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- [00:00]
A
So I'll give you. It's the end of the episode. I'll say we have not attributed this to a specific threat actor whatsoever. However, since I spent eight hours tracing this shit straight yesterday nonstop and they did not stop and I. I could not keep up, that is a pretty strong indicator that it's probably someone in North Korea who's doing this shit.
- [00:20]
B
Hey everyone, I'm Kane Warrick and welcome to Uneasy Money. Because what happens on Chain never stays on Chain. Before we begin, here's a word from the sponsors that make this show possible.
- [00:32]
C
This episode is brought to you by Kape America's Privacy. First mobile carrier. Same premium service you'd expect from any other carrier, but designed so your number, your location and your data actually stay yours. Get 33% off. Six months at Cape Co unchained. All right.
- [00:59]
B
Hey guys. I am here with my co host and we have two guests this week. Luca is still out. As Tay pointed out during the break, he's out hunting more advertisers for us. So hopefully, hopefully he's doing a good job out there. We seem to have some new advertisers, so it must be working. Good luck, Luca. Godspeed. So we have Tay, our resident security expert and we also have two people joining us from Cap, Benjamin and Wiso. So our first segment this week is Cap and the stable drop blowup. Now I should say I'm an investor in Cap, so I'm definitely going to throw these guys some soft balls, but it's up to them to knock them out of the park. So we'll see how we go. Good luck guys.
- [01:59]
D
Thanks.
- [01:59]
B
So let's, let's roll through. So, so, so Cap is a stable you guys through Mega Eth through like the one of the mafia like groups. Right. I feel like this is back three years ago or something. So you got run you mint STC USD. We're really running out of tickers here. Yeah, we're into the nine tick USD stable coins and, and C which have redemptions. There's no, no white list. And you're deployed around Mega E. So the, the controversy was this stable drop. So in Feb you committed to an 11 million token stable drop reward. And, and just to be clear, stable drop was like you're going to give people stablecoins instead of tokens, right?
- [03:10]
D
It's a new stable drop. Yeah.
- [03:15]
A
Okay, and then what happened?
- [03:17]
B
Okay, got it, got it. I mean, yeah, and then, then some stuff happened.
- [03:24]
D
And then some stuff happened. A lot of stuff happened. I mean look, we did a points program like many people do. And the points program ended. Everybody, most people left. Like, again, most people do. And we were very happy with our early users. So we decided to give them our reward. And instead of giving them tokens, which is usually what happens, projects give around 5% of their token supply for the first airdrop. This is the expected unspoken rule. We decided to try something different at creating certainty. There's people that want to buy the token when we tge, and there's people that want to get the airdrop when we tge, and they're not aligned at all, right? The people that want to buy the token have to wait until the airdrop people sell the airdrop people want to sell as fast as possible so they all get the best yield possible. So we said, let's arrange this so that we do an ico, get some money, give that money to the stable drop guys, and then everybody should be happy. We jumped the gun a bit, and we told people the amount of money we wanted to give them, the stable coins we wanted to give them, which is around 5% of the value of our token, which we thought would be 11 $12 million at the time we were going to do the ICO. Long story short, market tanked and we started a winter. It's not great. So we postponed the ico and we did it now, recently. And in the end, that 5% value is no longer worth 1112 million. We were able to raise around $4 million. So $4 million was our new budget. Now we have a new budget, much less than the original. And we debated a lot what to do. Do we give tokens? Definitely not in the plans, because then we go to zero, and then what's the point of doing this at all, right? You need to take care of your stakeholders. And so we decided to stick to our 5% budget. And we debated it with our investors, with our users, and we decided that instead of giving some people maybe 1 or 2% reward, whereas some people were losing 90, 100% on the YTS, we said, let's just make everybody whole, so at least nobody lost any money. And so the people that really were losing were the YT guys. And we made them whole. And then everybody else, they didn't make any money, but they didn't lose any money. And that's sort of the background, that's the context.
- [05:49]
B
Got it. Got it. And so, I mean, I guess this is like classic, you know, startup founder dilemma, right? You need to start off with like, a little bit of irrational exuberance and try and get some momentum into something and then, you know, unfortunately, reality sets in and, you know, you're not in a position to, you know, necessarily close out every thing that you've committed to. And so now you got to, like, figure out how to balance all of this out so that all the various parties are the least unhappy possible. Right. I'm guessing. And so were you guys the first ones to do this stable drop concept?
- [06:40]
D
Yeah, we were the first one. Before us, I think most people just do regular airdrop. They take their token and they give it to people. And I just see time and time again these projects coming up and they all do the same thing. They give a token airdrop to their early users, they pay Binance a bunch of money, and then they go to zero. And so we, that's why sort of we created something one, to make sure our project continues to be successful long term, but to hopefully make farmers happy. Obviously the farmers are not happy, so that, that didn't go to plan.
- [07:14]
B
That's, that's, that's normal. Don't worry about it. They're never happy. It doesn't. You could have given them $20 million.
- [07:20]
D
They still matter to us. I mean, I don't want to.
- [07:21]
B
Of course they matter. No, no, no, of course farmers matter. But, but yeah, farmers, farmers, farmers have a track record of being unhappy about things. So I think obviously, anytime. The fundamental problem in crypto, I think, is that you have way too many autists. And if you change the rules on an autistic person, God help you. You're going to have a bad time. Right.
- [07:48]
D
We talked about this before. I remember, like months ago.
- [07:52]
B
Yeah, yeah, we did.
- [07:52]
D
We were debating, like, how should I bootstrap cap? Is the points the best way? Yeah. Honestly, a lot of your advice should have been taken. I think you have a pretty good take on these, like, points programs.
- [08:06]
A
Wait, what was your don't do it?
- [08:09]
B
I have no idea.
- [08:11]
D
No, I think it's my take program. Just grow it slowly.
- [08:14]
B
Yeah.
- [08:14]
A
Oh, yeah. Okay.
- [08:17]
D
Who knows how it would have been differently? I guess.
- [08:19]
E
I also think that points programs are their marketing. And so there's this weird thing in crypto where we decide to give tokens as a marketing expense and then expect people not to just immediately sell them. So I think we're trying to shift that.
- [08:33]
A
Right?
- [08:34]
E
Like, hey, if we're going to give you tokens, you're just trying to farm for yield, so you're going to sell them. We'll just give you the yield. But the problem is that this marketing expense is now uncapped. Right. And so we ended up with way more TVL that was very unproductive for us early on and really didn't feed into the flywheel. And that budget now is like, well, you know, I don't. We don't need $500 million of liquidity. We don't even have that much borrowed demand or can execute on that, you know, early on, but, you know, because people can kind of keep coming in, keep putting in money, keep getting points. Now your marketing expense has no cap to it, and so you can grow pretty large. It's all temporary. The points end. Everybody leaves. Got really no productivity from it. And it's like, how much now do you actually spend on this program that isn't, you know, for the future? So I guess that's probably, like, the dilemma that a lot of people kind of fall into. And if you were to go and say, hey, like, I'm going to make everybody happy and give away $12 million now, you've just, like, cut your throat on the business side for, you know, your Runway, your token, everything in the future. So it's a very hard decision to make.
- [09:44]
A
Yeah, the incentives are just like. I don't know, they're pretty fucked, Right? Would you guys agree? And, like, I think we do this to ourselves, though, right? Like, we. We keep coming up with new mechanisms and new creative ways to try to, like, sort of fix them. But if you guys were to, like, let's say, like, wave a magic wand, go back in time to, like, the very beginning, like, what do you think? Like, what would be the ideal sort of path? Right. With everything that, you know now, what do you think, like, you could have done?
- [10:19]
E
I think first is you have an idea of how much you actually want to spend to the program, and then you cap it at that, and then you can kind of work towards that budget. And I think the second thing is communicating better. Like, we didn't communicate very clearly. You know, we committed to a number, you know, where we couldn't fulfill. And so, you know, those are pretty big mistakes. And I think if I. We could definitely go back, we would have done those two things strategically better.
- [10:45]
A
Yeah, yeah. I mean, that's. We hear this a lot, actually, but it is. I think it's hard to build in public as well. Like, the criticism and just like, the instant criticism and the ulterior motives. Like, for example, Cain has gotten in trouble for talking back to the mob at times, to put it lightly, you know what I mean? But it's like, it is Hard to build in public with that instant feedback and criticism.
- [11:17]
B
Someone's got to do it. Someone's got to do it.
- [11:20]
E
It's hard to resist.
- [11:21]
D
You have to make a decision and kind of live with it. We did talk to a lot of our investors, you know, try to survey, but at the end of the day you have to make a decision and, you know, not pick favorites, not treat anybody differently and then live with it. Right. And there will be a lot of people online, I'm sure all of us know, being in this space for so many years that that will kind of like attack you and do say things.
- [11:48]
A
Yeah, absolutely. And so what, you know, you guys mentioned earlier, like, obviously the market has taken a turn. I think a lot of companies in the space are feeling this. Like, I mean, a lot of companies did layoffs and now they're doing more layoffs.
- [12:03]
D
Right.
- [12:03]
A
Like it's going to, this is going to be, this is going to hit. What are you guys, let's look at like a two year timeline. Like what's the ideal sort of path from here? How are you going to regain trust of the, of the mob, you know, and then what are you guys going to ship?
- [12:22]
D
Well, first of all, I think we're in a better spot today than we were during the points program for two reasons. One, today 98% of our TVL comes from people that are not farming points. Right. These are just institutions that we go, we pitch them, they say, yeah, I like cap, I'm going to use it. And now they have, you know, multi, multi month deals with each other to work at Cap and it's very sustainable. And on the other side, yields are very much down on chain yields haven't been this bad in a long time. Whereas at Cap, our whole business model is bringing yield from the real world, importing yield from the economy. So our yield is pretty good. And so it doesn't take that much for us to go to an LP and make like TVL deals or sort of bring users into our platform. So I'd say that's been good. On the bad side, obviously now we have to repair some of this mistrust that might have arisen even though it's not our user base retail. I do think as builders in the space, we've been here for many years. I was at Cheetah, Wessel was at Beefy. This is our community. We've been part of creating this community. And we didn't leave, we didn't go to robotics, we didn't go to AI. And so there's nothing else but just to continue shipping and not make more promises.
- [13:54]
E
Yeah. I'd also want to say they had nothing to do with the protocol. The protocol itself functions exactly. It's supposed to. We had some redemptions. We actually calculated ahead of time, post the announcement what we thought was going to happen in redemptions. Making sure that we'd have enough liquidity coverage and all that. That all was fine. Coincidentally, we just got listed on AAVE's mega ETH deployment and gained some TVL from that 10 days prior to the announcement. At the same time, over the weekend, post the announcement, the biggest liquidity provider on AAVE Mega Eth decided to pull out, ran borrow rates really high, which led to obviously that same TVL that was not there 10 days ago to withdraw now on Unloop. I think that kind of played into like this narrative that something was functionally wrong with the protocol, which was not the case at all.
- [14:47]
C
Yeah.
- [14:48]
E
And so I think that's the most important thing for us is to go ahead and say, hey, just because the incentive program didn't work out like it was expected and people are unhappy with it, the protocol functionally works just as it did before the announcement. And it's the same trustworthy over collateralized borrowing mechanism that we have been selling to everybody for like the last year. I think our system also is bringing institutional borrowers on chain and a lot of times those deals take time so they don't happen within a month or two months. There's a lot of legal requirements that you have to go through. There's a lot of different people that have to make decisions on whether or not they're going to move forward with it. So those decisions take months over time. So for us, it's executing our entire pipeline that we have in place over the next few months to showcase, hey, like, you know, this is a real demand, right. We have, we're bringing private credit borrowing on chain. We have this pipeline of borrowers that are lined up to go ahead and execute via the Cap cap platform. And then from there it's just like, you know, showing hey, like we can be more transparent with our communication. So I think the number one way we're going to regain trust is learn from our communication errors, making sure that we're being a little bit more transparent, less opaque around different programs and delivering transparent yield.
- [16:10]
A
Yeah, yeah, that makes sense.
- [16:13]
B
So I think like, you know, you guys talk about communication, right? And I think it's fair to say that, you know, you guys made some mistakes in comms, right? But the fundamental issue that I, that I see here is you tried to reduce uncertainty. We live in an uncertain world, we operate in uncertain space. You tried to reduce uncertainty by saying we'll give you this fixed thing without knowing necessarily that you could deliver it on the basis that if you did all of the things right, it would work. So that reduced the uncertainty on one hand. But there's an implicit uncertainty that comes along with that, which is if we don't have that money, we can't give it to you. Then the alternative on a points program is we'll give you some tokens that we printed from nothing, which we definitely will have because we can print them. We just don't know if they'll be worth anything. And so you're in this situation where you're like, we'll give you some magic beans that may or may not be worth zero, right? Or we'll give you some other thing, but something has to give in that trade off space right? Now know this is the frustration that I have with people who are farming, right? Is like they have this expectation that things should only go well for them, right? That they should get a 15% yield with no risk. Which is nonsense, right? If, if yields are at 4% and they're like no, but you promised me that I would get 15% and that there was no risk, right? Yield know or 20% or whatever the number is, right? Like it's just not reasonable now you guys could have said, hey, just a heads up, you know, there are implicit risks in like we may no longer exist in six months time, right? And you will get no yield. Like, you know, a bunch of things could go wrong. You know, the world could have nuclear fallout. Like, you know, there are inherent risks in the world that may mean that this doesn't get delivered, right? I feel like that is probably the thing that if you guys had communicated that a little bit more clearly that like there is no guarantee that you will get these stable coins. This is our intention. It's not. Wouldn't have stopped the fud. It wouldn't have stopped the fud. Just to be clear, you would have still got it for fudded, but you could have at least slept well at night going, but we told you, right? I think the miss here is that you were like, oh, we'll definitely do this. And then you're like oops, we can't,
- [18:46]
D
right? No, I definitely do. Lots of good lessons learned on that side trying to reduce the risk. I think that's especially when it comes to the TGE we're really focusing on tge. We're launching this token because not just about the farmers, it's also about our investors. What are you going to do when you launch a token and you have all these tokens that had just been sold in this market? Is tough, but I think we did tge. Okay. I think TGE happened. We didn't go to zero, which is always good.
- [19:20]
E
Yeah, but if you do TGE bad, right?
- [19:22]
B
Yeah.
- [19:24]
E
The farmers are happy, but the farmers are happy and you do TGE bad, then you have the same mob now yelling at you that the token is going to zero. And what are you going to do to fix it when it's because everybody's just dumping your token incentives? So you're dealing with the mob no matter what you do.
- [19:42]
A
Yeah, yeah. It's. I don't know. Let me ask you this. If you guys were advising a, like, young team, been around for a couple years, who's considering doing like, points, TG token for whatever their product is, what advice would you give them?
- [20:03]
D
Well, this market condition is very different right now. We're in a very low interest rate environment in crypto. And so it is much cheaper for a new project to skip on all the incentives altogether and go to liquid funds and strike deals. Much easier. Much, much easier. And then you can leverage that to get retail interested. Because typically they look at TDL when making decisions. That's what I would do.
- [20:30]
A
Okay. Yeah. Yeah. I mean, I'm scared. I'm scared of the mob for personally, like. Like, I don't think you can win against them. And that's just, you know, from my experience, like, you know, and so you have to sort of, I guess, fall back to, like, what you know best and. And have faith, but not super ideal.
- [20:51]
C
So.
- [20:52]
B
So can we talk? We talk here. And I, We. We got to go to our next segment, but I. I was just looking through our run sheet here that we covering this. I think we kind of need to cover because it's become increasingly obvious to me just like, how wild what was going on. Right. Crypto Twitter is back.
- [21:20]
A
Oh, yeah.
- [21:20]
B
Like, the people that we have all been. We've all been here. This is like the wildest thing, right? Like, we've all been here, but we couldn't see each other. We couldn't see each other. We only saw what Nikita. What we did in Nikita. But he's like, these 20 guys are the only ones you're allowed to see. The absolute most trash, dipshit people on the timeline. This is all you Get. And we're like, oh, man. Like, this is like, the whole of crypto is bad. Like, the vibes were so bad because everyone's like, all I see is this guy, like, capital or, like, whatever, like some other, like, dipshit, right? And. And we were just like. We were just like, everyone's gone. Everyone's abandoned us. Meanwhile, like, everyone's feeling like that, but no one can. It's. It's insane to me that they could construct the algo in this way that, like, only these. These, like, it's wild. And yet then also they're just like. They're like, okay, the, like, switch is flicked and you're all back. And now, like, all these people. I'm, like, tweeting, and people are, like, replying to me, and I'm like, oh, you. I remember you.
- [22:28]
D
You're should come to New York. Kane.
- [22:30]
B
Friendly guy.
- [22:32]
D
I know here in New York, everybody that you don't see on the algo is here. And it's. There's a different air. You know, folks here are all bullish because the institutions are here, everybody's working hard. But on crypto, Twitter is a different story. I give myself one Twitter session a day, and that's it, because it's been bad, but now, recently, it's been a bit better.
- [22:54]
A
Yeah, I mean, my timeline turned over, I would say, completely. And also, thank God there was so much just shit that I don't. I didn't really want to see, but I also loved seeing. So for me, everyone has a little algo fix, like, weirdness.
- [23:09]
E
Yeah.
- [23:11]
A
For me, it was the cute animal videos. And so I'd be like, on crypto, Twitter, and then these, like, cute animal videos, and especially the AI generated ones that I'm like, like a penguin eating a fish, but it's 100% AI. It was horrible. And I was like, wait, why are. Why am I not. Why am I seeing a penguin and not a fucking. My friends. And overnight, like, Nikita, like, flipped the switch, and it was overnight, so I'm happy about that. But it is. It is wild. And it's wild that they have blocked the algo for that long.
- [23:44]
B
To be honest, it was like a year.
- [23:47]
A
Yeah, it's been forever. I've been watching penguins for so long. Kane. We're gonna go to ads, and then we'll be right back to talk about E Systems and another EF spin out and all the fun stuff that's going on there.
- [24:03]
C
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- [24:59]
A
All right, so we are back and we have yet another, I guess, spin out from the ef. This has been, gosh, the talk for the last few weeks. This one is called ETH Systems. This was a bunch of the guys that were at the EF that were doing a bunch of institutional stuff, privacy stuff, and they've spun out to create ETH Systems. It's actually a pretty stellar lineup of folks once again backed by all sorts of all sorts of the ETH diehards. Joe Lubin sharply bit mine. All them. So they're, I mean, I don't know, I guess one takeaway is like there are these institutional folks that are, that are betting big on Ethereum and Builders and like Infra Layer and then they're going to be working on, I guess, sort of like, I don't know, it's a bit weird when, when with all these spin outs they're going to keep doing basically what they're doing but now in a slightly different format and not within the ef. I don't know, bullish, Bearish. What do you guys think? Jump in, guys.
- [26:16]
D
I mean I generally, I generally like it when people have this finance.
- [26:20]
B
I think they're scared of Vitalik.
- [26:22]
D
Yeah,
- [26:26]
A
on this show.
- [26:29]
D
No, I mean we're huge. We're Ethereum people. I mean Wes and I, we are Ethereum builders. So we were very bullish on eth and I like it when people do these spin outs because then they have more agency. It's kind of like do you want everything to be done by state owned entities or do you want to privatize? I think the real world shows us that privatization is better. I think maybe not to get political, but hopefully now that they have their own group they can have a little bit more agency and get, actually get stuff done.
- [27:02]
A
Yeah, I mean, that's the. That's the hope, right? Is. And now we have. So I'm keeping track correctly. We now have three sort of spin outs. We have E Labs, we have the. I guess like the old, like actual institutional team. And then we have this one, ETH Systems. And then ETH Systems is doing a whole bunch of the privacy stuff as well, which I find quite interesting because I thought the EF was super focused on privacy, but. Okay, that's fine. Like, I mean, but yeah, maybe they'll actually get to do it, right? Maybe we'll actually get real progress there. I don't know. I'm bullish on it. I think that anything to get people, I guess, as you say, I like the word agency. Yeah, anything. I mean, we just gotta. We gotta build stuff, we gotta ship stuff. We gotta have people proud of what they build. And for some reason that just the amount of drama and both internally and externally around the EF in the last like year or two has just been brutal.
- [28:08]
D
I think it's also about the enterprise. Irrespective of what's being shipped or not. When people are poor, they start pointing fingers and they get upset and there's like more infighting. Let me tell you, if the same thing was happening at Eth, but Ethos 10k, there wouldn't be any infighting. There wouldn't be any kind of drama.
- [28:29]
A
Oh, 100%. 100%. What do you think it'll take to get eth to 10k, though? Are these orgs gonna be the thing?
- [28:38]
D
If I knew, if I knew, I would. It would be 10k, let me tell you.
- [28:46]
A
Yeah, I mean, I don't. Yeah, it's true. I think, I think we do actually. I think the biggest thing for me that would give me faith in ETH again. And I have faith in eth, I hold way too much eth. So let's not be delusional and say that I don't have faith in. But that would like. I would be super happy about is. Yeah, I think people just like actually committing to something that they really want to build, they really want to ship, and then just executing on it and executing really well on it. I think we talk a lot and we do a lot of theoretical stuff in Ethereum in general. And I would love to see us as an ecosystem just get a lot better. Lot better at executing on our dreams, say the least.
- [29:33]
D
Yeah, we're a. We're a community of researchers, it seems, at Eastland and not a community of shippers. Obviously. The researching is extremely important and there's a lot of value to it. But I've. I've always been. Maybe because I'm a founder, I've always been biased towards action. Let's just ship something. Let's test it out, let's see how it works. But there's definitely a need for both.
- [29:57]
A
Yeah, no, 100%. 100%. I want to actually talk on that note. I actually want to jump to it, like what our. Our next segment is, because I think it's super relevant. Did you guys see. So Jesse, Coinbase. Jesse Bas. Jesse handed off a whole bunch of stuff to Kobe. Did you see this?
- [30:18]
E
Yeah. He's in charge of Base app now.
- [30:20]
C
Yeah.
- [30:21]
A
What? Okay, so what's your read? Bullish.
- [30:23]
D
Bearish.
- [30:24]
A
Give it to me.
- [30:25]
E
Probably bullish. I wasn't a really big fan of the whole creator coins thing that he kept pushing over and over and over again. I don't really. I don't really understand it. Maybe that's just not my.
- [30:35]
B
I think. I think the most interesting thing was Jesse made the mistake of writing like eight words in a thing, and so no like or whatever. And so everyone was like, jesse's giving me base and now. It's. Their Coinbase wallet. And it was base and now it's been given back, which is just kind of fun.
- [31:19]
A
Wait, what's the difference though? Does anyone know or where? What's the delineation? I guess he's just doing, I don't know, whatever Kobe actually got versus, like, all of Base.
- [31:31]
E
The base app is that. That's the wallet.
- [31:34]
A
Right, the wallet. So he. So he's basically. Kobe's running products for that. But, like, the wallet.
- [31:40]
D
That's what it sounds like.
- [31:41]
A
Okay.
- [31:43]
D
I mean, base can be like all the defi stuff and maybe infra and everything. Like this.
- [31:49]
A
Yeah. I mean, base is huge. It's a whole fucking network.
- [31:52]
E
Yeah. But Colby had a funny tweet. It was like somebody's complaining about something and he's like, well, give me 30 days to fix it and if I can, you can call me a scammer.
- [32:04]
D
No. One thing to note is that they have such great talent. Like, imagine in your team, you have, you know, Jesse and you have Kobe. Right. I think they've done such a great job at Base and Coinbase in general at attracting top tier people. And so I think they're. I think Kobe, you know, anything he touches, he'll probably figure something out, obviously. Just like, even though Jesse has some issues with this whole, like, raider stuff, also very top tier and Very glad that they're in crypto and they haven't moved over to AI or something like this.
- [32:39]
A
I mean, it's low key. Amazing that Kobe's still here. Like, let's be real, Kobe should have retired like a decade ago. What is he doing? So whenever I see founders like that that are still here when they definitely should have been long gone, I do have a lot of respect for that because they're in it for just like the love of the game. And Kobe's definitely like one of those. Like he is. Yeah, he's never.
- [33:05]
D
Oh, we have Kane right here. Come on. And yeah, one of the legendary founders of crypto so here gracing us in his presence.
- [33:17]
A
Yeah. And Kobe too, I think when Kobe joined Coinbase originally, I was so.
- [33:23]
B
Yeah, so just like Kobe.
- [33:29]
A
Yes, that too. That's also me, by the way. I should return like years ago. I don't know what I think are doing, but I was like, when Kobe joined Coinbase originally, it was like, I could see it. Like, two things could happen. First is that you just get so disgusted by Coinbase and their Ivory Tower shit and just like immediately gets super disenchanted and gives up. And the other is like, powers through and brings his unique. Sort of like the way he approaches things. Right. Never up in the Ivory Tower. Like, he is always on the ground floor. He's always listening to people bringing that to Coinbase and Coinbase employees. I think he's still doing that. Like, he's been quieter on Twitter lately, but it seems like he's bringing some of the product guys at Coinbase down a notch and back into the community and back listening, which is if they can do that successfully, I think it's massively important.
- [34:37]
E
I think the fact that he's so engaged still is very positive for Coinbase.
- [34:41]
D
Right.
- [34:41]
E
Because it seems like they're at least letting him have some autonomy to go and try to fix things or letting him come to with different ideas and what's broken. I think he tried to tackle customer service when they first got him over from Gecko. Yeah, he's just answering, I can't access my wallet. And he's the customer service rep. And the Twitter replies, that's great.
- [35:04]
A
It's so good. It's so good. That's what you have to be, though. And especially when you do get so big and you get sort of hung up in processes. Queen Bees is a large org at this point that's been around for a long time. But, like, if you. Yeah. On Twitter, like, the biggest complaints for the longest time was like, you can't reach anyone. You get an AI bot support agent, you're locked out of your wallet. And Kobe was like,
- [35:28]
D
I'm just going
- [35:28]
A
to sit here on Twitter and cuss and also help you. And that's what the ecosystem fucking wants. It's so good.
- [35:36]
E
It was really good, guys.
- [35:38]
A
Kane, by the way, if we didn't say Cain is in New Zealand fighting the evil Internet gods in New Zealand, apparently we cannot do anything. All right, next segment. Should we move on? Yeah. You guys have thoughts on Robin Hood chains?
- [35:58]
D
What a slash.
- [36:00]
E
Yeah, but I have a fear. I've seen this over and over again where the hot new thing is really hot for like a month and then we see it kind of play out over time and it loses its momentum. So it'd be interesting to see what real difference it's going to change over from base or some other ecosystem that was really exciting for a few months and see how sustained it can be. But for right now, people are loving doesn't.
- [36:33]
A
Okay. So for listeners who have not been in the trenches with the rest of us, it's been live for two weeks now. Basically, they launched and it was. They had big goals. Let's say Robinhood chain has big goals. Yeah. But the biggest, I guess, actually activity that we've seen just like exponentially go up over the last, well, two weeks has been the. Mostly the meme coins. So surprising, which is not what I expected.
- [37:10]
E
I mean, how's that surprising, though? It's like the.
- [37:13]
D
They don't really have any meme coin in this market.
- [37:17]
E
Lots of people, Handsome coin went up
- [37:24]
D
for like, everybody lost their money that was going to trade these type of things because I think it's trash. I think meme coins are trash and we should get rid of them. And it's bad for space and there's no attention economy doesn't mean anything. What I want to see Robinhood, they have Robinhood gold where you can earn kind of T, bill, yield, put that on chain or do what stripe did. They brought a lot of their deposits onto Tempo. I think that's the stuff I want to see Robinhood do. And forget about this meme coin stuff because no one asked long anyways. Like west.
- [37:56]
B
Yeah.
- [37:56]
E
But they are going to do like tokenized stocks and stuff like that. So I think they're trying to use the chain for like, trying to do a mix of like, what they do proprietary to them, like their, you know, application, their Robin Hood app where they're stock trading, option trading, you know, crypto trading and also trying to bring that stuff on chain. I think that's sort of the connection they're trying to make there. But I think you can already trade certain equities and stuff on Robinhood chain. So I don't know.
- [38:27]
D
The big morpho integration, that was very good. I mean, let's talk about morpho. They've been getting some very good integrations, Coinbase and now what they did with Robinhood, that's amazing because it sets a path for a lot of other defi startups to do similar things. I think they're doing fantastic.
- [38:48]
A
Yeah. And I think. I mean, ultimately, I don't necessarily have a problem with Robinhood accidentally stumbling into the meme coin madness and volume. Speaking on that, I do think that they have to get diversity, though. You have to get and convert some of those memes into something else. It's not enough to just ride that wave, especially because everything's fine until everyone gets rugged and then none of your users have any money. So you have.
- [39:17]
D
You want to protect the user. That's what I mean when I say meme coins are trash. I'm not trying to hate on anyone.
- [39:25]
E
That's probably like the early. Like, how do we grab early attention?
- [39:28]
A
Right.
- [39:30]
E
If they just launched, they had nothing. Like, it was like, hey, we have morpho lending where you can earn 7% yield.
- [39:35]
D
People be like, okay, pretty sexy to me.
- [39:38]
A
Yeah.
- [39:41]
E
It grabs all that attention with like, Cash Cat and stuff like that, which I didn't even realize. Oh, you. You knew that. But, like, Cash Cat was supposed to be like Robin Hood's original name or something.
- [39:52]
D
I didn't know. I didn't know that.
- [39:54]
E
I was like, why is this meme so popular? I don't really get it. I was like, oh, it's because it was the name of before Robin Hood was. Robin Hood was supposed to be Cash Cat or something like that.
- [40:02]
A
So that's a terrible name.
- [40:05]
E
It is a bad name. They did much better than Robinhood
- [40:10]
D
to have more of these retail because I. Maybe it's just me, but I see Robinhood and Base in a similar neighborhood of, like, where they're trying to attract. You have Coinbase and then Robinhood with Robinhood chain. And the more of these you have, the more competition. And competition is fantastic because then it makes your space better.
- [40:30]
E
Well, they're porting their users, right? Coinbase is porting on the Coinbase application users. And then same thing with Robinhood, porting those users onto their chain.
- [40:39]
D
Let me tell you, it's much easier for Mega Eve to convince Robinhood Chain user to use their platform than it is for them to convince an average person on the street to download a wallet and start using their platform. And so I think, you know, the more users we can get anywhere in the blockchain, I think it will benefit all of us because then I could go pitch them, hey, come use cap now that they're already using the blockchain.
- [41:07]
A
Yeah, exactly. And then so the second half of this, I guess, conversation and I'm, I'm really interested to hear you guys takes on this is obviously Robinhood Chain test taken off and it's only been a short amount of time, but it, there is activity, mad activity going on. But then people are sort of looking at how much Robinhood Chain is, put it simply, paying Ethereum Mainnet, right? And they're getting quite upset about the fact that there's not, you know, it's sort of started. It's starting to feel on the surface that like, you know, Ethereum is perhaps undercharging people or settlement being the settlement layer. And obviously there's two sides to this. There's people who are like, yeah, it's way too cheap. Crank up the prices, like, what are we doing? And there's other people that are like, they'll just leave. Right. So what's, what do you guys think?
- [42:05]
E
This is not new though, right?
- [42:07]
A
Like
- [42:09]
E
L2. Yeah. I mean the, the same argument we've had for years, I think, about L2s. I think Vitalik himself even came out and said something in that regard about how the L2 Vision didn't work out like he thought it was going to work out. It's bringing in very little revenue for actually the mothership.
- [42:31]
D
You get what you pay for. Right. It's not like you have Ethereum level security on these L2s. Extremely centralized. And so at the end of the day, yes, it's cheap. Yes, they're not paying a lot, but they're also. You're not getting that much either, but you're at the completely at the whelm of these teams that are running the L2s.
- [42:53]
A
Yeah, yeah. And I go back and forth because on the one hand I think when, if you look at, say, how much like Robin Hood, Kane, Robin Hood, like how much they are making and also in this case they're paying a percentage to Arbitrum foundation, whatever, right? That's how the Dow works, right. You look at those two numbers and then you look at the number that's going to Ethereum and you're like, wait, we should be charging more, right? Like just from a basic business perspective. On the other hand, if you, I
- [43:32]
D
don't know, would they still be here?
- [43:35]
A
Would they still be here? Is it, is it really, like, can you really say that it's lost revenue? I'm not convinced.
- [43:43]
B
How do you charge?
- [43:44]
E
How do you charge more?
- [43:45]
A
I mean, you could. Well, I mean, we lowered the, the whole blobs years ago when, you know, with the introduction of blobs, they made the settlement cheaper. And at the time it was massively important that we did this because the L1 was impossibly expensive, but even L2s were massively expensive. And so they introduced some new technology, some new settlement. They're called Blobs, which is a great name, love it. But now they're super, super cheap. And then of course, now in hindsight, we're like, wait, is this really the, is this the vision? Was this the way to go? What's the value accrual to Ethereum and Eth, the asset? You know, it is an old debate, but I think, yeah, it's, it's interesting to have the conversation restarted in light of Robinhood Chain, but also just in light of like people kind of. I'm not saying that people are completely over L2s at this point, but it's not, you know, it's not 2022 anymore. It's not. And it's definitely not like 20, 2017, 2018, when you couldn't even settle on Mainnet. Right.
- [44:57]
E
I think you still have to keep transaction fees down for people to still wanting to interact on chain and build. I think when I was deploying contracts a few years ago, it was costing me like $300 to deploy a contract. I think upwards of a thousand is like the most I've spent. So it becomes. And that's just to do, to deploy a contract, but interact. I think when I first used AAVE, like 2019, I think it cost me like $50 to deposit a hundred dollars worth of ETH into AAVE to try it out.
- [45:33]
D
Yeah, it's like that'd be so much worse.
- [45:36]
A
It was really bad. It was really bad.
- [45:38]
D
Especially guys, I think for startups. Because let's think about Ethereum as a startup. You don't really need to monetize that fast. How many years did it take for Amazon to turn a profit and didn't matter. I think our KPI for Ethereum should be how many companies are posting to Ethereum? Because the reality is if you're not building On Ethereum, you're paying in tokens. Every chain outside of Ethereum, if you want to get real capital, you're paying it with tokens. And that says everything. And so at least Robinhood is building on Ethereum and they're not making their own chain like Stripe. And I hope more people do it because I would take that a hundred times over than making a few more bucks over, like, a lesser brand, for example.
- [46:27]
A
Yeah, yeah, a hundred percent. And I think, I don't know, I still think that there is immense value to keeping, I guess, things a bit eth. Centric. Even if the, you know, if you run the hard numbers and you're like, ah, it's. You are still. There's still a consistency if everything. I think we'd be in a worse position if everything was like a truly, completely separate. Like you just said, alt L1. Alt L1. Alt L1. I think it's just like the innovation goes down, the interoperability goes down. Like, it's Even like the L2 Ethereum experience is not the best, but, like, it's way better than if you go back in time to like, when it was like, Bitcoin, Litecoin. Doge Monero. Right. Yeah, we do have interoperability. We do have settlement. We do have assurances where, yeah, you can, like, force yourself back to. To the L1. We don't have to rely on fully centralized things to bridge back and forth. You can have innovation, you can have different rules, but you still do get that, the interoperability. So I don't know. I'm not. It's my, My take ultimately is like, I'm not super upset that Ethereum isn't making more here. I get the conversation, but I think it's more important to keep people using this stuff. Right.
- [47:59]
B
Yes.
- [48:00]
A
We're just talking about Robinhood chain, but also, like, you know, the conversation on like, is. Is ethereum undercharging these L2s?
- [48:09]
B
Yeah, I mean, yes, I've been an advocate for, like, I've been an advocate for this for a while. Like, Ethereum should charge more. You know, it's. It's like there's a massive advantage that L2s get from not needing to deal with all of the stuff that Ethereum has to deal with, but still getting to be a chain. And I think that it does not capture enough of that value. Unequivocally, it should capture more. The question is can. Should definitely try. Right? What would the consequence be of trying to capture that? Maybe all the L2s are forced to become L1s, that actually would also not be too bad because if all of the L2s stopped LARPing as decentralized and had to actually be decentralized, they would find that it's much harder than it looks and it would be at least an equal playing field. Right. Like, I promise you, like the 85th L2 is not viable as an L1 if they had to actually like produce their own blocks and have validators and clients and all of that stuff. Right.
- [49:21]
E
So.
- [49:21]
B
So I, you know, I think it would be the fact that like we have this weird L2 thing in the first place is like such a strange path to pen. Weird thing. I think we will eventually kind of. They'll either die off or they'll become L1s and it'll be a bunch of L1s competing against each other and you won't just be able to like be a parasite hanging off Ethereum the way that we have now.
- [49:51]
A
Yeah, but do you think that we can. I mean, do you think like it's realistic that ETH could like raise the prices now or do you just wish that?
- [50:02]
B
Yeah, yeah, like I. Yeah, for sure. Like what are they going to do that?
- [50:08]
A
I mean, this is true.
- [50:10]
D
I mean there are some benefits that to be aligned duty is if you look at the. Because I think in terms of capital, right, we have a defi startup. If you look at the cost of capital for incentivizing outside of the L2s, outside of Ethereum is meaningfully higher. I mean go to AAVE on Monad and look at the price that the market is giving for supplying USDC and compare that to all the L2s, it's much higher. Or go to any of these other alto ones. Either they have no liquidity or if they have it at scale, it's costing them much higher. And so I think that's the market saying it costs you more. And so I, as an L2, I'd pay a little bit more. Right now I'm paying nothing if it means I can save 2% APR on the capital.
- [50:56]
B
Yeah, agreed. I just think it would force much like more clear competitive landscape is what I think would happen right at the moment. You have this weird uncanny valley where like there's so many flavors of L2s it's not clear how decentralized they are relative to each other. We've been trying to figure this out for five years. No one really has a good sense of it. So my view would be if Ethereum jacked up the Price either. People who couldn't leave would have to pay it and the people who could leave would leave. And then they're competing on equal playing field. So I think it's good on, on both sides for Ethereum, right? Like, if, you know, if Arbitrum had to be an L1, it would probably be good for Arbitrum on some level, right? To actually just be like, all right, fine, it. We're in L1, let's go. Let's. Let's try and compete directly. Yeah, we'll see, we'll see.
- [51:56]
A
I mean, yeah, there's arguments on both sides. Again, we're back to incentives, though. And I do think if we, if anyone, if anyone wants to change anything, I think Bear Market's had time to do it. Rip the fucking band aid off.
- [52:07]
B
Oh, yeah.
- [52:08]
A
Let people get mad. Let it.
- [52:11]
C
Let.
- [52:13]
B
Yeah, yeah. The thing, you know, the thing that I always say, right, Is like, the status quo is what reigns, right? The status quo can be fucking insanity. Look at some of the status quo things that we have right now. It can be shit, pure lunacy. But because you have so many autists in the space, they will defend that because it's the current rule structure that they exist in. Like, their lives depend on it, right? And so when you come out of a bare market, whatever the status quo is, yeah, you'd have to fight with them a little bit, but, like, they will be the ones who will be like getting the pitchforks out in the bull market if anyone tries to change anything. And so you actually build up this like, you know, kind of defense system so that when you get into bull market, this, the new status quo, whatever comes out of the bare market is like the thing that is the stable equilibrium now. And that's what will run through the. The bull. So.
- [53:08]
D
And it takes guts, man. You make a mistake and you get burned.
- [53:13]
B
You get burned. Yeah. Better to get burned in a, in a bare market, right? Because people have short memories. They'll forget about it. No one will even remember in a bull market that that even happened. There'll be like five guys who are still crying about it. So.
- [53:28]
A
Yeah, and you can rebuild stronger, right? You can, you can, you can. You know, I think the community is a bit more it. They still get very upset about things. Let's not be. Let's not be crazy.
- [53:44]
D
And I was looking at the timeline today. Some people like attacking Calidora. And I'm like, man, can we all just come down? Let's just go off.
- [53:54]
A
It is. I think when there's I don't know. It's. It's a bit narrower of a community. The anger lasts a bit. It's a bit shorter, and you can weather it a bit easier, like, ooh, bull market. Anger is what.
- [54:09]
B
But here's. Here's the thing, though, right? Is like, in a bear market, it used to be that you had all of your friends around, and so the people who were angry with were, like, really balanced by, like, your friends kind of being like, eh, it's okay. Right? But we lost that until, like, three days ago because on the timeline, all you had was, like, the, you know, cancer people who were just, like, you know, fucking, like, losing their shit about, like, you couldn't see your friends right now, at least as of, like, 48 hours ago, your friends are back on the timeline, right? So, like, you see a balanced thing. You do something and you see, like, someone tweets, like, hey, it's okay. Like, don't worry about it. Because they actually saw that people were attacking you, and they jump in to be like, no, no, this is a good guy. A week ago, that didn't happen. It was just like, wall to wall, like, fucking cancer people. So, yeah, anyway, here we are. Hopefully Nikita doesn't fuck with Iago anymore, and we're. We're back for good.
- [55:08]
A
Literally.
- [55:08]
B
Right? Should we. Should we. What's the next.
- [55:12]
A
We are going to talk. Well, we have a choice. So we can end it here, or we can do a little. We can do, like, a rapid fire on the latest and greatest hacks that happen this week. Your guys' choice.
- [55:22]
B
Yeah, let's do it. Let's do it.
- [55:23]
A
Yeah.
- [55:25]
D
You got my favorite CTO here, so.
- [55:28]
A
All right, so we'll start with my favorite. I hate this, but my favorite one, Barnbridge. You guys remember Barn Bridge?
- [55:36]
B
Yeah. Dude, don't even get me started. Don't even get me started.
- [55:41]
A
So Barnbridge. Poor Barnbridge. Good team. Good guys. Got absolutely screwed by them.
- [55:47]
B
The sec. Oh, my God, the sec. Like, so. So I was really involved in Barnbridge, right? Like, Tyler showed up and was like, hey, I've got this idea. And I was like, yeah, I'll help you. This was that I was on my, like, you know, arc of, like, trying to help founders, and it wasn't as busy as I am now. And now I'm like, sorry, I can't help you guys. Um, but. But, you know, I was like, all right, how you guys want to do this? Like, you're in America. You want to do this Dao. Like, what? You know, I Was like my, my hot take is your only way to protect yourself. Here is like no entities, no anything. If you set up a foundation, it'll be a target or whatever. And it worked until it didn't. And then the SEC was like unincorporated association, you know. I mean at the end of the day, like I think anyone who did anything during the last SEC regime in America is certifiably insane. Like any, any crypto person in, in America during that reign of terror, certifiably insane. But these guys in particular got. Got singled out unfairly because I think that they, that like they did, you know, like, like I, Tyler lost me a lot of money, right? Like I, I lost a lot of money in a bunch of schemes of Tyler's. Even things that he wasn't involved in. Like Olympus Dow. I don't know if you guys remember. So there was a thing called dude. So, so I went into Olympus super early. I say I lost money. I, I probably didn't even really lose money. I probably put like 100k in and at the peak it was 5 mil, right? And Tyler comes into my DMs and he goes, hey, you have a bunch of ohm. You need to do something with it. And I'm like, do I? And he's like yeah, of course you do. Like, what are you like he's just sitting there gathering dust. And I was like, what should I do with it? And he's like, you should put it into Fiat Dow. And I was like, that doesn't sound great. I don't know about. I was like, I was like, okay, what do I have to do? And this is like before agents, right? So you had to do everything manually yourself. So he sends me this like 17 step process, which was so convoluted and insane. And I'm like, I'm not doing this, man. Like, I'm just not. I'm sorry. And he's like, no, no, no, like we need the TVL like you got to do it. And I was like, fine, whatever. So it literally took me like six hours of doing transactions. I finally get in there, I'm in Fiat. Yeah, it was like, it was like genuinely 17 transactions and you had to move stuff around on different chains. It was a nightmare, right?
- [58:21]
A
You have to use like the etherscan contracts test.
- [58:24]
B
Yeah, of course, of course you did. Of course you had to go into the ether scan. Yeah, of course. Like there's no interface for this shit, right? And like it didn't work. And like this, it was like one of those. And I Used to do this stuff all the time, right? Like, I used to be like, I'm just gonna figure it out. Anyway, so I finally get through it all. I put all of my into Fiat Dao. And then like a week later, Ohm starts crashing, right? And I'm like, oh, shit, I better get it out of Fiat Dao. Fine print. There's a 28 day unlock window in the Fiat Dow.28. And by the time it was all said and done, my own was like back to like 400 grand or something like that. So I like round trips that entire thing. And it was all Tyler's fault, so he's the good guy. But like, man, oh man, like, I've got some battle scars from that guy. Yeah.
- [59:20]
A
Okay, so. And I mean, Barnbridge too is pretty. I mean, I. I never played with Barnbridge, but like, my impression was like the real OG DJ were the ones in.
- [59:32]
B
Yeah. Oh, yeah. Oh my God, they were so degenerate, those guys. Like, everything that they did was like, so degen. And like degens loved it, right? Like, that was the audience. Like, Barnbridge came up at like the exact right time where they had a chance to like design this system purely because, you know, when. When we're building synthetics, we didn't even know what a degen was. Like, Degen Spartan coined that term well into the synthetics arc, right? Like in the. In the synthetics discord, he's like, all right, we're all degens. And we're like, we are. And we were. And he was like, yeah, yeah, we're deens. Like, that's what it is, right? And we're like, okay, cool. And so, so, you know, you didn't have a chance to like custom design a system for dj. You would build a system and it happened to be interesting to them and they like got super excited about it. The Barn Bridge, Barnesbridge guys were like, no, no, no, we're going to design this from first principles to be like, as degenerate as possible. Like, every aspect of it was like super degen. And so the DJ just loved it. And. And it. It was so much more success. I really didn't, like, I was like, this is a cool idea. But it became so much more successful than I was expecting it to. Which of course then SEC shows up and all of that stuff, right? So it was a bit. It. The whole thing was. Was very unfortunate.
- [60:52]
A
Yeah, so that's what happened to sec. No. Yeah, so the SEC showed up and also because of the sec. And this is like super important to remember, like that's literally going after these guys and other people legitimately, really hard going after them. So one thing that Barnbridge did to try to avoid that outcome, which happened anyways, was they set up governance over the protocol for certain things so that it was controlled by the DAO or whatever.
- [61:23]
B
The Dow. Yeah, exactly.
- [61:25]
D
That's what everybody did, right? You just set up a dao because you have to, you have to, you have to.
- [61:32]
A
Yeah, we forget because the FCC was trying to take you down and throw you in jail. Okay, so fast forward to this week, like Monday or something very similar to last week. Nobody who was watching the governance and so a proposal, and this is like how inactive the governance was in general. Proposal 14 Ormbridge is like what, five years old now? Six years old or something?
- [61:59]
B
Yeah, five, six years old, yeah.
- [62:02]
A
Proposal 14 passed and then 15. There might be a 16 at this point. But basically someone, I mean it's a standard governance attack. Someone acquired a bunch of tokens and then create a proposal to. In this case they're actually not going after like the treasury, they're going after, they're basically updating like the, the various proxies and contracts that run Barnbridge and then they're taking, they're able to take end users money via the, anyone that has an open approval. And so this is like such a Ethereum classic like the approvals. So in order to use Barnbridge at some point in the last five, six years, any address that had like approved their contracts to be able to like spend the tokens and move the positions or whatever, they have like an open infinite approval. And some of these are literally five years old. And then now fast forward, someone does these proposals for the governance and now they can take all the end users money. And so that's what they've done. There's been like three waves. I think it's kind of flying under the radar because the amounts of Money, it's like 600k, 700k, 800k. It's not a huge, huge amount but
- [63:17]
B
I guarantee you that some of that is my money. Like a hundred percent. It's like some forgotten wallet. Like this is like Tyler back from the grave to like wreck me one more time. Like I like I'm confident that I interacted with Barnbridge and did, didn't revoke approvals in some like random wallet that is like a dormant wallet. Like for sure I haven't even looked because I'm like, I don't even want to see it. But like.
- [63:40]
A
Well I feel pretty Certain I did. Look, we did a poll for all the NS names and Twitter handles and stuff in our database and you were not on it. So as long as you.
- [63:51]
B
Okay, it would be. It would not be my main wallet. It would not be my main one. It would be like some side wallet. Exactly. Yeah, yeah.
- [63:58]
A
Use. Guys, if you use Cain Eth for your degeneracy downside, Twitter might find you and come after you. Upside, Taylor will message you on Twitter and let you know that you have an open approval.
- [64:13]
B
Yeah, exactly, exactly.
- [64:16]
A
Yeah.
- [64:16]
B
Trade offs.
- [64:17]
E
Can I ask a question about this?
- [64:19]
A
Yeah, yeah.
- [64:20]
E
Is there any real reason to hook up upgradeability around a dao governance proposal nowadays? Is there like how many active actual DAOs are there?
- [64:33]
D
No, I think AAVE is actually. No, because now they're doing more lab stuff. Right?
- [64:38]
E
Yeah, but their stuff isn't like auto executing, right?
- [64:41]
B
No, this was pure degen. Right. This was like we're just going to wire it all into the chain and see what happens.
- [64:52]
A
Yeah. And the tokens control it. Tyler has no control. And the way that you sort of like proved that was like Tyler can't update the contracts.
- [65:01]
D
Yeah.
- [65:01]
A
Or like Tyler and his buddies can't update.
- [65:03]
D
It's the standard. We wanted everything to be automatic and
- [65:07]
B
everything fully on chain token weighted. Exactly.
- [65:10]
D
Right.
- [65:12]
A
And so, yeah, this is the, I guess, another outcome. I think it's just sad. Like the SEC just, in my opinion, just failed so magnificently on every level. They came after people that they didn't really make a difference though. Right. Like they didn't really save anyone there. And then as a result, the biggest
- [65:30]
D
one like FTX and ust, they weren't able to protect us from them, but they protected us from barn bridge and
- [65:40]
B
like open, like the open guys.
- [65:43]
A
Yeah.
- [65:43]
B
Like squeak. Like, why are you coming after Squeef? Like, what the hell is your problem? Like, it was like so nonsensical, the people that. But like, you know, I've said this before, the, the, the reason why they went after those people was very tactical. Like the sec, that SEC were. They were smart, but they were monsters and they were smart. Right. Like they went after people to send a message. Like they would like, you know, kick down someone's door and like blow their brains out and be like, this could be you.
- [66:14]
A
Yeah.
- [66:15]
B
No, stay out, stay away from, stay away from crypto. This we don't want. We would be. Be a real unfortunate if that happened to you. Like it was like, like genuinely to send a message. They would go after people that they thought that they could roll that wouldn't fight back. And they would go and just skull them and then, like, tweet about it.
- [66:37]
E
They went off. They went after, like, Uniswap and stuff too.
- [66:39]
B
Right?
- [66:39]
E
Like, so sorry.
- [66:41]
B
Yeah, yeah. Just to be clear, they went out, but they. But remember, they would. They would set this up, right? Like this. Again, this is very tactical. They would go after someone for something that they were planning to then leverage with a bigger protocol. So they would go and, like, get the win and have someone roll and, you know, go, like, I don't have the money to defend myself against this thing. Like, score. Right. They would settle or whatever. The settlement means nothing. But then they would go and take these settlements and show up at the door of, like, Uniswap or AVE and be like, listen, look at all this precedent that we've got here of your friends that we killed. We're coming for you. Right. And obviously Uniswap is not retarded. They'd be like, that's not precedent, guys. That's just like, you killed a bunch of people.
- [67:27]
A
You have to have really good lawyers for that. And, like, you have to, like, have them. Like, you have to be eager and willing and good lawyers and that those guys cost money.
- [67:39]
E
Yeah.
- [67:39]
D
I think that's how we learned this cycle is we used to do these DAO workarounds, but this cycle we just pay lawyers.
- [67:46]
A
It's not the worst upgrade, to be honest.
- [67:49]
B
Yeah, it's not the worst. It's not the worst. I mean, I'll put my hand up and say I was like, I don't know that we need lawyers anymore. I think we've solved the law. It turns out that was maybe a little early to call that one.
- [68:05]
A
So.
- [68:05]
D
Yeah.
- [68:06]
A
But I do want one little. So I have one little note on this. So because I was literally messaging people on Monday being like, you have an open approval. You have 12 hours before the proposal goes. Right. Revoke cash using Metamask. Metamask Ship something, guys. Amazing. Shout out Metamask. Yay. So basically, they're using the Metamask permissions, which is like the new. These new. It's like the delegator gator, the 7702. It's all the new, like, smart. Not smart contract, but smart contract stuff. So you can now via revoke cash. I think this is so cool. Via revoke cache, you can give them permission to revoke your open approvals. That make sense?
- [68:54]
B
Wow. Yeah. Nice.
- [68:56]
A
And so now if we find out that, like, Barnbridge is about to get Racked in all the open approvals. It's pretty good work with Revoke cash and be like, yo, guys, like, you know, everything's verified and then anyone who's basically given Revoke Cash the authority to like auto revoke their stuff, it'll just happen automatically.
- [69:16]
D
Which maybe I'm just weird, but personally, in my wallet, the moment I do something, I revoke immediately. Like, even if you have units, I don't know, like don't have any open approvals ever for anything.
- [69:29]
E
Yeah, but that's not, that's not real life though. That's not how people are. And there's a lot, there's a lot of interfaces that just like yolo, Max approve everything.
- [69:39]
D
They all do. Max approved. I was stopping something on a. I'm not going to say which one because I don't want to fud. But whatever.
- [69:45]
B
Infinite approvals, infinite approvals.
- [69:47]
D
The UI wouldn't let me continue unless I did. Infinite approval.
- [69:51]
A
Yeah.
- [69:51]
D
I'm like, guys, come on. It is.
- [69:55]
A
And used to be.
- [69:56]
B
Remember a lot of this was because of gas. It was because of gas. It was literally like gas was too. The price of gas is too high, too damn high. So we had to do all this nonsense and it cost us so much more money.
- [70:10]
A
Yeah, exactly. So I'm excited for this. I think this is one of the first use cases, sort of like low key use case for the permissions. Right. Where you're delegating a very specific permission or authority to a third party. Right. Just allowing this third party revoke your open approvals. That's it. Nothing else. And you're. If you're willing to do that, you. You sign. You sign once and then they can do that, but they can't spend your money. They can't open approvals for you. You know what I mean? They can just do this thing and that's like, I don't know, we've been talking about this for a decade with like smart contact wallets and I don't. Here, go look at remote cash, guys. Like, we're doing the things. I'm so excited. Okay.
- [70:59]
B
Things are hard. There's a lesson there. It's hard to do things. It takes way longer than you think.
- [71:05]
D
Like, it is harder to things.
- [71:08]
B
All right, let's wrap it up with alstium. Give us the, the quick rundown of all steam. I got a funny story about asean, but tell us what happened first.
- [71:19]
A
So there was a private key. There were multiple private keys. And then the hackers got the private key and then they stole all the Money. Yeah.
- [71:30]
B
How did they get the keys?
- [71:32]
A
We don't know how they got the keys.
- [71:36]
E
The same story every week now.
- [71:38]
B
Every week I will.
- [71:40]
A
Okay, so I'll give you. It's the end of the episode. I will say we have not attributed this to a specific threat actor whatsoever. However, since I spent eight hours tracing this shit straight yesterday non stop. And they did not stop and I, I could not keep up. That is a pretty strong indicator. That is probably someone in North Korea who's doing this shit.
- [72:02]
D
And you guys,
- [72:06]
A
they're. Yeah, because eight, I mean, dude, for eight hours. They, and they just. By the way, I. I had to take a shower and like do other things in my life. They kept going. I could see the addresses flowing for. And I woke up and they are still going. So. Oh, it just sucks. Once again, reminder guys. Multi sticks, multi sigs where your keys are stored. Who has access to the keys where they are? Antivirus. EDR logs. Turn your logs on. So if you're running devices, all of these basic things, you know, obviously when you have sophisticated threat actors, they can. There's always like this thing where you're like, they could, they could do this. Like that's not going to predict you perfectly. Like you just. You like you. We have to raise the bar.
- [73:01]
B
You got to mitigate Mitigation. Mitigation, mitigation. Like there's like, you just have to be not the slowest runner when the bear is coming after you. That's it.
- [73:10]
A
Yeah.
- [73:11]
B
Once the bear gets the slow guy, you're good.
- [73:14]
A
Yeah. And it's. I think they, they basically got all the money. There's actually a little bit of money left, but they basically got all the money. So it's about. My account was like 23 mil and I think there was like one other wallet that somehow couldn't be hit or whatever that had some 7 mil in it or 9 mil but. And it's BAS and basically already laundered. Like again, it just sucks like to watch this and just how fast they move. All because of ease that existed, that shouldn't have existed and people.
- [73:50]
E
I think as a builder in the industry you just have to like start with the fact of any EOA that you use is already compromised. You don't ever trust any UA ever. Then maybe that'll help you when you're designing your systems. Whether it's in control of whatever functions that you're saying, hey, this is already compromised. Is that going to affect us in some way? I think that's a good starting point. But the Amount of builders who still trust, whether it's because of convenience or ignorance that like their hot wallet is going to be able to do some administrative tasks on their platform. It's amazing to me, it's like every single week it's the same story over and over. Somebody gets their private keys. You know, you go on a Google interview somebody or something like that. Oh, like I can't. They sound like Kane. And you're like, oh, maybe it's my connection. I got to download the software.
- [74:46]
D
And then, you know, it's crazy. I, I used to, when there was like a lot more defi protocols, I would also just do the beefy finance check. There's like this different things that you have to do if you want a beefy finance to integrate you. And the number one thing was, okay, all admin functions need to be secured by a multisig. Pretty simple. And so I, maybe it's just me and Wesley, but I thought the standard was multi sigs always for admin functions. Always it is.
- [75:14]
B
But then, but you know, like complex systems like this is, you know, there's, there's a, there's a concept in like complex systems, like a normal accident, right? And you know you have all of these like fail safes and mitigations. But you know you're running a nuclear reactor at Three Mile island, right? And one day there's like a mouse or something and the guy's like, I am just going to prop the door open, right? And they prop the door open and then air conditioning fails in that room because it can't fucking switch on. There's like something that the temperature goes and then it's like this cascading thing where like all of the fails. And you know, if you have a complex system that's running for long enough, right? And people are involved, entropy just gets you, right? And I'm sure that this like price upkeep forwarder thing was like probably not set up the way that it is now. And someone's like tweaked something like, I'll just put this as like an interim solution, then we'll replace it. And it's only going to be a temporary thing. I'm just going to prop the door open overnight just to make sure that the mouse doesn't fucking get in or whatever the hell the problem is. Or like there's birds in there. I think Three Mile island, there was like birds were pooping and so they're like, oh, we're going to like put this sheet here and then like,
- [76:37]
A
yeah,
- [76:37]
B
meltdown yeah, yeah, yeah. Like. Like, it's. You know, humans go, oh, like, what could this great be here for? It's like, oh, that's the water sloosh. Great. That, like, allows the water to come in and cool the thing. And you're like, that. Like, you don't know. And you just cover the grate because you, like, want to stop the bird poop from getting through. Right? And here we are.
- [76:56]
A
Yeah.
- [76:57]
B
So, like, I just. It's so hard. So hard. It's so hard.
- [77:02]
A
It's. Yeah. And you have to. You just have to be disciplined. And this was a case where maybe I undersold it a bit, but, like, the private keys that were compromised was, like, those controlled the forwarder or the Oracle or whatever, which then.
- [77:17]
C
Right.
- [77:17]
A
It wasn't. It wasn't like the. The hot EOA that had all the
- [77:20]
B
money and where you could just get. Yeah, exactly. Yeah, but this is like. But this. I'm sure that connection, this wasn't connect. Like, you know, it's. It's just. The other thing is, right, like, it's one thing, you're running a complex system, right? Okay, cool. You're dealing with entropy, right? But you're not probably dealing with adversarial humans that are, like, sending an email to the maintenance guy, being like, hey, there's birds pooping, like, cover the grate, right? Because they know, like, literally that's what we're dealing with, right? Like, it's like, you know, like, it's. It's. It's so much harder when you have, like, people that are, like, getting the schematics for your nuclear reactor, and they're like, okay, I think I've found, like, one flaw in this system where if I can get someone to, like, flick this light switch at the right time, then the whole thing melts down. And, like, that would never happen. But, like, you have humans that are, like, actively probing and, like, trying to, like, break in. Right? And. And so, like, therefore, the level of defense in depth that you need is just so much higher. Because humans are smart. Those North Korean guys are smart.
- [78:32]
E
It's unfortunate. It's so hard. I actually kind of think about it as, like, I'm think about all of the times that your information gets stolen, you know, from, like, your cell phone provider, your TV provider, your, you know, whoever you gave your information to to, you know, sign up for an account somewhere. It's stolen all the time, right? And for us as a builder, it's like, well, that's just data. Like, somebody's stealing Your data now, it's sensitive information. Somebody's impacted, they go, hey, I'm sorry. For us, it's like, hey, yeah, you know, we made one little error. $25 million. Yeah, yeah, it's, it the, the amount of like blood pressure rising that you get as a builder in this industry. It's like every morning you wake up, you check, you're like, I hope nothing bad happened. You, you know, your whole concentration is, yeah. Your whole concentration is focused on security, like making sure that people don't lose money. We never lose. Like you're, you're basically thinking about like, how is somebody going to attack me at all times.
- [79:28]
B
Right.
- [79:29]
E
But there's always something you can miss and so you live with that.
- [79:34]
D
I feel like we have a lot more tools than we used to.
- [79:36]
B
We do have a lot more.
- [79:37]
D
I'm always feeling hypernative to everyone for some reason, but there's so many tools that we didn't have before.
- [79:44]
E
I also think the code's getting better. So in general we're seeing a lot less, I think code related bugs that are being exploited and it's a lot of just human error, private key management sort of related issues which I guess is good, right? Because it means at least the code level strength is getting better. But still we gotta figure out like how to secure our system better.
- [80:08]
A
Yeah. I mean in theory, for me, in theory, the private key, like admin, like feel like it's solvable. We've actually seen like the centralized exchanges go from it's solvable. Yeah. But we have to actually execute.
- [80:22]
D
Yeah.
- [80:23]
A
Once again where the code ones I think often felt like really impossible. But I do think that's why crypto in general has spent way more time and energy trying to solve the quote unquote unsolvable. Like these crazy like logic vulnerabilities in the code and they're like. Because yeah, infra. Basic OPSEC is solved, but it's actually not solved. Like the majority of money loss this year so far has been basic basic. And so it's. Yeah, it's not that it's, it's not that it's unknown how to solve it. Like we know how to solve it, but we completely fail to do so again and again and again.
- [81:09]
D
And what can you do other than sign? We know the illness, we know the medicine, it's just kind of. We refuse to take it.
- [81:20]
A
Yeah. Nor I was sitting in the bath last night after tracing for like literally eight hours I was sitting in the bath and I was just like, oh my God, I Can't. I can't believe I did that again. Like, it's just. It's exhausting, you know? And you. And I think the worst thing about hacks is that once you're like, once the hack happens, like, once it. It goes, you're just sitting there responding and trying to mitigate and trying to do literally anything after the fact. And there's all. You can spend so much time and energy at that point. You can go all in. You can literally sit at your computer and raise all the funds and make phone calls and write full favors, do all this stuff. But at the end of the day, none of it really has a huge impact, right? Like, we got some funds frozen, but, like, nothing huge. There's just not like. And then you're like, wow, we just spent so much energy. So many people's lives got upended. The builders, right? These guys were building. Now they're the users. Yeah, right. We're gonna have to figure all this out.
- [82:26]
B
So this is, this is the, this is the funny story, right?
- [82:30]
D
So.
- [82:30]
B
So Alstium. We had a Synthetics event in New York in like 2021. I want to say. And it was like, I want to say 1am or something. And someone's like, oh, hey, like, these kids want to meet you. And I was like, okay, cool, whatever. I was like, I'm kind of off the clock at this point. Like, I've done my meeting and greeting. Like, I'm. I was probably like high on ketamine or something, but. But I was like, yeah, sure, whatever. Um, and so these three, there must have been like 18, 19. There were like super young kids, like, front up, and they're like, hey, can we ask you about Synthetics? And I was like, it's like 1:00am but sure, like, whatever. And then proceeded to have like, I swear to God, like a 90 minute conversation about like all of the mechanism, design, whatever, like, why we made decisions that we did. It's now like 2:30 in the morning. I'm like, can I just go and have fun? Like, please? I was just like, let me live my life. And they're like. I was like, what's your deal anyway? Like, why are you guys so curious about this? I'm like, oh, we're building like derivatives protocol. And it was the Ostium guys. And I was like, oh, cool, good luck with that. And I literally said to them, I was like. I was like, honestly, if there's like one, like, piece of advice, because this is 2021, like, probably, again, I want to say like, mid 21. I was like, honestly, my advice to you is, like, don't. The amount of pain and suffering you're going to go through if you do this is like, it's just not worth it. Like, do something else with your lives. It's so fucking painful to build in defi. Like, you have no idea.
- [84:10]
A
And
- [84:14]
B
I've met them multiple times, and we still talk about that conversation where you're like, don't do this. And we did it and look at how well it's going. And it's like, I mean, not.
- [84:25]
D
You have to do it out of ideology. Like, if we're here, we do it because we fundamentally believe this is happen.
- [84:34]
E
Yeah.
- [84:36]
A
This is why. I think this is why, like, these incidents just, like, pain me so much. Right. So that's 2021. I think they, like, officially launched in early 2022. Okay. After ignoring. By the way, stop ignoring Kane's advice, guys. That's the lesson of this episode. Kane is always right. But they did, right? They said, no, you came. We are gonna launch this in 2022. They launch, they build it up, they survive. They. I'm sure it took an immense amount of effort, right? The 2022-2023-2024-2025, and halfway through 2026, they built all that. And then one freaking mistake and it's gone. And, like, hopefully they work hard.
- [85:20]
D
By the way, they were my neighbors, so we had another office before this very famous, like, office. A lot of people are there in crypto and literally, my neighbors in front of me. So I could see Kalidor in her meetings every day. Those guys worked super hard. And so it's a shame, all that work.
- [85:37]
A
Yeah. And it's.
- [85:39]
B
I mean, like, they might. They might, like, people recover from worse hacks. Like, it's possible that they. They recover, you know, especially when you got that long of a track record. But it's really hard. It's really hard. It's going to be, you know, like, it's. It's, you know, like the oiler guys, like, it took them two years to grind their way back. And, you know, it's going to be
- [86:00]
D
anybody else that they had a major hack and they came back well, in other wormholes, Right. I would say the kelp wormhole. Wormhole.
- [86:08]
B
Wormhole helps. If you've got billionaire friends to.
- [86:11]
E
Yeah,
- [86:13]
A
yeah.
- [86:14]
E
It also.
- [86:14]
A
It depends a lot on, like, timing. It depends on the team. Euler. I mean, Euler was. I would put Euler in a league of their own. They, for one, they managed to get the money Back, which is super rare, but that was like.
- [86:25]
B
Yeah.
- [86:26]
A
I still don't know how Michael did, but, like, he did. It's. It was. That team was Assassins. They're like. It's the ownership over that, like, they got right, and the ownership over that team to like, be like, no, we are not accepting this outcome.
- [86:41]
B
We don't accept this. I know. I. I remember talking to Michael and I was like, this guy's, like, insane, like, after it happened, right? Like, we were. We were talking about it, like, maybe like, two, three weeks later, and he's like, no, no, no. We. Like, this will not stand. It was like. It was like the. It was like the taken guy, right? Like, he was like, I've built up a, you know, set of fucking skills over my career.
- [87:08]
A
I'm gonna.
- [87:09]
B
I'm gonna hunt these guys down. And they did. It's my nuts.
- [87:12]
D
It was.
- [87:13]
A
No, but literally. And that energy rubbed off on. I mean, I. I worked that case for way longer than I would work any other case because I was like, oh, you.
- [87:21]
B
Like, these guys are all in. Yeah, they're all in.
- [87:24]
A
And I kept looking.
- [87:26]
D
They remember they had the whole language hack or something. Like, there was. That was a hack, but they found the money almost immediately. Hey, did you. Did you like participating? That was.
- [87:37]
E
That was a Viper bug, which is.
- [87:39]
B
That was scary.
- [87:41]
A
I was. Yeah, that one was. That one scared the out of me because I was like, oh, you can have lower. Lower level bugs. It's like, oh, Jesus.
- [87:56]
B
Compiler bugs. That's.
- [87:57]
D
That's.
- [87:58]
B
Now we've got a whole new. We got a whole new problem to deal with. Yeah. All right, let's wrap it up here. We're way over. Thank you, guys. Appreciate you jumping in. This was. This was really fun. Despite the New Zealand induced or maybe vibe coding. Induced. I don't know. I don't know if I blame my machine or the country of New Zealand. A bit of both, but, yeah. Thank you very much for jumping in. This is a great episode. Really appreciate the time. Thanks, everyone, for joining us for this episode of Uneasy Money. Remember, what happens on Chain never stays on Chain. We will be back next week. Until then, do your own research before aping in. Nothing you hear on Uneasy Money is financial advice. We're just three builders talking about what's happening on Chain, and we want you to always do your own research before aping in. You can find all our disclosures@unchain crypto.com. uneasy money.