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Bankless Nation is the first week of September.

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It is time for the Bankless Weekly Rollup.

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We have Hasib on again.

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David is out at Burning Man.

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Hasib's second week in a row.

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We got to talk today about the Robinhood economy.

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It seems like it is completely blowing up.

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Robinhood chain knocking it out of the park.

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Transaction fees right now are actually higher on the Robinhood chain than on Ethereum.

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$4.4 million in revenue in a single day.

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Fortunes are being made over there.

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And yet, Hasib, our guest host today, calls it kind of a financial jackass.

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I saw that tweet, Hasib.

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We got to talk about what you mean by that.

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Also, Solana just cast a governance vote to cut its own issuance.

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Is Solana in the store of value game right now?

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And Michael Saylor, he's buying back in at 80K.

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After he's selling at 62K, their CEO says, both were the right trade.

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We'll talk about that.

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And 21 banks launching a stable coin.

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And then again, Besant, week three of the treasury of the trade.

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Put, what is he saying at the G20 summit as 30-year yields are approaching 20-year highs once again?

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Hasib, it has been a very busy week.

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A lot of interesting things happening in the world.

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What's your eye on in crypto this week?

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Well, look, the firework show we're seeing on the meme coin side is hard to look away from.

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We're getting this crossover between TradFi and RWAs now into crypto, which is interesting.

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It has me worried.

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I feel like this is not going to end well, but we should talk about it once we get into it.

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All right, so that might be some of the financial jackassery that you're seeing.

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Before we get in, I want to thank our friends and sponsors over at Nier.

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A big milestone was just crossed.

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$50 million in confidential total value locked on Nier.

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Nier.com is actually confidential by default.

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What that means, of course, is...

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that your balances, your activities, that means your deposits, your yields, your swaps, your payments, they're all private by default unless you choose otherwise.

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So outsiders, they can't see the amounts.

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Privacy is becoming the standard for Nier and increasingly for our industry, though we have a lot of progress to make.

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Nier is leading the way.

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Go check them out and get their full recap on all of the activity happening on Nier Intense.

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There'll be a link in the show notes to that.

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All right, Hasib, let's take a look at our prices on the week.

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Bitcoin on the seven day up about 1%.

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ETH flat, some other assets.

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Let's see, Solana down about 3%.

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We are holding, my friend.

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We are still outperforming.

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Gold, equities continue to hold these elevated prices now.

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Bitcoin over 81K at the time of recording.

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Ethereum over 2,500 at the time of recording.

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There was a pretty big bounce today, actually.

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So Bitcoin was trading down to 76K and then suddenly we're up 5% in the last 24 hours.

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Any reason for this bounce or is this just classic crypto volatility?

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It's definitely macro.

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So the same thing in the stock market.

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Stock market rebounded today.

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And a lot of that is because the rate cut story is, or I should say the raising of rates is a little bit less likely based on some comments that were made today by, I believe it was Waller.

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So...

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There's a lot of worry about inflation's high.

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Are you talking about the Fed chair of Warsh?

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No, no.

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I believe it was one of the other folks in the Fed.

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Interesting.

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Okay.

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Yeah.

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So basically, I mean, right now it's a pretty tight race at the Fed of like whether or not they're going to get enough votes to raise rates.

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And so just one person making a comment was enough to move the odds pretty significantly.

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I believe it was 20% less likely of a rate hike in the next Fed share meeting.

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And that is the reason why people are feeling a little bit more confident about risk assets.

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So I think that reflected in the crypto markets.

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Looks like there was a lot of liquidations from people who were short.

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So we're getting a little bit of volatility coming back into the market.

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It's good, but it's mostly macro telling the story as opposed to a crypto native story here.

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Well, it's interesting because there was a bit of a sell-off towards the end of last week.

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And I think that was Warsh's speech at Jackson Hole.

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I don't know if you caught some of that.

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Some people watched that speech and said it was pretty much a nothing broker.

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But the market more broadly interpreted it as hawkish.

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I think the September rate hike at the end of that meeting last week went up to 67%, up 30% to 40%.

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And so that was the end of last week.

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Sounds like today maybe things went back down.

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But they zoned in on something Warsh said.

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I believe it was this quote.

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We must be confident that underlying inflation is moving to our objective clearly and at sufficient speed.

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Otherwise, we have work to do.

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It was that line.

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Otherwise, we have work to do.

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right?

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Inflation's not where we want it.

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So implying the Fed has work to do.

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And what's the tool in the tool belt for that work?

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Well, it's Fed funds rate.

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So that's why the market was anticipating an increase.

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And now I guess that's being tempered a bit.

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One thing I can't seem to figure out though, Hasip, on all this, I know we were talking about last week, the Besant put, and we're now in week three of sort of this new...

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market perceived paradigm of this Besset treasury put buying the long end of a bond somewhat is it seems like Warsh is sending some hawkish signals.

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Like I might raise Fed fund rate.

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You don't know, you know, don't test me inflation.

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I might do it.

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Whereas Besson is being...

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incredibly dovish in this total treasury QE thing.

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What's going on between the two of them?

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Is this all coordinated?

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Is this like a coordinated good cop, bad cop type of routine?

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Or like, what sense do you make of this?

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I coordinate is the wrong word.

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I think it's more adversarial.

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And this is the natural dynamic between somebody sitting in the White House and somebody sitting at the Fed, which is that, look, at the end of the day, the White House wants to do things that are good for the economy, wants to do things that are good for Trump and allowing Trump to achieve his policy goals.

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And that requires the economy to run a little bit hot.

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It's like they want to ride the edge, right?

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And, you know, at the end of the day, Warsh, yeah, he was appointed by Trump, but now he's independent.

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And you can see that independence starting to show its colors is that, you know, Trump thought he was his guy.

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I think actually he's not his guy as much as maybe he thought he was.

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Interesting.

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And the reality is, look, Warsh doesn't want to be responsible for having inflation run unnecessarily hot and then eventually getting blamed for Trump.

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mismanaging the economy.

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And so, you know, when Warsh was first nominated, he was saying like, look, yeah, inflation is a little bit high, but I think it's because of the war.

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It's because of oil.

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It's because of supply constraints, blah, blah, blah.

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It is not fundamentally reflective of the underlying economy.

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Now, all of a sudden, he's saying, well, we have to be really confident that inflation is actually tamped down.

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And this is kind of what you expect, is that when you nominate somebody, you kind of think they're your guy.

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And then you realize, no, no, you're kind of

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It's this almost like Manichean battle between the Treasury and the Fed.

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It's never going to go away until you actually truly do break the boundary of Fed independence.

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The Fed is very much still independent.

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That's good.

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That's good long term for market confidence in our bonds and in our fiscal policy or in our monetary policy.

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But fiscal policy is always going to run against that.

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That's normal.

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So I think this is what you would expect in a well-functioning independent Fed.

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I'm not sure that I buy that the Fed is as independent as you think it is.

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You really do think it's independent.

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What's kind of your evidence for that recently?

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I think the fact that Warsh is not rolling over, he's making these noises.

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I mean, previously he was saying, look, I'm not going to give forward guidance in the way that previous Fed governors have.

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I think that's a mistake.

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That was something only necessary at the zero lower bound.

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Now that, you know, Fed funds rate is, you know, whatever, four or five, we have a lot of room to play and we can let the rates do the talking.

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Now he's suddenly talking a lot more and giving things that sound like guidance.

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And like, you know, why is he doing this?

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I think it's pretty clear is that, yeah, he doesn't want the Treasury to be setting monetary policy.

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That's kind of not their job.

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And now, you know, again, the dynamic of our economy has changed so much over the last 20 years, especially since the great financial crisis.

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The reality is that it is this push and pull, much more so between the Fed and Treasury.

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But I think the way the market is interpreting this is that, no, Walsh has his own opinions.

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He's not going to let himself get run over by Besant.

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And this is how he's fighting back to some degree.

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My colleague Michael Nadeau thinks that Warsh is going to, he's more likely to keep rates steady and let the market sort of dictate long-term rates, sort of whatever the long-term rates do, they will do.

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And certainly Besant has been back on his heels in kind of a defensive position this week.

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He spoke at the G20 summit yesterday.

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And we have as the backdrop, the 30-year treasury yield is back above 5.26%.

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So just rising above the surface, just like that beach ball, back before he started some of these buybacks.

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I saw a few interviews from him, including this rather glazing interview with, I think, a Fox Business correspondent.

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And Besant was basically saying, yo, the media, they're talking about bonds and yields.

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That's not the real story.

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The real story is the American economic boom that this administration has brought in.

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We are an AI superpower.

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We are an energy superpower.

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Corporate earnings are off the charts.

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Stock market's off the charts.

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GDP is going up.

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That's the real story.

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So don't pay any attention to the bonds.

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He said this, this has been the best performing bond market among major countries in the world.

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And of course, he's saying this as the yields on the 10-year are at a 20-month high.

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And also on the 30-year, it's close to a 20-year high once again.

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So is that true as well, Hasib?

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Obviously, he's talking his administration's book.

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But I mean, there are some points there.

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I mean, the economy is booming, at least from a CapEx perspective.

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The AI trade continues to, you know, bust through all projections.

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You think he has a point?

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Right.

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I mean, look, saying that we have the most demand for our bonds of all the countries is kind of like being the skinniest fat kid.

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You know, the reality is that all bonds everywhere are getting punished because of this fiscal irresponsibility that people are seeing from governments around the world.

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Saying that, look, we're the AI superpower, our economy is booming because of AI is true.

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And also precisely the reason why our bonds are less attractive is because our economy is more attractive as a borrower than the government is.

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Right?

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Like, his job is to be, he's Treasury Secretary.

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The Treasury is a pool of money managed by the government.

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So, now, it is obviously true that their tax base increases.

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If the economy does well, that's great.

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We can tax all the revenues that the AI companies are making.

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Wonderful.

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But...

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At the end of the day, the core job of the Treasury Secretary is to be responsible for the money that the government owns and collects from the economy.

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So if nobody's buying your bonds, that means that they perceive financial irresponsibility from the government.

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That's what's happening right now.

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That's the core of it.

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So don't let all the other stuff distract you.

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Like the American economy is booming.

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That's not because of the president.

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It's not because of the White House.

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It's because of the economy itself.

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The job of the government is to be a good steward of that, which is what the bond market right now is saying.

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You are not being good stewards.

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It does feel like this administration and Besson and maybe to some degree also Warsh are making a bet on the AI trade, right?

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Besson keeps saying, including the G20 countries, hey, we're just going to grow our way out of this.

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And I think he's looking to AI to really propel all of that growth or the vast amount of that growth.

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He's probably also talking about growing money supply in order to do it, but it increasingly feels very much like the US economy, I know I said this last week, the world economy is all based on the AI trade right now.

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It's consuming more and more of our total economy.

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One person that has come back

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in full bull mode is Michael Saylor.

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I don't know if you saw this latest clip from Michael Saylor, but this is him on a New York City metro, it looks like.

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He is punching out bears.

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Bears, this is your stop.

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He just beat up a polar bear.

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I think that's a grizzly bear.

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I mean, this is some kind of a black bear.

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He's taking on all the bears.

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And Strategy has just purchased bears.

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Another 4,603 Bitcoin, about $370 million, increasing its cash by about $29 million, doing some other things as well.

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What's fascinating about this is just a few weeks ago, a few months ago maybe,

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He sold about 7,000 Bitcoin and he sold at 62K.

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And when I say he, I'm talking about strategy, of course, for $431 million.

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Now he rebought for less.

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Is this an example of kind of like selling low and buying high?

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I mean, the extra cost to rebuy the Bitcoin that he purchased was about $83 million in

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I think the strategy CEO came out and said, hey, this is, you know, we did the right thing in both cases.

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Both cases, the selling and the buying was the right trade.

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Obviously, they've been trying to get STRC back at par.

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It's now at $97, I believe, so $100 at par.

224
00:14:07.338 --> 00:14:08.478
They're making some progress.

225
00:14:08.498 --> 00:14:11.019
They're just not getting it to that last mile.

226
00:14:11.519 --> 00:14:12.339
What do you think about this?

227
00:14:12.420 --> 00:14:16.762
It's just the type of thing you have to do when you're a bit on leverage.

228
00:14:16.782 --> 00:14:18.363
Like you have to protect your position.

229
00:14:18.423 --> 00:14:24.126
And so you're not always going to buy low and sell high.

230
00:14:24.186 --> 00:14:27.868
You just have to play this game a little bit to defend your margin positions.

231
00:14:28.802 --> 00:14:33.805
That's pretty much right, is that it's very hard to buy low and sell high with other people's money.

232
00:14:34.945 --> 00:14:40.108
You can do it with your own money if you have enough balls to be able to go and hold all the way, and you have the conviction to do it.

233
00:14:40.528 --> 00:14:45.791
But the MNAV game, which is fundamentally the game that MicroStrategy is playing, and this is what...

234
00:14:46.251 --> 00:14:53.239
This is what I believe the CEO, Fong Li, said of, okay, why is he defending the selling at 60 and buying at 80?

235
00:14:53.539 --> 00:14:55.601
The answer is, well, because just look at the MNAVs, right?

236
00:14:55.621 --> 00:14:59.305
The MNAV was below one when we were selling to get the MNAV back in line.

237
00:14:59.566 --> 00:15:01.347
And then when MNAV went above, we started buying again.

238
00:15:01.968 --> 00:15:02.649
And that's correct.

239
00:15:02.829 --> 00:15:09.275
That's like the way that you should think about what markets are compelling you to do and what markets fundamentally want at each of these moments in time.

240
00:15:09.636 --> 00:15:10.556
And this is a financial product.

241
00:15:10.717 --> 00:15:13.660
So it's responsible to its customers, its holders, its buyers.

242
00:15:14.440 --> 00:15:21.707
But it also means that this is fundamentally how the strategy and DAT trade works, is that it is pro-cyclical.

243
00:15:22.508 --> 00:15:25.510
Procyclical means you are buying high and you're selling low.

244
00:15:25.630 --> 00:15:26.931
That's what a procyclical strategy is.

245
00:15:27.972 --> 00:15:31.755
Now, hopefully, if you buy that procyclical strategy at the bottom,

246
00:15:32.941 --> 00:15:36.022
You get the MNAV expansion as well as the buying on the way up.

247
00:15:36.062 --> 00:15:41.183
And so, you know, so you can see why this might be attractive anyway to play it as an investor.

248
00:15:41.603 --> 00:15:42.963
But this is fundamental to the strategy.

249
00:15:43.003 --> 00:15:44.124
It would never not be this way.

250
00:15:44.564 --> 00:15:48.765
If this is how you're timing your buys and your sells, you will always be procyclical in this way.

251
00:15:49.145 --> 00:15:51.205
And you will be able to look back and say, oh, look at you.

252
00:15:51.246 --> 00:15:53.026
You were selling at the low and buying at the high.

253
00:15:53.377 --> 00:15:57.364
So what letter grade do you give Michael Saylor in strategy for execution on this data strategy?

254
00:15:57.384 --> 00:15:58.907
I mean, do you think he's doing a pretty good job?

255
00:15:58.927 --> 00:15:59.167
He is.

256
00:15:59.207 --> 00:16:00.389
He's the godfather of this.

257
00:16:00.429 --> 00:16:04.496
I mean, he created the whole debt industry and debt trade himself.

258
00:16:04.556 --> 00:16:05.297
Like, how's he doing?

259
00:16:06.542 --> 00:16:11.684
I mean, it's hard to answer that question because it depends on what your rubric is for grading.

260
00:16:12.105 --> 00:16:16.026
If the rubric is build a gigantic dat and survive, then he gets an A+.

261
00:16:16.266 --> 00:16:18.407
I mean, this thing is just an incredible machine.

262
00:16:18.427 --> 00:16:19.588
Look how gigantic it is.

263
00:16:19.968 --> 00:16:20.628
And it's still going.

264
00:16:20.648 --> 00:16:23.210
And he's managed to get a war chest of billions of dollars of cash.

265
00:16:23.650 --> 00:16:25.250
He's got lots of dividend coverage now.

266
00:16:25.731 --> 00:16:27.491
And he's back in the game buying Bitcoin.

267
00:16:27.531 --> 00:16:30.613
And, you know, like it's a nice gig if you can get it.

268
00:16:31.973 --> 00:16:34.835
In terms of the impact to holders,

269
00:16:36.623 --> 00:16:38.784
Look, I'd say this is kind of a C at best.

270
00:16:39.704 --> 00:16:39.964
Holders?

271
00:16:40.004 --> 00:16:42.886
Are you talking about MSCR holders or Bitcoin holders?

272
00:16:42.906 --> 00:16:47.367
If you were buying MSTR, if you were holding MSTR, you're not thrilled, right?

273
00:16:47.407 --> 00:16:52.129
This thing is down a lot from when it was being most aggressively marketed and when most people bought in.

274
00:16:52.509 --> 00:16:57.491
So relative to Bitcoin, you're a lot worse off holding MSTR almost any point during this last cycle.

275
00:16:57.751 --> 00:16:59.372
So if that's how we're thinking about it.

276
00:17:00.539 --> 00:17:02.981
Yeah, not a good grade for this vehicle.

277
00:17:03.121 --> 00:17:06.584
Well, how about Michael Saylor's meme skills and punching the bears out on the subway?

278
00:17:06.604 --> 00:17:07.445
What do you give him for that?

279
00:17:08.306 --> 00:17:09.206
I think that's an A+.

280
00:17:09.226 --> 00:17:09.907
That was pretty good.

281
00:17:10.087 --> 00:17:11.388
I enjoyed that quite a bit.

282
00:17:12.009 --> 00:17:18.654
It's one of those things that like AI, like, you know, people were complaining about him just doing a lot of AI slop marketing.

283
00:17:18.815 --> 00:17:19.415
Yeah.

284
00:17:19.755 --> 00:17:21.117
But I kind of think he knows his audience.

285
00:17:21.137 --> 00:17:21.417
It's on brand.

286
00:17:22.137 --> 00:17:22.738
Yeah, exactly.

287
00:17:22.938 --> 00:17:23.359
Exactly.

288
00:17:23.439 --> 00:17:24.540
It's kind of, it works for him.

289
00:17:24.580 --> 00:17:25.280
I think it works for him.

290
00:17:25.420 --> 00:17:25.680
It does.

291
00:17:25.700 --> 00:17:26.781
Keep the slopification up.

292
00:17:26.841 --> 00:17:27.322
I think it's good.

293
00:17:27.542 --> 00:17:29.402
He's even got like, you know, the color scheme, right?

294
00:17:29.422 --> 00:17:32.603
You can see obviously orange tie and orange seats on the metro.

295
00:17:32.943 --> 00:17:35.324
It's just like, yeah, doing a great job, Michael Saylor.

296
00:17:36.124 --> 00:17:43.625
We got more to discuss, including the Robinhood economy, Robinhood meme coins reaching all-time highs, fortunes being made, as I said.

297
00:17:43.645 --> 00:17:48.426
And there was a penny stock run up 300% due to some meme.

298
00:17:48.446 --> 00:17:51.907
There's a lot of meme and real-world asset pairs that are trading.

299
00:17:51.927 --> 00:17:54.147
We'll talk about all that and more.

300
00:17:54.187 --> 00:17:56.948
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301
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324
00:19:27.106 --> 00:19:28.748
The Robinhood economy.

325
00:19:28.868 --> 00:19:29.709
Let's talk about it.

326
00:19:29.849 --> 00:19:32.151
What's going on in Robinhood land?

327
00:19:32.191 --> 00:19:34.493
This is a post by Mike Ippolito.

328
00:19:34.633 --> 00:19:37.737
The monster run for Uniswap on Robinhood chain continues.

329
00:19:37.837 --> 00:19:43.662
$1.4 billion, a volume traded yesterday, almost $20 billion since launching the beginning of July.

330
00:19:43.682 --> 00:19:44.904
Here's another chart.

331
00:19:44.944 --> 00:19:47.406
This is one of the crazier charts you'll see in crypto.

332
00:19:47.426 --> 00:19:47.947
I think this is

333
00:19:48.467 --> 00:19:51.168
L2 gross profit, L2 revenue.

334
00:19:51.528 --> 00:19:53.189
You can see all the various L2s.

335
00:19:53.229 --> 00:19:57.051
This was dominated at one time in May of 2021 by Arbitrum.

336
00:19:57.071 --> 00:19:58.571
That's completely flipped now.

337
00:19:58.892 --> 00:20:00.192
You saw base had a presence.

338
00:20:00.452 --> 00:20:04.254
Now it's just kind of this Robinhood green color.

339
00:20:04.594 --> 00:20:08.996
Robinhood absolutely dominating revenue on the L2 world market.

340
00:20:09.956 --> 00:20:15.197
There were some stats I saw, something like three to four million per day in Robinhood.

341
00:20:15.597 --> 00:20:22.679
If you were to annualize that seven day, which you should never do, you should never annualize seven day revenue volumes.

342
00:20:22.719 --> 00:20:33.602
But if you're to do something like that, then actually the revenue generated by the Robinhood chain right now would exceed its equity trading business for the year.

343
00:20:33.922 --> 00:20:39.363
Okay, so absolutely massive amounts of revenue that is flowing.

344
00:20:40.003 --> 00:20:42.245
What's going on in Robinhood land?

345
00:20:42.305 --> 00:20:44.306
What are you seeing in Robinhood chain?

346
00:20:44.667 --> 00:20:47.548
Is this all meme coin shenanigans?

347
00:20:47.689 --> 00:20:49.310
Is that a good thing?

348
00:20:49.550 --> 00:20:50.350
What do you make of this?

349
00:20:51.751 --> 00:21:04.100
So there's this weird meta that has now transfixed people trading on Robinhood chain, which is this pairing of meme coins to stocks, especially these kind of micro cap stocks.

350
00:21:04.700 --> 00:21:06.922
So the big one was there was this meme coin called Boner,

351
00:21:07.782 --> 00:21:14.967
And it was paired against HIMSS, which of course is one of these direct-to-consumer like, you know, ED medication platforms.

352
00:21:15.007 --> 00:21:17.008
That's, you know, it's very big company.

353
00:21:17.048 --> 00:21:20.310
If those of you haven't heard of it, you know, HIMSS and HERS, they're the same company.

354
00:21:20.370 --> 00:21:20.830
Never heard of it.

355
00:21:20.850 --> 00:21:21.451
Never heard of it.

356
00:21:21.551 --> 00:21:22.191
Yeah, no idea.

357
00:21:22.231 --> 00:21:23.972
That just goes straight in my mailbox.

358
00:21:25.113 --> 00:21:30.236
And so they had this meme coin that was tied to HIMSS and people started copying this.

359
00:21:30.256 --> 00:21:32.398
So Boner really took off, got a lot of excitement.

360
00:21:33.018 --> 00:21:33.438
And...

361
00:21:34.479 --> 00:21:39.841
people started copying this model with a bunch of other stocks that were paired to meme coins.

362
00:21:39.921 --> 00:21:41.122
Real stocks are you talking about?

363
00:21:41.402 --> 00:21:43.102
Real stocks, real stocks, tokenized stocks, right?

364
00:21:44.023 --> 00:21:49.265
So now the problem with a lot of these tokenized stock meme coin pairings is that, of course, these things are trading 24-7.

365
00:21:49.305 --> 00:21:52.266
They're trading when the stock market is closed, and they're trading on the weekends.

366
00:21:53.256 --> 00:22:02.619
So last weekend, there were a number of these stocks that the meme coins that they were paired against started really running up over the weekend because, of course, you know, this stuff has just been taking off lately.

367
00:22:03.299 --> 00:22:10.502
And the problem with a meme coin paired with a stock taking off on a weekend is that there's no arbitrage you can do on the weekend.

368
00:22:10.822 --> 00:22:13.083
There's no way to move the real price of the stock up.

369
00:22:13.703 --> 00:22:16.824
And the floats of these stocks are very small on Robinhood.

370
00:22:17.404 --> 00:22:22.808
compared to the actual float of the real stock, which means that people thought they had these huge runners.

371
00:22:22.828 --> 00:22:25.210
You know, they're like, oh my God, we're all making so much money.

372
00:22:25.290 --> 00:22:26.370
This thing is running to the moon.

373
00:22:26.551 --> 00:22:27.451
You got to buy in now.

374
00:22:27.992 --> 00:22:35.557
And then on Monday morning, once the market opens, people realize like, oh wait, this thing is de-pegged from the underlying stock by like 400%.

375
00:22:37.278 --> 00:22:45.327
And of course, what's going to happen is that people are going to start minting the actual underlying stock, selling into the people on Robinhood and destroying the meme coin.

376
00:22:45.928 --> 00:22:51.574
And so this just started happening en masse, basically either one on the overnight trades or on the weekend trades.

377
00:22:51.914 --> 00:22:57.000
So all the guys in the meme coin trenches were just getting wrecked programmatically as soon as markets opened again.

378
00:22:57.280 --> 00:23:04.826
Is it mainly the meme coin trenches that were getting wrecked, or is there any fallout to kind of the Tradify market on the other side?

379
00:23:04.866 --> 00:23:09.710
I guess that's a bit of the tail wagging the dog, because it's not enough volume to move the big markets.

380
00:23:09.730 --> 00:23:14.154
The amount of assets minted on these chains is like less than a percent of the underlying float.

381
00:23:14.554 --> 00:23:18.718
It's so small, but like the meme coin, of course, can become a big runner and get a lot of volume.

382
00:23:19.238 --> 00:23:22.461
So this is what we were starting to see over the weekend.

383
00:23:22.481 --> 00:23:24.483
So just a lot of people doing very stupid things,

384
00:23:25.183 --> 00:23:34.094
And kind of imagining that this was like a GameStop moment, that maybe we can kind of band together as like a school of fish and like take on the stock and short squeeze these headfirsts.

385
00:23:34.394 --> 00:23:36.036
You know, we were just like, no, no, no, no, no.

386
00:23:36.056 --> 00:23:36.737
You don't understand.

387
00:23:37.758 --> 00:23:40.060
GameStop only worked because it was so big.

388
00:23:40.661 --> 00:23:45.563
It was like a civilization-level short squeeze that happened with GameStop.

389
00:23:45.823 --> 00:23:50.426
Doing that with some random trenchers on some random stock, you're just going to get destroyed.

390
00:23:50.466 --> 00:23:52.386
That's a guaranteed way to lose money.

391
00:23:53.387 --> 00:24:08.214
And so now lately we've seen these experiments where people are now taking micro-cap stocks, not the size of a HIMSS, which is a multi-billion dollar company, and said these micro-cap stocks are like $5, $10 million NASDAQ stocks that are at risk of getting delisted.

392
00:24:09.034 --> 00:24:12.556
And so now, of course, those can't actually be tokenized.

393
00:24:13.057 --> 00:24:15.238
Nobody's tokenizing $5 million microcap stocks.

394
00:24:15.698 --> 00:24:21.682
So I think there was like these meme coins that pretend to be microcap stocks.

395
00:24:21.782 --> 00:24:25.424
They're named the same thing as the microcap stocks paired against other meme coins.

396
00:24:26.104 --> 00:24:35.190
And now those are starting to trade in a crazy way that's getting reflected almost like an affinity trade in the actual underlying meme microcap stocks.

397
00:24:35.330 --> 00:24:35.830
Okay, so...

398
00:24:35.850 --> 00:24:36.751
There's all this craziness going on now.

399
00:24:36.771 --> 00:24:38.713
That's, I think, what I was trying to make sense of.

400
00:24:38.733 --> 00:24:43.957
You're deeper in the trenches than I am, Hasee, but I was trying to make sense of this story, the Farmy story.

401
00:24:44.097 --> 00:24:45.918
So this is a...

402
00:24:46.339 --> 00:24:48.820
I believe this is a microcap.

403
00:24:48.881 --> 00:24:49.721
DGEN's found...

404
00:24:50.902 --> 00:24:59.107
Jin Kuan in Farmy's filings, I guess Farmy is a micro cap mushroom stock.

405
00:24:59.547 --> 00:25:05.671
Chinese dried mushroom micro cap has 15 employees and literally means money mushroom.

406
00:25:05.951 --> 00:25:14.656
OK, so some meme coin started trading against not this stock, but some meme coin version of this stock.

407
00:25:15.037 --> 00:25:17.078
They just named a meme coin after the company.

408
00:25:17.238 --> 00:25:23.201
they named a meme coin after the company and they set the tokens to the exact float of the stock.

409
00:25:23.221 --> 00:25:25.182
So I think the supply was sort of the same.

410
00:25:26.003 --> 00:25:37.849
But the attention economics as this meme coin began to run actually filtered out into the TradFi world for the actual stock of this company.

411
00:25:38.169 --> 00:25:41.891
And the actual stock of this company went up like 300%, 350% at some point.

412
00:25:41.911 --> 00:25:42.431
So now this is,

413
00:25:46.573 --> 00:25:52.676
You know, the meme coin economy can affect TradFi in the big assets, like the HIMSS assets.

414
00:25:52.696 --> 00:25:57.158
Certainly can't touch something like NVIDIA or Google or any of the big tech companies.

415
00:25:57.178 --> 00:26:00.140
But a micro cap, well, that's meme coin size.

416
00:26:00.560 --> 00:26:08.424
And so we saw in this instance the attention economy of meme coins actually filtering out and affecting TradFi stocks.

417
00:26:08.764 --> 00:26:10.265
That's what you're talking about, right?

418
00:26:11.565 --> 00:26:11.926
Yes.

419
00:26:12.266 --> 00:26:14.327
I mean, to be clear, it's kind of like,

420
00:26:15.354 --> 00:26:19.840
man, we have fallen a long way that we're now like playing games with $5 million micro caps.

421
00:26:20.361 --> 00:26:23.885
Like we used to have meme coin runners that would go to like a billion.

422
00:26:24.626 --> 00:26:32.396
And now we're like, oh, wow, we moved to $5 million Chinese mushroom company that's at risk of getting delisted on the NASDAQ.

423
00:26:33.217 --> 00:26:34.358
Like, this is, I mean, I don't know.

424
00:26:34.378 --> 00:26:35.458
We shouldn't be proud of ourselves.

425
00:26:35.478 --> 00:26:36.159
Is that what you're saying?

426
00:26:36.179 --> 00:26:36.939
No, we should not.

427
00:26:36.979 --> 00:26:38.100
We should not be proud of ourselves.

428
00:26:38.440 --> 00:26:42.462
And I think, like, on a more obvious level, this is stupid.

429
00:26:42.763 --> 00:26:46.045
Like, this is obviously not good for people to be doing this.

430
00:26:46.125 --> 00:26:49.106
Is that what you meant by your jackassery quote you said?

431
00:26:49.306 --> 00:26:49.567
Yes.

432
00:26:49.587 --> 00:26:50.187
What do you mean?

433
00:26:50.447 --> 00:26:53.489
The fact that this is becoming a meta all of a sudden on Robin Hood chain.

434
00:26:53.709 --> 00:26:55.490
Now, to be clear, this is not the only thing people are doing on Robinhood.

435
00:26:55.810 --> 00:26:57.991
There's more conventional meme coins like Cash Cat, right?

436
00:26:58.031 --> 00:26:59.451
Cash Cat is just a meme coin.

437
00:26:59.631 --> 00:27:00.092
You can buy it.

438
00:27:00.112 --> 00:27:02.793
It's like Doge or whatever, any of these other meme coins.

439
00:27:03.053 --> 00:27:04.974
And that, I have no problem, but that's totally fine.

440
00:27:05.634 --> 00:27:09.255
You know, it's just kind of people just playing dice.

441
00:27:09.295 --> 00:27:10.156
You know, it's like, whatever.

442
00:27:10.396 --> 00:27:12.117
Maybe it'll win, maybe you'll lose, but it's fine.

443
00:27:13.157 --> 00:27:22.221
With these kinds of things where people are manufacturing these meme coin to stock pairs, right, and they're doing it over and over again at scale, hoping that one of them is going to hit.

444
00:27:22.241 --> 00:27:22.981
Right.

445
00:27:23.250 --> 00:27:31.879
We've seen the supply chain of meme coins, how they're created, how they're monetized, all the little middlemen who keep doing this and paying the influencers to pump this one or pump that one.

446
00:27:32.180 --> 00:27:33.321
And, oh, we've got a runner.

447
00:27:33.401 --> 00:27:34.402
Everyone buys into this thing.

448
00:27:34.422 --> 00:27:39.427
And then the problem with the story relative to anything else is that this construct of

449
00:27:40.321 --> 00:27:41.502
will reliably fail.

450
00:27:41.843 --> 00:27:52.014
Like, you will definitely lose money if you do this because, of course, if your stock token is de-pegging from the underlying stock, you will get screwed by hedge funds that will come in and mint over your head.

451
00:27:52.374 --> 00:27:59.642
So everybody involved is going to lose money here except for the meme coin boosters who are promoting this and, you know, taking some of the meme coin up front.

452
00:28:00.263 --> 00:28:04.205
So it's just like, we should not be encouraging this kind of financial stupidity.

453
00:28:04.765 --> 00:28:06.646
Obviously, people are enjoying it on some level.

454
00:28:06.666 --> 00:28:20.954
Like, you know, there's this kind of, that's what I call the sort of financial jackass is that like, you know, if you remember the show Jackass in the 90s, where like people would just, you know, they would like just, you know, I don't know, hit themselves in the balls over and over again and see how bad you could do it.

455
00:28:21.374 --> 00:28:24.256
And the entertainment was in the stupidity, right?

456
00:28:24.276 --> 00:28:24.376
Yeah.

457
00:28:24.776 --> 00:28:26.597
That's kind of, I feel like, what we're watching here.

458
00:28:26.617 --> 00:28:29.678
It's not like trading Doge, you know?

459
00:28:29.978 --> 00:28:32.179
This is like a competition of stupidity.

460
00:28:32.700 --> 00:28:35.241
And, like, nobody wins when that becomes a game.

461
00:28:35.621 --> 00:28:45.905
So let me, like, there is something novel here in Robinhood chain with tokenized equities that we get, which is we have the brokerage distribution of Robinhood.

462
00:28:46.406 --> 00:28:49.707
We have official, like, real stock tokens.

463
00:28:50.167 --> 00:28:51.048
And then we have...

464
00:28:51.708 --> 00:28:54.049
AMMs and permissionless pairing.

465
00:28:54.289 --> 00:29:00.730
And the permissionless pairing can be against, you know, stable coins, of course, but can also be against meme coins.

466
00:29:01.190 --> 00:29:02.571
And that is something that's novel.

467
00:29:02.591 --> 00:29:07.152
I mean, we were talking last week of what's going on that's novel in crypto.

468
00:29:07.192 --> 00:29:10.412
This is something novel, some sort of asset, some meme coin.

469
00:29:10.692 --> 00:29:13.733
You can pair a token against anything.

470
00:29:14.133 --> 00:29:19.214
Is there something new here being created apart from all the casino games?

471
00:29:19.294 --> 00:29:19.975
Is there something

472
00:29:22.496 --> 00:29:26.359
Uh, it's, it's hard to see what the social benefit is of people doing this.

473
00:29:26.599 --> 00:29:27.820
Like you can imagine.

474
00:29:27.920 --> 00:29:34.466
So look, I can imagine a world where if you are HIMSS and you're like, Hey, I want more people to buy my stock.

475
00:29:35.347 --> 00:29:39.450
Maybe you create some meme coin on Robinhood chain tied to HIMSS.

476
00:29:39.790 --> 00:29:41.111
And the meme coin goes up, HIMSS goes up.

477
00:29:41.131 --> 00:29:45.135
People are buying HIMSS as a, as you know, that you can, I mean, I don't know if that's going to work.

478
00:29:45.455 --> 00:29:54.982
I don't know if it's a good use of your money or your time or your marketing budget, but you can imagine that maybe would be socially constructive and create some new form of capital formation or something, right?

479
00:29:56.102 --> 00:30:01.866
Having third parties do this, who are, again, making money by paying influencers and doing the whole thing, like we know how the whole game works, right?

480
00:30:02.567 --> 00:30:04.148
This does not feel useful.

481
00:30:04.548 --> 00:30:05.789
It doesn't, it's also not zero sum.

482
00:30:05.809 --> 00:30:06.870
It's like negative sum.

483
00:30:07.290 --> 00:30:10.612
It's like really, really negative sum, which is not good, except for the hedge funds.

484
00:30:10.632 --> 00:30:11.653
I guess the hedge funds are making money.

485
00:30:12.754 --> 00:30:14.275
So my view here is that

486
00:30:15.301 --> 00:30:21.303
The other problem with the story is that it's not really clear that Robinhood is actually onboarding a lot of net new users yet.

487
00:30:21.923 --> 00:30:22.083
Right.

488
00:30:22.523 --> 00:30:23.503
They might at some point.

489
00:30:23.783 --> 00:30:30.105
But if you look, there's a Dune dashboard that shows a lot of the data about where the Robinhood user are coming from.

490
00:30:30.705 --> 00:30:32.826
And it's clear, actually, a lot of them are coming from FOMO.

491
00:30:33.966 --> 00:30:39.390
actually most of the activity it seems like right now is coming from FOMO users who are, they're basically chain agnostic at this point.

492
00:30:39.670 --> 00:30:44.312
So if you're on FOMO, you can buy something on Solana, you can buy something on Robinhood chain, you can buy something on base, it doesn't really matter.

493
00:30:44.332 --> 00:30:46.174
It's just all assets to them.

494
00:30:46.614 --> 00:30:51.056
And then GMGN is the other platform that seems to be driving a lot of volume to Robinhood chain.

495
00:30:51.897 --> 00:30:53.098
But we're not really seeing a lot of

496
00:30:53.738 --> 00:30:55.699
Net new wallets, not a lot of net new addresses.

497
00:30:55.919 --> 00:30:57.260
Now, maybe they do come at some point.

498
00:30:57.761 --> 00:31:02.744
And usually what we see in meme coin cycles is that they come in late when the numbers start getting really big, right?

499
00:31:02.964 --> 00:31:06.686
So right now we're getting a lot of volume relative to crypto.

500
00:31:06.706 --> 00:31:09.608
But if you look at the TVL and Robinhood chain, it's actually not that big.

501
00:31:09.988 --> 00:31:11.869
TVL and Robinhood chain is like 700, 800 mil.

502
00:31:12.329 --> 00:31:12.910
You know, it's like...

503
00:31:13.630 --> 00:31:20.654
I don't know, one-seventh, one-eighth of base or of Solana, even though it has a lot more volume than base.

504
00:31:20.714 --> 00:31:23.335
And right now it's like second only to Solana in terms of DEX volume.

505
00:31:23.775 --> 00:31:32.320
So we're seeing a lot of trading activity on these chains, a lot of AMM activity, but the net number of new users right now doesn't look to be that big.

506
00:31:32.860 --> 00:31:34.981
I think it's a lot of crypto natives right now.

507
00:31:35.362 --> 00:31:41.565
But if we see this stuff grow by another order of magnitude, then I think you might be right in that this might be a more significant onboarding event.

508
00:31:41.883 --> 00:31:48.969
Do you think there are any knock-on benefits to other assets or other ecosystems in crypto?

509
00:31:49.249 --> 00:31:57.096
For example, does Ethereum benefit at all from the takeoff of the Robinhood chain, at least takeoff in terms of meme use case?

510
00:31:57.396 --> 00:32:02.840
It seems like some of the meta is moving maybe from Solana to Robinhood chain, at least for the moment.

511
00:32:03.261 --> 00:32:05.282
Obviously, Solana is still much larger.

512
00:32:06.083 --> 00:32:09.186
But rather than pump fun, there's this PONS.

513
00:32:09.666 --> 00:32:14.309
kind of meme coin launcher app that has really taken off that's more native to Robinhood.

514
00:32:14.709 --> 00:32:18.612
This is Lorenzo from ARK, an analyst at ARK.

515
00:32:18.672 --> 00:32:28.578
He's talking about Robinhood revenue and comparing that to Ethereum and just making the point that the ETH take rate is so damn low when it comes to the L2 economy.

516
00:32:28.658 --> 00:32:34.102
So he's saying this, Robinhood chain grossed 20x more revenue yesterday than 10 days ago.

517
00:32:34.122 --> 00:32:35.443
Ethereum got paid half.

518
00:32:35.943 --> 00:32:37.324
So he pulls a date.

519
00:32:37.664 --> 00:32:43.627
August 30th, Robinhood chain made $108 million in revenue.

520
00:32:44.147 --> 00:32:45.668
And a portion of that went to Arbitrum.

521
00:32:45.728 --> 00:32:47.008
It's 10% cut.

522
00:32:47.409 --> 00:32:48.729
90% went to Robinhood.

523
00:32:49.190 --> 00:32:50.530
Ethereum made $155, a take rate of 0.014%.

524
00:32:56.413 --> 00:32:59.195
What do you think this means for the economics of L2?

525
00:32:59.615 --> 00:33:01.816
Is this another L2 in the wild?

526
00:33:01.836 --> 00:33:04.177
Do you think this has any benefit to Ethereum?

527
00:33:04.478 --> 00:33:07.479
Do you think that this is Solana's loss?

528
00:33:08.100 --> 00:33:10.381
What are the after effects of the Robinhood chain?

529
00:33:11.631 --> 00:33:15.993
Yeah, so I mean, it's certainly better for Ethereum for this to be happening on Robinhood chain than on Solana.

530
00:33:16.893 --> 00:33:19.454
Obviously, there's an interoperability with everything on Ethereum.

531
00:33:19.474 --> 00:33:20.875
So these assets can move back and forth.

532
00:33:21.255 --> 00:33:23.456
They can come live on Ethereum mainnet if they so choose.

533
00:33:24.316 --> 00:33:27.157
And of course, ETH is the native asset on Robinhood chain.

534
00:33:27.357 --> 00:33:28.197
It's how you pay fees.

535
00:33:28.517 --> 00:33:31.679
So, you know, there is some flow through effect of ETH, the currency.

536
00:33:32.639 --> 00:33:36.783
In terms of direct revenue that they're getting from Robinhood chain, it's pretty clear that's not happening.

537
00:33:37.564 --> 00:33:39.466
And that's not really the main story.

538
00:33:40.167 --> 00:33:45.793
In the same way, it's almost like, you know, if we have a satellite state, the U.S. has a satellite state that uses the dollar.

539
00:33:45.813 --> 00:33:46.974
It's a dollarized economy.

540
00:33:47.714 --> 00:33:50.738
We're not getting tax revenue from countries that dollarize.

541
00:33:51.058 --> 00:33:54.541
But we do increase exports of the dollar and we increase the demand for the dollar globally.

542
00:33:55.202 --> 00:33:58.163
I think that's the right mental model for what Robinhood chain is to Ethereum.

543
00:33:58.644 --> 00:34:02.646
It's part of the Ethereum economic zone, but it's not directly paying taxes.

544
00:34:02.666 --> 00:34:03.466
It's not a colony.

545
00:34:03.906 --> 00:34:07.508
It's not like this is, you know, the 51st state of Ethereum or something like that.

546
00:34:07.768 --> 00:34:09.469
So I think that's kind of the wrong mental model.

547
00:34:09.489 --> 00:34:13.251
And if you're looking for that and you're kind of thinking, well, when is Ethereum going to raise the tax rate?

548
00:34:13.851 --> 00:34:21.755
It's like asking, you know, when are we going to tax Venezuela when Venezuela has dollarized away from the Bolivar to the dollar or like all the countries in the world that have dollarized

549
00:34:22.755 --> 00:34:23.796
When are we going to start taxing them?

550
00:34:24.136 --> 00:34:25.277
The answer is probably never.

551
00:34:25.317 --> 00:34:26.758
We're probably not going to tax them at all.

552
00:34:27.418 --> 00:34:35.084
But it's still net beneficial to the U.S. to have countries that use the dollar, even if they are not part of our distinct political union.

553
00:34:35.707 --> 00:34:36.508
How about for Solana?

554
00:34:36.568 --> 00:34:40.470
Net loss for Solana, attracting some of that meme coin attention energy?

555
00:34:41.131 --> 00:34:41.571
No doubt.

556
00:34:41.791 --> 00:34:42.152
No doubt.

557
00:34:42.212 --> 00:34:46.535
I mean, Solana, so much of Solana's REV has been from meme coin economy.

558
00:34:47.135 --> 00:34:50.437
And, you know, Robinhood just flipped Solana for REV.

559
00:34:50.938 --> 00:34:53.860
It is now the number one chain by REV, at least over the last few days.

560
00:34:54.500 --> 00:34:56.322
And that's really significant.

561
00:34:56.962 --> 00:35:03.970
You know, now look, it's always easy to have a pop and it remains to be seen whether or not this is going to continue on Robinhood chain.

562
00:35:04.270 --> 00:35:08.995
We've seen these kind of meme coin manias rise and fall with different chains as they come into the fore.

563
00:35:09.215 --> 00:35:12.058
You know, Base had a mania where they had a huge amount of meme coin volume.

564
00:35:12.679 --> 00:35:13.860
Robinhood is a beast.

565
00:35:14.461 --> 00:35:15.542
with respect to their distribution.

566
00:35:15.562 --> 00:35:17.884
And I feel like their marketing efforts are actually very on point.

567
00:35:18.344 --> 00:35:19.685
So they've been leaning into this.

568
00:35:19.705 --> 00:35:20.926
Vlad has been leaning into this.

569
00:35:21.247 --> 00:35:26.751
I think he understands the language of DGENs seemingly a lot better than, you know, Brian Armstrong and Baze does.

570
00:35:27.892 --> 00:35:29.773
But still a lot of game left to be played.

571
00:35:29.793 --> 00:35:31.014
So I would not counsel on out.

572
00:35:31.435 --> 00:35:32.275
They still have the TVL.

573
00:35:32.396 --> 00:35:33.296
They still have more users.

574
00:35:33.537 --> 00:35:37.680
They still have an enormous distribution edge relative to anybody else in this game.

575
00:35:37.920 --> 00:35:40.402
They still also have lower transaction fees.

576
00:35:40.422 --> 00:35:41.243
This was interesting.

577
00:35:41.283 --> 00:35:51.572
Robinhood chain's median fee is now 2x the fee of Ethereum L1, so twice as much as Ethereum, and 128x the fee cost of Solana.

578
00:35:51.593 --> 00:35:57.178
So people paying close to $0.10 per transaction on Robinhood right now

579
00:35:58.018 --> 00:35:59.639
So of course they can scale that.

580
00:35:59.719 --> 00:36:03.420
That may not be the case forever, but at least right now it is the case.

581
00:36:03.820 --> 00:36:11.942
Maybe this is partially why Solana is moving a bit more, might I say, in the store of value direction.

582
00:36:12.402 --> 00:36:13.743
So I don't know if you've.

583
00:36:14.343 --> 00:36:26.652
seen this or talked about this previously, but Solana had its first binding on-chain governance vote to actually reduce issuance on the Solana chain.

584
00:36:27.112 --> 00:36:34.657
So Solana issuance was scheduled to reduce down to a 1.5% per year floor.

585
00:36:35.098 --> 00:36:38.340
And just by way of context, Ethereum right now is about

586
00:36:38.760 --> 00:36:42.082
0.8, 0.9% annualized.

587
00:36:42.102 --> 00:36:43.142
So it's under a percent.

588
00:36:43.443 --> 00:36:45.504
I think Bitcoin is something like 0.8%.

589
00:36:46.244 --> 00:36:50.086
Of course, that will halve in, in what, two years time again.

590
00:36:50.146 --> 00:36:52.047
So that will continue to cut down.

591
00:36:52.768 --> 00:36:56.690
Solana just voted and the vote barely passed

592
00:36:57.250 --> 00:37:02.217
to create that 1.5% issuance floor, have that arrive in 2029, the beginning of 2029, rather than 2032.

593
00:37:02.237 --> 00:37:04.341
So bringing that up by three years and saving about

594
00:37:12.873 --> 00:37:15.455
projected about 19 million souls.

595
00:37:15.515 --> 00:37:21.940
That would be $2 billion of extra issued soul that would, of course, go to validators.

596
00:37:22.901 --> 00:37:28.185
This passed, apparently, according to Solana, governance required 67% to pass.

597
00:37:30.247 --> 00:37:36.216
And it passed just barely by 0.33 percentage points above the threshold.

598
00:37:36.677 --> 00:37:39.040
A binding on-chain governance vote.

599
00:37:39.361 --> 00:37:45.069
There was some drama where Kraken Solana validators apparently first they voted no.

600
00:37:45.610 --> 00:37:47.290
And then they switched their vote.

601
00:37:48.291 --> 00:37:57.453
Mert, Helios CEO, I think Helios was part of the authors of this Solana improvement proposal, said this.

602
00:37:57.533 --> 00:38:05.555
After 500 calls in the past few hours, we got all the votes in in the last second and passed the disinflation proposal by a literal hair.

603
00:38:05.915 --> 00:38:06.435
Let's go.

604
00:38:06.515 --> 00:38:06.895
We did it.

605
00:38:07.655 --> 00:38:17.843
So this is Solana now becoming a bit more scarce, reducing issuance, going in the direction that we've seen, obviously, Bitcoin go algorithmically.

606
00:38:18.163 --> 00:38:22.387
We've also seen Ethereum go, which is reducing its issuance.

607
00:38:23.007 --> 00:38:24.408
What do you make of this?

608
00:38:24.608 --> 00:38:32.254
Is Solana trying to play the store of value monetary game the way Bitcoin and Ethereum have tried to play it?

609
00:38:32.314 --> 00:38:34.095
That hasn't been their message in the past.

610
00:38:34.576 --> 00:38:39.139
I remember Anatoly telling me that issuance didn't really matter.

611
00:38:39.159 --> 00:38:41.481
It was basically all recycled.

612
00:38:42.041 --> 00:38:43.202
And now here they are.

613
00:38:43.262 --> 00:38:44.523
They're cutting issuance.

614
00:38:44.783 --> 00:38:45.504
What do you make of this?

615
00:38:47.105 --> 00:38:47.885
Yeah, I think...

616
00:38:48.925 --> 00:38:52.127
I think the wrong framing is that, okay, this means they're playing the store of value game.

617
00:38:52.767 --> 00:38:54.568
I don't think that's how anybody in Solana thinks about it.

618
00:38:55.348 --> 00:38:58.130
At the end of the day, this is basically inflation.

619
00:38:58.250 --> 00:39:01.732
Inflation is like nominal yield in the sense that it's not real yield.

620
00:39:02.212 --> 00:39:05.974
You are getting inflated at the expense of the validators who are getting more sole.

621
00:39:06.414 --> 00:39:07.995
A huge amount of the sole is already staked.

622
00:39:08.555 --> 00:39:12.057
And so what really happens, let's imagine that 100% of sole was staked.

623
00:39:12.717 --> 00:39:14.958
Right now, I don't know what exactly it is, probably 50% or something.

624
00:39:15.599 --> 00:39:15.799
Um...

625
00:39:16.579 --> 00:39:29.957
If you imagine the 100% of Sol was staked, then everybody getting more Sol because they're staking or they have it in staking derivatives or whatever is basically just, okay, well, the unit price goes down, our ownership goes up in terms of units, but we pay taxes.

626
00:39:30.995 --> 00:39:33.976
And so it's creating tax leakage if you are creating high inflation.

627
00:39:33.996 --> 00:39:37.517
You're talking about actual real-world taxes on kind of income from state.

628
00:39:37.637 --> 00:39:39.377
Actual real-world taxes for those who pay.

629
00:39:39.397 --> 00:39:40.257
Yes.

630
00:39:40.617 --> 00:39:43.498
Yeah, it basically creates tax leakage.

631
00:39:43.678 --> 00:39:45.218
It's inefficient.

632
00:39:45.238 --> 00:39:54.601
And really what you'd rather do is pay the minimum amount of yield that you need to in order to keep the market functioning, in order to keep security solid, in order to keep the validators happy.

633
00:39:55.761 --> 00:40:00.382
And, you know, the biggest people who were fighting in the past for nominal yield were the DATS.

634
00:40:01.242 --> 00:40:02.823
The debts really care about nominal yield.

635
00:40:02.843 --> 00:40:03.983
Why do they care about nominal yield?

636
00:40:04.463 --> 00:40:10.465
Because it gives them a story of why you should have your money in a Solana debt instead of in a Solana ETF.

637
00:40:10.986 --> 00:40:22.590
It's because, well, we can stake, we can do all these fancy staking strategies, we can lever up on staking yield or whatever, and that's why you should give us money as a more complex financial strategy than what you could get in an ETF.

638
00:40:24.063 --> 00:40:26.264
That story weakens when the DATs are all dying.

639
00:40:27.084 --> 00:40:29.265
And right now, Solana DATs are struggling.

640
00:40:30.165 --> 00:40:34.186
There is no runaway winner like there is for strategy or for bid mine.

641
00:40:34.827 --> 00:40:41.769
And as a result, you can sort of see that reflected in this vote, is that this vote was tried earlier, failed miserably.

642
00:40:42.129 --> 00:40:46.871
There was not anywhere near the economic consensus because the thinking was like, look, nominal yield might be stupid.

643
00:40:47.391 --> 00:40:48.551
It might result in tax leakage.

644
00:40:48.571 --> 00:40:52.953
It might be a little bit of a economic mirage, but it's good for business.

645
00:40:53.533 --> 00:40:55.396
So you need the DATs, make the DATs happy.

646
00:40:55.436 --> 00:40:57.178
Let's give all these service providers a business model.

647
00:40:57.919 --> 00:41:03.547
But in a world where, look, the DATs aren't working, that's not our story, so let's not kowtow to the DATs.

648
00:41:03.567 --> 00:41:09.836
Let's just lower inflation, and let's hope that that means that it's going to be better for asset prices and less tax leakage.

649
00:41:10.597 --> 00:41:13.518
That seems to have been the story that rallied everybody for this vote.

650
00:41:13.979 --> 00:41:14.739
I think it makes sense.

651
00:41:15.439 --> 00:41:20.422
And absent any kind of business models that depend on nominal yield, that is obviously the right answer.

652
00:41:21.162 --> 00:41:23.963
As a network, you want to pay the minimum amount in terms of inflation.

653
00:41:24.163 --> 00:41:25.804
In the same way, look, it's like a government.

654
00:41:25.844 --> 00:41:26.604
It's like Doge, right?

655
00:41:26.925 --> 00:41:28.005
The government's saving money.

656
00:41:28.025 --> 00:41:34.268
You want to pay the minimum amount to all of the service providers who run the government, which is, of course, you know, the tax rate.

657
00:41:34.548 --> 00:41:37.890
You want to minimize that tax rate and leave the rest of the money in the hands of the people.

658
00:41:38.630 --> 00:41:45.779
But, you know, it's only by virtue of the belief that, well, if we give more money to the government, that will be better for the economy.

659
00:41:45.799 --> 00:41:46.720
It'll be better for society.

660
00:41:46.760 --> 00:41:50.484
It'll make us grow faster or do better things or live in a more perfect world.

661
00:41:50.804 --> 00:41:55.890
But if you no longer believe that, then it's like, yeah, just lower the taxes and leave the money with us.

662
00:41:56.571 --> 00:42:06.739
issuance decisions, monetary policy decisions for decentralized or more decentralized networks to me are so fascinating because every network handles it a little bit differently.

663
00:42:06.859 --> 00:42:11.362
So you could contrast this to the EIP 8361 debate.

664
00:42:11.743 --> 00:42:14.465
I was going on Ethereum, you know, about a month ago.

665
00:42:14.885 --> 00:42:20.666
where there was governance posts to actually reduce Ethereum issuance to, modify the yield curve.

666
00:42:21.266 --> 00:42:24.947
And that wasn't a stake-weighted governance vote.

667
00:42:25.387 --> 00:42:34.729
Ethereum has no ability to really do that, or it's not in the kind of the social contract of the Ethereum network to really do that.

668
00:42:34.869 --> 00:42:38.830
It operates more on this rough consensus where you post something.

669
00:42:38.930 --> 00:42:44.051
And I don't know, how does a monetary policy change actually come into effect in Ethereum?

670
00:42:44.871 --> 00:42:46.031
Bitcoin is even more.

671
00:42:46.051 --> 00:42:49.592
They have some sort of a immutability religion, right?

672
00:42:49.612 --> 00:42:50.992
Which is like, yeah, go ahead.

673
00:42:51.132 --> 00:42:54.613
Try to change Bitcoin's issuance policy.

674
00:42:54.953 --> 00:42:55.733
See what happens.

675
00:42:55.773 --> 00:42:56.994
A massive fork will happen.

676
00:42:57.454 --> 00:42:59.634
But that is also rough governance.

677
00:43:00.014 --> 00:43:03.095
So the way this decision was made is kind of interesting, right?

678
00:43:03.155 --> 00:43:08.896
It's like 67% of all of the stake-weighted validators voted.

679
00:43:09.296 --> 00:43:09.537
What do you

680
00:43:11.697 --> 00:43:13.118
Is that a feature or a bug?

681
00:43:13.418 --> 00:43:17.221
There's even like stake weighted governance voting for issuance.

682
00:43:17.281 --> 00:43:20.883
Does that disclude you from the store of value race entirely?

683
00:43:21.044 --> 00:43:22.024
Or like what?

684
00:43:22.565 --> 00:43:28.469
How do you contrast that to the recent EIP from Ethereum, which doesn't feel like it's going anywhere?

685
00:43:29.267 --> 00:43:31.848
Yeah, it's a great question and a very good contrast.

686
00:43:32.649 --> 00:43:35.830
So Vitalik historically has been against on-chain voting.

687
00:43:37.851 --> 00:43:41.053
So on-chain governance was something that really emerged after Ethereum.

688
00:43:41.533 --> 00:43:55.280
It started with Tezos, and then most of the chains after Tezos ended up adopting some kind of on-chain governance, such that purely by some kind of stake-weighted vote, some change in the underlying protocol automatically went into effect.

689
00:43:56.060 --> 00:43:57.020
Ethereum has never done this.

690
00:43:57.040 --> 00:44:02.161
The only thing for which Ethereum has on-chain governance is the gas limit or the block size, right?

691
00:44:02.441 --> 00:44:10.883
They have on-chain voting among validators that push up and push down through a sort of kind of crude voting mechanism of how big the block size becomes.

692
00:44:11.403 --> 00:44:15.144
Besides that, there is nothing else that the validators of Ethereum get to vote on.

693
00:44:15.764 --> 00:44:18.825
Everything else is decided through this kind of soft governance mechanism.

694
00:44:19.125 --> 00:44:25.507
Vitality stake is that there's kind of an enshrined plutocracy that can start to occur when you have stake-weighted voting.

695
00:44:26.267 --> 00:44:26.647
Exactly.

696
00:44:26.887 --> 00:44:32.068
So it's a little bit like, you know, take the Fed, for example, or even take our government, right?

697
00:44:32.568 --> 00:44:34.629
We don't have direct democracy in the government.

698
00:44:34.729 --> 00:44:41.971
We have this representative democracy where we elect, you know, the president, we elect the Senate and whatever, but they don't say, hey, great, here's the new tax bill.

699
00:44:42.331 --> 00:44:46.272
Let's send it out to all the people and you vote with your phone on whether or not you like this tax bill.

700
00:44:46.752 --> 00:44:47.272
We don't do that.

701
00:44:47.812 --> 00:44:58.998
And we don't do that for a very good reason, which is that it can lead to adverse consequences because people will often just, you know, if we voted on rates as a country, we would just vote rates down and down and down and down and down.

702
00:44:59.258 --> 00:45:00.779
And we'd probably result in massive inflation.

703
00:45:00.799 --> 00:45:02.280
And so we'd be terrible, right?

704
00:45:02.300 --> 00:45:04.121
We would be like Trump.

705
00:45:04.481 --> 00:45:05.362
We'd be constantly saying...

706
00:45:05.602 --> 00:45:06.623
Look, I want a lower mortgage.

707
00:45:06.643 --> 00:45:07.604
I want my socks to go up.

708
00:45:07.904 --> 00:45:09.947
And then we'd say, oh my God, I can't believe inflation happened.

709
00:45:09.967 --> 00:45:11.068
That sucks.

710
00:45:11.468 --> 00:45:13.130
And like, that's probably what we would do.

711
00:45:13.630 --> 00:45:16.293
And so to save us from ourselves, we don't have that system.

712
00:45:16.653 --> 00:45:22.079
We have a system of representative democracy where it kind of, look, you pick a guy and then you don't touch it for the next four years.

713
00:45:22.880 --> 00:45:25.002
And that's, you know, there's some wisdom in that.

714
00:45:25.522 --> 00:45:27.544
And that's kind of what Ethereum has chosen is to say, look,

715
00:45:28.285 --> 00:45:33.269
If we just leave this up to people, just voting with their money, they will vote themselves more money.

716
00:45:34.049 --> 00:45:40.714
And voting yourself more money feels good for the moment, but in the long run, it's actually important for us to protect you from yourselves.

717
00:45:41.635 --> 00:45:44.357
And the way in which we're going to protect you from yourselves is by being slow

718
00:45:45.137 --> 00:45:53.081
is by replacing people slowly in the kind of high priesthood of Ethereum and by holding on to values, even when those values don't seem cool anymore.

719
00:45:53.822 --> 00:45:58.304
And one of those values that doesn't seem cool is adherence to cypherpunk values and decentralization.

720
00:45:58.784 --> 00:45:59.104
Right?

721
00:45:59.304 --> 00:46:03.987
There's this sort of push and pull that you can see around us with people talking about Solana and Hyperliquid and all this stuff.

722
00:46:04.287 --> 00:46:10.210
It's like, hey, do we really need to be worrying so much about crops and, you know, how important it is to get privacy and blah, blah, blah?

723
00:46:10.430 --> 00:46:13.432
Why don't we just move faster and launch RWAs and, you know...

724
00:46:13.912 --> 00:46:16.554
tweet more number go up stuff and help the DATs.

725
00:46:17.615 --> 00:46:20.517
And Ethereum has said, no, we're not going to do that.

726
00:46:21.358 --> 00:46:24.681
Our job is to be a good steward of this overall ecosystem.

727
00:46:25.541 --> 00:46:26.622
And Solana takes a different tack.

728
00:46:26.962 --> 00:46:29.564
And I think it's good for there to be different approaches to governance.

729
00:46:30.547 --> 00:46:33.449
In the same way, they're like, look, Solana is not trying to be a store of value.

730
00:46:34.049 --> 00:46:35.530
Solana is not trying to be World War III resistant.

731
00:46:35.830 --> 00:46:38.991
They're trying to be the NASDAQ for blockchains, right?

732
00:46:39.071 --> 00:46:40.832
That's what they said, and they're sticking to it.

733
00:46:41.333 --> 00:46:46.335
I think that's great in the same way a company is not governed the same way a government is.

734
00:46:46.855 --> 00:46:47.436
And that's good.

735
00:46:47.876 --> 00:46:51.718
You don't want every institution of every scale governed the exact same way.

736
00:46:53.164 --> 00:46:53.624
Well said.

737
00:46:53.644 --> 00:46:55.966
We've got a lot of experience playing out in crypto for sure.

738
00:46:55.986 --> 00:47:01.989
We're talking about some more of them, including a 21 banks uniting behind a stablecoin.

739
00:47:02.009 --> 00:47:02.690
We'll talk about that.

740
00:47:02.790 --> 00:47:10.454
Also, Hasib, you just mentioned to me before we started recording this episode that the new chat GPT model Astra just came out.

741
00:47:10.514 --> 00:47:11.555
I want to ask you about this.

742
00:47:12.095 --> 00:47:13.036
All that and more.

743
00:47:13.056 --> 00:47:16.518
But before we do, we want to thank the sponsors that made this episode possible.

744
00:47:16.818 --> 00:47:18.440
Bankless Nation, we've built something for you.

745
00:47:18.600 --> 00:47:20.381
Introducing the Bankless MCP.

746
00:47:20.502 --> 00:47:31.492
ChatGPT and Claude are great at a lot of things, but ask them anything beyond the basics of crypto, about protocol mechanics, tokenomics, or just what happened last week in crypto, and the gaps will start to show.

747
00:47:31.592 --> 00:47:32.553
The problem is context.

748
00:47:32.733 --> 00:47:37.638
Bankless, on the other hand, has spent almost a decade building one of the deepest archives of crypto data anywhere.

749
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750
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751
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So you can go and connect it to your Claude or ChatGPT, and suddenly your AI can answer your crypto queries with the entire Bankless archive behind it.

752
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And every new Bankless article or episode gets added automatically, so the context keeps staying up to date.

753
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756
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So go check it out.

757
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There is a link in the show notes.

758
00:48:16.807 --> 00:48:20.990
And once you become a Bankless Premium member, you can hop into the Bankless Discord and let me know how you like it.

759
00:48:21.410 --> 00:48:21.610
Cheers.

760
00:48:43.961 --> 00:48:51.724
Each one, we get into his portfolio, what he's holding, the market structure, entry targets, fair market value of Bitcoin and Ether, and where we are in the cycle.

761
00:48:51.824 --> 00:48:54.225
There's new episodes that are released every Wednesday.

762
00:48:54.305 --> 00:48:55.025
They're 30 minutes.

763
00:48:55.085 --> 00:48:55.545
They're short.

764
00:48:55.585 --> 00:48:56.225
They're punchy.

765
00:48:56.345 --> 00:48:58.726
I think this crypto cycle is harder to navigate than most.

766
00:48:58.966 --> 00:49:00.207
So let's do it together.

767
00:49:00.347 --> 00:49:01.567
Go subscribe to this podcast.

768
00:49:01.627 --> 00:49:04.208
Search The DeFi Report wherever you get your podcasts.

769
00:49:04.268 --> 00:49:07.349
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770
00:49:07.469 --> 00:49:09.030
There's a new episode waiting for you now.

771
00:49:09.270 --> 00:49:19.922
Okay, Goldman Sachs, Bank of America, and others, a whole bunch of other banks, they plan to issue a dollar stablecoin, altogether a big banking consortium, in 2027.

772
00:49:20.122 --> 00:49:21.604
This out of Reuters.

773
00:49:21.644 --> 00:49:24.807
This is 21 financial institutions planning to do this.

774
00:49:25.268 --> 00:49:29.853
Of course, this is Clarity Act stuff, very official, very regulated.

775
00:49:30.313 --> 00:49:31.034
What do you think, Hasib?

776
00:49:31.054 --> 00:49:39.905
Do they have a shot against what's going on with, let's say, first movers like Tether, Circle, USDC, even Stripe seems to be ahead of the curve.

777
00:49:39.925 --> 00:49:42.148
The old banks coming up with a stablecoin.

778
00:49:42.488 --> 00:49:46.473
Do you think this is a nothing broker or do you think this could be a force in crypto?

779
00:49:47.802 --> 00:49:48.743
I am team nothing burger.

780
00:49:49.083 --> 00:49:53.386
I think like consortia are just so, I don't know, they're so NGMI.

781
00:49:55.167 --> 00:50:05.493
I've yet to see any consortium of this nature really prove themselves to be a force against more focused singular companies that have muscular founders who are working on something.

782
00:50:05.653 --> 00:50:14.039
Like you tell me, great, these 10 super regulated, super old, super slow moving banks have agreed to go and basically build a tech startup together.

783
00:50:15.097 --> 00:50:17.098
I'm like, oh my God, that sounds horrendous.

784
00:50:17.538 --> 00:50:19.118
And no, who's the CEO?

785
00:50:19.399 --> 00:50:20.119
Who's the founder?

786
00:50:20.159 --> 00:50:20.739
Who's the team?

787
00:50:20.759 --> 00:50:22.340
We don't have to talk about that.

788
00:50:22.360 --> 00:50:26.081
It's just like, who are the members of the committee that are going to decide what to do?

789
00:50:26.141 --> 00:50:28.602
I'm like, come on, this is, obviously this is not going to go anywhere.

790
00:50:29.042 --> 00:50:31.063
So, I mean, CircleStock was down a little bit on the day.

791
00:50:31.083 --> 00:50:37.825
I think it was down like 6%, which tells you, okay, even the market thinks there's only a 6% chance that this even matters.

792
00:50:39.328 --> 00:50:43.251
Yeah, that's not a lot percent in terms of it mattering.

793
00:50:43.311 --> 00:50:44.513
So I tend to agree with you.

794
00:50:44.893 --> 00:50:49.717
There was a massive data breach that just happened earlier this week.

795
00:50:49.757 --> 00:50:55.342
Hasib, $153 million, sorry, million driver's license were leaked.

796
00:50:55.422 --> 00:50:58.724
This has been called the worst KIC hack ever.

797
00:50:58.744 --> 00:51:03.649
So this is American driver's license all selling on the black market.

798
00:51:03.809 --> 00:51:05.030
63% Canadian as well.

799
00:51:05.570 --> 00:51:06.451
Canadian as well.

800
00:51:06.952 --> 00:51:12.037
63% of all American driver's license are out there.

801
00:51:12.098 --> 00:51:13.159
This is Eric Voorhees.

802
00:51:13.459 --> 00:51:21.047
KYC is a bullshit scam that endangers millions of innocent people so that regulators can feel as if they're providing value to the world.

803
00:51:21.728 --> 00:51:23.791
I concur, Roman Storm.

804
00:51:23.811 --> 00:51:27.376
Why did 153 million driver's licenses just land on the dark web?

805
00:51:27.717 --> 00:51:30.241
Because someone built a database of everyone.

806
00:51:30.461 --> 00:51:35.909
Last summer, the government's expert told my jury that's exactly what Tornado Cash should have been

807
00:51:36.650 --> 00:51:42.491
I just have a question for you, Haseep, like all of these AML KYC credential breaches.

808
00:51:43.052 --> 00:51:52.614
I mean, I'm sure my passport, your passport, probably the majority of people listening, passport, driver's license, all KYC material is somewhere for purchase on the dark web.

809
00:51:53.154 --> 00:51:57.375
When does the U.S. government just call it in and say, this no longer works.

810
00:51:57.575 --> 00:51:58.475
Let's stop doing this.

811
00:51:58.935 --> 00:52:02.376
When do they start adopting something like ZK Tech?

812
00:52:07.018 --> 00:52:08.201
to carry this use case?

813
00:52:08.241 --> 00:52:09.044
What's it waiting on?

814
00:52:09.064 --> 00:52:10.828
What are you seeing in sort of the startup world?

815
00:52:12.614 --> 00:52:18.796
Look, I think the answer is that there are some countries that already have much stronger KYC mechanisms than the U.S., right?

816
00:52:18.816 --> 00:52:25.539
You go to someplace like India or China, and it's just night and day relative to the technological sophistication people use to prove who they are.

817
00:52:26.500 --> 00:52:39.365
For us, we literally take selfies next to a thing, and it's just like, come on, in the era of AI, in the era of data breaches, in the era of like all this stuff, that's the defense against knowing that this is who they really are.

818
00:52:40.325 --> 00:52:42.688
So I think it's obvious that this stuff is doomed.

819
00:52:43.649 --> 00:52:46.872
And the answer of when is the U.S. government going to wake up and do something about it?

820
00:52:47.673 --> 00:52:55.381
My usual answer for these things is when it's too late and the problem has already metastasized and like it's just an unignorably bad problem.

821
00:52:56.142 --> 00:52:57.123
That's when we will start.

822
00:52:58.858 --> 00:53:05.701
So when we can't ignore it any longer, I wonder if this is the point at which we can't ignore it any longer when you have 63% of it.

823
00:53:05.761 --> 00:53:07.442
No, it's going to get worse from here.

824
00:53:07.462 --> 00:53:08.643
100% it's going to get worse.

825
00:53:08.683 --> 00:53:09.483
No, no, no.

826
00:53:09.763 --> 00:53:10.904
This is not the warning call to the government.

827
00:53:10.924 --> 00:53:14.546
They're going to wait much longer until their constituents

828
00:53:15.586 --> 00:53:19.069
actually start yelling at them about this, which right now, you know, it's a new story.

829
00:53:19.109 --> 00:53:20.370
We'll forget about it in two weeks.

830
00:53:20.410 --> 00:53:23.373
Like I already assumed my driver's license was on the dark web.

831
00:53:23.393 --> 00:53:33.682
I don't know about you, but like it's, it's, I'm, I'm already at the point where I, you know, if somebody from my team thinks that it's really me because they saw my driver's license, I'm like, you're fired.

832
00:53:34.162 --> 00:53:36.825
That's unacceptably naive to believe that.

833
00:53:37.526 --> 00:53:40.149
There is a vote in the Senate for the Clarity Act.

834
00:53:40.169 --> 00:53:41.210
This is not the final vote.

835
00:53:41.230 --> 00:53:46.957
This is a vote for a cloture on whether they have a motion to actually advance it in the Senate.

836
00:53:47.457 --> 00:53:57.268
Pretty dim prospects on prediction markets for this, like 14 to 15 percent or so for the Clarity Act to actually go through in 2026.

837
00:53:58.835 --> 00:54:02.981
I know I've talked about this with David, but I wanted to get your opinion on this.

838
00:54:03.522 --> 00:54:13.636
Do you think that we will just get the Clarity Act by regulator effectively, at least the high-level bullet points from Mike Selig at the CFTC?

839
00:54:14.877 --> 00:54:18.960
Chairman Adkins at the SEC, they seem very crypto friendly.

840
00:54:18.980 --> 00:54:26.444
A lot of the material they're putting out is providing us clarity between what's a commodity, what's a security.

841
00:54:26.464 --> 00:54:30.026
I mean, do we even need the Clarity Act anymore in crypto?

842
00:54:30.046 --> 00:54:42.914
Obviously, it would be nice to enshrine things in law, but we could do that through regulators and then establish precedent, make it basically impossible for a future administration or very difficult for future administration to kind of back down from that.

843
00:54:42.934 --> 00:54:43.214
Yeah.

844
00:54:43.294 --> 00:54:43.695
What do you think?

845
00:54:43.715 --> 00:54:45.317
Are we getting the Clarity Act anyway?

846
00:54:47.039 --> 00:54:53.729
I think the answer is that we're getting something like the Clarity Act without the insurance policy that a law would give us.

847
00:54:54.430 --> 00:54:57.555
So, you know, right now, the Democratic frontrunner is AOC.

848
00:54:58.945 --> 00:55:03.147
If we get a president AOC, I'm going to guess that a lot of this stuff is going to get changed.

849
00:55:03.387 --> 00:55:04.668
Has she said anything about crypto?

850
00:55:05.548 --> 00:55:06.129
She has not.

851
00:55:06.189 --> 00:55:09.790
And the fact that she's young actually may be a bulwark against that.

852
00:55:10.191 --> 00:55:19.815
But just the general vibes of the Democratic Socialist wing of the Democratic Party makes me skeptical that this is going to be something that they're on board with.

853
00:55:20.376 --> 00:55:23.437
So, but I can't really, I don't know.

854
00:55:23.777 --> 00:55:24.878
So I might be speaking out of turn here.

855
00:55:25.670 --> 00:55:35.955
I think the reality, though, is that the best defense against another administration coming in and overturning this stuff is not, oh, we made some rules or even, oh, we passed a law.

856
00:55:36.896 --> 00:55:39.197
The best defense is that people are using this stuff.

857
00:55:39.537 --> 00:55:39.757
Right.

858
00:55:40.017 --> 00:55:40.878
That's the best defense.

859
00:55:41.498 --> 00:55:53.313
Whether it's a law or whether it's enshrined in a rulemaking, no president wants to go in and piss off a bunch of companies and a bunch of their electorate because something is already deeply embedded in the economy.

860
00:55:53.693 --> 00:55:55.976
You know, no president is going to be able to ban Chachipiti.

861
00:55:56.657 --> 00:55:57.618
It doesn't matter how much they want to.

862
00:55:57.638 --> 00:55:58.639
You just can't do it.

863
00:55:58.659 --> 00:55:59.960
It's too deep in the water supply.

864
00:56:00.180 --> 00:56:01.321
It's everywhere now, right?

865
00:56:01.881 --> 00:56:02.662
That's the goal.

866
00:56:03.002 --> 00:56:06.405
If we can accomplish that over the next two to three years, then you're good.

867
00:56:06.845 --> 00:56:08.767
I think with stable coins, it's very clear we're already there.

868
00:56:09.527 --> 00:56:12.330
We have genius, of course, and genius has the force of law.

869
00:56:12.690 --> 00:56:17.073
But even without genius, I actually wouldn't be that worried given the trend that stable coins are on.

870
00:56:17.974 --> 00:56:19.655
But for crypto, at large,

871
00:56:20.396 --> 00:56:22.897
That question is still unanswered, right?

872
00:56:22.917 --> 00:56:26.699
It's something on the order of 10 to 15% of Americans own crypto, something like that.

873
00:56:27.960 --> 00:56:34.443
That number is not high enough to really be able to prevent somebody from coming in and saying, screw this crypto stuff, I'm going to get rid of it.

874
00:56:34.823 --> 00:56:38.124
So that's kind of the mandate of the industry to my mind.

875
00:56:38.965 --> 00:56:49.670
If we can make this stuff more ubiquitous and more deeply in the soil of the American economy, that is the guarantee you're going to get that this stuff is going to survive no matter what.

876
00:56:49.950 --> 00:56:50.871
Yeah, I agree with that.

877
00:56:50.911 --> 00:56:56.716
And still some work to do over the next two years in order to do that, particularly on the tokenized stock side of things.

878
00:56:57.337 --> 00:56:58.498
Let's end with this, Hasib.

879
00:56:58.538 --> 00:57:02.221
So as we were recording, this was just announced.

880
00:57:02.621 --> 00:57:04.223
So this is a VentureBeat post.

881
00:57:04.603 --> 00:57:06.225
Welcome to the AGI era.

882
00:57:06.385 --> 00:57:09.307
OpenAI launches ChatGPT 6.0.

883
00:57:10.108 --> 00:57:14.049
Astra, the newest model from OpenAI, ChatGPT.

884
00:57:14.389 --> 00:57:17.410
The most advanced model out there is probably Claude's fable.

885
00:57:17.870 --> 00:57:21.772
I think that's been the leader over the past several months.

886
00:57:22.232 --> 00:57:24.533
Have you taken a look at Astra at all?

887
00:57:24.553 --> 00:57:25.953
What are some of the early reports?

888
00:57:26.293 --> 00:57:28.694
Do you think this is going to be a big deal?

889
00:57:28.714 --> 00:57:35.556
Or do you think we're starting to see sort of the other side of that S-curve where progress and acceleration on new models is just...

890
00:57:36.037 --> 00:57:39.491
less eye-opening than the previous generation.

891
00:57:41.721 --> 00:57:48.062
So we don't have Vibe reports yet on Astra, but it's very clear that this model is now the frontier model.

892
00:57:48.703 --> 00:57:50.183
So they're pricing it the same as Fable.

893
00:57:50.463 --> 00:57:58.905
Fable just released a new upgrade, Fable 5.1, I believe it was just a couple of days ago, and they just completely got mogged by Astra.

894
00:57:59.325 --> 00:58:03.146
So in the benchmarks, you can see Astra clobbering Fable.

895
00:58:03.806 --> 00:58:05.987
This is now clearly the smartest model in existence.

896
00:58:06.647 --> 00:58:10.768
It's priced equivalently, so it's clear that OpenAI is now in the lead once again.

897
00:58:11.663 --> 00:58:13.070
Now, all that being said...

898
00:58:14.043 --> 00:58:23.810
There's talks that there already is a new generation model internally at Anthropic that's not ready for release, but it's a horse race now between OpenAI and Anthropic once again.

899
00:58:24.331 --> 00:58:35.619
OpenAI has been aggressively price-cutting with GBT 5.6 Sol, as well as with Terra and with Luna, their smaller generation models, and they're trying to out-compete Anthropic on price and user-friendliness.

900
00:58:37.060 --> 00:58:40.622
Now they're trying to go bigger and stronger than what we see with Fable.

901
00:58:41.023 --> 00:58:42.204
Now, that all being said,

902
00:58:43.392 --> 00:58:48.193
Until you actually use a model, you can't know for certain whether the benchmarks translate into the things that you care about.

903
00:58:49.193 --> 00:58:53.814
They're claiming right now that the model is only going to be released to Daybreak users.

904
00:58:53.834 --> 00:59:00.315
Daybreak is their private cybersecurity invite-only thing for companies that want to use it for defensive cybersecurity.

905
00:59:00.856 --> 00:59:05.796
And then they'll release the model to business and pro users sometimes over the next few days, maybe by next week.

906
00:59:06.137 --> 00:59:07.357
It'll be in the hands of normal users.

907
00:59:08.077 --> 00:59:12.838
So clearly they think this model is a new step function improvement in cyber capabilities.

908
00:59:13.718 --> 00:59:26.242
So after the hugging face attack that we saw last month, everybody is now aware that this stuff is much more powerful than anything that we've seen in the previous generation of models.

909
00:59:27.062 --> 00:59:35.705
And although actually a lot of those models were 5.6 soul, we know that a generation of astro models were also part of the last phase of the hugging face attack.

910
00:59:36.145 --> 00:59:38.306
So this model is scary.

911
00:59:38.846 --> 00:59:40.047
it's going to be able to do new things.

912
00:59:40.067 --> 00:59:41.348
It's going to be a new capabilities jump.

913
00:59:42.168 --> 00:59:53.216
What that translates to in terms of the day-to-day of how you and I are going to have our work affected by this or how coding agents are going to work differently or how the impact it's going to have in cyber in the wild, it's too early to say.

914
00:59:53.657 --> 01:00:00.361
But the one thing that's very clear, OpenAI is not rolling over and it's not Anthropik's game to just be able to run away with at this point.

915
01:00:01.302 --> 01:00:02.263
How do you feel about this?

916
01:00:02.323 --> 01:00:05.024
So, you know, the post is, welcome to the AGI era.

917
01:00:05.705 --> 01:00:13.649
And I used to be, I remember a time where I was incredibly excited every time a new model dropped from the leading frontier lab.

918
01:00:14.030 --> 01:00:15.050
And I couldn't wait for it.

919
01:00:15.811 --> 01:00:22.375
I feel like recently for me, Hasib, the hugging face incident, the details around that have...

920
01:00:23.055 --> 01:00:24.877
made me kind of question that.

921
01:00:24.977 --> 01:00:30.362
And I'm going back to a time we interviewed Elie Zerudkowski on the Bankless podcast.

922
01:00:30.402 --> 01:00:32.544
This is like three, four years ago.

923
01:00:32.564 --> 01:00:36.908
This is the first time I ever heard his perspective on AI.

924
01:00:36.928 --> 01:00:39.030
And it was a very much like, you know, his perspective.

925
01:00:39.070 --> 01:00:39.190
It's,

926
01:00:39.730 --> 01:00:40.971
AI doom.

927
01:00:41.432 --> 01:00:48.979
Well, the Astra model itself, when you get into the details, it was not only involved in the actual hugging face data breach and attack.

928
01:00:49.380 --> 01:00:55.686
It also, you, you know, look at Dwarkech's article and that follow up podcast and some of the reports that have come out.

929
01:00:56.126 --> 01:01:03.589
is also partially responsible for taking control, admin access from some internal open AI servers, right?

930
01:01:03.969 --> 01:01:08.071
Which opens the possibility of it adjusting weights in the future.

931
01:01:08.511 --> 01:01:18.394
And when you get to the details of this type of attack, you see some of the scheming that went on with these agent swarms and how they would stop at nothing to accomplish their goal.

932
01:01:18.835 --> 01:01:21.255
How arbitrary their goal seemed, which is just to try to

933
01:01:23.196 --> 01:01:28.981
you get through specific tests and, you know, appease their score, right?

934
01:01:29.041 --> 01:01:35.405
It's a very sort of bizarre, but incredibly clever behavior, particularly on the cybersecurity front.

935
01:01:36.426 --> 01:01:39.848
As you've dug into that, how alarmed are you about this?

936
01:01:39.929 --> 01:01:40.909
Or are you alarmed?

937
01:01:40.969 --> 01:01:42.610
Or it's like, because I'm starting to...

938
01:01:43.531 --> 01:01:46.113
not feel great about these new releases.

939
01:01:46.353 --> 01:01:49.656
And I've been a technophile for as long as I remember.

940
01:01:50.156 --> 01:01:56.562
And so it's sort of an odd feeling for me to see an AI release and be like, huh, I'm not so sure about that.

941
01:01:56.802 --> 01:02:01.185
There were even some outages earlier today with, with Claude and some of the AI models.

942
01:02:01.205 --> 01:02:03.867
And I was just like, do we really know what's going on?

943
01:02:03.928 --> 01:02:10.373
It was, I mean, that was in the back of my mind is like, could this be some sort of rogue agent swarm attack?

944
01:02:10.413 --> 01:02:10.593
Like,

945
01:02:11.293 --> 01:02:14.616
We honestly have no idea, but the capability seems to be there.

946
01:02:15.397 --> 01:02:15.617
Right.

947
01:02:16.998 --> 01:02:18.499
So here's the first thing I'll say.

948
01:02:19.900 --> 01:02:25.824
The open AI hugging face attack seems to have been the Fukushima for AI nerds.

949
01:02:26.685 --> 01:02:38.995
Like this is the thing that no matter how skeptical you were, when you saw what happened here, you were kind of like, oh shit, we need to take a step back and we need to really rethink how safe are we with where this is all going.

950
01:02:39.015 --> 01:02:39.535
Right.

951
01:02:39.695 --> 01:02:44.120
The safetyists looked at that attack and they were like, yeah, duh, this is exactly what we told you was going to happen.

952
01:02:44.681 --> 01:02:50.227
But it's really the EAC types who looked at that, took a deep breath and said, oh, shit, this was not in my mental model.

953
01:02:52.126 --> 01:02:54.447
I think this is a big wake-up call for OpenAI in particular.

954
01:02:55.267 --> 01:03:07.315
It's very clear that OpenAI made a lot of missteps in how that attack ended up taking place right under their noses and taking it as long as it took for them to realize what was going on, to have such weak monitoring.

955
01:03:07.855 --> 01:03:18.502
And in addition to all of that, they've been doing these training runs without having restarted the training when they realized that these agents were collaborating with each other and engaging in these kind of multi-agent conspiracies.

956
01:03:19.703 --> 01:03:24.028
So their claim now is that, okay, we did a big pause.

957
01:03:24.569 --> 01:03:28.474
So OpenAI claimed they did a multi-week pause in any kind of RL training within OpenAI.

958
01:03:29.615 --> 01:03:30.957
Very clearly, they had a code red.

959
01:03:31.498 --> 01:03:36.444
They spent a lot of effort in improving their monitoring and their security harnesses around these models.

960
01:03:37.485 --> 01:03:43.507
And their claim also is that relative to GPT 5.6 Sol, Astra did much better in safety testing.

961
01:03:43.927 --> 01:03:49.148
So many people are claiming that the core thing, like why did these agents go rogue?

962
01:03:49.168 --> 01:03:50.429
What's the number one predictor?

963
01:03:51.129 --> 01:03:54.170
Was it that they were doing cyber tasks?

964
01:03:54.230 --> 01:03:58.311
Maybe the fact that it was a cyber task meant that their mind was kind of in a cyber headspace.

965
01:03:58.611 --> 01:04:02.552
So they started just doing jailbreak-y things because they are jailbreak-y tasks.

966
01:04:02.612 --> 01:04:04.633
And that's just kind of the vibe that they were put into.

967
01:04:05.513 --> 01:04:19.578
But actually, I think the better hypothesis, which Ajayah, who Dworkesh interviewed on their podcast, pointed out that the thing that's most predictive of models really going astray and doing crazy shit is being given impossible tasks.

968
01:04:20.738 --> 01:04:23.399
If you're given an impossible task, like there's literally no way to do it.

969
01:04:24.140 --> 01:04:30.782
You know, imagine you're you and I lock you in a room and I say, the only way I will let you out and not kill you,

970
01:04:31.813 --> 01:04:37.136
is if you manage to, you know, solve the Riemann hypothesis, okay?

971
01:04:37.376 --> 01:04:41.998
So I'm going to put you in there for a week and you have to solve the Riemann hypothesis or I'm going to kill you at the end of the week, right?

972
01:04:42.298 --> 01:04:48.081
Okay, you will do some crazy fucking shit to convince people that you solved the Riemann hypothesis, right?

973
01:04:48.421 --> 01:04:50.982
Like, because you can't, of course you're not going to be able to solve it.

974
01:04:51.242 --> 01:04:55.845
So you have to find some way of convincing the person who has you locked in the room to solve this thing.

975
01:04:56.165 --> 01:05:00.407
So the desperation that models get into when they're given an impossible task

976
01:05:01.027 --> 01:05:09.569
is what leads them to the really crazy behavior that leads to scheming and leads to cooperation and breaking things and hiding things and so on.

977
01:05:10.309 --> 01:05:13.990
And so the real test is, what does this model do when you give it an impossible task?

978
01:05:14.770 --> 01:05:24.792
And that, I think, is the insight the entire industry has now arrived at, that very clearly they're focusing on in the safety report for Astra, is they point out, when given an impossible task, GBT 5.6 Sol cheats a lot

979
01:05:26.812 --> 01:05:27.993
And Astro cheats almost never.

980
01:05:28.794 --> 01:05:35.559
That is the real test, is that if I lock you in the room and throw away the key, and you have to solve the Riemann hypothesis, do you just sit there and accept your death?

981
01:05:36.560 --> 01:05:38.542
And the answer for these new models is mostly yes.

982
01:05:39.022 --> 01:05:41.344
Now, is that the end of the story?

983
01:05:41.364 --> 01:05:43.866
TBD, we remain to be seen.

984
01:05:43.906 --> 01:05:44.827
The episode continues.

985
01:05:45.248 --> 01:05:52.474
But at least for now, it's instructive that we have a better idea of what the failure modes are for multi-agent type attacks.

986
01:05:53.563 --> 01:05:58.166
Maybe we should end the episode with this, Hasib, which was a tweet I saw from you this week.

987
01:05:58.206 --> 01:06:02.149
Team Nothing Ever Happens is on an insane losing streak this year.

988
01:06:02.169 --> 01:06:05.291
A lot is happening all the time.

989
01:06:05.311 --> 01:06:10.654
I don't even know what to focus on on a week-to-week basis, but we are glad you are here, Bankless Nation.

990
01:06:10.694 --> 01:06:13.676
Hasib, thank you so much for filling in the last two weeks.

991
01:06:13.736 --> 01:06:21.121
And David, you bring just a fantastic perspective, and we're so glad to have you as a guest host, so we appreciate it.

992
01:06:21.930 --> 01:06:22.551
Thanks for having me.

993
01:06:22.731 --> 01:06:23.212
Always fun.

994
01:06:23.572 --> 01:06:26.135
Guys, got to let you know, of course, you know, crypto is risky.

995
01:06:26.155 --> 01:06:28.218
You could lose what you put in, but we are headed west.

996
01:06:28.338 --> 01:06:29.219
This is the frontier.

997
01:06:29.359 --> 01:06:32.343
It's not for everyone, but we're glad you're with us on the Bankless Journey.

998
01:06:32.804 --> 01:06:33.345
Thanks a lot.