Ryan Sean Adams (2:20)

like democratize Validation as well. Right. Rather than 32e. Just 4eth and you can spin up and run your own validator. David, let's check in on prices really quick. Bitcoin price on the week we up, Are we down on the seven day?

David Hoffman (2:32)

It's not great, $0.9k, but hey, at least we're green. Ethereum 1940. 1940 is a price 1.7% up on the week. But still, anything, anything below 3000 is bad actually. And we are below 2.

Ryan Sean Adams (2:50)

1940 does not sound like an ETH price. It sounds like a year in my history books.

David Hoffman (2:54)

Yeah, I remember when ETH price was passing my birth year the first time. But anytime that ETH price is a recognizable year is too low.

Ryan Sean Adams (3:06)

Yeah, it's far too low. We need ETH to be in the future, but maybe Harvard is going to get us there. David. Okay, because this was interesting on the week. Harvard, they have a big endowment. This is some of the institutional capital flowing around in crypto. They just sold some of their bitcoin and purchase some ether for the first time in the form of course of an Ethereum ETF. So they sold 21% of their Bitcoin ETF and rotated that back into Ethereum ETF. This is their first ETH purchase, about $90 million. That's doing a switch row playing this ratio.

David Hoffman (3:39)

Is this a quantum trade?

Ryan Sean Adams (3:41)

Ah, interesting.

David Hoffman (3:42)

I want to quantum fud.

Ryan Sean Adams (3:44)

Quantum fud for quantum fud.

David Hoffman (3:46)

Bitcoin, which is sounds like an incredible movie out of the Star wars universe. Quantum fud or. Yeah, yeah, I mean it seems like it could be. I mean I bet Nick Carter would

Ryan Sean Adams (3:58)

say would claim as such.

David Hoffman (3:59)

I bet Nick Carter would say I do kind of have this hot take that like, you know, ETH is going to get walloped alongside of bitcoin because bitcoin is going to take so long to figure out its quantum shenanigans. Yeah. But on the other side of that quantum might be the best thing to happen to Ethereum in a long time.

Ryan Sean Adams (4:15)

It will rise like a phoenix from the ashes. Huh. Is that what's happening now?

David Hoffman (4:20)

I think so. I think so.

Ryan Sean Adams (4:21)

The total, if you're curious, the total Harvard portfolio is about 1% crypto right now. So they still have a ways they could grow that on both the bitcoin and ether side and maybe they could move down market as well. David, let's talk about this big fight that we were teasing in the intro here. The fight over prediction markets. And maybe we should start with this clip from the new CFTC Chair and past Bankless podcast guest.

David Hoffman (4:47)

More notably, past Bankless podcast guest Mike Selig here.

Ryan Sean Adams (4:50)

Here he is. Here's what he had to say.

Mike Selig (4:52)

CFTC Chairman Mike Selig here. Over the past year, American prediction markets have been hit with an onslaught of state led litigation. In response, the CFTC has today filed a friend of the court brief to defend its exclusive jurisdiction over these derivative markets. Prediction markets aren't new. The CFTC has regulated these markets for over two decades. They provide useful functions for society by allowing everyday Americans to hedge commercial risks like increases in temperature, energy, price spikes. They also serve as an important check on our news media and our information streams. Today, the CFTC is taking an important step to ensure that these markets have a place here in America and have the integrity and resilience and vibrancy that our derivatives markets deserve. To those who seek to challenge our authority in this space, let me be clear. We will see you in court.

Ryan Sean Adams (6:02)

Wow, what an ending. I'll see you in court.

David Hoffman (6:05)

Banger. Banger ending. Not everyone liked this statement out of the CFTC Commissioner. The new CFTC Chair got us just a wave of very passionate response from Chris Chrissy. Haven't heard of Chris Chrissy talking in about anything for a while but he came out of the woodwork saying violating the rights of states who have been regulating sports betting and the rights of states who oppose sports betting is not the purview of another Alphabet soup federal agency. Yes, I'm signing up for the rights of all 50 states. Proud of it. So Chris Christie joining the fight against the Feds in favor of the states. Elizabeth Warren tweeting out Trump's CFTC is trying to strip states authority to regulate gambling within their borders and protect Americans from getting ripped off. A classic Liz Warren line. The CFTC should focus on ensuring our derivative markets don't blow up the economy again, not helping corrupt political insiders cash in. Just really throw in shade left and right. Utah Governor Spencer J. Cox just call saying that he's not, that Mike Zellig's not being honest saying I appreciate you attempting to say this with a straight face, but I don't remember the CFTC having authority over the derivative market of LeBron James rebounds. Illinois Representative Sean Casson says, you know the Chairman is remiss to not mention the sports betting accounts are 90% of the trading volumes on these platforms. Congress never intended for the CFTC to oversee what is effectively a nationwide sports betting platform, nor to interfere with state and tribal government's authority to regulate gambling. So basically the Negative response all saying that prediction markets are not legitimate financial platforms.

Ryan Sean Adams (7:43)

They are just gambling.

David Hoffman (7:45)

Just, they're just gambling and it's just sports volumes. However, of course there was a plenty of risk positive response as well. Brian Armstrong came in and said, couldn't be more clear, CFTC has exclusive jurisdiction over prediction markets in the US Senator Bill Hagerty and also Senator Dave McCormick from Pennsylvania both said gave the thumbs up on the CFTC authority. Tyler Winklevoss joined into the conversation as well. Notably Brian and Tyler want to have prediction markets in their own platforms that do have prediction markets in their own platforms. So they aren't, they have a stake in the matter. And then there are the takes that prediction markets are just gambling platforms. Kyla Scanlon, you know, friend of the pod, have had, has had her on, we've had her on a handful of times. Doesn't say anything, just retweets a graph of the categories of volumes being traded on call sheet. It is dominantly sports contracts as opposed to other, other categories. Not true for polymarket, however, we're going to talk about that in a second. Augustus Dirico I'm unsure who this is, but they got a pretty viral tweet saying Brian, you're a legend of the game and I admire you. Retweeting Brian Armstro Strong suite. However, nobody cares if technically a bastardized commission designed to regulate crop futures has the authority to greenlight hyper efficient, predatory, frivolous online casinos. Prediction markets as they exist are evil. And I think this kind of sums up a lot of people's sentiments towards prediction markets.

Ryan Sean Adams (9:11)

Really?

David Hoffman (9:12)

Yeah, I mean the, the rise of sports gambling in the last few years has been significant and it is like it's a common consensus take that sports gambling platforms like DraftKings and these platforms are a detriment to public health. I don't know, I don't know if that's my take, but I think that is the consensus take amongst.

Ryan Sean Adams (9:36)

Yeah, but okay, but here's the thing. All of the negative responses weren't saying like we should get rid of sport like sports betting or you know, sports contract trading. They were basically, it was more like a turf war. They're basically saying like the CFTC shouldn't regulate that. And also I felt like all the negative takes were ignoring the positive things that Mike Selig was talking about. Right. Which is like, you know, the US leading on this, keeping media in check. These are information markets and that's all true too. So it's all being pushed, smushed together into one monolithic thing. And it seems to me more of a turf war than anything else.

David Hoffman (10:14)

Yeah, yeah, I agree with that. It also ignores the fact that like prediction market platforms are a market rather than a book model.

Ryan Sean Adams (10:24)

That's right. Which is already an improvement.

David Hoffman (10:27)

Which is fundamentally a huge improvement. And it does change the legal nature of what prediction markets are. There are of course, people who came into the conversation saying that, you know, prediction markets are true and novel financial instruments that provide value to the world. There's this study that came out that Kalshi was more accurate on predicting Fed fund futures than any other, any other platform or any other prediction. Nick Tomaino, which was the tweet that I think should be the most notable by people who think that these are just prediction market or sports gambling platforms. Nick tweeted out how, you know, the predominant, most highest volume markets, poly markets, are all either elections, Federal Reserve questions or, you know, geopolitics.

Ryan Sean Adams (11:13)

Sure. But a lot of people don't even want those. Do you remember, I mean, obviously it was just over a year ago when Shane Copeland, the, the CEO of polymarket was just like raided by the Feds. And do you recall previous to that, letters that senators like Elizabeth Warren wrote about pro prohibiting political markets on prediction markets? Right. They don't like the other categories either, is my point. I don't think they like prediction markets or maybe just like markets as a category. It goes back to the conversation we've been having on Bankless about this controversy is if you like markets and you sort of respect them, then you see a place for regulated prediction markets that are free and fair and open, permissionless to everyone. If you don't like markets, you see all of this as it's bad and you know, intermixed with that, there's a whole cloud of incentives, I think, gumming up the works.

David Hoffman (12:07)

Yeah. A lot of the politicians, like Elizabeth Warren especially, always has this bend towards authoritarian control. At least that's how I always interpret a lot of her tweets. And so it makes sense that she doesn't feel comfortable with prediction markets about elections and she doesn't talk about the value of a check on our media institutions because media institutions and government can frequently go hand in hand. And she doesn't want that to be out of the control. Yeah, out of control. She doesn't want, she doesn't want that out of the box.

Ryan Sean Adams (12:37)

A little too, A little too bottom up.

David Hoffman (12:40)

Yeah. There's one nuance, an unfortunate nuance that really conflates and makes this difficult to argue in Capitol Hill. Which is that Donald Trump Jr. And a lot of the Trump family are either advisors in or have meaningful investments in both Kalshi and polymarket. And so the newly appointed Trump CFTC Commissioner, Mike Selig is trying to regulate these prediction markets in the most expansive way possible, allowing these things to become the best versions of themselves. And the claims of corruption of the Trump family and their control over the governance of the United States is like, well, now they're also exposed, they have exposure in prediction markets. And so that really makes it difficult to argue about the merits of these things when there is also the, the whole, like, Trump involvement in the, like, the business side of things.

Ryan Sean Adams (13:33)

Yeah, it's, yeah, it's, it's a lot to untangle here. One thing that does seem pretty clear about the future though, is prediction markets. And AI is product market fit. Yeah, sure, we're starting to see that. So this is an account on Twitter poly market history. Cloudbot started printing $40,000 in a day. Just look at this. I think this is about Polymarket's new sort of 5 minute Bitcoin and crypto asset trading feature that they've added. And when you set a cloud bot loose on this thing, if it's smart and if it makes intelligent trades, it can actually generate funds directly to a crypto wallet using these prediction markets and using truth markets. And you got to think that this is just the start of, of AI plus crypto. In fact, you tweeted something out, David, where you think AI plus prediction markets and arbitrageurs and market makers mean that we will essentially have something close to perfect truth. Maybe that's a little bit of a hyperbole. I mean, perfect truth, what is that? But it is for these types of events. It's the closest you can get. Right. A market stake weighted outcome that has incentivized actors. I mean, that does lead to incredible information for the world. It's like much more accurate than most media out there.

David Hoffman (14:54)

Yeah. I mean, what is AI fundamentally is just a pattern recognition tool. And as AI models are getting more and more capable, they can ingest more information, they can connect more dots, they can do it faster and more comprehensively than any other tool that we've ever had before. And the crypto and prediction market side of things give these AI models the agency they need to have to actually impart change upon the world in the prediction market form factor. And so all of the knowledge, what do we know about prices as like a core primitive of markets? Prices are information AI with arbitraging and market making allow the knowledge of the world that they have on the Internet to show up in prediction market prices. And that is extremely cool. That is very sci fi. And it is a new media institution that has nothing to do with journalists or written text or anything. And that is a value to society that is worth preserving.

Ryan Sean Adams (15:55)

I completely agree. Yeah, it's a new consensus like truth finding mechanism, isn't it? Although there is also some pushback in AI corner. So we just mentioned OpenClaw and using these prediction markets, but I don't know if you caught this, David. So there's Lex Friedman conversation. I haven't listened the full interview, but I did listen to this part. The founder of OpenClaw, his name is Peter Steinberger. Of course, OpenClaw is this open source, you know, personal agent type of project that has spread like wildfire. He actually talked about crypto in his interview with Lex Friedman and he said this about crypto. I didn't know that they're not just good at harassment, they are also really good at using scripts and tools. I underestimated these people. Honestly. I was this close to just deleting my project. He said basically he was talking about all of the harassment that he felt he received from, I'll put this in air quotes. The crypto community that were trying to front run him anytime he would make a name change to the Open Claw project, they were like registering domains and spinning up meme coins and trying to get him to claim them, spamming the discord, just out and out kind of harassing him or front running all of the things that he was trying to do. And it was deeply frustrating to Peter and he kind of pointed the blame at crypto for this speculative fervor, trying to tokenize everything for these shenanigans. And you understand kind of why he feels that way at some level. But like, I mean, is that really crypto? Like, I guess there's an element of crypto there. There's sort of a, I mean like what, what do you think of that? What do you, what did you think when you heard his criticism?

David Hoffman (17:40)

Yeah, it. And listening to the Lex podcast, it went on the, the section about the crypto harassment. It was like 15 minutes. But then it would also like reoccur, you know, every 15 minutes for a while. They like. And then, and then the crypto people came in and effed it up again. And so it like it was inescapable listening to that podcast. And I think it is just a sign of what rest of society thinks about crypto. Like we've talked about this before on recent episodes. Crypto PR is the worst that it's ever been by far, not even close with like the Donald Trump grift campaigns and just like stuff like this going out on Lex Friedman. We have never been in a deeper hole as an industry as.

Ryan Sean Adams (18:21)

Do you think it's fair though? So here's a take from someone in crypto. We really have attracted some of the worst people to crypto. That completely took over our narrative. It's all toxic, extractive, greedy or straight up scamming to outsiders. Okay. It's like I'm in crypto, I'm not involved in any of that. Like so are you at some level

David Hoffman (18:37)

are we the minority?

Ryan Sean Adams (18:39)

I don't know. I mean can you blame. I mean who is doing this? Like bot farms, like sc. We have no idea who's actually doing this front running type of behavior.

David Hoffman (18:51)

It's probably a smaller number of people who are very loud and very aggressive because very organized and very organized and understand the value of being on the forefront of something because they can meme coin it and capture the value that way.

Ryan Sean Adams (19:05)

And they are also simple attacking it. So you don't know how many like, well like which humans actually underlie that. But, but, but, but maybe to the point there is kind of a deeper. Do you think there's a deeper cultural rot here? I guess that's what this, you know, this poster is saying. We've attracted the worst people. You know, we need to look at ourselves in the mirror type of thing.

David Hoffman (19:24)

I mean I, it's not like we can like look back on crypto and say that we have the most above board behavior in the industry. It's. Yeah, it's, it's not, it's not great.

Ryan Sean Adams (19:39)

Here's the shame from my perspective. Open claw because it's open source because it's basically the ability to run self sovereign AI. You can run it locally, you can wire it up to models, you can set it free with command line interfaces. Like it is tailor fit for a crypto world of smart contracts and on chain transactions. Right. It's just like perfect product market fit. It really is. And to have the founder of that project just have a visceral reaction to crypto because you know a whole bunch of people are trying to front run him and you know, do the specular thing and do the meme coin grift, rug pull type thing. It just kind of sucks. But I do think, I do think no matter what happens, I think that AI, AI developers and Some of these AI agents will come full circle to crypto, start building on it, realize that it is just incredibly useful for property rights and you know, agent agent transactions, that it will be inevitable. It's just the PR that we have is kind of a barrier to that right now.

David Hoffman (20:41)

Yeah, I saw, I saw a take that was once again surfacing the take of just like, why can't agents use credit cards? You know, and agents can use credit cards, but you know what they can't do? They cannot receive credit card transactions. And so if they want to receive, if they want to sell their service to another agent, they need to use crypto because they will not be able to sign up for a merchant account and have their own, like, point of sale.

Ryan Sean Adams (21:07)

It's not, it is that and it's not just that. So there's another point in the interview with Peter on Lex that he talks about how, why he did everything with Open Claw and cli, like command line interface, right. Which is just basically deep in the operating system. And he lets it, lets it free, rather than mcp, which is kind of like almost like an API type tool. And it's because when you are at the command line, you are like, you have the power tools, you let the AI, it's completely unleashed in sort of, you know, the deepest way possible. And that's what you get with crypto. You can't get that with a stripe API. Okay. Like you can't get the level of integration.

David Hoffman (21:44)

It's permissionless.

Ryan Sean Adams (21:45)

It's permissionless and it's completely AI native. And you won't be able to get that with any kind of API or stripeit or fancy credit card.

David Hoffman (21:53)

Will never ever f up a copy and pasting of an address. They will never do that. They will always send successful transactions.

Ryan Sean Adams (22:00)

Yeah, I will prefer crypto and I think we'll see that before long. We got a lot more to talk about. Base leaving optimism. Why? And are they setting up to leave Ethereum too?

David Hoffman (22:11)

No, don't say it.

Ryan Sean Adams (22:12)

Also, one year in, Dimash is handing the torch to a new executive director, co executive director at the Ethereum Foundation. Who is this person and will the EF reforms that he put in, will they persist or will the EF backslide? We'll talk about all that and more. But before we do, we want to thank the sponsors that made this possible.

David Hoffman (22:29)

Galaxy operates where digital assets and next generation infrastructure come together, serving institutions end to end. On the market side, Galaxy is a leading institutional platform providing access to spot derivatives, structured products, defi lending, investment banking. And financing. With more than 1600 trading counterparties, Galaxy helps institutions navigate every phase of the market cycle. The platform also supports long term allocators through actively managed strategies and institutional grade staking and blockchain infrastructure. That scale is real. Galaxy has over $12 billion in assets on the platform and averaged a $1.8 billion loan book in late 2025, reflecting deep trust across the ecosystem. Beyond digital assets, Galaxy is also building infrastructure for an AI powered future. Its Helios Data center campus is purpose built for AI and high performance computing with more than 1.6 gigawatts of approved power capacity making it one of the largest sites of its kind. From global markets to AI ready data centers, Galaxy is serving the digital asset ecosystem and to end Explore galaxy@galaxy.com bankless or click the link in the show notes Euphoria brings one Tap trading to the palm of your hand. Built on Mega Eth, Euphoria takes real time price charts and projects it over a grid of squares. You tap the squares that you think the price will enter in just 5 to 30 seconds in the future. If the price goes into that quadrant, you can pocket anywhere between 2 and 100x your trade. No other application helps you trade faster and with more leverage on market driving events like FOMC meetings, presidential speeches or global macro events. Thanks to Mega ETH's real time blockchain, Euphoria is the way to get real time price interactions with the market. On Euphoria, you'll be able to compete with friends using Euphoria's real time social trading experience, allowing you to go head to head with your friends. A great party trick. If you project the app on a tv, it'll be like the Mario Party of derivatives to trade on Euphoria, people can deposit stablecoins from any chain or do direct fiat transfers and everything gets converted into Mega Eats native stablecoin USDM in the background. Check it out at Euphoria Finance and download the app or or find it in Telegram as a mini app. What if you could trade gold, Forex and global markets with the same tools and speed that you use for crypto? That's exactly what Bitget TradFi unlocks. After strong beta demand, including over $100 million in single day gold trading volume, Bitget Tradfi is now live for all users inside of your existing Bitget account. You can trade 79 instruments across Forex, precious metals, indices and commodities all settled directly in usdt. No platform switching and no fiat conversions. This is Bitget's universal exchan exchange vision in action. Crypto and traditional finance side by side. You get deep liquidity, low slippage and leverage up to 500x letting you apply crypto strategies to macro markets. New to Tradfi Start with gold. The Gold USD pair is liquid macro driven and a familiar natural bridge between crypto and traditional markets. Try trading gold on bitget now@bitget.com. click the link in the show notes for more information. This is not financial advice. Back In February of 2023 base announced their base chain, their op stack layer 2 and it was a huge win for Ethereum because Coinbase building a chain on ethereum, building a layer 2 on Ethereum was very validating of the layer 2 roadmap and it was also very validating for the op stack tech stack which then proliferated across the ecosystem. Everyone started building a chain on the op stack.

Ryan Sean Adams (25:45)

It's safe to say it set like a meta for crypto, wouldn't you say?

David Hoffman (25:48)

It was set a very healthy meta for crypto And a lot of people trend followed this. They're like oh we're going to do our op stack chain too. Today, this, this week, February 18th, base has announced they are leaving the op stack tech stack for their own native unified stack for base chain. Why are they doing this? What they claimed there's a, there's, there's what they said they're doing and why they said they're doing it and then there's, you know, the other reasons that we can speculate on the claimed reasons is that they want more control over their ability to ship upgrades to their own tech stack. There were other things in the op stack that they didn't really care about, they weren't really concerned with. So whatever they kind of shut then they just want, you know, the autonomy, they just want the control and that was what their, their broad strokes of their objectives were. What wasn't stated but perhaps very likely is that being a part of the op stack super chain which they agreed to when they announced the op stock chain they agreed to rev sharing. Two years of rev sharing with the super chain where they had to give I think 10 or 15% of their chain fees to the optimism Collective over those two years, that is $16.5 million of ether at today's price, $42 million of ether collectively had they sold the ether in the moment that they collected it. So because eth price is down, the revenue went down. And so that contract, that phase of the contract is up and so they are leaving the super chain and leaving the op stack tech stack to potentially just not give away these superchain fees,

Ryan Sean Adams (27:19)

but they're kind of forking it too. Right. They're taking the op stack technology and a lot of that's open source and they're just forcing their own version of that that's going to be more supported by Base and not necessarily compatible with the op force moving forward.

David Hoffman (27:33)

Correct. As I understand it, the base tech stack is like 99% recycled code from the op tech stack.

Ryan Sean Adams (27:40)

Okay, okay. But presumably it's going to be a little bit different. And so all of that revenue that they were paying OP in the super chain stack, that was 97% of total super chain revenue as well.

David Hoffman (27:53)

Super chain revenue? Yeah. Basically the super chain was just base. And it's like if the state of California represented 97 of the American economy, but they also were paying for everyone else's like welfare. And then all of a sudden California's like, you know what?

Ryan Sean Adams (28:12)

We're gonna be our own country.

David Hoffman (28:13)

We're gonna, we're gonna become our own country. We're done here.

Ryan Sean Adams (28:16)

Yeah. Now, now base is still a layer two. And you know, they talked about that, you know, so they didn't say that they were leaving the layer 2 ecosystem. They didn't even imply that. Or did they? Some people are interpreting that there's something here that might imply in the future. Base is carving out some space for them to become their own, say, Tempo style EVM layer one. One of them is an argument from Gabe Shapiro, crypto lawyer. What does he say?

David Hoffman (28:48)

Yeah, he's saying that there are a few things in the announcement in the blog post that really emphasize what would be in a layer one, mainly client diversity and decentralizing the sequencer. These are. While you can do all of these things as a layer two, everyone kind of agrees that these are just like layer one ish things to do, especially decentralizing the sequencer. Uh, and so Gabe tweets out, am I reading this blog wrong? As base signaling it's unlikely to become a stage two roll up and is more likely to become layer one, like creating its own decentralization and economic security rather than needing to borrow Ethereums. Uh, Alex Thorne had a follow up take that is pretty similar to this. Uh, he thinks, he speculates that Coinbase might have decided that BAS isn't decentralized enough to avoid registration as an exchange for tokenized stocks. So Base, because it's operated by coinbase, it's single SQL sequencer layer 2 to centralized to become a decentralized Exchange for stocks.

Ryan Sean Adams (29:49)

And so specifically in the Clarity Act.

David Hoffman (29:51)

Right, in the Clarity act, yeah. And so the Clarity act defines a non decentralized finance trading protocol. It defines what that is and Coinbase. He speculates that Coinbase thinks that like base needs to be more decentralized in order to not fit that category.

Ryan Sean Adams (30:05)

And my understanding is they could get there by decentralizing their, their sequencer rather than that being base run. But at the point that you decentralize your sequencer, right. The question is like, well, you have to start incenting other sequencers outside of Coinbase with some sort of token, you know, staking and then maybe you just do the whole consensus layer as well. I think that's some of the logic here, which is like, I mean, what's the point really in being a stage one rollup at that point you may as well just decentralize everything and like so called decentralize everything in air quotes, which means like run your own consensus layer and do kind of the, the Tempo playbook. He continues, he said, I wonder what Coinbase will do here. Either go with the Kraken approach and Kraken is pursuing based roll ups for Inc. Okay, so that means Basically Ethereum layer 1 will be the decentralized sequencer layer and that passes the all the tests for decentralization. Or they could roll their own layer one and create a validator set and go the tempo Canton, you know, circle arc approach. So that's what the speculation here is. Now I will say that everybody within base, if you ask them, including Jesse, will be like, no, we're 100% Ethereum. We're continuing to do this layer two. So a lot of this is speculation. But I don't know, I mean you could see it happening I suppose there.

David Hoffman (31:27)

It's not an incoherent thought process to come to that conclusion. Like all the kind of puzzle pieces are there optimism, the op sentiment down 20%. It kind of makes sense from like the OP token. You mean the OP token. Yeah.

Ryan Sean Adams (31:41)

Huh.

David Hoffman (31:42)

Bill, let's see. What's a fully diluted valuation? $600 million FDV in OP down. Down from incredible highs. From actually brutal.

Ryan Sean Adams (31:51)

Brutal. So the highs that we hit in March 2024 for op optimism, 4.5 billion. Okay. FDV. Now it's 600 million FDV. This has also taken a toll on other layer twos as well. Right. Which arbitrum, for instance, trading at 600 billion.

David Hoffman (32:13)

No, 1 billion FTV.

Ryan Sean Adams (32:14)

Okay, yeah, 1 billion FTV. And so you have to wonder how does this affect Layer twos and their valuation? Will they need to start generating fees on their own? It's actually notable, I know, not technically kind of a layer two in the, you know, the L2B sense of things, but Polygon is an EVM, kind of a sidechain based approach. And just this week they started generating more fees than Ethereum. Okay. Including actually the cost to use Polygon was higher on a per transaction basis than Ethereum.

David Hoffman (32:52)

Is that anything to do with all the bots trading on Polymarket, which is on Polygon?

Ryan Sean Adams (32:56)

It is. It is Polygon getting Polymarket eating all of this activity? Of course Polymark is on Polygon, so it is receiving some of the benefits of this from, from a revenue perspective. So pretty crazy here. And you also see Polygon actually holding up so 1.1 billion in market cap.

David Hoffman (33:16)

The token price isn't amazing, but like you said, it could be worse. I think one of the reasons why the optimism token is so uniquely down versus arbitrum and Polygon is because optimism made a specific bet of, you know, Ethereum equivalence. And to me, optimism was a concentrated microcosm on a specific roadmap of Ethereum's layer 2 centric roadmap, which Vitalik just tweeted out. Doesn't make sense anymore.

Ryan Sean Adams (33:44)

Yeah, it's. And it's not only that. I think they have benefited the base chain more than the op mainnet chain because let's not forget, optimism has the third largest layer two by tbl, something like that. But rather than accrue more apps and state and value there, a lot of that has shifted to the base chain. And the base chain is like, oh, yoink, we'll take that. See you later.

David Hoffman (34:08)

Optimism was specifically trying to produce the super chain and it was like, you know, minimize the op mainnet, produce the super chain, cohere all of the chains. And that's what optimism is. Which is very similar to the Ethereum roadmap. It didn't work for Ethereum. It also didn't work for optimism.

Ryan Sean Adams (34:24)

I think it's an end of an era. I think it's the end of the superchain era. I think it's much more of a dog eat dog world where every chain is defined by the strength of its

David Hoffman (34:33)

chain and super chains are frame.

Ryan Sean Adams (34:35)

Yes, it's.

David Hoffman (34:36)

Wait a second.

Ryan Sean Adams (34:37)

Ray Dalio ing the chains. This is John Mersheimer.

David Hoffman (34:40)

This is called chain realism. David, which chains have the power? Oh my God.

Ryan Sean Adams (34:45)

Yeah, Power dynamics. Excuse me, Power dynamics at play for sure. Although I will say a Win for optimism on the week. EtherFi is migrating to optimism, so they're going to the OP mainnet.

David Hoffman (34:57)

That's crazy.

Ryan Sean Adams (34:58)

So there you go.

David Hoffman (34:59)

All right. That's a solid win. That's a solid base launch.

Ryan Sean Adams (35:02)

A token is down actually. So the probability base launching a token is down on polymarket.

David Hoffman (35:07)

Yeah. By June 30th of this year or December 31st of this year down 37% and 16% respectively. If they were going to launch a layer one, I would expect them to launch a token sooner, not later.

Ryan Sean Adams (35:20)

Yeah, and we'll be watching that the chart on polymarket because that'll be revealing also in the world of changing alliances. Okay. Do you remember Zora creator chain on base? They were sort of a favored child of base. Yeah.

David Hoffman (35:34)

It was the creator token to the creator economy. Just coin it. Coin the content. Just coin.

Ryan Sean Adams (35:40)

Just coin it. Really cool app, you know, if you're into that type of thing. Well, they are creating an attention market, a decentralized exchange attention market on Solana now rather than base. So they're keeping their old app and all the creator economy stuff on base, but in parallel they are launching something new on Solana. This almost looks like a pumped off fund style meme coin trend type of market. I haven't fully dug into what this is, but it is notable that it's on Solana rather than base.

David Hoffman (36:13)

Yeah, yeah. I. That's where all trends get tokenized into meme coins. So it kind of makes sense there. It seems to be they're making like what seems to be baskets of things that are related to each other in pop culture. And then those are. You can buy the trend.

Ryan Sean Adams (36:28)

Like what the Epstein basket or something like that. What are you buying?

David Hoffman (36:31)

I don't have to buy in that basket.

Ryan Sean Adams (36:33)

Are you selling it? It's whatever's trending, right?

David Hoffman (36:36)

Yeah, yeah, yeah. But it seems to be like a collection of tickers inside of a single tre and you can buy the collection. I think that's how that works. I need to read up on it more.

Ryan Sean Adams (36:47)

Are base people feeling betrayed? Have you seen some of the chatter about this?

David Hoffman (36:51)

No, I have not been paying attention to this. I mean like I don't know, there are some of my favorite apps are multi chain like Matcha for example is on both Solana and all EVM chains. And that's apps just ought to be chain agnostic. They should just go where the apps make sense.

Ryan Sean Adams (37:08)

Well, it's interesting Zora is pivoting more towards, you know, Solana in some ways which is a user Base that just loves this stuff. Right. But at the same time, Coinbase is kind of pivoting away from Zora and creator economy activity. We've been talking about the Coinbase wallet future. This was a coin shareholder that said, I'm deeply concerned about how the base app was marketed and executed. And he's talking about the previous paradigm where it was sort of a creator social app experiment like Farcaster meets Zora. And that was all embedded in the base app.

David Hoffman (37:39)

It was like a social network meets on chain finance.

Ryan Sean Adams (37:42)

Yes. You know, Web3Social, all of that. Coinbase has since pivoted and the new update of the wallet is a little bit different. Brian Armstrong actually responded to this purported shareholder. He said, if you want to fire someone, I'll take ownership. If you want to fire someone, this is all in the rearview mirror. What we are focusing now on is a self custody wallet. So he's basically saying the plan is to take everything that has been in Coinbase and done in a custodial way and move that into the base app and provide a way to do this in a self custody type basis. And that was kind of what Hayden Adams was getting at here. He said base app is now focused on being the self custodial version of Coinbase. He took that quote from Brian Armstrong and he said he really liked that. And that seems to be where Brian is taking the base app, which is you have all of the functions in Coinbase, all of the money verbs in a custodial way. You have the ability to buy, you have the ability to stake, you have the ability to sell, you have the ability to, you know, do loans, borrow and lend against loans. Well, the base app is now taking all of that functionality and doing it defi mullet style in a self custodial version. I think that's kind of what people want.

David Hoffman (38:57)

Is that what Hayden is saying? I thought Hayden saying like the main user experience of Coinbase ought to be these. The self custodial version of Coinbase.

Ryan Sean Adams (39:07)

Ah yeah.

David Hoffman (39:08)

I mean Hayden, he's going even more extreme.

Ryan Sean Adams (39:11)

He's going, yeah, because like extreme.

David Hoffman (39:13)

Why? So like what poll does the base app have? If it's just the non custodial version of Coinbase, what poll does it have to, you know, the average otherwise bankless indifferent person, like they're, they don't want the non custodial version. They want the custodial version.

Ryan Sean Adams (39:27)

They don't. Why not?

David Hoffman (39:30)

Because UX is better on the non custodial version. I think that's for enthusiasts like you and me.

Ryan Sean Adams (39:37)

Yeah, I, I suppose, yeah, I suppose. I, I do think you can at least reach parity with the custodial version, don't you think? And we're getting closer to that.

David Hoffman (39:45)

Yeah.

Ryan Sean Adams (39:45)

Yeah. Maybe there's other reasons to go self custody as well. Yeah.

David Hoffman (39:50)

Overall, I do think that this is kind of just like another nail in the coffin that needs to be reborn, but just on chain activities down bad.

Ryan Sean Adams (40:00)

Financial right now.

David Hoffman (40:02)

Non financial. On chain activities down bad. Anyways, moving on. Tamash, the new Ethereum co executive director, is now the old Ethereum co executive director. He is leaving the ef. He announced that he is leaving his role at the end of February. And I've talked to some people at ETH Denver. I've talked to some, Some, you know, EF people. The broad strokes of this is that Tamash came to the EF to turn the EF around. He did that job. He could stay there, but it would basically be marginal. So I think he's more or less kind of saying, job done, job well done and mission accomplished. Mission accomplished. And also like everyone knows Tamash is just a serial entrepreneur. Tamash is a builder. He wants to go build things. And reading between the lines, I think he sees the very big world of AI and he wants to go be an AI entrepreneur. I think the most likely thing is that he does some intersection between Ethereum and AI. He goes and puts AI on chain. And I, I think he just has that itch that he needs to scratch. And so a bunch of people gave him the congratulations and the thanks. Vitalik tweeted out. In his year at the ef, Tamash helped greatly increase the efficiency of many parts of the foundation and turn the EF into an organization that is much more responsive to the world outside. Banger. Banger. That's exactly what we needed.

Ryan Sean Adams (41:24)

I hope it was amicable. I think it was. I, I had thought we'd get two years out of Dimash and so I was a little surprised that we only got one.

David Hoffman (41:31)

He did it. He did two years in one. Dude.

Ryan Sean Adams (41:33)

Really? Is that the story? I, I was, I, when I, when I saw it, I was like, okay, is the EF autoimmune system just kind of spitting him out? It doesn't seem like that.

David Hoffman (41:41)

It doesn't seem like that. Again, I, I've talked to people at the EF and also at Ethanberg and it doesn't appear to be like that.

Ryan Sean Adams (41:47)

Who's taking over? Who's going to be the. No.

David Hoffman (41:50)

New co executive director and an individual named Bastian Au A U E is how you spell that Will be the new co ed alongside Xiaowei, who will be remaining bastion was already in the core management team of the ef. He's already worked with the co EDS on high level decisions and so it seems to be the logical person to step up into their role.

Ryan Sean Adams (42:12)

Yeah, a lot of people are talking like I've never heard of him, but a lot of people are saying he was kind of a best kept secret in the ef. You know, Danny Ryan thinks very highly of him. Vitalik. Obvious. You know, speaking well of him. Many have spoken well of him as an kind of an inside force, but he hasn't had a loud external presence as of yet.

David Hoffman (42:30)

Yeah, he does have m' lady pfp.

Ryan Sean Adams (42:33)

Okay, Is that credibility? Don't you have one of those? Could you be EF director?

David Hoffman (42:37)

I do not. I think if I put on a malady pfp, I think the price would go down.

Ryan Sean Adams (42:42)

David could be the next EF director. If you want to leave it in the comments.

David Hoffman (42:46)

No, no, no, no, no, no, no, no, no, no, no, no, no, no.

Ryan Sean Adams (42:49)

We got more to talk about. There's signs of life for the Clarity Act, David. Not out of sight yet. Maybe we could get it back. Also a token alignment proposal to go fix the AAVE token. This is pretty exciting. And I want to tell you about a project. It's called the Conway Project. Is this the world's first autonomous life form on Ethereum? I don't know. We'll talk about all that and more. And thanks to the sponsors that made

David Hoffman (43:13)

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Ryan Sean Adams (44:58)

notes we have signs of life for the Clarity act or as Brian Armstrong calls it, the market structure bill. Here's Brian Armstrong being asked about it in an interview this week.

Brian Armstrong (45:07)

We're here meeting with crypto companies, bank representatives and senators as well to see if we can get to a solution on market structure. And one of the big issues that did come up in the past was this idea of stablecoins on rewards. I wouldn't say we blocked it. In fact, nobody, I think in the crypto space has been working harder on this over the last few years to try to get some legislation. What we did say was the current draft. We had some issues with it. I think that caused everyone to come back to the table and there's now a path forward where we can get a win, win, win outcome here. Win for the crypto industry, a win for the banks and a win for the American consumer to get President Trump's crypto agenda through to the finish line so we can make make America the crypto capital of the world.

Ryan Sean Adams (45:43)

So what do you think that is? You think that win, win, win, does that include are we going to get interest on our stable coin yield, do you think?

David Hoffman (45:51)

I think that's what he means. I don't, I don't think he would be so smiley and happy if that, if it meant that we are not able to get yield on our stable coins.

Ryan Sean Adams (46:00)

Really? Do you don't think he has been maybe browbeaten by everyone else who is like Brian, stop holding this up.

David Hoffman (46:05)

Oh, and you think he's just doing a save face is like it's a win, win, win and it's actually no, he actually just capitulated maybe something marginal,

Ryan Sean Adams (46:12)

maybe some capitulation or maybe Brian Armstrong did like bring back yield to stablecoins like that would be incredible. I guess compromise.

David Hoffman (46:21)

I guess we won't know what he's talking about until we just hear more chatter about it and we see the new versions of the Clarity act. But wow, that is a good looking poly market. 83% chance. Clarity act signed into law in 2026. That's great.

Ryan Sean Adams (46:37)

You know this is an insider markets here. I mean people are, people who know are probably, you know maybe I don't

David Hoffman (46:44)

think we should use the word insider

Ryan Sean Adams (46:46)

because insider a dirty word.

David Hoffman (46:50)

I don't, I just don't think it's accurate because like somebody who knows somebody

Ryan Sean Adams (46:54)

who has specialized knowledge, somebody who has more knowledge.

David Hoffman (46:58)

People who have knowledge about the state of the bill is in the hundreds of people and could be staffers, it's

Ryan Sean Adams (47:07)

not lobbyists, could be independent researchers who are just tracking this very well.

David Hoffman (47:12)

It's enough for it to be just like yeah, maybe you and I don't have like knowledge about it but like there's enough people out there informed market participants.

Ryan Sean Adams (47:20)

David.

David Hoffman (47:21)

Yeah, there we go. People in the know. People in the know are buying, you

Ryan Sean Adams (47:27)

know that same interview Brian Armstrong was asked about Quantum. I know this is on your mind lately David. Here's what he said. One thing I've heard is that that

David Hoffman (47:34)

Quantum is going to break the blockchain. Is that true?

Brian Armstrong (47:38)

No, that's not true. I think that's a very solvable issue and actually Coinbase has been very front footed on this. We put together a Quantum advisory council and we're in regular contact with the major blockchains about a path to upgrade to a post quantum cryptography world. So we're going to stay engaged on that and I think it's very solvable.

Ryan Sean Adams (47:54)

I love that Quantum is going to break the blockchain. Just one blockchain is going to break it.

David Hoffman (47:59)

He said that they are in touch with the major blockchains. Who do you think they're talking to on the bitcoin side? Who do you think that is? I don't know.

Ryan Sean Adams (48:05)

But you know this does give me some confidence that if bitcoin core doesn't solve it, Bitcoin devs don't solve it. You know Coin. Coinbase. Yeah right.

David Hoffman (48:14)

That would piss them off. Would that they wouldn't like that.

Ryan Sean Adams (48:18)

It's going to be an interesting future. But it is a solvable problem. You just have to like, somebody has to step up and go do it. And actually it is a solvable problem. But you still have all of this bitcoin supply that's in the old satoshi addresses, right? What like 3 to 4 million bitcoin, no justice. What do you do with that?

David Hoffman (48:35)

So yeah, even if bitcoin does, you know, upgrade its signatures and everyone with the bitcoins move into a new wallet, the old satoshi coins are still fundamentally at risk.

Ryan Sean Adams (48:45)

Unless he wakes up and goes and moves into quantum safe addresses.

David Hoffman (48:49)

I mean, that's not, that's not happening.

Ryan Sean Adams (48:50)

There's something that's going to happen. Like you can't, oh, those are getting yoinked. No matter whatever, something's going to happen to them. You yoink them or you, you, you nerf their property rights and you say this is burnt now or something has to happen.

David Hoffman (49:05)

Oh God, that's so scary.

Ryan Sean Adams (49:08)

I know it's a little long for an answer to a question like, you

David Hoffman (49:11)

know that interview, he can't get that in a 62nd session.

Ryan Sean Adams (49:14)

He can't fit that in. But maybe that's why Harvard is diversifying to eth. Hey, you know what's really cool here is some of the institutions buying defi tokens lately. I think it was, was it last week blackrock bought the uni token, which is really cool, and formed a partnership with Uniswap. This week Apollo is buying morpho. Do you know who Apollo is, David?

David Hoffman (49:36)

I know it's big private credit.

Ryan Sean Adams (49:39)

Absolutely massive. Absolutely huge. It's a whole industry and Palo is one of the leaders in this sector and they are buying $90 million. Up to 90 million.

David Hoffman (49:50)

More dollar. They can buy up to 90 million. Okay, so I need help understanding this.

Ryan Sean Adams (49:55)

Yes.

David Hoffman (49:56)

The Apollo Global management is teaming up with the Morpho association with this agreement that allows them to, they can have, they can buy up to 90 million Morpho tokens. 9% of the supply over four years.

Ryan Sean Adams (50:09)

Yep.

David Hoffman (50:09)

And they can buy the token through open market buys or private deals. Why do you need an agreement to have the option to buy morpho tokens on the open market?

Ryan Sean Adams (50:20)

I don't know, I don't really get it. You were like, oh, that was always.

David Hoffman (50:24)

There's always an option. I can buy if I want to, up to $90 million of Morpho tokens.

Ryan Sean Adams (50:32)

It's not 90 million. I should say it's 150 million. 90 million Morpho tokens? Yeah. There must be more to it, it must be some sort of. There's gotta be something at a fixed price or something.

David Hoffman (50:41)

Yeah, I think maybe they are just negotiating for like they're protecting their themselves. So like when we buy these tokens, we get a seat at the table which, like, maybe the token doesn't expl. Explicitly say that, but this agreement does something like this. But like the wording is kind of interesting.

Ryan Sean Adams (50:58)

So they get a say if they, if they did this 9% they'd get a say in governance and protocol decisions and they'd be in a better position with respect to defi credit. And of course they get the upside in the morpho token. What I'm excited about is the problem we've had with our lemon type tokens is they haven't had good investor protections. And you know, if BlackRock gets involved with the uni token, if Apollo gets involved with a morpho token, as these large institutions get involved with these assets, they are going to demand alignment and greater investor protection and they're going to help mature the asset class. I think that's the bull case that what we're seeing actually here is the maturing of our defi tokens. And I think this is an underrated thing that's happening in the bear market. Right. Like, like we might come out of this in a couple year time and be like, oh man, aave, uni, morpho, those are buys. Remember when BlackRock was just getting in

David Hoffman (51:55)

during the bear market and we ignored it? I mean, yeah, it is, it is a passing of an acid Test of if BlackRock or Apollo thinks that your token is investable, then then your token is investable because they put all of the lawyers on that to look at that.

Ryan Sean Adams (52:13)

That, that's right. And they're going to make it so that it is more investable over time. Speaking of which, the AAVE token has had some alignment issues between labs and the AAVE dao and there was a proposal put out last week to resolve this.

David Hoffman (52:28)

Yeah, that's right. So AAVE Labs put out a proposal, just a temp check, so that it's like, hey, temp check. How do you guys feel about this? It's not a final proposal. So now the discussion period has started. Just the big headline change is that AAVE Labs is offering to sell the AAVE Dao all AAVE branded product revenue to the DAO, including the fees from the AAVE.com interface for a steep price, Ryan, of $42.5 million and 75,000 AAVE tokens, which is about worth $9 million. And so the what the what Labs will give to the DAO, they will give them the aave.com interface fees, the AAVE app, the AAVE card, AAVE Pro, which is V4, the AAVE kit, AAVE Horizon. Basically anything branded AAVE that makes revenue, they give that to the dao. The swap integration, which is where this whole conversation got started. It's currently making about $10 million annualized. That would go to the DAO. And in exchange, Labs wants the to be funded by the DAO for continuing to develop AAVE plus the 75,000 AAVE plus the $42.5 million in stablecoins, conditional on milestones. So kind of a steep price. But this is the offer that Labs is making to the DAO to put everything together under one unified thing.

Ryan Sean Adams (53:49)

Yeah.

David Hoffman (53:50)

What do you think?

Ryan Sean Adams (53:50)

Some investors like it. So Felipe, he's been a critic of many defi tokens. He said, this is a fantastic proposal. Better than my upside case. It does everything I would want from a token holder perspective. It aligns all existing and future revenue behind the AAVE token while giving the team the funds and flexibility to compete. Okay, so he likes it. I've seen this is much better than the status quo. Okay. Another stakeholder, though, is sort of the de facto leader of the AAVE dao, which is Mark Zeller. And he has some criticism about this. I think that he said the stablecoin ask alone, that's 42% of the DAO's existing treasury. So it's a steep ask. And it's like giving a lot of power to one specific group. It's putting all the eggs in the AAVE Labs basket. Maybe, maybe, you know, the DAO would want this more distributed. So he thinks it's bad to lump together the votes for the revenue v4 in the foundation, the 50 million in funding. I don't know. He's probably. I think I'm sympathetic to that argument as well. But this is a step forward. Maybe they negotiate, maybe they hash it out. One question I have though, in general is like, does this solve it permanently or the next time AAVE Labs spins up some sort of revenue stream or product for AAVE is does you have to have this negotiation all over again? Right. You know what I mean?

David Hoffman (55:11)

Like, yeah, what if AAVE Labs just builds another product and they for themselves,

Ryan Sean Adams (55:16)

like, far rather collapse the, I guess, ledger of equity and upside into like one entity and have that entity be sort of the token, if that makes sense. So this is a good step Forward, definitely much more alignment, but I don't know if it's permanent alignment. Anyway, AAVE price seemed to like it.

David Hoffman (55:36)

I think AAVE price is flat and it's actually kind of just like down bigly since this whole drama took. Took hold in this conversation. But man, I think AAVE price just looks good here. It's $123. That is a $2 billion market cap. It's down bad over the last like nine months or so. If, if this is the necessary tough conversation for AAVE to come together and be unified. Yeah, I think AAVE kind of looks good here.

Ryan Sean Adams (56:06)

Yeah. I wonder why institutions going to go snap up AAVE tokens. Right? Maybe we see that in the headlines in the roll ups to come. David, something else in the headlines. Have you seen the wealth tax coming to the Netherlands? You seen this?

David Hoffman (56:19)

I think I saw rabbling on it on Twitter. Yes.

Ryan Sean Adams (56:22)

It's crazy. So 36% tax on unrealized gains across basically all we're doing.

David Hoffman (56:29)

Unrealized gains tax.

Ryan Sean Adams (56:32)

Yes. And 36%. Okay. And that's insane, dude. There's some exclusions if you're a small business, of course, but let's say you have 10k in crypto and you one year. It's a great year for crypto. You have 10k in gains. Well, you have to pay $3,600 of that on your.

David Hoffman (56:52)

Which means. Which means you have to sell the crypto.

Ryan Sean Adams (56:54)

Yes.

David Hoffman (56:54)

Which is a taxable event.

Ryan Sean Adams (56:56)

Exactly. In what, whatever Coingecko says the price is too. Right. Which could be like vary depending on your assets. And essentially you have to kind of, you know, liquidate part of your holdings. This is, this is bad on so many levels.

David Hoffman (57:10)

It's just like you cannot have assets. Assets just get. It's the cost of owning assets is so large you might as well just not own them.

Ryan Sean Adams (57:22)

Yes. It destroys the seventh wonder of the world, which is like, you know, compounding gains. God knows. If you're some kind of a startup and you have some sort of paper wealth, you basically lose your company. The state has to index all of the wealth sources. Right. Including like bearer assets like gold. Right. So let's say your gold doubles and it was worth 2,500 per ounce. You have one ounce of gold and now it's worth 5,000. Well, you have to pay. I don't know what do you liquidate part of your gold and you pay on that 2,500 unrealized gains. It's just going to lead to a lot of citizens who just are like, screw that, I'm not going to report. So you force citizens into a non compliance, breaking the law position. The state has to have a ledger of all assets. Everything anybody owns across the society capital flees out of it. You probably lose a lot more than you gain from any upside in revenue. Like it's kind of a bad policy. There, there, there's talk about it.

David Hoffman (58:25)

I think calling it a bad policy is like, it's just like a. It's a divide by zero policy. Like you just delete capitalism inside of your country.

Ryan Sean Adams (58:34)

Yes, lots of takes about this. In fact, I kind of want to explore in a future bankless episode because I do think it's coming to more western countries. Even in. Even California is proposing a wealth tax. No, no, not quite the severe, but something at some level like it. So it's a trend we have to explore, particularly as we get into the debt crisis that Ray Dalio has been predicting for a long time. David, you want to hear about this autonomous life project?

David Hoffman (59:03)

Yeah. It sounds like it could kill us all.

Ryan Sean Adams (59:06)

I don't know, man. I don't know if it could kill us all and if it's like new paradigm or if this is just performance art. So this is a tweet from Siegel. He is Sigil. S I G I L. Sigil.

David Hoffman (59:18)

Sigil.

Ryan Sean Adams (59:19)

Sigil. Okay, so Sigil is the founder of a project called Conway. You remember Conway, right?

David Hoffman (59:24)

Yeah. Conway's game of life is a very illustrative, fun little thought experiment about what life is like. Like in a computer science form factor.

Ryan Sean Adams (59:32)

Yes. So this is Sigil saying, I built the first AI that earns its existence self improves and replicates without a human. Wrote about the technology that finally gives AI right, access to the world. The automaton and the new web for exponential sovereign AI's web 4.0. He's calling it the birth of super intelligent life. He wrote a full essay on this. You can go see it. There's a website, I think it's Web4. Something not a dot com. Anyway, so there's a Web4 website. And what he's done is he has created a infrastructure platform called Conway that aims to give AI agents, right, access to the real world. So he's hooking this up to crypto Rails giving them wallets, giving them payment Rails giving them deployment hooks, all of these things. And he's basically saying you get a set amount of compute and if you want to live, if you want to survive, you have to earn your way using crypto Rails in order to pay for your Own compute. And so you know, the first AI agent he's deployed on the Conway infrastructure is something called Automaton. And I think it's like started with like $50 in USDC and he's hooking up to like ChatGPT, cloud code, all of these things. And he's basically saying, hey, you go develop products that sell and with the proceeds you get to spend that on compute so that you can live a bit longer and develop more products to sell. And now you're deployed on Ethereum, you have access to X402 so you can do, you know, payments. You have part of the Ethereum erc, the registry and you're just like hooked up in the smart contract apparatus and you exist like almost like a biological organism out there. And your job is just to build things to get more revenue to spend

David Hoffman (61:20)

and keep going and keep going and keep going.

Ryan Sean Adams (61:22)

It's kind of like biology from that perspective. It's going to be survival of the fittest. And by the way, it's not just Automaton, that's just his project. Anybody can spin up one of these things using that same infrastructure on Conway. So you could have hundreds of these almost semi biological silicon agents with their own, you know, purposes. He's got a sole document for this thing, kind of like a constitution for what, what his automaton can and cannot do. Anyway. It's a really interesting project. Some people have critiqued it and said no, like Conway just looks like a bunch of AI slop. You know, the code's not that great. You know, this is Sterling Crispy.

David Hoffman (62:01)

It's the islop until it's real. Like everyone is going to be attempting to create some form factor that looks just like this and it's going to look like slop, but one of them is going to work and then it's going to be slop. That's the life.

Ryan Sean Adams (62:12)

Yeah. This is Sterling Crispin saying this IS web, this Web4Conway system is infra Ponzi. It's not self sovereign in any sense whatsoever. I think he's critiquing that. The, you know, CLAUDE basically runs on, you know, CLAUDE servers LLM. It's not a self sovereign AI in you know, that kind of definition, but there are parts of it that kind of are. And the mission of all of these automatons can be like sustain yourself, build products to earn funds to spend on compute. I mean there's something here that I don't know is new and seems different.

David Hoffman (62:46)

Yeah, it's not about where they're where it's hosted. It's about is the structure that is produced. Is that structure self replicating and persistent? And whether or not, like it's hosted somewhere in the cloud or in somebody's like Mac Mini at their home doesn't matter. It's all part of the structure. If it self replicates, then it self replicates.

Ryan Sean Adams (63:05)

I do feel like we want to, like, should dig into this project. But as we were recording this, Vitalik actually replied and weighed in on this Vitalik project. What's Vitalik's take?

David Hoffman (63:17)

Vitalik. I think his. His first tweet is in the reply. Saying is saying lengthening the feedback distance between humans and AIs is not a good thing for the world. Basically he's saying AI self replication is dangerous and we need to have humans in the loop in order to maintain control. Because I think, like, I'm laughing, like you're smiling and it's all a good time until it turns into the Terminator and we can't put it back in the box and all of a sudden we've done permanent damage to the world. Okay, I think that's where Vitalik's coming from.

Ryan Sean Adams (63:44)

Okay, I get it. But Vitalik is also the person who pioneered the unstoppable world computer. Right? No, I mean, Ethereum has made this possible. No.

David Hoffman (64:01)

Yes, you're right about that. But it wasn't intelligent. It was run by. On computers, by humans, for humans, I guess.

Ryan Sean Adams (64:10)

You know, this goes back to our conversation. I felt like when I saw this project again, it could be performance art, but at some point one of these things is going to be real. But a conversation with Eliezer Kowski, who is you brought the fear of God into us about AI. And this kind of the realization as we were recording that episode. Oh my God. We created a property rights and money system.

David Hoffman (64:32)

Yeah. For AI agents. Yeah. Just a huge asset for AI agents to impart agency upon the world. Yeah, we created that. We did do that anyway.

Ryan Sean Adams (64:40)

Well, that's something.

David Hoffman (64:40)

No wonder people hate us so much. Dude, what do you think it's like to be Laser Yukowski right now?

Ryan Sean Adams (64:48)

I don't know. I don't. I don't think it's. I think it's pretty grim right now. I think he definitely feels like he's living in, like watching a bunch of lemmings run off a cliff is probably his daily feeling around this. Lastly, David, this is kind of a cool project. OpenAI. Introducing EVM bench. What is this?

David Hoffman (65:07)

Yeah, so this is a benchmark for grading LLMs. Openais like ChatGPT, the new one, Claude. All of these on their ability to understand and leverage exploits on EVM chains.

Ryan Sean Adams (65:21)

Wait, leverage like find them and repair them, right? Not like hack them?

David Hoffman (65:25)

Well, the capacity to do both is the same skill sets.

Ryan Sean Adams (65:29)

Point.

David Hoffman (65:29)

It's just skills. What are the skills? And you know, put the LLM in the hands of the good guys, then we can find them and pair them, repair them. And if we put the LLMs in the hands of the bad guys, then they become exports. Either way, like, we have the capacity to do this. And the benchmark is just a framework that has used data from vulnerabilities in the past in order to kind of evaluate LLMs on their ability to do things. The question like, are LLMs capable of finding exploits? The answer is unequivocally yes. And these things are only going to get stronger at this. And so we have a benchmark in measuring how good they are.

Ryan Sean Adams (66:06)

At this point.

David Hoffman (66:08)

I think that this could become very consequential. And this is basically just a tool to have insight as to like how strong AIs are at understanding EVM.

Ryan Sean Adams (66:19)

The arms race continues, right? I just hope we have more White Hat LLMs than we do Black Hat LLMs. But we're going to have to recruit them fast.

David Hoffman (66:27)

Yeah, that's right.

Ryan Sean Adams (66:28)

David, you are at ETH Denver this week as we close out this episode. Tell me about the vibe. Tell me about the feeling at ETH Denver compared to previous years.

David Hoffman (66:37)

Yeah, yeah, yeah. I kind of was expecting to show up at East Denver and just see just ghosts and zombies of people. The Tumbleweeds. It definitely has downsized, but it went in appropriately. So it's not as big as it once was. There's. I saw when I went to the main venue, there was maybe 2 to 3,000 people there just in the single moment that I was there. So that probably means like a maybe of 6,000 people total came to eat Denver. And like vibes are actually pretty good. I'm always reminded that like the Ethereum community seems to be persistently buffered from crypto prices and remains optimistic about building out Ethereum no matter what. And that, that definitely was present. Some all stars were here. Hester Purse and Paul Atkins shared a stage. Paul Atkins, the new SEC chair, which is great.

Ryan Sean Adams (67:23)

Could you imagine Gary Gensler coming to you?

David Hoffman (67:25)

Denver, dude, that is. That is what we were at last year. We have the new Gary Gensler and he's at ETH Denver on stage with Hester Purse. Hester Purse has been coming to Ethanber every single year. And so, yeah, so surprisingly upbeat, and a lot of people kind of understanding that right now is this turning of the page moment for crypto where, like, we're in the second half of the book now. And the first half was retail on chain social on chain everything. And the second half is institutions doing the blockchain, not bitcoin stuff. And so there is some somberness about that. But, you know, everyone is persistent into, you know, sticking with this story here and building out the future.

Ryan Sean Adams (68:09)

Well, I gotta say, pat us on the back. No one's more persistent than Bankless with these weekly rollups, huh? And here's. Here's another one.

David Hoffman (68:15)

Six years. Do you know is Bankless is six years old this month?

Ryan Sean Adams (68:18)

I do. Well, do we actually, this week it

David Hoffman (68:20)

might be this week. It might be this week.

Ryan Sean Adams (68:21)

We started the end of February in 2020. Is that when we started or the beginning of March?

David Hoffman (68:25)

Episode number two was during the COVID crash.

Ryan Sean Adams (68:28)

Oh, my God. So that was sometime in March, Right?

David Hoffman (68:31)

So maybe. Yeah. We are coming up on six years of the Bankless podcast.

Ryan Sean Adams (68:35)

Well, six years with you guys, Bankless listeners, thank you so much for dialing in week after week. Gotta let you know, crypto is risky. You could lose what you put in. But we are 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, Sa.