Bankless Growth Story, Network Nation and Ethereum

Interview: Sunny

Edit: Min

If you are in the encryption world, you must have heard of Bankless!

This is a podcast and a Substack subscription channel. Today, there are also DAOs and Ventures under the name of Bankless.

As one of the most influential media brands in the encrypted world, how does Bankless achieve its own growth and evolution from zero to one?

In a restaurant in Zuzalu, Montenegro, TechFlow reporter from Deep Tide communicated with Bankless co-founder and BanklessDAO initiator David Hoffman (David Hoffman), by the way, he now has a new Title - Bankless Ventures Partner (General Partner).

The conversation covered his journey to founding Bankless, his investment strategy, his views on cyber-nation cities and nation-states, current research directions of the Ethereum Foundation, and even his guide to a healthier lifestyle.

Journey to Bankless

**TechFlow: Today we are very excited to welcome David as he shares his journey in the crypto world and the story of founding Bankless with Ryan. David, we can't wait to hear your story and learn about the origins of Bankless. **

David ：

The idea is something I learned when I was studying psychology, that with positive psychology, people can get a lot of results for a little! Also, to make people feel better mentally, you also need to get them to exercise. Now that you're addressing both, you can also incorporate good nutrition and diet.

Stumbled upon Ethereum and learned about money and finance before fully diving into crypto.

I was like, If I'm really interested in improving people's lives at minimal cost, I have to talk about money and finance and social structures.

Finance is as much a north star as an individual's health and if you want people to be in control of their lives they first need to have the money and the financial resources to do that, so it's not about simply pursuing psychology or physical therapy, it's about pursuing Solve very deep problems.

• My first company was ICO Consulting, which was a product of the ICO craze at the time, but it never really got very far and went bankrupt after seven or eight months. *The second company was Bunker Capital, not really a venture capital firm, it was a replacement for ICOs and focused on security tokenization, again, that company didn't get very far and eventually went bankrupt.
• A third company is a real estate tokenization company, also a security tokenization but with a more narrow use case, that company still exists.

I met Ryan on Twitter in 2018 and we started talking about similar things and slowly growing together.

Between 2018 and 2020, I started my first podcast before Bankless, called Pod Crypto, hosted by me and my college friends, and since then I have learned to make podcasts.

Ryan started working on the Bankless newsletter, and I was thinking, we should merge the podcast and the newsletter.

By the end of September 2020, I was more than ready to start working on Bankless full-time at any time, so I quit my job as the general operation of real estate tokenization.

Since then, I have officially partnered with Ryan and formed Bankless.

**TechFlow: What is the relationship between Bankless and Bankless DAO? As a founder, what are your reflections on running a DAO? **

David：

The origin of BanklessDAO is like this.

Ryan and I have been contacted by a lot of people saying they love what we do at Bankless and are more than happy to help.

We don't know how to incorporate them into the company, as we're not interested in building a hyperscale company, but we want to provide a way for anyone interested in advancing this movement to do something for Bankless as well .

That's what the DAO is about, we find people who are verified on the blockchain, they are part of our community.

So if you're a premium member and you have a voting app, like we have some tokenized t-shirts, these are some people's traces on the blockchain, and we can verify them, like, oh, You are part of our tribe.

So we issued a token and distributed it to all those who are willing to help and do things, call it BanklessDAO.

As for the leadership, we did not intervene in the leadership of the DAO, we let them solve it by themselves, so the development of Bankless DAO is completely determined by their own community.

**TechFlow: In Bankless DAO, is there a structure for resource and power distribution? **

David：

Yes, like the distribution of $BANK tokens, but mostly it comes together in many different ways, involving different aspects of each sub-DAO.

Each sub-DAO has its own way of making money, they are relatively independent, and most sub-DAOs are a whole DAO.

They all have a central resource pool. This resource pool is more decentralized and more focused on specific areas, such as Bankless content production, while another sub-DAO may be about consulting and so on. There are many different ways to participate in a DAO.

They all make money independently of each other, but when you put them together and call each individual part its own sovereign system.

**TechFlow: In terms of financial sustainability, do you think Bankless' current premium subscription is a sustainable approach? **

David：

We have a game relationship between premium subscribers and sponsors, which restrict each other, and Bankless has always maintained this game model.

So we're not influenced by the masses, because we have an obligation to our premium subscribers, so the masses don't control us.

Also, sponsors don't have control over us, because if they behave in a way we don't like, we can fire them and rely on our community.

So, this is an interactive process, the key lies in the uncontrollability of Bankless, which allows us to maintain our purity, which we hope is the case, because no one source of income can dominate the other .

Sponsorships allow us to fuel and grow the company, but our foundation is our premium subscription strategy.

So when power shifts from one side to another, we know which side to pay more attention to.

**TechFlow: In Bankless, how does Web3 change or increase the profit model? **

David：

The business model does not distinguish between Web3 and Web2.

No matter what industry we are in, the business model is the same. We have some additional revenue streams, for example, we tokenize our podcasts and sell them, and you can also pay in cryptocurrencies.

There may be some other, more crypto-native revenue streams in the future, such as NFT sites, which are unique.

But the business model is still the same, the more listeners and readers of your podcast or newsletter, the more value you get.

Because content is content, no matter what industry we are in.

**TechFlow: Bankless' mission is to bring the next billion users to Web3, what do you think differentiates Bankless content from other media providers? **

David：

I would say a large part of that is because the interaction between me and Ryan was really good.

So, that kind of pleasant vibe that the listeners enjoy because we're like two buddies chatting and also talking about the news, which makes the podcast very powerful.

We know and dabble in many different fields.

• We understand photography.
• We understand distributed systems.
• We understand history.
• We understand cryptocurrencies.
• We understand art.

So we can combine all of this knowledge to make a pretty educational podcast, and we're very invested in it, now a one-hour podcast requires three hours of prep work.

**TechFlow: How do you differentiate and combine media and investing? **

David：

There's the issue of conflict of interest, and everyone agrees that we have both media companies and venture capital funds, which seems to be a conflict.

We've always had the idea of doing angel investing, and Ryan and I have acted as angel investors over the years, and we've also been doing consulting work, which is roughly half of what it takes to be a VC firm.

We are already in the game, we are doing both private market investments and Bankless.

One of the reasons Bankless is what it is today is because people trust us and we build a brand and legitimacy which is the shield that protects us.

We have shown the world that we are there for the right reasons, that we will not manipulate maliciously, that we will not do anything nefarious.

So we're going to go ahead and of course have some simple rules like we venture into you and we have nothing to do with media.

When we started VC, one of the first things we did was ask lawyers about what we needed to do, what we needed to change in terms of media to start a VC firm, because we didn't want to change anything. It turns out that what we've done with Bankless disclosures, and the frequency and extent of our disclosures, has far exceeded the compliance requirements required to start a VC fund, and is much more legal.

So the idea is that at some point, we'll have the best exposure, we'll be one of the most transparent VC firms because of the pure nature of Bankless.

At that point, it's up to our community to listen to what we have to say and determine if there is a conflict of interest. I don't think it's going to be a problem because I trust myself, I trust Ryan, we know why we're here, creating content for Bankless.

Our community will accuse us if they feel our actions are illegal or inconsistent with Bankless values.

**TechFlow: What investment strategy and methodology do you use when determining whether a project is worth investing in? **

David：

I think some VC firms will put more emphasis on the team.

There is a project, I started from a technical point of view to see what it can do. When I spoke to another VC looking for a different opinion on the project, they said it was a bet on the founders.

But in my mind, I didn't see it as a founder's bet at all, because I was thinking about it from the perspective of a technologist.

Although in the eyes of most VC firms it is always a bet on founders. But to me, you invest in a project because of what they're building.

I would wonder, Is this technology really capable of doing what they say?

Different VC firms have different focuses. I love technology, but it's always the founders who make the innovation happen, the most important thing to me is whether the founders can actually execute, my focus is always on what potential the technology can unlock.

There will always be new areas being developed in this industry, so there will always be new investment opportunities, just like the narrative of cryptocurrency has always been, we are still only 1% done.

For example, we still have a lot of work to do in areas such as decentralized finance (DeFi) and Layer 2 infrastructure.

The current narrative is young. So you can go out and find a new narrative and find a shiny new object, there's still a lot of potential to be tapped into the current project.

So in a way, there needs to be a balanced focus on new things like artificial intelligence and cryptocurrencies, which have real potential and we totally should be paying attention to. But at the same time, don’t forget that a field like DeFi is still young and easy to develop, and there is still a lot of room for development.

I mean, cryptocurrencies are only 10% done and still need a lot of investment in infrastructure.

**TechFlow: Let’s talk about AI and cryptocurrency. Have you seen some promising projects in this field? **

David：

Yes, it depends what you mean, the cryptocurrency space is very broad. The number one thing everyone seems to be focusing on right now is Zero Knowledge Machine Learning (ZK ML).

The combination of privacy protection and machine learning seems to have great potential. Beyond that, there's a ton of potential in this space, but it might be too early.

If a16z can find a breakthrough project that can create a new relationship between artificial intelligence and cryptocurrency, it means a huge advancement in this field.

So I think what the VC world is looking for is how to find something really new in AI because there are potentially thousands of examples of projects that fail. Undoubtedly, the market attention in this area is very high, but the real combination point is indeed difficult to find.

**TechFlow: Do you think it is easier to find valuable projects in a bear market? From an investment perspective, how does a bear market mentality differ from a bull market mentality? **

David：

Yes, in a bull market people quickly chase narratives. In a bear market, people are more focused. So I would say that the signals are easier to identify and are largely driven by market sentiment.

**TechFlow: Do you think it is important for startups to make money at the seed stage? **

David：

The idea of a start-up is to achieve scale through venture capital.

I think a lot of people in the cryptocurrency space overlook the importance of "hey, let's make sure this project is actually profitable."

Of course, the specifics vary from project to project, maybe you really want to go for scale first, maybe it's a very ambitious project. But I think a lot of people choose to raise money too early when they could have built some foundations.

In addition, they can seek broad approval from the market, which allows them to raise money at a higher valuation while retaining a majority of the company.

There is a strong interest in raising capital early and trying to raise more capital.

This is a good thing from the perspective of venture capitalists, but at the same time, it also increases the risk. So I really like founders who delay fundraising as much as possible.

**TechFlow: Many people think that 2023 is the start year of Web3 social, what is your opinion on this? Do you have a favorite social project? **

David：

I agree with the philosophy behind this prediction that minimum viable decentralization makes sense.

But the current Web3 social track is to some extent just a Twitter clone.

The strategy of Lens (a decentralized social application) is to leave a large footprint on the chain, which is also very easy to achieve.

But what does it mean to make social apps composable? You don't really know. So I don't have a favorite project, but I'm glad to see that there are many experiments going on.

**TechFlow: Having been involved in real estate and securities crypto, how do you see Real World Assets (RWA) developing as a trend in cryptocurrencies? Do you think it's too early? **

David：

I think it may take a long time to mature.

A problem with tokenizing real estate and combining it with cryptocurrencies is that real estate is essentially a state-linked resource subject to traditional laws.

I've always thought so, yes, so there is a conflict between these two technologies. Successful projects in the cryptocurrency space, such as Aave, MakerDAO or Uniswap, are crypto-native without any real-world dependencies.

And real estate has many real-world dependencies.

So you can see that when these two worlds collide there is going to be a huge impact, we need to innovate at the national level, an industry that is critically dependent on external dependencies.

Zuzalu and Cyber Nation

**TechFlow: In late 2020, you wrote an article called "On Coordination Vs. Defection," describing how humans have historically chosen to diverge and coordinate. According to your definition, what is a cyber state? **

David：

I'd say there's probably a pendulum between very large agriculturally concentrated non-nomadic societies (what we call cities and countries), and there's a pendulum swinging between the two in the number of hunter-gatherers. Throughout history, the pendulum has tilted strongly in the direction of cities and nations, where non-nomadic people are deeply entrenched and well-established.

The philosophy of Net Nation is, hey, the pendulum has swung too far. Things have become too rigid. City or existing government support for the online world has come along with various other forms of coordination, charter cities, startup cities, network nations, whatever you want to call it, are saying, hey, let's swing this clock towards Swing in the other direction.

Let us gain more freedom and mobility, let us experiment more with governance, and allow individuals to be free rather than chained and fixed. So whatever you want to call it, the cyber nation is just experimenting with what it means to be human in society and how we can create new societies where humans are more autonomous.

**TechFlow: Do you personally travel a lot to "rebalance the pendulum"? **

David：

This has been the case recently. I didn't do that a long time ago. I have indeed traveled quite a bit over the past two years since cryptocurrencies have boomed in the past year.

**TechFlow: For me, I live in London. So, I go to San Francisco occasionally because most of the opportunities are there. This fact already reflects that. Geographically, it seems like all the opportunities are concentrated in the United States. Whereas Europe is made up of many different small countries, it's kind of spread out, and it's hard to scale your business in some ways. So everyone goes to Silicon Valley to expand their business. To me, a network nation also means being able to bridge arbitrage opportunities between different geographic regions. **

David：

Yes, the general idea is that cities no longer compete with each other, so, a network state can make cities competitive, which will only benefit individuals.

**TechFlow: Do you think that the way people self-organize into aggregating cyber-states can break the curse of human conflict caused by forming fenced tribes? **

David：

might go in the opposite direction. Before, there was only competition between countries, such as China and Russia competing with the United States. Now, a new player comes along, called the Cyber Nation, and everyone's going to say, "Oh, now we all have to fight this new force."

So not only do we compete with each other in the national sphere, but in this entirely new sphere, a whole new dimension of competition arises because there are new players.

Going back to the article, between rewards and coordination, there will also be motivation for coordination. Thus, some states may wish to coordinate with certain specific network states, while sub-networks may wish to ally with a larger state. This is just a new variable, at least it will trigger a series of changes, and the changes are progressive.

**TechFlow: In the future, when will cyber-nations like Zuzalu be more organic/natural? What are your thoughts on Zuzalu? **

David：

I think people would get so picky about Zuzalu that they would say "oops, I'm participating in a dot-com nation" such a mockery if the same people attended each time.

But that's also the problem, because we don't think anyone really knows what a cyber state is.

Zuzalu seems to be a symbol of progress. Those of us Zuzaluans don't really know what it's going to be either, since it's just the first time, but someone has some idea of what it's going to look like, and it's like an experimental pop-up city that happens on a regular basis.

So when Zuzalu happens again in six months, or maybe a year later, there will probably be some of the same people, and there will be new people coming in. And the idea is to create a shared identity called Zuzaluan.

So, what exactly is Zuzalu? Except for people in the world who identify themselves as Zuzaluan, we are just people who appeared at different times and places on Earth.

**TechFlow: Also, Zuzalu's mission and content seem to fit perfectly with David's interests in positive psychology, nutrition, and physical therapy, can David share how blockchain can improve or disrupt the longevity field? **

David：

It is the world of decentralized scientific research. So there's some interesting research that could be done in the field of longevity, but can't be done because of the limitations of regulatory agencies like the FDA.

Therefore, we need new experimental sites, which need to exist in countries that can authorize such research.

Cyber nations or other jurisdictions that allow such research will accelerate the development of longevity research. So we chose to have these discussions in Zuzalu, which is not really a place to fund research, but where we discuss how and where to do research, which is a coordination level issue. This may not be easy to understand, but it will be the subject of our discussion.

**TechFlow: Do you think longevity is a matter of improving lifestyles or making scientific discoveries to allow humans to live to 1,000 years old? **

David：

It's all in one, right? What's the point of living 1,000 years if you're not happy? Like I said, if you have arthritis and can't move your body, you don't want to live forever.

It just so happens that the quest for immortality is the same quest as the quest for a healthy lifespan and well-being.

So research is being done to find a pill that will keep people alive forever.

But at the same time, they're fat, unhappy, and inactive, so what's the point? You just prolong your pain. Therefore, the pursuit of longevity must also pursue happiness.

The pursuit of happiness is fundamentally the pursuit of health.

**TechFlow: Can you share a little bit about your longevity or healthy lifestyle? I see you drinking green tea every day, cold water steeping near Rok. What's your secret to longevity? **

David：

My secret is to make it a habit, it has to become a regular study.

Good nutrition is about diet and lifestyle. Therefore, you have to turn something into a habit. This is exactly what Zuzalu brought to me, a regular foundation of healthy habits, daily cold water immersion, autophagy.

Therefore, Kiki's breakfast is not only the same and healthy every day, but also a place where you can chat and communicate with people, which meets social needs.

Also, I don't drink alcohol. In New York, socializing and drinking are almost inseparable.

But at Zuzalu, it's the easiest place I've found to quit drinking. I quickly saw the benefits of doing this, like improved skin, as well as overall health and sleep.

At Zuzalu, since everything is here, the food is here, the social life is here, the content is here. I can easily do the things I want without commuting or sacrificing sleep.

Indeed, this is a highly optimized lifestyle.

Ethereum Ecology

Currently, if you search for the keyword "Ethereum" in Bankless, you can find 54 related articles, analysis and videos. In comparison, there were only 13 Bitcoin-related content.

**TechFlow: Did you engage with the Ethereum community during your time at Zuzalu? What has the Ethereum Foundation been focusing on these days? **

David：

Yes, I regularly communicate with Justin, and he dives into the new field of zero-knowledge cryptography. So I asked him what this means for cryptocurrencies, even though it is very far away.

I discussed EigenLayer and rehypothecation with Dankrad, Tim Beiko, and Vitalik, as this seems to be new territory for the Ethereum protocol.

The reason there are more articles on Ethereum than Bitcoin on Bankless is because Ethereum is more expressive. Bitcoin only does bitcoin-related things, like sending bitcoins to people. Ethereum is a smart contract platform, meaning you can do anything. So there are more topics to discuss.

**TechFlow: What do you think is the biggest challenge facing the Ethereum ecosystem right now? What can Bankless do to support the Ethereum ecosystem? **

David：

Ethereum still faces difficulties and doesn't explain to me the story of why it is the way it is.

Within the cryptocurrency industry, there is a problem of internal coordination, because many people still have incentives to be Ethereum skeptics, and going back to the "coordination and defection" article, there are still many incentives to defect to Ethereum.

To me, the whole point of the cryptocurrency industry is to get people to agree on the same protocol, that's the whole point. So we still have a lot of work to do to get people into the same protocol and make them feel like it's a smart choice. This is an internal problem of cryptocurrencies.

Then there's the external issue of we still need to build things that people want to use and care about. It seems like a perpetual challenge, but one that always takes time to solve.

**TechFlow: When you return to New York, will you take what you learned at Zuzalu to Bankless? **

David：

Yes, I can say we have already started.

Many new types of content have emerged, more on non-encrypted areas. So there's something about the world of cutting-edge technology, and something about cryptocurrencies that's going to come together.

The new things I learned at Zuzalu have also started to affect Bankless, the entry-level stuff.

But there are also a lot of new relationships that are established here that will have consequences, and a lot of new stories to tell.

So people here will end up being fans of this podcast. In general, this is just a record of what Ethereum means in the world and cutting edge technology.