ROLLUP: David Sold His ETH | EF Exodus | Hyperliquid’s Breakout | Stagflation Fears

TRANSCRIPT

Ryan Sean Adams:
[0:00] This is the first time we've had a Bankless podcast, and you are no longer holding Ether. So, from Bankless to ETHless, David. ETHless. What? Why? What changed your mind? What happened here? Bankless Nation, it is the third week of, wait, May? Yes, May. May. Hey, welcome to May. Third week. We've been here for three weeks. Bitcoin and ETH continue to look weak. Maybe that's why I don't remember. But that hasn't stopped some down market coins to reach some almost all-time highs. They are pumping. We got Zcash. We got Hype. We got Venice. I know, David, you've been following those. So we're going to take a look at these pockets of bullishness. Hype in particular, I think. They've got SpaceX pre-IPO. I think maybe OpenAI. They're getting a lot of, should we say, hype this week?

David Hoffman:
[0:52] Nice, nice. The Hyperliquid has certainly broken out further into mainstream, specifically because of how much there's attention there is on the pre-IPO markets that Hyperliquid has. I also, Ryan, I have some bear fuel for you.

Ryan Sean Adams:
[1:08] For you? Coming from you?

David Hoffman:
[1:10] Yeah, that macro bear fuel that I don't know if the broader macro market is pricing in. I'm not saying I'm bearish, but if things hit the fan, if shit hits the fan, I do want to say that I told you so.

Ryan Sean Adams:
[1:25] So you want to say both things. You want to give us, now you said the bull case. you want to give us the bear case you can always be right that's.

David Hoffman:
[1:30] Right that's right that's right that's right uh-huh

Ryan Sean Adams:
[1:32] Also, we got to talk about this exodus from the EF. It seems like every week more and more ETH researchers are resigning. Is this a trend? What's going on here? What insights do we have? Also, David, for the first time in history, talking about the bear case, you have entered this podcast owning no ETH.

David Hoffman:
[1:52] Sir. ETHless.

Ryan Sean Adams:
[1:53] Oh, my God. What happened? Yeah. Did that mark the bottom? I'm really hoping so.

David Hoffman:
[1:58] I also hope so. I also hope so.

Ryan Sean Adams:
[2:01] We got to discuss that. what your reasons are, and my position on things, and this new era of bankless that I think we've just jumped into.

David Hoffman:
[2:10] Before we get into all of that, a message from our friends and sponsors over.

Ryan Sean Adams:
[2:13] All right, give us the bear case. Last week, we talked about inflation numbers jumping up. We said April CPI inflation rose to 3.8%. We've got some more bearish action, I think, in the treasury market. Tell us what's going on here.

David Hoffman:
[2:29] Yeah, the word of the week is stagflation. It's a word that we all should send shivers down our spine. So downstream of the April CPI print rising to 3.8% highest it's been since like 2023, I think. The United States 10-year note hit 4.3%. That is the highest yield, bond yield on the 10-year since February of 2025.

Ryan Sean Adams:
[2:52] Wait, you say 4.3? I'm reading 4.63%.

David Hoffman:
[2:56] Excuse me, you are right. It is 4.63. 4.63, I misspoke. 4.63, which is the highest since February 2023. The 30-year note rose to 5.16, which is the highest since 2008. And this is not just United States bond market, Ryan. This is just all global bond market yields around the world are rising. Fiat is just inflationary. There's global inflation happening. This is because of oil prices. Oil prices are also up. They have not broken through the Iran wartime highs, but they continue to just push higher for longer. We're currently at $104 on Brent. That's the oil coming out of the Strait of Hormuz.

David Hoffman:
[3:41] The highs are $110, $112 to break all-time highs. So again, we're still below that, but things have just moved higher for longer, which is going to just further the input into inflation. Just another data point, Ryan, credit card delinquencies keep rising, which is now at the highest level since 2010. It's just one small data point amongst a pool of others. we can go to the poly market, Ryan and we can look at the decreasing likelihood of Fed rate cuts in 2026 over the last just couple weeks we went from a chance of zero hikes in 2026 going from 36% to almost 80% 70% is where we're at right now and so the market is pricing in no rate cuts Overall, things just don't look good from an inflation perspective, but then it always brings us back to what happens with the Strait of Hormuz. Donald Trump, once again, tweeted out, we are in the final stage of talks with Iran around a deal. How many times have we heard this?

Ryan Sean Adams:
[4:44] I think since the first week. Four.

David Hoffman:
[4:47] We have, like, yeah, there's been a peace deal on the table since, yeah, since the first moment.

Ryan Sean Adams:
[4:51] Peace was always an option.

David Hoffman:
[4:52] Peace was always an option. For some reason, I think the market is ascribing some amount of legitimacy to this. Like people are taking this one slightly seriously. There is a verbal statement from Trump that there is a letter of intent being drafted between Trump and Iran. I'll believe it when I see it. The polymarket odds on this are saying that this is not likely. There is a 55% chance that there is a peace deal by the end of July 31st, which is not anytime soon. And if you can imagine the straight up Hormuz stays closed until then, oil prices are probably going to break through all time highs. And I don't know, man, like I don't think the global economy can take 120, 130, 140 dollar oil. And according to Rory Johnson, who knows way more about oil than me, he's like, I don't understand why it's not at 180 dollars.

Ryan Sean Adams:
[5:42] He's saying 180 now? Yeah. I know when he came on the podcast, it was 150, but now he's saying 180?

David Hoffman:
[5:47] Yeah. And so all things come down to, will Iran relinquish the Strait of Hormuz? And I have no reason to understand why they would ever do that.

Ryan Sean Adams:
[5:58] Especially when the pain is increasing, right? Totally. I mean, they can look at charts.

David Hoffman:
[6:01] The plan is working.

Ryan Sean Adams:
[6:02] They can listen to the Bankless show and realize that 30-year treasuries are increasing to the highest level they've been since 2008.

David Hoffman:
[6:09] And they look at that and they're like, nice. pain. This is our retaliation against America.

Ryan Sean Adams:
[6:15] Exactly. And the longer they keep the straight close, the higher it goes, the higher CPI. Now, you used the stagflation word a little bit earlier. I actually hadn't seen that on the timeline, but I know this term comes up all of the time and it's often sort of a, yeah, it does strike fear in the hearts of investors and those monitoring the economy because it means we have negative growth. We're in kind of a recessionary type phase. And also we have inflation at the same time. Interesting. I'm not seeing the negative growth with recession. I mean, we've had a pretty strong year when it comes to kind of GDP. You're definitely seeing the inflation numbers. I think at least it seems like

Ryan Sean Adams:
[6:54] more the near-term fear is inflation. Let me show you some nightmare fuel on the inflation charts. This is a chart that I picked up from the DeFi report this week when I was talking to Michael. This is U.S. inflation, comparing the 1970s line chart to today. And if you just overlay these things.

David Hoffman:
[7:13] Okay? They overlay pretty well.

Ryan Sean Adams:
[7:15] They overlay pretty well in a concerning way. There was actually two tops to inflation during the historic 1970s kind of inflation. There was 1974 when we jumped all the way above 9%. But then there was another one in the early 1980s. That was the second top. There was a double top to inflation where we actually inflation went above 10% all the way up. Oh, my God. Why?

David Hoffman:
[7:40] Can you imagine 10% inflation?

Ryan Sean Adams:
[7:43] Yeah. I mean, can you imagine that? This chart is asking whether that could be in the future for us if there could be a double top. And the reason people are giving for the possibility of double top is, of course, the straight remains closed. but then also consumer sentiment, consumer expectations can almost cause inflation to rise. The first time we had inflation, you know, after COVID, people hadn't seen it in 40 years. This time they're anticipating it. And will that drive consumer behavior towards more inflationary tendencies? That could be a possibility. And all of this, and you have Treasury, you have Besant, and you have Warsh. And what are they going to do when they have over 100% debt to GDP and the interest payments keep going up as their yields are increasing, right? That's a rock and a hard place for Treasury and the Fed. And so the only way out, the only answer has been the long-term thesis of crypto, the long-term bankless thesis, which is fiat, you got to print the money to get out of this. Now, in the short run, that could be bearish for our risk-on assets, which crypto is kind of lumped in the risk-on category right now. Over the long run, scarce assets, alternatives to the fiat system have got to outperform. And this is an inflationary and money printing decade. aid you could just see it in the charts.

David Hoffman:
[9:04] This is kind of where i've concluded i think that it could just be short-term hard but debasement ultimately just benefits anyone like as you said it benefits all of crypto because we are scarce assets Maybe Bitcoin specifically, maybe there's idiosyncratic ways that the crypto industry responds to this. But man, I see a world where it's like short term difficult because of interest rates. But then 10% inflation, you know how much money we're going to print when we do that?

Ryan Sean Adams:
[9:36] Well, it could be the case that Warsh comes in and he's like, oh, inflation, it's just transitory. Remember when we were talking about transitory inflation because we have the deflationary force of AI. It's transitory. There'll be good news soon. Maybe the strait will reopen. So he might be able to kind of sweep this under the rug for some period of time. But I don't know. I think that the market forces here are pretty strong and consumers are expecting inflation and supply chains are being hit with it. I think we're in for an inflationary set of months, maybe years.

David Hoffman:
[10:10] When Kevin Warsh says AI is deflationary and this gives me room to cut rates, I don't know where he's getting off on that like i i kind of understand the logic but as a governor of the fed wait do

Ryan Sean Adams:
[10:25] You understand that the logic i mean the logic is right um you know the economy's humming and cost of services go down yeah right yeah.

David Hoffman:
[10:32] So productivity is up uh

Ryan Sean Adams:
[10:34] Health care costs decrease.

David Hoffman:
[10:36] Yes costs go down because because of ai yeah which is the the thought but we don't know dude. Like we don't know if that's what happens.

Ryan Sean Adams:
[10:48] And I don't see right now is 3.8% rising.

David Hoffman:
[10:51] Yeah. And like, I'm, I'm, that would be great if that happens, but it seems aspirational. And I don't think that a federal governor should be aspiring to, manifesting in order to create Fed policy, dude.

Ryan Sean Adams:
[11:06] No, you don't believe in manifesting?

David Hoffman:
[11:08] No, I do not believe in the Federal Reserve manifesting.

Ryan Sean Adams:
[11:12] We'll see. I mean, he hasn't gotten in yet, so we don't want to prejudge him, but definitely a tough place for the Fed and Treasury. I'm sure they have a way to get out of this one, but it's going to be more money printing.

David Hoffman:
[11:23] And the stock market reacted to everything that we're saying Friday through last Tuesday. Oh, yeah.

Ryan Sean Adams:
[11:28] We didn't start the episode with all-time highs, so we didn't get an all-time high in stocks.

David Hoffman:
[11:32] Yeah, no all-time high in the S&P. The all-time high was last Thursday, Friday. It was red at the end of Friday, Monday, Tuesday. And it was down like 2%. But now we're back up 1%. So we're less than 1% off of the all-time highs. And so the market is seeing everything that we're talking about. And it's like, I don't care yet. I don't care yet.

Ryan Sean Adams:
[11:53] It's all about the AI trade. I mean, I guess that's fueling all of this.

David Hoffman:
[11:58] Yeah, I guess.

Ryan Sean Adams:
[11:59] There are some pockets of bullishness in crypto, though. So blue chip assets, the Bitcoins of the world, the Ethereums of the world, not much movement to the upside, down on the weak. But there are a few things that are happening. Oh, we should mention strategy, MicroStrategy.

David Hoffman:
[12:15] Bought two billion of Bitcoin. Keeping Bitcoin afloat. Yeah. Keeping Bitcoin afloat.

Ryan Sean Adams:
[12:20] Thanks, Mike.

David Hoffman:
[12:20] That comes downstream to all of us.

Ryan Sean Adams:
[12:22] A little $2 billion donation.

David Hoffman:
[12:24] A little $2 billion. Yeah, so he bought something like $20 million of Bitcoin last week, and everyone was like, dude, why even bother announcing this? Yeah. But the following week, he gets $2 billion.

Ryan Sean Adams:
[12:36] So much money. That's crazy. Also, Bitmine, locking in that ETH target of 5%, they are on track, as you know, to hit 5% of all ETH by September, just over a year later from when he started Tom Lee almost has 5% of all the ETH did he buy some more last week?

David Hoffman:
[12:58] No he didn't this is just somebody extrapolating to where and when why is this Tom

Ryan Sean Adams:
[13:03] Lee working at.

David Hoffman:
[13:04] Starbucks? I don't know I don't

Ryan Sean Adams:
[13:06] Know oh he's handing me a latte.

David Hoffman:
[13:08] An ETH latte with the milk film shaped in the

Ryan Sean Adams:
[13:11] ETH prism here.

David Hoffman:
[13:13] Yeah beautiful what happens when he hits 5% because I feel like that's the big question for Bitmine like what happens next mission accomplished yeah mission accomplished he

Ryan Sean Adams:
[13:22] Did it but it's a.

David Hoffman:
[13:23] Company it's a company what are they gonna just stake ETH into the sunset look

Ryan Sean Adams:
[13:27] You just stake it and right now he's making like 300 million a year for just staking that ETH nice little yield.

David Hoffman:
[13:34] But he's also not selling that right what happens next what happens next what happens next that is a big question yeah

Ryan Sean Adams:
[13:44] Maybe Tom Lee will come in and help us fix the Ethereum Foundation a little bit. I don't know.

David Hoffman:
[13:48] That would be good. More to discuss later.

Ryan Sean Adams:
[13:51] But first, let's get to Hyperliquid, Zcash, and Venice. These are tokens in this crypto bear market that are actually up. They are breaking the trend line. You got some charts for us here. What are we looking at?

David Hoffman:
[14:04] Yeah, first, Hyperliquid, all-time high. New all-time high coming in. Oh, it's down a little bit. But it hit $61.50. That is a new all-time high for Hyperliquid What's the market cap here?

Ryan Sean Adams:
[14:15] Are we talking like $50 billion or something?

David Hoffman:
[14:17] There is a big dislocation between the market cap and fully diluted valuation of Hyperliquid Oh,

Ryan Sean Adams:
[14:22] By the way, it just surpassed on FDV Did you see this? Solana Hyperliquid surpassed Solana on FDV It's a little bit of rivalry going on there $56.5.

David Hoffman:
[14:30] Billion on the FDV Only $14 billion on the market cap So big dislocation there I'd actually like to learn a little bit more about what that dislocation is Oh,

Ryan Sean Adams:
[14:40] It's just tokens that haven't unlocked yet.

David Hoffman:
[14:43] Yeah, but like how and why? What's the nature of those unlocks? How quickly are those going to come unlocked? Like all the nuances there. You think so?

Ryan Sean Adams:
[14:50] Oh, yeah. I mean, Michael Nados got it in the TDR. He did a report on this. Of course he did. And I read up on it. Of course he did.

David Hoffman:
[14:57] Of course he did.

Ryan Sean Adams:
[14:58] But don't let that be a reason you're bearish with unlocks, right? Because that happens over time. And the here and now, we got what on the week? A 47% increase in price in the week?

David Hoffman:
[15:08] Yeah, 47% increase over 30 days. 40% increase in the last week. There has been particular momentum behind Hyperliquid in the last week. We'll talk about that in a second. Zcash up 25% as well this week, knocking on all-time highs. Not quite at all-time highs, but knocking on all-time highs.

Ryan Sean Adams:
[15:25] All-time highs in a bear market? I thought Bitcoin was supposed to lead.

David Hoffman:
[15:29] Yeah, no, no. There has been idiosyncratic moves down market coins. Yeah, you're right. We don't really see firm all-time highs. We are. That's what we are. And also Venice, VVV, the private AI inference application on base, also new all time highs.

Ryan Sean Adams:
[15:47] That's not so surprising to me. So I could I know we're going to talk about Hyperliquid more, but obviously that's some kind of perps. It's perps season IPOs. You get stocks. It's it's kind of not necessarily purely correlated to crypto. Right. And then you got Venice, which is part of the AI trade and picking up traction and like pretty amazing private AI. zcash is the truly idiosyncratic thing because it is a quote-unquote altcoin it literally is an alternative literally an altcoin to bitcoin yes okay it's literally a.

David Hoffman:
[16:17] Fork of bitcoin

Ryan Sean Adams:
[16:17] No it's not yeah yeah no it's it's not a fork of bitcoin it is what.

David Hoffman:
[16:23] Yeah dude it's a it's a 21 million hard cap

Ryan Sean Adams:
[16:26] No i know they forked the supply and such but it's not like it they didn't actually the Blockchain did not fork.

David Hoffman:
[16:31] It's a code base fork.

Ryan Sean Adams:
[16:32] Wait, what? They forked the, it's actually a fork?

David Hoffman:
[16:37] I don't know about that. It's not a blockchain fork, but they took the Bitcoin code base and they forked it to make Zcash.

Ryan Sean Adams:
[16:43] I know they forked, obviously, the supply schedule and some of those details, but the whole code base? I mean, it's all... Pretty sure. Yeah. Pretty sure. Fact check, David. Okay. We're going to fact check and.

David Hoffman:
[16:55] Come back to this.

Ryan Sean Adams:
[16:56] Didn't you just do a podcast episode on Zcash?

David Hoffman:
[16:59] Yes, which is where I got this from.

Ryan Sean Adams:
[17:00] Oh, really? Okay. Well, maybe. I'm out of the loop then, quite possibly.

David Hoffman:
[17:04] Is Zcash a fork of Bitcoin? Yes. Zcash is a fork of the Bitcoin code base. Launched in 2016, it was developed by taking the original Bitcoin core software and altering it to introduce enhanced privacy features. Yeah. It's a fork of Bitcoin.

Ryan Sean Adams:
[17:14] I just found that out. Yeah. And so they forked it and then they added the ZK stuff.

David Hoffman:
[17:19] You got to keep on listening to Bankless.

Ryan Sean Adams:
[17:20] Yeah. I guess I do. All right. So that I guess my point is that is the truly idiosyncratic thing. Like it's not supposed to happen in a bear market that some altcoin is like drastically outperforming. Actually, have you looked at the Bitcoin Zcash ratio, the pair here?

David Hoffman:
[17:38] Oh, that's got to be at all time highs. It's got to be, right? It's got to be at all time highs.

Ryan Sean Adams:
[17:42] Somebody can go look at that.

David Hoffman:
[17:42] Not even close.

Ryan Sean Adams:
[17:43] What do you think that means?

David Hoffman:
[17:45] Well, this is also why Venice is pumping. Privacy is in right now. You also see Railgun, which is a more niche privacy project on Ethereum, and also Veil, a more niche privacy product on base. Those tokens are also doing well. Privacy is in, dude. Privacy is in.

Ryan Sean Adams:
[18:01] Well, that's great. I'm very glad it's in. It needs to be in. We need more privacy. David, we got more on hype coming up. And what else?

David Hoffman:
[18:09] After we're done talking about the hyperliquid momentum, we'll talk about the incoming potentially biggest, most historic IPO season ever. We got SpaceX who filed this week, OpenAI on the cusp of filing. And then there are even more after that. And then we're going to talk about Wintermute, getting into vaults and the SEC framework that got teased about tokenized securities. We're going to talk about all of this and more. But first, a message from these sponsors that make this show possible.

Ryan Sean Adams:
[18:33] Up 47% on the month. Why is hype so strong? Here's a tweet from Matt Hogan. Hyperliquid is not a crypto app. It's a super app. It's not targeting the $3 trillion crypto economy. It's targeting the $600 trillion global asset market. That's all the trillions. I think that's the tam of just about everything, Matt. He said investors are valuing it as one thing. It's the other. The other, he means the bigger number.

David Hoffman:
[18:59] The bigger number, yes. The bigger number.

Ryan Sean Adams:
[19:01] And Bitwise is pretty bullish on hype on the week. There was some Bitwise news, right?

David Hoffman:
[19:06] Yeah, they launched their hyperliquid ETF last week. We covered that briefly. They're taking 10% of the fees from that ETF, and they are just buying hype with it and holding it on the Bitwise balance sheet, just Bitwise treasury. So just an alignment statement, a marketing statement from Bitwise. that obviously the Hyperliquid community really, really likes. There's only two ETFs. Bitwise has one and then 21Shares has the other. They are doing some pretty okay volumes to start. And so it's definitely penetrating into the TradFi circles pretty well. Ryan, do you follow this account, Geiger Capital?

Ryan Sean Adams:
[19:37] I've seen Geiger Capital, usually in meme form or some chart.

David Hoffman:
[19:41] He's a decently well-informed TradFi kind of FinTwit investor, but really his strengths are FinTwit memes. and he tweeted out hyper liquid first time I've seen him tweet about anything about hyper liquid and this person is just like the meme guy of all of FinTwit tweeting out hyper liquid now Why? Why is it? Where is this attention coming from? First, it's worth noting that real world asset volume on Hyperliquid is breaching 60%. And so it's servicing the normal economy. It's servicing that $600 trillion that Matt Hogan said. It's also got, you know, Bitcoin perps, Solana perps, Ether perps, Dogecoin perps. It's got all the normal stuff. All the normal stuff. Our normal stuff. Our normal stuff. Yeah. But really, the growth of Hyperliquid has come from just real-world assets. It launched oil markets. It launched the S&P 500 with a real partnership with the actual S&P 500. It launched gold and silver during their gold and silver mania of a couple months ago, and that's where the dominant volume has come on. And now the new thing, the thing that has pushed a ton of momentum into it in the last couple weeks is the pre-IPO stonks.

Ryan Sean Adams:
[20:53] Because you can't get these anywhere.

David Hoffman:
[20:55] Because you can't get these anywhere. And so ahead of IPO filings, really, this is TradeXYZ, which is the dominant market deployer on Hyperliquid. They create a pre-IPO market. And allow people to trade it, which is why you can trade SpaceX on Hyperliquid ahead of the IPO, which is the most hyped IPO, the biggest IPO in history. And so Hyperliquid is getting noticed by TradFi by doing a service that TradFi doesn't have. And so it's getting its momentum.

Ryan Sean Adams:
[21:24] It's also a source for price discovery for these assets where we don't really know where they're valued. I mean, the last valuation was some sort of private round, maybe somewhat opaque, right? And now price discovery for some of the world's largest companies and these companies that are getting ready to IPO is happening first. Where? On Hyperliquid in this market. So that's price discovery 24-7 like on crypto rails for assets that just aren't available anywhere else.

David Hoffman:
[21:54] There was a tweet that rocked around the Hyperliquid community of somebody doing the Cerebris. there was the IPO that happened last week, the NVIDIA competitor.

Ryan Sean Adams:
[22:04] Oh, right, we talked about this, yeah.

David Hoffman:
[22:05] Yeah, and somebody, there was a, like, on the Wall Street trading floor, there was somebody from the, I don't know if I'm pronouncing the company right, but the Cerebris company was like, yo, congratulations to, like, the Cerebris team, and they had computers in the background, and there was very clearly the Hyperliquid interface up on the trading floor of Wall Street. Right. Yeah, and so you know people are using Hyperliquid to determine prices, to look at prices.

Ryan Sean Adams:
[22:28] And this is SpaceX last week, I believe, officially filed their S1 registration statement with the SEC ahead of this IPO. Their revenue is about $5 billion. But the value of this, the current value in Hyperliquid, is it like north of $1.8 trillion, something like this?

David Hoffman:
[22:46] I mean, that's what I thought the IPO price was. It was like $1.7 trillion or something.

Ryan Sean Adams:
[22:51] That's the, okay. Yeah. Okay, so I was kind of curious. I was thinking about this. With Hyperliquid, they're releasing an asset. called SpaceX. It's SpaceX price exposure. You're definitely, this is a synthetic. So this is a perpetual of some kind. You definitely don't, if you buy this, you don't own SpaceX equity. Okay. You're not an equity holder, but you do have price exposure. But the question is, all of the other perps on Hyperliquid, right? Bitcoin has spot price. ETH has spot price. There's all some sort of reference spot price oracle to refer to. How do you get a reference point for the price of SpaceX if there's no spot market? It doesn't even exist in the real world. What is this thing? What are you buying if you buy SpaceX on Hyperliquid?

David Hoffman:
[23:35] That's exactly why this is an innovation. This is an innovation is that how do you find the price when there is nothing to refer to? And so just a small nuance, it's not Hyperliquid that's deploying or like listing SpaceX. It's TradeXYZ or any HIP3 deployer. So it's like a third party who's a service provider on Hyperliquid. And so they just go and they do a little bit of due diligence. They look at the last funding round of SpaceX, how much that was valued at. They look at some documentation, the 409As, the secondary bids. They kind of like, you know, lick their finger, stick it up in the air and be like, seems about 1.7 billion. And so we'll pick a number that seems correct. And then that's the anchor number. That's the reference number. and then traders can trade around that number. And as perps work, if the price that traders are trading around that number dislocates, the yields, the interest rates go up. But Hyperliquid and the pre-market IPO platforms, they dampen the volatility or the severity of the yields if it dislocates too far because they want it to dislocate away from

David Hoffman:
[24:49] The anchor price, because that is the price discovery. And so this is in contrast to Bitcoin, Ether, or anything with an actual known oracle where the interest rate, the yields paid by the people going long and short are set off by how many people are going long and short. And so the yields can get really high if it's too one-sided. The interest rates that's charged to traders stays pretty manageable, which allows for the price discovery. And so this is all before the actual IPO, actual moment. Traders are free to push the price around this arbitrary number set in stone by whoever is deploying the market. But then there is the moment of the IPO. And then that is when kind of like the Indiana Jones things happen where they hot swap the actual anchor price. So the former anchor price, the arbitrary number is just discarded. and then now an actual oracle price of the actually trading equity takes over and then it kind of resumes being a normally more traditional perpetual. Did I explain that okay?

Ryan Sean Adams:
[25:51] You did, yeah. And so before IPO, it's kind of this reference number set by Hyperliquid. After IPO, the spot market becomes kind of the reference oracle. And the pricing around that, provided you have enough liquidity and Hyperliquid has shown that it does, seems to be pretty close, pretty accurate to what the actual market would price these things at it all works i guess even better than you you think it would like work on on paper because it's yeah it's.

David Hoffman:
[26:19] Because there's literally trading nothing before the ipo and then they're trading around an oracle price you're

Ryan Sean Adams:
[26:25] Trading nothing but you are trading something you're trading what investors demand and supply for the ipo so you're effectively you're finding a market price for this thing yeah that's why it But then.

David Hoffman:
[26:36] Also there's the mechanism of in the future, it will be anchored to the Oracle so that you know that it will settle.

Ryan Sean Adams:
[26:44] It's actually incredible. And I think Tradfly is probably looking at this and being like, oh, shoot, we should have thought of that.

David Hoffman:
[26:50] We do have to give a tip of the hat to Lighter, the purpose platform on Ethereum. They actually listed SpaceX two weeks ago.

Ryan Sean Adams:
[26:58] Oh, they did?

David Hoffman:
[26:59] Yeah, they were way ahead of the curve here.

Ryan Sean Adams:
[27:00] Well, actually, so did Hyperliquid, right? It's been available.

David Hoffman:
[27:03] No, Hyperliquid just launched it like a couple days ago. Lighter beat them by like two weeks.

Ryan Sean Adams:
[27:07] Yeah, I mean, it's fantastic. We're innovating here in crypto. What's so striking to me about this too, David, is this is some of the original things we've been excited about in DeFi for a long time. It's happening outside of the platforms and the apps that were originated here. But this is like Kane Warwick synthetics on everything. We're in a different regulatory regime where apparently this is okay. Now we have the ability to scale this. We have the kind of user demand. And it strikes me that it's so much about sometimes getting these things right is so much about timing. You need all of the prerequisite infrastructure and regulatory apparatus in order to make the thing happen. But the idea has been around for years.

David Hoffman:
[27:54] Synthetics was early.

Ryan Sean Adams:
[27:55] Synthetics, yeah. Synthetics was early.

David Hoffman:
[27:57] So that's the SpaceX IPO. Again, going to be the biggest IPO of all time, $1.7 billion. They're trying to raise something like $1.7 trillion out of the gate. it's already going to be like a top Top 10, top 20 company, which is just wild. Fun fact, Ryan, did you know SpaceX holds almost 19,000 Bitcoin?

Ryan Sean Adams:
[28:15] I didn't. Wow, I knew Tesla did. I guess all Elon companies own a little bit of Bitcoin in the balance sheet.

David Hoffman:
[28:20] Yeah, yeah. I actually don't know how SpaceX got so much Bitcoin. That's a lot of Bitcoin. That's $1.3 billion of Bitcoin.

Ryan Sean Adams:
[28:26] Oh, yeah. That's a lot of Bitcoin. I mean, we're not talking Michael Saylor levels. That's probably the second largest debt, though, for Bitcoin, right?

David Hoffman:
[28:32] Dude, it's more Bitcoin than I got.

Ryan Sean Adams:
[28:33] Something like that. Yeah.

David Hoffman:
[28:35] But then, okay, so it's not just SpaceX. It's also OpenAI. OpenAI is rumored to be filing potentially as early as this week for their IPO. And then also, you know, just Anthropic and other companies are just shortly thereafter, which why people are calling it the most historic IPO season of all time, just in terms of size, which is why Hyperliquist positioning here is particularly strong. Adding to the momentum, Ryan, the SEC this week hinted at releasing a framework for trading tokenized or digital versions of securities. Yeah. There's a rumor that it was leaked somehow that the SEC is expected to release an innovation exemption for tokenized stocks, potentially as soon as this week, which will be today or tomorrow. So we should be hearing about this pretty soon.

Ryan Sean Adams:
[29:20] Such a different era of the SEC, right? Like with Gensler's SEC, you would have had office hours with Gary Post where he would have a video wagging his finger at you and saying that.

David Hoffman:
[29:30] Don't buy those illegal securities.

Ryan Sean Adams:
[29:32] Don't believe those SpaceX products.

David Hoffman:
[29:33] Those aren't real.

Ryan Sean Adams:
[29:34] It's not the real thing. You can only get the real thing from an SEC regulated trading market, whatever. And now the SEC is much more embracing, encouraging, certainly not preventing

Ryan Sean Adams:
[29:46] some of this free market discovery. uh david there was some news about winter mute as well opening vaults the vault theme is a pretty big deal i think this is um on morpho tell us about this.

David Hoffman:
[30:00] Yeah when we had a matt hogan from bitwise on the end of last year to do a predictions episode this is one of their big predictions was vaults are we going to become a very big deal uh winter mute probably crypto's biggest market maker is getting into a new line of business, brand new line of business, a new DeFi vault curation business. They have two vaults that they are deploying on Morpho, USDC Prime and USD Select. This is just two different levels of risk appetite. One's less aggressive. Prime is less aggressive at 4% to 5% is their target, and Select is more aggressive at 5% to 8%. Which do you prefer? Obvious.

Ryan Sean Adams:
[30:37] More aggressive?

David Hoffman:
[30:38] I'm not here for 8% yell at my USDC, dude.

Ryan Sean Adams:
[30:41] Wake David up when you have an ultra hardcore aggressive.

David Hoffman:
[30:45] Wake me up for double digits anyway

Ryan Sean Adams:
[30:47] It's great for less aggressive investors than you and this is on USDC so it's a stablecoin type product right yes.

David Hoffman:
[30:56] Yes yeah that's right that's right yeah

Ryan Sean Adams:
[30:59] So what's interesting about this is they're doing it in Morpho right so it seems to be these companies this is not exactly Wintermute It's what, a subsidiary? No. Well, today we're launching Armitage. So they're doing this under a separate brand, I suppose. But they're bringing all of their market-making expertise and risk management skills to these vaults. So rather than just throw...

Ryan Sean Adams:
[31:24] Stable coins into a vault from somebody who you don't know or is part of some governance form or something else. It very much feels like professionals taking over the management and the accountability and the risk with a brand name of these vaults, right? So Bitwise did this earlier in the year with a Bitwise vault. This is a press release. Bitwise expands on-chain solutions with non-custodial vault curation also on Morpho. Theirs was a 6% APY. They have a whole team around this, A whole risk management team that you can just be like, these guys have looked at what's going in the vault, how the yield is generated. It's got the Bitwise brand name. We're doing this, you know, we're dotting all the I's and crossing all the T's. And so this is implied something you can trust because it's the Bitwise brand is being staked on it. I like that model. It's a cool model. It's still a smart contract, but there's some reputational skin in the game from risk managers so that you have a bit of assurance that you're not just like chucking your money into something that who knows where the yield is coming from, right? Some like DeFi farm somewhere that's going to get hacked or going to get rugged.

Ryan Sean Adams:
[32:33] The professionals are on the scenes with these vaults. I think bitwise, now they're 15 billion in assets under management. So they're a pretty large and upcoming financial company, quite honestly. How long until BlackRock does this? Or Fidelity? Like all of the... I think Matt Hogan is exactly right. Like this is a big move. I think vaults are going to be a big deal this year and then into the next year.

David Hoffman:
[32:58] Well, I enjoy seeing DeFi evolve and get more sophisticated and mature. I can't help to feel a little bit sad because the juxtaposition between the hacks on Aave and DeFi native stuff in some of the OG DeFi platforms The juxtaposition between that and then these legal entity managed financial structured products. There's just a gap there.

Ryan Sean Adams:
[33:29] Oh, do you miss the yam farms? Do you remember that? Yeah.

David Hoffman:
[33:34] That's not exactly what I was going for, but I think that's a different topic. I do miss the yams.

Ryan Sean Adams:
[33:39] What was that era?

David Hoffman:
[33:41] That was DeFi summer.

Ryan Sean Adams:
[33:43] Yeah. You would just put your stable coins in some vault. We had no idea where the yield was coming from. It was double digits, sometimes triple digits, the way you like it, David. But it was not sustainable. I think that's something.

David Hoffman:
[33:55] Different because the reason why it wasn't sustainable was because people were speculating on a token called YAMS, which had no plan whatsoever. I'm just talking about putting USDC and Aave. I was listening to Cain Warwick on his podcast, on Laura Shin's platform. He's like, I feel so stressed out about putting my money into DeFi right now.

Ryan Sean Adams:
[34:18] Just hacks, you're talking about.

David Hoffman:
[34:19] Just hacks, just hacks. Yeah, we gotta figure out the hack thing. DeFi risk, had the hack thing. Yeah, and then like, I look at Bitwise's vault strategy and they're like, that is a completely valid answer to this problem. Why is it a valid answer? Because there's someone with accountability. There's a legal entity with accountability. Not really the bankless, like true DeFi, by CodeNotKing's philosophy. And so again, I like that this is growing. I like things that grow. This is clearly working. This is clearly a solution here. I can't help to feel like Yeah, I think you get what I'm saying.

Ryan Sean Adams:
[34:54] I get what you're saying. But you know what I mean? It's still permissionless. Anyone can spin this up. It's nice to have state-backed reputation. It's nice to have somebody who's looking where the yields are coming from and giving investors that level of assurance. I'm not sure how they're handling smart contract risk. That might be another question. And that might be required before some of the big, big guys, the Fidelities and Black Rocks come aboard.

Ryan Sean Adams:
[35:18] David, the Trump administration is investing $2 billion in quantum computing companies right now. I know quantum has been a big theme for us this year, as we've talked about the effect of quantum computing on all of our cryptography, including Bitcoin. Now Trump, the U.S. government, is spending $2 billion in this area. So $1 billion going to IBM, another to a chip maker, some to some startups. By the way, I was looking at where does this funding come from? Where do you think it comes from?

David Hoffman:
[35:52] Uh, taxpayers?

Ryan Sean Adams:
[35:54] Yeah, that's right. It's from taxpayers. More specifically, it's Biden's 2022 CHIPS Act. You know, Trump's kind of allocating some of that and throwing that at quantum and putting his name on it.

David Hoffman:
[36:07] That is humorous to me.

Ryan Sean Adams:
[36:08] Yeah. Do you support this? So, like, I think in our agenda somewhere it said this was a grant. It's an investment.

David Hoffman:
[36:15] It's an investment. The U.S.

Ryan Sean Adams:
[36:16] Government owns these companies. They own equity. They're investing.

David Hoffman:
[36:19] They get an equity stake. It's interesting that they use the word grant, but then they get equity.

Ryan Sean Adams:
[36:23] It's an investment. Yeah, they are investors. So we are investors. You're a taxpayer in the U.S. You're an investor. You own some of this. How do you feel about that? You think the government should be doing this?

David Hoffman:
[36:33] Yeah. So what's the rationale here?

Ryan Sean Adams:
[36:36] Industrial policy, right?

David Hoffman:
[36:38] Industrial policy, but what he is investing and what the White House has invested in, it's semiconductors with Intel. It's chips, critically important in the world of AI. It's minerals. Also critically important in the world of drones.

Ryan Sean Adams:
[36:51] You're talking about previous investments, not this quantum one, just previous things.

David Hoffman:
[36:54] Yeah, this is actually not the first or second or even the third time they've done this. This is the fourth time they've done this. Yeah. And like quantum is just the new tech stack that the government is deeming a national security interest that they need to invest in and also own and govern over. So critical minerals, they also did this. There's six different critical mineral companies that the White House owns now. There's a nuclear energy company. There's semiconductors, as I said, with Intel.

Ryan Sean Adams:
[37:19] And Trump is like up on his Intel.

David Hoffman:
[37:21] He's up so big. He's like up 5X on it. He's up so big on all of them. Even all of the quantum companies, like IBM is up 4%, and that's the one that's up the least. Like the other eight companies that he invested in are up between 7% and 10%. So like anytime Donald Trump dumps money into these things, these things go up, obviously, because they have like regulatory protection because they're owned by the government. It's like, as far as being bullish goes, it's a pretty good owner to have. But like, how do I, how do you feel about the government politics having corporate governance over?

Ryan Sean Adams:
[37:52] Yeah, this is a libertarian, right? This is not like free market. Let the free market play out. This is industrial policy. This is selecting winners. This is, I don't know what else this is. This is also a vector for corruption quite possibly, right? Give the right person a bribe, find the right contact. They will invest in your company. Everyone wins. Like there's some challenges. There's some like bad sides to it as well.

David Hoffman:
[38:15] Yeah. This is basically explicitly the China model. This is what China does. They effectively own all of the companies inside of China just because they govern everything. And so this starts to look a little bit like that, which probably is a good play because China's been winning. They are efficient. I don't know if it's the long-term. I'm worried about it eroding everything. Yeah. At least in the short term, I think is a good move.

Ryan Sean Adams:
[38:47] I need to do some study up on industrial policy in governments and what I think, because I don't really have a strong opinion on this yet. And I would like to have a really strong opinion on this that I can help people.

David Hoffman:
[39:00] What does your gut say? What does your gut say?

Ryan Sean Adams:
[39:04] Probably necessary, but the trade-offs should be acknowledged and we should be careful so that particularly the corruption vector and the loss of private competitiveness, those are the things I sort of worry about. But there's kind of the idea of USA, Inc.

David Hoffman:
[39:25] America first, yeah. We're kind of moving.

Ryan Sean Adams:
[39:27] Well, no, I mean like the United States is a corporation now, right? Like it kind of is, but it, you know, anyway, I have some hangups with it, but like maybe, maybe necessary, but we've got to have some moderation around it. That's all I've come to. I need to give it more thought and to really have an opinion on it.

David Hoffman:
[39:47] A thread we'll continue to pull on.

Ryan Sean Adams:
[39:49] Blockchain.com has filed for IPO. So they're doing it, David. Also, Ronin. You remember the gaming chain? Yep. They have now completed their migration to Ethereum L2. I feel like we were talking about that maybe six weeks ago. Anyway, that happened. Here's the big thing for me. because they're on a layer two. This has been a big bankless theme. They actually did the thing where they reduced inflation from 20% a year to less than 1% a year, their token issuance. And they're taking those savings and they're putting it into their Ronin treasury. So David, they're doing the thing where they are saving issuance by outsourcing that to Ethereum effectively, outsourcing their security to Ethereum and they're picking up the proceeds. I haven't seen many.

David Hoffman:
[40:41] When you say picking up the proceeds, what are those proceeds?

Ryan Sean Adams:
[40:44] Well, inflation of token economics goes for 20%.

David Hoffman:
[40:47] They're issuing their token less? Yeah. So they're just spending less on their token?

Ryan Sean Adams:
[40:52] So they were spending 20% per year and now they're spending less than 1%. That's the cost savings. That's the benefit.

David Hoffman:
[40:58] I saw somebody's tweet, which they were making some bearish Ethereum layer 2 tweet and they're like, look, only base is the only layer two making above... like a million dollars a week or something or a day or something. And like, you know, Arbitrum is at like 600,000. I think it was a month. It was like $600,000.

Ryan Sean Adams:
[41:17] Why, how much are they saving in issuance?

David Hoffman:
[41:19] And then you, in that same screenshot that they were tweeting out, there was like a margin column and all of them are like 97% margin. Yeah. And they're like, whatever, dude. It's a great business. Oh, boo-hoo, we're making $700,000 a month and it costs us nothing.

Ryan Sean Adams:
[41:35] Yeah, exactly. Anyway, Ronan did the thing that we've talked about, one of the virtues of the L2. Few have done this, but Ronan did, and that deserves some congratulations. David, more to discuss, including, I think the next section is all about Ethereum, the EF talent flight. Is everything okay over there? We got to look at that.

David Hoffman:
[41:56] What's going on at the EF?

Ryan Sean Adams:
[41:57] Yeah, also, what's going on at Bankless, huh? A new era. What's going on with David?

David Hoffman:
[42:01] Why are those happening at the same time?

Ryan Sean Adams:
[42:02] We'll discuss all this and more, but before we do, we want to thank the sponsors

Ryan Sean Adams:
[42:06] that made this episode possible.

David Hoffman:
[42:08] Ryan, have you noticed people at the EF tweeting out, hey, I'm no longer at the EF anymore?

Ryan Sean Adams:
[42:16] Yeah, it usually starts like, after X amount of years, I am announcing that I am, and then they- Departing the EF. Departing, yeah. There's been a lot of those.

David Hoffman:
[42:25] There's been a lot of those. The most recent one, Carl Beek, after seven incredible years, I've decided that Friday, May 29th, will be my last day at the Ethereum Foundation. Carl led the KGZ ceremony, which enabled Denkun, Dengsharding, all this good stuff.

Ryan Sean Adams:
[42:41] The kids don't remember that.

David Hoffman:
[42:42] Yeah, it's been forever since I've said that.

Ryan Sean Adams:
[42:44] KZG, they don't remember that.

David Hoffman:
[42:46] Yeah. But let's just kind of quickly go back in time a little bit. We can go back to February when Tamash stepped down as the executive director. In April, we lost Josh Stark and Trent Van Epps. In May, we lost Barnaby, Tim Baco, and Alex Stokes from the Protocol Cluster Leadership.

Ryan Sean Adams:
[43:05] Those are some big names. Tim Baco shipped EIP-1559.

David Hoffman:
[43:09] Dude.

Ryan Sean Adams:
[43:09] If you know any of the names that we said, it takes a lot for an E3. Most of the work that EF researchers do is behind the scenes. You'll never hear about them. They're like unsung heroes. If you recognize a name out of the list that David just said, that means they're kind of a big deal.

David Hoffman:
[43:26] Yeah. Barnaby, six plus years at the EF. Tim Baco was there since 2020 or 2021 or something when he just like saw EIP 1559 and be like, I'll grab a shovel and do that. Alex Stokes has been at the EF. He was working on proof of stake since forever.

Ryan Sean Adams:
[43:44] You know what? I've been terrified of like, he was set notifications on for Justin Drake's Twitter.

David Hoffman:
[43:50] Justin Drake will not. I don't think so.

Ryan Sean Adams:
[43:52] Can you imagine?

David Hoffman:
[43:53] I cannot imagine. I don't think he is. let's not talk about that um and then and then the the most recent ones carl beak and uh julian ma carl seven years at the ef uh julian ma four years uh built fossil in the fast confirmation rule all like pretty critical infrastructure for ethereum um there's

Ryan Sean Adams:
[44:12] More too we've heard of more.

David Hoffman:
[44:14] There are more there are more um there are about as many as we know there are about as many as we know is is kind of like what I'll say why

Ryan Sean Adams:
[44:24] Are they leaving.

David Hoffman:
[44:28] That is up for interpretation,

Ryan Sean Adams:
[44:31] I think. Can I give you some interpretations that I've seen and see if you resonate with them? Please do. So it's not your words yet. So one interpretation is, do you remember the loyalty pledge?

David Hoffman:
[44:44] I think this is the big one. Yeah, so this was the... This spun off from the mandate.

Ryan Sean Adams:
[44:49] The mandate. So the Theorem Foundation released a mandate where they talked about emphasizing crops, which stands for, let's test our knowledge, censorship resistance, open source, privacy, and S. Oh, P, privacy. And then, uh, censorship, open source, privacy, is there an S? God, what's the S?

David Hoffman:
[45:12] Peasureship, resistance, open source privacy, and not security.

Ryan Sean Adams:
[45:17] Maybe it is.

David Hoffman:
[45:18] No, because we already have security. I don't know.

Ryan Sean Adams:
[45:20] Okay. So there's an S too.

David Hoffman:
[45:22] We're missing an S.

Ryan Sean Adams:
[45:22] Embarrassing. I guess we wouldn't have passed as employees at the EF. Because apparently there was a mandate to sign this. That was the rumor anyway. And so this is DeFi Ignis saying that, you know, people that didn't want to sign the mandate for whatever reason, didn't want to be forced to sign the mandate, they were leaving. And that's maybe the reason for some of these departures, at least. So the loyalty pledge was kind of controversial.

David Hoffman:
[45:54] Yeah.

Ryan Sean Adams:
[45:54] That's one reason I've seen. Other reasons, of course, EF researchers are notoriously underpaid. there's other opportunities for them um you know manage there's been management, concerns at the ef right like how how well is it managed how well is it governed we've heard rumors of that over time so anyway there's a there's a number of things that uh you could point to as as reasons what what do you why do you think they're leaving yeah.

David Hoffman:
[46:24] I don't know i'm I'm sure being underpaid doesn't help. Like there's that famous Vitalik quote that he said, like if people aren't complaining about how much they are paid, then they are paid too much. And so like if people should be complaining about how much they are underpaid by, I'm sure that doesn't help. But like nonetheless, EF people have been working at the EF for six plus years, seven plus years. And so I don't know.

Ryan Sean Adams:
[46:48] That's just another reason. That's a long time. It's a long time to work anywhere. And so there's just a natural reason for this, which is just like, hey, people have been doing something for a long time and they want to change. They want to do something new.

David Hoffman:
[47:00] Yeah, but that answer to the question is why it's happening all at once?

Ryan Sean Adams:
[47:03] You're right. So why is it happening all at once?

David Hoffman:
[47:05] Why is it happening all at once? Um... I think morale is low. I think it is downstream of the leadership hammering the importance of this mandate, like being a little totalitarian about the mandate and saying this is the mandate, sign it.

Ryan Sean Adams:
[47:28] It's funny though, why would the mandate be a center point for this? Because everyone who works at the EF, everyone who supports Ethereum, like censorship resistance, open source privacy, S, sign me up.

David Hoffman:
[47:41] S is security.

Ryan Sean Adams:
[47:42] Thank you. I knew it. We knew it.

David Hoffman:
[47:44] We knew it. We did get that one right.

Ryan Sean Adams:
[47:46] Okay, but isn't everyone on board with that already? If you work at the EF, if you care about Ethereum, of course. Crops is the thing we've been doing. And thanks to the mandate, there's an acronym for it.

David Hoffman:
[47:57] Yeah. The mandate's different, though, because Crops... Crops is becoming like the end, the means to the end, like it's the end, whereas other people like me and maybe also you is like crops is a means to a greater end and that greater end is like growth and adoption. And the mandate, my interpretation of the mandate has always been that it was a dog whistle to say that we are not actually doing the growth thing and we're actually not doing.

Ryan Sean Adams:
[48:27] We're not prioritizing the growth thing. If it happens, it happens.

David Hoffman:
[48:30] If it happens, it happens, but we're not, we don't care about it. Um, and, and I think maybe making that explicit and doing this whole like sign the mandate thing just was a big turnoff.

Ryan Sean Adams:
[48:39] I think that, okay. So you and I don't know, we have no particular insight. The Ethereum foundation is a fantastic organization, by the way, in all sorts of ways is the reason Ethereum is what it is today. Um, we're not insiders, so we don't know, but I do think you're right about that. Like, I do think that there's a pattern to these departures and almost like kind of a, an organization to them. They're not random. They're not one-offs. I think there is a contingent of the folks who are leaving, it seems to me, who are leaving because they don't want Ethereum to just be a niche project that's focusing on crops.

David Hoffman:
[49:17] Not just a sanctuary technology.

Ryan Sean Adams:
[49:18] Right. So they care about building Ethereum as a world financial system, for instance, and not just a, it's crops. And if we build it, they will come. I think the EF has really focused on the protocol only. And the protocol is incredibly important.

Ryan Sean Adams:
[49:38] But there's also like... an ecosystem around this, right? Like coordination for interoperability among all of the L2s. And I think some of the departures are maybe frustrated that that hasn't happened. Also, it's just like the tone of the EF is kind of philosopher-ish. It's kind of academic. And it's long-term. It's kind of like the galaxy brain, a thousand year time horizon. In fact, it was like the mandate was a pledge for a thousand years, right? And I know that's somewhat tongue-in-cheek but I think some of the defectors are just like the people departing are like hey but what are we shipping now what about I'm alive today yeah and we want this to be relevant like next year and the year after in our lifetimes and so not that Ethereum has failed on that entirely but it hasn't succeeded in all of the ways that I think many of the believers thought it could and thought it should and there's a number of people who said this I thought the EF was supposed to do all of these things. Turn Ethereum into a global financial system, be kind of a padding for the ecosystem, work up the stack, not just at the protocol layer. I think my take though, David, is the EF is what it is. You know, they are, guarding the soul of Ethereum. They're doing this crops thing. That is a useful function. They can protect Ethereum from corruption.

Ryan Sean Adams:
[50:58] And this is kind of the focus. A thing for me is just like, I feel like the decisions for addition through subtraction and max decentralization, some of the structuralistness you see, the focus on crops, they're protecting Ethereum from corruption that you see with many other chains and many other crypto systems. But they're not protecting ethereum from irrelevance right and that to me this is something you and i have talked about but that to me is is at this moment of time actually the bigger threat because what if you build this max ivory tower decentralized system but like it.

David Hoffman:
[51:31] Has a few

Ryan Sean Adams:
[51:32] Tens of thousands of users only yeah what have you actually achieved yeah and that i think is what some of the defectors are maybe seeing and why there's some departure jadedness with the EF direction. But I guess my point is, I don't think the EF will ever get us that. I think what Ethereum needs is new institutions kind of step up and fill those gaps. Let the EF protect us, do the sole thing, preserve, you know, keep us max crops and save us from corruption. Other organizations need to work on the real-world adoption.

David Hoffman:
[52:11] Yeah. What do we know about the EF people? As you said, they are crops people, but I think they were all crops people, the Ethereum people to change the world. And I think that's been the more, the bigger schism in the EF right now, where a lot of the people who are leaving the EF are like, I'm trying to change the world today, and I want to bring crops to the world today. And what does that look like? That looks like, you know, impact and adoption and changing the world around Ethereum, where this thousand year mandate is much more of just like, hey, like we're going to maximize crops in the eventuality, the hypothetical, the circumstantial need, potential need for crops. And that's just not, it's hard. All these people are motivated by impacting the world. And Ethereum needs to impact the world, not be a check on a particular version of the world that might not happen.

Ryan Sean Adams:
[53:09] Yeah, I get it. And I think the people who would be hardcore crops would just be like, no, but this is the one thing that we can do. And it is actually the key to unlocking adoption. And they're partially right about that because Ethereum is special in so many ways. it is, I think you could argue even more than Bitcoin, the most maximally decentralized network.

David Hoffman:
[53:31] Yeah, I agree.

Ryan Sean Adams:
[53:32] And that is unique, that is special, and maybe adoption will come from that. Donkrad actually had the post, he said, the way to save Ethereum, Donkrad of course, former EF, now at Tempo, the community needs to create an organization that's economically aligned with Ethereum and accountable to it, because the EF only holds less than 0.1% of all ETH. There is no flow of Ethereum staking or fee revenues to it. I think Donkrat is calling for like, hey, there should be like, capitalistic incentives. There should be number go up incentives to the organization that is helping to steward the Ethereum Foundation. My take on this has been like, I would love to see some of the big Ethereum dads, right? I know, you know, Sharpling, Consensus, Joe Lubin, he's already done so much. Tom Lee feels like new blood here. I would love to see Bitmine step up and fill some of the gaps that the EF is leaving in terms of like global adoption. I don't know, Maybe there's an opportunity to fund some of the EF developers who are leaving to create a separate structure. Because, man, losing this talent from the Ethereum ecosystem feels like a setback.

David Hoffman:
[54:40] Yeah. And they also don't want to leave Ethereum. Like, they're still Ethereum believers. They still want to work on Ethereum. I think they're just kind of looking at, like, how can I better commit my time and energy and actually create impact on the world? And so, like, this talent, I don't know if this talent's leaving. I think it's just trying to find a new home. Did you see Laura Shin's post about this, by the way?

Ryan Sean Adams:
[55:03] I did, yeah.

David Hoffman:
[55:04] Yeah, I thought it was pretty good. There's a line that stuck out to me. She said, I think Ethereum's original sin was not considering tokenomics with every move it made from Denkun on. The ultrasound money thesis was a good one, and with Denkun, they should have stopped to say that this was going to hurt the ultrasound money thesis and consider how perverse it is. I think that's up for debate. It's not really, I debate that. I debate that. What she said next, I think, what she says, most people don't want to believe

David Hoffman:
[55:33] in something that isn't also putting up points on the scoreboard. True. That I believe in.

Ryan Sean Adams:
[55:39] Oh, well, speaking of David, this is the first time we've had a Bankless podcast and you are no longer holding Ether.

David Hoffman:
[55:47] So that's right.

Ryan Sean Adams:
[55:48] From Bankless to Ethless, David.

David Hoffman:
[55:50] Ethless.

Ryan Sean Adams:
[55:51] What, why? What changed your mind? What happened here?

David Hoffman:
[55:55] It's what Laura Shin said, dude. It's like there's not too many parts of Ethereum that's focused on putting points on the scoreboard. I actually think that Vitalik is doing this thing where he's trying to maximize crops to create Ethereum as a bulwark against some of the worst possible futures of the world, and I think that's great. I think there's actually a part of him who's just adverse to growth.

David Hoffman:
[56:20] And the time for Vitalik to have handed over the keys to somebody who could take the momentum that Ethereum had in 2022 and 2023 and run with it and grow it was like back in 2023. But he sees himself as like a protector of Ethereum's soul. And if you understand the trials that Vitalik had to go through navigating all the co-founder mess, you can totally understand and empathize with why he's doing that.

David Hoffman:
[56:47] But it seems that there are interests that are prohibitive for Ethereum growth to happen, and therefore ETH growth to happen. And a lot of the things that we see on Ethereum, like the layer twos, all of the banks tokenizing money markets on Ethereum, all this Ethereum adoption is great. The Ethereum network is great. Like, lean Ethereum is also great. and in fact it doesn't need a valuable ether to do any of those things like which has been some of the counter arguments for ethereum for forever it's like eth is just gas and it didn't have to be that way but we needed to have leadership to think like that and push forward like that when ether wasn't gas when ether was more money back in a previous era but now like I kind of feel there's just been so much momentum lost and I don't know how Ethereum gets it back, especially when we have like a leader who's trying to protect Ethereum's crops for a thousand years and is like somewhat disinterested in growth and adoption today.

Ryan Sean Adams:
[57:57] You know, there's one part there I disagree with, and you'll know why I disagree, which is I actually don't think Ethereum, the network, is very valuable without Ether, the asset, doing extremely well. And the reason for this is because I think in order to have actual decentralized finance, you need a crypto-native, censorship-resistant store of value that shares the same security as everything else. i.

David Hoffman:
[58:25] Totally agree yeah that feels like a it should be this way

Ryan Sean Adams:
[58:29] Exactly it is it it very much is a hopeful it should be this way and i would also acknowledge what you're saying which is um the last cycle it hasn't put points on the board to uh proving the store eth is a store of value thesis to the extent which i mean like have we have we said like as we said since the very early episodes It's money is a coordination game. Store of value is a coordination game. You have to have believers believe this thing is an actual store of value for it to become one. It's a memetic game. That was like episode five we did at Bankless. It's like money is a meme. Like we talked about all of this stuff, right? Totally, totally. And while it's done well since 2020, ETH as a money meme is in a trough, I would say. Yeah. A store of value meme. And now it's like, oh, what is it? after ultrasound money, like what is it if it doesn't burn? I still think.

Ryan Sean Adams:
[59:27] That story can change. I'm still bullish, but I understand like, man, confident, confident. This is like, this feels a little bit to me like 2019, where confidence in either of the assets at those types of lows. And it feels like the Ethereum foundation is not really stepping into help. Yeah. So I get it, but this is definitely like, it marks a new era, I think for Bankless, because part of the reason we started this podcast was actually Ethereum. It was, we're excited about defy we're excited about crypto money and we thought ethereum was the platform that put all of those things together eth as a store of value asset defy on top of it smart contracts all the same environment same ecosystems same shared security and um you know i think now that's like end of an era at some level right like it's it's kind of like we've been doing this for six years and it's just like um when you tweeted that out and this was the same week by the way that we had to let go some uh members of the bankless team which was really difficult like a bunch of team members that have been doing fantastic.

David Hoffman:
[1:00:36] Work for three four plus years

Ryan Sean Adams:
[1:00:37] And by the way i should say you should hire some of these people so the people on our media team the people in our newsletter, fantastic people david and i've been uh tweeting about them so i'm sure they'll get snapped up if they don't have job offers already go take a look at this talent set that we had to let go and part of it is bear market stuff right companies expand and contract but part of it i feel like is the end of a first era for us for bankless which is like crypto ethereum defy six years of doing this we brought the thesis to this point and now what's happening well, ETH probably still has another era. There's the opportunity for it to become a store of value asset. The confidence in that has somewhat decreased, but I'm still bullish. I still think it can happen. I'm still a believer. We've got things like Justin Drake's Lean Ethereum, Quantum Resistance, Scaling L1, that's happening now. We've got ETH and Ethereum is truly unique decentralized assets. Bitmine, Tom Lee, I mean, he can come in and do some stuff. I still think the architecture is correct, but it's a different era now. We got TradFi, we have all sorts of new horizons that you want to explore too, and that sometimes I'm less interested in, sometimes I'm more interested in. But like, I think, so for instance, I think hype is super cool, but is not as cool to me as Ether the asset in Ethereum when we started this thing.

David Hoffman:
[1:02:07] I totally agree. And maybe I'll take the time to talk about what's not changing at Bankless. Ethereum is the most interesting thing in crypto. That does not change. And like, I'm not- It's more interesting when the price is higher.

Ryan Sean Adams:
[1:02:26] Yes, it is.

David Hoffman:
[1:02:28] But like, yeah, Justin Drake's lean Ethereum, Ethereum getting over the quantum hurdle. There are things that are like bullish and exciting. And I have absolutely no interest in pivoting away from not doing content like that. So like, I don't want, people are thinking that I'm like swapping to be like an Ethereum antagonist. Not at all the case. I absolutely intend on covering all the interesting, cool stories about Ethereum from whether it's adoption from TradFi or again, whatever Justin Drake is building or stuff like this, like that, still going to cover all of that. I'm just not holding ETH, just doing it while I'm not holding ETH. And that's fine.

Ryan Sean Adams:
[1:03:09] And that's why it is, I think, a new era in part. But the other part for some of the reasons I said, so I'm going to be stepping back a little bit from the podcast, not completely. So for listeners, I will be here every single week for the rollup. Dave and I are going to do these together. We just enjoy hanging out. We just enjoy talking about crypto. I'm staying up to date on things anyway. So it's a fun platform to still do. And we appreciate all the listeners dialing in every single week and listening to what we're doing. David is going to be taking on more guest interviews. So I'm going to be less a part of that. I'm going to be less a part of the content focus moving forward. And what are you going to be exploring, David, on the frontier? So I know it's crypto. Is it primarily crypto? Is it other things as well?

David Hoffman:
[1:03:57] More primarily crypto. I think when you and I would do interviews together, we would be pretty expansive about the subjects with just one of us. I think it's just more apt to laser focus about the crypto specifics. And so I'm kind of, I'm now kind of just like investigating what's bullish in crypto. As we know, on the week, there are three crypto assets that hit all-time highs, Hype, Zcash, VVV. I want to talk about those. I also want to talk about the other assets that might also hit all-time highs. And so a little bit of just like learning what's bullish and poking around corners that I otherwise haven't. I didn't mean to like offend anyone when I said on my public tweet that like I don't have any more ETH, but it's also every conversation I would ever go into, I was always the ETH guy. And that steered and shaped the conversation in a way that now I don't feel like I have to do that anymore. And so, yeah, a lot of crypto.

Ryan Sean Adams:
[1:04:58] I totally get that. And I will say there's a non-zero chance here that David bottom ticked, okay? So David may have just.

David Hoffman:
[1:05:04] Sold the bottom.

Ryan Sean Adams:
[1:05:05] This could be the bottom signal we were all waiting for, ETH Max.

David Hoffman:
[1:05:09] I'll take that too.

Ryan Sean Adams:
[1:05:12] Guys, thank you so much for hanging with us. We will see you next week, of course, and got to end like this as we end each roll up. Actually, no, we have a moment of zen too. This is a scenario where David has bottom sold here. Okay, we're going to play that one for you right after the break, but got to let you know, none of this has been financial advice.

Ryan Sean Adams:
[1:05:33] Crypto is risky. You could lose what you put in, but we are headed west. This is the frontier. It's not for everyone, but we're glad you're with us on the Bankless journey. Thanks a lot.