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- [00:00]
Luca Net
Thing is, just lending is where everyone's blown up in the past that seems to be like 9 out of the 10 blow ups come from some sort of lending mechanism. That's the one place in crypto I'd.
- [00:09]
Ken Warwick
Be afraid to build.
- [00:10]
Taylor Monahan
Obviously people should have business models so that they can build like sustainable business and create new value.
- [00:16]
Ken Warwick
Ethereum foundation says.
- [00:18]
Taylor Monahan
I know this is super controversial at Ethereum by the way. Like you should not business models.
- [00:24]
Ken Warwick
Unfortunately in crypto once you have a token price becomes like the only signal of success, right? You can release a feature if the if Bitcoin randomly dropped 10% that day, it's suddenly a bad feature. Hey everyone, I'm Ken Warwick and welcome to the fifth episode of Uneasy Money. Because what happens on Chain never stays on Chain. I'm here with Luca Net CEO of Pudgy Penguins and Taylor Monahan Security at Metamask. Hey Luca and Tay. Before we begin, here's a word from the sponsors that make the show possible.
- [00:59]
Multichain Advisors Representative
Multichain Advisors is an emerging technology growth firm that has helped create $50 billion in enterprise value for 80 plus clients over the past four years. They're the partner to help navigate markets, build real traction. Today@multichainadv.com we one quick thing before we start.
- [01:19]
Ken Warwick
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 all right guys, let's get into it. It's been a very busy week this week. I think the first thing that we're going to talk about is a little bit of Salana warfare between Solana Defi teams Kamino and Jupiter. So Jupiter Lend is a lending protocol within the Jupiter ecosystem. Jupiter started off as I guess a Dex aggregator, slash Dex and has expanded vertically, horizontally, diagonally into other dimensions over the last like four years and I think has done a very good job at kind of dominating the Solana Defi ecosystem. Basically like any evolutionary niche that is available, they will go in and occupy it. As you can imagine, Kamino, that is a pure lending protocol. Maybe hasn't loved that. It was cool when they were just a Dex aggregator, but now they're like a lending aggregator. And so it's created a bit of tension I think within Solana ecosystem in particular there was this conversation about this zero contagion claim made by which anytime anyone in Defi tells you 0 anything run because it's going to be some kind of psyop. So the, the claim, I think was that there was zero risk of contagion within Jupiter lend within their pools. So the idea here being that you have these isolated lending pools within defi. The design is supposed to protect someone who's in one pool from having risk of someone else doing something crazy in another pool, right? So if Luca and I are borrowing against Penguin in one pool and then someone else is borrowing against Saul in another pool, they don't want us to be a risk for them, right? And Jupiter was like, yeah, bro, like, don't even worry about it. Like, the, the Pango pools are totally isolated and it turns out not so much. And so Camino, Camino is like, guys like this is creating rehabilitation risk, right? Like people are borrowing from one pool, putting into the other, they're like looping and, and you know, your cross contamination risk. Interestingly, multicoin, which, it wouldn't be an uneasy money episode without multicoin appearing, but this time it's Tushar. It's not, it's not Kyle. But there are two possible explanations here. Explanation one, the Jupiter team truly did not understand what isolated collateral means, which is brutal. And two, the alternative to incompetence is the Jupiter team was actively misrepresenting a core part of their protocol in order to mislead users and attract deposits, which is worse. Which is like a classic multicoin false dilemma that they love creating. This team we didn't invest in is bad in this way or bad in this totally other, very worse way. Now I'll. I'll say I, I am an investor in Kamino and I really like the Jupiter team. So I kind of don't have a horse in this race, but. But yeah. What do you guys think? Option one or option to? There's no option.
- [05:15]
Taylor Monahan
There's no option. Three, I mean, I always go with incompetence because I'm actually like eternally optimistic. Even as angry as I am at the world in general. Like, I'm still. Yeah, I'll always go the incompetent route, but I think there's probably something else going on.
- [05:35]
Ken Warwick
Like, is that, is that the cynicism? You say optimism. I say cynicism. Right.
- [05:40]
Taylor Monahan
Like, like, no, it's optimism because the alternative is that they're deliberately screwing you.
- [05:47]
Ken Warwick
But. Sorry, I guess my, my question is, like, you've seen so many teams over the years say like, oh, this is how this thing works, right? And it does not work in that way at all. They don't understand what they built. They forked something or, like, copied something from, like, some other chain or whatever. And like, no, no, no.
- [06:07]
Luca Net
You.
- [06:08]
Ken Warwick
Like, you don't know. We built this, like, yeah. And then it blows up and you're like, no, you. You guys didn't know. So it, like, obviously you got some battle scars from seeing people on the timeline being like, this is how this thing works, and it completely is wrong.
- [06:24]
Taylor Monahan
Yeah, well, and I also. I do get it wrong because there are people who are acting like, deliberately and with intent to deceive or worse. I don't know. Luca, you go, yeah.
- [06:42]
Luca Net
I'm glad that we at least got clarity as to why they did it, you know, versus, I think maybe my initial hypothesis of like, you know, trying to just see a competitor winning and trying to stall, halt that growth. So I'm glad that the Kamino team, you know, gave an explanation. I'll probably actually say it's number two, but with a caveat. I think when you get to orgs of that size, and I know the Jupiter team is very big now, and I think when you look at all the product offerings, I think, what kind of like my interpretation of what I think happened when you get to a size like that, and I experience it sometimes at Pudgy, and I think I see more of these problems today than I saw them two years ago when we were a lot smaller is the delineation of information, right? Like the marketing guy, you know, communicating that information in an X post, right. Has gotten the information on how it works delineated probably through two or three different channels. And I don't expect that guy to know how it works, right? I expect that guy to actually not know how it works, because. But I do expect the person, you know, the engineer who made it to know how it works. But if the engineer who made it said, you know, it's isolated collateral, you know, something, and then the. The marketing guy on the other side of it, you know, got an interpretation of what it was. And is that engineer, like, you know, fact checking tweets like, you. You know, Kane, you probably understand this, but, like, there's a point. And when you're founding and I talked to, you know, Brian Pellegrino from Layer Zero, told me this, and I was really stoked because I thought I was the only one. And I'm sure a lot. Kate, you're probably the same. Like, a lot of the tweets at a certain point did go through me, but at a certain point, it's not like There are now tweets that don't go through me anymore. Yeah, Right. And they're always dangerous.
- [08:26]
Ken Warwick
Every single tweet is dangerous. Yes.
- [08:29]
Luca Net
And so I think that's like the issue. And then so when you have like Jupiter lend and Jupiter perps and Jupiter swap, like, the business is huge, right? And they have like eight corners core, you know. You know, Jupiter Len is now a new product. Obviously it has momentum. A lot of defi builders would love to have that momentum, but, like, it still isn't a huge part of their business, especially from a money making perspective. Right. Like, it probably makes the least amount.
- [08:51]
Ken Warwick
Of money for them.
- [08:52]
Luca Net
Right. And so, like, of all the things, you know, the top guys are looking at over there, does that mean it's okay? No.
- [08:58]
Ken Warwick
Right.
- [08:58]
Luca Net
And like, obviously there's things that need to be fixed, but I do think, like, there's a little bit of grace to be given because, like, this to me feels. Feels like the way I like. Jupiter backtracked in some of the things they did, like deleting tweets. Like this just feels like a delineation of information mistake and somebody fucked up.
- [09:17]
Taylor Monahan
My question is. So when we were talking about this last week, we were in the very early throes of the drama, and the drama was basically like, Camino. So Jupiter launched this thing and it made it really easy for people to move from one place to the other. And then Camino was like, whoa, whoa, whoa, we don't like that. And then they blocked like the. The one click migration or whatever. And then the reaction was like, hold up, that's wrong. You're, like trying to keep people to yourself. What the heck? And then after, like a couple days later, then Camino came out and was like, okay, let us explain to you why we did this.
- [09:57]
Luca Net
Yeah.
- [09:57]
Taylor Monahan
And then it was like, hold on. And then it sort of. The whole story just like completely sort of fell on its head because suddenly it was like, wait, there's actually a risk here. And like, was Camino actually doing this for other reasons? What I'm confused about is, was Camino actually doing this for that reason from the start? Because they didn't really make that clear.
- [10:20]
Luca Net
Yeah, you come out of the gates and you say it that way, Right. Especially if it's a risk for the Solana ecosystem. Right, right, Camino. Solana first. That is very strange to me because usually what you should do, and I think there's some fault on Camino side, is if that's the case, like what I would do as a comms guys I'd be like, we are shutting down deposits here because there's a misrepresentation of how these deposits are made. They're clearly not isolated. There's clearly contagion or potential for contagion. We hope Jupiter fixes so we can continue our partnership with that. Right. Like, that is how you frame that. They did. It was really poor.
- [10:56]
Ken Warwick
Yeah.
- [10:56]
Taylor Monahan
So that's why I'm wondering if so. And I'm not gone and looked and, like, rebuilt the timeline, because I don't care that much, but I'm wondering if they sort of, like, latched on to this narrative. Like, once people started talking about the fact the vaults weren't as isolated, Camino was like, yeah, that's why we. That's why we did that thing. Because that's what it feels like.
- [11:23]
Luca Net
Yeah.
- [11:24]
Taylor Monahan
Due to the.
- [11:24]
Ken Warwick
The. It's like a post hoc rationalization of, like, let's find a reason to. And, you know, I think to your point, Luca, like, someone in Kamino may have been like, these things are really dangerous. Let's just block it. Like, this won't be a big deal. We'll just block it, and, like, no one will really notice, and it'll be fine. And then it blew up, and then there's, like, a comms guy sitting on the side that's like, why did we do that? Like, why would we block this thing? They're like, what? It's like the timeline's melting down. So I think, you know, there's probably, as you say, like, a little bit of grace to be given on both sides. But I think the larger thing that's kind of interesting to me about this is, like, within the Solana ecosystem, we are now at that point of growth where, like, hyper growth, where you can do any, you know, defi summer growth where anyone could turn up and do anything. And it all worked out fine for everyone. Almost ish. That kind of early 2020 vibe then became very competitive post Defi summer. Right. The next six months, people were tearing themselves apart. And I think that we're seeing a little bit of that in Solana, where, like, it's not just money falling from the sky. You actually have to be competitive. And so now, you know, there's some tension that's arising.
- [12:39]
Luca Net
I have a question from. From either of you guys, if you guys could answer, just, like, school me on, like, the defi business, but if I had, like, a. If I'm jupl. Because I'm just trying to understand, like, how big is Juplen to the Jupiter business. Just like this is. I'm just trying to understand it a little bit. Like if I have a Jupiter pool, you know, a jup len Pool is $500 million in USDC. Like what does Jupe Land make on $500 million in deposits in a year? Because they're giving 5, 6%, you know, call it 5 1/2% to the user. You know, obviously they're making some margin there. Like are they making 1% on those deposits? 2%? Like, can I just get like a. Either of you know, Like, I don't.
- [13:18]
Ken Warwick
Know for Jupiter, unfortunately. Like. But I mean my, my understanding historically on the margins for lending protocols is it's very thin. Okay. Like once, once money goes out to, you know, LPs, right? Because you've got, it's like peer to peer, right. There's a small slice that goes to the protocol outside of the peer to peer lending, you know, AAVE, the margins are very thin. But it's 20, $30 billion. Right. So you know, it's okay if you're making bips on. On that, what is then?
- [13:49]
Luca Net
10 bips? 20 bips is gimme rough. It's based on like your understanding. Yeah.
- [13:52]
Ken Warwick
Like 20 bits, like 20 bids net. I think it's, it's not much and, but it varies as well, right? And, and then there's like where does the money go? Does it go to buybacks, burns, does it go to insurance, etc. So like do you count insurance as net margin or is that like retained earnings? They're like, it's not, it's not super easy to unpack this, I think which is why we struggle to value these.
- [14:16]
Luca Net
Honestly. Honestly though, like just you telling me that like Jupiter's got way too much to lose, right? In terms of like, you know, they're making like on hoops and swaps. Like, you know, some of these trades will make, you know, a couple points.
- [14:28]
Ken Warwick
Yeah. Like why they're making way. One thing I'll say definitively is they're gonna make like 50x more on. On swaps than, than they will be making on like 100%. Like it's a much better business. So why they keep coming up with ways to like bother other people in the salana ecosystem. Not 100% sure on.
- [14:52]
Luca Net
I would have stayed away from this one if I was them.
- [14:54]
Ken Warwick
If I'm being.
- [14:55]
Luca Net
Yeah, this one doesn't make too much sense.
- [14:56]
Taylor Monahan
Yeah. If I had to, if I had to guess it's less about the direct revenue and more about like keeping user retention.
- [15:11]
Ken Warwick
Right. Like keeping It, Yeah.
- [15:13]
Taylor Monahan
I mean historically when you have swaps, you have meme coins, you have that whole thing is the thing that everyone's doing, you're fine. When the market shifts though, and people aren't swapping back and forth and back and forth and back and forth all the time, you're going to lose your users unless you have something else that they want to do. And when the market shifts, a lot of times you go from the aggressive mooning every meme coin, et cetera, to more like longer term passive or just more complex decisions. Right. Which is where the lending ultimately is going to fit in. But yeah, it's. I don't think it's necessarily like the revenue driver. I think it's just sort of like another, another thing in the ecosystem that they expect to be able to one push their existing user base to attract new users and then from there, you know, try to get them to do other things.
- [16:09]
Luca Net
Makes sense. The thing is just lending is where everyone's blown up in the past. That seems to be like 9 out of the 10 blow ups come from some sort of lending mechanism. That's the one place in crypto I'd.
- [16:19]
Ken Warwick
Be afraid to build. No leveraged Pengu loans on the horizon.
- [16:26]
Luca Net
Not, not in house at least.
- [16:28]
Taylor Monahan
Yeah, yeah, I also, I wanted to just call out. I thought Louie did a. She had a tweet, Lily Lou, she had a tweet where she basically was like, hey guys, hey both of you guys, I love you both. Can you please stop bickering now? Because in the grand scheme of things, YouTube going head to head on this is absolutely just the most worthless thing you can do. Pick your heads up, look around. Ethereum defi is so much bigger and then everything else beyond that is so, so much bigger than whatever this little, this little tip is. And I thought that was just, I don't know, I1 it reflects like how I feel about these things. Like zoom out guys, what are we going for? But it was also just like the timing of it was quite hysterical and like her being like, okay guys, it's.
- [17:20]
Ken Warwick
Like the mother coming in and being like Sapphire. Like let's like, let's just settle it down. I know we could use one of.
- [17:28]
Taylor Monahan
Those fighting with each other. Yeah, don't fight the Ethereum people. What are you doing?
- [17:33]
Luca Net
You know what I love though? Because if I was multi coin funded I would just have that energy though. I would just be ready. Because if you just know Kyle's personality, he's just ready to go at you. I feel like if I was a multicoid funded. I feel like it would just come with, I'm already like a competitor and a fighter. I feel like I'd just be that much more bold to just fight.
- [17:52]
Ken Warwick
You know, you gotta, you know you gotta like thousand pound gorilla behind you that's ready to jump in. If you get into a fight, you can't hand, you're like Kyle, help me out here. And then just nukes the other guy. So yeah, all right, let's, let's move on from Solana to Hyperliquid. So Tarun from Gauntlet and Robot Ventures, who's a good friend of mine, published a paper I guess like yesterday or something. I didn't know we're still publishing papers, but I guess he likes that kind of thing. That's his style. Arguing that the auto deleveraging on HyperLiquid during the October 10th crash, the 1010 liquidation event created unnecessary liquidations and that the algo is using a Bitmex style 2015 era greedy heuristic which over penalized winning traders to backstop bad debt. Jeff responded, which is kind of unusual. He doesn't usually jump in. So that, that's always interesting if Jeff's on the timeline. I saw it last night, I was like, oh, Jeff's gotten involved in this. So basically saying that ADL had nothing to do with HLP or backstop liquidations and called Tarun's claims misleading. Tarun is proposing a risk aware ADL algorithm that, that adjusts haircuts based on the leverage, aiming to improve fairness, solvency and long term exchange health. I think you know this, this whole debate about adl, the, the trade off between protecting the venue and protecting traders is something we've been talking about for a month now, right. Ever since October 10th. My, my, my kind of takeaway from this, I guess, right, is that I think models in crypto are often useless in the nicest possible way and that empirical data is far more valuable. The problem is that the cost of acquiring that empirical data can be. You are dead. So you go out and do stuff and gather empirical data, but the empirical data might be that you made a mistake in your calculations and now you're dead. And so you become a data point for future people doing things empirically because you no longer exist. And, and so there is this kind of like very tight sort of tension between coming up with a model and actually just like trying things. The challenge with Hyperliquid obviously is now they are providing empirical data to the market. Like they've got a system. It's been through multiple large deleveraging events and it worked. And so it's easy to turn up and be like, inefficient, like, and take potshots at it and propose alternatives, et cetera. But your alternative model that you're proposing didn't necessarily go through the same empirical conditions that the actual system did. And so I'm always a bit skeptical of, like, oh, my model is the trapezoid, and, you know, it does all these different cool things that yours doesn't do. And. Sorry, like, so, yeah, I don't know. I don't, I don't know what your. Your take on this is, guys, but, like, I'm. I'm always a bit of a skeptic when someone proposes a new model that's like, isolated from reality.
- [21:31]
Luca Net
So I'm, I'm too stupid to, you know, really give that much feedback here. But I will give you an interesting anecdote. I, I actually thought I lost a lot of money on 1010. And I, and I kind of believe this for a couple weeks. And then I did actually did the math and adl. So I hedged. I wasn't delta neutral per se. I was more net long, but I did hedge with some shorts. It did close my shorts at an absolute, like, pico bottom that, like, I couldn't have closed myself. So I will just say, like, as bad as, like, everyone claims it was, at least for me, like, one of my shorts closed like a robot. Couldn't have closed it better, right? I. I closed the absolute bottom of the bottom of the wick when it closed it, which, which turned out to be great for me. And so, like, I actually recouped a little more losses than I thought. That's my only point to that. I can't speak on this, you know, sorry, How.
- [22:26]
Taylor Monahan
Luke, how do you not know if you lost money or not?
- [22:29]
Luca Net
So I. Multiple accounts. So I have one account that shorts and one account that longs, right? And so I was looking at the pnl, I thought I had lost, like, way more than I. Oh, yeah. And then I was like, I was like, oh, the adl. Like, I, there's a million dollars on this short I could have made. And then I looked at it and I was like, wait, it actually closed me at the closing price. I just looked at the P and L and I thought I, you know, I had made what I made. But the actual closing price of the short was quite literally the bottom of the way. Like, I probably had 10% more downside, which, like, you Know, it's basically the bottom.
- [23:02]
Taylor Monahan
Yeah, interesting. Okay. Yeah, yeah, you're right.
- [23:07]
Luca Net
For you.
- [23:08]
Ken Warwick
But like perp traders are not the best at keeping track of their profit and loss. You may be shocked to hear this. But like also it's not super easy, right? Like trading on hyperliquid.
- [23:23]
Taylor Monahan
Oh it's.
- [23:24]
Ken Warwick
Dude, it's not super easy to keep track of, of your P and L. So.
- [23:29]
Taylor Monahan
Yeah, yeah, no, I know because the. There's like a few these individual DPRK guys who like to trade on hyper liquid. And so we have to track them and in part we have. When they trade, we have to track their P and L. And let me just say if you think it's hard for you to do it with your own wallets, it's so much worse when you're like trying to like trace and backtrack and connect these other people.
- [23:53]
Luca Net
Are the CRPK guys good traders or they have like profitable PNLs.
- [23:58]
Taylor Monahan
So they are. Overall they did pretty good. I'd say like in the last three months like when they. Because they do a bunch of things, they switch in and out of stables and from eats a bitcoin. So even if they don't necessarily go full bitcoin, they'll go to like wrapped bitcoin. One guy decided that he was going to do some wild stuff on hyperliquid in like August. And I'll just say that it was like for a while there it was like, oh, he's just like us because like you would short. He would short eth and then Ethan like just moon and then he's like, oh, that was a terrible idea. And then soon we even long eth and then ether crashed out.
- [24:46]
Luca Net
He knew this guy in the synthetics trading competition.
- [24:49]
Ken Warwick
I know, right?
- [24:50]
Luca Net
Erk, the North Korean. The North Korean Trading challenge.
- [24:54]
Ken Warwick
Yeah.
- [24:54]
Taylor Monahan
So yeah, they definitely do better with like the longer term plays. I would say they did. The only, the only money they recouped on their hyper liquid was on 1010 though they did get auto deleveraged which made their. Their sort of like because they were still down overall but like they were up. They made like a million dollars on 1010 with their positions.
- [25:18]
Ken Warwick
If they hadn't been, you know, like how much margin are these guys slinging around? Right. Like our friend Wyatt, that guy like is like how. How much cash of these guys got squirreled away that their handlers are not aware of.
- [25:37]
Taylor Monahan
So right now we're tracing from this year. It's like they've got. That hasn't been cashed out. They've got maybe 200 mil just, like, sitting around on Bitcoin and ETH. That's, like, ready to be laundered. What they'll do is they'll take like, a million to 5 million chunks and then go.
- [25:55]
Ken Warwick
But. So.
- [25:56]
Luca Net
But sorry.
- [25:57]
Ken Warwick
So just for context, right, there's a guy who. Who pretended to be Wyatt. Yeah, Wyatt and Nick. Right. From Castle Island Ventures. Right. And I had a whole thread where, like, I was trolling him, and I was, like, trying to get him to. I can't even remember the threads. But we'll. We'll find it.
- [26:23]
Taylor Monahan
We'll find it. It's hysterical.
- [26:25]
Luca Net
But.
- [26:25]
Taylor Monahan
But basically, Kane, without realizing it, completely trolled Lazarus. Guys, like, just completely trolled him. And it was like, the funniest thing I've ever seen in my entire life.
- [26:37]
Ken Warwick
So the first thing was that. That the. The guy was, like, pretending to be Wyatt, and I was like, oh, no. Pretending to be Nick. But he. His handle was still Wyatt. And so I was like, oh, isn't it sad that Wyatt has died? And I had this whole thing of, like, anyway, I'll find the thread. We'll. We'll post it. It was, like, a year ago. So. So back to hyperliquid. I think the conclusion here is, like, people are trying different things. Hyper liquid is pretty resilient to, you know, three Four Sigma events, like, 10 10. And it's easy to, like, take pot shots with some model and, you know, make a claim that. And truant loves models. Let's be honest. Right. So, yeah, I'm. I'm. I'm skeptic on this one.
- [27:30]
Taylor Monahan
Yeah. And okay, I will say this, though. I think that Jeff's response, like, his opening his tweet, opens with those who can't do, or those who can do. Those who can't fud. Like, God, Like.
- [27:48]
Ken Warwick
But you know what I'm here for? I'm here for that because there was a period of time where Jeff was, like, a little too aloof, in my opinion. Right. Like, I'm here if you're a founder and you're not willing to, like, get down in the mud with us and on the timeline, then, like, I'm. I'm bearish on that. I. I'm here for the Jeff arc where he's, like, fighting people on the timeline. And.
- [28:09]
Luca Net
And Tay, I will say to that point, I used to feel exactly the same way with you. As I spend more time here, I get a little more jaded. And I will tell you that, like, there's too Much. There's too much. Too much bitching and let like and not enough like people stepping up and problem solving. And so like I actually am more, I feel you 100%, but I am more, I'm leaning more towards that energy as I get older and working in crypto because it's like, it's like, it's too many times, too many people feel really bold to say like really insane things and then like not even be willing to like go. So like I do feel probably take the other side of that. And like today I'm probably, you know, you're not the guy that's antagonizing and picking fights. But I will say some of these people on the timeline just need a, need a little rude, little passive aggressive messaging. It might do them some good.
- [29:08]
Taylor Monahan
Yeah. And I don't disagree. And Jeff and the whole Hyperlo team have proven that they are, they do like, that is 100 their focus. And they'll do things that are not necessarily like, quote unquote, like how you should do them or whatever. According to traditional crypto tradition or whatever.
- [29:27]
Ken Warwick
Our long standing, hundreds of years of tradition that we've accumulated, like we're just.
- [29:32]
Taylor Monahan
Gonna actually do things wild. Okay. However, I don't know, maybe it's just me personally, like, I think that it would, I think that hyperliquid would be better if they continued to evolve their models. I'm not saying that they should just drop everything and do what Tarun says. Absolutely not. Like, they know their protocol and their sort of priorities and their risk tolerance more than anyone else. But I think that there's probably something in Tarun's research that could benefit them. And like, the way that I always think about this is like, you want to take that information in and like carry it with you with all the other things and then continue to build. Like a lot of times, especially on Twitter, it's. People are like, no, no, no, I don't understand your protocol at all. I've never built anything in my entire life. I'm going to tell you exactly what you should do and I'm going to get very upset when you don't do it. That's. Yeah, you should.
- [30:27]
Ken Warwick
Like the highly opinionated retards problem is like very, very frustrating on Twitter where it's like, let me tell you, you don't know. You don't know how it works. So. So I think like fundamentally though, right? Like talking about zooming out. The thing that I love about crypto and the thing that I think is the most valuable Part of crypto is the fact that TARUN can publish this paper and there will be some enterprising young artist who's like, this is the solution and I'm going to go and build it and they can go and build it in a vacuum and then release it in six months time and be like, hey, I've got a new per engine that does it in this different way, right? And like anyone can try it, anyone can do like this is so different to TradFi and even like the fintech ecosystem where you cannot just build a new exchange permissionlessly and launch it as like a 16 year old engineer, right? And here anyone can, someone can, can turn up and say, well, we've got a different model and the model works this way. And, and you know, this is, this is why I love the space because it would be theoretical otherwise. But it actually, like this will become not just a theoretical exercise, like someone will actually implement this and tweak their model and we will get to see do they die? And it'll be really fun.
- [31:56]
Taylor Monahan
Do they die? True, true or false?
- [32:01]
Ken Warwick
We'll find out. We'll find out. So speaking of tweaking designs, so the lighters, zero percent fees have come under scrutiny. I feel like this is the third or fourth time that they've come under scrutiny. The first wave of scrutiny was like 0% fees doesn't make sense. And then there were a lot of people that like, no, it makes complete sense. Like fees are a race to the bottom and therefore all fees will go to zero. Which also is a bit insane, right? But, but interestingly there's a hyperliquid community account or affiliated account that's saying that LIDAR's 0% fee tier is actually more expensive all in, right? Like the cost of trading on LiDAR at zero fees is more expensive because the latency is 200, 300 milliseconds. So basically the article makes the argument that like if something's free, you're the product, which is a bit of paraphrasing of a Web2 maxim, right? Like if you don't know where the kind of money is coming from, then it's probably coming from you. And so this idea that like slow execution leads to adverse selection and worse fills, et cetera. And I think someone else compared it to like payment for order flow. So this idea that the worst thing that you can have, and I think this is really interesting and I don't know if this was the kind of unique insight from lighter as to why they did this, but the theory Is that the worst thing that you can have as a trading venue or as a market maker on a venue is toxic flow. So informed flow. Toxic flow. There are a bunch of names for it. But like the worst thing, you don't want to be trading against luca. If LUCA is trading Pengu, right? LUCA has more information about Pangu. Just picking a random thing, right. Or me about snx, right? Like you don't want to be trading against the guy who has the most of that token and has like some insight, right. You don't want to be trading against Zuckerberg selling your meta stock. Right. If he's like selling blocks of meta stock, he probably knows something and you don't want to be trading against that guy. What you want to be trading against are a bunch of degens smashing buttons, right? Like a million monkeys on a million typewriters sort of thing. And what's interesting about this lidar situation is only retail would trade with this much latency. And so you create this very interesting filter where it's like you're choosing zero fees but you're getting worse fills in theory, but you also don't understand the dynamic that's actually at play, which means you are definitionally uninformed flow. Only uninformed flow would choose 0% fees. A market maker would never choose 0% fees and 300 millisecond latency. They would always choose lower latency and just pay the cost of whatever that is. Right. And so it is quite interesting I think as a model where they have this two tier system where they are manufacturing uninformed flow for the market makers to trade against by creating this latency. I've never read anything and maybe this is the quiet part out loud. Maybe they'll have to kind of come out and talk about this. I've never read anything from anyone at lighter as to like why they did this, but if they did do this, it's kind of genius. Is my, is my hot take on this, right? Like they can say to the market makers, anyone who's choosing zero fees, like you don't need to worry about them because they're just sitting there getting picked off by you guys.
- [35:48]
Luca Net
Pretty genius, I'm telling you. You know what I learned? All you have to do is just tail Founders Fund, just Founders Fund invest. You just got to tail them because they just are hidden out of the park. I can't really speak to this other than like, dude, you, you. And I say that because they recently just, just, you know, they probably had visibility to this. I mean Yeah, I mean.
- [36:14]
Ken Warwick
I mean.
- [36:14]
Luca Net
Dude, like, did you. I don't think people realize how much, how many people make money on your just regular swap. Like, once I started to learn, once I understood how much money, you know, some people know you swap a low liquidity little meme coin, sometimes you'll lose 5% on the swap, right? And like there's like couple guy players making money on that. And so just like you guys happily marched into Photon, giving Photon 1% on buys and sells and like bull X and like the rest of the bunch. And you know, at the end of the day, like you guys were paying NFT projects 5% on buys and sells. It's like as long as everyone's making money, they're making money. So I think this is what it comes down to. I think this is one of those like problems that's here today, gone tomorrow, you know, and like good for lighter, for having a hook for champion. And they have a different way to making money that's like. I could give you like 10 examples of 10 different businesses in crypto. I bet that like the end user does not know how that that company's making money, but they're making a lot of money on that end user. This is just seems like again, a problem that's here today, gone tomorrow. And you know, yeah, the zero percent.
- [37:23]
Ken Warwick
Fee thing, I always was, I kind of squinted at it. I looked at it as like more of a kind of growth hacking marketing scheme, right? Like a headline thing of like, hey, it's zero percent fees, but it's worse. Slightly worse. But you know, the slightly worse things buried. The 0% fees is at the top of the, the, the headline, right?
- [37:45]
Taylor Monahan
Yeah. And this, by the way, this is how it's always been. Like 2017, ShapeShift. No fees. Yeah, no fees. Right? No fees, guys. They have no fees and they would advertise that against all the other competitors and. But when you look at it. Right, okay, so then how are they making money? Oh, well, on the spread. Yeah, duh. So it's not that it's no fees, it's that they're making money on the spread. Okay, now is that better or worse than no fees? Well, you know, for most of the people that, that have this sort of business model, it's better in two different ways. One, because they can advertise it as no fees, which is very attractive to a huge portion of people in this world. Right? But the real reason that they do it is that they actually make more money, right? Because as long as they can, they can get the calculations right. Right. Because there's always like this little gap and then they have to take the spread. There is risk there, right. Like there is risk that they, you know, the user doesn't complete the swap or something else goes wrong or whatever. And then they do have to eat the loss. But so long as they, they do it correctly, they're going to make more money than they could with a fee. Right. And so that's so interesting to me.
- [39:11]
Luca Net
I have a great take here. Anybody who's offended at the lighter stuff, I encourage you to download Robinhood and buy an options contract on Robinhood and rape looks like. That's what rape looks like. Basically. They'll denominate you at the ask when like if you just literally like don't do the fucking Gen Z dopamine fast way and like actually just like edit the number to the bid, you'll save like hundreds of dollars on the contract. But that's where Robin Hood makes all their money, right? They make their little Gen Z or like me throwing 10 grand on an options contract, in reality it's filling me at the app. They're filling on the bid but I'm, they're auto pricing me on the ask, right. And so they're making money on all on. They're really paying the bid and then I filled on the ass.
- [40:00]
Ken Warwick
The spreads are wide on options contracts as well.
- [40:02]
Luca Net
Unbelievably wild and, and like, and like. But that, you know, at the end of the day, like I actually think that's bullish for lighter. Like they can champion a 0% hook. Obviously a little disingenuous. Like I don't like disingenuous framing.
- [40:17]
Ken Warwick
Right.
- [40:17]
Luca Net
But you know, they're probably going to make more money through this mechanism I would think, right. It's kind of like the Robinhood model and trust me, Robinhood gets insanely these. Anything that's retail that's trying to hit that mass, that's how these guys make insane amounts of money.
- [40:33]
Ken Warwick
But yeah, I think, I think fundamentally if you can, if you can say to market makers, I guarantee you that these guys now of course, right, like you know, do people then work out like the, you know, toxic flow go, ooh, I wonder if there's a way that we could like hedge out this 300 millisecond execution risk and look like retail and you know, like this, this is a multi round game, right? Like round one, great out of the toxic flow. Round two, the toxic flow comes back through the 300 millisecond latency and finds a way to exploit the market makers. But that's, that's finance.
- [41:12]
Taylor Monahan
Yeah, I mean, I think ultimately, like my concern here is I think obviously people should have business models so that they can build like sustainable business and create new value.
- [41:24]
Ken Warwick
Like Ethereum foundation says.
- [41:27]
Taylor Monahan
I know this is super controversial at Ethereum, by the way, like you shouldn't have business models. But I also just like again, optimistically hope that the business models that we tr. Like that we, that we choose, but then also that we, I guess like shill philosophically are not like rapey ones.
- [41:50]
Ken Warwick
Like, I prefer if they're like bringing market efficiency. Right. Yeah, let's, let's make the market more open and efficient and like people have to eat, but let's not make it, you know, ripping people's faces off.
- [42:04]
Taylor Monahan
Yeah. And I think if we continue to just, I think there's a possibility that you race to the bottom with zero fees in the sense that everyone goes to a quote unquote, zero fee model, which in reality just means that the way that people are making money is more opaque and it's more convoluted and it's more hidden away and that it's less clear who is losing. And ultimately that will lead to more inefficient markets. And also it'll lead to sort of like the most retail users are going to be the ones that lose the most. And ideally crypto is supposed to correct that. Right. Like for, for way too long the masters of the universe have been the ones who get all the benefit at the expense of the people. Crypto does have the ability to flip that, but it'll be interesting to see if we actually manage to do it over time or if we'll return to. If we're just going to, yeah. Take the long way around to end up in the exact same place.
- [43:08]
Ken Warwick
Reinvent the exact same mechanism, which we tend to do, but in convoluted ways. I mean, I'm, I'm, I'm optimistic for the same reason that I said, which is that like anyone can come in and say, okay, you know, there's a zero fee model, here's the zero fee model, here's why ours is better. You know, competition just begets more efficiency. Right. Like if someone has a model that's like ripping people's faces off, someone else is going to come in, you know, your margins, my opportunity. Right. The Bezos quote. And someone else will come in and be like, hey, we have zero fees, but our latency is like 30 milliseconds and therefore you know, the fills are better and blah, blah, blah. And you know, it's very easy for someone to just literally fork lighter but make the latency lower and hence crypto. So we'll continue with a discussion on Farcasters, Pivot and the future of Web3Social after a message from our sponsors.
- [44:09]
Multichain Advisors Representative
Multichain Advisors is an emerging technology growth firm that has helped create over $50 billion in enterprise value for more than 80 clients. Like Pith, Moonpay Commerce, and Wormhole. They've worked with some of the largest and most impactful companies in the space. They're the partner you want when you're navigating markets and trying to break out from the noise. They help navigate TGEs, go to market, BD and partnerships, capital markets, advisory, PR, media placements, KOL activations and more, driving execution from launch to scale. Their results are measurable. To learn more and start building real traction today, visit multichainadv.com okay, so far.
- [44:49]
Ken Warwick
Coster has shifted focus, pivoted away from Web3 Social to a wallet, which is exciting for all the people building wallets on this show. I think this is pretty interesting because Farcaster has been around for a long time. The original intention was like build a decentralized social network, right? Kind of break the back of the, call it Twitter, you know, behemoth, right? And offer an option outside of this like centralized social media thing, which is very Ethereum goal. And I think that what it's maybe there's probably two takeaways. One is like network effects are really, really hard to break, right? Like Twitter's bad for a whole bunch of reasons, yet we all kind of squint and close two eyes and just deal with it because it's the least bad option, right? There's, there's obviously, you know, Blue sky and Truth Social and a bunch of other people that have popped up to try and like kind of undermine the Twitter network effects, the X network effects. But it's really hard. Network effects are the one of the most powerful forces in the universe. And so far coster, after 4.5 years is like, actually, what about a wallet? And I think this is kind of interesting because almost it's harder if you're trying to fork existing social network style because you're too close to them, right? Like, at least friend tech was like, what if we do this weird monetization, private group bonding curve thing? And then obviously we know how that ended with, with Racer running off with everyone's money. But, but yeah, I, I guess my, my take from this is like, this kind of felt inevitable to me that, that this is where it would end up, which is a bit unfortunate. I'm a little bit surprised that they're like, we're just going to build a wallet because I'm not sure what the. They obviously have to build something. They've raised like hundreds of millions of dollars in, in funding, so they can't just shut it down and return funds. But yeah, I'm not sure that a wallet with social features is necessarily going to be the win that they think it will be.
- [47:21]
Luca Net
Yeah, I mean, I probably got like two takes here. I think the first one is no, kudos to them for understanding that it's not going the direction they want and having the balls to pivot, especially in a space like crypto. I think, like, pivoting is part of being an entrepreneur, but like pivoting your publicly traded startup that, like, people have spent, you know, hundreds of hours, you know, participating in, you know, indexing some future reward and just dealing with that, like, obviously never easy. You know, Dan and crew are probably some of the best builders in the space, so they'll figure it out. I'm kind of surprised they got here a little too late. Like when we did the whole abstract product, you're familiar, like, we have the portal that lives through everything. Like, we kind of knew it all had to be wallet first. I think if you kind of look at Phantom's playbook and you were talking to Brandon, like, he's going to go and try to build some social feed and they're going to go, they're already planting the seeds for it. Like, any product guy can look at Fantom and see that they're going to go in a cash app style direction and try to build some venmo, cash app, PayPal, pseudo social feed, and maybe open up the grounds for that. I do believe that if you're looking at one of the greatest opportunities in crypto, if you believe that crypto rails are the future of the Internet. An analogy I told investors for a long time was if Python was a token and Instagram was a token, which token would be worth more? Obviously, Instagram's written on Python. I would argue that Instagram would be a more valuable token than Python. And so in that vein, and in that spirit, I actually think these huge social apps in this next generation of the Internet, with AI agents running around like the tam, and the upside for who cracks that code is I very much believe a trillion dollar business and opportunity. Obviously those don't come around very often. So it's going to be incredibly hard to execute on. It was clear that, you know, Farcaster didn't have that killer feature that I think would, you know, was necessary for something like that to take place, you know, all in all. And then, and then my other take on it is just like, you know, part of me is a little. I wouldn't, I don't know, I wouldn't know what the right word is. But like, when I, when I see that, I get a little like, frustrated. And I don't know if that frustrated frustration is like deviated from like, envy because, like, I have insane product market fit. And if I had a hundred million dollars, like, why isn't Paradigm ever reached out to me or any of these guys who are cutting hundred million dollar checks on things with no pmf? Why don't they reach out to the guys with serious PMF who are like, you know, growing year over year and, you know, and so, like, I have, just to be candid, I had like a part of me that when I see that, I think two things, like, good for Dan. He's gonna figure it out. He's best in class builder. They have tons of money. You know, they should have probably come to this conclusion sooner because, you know, other people have come to that conclusion and there's a good barometer as to where to go. It's a huge swing, so can't fall him for failing. Nobody's gonna only wonder. One or two people in the entire history of human history are probably going to be a pull off this web 3 crypto social network. So no fault to him. And then the other side of me is like, damn, how did Paradigm underwrite giving you guys close to 200 million bucks? Because, you know, there's a couple guys that I know, myself included, it's like, if you give me 100 million bucks, it'd be. You wouldn't get. It'd be insane and be the nail in the coffin. I, I'd place the IPO two years from now, guaranteed. So who knows?
- [50:53]
Ken Warwick
I think, you know, the, there is an. There's a question of like, why do VCs in crypto do what they do? And sometimes it does feel somewhat inscrutable. I mean, I love the fact that you still have a chip on your shoulder. You're like, fuck those Paradigm guys. But, but I think that like the, one of the, the components to this, right, is they like Greenfield's opportunities. They like to go in. You know, this is, we talked about this last week, like, multicoin turned up Having invested in eth, the asset for a long time faded e defi. And then they're like, well, this defi thing seems to actually be working, so let's build a bunch of projects that are going to compete with the existing ones because they want to own 10, 20% of those things, right? Like, you couldn't come and buy Ethan, which became, you know, you couldn't buy 10% of Ethan/AAVE, right? In DeFi summer, it was too big. So it was like, well, I'd rather just go and, you know, invent something new that's going to come and take them down. So I think there is that, that kind of element to it as well. I also think, like, more broadly, this is. This is super bearish for like, one of the core crypto tenants, right? You know, talking about the Ethereum foundation, like, we're going to decentralize all the things. We're going to make them free and open and transparent, and yet we have, like, utterly failed to beat the largest centralized incumbent in history in this vertical. Right. Meanwhile, there's other centralized networks that have actually gotten more traction while we've been trying to build the decentralized one. It, you know, like, not amazing traction, right. But like, Blue sky has their own, like, weird little niche. And, and, you know, people have have tried to kind of attack Twitter. Like, Blue sky did better than Foster, I would, I would argue, right. You know, by having that niche. And, and so this idea that, like, decentralized tech will win because it's open and transparent and, and, and like, maybe the time frames are long enough here and we just didn't get it. Right. But just being decentralized is not. Is clearly not enough.
- [53:13]
Taylor Monahan
Yeah, exactly. It's not. And, and especially when we're talking about social and like, something like Twitter, right? You have to go back to what is the actual value that decentralization actually offers? Because the centralization on its own, like, really doesn't matter at all. The value that comes from that is potentially things like, like, I guess you can't resistance. Yeah, but I mean, but what does that mean for the end user, right? It means like, oh, so Elon's not going to ban your Twitter account or censor your words or. Okay.
- [53:54]
Luca Net
Well, we have a decentralized social network, and at 4 chance, go see how that. You can see how that one.
- [54:00]
Taylor Monahan
And that's the thing is like, you know, most competitors that crop up are the ones that have gained traction are the ones that, like, they either were or were potentially scared of being actually Censored. Right. Like, Truth Social is the one where it was like, all the people that actually got kicked off Twitter during that era went to their own little network, Trump included. Right. Because he was actually kicked off Twitter.
- [54:23]
Ken Warwick
Yeah.
- [54:23]
Taylor Monahan
Okay. Now that is valuable to those specific people. Yes. However, is it valuable to anyone else? Because social network is both giving and taking. Right. Like, the only reason that I would go is because I want to read those people. And the reality is when you have such a niche, narrow, like, user base of people that are pushing content there, it. It's very quickly it can devolve and be just a really bad echo chamber. And that's what we've seen with True Social. That's what we've seen with Blue Sky.
- [55:00]
Ken Warwick
Like, it just filtered out. You filtered out the people. I mean, the Trump thing is interesting, right? Because like you say, well, Twitter's centralized and it is, obviously, but, like, it's not that centralized. Like, it's not like there's like this Panopticon and like, they know everything that's going on. There's like trillions of bots running around. People just syndicated the Trump Truth Social posts on to Twitter. You didn't need to even go to shoot Social. You get them on Twitter and just follow some of the accounts that, like, screenshotted every one of his posts. Right? Like, Twitter didn't shut those accounts down. They're like, yeah, whatever. Like, we just didn't want the guy. Like, we can have his messages. Like, it's fine. Right. And tactically, that's like a way better, you know, and. And state for Twitter anyway. Right? They're like, we don't want people leaving, but also, we don't want that guy. So we get the best for both worlds. We get the guy's stuff and we don't have him on here.
- [55:54]
Taylor Monahan
Yeah, exactly. And by the way, that was also like, a very interesting period of time for Twitter where they were, in my opinion and I think in Twitter's opinion. And like, I think Zuckerberg has come out and talked about this too. Like, the post Covid Social era for us companies. I think most of them are like, we didn't take censorship resistance seriously enough. And we probably should have. Like, we probably should have had internal policies that really had some layers of accountability and policy so that we didn't have individuals running around banning, Banning Trump or banning whoever just because our friends that, you know.
- [56:32]
Ken Warwick
Yeah, yeah.
- [56:32]
Taylor Monahan
I mean, it was. You know, some of the leaks have shown. It's like, literally because, like, the friend that was Part of the, the administration was like dming people that worked at Twitter.
- [56:44]
Ken Warwick
There's a right.
- [56:45]
Luca Net
It's wild at least on the farcaster side. I think it's like a little more an interesting little back and forth with Kobe and I think it was carbon around like just the whole token side because it's like interesting. You know, kudos to Dan because there is a lens to this that I think earns at least deserves everyone's respect, which is at a certain point there. He could have launched a multi billion dollar token very easily, right. And could have made a lot of money from it, you know, depending on how like he, you know. Yeah. And, and he did it and he said and, and in crypto is very far, there's very few builders who have the integrity to be like, I am not going to launch the token just because I had put three and a half years into of work into it. Right. And that I deserve to see some upside and realize some of my gains, right. For that effort and instead took the high integrity path and said I'm gonna go build something completely new, a wallet based off of these learnings. That's a very high integrity decision that almost nobody listening to this, I promise you would make. Right? Does that have something to do with like Dan having made it already? Right. And like you know, obviously being early crypto and whatever and him being like, he kind of reminds me of like layer, you know, Brian from layer zero on that point where like, you know, you know, Kane, you give me that vibe too. Like you made it seems like Infinx is like super, like you're trying to do it, you know, no matter what. Obviously you guys have a token element to it. But like, if it was very clear to me early on that you were just trying to build the highest integrity product possible. It's interesting because like, but to be.
- [58:17]
Ken Warwick
Honest, like I, I, if I could go back, like I might not have an Infinix token. Like, like I, I'm, I'm, I'm not 100% convinced that that that was the right call in the way that I was say two years ago when I was like, I am 100% convinced that it is better to have a token than not have a token. I think today there is. And you know, maybe we can talk about this next week. Right? Like the, the debate about tokenization versus not tokenizing. You know, there have been a, I think even just like from a pure founder incentive perspective, right. The downside of having a token is infinite. Like, even if you do make some Money from. From launching a token, right? But whether you, whether you do or don't, the downside is infinite, right? Like, the people will look at whatever the highest price that token ever got to. And like, I have this conversation with synthetics all the time, right? Synthetics. The seed round was like $8 million. It's $200 million now. If you go back to 2017, like mid-2017, it was 8 million, now it's 200. The problem is that it went through 5 billion at 1 point, right? And so people go, yeah, but that's the. That highest price that it ever got to. Which, as a founder, you have very little control. People think that, like, oh, I just painted that chart and, like, made it look like that, right? Like, like you can't get people to trade hundreds of millions of dollars of a thing at a $5 billion valuation through, like, sheer willpower, unfortunately. And. And the market will do what it does. And so I look at that and I go, okay, so, you know, it's 98% down or whatever from all time high, but it's like 10, 20x up from where it started. Like crypto Twitter is like, you're a monster. And any other rational investor would be like, that's a great outcome. You got a 20x and like, it doesn't. The path kind of doesn't really matter. The interesting thing is if you remove the token element of it and you didn't have a token, and it was a pure equity play, right? And someone did invest in 2021, in DeFi Summer in an equity deal, and you, you know, did some secondaries and like, sold 10% of the company at that $5 billion, you know, Val, and someone put 200 million or whatever, you would be so much better off on the timeline. Like, so much better off, right?
- [60:59]
Luca Net
One guy would hate you and his LPs would hate you.
- [61:02]
Ken Warwick
Yeah, but. Yeah, but you know what the funny thing is? I don't think that even the agreement person would remember.
- [61:10]
Luca Net
Like, you write sophisticated investors.
- [61:13]
Ken Warwick
It's like you write text, you forget about it, and you're like, they wouldn't even remember. You're like. In fact, they're like the incentive structure actually, as a VC with LPs is to memory hole that $5 billion. Val, you underwrote it 200. You're just like, yeah, that never happened. Like, you're never mentioning that on the timeline ever. Like, why would you bring it up? So the incentives are completely different. Whereas, like, every single person who ever bought the snx token above $10 is like, you're the worst founder in history. And I get, like, I get it. Like, I get it on. On the level of like, yeah, like, that was not, you know, was that the right price? Was it the wrong price? Like, is the price now wrong? Like, I don't know, but, like, my, My. My mindset has definitely shifted lately over the last six months as to whether or not tokenization, which is pretty wild, like, I was like, one of the biggest advocates of tokenization, but from a pure founder perspective, if I was talking to a founder, delaying tokenization until you know that the thing is worked is. Is probably my default at this point.
- [62:28]
Taylor Monahan
Yeah, I agree. I mean, I've always agreed, but, like, so I'm not saying that I still agree.
- [62:34]
Ken Warwick
I still agree.
- [62:36]
Taylor Monahan
No, I mean, my biggest thing is that once you got a token.
- [62:40]
Ken Warwick
Tay, put the. Put the meta token in the bag, bro. Come on.
- [62:45]
Taylor Monahan
So once you. Once you have a token, or thinking about a token even, right? It shifts basically everything and especially, like, priorities and product and value. And I think it makes it, especially in crypto, where the data that you have to operate on is already, like, sometimes it's like, very weak. Sometimes it's, like, very biased. Sometimes, like, it just doesn't even exist. Once you have, like that, yeah, the sort of the hype and the expectations or the token incentives like itself, you can start operating on a really bad mix of, like, assumptions and bad data that takes you down a road that isn't, you know, the best for anyone in terms of value creation. And it takes a lot longer for you to, like, you know, figure that out. I think that you really have to have incredibly strong, like, product people and leaders to be able to, like, keep that, like, keep the priorities well, because.
- [63:53]
Ken Warwick
Unfortunately, in crypto, once you have a token, price becomes, like, the only signal of success. Right? You can release a feature if the. If Bitcoin randomly dropped 10% that day, it's suddenly a bad feature. You work for six months, you release a feature, and bitcoin drops. Therefore it drags everything else down because your token has high beta to bitcoin. And now it's like, look at these idiots releasing this terrible feature that they worked on for six months that market clearly says is bad. And it's like, what are you talking about? Like, but that's. That's unfortunate, Lucas. Just, like, blow my own brains out.
- [64:34]
Taylor Monahan
So I do. I might be curious, though, because Forecaster didn't have the token. I feel like they stole. I don't know, I feel like they took A long time to reach this conclusion.
- [64:46]
Ken Warwick
But you know, the funny thing is, sometimes putting yourself in a bubble and having infinite money is actually really bearish, right? Having too much money is. Is honestly from. From a market outcomes perspective, my view is that, like, if you gave. If you. If you just picked 100 random founders and gave them $100 million, right, the outcome would be far worse than if you gave them a million dollars. From a market perspective, the market would get better outcomes from those people having to actually make do with a million dollars and figure things out. Like, those guys would light that hundred million dollars on fire 95 out of the hundred of them within like, 20 minutes. And then they'd be like, sitting in a smoking crater being like, oh, man, like, what?
- [65:35]
Luca Net
How.
- [65:35]
Ken Warwick
That was a mistake. So, oops.
- [65:37]
Taylor Monahan
Yeah, no, I agree with that. And you do. Here's the thing. You have to be. To build something like Farcaster and really go, like, 100% walls to the wall, right? You do have to create a little bubble of insanity to operate within, because otherwise you're just never gonna believe in yourself, right?
- [66:00]
Luca Net
Yeah.
- [66:00]
Ken Warwick
You need a reality distortion field to go and do that, and also a really big one. And. And you need to hire, like, expensive people.
- [66:09]
Luca Net
This is.
- [66:09]
Ken Warwick
This is one of the things that's been, like, very interesting to me with. With Infinix is only in the last six months did we actually start to, like, go out to the market and say, give us your most expensive people. We want the best engineers, senior engineers, and pay them the most. Prior to that, we were focused on bringing in, like, crypto degens who were, like, much more incentivized by token grants than they were cash. And they've got a lot of experience in crypto. But we're not necessarily senior engineers that had been through multiple cycles of technology changes. No different architectures, really. Well, we brought in, I would say, 10 or 15 engineers over the last six months that are, like, just incredible relative to, like, the baseline of crypto engineers. Now they don't have the crypto knowledge, in fairness, right? Like, they're just pure engineers. But they come in and, you know, they're like, hey, there are, like, some risks here that you guys are taking that, like, and there's one guy who just, like, wanders around.
- [67:17]
Luca Net
It's like, tay, you're gonna love this, right?
- [67:19]
Ken Warwick
It's like, imagine you're building a house, right? And you bring in a guy and. And the guy's like, so you can't plug the wires into, like, the load bearing, like, metal pole There, someone's gonna electrocute themselves. And they're like, I'm just gonna unwind this and, like, plug it into the. Right, right. Like. And it's just like. And he just walks around all day long just unpicking, like, these things where he's like, I see. And. And, you know, this is the biggest difference. Difference with senior engineers versus, you know, a junior engineer. Junior engineer sees a mistake or sees, like, a thing that exists that is not optimal.
- [67:57]
Luca Net
Right.
- [67:58]
Ken Warwick
And they get mad about it. They're like, why did you do this? A senior engineer looks at and goes, I understand why you thought it was a good idea to, like, you know, plug this into this thing. I'm not even going to. I'm not even going to criticize you. I'm just going to unplug it quietly and plug it into the right place and, like, we'll all move on with our lives and. And it just is a completely different mindset.
- [68:21]
Taylor Monahan
Yeah, yeah. No, it's. Well, it is. So we've had. There's been similar things where I've been, like, sitting there banging my head against the wall, being like, I know there's a better way to do this, but I don't have, like, the technical expertise to, like, even figure out what it means. I just know that this can't be the best way. We did it with releases once, and it was like, yeah, sat down with a guy who I didn't even know had history doing, like, release management. And he starts, like, telling me about, like, what he does and stuff. And, like, no joke, this guy had been basically optimizing the release flows for, like, huge software projects for, like, 15 years. And he starts tell. And I was like, I just don't know how we could ever do this and this and this. And he's like, what? That's, like, the most basic. He's like, no, no, no, we should be able to do that, like, instantly. And then also, if there's a thing or if there's an issue or if there's even a potential issue, then you have a whole thing over here that just. And I was sitting there, like, back.
- [69:26]
Ken Warwick
And phrases things and. I know. Yeah, I know.
- [69:29]
Taylor Monahan
And he was like, yeah, this is, like, basic. And I was like, can we do this, please? Like, what are you doing, bro?
- [69:37]
Ken Warwick
It's also like, part of the crypto bubble is like, I'm not going to hire the guy with 15 years of, like, you know, release management, like dev sec Ops, because he doesn't know what Pengu is. And so he's a idiot. And so, like, how could I hire that guy? Like. Like, he's gonna be like, there's a penguin token. I don't like what? Like. And it doesn't do anything. I'm confused, right? I'm like, get out. Get out of my office. Like, all right. Well, that was fun. That's it for this episode of Uneasy Money. Thanks for tuning in. If you like the episode, follow us on the Unchained feed on X, Twitter, YouTube, or wherever you get your podcasts, and we'll see you guys next week.