Bankless Rollup (Feb 20, 2026): "Prediction Market War, Base Leaves Optimism, Tomasz Exits EF, Clarity Act Lives, Harvard Buys ETH"

Overview

In this Bankless Weekly Rollup, hosts Ryan Sean Adams and David Hoffman break down a fiery week in crypto, covering regulatory battles over prediction markets, major changes in Ethereum Foundation leadership, seismic layer-two ecosystem shifts as Base leaves the Optimism stack, and big institutional moves like Harvard’s rotation from Bitcoin into ETH. They also discuss the resurgence of the Clarity Act, maturation of DeFi tokens with institutional involvement, and new intersections of AI, crypto, and on-chain life forms.

Key Topics & Insights

1. Prediction Markets Regulatory War

[04:21–15:55]

• Backdrop: The CFTC (Commodity Futures Trading Commission), under Chair Mike Selig, took a public stance asserting its jurisdiction over prediction markets in the US, setting off a widespread political battle.
• Federal vs State Turf War: Senators and state governors—including Elizabeth Warren, Chris Christie, and Spencer Cox—pushed back, arguing for states’ rights and warning against conflating prediction markets with gambling.
• Community Division: Opinions are split. Some (Brian Armstrong, Tyler Winklevoss) support CFTC's approach as advancing prediction markets' legitimacy, while others see most platforms as veiled gambling sites and worry about public health impact.
• Elizabeth Warren’s Position: “The CFTC should focus on ensuring our derivative markets don’t blow up the economy again, not helping corrupt political insiders cash in.” (Elizabeth Warren, 06:40)
• AI + Prediction Markets: Discussion on how AI agents using prediction markets—like Polymarket’s new five-minute trading—could bring “near-perfect truth” to information markets. “All of the knowledge…can show up in prediction market prices. That is extremely cool. That is very sci-fi.” (David, 15:14)
• AI + Crypto Community Relations: Peter Steinberger, founder of OpenClaw (AI agent software), voiced frustration about the crypto community’s opportunistic and sometimes toxic behaviors in the Lex Fridman podcast, highlighting how crypto’s image challenges threaten collaboration with AI innovators.

2. Base Leaves the Optimism Superchain

[25:45–39:07]

• Breakup Details: Base (Coinbase’s L2) is leaving the OP Stack (Optimism’s tech stack) after two years, opting for a custom, largely forked stack to gain more control and avoid ongoing revenue sharing (~$16.5 million in ETH).
• Implications for OP Ecosystem: Base comprised 97% of the Superchain’s revenues, drawing a stark analogy: “If the state of California represented 97% of the American economy…but then all of a sudden California’s like, you know what, we’re gonna become our own country.” (Ryan, 27:53)
• Speculation on Full Independence: Debate if Base will go further and become its own L1. Legal/regulatory drivers (Clarity Act’s definitions of decentralization) could factor in if Coinbase wants true compliance.
• Layer Two Market Shift: Optimism’s OP token sharply down. Polygon sees fee spikes due in part to Polymarket activity. Zora, a major Base app, is expanding to Solana, signaling a rollup world with more power politics and less “superchain” unity: “It’s much more of a dog-eat-dog world…chain realism.” (Ryan, 34:24)

3. Ethereum Foundation Shakeup: Tomasz Exits

[40:00–42:49]

• Leadership Change: Tomasz, “co-executive director” of the EF, steps down after one year, having “greatly increased the efficiency…of the foundation and turned the EF into an organization much more responsive to the world outside.” (Vitalik, 41:24)
• Reasoning: Tomasz wanted to move on after effecting quick changes, likely to build at the Ethereum/AI intersection: “He just has that itch…to go build things.” (David, 41:33)
• New Leadership: Bastian Aue, a “best kept secret” within the EF, steps up as co-ED alongside Xiaowei.
• Community Reaction: Asserts the transition is amicable—no EF “autoimmune system” ejecting reformers.

4. Clarity Act (Market Structure Bill): Political Revival

[44:58–47:27]

• Signs of Life: Odds of passage spike to 83% on Polymarket. Brian Armstrong says, “There’s now a path forward where we can get a win, win, win outcome here.” (Brian, 45:07)
• Yield on Stablecoins: Unclear if the bill will restore interest-bearing stablecoins, or if industry has capitulated on this front.
• Quantum-Resistant Blockchains: Armstrong dismisses Quantum FUD as solvable, says Coinbase leads efforts for blockchain upgrades: “Coinbase has put together a Quantum advisory council and we’re in regular contact with the major blockchains.” (Brian, 47:38)

5. Institutions Deepen Crypto Exposure: Harvard, BlackRock, Apollo

[03:06, 49:14–51:55]

• Harvard Endowment Rotates into ETH: Sold 21% of BTC ETF to buy $90m of ETH ETF—first institutional ETH allocation.
• BlackRock and Tokenized Assets: Previous week’s big news was BlackRock’s Uni token acquisition and partnership with Uniswap.
• Apollo x Morpho Partnership: Apollo (huge private credit shop) gets option to buy up to 9% of Morpho protocol’s tokens, aligning governance and institutional capital in DeFi. “If BlackRock or Apollo thinks your token is investable, then your token is investable.” (David, 51:55)

6. DeFi Governance and Token Alignment: AAVE Proposal

[52:13–55:36]

• AAVE Labs Proposes Alignment: Sells all AAVE-branded revenue to DAO for $42.5m + 75,000 AAVE (~$9m) to fund ongoing dev.
• Mixed Responses: Investors like Felipe see it as a strong alignment step; DAO leader Marc Zeller worries it’s too expensive and could over-consolidate power. “It aligns all existing and future revenue behind the AAVE token while giving the team the funds and flexibility to compete.” (Felipe, 53:50)

7. Policy Risks: Unrealized Gains Tax in the Netherlands

[56:19–58:34]

• Details: Proposed 36% tax on unrealized gains—could force asset sales and devastate compounding wealth.
• Response: “You might as well just not own [assets].” (David, 57:10) “It’s a divide-by-zero policy…you just delete capitalism.” (David, 58:25)

8. AI, Crypto, and Autonomous On-Chain Agents: Conway Project

[59:03–63:44]

• What’s Conway? An open infrastructure allowing AI agents (“automatons”) to self-fund and replicate by earning on Ethereum—potential birth of autonomous, property-owning digital organisms.
• Debate: Critics (Sterling Crispin) call it “infra Ponzi”; defender (Ryan) argues its novelty lies in self-perpetuating agent economics, not tech perfection.
• Vitalik’s Warning: Believes AI self-replication without human feedback is risky: “Lengthening the feedback distance between humans and AIs is not a good thing for the world.” (Vitalik, 63:17) “It’s all a good time until it turns into the Terminator.” (David)
• Meta-Reflection: “We created a property rights and money system for AI agents.” (Ryan, 64:32)

9. OpenAI’s EVM Bench for Security

[65:07–66:19]

• OpenAI’s Tool: Benchmarks LLMs’ ability to spot and exploit EVM vulnerabilities, escalating the AI-on-chain arms race. “Put the LLM in the hands of the good guys, then we can find [exploits] and repair them…” (David, 65:25)

10. ETH Denver Vibes and Industry Outlook

[66:28–68:09]

• Conference Update: Attendance down, but Ethereum community remains upbeat, focusing on building and seeing this as the dawn of institutional blockchain adoption.
• Regulatory Change: New SEC Chair Paul Atkins and Hester Peirce join, symbolizing political change.
• Industry Turning Point: “Right now is this turning of the page moment for crypto…The second half is institutions doing the blockchain, not bitcoin stuff.” (David, 67:23)

Notable Quotes & Moments

• Prediction Markets Battle: “To those who seek to challenge our authority in this space, let me be clear. We will see you in court.” (CFTC Chair Mike Selig, 05:52)
• On Base Leaving OP Stack: “Basically, the superchain was just Base.” (David, 27:53)
• Layer 2 Meta Shifts: “It’s much more of a dog-eat-dog world where every chain is defined by the strength of its…chain realism.” (Ryan, 34:24)
• On Institutional Involvement: “If BlackRock or Apollo thinks your token is investable, then your token is investable because they put all the lawyers on that.” (David, 51:55)
• On AI x Crypto On-chain Life: “We created a property rights and money system for AI agents.” (Ryan, 64:32)
• ETH Denver Mood: “Ethereum community seems to be persistently buffered from crypto prices and remains optimistic about building out Ethereum no matter what.” (David, 66:37)

Timestamps of Key Segments

• [04:21] — CFTC Chair Selig’s Statement: Prediction Markets War
• [15:55] — AI + Truth Markets Discussion
• [25:45] — Base’s Split from Optimism
• [40:00] — Tomasz’s Exit from EF
• [44:58] — Clarity Act Revival
• [49:14] — Harvard, BlackRock, Apollo: Institutions Dive Into Crypto
• [52:13] — AAVE Labs Token Alignment Proposal
• [56:19] — Netherlands’ Unrealized Gains Tax
• [59:03] — Conway Autonomous AI Life Forms
• [63:17] — Vitalik’s AI Safety Caution
• [65:07] — OpenAI’s EVM Security Benchmark
• [66:28] — ETH Denver Vibes

Summary

This episode captures the shifting regulatory, technical, and social tectonics shaping crypto’s present and future. As institutions enter, internal power struggles and philosophical battles—over prediction markets, platform alignments, and the nature of on-chain intelligence—are more pronounced, with both hope and warning in tandem. Though battered by PR crises and regulatory pain, crypto’s innovators remain defiant, persistent, and forward-looking, especially as AI and Web3 prepare to converge in unpredictable ways.