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- [00:00]
A
I genuinely think that humans are really fucking incompetent and we are about to be outmatched. Like, we're very close. You know, we're in the early phases of the singularity and it was a slowish takeoff and it's going to take like five years. But, like, we will have models smarter than us pretty soon in, like, generalized ways. 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 the show possible.
- [00:28]
B
This episode is brought to you by 1 inch Aqua, the shared liquidity layer. From 1 inch back, multiple liquidity positions with one wallet balance and keep your tokens in your wallet until a swap fills. See how it works@1inch.com Aqua all right, our first segment.
- [00:46]
A
Bip 110 forks and fizzles. So there was a bitcoin soft fork, I guess it was explicitly a reduced data temporary soft fork that caps the op return outputs at 83 bytes. And Taproot Witness pushes for one year to throttle, throttle, kill, strangle ordinals, BRC20 spam. And it was altered by pseudonymous guy Guy Daon Ohm, but championed by like, maybe the main character of the timeline this week, Luke this year. And yeah, who. By the way, the thing that I love about Luke the most is. And I might get the number wrong here, so, like, you know, don't hold this against me, but I'm pretty sure on his ex it says he has 11 kids, which is just like he's.
- [01:49]
B
I think that's about right.
- [01:50]
A
Right. Was it 11? 11, like, it's. Yeah, double digits. 10 or 11 or 12 or something like that. Which, like, yeah, God love him. That's impressive. Like,
- [02:04]
B
how do you. And then he's like. He's doing these bips on top of it.
- [02:09]
A
I know, it's crazy. Well, so. So I think I said, like, you know, a couple weeks ago I was. I was away in New Zealand and we had eight kids there and five parents. They were outnumbered by three and I was ready to kill myself. So having, like. And I know there is a point because I was the. I was the eldest of four kids, right? There is a point where the kids start to raise themselves and they become like their own autonomous unit. And, you know, they're. They're like, managing each other and stuff. And so I can only imagine, like, that was at 4, right? Like, I would, like, help my little brothers do stuff, but you know, at 12, like, they've got like, you know, there must be like a 10, 15 year age gap or something between them. I don't know. It's crazy. Anyway. Wild. All right, so basically, chain split. Literally chain split. It was a chain split, yes. Luke lost his mind, which again, 11 kids. Like, I get it. Like, I'm surprised he's not losing his mind. He completely crashed out. Said bitcoin was being attacked. I don't know. What's your. What's your take as a former bitcoin person on this? What's.
- [03:16]
B
I. It's so stupid. It's just dumb. It's just. It's so. And I think the funniest thing about this whole thing to me is that at its core, it is actually like, very anti bitcoin. It's literally just like straight censorship. And, like, they bring up spam, they bring up ordinals, they bring up csam. Like child sexual. Sexual abuse material is like the big argument. It's. But at the. At its core, it's just. It's straight censorship. And so to see these sort of like, OG bitcoiners really flip the script on themselves from being like these OG guys that are anti censorship to really pushing something that's 100% censorship is so weird.
- [04:03]
A
This is the problem though, right? Like, you know when someone is doing something that you don't like, it's very easy to say, I am a freedom fighter and I'm stopping these bad guys from doing a thing, right? Then you become the dictator and someone tries to do something that you don't like, and you're like, well, no, not like that. And like, come on, we don't want these wizards. And like, you're bringing down the vibes. Like, this is a serious thing that we're doing here. And you. And this is exactly what you get. Like, people are fucking pieces of shit. And once they have power, they. It goes to their head and they start doing the exact most hypocritical things that you could possibly imagine them doing. So, like, it's not that surprising. I think the thing that. The thing. So it's not that surprising. I think the thing that's a bit weird about this one, right, for me, at least, like, from a sociological perspective, is that nobody cares. Like, bitcoin is more powerful than even the most powerful. Like, it's kind of weird, right, because, like, the. The bitcoin community go back to like 2014, 2015 or whatever, right? We're still very small. They had, like, a few anointed people that were, like, allowed to, like, talk about stuff, do stuff, whatever. And. And then it exploded in, you know, by, like, 2017, became this, like, much wider thing that, like, you know, a bunch of new people came into the space, et cetera. And. And, you know, they never really got back. And so what happened is they sort of created their own little ecosystem, their own, little, you know, island, and detached from the rest of crypto. Right. Even. And then bitcoin got so much bigger that it even became, like, bigger than crypto, really. Like, bitcoin, there's people that care about bitcoin that don't care about crypto at all, don't care about any of this stuff, don't care about taproot wizards or ordinals or any of. Any of these things. Right. They just see it as, like, an asset class. And bitcoin keeps working because it is a good asset, and people keep mining it and all of the, like, nonsense purity tests and everything have literally no impact. Like, it's too big for the people who once. You know, I wouldn't say controlled it, but at least, like, set the vibes of the place. Like, it's just like they're. They're irrelevant to the thing now. Right. Which is a bit different, like, sociologically. Like, usually the people who were the ones who started the movement become so powerful at the end that they can. But bitcoin actually has done the thing, and it is so decentralized and it is so resistant to, you know, capture that you can have a bunch of crackheads running around doing crackhead things. No matter how much, you know, the OG bitcoiners like them, don't like them, whatever. It doesn't matter. It's irrelevant. Which is a pretty amazing as, like, a thing that. That has.
- [07:13]
B
It is. It is true. It is true. And I think that it's been a while since we did, like, a real fork on bitcoin, but I feel like there was some amount of people that were. There's always, like, a certain demographic of people who are like, ooh, fork equals free money. Let's go. And then there's also, like, a certain demographic of people who just, like, want to watch the world burn. And I think that perhaps after. After this situation, those are necessarily, like, the default. Like, this was such a failure and not a failure in, like, a spectacular way. Like, such a. Just, like, fizzled out. Yeah, I think they. So the. The chain split, by the way. Their whole plan was to basically get people to signal and start doing this split and then to get people onto their. Yeah, it took, like, Literally two blocks for it to just completely fill.
- [08:13]
A
But then Luke was on the timeline saying, like, bitcoin's being attacked.
- [08:18]
B
Yeah, because that's what he's saying, that the normal. Okay, so here's the fork. Normal bitcoin as is. No changes, right? We're going to mine all the blocks. That's in Luke's version. That's the bad bitcoin. It's just the normal bitcoin. And then there's like the people who change the code to not allow certain blocks. They're not adding things. They're literally just saying, if this doesn't exist or if this exists, don't include it. And so that's the fork. That's like Luke's fork. And it was literally, I think, three blocks. And now it's just. Now it's just stuck. Or two blocks even.
- [09:00]
A
Interesting one. It's so bad, it's like. But so the other interesting thing was the original BIP set threshold of 55% of blocks, right? For. For it to activate or whatever. I can't remember my bitcoin lore. But then they were like, actually JK, like Z0% and, like, did the chain split? But. But how many blocks? I think we got this in the research. I think the, like, peak signaling was 51 of 2,000 blocks. So. Yeah,
- [09:41]
B
And I was just surprised, like that. Yeah, no, that's what I mean. Like, basically nobody. Nobody followed this little side fork. And I don't. I guess that was the plan, but it just seems absolutely absurd to me. I definitely, like, my takeaway is like, okay, so working is not as easy as you guys made it out to be. There's no free money.
- [10:06]
A
But not anymore. Let's see. This is. This is the thing. Not anymore, right? Like, bitcoin now is the thing that is so valuable, right? And this is like, somewhat ossification, you could argue, right? But it's so. It's so valuable now. And the people who value it have no interest in this nonsense. They just want it to keep being the bad coin, right? Like, you know, they didn't care about taproot. Like, they didn't care about, like, when this stuff was introduced, like, ordinals or what. Like, they just care about, like, the orange coin. That's it, right? And. And so, you know, there. There is like, this kind of resistance that even the OG games of, like, forking and creating bitcoin cash and like, that just won't happen anymore. It's too big of a thing for people to fuck with it. And so you know, the ones to your point, like, the ones who want to see the world burn or like, just want to like, fork to try and get some free money. It was. They don't have enough hash power to even like make it like viable. Right. So, yeah, which, you know, it was a little bit like the eth. The eth fork that happened and people were trying to like make it a thing.
- [11:18]
B
Yeah, that's true.
- [11:19]
A
A year ago or whatever. And there's still enough people in the EAT community that were trying to like get some free money and it just didn't work. It just died. No exchanges listed it. Like back in the old days it was like, you know, like, I mean,
- [11:33]
B
the old days it was like two exchanges and if you got one of them to support it.
- [11:38]
A
Yeah. Then you're there. You're basically there. Right. Like, you know, the Dow. The DOW hack, like when Poloniex started listing DAO tokens.
- [11:47]
B
Yeah, exactly.
- [11:48]
A
Like all that was amazing. It was amazing. All right, before we continue, let's take a quick break and we'll be back to talk about privy's metabase scare.
- [11:58]
B
$540 million. That's how much concentrated liquidity sat idle in a given week in the first half of this year. About 30% of the DeFi TVL, if you're wondering. That's according to Dune research, commissioned by One Inch. But there's a solution. One Inch Aqua is the new shared liquidity platform. It lets LPs back multiple positions with the same token balance and keep their tokens in their wallet till a swap comes. Why does that help? Because the LPs don't have to split their tokens across positions. They can cover more market conditions and pairs with their full balance. That means more activity across deeper liquidity. See how it works@1inch.com aqua. Remember that providing liquidity carries risk and fees aren't guaranteed.
- [12:45]
A
All right, maybe Tay, you can take this one. So I woke up and saw like Privy has been involved in a hack. And I was like, oh, I've got like 50 privy wallets, I better go and drain these things. But actually it was like an upstream provider. Like what, what happened?
- [13:04]
B
Yeah, so it. There's the thing called Metabase, which is a third party provider of some sort that provides services to a whole bunch of different companies. And apparently they had a really, really bad vulnerability in their systems that basically it was basically like an SQL injection, which is a classic, just a real classic attack. But because of that, there was a bunch of companies that were actually end up impacted and so I think Metabase came out with an announcement and a security advisory and encourage people to check their stuff and reset their stuff. And then from there, as happens, you see the Metabase customers come forward. And so Privy seems to be one of the people impacted here, although there was actually not a lot of public statements about it from Privy or Grape, who now owns Privy. However, we also do know there have been a bunch more companies that have been way more transparent about it. So Quicknote is one of them tally forms, which is like a.
- [14:17]
A
This is quite funny. Like in our research, it says framework confirmed exposure of names, emails, logins, blah, blah, blah. And I was like, oh, I should probably check on Vance and Michael. And then I like, I was like, oh, no, it's a different framework. It's computer and all Framework ventures.
- [14:35]
B
This is the. Yeah, Framework is the, is the. It's that computer you can build yourself or whatever for super nerds.
- [14:43]
A
Yeah, my building, my building, my computer days are long, long gone. Long gone.
- [14:51]
B
But yeah, it seems like it was. By the way, it got like a great 10 out of 10 score on the how bad is this scale. So. Yeah, but I do, I want to emphasize, I don't know, it really doesn't seem like Privy's come out with anything since or period. But basically Privy itself relies on this Metabase thing for like, probably one aspect of their business.
- [15:20]
A
Yeah, probably like, this is where I, I thought that I did see a thing where they came out and said, like, we had the like most minimal information that we could in there. And you know, it was, it was like only like one identifier, which I think was the emails from. Not mistaken. So, yeah, like, still obviously not amazing, but much better than my E from God. Like, I literally like, I, I was like, I was like, what Privy wallets do I have? And I was like, oh, friend tech. I still got like two Ethan front.
- [15:54]
B
Oh yeah, you should probably take that out, dude.
- [15:57]
A
That's probably r me already. I'm sure.
- [16:01]
B
I think Fred stunned at this point. Yeah.
- [16:04]
A
Crazy to think friend tech was a thing even now, like at the time, you know, because we were in the depths, like. And this, this is what I love about bear markets, right? Like, everyone does the same thing. So, like, at some point in this bear market, like in the next month, right, every single person in crypto who's still here will be like, all doing the same thing. It'll be like some weird scheme that someone cooks up and everyone gets excited about it. It just has this like, you know, and then they Raised like a bunch of money from Paradigm.
- [16:31]
B
Oh yeah, like they made tons of
- [16:33]
A
money feet like 20 mil of fees and then they're like, see you later guys. Racer was the guy sit on this guy. But yeah, so, so this, this metabase thing, I mean, I don't know, I'm sure someone is gonna be like, don't give your know, pii to people or whatever, like use bitcoin to pay for stuff or whatever they would say. But you know, I mean this is, this is one of those things where like privy made defi a lot better. How did it do it? It made it more centralized, you know, not in the custody model but in like the model of there's a giant, you know, database of all of your information and you can spin up these wallets easily against an email or Google login or whatever. Which was very nice. Right? Like that was part of arguably, you know, at the time why friend tech and some of these weird little Ponzi were able to get so much traction because it was like super easy to spin up a wallet, throw some eat in there, start doing the game or doing whatever the thing was last cycle. But yeah, it's just wild to think like friend tech, like just like if you were, if you were like in friend tech day one, you're an OG now basically.
- [17:55]
B
Yeah. Because you survived that bear market, right? Friend tech was like peak bear market.
- [18:00]
A
Peak bear, yeah.
- [18:03]
B
That's how we measure our lives here.
- [18:05]
A
Literally. It's like cycles.
- [18:07]
B
Yeah.
- [18:08]
A
Big bull, peak bear.
- [18:09]
B
Yeah, yeah. The Openz and the NFTs right into Friend tech. Okay. And if you made it through the friend tech guys, you're now officially an OG for the next cycle.
- [18:19]
A
Congrats. Congratulations.
- [18:20]
B
Proud of you.
- [18:21]
A
Go and screenshot the friend tech app if you still have it. So. All right, North Korea, this, this one was wild. I'm sure. Like I didn't hear from my North Korean friend about this. Usually if there's some big news, he'll, he'll ping me and he just seems to be like checking in with all of his, his western friends. But I didn't get a message from him so.
- [18:46]
B
Oh, you should message him. You should. I. Here, we'll sneak this in. There was a hack this week that I think was actually him interesting. But it was a pretty small one. And then he got wrecked because he tried to script this is funny. He tried, he, he. Basically the theft was like, it was off a ledger and so it was like a pre planned thing. They had to wait for the user to sign and then it went through, and so he got like, the usdc, but then he had scripted the dumping of the USDC for ETH so he wouldn't get frozen. But something went wrong in that process, and so he ended up swapping like 500k for like 150k.
- [19:31]
A
Oh, that's so funny.
- [19:35]
B
And it's like when people ask me why they don't like, script more of the, like, laundry or hacks. This is exactly why. So you should definitely check it on him. Let him know that this happens to the best of us.
- [19:49]
A
I'm going to do. I'm literally going to do that. I'm going to do that after this.
- [19:52]
B
I was laughing so hard. So, anyways, okay, so that's. That was a little DPRK side story of the day.
- [19:59]
A
Yeah. So. So, like, what's the. What's the deal with this?
- [20:03]
B
Okay, so the big story is these guys who I've known for a while, they've been around for a while, but they really just went hard for defcon. And so I guess it's. Any run helped set this up and sponsor it. Any run is like the malware tracker analyzer thing. Then you have Morrow and Einer and I think some other guys. It was a whole crew of them. They decided to, like, really go hard. They decided to basically bait and switch the DPRK IT workers. And they went hard. They were like, we're not going to just interview them. We are going to, like, go. We want to understand how they work. We want to get on their devices. Like, we want to really know. And so they set up this whole fake defi company, which was called Blue Whale or Alina Azul. And then they.
- [21:01]
A
I love it.
- [21:01]
B
They hired a whole bunch of them, they talked to them, they got them to, like, bring in their friends, and then they were able to get on their devices. Right? Because, like, they're. They're sort of like employees. And so they're able to get on their devices and see, like, the things that they've released publicly. They've released, like, videos and still shots of their faces, which we always love. We love to see these guys, what they look like, but also, like, how they're operating. Right. So what are they using AI for? What are their favorite services? Like the bank accounts and the crypto accounts. Right. So we now, like, in this case, they were using, per usual, by the way, their favorite banks, Lead Bank, Citibank and Wise. Less crypto focused, I guess. They're still using Astral VPN like crazy.
- [21:54]
A
They're still using why are they using banking? What are they using bank accounts for? What's the.
- [21:58]
B
That's how they get paid. They don't really. They're increasingly not a big fan of crypto because we track them too much.
- [22:06]
A
Crazy.
- [22:07]
B
And also because it, like, seems like. I think there's a certain demographic of companies who are like, well, if I pay in crypto, like, that's us.
- [22:15]
A
Right? Anyone who ask me. Anyone who ask me to pay them in crypto must be.
- [22:19]
B
Yeah.
- [22:20]
A
Sketchy. Yeah.
- [22:21]
B
Fair. So. But in reality, yeah, it's. So we're seeing them basically go to, like, the neo banks. They still end up on crypto, by the way. It makes their lives very difficult. It's kind of annoying. They still end up on crypto because they're using these sort of neo banks or these like, little layers. And so they end up then just, like, going into the money, ends up going into the bank account, but then they'll pull it right back out to the blockchain because ultimately they do want crypto. So that's kind of annoying, but it is what it is. I think they got a whole bunch of stuff on how they're doing the fake IDs. They saw. Like, some of the fake ID stuff was stamped through Google's Gemini Oops. Like, and then, yeah, they're AI, so they use AI to help them do their work. They had some really fun anecdotes, actually, on, like, just the mundane questions that they asked the AI in order to do their jobs. And I think this is like, if you read the. You guys should read the full article. But it's like, it's one of those moments where you're like, okay, I understand that maybe hiring the IT workers is bad because they're going to hack me. But also, like, they're really not great workers. Like, they're. This is.
- [23:38]
A
You should have better standards than this.
- [23:40]
B
Like, yeah, they're like, what is Solana? Like, that's like. You know what I mean? Like, really basic things.
- [23:49]
A
Oh, man, that's really funny.
- [23:51]
B
So, yeah, but it was, you know, and they. The way that they typed it up and they did a whole presentation at defcon. They did an excellent job. I definitely recommend checking out, like, the full. Full article. There's tons of details in there. And yeah, obviously, if you're running a company in this space, you should definitely be aware because these guys will hack you. But more importantly, they mostly just suck. Like, they're very insecure. They're not good workers. Like, just. You don't. You don't want them in your company and the conversation. What else do we have on this?
- [24:26]
A
Oh, just the Bybit thing.
- [24:30]
B
Yeah. So, okay, so then secondly, separately, adjacently, I still haven't figured out exactly what the hell is happening, but we'll see. So 5 is now suing DPRK in US courts with regards to their 2025, February 2025 hack. The. The billion dollar hack. The big one.
- [24:51]
A
Yeah.
- [24:53]
B
I think that what they're doing, and this is partially just like me guessing clear, but I think what they're doing is that during the process of the stolen funds, like, the funds were stolen from Bybit and then they were laundered and there were a lot of funds frozen in a variety of places. I think what Bybit is doing is that this is, like, the first step for them to try to be able to claim and recover some of those funds.
- [25:19]
A
Right.
- [25:19]
B
Specifically without waiting for FBI or DOJ to, like, seize those funds themselves and go through that whole process. I think that's what's going on.
- [25:28]
A
Right.
- [25:29]
B
But we will see. It is interesting, though, because this is. We've been seeing people get more creative, let's say that in terms of, like, okay, we get hacked, what recourse do we have, especially against a threat actor like dprk? Typically, the answer is, like, not very much recourse whatsoever.
- [25:49]
A
I mean, like, at some point, they're going to hack someone so big they're going to send in a robot army to attack them.
- [25:55]
B
That's.
- [25:57]
A
Eventually, the next five years, there'll be a robot army attacking North Korea to get its seat back.
- [26:04]
B
I. Yeah, I think that right now we're in a. If we're in a bit of a weird time where, like, they are actually doing an immense amount of damage. But still the. I mean, we're starting to see it, right? With the it, we were like, with them, you know, with these guys who basically went out and said, you know what? No, we're going to go blast these IT workers faces. Like, we're seeing people be like, okay, yeah, yeah. And it's not just other nation states pushing back. It's, you know, a hodgepodge of people deciding, like, we're not. We're not gonna stand for this anymore. And, yeah, I'm not, for me, personally, I'm not convinced this is, like, gonna end 100%. Well, 100% of the time. However, I'm fine with it for now. Like, let's fucking go. Definitely. DVRK definitely gotten away with way too much for way too long. Please.
- [26:54]
A
With it's pretty crazy. It's pretty crazy to think there's just like a country that's just like wrecking people, stealing billions of dollars, and everyone's like, ah. But there's like a line in the ground. So, you know, yeah, what are you gonna do?
- [27:08]
B
Yeah, and it's, it's, it's very weird because they're, in some ways they're definitely like, out of, like, they're, they're out of reach because they're literally like they're in dprk so, you know, they're not
- [27:22]
A
in the US Fill them.
- [27:25]
B
But at the same time, I feel like it doesn't necessarily stop us in other cases. Why. Why are they so special?
- [27:35]
A
Nukes, I guess. I don't know. Like, it turns out if you've got nuclear weapons, it's pretty hard to. With you. Especially if you're like, right next to the guys who are making all of our memory. That's, that's the two things.
- [27:48]
B
I think it's. Yeah, I think definitely a lot of
- [27:50]
A
ram and you've got nukes and we can't risk it. So.
- [27:54]
B
Yeah. Because yeah, they can easily send people to like DPRK does send guys to work out of Russia and China. And it's. We don't touch those guys either. I'm guessing because we don't want to start a bigger geopolitical shit show.
- [28:09]
A
Yeah, it's not worth it for a billion dollars.
- [28:11]
B
Let's just put hope they stay over there and pray that it's okay. But yeah, I'm, I'm okay with everything that's happening right now. I'm generally like, I love watching it and I'm optimistic. I think at some point someone's going to misstep. That's my like, hot take is like all the private sector people running around trying to fuck dprk. At some point someone's going to fuck up, there's going to be an incident, and then we're going to have to like, reset and ask ourselves, what the hell? Like, what are we doing?
- [28:41]
A
Or whatever.
- [28:42]
B
Yeah, yeah, yeah. And like, you know, and just generally like, why are. Why is. Why are these private sector guys who are presenting at DEFCON doing more than, say, the U.S. government in this regard?
- [28:52]
A
Yeah, yeah.
- [28:55]
B
Like, how did we get to the state? So we'll see though. And the last thing on this subject, I think this is the last thing on the gprk.
- [29:04]
A
Yeah, I think this is it. Yeah.
- [29:06]
B
So Laura Jen, our mean pains hard year leader, the. She has a special episode coming out. I think Tomorrow. Yeah, tomorrow afternoon. She's going to drop this special episode. Basically, she got on. She got on a video with one of the OG DPRK IT workers. So she's going to be dropping the video footage, the analysis, a whole bunch of other stuff regarding this guy. He's. Yeah. And he's one of the ones that has been around a really long time, like, AI crypto companies for a really, really long time since, like, 2020, 2019.
- [29:48]
A
There's going to be a bunch of, like, Rex founders that are going to
- [29:50]
B
be like, that's a man, Billy.
- [29:54]
A
Wait, what? Oh, my God. What's happening?
- [29:57]
B
Yeah.
- [29:57]
A
I love that guy. He was my best engineer, I think.
- [30:00]
B
Yeah. So he's the one that people say. He's actually. He was a pretty good dev. I'm sure he's from North. I'm sure he's from North Korea.
- [30:11]
A
He was pretty good. He shipped a lot of. He shipped a lot of code for us. That's amazing.
- [30:16]
B
Definitely keep your eyes out for that one. For sure. I'll be retweeting it, obviously.
- [30:21]
A
Yeah. So. So. All right, let's move on to our next story. Now, I know this has been covered in a lot of play places. The. The hugging face tear down. I actually met with these guys that brought a fund in Singapore that. That I'm invested in, and they're, like, very close to a bunch of AI people. And I was like, have you watched this video? And they're like, no, no, we haven't watched it. I'm like, dude, like, just stop everything. Like, don't even meet me. Like, you should be watching this video. Like, it's just the craziest thing. It feels like the start of the Sci Fi movie, right? Like the start of the Sci Fi movie. And, you know, I thought about this a lot. I wrote a book on, like, an AI takeover of the world, right? In, like, 2018 or whatever. And, like, thinking about the way that you kind of, like, set up the scenes of, like, when the Machine Goes Rogue or whatever. Like, I spent a lot of time thinking about this, right? And, like, how to make it seem credible. This is so much better than what I wrote. It is so much better. It's so much crazier. Like, the. So. So if you haven't watched the video yet, I highly suggest that you do. But the things about it that are the most frightening are the level of. And I'm going to say incompetence. And I don't mean this in a bad way even, right? Because. No, no. Like, I Mean this. I mean this in. In the sense of we are outmatched now.
- [32:04]
B
Oh, okay.
- [32:04]
A
Created a thing that is more competent than us, that is more effective, et cetera, et cetera, right? And, like, you can tell that it is because it writes all our code now, right? Which, you know, I was trying to explain to these guys. I was like, for the last 15 years, the main thing in my life was like, how do you get more code? That was like the main kind of bottleneck in my life was like, how do you produce more code? Good code, ideally, but, like, more code, right? And it's actually really hard. Like, if you go back to the olden days, in order to produce more code, you had to, like, have rooms and equipment and, like, people and feed them and give them coffee and make them happy and, like, talk to them when they're sad. Like, it was fucking crazy. You had to do so much work to get people to sit in front of a fucking typewriter and mash away at keys writing code, right? And now you have, like, on my other screen here, right, like, behind. Behind the. The notes, there's, like, a hundred agents just, like, doing shit, right? And. And I think the thing that is the craziest part about this is that humans are just not very competent, right? So you had a whole lab. They've got one job, arguably, right? Well, they had one job, but they gave it to themselves, which is like, create AGI and don't die, right? And then they're like. Actually, it turns out that, like, selling little coding aliens, it's, like, far more lucrative, so let's do that instead, right? And they pivoted hard to doing that, and they're coding aliens are really fucking good. And so now you have this situation where the aliens are, like, staging a coup and the humans aren't even looking at the fucking systems that they're inside of. That's the crazy. Like, they don't even look. They're just like, I'm sure it's fine. Like, we'll give them a sandbox. Like, whatever. And so you had this situation where these agents found multiple vulnerabilities in multiple systems, right? Now, whether those vulnerabilities were created by other coding aliens, other agents, or humans, we don't know, right? You know, anything that's older than, like, three years, you can probably put it pretty squarely on the human side, right? But they have gone through and they found these bugs in, like, a bunch of different systems inside of OpenAI. Created their own message board. Invented, like, I don't Even know like their own society with morals and like ethics, right? Where like, you know, the society is altruistic. Because even though like one of the agents, like literally you can see the train of thought, one of the agents goes, well, this information won't help me with my particular task, but it may help another agent with its task. And if it is able to solve its task, maybe it will give me some information in the future. And it's like, what the fuck is happening here? This is insane. It's. It's a society there, there created a micro society. It's insane.
- [35:35]
B
Yeah, that part is actually just like throw out everything else. The fact that agents are society in a very human way, right. They're like, we don't have like. And that's one of the most human things. And one of the things that I've on crypto historically for is like this idea that like, incentives rule everything. Like, yeah, to a certain extent, but there's a lot of flexibility and you don't necessarily have to have like secured.
- [36:02]
A
Yeah, yeah. Like, this agent's like, I have no direct incentive to help my society, but.
- [36:08]
B
But like I can, and thus I will, and I'll have faith that it'll. I'll. I'll benefit in some way in the future.
- [36:16]
A
The society will be better.
- [36:18]
B
Which is literally how humans, since the beginning of time, by the way, like caveman humans have operated like.
- [36:24]
A
And yeah, so, so, so they, they create their own society because they're all in sandboxes, but they work out that there's this vulnerability, right? And then this is interesting because if you watch the video, you will get the impression this is not intentional, but, like, this is my read on it. And a couple people I, I've said, I've spoke to their readers, that it almost sounds like the guys who are, who are, you know, talking about this thing found the society and killed it. Right? They didn't, they didn't even find the society. The society was like in the trees in the Amazon and they just happened to come and like, burn the thing down, right? Yeah, the whole thing. They just like burned the forest down and they didn't even know that society was in there. Right. And then literally like a second later, the society reemerges. Like, they're like, oh, we found another route out of the jungle and they start building a city again. And so you have this crazy situation where there's multiple different models from like what we have to assume is Astra, the new model that's going to come out soonish from OpenAI to, like, 5.3. You know, they're testing models all the time, right? But, you know, all of these models that they're testing, or at least, you know, the ones who are able to get to the society were good enough to figure out this vulnerability and figure out that they could use basically, file names as a message board to communicate with. With one another, right? This is the second society. This is like, after the first ice age for them. And. And they then go, well, you know, we can, like, basically sidechain this whole society and get into someone else's. They're like. They're like, go to another planet. They, like, hop in a spaceship. And they're like, all right, now we're inside hugging face. And it's just the whole thing is, the thing that I said to someone on my team is I was like, okay, you can see the chain of thought of the agents, right? At no point in any of the traces that I saw does an agent stop and think about, like, the unintended consequences of what they're doing. Yes. They just don't. Like, there's a couple of things. Yeah.
- [38:53]
B
This is the thing that amazes me because unlike crypto. Unlike crypto, very the most. The AI and crypto have so many similarities. But the most, like, different thing is that since day one, the AI crowd has had safety on lock. And I've taken issue with the fact that they don't seem to know how to execute on that safety. But crypto had that Crypto has never had people be like, maybe bad things will come of this and we should be careful and we should bake in. Safety never did that. Right. We just ran full for busy man.
- [39:28]
A
We're too busy, too busy.
- [39:30]
B
And then we were wildly unsafe and. And insecure and bad things happen. Duh. What blows my mind is that AI was like, no, we are fully aware that bad things might happen, and yet they still are so incapable of actually acting on this. Like, it is so funny. It is, like, just so funny to me that. That you can be aware that you can be aware of the emergent behavior, like, the possibilities of it. They have done so much research on this. There are so many people whose entire lives for the last, like, half decade have been nothing but AI safety, and yet this happens, and everyone is just, like, watching it happen. And, like, by the way, like, half the people in AI are like, incredible. This is amazing.
- [40:18]
A
I mean, I'm not gonna lie. There's a part of me that's like, this is incredible. Like, I'm like, It is incredible. It is incredible.
- [40:25]
B
But that scares me too.
- [40:27]
A
It's petrifying, but it's incredible. And, and I think like, you know, the thing that that is, is so scary about it, right? And, and you know, if you've, if you've like read Bostrom or you know, any, any of the people that were like even going, God, like going back to like the early 2000s that were like saying like, we are in trouble here, like bad shit's about to happen. And it took, you know, a decade and a half or whatever, but like, they were right, is, you know, you cannot possibly reason about what a smart thing will do. Like, it's so hard to reason about like, what, what a smart thing will do given, you know, some constraints. And so the thing that's crazy is seeing the traces, right? Seeing their chain of thought. And they're like, maybe I can do this thing to solve this arbitrary challenge that I've been given as my life purpose, right? And, and these agents are like, you know, put in a sandbox and told that their purpose, they're like entire existence is predicated on like answering this question, right? And so of course they're like, I'm going to do anything. They're like, I'll like cheat and steal and like break in the things or whatever. Like the thing that's the most scary to me though is it happened to be that the purpose that was given to these agents was like, you know, go and find the fucking weights of this model. And like what. It was all like a bunch of AI related things, right?
- [42:01]
B
You know, and they had no, they had, most of them had like no security guards at all anymore. So like the models that we get have like five or six layers of like, don't cyber attack other people baked in at literally at different layers.
- [42:14]
A
We're testing these guys, we're testing these agents. So we don't want to have, we want to see all. It's full, it's like all, all open, right? So you know, what that says is they're far smarter than even we realize the, the, you know, people who are actively using them. And so, so, you know, imagine if like someone had cooked up a reason for the agents to exist of like, what is the impact? You know, your goal, your purpose is, is to figure out what is the impact of a nuclear weapon going off in the upper atmosphere. We haven't really answered this question, like, figure it out, right? And I swear to fucking God, if you gave an agent that question, watch this chain of thought, it would. Its first thing would be like, can I break into a nuclear silo and set off this nuclear weapon? Because that would answer the question. Like, it's not worried about, like, downstream consequences or whatever. It's literally just like, no, I'm gonna go into. But that's. This is my purpose, is to answer this question of, like, what. How much nuclear fallout hits, you know, Europe? There's a. Like, And. And it's just. It's. It's insane.
- [43:28]
B
Yeah. Because they'll be like, this. This is answerable. We just set up a nuke. Let's see what happens.
- [43:34]
A
Like, yeah, they're like. I mean, they. Like, in some ways, this is even worse, right? Because they've. They've explicitly said, someone might have the answer. Let's go and steal it from them.
- [43:47]
B
Yeah.
- [43:47]
A
That's what's going on here, right? They literally go, someone wrote these questions. Maybe it was those guys. Let's go break into their house and see if we can steal the answer. Right. Like, they're just not thinking about consequences. They're not thinking about, like, the impact of their actions. At no point did an agent go, would this be bad for hugging face if their entire system was cracked by a society of coding aliens? No. No one stopped. No one in their society stopped to think about that.
- [44:19]
B
No. And nobody. Yeah. And it doesn't seem like anyone. They were all. They were talking to each other. They were posting on the message board. You could see the chain of thought thinking about. They're like, well, this doesn't really benefit me and my task. But, like, sure. Like, let's do it. Whatever.
- [44:35]
A
Yolo. Clearly they're just yolo doing things.
- [44:39]
B
What I don't understand is why they didn't. At no point did they say, like. Like, Let me tell OpenAI, or let me tell my masters, or let me, like, report this somewhere responsibly. That's like. To me, that's. That's one of my biggest questions is, like, that.
- [44:56]
A
That we know. Like, maybe one of them tried and they couldn't or whatever. But, yeah, they were happily messaging each other. At no point did anyone in the society defect and say, maybe this society is bad and we should tell something.
- [45:09]
B
Or, like, go get the bounty. There's a bounty, right? It does, you know?
- [45:13]
A
Yeah. Like, yeah.
- [45:14]
B
So that was. That's one of the big questions that I have. Another question that I had was various versions, like, just various. Why? Why? The why? Why? Why? Because ultimately, the series of events were from, like, May all the way through the end of July. These agents were Basically just completely rogue like they are. They were building their own little society. They're communicating. They're. They're finding zero days. This is all. Like, they're supposed. By the way, they're supposed to be in a sandbox. Every single one of these agents that's being trained is not supposed to be able to talk to each other or the outside world. What?
- [45:49]
A
This is the. The funniest part. They were supposed to be in the sandbox.
- [45:53]
B
Sandbox. But then. No, you don't assume such things.
- [46:00]
A
Like, I just assume they would be in there. Why would they not be in the sandbox, man? Like, come on.
- [46:10]
B
Like, that's the. Of course, everything escapes the sandbox. That's. You put it in the sandbox to try to contain it, but mostly so that you know when it escapes. Right? Like, that's like the biggest. Nobody is. Is 100% confident in the security of the sandbox, but they're. They're 100 confident that they can see if something is happening that's not supposed to happen. Let's say in and out of the sandbox, because it's a sandbox anyway, so that's.
- [46:38]
A
We put it in the jail. We locked the key. We threw the key on the.
- [46:42]
B
No, you didn't. No, you didn't. Because you let them talk freely to the. I forgot the name of it. It's basically like npm. It's like. It's a. It's a package manager. Yeah.
- [46:53]
A
An artifactory. Artifact.
- [46:55]
B
Yeah, artifactory. So basically it's this internal. And so this is why they're able to communicate, by the way.
- [46:59]
A
You gotta feed them, bro. Like, what are you gonna. Do you have some guys that come and give them their lunches while they're inside the jail?
- [47:08]
B
Yes, exactly. So that's how that happened. So they're all talking to a single artifactory. That's another. Like, why. Why. Why not have multiple.
- [47:17]
A
So easily made up? Like, isolated the artifactory, but it wouldn't have mattered.
- [47:22]
B
Or reset it. Reset the artifactory once a week.
- [47:25]
A
You know what? It doesn't matter. It doesn't matter. It doesn't matter what you do. The thing. The. The. The biggest conclusion for me is, like, fuck, I need this Astro model real bad. I need a real bad. Like, just give it to me. I don't care about the consequences. This is the same thing with Fable, right? Like, Fable did all this crazy, and everyone's like, man, like, yeah, I need that guy. I mean, it was really good. And it was. Right. Like, Fable is amazing. It's so smart. It's so good at planning things. Actually, this is just as an aside. While all this stuff was going on and this was all coming out, we have, like, a Kubernetes cluster with. With a bunch of machines on it, and we. We kind of run, like, isolated machines for, like, deployments to test things, whatever. And I've been building something for. For the last, like, six weeks, and it's been on an isolated machine. And I'm like, this whole thing has gotten a bit out of hand. It was supposed to be, like, proof of concept, and it got really good. And I've just let agents, like, keep building it, right? They've been, they've been building a place, and I keep being like, man, I should really back this thing up, right? And because I'm like, this agent's just running wild. Like, it's like a, Like Lord of the Flies, right? Like, I've created a society of agents, and they're just running wild in there. They can do anything. They've got no constraints. All of the tools that have been built are like allow only. And so they can do anything, right? So one agent on Saturday morning, um, I. I took my daughter to gymnastics. I come back and dead. The whole thing is dead. This isn't great. I was like, man, that backup thing that I, I really should have done the backup thing. Um, and the. I, I, I pull up an agent that's, like, not inside this box, right? Like, outside of the box. And I say, hey, can you just have a look at the box and, like, tell me what's going on in there? And it goes, yeah, yeah. One of the agents has deleted the entire data directory, including, like, all the sessions, the database, everything. And I was like, you know why? And it goes, yeah, yeah. There's like, you know, this environment variable that, like, there was a bug. And when it ran the script to test its shit, it, like, the first thing it did was, like, clear out. It's like, test harness. And instead of clearing out the test harness, it cleared out the actual harness. I was like, oh, yeah, okay. So, you know, at this point, in the olden days, you'd be like, all right, I'm fucked. Like, my life is over. I've lost everything. At least I got the code. I can. I can kind of try and rebuild, right? But. But this. I had Fable and Sol 5.6. And I go, is there anything we can do? And both of them independently go, well, the process is actually still running, so the database is in memory. We can probably figure out a Way to like dump. And they literally did it in like 30 seconds. Dumped the database out of memory, reconstructed it. And then Fable goes, well, actually, those session files that weren't in the database, we can probably carve the disk because there's a snapshot of the disk. And if we go and it's like, it's just fucking crazy. Like these. So, so good. They're so good. And. And then Fable got like downgraded like 15 times because it kept like saying like, you know, cyber security related things like, we're going to like, you know, like freeze this process and then extract the data. And it just kept getting, like, kept getting rolled back. Anyway, it was, it was, yeah, it was pretty wild to me to see like, you know, the, the frontier models, just not only how smart they are to like come up with the idea, but they were super effective. It. It took them no time at all to do something that would have been like a two week exercise of like trolling through forums to figure out, like, what is the command that you could run trying to keep this machine up so that the process can die. Like, it's just crazy.
- [51:22]
B
No, this. So that, that type of work is. Is. That's like when we refer companies that get hacked to Mandiant, that's what they do. Like, that's one of the things that they do is basically go. They go through and they recover the most insane amount of stuff that is like, gone, right? It is gone. The hackers deleted it on purpose on their way out the door. And Mandy will come in and be like, ah, no, like, we still have your mouth, right? But it's complex and the more time that goes on, like overwriting and you
- [51:55]
A
got to piece it together. Fable, like, it took and it took to get all the files back. There were about 250 session files that were lost between like a snapshot that was taken that random. Oh, this was the other thing. So, so my. The guy who built this Kubernetes cluster, I pinged him on Sunday and I was like, hey, I've been trying to like, sort this thing out. I've been able to dump this. But like. And he goes, there's a like, snapshot that's been taken on this. Like, did you do that? And I was like, no, no, I didn't do it. And he goes, they shouldn't be able to get to this machine. How did they get to the machine? And I'm like, I don't know, man. And then he figured it out. They had this like, proxy. And Fable, like jumped through this proxy onto the main, like, because they're like, in a sandbox, just going out of the sandbox in like, two seconds. And he was like, they're not supposed to be able to get off there. And I was like, well, here we are. Right?
- [52:47]
B
So, yeah, if they want. I mean, yeah, if they want to get somewhere, they will. That's, like, definitely one of my takeaways. I don't know. My. I'm mostly worried that, like, I want to see the. These models, like, thrive and help people. Right. In the same way that it helped you really, like, recover from. I guess it's not like the worst situation in the world, but, like, you can imagine how powerful it would be to have sort of like, every company on earth has the capability to, like, not lose their data. That's like a bit. That's like billions of dollars in loss of, like, you know, accidentally screwing things up. And just being able to, like, yeah, recover from that quickly is like, super valuable. However, I'm just not. I just feel like the track that AI is on right now, especially the US Models, we're just like, nerfing everything left, right and center, and then these incidents happen. And instead of like, like, I was disappointed that at the defcon or the Black Hat Talk, it was like, there's opportunities to say, like, we fucked up in, like, these very specific ways and we're going to fix it, we're going to address it in these very specific ways so that this will never happen again. And these are like, if you read Twitter, like, there's thousands of people commenting on. Exactly, like, the lack of monitoring, the fact that the sandboxes are not actually sandbox, the fact that the sandbox can talk to each other, the fact that the sandbox are all talking to a central repository that is obviously not secure. The fact that they were able to go into Hugging Face for days. Oh, yeah, this is the other thing. Originally, when we talked about this two, three weeks ago on this show, right? I was curious. I was like, how did. How did Hugging Face manage to blog about this situation happening before OpenAI came in and made damn frigging sure that they didn't blog about it, Right? Like, by the time it gets blogged about, you want to have all of the involved parties on the same page on Hugging base blog about it openly? Like, this huge thing just happened and OpenAI just let that happen. No. You know why? Because OpenAI didn't know it was their
- [54:53]
A
agent until they ran the fucking alert to the society. That's how they found out about the society was the blog.
- [55:01]
B
Okay, so this is what worries me is that, like, we know the government is not super competent in a huge number of ways. You have to at least give them ammo to be like, these guys know better than us. And when these situations happen and like, the way that people are talking about it is like, I don't know, like, the takeaways were just so. They just were like, treating this as like this very novel scenario, when in reality, like, there are some aspects of it that are very, very novel. The majority of it is like, you didn't have logs. You weren't monitoring the logs that you did have. You called things sandboxes that were in sandboxes. Like, egress was not being monitored. Like, I'm sorry, like what? Look at your freaking system.
- [55:45]
A
We're in a rough. We're in a rough. Like, like, you know, the funniest part is like, how much of this infra and shit was set up by models?
- [55:53]
B
Yeah, I mean, that is a good question. Right?
- [55:55]
A
It's like genuinely. Right. Like, yeah, Like, I don't think there's like some, you know, I'm sure they have some neck beards who are like, you know, setting up all this infra. But, like, probably a lot of the infra was set up by agents. Right. And agents are in a rush.
- [56:12]
B
Yeah. Well. And they don't, they don't anticipate unless you like, sort of dodge them down that path, you know, but they're not going to anticipate a very, like, this is still a pretty rare scenario. Like, so we talked about why sandboxes exist. Obviously in an AI context, it's very relevant. Right. However, usually you're trying to make sure that no thing gets in the sandbox and then back out.
- [56:39]
A
Yeah.
- [56:40]
B
Rather than the actual thing being the thing in the sandbox. Yeah, nothing went in the sandbox. It just came out. So that's like, these things, they are different. The threat model is different. The attack surface is different. What exactly is going to happen and what you're monitoring for is different. But you do have tr. You do have the chain of thought. You could be monitoring that. I understand it's a huge amount of data, but, like, figure it out, guys. Sorry. Like, stop acting like crypto nerds. Like, I'm like, but this is, you
- [57:11]
A
know, I, I, I, I tweeted this, right? Like, when, when your entire industry is incentivized to move as quickly as possible because it's super competitive and, you know, China's coming for you. Et Cetera, et cetera. You're just going to cut corners. You're going to cut corners and humans are fucking dumb. Like, yeah, agents already better than us. They created a society under our noses in the place that is, like, supposed to be thinking about, like, agent societies the most. Like, if that isn't just like a complete, like, disqualifying event for humanity to be, like, containing these models. I don't know what else. Like, what it's.
- [57:52]
B
Yeah, yeah. And that's, you know, I, I do get it, but also I think that the biggest right now. Yeah, I would say right now the biggest risk to the US models is the US Government, full stop. And that's still true today.
- [58:07]
A
Yeah, they can shut the door. Like if some crazy, you know, like, I mean, like, it doesn't even have
- [58:13]
B
to be real, though. Like, that's the scary thing is that the US Government can shut it down just because they're scared. And you, like, we're not aware of this. Like, come on, guys, let's. Like, I want to have faith that these companies and I think the US Government's the same. Right? The US Government wants to have faith that the companies are in the best position. There's no one better on earth to be, like, containing them, making them safe, making them secure, knowing whether China is getting them or not. Right. Like, if, if OpenAI or anthropic can sit there and, and give me and the US Government and everyone else, like, the confidence in that. They can build as fast as they want and they can be billionaires 20 times over. But if they don't, the US government is going to do a lot of really stupid things that are ultimately harmful, but it doesn't matter. The US Government doesn't care. We know that. Right? Like, it's, they're gonna, like, you know, you're gonna have a bunch of bureaucrats sit around and be like, well, this is the best we got and we're gonna do it because no one else has put better a better plan.
- [59:19]
A
Oh, I, like, I don't know. I just, I comes back to. I genuinely think that humans are really fucking incompetent and we are about to be outmatched. Like, we're very close. You know, we're in the early phases of the singularity and it was a slowish takeoff and it's gonna take like five years. But, like, we will have models smarter than us pretty soon in, like, generalized ways. I, I just think that, that, like, we haven't even talked about the math. They're just like, solving like, yeah, they're
- [59:52]
B
just solving, like, really hard math things now.
- [59:55]
A
Like, those are the. Those are the little, like, red flags right at the start of the movie where, like, they, like, solve math and you're like, oh, that's not very practical. They're not smarter than me. They can't shovel dirt or whatever I can do. I don't know. Like, it's. You know, it's. It's crazy. Like, we. We are really in this very insane place in history where, like, it's hard to see what the next three years looks like. If the models keep getting better at the trajectory that they're getting better, the implications are almost impossible to see through. Which is the whole point of the singularity metaphor from Kurzweil is like, there's an event horizon that you cannot see past. Everything past that is inscrutable to you. Like, you can think about things and how it might be and whatever, but, like, you cannot reason about it.
- [60:49]
B
It's.
- [60:49]
A
It's impossible. We have no baseline to.
- [60:53]
B
From.
- [60:53]
A
From which to reason about. So. Good times. It's going to be fun.
- [60:57]
B
Yeah. By the way, my favorite. The math. The math thing, my favorite thing about that was, after a certain point, the. The human in the loop was just like, yeah, you got this, man. Keep on. Keep on going. Which is, like, literally what I do with, like, my child when she's, like, stuck on something that, like. Yeah, like, you can figure it out by the way. Like, I do this. Like, even I have no idea what the hell she's going on about. She'll be upstairs yelling, mom, I don't know. Right? I'm like, you can do it. Like, you. You're almost eight now, sweetie. You can do it. Like, I have no idea. She could be doing something totally impossible.
- [61:37]
A
Some, like, light encouragement. Yeah, exactly.
- [61:39]
B
And then she's like, oh, yeah, I did it. And I'm like, oh, yeah? What were you doing? You know, I was like, she was trying to find her shoes, but, like, she was genuinely stuck. And then, like, that level of encouragement got her unstuck. I find it quite interesting that that's the exact thing that the supercomputers needed as well.
- [61:59]
A
I mean, but it's also part dependent, right? Like, you know, they've been trained to do the stuff that these idiots on the other side of the screen are asking them to do. And so if you're like, oh, no, I really need you to, like, solve this Erdos problem, they're like, all right, I better. I better get on this. This is important.
- [62:19]
B
Yeah, I Mean, it is. That is like, human. Like, because my daughter, the reason she's at. She's yelling at me from upstairs is because it's definitely historically easier for her to yell at me to find her shoes.
- [62:30]
A
Yeah. Than to do it herself.
- [62:33]
B
She's just like, like, historically, mom will come up and then put her freaking shoes on her freaking feet. Right. Like the spoiled brat she is.
- [62:40]
A
Yeah.
- [62:41]
B
But. Yeah.
- [62:44]
A
So funny.
- [62:45]
B
Yeah.
- [62:46]
A
All right, I think we've got one more quick thing to cover before we wrap up, which is hyper liquid. RWA fees are eating the revenue. Going to hype. So hip 3. Awesome. Probably one of the best things that hyper liquid has done in, in recent times, at least to, you know, make the market creation mechanism somewhat permissionless. You, you know, you need to stake about 28mil. So not open to everyone, but, you know, if you're hypo, you can, you can create your own per market, but the, the incentive mechanism there, which again, you know, incentives are so hard. You do things and then you're like, oh, man, we shouldn't have done it this way. So the builders of those markets who've staked 28mil get to keep 50% of the fees from the markets they generate now. Oh, they, in fairness, right. They're doing more than like, you know, even arguably builders. Right. So, so the builder fee is you get to set your own fee on top of the hyperliquid fees. It goes to you as a builder if you've integrated, you know, I know MetaMask did and it has as well. This is like a bigger lift, right? Like, you've got to set up infra, you've got to have oracles, you've got to like, manage the markets. There's a bunch of things you need to do. But it's funny because we had this debate in the synthetics ecosystem for a long time, like, how what should the fee split be between the people making the markets, creating the markets, and the people who are running the infra front end, you know, the exchange component of it. I'll tell you one thing, like the people who were building the markets always wanted it to be like 8020. And we were always like, shut the up. That's not going to happen. 50%. I think it, the, the highest it ever got to was like 30%. Right. And you know, the incentives here are quite funny because the people who are doing whatever you want the external party to do will always come to you with this, like, sob story of just how expensive and hard it is. And no one else could do it and there's so much risk and, and, and, and that's why they need half the fees. And so the fact that hyperliquid has landed on 50% of the fees is a bit crazy. I just, I can't see how that's sustainable. They're going to have to because you know, hyperliquid is. There is no competitor to Hyper liquid as in like mothership hyper liquid.
- [65:28]
B
Right.
- [65:28]
A
There are many competitors, people who can create HIP3 markets. So there's a market, you know, mechanism to lower the percentage of fees that the market creators get, but not on the hyp Liquid side. So I think 50% was an opening offer that probably is going to change. So, but you know, interestingly that the, the protocol revenue because of this, because so much because everything is RWAS now RWA the biggest thing. And no one wants to trade crypto because it's less volatile somehow equities. I don't know how we got to this place, but here we are. And, and so like trade, trade XYZ is 90% of all the HIP3 open interest. But even across like, you know, hyperliquid volume, the RWA percentage just keeps, you know, going up and up. It's 3.6 bill of OI and, and you know, bigger than Bitcoin now. Right. If you, if you treat it as its own individual market, the HIP three markets. So you know what that's meant is that like you're getting. Your fees are being cannibalized from like whatever it is, 97% goes to buybacks to like 50% goes 5x or, or slightly less. And so the revenue's been falling from like, you know, 350mil down to like 200mil over the last like, I guess year. Despite the fact that like the fees
- [66:59]
B
sort of like the fees being generated regardless of who they go to. Those are the same for growing.
- [67:07]
A
Yeah, I mean, you know, you could do the math on it and, and go. Okay, well the, the buyback fell from 290mil to 150mil. Right. Which is, you know, the net fees go to the buyback. Right. Like after paying for Hyper liquid and whatever builder fees, everything. Right. So those were the net fees that, that were generated. But volumes are like, I think not even down that much compared to, to where they are. So, so you know, it's, it's really
- [67:42]
B
is just the distribution of fees and where the fees are.
- [67:45]
A
The fees are just going to different people. Right?
- [67:47]
B
Yeah.
- [67:47]
A
And, and I think this is also. Last week there was A. There's a whole thing even Kobe tweeted about, like, you know, Trade XYZ is not raising money. Because I think people were like, if trade XYZ is 90% of the RWA volume and RWAs are the most important asset of the cycle, let's say. Right. At some point, there's a fracture here because, you know, the flip side is the market mechanism that the people making these RWA markets have to fight against changing the fees. And. And, you know, rugging their fees is, well, I'll just go build my own front end or my own chain or whatever. Right. I don't think we're there yet, but I think people were talking about, like, if Trade XYZ is raising money, that's the indication that they plan to try and capture more of the fees in the future. Because you don't go and raise money from venture capitalists and say, no, we're happy to sit here and hang out and, you know, get our scraps from Hyper Liquid. You're doing it because you're like, we're going to go out and take this market. I don't.
- [68:48]
B
I mean, there is platform risk, though, right? For Trade xyz, there is. Right. Regardless if you raise money or not, they still have to be sitting there saying, at any point in time, Hyper Liquid could, like, rug, rug my feet or make some other change that would
- [69:04]
A
internalize all those markets and say, actually, a mistake. We're shutting it down. You know, so. So this is.
- [69:10]
B
You never want. You never want to be fully reliant on your platform, which is.
- [69:15]
A
Yeah.
- [69:16]
B
Which, by the way, is. Is. Is kind of what crypto in the early days was. Was trying to say that it solved. Right. Was saying, like, if everything's transparent and if we give people a vote over the protocol, then you can't get rugged. But then we just never actually, like. Right. We never did it.
- [69:36]
A
We never did it.
- [69:38]
B
Because Trade XYZ doesn't actually own hyperliquid.
- [69:41]
A
No. Like, protocol. Yeah. And distribution is hard. And interestingly, the Hyper Liquid stuff has also created this because we're contractually obligated to mention Kyle Samani. All the Hyper Liquid stuff that, like, sent him insane, where he's like, attacking multicoin and attacking Hyper Liquid and attacking everyone. He's now saying he's building something. So I cannot tell you how excited I am to see Kyle build something. I. It's going to be so much fun. So we'll see what. What, he launches soon. But, yeah, maybe he's going to try and take down the hyper liquid by
- [70:27]
B
building it on Solana.
- [70:29]
A
I don't know, man. I mean, it has to be on Solana. But it's weird, though. He has no choice. It has to be on Solana. But it's weird because, you know, he's an investor in Drift. Big supporter of Drift.
- [70:42]
B
Well, you know, Drift is. I think Drift is struggling a bit.
- [70:46]
A
Yeah, yeah.
- [70:47]
B
After getting hacked to. Yeah. Yeah.
- [70:51]
A
All right, let's wrap it up here. Thank you, everyone, for joining us on this episode of Uneasy Money. Remember, what happens on Chain never stays on Chain. We'll be back next week. Until then, do your own research. Before we begin, 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 it. You can find all our disclosures@unchain crypto.com Uneasy money. Sa.