The Crypto Community Hangover w/ David Hoffman

Okay guys, today we have on very very special guest. Big fan of War Show allegedly. I know he would say that regardless, so it's hard to know, but David Hoffman from Bankless. I don't think you need much of an introduction, so we'll skip this. David, what do you think? You can go anywhere you want with this direct any direction you want with this question.

How do you feel about the state of crypto right now?

How do I feel about the state of crypto right now? Okay, maybe I can just back up and be like when I got into crypto. 2017 through 2020, I was like, "Wow, this is going to change the world. This is an inherently optimistic technology."

Like when I think about blockchains, they have like little sparkles on them and it's going to be so great and the future is going to be abundant because of blockchains. And wow, the world is, you know, the oyster for blockchain technology and like, you know, the naive, right? 2017, how old was I? Like 24, 25. Naive, like overly optimistic, way too in my imagination.

And to some degree, that's what the crypto industry was as a whole because it just hadn't been built out yet. And so therefore, everything was in our imaginations all the time. And you know, imaginations are unbridled. And I kind of think that relates to how crazy the bubbles of 2017 and 2020 21 were because like you could just imagine anything because we were just not tethered to reality whatsoever.

And that was like a really fun era of crypto. Like I look back on that era with nostalgia and I think a lot of people do. And a part of that I think is because just nothing was real at that point and therefore we could imagine anything.

And so now when people look around in the industry and they just see so much depression and despair and nihilism, I think part of that came from the fact that once upon a time we were completely unrealistic about what we could do in a short or even medium amount of time or potentially ever. Who knows?

I think the big question is if the pendulum is shifting too far back into the unimaginative, too nihilist side of things or whether we are just coming down from our high of imagination and now we're kind of in a hangover and maybe Wall Street was always destined to kind of Linux us into irrelevancy.

And these are potentially real concerns that as an industry we should have. We just had Zuko on the podcast and we talked about the failures of the Linux movement to really impart its values and imagination upon the world and really just ended up being a product that Google sells for example and that's kind of the current state of play and I think that's why everyone's not really thrilled. No one's thrilled anymore.

I think that it seems I don't know, tell me if you agree. This seems like a period which is scarier than any of the bare markets we've had. It's like this period of indifference and that seems much worse.

So, again, this is a question. This isn't just my opinion. Like what now in crypto specifically gets you excited that is new and novel in the ways that things were new and novel in 2017 and 2021 now whether or not those things work or were ever going to work right there is navote on all sides but what now gets you excited like because maybe maybe a little bit of context bankless has expanded into AI right your co-host The world has expanded into AI and we've tracked the world.

Your co-host took a sabbatical. Three months. Three month sabbatical. What is getting you truly excited right now and with regards to crypto?

I do think that just like the old world of finance moves far too slow to keep up with the modern pace of technology. Like AI is just progressing so incredibly fast. Like everyone's talking about cloud code and all these new new bots and Agents and all this kind of stuff that is allowing people to move at incredibly fast pace and the trad world of regulation just cannot is not the right form factor for the capital markets that could be associated with the product that comes out of this very fast-paced technology.

And so like to some degree you know internet capital markets is the right form factor to keep up with the rate of change in technology like like things like you know SpaceX is obviously still going to IPO and Open AI is still going to IPO because the the those are the current very large markets but like what the thing that I am hopeful about is that internet capital markets you know capital formation on public permissionless blockchains is the right form factor to enable investment at the right at the right pace to like kind of keep up with society.

So that's kind of what's exciting to me.

I think that so one thing that I've felt about you and Banklist is that I don't I have long disagreed maybe about our coins of choice and maybe some of your vision of the future, but I do believe that you have a lot of context. I do believe that both you and your co-host have seen and remember a lot of the original vision and the reason that this is important is because there are a lot of new entrance who I don't think have a lot of this context.

So when they talk like I saw a very interesting comment the other day and this is one of those things again where I don't agree with you about a lot of stuff but I I do agree with you at least with some some of the vision that you I think talk about is similar to what I at least envision myself.

And so what I was going to say was I saw this tweet the other day where somebody said like we should have called protocols businesses and you responded like a micto tweet.

So yeah, maybe I I don't recall, but you you have context from when we were building protocols and protocols are a real defined thing, right? It's not I think we try to like pretend there's a lot of nuance to well, is it a business or a protocol? In reality, a protocol is a set of rules and there's protocols outside of computer science, right?

Like there's a protocol for when you pull the fire alarm. everybody, you know, there's protocols for when there's a report to HR, it's a set of rules that people opt into and we've sensed, you know, like with open source computing, there are protocols and the idea is the set of rules that people opt into it and nobody really owns it because there's not really incentive to own it, right?

Like it's what we all agree to run for self- sovereignty or permissionless or security or like various reasons. And this is something that I think you remember, right? And this is what I'm talking about. Like that is context that does not appear very much anymore.

And so when we talk about revenue, we talk about businesses, it's like that's fine. And I I don't disagree. That's the direction we're going. But my point with saying all this is a bit of a diet tribe. I think so I'll turn this question back around on myself. I think there's a lot of memory hauling as to what we were trying to do and there's a lot of pretending like this was the vision all along.

And at some point I think that there are thresholds, there are lines where it's like that was not the vision like tokenization on a New York Stock Exchangeowned ledger with three or four validators. I'm doing this in quotation marks. People can't see me, but you know, validators like that was not the vision. Now it's okay that's where we're going, but that wasn't the vision.

So I wonder like do you look at some things and think like that's a threshold?

So the reason I sorry again you said internet capital markets on permissionless open blockchains. What do you think is the probability of that? Like what we're seeing right now is a lot of not open permissionless blockchains and what is your kind of like long run view on this and is that even crypto? Right? Like I asked myself this a lot like what is tokenization on a single sequencer run by Robin Hood? Like is that crypto right?

To some degree we've seen this movie before. Like this is just a rebirth of the blockchain not Bitcoin movement. And I don't mean that to just completely invalidate it and say that it's that's not a real thing because like you know every time the blockchain not Bitcoin movement comes back it comes back stronger and more capable and more relevant than ever before.

So, like just because we defeated the blockchain not Bitcoin movement of like the IBM Hyperledger era. Or like whatever the hell we were doing in the 2018 through 2020 era, just because we defeated it back then doesn't automatically mean that now that Tempo is a thing and now like the New York Stock Exchange is doing the thing like that's not a given that those projects are failures.

It is a given that those things are like not benefiting from what why we why we the public permissions blockchain side of things beat out the blockchain not bitcoin side of things in the first place like they are not public permissionless open platforms and they don't have that going for them and so that's a you know weight in our camp that's a point for us but nonetheless like they can still co-opt the technology and do the things that they want to do with our techn technology and that it can be successful despite it not having all the cool things that makes our side of the aisle very very cool.

And so like my in the same way of just like kind of like using Zuko's idea of just like we can't we need to make sure we don't Linux ourselves into irrelevancy like we have to once again fight the blockchain not Bitcoin fight and win out using the strengths that we have and have to do this fight all over again and then if and when we win again that fight will come back again four years in the future five years in the future once again and we'll have to do it again.

And both we will be we the public permissionless side of things will be more powerful and more capable and larger with higher market cap and more capability and more users and all that kind of stuff. And also the new reincarnation of the blockchain not Bitcoin whatever comes again in four or five years will once again be more capable more powerful and we will have to fight that fight again and it will once again not be a given that our side of things wins.

I don't know maybe actually this is the last time because like who's bigger than the New York Stock Exchange for example like that is the world's capital markets but like the the metaphor I think stands have you been surprised have you been give me your thoughts on Salana?

I kind of think the whole tribal wars are just a thing of the past. I agree. Like there's that meme of like the Japanese man still fighting the World War II fight and like I think people point that at me maxis because they're the ones who are kind of doing doing that tribal thing.

But I actually just think that that can be used for anyone who is tribal in 2026. And so like you know my fights versus the Salana ideology were like we I did that we that I I checked that box. people have heard what I've had to say about my opinions on Salana and like continuing to fight that fight I don't think is beneficial for anyone like to just whatever whatever degree of like me like using my platform to espouse values and principles that I don't think Salana embodies to whatever degree that that pulled Salana to embody those values and principles more is is like done now and I've I've whatever degree I've been able to contribute to that I've I have and like now in 2026 I'm just like whatever like they're at this point they're on our side of things in the terms of like decentralization and like nonetheless like I obviously I still don't think they are sufficiently decentralized to like have the world's capital markets on it but like it's now it's up is pushing up against like a brick wall like there's no there's no point fighting that fight.

Well, okay. But this kind of goes to a larger point of just the entire idea of community, right? Like I don't You saw who was it recently? Morpho, I think, just completely deleted their their Discord. Discord. Yeah. And it's a sign of maturation.

I think undeniably it's interesting because I don't think there's a Robin Hood Discord, right? I don't think there's a CME discord. So, it's a sign of the times, but so much of crypto was predicated on community and everybody believing in a shared purpose, often times to make money collectively or a shared vision.

And this entire concept is like largely unraveling in the face of just companies, right? And it seems a lot weirder now almost to be a member of just like you use an application, right? Like you I'm not a member of the the Discord for Uber. I'm not a member of the Discord for Door Dash, right? Like but Bank list was very much a community like at at one point there and I'm not saying you aren't anymore. I'm just saying that that was a big selling point.

Like how have you thought about evolving in that capacity, right? Like do people and I look I think about this too like this Twitter is just not what it used to be and I'm not trying to say like the good times are you know what I mean but but it's not right it's not what it used to be and there isn't this sense of like a a shared vision anymore. I'm curious how you think about that with regards to like bank list and then you know your vision going forward.

I don't want to discount the role that Discord scams played in the removal of the Morpho Discord. Like like all Discords are just surface area for like for scams like the punks Discord which will always be a community-led discord is just like riddled with like scammers trying to scam you out of your punk and they have just kind of like grown a So let your punk send it to me. The board apes often times work.

So like I I think to like some degree as a combination of just like Morpho wasn't getting value out of their Discord and it was like too much of a place where scammers were infiltrating. So like to some degree I don't want to discount that that that happened. But to also your point like what you were saying I think is also true and just like there's this like picture that I used to use a lot back in 2021 2020 to like really communicate what crypto is doing.

And it's like a it's like a two two panel comic and one is like a shark chasing a bunch of little fish. And then that panic that that can panel has don't panic on it. And then the next panel is all of the fish banding together to form what looks like the shape of a much larger shark and now it's chasing chasing the shark.

And so it's like don't panic, coordinate. And it's all about the idea of like, you know, bottom up coordination using protocols can allow the communities to band together and through the power of coordination, you know, sparkles and rainbows, we can take down Wall Street.

And I think that's kind of what you're alluding to is like that power when you shut down a Discord is kind of like illustrating that like we actually aren't really coordinating the community anymore. We are now businesses. and you know it was more for a protocol or a business like it's a little bit of both to to you know give credit to like Michael Balito's like idea is just like well if you don't treat it like a business you're going to go out of business but also you don't treat it like a protocol you're not going to have a business and so that's a little bit of yes and I have like generally mixed feelings on that and only because of what I said which was when I so right when I got into crypto I didn't have any context or you know I didn't like know anything but I did make somewhat I mean not to say that I'm an expert but I made somewhat of an effort to understand like the history of open source computing and like understand what people were trying to do like the cipher punks and Linux and you know like TCP IP and internet native protocols and like who maintains those and what anyways I I'm fine with what is emerging like and I and I think that this is very likely the the the endgame.

I just think that the reason again that I bring this up is because I do think you of of all I'm not saying of all people you a few people in fact have this context and I see you know I just see a lot of like VCs and the thought leaders giving you know their hot takes on the direction of crypto and and a lot of it ironically is like it doesn't really support what they invested in for the past five or 10 from my perspective it's like you you know you invested in a lot of this infrastructure and this isn't exactly what you're talking about where it's going so it's kind of it's like of course it's easy to be revisionist about this but I I do I mean it is a weird period and I'm I feel that I don't know I mean like people everyone's investing in precious metals right now right like and and even this the tokenization stuff it just it doesn't excite me really and I don't see it transitioning back right and I think your point is kind of like the continue to defeat the the you know blockchain not Bitcoin or whatever and I understand that but I don't know I I think that it does seem to me and I could be very wrong about this but it does seem to me that incumbents have a pretty big advantage with this type of technology which is open source and often times can be effectively integrated as a feature fairly simply.

There aren't massive modes to software and so I do I I say worry I mean like for example okay so here's here's a good question like what do you think of Hyperlid like Hyperlid has been a huge success story for the most part and what do you like what what's your take on Hyperlid and I have a point with this so like but I want to hear first what you think?

I don't know if my take about Hyperlid is all that like special it cut the corners that it needed to cut in order to have the trading experience that it needed to have to great success. So fantastic strategy and now like we're putting things on hyperlquid like real world assets and gold and equities and so that that's great.

That's like an innovation and an unlock that we have been looking for and so like but like my take on the hyperlquid is like the normal take what they're doing is is great. they cut corners and that worked out for them and can we scale that into like a public permissionless completely decentralized protocol? Don't think so. Would that also like neuter their business and make it like ineffective? Probably. Should they do the thing of like going full decentralization maxi? Probably not. And that's fine.

And also we have like alternatives out there that do kind of do some of those things like lighter as well which I I think is like a proof of principles of like you can do a little bit more cypher punk hardcore stuff and still get outcomes but like nonetheless like yeah so like my take about hyperl is like the normal take for whatever it is.

So I think that like I'm supportive of hyperlquid for kind of one reason. First of all I don't trade burps like I mean I do but I I don't pretend to have any edge. Like I'm very much degenerate gambling. I I'm optimistic about hyperlquid for the sole reason that I think it would be good if it there is proof that startups can compete with incumbents.

Right? So like in a sense I don't think we decentralized NASDAQ but we created a hundred smaller centralized NASDAQs that have to compete with each other and that's good for users. Now is that decentralized NASDAQ? No. But the optionality is good.

And a lot of what crypto seems to me now is that the ability to opt out is sort of our strongest selling point, right? Like the ability that okay, we don't like that financial system. We can opt into another. Now, a lot of this is like the the regulatory side.

And I guess one question I kind of have when you got into Ethereum and and you you know listened to Vitalic and a lot of the kind of thought leaders early on, would you have ever imagined that sort of the bulk of users are, you know, doing social stuff on a Coinbase L2? like how does that how how do you square sort of the original vision with what most people are kind of doing at this juncture? This isn't this isn't like necessarily you don't have to take this as like a criticism. It's more just interesting, you know?

I think it's hard to put myself in my shoes all the way back then, but like I kind of thought that like the crypto world would progress down the same kind of track that Uniswap opened up and Maker Dow opened up, which is like onchain financial smart contracts and like we did kind of push on that frontier. We got like we got Pendle, we got Morpho, like things like even like Alchemix, like great great mechanism. Great mechanism a loan that pays itself back.

Like stuff like that, man. Like that's cool. It's interesting. It's like more financial mechanisms that you know in take in the interoperability and composability and all that kind of stuff. And so like we did go down that track but like not nearly to the same degree that I thought that we would and like there was there was examples of like web 3 social back in that day before we had before we even called it web 3 like steam like the whole steam thing. Remember Steam?

I remember Steam. Yeah. And so like we had we had Web3 social. I was like, "Oh yeah, that'll also that'll also be a thing." But also, again, back then, I was like, you know, everything is going to be a thing on Ethereum because that's what you could imagine in 2018.

So, like the trend towards hyper financialization and like hyperrading is not what I accounted for back in the days, but I would be the person to not account for that as a non-trader. Um, and yeah, I agree.

No, no. I think that's actually ironically and it's funny you say that because I don't think this really resonates with people that the fact that the primary product market fit really I mean like they're stated in the revealed preferences and like the the revealed preference has been trading like swapping assets trading this for this and you know there's like some ancillary you know maker DAO and and ase things but a lot of those are kind of functionally served ve to allow you to do more trading, right?

So, at least for the time being, and I'm not saying that that that these versions of these protocols can't, you know, eventually evolve into like, you know, proper other financial stuff, but for at the beginning, and it makes sense, right? It was very early. there wasn't real assets on chain like but I don't think people realized that this was not really a thought in 2015 and 2016 and 2017 that highfrequency trading of assets was going to be the primary use case for blockchains and and like what's hilarious is that this this dark forest paper the MEV paper was I mean it wasn't until when was that 2019 or 20 like no dude like 2020 2021 even like it and that is I mean if you're actually zooming out that's insane that it took 11 years or I mean what whatever from from the inception of the first sort of blockchain with Bitcoin for people to realize that like oh hang on like this ordering thing can make like all the difference in the world and in fact designing around this ordering thing is quite literally the key sort of like mechanism that we need to solve.

So when I hear, you know, like it's fascinating because I go back and read these papers. So like Chris Bernitzky actually, ironically, I think wrote one of the best papers on valuing crypto assets. It's not really used in practice anymore. Who the other guy was from who wrote a good paper from Deli, I forget his name, like Jose something, you know, I'm sorry. Yeah. Yeah, but like there was no discussion of oh like blockchains could generate money because they can the validators can order transactions in a certain way.

Like I I don't think this people realize how big of a deal this is, right? Our solution has been sort of I would say to move towards increasingly centralized systems which may be the only in-game but like just you know I used to listen to all of the bankless podcast with Justin Drake and Hosu and you know we don't have those discussions anymore right like that's what's that kind of there you were talking about like the nostalgia like I feel the same way it's like we're not talking about those things anymore would you ever bring on somebody you know to bank list now to talk about like PBS like maybe but it's not going be, you know, it's not going to be twice a month.

There was an era in which like learning about deep tech stuff was super in vogue like in 2021 through 2022 is just like everyone wanted to learn about the basement of Ethereum and like that was what like Banklist mainly supplied into like the content sphere. It's like yo let's like un let's like get really nerdy and do our best to describe these things to some degree. like the we picked the lowhanging fruit back then not just bank list but just like as an industry like MEV was actually able to be made accessible and like the philosophy of MEV was a real topic that you could talk about and and like expand on and kind of connect it to very abstract ideas that like the average lay person could like wrap their head around.

And now we're way higher up the tree if whatever we talk about now like the proposal builder separation is just like these are not lowhanging fruit and they don't really connect to very many things and they're not big ideas and they're just straight nerd stuff and like not only in 20 2026 is the industry much smaller but the appetite for that kind of stuff is just much much less.

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How do you feel about the future of media? I asked this because, you know, like this podcast is I can I bring on whoever. It's it's totally random, right? like I just see somebody on Twitter and bring them on or I bring on somebody like really wellknown like yourself like you know what I mean so it's a wide array but it was mainly talking about crypto stuff and oftentimes mechanism stuff and nerd stuff too and at this juncture there is in my opinion it's like are we being forced to just become fintech podcast and I don't have I don't think that I have any unique insights when it comes to right like I make this joke. I think I said this when I came on on who am I to tell Stripe how to build a payment system? You know what I mean?

This juncture kind of like all of the crypto people are it feels like we're very much you know pushed to the to the back when it compared to Bitwise and you know Fidelity and the New York Stock Exchange and Robin Hood. It's like who are who am I to give commentary on this stuff now? But how do you feel then about like bankless and just the the trend of media going forward with crypto?

Like as it kind of relates to like like my job and like the producing the content that I have like a lot of what what broader trend is happening is that and with like this has been a trend for a while and like this has been something that I've just actually been advocating for and I tell like my my portfolio companies and other startups is just like every company needs their own media arm.

And so like you watch both Robin Hood and Coinbase do their own like Apple style events and they do their own comms. And so they don't actually depend on some external media to do their announcements. They do all their own tricks now because like this media technology is also becoming more democratized.

And you also see that in like there are 10,000 crypto podcasts and yeah 99.9% of them suck. But it doesn't matter because like people will will thrive off of a very low audience and like you can find niches and just like a 100 to a thousand people that like listen to your podcast and like they just for some reason like those hosts and so like things are getting really spread out and everyone is like Elon Musk did this with Twitter like this was one of his goals for Twitter is like I'm going to make everyone a journalist.

That was the the Twitter narrative before Elon Musk. Then like with spaces like spaces are are a thing and like the media itself is just being so spread out. So like where's where's my role in that is like well like me and Ryan do a very good job prepping for podcasts, producing agendas, doing research. Like I think we are very good podcasters and so like that's kind of our Hell yeah, brother.

I think we are we do a good job. We put a lot of effort into like you know doing the things we need to do to make our our podcast episodes enjoyable to listen to. when for some reason like podcasters just don't like most podcasters don't do that same level of like rigor when it comes to producing an episode. It's also hard work and it's there's not the same level of ROI to doing that as there was in the past.

And then also inside of that we're inside of an an ecosystem that is just attracting fewer and fewer eyeballs. Like to some degree like one of the malaise of cryp reasons why there's this malaise of crypto is that like AI is far more interesting and the traditional stock market is where the action is. That's where all the motion is. And now it's gold, right? Like like Bitcoin is how many years old? 16 years old. And China is finally moving away from the dollar system. And where is it going? Gold. It's going to gold. It's not going to Bitcoin.

And so like and then also there's like this quantum thing that is also maybe like suppressing the industry as a whole. Like I don't know, maybe. And so like to some degree like the the limelight is just not in crypto. And that also is impacting like what we can talk about here.

I think that and I I wholeheartedly agree. I will say this, there's kind of this chicken of the egg thing where yes, like a lot of liquidity in mind share has flown has has yeah kind of gone to AI this cycle. With that said, if the highest ROI was in crypto, then there would be money here.

So like I'm in agreement that that as a general statement AI is more novel and there's a lot more mind share there. It's also I mean it's a kind of undeniable it's more tangibly innovative like crypto is there's marginal gains especially for people in the first world where most of the capital is stable coins don't resonate the same way they do to somebody in Argentina or Sudan or wherever right like so a lot of the a lot of the actual practical application is very like visible it's visceral with AI but my I guess like I also think that we have maybe partially using this used this as a bit of a copout like given the past 2 years of launches and money in the crypto ecosystem.

It has been pretty like depressing and I mean has there been a like what do you make of this just most of the big hyped launches you know Hyperlid being somewhat of an exception and I think there's reasons for that but like outside of that it is it does not look great and so I think there's that's the other reason is that like people are losing money here they're not making money here so like what how do you feel about this one of the projects that like I would love to invest I would love to buy like and put a decent chunk of my portfolio into Athena like it's got the right product.

It's it's a stable coin. It's got the derivative background. But then I just go and I look at the price chart versus the market cap chart and the market cap chart is doing great. Price chart not doing great. Like it's a fantastic product, the project product that created a ton amount of wealth, $2.5 billion dollars, but just like the the value was captured like very very early in the stack and like it's the it's just been dilutive and that's just part of like our market structure and like you can go to the Binance Launchpad and you can look at like the median token on Binance and it's just like terribly down and yeah, I don't know to some degree like I can go back and say like you know like the capital markets are elsewhere.

Maybe Quantum is putting us a damper on the the valuation of everything and we haven't like fixed our token yet like like the whole Uni Labs versus Uni Foundation thing followed by the AI a thing. At least UniS swap is fixing everything or has fixed because now they're like they did the whole uni unification but like still like the industry as a whole still needs to like kind of solve its capital markets problems. But yeah, I don't really have any comments beyond that. It's just like it doesn't like getting a return on investment seems very very hard outside of just like buying the blue chips.

Zcash I think would be the other one. That's an an exception.

Well, even the even the blue chips I mean I I like for example do you consider unis swap a blue chip? Like is you need a blue chip?

No like blue chips are bitcoin and ether. Okay. Yeah. So like I was having this discussion with somebody and I basically said the same thing. It's like and actually I think Athena is a great example and I think Guy is I really like him like he's very stand up and I think he's just very smart and has the right vision but yeah it's really hard to find tokens where the the risk return is there and it that asymmetric upside has not revealed itself in the past two to three years with these launches and these launches got priced sort of accurately.