179 - The Bankless Origin Story - Raoul Pal

something truly Magic is happening here and yes we're in this bear Market phase of it all but there is total magic going on and that just gave me another shot in the arm thing you know what what comes out of this is going to be massive 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 guys this is part two of our conversation with Rao Paul and the tables have turned this time Raul is interviewing David myself so we wanted to publish this on the bankless podcast as well I hope there are some good takes in here for you this is really an opportunity to talk a little bit about the founding of Bank lists our early Theses where we've got our start how we met uh we're not usually interviewed and I don't think neither David or myself are in a place to kind of ask each other questions as

well as a third party would ask us so that's what you're in for today David do you have any Reflections on this episode yeah yeah like you said like we don't I always enjoy being on the other side of the microphone the times that you and I both have been on the other side of the micro microphone are very few and far between and nothing of this caliber of like Rao Paul all I I'm pretty sure the bankless nation will thoroughly enjoy us being interviewed rather than doing the interviewer into interviewing uh so yeah like Ryan said like the early days of bankless original and Genesis of Bank list like maybe you came into bank list

during 2021 or later and missed mine and Ryan's trajectory up to the Genesis of bankless and then also the early years of Bank list like this will probably provide you a lot of context and probably illustrate how we got to be the way that we are and why we say the things that we say uh so I think this episode is going to be pretty fun for a lot of people it was also an episode very very rare episode where we were recording in person like generally sitting beside each other so um there's that dining never would have thought possible I know can you believe it uh so

guys that's the episode today with Raul Paul talking to I guess David you and I are guests today yeah we're the guests enjoy this one but first a moment to tell you about the Fantastic sponsors that made this possible so double trouble today Dave and Ryan great to see you it's good to be on this side of the of the table and that should be a bit of fun not only are we infrequently on the other side of the microphone but we are even more infrequently actually together in person so this is unique yeah this is uh just just happened stance and uh David you

just you just put on your wells Bank list uh t-shirt I I noticed I see there yeah you've got the bankless America as well fantastic so as ever I always like to start with people's journey into the space because everybody comes in different ways there's a different hook that brings you on and then your understanding grows from there so I know David you want to start with you yeah yeah yeah yeah um I got hooked I'm a class of 2017 crypto graduate uh so came in bought the

top of 2017 as one does net worth went to zero in 2018 and again in 2019. um but I was immediately compelled uh by are you doing beforehand how did you get into this uh my first job out of school was in social work um after that I was going trying to figure out my way into the world of Health Sciences um the the through line between that and crypto was that I was in search of trying to find the way to improve people's lives uh for the biggest in the biggest bang for your buck so like how

do you do these smallest things that produce the largest net outcomes in people's just well-being my major was psychology with a focus on positive psychology and the tldr of that is just like hey psychology as a as an academic study is all about improving sick people to be normal but what if you apply psychological principles to to normal people to just make them feel strong longer more self-actualized just better and so in pursuit of that I was like okay that's great but in order to make people feel more psychologically sound

you need to also improve their Fitness right like you can't be psychologically sound without like exercise and then once you do those two things you might as well round it all out with nutrition and so these there's just a bunch of low-hanging fruit to make the average individual feel a lot better um so on my search for how to find a private practice role in that I discover ethereum because of 2017 and my mind gets opened up to the world of money and finance as an economic substrate for all humans and so like understanding like

how do I how do we improve everyone's lives very simply and very easily well money and finance goes down to the root of all things so like very far from psychology but the the through line of just like how do we improve the most people's lives in the easiest most systemic way possible as soon as I kind of you know had the aha moment of like money and finances at the root of all things and ethereum is a new platform for producing that I was just immediately compelled and there was no going back I think David is one of the the only people I've ever heard who came

through to crypto through route of psychology and nutrition actually my wife's a behavioral psychologist really she just thinks my nfts are just ridiculous but does she understand them no and I've tried she's just like this is ridiculous there's no psychological uh thesis behind why humans collect these sorts of digital objects he just doesn't want to accept it and she's like no this is stupid yeah I mean and and uh full credit to David too

I think one of the things that I've observed because I I've got to see him since 2017 we probably started working together more in 2019 and and then beyond to start bankless but this guy has taught himself everything and he's gotten up to speed you know just so quickly and uh to not like know I don't know how much did you know about Finance like how much did you know about money bosses a lot of my friends in college took business like went through business school yeah what you were doing right it's like money was root of all evil when you go

through kind of sociology psychology it's like yeah I wore a cccp shirt in middle school for sure oh come on so so but this I don't know if you've observed this Raul but but sometimes the most um tradify deepest uh economists people who have gone to graduate school and pursue their PHD they missed this crypto thing for some reason it's because I think they learn bad habits right and so you almost have to enter crypto as a child a

blank slate right and like and like kind of go back to the basics of let's let's build out from um base principles what this money thing actually is and then work from there and that's what I've observed David doing in this space I I've um I was going to mention when we were speaking to um yesterday but I've now on my screen got the bell curve of the mid twit and I was speaking to Melton about this that we both realized that it's the single most important thing is never be

in the middle and that's why most of these guys like you saw Talib yesterday on CNBC right he's squarely being the mid twit and it's the Sim Simplicity of the idea is what can drive much better results I think yeah it is all of my business school friends that that uh you know I was the one psych friend and Manchester business school people but I was the one that discovered crypto well ahead of the curve and did well for myself well well uh at an accelerated Pace in comparison how do they respond to that teasing

David you guys you had to unlearn all of this stuff in order to understand crypto it's about like the unlearning that I never had to do I never had to unlearn anything because I never talked because you could come in as a total [ __ ] yeah yes right and then move to Jedi Master over time are you on the left side of the mid twit then David are you on the right side I don't know what I am but I'm definitely not in the middle that's all right as long as you're not in the middle so Ryan what's your story how did you get into all of this um not by way

of nutrition not by way of psychology I actually did the uh the business school kind of thing right and uh so somehow I unlearned the lessons of Keynesian economics and everything they kind of teach you in business school but I I would say I kind of came at this through the um you know technophile uh startup entrepreneurship kind of thing I I remember um sold a healthcare tech company in 2014 and um the co-founder of the guy I was working with said something to me in passing he's

like have you heard about Bitcoin because I have set up a bunch of Bitcoin mining machines in my in my uh garage and this was 2014 right uh of course that was never profitable uh for him unfortunately but I was like what like what the idea of mining using machines using using computers the idea was so foreign that I I had a holiday like a kind of a Thanksgiving holiday in the U.S where I had some time and I just went deep down the crypto Bitcoin at the

time Rabbit Hole in 2014 spent the entire weekend you know didn't spend as much time with my family as I probably should have but I was just uh everything Andreas Antonopoulos had written or said on the subject I absorbed that I you know read everything I could on the subject and by Monday at the end of that weekend I was ready literally to kind of quit my job as a crypto person I I opened up five Exchange accounts had no idea what I was doing and these were some shade exchanges at the time let me tell you

and I was just you know starting to invest start I wanted to go all in um after that I almost think of that as a sort of a manic type of weekend for me because after that I kind of woke up and you know on Monday and I was like okay back to back to work back to what I am doing and um the idea you know crypto kind of left me until ethereum really entered 2016 and now there's the idea if Bitcoin was money over IP which was so incredibly important money over the Internet

digital money as a bear instrument that idea so powerful now the ability to program it this ability of smart contracts to actually build a didn't use this phrase at the time but a bankless money system that totally gripped me and totally captured me and this was in 2016 2017 still had no idea what I was doing in the space and actually I wanted to start a crypto fund so you know your assets appreciate a little bit and you rode Bitcoin up you rode uh ether up uh

from similos and you're like I'm an investor now I can do this I am brilliant so uh let me manage other people's money uh and did you ever put blockchain expert on your LinkedIn no I'm not that cringe David all right I'm kind of I kind of cringe But but so um I didn't do that because I went down the path in 2017 and I realized um one there was so much I still needed to learn like I didn't have an underlying thesis of where value would accrue in the space and so I had no business

managing someone else's money uh like absolutely none and at least you realize that I when I think a lot of people didn't in 2017 because that was the time of like crypto hedge funds and everyone was was kind of launching one um and you know another reason I think a a story arc of of my life and my narrative has been this pursuit of um of freedom and a kind of autonomy right and I saw in crypto a technology that would deliver that not just to myself but but to society to self-sovereign money this

concept of once you own private Keys no one can take that away from you right it's decentralization really kind of captured me almost like uh spiritually as well if if that's a way of kind of capturing it and so I knew if I took other people's money at that time I didn't know what that would be a shackle as well and I was here for freedom I was here for kind of you know everything that that entailed so I didn't do it at the time I'm very thankful and I spent the next few years really trying to understand and develop uh my thesis for

this space and it turns out David was doing that at the same time we kind of met and converged in this book what was that 2017 or later 2019 so that's before we get to 2019. yeah I just want to hear the genius to idiot phase of suddenly the space collapses is the first time wow you've fully gone through it I want to hear your mindset because a lot of people are going through that now right and I've I I was a class of 2012 so I've gone through a few times but

um it's never fun but you get kind of get used to it so why don't you tell yourself I'll tell mine okay so um you know you watch the the price of a Bitcoin appreciate to you know above 20K right when you purchase much uh much lower than that obviously and then you watch the price of ether appreciate uh you know to 1420 is that a number you remember David yeah uh just hit that very briefly but like

that was it right that that was the top and then you watch it fall over the preceding months right fast and Fast okay so you know down down to 800 okay you can hang with that it's just dip right it'll pass down down just like a massive flood at this time you know ethereum's only kind of a but you marked your net worth in your head the classic don't you everyone does don't you I mean and and you're kind of right now but I used to and and that's when you think you're sort of a genius and uh you do

things like one one mistake I I certainly made on the way up is um discover this really cool you know D5 protocol called maker Dao and opened up a you know a nice CDP of course right and I'm protected because if eat can't go below 100. it's great it can't go below 100 can it uh of course not that would be impossible hit you know 1420 we're in a new paradigm and then what happened over the the months and and and even years to come is this massive amount of fud uh this kind of dark

period where well maybe it was all a bubble just icos and they have uh Ethan in their Treasures or they just ride the whole like I rode the entire thing and you know what though it was not easy it's not easy to do that and and particularly um I spent all of my waking hours trying to figure out if I was crazy or not and I don't know if people can identify uh that right now that they're kind of for cyclers if they're just sort of

wondering am I the crazy one because that's what the world tells you and not only that Raul in in crypto in 2018 that's what the bitcoiners would say Bitcoin Maximus would say it was crypto too yes it's not only like the outside world is saying crypto is dead but inside of crypto ethereum is dead ethereum is dead there's no like D5 wasn't a thing it's just I feel like Ico is flash in the pan and so what I spent um that year doing was trying to figure out if I was crazy or not and um in 20 I

didn't sell during this time until I had some kind of conclusion of whether I was crazy and why sell when you're down bad you know that much anyway and uh so 2019. this is why you shouldn't be a hedge fund exactly so 2019 I I realized that you know what I I don't think I'm crazy I think everybody else is wrong all right like I've spent enough time looking at this technology like doing the pattern uh matching thing and everyone is missing defy everyone is missing what's going on in ethereum this

is actually bigger in Impact than just simple money over IP this is an opportunity for a bankless money system and I started to find others that thought the same way um David was one of those but I want to hear David yeah what's what's great yeah what's your 2017.0 we need to hear it thankfully I didn't have too much Capital going into 2017 and so like my high water mark even though like relatively was super high for me like going back down to zero after that it was like well okay here I was I'm familiar with this like so let me tell you social work does not pay pay quite a

lot and especially as you're a student you're already faced with debt uh and so like for me going into crypto is like hey either I go to four plus years of grad school in debt or I go into crypto and no debt and so like that that threshold was already already nice um so yeah so did the whole thing just like Ryan said went up to 1420 thought I was a genius it was a bull market uh tokens were doing crazy things got my got my first like taste of what capital markets and crazy Capital markets can do uh then that's Psychology 101 right yeah 100

like definitely learning about herd mentality and all that kind of stuff um uh and then so like yeah 20 2018 came I got it my first job in the space being like a Blog writer Community manager for an Ico advisory company which retroactively retrospectively I'm like okay that's a [ __ ] coin peddling company but you don't really think about that at the time uh then got a job at a security token company because all the icos rotated into security tokens and then I got a job at a tokenized real estate startup uh and so I was going from just like I was just like Holding On by my

fingernails like job to job to job getting through the bear market and meanwhile I learned that I can speak pretty well and so I started my first podcast POV crypto with a bitcoiner co-host and so I was the etherean had a Bitcoin or co-host and we were kind of like this bear Market darling podcast I think that's probably where Ryan I love it yeah I enjoy I listen to this every time you guys publish an episode I would listen to this yeah and I'd be cheering you on David obviously yeah it's like it was funny because like all the bitcoiners that listened to it for because of my co-hosts were like man I

really like POV crypto but you're your host is David man I really like POV crypto but your Bitcoin or co-host is an idiot yeah and so we were like yeah like it's my college friend we like each other it's great uh so that's where I learned that's when we learned to like be open and share ideas and so even though we were like fiercely debating with each other we we were friends and so it was with love and it was also like honest and integral and like trying to get down to the to the basement of things so that was my foundation and so like while like

trying to hold my grip on to actually having a drive throughout the bear Market I was also doing the whole side gig because like my first job the company blew up and I was laid off and so I was like okay I never like with Ryan's freedom things like I never want to have that be outside of my control ever again I want to work for myself no one's ever gonna lay me off ever again and so I started to make a podcast just like that that's mine and and like learn how to make a podcast into a business uh and so that was like my bear market like Endeavor uh can I ask you a question

David so um a lot of people left during that time I stayed just to figure out if I was crazy or not why did you stay I my conviction about crypto just did not waver in this light it's like it wasn't even a question to me it's just like I didn't get why people didn't get it and I was the annoying one of my friends was like guys like this is this is real and they were like uh we're going to baseball games like whatever what do you think you saw that they did like what

was it I don't know uh I always I grew up with a computer in my room so I was always like tinkering with computer stuff and internet things and so I understood that like that was more familiar to me I also got in Via mining myself so I was mining ethereum yeah and my father's Bay uh bathroom uh how many rigs did you have I had four rigs in the bathroom dude electricity water yeah I'm as well aware um

it worked out and like the the rigs actually still Gathering dust and I turned them off for years ago but I still have them um why why did I have such conviction yeah I there's just some things like from first principles things of like scarcity on the internet like what why wouldn't you have conviction about that like Bitcoin never broke ethereum never broke the things maybe people lost faith in them but the systems worked yeah and I was like icos are still great right yeah they're still a thing I like I don't know it's like people say like why why did you have conviction throughout

the 2018 to 2020 bear market like I don't know why didn't you have conviction like what yeah why did you leave yeah price is not people have to learn and you guys obviously learned it was that price is not an indicator right of the overall value of the network over time right it's just where it is that day you know and that's psychology and that's network activity and other stuff but overall you know you just look at I've always just looked at the lows and realized they're always higher I mean right yes I think that's the value of the network

therefore the network is more valuable each time you go through a cycle I mean that's all you need to know really for me I think there's a definitely a very strong personal element uh as to like why I stuck around um I was right I was learning to write and in my opinion I was learning to write very well as like Not only was I writing what I thought was like pretty on point Theses but I was also going back and editing the piece so that I knew people would effing read it right and so I would write a 3000 lot word long piece and I would trim it down to

2000 words and then I would trim it down to 1 500 Words and then I would read this like man this is a really good piece of article so it was for me it was like a part of like creativity and expression yeah and that kept me going because I was I was tuning my own brain at the same time so like not only is like we can talk about all the fundamentals of crypto and why it's here to stay and like why I had conviction but also I learned personally to like self-actualize and improve myself and become a better person because of what I had to do to get through the bear Market without losing my sandwich

yeah what Ryan was doing with trying to figure out is he insane or not right it's the same thing it's that and that's it's at that moment that you really make the breakthroughs it's that it's in the dark days and you're like you know what I've done my thousand hours and I'm building on that right and I'm more sure than ever it's that moment it's a really magic moment uh in this whole crypto space and once you get that you know you're never going to leave it is and you know what gave me the most

confidence and I think the reason um I concluded that a big part of the reason I concluded I wasn't crazy during that time was I was spending the Thousand hours actually using these protocols and using these tools and I was looking around me at all of the the critics uh and all of the the naysayers all of the people saying crypto was dead and realizing that they weren't they had never opened a collateralized deposition in maker Dao and seen in a few clicks what you can do without any trusted

intermediary I was I was refinancing my house at the time and the amount of documentation I had to sign to get a collateralized loan and I was able to do this on chain in maker using eth as my collateral and in a few clicks as clunky key is that interface was make it happen get a collateralized loan that to me was magic 2019 uniswap coming aboard the ability to swap assets without a centralized intermediary that was all

new and so it was putting in the work to actually use these protocols and it just it showed me how hollow the critics arguments were because they weren't actually doing this stuff they weren't spending the time using the the protocols even even kind of the the notable VCS this is why what I don't know what you believe about like the efficient market hypothesis and this idea that everything is always priced at in I'm like that's complete dog [ __ ] like that that is not my experience of the world like I think the rewards go to

the people who stick around and and research and put in the hours and put in the work and so like one message I would say is um you're never gonna make it through this bear Market if you're lazy right like you have to put in the work to actually um use the tools and develop your thinking based on first principles not relying on YouTuber tick tocker or someone on Twitter to tell you what to think and that is the The Meta skill I think all good investors uh eventually

learn it's something that I certainly learned during the last bear Market tell me the story of bankless because you know you guys have you really do produce some of the best quality content out there it's very thoughtful um what was the tell me the story how the hell did you two get together well I saw in 2019 I saw this um this guy writing all sorts of fantastic articles that I started reading um one of them a notable piece was on maker Dao and sort of explaining how that works to the Layman and I I think David you and I

started a DM conversation at the time and I was I had started a newsletter called bankless in 2019 and the idea of this newsletter was was very simple it's um to expose more people to defy tools and to help the world go bankless we can all go on the bankless journey and it starts by getting more of your net worth out of banked money systems Fiat in your bank account your Wells Fargo account and more into crypto systems and to the point where you stop using Banks right

um and I can say over time I have a much larger percent of my net worth that's bankless over time that that has happened to me and more of my transactions are on chain that are in kind of the bank money system and so it's it's a journey any anyway I wanted to build a community and provide an information resource for people who are going on the journey on the bankless journey and so met David and I was like I have to work with this guy he's a fantastic writer I want this person to write for bankless because it was very

hard at the time to publish you know three to five articles per week just myself solo and keep up with the space as well and so I needed some help with that and that's uh where we started he was just kind of a contract writer on bankless and then over time it evolved and he's like hey Ryan we should start a podcast hey hey right hey we should we should start a pot we should start a podcast you kept saying this over and over I was like David we're not going to have enough to actually talk about okay

like maybe five episodes worth it's not going to be if they've got faces for radio yeah exactly that's what I told him especially me and and uh so but but he he I don't know I don't know how you did it man but like um it took me a while to convince Ryan that podcast a podcast was a good idea yeah I had been a podcast consumer but didn't think that um I at least had the skills to to produce and then we just hit record one day somehow you convinced me we hit record and that was episode one I think in um May sorry March 2020

um right was it before or right after covet hit episode number two was the day of the covet dump there you go and so that's where we started and then um we just kind of grew it from there and of course uh this is uh this over the last couple days is only the second time Dave and I have met in person this is true um no way yeah so we had we developed this entire thing through covid uh and um met for the first time last year actually it was over two years of working together before we met yeah I mean we had like a 10 plus person

company at the time before we ever met yeah uh yeah I mean is that how you remembered David what's your yeah what's your story that's right uh I had my own medium and so I would that's where I was writing all my articles and Publishing all my articles and then I had that that other podcast uh that was called POV crypto point of view crypto and so I had never really meaningfully considered about like branding and business like yes POV crypto was a sex joke even though it was about like two questions yeah I'm just learning this what the hell it was like it's like point of view crypto point of view yeah and also

Bitcoin but also haha sex uh like I never never really like put on the like hey let's be professional and turn this into a business and scale this out and like lean into a brand I was like writing on my medium just because I wanted people to read my stuff and I I because I didn't go to business school I did not have that part of me to actually be able to build a foundation that was like in that mindset right like a self-sustaining hey we can scale this out we can do this better and more intentionally uh and so I'm I'm just like writing on my medium producing my content and then Ryan makes a bankless

newsletter and he's like and I kind of like get us like oh distribution like consistency brand oh and I'm like okay what if I just take all of my writing and deposit it into the bankless newsletter right and and then it's like Ryan and I are saying the same words anyways and so it's not and there's no like misalignment there and not only that but like the more I talk to him the more precise both of our words become uh and so like we're just sharpening each other's sticks uh and so it goes from a little bit of just like hey can can we

work together and be like oh where this is working out can we do a podcast together oh this is working out uh and so it was just like Bank list for me has just been this like Bastion of uh creative expression that I think always just like gets me going yeah and like gives me like what a reason to like hey what's the next bit of content I can produce like what's the next thesis what's your what's your guys Vision now for bankless yeah that's a good question I mean I think what you've been talking about you guys because now you've had some time together but you know where do

you want to go with it I think I think bankless started in uh in a way that you know Dave is talking with with is just an exploration a discovery we've always called it kind of going bankless as sort of the journey West right where you you know you you you set sail and you go try to discover undiscovered lands and I think that's why the podcast has been um for both of us Just Energy producing because we're both learning as we go and so you get to meet amazing people and

have fantastic conversations yeah absolutely so and then you're developing your thesis in kind of real time based on conversations with some of the smartest people I I do think that crypto yes crypto attracts this the scammers and the grifters and we have some of the worst of that it also attracts some of the most brilliant uh humanitarian uh wonderful people that I've ever met and to have an opportunity uh you know being David and I at least myself on the left