SOTN #14: FUNding with Kevin Owocki (Gitcoin Grants Round 7, StableCredit USD, CeDeFi = Fake DeFi)

Transcript

the bankless date of the nations are brought to you by ave ave is a borrowing and lending protocol on top of ethereum where you can deposit some of your favorite assets in order to borrow other assets from ave which is particularly well suited to yield farming if you don't want to sell your ether if you don't want to sell your wifey you can deposit them into ave and borrow stablecoin so you can use them in these various d5 farms what's cool about ave is that it will give you a variable interest rate based on market conditions but you can also pay a fixed interest rate to help you plan into the future check out ave ave.com if you want a better way to understand your d5 portfolio i recommend you go to zapper.phi and plug in your ethereum

addresses to get a comprehensive report as to your currently owned assets and where they are in ethereum if you were around for the 2017 bull market it was characterized by refreshing blockfolio over and over and over again and anytime you would ever make a trade you would have to manually update your block folio to make sure that your portfolio was accurate with zapper you don't have to do that because zapper looks on chain at your ethereum addresses to see the assets that you have in various dfi protocols not only does it tell you the assets that you own but it also tells you if they are deposited into ave into compound what yield farm they're in your predicted apy and it'll even let you make investments into d5 protocols right

through their zapper.fi portal making it really easy to compare and contrast different places as to where you can deploy your capital check them out at zapper.fi hello bankless nation welcome to another episode of state of the nation this is episode 14. david and i have a lot to cover today we also have a special guest kevin iwaki that will be coming on later really excited to be here david how you doing man how are things absolutely fantastic it's that time of year again where i just get really optimistic about ethereum's future as if i'm ever not but it's kind of where the rubber meets the

pavement and so uh when kevin comes on in a second we're going to talk about what it's like to fund the future of ethereum so that's what's going on this week it's a git coin themed week and i'm pretty excited to talk about it awesome man and i am seeing our production quality escalating ever since you've been full-time bank-less my friends like these commercials are going great this is gonna be a special episode thanks for djing so if it's your first state of the nation episode we do these weekly and what dave and i like to do is talk about what's happening the events that are going on in the space and relate it to big picture themes that we talk about the newsletter that we talk about in the podcast we hope to always drop some insight and action items this comes out on tuesday but we've changed

the time so now you can watch this live at 2 p.m weekly eastern time so that's 11 pacific time and i i can't do the other you know uh time stamp block block times in my head but um you guys can figure out what utc time that is and hopefully this is a good time for all of you so you can watch live get your youtube uh get your questions into youtube as well and then on wednesdays we release this to the podcast um i guess like a couple of announcements before we we begin or things that are going on in the nation we dropped a insanely cool podcast with kane on monday david what were your thoughts on that podcast man like i was

blown away by the road map what did you like about it yeah i really liked going into kane's personal background because no one has done that yet right and yeah i've been obsessed with the idea that where there is code there is social contract and where there is social contract there is like a reason behind it and a personality behind it and kane as one of the the leaders of the synthetic movement kind of has his dna written into the synthetics protocol and so no one's really explored that side of things and so that's something that we definitely were able to peel back the layers on with kane and with synthetic so i thought that was particularly fascinating yeah so check out that podcast it's uh on your on your podcast feed so that came out on monday also

david you've been super busy my friend so you've been churning out another show that we call meet the nation can you talk about what meet the nation is and a few of the other shows that you've covered so far yeah yeah so keeping up with defy is difficult right like every single week there's a new announcement every single week there's a new farm every single week there's something new right and so this is a place where people can uh from teams can go and meet the nation right like teams will come on explain what they do explain why they're doing it explain who they are and explain what their like future road map is right there's a ton of in innovation going on and frankly people like to learn visually and uh and uh with auditory whatever the the sound version of that is uh and and so like

youtube is a great place for this right and so we're gonna start churning out the meet the nations uh we have a bright id coming on later today which actually fits really well with this git coin themed week uh because uh and kevin will talk about it in a second but bright id is this decentralized identity solution which is really important for this base right like ryan you had a fantastic tweet that was super short super simple where you said the first phase of crypto is we take back our money in the second phase of crypto is we take back our identity and we need a decentralized identity solution like bright id in order to do that right so that's going to be fascinating we also have the based team coming on uh maybe later this week there's a little bit of complication there because the d5 founders are trying

to remain anonymous and so there's going to be a little magic going on behind the scenes there anthony cesano is coming on on thursday to talk about the token sets index which is brand new which i'm super excited about we just have some great projects lined up and so if you want uh some team some project that you don't understand or just want to give them more exposure at me on twitter i don't ask for being added very uh frequently but if you want to see somebody on the meet the nation let me know and we will get them on the books yes and if you want a taste of meet the nation too check out the episode on stable credit with andre that david put out on friday david is keeping his promise of going full-time bank listing like just churning out this excellent

content so meet the nation is a great way to learn about new projects and what's going on we've got a lot coming on the podcast too in including an episode with hugh carp that's going to ship next week an episode on nfts an episode on molok uh just just a lot of stuff going on but david let's start with the question i always ask at the beginning of these state of the nation episodes what is the state of the nation this week my friend the state of the nation is funding funding we are having fun while we are funding things and again this is like the christmas except it happens four times a year so thank you gitcoin for making git coin afford a four times a year thing uh this is where and especially this particular uh

particular quarter i think is going to be particularly fun because this is the first quarter that git coin has been a thing during a quote-unquote bull market right like and in addition to this treasuries d5 protocol treasuries are also making money and therefore also donating to get coins so i think this is going to be a particularly fun time in ethereum in d5 this is when the bitcoin maxis just gets super salty that we are just being able to fund ourselves with our own money and i think it's something that everyone should kind of stop and reflect on about ethereum because the first thing ether ethereum did was it made ether it made its own money and then it made it valuable and now it's using its own money to fund its own projects right so like total self-sovereignty like total

independence from anyone else like you don't need to ask permission don't doesn't need to go to the banks and say hey will you please fund me we will do it ourselves with bitcoin yeah super cool all right man oh i think that's the perfect lead into our first topic then we're going to talk about also stable credit again and then a grab bag of other interesting things that are going on in the space but the main event is uh talking about git coin and what's going on there and the sustainability of ethereum so we brought on the best person we know to talk about this first hand so this is you know there's someone told me david there's an apple event going on right so i think kevin owaki is the steve jobs of open source grants so take that apple i

hope you're tuning in here guys instead of instead of watching the apple keynote uh kevin are you there it's super awesome to have you on bankless state of the nation my friend how are things wait hillary hi ryan hi david hey kevin for welcoming me great to be here um not very comfortable with the steve jobs comparison but overall that forgot my black t-shirt and my uh asshole-ish attitude but yeah we'll roll with it things are good yeah we just launched git coin grants over the last 24 hours round seven got 360 k of matching funding that we will be distributing to the ethereum community and we're going to be distributing it

according to quadratic funding which is a formula that optimizes for the poor and the many and not the rich and the few so i'm really excited to enable the community to fund itself and to and um and and hopefully we can create some some freelancers who just work for the open internet i'm really excited to uh to be facilitating that with bitcoin grants around 7. well that is awesome we want to talk about all of that but first sir have you got any sleep in the last 24 hours i know it's like a ship day for for a git coin but how are you doing on the sleep side uh i haven't gotten much sleep um and it's partially because of bitcoin grants but it's also because i have two kids so used to no sleep already as well

so so kevin if no one if somebody's new to the d5 space and they haven't yet participated in git coin what is it and why are so many ethereum people so excited about it for sure um git coin started in 2017 and we we never did a token we never did an ico or anything um it's just a place where you can get coins in exchange for doing software development and so we've got a couple different ways that you can do that we run a bunch of hackathons that allow you to get coins in exchange for working on hacks that our sponsors put up and then uh bitcoin grants is kind of like a crypto patreon where anyone in the space who's doing work that is helpful to the community can create a bitcoin grant and then once per quarter we put together a

matching round of about 300k and we match the contributions to those those git coin grants and and what's cool about that is that as funding is coming in from your peers the people who know you best and are funding it the ethereum foundation and and other people in the space are matching those contributions so it's a really great way to raise some money once a quarter for projects that you're doing in the ethereum space so far we've done uh six and a half million dollars worth of funding for open source in the last two years so i'm starting to get to the point where where people can quit their jobs and work for the open internet and so in addition to going bankless people on bitcoin are going jobless which i think is pretty cool

yeah that's super awesome so okay so maybe we could talk so this is the seventh that you've done the seventh actual uh grant round and you mentioned something in the intro there kevin uh you talked about quadratic funding what is quadratic funding how what like why is it unique and and how does the funding process i guess get calculated in in these grant rounds sure yeah um with quadratic funding uh so typical grant matching campaigns will be one-to-one which means that if you give one dollar then uh your the matching pool will will match with a dollar and quadratic funding is um actually can i use a v can i use the

visual aid i'm not sure how many of the audience actually has has visual versus like audio yeah yeah if you want to share your screen we can do this yes all right sounds good so um one of the problems that i've had recently is that it's really hard to describe quadratic funding and one other thing and like because it's a math formula it's basically this math formula that is the mathematically optimal way to fund public goods in a democratic community and this math formula is that the amount of matching that you receive is proportional to the sum of the square roots of the contributions which is uh you you kind of have to be mathy to to really understand why that's powerful but we released this this

quadratic funding calculator at wtf is qf.com where i can just quickly demo to you that if i have a grant that is funded with ten dollars from one contributor and another grant that is funded with ten one dollar contributions then the matching amount of that second grant that is more democratically popular is going to be way way way higher than the one that raised the same amount but from one person so we we have a matching formula that basically optimizes for the poor and the many instead of the rich and the few and you know if you're trying to push power to the edges and remove intermediaries that's the way you do it with with small donations not not from mega funders and not optimizing for wales

so this is like splitting the difference between one person one vote and one dollar one vote right and so like let it be known that the whole one dollar one vote is as old as time and maybe it's not formalized in any real democracy but like purchasing votes is a real thing and what git coin is doing is just kind of formalizing this as a in relationship to one person one vote right and so the the cool thing is if ever if there are a bunch of people that all want to fund this one thing but maybe for some reason this one thing is like giving money to poor people like well poor people are really interested in that right and so but they don't have the capital to to fund that but this git coin is like the demo

the democratizer the equalizer that allows for you know the people that can only throw a dollar a couple dollars to have a much louder much more amplified voice yep that's pretty much it and you know in in the blockchain space i think that we're all about creating more digital democracy and pushing power to the edges removing intermediary so it's kind of walking walking the walk not just talking the talk and i'm really super proud that the ethereum community has started to fund itself this way because it's a great way it's a great way to get new people in the ecosystem that uh that are just starting out get them get them wet their whistle on on starting to do ethereum stuff in fact i know that one of our bankless hosts

maybe had gotten their start on bitcoin grants no that that is for sure before i was bankless i was an independent content producer and i got and like for me bitcoin was the place where i got signal that my work was actually valued right like i would post my articles on medium and then i would get some claps and people say hey nice nice article but that's not really the same as like receiving five thousand dollars in get grants that's a different kind of signal right that that tell that told me is like oh this is something that i can like sustain myself with right and so yeah i i actually recently closed my git coin grant because i no longer need it uh and and i kind of graduated i consider myself like a git coin graduate

here we go we'll have to we have to meme that eventually do do you have like a lot of stories like that kevin or is is david's case um fairly common right so i've seen uh some startup teams even you know come out of this um uh zapper who's now a banana sponsor is actually actually one i recall funding one of their early bitcoin grants and they've spun that up and now they have an entire company is that a pretty common scenario yeah there's a there's certainly a handful of people that made it through the bear market partially on their bitcoin donations one other thing that one of the things that vitalik is really passionate about is this that you have a quadratic freelancer so basically once quadratic funding gets up to enough money then there's gonna be this

threshold where anyone making over x thousand dollars per quarter off of bitcoin can just like quit their job and work for the open internet and that's kind of our mission is to enable people to quit their jobs and work for the open internet and it's more important to be able to provide that funding during a bear market i think than during a pool market where people are making money to quit their jobs off of their bags um it's about providing that sort of foundation for people to be able to quit their jobs because their peers respect what they're doing and um yeah there's there's on the order of six to 12 people that are get coin graduates and then there's there's three or four quadratic freelancers right now so uh i want to 10x that in the next in the next three or four years

and um you know i really like it if if we can 10x the number of people who can come into the ethereum space and do meaningful work because we have this this this funding mechanism so still working on that but uh right now we're doing about 500k per quarter through bitcoin grants and my vision is to be able to do five million per quarter through bitcoin grants you can do way more quadratic freelancers when that happens okay can we talk about this so i am i'm showing a tweet or i was um showing a tweet kevin where you were talking about the the current let's see let me click over to it the the current uh quadratic funders uh i suppose who are

you know funding a lot of this activity and putting their their money up front um as part of it and in previous rounds you've had a couple of i guess whale kind of entities that have funded these grants consensus has been won also the ethereum foundation has been another but what is incredibly exciting to see at least for me is that this round round seven we're starting to get donations outside of those two core entities so we're starting to get them from uh d5 protocols uh wiring we've talked about a lot on on bankless is actually allocating a percentage uh of i believe

their their entire capital pool to this can you talk about that like how did all of this come about who are the the current um donors in in round seven and how much are we talking like how much growth are we seeing yeah for sure yeah uh so when bitcoin grants was just getting off of the ground a lot of our funding came from the ethereum foundation and a small amount of it came from consensus i think people use those two interchangeably but it's actually mostly been the ethereum foundation and the the the thing the thing that has been really promising this round is that the mechanism is sort of validated i mean vitalik's written four blog posts about it and we know where the works are and it gets better every round and so i

think we've reached a level of legitimacy in the community where it's like oh bitcoin's not just talking about funding these these public goods bitcoin is actually doing it and they've got this mechanism that's scalable and secure that can do it and and and the other thing that has happened is that ethan's not at 80 anymore so we actually have a lot of protocols that are doing pretty well financially and so one of the things that that i i've been proposing in the governance proposals of wi-fi and yam and other d5 protocols is hey why don't you give back one percent of your treasury to get coin and not not to get coined the team but like to get coin grants and so you know uh andre is a bitcoin alumni from wi-fi and several

other people in the ethereum community are get coin alumni and so there's an opportunity to to pay it forward and to create the next generation of entrepreneurs who are going to be in the in the ethereum space and also to fund core infrastructure in the ethereum space and i think that's a rational economic act is if your bags are built on top of geth and parody and lib p2p and eth1 and metamask and all of these defy apps that are open source and maybe some of them don't have business models it's a rational economic act to make sure that the infrastructure underneath your bags is is funded and so we started to see not only d5 protocols but major whales in the space like andre robert lesner recently donated to uh to

get coin grants and so we have actually reached a threshold where more money is coming from the community to fund public goods than the ethereum foundation and that that makes me really really happy because the ethereum foundation as great as they are is not going to exist forever but the d5 community is going to exist forever and so if if we can try to create that altruism as a standard as a social norm in the ethereum community we could potentially fund our public goods in perpetuity and so you know in a blockchain world in which there is no taxation in order to cope in in order to fund public goods and i don't think there should be taxation uh i don't think we should do coercive stuff like like uh like tax people in order to fund our public goods then um you know these

donations from these db5 protocols and from these whales are a super important thing and oh you've pulled up bitcoin grants and you can you can sort of see the uh the fellowship of of bitcoin of bitcoin funders and so it's it's pretty exciting to see these people on on bitcoin grants funding the the rounds urine finance has funded 155k future fund uh defiance capital mariana from from maker all of these different people have been giving back with bitcoin grants and it's been super promising that's huge and you mentioned uh some of the i guess uh social norms that are being created right so here is here's kane from synthetics uh who said let it not let it not be said that i'm

susceptible to public shaming synthetics is in and he is he is responding to andre's lead um who is inviting basically all of these d5 protocols that let's call it what it is have gotten rich in the past their treasuries have gotten rich in the past six months to go give back to the the public goods that made all of it possible so andre kind of took some some leave and threw down the gauntlet and said you know like uh wirin's in we're doing this um it's past our governance one percent and now you guys should do it too and he made the call to like uh ave and balancer and robert leschner and now

kane's jumping in so it's starting to be sort of the social social norm as you said kevin that like hey if d5 protocols are getting rich on top of ethereum then they need to give back and it should be often right it should be it's not um a forced taxation of public goods it's it's an optional donation to these public goods um and that's been phenomenal to see this is really i think correct me if i'm wrong kevin but this is the first time we've seen that in in such uh such a magnitude do you think it's just kind of the the bull market people have more money to spend and um they're they're now able to do that with the success of these d5 protocols yeah i think that it's partially the

bull market people are feeling a lot more fortunate and you know the bull market has not spread evenly i think there's a lot of assets from 2017 that are still in bear market but the ones that are breaking new ground like wi-fi and compound are certainly doing well and i think that they feel need to to give back and i also think it's just the legitimacy of quadratic funding it's no longer just a paper by vitalik and glenn anymore it's been proven to to work in the wild and so it's about having that scalable credible incredibly neutral mechanism for funding public goods that i think is really important and um you know we can get into how that scales later but to the tens and hundreds of thousands of dollars it actually has been working pretty well so far well i

just want to talk one one second about the numbers here so if we had every d5 protocol following iron's uh lead of taking one percent of their treasury and periodically giving that back in the form of of a bitcoin type donation right i mean have you done the math like how much how much would that be uh as these protocols grow yeah it's tough because you know the the metric that everyone can track is market cap and i think that for most of these proposals what we're looking at is how much of their treasury would actually go to fund public goods and i just don't know what the aggregate amount of treasuries are in in the space but i i think that it's probably quite

substantial and we're talking about the millions of dollars per quarter so it's possible that i could get to my goal of five million dollars per quarter of public goods just by using treasury uh funding alone through these d5 protocols but let's not forget there are also founders who are d5 founders and defy whales who are contributing a stake and that is not connected to any protocol protocol related funding and so there's other ways to to pull donations for these things other than just the treasuries it's just the treasuries are really attractive because they'll exist in perpetuity which creates you know that that stable baseline i think is really important one thing i'm really excited about is is the fact that at some point like we call

these git coin grants and and donating to git coin but at some point especially for the whales it's straight up rational for them to fund things in ethereum right like if you if you are some like 10 000 eth plus whale like at some point you need to make sure that the ecosystem surrounding your ether making your ether more valuable gets funded right can you talk about that a little bit kevin yeah for sure um you know we're in a crypto ecosystem which fundamentals increasingly matter and so if you want ethereum to have value it uh it's in your best interest to make sure that there are no black swan events that happen on the ethereum in the ethereum space with the

infrastructure layer but it's also in your best interest to make sure that new defy apps are coming out and because of composability when you have this compounding value creation in the ethereum ecosystem and so if you're a whale and you want to see the ethereum community succeed giving to ethereum public goods is a really great way to do that because it just it just prevents those black swan events and it helps those those dapps succeed so um you know ethereum is growing for many reasons and community is is one of them and i think the community funding the community is a really positive bullish trend for for the ethereum space kevin we have a question coming in from youtube saying do projects need to get approved to be eligible to get into a

bitcoin grant round is it up to the community to weed out projects that do not meet the requirements of a public good yeah um so bitcoin is doing our best to not be a central intermediary that you have to that you have to curry favor with in order to be on the platform anyone can submit a grant to to get coin and we'll probably take a look at it just make sure it's not outright fraud and and other than that there's not an approval that you need for me or anyone on my team and we do have a flagging system wherein people can say hey i think this is maybe a private good not a public

good and and uh you can follow at bitcoin disputes on twitter if you want to get out your popcorn and see where the disputes are on the platform a lot of them are not cut and dry and so i think that maybe one of the things you'll see from us in the next three months is introducing some sort of governance layer in which the community community uh particularly the community that has funded public goods on get coin can decide whether or not a grant is breaking the rules or not but for now you know for now it's just we kind of keep an eye on twitter and see roughly what the sentiment is and if someone's doing something that's an outright lie or fraud that will move them but it's pretty thin from a governance and an approval perspective right now that's because we don't want to be an

intermediary we want to be credibly neutral we want the community to decide what to fund and the great thing about quadratic funding is that it optimizes for what the community sentiment is so it's already got that built in that built into resistance to crappy projects so kevin talk about did you have this you guys sorry go ahead ryan oh um i just a quick question on that i was i was just wondering kevin did you guys i used to call it hate voting right which was you could actually give a negative donation um is that still in get coin i know it was in one or two of the previous rounds did that work out or not so much and maybe you could describe what that is i'm sure you don't call it hate voting yeah if i if i did then i think we would have rebranded it

by now so the idea so this is straight out of london metallics paper with for the quadratic funding paper and it's called negative voting and the idea is that the example that i showed you earlier is that if a grant gets 10 contributions from 10 different contributors then its match will grow much higher and and so there's this problem where that can optimize for more controversial figures basically like if if you're creating a bunch of noise and you know 51 of those people really love the work that you're doing but 49 think that you're being an [ __ ] um then there's no more way for those those contributors who are against you to

express their preference other than funding every single other grant on the platform except for you and and so uh basically negative voting is just an automated way to fund every other grant on the platform except for you and we call it negative voting the idea is that you could you could you could vote with your dollars against a grant and that money the money that you pay with would go to the matching round and it would count against your match total so those those 10 contributions of one dollar are used in my example earlier if they were 10 negative contributions of one dollar each then it would really reduce your your match amount and that what that does is it dampens controversial actors and it sort of weeds out from a mechanism design

perspective the people who are not only creating public goods but creating public bads which is you know i don't know if vitalik would approve of the word public bad it's something i just made up but um it turned out that in in practice like people are emotional creatures in the evo in me voting against you kind of goes against the spirit and the ethos of get coin and so we ended up removing it because of the because it sort of violated the ethos of bitcoin and we haven't yeah it's still on it's it's it's still an unsolved question of basically how you dampen the controversial actors and i think you'll see us evolving our governance in rounds 8 9 10 11 and 12 in order to figure that out

i can see psychologically how it just felt like that from from uh like a human perspective like you could receive 30 positive contributions like saying hey your freelance work is fantastic and then that that one negative comes in and it just it just almost takes away from the 30 right like just in your head it just it feels like it hurts more like somebody's actively um trying to uh vote against you feels more painful for whatever reason i guess that's how we're wired yeah and i remember there were some people who were like it's it's not like a personal thing i just yeah are you it but like but then you get tagged in these twitter threads and like everyone's debating it and it

becomes like a a giant thing and so we just decided the the overwhelming community sentiment was kevin please remove this and so we haven't done it since round five i'd actually like to express the opposite opinion where um gosh i can't i can't remember i i was received the recipient of some negative votes uh last time and you know again like it hurts because like oh well that's money but also at the same time and what is a part of the ethos of of you know quadratic funding is funding via the market right and uh uh oh yeah well maybe i shouldn't i do remember the guy but maybe i should name his names but like he's i would consider him a friend and i really value the work that he does and he voted negative on me simply because he perceived the value

that i was receiving to be above and beyond the value that i should have received in relationship to others right and so there was no ill will there was just like you know i think the mark the the guy the individual said that he thought that the market was overvaluing my work and that other work should be more valued uh and i think that does kind of go in line with the ethos of quadratic funding because that whole thing is trying to get the market to determine how much value should be sent where so you can actually chalk me up as uh a pro on the negative voting side of things i'm sorry i negative voted you that one time david but thanks for not doxxing me there were actually like three or four people it wasn't me

all right so okay um so i guess you know how do you how do you guys prevent some of the cartel activities that are going on i'm seeing a bunch of questions coming on youtube about that like so there could be sort of a group that that seeks to promote only their cartel group members on git coin and channel all all of kind of the gifts through them has that been a problem so far or are you just at the scale where you haven't felt that kind of problem or do you expect it in the future what do you how do you take precautions against it yeah well let me answer your question with a question um is the meta cartel a cartel well they have cartel in their name so yes on that one

okay uh but so they're kind of named that in a fun way but you know what i meant when i asked that is like are they doing cartel behavior as in like when i think of cartel i think of like trafficking drugs into the country um whereas i think metacartel has done some pretty [ __ ] for some pretty bomb stuff in the space and so you know the question for me is like if there's a group of people who like consistently work together to produce value uh is it is that something that that the bitcoin grants formula should optimize for and i should say that like the meta cartel grants you well every single round and i think that that's a good thing not not a bad thing um and and i think that the reason why the

medic cartel grants do a really good job every round is because they're actually providing value value to to the ecosystem and like i said medi quadratic funding optimizes for the poor and the many not the rich and the few that's metacartel medical hotel is like other than eat global that's like the entry point into into the ethereum space and so i think it's a good thing that that meta cartel and groups like that are really done well in quadratic funding but i do think it's really bad if there's a quid pro quo or some sort of collusion or bribery wherein uh i person x could say to all of their all of their twitter followers hey i'll give you each a dollar and contribute 50

cents to my git coin grant and we will uh and and i'll give you you know you can keep the other 50 cents but i'll get all this matching fund and that actually happened two rounds ago we we saw that there was a grant that was rising in the rankings really really fast rel especially like relative to its social capital that it had in the ecosystem and then we looked at all the transactions and it was just one ethereum account funding 100 people with the money going back and so we're like oh this is this is a collusion attack this is a bribery attack and so we posted this whole long tweet storm about how we were going to consider each of those contributions or sorry each of those actors to be one actor we just collapsed the identity vector down to that one actor because it

was just one person and funding them all um so that's like an example of of a collusion attack that we aim to prevent and we have some some tripwires built into the system to prevent that but we also have this thing called uh pairwise bonding that vitalik came up with and and it's a automatic way that doesn't require like kevin can sleep through the night and pairwise bonding just works without me having to think about it otherwise bonding works is that it looks at every group of end contributors in the bitcoin grants round and if they are only contributing to the same grants as each other it realizes that they're colluding and it dampens back their their their contributions whereas if everyone is contributing to different

grants like if there's entropy in that um in in that set then it's considered to be a more democratic uh contribution pattern and so pairwise bonding is a way of bonding contributors to each other and figuring out if they're only contributing to the same grants and if they are then dampening those those contributions so there this is an ongoing area of research but vitalik is like galaxy brain dropping like pairwise bonding stuff on us we're building a thing called civil rank and collusion rank where we can test what which grants are colluding and which ones aren't and we're providing data back to the researchers in order to solve this problem and and the way i look at it is as an iterative problem right now we can we can absolutely ward off unsophisticated attacks we're

working on sophisticated attacks and then like the next level is like nation state level like north korea like stopping the i don't think that we're doing enough money right now for north korea to care about bitcoin grants but like when we're doing five million dollars per quarter maybe we will be and it's about it's about every iteration climbing that civil resistance that collusion resistance stack and so we built some sophisticated technology to to take care of it i don't know if that'll satisfy all the questions that you're getting on youtube but we're definitely taking it seriously and i think that that's that's the tl dr absolutely any anytime there is a crypto economic protocol and i would consider quadratic funding and get coin one of those there is a way to attack it right and so this seems like your challenge so where does um bright id and

decentralized identity fit into the bitcoin stack yeah so bright idea is an investment that we made this round and the exciting thing about bright id is that it's really hard to forge an identity so if you remember earlier i said that 10 contributors that are contributing one dollar each qa grant will fare much better than one contributor who is giving ten dollars to a grant and that of course creates a crypto economic incentive to make up new identities and and so basically that new identity attack is is a sock puppet account it's called a civil attack and so basically there is an ongoing effort to create

what's called civil resistance in these systems and bright id is this really this really really cool mechanism in which you can have dids decentralized identities that verify each other so basically um i don't know if you guys if y'all have bread id on your phone but if you do i could create a i could i could give you my qr code right here and i could say hey scans qr code and let's connect to each other and identity asserts that your identity is real and your identity asserts that my identity is real let me just take off my virtual background so that we can actually scan each other and so it's about creating identity mechanisms that are that are not reliant on the

government that are reliant on decentralized technology in order to in order to verify each other so it looks like david's about to oh you're so connected look at this look at we could not clean shave it and young michael that's before we got into the before we got into the crypto fun fact i'm standing outside of the wells fargo bank headquarters in downtown seattle in that photo if you zoom out yeah one day we'll release the uncut version of that photo dave there you go i'm your first sprite id connection david so you got to get your did your did rolling well we're doing the right id team and meet the nation later today so i'll have it yeah i want to i want to watch that guys because what um i feel

like ethereum has talked about decentralized identity for a while there's been another number of projects that have kind of come and not really gotten traction and kind of gone is bright idea kind of a different take on this i guess we'll find out on meet the nation right but like what's the what's the uh the 30 seconds on it yeah so a bright idea is an iphone and android app that allows you to just sort of assert that you value that you vouch that someone's identity is is a real identity and so through the git coin grants round we're going to be populating great ideas social graph with them by giving a match bonus to every person who verifies on bright id and we're also going to be hosting bright id matching parties every single

day in which you can kind of hang out with people talk about ethereum and get each other's identity validated through the app so i see this as i see git coin grants as an opportunity to populate bright id's social graph and i am really really long on taking social graphs and pulling them out of facebook and giving people control over their own social graph and i think that it's actually a huge huge huge huge investment in digital democracy to be able to tell the difference between humans and bots online and we can create civil resistant dowels and better digital democratic systems once bright id takes off so i'm pretty pumped about bread id and the impact it could have as we go west as we go more bankless and uh i think that

bright id is going to have a pretty strong social graph after this get going grants around something okay and so that that social graph the thing you just did with david right what what that is doing is it's basically um tying david's identity which you've attested to and maybe a number of others in the shields for graphic test to it's but it's tying that to an ethereum address right so it's saying this particular like decentralized bank account bankless bank account is david's he owns it he has the private keys that's what it's doing right um so it's it's connecting what's called a did to each other and you know just because we don't want to docs bank accounts like people can choose to associate their did with an ethereum address subject to like bitcoin will not

ever publicly connect your ethereum address to your did address because we don't want to dox you but um but but yeah it's a did network very cool yeah that's powerful stuff okay so another i guess uh tech improvement that you guys have come up with this round kevin is you started to incorporate some layer two payment type solutions so you know we're saving resources we're saving gas this round can you talk about that yeah absolutely so gas prices have been high on the ethereum network for the last month or so and one of the things that we really wanted to do was make it super easy to transact on bitcoin grants this round and so uh basically when you check out like say you have a bunch of

bitcoin grants in your cart you can go and we basically will give now two checkout options for you you're able to either check out on layer one on the ethereum network or we allow you to deposit some funds into layer two this this technology called zika sync and once you've got the funds in zk sync it is almost free to contribute on on git coin grants and so i've been loading up a hundred die at a time into zk sync and then every time i check out i can check out for pennies which is really an amazing thing and i don't think i think that when people complain about ethereum not scaling they don't realize that layer two is here today like we

integrated layer two without having to wait for eth2 without having to wait for sharding without having to wait for proof of stake layer two is here today ethereum is scaling today and we've proven it by putting zk sync on bitcoin grants so yeah check out once or twice with with each checkout option and compare and contrast the experience i think that the technology is ready today and the cool thing about cdk sync is not only is it faster but it also has almost the security guarantees of layer one these optimus or the zero knowledge rollups have like a pretty strong um have a pretty strong security guarantee in them so i'm pretty pumped on that as well and this is all from the loopering team right ck sync

uh zk sync is a zero knowledge roll-up uh and blue bring is another zero knowledge roll-up protocol we're actually planning on doing loop ring in round eight which will be in two months but they're different projects gotcha okay so can i've got uh a screen up um rare here kevin so can you kind of show how it's how how it works how it's different so eip1559 big fan i'm a big fan kevin i want to give some money to eip 1559 because i want that sweet scarcity engine to start getting activated uh i do i just add this to cart and then i have an option to check out is is that what i'm doing here yeah that's right if you click add to cart then you'll see a little sidebar that will load a uh that grant into your

cart and then typically people will go shopping and add a couple different grants to to to their cart but uh when you're ready to check out you click that checkout button right there and then that should take and then that should take you to the cart page uh in which you'll be given an option to do zk checkout or bulk checkout okay it's it's loading right now so i've just decided to give one dollar to eip 1559 which hopefully will get quadratically matched with tons of other um yeah likely givers likely very likely yeah so this is actually a bad one to do as an example because i've been talking to tim and he was like we raised enough money in the last round and we're not

going to be participating in this round so yeah there's no clr match for ifp 1559 um but yes in general that's the general use case um seems like your cart is a little bit slow and i'm wondering if that's on our end i've been doing a lot of performance attacking the last week or so but you also have a lot of tabs open so i don't know yeah i do and slows it down all right so we can maybe uh imagine i'm getting a bad gateway so we can maybe imagine what happened so anyway i got to the cart right and then i'm just presented an option to either check out like you know to to to do the transaction on main chain or zk sync and if zk sync then there's an initial fee right like i have to pay some gas costs to to

create this new zk sync account here um correct let me actually i'll maybe fund the bankless grant right here um and by the way on that on that gateway that you got i have to i have to admit that i'm deploying something right now and uh that may be why uh that may be why you got the the gateway uh anyway so yes uh add a couple grants to your to your cart right here i'm gonna add eth hub and cryptoeconomics study to the uh to my car as well of course bankless because i want more people to go west and and as i go to the cart right here i will see the three grants that i added to cart right here and i am going to

tell bankless great job youth hub great job and i'm going to tell cryptoeconomics study that i love the mission of their project because i love crypto economics um i'm going to fund each of them with 15 die instead of five die and then as promised i will have the option to check out with zk sync which is the layer two technology or i can check out with the standard checkout which is the layer one technology and so basically the the way it works is that if i if i check out with zika sync which is the layer 2 technology i just have to sign a couple messages and these are just signatures they're not actually ethereum transactions they're just me signing that uh that i own the git coin

account and then i click this this uh donation transaction button which is also a signature that is going to be going to broadcast to the to the zk sync network and so basically it the estimated processing time for this transaction is under one minute and i'm barely gonna pay any gas because it's a layer two piece of technology like sending transfer one one of four uh and it's gonna take take less than a minute to do so yeah i think that that's the sort of the power of layer two is that i'm able to check out in a matter of 15 seconds without paying a ton of gas tea and this is of course live in the ethereum network today so pretty

pumped about that that is awesome that sounds huge beautiful beautiful kevin uh if people want to go donate where should they go uh just go to getcoin.com if you want to fund public goods in the ethereum ecosystem and send us a tweet on twitter at bitcoin thanks so much kevin you know last thing i just want to say about this is it feels like what you've created and what the ethereum ecosystem is is is creating is a sustainable way to fund ethereum development protocol public goods without issuance without increased issuance without a forced taxation and

it strikes me that entire ethkiller projects have been born based on this premise that there needs to be a mandated public goods funding process some kind of a dev fund as part of the core protocol um ethereum has always said no like that's uh that would remove the credible neutrality of the system right we can't you know par park issuance into a dev fund because then who votes where the money goes and and this is essentially um creating an opt-in way to do that to fund public goods without increasing the issuance for supply of ethereum it just seems super like

like a big deal that this is happening all organically what's your take on that uh i think that you're you're right that it's a positive thing to fund public goods without coercive taxation one of the things that i've been trying to do is sort of break when people hear let's fund public goods they think of they think of coercive government taxation and i think that that's a relic of the industrial era in the information age we're going to be able to fund our public goods without taxation uh doesn't feel it it feels it may feel organic from the outside but for me it's felt like pushing a boulder uphill for three years and like thankfully we're finally starting to get over the hill and it's starting to get some momentum with andre and kane and

ryan lesnar and all these amazing people donating to public goods on the ethereum ecosystem but yeah i i think it's a super positive thing that people are realizing that they're standing on the shoulders of giants and we're all building on top of open source software and we're starting to support each other because that's the kind of community that i want to live in i want to live in a world in which in which uh there is open source software that that i can clone and download for free and those other public goods that i'm just really passionate about um you know clean air has been a real big one in the united states for the last for the last couple weeks with the entire west being on fire i think you don't realize that you don't have public goods until they're gone until you're until

you're breathing smoky air or you know you're stuck with windows xp phone you don't realize how much value you get out of public goods and so i just want to make sure that that my kids grow up in a world where public goods are well funded and and that's kind of what we're doing with bitcoin it's been a super satisfying project to work on kevin i want to take a moment and tease our future upcoming episode uh on the bankless pod we're going to bring you on to talk about meditations on moloch and how human coordination failure is the biggest threat to humanity in how git coin and a couple other interesting strategies going around in the crypto world can offer a tool to slay moloch there is uh a lot of things i just said that we haven't yet talked about on the

bankless pod but uh get used to it because we're gonna be talking about these things also amin soleimani respond to my messages because we want you on it all right awesome kevin thanks so much thanks for spending the time so we have bankless nation we have a couple more topics to cover but before we do we're going to get to uh some additional sponsor ad slots that david has put together cool all right thanks kevin the bankless date of the nations the banquet state in the nations are also brought to you by monolith monolith is a really important tool to help you go bank list but still let you buy your groceries at your local grocery store monolith will ship you a very sexy visa

card that you can use wherever visa is accepted which is basically the whole world but instead of using the dollars in your bank account it uses the die in your monolith smart contract wallet something brand new out of monolith is the ability to add funds directly to your monolith wallet without having to go through a centralized exchange like coinbase or binance or whatever getting your fiat money directly into ethereum straight through monolith is a really powerful tool to remove the influence of centralized intermediaries in this world now with monolith you can buy die straight into your monolith wallet with a zero percent fee which is absolutely insane so check them out at monolith.xyz and get your monolith visa card today you know that random string of

characters that you have to pass to your friends and family to show them what your ethereum address is and they just don't get it unstoppable domains fixes that problem with unstoppable domains you get a human readable name so you can tell them to instead of paying you at 0x11743q4 you can just tell them hey pay me at davidhoffman.xyz or davidhoffman.zil you don't have to ever worry about sending the wrong address because it's human readable and this works for not just ethereum but for bitcoin for litecoin for any blockchain that works with unstoppable domains you can even tell bitcoiners to send you bitcoin to davidhoffman.eth they even allow you to set up uncensorable websites that are always accessible even if the chinese nation

state doesn't want them to be check them out at unstoppabledomains.com all right david that was just uh fantastic with kevin i'm i'm super bullish on uh what the ethereum ecosystem is creating there and its sustainability moving forward you know something else i'm bullish on but i'm not sure exactly all of the details but is this a stable credit system that why earn is rolling out you did a video with andre from wiring about this on friday i watched the video i think i like i 80 percent feel like i understand it but not a hundred percent what is this thing how would you like summarize it

david what is the stable credit system that uh iron is putting in place it seems like some kind of a stable coin is it more than that too yeah it is a whole bunch of things and that's why people are having such a hard time explaining it and i think we're not really going to know what it is until it's out in production right until it's actually deployed on mainnet but yes at the end of the day it is a new stablecoin and it is a new protocol for generating that stablecoin right and so it's kind of a it's just a collection of many different uh primitives that we've all seen in the defy space stuck together right and this is the beauty of composability and open source engineering right and so uh what

it is i've kind of in my mind considered it like a maker dow 3.0 right um sorry sorry to to call call it the new and improved maker but it kind of is what it is and so it's it's maker it's a new multi-collateral depositing uh system that balances assets organically using uh the bonding curves a la unit swap right and so it's it's like multi-collateral dye in the sense that you can use many different assets to deposit into a into a protocol and then that protocol incentivizes or disincentivizes assets that are under or over utilized right and so if too many people have don't

have a submitted link and not very many people have submitted ave it will incentivize a rebalancing of that and and as a result it will produce stable credit usd which is a stable coin that is uh pegged to the dollar via the chain link oracle system and so this is highly dependent on chain link oracles which kind of makes me a little bit nervous but so far so good with chain link and so think of it like a a combination of multi-collateral die of a borrowing lending protocol like compounder ave mixed with an a an amm utilization market that also produces a new stable coin using chain link oracles to price

the stable coin so it's all three of these things all at once okay all right so i'm going to try to wrap my head around what you just said so um first of all there's a staple coin that comes out the other the other side of this like a die basically right and that that stable coin is a um asset-backed stablecoin like die so it's uh you know it's not like a um usdc which has actual dollars us dollars in a bank account somewhere that that coinbase uh maintains and owns this is backed by other tokens other defy assets in the same way that dye is right exactly okay all right so i'm with you so far and then like multi-collateral

dye you can put basically any asset that the protocol supports inside of it so yeah i could put um ustc in i could put ethan i could put dye in i could put link in whatever i want that is an erc20 that the protocol accepts is that true yes and the protocol accepts things that have chain link oracles so you can't just mint your own brand new token you can't just randomly just mint [ __ ] coin and a trillion supply and then drain the whole system because that that thing won't have a chain link oracle so it needs to have a chain link price oracle so it has that oracle i guess dependency or weakness right but to be fair so does die it's just um dye is dependent on maker's oracle system

rather than rather than chain link right okay so i'm with you there so we produced this this stable coin and it it it's also a credit system i suppose so if i have some asset that i don't want to sell and i want to borrow against that asset uh anything that chain link supports i can deposit that into uh a collateral debt position a cdp right of some sort and i can um then borrow against that is that correct yes that's all right okay all right and then the the rates of this thing like um how does that work like so uh who determines what the i guess the interest fees should be is that all algorithmically determined by

like andre's money robots yes it's algorithm algorithmically determined and i think that's where the amm style utilization ratio comes into play and so it and it also uses uniswap directly like the actual uni-swap exchange design don't know how that works that's kind of where i get lost okay but it also uses this utilization ratio to incentivize uh depositing of one asset that's underutilized and not depositing the one asset if it's over utilized and i'm assuming there's variable interest rates as we've grown to expect from compound and ave integrated with that as well but that's kind of where i'm i'm a little bit confused as to how the whole system works okay so i'm a i'm increasingly a big fan of this uh you're in finance newsletter

it comes around weekly and it's sort of it's almost a full-time job to keep up with everything that urine is doing just in and of itself so this does a good job of that and they described it as stable credit as a synthesis between what you're describing synthetic debt like a die but it's also like synthetics because it's all one i guess um pool of collateral that you're you're borrowing against that kind of synthesizes all of these things it's also like a lending protocol that we talked about and it's also like there's an automated market maker that comes embedded inside of it so where what what's the source of demand for this new stable credit uh dollar system is is that like um adoption has

been tricky for dye um how is adoption of stable credit going to work yeah so embedded in urine in some way so this whole stable credit system is actually totally agnostic from urine so it doesn't have any specific relationship to urine except for the fact that andre created it right and he created it because he needed a place to deposit all of euron's capital because urine has been so incredibly successful that it's overflown all of the various places to like get yield from right and so andre just solved this problem by making the stable credit system except the whole point of the the the usd uh new decentralized stablecoin is actually

a byproduct an afterthought it's not the whole point of the protocol the whole point of the protocol is to just be a place to submit assets and capital to which is actually something that i'm just i just think that's hilarious because like yearn finance is so incredibly successful that it has too much capital so the guy that made urine finance just created his own protocol a brand new protocol to submit all this extra capital to in order to further yield right and so uh and again i don't know where kind of these numbers come from we'll we'll figure it out when it's actually live in production but with urine this is this is now a fantastic uh no sealing place to submit capital right and and so like

what was limiting prior was maker dao had a limited amount of diet can produce which is why the dye price is so high uh and so it could it couldn't it couldn't leverage all that much capital right the y eth fault received like three hundred thousand dollars or three hundred thousand each in like the first three days and maxed out the utilization of maker doubt right and so andre is like well all the i've maxed out the utilization of all these other d5 protocols so i'm going to make my own that doesn't have a cap on utilization it only the only cap is the balance okay that's that that feels like that's really a big deal it isn't right because because the the prop the challenge with maker and with dye

uh to this point aside from governance challenges and those sorts of things of like having people have having to sort of tweak the knobs uh when there's you know demand or supply changes with with dye but scalability has been the the main issue right and you're saying that you know so the scalability of diet always has kind of a cap based on demand for uh cdps for instance right but this doesn't happen risk parameters for me but this doesn't have that right this doesn't have governance which is insanely awesome thing there's no governance over this thing it just is if it has a chain link oracle it works okay

okay so and the reason it can have no it doesn't need governance is because it has this amm embedded inside of it that essentially like market adjusts everything on the fly yep mm-hmm and and and i mean chain-link to some degree is itself a governance platform but also not really and so like all of these non-governance tools are all available to andre who just stitched them all together to create stable credit usd okay so like you know how we're always talking about um if only if only we had a decentralized highly scalable uh stable coin like um that would be the holy grail right vitalik's talked about this and and the key being that it would be also

governance free yep right so that it would be more scalable yep um is that what this is i mean like i think so i think that's what this is again i i can't say for certain because i'm not a 150 iq genius like like andre is but like that's what it seems to be question mark i guess so we'll find out wow if so if so that could be huge and when we say we'll find out um the contract smart contracts are already written and right it just looks like there's already built we're just waiting for the ui it's insane dude okay

so this is a this could be a really big deal then it's basically a new decentralized stable coin that has no governance its only dependency is this chain link oracle but aside from that which is somewhat apples to apples with maker just a different oracle system it it uh doesn't have a ceiling in terms of its scalability it can just kind of algorithmically adjust and go up or go down i guess the only scalability limiter would be the the amount of um erc20s yep essentially the economic bandwidth right economic bandwidth ethereum chain right which is like aggregate of all erc20s plus aggregate of the value of eth that's essentially the economic bandwidth of ethereum yep and that's the only scale limiter right now we just

scale out the three yeah literally hit the internal capacity ceiling there is no there is no ceiling other than ethereum itself that's pretty bullish man it's pretty pretty full of huge like again i'm trying to contain myself because i don't want to like get a little bit out over my ski tips with like something i only understand like 80 of and maybe 80 is generous but like it could just be like the biggest thing of of the last like 12 months wow okay we'll have to see we'll have to see when that ships that could be super exciting i mean it's been sort of the holy grail we've all been looking for in terms of a decentralized stable coin that didn't have us you know scalability limiter and how it came about is just so

incredibly hilarious andre was like i kind of need this and so i'll just build it yeah yeah and what's cool though is it is um it is there's an element of standing on the shoulders of giants right where yes you're stitching together concepts that are in synthetics that die and maker pioneered and then also uniswap without those three components this would not have been possible right it's back to that analogy of like you're in a video game and there's a tech tree and you have to like unlock these three things before you can unlock that other thing that comes later that's right this is that other thing that's right that's right all right man that's cool all right well it's hilarious yeah yeah very good very good i mean all we have to do is just like you know track

what andre's doing and then that seems like um the solutions just emerged from his brain he's just like a melting pot of all that yep um all right cool let's talk about our last thing this is like a a smorgasbord of i guess a few topics that um have come up recently but one is this so just this morning microstrategy which is a publicly traded u.s company they're in the business uh analytics intelligence space kind of a b2b company they're they're piling on more bitcoin on their balance sheet right so of course all of these publicly trade companies they have balance sheets generally they have like you know t bills bonds uh sovereign debt uh some cash positions

this this company and its ceo has decided to take that balance sheet and actually buy bitcoin with it rather than fiat-based um fiat-based bonds and and and cash it's that seems pretty crazy like what's going on here yeah the crazy thing this is the second time that this has happened with microstrategy right and so like maybe it was a month ago or so kind of hard to tell in during covet times but in covet and d5 times but roughly a month ago uh microstrategy announced that they're going to put um like something like 300 250 million dollars worth of bitcoin on their balance sheet is like 0.1 of all bitcoins right and that was that was like the biggest news and i wrote a whole entire article based

off of it bitcoin and bitcoin's prisoner's dilemma good article go read it um and the whole idea is that like how many companies does it take to purchase 0.1 percent of all bitcoins out there before there turns into be like a supply-side liquidity crisis of bitcoin right and like paul tudor jones did this and then and then microstrategy just did it and then before before we hear about a third company doing it microstrategy just does it again right they just added more onto their balance sheet of bitcoin right and so here here's what's going on is that the ceos or the people in charge of this company microstrategy are just huge bitcoin bulls right bitcoin the mine virus of bitcoin is infiltrating companies and leadership of companies

with balance sheets who are seeing the money printer go bur and they are saying you know what putting bitcoin on the balance sheet buying one percent point one percent of all the bitcoins out there those are ours uh you know we're never going to give them up um never going to let you down and then all and then all like how many times is this does this need to get repeated before there turns into just like a massive scarcity event of bitcoin because all the all the people all the companies are having a strong interest in protecting themselves from inflation so it's this guy right here this guy michael uh sailor looks like who is he is super bullish so he as you said they already purchased a whole bunch of

bitcoin but now they just added 175 million more for an aggregate total 425 million this is a publicly traded company that has decided to enter the the game that is the scarcity game that is bitcoin essentially like you know you might call it a ponzi game but i mean that in kind of a good way it's definitely a scarcity game there's only 21 million everyone's kind of playing publicly traded companies are doing this how soon until central banks start to do it right so this is maybe the first one that's starting to meet headlines other publicly traded companies may join and then do we have small nation states that start to play this game too it's a game of musical chairs sir

whoever wants to go first and it seems like uh i i don't really think people saw that publicly traded companies would be the first to go i think that's kind of a surprise and that's kind of why this is big news because i think you're right i think some people for some reason thought that nation states and central banks were going to go first but no it's it's i think it's a it's a much more of a bottom-up revolution right and in that bottom-up revolution companies with balance sheets come before nation states and central banks right and i think they're going to be the last ones to buy bitcoin right they're going to be the bag buyers who are buying million dollar bitcoin right and and company and companies with treasuries and and balance sheets are just going to going to go first they can

move faster they can move quicker they can deploy capital sooner and so they're adding bitcoin to their balance sheet where the bitcoin is working its way up working that feels bullish feels bullish crypto feels bullish bitcoin all right let's talk about something else too so another metric that i've been monitoring for quite a while is this metric that uh coinmetrics puts together so great analytics company coinmetrics they have like charts you can go see they're free but they put together this metric for adjusted transfer value and this is a comparison of bitcoin in red versus ether in green and adjusted transfer value it basically just means the amount of

bitcoin that was transferred or the amount of ether that was transferred in the network in dollar value right so um something interesting just happened recently that hasn't happened since i think briefly in uh 2018 like the first quarter of 2018 and that is the value transferred on the ethereum network in ether native units of ether has exceeded the value transfer on the bitcoin network of bitcoin so the reason that is so huge is because this value transfer is happening without any bank without any sovereign nation state it is a pure trustless uh transfer from like one

i guess pure node like one uh smart contract or individual or capital pull in the network to another and it's also with a non-sovereign store of value so that's what bitcoin is on its network and what ether is on its network so it's it's essentially the the most bankless uh value transfer besides maybe like um moving blocks of gold right um that like can occur and i think it it's it's bullish uh for ether that it is starting to exceed the um adjusted value transfer of of bitcoin here and i'm gonna continue to to monitor that but to me that is the story of ethan's trustless collateral fueling defy that's why

you're seeing a lot of this growth this is the story that we talked about a lot in bankless of ethan's money in the same way bitcoin is money on its network so um yeah really cool data point to see and i think bullish ether on that on this one you can you can see the rise of d5 right and right at the end of this graph here you can just see it um and and like that is the power of an internal ecosystem versus an external one like bitcoin is five plus years older than ethereum and so it has the the tailwinds of people of like companies putting it on their treasury and ethereum's equivalent of that is its internal defy ecosystem with you know unstationable demand for ether

yeah yeah we'll see how this plays out but it does it does seem like um some of the bankless thesis is is coming through in the in the data here in the in the metrics here but here's kind of a bear case for ethereum uh i suppose that's a narrative that's running rampant i want to get your take on it so um cz here's my take right here but uh cz who is the ceo of binance um is has created an ethereum killer right essentially so this is a binance smart contract uh platform um called the binance smart chain i believe um and it even has its own um ether scan basically uh bsc scan where you can kind of see it is

it is run by yeah you can see like this looks just like etherscan but it is binance chain and cz basically makes the argument that hey gas prices are too high um i'm going to put together a 100 million dollar ecosystem fund and go lure defy apps here you've got yams you've got you know these you know games in the ethereum world you could just play those on binance at a reduced price and all you have to do is uh trust our 21 validators right 21 yes so this is these are the validators um yeah and there can only be 21 so it's a delegated proof-of-stake style network

where bnb which is the binance issued i guess pseudo security loyalty coin you might call it is essentially the the reserve currency asset and the thing that is securing this entire network so cz makes the case that you should come to the binance chain it is a better version of ethereum because it is it is more scalable uh and i think he's making the case that um essentially it's uh projects can be vetted um it's not bulletproof but you know less less frauds less scams because cz and co vet it um and then you get like i don't know ultimate rewards because you could do something with staking your bnb and earn multiple rewards simultaneously hard to

ignore he says what's your take on this david yeah so i i don't want to there there is room for something like this like there's room for c5 and there's room for whatever c d phi is call it decentralization theater but call or college it's what it is it's just a more centralized version of ethereum maybe it also has customer support too so like you know people like that right um and maybe maybe this is what tether is like somebody accidentally sent a million dollars to the wrong tether contract or the wrong uniswap contract and then paul apollo arduino of tether was like yo dm me and i will get you your money back right so there are advantages to c d phi

it's just not going to replace ethereum it's not going to replace the whole the actual real thing right like for some for some certain use cases i'm sure that it will be beneficial but no it's not going to replace defy it's not going to replace like i i often view this whole world as a landscape and there are different peaks and valleys of value along this landscape right and so maybe there's a peak on some pseudo-de-fineness with some like centralized backstops like being able to retrieve funds or or have have customer support or whatever i'm sure there's value there but according to the protocol sync thesis which has literally never been wrong ever the the value peak at the d phi end of the spectrum is just way too high to

ignore so like again tip of the hat to cz for building he's done it he's built something cool uh and it's gonna remain over there where the d5 zone isn't so that's my take yeah that yeah that's a good take yeah it's kind of like the i guess we've used the aol analogy right so but also according to the protocol sync like the way we would expect this to play out is it's basically a bank centric far less credibly neutral chain than something like ethereum right so like our our i think the protocol sync thesis take would be that ethereum remains kind of the the base settlement layer right so if you're a comp if you're a competitor to coinbase

say you're a gemini or you or if you're competitor to binance you're a gemini or you're a coinbase or you're a kraken you are not incented to build on binance's uh binance chain with bnb as the reserve currency the money somebody else is like equity token basically yeah exactly you want to build on the most credibly neutral system so like unless binance kind of runs the world uh and is the only chain in existence um the protocol sync thesis would predict that a much more credible incredibly neutral settlement layer will will persist right we'll have to see how that plays out i

guess the counter argument to that or the bear argument to that is that basically like people don't care about decentralization david they care about um like permissionless programmable money whether that's bnb or whether that's something else it doesn't really matter they just want fast transactions and they want to be able to to build on top of it in you know in the composable way that uh that something like ethereum has allowed them to to build on top of so that would be the bear cases um i guess we'll have to see how it plays out i mean i yeah yeah it's gonna be yeah you're right it's gonna be a patiently wait and see and uh we've been playing this game ever since like i think eo started it in 2017 where like the faster quicker slightly more not

slightly significantly more centralized versions of ethereum are going to come and take all of ethereum's economic activity you know and like i guess we're going to continue to we've been waiting and seeing for three and a half years now i guess we'll continue to wait and see for the next three and a half years at some point some further people are going to capitulate like over the last like six months a lot of bitcoiners have capitulated to defy and i think that a lot of ethereum killers of the 2017-2018-2019 class have capitulated to becoming ethereum's l2 or sidechain uh and i guess we have this new wave of ethereum killers who i guess we're just gonna have to wait and see but like i've been waiting for a while now so i already know where i'm at

yeah hasn't happened yet so we'll have to see protocol sync pieces has held up pretty well so far we'll see if that continues hey last thing we should chat about is um this really cool index that uh set uh toketet just came out with so this is the d5 pulse index so you talked about um capitulation here um you know this may help retail i guess and even institutional investors capitulate into d5 can you talk about what this is yeah uh also ryan your camera is frozen on my end if you are sharing your screen i'm not seeing it um but i'll talk about what it is um the d uh this is coming out of set protocol and anthony cesano is coming on the meet the nation on

thursday uh to talk about this but this is something that i think is really really cool and could be an asset that becomes foundational there we go now i see it could become like foundational to the rest of d5 right a d a d phi index token right and there's so many conversations to have about this um but like something that a single asset that tracks the general value of d5 is fantastic and in the same way that urine simplifies things for yield farmers i think this defy index will simplify things that you know people are are hot on defy i'm getting texts about d5 from friends you're getting texts about d5 from friends now we don't have to tell anyone it's like hey like this is this

is what urine is this is what east land is this is what synthetics is this is what compound is like you know shut up just go buy the index like you're hot on d5 go buy the defy index this is a product for you and people are people are used to like etfs right index funds exchange traded funds in their brokerage and this is basically a um a token that you buy there's here's the current price right now it's 119 dollars and it gives you exposure to all of these underlying assets according to is it according to david the total value locked on d5 pulse or is it according to the market cap of these respective tokens that's a good question i think it's the market cap of the token because i'm pretty sure ave is number one on total

value locked i think it has double uh the amount of whatever yearn has so i think it's just an aggregate of the value of the market cap of these specific tokens yep that's what that's what it's saying in the summary here so it's basically like overweighting 26 of what you'd be purchasing is wi-fi right now because it is 26 the market cap of these top d5 tokens and you have ave you have synthetics you have compound it's just a great way to kind of buy the the d5 market in one fell swoop this is super cool stuff this is excuse my excuse my uh wordage here but this is such a big dick move from set because like we know that in like the s p 500 like companies are like two fighting tooth and nail to get included

in the s p 500 because if you're in the s p 500 that means you can be included in a lot more funds and a lot more investment strategies if you're outside of the s p 500 you're kind of like a nobody right and so now there's like this curated list of approved defy tokens that everyone's gonna be i feel bad for anthony or whoever's doing like support at token sets because they're going to be like hey people are going to be knocking on the door hey will you let us into the defy token set like index because we want to be in there uh that this is going to be a hot commodity and i would expect that that these specific tokens get some sort of a pump just because uh maybe over the over the long term not over the short term but you know just

the fact that this index includes these tokens is bullish for these tokens specifically yeah you'll notice for instance a link isn't here so i bet the link marines might have something to say about that spicy spicy we'll see all right david well we have covered a whole bunch of things today from get coin all the way to microstrategy buying bitcoin all the way to tokens years i think we should uh we should wrap it up for this state of the nation absolutely this was a this was a long one but absolutely jam-packed full of good content so thanks everyone for listening to this week's state of the nation this state of the nation is funding we are having fun funding all right man uh risks in disclaimers uh

eth is risky of course so is crypto d5 is risky even assets like eth and bitcoin are risky but so are smart contracts you could lose what you're putting putting in but as kevin said we are headed west this is the frontier it's not for everyone but we're excited you're with us on the bankless journey thanks a lot you