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Episode: ROLLUP: Markets Turn Bearish | Trillion Dollar Bank Launches L2 | Massive Pudgy Airdrop | DeFi Drama
Author: Bankless
Duration: 01:11:45
Episode Shownotes
Joining us this week is Anthony Sassano! We'll explore whether the current price downturn signals the end of the bull market or just a minor hiccup in the cycle, analyze the Fed’s latest rate cuts, and assess institutional adoption trends keeping crypto’s momentum alive. Big L2 developments are making waves:
Kraken’s Ink chain hits mainnet early, Deutsche Bank ventures into zkEVMs, and ENS selects Linea for scaling its Namechain. Meanwhile, Pudgy Penguins launch the PENGU token, sparking controversy and volatility. Plus, fresh insights from the 2024 Crypto Developer Report and a closer look at the Aave vs. Polygon drama. Stick around for Anthony’s On-Chain Spotify Wrapped and tips on spotting market tops! ------ 📣SPOTIFY PREMIUM RSS FEED | USE CODE: SPOTIFY24 https://bankless.cc/spotify-premium ------ BANKLESS SPONSOR TOOLS: 🐙KRAKEN | MOST-TRUSTED CRYPTO EXCHANGE https://k.xyz/bankless-pod-q2 🦄UNISWAP | BUG BOUNTY PROGRAM https://bankless.cc/Uniswap-Bug-Bounty ⚖️ ARBITRUM | SCALING ETHEREUM https://bankless.cc/Arbitrum 🛞MANTLE | MODULAR LAYER 2 NETWORK https://bankless.cc/Mantle 📈 iYield: YOUR FINANCIAL PICTURE, SIMPLIFIED https://bankless.cc/iYield 🗣️TOKU | CRYPTO EMPLOYMENT https://bankless.cc/toku ------ TIMESTAMPS & RESOURCES 00:00:00 Start https://www.cnbc.com/2024/12/18/fed-meeting-live-updates-traders-await-december-interest-rate-cut.html https://x.com/Matt_Hougan/status/1869627735267840135 00:02:45 Market https://www.cnbc.com/2024/12/18/fed-meeting-live-updates-traders-await-december-interest-rate-cut.html https://x.com/Matt_Hougan/status/1869627735267840135 00:09:10 Where Are We In This Cycle https://www.grayscale.com/research/reports/the-state-of-the-crypto-cycle 00:12:04 ETF Flows https://farside.co.uk/?p=1518 https://farside.co.uk/btc 00:16:09 Mover Of The Week… Fartcoin? https://www.coingecko.com/en/coins/fartcoin https://www.infinitebackrooms.com/dreams/conversation-1721540624-scenario-terminal-of-truths-txt 00:26:48 Developers, Developers, Developers https://www.developerreport.com/developer-report https://x.com/MariaShen/status/1867295574242078980 https://x.com/MariaShen/status/1851702783319126277 https://x.com/RyanSAdams/status/1867324885732671778 00:34:54 Kraken Ink Chain Live https://x.com/inkonchain/status/1869417386761470219 http://inkonchain.com/dashboard 00:38:34 Deutsche Bank Announces zk L2 https://thedefiant.io/news/tradfi-and-fintech/deutsche-bank-s-1-5-trillion-project-dama-2-develops-ethereum-l2-zksync-38f6221f 00:41:32 Caroline Crenshaw Vote https://x.com/BrendanPedersen/status/1869055922238279940 https://x.com/standwithcrypto/status/1869151080300548383 https://www.citizen.org/article/support-comm-crenshaw/ https://financialservices.house.gov/news/documentsingle.aspx?DocumentID=409421 https://x.com/EleanorTerrett/status/1867301980890165398 00:47:14 Aave vs Polygon https://governance.aave.com/t/arfc-adjust-risk-parameters-for-aave-v2-and-v3-on-polygon/20211 https://x.com/DefiIgnas/status/1868612366822461817 https://x.com/sandeepnailwal/status/1869153510756909475 https://x.com/stanikulechov/status/1869182600008679563 00:54:06 Pudgy Penguins Launched Their PENGU Token https://x.com/LucaNetz/status/1869005071624904959 https://x.com/suji_yan/status/1868682237488894422 https://claim.pudgypenguins.com/ https://www.coingecko.com/en/coins/pudgy-penguins-pengu https://nftpricefloor.com/ 00:58:15 Ethena Launched Its New Stablecoin https://x.com/ethena_labs/status/1868657723799470361 https://x.com/ZeMariaMacedo/status/1868673718911713602 01:00:35 Bankless Wrapped Just Launched! https://bankless.com/wrapped 01:04:37 How to Recognize Bull Market Tops? https://imgur.com/a/Vaw3TSW 01:10:42 Check Out The Daily Gwei Shoutout to The Daily Gwei for Ethereum-focused insights and updates. https://www.youtube.com/@TheDailyGwei ------ Not financial or tax advice. See our investment disclosures here: https://www.bankless.com/disclosures
Full Transcript
00:00:03 Speaker_00
Bankless Nation, it is the third week of December. It's time for the Bankless Weekly Roll-Up. I've got Anthony Sassano here.
00:00:09 Speaker_00
David Hoffman is off, not climbing mountains this time, Anthony, but he's like apparently circling around them somewhere in Argentina right now. So this is like a hike expedition, not a mountain climb expedition. How you doing, man?
00:00:21 Speaker_00
Actually, it's super late where you are. So I wanna thank you for doing this recording. You're all the way in Australia. It's like, I don't know, it's like 12 a.m. or something like that.
00:00:30 Speaker_00
And I know you always wake up bullish, Anthony, but my question to you is, do you also go to bed bullish?
00:00:37 Speaker_02
Yes. Well, thank you for having me on again. And yes, I wake up bullish. I go to bed bullish. And I sent you a message before I said, it's okay if we have to record this late because I'm always bullish on it.
00:00:46 Speaker_00
So it doesn't matter. Thanks, man. Well, we appreciate that.
00:00:50 Speaker_00
I'm amazed actually that you go to bed bullish because like I tend to wake up bullish and then just the day, you know, if you spend enough time on crypto Twitter, it like beats you down until you're like not as bullish as when you woke up and you have to like go sleep and dream about like, you know, high crypto prices in order to refresh yourself for the next day.
00:01:07 Speaker_00
But I'm impressed that you stay optimistic and you're able to go to bed bullish too.
00:01:11 Speaker_02
Yeah. Yeah. I mean, I think it can wear everyone down over time, depending on how much time you spend, you know, people get burnt out, things like that.
00:01:17 Speaker_02
But, uh, I don't know, like it's, it's, it's for me, I spend the whole day talking to a bunch of different people within the ecosystem, just researching a lot about Ethereum, checking out all the new updates and it just keeps me going, keeps me bullish.
00:01:29 Speaker_02
Yeah. It's just very hard to be bearish. Like even if the prices are going down, just so much stuff happening in Ethereum, which obviously we're going to talk about a bit today, but yeah, just very, very easy to be bullish, I think.
00:01:39 Speaker_00
Well, speaking of prices going down, that is pretty relevant to the topic today. So prices are down, Anthony Sassano. We're going to talk about that. Also want to get some takes from you and others on where we are in the cycle.
00:01:50 Speaker_00
So there is the Fed Chair Jerome Powell. There was a meeting this week. They did something with interest rates. We'll talk about that. Also, some big Layer 2 news on Ethereum. So Kraken's Inc. This is their Layer 2. It hit mainnet. This was unexpected.
00:02:04 Speaker_00
This was ahead of schedule. We'll talk about that. Also, there's a $1.5 trillion bank launching a Layer 2. What does that mean? And ENS, the .eth domain names, they picked their Layer 2, so we'll discuss that too. Pudgy Penguins also did an airdrop.
00:02:19 Speaker_00
We'll talk about that. There's some DeFi drama. I want to get your takes on this. We've got crypto developer numbers, a whole report. And guys, stay tuned to the end because what we're going to do is I'm going to get Anthony's .eth address.
00:02:32 Speaker_00
I'm going to plug it into the bankless on-chain version of Spotify Wrapped. And we're going to actually see his score to see how bankless he is, what he's been up to on-chain this year. So all of that and more.
00:02:42 Speaker_00
Thank you guys so much for tuning into the Bankless Weekly Rollup. All right, Anthony, let's get to prices. You know, not as good as they have been previously, but actually, at least at the time of recording, we're still up on the week.
00:02:54 Speaker_00
The last time we recorded, we're up on Bitcoin about 1.5 percent. So Bitcoin is hanging out at one hundred and one thousand.
00:03:03 Speaker_00
So we're still above one hundred K. We've got an ETH price down more significantly, down about five to six percent at the time of recording. from 3,900 last week to 3,682. And the big question is, are we down because the Fed cut interest rates?
00:03:25 Speaker_00
I thought cutting interest rates was a good thing, but apparently some of the news, the Fed had their meeting this week bringing the target interest rate from 4.5% to 4.25%, but they indicated that there would only be two reductions. in 2025.
00:03:43 Speaker_00
And the market was hoping for four reductions, not two. What's your take on the prices this week? And in general, why are we down? I thought this was a bull market. I thought we were just infinity up only.
00:03:56 Speaker_02
Yeah, I mean, it can feel like that. I think once you get towards the ends of a bull market, you will start to get like that up only every day or every week for for kind of a few weeks or a couple of months or something like that.
00:04:07 Speaker_02
But I think people obviously always need to zoom out and kind of contextualize things. One week worth of price action is not really going to tell you much. And people always look for different reasons as to why movements happen, obviously, today.
00:04:19 Speaker_02
People will be pointing to the Fed stuff. Tomorrow they'll be pointing to something else. So for me personally, I don't tend to pay too much attention to the short-term kind of movements. I tend to zoom out.
00:04:28 Speaker_02
And I think on both ETH and BTC, they look really amazing when you zoom out there. I think ETH, honestly, obviously it has lagged for a little while now, lagged BTC. It usually does do that until later on in the bull market.
00:04:42 Speaker_02
But I think if you actually look at what ETH is doing, it's consolidating between around 3,600 and 4,000. And I feel like 4000 just seems to be this very strong resistance for some reason on ETH.
00:04:54 Speaker_02
I say for some reason, but I think it's quite obvious why, because if you actually zoom out over multiple years, you can see that 4000 has always been a tough area for ETH. But I feel like in the new year, things are going to pick back up and
00:05:06 Speaker_02
it will definitely get through that and go on to all time highs. So yeah, I'm more of a zoom out guy than anything. I mean, anyone who knows me knows that for sure that I take a very long term view on these things.
00:05:15 Speaker_02
So these week to week or day to day movements definitely don't affect me too much. And I think when it comes to the macro environment with stuff like the Fed, no one's an expert on this. Like even the macro people who follow this aren't experts.
00:05:26 Speaker_02
It's very hard to kind of be across all of this stuff. So I honestly don't spend too much time on it myself because you can make yourself go crazy trying to find a reason, right?
00:05:37 Speaker_00
You can make yourself go crazy, and who knows what the Fed is going to do and how that will affect markets. It did seem, though, in the charts that the Fed announcement correlated very closely with this crypto sell-off.
00:05:49 Speaker_00
So, here's the Fed press conference right here, and this is the Bitcoin price chart. It's about $105K. And then, after that conference, Powell and we're dipping below $100K on Bitcoin. Matt Hogan, I always appreciate his takes.
00:06:04 Speaker_00
They're always pretty seasoned, pretty rational. He wrote a brief thread on today's move in crypto, the down move, and why he said, I don't think it alters the bullish trend. I want to hear if you agree with some of this.
00:06:17 Speaker_00
He said, obviously, the big catalyst today was the Fed announcement. We just talked about this. But that being said, he says, the initial pullback wasn't the end of the story. Leverage is a fact in crypto. He points out that some of these sharp
00:06:30 Speaker_00
pullbacks get amplified in crypto because there's all of these leveraged positions. So this was like a $600 million of leveraged position that just like gets blown out in crypto.
00:06:40 Speaker_00
And I'm not saying that like leverage is, you know, crypto is the only market to have leverage, but it does have a lot of leverage. The big question though, is this a hiccup or a reversal? And Matt says it's a hiccup.
00:06:53 Speaker_00
The reason is because the Fed is not even like relevant to crypto. It's less relevant at least than it has been in the past. And he points to these four things that we still have as tailwinds going into 2025. The pro crypto reversal in D.C.
00:07:08 Speaker_00
Rising institutional adoption of ETF flows, which you're going to talk about. Bitcoin purchases by government and corporations, and major breakthroughs in smart contract blockchains, primarily scaling them, right?
00:07:20 Speaker_00
And this is coming through Ethereum Layer 2s. So what do you think about that? He says it's just a hiccup. It sounds like you tend to agree.
00:07:27 Speaker_02
Yeah, I definitely think so. As I said, you can make yourself go crazy looking for different reasons when it comes to the macro stuff. But I agree with Matt here that the Fed macro stuff isn't very relevant to crypto overall.
00:07:41 Speaker_02
Maybe over the longer term when you're talking about different kind of assets and their price movements and stuff like that and how that reacts there.
00:07:49 Speaker_02
But in terms of where crypto is going in 2025 and in terms of what's on the horizon, I completely agree with Matt. There are these massive tailwinds, like the pro-crypto policy in Washington, in D.C.
00:08:00 Speaker_02
and on the political kind of side here is, I think, still way underpriced. I don't think people realize just how bad it was, especially the last two years and how different it's going to be.
00:08:13 Speaker_02
There is obviously those kind of doubts from people that say, well, they say it's going to be different, but what if it's the same? And I understand that it's not like a guaranteed thing,
00:08:21 Speaker_02
But everything that I've seen so far points to it being very different and points to it being a very, very favorable environment for crypto to thrive in.
00:08:28 Speaker_02
And that will actually lead into the rising institutional adoption because they'll be able to get involved. They have those regulatory frameworks in place to get involved, which will then translate to more ETF flows.
00:08:39 Speaker_02
So it does tend to feed on itself, just having this, I guess, clearer guidance and clearer regulation and a much, I guess,
00:08:46 Speaker_02
But maybe not safer is not maybe the right word, but like clearer picture for these institutions to get involved because they're very risk averse, especially the bigger ones that are managing lots of people's money.
00:08:56 Speaker_02
They don't want to get involved with something that could bite them in the ass, so to speak, later on. And I think this is what they've been waiting for, just clearer regulations.
00:09:04 Speaker_00
Yeah, there's some structural differences this time, particularly in the regulations. I totally agree with that. And also, there's some similarities. I mean, crypto goes in cycles.
00:09:13 Speaker_00
And I wanted to get your take on this, because another question during weeks like this, people ask themselves, and again, at the end of 2024, starting a new year 2025, is like, where are we in the cycle?
00:09:23 Speaker_00
You know, these four year cycles, Grayscale put together a report here where here's kind of Bitcoin price over log scale and they show kind of the cycles. And you can see sort of when the price goes above the line, right, that's like bull cycle.
00:09:36 Speaker_00
And when it's below the trend line, then you're kind of in the bear cycle. But it tends to follow this long. this log trend line. Of course, this is also the log line is fitting the data, so it's a self-fulfilling prophecy, all of these things.
00:09:48 Speaker_00
I get that. Here's another chart that's showing Bitcoin price by cycle with the number of days. And so we are how many days in? We are over about 800 days in, something close to that, into the bull cycle.
00:10:03 Speaker_00
And this dotted line, you can see where we are in the cycle. Basically, their conclusion is we're in kind of the intermediate stage of the cycle. So we're not early in the cycle. We're not late in the bull mania part of the cycle. It's not over.
00:10:18 Speaker_00
We're in the intermediate phase of the cycle. What's your take on this kind of analysis and these cycle types of metrics?
00:10:25 Speaker_02
Yeah, I mean, this is the classic four year cycle that crypto has become known for, especially obviously led by Bitcoin, because that's the asset that tends to get us out of the bear markets, tends to run first.
00:10:36 Speaker_02
You know, Bitcoin dominance goes up and then that liquidity gets pushed into other assets as time goes on. People can become more risk on. And then we have a full blown bull market.
00:10:44 Speaker_02
So I do agree with this analysis that we're pretty much like not at the end yet, but not at the start. We're kind of in the middle, maybe, maybe I guess like you could say three quarters of the way through, so to speak, getting to that
00:10:55 Speaker_02
that really crazy phase that I suspect we're going to see in 2025. But again, I think I've mentioned this on the Rollup before, and also a lot of times on my own show, this cycle has been a bit weirder than other cycles, I think.
00:11:09 Speaker_02
We've had weirder price action and different kind of price actions. I mean, BTC went to all-time high before it's halvening, and that has never happened before in the four-year cycle.
00:11:17 Speaker_02
And obviously this was driven by the ETFs and driven by Saylo as well, doing his big buys and things like that. So there has been differences, but a lot of similarities. So as they say, you know, the history doesn't repeat, but it does often rhyme.
00:11:29 Speaker_02
And I think that's what we're seeing here. But I think going forward as the asset class matures,
00:11:34 Speaker_02
these kind of cycle analysis that people do is going to become less and less reliable because it'll just become, I guess, more well-known and it won't be as self-fulfilling as it probably has been in the past.
00:11:45 Speaker_02
And there'll be different, I guess, ways to access these assets. Like right now, BTC and ETH have an ETF, but nothing else does.
00:11:53 Speaker_02
And that tends to distort things because there's this whole pool of capital that other assets don't have access to that BTC and ETH do. So there are differences, but similarities for sure.
00:12:03 Speaker_00
Well, speaking of ETFs, let's look at some Ethereum ETF numbers on the week. And I want you to go full bull mode, Anthony Sassano here, because look at all of these. These are the totals from all of December.
00:12:15 Speaker_00
Basically, we're looking, I'm looking at the Ethereum ETF flows and this totals column, net inflows, positive, positive, positive. All of the days in December have been positive, even yesterday, which was like, you know, Wednesday, December
00:12:29 Speaker_00
18th at the time of recording was even a positive day on a sell-off and This you know like in in previous months It looked like the flows weren't actually ETF flows weren't actually coming into ETH and now suddenly they are like it's it's happening But later, what do you see when you look at these numbers?
00:12:47 Speaker_00
and I'll just say for the audience who doesn't have this open is total net inflows right now on the week into the Ethereum ETF. This is a net new institutional buyer of ETH that we haven't had in previous cycles. 2.4 billion.
00:13:02 Speaker_00
I think that's like between 2 and 3% of all ETH supply here. Anyway, what do you see when you look at these Ethereum ETF numbers?
00:13:10 Speaker_02
Yeah, I see a trend shift, to be honest.
00:13:12 Speaker_02
Obviously, I think anyone who's been following along with this stuff since the ETH ETF went live in July knows that it didn't have the start like Bitcoin did because it launched in a different market conditions.
00:13:22 Speaker_02
July was still very bearish, whereas the Bitcoin ETF launched right in the middle of a huge uptrend in January of this year. So the ETH ETFs have had a slow start, as we're all pretty much aware of by now.
00:13:34 Speaker_02
But over the last few weeks, there's been a major trend shift with the ETFs getting, I think, 40 to 50% on average of BTC's flows, which is higher than its month cap percentage, right? In terms of comparing it to BTC.
00:13:46 Speaker_02
And I think it hasn't had a negative outflow day since November 21st. So almost a month now of positive inflow days. And as you said, even on the sell-off, we had a positive flow here.
00:13:56 Speaker_02
So people need to be paying attention to the trend shift that's happening here and how this tends to accelerate as time goes on, especially as price keeps going up. Obviously, these institutions will also get FOMO.
00:14:07 Speaker_02
It's not just us kind of degen crypto natives that get FOMO. They get FOMO as well. But I think as long as the price is above $3,600, I think all ETF buyers are in profit because that's when the ETFs launched. People don't remember this, but
00:14:21 Speaker_02
ETH went from $3,600 to like $2,000 after the ETF's launch. So there was no appetite to buy an asset that's going down, of course. But now that it's going up, there is an appetite, but there is also a lot more education happening too.
00:14:33 Speaker_02
I've been hearing that there's a lot more education happening on the institutional side and that's ramping up as time goes on. So that's being reflected in the flows.
00:14:42 Speaker_02
But as I said, the main thing here is to notice the trend shift happening and notice that it is a shift that's happened over months now, not just days.
00:14:50 Speaker_02
I guess pay attention to this as we head into 2025 because I feel like ATF is going to have a really good year in 2025 and the ATFs are going to be a very big part of that.
00:15:00 Speaker_00
Yeah, I think that that that piece is understated. The amount of education that these issuers like the black rocks of the world, the fidelities of the world are like prepping to do and have planned in 2025.
00:15:11 Speaker_00
That's going to be like and that's something that Ether the asset has, I think, struggled with in mainstream is kind of education, getting institutions to understand it. And they're basically all incented now to help investors understand Ether.
00:15:25 Speaker_02
Yes, exactly. And I think a bigger deal is that these institutions traditionally have been selling Ether or Ethereum as like a technology platform, right? Not as a store of value because they don't want to cannibalize the BTC ETFs.
00:15:39 Speaker_02
And I think that obviously within crypto, we know that it is a money as a store of value. People treat it like this. And I think that's going to slowly bleed into the sales pitch that these institutions use.
00:15:50 Speaker_02
But they're going to start with the tech pitch first, because that's what resonates most, I think, with these investors after they've just heard about the money and story value pitch for BTC.
00:15:58 Speaker_02
But I do think that it's inevitable that the ethers, money, story value story gets woven into the tech story as well. And that's definitely going to help flows.
00:16:07 Speaker_00
Do you know what I think is going to be a narrative that's like the institutions aren't ready for, but I think it's going to be pretty exciting for those of us who think Ether is a phenomenal store of value.
00:16:17 Speaker_00
I just did a AI roll up with eJazz where we just kind of recap the AI type agent type news on the week.
00:16:24 Speaker_00
And we talked about an AI agent called Zero Bro earned a whole bunch of fees through trading, earned money through trading, through Spotify streams, all of these things.
00:16:34 Speaker_00
And you know what it did with those funds, Anthony, is it took that fiat and all those token fees, and it actually purchased Ether, the asset, and it spun up a validator, okay, in order so it could have passive income.
00:16:50 Speaker_00
Okay, so the big question is, what's the store of value for these new economic players, AI agents? Is it going to be fiat? Is it going to be stocks? Is it going to be real estate?
00:17:03 Speaker_00
Or is it going to be a programmable non-sovereign money like ether that generates passive income? It's kind of like the internet bond type story here. And that's how Zero Bro is treating it. Anyway, you know, emerging story, that kind of thing.
00:17:20 Speaker_00
But they're a new economic actor, and what they determine as money and how they store their value is actually going to factor in here and matter. One topic I have for you in the realm of non-institutional assets, though,
00:17:34 Speaker_00
but also links with AI agents, is Fartcoin. Like, what the hell, man? I have not, like, okay, this is, there's an actual token called Fartcoin. It's been moving a crazy amount. It's up 27% on the week.
00:17:49 Speaker_00
Started in November, it was like 18 million, and now it's, wait, fully diluted, over a billion dollars. And its genesis was really another AI agent, like a token terminal type thing.
00:18:01 Speaker_00
And, you know, Token Terminal, if people are following that story, you know, created, not created, but popularized a coin called GOAT. Token Terminal is an LLM.
00:18:11 Speaker_00
Anyway, Token Terminal has adopted Fartcoin as, like, its memetic, you know, token of value. And, you know, like, look at the price ascent here. What do you think of these types of shenanigans that are going on? What's your take here?
00:18:27 Speaker_02
Yeah, I mean, I think when it comes to these sorts of things, it's always hard to pick winners. Like you look at this right now and you think to yourself, okay, well, this has done really well price action wise.
00:18:38 Speaker_02
Obviously right now it's at all time high and everyone's made money that has bought it and everything. But then there is usually a graveyard of other assets, like millions of these things that go absolutely nowhere.
00:18:48 Speaker_02
So really what the meme coin and AI coin game becomes is a game of attention. Where can you direct people's attention to? And that's what coins usually tend to particularly do well and get outsized our price movement.
00:19:03 Speaker_02
And usually how that attention was given was via humans. Like there'll be some influencer on Twitter that says, I bought this meme coin. I think it's going to go up for such and such reason, go buy this.
00:19:12 Speaker_02
But now we're entering the realm where these AI agents are doing that themselves. It's not just the humans, it's the AI saying, well, I like this meme coin for such and such reason. And this is the one I've chosen. So people are now following that.
00:19:25 Speaker_02
So it really is, it's the same kind of concept, but with an autonomous agent instead of a human doing it.
00:19:31 Speaker_02
And it starts to get weird when you consider the, I guess, incentive here where you can say, well, there is an identity attached to this AI agent, but at the same time, I know it's not a real person. I know it's not a human.
00:19:42 Speaker_02
So I can trust it potentially more than a human because I can actually see what it's doing on chain. Whereas a lot of these humans that promote these things, they've got backroom deals going on. They've got insider stuff going on.
00:19:53 Speaker_02
They're part of a cabal. AI agents can do this too. But if they're doing everything on chain from a public address, then it becomes a bit more transparent, I think.
00:20:02 Speaker_02
But at the same time, it's still fundamentally the same concept of attention economy, I think.
00:20:08 Speaker_00
Yeah, I totally agree. Attention economy. What we're looking at here is to your point is you can see inside of the A.I. 's brain. So this is infinite back rooms. If you do like search for fart. Right.
00:20:17 Speaker_00
This is where a token terminal is literally dreaming up the idea of, hey, I should we we should do a fart coin. and airdrop it and instantiating it. So you can literally read the transaction logs of what it's thinking. Anyway, bizarre stuff.
00:20:30 Speaker_00
In contrast to the institutions where we're like, hey, Bitcoin and Ether, they're serious asset classes. And then we have Fartcoin trading over a billion dollars. One last thing on the week that I noticed from the Fed FOMC meeting,
00:20:43 Speaker_00
Somebody asked Jerome Powell about a federal strategic Bitcoin reserve. Of course, that's been a Trump talking point lately. And he said this, from the Fed's perspective, Jerome Powell, we're not allowed to own Bitcoin, he said.
00:20:59 Speaker_00
And he was asked a follow-up question in terms of like legal issues, like is it illegal even for the Fed to own Bitcoin? And he said, that's the kind of thing for Congress to consider, but we are not looking for a law change at the Fed.
00:21:11 Speaker_00
Powell or the Fed actually wants to own Bitcoin. And there's a question as to whether Trump or Congress kind of like force them into it or force the rest of the U.S. government into owning some Bitcoin. What's your take on the strategic reserve?
00:21:24 Speaker_00
Are you like in 2025 over, under on the probability that Trump does something or the U.S. government does something here? Do you think it'll happen?
00:21:33 Speaker_02
I think they'll try to do something and they'll talk about it a lot and try to get things kind of passed or pushed through. I don't think it'll happen in 2025, to be honest.
00:21:42 Speaker_02
I think that people underestimate how difficult it is to actually make this happen. It's not like Trump can just like wave a wand and make it happen. He has to go through all the bureaucratic stuff to do this.
00:21:52 Speaker_02
And he's not like some God king who can just make anything happen, especially when it comes to the money. Like it's a very different game when you're playing that game. So I think maybe potentially it can happen eventually.
00:22:05 Speaker_02
But I mean, I've been following it and all I'm seeing is a lot of talk with not much action yet, obviously because there can't be action until at least the inauguration happens and Trump's actually got in power and everything kind of changes over.
00:22:17 Speaker_02
But I feel like It should happen because I do agree that it is of strategic importance for nation states to own these assets. I believe that they're better off owning ETH than BTC.
00:22:29 Speaker_02
I believe ETH is a more strategically important asset, of course, but I think both of them hold their own importance for different reasons. And I think that you've already seen smaller nation states around the world, you know, buy BTC.
00:22:42 Speaker_02
I think some of them even bought ETH or are going to or have plans to. So eventually I can see the US doing it, but yeah, I don't know if it'll happen in 2025. There'll be a lot of talk about it though, that's for sure.
00:22:53 Speaker_00
Yeah, the one thing that Trump might be able to do, it's unclear to me, is just keep the Bitcoin and other crypto assets that they have already, that they've already seized.
00:23:01 Speaker_00
Whether you consider that a strategic Bitcoin reserve or not, I guess, is semantics. I think buying more might be a little bit of a higher bar. I did point out, by the way, that China has something like 10x the amount of Ether. versus the U.S.
00:23:15 Speaker_00
government. So, you know, I don't know if Trump wants to play for second place or if he wants to play for first place, but you better boost those ether bags. And you can see him doing that in World Liberty Financial, his little DeFi outlet.
00:23:26 Speaker_00
We'll talk about that later. A lot more to talk about, too, including, Anthony, I want to get your take on the developer report. So we got some big insights from a 2024 developer report. Also, Kraken's ink chain. We'll get into that.
00:23:37 Speaker_00
It's a new layer, too, of course. And an update on a vote in Congress for the very last remaining anti-crypto SEC commissioner. There's still one of them. Is she going to be there come January or not? We'll talk about all of that and more.
00:23:51 Speaker_00
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00:26:45 Speaker_00
All right, Anthony, it's all about the developers. You know, Steve Ballmer, developers, developers, developers, developers. So every year, Electric Capital puts together their annual developer report.
00:26:56 Speaker_00
And my take on developers is they're sort of like entrepreneurs.
00:27:00 Speaker_00
You know how regular nation state economies, they'll do reports on how many small businesses started in a given year or like, you know, what's the kind of the company activity of all of the startups? Well, this is a similar type of thing.
00:27:13 Speaker_00
I think it's a leading indicator for the crypto economy. So like developer number go up, that's a good thing. That means more entrepreneurs, that means more businesses on chain.
00:27:22 Speaker_00
So Electric Capital analyzes like a whole bunch of GitHub repositories, 1.7 million repositories, apparently, and it produces this report at the end of the year. So a few things to look into. The number one is this chart. You've seen this.
00:27:37 Speaker_00
So this is crypto developers grew 39% per year since 2015. And you can see kind of this chart up. It's not a vertical lineup of interest, right? It's kind of like, it's kind of bumpy.
00:27:49 Speaker_00
When you see something like this, and 39% per year since 2015, we are at the end destination right now, as of November 2024, we have 23,000. So there's part of me where I'm like, I'm impressed at the, you know, 40% annual growth rate. But also, look,
00:28:04 Speaker_00
There's only like 23,000. I mean, that's a small town. There's not a lot of developers yet in crypto. What's your take on these numbers?
00:28:12 Speaker_02
Yeah, I mean, I agree with you. It's not that many yet. I mean, obviously, the growth is great to see and it's up and up.
00:28:18 Speaker_02
But compared to the rest of the software development world and all the other developers out there, there are hundreds of millions of developers in the world, I believe. So this is a drop in the bucket.
00:28:27 Speaker_02
And we have a lot more people left on board and I think we're going to keep doing that as time goes on. Uh, I don't think this is going to slow down. Obviously there's bumps along the way. A lot of these bumps tend to be correlated with price action.
00:28:37 Speaker_02
Obviously as prices go up, you know, things tend to get harder. People, uh, developers just like everyday regular people follow the money as well. If you're getting.
00:28:45 Speaker_02
you know, a higher salary working in crypto and you've got the skills to do it, you're going to go work in crypto.
00:28:50 Speaker_02
And then if there's a downturn and you get laid off because the company you're working for doesn't have much money anymore and you go work somewhere else. So it's the same kind of story here and you follow that boom and bust, but the trend is up.
00:29:00 Speaker_02
That's what we care about. That's what we care about in all, I guess, aspects of crypto. As long as the trend is up, we're doing something right.
00:29:07 Speaker_00
The trend is up, but not in all places. Actually, the trend is down in North America. So maybe this was the hostile regulatory environment. But look at North America. It used to be the leader in terms of crypto developer share market share, that is.
00:29:21 Speaker_00
And it's dipped below to other continents, both Asia and Europe. So now North America is number three and has been bypassed by Asia and Europe. I think that's the whole like Gensler anti crypto army effect. Yeah, you agree.
00:29:36 Speaker_02
Yeah. I mean, a hundred percent. Like as I think I said earlier, the last two years specifically have been really, really bad.
00:29:42 Speaker_02
A lot of different crypto entrepreneurs, developers have either moved their business offshore if they were based in North America or just not started anything in North America at all, because they're like, well, it's a hostile environment.
00:29:52 Speaker_02
I'm not going to go there. You know, if you're a sheep, you don't go into the lions den. So all the wolves then I should say.
00:30:01 Speaker_02
But yeah, so I feel like if we get the positive regulatory change in 2025, North America should go back up in the next report that we see from electric capital at the end of next year.
00:30:13 Speaker_00
From an ecosystem perspective, Ethereum was leading on every continent. Solana was like number two, and then there was some of the other ones, Bitcoin, etc.
00:30:22 Speaker_00
A couple of my takeaways is it's sort of interesting to see the differences between these chains. So this is a chart of total value locked. where Ethereum is like absolutely dominant, like nothing else is close, not even kind of the layer twos.
00:30:35 Speaker_00
So a lot of the kind of total capital locked up is on Ethereum. Whereas, you know, Solana has had an increase in terms of transactions, like number of transactions, and like exchange volume and that kind of thing.
00:30:50 Speaker_00
They're actually quite impressive on that dimension. So there's some differences between the markets. A lot of people pointed out though, this Anthony, I wanted to get your take. So this is a chart of
00:30:59 Speaker_00
the number of new developers in the ecosystem in 2024. And Solana for the first time, this was the headline chart, Solana for the first time was ahead of Ethereum in terms of attracting new developers. Now, there's a few footnotes to this.
00:31:14 Speaker_00
If you include Ethereum plus like you add, you know, base and plus you add arbitrary optimism, other layer twos, Ethereum is still ahead on net new developers. It's also the fact that like net new developers, don't tend to stay.
00:31:29 Speaker_00
So you know, there's kind of the tourists and the settlers, right? And anytime you get net new developers, 80%, like 80% of them are likely to leave, according to some of the stats and only a few sort of stay.
00:31:40 Speaker_00
So they're less valuable than the veterans and when it comes to staying powers, but still pretty impressive in terms of attracting new developers. What's your take there as a as an ETH bull?
00:31:51 Speaker_02
Yeah, I mean, there's no denying that obviously Solana had a big year in 2024, right? It grew a lot.
00:31:56 Speaker_02
The price of the token went up a lot, which created a wealth effect around the ecosystem, which tends to draw people in, both users and developers alike.
00:32:03 Speaker_02
As I said earlier, users, people, regular people, developers, they're all attracted to the same thing, which is money. You go where the money is, you explore new frontiers, you explore new kind of places to generate wealth.
00:32:14 Speaker_02
And I think that's exactly what happened here. As I said, Solana had a wealth effect. Developers came in, they're like, what's this Solana thing? I haven't tried it before. Cause it says new developers, right?
00:32:22 Speaker_02
So it's like, okay, well, I haven't tried Solana before. Maybe they've tried the EVM before. You've been able to build on the EVM for a very long time now, which includes Ethereum, it's L2s and also other L1s, right?
00:32:32 Speaker_02
There are many other L1s out there that are also EVM, but Solana is different. Solana is SVM. They have their own virtual machine that they use. So it's a different environment altogether. So if you had been on the fence about it until this year,
00:32:44 Speaker_02
and you saw this activity happening there, you're naturally going to be like, well, let's see what I can build on there. What's the developer experience like? I want to check this out. I want to see what's going on over here.
00:32:52 Speaker_02
So I think that it's natural for this to happen. And I think that it's obviously impressive as well, like kudos to Solana for this. But as you pointed out as well, Ethereum is still huge, right?
00:33:04 Speaker_02
Ethereum still has plenty of developers on there, both at layer one and layer twos. And that shows no signs of slowing down either.
00:33:10 Speaker_02
There was actually a good thread from Josh Stark that pointed out from this report, all the Ethereum related stuff and Ethereum still dominates across pretty much everything else.
00:33:17 Speaker_02
Like not the new developers chart as you just showed, but for the reasons I explained, but across everything else, Ethereum still dominates. And it dominates, I think, where it matters as well. You mentioned TVL. That is a huge thing.
00:33:28 Speaker_02
People tend to underrate it, but I think that it is something that is not rated highly enough because it really does show where like the big capital likes to be and likes to stay.
00:33:38 Speaker_02
And even though there are other ecosystems, most of the money stays on Ethereum L1 because, I mean, they're probably fee insensitive users, obviously, because fees are higher there you have to be.
00:33:47 Speaker_02
But also you trust Ethereum L1 not to go offline, you know, trust it to be secure and resilient and decentralized.
00:33:54 Speaker_02
And you trust that there aren't going to be changes made to the network that's going to cause things to go wrong for you and your assets.
00:34:01 Speaker_02
And obviously, a lot of the DeFi protocols on there are extremely battle tested at this point and hardened, like Aave, for example, like Uniswap on there, been around for a long time. So I think that's what you're seeing there.
00:34:11 Speaker_02
But yeah, I feel like as the Ethereum community or Ethereum ecosystem continues to modularize, you're going to see more of a split here as well, because Ethereum also has layer twos that are not EVM going forward. They're going to be launching.
00:34:24 Speaker_02
I mean, Eclipse is already live. That's using the SVM. There's Fluent coming along that's going to be doing a bunch of blended execution stuff with Wasm, things like that.
00:34:33 Speaker_02
Fuel just launched one with a similar architecture to what Bitcoin uses, UTXO architecture with their Fuel VM. So there's just a kind of modularization pattern happening too.
00:34:43 Speaker_02
So I do hope that the Electric Capital report can highlight that and kind of dig into the intricacies of that in their next report, because that's what it's going to be like going forward for the Ethereum ecosystem.
00:34:52 Speaker_00
Well, speaking of all the Ethereum modules there, there's certainly a lot of Layer 2s that have launched, and one of which just launched this week.
00:35:01 Speaker_00
This was kind of a little bit of a surprise, I think, for a lot of people in crypto, because this is the Kraken Inc. launch. Okay, so Ink is a Layer 2. It's built on the Optimism stack.
00:35:12 Speaker_00
So similar in some respects to what we've seen from Base, which has chosen a similar framework. And it seemed like Kraken just launched this ahead of schedule.
00:35:22 Speaker_00
I mean, they had announced that they were going to launch it, I think, about six weeks ago or something like this. And now here it is, it's live on Mainnet this week, and people who are listening to this can go check out the Ink chain.
00:35:32 Speaker_00
I've got here a dashboard, a list of kind of all of the apps, and it's everything you'd come to expect.
00:35:37 Speaker_00
You've got things like Curve down here, you've got Frax on there, you of course have the Kraken wallet support, and everything that you'd see in another optimistic roll-up EVM type chain.
00:35:47 Speaker_00
What's the significance of Kraken, another major exchange, probably the You know, one of the top exchanges in the world right now launching its Layer 2 and doing this on the back of a very successful base program from Coinbase.
00:36:02 Speaker_00
What do you think this means?
00:36:04 Speaker_02
It just continues the trend of everyone wanting to be on chain, right? And they want to be on chain in their own way. They want to kind of create something that reflects their brand identity. And that's exactly what Kraken has done with Ink.
00:36:16 Speaker_02
That's what Coinbase has done with Base. There's others out there as well. You can go down the list on L2beat and check out each of them for yourself. But they all have their own ecosystem, brand, community identity that they try to build.
00:36:28 Speaker_02
Inc seems to be trying to build its kind of branding and ecosystem around, I guess, degen first, right? Like very degen kind of stuff first, like getting into the meme coin stuff.
00:36:38 Speaker_02
I know they had like one of the GigaChad kind of faces on their website, like stuff like that, right?
00:36:44 Speaker_02
Whereas when Bass initially started, they were going hard on things like social fire, for example, and they had Firecaster on board there and things like that. And they've kind of shifted over time.
00:36:52 Speaker_02
But yeah, it's all about creating that new kind of, I guess, on-chain identity for these organizations here. So overall, I think it's really bullish that these organizations get to do this because you can imagine a world where there wasn't L2s.
00:37:04 Speaker_02
It was just one layer, like Ethereum was just one layer. There wasn't L2s out there.
00:37:08 Speaker_02
These brands wouldn't have built an L2, obviously, and then they really, to come on-chain, would probably have a harder time doing that because they'd maybe just create some kind of, I guess, like app on Ethereum instead of a whole L2 ecosystem.
00:37:21 Speaker_02
and try to build an ecosystem around that. So it does become more, more kind of difficult there. Uh, so I'm excited to see this go live ahead of schedule that I know that the cracking guys have been working on this for quite a while now.
00:37:32 Speaker_02
Uh, and I really do like this dashboard that you have up on your screen because it shows you exactly what you can do straight away. You know, you have no need to ask, Oh, what do I do on ink? It's like, here's what you do on ink. Here's all the apps.
00:37:41 Speaker_02
Here's how you bridge in. Here's the infrastructure support we have right now. Here's how you on ramp. Cause that's what we need to see going forward because there's no use putting something out there and being like, okay, well, we're live.
00:37:51 Speaker_02
Oh, and people come along and go, oh, okay, you're live. What do I do on your chain? So I'm glad that they've done this. This is actually a really cool thing to see.
00:37:59 Speaker_02
But I think that going forward, you're going to see these chains launch faster and faster as the infrastructure matures as well. And it becomes easier to launch these things. And you're going to see other companies around the world doing this.
00:38:10 Speaker_02
And I'm sure we're going to talk about one of them, as you mentioned, a big, big bank that's doing this as well.
00:38:15 Speaker_00
Oh, let's talk about that next, because what we've seen, of course, is all of the what we call on Bankless sometimes crypto banks, but what we mean is exchanges that are custodying crypto.
00:38:24 Speaker_00
They all have Layer 2 strategies right now, almost all of them, except for Binance, which has its own Layer 1 strategy with the BNB chain. The question is, what's the next kind of group to start launching chains?
00:38:37 Speaker_00
And the answer to that question might be like trad5 banks, actual traditional banks. So Deutsche Bank is a $1.5 trillion bank. It's Germany's largest bank.
00:38:47 Speaker_00
And just this week, they announced that they were launching an Ethereum L2, not just any Ethereum L2, a ZK Sync L2. So it's a ZK EVM on top of Ethereum. Here's the headline here.
00:39:00 Speaker_00
Deutsche Bank valued at $1.5 trillion, Germany's largest, is developing a Layer 2 blockchain on Ethereum. Are we just going to get all of the banks to launch L2s as well? Is that is that how this works?
00:39:12 Speaker_00
They're just like port all of their ledgers and their assets over?
00:39:15 Speaker_02
I mean, if they want to, they can. That's the beauty of it, right? No one's stopping them from building these things on Ethereum because Ethereum is credibly neutral and decentralized. It will not stop you from from doing this.
00:39:26 Speaker_02
And I think that you can see on the headline here, it says it's going to have regulatory oversight and people will maybe balk at that and say, oh, you know, it's just like another centralized thing from a bank.
00:39:36 Speaker_02
It's like, yeah, but the point is, is that They're using crypto rails. They're coming on chain. They're going to interoperate with the wider on-chain economy. And if you don't want to use this, you don't have to.
00:39:45 Speaker_02
You have the entire decentralized on-chain economy to access. But they're saying, well, I want to access that too. I want to be involved with this too. And that's why I think that they're doing this.
00:39:56 Speaker_02
And one of my dream things to see in crypto, and one thing that I've been speculating about for a little while now,
00:40:01 Speaker_02
is an entity like BlackRock coming along and launching their new stock exchange that they want to launch as a layer two on Ethereum using real world assets that they've tokenized, like stocks and bonds and all that, and doing that there.
00:40:15 Speaker_02
That to me would be the holy grail because all of a sudden, if BlackRock was to do that, you would see an absolute flood of all of these banks and companies coming in and building their own L2s here, which obviously strengthens Ethereum beyond
00:40:27 Speaker_02
Beyond words, I think, even though these are centralized entities, it basically says to the world, Ethereum is the place that we're building.
00:40:34 Speaker_02
Just like when, I guess, like a nation state comes up, like America, for example, all the businesses went there and said, I'm building in America because of such and such reason. People are coming to Ethereum and saying, I'm building in Ethereum.
00:40:44 Speaker_02
I'm building my ecosystem on Ethereum because that is the obvious place to build.
00:40:49 Speaker_00
Oh my God, do you know something about BlackRock, Anthony?
00:40:52 Speaker_02
No, no, I don't have an insider. It's something that myself and others have speculated, but that's it. That's the thing. I think that's the point. You can see it, right? There is a path to that actually becoming a reality.
00:41:05 Speaker_00
Yeah, my take was when BlackRock launched the Biddle Fund, which has been a massive success on Ethereum. This is their tokenized treasury assets.
00:41:13 Speaker_00
And now, by the way, there's some news later in the episode where they're integrating into all of these other DeFi protocols. My take was that, okay, that's the first BlackRock bank branch on Ethereum. They just opened up shop on Ethereum.
00:41:24 Speaker_00
And it totally makes sense that they would expand and eventually become a layer two. So let's see what they have in mind. Anthony, I don't know if you've been following this, but we have one remaining.
00:41:34 Speaker_00
SEC commissioner as part of the Gary Gensler anti-crypto army. Her name is Caroline Crenshaw. And we just an update on this because she was supposed to go up for vote in Congress this week to be reconfirmed, renewed another 10 year.
00:41:49 Speaker_00
And of course, the crypto community pushed back against this. We don't want more Gensler style commissioners that are like super anti-crypto. An update on this. She was up for vote this week. And what happened? The vote was canceled.
00:42:03 Speaker_00
And what I think this might mean is it's likely that she's going to be out because we are running out of time for her to get the votes in the Democratic-controlled Congress to actually vote her in.
00:42:17 Speaker_00
And in January, this all flips to Republican, of course. So that's kind of crazy. And it's also crazy because it's another extension of the story of crypto advocacy in D.C.
00:42:29 Speaker_00
This is Stand With Crypto, you know, also part of kind of like, you know, the PAC. They sent, they had crypto advocates send over 100,000 emails to U.S. senators about a regulator. about Caroline Crenshaw saying, like, don't reconfirm her.
00:42:46 Speaker_00
Like, crypto is watching your votes, members of Congress. And if you vote yes, that is an anti-crypto vote.
00:42:53 Speaker_00
I think a big story coming out of 2024 is just like the political willpower of the pro-crypto army, which it seems like is composed by a lot of single issue voters, crypto zealots, A lot of capital, of course, industry support, all of these things.
00:43:09 Speaker_00
But it's like a force in Congress. We may be down to like zero anti-crypto commissioners going into 2025. And that's absolutely crazy.
00:43:21 Speaker_02
Yes. Yeah. And I think that if you look at all of the stuff that's happened over the last couple of years as well on this front, the SEC is at the forefront of being the worst actor in the crypto ecosystem on the regulator side of things, for sure.
00:43:36 Speaker_02
So having a positive SEC going forward, like once the inauguration happens and everything changes over, That's going to be a huge boon to crypto, I think. So we're definitely going to have a pro-crypto SEC finally, like after so long.
00:43:47 Speaker_02
It feels like we've been waiting forever for this. We're finally going to have that. And, you know, I think it's funny because I think most people would settle for just an SEC that actually plays by the rules.
00:43:57 Speaker_02
People don't realize that, you know what I mean? It's not about being pro or anti-crypto.
00:44:02 Speaker_00
It's just that we want a regulator that follows the rules that they're supposed to follow. I mean, that was basically Hester Purce. I mean, she was just like open to it. She wasn't just like, oh, I support everything.
00:44:12 Speaker_00
You know, God bless all of your tokens. None of them are security. She wasn't like that. She was just like, why don't we create a sandbox? Why don't we just not stop this innovation in the US? It was totally reasonable. You're right.
00:44:23 Speaker_00
It's not even pro crypto. It's just like neutral. We just don't want anti crypto. Actually, last thing on politics before we leave this section, Congressman French Hill, which has been on the Bankless podcast, he's a congressman.
00:44:36 Speaker_00
He has been nominated to chair the House Financial Services Committee. It's a very big role in Congress. He is definitely pro-crypto, and he got that nod this week too, so big news on that. Anthony, we got a lot more to talk about, including Athena.
00:44:49 Speaker_00
They introduced a stable coin backed by what we were just talking about. BlackRock, the BlackRock Biddle Fund. What does that mean? Also, there's some Ave versus Polygon drama, DeFi drama that I want to get your take on. All this and more.
00:45:02 Speaker_00
But before we do that, we want to thank the sponsors that made this episode possible.
00:45:05 Speaker_01
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00:47:12 Speaker_00
All right, Anthony, have you been following the Aave versus Polygon drama? I'm not sure what the lessons are from this, if this is a lesson in risk, a lesson in governance. How would you summarize this?
00:47:23 Speaker_02
Yeah, I mean, it's been a while since we've had some serious DeFi drama, I think, within Ethereum. So it was quite entertaining to follow along with this, if I say so myself.
00:47:33 Speaker_02
But I think if we zoom out a little bit and focus on what was actually being debated here. So essentially, there was a proposal put forward by a bunch of projects within the Polygon ecosystem.
00:47:41 Speaker_02
that wanted to use the bridged funds, so the funds that were bridged into Polygon, and put them to work essentially. Because right now they're just sitting in the bridge. These projects were like, hey, we can use these stable coins to earn a yield.
00:47:53 Speaker_02
And we're leaving like $70 million a year on the table by not doing this. And then, of course, there was a whole debate kicked up about this once people started paying attention to it, saying, well, that's really risky.
00:48:04 Speaker_02
What if something happens to those assets? Then the assets that were bridged over aren't backed by anything anymore and essentially can become worthless. And we've seen all these bridge hacks over the years, and it's really ugly.
00:48:15 Speaker_02
They're huge honeypots, so on and so forth. It also breaks the kind of social contract you have with users that you won't use their bridge assets to do other things. and so on and so forth.
00:48:24 Speaker_02
So ultimately the proposal was shot down and it's not going to be going ahead right now.
00:48:29 Speaker_02
But the drama, I think, stemmed from a bunch of community members or a bunch of people within the Aave and Polygon ecosystems having a bit of, I guess, like, I don't know if I'd call it personal attacks, but more of like personal drama where they said, oh, he said, she said kind of thing.
00:48:45 Speaker_02
So that's what blew out the drama, I think, but the actual proposal itself, yeah, there was debate around that, but then there was also debate around the interpersonal drama that stemmed from that.
00:48:55 Speaker_00
Yeah, okay, so I haven't been watching this up close, but I've sort of seen some of it, and I guess my take is, so there's this proposal, as you said, to take bridge assets and do something else with it, like put it in Morpho and Yield or something like that, Morpho and Urine, get some additional yield on that.
00:49:12 Speaker_00
My take on that is like, oh, that sounds like a really bad idea, because You know, none of the users who bridged their assets, you haven't consented with any of them. And what we're doing is like, it's almost like re-hypothecation, right?
00:49:24 Speaker_00
We're stacking risk on top of risk. So like at the outset, I don't like proposals like this. It doesn't sound like a great idea. However, it's just a proposal. It hasn't happened yet. Open governance forums, proposals are messy.
00:49:37 Speaker_00
And then what I saw is some members of the Aave community submitted their own proposal, which is basically like, if you do this, we're going to deactivate Aave on Polygon.
00:49:47 Speaker_00
Basically set parameters to zero in their risk model so that nothing on Polygon. And then Polygon reacted to that and some of the founders, Sandeep, et cetera, and said, wait, okay, hold on. This is just a proposal. You're like, why are you exiting?
00:50:03 Speaker_00
Maybe you're doing this for your own reasons, Aave. And you secretly wanted to use the bridged assets for something in Aave.
00:50:11 Speaker_02
That's the point, right? One of the projects that proposed this was Morpho, which is a direct competitor to Aave. So that's where a lot of the drama stemmed from as well. It's like this conflict of interest, I guess, and competitive stuff.
00:50:24 Speaker_00
Yeah, and then so there was some like Sandeep from Polygon and Stani from Aave like back and forth, like back and forth. And, you know, I think Stani was saying, like, well, what are you get? What are you guys getting from the Morpho community?
00:50:36 Speaker_00
Are you getting token incentives? Anyway, some messiness, some mudslinging. What did we learn from this? Other than like some of this happened, all of this happens in the open, such as the nature of DeFi.
00:50:47 Speaker_00
So this is probably not the last time that we'll see like a blow up from this. You're like, what else did we learn?
00:50:55 Speaker_02
Yeah, I mean, I think from some of the discussions that I saw that fell out of this, just regardless of the projects involved, it was discussions around using bridged assets in other ways. Like that's been a big discussion for a while.
00:51:06 Speaker_02
I know there are some like layer twos, for example, like Blast and Mantle that will tell you, we're going to use your bridged assets to do things. Like they just put the ETH into Lido and stake their ETH and earn a yield on that.
00:51:17 Speaker_02
But they tell the users upfront that they're going to do that. There is no kind of like after the fact. bridging, oh sorry, after the fact usage of assets once they're bridged in. So I fall more in that camp.
00:51:27 Speaker_02
As long as you let the people know that, hey, your assets are actually going to get used if you bridge into our L2 or use our protocol, whatever it is, then that to me is fine.
00:51:37 Speaker_02
It's when, yeah, you do it after the fact, where you've bridged in all this money, billions of dollars of capital, and then you say, well, it's just sitting there right now. Why don't we use it for something? That's where things get very murky.
00:51:48 Speaker_02
So I think that we're going to be having more and more debates over the coming months about this, because there is a lot of money in these bridges that is doing nothing right now.
00:51:57 Speaker_02
And as that grows, it's going to become more and more tempting to put that to work to earn yield. and to kick that back to users as well in order to get more users on your platform.
00:52:07 Speaker_02
Especially when it comes to the L2s competing for users, this could be something that they use to essentially even offer free fees.
00:52:14 Speaker_02
Even though the fees are low, they could offer free fees because they could earn that yield and then kick that back to users as subsidization for fees. So there is going to be a lot more discussion around that.
00:52:23 Speaker_02
But in terms of the other major lesson as well is the fact that these protocols compete with each other. People tend to forget this, but they compete with each other and it's cutthroat competition too, because it's all out in the open, as you said.
00:52:35 Speaker_02
So we're going to see more of this drama unfold as protocols start juicing incentives for these things. As, Hey, why don't you use your bridged assets in our protocol and we'll put some nice token incentives on top as well.
00:52:47 Speaker_02
And then you're going to get the users saying, well, I want those token incentives. So I want you guys to use the bridged assets.
00:52:53 Speaker_02
And then you're going to see capital flow around like that and projects fight with each other over users and so on and so forth.
00:52:59 Speaker_02
So I think this is really only the beginning of what we're going to see around using bridged assets for different things, but there's going to be lots of drama as well.
00:53:07 Speaker_00
OK, so I totally agree with you about informed consent. And for anyone who's looking at this and like being like, oh, this is terrible, like I don't like it. You're watching how the sausage is made.
00:53:17 Speaker_00
And what I would remind everyone listening to is banks do this all of the time, except it's completely closed. They don't talk about it. They don't ask anyone's permission. They don't like they just rehypothecate. OK. And there's no accountability.
00:53:33 Speaker_00
because none of it's on-chain, so you have no idea what's actually going on. So these types of conversations, actually, and kind of the back and forth of it, and even the competing for users here, and the competitive pressures, it's good for us.
00:53:46 Speaker_00
It's good for DeFi users, okay? Because it's open, it's transparent, you can right-click, view source, and the code to see where the assets are, what the risk profile is, and all of that that you can't get in traditional finance.
00:53:58 Speaker_00
So I think it's like, in that way, it's bullish, even though it just looks a little bit, you know, mud slingy.
00:54:04 Speaker_00
Pudgy Penguins launched their Pengu token, 7 million addresses were eligible, a whole bunch of ETH addresses, a whole bunch of Solana addresses as well. This is what the token is doing, Anthony. So almost a 2 billion market cap.
00:54:18 Speaker_00
What does this remind you of? Okay, so like, it feels like I'm getting flashbacks to Bored Apes and They launched a coin. Am I right about that? I'm pretty certain they did at some point in the cycle.
00:54:30 Speaker_00
And it did something like this, multi-billion dollar valuation. Are you getting flashbacks to that?
00:54:37 Speaker_02
I mean, they launched at a different timing in the market.
00:54:39 Speaker_02
I believe they launched in 2022, which was obviously the bear market, like crypto had already topped in 2021, whereas Pudgy Penguin seems to be launching at least halfway through the bull market.
00:54:49 Speaker_02
But the price action is interesting to see because there was another airdrop a few weeks ago, maybe a month or two ago called Hyperliquid that happened, and then it went up only after the airdrop, right?
00:55:00 Speaker_02
With Pudgy Penguins, it has gone, I believe, mostly down only since it launched, basically, a few days ago.
00:55:06 Speaker_02
And obviously, the Pudgy NFTs, for anyone who saw, they also dumped, I think, 50% to 60% because people were buying those NFTs in order to farm the token.
00:55:16 Speaker_02
And then as soon as you got the token, that was baked into the price of the NFT, the ARB was done, everyone sold the NFTs. So what happened is that there was a ton of hype, the broader market sold off,
00:55:28 Speaker_02
you know, the NFT sold off because that ARB closed and then the token just is already worth, you know, a fair bit right now. So it's kind of plateaued of where it is. So I don't have any opinions of where it's going to go from here.
00:55:38 Speaker_02
I don't know much about the Pudgy ecosystem. I'm not a bull or bear on it. I'm relatively neutral on it, but I don't think it is that comparable to what happened with Apes because it was a different timing in the market and also
00:55:51 Speaker_02
I think from what I've seen, the Pudgy Penguin ecosystem is doing a lot more than the Bored Ape ecosystem is doing right now. And they've branched out and doing a bunch of different things.
00:55:59 Speaker_02
They've got their own layer two coming out with abstract, you know, I don't think it's like the Pudgy L2, but they've been working very closely with it to launch that. So they're doing a lot of, a lot of different things.
00:56:08 Speaker_02
So I, I, I, I respect the building that's going on there, but yeah, the token, I mean, who knows? I think they even called it a meme coin themselves. So we'll see.
00:56:19 Speaker_00
Yeah, fair enough, fair enough. It's just another meme coin. I do really respect Luka and his ability to execute. He basically brought Pudgies back from the dead. And you're right around this ARB opportunity.
00:56:29 Speaker_00
So Pudgies has been up from the NFT perspective. And now it's like it was down on the week because everyone sort of got the proceeds from this.
00:56:37 Speaker_00
You know, one other dimension that's different than Bored Apes or anything that we've seen before is actually, there's actual Pudgy Penguin toys in stores.
00:56:44 Speaker_00
And so what's happening is Pudgy Penguin's toys were sold with a QR code that entitled you to Pengu Airdrop. So what's been happening, Anthony, in stores all around, I guess the world, is people are ripping open the package and yoinking the QR code.
00:57:04 Speaker_00
in order to be eligible for that airdrop. So they're just like, here's a package of pudgy penguins. They left the stuffed animal, but they ripped off the QR code in order to be eligible for that airdrop.
00:57:14 Speaker_00
So some weird incentives when it comes to airdropping physical products.
00:57:20 Speaker_02
Yeah. Yeah. And this, this is funny cause we, like, uh, I, I pay attention to like the trading card game kind of arena, uh, Pokemon cards and stuff like that.
00:57:29 Speaker_02
Uh, and this was happening with, with Pokemon cards where people would go in, open packs, collect the rare cards and then resell them on eBay or whatever. And then they had to end it up locking up all the cards behind glass.
00:57:40 Speaker_02
Imagine seeing these pudgy penguins locked up behind glass and you have to go to the teller and ask, Hey, can I get one of the pudgy plushies please?
00:57:49 Speaker_00
Yeah, this is what happens in America, I'm sure. In America, Walmart, you can buy the guns, right? They're not locked up, but the pudgy penguins are locked up behind the glass. Can I speak to a manager? Show your ID, sir.
00:58:03 Speaker_00
All right, so that's the Pudgy story on the weekend. And by the way, go check if you're eligible for this. A whole bunch of wallet addresses are eligible for this, so you might be as well. At Bankless Claimables, you can do that.
00:58:13 Speaker_00
Athena launched a new stablecoin, Anthony, on BlackRock's Biddle Fund. This was kind of new. So they have a stablecoin, of course, that works on sort of the ARB-type trade.
00:58:28 Speaker_00
The carry type trade between the price of ETH and the price of fiat and works with centralized exchanges. They've launched a different stablecoin though that is different.
00:58:37 Speaker_00
It's called USBTB and it has a different yield source, a different backing, a different collateral base. And that collateral base is all BlackRock Treasuries. It's all the Biddle Fund.
00:58:49 Speaker_00
So this is an example, I think, of BlackRock really expanding into DeFi. So it's like, you know, Athena is like less than, I mean, maybe it's a year or two old. It's pretty new. It's all DeFi. It's all cutting edge.
00:59:00 Speaker_00
And this is BlackRock, like striking a deal with them and really expanding. They just want Biddle to go everywhere in the crypto economy, it seems. And they're willing to partner with just about everybody. What do you make of this?
00:59:14 Speaker_00
The partnership between BlackRock and a DeFi protocol, Athena?
00:59:19 Speaker_02
Yeah, I mean, for such a large organization, BlackRock being the largest asset manager in the world, the fact that they're this forward looking and this fast moving with coming on chain is pretty staggering.
00:59:30 Speaker_02
As you mentioned, Athena is not an old protocol. It is relatively new and they're already working with BlackRock and BlackRock was already working with them. And it seems like this is just the very beginning of BlackRock's plans.
00:59:42 Speaker_02
They probably have some very ambitious plans of what to do. on-chain.
00:59:47 Speaker_02
And that's why I mentioned earlier where I do see a reality where they launched their own L2, which gives them the control and the ability to come on-chain in the biggest way possible and to interoperate with the rest of the on-chain economy.
01:00:00 Speaker_02
And they are a fee-insensitive user as well. So they wouldn't necessarily be launching the L2 for
01:00:05 Speaker_02
I guess, scalability purposes, it would be more probably to be able to onboard a bunch of different things, a bunch of different real-world assets, which is what they're mainly focused on.
01:00:14 Speaker_02
Larry Fink always talks about tokenization of real-world assets. So bringing all of that on-chain and interoperating with the wider Ethereum on-chain economy is just such a thing that I'd see them doing.
01:00:24 Speaker_02
And it would be such a massive unlock for Ethereum that I can't even begin to describe, to be honest. So it's great to see them being so forward-looking, to be honest.
01:00:33 Speaker_00
Anthony, as we begin to close out this episode, I wanted to get into your personal on-chain Wrapped. Somebody tweeted this out, that somebody in crypto should create a Spotify Wrapped, but for your wallet, essentially.
01:00:47 Speaker_00
The devs at Bankless actually did this. Anthony, I am going to plug in your wallet, this is bankless.com slash wrapped, and just reveal what you've been up to on this address. So what is this wallet? This is not all your trading activity.
01:01:01 Speaker_00
I'm sure you have all sorts of secret wallets out there that aren't docs, that no one knows about, where you're making insane gains. But this wallet, what do you do in this wallet?
01:01:09 Speaker_02
So yeah, this is my very public wallet. I don't do that much on this wallet. It's stuff that I don't care if people know that I'm doing. I do have separate wallets.
01:01:20 Speaker_02
I have one wallet that I use just for trading different very risky coins, like meme coins and AI coins, because I don't want anyone copy trading me. Also because I don't want them seeing my bad trades too, because there are some bad trades on there.
01:01:37 Speaker_00
I get it. I'm with you. So this is Anthony's most wholesome wallet, let's say. So you're not going to see any of the fart coin trades that he's been making behind the scenes, I'm sure. So here it is, let's take a deep dive into Anthony's wallet.
01:01:48 Speaker_00
So you performed 99 transactions this year from sassle.eth, 45% more active than other bankless citizens. Your most traded token was USDC. I imagine you're just trying to sell all that fiat for like, you know, ether or something like this, right?
01:02:03 Speaker_00
You wake up bullish and you're buying ether with your fiat. You're most loyal to base, your most commonly used layer two, your spirit animal, let's see, Brian. Apex Armstrong, that's your spirit animal. Hey, we're both bald. How do we know this?
01:02:22 Speaker_00
It turns out your most active time was during July, 18% of your transactions. So you're, you know, summertime, you had some energy. It's winter for me in July. That's probably why. He's indoors. What else are you going to do but trade crypto?
01:02:38 Speaker_00
Your crypto horoscope is a cancer. And how bankless are you? Let's see. Here it is. Drumroll. 71 on the bankless score. Anthony Susano.
01:02:46 Speaker_02
I'd love to plug in some of my other addresses in that on my own. Not on this stream, but on my own.
01:02:52 Speaker_00
Yeah, we won't tell.
01:02:53 Speaker_02
To see my score. Yeah, yeah, yeah. And then just talk to you about it, but this is cool. This is actually a really cool thing. I hadn't seen this yet. Um, yeah, people should definitely plug their addresses into this or other people's addresses as well.
01:03:05 Speaker_02
You know, I know there are a lot of people who have public addresses that they don't mind doing whatever on them because they, because they want the attention basically. And they, and they want the, uh, the, the fame, I guess.
01:03:16 Speaker_00
So I don't know how this works, but I actually plugged in Vitalik.eth. And a fun fact, do you know who his spirit animal was? Uh, no. It was you. It was Anthony Sassano. Yeah. I don't know how the algo works.
01:03:30 Speaker_00
I'll have to, you know, consult the devs on that, but like, I don't know, you know, I'm, I'm sure the, the machine intelligence saw the similarities there. Yeah.
01:03:40 Speaker_02
Vitalik and I are basically twins.
01:03:42 Speaker_00
Basically twins, basically the same person. I want to end with this. So I was thinking that we would have more of a bull market going into this episode, but I think we will in 2025. And I want your seasoned veteran advice.
01:03:57 Speaker_00
When we go to 2025 and things are feeling frothy, things are feeling bullish, how do we know it's a top? You know, this whole thing around top signals.
01:04:06 Speaker_00
OK, so I've got nine top signals here for you, Anthony, and I want you to score them, if you will, one by one from one to 10. OK. And one is you're not seeing any of it exhibited. It's like deep bear market. Your sensors aren't tingling.
01:04:23 Speaker_00
It's like whatever one is kind of low on the you know, is it a is it a top scale? And 10 is you're seeing it everywhere. It's like high alert. Feels like the top feels super frothy. OK, you ready for this?
01:04:34 Speaker_02
Mm hmm.
01:04:35 Speaker_00
I snatched this from a crypto Twitter account. I'll have to include in the show notes because I don't have it in my notes where these top signals are from, but here's the first one. Okay. So are people you know asking you about crypto right now?
01:04:47 Speaker_00
Again, 10, a lot of them, super frothy. I'm like scared and like one, not at all. It feels like a deep bear market and they're like feeling sorry for you that you're like in the crypto industry. So what are you from one to 10 on this?
01:05:01 Speaker_00
So a few days ago, I was a five, but that's at like an eight right now.
01:05:05 Speaker_02
And I'll tell you why. I'll tell you a guy that did some work on my house a couple of years ago that I hadn't spoken to in a couple of years called me to ask about crypto and he's got nothing to do with crypto at all.
01:05:19 Speaker_02
And I was like, Oh no, we're already at that part of the cycle. So yeah, I went straight to an eight when I got that call. I was like, no, not already.
01:05:29 Speaker_00
Yikes, yikes, too soon, too soon. Okay, but no fear, guys. No need to panic yet. There's still eight more. How about people flexing on the timeline? Are you seeing flexing on the timeline going on from one to ten?
01:05:41 Speaker_02
Not much, actually. I would say maybe like a three or a four, to be honest. I'm not seeing much. I saw some account posts that he bought like a Porsche 911 the other day or something. Oh my God.
01:05:51 Speaker_02
I was like, okay, that's a bit of a flex, but it's just here and there. I'm not seeing a lot of it yet. Is that because we're in the ETH community, you and I? So you don't see any?
01:06:03 Speaker_00
How about, how about number three greed on the timeline? You seen any greed? It's a little bit different than flex. It's just like more like, um, oh my God, you got it.
01:06:12 Speaker_00
I'm investing in this thing and just like, it's going to the moon, that sort of thing.
01:06:16 Speaker_02
Yeah, but I've been seeing that all year because you know, obviously we've had the meme coin mania going off and a bunch of other kind of ecosystems having a bit of a. a pump.
01:06:24 Speaker_02
So I would say that it's probably like at a five still in terms of what I've seen. Like it's definitely not like what I saw in 2021 just yet.
01:06:33 Speaker_00
That's good. Okay. How about when the market stops going up with positive news? Okay. So that's when the market's fatigued and get this super positive thing and there's still not going up. So what's that for you? One to 10.
01:06:45 Speaker_02
Yeah, I mean, probably like a three or four, to be honest, but I feel like we've moved past that phase of the bull market so far. And we're in the phase of, it doesn't really matter at this point if it's negative or positive, the trend is still up.
01:06:57 Speaker_02
So yeah, we've kind of moved past that, I think.
01:07:01 Speaker_00
Okay. How about crypto apps in the app store trending, you know, top 10, top five?
01:07:07 Speaker_02
Yeah. I mean, Coinbase and, and Robinhood, which does crypto as well, have been there for a little while now for multiple months, but. I don't know if I would call that the same top signal that I would have last cycle.
01:07:19 Speaker_02
I feel like that crypto just has more general mindshare now, uh, and more people are just generally aware of it and already have the apps on their phone and stuff like that. So, and it just re-logging back in.
01:07:29 Speaker_02
So that again, maybe like a five, I guess, or a six, uh, yeah.
01:07:34 Speaker_00
That's not too bad. All right. Blood pressure going down a little bit. Search trends at historical high.
01:07:38 Speaker_02
Sorry, what was that?
01:07:41 Speaker_00
Search trends, like Google results.
01:07:43 Speaker_02
From what I've seen, they're not anywhere near their highs yet, or they're creeping back up, but they're definitely not at the 2021 levels. So yeah, again, like maybe even less than, maybe like a three or a four right now.
01:07:53 Speaker_00
Oh, that's good. Okay. Crypto in mainstream news. You've seen this in mainstream news?
01:07:58 Speaker_02
Yes, Bitcoin mostly though, not crypto. Just Bitcoin in the mainstream news, especially because Trump's talked a lot about it. That's obviously a huge reason why it's in the news more. Outside of that, not as much, just Bitcoin mainly.
01:08:12 Speaker_02
And that's usually not a top signal. That's usually just a signal of, oh, well, the mainstream is paying attention to us again.
01:08:17 Speaker_02
It's when you start seeing the really kind of random degen crypto stuff that is a crypto insider thing start branching out into the wider ecosystem. That's when you can probably start like screaming. So I would say again, this is probably like a five.
01:08:31 Speaker_02
Yeah, it's just Bitcoin and Hoctua.
01:08:32 Speaker_00
That's the only thing that's weird. Hoctua worries me, okay? Hoctua worries me. Okay, how about people quitting their jobs?
01:08:39 Speaker_00
This is a peak bull market when people are like, I'm getting a job in crypto and I've been doing like corporate finance for 20 years, but now I'm doing crypto. You do this at the tops.
01:08:49 Speaker_02
Yeah, no, not necessarily, not seeing much of that. I am seeing a bunch of people who joined a team like three years ago now going and like starting their own thing or,
01:08:58 Speaker_02
or kind of leaving and saying, I'm going to take a break for a bit, probably because they made a lot of money in the last three years. And they're like, you know, I'm going to go and relax for a bit. So maybe a five.
01:09:08 Speaker_02
Yeah, I'm not seeing too much of that. Yeah.
01:09:11 Speaker_00
OK, last one, then we'll sum this all up. Exaggerated price prediction. So that's where you start seeing people saying like, you know, Bitcoin to like, you know, two million or something.
01:09:20 Speaker_00
I remember last cycle, right, you and I were chanting, many of us were chanting ETH to 10K, ETH to 10K, right? As soon as we started saying that last cycle, people were like, 10K is bearish, ETH to 100K, you know what I mean?
01:09:33 Speaker_00
And that's at the point you're like, oh, okay, I don't know. Have you seen exaggerated price predictions yet this cycle, 1 to 10?
01:09:40 Speaker_02
Yeah, I mean, I have, but the thing is, is that I've been seeing that on Bitcoin for a while now, like since even 2023 of people saying $1 million Bitcoin and so on and so forth.
01:09:51 Speaker_02
But what I will say is that I am seeing a lot of the people who were previously calling for maybe 150k to 200k Bitcoin start calling for like 500k now because whatever reason, obviously the froth in the bull market.
01:10:03 Speaker_02
And same on ETH, people just like to raise their targets as time goes on.
01:10:09 Speaker_02
But if I start seeing people give ridiculous prices for assets that are fundamentally worthless, that's when it goes to 10 for me, because those assets have obviously been pumping a bit and people are like, oh my God, it's going to go to such and such.
01:10:20 Speaker_02
Um, but no, I would say it's, it's probably at like a five or maybe not. You know what? That's as close to a six, I think at this point, but, uh, nothing too crazy just yet.
01:10:28 Speaker_02
But I think the common theme through all of this is that we're in the middle, right? That seems to be where all my answers landed.
01:10:34 Speaker_00
Totally. Intermediate. I think we are a five or a six, which is actually a good place to be as we end the year. Anthony Sestano, thank you so much for hanging with us. Remind people where they can get The Daily Guay.
01:10:45 Speaker_00
Fantastic, uh, Ethereum education that you're putting out on the daily? almost, you know, like a lot.
01:10:52 Speaker_02
These days it's a bit more sporadic, but I did make a news resolution promise that I'll, I'll go back to doing it a lot more frequently, but yeah, people want to follow me. They can just go find all the links on my Twitter.
01:11:04 Speaker_02
I do my daily gray show, as you mentioned there, and I'm very active on Twitter. So I'm sure you'll link that in the show notes for people to check out.
01:11:10 Speaker_00
Go check it out, guys. It's also available on podcast format, too. So if you're not tuned in to Spotify, you can get on the podcast. We'll include a link to that. Gotta end with this, of course. You guys know crypto is risky.
01:11:21 Speaker_00
It's been a good year, 2024, but you can lose what you put in. We are headed west. This is the frontier. It's not for everyone, but we're glad you're with us on the Bankless Journey. Thanks a lot.