ROLLUP: Bull Market? | Inflation Cools, War Heats | Robinhood Flips Base | ETH’s Fee Problem

TRANSCRIPT

David Hoffman:
[0:04] Bankless nation it's the third week of july and for the third week in a row me and ryan go over the question have we bottomed yet we got some extra data to talk about inflation is coming in cold, but the iran war is coming in hot and also we've got some drama over in the robin hood base ethereum complex ecosystem,

David Hoffman:
[0:26] uh i think that's the big news of the week is that robin hood chain has past base in activity. And as a result of that, things are just, things are changing. Times are changing. It's a new bull market. So time for some changes.

Ryan Sean Adams:
[0:38] Yeah. Well, I don't know if I'm ready to call a bull market, David, but there are some changes that I feel are downstream of Robinhood chain. One, it might be actually, and this is somewhat bullish for ETH, Maxie's listening right now, is some movement, positive movement for ETH on the ratio. There's a question of whether that is Robinhood chain induced. Maybe. Well, We'll explore in today's episode. How about that? There's also Jesse from Base, founder of Base, saying all first quarter he's had to eat shit.

David Hoffman:
[1:06] Creator of Base, I think, is his preferred title.

Ryan Sean Adams:
[1:09] Creator of Base has been eating shit. Those are his words, not mine. Talk about what he means, but this is a base pivot. We'll talk about that. And also, there's a new resurging question again in the Ethereum ecosystem, which is, are the L2s paying enough rent to ETH holders?

David Hoffman:
[1:27] Wait, I've never heard of this question before. Have we ever talked about this before?

Ryan Sean Adams:
[1:33] It's kind of like the perennial question of have we bottomed yet? We're going to talk about that today.

David Hoffman:
[1:37] There's new stuff to talk about there. There's new stuff to talk about.

Ryan Sean Adams:
[1:39] Yeah, including Plenya is back. Do you remember Plenya? The famous L2 bull. Back? They are back.

David Hoffman:
[1:46] Mythological creature in Ethereum lore.

Ryan Sean Adams:
[1:49] Yeah, with a hot take. So we'll talk about all that and more. But why don't we start by

David Hoffman:
[1:53] Looking at this chart? When you look at this chart, Ryan, what do you feel? What do you feel? How does this chart make you feel? For the listeners, we are looking at the four bull markets of old in Bitcoin. 2014, 2018, 2022, 2020, SpaceX. It's sectioned off into four sections of each of those things. You have the bear, the pre-bull, first bull, and second bull. And it all lines up pretty well. Again, this is just the cycles playing out. And if you believe in this chart, what this implies, we're basically towards the end of the bear. Not at the end. There is a chunk of time left in this aligning of the seasons, aligning of the cycles for some shenanigans to happen. And so I think that's the question to be asked is like, in this remaining two quarters of time, the rest of this year, perhaps, what do we think happens? And it's like, I think the big question is, is it a slow grind to the right? Is this a flat grind? Or is there a final capitulation leg? We've just been asking this question every single week on the roll-up. I'm in the camp of, it's a grind to the right.

Ryan Sean Adams:
[3:00] Well, I mean, I think, like, you asked how this chart makes me feel. And this chart makes me feel the thing I have been feeling for the last 12 months is that, like, I need to get this tattooed somewhere on my body. Never fade the cycle. Never fade the cycle. Every time you want to fade the cycle in crypto, the cycle repeats. And this is just a fourth instance of the cycle repeating. That's what this chart is saying. So the clearest indication of what's going to happen is what happened the last three times. And that means we're close to a bottom, but have not yet bottomed. And so I think the answer to the question is, have we bottomed yet? Almost. That would be my answer to the question.

David Hoffman:
[3:44] But not yet, but not yet, but not yet.

Ryan Sean Adams:
[3:46] And it just follows exactly like this. I believe in this chart. I believe very much in this chart. And I think it's going to play out the exact same way. So we're talking about a bottom in probably two, three months and then sideways for the next year, sideways up and then we rebuild the base and then we have a okay 2027, a fantastic 2028 and then it just repeats again.

David Hoffman:
[4:14] Yeah, it would be poetic for there to be a bottom in October. Like one year after 10-10 is like the actual Pico bottom. I guess I'm trying to be a, I'm trying to negotiate my way into the cycles not being a thing. And the way that I do that now is that I do, I say that instead of there being a final capitulation wick in October, we're just, we're already there. We're just grinding flat for the remainder of the year. Why? I don't know. Because it's too magical for the cycles to keep on repeating. That's too much magic.

Ryan Sean Adams:
[4:52] I mean, it's okay for magic to exist in the world, you know? That's why I'm seeing the Christopher Nolan movie this week, because he is a magical director. He brings magic to his movies, and that's okay. I know every single movie I see from him is going to be pretty solid. Magic can exist in the world.

David Hoffman:
[5:11] We were talking about The Odyssey right before we started recording. I'm going to see it this Friday.

Ryan Sean Adams:
[5:15] I just wanted to inject that somewhere in the world today.

David Hoffman:
[5:17] Are you seeing it in IMAX?

Ryan Sean Adams:
[5:19] Of course. That's the only way to see it. Got to do it.

David Hoffman:
[5:22] All right. Well, Ryan believes in magic. That's the takeaway so far.

Ryan Sean Adams:
[5:25] And I believe in four-year cycles. How about Brian Armstrong? So he put out, I think, a poll on this.

David Hoffman:
[5:31] We're looking at it right here. 31,000 votes. 44% said yes, the bottom is in. 55% said no, the bottom is not in. Now, of course, Twitter is just a sentiment check. Pretty split, though. Pretty split. I like the tweet from Good Alexander where he goes, Bitcoin can't go down with a war and Michael Saylor selling. Zcash can't go down with a day zero privacy bug discovered by AI. ETH books Robinhood after Vitalik disavows gambling as a use case. The night is darkest before dawn. Bitches. He's basically saying, like, what's going to send us lower? We've got nothing to send us any lower. Like, it can't be done. you might as well go up.

Ryan Sean Adams:
[6:13] But that's how cycles kind of end with seller exhaustion, right? So this is just saying there's seller exhaustion. What's the worst that could happen? I do think some worst things could happen though. Probably not an unwind, but if you had a major stock sell-off, and we're seeing a little bit of a sell-off today, but that's a tiny micro sell-off. If we saw a 10% to 20% NASDAQ sell-off from here, things could still get uglier. I mean, that could be a final capitulation bottom.

David Hoffman:
[6:44] Yeah, you can see. Okay, so here's the... We're looking at the charts right now, so you can see here's the Iran war conflict, and then the absolute monster rally, and then we've just been kind of ranging up the highs. You can see if we went down, I don't know, a modest 8% from here, There's no way Bitcoin would be above $50,000.

Ryan Sean Adams:
[7:03] You're talking about the NASDAQ. So if we went down to what, like, you know, 26K, something like that?

David Hoffman:
[7:09] Below 27K. So we're at 29K right now. If you've been below 27K, which would bring us, you know, down 7%.

Ryan Sean Adams:
[7:17] Yeah.

David Hoffman:
[7:17] Like, yeah, Bitcoin is hitting an all-time low. Or not an all-time low, a cycle low. For sure. But not that much.

Ryan Sean Adams:
[7:24] Yeah. I guess we'll check in on the bottom again next week. I mean, part of the reason we're asking this question is because crypto was up a little bit. And was it up partly due to inflation news? So we had some positive numbers on inflation, which means inflation was a little lower than analysts expected on the monthly rate.

David Hoffman:
[7:43] I would say it's a decent chunk lower. So here's the summary from the Kobayashi letter. June, CPI inflation falls to 3.5%, below expectations of 3.8%. Core CPI inflation fell to 2.6, below expectations of 2.8. Month-over-month inflation fell 0.4%. Biggest monthly drop since May 2020. So we started this week. We knew we were getting these numbers this week. After last month, it was a little bit higher than expected, and there had been discussions about near-term rate hikes happening this year, which really spooked the market. And then these numbers came in significantly below expectations with inflation. So inflation is coming in real cold. And I think everyone in the market who is positioned with risk, like myself, and basically probably most of the listeners, all just breathed a sigh of relief. It's like, oh, phew, phew. I can hold on to my risk on position.

Ryan Sean Adams:
[8:42] Well, it's interesting, though. Of course, this is annualized inflation. It's somewhat of a lagging indicator because on the other side, we have cold inflation numbers. We have hot Iran news, it seems like. And since the beginning of July, oil is up 20% in July. That's going to be reflected at some point in future increases in energy prices, right? And that will be reflected in CPI, at least in some measure. So it's sort of interesting. We got lower CPI numbers, but energy prices increasing on the week. And certainly the war has continued to intensify. I think last week we played a clip of Trump saying, what, like, it's over. I'm not talking to these guys anymore. What's his exact...

David Hoffman:
[9:25] They're kooks or something. Yeah. Pretty aggressive words.

Ryan Sean Adams:
[9:30] Yeah. So what's the update on the Iran war?

David Hoffman:
[9:34] Yeah. Okay. So today, the time of recording Thursday, fifth straight day of U.S. strikes on Iran, targeting Iranian command centers, air defense sites, missile and drone capabilities in coastal surveillance facilities. All kind of the same words that we were using last time we were doing this. All the goal is to attempt to reduce Iran's ability to disrupt shipping through the Strait of Hormuz. So we're just trying to brute force Hormuz open. There's a quote from Trump that I thought was worth reading. The memorandum of understanding with you're dealing with sleazebags doesn't mean much. And so he is positioning the MOU that they had with Iran as like kind of a test, of Iran's commitment to the memorandum of understanding. Do we have a memorandum of understanding? Now, there's a quote out there that Iran's never won a war, but they never won a war, but they never lost a negotiation. Iran's very good at negotiating. They've negotiated the hell out of their very terrible position that they're in with all the previous presidents. And now we kind of know that and Trump knows that explicitly. And so because they were trying to overextend themselves in the negotiation phase, based off of their very little leverage that they had, Trump was like, you guys have no position. So I'm going to send more bombs because I'm not listening to you. And so that's kind of where we are.

David Hoffman:
[10:48] Donald Trump informed Congress that we are resuming military action in Iran. So that was a part of the War Powers Act that mandates the president informs lawmakers within 48 hours of launching a military attack. So according to Trump, he has now 60 more days of a free reign to have a conflict in Iran because he's not counting the last conflict in Iran as the same conflict. So now we have a new second conflict in Iran. The first one is a different one. And so we'll see how that stands up. But as far as things go that's just where it is.

Ryan Sean Adams:
[11:23] How does this stop Will this ever stop? Like, so...

David Hoffman:
[11:31] Like, it's an unstoppable force meets an immovable object because Iran is up against the ropes. And so, like, and again, the nuclear effort by Iran is existential. It feels existential to Iranian sovereignty, the regime's sovereignty. So they cannot give that up. Sure. But then Donald Trump is like, well, I'm not allowing you guys to have anything. And so it seems to be that we're in a, between a rock and a hard place of Iran needs to keep constricted the Strait of Hormuz because that's their one defensive maneuver that they have is to increase energy prices across the world.

Ryan Sean Adams:
[12:05] And you said they didn't have leverage, but they do have leverage there with the Strait of Hormuz, right?

David Hoffman:
[12:09] I mean, they get some drugs in. We're doing our best to disrupt whatever control that they have. So the U.S. Central Command announced on Monday that it would resume the naval blockade of traffic entering and exiting Iranian ports. So oil was flowing out of Iran and into, and money was shipping into Iran since this peace deal had been signed. That was lifted on June 18th with the peace deal, but now is reinstated.

Ryan Sean Adams:
[12:36] I mean, it feels like we're pretty much where we were a month ago then, before the memorandum of understanding.

David Hoffman:
[12:41] Yeah, yeah. The situation, the economic situation in Iran is decaying. They don't have much economic view. They're on the ropes economically. And now there are, once again, protests. There are small incremental protests emerging in Iran. You know, TBD if they grow into anything. But you could imagine that if you have the U.S. military on one side and then another wave of domestic protests on the other, like Iran's in a worse and worse position. is just not moving quickly in any direction. But economically, they just don't have much of a lifeline.

Ryan Sean Adams:
[13:15] Difficult to see, though, with these actions and end in sight. It just feels like it could go back and forth, back and forth for some time, for weeks to come, for months to come.

David Hoffman:
[13:25] The words forever war have been uttered frequently, more and more frequently this week, specifically. You talked about the oil prices. So the oil prices came down from the middle of the Iran war oil price range. We'll call it $95. It's kind of picking the middle of the curve. It fell down 28%, almost 30%, to $66 at the very start of this month. And now since resuming conflict, we have gone up from $66 to $78. $78 oil is still the cheapest oil during this Iran war conflict in total. And so we're below all previous oil prices for the entirety of this conflict. And a part of that is just because, The market has had time to route around the Strait of Hormuz. And so, you know, buyers are buying oil elsewhere. The United States is pumping more oil than ever. The Gulf countries are shipping oil away from the Strait so they can just ship it outbound elsewhere. And so the market has been given time to rebalance itself. And so I don't think we're ever going up to like high, high oil prices ever again just because like the time is on the United States side here.

Ryan Sean Adams:
[14:32] So we are recording on a Thursday. This episode comes out on a Friday, so listeners will have already heard this, but Trump plans to address the nation tonight, so that news will already be in. And there's a question, what's it going to be about? Is it going to be about the war? Is it something else? Election fraud? Assassination of Lindsey Graham are in the notes? Like, I have no idea what all this is, but it's Trump, so it'll be something.

Ryan Sean Adams:
[14:57] David, can we check in on some of the other prices? So I know we're down a little bit at the time of recording, but other than that, I mean, Bitcoin, Ether, they have had pretty good weeks.

David Hoffman:
[15:08] I would say that we had a very good week on the crypto side of things. I think people were noticing this on Twitter this week. There was unique strength in crypto assets this week because there was not strength in the stock market, not comparatively. There was definitely not strength in the memory stocks, which is like the other big speculative bubble that's happening. But there was strength in crypto. So Bitcoin was up 2.5% this week. ETH was up 8% this week. So not only did we have unique strength in crypto, but we had unique strength in ETH as well. The ratio, the Bitcoin-Ether ratio is up 16% since the start of June. Wow. I'm going to call the ratio, the ratio is edging at this present moment.

Ryan Sean Adams:
[15:48] Do you think the ratio bottomed?

David Hoffman:
[15:52] I mean, the ratio was way lower right before Tom Lee bought it. So it was at 0.018 back in April of 2025 in the absolute depths. And then Tom Lee added 130% to the ETH BTC ratio. And then we have retraced that 130% by 30%. So we're 30% lower from the Tom Lee top. But since the bottom, we were up 18%. We're still kind of trending post. We're trending down from the Tom Lee top. But like, hey, I'm watching it.

Ryan Sean Adams:
[16:22] I'm watching it. You think that a part of this was a Robinhood chain and some attraction? I know we'll discuss that a little bit later in the episode, but there's some energy coming from that sector of crypto, and that is in the Ethereum expanded universe.

David Hoffman:
[16:36] Yeah, yeah. The Uni token was up 11% because Uniswap V3 and V4 are seeing very high volumes. The Athena token is up 12% because Athena is integrated into Robinhood chain Morpho is also up in double digits and so the Ethereum ecosystem DeFi tokens are definitely up so I think I don't know how else to explain, the unique ETH price this week other than Robinhood chain so I think that's fair I think that's right.

Ryan Sean Adams:
[17:04] Well, let's check in on Michael Saylor. And you also mentioned Tom Lee, so maybe we should check on him too. So Saylor on the Week has purchased more cash. He has more cash reserves. Last week we reported... He's purchased cash. Yes. He's purchased cash with his...

David Hoffman:
[17:22] What did he sell?

Ryan Sean Adams:
[17:23] He sold his... He inflated some MicroStrategy. So this is at the market sales.

David Hoffman:
[17:29] He turned on the money printer.

Ryan Sean Adams:
[17:30] He turned on the MSTR money printer and bought it, which is different from last week. So last week he was building his reserves. How much Bitcoin did he sell last week? Reported a few million, right? 300, 400 million, something like that?

David Hoffman:
[17:43] Yeah, it was like some single-digit thousands of Bitcoin he sold.

Ryan Sean Adams:
[17:47] Yeah, and this week it's...

David Hoffman:
[17:48] Maybe double digits, yeah.

Ryan Sean Adams:
[17:50] Zero.

David Hoffman:
[17:51] What, zero? Zero. Zero Bitcoin. He sold zero Bitcoin this week. This week.

Ryan Sean Adams:
[17:55] This week he sold zero Bitcoin. This week. But he managed to raise $466 million by inflating some MSCR, which is impressive. I didn't know he could still do that. We thought he was kind of out of bullets, but he's never out of bullets, is he?

David Hoffman:
[18:11] Well, he gets to do whatever he wants. So yeah, $466 million of MSCR. They now have $3 billion of cash. So they have a $3 billion cash position. That will give them 30 months of dividend coverage in just cash. Excuse me, did I say 30? Yeah. 20. 20 months. 20 months. And so I think if we go back to this chart, Ryan. Yeah. This chart. 20 months. Gets him into the pre-Bowl section. That's early 2020. Not even. Not even. No, no.

Ryan Sean Adams:
[18:41] That gets us to 2028. That gets us into the bull market fully.

David Hoffman:
[18:45] That gets us. So he has until the pre-Bowl to first bull section shift. You're looking at this picture. Bison, Bison plenty of time. So who's bigger? Michael Saylor or The Cycles?

Ryan Sean Adams:
[18:58] Cycle is always bigger.

David Hoffman:
[19:00] Cycle is bigger than Microsoft.

Ryan Sean Adams:
[19:01] Cycle, look at the tattoo, man. Don't fade the cycle. Okay, so he's fine for the cycle. We'll just assume that. Now, there's, of course, a bear take on this. This Peter Schiff loves giving the bear take on anything Saylor does. By selling MSDR at a huge discount to Bitcoin value per share, you needlessly destroyed shareholder value just to avoid selling Bitcoin. Well, yeah, that's the point. That's MSTR holders.

David Hoffman:
[19:26] I will say that that's a bear case for MSTR, not for Bitcoin. Of course. He's not talking about Bitcoin. That's actually bullish for Bitcoin.

Ryan Sean Adams:
[19:33] And in a way, it's not maybe, as long as you increase your Bitcoin per share, I'm not sure what it looks like on the week, but that's the end goal that MSTR holders should actually want. The bold take on this from Dylan LeClaire is stronger credit, stronger equity, more Bitcoin by not selling it. So it chores up the balance sheet. On the other side of things, I feel like Tom Lee is making miracles happen. I have no idea where he's getting this cash because it's not from preferred shares right now. It's not from kind of debt-based instruments. But he has increased. He made a big buy this week. You said, every single day I get this notification. I don't know

David Hoffman:
[20:13] What you subscribe to.

Ryan Sean Adams:
[20:14] But you get Tom Lee notifications when he's buying.

David Hoffman:
[20:17] Yeah, this is a Telegram notification from Lookout Chain. It's just like a, it's just, it's a really good, like kind of just feed of stuff that's happening on chain. Yeah. And like every single day, it's like in the notification, I see Tom Lee's face. Like I haven't, I haven't clicked on the notification yet, but the bubble is up on my phone and I see Tom Lee's face just staring at me.

Ryan Sean Adams:
[20:34] So through all of these, through all of these purchases, Tom, Tom Lee is making every single day or like all the days that, that David is waking up and looking at it. He now has 4.8% of all ETH supply. That's 5.77 million ETH supply. That is 96% of the way to what he said he was trying to do was reach 5% of all ETH supply. He did this in a year and he's doing it during a bear market. And this is a quite a... Quite a bear market for ETH holders in particular, right? Because there's the feeling that ETH kind of skipped last cycle and Tom Lee is doing this and he's somehow raising the cash in order to get to his 5%. Pretty incredible.

David Hoffman:
[21:24] Yeah, pretty incredible. He needs to retract his 5% target.

Ryan Sean Adams:
[21:32] What do you mean? He has to blow past it.

David Hoffman:
[21:34] He needs to raise that? He has to blow right past it.

Ryan Sean Adams:
[21:38] You want him to get to what? 7%? 8%?

David Hoffman:
[21:41] As much as he can. Well, unfortunately, if he gets past like 33%, that's a huge problem. Oh, he's not.

Ryan Sean Adams:
[21:48] 33%? That's insane.

David Hoffman:
[21:52] He did 5%. That is insane. We said 5% was insane.

Ryan Sean Adams:
[21:57] I thought it was insane, and he's done this. But I think it would start to be diminishing returns and into negative return territory if he starts acquiring into the double-digit mode. But you do think he should raise his target from 5% to something higher.

David Hoffman:
[22:11] It's just bearish for him to be like, okay, I'm done. I'm not buying anymore.

Ryan Sean Adams:
[22:16] Yeah. I mean, this could be an incredible investment for him, an incredible position to take if ETH does resume its ascent, which is to be determined at this point. But Tom Lee is...

David Hoffman:
[22:29] I mean, I don't even know if it needs to do that. I think ETH just needs to

David Hoffman:
[22:31] track the crypto market And Tom Lee will do decently well.

Ryan Sean Adams:
[22:35] He'll do pretty well. Yeah, he'll do pretty well. But Tom Lee, of course, is also a fan of Robinhood Chain, which we're going to discuss next. He said this about Robinhood Chain. One of the biggest crypto success stories of this year is the breakaway success of the Robinhood L2. Dollar volumes have exceeded $1 billion, and Robinhood Chain has now more trading volume than any other DEX. I don't know about that last part. I think you did some math on that, but we'll talk about that. I want to dive into the Robinhood chain, the ways it is making. Talk about Jesse's quote of base eating shit. Talk about maybe ETH tokenomics, if ETH holders actually benefit from the success of Robinhood chain and a lot more. But before we do, we want to thank the sponsors that made this episode possible.

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David Hoffman:
[24:51] So this week, Robinhood chain usage flipped base on July 10th, so six days ago from the time of recording. User operations per second, that's like a metric, refined metric for measuring usage, basically, from layer 2B. 117 user operations per second on Robinhood chain, where just 93 on base in Robinhood chain just, of course, launched just a couple weeks ago. So very quick ascent by Robinhood chain. There's just actually way more metrics that we should go into. What's the number one activity on Robinhood Chain? Obviously, memes, we know this. The protocol TVL, the number one protocol TVL is Morpho at $152 million. That's because inside of the Robinhood app, you can get 7% on your dollars. And in the background, it's the DeFi mullet. It's Morpho on Robinhood Chain.

Ryan Sean Adams:
[25:44] Is that the Robinhood app, the app, or is it their wallet app? It's the app. Oh, it's the app, okay. The app.

David Hoffman:
[25:50] That is the only thing about Robinhood Chain that I know of so far that is integrated in the Robinhood app is the 7% USDG deposited into Morpho. And there's $152 million of that. Athena, $110 million. Uniswap, $40 million. And Maple Finance, $30 million TVL. And so pretty cool. Pretty cool. And naturally, all of the activity, all the user operations is very dominantly going to be meme coin trading. There is currently, Ryan, a pretty fierce competition to become the leader of a token launchpad on Robinhood chain. There is this one token launchpad that had dominance. They were the kings. They had won all the market share called Noxa. And they were printing like $3 million a day, but they stopped because the team had political issues and they couldn't figure out how to split the pie fairly or something. So they just shut it down. Oh my God, that is so crypto. Now like the second places are fighting. So now it's between Pawns and Flap, and Hood.Fun are three contenders for number one. But the throne of who is the number one token launchpad on Robinhood that's the current meta of like who's trying to figure that out.

Ryan Sean Adams:
[27:07] Does it surprise you that just like an established incumbent from Solana or something like Pump doesn't just enter and kind of dominate this like why is this spawning new token launchpads I mean that's tech that we have already had

David Hoffman:
[27:19] Yeah, you can buy Robinhood tokens on PumpFun, but PumpFun is an SVM logic, so it doesn't port to the EVM. But there have been other token launchpads, like Zora and Flare, that I'm kind of like, where was the readiness to deploy? Where were you guys? But also, I do kind of find that the fact that it's completely organic and unprepared is for some reason bullish. It feels very Darwinian, survival of the fittest.

David Hoffman:
[27:48] And somewhat equitable, I guess, in that sense. And so we have two barometers now because we have two very big meme coins that are about the same size that launch in different ecosystems. So we have Ansem's meme coin. Did I tell you about Ansem's meme coin? Yeah, I did. We talked about it. Yeah. Okay. We have Ansem's meme coin and we have Cash Cat. And so Cash Cat has been crowned the meme coin of Robinhood chain. Cash Cat was what Robinhood was going to be named or was named before it rebranded to Robinhood back in like the early, early lore of Robinhood. So now we have Cash Cat and what's the market cap right now? Fully diluted valuation of $104 million. And what's the Ensem coin? That's $190 million. So in the same ballpark as each other. One's a Solana meme coin, one's a Robinhood meme coin. And in addition to that, it's like kind of a fight between two different ecosystems. But overall, we have two meme coins about the same size that launch around the same time at the market bottom globally. And so I'm kind of using this as a barometer of like, A, ecosystems, but B, risk. And so in my mind, if these meme coins do well, it's a barometer of just like, people are on. People are playing the games.

Ryan Sean Adams:
[29:02] But it's also a fight, isn't it? Between who's going to have the meme coin empire? Is it going to be Robinhood right now? Or is Solana going to retain its throne?

David Hoffman:
[29:12] Yeah, I would say that's right. Yeah, like if Robinhood dominates Solana in meme coins, you would buy Cash Cat. But if you think Solana is going to dominate meme coins, you buy Ansem. But the Ansem is a little bit different because like you have the one dude who's like responsible on promoting it where Cash Cat's a little bit more organic. But that's kind of like the activity and just like litmus test is going on.

Ryan Sean Adams:
[29:31] Downstream of this, I think related downstream, this is also a long time coming. Base, which is Coinbase's L2 and a competitor, comparative point to Robinhood chain has been on a path towards pivot for at least the last six months, let's say. This tweet from Jesse Pollack, who's the creator of BASE, as you called him, lays it out very starkly. And this is the quote I was alluding to earlier in the episode. He said, the collateral damage talking about this year, how things have gone, has been an exercise in eating shit. He has a whole post about this. He describes the first quarter of 2026 as a punch to the face. What I got out of this episode was Jesse admitting that the social coin, creator coin direction that base was going in and promoting both, I guess, on the platform, the infrastructure level, that was a bit more neutral, mainly up the app stack in terms of what the base app prioritized, what he as a leader of the base ecosystem prioritized. This whole creator coin direction, he's saying that was wrong. It was Web3 social.

David Hoffman:
[30:44] Web3 social.

Ryan Sean Adams:
[30:45] Either it was wrong because it was too early, or maybe it's like wrong because it just like won't work. But it was the wrong direction for the base app and ecosystem. So the Farcaster, Zora, base thing that was very popular last summer that Jesse was spearheading, and that looked like it would be the next thing, he's saying that was the wrong direction. What we should have done instead was focused on Internet of Finance, basically. The money types of things, the DeFi, the perps, the trading, these sorts of money primitives instead. And so he's admitting that he was wrong. Also, stepping back from the base app and Kobe is now running the base app team. So Jesse is going to be still involved in the base chain itself and the engineering development of that. But now Kobe is taking the lead on the app side of base and is clearly going to be prioritizing perps trading, making this a very friendly environment for that sort of class of person. What did you make of this?

David Hoffman:
[31:47] Yeah. I mean, the timing of this is absolutely downstream of Robinhood chain, obviously, and Robinhood wallet. And so the context of this is just because, well, why did Robinhood do so well so quickly? No, Robinhood is a gargantuan in and of itself. And so they were always wanting to have some amount of success on their chain. But like the timing of this seems to be just because it's downstream of Robinhood success, which feels like Coinbase is like this should have been our success. And why wasn't it our success? Jesse when everyone was like yelling at him to stop doing the creator coin stuff Jesse was like I'm going to do the creator coin stuff it's conviction and like I don't know man you got to respect that to some degree.

Ryan Sean Adams:
[32:31] He took a swing it

David Hoffman:
[32:33] Was a big swing he took a very big swing and he didn't listen to anyone he was like disagreeable founder which is bullish and so you got to tip the hat to that level of conviction, in hindsight, now that we have hindsight 2020, hindsight bias, hindsight privilege. It's like, dude, that was so schemorphic. Like social was web two. Crypto is web three and crypto is not social. Crypto is trading.

Ryan Sean Adams:
[32:54] Maybe, I mean, Jesse would still say, hey, the future is not written. You were just talking about a thing called, what is it, cash cat and Ansem coin. What is Ansem coin? Well, it's a creator coin. Like it's in the vicinity, it could re-manifest. But I think your point is taken. And this this was a highly risk conviction-type move, and maybe it would have been better in a startup, to be honest, rather than kind of Coinbase. Maybe the argument would be like Coinbase should have done the safer play, which is continue to develop the financial use cases for which it was known. In fact, a friend of the show, Austin Campbell, has a pretty harsh critique on this. He said that base has been an outright failure, and he gives reasons why.

David Hoffman:
[33:37] Wow! I don't know about that one. Wow.

Ryan Sean Adams:
[33:40] Yeah, a strong take. He gives reasons why. It's a long post. He said, Base was a distraction that harmed Coinbase itself. Coinbase is not fixing what matters.

David Hoffman:
[33:50] Can Coinbase understand? Those are separate issues.

Ryan Sean Adams:
[33:52] Yeah. He's basically saying that, like, it's a different matter when you're competing against, like, Robinhood and Charles Schwab and TradFi, right? These are bigger boys than kind of, like, the former exchanges, you know, Gemini and Kraken. So you have to compete in a different league and just like asking the question, is Coinbase up to the task? And so far, he's saying that base has been an outright failure. I don't, I think that's going far too far.

David Hoffman:
[34:19] I mean, that's too far.

Ryan Sean Adams:
[34:21] The tech works.

David Hoffman:
[34:22] This is not- Base is still like the third largest chain in crypto.

Ryan Sean Adams:
[34:25] Yes, and this is not- Well,

David Hoffman:
[34:27] That's fourth.

Ryan Sean Adams:
[34:28] It is a pivot away, but it's kind of like a pivot of the application layer. You can still use the exact same infrastructure. I mean, and keep in mind, Robinhood has only been out for like, what, three weeks? And we're already calling like, oh, Robin Hood won and bass is felt. Like that's way too soon. Like we're getting way over our skis on that one. So that's a take that's going around as well.

David Hoffman:
[34:49] I will say that when BASE was launching, everyone was very stoked about BASE, the chain. And why? Because BASE was going to get distribution from Coinbase, which is not something that any chain had ever had before ever. It was a centralized exchange or a big, large, retail-oriented platform.

Ryan Sean Adams:
[35:06] Well, there was finance. There's B&B chain.

David Hoffman:
[35:08] True. Yeah, true. Which was also bullish. Which was also bullish. And so, yeah, that's when we got BASE is just B&B chain for white people in North America. Uh, uh, and so like Robinhood saw that as like a free lesson. It's like, oh, well, if you have distribution, your chain is automatically bullish and people will kind of build on your chain because of the distribution that you're going to put on it. And so really it ended up being a competition between Coinbase.com and the Robinhood app. And Coinbase.com has, as an app has lagged Robinhood. Like they were always, between crypto and TradFi, you know, crypto lost energy in 2022. And so this was a race for Coinbase to put stocks inside of Coinbase before Robinhood put crypto inside of Robinhood. And Coinbase has been somewhat slow. And so maybe to Austin's point, like base was maybe a distraction, But I don't know, the company's big enough. You can go, you can chew gum and walk at the same time. I don't know if that, if one was really competing for oxygen versus the other.

Ryan Sean Adams:
[36:05] They'll figure it out and the chain strategy is there. I mean, compare it to like Inc. from Kraken, right? It's doing far better than that.

Ryan Sean Adams:
[36:11] So I think there's a strong base, shall we say, to build on top of. There's another question though that was brought to the ecosystem as a result of Robinhood's success. And that was the question of like, okay, like ETH price is going up, but the question is why? This was a tweet I saw fired around from an analyst at ARK Invest, who, of course, owns a whole bunch of crypto assets, including a pretty large share of ETH assets, maybe through Bitmine, some other mechanisms as well. But he says this, this is Lorenzo, the Robinhood chain is the cleanest case study of what happened to ETH's economics over time. And then he goes through some stats. Since inception, Robinhood chain did 816K in revenue, 1,000 in revenue. Arbitrum, the tech provider, middleware, takes 10%. That's 80K of that 816K. And then Arbitrum then pays Ethereum for settlement. And so far, they've paid $1,538 to Ethereum. So if you look at the margins here of who wins, Robinhood gets 90% margins, Arbitrum gets 10%, and Ethereum gets 0.15% for data availability. And so he goes on, And he says, if your thesis is ETH is money, then Robinhood building here is ultra bullish. More activity, more ETH collateral, more lendiness. He's talking about, look, a lot of ETH is being used in these use cases, being bridged across. ETH is being used as money.

David Hoffman:
[37:33] ETH is the trading pair with all the meme coins. Exactly.

Ryan Sean Adams:
[37:37] Good for ETH, or at least net marginally better for ETH than not having Robinhood chain. However, he says, if your thesis is ETH is a revenue generating asset, this is the ultra bear case. Because there's an uncomfortable truth. Robinhood was already going to build on Ethereum the whole time, so you haven't actually won anything. He's basically making the case that... ETH, you could look at this, you could say ETH is not collecting enough benefit for hosting a layer two. He said a healthier split would be at least Ethereum captures 15% of this margin. So this is a longtime question. Should L2s be paying more to Ethereum? And that's where we got Plenia coming out of retirement. This is a famous L2 bull and poster from, I mean, started five or six years ago, famously bullish on Layer 2s.

David Hoffman:
[38:31] The Layer 2 model, yeah.

Ryan Sean Adams:
[38:33] And it just kind of has gone quiet, jaded from lack of quality applications being built in the crypto ecosystem and has fallen silent for a couple of years. And Plenia just came out with, I guess, an updated take on where the crypto market is. What is Plenia saying here?

David Hoffman:
[38:54] The way I read Polenia's take was that, there is a tension between the scalability of supply, blocks-based supply, that exploded. Blocks-based supply exploded while demand for crypto kind of collapsed at the same time. And that made it very hard for the ETH is Money model to come to fruition. And mainly because, what did he say? Demand growth for applications has been negligible relative to the increase in supply for the last four to five years. Further, the demand curve has proven to be highly inelastic. And so he kind of stays with his original concepts and ideas. I don't think he really updates them, but he kind of gives an account of just like, well, we did expand supply, but just demand hasn't really kept up. And that's led to the economics that Ether is at.

Ryan Sean Adams:
[39:46] Well, I was... Glad to see this. Plenia did admit that he was wrong about something. He said, my expectations for growth in application demand from 2021 and 2023 posts have proven to be wrong. So he was wrong on the demand side.

David Hoffman:
[40:05] The entire industry felt that, yeah.

Ryan Sean Adams:
[40:06] The entire industry felt this. But the core of his post is there are two paths for Ethereum right now and ETH value accrual, which is you could either subsidize transaction fees and simulate application demand to better compete in the trillion-dollar alternative store-of-value market, so ETH as a store-of-value asset, in which case you don't care about fee revenue from L2s at all. You just care about ETH being used as money somewhere else. Or you could reduce the capacity drastically, so capacity of L2 block space, capacity of block space in general, to hike transaction fees, and you play in the shrinking billion-dollar transaction fee market and accept a $100 ETH as the endgame. Those are the two paths. Do you agree that those are the two paths, David, or do you think that's somewhat of a false dichotomy here?

David Hoffman:
[40:57] False dichotomy. Why? Super false dichotomy. Because the whole premise and structure and pattern of the Ethereum system is always about synergies and synthesizing and collapsing paths down to the same path. ETH is money because of the fees. And the fees, if you value ETH on the revenue model, then yes, ETH is worth $100. But that doesn't mean that that's what's going to happen. In my mind, you want to maximize fees because ETH is monetized through the fees. And so it's a little bit of like, take the two binary directions that you think we are pointing in and put them in the same path and go down both. Do both. That's my attitude.

Ryan Sean Adams:
[41:43] I think, though, there's some truth in that you have to pick one or the other, right? It's like you have to pick one or the other to optimize for, don't you? And so, like, the way you put it here is you said eventually at the end game for max ETH value, fees won't and can't matter. I agree with you there. And you said ETH as money implies a market cap far higher than revenue could support. That's what Plenty was saying. I also agree with you there. And then you say, but the bootstrapping process is different than the terminal environment for ETH, different than that end state you're saying. And the bootstrapping process requires fees, that line. The bootstrapping process requires fees. Okay, I'm not sure that it does anymore. Or I'll throw this out at you. Like the last 10 years have been the bootstrapping process. And now ETH no longer requires fees. So I'd be more on the side of like, I question that assumption. I don't think we actually need to care about fees anymore. And certainly we shouldn't be optimizing it. We should be optimizing for scaling Ethereum and scaling ETH as a crop's store of value asset. And if BlockSpace is super cheap to do that, go do BlockSpace. Who cares about fee revenue?

Ryan Sean Adams:
[43:04] Bitcoin doesn't care about fee revenue. Gold doesn't care about fee revenue. A store value asset shouldn't care about fee revenue. We're 10 years into the project. Now ETH can afford to not care about fee revenue. That would be my case. But I think you still believe that fee revenue is important. And there are others like you. I think Donkrad has said this previously. It's been part of his case. It's like, no, actually fee revenue does matter and ETH should be prioritizing it. But I just see a $100 asset at the end of that path. And it's like, I've already seen the bootstrapping being done. And I'm like, now it's time to be a store of value asset and not worry about fee revenue at all.

David Hoffman:
[43:44] This week, the ETH BTC ratio, as we said earlier, is edging upwards. And it is not because of any of the fees that were collected with Robinhood chain, either on the Robinhood chain or on the on the layer one. And so if the reason why ETH is edging this week and it's up 8%, 9% to Bitcoin's 2.5%, if that is because of Robinhood chain, and the positive sentiment and momentum of Robinhood chain, that is a huge point for the ETH is money crowd, the no fee crowd. I don't know. I don't know. I think I would describe more than 50% probability that that is why ETH moved to this week, but not 100% because Tom Lee also bought this week.

Ryan Sean Adams:
[44:26] And it's also just one week. I mean, it's pretty, it's kind of noisy.

David Hoffman:
[44:31] It could be a random walk. Of course. I take the point... The destination of like $100 ETH because you value it on the DCA doesn't strike true to me because like when I see like a dollar of revenue is given some sort of like 2000, like DCF analysis. And it's like, so like, for some reason, like an Ethereum dollar of revenue is weighted so much higher than like Microsoft or Amazon. When I see that, I'm like, yeah, yeah, we should make more dollars then because we get a 2000x premium on the dollars that we make. So we should optimize for revenue like that.

Ryan Sean Adams:
[45:13] But let me throw another take that you may resonate with and might actually be true. So it's the idea that the human brain can't like contain and the scalability of a story value can't contain multiple things at the same time. And if you're saying on the one hand, it's a story value and the other, but it's also valued from fee revenue. It's hard to mimetically treat the thing as a story value asset if you're running it on DCF calculations. So it's better to do the Bitcoin thing, which is just like fees don't matter.

David Hoffman:
[45:47] Yeah.

Ryan Sean Adams:
[45:48] Tough shit. Fees don't matter. And then you get cemented socially and memetically in the store of value camp. And so Ethereum is actually shooting itself in the foot on the social layer by talking about fees at all. Fees are not the point of Ether. And I think if you push that understanding of what Ether the asset is, which is it's a store of value asset. It has all of the properties of Bitcoin. And it also has DeFi smart contracts. And you ignore fee revenue. You'll be doing like a much better service to kind of the narrative. And this is a memetic asset, story value assets are that by nature. So don't talk about fee revenue is what I would say.

David Hoffman:
[46:30] Yeah, I think the Bitcoiner, the Bitcoiner archetype would agree with you because there was like an early process of like trying to get utility out of the Bitcoin blockchain, by like timestamping startups and all these startups that tried to like make the Bitcoin blockchain useful. And all the Bitcoiners are like, we need to drive that out of the blockchain because we need to remove any sort of value capture mechanism at all. And we need to trim away everything from Bitcoin other than BTC, the asset. So I find that argument to be highly congruous. And so, yeah, I do take that point. I do take that point.

Ryan Sean Adams:
[47:10] Joseph Lubin weighed in here. He said, Ethereum L1 revenue fees should stay low to foster growth. That's his reason for it. And he basically says, ETH will make it up on becoming a store of value asset. But we want to keep the fees low and supply humming in order to attract more market share. So that's another take.

Ryan Sean Adams:
[47:30] We could get into some more on Ethereum, L2, roadmaps. I don't know if we want to do that or just keep moving on.

David Hoffman:
[47:36] I do want to talk about Stephen Goldfeder's. Did you call it Stephen Goldfeder radicalism in the notes?

Ryan Sean Adams:
[47:43] This is the founder of Arbitrum, right? Who had an interesting proposal to this dilemma. What was his take?

David Hoffman:
[47:50] Okay, so his proposal, this is on Twitter, is, this is downstream of this exact conversation from the ARK analysis. He says, Ethereum should adopt its largest roll-ups in the sense that a critical bug in Arbitrum, Bass, or Robinhood chain should be treated as an Ethereum vulnerability and trigger an L1 fork just like an L1 bug would. Do you remember during the Eigenlayer days, Ryan, when Vitalik wrote that article, Don't Overload, Ethereum Consists? Yes, yeah. So Stephen Goldfeder is proposing to overload Ethereum consensus.

Ryan Sean Adams:
[48:24] No, he's not. He's just saying just Arbitrum. He's not overloading it, just add Arbitrum.

David Hoffman:
[48:29] And base and Robinhood chain. Or I think what he's saying is like any layer two ecosystem that is of sufficient critical mass, they get to do the regulatory capture game or regulatory arbitrage game. And we get the protection of Ethereum, the Ethereum layer one, because we are big enough.

Ryan Sean Adams:
[48:51] Yeah, I think that is what he's saying. And he's saying in exchange for that, we as L2s would be willing to pay more rent to ETH holders. Instead of the 0.15% that you're getting today, maybe we'll do 10%, maybe we'll do 20%. Because the service is worth more to us because we no longer need a security council. We accept the sovereignty of Ethereum L1, and that's a fair exchange for us.

David Hoffman:
[49:18] Big government instead of state power.

Ryan Sean Adams:
[49:20] Less federalism and a bigger federal government, let's say. And so we'll give you more taxes because you're giving us a higher level of service. You know, like the analogy that we've often used is right now it feels like many of the L2s like Arbitrum are in kind of this, you know, like almost like a NATO security alliance, but they have their own sovereignty. It's kind of opt in. They don't pay that much. This would bring them closer to like a state in the union of chains right under the sovereignty of the l1 in exchange they'd pay higher taxes is closer to the united chains of ethereum vision but it does have the trade-off of wow you are really overloading the consensus and being dependent on this third party do you want this chain in the union or do you just add all of that capacity into the L1 where you have kind of like full control and full ability to make it crops the way you want it to.

David Hoffman:
[50:15] So something that Lorenzo said, the original tweet that spawned all of this conversation, he's talking about the dichotomy between ETH is money and ETH is a revenue generating asset. He goes, this is the uncomfortable truth. Robinhood was never going to build on Solana, SUI, or any monolithic layer one, which what you said is like, well, what if we just put the capacity on the Ethereum layer one? Robinhood chain was never going to build on any other chain. So like the $1,538 that Ethereum layer one burned in blob space fees from Robinhood, it was never going to get in any other way, other than the L2 model. So you do have to take that point that like there was never going to be Robinhood organic adoption of like the Ethereum layer one. Yeah. And so I do take that point. Yeah. What do you think about Stephen's proposal?

Ryan Sean Adams:
[51:08] I think that it's interesting. I think it's part of a negotiation of moving into a tighter, more coordinated, united format of L2s. I don't know if this is the proposal Ethereum should do. There's lots of alternatives out there, one of which is just native roll-ups. Stephen would say, native roll-ups, you have to start from scratch. It doesn't have any state. There's no Robinhood chain. There's no distribution. It'll just be a nothing chain and what's a native rollup. But a native rollup is exactly what Steven said, which is it will fork if Ethereum L1 forks. The block space of a native rollup is Ethereum in a way that on an Arbitrum L2, it's not quite the same, has different guarantees. So that's a competing direction. So I guess I'm not opposed to it. I just think that it'll have to develop. We'll have to, it'll take years maybe to develop a different sort of contract relationship with L2s. And I'm not sure that with Steven, like, what if there was a fork in like Arbitrum land? You're telling me you're going to fork, like you lose the store of valueness of ETH if

David Hoffman:
[52:19] Things can be changed.

Ryan Sean Adams:
[52:21] If the L1 is forking a bunch, like you lose something really important here. Yeah.

David Hoffman:
[52:27] I'm not totally sure about that. One of Ethereum's greatest skill sets is decentralized governance and decentralized coordination. And with Stephen's proposal, I'm kind of seeing that skill set and product that Ethereum has to offer the world being monetized because no other ecosystem has the level of decentralized coordination that Ethereum has. And like Stephen's like you guys do this thing that's really valuable for us and would solve our problems and like allow us to remove our security council and we would pay you a bunch of money for it, and so you guys can monetize decentralized coordination but it's also the game that Ethereum as an ecosystem never wanted to get into do you think Preston Van Loon and like the Prismatic team and like all the other client teams of Ethereum would be like yeah I would like to govern whether we do state changes on the Ethereum layer 1, so that ETH can be monetized more I don't know I have another point before we move on before we move on I have one more point. Can you open the Lorenzo chart that showed the value flows of like Robinhood getting 90% Robert Tom, yeah. Say Ethereum got a much larger number than the $1,538. So of the total paying users of $816,000, what if Ethereum got a... $100,000 of that rather than $1,500 of that? Would that be bullish or bearish for Ether, the asset?

Ryan Sean Adams:
[53:48] Bearish as hell. You're talking about $100 ETH price. Fees don't matter. This is why I don't really...

David Hoffman:
[53:54] Dude, the market would send ETH up. If Robinhood was paying Ethereum layer one $150,000 in the first week, that would send ETH upwards.

Ryan Sean Adams:
[54:04] It would send it up on the week and on the two week. But in the five year and the 10 year, it would just cap the top at an asset that's worth a few hundred billion dollars max, max, rather than multi-trillion dollar store value assets.

David Hoffman:
[54:20] I don't know if that's true. I don't know if that's true. I don't know if that's true.

Ryan Sean Adams:
[54:24] I mean, I think you do have to choose, really. And I think that maximizing for fees would be a huge mistake for Ethereum is not the way formed. Yeah. Yeah, the community is somewhat divided on that. And you could tell the narrative is somewhat divided on that. David, we've got more to discuss. We've got another spinoff from the Ethereum Foundation. Also, the DTCC is tokenizing things. Are they doing it on our public chains or not? We'll talk about all that and more. But before we do, we want to thank the sponsors that made this possible. Some exciting news. We are launching a new podcast to help people figure out the crypto cycle, how to navigate it. The best crypto cycle investor I know, his name is Michael Nato. He runs the DeFi Report. This is the guy that sent me a sell alert before the 1010 price drop happened. His cycle analysis has been absolutely on point. I've been following him for years. And this year we started recording weekly podcast episodes. Each one we get into his portfolio, what he's holding, the market structure, entry targets, fair market value of Bitcoin and Ether, and where we are in the cycle. There's new episodes that are released every Wednesday. They're 30 minutes, they're short, they're punchy. I think this crypto cycle is harder to navigate than most. So let's do it together. Go subscribe to this podcast, search the DeFi report wherever you get your podcasts, YouTube, Apple, Spotify, or find a link in the show notes. There's a new episode waiting for you now.

David Hoffman:
[55:42] Hey, Bankless Nation, it's David. If you're hearing this, that's because you are listening to the free Bankless podcast feed. Did you know that there is a premium Bankless RSS feed? The premium feed has extra interviews that I do for my own personal research and just deeper questions that I want answered about the crypto industry, questions that I want to answer so I can be more informed as an investor, both at Bankless Ventures and also just in my own personal portfolio too. Also, there are no ads, which means if you listen to the premium feed instead of the free feed, you'll get about 20 hours of your life back every year because you choose to support Bankless directly. So if you're interested in getting extra content all while skipping the ads, or you just appreciate what we do here and want us to keep doing it,

David Hoffman:
[56:18] we'd appreciate it if you signed up for Bankless Premium. And there is a link in the show notes to get started. cheers to a good 2026 another week another Ethereum Foundation spinoff this is now ETH Systems this was the Ethereum Foundation's Institutional Privacy Task Force, now is ETH Systems. This is a for-profit. So the other two previous ones, ETH Labs and Ethereum Institutional, were non-profits. This is a for-profit. This is a for-profit financed by the same investors. So Bitmine, Chartlink, Joe Lubin, these ETH Treasury companies that are funding this. And this is trying to provide institutional privacy tools to build on Ethereum while giving enterprises the privacy that they need to do so. So former EF Talent, now in ETH systems. So I think we go four for four over the last four weeks.

Ryan Sean Adams:
[57:09] I think it's got to be, that's got to be it. That's got to be all of them. So we have ETH labs, which is protocol development, non-profit. We have Ethereum institutional, which is commercializing ETH for institutions,

David Hoffman:
[57:20] Also a non-profit. Also non-profit.

Ryan Sean Adams:
[57:23] And we have ETH systems, which is institutional, confidential, private transactions. And this is a for-profit company, probably more tools and consulting type base. There was also this, David, I don't know if you saw this. Another member of the EF is leaving the EF to go join ETH Labs. So Francesco, after five years.

David Hoffman:
[57:43] Yeah, Francesco.

Ryan Sean Adams:
[57:44] Francesco. Okay, do you know him?

David Hoffman:
[57:46] Yep. I'm pretty sure I've met him a handful of times.

Ryan Sean Adams:
[57:49] He's five years of EF research, and now he's going to ETH Labs. It's just interesting that there is now a repository, almost like a refugee camp, for like EF people that want to leave because they're just kind of like done with it. EF no longer fits their mission. There's places now that can receive them. And it'll be interesting to see whether ETH Labs grows in that way or shrinks over time or stays even or what happens there. But it's another outlet for people who are passionate and excited about contributing to the Ethereum ecosystem other than the EF. I think that's healthy.

David Hoffman:
[58:25] A lot of people are talking a lot of shit about DATs, Ryan. Like DATs are just terrible, terrible innovation, fake innovation. At least for one thing with Ethereum, they financed alt-EFs, which I think is phenomenal.

Ryan Sean Adams:
[58:38] Agreed. And by the way, I'm not one of those people. I think DATs have been fantastic for Ethereum in particular.

David Hoffman:
[58:45] For Ethereum, yes. For Ethereum. Then there's a bunch of other DATs,

David Hoffman:
[58:48] and you're like, I don't know about you.

Ryan Sean Adams:
[58:50] I don't know about you. David, this is a Hasib take that I know you wanted to get into, but we had been talking earlier in the year about all of these DeFi hacks. It seemed like every week, every month, hacks kept getting bigger and AI was partially to blame. Hasib has a counter take on here and it's based on some data. So what's the take?

David Hoffman:
[59:12] Yeah, the take was the month of terrible hacks, which was April of this year, was the top. And in fact, hacks have gotten fewer and less significant ever since then. And so he's calling the DeFi hackpocalypse as a false alarm. He goes, it's more than halfway through the year and annualized dollars of hacks in DeFi in 2026 is lower than in 2025, even though that includes April, which was a gargantuan month in KelpDAO. So the number of hacks, maybe I misspoke, the number of hacks is up, but the size of hacks fell even more than the number going up, which means those hackers are picking up smaller and smaller protocols and abandon where, as he called it. Actually, I like that word. The existential threat that AI imposed upon DeFi, was kind of like, for me, like the last draw that motivated me to sell my ETH because like, well, dude, if AI is just going to hack all these damn protocols and these protocols aren't actually growing in TVL, then like, that's, what am I doing? What's my ETH for? But Hasib is saying, is like, well, the worst is actually behind us.

Ryan Sean Adams:
[1:00:19] What do you think? Do you think he's right? I don't know.

David Hoffman:
[1:00:22] Kissy's pretty smart.

Ryan Sean Adams:
[1:00:25] I mean, he's just saying, like, there's, you know, when you talk about the hacks, there's something causal there, right? And so the attackers get this AI advantage, but so do then the defenders.

David Hoffman:
[1:00:34] So do the defenders, yeah.

Ryan Sean Adams:
[1:00:35] We harden our protocols, and then, you know. The thing about this is, though, this could be somewhat lumpy in that it could happen every time there's a major AI breakthrough. That's one possibility. Or, he's right, I mean, this just could have been the top, and the DeFi hack-pocalypse was overstated maybe.

David Hoffman:
[1:00:57] Yeah, maybe. Hopefully. Now it's about vault permutation risk. Did you listen to the premium feed episode that I did with my friend Andrew who does vault risk? Oh, dude, there's just a growing number of spaghetti permutations of vaults depositing into other vaults, depositing into other vaults.

Ryan Sean Adams:
[1:01:15] That sounds like trash, I'm in.

David Hoffman:
[1:01:17] What you think, exactly. What you think is like, oh, I'm going to get like a 6% yield on my USCC and I'm only going to deposit into this one vault. Well, that vault deposits into four vaults, which deposits into four vaults, which deposits into four vaults. And one of them is just an EOA and it just gets so messy so quickly. And so that has nothing to do with AI exploits and like security and just everything to do with risk management, which, as you were saying, is just TradFi stuff.

Ryan Sean Adams:
[1:01:44] Yeah very much is and somewhere where we could we could level up for sure David let's end the episode on a take that you had that I wanted to ask you about you said the buy and burn token model is undefeated and you point to a few popular tokens that are doing well this cycle Hyperliquid, VVV and Lit all talk big games about burning their token the point of a token is to be burnt Maker had it right from the beginning all along Maker had it right who knew? MakerDAO What about this model works for you and is working right now, do you think? Buy and burn.

David Hoffman:
[1:02:21] Well, it's more about the fact that in 2026, our leading projects with the most energy and attention and growth are doing the buy and burn model. And so like hype is unequivocally very successful at it. VVV still, still new, like there's still a lot of VVV to be burned. But Venice, the project, Venice, the company is like, yeah, we want to, they said it on my podcast, we want to burn every last VVV token. Lit, the Ethereum Layer 2, PerpDex, wants to burn all of his tokens. If you scroll down, you'll see I add JTO from Gito. JTO, they just launched a JTX this week. It's a prosumer trading interface that basically wraps up Solana liquidity and assets and gives you a trading experience. And they burn 80% of the fees that they receive with JTO. So it's just like, dude, we've been debating the buy and burn model in crypto for forever, but just we keep doing it. All the hot new projects that are on the frontier are like, yeah, and we're going to burn our token. And so I'm just like, dude, I'd love to buy and burn model.

Ryan Sean Adams:
[1:03:18] This seems like two things to me. This seems like, number one, all of these tokens are generating revenue. It's fee revenue. So in order to burn things, you actually have to generate fee revenues. That's number one. That's kind of the entry criteria. And then number two, what they're doing with the fee revenue is they're actually prioritizing token holder interests and fiduciary responsibilities to return the proceeds of that capital back to token holders and they're taking that job seriously. Yeah, it's something that previous teams have not. Ansem actually had a take on this.

David Hoffman:
[1:03:53] I will say on all of those tokens, Gito, VVV, Hype, Lit, all of those have equity structures.

Ryan Sean Adams:
[1:04:02] Yeah, and that's not preventing them from doing this?

David Hoffman:
[1:04:04] Nope. Nope. And they just like, the way that we're aligned is we're going to burn the token.

Ryan Sean Adams:
[1:04:09] This was a tweet that's somewhat of an iteration on your take, but I think it's worth talking about. This is from Ansem. He says, I have a thesis that buybacks don't actually work. Hyperliquid makes $800 million in annualized revenue. Pump Fund makes $440 million in annualized revenue. But Hype trades at $65 billion, whereas Pump trades at $1.4 billion. Why the discrepancy? discrepancy. They're both buy and burn. Pump is just half hyperliquid. Shouldn't it be half the valuation? And he goes on, he has some more detail, but what he's saying is the difference is not in actual revenue generation by the business, but instead of the trust premium ascribed to the team. So he's making the point that a pump makes tons of revenue, but they've done other things. They raised a billion dollars in the ICO. They promised an airdrop to users that were never delivered. Even though they have a consistent business model, they haven't shown social alignment with their holders. Whereas Hyperliquid is like no VCs from the beginning, you know, reward insiders.

David Hoffman:
[1:05:10] Didn't promise anything.

Ryan Sean Adams:
[1:05:12] Yeah. And so what he's saying is in addition to just a buy and burn mechanic and cash flows going back to token holders, there's something to do with like, there's some kind of a trust premium that's happening with some of these assets. Like, are they going to in the future care about and prioritize token holder interests above all of their other competing interests? He's making the case that Hype has that and Pump right now does not. And that's why it has such a premium.

David Hoffman:
[1:05:41] Mm-hmm. I'm reminded of Vitalik's legitimacy article that we talked about. Hyperliquid just feels very legitimate, and they've won hearts and minds about legitimacy. And so that's kind of like the squishy, squishy social thing. But one part of Ansem's article is just like, yeah, you're talking about revenue quality, revenue durability. I think people are not saying they're saying that pump's revenue is just not as durable as hyperliquid's revenue because meme coin trading is just not as durable as the perpetual. Yeah. And so one little bit of this is like the squishy social thing and then a little bit of just like, OK, what's the quality of the actual dollar being produced? Because did the market will ascribe a premium for dollars based on the nature of the business?

Ryan Sean Adams:
[1:06:25] Yeah. A lot of token holders are voting with their feet, though. So that's going to lead to better outcomes and higher quality tokens, I think. So it's all a good thing.

David Hoffman:
[1:06:33] Bankless Nation, we'll be back in a week. But until then, crypto is risky. You can lose what you put in, but unless there's Frontier. It's not for everyone, but we're glad you're with us on the Bankless Journey. Thanks a lot.