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- [00:01]
A
Hey all, before we begin, I've got some exciting news to share. We've been working on something a little wild behind the scenes. It's called Unchained on Air, a revamped live stream series and podcast feed that takes you way beyond the headlines. It features sharp, maybe even controversial takes on major events and the kind of on chain intel that never makes it to your feed. Way more shows way more often, each one laser focused on a different slice of crypto and finance. First up is Dex in the city where the wallets are cold and the takes are hot. With Jesse Brooks, Katherine Kirkpatrick, Boz and V. Lee, three powerhouse lawyers gathering to dish about the latest. From defi enforcement to token regulation and everything in between, it livestreams every Tuesday at 12pm ET. Second is uneasy money because what happens on Chain never stays on Chain. With Luca Netz, Kane Warrick and Taylor Monahan, three OG DeFi builders unpacking everything happening on Chain from tokenomics to daos, from hacks to yields. It airs Wednesdays at 3pm ET. And finally, bits and the Interview, an addition to our group chat show in which our executive editor Stephen Ehrlich takes you deeper with one on one conversations. This streams on Thursdays at 12pm ET. To catch the live streams, follow Unchained on x, subscribe on YouTube or find us on your favorite streaming platform now. And don't forget to hit the bell icon so you never miss a show. And if you can't make the live stream, these episodes will show up in your podcast feed the very next day. Thanks as always for your support.
- [01:46]
B
All things told, yes it was messy, yes mistakes were made, but it could have been way way way worse.
- [01:55]
C
So we go to lunch and Shane turned up and he was there for like an hour and just is just an insane person. Like even by crypto standards, like his level of like reality distortion field that he lives in is like insane. And so, so then he left and, and all my friends were like that guy is insane. Completely insane. I'm like I know, that's why I love him.
- [02:21]
D
I realized that the vet majority of venture investors are really just retail with a large check size. Like a lot of you guys are not the brightest so you know, maybe it did just get away from everybody. And that's like one of those areas in, in there's probably one of those stipulations like first right to refuel. It's probably one of those things you have a conversation on and, and you, you know one VC is talking to one guy and they're just like, screw that, you know, he's leading.
- [02:47]
C
Hey, everyone, I'm Kane Warrick and welcome to the third 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. Here's a reward from our sponsors that make the show possible.
- [03:02]
A
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- [03:22]
C
One quick thing before we start. 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, episode three. Let's get into it. It's been a busy week as. As it tends to always be. How are you guys doing?
- [03:48]
B
Pretty good. It's, yeah, pretty fun week.
- [03:53]
C
Yeah, it feels like there's a lot of stuff going on. So first thing we're going to talk about is Monad. Monad hit Mainnet. So Monad is a chain that has been around for a long time now, almost four years, and just got to Mainnet. So it was probably one of the longer pre. Mainnet chains that we've seen historically. It's kind of wild to think about the fact that Ethereum was like maybe a year, 18 months before the genesis block between the ICO. Not even 18 months between the ICO and the Genesis block. And the first four years of Ethereum history was like, insane, the amount of stuff that happened. But. But yeah, Monad finally went live. The. The interesting thing is Monad did a ICO through Coinbase, through Coinbase's new platform, and the token dipped a little bit, but I think it's over 4 cents, which is, I think, an implied FDV of 4 billion. Um, but there's not a huge circulating supply. It's only. It's only about 10%. Um, I. I think, Luca, you're probably scratching ahead at that one. What was the circulating supply of Pengu when. When you guys went live?
- [05:21]
D
Like I said, Microsoft 70%.
- [05:23]
C
Yeah. Yeah, different. Different time a year ago. So. So, yeah, I think it seems like it's been. It's been a Pretty good launch so far. There have been a ton of, a ton of different platforms that have supported chain. I know you guys are supporting them on day one, right, Tay? That was.
- [05:46]
B
We are, we did. I'm very proud of our team. I. It's been. I don't think people realize like MetaMask has been around for so long. We also have like a huge amount of tacta and things happening and yeah, we, we ship monad support on day one and I'm super proud of us for doing so. We also have like, I don't know, we have a new network page that actually like, I don't know. Wild, right? It links you to the things that you can do on chain. Who'd have ever thought? But yeah, I'm pretty happy with it and the team is obviously really happy with it, but I'm just mostly impressed that we, we shipped it on day one. And we also, like, I don't know, philosophically, we go back just for context, right?
- [06:37]
C
You shipped Solana like day 1000 or something like that. Like day, like day 3800. So it's definitely improvement.
- [06:46]
B
Yeah, exactly.
- [06:49]
C
Yeah. So I'm sure you've got some thoughts on this, Luca, but like the meta of launching a new chain, right, you know, for I think a long time was like go out to all of the defi projects, you know, pay them a grant or something or if they wouldn't do it, find some crack 20 year old to fork it and just YOLO deploy it. And so your monad has really leaned into that with the combination of like defi and meme coins. What are your thoughts on that launch strategy?
- [07:23]
D
Yeah, I think it, it's. Yeah, I, you know, I can't really, I can't really speak to it just yet because like, you know, I don't think there was that many big meme coins on the chain just yet. I think the defi stuff I played around with, but you know, na, naturally the ecosystems have to be relatively holistic, I think nowadays. Or I, you know, or at least most people think I, I have a, I have a contrarian take. I think people should be more purpose driven. Meaning like go after a person specific function, whatever that function is. Like, I'm not actually a general purpose believer, but I think all in all, you know, give credit where credit is due. They executed well. Obviously they didn't have the binance listing, which I thought was interesting, but you know, you know, tokens, at the end of the day, there's plenty of chains that have nothing going for Them that tokens go up and community rallies behind it. And I don't actually like that side of this part of crypto, but it is just the unfortunate reality. And it's a reality that, you know, at the end of the day, if you have bag holders and people are making money, then they're bullish and you're doing a great job and you're an amazing builder and the entirety of everything you've built is so amazing and they don't really look at anything else under the hard.
- [08:44]
C
So just maybe let's talk about Binance for a second. Right? This has to be one of the biggest launches in years that Binance hasn't listed very quickly. Except for Hype, probably like Hype and Mon are the two that I can think of in recent memory where it was like a huge hype launch and Binance has faded. It seems weird. I don't know what's going on there.
- [09:13]
B
Does that have to do with the Coinbase, the fact that they did. They were like the big Coinbase thing? Because historically Binance has. You have Binance, you have the listing, you have Alpha, you have all these different incentives and reward programs. But historically also Coinbase doesn't have any of that. Right?
- [09:31]
C
Yeah, yeah, exactly.
- [09:32]
B
So was that a factor in this?
- [09:35]
D
I don't know.
- [09:36]
C
I don't know. But, you know, I think there's been obviously a lot of discussion about Binance, the cost of listing on Binance, the cost of listing on all exchanges. Right. You know, there is, there is an expectation that Binance gets a pound of flesh from projects, you know, one way or another.
- [09:53]
D
Right.
- [09:53]
C
For listing, which, like, you know, my hot take is like, markets are markets, right? If someone has a useful service that is a bunch of, you know, degens that are sitting on their platform, I don't have really an issue with people paying for it. I know that there's been like a lot of debate about this. There was a bit of, a bit of kind of contention on the timeline between Coinbase and Binance about listing should be free versus listing should be paid. Yeah, yeah, it's. I mean, you know, you've been through this process. Like, I don't know, if you build a big business, it feels like weird that you'd be like, no, no, let me give that thing away. Right? The problem, I think, you know, there's a whole bunch of things that get tied up in this, right? Like if you monetize your ability to put a token in front of all of your users, that can get dark very quickly. Right. Where it becomes, you know, about extracting versus, you know, so. But on the basis that you are genuinely filtering out bad products, projects and only allowing good projects to, to come on the platform, then I don't really see an issue with charging a fee for that. It's just that it, it gets, it drags in all of this, this stuff around, like who gets the fee, where does it go, what is it for what, what are we doing? But you know, like exchange fees and listing fees. It's hard to see a way of getting around it. I mean, of course someone can just come like Coinbase can go, well, it's $0 to list on Coinbase. And you know, if there is a large market participant that crushes the margins on something, then you know, maybe the price goes to zero. I don't know. I don't know if that's, that's something that we see as sustainable over the long term.
- [11:49]
B
I mean, what's the, like, I don't know. I think the conversation on the timeline about the listing fees specifically was like slightly disingenuous because it's portraying the entire.
- [11:59]
C
You're saying the time I was disingenuous. You're saying there was a psyop going on. I don't believe it. That's crazy.
- [12:05]
B
It's like, I don't know, the whole thing was like just put in this pretty little package of like this listing fee where in reality I think it's pretty rarely the case where it's like just such a simple situation and such a simple deal where like give me X dollars and we'll list you. Like, that's not what's actually happening. There's all these different things going on and you know, how those are packaged up and what they're called and what the money is and what the team gets value out of, what the end users get value out of, what the exchange gets the value out of. I just think the conversation is usually like very.
- [12:45]
C
It gets reduced down and I mean, you know, talk Binance, right? Binance has like four or five different programs that can go through, right? And you know, one of them is basically turning the token into yield for BNB holders. Exactly like that. I'm, I sit here and go, that's the job of Binance. Make BNB go up. Right? Like that is literally their sole job. So if they're saying, hey, you know, I mean there's, there's on chain examples of this, like Aerodrome is a really good example of this. Like take everyone's token, you know, add Liquidity, but then inject it into the aerodrome token effectively. Right. Sell, sell everyone's token and put money into the aerodrome price. Right. Yeah, I don't, I don't know that I like see a huge issue with that. Of course no one's got a gun to anyone's head saying you have to list on Binance. But the interesting thing about this is you have to imagine that Monad has been like eh, whatever. Which you didn't used to be able to get away with. You couldn't say no to Binance.
- [13:51]
B
Yeah, well. And at some point Binance users are going to be like wait, what the heck?
- [13:59]
C
Yeah, right. Like, yeah, like how do we not have mon. Right. Especially if it goes up. Well this is the other thing, right. If the token goes up from here and they're like wait a second, you didn't give us this token when it was $0.20, it's now $2.00. You have prevented us from having generational wealth. Like that's literally the conversation. Right. So, so you know, but also there is something interesting about the dynamics of this where you know, this is one of the few tokens that we've seen, maybe excluding hype, where like at least in the first 24, 48 hours it hasn't been a down only chart. So there's something, there's something interesting about that as well I think.
- [14:43]
B
Yeah, there is.
- [14:45]
D
And, and, and his drunk trading experience. I think in hindsight that was pretty obvious. Keon wasn't going to let that thing go out of the gates and stink up the joint.
- [14:54]
C
Yeah, yeah.
- [14:56]
D
And I'm like oh, that was probably an easy trade. I, I did you know, try to max fill on Coinbase. It seems at least relatively somewhat free. Yeah, but they didn't fill you. They basically, what they did is they, they basically put like the ceiling almost at $50,000 and try to give as many people $50,000 worth because I, I smack submitted for half a million bucks. And then you know, my friend who, a bunch of friends who only submitted 50 to 100 grand all got 50 pretty much. Interesting.
- [15:25]
B
Oh that's interesting.
- [15:26]
D
Barometer. Yeah. So they were maxing. So there wasn't any like big. It was actually a good strategy though. So like not one big person or there wasn't like a, a constituence of like jumpers, like big whales.
- [15:37]
C
Yeah, that bottom up fill structure. Right. The way that they did is they kind of did this round robin fill everyone from the bottom up. So you know, everyone who bid up to 50k got their full Allocation, which is interesting compared to, compared to mega eth, right, where they were like, hey, you know, picking and choosing. I think with us we've said we're going to do a lottery, there's no real good. You know, every single solution has trade offs, right? Like someone's going to be unhappy. You know, person who wins the lottery is like, this is the best system ever invented. And people who lose a lottery, like.
- [16:16]
D
This is the worst.
- [16:17]
C
This is a, this is, you know, war crime basically.
- [16:22]
B
So, but, I mean, but, but with these, right, One of the, there's different, I guess there's different things that you want. One of them is distribution. Like you want the most amount of people to have it, but you also want those people to actually presumably care about it and use it and not dump it and stuff like that. Right. So it's like you can weigh those trade offs based on the larger sort of long term goals of what you're doing. I don't know. I have some amount of respect for Monad. Again, just going back to like last week, what we were talking about, where they just seemed completely unfazed by the fact that it hadn't sold out on Coinbase and like, it just to me points to them being confident in their long term goals. And like, that's something that we don't see a lot of in this space.
- [17:11]
C
Long term goals or confidence. I think we see confidence. So Luca, did you have any, anything else to add there?
- [17:26]
D
No, no, no. I was gonna, I was gonna say, to be frank, I actually like their approach a lot because I was a little upset for like a minute that I didn't get filled for the full amount or close to it. But if you think about it, if you try to weigh all the different options, the bottom up option is actually a good way to like make, you know, everyone's kind of happy. Like everyone has a meaningful amount of, you know, allocation where, you know, like, I'm not, I'm not. I was mad for literally 30 seconds and then I was like, happy, right? So, you know, it's actually not a bad one because, you know, you. What you really want to optimize for in scenarios like this is maximum happiness amongst the most amount of people. Right. Like that would be your objective read, right? As much good vibes and goodwill across as many individuals. This probably fit that. If I'm being frank, I don't think many people were upset. You know, I didn't see.
- [18:17]
C
Yeah, I think it does require having a lot of allocation though, right. Like if it's you know, they raised 200 mil, right? So it requires having a high enough FDV and a large enough, you know, percentage. If you were doing, if they had done like a 500 mil sale, right, you would have had a ton of people, it would have been massively oversubscribed and everyone would have gotten filled for like $2,000. And then everyone would be unhappy.
- [18:46]
D
Right.
- [18:46]
C
So there's like, it's just, it's, it's hard to know, you know, exactly how it's going to play out before. But I think to your point, like, they're confident, they're like, no, that's fine. We're going to do 2.5 bill. It's going to be cheap.
- [19:01]
B
Yeah.
- [19:01]
C
And everyone was like, this is so expensive.
- [19:03]
B
And they're like, it's not, it's just a different vibe. Like, I'm sorry, like everyone else is on, you know, but should we talk about Maggie?
- [19:13]
C
Yeah, let's talk about Maggie.
- [19:14]
B
That's a different vibe right now.
- [19:16]
C
This is a different vibe. Look, so Mega Eth had a TVL campaign to kick off the chain because their chain launches in, in like a week, I think, right? So they have a deal with Athena. We talked about Athena last week. The, the stablecoin issuer that does this kind of basis trade where you get a bunch of yield for holding the stablecoin. They've gone out to networks now and said, we will give you a white labeled version of Athena effectively that you can run on your chain. And so for Mega Eth, it's, it's usdm. And so Mega was like, okay, let's, let's go, let's get some TVL on this chain and get the party started. And it was a bit of a mess, unfortunately. So there were two fairly unfortunate things. I guess the first one was that they were a bit delayed, which is like classic crypto, right? Like, you know, who hasn't tried to launch something and been three hours delayed when they try to actually ship it? And yeah. So then the second thing was they did all this stuff. It started going, they started filling it up. And then Ghost is Safe strikes again. People do not know how to use Gnosis Safe. And they staged a transaction without realizing that once you stage a transaction, anyone can execute it. And so they had this executable transaction that was sitting there to bump up the cap on this TBL campaign. And some smart, enterprising young artist who was watching the chain was like, wait a second, I'm just going to execute this transaction. And then the cap Was raised, and then people were depositing again, and then it got up to, like, 400, and then they paused it. So just all around kind of crazy stuff. A bunch of. A bunch of crazy things in a row.
- [21:18]
B
Yeah, just like. And this was. It just reminds me of, like, 2017 era, where it's just, like, this series of things that just keeps, like, falling onto one another, and it just sucks. Like, it sucks for the team, it sucks for the people. It's a mess. It's not a good look. It's not a good vibe, you know.
- [21:38]
C
I think, you know, on the plus side, scrambling in crypto is never good. As soon as you start scrambling, like, pencils down, stop everything, and, like, go back to first principles and figure out what you're doing. Like, in crypto, being like, all right, here's the solution. Let's just quickly stage a transaction on our gnosis. Safe is not the answer.
- [21:58]
B
Yep.
- [21:59]
C
That's never a good answer.
- [22:01]
D
So a good use of advice. I actually. I actually like that. No.
- [22:05]
B
Yeah.
- [22:05]
D
If you catch yourself scrambling. Take a second. Never.
- [22:09]
C
Yeah, Never scrambling crypto.
- [22:10]
D
I scrambled before.
- [22:11]
C
It just. It just gets. It just gets worse. Right? Like, it's like, oh, and there's so many foot guns in crypto. Like, there's so many things where you're like, I'm sure it's fine if we stage this transaction, so it'll just be a bit quicker when we want to do the execution and then unintended consequences. I think the good thing is I actually spoke with Namec yesterday. They've got a bit of a plan that they're putting together, and they might have already announced this to kind of try and make good with the community. This is one of the other challenges, right? You're trying to launch a chain. I'm sure, Luca, you get this. You're trying to launch a chain. And then you're like, okay, we're launching a chain, but we have to do this campaign. So you send two or three people off on this little side quest to go and launch the campaign, and you're like, I'm sure this will be fine. People have done TVL campaigns a million times, and then they never come back. And you're like, what happened? And they've been massacred out in the wilderness somewhere. And you're like, oh, okay, next time we'll put a little bit more thought into that side quest.
- [23:22]
B
That's such an accurate description of, like, crypto in general.
- [23:27]
C
Their bodies are like orange shreds. And you're like, what happened?
- [23:32]
B
We Never see that.
- [23:34]
C
What happened to the dudes? We said on that side quest, they never came back.
- [23:39]
B
Yeah, no, exactly. I do. I like the advice. Don't scramble. I also want to point out it could have been way worse. Like, all things told, yes, it was messy, yes, mistakes were made, but it could have been way, way, way worse. And I think, you know, at the end of the day, we should just take a moment to appreciate, like, no one got completely hacked, no one got completely wrecked. It was just a little bit messy, as crypto tends to be. So, you know, blessings.
- [24:08]
C
Yeah, exactly. Exactly. Yeah. I think take the win, which is no one lost money. People are just a bit annoyed and. And a little bit of waste of time. So Polymarket, we've talked about polymarket a few times the last few weeks. They finally had this CFTC green light for a relaunch in the US I should say. I'm a polymarket seed investor. So I'm a big fan of polymarket and Shane and I've been following this journey. I think it was like, call it eight figures, low eight figures, something like that, dude.
- [24:48]
D
Holy moly.
- [24:49]
C
Yeah, well, so. So it is interesting, right? So. So I've got a funny story about Shane. So in, I want to say it was like 2020, it was ECC in Paris, and I was like, hey, Shane, I'm having like a lunch with a bunch of friends. Like, come. These are crypto people. Like, you know, OG crypto people. So all completely insane. Like, every single one of them completely insane. And I was like, hey, Shane, come and meet some of my. My other friends. Like, you know, I'm sure they'll be super interested in what's going on with polymarket. Whatever. So we go to lunch and Shane turned up and he was there for like an hour. And just. He is just an insane person. Like, even by crypto standards. Like, his level of like reality distortion field that he lives in is like, insane. And so, so then he left and. And all my friends were like, that guy is insane. Like, completely insane. I'm like, I know, that's why I love him. He just does not care. He's going to get the job done. Doesn't matter what anyone throws at him. Like, this is a guy that the FBI raided his house and an hour later he tweets new phone. Who dis, like, just like, levels of like, not giving a fuck that are insane. So I'm very happy to see that the CFTC that came after Polymarket like four years ago has capitulated and said, actually this is fine. You guys can do whatever you want.
- [26:27]
B
Yeah, 100%. As they should. Because you know, this is, I mean.
- [26:34]
D
It'S probably going to go down as the greatest use, you know, one of crypto's greatest use cases and innovations. Right? I mean, has to be the prediction market. Obviously there's, there's some good narratives around that it's going to replace the financial infrastructure. I mean, who knows? But I mean, it's hard to say that like without crypto, Rails prediction markets wouldn't be possible. And it is completely changing the paradigm of the world. And, and he was one of the pioneers, if not the pioneer. I mean, Joey Krug won the cow. She guys, those cowshoot guys maybe deserve a little more credit than they get because they've been around a lot longer than I think people think. Though it does feel like they're just like totally grifting or on top of poly markets hype or at least like the whole marketing beef is just so lame and loser esque, but nonetheless, like I care.
- [27:27]
C
No comment on that one. No, not touched on that one.
- [27:30]
D
Okay. Those guys deserve some credit though, right? Because they, they've been around a while, so you know, kudos to them. But I mean, wow, what a fumble. I mean I, I remember looking at that. I wish I just really understood. I think I was buying the whole political Kool Aid. I don't know why I was being so naive, but it just hit me like a couple months ago, I was like, holy shit, wait, this guy, this business is going to disrupt all the businesses, right? There's like eight businesses where that thing disrupts. And, and the tan is, it might sound insane, but it's trillions. I mean it. So, so I, I mean, geez, what a, what a fumble. I wish I would have got in at any point.
- [28:12]
C
Yeah, I couldn't wait. Well, you know, so this, so maybe we can speak to this as well. Right? This is an interesting dynamic and this kind of was surprising to me. Most of the investments that, that we do at BOD are like token warrants, right? Like we do equity, but usually it's the token warrants or like safs, like literally like direct token deals. So for context, there's a whole bunch of ways that you can invest in a company. You, you can just invest in equity and hope that at some point something happens, right? That the equity is worth money. There's a buyout or, or something like that. You can, you can invest in equity and then get warrants for future tokens. So if a token launches you pay like a, A, you know, nominal amount of money and you get the token when it launches. Or you can do a saft, which is this, like, call it a crypto capital formation innovation, where it's a simple agreement for future tokens. And it just basically says, all I want is the tokens, bro. Like, just put the tokens in a bag. I don't want equity, I don't want any other nonsense. Just like, tell me when the token is launching. The interesting thing is when you do a saft, typically the tokenomics are already kind of locked down to some extent, right? So you know how many tokens you're going to get. There's usually no dilution, right? Like it's a percentage of the network, the 50, the future network that you're going to get. Whereas with equity, there is dilution, people issue more shares, right? So, you know, when in, in 2020, when we invested in Polymarket, there were, let's call it a hundred thousand shares, right? Then they did a round and then there was like 150,000 shares. Then they did another round, this 200,000, and another and another and another. And they did, I think maybe four or five rounds between the seed and where they are today. And so the dilution is actually like pretty high, like 75% or something like that versus a SAFT where it's like I get 1% of the tokens and it doesn't matter what happens between now and then. So, yeah, equity deals versus versus SAFs, definitely different outcome. Still a good outcome, but like very different outcome.
- [30:27]
D
It's still going to be great, dude. I mean, that thing is going 50 bill plus now, every ton tokens going 50 bill. Whatever it is.
- [30:36]
C
I just want the tokens. I've been waiting for this token for.
- [30:39]
B
Just give me the tokens. Put them in the back.
- [30:42]
D
He's got a double dip. I mean, he, he's a business that.
- [30:45]
C
Has to double dip.
- [30:46]
D
And when I say double dip, I mean like, you know, telegram it or. No, you got to do the token and you got to do the stock. There's no way you're not double dips.
- [30:54]
C
Yeah, 100%. I think it's a, it's a, it's a good one as well, right? Because there's different, different audience. There's like crypto degens using polymarket that want the token and then there's like tradfi that's like, help us figure out what the prices of things are. So, you know, very, very different audiences. All right, so in a moment, we're going to talk about Clarna's stablecoin launch, but first, quick word from the sponsors who make this show possible.
- [31:20]
A
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- [32:19]
C
All right, Klarna. So Klarna, which is a fintech company, we won't, we won't troll them too much for that, but they're getting into stablecoins, so we'll give them a little bit of credit. I think the founder of Klarna once was like, crypto is a scam or something like that. And now he's like, actually stablecoins are pretty good. So we're getting there slowly. So they have launched a USD backed stablecoin, RWA backed stablecoin. There's a bunch of people involved. So bridge, stripe paradigms, Tempo Blockchain is where it's going to be launched. Probably the most interesting thing to me that I am struggling to get my head around, maybe one of you guys knows, is they're launching it on Tempo's testnet. Are we launching stablecoins on test nets now? Like what? Yeah, it's fine. You just launch it on a test net. Who cares? Like what's. I don't know, it feels, feels weird. Why, like, we have so many networks. Why are we launching on a test net? I don't get it.
- [33:26]
B
I mean, it just, it feels like what Consensys grew up doing, which was these big, huge things with big, big traditional companies, right, that were on, not Ethereum, like on a sidechain or all or partially on Ethereum or it was like, you know, a little experiment that was on Ethereum that was going to be huge or whatever. And well, I think we all Know how those work out.
- [33:58]
C
Can you give us, give us an example of one of those?
- [34:02]
B
I mean there was like a JP Morgan one, right?
- [34:07]
C
Yep.
- [34:07]
B
There was also early days consensus we had. There were so many different little initiatives. Right. Because this was like when the world was waking up to blockchain as the technology, not as like the ico, not as the coin, but as this like global distributed ledger blockchain.
- [34:27]
C
That whole, that whole arc.
- [34:29]
B
Yeah, exactly. In the same way that like in a lot of ways companies are doing with AI, Right? Companies are like, how do we use AI to improve our business? The same thing was happening back then with the blockchain. And some of these things are worthwhile experiments because you learn a lot of things and you grow from them. Some of them are just, you know, they, a lot of people like try to patch on something to their existing business and then at some point everyone looks around and goes like, wait, why are we doing this? My question for like, we're obviously the industry on the whole is in a different position today than it was back then, but we're talking about, we're talking about Klarna, we're talking about Stripe, we're talking about Tempo, testnet, right? What's the trajectory of this, like, realistically, Right. Are they going to bring all of Klarna's everything on chain? Like, what exactly is the goal and how does this improve their traditional business? What does it unlock? You know, those are the questions that I always had before.
- [35:32]
D
Yield to more customers in probably different regions that they probably couldn't access. But the Klarna business, I never understood it. I don't understand most fintech businesses. Klarna is a, you know, 20% defaults right now. Right. So 20% of all the money that they're loaning out is defaulting.
- [35:50]
C
That's good, that's good for crypto. I almost feel like those are some good numbers to bring across the crypto.
- [35:56]
D
Side look, and it's publicly traded, so maybe it's a narrative thing and they're just trying to insert themselves in the stablecoin narrative and like, you know, distract people from the 20% default. I just don't know how a business sustain when you're basically giving away 20% of all of your revenue. That's basically just defaulting. Right. That buy now pains later never made any sense to me. But so there and 10 billions of enterprise value created for these businesses.
- [36:22]
C
So I'm, I'm, I'm still like, maybe I'm kind of overfitting here, but I'M still trying to get my head around how do you launch a stablecoin on a test net of a chain that's not going to launch for a year? What the is going on? Like, that doesn't make any sense to me. Test nets go down, testnets go down, they lose blocks. Like weird stuff. Like what?
- [36:44]
B
Like, because obviously the whole traditional business and Rails are not actually being powered by the testnet at this point. We are, we are in a transitional state, let's say where we are exploring things and seeing if this is possible and pushing the limits on the evolution and that, you know, I don't know. I.
- [37:15]
D
That's funny.
- [37:17]
B
We'll see. I, I also, I just, I really don't understand what. Again, what. Like, in order for this to be something that is a real unlock, right, There has to be some amount of like new value created or unlocked somewhere. And I'm not. That's. That's the missing element for me. If you tell me what that is, okay, then I might be on board with this.
- [37:44]
D
But hey, welcome to the world of narratives. This unlucky, that's the big unlock. It's right partnership and it's stable coins, right. Klarna is innovating, they're thinking ahead. Right? So the AI agents can just use Klarna seamlessly and then that's going to add billions of their market cap. That is the great unlock I love.
- [38:08]
C
You should do a promo video for them. That was actually, that was very well delivered. I like that. I reckon they put a suit on you, get you on cnbc. We could add a couple of zeros to the Clara market cap there. So speaking of test nets, Cardano. So there's, there's. I love trolling Charles. I can't, I can't help myself. Whenever anything Cardano comes up. I can't help myself. I. I'm supposed to be magnanimous about all chains. I have like a contractual obligation now to do that with Infinix. But there's some that I'm just like, I, I can't. So, so this, I love this because there's so much going on. There's like Charles on the timeline being. Charles being insane. This for whatever reason, so someone apparently vibe coded or vibe coding was involved in this exploit or a chain halt thing where they targeted the consensus mechanism and actually Charles's own proof of stake position, which is like the irony levels just keep going up and up and up.
- [39:27]
B
So.
- [39:28]
C
So the weird thing was this happened. The chain went down. Nick Carter described the incident. Incident as Someone vibe coding an exploit which brought down the entire Cardano blockchain. And then Charles said so. Charles is a founder of Cardano and erstwhile co founder of Ethereum as well, maintains this characterization is false and undermines Cardano's decade of formal methods and high assurance engineering. But like the chain went down, bro. I don't know what like is the issue that it was vibe coded or like someone wrote code that took the chain down. Like that very clearly seems to have happened unless I'm mistaken here before we even get there.
- [40:12]
D
I mean Kane maybe put a young buck on game. How. How does, how does this even happen?
- [40:17]
C
Right?
- [40:17]
D
How does this. Like because there's dino coins, there's guys that are early. Like how. Because it, to me it just, it's been ridiculous since I've been in the space since 2017, but I don't know the lore and obviously he sold the whole Ethereum that Ethereum co founder badge man, straight shot. If you didn't make billions on Ethereum, you made more billions on the other thing. Yeah, like how does this even, like how does this nonsense even stick for this long? You know, this just seemed like obvious that that's nonsense. So like what's going on here, Tommy?
- [40:48]
C
So, so I think there's a. I had a very interesting conversation with Robert Leshner, the founder of Compound about a year ago, right? And he had this very interesting take of this thing, especially in the Ethereum community that he calls chain racism, right? And basically it's like all of the OG chains that are kind of what we in Ethereum would call nonsense chains, right? Like chains that don't do anything. They used to be called zombie chains, whatever. Like they don't produce blocks or like there's no transactions in the blocks or whatever. And he was like XRP actually works now. Like there's a whole thing and you can do stuff with it. And, and I actually went and had a look at it and I was like very surprised to find out that it does work. And I think for a while Cardano had this, you know, it was like perennially unlaunched. It was like it's just about to launch, like just one more month of development and then it kind of launched. And like a lot of chains didn't get much traction, but like it is live, which is why I think it going down is because someone did something with their consensus, caused a chain split. I mean we had the balancer hack that we talked about last week where there was some theory that this hack was maybe augmented with some AI coding tools. I don't know. Tay, what are your thoughts on AI on blockchains? Is AI going to kill all of our chains? What's the deal?
- [42:22]
B
No, no, unfortunately not. No, I mean, like, specifically in the Balancer situation, the story that was being told was that because the hacker left comments in the code, and the comments sort of like, had a bit of a vibe code like, aura around them. People were like, oh, the hack was vibe coded. I personally, I don't even think that the comments seem like they were AI comments. I think they're human comments. I have no idea why the hacker left them in. That's unusual. But, you know, then the second story was that was all the AI companies who are trying to shill their product or service, we're like, we detected this. We would have spotted this. Balancer should have.
- [43:18]
C
That was the worst.
- [43:19]
B
And that's always the case. Like, it is. You will always have this like, vendor ambulance chasing thing. Right now it's just so centered around AI and because there's actual innovation happening in AI and things are actually being done, it's a bit harder to discern when the AI is actually being useful and when it's like just more vendor slop. Right? And they're like, we would. Okay, if you would have detected it, like, you probably should have done that, bro.
- [43:48]
D
Yeah.
- [43:48]
C
Why didn't you do something about it? Well, I think the. So, yeah, for context, one of the. One of the AI security vendors, right, Was like, oh, this Balancer hack is like, so unfortunate. We told you guys about this. It's right here. And everyone was like, what are you talking about? You didn't tell us about. And they're like, yeah, yeah, okay, okay. We didn't tell you about it.
- [44:12]
D
They're fine.
- [44:12]
C
Sure. That that's not what happened. But we could have told you about it if we had known. And then it was like, what? Like you could have told us about. But what are you saying right now?
- [44:24]
B
But you didn't.
- [44:26]
C
But, like, in theory, we may have, like, in theory, our software could discover this hack. That's all we're saying. We're just saying in theory we could have prevented it. And maybe we chose not to. We don't know. And then it was like the homer, like, fading into the page. They just disappeared. Like, delete your account and pretend, like, as they.
- [44:46]
B
Shut up. By the way, I asked. I asked ChatGPT on day one of the drama. I, like, dumped a bunch of the tweets in. And the reaction, I was like, what should I do. This is my company. What should I do? And ChatGPT was like, 72 hours. Do not go on the Internet. And for the Nexus.
- [45:04]
C
That seems like, crisis.
- [45:06]
B
I was like. And then it had a little rationale, but that was like, it's number one advice. It's like, let me break it down for you. And then, of course, for the next 72 hours, they kept coming back on Twitter and trying to, like, defend their position.
- [45:19]
C
No, no, no. I didn't get it. What we're saying is we couldn't have worked this out and that was. It was the opposite of what we were saying. Yeah, yeah.
- [45:29]
B
So I will say, though, that there is a whole portion of, like, vulnerabilities and of coding and like, like a whole spectrum of work that can be. That can happen, like, way faster with AI. So you still have to have, like, everything in the right positions. You still have to have people, you still have. You still have to have all of this, right? But it can really just make the turnaround time and the iteration time, like that feedback loop. Whereas with a lot of technical things, historically, you're sitting there alone looking at this code or trying to figure out if there's something there. And one of the techniques that you learn when you're doing this type of work is to talk to yourself or go for a walk and talk to yourself, or pick up the phone and talk to someone else. The AI almost channels that in a way more efficient way and also in a way that vibes with asocial engineers a lot better.
- [46:33]
C
Just having a conversation, being like, hey, show me this. What do you think about this?
- [46:37]
D
Right?
- [46:38]
B
And so that's, I think, what, like, with this bug or with this thing that happened, right? It's not that the AI went out on its own and, like, figured it out and then broke Cardano. It's like this guy that had, like, deep expertise and deep experience, that understood the ecosystem and had all this stuff, like, was able to successfully execute this thing, like, actually do so with the help of AI in various parts of the process. I think also one of the reasons he's saying this so loudly that he was like, saying, like, yeah, I was. Part of this is because his. The, like, part of the base of his claim is that he. They didn't really, really realize that it was actually going to break all of Cardano.
- [47:28]
C
Which there's. There was. There was a vibe of like, DevOps199. So. So there's. There's this story from, like, I guess it's 2018 that this happened, if I'm not mistaken, where there were maybe even 2017.
- [47:50]
B
There's 2017.
- [47:51]
C
Yeah, yeah, 2017.
- [47:53]
D
We.
- [47:53]
C
We had multisig wallets, right? There was this multi sig wallet that had been built by Parity. And basically this is kind of similar to the mega thing, right? Like you have three people who sign a transaction and then someone executes it and it. It's sent on chain. But the way that the parody. And you jump in here, Tay. But the way that the parody hack happened or freeze effectively is this guy was just playing around, submitting transactions, like testing stuff out, and basically bricked all of the wallets with like hundreds of thousands of eth in them. Like every single parody wallet got bricked.
- [48:37]
B
Yeah. And then he goes into the GitHub and he goes, oh, God, I'm gonna mess up the quote. But I think he goes, like, I accidentally killed it.
- [48:52]
C
The smiley face of like. Like, did I?
- [48:57]
D
Yeah.
- [48:58]
C
And then.
- [48:58]
B
Yeah, and then of course, the getter. Because back in the day, all the GitHub conversations were like mapped to the GitHub channels. So then everyone on Gitter was like, oh my God, he actually killed it. And it was a big debate. There was like a lot of, you know, it's still to this day not 100% certain how. How knowledgeable the actor was, but it doesn't really matter if it was, you know, I mean, it matters to a certain extent, but like, for the parity multisig wallet to be in that position in the first place was a big problem. In the same way that Cardano being in this position in the first place is a big problem. The fact that it's even slightly plausible that someone did something truly accidentally is a problem. Like your system should not be accidentally.
- [49:50]
C
Take down chains, you know, and then.
- [49:52]
B
I think it's a separate conversation. If we want to talk about the people behind these and their intent, that's a separate conversation. But in terms of, like, lessons learned for big protocols and things that hold money. Yeah. We should avoid people accidentally killing our things.
- [50:09]
C
Yes, that should be definitely one of our primary things to avoid. All right, so next. Next topic. Bear Chain. It feels like we're just talking about chains. It's chains all the way down here. All the chains have been the protocols, protocols.
- [50:26]
B
Do some stuff.
- [50:28]
C
Yeah, yeah. So Bear chain gave a 25 million dollar refund, right. To Brevin Howard. To Brevin Howard's fund. So Nova Digital, they got this refund clause on their series B investment, letting it reclaim cash, post TG and If I'm, if I'm not mistaken, it goes for a year. They had this one year clause of post, post TG refund. I'm not sure exactly how this works, the strike price tenor of it or whatever, but I've. I don't think I've seen this before that I can remember.
- [51:12]
D
Right.
- [51:13]
B
That was my question. Because there's two different sides to the conversation that are. Is happening on Twitter right now. The first is whether or not this clause is legal, is fair, should there be any transparency, et cetera, et cetera, et cetera. And then the other part of the conversation is like, which isn't really. You know, there's like a bit of speculation, but I wasn't able to find anything really hard on it. Like, are these types of side deals in series rounds normal? Because when I raised my rounds, that was definitely not a thing that. I mean, like, there were no special terms given.
- [51:56]
D
If anyone wants to take my money under those terms, just ping me, I'll give you my money. I will say, I actually want to chime in on this one. Wow. I feel bad for Smokey because I think he's incredibly bright. I don't know if you've ever interacted with him, Kane.
- [52:12]
C
Yeah, no, I love smokies. He's a good guy.
- [52:14]
D
He's a super good dude. So. And he's gotten some bad beats. You know, bad beats obviously, you know, turn people into, into savages. So hopefully he, he turns it around and, and he, he takes them on the chin and comes back bigger and stronger. I, I'm rooting for him to do that because I think he deserves it. One of the few, one of the only people I've ever been on a panel with. And I listen to him, I'm like, oh, finally there's like a dude that's like, really? That I'm like impressed by listening to. Usually most of the time you sit on these stages and they're just like, ah, it's fucking go. It's. It's horrible conversations. Smokey is one of the few where I'm like, I'm on a panel with Smokey. I'm super happy because I know we're going to have a good convo. So I think he's incredibly bright. And then on the Brevin Howard side, I mean, you know, if you can pull it off, pull it off. I mean, at the end of the day, their fiduciary responsibility is not to anybody that they're investing in. Their fiduciary responsibility is stay within the Legal guidelines and return capital to Brevin and Howard, you know, and. And. And, yeah, it's a shark of you know who. Well, shock.
- [53:11]
C
You can pull it off.
- [53:12]
D
I do that deal any day of the week. Anybody wants to ring me for some money, right? Check.
- [53:17]
C
Check in on here. Because I reckon he's had a rough 24 hours going. Wait a second. You're telling me that I could have been forcing people to give me refund rights? Like Brevin Howard comes in and they're like, no, no, no, no, no, no.
- [53:32]
D
We.
- [53:32]
C
We're gonna.
- [53:33]
D
We're gonna.
- [53:34]
C
We're gonna cook something really special.
- [53:35]
D
No, but there's a couple guys, Brevin Howard being one of them, Kyle probably also being another, that could. Could yield that if they wanted to.
- [53:42]
C
Right.
- [53:42]
D
Like, I do think there's some reputational blowback. Right. Like, obviously, some people look at that strange, but to be frank, this is business, and if you can do a good deal, do a good deal, Kyle could do that. You know, Kyle probably actually the last 24 himself, he's like, that's a guy who could do deals like that if you wanted to, just because of his cachet and what he's been able to, you know, at least in the eyes.
- [54:02]
C
Of a lot of people. Yeah.
- [54:04]
B
Okay, but are the other investors in the round? I'd be furious alone like that. But don't have. I mean, these, These. It's a. It's an agreement, right? You have agreements around the.
- [54:20]
D
50 million bucks?
- [54:21]
C
I'd be livid, dude.
- [54:23]
B
Okay, so, like, when we did our Series A, right? Like, there were terms in the Series A that were clearly, like, it was boilerplate language, but it was like, there are clearly terms. That was one. Making sure that if I did anything funky with anyone else, they knew about it.
- [54:39]
C
Yeah.
- [54:39]
B
And then also terms that said, like, if I. If I somehow. If something came up where I made a future offer to basically anyone under any terms, I would have to write of refusal.
- [54:51]
C
Yeah, all that stuff. Exactly.
- [54:53]
B
Right. And what in the reason for that, in my understanding, is so that it's like a forcing function so that I can't. You can't, you know, and. And it makes the whole process more efficient because if every single investor in a round has to basically be like, running around making sure they're getting the best possible deal, deals don't get done. Whereas if you're like, look, okay, we all agree this is the deal, as long as we know all the. All the information that's on the table, like, you know, and if you're gonna. If. If something happens and you somehow end up in a situation where giving someone special terms, like, you have to make the offer to me, and that's like, such broad coverage. I don't understand how that wasn't how none of the other investors in the round had those terms, which would then make the offer. Like, the special terms given to. To Brevin Howard at least have to be disclosed, right?
- [55:43]
C
Yeah, exactly. At least. So, look, I don't want to sound too crazy here, but what if we had a system that was transparent and we could put a contract like this on some kind of a chain so that everyone could see it, and there was no way that, like, literally, like, meatspace law is like, so adversarial, right? And you know, the whole point of smart contracts is like, here's the contract. It does the same thing for everyone. Put your money in, you can inspect it and hopefully it doesn't lose everyone's money. But aside from that, like, you put your money in, the terms are clear. It's transparent. Everyone can see. See it. Like, there is. There is very much an argument for like, do an ico, bro. And everyone can see the deal. Like, yeah, when you're doing, you know, these equity deals, side deals, weird stuff, like, at the end of the day, you can't really stop anyone from doing anything. Like, it's the law, right? Like that. The only recourse is, like, going. And I'm sure that some of the other investors are like, well, let's go get some lawyers and sue these guys, you know? But then it's a whole thing. It's a whole, like, now you're in this whole. You're suing like a family.
- [56:56]
B
That's really bad.
- [56:57]
C
Yeah, it's really bad. So, yeah.
- [57:00]
B
And. And that's why I'm just shocked that. I don't know. I think. I think there were like, a couple lawyers on the feed who are like. And even the ones that commented in the story were like, they kept prophesying, assuming that we see that we know everything, assuming that this is like the full collection, right? This is weird. Etc. I'm in that same boat still. What? Like, how did you know? These are all people who are pretty sophisticated. We're not like, the other investors in the round aren't retail, right? How did. How did this happen?
- [57:33]
C
I'll tell you exactly how this happens, right? This is founder psychosis. And again, I don't know anything about this, right? But someone comes to me and says, hey, I'm going to give you 25 mil. But all I want is this refund, right? In case the price. Price goes below a dollar. And as a founder, you're like, well, that'll never happen, so this is fine. This will never be a problem. The end. And then you write the thing. You're like, whatever I need to do. Sure. And then two years later, you're like, oh, okay, fuck, this is bad. Like, founders do crazy stuff, and they're like, this is just. It's like a little. You know, there's a fine line. Matt Levine talks about this a lot the time, right? There's a fine line in founderland between, like, crime and, you know, just, like, irrational exuberance, right? Like, the line is very gray, and it's like, no, no. Like, this is it. This is fine. Like, I just need to do this. These guys are asking me for this unreasonable thing, but it's never going to happen, so it's fine.
- [58:31]
D
And. And I think I can empathize and put myself in his shoes and, like, tell myself that story and be like, yeah, we got it, right? Like, I can see that one thought. Like, I. I can understand it. Like, the way that you just framed. I could be like, yeah, like, yeah, we just raised at 1.5. What do you mean?
- [58:47]
C
It's crazy. Like, as if it's going to be 200. Like, this is not a real. This almost isn't even real.
- [58:54]
D
Poor Smokey. I hope this is the bottom. I really do. That's a talent. That's one of those talents you don't want being, like, pushed away and do.
- [59:00]
C
It like, you know.
- [59:01]
D
You know you don't want that.
- [59:03]
B
I mean, I'm hoping that. I'm really hoping that some. There's some. Some piece that's missing to the story that gives a little bit. Like, that explains how this all happened because. Because, by the way, Luca, even if you did that right, your lawyer would then be like, yo, Luca, you can't do that, right? Like, you have. You know, you have responsibilities and agreements.
- [59:26]
C
Say no to lawyers. You can say, thanks for the advice. Like, a lawyer will be like, this is my advice. And you can be like, cool. But, like, I don't care.
- [59:35]
D
My lawyers are too aligned.
- [59:36]
B
They'll quit.
- [59:37]
D
I. My lawyers are on my cap table, right? So lawyers would be like, we're not going to jail for you, man.
- [59:42]
C
It's not happening.
- [59:44]
D
We got.
- [59:45]
C
Yeah, yeah.
- [59:46]
D
Line your lawyers with some equity so that they can. So they can, you know, so you guys can fight.
- [59:51]
B
That Feels magazine. Yeah.
- [59:53]
C
I don't know.
- [59:54]
B
I think, I mean, it ultimately comes down to, like, whether they're right. If he had terms with other investors that he did have to disclose or extend those special terms, then feel like we're firmly in territory where you're living, like, maybe, maybe.
- [60:07]
D
I'm going to be honest, the. The more I stay in this space, the more that I realize that the majority of venture investors are really just retail with a large check size. Like a lot of you guys that have the brightest. So, you know, maybe it did just get away from everybody. And that's like one of those areas in. There's probably one of those stipulations, like, first right to refuel. It's probably one of those things you have a conversation on and. And you, you know, one VC is talking to one guy, and they're just like, screw that. You know, he's leading. You know, this not being a legal thing and, you know, this being carved out and then one guy coming in with a $50 million check being like, I'm leading him, figuring out those terms with Smokey, then Brevin and Howard piling in. You know, I can see that happening, right?
- [60:49]
C
You can imagine you get much VCs being like, sure, give him like, you, like, okay, Talk about a founder being like, oh, this is fine. It's not going to happen.
- [60:58]
D
Right?
- [60:59]
C
You can even easily imagine a VC being like, yeah, like, that's never going to give him whatever here revenue.
- [61:07]
D
Howard wants to join the deal. Yeah, screw that clause. Let's just get more names a part of that.
- [61:12]
C
Want some more big names? Get some more big names involved.
- [61:14]
B
All right, I see. Thank you for the reality chat, guys. I appreciate this.
- [61:18]
C
Yeah, yeah. Everyone involved is like, this is fine.
- [61:22]
B
The sit, but also, like, I don't know exactly the timeline, but like, it was like, once you're in, if you're in, like, 2023, 2024, even 2025, 2026 is so far away. Like, we don't. We'll cross that bridge when we get there.
- [61:36]
C
Like, so it may not even happen. We may not get to 2026. Like, it's. It's like not even. Not even a real, real time. So, yeah, I think. I think that is pretty good for this week. I think we can probably wrap it up if you guys are. Are okay with that. So that's it. Good episode. A lot of stuff. Let's hope we have some more chains doing crazy stuff this week. Seems like all the chains are doing. Doing crazy stuff, so I'm here for it. So thanks for tuning in. If you like this episode, follow us on the Unchained feed on X YouTube or wherever you get your podcast and we will see you next week.