$160M Wintermute Exploit, Algo Stable Regulation & Arbitrum's Close Call | Roundup

Transcript

this episode is brought to you by core the brand new non-custodial wallet that offers a seamless and secure experience on Avalanche you'll hear more about core later in the show everyone welcome back to another episode of Empire we got the Roundup Santi is traveling so you've got me and you've got uh two of blockworks researches analysts we've got Westie and we've got pibbles what's going on guys welcome to the show thanks for having us yeah happy to be here man you guys are gonna have to bring more energy than that it's a Friday people are getting you know trying to figure out what's going on this week there's a lot of news uh pibbles before we um hit record right when I jumped on I heard the tail end of Hugh saying who the [ __ ] is buying

ethereum right now so I gotta get that's where we're starting here it's not news of the week but I got to get your take why is that the question that you're asking Wesley yeah I mean fomc minutes come out and like 20 minutes and then like as soon as uh 1 30 hit if you're looking at FTX like someone just bit ethereum like up 30 40 dollars it's time to gamble I guess so you are not buying eat at this point oh no I'm completely flat because it's gonna whip salt plus 10 minus 10 in about 10 minutes nice nice Westy what about you how are you feeling about eat post merge I pretty much agree with what Spencer said I think there's going to be

a lot of volatility this week giving us one C given Putin's speech um but I do obviously in a post-emerge environment love the esupply narrative the question is just like Bitcoin happenings it kind of takes a while for the price to sort of react to those Supply shocks but I do feel pretty good about eth over the next six to 12 months for sure nice um all right guys let's get into some of the news um I think wintermute is probably here's here are a couple of the things I want to talk about wintermute hack uh arbitrary vulnerability uh the stablecoin bill NASDAQ uh maybe we get into like Rory if you uh like the hack payment from like Rory

um and like that payback maybe uh maybe talk about some other things but I think let's focus on winterview first so when here's the tldr if you guys weren't paying attention this week probably the biggest news of the week wintermute was hacked for 160 million dollars due to this brute force of all memorability in their uh vanity slash custom address whatever you want to call it um wintermute is still solvent looks like they've got over 300 million dollars in equity can you get into the details here just break down kind of what happened with this hack yeah so um a long time ago wintermute seeded a wallet address that had like seven zeros at the beginning of it um they did this with the profanity tool

which how SD puts it is it's basically like getting like a custom license plate um so if you want a certain address you can get it and how that happens is you see the the profanity tool like will let you pick one seed phrase from like I don't know however many billion possible options and then like it slowly um iterates and Loops through each digit until you get the address that you want um so wintermute specifically wanted one with a bunch of zeros at the beginning because something with how bytecode is processed it gives you slightly cheaper

transaction fees on ethereum so before wintermute actually got hacked it looks like one inch put out a blog post about a week ago disclosing of vulnerability and how easy it is for someone to kind of reverse engineer and loop through to get the private key for any profanity generated address wintermute acted accordingly and they tried to you know switch their addresses out but I think they fat fingered something there's a human error and they accidentally blacklisted a router address and um before they could like or I guess they thought they'd gotten it fixed and

then um someone took the funds and then they immediately took I think like 115 mil threw it into the three pool on curve because if you're holding usdc Circle can you know they can Blacklist your usdc but if you throw it in here with everyone else's liquidity I mean that's a way bigger task of blacklisting the entire like curve pool and like getting sanctions against that so that immediately shielded them a good bit and then they just have this Treasure Trove of tokens sitting on chain who the hell knows how they're going to get it off but uh we'll see yeah and for context here for folks who don't know winter wintermute is one of the best crypto market makers they're

one of the most active D participants they're an LP and a lot of the big pools they've got a huge OTC desk they're registered with the FCA they're run by deeply crypto natives um so it sounds like basically what happened here Spencers so you've got a vanity address right so vanity address address is essentially I like that what you said Westy of like this uh custom license plate so for winter mute they wanted one with seven zero so theirs was like zero X zero X zero zero zero zero zero zero zero like Fe 6A et cetera et cetera and a lot of people call these vanity addresses because it's like you kind of do it to watch show off a little bit that you've got this like sexy address what if Jenny their CEO would say is that there's gas optimizations

and you pay a little bit less in gas the problem with this is that the way you generate this vanity address is you've got this thing called profanity I guess there's like it's called profanity and it's a vanity generator it was shown that this that profanity is vulnerable terrible to these Brute Force attacks so that's am I kind of that's kind of that's where like the problem started yeah yeah yeah cool what how did the hacker actually get how like how was the 60 I I still don't think I'm following exactly how the and either Westy or pibbles but I can throw it to either you guys here like I don't think I get exactly how the 160 million was lost like how does someone just take 160 million here was this a user error on Winery side or did they like Brute Force attack this what what really happened

here I don't know how technical you guys can get here but would love to hear it yeah so I think basically what happened is wintermute tried to migrate addresses and they were going to get all their funds off of this um this vulnerable address and then in doing so somebody on their Dev team thought they had solved the issue and they blacklisted like one address that the wallet interacts with and they meant to Blacklist another um so then somebody came through they look for profanity addresses that have high value in them and I think basically they just go into the transaction hash on like etherskin they see the public key and then they can see the public

knots and then from there they were able to kind of just reverse engineer it and like Plug and Play kind of like a reverse iteration of how profanity generated the address in the first place they just kind of like they did that but backwards until they got to the right thing and they deployed this contract that just transferred all those funds to their wallet which is labeled as like the winter mute exploiter on etherscan right now gotcha okay so these vanity addresses are basically assigned a specific prefix or suffix to the program and it generates these like thousands or hundreds of thousands or millions of addresses until it finds one that matches the specific conditions

that the person in this case or company in this case when we wanted so this hacker basically just brute forced to almost reverse engineer the the millions of like uh basically trying to find that that address that matched what they wanted here um it sounds like okay that's that's really interesting Westie anything uh and then through that they were able to basically generate the private keys for the users with the vanity address to essentially get in and once you have the private key with the public key uh you can basically just take the funds so Westie any uh what are we missing here anything else uh any other takeaways from this wintermute thing um yeah I guess my question is we sort of knew that you could Brute Force these

Vania addresses about nine months ago so I'm not sure why when Army decided like more recently to get away from these vanity addresses and I do think that we're going to start to see sort of different naming conventions like I don't think we're going to see if any addresses anymore I think more people are just going to use ens domains and subdomains where like when you can just have a wintermute.eath and then each wallet could have like wallet one dot winnermuth.eath so I think just changing naming conventions would be a good idea and I don't think it's worth the vanity address for just like a small amount of gas efficiency I think like you're making up on security way more using a different naming convention yeah

Pebbles what are your takeaways on this like my thoughts when I saw this I was like damn like winner if winter mute is getting hacked like no one is safe here because I think when I think of one of you I mean they have this is kind of I saw wrecked put out a thing and it was like at the end of the URL I was like winter mute two and you never want to have two things on on wrecked but um yeah it's kind of like damn if wintermute is if this is happening to wintermute like it can kind of happen to anyone but what are your thoughts here Pebbles what are your takeaways yeah I just think it goes to show that no one is safe no matter how safe they think they are and um to just be like super careful and

keep everything as simple as you can when it comes to custody while at the same time like being secure and um you know it really sucks to see this happen especially like they've they've been grinding for years and just to see that get erased like that like we really hope that the um the hacker actually Returns the fines um but it's just a terrible situation all around and um yeah it makes you wonder like how to keep institutional money safe and like can they just only rely on centralized exchanges from here on out if you can't even do any defy activities

yeah I'm sure we'll talk about this more in the NASDAQ section but I think it really opens the door for a really good uh custodial Solutions um because you know security is a big problem and if wintermute can get exploited so can anyone and so I think a lot of these traffic institutions are going to want to go through some sort of custodial service one of my takeaways was um the level of hacker that's coming to the industry is getting the levels of the hackers uh are getting better like this was a professional who did this right like uh Pebbles you explain how this kind of happened like reverse engineering I saw one estimation so winery's address had seven leading zeros like zero X and then

seven zeros um so this estimation you could brute force that in 50 days using a thousand gpus right so like I don't think the three of us have like a thousand gpus and 50 days of time lying around uh this was a pro who did this so that was it's like not only are the custodians getting better Security's getting better funds are getting better but also the hackers are getting better too that was another one of my thoughts so now that tornado cache isn't like as popular I'd say Obviously considering what happened a couple weeks ago so the funds got stolen where did the funds go did it go into I think I saw it went into the curves like three CRV three curved liquidity pool yeah so a good

portion of the funds went there the funds that they wanted to keep in Stables um or I guess if it just happened to fit in that pool it was fine um and then they they kept all the other tokens like they haven't dumped them or anything they're just kind of sitting in the address he can go on etherscanner d-bank and just look at it and speculate when are they gonna dump that yeah so so now so how many like how many assets are in that pool it's probably co-mingled with like a billion dollars in the pool or somewhere around there maybe a couple hundred million yeah for the for the curve pool like I think there's like close to a billion just in there and does this make it now that it's in the pool does that make it

harder for someone like a circle to come around and like Blacklist the tokens essentially is that why you put it into the pool yeah because if if circle's trying to come in and be like we're gonna freeze this like you can't specifically just freeze um all three tokens in that pool you can only control the usdc and if you were to freeze that contract for the pool I mean you're also freezing a ton of other people's money who were not involved in this at all any other thoughts on any other takeaways anything else you guys want to talk about on winter mutant here yeah I think um one thing that was interesting is somebody deployed a winter mute Enew token on uniswap like right after the

hack happened so someone like spoofed the address so they made it looked like the contract was deployed by the exploiter so a bunch of people started aping in and people were throwing like thousands at a time into this they're like they're gonna distribute the wealth and actually what happened is every time someone bought the token the the tokens that they bought were instantly burned so it was just another exit mechanism for some random scammer who just was around to exploit this wait wait let me get this right so scammer spoofed a contract deployment for a wintermute enu token so why like w-i-n-u that immediately burned the tokens of anybody who bought that token so if I went and

bought the winner mu enu token the winner you knew tokens that I bought would just burn so they were basically I was basically just handing money over for free to someone yep and a lot of people okay did you do it no I saw some people who did it all right basically lighting money on fire um awesome that's a good that's a good it's a good on Wesley anything else to add on to the uh winter view conversation uh nothing from me nothing for you all right cool let's move on um maybe uh I don't think there's too much to say here just an interesting bit of news from the week is that NASDAQ uh NASDAQ is the second biggest Stock Exchange operator I think in the World Behind the New York Stock Exchange I would assume

um announced that they're planning to launch a crypto custody service for institutional investors starting with both Bitcoin and ethereum um NASDAQ hired I think it was the former Gemini Prime head uh this person Ira Auerbach to lead the new division it's going to be called NASDAQ digital assets uh really interesting I mean this puts them in direct competition with coinbase Gemini bitco uh other traditional players like bny Mellon and State Street are coming out with custody Solutions at the end of the year put seven computation uh competition with them think this is a good move right like no one cares about on and off ramps in a bear Market everyone's like like when I immediately saw the news I was like so

what like this doesn't this doesn't just another player kind of getting into custody but what you forget is like in Bull markets when everyone wants to get in the the on and off ramps become really important players right and we've seen over like almost probably two billion dollars in crypto hacks this year already so like safe custody of funds is just more important than ever so uh what do you guys think of this news yeah I think it's pretty obviously a positive sign for the industry having the the second big biggest uh Exchange in tradfi basically saying we're going after crypto I think it's definitely a good thing um but I I think basically um on the winter mute situation I think there's huge demand in Trad fire to have

really robust custody Solutions and having NASDAQ as that sort of household name sort of gives them a head start with a lot of these travel institutions that want to get into crypto so I think it's a good thing it's going to spark some competition um yeah I think it's pretty positive overall Pebbles any uh controversial takes here no I think it's overall net positive I'm glad that there's appetite and demand from customers to even do this and I'm glad it's just Bitcoin and ethereum and it's not you know all these these random old assets that you see on like the the Bloomberg tab like of just stuff that nobody is buying true yeah true I uh I mean I think it's just

important not to lose sight of like how crazy some of the things that have been built uh just some some of the announcements in like the last month or two right BlackRock launching a Bitcoin fund or like direct exposure integration with coinbase uh coinbase institutional nasdaq's launching crypto custody Fidelity is offering Bitcoin to their 34 million clients uh Citadel Fidelity and Charles Schwab are partnering to build a crypto exchange um which my buddies actually uh in Final Round interviews and I was like is that real like they're really doing it and he's like yeah they're they're really going full force with it so very interesting let's move past it let's get into uh some other interesting things we're going stablecoin bill U.S lawmakers are reportedly uh drafting a house stablecoin bill that's going to

place a two-year ban on I think they called it endogenously collateralized stable coins AKA algo Stables um Westy what was your gut reaction to this when you saw this you're the I know you were the Terra uh you were the Terra uh analyst when when you when you first joined here so I think you've got a soft spot in your heart for the algo Stables um what was your thought when you saw this yeah I mean my first gut reaction was I kind of figured this was coming given sort of the Wipeout of Tara uh that was what like 40 billion dollars in value like wiped out so you kind of figured something like this was coming I just sort of have a lot of questions around specifically how this is like the language and the bill itself like we got

a lot of Articles basically explaining that this thing is coming but each of the Articles had different sort of languages for how an algo stable is sort of defined and so I was sort of confused and whether this applied to a lot of the over collateralized tables we see so for example you have um synthetics so they're susd is backed only by snx and so it's not necessarily an ago stable coin but by some of the definitions I was seeing that could technically be construed as now go stable because it's basically backed by an asset by the same Creator and so I just love to see like the specific language what it applies to and also like I'm not sure if like a bill like

this will even pass like obviously it's something that needs to get voted on go through the the proper steps and so like obviously people might be freaking out in the output it could just be done in the future yeah I think it's important to remember that there's a five-step process to these bills right you you introduce it you pass the Senate you pass the house you go to the president and then you become law this bill is in Phase zero right it hasn't even been officially introduced yet it's extremely new uh so it's not it's probably isn't coming anytime soon um I think maybe just a little more clarity around the bill like uh here are a couple things I read issuing a stable coin without approval from appropriate Regulators could be punishable by up to five years in prison and you'd get hit with a one million dollar fine

does this mean that like what are the current implications then for what are the implications for the current maybe things that look like algo Stables right does this mean that frax must have a collateralization ratio of 100 does this mean that obvious stable coin can't now use obvious collateral does this mean that CRV USD can't use CRV as collateral like what are the implications for existing Stables yeah so I from what I understand that's exactly what the case is like stuff has to be fully collateralized um I also saw something about that existing stablecoin projects would have a two-year grace period to become

compliant so it's not completely shafting them and that's like kind of a sensible stipulation to add to it um but I also think like so if something's collateralized by external assets that aren't from the same Dev team um then allegedly it's okay from what I saw and if that's the case then even if you had something like Tara pop up okay it was you had UST collateralized by Luna so what if they just created a separate entity that's not quote the same Dev and they just deployed the same mechanism but it's a different project like if people want to hurt people they're going to find ways around it

this is just kind of like something to appease headlines and Regulators I guess Westie what do you think yeah I mean I kind of agree with that um although I think like having a stable coin like that will just take would obviously be pretty hard to create and hard to Market as having like two separate projects that sort of coexist so I think it's going to be a lot tougher to create that kind of stable coin project but I could definitely see some sort of workarounds um and I also like the questions I have like I see sort of two sides of this debate where like sort of questioning is this a good thing or like the US is kind

of stifling Innovation and like reducing the strength of the dollar because by like not allowing stable coins to experiments you're basically not allowing uh the dollar to be like the prevalent currency within D5 but at the same time maybe that's what they want is they sort of only want centralized issuers that sort of have a constant Demand on the buying U.S treasuries and so I'd just love to know like the why behind is there like a deeper uh meaning behind this bill which would simply they saw the headlines from tarot and they thought they had to do something yeah I I also wonder what the implications are for someone like a maker right maker is collateralized with exogenous assets like um like mostly

uscc and eth but I do wonder if this means that someone like a maker like the protocol I just makes me think that they uh they might like the US Regulators might not probably anytime soon but like in the future make someone like the maker protocol register with U.S Regulators to continue serving users in the US and then that's when you have a big decision to make right which is like something that we talk a lot about on the podcast which is are you basically leaning in and you're trying to increase the Tam of your protocol and like get as big as humanly possible probably by registering with the US regulators and like complying with the rules are you basically saying like we're keeping the ethos of our protocol and like we're gonna not really register and like do

kind of the things that you want us to do and just like decentralizes as quickly and as much as possible so I think that's I don't know that's maybe one of the second order implications that this made me think about yeah I know this is something that roon talked about the sort of end game plan and that like basically maker had to pick two paths either being sort of like a Neo Bank someone that goes along this route where they sort of have to talk to uh The Regulators um in order to exist or go fully decentralized and so it's something like like you said were to exist where basically in order to have a stable coin let's back to the US dollar you have to go this route like it's pretty tough to be in Maker's position like what do you decide there

Pebbles you worried about this one um I'll be keeping an eye on it but I in the meantime I will not be playing with any decentralized stablecoin governance tokens at least um I think this is gonna add a lot of weight to price appreciation of anything from like frag shares to maker to even like liquidy like I'll I'll just stay away from them because even if like technically it's fine it's not implemented like people are still going to associate this negative correlation that's I mean I think so Jake travinsky said this well on Twitter he said uh and Jacob you guys don't know Jake we just did an episode with him a couple weeks

ago he's the head of policy at the blockchain association he's like it's hard to overstate the damage that Tara did to the perception of crypto in DC right many as many policy makers already dislike the notion of a this permissionless like digital Marketplace and wanted to put all of crypto into this well-sealed box Tara gave them the as he says I would agree with him the unjust cause but it's still just you know in their minds is a just cause to push that forward so I think it's a shame that this is happening I do think it's going to have an adverse react what's actually going to happen is you're going to see a race to create a bunch of algo stables in the next like year or two before this bill is actually introduced uh in like some of the chats

that telegram chats that I'm in uh with some folks who are in doing work on some of this stuff they're like yeah this is just going to push us to move faster um and like race to build our stuff which was kind which is just an interesting like adverse reaction all right folks this episode is brought to you by our friends at Avalanche and Ava labs they have just dropped a new crypto wallet called core you're going to be hearing a lot about it over the coming months you can now be one of the first to try it out here's the reason I'm excited to partner with them on Empire right now crypto wallets and browser extensions they feel clunky they feel non-intuitive that's why Ava Labs built core it's a free non-custodial browser extension that gives Avalanche users a seamless and secure web through

experience across the entire Avalanche ecosystem here are a few reasons to try core here's what I'm experimenting with number one core has intuitive dashboards with a unified display for all of your nft collections all your crypto assets you can execute asset swaps directly inside the wall it's a really nice experience uh maybe you want to earn yield or borrow against your Bitcoin but you don't want to do it on one of those C5 platforms right now core's native bridging functionality makes it really easy to bridge your Bitcoin to avalanche's robust defy ecosystem last but not least core makes unwramping super easy you can convert dollars to crypto right now using the moonpay integration just takes a few clicks

download Core today using the link in the show notes it's really really nice if you are interested in the Avalanche ecosystem at all you have to be using core download Core using the link below now let's get back to the show Westy take us home with the arbitrim bug what's going on what what uh what happened on Monday yeah I mean I'm not too in the weeds in the details but essentially there's a bug on the new arbitrum Nitro chain which allowed attacker to steal all incoming eat deposits basically going from the ethereum L1 to the L2 and there's a guy named Riptide who wrote like a medium article detailing how he was able to like wipe these like storage slots and well-intentioned gas optimizations in

order to essentially like stop eat deposits and sort of take them for himself and so you sort of notified arbitral Nitro and got I think it was like a 400 youth as uh bug Bounty and one interesting thing he said in the article that I read was basically that like he is 100 certain anytime a developer like deploys a new contract to mainnet that like he's 100 certain there will be some sort of problem that he can find and exploit and sort of claim a bounty on which is pretty pretty scary to read but at the same time it's something you need to be aware of as a contract developer that anytime you deploy a contract to mean that there

will be dozens of some of the best developers basically trying to find any cracks that they can so it's like security once again is super important definitely get your audits um but it's obviously something to keep in mind yeah Pebbles what happened here what do you think about this one I think the first takeaway is uh learn to code and get these bug bounties because that's insane money I mean imagine just hitting I thought they weren't gonna even pay they weren't even gonna pay Riptide though full the full Bounty that's what I heard which uh that's what I saw on Twitter but which I'd be pissed off about yeah I'm I'm not sure about the specifics of that I'm just thinking like

man if I knew solidity and I could hit one Bounty a month it's like I'd be retired within a year to no longer be working a blockworks research huh now I'm here for life um but I will say like it it does suck to just see another bug like this happen and like obviously the the future is cross chain or inner chain and you just need a safe way to like move funds around or interact with funds on different networks and like we have we have so many VC funded projects we have like synapse we have Stargate we have Wormhole and they're all working towards

this but like you you see something like this with the biggest roll-up arbitrum it's like when is anything going to be safe ever and then like also like sure I'm sure they had audits for the code but like even an audit like it's not like a 100 like gold seal that everything's gonna be okay with your project or your code I mean I sat in the D5 project for a few months as a trade and then um they they had like two or three audits from like really good auditing firms and at some point they realized that it was calculating interest wrong so the protocol is actually running at a

deficit and was just hemorrhaging money so I got wrecked on that but like so even audits all the way don't work yeah I mean it just feels like there's so much that has to go right right now um and there's so much that kind of currently is going wrong it's like L2 Securities touted is one of like the most secure scaling Solutions right but then you get into like Bridges what was this this was on the it was sitting on the bridge I think it was it was like uh it would allow the attacker I think Westy just said this but allow an attacker to steal all the incoming Eve deposits from the L1 to the L2 Bridge so anyways uh I feel like this is another example of like just Bridges needing to

be fixed um and like just how yeah how early we are to the bridging space I also think um I mean I don't know if this is true or not this like total fund probably but Riptide post and he's like what or he or she would arbitrum have been insolvent if the 470 million dollar deposit a few days ago was stolen and they had to reimburse and 73 74 of people said yes they would have been insulting now I have no idea like that's probably total fud but I don't know if you I don't know if you guys have insights into that but like just the fact that one hack uh could take down some some big folks it's pretty crazy yeah it's a scary thought and then the people who have equity in a company like arbitrim are the ones that are helping

prop up the entire crypto industry so if you know if some of their projects get hacked and they they lose a lot of value in their seed Investments than like who's left for crypto at the end of the day yeah it it makes me wonder if like are we going to see ethereum with actual sharding live or are we going to see an actual secure Bridge like which one comes first what do you think I have no idea at this point like hopefully one of the bridges just completely locks it down and like we go exploit free for you know the rest of Eternity but um I think complete safety

will probably happen just when ethereum shards and we don't have to pay crazy gas fees all the time yeah Westie what do you think I think this kind of shows the the Ingenuity of IBC on Cosmos like the fact that there hasn't been any major Excellence there I think and I know they're developing ways to connect IBC to ethereum and to Solana currently and so I think that could be a pretty good bridging solution but at the same time I agree like all it takes is one hack on a bridge and that's like a lot a lot of value that you're taking and so it's sort of hard to align incentives like because there's a lot of value in these

Bridges like how much is a bug Bounty worth it um to these hackers so I think managing incentives is a tough thing to do with something you need to do yeah anything else on arbitrum a broader thing with just security is like maybe we do see a ton of huge dollar amount exploits on anything that's ran on solidity but um maybe like we haven't seen a ton of Cosmos exploits because that language isn't as widely known I think they use like wasm wasm so if that starts getting more value on the chain that it's going to attract all the hackers to come out there learn a new language and then get ready to go to

town on exploits there you guys ready for Adam 2.0 yeah let's see it what do you guys think what do you guys think is coming and I'm excited to hear about what the EIP 1559 like looking like a joke means like I'd love to know what's the deflationary pressure on that I'd love to know like Mev I know they said they're probably including some sort of proposer Builder separation but what does that look like like I'm definitely super excited for like the Hub actually having some value um but I I wonder what that value looks like yeah yeah we'll keep an eye on that um all right last thing Rafe uh Ray Ray

Rory Rory Faye uh in August we talked about how Faye Labs proposed to dissolve the protocol um the proposal had tried out paying out basically all of its assets to token holders except for about 14 million that was set aside to compensate users who were victimized in a previous 80 million exploit they catch and the reason people were pissed uh is that not all users were going to be made whole basically Faye was only going to pay out two percent of fra uh of the 13 million that frax lost uh Olympus Dow lost like 9 million they were gonna pass three percent of that uh they're gonna pay like 19 of balancers losses 27 investor best provides losses so some people really pissed including Sam the founder of frax uh who called it one of the most

egregious down D5 situations he had ever seen fast forward to this past Monday uh Sam the rest of the community Olympus won out with a big new on-chain proposal that approved that uh approved that got approved that paid out all victims in full so Wesley what are the what what's the interesting thing about this here like when you see this happen what are you thinking about yeah I think so this is something Joey actually said in his tweet thread but it was sort of like in the future how do we deal with situations like this like when protocols have some sort of PCV or some sort of value um and in certain situations whether they get exploited or like something happens how do we actually pay out those

assets and he sort of had the idea to enforce this on chain which I think is pretty interesting I'm not super technical myself so I'm not sure how that would actually work in practice but I think if somehow you could code within smart contracts specifically who gets paid out first in certain situations I think that could definitely help alleviate in a similar situation in the future and I'm yeah I'm just excited to see uh future development in the space and how we sort of tackle this issue going forward I mean it feels like that it feels like what should exist is what already exists in traditional startups which is like let's say there was a and let's say there's an acquisition or

bankruptcy like there's a very clear preference stack that shows who gets paid out first right like you'd have like the debt holders get paid out and the equity like it kind of just basically trickles down the stack um that should probably be and that's basically written in the operating agreement of a company uh that should uh and and honestly just it's in the legal system too that should probably get included in like the formation docs I don't even know what it is but like in the smart contracts or whatever of of these protocols that's a good point Wes dude yeah I think on-chain enforcement is definitely like the best method going forward and you know like people are all about you know throwing funds at some some Dow tooling companies like let's

let's see them build something useful like this so that you're not counting on a bunch of 17 year olds behind a computer to pay you back your money when something goes wrong but also like I don't know maybe don't do a down treasury swap with a project funded or like completely created by a bunch of 16 17 year olds yeah true true so um all right guys this is great any anything else that you guys are uh are looking at this week not really I'm just trying to see um what this interest rate height looks like and um how the markets react to that raised at uh 1.4 billion dollar

valuation so this total rumor we're recording this on Wednesday afternoon so we will see if that actually happened or not but yeah September 23rd it'll be announced yes exactly so cool guys all right this is great appreciate you guys coming on hope you guys enjoyed the episode and we'll see you next week cool thanks [Music]