19 - DeFi vs. Banks | Hasu

welcome to bankless where we explore the frontier of internet money and internet finance this is how to get started how to get better and how to front run the opportunity this is ryan sean adams i'm here with david hoffman and we're here to help you become more bankless david we have a fantastic show with hasu tell us about it hazu is one of the few people that i consider a secular thinker in the crypto space he's very sober in his thoughts he thinks clearly and there

have been just he's produced a ton of content that the most incredible thing that i think about the content that he produces is that we've seen companies make choices based off of the the content that hazu and the content that comes out of uncommon core so hazu we would call him a person that is the m zero of thought i would say uh there's just a lot of memes a lot of ideas a lot of concepts that comes out of what hazu produces so getting hazu onto the bankless podcast

was an absolute necessity and he did a great job walking us through how he thinks about the space we talk a lot about the concept of a blockchain crypto system as kind of like an organism kind of a a cohesion of stakeholders that creates some sort of that has a body and then also a spirit right it has the the physical code and the in the physical people running their nodes but then it also has like the social contract right it has the implied values of that system

and how these things interact and the the different ways that they cohere together you know it's cool i think hasu thinks of himself as a as a bitcoiner but also an ethereum so this is this is kind of a good follow-up to our nick carter conversation because i think both nick and he think in um they're both free thinkers as you said and many of their ideas intersect and complement one another but what i love about hassu is he is not afraid to sort of shake things up so

um i think he originally maybe came more from the bitcoiner community or bitcoiner side of things but he's not afraid to break rank and write articles like why bitcoin might not survive the bitcoin standard that was the title of an article he wrote and it was about how crypto banks might sort of infiltrate bitcoin and break up the decentralized social contract and value system of the network so he's definitely not afraid to go push back on on norms and push back

on ideas and part of the reason i think he can do that is uh he's actually a pseudo-anonymous account so on twitter and everywhere he posts um you know there's no profile shot we don't actually know who who hassu is he's got sort of this rick and morty with an eye patch uh avatar everywhere and that's that's you know what we know of of hasu to me he's like from rick and morty and he's dropping all of this wisdom but what's so cool is uh that you know the the crypto community is very much a

merit-based um social economy so it doesn't matter who he is really it's it's we judge hasu based on the quality of ideas that he presents and not based on you know his reputation or or pedigree have no idea who he actually is but know he is a fantastic thinker just given what he's written and the way he presents himself every conversation that i have with hazu i always find immensely valuable and i'm sure you the listener will too we also

talk about common topics such as eip1559 and the the issue of the growing world of crypto banks and how that influences this crypto industry and what it will look like into the future so evergreen topics and coming from a guy who thinks about them a lot so this is a fantastic interview before we get into that interview let's talk about some bankless things both part one and part two of a bank list nation i've written are up and on the bank list website so you guys should

check them out it's a it's a two different two different articles one kind of goes into the past history of nations one goes into the future history of digital nations we talk about these concepts in this episode with hazu and so uh i definitely recommend reading those if you guys don't like to read but instead you prefer audio content as you are a listener of a podcast you can go to the bankless youtube where i read these articles to you and i also scroll through the articles you can read it with me but i read it aloud read it

right into your ears so it makes it really easy and then while you're there you might as well just subscribe to the bank list youtube yeah the bankless youtube is really catching fire these days we actually just released a new show that we're publishing first on youtube it's called state of the nation where we talk about topical news items that are most relevant to the bankless nation and we're releasing that on youtube every tuesday we'll also publish it to this podcast stream as well on wednesdays so from here on out on mondays you're going to

be getting a typical edition of the bankless podcast and then on wednesdays on this podcast stream you can you can listen to state of the nation and you can also catch that a day early if you go to youtube and subscribe to our channel so to do that just go to youtube type in bankless and it'll pop right up so we are about to dig into the interview but before we do we should take a minute and talk about our sponsors maltus gives you the ability to run your business without a bank that is the

dream it is the first ever bankless bank account for entrepreneurs who want to run their business both on crypto and traditional currencies like stablecoins so it features a multi-sig wallet that means you can have team access not just individual access which is necessary for a business so you can implement access controls you can also earn interest on your crypto using money protocols inside of multis like compound and ave and others you can streamline pay payments as well multis has been featured on bank

list we're huge fans of the product they're adding fiat on-ramp soon and as you are listening to this on june 22nd they are launching a completely revamped app you've got to check it out if you're starting a business want to run a business in crypto check out multis dot co in their revamped app we're going to be doing a video pretty soon and publishing it on the bankless youtube channel as well all right so you need to go to multis.co that's m u l t i s dot co and check it out when you mention

bankless they'll put you ahead of the queue they'll give you better priority and let you sign up quicker in this episode with hazu we talk about the influence of exchanges crypto exchanges and how they turn into crypto banks and how that starts to dictate what these chains look like however getting value onto these systems doesn't always require a crypto bank and that's where monolith comes in coming soon on monolith is an on-ramp into your monolith smart contract wallet directly from your bank account so you

don't need to pass through any sort of crypto exchange crypto bank to get your value on into ethereum monolith for those that don't know is a smart contract wallet that also connects to a crypto visa card so you can go to the store swipe your visa card as you normally do and instead of pulling out dollars from your bank account it pulls out die from your smart contract wallet so this is a way to live a bankless life without having it impact you and your daily livings with with your friends and

family and you don't have to be that weird person that only has crypto money and no real money so it wraps your ethereum address in a visa card and visa is accepted basically all over the world and you still get to have access to your die earning that interest rate in d5 at the same time so check them out at monolith.xyz to get your bankless visa card today all right guys let's go ahead and get right into the interview with hazmat

hey everyone we are excited to have hasu with us hasu is a crypto researcher he is also a writer he's read a ton of stuff you've probably already read if not his ideas are likely embedded in your subconscious as they are in mine hasso it is fantastic to have you today we're really excited about this yeah sam i'm really excited to be here guys okay so when i was looking at the volume of writing that you've done over the years since i don't know 2017 2018 when

you started to really get active in crypto and publishing i was just overwhelmed like there are a lot of even your earlier ideas that i feel like are embedded in my own subconscious but i want to ask you this question you know maybe it's not your most popular article but what's your favorite article that you've written so far hmm well first of all first off that's what you said is probably the biggest compliment that you could give to to me

i don't know i just i just love to write stuff where people say uh or that becomes basically part of this uh what everyone believes right it's i don't know how to put it yeah but um because i myself am influenced by by some writers very strongly and it's just we talked about this a little bit before the show started but i feel like it's worth repeating here but we all have these these kind of people who influenced our own thinking

in a very strong way and for me for example like he's he's not the most popular guy or like he he doesn't tweet very much and so on but a lot of my thinking for example is strongly influenced by reading paul storz's blog truthcoin.org i believe so a lot of times when i write something and i actively wonder okay where does this particular thought of mine originate then and it's like there's

like a 25 chance or something that i first set the thought while reading his blog or picking up something that he said um yeah and there are a bunch more people like that so james prestwich is someone who was probably almost at the same level as paul for me just in terms of when he says something then i listen so intently because just historically there's such a large chance that when they say something then it becomes

like it it permanently alters my my thinking that's so funny because uh so i'll have to check out paul i've read some of james's stuff i'll have to check out paul a bit more too because um i feel like you're probably in that category for me at least personally and um nick nick carter who we had a couple episodes ago is probably another one who's in that camp for me too but like it's it's very cool how the crypto social um like contract or the the social layer i

i guess i should say sort of works because it very much um it's it's sort of a just a free open thinking society um especially among among some of uh some crypto thinkers who haven't descended into weird you know maximalist kind of like narrow-minded paths and each of us kind of build on what another says and sort of take an idea you know further and it really develops this incredibly rich social layer that i haven't personally

seen anywhere else i don't know if it exists anywhere else but i haven't personally seen it yeah and even um even when it comes to maximalism that's it's so fascinating to observe like in every aspect of this complex or these complex social dynamics that we have in the crypto community there's always something to analyze um and to draw an interesting takeaways from in my opinion so um the way that the just the

the kind of tribalism works um in crypto i mean we've talked about this like so many times before but the they are very strong parallels to religious movements and when i realized that it really transcended the debate for me and it made me bullish on a whole other level about cryptocurrency when i realized how religious the movement is and i'm generally surprised by how how few people get this still or or

still see the religious aspects of crypto as a negative because for me it it's so massive like even though i don't participate in these kind of religious rituals and the way that i guess others do but just as an observer i look at them and i find it in incredibly positive for the future if you have a movement that's that has ambitious goals and and changing how the world works um and you they're then having this this kind of

religious structure is just and religious fervor is it's just fantastic all right so so that i'm glad you bring that up because so david and i were just talking about this uh yesterday on uh the first uh state of the nation episode uh that we released and we're talking talking about whether crypto is more similar to a religion or a nation state and uh david i think you made the comment that um well you know to you bitcoin feels a bit more on the religious side whereas maybe ethereum is a bit more nation state that both sort

of blend together what what's your take on the legitimacy yeah i write actually i thought it was good the main criterion that you defined for the nation state was that it provides physical protection for its people is correct or not not even a nation state but just a nation at large right like so

the whole idea was to expand the model of a nation into the groups of organizational schemes that have come throughout history and religion would be one of the original schemes of a nation that one of the core features of it is that it offers protection for its own constituents yeah yeah um i kind of buy into the i guess you would you could say like it's the sabo saboyen uh way of thinking about this or also

harari it's they both kind of um have a very similar attitude about this but so those were both the the state or the the nation state and um religions are both uh social technologies or social institutions that are that humans invent to increase their ability to cooperate with one another beyond the the confines of their small trusted social group so it's it's always about

scaling the ability to trust one another and as a result you can you can cooperate with one another um and the they both operate in like in slightly different ways so the the punishment or like the way that i would say this the state does it is um where you would combine it with some kind of uh legal system um so you impose some rules that are if the rules are paid it's beneficial for for everyone i

just like social contract in that sense right but um like you can't kill me um well i can't kill you but in return i'm sure that you won't kill me and we enforce these rules by uh whereby by by physical punishment in the case of the state but in and in the case of religion via some yeah i guess some kind of more arcane threat right so um it's it's the punishment in the

afterlife or it's the fall from grace i don't know what to call it um but in both in both in both it's also the the threat of being rejected from your community but that that aside so um so they are both social technologies um aiming to scale our ability to cooperate with one another by removing trust from the equation and i don't think that there's

i don't think there's a diff difference between like bitcoin and ethereum there um to me they i think even in the future i think it's already happening but the just this distinction between religion and the nation state even in the in the physical world is just going to disappear so um this the state can be a religion and the religion can be a state um and then there are other movements that have sort of the attributes of both a

little bit so um i just think that the whole the soul um distinction between them is is going to disappear and yeah bitcoin ethereum definitely have attributes of both i want to bring it back to the original question so the um bitcoin to me is more of a religious nation although it is also like a nation-state but ethereum to me is also more closer to a nation-state but it also it can has its religious components

do you recognize that distinction i guess i guess not really um so i mean when you would say it it's more like a religion that that would imply to me that uh the properties are very strongly reliant on social norms because that's what religion mostly does it it creates or it the rules in a religious movement are upheld via the strong enforcement of social norms and values

and that's how you get these scalability benefits um but bitcoin is just as much a a technical protocol where rules are enforced by a network of computers that reject each other's messages if they don't follow a certain well if they don't follow the correct protocol um so it's you have just as strict as an enforcement there and in some ways the enforcement in bitcoin is arguably even stricter right

um because in bitcoin the the the bitcoin community is more more strongly believes in this this notion that everyone should be able to validate um the blockchain and we should reject the idea of weak subjectivity so there should be no subjectivity at all and what is the heaviest chain whereas in in ethereum the human community believes that hey it's okay we can use checkpointing for validation and it is okay if there's if

an attacker takes over a proof of stake network then we can just fork them out on the social layer uh so i feel like the the enforcement is more strict and more physical is the bitcoin so in that sense uh in that sense it it might be like ethereum might even have some some of these more religious aspects or more social aspects if you equate religion with social enforcement that's that's really interesting that

you say that you know one to one take on this and maybe part of the reason why david feels like um bitcoin has a bit more religious aspects to it and further about it is just it does feel like there is a um richness in bitcoin that oh in the social layer in sort of these uh enforced norms that isn't yet present in ethereum though ethereum is kind of is kind of getting there right there there are some very clear things in bitcoin

that you have to sort of subscribe to to be you know part to be a bitcoiner right and there there's even you call the maximalists or you've written articles about an intolerant minority people who who go around and they they enforce these norms you know through sort of purity tests um so-and-so is not a real bitcoiner if uh if he was he he wouldn't say xyz right yeah um but but possibly that's just because uh bitcoin has been around for twice as long um you know so it's had you know 10

years-ish and and ethereum's had five and it's still kind of working itself out so i think that maybe a closer comparison would be to check out bitcoin in 2015 versus ethereum today where it's just starting to establish its norms but it on the topic of kind of uh these these social coordination systems as a religion right i find it very interesting that um when people talk about their religious affiliation they might say i'm a christian or i'm a muslim or i'm a hindu right and they put a name to

it we do the same in crypto i'm a bitcoiner i'm an etherean and i guess my question to you is the same question i asked as nick are you a bitcoiner and are you an etherean hatsu do you identify with that yeah sure i i would say i'm both um for me i i would say mostly i i read nick's interview and i i was nodding along when he said so yeah i think he asked you for a definition of what it means to be a bitcoin or an etherean first um it's the most snick harder thing to do

[Laughter] um and it's very it's it's i also agree with what is what he said that is uh it's easier to define what a bitcoiner is because they've like the the the the values of what that means are much more defined but i also agree with what you said earlier that the values of what it means to be an ethereal also becoming more strongly defined over time

um and it's mostly this it's mostly a process of removal so you start with a community that has a lot of different beliefs but those beliefs are not held very strongly and then eventually it converges it converges on on the much smaller set of much stronger health beliefs um at least that's what it seems like to me and then people who were like held some of these fringe views um

they find themselves pushed out eventually so yeah any kind of movement i think tends towards the the more extreme versions of uh what it previously believed over time do you think those extreme like people and those extreme versions that the maximalists are useful for these predator religions oh yeah i mean this goes back to what we talked about a few minutes ago with just uh the kind of religious

fervor how how i think how valuable i think it is and one example would be one example would be um in terms of what i my my uh the article that i wrote before the one on eip159 about custodial banking so this is a in my opinion a great example of how it's not enough that you have a protocol a technical protocol that can enforce a particular set of uh of rules um

automatically because the the number of rules that you can enforce with a blockchain is actually quite limited and it's not nearly enough to build a system that can become a global form of money that is very valuable and exists in a very adversarial environment you need to pair this with with social norms as well right look at gold gold is

gold is a physical element and you can't alter the shape of the physical element but everything that is built on this base layer of gold as settlement asset is entirely shaped and molded by humans and it's extremely malleable in the sense so the same is true for bitcoin you can you can have um you can have a very robust base layer but if people are not using the base layer but using any kind of system that is built on top of it then

um that's not something that that's a not something that the base layer can control and b it can it can push the entire system in a state where the roots of the base layer that they don't even matter anymore so if everyone's everyone's transacting only on on higher layers then whoever controls these higher layers they control the entire rules of the system so that that shows to me why this the social norms are so so important um

as well if you want to build a system like that so hazu in my article the the nation article i made some sort of claim that the protocol of these systems are their dna right and as these systems grow if you take if you take the lens that these systems are organisms as these systems grow the dna of the protocol the the specific details of how their specific code works defines what they look like at maturity you know

as dna does like as an organism grows up it determines the shape and structure of said organism and i think what you just said and something i think we want to get into in this episode is the the dna of a particular protocol if it doesn't retain its the sovereignty over its own soul right if it doesn't control what it looks like at maturity then there are layers on top of the protocol that can perhaps capture and control the soul of

the system and redefine what it means to use use this system itself and to make this in more concrete terms so i'm not speaking in generalities uh this is the conversation of of crypto banks right where the cryptocurrencies have a soul a a structure of belief systems and values that are instantiated in the code in the dna but if everyone is using these cryptosystems via a proxy like a crypto bank

that may or may not thwart or corrupt the soul the spirit of the the spirit of the system uh and so i kind of want to get your take on on a that perspective but then also lead into the conversation of what the future of crypto banks are and how they are going to impact the spirit of these systems so i think it's i agree with the take that um the co the code of these protocols is the dna

but i would say it's part of the dna because your part of the dna also rests in the social contract and the social contract is not the same as the the protocol itself so they the the social contract is for to me is really the layer zero um of any of these systems and then on top of the the social contract sits the protocol and the protocol is expressed by code

but the protocol can only enforce part of the social contract so it can for example enforce that i'm not allowed to print money from thin air i can only spend a coin that i have that someone that either i have mined or that that someone has sent to me with a valid signature um but then there are things that are not possible to enforce with the protocol and those are also important

parts of the dna so for example the fact that we should use uh or we should validate our our own transactions or that we should um use when possible uh don't use intermediate forms of payment and custody for our keys so we should hold our own keys so those are not like how would you enforce those things by the protocol you can't um this this has to be all done through social norms that are

also built on top of the social contract and that's where i think the whether more the i guess when the more strongly minded and vocal people and in both communities uh are very important because they do the same as the protocol does they and socially enforce um particular routes that are important for the long-term survival of the protocol does it make sense

i mean i i think of these people as like they're like priests right almost in kind of a religious context they're like the the core devs of the the meme layer of the social layer and they are important and the weird thing about it is um sometimes i see the bitcoin maximalists uh on that side of things i think geez this is bizarre like you guys are not responding to like logic and reason and yet at the same time it kind of makes me bullish on bitcoin right it's this weird dichotomy because that level of religious uh fervor

implies that there is a strong social contract around some of these things and ultimately it's that social contract that secures the bitcoin network and that's also why i see like i get bullish when things like um you know the parity multisig hack uh there was an eip to release funds there right but um that never went through that sort of shot down by the ethereum social contract that to me is is bullish for ethereum maintaining its minimum