ROLLUP: Trump Crypto Reserve | SBF Prison Interview | Ethereum Leadership Shuffle
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Bankless Nation, welcome to the weekly roll-up. Each week I'm bringing on a different co-host to help me go through the news. And this week I have the pleasure of being joined with once again by Haseeb Qureshi. Haseeb, happy Friday. Really happy to see you here today.

Happy Friday to you too, man. So we have a pretty good agenda here today. We're going to talk about Trump's antics with the crypto strategic reserves. Also his tariff yo-yoing, his implementation and retraction of tariffs. We're going to talk about Ethereum as well. But first, before we get into all that stuff, something that just dropped right before we started recording is a Tucker Carlson.

Carlson interview with Sam Bankman Freed. I was not expecting this to see on my timeline. You know, when you see weird stuff on your timeline, your first, your first, my first reaction is like, oh, this is AI. Somebody just made an AI interview with Tucker Carlson and Sam Bankman Freed. No, it turns out this one's real. It's a 42 minute interview with Sam Bankman Freed in prison. And Haseeb, I believe you just actually wrapped up watching this. What were your takeaways? I watched the entire thing. It's really, I don't know. It's eerie. It's very sad.

I mean, the thing is, like, we saw so much of SPF when he was in his prime. You know, he's now, it's been two years that he's been in prison. And just seeing what prison does to somebody, it's like, it's sad. Obviously, what FTX did was sad. And what happened with that whole, just that whole arc of his career within crypto. Yeah.

But, you know, SPF, you can just tell he's obviously, he's being broken down by what's happening to him in prison. And the thing that he kept bringing back, which was, again, like, you feel for the guy. It's just that he sees what's happening in the world. You know, he was an investor in Anthropic. He led the Anthropic seed round. And at the time, people were like, oh, my God, what is he doing with the money? Turns out that was the best investment he made out of the FTX estate was the seed round of Anthropic.

But he was reflecting on the fact that the world's moving on. Like so much stuff is happening. Crypto is going through this renaissance with this new administration. AI is blowing up. You know, all these LLMs are now getting to an incredible scale of intelligence. And it's all happening on the outside and inside a prison. All he's doing is reading books, playing chess,

And apparently they have the economy is in muffins. So they have like these stale muffins. Yeah. Muffin-fi is what's going on inside prison. So it's like hearing all that, man, it's like, man, it's sad. It's just sad. That's interesting. That's your reaction. I didn't watch all of it. I watched maybe 13, 15 minutes of it. And my takeaway was actually pretty different from yours. My takeaway was that this is this man is a pretty cold algorithm and

that is going to just chug forward one foot in front of the other, no matter what his environment was. Like, it's hard to armchair about this, but like, I didn't actually get too much sense of some emotional depth in Sam. He's just like, oh, like a couple of years ago, I was leading this big exchange in the Bahamas. And now today I'm trading muffins in jail. And that's just the way things are. That's just how it goes. Yeah.

Yeah, I mean, look, he's obviously on the spectrum. He's not somebody who's going to be gnashing his teeth and crying, but he's been in prison for two years. And Tucker was asking him, how old are you going to be when you get out? And he said, well, depends. It could be 47 if I'm lucky.

or 57 if I'm not lucky. And I mean, I don't know, just like imagine what that must feel like to have the rest of your life waiting for you. I don't know. I think if you're looking at that and you're like, fuck this guy, I mean, I get it. But I just think like as a, I don't know, as a human story, it's just really difficult to watch somebody

kind of processing what that means yeah and i do take your point that the last two years have been incredible uh ftx was the bottom yeah that was the worst worst in the markets worse in technology both in that's when um interest rates in the traditional equities market was really uh hitting the traditional markets hard uh and we really didn't have that much excitement in ai quite yet um but things have been really uh accelerating uh ever since then

That's right. So I initially when I saw this, I was like, I don't want to watch this. I feel like it's gonna make me depressed. But watching it, it did a little bit, you can tell. It definitely bummed me out. Because I don't know, I don't want to, I don't want to imagine that. Like, I think, I thought his sentence was too punitive.

I think spending 25 years in prison, um, as a young man, like I, I, I don't think like obviously the scale of his financial crimes were, were enormous. Um, but I don't think sending people away for nonviolent crimes for like 25 years, I don't think that's useful. Like the man's life is destroyed. His reputation is destroyed. Um, but, uh,

you know, yeah, he'll get out when he's in his fifties. Yeah. Like that's, that's, that's bizarre. And I think even if you had gone to jail 30, 40, 50 years ago, getting out in your fifties, the world would be material, materially different. And that was that world. This world is going to be insanely different. One can't even imagine. One can't even imagine. And like the one place where you won't feel any of it is inside of a maximum security prison. Yeah. Yeah. Yeah.

Well, that's a pretty heavy way to start the weekly rollout. Maybe we can get into... Starting on a positive note. Yeah. Let's get into the truth social... I don't know what you call these things. Tweets? They're called truths. They're called truths. Okay. Yeah. So this one came out on March 2nd in the morning from Donald J. Trump.

announcing a U.S. crypto reserve, not a Bitcoin reserve, but a crypto reserve will elevate this critical industry after years of corrupt attacks by the Biden administration, which is why my executive order on digital assets directed at the presidential working group to move forward on a crypto strategic reserve. That includes...

not xrp solana and cardano i will make the us the crypto capital of the world making america great again initially did not even mention bitcoin let alone ether he actually retweeted it retweeted be truth it and included and obviously bitcoin and ether and other valuable cryptocurrencies will be the heart of other valuable cryptocurrencies not and excuse me oh that is a very important distinction

as other valuable cryptocurrencies will be at the heart of the reserve. I also love Bitcoin and Ethereum. So Donald J. Trump announcing a crypto strategic reserve, naming five cryptocurrencies, Bitcoin, Ether, Solana, Cardano, and Ripple. Haseeb, what was your reaction when you saw these truths?

Just so bizarre. I mean, so like, okay, a few red flags. First of all, he tweeted this or posted, let's say, just say posted. I don't want to say truth. He posted this on a Sunday, right? Which is generally weird timing to post something like this. If you remember his first executive order, he stated that he was directing a presidential working group to basically go in and investigate what makes sense for a strategic crypto reserve. And they had something like 90 days, I believe, to come back with recommendations.

It sort of looks like he front-run that and basically said, you know what? Never mind. You guys don't do this. I'll decide. And of course, this decision, markets rallied like crazy when they saw this. But the big question is like, okay, what does this actually mean? Is this happening? Because you can't do this unilaterally, right? Like if you're saying, okay, I'm going to create a Bitcoin stockpile,

That you can do straightforwardly because the US government always has Bitcoin in reserves because of criminal seizures. So they have a bunch of Bitcoin already. They have billions of dollars of Bitcoin. And they can just decide unilaterally not to auction it off, which is normally what happens when you seize criminal assets. But for everything else, there's no ADA on the government balance sheet. There's no SOL, there's no ether. None of this stuff exists. So in order to get it, you have to go buy it. And to go buy it, you need a congressional appropriation, which means Congress has to- - Congress is in charge. - Exactly, Congress is in charge.

So Trump can't just do that. He can't just make this happen. He needs to go and advocate for this to Congress. And do you think Congress...

It's going to be like, yeah, you know what? While we're cutting the government, we're also going to go buy some Cardano. That's a great idea. Let's put Cardano. Let's take our money and buy Cardano. Exactly. So the thing is markets first rallied like crazy. And then people started talking about, wait, wait, wait, hold on. How is this going to happen? How much are we going to buy? Do we need Congress on board? How likely is it to happen? And so you saw by Monday, so this tweet was on Sunday, by Monday markets had completely

completely reverse all the gains reverse and obviously reverse and worse uh for everything I think oh cardano was the only thing that was like slightly up everything else was down that's right and um and I if you look at polymarket so polymarket was pricing the likelihood of a Bitcoin Reserve at 65 percent and I believe for uh I think it was uh for for soul

it priced it at 30 something percent, like 31, 32%. So it looks like markets don't believe this. They don't believe that this is going to actually happen because yeah, Congress, why would Congress agree to do this? Like that's crazy. Bitcoin, you can do unilaterally. Everything else, you need congressional approval and that seems much less likely to happen.

Yeah, the markets just put some numbers on it. Cardano rose the most about 50% in the 24 hours post the tweet. Solana went up 20%, Ripple went up 30%, Ether up 13% and Bitcoin up 10%. In 48 hours, about

almost $300 billion got added to the total Bitcoin market cap. So markets just pumped. We were so back. This was right after coming off of actually some pretty bloody candles. And so this was a pretty strong reversal off the bottom. I think the sentiment, obviously, because sentiment just tracks price. Sentiment also became very, very optimistic, saying like, oh, that was clearly the bottom. And then as a result of, I think, Monday...

Donald Trump announced tariffs, which we're going to get into some macro conversation. Once the tariffs and the geopolitics set in, then all of that got erased. And then I think also maybe in addition to that, the conversation that followed was people realized that, oh, the inclusion of

things downstream of Bitcoin really warps things in the crypto industry. This was a report by Laura Shin, who tweeted out and also wrote a report. Ripple apparently pitched Solana to be a part of the National Reserve in order to make the inclusion of Ripple in the reserve seem more legitimate, according to familiar sources. And so this has people in the crypto industry have now realized like, oh, this is changing the game. If you can lobby your way into having your crypto asset be a part of the reserve, that is probably the most

high leverage thing that you can do for the price of your asset so you better go ahead and do it and now now if you go and look on the twitter timeline everyone is bull posting america all crypto companies are bull posting america uh and people like are showing pictures of them in capitol hill we have the crypto summit that's happening tomorrow uh and uh this this is a really uh good tweet that i like from niraj from coin center who uh retweeted a quote from bill hughes

He's a crypto lobbyist. He says, chains compete in the marketplace and not in DC conference rooms or at policy roundtables. What's your take on this whole changing of the game for all this? Yeah, I mean, this is like this whole thing is just obviously we've strayed so far from the light of God as an industry, right? Like once upon a time, people used to talk about, yeah, I remember there's this old saying

episode early in the life of Bitcoin where Satoshi was worried that WikiLeaks was going to start taking Bitcoin donations. And Satoshi said, this is a bad idea. We should not encourage WikiLeaks to bring down all this attention on us because we're not ready for it, right? We're not robust enough. We're not decentralized enough. We're not secure enough. And there was a supreme wisdom in him identifying that.

Now it's just like, oh, okay, please government buy my bags. Like, please, please save my coins price because it's going too low. I think it's just so short-sighted because it's,

take something like Cardano. Cardano is probably the best example because Cardano has literally on-chain governance, meaning that token holders vote on changes to the protocol, right? So it kind of inherited this from Tezos. I think Tezos was the first to do this and Cardano ended up following suit. And what does this mean? This means that if the government bans

buys enough of Cardano, then the US government now controls the chain. The government can now literally vote to change fundamental aspects of the chain. And if the government owns, let's say billions of dollars of Cardano, right? And it's not even just like, look, I think they probably would not actually vote with their tokens. They probably wouldn't engage in on-chain governance, but here's what would happen.

Let's say that Cardano has some kind of rogue state actor using Cardano. A by-bit hack on Cardano. Yes, or North Korea is using Cardano for all sorts of stuff or sanctioned entities or whatever, or Russia embraces Cardano. And the US government says, you know what? We don't like that.

And unless Cardano fixes this, we're going to dump all of our Cardano, right? You can imagine people in DC saying that, oh, this is supporting the Russians. This is supporting the Chinese. We should get rid of this thing. And now all of a sudden, even without them actually participating in on-chain governance, everybody in Cardano is basically, you know, healing to the US government. The US government now implicitly controls this thing. And you will only do things that the US government likes. Otherwise, your token is going to get dumped.

This is just so obviously corrupting of what the point of crypto is. Like, okay, well, if that's true, then why are we doing any of this? So, you know, I think for Bitcoin, Bitcoin is so clearly beyond anybody's control. The US government could buy $10 billion of Bitcoin. They still wouldn't be able to control it. But for anything else in the space, I mean, the idea that this is a strategic reserve, right?

of Cardano or Solana is obviously nonsensical. There's no strategy, there's no strategic reason for the US government to own any of these assets. For Bitcoin, I can see it because the US government owns gold and Bitcoin is trying to be gold. And it's strategic in the sense of being a strategic financial investment and front running where the world is going, right? And kind of being the one yourself to shift the Overton window and get everybody else to follow. That's a great idea.

I think that's wise. It's judicious. It's exactly what the U.S. government should do because it has the ability to absorb that risk. But for everything else, I think, one, it doesn't really benefit these other assets. And second, it has no value to the U.S. government at all.

My interpretation of this is this is downstream of the crypto industry's support of Donald Trump helping him get elected. And Donald Trump responds to incentives and when he says words that the crowd likes, he says them more and he says them louder. And the crypto crowd, what the crypto crowd likes the most is the president of the United States saying that he's going to buy your bags. And then the crypto industry just goes wild.

And so Donald Trump's responding to incentives, and I think this is downstream of that, and it's also starting to jump the shark a bit. This is like getting a little too far. I think you kind of gave your answer, but maybe I'll ask this question just more explicitly. What would your happy outcome be? Because I can see three outcomes that I think are reasonable.

Just no reserve at all. Just no, no reserve. Just none. Just don't do it. We don't need to do it. Gold is fine. Gold's great. Oil reserve also makes sense because energy is really important. Bitcoin, like it's arguable, but like I think it's just simple to not have a reserve. That's one possible outcome. And I think that's a pretty good one. The other one is, as you said,

Bitcoin is, for every reason that you said, I won't trace over that argument again, having a Bitcoin reserve and nothing else. And then I can see a smidgen of possibility of Bitcoin and Ether. But I will admit as an Ether holder, as an Ether biased person, that is a minority of the population.

of the possible outcomes I think is either good or likely. That's my kind of like lay of the land. So like, I'm kind of in the camp of like equal parts, nothing at all equal parts. Okay, let's have Bitcoin and then a very small smidgen of Bitcoin and Ether. And then anything else beyond that, I'm like, that's just too messy. It's too corrupting. The incentives are so warped. Let's just not even go there. How do you, how do you agree with that analysis? - Look, I own a lot more Ether and Sol than I own Bitcoin. I own some Bitcoin, but not as much as those other assets.

And so it's good for my bags if the US government buys a bunch of ether, a bunch of soul, but you know, whatever other stuff. I think it's clearly the wrong answer.

Clearly the wrong answer. And like this, this is one of those things that even if you do this, it's going to get reversed by the next administration. And it's also going to be, it's going to ultimately impugn the, the genuineness of people in the space, right? Because look, Trump has made crypto the family business now. That just is what it is. And, you know, the fact that Eric Trump is bullposting Ethereum and they're building World Liberty Financial on top of Ethereum, and he's got his meme coin on Solana,

All these things just make it obviously suspect that he's doing this for the good of America or for some broader strategic interest. Everybody knows that there's no strategic interest in any of this. I think that Nick Carter actually put it very well, is that there's just so many reasons why this is going to end up hurting you in the long run by politicizing what is meant to be intrinsically an apolitical movement. Right.

Yes. I want to play a game with you, Haseeb, which is also from a Nick Carter tweet where he ranks and rates Trump's crypto schemes according to how crazy they are in chronological order. So he's rating how crazy they are. So the first ever crypto project from Trump was the NFT project. He calls it a three out of 10. Low stakes. Kind of cool at the time.

Not too big of a deal. Next came World Liberty Financial. 7 out of 10. Kind of an insane thing to do ahead of the election. Started as vaporware, now an extremely questionable slush fund. Thing that Justin Sun owns a lot of. Bad vibes. Trump Coin. 9 out of 10. Completely unhinged. Just overall crazy move. Melania. 6 out of 10. Just kind of sad at this point. And then the crypto reserve featuring Cardano and Ripple.

10 out of 10 crazy, 10 out of 10 unhinged. I don't even know what to say at this point. A government bailout for your buddy who gets crypto news from TikTok. Silver lining is at least the Maxis are upset. And then he concludes with sad how long this list is. I think he gave those ratings. I would agree with those ratings. What's your take?

I, yeah, completely agreed. I think Nick, Nick so far in my mind has been nailing this every step of the way. Um, I mean, Nick himself though, he's, he's, um, I believe he's also against a Bitcoin reserve. So he, his view is that we shouldn't be doing any of these things, which, which, which to be fair, I think is, um, is very sensible. And, and Nick, I, you know, he's, he's very bullish on Bitcoin. He's very, uh, kind of Bitcoin, uh, Bitcoin pilled, but, um,

But I respect it. And I think as an industry, sometimes you kind of have to look past the short term.

And the short term is like, oh, okay, government's buying our bags. That means, you know, number go up. Like, isn't that great? I think for Bitcoin itself, I think you can say very clearly Bitcoin has crossed that chasm and has earned its place on the balance sheet of a sovereign wealth fund. And it's not the first one, right? It's not as though America is the first sovereign wealth fund to buy Bitcoin. We know that Tomasic owns Bitcoin. We know El Salvador and a few other countries own some Bitcoin. But in order to be...

really long term, you have to be intellectually rigorous. And I think the only serious way to look at this is that this is not long term good for you. There's I'm of two minds when it comes to the Trump administration and its relationship to Bitcoin. I see who he's appointing to his cabinet, to the administration. Mark Ueda is now the acting chair of the SEC. And then Hester Peirce has been given authority to basically be the SEC chair as it relates to crypto. CFTC commissioners, Brian Quintenz, we're getting a lot of

things that have been on our wish list for almost a decade now in the crypto industry. We're getting like 10 out of 10 fantastic treatment by the three-letter, four-letter agencies. And then even David Sachs, who isn't really a formal member, he's just the crypto czar, he tweets out this.

Over the past decade, the federal government sold approximately 195,000 bitcoins for the proceeds of $366 million. If the government had held the bitcoin, it would be worth over $17 billion today. That's how much it has cost American taxpayers to not have a long-term strategy. Totally fine and reasonable take for somebody inside of the administration to give. And I'm just like, all of the things that Donald Trump is doing, I'm like, please stop.

All of the things that he has appointed people in positions of authority are doing are great. And I'm like, green light, keep going, full steam ahead. Do you agree with that take? Well, I mean, Trump also did the appointments, right? So he did all of these things. He did do the appointments. He did all of these things. Just the things that he's doing. Yeah, the thing that he's doing personally with his own business interests, yeah, I'm not the biggest fan of. Look, at the end of the day, all that we really ask for as an industry is to be left alone.

That's kind of the whole crypto ethos is this libertarian, like that's the whole idea behind all this technology is that it gives people freedom to do what they want to do with their own money. And the idea that, okay, well, in addition to all of that, we also need the government to buy things and to actively intervene in markets. No, we don't need that. And it's unwise to ask for it.

I think at the end of the day, like I give Trump a lot of credit. I give this administration a lot of credit for having very clearly listened to what was going on with respect to, you know, regulation by enforcement, with debanking, with all of the stuff that was getting in the way of the industry just doing its thing. And that, to be clear-

has all been cleared away now. We are in a great position. We don't need anything more. We don't need government to be buying things and we don't need the corrupting influence of all these companies now trying to beseech the government, "Oh please, please government, will you buy this? Will you buy that? Will you make me a winner?" I think it really is bad for all of us to have all of this. So David Sachs' point here, that look, if government held all their Bitcoin, it'd be worth a lot more today.

Yes, look, I don't think the government is really in a position to speculate on new technologies. That's not what the government should be doing. It doesn't have the competence to do that, right? That's why we don't have a sovereign wealth fund and that's why we don't have the government making investments of this kind. We have private investors doing that because we believe that they're more competent and they're more able to take those kinds of risks. At this point, Bitcoin is not a speculative investment.

Right? That is very clear. Bitcoin has crossed that chasm, as I said. So I think it's fine to say like, well, look, the government should not have been holding onto the Bitcoin and hoping that it would go up because the government had no way to know. There were no competence to know. But now it does. Now it does have the competence to know. It has the people in place. It has the regulatory structures in place. And Bitcoin now is over 15 years old.

This is no longer taking a bet on something that might happen. This is basically seeing the trend line and getting ahead of it. Yeah. Yeah. The United States government would actually not be the first government to buy Bitcoin. It would be something like the second or third or fourth or something. Still very close to the front. And in terms of size, meaningfully the first. But yeah, they are by no means the first government to be doing this.

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And for Bankless listeners, you can use Frax.com slash r slash Bankless when bridging to Fraxel for exclusive Fraxel perks and boosted rewards. And we're back. Hasib, the SPY is down 7% over the last 15 days, which is not great. And markets everywhere, especially the crypto markets, but even the traditional markets are taking a pummeling. And some of the analysis that's going on here is we're in this like

perceived trade war, potential trade war. Trump, maybe this sounds like deja vu, but he confirmed 25% tariffs on imports from Mexico and Canada that would take effect on Tuesday. That has been received by some counter moves. So 25% on goods and 10% on energy from Canada to the United States.

export tax from Ontario, 20% on tariff goods from China to the United States. So there's a trade war going on. This has since been rolled back selectively. So I think the automobile industry is getting a selective undoing of the tariff. The current joke is that we're getting tariffs, but everything has an exception. So we still don't know how this tariff conversation is happening. But also people are just kind of understanding that

Trump is no longer aligned with the stock market. He is now aligned with the 10-year treasury. He wants the stock market down and the yields, the 10-year treasury to go up and for yields to go down. And so people, I think the market have digested to have short-term pain as their plan. Why this is happening is multifold. I did an episode with Jim Bianco, I think that

I think did a really good job explaining this, but basically it's really good for domestic manufacturing. It's really good for domestic innovation and the jobs market. And he thinks I think the the 40 chess move is that Trump can make the economy surge off of much more real growth in the GDP. In addition to everything that I've just said, Elon Musk and those are laying off tons of people from the federal government, which is one of the nation's biggest spenders. And so spending is going down, which is

unraveling some perceived fake GDP growth. Overall, markets are confused, they're concerned, they're uncertain, they've been rocked. What's your take about the recent unfolding events in the macro markets?

I think anybody who's trying to frame this positively is absolutely talking out of their ass. Like that's actually ridiculous. That's of course, that's ridiculous, right? Like there's a reason why every single economist says that this is a bad idea. There's a reason why his own administration is confused and is like, oh, wait, we're doing that. Wait, no, no, no. We're not doing this. Like there's the messaging is not consistent. And there's a reason why markets are so surprised by this.

is because literally everything that you've been hearing from all the talking heads was that, oh, Trump is posturing. He's not going to go all the way on this because it would obviously be so stupid to start a trade war with your closest allies in a very integrated supply chain. Like these are not the enemy. Like the United States has enemies. No doubt about that. It is not Canada and Mexico. Like we intentionally, like if you remember during COVID, we had this thing called friend shoring.

Friend-shoring is the idea that like, okay, we want to untangle some of these supply chains and bring them back domestically. But obviously it doesn't make sense to do them in the U.S. because it's just not our expertise. We should try to bring them closer to our hemisphere to people that we do close trade with and we have strong trust relationships. That means Canada and Mexico. Now Trump is saying, no, no, no, they're also enemies.

Everybody that's not the US is an enemy, which is stupid, which is absolutely stupid. Like it is economically destructive to take all of the human capital and all of the economic capital that we've found ways to bring close to us and say, no, no, no, that's not good enough. That's not good enough. It has to literally be in the United States.

Why is it that we're moving some of this manufacturing stuff into Mexico and into Canada? The answer is because the United States sucks at it. We have way too onerous regulations. We have way too high labor prices, and that just makes it uneconomical to do things here. So if we're doing that here, what is the United States really good at? We're really good at high value stuff.

not manufacturing, not making cars. We're really good at the intellectual labor. We're really good at making AIs. We're really good at finance. We're really good at this very, very high-end stuff, which increasingly is the stuff of which we're the envy of the world. And Trump is saying, no, no, no, no, no. We want to be the envy of the world for everything. We want to have low-end manufacturing also in the U.S. It's not going to happen. There's just absolutely no way it's going to happen.

And the reality is that yes, okay, we're in a trade war ostensibly, but whatever Mexico and Canada are doing to us doesn't really matter because we don't import that much from Mexico and Canada. It's more them are so export driven. Like we're just crushing the Mexican and Canadian economies and forcing them into recessions.

And, and like their, their governments are confused. They're like, wait, what, what, especially Canada, Canada's like, what, what do you want from us? I don't, I don't know. We don't, we're not making the fentanyl guys. Like that's Mexico and China. It's not us. It's, I swear it's not us. So I think, look, Trump has his own, he has his own instincts about politics and he has his own instincts about economics, which very clearly, I mean, Trump said while he was on the campaign trail that he loves, I believe it was McKinley, McKinley,

who was this, like the Trump, the Trump, sorry, not the Trump, the tariff president. And it's funny because, you know, McKinley had two terms. His first term, he was very, very aggressive on tariffs. And his second term, he basically renounced all of his tariffs and changed his mind and decided that tariffs were a terrible idea. And the United States got a lot wealthier when they removed all these tariffs. So if you look back in history at the Smoot-Hawley tariffs, which were the instigator for a lot of what happened in World War II, you just like the...

Our country just learned tariffs are stupid. Tariffs are taxing yourself. It is making importing and trade, which is the thing that made the world rich over the last 300 years, it is making that more expensive. It is saying, no, no, no, we should do less trade. To the extent that Trump is saying, oh, they're charging us too much to send goods through the Panama Canal, that's trade.

When you are raising tariffs on everybody, that's the same thing as us getting charged more to move things to the Panama Canal. Shouldn't you want prices to go up on the Panama Canal? Great, that's making less trade. Now it makes it more incentives for us to build things domestically. This is stupid. It's stupid, and that's the reason why markets are vomiting every time he does it. So in your interpretation, in no way are we in the world in which Donald Trump is playing 4D chess,

is mostly he's kind of playing chaotic checkers, trying to like negotiate maybe, and finagle his way into a more positive outcome. But you're just like not optimistic that this is the optimal strategy at all. - Look, I think Donald Trump is an excellent politician, and he's fundamentally a strong man.

There are times when you want a strongman. There are times when a strongman is the right kind of musculature to do stuff. I think what he's doing in overhauling a lot of the very staid and antiquated bureaucracy in America, you need a strongman in order to make that happen, right? No kind of bureaucrat, you know, sort of, you know, what's the term? Like a Mandarin type president is ever going to be able to make that happen. But for something like this,

Like Trump is very straightforward. I think people who are trying to read multiple layers of interpretation of what Trump's doing are just wrong. And they were wrong in the previous administration and they're wrong now. Trump is very straightforward. He's very easy to understand what he's doing and what he wants. He's going to arm wrestle our allies because he thinks we're getting bad deals and he thinks he can get more concessions from them. And he's right. He can. Is it worth it? I don't know. But he's absolutely right that yes, if you arm wrestle them, you can get them to give you more concessions.

Okay, so that's the trade war conversation. The other half of the macro economy conversation that's going on is just what I think Scott Besson has contrasted is Main Street versus Wall Street. This is a tweet from Scott Besson on a Fox News interview. He said, over the medium term, which is what we're focused on, it's a focus on Main Street.

Wall Street has done great. Wall Street can continue to do fine. But we have a focus on small businesses and consumers. We are going to rebalance the economy, rebalance the economy. Those are that really stuck out to me as a phrase. And this is something that has been going around in like the macro commentators is Trump is favorably heavily favoring bonds over stocks.

The stock market can go down and they're okay with it going down in stark contrast to the first administration from the Donald Trump, but he really wants bonds to go up and yields to go down as well. And so people have grown around some sort of understanding that short-term pain in the traditional markets is totally acceptable to the Donald Trump administration. Also because there's a bunch of short-term debt that they need to refinance. So because of the Biden administration spending, there's a lot of short-term treasuries that we are going to have to pay for soon.

And the yields at the time that we have to pay those things, the current yield rate is really going to matter. And so Donald Trump is trying to hammer the economy in order to bring it down the equities market, bring up the bond market and bring down yields. That's that's the perceived strategy. I think that's probably what the status quo assumption is, what he's doing. Do you have a take on this or what's going on here?

Again, I think this is people essentially having to create a narrative around what Trump is doing, right? When he got into office, he did not say this. He did not say this when he was campaigning, right? Which tells you, okay, now they are trying to give a coherent explanation to Wall Street because that's Scott Besson's job. This is Besson's, he's brilliant. He's a very capable guy. And so he's going to give a very clear, consistent narrative to what they're doing. And market is, for whatever reason, they're buying it. But he wasn't saying this before.

And if they weren't saying this before, that means that, okay, this is a reaction to try to rationalize what Trump is doing. But like, do you really think that Trump is there being like, oh, you know, we're paying too much government interest and we need to, we need to lower treasury yields in order to get like, no, he never said that that's what he wanted. What he said was that- It seems too highbrow for him. Exactly. Obviously not. This is obviously not what he's doing. And he said, look, I'm going to focus on like, he's saying here, we have a focus on small business and consumers. Okay. Tariffs do not help consumers. Tariffs are a tax, right?

Tariffs, what is a tariff? A tariff is a tax on an import, okay? Consumers mostly buy things not made here. We don't mostly buy things that are American, right? This is a tax. You are paying a tax. So the idea that this is good for small businesses and consumers is obviously wrong. It is good for a subset of producers, right?

Those producers now have less competition because their opponents are getting taxed. This is industrial policy. Industrial policy is not good for consumers. So this is just wrong. It is just incorrect. The rebalance of the economy, yes, he's trying to, again, push things more toward more domestic production. But is that what the U.S. really needs?

For some definition of needs, yes. But look, I mean, Trump basically is a mercantilist. He's always been a mercantilist. He doesn't believe in, he believes like trade imbalances are intrinsically bad. Okay. I think this is clearly stupid, right? If China is making things and giving them to you in exchange for green pieces of paper, then,

It's way better to have things and not paper, right? Paper is just paper. Let's give people paper and get things. That's a great deal. So I think the idea that, oh, wow, this is bad and we should try to remove this and we should try to create normalization of trade imbalances. I think this is just clearly very, very old school thinking. And Trump is very old school.

All right. Well, then riddle me this, Haseeb, because after all of this and the Donald Trump presidency, crypto markets have – we've lost a trillion dollars in the crypto market cap. I think we're just over $3 trillion. We were in the $2 trillion range last week. We're just over $3 trillion. Mm-hmm.

Bitcoin is up like 2% on the week, but it's down to $88,000. The Ether price, $2,200. The one month candle of the whole entire market looks like crap. This is one of my favorite tweets that I've seen in a while. This one's from you. Trump keeps on delivering no cap gains on crypto in 2025. I thought that was a funny joke. Really what this means is, no, you still have to pay capital gains. You're just not getting any gains.

So if you don't pay your taxes, if you have no gains on crypto in 2025, what do you think this means? How would crypto investors interpret the chaoticness of Trump when it comes to managing their portfolio? Like, how are you thinking about this? Look, I do think at the end of the day, Trump is...

trying things and you can see it very clearly. He's doing all sorts of things. It's been explicit part of their strategy of, um, what is it? Uh, sort of a flood the field and just do as many things as possible. See what sticks, see what's working and then, and then work from there. You can see it with his, with his negotiations. You can see it with the stuff he was doing with Hamas and, and, uh, Gaza was saying, Oh, we're going to turn Gaza into Riviera. Okay. Nobody likes it. Nevermind. We're not talking about that anymore. Uh, now you see it with the negotiations with Zelensky is that it's kind of going back and forth. It's all over the place. Uh,

And same thing I think that he's going to be doing with the economy is that first he announced tariffs, markets vomited. He said, oh, no, never mind. We're going to get a 30-day reprieve. And then markets are like, oh, OK, great. Never mind. You're very reasonable. And then, OK, then he puts the tariffs back in and says, oh, my God, this is terrible. I can't believe he's really going to do this. And he says, oh, no, we're going to give exceptions to automakers. And there's probably – as you mentioned, there's probably going to be more exceptions. I think at the end of the day, Trump is – he's not –

He's not really married to principles. He's not trying to be easy to understand. He's trying to do things that make sense to him. And he's seeing what happens and he's playing it fast and loose. So I think what you will see in the long run is that Trump is going to adapt quickly.

He's going to realize what works and what doesn't. And at the end of the day, you know, what was the original stated impetus for all of this? The answer was fentanyl, right? It was, it was fentanyl and immigration. That was what he won, ran on, mostly got elected on was honestly a lot of the stuff going on with respect to immigration and the border. And if you, if you follow some of the coverage from the New York times,

He has been wildly effective at closing down the Southern border. So we're, we're, we're something, it used to be, I think something like a thousand people a day that's gone down to like five people a day that have been coming across the border. The amount of fentanyl, like what's going to happen with the cartels, it's been incredibly effective. So what he's done is,

Now, I think he's, I think probably what ends up happening as the year drags on is that he realized like, oh, okay, well, huh, that worked. Everyone likes it. They don't like this tariff stuff. I'll stop. And,

And he'll stop and the stock market will come back to where it was and crypto will start doing well again. And he'll be like, great. And he'll move on and we'll never talk about it again. So my base case is that this is the way Trump operates. Trump just does stuff and he sees how things react. So I don't think that we are going to be in for a long-term secular decline because of these tariffs. And I think at the end of the day, like the trend line for crypto is still positive. It's just reacting to macro. And macro, of course, like the main thing that matters for macro is that

tariffs are inflationary. Tariffs also mean lower growth because again, it's a big tax. It's a tax on trade. Trade is really good for growth. So if we are not trading anymore and we're going to have a higher inflation, then yeah, you're going to have higher for longer and you're going to have more pain. I think Trump will walk this stuff back because he has also said,

In addition to all the stuff about, okay, yeah, we're going to help, you know, bring manufacturing back to America. He also said, we're going to lower interest rates, right? That doesn't mean bond yields. It means interest rates. So he wants the Fed fund rates to come down and he knows that's going to be, that's going to be juicing the economy. And at the end of the day, he has a huge real estate portfolio in addition to his crypto portfolio. And that means he needs rates to come down. Right.

Right. Yeah, this one tweet from Zero Hedge is comparing Trump tariffs 1.0 from the last administration, the last Trump administration, which he did this whole tariff thing in the beginning of last administration too, overlapping it with the Trump tariffs 2.0 with what I believe is, I'm pretty sure, some index of the stock market. And it echoes. I don't really believe in-

comparing across time. It's a little woo-woo, but it makes me feel good. It makes me feel good. Also tariffs 2.0 are way bigger than tariffs 1.0. That's true. This is true. This is true. But tariffs 1.0 also, like, as you mentioned, there were a lot of walking it back, right? So you started with this big thing that you added more and more exceptions and epicycles to the point where the tariffs eventually were like a few percent of overall trade with China. So it wasn't that significant in the overall scheme of things.

Okay, let's dive back into some crypto native topics because there are some tectonic shifts that are happening in the Ethereum universe. Following the announcement of Ayamayaguchi, the now former executive director of the Ethereum Foundation, she is now the president that got announced last week or the week before. It is now announced that there are two new co-executive directors that will replace her.

Pardon me for butchering these names. Xiao Wang Wei, who has previously been a researcher at the Ethereum Foundation for the last seven years. She is now becoming the co-executive director of the Ethereum Foundation. And then her co-ED is Thomas Sanzak, the CEO of Nethermind, managed to lead the team and manage to scale the Nethermind project from an early stage project to a global company.

Also pretty good at talent recruitment, allegedly. These two co-directors will start their role on March 17th. So that is 10 days from the time of this release. So going from one executive director, Aya Mayaguchi, who I think the Aya Mayaguchi phase of leadership of the Ethereum Foundation will be called the philosophy of addition by subtraction. That was her whole deal. And now we are having two new co-EDs to lead.

a little bit unknown about what this phase, how this phase will be defined by or marked by as it relates to the Ethereum Foundation and its stewardship of the Ethereum protocol. Haseeb, what's your reaction to this?

Uh, I, to be honest, I don't have a good read of how the leadership is going to change, especially under a co-executive director situation. I don't tend to love these kinds of co-CEO, co-directorships. Uh, I think they tend to be kind of messy and splitting the baby between two different worldviews or two different characteristics that you want, but we'll see. I think we have to give them the benefit of the doubt that, um, there's some wisdom here and also that they're, they're listening, right? They're paying attention to what

the ethereum community has been saying and i have to imagine they have a very clear mandate which is that we're we are going to be changing the way that we do things within the ethereum uh uh foundation compared to what was

Yeah, many people in the Ethereum community were really gearing for Danny Ryan to become the ED. People are familiar with Danny Ryan. He was the coordinator, engineer coordinator who helped ship the merge. So understands both like the incredible importance that Ethereum has a role to play for this world, but also he's an engineer.

Also, he is a coordinator, which is kind of what Ethereum needs most of all, because Ethereum is this not just the EF isn't just this flat organization, but Ethereum is this very flat ecosystem. And that's rather than a director, an executive director, Ethereum overall needs coordination the most, because as a decentralized ecosystem, coordination is what it lacks the most. And so people are really gearing for Danny Ryan to become the ED.

uh he is not the ed he did not get the ed job but he is instead announcing that he has joined as a co-founder of etherealize uh which is um this organization that is coming up kind of this pseudo second foundation which is really meant to be a liaison to the institutions of the world as

to like how they can work with and be benefited by aetherium just really trying to be a conduit a pipeline of just education and resources between The institutions of the world and aetherium so people are pretty pretty stoked about this I think people are still kind of digesting their thoughts, but I think people are very happy I'm less familiar with both his y'all and Xiao and Thomas from from the executive ED side of things But I think people are very

happy about Thomas's technical competence. But then also people are very happy that Danny Ryan is going and talking to institutions because Danny Ryan is such a likable guy. I don't think he's ever done a BD role before, but I think he could crush it. So what's your take with Danny Ryan's landing as a co-founder of Etherealize? Totally agreed. I think it's unfortunate to see him not be on the foundation side, but I'm sure Etherealize is going to do great work. Etherealize, it sort of feels like a

a new generation of consensus, the consensus of the company, where they're really specifically working on trying to get institutions on board and getting them into the Ethereum ecosystem. So I think it's great to see. That being said, for all of these choices, the proof's in the pudding. So we've yet to see what they're actually going to deliver. And I think that's the way you should be trying to judge these things.

Yeah, I'm working on a number of podcasts on this subject. So to be confirmed on both date and whether or not these podcasts are actually happening, this is not locked in, but I'm working on getting Vivek and Danny Ryan from Etherealize on the show so we can hear a little bit more about what's going on there. Thomas and Sia from the new EF directors, I'm working on getting them on the show. And then while I'm at it, we're going to talk about some native roll-ups with Uma Roy and Justin Drake and then also Tim Bako on the Ethereum roadmap and the scaling roadmap because I think that is...

The main like topic at hand that people that the community is concerned about when it comes to the Ethereum foundation is like yo Ethereum is in a new phase. It is in a new environment The environment around a theorem has changed and a theorem itself has not changed It is still in this peacetime peacetime world and we need some more aggressive leadership and

Which came to, which brings me to this tweet from Vitalik, who says, for 2025, we need Fusaka on the layer one with PureDAS, ideally with a 48 slash 72 blob target limit. If you didn't understand any of those words, Fusaka is an incoming update to the Ethereum protocol. It's a hard fork. We name these things weird. PureDAS is a upgrade to Ethereum's data availability supply. We introduced data availability sampling. And then 4872 is how many blobs we're going to have per block.

block this is roughly 2.5 times more aggressive than previous estimations for what the ethereum protocol the layer 1 will get in 2021 this is still a an estimation of what we will get this is just from vitalik so it's not confirmed but it's definitely more aggressive than things in the past

Haseeb, what's your general sentiment? We have Celestia on one side of things with a ton of DA. Solana is squeezing Ethereum from the execution side. Bitcoin is becoming money faster than I'll say Ethereum is. So Ethereum has gotten squeezed. This has led to this community angst as it has felt, which is why we're having these Ethereum Foundation executive director conversations. What's your take on just the broad landscape of all of these conversations? Yeah, so I think Ethereum being focused on scaling data availability feels again like

Kind of being on autopilot. It doesn't feel like scaling data availability is the thing that Ethereum really should be focusing on, given all the voices that are chattering in the wings. Like if you think about the risk to Ethereum being eventually made obsolete by one, these new generation of EVMs or alternatively from Solana or the move ecosystem, it's not that it needs to scale DA.

In fact, you know, one of the constant critiques that you hear of Ethereum is that so much of the fees that it was generating was from the DA that was coming from roll-ups paying significant fees to Ethereum because of the fact that it had to be, you know, using these state up

Once you separate out blob storage, which is the DA, then the fees basically went to near zero and they're still at basically near zero. If you scale this up, you're going to be even more at near zero because there just isn't the demand for DA on Ethereum. So I don't know that this is, I mean, look, in a limit, I do agree that, look, everything should be scaled, but it feels like the most obvious thing that really needs to be scaled is Ethereum execution layer.

The layer one, right? I mean, this is also layer one, but it's not the execution side. It's not smart contracts, not state. It's not all that other stuff. So look, this is fine. And I don't disagree that, look, you should be scaling the DA side and yes, okay, you need to have data availability sampling as opposed to just doing the kind of dumb obvious thing where everyone stores everything. But is this really the problem? I mean, again, this was always part of the roadmap. And so I wouldn't say, okay, you should drop this and

not do it at all, but it's very clear, you know, Ethereum basically has only increased the gas limit since, what is it, like six, nine months ago? And that's it. It hasn't done anything to, if you remember, who was it? Max from- Max Resnick, yeah. Max Resnick, right? He was instigating very strongly that Ethereum needs to do more to scale the execution layer.

And it seems like so far, those voices have mostly gotten crowded out. And I'd like to see Ethereum re-engaging with that conversation because a lot of these parameters haven't really changed very much in a very, very long time, despite the fact that the internet has changed, hardware has changed, bandwidth has changed, all these things have improved. And most of these networks, they basically say like, look, as...

as the capacity of the underlying links in the network increase, we should be scaling the parameters of the blockchain too. But Ethereum seems kind of frozen in amber. And I think that's right now to its weakness.

Yeah, yeah. People really resist the idea of scaling the layer one the most in Ethereum. Yet seemingly all the other competitors of Ethereum are doing that, are all doing that. I think as downstream of like Max Resnick's like tugging of the Overton window of the same conversation, Vitalik did release this blog that I'm trying to pull up, but I don't have the URL, right? Just kidding. He, on February 14th, he said, reasons to have higher layer one gas limits, even in a layer two heavy Ethereum.

So he wrote this blog post that kind of gave the argument for like why we need a high throughput layer one and gave some like instances in which a high throughput layer one is not a nice to have, it's actually a requirement. I do think that this article, this motivation for writing this article is downstream of Max Resnick's like influence on the discourse of layer one scaling in the Ethereum land, whether people want to admit that or not.

But nonetheless, I do agree with you that nonetheless, we have like scaled the gas one limit a little bit, like validators have voted to have higher gas limits, but that is a drop in the bucket of like what's happening on in like Solana and incoming chains as well.

That's right. That's right. I mean, at the end of the day, so much of the revenue from any of these chains comes ultimately from MEV and not from the base fees, right? But basically, I think what people need to see from Ethereum is a commitment to scaling the layer one enough that fees can be like, you know, baseline fees can reliably be fairly low. They don't have to be Solana level. They don't have to be Polygon level, but they should be low enough that people have confidence that Ethereum is going to continue scaling. Like Ethereum should not be Bitcoin.

Bitcoin had basically a civil war over whether or not Bitcoin should quote unquote scale by increasing the block size. Of course, that war ended up being extremely contentious. But the fact that the war was so contentious was in large part an outgrowth of the fact that Bitcoin has not really made a commitment

to scaling um ethereum it's not really clear to people what is ethereum's commitment right so oh we want to be world war iii resistant we want to be maximally decentralized we want to encourage home staking and have this uh you know very very broad what is it infinite garden of everybody being able to participate but um the the raw brute reality of hey people want to use this chain

and if it's too expensive to use this chain they will go elsewhere uh i think that's a real threat that hangs over ethereum that ethereum needs to thoughtfully meet that challenge and have a real answer to those people yeah one of the answers to that question is like well yeah they will go to the layer twos and this is a tweet that came out um both from base and jesse uh introducing flash blocks which is uh innovation coming out of flash bots

also i believe live on uni chain but it is an update to the base chain that is making base the fastest evm chain to date allegedly bringing block times down from two seconds down to 200 milliseconds i believe solana block times are 400 milliseconds arbitron block times are 250 milliseconds and so now base is at 200 milliseconds

And then Jesse tweets out, you know, wartime Jesse, base will be two times faster than Solana. And so hopefully, according to the Ethereum ecosystem, that if the Ethereum layer one loses a user, base or another layer two gains a user. Do you think that...

So there's one conversation of just like it's layer twos versus the layer ones and it's all the theorems layer twos versus layer ones. And then there's another conversation out there which users don't care anything about what a layer two or layer one is. And honestly, in the future, the definition between a layer one and layer two will also be blurred. It's all just chains. It's all chains all the time. Everyone's trying to go IBRL. Every chain is trying to maximize, increase their bandwidth, reduce their latency.

And so Ethereum layer one also ought to do that. What's your take on that and like nuance of the conversation? It's somewhat true, somewhat not true. It's definitely more true than it felt like a couple of years ago that these are just chains at the end of the day. They're just RPC endpoints and users are mostly indifferent to the quote unquote security of a layer two versus a layer one. So I think that is probably true.

The second thing of course is that it is different to use a layer one versus layer two because the native asset is different, right? So if you're using a layer two, native asset is ETH. And so if you're on base, you're probably paying your fees in ETH or I guess maybe in USDC at some point. But right now the monetariness of the asset is very different for a layer two that has a governance token versus a layer one that has its own native asset that's used to pay gas.

Beyond that, so I think what Jesse's pointing to here is this Flashblocks that they're doing in partnership with Flashbots, which is basically very similar to Solana Shreds. So Shreds are sort of these sub-blocks or part of a block that's not fully completed that's being streamed out in real time that allows people to get more or less a high degree of confidence that their transaction is going to be confirmed slash finalized.

But it's sort of less strong than actually getting the complete block and certainly less strong than the block actually settling to layer one. The reality is that most people at this point don't really care. All they want is for their UI to stop spinning, right? And so as soon as your UI stops spinning, you're like, great, I'm done, time to move on. So if you can get the UI to stop spinning faster and make things feel snappy, great. The reality is that when you have a centralized sequencer, as you have with layer twos,

It's not that hard to get 200 millisecond, 250 millisecond, because that's just, okay, you know, we've had this for a while with receipts, right? Receipts are this cryptographic commitment that, oh, I saw your transaction. I will include you. You're good. You don't necessarily get the new vision of the state, but you at least get confirmation that, yes, your transaction will be included. But I don't know what the state is going to look like once you're done. This is somewhat better because it gives you a picture of what the state is going to look like once you're actually finished.

Lastly, in the Ethereum world, DevConnect was announced going to Buenos Aires. It has been a long time coming. I think if you are an Ethereum community member living in Argentina or Buenos Aires, you are very happy that finally there's an Ethereum event coming to Buenos Aires. This is coming in November 17th through 22nd. I am very excited. I was in Buenos Aires twice last year. I'm very excited to go back. Kasib, are you going to go to DevConnect?

I am not, unfortunately. You already know that the answer is no. Yes. I've, after all of the weird, after all the like kidnappings and ransoms and all this stuff that we were seeing over the, over the last like six months, I just decided that I'm not going to go to any more high profile places where I, I'm not super confident in the security.

And Buenos Aires, beautiful place. I will go there when there's not a high profile event happening. You will go there when the crypto people are not going there. Exactly. I don't want to be broadcasting the world. Hey, I'm going to Buenos Aires. Hit me up. Well, Haseeb, while you are not at the DevConnect in Buenos Aires, I'll have a bunch of talks for you because we are doing a bankless summit there. Yeah.

So there will be entertainment for you to sit back and watch. I don't know if we're going to live stream it, but there are. We're going to do a Bankless Summit, just like we did at DevCon. We had, I think, 11 speakers all give talks. No panels.

No panels whatsoever. Only talks. TED Talks for Ethereum. Everyone really enjoyed it. So if you are a Bankless citizen, you guys have a discount code for your tickets. All right. All right, Bankless Nation. We're going to wrap up this conversation with a few talks about some AI models because I know Haseeb is following the AI space. There's also a Kaido tweet that I want to get Haseeb's take on. But first, before we get there, a message from some of these fantastic sponsors that make this show possible. Imagine a world where your day-to-day banking runs on a blockchain. That's exactly what Mantle is building.

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Hasib, just to recap some of the recent developments in the AI space, Alibaba, this is your tweet, Alibaba is cooking their 32 billion model parameter. Parameter model is outperforming DeepSeek's R1 671 billion parameter model. So this is a 20x more efficient model that got released two months after DeepSeek R1 that is already outperforming it. So we got a 20x

efficiency increase from Alibaba from their model. Chat GPT 4.5 is getting announced. You tweet out that it's underwhelming, but nonetheless, it did get released. But then also Grok 3 from XAI, which people did not

realized that XAI was in the race at all. I think blew previous models, other frontier models out of the water when it got released just a couple of weeks ago. The AI wars, I think, is one of the most interesting things to have ever happened in my lifetime. I think I'm having a ton of fun following it. We're doing a little bit more AI content here at Bankless these days. What's your high-level broad take about your excitement about AI, your interest in AI, why crypto people might

consider it relevant to their bags, to their industry, just overall, like what's up with AI? So high level, what you're seeing in the industry right now is enormous amounts of compression where all of the frontier labs are getting closer and closer to each other. So you see now XAI, Google, OpenAI, they're trading spots. And of course, DeepSeek is now in the running as being one of the top labs in the world. Uh,

Interestingly, Meta seems to have kind of fallen out of the conversation. So the Lama models are just way left in the dust due to DeepSeek and Quen, which is Alibaba's models. So it's been very impressive to see how much everybody's converging. And once upon a time, we might have thought like, oh, wow, you know, opening eyes so far ahead, who's ever going to catch up? Opening eyes is going to be worth a kajillion dollars someday. And obviously right now, they're an incredibly valuable company in large part because people trust their products, right?

but not because their models are way ahead of other people's models. That being said, you know, O3 Mini High is still right now the number one model, and they're still beating, you know, even Grok is stronger than the O3 Mini High. And then once we get the full O3 release, almost certainly according to their benchmarks, that is going to be the number one model that's out there. But again, it's only a short period of time that any of these labs stay as the number one player, which tells you,

everybody knows what everyone else is doing. There's no secret sauce. There's just spending money, doing the thing, training the model. You see somebody else pulled ahead and you figure out really quickly what they did right and how you can catch up. So that's one of these big meta stories that's happening in the AI space. The other one is distillation is crazy powerful.

So distillation is when you take a big model like, you know, take the GPT 4.5. We don't know how big it is, but we know that it's probably in the trillions of parameters. It's a gigantic model, probably the largest model we've ever seen, which is why if you look at the API pricing for GPT 4.5, it is huge.

It is way more expensive than anything else out there on the market by a very large margin. And Sam Altman said, look, I don't know how long we're going to offer this on the API, implying that it seemed like it probably was uneconomical for them to even offer it for inference. And he's basically like, look, you guys tell us if you find something useful to do with this because we don't really know.

So what that tells you is that this distillation process, they, according to some internal reporting, they had GPT-4.5 for a long time and they used GPT-4.5, which is kind of just a base intelligent model, to distill down into O3.

And O3 was a much smaller model that was learning from GPT 4.5. This process called distillation. This distillation is incredibly powerful. And it's basically a deflationary force on the cost of AI because you get these gigantic training runs to run these huge models. You distill them down into these very small models that are way more efficient to run inference on. And eventually, like for something like Quen, you can see how smart these things are that can now run on a high-end GPU.

So you could have your own consumer device running a 32B model. It's not easy to fit this thing onto a device, but for high-end stuff, you can actually run this locally, which is crazy because, you know, 671 billion, that's like, okay, you need a cluster of H100s to run something like a 671B model. So that meta level, those are the things that are happening. And the last thing, of course, is reinforcement learning.

The R1, O1, O3, all this stuff is using reinforcement learning to get really, really good at fixed domains like math and coding. This is the big trend that we just have no idea how far it's going to go, but it very clearly, there's a lot more juice to be squeezed from this paradigm. And that's what people are most excited about is maybe this is the path to general intelligence is that, you know, so far we've been this, you know, next token prediction, quote unquote. But next token prediction just gets you to like,

just babble, right? And that's what all these models do. They babble, but they babble in a smarter and smarter and smarter way, but they're not getting rewarded or punished for being right. And that's fundamentally what reinforcement learning is. It's not just you babble. You babble, but you only get rewarded if you're right, if you get the right answer. So we started with reinforcement learning from human feedback, which is do humans like your babble or do they not like your babble? But that's not the same thing as did you get the right answer?

Getting the right answer is the ultimate way that all organisms like evolve, right? They evolve by did you live or did you die? Did you do the right thing? Did you get the food? Did you accomplish the task? So accomplishing the task of pleasing humans gets us to say things that, gets models to say things that we like. But getting models to solve problems in the world requires reinforcement learning. And that's where we are finally, just really in the last year or so. So I'm very excited about where all this stuff is going.

Bringing this back to crypto, I've always believed that the bigger vector of influence is not going to be crypto influencing AI, but AI influencing crypto. What do you mean by that?

So what I mean is there are some people who are trying to build things like, you know, if you look at Noose Research, Prime Intellect, you know, you look at some of the folks who are trying to do decentralized machine learning, decentralized GPUs, these GPU marketplaces, all these things are trying to see how can crypto help the AI industry?

And there are some ways in which maybe we can be helpful. And I don't discount those necessarily, but it's clear that that vector is going to be much smaller than the vector going in the other direction, which is how is AI going to change the crypto industry? Right. And I think the answer is that the change is going to be absolutely fucking massive. Right. Like, so, you know, I'm a VC, we invest in startups and most of this, what, what do the startups do when we give them money? They spend it on engineers to go and build code because it's very, very expensive to build and test and audit software.

In a post-AI world, those costs are going to absolutely plummet because you're going to see that AI agents, which are going to be much, much cheaper than what it currently costs to hire a bunch of engineers, are going to be able to build products like that. Instead of having to raise $3 million to go build an MVP, you can raise $1 million.

you know ten thousand dollars you can finance that yourself just you know weekends and evenings have your little ai agents off there working while you're at work all day uh and the amount of startup activity the amount of products that will get created the amount of of just anybody who'll be able to start a company in their free time and test whether or not people actually want it is going to absolutely explode right so the analogy i like to give people you know people uh sometimes ask like well well then what are vc's gonna do if all this stuff you know if you don't need to give people millions of dollars to write software

Well, for one, there's a lot of stuff you need to spend money on besides software. But two, you know, if you look back to the early internet, right? In the early internet, like 95, 96, if you want to create a website, right? Just a website. It was tremendously expensive to create a website because what do you, what did you have to do to create a website? You had to go and buy a fucking server, right?

And run that server in your apartment or in your office building. And that was where you hosted your website, right? It cost a shitload of money. That's what people raise money for is just to have a website. Now a website is literally free.

You pay $0 to run a website, right? That deflation in the cost of actually getting a startup up and running off the ground, right? Think about the startup, like the amount of money now that you need to spend in order to just try out, hey, does anybody want this thing with a landing page? And, you know, even running an app, right? You go on AWS, you can get, you can serve to hundreds of thousands of people for like, you know, less than a hundred bucks. So that is no longer the reason why you need to raise capital. Mm-hmm.

You need to raise capital for other stuff, but not for that, right? That is where we're going as an industry. And it just means that the proliferation of products, of startups, of ideas is going to increase 10, 100 fold in crypto. And I think that's going to be huge renaissance

in our industry. And that's something I'm super excited about. Yeah. From November to early January in the crypto industry, it was really marked by like the AI agent bubble, the AI slop bot bubble, the wrapped LLM in a Twitter account bubble. And I think that's what really people think about when you say the words AI agent or crypto AI, that recent memory is kind of like the taste in their mouth. But it's also worth noting that there were like

two waves of AI crypto investment that came before that one that were much quieter, not very big, but this has been a rolling theme of like this crypto AI bubble that is, in my opinion, crescendoing in smaller and smaller, or excuse me, larger and larger bubbles. And that was just the most recent one. I kind of think this is just going to happen all over again. Like the models, even from just compared to last November,

the models I'm using today, uh, chat GPT, Claude, um, anthropic, they're so good. They are so good. They do some incredible stuff. And the rate of acceleration is just absolutely incredible. And so I'm just kind of like sitting on my hands waiting for the next one. We're waiting for the next, like, um, what was it? Truth terminal moment that really unlocks some creative new long tail of opportunities and where the, the way that I, here's the take that I want to bounce off of you, uh,

The AI labs worth somewhere between tens and hundreds of billions of dollars a piece. And that is the arms race. That is the Silicon Valley investment. AI like China versus United States. That's the blue chips. That's the fat tail. That's the fat tail of AI. The long tail of AI starts to become so much more overlapping with the crypto industry. Just because we have more creative people, we can think outside the box. If you're going to make a...

one to $10 million company, or even maybe a $50 million company, the odds that you issue a token is actually pretty high down on that long tail. The odds that you're doing something in crypto is pretty high. And so as the long tail of AI goes, it starts to become more and more integrated into crypto, kind of in the same way that like,

Uniswap actually doesn't really dominate Ether USDC volumes. That's still Binance, that's still Coinbase, but it does dominate on the long tail of assets. I kind of want to apply that same principle to like the long tail of AI projects, the long tail of AI startups. And if you are an

an AI entrepreneur and you want to monetize, well, you're don't go public. It's too cumbersome. It takes too long. It costs way too much money. You can just issue a token related to your project. Not unlike Kaido who issued a token a few, two, three weeks ago and is now actually buying and back, buying back and burning Kaido from the fees. They are an AI relevant company and they issued a token and they're buying back, buying back the tokens from the revenue that they create. Stuff like this, stuff like this. That's kind of my take. What do you think about that?

Yeah. So it's an interesting take on the world. I do think, taking a step back from the particular prediction that you made, the reality still is that AI agents aren't really working yet. The ones that we know of them, yes. The ones that we know. I'm not even talking about crypto. I'm talking about outside of crypto. If you go try OpenAI Operator, try Anthropix computer use, these things cannot reliably order a pizza. Mm-hmm.

Okay. So this, like, obviously it can like write essays, it can solve math problems, but it can't order a pizza. It can't, you know, even get groceries for you. And like, it's sort of, I think what you'll see is that there'll be a phase transition, which is that right now it's kind of a whole lot of nothing, like a lot of Twitter demos, a lot of like, oh, look at this thing. Isn't that cool? But you try it and it's like, oh, it like worked, you know, three out of four times. If you had an executive assistant that could book you an Uber three out of four times, you

You would be like, all right, yeah, you'd fire them and you'd be like, look, I'm just booking my own Ubers. Like it's not worth, it's not worth bothering. So I think what you'll see is that once these things cross a threshold, like right now we're very excited that they can do it even 75% of the time, because before it was more like 10% of the time. But it really has to get to like 98, 99 before we start seeing these things start to just totally change the world.

But it's kind of like nothing, nothing, nothing, nothing, and then everything. That's what it's going to look like. So right now we're still in the nothing phase. And in the nothing phase, there's going to be a lot of beam coins and speculation and Twitter demos and people kind of saying, people getting really excited and then really sad and then really excited and then really sad. I think that you should expect that, is that there's going to be this stop and start feel to all this excitement about agents. But I think you shouldn't lose the thread.

Right. It very clearly, these things are getting better. And once they do, you know, to be honest, I think the biggest thing with respect to crypto is not going to be that, okay, a bunch of startups are going to be using, are going to be launching AI, you know, using AI to launch tokens. I think the biggest thing is going to be that our experience of crypto will fundamentally change because right now, right, we as an industry are very human mediated, right? Like when you are using your wallet, right?

You are clicking buttons, reading hashes, like checking to see if something is a scam, double checking the URL, making sure that, oh, maybe I should check their Twitter. This looks a little weird. Did they get hacked? Did they announce something? Like all this stuff that you're doing manually to prevent yourself from fucking up, to prevent yourself from getting hacked, prevent yourself from like when you're investigating a founder and trying to say, oh, let me look at their LinkedIn. Are they a real guy? Should I trust this app? And AI should be doing all of that for you.

And what is crypto going to feel like when instead of being like, oh, I have my Solana wallet, I have my Ethereum wallet, I have my this wallet. Oh, where's my USCC? It's over here. Oh, it's on Coinbase. I got to pull it out of there and do this and do all this remixing to get my money in the right place to do the thing I want to do with my app. What is it going to feel like when there's just, you have one agent,

That handles all of this. It handles your Coinbase, handles your Metamask, handles your Phantom. It handles like those things, those brands don't even exist anymore. It's just, there's your financial advisor. It's kind of like your crypto guy. You know, like you're someone's crypto guy. Like your mom calls you, is like, hey, buy me Bitcoin. I thought Bitcoin's going up. And you're like, all right, mom, don't worry about it. I'll buy you some Bitcoin. Like that's what your AI agent will be for you. Right.

And you're not going to bother reading the LinkedIn's of these random founders because it'll just do it for you. It'll just say, hey, I checked out the LinkedIn's and I went back to their Twitter history. These guys look scammy. Don't buy this token. And once your agent is doing all that for you, what is it? So first question is like, what is going to be the network effects of blockchains anymore?

Right? Because right now, like we think of like the L1 premium, right? Solana, it's like, oh, well people are on Phantom. And so they're going to, they're going to only want to use Solana apps. But in the future, it's going to be like, well, I want to use this app. I don't care what layer it's on, what L1 it's on. So I want to use this app and my agent will figure out, oh, you know, your USCC is over on base, bridge it over here, do this, blah, blah, blah. It's all happening behind the scenes. And you're just going about your day. You're just doing your stuff and it does it for you. And it's just great. I'm now yield farming on this thing. Just like you asked me to. That world,

really changes the way that we think about blockchains, the way we think about friction, the way we think about lock-in, the way we think about moats. Now, to be clear, we're very far away from that world, right? I think one of the last things that AI agents will be doing is managing your crypto because it's really hard and if you mess up, you can lose everything. So I think that's probably at least five years away. But I think once that happens, to me, that's the most mind-bending change that you're going to see to how crypto works and is valued, which is what you and I are thinking about every single day.

Well, Haseeb, I think that's a great place to leave our listeners. Thank you so much, my man, for walking through the news with me this first week of March. You speak so quickly and so precisely, and you are just a wealth of knowledge. I'm just always very impressed with the knowledge that you bring to the table, Haseeb. So thank you for sharing it with the Bankless Nation this Friday. Thanks for having me, man.

If people want to follow you, Haseeb, I've got your Twitter pulled up here. You are H-O-S-S-E-E-B on Twitter. You also do the Chopping Block every week on Laura Shin's podcast, Chopping Block. If people want to go listen to you, they like the sound of your voice. They like the words that you say. Where should they go find you on the Chopping Block? How can they go find you? Just go to choppingblock.xyz and you can find our podcast.

All right, Haseeb, thank you so much. Bankless Nation, you guys know the deal. Crypto is risky. You can lose what you put in. But nonetheless, we are headed west. This is Frontier. It's not for everyone, but we are glad you are with us on the bankless journey. Thanks a lot.