Podcast Summary
Exciting developments in crypto space: Coinbase's layer 2, SCC lawsuit, and Spotify's tokens: Coinbase's layer 2 could offer more efficient transactions, SCC lawsuit may set legal precedent, and Spotify's tokens hint at wider adoption
Learning from this week's Bankless Friday roll up is the exciting developments in the crypto space, including Coinbase's announcement of its own dedicated layer 2, SCC's lawsuit against Terraform Labs, and Spotify's plans to introduce tokens into its app. The implications of these events are significant and far-reaching, from Coinbase's potential to offer more efficient transactions to the potential legal precedent of the lawsuit. Additionally, the Bankless team announced the upcoming launch of their new beta site and the opportunity for individuals to become citizens of the Bankless nation, gaining access to exclusive content and events. These developments underscore the rapidly evolving nature of the crypto industry and the importance of staying informed.
Fed's Interest Rate Hike and Ethereum's Burn Rate Discussed in Crypto Market: The crypto market remains stable despite Bitcoin and Ether's decrease in value. The Fed's upcoming interest rate hike and Ethereum's burn rate are major topics. The market does not expect interest rates to exceed 5.3% and sees Ethereum's burn as insignificant compared to its total market cap.
Despite a 4% decrease in Bitcoin's value and a 3.3% decrease in Ether's value over the past week, the crypto market as a whole remains relatively unchanged. The Fed's upcoming interest rate increase and the ongoing debate about the significance of Ethereum's "burn" are major topics in the crypto world. The Fed is expected to raise interest rates by 0.25% in March, but some officials are pushing for a 0.5% increase. The crypto market does not anticipate interest rates to rise beyond 5.3%. Ethereum's "burn" rate, which refers to the destruction of Ethereum tokens as a result of the Ethereum network's transition from proof-of-work to proof-of-stake, has been a topic of debate. Some argue that the burn is insignificant in comparison to the total market cap of Ethereum and does not impact the flows of sell or buy pressure on the asset. The focus on the burn is seen as a distraction from the real price catalyst, which is the elimination of proof-of-work issuance and the reduction in issuance. The total crypto market cap remains above $1 trillion.
Ethereum's growing transaction volume and deflation driven by network improvements and Layer 2 solutions: Ethereum's network improvements and Layer 2 solutions like Arbitrum have led to a surge in transaction volume and deflation, making it a vibrant and self-governing economic system with a clear monetary policy and lower fees.
The recent surge in Ethereum's transaction volume and deflation, driven by the network's improved efficiency and the growing popularity of Layer 2 solutions like Arbitrum, signify a vibrant and self-governing economic system that's able to capture its own energy. This is a significant development, as Ethereum now has a clear monetary policy and is able to process more transactions with lower fees than before. The ultrasound money meme, which celebrates Ethereum's deflation, is a way to spread awareness about this mechanic and the network's activity. For instance, Arbitrum, a Layer 2 solution, has seen a 10x increase in total transaction volume and a 9x increase in capacity with only a 7% decrease in fees over the last year. Additionally, Coinbase's Q4 2022 earnings report shows that Ethereum and Bitcoin now represent a combined 68% of the trading volume on the platform, indicating a shift towards blue-chip assets. Overall, these developments demonstrate the growing strength and maturity of the Ethereum network.
Coinbase enters Ethereum layer 2 with new project Base: Coinbase's new project Base, an optimistic rollup on Ethereum, could lead to a mass migration of DeFi apps for improved scalability and efficiency.
Coinbase, the first US publicly traded crypto exchange, is entering the layer 2 space with its new project, Base. This optimistic rollup, built on Optimism technology and settling on Ethereum, is fully EVM compliant and permissionless for developers to build on. The announcement of the Base test net marks the beginning of a potential land grab for DeFi apps to move to the new chain, as Uniswap and other infrastructure projects are expected to follow suit. The collaboration between Coinbase and Optimism on Ethereum Improvement Proposals (EIPs) 4844 and 4844's proto danksharding project sparked the idea for Coinbase to build its own optimistic rollup. The second order effects of this announcement could significantly impact the DeFi landscape, as more projects may migrate to Base for improved scalability and efficiency.
Coinbase's Decentralized BaseFi Project: Coinbase's decentralized BaseFi project, powered by Optimism and OP Stack Technology, sets it apart from other exchanges by minimizing risk and aligning with decentralized values, potentially onboarding millions of new users into crypto.
Coinbase's entry into the blockchain space with its BaseFi project is a significant development due to the decentralized nature of its launch. Coinbase had previously considered starting its own chain twice before, but it was their partnership with Optimism and the OP Stack Technology that made it possible. This new chain, Base, will operate as a layer 2 solution on Ethereum, meaning it settles transactions to Ethereum. Coinbase will be the only sequencer of the base chain, but the long-term vision is to become a fully permissionless network. No Base token exists yet, but the validator set will eventually be permissionless. This decentralized approach sets Coinbase apart from other exchanges that have launched their own chains, as it minimizes the risk of nefarious activity and aligns with the values of maximally decentralized and bankless systems. With Coinbase's large user base of over 110 million verified users, the potential for onboarding a significant number of new users into the crypto space is immense. This decentralized approach could pave the way for other publicly traded companies and crypto exchanges to follow suit, offering users a seamless onboarding experience into the world of decentralized finance.
Coinbase enters Layer 2 space with new product Base: Coinbase, with its large user base and assets, enters Layer 2 space, potentially onboarding millions into self-sovereign tech. Base integration allows users to withdraw/deposit assets within Coinbase ecosystem, signaling shift towards decentralized solutions and increased interoperability.
Coinbase, a major centralized crypto exchange, is entering the Layer 2 space with its new product, Base. This move aligns with predictions that exchanges would eventually adopt Layer 2 solutions to offer users more autonomy and self-custody. Coinbase, with its large user base of 110 million and $80 billion in assets, has the potential to onboard a significant number of users into self-sovereign technologies. The integration of Base within the Coinbase ecosystem allows users to withdraw and deposit assets while remaining within the exchange's infrastructure, creating a bankless version of Coinbase. Despite concerns about AML/KYC requirements, the massive user onboarding potential outweighs these concerns for many. Coinbase's adoption of Layer 2 technology also signals a shift towards decentralized solutions and opens up new opportunities for on-chain products and services. Additionally, the collaboration between Coinbase and the Optimism team on EIP 4844 and the OP Stack standard is expected to lead to increased interoperability and composability between various Layer 2 chains, further blurring the boundaries between them.
Coinbase Building Bridges Between Blockchains with Optimistic Ethereum (OP) Stack: Coinbase is using the OP Stack on Ethereum to connect to other layer 2 networks, Ethereum's ecosystem, and future chains for interoperability and cost savings. The OP Stack's forked codebase and absence of a security token make it an attractive option for companies like Coinbase.
Coinbase, through its involvement with the Optimistic Ethereum (OP) Stack, is aiming to build bridges between various blockchain networks rather than creating isolated islands. By utilizing a layer 2 solution on Ethereum, Coinbase can connect to other layer 2 networks, Ethereum's ecosystem, and even future chains, providing interoperability and cost savings. The OP Stack, with its forked codebase, is expected to provide advantages for superchains like Optimism. Additionally, the absence of the need to launch a token for security on a layer 2 network makes it an attractive option for companies like Coinbase. The ease of use and security of layer 2 networks are contributing to an explosion of new chains. Euler Finance, for instance, is planning to deploy on Coinbase's layer 2 network, Base. Coinbase's Jesse Walden has become a key contributor to the OP Stack development alongside OP Labs. The SEC's lawsuit against Terraform Labs and Do Kwon, despite Terra's collapse almost a year ago, is a reminder of the regulatory challenges the crypto industry continues to face.
SEC sues Terraform Labs and Do Kwon for alleged securities fraud: The SEC's lawsuit against Terraform Labs and Do Kwon highlights the importance of transparency and truthfulness in the crypto industry, as the SEC alleges the company failed to disclose crucial information and intentionally misrepresented the stability of their stablecoin, leading to potential investor losses and regulatory action.
The SEC's lawsuit against Terraform Labs and Do Kwon for alleged securities fraud highlights the importance of transparency and truthfulness in the crypto industry. The SEC alleges that Terraform Labs failed to provide full disclosure to investors, intentionally misrepresenting the stability of their algorithmic stablecoin TerraUSD and concealing the fact that they were cashing out large amounts of cryptocurrency while assuring the public of its stability. The SEC also accused Do Kwon of using his Twitter account to deceive investors and manipulate the market. The case serves as a reminder that securities laws apply to crypto assets and their issuers, and that attempts to evade regulation will be met with legal action. The SEC's findings also revealed that a third-party, Jump Capital, had made significant profits from Terraform Labs before the collapse of TerraUSD. The case demonstrates the potential risks associated with investing in unregulated crypto assets and the importance of doing thorough research before making investment decisions.
Accusations against large trading firms like Jump Trading: Large trading firms' actions, such as propping up failing projects without disclosure, can lead to larger bubbles and greater losses for retail investors. The SEC's lawsuit against Terra and its founder may set a precedent for stablecoin and wrapped asset regulation, emphasizing the importance of transparency and ethical practices in the crypto industry.
The crypto space has seen significant destruction to retail investors due to the actions of large trading firms, such as Jump Trading. These firms have been accused of propping up failing projects, like Terra, without disclosing their involvement, leading to larger bubbles and greater losses for the wider community. The SEC's lawsuit against Terra and its founder, Do Kwon, could set a precedent for the regulation of stablecoins and wrapped assets, potentially giving regulatory bodies more control over the crypto market. This situation highlights the importance of transparency and ethical practices in the crypto industry, and the potential consequences for retail investors when these principles are disregarded.
Uniswap expands beyond DeFi with fiat on ramp and NFT aggregation: Uniswap simplifies the journey from traditional fiat to decentralized assets, including NFTs, within its platform. Ethereum scalability solution Arbitrum accelerates Web 3 adoption, and Spotify's token-enabled pilot advances creator opportunities.
Uniswap is expanding its horizons beyond decentralized finance (DeFi) by adding a fiat on ramp and becoming an NFT aggregator. This makes it easier than ever for users to go from traditional fiat currencies to decentralized assets, including NFTs, all within the Uniswap platform. Additionally, Ethereum scalability solution Arbitrum is accelerating the Web 3 landscape with its secure, fast, and cheap transactions, attracting numerous projects and ecosystems. Spotify's token-enabled pilot represents a significant step forward for creators, enabling token-gated access to content and experiences. These developments reflect the growing importance and accessibility of decentralized technologies in various industries.
Ethereum users protect transaction data and recapture value with MEV share: Ethereum users can keep transaction data private and recapture value through MEV share, while market downturns lead to layoffs and fee drops in the crypto industry. A court ruling adds to the confusion over crypto securities.
Ethereum users can now keep their transaction data private through a system called MEV share, allowing them to recapture some of the value they create by forcing searchers to pay for the MEV. Meanwhile, layoffs have hit several crypto companies as they optimize for resources during market downturns. The court ruling that NBA Top Shot Moments could be securities adds to the confusion over what constitutes a security in the crypto world. In response to competition, OpenSea has dropped its fees to 0% for a limited time. These developments highlight the dynamic and competitive nature of the crypto market, with companies adapting to changing market conditions and users seeking to maximize their value.
Artists, NFT marketplaces, and royalties: A complex issue: Blur dominated NFT market in Jan 2023 with 46% volume, but their dominance might be due to dropped token. Artists may respond to marketplace royalty fees by implementing contract-level royalties, making it harder to sell on other platforms. Crypto industry faces challenges and risks, with figures reporting probable crimes to authorities facing backlash.
The relationship between artists, NFT marketplaces, and royalties is a complex issue. Artists want their royalties, but NFT marketplaces like Blur are trying to minimize these fees to attract traders. Artists may respond by implementing contract-level royalties, making it harder for them to sell on other marketplaces. In January 2023, Blur dominated the NFT market, accounting for 46% of the total volume compared to OpenSea's 40%. However, Blur's dominance might be due to their recently dropped token. Bitcoin's Ordinals volume is down but still healthy. A tweet from Patrick Hansen criticizes El Salvador's Bitcoin adoption, arguing that only 1.6% of remittances are sent via Bitcoin while 1/3 of Latin American consumers have used stablecoins for everyday purchases. Caitlin Long, a crypto industry figure, claimed to have reported evidence of probable crimes in the crypto industry to law enforcement and regulators, but faced backlash when her bank's charter was denied. This situation highlights the challenges and risks associated with the crypto industry.
Regulatory Frustration: Balancing Market Integrity and Innovation in Crypto: Regulators face challenges in maintaining market integrity while fostering innovation in crypto, with good actors facing hurdles and bad actors evading consequences, creating an uneven playing field.
The regulatory landscape in the crypto industry can be frustratingly complex, with some bad actors slipping through the cracks while innocent players face harsh penalties. Jesse Powell of Kraken expressed his frustration over regulators ignoring red flags and illegal activities for years, only to crack down on compliant players like himself. Meanwhile, alleged wrongdoers continue to thrive, causing destruction and chaos before disappearing offshore. The situation is further complicated by the fact that regulators can use high-profile cases to set examples, painting all crypto actors as potential criminals. Another topic touched upon was the use of technology in the crypto space. Collab Land, an important Discord infrastructure, launched a governance token, Collab, enabling holders to participate in the Collab Land DAO. Superfluid, a platform for streaming payments, introduced vesting contracts using Superfluid, enforcing vesting at the code layer, which is a more effective use of smart contracts. Despite these advancements, the regulatory environment remains a significant challenge for the crypto industry. The good actors, like Jesse Powell, continue to face hurdles while the bad actors evade consequences, creating an uneven playing field. It is crucial for regulators to strike a balance between maintaining market integrity and fostering innovation in the crypto space.
Showcasing identity and achievements in Web 3.0 through digital lands: Users can claim and develop digital lands on decentralized platforms like Uniswap and File Land, which can be linked to social media and wallets. These lands serve as a form of social signaling and a way to showcase involvement and achievements in the Web 3.0 ecosystem. Opportunities in software engineering, marketing, and more exist in the crypto space.
In the world of Web 3.0 and decentralized platforms, users can claim and showcase their achievements and identity through digital land, such as Uniswap or File Land. These digital lands can be linked to social media platforms and wallets like MetaMask. The more engagement or trading activity on these platforms, the bigger and more developed the digital land becomes. For instance, Uniswap users can obtain Uniswap land and even link their YouTube channels or other social media accounts. File Land, on the other hand, allows users to build out their virtual lands and even link their Web 2.0 identities. These digital lands serve as a form of social signaling and a way to showcase one's involvement and achievements in the Web 3.0 ecosystem. Additionally, there are various job opportunities in the crypto space, with companies like Uniswap Labs, Bankless, Consensus, and Adidas looking for talent in software engineering, marketing, and more. Overall, the Web 3.0 landscape offers unique ways for users to showcase their identity, engage with decentralized platforms, and build their careers.
Layer 2 chains inherit Ethereum's security through relationship commitments: Layer 2 chains offer security through formal ties to Ethereum, allowing transactions while maintaining power balance and providing a recovery mechanism.
A layer 2 chain like Base inherits the security of Ethereum due to its formal and specific relationship with Ethereum as a layer 1. This relationship is established through cryptographic commitments made by the layer 2 chain to the layer 1, ensuring adherence to certain rules and allowing users to make transactions on the layer 2 while maintaining the power balance between the two. Unlike a side chain, which is an independent blockchain posting data to a larger chain, a layer 2 chain offers an "escape hatch" back to the layer 1, providing users with assurances and a way to recover their assets if anything goes wrong on the layer 2 chain. This relationship is what makes a chain a layer 2 and gives it corruption resistance. Vitalik Buterin, the co-founder of Ethereum, is known for his interests outside of crypto, including longevity, AI, and charitable giving. If he weren't in crypto, he might be working on projects related to these areas, such as promoting research in longevity science or developing protocols for societal governance.
The speaker's personal connection to crypto and AI: The speaker sees crypto and AI as significant areas of exploration, has a personal connection to crypto due to its intersection with finance and investing, and is concerned about AI's potential harm to living creatures.
Both the fields of crypto and artificial intelligence are expected to be significant areas of exploration and innovation in the coming decade. The speaker expressed a strong personal connection to crypto due to its intersection with finance, investing, economics, politics, social theory, and psychology. If they weren't involved in crypto, they would likely have pursued a career in content production or writing, possibly in the field of futuristic technology like AI. The speaker also highlighted the appeal of investing, as it provides a sense of being in the game and the gratification of being right or wrong. In the context of AI, Elon Musk raised concerns about its potential to harm living creatures on the planet, and the speaker plans to further explore this topic on their podcast, Bankless. Overall, the speaker sees crypto and AI as two of the most intriguing technologies for the future and expects them to intersect in various ways.
AI safety and NFTs in crypto: AI safety is a pressing issue in crypto, NFTs can help solve the problem of buying digital goods, but transparency and disclosures are crucial when promoting tokens, and investors should exercise caution when dealing with financial assets.
The conversation around Artificial Intelligence (AI) in the crypto community has gained significant attention recently, with the release of an episode discussing AI safety causing a public impact and raising awareness on the issue. Meanwhile, NFTs have been identified as a solution to the problem of people wanting to buy digital goods. However, it's important to note that disclosures are necessary when promoting tokens, especially those specifically issued by individuals, to maintain transparency and avoid potential conflicts of interest. The crypto community should also be cautious when investing in financial assets, as demonstrated by the SEC case against Sera Luna, which resulted in substantial losses for many investors. Overall, these discussions highlight the importance of being informed and responsible in the crypto space.
Protect Yourself from Crypto Scams with a Strong Investor Mindset: Stay vigilant against scams by questioning quick gains, doing due diligence, and staying informed about the latest trends in the crypto industry.
Individuals need to develop a strong investor mindset and psychology to protect themselves from potential scams and frauds in the crypto space. Feeling a strong urge for quick gains is a common tactic used by scammers, and it's essential to cast doubt on such feelings and give due diligence before making any investment decisions. The crypto world moves fast, and even regulatory bodies like the SEC cannot fully protect investors. Therefore, being vigilant and having a solid understanding of the market is the best defense. Additionally, the crypto industry continues to evolve, with layer twos and decentralized protocols gaining popularity as the foundation for future developments. It's important to stay informed and keep up with the latest trends to fully embrace the benefits of going bankless.
Coinbase Launches Layer 2 Solution on Ethereum: Coinbase's move to Ethereum signals a major milestone in the crypto industry, bringing more users to the space and addressing UX/UI issues, despite regulatory challenges and risks.
This week marked a significant milestone in the crypto world as a major exchange with 110 million users launched a layer 2 solution, embracing Ethereum, decentralization, and crypto values. This move is not just about numbers or prices, but about the long-term thesis of the crypto industry. The speaker is excited about the potential of bringing more users to the crypto space, including grandparents, and believes that Coinbase, as the front end for its own chain, can help address UX and UI issues. Despite the regulatory challenges, such as the ongoing case of Alexei, a software developer behind Tornado Cash, the speaker remains optimistic and encourages building a "city in the sky" where people's rights are respected. The risks and uncertainties are acknowledged, but the belief is that personal sovereignty and neutral technology are the driving forces behind the crypto movement.
Balancing National Interests and Individual Rights: The speaker highlights the tension between upholding individual rights and national interests, arguing that governments should not sacrifice individual welfare for their own power and image.
The conversation highlights the tension between upholding individual rights and national interests. The speaker expresses concern over the Dutch government's actions towards a Russian activist, Alexei, who was detained for protesting against the Russian invasion of Ukraine. The speaker argues that the government is prioritizing its relationship with the US and its image as a strong nation over the welfare of an individual. They remind us of the historical struggle for human rights and the importance of standing up for them, even when it's difficult. The speaker also criticizes the growing power of nation-states and calls on officials to put humanity above their own interests and power. In essence, the conversation underscores the importance of balancing national interests with individual rights and human dignity.
