures. You've got data availability vulnerability so the KZG you know ceremony that they did that's all toxic waste that's all a backdoor you've got, Admin accounts, so stable coins, some of the smart contract keys for stable coins have quantum exposed admin keys. So there's all sorts of things that you have to upgrade on Ethereum that you don't have to upgrade to Bitcoin. So I don't know if it's an order of magnitude of a larger task. I don't think it's quite that much, but it's probably like a 2 or 3x effort.

David Hoffman:
[30:26] Engineering effort, you mean?

Ryan Sean Adams:
[30:27] Engineering effort and just like the work required.

David Hoffman:
[30:30] The work required, yes. Yes. Qualitatively, Bitcoin has a coordination and a consensus problem. Yes. And Ethereum, like some of these things, like admin vulnerability for something, for example, 200 billion in stable coins and real world assets controlled by quantum exposed admin keys. Well, the admins just need to do the thing. That's right. And there's a lot of those examples. It's a matter of just like, hey, you guys are the admin over this smart contract. You guys need to upgrade. And I mean, they will because they have $200 billion at stake. And so while that's an engineering challenge, it's not really a coordination challenge in the same way that Bitcoin is. And so, yes, broadly, there is more to do on Ethereum. Like you said, maybe two to three X more to do. Maybe even I could go up to five X. Could you? But it's qualitatively a different kind of problem because there's less of a coordination and an agreement problem.

Ryan Sean Adams:
[31:26] And you don't have to deal with a big thing, which is property rights. What do you do with 10 to 15 percent of the supply? Like there's no good answer for Bitcoin there. And actually, Google makes the same assessment. They said Ethereum has a broader overall quantum attack surface than Bitcoin. However, this is compensated by stronger community leadership in the Ethereum Foundation. Ethereum already has a roadmap for this. Bitcoin is kind of like, eh, are quantum computers real?

David Hoffman:
[31:50] Are they real? Bitcoin is still in the don't look up phase.

Ryan Sean Adams:
[31:53] Yes.

David Hoffman:
[31:55] They're like the Bitcoin zealots, the laser-eyed maxis are like, shut up. This is not a problem.

Ryan Sean Adams:
[32:04] Yeah, I can't hear you.

David Hoffman:
[32:05] Blah, blah, blah. Blah, blah, blah, blah, blah. Yeah.

Ryan Sean Adams:
[32:08] We'll give you some takes on the takes later. But they also mentioned some other chains. So Zcash, they said it was likely like a first target. They mentioned stealth inflation attacks that are available. Also, Monero. If you're on Monero, all of the private transactions could be yielded public like this with a quantum computer. Are you serious? Yes, David. So all of your nefarious transactions on Monero.

David Hoffman:
[32:34] Every illegal action on Monero is going to be revealed.

Ryan Sean Adams:
[32:40] Yes, yes. Yes. Now, some chains are ready for this. Algorand is ready. They're already ready. So there you go. Maybe that's a boon for Algorand. Solana, they said it's similar to Ethereum, but they have less institutional inertia. They'll be able to implement it. They released proof that the 20x algorithm, Shor's algorithm improvement was a real thing, not by publishing the algorithm itself and how they did it. because they said that would be too dangerous.

David Hoffman:
[33:13] Yeah, because they're just giving the secrets. They proved that they could do it, but they're not releasing those secrets to anyone else.

Ryan Sean Adams:
[33:19] So they use a succinct ZK proof in order to prove that. So they didn't tell you how they did it, but they did prove that they do have a 20x improved algorithm for Shores for cracking this type of thing. Crazy.

David Hoffman:
[33:33] You got to know that China is like, somebody go get that secret.

Ryan Sean Adams:
[33:38] Oh my God, that's a great point, right? And I mean, I think it's also a point that we are beyond the days where this is going to be released publicly. So there's like... Quantum is a military weapon, isn't it? So if Google is releasing this quasi publicly, they're saying we have the capability, but they're not showing you how. What are nation states actors doing about this today? Because remember, this technology allows them to spy on their neighbors. Like it's a military grade technology. So that is kind of the scary thing. And Nick Carter reminds us, you will not get a warning. The warning is what you are getting now. This is your warning. Once logical qubits start to meaningfully scale, you will go from cracking five bits to 256 bits very quickly. So Google's kind of being the good guy by telling us in advance. There might, that's not the expectation necessarily. One day you could wake up and the attacks are starting.

David Hoffman:
[34:33] Yeah. I think that is the mic drop moment is that this is the warning shot. This is the shot across the bow and we probably won't be getting any more

Ryan Sean Adams:
[34:44] Now, I'll dampen that a little bit. There's some takes around crypto. This one's from Anatoly, founder of Solana. He did remind us that we still have no clue on how to manufacture and add qubits. So this getting from five logical qubits to 1400 qubits, we don't actually know how to do that from an engineering perspective. We don't know if that scales yet. And it could be the case that there's some impossibility in the world of meatspace that just makes that very, very difficult or decades out.

David Hoffman:
[35:12] Technically true, not something to depend on.

Ryan Sean Adams:
[35:15] Kind of agree with you, but maybe you're being a panicking, David, because this is the other take. It was a take from a former Bitcoin developer, which is, and we also, we talked to, you and I talked to Michael Saylor this week and we asked him about the Google quantum paper. We did a recording with Michael Saylor and he took this view. He said, basically like ignore the alarmists. There's a lot of pessimists out there that want you to feel FUD. And if you move too fast, sometimes the cure can be worse than the disease, right? So everyone calm down. Don't panic. The devs will figure a solution out. This is Jonas Schinelli. He said, don't rush. Avoid the FUD. Bitcoin devs, I know, they acknowledge that quantum is a risk. They're looking at researching it. Maybe it never materializes, but like it's just don't be all alarmist and panicking about it.

David Hoffman:
[36:13] It's hard for me to take the don't be a panic and don't believe the FUD response seriously because this is, is this not existential for Bitcoin?

Ryan Sean Adams:
[36:23] It's pretty damn important, yeah.

David Hoffman:
[36:24] It's pretty important.

Ryan Sean Adams:
[36:26] No, it's existential.

David Hoffman:
[36:27] There's like a level of FUD that we all need to get on board with because this is our industry here. And so to say, hey, don't panic is like, the building's on fire. Like, sure, don't panic, but like do rush for the exit.

Ryan Sean Adams:
[36:47] Don't panic, but prepare, maybe.

David Hoffman:
[36:49] And I don't mean exit Bitcoin. I mean, just like go to the solution. Yeah. It's urgent.

Ryan Sean Adams:
[36:55] Brian Armstrong seems to feel that urgency. So just this morning he posted, going to start spending time on this personally. Seems like we need to solve it sooner rather than later. Yeah. I don't know what the solve is actually going to be. You know, there's so much here. This actually leaked outside of crypto Twitter as well. This is Chamath, co-host of the All In podcast. He said, I mentioned last year, and the crypto bros freaked out about it, but there's two things that are true about crypto bros. They're extremely technical and extremely belief-oriented. Sometimes, though, the latter cloud's the former. This paper from Google is quite reasonable.

David Hoffman:
[37:28] He's just talking about Bitcoiners. These are just Bitcoiners he's talking about.

Ryan Sean Adams:
[37:31] It's quite reasonable, and it raises some important technical questions. The crypto elders should start spending more effort organizing on a timescale that makes crypto quantum resistant and do this in the next few years with a conclusive roadmap.

David Hoffman:
[37:45] I hate it when Shamath makes the point that echoes around the world and he's right.

Ryan Sean Adams:
[37:50] What do we got coming up?

David Hoffman:
[37:51] Coming up next, we're going to talk about the biggest hack on Solana. They're $285 million exploited from Drift. And we're going to talk about the lessons learned from that. Then we're going to go on to Ethereum and the EEZ, the Ethereum Economic Zones. And why that might be Ethereum 3.0? You didn't hear from us though. And also the clearest evidence so far that X is working on a crypto wallet in their X Money Super app. All of that and more. But first, we're going to talk to some of these fantastic sponsors that make the show possible. On Wednesday, April 1st, Drift Protocol, which is a Solana perpdex, was exploited for $285 million.

David Hoffman:
[38:28] One of, if not the biggest hack on Solana. There was the wormhole hack a while ago in 2022 that was $325 million. But that was a bridge. Drift is a DeFi app on Solana, so it definitely ranks up there.

David Hoffman:
[38:43] 50% of Drift's total TVL was drained. How did this happen? The attacker somehow got a hold of two of the five multi-sig signatures through social engineering. And they just were allowed to push a transaction through that I think some of the other multi-sig signers couldn't comprehend. And so they just pushed them to approve, which gave them control over the protocol. That's market creation, Oracle assignment, withdrawal limits, and also importantly, no time locks. And so once the exploiter had access to the sufficient number of admin keys, they basically had full admin control over the protocol. Weeks before they got access to these keys, they made this fake token that they had minted and watch traded for days and days and days and days so that they could create this fake volume that made this token perceived to be real. That allowed them, once they had governance over the protocol, to add this token to the Drift protocol, and they controlled the entire supply. And so once this token was approved as collateral, they could collateralize this token and then withdraw USDC, USDT, CB Bitcoin from the protocol. All of this happened in 31 transactions over 12 minutes that resulted in $285 million getting drained. The Drift token fell 20% in the hours after the exploit was first reported.

Ryan Sean Adams:
[40:03] The amount of planning that went into this, and it was like the multi-sig signers were kind of like, almost like hunted, right? So again, it took two of five on this multi-sig in order to have this kind of God mode ability to drain 285 million, which is 50% of Drift's TVL. And it was a very sophisticated group that pulled this off. So someone like the Lazarus group, maybe even indeed was them. I'm not sure. I haven't seen kind of the reporting on this. And that was the vulnerability. So they were able to trick two of Drift's five multi-sig signers to sign these transactions that they didn't fully understand.

Ryan Sean Adams:
[40:43] And that's how this hack happened. Unfortunately for users, like there's, I mean, the money's gone, right? So Drift hasn't come out with a way to remunerate users. Drift was not a huge perps protocol in the scheme of all perps protocols. They were kind of like top 30, but they were the biggest, I think, on Solana, at least one of the largest on Solana. And as you said, I mean, this ranks as one of the biggest hacks ever, certainly the largest on Solana. This reminded me a little bit of the Ronin sidechain hack. Do you remember $625 million? That was in 2022. That was also a multi-sig type hack. Social engineering, compromised keys. Like these multi-sigs are, they are just hazardous for protocols to have in place, right? Yeah. I mean, what are the lessons that we learned from this?

David Hoffman:
[41:36] There's a lot of just kind of criticism on the Drift structure, the admin setup, the multi-sig setup of Drift from some DeFi founders. So both Stani from Aave and Hayden from Uniswap said something to the effect of Drift was not DeFi. If you have admin keys that can do these sorts of things, like one single entity can govern this protocol in this particular way, that's just not DeFi. Hayden said, people might accuse me of gravedancing for saying it, but we have to stop letting centralized things call themselves DeFi. An admin key that can drain all the funds? CeFi. Otherwise, DeFi means nothing and the brand is destroyed. No admin key can drain any version of Uniswap for a reason. I think there's a point there to be taken of just the whole point of this thing is smart contracts and code. And that's the thing to aspire to. Granted, that's a very difficult thing to aspire to. And we've also learned other lessons in the inverse direction of things completely governed by code also have problems. So it's a little bit stuck between a rock and a hard place. I think the big lesson to be learned was the zero time lock, the zero second time lock where new governance decisions, new admin changes go into effect immediately and don't give any sort of recourse. There should be uh i don't know 24 hours seven days before some things take effect that would allow people to just raise a flag and be like yo this is not right

Ryan Sean Adams:
[43:04] Certainly even if you have a multi-sig there are better ways to design it it was only a two of five right you could do a five of seven or something like this yeah um there's all sorts of time time delays all sorts of things you could have done i think another lesson learned is um the social engineering behind these hacks is getting crazy sophisticated, right? So how they got these signers to actually sign, I don't know if that's completely known, but it could be like supply chain attacks where like there's some kind of code library that they downloaded as a dependencies now infected their machine. I mean, if you're a multi-sig signer, You should be concerned with your setup at all times and be paranoid about it.

David Hoffman:
[43:44] You should have a setup that does not touch anything else other than doing it one job.

Ryan Sean Adams:
[43:50] Absolutely. David, there was something that big that came out of ETH CC this week that caught my eye. I want to tell you about it. Is that okay?

David Hoffman:
[43:58] I would love to hear it.

Ryan Sean Adams:
[43:59] Okay. So there was a dream that was the United Chains of Ethereum. You remember this?

David Hoffman:
[44:04] I had this same dream.

Ryan Sean Adams:
[44:07] That's what I thought we were kind of getting back in 2022.

David Hoffman:
[44:10] Yeah, that's kind of what I thought was the whole idea.

Ryan Sean Adams:
[44:12] So I want to take you to maybe DEF CON 2024. Do you remember when Drake gave his first kind of lean Ethereum talk?

David Hoffman:
[44:20] Yeah, the five-year plan talk.

Ryan Sean Adams:
[44:22] Yeah, and so there was news like Justin Drake was getting on stage. He was going to present something. I was hoping it would be, a way to unite all the chains what i was thinking of of calling kind of ethereum 3.0.

David Hoffman:
[44:33] Yeah we were memeing before it was announced we were memeing ethereum 3.0

Ryan Sean Adams:
[44:36] Okay and what like what we meant by uniting the chains was basically synchronous composability so the the problem with the l2 roadmap and l2 strategy in general was that every l2 felt like a separate country right like it had its own blockchain.

David Hoffman:
[44:53] Everything was a separate

Ryan Sean Adams:
[44:54] Blockchain it felt like a separate blockchain Sure, there was some shared security there, but when it comes to liquidity, oh, that's a separate liquidity pool. You have your L2 liquidity. You want to get that bridge.

David Hoffman:
[45:04] 18 different implementations of Uniswap, 18 different implementations of Aave. No one plus one equals three.

Ryan Sean Adams:
[45:11] It was a security alliance, like a very loose federation of countries. It wasn't a united chains of Ethereum. It wasn't kind of like no borders. Everyone shares the same liquidity. Okay, well, the dream might be back on the menu. We'll see.

David Hoffman:
[45:26] Am I ready to be hurt again?

Ryan Sean Adams:
[45:28] Don't get your hopes up yet, but actually, I do think there's some meat on the bone here. So this is a rollout from Gnosis and also from Geordi. You remember Geordi, right?

David Hoffman:
[45:38] Yeah, Geordi Bellina.

Ryan Sean Adams:
[45:40] Yes. So ZK Genius. Anyway, it's called EEZ. It stands for the Ethereum Economic Zone. And the promise here is that it's a way for layer twos to synchronously compose with layer ones. So all shared liquidity, shared fees, shared everything. So it seems seamless to be on whether on an L2 and the Ethereum economic zone of L1. It all feels seamless, shared liquidity. It's all unified. You can get atomic transactions through. And it does indeed feel like one chain. So the way they are doing this is through technical architecture and some specifications, a sprinkling of ZK magic. You know, that's important for kind of fast withdrawals.

David Hoffman:
[46:29] To add some ZK and then you're done.

Ryan Sean Adams:
[46:31] Yep. And then developer tooling and ecosystem integration. Some of these details are going to emerge over the coming weeks. And the hope there is that you get chains to opt in. So one chain that would be nice, which is currently an L1, is the Gnosis chain. So Martin, I guess one of the leads for the Gnosis chain, had said if this works, the Gnosis chain might come back and might transfer from an L1 to an L2. And why? What's the reason? Shared economics. You get to tap into all of Ethereum's liquidity and this alliance can grow. So it's kind of a, you know, a sum type story. A sum is greater than the parts type story because every L2 that joins adds some more liquidity and they all kind of share it together. So that's kind of the alignment hope. I don't know yet. It's too early to see whether they can pull it off, but the dream is still alive.

David Hoffman:
[47:25] Yeah. This sounds like just based and native roll-ups applied. Is that what this is? Because I know Martin was big on native roll-ups. Is this that?

Ryan Sean Adams:
[47:36] Well, it's funny because Martin gave the talk at the same DevCon I was talking about, about native roll-ups, right? And so this is the manifestation of that. And he thinks now it's kind of possible. It's not quite native roll-ups in the way he talked about them as being completely homogenous, but for all intents and purposes, it feels kind of like a native roll-up. And the bottom line is united liquidity united network effect um a much more coordinated ecosystem of chains that, was the original vision, and maybe this pulls it off.

David Hoffman:
[48:10] I think the thing that I am still undetermined on, the jury is still out on, is this kind of closer to a main quest line for Ethereum that somehow Martin from Gnosis is doing instead of the EF? Or is this more of another technical side quest, intellectual masturbation kind of thing that we like to do in Ethereum?

Ryan Sean Adams:
[48:32] Which one is it? It all kind of depends on traction, I think, right? And, you know, some have said like Zaki Manian from the Cosmos ecosystem. Where have I heard this idea before? We tried this in Cosmos in 2023 and it didn't work.

David Hoffman:
[48:46] Cosmos tried everything.

Ryan Sean Adams:
[48:48] Yeah. Martin Koppelman says, to be frank, being in the same economic zone as Ethereum is more relevant than being in the same one as Cosmos. So basically.

David Hoffman:
[48:55] That was always our argument, which is like, well, Cosmos didn't have money. Like atoms were never money. ETH is money. And so that's a material difference.

Ryan Sean Adams:
[49:03] If this path catches on, it would be great because the EF can focus on scaling the L1. They can focus on getting Ethereum quantum secure, right? And the community can focus on efforts to unify all the change.

Ryan Sean Adams:
[49:14] So maybe we get the best of both. But again, we'll have to see how this actually plays out in practice.

David Hoffman:
[49:20] I do like saying the ETH is money words because what would be, Ryan, the native currency of the Ethereum economic zone?

Ryan Sean Adams:
[49:26] You know, right? Every united country, I suppose, has a single currency. So it would have to be ETH.

David Hoffman:
[49:33] It would have to be ETH. It would have to be ETH. Speaking of things that make ETH money, Aave V4 is now live on Ethereum. So we've been at Aave V3 for a while. V4 has been in development, is now deployed. Some of the biggest changes is that V4 turns Aave from a collection of independent lending pools into a single liquidity hub. That has specialized lending markets called spokes to plug into the hub. So each spoke has its own underwriting rules, collateral types, specializations, etc. And also the idea is that anyone can launch a spoke with DAO approval and all the spokes just plug into the hub.

Ryan Sean Adams:
[50:13] So shared liquidity, but how does risk work? Like if some pool kind of like or some spoke, you know, the debt goes bad or something, it's a bad asset, something bad happens. Right.

David Hoffman:
[50:23] Okay. So this is the toxic contagion model. So if some spoke is like, let me allow for some terrible token to be collateral. What was the Sam Bankman-free token? FTT. Let me allow FTT to be collateral. Yeah. Well, first, I'll answer that question in a second. First, there's a risk premium different for tokens. And so in V4, if you, Orion, are collateralizing Ether to borrow USDC and I'm collateralizing FTT, the Sam Bankman high concentration low float token, Aave will charge me as the FTT collateralizer a much higher premium than you for collateralizing ETH because ETH is money and FTT is a scam. And so first, at first, there's like one defensive layer off of that. Second, there are credit lines as like blast radius constraints. And so the credit lines are created by the hubs to govern the spokes. They set limits and conditions for borrowing. And so Aave is the main risk manager of the hub, and they will govern over the size of the collateral, the size of the credit limit, which constrains the damage any one spoke can do. So it's a little bit of a trade-off. It's not completely constrained, but it is balanced between the two ends of the spectrum.

Ryan Sean Adams:
[51:49] Yeah, I mean, I think this is a big deal. Now, it's starting small. I think there's some limits on how much can be added to Aave 4 right now. But I'm sure they'll take those limits down as security is proven and time goes on.

David Hoffman:
[52:01] It is worth highlighting that the explicit intent is that users never really interact with the hub directly. They interact with spokes. Not dissimilar from the layer two model. Remember when we were saying like users go on the layer twos? This kind of, to me, Ryan, mimics central banking where you have the hub, the central bank that governs the spokes, the commercial banking layer. And it determines the interest rates. you know, who's got the money, all this kind of stuff. And so Users go to the spokes, the spokes are the commercial banking layer, and then the spokes are governed by the hub. And so this is Aave going into like a platform model.

Ryan Sean Adams:
[52:40] Yeah, it's kind of cool. I mean, this is a big network effect game, right? And so Aave is leaps and bounds ahead of their nearest competitor.

Ryan Sean Adams:
[52:46] And it seems like a plan like this, they'll remain so if they can execute on this. David, it looks like X is clearly working on a crypto app. Maybe call it a money super app. We have Benji Taylor, who just announced he is joining X. He's got a photo here with Elon Musk. This is Benji. If you don't know who Benji is.

David Hoffman:
[53:06] I do not know who Benji is. Who is Benji?

Ryan Sean Adams:
[53:08] This is the guy that built the wallet that got poached by Aave. So he built a crypto wallet that was purchased by Aave, and they rolled it into a consumer product. Then he was poached by Base. Yeah, then he was poached by Base, building wallet stuff there. So it's all crypto stuff, all wallet stuff. And now he is working for Elon Musk and X.

David Hoffman:
[53:31] So he just, hey, do you have a wallet that needs built for your money app? Yeah. I can build that for you.

Ryan Sean Adams:
[53:36] Exactly. And I'm sure X was like, hey, we need some talent to go build us a crypto money app wallet. And so they went and they picked up Benji. That's a sign of things to come. Meanwhile, you have Phantom and some of our crypto native wallets. Coming steps closer to building their own money super wallets. Starting today, this is Phantom. Anyone in the U.S. can fund with bank transfers or Apple Pay directly to a Phantom wallet. Send and receive wires. That's a bank feature in a DeFi wallet. Without Phantom fees. And then Phantom has a debit card. There's another convergence happening here where crypto wallets are becoming a bit more TradFi friendly.

David Hoffman:
[54:13] Yeah. Yeah. I mean, especially when we got the doors blown open by the CFTC and the SEC about financial super apps. Like, we have the green light and now the race is on to build the Phantom super app.

Ryan Sean Adams:
[54:24] Absolutely.

David Hoffman:
[54:25] Something that caught my attention this week, Apex is now building on base, A-P-Y-X. We learned about this actually through our conversations with Michael Saylor. We recorded with Michael Saylor yesterday. That episode is going to come out in a week from Monday. So premium subscribers get it like 10 days earlier. So if you want to go listen to that episode, you can subscribe to Bankless, get that in your podcast feed. Apex is bringing Strategies Stretch product, their yield-bearing $100 pegged equity instrument that spits out, I think, 11% yield right now. 11.5.

Ryan Sean Adams:
[54:55] 11.5. Yeah.

David Hoffman:
[54:56] And it's putting that on base. And so we have Strategy, which buys Bitcoin, puts it into its equity holdings behind MSTR, issues another equity instrument called Stretch.

Ryan Sean Adams:
[55:10] Fixed income instrument.

David Hoffman:
[55:12] Variable, because it flexes up and down. It used to be 8, now it's at 11.5. It's got $6 billion of AUM right now, because retailers just love those products. And then we have Apex tokenizing that equity instrument and putting it on base.

Ryan Sean Adams:
[55:28] Okay. So we took a digital asset, we converted it to a security, then we took that security and we tokenized it and we put it back on chain.

David Hoffman:
[55:36] Yeah. And we issued another security in between those steps. You missed one of those steps.

Ryan Sean Adams:
[55:39] Cool. Innovation. I mean, if this is what the market wants, right?

David Hoffman:
[55:45] DeFi, LUDS, yield, stretch is yield.

Ryan Sean Adams:
[55:48] I don't hate it. Best of breed. Best of all things.

David Hoffman:
[55:50] I don't hate it.

Ryan Sean Adams:
[55:51] The market will figure this out. David, you know, OpenAI just closed $122 billion raise, and the valuation was almost $900 billion. This is a company that just released a product, what, like three years ago? Fastest growing product in history. $2 billion revenue per month growing at 4X. 4X faster than when they raised at $157 billion. That was the last time they raised. These private valuations are gargantuan. So this is still a private company. There was some other news on the week that SpaceX, they are targeting a June listing at a $1.75 trillion valuation. Now, this would be an IPO. Okay? So a company goes from zero to $175 trillion completely privately. And then IPOs to dump on retail. No, I'm sure it's a great company. But like after all of the upside has been achieved privately.

David Hoffman:
[56:49] It's hard to get excited about $1.75 trillion valuation.

Ryan Sean Adams:
[56:53] It's cool. This is also such an indictment of our public markets today in the U.S., which is the vast majority of the growth, the most exciting companies, the Decacorns and Future Unicorns, are now happening privately. And retail does not get accessed because of accredited investor laws. So Amazon, contrast that, 1990s. Amazon, if you bought at IPO and held all the way to now, that would have turned, let's say you had $1,000, you did that, $1,000 into $2.88 million. Almost a 3,000x return. Returns like that just aren't existing as these companies are IPO-ing later in the cycle. So, cool. And also, I'm pretty frustrated by that.

David Hoffman:
[57:39] You're going to send Ryan's little butt hurt.

Ryan Sean Adams:
[57:42] I couldn't get it in either of these companies.

David Hoffman:
[57:45] Ryan, I've got some breaking news for you on the backs of the OpenAI news. What's that? This happened just a moment ago. OpenAI has acquired TBPN.

Ryan Sean Adams:
[57:55] Oh, really? The media company?

David Hoffman:
[57:56] Yeah, it just got announced. The media company out of LA.

Ryan Sean Adams:
[58:01] Yeah. That's crazy.

David Hoffman:
[58:03] Yeah, what are they doing with them? I mean, obviously, it's a very cool media company to own. Yeah. I don't quite see synergies between TBPN and OpenAI. Are you sure about this?

Ryan Sean Adams:
[58:13] This isn't like a remaining April Fool's joke.

David Hoffman:
[58:16] Is it? Leftover April Fool's. The date on the blog post on OpenAI.com is April 2nd, 2026.

Ryan Sean Adams:
[58:22] All right, we're safe then. If it's April 2nd, we're safe.

David Hoffman:
[58:24] That's a bad April Fool's joke. If it's April Fool's.

Ryan Sean Adams:
[58:27] Let me tell you, man, there were some good ones. Like, I enjoy April Fool's. I just like it. It's fun. MetaMask had a good one. They released MetaMask TradFi mode, which you can activate on your wallet, and it slows everything down.

David Hoffman:
[58:38] The app shuts down at 6 p.m.

Ryan Sean Adams:
[58:40] Banker hours only. I thought that was pretty clever. Did you see anything that was good?

David Hoffman:
[58:45] Well, I think, Brian, we do a bang-up job with our April Fool's jokes. We have a history of pretty good April Fool's jokes. Our April Fool's joke this year was that we issued, we did an IPO on Canton Network, which is like just believable enough that it got enough people. And you're like, some guy was in the reply saying like, I sent this to people in a furious rage.

Ryan Sean Adams:
[59:10] No way. Really?

David Hoffman:
[59:11] Yeah. Uh-huh. Yeah.

Ryan Sean Adams:
[59:12] I remember some of our previous ones. Like one time we announced that Bankless was acquired by Wells Fargo and my inbox was full.

David Hoffman:
[59:19] Yeah. We lost 1% of our email subscriber list.

Ryan Sean Adams:
[59:22] We lost community that day.

David Hoffman:
[59:23] People were furious at us.

Ryan Sean Adams:
[59:26] Well, that does bring the question of like, can you push an April Fool's joke too far? I think there were some crypto protocols that maybe did that. What? You tweeted about this hyper bridge.

David Hoffman:
[59:36] Yeah, I'd never heard of this before. And granted, this is a victory for them because now I've heard of them before. But they are a bridge, I think, to Hyperliquid. They are a bridge. And they tweeted out, we've been hacked. We're working hard to fix this. If you're a terrible April Fool's joke.

Ryan Sean Adams:
[59:52] If you are a crypto protocol, do not tweet on April Fool's that you've been hacked.

David Hoffman:
[59:56] There is a unspoken but should be spoken rule of if you are a crypto protocol, if you're a crypto company, you do not make April Fool's jokes that are related to customer funds. Yes. Or move the market. Yes. You do not disturb markets with your April Fool's jokes.

Ryan Sean Adams:
[1:00:13] Use some sense, people.

David Hoffman:
[1:00:14] Use your, yeah, goddammit, people. Jesus Christ.

Ryan Sean Adams:
[1:00:17] All right. well we got to end it there of course you know April Fool's is risky so is crypto you could lose what you put in but we are headed west this is the frontier it's not for everyone but we're glad you're with us on the bankless journey thanks a lot.