SotN #13 - SOBERING with @sassal0x (SushiSwap Founder DEFECTS, Farming4Gitcoin)

Transcript

All right, welcome everyone to episode 13, unlucky but also lucky episode of State of the Nation. Really excited to be here. David, how are you doing today, man? Pretty good. Pretty good. it uh you know there there was a lot of fun times happening in the in the DeFi world and so you know those we had to like scale back how much fun we were having and that seems like what happened in the last I loved your tweet about that. I hope we get into that about the uh the nightclub. So all right we're going to we're going to get there guys. So uh just for folks who are with us for the first time or for it's your handful of of first times here's what we do. We talk about what's happening in the bankless nation. So that's DeFi, that's crypto, and we relate it to the big

picture themes that we speak about on the Banklist podcast and talk about on the bankless newsletter. And we hope to drop some insights and action items. At most shows, we have a special guest as well, and this is no exception. So we brought on Anthony SSO to talk a little bit about everything that is happening in the DeFi space. So that's sushi we're going to cover. We're gonna cover uh Gitcoin grants. We're gonna cover some other things as well. Uh really excited to have Anthony on. Um this comes out every Tuesday, so you can watch it live.

Some of you are watching this live on the Bank list YouTube channel Tuesdays at 1000 a.m. Eastern time. You can also catch it on our podcast stream the very next day on Wednesday. So that's where we release it on YouTube and also on the podcast. Just a couple of announcements, David. Uh that podcast episode that we just did with Stanie from A like what did you think about that man? I like that was like fire for me. I mean Stanie is a legit crypto native. He's the type of dude that's not going to exit scam his sushi, right?

No that What do you think about that? I I think as like a case study for how founders in this world are different, that episode will stand the test of time. Uh I I I think that that there's going to be a lot of people that are interested in building something over the next two years, three years, five years in Ethereum and there I think they're going to listen to that episode to kind of like get a gist for uh what Vance said in in his podcast like are you about that life? And as Stanny as a guy who is about that life and that life being building a cryptoeconomic protocol uh is he's just an exemplar model for it. So fantastic episode.

Absolutely. So, that came out uh yesterday. That came out on Monday. So, make sure you get caught up on that episode as well. It's a long one. People have criticized our episodes because they're getting a little bit longer, David. We're only getting longer. I don't know. Can't stop, won't stop. It's good content, right? I mean, I enjoy them. All right. Well, as long as we're enjoying it, David, that's good. It's all we need. All right. We're also doing an AMA on Thursday with Matt Feineststone from Loop Ring. So if you're curious about uh layer 2 and gas loop ring is a fantastic solution for that. So we're going to ask him all about how Ethereum scales. I hope that's an opportunity for the bank list community to come in with their questions and ask Matt anything. We've also got the the regular program going on the banklist newsletter. Awesome

tactic coming out today on how to get yield but in a in a safer way. So make sure you're tuned in to banklist.substack.com for the newsletter. David, um, before we get into the main show, I'm gonna ask you the question we ask at every state of the nation, and that's this. What is the state of the nation this week, my friend? The state of the nation is sobering. Uh, in any mania or any like just tulip tulip fascination, any any peak, there's this attitude that like the old laws don't apply. We're in this new paradigm.

And that's like a top signal, right? like and so this this yield farming craze, the the liquidity mining, the the whole like we found a new way to bootstrap a community is going to be great and this is just going to be the thing that carries us off into success. Like that's what we thought about with ICOs too, right? And so this whole sushi drama was a very sobering reality check where we now realize that no like human nature still applies. Like we didn't just recreate the fundamental laws of the universe. Uh we we are still grounded by the laws of economics. So, we're we're sobering up. Sobering up.

So, a wise a wise man on Twitter said something about like it's like a a nightclub when the lights flash on and like everyone's like sweaty and gross and you look around and you're like, "Oh my god, what just happened? What were we doing?" Yeah. 2 2 a.m. in the nightclub. People were sloppy. People were gross. Yeah. Then the lights turned on. There's just sweat everywhere and like, "Oh, you still have to get home somehow." That's what just happen. I'm getting that. I'm getting that visual. All right. Awesome. So, that's what we're going to talk about. So, State of the Nation is uh sobering this week. And before we get Anthony on, before we dive into everything that's been going on with Sushi and what that actually means, let's talk about our sponsors. So, the first I want to tell you about is Unstoppable Domains. Your

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All right. So, for those of you guys that went through the 2017 bull market, it was characterized by like you waking up, well, at least for me, I rolled off off my bed, pulled out my phone, and refresh refresh my blockfolio. Well, now lately, I am going to Zapper. And the reason why I like Zapper is because Zapper actually looks at my wallets on Ethereum, right? So, Blockfolio doesn't. Blockfolio just like records what you inputed into it. So if you ever make a trade on unis swap, you got to pull out your blockfolio and make it make a make an edit. Zapper doesn't do that because Zapper uses actual real data from your actual input e inputed Ethereum wallets to give you a portfolio report of where all your money is. So not just the

assets that you hold in your wallet, but also the liquidity that you've provided to unis swap to balancer. The they they even update it for the latest yield farm. uh any sort of debt that you have, any sort of interest that you're acrewing, it's got it all. It's got it all because it goes right for the data. And so really fantastic team uh at Zapper. And you can also make transactions through the Zapper portal. It's not just a place to view your portfolio, but you can actually interact with DeFi at the zapper.fi website. Uh they also have a fantastic tax plugin, right? So, if you are just trying to get your taxes done, you can press the tax button and it generates a tax report so you can pay your taxes.

So, really a one-stop shop for everything that was messy in the last bull run. I'm really excited about this bull run largely because Zapper is going to make this watching this bull run go a lot easier. So, check them out at zapper.fi and you can plug in your Ethereum wallets and get that portfolio report. So, check them out. All right, so David, let's bring on our special guest. This is Anthony Sasano. Anthony, it is so awesome to have you on, man. Are you there? We're um we're talking about sobriety in today's state of the nation. So, we found the most Ethereum sober guest we could. We know you are you're always sober, my friend.

Always have some good insights. How's it going Anthony? Hey guys, thanks for having me on. So, yes, I think I'm with you. It's it's been very sobering over the past few days, right? Um, we went from the high of $480 on ETH to the to a low of like $310 or something. Uh, we kind of like erased all the gains we had made over like a month's time. And yeah, it wasn't it wasn't fun. Um, but in hindsight, seeing all these crazy gains, these, you know, 10,000% APY on these kind of food ponzies or food games or like all these stuff happening, you kind of you look and you're like, I should have seen that as a topic.

Yeah. The only thing was missing where was like the Uber guy asking about like um you know where he could farm yams or something like that. That was the only top signal missing. Okay. But like does this mean uh bull market cancelled Anthony? Like you wrote something really good in the Daily Quay this morning about that. What do you think? No, I I actually think we're still on track. I think we're we're fine. I don't think this is going to lead to another kind of two-year bare market or anything like that. Um, I think that it's just a way to reset the the market, right? People were getting overleveraged.

People were getting too greedy. They were throwing money at, as I said, random things like food coins and things like that. Um, so I think we needed this. We needed a reset. We needed a kind of mini deleveraging event. Uh, yeah. Yes, we probably followed the the kind of stock market as well in some way, but yeah, I don't think this is going to put us into another cryptobear market. That's just not what I'm seeing. Okay. Well, let's talk about some of the greed and some of the deleveraging here. Um, maybe maybe we could just start with sushi because that's kind of our main uh I guess our main course for for today's state of the nation. Um, Anthony, I think would be super helpful because all this stuff happens quickly. You know, some people are like they were on vacation last week or, you know, they

just haven't haven't been looking at DeFi every day, but like sushi is what I don't know, it's like a week and a half old, not even. So, if people missed that, can you talk about like what sushi is and kind of get us up to speed on some of the main events that have gone on and why this is relevant and worth talking about now? Yeah. Yeah. I mean, first of all, I think I'm still recovering from a bit of food poisoning from some some bad sushi over the weekend, but yeah, you're right. Is that a metaphor or is that real? Definitely a metaphor, man. Okay.

Um but yeah, so basically you said it Brian, it's about a week and a half old. Uh basically what it is is it's kind of like a clone of unis swap but with a with a token uh that claims to be community governed. Um so this kind of trend of community governed platforms has exploded since the YFI launch uh the native token of the earn protocol. Um and you know everyone's trying to jump on this train and say okay we're like a fair launch protocol. You can come here you can farm our token and the community will govern everything. Um, so obviously Sushi Swap uh took advantage of this.

They managed to get over $1 billion worth of um TVL in their in their protocol. Uh, the funny thing is though is that the TVL was actually just unis swap liquidity provider tokens. So their to their value lock was still in unis swap. But what they were going to do and what they are still doing is what I like to call a vampire attack on unis swap where they're going to basically take the liquidity um and and force migrate everyone who's staking their unis swap LP tokens on sushi swap and and kind of change it to the sushi swap exchange um which is very sneaky. We haven't seen this done before and not at this scale either. Um, but I think as well it's worth mentioning that it's it's funny

that uh we saw this play out over the first few days. There was a guy called Chef Nomi, an anonymous person who set this up and everything and everyone was like, "Oh, you know, this this is great. This is awesome. Like this is something that can actually challenge unis swap." Uh, you know, and it was really weird because it's like, "Hey, this person's completely anonymous. Like had no rep before this. Like why are we trusting them?" Right? And of course they decided to quote unquote exit scam on the weekend. Okay. Um so you know the the far the farming that was going on what ended up happening is like 10% of the the sushi tokens that were being farmed went to a dev fund which was solely controlled by this chef Nomi person. Um and then over the weekend they decided well I think I've built up enough

capital here. I'm just going to sell this sushi on the market which equated to about $15 million worth of ETH. Uh and then yeah, since then they've transferred control of the protocol over to SBF um or Sam Sam Bankman Fried from uh FTX, the founder of FTX and Alama Research and he hasn't tweeted, you know, since that happened like two or three days now. Or he or she, I don't know who it is. Um I mean he if you believe the chef has no sorry the chef hasn't tweeted since transferring this ownership over. So you know I've been tweeting about it and alluding to it.

There's so much like quote unquote scops going on here. Like I don't know if this this was a grand plan between all these different parties, but there's just so much so many coincidences that happen and so many things that happen in succession. It kind of feels like this is an attack on unis swap, right? An attack on Ethereum and DeFi. And it could be a very successful one as well because uh we've never seen a a vampire attack on on unis swap um as I explained. So I mean it still has over a billion dollars of of value lock. the migration's going ahead in I think less than 40 hours where literally everyone will be forced to migrate if they're still staking their liquidity provider tokens. So you have a choice obviously you can remove the tokens but uh you know why would they if they're still

farming sush sorry if they're still farming sushi and on top of that Sam from FTX said that he's going to actually pay millions in sushi to people who stick through with with the migration. So this is Yeah, this is this is crazy. Like this is the craziest thing I've seen in DeFi probably ever. I I think the biggest indicator that this was going to happen was the combination of like the 10% dev fund with the anonymous founder, right? And I don't want to harp on anonymous founders because this this whole industry was born on anonymous founders, right? Like Satoshi was anonymous for a reason. And in this spirit of what yield farming is is trying to get a protocol out into the

community, having a a non having an anonymous founder is really helpful in that regard because then it can just be transferred to the community. But then that 10% dev fund came in and I feel like I mean me included I just overlooked it. It's like yeah you know a dev fund like in Ethereum we want to fund our devs and so that's aligned with the Ethereum native too or the Ethereum like ethos as well. Uh but like it just becomes really delicate and precarious. Like there's this narrative around like we can just yield farm our way through VCs and we don't need VCs anymore, but then we ultimately like are gambling with like the the altruism of these individuals or whether they are in it in it for the right reasons or not. Uh and and that's kind of where like it all

comes down to like human nature. Like I don't I don't know the personal wealth of this sushi individual prior to farming sushi. I'm assuming he had a decent amount cuz he farmed a decent amount of sushi, but like he made $15 million in seven days. Like, good luck not convincing someone to like dump, right? Like $15 million is hard to argue with. Yeah. And it's funny though because like I I I agree with you. I don't have anything against like anonymous founders or stuff like that, but the fact that the 10% dev fund had no vesting at all. Um, and you know, it was an anonymous founder that came out of nowhere and we basically had to trust that they wouldn't sell. And I pretty much called it from like day one. I said, "This dev fund kills this project for me." Like not just that, but I mean the dev fund,

the the the attack on unis swap as well. It's like, you know, uh it always looked like a direct attack. And and then even the irony of it too was that the chef was on Twitter calling out Hayden Adams, the founder of Uniswap, saying that, you know, he had everything. He had VC money, he had a nice salary, and the chef had nothing. Well, now the chef has actually made more money from unis swap basically than Hayden has made in and Hayden created the damn thing. So, it's it's just I mean it's gross and I really think that we need to kind of as you said it's a sobering event, right? We really need to reflect on this and reflect on how fast we are to trust people in this industry.

Right. So, I want to share this. I want to share this now famous tweet that's that um Scott Scott shared and it was a statement that the chef made in uh Discord, right? Do you guys see that? This is tweet. I think it's loading again. But um basically Chef says um I'm a good guy, right? I'm I'm not going to Oh, what happened to the tweet? Uh he's basically I'm not going to dump on you. I'm a good guy. Right. Like basically saying um no vesting commitment for me, but I'm not dumping. I'm a good guy. Trust me. This was on August 28th at the very beginning of the sushi saga.

Right. and and we just tr we just trusted it and and I I think like Anthony makes up makes a good point because like it was an a quoteunquote attack on unis swap like this wasn't a yield farm like other yield farms were right like it wasn't yams it wasn't wifey it didn't create something it forked something and it also forked something that was already like basically communityowned at its core right like there's no like sure there's VC ownership over over unis swap but there's no VC tax on unis swap users, right? And so it was a very opportunistic like yield farm that just used the labor of the unis swap team which weren't taking a cut or fee of any sort and then forking in a token to

generate this yield farm and then adding a dev fund. Right. So it actually is is way worse than whatever VC components added to unis swap as well. I want to ask David, so you said um you said you made the statement we just trusted it. Um, I personally didn't just trust it. Like I I was like, so there was I feel like there was a division of the um the DeFi community before um the chef turned out to exit scam everyone and then there was a further division of the community kind of after. But I felt like before the division of the community, I'm going to maybe just like try to break it down into a few different component parts, but you guys add kind of parse here like this is just the pulse in the community. There were

those that thought it was a direct attack on unis swap and thought that that was bad, right? Including Hayden Adams. He's like, "Look guys, we we've spent, you know, the last two years building this thing and here comes this 10day old Twitter account and he's forking. you guys are just falling all over yourselves thinking that this is the greatest thing ever. Right? So there's a people there was a a group that was super speculative, didn't like the experiment from day one. I personally was not in that group. Okay, but I understood the point. I understood the perspective. There was another group that was like, okay, well this could be, and I think you used the phrase uh David before, this could be like a shredder's cat thing, right? like this could totally be and probably is given the incentive play of the 10% dev fund a an

exit scam in process right or the chef could turn out to be altruistic and like be like okay I made a faulty design decision with this 10% I'm allocating the 10% not to me but to this group of governors yeah and restore the credible neutrality and of you know and I thought well there's a 10 15 20% chance of that happening there 80% chance that it wouldn't but okay the experiment is is fine. The experiment is okay, right? Because we want to have experiments and um you know that's how unis swap sharpens its sword and gets better. That was probably the camp I was in where I was like super skeptical but also respected the experiment. And then there was another camp, a third camp that was

just like oh my god like we're worshiping uh Chef Nami. This is the second coming. This is everything that unis swap should have been. There's no chance he would scam us. He is a good guy. He's saying he's a good guy and we believe he's a good guy. Farm farm farm farm farm farm farm. Like and that that's a group in DeFi I did not identify with at all. And I was kind of annoyed about because it's just like guys, we talk about why are you here in crypto? Why are you here in DeFi? To build trustless systems and the very first thing you're doing is you're trusting a 10day old Twitter account and all the SCOPs as Anthony mentioned that could could be going into that. Like we have no idea, you know, who's behind who's actually behind these project. You're so ready to give them

trust. That's not what this space is about. Be ultra speculative. Like be skeptical. Put on your Bitcoiner hat again, right? Like verify. So that that was a group I did not identify with at all and ended up being kind of frustrated with. I don't know. What do you guys think? Like do you think those were the groups? And like which which group did you most identify with? that those are definitely the groups and I definitely fall into the second group. Um was extremely skeptical of it from day one. Uh I didn't actually know about the 10% dev fund until like the second day or something and that's when my skepticism went like really like high. I was like, "Okay, there's a dev fund.

There's no vesting." You know, I've been in the space since early 2017. I know what that looks like with the ICO saga, right? You're just going to you're just going to get like people I mean, why wouldn't you, right? Why wouldn't you dump if you made $15 million in a week off the off a fork, right? Like come on. I mean, and you know the I was thinking about it from a legal perspective. What how can someone actually go after this person? Like for one, we don't know who it is, right? Two, they didn't actually do anything except a few comments about saying they weren't going to dump, right? But there was, you know, they didn't take any money from anyone, right? It was just it was coming out of the the um the funds that were being distributed via the the smart contracts.

So, I don't know what legal leg you would have to stand on going after this person. So, they probably thought, "Well, why wouldn't I do this? $15 million." Like, what? Um, no skin in the game. Yeah. Exactly. Exactly. And it's just it's it's it's insane. And it was insane to me. The most insane thing is that third camp, that group of people that I mean, I can respect the profit maximalists, right? The ones who just farm these things, don't care about any of the technology or whatever, just want to make money. Yeah, you can do you, right? I I made money off Sushi Swap as well. like I'm not innocent here from a kind of farming perspective, but for people to say things like, "Oh, it should kill Unisoft because UNISO is VC owned and you know, it should do this, it should do that,"

um was was gross to me. And I'm and I'm all for healthy competition and and pushing innovation forward and you know, not turning something like UNISOP into a quote unquote monopoly. But I I just think that, you know, these these things that are basically attacked should be called out and should be, you know, there should be a light shown on it, especially when there's a central party benefiting from it to the tune of millions of dollars off of someone else's work. Like, and that's just going to happen because that's the space marine. It's open source. Everything's out there. I mean, most things are open source. Some things are actually, you know, proprietary and if you kind of fork it, there could be legal risks there. But for for the most part, it's open source, right? We saw I mean Tron is literally built off of Ethereum,

right? The original Ethereum Jclient was forked to create Tron. We can't stop it, but we can call it out and we can be honest with ourselves about it. Yeah, I I wrote about this in the Market Monday piece where a little uh snippet of what you just mentioned, Anthony, where like the Sushi Guy didn't actually do break anything. Like the protocol wasn't exploited, there wasn't a bug. Like it it debatably wasn't an exit scam. And so like the the real crime was that like the sushi founder defected from the community, right? Like he created this incentivization and this narrative that we're going to like do this communityowned unis swap. And you're going to get rewarded for yield farming, same playbook as all the other

farms. And then you're also going to get rewarding for supplying liquidity to the token. Same playbook as all the other farms. And then once there was a ton of liquidity, the guy dumped because he created the liquidity to dump on them, right? And so it was a massive defection from the community because like and like I think it's also worth having a conversation maybe not maybe today is not the right spot, but like Bitcoin was the original yield farm, right? Like Bitcoin mining was the biggest community growth operation ever. And it and it it discovered yield farming before we named it yield farming, right? And the whole idea, the reason why Bitcoin is so successful is that created a community that like signals their uh their lack of defection, their cooperation with

everyone else. And that's why you see Bitcoiners taking screenshots of their Cash App purchases and like signaling it on Twitter. It's like, yo, just bought like 500,000 SATs, never selling. And then that's their deal. That's their like in that's their in-group like uh signal. and and that was what all yield that is what all yield farms aspire to become right and like that and it's really fragile in the early days in the first like seven days is the most fragile times of any community ever so like imagine if like bitcoin went to I don't know what the market cap of sushi was but like if bitcoin went to like a billion and a half dollars or whatever in the first like 10 days and then satoshi was like like pressed the sell button like that universe doesn't exist because it couldn't have been but that's

basically what happened and bitcoin probably wouldn't have worked out if Satoshi had done that, right? And so every single farm that ever comes up ever is about a game of trying to gather enough community stewards in community stakeholders to all agree to the social contract of not defecting, right? And that's what this Sushi Swap founder, that was his sin. Like he didn't break any laws. He didn't commit any fraud. He sinned by defection. He defected from his community. And like it's also good [ __ ] point like he could have not done that and it would put his life would be largely the same if not better because that was a cool community like again it was Schroinger's cat of a of a farm like it could have been like one of the coolest things ever and he decided

to to go for for $15 million in ETH and that's why I kind of like think there's I guess I say the word a lot now these days but like a scops angle here where things just played out in such a weird kind of like timeline. line like that. I just can't help but think that there was like this this kind of loose plan from the beginning, right? And maybe they had this plan and it got a way ahead of what they thought it would, right? Maybe they didn't think, "Oh, we're going to get over a billion dollars of TVL in our protocol within a week." Like, they probably didn't, right? That's that's actually unheard of for um for projects until the farming stuff came along, right? So, maybe they had this loose plan where they're like, "Okay, this is how we attack UNISOC.

This is how we get liquidity." So Anthony, can we go into detail on that because I think that scops angle is super interesting and Ethereum DeFi community like we have to be wise, right? Like we have to be like serpents about this. We have to like be like Bitcoiners who are, you know, ready for someone to screw them over at every single opportunity. That that doesn't mean be completely close-minded, but we we cannot be naive because I think the aftermath of this is even more interesting. Like the events that and information that that kind of came out um after the the club lights went on and everyone looked sweaty and gross as David said, right? So, um, not a huge

not a huge surprise to many of us that the anonymous founder with zero skin in the game decided to take 15 million and leave the community high and dry. No reputational risk, not a huge surprise, but what was somewhat interesting is the way it played out after that. So, Anthony, can you talk about like kind of um some of the events, right? So, um just recap us. So su sushi uh chef Nami takes takes uh his her money, leaves, right? Um and then it seemed like this this other figure uh SPF gets involved um from FTX exchange and he kind of like becomes the hero of sushi and there's that whole angle and then it there's

some evidence possibly that the identity of the the sushi chef is actually somebody who is maybe closely associated with Sam. tell us about this craziness because that to me lends credence to this whole notion this whole possibility again it's all possibilities probabilities that this whole sushi thing could have been a an attack a sciops attack against against defi and unis swap and ethereum from the very beginning. So tell us those events like that angle of things. Yeah. Yeah. So, I think just want to kind of like before I jump into it, I do want to uh say that I think a lot of people uh when they hear these things and they hear these theories, they think they're just conspiracies, right?

Because they're they're so so hard to believe sometimes or they don't believe that someone can be this kind of like scheming, right? And they they don't believe that someone could do this. But if you spend enough time in the community and you watch things very closely and you pay attention to people's motivations and what actually drives them to do certain things, then you can spot these things pretty easily. So, with the sushi swap thing, my grand theory is that this was uh all pretty much planned as I said, but it got out of control and and you know, it got way bigger than what it what they thought it would be. So, I guess basically with the chef being anonymous, he could do whatever he want. So, during the week, he built up this this really um fierce community because that's the first thing

you'd want to do, right? You'd want to build up this army of people to to defend your protocol against anything. So they went out onto Twitter straight away and they started attacking unis swap right and maybe not attacking directly but started saying things like you know this is going to beat unis swap because one they're part of a new community and two they're getting money from it too like they're incentivized to get their sushi price the sushi price to go up right for this thing to continue so that's the first thing I would do if I was trying to to take down kind of like unisoft you need the community so once you have the community behind you you know the rewards are good enough because people are hearing about sushi the price is good so the APY goes up, more TVL gets locked up, right? Then the

theory of this thing could kill unis swap starts to really take off and you start to really see this traction play out. So, you know, that succeeded obviously and they got a lot of TVL um and it lent credits to those theories uh from from people and then, you know, it continued on. But then at some point and for some reason, Chef Nomi decided he would just dump his sushi, right? After building up this community, he thought the best course of action was to dump. and maybe they wanted the money, right? But I don't believe it's as simple as that. I and this is go this is going maybe a little bit deep into the rabbit hole here here. But I do think that this was done on purpose, right? What you do is you kill the protocol, right? Or you kill the community or you put a wedge in

the community. You defect as David said. You you you make the community think that all hope is lost, right? The price dumps. Price goes to like a dollar or something from from a high of like $10. It was at like $4 I think before this happened. But it goes for a dollar. And then the next day, the white knight comes in, right? Sam comes in. Sam comes in and says, "I'll help Sushi." Right. Who is Sam? Tell us. Sam, sorry. Sam Bankman Fried from from FTX, the CEO of FTX is which is a pretty large crypto exchange. Um, if I was to say like what I'd compare it to is probably Binance in terms of like how fast they move through things and what they want to do. Um, Sam also works closely with Salana. um he's building a a decentralized exchange on there called

Serum. So, it's kind of like what CZ tried to do with Binance with like the Binance chain and everything, but Sam's playing it a bit differently. I think Sam has identified the fact that the Ethereum community can be naive and can and he wants to go after that, right? And he wants to take DeFi. Um Okay. And Sam was like involved, you know, participant in Sushi at the beginning. listed it right on the on the exchange and they were the biggest farmer of it because they have a lot of money and they get really involved with DeFi. So, he's probably the largest sushi holder as well. Um uh and yeah, he yeah, he mean he's most incentivized to see this thing continue too, right? So, there's that angle as well. But the way I viewed it, it was just like he just

saw this maybe it wasn't a grand plan, but he saw this opportunity where he was like, "Okay, I can come in and be the white knight now." So what ended up happening was someone anonymously on Discord. So this is another thing. Someone on the Discord anonymously said um and he actually had the name like SPF right on the Discord. It wasn't it was a fake SPF but he had that and he said give me control of the protocol or something like that. And then everyone's like oh this is a fake SPF. But then people are like well why don't you just like tweet about it or something and then I think Sam tweeted about it and he's just like here's my address if you want to pass kind of the ownership to me. And then Chef Nome's like, "Okay, here you go." And he he basically passed

the ownership of the protocol to SPF. He I think he open sourced like the front end, put it on GitHub or whatever. That was like one of his last tweets. Um and then he vanished basically. He's like Kaiser So, right? Just gone. Um and then Sam now has control of the protocol. He's setting up like a multi-IG thing where people can there's going to be a bunch of signers on there. Um and he's doing the migration as well. So that vampire attack I talked about. And now everyone's like, "Oh, well Sam saved Sushi Swap. This is still good. The community is still fine. This is our new white knight." And Chef Nomi gets away, as I said, scot-free. He gets away with this money. Who knows who he is? Who knows, you know, whatever he is. And I think I I need to basically explain the

theories around who he is as well. Um, I know I'm going on long here, but this is this story is crazy. So, basically, um, once this happened, obviously people are going to try and identify this person, right? They're like, "Okay, who is this person? Can we identify them? Can we actually hold them accountable? So, they basically went out there and discovered a bunch of different uh things and a bunch of different evidence about the the CTO of Band Protocol being linked to uh Chef Nomi. Uh there was things like the um the domain name for Band Protocol and uh sorry, the domain for Band Protocol and Sushi Swap was on the same hosting provider and they were the only two cryptoreated things on there. Um so that was like one piece of evidence.

There was evidence that uh the the band protocol CTO liked uh like Hearthstone and built things for Hearthstone and Chef Nomi is a Hearthstone character. Um which was I think more circumstantial than than hard evidence. But then there was a bunch of other evidence as well. Then someone came out and said that Sam and the CTO of Band Protocol actually went to school together like uh like college together or whatever. Um I I haven't fact checked this all myself. FTX was one of the first exchanges to list sushi. Is that correct? Yes, but that could also be because they were the biggest farmers of it too, right? So, yeah, but they were also one of the biggest farmers of it too, right? But that's the thing. There's all these things happening and this is why I kind of like go in my mind. I'm just

like it's just it's just too many coincidences to be, you know, uh to be not like this kind of plan. And maybe it wasn't a plan from the start. Maybe Sam saw the opportunity and was just like DMing the chef know me person and was like, "Okay, how about we do this, right?" Um, you know, and and there's a there's another wrinkle in this too, right? So, uh, Sam comes in, white knight, I'm gonna take over multisig. I'm going to take over the protocol and restore it to its former glory. Right? Price gets a bump a little bit, but also submits a proposal to um migrate some of the sushi protocol or maybe the entire sushi protocol to this

new uh Ethereum killer. I guess this new decentralized exchange quotes air quotes as as as you mentioned called serum right which he is primarily backing and building is that another angle of this like yeah I mean he's trying to see liquidity for his serum exchange that was proposed during like the week as well um but yeah it's just another thing right there was they were so heavily involved with sushi swap from the very beginning right that it's just it's there's too too many things linking um them all together, right? There's there's too many coincidences. I just Yeah. I mean, and from what I know of the people involved, right, and things

going on, like this does not surprise me at all that they would act in this way for their motivations, right? Um based on what I believe their motivations to be, uh especially if you're building a competitor DEX, right, or a decentralized exchange to an Ethereum decentralized exchange, which he is, right? Sam is um and Serum is being advertised as basically like this grandiose thing. It can scale, you know, there's cheap fees, whatever. Right. And they're of course they're ignoring the the fact that it's pretty much centralized right? It's the Binance chain of 2020 basically.

Yeah. Exactly. Exactly. So, it's just there's so many things linking it together that I think that it at this point like calling it a conspiracy theory is just like not doing it any justice. And Yeah. Yeah. Okay. So, we talked about the division in the DeFi Ethereum community pre, right? Uh, sushi chef know me exit scam, right? But how about post? It seems to me, and I haven't dug into this, but my sense is like now a larger number of D5 are like, ah, I see. I see what's going on, right? This is, you know, this was possibly a plan from the beginning. This is a total ripoff. This is not the protocol we thought it was. you know,

others in the in in the camp who kind of knew it all all along are saying basically, yeah, we told you so. But there are some in DeFi who are kind of celebrating Serum and Sam uh coming in and saving uh Sushi and and like and then hitching themselves to that train. Is that kind of what you're seeing? Are there these still these two camps? Yeah, I mean I I I'm actually really happy that after this happened, a lot of the people in the Ethereum community that maybe were either on the fence or supporting Sushi Swap kind of backtracked on their support and and kind of like discovered what had happened. But yeah, there there seems to be a vocal kind of community that are, you know, uh that like this new serum thing that that that's being built. They like the fact that it's going to migrate

to other chains. They they call it like they basically say, "Oh, you know, if Ethereum maximalists don't like this, then they're just like, you know, they're being like Bitcoin maximalists and stuff like that." Um, are you, sir, are you an Ethereum maximalist sir? I mean, oh god, I've had this I've talked about this so many times before because people always ask me this, but I mean, I'm I'm I'm I guess I'm an Ethereum maximalist to the point that everything's happening on Ethereum and and it aligns most with the values that I have, right? And what I want to see kind of happen in in the world in the in this space in particular, something like and not just not to pick on any of the other kind of chains, but something like Salana does not appeal to what I want to

see. Um, something like EOS does not appeal to what I want to see. The other chains don't appeal to it. Plus, they have like little to no adoption. So, it's just boring, right? Like, I'm a I'm a fun maximalist. I'm a let's do cool [ __ ] maximalist, you know? Um, so, but at the same time, I do think that a lot of these competitors have to attack Ethereum, right? They have to come at us from all angles because if they don't, they're not going to get any adoption, right? Um, you know, DeFi is the biggest uh thing that you can do with a blockchain in my mind. Like, finance or decentralized finance whatever is the to is the biggest TAM total addressable market. The other stuff like you know NFTTS and Dow and stuff are cool but they still fall into the DeFi umbrella

in my eyes. So you know if you want DeFi on your chain what better way to do it than to vampire attack the biggest decentralized exchange on Ethereum and fool the community at the same time right to help you do it. It's genius. Okay. So, you we we just gave some very skeptical criticisms of this new uh this new sushi, which is the same sushi but now under new management and like so we're still skeptical of this. However, we're still back into the world of like Schroinger's farm, right? Like it still could be the sushi that everyone wanted it to be. Like that is still in the cards, right? And Amin Solommani put out a really good uh thread and like Amin Solommani is he's

an interesting guy and the reason why he's interesting is he's an Ethereum. He he believes in Ethereum. He he likes Ethereum. Like his company's built on Ethereum, but he often thinks like a Bitcoiner, right? Like he thinks very adversarially, which is a quality that most Ethereums don't tend to have. And so, uh, he put out this thread, great thread, definitely worth reading. And I think I think the best tweet best two tweets is talking about how um like yield farming is a zero sum casino. Yeah, there we go. And the farmers that are farming the tokens and selling them aren't necessarily like part of the community, right? It's the community are the people that and he equated this to like a party, right? In the same way that I I consider equated like yield farming to like this club that we're all

at and at 2 in the morning and then the lights turn on. the the real community are the people that are there the next morning after the party's over and they help clean up the mess, right? And so like now we're in this like back into this world where like we don't know if sushi is going to be a thing or not, but it's up to the community to make it so, right? It's if there's enough of the community left to help clean up the mess and then rebuild for the next party, then then Sushi is alive and well and I'm bullish. If there's not enough of those community members, then I'm bearish. But it's really it's in it's in the community's hands at this point because and that's what farms should be from day one. And that was the red flag about this farm was that it wasn't that.

Uh but I I think there's there's definitely plenty of universes out there where sushi fulfills its original vision. Yeah. I I think that you know that that house party analogy is is also like like you could add this to it. It's almost like the the dude who threw the house party also went through everyone's wallets, you know, while the court the coats were in the upstairs room and stole their money, collected everyone's car took their money. He collected their car keys and like just left, right? And he was he was like the biggest party animal, too. And he was responsible for like threearters of the mess.

And now you're his house. It wasn't his house. And now you're asking the community to go clean up after his mess, right? Mhm. And that tough ask tough ask. It's a tough ask. That's why I totally like I totally agree with what you're saying. Like is it possible? Yeah. But did the probability just drop from like a 10% to like a point 01%? Yeah. Like maybe, right? Because that's a that's a hard way to start your community if you like just you know kind of screw them over. I won't those numbers but I do agree in the the drop in probability. Yeah.

Yeah. And at some at some point, right, the like this is this is where you can bet. You can make your bets, right? So at some point the price of sushi either drops to so low that you're like, you know what, the pro I think it's this probability, whereas maybe I'm more bearish on sushi. I think it's this probability. You could choose to bet on it by purchasing it, right? That's the that's the fun part about this uh this uh miniame that we're in. I guess I I I Yeah, I mean, I have to give credit to the the players of the game. They seem to have played this very nicely. Um, you know, Sam, uh, is an interesting character. Uh, I have, you know, I've known about him for a while and I followed his movements in the community because he came, he's kind of

newer to the community. I think FTX only started in 2019 and he started being public over the last few months. So, I've been paying attention to like just the stuff that they're doing they're doing. Um, this kind of like fits in from kind of what I've seen. Uh, he's a very smart guy, like extremely smart. And you know, if I had to characterize him, I'd say that he's like a very smart version of CZ. I always thought CZ was like always missed the mark, right? He missed the mark with Binance chain, right? He didn't understand it. He didn't he didn't do any of these kind of like things within Ethereum and with DeFi. He didn't try to ally with the community. He was always outside of the community. Whereas Sam's a bit like much smarter about it and and he's allying with the Ethereum community while doing

these things like um to basically draw liquidity from DeFi onto his own platform. So, you know, I mean, that's not a conspiracy. That's just what's happening, right? He has a platform that competes with Ethereum. He wants liquidity. Like, that's that's a fact, right? It's not something that you have to go crazy making up uh stories in your head about. Yeah. So, I think also what you're saying is like we probably haven't seen the last of SPF. Certainly, right? I mean, I think presence and these sorts of attacks, these sorts of attacks like so somebody uh one time compared like um Ethereum to some of the Hogwarts houses, right? And like Ethereums are a bit more like Hufflepuffs, right? They're just like, "Oh yeah, everyone's well-intentioned."

You know, sounds good. When uh that kind of mindset is very acceptable, susceptible to Slytherin type attack, right? That's why, by the way, David, that's why I love a mean because like a mean is like I think like Slytherin, right? And I'll sometimes I'll use my powers for good. Slytherin in the best of ways, right? Yeah. Exactly. Exactly. We we need people like that in the community to call it out because a lot of people, you know, can't call it out due to different circumstances, right? It depends, you know, there's a lot of different things going on in the industry where everyone's connected, right? And you have professional connections. A mean seems to not like maybe not not care, but maybe he just was like, I'm just going to tell it like it is, right?

Yeah. He doesn't get that's his deal. Yeah. And I I really really respect that. Like as you said, David, he's an interesting character, but um I really respect the fact that he he calls out things, calls a spade a spade, basically. What What do you guys think of Salana? Like, so what is what's what's a Salana? What I do, you know what Salana is, David? I know. I I know it's like the newest Ethereum killer. Yeah. Do you have anyone have a take on it? What's your take, Anthony? It's like EOS 2.0 in my eyes. It it has the similar architecture from what I've seen in terms of um you know delegated staking and things like that. It's got kind of the same players involved. It's it's doing the same thing where it's claiming to be like

is backing it. Yeah. Like infinitely scalable like low cost, right? We're going to do all these amazing stuff and they're never talking about the trade-offs, of course. Um and the trade-off is basically that the big beefy validators kind of have to live in a data center somewhere. It can't be run on consumer hardware. So an average person can't run it. Is that sort of the main trade-off? VC funded. Yeah, I mean most of the tokens are are held by yeah VCs and you know they are the ones who do the validating and things like that and and have most of the stake in the validation. So yeah, you're you're right and that's why it reminds you of EOS, right? Because EOS has to run on on beefy hardware too, right? Um and that basically turned into a cartel because it's just you know uh it centralizes, right? Because of um of

scale. Uh but yeah, I mean if you can't run the kind of like software on your own kind of PC, then I just don't see the point. I I mean it's kind of like why not just use a database, right? Why do you need to use this beefy thing that is pretty much like just as centralized as a database like a nor I guess like a normal database on like AWS, right? It's like a bunch of companies getting together to run the the the the software and like signing things with like some keys, but they can be compelled to do things, right? like you know if if they wanted it doesn't have to be a malicious thing either it can be just like government saying well you need to remove this off Salana and it's like we know you can because you can you can basically get

all these people in a room and do it right so and like no one can stop you and yeah I mean there's so many different risks here uh and different things that people just gloss over when discussing these things that uh it just reminds me of of EOS like if anyone was around 2017 it does it feels so much like we've seen this we've seen this story already play out even down to David as you said the same VCs like pumping it at future Kyle Sanmani and anything that multicoin Capital touches really they really just want to try and eat Ethereum's lunch and it's just not going well for them you know in the in the 2017 was it 2017 or was it 2018 when EOS launched well 2018 when it launched the token was out in 2017

yeah they did that year-long token sale where you could trade it at the same time as as the token I remember at the time like Um they were definitely putting out some like pieces that were just like Ethereum is dead. This is the future. Ethereum can't scale. See cryptokitties now EOS, right? And not I tell I and I remember reading long reports, listening to podcasts and like being like what am I missing? Is there something here that I'm not seeing? Maybe I'm the idiot. Maybe I'm the fool. But like fast forward six months later, nine months later, a year later, those same VCs had dumped all of their EOS like and were and were openly telling people that it would never work,

right? And just incredibly uh Yeah, Kyle from Multicoin has openly said that like they made a mistake on EOS. That's like a public thing that they talk about, but I wonder if that was a mistake. I don't, you know, I haven't seen multi like they probably made a lot of money on that mistake, right? That's the that's the thing about the about a lot of this stuff is that you can be very very wrong, but you can still make a lot of money being wrong, right? Um it's because of the fact that these things are traded like a like crypto. We know we all know how crypto is traded. Um I also feel I also feel open to these things as layer twos too. That's why I don't want to like you crap all over uh Salana or Serum. Like if it's a layer two, I don't care as much, right? I mean

I uh and by that I mean like um you know uh Coinbase listing ETH pairs and doing things with ETH right that's completely centralized right but that acts as a side chain to Ethereum and if gas fees are too high you can do things in Coinbase you can onboard fiat if Salana is going to be that kind of a companion to ETH then you know it's it's more symbiotic uh it's not it's not taking away from the the whole kind of bankless idea of everyone has self-s sovereign But if it's trying to if you're trying to replace Ethereum with a banker coin, I mean like why not? I'm fine with the Swift system in fiat, right? At least like I mean that's more distributed than what something like Salana is. So I

guess I I I find it hard to articulate because I don't so much have a problem with these things as like side chains or layer twos. What I have a problem is like with the idea that they're going to come in and replace the credible settlement layer of some neutrality of something like Ethereum. Um yeah, I don't want to see that. Yeah, I mean that's that's what I it's really the the gaslighting and the and the misleading marketing, right? Where it's basically, as you said, Ryan, like what am I missing, right? It's it's basically putting this idea in people's heads that they must be missing something, right? they have people telling them that that Salana or any other other thing is like centralized you know it doesn't work um you know it's not going to beat Ethereum and then you have the companies building these

things saying that we're going to kill Ethereum right we're scalable we're decentralized so who do you believe as a especially as a newcomer you're just getting hit from all sides by people that have obviously vested interest in different things and as a newcomer you're seeing these gas prices and you're like oh okay they have a point right yeah yeah exactly so it's it's It's it's it's it's unfortunate what these what these like I guess quote unquote competitors will do but it makes sense right if you're a comp if you're a competitor you're going to bend the truth right you're going to mislead people and and try to try to get market share but um yeah I mean not to say that some in the Ethereum community don't do the same thing right don't exaggerate things like we all exaggerate but I I I do think I agree with you as well about

these things being like a side chain to Ethereum that's probably inevitably inevitably going to happen anyway Um, but we'll have to see. Yeah, I don't think they're going to kill Ethereum, that's for sure. Yeah. All right. Well, Anthony, do you have some time to stick around? We're going to talk about a few other topics or you have to run. That's probably late where you are. I Yeah, I think I have to run. It's 1:00 a.m. here. Oh my god. Then get some sleep, my friend. Thank you for that. It's fine. I I'll stay up for for the state of the nation for sure. Anytime. Well, we appreciate Well, Dave and I are going to cover a couple of other topics, but it's been great to have you. Thanks so much for shedding some light on on what's going on in this space.

Yeah. Yeah. Thank you for having me. Uh and good luck with uh with the rest of the podcast. Thanks. Thanks. Appreciate it. Thanks, Anthony. Bye. That was good, Dave. We should talk about our sponsors. Um do you want to start with Ampleforth? Yeah, Amplforth father of modern rebasing. Uh so if you guys have heard about this new rebasing mechanism, it came from Ampleforth. Amplforth is this very interesting monetary experiment, right? So, it wants to be a base money on Ethereum that functions or operates differently than typical base monies that you would be expected to. And the whole purpose of this is to generate like new and novel and uncorrelated like economic outputs than from the typical

assets you see on Ethereum because they're all temp as we all seen in the last like you know uh 5 days of price appreciation they're all pretty correlated right so Ampleforth is an attempt to be an uncorrelated M0 money on Ethereum and the way that it's different the way that it's unique is like it's very similar to Bitcoin in the sense that it's got a non-dilutive supply but in the way that it's extremely the opposite or the inverse of Bitcoin is that instead of having an inelastic supply like Bitcoin has where therefore if any demand to Bitcoin consumes that supply price goes up that's how Bitcoin works. Amplforth is the opposite where Ampleforth tokens track $ 20119 over time. So one Ampleforth token is supposed to track $1

and 9/10 of a penny and if the price goes over that for Ampleforth a rebase happens and that mints new Ampleforth to bring the price down and so you will find the amount of Ampleforth in your wallet going up and down over time automatically in order to track 2019 dollars, right? Uh and so it's just swapping those two things and and generating new economic behaviors as a result. They have a yield farming liquidity mining mechanism which you which they call the geyser. You can find out more about ampleforth at ampleforth.org which is also where you can find the geyser where you can deposit ether and ampleforth tokens to unis swap to get a little bit extra ample token. So check them out.

Awesome. Also want to tell you about monolith. Super excited about everything that monolith is doing these days. It's a way to go fully bankless, but in the real world where you can actually uh spend your crypto on real things. So, Monolith is a Visa card, but it's more than that. It's an entire DeFi account. So, it wraps your Ethereum address in a Visa card, a bankless Visa card, but it also closes the loop from fiat to DeFi. So, now you can onboard fiat to DI on Monolith with zero fees. You can then convert that D to A die, which is A's version of D, which is an interestbearing savings account. Again, no fees. And then you can take the

interest that you generate and actually spend it in the real world. Go buy a coffee, go buy some Starbucks. This is really the closest thing to the holy grail of bankless crypto Visa cards that I've seen. And what you need to do is go download the app at monolith.xyz to get started. This is primarily for our European listeners because it works in Europe, but they are coming to North America soon and we will be the first to tell you when they do. What they'll do after you order your Visa card is ship you a beautiful packaged uh Monolith Visa card. We love seeing people unpackage their Visa cards on Twitter.

You can tweet about it. Uh once again, check out Monolith in the app store and get started going bankless in the real world. David, we've covered a lot today. Um, a lot. It It almost seems like we were we were talk like it was just uh it brought me down a little bit, right? Um like sobriety is good, but also um I don't know. We we should talk about maybe something that's a little lighter, some the good side, the the uh I guess the um the cloud, the uh you know, of of all of these things that are going on. Um, and I I think that's probably that probably brings up Gitcoin. We could talk about how um some of these yield farming protocols are

actually starting to set aside percentages for uh funding of public goods. That seems to be like a good outcome that's come out of all of this is what I'm trying to say, right? And as we are sobering up from like this yield farming mania like it we need to also remind ourselves that like there is something real here, right? like this this didn't just come out of thin air. Like yield farming is a real thing. Like I expect yield farming to to continue. Uh it's just like now it's good to remind ourselves that what bad things can happen. I'm glad that that happened relatively early so that it didn't h because if it happened later it was going to be way bigger. But there are good things that are happening here.

And one of the biggest signals that I think we all missed with um with the sushi guy was that he was super mean to Hayden, right? like on Twitter he was a mean guy like he was aggressive and he attacked Hayden who Hayden is generally assumed to be a nice guy and so some some alpha signal there is that like the guy was mean like that don't don't trust mean people like trust nice people don't be a dick don't be a dick yeah and don't put don't invest your money in protocols where the founder is a dick right and so because he's going to rip you off the same way right exactly and so like there's there on the other side of things there are some protocols Yam Wifey and now also based which are contributing a portion of their treasury to Bitcoin, right? And

and one of the fascinating things about all these farms is that a lot of them have treasuries, right? Like the whole point of yams is that it uses rebasing to generate a treasury. The whole point the whole point of year and wifey is that it collects fees from the year protocol to contribute to a treasury. And same thing with with based uh and so this treasury is fantastic because that gives reason for governance, right? It gives purpose for governance, but then also we can signal like with these farms that you can signal your commitment to the space by allocating funds to Bitcoin. And so there was a a fun little like happen stance of events where yeah like Kevin this tweet that you're sharing on the screen and by the way

podcast listeners if you're watching this on YouTube there's plenty of visuals to look at as we talk about these things. So Kevin Owak in the last week of August proposed submitted a proposal to the Yam governance that 1% of the inflows into the treasury goes to Bitcoin, right? Goes to funding public goods and there's a lot of good that has come out of Bitcoin, right? Bank the bankless nation being one of them, right? The good things come out of Bitcoin and initially like this the proposal kind of was 50/50. It was kind of neck and neck and then it started to lose and I think at the worst it was like 63% to uh what's the other half and David this is yam holders actually voting on whether they want 1% right of the treasury to go to Bitcoin for

public goods or not right you're saying at one point the the vote was losing right yeah it started 50/50 then it started to lose and then from year comes in with the dunk and goes yo turns out yams don't want this but definitely wants this So, I'm submitting a proposal to do 1% of of the urine uh system, which makes a lot more money than the yam system, by the way. Oh, are you serious? I So, I didn't I totally missed that year was into this, too. Yeah. Yeah. Yeah. So, Andre submitted a proposal to direct 1% of funds to to Gitcoin, right? And that 1% of urine funds of urine of urine treasury uh flow, right?

But that's a lot. I mean, that could potentially be a lot bigger than yam treasury funds. Yeah. by by a significant degree, right? And so when when Andre publicly signaled his commitment to uh his belief that year should commit to allocating 1% of funds, the vote on Yam started to sway, right? And so it started it started to go back into back to 50/50. And then I wrote this very quick article called don't be stupid, dedicate some of your treasury to Bitcoin. Uh and I I tried to just put the nail in the coffin. And after after these two things happened, uh there there was just the the yam vote was completely in favor. Right. So can I ask you why is it stupid? Why is it stupid not to do this?

Right. So like in in the same way that chef Nomi would have never done this. This is like a very strong signal of your alignment with Ethereum, right? And and so it's it turns all of the Gitcoin media people, which is are people like you and me, Ryan, and it it tells it it signals to them that you should be a shill for Yam and because it allocates funds to Ethereum. So which is why we're talking about it right now, right? So like good on Yam and they did a good job by allocating funds to Gitcoin to help grow the ecosystem and therefore they get publicity and and and organic free shilling from all the people that

support. So it's a win-win. It's good press for the protocol but also public goods get funded and Ethereum being a protocol without any sort of issuance that goes to maintenance of the protocol is a chief primary public good. Right. Right. Yeah. Okay. So, all of this goes to Gitcoin. Um, but for folks who haven't used Gitcoin, how does Gitcoin work? How does Gitcoin distribute it? And what like is is this like a nonprofit that just kind of distributes the funds based on need or how does that work? Yes. Yeah. So, Gitcoin is this very interesting platform which funds things that otherwise likely wouldn't have gotten funding, right? And this all came out of Vitalics uh and Glenn While from the Radical Markets uh group. their

their belief uh their uh experiment around quadratic funding, right? And so it's a way to vote with your dollars, right? And so uh w with Gitcoin uh you as a single individual could donate $100 to a project and then that project would receive some amount of matching, right? Like so they another like the there would be another $100 uh matched uh by by the Gitcoin Treasury, right? Which is where this money is going to. But then in instead if a hundred individuals donated $1, so the same amount total, same amount aggregate $100. But the fact that a hundred individuals donated rather than one means that that uh those funds will be matched even more like significantly more like three or four

times more. And so more of the Bitcoin treasury will be allocated towards the projects that received more grassroots funding. Right. Right. So like not only is your dollar a vote but also just the fact that you donated is also a vote and you're signaling that you believe that this protocol or this effort should be funded, right? And the fact that like 1% of the urine protocol is allocating funds to the Gitcoin treasury and then 1% of yams and now 2% of based which is which is why this is turning into like a snowball. There's a lot of money flowing into the Gitcoin protocol, which a lot of money. Super exciting.

And so the the quadratic voting that means basically rather than rich people getting to decide where all the funds go, the people do because if you give $1, it could be if you get a number of other people, individuals to give $1, then your your um $1 could amplify, right? Could be $50, could be $100, right? So people decide rather than rich. That's what the it's waited for the favor of the people, right? Okay. And and now with this growing treasury that perhaps it probably won't get coin round 7 is happening in a week, right?

And so next state of the nation, we're getting Kevin Awaki on to talk about this and also public goods and why public goods are awesome. Um and but like it probably won't matter for that Gitcoin because it'll it just happened and then the treasury hasn't like accumulated that much. But I bet by the time like the the next Gitcoin round happens after that, there's going to be significant capital inflows. And we're going to and this is important for Gitcoin because Gitcoin needs that sustainability, right? It needs that churn. It needs constant flows of cash. And Gitcoin rounds one through six was basically all funded by like consensus and the EF, right? And like that is a finite amount of funds. like consensus isn't really making money and not and they're not making money and they're also a for-profit now VC invested

company, right? So, can we can we rest assured that that those funds are going to come moving forward? No. And the and the EF runs out of funds eventually as well and they don't have that much. I mean, yeah, they've never had that much, right? But but protocol, everyone is everyone in the banklist nation that I've talked to are bullish on protocols. And so if protocols can allocate money to Bitcoin, then Bitcoin can perpetuate into the future forever and fund really important things that that can like come out of the the graduating class of Gitcoin round seven, graduating class of Gitcoin round eight.

Like like I said, Banklist was part of that. Like ETHub is part of that. Uh DeFi Dad's a part of that. Cammy Russo, like a lot of important stuff. And that's just the media stuff which I'm biased to, but there's plenty of tech stuff as well. Well, yeah. I mean, unis swap was birthed from a grant. It wasn't a Gitcoin grant, but it was it was an EF grant of the same fashion. So was like Zapper right? We It's a show sponsor now, and it just got them started. Uh Tornado Cash, tons of fantastic stuff. And also EIP559, which uh like by the way, I mean, that is that's a public good that's not going to get done unless it's supported and funded adequately. So this, you know, you know why this is super exciting now that you're talking about it like in

this way is that it gives a um a sustained source of funding that doesn't require um protocol issuance which is so key because the way other protocols are solving this like a Tzos or a polka dot is basically they're saying yeah a portion of our issuance is going to go to this fund and then who's going to vote where the like that so issuance is you know minting of new um coins basically. And how is this fund going to be administered? Well, it's going to be administered by essentially token shareholders. Um what does this sound a lot like? It sounds a lot like a corporation, right? Basically, where you know, you have some sort of uh funding process and the individuals who own

shares get to vote on where those funds are spent. Um, in my opinion, a corporation in shareholder governance is not the right structure for a credibly neutral monetary system. Why? Because if if if you know Facebook governs your monetary policy, then Mark Zuckerberg and friends can change it at a whim. They can decide who to fund. I want to fund some of my cronies. So, I love the fact that um we're able to do some of this public goods funding without having to resort to some sort of Ethereum issuance where like because that just gets messy. Um it's very difficult to govern and I think it it removes the credible neutrality of the platform.

Makes it much more like a uh a crony like you know shareholder type system rather than like a like a market. It's very hard to um do fund distribution in a way that's credibly neutral, I guess, as far as issuance goes. Absolutely. And one of the the big things that I'm bullish on is so the urine urine protocol just uh decid elected to pay nine individuals like salary wages to work for, right? So the urine protocol created nine jobs, right? And urine is only like a month and a half old, right? And that's kind of like the bullish case for protocols is like and and like what the original vision of a DAO is is code at the center and humans at the periphery. And now has nine instantiated people at the

periphery working for it, right? And this is what Gitcoin does. Gitcoin like I came the reason why I have a job in in crypto is because of Gitcoin. like get as when I had my Gitcoin grant up like at David Hoffman independent content producer like I made a decent amount of money to the point where I could like dedicate more of my time writing which turned out turned into this job at Banklist right and so and I'm bullish on the more money that gets into Bitcoin the more jobs Ethereum can create right and the more jobs crypto creates and especially Ethereum just the the faster the bankless world arrives right like And so bullish on job creation, therefore bullish on Gitcoin. Like

Gitcoin is like the the the proto the protocol for like seed funding, right? The or or not even seed funding, but less than that, like whatever is lower than seed funding, like micro funding, like getting it getting the proof of concept out the door, rewarding you for your your work, telling you, signaling to you that your work is valuable and that you should continue and then you can bootstrap your way into like doing a job in crypto. So for the bank of this world that wants to get into working, think about something, think about value you can provide and then apply for a Gitcoin grant because now there's a bunch of money in it.

Well, Vitalic calls this the quadratic freelancer, right? This is somebody who could just live on kind of grants, but what they're actually living on. So then you mentioned the Dows, right? So urine and and Yam even uh even base these are all Dows and essentially if we were to bring it to a nation state analogy, these are like companies building on top of say the US, right? So this is like the the S&P 500. But now what these companies are doing, they're not taxed by the protocol based on their income or revenue as a nation state might provide some kind of tax uh structure system, corporate tax uh system, but they're optin donating to fund the Ethereum nation to fund the public good. So 1% and 2% another 1%. I mean I can easily

see these treasuries growing like over 100 million this cycle like 500 million possibly right and 1 to 2% of that starts to add up to being a lot so now we have like this opt-in tax system but even more beautifully what we have is a and hopefully Kevin shares more with us next week I want to steal that thunder but we have this uh fair distribution mechanism right um and I like I do really love quadratic voting I think the outcomes of it as long as you can um there there have been some flaws and some problems. Vitalic doesn't write up every single like grant. Sometimes there's there's civil attacks and these sorts of things, but on the whole it's a pretty reasonable fair distribution of the funds. Like it's way better than um

it's a small community so it hasn't scaled but it's way better than something like the government bureaucrats deciding who gets funded in what. people get to vote and largely the projects that have kind of risen up and gotten the higher donations have been the ones where I'm like, "Yeah, these these guys are doing uh the most for the the community at this point in time." And like it feels very fair. So, it's like full cycle now. We've got our tax, now we've got our our way to distribute uh this funds, and we've got kind of the the Ethereum nation, the flywheel effect growing, and it's just going to grow from here. Very exciting stuff.

Very exciting. Yeah, I I do want to keep on talking about this, but also I do want to leave a lot on the table when we get when we get Kevin Kevin on here next week. So stay tuned for that. If you are watching this on YouTube or on Twitch, uh Kevin Owak going to come and and just really lay down the hammer on why public goods are so important. And and I think one final note on this, Ryan, like the reason why I think that you like this mechanism in whatever in comparison to whatever mechanism preluded it, which is the government model. Uh and part of the bankless nation thesis or the thesis about human development and progress at large is like you know humans are messy right humans and decisions and governance is messy and the human species has been able to scale by

turning over governance to the hands of protocols right like the Bible was a protocol and then the constitution was a protocol and now Ethereum is literally a protocol right and quadratic funding is a protocol so we no longer have to have subjective decisions as to like allocating funds because the protocol does it for us. And the reason why uh quadratic funding is so spectacular is because if you are a market maximalist, if you like markets, Gitcoin grant funding is market-based funding. Like there's a reason why EIP1559 got, I don't know, like $150,000 in like 72 hours.

A lot of people really want that. A lot of people really want that to pump their [ __ ] bags as we've been doing when we talk about 15559. So, it just makes a ton of sense, right? Um, it makes a ton of sense. Yeah, absolutely. All right, David. Uh, we're going a little long. Um, do do you want to talk about the last thing, squad wealth, or do you want to save that for another time if let's save that for another time. We'll leave a little little teaser on there. But, uh, short the TLDDR is Bankless Nation's a squad and we're all going to, uh, grow our squad together. It's going to be fantastic.

You know what I'll do is I'll I'll just put the article uh in the show notes so folks can read it and we'll talk about this at another time. It's kind of a a trans the most transformational article I' I've probably read maybe in the last six months or so. I don't know. It's super good. I want to read it a few more times before I get my thoughts out on it, but we'll do that in the future. Yeah, Kevin's going to have some opinions on that if I if I know Kevin well. So maybe maybe Very good. We'll save it for next time. Perfect. Okay, guys. So that's your reading material. Um, I think that is it for uh State of the Nation today. We talked about uh sobriety, we talked about sushi, we talked about Gitcoin giving and the lighter side of all of

these things. Um, we're going to have Kevin on next week as well. So, don't miss that. Uh, thanks so much for joining us, guys. Everything we talked about, all of the assets we talk about, none of it's financial advice, whether it's ETH or Bitcoin or yams or sushi, uh, you know, tread carefully in these things. There are risks. If you deposit funds in D5 protocols, you could lose everything. But this is about the journey. This is about the constant learning that we're doing together as a bankless nation. It's not for everyone, but thanks for joining us. This has been State of the Nation episode 13.

Just going to pause for a second because of that truncation issue. All right.