Could AI Crack Crypto's Cryptography? Why Not to Panic Yet

Transcript

the speculative premium that these tokens had during the hype period is going away. Right? So, if you're going to put a governance token in front of your project and allow decisions to be made in one way or another or mediated through in one way or another token holders, then you have to be able to provide economic security through that token, right? Because if the value of the token drops below what it would be worth to steal the assets that the protocol protects, then it's not just like some thing that you can just say like ah we don't care about the price. That's not our focus. Like no, that's like a key component to why the system works and and if it if it can work, that's why it's supposed to work.

>> I'm Kane Work and welcome to Uneasy Money because what happens on chain never stays on chain. Before we begin, here's a word from the sponsors that make the show possible. This episode is brought to you by 1- in Aqua, the shared liquidity layer from 1 in. Back multiple liquidity positions with one wallet balance and keep your tokens in your wallet until a swap fills. See how it works at 1 in.com/ aqua. Not listening to Bits and Bips yet? It's our weekly crypto and macro market show with Rahm Alawalia, Austin Campbell, and Chris Perkins. Search Bits and Bips and subscribe.

>> All right. Hey guys, I'm here with my co-host, Taylor Monahan, security expert, and Austin Griffith, builder enablement at the EF. Um, and we have a very special guest this week, Ben D Franchesco, founder and CEO of Scoplift, uh, the team behind Umbra and Cactus. Um, formerly Tally. That's quite the bio. Um, you were not formerly Tally. That was Cactus was formerly Tally. Uh, >> that's right. Yeah. >> All right. Just making sure. >> I've always been Bendy Francesco. Has not changed.

>> Okay. You weren't you were never masquerading as a Dow that was going out of business. Okay. Um, good to know. Um, good to know. All right. So, our first segment, uh, I was saying before the show started, uh, like slow AI news week. Um, and then I'm in Singapore, so yesterday it became not slow. Um, and it's only accelerated since. Um, so we're now in this interesting weird rumor situation um, about MetaMask um, and bunker mode. Um, so Justin Drake um, who I love like his tweets are the he tweets like it's just like max chaos sometimes. It's amazing. Um, so Justin Drake tweeted yesterday um, don't panic.

>> Always a strong start. strong start. >> That's what you want to hear. Yeah. >> You may want to move all of your crypto out of the cryptography zone that it's in, which like not amazing. Um so, so you know, uh don't rush though, guy. Like don't rush. Um just like slowly panic, uh exit, right? Um and and the the thesis was um this was all on the back of OpenAI being like, "Hey, um you know how we take out startups all the time? Well, we're taking out mathematicians this week." Um not a

startup, but like we're going to ruin it anyway. Um and they dropped 722 uh papers. A bunch of them that were like formalized and lean. A bunch of them that like have implications for things. And one of the implications I think is um maybe there's like faster methods to uh you know break um and and again like this is not saying that like elliptic curves are solved or something like that. It's just saying that like there might be faster ways to brute force um keys, right? Um and so you know if you happen to have more than 50 Bitcoin for example, right? because there's there's a bunch of Satoshi wallets that have 50 BTC because that

was the original uh block reward. Um but if you happen to have accumulated more than 50 BTC and it's sitting in a wallet, maybe move it behind like a hashed um a hashed wallet somehow that uses like a different uh different hashing function to protect it. Um like on one hand it seems like fanciful and insane. Um but I just think that we are in a situation where like it's unprecedented, right? Like this is an unprecedented situation. No one knows how to think about it. The average person doesn't want to think about things. And this like you know for me hearkens back a

little bit to like co right like crypto people are like autistically right? And crypto people were far more worried people crypto people were far more worried about um about co like I remember not going to ECC that year because I was like this is going to be a catastrophe. I did send my co-founder I was like you have don't have children you go it'll you'll be fine >> sacrifice you for the ECC. >> Yeah I was like someone has to go but just not me. Um and and so I said I sent my co-founder uh he was fine. Um it wasn't it it was like a it was a hot spot right that year if you remember

there were like 150 people that got co um he somehow avoided it. Um so congratulations but um but it just feels like we're in an unprecedented situation. Um and you know of course then what happens is people start to uh connect dots that may not even be connected right. So, one of the dots that got connected from this is like MetaMask is rotating their validator keys and like maybe they know something about like math being solved and they're like which doesn't seem that credible to me. Um, >> no, >> but I don't know.

>> FYI, that's I know what happened. >> It's not what happened, right? But >> but it could have been it. >> And that's it could have been. That's and the possibility is terrifying. So, I can give I can give you I can talk a bit about the MetaMask situation, not because I formerly worked at Metamas, but because I read the Metamas tweet and I can explain it in more human language. Um, it seems like um so so MetaMask staking, formerly consensus staking, right, is a non-custodial staking thing, right? The stakers have the validators have two keys. There's the like withdrawal, move the money key, and then there's like the

validator key. The validator key that does the work is on the server somewhere. The withdrawal key is yours as the end user, right? Okay. So, there's a third, it's not even a key. There's a third configuration that is neither of those keys. That's the fee. It decides where the fee goes. So, me fees and block rewards go to specified address. This is actually not signed. Well, it's sort of signed. >> You have to sign to to shift it, right?

Like to shift where the fees go. >> No, it's a configuration on the servers on it's like a web two thing, >> right? >> And so basically, uh, a whopping total of 0.36 E was redirected from the original key addresses that people had specified into new addresses, >> right? And that set off the alarm in terms of like wait what the happened. >> Metabas has not come out and said exactly like like the I think Joe came out and said that they're working that once it's all resolved they'll do a full postmortem and disclose everything. But just based on my understanding of this incident and then also formally um about a year ago Kilm had a a similar

situation. Usually what happens is basically like something happens on the infrastructure somewhere, you see signs of bad things happening and so you just proactively if if you have strong security, you proactively start rotating things to make sure that nothing else bad can happen. What's super interesting is that with validator setups, there's actually a very low risk of money being stolen because the keys don't live on the servers, right? >> Yeah. I mean, like I have a confession to make here. I'm not sure that I know where my validator keys are. Like, I've got all my nodes. They're all running.

>> The fees get sent to Kane. Um, so that's fine. Uh, but like >> I'm It was such a long time ago, man. Like, how am I supposed to remember? >> If your fee suddenly went to a different address, would you have noticed? >> God, no. Absolutely not. So when I saw this I was like everyone's freaking out and I was like you know what I can't believe they noticed.36 either was crazy >> but that it's just a testament to like actual like strong >> I mean it's impressive. It's impressive.

I'm not running a very I have I have the least effective validator set in Ethereum history. So I've got like 40% downtime historically over like five years. It's like shockingly bad. Um, so, uh, a zero nines is is our policy. Um, zero nines. >> I would notice mine. I would notice mine. My my it's my net worth there. My couple of validators is like my nest egg. So, I would notice it differently, but also like cookies are hard to remember where they are. I do know where they are, but I remember one time a long time ago, Kane, someone stole one of your validators. I remember you tweeting about it or something. And you were like, "Good luck because you can't do anything with the stolen validator anyways." Like, it doesn't actually have

the keys on it, right? >> Oh, yeah. No, this was my DAP node. The the machine disappeared. >> The machine The whole machine disappeared. >> There's There's nothing you can do though, right? Like, >> dude, it's the funniest thing. This DAP node, like I bought a DAP node and I was like, I'm going to self validate. This is what I'm going to do. And I spent I spent so much time setting it up, whatever. And this is like I've now thought back on the process. And you know, memory is is very fallible, right? And so the confabulations that I have about the process that I went through to set up these validators. I have no bearing on reality at this point. Like I have like I've got no idea what I did, when I did it, what room I was in. But in my head I'm like, "Oh, I know I was

here. So if I can reconstruct it, I got no idea." >> But by the way, way easier now. You you can give AI like SSH access and say, "Let's run a validator on this thing." And it's going to say, "Let's figure this out. >> Do this and that. We would still have no idea how you did it, but just because the AI did it for you. >> Yes. >> Yeah. >> You'd at least have the session. You'd have the session, right, to to go back like Yeah. It's crazy. You know, the the session files are like my memory now. It's the only way I know what what's happened, right? I'm like, "Hey, two weeks ago, why do we do this thing? Go look at the session file." And I'll ask them to tell me what my reasoning was >> because I'm like, "I can't remember why

I thought this was a good idea." >> I did it yesterday. like two days ago. Sorry. Go ahead. >> Yeah. No, I was just going to say it's weird. I've added Yeah, my AI sessions are like a form of memory now and it's like the first one I go to and there's so much goodies. There's so many goodies in there. >> It's dangerous. >> Well, Austin, you called me the Rword 10 times and then you >> Exactly. >> Sorry, Ben. No, I was gonna I mean what I was thinking is like so this the the meta mass connection to like the AI you know possible break of encryption thing does to me feel a lot like uh kind of a COVID era everybody's online a little bit on edge and like you know we're all

kind of like you know Charlie and that meme where we're connecting >> things uh on the on the whiteboard right that aren't really connected so it definitely feels like co co in that respect it also kind of I think I think the the comparison is apt because it it feels like we're at the beginning of like an exponential process, right? And people who are like too online and like paying close attention like see the like start of this exponential curve happening, right? Um and we're like, "Huh, that's that's a little alarming." Like something something is happening here, but like everybody else in the world is like, "Oh, you know, a virus in China or like I can talk to Chad GBT or whatever." And like they don't, >> you know, it's not connect. And by the way, I'm not saying that AI is going to

be like bad or a disaster or like kind of doomer kind of thing. I'm just saying the the changes are exponential process. >> Exponentially fast. Yeah. Exactly. Right. and and we have really bad intuition about exponential processes and and so you know >> autistic like firmly online people are going to be the first ones to notice that like there is a gap now between you know the the y axis and and so um yeah it's it's like yeah it's crazy um so >> I also hold on though I want I just want to ask because I was reading like Justin Drake like this morning right Right.

>> If if if like cryptography is broken, is the crypto is the cryptocurrency the worst thing thing that's going to end the world or >> this is the thing though, right? It's it's a little bit of uh I mean the thesis I think right from from his tweet is that it's like we haven't broken elliptic curves, right? Like what we've done potentially is make it easier to brute force them. And so if you have 100 GPUs um in you know server farm which funnily enough people weirdly for some reason have now um and you're like ah these AI tokens are like cool but maybe I'll just break Satoshi's wallets instead. Um you know we've we've

got so much compute laying around. So yeah. >> Well I I will take I I I'll modify what you said a little bit. Um I do think that if it's if it becomes possible to brute force in any kind of reasonable human time you know ext broken in a sense but you're right in the sense that it's not as if what would happen even in the worst case scenario >> um it's not as if what would happen is tomorrow um anybody can sign a message >> read anyone's message >> right exactly like even in the even in the like bad very bad scenarios what would realistically happen is you would have some kind of weakness in the

underlying cryptography that's been discovered right that allows brute forcing to happen but still requires you know a long time and enormous amount of compute right and you're right we do have a bunch of compute now but the other side of that is that the compute is now very expensive uh and that actually helps helps here as well right um because you know basically it sets again even in worst case scenarios where you can just throw GPUs and get a key for any address um that's signed a transaction. even in those scenarios um you know a lot of addresses are not going to be holding like economically worthwhile amounts of of funds right which is why if you read Justin Drake's tweet he he focuses on like the big

infrastructure providers and that's not only because they stand to lose a lot it's because >> um they would be the first targets right the ones who are like custodying enormous amounts of assets in um you know in uh in a single address or whatever. I mean like the west the west address to me feels like a fun one >> like >> or or zero it could be zero address >> just even better yeah zer's dead right like but you know we is funny because like there's always been these like it just feels like a bad it I've always like it's like the start of the horror movie right like is like walking through a dark forest and you're like h something bad's gonna happen to this guy

he's too beautiful for the world and and so like you know I I just I've always had like a a fear of the wealth address and and so >> 5.5 billion in we right now >> is it really Jesus Christ >> I know it's crazy man that's what I'm saying it's too big it's too big to fail >> well but to be clear that's a smart contract address too so it's not secured by a private key in the traditional way but you know your point is is a good one I also I think like I think it's just I I I also just want to pause for a second and think about how crazy it is that we even have to consider this as a possibility right now.

>> That's what I was saying. >> It is really >> Yeah. Right. I actually >> You asked me. You were like you're like insane in what way? And I was like I don't know yet. Like I'm just processing. But the fact that you have to process is wild. >> It is wild. But if you think about it, right? Like we are sitting here on our planet with our like rudimentary technology. We think we're really cool and really smart. We're like way smarter than all of the other dumb meat sacks, right? On on the planet, right? Like whales and Like what the have they done? And then and then and then aliens land on the planet, right?

And of course their technology, they've come from like light years away. Their technology is way better than ours, right? and and they're gonna be like, "Oh, hey guys, like we're just gonna secure all of your Bitcoin first before we like start giving you, you know, solutions to like elliptic curve cryptography and and what have you, right?" And a bunch of other right? I'm sure they'd have to do to before they could like they couldn't just be like, "Here's the trove of all of the solutions to the things because society would would blow up, right?" Um, unfortunately the aliens that have landed on our planet are also like pretty and they're like owned by humans. And so this is like the worst case scenario for us, right? Like it's

there's no process here. Like the aliens, you know, you would hope that those aliens like this is not the first imagine it's the first planet that they've found. Like they would it up like hilariously, right? Like they would have like all these ideas of how they're going to do it. If we're like the thousandth planet they've arrived at, it would be >> they know they have a process. They're like, "Oh man, remember like the 30th planet? They nuked each other because we told them that their gods weren't real or whatever the happened, right? >> They haven't come up with a prime directive yet, you know?" >> Yeah. Exactly. >> Yeah. Exactly. So, but unfortunately that's not the scenario we're in. The aliens we invented and they have no idea what they're doing to us. They're just being like, "Hey, I was told to

formalize this proof and I have done it. Here you go. >> We don't even know what to do with it either." Like that's the it's not going to end well. >> It's crazy, man. >> So, with Elliptic Curve, it is crypto, but to answer Tay's question, it's also HTTPS and like all internet traffic. >> That's what I mean. Yeah. >> When the aliens landed, they could plug in and just like see everyone's internet traffic immediately. Yeah. Right. >> Yeah. >> Yeah. So this is like thing that that I've always explained to people since for like a decade now, right? When they're like but >> how do you know that the cryptography is stronger or strong enough or you know the answer is well we don't necessarily like forever know. However, if it

>> breaks signs >> there will be there will be signs but also the first thing to break is not going to be Satoshi's coins. is going to be like the most powerful people on the planet hacking the second most powerful people on the planet. Meaning like you know probably one government hacking another government or the rest of the world or whatever like that's right because cryptography underlies a huge amount of the technology that the world operates on. So, >> including by the way the traditional financial system which I think like to your to your question Taylor like >> if this is if this turns out to be true which again I I put like relatively low odds on it but but let's say it is like if it turns out to be true then you know

I think similar to the way similar to what happened when these models suddenly got very good at cyber attacks recently right like finding bugs >> mean two weeks ago man two weeks ago >> like yeah like last night >> right like >> so I think open source got hit like hardest and first because the source code is there and it's open and it's permissionless and you can scan it and find bugs right um but and but then in the long run I think open source is going to be the most secure right because for the same the same reasons like it's a permissionless bottom up like tons of eyes on it everybody's going to apply those resources to these open source code bases in a way that a you know closed source proprietary thing can't afford to do and so I think you

could see something play out similarly if it turned out to be something like this with the traditional financial system, you know, in the long run being the worst place to have your your money. Actually, like crypto networks get hit first, but then they can react and fortify and fix the bugs and patch node software and do roll backs and all the messy terrible things that would happen, but then you know these legacy institutions, financial system that is built on, >> they're not going to be as react. Yeah. They won't have the ability to to react. They absolutely won't. Agreed. Yeah, I still I still hold that the people that first gain access to this magical power of being able to basically do anything with any technology is going to be like the

those people don't need more money. Like they can just like print money out of thin air, >> right? So they're not they're not going to be stealing Satoshi's coins, let alone like Yo Luben's coins. >> They wouldn't start with something that's like extremely obvious, you would assume, right? They would be doing, you know, >> they're going to be doing what? like real power like geopolitical like the world type Um there's yeah >> like to your point if OpenAI has figured this out right it's already been you know moved into classified you know sections of the government like it's being used for cyber security I think the bigger concern you know for crypto like that gives us a window to act right and and I think if it if if the if there's anything to these rumors and

again I give them relatively low uh probability of being true but if there's anything to the rumors that like OpenAI is coordinating with the EF or whatever like we'll see things happening in pretty short order that tell us because the real risk is like with as with all the AI stuff is that the Chinese models are not far behind and in that case you do have you know first of all they're open weights but there's also an adversarial part to it you know so like that is you know you have maybe some number of months uh if openi was able to do this with their you know cutting edge frontier model then you have some number of months before a Chinese model is going to be able to do it right so That's That's like the clock if this were to actually be the case.

>> Yeah, agreed. >> Agreed. >> I I have to say that at least this is very interesting. Usually when we're talking about hacks on this show, it's a few up on the stack where it's like into some system stole. Now we're talking about like math breaking. Then this is going to be interesting, you know? >> Yeah, >> it is. It is. So like it's it's wild. A decade ago when I would explain to people like your private key is secure because of XYZ, right? The saying is that like uh in order to brute force it, you have to like consume more energy >> of the universe. They used to say death of the universe. Now they're saying 2027 2028.

>> Oops. >> Which by the way, like we might not make it there, right? Like we might not make it to 2027. So >> it's just wild to like think about like my entire basically my entire career has been like Yeah. Yeah. totally safe. It's been a lie. You've been lying. >> The density of energy in the universe and then it's like it's like oh okay cool actually maybe not >> about that. I mean I do think it's worth like highlighting a part of what uh Justin said in his tweet which is like don't you know panic and rush and do something like stupid. you know, the average like you're much more likely to lose funds because you go to like rotate

all your, you know, cold wallets and screw something up um than you are to like have it stolen by a GPU farm anytime soon, right? So, for the average holder out there, even the above average holder out there, like even if you're a whale, like don't panic and do something that's going to be much more likely to cause you a problem than than this, right? >> Yeah. Yes. Yeah. Agreed. I think that's I think that's a fair call out um for today. >> Yeah, >> for today. >> Yeah, >> like the time like the the clock is ticking here, right? Like time is time is running out. Like I mean the thing that was maybe the the most scary to me uh about uh the like math dump I don't know what better term

to to give is that uh the description of the process that they went through right like the Erdos problem they spent $10 million on um this they gave it to like one model like one model in one session like it it doesn't seem like this was like a brute forcing of like running, you know, uh $10 million of compute to solve this problem. They just like gave it to the whatever the latest and you know, it's kind of it's it's very interesting because models are spiky and we know that. Um and you know, it's easy to forget that there was a period of time like two years ago where they couldn't add like 2 plus two.

>> Yes. Like you ask a model like what is 2 plus2 and it would come up with plausible answers like seven like it's in the area right but they were not correct and and you know it didn't say like 80 trillion right but like it was it was not right um and it would get like very trivial math problems wrong and people would like you know pose slightly tricky math problems and they would get them like even more hilariously wrong and they were like see look they're idiots they have no idea right um And that was two years ago, right? And and what's interesting is the the skills set of models um you know does kind of reflect the uh evolutionary pressure of like making smarter models,

right? They're really good at scraping data and scraping data is like not like you know doesn't take genius level intelligence, right? It takes like some brute force and, you know, some trickiness to get around, you know, whatever things that people are trying to stop you from like stealing all their data by scraping their pages. But they're like super good at that. If you ask them to scrape a website, like they will scrape the out of it, like faster than you can imagine, right? Um, they're really good at engineering, at writing code, um, which is more trivial than like solving hard math problems, right? But now, weirdly, as they've like like stepped up this scale of intelligence, right, they've all of a sudden gone through this like spiky thing where they're really good at math.

Um, and you know, we saw this play out with with engineering where you know, really good engineers are like, "Ah, look at the dumb mistake that it made six months ago and now like the best engineers are like, I this is like we're done. We're not doing this anymore." Um, so you know, I mean I was I was actually uh Eli was at the event that I was at um last night um from from Stocknet Stockware um uh Zcash fame um and he was like I used to be one of those guys that did this thing and now it's not a thing anymore. And he wasn't talking about coding, he was talking about math.

Crazy. >> Yeah. >> Yeah. >> It's clever math that's breaking it. I feel like my smooth brain take on this is like there's levels here and ECDSA gets cracked by just clever math, but then you have like hash functions and hash signing that are harder. And then you have like quantum computing and all of that stuff. This is like a couple layers down. Even though it sounds scary, like clever math only breaks the first level, not the second and third level. So there there's something there that's like less scary, but still scary and interesting.

>> Yeah. I mean, let's not for Yeah, let's not forget, right? Like, you know, we it was it was less than six months ago where people were like, "Oh, these things, you know, like a year ago, they couldn't like do a git commit, right?" Um, we're at the point now where you can give a clever model an open source codebase and it will transcribe the codebase from Go to Rust in like 24 hours perfectly. >> You're saying that the rungs will be uh climbed >> like they tend to get better at stuff is all I'm saying, right? Like I don't know. I don't know.

>> Yeah, I agree with that. >> Yeah, I mean I've stopped making predictions I about where it'll go because it's just like it doesn't doesn't seem seem to work out that well. I mean there so my understanding of some of the math stuff is that a lot of it is sort of like a kind of a computational or a brute force exploration of you know solution spaces. I don't think as far as I know, math people check me on this, that anything that's been produced by the models yet is such that a human can't review, an expert mathematician can't review it and understand it. In other words, it's not as if the models are at the point where they're, you know, solving problems in a way that's incomprehensible to human beings yet,

right? Where we just have magic technology that we literally are incapable of understanding. Um, yeah, but I think your point Kane is a really good one that like we were saying, well, the models can't do this six months ago and they like blew by that. So, again, I've stopped making predictions. I don't know. It's crazy. We're in crazy time. >> It is. It's an interesting question of like um is it possible for a uh you know, ignore models, right? Like like genuinely aliens. Imagine they're super intelligent aliens that are, you know, for some reason a thousand times smarter than us, right? Would their math be incomprehensible to us? Right? Or like is there a comprehensibility to math that a smart human any math thing like we are past some you know uh

intelligence horizon where like all math it will be scrutable to us. >> I we'll find out. We're about to find out. I'm telling you we're going to find out in the next six months like whether or not that's true. So that'll be fun. >> Hold on to your butts. $540 million. That's how much concentrated liquidity sat idle in a given week in the first half of this year. About 30% of the D5 TVL if you're wondering. That's according to Dune Research commissioned by 1 in. But there's a solution. 1-in Aqua is the new shared liquidity platform. It lets LPS back multiple positions with the same token balance and keep their tokens in their wallet till a swap comes. Why does

that help? Because the LPS don't have to split their tokens across positions, they can cover more market conditions and pairs with their full balance. That means more activity across deeper liquidity. See how it works at 1in.com/aqua. Remember that providing liquidity carries risk and fees aren't guaranteed. If you like this show, there's another one from our network you should be listening to. Bits and Bips is our twice weekly market show. On Mondays, Rahm Alawalia, Austin Campbell, and Chris Perkins chat about where crypto and macro collide. It's sharp, it's fast, and it has its own channel. Search Bits plus sign BIPS and subscribe.

>> All right, we are back. Um, so we talked about this uh last week. Um, the near intense hack. Um, in the intervening time, uh, the hackers sent their money back. Um which you know you see this happen occasionally right um you know they post a message uh um you know Alex uh from from Aurora said we've identified you sir and then mag came back um now you know the interesting thing about that is that whenever this happens like it's obviously not North Korea because they wouldn't care right um so you know it means it's some probably not nation state level actor Right. Um it's it's just some dudes. Um

yeah, I don't know. Uh what's your what's your take on this one day? >> Well, okay. So, the one of the interesting things was that the the attacker actually sent some dust to to the the to Lazarus, the Ronin address, the infamous Ronin address. Uh which is the same thing that the Oiler hacker did back in the day. Um, it's been like three years now, but yeah, there's like a certain demographic of hackers who think they're like clever and are like, "Hah, everyone's going to think of North Korea and then they like send the money to the Ronin address and then they immediately get caught and send all the money back." Like this happened with Oiler and now it's happened with Near. I don't know what to make of it. I think

it's also interesting though because I feel like the Oiler team and the Near team are like they're just sort of cut from a different cloth a bit. like they don't like they get hacked and they're like >> we're like let's go get our money back. Like that's like the only path that they see. Um I don't know. It's wild. I want I would love to hear the story if someone has a story or maybe the near team. Please let us all in on the secret on the back. >> I mean, you know, it's funny, right? Like I when when we had the the Oracle hack, like we'd shut down the the thing so the guy couldn't get the money out.

Um, but like I was pretty clear with them like I will hunt you down. >> Like you can you can play this game as long as you want, but like I will actually physically hunt you down. >> And like he didn't seem to appreciate that. Um, so you know, I think if you're if you're if I like and you know, you're a physical incorporated body in the world like you're not like you know, you're not unfindable. um everyone can be found and and you know if you're not a nation state actor, if you're just two guys um who are you know hanging out in Southern California or something um not naming any names uh then you can be found. you can be found. Um, and so, you

know like >> I think that there are teams that are like, "We will find you." And there's people that can find people like there are people in the world who that's their job. And if you make the money worth enough, like $4 million, like people will find you for a lot less than $4 million. Trust me. Um, so yeah. Uh, it's just like, you know, the teams that go eh I mean, and this is this is the funny thing, right? Because you know, >> but that's the thing, Kane. It's like they don't go ad. They like write a big post and they're like, "You give us the money back, we're going to get your Binance account and the law enforcement's going to come after your like it's such a credible." You see it, they're just like like sometimes it's

credible and sometimes it's not credible. Like >> there's something really real like Alex going on. He's like, "I'm not even going to bother with an onchain message. I know this is watching my Twitter." literally >> like we've identified you, sir. Like >> it just like it's a completely different tone. >> It is. >> There's no It doesn't feel like there's any laring with it. >> Uh and then Yeah, the guy is like immediately like sends all the money back. By the way, he also he zero% bounty. >> Like that's how it's done. >> 100%. Like why are you paying bounty to these guys? Nuke them from space. Yeah.

>> Like like UAV straight into their house. Yeah. Bounty after. Yeah. No, you don't get a bounty after you hack something, guys. Like this industry. >> You made a mistake. You made a big mistake. Um Yeah. So, like I don't know. It's just fun. Like you there's so many times where where teams get hacked, right? Like this this especially used to happen in the olden days, right? Like you know a project that's like doing poorly or whatever and it gets hacked and people would be like, "Oh, it's an inside job." And you know, I don't think they were all inside jobs cuz people do definitely get hacked. And you know, you can look at the like uh onchain kind of forensics and go ah this wasn't the team like this this is an MMO right of someone who who's you know done this

before or whatever. Um you know but like a lot of the private key leaks you're like oh this is very convenient isn't it? >> And then it's like you know we're mounting a search party to go after the guys and they're like searching around and it's like no like you did like you killed them. Like what are you talking about? like um so yeah. So I I just I think I think there there are certain teams that you just don't with and Near is one of them. Do not with those guys. >> Like don't hack them. It's not going to end well for you.

>> Clearly. Clearly. Okay. And then >> speaking of people not to with, uh Zack XBT. >> Yeah. Zack. Zack XBT went undercover. This is amazing. I like I love the story. Tay, walk us through this because I think you have you have a bit more insight into it. >> Yeah. Well, and I've also I've known um I mean whenever Zach does a thread, I get like the full I get to I get to experience the full experience of reading and absorbing the thread and the full story like in one go. Um but I was aware of like a lot of these efforts as they were happening. Um and it's just a wild story. Okay, so basically after the Bybit hack um and even before the Bybit hack, but the BBE hack it was just a

different of a different level. We would always see, and I've talked about this on this show, the guys, the loud guys bitching about their funds being like up, bitching about like when how long is my swap gonna take, when they get frozen, they would show up, that sort of stuff. And I remind everyone like if there's someone like making a big scene somewhere, like they're probably a moneyaunderer. Like it's that consistent. We had been seeing this. And so, but then Zach was like, "All right, let's figure out how the these guys operate." and went way harder than anyone else had ever considered. So, Zach became friends with one of these guys. His name is Jimmy Green. He's a Chinese moneyaunderer for DPRK. Uh, he

basically became friends with him. He also did like a full undercover operation multiple times to get his addresses basically fully get the the trails and how these these operations work. The level the amount of intel and the level of intel is absolutely like it's just insane. Um the insight that we now have into the laundry networks is wild. Um there was I mean everyone just has to read the thread because there's like so many details. Like at one point they're talking about breakfast. They're talking about drinking coffee.

Jimmy is trying to like lose weight. But like it's just a wild a wild thing. Um but one thing that also just like kind of opened my eyes to was I think there's this I don't know there's this sense that like you have DPRK and you're know you know that they're like handing off the money to be laundered. It's it's over a billion dollars that they laundered in like four or five months. You know that there's handoffs happening. What this story and these conversations and other conversations that have happened reveal is like the money launderers, they know exactly what the they're doing.

Like they are completely shameless. Completely shameless. And they um they will again they will use the industry's language as their own. So they'll be like, "You're not if their swap isn't going through, you're not decentralized, you evil person." It's like they're the biggest Bitcoin maxis. And it's a bit scary to think about. Like it's just a bit scary to like consider that like they basically in a sense like co-opted the industry's own language and it's like consistently then use it sort of to to get their to complete their end goal which is to steal and launder billion literally billions of dollars from society. Um, and then the other wild thing is like

just he's like, "Yeah, Kim Jong-un released 50 Bitcoin today. Like, I'm happy money launderer today." And like he he's completely shameless. It's wild. It's >> crazy. Yeah, it's wild. It's wild. >> Um, but yeah, Zach just like going really balls to the wall and getting all this is just a wild wild situation. I think what did he say? like $400,000 to get all the different addresses and all the different trails and stuff. But >> his own money, right? 350 he put in.

Yeah. >> Yeah. >> Like insane balls. >> It's a it's a it's an amazing level of autism. Uh you have to >> do not do not with Zach, right? Like Zach like you know it's it's funny because um I had I had like a a pretty good relationship with him in in the early days. um like you know he a couple times like asked me stuff and I would help out or whatever and like I think if I DM'd him now he would still respond but there a couple of times I sent him messages about things that people were like hey can you put me in touch with Zach and like he just he put up this wall at one point where he's like everyone's trying to exploit me everyone's trying to get me to do stuff for them no one wants to you know

support anything blah blah blah like he really soured on like how extractive you know people were like um you know they would >> you want to hang out with them, you just got to launder some money for the Koreans. >> He'll come have coffee with you right away. >> Yeah, exactly. So, I'm trying to lose some weight over here. Um, so, so yeah, like I I I it's it's just interesting like I I feel like you know he's such a unique person in the space and you know like there's stuff with like meme coins and like weird where like people send him meme coins and you dump them and stuff. like there's a bunch of like weird things, but like he's just at the epicenter of so many things uh over the years that that uh you know he seems to have like

>> he seems to be coming out of that like very cynical mode and he's like back doing things like altruistically again. Um which feels good. But like I think he had like a bit of a dark period where um he just felt like everyone was exploiting him for his skills to to you know oh something bad happened to you and then you would turn up on his doorstep and be like help me Zach and he's like why the should I help you? You didn't even help yourself. Like I told you to do this like you know uh like you know I'm I'm trying to help and you idiots just keep like begging at my door. It was it's kind it's just a weird I don't know if that's your impression to you but like it just yeah it seems like

>> I think every like I mean I've gone through my own journey processing with like this sort of stuff. I used to be really bitter in like the ICO days and the post ICO days. I would be so bitter that so when we were when I was running Mew right like >> it was like we were we were literally begging for donations. I still had a real job. I still had I had clients that I was working for at the time. >> Yeah. >> And and then I was just watching all these people around me make like 10 million, 20 million, 50 million with our product and then they wouldn't even >> they wouldn't even have like just the audacity like they would just send their users to us for support

>> like oh something went wrong with their ICO like >> to >> Yeah. And it just like it would just it just ate away at me um in a really like dark way and I had to like sort of come to terms because I was like wait why don't we sell out and a lot of people by the way told us they're like you should be charging each of these ICOs like millions of dollars in tokens and like they want to be listed like charge them and I was like yeah but I don't >> I was always like I don't want to work for the tokens I want to work I don't want to work for the pieces of right I want to work for the people. We ended up figuring it out. Um, obviously like my life is like fine and great, but like it's it's I think that

>> there was a period, right, where like you're like staring into the abyss and you're like, "What the is going on here?" Right? Like it just feels like Yeah, I I know. >> You feel taken advantage of. You also are like I mean, I hate to say, but like the meme like everyone around you is getting filthy rich except for you. Yeah, >> there were a lot of days where I was like, I feel like I should be rich now, guys. Like, can someone help me out here? >> Um, >> and just the I think like um also just like having a a relatively like normal existence, >> but being surrounded by people that have like that were literally we're talking about like 20, 50, 100 million dollars is a wild existence to like live. Um,

and I don't know. I think that that the combination of like that much money plus the the idea that you're being taken advantage of or that you deserve more or something, it can really put you in a dark place. Um, I think Zach's experience is different than mine, but I think that there are similarities in terms of like Yeah. And it's just like like you guys make and I mean I still do it when when people get hacked, right? Like, sorry. You have like, how are you so stupid? You have $200 million to lose. How the are you so stupid?

>> Get your together, guys. Yeah. Yeah. Exactly. >> Use a hardware wallet, please. like and it's painful and there's like guilt and there's you don't want to like you really don't want to insult the victim, but like sometimes you're like like man if I had $200 million like I would buy a $60 ledger and I would use it. What the Like why can't you know like you know deserve this? Like there's a lot of just really dark thoughts that come up when when you >> are doing this day in and day out. And I think Zach also just gets the basically the worst end of the stick because people are so entitled. They feel so entitled to his time >> and and like that's the the entitlement, right? Like I I remember there was there

was a guy um who uh who did say like I'll pay Zach to like help me with this thing. He's like there's this whole theme that's going on and no one knows about and I want Zach like help you know expose it or whatever. Um and I'll donate to him. Um, and Zach was like, "Fuck that guy." Like, he's like tried to buy me like, you know, he's almost like he's trying to bribe me to like care about his particular thing, right? Um, and that was when I was like, "All right, I'm not sending Zach anymore things." I was like, "I'm I'm done." >> Oh, is this why I take care of your people now?

>> Pain grants, right? Like grants and donations is how the guy operates. So, >> yeah. >> Yeah. >> Yeah. >> Yeah. >> I think I don't know. This this investigation felt good. And I hope that he feels good about it. That's all I'll say because it is like this is like just the pinnacle of Zach and and especially being public the these sorts of investigations do happen behind the scenes especially at like the state level. We don't usually see them. And I think that it's a really interesting like there's a lot of people in like web two crowdf security that look at this and they're like this is insane. But they're also like wow like the we can actually move a lot faster with the information being public like rather

than everything under wraps. And it's really interesting for like security and and thwarting these sorts of threats. >> Crypto is just doing things differently. That was going to be my question about this like having perused the thread you know what is um what's like the practical like does this help disrupt these moneyaundering networks or like help people avoid certain failure modes like like what's the immediate benefit of it which I'm not saying there is one I'm wondering what it is >> so I mean to be clear like this is the actual conversations the moneyaundering happened like a year and a half ago the information was shared with various relevant private public sector people at

the time. Um because ideally like I there's a there there's a number of actions that theoretically can be taken. Usually they just stay under wraps forever. I think it's just a different dynamic when Zach then makes something public. it lights a fire under everyone because it's kind of like wait if this if this bro on Twitter can tweet this why didn't anyone do anything about this beforehand. Um but the other thing is just knowledge. A lot of people don't understand the moneyaundering dynamics. A lot of the teams don't understand um like the especially the centralized exchanges. it's a clear as day DPRK hack, but then they'd see really strong Chinese indicators and Chinese language and Chinese everything on the on the

accounts that were laundering the money. And if you don't have any like open source public reporting on the the laundering dynamics, you're basically like you're basically like one by one trying to explain and to convince these exchanges who are often Chinese, by the way. Like no, no, we swear this is like these are these are money launderers who know that they're laundering money, right? Um, and if you like Yeah. If you follow me on Twitter, postbbit, even pre-bbit, you would see me bitching at the a lot of the exchanges for for >> reacting to this. Yeah.

>> Yeah. But I mean, the amount of times that I have sat there and explained to the exchanges, yes, they're Chinese, but they they're working like really handinhand with DPRK. Um, yeah. So yeah, I think I think like raising awareness of like just how mercenary >> these people are. Like they're not being >> Yeah. >> They know exactly what they're doing. >> Yeah. And I didn't I didn't see anything where they were like what would have been great is is uh if they were like making fun of the exchanges for like being That would have been amazing.

>> Yeah. >> Cuz then you could be like see these guys are like just cynically exploiting you and calling you idiots. like >> get them, you know. Uh but yeah, unfortunately I didn't I didn't see that in there. >> I'll have to go back through my logs and see if there's any. I do know that they I mean they just they w they'll waltz into the Thor chain Discord and Telegrams. They'll waltz into all the different like any D5 protocol. They'll go in >> like a you said that you stood for the little man and the centralization. It's like, oh lord. Like it's painful.

>> Last week, too, and I didn't totally understand this, but like when when they're going in to complain and they play the victim saying that they have their money locked up, >> they're actually money launderers trying to move money through the system and they'll come in complaining in the Discord as if they're like, "Yeah, >> I have one I have one guy who replied to me today. He actually replied to me and Laura today. uh the he watches the podcast. He's like he's been laundering for DPRK for like four years. Um he'll come in, he'll talk, he'll he'll be like I'm just innocent man and you take my money illegitimately and I'm like >> but it's always it's always

>> Twitter like >> yeah the bad actors like like we we um because of our gas sponsorship setup in Infinex, right? We'll have people come in. There's like one Vietnamese guy that like comes in and finds like these ways to uh extract gas, right? Like especially Salana Rent, whatever. Um it's been happening for like a year and like we'll catch it and then you know we'll freeze his accounts and then he always turns up, right? And he's like something bad has happened. What is going on? And we're like we're like uh yeah, something bad has happened. You stole $3,000 from us in Salana Rent, man. like um and and it's so funny because I like jokingly say like there

will be a point where I'm like I'm going to fly to Vietnam and find this um and it's not there yet like because it's just like it's just like this annoying amount of money where you're like man like you know it's not like he's like pulled like five million bucks out or something like that but um but yeah it's so funny because they'll turn up like one guy one guy turned up um they I can't remember exactly what they did but they did some kind of civil attack right? Um where they uh they exploited something that we're doing and they ended up with like 50 of our patron NFTts, right? Um but they're in individual accounts. So every day and they got seven of them. So I was a bit disappointed with my team on this, right? But every day for like two weeks, they would turn up as a different

person, like put on a different outfit, turn up an email and be like, "Hey, um a weird I've just tried to do the thing and it's not working and can you help me out?" and and they just like pretended to be an innocent user. They like got caught up in this drag net of like civil, you know, uh whatever. And and like it went on for like and >> after seven days, one of my team was like, "It's so weird. We keep getting like a new and I was like, "Oh man, this is the same guy. What are you guys doing? Stop giving him NFTts." And and then >> Yes. Yes.

>> And then as soon as we stopped it, as soon as we stopped it, then the outrage came. Like the next day it was like my account that I I've gotten this thing and I'm not getting it and like how could this happen to me an innocent user? What do you guys stand for? And I'm like man you're the same dude. Like come on. Like give me a break. >> The outrage guys are like usually the worst. And you >> but it's straight outrage. You know it's a bad actor. Like normal users don't go straight to outrage. >> Yeah. Exactly. I was going to say like there are people who get screwed by certain things. So like we do the same thing with the MetaMask, the fishing block list, right? Or deal with this every single morning. I'd wake up and there'd be false positives. There are

legitimate false positives and people do get outraged about it and totally legitimately so. But there's also like 50% of them are like literal scammer drainers. We're like, "You blocked my >> what the I have files on these guys." You know what I mean? And it's like so painful and you have to remember to stay especially when we were like first rolling out like blockade and stuff. Oh my god. It was like I had to remind myself every single morning like take a deep breath and like clear the pallet because like there's going to be one true false positive for the 10 scammers.

>> Yeah. >> But like it was hard so hard. It was so hard to like like have the patience to actually respond to each person like as if it might be a serious issue knowing knowing that like one >> 90% chance. >> Yeah. >> Yeah. >> Yeah. >> Yeah. Okay. >> Well, one of the one of the uh PayPal mafia guys, it might have been Elon or Peter Teal or something. I don't remember who, but they they said that like in the PayPal days, the the people who would scream the loudest about fraud when they would, you know, like reverse a transaction due to fraud or whatever were the fraudsters. Like they were the ones with who were outraged and you know like >> they've optimized they've optimized the

pipeline to getting the thing overturned, >> right? like they have truly optimized it >> and they know yeah like they've got and also they've got the numbers game right like they know they've tried all the different ways and they're like outraged like instant outrage and you're like I don't want to deal with this customer man like just give them their money back right and they're like oh that works okay you know as soon as they find a vector they'll they'll exploit it uh let's go to our next story so uh safe the safe foundation um nosis uh you know so so maybe a bit of backstory on this just to contextualize this, right? So, Nosis, um, speaking of people with a fuckload of ETH, um, did an ICO um, and, uh, they did an ICO in 20 early 2017,

late 2016, if I remember correctly. >> Yeah, they were on the they were on the up. >> They were on the upswing, right? >> Yeah, that was, by the way, by the way, that was the one where they tried to do the the reverse Dutch auction. >> Yes. And >> they were so smart that they epitome of autism, right? It's like the bullish bull market is like hype, hype, hype. And people are like, "No, people will act rationally and wait so that Nosis doesn't get all the money." Spoiler.

>> They did not wait. >> They waited. >> They bought it at the absolute They bought it. And now the hilarious thing is if again like this is my recollection, right? I haven't I haven't looked up these numbers, but uh the market cap that everyone paid was like $68 million, right? Um and and which was insane at the time, like absolute insanity, right? You know, this was a prediction market, right? Um this is this was >> this is for a prediction market, right? Um this is one of the failed prediction markets that like and and um you know, Augur and Nosis were the two, right? Um but people were bullish on prediction markets because uh Vitalic was bullish on them. Um so uh so they got 330,000 ETH in this ICO. Um

>> but it should it should if people had been logical Kane and rational and like just waited a few more minutes into the ICO, the people would have gotten more tokens or more ETH or whatever >> tokens. They ended up paying it all to the team. Yes, they but this is the amazing thing the team that like they were like at the limit right like the the we will sell in the in the >> whatever best case worst case scenario we'll sell um >> only like >> 3% of the tokens for 330,000 or whatever it was right um and >> then they were shocked when that's

exactly what happened because we're in the middle of ICO mania and you could buy anything and flip it instantly and make a profit and people did. It was wild, right? Like just the craziest So anyway, like cut to 10 years later, they still have like 180,000 ETH, right? ETH is no longer $10. Uh it's >> they don't have a prediction market though, but they do have one of the primary >> one of the most important things. And this is like this is this is just like life finds a way, right? like you know they've done so many academic experiments and things and and you know like I would say they're one of the most prolific prior things you know this is why I

think the we'll get into the investors being like ah lazy fox not doing anything whatever um but like but you know they've released so many things many of which have not worked um but the one that's probably worked the hardest right um maybe two cow swap right they invented cow swap Um, and uh, which like I still remember the conversation with Martin when he was first explaining the first version of Cow Swap, which was the most nonsensical, zero chance of working thing that you could possibly imagine.

Like just like the like I was like, bro, like there's no way this can work in practice. And and he was like, but the theory is so beautiful. And then they did it and it obviously didn't work in practice. And then they were like, "Oh, actually if we do this much more pragmatic version and then everyone loved it, right? It was like suddenly amazing." Anyway, so so um many such people >> they do find a way they do find way >> they find a way like like they iterate and and anyway so so uh so safe which you know thankfully right post parody hack so we had a we had a multi-IG wallet called parody and it didn't go well for us um and uh and these guys

kind of stepped into the breach and said we need multi-igs we will build one and they built one is amazing and it secures like 100 billion plus of assets or whatever. >> Um, you know, it's it's insane. Um, it's like >> been super robust over like multiple cycles, blah blah blah blah blah. Amazing. Anyway, >> against that backdrop, some jerks have shown up. Uh, and like you could say like, uh, you know, they haven't monetized it well and it's not a business and and and they're too academic and there's a lot of things you could say about about Nosis and SAFE and you know, safe got spun out, they have a token, whatever, right? Um, but you cannot say that they have not produced value for the world, right? Like if you

went back and and ask those people that, you know, whatever the amount of E it was, like I think they raised 30 mil or something like that at the time, right? um you know uh if you said to those people like hey are you happy with the outcome of this thing like I think most of them would say yes right um you know even if they didn't directly benefit from it um uh and and you know like it's wild to me that you would turn up and be like oh and this is not to say Dows aren't they are and they're terrible terrible at organizing things but like the empirical output from Nosis if You know, the if you trace the through line from the ICO all the way through,

>> it's been a decade. Well, almost a decade. It's been almost a decade. >> Like, we got good >> We got good out of it. They're still doing stuff. Um, so anyway, sorry. >> The economic zone, they're doing the atomic swaps between L2s and they're doing cool They always have been. >> They do. Yeah, they do cool So, um, but they're now being sued, >> um, uh, in like Swiss Foundation court or something. Um, basically saying like, uh, you know, um, and this is, this is interesting. I I was kind of surprised to hear this. Um, money in safe accounts fell from 66 billion to 30 billion. Um, which where is this money going? This

seems weird to me. I don't know. I don't know. Like, we have no other >> Did the market just move? Is that >> right? I was going to say, is that is that just the price of the assets like changing over time? Like I would >> right isn't everything down 95%. Like isn't this >> Yeah. Like Yeah. I don't know. Uh >> also, by the way, >> I wanted to mention my understanding is that they're is not they're not being sued. I don't think I think basically I'm not a legal expert here. Certainly not sure >> on Swiss law. Um but uh like I think basically like this group has asked the Swiss government to open >> the Swiss Yeah. They're asking for an intervention right?

>> Yeah. It's like you know chancellor chanc you can turn up >> and say like hey this this you know this they did bad stuff in business land and you know someone will will kind of mediate the dispute or whatever. Um, they've got a Swiss version of that, >> but they're they're not are are they accusing safe or not? What are they accusing of like fraud or are they just saying no? They're just saying they're lazy, >> not doing enough stuff >> like malfeasants or something. I mean, there was >> No, it's not even that. It's it's it's not even that. They're just saying like you you have a responsibility if you have a Swiss foundation, right, to operate the foundation to the benefit of

the foundation members, etc. And you know if you are not operating the foundation well to whatever the mandate is. Now the funniest part about this is like Swiss foundations I have one like they have no recourse right like there's nothing like like and you know even the investors say that right like uh you know it Mike Dudus is like it's critical we transition away from lazy unaccountable foundation boards. Um Simon from Moonrock is like the lazy delusional teams that just happen to be in the right place at the right time. I mean, like pot kettle, man. But um >> I was about to say like I'm sorry like you're not I'm not saying that >> I'm not saying that they're 100% wrong, but I'm just saying like if you're

grievance is that people in 2017 collected a whole bunch of money and then didn't optimally build with that money even though they're still here and building. If that is your biggest complaint, like Jesus Christ, I'm so sorry. What percent of teams that did an ICO in 2017 are still doing anything around >> in crypto, let alone anything useful, which which Nosis and Safe obviously is like, yeah, I don't know. It's >> and the the irony though here I think is and like I say this all the time. I've said it to Martin, right? Like they are too academic. I said it to him when he brought me the weird Moonmath cow swap V0 thing, right? I was like, uh, I'm struggling to understand what

you're saying to me right now, man. Like I literally said that to him. I was like, I don't understand what this is. Like how am I supposed to use it? And and you know, uh it was too theoretical, right? Like you know, so so uh they do have a tendency >> Ethereum way. >> I know this is the irony of ironies, right? >> This is our blood, okay? We are autistic as and inefficient and we want to believe that the world is a great place and we >> very we are so close to just full communism. Okay, that is the Ethereum way.

>> That does not mean that does not mean you get to freaking call them fudsters. That's a different thing. >> It's and I don't think they're they're not even saying like but the the thing that I would test right and and you know Gabe Shapiro also says like these foundations are set up to owe no duties to anyone. they are like they like that's in the mandate, right? Like the people who set these things up are not idiots, right? Um and and you know on one hand you go okay um you know there is a Nosis token, there's a safe token and both the tokens are down, right? So you can look at that and say like you built cool stuff but why have you not returned value to the owners of those tokens, right? Fine. Like you know not many tokens are doing well out there

just quietly, right? Um so so you know that that's not really an indicator of whether you've built value. And the thing with with you know with safe right is um one of the reasons why it has such you know wide adoption is that it doesn't charge fees right um and you know they've tried to monetize in other ways or whatever but like if you put a fee on safe I think that people would find people would you know and and safe has infrastructure requirements. It's not just a pure smart contract. there's like off-chain components to this and and you know a bunch of complexity to it. Um, and and so, you know, could you monetize it more effectively? Like maybe, but it's not 100% clear that it wouldn't get forked and, you know,

someone would spin up a a you know, no fee version of it or whatever, right? Which would be worse because the forked version would inevitably lose people's money for sure, right? Um, and and so, you know, this is this is like kind of a stable equilibrium and it seems fine. Um, and so, but at the same time, I can see how if you're holding safe tokens, uh, you might be like, make us more money, right? That's like a re, you know, like it's a it's a token. It's supposed to go up. Um, so I can see how you get yourself here, but like also like >> let's just let's zoom out cuz Ben, you you live in

>> or at least on the edge of the world of like deep governance down. Yeah. >> What do you what's your read on I don't even know if we want to call it the Swiss thing, but like ideally like what where does safe go from here or or any Dow? >> Well, yeah. Maybe zoom out further from like the specifics of the safe situation and just talk about kind of Dows in general. I mean, I think people really people outside of the industry if you're not like working in it and working with projects daytoday like on this stuff. I think it's really easy to underestimate the degree to which our entire industry and Dows especially as a category but really the entire industry has been like warped over the last you know four to 10 years by regulatory fears and so much of

what was done or not done or behaviors that seemed weird or whatever was done because like people didn't want to go to jail or get a nasty gram from the SEC or whatever, right? And you don't see that from the outside because they don't talk about the fact that the reason they're setting it up this way is to like hack around some kind of regulatory concern, right? Um obviously because the lawyers will jump down your throat if you do that, but like that's the reality of what has been happening in the industry for like a long time. So, you know, not to completely excuse the behavior of many Dows, but a lot of it does come from like a lot a big chunk of the dis dysfunction um does come from this sort of like things

>> approximate cause of of like obfiscation of what's actually happening, right? Yeah. Um yeah, agreed. Agreed. >> And and value return is definitely one of those things, right? like people had to, you know, people had to create these tokens that were not going to ever return value. There's no dividends. There's no buybacks. There's nothing. We're never going to do that. It's just governance. Um because if you said that you were going to do that, you were at serious risk of violating securities law. Now, the good news, I think, is that that's changing, right? And so coming what comes along with that, I think, is uh increased scrutiny on teams who aren't doing it, right? So, if you're a big protocol and you are monetizing or have potentially the the

ability to monetize um and you have a token or you're thinking about issuing one, you ought to have a story uh for how to drive value to that token that's actually rooted in something real, right? Like not some like moon math. We're setting up the incentive so perfect. It's like no, we're charging a fee and then we're distributing those fees or we're using those fees to buy back the token in this like programmatic way the way that like say unis swap or other you know big projects are now doing right um and I don't and the other thing I'll say is that I don't think that's like a small like um you know the point of governance tokens and governance in general for projects um is

that you're supposed to be like it's to provide economic security, right? Um, so it's not just like, oh, the token doesn't matter. Like, I don't I don't buy that excuse anymore, right? The regulatory excuse is going away. Um, and like the speculative premium that these tokens had during the hype period is going away, right? So, if you're going to put a governance token in front of your project and allow decisions to be made in one way or another or mediated through in one way or another token holders, right? um then you have to be able to provide economic security through that token, right? Because if the value of the token drops below what it would be worth to steal the assets that the protocol protects, then you

know, you know, so it's not just like some thing that you can just say like ah we don't care about the price. That's not our focus. Like no, that's like a key component to why the system works and and if it if it can work that's why it's supposed to work, right? So you know I have very good impression of the Nosis team as well from my years of interacting with them. I think they have built amazing stuff. I think uh as a category a multi-IG is like a brutal business. Like the amount that you're securing it's like >> and yet we need it. >> And yet we need it. Thank god that they built it right because if they hadn't >> never build a wallet, guys, never ever build a wallet.

>> Life advice. >> I love why not put a small fee in the front end. Like why not? >> Because people would hate it, man. If you like I would I like genuinely >> the number one brand damage the number one brand damage is the metab what's the second multisig what's the second best multisig in the space >> there isn't >> so why why not but a fee a small fee >> because I have okay so I for the record I have always said that a transparent fee on convenience features in the wallet is the most aligned and best way to support like to have a sustainable wallet 100%. But I will also say that it is the most hated feature in the

world and it there is a trade-off because you do you you want to think that only like the biggest whales and the very like these people that are just more sophisticated won't use the feature, but that's actually like not entirely true. And then the other downside is that like the argument at least is is that only the stupid people you're basically exploiting people who don't know how to go to unis swap directly that are et right there's all these like >> there's there's there's potential other ways to monetize it like the like safes secure like like everything in the world these days it's a power law right like most safes have like 12 cents in them and then there's like a few safes that secure like 110 billion dollar worth of value right and Like so you go to the

people who are using those safes and you sell them some kind of like enterprise plan with like a bunch of you know security >> they did try >> they did try they did they did they did have like an enterprise thing um but like you know people in crypto are so like trying to get them to do good security when it's free is hard. Like you turn up and you're like, "Hey, we're going to charge you to do good security." And they're like, "Get the out of my office." >> That was And I don't know if MetaMask is still I should check in with the team because I'm actually curious. There is a there's a MetaMask like transaction safety feature that was in the works forever. And the biggest >> the biggest um >> the biggest conversation about it was

>> you're it felt like you were charging people for basic security, >> right? And this should be a core feature. Your job is securing people's. I'm not saying it's easy. I'm not saying easy. I'm saying actually the opposite. It's it's a really brutal it's a brutal business and like we should be grateful that they have done it and done it like you know well for for a long time. Um, but I also think on the flip side, again, zooming out, not just talking about safe, like increasingly, um, if you have a token, you're going to have to answer these basic questions about like what's the value return mechanism, like what's your monetization strategy? And like that's actually a good thing. It's like a maturation of the ecosystem. I mean, I think the other thing I'll say from like the zoom out perspective is that you know um a lot of

people think that like Dows don't work because there's contention within a DAO or like there is um you know there's a situation like this where somebody's suing someone or someone's trying to you know there's there's factions or something like that. I mean governance almost by definition is going to involve at least the possibility of contention, right? Like if everyone agrees on something, you don't need a governance system for that. Like the point of a governance system is to resolve disputes when they arise in a kind of structured uh matter so that you can progress beyond the dispute and not be deadlocked forever, right? So I think part of the problem like we were talking about this earlier with the Ethereum culture, everyone is sort of like idealistic to the max and autistic and thinks like if

you just set up the incentives everything works perfectly. It's like well no like things are are messy and you know that's like the point of of of having uh a governance system in the first place. So like if you thought that Dows were just going to like solve human nature and get rid of of uh contentious arguments, >> we absolutely did think that. >> It's not surprising that you've been that you've been disappointed, right? But like I think the bigger thing is like >> uh for me it's about like the capture resistance and some like ultimate accountability to people that run projects that have huge network effects, right? Which we didn't have in web two um and that I would like to see us have in web 3. like that's like the the like bedrock uh goal of Dows for me in the long run and and you know for as much

enormous dysfunction as there has been um I do think that like we're better off in that regard than we would have been otherwise if we didn't you know try these experiments with Dows and and do things that we did. So >> agreed. I I think that's very true. Um I think we got to wrap it up uh here. Just one quick thing because we should probably mention this. Um, we had two uh L2s blast and abstract uh shut down this week. Um, like bullish shutdowns. I don't know. Um, it feels like this is like the capitulation at the end of the cycle that happens where people just like run out of juice and then it's up only from there. Um, so yeah, feels it

feels very bullish um uh to me that we've got some L2s. Uh, I mean the L2 market, let's be honest, right? like it and you know I'll take some personal responsibility on this one uh trying to meme it into existence but like we probably have too many L2s. Uh I tried to do one. >> I was like what if we just do one L2 >> and instead we haveund 80 million of them. So >> L2 need to differentiate right? Like every L2 needs to be different than just a general purpose EVM. What Abstract was doing was good UX. Like they were trying to bring >> it did a bunch of cool stuff but it didn't work.

money and good together. >> There was a wallet involved. Abstract wallet of death. >> Never. >> That's the theme. That's the theme of the episode. >> Theme of the episode is never build a wallet. Absolute absolute T's kiss of death is if you build a wallet, you'll go straight to the goolog. Um, all right, let's wrap it up here. Thank you, Ben, for joining us. Uh, this is been a very fun show. >> Um, all right. Thanks everyone for joining us for this 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.

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 at unchaincrypto.com/unemoney. Hey, everything.