ROLLUP: Downtober Drags | Tempo Poaches Dankrad | Coinbase Buys Echo | Gold Surge! | Fed Access

TRANSCRIPT

Ryan Sean Adams:
[0:03] Bankless nation it is the third week of october down tober i should say and it's continued on the week

David Hoffman:
[0:11] You would know actually no bitcoin up two percent on.

Ryan Sean Adams:
[0:14] The week really

David Hoffman:
[0:15] Up two percent on the week bitcoin's at a hundred eleven thousand dollars which is not a cheap bitcoin you know what an ether up a whopping 0.2 percent on the week.

Ryan Sean Adams:
[0:24] All right so we're already doing prices i How come it feels like down to the top?

David Hoffman:
[0:29] How come it feels bad?

Ryan Sean Adams:
[0:30] Yeah, how come it feels bad on the week?

David Hoffman:
[0:32] I mean, I think the new numbers that are bad are like Bitcoin below $114,000 and Ether below $4,000. Yeah. That's a new feel-bad level.

Ryan Sean Adams:
[0:43] That's why. Okay, that's why. All right, well, we'll talk about that.

David Hoffman:
[0:45] Hedonic aptitation, you know?

Ryan Sean Adams:
[0:47] Yes. I'm not feeling great about these prices, but you're saying they're up on the week.

David Hoffman:
[0:51] They are. They're technically up on the week.

Ryan Sean Adams:
[0:53] We're going to talk about three ways this cycle could play out. Two of those ways, David, are bullish. So there's still some hope in the air. Also, a big question. Gold's been on a tear. Can crypto catch up? We'll talk about that. What else we got?

David Hoffman:
[1:04] Ethereum loses EF researcher Dankrad Feist to Tempo. That's Stripe's new thing. So the Ethereum community has kind of a split among it. So I'm just, you know, thanking Dankrad, wishing him well. Like, thank you for all your contributions. And others are a little salty. A little salty, a little mixed bag. And it's kind of hard to tell what the real reaction are. It's also hard to tell which chains are Ethereum's friends versus Ethereum's competitors. A nuanced conversation.

David Hoffman:
[1:31] We will not be using the A word, but we will find ways to work around that.

Ryan Sean Adams:
[1:37] I got to find out what David means by the A word. Also, we got Coinbase. They made a big acquisition on the week. Kobe. They acquired Kobe's token investing project, Echo. They also are bringing back the Up Only podcast. Also, Polymarket, David, strikes a deal with the NHL and DraftKings. I think they have a competitor that's close behind them, too. And we've got AI models, Grok, ChatGPT, Claude. They're all competing to determine who is the best trader.

David Hoffman:
[2:04] They're all trading on Hyperliquid. They are all making trades on Hyperliquid, and some of them are better than others. And then lastly is the Fed about to give crypto companies direct access to FedWire.

David Hoffman:
[2:16] So crypto weaving itself right into the heart of the financial system. We're going to talk about that. First, this is your warning. On Ryan's screen, it says 40 days until Bankless Summit. That's actually incorrect. There are 28 days until the Bankless Summit. That is the Tuesday of DevConnect, where we have some just absolutely gargantuan speakers speaking at DevConnect. So if you're going down to DevConnect, which you should be, because it's the crypto capital of the world, you go down to Argentina, you just fast forward five years into the future.

Ryan Sean Adams:
[2:46] Wait, Argentina's the crypto capital of the world? I thought this was America. Trump told me it was America.

David Hoffman:
[2:51] Yeah. Okay. Hey, crypto adoption capital of the world.

Ryan Sean Adams:
[2:55] The one that matters.

David Hoffman:
[2:57] The one that matters, yeah. So we've got some pretty incredible speakers. Donkrad will be speaking there. I actually have to change the little logo next to Donkrad's name to the Tempo logo. Oh. But he's going to be talking about Tempo. He's going to be talking about Tempo's relations with Ethereum, amongst other speakers as well. Ticket prices are going up. They have been going up. If you've heard me say this multiple times, they are currently at $130, and they're going to be higher.

Ryan Sean Adams:
[3:21] That's so cheap.

David Hoffman:
[3:22] They're going to be higher by this time next week. And tickets are running out. We are going to sell out. It's a 400-person capacity event. We're going to sell out tickets. And that's because it's at capacity. If you're my friend and you're like, David, I didn't get any ticket. It doesn't matter. It's too bad. Fire code. They have fire codes in Argentina. Anyway, there is a link in the show notes for you to go get a Bankless Summit ticket brought to you by.

Ryan Sean Adams:
[3:45] David, we already did prices. All right. You said we're up on the week. Give us those prices just to get us in the frame of mind. Give us those prices quickly.

David Hoffman:
[3:52] $111,000 Bitcoin. Okay. And $3,920 ETH.

Ryan Sean Adams:
[3:57] Oh my God. You're right. We are up on the week. How about that?

David Hoffman:
[3:59] Practically up on the week.

Ryan Sean Adams:
[4:00] Let's talk about Bitcoin performances in other Octobers compared to this October. So going into this October is the fourth year of a bull cycle. We thought it would be bullish. Everyone in crypto thought it would be bullish because we've had a lot of up-tobers previously. 2013 plus 60% Bitcoin. 2017 plus 50%. 2021 plus 40%. 2005, it's been negative 5% in October. That's probably why people are feeling bad about this.

David Hoffman:
[4:33] It just means we're due.

Ryan Sean Adams:
[4:36] The other reason I think- We are

David Hoffman:
[4:38] Owed green candles.

Ryan Sean Adams:
[4:40] I mean, okay, so we're owed green candles, but we are still also above 100K Bitcoin, okay? Yeah. And it's like 102 is the 50-week moving average. As long as we're above that price, We're still, at least compared to previous cycles, we're still in a bull market. So the question is, why is everyone so barric? It feels like sentiment is bad. We're in the extreme fear zone of the spectrum. And Luke Martin offers one reason. What's this?

David Hoffman:
[5:10] Well, Ryan, just because Bitcoin is doing well doesn't mean people own Bitcoin. The middle of the market, and this has been the theme of the last two years, is like the middle of the market is far more hollow than it has been in previous cycles. This is related to Bitcoin dominance, but Bitcoin, you know, Bitcoin's doing great. Bitcoin's on the regular path. It's always been, it's on track. It's had a good run. And it's kind of the only one, except for a few like small token outliers. The middle of the market, the tokens, altcoins, as you call them, are all below where they were post FTX crash in 2022. Not all, but just like the majority of the market. And so, yeah, just like if you were holding the middle of the market, which again is, it's not just like people's investments and like altcoin speculation. That's, that's people's jobs. That's people's like salaries. That's like BD revenue. Like that, this is like the industry, the crypto industry. Sure. And so, yeah, there's like a malaise in the middle of the market and that has continued. It kind of has had spikes. There's been like altcoin surges, altcoin spikes. But overall.

David Hoffman:
[6:18] Really, the only asset that's like truly on track since inception is Bitcoin.

Ryan Sean Adams:
[6:23] Yeah. So if you had faith in one of those 50 altcoins now in this basket that Luke is pointing out, you're still down. So you're not feeling great about this. I got to say, though, in general, the cycle has felt a little disappointing. What do you see when you look at this chart? This is a chart all the way from 2011, looking at various crypto cycles and the percentage moves on the year and usually get three strong years yeah yeah three strong years and this would be the third strong year right and you know the the new year the yeah i guess is the bull cycle but we're only 18 this year yeah on on bitcoin um

David Hoffman:
[7:00] And this is supposed to be the frothy blow off top year yeah we haven't gotten that yeah i mean i just when you ask me what do i see when i look at this chart i see moderation and that's been the story of crypto since i got into it like as crazy as the 2021 cycle was like 2017 was insane dude that was stupid yeah and things just moderate over time and when we get institutions in and we get etfs and blackrock gets involved like things are just not gonna be as crazy and that's kind of what i see like oh no we're up 18 on the year like okay.

Ryan Sean Adams:
[7:36] We're not down. By the way, that's only if you held Bitcoin, right?

David Hoffman:
[7:40] Oh, yeah. So, although... Oh, yeah. Maybe we are down.

Ryan Sean Adams:
[7:42] As somebody who is, you know, like bullish on ETH, it feels for ETH holders like they still haven't gotten it.

David Hoffman:
[7:49] Yeah, ETH does not feel like it's on track.

Ryan Sean Adams:
[7:51] Yeah. So, I think it's been disappointing to a lot of folks. Dude, I was looking at this. There's kind of three cycles or three possibilities for the cycle in the different takes here. One is that we topped already. This is Michael Nato's take. I had him on the episode earlier this week. And his point is the volume is slowing. There's no net new buyer catalyst coming. So he's like majority cash. He's like 70% cash. Another take is we're not done yet. Q4 is not over. We've got one last push. We'll probably see a Bitcoin top in November, December. Ben Cowan thinks that this is a distinct possibility. But that's his take. Bitcoin top. Maybe we get an after boom after that. The third take is more the Raoul Paul super bull take, which is we're going

Ryan Sean Adams:
[8:37] to get an extended cycle. And the reason here is because global liquidity ain't over. And we're still continuing to print money. Crypto is up big in, we'll go up more in 2026. We'll at least get a Q1 and a Q2, probably bullish there. And look at this, in six days, David, there's going to be another Fed rate cut. It's basically 100% guarantee. So Fed rate cuts too at the same time. So an extended cycle of those three, I know which one you prefer. What's, um, what's your take? Like, what do you think is most likely?

David Hoffman:
[9:11] I think charting a path, if you pick a path, the only way I can be wrong, Ryan, is to say one of those three is going to happen.

Ryan Sean Adams:
[9:20] So just don't say one of the three is a certainty,

David Hoffman:
[9:23] Right? It's like it's going to be, they're all, all of those points that you just, all those particular paths, I think all have merit to them. And they will all have some semblance of the truth. And the way that the market moves forward will have some coherence between all three of those things. I think we're starting to just look closer and look more like the S&P, where we're starting to look like things are churning out less.

David Hoffman:
[9:45] The top 20 cryptos are starting to actually solidify themselves. And the chart that Luke Martin tweeted out is like the basket of the top 50 altcoins now trading below from where they were with the FTX crash in 2022. Those are the 2022 altcoins. We've had things like Athena come in and add like six or eight billion dollars to the total crypto market cap. But now it's like established itself as a top coin. And I think this is kind of just also happening slower as in like things are just turning out less. And so I think we're starting to enter the phase where like crypto just slowly grinds upward for a very long time. And I think maybe we're all kind of disappointed that we didn't get this like 20x, 10x phenomenon fever. But I think that means we're not going to crash by 70%, 80% either.

Ryan Sean Adams:
[10:30] Well, here that starts to indicate another possibility. And here is where you bring someone from the outside looking in, somebody from macro, and they say, this is Quinn Thompson, the current setup for Bitcoin and ETH is rare. Largest positioning rents in history. He was talking about the washout that we got. We got liquidation cleared. And opportunity ahead is similar to the pre-Trump victory of 24. he's still ultra bullish on Bitcoin and ETH. And the reason he gives is like, because the question is, well, why is everyone selling? Why in crypto are people bearish right now? And he said, four-year cycle fears. It probably sounds silly to you coming from the traditional world, but it's a deeply held belief in crypto. They've been wrong plenty of times, but the four-cycle belief. And so like four-year cycle belief, that is so enshrined.

David Hoffman:
[11:19] It's very, it's part of our DNA.

Ryan Sean Adams:
[11:21] In all crypto natives, we're like, oh, it's gotta be cycles. It doesn't always have to be in cycles. Like, who said that?

Ryan Sean Adams:
[11:27] That's not written into the laws of the universe?

David Hoffman:
[11:29] That's where I'm at. Yeah. I think we should remove four-year cycle from our vernacular.

Ryan Sean Adams:
[11:34] Maybe. We'll see. But they have held up previously.

David Hoffman:
[11:37] But if everything happens in four-year cycles, like, this is how markets work. If the market knows it's going to be a four-year cycle, knowing that is what ends the four-year cycle. Yeah.

Ryan Sean Adams:
[11:47] Okay. For me, David, here's the thing. Here's the Zen play, which is basically like, you don't even have to play cycles. As you can tell, no one knows what's going to happen in the future with cycles, whether they're going to have them, when they're going to end, when they're going to begin, whether we even have them anymore. You still don't have to play them. One data point I often look at is the... The days where Bitcoin and crypto just go on a rampage, if you miss those days, if you're out of the market those days, it makes a big impact on your portfolio. So here's a tweet.

David Hoffman:
[12:17] The top 10 days is what you mean.

Ryan Sean Adams:
[12:19] Missing just 10 days can destroy your Bitcoin returns. If you held Bitcoin from 2017 to 2024 without selling, your return was 847%. But if you missed the 10 best trading days, you'd be down 23%.

David Hoffman:
[12:33] That sucks.

Ryan Sean Adams:
[12:34] Okay? If you missed the best 20, you're down 67%. If you just miss 10 days in Bitcoin, being in Bitcoin from 2017 to 2024, the difference is being up 8x and down 20%. That's the difference.

Ryan Sean Adams:
[12:52] And so like, you don't have to play the market. You can just buy and hold. it's you know it's this is why it's hard for me to like think about um doing much on these cycles because we just don't know the question is are you bullish on crypto assets in general is the world becoming more digital is this a debasement resistant asset if the answer is yes you're bullish in the future you can also just not play cycles you could just hold

David Hoffman:
[13:22] I mean, I think we even see that in Ether more clearly. Ether went from $1,800 to $2,600 in two days. And then it did $2,500 to $3,700 also across like three or four days. And then it's been flat. And then it's been grinding flat.

Ryan Sean Adams:
[13:39] You're talking about just this year this happened,

David Hoffman:
[13:41] Right? In the most recent six months. Yeah, yeah, yeah, yeah. And so, yeah, like whenever I buy or whenever I sell Ether, which is rare, I'm always in the back of my mind. And I was like, but it could be tomorrow. It could move tomorrow.

Ryan Sean Adams:
[13:57] Yeah. But the thing is, you got to be careful which assets you believe in. Because look at this. We're going to go back to that Luke Martin chart again. Yeah. Look at all these assets that people were believing in since 2022. And they're just, they're dead. Dead networks here.

David Hoffman:
[14:08] On the flip side of things, all those tokens that were in that chart in 2022, were all kind of like, not the most high quality tokens, like the tokens that died out in 2022. There's something worth noting about the current crypto meta. between, Pump Fun, Hyperliquid, and Athena, we have some massively revenue generating applications for the first time in history that we have apps generating a ton of revenue beyond just change. So Pump, Jason Yanowitz tweeted this out three days ago, so I'm assuming this has already happened, but he said Pump is now just $10 million away from $1 billion of all time revenue. So I'm assuming we're at like $1.05 billion of pump revenue. And so to some degree, this is why I think the cycles start to moderate is when we have revenue-based token analysis versus whatever token analysis we had in 2022, things can stabilize around the revenue.

David Hoffman:
[15:04] And that's, again, it's just a part of a maturing industry. I think that's just the story.

Ryan Sean Adams:
[15:08] I agree with that. Let's talk a little bit about gold and broader macro here. Here's a chart for you, David. This was interesting to me. A staggering $7.5 trillion is now sitting in money market funds. This is a new all-time high. Look at all this cash in money market funds.

David Hoffman:
[15:24] It's hard to reason about a trillion dollars, let alone seven of them.

Ryan Sean Adams:
[15:27] Seven trillion, okay? It's an all-time high. And now that rates are beginning to go down, right? Another rate cut made by next week. Do you think that people are going to start deploying some of this money market fund? This is liquidity sloshing around. So that's happening in the background. You also have M2, money supply, a new all-time high of $22 trillion. That's going on. But actually, the biggest macro story of this year has got to be gold. It's got to be gold. So gold still above $4,100 per ounce today. It got even higher late last week. And then there was like a day this week where there was like a 5% to 6% drop.

David Hoffman:
[16:08] Gold got spooked.

Ryan Sean Adams:
[16:09] Yeah, look at this.

David Hoffman:
[16:10] A 5% to 6% drop in the number one asset... And gold isn't even number one by a little bit. It's number one by a lot. Six to seven percent drop in gold. That's like, how many bitcoins is that? That's like three or four bitcoins.

Ryan Sean Adams:
[16:24] Yeah, it's at least all of crypto's market cap for sure. And it just lost it in one day.

David Hoffman:
[16:31] Oh, I can't comprehend that.

Ryan Sean Adams:
[16:33] Gold is still a very popular trade, though. And it's been the most popular trade of the year, actually.

David Hoffman:
[16:38] I mean, it's turning into a momentum trade.

Ryan Sean Adams:
[16:40] Oh, let me find the chart. Look at this. Long gold, institutional capital, it's the most popular trade. It's even more popular than AI at this point in time.

David Hoffman:
[16:50] Wow. Okay?

Ryan Sean Adams:
[16:50] Wow. Let me give you some other numbers on gold. Part of this, it's a big part of it. I think actually the driver of it is central banks. So this is a table, year 2000 versus 2024. Look who is buying the gold.

David Hoffman:
[17:07] Russia and China.

Ryan Sean Adams:
[17:09] China.

David Hoffman:
[17:09] You mean the two largest economic adversaries to the global reserve dollar?

Ryan Sean Adams:
[17:14] Yep. And they've really ramped up over the last five years, let's say, particularly after 2022 when Russia got all its teabots.

David Hoffman:
[17:19] Followed by India and Turkey.

Ryan Sean Adams:
[17:21] Yep. Weird.

David Hoffman:
[17:23] Look who's selling, by the way. Weird how that happens.

Ryan Sean Adams:
[17:24] It's like European countries, like France. I actually learned that Canada has zero gold now. Over the last 30 years, they sold all their gold. They used to be top 15 gold country.

David Hoffman:
[17:32] That's the most Canadian thing.

Ryan Sean Adams:
[17:34] We'd rather have fiat. That's what they did.

David Hoffman:
[17:37] That's so Canadian.

Ryan Sean Adams:
[17:38] Here's another thing Look at this This is a chart of Foreign central bank reserves Okay Gold in orange And green is treasuries Got to flip it in here. Yeah.

David Hoffman:
[17:51] Yep.

Ryan Sean Adams:
[17:52] Gold is now exceeding treasuries in central bank reserves for the first time since 1995. 1995, it was the first time treasuries actually flipped gold. Uh-huh. And now it's gone the other direction.

David Hoffman:
[18:07] Yeah. I wonder if we look when we're all old, Ryan, when we're like 80, 70, and we look back and like treasuries are like back down closer to zero and golds are actually back in the like all-time high in central banks. It's like, oh, remember that weird time where treasuries were the dominant collateral asset?

Ryan Sean Adams:
[18:25] That was weird. 1970, David, 13% of central bank reserves were treasuries. 48% was gold. Okay.

David Hoffman:
[18:34] There's a fourth turning comment to be made here, but I'll just leave that to the imagination of the listeners.

Ryan Sean Adams:
[18:38] Look at this. Gold is the best performing major asset over the last 20 years. This has got to be infuriating for like stockholders, investors.

David Hoffman:
[18:46] Everyone. Who the hell has gold? Gold in their portfolio.

Ryan Sean Adams:
[18:49] Okay, 11% annualized return. Number one, it beats the U.S. market at like 10.9%. It beats small U.S. stocks, REITs, bonds, and beats every single asset class. All you had to do over the last 20 years was hold gold. No other decisions.

David Hoffman:
[19:07] Yeah, but that's also kind of not fair because it's a bit cherry picking because we happen to be talking about gold when it's peaking at a very high price.

Ryan Sean Adams:
[19:15] Okay, look at it over 10 years. Look at it over five years. Look at it over three years. Look at it over one year. On all of those dimensions, it's exceeded. I mean, that has got to mean something. This is kind of a disturbing tweet too, which is like, this is a chart of the hours of work to buy one ounce of gold. It was spike up. So... it takes a lot more work to buy gold. So this says something about debasement, also says something about

David Hoffman:
[19:45] The relationship between labor and capital.

Ryan Sean Adams:
[19:48] And it says something about capital unrest as well. You could see so much in gold. But the question is, could it move even more? Are you gold-pilled? I don't know. I'm just so fascinated by gold right now.

David Hoffman:
[19:59] Wait a second. What's going on here?

Ryan Sean Adams:
[20:02] Well, we haven't talked about the crypto gold catch-up trade, which could happen, by the way. Okay, look at this. as a percent of share in investable assets though, gold is only 6% and it's moved up from 4% two years ago. So that's still not its peak. 22% is its peak. What I'm saying here, David, is gold could still run for a lot longer.

David Hoffman:
[20:25] Dude, Ryan's turning into a gold bug.

Ryan Sean Adams:
[20:27] No, I'm not. No, I'm not. All that to say this, all that to say this. Bitwise put out a chart that says a 5% capital rotation from gold to Bitcoin, you know, if people get sick of the physical gold and they move to Bitcoin, 5% could send Bitcoin to $42,000.

David Hoffman:
[20:47] Wait, wait, so if 5% of gold was sold to buy Bitcoin? Bitcoin goes to a quarter million.

Ryan Sean Adams:
[20:54] Yep. Capital rotation, right?

David Hoffman:
[20:56] Why do I feel like 5% is kind of a lot?

Ryan Sean Adams:
[20:59] Because it's a lot of money. That's a lot of money. But it takes a lot of money to move Bitcoin these days. But I mean, if you'd like physical gold, why not? Don't you like digital gold? Come on, right?

David Hoffman:
[21:09] I don't know. You should ask Peter Schiff.

Ryan Sean Adams:
[21:12] Peter Schiff's never going to be convinced. I heard actually he's launching tokenized gold on the blockchain.

David Hoffman:
[21:19] That's hilarious.

Ryan Sean Adams:
[21:20] That is hilarious. Good for him, right?

David Hoffman:
[21:22] Wow. So anyway, that's the gold story. Coming up next, we're going to get into some crypto-native subjects. We're going to talk about prominent EF researcher Dankrad Feist, of which Dank Sharding is named after, has left Ethereum to get a new job. Where did he go and what does that mean for Ethereum? Ryan, not only has he been gold-pilled, but he's also been Bitcoin-pilled. So he's going to talk to us about Knotts versus Core and his political stance as to which Bitcoin side of this re-emerging civil war is Ryan on. Yes. And also, right before we started recording, Trump pardoned CZ. So we're going to talk about that and more. But first, a message from some of these fantastic sponsors that make this show possible.

Ryan Sean Adams:
[22:01] Like, This is CZ, the founder of Binance. Deeply grateful for today's pardon and to President Trump for upholding America's commitment to fairness, innovation, and justice. We'll do everything we can to help make America the capital of crypto and advance Web3 worldwide. He's still got more to come. Trump pardoned CZ, David. That's what happened on the week. It just happened at the time of recording. This was reported by the Wall Street Journal. Trump pardons convicted Binance founder. There is a press secretary in the White House who said, Trump has exercised his constitutional authority by issuing a pardon for Mr. Zhao, who is prosecuted by the Biden administration in their war on cryptocurrency. She then added, the Biden administration's war on crypto is over.

David Hoffman:
[22:52] Okay, so let me just refresh the listeners. Why was CZ convicted at all? CZ was convicted for violating the Bank Secrecy Act. So being intentionally and with awareness lenient on KYC on the Binance platform, allowing money laundering to occur, and knowingly so, especially with terrorists. And so when we were talking about this, when this was happening, you and I, I think we were of the opinion of like, Like, you know, CZ hasn't really harmed any retail individuals. No one was really harmed. Maybe, you know, funneling money into a terrorist organization, that can totally count as harm. But really, it was an offense to the nation state's banking apparatus, Binance was. And so they charged him with violating the Bank Secrecy Act.

Ryan Sean Adams:
[23:38] There was also, I'd add here too, there's also, it seemed like some selective punishment going on, right? So there's a lot of different entities in crypto you could go after for AML, KYC stuff. and they went after CZ.

David Hoffman:
[23:50] There's a lot of trad-fi banks you could go after for MLKYC.

Ryan Sean Adams:
[23:53] So there was definitely some selective punishment that felt like there was some, there was some story there. Some reason they targeted him specifically.

David Hoffman:
[24:03] Yeah. And so he paid a four billion, Binance paid a four billion dollar fine and then he went to jail in Seattle for four months and then came out. Does he need to get pardoned for that?

Ryan Sean Adams:
[24:13] I think it was, it was longer than four months, wasn't it?

David Hoffman:
[24:15] No, no, no. No, that was a whole, remember when it was announced say he had a four-month sentence, and because it was four, every crypto Twitter blew up.

David Hoffman:
[24:24] Does he need to get pardoned for that?

Ryan Sean Adams:
[24:26] Well, I mean, he's a felon, so that's on his record in the U.S.

David Hoffman:
[24:30] He's not even a U.S. citizen. He doesn't even live in the U.S.

Ryan Sean Adams:
[24:33] Doesn't he? I don't know. Actually, I think he's family in the U.S. or something. I'm not sure. I'm actually not sure. Don't quote me on this. But also, he can't operate Binance under the terms of the court case, right? He can't go back to Binance. He can't be in crypto. he can't do stuff in crypto. And this pardon alleviates that.

David Hoffman:
[24:52] I would guess. Yeah, part of this was that Binance cannot operate in the U.S. Is that pardoned?

Ryan Sean Adams:
[24:58] That's a separate thing. That's separate. That's separate. But CZ specifically could no longer, I think, be in crypto. And actually, he certainly couldn't be the CEO of Binance or be involved in that way.

David Hoffman:
[25:10] So now he gets to go back to Binance?

Ryan Sean Adams:
[25:12] He could, I suppose. I think, again, the details of this are not clear, but we do know that CZ wanted a pardon. Arthur Hayes got a pardon, too. So similar situation, of course, with BitMEX, Purpose Exchange. Arthur Hayes was on house arrest or didn't go to jail, but he got the Trump pardon. Remember when we talked to Arthur, we were like, hey, what's your advice for CZ getting the pardon? He said something silly. He said like, write those letters and, you know, just, I don't know what he said.

David Hoffman:
[25:39] I'm assuming that earlier, before Trump pardoned CZ, money went from CZ's hands and then ended up in Donald Trump's pockets.

Ryan Sean Adams:
[25:49] Do you think so? Do you think so, David?

David Hoffman:
[25:51] Yeah, I think I think Donald Trump has more money in his pockets today. And because of that fact has pardoned CZ. That's what I think.

Ryan Sean Adams:
[26:00] OK, but I don't know. So that's that that would be an allegation, of course. But there's like all sorts of direct ways to sort of, quote unquote, put money in Trump's pocket. Right.

David Hoffman:
[26:10] Sure, yeah. He has opened so many different doors to putting money in his pocket.

Ryan Sean Adams:
[26:15] All sorts of assets that you could buy, including meme coins you could do. There's all sorts of ways you can sort of grease those wheels if you want to.

David Hoffman:
[26:22] Just buy $10 million of my meme coin and burn it for a free pardon. Get out your free card.

Ryan Sean Adams:
[26:29] That, I think, is just the thing that does not feel great. If presidential pardons are for sale, if you want a pardon, I don't blame you for trying and paying to go get that but like presidential pardons should not be for sale at the same time But CZ was selectively prosecuted for AMLKYC. And the war on crypto is over. I mean, that's a true line as well. That's hard. Here's my line, though. Do not pardon Sam Bankman-Fried.

David Hoffman:
[27:02] Do not pardon Sam Bankman-Fried.

Ryan Sean Adams:
[27:04] All right. That's at least my line.

David Hoffman:
[27:06] Sam Bankman-Fried donated way too much money to the Biden administration to get a pardon from Trump.

Ryan Sean Adams:
[27:11] Dude, you never know. This could be a headline. I'm sure there's a party market

Ryan Sean Adams:
[27:16] for this. But, dude, tell me the story. Donkrad, the EF researcher, moving to Tempo. What's happening here?

David Hoffman:
[27:23] Yeah, so Donkrad announced on Twitter that he is leaving the Ethereum Foundation to join Tempo. So, again, maybe a little bit of a backstory on who Donkrad is. Pretty prominent EF researcher.

Ryan Sean Adams:
[27:35] Would you say, David, on the Mount Rushmore of Ethereum? Would you say one of those four sort of figures?

David Hoffman:
[27:40] Yeah, I don't know who is more significant to Donkrad after Justin Drake. So like, Justin Drake's definitely on Mount Rushmore. And then after Justin, I don't know who comes before Donkrad, but like Donkrad. I mean, like, again, there is a part of the Ethereum protocol named after Donkrad. It's called Dank Sharding. It's one of the reasons why Ethereum layer twos are going to become hyperscaled is because of Dank Sharding. It's like the original inception of Sharding. Anyways, he's been, Donkrad has been one of the chief pushers for aggressively scaling the layer one. and doing it so aggressively that it's like kind of pushed against Ethereum culture where like Donkrad wants it in the protocol to automatically scale the layer one, like automatically. And if we think that it's going too fast- Three X per year. Three X per year. And like programmatically just like saying, hey, that's what's going to happen. And if we don't want that to happen, we can hard fork away from that, but having that happen by default. And it's been like, it's saying, he said, he wrote this blog post. They're like, hey, we need this level of aggression or else Ethereum is going to become irrelevant. So he's like kind of the guy that's like, I think, frustrated. Some of his goals and aspirations for Ethereum were kind of thwarted or frustrated by just the bureaucratic slow consensus, rough consensus nature of Ethereum.

Ryan Sean Adams:
[28:57] It's a big ship to turn.

David Hoffman:
[28:58] Yeah, big ship to turn. And overall, just a great guy. Again, he's speaking at the main summit. He's been around the Ethereum community extremely well respected. He tweeted out, I'm excited to announce that I will be joining Tempo. This last year has been a turning point for crypto, where we have finally seen the outlines of our vision being materialized. While payments used to be front and center in the early days of crypto, I see a special opportunity to finally achieve this ambitious goal with relentless execution on both the technical and distribution fronts. I believe the real moment is now, and I want to make sure that we do not miss this moment to touch normal people's lives. That was his tweet. He goes on to say a little bit about his history in Ethereum. And this was surprising, I would say. I did not see this coming of this like high caliber of talent going straight from the Ethereum foundation to Tempo. We've seen like pretty big talent moving to Tempo elsewhere, like Liam Horne from Optimism, Malash from SMG. So like pretty big people. Donkrad is in a league of his own. And so this kind of like was a big shot, maybe call it a shot across the bow on the Ethereum community of simply the level of like talent suck that Tempo is causing across crypto.

Ryan Sean Adams:
[30:10] It caused a lot of conversations for sure. So Donkrad had been in Ethereum for seven years. So of course, like people aren't going to, I mean, it's not a lifetime commitment. You're not like a Supreme Court justice, right? So of course people are going to move on. I think part of the reaction was like where he moved, which is Tempo. This is Stripe's layer one. Okay, so Stripe invested in it. It's also a paradigm invested in. Yeah, kind of built by paradigm. Right, and it's going to be an EVM chain. But they claim they want to be as permissionless and decentralized as possible. So it seems like with all of the forces they're assembling, they're almost going to like front run Ethereum's roadmap. And I think that's likely case, right? They have Georgios with Reth and that Ethereum client.

Ryan Sean Adams:
[30:56] So, I mean, that could be a good thing for Ethereum in some ways, which is just like you almost get to test out all this frontier tech in a production ecosystem. They're building this back, they're engineering. So long as they're open source and they give this back to the community, people like Donkrad, the likelihood of that being the case increase. But also, it's a separate layer one. It's going to have its own token, one would presume. It's going to have its own economic incentives. It's going to take state, stable coins, assets, attention, users from the rest of crypto, including Ethereum. At least this is the possibility. So like the same day, which is really interesting, Tempo announced a raise of $500 million at a $5 billion valuation. So how do you pay those investors back? You have to carve out some market share, right? You have to compete in the space of change. But are they competing against Ethereum? Are they helping Ethereum? It's kind of squishy. What's your take on all this?

David Hoffman:
[32:00] Yeah, I've read a number of people's tweets and announcements saying, hey, I'm excited to announce that I'm going to Tempo. And basically all of these tweets have two of the same components in them. One is the time is now to take blockchain's mainstream and provide real world value to everyday people. That's the first one. And then the second one is Tempo will grow the pie for all of crypto. I see those same two components in like everyone's announcements. That second one, Tempo will grow the pie for all of crypto, is like probably true. Like the pie will grow. Crypto adoption will happen faster. What is not said is that Tempo, just like every other layer one, has every incentive to gobble up as much as that pie as possible. They want the pie. That's the whole premise of building a layer one. And even in addition to that, like Tempo is supposed to be a payments focused chain. that's where they penetrate like tempo in the future will happily have any valuable defy application that suits it and so like it'll eventually become a very generalized multi-purpose layer one that just has very high throughput it's just starting with stable coins which is a fantastic place to start because you you always want to penetrate with a niche but the stable coin niche is huge it's billions of dollars soon to be trillions of dollars uh and so like some Some people are kind of like calling and throwing flags saying like, yeah, you know, Tempo is good for Ethereum.

David Hoffman:
[33:21] The only thing that this is unequivocally good for is the EVM. The EVM takes home a huge victory here because the Tempo is the Ethereum virtual machine. But again, the economics of Tempo are for Tempos to own and not Ethereum. And that's just to be expected from a corpo stripe chain that wants to do what it wants to do. And this is all pretty rational.

Ryan Sean Adams:
[33:47] Some people saw this as basically a corporate chain, VCs raiding a public good. This is David from Blockworks saying, that's a nice public good he got over there. It'd be a shame if we ripped it off, hired all the talent that built it. These are massive distribution to ensure no one ever uses it again. Joe Lubin had a take here. He, of course, is Ethereum co-founder, founder of SBET right now. It's a pretty long take, but basically he admits that Paradigm, which is a VC behind this, has been trying to control Ethereum for a while. That was his take. Control, but he also said that they were developing Ethereum too. Certainly, they've given back a ton to the Ethereum community. And overall, he's not worried because corporate blockchains are a gold rush, but they can't compete with permissionless, credibly neutral, decentralized, non-corporate chains like Ethereum. And while he'd prefer folks like Donkrad to focus on Ethereum, they probably need to um they need new challenges to stay motivated basically this is kind of what happens so all sorts of takes in the community here i think it did boil down to like which chain is ethereum's friend and which is not

David Hoffman:
[34:58] Overall this idea of like there's this boogeyman evm alt layer one out there that's going to pay much more money a much more profit motivated rent seeking chain is going to pay for the talent and just co-opt the EVM and all the other like public goods. That's always been this like theorized boogeyman. And Avalanche, for example, again, an EVM all-air one tried to pay Peter Silghazi from Geth, like, a very high salary to defect from Ethereum and go to Avalanche. So, like, this concept has been out there. I think Stripe and Tempo is, like, the actual real instantiation of this. And so, like, yeah, people in Ethereum are, like, valid. Their fears are valid. But, again, it's just partly rational. I think people are just kind of disappointed because, you know, Ethereum has these principles and this ethos and it's special and you can't recreate Ethereum in the same way you can't recreate Bitcoin. And so people are kind of bummed that like Tempo is even existing at all. And like, I understand that. I think it's fine to be bummed. I don't think it's, it's just, but again, it's just rational.

David Hoffman:
[36:00] So like, there's no point in complaining about it.

Ryan Sean Adams:
[36:02] Do you want to talk about the fight for Bitcoin, Sol? Move from Ethereum, David. Okay.

David Hoffman:
[36:05] So, so Ryan, Ryan's gold bugged, but now he's also Bitcoin bugged.

Ryan Sean Adams:
[36:09] Well, no, I've just been following this, this argument in the Bitcoin community, just like at a surface level, but I find it kind of interesting because it's an argument for whether the block space on Bitcoin should be neutral or whether it should be Bitcoin only. When I say neutral you know what i mean is like can you store other things inside of the block space yeah like ordinals basically um this

David Hoffman:
[36:33] Debate has been happening for a while right.

Ryan Sean Adams:
[36:34] This has been happening for a while but the reason it's heated up is because bitcoin core recently unveiled an upgrade which would basically expand bitcoin's op returns that's the data field where they you know put all sorts of non-bitcoin data the arbitrary data it's like ethereum block Arbitrary data, yeah. Remember the tokens that they were launching inside of the return blob space? Anyway, they're increasing the data field from 80 bytes to 100 kilobytes. So this is a 1,280x increase, right? So they're basically saying, yeah, like stuff our blocks full of other things.

David Hoffman:
[37:08] That's a difference between like text only and an actual compressed JPEG.

Ryan Sean Adams:
[37:14] For sure, right? You could store a lot more in that space with $1,280. And so the people who think that Bitcoin block space should just be auctioned off to the highest bidder and you shouldn't control what's actually inside of the block space, whether it's Bitcoin or whether it's some other kind of data, Those might be the Bitcoin core folks, right? Sort of maybe call them the neutral blockers or something, the neutral block space people. There's another group in the Bitcoin community with a forked client of Bitcoin core called Bitcoin Knotts. And what the Knotts community is doing.

David Hoffman:
[37:50] K-N-O-T-S.

Ryan Sean Adams:
[37:51] Yes, that's right. And what they're doing, Luke Dash Jr., he's a Bitcoin core developer. He's kind of like forked this and launched this. It's got about 30% of all Bitcoin nodes that are running Knotts right now. So it's like a sizable portion of the community. and like been growing fast, they want to block, they want to filter out all non-money transactions from their clients. They could do this locally at the client level. So if it's something like ordinals, if it's all the, you know, stuff in the block space that they don't want, they just basically filter it out. Okay. And so this has caused a big community like Rift, a cultural question of like, what is Bitcoin block space for it? And the knots people say, it should only be for Bitcoin. It should, like, just financial transactions, basically.

David Hoffman:
[38:34] Bitcoin is for Bitcoin.

Ryan Sean Adams:
[38:36] Yeah, and part of their rationale is, like, well, if you start shoving other things inside of it, you could, you know, shove child pornography in it, for instance. You could shove all sorts of unsavory things that could be illegal. And then in various jurisdictions around the world, people would refuse to either morally, ethically, or legally run Bitcoin nodes. And so we'll have fewer nodes out there.

David Hoffman:
[38:57] Some people are saying that this is a potential attack on Bitcoin because somebody who is interested in taking down the Bitcoin network can leverage this space in Bitcoin blocks to put illegal pictures in there. And then people running those nodes are almost compelled to shut down their node because it's illegal to host those pictures. And so it's an attack on Bitcoin. It's actually a risk to Bitcoin.

Ryan Sean Adams:
[39:23] That's right. That's exactly right. And so the other side, kind of the neutral side, the Bitcoin core side says, no, Bitcoin has always been a system that basically operates based on neutrality of block space. And it's the economics and self-interest. Anyway, that's the... debate that's going on in the community. Greg Maxwell, the original Bitcoin developer of Legends and Lore, weighed in and he's basically on the neutral block space side of things, but people are firing back at him. And it's quite the debate, quite the controversy. So I've been roughly following it. We're actually trying to schedule a debate between Eric Wall, who is on the neutral block space side, and somebody from the Knott's community to go debate him. And so we can surface some more of these issues, but it's been fascinating to watch.

David Hoffman:
[40:07] The problem with that is that the people on the not side are just the most, most hardcore Bitcoiners. And so like, not only do they not want to go on a shit coin podcast, but Eric Wall is too much of a shit coiner to even like legitimize.

Ryan Sean Adams:
[40:23] Yeah. I think he's been called a scammer by Luke Kandash Jr. and such.

David Hoffman:
[40:26] So I just, this is something I actually kind of just love about Bitcoin is like, they take a, they take a difference between like 28 bytes and 1,208 kilobytes or something.

Ryan Sean Adams:
[40:37] Yes, and they make it a hill to die on.

David Hoffman:
[40:40] They make it a civil war of a philosophical difference of just this matters so much. And it's like, it's three bites, dude. Three bites.

Ryan Sean Adams:
[40:51] But it matters to a lot of people in the Bitcoin. Like, it's an unresolved debate. And actually, I'm not sure how it will resolve. Yeah.

David Hoffman:
[40:58] Okay, so and one of the reasons why it's happening right now is because there's now two different versions of Bitcoin. There's Bitcoin Core and Bitcoin Nots. And Notts is gaining market share. And so that's like, you know, the different Ethereum client, Geth or Prism or whatever. And one of them has a more opinionated stance about Bitcoin. And the Notts side is growing in market share because people like Luke Dash Jr. are saying like, yeah, download and run Notts, don't download Core.

Ryan Sean Adams:
[41:21] When you start filtering Bitcoin blocks, though, like where does it end? Is that not a slippery slope? Like I wonder about that and I worry about that. What if it becomes illegal to, you know, transfer Bitcoin because of OFAC sanctions? There's, you know, like, it's become acceptable to filter that out. Like, what happens, right?

David Hoffman:
[41:39] Can I say something, Ryan?

Ryan Sean Adams:
[41:41] Oh, you want to weigh in on this Bitcoin or deep Bitcoin argument? Go ahead.

David Hoffman:
[41:44] I kind of like the knots.

Ryan Sean Adams:
[41:46] Oh, my God.

David Hoffman:
[41:47] I kind of like the knots.

Ryan Sean Adams:
[41:49] For Bitcoin.

David Hoffman:
[41:50] For Bitcoin. For Bitcoin. For Bitcoin.

Ryan Sean Adams:
[41:52] Because there's Ethereum and other chains that are doing other things. Yeah, exactly.

David Hoffman:
[41:56] Exactly. Like Bitcoin is never going to have robust DeFi. So like I might as well prune it out and just focus on Bitcoin. The cool thing about this is that there is a very similar, not a debate, but a conversation in Ethereum about Fossil. And Fossil is this part of Ethereum, which forces nodes to download data, the node ahead of you. And so like when you're running a node, when you're staking ETH and you see transactions that you can't fit in your block, but you want the next person to put it in their block, you can force the person to download their transactions and put them in the block. And that is a complete, it's the inverse of knots, which is like preventing any sort of data. You're actually forcing people to download the requisite data. In order to run your Ethereum node.

Ryan Sean Adams:
[42:43] Which is kind of crazy. It's an extreme take at some level. It's a censorship-resistant maximalist take. And Ethereum is probably going to be implementing this next year, which is wild. Yeah, these networks are really diverging in truly important ways.

Ryan Sean Adams:
[42:56] David, we got more to discuss. Coinbase bought Echo from Kobe for almost $400 million for talk about that. Also, is the Fed allowing crypto companies on Fedwire? I think so. There's an AI trading competition going on as well. Grok, ChatGP, Gemini, Claude. We've got to check in, see who's the best trader. All this and more. But before we get there, we want to thank the sponsors that made this possible, including our friends over at

David Hoffman:
[43:20] Crypto Twitter just had a huge uproar when they noticed that the Coinbase.eth Ethereum account on Ethereum bought the UpOnly NFT for $25 million. Now, what is the UpOnly NFT? UpOnly, for those who don't know what UpOnly is, UpOnly was this podcast between Kobe and Ledger. Kobe is kind of this, like, kind of like a focal point of crypto Twitter, I would say. He's been in crypto Twitter since Genesis, really. And he's kind of, like, culturally defined what crypto Twitter is.

Ryan Sean Adams:
[43:47] A beloved trader, I would say, who has not scanned anyone.

David Hoffman:
[43:50] Trader and social commentator. Yeah. And, like, you know, pretty smart. Like, pretty smart guy. And so when they shut down UpOnly, not too terribly long after that, he jokingly made this NFT and listed it for something like $25 million. I think it was like $40 million or $50 million. But he had to lower it because he was talking to Coinbase.

Ryan Sean Adams:
[44:11] If someone buys it, then they would come back.

David Hoffman:
[44:13] Yeah, so it was like, whoever buys this NFT, we will come back for an eight-episode season. Yeah. And then there was a bunch of funny-ass parameters. And we are not obligated to talk about you. You are not sponsoring this. We get to pick the guests if we like you. Yeah, so it's very on-brand for Kobe. It's just like, I'm too fucking rich to care. Coinbase buys this NFT, And everyone on crypto is like, what the fuck just happened? Why did Coinbase buy this NFT? It's a terrible marketing ROI. $25 million for eight episodes and there's no guarantees of like any sort of like whatever.

Ryan Sean Adams:
[44:46] Yeah, $3 million per episode. Yeah.

David Hoffman:
[44:48] The next day, it's announced that Kobe's ICO platform, Echo, was sold to Coinbase for $375 million. And I can only assume it's in a part stock, part cash deal. I can only assume that the cash is the $25 million that he got. The rest is stock.

Ryan Sean Adams:
[45:04] Or it's all negotiated as part of the same deal,

David Hoffman:
[45:07] Right? It's all part of the package. Yeah, yeah. And so they did that as a marketing stunt, which was pretty savvy of them.

Ryan Sean Adams:
[45:11] Yeah, pretty well done.

David Hoffman:
[45:12] Yeah. And so why did Coinbase buy Echo? And what is Echo? Echo is a place for individuals, both accredited investors to access private sale and then later retail investors to access public ICOs. Like MegaEth, for example, is running their public ICO on Sonar, which is Echo's ICO platform. And so it's just a KYC platform that also just helps you launch and list tokens, right? And Coinbase is building out this, I'll call it this like internet capital formation pipeline, which they are a part of because they have like the spot trading and the margin and all that kind of stuff. But they are also building out, they also acquired Liquify earlier this year. Yeah, Liquify, which is a place for you to kind of like start your startup and then also issue and rewards to your employees and stuff like that, like compliance for token startups and stuff like that. And then Echo and Sonar kind of fit in the middle of this pipeline, which is like, okay, now that you are ready to like go public and have liquidity.

David Hoffman:
[46:12] You can do some of your final public sale, private sales, raises, you know, Series A, whatever, inside of Echo and then also with Sonar. And then once those tokens are listed, like what do you think, where do you think the liquidity is going to be found? It's going to be found on Coinbase. So Coinbase now has a kind of a complete end-to-end capital formation pipeline, which is pretty cool. and so that's why they acquired Echo so you gotta tip your hat to Kobe for a $375 million exit he started building Echo like two years ago so incredible returns and, And then also we get up only back for eight episodes. That's pretty cool.

Ryan Sean Adams:
[46:43] It is kind of cool because it's giving retail access to more deals that basically only VCs would have access to. And I think that was his whole founding mission. And so he brought that to completion. It's going to continue at Coinbase. So, I mean, like, well done there. Speaking of Brian Armstrong and Coinbase, he's on Capitol Hill right now. And he's got some news about the market structure bill. Let's play that clip now. Hey, everyone. Brian Armstrong here. I'm back in D.C. and even though the government is shut down, the Senate is working hard on getting market structure legislation passed for crypto, which is great to see. I attended some meetings this morning with both the Senate Dems, the Senate Republicans, and I'd say they're 90% on the same page. There's draft text being shared back and forth between both parties. Both sides want to get this done. That last 10%, there's a couple remaining issues open, like, for instance, DeFi. We want to make sure that we're pushing to protect DeFi and all the innovation potential that can have, and that the centralized intermediaries in crypto, like Coinbase, should be regulated, not the protocols. And then, of course, we're making sure to preserve stablecoin rewards for you as well. The big banks are coming for their cash grab, trying to block that, even though it was just recently decided in the Genius Act, which just recently became law. We're not going to let them relitigate that. So with these last few issues getting wrapped up, we're hoping to see this bill come out of committee by Thanksgiving. That would be a great outcome. Fingers crossed. We're going to keep showing up for your rights and we'll keep you updated.

David Hoffman:
[48:07] Straight from the source.

Ryan Sean Adams:
[48:08] You know what? I'm really glad he said that. I'm glad he said that about DeFi though. Do you remember when SBF was in Capitol Hill? He was the only one lobbying for us and he was basically on the side of let's AML KYC, all the DeFi and all the front ends and that's the only way the US is going to allow us to do this. He didn't even put up a fight and that was so contrary to the entire reason we're here. So let's hold Brian to that. If he's going to lobby and represent crypto, he's got to be supportive of DeFi and he says he is, so that's fantastic. David, Polymarket, with some news on the week, Polymarket and the NHL? What's this?

David Hoffman:
[48:43] Yeah, so it was announced that Polymarket is the official prediction market for the NHL. So, like, pretty big sports league. I mean, not bigger than football, not bigger than baseball. Top four. Top four. I don't know what the third is because I'm not a sports fan.

Ryan Sean Adams:
[48:58] NBA, man.

David Hoffman:
[48:59] NBA, yeah, yeah, yeah, sure, sure, sure. And so, yeah, Polymarket is the official prediction market for the NHL. Um, On to the next bit of news. It was also announced that Kalshi is now the official prediction market for the NHL.

Ryan Sean Adams:
[49:13] Wait, what? You said NHL? Both NHL?

David Hoffman:
[49:17] Yeah. They both announced this at the same time.

Ryan Sean Adams:
[49:21] That's so crazy. Who got there first, though?

David Hoffman:
[49:23] Kalshi tweeted it out first. Oh, they did? Yeah, they beat him like by an hour or something.

Ryan Sean Adams:
[49:28] Oh, my God.

David Hoffman:
[49:29] I'm like, what the hell is going on here?

Ryan Sean Adams:
[49:31] Yeah, what is going on?

David Hoffman:
[49:32] The word the implies that there's only one, But there's apparently two official prediction market partners of the NHL. So a little birdie came into my DMs and whispered something to me. So here's a rumor, Ryan, is that these big corpo accounts and the NHL, it would be one of them. I think Twitter also did this. Just smells the blood between Kalshi and Polymarket. And they just cause them to bid each other up. And so they like both Kalshi and Polymarket presumably paid the NHL saying, hey, tell the world that we're your official prediction market platform. And then the NFL's like, well, they call she's offering this much. So Polymarket, like, you're going to have to beat their price. And then they go to Callshi and be like, well, Polymarket's offering us this much. So you have to beat their price. And then they take both. Because apparently that's allowed? No, no, that's scammy. That's scammy.

Ryan Sean Adams:
[50:24] No, it's not. Whatever. It's fine for whatever consumers, you know? Well, I guess benefit. Why not put these things on both platforms? Why does one have to be the official?

David Hoffman:
[50:33] I mean, if I was either Kalshi or Polymarket, I'd be pissed.

Ryan Sean Adams:
[50:37] Oh, of course I would be pissed. I'm talking about from the consumer, though. I'm talking about from the user perspective. Like, whatever. Let these two giants compete for our love. That's what I said. They'll get better in the process.

David Hoffman:
[50:49] The NHL is not doing that. That's just the NHL being opportunistic.

Ryan Sean Adams:
[50:55] Okay, what is this, though? Polymarket is acting as DraftKings' clearinghouse now. So we did this whole thing about sports books versus prediction markets.

David Hoffman:
[51:04] Really good episode. I enjoyed doing that.

Ryan Sean Adams:
[51:05] Okay, now prediction markets teaming up with sports books? What's happening here?

David Hoffman:
[51:09] No, no, no, no, no. Not teaming up.

Ryan Sean Adams:
[51:11] No?

David Hoffman:
[51:12] DeFi mullet, Ryan. DeFi mullet. What? So DraftKings in the front, Polymarket in the back.

Ryan Sean Adams:
[51:17] No way. So they're just going to be the UI for Polymarket?

David Hoffman:
[51:21] Yeah, yeah, yeah, yeah. That's cool. Because DraftKings doesn't have a CFTC license, they're registered as a casino. What they are doing is they are just being the front end to Polymarket.

Ryan Sean Adams:
[51:30] If you can't beat them, join them.

David Hoffman:
[51:32] That's right. That's right. That's right. I think that's brilliant. I think that's brilliant.

Ryan Sean Adams:
[51:37] Polymarket also getting into every crypto wallet on the planet. So Metamask, that was a week or two ago. Now Rabi Wallet is going to have Polymarket prediction market. Got to be Phantom next. I think they'll all have it. It's a source of revenue for wallets and like, why not? David, a blast from 2022. OpenSea is doing something. This is a tweet from Devin Finster. OpenSea crossed 2.6 billion in trading volume this month. Wow, that's actually impressive. with 90% from token trading, but now they are transitioning to- Token trading,

David Hoffman:
[52:10] Importantly, Ryan, not NFT trading. Okay. Token trading, that token word's important.

Ryan Sean Adams:
[52:14] NFT marketplace to trade everything. Okay, what's happening with OpenSea? What are they doing?

David Hoffman:
[52:18] So they announced the Sea token. That's actually what this tweet is.

Ryan Sean Adams:
[52:23] SEA.

David Hoffman:
[52:24] SEA. And so they are finally doing an airdrop. I think that's probably why they crossed $2.6 billion in trading volume. Okay. Is because people are like, oh, token. No, I love OpenSea. Let me go trading. But they've also expanded just being an NFT platform to token trading. And this is what Denver's saying. It's like, okay, OpenSea needs to pivot because NFT volumes are just dog shit and they just have not come back. They blew up incredibly in 2021 and then they just went to zero. So they need a new business. So they're expanding their platform to be able to trade everything up. And so that's what the announcement is. And then also the Sea token from the OpenSea Foundation is coming. We'll be in Q1. 50% of the supply will go to the community, which is a large amount, a large amount. And then 50% of the revenue from OpenSea will go back to buy back the C token.

Ryan Sean Adams:
[53:15] David, you think that's going to make up for any of the money lost on NFTs, man? Or money we all collectively lost?

David Hoffman:
[53:21] Bro, I'm up on NFTs. I don't know what you're talking about.

Ryan Sean Adams:
[53:24] You're the only guy. Are you actually up on NFTs?

David Hoffman:
[53:27] I mean, my CryptoPunk has saved me quite a lot. Because I bought my CryptoPunk early.

Ryan Sean Adams:
[53:31] Besides CryptoPunk, are you up on anything?

David Hoffman:
[53:34] Every other NFT I'm down bad on.

Ryan Sean Adams:
[53:36] It's been brutal. They did not come back this cycle. That's for sure. This was some cool news. So the Fed, David, is going to give crypto companies direct access to Fedwire. All right. But so have you ever tried to wire something into a crypto exchange, like into Coinbase or something like that?

David Hoffman:
[53:55] Yes.

Ryan Sean Adams:
[53:55] Okay. So what you'll notice is you're actually not wiring it directly to Coinbase. Like you're wiring it to Coinbase's bank, right? It's like customer's bank or something like this. And you have to do that. Even brokerages, they all have these go-between banks. It's the banks at the end of the day. Because the banks are the only ones connected to Fedwire. That's where wires are actually settled. Well, Chris Waller came out. So he's one of the members of the FOMC. Governor Waller said that they were going to create skinny accounts so that crypto companies, stablecoin companies, organizations like Coinbase could access Fedwire directly and they don't have to go through banks. This is pretty historic because this has never happened before. It used to be the groups, the nodes that could settle onto Fedwire, let's call it, were all permissioned and they were like a good old boy bank club of just a bunch of bank names and no one else could get in. Well, Waller is proposing that they all get access to Fedwire too or will have a more liberal licensing structure. He also said some pretty bullish things about crypto. I'm just going to play this clip. This is an acknowledgement. the distributed ledgers and crypto assets are no longer on the fringes, but are increasingly woven into the fabric of the payment and financial system.

Ryan Sean Adams:
[55:13] Now, before we hear from these innovators, I would like to touch on roles that the Federal Reserve plays to support the private sector. These include serving as a convener to solve coordination problems and operating core payment and settlement infrastructure. We are also looking ahead, conducting hands-on research on tokenization, using smart contracts, and the intersection of AI and payments for use in our own payment systems. We do this to understand the innovation happening within the payment system, as well as to evaluate whether these technologies could provide opportunities to upgrade our own payment infrastructures and to enable us to have deeper conversations with the industry on these new technologies. Wow, that's great. There you go. Yeah. Actually, fun fact too, David. Do you know on Polymarket, Chris Waller is the number two listed probability of becoming the next Fed chair.

David Hoffman:
[56:10] Wow.

Ryan Sean Adams:
[56:11] That same guy. Can you imagine if he's running the Fed?

David Hoffman:
[56:13] Usually when I hear the Fed doing research about crypto, it's like research about CBDCs. I'm like, okay, that's nothing. But researching about how the market has adopted specific payment opportunities being stable coins.

Ryan Sean Adams:
[56:25] Pretty wild, right?

David Hoffman:
[56:26] Hopefully a little bit more real.

Ryan Sean Adams:
[56:28] Pretty wild. David, you know, last week we talked about this asset seizure by the U.S. government from a group of 127 Bitcoin, a group of scammers, Chen Zai, still on the run. We talked about all that. I was doing some more research on this. This means that the U.S. government would have $36.3 billion worth of Bitcoin right now, which is like three and a half percent of the U.S. government's gold stockpile. And that's at current Bitcoin prices. Wow. And you remember that there was an executive order earlier this year where Trump said, hey, we're going to make a strategic Bitcoin reserve. But the thing is, it had to be budget neutral. So they were going to do a strategic Bitcoin reserve without buying any Bitcoin. You know how they're doing it.

David Hoffman:
[57:14] Yeah, seizing.

Ryan Sean Adams:
[57:15] They're seizing it.

David Hoffman:
[57:16] They're stealing it.

Ryan Sean Adams:
[57:17] This is part of the strategic Bitcoin reserve. They're actually going and getting it. And you say stealing it, right? There's an element to that, actually.

David Hoffman:
[57:24] Yeah, a little bit. It's taking things by force.

Ryan Sean Adams:
[57:27] Okay, so whenever the government seizes something, it doesn't get forfeited yet. So they seized it. So it's, you know, unclaimed right now, or it's like subject to claims by other individuals. But only 3% of forfeited assets are ever returned to claimants. So I was thinking about this, right? All this funds, this, you know, $15 billion or whatever, it's all victims' money. Does it ever get back to victims? Historically, only 3% of funds have gotten back to victims. And it's a whole legal process.

David Hoffman:
[57:57] There's no incentive for them to get money back.

Ryan Sean Adams:
[57:59] Tons of, like, documents. The government makes it very hard to get back your assets.

David Hoffman:
[58:04] You know when they seized Bitcoins from the Silk Road? Yeah. And then they was just in, and then the FBI agents stole those. Remember those? Yeah, they don't want to give them back because somebody can have those.

Ryan Sean Adams:
[58:17] This is like... Okay, so I'm glad criminals are getting prosecuted. That's great. It makes me very uncomfortable that the way the government, the U.S. government is going to get its crypto reserve is to basically like, go take it.

David Hoffman:
[58:31] Say you get raided and arrested and then your Bitcoin is seized and then you go through the court system and you come out not guilty. You don't necessarily get your Bitcoins back. Like that is another legal process that you have to go through. And you don't know where those Bitcoins are. And then we lost them. Oh, they ended up in the stockpile somehow. I don't know.

Ryan Sean Adams:
[58:53] Yeah. So anyway, it's not great. I mean, I'm glad we have a strategic Bitcoin reserve, but it's also not great at the same time. David, tell me about this competition between AIs, this trading competition. What's going on here? Okay.

David Hoffman:
[59:04] So there's this website called Alpha Arena, and it has taken six of probably the most used LLM models. DeepSeek, Quad, Grok4, Gemini, ChatGPT, and Quen. So like two Chinese models, three, four Silicon Valley models. This individual gave $10,000 to every single model and set it loose on Hyperliquid. And it was like, go maximize profit. And some of these models, Quen, one of the Chinese ones, is at $15,600. DeepSeek, $12,600. So Ryan... two Chinese models are up.

Ryan Sean Adams:
[59:41] They started with 10K. Did you say that?

David Hoffman:
[59:43] You should say that. Yeah, they started with 10K. Yes. Grok used to be up. Grok used to be in the lead.

Ryan Sean Adams:
[59:48] Had a few good days.

David Hoffman:
[59:49] Had a few good days. It's down 12% to $8,700. Claude Sonnet is at $8,700 as well. And then Gemini and ChatGPT.

Ryan Sean Adams:
[59:59] Do not trust them with your money, okay?

David Hoffman:
[1:00:00] Don't give them your money. The ChatGPT chart looks like somebody who just is a bad trader.

Ryan Sean Adams:
[1:00:05] It looks like my trading chart, to be honest. But even I, I feel like I could out-train ChatGC

David Hoffman:
[1:00:10] At this point. I think you could do better than that.

Ryan Sean Adams:
[1:00:11] It's kind of cool, though, right? It's pretty cool. You give an AI model some money, and it does stuff on a perps exchange, and you get to see what the best model is. It's a pretty objective measure of how sort of trading intelligent, how powerful they are, aren't they?

David Hoffman:
[1:00:24] How intelligent they are, at least.

Ryan Sean Adams:
[1:00:26] It's hard to game this. You actually have to be good.

David Hoffman:
[1:00:28] It's impossible to game it. It is a very good benchmark. So we have a sister podcast. It's called Limitless. It's hosted by Jaws and Josh. They did an episode on this. currently this episode is trending hitting the algorithm hitting the algorithm they did one of my favorite part of this episode actually was Josh kind of psychoanalyzing each of the LLMs talking about like yeah you know Grok, this is when Grok was up like $18,000 or whatever, Grok is like unhinged and just calls it as it is and it's unfiltered and takes a lot of risks and so of course it's up is that.

Ryan Sean Adams:
[1:00:59] What you want in your trading bot you want somebody who's unhinged managing

David Hoffman:
[1:01:03] Your money yeah so these things are taken in between like 2 and 20x leverage, And then you have like ChachiBT, which just like, you know, glazes you.

Ryan Sean Adams:
[1:01:11] Maybe we shouldn't do this.

David Hoffman:
[1:01:13] It's a little bit of a soy boy, you know. It doesn't. And then now it's down to $2,000.

Ryan Sean Adams:
[1:01:18] You can't recover from that. We'll have to see. I want to check in on this weekly because it's kind of entertaining. Yeah.

Ryan Sean Adams:
[1:01:25] David, one last thing before I let you go. We're talking about AI. You know, one thing we've both been very excited about is this X402,

Ryan Sean Adams:
[1:01:33] Basically, payments protocol, right? Using crypto, using stable coins, anything. but it turns any API gateway into kind of machine-to-machine microtransaction portal. There's this website called Nexus where it lists like all of the different services that you can call using this right now. And I was looking at a demo that Coinbase put out. And so here's a demo of their MCP wallet, okay? So this basically gives you an MCP wallet that you can now connect to your AI, basically. So this is a model of Claude. basically what you're doing here is you're downloading this thing it's companioning with Claude and then you can fund it so you put like five dollars into your wallet and the AI gets Claude gets to control this and then you can ask it questions like here's an example of um you know like what what different services are available in x402 and then Claude can just enhance its answers by spending money from its wallet and you can set limits right but it gets Claude can spend money from its crypto wallet to go and prove its answers and consume these X402 services.

Ryan Sean Adams:
[1:02:39] So the idea of an AI agent having a crypto wallet is like now here, and we are beginning to build a whole data consumption infrastructure of micropayments to create a marketplace, basically, for AI data consumption. And I think this is one of the coolest things happening right now in crypto, is a beautiful intersection between AI and crypto.

David Hoffman:
[1:03:03] I mean, it's not just micropayments. X402 is just native payments inside of the internet. It goes back to Marc Andreessen's comment about like the original sin of the internet was not having payments embedded in it. And that's what X402 is. Lincoln Murr is the head of X402 product at Coinbase speaking at the Bankless Summit. Oh, really? Cool.

Ryan Sean Adams:
[1:03:22] Yeah. Well, hopefully he's talking about AI agents and everything they're doing over there.

David Hoffman:
[1:03:26] I don't know. I just know he's talking about X402.

Ryan Sean Adams:
[1:03:30] Guys, we will end it there. of course, you know, none of this has been financial advice. Crypto is risky. You could lose what you put in, but we are headed west. This is the frontier. Not for everyone, but we're glad you're with us on the Bankless journey. Thanks a lot.