ROLLUP: BTC ATH & ETH Near ATH | Stripe & Circle L1s | Monero 51% Attack

TRANSCRIPT

Ryan Sean Adams:
[0:04] Bankless Nation, it is the second week of August. It's time for the Bankless…

Ryan Sean Adams:
[0:07] Weekly Roll-Up. We’ve got ETH just teasing us on that all-time high, David. It hasn’t quite hit it yet.

David Hoffman:
[0:12] Ripping through numbers but not breaking the all-time high. Yeah, because it was like two thousand dollars less two weeks ago. It’s like a thousand dollars a week for two weeks, but…

Ryan Sean Adams:
[0:23] We’re so close, just teasing it. Also, Bitcoin did hit an all-time high, stealing some of the glory.

Ryan Sean Adams:
[0:28] And then Tom Lee is the first to 1 million ETH in his ETH treasury vehicle, okay? ETH treasuries are buying a ton of ETH. I think that accounts for a lot of the growth. We’ll talk about that. What else have we got?

David Hoffman:
[0:41] We got some bad PPI numbers this morning, the morning of August 14. I am of the mind that all of these speed bumps that come from the economy, or any sort of, I don’t know, war, are just speed bumps. The market is going up. The economy’s strong, the market’s strong. So yeah, we’re going to have some speed bumps along the way, and that’s what we got with the PPI numbers. We’re going to talk about what those PPI numbers are and why everyone’s a little bit skittish this morning. And what is old, Ryan, is new again: we are back in the world of private intranet blockchains. Both Stripe and Circle launched or announced new Layer 1s this week.

David Hoffman:
[1:20] ARK and Tempo, respectively. Good for crypto? Bad for crypto? We’re going to give our takes on that.

Ryan Sean Adams:
[1:25] Also, Monero was 51% attacked. The famed 51% attack — we’re seeing it in the wild. And banks are angry. They’re lashing out against the Genius Act because I think they’re losing their monopoly power. Maybe that’s why they’re crying about it.

David Hoffman:
[1:39] When banks are angry, I’m happy. That’s good for us.

Ryan Sean Adams:
[1:43] That’s the whole bankless thing, right? Coinbase is adding a DEX to the Coinbase app, and that’s doing numbers. We’ve got all that and more. But David, before we get in, talk about the dip we saw this morning, the PPI dip.

David Hoffman:
[1:57] First of all, what does PPI stand for?

Ryan Sean Adams:
[2:00] OK, so the PPI is the Producer Price Index. It’s a measure of inflation, but probably not the one you’re used to. What’s the one that we all talk about constantly?

David Hoffman:
[2:09] CPI.

Ryan Sean Adams:
[2:09] Yeah, CPI — Consumer Price Index. Right. So PPI is the wholesale cousin of CPI. It’s all about producers and wholesalers and their costs of goods, their costs to make things. So it excludes things like rent and other costs that might affect a regular citizen. It’s more, if you’re running a big business, your price of inputs.

David Hoffman:
[2:34] It’s more about goods rather than… yeah, OK.

Ryan Sean Adams:
[2:37] It’s more on the goods side. OK, so the problem with the PPI number — and there was a problem — was the actual was 3.7%.

David Hoffman:
[2:45] The measured number we report on was 3.7%. What was it supposed to be?

Ryan Sean Adams:
[2:52] It was estimated to be 2.9%, so analysts thought it was going to be almost a percent lower than it came in. It’s running a lot hotter. And the prior metric for this was 2.6%, so a big jump. The scare, of course, is this looks like tariffs having an effect on the producer side of the economy, on wholesaler goods. And PPI is generally a leading metric for CPI. What affects PPI first affects CPI some months later. So it’s basically an inflation-running-hot story.

David Hoffman:
[3:31] OK. The last pattern I’ll point to is when we got the jobs report and it revised itself — what was that, two weeks ago? One week ago?

Ryan Sean Adams:
[3:41] Yeah, yeah, yeah, that was last week.

David Hoffman:
[3:43] Everyone was like, oh, bearish, the tariffs and AI are going to destroy the economy. And then the S&P dumped half a percent. We are up from that moment 0.3%. The SPY, the SPX is almost at all-time highs. I’m categorizing this the same way. Speed bumps in the economy, but we’re going up. The trend is the same. In two or three days, we won’t be thinking about this.

Ryan Sean Adams:
[4:07] You know who you sound like, David?

David Hoffman:
[4:09] Tell me.

Ryan Sean Adams:
[4:09] Our friend, friend of the show, Tom Lee. Tom Lee. I’m sure Raoul Pal too, also a friend of the show. But Sir Tom Lee said today’s hot PPI is just a graze. Since late 2022, every dip has been bought.

David Hoffman:
[4:22] Every dip has been bought.

Ryan Sean Adams:
[4:24] He repeats that three times. If you didn’t get it the first time: every dip has been bought since late 2022. Is there any reason to believe this dip wouldn’t also be bought? Also, while PPI was a huge miss, CPI this month was a small beat — it came in lower than analysts expected. So maybe some sun there. But you don’t think this affects anything in our trajectory. Neither does Tom Lee. I agree with both of you. I don’t think it affects anything either. So there are three co-signs on it.

David Hoffman:
[5:01] We’ll talk about the ETH price in a hot sec, but that dip is already mostly gone.

Ryan Sean Adams:
[5:06] Yeah. And also, I was looking at Polymarket. The Fed decision is what this could affect because, if inflation is burning hot, maybe the Fed isn’t as dovish and everyone expects the Fed to cut rates in September. The probability dipped a little on Polymarket that the Fed would cut, but not that much. Consensus is still that the Fed is going to cut. The market’s pricing that in too. And speaking of prices, tell me about Bitcoin on the week. We’re not at all-time high at the time of recording, but we did hit an all-time high. Where are we right now?

David Hoffman:
[5:40] We came off the all-time high. The new Bitcoin all-time high as of yesterday is $124,500. That’s $1,300 higher than the previous all-time high, $123,200. Because of this dip, we’re currently at $117,700 at the time of recording. So Bitcoin is up a modest 1% on the week.

Ryan Sean Adams:
[6:06] So it lost like 5.5% from the top on the PPI?

David Hoffman:
[6:09] Down 5.5% from the top, but the week is flat. We went up 5.5% and down 5.5%.

Ryan Sean Adams:
[6:18] The thing to celebrate is that all-time high. People screenshotted the website of the world’s largest assets. Bitcoin was actually number five. It’s slipped to seven now, but was five. Of the top assets in the world, things you can buy with your money, gold is number one, NVIDIA is number two, Microsoft is number three, Apple was number four, and then Bitcoin was number five. Pretty cool. It probably regains that in the coming weeks.
It’s pretty cool.
Top asset. Actually, I didn’t look at Ether. Ether’s in the top 25 now too.

David Hoffman:
[6:54] Yeah, number 22.

Ryan Sean Adams:
[6:56] Yeah. We passed MasterCard. We passed Netflix on the week. We passed ExxonMobil.

David Hoffman:
[7:02] The internet of money is currently priced equivalently to MasterCard. That’s so ridiculous.

Ryan Sean Adams:
[7:07] Well, just above MasterCard. Who’s next we could pass? Walmart? Oh, Visa. There’s Visa three slots up, hanging in at number 19.

David Hoffman:
[7:16] Ethereum is a superset of what Visa is. It should be more than all of those combined.

Ryan Sean Adams:
[7:22] Let’s talk about ETH price on the week. Tell me.

David Hoffman:
[7:25] It’s getting closer to that fair valuation of ETH.

Ryan Sean Adams:
[7:29] We’re not at all-time highs, but we are up on the week, are we not?

David Hoffman:
[7:34] ETH is up. Even with this dip, ETH is up 19% on the week. I think it was up something like 25% at the local high. $4,540 at the time of recording. Teasing the all-time high — it touched $4,780, which is just $100 away from the all-time high. So all-time high is close.

David Hoffman:
[7:58] Not yet.

Ryan Sean Adams:
[7:58] What is the all-time high? We should give the official Bankless number.

David Hoffman:
[8:02] According to Coinbase Exchange, $4,878 in November 2021.

Ryan Sean Adams:
[8:09] Look at this. We haven’t hung in the 4,500s and above for very many days.

David Hoffman:
[8:17] ETH has been in the 4,000s not very much.

Ryan Sean Adams:
[8:21] And then the 4,500s have probably been like, I don’t know, seven days? Eight days?

David Hoffman:
[8:25] A very low number of days.

Ryan Sean Adams:
[8:27] So we are in uncharted-territory-esque. Not quite all-time high, but uncharted territory. Now, let me throw some rain on that: this is not the CPI-adjusted all-time high. If we take inflation into account, you know what our all-time-high number actually is?

David Hoffman:
[8:47] This is going to make me sad.

Ryan Sean Adams:
[8:50] $5,530. And you know what? It should make you sad too, because fiat has not done well.

David Hoffman:
[9:00] But no one holds dollars. I’d like to see that compared to, well, it’s been four years, so a five-year Treasury.

Ryan Sean Adams:
[9:08] Yeah, but a lot of people still hold dollars.

David Hoffman:
[9:11] You’re not holding the same dollars you held in 2021. If you are, you’re doing something wrong.

Ryan Sean Adams:
[9:17] Do not hold dollars for the long run. Do not do that. We do have an all-time high, though, when it comes to market cap.
ETH market cap just hit $1.557 trillion. That’s the highest it’s ever been. Why would that be, for people who don’t know?

David Hoffman:
[9:37] Because we issue ether at a going rate of like 1.3% a year.

Ryan Sean Adams:
[9:41] Well, 1.5% is the max. There’s been some burn. If you go back to the Merge, it’s 0.3% a year. So the issuance rate of ETH is 0.3%…

David Hoffman:
[9:52] Excuse me — it’s even lower than that. Since the Merge, effectively three years ago, the issuance rate of ether has been 0.13%.

Ryan Sean Adams:
[10:05] That’s nothing.

David Hoffman:
[10:06] Kind of crazy. That’s nothing.

Ryan Sean Adams:
[10:07] That’s a way better CPI than fiat. Also, annualized it’s, what, 0.8% or something like that? This is just from the last year or so. I don’t know if you can see that.

David Hoffman:
[10:19] I don’t think it goes out to a full year. It’s kind of annoying. It goes from 30 days to two years since the Merge. But for the last 30 days, which I think is related to the year, 0.7% yearly issuance.

Ryan Sean Adams:
[10:34] Since we are in this uncharted territory and haven’t been here for very long, this is where people get to do the fun stuff — predict where ETH is going. It’s more fun to do that now than a few months ago. Here’s a tweet from a trader I saw: minimum 10K, bull case 16 to 20K in the next six to eight months. He puts up a nice chart.

David Hoffman:
[11:07] 16 to 20K? It seems crazy.

Ryan Sean Adams:
[11:10] It’s not crazy. I don’t think that’s crazy at all. This is some PTSD David talking. I think it could totally happen. Now, this is someone drawing squares on a chart, and I don’t know what you believe about that.

David Hoffman:
[11:29] They look nice.

Ryan Sean Adams:
[11:31] Standard Chartered predicted $7,500 ETH. Are you familiar with Standard Chartered predictions?

David Hoffman:
[11:33] I know the name, but not much more than that.

Ryan Sean Adams:
[11:36] It always feels to me like bellwether predictions. I think this prediction was pretty sad for ETH three to six months ago, and now ETH has momentum, it’s going up, and their tune changes. So their bellwether prediction is $7,500 by the end of the year. Tom Lee has confirmed that number and thinks it could go much higher. That’s my number — I picked it for you, David, for end of year. Do you have a number on where this could go, or not ready yet?

David Hoffman:
[12:12] In a bull market it gets hard to predict because anything can happen. Crypto is three years of slow motion and then one year where a decade happens.

Ryan Sean Adams:
[12:23] See, this is great. Asking you this means we’re not in a frothy bull market to me. Because I know David in a frothy bull market — you’d be like, oh, hell yeah, we’re going to 30K, this train isn’t stopping.

David Hoffman:
[12:38] Maybe I’ve mellowed out over the years. Maybe I’ve learned my lesson. I said the F-word a few too many times last cycle.

Ryan Sean Adams:
[12:45] Speaking of the F-word, there’s an F-word on Ethereum ETF flows.

David Hoffman:
[12:50] Oh, it’s been F-ed for weeks.

Ryan Sean Adams:
[12:53] It’s very F-ed. F-ed in the best ways. Last week we had a billion-dollar day on ETH ETF inflows. Compared to Bitcoin…

David Hoffman:
[13:04] It was higher than the previous all-time high. A billion dollars in inflows is a lot.

Ryan Sean Adams:
[13:09] It looks like double or triple what Bitcoin did on the same day. Incredible. So there’s a flipping on that. Even Eric Balchunas is like, wow, these ETF flows are impressive.

David Hoffman:
[13:19] He called them chunky. And when you look at the total size of the Ethereum ETFs, it’s $12 billion. Just two days ago, from the time of recording, $1 billion came in. It went from around $10 to $11 billion, and we’ve accumulated a billion more since.

Ryan Sean Adams:
[13:37] There are some explanations for this. This is Nate Geraci. He says…

David Hoffman:
[13:42] What do you mean, explanations? People want ETH.

Ryan Sean Adams:
[13:43] OK, let me give an explanation. It feels like the spot ETH ETFs were severely underestimated simply because TradFi investors didn’t understand ETH. Bitcoin had the clean “digital gold” narrative. ETH takes more time. Now they’re hearing “backbone of future financial markets,” and it’s resonating. Nate’s case is it just took them longer to understand. ETFs came out last summer; about a year later they’re like, I understand ETH and I’m going to buy it. That’s one explanation.

David Hoffman:
[14:20] Price going up materially helps people understand the narrative.

Ryan Sean Adams:
[14:24] Oh yeah, I understand ETH way better now.

David Hoffman:
[14:26] It’s above 4K? Makes total sense.

Ryan Sean Adams:
[14:31] The big question this cycle is the institutional cycle. What I think is happening is consensus understanding. We already have one institutional asset from crypto: Bitcoin. Now it looks like with these ETF flows — and we’ll talk treasuries later — we have a number two: ether. Ether is becoming institutionalized. The chain is ETFs, then treasuries, then lots of holding. You get endowments like Harvard. Harvard just revealed they had $116 million in BlackRock Bitcoin ETFs. US endowments are about a trillion dollars, and now the biggest endowments are buying crypto assets. This is like their fourth or fifth largest holding at this point. We’re moving up that curve of institutional adoption. That’s what people are seeing.

David Hoffman:
[15:29] They’re under-allocated to ETH. Is that your punchline?

Ryan Sean Adams:
[15:33] That’s right. A year and a half or two years after Bitcoin ETFs, Harvard reveals. Look for the same effect with a lag and it’ll be ether on the balance sheet. I see no reason that doesn’t happen with the treasury and ETF momentum.

David Hoffman:
[15:50] There are plenty of academics — not necessarily Harvard — Stanford, Princeton, Columbia — with Ethereum academics.

Ryan Sean Adams:
[16:05] Rebel academics, I would say.

David Hoffman:
[16:07] Rebel academics, yeah. Dan Boneh, cryptography researcher; Tim Roughgarden from Cornell, yeah.

Ryan Sean Adams:
[16:20] Omid is Columbia, right? And Austin Campbell is also a Columbia prof.

David Hoffman:
[16:24] Where Bitcoin has previously been offensive to established institutions, Ethereum is like, oh, established institutions can release academic papers about this. I’m drawing connections here.

Ryan Sean Adams:
[16:36] You’ve got a future professorship, I think, David. OK, let’s look at the ratio. How are we doing on the ratio?

David Hoffman:
[16:43] This one’s pretty fun. We are tickling 0.04 on the ETH-BTC ratio, which is a good number — definitely up from the subterranean trenches of 0.018 where ETH came from. My eyes, Ryan, are on 0.05. That’s when ETH stops being a mean-reversion trade. Above that, it’s continuation and momentum. I think 0.05 is safe for ETH to reach — low risk.

Ryan Sean Adams:
[17:17] It was there in December 2024, 0.05, wasn’t it?

David Hoffman:
[17:19] Yeah. But at 0.05, traders who bought ETH at 0.02 will start to cycle out. At 0.05, that trade starts to be over, and it definitely finishes at 0.06. Beyond 0.06, it’s momentum — whatever momentum can carry ETH higher. That puts ETH at $6,000 at 0.05 ETH-BTC if Bitcoin stays flat at $120,000.

Ryan Sean Adams:
[17:50] When the ratio starts bouncing up like this, you get a lot of Bitcoin maxi cope.

David Hoffman:
[17:57] The story of the week on crypto Twitter is Bitcoiner fear about Ethereum. They hadn’t tweeted about Ethereum in years, and now so many of these old-guard Bitcoiners are like, “Don’t pay attention to Ethereum.” Pierre Rochard is famous for this. “Ethereum is a psyop to distract you from Bitcoin,” “you can’t verify ETH supply,” like clockwork.

Ryan Sean Adams:
[18:28] The problem with Pierre’s comments is they feel right out of 2017. He hasn’t updated the software at all. “Ethereum will systematically dilute you,” “stakers will vote for more issuance,” “in the fullness of time there’s infinite ETH.” None of that is happening. We have charts and years that show that’s not the case.

David Hoffman:
[18:51] It’s the opposite of the case.

Ryan Sean Adams:
[18:53] They should update the playbook, but that’s not happening.

David Hoffman:
[18:58] That’s what happens when your ETH-fudders have no context. Pop quiz, Ryan: as a percentage, how much more Bitcoin has been issued versus ETH since the Merge?

Ryan Sean Adams:
[19:08] Since the Merge? How much more in percent?

David Hoffman:
[19:12] In percent, yeah. Bitcoin issuance versus ETH issuance.

Ryan Sean Adams:
[19:15] I bet it would be like probably 5% to… Wait, actually, no. So Bitcoin would be maybe, I don’t know, 4% in total since the Merge?

David Hoffman:
[19:29] Bitcoin is 10x Ethereum’s issuance. Since the Merge, ETH has issued 0.13%, Bitcoin has issued 1.3%. So Bitcoin issuance is 10 times higher than ETH issuance since the Merge.

Ryan Sean Adams:
[19:42] 1.3% annual, though.

David Hoffman:
[19:44] Annual.

Ryan Sean Adams:
[19:44] Yeah, I was doing cumulative, so multiply by the number of years — same idea.

David Hoffman:
[19:49] Yeah.

Ryan Sean Adams:
[19:49] Another nice number: Brian Armstrong wishes us all a happy Financial Awareness Day. Over the last 10 years, gold appreciated 201%, the S&P 207%, Bitcoin 49,000%, and ETH 350,000%. That’s incredible.

David Hoffman:
[20:23] The number is a bit broken because ETH 10 years ago was just born — you’re buying at a quarter.

Ryan Sean Adams:
[20:31] No one had heard of it. That was Ethereum’s birthday. If you stretched Bitcoin back to inception it would be up even more. But still, over 10 years, incredible.

David Hoffman:
[20:44] It’s notable as a generational change in financial assets. When we create a new asset class of new technology, that’s what you see.

Ryan Sean Adams:
[20:59] We got a crypto market cap all-time high this week. Is that the case?

David Hoffman:
[21:04] Earlier this week, it peaked at $4.28 trillion, currently down to $4.12 trillion.

Ryan Sean Adams:
[21:10] Tell me about some movers of the week, David.

David Hoffman:
[21:12] Movers of the week, brought to us by Uniswap. Lido up 45% this week, outperforming ether. Arbitrum up 28%. Ryan, on the premium feed, did you listen to my episode with AJ about the “Arbitrum Everywhere” thesis?

Ryan Sean Adams:
[21:27] No, I need to catch up on that.

David Hoffman:
[21:29] Good episode. I’m pretty compelled by the thesis. I’m pretty bullish Arbitrum. I don’t own any, but I could.

Ryan Sean Adams:
[21:36] I could see myself owning some. Investors seem to agree recently with the Robinhood news and all that. The question though: ETH is performing, what’s beta to ETH? What do you buy that’s beta to ETH? Is there any asset? Some say DeFi assets. Others say L2s. Others say ETH memes or NFTs like CryptoPunks.

David Hoffman:
[21:56] CryptoPunks have been plus-beta to ETH.

Ryan Sean Adams:
[21:59] I feel like that’s the mystery. I don’t know there’s a single asset or class that is beta to ETH.

David Hoffman:
[22:07] There’s really no alternative.

Ryan Sean Adams:
[22:09] There’s no…

David Hoffman:
[22:11] Aave is close. It’s still DeFi to me.

Ryan Sean Adams:
[22:16] It’s DeFi momentum. I don’t know if it’s beta to ETH, but maybe that’s close. Aave and CryptoPunks are pretty close.

Ryan Sean Adams:
[22:22] Another mover of the week in TradFi-meets-crypto was shares of Bullish — soared. The Bullish exchange went live on the NYSE and debuted. Was it up like 3x from its IPO price?

David Hoffman:
[22:39] It’s now at 2.5x the IPO price.

Ryan Sean Adams:
[22:42] And Bullish is what — an exchange like Gemini, like Coinbase?

David Hoffman:
[22:47] Yeah, it’s a crypto exchange. Do you know anyone who uses it?

Ryan Sean Adams:
[22:51] I’ve never met a real-life person who uses it.

David Hoffman:
[22:54] You’ve never met anyone who uses Bullish?

Ryan Sean Adams:
[22:55] I’ve also not met a real-life holder of XRP, so I don’t know. There’s another world that exists.

David Hoffman:
[23:02] I forgot how housed up you are.

Ryan Sean Adams:
[23:05] One time I saw a guy in an XRP shirt in a bar, and I was going to approach him and…

David Hoffman:
[23:10] You don’t want to do that.

Ryan Sean Adams:
[23:10] …then decided not to. You don’t want to do that. There was one time I was climbing Mont Blanc and I was in a hut with like 20 other people. Any time you climb a mountain, you’re in a hut, and you eventually chat with everyone. Talking to this guy, he learned I was in crypto, I learned he was interested in crypto — he was into XRP. And I was like, no, I’m stuck in this hut with this XRP guy.

Ryan Sean Adams:
[23:40] No, no — real crypto. I’m into real crypto. I’m not into XRP.

David Hoffman:
[23:45] Oh my God. We talked, I went elsewhere, we reconvened later. I was like, do I want to talk to this guy? Oh wait, he’s into XRP. I don’t want to talk about that.

Ryan Sean Adams:
[23:58] Let’s talk about Tom Lee and treasuries, David. I don’t want to link this to XRP, because Tom Lee is doing a noble thing for us. He just bought 1 million ETH. This is in a 30-day period.

David Hoffman:
[24:12] He accumulated a total of 1 million ETH — not net new — but he bought more ETH and that put him over the 1 million mark.

Ryan Sean Adams:
[24:17] Exactly. Over the last 30 days, he has 1 million ETH in purchases for his treasury. He won that race. Remember we were like, who’s going to be first to 1 million ETH? I thought that race would play out over many months. Then Tom Lee’s like, nope, I got it. I have 1.2 million ETH. This is 12x faster than Michael Saylor has been acquiring Bitcoin. That puts him over 20% of the way to his stated goal of 5% of all ETH.

David Hoffman:
[24:54] Six million ether.

Ryan Sean Adams:
[24:54] There’s also a press release that Bitmine has announced it wants to raise $20 billion to buy more ETH — the remaining ETH at today’s price to get to his 5%, about $20 billion more. This guy is buying all the ETH he can find.

David Hoffman:
[25:13] Do you think at 5% or 6% of all ETH he’s like, I’m done? Or does he keep going?

Ryan Sean Adams:
[25:20] I doubt he can get there. It doesn’t seem like you can keep acquiring that much ETH at these price points, even under 10K. How do you do that?

David Hoffman:
[25:31] There are four other ETH treasury companies with momentum. ETHzilla this week, one of the newer ones, announced that Peter Thiel has taken a 7.5% stake, and the stock pumped 200%. The NAV premium is crazy right now, and that turns into ETH on the balance sheet later. In addition, a new one, Fundamental Global, filed to raise $5 billion to buy more ETH — a $5 billion shelf registration with the SEC that lets them sell shares to acquire more ETH. They said they want to own 10% of the ETH supply, which is great for them. And you know what, Ryan? I announce here today on the podcast my intent to own 15% of the ETH supply. I am in a race with Tom Lee and Fundamental Global to get there.

Ryan Sean Adams:
[26:25] No disrespect, but the difference between a Tom Lee and some of these others with the same intent is that Tom Lee has access to the capital. He’s making it happen in a hurry.

David Hoffman:
[26:37] He’s actually doing it.

Ryan Sean Adams:
[26:37] Even faster than ESBT. ESBT is overshadowed. They bought almost 80K ETH this week — many, many millions of dollars — and it’s overshadowed by Tom Lee because he’s monster-buying all this stuff.

David Hoffman:
[26:52] It’s 80K versus like 300K of ETH.

Ryan Sean Adams:
[26:56] Another F-word people are watching is not just ETFs, but treasury volume. In blue here is ETH treasury volume compared to Bitcoin treasuries.

David Hoffman:
[27:05] Wow. That’s a lot of blue.

Ryan Sean Adams:
[27:07] Treasury stocks — the Bitmines of the world — are getting massive volume. Top-10, top-25 stocks by volume. Also, if you look at this chart, this is ETH as a percent of the network versus Bitcoin as a percent of the network, held inside treasury companies. In a very short period we are approaching Bitcoin levels of ETH as a percent of the network. This is happening so fast.

David Hoffman:
[27:34] During my dark days of ETH, when ETH was down around $1,700, I tried to emphasize why Bitcoin was at $100,000 and ETH at $1,700. My answer was, Bitcoin as an investment attracted the likes of Michael Saylor because of the 21 million units. ETH hadn’t done that. That’s why ETH was in the trenches and Bitcoin wasn’t. As a project, we needed to focus on Ethereum as an investable asset. Then along comes Tom Lee: “Ethereum is the backbone of the global financial system. I’m going to buy all the ether.” And look what happened, following in Bitcoin’s footsteps. Bitcoin is a special snowflake when dominance is 70%. But if you look at the decline in Bitcoin dominance happening right now, versus the Solana meme-coin mania and the Trump token, you can see that meme-coin mania as a blip on the chart of Bitcoin dominance. When ETH pumps because Tom Lee is buying it, it’s not a blip. Bitcoin dominance is materially falling. These are big moves of capital.

Ryan Sean Adams:
[28:56] It takes a lot to move ETH. It takes a whole lot to move Bitcoin, and it takes a whole lot to move a $500 billion asset. That’s what’s happening.

David Hoffman:
[29:05] ETH is becoming more and more of a special snowflake with every purchase by Tom Lee.

Ryan Sean Adams:
[29:11] I agree. There can be more than one snowflake — every snowflake is special. Maybe there are some signs of froth in the digital-asset treasury space. Story Protocol launched its own DAT. a16z is involved in launching this DAT, and they’re a large holder of Story.

David Hoffman:
[29:30] Highly incentivized to launch the Story Protocol DAT.

Ryan Sean Adams:
[29:33] Why do this? One way to think about these treasuries — Story’s not a store-of-value type asset, nowhere close to Bitcoin or ether. Why would you do this? A pessimistic reason is you want to dump on retail. Another reason: it’s a TradFi token wrapper that allows Story Protocol to access US capital markets and trade inside brokerages. It’s like an ERC-20 for TradFi, a wrapper.

David Hoffman:
[30:05] TradFi isn’t coming into crypto to buy our bags. Let’s take our bags to TradFi. Please buy our bags over here now.

Ryan Sean Adams:
[30:13] Pretty much. And that might be what…

David Hoffman:
[30:16] You said this is froth. I’m going to push back. It’s only froth if people actually buy it.

Ryan Sean Adams:
[30:25] I agree.

David Hoffman:
[30:26] Anyone can launch a DAT for their coin. It’s only froth if TradFi retail is like, “Let me go buy this.” If there’s no demand, there’s no froth.

Ryan Sean Adams:
[30:39] Agreed. The question now: Eric Trump is wondering whether people will buy the World Liberty Financial token, because he also launched a treasury company this week called ALT-5. The purpose of ALT-5 is to buy the Eric Trump-launched WLFI treasury token. That’s their treasury play. ALT-5 is the ticker. That will allow TradFi exposure into the token WLFI, which is DeFi-lending-ish.

David Hoffman:
[31:12] There’s no app. I keep going to the World Liberty Financial website every month to open the app — it’s not launched.

Ryan Sean Adams:
[31:17] The app’s coming.

David Hoffman:
[31:18] If you want to buy into the Donald Trump grift of World Liberty Financial and say “Donald, please take my money,” you can buy the WLFI token.

Ryan Sean Adams:
[31:30] I don’t know yet.

David Hoffman:
[31:31] Or go to the stock market and buy the nesting-doll grift — the inflated treasury company with advisor shares minted to the Trump family — and buy the 50-cents-on-the-dollar version of WLFI. Depends on how much capital you want to hand over to Donald Trump.

Ryan Sean Adams:
[31:53] That’s a pessimistic take. I don’t necessarily disagree. It could totally be that. There’s a lot in the Trump enterprises that are…

David Hoffman:
[32:02] Grift nesting dolls.

Ryan Sean Adams:
[32:02] They’re doing all the things. NFTs, a meme coin, DeFi, and now the treasury company.

David Hoffman:
[32:09] The NFTs are the least grifty.

Ryan Sean Adams:
[32:11] I still have hope WLFI could be something they actually attempt within DeFi. We haven’t seen it yet, but I don’t discount that as a possibility. Maybe they build something. It feels a little like the Justin Sun playbook — doing all the things at once — but who knows. Justin Sun is serving up stablecoins in emerging markets and it’s helpful to some people.

David Hoffman:
[32:41] He did something.

Ryan Sean Adams:
[32:42] Coming up next, Circle and Stripe are launching chains — L1s, not L2s. We’ve got to talk about that. Also, the banks want take-backs on Genius. They don’t like the bill anymore.

David Hoffman:
[32:53] They want to undo? They want to redo?

Ryan Sean Adams:
[32:55] They want a redo. They’re scared Americans might get to keep their interest payments. We’ll talk about all that and more. But first, thanks to the sponsors that made this possible.

David Hoffman:
[33:02] TradFi stablecoin players are launching their own Layer 1, starting with Circle. Circle announced ARK. Purpose of ARK: a stablecoin payments, FX, and capital-markets Layer 1. You pay for gas on ARK with USDC — no ETH because it’s a Layer 1. The native “token” of ARK is USDC. It’s an EVM chain. There are opt-in privacy features — shielded balances with selective disclosures via a view key. There’s MEV protection, encrypted mempools, batch processing, multi-proposers — a bunch of things that reduce MEV.

David Hoffman:
[33:41] Permissioned validator set — something I know, Ryan, you’re so stoked about. Permissioned validators run by regulated institutions to better comply with enterprise policies. Because it’s permissioned, there will be a low number of validators, which means the chain goes super fast. So 3,000 transactions per second, finality under 350 milliseconds, using a whopping 20 validators. Some analysts view this as business diversification. Rob from Dragonfly has been beating this drum: stablecoin issuers — Circle, Tether — need to be more than tokenized money-market funds. They need to get into payments. That’s why Tether invested in startups that use Tether as the native L1. That’s why Circle is doing the same thing.

Ryan Sean Adams:
[34:33] To be fair, this looks like a payments network — early Visa vibes — a blockchain version of Visa. It’s permissioned, but it looks like that.

David Hoffman:
[34:43] Circle gets to be the hedge fund that invests in Treasuries and also compete with Visa, MasterCard, anyone with a payments network. Reactions from the crypto community were not positive. Adam Cochran said this isn’t a Layer 1 and it’s offensive to call it such. I agree. It’s a consortium chain — private, pre-approved validators who even have permission to refund transactions via dispute protocols. You have to squint to call this Web3. It’s a bastardization of blockchain.

Ryan Sean Adams:
[35:15] Some of those words are loaded. You call it an L1 because it validates its own blocks — that’s definitional. I think it’s a corporate blockchain. That’s all. A corporate intranet isn’t a bastardization of the internet; it’s a corporate intranet that connects to the internet. It’s just a thing that exists that a company is running.

David Hoffman:
[35:53] Neutrally, sure.

Ryan Sean Adams:
[35:54] I have some other takes, but there were more negative reactions too, right?

David Hoffman:
[36:01] Victor Bunin from Coinbase said this feels like Libra all over again. Jeff Garzik said he calls Ethereum the Grand Central Station of crypto because interconnection and protocol compatibility are strengths, and interconnection is fundamental to the internet and human electronic experience. “I’m building a new island on the internet” sounds paradoxical in 2025.

Ryan Sean Adams:
[36:20] I feel that take. Before my other takes, we should talk about Stripe because they’re doing the same thing. There’s convergence here. This wasn’t announced by Stripe; it was found out.

David Hoffman:
[36:33] I believe Fortune saw a job posting.

Ryan Sean Adams:
[36:35] Yeah, leaked. They are launching an L1 — a stablecoin L1 — called Tempo. What do we know?

David Hoffman:
[36:46] EVM Layer 1. We don’t really know what the stablecoin will be, but why would they use anyone else’s? I’d guess they release their own stablecoin — the Stripe stablecoin. It’s being developed in partnership with Paradigm. Matt Huang from Paradigm is on Stripe’s board.

Ryan Sean Adams:
[37:08] That’s interesting, right? Matt Huang, a crypto-native VC, is effectively CEO-ing this entire L1 blockchain project.

David Hoffman:
[37:17] Yeah. Stripe has distribution and flows. Why not control the full payments stack from minting to settlement so businesses can use Stripe’s interface for stablecoin transactions and bypass SWIFT? It makes a ton of sense. Between Stripe’s Tempo and Circle’s ARK, I’m way more bullish on Tempo. Circle is not in an advantageous position here.

Ryan Sean Adams:
[37:46] Sure. Stripe has massive distribution.

David Hoffman:
[37:50] Massive distribution.

Ryan Sean Adams:
[37:51] Positive take: Stripe’s stablecoin evolution has been impressive. In 2022 they were doing fiat only — banks, no crypto. In 2024 they acquired Bridge, a stablecoin project, for $1B. Then they acquired Privy, a Web3 wallet company, for $1B. Now they’re launching an L1. They’re leveling up, doubling down on stablecoins and getting off zero. Negative take from Austin Campbell: if everyone is launching their own L1 and I have to hop between them, why shouldn’t I just use a bank?

Ryan Sean Adams:
[38:44] Another take I enjoyed: Stripe building Tempo is like watching the final domino fall in what was always going to happen once payment companies realized they were paying protection money to Tether and Circle for the privilege of using infra they could own themselves. I’d extend that to the banking system too. Is this good or bad for crypto? For Ethereum? For other chains? One party it’s objectively bad for is the banks. If Stripe has its own blockchain and stablecoin with its own Treasuries, they’re not using banking infrastructure at all.

David Hoffman:
[39:28] They’re using the EVM as the backend to manage accounts.

Ryan Sean Adams:
[39:34] So there’s debate about who in crypto it’s good for, but it’s clearly bad for the banking system.

David Hoffman:
[39:43] I agree. Big question in Ethereum world: why not build a Layer 2? The thesis of Ethereum is this should be easy and cheaper as an L2. Why did both Circle and Stripe launch L1s?

Ryan Sean Adams:
[40:00] Because they’re stablecoins — real-world assets. What’s the purpose of a Layer 2 from a user perspective? When I import crypto-native assets into an L2, I care about: can they steal my assets, freeze them, censor my transactions. That’s the purpose of L2s. For USDC, Circle can do those things no matter what chain I’m on. If I hold USDC on Ethereum, they can do all three because it’s a real-world asset and Circle has backdoors. Am I losing anything if I put USDC on Circle’s L1? No. They can still do that anywhere.
The difference: will I import assets into Circle’s ARK L1? No, I will not.

David Hoffman:
[40:55] You don’t see yourself being a user of ARK.

Ryan Sean Adams:
[40:59] Not for assets I want to keep in an untrusted way. If you launch your own L1 and it’s a consortium chain, you make it disadvantageous for people to bridge assets to you. Why would I put ether there? Then Circle can do all those things to my ether. I’d rather keep it on L2 or Ethereum L1. If I put Tether there, now I have two parties that could steal, censor, or take my assets — Tether and USDC. I’m adding trust assumptions.
This looks like a corporate intranet that connects to Ethereum and the world ledger and crypto writ large, but doesn’t import assets inside it. It won’t be a DeFi chain or world ledger. I don’t think it’s a threat to crypto; it’s an adjacency. Net good because we’re off zero, especially for Stripe. Circle could have done this as an L2, but Stripe didn’t even have a blockchain and now they have an L1. The path is still open for them to become an L2 later if it makes sense and they want to expand.

David Hoffman:
[42:19] That’s my take. There’s so much discourse on this and it’s premature to know where these go. People think these are closer to Ethereum, Bitcoin, Solana, Avalanche than they are. Tempo, the blockchain, won’t be on CoinGecko. It’s further away from crypto. It’ll be in the background.

Ryan Sean Adams:
[42:48] It’s in the background.

David Hoffman:
[42:50] The only time you’ll see it is when you’re a Stripe user. There will be stablecoin account balances — not even called a “stablecoin,” just numbers on a screen — and on the backend Stripe uses that to transfer stablecoins. Mostly invisible. Unless Stripe or ARK are like, we’re an open developer ecosystem, hackathons, come build DeFi on us. That starts to encroach. But I don’t see that happening. How do you attract open-source developers when you’re a consortium chain of 20 permissioned validators?

Ryan Sean Adams:
[43:27] It’ll be a different use case. Not crypto-native long-term store of value, that’s for sure. Let’s talk about the banks. They are demanding exclusion for yield-bearing stablecoins in the Genius Act and are throwing a fit.

David Hoffman:
[43:42] I thought it was already excluded.

Ryan Sean Adams:
[43:43] It was, but they realized there’s a loophole. The exclusions apply only to issuers of stablecoins. So Circle itself, the issuer, cannot add yield to USDC — pass the Treasury 4.1% to users. In the current model, the issuer keeps that, and the Genius Act lets them. However, it doesn’t preclude exchanges or other parties from giving back interest or rewards to USDC holders.

David Hoffman:
[44:26] So if you hold USDC on Coinbase, you get a 4.8% reward.

Ryan Sean Adams:
[44:30] You can still get your 4%-ish reward. If you hold it on Base, you can still get that. Banks are realizing this, and they’re like, oh no, this will take our interest. In the current banking model, they pocket that interest — that’s why your Wells Fargo “savings” gives you like 0.15%. They’re upset and writing letters, but the bill already passed. Jake Chervinsky says: sorry, you did a bad job negotiating your regulatory moat. Try lobbying better next time. The banks demanded the exclusion for yield-bearing stablecoins in the Genius Act, and now they’re upset the language they asked for doesn’t screw over stablecoin holders hard enough. That’s hilarious.

David Hoffman:
[45:19] Let me get out my violin. All right, one last bank thing. Trump guarantees fair banking to all Americans. Call this analog bankless values. A fact sheet from the United States White House says President Donald Trump guarantees fair banking for all Americans. Today he signed an executive order to ensure federal regulators do not promote policies and practices that allow financial institutions to deny or restrict services based on political or religious beliefs or lawful business activities, ensuring fair access to banking for all Americans. This is tripling down on killing Operation Chokepoint 2.0. He’s stating that all individuals — we already had institutions — now all individuals get access to banking under all conditions, which is good.

Ryan Sean Adams:
[46:14] Great. We’re discovering credible neutrality in our banking system. Ethereum and Bitcoin always had that in crypto, but I’m glad the banks are learning about this.

David Hoffman:
[46:22] Coming up next, we have an update on the Bitcoin Strategic Reserve. What are the words from Treasury Secretary Scott Bessent about the Bitcoin Strategic Reserve? And it’s rare we actually see an economic attack on a blockchain, but this week we got one — a big 51% attack on Monero. I think the last time I heard about a 51% attack was Ethereum Classic.

Ryan Sean Adams:
[46:48] Oh yeah. Wow.

David Hoffman:
[46:49] But honestly, who cares about Ethereum Classic? People care about Monero. I care about Monero, and Monero is getting 51%-attacked. We’re going to talk about that. And now Coinbase adds a DEX to the Coinbase app so you can access any token on Aerodrome in Coinbase. We’ll talk about that and more. But first, a moment to talk about some fantastic sponsors that make the show possible, like…

Ryan Sean Adams:
[47:07] David, we’ve got an update on the US Strategic Bitcoin Reserve. It’s from Scott Bessent. Here are his comments.

David Hoffman:
[47:14] “We’ve also started, to get into the 21st century, a Bitcoin Strategic Reserve. We’re not going to be buying that, but we are going to use confiscated assets and continue to build that up. We’re going to stop selling that. I believe that Bitcoin reserve at today’s prices is somewhere between $15 and $20 billion.”

Ryan Sean Adams:
[47:37] This is a little disappointing for some Bitcoin bulls who hoped they’d set up a Strategic Bitcoin Reserve and start throwing all the cash into Bitcoin. Senator Lummis’s bill kind of calls for something like that.

David Hoffman:
[47:56] She did say that.

Ryan Sean Adams:
[47:56] “We’ll use low-repriced gold to buy Bitcoin.” Scott Bessent is saying that’s not what they’re going to do.

David Hoffman:
[48:02] “We’re not buying any Bitcoin.”

Ryan Sean Adams:
[48:03] Unfortunately. They will set up the Strategic Bitcoin Reserve, but just for the Bitcoin they’ve already seized. He said that’s about $20 billion worth.

David Hoffman:
[48:13] The US government accumulates Bitcoin via seizure, which doesn’t make me feel good. Then they’re incentivized to seize more.

Ryan Sean Adams:
[48:20] If you think about it too much, it doesn’t feel good. Don’t think about it too much.

David Hoffman:
[48:23] “How can we seize more Bitcoin?” If that’s their buy plan…

Ryan Sean Adams:
[48:27] …to seize company Bitcoin? I’m not feeling great, but at least it’s a step to set up the Strategic Bitcoin Reserve. $20 billion though — Tom Lee will have more ETH than that in the next few weeks. It’s not very much.

David Hoffman:
[48:43] The government is going to be a weak player.

Ryan Sean Adams:
[48:45] What’s this Coinbase stuff? Coinbase launched DEX trading on the Coinbase wallet? Is that it?

David Hoffman:
[48:52] DEX trading. They’re not launching a new DEX — there are already DEXes on Base, namely Aerodrome. You can go to the Coinbase wallet and I think also the Coinbase app. Yes, excuse me — bigger story — the Coinbase app, also known as just Coinbase, lets you buy tokens that connect to any tokens on Aerodrome. Whether or not that token is listed on the Coinbase exchange, you can access it via Aerodrome. Any token on Aerodrome is available in Coinbase. Pretty bullish. If you are in New York State, quell your excitement — it’s not for you.

Ryan Sean Adams:
[49:33] You don’t get it in New York State?

David Hoffman:
[49:35] You don’t get it.

Ryan Sean Adams:
[49:36] You’re in a financial prison still?

David Hoffman:
[49:37] If you own Aerodrome, that’s up 25% on the news because Aerodrome is hooked into the Coinbase front end. Following in the footsteps of Morpho — Morpho on Base got hooked into the Coinbase front end to give BTC-back loans. Now Aerodrome is hooked in for tokens. If you want to launch a meme coin and want it effectively listed on Coinbase without risking not being listed, launch it on Base.

Ryan Sean Adams:
[50:04] So cool.

David Hoffman:
[50:05] Get liquidity on Aerodrome and then you can buy it on Coinbase.

Ryan Sean Adams:
[50:08] What’s cool is Coinbase is not building this themselves. Aerodrome is an AMM and Coinbase is tapping the community of builders on Base. This is the DeFi mullet we talked about in 2021.

David Hoffman:
[50:20] Exactly the DeFi mullet. Exchanges in front. You know how Coinbase has alignment with Aerodrome? Why they’re OK with this rather than building their own app?

Ryan Sean Adams:
[50:28] Because it’s on Base? Any other reasons?

David Hoffman:
[50:31] Yes, and Coinbase Ventures bought a ton of the AERO supply forever ago. Coinbase owns AERO tokens.

Ryan Sean Adams:
[50:39] Look at the DEX volumes — really doing well, insane. Brian Armstrong tweeted DEX trading rolled out to 1% of users in the Coinbase app, and volumes are already popping. It’s still early. “We’ll ultimately support every chain our customers want.”

David Hoffman:
[50:54] Love it. I expect Robinhood — and a Robinhood chain — to follow this pattern. It makes so much sense.

Ryan Sean Adams:
[51:01] I agree. David, is the Uniswap fee switch finally on the way? There were some moves this week. Tell me.

David Hoffman:
[51:08] Potentially. Some precursor moves out of the Uniswap org and structure. The Uniswap Foundation put forward a proposal to wrap the Uniswap DAO with a legal structure known as a DUNA under Wyoming law. What’s a DUNA? Decentralized Unincorporated Nonprofit Association. A legal innovation from a16z’s Miles Jennings and others. This allows Uniswap as a DAO to be legally recognized and compliant in the United States, giving them the legal comfort to do things they haven’t been able to do before. One might be the fee switch. If you’re interested in the story arc of the fee switch, this is a necessary precursor for the people with hands over the switch to feel legally protected and compliant turning it on.

Ryan Sean Adams:
[52:06] Senator Lummis — a Wyoming senator — says, congrats to Uniswap for setting down roots in Wyoming. Our state’s laws for digital assets are best in class. I commend the Wyoming legislature for its foresight in creating decentralized nonprofit associations. This wrapper gives the Uniswap Foundation and the protocol some liability protection, a jurisdiction for tax treatment I assume, and makes DAO votes binding in US courts. That’s cool. Uniswap has been building a lot. I noticed as we started the Roll-Up: UniChain’s been cooking. 200-millisecond blocks live on UniChain using TEEs. I know you’re a big TEE guy.

David Hoffman:
[52:53] I’m a big TEE guy.

Ryan Sean Adams:
[52:54] Flash blocks on UniChain run the way they were designed to. Remember Vitalik’s Ethereum barbell: L1 might get to 1-second block times, but not millisecond zone. Leave that for L2s that can hyper-optimize. That seems to be playing out with UniChain.

David Hoffman:
[53:22] I talked to Preston Van Loon again on the premium feed. He named 1-second blocks as a real possibility for Ethereum around 2028–2029.

Ryan Sean Adams:
[53:37] That’s cool. Moving on. Do Kwon has pleaded guilty. If you don’t know who Do Kwon is, he’s the co-founder of Terraform Labs.

David Hoffman:
[53:53] I’m jealous if you don’t know what that is.

Ryan Sean Adams:
[54:01] Terra Luna — the stablecoin that blew up.

David Hoffman:
[54:02] The stablecoin that blew up — around $80 billion — blew up.

Ryan Sean Adams:
[54:06] That’s a lot of billions.

David Hoffman:
[54:07] He pleaded guilty in a New York federal court to two felony charges: conspiracy to commit fraud and wire fraud. He initially pleaded not guilty to nine counts that included securities fraud, commodities fraud, wire fraud, and conspiracy to commit money laundering. He agreed to forfeit $19.3 million and will pay restitution to victims. Each charge carries significant prison time, up to 25 years total. I imagine he won’t get all of that because he pled guilty and cooperated.

David Hoffman:
[54:42] Prosecutors agreed to recommend no more than 12 years if Kwon fully accepts responsibility.

Ryan Sean Adams:
[54:50] So he’s like, I’ll plead guilty if you reduce 25 years to 12 and I get to live a life after my sentence.

David Hoffman:
[54:58] Prosecutors agreed to recommend no more than 12. So 12 years is the cap. Sentencing is scheduled for December 11. He was arrested in 2022.

Ryan Sean Adams:
[55:10] Then he was on the run, arrested in Montenegro, and extradited back to the US. What a story. He’s already been in jail. I wonder if that counts.

David Hoffman:
[55:22] Being in a Montenegrin jail for two years should count as double.

Ryan Sean Adams:
[55:25] Oh my God. It’s the end of a chapter with Do Kwon’s guilty plea. We’ll keep you updated on sentencing. David, Monero getting 51%-attacked — the famed 51% attack of a proof-of-work network — is actually happening. Monero is a privacy chain. It’s been live a very long time. It has a large history.

David Hoffman:
[55:48] It’s like Bitcoin for privacy, and Bitcoin in the sense it has a lot of Bitcoin ethos: total decentralization, total immutability.

Ryan Sean Adams:
[55:56] How did a 51% attack actually happen? This is an interesting academic study. Details?

David Hoffman:
[56:03] They acquired the hash rate. To attack a proof-of-work blockchain you need at least 51% of hash rate. An organization, QBIC, acquired this hash rate by incentivizing miners with a more lucrative model than Monero mining. QBIC distributed Monero it mined 50-50: half to buy back and burn QBIC tokens, half as extra bonuses to miners in QBIC tokens. The feasibility depends on the value of the QBIC token. The system increased the effective reward miners received to 3x compared to directly mining Monero.

Ryan Sean Adams:
[56:49] They basically bribed their way.

David Hoffman:
[56:51] Bribed their way. With the pump that ensued, they had the economic war chest to pay for 51% attacking. It costs money — I think around $100,000 a day.

Ryan Sean Adams:
[57:02] That’s not that much. $100,000 a day for that kind of economic security?

David Hoffman:
[57:10] It’s lower because Monero’s market cap is small compared to Bitcoin, so the hashing requirement is smaller.

Ryan Sean Adams:
[57:23] They were top 30 — or at least were.

David Hoffman:
[57:23] Number 42 with a market cap of $4.5 billion. Not small, but not massive.

Ryan Sean Adams:
[57:28] This is a real attack in the wild of a proof-of-work network. What can you do with 51% of hash? You can rewrite history, double-spend, and censor transactions. You have god mode over the chain.

David Hoffman:
[57:51] You can’t spend other people’s coins. You can spend your coins twice.

Ryan Sean Adams:
[57:57] You can spend your coins twice. Pretty bad. Especially on a privacy chain where no one can tell what’s going on.

David Hoffman:
[58:05] Yeah — what’s going on.

Ryan Sean Adams:
[58:05] Question: is this a shot across the bow for Bitcoin? Baby-brother chain, proof of work, same mechanism, much smaller, but this could happen to Bitcoin in some future if they’re not careful and don’t have the incentives in place.

David Hoffman:
[58:33] Empirically it shows a 51% attack can happen to a $4.5B network. Bitcoin is $2.3T…

Ryan Sean Adams:
[58:45] But it’s not only about size. It’s about economic incentives to miners. The reason market cap matters now is because of block rewards. Bitcoin continues to issue new BTC as a reward, but that’s cut every four years.

David Hoffman:
[59:07] Unlike Bitcoin, Monero has ongoing inflation — no hard cap — around 0.8%.

Ryan Sean Adams:
[59:17] So they even had permanent block rewards, and this still happened.

David Hoffman:
[59:20] Despite permanent block rewards, they didn’t have the economic weight. You can say this won’t happen to Bitcoin because it’s 100x larger, but when the security budget drops 50%, then 50% again, it’s about the daily economics, not just market cap.

Ryan Sean Adams:
[59:37] Is it 100x in market cap, but what is it in daily economic incentive to own the network? It’s only $100,000 for Monero.

David Hoffman:
[59:46] That’s the smaller number.

Ryan Sean Adams:
[59:48] Is it 30x for Bitcoin? We could run the numbers. Anyway, it’s a warning signal — very early — for Bitcoin.

David Hoffman:
[59:56] That’s right.

Ryan Sean Adams:
[59:57] Bitcoin security-budget things are theoretical. As we approach them, they become less theoretical. This is something happening in practice.

David Hoffman:
[1:00:12] Yep — happening in practice.

Ryan Sean Adams:
[1:00:14] We’re going to end the Roll-Up there. Bankless listeners, 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.

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