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A

Bankless nation. We got the ten biggest events in crypto in 2023. Call it the yearly roll up because it is the last week of December of the year and it has been quite a year. I'll say in January of this year. The wounds that FTX gave us were wide open. It was not a good 2022, and 2023 did not look like it was going to be any brighter. We had just delivered the anti crypto regulators of the world the best possible leverage they could have ever asked to suppress the crypto industry. The incoming onslaught of overly aggressive crypto regulation felt inevitable. Meanwhile, the macroclimate was not good. Interest rates were climbing without signs of slowing down. Conversations of the looming recession were growing louder. Consumer credit was rising, and consumer sentiment was down bad. We all entered 2023 with PTSD, all waiting with anticipation for the next shoe to drop. And then, after all that, the drop never came. What seemed like one of the worst moments in Crypto's history turned out to be the bottom the bomb of Genesis. And DCG turned out to be a dud. Rising interest rates began to decelerate in Q one and stopped completely in Q two. The SEC took its first l in the courts, and sellers literally ran out of coins halfway through the year. BlackRock filed its bitcoin ETF on June 16 in 2023, and at that moment in time, bitcoin was already up 200% on the year, recovering from 15,000 to 30,000. And the dark clouds from the demise of 2022 began to lift and the path forward started to reveal itself. Now, here we are, just twelve months later, bitcoin is under one month away from a generally assumed spot, bitcoin ETF approval. Solana after flirting with death from capital, fleeing the network has risen from the ashes in an unprecedented fashion. Gary Gensler has not taken a single w in the courts, and the Fed just pivoted. Funny how all the stars of the markets tend to align before we walk into the bull market of 2024. Bankless nation on this episode of Bankless, we want to cover the biggest events of 2023, lest we forget the lessons it taught us and the patterns we will see in the future. Ryan ready to get through the ten biggest events of crypto?

B

Yeah, I am. And overall, just, I would say 2023 for me, felt like, aw, definitely 2022 is in the l category for sure. 2023. We started our redemption arc, I think, and I'm feeling fantastic about the way we ended the year. So, David, I'm excited to get into the ten biggest crypto events of 2023. And actually, uh, there's a rug here because we actually have 13.

A

I don't know if you know this.

B

We just say ten because it seems good in a title. But, like, we couldn't help ourselves. We. We got three bonus ones for you guys. We're gonna get right to that. But before we do, we want to thank the sponsors that made this episode possible, including we got the biggest events of 2023 for you, bankless nation. But before we get to them, let's take a look at how it all started. This is the charts as of January 1, 2021, 23. So just less than a year ago. And here we are. The total crypto market cap at the time was 840 billion, measured in billions, so we were under a trillion. And we have bitcoin here, 16k bitcoin at that time, David Ethereum above 1000, but 1200 was the ticker price. A number of other coins that you'll recognize. One that we'll get to later in the episode, Solana was sitting at number 17.

A

Okay, it's not anywhere close to the.

B

3.6 billion, or about $10 per Solana. So it was like flirting with that, that $10 mark. Number of other coins, just in general, man, do you remember January last year? Like, how did you feel? It felt very much to me like crypto was licking its wounds. But how did you feel?

A

Personally, I just remember seeing at the top of the Coingecko charts all of the stable coins. And I'm like, oh, yeah, it's a bear market. Coins are like number three through six on the total crypto market cap. You know, people are down bad. If you go look at the charts today, things are not necessarily that case. Things look a lot better. But that will be at the end of the episode because these are going in some loose chronological order.

B

We had a very somber start, I'll say to 2023. And then things started happening. We'll go through these ten to 13 events, and most of them are pretty bullish events, those sprinkled in some bearish events. But let's get to the first, and that is this. Coinbase introduced its layer two network. It's called base. They did that in February of last year. At least that was when it was announced. Why is this? Why does this make number one on our list?

A

It makes number one because Coinbase is just such a signal of legitimacy, because of the way that it has developed the company. It does things slowly, it does things intentionally. It does things that it feels is very safe. And when Coinbase decides to build its own layer two network to finally enter the arena with binance smart chain, and Binance, which had dominated the conversation and had made Binance a ton of money. When Coinbase in the west in America was spinning up its own native layer two chain, using the op stack, using a layer two on ethereum, that was just a huge signal of doubling down and building in a bear market. There are a couple of core principles of base that they launched with. First, a bridge, not an island, whereas binance marching, kind of an island, kind of a siloed ecosystem that's beholden to the binance world. Base was supposed to be a bridge, a bridge for users into the crypto economy, they wrote, built for an easy on chain experience and interoperability with other chains meant to be the home of Coinbase's on chain products, and also built in collaboration, like I said, with the op stack, with optimism. So Coinbase is the second core dev team working on the op stack. So it was really Coinbase and the decentralized world of Dao governance and MIT open source licensing coming to build something for Coinbase, but also for the greater crypto world. And it was just a huge signal of building in a bear market, building a layer two, and open innovation for all to contribute to.

B

I also got some traction pretty quick. It was the fastest l two to 100,000 users in history reached that milestone in 56 days after launch. So even those dark times, we had some traction early on. So that's, number one, that happened to February 2023. I think we're going somewhat chronological here as well. Number two is the collapse of Silicon Valley Bank. David, I almost forgot that happened. But this whole bank crisis in Q one earlier this year, and it kind of culminated in the collapse of this major bank, Silicon Valley bank. And there was all of this talk about contagion. Take us down memory lane. So what, what, what happened in March of 2023?

A

March 10? The joke, I think, is that crypto exported its yield contagion to the trad world because we had just watched terra collapse, then through capital collapse, and then things were kind of okay for a bit, and then we watched FTX collapse, all because of this, like, contagion yield. This yield is toxic yield. And then it worked its way into tradfi, and we all kind of got a lesson on how banks are constructed. And like long term maturity securities, the significant thing is that a lot of crypto startups were banked at Silicon Valley bank and a few other banks that were also adjacent to Silicon Valley. Also, USDC de pegged because it had $3.3 billion of reserves hosted at Silicon Valley bank. And that bank went under, a few others went under. And one of the huge bits of collateral damage as a result of this is signature bank, which also went under, had signet, which a lot of crypto market makers would use to transfer money around very, very quickly. And since signature bank went down, it was more or less, there was a conspiracy that the Fed allowed it to go so that they. They could capture the signet infrastructure. And that is the an l that we took as an industries. We lost Cygnet and we lost a big crypto banking partnership and was one of the beginnings, I would say, of choke. .2.0 yeah.

B

So choke point to 2.0 was really the Fed coming after banks that banked crypto companies. And there was also a legitimacy hit. You said that USDC de pegged. Do you remember it depend to $0.87? Yeah, $1 USDC. And then you see a deep $0.87. That was very concerning at the time for all stablecoin holders. I think a good outcome of this is circle and the issue of USDC got into some of the top ten, the too big to fail types of banks. So now it's no longer. Assets are no longer backed by some of these smaller regional type players like Silicon Valley banks. So maybe that was an upgrade. But at the time, there was talk of contagion. It wouldn't stop at Silicon Valley bank, that many of the other regional banks in the US would. Would get the virus and they would start to collapse. In fact, Balaji, if you remember at the time, David, this was March of last year, he made his famous $1 million bitcoin bet. He said, you buy one bitcoin, I will send $1 million USDC. This is 41 odds as bitcoin is now worth twenty six k. The term is 90 days. He was essentially betting that bitcoin would hit a million dollars in the next 90 days. This year, of course, he fell short on that beta. I remember doing an episode with him where we talked about the reasons. There was also an episode with Arthur Hayes where we talked about the contagion and how the Fed was going to have to bail out the banking system. The FDIC essentially guaranteed all of the assets at these companies and stopped the contagion in its tracks. But it was a Dicey Q one of this year for sure.

A

Yeah, it definitely didn't bode well for the looming recession macro crisis that we all kind of still thought was definitely going to come in Q one Q two of 2023. Moving in to the third subject of this year. This one spans the whole entire year, but it really first started in March. Before I really introduce the subject, I want to pull out this tweet from Nick Carter, where he says, if you want to pick a bottom, it's when all of do Kwon Bankman, Alex Mashinsky, and Suzu have reached their reckoning, only then can we recover. And I heard Nick Harder gave the stake on his podcast as well. He was saying, we cannot proceed as an industry. We cannot come out of this bear market until the scammers and fraudsters of 2022 were jailed. Well, do Kwan was arrested in Montenegro in March of 2023. Fun fact, bankless actually broke that news. Alex Mashinsky was arrested in July 13. Suzu was arrested on September 29, and the SBF was found guilty of seven counts of fraudhouse on November 3. So over the year, one by one, all of the fraudulent scammers of 2023 were, one by one, arrested all over the world, which restored a little bit of my faith in humanity. Ryan, to discover that we still have due process and rule of law, and no matter what you do inside of crypto or outside of crypto, if you scam people, you will go to jail.

B

That was number three. So scammers arrested, and it took many months for that to play out. But. But some people at the beginning of the year were saying things like, SBF would never be held to account, yet. Too many friends in Washington sort of thing. And it turned out none of that was correct. Justice did prevail in crypto. So hopefully we've learned some lessons going into this bull cycle going to 2024. Something as well happened in March that is significant. David, this is the arbitrum airdrop. That happened on March 16. $1.5 billion was dropped to individual arbitrum addresses and making it the largest, one of the largest airdrops in history.

A

It might be the largest.

B

Yeah, this is the. This is the promo video for that absolutely massive amount of money. Of course, arbitrum was the first layer two roll up, kind of out of the gates early on, optimism close on its heels. But arbitrum was first, and this was a very significant event, kind of kicking off the growth of layer two s.

A

The arbitrum token, of course, has spawned the arbitrum dao, and the very vibrant defi ecosystem on arbitrum made it pretty easy, I would say, to distribute arbitrum tokens into on chain users of arbitrum. We also didn't necessarily have to use arbitrum to get it. Arbitrum Nova was also on the table, as well as a few other criteria. And this also marked the launch of arbitrum orbits, which was Arbitrum's chain development kit. So you could launch layer threes on top of Arbitrum, and then also with Arbitrum Dao approval, you could launch arbitrum chains on top of Ethereum as well. So it was also arbitrum entering the race of the chain development kit. The horizontal scaling of layer twos on Ethereum. I think to this day, I think Arbitrum has one of the largest treasuries crypto, and that is all governed by the DAO, all by the ArB token, and that is not including the very positive economics that arbitrum has from sequencer fees. So arbitrum just makes eth from reselling Ethereum layer one block space, and they are very, very cash positive as an organization, which I would say was just a big plus one to the overall layer two economic thesis.

B

Yeah, a big moment. That was certainly a coming in at number five. And I'm not sure what the exact date is for this. David, maybe you could give us some insight, but it's definitely been an evolving trend through the course of 2023, and that is bitcoin ordinals revived bitcoin building culture. Give us the recap on what ordinals actually is. And I'm looking at the dude analytics charts here of daily inscription data, and it looks like a straight line up starting really in May. That's when it will, like, the charts show it really taking off. But. But what is this? And what did it do for bitcoin culture and the community of bitcoin?

A

Yeah, so bitcoin ordinals was launched in February, and it made a pretty big splash between February and March. And then the absolute vertical line of further inscriptions, which are ordinals, coming after the first wave, just was massively significant. And to this day, inscriptions is a very vibrant ecosystem on bitcoin.

B

When you say inscriptions, what do you mean? Because it's coming. Somebody coming from, like, the Ethereum space might not fully understand. What's an inscription, Dave, and what does it empower?

A

An inscription is kind of like a packet of data. I would say. An ordinal is a single satoshi, which is a very, very small division, the smallest division of bitcoin, and it spawns, like, splits from the Utxo set. So you send one satoshi, and all of a sudden you have a unique trail of one single satoshi running around bitcoin. That's how bitcoin works. And with inscriptions, you can append data to that one satoshi. So you're kind of making an NFT. And so an inscription is like a little packet of data. Could be a jpeg, could be anything. Someone, Ryan, put doom the video game into an inscription that you could legitimately play on bitcoin through ordinals, through this inscription technology.

B

Not just nfts, too. Tokens. Right? I'm seeing a chart here, BRC twenties, which is bitcoin's version of an ordinal based token. Is that right?

A

That's exactly right. And so bitcoin through ordinals, through these inscriptions, has become extremely expressive in a way to produce surface area for bitcoin builders. And this is kind of spawning, spawned a civil war in bitcoin between the bitcoin fundamentalists, the people who are like, no, it's BTC and BTC alone. And then the bitcoin progressives who are saying, hey, it's inside of the protocol rules. It's allowed. And as a result, we are seeing a renaissance of bitcoin building culture. There are venture capital deals, there are startup deals building on bitcoins in ways that we have never seen before. Taproot wizards, I would say, is the spearhead of this, the vanguard of this, who raised $7.5 million this year, led by Eric Wall and Udi Wertheimer, and who showed up to the bitcoin conference in Miami in their wizards uniform, doing the floss on stage, kind of trolling all of the bitcoin fundamentalists out there saying like, yo, we're like, we're part of bitcoin, and this is part of the rules, and this is what we're doing.

B

I enjoy it from a number of different dimensions, but certainly there's this cultural rift that we've seen in the community and kind of the lyric zero of bitcoin between those, you call them fundamentalists, who basically think bitcoin block space should really be reserved for this pristine asset of bitcoin and, like, transactions related to bitcoin, the asset, and others who are basically saying, no, it's block space. Bitcoin block space. We can put tokens in it. We can put everyone in it. We can do whatever we want. And by the way, that's totally in protocol one byproduct has been. Transaction fees have gone up a lot, actually, which, of course, gets into the economic sustainability of bitcoin discussion that the community has been having for the past half a decade or so and will into the future. So I think going into 2024, it's going to be interesting to see whether the two separate camps in the community fracture more. Some people are speculating that there could be some sort of a fork. Others say, no, it's not quite that significant. I mean, it's not a big deal. And at the end of the day, all bitcoiners are kind of United. As long as number goes up, it's fine. But we'll have to see. There's these two opposed, opposing camps, I think, in the bitcoin community, which has certainly made things interesting.

A

I think the last interesting thing about the bitcoin ordinal story that I want to draw out is that this is actually something that bitcoin exported to Ethereum. Uh, usually we had seen things kind of go the other way as of late, but BRC 20 tokens and inscriptions ended up hopping from chain to chain to chain. And, you know, at the time of recording, Ryan, at the end of the year 2023, uh, you know, inscription started on bitcoin in February of this year, but in December of this year, inscriptions took down arbitrum. Because this call data, the amount of data that was using, and like it has been, it has been like a rite of passage for layer two chains to stress test. Not just layer twos, there are now inscriptions on Celestia. So this is kind of this primitive that has been exported from bitcoin to the rest of the crypto world. And all of these other chains are being stress tests with how much data they can be, can be consumed by inscriptions, because inscriptions are by definition a data intensive primitive. And so all these non bitcoin chains are getting tested.

B

It's kind of weird too, because all of these chains are like EVM chains that already have ERC 20, they already have nfts. So it remains to be seen whether this is a fad or not. But one thing that will persist, I think, going to next year is with introduction of EIP 4844 and proto dank sharding, we're going to have even more call data available to us, almost a new primitive. And I wonder what sorts of weird things that developers in the community might try to store in there as well. So I think that's going to be something to watch. David, we've got number six here and this hithenite crypto in a big way. That was the launch of friendtech, and most significantly, friendtech reaching 1 million users. And they did this in two months. This happened in August, I think, or maybe peaked in August earlier this year. Tell us the story of Friendtech.

A

Friendtech was a combination of a handful of different technologies to really show the crypto world that, yeah, you can build a consumer app, and we do have the infrastructure ready to support a growth of 1 million users inside of two months. I think this was just the combination of progressive web applications, ethereum, layer twos, improved wallet backend infrastructure from privy, and a fun kind of social element, a social gamification element to really incentivize a bunch of adoption. We all remember friend tech. You can buy your friends shares, you can speculate on your friends. It's probably the most dgen crypto native app that you can probably think of. And it went viral. It went viral very, very quickly, mainly because you could make money on Friendtech. And there were like hundreds of millions of dollars of paper gains at least at any given moment in time. During the big hype cycle of Friendtech, the user retention and user growth was just massively up, only for like, I think, two months in a row. And then it retained even as kind of this shiny new toy eradic came and went. It did retain a bunch of new users and it even escaped crypto. We saw OnlyFans users coming onto Friendtech. We had saw NBA stars coming onto Friendtech. We saw DJ's coming onto Friendtech. So it really, I think, showed the crypto industry, Ryan, exactly where we are in our capabilities for building apps that we can convince mainstream users to use.

B

At one point in time, they passed bitcoin in terms of their daily fees. This is one app on the base, layer two, and that is significant too. Friendtech was deployed on basis player two, which of course, that was number one in our list here. And base came out earlier in the year. So this looked like a killer app. And of course, any killer app in crypto spawns a whole bunch of forks. So we saw this long tail of a friend tech on Arbitrum, frenzy on Solana, Fantech on Mantle, alpha on bitcoin, layer three, on and on. I'm not sure, I haven't looked at the traction of Friendtech recently, but okay, I have to assume it's died down from the heady the days of earlier this summer. There was also David in the background, I think some outrage about friend tech as well. This comment of, oh, great, crypto, your innovation is just another pyramid scheme. Get out of here. Stop talking about it. Influencers shilling more of their bags dump on retail. And so we had some conversations around that as well, which I think was a good conversation to have, certainly on the back of all of the scammers of 2022. And I'm not sure how the, if the industry knows how it feels about Friendtech, but we've certainly moved on to Ponzi's, I would say, here lately. So maybe the moral outrage isn't as peaked at this point in time.

A

The one thing that friendtech did leave us with, Ryan, is points. I think Frontech made points, and if they did make points, then they definitely popularized it. And now it's kind of gotten to the point where everyone's doing points because no one wants to strike the ire of Gary Gensler in the SEC.

B

They're not tokens, Gary.

A

They're not tokens. They're just points.

B

We know you've heard, we've, we've heard you say tokens are securities, but have you said points are securities?

A

All right, moving on to number seven. Pudgy penguins waddles their way into 2000 Walmart locations.

B

Nice.

A

Happened in September, but earlier of the same year, in May, Pudgy toys and Pudgy world were announced. So Pudgy toys were already a thing by the time that they got their way into Walmart. It was really the Walmart launch, getting it into 2000 Walmart locations around the world that really elevated pudgy penguins and showed that you can actually build IP using nfts. I think this was probably one of the most, the largest branding and distribution announcements that we ever saw out of the NFT world. And that was just two of the three Pudgy penguin announcements that were big this year. The first one being the announcement of pudgy toys in Pudgy world. The second being. Oh, pudgy toys are inside of Walmart. And also, by the way, when you buy a pudgy toy, there's a QR code to link you to somewhere. Where does that somewhere go? Oh, well, that's the third announcement. I'm so glad you asked. The release of Pudgy World, a multiplayer digital social experiment experience built on a ZK sync chain where you can actually register the in real life stuffed animal pudgy penguin and claim some properties inside of the pudgy world. So fulfilling, I would say, ryan, some of the metaverse promises that nfts made in 2021 pudgy penguins turned out to be the one to actually be able to cash that check. So congrats on Pudgy. Congrats to Luca, who bought, by the way, he didn't start pudgy penguins he bought the IP towards pudgy penguins and really turned that ship around in the middle of 2022. So huge success story out of nfts in the world of pudgy penguins.

B

Yeah, big, big turnaround story here. And I think was a couple weeks ago on the roll up, we looked at the price of pudgy NFTs and they have absolutely twelve Eth all the way from the bottoms of like one eth or something like this. Might have even been less than one EtH. So big turnaround story here in addition to of course powered by ZK sync. So this is part of the, the layer two story as well in a pretty large app on, on Zksync. So fantastic turnaround showing the world that pfps are not dead, at least when they, when they have a physical man like representation in the real world, then maybe they're worth a little bit more than the JPEG. David, we got a lot more to cover. I think we've got eight all the way through 13. But before we do, we want to thank the sponsors that made this episode possible.

A

Coming in hot with the biggest events of 2023. We're halfway through the year, Ryan. Starting in July, the SEC starts to collect a series of L's in the courts. The two biggest ones, the two biggest L's that it collected, SEC versus Ripple. In July of 2023, Ripple Labs notches a landmark win in a case versus the SEC over the XRP cryptocurrency. This was mainly viewed as a canary in the coal mine by the crypto industry for all further SEC versus crypto cases because, you know, Ripple XRP extremely centralized, extremely like, bold in its sales of XRP. And yet the SEC could not get the win in the courts, claiming that the XRP currency was a security setting in some very large landmark precedents about what exactly is a security and is not a security, and really just took the wind out of Gary Gensler sales going into the second half of this year.

B

Basically the ruling, if I remember it, David, is that the investment contract itself, the promise to give XRP tokens like that part of it was a security, that's the investment contract itself. But the court ruled that the XRP token itself was not a security when it, when it's outside of that investment contract wrapper. And this, this is something that, that crypto people and crypto lawyers have been arguing for for a very long time. And completely, if this precedent holds in other court cases, completely debunks the Gary Gensler standard. SEC take that all tokens aside from bitcoin, are secured. Right. So. Absolutely. Major win. Now, I want to ask you a question. Where were you at the time of this win? Okay.

A

I was busy.

B

Yeah.

A

You were busy somewhere.

B

You were on top of a mountain. Okay. That was July 2023 on top of a mountain. And then that wasn't the only l that we've got in. In number eight here. What was the second l from the SEC this year?

A

There was a court case back in August over which was about the grayscale turning its trust into an ETF. And a quote from this article, the mandate puts into effects the court's ruling when it overturned the SEC's rejection of a grayscale of proposals to convert its trust into an ETF. Judge Naomi Rao called the SEC's decision arbitrary and capricious because the regulator failed to explain why it approved similar products. And so this was more or less calling out Gary Gensler and the SEC, saying, like, yo, bitcoin can have an ETF, and you need to find a better reason as to why you're denying it it. Otherwise, we're going to approve it.

B

Yeah. And that phrase, that turn of phrase from the judge, arbitrary and capricious, that totally describes how the crypto industry has felt with respect to the SEC's treatment of it. These completely arbitrary rules and just, actually just negativity. It was just like they dislike crypto for some reason. They can't exactly explain why. They just hate it. And that's what the judge was reflecting. I feel like this was part of the opening of the door for what we stand on. The gateway of going to 2024, which is the bitcoin ETF. Right. If the courts hadn't slapped back the SEC and slapped back Gary Gensler in this way, if they hadn't done their job to push back in these cases, I don't know that we'd be on the precipice of getting ETF's approved bitcoin spot. ETF's approved, which we are now. So these were two major rulings in 2023 and major losses for the SEC with respect to their position on crypto.

A

Well, think about the two major precedents that this placed and gave us in the crypto world. It said, just because a token is transferred on a blockchain doesn't make it a security, which is what Gary Gensler and the SEC was trying to say, which makes Uniswap not inherently a securities exchange, just because one of these tokens might be a security on Ethereum and also just being a token on Ethereum doesn't make you a security. And also, it sets in stone, it sets the precedent that bitcoin deserves to have an ETF just like gold and just like all the other commodities out there. And so these were two very large doors that were open to the crypto world, which Ryan, starting the year we did not think might be open to us. And so it was two of the biggest clearing of the skies in terms of actually being regulatory approved, given regulatory green lights that we could have ever asked for this year.

B

One of my favorite clips from the year was the number of times that Congress had Gary Genslert testify in front of them. I believe it was Representative Richie Torres who asked Gary Gensler whether ether was a security or not. He couldn't answer the question, then proceeded to ask him whether a Pokemon card, if tokenized, would be a security. And Gary Gensler kind of, like, fumbled in that answer. One of my favorite clips of this year. But this did not stop the SEC from continuing to go on the offensive against crypto. And this is number nine. The SEC sued Coinbase, binance, and Kraken. And Kraken not once, but twice last year. So all of that happened. Give us the recap of these three major crypto exchanges who are sued by the SEC and some of those stories.

A

Yeah, the SEC sued all three major crypto exchanges for failing to come in and register. And I think those words, come in and register are burned into our brains by the end of this year. Was also sued by the SEC for offering us ETH staking service. So deposit your eth with Kraken. They'll stake it and pass along the yields. So the three major crypto exchanges were sued for being exchanges, and then Kraken sued again for just providing a very basic, normal financial service to it, to its users. Hester Purse, of course, crypto mom, I believe, wrote a dissent for every single one of these, which is why we enjoyed having her at permissionless this year, especially the Kraken one, I think, was one of the most articulate speeches that I think I'd ever watched her give speaker one.

B

So this is one story that persists into 2024, which is all of these exchanges are still fighting the SEC in the court system. Now, we've got a number of losses for Gensler and the SEC in 2023. We'll see if those continue into 2024, but the fight certainly continues. Meanwhile, David, coming in at number ten. This is something that isn't a specific date for last year, but just happened, like, every two weeks or so we were talking about it. Michael Saylor Microstrategy was dollar cost averaging into bitcoin purchased over $1.3 billion worth of bitcoin in 2023. That's 47,000 bitcoin. There was actually eight different purchase events, and not as many as I remember. And locked in an average buy price of $30,142, which is lower than the price of bitcoin now, which means he is up on those dollar cost average purchases. So bitcoin continuing to demonstrate extreme bullishness in 2023, as he had the previous couple of years.

A

I think by the time 2023 started, we were all used to Michael Saylor's average buy price being higher than the bitcoin price, because bitcoin price went down all of 2022. And then 2023 was. It started to, you know, be flat. And then towards the end of this year, for the first time ever, we're starting to see the average buy price of bitcoin being lower than the current price of bitcoin. And I think the lowest, the most down bad Michael Saylor ever was, was down like 30%, maybe 30 or 40% from that at all.

B

Down a lot worse than that.

A

In the grand scheme of things. He made out just fine. And now we are watching. I think the total. I think Michael Saylor and Michael strategy, microstrategy are up, I think, over $1 billion in profits on their bitcoin purchases. And we are just getting started. My friend, like, he is going to print some billions and billions of dollars. I think he's the number one owner of bitcoin after maybe block one, but we don't know how many. How many bitcoins. Block one still has number one bitcoin treasury, that's for sure. And it's a pretty insane concentration of bitcoin inside of microstrategy.

B

It is. It's a lot.

A

It's definitely contributed to some of bitcoin's very strong price performances. Like when you buy 1.3 billions of dollars or something, it goes up in price. My question is, well, I know he says he's never going to sell, but that is a key man risk with the price of bitcoin. What happens if Michael Saylor turns from bull to bear? That is something.

B

That's a great thing about Saylor strategy here. He doesn't actually have to sell bitcoin. He could just sell microstrategy stock and, you know, exit that way as well, because microstrategy stock is certainly correlated to the price of bitcoin now, with with all of this bitcoin on the balance sheet, I just think as the price of bitcoin goes up, he is going to, like, be very much in the green on this trade, and he's probably going to be become absolutely insufferable. David, of just right. I told you you should, like, mortgage your house, buy more bitcoin.

A

You think his Twitter account is annoying now? We'll wait until $100,000. Biggest bitcoin.

B

All right, number eleven. This was absolutely massive. One of the biggest events of the year, and it happened towards the tail end. That is the binance founder and CEO Cz pled guilty to federal charges in a $4 billion resolution. That happened in November of this year was absolutely huge news. So this is one of the largest financial settlement cases in history. It's larger than almost all of the biggest big cases against the big banks. $4 billion that CZ and Binance have to pay. Refresh us on the details here, David. Why was finance charged in the first place? And what was the settlement? And what happened to CZ as a result of this?

A

This was a settlement with the Department of Justice, which is like the highest, most severe, critical office in the land. And this investigation of finance by the DOJ started Ryan, back in 2018. So this had been a long time coming. The Department of Justice has been looking into binance for, you know, as long as we've been in crypto, and finally has come to a head with a settlement with a massive, massive price tag of $4.3 billion, which amazingly, binance has enough cash on hand to pay that outright without selling any of our crypto assets. So he's not going to tank the market. CZ was in a courtroom in Seattle where he pled guilty, and he has been released on $175 million bond. But he remains, I believe, inside the United States because the court, the judge said, well, you're kind of a flight risk, so you're going to stay here. He will be sentenced for in February. I think the expected length of sentence is 18 months. So CZ will spend 18 months in jail, and he has been ordered to not be able to lead Binance for three years. Meanwhile, Richard Tang has replaced CZ as CEO. So we have a new binance CEO in charge taking over the CEO seat for Binance, the largest crypto exchange, crypto empire, if you will, of the east. So massive, massive churn in binance, but also one of the largest looming clouds of uncertainty and unclarity about the crypto space as it relates to the United States. Now, decently clear. I would call that a solved problem, if you will.

B

Yeah, I think so. It certainly provides more clarity. And one thing that's notable, we had a, uh, we were talking about the bad boys of crypto earlier, the SBS and Alexinskis and that sort of thing. This was a different type of charge. This was not, like, insolvency. This is not fraud. This is not like you're taking customer deposits and, like, you know, gambling them away or using them for other purposes. This is AML KYC type stuff. Money laundering, basically. You didn't do the identity checks, and therefore, like, you could have let russian oligarchs and, you know, terrorists use the binance platform. And that's a no no and. Right. That's why it was a dojenna type of charge. I do think that CZ retained some of his reputation crypto, though. I think he built the largest crypto exchange in the world. He didn't rug people. He didn't steal their money. Certainly he did not abide by nation state laws and regulations. He played it fast and loose in many ways. He blitzcaled. Maybe he cut some corners in various ways, but I don't think he has gone from the public sphere at all. And, you know, all in all, I mean, the guy's probably worth, what, $100 billion, something like this, like, plus or -50 billion, right. And so $4 billion fine is kind of a slap on the risk. So I expect to see him in the. In the future as well, and I'm not sure what he'll be up to.

A

The day CZ comes back will be a glorious day. No matter how you feel about him, it will be a big deal. Coming up on the home stretch here, we're getting into November and December. In November, Solana rose from the ashes. We had Anatoly on Ryan, I think, in February of 2023, for an episode titled is Solana gonna make it? And I think by the end of this year, we definitively have the answer. Sole price back in December of 2022, right after FTX collapsed, was $12. And I tweeted this out, good luck to the Solana community out there. I hope this is your $80 eth moment. And that's just something that I learned when I went through the $80 ETH moment in 2018 of Ethereum. And the Ethereum community grit its teeth, chewed glass, and built its way out of the bear market. And that seems to be the exact same pattern that Solana has gone through over the last year. Happened really fast to be honest, I would say, like, eleven months. Solana Price is now, at the time of recording, over $80. Solana volumes are up bigly, reaching new heights that it never saw in the bull market of last year. NFT volumes are pretty high. Stablecoin volumes are high, TVL still suffering. But that's because Solana is less of a defi chain, more of a consumer app chain, and so definitely a renaissance currently going on inside of the Solana ecosystem at the moment.

B

Yeah, I think some other metrics that are pretty impressive is total active users since the beginning of the year, and they have spiked way up, over 400,000 total active users. There's also some pretty strong development going on. So it's not just narrative, right. In this case, we got tensor, which is kind of like the open sea of Solana, NFT platform. We've got Jupiter, which is kind of like a super exchange, sort of like a uniswap. We've got jitto, by the way, they just did an airdrop. I think we'll talk about that in a minute. This is staking plus mev. We've got, like, the Dpin narrative. So we've got a lot, uh, narratives going on. And that is, I would say, a key win for Solana as well, is they. They have really, um, changed the narrative on crypto, Twitter in various places. Right. And, you know, some would say it's like they've overextended on the narrative a little bit. But I think going into, um, 2023 of last year, if you spin back to January, they were basically the. The chain and the token that SPF was holding, you know, and, like, where would they be without SBF and FTX? And the answer that a lot of people in the crypto industry gave us, like, nowhere. But you're right. The community stuck on. They held through, and they've really done this jujitsu on the narrative. So rather like. Rather than the monolithic chain versus modular, it's like integrated, integrated chain. Right, which is what?

A

More bridging.

B

It's great because it's an answer to the fragmentation of Ethereum's layer two low transaction fees on the layer one. Like, we are the chain that's ready for the bull run. Ethereum is not ready for the bull run. It has really expensive transaction fees, is difficult to bridge. Is the narrative that's going on minimum necessary decentralization? How much decentralization do you really need? That's the question I think this narrative is posing back to Ethereum. Maybe Ethereum is over engineered. This is the narrative landscape going into 2023? And I think they have excelled on that front in a way that probably is reminiscent of Ethereum in, like, 2020, 2021, right. With kind of like, fighting back, pushing back. We're like fighting bitcoiners. They have done that effectively and really made some, you know, I'll say propaganda, but I'll say narrative strides in 2023 that have been a sight to behold.

A

Coming up in the rear, we got number 13, a bonus one. Tia Celestia restarts airdrop season, and Jitto follows suit. And this is October through December. So Celestia drops their Tia Tia token as the network goes live and starts the era of modular chains. Pretty massive airdrop. $120 million to over half a million addresses. 580,000 addresses. And I think the cool thing about this, the unique thing about this airdrop, Ryan, is that it never went down in price, including when you are showing this chart to me today, in this moment, it is even higher than the last time I looked at it. It's zooming all the way out. It only goes up. Tio was dropped at $2, at roughly a $2 billion market cap, and it has now been arriving at $13. Right. And doesn't go down. It only goes up. And when things only go up, people start to get bullish. And so all of a sudden, a $14 billion network just gets airdropped onto the seen. And not too long after that, Jitto, a very beloved project inside of the Solana ecosystem. Airdrops, over 10,000 addresses, a collective $200 million of Jito tokens. And so, actually, let's compare those things really quick. I said two numbers. It was 120 million or 200 million. The prices at the beginning of the TIA token were volatile. I kind of like the $200 million. So 200 million sent to 580,000 addresses for less. Yeah. Whereas Jito sent roughly the same $200 million to 10,000 addresses in Solana. That's because Solana just, like, didn't really have any users in the bear market. And so the very few users that were left all touched, the very few apps that were being built, one of them was Jito. And so if you merely just held on to a bunch of Jitto Soul tokens, the staked Geeto, kind of like the staked ETH version for Solana, you received the minimum, which was a $10,000 airdrop at the time of the airdrop drop. And similarly, that geo price has been up only ever since. And so we are releasing hundreds of millions of dollars, Ryan, to users and that is just in q four of 2023, we have already gotten the tease for Starknet and for layer zero have both confirmed that yo, the tokens coming pretty damn soon. And so as a result of these two airdrops in late 2023, I think we are definitely going to see, see a pretty big airdrop mania going into 2024. I will make a prediction, Ryan, that at least $2 billion is going to be airdropped into users hands in the year 2024.

B

I think that's a great prediction and probably even a conservative prediction, David. I mean, earlier in 2023, the arbitrary airdrop was 1.5 billion, right. And then these two judo and Celestia just added to all of that. And so I think we have restarted airdrop season in a big way. Which leaves us, David, we've gone to, through the 13 biggest events, not ten, but three bonus events. It's a reverse rug.

A

We actually give you more of the year.

B

We actually give you more than you thought you were getting. But let's kind of recap. So we brought up the price chart at the very beginning. And if you recall, in January 1, 2023. So about twelve months ago, we were 800, $800 billion, $840 billion in total crypto market cap. Bitcoin was hanging out at 16K, ether was 1200. Solana was under $10 at that time. Market cap of 3.6 billion. Let's, let's flash forward to where are we now? This is the 20 December when we are, when we are recording this. So tell us about the charts now. My, have they, they have changed. Total crypto market cap is what, $1.6 trillion? So just about double. How about bitcoin? How about ether? How about some of these other tokens?

A

Yeah. Bitcoin coming in at $42,000. Where it started the year at $15,000. 150% increase year over year. Ether, $2.1 thousand at the time of recording, a very meager 75% increase year over year. It's actually pretty sad. Solana up from $3 billion to a $31 billion network, something like almost 700% year over year. So definitely Solana coming in as a last minute finisher. I'll say, since all of that activity started in November and December, coming up as a last minute winner. Last minute finisher in the 2023 race of the crypto assets, but also not to be discounted. I say layer twos had a fantastic year of adoption. In terms of AuM, layer twos went from a 4 billion to $16 billion in value deposited on Ethereum layer twos. And also we are up to eight x, hitting new all time highs in terms of ethereum transactions per second. So ax ethereums built on the Ethereum layer twos. And so that is some of the numbers. Any other numbers you want to bring up, Ryan?

B

No, I think that's great. I mean, we're showing in the report cards, you know, we said 2023 was a, was a win, and that's where we see it and kind of numbers. I think adoption is going up. I think we have a fantastic setup going to 2024. I do feel like some things are discounted. I know we've made no secret that we think layer twos are probably discounted in terms of their narrative value in the market. And also ether.

A

Wow.

B

It had not a great year, considering it was a bull market. So we'll have to see if that changes in 2024. But I want to ask you, how are you feeling going into the next year? Like, what, what do you, what are you looking for? Are you feeling like, hopefully, what's your take going into next year?

A

I remember I've given this take a few times and I'll just keep on hammering this home. But at the beginning of 2023, I think there's a couple weekly roll ups. I said, this is that 2023 is going to feel like a year of pain. It's going to feel like a year of flaw flat. And then we're going to look back on the year and you're going to realize that it was up only. And I think I said, that's in like January or February of this year. And if you look back, that's exactly what happened. Bitcoin ether, like, pick your asset. They are all up only over the year. Even though it felt like a year of turmoil and trouble, ultimately we were just coming out of recovery mode from being oversold going into 2022. And so now I think prices have reverted to some sort of, and they are about to enter froth. If we're not, we might be a little bit frothy already going into 2024. Man, I remember going into the bull market of 2020, 2021, thinking like, oh, my God, I want a bull market. Please give me the bull market. I'm so excited for the bull market. And then the bull market came. I'm like, what is this? I don't know what is happening? Not like this. Yeah, bull markets are hard. There's a reason why veterans prefer bear markets is, and we all like art when our numbers go up, but when number goes up, mental health tends to go down. These things are inversely correlated with each other. Yet nonetheless, I think there is a massive white space, green space, fertile land to build new stuff on. There are tons of things that I'm excited for going into 2024. Eigen layer and re staking networks. I mean, it kind of. It actually, this happened today. Ryan. Um, here's a bonus. Number 14, Eigen lair hits $1 billion in total deposits in its taking network before it even hits main net. Um, it's just because, you know, starting conservative, growing at the pie, slowly bootstrapping the eigen layer system. I think Eigen layer is going to be a massive thing to watch in 2024.

B

It's just taking in general.

A

In general, yeah. Liquid restaking tokens. Here's another prediction. Liquid restaking tokens is going to eat significantly out of the market share of liquid staking tokens. And that'll be definitely a narrative behind ether, the monetary asset. And so I think even though ether is undersold, oversold at this moment, or at least just underappreciated by the crypto markets, I think really, we are primed for an evolution in ether. The monetary unit going into 2024, Gary Gensler, is going to continue to take l's like, that's just going to happen. We all know this. We are going to continue to fight the DOJ and the treasury because privacy is offensive to them. Yet we're still going to be investing in privacy. I'm not going to stop that. And so it's going to be a mixed year, but it'll probably be very bullish.

B

Yeah, I agree with you there. I'm counting on a bullish year. I'm also very excited about the restaking types of activities. I'll add crypto gaming to the list here. I think that might be a way we onboard the masses. I'm looking at things like, in the ecosystem, how you can basically connect to get a crypto asset. You don't even know what chain you're on. You don't even like. It's not the clunky experience that you crypto natives are used to. It just feels like a gaming experience. I think that could really birth something exciting. And in the backdrop, of course, we still have some people predicting recession. We still have 2024 as an election year in the US. And all of the uncertainty that comes with that. I mean, Colorado just nixed Donald Trump from their ballot, at least the Supreme Court. There's a lot of uncertainty in the US politically as well. So that's always the backdrop that we face going to 2024. There's always something going on in macro and the rest of the world that could disrupt the bull market. But I think if things take the course 2024, to me it looks a lot like 2021, one of the last cycle for all of the good and also all of the bad, hopefully with a few less scammers, but we'll have to see and keep our guard up. So I'm going to take a much needed break, I think, over the holidays, get off the charts, not podcast too often, spend some time with family, and I hope you, bankless nation, get an opportunity to do the same because you've got to recharge. We got a big year ahead of us in 2024, and it's been a pleasure to with you, David, how do you want to end it?

A

How do I want to end it? Well, banquet sanction. I actually want to see all of you, not now, but later at permissionless in October in Salt Lake City in 2024, that is in October, we're going west. That's where Salt Lake City is. For all you european listeners who don't know where that is, that is literally the west. So if you do not have your ticket prices, they are extremely cheap now. They are $200 if you are just a normal, but if you're a bankless citizen is $140 because bankless citizens get 30% off. So if you want to hang out at the one time that me and Ryan hang out in 2024, it'll be at permissionless. There's a link in the show notes if you want that. And also if you believe my prediction that at least $2 billion is going to be airdrop to users in 2024, sign up for the airdrop Hunter because we have a bunch of work, don't we are doing the work for you, so the work is easier for you, you. And if you need guidance as to how you get your share of that two plus billion dollars, sign up for the airdrop hunter as well. You need bankless pre. Like, if you don't want to listen to the ads, get bankless premium. Like it's your tool to navigate a bull market. Just do it. For one of these many reasons.

B

Like I asked David how he wants to end it. He ends on a shill.

A

With a shill.

B

But this is, this is healthy medicine for you guys. I do think that these are tools you're, you're going to want and save you tons of time. We'll end with this, though. Risks and disclaimers, of course. Course, crypto is risky. You definitely 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.