Can PumpFun be Dethroned? ETH's Pectra Upgrade | Future of Bitcoin L2s | Jon, Bread, & Andy8052

Welcome, Bankless Nation, back to the round table. Here with me today is the man with glutinous glutes, Zero X Bread Guy. Good to see you.

Hey guys, back for another week.

And we've also got Crypto's Chief Lowercase R researcher, John Charbonneau. Welcome back.

Yep. How's it going?

And last but not least, the world's most Zen D Gen, Andy 8052. It's good to see you.

Hello, hello.

Alright, so we got some drama to pack through this week. The movement drama that came out Friday of last week. We're going to talk about that. There's some boop.fun discourse, which we're going to unpack. Maybe something that's actually pretty big that people are under indexing is Apple's new iOS meta and its impact on the commerce economy in the App Store, which is inclusive of crypto.

When this goes when this podcast goes live tomorrow, Pectra, the Ethereum upgrade, will be live. And so that's where we're gonna talk about that as well. But overall, I was kind of just powwowing with Bread as we got started here before we hit record about like we started doing these episodes, and then things on crypto Twitter just started to to calm down right as we start doing these roundtables. Kinda

kind of unfortunate, but I think we're gonna make the most of it. Brad, what what you thinking about, my man?

Yeah, I was I was

so I do a daily show too, right? So like we we have to talk about stuff pretty routinely, not daily. And had the same conversation earlier this week where it's like there's a a huge disconnect with like the structural bullishness of the industry right now and like just the general sentiment you have on like crypto Twitter. I know last week John was even pointing out that uh and I don't even know it was on chatter in the actual conversation, it's just like, yeah, the alpha on on CT hasn't really been there recently. So it's like, you know, kind of disconnecting myself from it. He was saying that. But yeah, like it's it's kind of felt that way. And even as someone that's like on the timeline trying to engage, like maintain the conversation lately, it's just like I haven't felt strongly about much of the stuff that has hit the surface. So most of it was just like drama based, so I avoided, or it's just like not really intellectually exciting. So I just like, you know, don't don't speak on it mostly. So yeah, I felt it too.

I do think the movement drama has kind of hit

what might there's probably going to be more drama, but it's really hit a nerve of people feeling despair about like why are we continuing to get into this place? You you said Brad, structural bullishness, the mismatch between the structural bullishness of the industry with like the despair on the timeline. And I that is what I see. I see a lot of

People say like institutions have never been more bullish about crypto before. The amount of inbound from Wall Street is the highest that it's ever been. And then like the despair on the timeline is also the highest that it's ever been, which is like an interesting gap that we haven't really seen before in crypto.

Do you think it's because we see like so we see that on the horizon and everyone's kind of like knife fighting to s make sure that they're the ones that are positioned to get the structural bullishness? Cause like I know there's like some self-consciousness right now going on with, you know, Ethereum, Solana, like what's the right direction and stuff. And, you know, we feel like we feel like we're there, like we're on the precipice of something, but like you're on you're not sure if you're gonna like you're gonna be in the group that misses the misses the wave. Yeah.

Yeah, we all know that the music is about to be up and there's only so many chairs left. What's up, Andy?

Yeah.

Yeah, I feel like a big part of it is just like

Bitcoin dominance can explain a lot of it.

Where it's just like

I mean, I would argue that probably everyone on crypto Twitter, myself included, is underexposed to Bitcoin compared to how much time we spend in the industry. And like as Bitcoin dominance goes up and up, it's like, oh, crypto's doing well, but I'm not actually making that much money. And like you see stuff like movement and all these different things, and that's just like really disheartening. Or you see, like, I saw images of like Starknet's token chart going around this morning, going from like $26 billion to a billion dollars and all that.

And I think a lot of it would go away and people would feel differently if Bitcoin dominance started going down.

You know, there was a

yeah, well, John get in there and then I have I have something to follow up on that.

Yeah, it's following on that. I'd say that's like half of it, but it gets to the same point of the big split, which is why it makes sense, is all the institutional stuff like sounds great. Of yeah, you go talk to the more institutional side. Everyone is, you know, peak of positive sentiment for the most part that you've had over the past few years. But the things that all the institutions are interested in one, one is Bitcoin, which, like we said, is like CT is just chronically underexposed to. And then the other half of it is I would say, like, pointing at, you know, somewhat growing concern with a lot of people of like, okay, but what what if the institutions come in and then none basically none of our coins win? And this is basically, you know, like I've heard people say this a bunch of time like Robinhood is just going to show up and be like, hey, thanks guys for building all this open source software. This is sick. We're we're we're gonna copy all this. And

Yeah, exactly. And then like Coinbase, Robin Hood, and JP Morgan end up winning. And like th thank thanks for building everything, guys. So I mean like

there's like there's definitely so I mean there's definitely some truth behind that of, you know

A lot of those businesses are going to come in increasingly and they are going to start to squeeze and compete. I'd say a mix also is a lot of the stuff that people are super positive on right now with stable coins.

And it's a it's a similar bucket of every everyone would love to own a piece of tether right now, but nobody on CT also owns a piece of piece of tether. I mean, circle is kind of underwhelming with their financials that you they put out, even though they are going to IPO. So it a lot of the stuff that is going well is just like it's not the stuff that CT and a lot of us are actually exposed to and spending time on the investment side. Bitcoin is the one that like everyone can, and it's the one that everyone just chooses not to own enough of all the time.

Yeah, there were so the the the revelation that I had, or maybe just like coming to acceptance of was you know, the bullish case for smart contract platforms for me over the last few years is just like

TradFi loves yield. They love yield. We're going to create all this new yield that they're going to want to come a part of. And then as like as the ecosystem has matured the last year, it's less that we are creating our own useful yield and more that like they just want exposure to the yield that they've always had exposure to, just in a more efficient form, which is like stable coins and you know just a few treasuries that they're doing. Like that's that's nothing we do. That's not that doesn't plug into like the DeFi the same way as like we do. It doesn't do any DGen games. It's just like, yeah, Biddle fund. Yeah. Stable coins get exposure to treasuries, and therefore they're like it's a really successful business model. But like, yeah, it's it's not the games that we have played and not like the the like euphoric future that I had envisioned even as recently as like two years ago. It's practical. It makes a ton of sense in retrospect, but it was not what I had foreseen.

I was gonna say the tough part about generating yields means very literally we need to actually like generate users paying fees to decentralized protocols and at a high level that that that is just currently lacking in the industry. And pointing again to that point of like what CT actually has exposure to, even the most, you know, what is the thing that you know people in the trenches on chain are using and paying for is Pump Fun and is once again a thing that no one has exposure to, which we'll also get into like in our topic later on talking about like boop and these other platforms. But it it gets to that same point of like, yeah, I like the the reality is a lot of this, you know, decentralized protocol activity, people like actually paying fees to use these things, it's it's still small to Crowdfy. The reality is like most of the yield is it's getting people to hold dollars and like, hey, we can clip the yield on like treasuries on the back end, stuff like that.

The idea that the institutions are gonna come and buy our bags has been this like perpetual motivating force in the crypto industry. Like we are so early, the institutions are gonna come, we're gonna get so rich because we own the rails, we own the tokens before the institutions do. And this I this was the dominant narrative in 2017 when some of the looking back at the tokens that I own, based on that narrative, I was an insane person. Like those no institutions was gonna come and buy those tokens. Those were just the temporary.

Yeah, you know, you know, Aonnet, like IOTA, like these what you know, in hindsight were just like casinos that people gambled on at the time had a narrative of like, oh yeah, these are the future rails of the internet. And I think right now in this moment of time, the the reason why there's despair on the timeline is is like multifold, right? There is the the rails that institutions are actually using are not ownable. They are not ownable by us, or it's Bitcoin, and so that Bitcoin's not going to give us that like 100x that we're looking for, or it's Tether, which is a private company. And then like the middle of the market, I think we've talked about this before, the middle of the market where like there's a lot of you know people's jobs and uh the tokens that you know represented the speculative gamble that existed in 2020 and 2021. We are people are now realizing that that's just not likely what to be the infrastructure that supports the future of finance. And so we are creating this stablecoin, Bitcoin barbell with a meme with a meme coin kicker for those who want to speculate on the meme coins, and then the things in the middle, which represents like the livelihood of people who work in crypto, is just hollowed out. And so that you add all those things together. I feel like that's how you get all the despair that we feel.

No, I mean I totally agree. I think like

it just is it feels

like we're kind of at a point where it's hard to see what's gonna change that in the short term.

Mm-hmm.

And so it'll be interesting to see just how

dispary we can get.

Okay, so speaking of how dispary we can get, you guys ready to dive into the movement drama? Because I've got a pretty robust set of notes, ChatGPT notes. So let me run through the facts of the details and we can unpack it, unpack it together as a group. Okay, so November 27th, 2024 is when Rentech, which is a shell entity, asked the Movement Foundation to loan it 5% of all Move tokens. The General Council of Movement called these terms, possibly the worst agreement I've ever seen. Later, a tweaked version of that agreement still lets Web3 port, a different entity, via Rentech, borrow the 66 million move tokens and also liquidate these tokens if and once the FTV of the Move token hits $5 billion FTV.

The signing of this agreement happens one day before the token goes live. Then later, December 9th through 10th, move list on Binance, while it's connected to Web3 port, which is the market maker, unloads the full $66 million in under 24 hours, pocketing $38 million, crushing the price. And then Binance later banned this offending market maker, which is the news that kind of rippled around the industry that everyone's like, yo, that's not normal. Like, what's going on over there?

Uh they flagged of course uh market maker misconduct and now movement starts an internal review in this March uh to understand like what's going on. As a result, with the $38 million that was confiscated by Binate Binance handed back over to the Movement Foundation, they announced a $38 million UST buyback to repurchase the dump tokens and they have cut ties with Web3Port, the market maker.

So this is uh to sum up all of the reasons why people are calling this a nefarious behavior. Rentec, this mysterious entity, appeared on both sides of the contract. So once as Web3 port's subsidiary and once again as Movement Foundation's agent. So they are basically on both sides of the contract. They are the negotiating and they're also the client. So the same people get to dictate the terms, the lending terms, and the trading strategy. So they said, okay, you lend us five million tokens and we get to dump them at a five FDV, $5 billion FDV market cap. So the same entities setting the terms. The perverse incentives are already in there. The idea that you get to dump 50% of the tokens if the token hits $5 billion is just a contractually obligated pump and dump scheme. There's no lockup. The $66 million, $66 million tokens were immediately liquid. And despite the council's red flags, the deal still got passed through governance and was still somehow signed. So where do things stand now? There's an independent audit still in progress. The foundation is, like I said, buying back the move token on the open market to recover the $38 million, inject it back into the chart. And then also Rushi Manch, the CEO of movement, has been suspended and the board is considering additional governance reforms. So I think this is really the sum of this is is like we all as an industry knew that there were these boogeyman market maker deals out there.

But no one had really ever seen it so explicitly and put into actual real contracts. And then those contracts were ended up being circulated. And there's extra weirdness about the relationship between the market maker and the foundation. That I think is like the unique thing that allowed this to kind of explode onto the scene. But overall, now people are understanding that like this has become become productized and structure structurally systemic across the industry. And we have seen this so many times, but now we have evidence of it. And now it's just got a little bit too real for people. And that's why people are reacting the way that they are reacting on Twitter. I'll just throw this to Bred. Brad, what's your what are your thoughts? What are your reflections? What are you thinking?

I don't know if you saw it on the timeline, but there was some people from within the movement

Team, like I think it was the DevRel person specifically, coming forward and giving like a gut-wrenching, like look like post-op of like, guys, I was blindsided by this too. It fucking sucks to have like tried to build all this stuff, get the encouragement of builders and like build up this ecosystem. And then like people are calling me dumb because I wasn't aware of it. So like

one element of it is like the yeah, feeling sympathetic for genuine people that are caught up in this stuff because they just weren't made aware of it. The other is there's a shit ton of hashes that were put on the timeline over the last like week of like things to be revealed later that I'm excited to see. Several from like Torgirl, who works at Fluent now. I think Kobe put out one on a movement post a couple a couple of weeks ago. So

He revealed those.

Did he? What was it? Yeah, yeah, yeah. Yeah,

Can we talk about this mechanism? What does it mean to put a hash on a tweet or publish it on the internet? Like why are people doing that and what's behind that hash?

it's almost like a predictive thing, right? So you can just go to like any SHA-256 generator, put in any any amount of text, that text will give you a hash string, and you just post that string. No, and like the ability to like brute force uh re reverse engineer what that actually represents in like readable text is basically impossible. So people are posting things to say like I know something about this or I'm predicting something and I want to make have proof that I can predict this. They post it on the timeline, and then after the point where it's no longer impactful either to the markets or the prediction has come true or whatever, they will go back and say, like, this string of text is what reveals or what that hash translates to. So uh

They're just claiming that they know something. It's like a clout thing. It's like I g I'm claiming that I know something without actually revealing it. Because if I'm if I'm if it if I'm right and it moves the market, or if I'm wrong and it moves the market, then that has consequences. But if I just hide this for now, it doesn't move the market, but I get to claim clout at a future date. Is that kind of the idea?

Yeah, basically. Yeah. So like if maybe if you have further damning evidence but you're not sure of it and like you wanna claim it or uh it will have market impacts that you just don't want to impose until after it's revealed by someone else. You don't want to be the person that says it. Uh it just gives you that ability to do that and and yeah, show that you had insider information and or were onto something before other people were.

Okay. Okay. And then John, you said that Kobe revealed his hash. He revealed what it said. Maybe maybe walk us through that.

I don't remember the exact wording of it, but yeah, he posted it a couple weeks ago and then he revealed it in the last few days or so. It was just saying I think that he I think the prediction was that Rushi would be removed within the next twenty eight days for like fraud or misconduct or something like that. And he and he revealed it in the past week, which was he was correct. Okay.

Yeah, I know the other main culprit was like again Torgo working at Fluent. He's like he has gone publicly after movement a lot and they throw mud at each other and basically just said, I had a bunch of stuff in my DMs I'm not willing to reveal, but he's just posting a bunch of hashes that, you know, maybe will be the reveal of whatever those DMs are. I'm not an investor myself. I don't have a lot of C deals anywhere, but like the general thing was that people recognize early on that there's maybe some of this going on, but they saw it as a money making opportunity anyways, and they went forward for that reason. So, you know, it's just a lot of questions around, you know.

Well how how much is that worth to people? Right. Like are they willing to to jeopardize or give up on some of their values? If they think something is wrong, if it's it comes with a couple dollars, you know,

how prolific that was or like the amount invested under those pretenses, I don't know. But I have heard that just, you know, through the grapevine. So

commentary on the space.