ROLLUP: One More Dip? | Saylor Sold | IPO Season | Ethereum vs ETH

TRANSCRIPT

David Hoffman:
[0:04] And we're back for another bankless friday weekly roll-up it's the second week of june ryan is back from vacation ryan uh we were fighting i guess we made up.

Ryan Sean Adams:
[0:13] Wait fighting on twitter are you talking about yeah that was not a fight come on i was on vacation and i just felt compelled i just had to i just had to tweet at you david so actually it wasn't about you at first

David Hoffman:
[0:26] It was kind of.

Ryan Sean Adams:
[0:26] About subtextually about you

David Hoffman:
[0:28] It was about my take.

Ryan Sean Adams:
[0:29] It was about some of your takes.

David Hoffman:
[0:30] I was like, I read that tweet and I was like, okay. Okay, dude.

Ryan Sean Adams:
[0:34] Well, we're going to discuss that, right? I saw a meme. Babe, look, bankless guys are fighting. What's happening? So we got to resolve this and actually see where the daylight is between us on the question of the old asset that you formerly loved and I still do love, ETH the asset.

David Hoffman:
[0:51] Do I not love ETH? I love ETH as an idea, but we'll get into that. The topics of the week, the crypto crash, the third 25% drawdown in crypto since November, the deepest yet. Bitcoin has round-tripped the entire Trump presidency. Ryan, we are back towards Joseph Biden Bitcoin prices.

Ryan Sean Adams:
[1:11] Oh, my God. Thanks, Obama. Yeah.

David Hoffman:
[1:13] God. We never thought about it. Thanks, Obama. $4.4 billion flowed out of the ETFs in over 13 days. And then Michael Saylor sold Bitcoin. He did the thing that he said you should never do. What? And then he bought more. So why did he do that? Why did he do that? I don't know. It's also IPO season. The SpaceX IPO is coming up tomorrow, which will be today for you listeners, if you're listening to this on Friday. Fortunately, in the crypto side of the world, we have pre-markets. We have pre-IPO markets, which is something new out of crypto. So we can take a look at what the valuations are saying.

Ryan Sean Adams:
[1:46] It's too high. It's too high, I think.

David Hoffman:
[1:49] Oh, you think the IPOs are too high?

Ryan Sean Adams:
[1:50] God, they're so high. They're in the trillions.

David Hoffman:
[1:52] Well, they are too high, but like... They could go higher.

Ryan Sean Adams:
[1:55] Too high to buy. I mean, they could go higher, but they could also go lower. This is the kind of analysis that people show up for on a weekly basis.

David Hoffman:
[2:03] They could also go lower. That is right.

Ryan Sean Adams:
[2:04] Why don't you take us to charts?

David Hoffman:
[2:06] Yes.

Ryan Sean Adams:
[2:06] Because it was gross on Friday. I looked a couple of times at prices and it looked disgusting.

David Hoffman:
[2:12] So the Iran war was technically bullish for Bitcoin because it was up. Bitcoin was up about 30% over the course of the war. I think we invaded. When did we invade Iran? like something like March 1st or something.

Ryan Sean Adams:
[2:24] No real reason why, though. I thought like maybe stocks were up and it just dragged Bitcoin up as well.

David Hoffman:
[2:29] I think it is a complete anomaly. It was just because Bitcoin had fallen from its highs, if we're looking at the charts, from its highs down to the Elrond world, negative 50%. And so it recovered a little bit, but then we fell from the peak about another 25%. Bitcoin is right on the 200-week moving average. It wicked below it. Yes! Bitcoin tagged $59,000, which is firmly below it. It has since recovered to above it.

Ryan Sean Adams:
[2:56] First time below the 200-week in the spare cycle since November, right?

David Hoffman:
[2:59] That's right. Well, also, if we go back, we're going to zoom out on the charts here, Ryan, because since you have taken a vacation last week, I am now a pro-charter.

Ryan Sean Adams:
[3:07] Yeah, I see that blue line. That's got to be the 200-week.

David Hoffman:
[3:10] Yeah, okay. So the only time we spent below the 200-week moving average in Bitcoin's history is briefly during the COVID crash for like maybe five to seven days back in 2020. And then the meaningful time it spent below the 200 week moving average was after the three errors capital FTX drama, like the worst bear market.

Ryan Sean Adams:
[3:31] Worst like cataclysms in crypto.

David Hoffman:
[3:32] That looks like months it spent below there. Yeah, months, months below. So it spent 280 days below, popped back up, went back down below. But then as BlackRock issued or announced the filing for the Bitcoin ETF.

Ryan Sean Adams:
[3:46] That's when we popped up on it.

David Hoffman:
[3:47] Yeah. We've never been below the 200-week moving average before that. So I think this is kind of the question. that people who are buying Bitcoin or not buying Bitcoin right now are asking is, will we do the historically normative thing of bounce off of the 200-week moving average? Or are we going to be due for one more 25% drop?

Ryan Sean Adams:
[4:10] When you say historically normative, we see both examples. Sometimes we bounce, but in 2022, as you just said, we stayed below for a while. We camped there.

David Hoffman:
[4:18] Only once. Granted, we camped there for a while, but it was only one time. And again, it was after FTX, Three Hours Capital, the worst contagion event in crypto's history.

Ryan Sean Adams:
[4:27] Actual force-selling capitulation, which we really haven't seen.

David Hoffman:
[4:31] Force-selling plus the highest interest rates in all of Bitcoin's history as well. And they jacked up interest rates quickly. Now, you could say interest rates are actually still somewhat high. And so maybe in a higher interest rate environment, Bitcoin is more likely to go below the 200-week moving average. But there was just so many events lined up in 2022 through 2023 that pushed Bitcoin below. And I don't really see those same events this cycle.

Ryan Sean Adams:
[4:56] Yeah. I mean, there's a comment Michael Nato made, which is like, we haven't paid for our sins yet. So maybe there's still some sins to pay for.

David Hoffman:
[5:03] We had a lot of sins in 2021. I don't know if we have as many sins now.

Ryan Sean Adams:
[5:06] I think if we saw some big sinning, like if there was some big sinning, we would have seen it already. Remember the spooky stuff in October? Never found the dead bodies. Yeah, 10-10.

David Hoffman:
[5:18] Yeah.

Ryan Sean Adams:
[5:18] Like, who knows what that was? We still don't know. Maybe there's still some sin that's just hidden from us.

David Hoffman:
[5:24] Yeah.

Ryan Sean Adams:
[5:24] It needs to be washed clean by this bear market.

David Hoffman:
[5:27] I mean, we didn't, no one expected Theros Capital to go under because Suzu and Kyle Davies projected so much confidence. But who would be the sinners this cycle? Like Michael Saylor, clearly, could be the sinner.

Ryan Sean Adams:
[5:42] I mean, there was a lot. Trump, meme coin shenanigans. I guess you pay for that in meme coins.

David Hoffman:
[5:48] But Trump isn't Bitcoin leverage, you know? Sam Bankman-Fried was selling paper Bitcoins. Trump is not doing anything like that.

Ryan Sean Adams:
[5:53] Yeah, the person we know with billions of Bitcoin in kind of- Is Michael Saylor. He doesn't like to call it legend.

David Hoffman:
[5:58] Who bought an aggressive amount of Bitcoin this week?

Ryan Sean Adams:
[5:59] Well, so maybe it's Michael Saylor that's going to be coughing up blood by the end of this. I can't see how it dips and sustains below the 200 week if AI stocks continue to do okay. But if they could pitch late, that could just be full risk off. Oh my God, it's over.

Ryan Sean Adams:
[6:16] We're effed. Get out of this market. And then I could see it sustained. So I guess the question is, what do you think? Do you think that now is the time sort of to buy? Or like if you're a betting man, are you waiting for one last capitulation down into the 50s or even lower?

David Hoffman:
[6:33] My cognitive brain tells me that I can't find a big forced seller in this market right now. And I don't. I think sailors generally sound. I'm looking at this chart and I'm like, dude, it's totally going lower. I think it's going lower too. It's totally. You think it's going lower?

Ryan Sean Adams:
[6:51] Yeah, I think it's going lower. I mean, I think if you're deploying, like, look, if you had 100% of cash, you're trying to deploy of that 100% 50 here and then 50 for final wick down. Not a bad play here.

David Hoffman:
[7:05] I feel like that's right. I feel like that's right.

Ryan Sean Adams:
[7:06] And we're eight months into this thing. They typically last 12 months.

David Hoffman:
[7:09] It is early on the bear market. It's not that early.

Ryan Sean Adams:
[7:11] It's like mid-late. You know what I mean? It's like if we're eight months in, we usually bottom after about 12 months. And so that's kind of the bad third.

David Hoffman:
[7:21] Well, 12 months I'm counting as like the middle of the bear market. And on the second half of that, you're on the up and up. You are.

Ryan Sean Adams:
[7:27] You don't know if it still feels bearish and it still feels really shitty. But like you will have bottomed by that point, hopefully, if this if this continues. OK, but what was with the sailor selling 32 Bitcoin?

David Hoffman:
[7:38] He sold 32 Bitcoin. Stretch has been and continues to actually trade off par. And we don't really know why he sold the 32 Bitcoin because it was two point five million dollars that funds stretch like dividend obligations for like eight hours.

Ryan Sean Adams:
[7:58] But he only has six months of dividend obligations and cash in the bank to fund SDRC holders. Correct. Which might be why it's trading off par right now.

David Hoffman:
[8:07] Right, right, right, right. Why he sold 32 Bitcoin and then this week bought 1,550 Bitcoin. Why he sold 32 at all? I don't know. I know.

Ryan Sean Adams:
[8:19] I know. You sell 32, you create all the FUD, Bitcoin price goes lower, you buy back at a lower price, you go, ha ha, market can't predict me. You thought I was selling, I'm actually buying. I'm Michael Saylor, F you. And you tweet about it. You put a meme together, an AI generated meme, and you go on your way and people don't know what he's doing. Is he buying or selling? They don't want to try to predict him because he's unpredictable. He's a maverick.

David Hoffman:
[8:47] Okay. That's the mischievous plot plotting version of Sailor. Yeah.

Ryan Sean Adams:
[8:52] What version of Sailor do you think there is?

David Hoffman:
[8:55] I think that he was signaling to the market and he's getting the market used to him selling so that if he has to sell in the future, the market has digested this. And he sold 32 Bitcoin knowing that he was going to pile on a F ton of cash to buy more Bitcoin. He didn't plot the malaise of Bitcoin to buy lower intentionally. It kind of just worked out like that. But he knew he needed to provide confidence to the market. And so he knew that he had hundreds of millions of dollars of powder lined up ready to go. It wasn't intentionally pushing the market lower. Somewhere in between these two things.

Ryan Sean Adams:
[9:36] Probably. Okay. I mean, I think we might be saying the same thing. He's taking advantage of the opportunity to say, you are an STRC holder. How do you feel with the trading?

David Hoffman:
[9:45] I hold a little bit of STRC. Okay.

Ryan Sean Adams:
[9:46] It's not trading par right now. Does that make you nervous?

David Hoffman:
[9:48] It is not trading at par.

Ryan Sean Adams:
[9:49] Six months cash to pay your juicy 11% dividend. You getting a little nervous, Mr. STRC holder?

David Hoffman:
[9:56] The amount of capital that the STRC is off is recovered by like two dividend payments.

Ryan Sean Adams:
[10:04] This is down lower than I thought. We went down to like 93% or 93 on...

David Hoffman:
[10:09] It went all the way down to 10% off of par. It has recovered to 96.41 when it should be trading at 100. So it is not clear yet. There's clearly a lack of confidence here. It is slowly being restored.

Ryan Sean Adams:
[10:25] That's a buying opportunity, I guess, if you buy it at 90 then and you make that 10%

David Hoffman:
[10:30] And then you make.

Ryan Sean Adams:
[10:31] The yield of 10 to 11%.

David Hoffman:
[10:33] Yeah. Yeah. So $90 buyers are... But like in the moment, you don't really know. Like some people are comparing this to Luna, which is just not like Terra Luna. Yeah. Yeah.

Ryan Sean Adams:
[10:43] How is it like Luna?

David Hoffman:
[10:46] It's because... Like I actually am slightly worried about this, although at the same time...

Ryan Sean Adams:
[10:50] It's not under collateralized in any sense.

David Hoffman:
[10:52] No, it's not. But... The lower it goes, like there's a positive feedback loop between stretch and the Bitcoin price. And if stretch goes down because Bitcoin is going down, it just means that there's an even greater lack of faith or confidence in strategy and sailor. And if he ever does become a forced seller of Bitcoin, he has to sell Bitcoin at worst terms. What he did to solve his problems is he just hammered the ATM on the equity, on strategy, on the MSTR. Yeah. Which like, who the F is holding MSTR? Like, why would you ever hold MSTR? Because you are like last.

Ryan Sean Adams:
[11:32] I would hold MSTR at some price.

David Hoffman:
[11:34] Sure, at some price.

Ryan Sean Adams:
[11:35] But over NAV premium?

David Hoffman:
[11:39] Yeah, it's been trading at one. And it could be, it's not down that bad, but it could be down worse.

Ryan Sean Adams:
[11:46] I don't know. It's possible SDRC and the whole strategy complex is the final wick down and the sin we have to pay for. I still don't think that it will.

David Hoffman:
[11:56] It's just so much more sound than 2022 FTX. It's not GBDC. It's capital Celsius.

David Hoffman:
[12:02] Like, come on. These are not comparable.

Ryan Sean Adams:
[12:04] Yeah, exactly. I agree. How about the Michael Saylor of Ethereum? So Tom Lee, impressing with some major buys, even on the week in this bear market. He's down bad right now.

David Hoffman:
[12:18] He's down $10 billion.

Ryan Sean Adams:
[12:20] So what does he do?

David Hoffman:
[12:21] He piled $18 billion into Ether. He's down $10 billion.

Ryan Sean Adams:
[12:25] It's Tom Lee's own blood. And he's looking down at his blood and he's saying, I want more of this. You've got to admire that.

David Hoffman:
[12:33] Right.

Ryan Sean Adams:
[12:34] If he's right, you've got to admire that.

David Hoffman:
[12:36] Tom Lee bought $213 million of Ether on Monday. Ryan, you don't know this because this happened about 10 minutes ago, but he also just bought 25,000 more Ether. This was announced just now. He was seeing on change, so $41 million. So he's bought a quarter of $1 billion of Ether this week.

Ryan Sean Adams:
[12:54] Legend. That's crazy.

David Hoffman:
[12:56] That is absolutely crazy.

Ryan Sean Adams:
[12:58] Okay, Tom, in my opinion, we'll talk maybe more about this, But Tom Lee is the most important thing happening in the Ethereum ecosystem right now. It's not even close. Justin Drake with Quantum, that's all cool. But Tom Lee for ETH,

Ryan Sean Adams:
[13:13] the asset, is the story for Ethereum right now. That's right.

David Hoffman:
[13:16] That's right. Now, when I sold my ETH article, somebody asked, what events would you say would make you bullish ETH again? And I said... The layer one burn, followed by Tom Lee issuing a stretch-like asset that leverages the yield of Ethereum, especially under the conditions of the burn, to provide a stronger, more sounder version than strategy's stretch. And last week, we talked about this last week with Hasee, but I want to talk to you about this now that you're here. Last week, Tom Lee announced that he is going to copy Staler's playbook to offer 9.5% yield with a preferred stock offering. What do you think about that, Ryan?

Ryan Sean Adams:
[14:00] Do you want to talk about this now? Because I know we have a section to talk about it a little bit later. Do you just want to talk about it now?

David Hoffman:
[14:05] Yeah, let's get it out of the way. Let's talk about it now. Let's talk about it now.

Ryan Sean Adams:
[14:07] So, I was... Okay, in your mind, so I think we had a discussion about this and you were like, hey, Ryan, what do you think the probability of Tom Lee doing this, Bitmine doing this? and my take was like um almost a hundred percent like above 80 percent and that just because the tom lee playbook has been to take what's working with michael saylor and have the second mover advantage here where you get in and duplicate it so discard all the failed projects so if he could he would was my take and i don't think he originally intended to or wanted to but how has not looking at SDRC and saying, oh, this would work fantastic for Ether in particular because I have this native yield and I'm throwing off 200 to 300 million on my 3% staked ETH anyway, and I have my own validators. Duh, why wouldn't I do this if I could? So I rated it higher. I think you rated it maybe lower. You thought it was lower probability. So I would ask you, why did you think this was lower probability? And it's not out yet. They filed SEC filings. There's probably still some hurdles in order to get this to market. But it seems like they're going to execute on this.

David Hoffman:
[15:27] Yeah, they're going to do it. Yeah, this is happening. So there were two reasons as to why I was less sure than you. One, We had a call with Tom Lee, and we literally asked him this.

Ryan Sean Adams:
[15:35] Well, well, well. We probably can't disclose all of those details.

David Hoffman:
[15:42] Well, we had a call with Tom Lee. We asked him, what do you think about Michael Strategies' stretch? And he goes, if we do that, it closes down optionality to us. And so we want to preserve optionality. And so it sounds like they chose the door that they want to go through. Some doors, as a result, are going to close. but I think he was compelled by strategy's stretch. Yeah. And now he's going through the door.

Ryan Sean Adams:
[16:09] $11 billion in stretch or something like this? Yeah.

David Hoffman:
[16:10] Yeah.

Ryan Sean Adams:
[16:11] Yeah. And again, 3% internet bond native yield. Easy. Do it. How comparable is this to STRC? Because we understand that product. We had Michael on the podcast. He described it in detail. When I looked at the filings and I got kind of a LLM summary, It seems like it's basically the same thing, except that part of the yields at least gets generated from staking plus any kind of DeFi magic on top of that.

David Hoffman:
[16:41] Yeah. The staking element is important. Does Tom Lee sell the staking yield to fund part of the dividend is a question mark? Because you're not supposed to sell. And this is the other thing that...

Ryan Sean Adams:
[16:56] That's the same thing with STRC, aside from like, you know, does Michael sell his acquired Bitcoin or does he...

David Hoffman:
[17:05] Right, but he seems to be hammering MSTR at the ATM in order to pay for the dividend sooner than...

Ryan Sean Adams:
[17:11] And Tom has that option. And then he just also has the additional option of the 3% yield, which he could also pull.

David Hoffman:
[17:17] Yeah, but like whether he sells Ether staking yield or not, is important in my mind. And the other reason why I wasn't totally convinced that Tom Lee was going to do this was because he said, we're going to hit 5% and we're done. The alchemy of 5%. I think, now I will re-rate the chances of this happening, which is I think Tom Lee needs to blow past 5%. He needs to not stop. If he's going to do the strategy playbook, he has to do the strategy playbook, which means stop capping yourself. They earlier said that they are going to slow down their ETH buys as they approach 5%, I think they need to not do that. I think they need to go like 15%. They need to just go- 15%? As much as possible. That's the whole deal.

Ryan Sean Adams:
[18:03] He's at 4.6% right now. He did this in 11 months from zero. Insane. At this rate, he would have 15% in two more years.

David Hoffman:
[18:14] Yeah. I mean- If the ETH price goes down even more, it can go even faster than that.

Ryan Sean Adams:
[18:18] I'm blown away that he has acquired the capital to do this in a bear market. Blown away at the conviction of launching this in a bear market like the pro this is the product to launch in a bear market

David Hoffman:
[18:29] I totally agree people people were making fun of tom lee for like launching it in the same week that's that stretch was like coming off of its peg and i'm like no this is the best time to you want to launch in the hardest possible moment yes.

Ryan Sean Adams:
[18:43] Launch your launch your token in weakness you know like because then you

David Hoffman:
[18:46] Create then you're a bunch of holders.

Ryan Sean Adams:
[18:48] It's all upside but he's doing the thing, David, where Michael Saylor's thing is saying, oh, I've converted. Bitcoin is not just a store of value and money. It's also a capital asset. And I'm doing my alchemy and actually turning this into a monetary capital asset. That's what's also happening to ETH at scale. It is a checkmark on one of your big ETH has to do this in order for me to buy back in. I don't know why you still need a burn. This is worth way more than any kind of puny burn to me. I think you should

Ryan Sean Adams:
[19:26] buy back ETH, David, on this news.

David Hoffman:
[19:28] Okay. So can we look at the ETH chart? So we were talking about Bitcoin. Bitcoin's hovering above the 200-week moving average. Bitcoin tagged $59,000. It's now up to $62,000.

Ryan Sean Adams:
[19:39] Is this Ether's 200-week?

David Hoffman:
[19:40] Now we're looking at Ether. God. Ether tagged $1,500. It is now at $1,643. Ether is 34% below the 200-week moving average. And the 200-week moving average for Ether has not gone up, Ryan, in a year.

Ryan Sean Adams:
[19:57] Yeah, I know.

David Hoffman:
[19:58] It is flat in a year.

Ryan Sean Adams:
[19:59] You're bearish because price is low and has been low, and the cycle was super shitty for ETH.

David Hoffman:
[20:04] And so here are the two idiosyncratic moments of Ether. It was going from 2020... At $300 up to $4,600 at the end of 2021, that was the COVID bubble. That was the stimulus bubble, helicopter money, the NFT mania. Ethereum won that cycle. And then we have the return from like $1,500 to $4,000 with the Ether ETF. And it was really just following Bitcoin. Bitcoin broke all-time highs. Ether did not break all-time highs. And so this is when Ether malaise started to happen. And I'll say that that was Ether starting to lag. behind everything, behind the market. And then the next idiosyncratic event in Ethereum was with Tom Lee. When Tom Lee started buying, when Ether was $1,500 or $1,600 back in April of 2025.

Ryan Sean Adams:
[20:53] He's round-tripped all that. That's what's crazy.

David Hoffman:
[20:56] And it went up to all-time highs, $4,800. And now we are back at pre-Tom Lee level. So Tom Lee has almost bought $20 billion of Ether and we are at the same price. And so we had the COVID bubble with helicopter money and ZERP and stimulus checks and the NFT mania and that allowed Ether to have like the 60X that it had. Yeah. Then we had Tom Lee and we have erased Tom Lee, Where does $20 billion of buy pressure come from?

Ryan Sean Adams:
[21:27] I mean, look at your chart and you could look at this chart and you could choose to be bearish or bullish. You could interpret it in both ways. You could look at this chart and you could say, hey, last cycle, the 2021 cycle, ETH grew so much, it packed two cycles into one and got way ahead over its skis.

David Hoffman:
[21:45] I think that's true.

Ryan Sean Adams:
[21:46] And so it was destined to have a more muted second cycle. And this is the more muted second cycle. And now you have a lot of strong fundamentals being created, particularly the Michael Saylor of Ether. And he is viewing ETH as a monetary asset, as an internet bond, using yield, doing the same play that Michael Saylor is doing at scale. And it's Tom freaking Lee. And the guy has 5%. If you were bullish Tom Lee last summer, which everyone was, this is what the chart shows, right? And he was just promises, yeah, maybe I'll get to 5%. And you look at him, you're like, are you? Really? Are you? That's cute. But are you going to be able to do that? Why are you not even more bullish when the guy has executed on 5% and now he's got validators? He's looking to get involved in probably the Ethereum Foundation roadmap. I'm just saying, you could look at this chart and you could take either side of that argument. And I understand what you're saying. It's like, oh, where's 20 billion more? We're never going to have Zerp and helicopter money. It's over. That was the one spike we get. We don't get anything else. It'll just trade flat for infinity. I don't know. Maybe. Maybe not, though. Maybe not.

David Hoffman:
[23:09] I think the thing that concerns me the most is that for every buyer, there's a seller. And there were so many people willing to sell Tom Lee their ETH. I know. To the point that it was just, we netted out.

Ryan Sean Adams:
[23:22] It's all the people from last cycle that were just like, made so much money and just kind of, you know, it didn't happen as quickly as they thought.

David Hoffman:
[23:32] Yeah. It is a timing thing.

Ryan Sean Adams:
[23:34] I'm going to work on you. I'm getting to you. I know it.

David Hoffman:
[23:37] Like, this isn't the place for the weekly roll-up, but we'll leave little breadcrumbs as well. There's like strong versus weak crypto I want to talk about, but let's just get into the trad market because we have to move on to the weekly roll up. And so let's talk about inflation numbers. The May PPI inflation came in surging to 6.5%. That is above expectations of 6.4% and is the highest level since November of 2022. Yikes. Here is the poly market for the Fed rate hike in 2026. It was, Ryan, just at 14% or 15% in May last month. It is now at 51% chance that we get a federal rate hike. in 2026. Europe is increasing rates. The ECB raised Eurozone interest rates as the Iran war has stoked inflation.

Ryan Sean Adams:
[24:29] They're front running the Fed, basically.

David Hoffman:
[24:32] Their Fed is front running our Fed. And then here is the Fed graph that, Ryan, I know you like this chart.

Ryan Sean Adams:
[24:37] Yeah, this is CPI. So you mentioned PPI, which is kind of a leading indicator for CPI, right? And that was high. It was 6.5%. The headline number that I think probably is being reported on CNN and people are pissed about, is 4.2% in May. CPI, 4.2%. That feels like a lot. It was kind of like, oh, you know, the Fed's, our aim is 2%. And then post-COVID, we've been like, oh, I guess 2%, 3%. Eh. When you get to 4%, that feels high, doesn't it?

David Hoffman:
[25:06] 4% is high. When was it last? I think 3% is tolerable because fiat is weak and all of our central banks have a ton of debt and we owe a bunch of money. 3% is tolerable, 4% is high.

Ryan Sean Adams:
[25:15] That was, and a lot of this was driven, of course, by energy prices, which we're starting to feel from Iran. Although oil is not crazy at the moment. What's the price of oil?

David Hoffman:
[25:25] I mean, like, okay, the whole entire oil price during the Iran war, like the whole thing is crazy, but we have high crazy and low crazy, and we have settled in low crazy.

Ryan Sean Adams:
[25:34] We're new normal crazy.

David Hoffman:
[25:35] We're new normal, yes, we're normal for being crazy. So WTI is trading at $89. Just again, for context, it's ranged between $85 and $110. And so the fact that we're in the 80s is good. I really want to see this breakdown below $85. I don't really know if it makes sense to talk about oil breaking down because that's very charty TA stuff. And what's the point of charting when there's Donald Trump versus the Islamic regime? Like you can't chart that.

Ryan Sean Adams:
[26:05] But nonetheless, it just looks like this and you can only do it historically.

David Hoffman:
[26:09] Look at this thing. Granted, there was an escalation in the conflict this week. Like, we're approaching a deal like we are every week, the week before and the week before. And nonetheless, like, missiles were thrown, bombs were dropped, strikes were had. Oil price stayed low during the market, during the turmoil. And so it is kind of indicating that the oil is settling out and there's a new equilibrium being established and we're able to supply the world with oil as we need it without prices going too high. And so there is some cause for optimism. If this drops, if this goes down and drops below and also we do get the opening of a Hormuz, that's going to be so goddamn bullish. I just don't think that's going to happen. I think this is the new normal.

Ryan Sean Adams:
[26:53] Big macro questions right now. The AI trade, will it continue? And then also, when Warsh gets in, what's he going to do? There was talk of him. So there's talk of him actually moving the goalposts on the definition of CPI using a different definition. It's like a lower definition. You know?

David Hoffman:
[27:11] We're just changing how we count things so we can report better numbers.

David Hoffman:
[27:14] Yes. Ask how well that worked for the Soviets.

Ryan Sean Adams:
[27:17] That's right. David, we should cut for sponsors. What do we have coming up?

David Hoffman:
[27:22] Coming up next, we're going to talk about the IPO season. We've got this SpaceX IPO coming in tomorrow, Friday, today, if you're listening to this on Friday. The largest IPO in history. We're also going to talk about Anthropic and OpenAI. We got pre-market perps out of crypto that show us information. We're going to look at that information, and then Ryan and I will resume our fighting after we talk about how we're fighting.

Ryan Sean Adams:
[27:44] Now the real fight comes. It's round two.

David Hoffman:
[27:45] Now the real fight comes.

Ryan Sean Adams:
[27:47] After sponsors.

David Hoffman:
[27:48] But first, you have to listen to these sponsors to get to the fight. So let's go hear from them right now. SpaceX shares are going for $135 a share. That is a $1.77 trillion valuation. They are raising $75 billion. Largest IPO in history. 3.2 times bigger Saudi and Mariko, the previous record holder. The perps market, we're looking at Leiter. Leiter is a perps market that is trading SpaceX. It's been trading actually on Leiter for like a number of weeks now. The purse market is valuing SpaceX at $2.13 trillion. And so there is an implied a little bit of a pop coming. If LIDR, traders on LIDR are valuing it correctly, traders on Hyperliquid did do the job of appropriately valuating, Cerebris, which is an AI IPO that happened like a number of weeks ago. So, you know, still data out there needing to be found. I think it's accurate. I think it's probably accurate. But we're going to find out. So if we all open up our brokerages and we see SpaceX tomorrow trading at two plus trillion dollars. Traders on Leiter did their job.

Ryan Sean Adams:
[28:56] Not the only IPO, right? You said it's IPO season. We have Anthropic, OpenAI, some of the AI native companies coming on the scene. Is that all happening this summer as well? And what's the estimated market cap in the perps markets for those puppies?

David Hoffman:
[29:13] So both Anthropic and OpenAI have filed. Neither of them have dates. OpenAI is not soon. It's going to come at the end of this year. Anthropic could be soon, could be Q3. We don't really know. But the implied market cap for Anthropic on LiDAR is $1.6 trillion.

Ryan Sean Adams:
[29:31] Oh, so about a Bitcoin or so. The entirety of all Bitcoin supply.

David Hoffman:
[29:35] The entirety of Bitcoin, yeah. And then OpenAI, $1.25 trillion. There's an interesting revenue story. Okay, so SpaceX made $18.5 billion of revenue in 2025, reported a $5 billion loss because it just burns cash. Rockets are expensive. But out of that revenue... Out of the $18.5 billion, Starlink made $11.5 billion. So the satellite business, which is like a first-party product inside of the larger product. It's a killer app. The killer app on the.

Ryan Sean Adams:
[30:06] App platform of rockets, I guess.

David Hoffman:
[30:07] Yeah, it's like the Uniswap to Ethereum back in 2021. Yeah. And so Starlink is making two-thirds of SpaceX revenue. Anthropic, run rate reported revenue crossed $44 billion annualized as of May, 2026. The company is on track to post their first ever profit, approximately 550 million in the second quarter of 2026.

Ryan Sean Adams:
[30:34] Incredible product. Have you tried the Fable model?

David Hoffman:
[30:38] Totally. Yeah, it's great. Just incredible. Yeah, super smart. It's just like, it makes me feel dumb because when I get a response back from Fable, I'm like, oh, my prompt was so stupid. Like what I'm getting back is it's like I'm asking a genius, like idiot questions. Yeah.

Ryan Sean Adams:
[30:54] Pretty soon I'm just not even a prompt. I'm just going to blah, blah, just leave it on my keyboard and just it'll know. It'll do.

David Hoffman:
[31:00] Fable, I want something. It'll prompt.

Ryan Sean Adams:
[31:02] Yes. Find out what I want and then make that thing.

David Hoffman:
[31:06] Help me figure out what to ask you.

Ryan Sean Adams:
[31:07] God, what does that make us? Like just we just get dumber and dumber.

David Hoffman:
[31:10] Dumber is super dumb.

Ryan Sean Adams:
[31:12] Okay.

David Hoffman:
[31:13] Okay. But then OpenAI Revenue. The last private round for opening, I valued it at $850 billion in March 2026. Revenue has blown past $225 billion annualized rent rate, but their cash burn, is $27 billion for 2026. So opening, I'm not yet pulling a profit.

Ryan Sean Adams:
[31:31] Yeah. I just have to say, as we always say, look, I hate trillion dollar IPOs.

David Hoffman:
[31:37] It's just- Something about that is bad and wrong. It's wrong.

Ryan Sean Adams:
[31:40] I mean- Who can we blame? I like Paul Atkins. Regulators. Gary Gensler, why did you do this to us? Look, it's not any SEC person. It's the laws on the books. It's regulation. Who do we blame? Sarbanes-Oxley. Who do we blame?

David Hoffman:
[31:58] Too much money. Too much fiat money.

Ryan Sean Adams:
[32:01] But it's not just that. It is that. But it's also a fundamental failure of U.S. capital markets that you have to be an accredited investor, that this all happens privately. It didn't used to happen this way. It's like, tell your kids this is not normal. In the 90s, you could IPO Amazon and it would be $400 million. And the public, 401ks, the average investor, retail, could actually realize 100x, 600x, whatever, upside on that. That is no longer the case. So the IPO and then your exit liquidity and whatever, it goes up a few trillion. Who cares? Yeah.

David Hoffman:
[32:47] I think there's two parts of the story. One part is that it is encumbering to, be on the public market because of compliance and regulation and it's costly. And so only big companies can do it in the first place. So we need to stop being public, be such a stick. we need it to be more of a carrot than a stick and so we create more incentives, lower the barriers the other side of the equation is that it's just so much benefit so much better for founders and companies to take private money, Part of the reason.

Ryan Sean Adams:
[33:18] Is because- I think that's the same side of the equation, honestly. You're saying they just don't want a ticker or they don't want like quarterly reports?

David Hoffman:
[33:25] That's all part of that. Is that they can take private money because there is so much private money out there because there is so much money out there. There's so much money out there.

Ryan Sean Adams:
[33:33] I think it's both sides of the same coin, but it's the same root issue. It's just, it's a failure of US capital markets, but whatever, we're not going to solve that today. I just, this is not good for populism, is it?

David Hoffman:
[33:43] No, it's not.

Ryan Sean Adams:
[33:45] It's not.

David Hoffman:
[33:46] I do like that we are trading these things on an Ethereum layer 2 ahead of the IPO, months ahead of the IPO. For sure. It doesn't quite solve the problem at hand, but it's pointing in the correct direction. It's more democratic. It's more democratic.

Ryan Sean Adams:
[34:02] Waiting for your brokerage to list this thing after it's hit like $3 trillion. Yeah, that's right.

David Hoffman:
[34:08] All right. At least we got, okay, round two?

Ryan Sean Adams:
[34:11] Yeah, okay. So there was a tweet. I think this is the meme. Babe, look, the bankless guys are fighting.

David Hoffman:
[34:17] Oh, I actually didn't see that one. You did not see this?

Ryan Sean Adams:
[34:19] This is in one of the replies. Okay, so I was on vacation last week, and it felt like I didn't look at my X timeline very often. The few times I did, I looked, and I was like, God, man, ETH sentiment is so bad right now, and I understand why. And you could take back to the chart, the price chart you were just showing. It's been flat for five years, right? Like we haven't done anything from a price perspective. This is why there were errors made in the L2 roadmap, all sorts of reasons we could get to. The one thing, none of that, I mean, it's disappointing. That's disappointing to me. None of that triggers me. The only thing that triggers me just a little bit is the idea, this mental fallacy that Ethereum can be a successful platform. without Ether, the asset, being worth a shit ton. And by that, I measure shit tons in the trillions. Many, many trillions of dollars. It has to be a global reserve asset or else the alternative because the entire purpose of the platform, so says bankless thesis, so says the reason I started talking or writing about Ether, the asset, Ethereum to begin with, is strong DeFi.

Ryan Sean Adams:
[35:46] So you can't have strong DeFi on the back of a dollar custodial stable coin called USDC or Tether. You have to have strong DeFi on the back of a crypto native asset that does not settle in meat space that settles on chain. And in the shared security strong DeFi setup of the Ethereum ecosystem, that asset is Ether. And so I don't care so much that people are like, hey, it was a good run. We put 10 years into this thing. And it's just like it's not working out or it's kind of working out, but it's just like, oh, we're not going to get there. And Bitcoin has taken all of that narrative. I understand people thinking that. I don't blame them.

Ryan Sean Adams:
[36:38] And I think that way, too. I'm like, oh, I thought we'd be, you know, further along than we are actually now. I thought some of the strong DeFi experiments actually might work, like single collateral die or like other crypto native stable. And they haven't. A lot of those things just haven't worked and things have gotten more tradify. But.

Ryan Sean Adams:
[37:00] The fact that those things haven't worked just points to the possibility that Ethereum is a failed project. In other words, you can't say, oh, Ethereum has succeeded without Ether, the asset, also succeeding. I'd rather people just say, looks like it's not working out. We had high expectations. The project is just like not working out. What triggers me a little bit is when there's some sort of idea that, no, Ethereum is successful. It's just Ether the asset is successful. No. If Ether the asset is not successful, Ethereum wasn't successful. It was an urban-esque niche, like, sideshow thing that didn't change the world at all and actually didn't achieve the crypto-native aspirations it set up. And that's it. That's all. And so that's what I tweeted out, which is just like, hey, I find this triggering. You can't have Ethereum succeeding without Ether, the asset, succeeding. And so that was not targeted at you necessarily, although I felt some kind of inclinations towards that, where it was kind of like in your post, why I sold my ETH.

Ryan Sean Adams:
[38:14] There was an idea that Ethereum could be a successful nonprofit.

Ryan Sean Adams:
[38:21] Remove the successful piece out of that sentence. And I probably might agree with you that that would be the failure mode. It would just be a failed niche nonprofit type project that just didn't succeed or impact the world. And I guess the reason I feel somewhat strongly on that is because it takes me back to like 2019 and 2020, which was just like the same sort of thing. ETH is gas. Ethereum could be successful. ETH doesn't need to be money. and it just was like, oh, I thought we already talked about this. No, it may not be successful. It may not be money, but a precondition for its success is that Ether becomes a store of value reserve asset. So when I put it like that, I'm wondering how much daylight is actually between us in this debate.

David Hoffman:
[39:13] Not too much. What I want to emphasize and see if I can get you to agree with So we can like stand on that foundation and move forward is that what you are, what I see you doing, here is that you are prescribing a win condition for Ethereum that is your opinion and aspirational and what you want to happen. And it is not inherently what is capital T true about what Ethereum is. Kind of in the same way where, you know, when Bitcoin was born, it was born as a peer-to-peer digital cash system. And then it turned into, I don't know, what the next narrative was. And then the next narrative was Bitcoin is digital gold. And now Taylor's trying to adapt the narrative into Bitcoin as digital capital. Bitcoin was never a peer-to-peer digital cash system. It was never digital. I actually don't think it's digital gold. We are collectively learning and prodding at what Bitcoin is. We still don't know what Bitcoin is. We are learning how it fits in people's portfolio. We are learning how it works as a financial instrument. And we are updating our models as we go.

David Hoffman:
[40:25] We can do the same thing with Ethereum where in 2019, when you are saying like this was triggering to you because it was back in the old days of like ETH is just gas. In 2019, we had strong DeFi ahead of us. Strong DeFi was being built. We were excited about it. It was somewhat working and it was going to be working even more going into, DeFi summer in 2021. Strong DeFi and strong Ethereum was like the big thing. Now we are looking back on that. We're like, it's not exactly working very well. And what is working very well is that Ethereum is like a really good, ledger upgrade technology for the back end of the world's largest financial institutions who are paying $20 a year in layer one settlement costs to have an improved ledger technology as their database. And that's just not strong DeFi and strong crypto. And that's not strong Ether, the asset. But that is Ethereum being adopted. You know, that is, you know, institutions building on Ethereum. That is Ethereum, the ledger technology proliferating across the world. And so what I'm trying to do as an investor when I talk about Ether and my decision to sell my ETH and saying that like Ether price is what it is and I don't really see it going anywhere, is that I'm trying to not be prescriptive about what I want Ethereum to be. Although there is zero daylight between you and me about what we want Ethereum to be.

David Hoffman:
[41:49] But I'm trying to like not, I don't want, I don't think it's prudent to have my financial position be aspirationable about what I want Ethereum to become and what I want Ethereum to be used for. Because if the market is not using it for that, then I need to reconsider my position.

Ryan Sean Adams:
[42:06] I see. I think that maybe this is more semantics then in terms of where it kind of breaks down. Because I guess to me, I don't know if you'd agree with this, but to me, so goes strong DeFi, so goes Ethereum, basically. So if, and this is kind of the strongest case that you make with respect to looking at this as an investor and saying, strong DeFi hasn't worked out so far, right? And like, I see that too. It hasn't worked out. What has worked out is some of the ledger technology. What has worked out, by the way, is the thing that Bitcoin is, which is whatever you want to call it, store a value asset, right? On chain, bear instrument, that kind of thing. So you could say that strong DeFi is not worked out. But I think if you have to say, at least I believe this, this is not necessarily just a subjective win condition that I'm making. It's certainly my preference. I think it's actually more objective. Because if weak DeFi is the only thing we get, we get Bitcoin and we get weak DeFi, Ethereum is way over provisioned. It's back to it has too many nines. It doesn't need the security guarantees and the censorship resistance and the privacy and the open source and the security. I think I did crops right there, right? It doesn't need all of that. You just do it on Canton Network. Fine, you're done. Call it a day. We got some super validators.

Ryan Sean Adams:
[43:32] Done. We got some nice ledger technology. We got some, you know, you don't need Ethereum. The only thing you need, it was back to, do you remember when Donkrad was like, what apps actually need crops? and then people are like this, this, this, and this. And he's like, at my submitted, and I was like, Ether the asset needs it. And some DeFi like Uniswap does. And he was like, oh yeah, that's probably the answer. That's the only thing that needs crops, guys. Strong DeFi, Ether the asset, store of value. And so I guess what I'm saying is what you'd have to do is you'd have to look back at Ethereum and be like, yeah, it was a cool attempt and it did the EVM and then a bunch of, then blockchain proliferated. And it has a spot in history, But ultimately, the dream kind of failed because Ether never became a store of value asset and strong crypto didn't work anywhere outside of Bitcoin. So to me, this is why it's probably semantics. To me, describing what your case is and why you sold your ETH, that's just called Ethereum failing. And you could be like, I'm selling my ETH because I think Ethereum is going to fail and Ether, the asset, is not going to appreciate. Again, it's probably just semantics. We're probably saying the same thing.

Ryan Sean Adams:
[44:45] That's the piece that triggers me just slightly is because I feel very strongly that Ethereum is nothing without Ether the asset aside from like we tried that thing and it didn't work. Like we tried Webvan back in 2000 and we're really waiting on like Uber Eats for food delivery. Something like that.

David Hoffman:
[45:04] Mm hmm. Yeah. Yeah. There's a lot of people on Twitter are saying like the whole ETH, not Ethereum, is just a reincarnation of blockchain, not Bitcoin. Yeah. And I want to throw a flag at that because that's an incorrect comparison, because when the whole like phenomenon of blockchain, not Bitcoin was literally just blockchain technology, not Bitcoin, the blockchain. And so they were going to use IBM Hyperledger, you know, intra database blockchain technology, literally the blockchain technology, but without any sort of asset. That was a complete failure. The actual reality is public permissionless blockchains, not your private intranet. That's the real innovation here.

Ryan Sean Adams:
[45:43] But the same, there was a similar thing, which is they're fading the digital bearer asset, the store of value. That was rat poison squared. That was a Ponzi scheme. That was speculation. That's not the thing that's important. Oh, it turns out that's the only thing that's important for Bitcoin. And I'm just saying that's also the only thing really that's important for Ethereum is Ether, the asset. plus some strong DeFi around it. Everything else you could do on the Canton network or something like that.

David Hoffman:
[46:10] Yeah. There's some benefit to like, you know, using a public permissionless blockchain, credible neutrality, censorship, resistance, all of that stuff. And that's why Wall Street is using Ethereum, not Canton because of the public permissionless blockchain nature of it. And as a shelling point of where everyone else is building. But anytime, like I talked to the figure guy who's putting Helix on chain So you can go buy HELOCs and get like 9% yield. Great financial opportunity. We're democratizing access to that. They get to tap the world's capital markets. People get access to HELOC investments. That is Ethereum, the blockchain.

Ryan Sean Adams:
[46:45] Yeah.

David Hoffman:
[46:46] Using Ether, the asset is just not relevant in that flow.

Ryan Sean Adams:
[46:49] Oh, I agree. I agree completely with that. But like, I think that they are using it and they're issuing on Ethereum first because of network effect. And I think that part of the reason Ethereum is getting that network effect is because of crops and that propels it. So, for example, I noticed Circle this week, they launched a Bitcoin custodial kind of tokenized product. Right. And they launched it on Ethereum first. It's because Ethereum has that strong network effect. I don't think they're launching it on Ethereum for like crops for their wrapped Bitcoin product. And their second chain is their own chain. It's ARK, right? That's the other place they're launching it. So I think the benefit is kind of a side benefit and it comes from network effect, not because the real world tokenized asset actually needs the crops guarantees of Ethereum. Does that make sense? I think that's probably a subtlety you'd agree with.

David Hoffman:
[47:43] Yes, yes. And overall, the point that I'm making is that, you know, Ether, the asset, and I have said this on Bankless thousands of times throughout the year. Bitcoin, the blockchain by Bitcoiners, is viewed as an encumbrance upon BTC, the 21 million hard cap unit. And if the philosophy of Bitcoin could do this, they would do away with the blockchain so that they could just have 21 magical units. But turns out you actually just need the blockchain and proof of work as these minimum viable mechanisms to secure the assurances of 21 million units. And so you have to deal with the encumbrance. I agree with that. But the philosophy is Bitcoin is 21 million units and that is Bitcoin and everything else is just a means to that end.

Ryan Sean Adams:
[48:25] Here's the last thing on this. Oh, did you have more to say?

David Hoffman:
[48:29] Yes, because when we talk about Ethereum, that relationship is inverted where Ethereum, the blockchain, is the point. Ethereum, the block space with crops, is the point. But an Ether, the asset, has been a means to an end of providing World War III resistant block space. And when we were talking about ETH as money in 2021, a lot of that money talk was out of an emergence of properties, not any one specific mechanism other than the burn, not any one specific mechanism. But that's because the economy is built on Ethereum, ETH emerges as money because of all these money episodes that we did.

Ryan Sean Adams:
[49:05] I think part of the reason you're saying that is because that's how Vitalik and crew have pushed it and the narrative has been set.

David Hoffman:
[49:12] That's also the era that we are in now is strong crypto is out, retail crypto is out, crypto believers are out, and Wall Street is in. And it seems to be we are just handing the torch to Wall Street and be like, here's our sick ledger technology. Put any of your assets on it and forget about Ether.

Ryan Sean Adams:
[49:31] Maybe. I don't think it's over yet. If you're right, the second thing, that makes Ethereum a failed project, by my definition.

David Hoffman:
[49:40] By your definition. When you say Ethereum is a failed project, it's still producing blocks. It's still crops strong.

Ryan Sean Adams:
[49:46] It's not crops. It's not. USCC is not crops. USCC is a stable coin.

David Hoffman:
[49:51] Ethereum block space is crops.

Ryan Sean Adams:
[49:53] For what, though? For something that Jeremy Allaire can freeze? Anyway, we could debate this for a long time. I just have one last kind of thing that I think is kind of somewhat interesting or somewhat funny. And this is not like a poke. I think it's the actual truth. So would you be saying this if ETH right now was trading at 10K?

David Hoffman:
[50:12] Certainly not.

Ryan Sean Adams:
[50:13] There you go.

David Hoffman:
[50:14] But no, my counter argument to this.

Ryan Sean Adams:
[50:17] That's not an argument. That's like, that's I think the truth of it is that you will believe it when you see it. Totally. The problem is when you see it, it's too late to appreciate the upside of it. And you will buy ETH at the price you deserve. if this all comes true if that's the bitcoin thing too

David Hoffman:
[50:36] I i'd also like to emphasize that, This is not necessarily just like a lack of faith about Ethereum, the project. This is an existential questioning of crypto, the industry. Yeah. Which is largely represented by Ethereum. And so when people say like my conviction in crypto is gone, Ethereum gets the brunt of that because it represents crypto in the hard sense.

Ryan Sean Adams:
[51:03] I get it.

David Hoffman:
[51:03] But it's just like, dude, what are our products that generate and capture value? It's perps and it's stable coins.

Ryan Sean Adams:
[51:12] I get it.

David Hoffman:
[51:14] And then maybe it's also privacy. Like maybe we can get privacy here too. And that's why Zcash is cool. And if we had privacy on a DM layer one, it'd be better.

Ryan Sean Adams:
[51:22] And we're going to get that.

David Hoffman:
[51:24] Yeah.

Ryan Sean Adams:
[51:25] Let's leave it here. I think this may be an ongoing discussion as I come in as guest hosts for the weekly rollup. But I appreciate the engagement here, David. We got a few more things to talk about though. What else you got for us?

David Hoffman:
[51:36] We're going to talk about Morpho raising $175 million and flipping Aave in market cap and then Zcash dropping 60% right after I buy it. What did I do? What did I do? We're going to get to all of that and more. But first, some of these fantastic sponsors that make this show possible. Announced last week is Morpho raising $175 million, co-led by Paradigm, A60 and Z Crypto, and Ribbit with also participation from Apollo Circle Ventures, VanEck. In that same week, Morpho, $1 billion market cap, $1.2 billion FDV, flipping Aave at $970 million market cap and a $1 billion FDV. To me, Ryan, not to be a dead horse, this would be the last thing I say about this, but when Morpho flips Aave, it is back-end financial infrastructure for the world's largest financial institutions, minimum viable use of Ethereum, flipping strong DeFi. This is weak crypto flipping strong crypto.

Ryan Sean Adams:
[52:32] I think Morpho is pretty strong DeFi. It's as strong as Aave. It's definitely as strong as Aave from a smart contract perspective. I get that there's all stable coins doing this. I think that the way it's sort of a weaker DeFi is they're not as DAO-y as Aave, which by the way, to me, has been like a millstone around Aave's neck and a hindrance is like, oh, first we got to talk to the DAO. Sure. Morpho is just like, no, we've aligned all parties. And Paul is running the thing, and it's got the founder energy, and it's not like tyranny of the structuralistness, and he just runs the thing and he does it well. But the smart contract level, really, I mean, you tell me, I'm misunderstanding it, but the difference is you have segmented vaults with RISC, whereas Aave, it's all pulled together. In some ways, Morpho is even more like strong DeFi, particularly if it was with crypto-native assets.

David Hoffman:
[53:25] DeFi, but the idea of everything being on-chain and then on-chain assets governing over risk pools, to me, that is strong DeFi. And so like DAOs are strong DeFi. And so what you're saying is like, yeah, these are a centralized team who can move fast and shake hands with Apollo, the largest private equity firm. And I'm like, yeah, dude, that's weak crypto. That is ledger technology for the world's largest financial institutions. and then like Aave token holders risk managing on chain is strong crypto and that's just slower and harder. I guess so.

Ryan Sean Adams:
[54:01] That was like V1 crypto. I think DAOs were a bad idea. I think DAOs were one of the bad ideas.

David Hoffman:
[54:06] DAOs are strong crypto.

Ryan Sean Adams:
[54:09] It was like structurelessness like you know we're all going to make it crypto which ended up being the wrong path. Tell me about Zcash. So what happened?

David Hoffman:
[54:19] Okay so this is actually an AI topic Like on May 29th, a security researcher was using Anthropics Opus 4.8, and he basically typed in the prompt, find me an exploit in Zcash. Make no mistakes. Make no mistakes. And it found one. A critical flaw in the orchard pool. So Zcash has privacy pools. So you have the transparent supply of Zec. That's the UTXO set. That's a set that's on exchanges. You can also just hold this as an individual and your Zec is like accounted for. Or you could put it in the privacy pool and then you shield it and you mix it up with everyone else's. There was a vulnerability discovered in the privacy pool that would allow an exploiter to mint unaccounted for ZEC. And so if you...

Ryan Sean Adams:
[55:05] Infinite, basically. As much as they wanted.

David Hoffman:
[55:07] Up to the amount that is deposited in the privacy pool. So you could only withdraw the amount that's in the privacy pool.

Ryan Sean Adams:
[55:12] Double your money.

David Hoffman:
[55:12] Yeah, exactly. And so it would be a transfer of Zek from privacy pool depositors to the theorized exploiter. There is no proof that this exploit was ever exploited.

Ryan Sean Adams:
[55:23] But there's no proof that it wasn't.

David Hoffman:
[55:25] There's no proof that it wasn't. This is true. It was patched and then a hard fork was shipped very quickly before it was announced. So a hard fork on June 3rd fixed the privacy pool and then the public disclosure came on June 5th. But the news that no one can prove that it wasn't exploited sent Zek tumbling about 50%, $100 million of liquidations, and then Arthur Hayes saying that he's out. There is an upgrade coming, Ironwood hard fork that brings in a new shielded pool. And Zcash does this. There's new pools every now and then to upgrade the cryptography, make it stronger, just like software updates, how you update your phone, software updates for the privacy pool. And then this time it's also going to be formally verified. and then there's also AI assisted just circuit analysis of the ZK circuits just a much more rigorous assurances around.

Ryan Sean Adams:
[56:15] The privacy pool

David Hoffman:
[56:17] Stronger assurances that this doesn't happen again. That's right.

Ryan Sean Adams:
[56:19] This vulnerability was active since 2022, right?

David Hoffman:
[56:23] It was possible to be found since 2022.

Ryan Sean Adams:
[56:27] This is a long possible window. But in my understanding of things, I think I read this, that with the new upgrade, they'll also be able to tell if it was actually exploited. So it won't forever remain a mystery. And that's a key part of the puzzle is once this upgrade happens, you can tell if someone triggered the double my money button a few times.

David Hoffman:
[56:44] Correct. Every time we hop from privacy pool to privacy pool, every time there's a privacy pool upgrade, you can get assurances that it was not exploited in the past. Yeah. Yeah.

Ryan Sean Adams:
[56:55] I think that this is sort of quite possibly if you're bullish Zek long term, which I'm not sure if you should be. But if you are, this is sort of a buy the dip type moment probably because.

David Hoffman:
[57:09] Totally. People did buy it. It's up like 40%.

Ryan Sean Adams:
[57:12] There's going to be, there's a bathtub curve with AI related issues. Like, have you seen this with you have flaws at the beginning stage of something and then they dip down, right? And you get kind of a bathtub floor and then maybe they dip at the end and everything fails or whatever. But anyway, I guess what I'm saying is we're going to see a bunch of these types of issues with the advent of AI, but then we're going to find them all with the advent of AI and resolve them, protect against them,

David Hoffman:
[57:41] Equipped with tools like formal verification.

Ryan Sean Adams:
[57:43] And then they'll be stronger than ever and we won't have these flaws in the future. That at least is the hope but I think that's kind of what I expect to happen here.

David Hoffman:
[57:52] Yeah. Part of my calculus in my decision to sell ETH was that like dude, everyone's scared to put their money in DeFi and.

Ryan Sean Adams:
[58:00] I get it.

David Hoffman:
[58:01] But also on the flip side of that, there is the equal and opposite to exactly what your point. The other side of the bathtub. They're scared.

Ryan Sean Adams:
[58:08] They'll be scared of it. Weirdest meme we've ever used. Yeah. We'll be in the bathtub and it feels good. The water feels good. And then everyone will hop back in, into the bathtub. Be all one shared bathtub together.

David Hoffman:
[58:18] Dude. Okay. Okay.

Ryan Sean Adams:
[58:22] I told you I'm out of Fs to give, David.

David Hoffman:
[58:24] We're going from bankless boys are fighting to bankless boys are in the bathtub.

Ryan Sean Adams:
[58:29] What about this? Jason Kalkanis, three years ago, he tweeted this, and I remember being absolutely livid. He said this. Really? If you're in, kind of. I was just annoyed. Can't you say something nice about crypto, Jason? We're dying out here. This is 2023. If you're in crypto, pivot to AI. Did that age well? Did that tweet age well?

David Hoffman:
[58:51] Yeah, I mean, you can't.

Ryan Sean Adams:
[58:52] Hard to say it's not H-Laja.

David Hoffman:
[58:53] You can't say, yeah. But at some point, crypto is down bad and AI is IPO-ing at multi-trillion dollar valuations.

Ryan Sean Adams:
[59:02] Yeah, maybe at the point Jason's taking victory laps, maybe that's when it ends, huh?

Ryan Sean Adams:
[59:07] I guess we're wrapping this up, but I did see Hester Pierce.

David Hoffman:
[59:11] We would like to give a shout out.

Ryan Sean Adams:
[59:12] Pierce is resigning, yes.

David Hoffman:
[59:13] To Hester Pierce, who wrote a blog post, typed or gave a speech titled Purse Almost Out. Hester Purse, commissioner of the SEC, has been at the SEC as long as we've been doing the Bankless podcast. She has been a light for when we needed it the most in the darkest of nights. When Gary Gensler was releasing Office Hours, Hester Purse was releasing incredibly poignant remarks, critical remarks. and so she's been on the podcast like eight times she's been at.

Ryan Sean Adams:
[59:50] Ethereum Denver the regulator of regulators

David Hoffman:
[59:53] Crypto mom just like a round of applause for Hester.

Ryan Sean Adams:
[59:57] But also like just like base fundamental principles of like why am I a regulator what are the principles I am as a public servant to uphold she hit those ethical standards and she delivered such eloquent speeches She's such a well-spoken person. I think maybe Bankless podcast could use a co-host energy. I don't know if Purse is looking on the market.

David Hoffman:
[1:00:27] Hesser, if you want, if you're looking for a job, the revolving door, you know, you'll leave regulation, you come into crypto. Join a podcast. Let me read a few remarks, just a few sentences from her from her from her statements. I'll just read the beginning of the end. This is the very beginning. Thank you, Jim. She says thank you to the person who introduced her. I'm delighted to be a part of the summit. My views are my own as a commissioner and not necessarily those of the commission or my fellow commissioners. My days of giving that disclaimer are rushing to an end. After nearly 30 years in D.C., I am leaving the city and moving to the beach. Then she.

David Hoffman:
[1:01:06] Gives a number of points. Her main points in this speech is that capital markets succeed because governments stay out of the way. United States capital markets are the world's best because the government acts as a referee, not as a player. Government power must be tied to consent. and recently the SEC commission has been correcting course in a way that feels more aligned with her but that did not stop her, Ryan, from giving further dissenting marks about where she thinks the SEC continues to need to improve regardless of who is in the chair seat I think she's always been the SEC's biggest critic, which is why we love her the most and then she finishes with thank you for indulging the meandering reminiscence of a soon-to-be, former regulator I'm sad to be leaving a place that has allowed me to engage in the important work of regulating the finest capital markets in the world, alongside fellow commissioners and wonderful staff who are committed to doing that task as well. Happy 250th anniversary to the nation I'm so honored to serve.

Ryan Sean Adams:
[1:02:06] Well done.

David Hoffman:
[1:02:06] Thank you, Hester.

Ryan Sean Adams:
[1:02:07] Yep. Thank you. Thank you for the service. And does that wrap this up?

David Hoffman:
[1:02:12] Thank you for listening to the Weekly Rollup. One last polymarket before you go, Ryan. As the world's greatest soccer fan, who do you think wins the World Cup?

Ryan Sean Adams:
[1:02:22] The World Coin Cup.

David Hoffman:
[1:02:24] The World Coin Cup.

Ryan Sean Adams:
[1:02:25] The World Cup. Okay. I'm not going to look at these answers. Isn't it probably a South American country, right? Or European?

David Hoffman:
[1:02:33] You can pick Argentina.

Ryan Sean Adams:
[1:02:34] Argentina? Argentina? That's going to be my guess. It's up there. What's Polymarket say?

David Hoffman:
[1:02:38] So it's pretty close between Spain and France at 17% and 16%. Okay. Portugal is number three, England number four, and Argentina at number five. But, you know, it could be anyone's game. Dude, there is $2 billion on this market. Okay. $2 billion on the Polymarket World Cup winner.

Ryan Sean Adams:
[1:02:57] Why didn't Ethereum do sports betting? Oh, my God.

David Hoffman:
[1:03:01] Put sports betting on chain.

Ryan Sean Adams:
[1:03:04] Oh wait oh wait oh okay

David Hoffman:
[1:03:06] Anyway it's on polygon put it on the.

Ryan Sean Adams:
[1:03:08] Layer one yes yes burn some eath and then david will be back in uh by the way are they stopping by because it's in the u.s this year is the world coin cup stopping by new york city

David Hoffman:
[1:03:17] Your world coin cup is in new york it is in atlanta it's in seattle it's in florida uh those are.

Ryan Sean Adams:
[1:03:24] Places you can get to

David Hoffman:
[1:03:25] Yeah i might go to a game maybe i'll go home and see my family in seattle i'll go to a game there i think.

Ryan Sean Adams:
[1:03:29] You go to a game tell me how it is sports fan all

David Hoffman:
[1:03:33] Right well we'll stay tuned for your uh the world's best coverage of the world coin cup, uh that's it this week bank station thank you much for sticking with us uh ryan we'll be back on vacation next week just one, one week he's in one week he's out you never know what it's going to throw at you but nonetheless crypto is risky you can lose what you put in this is frontier it's not for everyone but we're glad you're with us on the bankless journey thanks a lot.