ROLLUP: Rate Cuts! | ZK Breakthroughs | Farcaster’s Pivot | SEC Onchain | NYT’s Stablecoin FUD
TRANSCRIPT
Ryan Sean Adams:
[0:04] Bankless nation is the second week of december's time for the bankless weekly roll-up we got the latest fed meeting the last one of 2025 is now behind us we got a rate cut okay rates went down so can we be bullish now i don't know maybe depends what the prices are telling us on the week actually
Ryan Sean Adams:
[0:21] i don't know david are we like i don't know if we're flat or if we're down in the week or we're up. I just like, I have no sense of this.
David Hoffman:
[0:29] This is the information that people really tune in to the podcast to really get.
Ryan Sean Adams:
[0:33] I know.
David Hoffman:
[0:34] If you want to be bullish, you can be bullish, Ryan. Okay. That's okay. That's okay. I'll give you some things to be bullish about. We're going to talk about ZK technology really maturing to the point of actually unlocking synchronous liquidity across the Ethereum roll-up design space. This is a ZK Sync innovation. It's going live it is live fixing some of the fragmentation problems that we all know ethereum has had which is pretty cool you.
Ryan Sean Adams:
[0:56] Said the s word though you said synchronous i'm not sure if it's synchronous might be async david
David Hoffman:
[1:00] As i understand it layer twos get to tap into layer one liquidity on their layer two which means we don't.
Ryan Sean Adams:
[1:08] Atomically composable in a transaction i don't think not quite it's
David Hoffman:
[1:12] Async not quite not quite happening but but layer twos don't need their own liquidity anymore okay so yes maybe it's not synchronous but it is one there's
David Hoffman:
[1:22] one liquidity pool downstream of this innovation i'm sorry for.
Ryan Sean Adams:
[1:24] Getting the details let's just be bullish it's bullish okay
David Hoffman:
[1:27] Yeah i got some things for you to not be bullish about uh uh crypto social uh we got some news around far far caster quitting social and focusing on to wallets as it turns out crypto has always been about assets and trading assets uh as we're going to talk about that and what that means and, Perhaps memory lane about all of the three and four letter agencies that have done a 180 pivot when it comes to the regulation around crypto.
David Hoffman:
[1:54] And so I'm excited for that part of this.
Ryan Sean Adams:
[1:56] Yeah, especially this. OK, this week, SEC chair Paul Atkins, the anti-Gensler, said this. This is a direct quote I'm going to give you. You ready for this? All U.S. markets will be on chain within two years.
David Hoffman:
[2:09] Wow.
Ryan Sean Adams:
[2:10] He used the term on chain.
David Hoffman:
[2:12] On chain. It doesn't mean 100% of the markets, but there will be an instantiation of all U.S. markets on chain within two years, which is a very short amount of time.
Ryan Sean Adams:
[2:23] I don't know, David. All means all. He's saying all. You've got to take him at all. Also, it's pretty funny that the OCC, remember they were debanking people last cycle? Well, this time they're getting angry at the banks for debanking people. They're doing some finger wagging. I had to tell you about that story. And a New York Times article writes about stablecoins. It was a stablecoin explainer piece, except for the fact they explained how stablecoins are bad and dumb and we shouldn't have them.
David Hoffman:
[2:49] Wait, I thought the world loves stablecoins.
Ryan Sean Adams:
[2:51] Not the New York Times. David, before we get in, we got to shout out our friends and sponsors over at...
David Hoffman:
[2:57] Since we published that episode, I have discovered four more token sales. I think it's on. I think the meta is on.
Ryan Sean Adams:
[3:07] Or did they announce post the, they listened to the episode and they were like, whoa, we got an ICO. Stumbled.
David Hoffman:
[3:13] Maybe. No, there's four more ICOs since researching that article, token sales, that are out in the public. There we go. So a little teaser to the bankless listeners. We're going to put some effort into aggregating all of the information, standardizing a lot of the information that ICOs are putting out. So... informed investors could be informed.
Ryan Sean Adams:
[3:34] You just kind of tell me which ones I should buy and which ones I shouldn't.
David Hoffman:
[3:38] I'm not going to do that.
Ryan Sean Adams:
[3:40] Yeah, it wouldn't be financial advice on a bank list, but give me some pricing advice.
David Hoffman:
[3:43] I'll give it to you in the DMs. I'll give you financial advice in the DMs.
Ryan Sean Adams:
[3:47] And I will screenshot those and tweet them out as a separate product for bank list citizens. Bitcoin price on the week. Don't keep us guessing. Why are we?
David Hoffman:
[3:56] No one knows. No one knows until this moment on the weekly rollup. Bitcoin is down 3% on the week to basically exactly $90,000. Yeah, down 3%.
Ryan Sean Adams:
[4:06] It was up. It was up yesterday.
David Hoffman:
[4:07] Well, it's down today. It's down today. People are pissed off about it. I saw a tweet of the BART. Do you remember the BART formations of 2018 through 2020?
Ryan Sean Adams:
[4:18] Are we getting those back? Can you describe that? Use your fingers to describe what a BART is.
David Hoffman:
[4:22] So the BART head is like this going flat, and then it goes vertically up, and then it chops around, and then it goes vertically down. Yeah. And basically, this is indication of just a pretty low liquidity market.
Ryan Sean Adams:
[4:33] It's like the most annoying graph, I would say. Yes.
David Hoffman:
[4:36] Because first you're bullish, then you're bearish, then you're bullish, then you're bearish. Hate BARTs. Yeah, we hate BARTs.
Ryan Sean Adams:
[4:41] Are we in BART season? Is that what we're doing?
David Hoffman:
[4:43] For the last 10 days, we've been in BART season. Yeah, we're grinding around. Yeah. It's ever since 10-10.
David Hoffman:
[4:51] Bart season has been around.
Ryan Sean Adams:
[4:53] All right. Well, I've got something maybe a little bullish for you if you're a trader, but you don't like to trade, which is a product that is called Bitcoin After Dark. Okay. This is not a new podcast. Sounds like a TV show or something. This is an ETF, a Bitcoin After Dark ETF.
David Hoffman:
[5:14] Sounds like a Bitcoin-themed lingerie brand.
Ryan Sean Adams:
[5:18] Okay. So what does this thing do? This is real. Okay. Bitcoin after dark is a newly proposed ETF concept that would give investors exposure only to Bitcoin's overnight moves. See how the market closes, at least in US equities? Market closes at what? 4 p.m. every day? Is it 4 or 4.30? I can't remember. 4.30. Okay. 4.30, we'll say. I don't know, actually. Bitcoin still trades after that. Did you know?
David Hoffman:
[5:44] Like how God intended.
Ryan Sean Adams:
[5:46] Yeah. So what if there was an ETF fund that only held Bitcoin during the nighttime when U.S. markets were not trading and then has sold it the next morning? That's what you get in the Bitcoin after dark product.
David Hoffman:
[5:59] It buys and sells Bitcoin every day?
Ryan Sean Adams:
[6:02] It's just a nighttime product. It only holds at night after hours.
David Hoffman:
[6:07] You're paying trading fees twice a day on a huge amount of size?
Ryan Sean Adams:
[6:12] Look, man, it's innovative, okay? Who says TradFi doesn't innovate? This is the type of ETF product I think a lot of people have been waiting for is just after-dark Bitcoin.
David Hoffman:
[6:19] What do you use this for? What kind of position are you trying to express by only-owning Bitcoin during after-hour moves?
Ryan Sean Adams:
[6:27] I don't know, but Eric Belchunas is bullish on it. He said, I'm glad they're innovating, basically. What did he say? Is that innovation? Yeah, you know, this is something you'd find in like a DeFi product, I think. Some sort of algorithmic trading thing, and now we're getting them packaged in ETFs, which is just hilarious to me.
David Hoffman:
[6:45] I'm only bullish on Bitcoin when the sun's down.
Ryan Sean Adams:
[6:49] Want to recommend your family over Christmas. All right, ETH price, I got to imagine, also down?
David Hoffman:
[6:55] No, flat, flat, zero, 0% move on the Wii. Yeah, so ETH are doing okay. Yeah, we're going to talk about this later. But I think because everything else was down and Ether was, you know, flat, there was a moment where it was up. Like, people are bullish Ether on the timeline this week.
Ryan Sean Adams:
[7:12] Well, I'll tell you why. Like, one person who's been consistent, relentlessly consistent, relentlessly bullish is Tom Lee. He's been the Ethereum hero of the cycle of 2025. He now owns 3.2% of all ETH supply. Remember? Like I didn't think he was serious when he came on Bankless and told us, I'm going to buy 5% of all ETH. And now it's less than six months later and he has 3.2%. Tom Lee, how do you do it?
David Hoffman:
[7:42] Who do you think is more responsible for ETH's market cap, Tom Lee or Bankless?
Ryan Sean Adams:
[7:46] I think this cycle, you've got to give it to Tom Lee. You've got to give it to Tom Lee. All right?
David Hoffman:
[7:52] People are going to hate that I even said that.
Ryan Sean Adams:
[7:55] Heavy lies the crown.
David Hoffman:
[7:56] We will give you the crown, Tom Lee.
Ryan Sean Adams:
[7:59] You've earned it. All right? All the percentages of ETH that Bankless has bought over the years, I'm sure. Okay. Anyway, so he bought about $420 million worth of ETH last week.
David Hoffman:
[8:13] Yeah, same.
Ryan Sean Adams:
[8:13] In the bear market. Same. Same. Yeah, so he's still doing his part and continues to stack. I don't know where he's getting all the money, but let's talk about the sentiment shift you were saying. Now, this is...
Ryan Sean Adams:
[8:25] Our world is kind of the crypto native world, and that's dominated still by crypto Twitter. And so when you're talking about sentiment change, you're talking about on crypto Twitter. And there was some of that this week. Former skeptics, Ethereum skeptics, became bullish, became supporters. This was a tweet that kind of encapsulated it for me. This is venture capitalist and investor Ryan Watkins, who has previously- Back in the day, he was?
David Hoffman:
[8:56] Back in the day. Back in 2021, 2022.
Ryan Sean Adams:
[8:59] Four or five years ago?
David Hoffman:
[9:00] Yeah, then his funds backed up the truck, as I understand it, on Solana in 2023 and got very bullish Solana, very bearish Ether.
Ryan Sean Adams:
[9:08] Okay. But now, now what's happened? He says, the more time that passes, the more I believe crypto natives have completely lost the plot on ETH. And it's becoming impossible to replicate the product that Ethereum has built. He goes on and he talks about product market fit for Ethereum. He talks about network effect. He talks about entrenchment. He says Ethereum is like Bitcoin, and it's got this kind of immaculate conception type of story. And he also says now that Ethereum has really gotten its shit together from a shipping roadmap perspective, I guess he's talking about sort of the future prospects of the roadmap and also the fact that Ethereum shipped two hard forks this year. He's like, now it's Ethereum's game to lose. And I've changed my mind on that. And that was just one of the, I guess, tweets that I read this week that embodies this sentiment shift.
David Hoffman:
[9:59] Yeah, the other one comes from Mike Ippolito, who just puts it very succinctly. Ethereum is in the best looking place that it's been in four years to me. So this is kind of, this take, this sentiment is going around. I saw another tweet, I saw it in the agenda, but it was something to the effect of, you know, Ethereum last cycle of this most recent cycle, 23 to the 25-ish era of crypto, which I think we're calling a cycle now, is where Bitcoin was in 2021, the 2021 cycle, where like, you know, Bitcoin did pretty well in 2021, but it was Ethereum cycle. It was kind of a miss. It was kind of a miss. It did pretty well. It definitely led the market. So it's hard to call it a miss for Bitcoin, but it was really Ethereum's cycle. And a lot of Bitcoiners felt that. They felt that just like they had a negative attitude about that cycle because it was Ethereum's show. And I think you can play that forward where Ethereum got skipped this last cycle. It was Solana that really stole the show. And actually, Bitcoin resurged because of what it was very, very good at, just being a 21 million hard cap asset.
Ryan Sean Adams:
[11:05] I guess they decided in 2021 to just double down, triple down on narrative and institutional adoption. And that was really what gave them such a successful cycle this time around.
David Hoffman:
[11:15] Yeah. Now, I think is that this is the stars could be aligning for a very similar thing to happen to Ethereum, where just like all of Wall Street, as Tom Lee says, Wall Street has picked Ethereum to do all of its stuff, mainly tokenization being the very big narrative. So Clarity, very good for Ethereum. The Genius Act, very good for Ethereum. Clarity is not yet through yet. But like, I think the stars could be aligning for some of Ethereum's properties that really held it back last cycle to really shine through this next coming cycle. I remember you and I had a meeting with, just a call with Chris Berniske like two years ago. Yeah. And he said something that both you and I like didn't really like, which is like this cycle could just skip Ether. Yeah. And that's what happened.
Ryan Sean Adams:
[11:59] Yeah.
David Hoffman:
[11:59] You know what, Ryan? What? Like...
David Hoffman:
[12:01] Cycle's over.
Ryan Sean Adams:
[12:03] Oh, is it? Wait, I thought you told me there was no cycles. Last week, you told me there was no cycles.
David Hoffman:
[12:09] Cycle's over, right? And now we're on to the next one. We're on to the next cycle. So the whole cycle that skipped Ethereum is in the rear view mirror now. We're looking forward to the next phase of crypto. And to me, the next phase of crypto is tokenization on Ethereum.
Ryan Sean Adams:
[12:23] Okay, but what accounts for some of the sentiment shift? And the reason we highlighted the tweets that we highlighted is because previously, these have been more Ethereum skeptics. Certainly Ryan Watkins has. Mike Ippolito, I think he's been pretty, he's basically like Bitcoin is a special snowflake. Ethereum ain't nothing special. Show me how it produces revenue and then I'll believe you basically. So kind of a doubting Thomas on ETH from a monetary perspective. Some of that sentiment is shifting and it's happening all of a sudden. Do you have an explanation for that?
David Hoffman:
[12:54] Well, I know Mike Ippolito would definitely agree with Ryan Watkins' concept or idea that you can't really replace Ethereum. And in a very world of very saturated smart contract layer ones, the only one that truly is differentiated is Ethereum. Okay, but that.
Ryan Sean Adams:
[13:07] Was true a few months ago. That was true like three months ago, four months ago.
David Hoffman:
[13:12] Yeah. I think the market and the attitude is reorienting Ethereum from being comped to Solana to comped to Bitcoin because of that whole immaculate ICO, decentralization, censorship resistance, like Ethereum. the properties of Ethereum are finally starting to show through. And this is always going to be what was happening. Ethereum is in it for the long game, and it is the tortoise, whereas Solana was the hare. And now the hare is doing the whole end of story nap, and there's Ethereum just chugging along.
Ryan Sean Adams:
[13:41] Not to over-explain it, but I think it could be like three factors. Factor one is Tom Lee.
David Hoffman:
[13:48] Yeah, you can't, you can't.
Ryan Sean Adams:
[13:50] Yeah. Just institutional purchasing, the message going out there, like buying it because it's a store of value, you can't replace Tom Lee, and that's markedly different, okay? He is stacking up to 5%. The second thing, I do think that Ryan is right, in that we have seen much more builder momentum and clarity around the Ethereum roadmap, and that is a change. I haven't seen this much momentum in building an Ethereum, so much of a sense that, okay, it's getting its shit together since like 2022. And the third thing I think is people are seeing the L2 roadmap start to come together. It's not quite there. There's still the problems exist, but we had this week, Leiter overtook hyperliquid in terms of it. Leiter is a perps L2 in terms of volume, perps volume. And so people are seeing ZK, people are seeing the L2 roadmap start to work. Some of the fragmentation issues have a path to resolution and they're just getting more bullish on the roadmap too. I think that stuff might account for it. Some skeptics might say, well, it's just because ETH price outperformed on the week. But I think there's some fundamental changes here too.
David Hoffman:
[14:57] I do think it was a decent amount of ETH price outperformed on the week. I do think that has something to do with it. But why did it outperform on the week? What was some of the reason? Well, because Tom Lee bought a bajillion dollars of ETH.
Ryan Sean Adams:
[15:11] Thanks, Tom.
David Hoffman:
[15:12] Thanks, Tom. Total crypto market cap, $3.15 trillion. So still pretty low. Still pretty low. I don't know about you, Ryan, but I've been buying. I've been buying crypto assets and other assets over the last like two weeks.
Ryan Sean Adams:
[15:25] Not financial advice, huh?
David Hoffman:
[15:27] I didn't say that. I was saying what I was doing.
Ryan Sean Adams:
[15:29] I know. I know. And I'm getting ready to package everything that you're doing and selling that as a product. Yeah. You want to talk about what the Fed is doing. So this was the FOMC, last FOMC meeting of the year, and there was a rate cut. Yay. We got 25 bips. Yay? You think, okay, so David's in favor of rate cuts because he likes easy money policy.
David Hoffman:
[15:51] Yeah, I like easy money.
Ryan Sean Adams:
[15:52] He's got crypto bags.
David Hoffman:
[15:53] Who doesn't like easy money?
Ryan Sean Adams:
[15:55] I don't know. I think, well, maybe it's not good for us. How about that? Maybe it's not good for the U.S. to have easy money all the time.
David Hoffman:
[16:02] Yeah, but it's only 25 bips. Okay. 25 bips never hurt anyone.
Ryan Sean Adams:
[16:06] Yeah, 25 bips all the way to zero. I don't know where we're going, but we're at between 3.5% to 3.75%. And the framing of this, because it's always, you got to justify your bips, whether they're up or down with a story. And the story was because there were slower job gains, slight rise in unemployment, and inflation that's somewhat elevated, but like not so bad. So we can cut the rates here. The vote was six to three. Of course, one governor, this is maybe Trump's favorite, Stephen Moran, he wanted a larger cut. He wanted to go to 50 bips.
David Hoffman:
[16:43] Isn't it Stephen Mirren?
Ryan Sean Adams:
[16:45] Mirren. Yeah, thank you. That's probably right. So that happened. And also a little bit of, I'm not going to call it QE because it's not, but a little bit of Fed balance sheet adjustment up is happening.
David Hoffman:
[17:00] Not QE though.
Ryan Sean Adams:
[17:02] Not QE. It's actually kind of not QE because it's more on the T-bill side of things.
David Hoffman:
[17:06] No one knows what QE is anymore.
Ryan Sean Adams:
[17:08] Well, Powell stressed that these bill purchases, oh, let me tell you what he
Ryan Sean Adams:
[17:13] did. So the Fed is going to buy $40 billion. So this line is going to go up about $40 billion in the next 30 days. So that's not in the trillions. You see this is measured in the trillions, right?
David Hoffman:
[17:23] Yeah, that's a pretty marginal number it feels like.
Ryan Sean Adams:
[17:25] Just QE when it was going full steam ahead, you know, it was like $800 billion, like that level. So we're talking $40,000, and it's all treasuries. So these are short-duration bonds. True QE would be a bit more on the long-duration side where you really get to kind of adjust rates around this. And so a little bit of that is happening, and Powell emphasized that this is just temporary, basically. We're just, how do you say it? We're just trying to balance. What's the word he used? It's policy neutral. I don't know. He's it's not a big deal. It's not QE.
David Hoffman:
[18:00] OK, 40 billion dollars seems like such a small number. I'm just kind of like, why bother? Yeah.
Ryan Sean Adams:
[18:05] Why bother? Yeah. Well, Powell will not be the Fed chair for much longer. His tenure does expire. And Trump was actually asked about this in an interview.
David Hoffman:
[18:16] I'm so glad he was asked.
Ryan Sean Adams:
[18:18] Let's play it. I want to ask about interest rates, because a lot of Americans agree with you that they're too high. You're going to pick a new Fed chair soon. Is it a litmus test that the new chair lower interest rates immediately? Yes.
David Hoffman:
[18:33] Oh, my God, the timing on that. I don't even, maybe that was edited, but just like the speed at which the yes comes out of that man's mouth is just.
Ryan Sean Adams:
[18:42] He just says what's on his, like he is an open ledger.
David Hoffman:
[18:47] Totally, which I appreciate.
Ryan Sean Adams:
[18:49] Yeah, I mean, this would be, you know, most politicians would be like, well, I don't want to seem like I'm influencing, you know, independent monetary policy. No, he's like, I want easier money. So what do the markets do? S&P went. crypto closed red on the day. The two-year and the 10-year treasury went down. Dollar went down a little bit, 0.3%. The big question here is easy money, right? It seems like this is easy money, rates going down. It seems like that dovish monetary policy should also be good for risk on assets. Michael Nadeau, always with the contrary take around this lately, says that That doesn't necessarily mean it's dovish for risk assets. So first of all, it's only $40 billion. This was short duration. So this is not the type of QE that we've seen before with long duration bonds. So there's not a suppression of the long-ended yield. And broadly, financial conditions are easing. So he said, if this was risk on the way we would want it, the way you want it, David, that you're excited about, I would expect to see long bonds dropping and more of an impulse from Bitcoin. So he would have expected Bitcoin to kind of react to this. Although I do think, I haven't looked at gold prices. I think maybe they were up a little bit. I don't know. I'd have to go check on that.
David Hoffman:
[20:13] To reiterate, I am a fan of the slow long-term rate cutting without any sort of material changing, of course. Which I actually would consider Donald Trump coming in with Edward Scissorhands. And I don't want him to do that Because I don't want him to just Like I've said before We've got a good thing going Like if you look back historically Over the last two years Prices are up, And I want them to stay on that slow grind up. And I don't want anyone to disturb anything.
Ryan Sean Adams:
[20:43] So you just want the president to be cool, calm, collected, and highly rational. Yes. No problem. That's easy.
David Hoffman:
[20:50] Don't shock the system. Like, we got a good thing going.
Ryan Sean Adams:
[20:53] That's going to go great. We'll see who he nominates. David, what else are we talking about?
David Hoffman:
[20:57] Coming up next, we're going to talk about a crypto social forecaster pivoting
David Hoffman:
[21:01] to just crypto, pivoting to a full wallet. We're going to talk, is crypto social over? and were we naive to even think it was a thing in the first place? And then also, did the ZK Sync upgrade fix Ethereum's Layer 2 fragmentation problem? We're going to talk about all this and more, but first a message from some of these fantastic sponsors that make this show possible. Dan Romero, the founder of Warpcast and Farcaster on Farcaster, announced a major strategic pivot to the platform about how Farcaster is shifting from a social app with an optional wallet to an on-chain identity and trading platform centered around the wallet. So rather the social being the center of Farcaster, the wallet will be the center of Farcaster and all the social elements will be focused around the wallet. So a lot of the same products that Farcaster's already is built, but really reorienting what is first class in the Farcaster ecosystem and really the message that on-chain social or decentralized social is a...
David Hoffman:
[21:58] Service to add on to a wallet is kind of the big takeaway here is like you can't really do according to dan they've tried they've tried to make on-chain social decentralized social like the first class citizen of their ecosystem and he said no it's a wallet the wallet is actually the center of the ecosystem and all of farcasters engagement and like uptake has really come from people doing trading or token stuff and so he thinks it's his decision to reorient the farcaster ecosystem around the wallet.
Ryan Sean Adams:
[22:28] Yeah. I mean, wallet first approach rather than social approach, whereas previously, you know, they would have been a reverse. They were a social network with a wallet. They had pretty big ambitions around this and they've been doing it for five years and they built through multiple bear markets. I don't think it's a good take to say that they haven't tried. This is Dan. He said, the goal has always been to build an ad scale decentralized social networking protocol with 1 billion people using it every day. They were trying to get to Twitter-level usage and saturation. How are they doing that? Well, it's Twitter, but it's decentralized was the take. You own, as a user, you own your own property. Any client can build on top of it. We're protocol first. That was the pitch, and it didn't take off. And I'm curious your thoughts on why it didn't take off, because I do think they genuinely tried, and they aren't the only team that has tried. And there's been Lens Protocol. There's been a number of crypto social networks I've tried, but this is one of the most legitimate, buildiest teams actually working on it and they couldn't make it work. My take is it just wasn't ever 5 to 10x better than Twitter. in order to get kind of the network. And like the network effects in social networks are surprisingly strong. Yeah.
David Hoffman:
[23:48] I mean, you and I have tried out Farcaster. I've gone on to Farcaster four times over the last two years. And does it ever, is it ever sticky?
Ryan Sean Adams:
[23:56] Not really. And why not? Like I went in series where I'd be like, okay, like I'm going to use Farcaster this week. It's kind of like a fitness regime. Yeah, I'm like, I'm going to do it. You know, I'm going to do it. I'm going to build here. And I just kept getting pulled back to Twitter. And that's in despite despite the fact that X is kind of shitty. Yeah. It's pretty shit. It's bought. It's bought farmed. It's but like that's still where things happen. News breaks. Conversation is happening. The people I know are like it's the center point even for crypto conversation. Yeah. Why do you think this didn't work?
David Hoffman:
[24:29] Partly because of what you just said. X network effects are very large. But you can also just look at kind of a graveyard around crypto social with other Web3 subjects. Like there's a lot of Web3 subjects that are just tombstones. On-chain gaming, for example, is one of them. Just like generally speaking, Web3 hasn't done well as a concept. I know Chris Dixon's whole like read-write-own thing, which like that's what he'll equate to Web3 is. It's like, yeah, you get to own stuff. Like, yeah, that's true. That's totally what crypto is. But like there was a on chain maximalist position where it's like on chain gaming and on chain social and, you know, pick your pick your thing and you're going to move it on chain. That never really has happened. And it kind of coincides with one of those articles that went around Crypto Twitter of just this one guy, founder of Ribbon Finance, wrote an article saying, like, I've dedicated eight years of my life to building out this casino and now I have ragrets.
Ryan Sean Adams:
[25:30] I know you read Nick Carter's counter to this. Yes. And I think that's a clue. So Nick Carter wrote an article entitled, I do not regret spending eight years of my life in crypto. And he actually talks about five kind of canonical use cases or like reasons to Loy.
David Hoffman:
[25:52] Is that the word? He's throwing some light in there. He's such a, what is it, classicist?
Ryan Sean Adams:
[25:57] Yeah. Anyway, so he said there's really, there's like five reasons or like moral virtues or goods that like crypto is providing the world. Number one, the sound money thing, the hyper-Bitcoinization of the world, or if you're in Ethmax, so you need a hyper-Etherization of the world. Number two, make everything smart contracts. You take existing business logic, you turn this into smart contracts. Maybe DeFi fits in here. Number three was what you just said with Chris Dixon. That would be making digital property real. And that's where we get NFTs and Web3 Social. That kind of fits there. Number four is you take TradFi, but you make it more efficient, right? Making capital markets more efficient. That's something that crypto can do.
David Hoffman:
[26:38] Connected to number two.
Ryan Sean Adams:
[26:39] Cobalt mainframes and we're upgrading that. And then number five is broadening financial access. So giving everyone basically a bankless bank account and you can come on the world's greatest financial system. Now, of course, all of these are tied together. So it's sort of a Venn diagram of interlinking circles here. But number three, making digital property real. We had NFTs. You mentioned Web3 gaming. the whole web three concept even of what, you know, like social's wrapped up in there. Yeah. Are we giving up on all that? Or are we like, are we like growing up and just realizing that Maybe crypto can't do all of the things we hoped, but it does do some of these things. Like, are we giving up on the Web3 thing?
David Hoffman:
[27:22] I'm not. I think there is a more suitable, suited order of operations on some of this stuff. Like, sound money obviously comes first. Bitcoin obviously comes first. And after that comes something along the lines of DeFi and smart contracts and putting Wall Street on chain. and some of the big aspirational kind of grandiose ideas that I think we all got starstruck by both in 2017 and 2021, on-chain gaming and on-chain social being two fantastic examples. Like I think we'll kind of get there and we'll get there last. We'll get there at the end. We'll kind of like go full circle in like 2040. We'll look at some of the stuff going on and be like, oh, that's on-chain gaming and that's on-chain social. And actually it kind of just like showed up, it kind of just sneaked its way into the ecosystem without actually anyone really building it in particular. We're kind of just like end up there to kind of realize that a lot of the original ideas actually did end up playing out. Not in ways that we thought we didn't get there directly, but we did kind of get there in a roundabout way.
David Hoffman:
[28:25] And I think we kind of have to just do a few things first. We have to legitimize crypto, get stable coins into people's wallets, give people wallets in the first place. you know get people using the finance side of crypto and then all of a sudden when like literally everyone is using a wallet on a day-to-day basis in one way or another whether it's through i don't know like robin hood or coinbase or everyone's got a wallet somehow then all of a sudden like it's going to be a lot easier to do on-chain gaming and on-chain social than it was prior um but first we have to kind of go through the correct order of reparations and i think we just were too early and a lot of stuff that we labeled Web3 in 2021 and 2022.
Ryan Sean Adams:
[29:07] I think part of Web3 that made sense to me was the part that was around property and property rights and the part closer to kind of like money and ownership and everything tied in with kind of like finance fits that. The part that made a lot less sense and never had heat around it was like the, we're going to take the internet thing, but we're going to make it decentralized. And acting as if decentralization was like a feature. And it's not. But decentralization is just anti-corruption technology. And it is not a feature, right? If you take that and you build sound money on top of it because you need anti-corruption technology, well, then you have a feature. But the feature is like the sound money. Decentralization just gets in the way for a lot of things.
David Hoffman:
[29:58] Yeah, yeah. It's actually inappropriate in most circumstances.
Ryan Sean Adams:
[30:01] Yeah, and I think some aspects of crypto went in the wrong direction. But I also agree with you. I think in the fullness of time, a lot more will be uncovered. So part of maybe... There is a version of Web3 Social that works, and it's probably around kind of more property rights-y type stuff. But also, it could be the case that the time is not now, and the time will be later. But one thing you said about this article was that... You said you strongly resonate. You came into crypto as a starry-eyed dreamer and seeing the good future that crypto could bring. But you said, I see much less of that in me now. I was also dumb and naive back then. You were dumb and naive back then. So are you smart and wise now? What do you think is different?
David Hoffman:
[30:50] I mean, in 2017 when I got into crypto, I didn't know shit, dude. I fully believed every single ICO. Every narrative? Every narrative. Did you invest in a DAG? I did invest in a DAG. You know what I also invested in? Substratum. Do you remember that one? Yeah. Something to do with decentralizing web pages or something like that. I can't remember, dude.
Ryan Sean Adams:
[31:09] I bet you invested in interoperability networks, too.
David Hoffman:
[31:13] Probably. Yeah. Yeah, yeah, yeah. Yeah, no, I didn't know shit, dude. And... Yeah, I mean, that was me growing up. And I feel like that's probably how everyone gets into crypto is like, this is going to revolutionize everything. Not only is it going to revolutionize everything, it's going to revolutionize everything tomorrow. And I need to buy it right now and tell all my friends about it. And then like you realize, you know, I know you know this. Tyler Cowen's main argument about why AI is just not that revolutionary.
Ryan Sean Adams:
[31:42] Yeah.
David Hoffman:
[31:42] Is that it just takes a while for new revolutionary technology to get to the rest of society. It takes a while.
Ryan Sean Adams:
[31:51] Well, it's because the rest of society, things move a lot slower than the tech, right? It's like regulatory is an example of this, right? The existing regulatory systems have to adapt to see smart contracts as some sort of law type of thing that can be respecting a court system, right? All that, the human stuff takes so long. That's his point around AI.
David Hoffman:
[32:12] Yeah. And like I live in New York City, which is a very fast paced city. I worked in crypto, which is a very fast paced industry. Most crypto people use AI, which is also pretty fast paced. Have you ever talked to somebody who, I don't know, lives in like Oklahoma?
Ryan Sean Adams:
[32:27] Doesn't change very much.
David Hoffman:
[32:28] Their life is mostly the same year in, year out. Yeah. And like the rest of society, like we're in a very, we go fast here. We go fast in crypto and we have very fast. We're in a bubble.
Ryan Sean Adams:
[32:38] It's a bubble, yeah.
David Hoffman:
[32:39] The rest of society doesn't go that fast. And it takes time.
Ryan Sean Adams:
[32:41] No, it takes time. I see that's true. But you also said this. Crypto will still do the things I dreamed it would when I first entered, just much slower and more quietly than I originally thought. I kind of resonate with this too. I feel like simultaneously crypto is doing less of what I thought it would do and also more. So less in terms of total expressivity of all the use cases that I thought it might do at one point in time. But the things that it's doing is to a deeper level And like in a way that seems so full steam ahead and it's accomplishing more like the speed at which it's actually revolutionizing Wall Street and saturating that like getting the genius bill signed. These are huge things milestone moments. Yeah. And so at the same time, it's. It's come farther than I thought it would when I started in crypto, but also just in a more limited set
David Hoffman:
[33:35] Of use cases. In a different direction.
Ryan Sean Adams:
[33:36] Yeah. In a different, yeah. Anyway, let's talk about ZK, David. Yeah. So part of maybe why people are bullish Ethereum, as we talked about earlier, is ZK technology. So tell us about this. This is ZK Sync. they're deploying ZK technology in a layer two and unlocking some pretty cool things with, they call it the Atlas. That's their name for this network.
David Hoffman:
[34:02] The Atlas upgrade, yeah.
Ryan Sean Adams:
[34:02] Okay, that's an upgrade. Tell us about this.
David Hoffman:
[34:05] Yeah, it's kind of, it'll probably be ZK Sync's biggest upgrade ever.
Ryan Sean Adams:
[34:10] Maybe.
David Hoffman:
[34:11] Mainly because it's just like kind of fulfilling one of the early visions of ZK and ZK Sync, generally speaking. So they went through the Atlas upgrade and transitioned ZK Sync from a single layer two into the elastic network in order to visualize the elastic network i want you to imagine uh lightning or tree and tree branches things branching off of each other and new chains are spinning up uh with an elastic amount of scale so elastic scale with like permissionless addition of new chains uh but the whole cool thing about this is that whole meta network that whole network of networks all has unified liquidity to ethereum okay so earlier when we started the episode i said synchronous i meant to probably should have said unified yeah so the the zk elastic network has direct access to layer one liquidity in layer one smart contracts and so if you got ether on the zk elastic chain layer two meta network you can you make a layer one transaction that accesses the business logic of layer one smart contracts as if they were on the layer two.
Ryan Sean Adams:
[35:15] Can I show you this? This is a demo. So this is a demo of, I believe what they're trying to do is they're taking out a loan. They're on a ZK Sync L2 and they're taking out a loan on L1 Aave. So interacting directly with L1 Aave in a seamless way without having to bridge over. Correct. And you can see in this kind of, this is a test environment, but this is essentially what the Atlas upgrade does is this all feels very seamless. You don't have to move assets anywhere. You don't have to wait. You don't have to bridge. You're in your same wallet if you're in a ZK Sync L2. And you can just get access to all of the DeFi and all of the liquidity on top of Ethereum. So it feels much less fragmented. And they can do this because ZK proofs, essentially, right? Rather than optimistic fraud proofs with long withdrawal windows. And they do some magic with bundling transactions, integrate that in the wallet. and it all feels nice and seamless if you're in a ZK Sync L2, which is a big step.
David Hoffman:
[36:18] This is a pretty big deal. One of the ways to illustrate why this is a big deal is you got to know that Aave just loves this just because like imagine like ZK Sync not being able to do this. I mean like Aave, please build and maintain an Aave deployment on our chain for users.
Ryan Sean Adams:
[36:33] Yeah, deploy another thing of Aave.
David Hoffman:
[36:35] Yeah, whereas we're now ZK Sync is like, oh no, we're just going to use a layer one Aave. Like the layer one Aave is the ZK Sync layer two Aave. So that's pretty sick for Aave. Pretty sick for ZK Sync users who get to access to Ethereum's layer one Aave implementation, which is the most liquid implementation.
Ryan Sean Adams:
[36:51] It's exciting to me when the builders say it, right? Because like we've got all the infrastructure stuff, but here's Stani. He said from Aave, of course, this is a game changer. L2 is tapping into L1 liquidity. No need to replicate the same DeFi ecosystems on L2's infractionalized liquidity. Well baked. He's a big fan of this model.
David Hoffman:
[37:08] For exactly.
Ryan Sean Adams:
[37:09] The reasons you said
David Hoffman:
[37:10] The thing to pay attention to is like this was always going to happen with ZK there's kind of a race to get here with ZK, Now that ZK Sync has Layer 2 users accessing Layer 1 liquidity with their ZK implementation, that kind of sets a standard, a ZK standard, that other Layer 2s might also want to use that same sort of infrastructure. This is also going to speed up, by the way, as ZK Proving gets faster and faster and faster so that we can get cross-chain synchronous composability. This is like the first step to get there. And as more people use ZK Sync's technology, then all of a sudden that technology gets more robust and might become the standard for technology. the ecosystem.
Ryan Sean Adams:
[37:51] That's right. And maybe we can on Bankless coin another phrase here, like, you know, the DeFi mullet, you remember that? What about the L2 mullet? Okay, where it's a bank in the front, but it's an L2 in the back. And some of that seems to be happening because this is appealing in particular for institutions. That's who ZK Sync is going after. And these are institutions I'm like, oh my God, you're doing something in crypto? I can't believe it. And It's hard for me to know how serious they are about it, but look at this. This is the ADI chain that just went live. I'd never heard of this. It went live with ZK Sync Atlas. This is actually the United Arab Emirates. It's a chain backed by their central bank.
Ryan Sean Adams:
[38:37] What yeah so a bunch of regional banks in the uae a sovereign country got together and launched this chain and they have a stable coin that's regulated by the uae central bank on top of it so it's all sanctioned and the idea is that uae residents um can use a digital currency basically a stable coin as a bank account essentially they didn't even know necessarily they're using crypto Of course, all of this is private. So part of ZK Sync is it can be private as well, but then it's all connected to the L1 ecosystem. So if anybody or even some of these regional banks on this ADI chain want to go take out a $100 million money market loan against Aave, they can do that seamlessly without having to bridge.
David Hoffman:
[39:23] Or provide any user the yield that Aave provides.
Ryan Sean Adams:
[39:27] That's right. Right. What? L2 mullet, baby.
David Hoffman:
[39:30] That's crazy. That's crazy.
Ryan Sean Adams:
[39:33] Kind of cool. Kind of cool. All right. All right.
David Hoffman:
[39:35] Not just ZK Sync building stuff in the ZK world. Cello is also the first Ethereum layer 2 to use OPZK fault proofs. God, if any new listener of Bankless is listening to this, I'm like, what's the shit that's going on? OPZK fault proofs using an Ethereum layer 2.
Ryan Sean Adams:
[39:55] Simplify it. What do they actually do?
David Hoffman:
[39:56] Okay, so this is the Jell-O hard fork out of the Cello ecosystem. Cello was an OP stack chain. Let me just make this as complicated as possible. It was an OP stack chain, which is naturally an optimistic roll-up. So you have the optimistic seven-day settlement windows of non-interoperability, fraud proofs. But they just did their hard fork, brings in using succinct, OP succinct, which we've covered before. They're calling it the light version of that, a light configuration of an OP-powered system by succincts, proving network to give the op stack roll-up zk fault proofs without turning them into full zk roll-ups that prove every.
Ryan Sean Adams:
[40:33] Transaction dude oh
David Hoffman:
[40:36] My god why isn't crypto.
Ryan Sean Adams:
[40:37] Mainstream why isn't crypto it's really cool it's cool though right it's basically the story is all of these fault-proof optimistic roll-up chains with seven-day withdrawals they're all going to get upgraded the way cello is upgrading jello To ZK.
David Hoffman:
[40:53] We're just not ever going to have to use fraud proofs ever again. And they're just going to be ZK proofs. And when there's just one implementation, we don't even have to talk to them at all. Jesus. All right. Let's go. Let's go to our next section. We got, this will be a more accessible. Base built a bridge to Solana and Solana totally loved it. Three major regulators continue their complete 180 on crypto regulation. And also the New York Times runs a piece on how much they love stable coins. So we're going to hear about all of this and more. But first, a moment to talk about some of these fantastic sponsors that make the show possible.
Ryan Sean Adams:
[41:27] Base is a layer two chain from Coinbase, of course, and they launched a bridge to Solana. But was this a hidden vampire attack against Solana or was this an act of love? They're just trying to get more people on chain, as Jesse always says.
David Hoffman:
[41:44] Answer is yes. Answer is yes. So it's a pretty simple, like, proprietary Coinbase base bridge. So you'll just lock up assets on a base-controlled contract on Solana, and then base will mint those same assets on base. In theory, you can go the other way, but there's definitely a clear emphasis on the directionality of the bridge. Jesse commented saying, we built a bridge from base of Solana because we think the global economy should be connected, and that base builders and creators should be able to access the capital markets on Solana. And so some of the early integrations here include Zora, Aerodrome, Virtuals, Flaunch, and Relay. These are all base applications that you can now put Solana assets into the base applications.
Ryan Sean Adams:
[42:26] The Solana tokens, they live in a different world pretty much, right? Yeah. It's all in the Solana ecosystem. There's tons of them, lots of meme coins and such, but it's not ERC-20 standard. So none of that exists inside of base.
David Hoffman:
[42:36] Yeah, so you need some sort of like central operator to coordinate assets across these ecosystems that don't talk to each other because naturally Solana is on the Solana virtual machine and base is on the Ethereum virtual machine. These things can't communicate. And so the base bridge does that work of communicating assets across chains.
Ryan Sean Adams:
[42:54] Makes sense.
David Hoffman:
[42:54] Makes sense. The important thing is... you can just do this. Base can just do this. They are both our permissionless ecosystems. And so base did a thing to put a Solana assets on side of the base chain. That is not really how the Solana ecosystem community received it. They took the more of the vampire attack position here. The founder of a Solana platform tweeted out, these are not partners talking about base. If they had it their way, Solana would not exist. Jesse, the founder of Base, replies to this on Twitter saying, What? We just built a bridge to Solana because we think Solana assets deserved to have access to the base economy and that base asset should have access to Solana. That same person replies saying, You didn't set up a single Solana partner for launch. Didn't talk to Solana Foundation for marketing or ops. You just dropped a repo. And then Jesse replies, which I actually think there's a bunch of extra context that I'll have to say to help with this. He replies, just for everything, everyone following along here, there was some communication breakdown here that we are digging into and solving. But it's not true that we didn't talk to Solana folks or work with Solana partners. We spent the last nine months building this, including publicly announcing it five months ago. At many point during that time, we tried to get engagement from people across Solana, but folks weren't really interested. But we did end up with a bunch of great memes like Trencher and Chill House collaborating with us on it. Now, Ryan, I know you don't know what those two things are.
David Hoffman:
[44:22] Chill house is this solana meme that ported as i understand it ported over to base when base announced this like a number of months ago and so there was this drama about the chill house solana meme now migrating moving doing something with base like taking up this opportunity to move to base oh no and jesse supported this and that caused a bunch of drama and So like this has been the base Solana Bridge that was announced forever ago. We talked about that on a weekly rollout.
Ryan Sean Adams:
[44:49] I remember talking about it. That's why I'm wondering why people are surprised.
David Hoffman:
[44:52] Yeah. And so the fact that somebody said you didn't talk to the Solana Foundation, marketing or ops. I didn't know you needed to do that.
Ryan Sean Adams:
[45:04] This all feels really silly to me. And I don't know if this is just like actual drama or it was just stupid Twitter drama. The net of this is Solana, they're doing their breakpoint conference right now, I believe, right? So it's mid-breakpoint. And Base went on stage, or at least Coinbase did. Somebody went on stage. And they announced, this should keep the Solana folks happy, a way to trade all Solana tokens through Coinbase, through kind of their DEX UI, the Coinbase wallet app.
David Hoffman:
[45:36] Yeah, similar to how you can trade any token on Aerodrome, which is a dex on base on the Coinbase front end. They are now just enabling that with a Solana dex. Don't know which one, but you can now do that through the Coinbase front end.
Ryan Sean Adams:
[45:49] I guess they're all friends again, huh? Or maybe that was... They'll always be frenemies a little bit, just like everything in crypto, I think. But it is interesting to see base versus Solana in these head-to-head fights and competition.
David Hoffman:
[46:02] I love the line, you didn't talk to the Solana Foundation. Totally. Okay, Anatoly just has the last comment on this whole thing. He did tweet out that the bridge is bidirectional in code, but not in economic gravity. If the bridge just lets base app import Solana assets while keeping all execution and fee revenue on base, it extracts value from Solana without reciprocating. Is there an alignment, a notion of alignment coded in here? Yeah, I think so. Is this alignment?
Ryan Sean Adams:
[46:34] That sounds like alignment to me. Economic alignment is another version of alignment. Yeah. And pretty important to Anatolia, I'd imagine.
David Hoffman:
[46:43] Let's talk about some Ethereum news. I'm sorry, I'm having too much fun.
Ryan Sean Adams:
[46:46] Yeah, I mean, I barely paid attention to that. So thanks for explaining it all. Ethereum Fusaka upgrade shipped last week. We talked about it. Maybe one of the things to emphasize and underline was BPOs, blob parameter only upgrades.
David Hoffman:
[47:02] Here we fucking go.
Ryan Sean Adams:
[47:05] All right. So you think this is a big deal. It was actually activated on Tuesday. So this didn't happen at the hard fork last week. It happened Tuesday. So there's a bit of a delay. And by the way, BPOs are going to go up again. Now, there's going to be another blob increase, I believe, in January.
David Hoffman:
[47:21] Have we said what a BPO is?
Ryan Sean Adams:
[47:22] No, we haven't.
David Hoffman:
[47:23] A blob parameter only is now live on the network.
Ryan Sean Adams:
[47:30] And that gives us basically layer twos, so chains that settle on Ethereum, will have more transaction throughput as a result because blobs are their fast lane for transaction throughput. So they get a lot more, which means transactions on L2s get cheaper and become much more scalable.
David Hoffman:
[47:48] Yes, correct. Blob parameter only, we don't really need to know that. What we do need to know is that this was bundled in Fusaka. This was an intentionally delayed activation. So however many days after Fusaka, it got activated like five or a week or something. And really, I'm pretty sure the purpose of that is just to like not change too many things at once, kind of have siloing of concerns. That's right. And so the blob target, so Ethereum blobs increased from six to 10. And then the maximum blob limit increased from nine to 15. And so roughly like a 40% increase of blob size.
Ryan Sean Adams:
[48:23] And the one in January, what's that going to do?
David Hoffman:
[48:25] 10 to 14 with a maximum of 15 to 21. So another 40%. We just went from six to 14 basically. Yes.
Ryan Sean Adams:
[48:32] No, no, no. Sorry.
David Hoffman:
[48:34] So in January, we will have gone from 6 to 14 with a Fusaka fork. Yes, which is quite a big deal.
Ryan Sean Adams:
[48:40] So much blob space. This is... a dashboard, DUNA List dashboard from Hill Dobby of average blob count per block. And you could see we were just about reaching the ceiling of demand starting to exceed supply. And then we just got another boost upgrade, another blob stimulus upgrade. And we're going to get another one. It's going to be a while before L2s probably hit those things. Well, it depends on how fast they grow.
David Hoffman:
[49:04] Yes. I mean, we could see between the period of October of 2024 until April of 2025, blobs were at saturation and layer twos were consuming as many blobs as Ethereum was able to supply to the market. And so layer twos had to go look elsewhere. We had to go to Celestia or EigenDA. And then Ethereum increased its blob count from three to six. And then as we just upgraded just now, like Ryan said, blob consumption basically was approaching six, hadn't quite got there, which is good because what that means is Ethereum is upgrading its supply of blob space faster than the market can consume it, which means Ethereum is scaling. Transaction fees continue to be extremely cheap on layer twos. And again, like Brian said, we're going to increase this even more in January, which means there is a, significant amount of slack in the blob system for layer twos and the fact that ethereum is delivering this ahead of actual saturation and not not six months of saturation after i think is very very bullish because that means ethereum is scaling and.
Ryan Sean Adams:
[50:11] There's a path to continue delivering on this right at a very frequent cadence this is kind of a javen's paradox type thing of like Like, you know, the more, the cheaper the cost, the cheaper the resource, the more that will be consumed. And I think that's exactly what's happening here.
David Hoffman:
[50:28] Saturated blobs is a legitimate argument as to why a chain would launch as a layer one instead of a layer two. And so if blobs aren't saturated, then that argument doesn't exist.
Ryan Sean Adams:
[50:38] David, I want to tell you about the different world we are in from a regulatory perspective. And I know we've covered this so much, but every time I look at it and zoom out, I'm just like...
David Hoffman:
[50:47] We need it.
Ryan Sean Adams:
[50:48] Yeah, okay, so Regulator's doing a complete 180 on crypto this year, and it really feels to me like, do you know like in the Disney movies, when the spell is broken and the villain gets, or like take Lord of the Rings, you know, Sauron, the ring gets cast in the fire and Sauron's tower collapses and all of the darkness fades away. That's what's happening right now is all of the darkness is receding from-
David Hoffman:
[51:12] Is Gary Gensler Sauron in this.
Ryan Sean Adams:
[51:13] Example? Yes, pretty much. Anyway, okay, let's talk about three agencies here and what they're doing. So the first is the SEC. The SEC is ending a two-year investigation into Ondo Finance tokenization platform. I want to zoom out and remind you that the SEC had enforcement actions in close to 20 different crypto companies, many of these notable. A dozen inquiries and lawsuits have now ended with no enforcement, Ondo being the latest. And we had Corey Freyer on, who was actually Gary Gensler's lieutenant. And he didn't like this at all. I mean, he was orchestrating a lot of this. But he basically said, this is unprecedented. It's never been the case.
David Hoffman:
[51:56] It wasn't. They were unprecedented. They were unprecedented first.
Ryan Sean Adams:
[51:59] And now we're undoing the unprecedentedness of all of these enforcement issues.
David Hoffman:
[52:02] It's unprecedented that we had to deal with your bullshit.
Ryan Sean Adams:
[52:06] We were so kind to him, though. I do appreciate him coming on. Let's talk about the new SEC chair. He had a quote this week. I'm just going to play. This is Paul Atkins. There were really only two countries in the world here in the last few years that were working to make cryptocurrencies illegal, and that was communist China and the U.S. through the SEC. So that's changed. It's a new day now. And so we want to embrace this new technology. I love how he just compared the Gensler SEC to communist China, David.
Ryan Sean Adams:
[52:40] That is the SEC chair doing that. And he's saying, we're completely changing. Now we're going to embrace it. So that's the SEC. They could not be more pro crypto, more bullish on crypto. Also, the CFTC launched a digital asset pilot allowing Bitcoin, ETH, and USDC to be used as collateral. Okay, so this effectively recognizes both Bitcoin and ETH as well as USDC as money for margin collateral. This is a legitimization process of Bitcoin and ETH as commodity monies and for use in derivatives and other CFTC regulated collateral. So that's a big deal too. Joseph Shalom from the co-CEO of Sharplink says, this is further recognition of ETH as the pristine collateral bridging TradFi and DeFi. So more legitimacy on that side. You could also see this with Bitcoin. U.S. banks are now able to issue credit against Bitcoin. Okay, so Bitcoin being used as a unit of debt. is kind of important and interesting here. This is Citi, JP Morgan, Wells Fargo, BNY Mellon. All of these, Michael Saylor said this, are now issuing credit against Bitcoin. So it's not just the crypto companies doing this. This is major banks allowing you to take loans against your crypto money collateral.
David Hoffman:
[54:08] That's kind of huge. I feel like that's a very big deal. I know. Going back to Nick Carter's article of like the five things that crypto is really good for. Number one, the restoration of sound money.
Ryan Sean Adams:
[54:18] This is that.
David Hoffman:
[54:19] Banks issuing credit against Bitcoin. Banks are saying, yeah, we'll give you a loan against your Bitcoin.
Ryan Sean Adams:
[54:27] It gets your magic internet money.
David Hoffman:
[54:29] That's a crazy statement.
Ryan Sean Adams:
[54:29] Isn't that insane?
David Hoffman:
[54:31] We'll give you dollars backed by your magic internet money. That is a monument.
Ryan Sean Adams:
[54:35] Yeah, I know. Sometimes we don't zoom out and reflect about how far we've come. Last thing I want to tell you about on the regulatory front is the OCC. So that's another three-letter agency. And do you remember, this is the Office of the Currency Comptroller? Yeah.
David Hoffman:
[54:53] Comptroller is such a weird word.
Ryan Sean Adams:
[54:54] Comptroller, like a super finance accountant guy. Anyway, the OCC, they regulate a lot of things, including, I believe, the FDIC, or they're involved in the FDIC.
David Hoffman:
[55:03] They were the people that, back in the Operation Choke Point 2.0 days, would send messages to banks saying that they are like—.
Ryan Sean Adams:
[55:11] What you're doing is risky.
David Hoffman:
[55:12] What you're doing is risky.
Ryan Sean Adams:
[55:15] Raising eyebrows.
David Hoffman:
[55:16] Between the lines, if they have to send you a letter saying what you're doing is risky, that basically says, stop doing it or we're going to yoink your license.
Ryan Sean Adams:
[55:24] That's right. They were one of the implementers of Operation Chokepoint, which is debanking a bunch of crypto companies and crypto investors. They signed in 2023 a joint crypto statement, a joint statement with the Fed and the FDIC explicitly warning of the risks of crypto and public blockchains and all of these things.
David Hoffman:
[55:40] Which is funny because now they're using it as collateral for loans.
Ryan Sean Adams:
[55:45] Right. Okay. And not only that, this week from the new comptroller of the OCC, so the guy in charge of all of this, They came out with a report that was basically finger-wagging, David. So they said the OCC called out America's top banks for unlawful debanking behavior. And they said that these banks targeted industries, among them the cryptocurrency industry. And they shouldn't have gone and debanked everybody. And they wrote an entire report about it, which is hilarious to me because the OCC was one of the groups telling them to go debank crypto customers. Anyway, part of the reason this is being unwound is because of an executive order. Donald Trump, this is an executive order from August guaranteeing fair banking for all Americans, where he specifically asked the executive branch and the OCC to go investigate this. And so they did, and they came back saying, the bank shouldn't have debanked anybody.
David Hoffman:
[56:42] Yeah, why did you guys do that? You guys don't have to do that anymore. Anyway, this is.
Ryan Sean Adams:
[56:48] The theme of the cycle. All of the winter,
David Hoffman:
[56:52] The rain tree winter is thawing completely. The evil witch is dead.
Ryan Sean Adams:
[56:56] That's right.
David Hoffman:
[56:57] That's right. The snow witch is dead. Yeah. Shenanigans like this just kind of makes me think like, oh, China's going to kick our ass, dude.
Ryan Sean Adams:
[57:04] I don't think so. I think their dairy gunslers are like 100 times worse than they actually have guns and can't get voted out of office. So I don't think they'll ever be embracing a free and open internet technology.
David Hoffman:
[57:14] Yeah, that's not my point. My point is like, at least they're not flip-flopping on themselves every four years.
Ryan Sean Adams:
[57:19] Yeah, no. Yeah. Yes, that's true. They are very, Gensler reigned for a thousand years there, I guess. How about the Clarity Act, though, David? This is actual hard-coded legislation we need in order to get some clarity on crypto. People have called this the market structure bill. What's happening there?
David Hoffman:
[57:36] Okay, so maybe just a level set about the Clarity Act. The Clarity Act is uniquely a bullish Ethereum and tokenization. Why Ethereum is because it really is like, effectively the legalization of anything wall street might ever want to do with a smart contract is that a fair fair assessment i.
Ryan Sean Adams:
[57:54] Think so it's yeah it's definitely tokenization right
David Hoffman:
[57:56] Tokenization is the big one so if we want tokenization to grow we need clarity act to pass and so i think specifically as an ethereum believer and supporter and holder i'm watching clarity act very closely hoping that it does pass there's no guarantee that it passes i think it It could be like 50-50.
Ryan Sean Adams:
[58:17] It seems kind of stalled out at the time of recording, right? This is a senator calling the crypto bill talks decently frustrating. It seems like it's kind of stalled in the Senate and unlikely anything's going to happen over the holidays. And I don't know, 50-50 sounds about right to me too.
David Hoffman:
[58:34] Yeah, yeah, yeah. Key jurisdictional and policy issues remain unsolved. According to Senator Moreno, he is signaling that he would rather let the process slip and accept a compromise he views as structurally bad for the industry or for Republican priorities.
Ryan Sean Adams:
[58:51] Democrats are flagging corruption stuff with Trump. They don't want Trump to get a win there.
David Hoffman:
[58:56] Yeah, they want the president to be barred from doing any sort of crypto stuff, like issuing tokens or crypto businesses.
Ryan Sean Adams:
[59:03] That would be fine with me, but Trump's never going to sign that.
David Hoffman:
[59:05] Give that to them.
Ryan Sean Adams:
[59:07] He's never going to sign it. Oh, God damn it. I know.
David Hoffman:
[59:12] But come on He's like He's already started Like four or five businesses He gets to keep them He just can't start anymore.
Ryan Sean Adams:
[59:20] Yeah.
David Hoffman:
[59:20] Yeah.
Ryan Sean Adams:
[59:21] Tell that to Trump. I don't know.
David Hoffman:
[59:23] I will.
Ryan Sean Adams:
[59:26] Lastly, let's talk about the New York Times. So they had an education article around stable coins, and this was from their article. You could see on the left, we've got bank deposits being compared against a stable coin wallet. They say in a bank deposit, your deposit is insured up to $250K by the federal government. But with a stablecoin wallet, your money is not insured by the federal government. Number two, the bank lends out your deposit for mortgages, business loans, and other types of borrowing. Whereas with stablecoin wallets, the coin issuer invests the money in financial markets, often buying bonds. The bank shares a portion of the proceeds with your interest. Whereas with stablecoins, in most cases, the coin issuer keeps all the proceeds.
David Hoffman:
[1:00:11] That one is completely inverted. That one is the most wrong.
Ryan Sean Adams:
[1:00:16] It was basically, the whole thing was kind of like a FUD about stablecoins, and there's a whole list of things. Like, first of all, the idea that your money is not insured by the federal government, it's T-bills, bro.
David Hoffman:
[1:00:26] It is the federal government. And not only that, the bank, your FDIC insurance for $250,000, the only reason that exists is because the banks are a fractional reserve, whereas your stablecoin is not.
Ryan Sean Adams:
[1:00:39] That's right.
David Hoffman:
[1:00:40] That's right. It doesn't need insurance. That's right. It's a better product.
Ryan Sean Adams:
[1:00:43] How about this? In most cases, the coin issuer keeps all the proceeds, whereas the bank shares a portion of your proceeds with you with interest.
David Hoffman:
[1:00:50] No, it doesn't.
Ryan Sean Adams:
[1:00:51] 0.15% in my Wells Fargo account. Coinbase gives me 4%,
David Hoffman:
[1:00:55] And that's low.
Ryan Sean Adams:
[1:00:58] This is a really bad article,
David Hoffman:
[1:00:59] But this is- It's a terrible article.
Ryan Sean Adams:
[1:01:00] But it just seems like a hit piece. I mean, a poorly researched hit piece.
David Hoffman:
[1:01:05] Of course, it does come out of the New York Times, so at least that's the appropriate venue.
Ryan Sean Adams:
[1:01:08] Yeah, we're still dealing with that in mainstream media.
David Hoffman:
[1:01:10] Coming up last, we've got to sneak some prediction market news in here. Gemini, the Winklevite Twins exchange, is now offering, can offer a prediction market in the United States. And also Gemini, which is a publicly traded company, we actually, I don't think we covered that IPO, stock surged 14% on the news. So kind of just an indication of how hot prediction markets are. So Gemini's affiliate Gemini Titan received a CFTC license allowing it to launch
David Hoffman:
[1:01:37] fully regulated prediction markets for U.S. customers. This is the same registration category that the CME has for derivative contracts. And so Gemini can list a clear standardized event contracts on Gemini. So pretty cool. That's our second. So Gemini will join CallShe as a CFTC regulated prediction market operator inside the United States. So just growth.
Ryan Sean Adams:
[1:02:00] It's their own thing, too. It's not they're not integrating Polymarket or CallShe. It's Gemini's own prediction market that they're growing from home.
David Hoffman:
[1:02:08] Yeah. So pretty cool. Well, congrats to the Winklevite twins, Ryan. I've got a meme for you.
Ryan Sean Adams:
[1:02:13] I've seen this meme. I saw this around. I can't believe you got so much clout for this meme, David. It's incredible, actually. So your tweet is up to how many views?
David Hoffman:
[1:02:23] 32,000 likes or something. Is that your most successful tweet ever? By far. I mean, it would have been better if I had actually gone to. This isn't in Times Square. It's like right next to Times Square and actually taking a selfie with it. That would have probably gotten even more likes. You're joking. He's joking. I didn't have the time.
Ryan Sean Adams:
[1:02:42] This is not real. This is not real.
David Hoffman:
[1:02:44] My most successful tweet of all time quoted this tweet saying, real.
Ryan Sean Adams:
[1:02:49] Your most successful tweet of all time quoted this tweet of an AI-generated,
David Hoffman:
[1:02:54] Not real tweet. I don't know what you're talking about.
Ryan Sean Adams:
[1:02:56] From a meme that was created by... Okay, what are we looking at here?
David Hoffman:
[1:03:00] This is a real ad on a big LCD screen out of Times Square. This might be right next to the NASDAQ or something. It's not real. And it's a pen. This is a Ryan Sean Adams OG meme. You know how you go to the bank and you have to write down your little request to withdrawal or something? And you have a little pen and it's on the little ball chain thing because they don't want you to steal the pen? Yeah. And so there's a picture of the pen with this is how much the banks trust you. Go bankless instead. We got so much trashing on this very real ad. 1.8 million views and that's just a bankless one. Mine also had like 1.2 or 1.3 million.
Ryan Sean Adams:
[1:03:40] Listeners can decide. I think it's great though. You know, go bankless instead. Fantastic. Why don't we leave it there? Risk and disclaimers. None of this has been financial advice. That ad was not real. Okay, just so you know. Crypto is risky. You could lose what you put in, but we are headed west. It's the frontier. It's not for everyone, but we're glad you're with us on the bankless journey. Thanks a lot.
David Hoffman:
[1:04:21] I'm blowing this. I'm blowing this.