ROLLUP: $19B Flash Crash | Binance Fee Leak | China L2 on ETH | $14B BTC Reserve

Summary

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Bankless Weekly Rollup — October 17, 2025

Brief Overview

In this episode, Bankless hosts Ryan Sean Adams and David Hoffman break down one of the wildest weeks in the crypto space: a $19 billion flash crash, major drama around Binance listing fees, signs of a new Chinese tech giant deploying an Ethereum L2, and startling news about the U.S. "strategic Bitcoin reserve." The discussion weaves between macro market shockwaves, structural changes in DeFi and regulation, and the relentless advance of TradFi giants like BlackRock into on-chain finance. This is essential listening for anyone following the intersection of crypto, global finance, and regulation.

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Key Discussion Points & Insights

1. Crypto Market Flash Crash – "Flash Crash Friday"

Timestamp: 00:32 - 05:52 / Deep Dive: 29:31 - 45:54

• Market carnage: Bitcoin lost 10–14%, ETH dropped to $3,500 at the lows, and many altcoins crashed 30–40% or more—Aptos down 31%, Mantle 30%, and some, like Cosmos (ATOM), briefly went to zero in the order book.
• Cause: A surprise tweet from Donald Trump announcing 100% tariffs on Chinese goods triggered a global liquidity crunch, especially with U.S. markets closed for the weekend.
• Leverage Wipeouts: $19 billion in liquidations occurred in a matter of hours, with cascading failures due to excessive leverage buildup, especially across perp DEXs and Binance.
• Exchange Outages: Binance's API broke down, leading to market makers pulling liquidity and a cascade of ADL (Auto-Deleveraging), forcing traders out of positions, often without realizing the risks.
  • Quote: "Some altcoins actually went to zero. Dude, the order books broke...Adam actually went to zero." – David Hoffman (31:41)
• DEX vs. CEX Resilience: DeFi protocols, most notably Aave, handled record liquidations flawlessly, while some wallets (Rabby, DeBank) struggled with outages.
• Aftermath themes: Is this the cycle's top, or just a gut-check on leverage? Bear/bull debate continues.

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2. The Gold Rush & Macro Context

Timestamp: 05:27 - 08:43

• Gold hits all-time highs: $4,300/oz, adding an "entire Bitcoin market cap this week," with massive queues of buyers at bullion stores globally.
  • Quote: "It's wild, man. People are lining up to buy gold." – Ryan Sean Adams (07:44)
• Debasement trade is alive: Investors are seeking hard money, fueling both the BTC narrative and traditional safe havens.
• Comparison: Hosts note their surprise that gold could "hit $5,000 before ETH does."

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3. BlackRock & the Rise of Asset Tokenization

Timestamp: 09:05 - 13:01

• Larry Fink (BlackRock CEO) is all-in on tokenization:
  • Clip: "I do believe we're just at the beginning of the tokenization of all assets, from real estate to equity to bonds." – Larry Fink [09:07]
  • BlackRock has launched "BUIDL," a tokenized money market fund, and rumors swirl about a new BlackRock operating system for tokenization, possibly on Ethereum.
  • Perspective: "We're going to take the value of Wall Street and now we're going to provide that to the world and everyone's going to be able to buy it and it's going to be on chain." – David Hoffman (10:54)
• The impact: The hosts highlight the efficiency leap: BlackRock’s digital asset team is tiny, illustrating how using Ethereum as "your backend" shrinks costs and multiplies reach.

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4. Stablecoins, Banking Unbundling & U.S. Treasury Forecast

Timestamp: 13:34 - 17:25

• U.S. Treasury expects up to $6.6 trillion of M1 "leaking" into stablecoins—potentially upending the banking industry's deposit and payment franchise.
  • "Stablecoins are in the process...of unbundling the banks." – Ryan Sean Adams (15:01)
• PayPal’s 300 trillion PYUSD Mint Incident: A misconfiguration led Paxos to mint $300T in stablecoins (quickly burned), raising questions about process risk.
• DeFi overtaking TradFi? Reports from Theta Capital in Amsterdam suggest European capital is already prepping for the transfer of deposits from banks to stablecoins.

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5. Wall Street’s Ethereum Play: Tom Lee & Michael Saylor's Debate

Timestamp: 19:36 - 25:51

• Tom Lee’s ETH moves: Continues billion-dollar ETH buys for Bitmine; meanwhile, hedge funds short the BMNR stock (ETH proxy) due to NAV premium and structure.
• Saylor’s take: "Tom Lee has emerged as probably the most visible, influential spokesperson in the entire Ethereum ecosystem..." – Michael Saylor (22:44)
  • Interpretation debate: Ryan sees this as validation for Ethereum/TradFi convergence; David argues Saylor's tone is more a backhanded jab, warning ETH is "bending the knee to Wall Street."
• Ongoing discussion about TradFi "commercializing" and "legitimizing" Ethereum at the expense of the "revolution."

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6. Binance Listing Fee Leak & Exchange Drama

Timestamp: 48:20 - 54:03

• Real numbers exposed: Binance allegedly asked for up to 5–15% of token supply for new listings (plus deposits, market-making, marketing allocations), per a leaked document from a Limitless founder.
  • Quote: "We've always known...there are egregious exchange listing fees...Now we actually have one and it just caused a bunch of rabbling on Twitter. It's as bad as we ever thought." – David Hoffman (51:15)
• Industry Reaction: Mixed outrage, lots of ‘rent seeking’ talk, especially comparing DEX (no listing fee, permissionless) and CEX (opaque, heavy fees) approaches.
• PR fiasco: Binance’s official account calls the leak "false and defamatory," but reaction is skeptical, especially after Coinbase promptly lists BNB after public prodding.

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7. New L2s & Massive Airdrops: Monad & Mega ETH

Timestamp: 54:05 - 58:01

• Monad airdrop is live: Users must claim eligibility now, tokens distributed upon mainnet later. Soaring alt-L1/L2 competition heats up with Mega ETH’s ICO on Kobe’s Sonar platform.
• Narrative: Battle for fastest, most composable EVM chains is on; pre-market FTV for Monad swings from $13B+ to $6B due to market crash, setting comparisons with Arbitrum et al.
• Key insight: "Both of those chains are fast enough where being faster doesn't really matter...it's really about the app ecosystem." – David Hoffman (57:30)

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8. Chinese Tech Giants Build on Ethereum: Ant Financial’s "Jove" L2

Timestamp: 58:01 - 59:34

• Ant Financial (Alipay parent) launches a zkEVM L2 on Ethereum—Jove
  • 1.4B MAUs; massive potential if scaled.
  • Despite Western ignorance and low EF engagement, confirms Ethereum’s L2 network as a global corporate backbone.
  • Quote: "Major companies just build on Ethereum and we find out about it later." – Ryan Sean Adams (59:12)

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9. U.S. Seizes $14B in Bitcoin from "Pig Butchering" Scams

Timestamp: 61:17- 65:46

• Largest seizure to date, not a "strategic reserve" buy: DOJ confiscated 127,000 BTC from Asian scam operations; speculation that the government cracked "weak entropy" wallets to seize coins rather than traditional asset forfeiture.
  • Quote: "Looks like maybe someone in the US Government cracked weak entropy wallets three years ahead of anyone else and kept quiet about it." – Citing Taylor Monahan (63:27)
• Takeaway: Raises alarm about governments' technical prowess and the real security of poorly generated wallets.

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10. Political Headwinds & Regulatory Watch

Timestamp: 65:54 - 68:43

• U.S. Senate Democrats propose a regulator-draft Market Structure Bill that would make most DeFi illegal.
  • "Defi protocols, they would all be seen as digital asset intermediaries. Defi websites, they'd be financial brokers." – Ryan Sean Adams (65:57)
• Ongoing reminders of SBF’s legacy, legislative risks, and the ever-shifting U.S. regulatory climate.

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Memorable Quotes & Notable Moments

• On market carnage:

  • "I feel like we should apologize to everyone for invoking...uptober. I feel somewhat responsible..." – Ryan Sean Adams (00:18)
  • "Move down, pumpkin. 34% down on the week." – Ryan Sean Adams (06:01)

• On BlackRock & tokenization:

  • "I do believe we're just at the beginning of the tokenization of all assets from real estate to equity to bonds across the board." – Larry Fink (09:07)
  • "BlackRock is clearly going to create some sort of BlackRock operating system for tokenization." – Ryan Sean Adams (12:16)

• On leverage & ADL chaos:

  • "When the platforms deleverage them, they’re no longer delta neutral...they’re taking a directional stance that they didn’t intend to." – David Hoffman (38:01)

• On DeFi strength:

  • "Aave had $180 million in liquidations—handled it flawlessly." – Ryan Sean Adams (40:53)

• On Binance listing fees:

  • "We as an industry know that these fees have existed. We’ve never actually seen an offer before...it's as bad as we ever thought." – David Hoffman (51:15)

• On the U.S. government seizing Bitcoin:

  • "Maybe someone in the US Government cracked weak entropy wallets three years ahead of anyone else and kept quiet about it." – Citing Taylor Monahan (63:27)

• On regulations:

  • "Democrats in the Senate, they spit back something that basically makes defi illegal." – Ryan Sean Adams (65:57)

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Timestamps for Key Segments

• 00:32–05:52: Flash Crash Friday recap and market context
• 05:27–08:43: Gold’s run, queues at bullion stores
• 09:05–13:01: BlackRock’s Larry Fink on tokenization
• 13:34–17:25: Stablecoin expansion, PayPal/Paxos mint mishap
• 19:36–25:51: Tom Lee, Saylor on ETH-Wall Street convergence
• 29:31–45:54: In-depth flash crash, leveraged liquidations, ADL explained
• 48:20–54:03: Binance listing fees leak & community backlash
• 54:05–58:01: Monad/Mega ETH airdrop and L2 competition
• 58:01–59:34: Ant Financial (Alipay) launches Ethereum L2
• 61:17–65:46: DOJ seizes $14B in Bitcoin, wallet security debate
• 65:54–68:43: US regulatory developments, SBF commentary

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Tone & Color

• Conversational, energized, with heavy doses of gallows humor and inside crypto banter.
• Recurring motif: "Blame the intern."
• Emotional rollercoaster: From gallows humor over "uptober" failures to awe at DeFi's resilience and skepticism about TradFi’s embrace of crypto.
• Community vs. Institutions: Reluctant acceptance (or distrust) of Wall Street’s arrival in crypto, coupled with hope that decentralization will eventually win out.

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Transcript

[Ryan Sean Adams]

Foreign Station. It is the third week of October, David. I'm just going to come out and say I'm not saying uptober anymore. That word is now banned.

[David Hoffman]

It is not uptober.

[Ryan Sean Adams]

Yeah, it's not October. That word is banned.

[David Hoffman]

Down. Timber was more up than October was.

[Ryan Sean Adams]

I feel like we should apologize to everyone for invoking that. I feel somewhat responsible for all the.

[David Hoffman]

People that smash to the buy button because David and Ryan said October on the first of the month. I'm sorry, is there a ref?

[Ryan Sean Adams]

But you should have redemption. Anyway, it is time for the Bankless Weekly roll up and we got to talk about what the heck happened on Friday. You know, some people are calling this Black Friday. I feel like it's more like Flash Crash Friday.

[David Hoffman]

Yeah. Even though Flash Crash Friday. That's annoying to say, but yes.

[Ryan Sean Adams]

Yeah, Flash crash. But the question is, what caused it? What's. Where's this going? Was this Trump or is this the end of the cycle? What else we got? What else?

[David Hoffman]

We got a bunch of drama on the timeline from Binance listing fees. There was an individual who sent a document from Binance about what it would take to have their token listed on Binance. And so we finally have the numbers because usually they're supposed to sign an nta. That was not. The NDA part was skipped. So now we know the numbers. We're going to talk about that. Also, a major Chinese tech company building on Ethereum. Which one? Which one's doing it? Which one's building a layer two?

[Ryan Sean Adams]

We'll tell people later. Also, is the US about to add $14 billion worth of Bitcoin to its strategic bitcoin reserve? I mean, kind of, but maybe not in the way we hoped. Also, the Democrats in the Senate, they're going all anti crypto army on us now and trying to take down the market structure. Bill.

[David Hoffman]

Damn it, dude.

[Ryan Sean Adams]

But yeah, I got good news for you, David. None of this is stopping Mr. Larry Fink, who is determined to keep tokenizing all the things blackrock. Seems like they're up to some new things in crypto. Maybe on Ethereum. We'll talk about all that and more. But before we do, we got some sponsors to shout out. And these are special sponsors because they help with security. Tell us about them.

[David Hoffman]

They make our industry look good when we do not lose billions of dollars to hackers. That's immunify security. Of course, one of the biggest issues in crypto, we like property rights at Bankless. That means that we need security protocols to help secure our apps. Immunify, one of the most trusted brands in crypto security with $180 billion in value protected and over $25 billion in hack damage prevented across some of the top protocols in crypto. Now they are taking this even further with a security operating system for the onchain economy. Think of it like a command center, a battle station that keeps your protocol safe end to end. So there is a link in the show notes so you can learn more about this new operating system, the security operating system from Immunify. [e-mail] Immunify is where you can follow them on Twitter.

[Ryan Sean Adams]

I feel like at this point, David, like defi protocols, they gotta have some sort of system like Immunify set up. Like that's a base expectation because if they don't, it's kind of irresponsible.

[David Hoffman]

Yeah, well, I mean you saw Vitalik's recent article which was like, yeah, we have 0.02% of TVL was lost in defi apps due to hacks and over the last year. Let's keep huge improvement streak going. Let's keep that streak going.

[Ryan Sean Adams]

Yeah, because it has been in the, you know, multiple percentage points in previous years, hasn't it? All right.

[David Hoffman]

Well speaking of, speaking of multiple percentage points, no losses.

[Ryan Sean Adams]

Do we have to look at the bitcoin chart?

[David Hoffman]

Do we have to? We do, we do. It's, it's dumping. At the time of recording, Bitcoin is down 10.5% on the week we are at. Oh my God. It's down even further. I have to update the numbers. I'll estimate down 11 or 12% on the week.

[Ryan Sean Adams]

It's just free fall right now.

[David Hoffman]

It's free fall right now. $108,000 Bitcoin. Wow, wow, wow. ETH Price doing something similar. You're going to have to refresh the eth price page so I can get the accurate price. Yeah. The moment of recording $3,875 that is down nine and a half percent on the week was that this is, this.

[Ryan Sean Adams]

Is not worse than the lows though.

[David Hoffman]

Yeah, well during the worse than the lows in September. Yeah, eth e flashed down to like 3500 and then bounced back up. But like it sounds like we are still licking some wounds. When people get liquidated, they go risk off. That's what happens since like 8, $19 billion got liquidated. We haven't found any dead bodies yet, but they're probably out there. People are probably just at the very least going to be cautious. Hopefully the whole market doesn't roll over because of some stupid flash crash because of a tweet. That would be so dumb. I would be pissed.

[Ryan Sean Adams]

I would be so angry at this Bullseye.

[David Hoffman]

We had momentum.

[Ryan Sean Adams]

We had everything. Well, but there's no. Look, there's no Do Kwon. There's no Sam Bankman freed. Yeah, right. There's no massive Celsius scam. There's no three hours.

[David Hoffman]

Well, maybe there's you knock on wood right now, sir. You don't know.

[Ryan Sean Adams]

I don't know. I. You look, I mean it seems bad on the week, right. But maybe we'll talk about this later. Whether this is actually the end of the cycle or whether it's just a Friday flash crash. Those things.

[David Hoffman]

I know you do these weekly or monthly market reports with Michael Nadeau from the Defi report. I know he's.

[Ryan Sean Adams]

He's bearish.

[Sponsor/Ad Voice]

You've told me he's bearish.

[David Hoffman]

And it's. It's different when it's Michael.

[Ryan Sean Adams]

I know. I. So I'm actually going to talk to him on Monday about his bear case because we got to hear it. I mean you just got to hear the contrarian case. But he is swung bearish. I'll hear that. But I'm going to bring the bullish to here because I don't believe it's over. He's not yet anyway. Let's talk about.

[Sponsor/Ad Voice]

Gold's at an all time high at least.

[Ryan Sean Adams]

Okay, well, you want to talk about that? Actually one thing before gold, you know, total crypto market cap, 3.8 trillion. That doesn't sound that bad when I put it like that. 3.8 trillion.

[David Hoffman]

No, 4. 4 is the happy number below.

[Ryan Sean Adams]

4 is happy number, but it's not. This is not pitiful. 3.8 trillion is not too bad. Sure, sure. Actually if you want to see like the sufferers over the last seven days, here's a. You know how we do movers. This is losers of the week. Okay.

[David Hoffman]

Movers of the week. Movers implies either direction.

[Ryan Sean Adams]

Yeah, that's good.

[David Hoffman]

But by the way, this week is all down.

[Ryan Sean Adams]

Move down, pumpkin. 34% down on the week. Aptos, 31% down. Mantle, which had a great run up until recently. 30% down. What else should I pangu? 25%.

[David Hoffman]

Athena down 35%. 35% down on the week seems to be the number to be down on the week.

[Ryan Sean Adams]

It's basically some of the alts that we're running are just like coughing up blood right now. That's what's happening. But you're Right. It's not affecting gold. Gold remains unbothered and is hitting all time highs. So at the time of recording. Right. About 4,300 per ounce in gold.

[David Hoffman]

It was at like 4,000 last week. These are some new can chew in moves.

[Ryan Sean Adams]

Yeah. Okay. So it added an entire bitcoin market cap this week. That's like $2 trillion on the week. One week, 2 trillion.

[David Hoffman]

That's a lot of capital.

[Ryan Sean Adams]

That's a whole lot of capital. And I'm just worried that gold is going to hit 5,000 before Ethos.

[Sponsor/Ad Voice]

I saw, I saw somebody tweet that.

[David Hoffman]

Out like two weeks ago and I'm like, that could never happen. Yeah. I was laughing.

[Ryan Sean Adams]

I was like, no, it's impossible. No, but look at this. Gold is historical highs. Of course, when you do, adjusted for inflation, it's looking pretty good too. Right? It's like back in the 1970s. This is the debasement trade everybody's talking about. And are you seeing stuff like this all over your timeline, David? I'm actually. Let's play this clip because you brought this into the agenda and tell us what we're looking at.

[David Hoffman]

This is a clip of people outside of a store. A bullion store, a Boolean store.

[Sponsor/Ad Voice]

People are just.

[David Hoffman]

Is that how you pronounce it? I don't even know that word.

[Ryan Sean Adams]

Bullion. Yeah. Yeah. They're trying to get their gold store. Yeah.

[David Hoffman]

People are lining up to buy gold.

[Ryan Sean Adams]

It's wild, man.

[David Hoffman]

This looks like. It looks like run on the bank got released or something. Yeah, yeah. Actually.

[Ryan Sean Adams]

Yeah. Doesn't it? It looks kind of like. You ever see that Christmas movie It's a Wonderful Life where there's a red on the bank. Uh huh. Little bit like that. Except people have smartphones and they're all recording what's going on.

[David Hoffman]

Yeah.

[Ryan Sean Adams]

So what are people doing? They're actually just like waiting, I guess.

[David Hoffman]

I guess people are just really into buying gold right now. Yeah. So much that they're willing to stand out in line. What do they, what do they bring cash, I guess.

[Ryan Sean Adams]

Or you transfer cash or whatever. But are you walking out with like, I don't know, chunks of gold, little nuggets or like gold bars, Backpack full of gold. At least you get your private keys that way. It's a true bare instrument that way.

[David Hoffman]

Yeah. I hope they get right into a car that looks like they're in New York. So some of those people probably took the subway home.

[Ryan Sean Adams]

I don't think this is New York. I thought a lot of these were from Australia, but I Don't know, man. You're in New York, you tell me.

[David Hoffman]

I'm in Amsterdam at the moment.

[Ryan Sean Adams]

You ever see a bullion store in Brooklyn?

[David Hoffman]

I've never seen a bullion store.

[Ryan Sean Adams]

Well, maybe we're about to. There is some good news here, okay. For crypto, which is Larry Fink feels like he's getting loud again about crypto and about tokenization. And whenever he gets loud, it means BlackRock is about to like launch a product or do something more. Should we play the clip?

[David Hoffman]

Do something crazy? Let's hear it.

[Larry Fink]

I do believe we're just at the beginning of the tokenization of all assets from real estate to equity to bonds across the board. There's. It's very loud here, but it's good. Capitals at work.

[David Hoffman]

You like that?

[Larry Fink]

I love capital work. But there's $4.1 trillion of money in city globally and digital wallets. A lot of that money is outside the United States. If we could tokenize a etf, you know, digitize that etf, we could have investors who are just beginning to, you know, invest in markets through, let's say crypto. They're investing in it, but now we could get them into the more traditional long term retirement products. So we look at that as the next wave of opportunity for BlackRock over the next tens of years as we start focusing, moving away from traditional financial assets by re re potting them in a digital manner and then having people stay in that digital ecosystem, they can have their cash. And we have the largest, this cash money market fund that's tokenized, called Biddle. You know, our Bitcoin ibit is now over $100 billion.

[David Hoffman]

Nothing not that long ago, two years ago.

[Larry Fink]

Zero.

[David Hoffman]

Yeah, so. Well, you weren't always a huge proponent.

[Larry Fink]

Of crypto, as we know, but I grow and learn.

[Ryan Sean Adams]

I heard you say that on 60 Minutes.

[Larry Fink]

I did, yeah.

[David Hoffman]

I love it now.

[Ryan Sean Adams]

Hear that? I grow and learn.

[David Hoffman]

You know what I hear when I hear this? I hear two things. American exceptionalism. Because of the strength of our Wall.

[Ryan Sean Adams]

Street, US capital markets.

[David Hoffman]

US Capital markets and how US Capital markets are moving onto blockchains. And we're going to take the value of Wall street and now we're going to provide that to the world and everyone's going to be able to buy it and it's going to be on chain. That's what I hear.

[Ryan Sean Adams]

Yes. What Larry Fink sees is more capital out there that is untapped. Right. We've tapped all the capital. Where's the next leg? Well, it's all of these international buyers that don't have the access to a broker, brokerage account. Right. And he's coming off of the success of IBIT, which is just printing money for BlackRock. Okay. And also the, their ETH ETF and the Biddle fund. And now he's like, what else can we tokenize? Can we tokenize all of our ETF products? Yes, we can. And we're going to. In fact, there's some rumors about this. So there was a rumor actually Larry Fink may maybe said as much that they are developing technology for the tokenization of assets. Some people are calling like there's maybe a platform called Synoptic, I believe. I'm not sure what this thing is going to be. There is today. It's supposed to launch today. So sometime at the time we're recording, we don't know yet. BlackRock is going to unveil a genie sac to line money market fund designed for stablecoin issuers. So I guess not just their Biddle fund, but a broader money market fund of some sort, I suppose. So they're just taking these things? They're tokenizing them. They're clearly going to create some sort of BlackRock operating system for tokenization. What does this mean? I don't exactly know. Will they tokenize everything on Ethereum and public chains? I gotta imagine. So will they do a layer two? Will they launch their own chain? Have no idea. We are actually going to have Robby Michnick from BlackRock on the podcast sometime in the next few weeks. So these are questions that we'll be asking them. But it's very clear that they see massive opportunity here in tokenizing all of the things that US capital markets have to offer.

[David Hoffman]

Yeah, I, I think that they are just pushing forward on the tokenization of everything movement. And when Larry Fink, who like owns all the assets, hears people say we're going to tokenize everything, he's going to be like, I'm going to tokenize everything because I own everything you have.

[Ryan Sean Adams]

Yeah. On his face at the end of that interview.

[David Hoffman]

Totally, totally. Do you know how many employees BlackRock has?

[Ryan Sean Adams]

Oh, do you want me to take just a wild ass guess? Totally.

[David Hoffman]

Go for it.

[Ryan Sean Adams]

All right, so like a Wells Fargo has what, like 130,000? Something like that. Oh God, that's so high. I'm, I'm, I'm betting black is much more lean, so I'm going to say 8,000.

[David Hoffman]

21,000. 21,000.

[Ryan Sean Adams]

Okay. Okay.

[David Hoffman]

So how many employees do you think are on the digital asset team of BlackRock 150. No, I don't know the answer but it's somewhere like between, between like 6 and 12. Dude.

[Ryan Sean Adams]

What?

[David Hoffman]

It's a very low number of people. It's like a SEAL team. 6 of people. And that's the story of crypto is very low number of employees. Use Ethereum as your backend. Use team Ethereum as your best employee ever. Do the smart contract as your compliance hire no one Highly profitable and makes it highly profitable. And I think that's part of the story here too.

[Ryan Sean Adams]

And pass some of those gains back to retail so your take rate is lower and so you're not rent seeking. Right David? Sure. Right David? Sure.

[David Hoffman]

I'm sure. That's what Larry Fink thinks.

[Ryan Sean Adams]

You know what was crazy here is in terms of real world assets on chain, I actually saw a Treasury estimate. This is the US Department of treachery. And they were contemplating the question of how much in stablecoins could we actually see as a result of the genius bill. You know how people like Secretary Scott Besant have quoted Things like by 2030 we'll have 3 trillion or so, which.

[David Hoffman]

US treasury context is 70% growth year over year until we get there.

[Ryan Sean Adams]

Huge. Okay. US treasury says in final form, look at this number. 6.6 trillion in M1 will leak out of demand deposits in banks checking deposits and go into stable coins because stablecoins are in the process basically unbundling the banks. So banks are depository institutions right now. They collect rent on all of the interest from all of their deposits. They love that business. This is treasury saying they're no longer going to be able to do that business. It's all going to leak into stablecoins. So you can kind of see why the banks are up in arms about this. And they're trying to like they're freaking out now about the genius bill and what they already signed on to and the fact that crypto exchanges and defi are able to give customers back their interest because they see 6.6 trillion in potential depository leakage from their systems.

[David Hoffman]

So the reason, Ryan, why I'm in Amsterdam right now is because of Theta Capital, which is one of the bigger fund of funds in crypto. The European capital in Amsterdam, birthplace of modern capitalism. They have their like annual like blockchain crypto day and it's like a day of talks, not unlike the banquet summit. So like a whole day of talks and like they bring their LPs and then they bring some of the GPS that they've invested, invested in big money. Yeah, well, big money guys coming from old money and also crypto gps. So his Eve is here, Matt Walsh is here, Robert Leshner is here. And everyone's kind of giving their take about like here. Here's the current state of crypto and obviously, as you'd expect, stablecoins, huge subject Haseeb brought up that whole like 16% of M2 is going to turn into like stablecoins. Some like crazy downstream of like Scott Besson. So he's talking about this and everyone is like all kind of putting these pieces together of. It's not like we've always gone after the banks. The time is now. The time is right now. We are watching the banks get unbundled. In the next three years, things are going to have tectonic shifts. We are watching it unfold in real time. It's the first ending of the game actually being played. And like the, the event in question is European capital. But like the whole world is watching this happen right now. Yeah, watching the banks just sink. Like the Titanic took a while. How long did it take the Titanic to sink? Like 12 hours.

[Ryan Sean Adams]

I mean they're not going to sink, sink. They're just going to be unbundled. So there's parts of banks that are useful and they're providing credit, you know, community banks, credit for, you know, communities. But the depository and payment side, they don't need to be in that business. Why are they in that business? When we have stablecoins, we can do it for far cheaper. I, you know, though, David, it seemed like we were going to get a shortcut. We have about 300 billion in stablecoins right now. 350 billion. And then suddenly we got 300 trillion minted on Ethereum. Did you see this?

[David Hoffman]

Yeah, I did see this. Okay, so this is a Py USD from PayPal minted 300 trillion Py USD. So this is on Ethereum of $300 trillion into. And then it went away. They deleted it. They, they burned the tokens like 25 minutes later because somebody put in three too many zeros. One, which like is kind of funny. But then like, okay, now, now everyone now in PayPal has to like go through their checks. Why did this happen? How.

[Sponsor/Ad Voice]

Why is this process broken?

[Ryan Sean Adams]

You know, Pay USD uses Paxos. So Paxos actually came clean with it.

[David Hoffman]

They were like, this is our bad.

[Ryan Sean Adams]

Yeah. At 3:12pm Eastern, Paxos mistakenly minted excess pyusd. They don't say how much.

[David Hoffman]

$300 trillion 99 excess PyUSD the reason.

[Ryan Sean Adams]

It doesn't really matter is because those are all kind of IOUs, right? So they didn't, they don't have $300 trillion worth of treasuries that are real.

[David Hoffman]

In, in theory could matter. If this was a, a malicious attack, right? If somebody got a whole, if somebody was maliciously minting PyUSD, they could go and they could liquidate people's positions in AAVE. They could disrupt all PyUSD collateralized positions inside of DeFi. And so that, that could matter.

[Ryan Sean Adams]

People were worried a hacker got, you know, so they said no, it's, it was an internal technical. Blame it on the intern man, some intern fat fingered some number.

[David Hoffman]

They didn't blame it on the intern. They said it was an internal error.

[Ryan Sean Adams]

I'm blaming it on the intern. I know there's an intern somewhere maybe listening to this.

[David Hoffman]

It is, this is how the Fed prints money though. Like they could do this so easy.

[Ryan Sean Adams]

You just fat finger a few digits into a ledger somewhere. Anyway, okay, it's a funny story. So one thing that has been a continuing trend this cycle has of course been Tom Lee purchasing ether the asset. And I can tell you he was not phased by the flash crash. No, he bought a bunch more on Sunday, he bought a billion more eth.

[David Hoffman]

Okay, so he's a billion dollars. A billion dollars of eth.

[Ryan Sean Adams]

Of course there's not a bankless listeners know there's not a billion ETH in supply in existence. We all know our supply numbers.

[David Hoffman]

Bitcoin will be like you could just mint ETH out of thin air.

[Ryan Sean Adams]

But okay, but here's the thing. He's got a lot of people who are betting against them. I read an entire we're shorting short report. Bnmr Bitmine Emerging Technologies is Tom Lee's company from a company called Carousel Capital. And their case was basically like, there's no way that Tom Lee's bit mine should have an MNAV premium. They're not betting directly against eth, but they're shorting Tom's stock and they're trying to like essentially bet against his MNAV premium being any surplus in particular. They don't like how he's making these buys, which are basically like issuing more equity and diluting shareholders in order to make these at the market purchases. As we know the mechanics behind these things are. I mean like the level at which Tom Lee is able to do this is astounding. Anyway, Karasdale is calling. They're bluff. And I gotta think there's a lot of organizations, entities Hedge funds out there that are shorting some of the dad stocks right now. I'm sure MicroStrategy has a lot of shorts going on. Certainly bit mine does, certainly some others. And that could be contributing to these suppressed MNAV prices isn't the whole thesis.

[David Hoffman]

Of BMNR is a long ETH short BMNR position anyways. So like take out, they're shorting it with a dollar. But the whole idea is if the M nav goes above 1, you print Bitmine shares to buy more ETH which pumps up the ether price and suppresses the price of bmnr. So the premise is already long ETH short BMNR in the first place. The whole dat is short BMNR as.

[Ryan Sean Adams]

It relates to ETH depends how much at the market purchasing you're doing versus other types of funding. And you know one of the metrics for these Treasuries is, is obviously increasing ETH per share. That's something that is true and that kind of goes against the metric that you just said. So yes, investors want growth and they want volume, but they also want to maximize ETH per share in these entities. Anyway, the long term thesis for positive MNAV is basically liquidity premium and yield that ETH is a productive asset offers. So long term some of these stats have to be trading at some positive MNAV premium. But the market is doubting some of this. Did you see this clip though? This is Michael Saylor commenting on Tom.

[David Hoffman]

Lee and Tom Lee's impact on Ethereum. Yeah, yeah, yeah.

[Ryan Sean Adams]

So let's just play the clip and I want to get your take on and how you read his comments here. So this is Michael Saylor.

[Michael Saylor]

Tom Lee has emerged as probably the, the most visible influential spokesperson in the entire Ethereum ecosystem in a matter of months, maybe a matter of weeks. What does that represent? Well, first of all, they have $10 billion of capital. Second of all, Tom Lee is part of the Wall street establishment. He was never part of the crypto establishment. You saw Wall street merges with the crypto economy. Capital flows because it trusts Tom Lee. And then the next thing you know, you have Tom Lee having conversations with the early Ethereum entrepreneurs, with the Vitaliks of the world and the like. And what's interesting there is that entire movement becomes commercialized, institutionalized, legitimized, rationalized, becomes a bit older, a bit more credible.

[Ryan Sean Adams]

Okay, so I took that as bullish. I took that as Michael Saylor giving props to Tom Lee and saying that he's helping to make Ethereum more credible. More legitimate, particularly to tradfi. But we were talking before this episode, and you took this in a totally different way.

[David Hoffman]

How did you know he is firing shots, dude. He is like, Tom Lee is a part of Wall Street. He's a part of the system. Ethereum and Wall Street. These are the. The system. These are the man. And he's like, out grouping for the bitcoiners. He's talking to bitcoiners and he's like, yeah, like, they are not the revolution. They are the same old guard, same, like, new guard, same as the old guard. And like, Wall street comes in and they commercialize it. Like, they neuter the revolution.

[Ryan Sean Adams]

That's what he's doing with bitcoin. That's exactly his play with bitcoin. I don't see how he could be criticizing that.

[David Hoffman]

Well, I mean, when. How. How large is bit mine as it relates to microstrategy, like, not insignificant. So Tom Lee is soaking up some of his oxygen, and Michael Saylor's feeling threatened. And so now he's throwing shots about how Ethereum is bending the knee to Wall Street.

[Ryan Sean Adams]

I don't agree with that.

[Sponsor/Ad Voice]

And Wall street is like, that's totally what he's doing.

[Ryan Sean Adams]

No way. No way.

[David Hoffman]

This is a negative stance towards Ethereum and Tom Lee. This was negative towards him.

[Ryan Sean Adams]

Really? Maybe we need to see, like, the full clip. Okay, so I don't think that's how Tom Lee took it. So I think Tom Lee is, like, clapping or something. Maybe clap tweet. Did I imagine this?

[David Hoffman]

I mean, he clap tweets everything, though, so.

[Ryan Sean Adams]

Oh, love, love, love, love. Emojis.

[David Hoffman]

It's one of those things where, like, you're like, yeah, that's what I'm doing, and that's why it's working for me. But, like, then Michael Saylor be like, yes, like you. You guys, like. And then he goes like. And he points at Vitalik and says that he had. The Vitalik types are now in association with Tom Lee, who's in association with. With Wall Street. This revolution is not found here and is not found in Ethereum.

[Ryan Sean Adams]

Well, bankless listener, you make the judges of whether this was like a. I guess maybe a backhanded compliment is what you're saying, David. Not.

[David Hoffman]

No, it's not even backhanded. It's a jab.

[Ryan Sean Adams]

No way. I actually think this is Michael Saylor, you know, not completely saying ETH is now a legitimate asset class because he's in front of bitcoiners, but kind of saying that and giving some credit to Tom Lee. Anyway, Bankless listeners can decide how they interpret maybe. What's the tone for you? I know Michael Saylor has a very like, kind of like a way he speaks that is kind of sharp, I suppose. Yeah, maybe that's what you were reading. Anyway, bankless listeners can decide on whether I'm Michael Saylor.

[David Hoffman]

I'm pretty sure I'm right here.

[Ryan Sean Adams]

All right. All right, we'll see. David, what do we have? Coming up.

[David Hoffman]

Coming up next, we're going to talk about the Flash crash on Friday. The biggest liquidation event in crypto. $19 billion got liqu in about three to four hours. What the hell happened? Why did it happen? And why are we still taking this long to recover? As we approach seven days later, we're going to talk all about that and more. But first, a moment to talk about some of these fantastic sponsors that make this show possible.

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[David Hoffman]

Flash crash Friday $19 billion wiped out in just three, four hours the second largest liquidation event happened just six months ago and it was something like $16 billion. So we're having these stress tests pretty damn soon here. So what happened? Obviously this got started off from Donald Trump's Black Swan tweet. I'll call it a black swan tweet because no one was prepared for this tweet where he just ramped up the tariff wars one more time, saying hey, on particular goods being shipped in from China, we are adding in 100% tariffs. And when you add 100% tariff on something, you're almost effectively banning it unless the margins by the producer are so incredibly high they can somehow pay that it's an effective ban. And so this got sent out Friday after hours stock market was closed. You know, people packing up for the weekends, market makers shutting down their operation for the weekends. I don't know if they do that.

[Ryan Sean Adams]

But like, liquidity issues were down too, right? Like, this was a little similar to what he did in April, which was like, now there's tariffs. Was that. Did that happen in April?

[David Hoffman]

Yeah, he always does it during the weekend, which sucks because no one can buy or sell equities. So they go to crypto and they sell their.

[Sponsor/Ad Voice]

Sell.

[David Hoffman]

Yeah, they sell our bags because they do it during the off hours.

[Ryan Sean Adams]

God.

[David Hoffman]

Yeah, yeah, yeah. United states will impose 100% tariff on China over and above any tariff they are currently playing. Blah, blah, blah. When the stock market opened, NASDAQ fell 3.5%. SB and 500 fell 2.7%. Recorded worst day since April. But Bitcoin went down 14% and ETH went down 21%. ETH went all the way down to $3,500. Okay, which is, which is. Which is bad. But dude, altcoins. Have you ever. You.

[Sponsor/Ad Voice]

You've heard of.

[Ryan Sean Adams]

You're.

[David Hoffman]

Sometimes you're not in the trenches. Actually, most of the time you're not in the trenches. Ryan, have you ever heard of the term 911 for the trenches?

[Ryan Sean Adams]

No. It's so disrespectful.

[David Hoffman]

It's actually on the. The COVID photo of the article you have. This is truly 911 for the trenches in the sense that some altcoins actually went to zero. Dude, the order books broke. Some, like Adam, Adam actually went to zero.

[Ryan Sean Adams]

That's the cosmos. It's so funny. It's like, you know, people talk about, yo, yeah, you know, we're going to send whatever token is zero.

[David Hoffman]

It's all going to go zero.

[Ryan Sean Adams]

And it literally went to zero on some of the orders.

[David Hoffman]

Zero.

[Ryan Sean Adams]

Now, this was very brief though, right? We should say even. Even the 21% eth fall to $3,500 was a wick. That. That was a wick down. This did not last long. I mean, still traded like down. But what we're looking at here in all of these alt trades are quick wicks down. But we are looking at, you know, in some cases, 100% down.

[David Hoffman]

And you didn't think it was possible.

[Ryan Sean Adams]

Sol dropped 40%, dude.

[David Hoffman]

Yeah, that's. That's a lot. Dropped 80%. And so it's like, okay, so here's what happens when some shenanigans like this happens, especially when it happens on the weekends is. Well, there. There was a cascade of failure, starting with Binance. So Binance APIs started to not respond, started to, to just break down. And so liquidity stopped Happening on Binance. Trades stopped happening on Binance. Binance is an oracle for many other dexes, especially some of the perp dexs they use. Like Binance is used as an oracle almost everywhere systemically so and Binance stopped happening. Market makers get scared. So they yoink their books. Market makers have agreements with all of the tokens that they do that they have agreements with.

[Ryan Sean Adams]

Right.

[David Hoffman]

And but their agreement is something along the lines of like 99% of the time we will be market making for you 1%. When you are market making 24, 7, 365, you get to just yoink the liquidity for an hour and you are within your agreement of being a market maker. And so that 1% of time we found, we found the 1% when market makers decided to yoink their liquidity stop market making. And then tokens were just in a free fall and there was no bids. And also the exchanges were broken. And so you couldn't get right.

[Ryan Sean Adams]

It was like some APIs on Binance. But it did seem like something was going on with Binance specifically. That was where a lot of the chaos kind of started. But I liked Doug Collatt's take here, which is basically. Yeah, colk it. Sorry, yeah, sorry Doug. He said why was this and why are we even calling this a flash crash? It's because it's one of those things where it was so amplified because of all of the leverage buildup we had.

[David Hoffman]

So we have specifically on perp Dexs because we do not have that much leverage in the system right now other than perp degrees.

[Ryan Sean Adams]

Not just perp dexs, we can see that leverage, but even just general perps exchange like Binance perps exchange as well. So all perps, there's a lot of leverage on perps. So on perps Dexs specifically, we had open interest near all time high 26 billion before the crash, global crypto open interest, so CEX included almost a hundred billion. This is 10x or higher leverage on these things. So like a lot of the run up has been or a portion of the run up has been not due to new buyers. We've definitely had new buyers as a company like institutions, but it's also been a lot of existing buyers in crypto levering up.

[David Hoffman]

You mean the particular the market everywhere.

[Ryan Sean Adams]

Across the market in crypto. I mean a good portion because I.

[David Hoffman]

Thought a lot of that leverage, open interest leverage is people farming lighter points people farming the next hyper liquid airdrop people farming.

[Ryan Sean Adams]

Well, how do they farm though? They have to take on Leverage farm.

[David Hoffman]

But you can go delta neutral. You're going to go crypto.

[Ryan Sean Adams]

Crypto is levered up at this point in time always and always, always. And we've seen this like other flash crashes in the past. It's kind of expected. You mentioned one earlier this year. It wasn't as severe. We had something like this in the summer of 2021. The end of this, I was like, September 2021.

[David Hoffman]

Yeah, dude, dude. Eth price went from like $4,000 down to like $1800.

[Ryan Sean Adams]

I don't even remember what eth price did. I remember bitcoin did like almost 14 to 20%. Kind of went down in September 2021, which seemed crazy.

[David Hoffman]

That one scared me. I don't scare you. I mean my net, my, my, like zerion at the time went down 70%. I'm like, what?

[Ryan Sean Adams]

Stop. Can you talk about, can you talk about what happened specifically on perps Dex? Because it felt like crypto learned about a new term called adl, which is auto deleveraging. So if you had a perp open at the time, you may have gotten liquidated on adl. Liquidated when you sort of shouldn't have. The price didn't dictate that.

[David Hoffman]

You got your market, you got your position closed. Yeah, yeah.

[Ryan Sean Adams]

What is this? And you know, like, how did this affect traders?

[David Hoffman]

Sure, yeah. So inherently, in any perp platform, what does a per platform do? It gives you leverage. It gives you potentially massive amounts of leverage. 50x. So your $1 can turn into $50, either long or short, depending on which way you choose. In the happy case, 99.9% of the time on a perp dex, longs and shorts balance out. And when they don't balance out, shorts just have to pay the longs or longs have to pay the shorts. And so they. The perpetex by construction equilibriates between a dislocation between too many longs and not enough shorts by making the longs pay the shorts. And that's totally fine. Sometimes in when there is a dislocation between longs and shorts, which there always is, that's. And that's fine. And again they. The platform just balances out by making one side pay the other. But also if price moves significantly in one direction, while there is also a significant dislocation between longs and shorts or shorts and longs, all of a sudden there is effectively a bankruptcy in the sense that there's not enough money on the platform to pay the winners from the losers. The losers don't have enough Money to pay the winners. And so in order to equitably transfer all the wealth, we need to do an automatic deleveraging of the winners because they won too much. And so usually. And so each.

[Ryan Sean Adams]

You say automatic, maybe another term for that is like forced, basically.

[David Hoffman]

Forced, yeah, forced deleveraging of your position. And so if you say, say you had a 50x short and then crypto prices went down by 30%, I mean, congratulations.

[Sponsor/Ad Voice]

But the platform doesn't have enough money.

[David Hoffman]

To pay you because the losers didn't.

[Sponsor/Ad Voice]

Lose enough money to pay you how.

[David Hoffman]

Big your winnings were. And so they need to automatically deleverage you and everyone else. And there is a, each perp exchange has a, a way to do this, an opinionated way to do this. And so the, It's a style of deleveraging who. There's a queue of like, okay, first we're going to deleverage this person and then that person and then that person, and hopefully that clears the books and they'll go down the line. Many people, especially as we got down into the long tail of altcoins with very low liquidity, many people just had their positions just stopped, just deleverage because there just wasn't enough capital in the market, which is effed up a lot of people's positions because like I said, they were farming aster points, they were farming lighter points, they were farming hyper liquid. They thought they were delta neutral, but when the platform deleverages them, they're no longer delta neutral. And all of a sudden they're taking a directional stance on the. That they didn't intend to. In addition to that, lighter had an outage for like a number of hours. Binance had an outage for a number of hours. So both of those platforms are working on compensation plans overall, just very messy and chaotic. Usually when we have cascading liquidations, we don't really have to talk about it other than just like, hey, don't take too much leverage. Now we're talking about it because the market's failed. Truly. The platforms and the infrastructure broke down in a way that is now requiring us to do like manual compensation of people who are harmed.

[Ryan Sean Adams]

Not everywhere, though. Primarily on perps exchanges, primarily on. If you're doing stuff with Spot, you don't have to worry about this.

[David Hoffman]

Yeah, I was up in the mountains, dude. I was like, shit, like eth is down $400.

[Ryan Sean Adams]

Oh, well, yeah, well, I mean, if you're not on margin, you can kind of do that. So even Binance hit this ADL so a lot of liquidations there. Binance ultimately paid 280 million in compensation to some of the affected users who were liquidated and lost a certain amount of money. So they're trying to make good. As you mentioned, some of the other perps exchanges Lighter had its own problems. It didn't actually hit too much in the way of adl, but it did have an outage. Hyper Liquid stayed up the entire time. But a lot of traders have some dissatisfaction because they weren't aware of the ADL mechanism and they got liquidated in a way that they didn't feel that they should have. So a whole bunch of platforms had problems. I guess one bright spot is Defi did fairly well. First off, always I'll talk about some of the wallets. So Unfortunately Rabi and Debank stopped working. They must have had some sort of.

[David Hoffman]

DDOs, kind of DDOs, accidental DDOs from people trying to save themselves?

[Ryan Sean Adams]

Yeah, yeah, something like that. So that wasn't great. But other crypto wallet stayed up but Defi was pretty much fine. In particular aave. So big stress test of aave. Right. It's one of the largest liquidations on record actually the largest in record in an hour I believe 180 million handled it flawlessly.

[David Hoffman]

Love it.

[Ryan Sean Adams]

75 billion capital and just ate that $180 million liquidation share in orderly markets. Yeah, it was very good. The other Defi protocols fared similarly. Actually Athena had a depegging event on Binance. One of the reasons this did not affect Defi was because most of the Defi Oracles peg Athena, the Athena stablecoin usde, I believe with usct. So they're not using the Binance order book data so much. And so if they had have been, they had kind of their Oracle risk management configuring a different way could have caused some problems in Defi. Fortunately they avoided that. Athena also has some interesting ADL deals that are custom that I didn't know about. Right. You know something about this?

[David Hoffman]

Yeah, with the centralized exchanges because you can't really make a deal with a decentralized exchange. So Athena again, which is a delta neutral platform, they just make their stablecoins by longing spot and then shorting the derivative. And so because they are not like inherently leveraged, they have gone out to Binance, bybay, OKX and just made deals saying hey, take out like preserve us from ADL's. Like don't ADL us ever give us a privileged position when it comes to adl. Because ADL is for people who are winning on the platform versus losing and Athena is delta neutral.

[Ryan Sean Adams]

Delta neutral. So.

[David Hoffman]

So it doesn't matter. So it kind of doesn't apply to them. So that deal makes sense for Athena. It's like, well, they're not winning or losing. They're not profiting from the thing they.

[Ryan Sean Adams]

Put in place though.

[David Hoffman]

Yeah, very good thing, Very smart of them. The day finally came where that deal actually played out in their favor. Other people are like, this is kind of unfair. Like I'd like to go negotiate my ideal position.

[Ryan Sean Adams]

Yeah, I mean you have to have, you have to have that kind of size.

[David Hoffman]

Yeah, right, yeah. If you have size, you can make negotiations. Yeah. Guy here, guy from Athena, he's here at the Athena One day event and he actually talked about this because he was on a fireside chat. I thought he said something pretty interesting. So again, thino, delta neutral. But they, when they are short, so they are short on derivatives, long spot, short derivatives. And in theory, you know, the price goes down and their spot value goes down and their short value goes up and those things equilibriate. But when markets dislocate and are disorderly and when prices go down in this disorderly way, shorts actually make money because it dislocates further away from what it ought to compared to spot. And so apparently Athena was actually pocketing millions of dollars because their short positions actually profited them more than their spot positions loss. So I thought that was a little fun fact that like Athena actually, well, good for them.

[Ryan Sean Adams]

Maybe that'll show up in price at some point. It hasn't, it hasn't yet. Some people are thinking this is a coordinated attack. Okay. So there's some suspicious timing. Part of the issue was on Binance and Binance had an Oracle price update that they had scheduled for October 14th. And during the interim before October 14th there was some vulnerability. There was also on different perps exchanges, we saw whales open up billion dollar short positions like 30 minutes before the Trump tweet. Okay. And they were doing this in bitcoin and eth. So I mean somebody knew what was happening. Now what's interesting here is like because these markets are transparent, you actually see it. How often does this go on in traditional markets? We just don't see it. I mean somebody knows something and is trading something for sure now. I don't know. The question is like, will this continue? You know, is this the end? Kobe said he compared this. He said this was the most severe flush he's ever seen on alts. He said it did remind him a little bit of summer 2021. It's a good reminder to myself to own, to own things that I'm actually bullish on and not try to shift the momentum. Raoul Paul had a take which is this is all noise. The lesson here is don't use leverage. Right? Okay. So if you weren't using leverage, this is just kind of a pretty bad wick down. But it's not existential. It doesn't affect you. You're still in the game. He said there's only two questions you need to ask as a long term holder. Will tomorrow be more digital than today and has the liquidity cycle and business cycle topped or is it still rising to finance the 10 trillion that needs to roll it in the next 1212 months? Raoul Paul is betting it's not over because of the liquidity cycle. That's basically it. Now there are some who are saying, I don't know, that felt like some weakness. That felt like maybe we've seen kind of the top. One of them is Mike NATO who I'm going to talk to on Monday. Do you have a take on this, David? You think it's over or you think we're still good?

[David Hoffman]

I'm. I know who I am, Ryan, and I'm not going to be the one to call the top. I don't have that skill set, I don't have that disposition and so.

[Ryan Sean Adams]

But good to your head, is it the top? Yeah.

[David Hoffman]

No, it's not the top.

[Ryan Sean Adams]

That's the way I feel. Well, we got some stuff coming up next. You got to fill me on the binance listing fee drama. Also, hopefully it's not the top for the Monad token and the Megadeep token which are coming out. And we got to talk about the US adding billions to its strategic Bitcoin reserve. But like maybe not in the purchasing bitcoin type way. Talk about all that and more. But before we do, we want to thank the sponsors that made this episode possible including frax, which is our favorite stablecoin. Some of the best yield in defi as well. Let's go hear from them right now.

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[David Hoffman]

Clicking the link in the Show Notes so there's a tweet that was heard around crypto Twitter. This comes from CJ who is a founder of a up and coming prediction market. Price prediction market on base and the Limitless has definitely gained some attention and some momentum lately because they had a Kaido sale. So they had a they were selling a million dollars of their future token and it was super oversubscribed so they were gaining some momentum. He gets a Apparently he gets an offer from Binance about what it would take to get their future token listed on Binance and apparently the intern we're blaming interns this week. That's the theme of the week. Blame the interns.

[Ryan Sean Adams]

Yep.

[David Hoffman]

Is the intern forgot to send CJ the NDA of what the deal would look like. So CJ was free to just post the deal on Twitter. And so here's what it would take for CJ to list his limitless token. Limitless is the name of his prediction market on Binance. 1% of the token supply for an airdrop on day one. 3% further of the token supply for further airdrops over six months.

[Ryan Sean Adams]

4%.

[David Hoffman]

1 more percent for marketing at Binance's full discretion, he also has to provide 100% of the TVL for a token pool on pancake swap. That's a million dollars. A $250,000 security deposit, 3 more percent of the token reserved for the BNB holder program, and $200,000 worth of tokens for Binance affiliate marketers. And then a $2 million BNB security deposit for spot listing. That was the fee. Now I think this, these numbers are negotiable. That's what CJ said when I interviewed him. That podcast came out on your podcast feed. So in theory those numbers could be lower, but they can also be higher too. And so we've always known as an industry that there are egregious exchange listing fees because liquidity is so incredibly valuable. Simon, founder of Moonrock Capital, he put out a tweet that said, I spoke with a tier one project that raised close to nine figures. After wasting a year of due diligence with Binance, they finally received a listing officer offer. Binance asked for 15% of their token supply. Imagine paying 50 to 100 million just for a sex listing. Centralized exchange listing. We as an industry know that these fees have existed. We've never actually seen an offer before because they get NDA'd. And then also when I was talking to CJ, he, he talked about like, well, who is really incentivized to actually disclose what these deals are? Well, Binance definitely is not the market maker deals who also are like kind of privy to this information. The market makers aren't incented to like disclose what the deal is. If the founder signs this deal, they're not interested in disclosing what the deal is either because it's kind of embarrassing for to sign such an egregious deal. So no one really is incented to release the details of the deal. So it remains an like a not so well kept secret that founders pay for liquidity. Now we actually have one and it just caused a bunch of rabbling on Twitter. It's like, no, now we actually have the details of a real offer and it's as bad as we ever thought.

[Ryan Sean Adams]

And I guess we're, we're throwing Binance under The bus. Other exchanges have charged these fees in the past. Still do, to my knowledge, charge these fees. We don't know what Coinbase's listing process is for, for example, or what fees that they charge. I do think, though, that the whole thing feels very tratify and not in the spirit of defi, and not in the spirit of crypto, which is you get your asset on a decentralized exchange, there's no listing fee, there's no permission, it's just there. And so this kind of fee charge of 5% feels anachronistic. It doesn't feel like real crypto. So I get the sentiment there. The other thing I'll say is 5% right. Of token supply. You know, Binance is really juicing the BNB token because that 5% goes primarily to BNB token incentives. So one thing you can.

[David Hoffman]

Who owns BNB?

[Ryan Sean Adams]

Who dominantly owns, last week, potentially 60, 70% CZ. Right? Yeah, they are doing a good job for BNB token holders, let's say that. The other thing I guess I would say is just like, it's unclear how long that this type of rent seeking can actually last. And I think the power of centralized exchanges starts to diminish as decentralized exchanges gain market share, which they have been 20%.

[David Hoffman]

20% market share, something like that, which is low, but it's been up only since forever.

[Ryan Sean Adams]

Yeah, that's great. I do think also this was an opportunity to do a little bit of Coinbase versus Binance type, like, back and forth. Because I saw back and forth, you.

[David Hoffman]

Know, and one of them is definitely in the replies.

[Ryan Sean Adams]

Yeah, yeah. And CZ responded. He was like, okay, like, you don't like listing fees, like, don't pay them. It's a free market. Market, do whatever you want, blah, blah. And by the way, he said Coinbase doesn't even list the third largest crypto asset, which is bnb. Why don't you ask them why they don't list bnb? And then a day later, Coinbase listed bnb.

[David Hoffman]

Yeah, So I thought it was pretty funny.

[Ryan Sean Adams]

Hilarious drama.

[David Hoffman]

Yeah. There's another conversation of kind of like the PR failure of Binance as it relates to cj, the founder of Limitless. Because there was definitely some.

[Ryan Sean Adams]

Maybe I'll call it bullying back and forth between.

[David Hoffman]

They like explicitly. The Binance. The at Binance Twitter account explicitly tagged cj and it was like false and defamatory statements from this one individual.

[Ryan Sean Adams]

Oh, wow.

[David Hoffman]

And then one of those. One of those. The. They made like three arguments and they bulleted One and like the first one was something like making false false claims and then the third was defamation and like. Whoa. And releasing private info and like, wait a second. Either the info is false and it's defamation or he was released in private info.

[Ryan Sean Adams]

You got to pick one, guys.

[David Hoffman]

You have to pick one of those two things.

[Ryan Sean Adams]

Yeah, that's fair for sure. I mean, kind of a rough week for Binance, let's say.

[David Hoffman]

Yeah, not great, not great.

[Ryan Sean Adams]

Let's talk about Mega Eth and Monad. So last week we talked a little bit about the Monad airdrop, which is coming up now. It's open, so you can go check if you're eligible. In fact, I think you sort of have to check whether you're eligible for Monad and go claim right now or else, I don't know, you lose your tokens. Is that so?

[David Hoffman]

We are, we are claiming our Monad tokens, but you don't get your tokens, you just get them in the future when the Monad blockchain is up and running. Monad, there's an EVM soon. Yeah, well, end of this year, we don't really know. So like November, December is my guess.

[Ryan Sean Adams]

Really. I heard October, but no, October's almost. Could be, could be, could be, could be.

[David Hoffman]

The monad is an EVM equivalent chain. So you're going to use your Ethereum address and you're like Rabi Wallet or your Metamask Wallet or whatever and you're going to go sign and authenticate your ownership of the wallet. And I would presume that would be the address that would then have the tokens on the Monad blockchain. I presume that's how that would work. And so go do that. You have until November 3rd to go claim your future tokens. So go do all the things. Connect your forecaster, connect your Twitter, connect your discord and yeah, make sure you don't miss out on your tokens. You might have them. And so also since it's happening the same week Mega Eth has their sale, they are doing a sale on Kobe's platform Sonar. And so you can sign up kyc, it takes a bit. So you have to go like, you know, do some tradfi legal document bureaucracy bullshit because of rules. But then once you get through over those hurdles, then you can potentially participate in the Mega Eth ICO if you so choose.

[Ryan Sean Adams]

And do you know the valuation of.

[David Hoffman]

No details are going to be details soon on that, but I'm guessing, understanding Mega Eth, it's going to be kind of favorable, but people aren't going to be able to have large allocations though.

[Ryan Sean Adams]

From the very beginning, Monad and Mega Eth have been kind of set against each other as competitors. It's interesting that they're going main at kind of a similar time also Tokyo at a similar time. So the design is different. Right. This is almost a little bit of a battle of alt layer ones and layer 2s as well.

[David Hoffman]

So Monad, they're both EVM, they're both extremely fast.

[Ryan Sean Adams]

Right. And Monad took four years to redesign the EVM to do a parallel execution and really juice it. Right. Whereas Mega Eth is super juicing their sequencer. They're not decentralized sequencer at all, but juicing that to the nth degree so they can have max tps and they'll have more transactions per second than Monad. And so it's kind of a race. And I'm very interested in seeing what the FTVs of these tokens will end up being like. Right now, pre market, Monad is about 6 billion, which indicates like a pretty nice L1 premium, let's say.

[David Hoffman]

I thought it was higher than that. I saw 13 to like 16 billion.

[Ryan Sean Adams]

You saw that last week, now this week, my friend.

[David Hoffman]

Oh yeah, that's a good point.

[Ryan Sean Adams]

This week we're at 6 billion. Okay. Rut row now, I'm not sure. I mean, I guess we could look at like top layer twos. What are those right now? I mean, something like Arbitrum. It's that.

[David Hoffman]

Yeah.

[Ryan Sean Adams]

4 billion, something like that. FTV.

[David Hoffman]

Yeah. Do you think Mega Eth comes in above or below that?

[Ryan Sean Adams]

I don't know. That's what's going to be really interesting comparing Mega Eth to Monad because they feel similar. They're Both highly juiced EVMs where you get like a ton, a ton of throughput.

[David Hoffman]

Yeah. My take on this is both of those chains are fast enough where being faster doesn't really matter. They're both over the hurdle of like, they're so fast that users don't care. And so it's really about the app ecosystem that is the game changer between Monad, Monad and Mega Eth, when they go head to head. And Mega Eth on Twitter is like, we're not competing with Monad.

[Ryan Sean Adams]

We're different.

[David Hoffman]

I'm like, yeah, okay, sure. Uh, it's gonna be their app layer that is going to be how these ecosystems compete, not about the speed. They're both so fast. It doesn't matter.

[Ryan Sean Adams]

I totally agree. So we mentioned a Chinese company that's building on Ethereum. That company is Ant Financial. This is the parent company of Alipay. This is a big Chinese. I mean I would say Alipay and Alibaba is sort of the, the Amazon of China, but it's also a kind of the, a super app as well. So 1.4 billion monthly active users on Alipay. So the parent company is launching an Ethereum L1. Looks to be a ZK roll up.

[David Hoffman]

Of Ethereum layer two, please.

[Ryan Sean Adams]

Layer two dice layer two. It's called Jove. Now there was some talk like there's some hype tweets like alipay and it's 1.4 billion monthly active users. They just chose the Ethereum Layer two. So it's not like Alipay is actually going to be involved in this and they're not going to port their 1.4 million monthly active users for payments. Not out of the great the gate. It looks like what joyve is is kind of like a real world assets blockchain initiative by Ant Digital, which is a financial company but using some pretty cool tech. So this is going to be ZK proof engine. It just goes to show these projects seem like they come out of nowhere, but here is like a mega tech company out of China. No radar, like under the radar, no hype. And I said I didn't even know, like I don't even know if they talked to anyone at the EF before launching it. And major companies just build on Ethereum and we find out about it later. Actually turned out not to be true. Apparently the EF was talking to them.

[David Hoffman]

Yeah, this happened in Asia that we just don't know about because we don't speak any of those languages.

[Ryan Sean Adams]

Exactly. So it's like, you know, the west kind of ignores Mandarin at some level anyway. Seems like it could be a big deal, but we'll have to see and it's all based on traction, what they decided to do with it. David, did you see the Ethereum phone, the Degen one? This was a unboxing from Jesse Pollock from base. Do you see this?

[David Hoffman]

I have not seen this.

[Ryan Sean Adams]

No. It's actually kind of cool. So you know, the Degen one was like this phone, it doesn't look like a traditional smartphone. Right. It's kind of like. No, it looks like something out of. I don't know, it looks like a Game Boy or something. Yeah, that's what I was thinking. But like, look at this. So this is Jesse unboxing it. It's kind of cool. Crypto native. It's got a laser.

[David Hoffman]

What do you do with the laser?

[Ryan Sean Adams]

It's got an entire app store. It's completely. It's got Uniswap, all integrated Pokemon on it. Look at some of these screens. XMTP Messenger. It's got Zora on it. It's actually cooler than I thought. I'm looking at this and I'm like, at $500, this might be something to go test out and try at least for like the Ethereum enthusiast and hobbyists.

[David Hoffman]

Deep enthusiasts. Yeah. I want to play Pokemon. Excuse me. That's what I want.

[Ryan Sean Adams]

It's not going to replace your phone though, right? That's the thing. It's got to be some sort of side companion type of thing for the Ethereum enthusiast. Cool thing is the entire operating system is open source, completely is built, hardware, everything by a three person T. Obviously they outsource the manufacturing, but like, pretty impressive. So, dude, those are going to be.

[David Hoffman]

A huge hit at DevConnect. I bet you. I see a handful of those at DevConnect.

[Ryan Sean Adams]

I bet you will. Yeah.

[David Hoffman]

Ryan. So you know the bitcoin strategic reserve that we now have that has like hundreds of thousands of bitcoin in it? Yes, we have. The United States has 127,000 more Bitcoin this week than it had last week. How did it acquire that much bitcoin? Where did that go?

[Ryan Sean Adams]

They didn't buy it. They did not buy it. They got it the way they got the rest of their bitcoin, which is asset forfeiture. They seized it. They seized it from criminals. So this is a report coming out of the justice department that the US seized 127,000 bitcoins. That's about 12 to 15 billion dollars worth of bitcoin from scammers, from pig butchering scammers. You remember the pig butchering thing, which is like the idea that you. You have to fatten up your victims, you become friends with them, you just like fatten up the pig for slaughter and then you like defraud them, then you take all their money. Because apparently there was a massive operation that's been going on for the past five or more years run by a guy named Chen Xi. He's a Chinese national who leads a group in Cambodia who's doing this. They used forced labor to actually carry out these scams. So people who, like, they had extortion over their trafficking victims. These were some of the scammers. They were actually forced into this. And they basically stole money from all sorts of Crypto investors and crypto users, you know, $127,000 worth of Bitcoin. So they've been charged with fraud. Apparently the main guy behind this, Chenzai, he faces up to 40 years in prison. They haven't found him yet, so he's somewhere out there still. But they do have the bitcoin. And what's interesting about this is people like Taylor Monahan have been doing some on chain sleuthing as far as how the US Government actually sees the bitcoin. And this is a tweet from her. She said it looks like maybe someone in the US Government cracked weak entropy wallets three years ahead of anyone else and kept quiet about it. Whether that's the US Government or the private industry partner or something else entirely. They beat open source security researchers. She's got a whole thread on this with all of the receipts and facts that you can get.

[David Hoffman]

Wait, that's a different story. And also way bigger.

[Sponsor/Ad Voice]

The government hacked wallets.

[David Hoffman]

Bitcoin was.

[Ryan Sean Adams]

So the government at the doj, like Justice Department is not going to tell you how they got 127,000 bitcoin. Right. They just say they seized it. But Taylor Monahan is doing some entree and she's seeing these addresses that she's calling weak entropy addresses. That means when they were set up, there was something like, with the way they generated the seed phrases, just with like, weak cryptography.

[David Hoffman]

Yeah, yeah, yeah, yeah.

[Ryan Sean Adams]

They used like, I don't know, something that wasn't some random number generator that kind of could be hacked or was susceptible to brute force. But then somebody in the US Government has some advanced, like weak entropy address cracking magic that allowed them to go like, yoink, 127,000 bitcoin. That's what Taylor is saying could have happened here, which is wild to me.

[David Hoffman]

I'm sorry, how does that connect to the pig butchering scandal?

[Ryan Sean Adams]

Oh, that's just how they seized 127,000 Bitcoin.

[David Hoffman]

Well, I thought, I thought they seized it because they cracked the wallets.

[Ryan Sean Adams]

Yeah, that's how they seized it. Exactly.

[David Hoffman]

And it just happened. The wallets happened to be owned by this scammer.

[Ryan Sean Adams]

Yeah, yeah. They're not going around and going and seizing all of the.

[David Hoffman]

So they identified that there's this scammer. They identified that he owned these wallets. And they're like, well, these wallets are weak, so we can steal them. They didn't arrest him.

[Ryan Sean Adams]

Oh, they're trying to arrest him too, but again, he's somewhere else relevant.

[David Hoffman]

No, they're Doing both. They just, they just went around and they like, okay, this bitcoin belongs to a scammer, therefore we can steal them by hacking the safe.

[Ryan Sean Adams]

That's what it looks like.

[David Hoffman]

That's what it looks. Crazy, dude.

[Sponsor/Ad Voice]

That is crazy.

[Ryan Sean Adams]

How do you seize. Think about it practically. How do you seize private keys?

[David Hoffman]

By arresting him and making him. At gunpoint.

[Ryan Sean Adams]

At gunpoint. Okay. I mean, there's like laws against this. I mean, does the government like actually wrench attack people, that kind of thing? Right. But anyway, but it looks like that's not the case. Taylor is saying on chain evidence, it looks like they used some brute force magic to go attack the weak entropy wallets and yoink the funds. This is some tech that the US government has that seems pretty advanced. More than what we thought they had, potentially.

[David Hoffman]

That is extremely ominous.

[Ryan Sean Adams]

Yeah, well, don't worry, I'm sure, like no one listening has weak entropy wallets.

[David Hoffman]

But yeah, because they all own eth.

[Ryan Sean Adams]

Look, man, governments can do scary stuff. Governments can do scary stuff. Let's leave it at that. Speaking of scary stuff governments are doing, looks like the Democrats are shooting down the market structure bill right now. Democrats in the Senate. So the Clarity act went through the House bipartisan support. We had a good Republican draft in the Senate of market structure bill, which is kind of a derivative of the Clarity Act. And then Democratic senators, they spit back something that basically makes defi illegal. David. Defi protocols, they would all be seen as digital asset intermediaries. Defi websites, they'd be financial brokers. Do you remember when Sam Bankman Fried was proposing basically this back in like 2022 before he crashed out?

[David Hoffman]

Yeah, he's. Did you see Sam Bankman Fried is. He has his appeal, this sentencing appeal this week. So he hopefully he's gonna like appeal his 25 million or 25 million 25 year sentence. And his claim is that it was the hostile Biden administration, the hostile Democrat administration, that is the reason why he got such a terrible sentencing. Never mind that he was the largest donator to Joseph Biden.

[Ryan Sean Adams]

Not only that, I've seen stories where he's basically like, there was an interviewer, went to prison, got his side of the story. Sam Bankman Fried was saying, I did nothing wrong. If you look at the bankruptcy, there shouldn't even have been a bankruptcy. All the creditors were made whole. Okay. There was never any missing funds. I think. No, it's not true. Do not let him rewrite history. He was completely. He was stealing customer funds.

[David Hoffman]

That he was. He was stealing customer funds but then he made some banger investments, dude. He invested into the Anthropic seed round.

[Ryan Sean Adams]

Yes, but you can't steal customer funds. You're totally right.

[David Hoffman]

You're totally right.

[Ryan Sean Adams]

Risky assets. And then hope that pays off. And you know what? Sam Bankman, he wouldn't have stopped there had he gotten away with this. The dude would have just done more and more in risk. He's trying to rewrite history. The money was not there. He stole customer deposits and he invested in them just because he invested in Anthropic and it was like a hundred and.

[David Hoffman]

And Robinhood at like $9 and now is at 150. Like, he actually made a fuck ton of money, dude.

[Ryan Sean Adams]

So he should have been a freaking vc. He shouldn't have been running a custodial crypto exchange.

[David Hoffman]

You're totally right. Anyway, arguing with that, he needs to.

[Ryan Sean Adams]

Stay in jail and Trump needs to not pardon him. I'm going to be super pissed. And anyway, end of rant, we're gonna.

[David Hoffman]

And anyone who glorifies Sam Bankman fried on Twitter is. I'm gonna bonk them.

[Ryan Sean Adams]

You're gonna shun them.

[David Hoffman]

Bonk.

[Ryan Sean Adams]

Bonk them. And just like, okay.

[David Hoffman]

Hit him on the head with a bat. I don't know. From my desktop. You really made that weak. Or maybe that was me.

[Ryan Sean Adams]

I don't know. Whatever.

[David Hoffman]

We'll bonk, we'll bonk.

[Ryan Sean Adams]

People gotta end with this. Of course. You know, none of this has been legal advice or crypto advice or financial advice. Certainly not this week. We've been wrong. You could lose what you put in. We're headed west. This is the frontier. It's not for everyone, but we're glad you're with us on the bankless journey. Thanks a lot.

[David Hoffman]

So I got 14 days to turn downtober into uptober. 14 days.

[Ryan Sean Adams]

You had to say it. Yeah.