Anthony Sassano & Eric Conner | Luna Demise, Bear Survival, Bullish ETH Merge

Welcome, Bankless Nation, to this very special Saturday morning edition of the Bankless Podcast. Every once in a while, me and my buddy Anthony Susano from the Daily Gway, we just hop into a live stream, no agenda, and just chat about the current events. There were a lot of the current events to talk about. I think you can know what we uh what we begin with. Uh and so we just kind of recap the t the Terra ecosystem, uh, but we do change subjects eventually after about 30 minutes uh and go into the merge. Uh and if you have not watched the HAL Press interview that we did earlier this week, it was extremely bullish. So we talk a little bit about that. I give a quick TLDR, although it is not to be missed. And then uh Eric Connor uh decides to hop into the stream. Uh and so Eric Connor from Into the Ether, uh long-standing Ethereum community members would might recognize him, uh comes and finishes off the last third of the show. Uh really fun conversation, really enjoyed it, tons of fun, tons of energy. I hope it is a nice thing to chill and relax to after kind of a down bad week. Um, but uh hopefully we can all shrug it off together. And so I hope you guys enjoy this fun, very fun conversation right after we get to some of these fantastic sponsors that make the show possible. Hey Anthony, what's up?

Hey man, what's up?

Oh, you know. Survived another week. How 'bout you?

Yeah, yeah, survived another week. Uh, I think my brain didn't survive the week, though. Uh, I don't know about you, but I am feeling very uh mentally exhausted, that's for sure.

Uh what's doing it to you most? Just like Twitter Doom Scrolling?

Usually my Doom scrolling I do on on Instagram, not on Twitter.

Really? Instagram Doom scrolling? That's uh my Instagram's just like uh random pictures of kind of like computers, watches, and cars. So it's not doom scrolling, it's kind of like wealth scrolling, maybe again. Um no, I

Yeah, yeah. I that's really poor timing. No, no. I think um I I I think what what did it to me most was just the speed at which it happened, right? We basically ran through like uh crypto's 2008 moment in like three days. It was just insane, right? And

I think that's what fries my brain the most is when like and that's it, especially happened during like DeFi summer a lot when things would have just happened really, really quickly, right? You'd you spend like all this mental energy trying to keep up and just catch up, and then you would just get like completely blown out by it, and then you do it all again the next day, right? So yeah, it's just the speed of it, I think, for me.

Yeah, it's it's uh it just reminds me of like the classic line when people are hung hang uh hung over and they're like I'm never drinking alcohol again and then a week later there's just like another farm to like ape into. Like that that's what what D Fidel felt like. If we're if we're doing the whole like crypto is speed running the history of money and finance thing, we just like sped sped ran like a hyperinflation event, right? We went through like usually hyperinflation events take it, I mean they can take months, right? Uh, but this one took like 36 hours. Uh like we did just like Weimar Germany in like 36 hours.

Yeah, exactly. And I think that's what I think shocked a lot of people. It was like, yeah, a lot of people called um this and kind of like uh had been calling it for a long time, but I don't think anyone expected it to unwind as fast as it did. Like it literally went, like, I mean, what the Luna token went down like 99% in 24 hours or something. That was just insanity, right? And it wasn't just like some small shit coin either. It was like it was worth tens of billions of dollars. It was a top 10 coin, and then it just collapsed. And we're and everyone's just like trying to keep up with it. They're trying to keep up with kind of like I think that they're in disbelief because they're trying to actually process the fact that this is actually happening. Like, this is actually happening. This is not a meme, like, this is not kind of some dream that everyone's having, it's an actual reality that we're all gonna have to adjust to, and of course, that.

Bled into the wider markets. It wasn't just Terra, like everything came crashing down, and then people were trying to short the other stable coins, which was like peak stupidity. I was like, what the hell? Like, what is this? So, so yeah, just absolute insanity, man. Seriously. I uh I think that I'm still gonna be processing this for a while. I mean, it was my craziest week in crypto. I don't know about you, but definitely um I haven't felt like that before in crypto.

Yeah, I I was thinking about that question. Is this a craziest week in crypto? And it's it definitely is in a like catastrophic sense. Um I would say that like crazy as in just like I'm having to process so much with still still DeFi summer, but uh yeah, bar barring that, which is like a completely tangential thing. Uh yeah, I would say like this this had like a the most amount of just like news per hour of any single week. And and uh like comparing it comparing it to like with the last last year's cycle, like oddly, also in 2018, right? Like 2018, the downside of the peak mania, uh halfway through 2018-ish, is when BitConnect blew up. And like I think BitConnect was a top 10 coin, like at one point in time. It was and it and it went to absolute zero at some point in time. Uh, and it took it took basically like 36 hours. But like the the reason why no one really cared about that. Well, people cared, but we were the we all just expected it. Everyone was like, BitConnect took way too long to implode. Uh, like it made people like question reality is like, why hasn't this thing imploded yet? Uh and then one day there was some bad news, and three days later it went to zero. Uh, and so like the pattern fits, and it was a top 10 coin, and then it just went to zero. Uh, and it was $3.8 billion market cap when it went to zero, which just A T like tells you how big the crypto market has gotten in the last cycle. Because if like Terra was also a top 10 coin, it went to zero, and it was something like over 40, it's like 42 billion dollars at the time Luna was. Uh, and so like the scale of the thing is like proportional to the crypto markets, as in like the crypto markets allowed BitConnect and Terra to get to the same size uh as a relation of the total crypto market, and then it also went to zero roughly around the same time of the peak, right? Like as the markets were fleeing, as like the game was up, as like the dance of chicken was like, all right, who's gonna sell? Who's gonna sell? Uh, and then like, you know, roughly halfway through 2018, BitConnect uh crashed, and roughly halfway through 2022, uh, Terra crashed. I mean, those are the patterns I'm seeing.

Yeah, yeah. No, the patterns are definitely very similar. I think the main difference, as you mentioned, is like the scale of it. Like obviously Terra was much bigger, but I think it wasn't just like the Luna token. Terra was like a double whammy, right? Because like there was the Luna token, but there was also the stablecoin that was attached to it, right? And then on top of that, there were all the people going through these kind of like neo banks, which are like front ends for Terra, that had no idea what they were doing. They just saw this APY number, like, oh, I can earn 20% on my dollars. I'm gonna put it in here, right? Um, and then they didn't read the fine print because if you read the fine print, it says you can lose all your money potentially, because that's just you know, classic legal speak. No one ever expects that to actually happen, but it happened this time. And I think that that's what caught a lot of a lot of people. And obviously, a lot of people have lost a shit ton of money. I mean, not just individuals, um, not just kind of like everyday people, but massive funds and and and kind of like uh prop trading phones and market makers. Like uh there, I mean, I think that like most people in crypto were hurt by this in one way or another. Um, everyone was was hurt by it indirectly because the prices went down because of this, I think. Um, but yeah, it was just uh such a shock to the system, I think. But the thing is, is that just kind of looking for positives in this, I think ETH fared quite well, like in in in it all. Um, I don't know so far at least. I think that um the Ethereum has gotten a lot of tailwinds from this. Uh, I think like and and and I think that.

You know

The people that have kind of like been hurt, maybe they're not going to come back to crypto for a while. Um, especially the ones who were just like in it for for the yield. They weren't even hoping maybe holding Luna, they just had like the UST. And that's sad. It's kind of like set adoption back uh kind of kind of kind of quite a while there, but it really does validate like the Ethereum thesis, I think, of building, you know, decentralized, secure, and sustainable kind of infrastructure rather than just doing it in a cowboy fashion. And I remember, I don't know if I've said it on bankers before, but I've said it on my own show plenty of times, where I say to people, you have to reframe the decentralization argument as security. So instead of asking, do you care about decentralization? you ask, do you care about security? And now you ask any terror people about this question now, they're gonna say yes, right. But if you ask them if they cared about decentralization um before, they may have just given you a non answer and not really paid attention to it. But you know, no one cares about it until they need it. And then when they need it, they really, really need it, right? So I think that's the main takeaway for me from all of this, that's for sure.

And this has been the drum that has been beat by like a number of like core crypto people for a very long time. Like this was a conversation back in 2017-2018 when it was EOS and the zero transaction fees of EOS versus like the trend the blockchain fee model of Ethereum. Right. Like we've s we've seen this rodeo before. I was actually talking to there's also like this whole prioritization of scale over security, both works at the layer one layer layer and also the app layer too, right? And so I was talking to uh uh our guy, our analyst at Bankless Ben, uh, and talking about the patterns here, and I and I said, like, die supply always lags die demand, which is like the it's it's uh there if there is demand of die, it'll prop up the value of the stablecoin and then people will uh mit more die, but with real collateral. Uh and so like dye only scales out its supply of die if there is actual real bona fide demand of die. And like in the same thing with uh like Ethereum, this block space demand for Ethereum lags behind demand, right? So when there's when transaction fees are high, it creates the need for layer twos, it creates the need for scale, but it doesn't it doesn't answer scale first, right? And neither does die. DAI doesn't mint excess die and then give it to the market. Ethereum doesn't mint excess block space and give it to the market. These things lag demand because they prioritize security. Uh and but then on the flip side of things, the Terra UST supply, they just minted that thing like fucking mint, mint, mint, mint, mint UST. Buy Bitcoin, buy Bitcoin, like short, like but without creating any amount of demand. And this is what Solana is doing when it's minting infinite block space. It is just the money printer block space, and it causes the chain to go down over time. And so these like bull market chains, which is like the my new word for monolithic blockchains, these bull market chains are just minting out supply, selling their product for a discount, devaluing their product because that's the competitive advantage. They're like the off-brand blockchain. So they're devaluing their product and just like injecting it into the market and say, cheap, cheap, cheap, buy it, buy it, buy it. Uh, but then when the bear market comes, like they have no real sustainability and they have like infinite supply. Uh and so like the the it exists in the app layer, it exists at the core protocol level, and like in in hindsight, it just makes total sense that things that devalue their product to go out to the market can't sustain themselves in a bear market.

Mm-hmm. Yeah. Well, exactly. And I think that's why like our maybe our points fall on deaf ears a lot of the time during the bull markets is because this is this is stuff that it's not immediately apparent to most people, especially new people. They've got no idea for the context around this. They haven't been around, they haven't experienced uh you know a bear market or anything like that. To them, it's kind of like all the coins are going up, you know, and and if you say anything against that, you're just a dirty fudda, dirty ETH maxi. We don't want to listen to you, sort of thing, right?

Um, and that's what exactly what happened with you, I mean, you guys, uh you and Ryan um were some of the champions of calling out Terra, right? Like the show that you did just a few weeks ago um and everything like that. And you guys were kill called out relentlessly for it, especially by Do himself, right?

Like

My emotion

my emotions f I felt that.

Yeah, yeah, exactly. And you know, this is one of the reasons why I try not to get too involved with it as well, is because I don't want to have to deal with like all that crap, even though I know that um, you know, I'm I'm I'm right. I don't want to have to kind of like deal with the the crap that gets swung at me. And then yeah, just seeing you guys go through that, I was like, holy shit, this is insane. And I think that's what a lot of people miss is that we're not like now that everything collapses, we're not dancing on the graves of people who lost money, we're dancing on the graves of Dokon and his lunatic army who literally didn't listen to anyone, you know, kept insulting everyone who ever brought up anything wrong with the system and acted like kings and gods, and nothing could, you know, I think nothing bad could happen to them. Um, and and and that's it. Like, yes, it may be maybe a little bit too much, but I think.

I think social signaling is very, very important here because that's the only accountability and recourse we really have in crypto is social signaling. Because there's no, I mean, the government might go after Dokon himself, but there's no government to bail out anything here. Like they let everyone let Luna go to zero and UST basically go to zero because there's no bailout. Like who's going to bail them out? The only bailout comes from the private enterprise. And eventually the private enterprise was like, no, no, no, man, this is too toxic. We're not going to touch this, right? It doesn't matter if if if it was quote unquote too big to fail or something, there's none of that in crypto. Things will fail and they'll fail very, very quickly. And I think to prevent this sort of stuff from happening in the future, you really have to social signal. You really have to get everyone on board with this. So next time there's an algo stablecoin that comes out, you have everyone calling it out, right? Like there was people calling terror out, but it wasn't the majority. And a lot of people were scared to call it out because they had this massive army that would swarm you as soon as you did.

So we need to break past that. Like if we let that dominate the industry, then this stuff's just going to keep playing out again and again. And as a lot of people have already mentioned, it's going to bring with it a lot of bad regulation, right? That's it's and it's going to uh set crypto adoption back years. So, I mean, again, kudos to you guys for calling it out for so long and and and kind of like putting up with all that crap because that's not something that I really, really uh can do. Like, I really hate I try to avoid conflict most of the time um with these, especially with these armies, man. They just come from nowhere. I don't even know, I don't think a lot of them are real people. They have to be bots, right? Like it's just insane.

Supply. Yeah. And the bots have to like find real people to convince themselves to like mix themselves in with the rebel real people so the bots can be like or th the bots, not the necessarily the bots, but just like the civil attackers, right? Just like one guy with like ten, fifteen, a hundred accounts or something like that, which you would consider bots. Um like

Uh well, I think there's two things I I want to say to that. Like, there also there were a lot of like VCs that were very much a part of this whole thing. Like at the same at some time, there's like so many people ended up supporting this ecosystem that you just have to say that they were duped. Like it's like some people just like took the Kool-Aid. So like algo stable coins, they work this time. Uh like it's it's this time it's different. Like we're that fund's in it and this fund's in it, so like I'll be in it too. Like, we're all promoting its legitimacy, even though like at the base layer, like there's like a bunch of like hot air here. Uh, and and like I I had a I did a podcast with a VC who taught and I asked about like, okay, what are the fundamentals of VCs like as a concept? It's like, why are there VCs? And one of what one of his answers was that like, well, VCs provide legitimacy, right? Uh, and so like when you when you onboard with a VC, when you take money from a VC rather than a bunch of angels, that VC has network connections, that VC can do things for you. Like the best VCs create the best premium because they have the best returns. And so the competition is based on what VCs can provide the most value to blah blah blah blah. Uh and so like if we're talking about like the fallout collateral damage of these things, like the market needs to uh reassess the value of various VCs in this industry. Because some VCs were on one side of this trade in this industry and the other VCs were not, right? Uh like Fred Arrison from Paradigm tweeted out the um the guy from the the 2008 crisis movie, The Big Short, who's like the uh I can't remember his name, the guy that also was in the GameStop.

B Michael Burry I think

Yeah, so like

played by Christian Bale in that movie.

Exactly, yeah. I like who knows if they like were actually short or are they just tweeting out a meme? I don't know, but it kind of implies that they were taking the other side of this trade, as in shorting Luna. Uh and there were some VCs that were very much in promotion of it to the point of shilling it, right? Like as some of these VCs do. Uh and so like we need to like reassess which VCs were on like the right side of history, and and especially uh Tarun Chitra, uh, which is actually where I was going with this next, uh uh from he had was on um the uh uh Laura Shin's like um uh all-in-styled podcast, and he talked about how people that make algo stable coins just inherently must have this god complex, and they don't look at history and they just ignore history and they're like, I've just created alchemy, like I am the stablecoin god, I can mint coins out of thin air. Like, look at this magic. I'm like a billionaire. I will bet on like the future price of my token in a $20 million bet that I make on Twitter because I'm a fucking Chad. And if anyone denies me and if anyone doubts me, like I'll just like throw my stable coins at you. Uh and like this is Doquan, man. And like he he the Algo stable coins, and I'm getting I'm learning about this too in like the last week. So it's not like I knew this ahead of time, but like the whole algo stablecoin thing is the same thing as like the Zimbabwe dollar, it's the same thing as Weimar Germany, it's just a straight up hyperinflation event sped up in real time. And uh Doquan should have known this because he did basis cash on the app layer, but then like it's because it was on the app layer, it failed, and so he had to go make an LL a separate L1 so it couldn't be economically attacked by flash loans or all that other shit or whatever. Uh and then he just starts playing God, right? Uh and so like there's so much like hubris and status and legitimate that's involved in these things that are inherently faith based at the end of the day, anyways, and rant, and rant.

No, no, I mean, I I think from all of that, the main takeaway for people should be that just because someone is a VC or is a fund or works at a fund or whatever and has money doesn't make them more intelligent than you, right? There is no there's not much correlation between money and intelligence. From that's that's one thing I've learned, definitely being in crypto the last few years. There are billionaires who are really dumb. Like, and that might might seem counterintuitive. You might think to yourself, how can a billionaire be dumb? Well, put it this way, guys crypto has created so much wealth in such a short period of time. There are people that could have become billionaires by literally just throwing, you know, maybe uh six figures into ETH at the ICO, for example, right?

There's also a

It's between like uh like intelligence and ability to make money at the same time.

Yeah, yeah, yeah, yeah. Ex exactly. So I think um, you know, that that should be like one of the main main takeaways from this. And also these things can can go on longer than you than you think they can. I mean

You know, the I think the reason why uh that picture was shared of Michael Berry on on Twitter, or one of the reasons, I don't know if that was short or not, was that in the movie it shows how Michael Berry was betting against the housing market really early on, and the housing market kept going crazy, right? And and he was betting against it for such a long time, and everyone was calling him out. They were saying, Man, it's still growing. Like, what are you talking about? This is crazy, like this is a crazy trade, you're pissing away our money. Uh, and then the same thing happened here where people were calling this out for a very long time, and then it kept growing and growing and growing. And everyone was like, Oh, okay, well, it's gone to such a big size now, it's too big to fail, right? Like, it's it's not gonna fail, it's all well and good. Um, and then people were waiting, they were like, No, it's gonna fail, like we're gonna get our Jews eventually. Like, it's it's basically mathematically programmed to fail, which it was. Um, and it did, it failed exactly how the Bears said it would. It didn't even deviate from that because it was programmed. Like, all you needed to do was read the white paper to see exactly how this worked. And uh it did that. And and the funny thing is though, is that the Terra Form Labs, uh, the main team behind Terra could have wound this down a lot uh kind of like um a lot more gracefully than what happened, right? They did nothing, they actually let it go to zero. They could have paused the chain, they could have paused minting, they could have done all this other stuff, right? And they did none of them.

Contingency plan. They had no idea

it happened.

That's what I'm saying. Like, so that's that's that's kind of like we were talking about with with Doquan and kind of like him feeling like a god and him feeling like nothing could go wrong. And he was like, you know, had all this alchemy, he could just print money out of thin air. They had no plan for when everything went to shit, inevitably. And because of that, everything went to shit. Like it went to it actually went to zero. Like Coin Gecko did one a minus 100% on um on Luna because it rounded it to the nearest zero, which was zero. Um, I was like, what the hell? This is crazy. Um, but yeah, no, I I think that it's right. And the thing is, is that you talk about kind of like people not learning from history. Um, yeah, I mean, the algo stable coins within the crypto context actually went back really far. I think as far back as 2014 or even earlier than that, right?

Yeah, before theory was a thing.

Yeah, exactly. So this is this is definitely not new. But the thing is, is that

these things are very easy to grow in a bull market whenever when everyone's throwing money at you, they're very reflexive on the upside as well as to the downside. And uh you can easily kind of like pump your token like this, right? And

And make it work for a little bit. So I think because of those facts, this isn't going to be the last of them that we see. They're going to take other forms. People are going to be like, oh, it's not like the other algo stable coins. This one's actually going to work, right? And it's not, and we're just going to see this play out again. But that's why I said the social signaling is so powerful because you keep signaling that these things, you know, they can't work. They're they're just kind of like fundamentally broken. More now, more people will believe you when you say that because it's not just crying wolf anymore. The wolf came to fucking eat the chickens, right? And it ate a lot of chickens.

Right.

I don't know. There there's like the the optimistic, cautiously optimistic take that like, okay, well, when the fifty billion dollar algo stablecoin ecosystem goes to zero, then we learn our lesson. Like,

we won't learn it at ten billion dollars, we won't learn at twenty billion dollars, but okay, at fifty billion dollars, we'll learn the lesson. How do you feel about that?

Have we learned the lesson? Because there's going to be new people coming in who haven't learned this lesson at all next cycle.

I I I did say that like okay the last bull market we did have like a top ten coin do the same thing. It was an actual Ponzi.

Yeah.

That is one of the differences about this whole Ponzi collapse is that like this one was pumped by a lot of just like ecosystem people. I mean, as you and I pump ETH, but like at least ETH doesn't blow up though. Like

that stays around.

But I mean also like ETH is can't just go to zero like that at all. I mean ETH has fallen a lot in the past, but it it can't do that unless it was like

I I mean I I don't even know the scenario where ETH would go to zero if unless there was like an infinite mint bug, but then it would just get reversed and it would be you know, whatever.

That's what you were talking

about. Like the the terror ecosystem could have mitigated this and like yeah, if even in worst case Ethereum scenarios, like we can still mitigate that.

Yeah, exactly. And the funny thing is that you're right. They would have had no plan at all. Like they should have had a worst-case scenario of plans. Like, hey guys, like what happens when it goes into a death spiral? But I I truly believe that Doquon and probably his closest kind of like people within the company didn't believe that it could death spiral. They actually believed that they had created something that was basically a perpetual motion machine, an infinite money printer. And uh that obviously wasn't the case. And I think his ego um is infinite. Like, I actually don't think he's learned his lesson. I've been seeing his tweets, he's not remorseful. It seems like he just wants to try and get it back up and running and kind of like you know, restore his god status. Um, yeah, and do it again, right? But it's not gonna happen. It's it's the same with every other one that we've seen, like Daniel Sesta, right? You guys called that out as well the Frog Nation crap. Like, same thing happened there. Um

A bunch of others. Um, Andre Kronjay is a bit of a different scenario, but he eventually got to that status. Like, um, you know, but but he is a bit of a different scenario.

Yeah, it was it was definitely adjacent, but there's there's so many of these things, right? And and I think that people just need to stop

creating cults. Like, let's stop creating cults of personality around these people, guys. Like, it's just it's not healthy, it doesn't lead us anywhere good. Um, but yeah, man, like I don't know, craziest kind of like week in in crypto for me, just because of the speed and and you know, just the the mental kind of like uh mind fuck of it all was just insane. And I think the legitimacy thing is the last thing I wanted to talk about.

Um, you're right in that, like