ROLLUP: ZkSync Airdrop | Optimism Fault Proofs | Pectra Ethereum Upgrade

ZK Sync introduces the ZK token. The probably one of the more anticipated networks to drop their token, dropped their token. Also, I mean they dropped 17.5%, and it was like a kind of a crazy large airdrop.

Bankless Nation, welcome to the Friday weekly roll up. It's the second week of June, and we got a bunch of good news. I think it's a lot of good news. And also, instead of Ryan, who's down and out for the weekend hanging out with his uh AI family like he sometimes does, we're pulling in Anthony Cesano to substitute Teach for the Bankless Nation to cover the weekly news in crypto. Couldn't think of a better person to uh to sub in. Anthony, how you doing?

Hey, I'm doing good. Thanks for having me on as a substitute teacher again. Always love doing these episodes with you.

Yeah, we love having you. And before we actually get into like the specifics of the news, like maybe let's just zoom out, Anthony. Let's like quick vibe check. Just like, how are you feeling? Uh we're in kind of a weird spot. We've gotten really good news. We've gotten some cool um innovations that have happened this year. Uh it's definitely been a very fun year. Overall, like what what would you just say is this high level about just the vibe of everything right now?

Yeah, yeah, I think the vibe's a little weird right now. It depends on where you look. Uh, if you go on Twitter, I think the vibe is different to going on like some private Discord communities that you might be a part of, or even public ones that you might be a part of. I think everyone's still very, very excited about the tech and all the developments that have been happening. You know, we're seeing a lot of growth across the industry generally. But of course, if the price goes sideways for a few weeks, everyone starts losing their heads. So I think, yeah, there's a bit of a disconnect there. But I guess we'll get to the point where price starts going up again and the tech will be good and everything will be suddenly be good for a few weeks as well.

Yeah, it does get hard to like decouple price action from like the sentiment of almost anything else. But there is a lot of other things that I think are just like pretty crazy things that happened this week. Uh crazy big. Uh ZK Sync, one of the oldest and most long-standing layer twos, dropped their ZK token. So we'll talk about who is eligible and what's the sentiment around that. Optimism, one of this is one of the big things I've been referring to, uh, launched the first permissionless fault proofs ever. Uh so if you have been paying attention to the just technical advancements and decentralization of a layer two, Optimism got a green slice on their layer two beat security orange, as you call it. Eigenlayer gets a competitor. Do they got the juice? Brand new competitor on the scene. This one's a little bit different than the others. And also, it's kind of like acquisition week this week. We saw like three or four major acquisitions. We'll talk about all of them as well. And something that's gonna be very useful to have Anthony here. Petra is about to be one of the biggest Ethereum upgrades. Uh, it's chock full of upgrades. Uh, and so we're gonna talk about just everything that is in the Petra upgrade and when it is coming. But first, of course, gotta talk about the markets. Uh, it's not the greatest week in the markets. Uh, we are down across the board. Uh Bitcoin down 5.8%, start of the week over $70,000, ending the week $66,800. Uh, Ether, kind of even worse. Uh, start of the week uh $3,800, uh down 8.8% to $3,475. So we were really like pretty riding high, especially the Ethereum community post ETF, and we just like couldn't keep it going. We just like lost steam. Uh overall, just like any comments on the price action, Anthony.

Yeah, yeah. I I think what it really just keeps confirming is that there doesn't seem to be any really net new money coming into the ecosystem for quite a while now. Obviously, BTC has some new money coming in via the ETFs, but even that, like people don't realize that just because money's going into the ETFs doesn't mean it is a net buyer of Bitcoin. It can be doing a complex kind of strategy in the background where it could just end up being flat, where essentially you're longing the ETF and then shorting uh uh uh shorting the market generally on BTC. So your exposure is basically flat there. So yeah, I think that because of that, it means that pretty much everything else except BTC is bleeding pretty hard. ETH, of course, got the ETFs approved, but they're not live for trading yet. We're expecting them, well at least I am expecting them to go live next month, hopefully, for trading. But yeah, until they're actually live, there's there's no inflows, right? So people are just really speculating still, speculating on what those flows will look like. And it's the same pool of money rotating around. I I really do firmly believe that there's mostly uh the same money sloshing around in crypto and has been for quite a while. There's not really any net new money in. Like no one that I know in real life, like literally no one that has is not just in crypto already, has even whispered a word about crypto to me. And they know how much I'm in crypto. It's like very uninteresting for them right now. There's no FOMO. I think people, especially if they're in 2021 slash 2022, they're still burnt from that because I think we tend to forget how bad that was for the average investor. You know, things like Terra collapsing wiped out so many people that had just come in and were new people. So for them to come back, I think they're gonna need some really strong FOMO. And I don't think we're gonna see that until BTC and ETH are firmly in price discovery and the mainstream media every day saying, look at these new all time highs, you know, get in now, or actually gonna miss out, sort of thing. So until that happens, I'm not surprised at all by this kind of price action because of the fact that the the new money is just not coming in right now.

Yeah, the the Bitcoin chart, it's it's pretty interesting. We've never seen maybe you can correct me if I'm wrong. Uh we broke all time highs, but we did not see price discovery. Like I don't think anyone was expecting to break all time highs and immediately skyrocket, but like we broke all time highs in March of this year, and it's now like well into June. Uh how many, how many months is that? Like four? Uh it's been pretty pretty crazy to break all time highs and then not like do anything meaningful, like four months in a row.

Yeah. Yeah. Yeah. It usually happens where it'll kind of hit the all-time high, the old all-time high, hang around for a month and then go into price discovery. But because this cycle's generally been quite weird and quite accelerated as well, I think that maybe the market is trying to quote unquote get us back on track into that classic four-year cycle meme, uh, where essentially we'll, you know, BTC will go sideways for a little while and then start going into price discovery to catch back up to that. But yeah, we've we've not seen this kind of lag before from BTC going, you know, to a uh its old all-time high and then, yeah, it's four months or something, three, four months, and not going into price discovery. But again, I think that speaks to the to the fact that there's yeah, there's there's not really new money coming in. And the and the BTC ETF money is what's keeping BTC so sh relatively strong as well. Like it's it's very, very strong, even against ETH, which I consider to be, you know, just as good as BTC, if not better, from from my perspective there as an asset. Uh, yeah, I just think that's the phenomenon that we're seeing right now. It's not gonna last forever. And I also think that there is the phenomenon of uh the summer lull. Like 90% of the world right now is in sum is in summer in the warmer months. So they're not sitting around on their computers trading crypto, right? They're outside on the beach, you know, having fun. Uh, and that's traditionally what we've seen. But then you can look at the stock market, and the stock market's doing really well and and going, you know, bananas basically. But I think the stock market is definitely very different to crypto. Crypto is super risk on. Stock market, not so much, especially like the top 10, which carries the entire stock market, top 10 stocks. Uh, people don't treat that as a super risky, you know, I'm gonna throw this in for a punt sort of thing.

And we're we're looking at the uh ETH Bitcoin ratio on this on the screen right now. And we had just a pretty crazy green candle from 0.045 to 0.057. Uh, but we've retraced almost half of it, and Ether USD is definitely suffering in comparison to Bitcoin uh in the last like week or so. Um again, down nine percent, eight percent this week for ether and five percent for Bitcoin. Uh and of course, ether just doesn't have those flows. We have the speculation of the ETF, but we don't actually have the flows of the ETF. And I think like the entire crypto market that was going to buy Ether because of the ETF getting approved did that. But then like that was we we shot our shot, and now we're kind of just waiting for the flows to kick in. Uh, and we we got a rumor out of uh this week, uh, well, not a rumor, but a uh a mention of Gensler Gens Gary Gensler talking about when the ETF S1s might actually get approved. And he says, sometime this summer, which I will say is now. Now is the summer. Uh and so like it's still a pretty like wide range of time. Uh, I think we've got like one more month, like early July is kind of my time frame. I don't know if you have any opinions on like when you think the ETF might actually start trading.

Mm-hmm. Yeah, I'm in the same boat early July. I gave a date on my own show of July 8th, not based on anything other than kind of speculating that maybe it doesn't go live in the first week because of the July 4th holiday in the US. So it could be July 8th, which is the Monday following. But you know, I feel like it's not going to take very long because the S1s are basically copy paste from the BTC ones. It doesn't seem like there's going to be a lot of back and forth or feedback or anything to be rectified. So yeah, I feel like it's going to happen sooner than people think. But I guess like in the next couple weeks, we'll get a better picture of that.

Quick update on the layer two ecosystem. We got $44 billion locked on layer twos. Arbitrum again coming, still having a healthy lead over everything at almost $18 billion. We're down 9% in TVL, but that's just because of the Ether price. But then the activity on layer twos is staying pretty damn high, I'd say. We're at a 11 scaling factor. So you can really just see the Denkun, um, uh the 4844 blob space um hard fork into Ethereum, and then we've just been like holding this pretty high level of activity. Um, anything you want to comment on the layer two activity? We're definitely gonna talk about optimism and their fraud proofs later on, but like globally, any comments about the layer two space?

Yeah, yeah. I mean, it's just continuing the trend that we've been seeing, especially since Denkun went live, as you mentioned, of usage going up and up and up, because we basically gave more capacity for users and they're using that. And there's more apps going live and there's more interactions happening. It's it's great to see. I mean, I don't think the uh L2 activity has slowed down uh with the price slowing down at all, which is even better to see because as you were talking about earlier, we would love to see more and more of that decoupling of price and tech fundamentals and usage of products on-chain. And I think we've been seeing that lately. So every metric that I'm tracking with regards to layer twos, specifically like the top layer twos, like base and arbitram one, things like that, right? Yeah, even the smaller ones is still up and to the right. People are using them, people are getting value out of them. And you know, sometimes people say, are people just airdrop farming? Well, it's like, no, because Arbitrum already has a token. They're not doing another airdrop. So their usage going up is not airdrop farming of the ARB token. Uh, base has said multiple times they're not going to do a token. Whether they do or don't is another thing. But we know that that a lot of this activity is an kind of um a natural thing, an organic thing. People aren't just farming things. They they're using it, they're getting value out of it, which is what I really love to see there.

Switching into the world of macro, we got a FOMC uh day this week uh where this is where the Federal Reserve comes together and tells us whether or not they're gonna raise lower or hold steady interest rates. Uh and then we also get the inflation report. Uh so that inflation report came in pretty cool. Uh so inflation uh this last month was lower than expected, uh, which means that we are more likely going to get raise cuts. That's the general thought. Uh, but we uh did not actually get any raise cuts announcements. So we have indicated that there will be one raise cut uh coming this year, but that's um that's that's no new information. That was already like pricing by the market. Uh but uh I definitely remember waking up one of the days this week after the FOMC day and hearing the indication of like cooling inflation. And I think that's what caused like a pretty like good day in the markets. Like I like Ether was jumped like $200 or something. We have, of course, since retrace, but uh at least the market favorably um uh reacted to this FOMC day.

Yeah, yeah. So I think people because they saw the Canadian Central Bank and the uh European Central Bank or the ECB cut rates, I believe, last week. Uh, they thought that the Fed would be signaling that they're gonna cut rates. And I think that it's eventually gonna happen, but I think people are uh the little bit of wishful thinking there of like, oh, it's gonna happen now. It's like maybe not. And markets are forward-looking too, where they'll speculate on this before it actually happens. Uh, and I think that markets have been doing that for quite a while now. People forget that inflation actually peaked in June of 2022, which was when ETH bottomed. You know, ETH bottomed at 880 two years ago now, and that's when inflation peaked in the in the US, not anywhere else, but I guess US is the main market we we kind of look at within crypto. Uh, and then since then, uh things have really been up only for ETH and BTC specifically. But yeah, I think if if the market wants to be more risk-on, if people it want new money to come in for the long-tailed assets, it's definitely going to require the quote unquote cheaper money, right? Looser monetary policy. You you can't really have this in a in a tight monetary policy regime because people are like, well, why would I go, you know, uh speculate on this super risky stuff where when I can just buy treasury with my cash and get like a guaranteed kind of return there? Uh, and especially because inflation has, you know, it's it's still relatively high and it's still adding to the cost of living. People just maybe just don't have that disposable income to go and gamble in DGen on this long tail of assets. So that's what everyone I think is thinking about and looking at. But as I said, the market will price this in before it actually happens, like these cuts. And when the Fed starts cutting, I I don't know, like I'm not a macro expert. We're gonna see if they keep cutting down to what they were before and what inflation does because it's it's really just a tricky game of managing the cuts versus inflation and and uh it's it's a fine line. I wouldn't I wouldn't like to be in J Power's position, that's for sure.

I've definitely just noticed a lot more conversation about the cuts over the last like two weeks or so. The conversation has has picked up in like intensity. And I think if there's one theme I've kind of just felt between the ETH ETF that's been approved, but not live, and like having super high interest rates that people generally understand are going to get cut, like there's just an air of anticipation. Like we have like uh stars that are aligning, but like they're going real slow, they're going in slow motion. And so like people are generally bullish, but they don't want to get too bullish too fast because you know prices can still move against you because there's plenty of time before these like stars do align. That's kind of like my sentiment.

Yeah, yeah. And I think that's just the the probably the phenomenon of how fast information travels versus how slow these things take to play out. Like we, you know, information travels so fast because of the internet 24-7. Everyone's always like hyper-informed. You know, you can be as informed as you want to be, but then the actual process, the actual reality of it playing out takes a lot longer, is a lot slower because a lot of these systems are still on the old world. I mean, the Fed is a very, very old institution. These notions of kind of rate cuts and inflation and the macro environment generally tends to move very, very slow, not just because of the systems that are in place, but also because it's a huge beast. Whereas the information will move at light speed, quite literally, right? So there's a mismatch in timelines there. And I think that that is actually that explains so much of the market movements and so much of the market sentiment generally. And you know, I recently had my two and a half week break from crypto. I went away and came back, and I didn't really feel like I missed anything, even though I know within those two and a half weeks things were.

A lot and nothing at all at the same time.

That's what I yeah, exactly. That's what I'm saying. So like I I feel like there's so much news and so much information that gets spread around, but the actual reality takes longer to play out. So you can go away for months at a time and then come back and be like, oh okay, it played out. You know, I heard about this you know months ago, but now it's finally playing out. So there is a a mismatch there.

Yeah, and definitely a plus one to the idea of patience around these things. This is a tweet from Hong Kim, who I believe works at Bitwise. So what uh yeah, oh co-founder, excuse me, co-founder of Bitwise, uh, who says, yes, $14 billion in net new flows into the Bitcoin ETFs in the first six months has been a remarkable success. But people don't realize that the gold ETFs had positive and mostly increasing flows for the next eight years after the its own successful launch in 2024. So basically Hong Kim saying.

Like it's we should pat ourselves on the back because we got all these fantastic flows into Bitcoin. But also, like the fl the idea, the reason to be bullish is that the flows don't stop coming. Like we get further flows. Uh, and of course, we're hopefully about to get the same thing for ETH. Uh, and so like sitting on your hands, understanding that anticipation, but also being zen about it and knowing that we're we're destined to fall how perhaps uh if you have an ETF behind your asset, uh, is like the takeaway that I'm getting from this.

Yep, yep, same here. I mean, I've been banging the drum about the ETFs being a passive vehicle for for a long time now, and that's exactly what they are. They're a passive long-term vehicle. They will keep taking in flows over time. Uh, but yeah, it's been very impressive just to see how much BTC has taken in. But I think that was a pent-up kind of demand thing because it's been so long since people have been trying to get a BTC ETF. Um, but yeah, I do think that going forward, BTC and then the ETH ETFs will get those passive flows in. And it may be disappointing for people if they're looking at the daily flows, which is literally noise. It doesn't matter at all. But if you look out, like as I said, like you go away for a year and you come back, you're gonna see all the flows that happened during that time. And then cumulatively, it will be a lot more than what you expected, I think.

Totally.

All right, that was uh the market section. We're gonna get into the ZK Sync airdrop. And of course, there's a bunch of activity across the layer two space as well. So we're gonna get to optimism, brand new fraud proofs, brand new shiny fraud proofs, as well as the rest of the news. So we're gonna get to all of that and more. But first, a moment to talk about some of these fantastic sponsors that make this show possible, especially ZK Sync introduces the ZK token. The probably one of the more anticipated networks to drop their token, dropped their token. Uh so here are some of the details: 21 billion in supply. It is being priced on the pre-market on perpetual markets at $36, which is coming in at I think at like an $8 billion network. So pretty, pretty, uh, pretty hefty, of course. I mean, ZK Sync has been one of the oldest brands alongside Ethereum that I can remember. I remember donating on for Gitcoin grants, probably actually to one of your Gitcoin grants, Anthony, back in like uh 2019 using ZK Sync Lite. Um I I'm sure used it plenty of times as well to because I know you're a big fan of uh uh of Gitcoin. Um in the airdrop, 17.5% of the total supply was airdropped in a one-time airdrop. So many other teams, layer twos, networks have done seasons. ZK Sync is not doing a season, they just uh jumped uh dropped 17.5% all at once to almost 700,000 wallets. Uh so of that 17.5 percent, 89 went to users with on-chain activity, which who became eligible for the ZK Sync airdrop. 11% went to contributors. So this is like developers, researchers, educators, like off-chain activity that was rewarded uh with uh with an airdrop. Uh so yeah, just want to emphasize 17.5% to 700,000 wallets is like pretty crazy. Um, I think Arbitrum did uh I can't remember the numbers off the top of my head. The eigenlayer did 5% with another 5% slated for later. Uh like industry standard has like somehow like converged on like 10% plus or minus a few um percentage points. 17.5%. Like uh correct me if I'm wrong, Anthony, but that's that's like the largest airdrop in terms of supply that I can remember.

Yeah, no, it's a it's the same for me as well. Like it is definitely the largest airdrop in quite a while. I don't remember which ones in terms of major projects, which ones were larger. I think as you said, the trend has seems to have been it gets smaller and smaller or gets broken up into seasons. And I've been a big advocate of not just like bigger airdrops, but like bigger community distribution. And I think that with ZK Sync, uh the community contribution came out to around 67%, I believe, with team and advisor uh and investors, sorry, getting about 33-ish percent, which is much better than what the industry standard has been up until now. I think the industry standard tends to have been 50-50 split, where a lot of that would go to a treasury instead of to the users from day one, uh, which I think is actually detrimental to a token because what ends up happening is that tokens uh open up at a pretty high fully diluted value. Maybe there's only 5% of the tokens circulating, and then the market has to price in another 95% or up to 95% of tokens coming out over the next few years, which has been a trend that I I hope to see reversed in the coming future. I I mean, I'm personally trying to be the change I want to see in the world and talking to projects about this and trying to get them to uh come over to my belief that, you know, have a large float, have a have a big float from from day one on the market. So you can have actual price discovery on this stuff. But ZK Sync definitely is is is pioneering it here, which is which is really great to see. I mean, as as I said, 17.5%. Yeah, seems to be the largest in in quite a while.

Yeah, so just to really put some numbers in here, uh investors of ZK Sync will own a supply of 17.2% versus the 17.5% that's airdropped to the community that is airdropped. And then the team will own 16.1%. So the airdrop supply is larger than both investors and the team. Uh and overall, so they have this like pie chart that we're looking at where there's also a supply of a token assembly. I kind of think that means like it's like a foundation of sorts, is like what people would think. Uh, and then ecosystem initiatives, which I think is um incentivization campaigns for the future. So they're classifying this, these two things in the community section, which comes out to two-thirds of the total token supply allocated to uh the community, both past, present, and future. Uh, and then one third is allocated to the team and investors. Uh, it is pretty nice to see like the airdrop larger than investors and teams. It's like part of the ethos of crypto. It's kind of hard to follow through on, it's hard to convince projects to follow through on. Also, like it's just not in VC interest either. Uh, but um uh ZK Sync just showing the way and covering a path. I think that's pretty cool.

Yeah. Yeah. Yeah. I I think there might be a little bit of a caveat to that generally, not just applying to ZK Sync, but just generally in that in the investor kind of pool of entities in there is quite small relative to the kind of airdrop pool. So for example, you might have like maybe a couple hundred individuals that make up all of the investors, whether they be angels or or VCs, and then they have different percentages of the supply. You know, there's there's usually a lead VC in in rounds that take a huge chunk of the supply. So they may have you know a huge chunk there, and then you've got the airdrop going to tens of thousands, hundreds of thousands of individuals. Uh so it's it's it's it's a bit different like that. But it's hard to plan for that. Like even if you were to do an ICO, you know, one whale can come along and just buy up so much of the supply, right? So the only way to actually get proper distribution is have years worth of price discovery through multiple cycles, like how ETH had, like how BTC had, to actually get good distribution. You can't plan for it. It's very, very difficult because there's always the whales that are around. Whether you do an ICO or we'll do it as a private investment rounds. Um, and even if you try to get around that, it's difficult, very, very difficult because there's no on chain identity yet, right? There's no no one uses on chain identity products to try and do uh Sybil resistance and stuff like that. So essentially you have this game of trying to balance things, but no one's gotten it right so far. But I feel like ZK Sync is is is is done has done pretty well on the distribution side of things.

Yeah, one more um caveat about the 17.5% airdrop. ZK Sync users got 89% of the 17.5%, and then uh 5.8% of the 17.5% was sent straight to uh like native applications on ZK Sync, which were then like uh given the mandate to do what you see fit with these tokens, like use it for incentivizations, further airdrops to your community members. And so they did the kind of the model where, like, in addition to airdropping to their own users, they also airdrop to projects with a mandate to drop to their own users. Um, okay, so let's unpack how people actually got eligible for the ZK Sync airdrop because this is where a lot of the tension uh over the airdrop was felt. You needed to accrue one point, and there were uh six, seven different ways to accrue a point, and you just needed to have one point in order to be eligible for the ZK Sync Airdrop. Uh, you needed to have uh interacted with 10 contracts on ZK Sync Era, or deposited liquidity into DeFi protocols, or used one of the account abstraction paymaster accounts on ZK Sync Era, or traded 10 ERC20 tokens, or held a one of the native ZK Sync era NFTs, or on the ZK Sync Lite network, donated to a Gitcoin round, or at least transacted three different times. If you did one of those things, you became eligible. And then there were uh further uh activities that you would have earned to have uh add-on a multiplier onto your eligibility. Uh so uh the if you read the blog post, which I highly encourage people to if they want to learn more, the ZK Sync team shared some of the philosophy of how they wanted to drop their token. Uh, obviously, it's pretty it's pretty well known that ZK Sync is one of the most botted networks, like uh sibled networks out there, because they have been from the earliest of days very explicit about the existence of their token. Like the the the founders in the team said, like, yeah, there will be a token. That's how you decentralize a network. We're not gonna hide that. Um

As a result, that kind of like was the magnet towards a bunch of like sibling activity. And so in their blog posts, they talked about how they wanted to identify uh uh and reward people on a human-first approach. Uh so they tried to identify human-like behaviors, such as like using smart contracts very early in their existence rather than trying to like hide amongst the crowd. They say humans tend to be risk-on. Uh, and uh other like criteria um just to like try and parse out what is a human. After they developed the criteria that would uh reward humanness, then ZK Sync added on a pretty light, light-handed sibling um uh filter as well. So not trying to just filter out every single Sybil, but just like admittingly letting some uh Sybils in because they still nonetheless uh over-emphasize rewarding human behavior. Uh just a very light Sybil uh filter on the end of things, just to like kind of pull out the most egregious ones. Uh and then um, and so that was their like philosophy. If you go into Twitter, you will see a ton of discussion about all of these things. Uh and like signal is like being thrown all over the place. Uh, you can only imagine that if there are Sybil accounts um and Sybil farms, they'd also know how to Sybil Twitter too. Uh, and so deriving noise, which is something that we do at Banklist because we cover these things. Like we generally have teams on for live streams, we definitely cover the token drops, like getting people's feedback is always very difficult because people are just shouting left and right, that you don't have a lot of time to capture feedback. Um

Overall, like maybe I I have my thoughts and and sentiments, Anthony. Maybe I'll ask you about about yours first. Like overall, like what are your thoughts about like the feedback about this token drop?

I mean, I think my my general thoughts about airdrops in gener like just generally, not just specific to ZK Sync, is that they are all heavily farmed, right? And they are all heavily botted. And it's not just on-chain, it's also on Twitter, because Twitter's done nothing to curb the usage of bots. They are absolutely rampant on there. And it's naive for people to think that that people aren't taking advantage of this to steer sentiment for certain reasons, right? Like we saw this play out with Starknet doing their airdrop. There was just a massive amount of hate because the the sibles didn't get what they were that what they wanted. So essentially what they do is if they're already part of a massive kind of operation running many different addresses to try and Sybil to get more money, they'll go on social media, they'll start fighting the project, and then they hope that the project caves and changes the distribution to give them more. And this has happened a few times with other projects. And I think if you do the math on it, this is not small change we're talking about. I saw something on Twitter that there was one entity tied to 65,000 addresses. Now, if you are controlling those 65,000 addresses, you're obviously going to be uh, you know, smart enough to go on Twitter, get a bunch of bots spun up, and then try and steer sentiment so that you can get the team to actually reward you. Because if the team then says, okay, well, we're just going to give every address that ever used our protocol even $100 worth of tokens. If you own 65,000 addresses, that's $6.5 million, right? So just putting the math on these for people to understand the gravity and the incentives here. And when you follow the incentives, that's what you get to. And the bot activity is very, very obvious. As much as they try to act like they're not bots, it's extremely obvious which ones are bots and which ones aren't. And now with AI taking off as well, they uh, you know, they may try to hide themselves uh a bit better, but it's still very, very obvious. And I've been watching you tweet about this and seeing all the replies to your tweets. And I actually, before likes were private, I went through the likes and I looked at the accounts. 90% of them were bot accounts or hacked accounts because a lot of them will say joined uh 2015, but they're hacked accounts. They're accounts that have not been uh that don't belong to the original owner, and they've got no mutual follows with me at all. They're just retweeting everything got to do with like airdrops in generally. So it's just very, very obvious once you once you go into it. But now that likes are private, you can't even do that anymore. So yeah, it's it's a bit of a mess.

The tweet that I'm showing on screen is a reply to a tweet that I said. I'm collecting feedback on the ZK Sync ZK token drop. Please let me know your thoughts. And also, if you're in the Bakelist Discord, you can at me in the Airdrop Hunter channel directly too. And this was the most liked tweet in response to my tweet. And the alloc the response about what the uh changes ought to be would be reduce the allocation for the team. Uh make lower the highest max allocation from 100,000 down to 25,000 to 30,000. Allocate more tokens according to their fees spent, their active days and weeks and months, their pay master, which is a contract, native bridge volume, and then light transactions. Give allocation to the minimum one 1 million to 1.4 million wallets, uh, and then multipliers for old active wallets. Basically, every one of these suggestions is take away tokens from the fat tail and give it to the long tail. And this uh tweet happens to have like an insane amount of like 1.2,000 retweets, like 2.5,000 likes. Uh, and then but and if you just go down to the comments, it's just like just just not, it's just incomplete. Uh and the and so it's hard to parse out signal and noise because I will also go into the bankless Discord, and I don't want to say that like this ZK, this particular token drop was like unrelentingly like uh beloved by everyone. There is everyone that has problems with the token drop. But if you go into the bankless Discord, there's like problems that people will say, like, hey, I like I think I should have got an allocation for my wallet that used like Argin or ZK Sync Light, but I didn't, and I'm disappointed by that. There will people say, like, I I I'm very happy with this airdrop is good for me. Uh, and then there are people say, like, look at these bot farms, I'm upset by this. But like the feedback and conversation in there is like

like coherent and like everyone has a different opinion and then you go onto Twitter and everyone has the same opinion and it's just like give allocation from the fat tail and and give it to the long tail. Uh which is just like to my opinion, like if that that's just like, oh y you want you want Sybils to be rewarded. That's kinda like my take

Exactly. And it can't be more obvious. I don't understand why people like uh like it can't be more obvious. If you want to reward the the the long tail, right, and you know that there's lots of sibles there because we have on-chain proof of this, it's very obvious, then what do you think is happening here? And as I said, once you put the math to it, this is not small numbers. This is very much worth someone's time to go out there and steer sentiment if they can get the team to cave and reward them for it. Because then they just go off and yeah, they they've made a lot of money for very little effort because it's just bots that they're running that are very readily available. And there are probably like uh teams that do this, like teams of people that where it's become like industrialized for them to do this because their payout is so large. So, yeah, I don't know why anyone is even doubting that this happens given what we've seen in crypto anyway, like outside of this. The incentives are there to do this.

Yeah, it is totally rational. Even ZK Sync is making like tweets. Uh here's a tweet that they made response. Meanwhile, something important you need to know there is a massive coordinated Sybil misinformation campaign against ZK Sync on X run by thousands of bots. And so like they're not even like saying like uh hey, we'll try and like uh get feedback. They're they're just going full frontals, like declining the legitimacy of like a lot of these requests. Um I'm out here at uh Edge City Esmeralda, which is like a pop-up city, kind of like Suzalo, and there's a couple ZK Sync members here, and just like the ZK Sync team's like working like you know, 24-7, just like trying to gather data, trying to gather information. Uh, and then they put out a tweet today uh and said, like, um, we believe in our choices. We're gonna, we're gonna keep with the path, we're not gonna change anything. Uh and like maybe they could they could have had uh enough data to like be more precise about the distribution of their tokens, but like the DDOS attack that is like a Sybil attack just like robs them of that opportunity. Uh that's what that I having been on the receiving end of many like Twitter mobs, it feels like a DDOS attack on your brain. Like it's impossible to parse like signal from noise. Anyways, that was that. Um I would also like to say to like tie off this section. The fighting between like siblers, users, and teams is an actually a symptom of SEC governance failure. Uh, this is the opposite of what a fair and orderly market looks like. Uh, this is like capital being wasted, capital being destroyed. A lot of the siblers were like, I'm bummed that I didn't get like some of the siblers were like, I'm bummed that I didn't get the token, but at least give me my gas fees back. So, like, that is like inefficient capital being destroyed. Uh, and all of this is because of this like kind of unfortunate airdrop paradigm, uh, which we could have have a much better equilibrium if uh Gary Gensler and the SEC allowed us, but they don't.

And to tie off the token, not to not to be um uh ignored, Tyco, which is a much newer uh layer two on the scene, a base roll-up. We did a show with them on the Bankless Premium feed with Justin Drake as our technical co host. If you want to learn all about Tyco and what a base roll-up is, their token drop also went live. So 5% of the initial token supply, 50 million tokens, can now be claimed by eligible users. Tyco, like much more recent project with a much more recent mainnet, like mainnet went live just a few weeks ago. Uh, like, how did it like get to a token so quickly? Uh part of that answer is a base rollup needs a token uh to stake to be a part of the functionality. So they needed a token to go out there uh to be live. Um, Anthony, any comments or thoughts on Tyco?

Yeah, I mean it's just uh uh I guess like another airdrop of a of a big uh layer two or or a layer two generally. As you said, Tyco is definitely newer to the ecosystem. But what interests me the most about Tyco, probably not their token, but the fact that they're a based roll-up, which is something that I've been doing a lot more research into over the last couple of months, just base roll-ups generally and pre-confirmations and stuff like that, which seems to be like the end game of L2s. Like if it were to look five years out, that's kind of what I think it's gonna look like for for most of the L2 ecosystem. Um but yeah, as you mentioned, like they need a token to achieve a lot of their goals uh around decentralizing, around getting people to run the infrastructure as in as incentive mechanisms. So yeah, pretty, pretty standard airdrop, I think, from them. It wasn't anything groundbreaking from what I saw. Uh, but yeah, I mean, people knew this was coming as well, I I think.

The it is worth noting that the claim window for Tyco ends July 5th, so that's relatively quick. I think the ZK Sync uh claim window is open until early next year, so you have a pretty big uh window of time. But nonetheless, uh you can check your eligibility for both Tyco and ZK Sync using uh bankless claimables. Uh so if that is a tool that you use, which you should totally should, um you can use that and it'll tell you exactly uh how many tokens you got or did not get. Okay, into the back into the optimistic roll-up world. Optimism. Fault proofs, which are the same thing as fraud proofs, and stage one have arrived. Open source permissionless fault proofs are live on OP mainnet, and with them the OP stack arrives at stage one decentralization, a major step forward for the super chain. Just to really um lay down what fraud proofs are. Fraud proofs are the mechanism in which we remove the multi-sig from layer twos. Uh so we have currently multi-sigs on layer twos on some layer twos in order to uh upgrade the chain or like maybe uh fix a bug. Uh but of course that also opens up these networks towards like exploitation. Like you can exploit a network with multi-sigs. Um, why hasn't any of the networks done this? Well, because of course they're building the things. But fault proofs, battle-tested fault proofs are the uh big step to getting uh a multi-sig off of the security model for many of these roll-ups. Uh, and optimism mainnet, the OP mainnet, has uh launched and deployed their uh fault proofs. So they are in production, they are working as intended, which has earned uh uh Optimism two green new slices on layer two B. Uh so data availability, state validation, sequencer failure, and proposer failure are all green slices on layer two B, leaving the last one, the exit window, uh, which is just um a timer on network upgrade ability. Uh and that these are the things that are our risks to layer twos, and Optimism has uh four green slices out of five. Pretty big day for the OP stack, the optimism community, for the Ethereum roll up landscape. Sassel, give me your thoughts, your sentiments.

Yeah, yeah, a very, very big day, especially for Optimism, who have been building this for quite a while now. And for those who may not know, there are two major optimistic roll-up kind of frameworks live today. There's the OP stack, which runs Optimism and Base and a few other networks out there. Then there's the Arbitrum stack, which is Arbitrum 1 and uh uh their orbit chains and kind of like L2s, L3 sort of thing there. Um and they both use fraud proofs for their security mechanisms here. Now, for me, the most exciting thing about L2s generally is that they run on a secure L1 in Ethereum, and then they can have the optional escape hatch window, where essentially what that means is that if the L2 is down for whatever reason, you can st and and goes offline or something happened, you can still get your funds back on the L1 by doing a transaction on L1 to essentially escape your funds out of the L2. That it to me is one of the most, if not the most important properties of L2s, and that needs fraud proofs to be able to work, and that's exactly what um you know OP stack has now, and that's exactly what Arbitrum 1 has. But Optimism went a step further by making it permissionless out of the gate, whereas Arbitrum is still permission. So they have 14 whitelisted actors that can submit these fraud proofs, whereas in Optimism's case, uh anyone can do it. Now I know that Arbitrum is going to move towards permissionless fraud proofs as well, but as you mentioned, this is what this kind of pie chart is all or this pie um representation is all about. Filling in the green there. There are sometimes yellow. I believe yellow is when it's permissioned, and then there's red where it just doesn't exist at all. And once we have all green across the board, that's when they can move to stage two decentralization, which is really the end game for these things. And the the number one thing I like about these roll-ups continuing to progress through these stages is that it kills the FUD that roll-ups aren't going to decentralize. Like that's a big piece of FUD that a lot of people have been using for a while now, saying that, you know, roll-ups and L2s are always gonna be centralized, they're never gonna be able to decentralize, they're never gonna be true kind of uh blockchain, so on and so forth. But we're proving them wrong each and every day. And every time we do something like this, it proves them wrong. And I strongly believe that there is there are very, very strong incentives for these chains to decentralize. Centralization is a huge liability. It means that a government agency can come to and force you to do things using your centralized power. And as a builder of these networks, you do not want that power because you are trying to essentially be as detached from it as possible or from the operation of it as possible, and trying to create a decentralized community around it. So if you want that to happen, you need to get to stage two. And I don't think anything is stage two right now. Arbitrum said that they want to be stage two. Well, nothing that has usage. There are some that are very, very small that are stage two.

Deadly.

No, no, if you got if you got if you go to some of them, like they don't they don't they really don't have much usage compared to to the big players, right? Like kudos for them for being stage two, but I don't think it really means anything if you haven't got any any usage, right? Because it's not you're not really giving any value to anyone. But you know, Arbitrum one or Arbitrum has committed to being uh stage two at the end of this year, uh which I hope to see it play out. And I'm sure optimism isn't far behind them. Uh, and because a lot of the chains are built on the development kits that these uh ecosystems put out, automatically they get to be uh they get to upgrade to stage two as well once they've implemented that. So for example, base will be able to go to stage two or even stage one now because OP stack has those fraud proofs uh implemented, which I think is really cool because it means that we're not reinventing the wheel every time. We're allowing this community to come together, build these things out, progressively decentralize, and that has downstream effects on a bunch of other chains as well.

Yeah, that's I think that's really the point of emphasis that I want to drive home. Since so many chains use the Optimism OP stack, they just get to uh take these fraud proofs and put them right into their network. So base, as you said, Blast as well, which is uh got $3 billion on it, Mode Network, which has $650 million on it, Bob, Zora. Um, these are all OP stack forks, right? And so they will just be able to take these fraud proofs and put them right into their network, which is kind of actually the point of uh the OP stack framework and why you would use the open source piece of software, because then you get the benefits. All these networks, BASE didn't have to do uh uh false proofs. Actually, BASE is a core contributor of the OP stack. So actually, this these are this is their technology, but like anyone else using the OP stack gets the uh gets the false proof.

They all work together as a collective. I think that's the overall point here is that we're not just decentralizing the tech, we're decentralizing the development of the tech, which is exactly the Ethereum philosophy, where Ethereum layer one development is very, very decentralized. And specifically, optimism has has always been about following that philosophy, following that, basically mirroring what happens on Ethereum L1. And I think that they're doing that. I think they're doing that in both, you know, in practice and in theory, which is great to see.

Vitalik, of course, uh gave his congratulations to Optimism saying, Welcome, Optimism, to the club of stage one plus layer twos, meaning layer twos where proof systems actually have teeth. I'm looking forward to seeing many more layer twos join this club soon, especially some ZK ones. And then he follows up with uh I just have to put the meme of the week here, so we're getting the meme of the week in the middle of the show. Ethereum, where yesterday's FUD is today's solved problem, uh, starting with the very first FUD ever, which was Ethereum will never launch. That was 2014 FUD. Uh Ethereum will never get past the DAO fork, the merge will never happen. Layer twos will not have low fees. Layer twos are just multi sigs, uh, which was the most recent door that the Reaper just laid. Uh, and then the next door of Ethereum is cross layer two, UX is too fragmented, running a full node takes too much space, and MEV centralization and builder censorship. So these are the next things that's on Vitalic's horizon to go slay.

Mm-hmm. Yeah. Yeah. And we just keep slaying him. That's the point. I think the trend is what you want to be paying attention to is that all of the FUD, or at least 99% of it, has been completely and utterly wrong, or has been right for like a short period of time. Like, and people say the merge will never happen. Well, technically, you're right until the merge happens, and then you're just completely wrong. Right? But the thing is, you you you could you knew these people were wrong years in advance because you saw that the merge was happening on test nets, on shadow forks, and there was there was just no way it wasn't going to happen by all logic and reasoning. But of course, you know, Ethereum has its haters, a lot of them, unfortunately, but they keep getting slayed. And uh I'm glad the Grim Reaper's on our side.

All right, everyone, coming up next, Eigenlayer gets a brand new competitor on the scene and makes a very big acquisition. A big moves in the world of restaking. Terraform Labs, the creators behind Terra Luna, agree to settle and pay the SEC $4.5 billion. Where is it getting the money from? We got Pleaser Dow and the Wu Tang album. We got Crypto the Game acquisition. We got an Alchemy update. All of this and more. But first, a moment to talk about some of these fantastic sponsors that make this show possible. Especially and we're back with a tweet from Sazzle, who's also on the show with us. Petra, the next Ethereum network upgrade is shipping to be one of the biggest in Ethereum's history. The confirmed EIPs include EIP 7702. Uh, I'm not gonna list all of these off. Uh Sazel, maybe you can kind of walk us through some of these EIPs and why what significance they have and why people should care.

Yeah, yeah. So so maybe I should kind of just touch on the ones that I find to be the most exciting and the ones that probably have the yeah, the most user-facing effects here. So as I said, it Pecktra, the next Ethereum network upgrade, which I'm speculating will go live in Q1 of 2025, uh, is shaping up to be the biggest in Ethereum's history because it includes so many things. And I think originally they started off, they being the core devs, started off with wanting to do a relatively small fork to get it out, you know, maybe faster. But there's so many things that people want to get into the network that are pretty critical, mind you, that they're pretty important, that it's now become this kind of mega fork. And the things that I'm most excited about, there's I guess like probably two or three of them. So number one is EIP 7251, or otherwise known as Max EB. So what this allows people to do is stake more than 32 ETH per validator, um, which essentially means that I think the the latest I saw was up to 2048 ETH per validator. So if you're running 10 validators today because you're staking 320 ETH, in the future you'll only have to run one validator with 320 ETH on it, and everything would be the same. Your block proposal chance will be the same, you'll get the same kind of uh rewards generally. But this is a huge unlock for the network because it basically allows us to collapse the amount of validators live on the network while keeping the same security, both economic and security via how many node operators there are. But we take a massive load off the network, which enables us to keep scaling Ethereum as a network generally, which to me is definitely the most exciting uh part of that. And uh because of that, it means we basically get to keep scaling up L2s with something like PeerDAS, uh, which is what I've I've listed here as well. So PeerDAS is essentially the first implementation of data availability sampling, which is part of the full kind of dank sharding roadmap if people have heard of this. And essentially what this allows us to do is scale up blobs even further, which means even cheaper fees for L2s and cheaper fees for a longer period of time. For people who've been paying attention lately, they may have noticed that blob usage is going up, which means once they actually reach their capacity, fees will start going up. And that means the L2 fees will start going up. Now, in order to uh yeah, I think I put a tweet about this um just very recently.

Now, in order to rectify this, uh, or in order to keep scaling up, there are two different things we can do. We can increase the size andor count of blobs, which basically gives us more capacity, um, and and we can do peer dash and in the future even even more stuff around um data availability charting slash search sampling there, which allows us to scale up even further. And without getting too technical, the TLDR is basically cheaper fees for longer for L2s, more sustainable uh for L2s, and a continued um kind of good user experience there. But as I mentioned, like Max EB actually plays into this as well because it takes load off the network, takes load off the validators, which allows us to do this in a in a safer way. And I think that the last thing um I'll I'll say here, the the last thing to be excited about is EIP 7702, which replaces 3074, I believe it was, which is the account abstraction EIP, which essentially makes normal Ethereum accounts, we refer to them as externally owned accounts or EOAs, on the same level as smart contract or smart wallet accounts uh there. Now, there was a bunch of drama around 3074 around how it was insecure. Then Vitalik came along and said, Hey, why don't we just do it this way with you know with 7702? And essentially that is the EIP that is now going into the network there. So a lot of stuff to be excited about. That's just the tip of the iceberg, really, but those are the things that I'm most excited about there.

Yeah. So there's nothing like overly massive. Like we're not merging, we're not doing EIP 1559. Uh, but uh like there's a lot of like pretty like m more than incremental uh upgrades to the network. So uh a lot of medium

Massive, I think. I think

is massive, yeah.

result of years worth of research and dev to get us to that point. It's basically on the same level as blobs, I think, in terms of what it represents for the network. Um, but yeah, nothing like the merge. I don't know if we ever get something like the merge again.

Yeah, and it would be like kind of bad news actually if we did.

Yeah, yeah. Something went wrong, I think, or we had to like fix something critical. We never get that. Yeah, yeah, yeah.

Okay, yeah. I agree. Like that pure DAS is um just like more blob space, right? And uh it is the especially with that illustration that you had on your on your tweet, where like we're starting to approach um some sort of like fee structure where people are actually gonna have to pay, have some sort of contention for blob space. But this is just what the future of Ethereum is. Like we're going to make it have a lot more scale, which we did when we uh had blobs, uh, and then we're gonna fill up those blobs, uh, and then we're gonna have like another 3x increase of supply. That's what um how Mike Neuter said it on our episode with him. Uh and so uh we'll probably have uh a blob market show up and maybe in the next like one to three months, and then there will be like a pretty healthy like people are gonna have to pay for their blobs rather than blobs being free. Uh and then uh, like you said, around sometime around Q1, if that estimation is correct, we're just gonna have more blobs and then transaction gonna go be free again, and then we're gonna repeat that print uh process all over again.

Yeah, yeah, and and the thing is, this is extremely bullish. It basically means that the entire Ethereum scaling road map is working and Ethereum is growing. Like I would be bearish if blobs remained free forever. Like that wouldn't be a good a good thing. It would mean that no one's really using them. Or maybe we scaled them up so much that there's just so much capacity, but I don't think so. As you as you illustrated, it's a cat and mouse game of we scale up, people fill the space up, we scale up some more, and it's a it's a it's kind of a never-ending game. But what blobs allow us to do is basically keep scaling up in a relatively easy manner without having to make substantial fundamental changes to the network. It's literally just a tweak. Like increasing the count or size of blobs is a one-line code change. It is not a big deal, but it does have downstream effects in that it adds more load to the network. And that's why we do other things like max EB, which takes load off the network. So we're essentially doing a swap here. It's like, okay, well, let's take off the load from the validators and let's put that load uh sorry, from having too many validators on the network, and then let's put that load back on the network via blobs, which actually serves a purpose and actually gives value to people.

Moving into the world of uh restaking, symbiotic has come out of stealth. Uh, symbiotic is they call themselves a permission permissionless flexible re-staking. Uh, and so this is uh permissionless in terms of uh governance. So I think symbiotic is positioning themselves as a governance minimized, governance reduced uh restaking platform. Uh and then flexible implies just not just ETH. Eigenlayer, of course, has ETH and ETH derivatives. Uh Symbiotic is going for, I guess, everything else. Uh, and so uh they have opened up what is pretty similar. Like if you're um a yield farmer out of uh Eigenlayer, an Eigenlayer points farmer, um, then a pretty similar thing going on with Symbiotic, you um submit capital. Uh, and I could only imagine this would result in the collection of a token at a later point. Symbiotic has been in stealth for uh pretty long time now. This is a paradigm and cipher fund backed project. So if you've been paying attention into the into the reestaking world, you've probably caught wind of this. Uh and a cipher fund is um part of the like not officially, but just like it's a bunch of a light LIDO members, and Lido is also, of course, um a paradigm incubated, or maybe not incubated, but just like alignment with paradigm. Uh, and so this is like coming out from that corner of the world. Any any thoughts, reflections, Anthony?

Yeah, I mean, I'm glad to see Eigenlayer getting competition across the board. There's two others that I know of uh that have come out recently, like re-staking platforms.

And nectar.

Yes, yeah, those two. Yeah. So there's four. I mean, I think there's going to be more because obviously the opportunity is so big. It's the same, it's the same with that what happened with Lido, right? People saw Lido getting so big and like, why is Lido so big? We can make new liquid staking platforms and re-restaking platforms that chip into that, which is which has happened. So when the economic incentives are there, people will come up and and and come with competition. But I do think that we've kind of jumped the shark here a little bit. Like for me, restaking really only applies to like an actual staked asset on a network like Ethereum, like ETH being staked and then re-stake. Like that's where the actual economic security comes from. If you're restaking, like it doesn't even like some people are saying, oh, we'll restake stable coins. Like, what? Like, I'm just a little bit confused here. Like, you know, what stable coins?