ROLLUP: Prediction Market Bill | Solana DEX ATH | ETH Stablecoins ATH | Zcash Implodes | Vitalik “Trilemma Solved”

TRANSCRIPT

Ryan Sean Adams:
[0:04] Bankless Nation, it is the second week of January and the first week I've been back. It's time for the Bankless Weekly Roll Up. We've got a lot going on. A prediction market trader placing a large bet on Maduro's capture four hours ahead of his actual capture and a bill from Congressman Richie Torres saying, I don't like this. This looks like insider trading inside the government. What is going on? We'll talk about that.

David Hoffman:
[0:27] I think that's going to be a reoccurring theme for this year as we figure out what to do, what we think about, and we being society, what we think about people using special information on prediction markets.

Ryan Sean Adams:
[0:38] David, I don't even know what I think about it, though.

David Hoffman:
[0:41] I'm fascinated by it. I think it's an interesting topic to pay attention to in 2026.

David Hoffman:
[0:47] Expect more news like this as this happens more and more and more. Meanwhile, on the crypto-native side of things, Solana DEX volume hits an all-time high. Ethereum's stablecoin transfer volume hits an all-time high. And trouble in Zcash, why is it down something like 20% on the day? Something happened, and we're going to talk about it.

Ryan Sean Adams:
[1:06] Yeah, we also covered the lighter token drop. David, you're going to have to fill me in on that. And Vitalik Buterin, he's coming back in 2026 with a full Milady arc, I would say. He's got a lot of tweets out there, one of which is claiming that Ethereum has solved the notorious blockchain trilemma. David, you remember the trilemma? Couldn't be solved?

David Hoffman:
[1:24] I remember the trilemma.

Ryan Sean Adams:
[1:25] It's solved now, okay?

David Hoffman:
[1:26] We solved it. Mission accomplished.

Ryan Sean Adams:
[1:28] Yes. Before we get there, got to thank our friends and sponsors over. David, Ray Dalio released a 2025 post-mortem. Did you catch this?

David Hoffman:
[1:36] I did not, but I know that you read every single Ray Dalio thing. So I was like, why do I have to read it? Ryan's just going to tell me what to think.

Ryan Sean Adams:
[1:42] I can just synthesize it. I read Ray Dalio, Howard Marks, like a few investors in space. I just read everything they write. But Dalio's take was basically this was a devaluation of the dollar trade that happened last year. It wasn't that stocks were up.

David Hoffman:
[1:58] That's not new.

Ryan Sean Adams:
[1:59] I know, but it's Dalio kind of doing a victory lap, I think, at some level and just underscoring it for us. So he said the S&P, it returned 18% for dollar-based investors, 17% for yen-based investors, 13% for renminbi-based investors, and 4% for euro-based investors. He just compares all the different assets and their appreciation versus the different fiat currencies. And he paints the picture that, yeah, the S&P was up. But it didn't even account for the demonetization of the dollar effectively. Go look at gold for that. Go look at commodities for that. So he really underlines it.

David Hoffman:
[2:37] Is the S&P up versus gold this year? I don't think so.

Ryan Sean Adams:
[2:40] Yeah, it's not, David. So the S&P fell 28% in gold money terms this year. So if your benchmark was gold, the S&P actually didn't return. It was up in dollars. It was down in gold, right? So that's what's going on. It's the demonetization phenomenon. And Ray Dalio doesn't want you to forget that that happened last year and it's

Ryan Sean Adams:
[3:00] going to continue into 2026.

David Hoffman:
[3:02] Well, that's why we are into crypto. Speaking of crypto, let's talk about some Bitcoin prices. Bitcoin had its least volatile year ever this last year, Ryan, in 2025. Daily volatility in 2025 fell to 2.24%, the lowest reading in history. According to K33 research, this reflects growing market depth, institutional driven flows from the ETFs and also a maturing derivatives market. Just an aging of Bitcoin. This is always the plan. We've always seen Bitcoin dropping in volatility. It was at 2.8% in 2024. So even 2024 wasn't even all that volatile to begin with. And what does this mean? What does this mean for investors? This means that sharp style risk adjusted metrics, which are just TradFi loves sharp ratios, risk ratios.

Ryan Sean Adams:
[3:50] Volatility adjusted, right?

David Hoffman:
[3:50] Yes. They can improve, and then that means Bitcoin can fit into more portfolios if it has a lower vol. And so it's just more appetizing because TradFi doesn't like scary things, and volatility is scary to TradFi.

Ryan Sean Adams:
[4:05] Yeah, that's right. 90,500 on the week, right, Bitcoin? So what's your take on that? Do you think we're... I don't know. You think we're going up?

David Hoffman:
[4:15] What did I say? Slow grind up. Slow grind up.

Ryan Sean Adams:
[4:18] I talked to Mike from the DeFi report earlier this week, and he's like, yeah, there's going to be a grind up. I expect to see possibly over 100K Bitcoin, but that's going to be a bull trap, essentially. And he still predicts we're going down below 70K before this is all over.

David Hoffman:
[4:35] Is he still as risk off as he was?

Ryan Sean Adams:
[4:37] Yes, he is still as risk off. He's still full risk off.

David Hoffman:
[4:40] Well, I am not. Yeah.

Ryan Sean Adams:
[4:43] So you hope for different things, but yeah, we'll have to see what the months to come bring. How about ETH price?

David Hoffman:
[4:50] ETH price also looking good on the week. We crossed over 3,000. So we hit almost 3,200 on the week. We are at 3,100 right now. Wow, we almost got up to 3,300 in the first week of January. Up 4% on the seven day.

Ryan Sean Adams:
[5:06] 4%, I mean, that feels good, right? It's a good start to be here.

David Hoffman:
[5:08] Yeah, we're okay with that. We're okay with that. We're okay with that. And then the total crypto market, $3.17 trillion. That three number just feels so close to two, which I don't like.

Ryan Sean Adams:
[5:18] Well, Nick Tomaino of One Confirmation, VC, been here for a while, says, you got to zoom out, David. The total crypto market cap is $3.1 trillion. That's down 14% in the last year. But if you zoom out, we've gone from zero to $3.1 trillion since 2009. He goes on to say, the era of easy money, too much easy money being made, that's probably over. it's going to get harder moving forward, but that doesn't mean there's not money to be made in key spots. So I've seen this take from a lot of crypto investors that we're getting into the kind of prove it type era. Like we've figured out all of the possible or many of the possible use cases. And now it's time for the smoke and mirrors and the speculation to kind of fade by the wayside and the actual applications and protocols and networks that prove it will be the ones that appreciate into the future. I hope so. That's always what people say, I think, when there's a bear cycle that, you know, the speculation, the gambling, the stupid stuff is going to burn off and all we'll be left with is kind of pristine, perfect crypto. Maybe this time it happens a bit more.

David Hoffman:
[6:27] Maybe. I think, yeah, the trend is always that it happens a bit more. But I think crypto is also the perfect breeding ground for stupid stuff. Yep. So I would not get stupid stuff out. Yeah, it's not out. we can all.

Ryan Sean Adams:
[6:42] Maybe AI gets some of the stupid stuff though I mean it's starting to get a little frothy over there maybe so far the AI improvements on a like monthly basis are blowing my mind so it still feels like it's yeah actually delivering meaningful value but I'm sure it could get a little stupid over there maybe they absorb some of that stupidity

David Hoffman:
[7:00] Yeah, yeah, yeah, maybe, maybe. So I mentioned this in the beginning. Solana on-chain spot volume has overtaken all sexes, all centralized exchanges except Binance in 2025.

David Hoffman:
[7:12] Solana processed $1.6 trillion in all of last year in 2025. That's 12% of global spot market share in crypto. That's passing Bybit, Coinbase, and BitGet in total volume, which is kind of crazy.

David Hoffman:
[7:26] Binance did $7.3 trillion in 2025. Solana doing 1.6, but nonetheless, like you got to kind of tip your hat. And also one question you might have, Ryan, and the listener is, okay, but what are the tokens? What are the tokens doing the volume on Solana? Because I think a lot of people from my first reaction would be like, oh, it's just the meme coins. So it's like, whatever. It's just funny money volume. Nope. It's actually 70% Solana USD volumes. Oh, really? According to BlockWorks research. Yeah. And there's like a little bit of an anecdote as to like how this happened. And there's like a lot of prop AMM innovation and just like competitiveness going on with Solana. And what that means is like AMMs, like Uniswap or just like liquidity pools, except prop AMMs are the combination of like opinionated when we put liquidity and where inside of a single block. So it's an AMM, but people are starting to treat it like an order book. And that sector is very, very hot, has been growing in volume quite significantly. And overall, that's all to do with Solana, the US dollar pair. And the Solana block times are fast enough that you know how people on Ethereum, because Ethereum has slow blocks, they will buy stale orders on Ethereum because the Binance price changes. Apparently you can do both legs of the trade on Solana. So it's a fully on-chain volume, both the introduction, the in-leg and the out-leg. And so you do kind of have to tip your hat to the fast block speeds of Solana.

Ryan Sean Adams:
[8:50] I kind of see Solana evolving into almost like a trading chain. You know, I not the Dex train. Yeah, that seems to be the direction that they're moving.

David Hoffman:
[9:01] Fast DeFi instead of slow DeFi.

Ryan Sean Adams:
[9:02] Yeah, super fast DeFi, but particularly around that, the trade verb. And I wonder if that's where, you know, they're finding the most product market fit. And we'll do that moving forward.

David Hoffman:
[9:12] On Ethereum land, Ethereum in Q4 doubled its stablecoin volume versus Q2. So it's up to $4 trillion in just stablecoin transfers. And so this is just using the Ethereum layer one as just a payments layer. Or like a large settlement layer of stablecoins. For all of 2025, Ethereum settled $18.8 trillion of stablecoin volume. Q4 was 40% of that. 40%.

Ryan Sean Adams:
[9:37] That's funny. So for all the talk recently about Ethereum not being optimized for real world assets, it is still the king, the reigning king by far of real world assets.

David Hoffman:
[9:45] To some degree, I don't think it matters. You know what Ethereum's optimized for? Being awesome.

Ryan Sean Adams:
[9:52] Speaking of kind of awesome, so Morgan Stanley just filed for Bitcoin, Solana ETFs, and then also they followed up a day after and filed for an Ethereum ETF. This was actually a shocker to the ETF boys, like Eric Balchunas and James Seyfert from Bloomberg. They were actually surprised by this because Morgan Stanley is a big name, David. It's like the bank of banks. This is the first major U.S. bank to file for crypto ETFs. And on CNBC, they're even saying it's a huge endorsement. So the floodgates are completely open for the banks getting into crypto now.

David Hoffman:
[10:29] Interesting. Okay, why is the first big bank, why is that significant? Because we already have ETFs. So why is this anything new?

Ryan Sean Adams:
[10:35] I think it's more of a branding type thing, probably just first big bank milestone. I mean, obviously, BlackRock was the big mover in the space. And when they entered, they got all of the size. But Morgan Stanley still has a ton of capital, a ton of kind of investors, a ton of people that trust their assets to this institution. And now they're going all in crypto. So it's like all of the banks, the big brand name banks are no longer resisting crypto. though. It definitely marks the change of the era.

David Hoffman:
[11:07] Yeah. Matt Hogan says, Morgan Stanley manages 20 ETFs, but mostly under the Calvert, Parametric, Eaton Vance brands. I don't know what these are. He says, but these will be the third and fourth ETFs to bear the Morgan Stanley brand, which he says is pretty remarkable. Matt knows more than me. So if he says it's pretty remarkable, I guess it has to be pretty remarkable.

David Hoffman:
[11:26] Coming up next, Richie Torres wants to stop insider trading on prediction markets. Perhaps this was because of what happened after President Maduro was captured. Perhaps it's because of all the other instances. And then there's also a conversation, Ryan, about the United States stumbling into a surprisingly large amount of Venezuelan Bitcoin. Do we get that? Do we get that now? We're going to talk about that.

David Hoffman:
[11:49] And the lighter airdrop has hit the markets. We're going to talk about that and more. But first, we're going to talk to some of these fantastic sponsors that make this show possible. Okay, so, Ryan, last Friday, I'm sure you heard the news that the United States just went down to Venezuela and yoinked President Maduro in an overnight operation.

Ryan Sean Adams:
[12:04] Absolutely wild. Yeah.

David Hoffman:
[12:07] Surprise. So there's a Polymarket account that was created last December that only made four trades ever, all related to the U.S. Intervention in Venezuela. invested $32,500, predicting that Maduro would be out by January 31st, purchasing shares at $0.07, which implied that the probability that this would happen would be 7%. And so what that means is that $0.07 turns into a dollar, so a very large return. Maduro's capture was confirmed Saturday morning, and those shares resolved to a dollar, yielding a profit of $400,000.

David Hoffman:
[12:44] So that's a 1,200% return in less than 24 hours. Pretty good return. Pretty good return. Another polymarket trader earned $80,000 betting on Maduro's capture after he noticed Domino's pizza orders near the Pentagon, which is a... I don't know if you pay attention to those Twitter accounts, but there are like pizza, Pentagon pizza alerts to let you know if there's ever a spike in pizza orders near the Pentagon to let you know that like something's happening. I don't think that is insider information. That's just a guy paying attention. But nonetheless, this and other instances like this have... Caused issues, I think, in Capitol Hill. Richie Torres has introduced a bill, the Public Integrity in Financial Prediction Markets Act of 2026, pretty straightforward title, no creativity there, targeting insider trading on prediction platforms. So the bill will prohibit federal officials and employees from trading prediction market contracts related to government policy or political outcomes if they have non-public information from their duties. A Torres spokesperson said, the bill has been in the works for a bit, but the news of the Venezuela bet underscored the urgency of introducing the bill as soon as possible. Okay, so Ryan, what do you think about the trader that, nevermind the guy who was just smart and used the Pentagon Pizza Twitter account to like predict something.

David Hoffman:
[14:04] What do you think about the trader who like very clearly had insider information and put in $32,000 and then got $400,000 out inside of 24 hours? So what do you think about that?

Ryan Sean Adams:
[14:17] Well, at some level, what is being created here is a public good because it did increase the odds and our knowledge in the world that Maduro was actually going to be captured. So it increased our public prediction capacity and it provided information and knowledge to the world. And that has

David Hoffman:
[14:36] Value and that's a good thing. It did that four hours ahead. So we had that benefit, that public good for four hours.

Ryan Sean Adams:
[14:43] Which is a pretty big freaking deal. I mean, I think that's a big deal. Yeah, if I was a world leader right now, I would have my people monitoring prediction markets for me being captured. You know what I mean? Like, if it spiked, if it spiked, like... Four hours before, I'd be like, holy shit, get me down in the bunker, right?

David Hoffman:
[15:04] Yeah, right.

Ryan Sean Adams:
[15:04] I don't know if that's a public good specifically, but just the idea that information and knowledge is getting captured in a, like, Vitalik wrote a post about this. And I mean, he said it much more eloquently, but just the idea that this is an incredible public good for the world is much better than somebody's opinion on social media. It's skid in the game. Now, that's one side of it. The other side of it is, it feels unfair, doesn't it? It feels unfair. It does feel unfair. That somebody inside the government somewhere, likely, or somebody with a leak, is selling that information. At some level, they kind of are selling it, aren't they?

David Hoffman:
[15:42] Yeah, selling it to the market.

Ryan Sean Adams:
[15:45] Yeah, isn't that our information? And, I mean, shouldn't the American people benefit from this? Why does a government official, specifically a single person that does this first, Like, why should they have the ability to benefit from this? I mean, we talked about this with Joey Krug. Remember, there was a Google employee that made a lot of money predicting the next Gemini release.

David Hoffman:
[16:06] Release of the model, which he probably built or something.

Ryan Sean Adams:
[16:09] Maybe, or maybe, like, who knows, right? But he's inside Google. And is it his information? Like, shouldn't that just go to Google shareholders? Like, why does this specific person get this? And so there's a level of unfairness to it. So I like the public good side of it, but I don't, the rules, like we've got to do something about the mechanism because, you know, we can't incent it this way. And I don't think it's that employee, like that government insiders, it shouldn't just be there. They shouldn't get all the proceeds from this, as I guess what I'm saying.

David Hoffman:
[16:42] Yeah. Plus, you also have to think about, you know, there were people on the other side of that trade who were selling. Maduro's not going to be captured by the end of this month. And how do you think those people feel? And this is why I think the title of this bill is called the Market Integrity Act. Markets grow larger when participants consider them to be fair and equitable. And I don't know if this is without some sort of rule around integrity that I think prediction markets might be smaller as a result.

Ryan Sean Adams:
[17:11] That's right. Yeah, that's right. If we can make prediction markets fair and orderly and have integrity, then I think we grow the size of it. I guess we're making the assumption, though, that this was a government insider. And we have no... There's no way to tell it actually is. It could be someone who's just a regular civilian who is monitoring for these things.

David Hoffman:
[17:33] Barron Trump just tweets his buddies like, yo, my dad's going to yoink Maduro.

Ryan Sean Adams:
[17:37] Well, maybe someone like, you know, monitoring kind of your pizza orders at a specific time. Maybe someone's monitoring something in airspace. Maybe someone's being super smart.

David Hoffman:
[17:46] Yeah, maybe someone has like, has all the strings with all the pictures on the wall. Exactly, exactly. Oh, he's going after Maduro. I cracked it. I solved it. That seems completely fair.

Ryan Sean Adams:
[17:55] Doesn't it?

David Hoffman:
[17:56] Yeah, that totally seems fair. Yeah.

Ryan Sean Adams:
[17:58] But I guess we don't know. So the fact that we don't know. Yeah.

David Hoffman:
[18:00] And I bet you there are a bunch of circumstances, a bunch of like trades markets that could happen where like we would point to be like, that was super unfair. And then other instances where like, oh, same insider trading thing, but like, oh, but this one is totally fair, depending on the context and the circumstances. So it's hard to be homogenous about it. It is.

Ryan Sean Adams:
[18:18] And so I don't know how I feel about this bill, to be honest, because what I'm worried about, David, is that regulation gets into over-regulation territory and then we just start nerfing and killing the experiments and we lose an incredibly valuable public good that, quite frankly, we're going to need in the 21st century with AI. Like we need prediction markets and truth consensus mechanisms out there. And I hope this bill doesn't kill it. That kind of thing that could if it's done in a ham-fisted way. And do you really trust our legislators to not push this forward in a ham-fisted way? It's like too early is a take I have.

David Hoffman:
[18:52] Yeah. Yeah. The facts and details and circumstances of that bill in question does obviously very much matter. What people are doing now, Ryan, are people are scouring Polymarket to find large traders, large trades made by accounts that have never made a trade before. One of them is an account that has made a $34,000 position on will China invade Taiwan by the end of 2026.

David Hoffman:
[19:17] And so, this one account has made one trade and it's a decently sized position about China invading Taiwan. We'll see what happens. One thing about the whole Maduro capture, Ryan, is that there is now potentially a shadowy Bitcoin reserve by Venezuela rumored to be as high as 600,000 Bitcoin. So the media speculated that U.S. Authorities might seize any verified regime-linked coins and yoink them along, as we did with President Maduro, by sending them to our Bitcoin treasury. So we don't know. Only 240 Bitcoin is officially linked to the Venezuelan government through public records and on-chain trackers. But investigative reports and intelligence sources suggest that Venezuela has accumulated much more Bitcoin than what has been officially reported by swapping and selling for gold, oil exports in Bitcoin or tethered to bypass sanctions, and also confiscating crypto and mining equipment from local miners. There's actually a decently large Venezuela mining community. Then this happened in all of 2024 and 2025.

David Hoffman:
[20:23] And so Venezuela has lots of Bitcoin is the takeaway. And apparently people are discussing whether or not we are going to just seize it.

Ryan Sean Adams:
[20:32] Okay, a couple of things. So it's unclear whether that Bitcoin is actually verified, right? So we don't actually know. There's not actually on-chain records. So this is all speculation. Don't know how much, if any, that the Venezuelan government owns. But secondly, that's messed up. Like the U.S., if anything, Venezuela's Bitcoin reserves or crypto reserves belongs to the Venezuelan people. It doesn't belong to the U.S. government.

David Hoffman:
[20:57] The claim is that Bitcoin is being sold or received by Venezuela as a part of Maduro's like narco-terrorism charges.

Ryan Sean Adams:
[21:05] Okay, fine. He's a narco-terrorist. Give it back to the Venezuelan people, though. Why should the U.S. get this? That's insane.

David Hoffman:
[21:14] Am I wrong? You're totally right. But like, if you give it back to the Venezuelan people, it is just like kind of an arbitrary gift from Venezuela, from, because it's like, it should it be Maduro's? Probably not, because it's drug Bitcoin. And so, yeah, like in theory, it goes to the Venezuelan people. But is there a legal precedent for that?

Ryan Sean Adams:
[21:36] If the U.S. government is just going and deposing leaders and then goinking like all of their oil and all of their cash reserves and all of their hard assets, right? I mean, like, what is the U.S. doing? I mean, not to get political here, but that's just raiding and pirating, right?

David Hoffman:
[21:53] It sounds a little bit like Russia.

Ryan Sean Adams:
[21:55] Yeah, it does. Yeah. Anyway, we don't know how much they own, but yeah, I guess if it's a hard asset and the U.S. Wants to take it, I mean, they could take their gold reserves too. Does Venezuela have gold? Right.

David Hoffman:
[22:08] I think the argument is that if it is a part of the narco-terrorism, if it was revenue from selling drugs that got put into the United States, which is what Donald Trump's worried about, then like they might want that as like compensation. What?

Ryan Sean Adams:
[22:22] Okay.

David Hoffman:
[22:23] Yeah.

Ryan Sean Adams:
[22:24] This is news too. Tell me about this. Polymarket's rolling out real estate prediction markets. Yeah.

David Hoffman:
[22:28] So each market inside of the apply market real estate category is going to be a very clearly defined question like, will the U.S. Median home price be above X on date Y? Or will cities in the real estate market finish up or down on the year? And this is just being used by, there's an oracle here. Settlement will be based on parcel. Parcel is independently published daily home price indices. Parcel aggregates county records, new constructions, real-time listings in the city and nation-level benchmarks. So we like have a pretty good resolution of home prices, real estate prices across the United States just from data oracles. And Polymark is turning that into a new category of prediction markets that you can take a position on.

Ryan Sean Adams:
[23:11] I love that. I think that's going to drive price efficiency and transparency.

David Hoffman:
[23:15] That is a sophisticated adult use of prediction markets.

Ryan Sean Adams:
[23:18] Yeah. And the realtor, I feel like realtors in the United States have all of this data that only they can have access to. And they really protect the MLS database. Right. And so this starts to open

Ryan Sean Adams:
[23:27] that up a little bit more. And I think there'll be a lot of innovation on top of this. Let's talk about some crazy times for Zcash. There was a Zcash dump. Do you see that? It just happened this morning. Let's look at the price chart.

David Hoffman:
[23:37] Well, I don't own any Zcash, so I didn't see it.

Ryan Sean Adams:
[23:39] You're not looking at that? No, I'm not. Down 12.5%. Let's see. 24 hours. It's down about 12.5%. So it has recovered somewhat. It's down 20% at one point earlier. Do you know why?

David Hoffman:
[23:52] Yeah, because the development team resigned. Yeah.

Ryan Sean Adams:
[23:54] Yes, this is kind of emerging, but it seems to be the case. Ignis, the Twitter account Ignis, DeFi Ignis, gives a pretty good description of what happened. The entire team, development team, led by the electric coin company, that's ECC, resigned after, quote, employment was changed in ways that made it impossible for us to perform our duties. So do you remember Zcash, like the way they fund development? Do you recall how that works?

David Hoffman:
[24:23] Yeah, block rewards.

Ryan Sean Adams:
[24:24] Splock rewards, like 12% of all mining rewards are actually funneled into a DAO sort of apparatus, a governance-based apparatus. And they go to fund the developers, the ECC and the foundation.

David Hoffman:
[24:38] 12% is a lot.

Ryan Sean Adams:
[24:40] 12% is a lot. So in late 2004, actually, that model ended and the community- 2024. 2024, I should say, to move that 12% cut into a lockbox. And now there's debate as to how to unlock the lockbox and what to fund with it. And apparently this debate has caused the ECC to just be like, well, screw it. If you're not going to give anything to us, we're not getting paid. We're leaving. So governance issues on Zcash.

David Hoffman:
[25:05] You remember how like every year there seems to be somebody who's like, I've got an idea for how to defund Ethereum development. Let's siphon off some block rewards. And like all of us have been in Ethereum for as long as we have. That hasn't happened for like four or five years.

Ryan Sean Adams:
[25:18] But yes, that used to be a recurring debate.

David Hoffman:
[25:20] I saw it somewhat recently. Somebody recently said this. And it was like, dude, don't do this again. And like, no, we've done this. We've done this so many times.

Ryan Sean Adams:
[25:28] Bitcoiners were right. You know, you can't, it's very difficult to arbitrarily fund public goods in a DAO-type structure. It leads to this type of thing.

David Hoffman:
[25:37] Yeah. My question is, why did the Zcash token dump? Because it definitely didn't pump for any reason related to the development of Zcash.

Ryan Sean Adams:
[25:45] I mean, traders doing trader things. I mean, the dev team rage quitting is kind of a big deal, but it doesn't mean the dev team is done. So the take was that the dev team was going to try to spin off their own company and build for Zcash. So they would still build for Zcash. And Ignis' take here is, as an investor, these civil wars suck, and I hope they can resolve the funding and disagreement issues ASAP. It almost reminds me, like, just last week, you and Anthony Sassano, right? You were talking about Aave, another governance thing. It just gets particularly messy when you're dealing with a layer one protocol, I think. And there's supposed to be all sorts of other governance things built on top of it. If you're struggling at the base layer, things feel a little shaky. I'm sure they'll resolve it. I'm sure they'll figure it out. But, man, still an issue for actively developed protocols.

David Hoffman:
[26:33] And people have been branding Zcatch as just encrypted Bitcoin. But I don't know if Bitcoin has governance issues on its layer one.

Ryan Sean Adams:
[26:40] They definitely do, but they don't have a DAO. True, yeah.

David Hoffman:
[26:44] It just means a lot less. Whether we're going to, like, you know, censor arbitrary data on the Bitcoin layer one or not is actually a relatively insignificant question. They should probably focus on quantum. Anyways, let's move on to LiDAR. and the lighter infrastructure token, or LIT,

David Hoffman:
[27:00] That's the ticker. It's not my joke. It's not my pun. So they have introduced LIT as the Financial Infrastructure Equity and Fee Token, which is intended to, of course.

David Hoffman:
[27:11] Capture value from execution, verification, data, and pricing services across the LiDAR stack, also used for governance, ecosystem incentives, and economic alignment around the LiDAR perp decks and future products. It's the LiDAR token. It's the LiDAR token. 25 of the 1 billion supply was airdropped to traders and ecosystem participants on the lighter platform Came in valued roughly at 675 million dollars at the time of the airdrop That was the 25% Not the whole FDV, Placing LiDAR in some of the largest airdrops in history. Just airdropping $675 million is quite a significant deal. After the token was introduced and airdropped, $250 million, Ryan, was withdrawn from the platform. That represents 20% of LiDAR's $1.4 billion of TVL. Decently expected. Like, why are people putting TVL on LiDAR? Because Hyperliquid set a precedent. Very, very valuable. Leiter actually did attract a ton of traders and a ton of volume. Therefore, the Leiter token is going to be valuable, so people want to come and farm that. 20%, I think if you told me only 20% of the volume leaves, I'm just saying, I'll take that as a win.

Ryan Sean Adams:
[28:26] What's the FTV of Lit right now? I guess you gotta look this up, huh? Compared to Hyperliquid?

David Hoffman:
[28:30] So with the departure of 20%, the valuation of Leiter dropped to $2 billion. I think it came in at around $3 billion, but it has since recovered. It launched at $3.3 billion, dropped 30% over the next day, and then has recovered to where it is now at $3.13 billion. I do have to appreciate tokens that launch with very simple total supply numbers, like $1 billion, for example. So when I see the lighter price of $3.13, then I'm like, okay, I can do the math. Like $3.13 billion is how much lighter is worth. How much is Hyperliquid worth?

Ryan Sean Adams:
[29:03] What is it? $25 billion. $25 billion for Hyperliquid.

David Hoffman:
[29:06] And Lider is at 3?

Ryan Sean Adams:
[29:08] Yeah. Okay. Not bad. I really like the Lider project. And I think UX is fantastic. I think they are a strong competitor to Hyperliquid.

David Hoffman:
[29:17] It's fantastic. Have you traded on Leiter? I was about to say, Ryan is not the perp tax trader.

Ryan Sean Adams:
[29:25] That I know. I'm not as a user, from a user perspective, but from an investor perspective, you know, I'm pretty, maybe pretty attractive at these rates. We'll have to see.

David Hoffman:
[29:34] Yeah. I do want to know if they are opening up. So you could deposit money into like the on-chain market maker fund, the automated market maker fund, and you were getting 60% APY just by providing liquidity to LIDR. The only problem is that they would only allow you to deposit one quarter of your money. You had to like, in order to farm the token, you had to get more access to that pool. You had to actually trade on LIDR, which I'm not going to do that. I'm just going to get liquidated, which I did. But I do want to know. Yeah, I do want to know if they are opening that up to like, I would like to deposit 100% of my money into that 60% APY pool. I don't know if it's still 60%, but it's pretty lucrative for a while.

Ryan Sean Adams:
[30:13] We got more coming up. Vitalik says that Ethereum is solving the blockchain

Ryan Sean Adams:
[30:18] trilemma. Maybe already has. Also, Donkrad doesn't quite agree. He's got a different take. He's got a different direction he thinks Ethereum should have gone in. And Wyoming is launching a stablecoin. We'll talk about all that and more. But before we do, we want to thank the sponsors that made this episode possible. Vitalik has been on a Milady arc this year. Ending these posts with Milady is going to get a little sassy. Actually, this post ended with Onward. which I appreciate, but this feels to be some, I might call it North Star content coming out of Vitalik as one of the primary leaders in Ethereum right now. So this is a quote from a tweet this week. The trilemma, he's talking about the notorious blockchain trilemma. The trilemma has been solved not on paper, but with live running code, of which one half data availability sampling is on mainnet today and the other half ZKEVMs is production quality on performance today. Safety is what remains. What's he talking about here? Do you recall what the trilemma actually is? And why is he thinking it's solved now?

David Hoffman:
[31:22] Yeah, the blockchain trilemma is there's three properties of a blockchain, and you get to pick two of them. There is security, scalability, and decentralization. And like famously, everyone has only ever been able to pick two. So Ethereum and Bitcoin have optimized for the same things, security and decentralization, but as a result of that, they are slow. What did Ripple do? Ripple picked security and scalability, but they lost decentralization. That's what we would say also Solana has done. Solana has optimized for something close to that end of the spectrum. And really the infamous blockchain dilemma is like it's really hard to get the third. Ethereum's strategy to get the third is ZK. ZK and data availability sampling, which is sharding. So sharding and cryptography, basically. And through those things, we can get both parallel processing of independent nodes running in parallel, while also having the scalability and preserving decentralization. So it's always been on the Ethereum roadmap to solve the trilemma, and Vitalik's saying the technology is here now.

Ryan Sean Adams:
[32:21] Okay, if he's saying it's solved, why isn't Ethereum, you know, a thousand TPS right now? It's only like, you know, 25, something like this.

David Hoffman:
[32:30] Well, I think what he's saying, as I understand it, is like we have the engineering and now we need to put it into the chain.

Ryan Sean Adams:
[32:36] Right, right.

David Hoffman:
[32:37] Yes, we need to update the chain. We'd have to hard fork.

Ryan Sean Adams:
[32:40] And the data availability sampling, he's talking about in particular what that's doing for L2s right now, which is, and I think we just got another blob size increase just this week. The new target size for blobs has gone from 14 to 18, oh no, to 21, a maximum of 21. And this is basically, blobs are the fast lane for L2s, and this is data availability sampling, so this is sharding for layer 2s. And Vitalik is like, that's already not just in production, it is on its way to scaling up. Like this can be scaled up again and again and again and again. And blob space will not be a constraint for L2s anytime soon. And that's certainly the case. And so that part is in production and it's on its scaling path. And then the other piece of this is ZKEVMs. So that would be scaling the layer one itself and execution on the layer one itself. and that initiative has just kind of started. It's where maybe Blob Space was, say, two years ago, and that initiative,

Ryan Sean Adams:
[33:42] Is happening with ZKEVMs. That entire episode we did with Justin Drake kind of captures that. And Vitalik says that's production ready. What just needs to be, I guess, vetted and hardened is the safety side of things. So making sure there's no critical bug, making sure that we have some formal verification plan, making sure that we roll this out slowly so there's not some catastrophic event on the ZKEVM side. But he says with both of those technologies combined, the trilemma is no longer a trilemma. It's solved. You can have all three.

David Hoffman:
[34:14] You can have all three. You can have all three. Have you looked at the blob supply versus blob demand chart? No. Because it's looking very good. So we increased blobs in April of 2025 from a target of three to six. And we, by the, around now, is starting to approach six finally. But we first did, in the most recent hard fork, we increased the supply from six to 10. and we are nowhere near filling 10 up and now we just went from 10 to 14 and we are still nowhere near filling any of that up. So like there is so much slack in the system to add capacity on layer twos and now layer twos just need to like learn to use them. Like, yo, guys, you can take off the brakes. You can go really fast, more transactions. But like in terms of data availability, there's just no, like there used to be, I used to be about a year ago, fundamentally concerned with like, oh, just base. Base wants to soak up all of the blobs. and also so does WorldCoin.

Ryan Sean Adams:
[35:09] And Ethereum won't be able to scale maybe they'll have to use an alternative DA layer or something like this and it won't be on Ethereum that does not seem

David Hoffman:
[35:16] To be the case we seem to have plenty of blobs actually.

Ryan Sean Adams:
[35:19] Yeah, I think it's pretty exciting to hear Vitalik say it. I mean, he's a guy that popularized the blockchain scaling trilemma. So to hear him say it these years later is kind of a big, big deal. He also tweeted this out. Now, this is more on, I guess, the social side of things and the spiritual side of things. He said this, Ethereum was not created to make finance efficient or apps convenient. It was created to set people free. And he goes on with an entire post about this. But his take is the priority is for Ethereum to be first and foremost, most decentralized, permissionless, and resilient block space and make that more abundant. He's really, I think, throwing down the gauntlet and saying, we're not going to be the fastest chain in the world. We're not going to have the fastest, you know, the highest TPS or the fastest block times. That's not the optimization that Ethereum is going for. Instead, it's going for max sovereignty, max censorship resistance, max decentralization. And he equates that to max freedom. This means saying no to some things, doesn't it? And it means saying yes to some other things. Donkrat had a comment on this, but what's your take on Vitalik's post?

David Hoffman:
[36:33] Yeah, so he's saying that we value the values of Ethereum, decentralization, property rights, censorship resistance, more than we value finance. And those come first, which I think I directionally agree with. What I'm kind of disagreeing with is like, you can use the valuable properties of Ethereum that we are trying to preserve at the highest order and we can apply them to things that matter, primarily finance. And so I'm like, Vitalik is kind of positioning it as like an either or is like, no, we're not optimizing for finance. We're optimizing for freedom. I'm like, well, what if we apply freedom to finance? You know, like, can't, can't we include like, Ethereum will not sacrifice its values, We'll not lose its soul by going from 12 seconds to two-second block times. And we would be able to apply our freedom to more places if we went from 12 seconds to two-second block times. So that's kind of where I'm at. I don't know why it has to be so antagonistic.

Ryan Sean Adams:
[37:34] Did you see Vitalik's other post? I mean, he's getting into the technical details here. So this is one from this morning, and he actually talks about block times. Let's see. Oh, I did not see this, actually. Okay. I think the summary is, I think moderate latency, he says latency decreases are more centralizing, right? And he gives an entire reason why. I'll send this to you after the episode. But he said that I think moderate latency decreases are possible without losing all the decentralization properties to the two to four second level. But very much beyond that, and you start to get into the high frequency trading games and you lose centralization.

David Hoffman:
[38:14] Below two seconds, I'm like, okay, I don't, I think job well done at two seconds.

Ryan Sean Adams:
[38:19] So if you're max efficiency finance, then you would want to be well below two seconds. You'd want to be like Monad and Solana and like Speed of Light and IRBL. And he said the reducing latency piece of it is what gets you into the high frequency trading and you kind of like lose your soul type game. And he's doubling down on that. So two seconds is in the realm of what could be possible on Ethereum. But I don't know 300 milliseconds is not not on the layer one and that's the gauntlet he's you know yeah he's throwing down on that I'd say okay

David Hoffman:
[38:51] Well I'm fine with that can we get to two seconds though?

Ryan Sean Adams:
[38:55] I think we can Donkrad's comment on this was I'm not sure that the world needs what you're designing, except for the use case of non-sovereign store of value, a digital gold, like a Bitcoin type use case. And so stable coins, I think Donkrad would say, don't need that. And so you're over-provisioning for a product market fit that only exists in a small realm of global store of value, digital store of value type of thing. So you're effectively saying Ether is money with these design choices and that's what you're optimizing for. What do you think?

David Hoffman:
[39:35] I think we can find use cases and we could actually only find use cases that need censorship, property rights, you know, decentralization if we have that in the first place. And so those things that will emerge from those properties need those properties to emerge. And so, yes, maybe we can only think of Aave, or excuse me, not even Aave, just Ether as the primary use case of all of this abundant, trustless, censorship-resistant block space. But in order to produce things, I'm glad that Aave is as censorship-resistant and decentralized as it is. And that I trust my Ether inside of there, among with some other apps. And as that part of Ethereum grows, it needs to have those properties in order to grow. And so I'm saying I'm happy to hold out for future use cases, but we need to preserve the properties in order.

Ryan Sean Adams:
[40:27] To get them. I think the counterpoint Donkrad might make is, okay, but we've had 15 years at this, over a decade at this.

David Hoffman:
[40:35] Yeah, but the first half of that didn't count.

Ryan Sean Adams:
[40:40] Wow, so you are a very long game, huh? You're a very end game that we can create all of these different possibilities on Mac's decentralized block space.

David Hoffman:
[40:50] Ethereum is the tortoise.

Ryan Sean Adams:
[40:52] All right. Well, it's going to turn us into 2026. David, do you remember Caroline Crenshaw, Commissioner Caroline Crenshaw of the SEC?

David Hoffman:
[41:02] How could I forget? She was like Gary Gensler's secondhand lady? Yes, I would say. Lieutenant?

Ryan Sean Adams:
[41:08] I have no idea how she stuck around the SEC for this long, but she's now gone. So she was the last remaining, I would say, acolyte or kindred spirit of Gary Gensler left on the SEC. And she has now resigned effective January 2nd. So the SEC, as far as I can tell, is full crypto innovation. And there's no one really in there that's going to stop this. It's the complete opposite of the Gary Gensler administration at this point.

David Hoffman:
[41:36] Don't let Thor hit you on the way out. So there are some major U.S. Retailers that are accepting crypto directly as payments. This is a news headline that I think we get every now and then. Walmart, Starbucks, other major retailers are opening up to crypto payments. And so Walmart's OnePay app will allow users to buy, hold, sell Bitcoin and ETH in-store and also for online purchases. and then also Starbucks. Starbucks doesn't accept Bitcoin directly but it can use apps like Bact or Flexa which instantly convert digital assets into UnitedUSD to use it on a Starbucks card. Brian, do you care about these news headlines anymore? Because like, I think we would have been bullish on them in like 2020 and 2021. But like, I just don't care about spending Ether or Bitcoin at Starbucks. That's not a thing that I care about or I think matters.

Ryan Sean Adams:
[42:26] I remember, I think it was like, maybe it was 2018 or something like this. Anthony Pompiano was very excited about something like Kroger was accepting Bitcoin on the Lightning Network. I don't even know if this was actually real or actually happened or if it was just one tiny pilot or something. You're right. Yeah, I'm no longer excited about that type of, I mean, for a store of value asset, do you actually want to spend it?

David Hoffman:
[42:50] Yeah, it's like Walmart allows you to use gold at Walmart. Does anyone care about that? No one's going to use that.

Ryan Sean Adams:
[42:57] Does anyone want to do that? No one wants to do that. It is good that they're connecting to crypto rails. Obviously, it does seem like stable coins is going to be the way that practically people will pay, wire that into an Apple, like my Apple wallet. That'd be fantastic.

David Hoffman:
[43:12] Can I just have a USDC wallet in my Apple wallet, please? That's what I want.

Ryan Sean Adams:
[43:16] I think that's what most people want. And, you know, that's coming.

Ryan Sean Adams:
[43:20] That's on the way for sure.

David Hoffman:
[43:21] Yeah. Speaking of what most people want, Wyoming wants a stable coin and is going to get it. So the Frontier Stablecoin, FRNT, is the first fully state-issued fiat-backed stable coin. Wow. It's structured as a dollar-pegged, of course, with a state-managed reserves of cash and tea bails. And you know who gets the yield on this, on the Wyoming stable coin? Wyoming gets the yield on the Wyoming stable coin. That's kind of actually cool, right? It's a tax revenue screen. Yeah, it's a tax revenue stream. And so, like, I don't know, it's on Solana. Does Wyoming want all of its Wyoming citizens to, like, pay their state taxes in the Wyoming dollar?

Ryan Sean Adams:
[44:02] It's amazing. Can you imagine if all 50 states got their own kind of stable coin and just incented to pay? And, like, you know, you'd have, like, Texas dollars, New York dollars, California dollars. Why not?

David Hoffman:
[44:13] Why not?

Ryan Sean Adams:
[44:14] Then every state could inflate their own currency, too.

David Hoffman:
[44:16] So let's divide up all 50 states into different layer ones. So congrats on the board of risk, Wyoming. Solana gets Wyoming. Yes. I bet my home state of Washington state, I bet that's a pretty Ethereum. And also Colorado. Colorado, very public goods-y. You know, East Denver, I think that goes to Ethereum. New York, also going to Ethereum. I bet California is like contested territory. That could go to Solana.

Ryan Sean Adams:
[44:43] Wow. I do think there's a limit on these. If I'm remembering the Genius Bill, it's something like $10 billion. The state-issued stable coins couldn't get over a certain cap or something.

David Hoffman:
[44:55] $10 billion? That's a pretty high cap, I think.

Ryan Sean Adams:
[44:57] You think so? For a state? An entire state? That seems like small potatoes to me, but I guess. May the state wars begin. This is another thing that was a story, I think, leading off from last year. Do you remember how strategy, Michael Saylor's strategy, he was trying to fight

Ryan Sean Adams:
[45:17] to get it into all of these indices like the S&P 500 and that sort of thing. And he was getting some pushback from that. Well, the MSCI has decided not to exclude strategy and other dApps from its indices. There was talk that they were going to just take all the treasury companies and say, nope, they couldn't be in any indices like the S&P 500. And they've decided not to do that. So strategy could be included in the S&P 500, maybe sometime this year. It's a possibility. They still have to vote on that. But the door is now open, David.

David Hoffman:
[45:50] Okay, I think that's got to be bullish. I mean, like, that is the end game for debts. And if that end game is close to them, I think the investment case kind of takes a pretty bad hit.

Ryan Sean Adams:
[46:03] Yeah, the MNAF premium is much less attractive, I think. And it's much more attractive if you get included in the indices. And basically, all passive investors are forced to buy a little bit of micro strategy. That'd be nice for Michael Saylor.

David Hoffman:
[46:15] The Ponzi just gets self-sustained. You pick up the Ponzi into the money printer.

Ryan Sean Adams:
[46:19] Hey, I thought you said we weren't supposed to use the word Ponzi anymore for what we're doing. Do you know? Some people don't understand what you mean when you say Ponzi.

David Hoffman:
[46:27] Did I say that? I think I did say that.

Ryan Sean Adams:
[46:29] Yeah, you did say that.

David Hoffman:
[46:30] I did say that. Well, here's to a good 2026, Ryan.

Ryan Sean Adams:
[46:35] We'll end it there, guys. Got to let you know, of course, none of this has been financial advice. Crypto is risky. You lose what you put in, but we're 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.