ROLLUP: World War Threat | North Korean Hackers | Vitalik Roadmap Updates | Visa Platform On Ethereum

It's actually crazy just like watching the missiles rain down on Israel.

Yeah, so what you're hearing is the sirens in Israel as uh Iran launched 200 ballistic missiles, um some getting through the Iron Dome into Israel. Uh and global globally Marcus just got really scared.

Oh yeah, this is this is uh peak global uncertainty, I think, at least uh on this year. And I think we should say, obviously, before we get into this roll-up, just uh a sentiment check. This is like not this is bad news uh for everybody, for the entire world, right? And uh I think Lex Friedman put it well when he said probability if World War III feels higher than ever, a global war would destroy humanity. I pray for the wisdom of our leaders. I think, you know, we we also echo that sentiment. Uh this is kind of a concerning time that we're in, for sure.

I think all eyes are kind of pointed at the Middle East right now, not really knowing what happens next. But neither neither side, either the Is anti Israel pro Israel side really seems to um be interested in taking the foot off the gas at the present moment.

Yeah, I mean, uh hopefully this doesn't escalate into something uh wider. And of course, all of this global instability affects markets, including crypto markets. And that's been a theme of the week. This has been the worst start to October uh as these tensions have um raged on. And it calls into question, I think, what we've talked about. You know, remember that BlackRock report where they were talking talking about um Bitcoin as actually sort of a uh an asset when there's global uncertainty, like it should appreciate the way gold does in global uncertainty. It kind of wasn't in the aftermath of this, which is kind of interesting. Last night's, so this is the published the day after these attacks. Last night's Bitcoin priced action, Bitcoin was negative four, while gold was up almost 1% in the aftermath of the uh Iranian attack. And that's kind of puzzling when you try to think about Bitcoin being sort of a global instability type of hedge.

This is what uh BlackRock was talking about as their frame of understanding around Bitcoin. Now, there could be a difference of time frames here. Bitcoin could just like go risk off in the very short term, while global instability uh over the long term might actually benefit Bitcoin. That that is still possible. Uh also in since we're talking about this, uh, there was this uh tweet that went out with this new polymarket front page uh where just talking about all these these different markets that are related to this crisis in the Middle East. Uh will Israeli forces enter Lebanon in September? 86% chance. Will Iran strike on Israel before November? Uh will the US evacuate their Beirut embassy before October? And the tweet on this uh the screenshot of Polymarket says, it feels wrong that Polymarket has an entire Hezbollah betting section that makes war look like a football game to bet on, which actually caught Vitalik's attention, uh, who went and responded, I'm actually in support of these. I support these existing. The point of Poly Market is that the perspective of traders, it's a betting site, but from the perspective of viewers, it's a news site. So there's all kinds of people, including elites on Twitter and the internet making harmful and inaccurate predictions about conflicts and being able to go and see if people with actual skin in the game think that there is something that has a 2% chance or a 50% chance is a valuable feature that can help keep people sane. So just it this is interesting to see uh crypto respond to global current events uh in an increasingly high fidelity fashion.

Yeah, it's um it's like war betting does seem crazy. And like viscerally, when you look at this and you're like these these charts, um, I guess viscerally my first reaction is like, is this like a war betting market? And that seems like it does seem wrong. So I share the original like poster's uh visceral reaction, and yet I also agree with Vitalit that when you look at the the the probability of all of these things, is there a better source of accurate information around this? Like in a world where I have no idea what's going on and um the risks of various escalations and attacks, this is a fantastic source of information for that. So I I I sh I share that uh from Vitalik as well. I just kind of wonder what the rest of the world thinks about all of this in crypto. And I I do think this brings up a broader question in crypto. It's just like I think sometimes uh the outside world looks at crypto and they're like, oh yeah, you guys are betting on like bunkers.

Hyper financialization.

Yeah, you guys are betting on doomsday scenario, and like you're hopeful that you know f fiat inflates to infinity so that you can go hide in your bunker and have Bitcoin, and that's like a very anti-social type of uh like take. Right. But but it's interesting with Bitcoin and uh more so with Ethereum, I think it it's kind of juxtaposed from like it's it's not a pessimistic technology, but it kind of is. And also it's not purely an optimistic technology, but it also kind of is. It's almost like this cynically optimistic technology because the entire Bitcoin and even Ethereum project is basically cynical from the perspective of hey, we we can't put all of our trust in centralized institutions.

Uh and you know, if we don't have balance of power and decentralizations, they will increase in their level of corruption, right? So it's cynical from that perspective, but it's also optimistic from the perspective of it's building an alternative and it's building a new set of tools that people can use that fosters trust. So it's just this weird juxtaposition I find myself in being a uh Ethereum and Bitcoin bull.

I think for whatever take there is out there of oh these crypto people are just betting on World War III, they're betting on the the destruction of the earth and that's just like what they're doing or what their culture is, it seems to be pretty adjacent to people say that say crypto has no use case. And it's it's because the crypto has no use case for them, but go talk to somebody in a developing nation that has escaped their hyperinflating currency using stable coins. And now, like there is information here, like two million dollars on will Israel invade Lebanon before November, 86%, uh 80% chance. Um that has been that has now been able to inform people's actions and choices about their lives as it relates to them. And this, of course, is just the Hezbollah section of polymarket. There's other sections of polymarket that now people can have information, good quality, unbiased, market based information about how to make champ choices about their lives, aside from the fact that other people are betting on these outcomes.

Yeah, agreed. David, we got so much more to talk about. It's not just uh war stuff today. Roman Storm of Tornado Cash had his motion to dismiss. He had filed a motion to dismiss his court case. It was rejected this week. And David, there are massive implications for this. I want to talk to you about. The judge made a ruling that might actually imply all DeFi operating in the United States is illegal, a money transmitter. We got to discuss that.

Ripple might be getting an ETF if bitwise has its way, but the SEC says not so fast and wants to go back to the drawing board about the XRP versus SEC case about Ripple being a security. Wow. Going all the way back there. And then also Visa debuts a fiat tokenization platform on Ethereum with banks as its biggest customer.

Powell's predicting a couple more rate cuts. We'll discuss that. Also, North Korean hackers are invading crypto companies like en masse. This is a wild story we gotta get into. And beckless listeners, stay tuned to the end because I got some alpha on the Kane versus David fight. At least I hope I do.

Do

And that's happening next week. I hope you do. Anyway, David, you gotta

I give you this alpha or do you have this alpha?

it's it's uh uh a mix between your alpha and my alpha combined and and basically.

Do you have alpha that you haven't given me?

I don't know. Wait till the end and you'll hear all that. It's happening October 11th, and there's going to be a special offer for everyone trying to get last minute tickets to that fight and to permissionless. So stay tuned. Uh all right, let's get to the prices on the week, David. I want to look at these charts in some detail. Thanks to Kraken for providing these charts. Um, all right, where are we on the week? And where was the uh the missile dip that we saw earlier?

Yeah. Turns out crypto prices are inversely correlated to the number of missiles launched in the world. Uh Bitcoin currently clocking in at $60,300. Uh dipped below $60,000, but got back above $60,000 pretty pretty uh quickly there.

Said, do you say down seven percent on the week?

Down seven percent. That's right.

That's a that's

Right.

a

That's a lot. It's a lot for Bitcoin. How about Ether? Ether, uh down eleven percent on the week. Start of the week at 2640, currently at 2315. I think that actually means it's more like down 12% because that's uh dipped to lower than when I put these numbers in.

Okay, so what does that tell us? Does that tell us that um like global instability is even worse for Ether relative to Bitcoin?

Yeah, Ether's always been like the more optimistic uh optimistic token of the two.

And I'll it always just moves more than Bitcoin. That's right. Let's go and uh check on the uh ETF flows starting with Bitcoin. Where are we at on the Bitcoin ETF flows? Uh it has been some big weeks up uh last week, but uh in the last two days, $242 million out of the Bitcoin ETF uh on the first, $64 million out of the Bitcoin ETFs on the second. Uh at some point these are just gonna be called a equilibrium. Last week was a huge week. There was like almost a billion dollars of inflows into Bitcoin ETFs alone. Uh so I mean it's not bleeding that much.

I mean October first was kind of uh the Tuesday that the missile strikes took place, right? So it it makes sense you'd see uh a drainage um as well. Is that the first day that there's outflows?

From the BlackRocket uh Bitcoin ETF. Wow, I think it might be.

Oh wow. Um well the first day in a while, right? Uh

No, I think that might be the first day ever.

ever? I mean this

That might be the first day ever.

this chart only goes back like 15 days here.

Yeah, I don't think I think that's the first day ever that Bitcoin has been had outflows.

You actually think that's the first day ever that BlackRock has had outflows?

Yeah, it's always been inflows. Yeah. Mm-hmm. That's the first red number there. I'm pretty sure that's true.

Someone fact checked that. I don't know about that.

You want to place a bet?

Place a bet.

No, I've done all my money's going on the Kane versus David bet. Okay. All my betting money.

On which side?

Well, we'll have to wait to the end to find out, David.

Uh Ether outflows, similar to Bitcoin, $48 million on the first. Actually had $20 million of inflows on the second. So it wasn't the inflows weren't too rattled, I would say, by the um by the uh Middle East conflict.

Okay. Um there was a milestone that was passed, which is nice though. This is a pretty big milestone. So the iShares, that's a BlackRock Ethereum ETF, just eclipsed 1 billion in uh total assets. So assets under management of above 1 billion. So it's now in the top 20% of all of the ETFs of all time, and it did it in two months. So it feels like that feels like a big deal, but also it still feels like uh, I don't know, Ethereum's little brother syndrome of like Bitcoin already smashed all of these records. So now I look at this and I'm like, oh cool. Like, you know, the second place trophy doesn't seem that great uh in comparison.

The trophy going to the uh little brother that's five years younger.

Yeah. Well, especially when you meld it with this, David, this is the e Bitcoin ratio and we're under zero point four again. What are we on the week?

Point zero three eight five. So that's been as low as it has been. It got this low on the nineteenth of September. It's back there again. It's bottoming. Bottoming. Yeah, we're mm-hmming.

Bottoming can continue. It can continue to bottom.

Yeah, you know, continue to bottom. Uh and how about total crypto market cap? Are we we're still above

2.2 trillion on the week. Yeah, still healthily above um two trillion.

Well, speaking of health, one thing that is healthy in the Ethereum economy is uh the layer two economies. And thanks to Mantle for this layer two update. This is what caught my eye uh this week. So this is a new set of dashboards created by the uh the Grow the Pie analytics team. It was just like uh you know crushing it. And they they call these economics dashboards. And here's what I kind of picked out. This is if you sort this on the one year and you look at L2 profitability, you can see, David, a number of very highly profitable layer twos that have built on Ethereum. So nine chains.

We actually have to define what profit is because some people reject the term profit in the term of of chain terms. What do you mean by profitability in in uh the context of a blockchain?

Yeah, so the revenue that a layer two in particular makes is the sum of fees that were paid by users of the chain. So if you use base, if you use Arbitrum, if you use Optimism, Scroll, et cetera, right, as a user, you're paying some fee. Okay. So that's the revenue that they make. Uh and the cost uh in this context is kind of like a gross profit metric. So the cost in this context is the fees that they have to pay the layer one, that is Ethereum, in order to settle and provide uh data availability for this service. So this is why we our analog has been Ethereum, like layer twos are essentially reselling Ethereum block space to the market. And they're reselling that on a profit margin. So the delta is gross profit margin, essentially. Revenue, less less costs is your gross, gross profit margin. The story here is there's now nine chains in total that are very much in the green. $150 million they've made in gross profit over the last uh 12 months. It's really cool to see this uh economy of chains. Like here was kind of my my my bull take on it, David, in in uh tweet summary. Ethereum has already produced nine chains with gross profit. Each chain is an economy. Ethereum is a federated union of economies with ETH as its money. I think this is very bullish ETH, uh, even if the market's not reflecting it at this point in time.

For some reason people really just uh don't like this profit word. And maybe you can argue with the semantics. Maybe you can argue with the idea of profit. Who doesn't like it? But what you cannot argue with is that $50 million of ETH over the last year ended up in BASE's treasury, which is Coinbase. Or it Arbitrum, $22.3 million of ETH went to the Arbitrum Treasury. I don't know what you want to call that, but there's $22 million of ETH there. Revenue from base over the last year, $64 million. Costs of base, $14 million. That's not a lot of costs in comparison to the revenue. Arbitrum, $58 million of revenue, $35 million of costs. And these are the nine chains that are profitable, the nine layer twos that are profitable, are nine out of the ten chains that are profitable, the tenth being Tron. Tron is the only other than the Ethereum layer one.

You're talking about of all the chains, not just like

Of all the chains.