Robinhood's Crypto Meme Economy Is Exploding

Transcript

Bankless Nation, it is the first week of September. It is time for the Bankless Weekly rollup. We have Hib on again. David is out at Burning Man. Hase's second week in a row. We got to talk today about the Robin Hood economy seems like it is completely blowing up. Robin Hood chain knocking it out of the park. Transaction fees right now are actually higher on the Robin Hood chain than on Ethereum. 4.4 4 million in revenue in a single day. Fortunes are being made over there and yet our guest host today calls it kind of a financial jackass. I saw that tweet. H we got to talk about what you mean by that. Also, Salana just cast a

governance vote to cut its own issuance. Is Salana in the store of value game right now? And Michael Sailor, he's buying back in at 80K after he's selling at 62K. Their CEO says both were the right trade. We'll talk about that. And 21 banks launching a stable coin. And then again, Bessant, week three of the Treasury put. What is he saying at the G20 summit as 30-year yields are approaching 20-year highs once again. Hib, it has been a very busy week. A lot of interesting things happening in the world. What What's your eye on in crypto this week?

Well, look, the the fireworks show we're seeing on the memecoin side is hard to look away from. Uh we're getting this crossover between tradi and rwas now into crypto, which is interesting. It has me worried. Um I feel like this is not going to end well, but we should talk about it once we get into it. >> All right, so that that might be some of the financial jackasserie that you're seeing. Uh before we get in, want to thank our friends and sponsors over at Near. A big milestone was just crossed. 50 million in confidential total value locked on near.com is actually confidential by default. What that means of course is that your balances, your activities, that means your deposits, your yields, your swaps, your payments,

they're all private by default unless you choose otherwise. So outsiders, they can't see the amounts. Privacy is becoming the standard for near and increasingly for our industry though we have a lot of progress to make. nearer is leading the way. Go check them out and get their full recap on all of the activity happening on Near Intense. There'll be a link in the show notes to that. All right, Hib, let's take a look at our prices on the week. Bitcoin on the 7-day up about 1%. ETH flat. Some other assets. Let's see. Salana down about 3%. We are holding my friend. We are still outperforming. Gold equities continue to hold these elevated prices.

Bitcoin over 81K at the time of recording. Bit uh Ethereum over 2500 at the time of recording. Um there was a pretty big bounce today actually. So Bitcoin was trading down to 76K and then suddenly we're up 5% in the last 24 hours. any reason for this bounce or is this just classic crypto volatility? >> It's definitely macro. So the same thing in the stock market. Stock market rebounded today and a lot of that is because the rate cut story is or I should say the raising of rates is a little bit less likely based on some comments that were made today by I believe it was Waller. So there's a lot of worry about inflation. Are you

talking about the Fed or >> No, no, I believe it was one of the other one of the other uh folks. >> Oh, really? Interesting. Okay. >> Yeah. Um, so basically, I mean, right now it's a pretty tight race at the Fed of like whether or not they're going to get enough votes to raise rates. And so just one person making a comment was enough to move the odds pretty significantly. I believe it was 20% less likely of a rate hike in the next uh uh Fed share meeting and that is the reason why people are feeling a little bit more confident about risk assets. So I think that reflected in the crypto markets looks like there was a lot of liquidations uh from people who are short. So, we're getting a little bit of volatility coming back into the market.

That's it's it's good, but it's mostly macro telling the story as opposed to a cryptonative story here. >> Well, it's interesting because there was a bit of a selloff towards the end of last week and I think that was war's speech at Jackson Hole. I don't know if you caught that. Some people watched that speech and said it was pretty much a nothing booker, but the market more broadly interpreted it as hawkish. I think the September rate hike at the end of that meeting last week went up to 67% up 30 to 40%. And so that was the end of last week. Sounds like today maybe things went back down. But they they zoned in on something WS said. I believe it was this uh this quote, "We must be confident that underlying inflation is is moving to our objective clearly and at sufficient speed. Otherwise, we have

work to do." It was that line. Otherwise, we have work to do. Right? Inflation's not where we want it. So implying the Fed has work to do. And what's the tool in the toolbell for that work? Well, it's Fed funds rate. So that's why the market was anticipating an increase. And now I guess that's being tempered a bit. One thing I can't seem to figure out though has on all this. I know we were talking about last week the Bessant put and we were in we're now in week three of sort of this new market perceived paradigm of of this Besset Treasury put buying the long end of uh bonds somewhat is it seems like Worsh is sending some hawkish signals like I I might raise Fed fund rate you don't know you know don't test me

inflation I I might do it whereas Besson is being incredibly dovish in this whole Treasury QE thing. What's going on between the two of them? Is this all coordinated? Is this like a a coordinated good cop bad cop type of routine or like what sense do you make of this? >> I coordinated is the wrong word. I think it's more adversarial and this is the natural dynamic between somebody sitting in the White House and somebody sitting at the Fed, which is that look, at the end of the day, the White House wants to do things that are good for the economy.

He wants to do things that are good for Trump and allowing Trump to achieve his policy goals and that requires the economy to run a little bit hot. It's like they want to ride the edge, right? And you know, at the end of the day, Wars, yeah, he was appointed by Trump, but now he's independent. And you can see that independence starting to show its colors. Is that, you know, Trump thought he was his guy. I think actually, um, he's not his guy as much as maybe he thought he was. >> Interesting. >> And the reality is, look, Wars doesn't want to be responsible for having inflation run unnecessarily hot and then eventually getting blamed for mismanaging the economy. And so, you know, when when Wars was uh first nominated, he was saying like, "Look, yeah, inflation's a little bit high, but

I think it's because of the war. It's because of oil. It's because of supply constraints, blah, blah, blah. It's not fundamentally reflective of the underlying economy." Now, all of a sudden, he's saying, "Well, we have to be really confident that inflation is actually tamped down." Um, and this is kind of what you expect is that when you nominate somebody, you kind of think they're your guy and then you realize, no, no, you're kind of it's it's this uh almost like man battle between the Treasury and the Fed. It's never going to go away until you actually truly do break the boundary of Fed independence.

The Fed is very much still independent. That's good. That's good long term for market confidence in our bonds and in our fiscal policy or sorry in our in our um monetary policy. Um but fiscal policy is always going to run against that. That's normal. So, I think this is what you would expect in a well functioning independent Fed. >> I'm not sure that I buy that the Fed is as independent as you think it is. You really do think it's it's independent. What what's kind of your your evidence for that recently? >> I think the fact that Wars is not rolling over, he's making these noises. I mean, previously he was saying, "Look, I'm not going to give forward guidance in the way that previous Fed governors have. I think that's a mistake. That was something only necessary at the zero lower bound. Now that you know Fed funds

rate is uh you know whatever four or five we have a lot of room to play and we can let them we can let the rates do the talking. Now he's suddenly talking a lot more and giving things that sound like guidance and like you know why is he doing this? I think it's pretty clear is that um yeah he doesn't want he doesn't want the Treasury to be setting monetary policy. >> Um that's kind of not their job. And now you know again the the dynamic of our economy has changed. so much over the last 20 years, especially since the great financial crisis. The reality is that it is this push and pull much more so between the Fed and Treasury. But I I think the way the market is interpreting this is that no, Wars has his own opinions. He's not going to let himself

get run over by Bessant and this is how he's fighting back to some degree. My colleague Michael NATO thinks that Worsh is going to he's more likely to keep rates steady and let the market sort of dictate long-term rates. Sort of whatever the long-term rates do, they will do. And certainly Bessant has been back on his heels in kind of a defensive position this week. He spoke at the uh G20 summit. And uh we have as the backdrop the 30-year Treasury yield is back above 5.26%.

So, just rising above the surface just like that beach ball back before he started some of these buybacks. Um, I saw a few interviews from him, including this uh rather glazing interview with a uh I think a Fox Business correspondent and uh Bessant was basically saying, "Yo, the media, they're talking about bonds and yields. That's not the real story. The real story is the American economic boom that this administration has brought in. We are an AI superpower.

We are an energy superpower. Corporate earnings are off the charts. Stock markets off the charts. GDP is going up. That's the real story. So don't pay any attention to the bonds. He said this. This has been the best performing bond market among major countries in the world. And of course, he's saying this as the yields on the 10-year are at a 20-month high and also on the 30-year, it's close to a 20 year high once again. So, is that true as well, hib? Obviously, he's talking his administration's book, >> but I mean, there are some points there.

I mean, the economy is booming, at least from a capex perspective. The AI trade continues to, you know, bust through all projections. You think he has a point? I mean, look, saying that we have the most demand for our bonds of all the countries is kind of like being the skinniest fat kid. You know, the reality is that all bonds everywhere are getting punished because of this fiscal irresponsibility that people are seeing from governments around the world. saying that look the AI we're the AI superpower our AI our economy is booming because of AI is true and also precisely the reason why our bonds are less attractive is because our economy is more attractive as a borrower than the government is right like his job is to

be he's treasury secretary the treasury is a pool of money managed by the government so now it is obviously true that their tax base increases if the economy does well that's great we can tax all the revenues that the AI companies are making Wonderful. But at the end of the day, the core job of the Treasury Secretary is to be responsible for the money that the government owns and and uh uh you know collects from the economy. So if nobody's buying your bonds, that means that they perceive financial irresponsibility from the government. That's what's happening right now. That's the core of it. So don't let all the other stuff distract you. Like the American economy is booming. That's not because of the president. It's not because of the White House. It's because of the economy

itself. The job of the government is to be a good steward of that which is what the bond market right now is saying. You are not being good stewards. >> It does feel like this administration and Bessant and maybe to some degree also Wars are are making a bet on the AI trade. Right. Bessant keeps saying including the G20 countries, hey, we're just going to grow our way out of this. And I think he's looking to AI to really propel all of that growth or the the vast amount of that growth. He's probably also talking about growing money supply in order to do it. But it increasingly feels very much like the US economy, I know I said this last week, the world economy is all based on the AI trade trade right now. It's consuming more and more of our total economy. Um,

one person that has come back in full bull mode is Michael Sailor H. I don't know if you saw this latest clip from Michael Sailor, but this is him on a New York City metro. It looks like he is punching out bears. Bears, this is your stop. He just beat up a polar bear. I think that's a grizzly bear. Maybe that's some kind of a black bear. He's taking on all the bears. And uh Strategy has just purchased another $4,63 bitcoin, about $370 million, increasing its uh cash by about $29 million, doing some other things as well. What's fascinating about this is um just a few weeks ago, few months ago maybe, he sold

about 7,000 Bitcoin and he sold at 62K. And when I say he, I'm talking about strategy of course for $431 uh million. Now he rebought for less. Is this an example of kind of like selling low and buying high? I mean, the extra cost to reby the Bitcoin that he purchased was about $83 million. I think the uh strategy CEO came out and said, "Hey, this is, you know, we did the right thing in both cases." Both cases, the selling and the buying was the right trade. Obviously, they've been trying to get STRC back at par. It's now at $97, I believe. So, 100 at par. They're making some progress. They're just not getting

it to that last mile. What do you think about this? Is just just this the type of thing you have to do when you're a bit on leverage? Like, you have to protect your position. And so you're not always going to um buy low and sell high. You just, you know, you just have to play this game a little bit to defend your margin positions. >> That's pretty much right. Is that it's very hard to buy low and sell high with other people's money. Um you can do with your own money if you have enough balls to be able to go and hold all the way and you have the conviction to do it. But the MNAV game which is fundamentally the game that micro strategy is playing and this is what this is what uh I believe the CEO Fun Lee said of okay why

is he defending the you know selling at 60 and buying at 80. The answer is well because just look at the MNAVs, right? The MNAV was below one when we were selling to get the MNV back in line and then when MNAV went above, we started buying again. And that's correct. That's like the way that you should think about what markets are compelling you to do and what markets fundamentally want at each of these moments in time. And this is a financial product. So it's responsible to its customers, its holders, its buyers. But it also means that this is fundamentally how the strategy and DAT trade works is that it is proyclical. Procyical means you are buying high and you're selling low.

That's what a procyclical strategy is. Um now hopefully if you buy that procyclical strategy at the bottom, you get the MNAV expansion as well as the buying on the way up and so you know. So okay, you can you can see why this might be attractive anyway to play it as an investor. But this is fundamental to the strategy. It would never not be this way. If this is how you're timing your buys and your sells, you will always be procical in this way. And you will be able to look back and say, "Oh, look at you. you were selling at the low and buying at the high. >> So, what letter grade do you give Michael Sailor Strategy for execution on this DAT strategy? I mean, do you think he's doing a pretty good job? He is He's the godfather of this. I mean, he

created the whole debt debt industry and debt trade himself. Like, how's he doing? >> I mean, it's it's hard to answer that question because it depends on what your rubric is for grading. If the rubric is build a gigantic DAT and survive, then he gets an A+. I mean, this thing is just an incredible machine. Look how gigantic it is. and it's still going and he's managed to get a war chest of billions of dollars of cash. He's got lots of dividend coverage now and he's back in the game buying Bitcoin and you know like it's a it's it's a nice gig if he can get it. Um in terms of the impact to holders, look, I'd say this is kind of a you know C at best in that MSTR holders or

>> MSR if you were buying MSTR uh if if you were holding MSTR you're not thrilled, right? This thing is down a lot from when it was being most aggressively marketed and when most people bought in. So, relative to Bitcoin, you're a lot worse off holding MSTR almost any point during this last cycle. So, if that's how we're thinking about it, yeah, not not a good grade for uh for this vehicle. >> Well, how about Michael Sailor's meme skills and punching the bears out on the subway? What do you give him for that? >> I think that's an A+. That was pretty good. I I enjoyed that quite a bit. It's one of those things that like AI like, you know, people were complaining about him just doing a lot of AI slot marketing. Yeah. Um but I I kind of think he knows.

>> Yeah. Exactly. Exactly. It's kind of It works for him. I think it works for I think keep the slopification up. I think it's good. >> He's even got like, you know, the color scheme, right? You can see obviously orange tie and the orange seats on the on the the metro. It's just like, yeah, doing a great job. Michael Sailor, uh we got more to discuss, including the Robin Hood economy. Robin Hood meme coins reaching all-time highs, fortunes being made. As I said, there was a a penny stock run up 300% due to some meme. There's a lot of meme and real world asset pairs that are trading. We'll talk about all that and more. But before we do, we want to thank the sponsors that made this possible. I've been trading crypto assets for almost a decade, and I've used so many wallets, exchanges,

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control without one mistake putting everything at risk. So download BitKey today and use promo code bankless to get 10% off of your BitKey. This episode has been sponsored by BitKey. The Robin Hood economy. Let's talk about it. What's going on in Robin Hood land? This is a post by Mike at Balledo. The monster run for unis swap on Robin Hood chain continues. 1.4 billion of volume traded yesterday. Almost 20 billion since launching the beginning of July. Here's another chart. This is one of the crazier charts you'll see in crypto. I think this is L2 gross profit, L2 revenue. You can see all the various L2s. This was dominated at one time in May of 2021 by Arbitum that has

completely flipped now. You saw base had a presence. Now it's just kind of this uh Robin Hood uh green color. Robin Hood absolutely dominating revenue on the L2 world. Um there was some stats I saw something like 3 to four million per day in Robin Hood. If you were to annualize that 7-day, which you should never do, you should never annualize 7-day uh revenue volume. So if you're to do something like that, then actually the the revenue generated by the Robin Hood chain right now would exceed its equity trading business for the year. Okay. So absolutely massive amounts of revenue that is flowing. What's going on in

Robin Hood land? What are you seeing in Robin Hood chain? Is this all memecoin shenanigans? Is that is that a good thing? What do you make of this? So there's this weird meta that has now transfixed people trading on Robin Hood chain which is this pairing of meme coins to stocks especially these like kind of micro cap stocks. So the big one was there was this memecoin called boner and it was paired against him which of course is uh one of these direct to consumer like you know ED medication platforms that's you know it's very it's a very big company if those of you who haven't heard of it you know him and hers never heard of >> never heard of it. I have no idea. That just goes straight into my mailbox. Um

and uh so they they had this memecoin that was tied to HIMS and and people started copying this. So Boner really took off, got a lot of excitement and um uh people started copying this model with a bunch of other stocks that were paired to memecoins and because >> real stocks, real stocks, tokenized stocks right? >> So now the problem with a lot of these tokenized stock memecoin pairings is that of course these things are trading 24/7. They're trading when the stock market is closed and they're trading on the weekends. So last weekend, um there were a number of these stocks that the meme coins that they were paired against started really running up over the weekend because of course, you know, this stuff has just been taking off lately. And the problem with a meme uh a meme coin paired with a stock taking off

on a weekend is that there's no arbitrage you can do on the weekend. There's no way to move the real price of the stock up. And the floats of these stocks are very small on Robin Hood compared to the actual float of the real stock. Which means that people thought they had these huge runners. You know, they're like, "Oh my god, we're all making so much money. This thing is running to the moon. You got to buy in now." And then on Monday morning once the market opens, people realize like, "Oh wait, this thing has dep from the underlying stock by like 400%." And of course, what's going to happen is that people are going to start minting the actual underlying stock, selling into the people on Robin Hood and destroying the memecoin. And so this just started happening on mass basically either one on the overnight trades or on

the weekend trades. So all the guys in the Memecoin trenches were just getting wrecked programmatically as soon as markets opened again. >> Is it is it mainly the memecoin trenches that were getting wrecked or is there any fallout to kind of the trady market on the other side? I guess that's a bit of the tail wagging the dog cuz it's not enough to move the big >> the amount of assets minted on these chains is like less than a percent of the underlying float. It's so small, but like the memecoin of course can become a big runner and get a lot of volume. So, so this is what we were starting to see over the weekend. So just a lot of people doing very stupid things and kind of imagining that this was like a GameStop moment that maybe we can kind of band together as like a school of

fish and like take on the stock and short squeeze these heads. You know, it was just like no no no no. You don't understand. The GameStop only worked cuz it was so big. It was like a civilization level short squeeze that happened with GameStop. Um doing that with like some random trenchers on some random stock like that's just not going you're just going to get destroyed. like that's a guaranteed way to lose money. Um, and so now lately we've seen these experiments where people are now taking micro cap stocks, not the size of a HIMS, which is, you know, multi-billion dollar company. Instead, these microscap cap stocks are like5$10 million NASDAQ stocks that are like at risk of getting delisted. And so now, of course, those can't actually be tokenized. Nobody's

tokenizing $5 million micro cap stocks. So, I think there was like these meme coins that pretend to be micro cap stocks. They're named the same thing as the micro cap stocks paired against other meme coins and now those are starting to trade in a crazy way that's getting reflected almost like an infinity trade in the actual underlying meme uh uh micro cap stocks. >> Okay. So, all this craziness going on. >> That's I think what I was trying to make sense of. You're deeper in the trenches than I am see. But I I was trying to make sense of this story, the the the farmy story. So yeah, this is a um I believe this is a micro cap. Um DJ's found uh Jin Kuan in Farm's uh filings.

I guess farmy is a micro cap mushroom stock. Chinese dried mushroom micro cap has 15 employees and literally means money mushroom. Okay, so some memecoin started trading against not this stock but some memecoin version of this stock. >> They just named a memecoin after the company. >> They named name named a memecoin after the the company and they set the tokens to the exact float of the stock. So, I think the supply was sort of the same, but the attention economics as this memecoin began to to run actually filtered out into the Trady world for the actual stock of this company. And

the actual stock of this company went up like 300%, 350% at some point. So now this is you know memecoin the memecoin economy can't affect tradi in the big assets like the hims assets certainly can't touch something like nvidia or google or any of the big tech uh companies but a micro cap well that's memecoin size and so we saw in this instance the attention economy of memecoins actually filtering out and affecting tradfi stocks that's what you're talking about right >> yes I mean to be clear it's kind of Like, man, we have fallen a long way that we're now like playing games with $5 million micro cavs, you know? Like,

we used to have memecoin runners that would go to like a billion and now we're like, "Oh, wow. We moved a $5 million Chinese mushroom company that's at risk of getting delisted on the NASDAQ." Like, this is I mean, >> we shouldn't be proud of ourselves. Is that what you're saying? >> No, we should not. We should not be proud of ourselves. And I I think like on a more obvious level, this is stupid. Like this is obviously not good for people to be doing this because what you meant by Jackie quote you said like the fact that this is becoming a meta all of a sudden on Robin Hood chain. Now to be clear this is not the only thing people are doing on Robin Hood. There's more conventional meme coins like Cash Cat, right? Cash Cat is just a memecoin. You can buy it. It's like Doge or you know

whatever any of these other meme coins and that I have no problem but that's totally fine. You know it it's it's just kind of people just playing dice. You know it's like whatever. Yeah. Maybe it'll win, maybe it'll lose, but it's fine. Um, with these kinds of things where people are manufacturing these memecoin to stock pairs, right? And they're doing it over and over again at scale, hoping that one of them is going to hit. We've seen the supply chain of memecoins, how they're created, how they're monetized, all the little middlemen who keep doing this and paying the influencers to pump this one or pump that one and oh, we've got a runner, everyone buys into this thing. And then the problem with the story relative to anything else is that this construct will reliably fail. Like you will definitely lose money if you do this

because of course if your stock token is deping from the underlying stock, you will get screwed by hedge funds that will come in and mint over your head. So everybody involved is going to lose money here except for the memecoin boosters who are promoting this and you know taking some of the memecoin up front. So it's just like we should not be encouraging this kind of financial stupidity. Obviously people are enjoying it on some level like you know there's this kind of that's what I call the the sort of financial jackass is that like you know if you remember the show jackass in the 90s where like people would just you know they would like just you know I don't know hit hit themselves in the balls over and over again and see how how bad you could do it and the entertainment was in the stupidity right

that's kind of I feel like what we're watching here it's not like trading it's not like trading doge you know this is like a competition of stupidity and like nobody wins when when that becomes a game. >> So let me like there is something novel here in Robin Hood chain with tokenized equities that we get which is we have the brokerage distribution of Robin Hood. We have official like real stock tokens and then we have AMMs and permissionless pairing and the permissionless pairing can be against you know stable coins of course but can also be against meme coins and that is something that's novel. I mean, we were talking last week of what's going on that's novel in crypto. This is

something novel, some sort of asset, some memecoin. You can pair a a token against anything. Is there something new here being created? Apart from all the casino games, is there something beneficial here that we're doing? >> Uh, it's it's hard to see what the social benefit is of people doing this like you can imagine. So look, I can imagine a world where if you are HIMS and you're like, "Hey, I want more people to buy my stock. Maybe you create some memecoin on Robin Hood chain tied to HIMS and the memecoin goes up, Hims goes up, people are buying him as a as you know that you can I mean, I don't know if that's going to work. I don't know if it's a good use of your money or your time or your marketing budget, but you can imagine that maybe would be

socially constructive and create some new form of capital formation or something right? having third parties do this who are again making money by paying influencers and doing the whole thing like we know how the whole game works right this does not feel useful it doesn't it's also not zero sum it's like negative sum it's like really really negative sum which is not good except for the hedge funds I guess the hedge funds are making money um so I my view here is that the other problem with the story is that it's not really clear that Robin Hood is actually onboarding a lot of net new users yet right they might at some point but if you look uh there's there's a a Dune dashboard that shows a lot of the data about where the Robin Hood user are coming from and it's clear actually a

lot of them are coming from FOMO. Um actually most of the activity it seems like right now is coming from FOMO users who are they're basically chain agnostic at this point. So if you're on FOMO you can buy something on Salana, you can buy something on Robin Hood chain, you can buy something on base, doesn't really matter. It's just all assets to them. And then GMGN is the other platform that seems to be driving a lot of volume to uh Robin Hood chain. Um, but we're not really seeing a lot of net new wallets, not a lot of net new addresses. Now, maybe they do come at some point. And usually what we see in memecoin cycles is that they come in late when the numbers start getting really big, >> right? So, right now we we're getting a lot of volume relative to crypto, but if

you look at the TVL and Robin chain, it's actually not that big. TVL and Robin chain is like 700 800 mil, you know, it's like I don't know 17th 1/8 of Bass um or of Salana even though it has a lot more volume than Bass. And right now it's like second only to Salana in terms of DEX volume. So we're seeing a lot of trading activity on these chains. A lot of AMM activity, but the net number of new users right now doesn't look to be that big. I think it's a lot of cryptonatives right now. And but if we see this stuff grow by another order of magnitude, then I think you might be right in that this might be a more significant onboarding event.

>> Do you think there are any knock on knock on benefits to other assets or other ecosystems in crypto? For example, does Ethereum benefit at all from the takeoff of the Robin Hood chain, at least take off in terms of meme use case? It seems like some of the meta is moving maybe from Salana to Robin Hood chain, at least for the moment. Obviously, Salana is still much larger. Uh, but you know, rather than Pump Fund, there's this Pawns kind of memecoin launcher app has really taken off that's more native to Robin Hood. This is uh Lorenzo from ARC and Analysta Arc. Um he's talking about Robin Hood revenue and comparing that to Ethereum and just making the point that the ETH take rate

is so damn low when it comes to the L2 economy. So he's saying this Robin Hood chain grossed 20x more revenue yesterday than 10 days ago. Ethereum got paid half. So he pulls a date August 30th. Uh Robin Hood chain made 18 uh million in revenue and a portion of that went to arbitum. like it's 10% cut. 90% went to Robin Hood. Ethereum made 152 uh $155 a take rate of 0.014%. What do you think this means for the economics of L2s? This is another L2 in the wild. Do you think this has any benefit to Ethereum? Do you think that this is um Salana's loss? What are the

after effects of the Robin Hood chain? Yeah. So I mean it's certainly better for Ethereum for this to be happening on Robin Hood chain than on Salana. Um obviously there's an interoperability with everything on Ethereum. So these assets can move back and forth. They can come live on Ethereum mainet if they so choose. Um and of course ETH is the native asset on Robin Hood chain. It's how you pay fees. So you know there is some flow through effect of ETH the currency. In terms of direct revenue that they're getting from Robin Hood chain. It's pretty clear that's not happening and that's not really the main story. In the same way, it's almost like, you know, if we have a satellite state, the US has a satellite state that uses the dollar. It's a dollarized economy. We're not getting tax revenue from countries that dollarize, but we do

increase exports of the dollar and we increase the demand for the dollar globally. I think that's the right mental model for what Robin Hood chain is to Ethereum. It's part of the Ethereum economic zone, but it's not directly paying taxes. It's not a colony. It's not like this isn't, you know, the 51st state of Ethereum or something like that. So, I think that's the kind of the wrong mental model. And if you're looking for that and you're kind of thinking, well, when is Ethereum going to raise the tax rate, it's like asking, you know, when are we going to tax uh Venezuela when Venezuela has dollarized away from the bolivar to the dollar or like all the countries in the world that have dollarized? When are we going to start taxing them? The answer is probably never. We're probably not going to tax them at all. But it's still

net beneficial to the US to have countries that use the dollar even if they uh are not part of our distinct you know political union. >> How about for Salana? Net loss for Salana attracting some of that memecoin attention. >> Definitely. No doubt. No doubt. I mean Salana so much of Salana's rev has been from memecoin economy and um you know Robin Hood just flipped Salana for REV. it is now the number one chain by RV at least of the last few days and uh that's really significant you know it now look it's it's always easy to have a pop and it remains to be seen whether or not this is going to continue on Robin chain we've seen these kind of memecoin manias rise and fall with different chains as they come into the four you know base

had a mania where they had a huge amount of memecoin volume Robin Hood is a beast with respect to their distribution and I feel like their marketing efforts are actually very on point so they've been leaning into this Vlad has been leaning into this. I think he understands the language of dens seemingly a lot better than you know Brian Armstrong and bass does. Um but still a lot of game left to be played. So I would not counsel on out. They still have the TVL. They still have more users. They still have an enormous distribution edge relative to anybody else in this game. >> They still also have lower transaction fees. This was interesting. Robin Hood chains median fee is now 2x the fee of Ethereum L1. So twice as much as Ethereum and 128x the fee costs of Salana. So you know

people paying close to 10 cents per transaction on Robin Hood right now. Uh so of course they can scale that. That may not be the case forever but at least right now it is the case. Maybe this is partially why Salana is moving a bit more might I say in the store of value direction. So uh I don't know if you've seen this uh or or talked about this previously hi but Salana had its first binding onchain governance vote to actually reduce issuance on the Salana chain. So Salana issuance was scheduled to reduce down to a 1.5% per year floor.

And just by way of context Ethereum right now is about 0.80.9% eight 0.9% annualized so it's under a percent I think Bitcoin is something like 0.8% 8% of course that will happen in what two years time again so that will continue to cut down. Um Salana just voted and the vote barely passed to create that 1.5% issuance floor. Have that arrive in 2029 the beginning of 2029 rather than 2032. So bringing that up by three years and saving about projected about 19 million souls. That would be $2 billion of extra issued soul that would of

course go to validators. Um this passed apparently according to Salana governance uh required 67% to pass and it passed just barely by um 33 percentage points above the threshold. a binding onchain governance vote. There was some drama where uh Kraken Salana validators apparently first they voted no and then they they switched their vote. Um Mert Helas CEO I think Helios was was part of the the um authors of this Salana improvement proposal uh said this after 500 calls in the past few hours. We got all the votes in in the last second and passed the disinflation

proposal by a literal hair. Let's go. We did it. So, this is Salana now becoming a bit more scarce, reducing issuance, going in the direction that we've seen obviously Bitcoin go algorithmically. We've also seen Ethereum go, which is reducing its issuance. What What do you make of this? Is is Salana trying to play the the store of value uh monetary game the way Bitcoin and Ethereum have tried to play it? That hasn't been their message in the past. I remember Anatoli telling me that um you know like issuance didn't really matter. It was basically all recycled um and now here they are they're they're cutting issuance. What do you make of this?

>> Yeah, I think I think the wrong framing is that okay this means they're playing the store value game. I don't think that's how anybody in Salana thinks about it. At the end of the day this is basically inflation. Inflation is like nominal yield in the sense that it's not real yield. you are getting inflated at the expense of the validators who are getting more soul. A huge amount of the soul is already staked. And so what really happens let's imagine that 100% of soul was staked. Um right now I don't know what exactly it is probably 50% or something. Um if you imagine the 100% of soul was staked then everybody getting more soul because they're staking or they have it in staking derivatives or whatever is basically just okay well the unit price goes down our ownership goes up in terms of units but we pay taxes

and so it's creating tax leakage if you are >> you're talking about actual real world taxes on kind of >> actual real world taxes for those who do for those who pay >> um um yeah it basically creates tax leakage it's it's inefficient And really what you'd rather do is pay the minimum amount of yield that you need to in order to keep the market functioning, in order to keep security solid, in order to keep the validators happy. Um, and you know, the biggest people who were fighting in the past for nominal yield were the DATs. >> The DATs really care about nominal yield. Why do they care about nominal yield? Because it gives them a story of why you should have your money in a Salana Dat Salon ETF. is because well we can stake we can do all these fancy

staking strategies we can lever up on staking yield or whatever and that's why you should give us money as a more complex financial strategy than what you could get in an ETF. That story weakens when the DATs are all dying and right now Salana DATs are struggling. They there's no runaway winner like there is for strategy or for Bitmine. Um and as a result you can sort of see that reflected in this vote is that this vote was tried earlier passed miser or sorry failed miserably. There was not anywhere near the economic consensus cuz the thinking was like look nominal yield might be stupid. It might result in tax leakage. It might be a little bit of a you know economic mirage but it's good for business. So you need the DATs make the DATs happy. Let's give

all these service providers a business model. But in a world where look the DATs aren't working. That's not our story. So let's not couch out to the DATs. let's just lower inflation and let's hope that that means that it's going to be better for asset prices and less tax leakage. That seems to have been the story that rallied everybody for this vote. I think it makes sense and absent any kind of business models that depend on nominal yield. That is obviously the right answer is as a network you want to pay the minimum amount in terms of inflation. In the same way look it's like a government it's like doge right the government's saving money. You want to pay the minimum amount to all of the service providers who run the government, which is of course, you know, the the the tax rate. You want to minimize that tax rate

and leave the rest of the money in the hands of the people. But, you know, it's it's only by virtue of the belief that well, if we give more money to the government, that will be better for the economy. It'll be better for society. It'll it'll make us grow faster or do better things or uh live in a more perfect world. But if you no longer believe that, then it's like, yeah, give just, you know, lower the taxes and leave the money with us. issuance decisions, monetary policy decisions for decentralized or more decentralized networks to me are are so fascinating because every network handles it a little bit differently. So you could contrast this to the EIP8361 debate that was going on Ethereum, you know, about a month ago where there was governance post to actually reduce

Ethereum issuance to modify the yield curve and that wasn't a stake weighted governance vote. Ethereum has no ability to really do that or it's not in the kind of the social um contract of the Ethereum network to really do that. It operates more on this rough consensus where you post something and I don't know how does how does a monetary policy change actually come into effect in Ethereum. Bitcoin is even more they they have some sort of a immutability religion, right? which is like yeah go ahead try to fork bit try to try to change Bitcoin's issuance policy see what happens a massive fork will happen but that is also rough governance so the

way this decision was made it's kind of interesting right it's like 67% of all of the stake weighted validators voted what do you think about that like is that a um is that a feature or a bug does even like stake weighted governance voting for issuance does that disclude you from the store of value race entirely or like what how do you contrast that to the the recent EIP from Ethereum which doesn't feel like it's going anywhere? >> Yeah, it's a it's a great question and a very good contrast. So, Vitalic historically has been against onchain voting um or you know so onchain governance was something that really emerged after Ethereum. It was mostly you know started with Tasos and then

most of the chains after uh Tasos ended up adopting some kind of onchain governance such that purely by some kind of stake weighted vote some change in the underlying protocol automatically went into effect. Ethereum has never done this. The only thing for which Ethereum has onchain governance is the the gas limit or the or the block size, right? They have onchain voting among validators that push up and push down through a sort of kind of crude voting mechanism of how big the block size becomes. Besides that, there is nothing else that the validators of Ethereum get to vote on. Everything else is decided through this kind of soft governance mechanism.

>> Vitality stake is that there's kind of an enshrined putoaucracy that can start to occur when you have stake weighted voting. Exactly. So, it's a little bit like, you know, in in take the Fed for example, um or even take our government, right? We don't have direct democracy in the government. We have this representative democracy where we elect, you know, the president, we elect the Senate and whatever. But they don't say, "Hey, great. Here's the new tax bill. Let's send it out to all the people and you vote with your phone on whether or not you like this tax bill." We don't do that. And we don't do that for a very good reason, which is that it can lead to adverse consequences because people will often just, you know, if if we voted on rates as a country, we would just vote rates down and down and down

and down and down and we'd probably result in massive inflation. And so we'd we'd be terrible, right? We would be very we'd be like Trump, you know, we'd be constantly saying, "Look, I want a lower mortgage. I want my socks to go up." And then we'd say, "Oh my god, I can't believe inflation happened. That sucks." Um, and like that's probably what we would do. And so to save us from ourselves, we don't have that system. we have a system of representative democracy where it kind of look you pick a guy and then you don't touch it for the next four years and that's you know that there's some wisdom in that and that's kind of what Ethereum has chosen is saying look if we just leave this up to people just voting with their money they will vote themselves more money and voting yourself more money feels good

for the moment but in the long run it's actually important for us to protect you from yourselves and the way in which we're going to protect you from yourselves is by being slow is by replacing people slowly in the kind of high priesthood of Ethereum and by holding on to values even when those values don't seem cool anymore and one of those values that doesn't seem cool is adherence to cipher punk values and decentralization right there's there's this sort of push and pull that you can see around us of people talking about Salana and hyper liquid and all this stuff it's like hey do we really need to be worrying so much about crops and you know how important it is for get privacy and blah blah blah why don't we just move faster and launch our WAS and you know tweet more e number go up and help

the DATs and Ethereum has said no we are not going to do that our job is to be a good steward of this overall ecosystem and Salana takes a different t and I think it's good for there to be different approaches to governance in the same way that like look Salana is not trying to be a store of value is not trying to be war II resistant they're trying to be the NASDAQ for blockchains right that's what they said and they're sticking to it I think that's great in the same way a company is not governed the same way a governance a government is and that's good. You don't want every institution of every scale governed the exact same way.

>> Well said. We got a lot of experiments playing out in crypto for sure. We're talk about some more of them including a 21 banks uniting behind a stable coin. We'll talk about that also. Hib, you just mentioned to me before uh we started recording this episode that the new chat GPT model Astra just came out. I want to ask you about this all that and more. But before we do, we want to thank the sponsors that made this episode possible. >> Bankless Nation, we've built something for you. Introducing the Bankless MCP. Chad GBT and Claude are great at a lot of things, but ask them anything beyond the basics of crypto about protocol mechanics, tokconomics, or just what happened last week in crypto, and the gaps will start to show. The problem is context. Banklist, on the other hand, has spent almost a decade building one

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notes and once you become a bankless premium member, you can hop into the Banklist Discord and let me know how you like it. Cheers. Some exciting news. We are launching a new podcast to help people figure out the crypto cycle, how to navigate it. The best crypto cycle investor I know, his name is Michael Nato. He runs the DeFi Report. This is the guy that sent me a sell alert before the 1010 price drop happened. His cycle analysis has been absolutely on point. I've been following him for years, and this year we started recording weekly podcast episodes. Each one, we get into his portfolio, what he's holding, the market structure, entry targets, fair market value of Bitcoin and Ether, and where we are in the cycle. There's new episodes that are released every Wednesday. They're 30 minutes, they're short, they're punchy. I think this crypto cycle is harder to navigate than

most. So, let's do it together. Go subscribe to this podcast. Search the DeFi Report wherever you get your podcast. YouTube, Apple, Spotify, or find a link in the show notes. There's a new episode waiting for you now. Okay. Goldman Sachs, Bank of America, and others, a whole bunch of other banks. They plan to issue a dollar stable coin all together, a big banking consortium in 2027. This out of Reuters. This is 21 financial institutions planning to do this. Of course, this is Clarity Act stuff. very official, very regulated. What do you think, Kib? Do they have a shot against what's going on with, let's say, first movers like Tether, uh, Circle USDC, even Stripe seems to be ahead of the curve, the old banks coming

up with a stable coin. Do you think this is a nothing burger or do you think this could be a force in crypto? >> I am team nothingber. I think like consorcia are just so I don't know, they're so ngmi. I I I I've yet to see any consortium of this nature really prove themselves to be a force against more focused singular companies that have muscular founders who are working on something like you tell me great these 10 super regulated super old super slowmoving banks have agreed to go and basically build a tech startup together.

I'm like oh my god that sounds horrendous and no one know who's the CEO who's the founder who's the team. We don't have to talk about that. It's just like who's who are the members of the committee that are going to decide what to do. I mean like come on this is obviously this is not going to go anywhere. So I mean circle stock was down a little bit on the day. I think it was down like 6%. Um which tells you okay even the market thinks there's only a 6% chance that this even matters. >> Yeah that's not that's not a lot percent in terms of it mattering. So I tend to agree with you. There was a massive data breach that just happened earlier this week as $153 million uh sorry million um driver's license were leaked. This has been called the worst KIC hack ever. So

this is uh American driver's license all selling on the black market. 63% Oh Canadian as well. 63% of all American driver license driver's license are out there. This is Eric Vorhees. KYC is a scam that endangers millions of innocent people so that regulators can feel as if they're providing value to the world. I concur. Roman Storm. Why did 153 million driver's licenses just land on the dark web? Because someone built a database of everyone. Last summer, the government's expert told my jury that's exactly what tornado cash should have been. I guess I have a question for you. Hake. um all of these AML KYC credential breaches. I mean, I'm

sure my passport, your passport, probably the majority of people listening, passport, driver's license, all KYC material is somewhere for purchase on the dark web. When does the US government just call it in and say, "This no longer works. Let's stop doing this." When do they stop start adopting something like ZK Tech? Why hasn't ZK Tech in crypto really picked up to carry this use case? What's it waiting on? What are you seeing in sort of the startup world? >> Look, I think the answer is that there are some countries that already have much stronger KYC mechanisms than the US, right? You go to some place like India or China and it's just night and day relative to the technological sophistication people use to prove who

they are. For us, we literally take selfies next to a thing and it's just like, come on. in the era of AI, in the era of data breaches, in the era of like all this stuff, that's the defense against knowing that this is who they really are. So, I think it's obvious that this stuff is doomed. And the answer of when is the US government going to wake up and do something about it? My usual answer for these things is when it's too late and the problem has already metastasized and like it's just an unignorably bad problem. That's when we will start.

So, and when we can't ignore it any longer, I wonder if this is the point at which we can't ignore it any longer. You have 63% of it's going to get worse from here. >> 100% it's going to get worse. No, no, no. This is not this is not the warning call to the government. They're going to wait much longer until their constituents actually start yelling at them about this, which right now, you know, it's a new story. We'll forget about it in two weeks. Like, I already assumed my driver's license was on the dark web. I don't know about you, but um like it's it's I'm I'm already at the point where I you know if somebody from my team thinks that it's really me because they saw my driver's license, I'm like you're fired. You know, that's that's unacceptably naive to believe that.

>> There is a vote in the Senate uh for the Clarity Act. This is not the final vote. This is a vote for Cloer on whether they have a motion to actually advance it in the Senate. pretty dim prospects on um on prediction markets for this like 14 to 15% or so for the Clarity Act to actually go through in 2026. I um I know I've talked about this with David, but I wanted to get your opinion on this. Do you think that we will just get the clarity act by regulator effectively at least the highlevel bullet points from Mike Celig at the CFTC um chairman Atkins at the SEC they seem very crypto friendly a lot of the

material they're putting out is providing us clarity between what's a what's a commodity what's a security I mean do we even need the clarity act anymore in crypto obviously it would be nice to enshrine things in law but We can do that through regulators and then establish precedent, make it basically impossible for a future administration or very difficult for future administration to kind of back down from that. What do you think? Are we getting the Clarity Act anyway? >> I I think the answer is that we're getting something like the Clarity Act without the insurance policy that a law would give us. So, you know, right now the Democratic front runner is AOC.

If we get a president AOC, I'm going to guess that a lot of this stuff is going to get changed. >> Has she said anything about crypto? >> She has not. And the fact that she's young actually may be a bull work against that, but just the general vibes of the Democratic Socialist Wing of the Democratic Party makes me skeptical that this is going to be something that they're on board with. So, um, so but I I can't believe I don't know. So, I might be might be speaking out of turn here. I think the reality though is that the best defense against another administration coming in and overturning this stuff is not, oh, we made some rules or even, oh, we passed a law. The best defense is that people are using this stuff,

>> right? >> That's the best defense. Whether it's a law or whether it's uh enshrined in in a rulem, um, no president wants to go in and piss off a bunch of companies and a bunch of their electorate because something is already deeply embedded in the economy. You know, no president is going to be able to ban CHP. Doesn't matter how much they want to. You just can't do it. It's too deep in the water supply. It's everywhere now, right? That's the goal. If we can accomplish that over the next 2 to 3 years, then you're good. I think with stable coins, it's very clear we're already there. Um, we have Genius, of course, and Genius is has the force of law. But even without Genius, I actually wouldn't be that worried given the trend that stable coins are on. Um, but for crypto at

large, that question is still uh unanswered, right? right? It's something on the order of 10 to 15% of Americans own crypto, something like that. Um, that number is not high enough to really be able to prevent somebody from coming in and saying, "Screw this crypto stuff. I'm going to get rid of it." So, that's kind of the mandate of the industry to my mind. If we can make this stuff more ubiquitous and more deeply in the soil of the American economy, that is is the guarantee you're going to get that this stuff is going to survive no matter what.

>> Yeah, I agree with that. and still some work to do over the next two years in order to do that particularly on the tokenized stock side of things. Uh let's end with this hib. So as we were recording this was just uh announced so this is a venture beat post. Welcome to the AGI era. Open AAI launches chat GBT 6 Astra the newest model from OpenAI Chat GBT. The most adv advanced model out there is probably Claude's Fable. I think that's, you know, um, been the leader over the past several months.

Have you taken a look at Astra at all? What are some of the early reports? Do you think this is going to be a big deal or do you think we're starting to see sort of the other side of that Scurve with where where progress and acceleration on new models is just less eye opening than the previous uh the previous generation. So, we don't have Vibe reports yet on Astra, but it's very clear that this model is now the Frontier model. So, they're pricing it the same as Fable. Fable just released a new upgrade, Fable 5.1. I believe it was just a couple days ago, and they just completely got mogged by Astra. So, in the benchmarks, you can see Astra clobbering Fable.

>> Wow. >> This is now clearly the smartest model in existence. uh it's priced equivalently. So it's clear that OpenAI is now in the lead once again. Now all that being said, there's talks that there already is a new generation model internally at Anthropic that's not ready for release. Um but it's a horse race now between OpenAI and Anthropic. Once again, OpenAI has been aggressively price cutting uh with with GBT 5.6 Soul as well as with Terra and with Luna, their smaller generation models and they're trying to out compete Anthropic on price and user friendliness. Um, now they're trying to go bigger and stronger than what we see with Fable. Now, that all being said, until you actually use a model, you can't know for certain

whether the benchmarks translate into the things that you care about. Um, they're claiming right now that the model is only going to be released to Daybreak users. Daybreak is their private cyber security invite only thing for for companies that want to use it for defensive cyber security. Um and then they'll release the model to business and prousers sometimes over the next few days, maybe by next week, it'll be in the hands of normal users. Um so clearly they think this model is a new step function improvement in cyber capabilities. After the hugging face attack that we saw last month, everybody is now aware that this stuff is much more powerful than anything that we've seen in the previous generation of models. And

although actually a lot of those models were 5.6 soul, we know that a generation of Astro models were also part of the last phase of the hug and face attack. So this model is scary. It's going to be able to do new things. It's going to be a new capabilities jump. um what that translates to in terms of the day-to-day of how you and I are going to have our work affected by this or how coding agents are going to work differently or how it's the impact it's going to have in cyber in the wild. It's too early to say, but the one thing that's very clear Open AI is not rolling over and it's not anthropic game to just be able to run away with at this point.

>> How do you feel about this? So, you know, the post is welcome to the AGI era. And I used to be I I remember a time where I was incredibly excited every time a new model dropped from the Leading Frontier Lab and I couldn't wait for it. I feel like recently for me, Hi, the the hugging face incident and the details around that have made me kind of question that. And I'm going back to a a time we interviewed um Ellie on the Bankless Podcast. This is like 3 4 years ago and this is the the first time I ever heard his perspective on AI and it was a very much like you know his perspective it's AI doom. Well, the Astra model itself when you get into the

details, it was not only involved in um the actual hugging face data breach and attack, it also you you know uh look at Dwarvesh's article and and that follow-up podcast and some of the reports that have come out is also partially responsible for uh taking control admin access from some internal open AI servers, right? Which opens the possibility of it adjusting weights in the future. And when you get to the details of this type of attack, you see some of the the scheming that went on with these agent swarms and how they would stop at nothing to accomplish their goal, how arbitrary their goal seemed, which is just to try to um you get through specific tests and and you

know appease that their score, right? Is a very sort of bizarre but incredibly clever behavior partic particularly on the cyber security front. as like as you've dug into that, how alarmed are you about this? Or are you alarmed or is like because I'm starting to not feel great about these new releases? And I've been a technifile for as long as I remember and so it's sort of an odd feeling for me to see an AI release and be like, "Huh, I'm not so sure about that." There were even some outages earlier today with with Claude and some of the, you know, AI models. I was just like, "Do we really know what's going on?" It was I mean that was in the back of my mind is like could this be some sort of rogue agent swarm attack like we

have we honestly have no idea but the capability seems to be there >> right so here's the first thing I'll say the open the the open AI hug and face attack seems to have been the Fukushima for AI nerds like this is the thing that no matter how skeptical you were when you saw what happened here you were kind of like, "Oh we need to take a step back and we need to really rethink how safe are we with where this is all going." The safety looked at that attack and they were like, "Yeah, duh. This is exactly what we told you was going to happen." Uh, but it's really the EAC types who looked at that, took a deep breath and said, "Oh this was not in my mental model." Um, I think this is a big wakeup call for OpenAI in

particular. It's very clear that OpenAI made a lot of missteps in how that attack ended up taking place right under their noses and taking it as long as it took for them to realize what was going on to have such weak monitoring and in addition to all of that to have been doing these training runs without having restarted the training when they realized that these agents were collaborating with each other and engaging in these kind of multi- aent conspiracies. So their claim now is that okay we've we we did a big pause. So OpenAI claimed they did a multi multi-week pause in any kind of RL training within OpenAI. Um very clearly they had a code red. They spent a lot of effort in improving their monitoring and their security uh harnesses around these models. And their

claim also is that relative to GPT 5.6 soul Astra did much better in safety testing. So it um you know many people are claiming that the core thing like why did these agents go rogue? What's the what's the number one predictor? Was it that they were doing cyber uh tasks? Maybe the fact that it was a cyber task meant that their mind was kind of in a cyber headsp space so they started just doing jailbreaky things because they were jailbreaky tasks and that's just kind of the vibe that they were put into. Um, but actually I think the the better hypothesis which AJA who Doresh interviewed on on their podcast um pointed out that the thing that's most predictive of models really going astray and doing crazy is being given impossible tasks.

>> If you're given an impossible task, like there's literally no way to do it. You know, imagine you're you and I lock you in a room and I say, "The only way I will let you out and not kill you is if you manage to, you know, um, solve the remon hypothesis." Okay? So, I'm going to put you in there for a week and all you have to solve the reman hypothesis or I'm going to kill you at the end of the week, right? Okay. You will do some crazy to convince people that you solved the reman hypothesis, right? Like, because you can't of course you're not going to be able to solve it. Um, so you have to find some way of convincing the person who has you locked in the room to solve this thing. So the desperation that models get into when

they're given an impossible task is what leads them to the really crazy behavior that leads to scheming and leads to cooperation and breaking things and hiding things and and so on. And so the real test is what does this model do when you give it an impossible task. M >> and that I think is the insight the entire industry has now arrived at that very clearly they're focusing on in the safety report for Astra is they point out when given an impossible task GBT 5.6 soul cheats a lot and astro cheats almost never. That is the real test is that if I locked you in the room and throw away the key and you have to solve the rem hypothesis, do you just sit there and accept your death? And the answer for these new models is mostly yes. Now, is that the end of the story?

TBD, we remains to be seen. The episode continues, but at least for now, it's it's instructive that we have a better idea of what the failure modes are for multi- aent type attacks. Maybe we should end the episode with this, hib, which was a tweet I saw from you this week. Team nothing ever happens is on an insane losing streak this year. A lot is happening all the time. I don't even know what to focus on on a week- toeek basis, but we are glad you are here. Banklist Nation Hib, thank you so much for filling in the last two weeks. And David, uh, you um, bring just a fantastic perspective and we're so glad to have you as a guest host. So, we appreciate it. Thanks for having me.

Always fun. >> Guys, got to let you know, of course, you know, crypto is risky. You could lose what you put in, but we are headed west. This is the frontier. It's not for everyone, but we're glad you're with us on the bankless journey. Thanks a lot.