Uneasy Money: Why the Broken Pre-IPO Secondary Markets Won't Be Fixed Anytime Soon

Summary

Podcast Summary: Unchained – "Uneasy Money: Why the Broken Pre-IPO Secondary Markets Won't Be Fixed Anytime Soon"

Host: Laura Shin (Note: For this episode, Kane Warrick leads with guests Taylor Monahan and Luca Net)

Date: May 15, 2026

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Episode Overview

This episode dives into the wild world of pre-IPO secondary markets, particularly focusing on the recent moves by Anthropic and OpenAI to void trades of their shares on secondary platforms. Kane, Taylor, and Luca break down why these markets have gotten so messy—spanning SPVs (special purpose vehicles), rampant fraud, synthetic crypto assets, regulatory challenges, and what the future holds for both startups and investors hungry for early access. The conversation veers into adjacent topics like synthetic assets in crypto, the explosion of synthetic pricing for non-public shares, the Circle ARC token drop, and the ongoing drama in DAO-based governance and DeFi hacks, tying everything back to how crypto is changing the structure of markets.

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Key Discussion Points and Insights

1. Why Pre-IPO Secondary Markets are Broken

• SPV Proliferation and Fraud

  • The demand for hot AI company shares (like Anthropic and OpenAI) has led to endless SPVs, which are repeatedly sliced, resold, and sometimes impersonated for fraud ([00:43]–[04:46]).
  • Kane: "It's far easier and arguably more profitable to satisfy the market by selling them rocks with anthropic written on it, which is, I think...what is driving some of this...there's just like so much fraud going on, so many scams, so many things that they have to actually, you know, drop the hammer on this and say, like, we are going to void these, like, stop doing it." ([02:58])

• Operating Agreement Loopholes and Company Responses

  • Luca shares a real-world example of Pudgy Penguins facing predatory secondary sales due to a flawed operating agreement ([05:18]).
  • Luca: "My operating agreement had allowed for such a transaction to occur. And my question to Anthropic and to everybody here is, you know, did Anthropic's operating agreement allow for such sales?" ([06:03])

2. Legality, Control, and Infinite Demand

• Company Constraints and Resulting Market Oddities

  • Companies want to control their cap tables and avoid unwanted secondary sales, but immense demand, combined with new financial vehicles and opaque marketplaces, make this nearly impossible to manage ([07:03]–[08:27]).
  • Kane: "...the only way to actually legally easily satisfy the market would be to IPO, which they refuse to do...They're stuck in this weird situation." ([07:28])

• Legitimate Platforms Also Impacted

  • Even platforms like Forge, generally seen as credible, are swept up in the move to void these trades, raising huge questions about enforceability and investor losses ([10:05]).
  • Luca: "...nullifying investments from place like Forge is very concerning...Like, how legitimate is this and who is liable?" ([10:51])

3. Fraud and Gray Markets: Separating Signal from Noise

• The Dark Side of Pre-IPO Shares
  • The team describes WhatsApp groups and DMs acting as backdoors for shady, unvetted deals—a “trust business” often missing real trust ([04:11]–[09:00]).
  • Taylor: "Like, it's assumed that everyone's a scammer in a certain sense. And so you escrow it because...ultimately you're going to do the transaction pretty quickly." ([09:10])

4. Enter Crypto: Synthetic Markets for Pre-IPO Shares

• The Double-Edged Sword of On-Chain Markets

  • Pre-IPO exposure exists fully synthetically on platforms like PreStocks and Ventuals (on Solana), which can trade at wild multiples to any “real” valuation ([12:41]–[24:54]).
  • Kane: "The interesting thing about a synthetic asset...is that you can't necessarily claim the [underlying], so you can't redeem it..." ([15:21])
  • Taylor: "Perps...just becomes this market in itself...And it's just like another layer...adds complexity...especially [for] pre IPO stocks." ([22:50])

• Synthetics Erode Company Control

  • Once perpetual/synthetic markets exist, companies lose all pricing control, just as crypto founders do today ([29:46]–[33:45]).
  • Kane: "If people start to believe that these synthetic per markets are the price of Anthropic, then...you have a continuous price that you have no control over. And unfortunately...this is going to happen. It is inevitable." ([31:45])

5. Why Companies Hate Continuous Pricing

• IPO Reluctance

  • Public markets and continuous spot/synthetic pricing force companies to endure public volatility and pressure, incentivizing them to remain private as long as possible ([34:48]–[36:55]).
  • Kane: "It is unequivocally not a better situation to IPO...It used to be that you had no choice...That is no longer true. So why would you ever IPO...Unless the government mandates that you must IPO." ([34:48])
  • Taylor: "It's exactly what you said. It's just generally better to have like a handful of aligned investors who you keep happy because the price of your stock gets updated once every couple years..." ([36:01])

• Broken Market Structure

  • With enough private capital and synthetic markets, there may soon be gigantic private companies dominating global value creation ([36:55]–[37:11]).
  • Kane: "...the shift away from public markets as the primary place for liquidity has broken market structure somehow. The incentives are completely inverted now." ([37:14])

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Notable Quotes & Memorable Moments

• On SPV Arbitrage and Market Dysfunction:
  • "It's SPVs all the way down." — Kane ([01:35])
• On Fraud:
  • "The issue is that, like, it creates...a whole spectrum of different sort of vehicles, some of which are 100% just outright fraud." — Taylor ([04:46])
• On Why Continuous Market Pricing is Inevitable:
  • "This is going to happen. It is inevitable. I'm so confident this is the way the market goes...we will just have continuous pricing on everything that is in demand." — Kane ([31:45])
• On Synthetic Pricing’s Emotional Impact:
  • "If people start to believe that these synthetic per markets are the price of Anthropic, then...your employees also don't have a scoreboard, right? Like once every six months they just get like 5% richer...But if we have a world where anthropic has a continuous perpetual price...then you don't have this like slow ratchet up of pricing." — Kane ([31:47])
• On Why Startups Don’t Want to IPO:
  • "It's just generally better to have like a handful of aligned investors who you keep happy because the price of your stock gets updated once every couple years..." — Taylor ([36:01])

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Timestamps for Important Segments

• [00:43] – Opening context on secondary market chaos for Anthropic and OpenAI.
• [05:18] – Luca’s personal story about secondary sales and operating agreements.
• [10:05] – Impact of nullifying trades on legitimate secondary marketplaces (e.g., Forge).
• [12:41] – The advent of synthetic pre-IPO stock markets on platforms like Solana.
• [14:24] – Explanation of synthetic assets, oracles, and perpetuals.
• [29:14] – Why synthetic markets (and their customers) may not align with best company interests.
• [31:45] – Why continuous market pricing is now unstoppable.
• [36:01] – Downside for startups of going public; incentives for staying private.
• [37:14] – Market structure fundamentally changing as liquidity migrates to private/secondary markets and crypto.

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Additional Segments

Hacks and Security: The AI-Augmented Threat Landscape

• [40:37]–[58:48]
  • Discussion on the record number of crypto and Web3 hacks, the suspected role of AI in enabling more sophisticated attacks, and a deep dive into the new exploit trends, including supply chain worms and LLM-built malware.
  • Taylor: "We're getting to a point where the focus is on basically containing the blast radius at all points instead of trying to like secure it up front..." ([48:55])
  • Kane: "[On using agents to detect attacks:] It's like, you guys are idiots. The way that you're going to solve this problem is not the right way to solve it. Let's solve it this way." ([52:18])

Circle ARC Token Drop: A New Era of Token/EQ Disjunction

• [59:40]–[65:17]
  • Surprise Circle $220M ARC token drop reveals the odd world of public company tokens, new business models, and commingled interests of token and equity holders.
  • Luca: "At the end of the day, like, the Circle buyer is not the arc token buyer. And so go create some tokens out of thin air, add it to the balance sheet, beat earnings..." ([59:53])
  • Kane: "It's just very antithetical to our like OG Erie roots I think. But here we are." ([66:17])

DeFi Governance and Legal Recovery Drama (AAVE/Arbitrum)

• [66:23]–[74:51]
  • The saga of AAVE, Arbitrum, and Help DAO: courts, DAOs, questions of ownership, on-chain distribution, and the hard problem of legal and practical recovery in decentralized systems.
  • Taylor: "...if the judge...rocks how on chain recovery flows work...it's a perfect 1:1 map based on facts and based on the ownership that got them into that position in the first place. I think it could be very interesting...it's so much better than every other situation in the world." ([73:07])

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Takeaways

• Structural Change Is Here: Everyone wants exposure to the most in-demand private companies, but the tools to access that are full of risk, deception, and rapidly evolving synthetic markets.
• Synthetic Markets Can’t Be Stopped: Whether companies like it or not, “on-chain” perpetuals and synthetic pre-IPO exposure are here; they will soon define pricing narratives.
• Fraud Will Flourish Without Better Controls: Even well-intentioned platforms are hard to police—there is no perfect filter for trust.
• Staying Private Has Never Been More Appealing: Companies can now access so much capital without the scrutiny and volatility of public markets that IPOs are increasingly obsolete—unless regulators or governance structures force change.
• Crypto Eats Everything: Synthetic assets, perpetual trading, agentic infrastructure, and on-chain governance are infiltrating all asset classes and forcing a rewrite of the old rules.
• Security Remains an Unsustainable Arms Race: As AI turns up the heat in cybercrime, only more robust, agent-driven, real-time defense will save projects—manual security is not sufficient.

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This episode is a must-listen for anyone interested in the intersection of private company finance, crypto innovation, and the new pitfalls and opportunities every step of the way brings.

Transcript

[A]

Hey everyone, I'm Kane Warrick and welcome to Uneasy Money. Because what happens on Chain never stays on chain. Before we begin, here is a word from the sponsors that make the show possible.

[B]

Multichain Advisors is an emerging technology growth firm that has helped create 50+ billion dollars in enterprise value for 80+ clients over the past four years. They're the partner to help navigate markets, build real traction [e-mail].

[A]

hey everyone. I'm here with my co host Taylor Monahan, security expert and Luca Net's CEO of Pudgy Penguins. Welcome guys. How we doing?

[C]

Hey. Hey.

[A]

All right, so our first segment is one that is a slightly different angle on the AI war. So Anthropic and OpenAI are now saying that they are going to void the trades that have been happening on secondary markets. So for context, for the last year there's been this raging roaring trade of people putting Anthropic in OpenAI as well as other free IPO shares. But you know, Anthropic has been one of the big ones, right? And they basically put the shares into a special purpose vehicle or some other entity and then they slice them up and then they sell them and then the people that buy those put them into a different SPV and then they slice them up and then they sell them, et cetera and so on. SPV is all the way down. Now the interesting thing about this is I've been, as I'm sure everyone in the world has been via email or WhatsApp or whatever, offered these opportunities, you might say, many times. And while I am, I have a sense sometimes when something is a little bit off. And the, the, the reason why this trade felt not great to me is I, I kind of had this sense. It's like they're selling you something that will only go up, right? Like now of course there's, there's risks with any, with any company. But like these pre IPO businesses are not like the olden days pre IPO business, they're like post IPO businesses that are almost too big to fail in some cases. Like Anthropic has gotten in a fight with the government. That's not how pre IPO things used to work back in the olden times. So we have this weird situation where many companies are staying private for much longer than they used to. People want exposure to it and people are satisfying the market. Like there's a bunch of people who want to own Anthropic and people are like, ah, now the funny thing is you can satisfy the market for something in many different ways. You can satisfy it by actually giving the people what they want. But it's far easier and arguably more profitable to satisfy the market by selling them rocks with anthropic written on it, which is, I think I, I, I have to imagine what is driving some of this, right, that it's gotten so frothy and there's now like reputational risk associated with the fact that like everyone's grandmother is buying anthropic stock. I eat rocks with anthropic written on it. And there's just like so much fraud going on, so many scams, so many things that they have to actually, you know, drop the hammer on this and say, like, we are going to void these, like, stop doing it. Right. So, yeah, I mean, here we are.

[C]

Yeah. And I think part of it is, I mean, as you said, right, the market is demanding this, like, people want this stock. Like, there's been some crazy people out there who I've been going to great lengths to try to get it right. And so of course someone's going to fill that g, that, that gap. The issue is that, like, it creates, like in this situation, it's created a whole spectrum of different sort of vehicles, some of which are 100% just outright fraud. Like outright scams.

[A]

Like very, like, yeah, yeah, the WhatsApp ones. I mean, Luca, you, you are somewhat of an aficionado. Gray market transactions. What's, what's your take on this? How, how do you, if someone turned up and they're like, I have the handle, I don't know, he man to sell this movie studio that has like the he man movie, like, how do you like, separate the grifters from people actually doing a thing?

[D]

So I had a situation like this happen to me. When we first bought Pudgy, we kind of consolidated the cap table accordingly to the two and a half million dollar purchase price. There was basically four co founders, as people know us today, but there's actually a fifth, the fifth one, after our seed round, went and started procuring sales for the equity at the valuation that we had recently got. And he was selling it to like a really predatory group that was like, known for being an infamously anti founder, anti pro, you know, just dumpers, Right. And when I had caught wind of this, he was trying.

[A]

Multicoin, isn't it?

[D]

No, I'm joking, I'm joking.

[A]

I'm totally joking.

[D]

He was trying, he was trying to do this behind my back. And when I had found out, I went pretty ballistic, obviously. As you can imagine. And the flaw was actually in my operating agreement. My operating agreement had it allowed for such a transaction to occur. And my question to Anthropic and to everybody here is, you know, did Anthropic's operating agreement allow for such sales? Now, typically, they don't. Typically, it needs board approval at. Today, if somebody in Igloo tries to sell Igloo shares, it has to get my explicit approval. And if it doesn't, you cannot sell any Igloo shares. And I've had people come to me, you know. You know, I've had other people throughout the years, like, try and get, you know, 100 grand of liquidity or 200 grand of liquidity, and I nix it every time. Like, you're either here with the ride or you're not, and you get liquidity when everybody else gets liquidity.

[A]

I'm a couple of emperor penguins. Show up at their door and rough them up a little bit. Right?

[D]

Rough them up. And so the.

[A]

The.

[D]

It really comes down to this comes down to, is it allowed in the operating agreement? And if it is, then I think Anthropic.

[A]

But I. I think even. Let's assume for a second. Right. That it's, like, totally allowed or even encouraged. Right. It. It seems like something has broken in this market. It is like, you know, there's so much demand and not enough supply to satisfy that demand that people are inventing demand. And you. You could argue that they might be, like, they might have to stop it even if they wanted it to happen, because they have no control over it. And therefore, they're in. They're stuck in this weird situation where, like, the only way to actually legally easily satisfy the market would be to ipo, which they refuse to do. Yeah. Yet. And.

[D]

And the interesting conundrum here is if it is allowed, like, you going and saying this, like, Anthropic, I think, will be ultimately liable. You can't backtrack something that was allowed, I think. But to your point, k, There is an opportunity here for an entrepreneur somewhere, because that whole secondary SPV model is broken. And I can tell you, even if I do allow it, like, you do want to be able to kyc your shareholders, like, last thing you want is North Korea buying $500 million. You know, even if it is.

[A]

Or, like, you don't want to be.

[D]

Right. And so it's an. It's an interesting situation. My take on it is there definitely was a lot of fraud going on. I mean, WhatsApp groups, I'm. I'm Never. I'm never going to be put into a group or make an investment based on a group chat if I don't know explicitly know the people and trust the integrity of the person on the other side. So that's just like me, the handles business to the, you know, metaphor or to the, to the analogy that you were making is a very much a trust business. So usually have some sort of intermediary, like somebody, it's very like almost crypto

[A]

cypher punk, some other guy with a really good handle. Yeah, this guy is legit, right?

[C]

Yeah.

[D]

Well.

[C]

And you escrow, right?

[A]

Yeah.

[C]

Like it's assumed that everyone's a scammer in a certain sense. And so you escrow it because you, because ultimately you're going to do the transaction pretty quickly. Right. Like there's going to be an exchange of two things in a fairly quick manner. The issue with some of the vehicles for these sort of like pre IPO stock situations. Right. Is it's a lot of times it's very unclear what the actual transaction is. Right. Like you're buying future stock, you're buying future access. Right. Like a lot of times the secondary markets, the original investor is going to like receive their allotment right down the line.

[A]

They will.

[C]

Yeah.

[A]

And then it has to.

[C]

And then there's like a secondary. Yeah. And so that's typically how it works.

[D]

The, the interesting part about this is it's not necessarily the group chats that got targeted. It's like you have secondary marketplaces. Like I've used. I made estimates on Forged. The fact that they're nullifying investments from place like Forged is very concerning. Right. Because like in the spirit of what I said a second ago, which is like, there's an opportunity for an entrepreneur. Actually entrepreneurs have caught this opportunity and secondary markets do need to be fixed platforms like Forge, which do, you know, billions of dollars in volume, like are supposed to be the safe place for secondary transactions. If they nullify those, it's a huge shake up. Just in general, like it's going to shake a lot of people up in a lot of different sectors and have a lot of big ramifications because there's no way that you're buying something as credible as Forged. For example, you know, buying a. Like I would go and do. I mean, I would call my lawyer immediately if for some reason Forge didn't fight this and just conceded and be like, dude, I got a couple hundred grand in Forge secondary transactions. Like, how legitimate is this and who is liable? It's going to have Some really nasty.

[A]

It will be chaotic. Right. Also, but the problem is, right, my, my read on this is like, okay, you have a legitimate place, right, that, that is offering, you know, KYC all, like all above board legal documents. Like, it's a, it's a, you know, proper marketplace. Right. Two things can happen. One, someone can go onto that marketplace, buy, buy them, buy shares and then rewrap them and sell them in WhatsApp. Right? That's the first thing. And be like, no, no, no, I bought these on the like, legitimate place that, you know. And, and you're not really vetting the buyers. No offense, Luca, but you're not really like, you know, scrutinizing the buyers of these shares. Like anyone can come on and, and go through the process and buy shares and then turn around and, and flip them on secondary, right? Or tertiary or tert. Yeah, yeah. And so, so I think that's the first thing. But then I think that there's like just a philosophical issue of like, as soon as there is one, even one legitimate place, means this could be real. And someone's grandmother gets defrauded because she's like, no, no, no, like you can do this. It's allowed. Like there's places where, you know, and it's like, no, no, go to the real place. And she's like, yeah, but this is in Facebook. I love Facebook.

[C]

Yeah, and it becomes plausible, right? Because you hear like, it becomes like sort of this legitimate thing that you can, you can do this. You can buy them on.

[A]

You can do it. Yeah, everyone's doing it. Everybody's doing it. Like, I've got a friend of mine who has put so much money into these secondary markets, I actually should probably do a check on him, make sure he's okay. But like every week, every week he's like, hey, I'm doing this one. He send me emails. I'm doing this one. And like, he is very well connected and I'm sure every single person that he was dealing with was like a legit holder of like direct shares or whatever. Right? That was not the issue. The issue is that like, someone can come and just nuke you from space. Now let's talk about the crypto aspect. Because of course, crypto is involved in this. We've, we've found a way. Crypto finds a way. So there are, I think, a couple of marketplaces, but the main one is pre stocks on Salana. Now my, my understanding is pre stocks was already a bit insane because it was already trading at like a 3x multiple which again just speaks to the like satisfied demand part of this equation. Right? But my understanding is that pre stocks was trading at some crazy multiple of the actual anthropic raise that happened. It was like 800 billion and the implied market cap of pre stocks was 1.4 trillion or something. And now it's come back to the actual value of like 800 billion. So yeah, I mean, you know, again,

[D]

like, because you, you'd be probably best to explain this. But the purification of non liquid secondary, like when hyper liquid has anthropic burps, for example, on a max law to the tits, right? Like is there a bucket somewhere and a piece of paperwork in the back somewhere of like.

[A]

Yeah, no. So this is the best part, right? Like yeah. What's so. So synthetics. And one of the original arguments against synthetics, right, was there were a lot of like OG people that were like, this is like paper gold all over again, right? So there, there are conspiracy theories that like there is. And there's probably not even conspiracy theory. There's probably like, it's fair to say there is something like 10x more paper gold in the world than actual gold, right? You can go and buy gold on a marketplace and it's like not real gold, you know. And Matt Levine talks about this like every once in a while they go into one of the storage facilities and try to like pull out some tungsten and it's a bunch of rocks, right? So, so this is like a known issue, right? The interesting thing about a synthetic asset that is not tied, there's not an rwa, right?

[D]

There's.

[A]

There's two different components here, right? If I say to you I'm going to sell you an rwa, real world asset that's been tokenized. Let's say gold tether has like billions of dollars of gold in a Swiss vault that they have tokenized, right? And they're like, no, no, we're tether. We're super rich. You can trust us. We've got the gold. Like we've got the gold and we will give you the gold the same way that they have the dollars in theory and no, they do Now I'm joking. But like tether has a pile of dollars, a pile of gold, pile of pig bellies or whatever the else they're tokenizing, right? That like they're saying this is a legitimate real thing. You can't necessarily claim the gold, right? So, so you can't redeem it. I'm sure that they've got in, in the case of Tether. They have people that have redemption rights. They can redeem for dollars, right, and get dollars in and out. That's why the market stays liquid. But this is a purely synthetic asset, which is a completely different thing. You're basically saying there are two counterparties that are making a bet with each other about a price that is exogenous to the system they're using, right? About what the, the value of this thing is. It's a pure like bet either with, with a direct counterparty or a bucket shop, right? And, and a bucket shop is like an olden times thing from like the 1900s where you could go to trade shares because, you know, you, you wouldn't really get access to like a, a you brokerage account back then, right? So you go to this place and it was basically like a betting shop, but you're betting against the house. You, you would write a slip of paper or whatever. So, so that was again, a synthetic asset. You weren't actually trading the underlying shares. You weren't buying like the Mississippi Railroad shares. You were literally placing a synthetic bet on whether Mississippi Railroad stock would go up or down that day. Interesting. And so that like, it's is the, like, so I get the oracle part, but who determines the float? Like if there's on hyper liquid, is

[D]

it, is it, you know, does anthropic have 10, you know, 10 million of these bets existing?

[A]

And then whoever is, you know, anthropic is not involved. Like obviously anthropic is not involved, right? So, so imagine you and I, right, have a bet about the price of anthropic shares, right? I think it's going to be, let's say, for sake of argument, 900 billion, right? So I buy. And you, you can think about this in poly market terms as well, right? Like I buy a bunch of. Yes. Shares of 900 billion and you're like, you idiot, it's not going to be 900 billion. AI is scam. It's going to zero. And so you sell the no shares, right, to me. Like, or, or you, you're buying those shares from me, right? And so we, we create this synthetic market where you and I are expressing a bet about what we think the price will be. But then Tay comes along and goes, I think it's going to be 2 trillion. Sorry, Tay, you're the idiot in this. Or maybe not. Maybe you're the smart person. I don't know. Depends on, depends on how it goes, right? And you're like, I don't care what the price is. I Don't give a what the price is. I just want as much anthropic as you will sell me. And just bids through the book. Every single person who's like, it won't go over 1.1 trillion, tastes like you're an idiot. Then the next person who's like, it won't go over 1.2 trillion, tastes like you're an idiot, it's going to 10 trillion or whatever the hell she thinks, right? And she just keeps buying against every counterparty. And then eventually the price settles at whatever the last person was willing to sell her the other side of this trade, right? Like call it 10 trillion, right? So, so Tay is now put like $10 million into this like crazy trade where she's bid anthropic up to 10 trillion. And now we wait and we wait to see what happens when the IPO happens. And when the IPO happens, the trade will effectively settle, right?

[C]

And that's not settled.

[A]

But it's not settled now.

[C]

It's not even in the future. It's not settled with real shares, right? It's. You're just settling the bats. It is. I think Poly Market is a good example for these. Like, this is Polymarket.

[A]

Yeah, this is Poly. Like the, the synthetic thing is Poly Market. It's just the difference between Polymarket is it's two separate binary bets that are actually detached. Like, it's only arbitrage that keeps them in, in alignment. But for, for a purely synthetic perp market, it's just who's willing to pay the funding to bid the thing above the Oracle price? Because there's an Oracle price. And you know, so they, they will kind of anchor it to the last raise or whatever, but it floats outside of that, right? And the higher it is, you know, or, or it's based on the skew. So the old, the old synthetic style was like, the more you bid the, the price up, the more skewed the market is. This was the bucket shop model, right, where like the market is taking the other side, right?

[C]

Right.

[A]

But the market is like, well, you're probably wrong, like over time, right? You're probably wrong. And you're going to pay 300% funding to, to bid this thing above. You know, if, if it's so skewed, I, you know, you've got $10 million bet on one side and there's only 100 grand on the other side of the, of the trade. You're going to pay a massive amount of funding to the people on the other side. And so there's a bunch of different mechanics that you can use to keep these markets.

[D]

And Arthur, at least on the perp side, the, the story goes that Arthur is the pioneer of these perpetual markets. Is that correct, Kane, or do I.

[A]

That is correct. Yeah. Yeah. The, the idea of, you know, creating the, the genius of perps, right, was that you could take a spot price and you could create a continuous market that didn't need to be settled. Right. And the settlement was this funding mechanism. Effectively it's continuous settlement via paying funding from one side to the other of the market. So in, in classical futures, it settles once a month or once every three months or once a year or whatever. Right. So we make this, by the way,

[C]

it, A lot of futures markets settle in the actual thing. Like you, you hear horror stories every once in a while of people who get into futures and make a killing and then accidentally get settled and they have oil. Yeah, yeah. They have to accept delivery of like literal oil or like eggs or like whatever, whatever market they were, they were on.

[D]

Yeah.

[A]

So, so they're, they're cash settled and, and, and you know, things that settle in the asset down the line, asset themselves. Yeah, but, but most, most of the time, you know, those, those stories are like apocryphal stories, right? Like, they're not necessarily like. But, but there, there are times where the market detaches.

[C]

Yeah. But it highlights. That's where. So if you get, if you get the concept of like futures in that, right, you're, you're betting basically on like the future price of something. It's going to settle, right? And you're going to have the eggs, the price of eggs, the bets, right? Everything's going to settle out.

[A]

Pork bellies are the best because it's like a ridiculous thing like what am I doing with pork black? Who's even. I don't even get it. Pork bells.

[C]

It's quite fun, but with perps it's just forever. It's just, but it's conceptually it's very similar and again, it becomes this fully synthetic market, right, where you, you just, you're just betting, right? And it's, and it's just becomes this market in itself and that's, it's just like another layer of, of stuff that adds complexity, I think, especially to situations like anthropic and these pre IPO stocks, right, because you might, you, you have all these different sort of like deal terms, let's call them, and markets springing up again, it's not super clear which vehicle is which in a Lot of situations you have on chain stuff, off chain stuff, you have stuff that's just never going to settle, right? Like if you have perps for these, like you're not, you're not settling the real.

[A]

But that, the genius of perps, right, is that you can always exit because it's super liquid.

[C]

Yeah, that's right.

[A]

That's why that was such a amazing innovation, right, Is that like, you don't need like 30 day settlement period because you know, it's so liquid that you can always get in and out of the it.

[C]

Right, but like pre stocks, right? The salon of pre stocks, those have. That's. There's an actual SPV there with actual stocks somewhere, right?

[A]

Yes. No, no, no, I don't believe so. I don't believe so. I think, I think pre stock, if actually maybe I'm wrong here, pre stocks might be the one. Because there's. There's one big one that is purely synthetic and one big one, no, it looks like free stocks is the SPB wrapped one.

[C]

Okay. So they, and that's where. And this is what I mean by the complexity and like it's just ripe for fraud.

[A]

Ventuals. Sorry, Ventuals is the, is the purely synthetic one. So, so there's Ventuals. There's also, there's another Solana one that's been around for a while that's also synthetic. I can't remember the.

[C]

Okay, so do you think that anthropic, I mean, do you think that in the. At the end of the day this is going to, let's say like come to fruition where anthropic or open AI or whatever, they're going to have to like deal with this or are they just trying to. To curb the, the frothiness and make sure that they don't end up on the, with the short end of the stick. Right, because that's where we're heading.

[A]

Markets are. Right. So like if you, if they aren't serious about this and people don't believe them, like if there aren't like, you know, someone's going to sue them. Like to your point, Luca, like, someone's going to be like, yeah, but you didn't say I couldn't do this. Whatever, there's going to be some lawsuit, you know, from like some legitimate person who bought shares who then put them in an SBV that now has counterparties that are, you know, someone's going like, there's going to be a lawsuit for sure. And then it'll be interesting to see in Delaware or wherever. You know, for open AI, it's even weirder. Right, right. Because OpenAI, let's not forget, was a charity and then converted into like, you know, so there's, there's, there's other issues there. But like, anthropic was like, there's people who are shareholders who've sold them now have counterparties that they can't deliver the shares to, or, you know, it's not clear. Like, the other, the other interesting thing about this is, and this happens in crypto all the time. Like, people buy, you know, let's say Athena. This was happening pre. Pre TG on Athena. And it happens on a lot of pre TG hype projects. People are trying to offload secondary and the same thing happens. And oftentimes the founder has to, like, reach out because, you know, there's like seven investors, right? It's not like anthropic where there's like a million people. It's like seven dudes. And you're like, well, which one of you is selling? Because, you know, someone approached me and said, someone's selling, you know, 10% of the, the equity. Right. And so it's not too hard to triangulate and be like, stop doing that, you know?

[C]

Well, and typically, I guess as you sort of like edge closer to ipo, typically people are not super opposed to these sort of like, quiet secondary reasons.

[A]

Secondaries are fine, secondaries are fun. But it's usually the team.

[C]

Yeah. Because this is the thing, right? It's like, if you have investors who've been along for the ride for that long, they're getting, let's say, antsy for liquidity. Like really antsy for whatever reason. Right. And if there's other people in the market who really, really, really want to get in, that's not the worst thing for, like the founder for the company. Right. If you have someone that's like, really needs to accept for whatever reason and you have people that want in, it's not the worst thing in the world. The issue is that we've gone so far past this, right? Like, this we're talking about like full pre IPO markets, right? With fraud, with chats, with tokenized on change it with SPVs. Like, there's so much going on, it's just like it's a real mouse.

[A]

And so, so, so I think this is the interesting thing to me and the argument for why, you know, again, back in the day when synthetics first started doing this, we were the first ones on Ethereum to create a purely synthetic gold Purely synthetic Bitcoin that just traded it had a mechanism to keep it in line with the price of bitcoin, but that was it. Right? And the nice thing about it is you didn't need to trust an external party. You had to trust the Oracle that the bitcoin price was right. Um, but the cool thing about that is, you know, you could look at the Oracle price and the actual price and see historically that it had been quite accurate and go, well, I don't need to worry about this that much. What you didn't need to worry about was that is there the bitcoin somewhere and is it safe? Like, what happens if it's hacked or whatever? So, you know, this is just the advantage of a synthetic asset. And then when you add synthetic perps on top of it, you know, when you have leverage it in, in a situation like this, it is outside of the scope of anyone to tell you that you can't do it.

[C]

Right.

[A]

If you want exposure to a thing, you know, if the market's liquid enough, it will just be a better place to trade these assets.

[C]

So, you know, there's also, again, going back to like, what's the ideal outcome, right, Having. So there's some people that really just like, want in on the price and they just want to bet on the price. Those are not necessarily, especially for pre IPO companies, not necessarily your best investors, as crypto has learned over the years, right? Like the people that just want liquidity, they want to make their quick bets. They want, yeah, they want to make a bunch of money. They're not necessarily your best investors. And so having a market for those people is not inherently bad, in my opinion.

[A]

Well, I'm, I would like, I think it's really good. There is a down, there's a potential downside. So one is you remove the adverse selection of people trying to buy organized shares. Yeah, the real shares, like going and bothering people and saying like, some of your shares or whatever. And you know, funnily enough, this happens, right? Like when polymarket announced their raise, you know, I'm a known investor in the seed round and I got like 100,000 emails, most of them, I'm assuming from scammers being like, we want to buy your shares. Right. And, and, you know, so I had to put like a filter on my email to just like filter out anything from polymarket for a while because it was crazy. It was like multiple emails a day from people being like, I've got buyers, like, please sell us the shares. But the, the thing that just From a market structural perspective, right? The thing that would be concerning to an anthropic or an open AI is the, one of the reasons arguably that they, they don't want continuous pricing of the asset is it is far better to raise money at $100 million, then raise money at 500, then raise money at a billion, then raise money at 10 billion. Like, and it's a number only goes up. Your investors are always happy. No one's calling you being like, why did the price go down? Unless you do a down round, you, you never have a concern, right? This is one of the biggest issues with crypto is like early stage companies have a continuous trading price that anyone can point to and be like, you're a bad guy, you're bad and the company's bad and everything about you is bad and I hate you and like, why did you do this to me? Right? And, and if you don't have that, it's not a distraction, right? But even more so, your employees also don't have a scoreboard, right? Like once every six months they just get like 5% richer or 10% or 50% or 100% richer, right. And so they're always happy. But if we have a world where anthropic has a continuous perpetual price that is believed to be the canonical price by the market, right? They raise at 800 billion. Let's say, here's a hypothetical, they raised at 800 billion and then they get in another fight with Trump, right? And the synthetic market is like doing whatever, let's call it like a billion dollars a day, 2 billion, $5 billion a day in volume, right? And when they get in fight with Trump, the price goes down from 800 billion down to 400 billion. And all the employees are like, what? Stop, don't do whatever, I'm getting poorer. Like, like that is a genuine problem that they would have to deal with. Because if people start to believe that these synthetic per markets are the price of anthropic, then you don't have this like slow ratchet up of pricing. Now you've got a continuous price that you have no control over. And unfortunately for anthropic and anyone else who is pre ipo, you have zero ability to stop this. This is going to happen. It is inevitable. I'm so confident this is the way the market goes. Hyper liquid will do it or some hyper liquid market and we will just have continuous pricing on everything that is the world.

[C]

Well, not, hold on, not on everything though. On everything that is in demand. Enough, right? Like that's the thing.

[A]

It's, like, have been liquid, continuous pricing.

[C]

Yeah.

[A]

Like, but you, like, it might not be the most accurate pricing, but you will have markets for everything because the cost of launching a new market, zero. Right. Like, so, you know, we, like, we could create a market for the. The statue in Lucas office. The little. Yeah, let's do that Mouse hard guy. You do it. Like, it might not be that many trades, but it's there.

[C]

Right, but nobody's going to trust that, like, the two bets on it to be like, the canonical price.

[A]

Sure. No one. No one will. But if you have a market that's doing $10 billion a day, suddenly you're like, the price of the Vanthropic did go down to 400 billion. Like, clearly it did. Like, the market's saying, just like, crypto, don't fight with Trump. Stop fighting with Trump. Daria.

[C]

Like, and this is. This is. This is. I mean, this is crypto. It's like crypto is leaking into the real world because this is how crypto. This how crypto operates. Right? Like, you do something and then you don't have to just contend with the angry hordes in your discord.

[A]

So.

[C]

But, like, your employees are also, like, your employees. Like, you pay me. You pay me in the token, bro. What the heck? So, I don't know. We'll see how it falls out.

[A]

Good times. Oakley. AGI kills us all before this happens on the.

[C]

Oh, I mean, the solution here is. Is to let them. Is to. Is to make it a better situation for them to ipo, right, so that they can just be on the real market.

[A]

I think this is genuinely an issue. Is. It is unequivocally not a better situation ipo, because if you ipo, you have this exact problem, except it's now even more real. You're now on the NASDAQ and the price is trading every day. Like, Right. It is genuinely better to be illiquid. Like, there's a premium for being illiquid and having investors that are always happy because the price always goes up and. And having a trading price and having retail investors and all of that stuff. It. Like, it used to be that you had no choice, right? If you. If you needed a billion dollars to do something, the only place that was liquid enough to give you that billion dollars was public markets.

[C]

Yeah.

[A]

That is no longer true. So why would you ever ipo, Right? Unless, you know, the government mandates that you must IPO after, like, stuff. Like, something will have to change in. In this market because the incentive is to never IPO now, which means you have these giant companies that are private companies. Like it's a very weird. That's very situation. Like that harkens back to like pre stock market era of like the 1800s.

[C]

Yeah.

[A]

Where everyone, it's all private wealth. There's no way for anyone to invest in things. It's crazy.

[C]

Yeah. But it also, I mean the reason they don't ipo. It's exactly what you said. It's a lot. It's just generally better to have like a handful of aligned investors who you keep happy because the price of your stock gets updated once every couple years or whatever. Then have the, the public market watching your literal every single move. Right. Every single day, every single quarter, every single event is going to move the price and it's going to impact you. And that's good for early stage companies because you need that sort of like that patience in order to. You can't have people bringing on your neck because you have to think more to do things. Yeah, yeah. But it does get very interesting down the line when especially for these, these really in demand companies who are huge and the valuations are massive. Like you know, it's, it's.

[A]

I mean you like genuinely, you make it to the point where the most valuable company in the world is a private company, that will happen and at that point that will be like the market is clearly broken. You know we loan against.

[D]

You can loan against those shares now we've got loan against every.

[A]

Ever.

[D]

Any private companies gained.

[A]

Yeah, the. No, I haven't, I haven't. But like I, I just think that the, the, the shift in the mar. And again like Matt Levine has been talking about this for like a decade now. Right. That like the shift away from public markets as the primary place for liquidity. That, that, that was the only place you could get liquidity has broken market structure somehow. Like there, there's something that, you know, the incentives are completely inverted now. There's more than enough money in private markets. And to your point, Tay, like why the would you want to deal with pri, like public markets? Why would you want to deal with retail investors?

[C]

Yeah, exactly.

[A]

All right, let's, let's go to an ad break. When we come back we will talk about more hacks.

[C]

Yeah.

[B]

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[A]

All right, we are back. We've talked many times over the last few months about the hacks spree. I think we have reached some level of consensus that many of these attacks are somehow AI mediated or supported or or something. Hey, I'm sure you've you've got some takes here, but apparently April was the worst hacking month in crypto history. 625 million 30 incidents. I'm not sure on what dimension we're measuring that because there have been higher dollar values or maybe like the number of incidents. It's like an incident in a day, which wild.

[C]

It was crazy. And I don't even. I think there's more than that. I don't know what the real number is, but like it was like every day there was. Every day there was like a sizable incident and then there were like five other incidents that just like happened. And like, yeah, like just random.

[A]

How lucky to be the. The guy that gets hacked for like 10 grand on a day where like someone loses $200 million and no one ever notices. That's.

[C]

It's. Yeah.

[A]

Nice.

[C]

So it's, I think they're just going off like basically like the prevalence of hacks. And it was not just like random people getting phished or like private key compromises, but it was like there were big infrastructure centralized exchange hacks, defi hacks, and then there were also like just this like big smart contract hacks, small smart contract hacks. Like there were a ton of hacks where it was like, we don't even know what the heck that is, but it just got drained for a million years.

[A]

Money is disappearing. Yeah, yeah.

[C]

Some unverified contract on Arbitrum got, you know, or whatever. It just, it felt wild. And then that's just on the crypto side. You go to the, the regular world.

[A]

To the regular world as well. So. So yeah, it looks like through April, more than a billion stolen. 68 incidents. The crazy thing is I was reading through our show notes, right? And it was like the first one was Drift for 285 million. I had forgotten, like legitimately forgotten about Drift. There have been so many hacks since the Drift hack that I was like, I've been much more concerned about help Dao and all the AAVE stuff. I was like, oh yeah, Drift. Like it just completely off my radar. So now Google announced yesterday in their cloud blog and what they identified now, I don't know if they identified this through like their own system. I don't know why anyone would be using Gemini to build software, but maybe the checks aren't as good or something, I don't know. But they found an LLM built python exploit that bypassed 2fa on an open source admin tool. Google says it disrupted a planned mass exploitation campaign pre launch. Do we have any they. I don't think they released any details. What's your, what's your take on this one?

[C]

Okay, so I think this one, there was one interesting one, the rest are like, whatever. Is it this one? Okay, okay. So I think I might be wrong, but let's just go with it because it's cool even if I'm wrong. Okay, so I think what happened is that in the last year, Google, Android, Chrome, Google things have slowly increased the, let's say like the way that Gemini can be accessed. And it's not just like you as the user going to like Gemini and like typing things in.

[A]

Right.

[C]

It's like it's increasingly like built into the browser, it's built into the operating system and there's APIs, like not APIs to the cloud, but internal APIs. So one thing that we have been asking about for a long time is when we're doing phishing detection for URLs, right now it's a manual block list and there's all these processes running to identify phishing sites and then it adds the URL to the list. Theoretically, if your local device or your local browser has access to call it AI, right? You could, instead of having all these processes running in the cloud and then pushing the outputs to the manual block list and then users being protected, theoretically every time a user visits the site, you could run a local. Do you get what I'm saying? Like you could have it check locally and be like, yo, is this, what's the chance this is malicious and it doesn't have to leave the browser, just like, you know, operates in this little realm. I think what happened was they found someone trying to use these APIs, not in the way that we're trying to use them, but instead to like call Gemini locally on the device and be like, yo, go find all the, go find all of the attack surface, go find all their private keys or like whatever it was. And so it's sort of like this, using the local Gemini as like an aid to construct the malware sort of on the fly, let's say. Right, right. Or do the exfiltration on the fly, which is wild.

[A]

It's great. That's wild. Yeah, that is wild. I mean, we haven't even gotten to like, you know, there's, there's been prompt injection attacks and stuff, but like we haven't even gotten to a point yet where like there are sufficient, a sufficient number of like continuous running autonomous agents in systems that can be owned. Like that's going to be one of the next vectors in, in my mind, right? That like, people find a way to like, get into a system that has an agent. We're thinking about this because like, we, we are, we're like moving so quickly to this like, agentic coding, kind of continuous autonomous coding infrastructure. But our biggest concern is like, how do you protect the guy who's writing the code from anyone ever talking to him? Yeah, like, you know, and like, it's, it's, it feels the same as like trying to protect private keys, right? Like, we have a, we have an agent that's running on like a vm, right? And we have to make sure that there is no way into that vm because that agent could insert some code and you would never find it. I mean, you find it eventually and someone activates it. But, but like, you know, there, there's no way, if you live in a world where agents write 99% of the code for you to review all that code, except with other agents. And so like, you have to have these checks and balances. And, and yeah, we're not there yet. I don't think in terms of like, you know, the, the thing that I've, I've sort of proposed, I guess, is like, you know, an open clause is heading this direction, not in a good way, but like you have an agent that owns an open source repo, and it's like a continuous running agent that's running somewhere in some secure environment, right, that reviews every pr, reviews all of the things, reviews, you know, every bug fix, whatever, right? And is also in charge of deployment. But you have to like segregate the ownership of that. And it has to run somewhere like, really securely that someone can't get into it. Because if they get into it, then they'll inject malware and inject zero days, inject all these exploits and stuff and you know, like, you know, supply chain attacks. There, there's just a bunch of different attack vectors if you can. The same way that if you like compromise the machine of a team member of someone, right? You know, of a team that's writing critical code and you inject code into the code that they're writing now all of a sudden you've got this like amazing attack vector because everyone trusts that team, you know, and if it's some, some library, right? They're like, ah, these guys know what they're doing. Anyway, it's, it's, it's pretty crazy. So, yeah, we're getting, we're getting to

[C]

a point where again, I, we talked about this bit last week, but we're going to have to get to a point where the focus is on basically containing the blast radius at all points instead of trying to like secure it up front because.

[A]

Right.

[C]

And we are never very good at that anyways, like, securing it up front. Like we tried with the smart contract audits and everything. Like, it doesn't. We're not very good at it. Okay, So I think the solution is to, yeah, you still want to like, try to keep things secure, obviously, but like the, the blast radius and mitigating and having like these external things that can press pause or stop or whatever it is to prevent exfiltration, to prevent theft, to prevent whatever. It's going to be mandatory and it's going to be, you know, everywhere so that you basically, like, you're just expecting something to be wrecked at all times. But even if it's like wrecked, you have like, at the very last second a dude like step in and be like, just kidding, you can't, you know, you can't have that. But yeah, it's gonna

[A]

take the next step. One thing that I think is one thing that I am bullish on though is like continuous monitoring with agents, right? So we have this annoying thing, right, where we in various ways sponsor ATAS for Solana Tokens, right? So people have found over the last two or three years, right, like really annoying slow drainer attacks where they like set up this attack, like fund a bunch of accounts and then like get like thousand bucks or like 2000 bucks of like Solana, like gas from us from like opening accounts, then closing them, whatever. It's like the most annoying thing. And. And they do it over like two days and happens really slowly and whatever. And we had one that happened over the weekend and it was going on for like 12 hours and it just fades into the background and like normal activity, you know, like nothing spikes. There's nothing like, too crazy. And we just don't have enough monitoring for like those, those things. And so myself and one of our engineers sat down for a few hours and we like sat down with an agent and said, okay, here is all of the data. Like, take all of this data. Like, here's what's happening. Here's. Here's our best guess as like, how to have an early warning sign. And the agent came up with a scheme to like, track this that is so much better than what we would have thought up independently. And we were like, oh, that's way better. Like, like. And we just sent this agent out to like, do research, whatever. And basically it found that like, the easiest way to Detect it is like a price discrepancy in the input output. And we didn't even know we had. We're tracking that in the database. And it was like, yeah, the database, like, show. And it's like, you can just have that agent running. And now it's in Slack and it'll be like, hey, someone's doing something weird. And it. And it just like, alerts you, like, within, like. And then we were like, okay, go and back test this. This was the funniest part of this, right? So we're four hours in. It's like, you guys are idiots. The way that you're going to solve this problem is not the right way to solve it. Let's solve it this way. And we're like, okay, cool. And we're like, all right, if you're so smart, go and back test it, right? And he goes, okay, here are the four most recent incidents. And I've sent an agent to like, backtest each of them. And it goes. So the good news is that this detects every single one. You know, there's no, there's no false positives like this. This metric, like, finds every single one. It goes, unfortunately for two of them, it took approximately 90 seconds. And we're like, yeah, that's. You're gonna have to do better than that, bro. Like, we're like, it was going for 12 hours and no humans noticed it. Like, it took us 12 hours to notice this. And it's like, yeah, like, I would have caught it, but it would have taken me 90 seconds. And it's just like you're on a different level. So, you know, like these, these. The. The. The biggest issue I think with like, smart contract hacks is like, it's not like 90 seconds is actually too slow. Like, you need to detect it in like the mempool and, and block it, right? Or like detect. You know, it's often one transaction that's bundled or whatever. So you can't just like. It's not like it happens in slow motion over. Over days or whatever, but it's not slow motion.

[C]

It's. Yeah, it's one. It's literally one transaction. And like, yeah, especially with like the Flash loan aided ones, it literally since forever now, right? Those are all single. Single transaction ones, which means that we're going to also have to probably re. Architect things to not have a single do that point that, right? Like, if you want to. If you. If. If somehow you're hopping from here to here, like, you just can't have that in a Single bundle. But it's definitely, it's not going to be easy. It's going to, it's going to get worse before it gets better.

[A]

But the supply chain attacks are that more kind of slow motion thing where like someone gets in and they do something. It's only bad while people are like updating their software. So like there is a genuine window where the faster you detect it, if you detect it in 90 seconds, maybe only a couple of people, it stops the spread, et cetera. So you know, there are things that are like much more kind of amenable to this early detection continuous monitor.

[C]

Yeah, the supply chain ones. Like what's happening originally is that they're getting in like let's say that you miss. And the AI and whatever the magical beings, they all miss the initial implant, which in like the latest Tan stack case, the initial entry point was via like a GitHub action thing that was quite complex. But the next thing that happens, right, is that then it comes and grabs everyone's environment files, API keys, on and on and on forever. And then it'll go and it worms via all their repos and all their things and it'll exfiltrate stuff. It'll take stuff from individual devs devices, but also spread on and on and on. That's what we're seeing happening over like the last. It's been like two days now nonstop, just like this. The slow worming out theoretically on like your individual device. When it lands, it lands on your device and then it runs all these processes. And one of those processes is to like grab all your secrets and send them to the C2. The thing is, is if they're already like today there are already things like CrowdStrike, right, where it'll attack this down and then the process start spinning up to, to do certain things. Oh, it's touching your key store. Oh, it's grabbing your environment files. Oh, it's grabbed, right? And it'll just like say like yo, stop. And definitely don't just stop. But like definitely don't talk to the network. And so it stops it right before it exfiltrates. Which means that even though you got, even though the malware dropped onto your computer, the hackers don't get anything. The issue of course is that like, you know, not everyone is running this stuff and there's other, there's like a lot of different.

[A]

Obviously is a paid service, right? Like are there, are there like open source tools that like you can run? If you're poor, you're poor.

[C]

So there's like Objective C which is like, it's like objective and then SE is like one for max. It's just like a bunch of open source tooling that can like.

[A]

Right.

[C]

It's not quite the same as like CrowdStrike, but it's like there's all these little things that'll detect like persistence or detect like weird network calls for Windows. I think like Microsoft Defender or whatever they have somewhere you can like crank it up. Feels like an okay job. Yeah, you should definitely be running these and especially like companies like just yet CrowdStrike. But yeah, we're gonna have to get way better at this, this type of stuff. And I think that what we're seeing with open source and like these GitHub actions and these worms, I think someone's finally realized that like, oh, hey. The decentralized nature of open source maintainers is basically the same as crypto people. They're just running around on their personal devices and not a secure like, like CrowdStrike running organization with formal processes. Like most of the stories coming out of a lot of these are especially like the open source maintainers. It's, it's just like crypto. It's like bro was woken up because his friend called him in the middle of the night.

[A]

Like you're, you're.

[C]

Yeah, your shit's gone and it's like worming in everyone else and you know, everyone's reacting. Yeah. So it's going to be tough. Those are definitely going to be tough because we often forget that so much of the software today relies on these low, like just these open source maintainers who are just maintaining this open source software out of the good of their hearts. And yeah, the incentives are a bit screwed there. It's. Yeah.

[D]

This is where the black swans are

[A]

gonna come from though.

[D]

It's not going to be nuclear bombs.

[A]

Yeah, some, some crazy, some crazy hack.

[C]

I feel like we just also like, we keep dodging bullets with these like if this one's like pretty.

[A]

Yeah.

[C]

But like I know even this one could be so much worse and like should have been so much worse but like luckily this happened. Luckily, you know,

[A]

we just have to keep getting lucky. Tay. It's easy, easy peasy. I don't know what you're worried about.

[D]

Hey, you guys should make Seal 911 agents at charge 39.99.

[A]

All you guys just, just run. All right, let's, we got, we got another like 10 minutes left here, so let's, let's smash through another couple of segments. So um, this one Completely caught me by surprise. Circle did a $220 million ARC token drop. This was not on my radar at all. So, yeah, I, I, I don't know.

[C]

I'm so confused.

[A]

Like, I thought the whole point of the IPO was to not need a token. Luca, what's your, what's your take on this? Are you across this? If you, if you can, if you can, you will.

[D]

At the end of the day, like, the Circle buyer is not the arc token buyer. And so go create some tokens out of thin air, add it to the balance sheet, beat earnings, or show a good quarter for balance sheet asset value going up somehow, some way. And if you can, why not? And I was, Jeremy, look, is a fiduciary responsibility to accrue value. And look, the crypto buyer is not the tradfi buyer. I've underwrote this because one of the things that we're working on, at least on the abstract side, it's just very clear. It's two different cohorts. And look, I'm not surprised, frankly. Obviously, I didn't know he was doing it, but, like, what is the business sense of it all?

[A]

Like?

[D]

The business sense of it is like, new Circle is one cohort of investment, and if you have leverage and pull in another cohort of investment,

[A]

why not

[D]

pull the lever if you can?

[A]

Yeah. I mean, John Charbonneau said, saying that Stripe and Circle building their own L1s is bullish Ethereum because their EVM is crazy coke. These chains will just be bullish for Circle and Stripe equity holders if they're successful. Not everything is bullish. Our bags, which, Which I agree with it. It is weird to see this, like, kind of proliferation of we, because we saw this, you know, the, the, like, blockchain, not bitcoin era of crypto, you know, was like, corpo chains and basically, like, consortium databases, not even blockchains, et cetera. Like, we, We've seen this play out before. Maybe this time it's different, but it does feel like this is competitive with the evm, you know, and, and Salana. I'm still bullish. Both Ethereum and Salana in, in the sense that I think that they have a much more clear, like, plan for scaling and, and how to, how to make the chain. Like, you're kind of more globally useful than just like a stablecoin transport layer. I just don't know if that's sufficient for a chain to be valuable. But we will see. It works for Tron, I guess. So maybe

[C]

it's isn't this going to create a conflict at some point, if it hasn't already? Because this is the arc. The Arc Token isn't. Isn't even like. Well, is it. Can. Can I go buy arc right now?

[A]

Oh, I don't know.

[C]

I don't think so.

[A]

Empire. I think it was just a. I think. I think there's a. Yeah, there. Yeah. It's just the race for now. Like, I don't think. I don't think that the chain hasn't launched yet. So presumably the token will launch with chain. They're going to do some incentives or, or whatever. So, yeah, bid strap.

[D]

It's kind of like a way. Almost like a know, it's a way to incentivize more usdc. I mean, it's just so bullish on the stock. Like, I. I don't know if you're a buyer of Arc Token, but as long as there's market makers in the books and you know some sort of bid somewhere, right. He can just take that whole supply and just more usdc. More usdc. And then they start to hit, know, break earnings, etc. There's probably also another take here which is, you know, bag holder syndrome. You kind of see, like there's a strategy amongst some token founders where it's like, okay, get people to line with your bags. Like, this is just like another way to get more people on the cap table. More people bullish. J. Jeremy. And you know what I mean? Like.

[A]

Yeah, yeah, good.

[C]

I just thought that. I don't know, I feel like we've. I feel like it's a bit like we've been doing for a while now, where you have like the equity, right? You have the company of the equity, of the builders, you have the dev team, whatever you want to call them, and then you have the token and they become disjointed and weird things happen. This is just even weirder because Circle is already a publicly traded company. Right. But that's the equity. Right? That's the. That's that market equity.

[A]

Yeah.

[C]

And then you have this now you have this second.

[D]

It's bullish the stock. I don't know if I'm bidding that token, but I'm bullish on the stock.

[C]

Okay.

[A]

Yeah, yeah. And that's his job, right?

[D]

Like he did that first. He's shown his car like that. Like he's in the business of accruing as much value as possible. It's like Coinbase and Base, you know, and they do tell different stories. Like, I think a chain is a story of Network effects.

[A]

Sure.

[D]

Right. And like in a world where AI agents are really swarming in the trillions, like I can see a world where that catches a bid. Right. And then versus like stock is also. It's a double edged sword. It can be a catch 22 can play on both sides. Today it plays on the side of stock. Right. But there is a world 10 years from now, five years from now, we get another 2020 altcoin season. Right.

[A]

It will bode.

[D]

You know, it could bode really well. Also the token holders.

[C]

Yeah, I guess it feels weird right now because the token is just, it's just a, it's a fundraise. Let's be real.

[A]

I mean I think it's a fundraise plus it's a new chain.

[D]

Right.

[A]

And so it's like the, the theory is every stable coin needs its own chain now, which was not a theory a year ago, but like it seems to be like tempo and you know, there's all of these like, you know, if you go to TradFi, right. Like one of the most profitable things is the having a payment network. Like the, the original idea for Haven, like my, my, you know what became Synthetics was to build a decentralized payment network where people could transfer money. Like it's a very obvious play it it, you know, you can capture a lot of value if you own the rails that people are paying each other on. And so I think that this is like we own the token that is transporting all this value, but we don't own the chain. Therefore it's harder for us to capture value if we own the full stack, then we can capture the payments. And like it's, it just makes sense. Like it's, it's a sensible approach. It's just very antithetical to our like OG Erie roots I think. But here we are.

[C]

Yeah, I mean it does. It presumes that you can make it valuable. Right. That the, the chain and what is

[A]

built on it, like valuable will accrue to the chain and you know, etc. All right, we got time for one more segment. Let's. Let's close out. Close out. That's very aspirational the AAVE. Help DAO situation. So yeah, our aave. Yeah, our weekly AAVE update. So the court has said they. That Arbitrum can send the money to AAVEN for the RSC recovery. So yes. So basically, but, but they are bound by the like future decision or something of the court.

[C]

Yeah. So basically it takes the, it allows the DAO and the all The Arbitram people who are in the process. Right. Because these things, these processes take like, days and weeks. It allows them to release the funds. Well, it allows them to vote. Right. Without thinking about the courts, which was the situation before. Right. Was like you're asking the DOW to vote on something. But the DAO sort of had been served on the forum by these lawyers. And so what this does is it allows them to. To vote. The DAO still has to make the decision to, like, move it to this place. But that. That was in the process. That was already happening. And so the court's saying, like, okay, all the arbitrary people, you can keep doing what you're planning on doing and figuring out that through the normal governance, but then are they llc and where those funds basically end up, that is still bound by the court.

[A]

And so does the court decides to give it to the North Korean victims.

[C]

That's going to be the battle is like now. But it does. It makes this the case a lot. It makes it a lot simpler in terms of who all is involved in their standing and their interests. Because before, again, you had this, like, all these different parties that were involved, and then you had Arbitrum who actually had the funds.

[A]

Yeah.

[C]

And. But they weren't. It was. It was very weird in, like, legal court terms. It was very weird because basically the Arborsham Dow theoretically was like, the only one that could stand up and try to defend and fight this. This absurd court case, which is a hard thing to do because it's a freaking dow. This eliminates this. So now AAVE and their lawyers can, like, continue to fight the battle for all the people and, and figure out how that's what the hell is going to happen. Figure out if the DPRK gets actually as an ownership of funds that they steal. Like, there's all these. There's all these questions that are gonna come up in. In court. And I think they're still trying to, like, the. They're the. The A guys and also the Gerstein lawyers are both trying to move pretty fast, it seems. But I still think it's gonna take time,

[A]

but at least they're now not stuck in this world of like, all of the ave. People can't be made whole.

[C]

Yeah. And it also, like, again, because it was like this, this, the governance decisions that for Arbitrum, they're like a long process. It's like 40 days or whatever. And so when the, when the court, when the restraining notes dropped, it was like, everyone has to pause the governance process. And so then theoretically if, like, the court is like, yeah, this is an absurd thing and throws the case out, you then have to like, restart the governance process and carry on. And you know, and then obviously it was just complex because, like, what is the arbitram dow? How did they stand up in a US court and what do they say where. Now it's just, yeah, now it's just ave and their lawyers are going to fight this and, and hopefully prevail, which I think.

[A]

And like, you know, if this were to go horribly wrong and the court says, no, that wasn't your property, it was, it's someone else's, this effectively now puts a on the hook for coming up with that eth, right? Like, they've already distributed like, everyone's got it. You know, they have no recovery path to get the eth back from. It's not like they're going to. I mean, maybe they will, like, it'll be pretty funny if they asked everyone who is going to get this distribution. But, like, as it stands now, the eth TR should just go back into the ether market and then everyone can withdraw their eth. Like, we're back to state one, right? Like, they're not going to ask you to like, show your passport. Hopefully, you know, in order to.

[C]

This is going to be a thing that comes up in the court because we already saw it in. In the oral arguments that happened last week. One of the things that came up was the Gerstein lawyers were saying, like, what the hell? You don't even know who these users are. You can't make them whole. Howard. How they need to come to court and they need to prove who they are. Everyone in crypto was sitting there like, holy crap. No, no, no, no. Because it's wild, but it's true. You can do a perfectly fair distribution distribution without getting ownership, like, based on the same ownership that sort of got them into that position. You can do. And we've done this many times, there's been many emergencies that have done this. It is actually more fair than the court situation because if you try to make everyone stand up in court, improve their like, traffic id, you're actually going to rule out a lot of true owners. It's not perfectly fair. And that I believe is going to come up in court and it's going to get very, very interesting. And I think if the judge question rocks, how on chain recovery flows work? Meaning It's a perfect 1:1 map based on facts and based on the ownership that got them into that position in the first place. I think it's going to be, like, very. It could be very interesting because, like, you're. It's. It's really hard. It's really hard for people that imagine that that's possible, but once they realize

[A]

it's possible, they're like, oh, this is good tech.

[C]

Yeah, yeah.

[A]

Because again, do all of our recovery distributions on chain, if you can prove

[C]

the ownership, sort of like the distribution based on the ownership. Right. And it's like a perfect, fair, transparent, like, it's so much better than every other situation in the world. But, yeah. Whether or not what the Gerstein lawyers are trying to say, like, to be clear, they're trying to say that, no, every single person that has a ownership claim needs to come to court and fight with us because we have an ownership claim. Like, that's what they're essentially doing. And that's why this argument is, like, so fundamentally absurd for everyone in crypto, because we're like, no, no, we know who the owners are. We don't know literally their names. We don't know literally their addresses, but we know their on chain addresses. We. It's cryptographically verifiable, et cetera. But the Gerstein lawyers are literally. They're. They're. They're cutting in line and trying to, like, basically game the system and put their ownership rights, which they don't have, but trying to basically edge in as if they were an owner of this money and then screw everyone else because they want. They're going to try to force everyone to come to court or whatever.

[A]

Right. Well, I will tell you, I won't be coming to court, so.

[C]

Yeah, exactly.

[A]

I expect my money to be delivered on Chain in a timely fashion. I will be picking it up with Stanley personally.

[C]

I mean. Yeah. And hell, hell, you're gonna take it up with Kirsty.

[A]

All right, I think that's it for this week. Thank you for joining us for this episode episode of Uneasy Money. Remember, what happens on Chain never stays on Chain. We will be back next week. Until then, do your own research before aping in. See you guys.

[C]

Bye, guys.

[A]

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.