SotN#19: DRUMROLLING! w/ Jacob Cantele from Metamask (1M Users, Q3 Token Report, Markets!)

Transcript

the bankless state in the nations are brought to you by wiring wiring is defy's first self-building community run project which i just get really really excited about wiring is a system that seeks out yield in defy and it does that in a number of different ways a very aggressive way is with the vaults where you can deposit your preferred asset of choice and different defy experts will come in and generate a strategy for what to do with your deposited token right and so it'll go find ways to get yield in that deposited token in d5 for those who want to just earn yield on their stable coins the urn system is for you where you can deposit your preferred stable coin and wiring will go and figure out which money market on defy and defy is producing the best

interest rate whether it's dydx it's compound or ave it looks around d5 to see where the yield is coming from and it directs stable coins automatically so you don't have to check them out at yearn.i to get started and also check out the stats page to see what other people are doing as well we're also brought to you by monolith monolith is your cool new defy account your d5 savings account your d5 checking account except the cool thing about the monolith defy account is that it gets software updates right you actually get to increase the usefulness of this over time so here are some of the features monolith is a smart contract wallet with a lot of the features that you would expect if you've come to know dfi and what it is you can you can add money to it you can put that

money to work uh in compound and accessing yield uh but you can all and you can also swap through uniswap what was cool with monolith is that they will send you a very sexy monolith visa card that connects to your smart monolith smart contract wallet on ethereum so it's a really awesome tool to live a bankless life with a a savings account that gets software updates so this is something that you're never going to find out in the real world but you can still do real world things with you know real money and like buy your groceries so that's just fantastic coming soon to monolith actually already here to monolith is now you can buy die and get it sent to your wallet directly right so it's also being an on-ramp so you don't

have to go through your centralized exchange like coinbase or gemini or wherever you can just go straight from your bank account right into your monolith checking account smart contract wallet so check them out at monolith.xy all right welcome everyone to state of the nation thanks for joining us this is state of the nation episode number 19. if you are new to state of the nation david and i uh do a couple of things first we talk about what's happening generally in crypto then we try to relate it to the big picture stuff that you hear about in the podcast you read in the newsletter and finally we try to drop some hot

insights and action items for you of course this comes out live tuesday on youtube and you could watch it there you can also get it on the podcast stream if you're an audio only type of person we release it in both places for you david how you doing today absolutely fantastic there is always as as always so much to talk about the the space continues to move at a mile a minute and so we are going to get into some of the things that are on our minds in today's state of the nation yeah david so there's three things we're going to dive into um the first is metamask so metamask recently hit this massive milestone over a million monthly active users and we've brought

jacob cantel on to talk about it he's from product at metamask that's going to be pretty exciting what else are we doing david uh we are going to talk about the bankless q3 token report which uh like like i've been saying uh q3 looks like it looks different from all the other cues and so we're getting the author himself lucas onto the state of the nation after jacob to talk about the q3 token report and then yeah this is that all right go ahead oh yeah i was going to say this is a token report that we put together in-house so lucas campbell is a fantastic editor and analyst on the bankless team he puts this token report uh together once per quarter and there's some fantastic insights there that we'll get to a bit

later in the show and what's the last thing david yeah last thing is kind of what i was alluding to is and what i wrote in this week's market monday is this like gradually then suddenly idea of crypto adoption right first it happens slowly first progress seems to take forever and then all of a sudden like adoption arrives right and we're like we're there right and so there's this very like you know the mentality of this is gonna take forever and then all of a sudden it's here and i in in my mind on the gradually then suddenly timeline we're at the then right we're past this the gradually part we're not at the suddenly part we're at the then and that's kind of what it feels like yeah absolutely totally agree

all right can't wait to dig into that we should also talk about some of the things that are going on in the bankless nation david we just dropped this epic two hour long episode with vitalik on ethereum and eth2 and that really struck at like not not not so much the wen eth or the howie but the why eve what were your takeaways from that yeah yeah my big takeaways is that some of the very original og design decisions that uh were made around ethereum and specifically ethereum 2.0 were fundamentally fundamentally the correct choices like no matter what blockchain no matter what ecosystem like there are some some design choices that are going to be correct like no matter what and

that's kind of the the subject matter the through line of that particular podcast with vitalik like why are we so committed to proof-of-stake why are we so committed to sharding like why didn't we pick a different like version of consensus mechanisms or you know blockchain skill scalability and then on the other on the flip side of things a lot of things have happened in ethereum that you know no one could have guessed back in 2015 when ethereum was really being like kind of architected or designed in the first place and that's stuff like rollups and eip1559 so to me that my big takeaways was that you know there there were some choices that we knew were correct at the very beginning and there were other choices that we you know that we discovered through r d that came out in the last five years and what

ethereum 2.0 is looking like it's turning into is like an elegant combination of you know very early primitives that we had strong convictions of choosing along with some of the stuff that we are indeed along the way yeah absolutely and a perfect follow-up i think to that vitalik episode that sort of spells out the why ethereum and the high level is our ask me anything for the bankless community with danny ryan that's coming up this thursday so this thursday 12 p.m eastern you can catch it live on youtube we'll also be publishing that to the podcast but that's really an opportunity for the community to ask the more intricate details of uh danny ryan like when is the actual

e2 staking contract going to drop how about the various client implementation teams perfect opportunity to get into eth2 there it's it's really become sort of an eth2 week i think uh and then finally david we've got this new show and uh we we put it out every friday morning this is called our weekly roll up show um that's that's really a kind of a another cool way to plug into what's going on to crypto can you give folks a preview of what that is and why did you catch it yeah weekly roll ups so this is something that me and ryan will always play plan like seven days rough you know the up to seven days in advance where like something gets shared on twitter something gets shared on reddit something gets shared in the bankless

discord we grab the link we stick it in the dock and then on thursday we run through every single link that we grabbed from the prior seven days right it's a roll up right and so it's about rolling things up into bite-sized chunks so that you know if you have a full-time job and like not in the in the crypto world or you just maybe you're on vacation how do you get how do you sync your node over the last seven days of information especially when information the crypto world moves so fast so that's what the weekly rollups is for we are rolling up about a bundle of packets of information injecting them right into your head yep five topics 25 minutes if you've got 15 minutes you can listen to it on 2x speed and be done get crypto downloaded into your brain uh the last seven days

of it in 15 minutes uh super cool show so that's coming friday mornings both on the podcast and youtube david let's start with the question i always ask you at the beginning of state of the nation what is the state of the nation today my friend the state of the nation is drum rolling we are drum rolling and once again this has so many different meetings meanings to so many different parts of the the crypto world right uh you know ethereum 2.0 seems to be like like right there it seems to be right next door uh we some some people are just waiting for the deposit contract to get announced uh and at that point in time like it's off to the races with

getting the the other phases finished and finalized meanwhile in bitcoin land like the the conversation around like money printing and mmt and bitcoin as the asset that's diametrically opposed is really picking up steam right uh and so there seems to be just a lot of preparation in anticipating excitement around what it seems to be coming around the corner like so some things kind of just need to come to pass so we can get them in our rear view mirror the us election comes to mind um especially then this is kind of using a crypto-centric uh uh viewpoint of the world but like some things just need to come to pass and then we can finally get to like the climax that we have been looking for at least that's what i i feel like all right so this is like the

drum roll before the before the charge or like the drum roll intro before the band starts playing that kind of thing that's what you mean right that's exactly right yeah very cool all right well let's dig into uh some of that drum rolling in today's episode but before we do want to um talk about our fantastic sponsors that made this state of the nation possible where are we just sponsors we already did sponsors oh sorry how long do you want to talk about diversify well you know what we should talk about diversify but let's get to that so um one sponsor i probably had that in my notes um that we should talk about is uh diversified they actually made the token report possible uh that we're going to get to a

little bit later but we'll reserve time for them when we get to the token report so my mistake you know what we should be doing instead is we should be introducing jacob cantel from metamask he is on the product team at metamask jacob it's great to see you how are you doing today i'm doing great uh thank you so much for having me ryan and david i really appreciate you guys welcome welcome well it's awesome to have you here we are obviously huge fans of metamask both ourselves of course um you know you know super users maybe like use it every day and also the bankless community i know is composed of a whole bunch of people that are daily active users of metamask but uh i want to talk about like first

this impressive milestone that you guys recently uh reached which is you have recently exceeded over a million monthly active users on metamask can you kind of break down what that means for metamask and how that data was collected jacob yeah so uh so thank you so much for saying that ryan um so i think a lot of people remember uh just a little over a year ago we very first hit a million total installs and that was just in general installs

we've been seeing compounding growth in metamask especially towards the end of 2019 we saw a lot of growth of users who were in who are using dows and who are playing games using using metamask and then this this year the the d5 space has also has taken that previous growth and is compounding it again and really what you see is when a when a user onboards into one site they start using one app that compounds and the value for the entire ecosystem

grows so we we sort of think of ourselves as a universal solution that's serving the entire ecosystem we're not just a gaining wallet or a d5 wallet or a dow wallet or a payments wallet we're all of those things and people are compounding into one or joining into one use case and then they're going and discovering value and all these other things and we think it's the same kind of feedback loop that you get with the internet generally so you know like uh there there's certainly a place for for niche apps that focus on one use case or another but um we think that by by creating uh the most value possible for our users

and the most universal and most interoperable solution that we're going to be able to to do the best for the for the developer ecosystem and and for the community itself to start discovering all these sites and apps all yeah you were just showing the countries those are on our on our mobile growth um i i just want to point those out we're seeing a ton of growth especially in in developing countries where people are using this for payments they're using it for for daily survival they're using it also to try out defined games and depths and we're super excited to be able to provide those

kinds of financial services to people who are who have historically been locked out of the traditional financial system so for people in the podcast who can't see what we're showing on youtube the top four countries in terms of metamask mobile volume were first the united states but second india third nigeria and fourth the philippines these last three are pretty surprising and i think maybe that demonstrates what exactly what you're talking about yeah there there's a there's huge community growth and there's um especially like mobile in a lot of those countries most people principally are using a cell phone they're not using a desktop computer or

something like that so there's a lot of people who've been waiting for this to really um to really start joining the ecosystem and our mobile launch has really really helped with that it's also worth saying that the mobile app in its first month past the peak of where the extension was for the for the whole of 2019. um so we're really excited about that growth um this this chart you're showing here um this is showing just the constant month over month growth that we're seeing and the the compounding value that that we're we're seeing for the ecosystem it looks a bit like a hockey stick i would say jacob you asked a little bit about how we how

we get the data yeah so we're not using on-chain data i want to be super clear that this uh there's not duplicates or something like that um some some people were like well one person it's probably just people making a bunch of accounts or something we have an opt-in consensual thing that we call metametrics if people google metametrics you can read in detail about our methodology for how we do analytics um we let the user opt in uh to to analytics directly we don't even on the users who opt-in we don't track ip address we're very serious about privacy and and protecting uh protecting the privacy of our users

we we want web3 to be an alternative to these companies like facebook and google that are treating people like products and that are treating data as um you know as a commodity and instead we want you know we want to our mission is to democratize access to the decentralized web we want the decentralized web to be available to everyone we want a transactional layer on the internet that allows people to to consensually have interactions and permissions and privacy and to create a better internet and we want to transform the internet and financial system um

so our our metrics solution we take those who have opted in to the metrics and then we also track those who have opted out of metrics we get one tracking event that tells us that someone has that someone track that someone opted out and then we don't track them any further so we have ratios about about uh how many how many total uh or what what the percentages of people who are opted into the metrics are and then we use the data that we have on people who have opted in and then we project that to the the total number to arrive at a real monthly active user number so

do you know what percentage of people opt in so like what what's the sample size that that is of the whole so um it changes month to month uh when we very first rolled it out uh the people who opted out was a higher proportion it was like around a little higher than 25 percent um and today it's it's around 18 um and we sort of uh grouped together uh the the last six month of data six months of data to get a an accurate number of where we're at today um yeah so sometimes it's really historically it's really hard to like calculate how many people use d5 right because i have

i have at least 10 wallets that that i've used you know in the last like two years in ethereum right however i think metamask it's actually a little easier to get rid of some of the noise because with metamask it's really just the number of devices you have rather than the number of wallets you have right and so inside of metamask i could have 10 wallets but i would only have one meta mask right and so i my intuition is to assume that some of the data that's coming out of metamask is a lot less noisy than like somebody that is looking at like unique addresses that have used compound or maker dow or uniswap is my intuition correct there that's right so we're we when a person opts into metametrics

we're just getting one event per all their accounts so these are much more accurate we're not tracking like oh you have 10 accounts so that's 10 users no that we're we're trying to to do real uh real data and make this available for the ecosystem and we want to use it to to benefit the ecosystem cool very cool just one last little nuance on there so like if the metamask was like my first wallet right so i've had my metamask seed phrase basically since forever and so i've used i've actually put that metamask seed phrase in a couple of my devices would you guys count those as one one user or like one still one uh one user per device so we don't

we we will for privacy reasons we will not associate a um the consensual tracking cookie with your seed phrase across multiple devices okay so if you did use you know two different devices that would count as multiple monthly active users um most people don't do that um although we do see a lot of people that have the extension in mobile um so there is some element of duplication there and okay so what what were you surprised about when you got some of this data was any of this data like shocking uh you know if i if you ask me like oh metamask one you know one million monthly active users coming hot on the heels of defy

yield farming i would have been like well yeah that's because of the dfi yield farming but you're telling me that there's some extra stuff going on um so was that surprising was that was that new information for you guys and like and also how has that kind of changed the trajectory or priorities of what you guys are working on at metamask internally so we do we do get numbers on the dapps that people are using on in a given month um so we have we have uh not not that an individual is using but we get we get aggregate metrics about which which dapps are more popular and stuff like that so uh we you know the month over month changes of

what dapps people are using very wildly like every month um and actually it's really fun um in my role to like go and i can just see like oh what's what's the top 10 this month and go and try all of them it's it's been really really fun for me um but uh you know most months the most popular thing that thing that people do is send payments to one another or just send transactions to another wallet or something like that um after that the dex um category tends to be uh the most popular um then in most recent months it's that and then

the d5 d5 use cases are our number three and then uh and then games and then dowse and within each of those categories the sites that are the most popular they vary wildly the space is just growing so rapidly and there there's so many new use cases and new sites and new platforms that uh there's not just like a consistent oh this is what people do in metamask and i think that by by trying to be permissionless and give people a platform for innovation and um to empower the developer ecosystem

were we're best positioned to uh to serve those those many use cases another really cool thing jacob about this metric is this is a very common web 2 metric right like if you look at like annual reports of a facebook or the social any social platform they're going to report out in monthly active users and daily active users and that's exactly what this is they they don't quite understand the other metrics that defy use such as like you know maybe active wallets or amount of value total locked um so so that's pretty cool but i'm also like i just wanna um step back and think about one million users of a defy a bankless d5 wallet

product that is a fantastically huge milestone i remember at uh in the quarter one the first quarter of this year we were talking about like what's the size what's the population of everybody who uses defy and the numbers came out around you know 250 000 to 300 000 people right so the the size of a small u.s city you know like a richmond virginia or something like that now here we are six months later uh and we've got uh metrics that are telling us there are one million monthly active users in d5 well now we've grown from a city the size of a richmond virginia and now we're a san jose now we're in austin texas like that's a a major

uh metropolis at this point um i can't wait to see as we extrapolate that hockey stick forward how it grows well you know how long until we're we're larger than a a small nation for example and then how long after that until we're larger than the united states of america um so it's very exciting to see these numbers and uh congrats to you know your success for helping to onboard the world world into a bankless money system we really appreciate what you guys are doing at metamask um i want to transition to another exciting element i think that's coming out with metamask is you guys are you dropped the mobile wallet which is super cool um a number

of us particularly i would say that the d5 super users among us uh really love the desktop version and love the desktop version because it's so damn versatile like you can do anything with it so any define app it just kind of works out of the box natively you can do things like connect your your ledger hardware wallet to it so it feels like if you're if you're prioritizing security it is one of the most secure ways to actually use defy you don't have to trust a smart contract wallet which they're coming along but they're somewhat new um so like metamask is fantastic for that and you guys are starting to add some more features uh i think i'm seeing to the desktop

version as well and that's starting with this idea of metamask swaps can you talk about metamask swaps uh and in general what's kind of in store for the feature set of the desktop version here yeah i'd also love um you mentioned hardware wallets so i'd love to talk a little bit about that too yeah please i'll come back to that in a minute but uh so so we've launched this new swaps product um it is it's funny i'll tell you the whole story of it so we started out with just the idea let's pick a dex aggregator um that pulls in a bunch of liquidity sources

and bring that to metamask um so there's a few decks aggregators in the space um there's some really great ones and we went out and we actually um we tried all of them and we did a study internally on on which was the best one that we were going to pick and we ended up with this split that was like all of these basically almost evenly compete with each other in different scenarios based on the order size based on the specific token based on their own unique approaches to gas and so a team member made this like weird app

called aggregator aggregator um and i was actually just looking at an old screenshot of it uh but it took all of the dex aggregators and it pinged them individually and it allowed us to get the best possible price for the user and then to route the order through the specific dex aggregator or direct decks that made the most sense for the user so um so we've rolled this out um now and obviously it's it's a lot more robust and and beautiful than the original uh aggregator aggregator was but uh so so we've rolled this out

um we're aggregating uh many different decks aggregators we're aggregating apis that are not as readily available to people we've also got private market makers who are providing liquidity to it as well that wouldn't necessarily uh be available otherwise um and we're uh we're we're bringing this to to end users um and trying to to really take that million monthly active users that you mentioned many of whom have never even done deck swaps like they onboarded

into metamask to play games to to be a part of a community all kinds of different use cases and to make that feature set more available to them to make it more convenient and then also to give them confidence that when they make a deck swap that they're actually getting a fair price for uh for the the um for the swap so [Music] that uh that's now available today in firefox uh we're looking to roll it out to chrome very very shortly i think next week um plus or minus um and we'd love to bring this to you to

mobile as well fantastic that was actually a youtube question um hey like when when is it gonna release other browsers so it sounds like next week for chrome uh it's fantastic news and jacob you wanted to say something about uh hardware um don't hold me to that date by the way that's speculation and estimation um but uh yeah um well uh did did you want to talk ask me more about this we can go to the hardware wallets in a second i didn't well okay i guess so swap seems pretty straightforward but basically uh to maybe to summarize and you can correct me if there's you know anything wrong you open the extension basically and within the metamask wallet itself

there's some functionality that allows you to move from one asset to another and it gets you the best price using that aggregator of aggregators type of formula so i could move from eat to a die or a die to a you know wifey or something like that just with a couple of clicks is that kind of it yeah yeah that's it that's a good summary so pretty cool the reason why i think this is such a big deal is because historically at least from what i've seen metamask has been a product that has pushed complexity out to the edges right it lets the websites take care of crazy logic and metamask just operates as this like coupler between your wallet and that website right and so this is

like the first feature i've seen metamask rolled out roll out that has complexity on the inside of metamask right which is kind of a big step for metamask outside of its you know previous you know keep things simple on keep things simple and secure and then just you know make everything you know ask the user for permission if they want things to be more complex um so what was the thought process with you know adding in complexity into metamask natively so i think the way that we think about it is we want to be a wallet that serves the whole ecosystem and the whole community uh first and we're definitely principally still focused on on being a universal wallet um

that that has not changed uh really at all we're providing some additional like where we see clear adoption of a specific use case where we can make it easier for people to do we are bringing some of those features into the wallet you mentioned swaps but there's also another example of that on mobile we actually launched an aggregator of on-ramps so a metamask mobile user can can purchase crypto through metamask mobile and be routed through the appropriate uh on-ramp to the country that they're

in um so we're we're aggregating wire we're aggregating uh tranzact which is itself an aggregator of other on-ramps um and uh bringing those two together and so we're trying to make it easier for people to get eath to get die um and uh to do so in whatever country that they're based in um so i i think that uh you know we we want to make those kinds of things available um while principally we're still focused on serving the entirety of the ecosystem very good yeah so maybe jumping to that um hardware question so

the reason this is i think um important is you know the reason d5 super users love your product again is because it's so versatile it just works with everything but also if you are doing things with larger capital amounts larger capital pools um you know you're most comfortable probably holding your own keys on some sort of a hardware device or some sort of multi-sig right there might be a handful of smart contract wallets that are mature enough to be trusted maybe a multi-uh gnosis multi-sig maybe um an argent wallet getting closer right but if it's large amounts the safest play place to to do it is is directly like self custody not a smart contract wallet we've seen you know

issues like the parity hack in the past so um can you talk a little bit more about hardware support because that's been kind of a killer combination i know for many folks in the bankless community you take a hardware wallet like a ledger or a trezor and you combine that with metamask and now you have your own self-sovereign banking interface and can do anything in d5 in a very secure way yeah so um so so thanks for that so a bunch of we have a bunch planned on the hardware wall up front um and we're we're this has been one of the the most popular things that we do but it's also been uh one of the more finicky things in some ways because of third-party apis

so a lot of the the a lot of hardware wallets were built around u2f and web hid which are apis that force or that they give the browser or the operating system in different circumstances um the they're dependent on on those apis so in you'll have some some challenges for some users like on on windows um there's annoying pop-ups to use those apis um so we're we're working together with the ledger team on a better a better flow for for that i don't have anything to

announce yet but uh we'll have a much more versatile and universal solution there i believe um we also have a pull request that you can find where metamask is potentially going to be supporting uh qr code based hardware wallets air air gapped hardware wallets so we would love to you know someone can use a device that doesn't go online anymore an old phone without a sim card in it you could use that as a hardware wallet and use the camera on your phone there's other hardware wallets that are coming out with cameras and screens that that

are air gapped we'd love to be able to support a broader diversity of things and things that aren't dependent on third-party apis [Music] we are also coming out with a plug-in system that is that's going to allow the addition of additional hardware wallets so any hardware wallet manufacturer will be able to add their hardware wallet to metamaps through a snap snaps they get installed during the connect flow to a site so you know the user could go out to the hardware wallet site install a plug-in

that that will allow support for that specific uh that specific hardware wallet use case and uh we'd love to lower the bar of entry for for hardware wallets and we don't want to be the gatekeeper of which integrations are in metamask or which ones are not so we're increasingly moving towards this uh sort of permissionless platform for for innovation and extension of metamask itself jacob one thing that really excites me is that metamask really offers this obfuscation layer which you know maybe in different words it's kind of like this user aggregation layer where you guys are at least with this

swap with this new swap feature you guys are the aggregator of aggregators right and so there's a lot of d5 protocols that are operating behind the scenes to make the metamask swap feature work right so you know metamask looks to uni-swap for its price it looks to dex ag for its price uh when dexag looks at kyber for its price to me what i'm seeing is a manifestation of the protocol sync thesis which if you're familiar the protocol sync thesis is protocols that are just you know operate as infrastructure agnostic credibly neutral infrastructure fall down to the bottom and then surface layer surface level interfaces things like like metamask tap into those protocols in order to offer

services to its users and what you guys are doing is really clever is you're adding on a 0.875 percent fee onto the swap for it to add to that service which to my knowledge is metamask's first big step into actual monetization of the product um from from what i can tell so are there few uh future uh like kind of um you know value added features that you guys are thinking about where you guys also take take your guys's uh your your fee your cut to help support the metamask business and maybe grow this thing into something you know massive is are there future products coming down the line that kind of fit in the same pattern yeah so um we don't have any other value-added services

to announce yet with the exception of uh the the other one that i um the other one that i mentioned was the the on-ramp aggregator so we have that on mobile today um we make a small revenue from that as well [Music] and we've historically had just wire and a couple other uh solutions on the extension but uh so the the two ways that we do make money are from the on-ramp aggregator and from the swaps teacher the i i don't know what the the long-term pricing of the swaps feature will be um we we had originally announced a

um 0.3 percent to a 0.875 percent uh depending on swap size and different things like that um we haven't rolled out the dynamic pricing to uh to the to the firefox version yet and we're looking at a lot of data thinking about uh what the the best uh the best way to approach it is we we did intentionally set um we did a lot of research on how much money we were going to be saving people and so it varies a lot depending on swap size depending on different scenarios but we've seen swaps where we're saving people five percent um

we're we're able to really save the end user a lot of money and it varies a lot based on the order size based on different scenarios but we feel really good that we have a really strong value proposition and that we're saving people uh saving people money we're not trying to do this as like fee collectors it's not just like i mean convenience is a part of it but we want to give people confidence that they're getting the best swap price um and so our our fees are sort of built around that very cool all right i want to talk about this uh this last maybe major feature set that we're starting to see roll-ups actually come into existence in a big way in d5 even um starting to see ethereum roll-ups actually projects

deploy on ethereum roll-ups first before they deploy on mainnet which is super exciting right now in metamask um you can kind of you know change from mainnet to ed testnet um to you know something like ribstone or or or some other test net very easily yeah xdi and just like a click of a button is that is that can you do the same thing for a roll up let's say this optimism roll up with synthetics and um with uniswap comes into existence will will that be you know able to natively plug into metamask as easy as a click of a button and you're on this new network so uh so all all so a few things that we have

announced today there's lots of lots of things to talk about but uh so we've announced our plug-in system uh late last year there was a developer preview of the plug-in system that's available today and that can support both evm compatible custom block chains and it can support um not medium compatible custom blockchains uh layer twos like uh for example starkware you can't just add starkware as a custom network today um you you need a you need a wallet that's compatible with its team so we're building this plugin system that allows the user during the connect flow to a site

to add a custom blockchain um and to uh to have that as a part of their metamouse wallet um there's a lot of security things that we're figuring out with it um we're we're also uh we're doing some some other uh some some other exciting stuff um with uh complementary blockchains uh they're being used for file storage so yesterday you might have seen i got announced that filecoin uh is is doing us a plug-in and snap together with metamask so you'll be able to do data storage and stuff like that from from metamask

so we we really want metamask to be uh deeply extensible and to allow the developer community to start ex extending what metamask can do um we also we want to have contract account apis so a a wallet developer of a of a specific contract account standard can can create a contract account wallet uh you can import your contract account wallet into metamouse so even if you were using a different um you know using a specific contract account um say like a gnosis multisig for instance yeah exactly um you'd be able

to import that um with the plugin system um so we're we're really committed to that it's it's very important to us it is technically challenging um we're doing a lot of really interesting stuff with security as well to make to make it work so we've got this product uh it's it's a library called lava mode that sand boxes all of the open source dependencies to the wallet um so we're really excited and uh proud of that we take security extremely seriously and so we're doing a lot of innovation in the space lava mode also uses something called cess or secure ecmascript

which is a javascript sandboxing method um the um in terms of we'll also have some other some other announcements short of the of snaps uh to announce in in the coming few weeks but i'm not ready yet it sounds like you guys have a ton of stuff in the back pocket yes absolutely well that's great well um jacob thanks so much for your time it's been a pleasure to have you there's so much more we could get into we haven't even talked about like infura and or metamask token or other future things but uh we'd love to have you guys back on stay the nation to talk more about that as those exciting

announcements come in uh thanks for thanks for joining us so jacob yeah thank you guys so much that uh that token one is a very popular request so anyway um thank you guys so much and i i really appreciate it oh fantastic take care jacob all right david now this is the point time where i'm supposed to announce uh sponsors basically so to the sponsors that made this possible thank you very much we're going to show a little bit about their tools in just a second here and then we'll be back talking to lucas campbell about the q3 token report that we just do three token report stay tuned here we go zapper is this new tool that i use to

check out all of my assets in defy as you guys have known dfi has absolutely exploded recently and so managing your assets is getting harder and harder because there's so many different places and so many different assets that it could be so i'm going to put my ethereum address in here and zapper is going to tell me where all of my assets are across ethereum right so here are all of the assets in this wallet there's there's a decent amount of them and it's also going to tell me where i've deposited assets into various d5 protocols right so there's some yield farming going on there's some liquidity pooling going on we can also look more granularly at the specific protocols that it's involved with in this explore feature so it's got some assets deposited into uniswap it's got some

assets deposited into balancer and also with zapper you can just exchange straight from the zapper interface right so this is just another layer on top of unit uniswap or other exchanges on ethereum that allow you to swap assets right so check them out at zapper.fi it'll give you a nice clean portal to invest your assets in d5 and you can also connect to multiple wallets if you use multiple wallets all at once and it'll give you an aggregate of every single wallet that you own check them out at zapper.fi also this is definitely not my wallet unstoppable domains is helping the world become censorship resistant and permissionless if you are looking for a censorship-resistant website that no one can take down go to

unstoppabledomains.com and type in the domain that you think that you want so i'm going to type in the domain that i think that i want trustless date and it's going to tell me some of the options that i can get to get a permissionless domain trustastate.crypto and so what you can do with trustlessdate.crypto or whatever domain that you want is you can you can purchase it and then it can be a url that you direct people to that no nation state can take down that's what unstoppable domains it's all about what's also really helpful with unstoppable domains is that wallets can integrate unstoppable domains so that the addresses that you send your crypto assets to can become human readable and this doesn't work for just ethereum you also can do this for bitcoin or litecoin or any blockchain at all where wallets

can resolve to your human readable name so you can tell bitcoiners to send you bitcoin to trustlessdate.crypto or yourname here.eth check them out at unstoppabledomain.com all right bankless nation we are back to talk about the q3 d5 token report and we are joined by lucas campbell who is a bankless editor and analyst on our team puts out these fantastic reports every quarter lucas how you doing man i'm doing great thank you guys for having me oh well it's great it's great to have you my friend so uh we want to dig into this this token report um and of course uh aside from yourself the

other party that really made this this possible is our token report sponsored diversify which is a killer decentralized exchange for serious traders it's private transactions instant settlement all the bankless way they're doing some really cool stuff with layer two particularly starkware to make all of this really fast with solutions like diversify i feel like you don't even need a central uh crypto exchange anymore we will include a link to diversify where you can start trading on it in the show notes and just want to thank them for making this report possible one of the first companies to really get onto a layer two up and running and and i i use their exchange like really

quickly when they first like launched and like the ui was pretty pretty simple pretty pretty easy to use but then it's all already like so become so polished over the last like two three four weeks so big time to diversify you can't even tell they're they're a decentralized exchange there was a time where you could like tell oh my god this is a decentralized exchange like you know brace yourself for a clunky user experience it's not like that anymore um all right lucas we've got the report open we want to talk about some of the highlights man that you saw so this is the the uh report that we issued on bank list we've got it of course in a web version but also this cool institutional wall street grade uh

pdf version and you've called this report lucas the rise of the ownership economy can we dig into that name so why did why'd you call it that yeah i mean i think that's a great question so you guys talked about this a lot last week with jesse walden and the ownership economy but really the name came from this mania this yield farming mania that happened in q3 where the core idea was give ownership to the users right so it would be like the equivalent of like let's say uber distributing equity to anyone that gave a gave or took an uber ride or let's say like google giving out shares to anyone that used that search engine so like the equivalent of this in d5 is

how compound gave comp tokens which you know pretty much kick-started the whole the whole mania they gave comp tokens to anyone that provided liquidity or borrowed assets from the from the protocol and that pretty much just kick-started this insane insane quarter that we can kind of just see in the data but uh yeah i mean the rise of the ownership economy is really just this core notion of giving ownership to the users and making them um you know the stewards of the protocol over the long term all right and it was an insane quarter you know what let's let's just get right to the quarter i want to come back to the shift uh from price to earnings pe to price to sales because i think that's important just you know as far as a takeaway but let's get into this insane

quarter that we saw and here's kind of like the you know the money headline here but um we saw a quarter to quarter revenue increase for these d5 tokens we call them capital assets because they're similar to stocks in their ability to potentially in the future uh produce cash flows they can be valued as such but the revenue increase was 26 x from last quarter right so this is this is the graph these are all quarters here q1 q2 q3 q4 and then oh my god here's q3 it's like massive so we went from 3.9 million in revenue created by these d5 protocol

tokens to 108 million revenue created by these d5 tokens in q3 is that the the ownership economy the yield farming mania that you were talking about is as much of the growth as a result of that yeah i mean definitely it was a lot of that i mean unisop was like a big contributor to that so a lot of people were you know trading d5 tokens were swapping in and out of tokens you know a lot of um the yield farming protocols like featured uniswap lp tokens so like uniswap is obviously the biggest contributor with 67 million dollars in that quarter alone distributed to uh liquidity providers wow wow okay and then who are the big

token winners uh for the quarter i guess uh is this a graph of this is still graph of of quarterly uh revenues is this a change from previous quarter or is this just you know that is the same yeah so that is the d5 price perform or the token price per performance throughout the quarter so between july 1st um and september 30th ave was the biggest gainer with 300 percent increase um i will caveat that with saying that yfi was probably the real gainer but it effectively went from zero to you know a billion so it was like an infinite gain so i couldn't put that on the graph but

um yeah abe kept kind of um kept its lead it had a really awesome quarter in q2 as well um and it just kind of kept going off the back of the avenomics upgrade which was like this major overhaul to the token economics and introducing decentralized governance and some yield farming mechanisms and a whole bunch of other stuff so ave again with 300 percent um revenue growth in their in their d5 pro token what were a couple of the others so there's there's two more that are above 100 growth what what what are they yeah so the other second biggest one was loopering which i think a lot of um d5 investors were kind of getting tired of the gas fees on ethereum and we're definitely looking

towards like layer two solutions so like i think another notable one that wasn't necessarily uh depicted on the graph was uh like omisco omg had a really awesome quarter from what i remember um so i think like a lot of d5 investors were looking towards later too as like an opportunity to like capitalize on like the increase in gas fees and just like the lack of usability for ethereum during that time period i don't know if you guys remember that but like you were paying you know hundreds of dollars in gas fees to get in and out of like you know different yield farms um absolutely the last one was uh synthetics there with 155 gain and um i mean synthetics is always just pushing out new stuff they're constantly up you

know releasing upgrades they were the best performing token last year in 2019 they've had like you know a meteoric rise and they're just kind of um piggybacking off that momentum and keeping keeping the keeping the train rolling here and also one of the first apps to also leverage layer 2 as well right so like loopering it itself is a layer 2 but synthetics is an application but is now kind of pushing the envelope with getting applications onto layer 2s so it's interesting to see like you know no one's gonna no one's gonna point at some price increase in synthetics and say that's not because of exactly what synthetics deserves but also what they deserve is you know because they they are the ones that push the envelopes and

move really fast and get onto l2s as fast as possible when it's necessary so you know tip of the hat to those guys yeah i mean they're they're definitely testing the optimism test net right now um and you can stake on it right now and they're incentivizing it the whole work so um definitely check that out and see if you're eligible it does feel like the tokens that are building more are doing better in general like ave that team just like always building always releasing things so same with synthetics so i mean the builders have really won over the past year um really quick before we kind of talk about eth as a defy asset as well and then break it down these d5 tokens by by segment um let's talk about the shift from price to

earnings to price to sales and what that sort of means right so when you you're evaluating capital asset like a stock investors tend to use this price to earnings ratio which basically tells you how much you are paying when you buy that stock for every dollar of earnings so a netflix might be around 80 80 price to earnings ratio that means you're paying it around eighty dollars for one dollar of earnings so you're anticipating that it's going to continue to grow in order to justify a price to earnings ratio of 80. and uh we've done a lot of work in the past kind of looking at these defy tokens from that lens because it can be evaluated from that lens how much money

are you paying for every one dollar earned in um by the ave protocol for instance right and that can be a relative valuation metric that's useful but there is kind of an asterisk there in that a lot of what we're looking at is not like bottom line earnings like profit but when we're talking about revenue for these d5 tokens we're actually looking at top line revenue actually their their sales revenue so that's sort of the lens it's not so much price to earnings it's really um priced to top line sales because there can be other costs uh you know before you get to sort of the bottom line revenue um is that a good way to summarize it lucas or like

what would you add on that concept here yeah i mean exactly um i would say like i think the best way to think about it is like price to earnings is the profit that is accrued to the protocols token whereas price of sales is really just the revenue generated from like usage of the protocol right so i think like a really good um example of this is kyber um so the liquidity protocol uh you know generated i think it was like 10 million dollars in revenue off of like a 0.2 percent trading fee and right now governance dictates that 73 give or take is accrued to knc holders via like dividends and then a small amount of it's burned um whereas the remaining 26.5 percent uh

is distributed to like reserves which are kind of like their kybers like liquidity providers almost um so you kind of see that distinction whereas like kyber's price of sales is 21. whereas their price earnings is a little bit higher because only 73 of that revenue is accrued to the token so the price of earnings is 29. that makes perfect sense right so um but but but on that so like we've got a price to earnings of 29 a price sales of 21 a little bit lower but price earnings of 29. by the way um that just seems super low right like high-flying tech companies right now on the nasdaq are going for pe ratios of like you know 80 amazon's like 160 170 i don't know what

zoom is what's zoom lucas these days from a price to earnings perspective um like probably 11 right now 411 right now that's that's the the you know the zoom stock that we're using zoom so fantastic um for them but that's a pretty high valuation metric using using their product to tell the to tell them that their valuation is really high right well the product could be great but the you know stock price could be high relative to um to what it's worth um but anyway are are we seeing a lot of very low price to earnings ratios like like kyber i mean um just that seems super cheap still for the potential growth of d5s is that the case

um yeah i mean i would say so um i would like there's a couple that are like a little bit more nuanced like uni swap and compound and like you know a few others aren't actually generating any earnings for um token holders it's all revenue um with that like maker was another notable one where right now they're generating like you know eighty thousand dollars per day and they don't have the dsr on so they don't have that die savings rate so all of those revenues are being allocated or directed to mkr burns right so i think i in the report it was like you know they're at a new low of a pe ratio of like 30 or something um so you're definitely seeing like the

protocols that do accrue value to token holders that have like that mechanism you know they're definitely hitting you know new lows or they're on the lower end you know especially when we're looking at some of these other tech stocks that are you know valued at like sky high valuations you know was there a place in the report lucas where the p e ratios are that we could see here the price to sales ratios um there was a priceless sales ratio i did not do one on the price and earnings just because it was like a lot more nuanced too where's the price of sales page should be let's see scroll up it was in that first section like the defy overview ah must have missed it okay so so what does that mean i'll

scroll up to find it but what does that mean for a token like like you to swap for instance it's almost like a unislop is clearly there's value there but it's almost like pre-revenue it's almost like facebook right while it was building network effect and acquiring users but it hadn't yet turned on its ad modules and started making money um is that kind of how you'd think about it it just all it needs to do is sort of flick a switch and then you know they could start channeling some of the the uh fees to users and then it could be a capital asset that's generating actual earnings yeah so uni swap is actually a really interesting example because if you remember uni swap in

uni swap v2 introduced this protocol charge with like an on off switch we just governed at the time with some like ambiguous governance thing and now it's like oh it's governed by uni holders right so the protocol charge is switched on the 0.3 uh swappy uh 0.05 percent of that so quarter quarter basis point or point two five percent and then point zero five is directed to um a protocol treasury so really what that money can be used for is really up in the air right that right now at the current earnings or the current revenue was about 45 million dollars

um in annualized revenue to that treasury if the protocol fee was switched on um and you could use that in theory to burn or like distribute dividends or whatever you wanted to do you could you know accrue that that capital to the token holders um but that's not necessarily what's in like that social contract i think like a lot of it's going to be used to like fund um and incentivize like community contributions and the long-term development and growth of like uni swap at large but what's interesting is like uh kyber almost set a precedent there where like it did distribute over 70 percent it is distributing over 70 percent to actual um knc owners right i wonder if

uniswap will follow a similar path they'd at least have to be competitive with some of these other protocols in terms of what they uh distribute here's the price to sales by the way that i was missing earlier and unit swap right now is a 12 price to sales ratio which is absolutely crazy when you think of a zoom at uh 411 um not quite apples to apples but like kind of close that's crazy um all right well let's break this down by sector a little bit lucas so um maybe we'll we'll come to ethan at the end if we have time but um decentralized exchanges how did how did they do i guess what are the the sections that you outlined in this

report and then maybe let's start with decentralized exchanges but like that's the first what are the other sections you got like derivatives and something else right right yeah so we did uh dex's lending derivatives and then we did some like miscellaneous highlights um namely wi-fi and the nexus mutual okay um so in terms of like the dex sector pretty much led the charge right in q3 um i think overall the deck sector aggregated over 40 billion dollars in volume in q3 with unit swap you know comprising of like 25 billion of it so a really solid portion of the rev and earthy volume in q3 was from uniswap i think like curve was in second with 8 billion and then balancer with

2.7 billion dollars in quarterly volume um so the debt sector really led the charge they killed it a lot of the revenue is attributed uh you know a lot of the d5 revenue at large is attributed to the debt sector um i can't remember what the specific number was yeah 91 million dollars of like 108 was from dexes so wow they crushed it um do you want me to keep going on the on the dexes here um yeah anything else on texas before we pop the lending um we kind of talked about the unit swap stuff so that was kind of like my sector highlight which was talking about union swap and how that protocol fee can be allocated towards like um accruing earnings for token holders

um so that was really the majority of it balancer had a really awesome quarter i think they generated like 16 to 18 to 18 million dollars in revenue to lps which given the launch back in like march april you know spring of 2020 now that's pretty uh pretty impressive given the short time span um but yeah i mean dex is crushed at this quarter you just swap in balancer so it seems like even in the deck sector it was automated market makers that really dominated in terms of exactly very cool all right let's jump to lending um yeah lending what had a comeback quarter here um so let's see compound i will say that like compound ave the way that the token

terminal who's the people that provided the data the way they calculate um the revenue is the interest accrued to suppliers right so it's it's kind of a nuanced thing where a lot of the um the revenue is really just going to people that's applied assets to the protocol you know through interest um you know with that said there's obviously a uh an earnings mechanism that could be implemented there where like a portion of that interest is crude to token holders right of ave token holders or comp token holders that's not the case right now but i think that was just an important nuance to kind of understand about lending revenues with that i think maker was kind of the biggest highlight um they ended up turning on the stability fee after

multiple months following like black thursday of zero zero percent stability fee not earning anything mkr was diluted you know it was a top past couple months for mkr but you know they're back on track now there's nearly a billion dollars of dye um in circulation right now they're earning you know somewhere around 70 to 80 000 per day with the entirety of that being accrued to mkr holders right because the dsr is not online so all of that is going to earnings or mkr's kind of you know back on track to say the least which is which is a good sign david just on that do you remember when we had mariano conte on a few months ago it was back in april or so

and he made the bold crazy prediction that dai would hit 1 million or 1 billion excuse me in circulation this year and that seemed absolutely outlandish and crazy right and now here we are here we are well we're not we're not there yet but we are so close you can you can taste it right it's so close and i do want to make that distinction between maker and the rest of the d5 protocols you know the d5 yield farming it was really a thing because of token issuance right and you know while there is revenue going through these protocols the reason why there was this d5 mania was that because like there was just a lot of issuance of valuable tokens right uh and i think what was going to come is

a lot of those tokens as lucas just kind of alluded to a lot of those tokens don't capture the revenue of the protocol a lot of the revenue like like the unisop versus kyber example like uniswap captures a lot of revenue and then redirects it to liquidity providers not necessarily to the uni token and maker had their token economics knocked from like day one where like revenue from the protocol went into the token itself and it's really exciting to see that get turned back on so like maker as like a leader of the protocol that is both generating revenue and also it accruing to the token which it's supposed to be designed for is like the exemplar model that i think a lot of other d5 protocols are either going to get to this point or not go anywhere at

all yeah it's got like two to three years of maturity on these other tokens and you can kind of see that with it's going through its own cycles i will rip on maker for a second though like i feel like their token economics is a little outdated like they don't they didn't yeah i feel like you they could improve a lot on it right like they could be implementing mkr rebates for paying stability fees kind of like that yield farming mechanism for opening a die cdp um i feel like the auction like the mkr auction for burning is like kind of not great i feel like if they had a uni swap with a ton of liquidity like implementing open market buybacks and stuff like that would be like much more effective

but that's just like my personal opinion and like i would love to see interest rates being set algorithmically rather than by mkr governance so they're they're definitely killing it but all good points yeah they are taking this conservative approach at the same time all right let's talk about derivatives who are not traditionally conservative types of assets so what happened here um yes so the derivative sector just in terms of the data that we had was largely almost entirely synthetics which they made a comeback um their previous record of 1.9 million dollars in quarterly revenue was kind of um

disproportionately reported due to like front-running issues yeah but they fixed that back in q2 which is why you see that huge dip and now they're kind of back on track they almost exceeded that previous record almost all organically um and with that like you saw like a pretty substantial increase in the outstanding susd which is synthetics's native crypto dollar um but yeah i mean synthetics pretty much killed it i will say like auger v2 launched um and then uma has been doing pretty well we don't have the data on that but just from what i've seen personally like um has been um definitely doing some interesting stuff out of the out of that camp yeah i wonder how uh uma token uma token looks from a revenue perspective

there's a few other things that um i hope we get more data on the future with token terminal which is um like uh mcdex which they did something uh last quarter uh and they they have their their their token as well and then also i kind of wonder what uh dydx would look like if they actually had a token that accrued some of the value of their platform because they're definitely doing a a large amount of volume so maybe we'll see dydx i feel like antonio maybe hinted about that on our ama with him david but um yeah we'll we'll see when when these other new derivatives platforms get added how synthetics shapes up because

right now it's just dominating everything mm-hmm yeah we'll put a pin on the dydx thing uh i have a feeling they'll come out with something but we'll see all right so now we've got uh yield aggregators of course we just gotta talk about wi-fi they just had a killer quarter some of those data are not in the data set that we were looking at but what do you want to touch on with wi-fi yeah i mean wi-fi pretty much had this meteoric rise in d5 um pretty much went from nothing in terms of like token value to over a billion dollars in less than two months um was pretty wild to say the least um and i think the most notable thing out of

that was it kind of kick-started or built upon the fair launch movement which we talked about in a newsletter post um before but it's essentially this token distribution mechanism where you're kind of just building off the altruism of satoshi nakamoto and b and bitcoin and where everyone just has equal opportunity to earn the tokens like there's no founder allocation there's no vcs there's no no there's really no um favorable you know token token allocation it's really just equal opportunity for everyone and i think that um that fair launch movement kind of got kick-started and you kind of saw like em finance and all these other

fair launches where there was just you know equal opportunity for everyone to kind of um get a portion of that token supply um wi-fi is definitely a capital asset we don't have the numbers in this specific report but it is printing money basically and i can't wait to see as those numbers get incorporated how much revenue it's actually throwing off to its uh to its holders basically um all right uh the last one is nxm so this is nexus mutual so they had a massive quarter in terms of premiums paid wow um that graph is up and to the right yeah yeah nexus mutual killed it it was actually interesting because like right at the beginning of q3 like on like july second or third the launch pulled

staking which was like this new way for nxm holders to stake against contracts and earn those premiums that are depicted on that graph and that had this you know um transformational effect on nexus mutual um and kind of what you saw was this massive you know run up in active covers and premiums paid i think one of the interesting takeaways from that is nexus mutual right now has earned over two million dollars in premiums from selling like insurance um and it's only paid out thirty five thousand dollars in claims right so like that is insurance right there at its finest if you were like wondering how how the hell like insurance companies make money like this is the map right here like

millions of dollars made only a few thousand dollars paid out in claims um and i think that's really interesting a really interesting um takeaway when you're looking at nexus mutual yeah that's going to be exciting protocol to watch i'm pretty bullish about its future specifically having talked to hugh carp who's who's the founder of nexus a few podcasts ago all right so there's also a number of untokenized protocols and applications we mentioned dydx but there's also instadap which doesn't have a token open set zapper zurion what do you think over under on whether some of these protocols are going to launch tokens yes or no what do you think lucas um i would say i'll take a while i mean do we count

index for set protocol i do i think i would set launched a token in queue right so we can cross files on the list one already has um i would assume dydx would i would put it like a sure bet i'm not going to say that but i would i i would strongly you know think that dydx would put out a token just to get competitive just because he lost a lot of other market share in q3 to like union swap and all these other dexes um i'm interested to see how the asset management platforms kind of play out like insta dab zap or xerion like there's not like some sort of set model

token model for them yet so i'm very interested to see what happens there and then open we'll see we'll see it's basically like to be competitive a token needs to be part of the incentive mechanism it seems like uh that's what q3 really showed us um conclusions okay so killer quarter absolutely phenomenal quarter but now we're down 50 on d5 assets exactly um so people people are like oh it was a mania as a one-time thing bubble burst bye-bye d5 and now we're really excited about bitcoin and everything else and again d5 for a while is uh did the bubble pop lucas or is d5 kind of

did it do its thing and now it's dead um i will say what i will say and i kind of outline this in the report is that this is a multi-year market cycle um ethereum in the last market cycle had you know over half a dozen 30 40 50 drawdowns um d5 has only had one so far after this massive run-up so i would say that if you are you know if you subscribe to that thesis that we're you know at the beginning of a bull run i think d5 has like pretty much cemented itself that it's going to be you know a critical part of this bull run um you know that said you just never know um i think there's a lot of you

know profound and valuable mechanisms and distribution stuff like as we talked about at the beginning the rise of this ownership economy i think will have you know profound effects beyond just d5 and um crypto at large so i think this is just the first drawdown of many to come after multiple multiple run-ups so we'll see very good lucas well you crushed on this report my friend um this i think is one of the best reports if not the best reports on d5 in the space right now it is institutional level so you could send this to you know your investor friend who's tinkering with stocks and they should be able to understand the terminology uh once again you can get it

on bank list just type in bank list q3 token report in google and bankless.substack.com lucas thanks a lot for for walking us through that my friend of course this is uh this is awesome to do so thank you guys for having me on i appreciate it looking forward to q4 alright appreciate it guys thank you david uh killer quarter man and last thing we want to talk about is something that relates to that because you know what that felt like is we we did we did we did years of d5 right and then we did a q1 of d5 in 2020 and then a q2 and it felt very gradual right and then suddenly oh my god q3 it explodes it's it's back to the gradually than suddenly mean that we're

about to talk about right right yeah that's that's exactly right and kind of d d fight to me kind of seems like a harbinger of things to come right uh that what we just witnessed in this last quarter uh and there's a lot of other like meaning and significance that we can pull out of what happened in d5 in q3 2020 but i think the the main point that i think that defy triggered was that you know these markets are so reflexive and that's exactly what lucas was kind of alluding to at the end is like once once more the uh morale of a market shifts and it goes from bearish to bullish it doesn't just swap back it doesn't just go backwards

like we're like oh we're down 20 40 like oh damn turns out that wasn't the thing that got us out of the bear market like no like it's it shifted like we are now in bull market mentality and bull market mode and i think q3 was kind of the spark that lit the fire under under the rest of the crypto market yeah absolutely all right well let's talk about this gradually then suddenly mean because you wrote about it uh earlier this week and maybe maybe first talking about um you know in 2017 you contrast there's this euphoric mania around ico tokens and people probably a lot of people in mainstream probably last remember crypto from hearing it on cnbc

and all of these ico schemes and scams and that sort of thing and that a lot of people haven't thought about it until then but there have been a ton of major changes right even in the past few months um you you outlined three of them what are they yeah so this goes along the lines of like back in 2017 and any sort of mania you ha you tend to feel like the world that the world is about to enter this new paradigm right and like as somebody that came into crypto in 2017 like i definitely felt i succumbed to that mental model so i you know i owned like 20 coins which i can't name anymore and i thought that all of them were about to totally reorganize the way that humans like relate to each

other like right away like right away like what's gonna happen like like all of a sudden like my mom my sister my friends are all gonna be like having a wallet with tokens inside of it to like buy their electricity or something like that uh that was that was grandiose thinking that was euphoric thinking and there's that bill gates quote where you know he says we overestimate what we can do in a year but we underestimate what we can do in 10 years and we're just three years away from that that moment in 2017 maybe three and a half and china's rolling out a central bank digital currency right like because uh running the square the biggest payment processor in the united states is making an absolute killing of revenue from bitcoin sales and no other like you know sales company

is doing that right and also commercial banks are okay giving the green light to custody crypto and it there just seems to be like you know that that quote i just said where you know we overestimate what we do in one year and underestimate what we can do in 10. well i think with crypto with the rate of development it's like we can shrink 10 down to like four right like if things are really really moving quickly and all of a sudden it seems like we are crescendoing into kind of the the products that we are indeed back in 2017 2018 are starting to come to market and not the sales products the big products yeah so this is that gr gradually segment where all this stuff that mainstream doesn't see because they've been checked out of crypto for a

while is is being built and all of this infrastructure is being laid and all of this has been happening and there's also this um global macro trend right um like it seems like you know kovid may have accelerated this even but it governments central banks have uh they're running out of options right so interest rates down to zero percent um qe they've done rounds of qe already this year right and it's having diminishing returns and it's increasing populism because it's increasing wealth inequality we've talked about the cantillian effect right so now they've got like one option left and that option is modern monetary theory something we call

mmt which is basically like uh printing money through fiscal policy and air dropping to people right that's exactly right yeah yeah so what happens in that world where central banks only have one option um yeah like what happens yeah so i i think in order to start that conversation we should ask ourselves like what what doesn't happen if they don't do that right like what if they sit on their hands and they say like you know what the dollar it's going there's no more dollars like whatever however many dollars there are out there that's how many there are and we're so german powell gets real austrian all of a sudden real austrian like jerome powell turns into a bitcoiner and be like you know what i

know what would make the dollar gold bug to be hard hard money right imagine in that scenario a number of absolutely terrible things happen right uh you know businesses don't get support during a crisis right you know there's no there's no further unemployment support we only can give out as much employment as we collect in taxes you know revenue for all states and federally the revenue from taxes is down because the economy is like 50 shut off right so we don't even we can't even support ourselves uh and you know and and then you know no more you know 1200 checks for for coveted stimulus uh and all these things are terrible and so as a result of you know the decision of of the federal

reserve turning super austrian society basically crumbles right civil unrest happens because you know the people are under there there's too much wealth inequality and the wealth isn't being spread around and so you know if we want our economy to not crumble if we don't want civil unrest we have to print money right like there's basically if we want to retain the status quo basically the central government or the senator the federal reserve and the central government have to create money and push it into the economy one way or another and there is no choice they have no choice and also there's no significant reason as to why it's really going to be long-term effective this is just consistently a short-term solution followed by another short-term solution

followed by another short-term solution which is money printing after money printing after money printing right and so bitcoin as an asset that is diametrically opposed to mmt along with how people are just going to become okay with crypto be throughout their by increased understanding of what it does i'm seeing i'm hearing like a very loud crescendoing drum roll of like people clicking as to what this whole crypto thing is really for and what it does and it's in its role in the world non-sovereign assets that aren't dependent on those things that that's the thing i think um people maybe don't understand right so let's say you and i are hardcore austrians and uh our solution to jerome

powell is just like stop the money printing buddy right the problem with that kind of simplistic approach is basically like it's almost not even jerome's pal jerome powell's decision anymore it's almost not even you know donald trump's decision or uh you know v2 donald trump or joe biden's decision because they only make decisions on like a like a four to five six you know eight year basis right um they're trapped in this cycle they're trapped in the wheel and they can't really get out of it i there there's an element where you know what else do you do they're they're um living with the decisions made by nixon getting off the gold standard in the 1970s right and there's absolutely no other decisions

that are politically tenable that that they can actually make so mmt is happening regardless of which party wins regardless of the way the election uh plays out and it's not just happening in the u.s it's happening in every country throughout the world every country with a money printer is printing money right and that's why they're so based off of like nixon's choices like nixon's choices to get off the gold standard happened because he was printing money like yeah it happened exactly exactly all right so that's the bitcoin story right in the macro story and you know not only bitcoin of course but we think ether is a non-sovereign asset as well and um can be subject to these same headwinds as we're seeing um but let's talk more

about ethereum because uh that is also sort of a gradually then suddenly type of story so what's building there yeah to me the first part of the ethereum story which is the the it's maybe the smaller of two stories or maybe the legacy of two stories at the legacy markets is the supply of stable coins crypto dollars on ethereum and you know while we were just talking about you know money printing and the dollar and how the dollar is weakening it's actually being incredibly strong versus other currencies right uh and so you know you know you would never the last thing you would want to be is to be like a third world nation's fiat currency because especially in a world where more and

more crypto dollars are available and becoming liquid on ethereum because the ethereum payment rails for dollars extends into every single country that has internet right and so you know but before you you know if you are the argentine peso or you know you know insert your you know not very large fiat currency here if you are that you want to be traded as a your constituents of your country want to trade you for dollars not bitcoin right you know bitcoin the narrative behind bitcoin is great but if you are from like if you are a holder of the argentine peso you want to go into dollars because that's dollars are king cash is king right good dollars are the most uh you know liquid asset in the world and ethereum is transporting you know incredible amounts of us dollar uh

around its network every single day and the amount of stable coins on ethereum to support that use case has just exploded right and even with defy yield farming mania coming to an end we are still seeing an absolute rise in stable coins and especially with dye being off its peg i think that's also always something that's useful to pay attention to yeah i think it's interesting that you mentioned dollar you know dollar dominance versus other currencies it is the strongest of all of the weak fiat currencies like an example of this is like uh why why are there no euro stable coins right now or chinese you know remember there would be if there was market demand of course we'll see those in the future but the fact that we're not seeing them competing with the

crypto dollar on ethereum is uh pretty amazing we're almost at 25 billion there's almost no crypto euros to speak of it's all dollars that is the preferred reserve currency at least in fiat land right now it seems clear um but so how does that tie into ethereum though yeah so then we can well that's that's how ethereum relates to like the global macro environment right like that's how the relationship between ethereum covid and mmt kind of fits in uh but also there's its own uh you know its own narrative its own track which is the development of ethereum 2.0 right and so you know if you're watching from the sidelines and maybe you you are thinking like you know i'll check in

with ethereum 2.0 every now and then and you hear this phase zero thing followed by phase one phase two you kind of think like okay well we're gonna you know first we're gonna do phase two and then we're gonna do phase one and then we're gonna do phase two because that's how numbers work right it's five years away yeah and so like okay great like the ethereum people are finally getting to phase zero and so phase zero can finally start that's actually not how phase zero one two and two work right these are actually things that go in parallel and like yes we do need phase zero to get finalized before we can start on phase one but the r d behind phase one and the development behind phase one has been happening as long as it has for phase zero right these things are being parallelly

these things are going being processed in parallel right yeah so phase one phase two and phase zero are all being worked on in tandem and so what i think is is about to happen is some sort of uh compounding progress with ethereum 2.0 like as soon as phase zero gets rolled out like phase phase one is not far behind it yeah and the really interesting thing i think this was a huge takeaway from our conversation with vitalik uh that we put out earlier in the week is basically like in parallel to what you're seeing here on the timeline with phase zero one and two there's there's work on ethereum that had like scalability work on aetherium if the goal of ethereum and phase two is scalability right all of this technology that's being developed and has been

created the past two years around roll ups uh and zk roll-ups optimistic roll-ups and you know even you know plasma with omg and some of these things um they're going to feed into the you know the ethereum 2 roadmap so like that's going on concurrently with all of the eth2 stuff so that we can get to like a phase one and actually have all of the scalability or close to all of the scalability promise um that that we need um that that would have only been available in phase two if it was just the eth2 roadmap right does that make sense like we got all the stuff on existing eth1 scaling out ethereum at

the same time as this eth2 roadmap is being developed and those things are going to converge in probably a pretty sudden way a very very sudden right way right and as soon as people start to realize this and you know what's also going on in behind the scenes is that you know there's there's been the uh depression of the eath price based on the bearishness of east 2.0 right that's been that's been a thing ever since like we started going downhill in 2018. uh at some point that's going to turn around because it's not like the triple point asset thesis is like a curiosity like no there's those are three really good reasons for why ether price is going to go up and two of them are required by ethereum 2.0 and as soon as all these things get locked into replace it locked

into place i think the ether price is going to uh do something that is sudden not gradual yeah i think you've summed up really well in this fantastic sentence gradually then suddenly the price of eth will begin to reflect the thousands and thousands of labor hours that have been poured into ethereum 2.0 these last three years so all of this work it's been very gradual it's felt very gradual but that will all pay off in eth price uh you think when it suddenly ships and silences all of the critics who said ethereum 2 isn't a thing it'll never ship it'll never work once again um looking forward to seeing that david anything else on this yeah and to just to continue this conversation i think

everyone should tune in to the thursday ama with danny ryan where we exactly talk about like where all the progress is on phase zero one and two danny did a fantastic talk at the ethonline event where he kind of said you know eth1 eth2 these are kind of misnomers it's not they're not two different separate blockchains one just kind of gets rolled into each other it's actually more accurately reflected by two two different places on the same tech stack that's a really good talk and so i would recommend to listen to that and then to tune in to the ama live stream with danny ryan on thursday yeah i do think ethereum is going to prove to be in the next decade the most important open financial network in the

world so uh we are here early and we're watching at as it emerges it's such a privileged position to talk to some of these folks like vitalik and danny about its development at the time it's being developed so tune into that all right guys this has been state of nation number 19 we talked to metamask and 1 million users we talked about q3 and the explosive uh token appreciation and revenue that it saw and then finally we talked about gradually then suddenly in with respect to the ether price risks and disclaimers guys of course the d5 capital assets we talked about are risky so is eth 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