Daily Gwei Bankless Friday Livestream

Transcript

anthony hey man what's going on uh nothing much just having a another a nice uh friday evening saturday morning for you live stream to talk about all the things that we have uh been missing talking about lately so uh what comes to mind first well i mean the reason we've missed things is because you've been uh on the conference circuit right let me live vicariously through you tell us a bit about the conferences you went to and like the fun things that happened right okay so it started off the the very start of this story begins two weeks ago wednesday um when ahmad from metafactory telegrams me saying hey man let's think of some questions to talk about on the panel that we're on and i'm

like dude like it's not for 24 hours i haven't even left yet i'm in san diego i realized no it's in like 20 minutes and it's in denver and i'm still in san diego i i realized this like while i was in the middle of a live stream panel doing the loot panel on bankless and i immediately texted him like dude i'm so sorry i'm still in san diego i have not left yet for denver and then i and then i get a picture he doesn't respond and then i see a picture coming from somebody else and it was kevin owaki being me and i was like oh okay he got it kevin he's got his guys nothing went wrong at all but apparently that's what emcon was like apparently emcon was like this very bottom up conference where they just decided to

rent out some places and somehow a schedule and agenda got thrown together and everyone that went there and attended the actual conferences unfortunately i came late didn't get to see the first day only got to see part of the second day didn't really get to see any any of the talks actually but they're all on youtube importantly and everyone who attended mcon was like dude those are some of the coolest conversations that we've heard uh ever ever and like that that was like in stark contrast to what was going on at mainnet conference where mainnet is like the blockchain week coin desk consensus like like you wear a suit and tie if you're a normie and it's like one of those things where like well the content matter at mainnet was a bunch of teams going up on

stage and saying all right here's what we've done for the past year like if you haven't been paying attention you can hear here's our year of progress in the last in 20 minutes whereas mainnet was like excuse me whereas m con was like all right dow focused here's about the future here's how this works here is why this is a thing and mainnet was like everyone put on a suit and tie and we'll talk about what we've done for the last year yay yeah so like very very different cultures and personally i resonated with a colorado m-con dao culture more than i did with the new york suit and thai like big mega conference culture but they were each fun in their own rights so i had a good time yeah i mean i think i've only been to

like the really core 8th culture conferences i don't think i've been to any of those ones like like main net esk kind of conferences even though i would have loved to have gone because i've never been to new york so i would have loved to have gone to it but maybe maybe next year but i think that the denver ones like even east denver's like that right where it's very bottoms up very kind of like core eath culture like if you want to experience eve culture to the max you go to east denver it's like so it's so oriented as well was like last time was like three levels of builders or something in in the building like it was just crazy like hundreds of builders um so and that was funny because that was back in what feb 2020 so almost yeah yeah so coming up on two years back

and that was still the bear market back then i guess like the we we'd come out of 2019. no we were we were pumping for the first time and we hit 376 dollars ask me how i know well not in february i don't believe yeah yeah yeah yeah we hit three hundred are you sure i'm pretty sure because i'm pretty sure yeah uh-huh um yeah actually i'm pretty damn sure and then like i was like yes it's finally happening we're going to hit 400 as soon as we hit 400 we're off to the [ __ ] races and i don't think i think that was it man though like i remember the eat denver it was february it was really really bullish at eat denver and eat never marked the top because what happened next was we went back down to 80 dollars

yeah no we sorry it was it was 300 i i don't remember us going over 300. oh damn it did i just mix up 300 and 400. no that's okay this is why you don't second-guess anthony when it comes to things in ethereum history the reason why the reason why i remember it is because i remember 300 being that like number that has ptsd for ethereums because we sat at 300 for so long in 2017 it became like this massive kind of like meme thing and then it became 275 not 375 jesus yeah yeah yeah so yeah we can't but i i think that the thing is though it's funny because like yes we did like after the brutal 2019 we came into january

really really strong like looking at the kind of chart january we started like immediately pretty much like first of january we just started mooning from like 126 to to like yeah i mean parabolic pump yeah it was in within like a month and a half and that was kind of like the relief pump and everyone at eve denver was i mean we were cautiously optimistic we were like yeah okay is this it and then and then march hit and then like what is going on and then it actually took until july to get back to the price that were in in feb after that and then of course the rest is history but i think though it was just funny because even though the price was going up like it was still am i i mean the community was still very tight-knit back then it

was like there was there was a lot of like everyone knew everyone it was it was definitely not like a thing where you'd have tons and tons of new people coming in like we do today so i don't know like did you feel like the conferences i don't know which ones you've been to which are more kind of like denver ish but do you feel like they were kind of like much different to what kind of like they were like two years ago like is there just much more of a kind of like new faces even like even more distilled of it was it was much much smaller than 8th denver and the the way that they like broadcasted mcon was not by like promoting it and selling tickets and selling sponsorships but rather just word of mouth saying like

hey there's we're gonna do this thing uh and like people just like instead of like sponsoring people just like bought stuff right so like the fire eyes boys like i think they they bought out like a brewery for one of the one of the three days or something like they did one of the things right and so so many people just like bought space or time at these places it was all word of mouth right so like if even even eat denver is like kind of a big festival right like it's like six thousand people or something mcon was i think five six hundred less than that right so very very um very very like concentrated um i'm curious to see what east denver's like next year um in feb uh i hope maybe i can go that would be awesome because

it'll be funny like that's the last conference i went to before and then you have to go well i'm gonna try my hardest that's for sure but uh it's gonna be interesting to see the difference on like see all the new faces and stuff that have like come into the ecosystem during the bull market during the last two years um i think it's it's definitely going to be a fun thing to to see but i mean because we haven't had an east denver post bull market right yeah no no we haven't we haven't yeah we haven't had one since feb 20 2020 uh and same with like devcon and things like that um defcon's funny though because of the fact that it's in colombia like i know if a fair few people are just like i don't know if i want to go to columbia

with like being a crypto person the ef seems just dead set on columbia for some reason i don't know why apparently the venue is like really really nice that's why like apparently it's like because the main complaint of devcon and osaka was that the venue was kind of like shitty uh for a few different reasons like the elevators were like tiny so you could only let up a few people at a time and for some reason they put the the actual core ethereum speakers and and developers and like the side rooms like yeah yeah there was a lot of drama but that was still fun but yeah i mean i don't know i'm still on on the fence about if i'll go or not to colombia i mean for a number of different reasons not just the safety aspect of it um maybe i'm not even allowed to back into

the country if i go to colombia that might be like when you're you went to a high-risk country you can't come back in so who knows man like these covered restrictions are just like you know they are what they are but you're anyway mariana where you like just stay out for a really long time yeah exactly exactly um but yeah i mean i think we promised people that we'd talk about like the compound stuff because me and you were having like a bit of a heated debate yesterday about this and i was like okay was it he didn't i mean like we were disagreeing with each other uh we weren't like in alignment over it we kind of had our own opinions um guys we're no longer friends it was

yeah yeah because of robert thanks robert um i don't know if you wanted to kind of like give give us context so we can jump into it so um robert lesner of compound and backing up even more there was an exploit in compound that happened as a result of a user-submitted code that was accepted by the compound protocol that unfortunately allowed people to claim comp tokens as a result of the liquidity mind liquidity mining or yield farming that that compound offers like if you supply or borrow from compound you get comp tokens as rewards for participating compound there was a bug in this new code in this new contract that allowed

people to claim comp tokens at the same emissions schedule but the emission schedule was sped up right uh it was there was like i don't i don't know the details on this it was like two years of comp emissions collapse into like a very short amount of time and so some i th correct me if i'm wrong but some people claimed comp tokens and got extra on accident but a lot of people figured this out and was able to exploit is the right word the the bug the the exploit the bug um would you use those terminology that terminology i mean yeah like if you're in air are doing it intentionally then yes you're exploiting a bug that you found in the system um but there i think there were some cases where people did it

accidentally okay um so when we were arguing i did not know that and i thought it was exploit only yeah i mean i'm not sure i'm not 100 sure on that like i saw some people talking about it but i don't know if it was ever confirmed but i could see how that could happen though like if it affected the entire kind of like uh liquidity mining um i could see how that could happen but yeah i mean i'd have to check up on that but i think what we would kind of like right okay so that's the background uh can you do me a favor as a favor and just share screen for uh robert's tweet uh yeah this is what happens next so robert lesner ceo founder of compound i'm pretty sure the biggest comp stakeholder ever probably most likely um i mean yeah you'd have to you'd have to

be the biggest stakeholder yeah sure or one of so this the corroboration founder of compound has all the stake of not all the stake has the is the single largest individual of stakeholder of compound right so he has a lot to lose right or a lot he has a lot of you know personal reasons to maintain the value of comp and also just like the nature of the protocol right he tweets this out right so there's al there's all these people out there that got comp tokens more than they should have more than they ought to but is a funny word here we have to parse that apart and he tweets out this tweet that says if you received a large incorrect amount of comp from the compound protocol error please return it to the compound time lock posts the ethereum address

he says then keep 10 as a white hat and then you finish this finishes it with this sentence it's the one that everyone gets like uh you know in an upper about otherwise it'll be reported as income to the irs and most of you are doxxed so what compound what robert is doing is saying like hey if you claim these comp tokens we're gonna make sure that you also pay income tax on or income tax or capital gains tax or whatever to the irs because if you claim comp that's a taxable event therefore you need to be reporting that to the irs and if you are doing that that's fine great but it's implying that like these people that are claiming

this comp token are also not paying taxes which generally is a good bet i feel like if you are technically savvy enough to exploit bugs you are also highly interested in not doxing those funds and are doing it in a private manner regardless so like again good bet but all of crypto twitter turns into an uproar about like hey this is supposed to be defy right like we're not supposed to use like regulators or agencies to impose what we want to have in our ledgers uh and so uh and so that's kind of where the cards fell robert like uh got a ton of flack for even mentioning doxing other people to the irs right because like kind of an

aggressive stance right and like i said like in theory the people that have a lot to lose would also be the same people that would be interested in exploiting this bug right and so uh everyone all the crypto twitter gives gives robert a lot of flak he follows that up like 10 15 minutes later with a new tweet that says i'm trying to do everything i can to help the community get some of its comp back this was it and this was a boneheaded tweet slash approach that's on me luckily the community community is much bigger and smarter than just me i appreciate your ridicule and support so realizing that he sent a tweet that almost no one in crypto agreed with and walked it back without actually deleting the original

tweet which i think is honorable um uh but also it was like too late right like way too much i mean quickly yeah if you deleted it straight away people would have had the screenshot anyway so yeah but no so i guess like two things on this before i guess we can dive into what we disagreed about um the first thing is that i think robert put this out uh because he was stressed and under a lot of anxiety i mean compound is his baby right like this is his thing that he it's it's his it's a big part of his life's work he still spends a lot of time working on it like even though compound is quite unquote decentralized because they have the token and the governance process and all that sort of stuff but um he obviously put this out in a state of

like this is really sucks like it's like 80 million or something where the comp was claimed when it shouldn't have been this is hurting comp holders and hurting the protocol's reputation um i'm going to put out this tweet and he obviously didn't think it through and got a lot of flack and then followed it up by saying you know this is a stupid tweet and he left it up and i respect him for that so i don't like people that kind of like through the people who are throwing lesnar under the bus as well because you know you've got to consider the context too lesnar has been a champion of d5 for i mean a very long time he's one of the pioneers he he pioneered liquidity i want a pioneer but he popularized it with compound um synthetics i would argue pioneered it um back in 2019 um

but he kickstarted defy summer he's the reason or at least a big reason why defy is where it is today on ethereum and kind of like um you know in the broader ecosystem so i think context matters here this isn't just some kind of like random saying this uh and and i think that that's like a double-edged sword because it's robert saying robert listen are saying this and not some random it means a lot more and it's a lot heavier for people to see but uh on the other on the other hand um you know you got to consider the context but on top of that i wanted to just address what you said before the funny thing you can also sharing screen now we can go back to me oh yeah oh yeah there we go all right go ahead um yeah so so the funny thing is that i

actually think criminals are better off paying their taxes than not because there's a lot of criminals who actually get caught out not for the crime but for not paying their taxes because it's very easy to see if you're not paying the taxes if you're splurging and buying all this fancy stuff and you aren't actually reporting the income to the irs or something right um so i actually think it's it's good it'd be good for criminals to do that if they want to stay under the radar um but so so i think what we disagreed about was kind of like that last part of his tweet where he said kind of you know we're gonna dock you to the irs or whatever if you don't return the funds uh that does definitely go against the very spirit of not just defy but crypto like we're trying to build things that are

disrupting both nation states and large financial institutions and institutions just generally so saying something like that is is what triggered everyone of course and and for good reason like we like my kind of whole argument around this is that if we're trying to disrupt something we shouldn't be appealing to them for an authority or appealing to them to be kind of like our little lap dogs and be like hey you know we're trying to disrupt these institutions but when we need them we're going to go out we're going to go to them and be like hey can you please help us like something went wrong in our little playground even though we were trying to disrupt you it just doesn't work like that right it's just it's a really bad not only is it a bad look but it's just like a really bad approach to it as well

and it sets a shitty culture um so that was kind of like my whole thing there not it wasn't really around like if people should return the funds or not um and there was like the whole code is law debate which probably we can probably get into but your position was i guess like a little bit different here so you can give yours your position yeah so i actually think this matters less about the nature of compound and i think what people are doing to too much is that they are thinking that this is compound but in reality this is just robert right uh and so it's not like there wasn't a exploit of compounding compound is saying oh no we need regulators to step in this was a guy that has these

resources available to him which is like figuring out the identities of all these people which is a public publicly available service that you can pay for it's not anything explicit to compound order robert and robert was just saying hey like do you want to be doxxed or do you want to return the funds and like anyone can do that it has nothing to do with compound anyone has these options available to to them the only difference is that com robert has the incentive and so like people are thinking that robber is acting on behalf of compound but no robert's just acting on behalf of robber and this is the reason why i emphasize that robert he's the largest comp stakeholder that there is

is because like the the role and responsibilities that nation states have is that when one individual feels wronged by another individual or another group of individuals they can take that individual or group of individuals to court compound or ethereum is not relevant to that conversation right these are just individuals who feel harmed and they think that they can make a case against under other individuals right and so what robert is saying is like it's just we have this like like chess game of outcomes available to us and ethereum is the playing field right it's just a it's just a function of the fact that like oh these the assets and valuable assets that we are talking about they happen to be on ethereum but that's actually an

irrelevant detail these are just individuals talking to other individuals and like people like i think people are saying like oh robert this is against the ethos of defy it's like well ethereum isn't like did you ever play tag when you were young did you ever like and then you had like a safe zone where like it's a rest zone like if you're on the bench like you can be touched like ethereum's not just like this safe zone of like of like away from courts it's like oh well we would let you sue that person but it happened on ethereum so we we like we can't can't do anything like no that's not how it works yeah yes and yes and no though because like what legal kind of claim does robert have here robert that's a good question that's why this would be really interesting if it went to court but the

thing is the case would be thrown out because robert doesn't own that comp that would it didn't get stolen from him right compound protocol doesn't own it either because if the compound protocol says we own this comp well that introduces a lot of legal kind of and kind of like tax ramifications to that as well because the irs will be like well if you own this then why aren't you paying tax on it because the compound protocol doesn't pay tax to any nation state it acts autonomously to pay out rewards to people who pay tax on their awards for example i really wanted to tweet out jake stravinsky we you just quit compound come on and help us like figure this out yeah yeah yeah yeah but like i just i mean i'm obviously not an expert on the law or anything like that but i don't

think that he has a legal claim there but the thing is is that there are laws around hacking right and and kind of like exploiting bugs and things like that but they're all laws that were created for centralized uh information technology systems not for decentralized ones so i actually don't even know if that would hold up it'd be like an interesting court case maybe this is going to have to be something that gets played out and this case law that builds up around this but essentially like i don't i don't see what what legal footing robert could stand on because he he says like oh okay well the compound foundation whatever he's part of he's not like in control of the compound protocol we're decentralized but then if he claims well i was robbed or like the the the the project that i kind of like

worked on that i founded was kind of like robbed um i don't think that would hold up at all because you can't have your cake and eat it too right so one one mistake i've done is like assuming that this is actually a court case and when robert says like you guys are all doxed and i'm going to report you to the irs that's actually not the court case he's just like title tailing on people right so there's there's an important nuance there but also it's also good it's also a bit of a an empty threat though because if these people pay their their taxes anyway on it like you know what i mean like he's kind of assuming that they're not going to pay their taxes on this massive gain that they have and i feel like that's a dumb thing to do because like why wouldn't

you pay your taxes on most of you are dogs because you're not paying your taxes on the rest of your crypto stuff yeah but the thing is it depends on the size right i think a lot of people pay their taxes if they get to a certain size because then it becomes very very hard yeah it becomes very hard for you to buy anything because like if you start buying expensive things or even buying anything like even a house if you you want to buy like a house outright or you want to kind of i guess like put a large amount of money towards a house that immediately is going to get flagged if your income tax sorry if your tax return doesn't match that amount of money that you've come into um so from that perspective i think i don't know there's probably some some

dumb people out there but i think most people are smart enough to realize that they need to pay the tax if they have a lot of money coming in um so i actually think that his threat was kind of like a bit of an empty one in terms of like people would see that and be like well what the hell bro i'm gonna pay my taxes anyway i don't care so then it comes back to is what these people did illegal they they they played by the rules of the system right i don't think code is actually law i think like you know the law is law and humans set the law on the social contract of these systems and everything like for example i mean i gave this example on my review refill yesterday let's say 50 of all eighth on the ethereum network was for

some reason sent to the burn address or like just burned right like and this earth came from everywhere it came from defy came from staking the staking contract came from everything and it hurt everyone do you think the ethereum community would stand by and be like oh that's okay code is law that happened because of this bug we know it's not going to happen again so let's continue on no the ethereum community will come together and be like well let's kind of fix this bug change the state that this happened in so that everyone gets their eighth back and everything goes back to normal same with bitcoin like it wouldn't it wouldn't the bitcoin say are immutable it's immutable until something really bad happens then you're gonna fix your [ __ ] it's immutable until you lose your bitcoins yeah yeah exactly so there's a certain

threshold that needs to be met for like a quote-unquote bailout to happen or for the community to come together to fix something at the social layer because the social way is the last line of defense um so for people to say a code is law like it's not like it's law to a certain extent where and then people were like well you know this is [ __ ] like we need to change this because it hurt too many people so from that perspective um you know i i just don't buy into the kind of like cody's law always sort of thing sometimes it is like should uh with this comp thing it seems like it will be there's nothing they can do to change this now except appeal to people and be like hey can you please return the funds maybe not in the way lesnar did it where he threatened

kind of like irs stuff but i'm also in the way of hey like return the funds like be a good samaritan be a good steward of the network and i think that's what you argued as well you were saying like the social layer matters like being a good steward of the network being a good person matters but the thing is is that it doesn't matter what your morals are and what you what your views are like people they aren't forced to do to do it and as far as i understand there's no kind of like legal basis for them to do it either unless you battle that in court and you basically had a judge side with you and said well okay hacking and exploiting of decentralized systems is equivalent to doing it in centralized systems as well it doesn't matter it's still it's still doing it but then it's

like the murky waters of like okay well who did they harm they harm the compound protocol the compound protocol can't sue anyone it can't go it can't take someone well they harmed other comp holders there was an 80 million dollar dilution yes you would need the other comp holders to come together and and but it gets i mean as i said not an expert on the law but like it gets so murky man there's so many kind of like things that and the implications of this case for decentralized systems would be vast because there'd be case law built on this and then you just it just strengthens over time too like case law you know the more it's reference the stronger it gets and you might end up in a really bad position where any kind of like uh a thing that that kind of like

favors one person over the other as part of a decentralized system say mev gets classified as illegal because if you do mav you're technically stealing value from people right especially sandwich attacks imagine trying to define mev yeah so you get what i'm saying like you you start doing that and say okay well mav is illegal because you're taking advantage of someone else um you're technically stealing their funds because of this this and this yeah i don't know it'd be interesting thing to see play out but i really don't think we should be appealing to any kind of like nation state institution at least not at this point in the game like maybe later on when there's a lot more people using this stuff it's going to happen inevitably but none of us should be calling for this that's just kind of like my core belief yeah and what you

just said right there at the end is exactly kind of like why i was like so surprised that so many people got really like um just like passionate about this it's like that you talk you talked about like is code law no but yes and then also but there are times where law actually impacts code and so like we have code is law on the crypto side code is code and we have like law as law on like the nation side and but like there are some instances where the law can make people make transactions on ethereum right like the law will say like okay yes you have to return that money and like sure you can say it's on ethereum but like you can also go to jail right but there's also times where it's going

to be the inverse right where like transactions happen on ethereum and then the court will be like oh well because of what happened on ethereum is that's what it is that's the truth right and in that way code is law right and so but like it's just going to be a case-by-case basis right every single instance is if it can be like if the incentive is large enough to take that into nation state law then the court system will determine whether that ethereum where code is law is code is law or whether law it will actually impact the code like they will determine that and they will determine that by like if you don't actually honor nation state courts then you're going to go to jail which like you're we're never

going into a code-only world because there will always be police there will always be jails right so like these blockchain codes law phenomenon and these nation-states laws law phenomenon are going to have to intermingle and intertwine with each other and so like maybe it's not ideal that like robert lesterner the founder of like modern yield farming and compound uh is the guy to like do this so early but when societies and blockchains develop and like seem together we're going to see more and more of this stuff where people are like saying like hey something happened on ethereum that i didn't like and there are these individuals that i can take to court and that is just a nation-state phenomenon and that is

going to happen and so we're going to see this more and more and more hopefully actually it like to your point it happens in places that are outside of the social layer that actually defines the ethos of defy maybe that's the big mistake that robert made is that he is a guy that is about this life and then stepped out of that life to do this thing um but like other people are going to come into ethereum and and like crypto at large and they're going to be like they're going to have some incident that's going to take somebody else to court and then the court system will determine the state of ethereum based on the realities of those two or groups of individuals and we need to come to terms with that and and it was it was just like there was that um

article about how i think chain analysis had like spun up some like snooping site on uh it spun up a bitcoin uh wallet explorer and then it would like trace your ip address and track it with uh with your bitcoin wallet and then it would assume that those things are connected and then it would use that information to knock on you like this is the realities of a public open auditable ledger society gets to use that public open audible ledger and take that data to court like that's what's going to happen a very frequent amount of times right and so we're just going to have to come to terms with that it's it's going to vary though like between nation states this is the thing and because ethereum doesn't have a nation-state home like what

you know it's just kind of like thinking through the implications of this like what laws do it there's a theorem follow with a theorem follows its own laws it's set in like i know code is not always law but like while in in the in the um the normal case ethereum code is law because like the law that everyone's following on ethereum and everyone's playing by all the rules that we're playing by on ethereum is set by the code now of course the code can be changed and it as i gave the extreme example before it would be changed i mean it's already been changed before with the dow that was an extreme example and that you know community came together and changed it back then um and importantly no one took anyone else to court mm-hmm yeah exactly exactly i mean you basically had like the court of like

public opinion within ethereum the court of the hearing community kind of like handling and the community was much smaller back then doing it today would be a mess it would be very very uh there would probably be some some kind of like cases that spun up about this uh from some people ambulance chases as they called like trying to sue someone but i don't know who you'd sue because yeah i mean ethereum is actually truly decentralized like you can't go after the ethereum foundation or anything like that it just you could try but i don't think you'd succeed but you know in saying that it's just kind of like different nation states are going to have their own different approach to this a lot of them are going to be very far behind and you know what happens if you exploit something from a nation state that

doesn't have any kind of case law around this or anything like can someone sue you for that like do you get extradited because you did this like to you know have uh have your kind of like um case held in in the us for example so it's definitely i think a murky area and if the thing is is that and then it brings in a lot of other implications of okay well you know the protocols decentralize but like these humans are kind of like suing each other over something or like trying to get their funds back but the protocol did what it was programmed to do um this was an exploit that happened so like can that person be forced to return the funds or is it just kind of like well you're out of luck because this property never belonged to you in the first place

um you know in the comp case it's like that comp belonged to other people sure like over the period of time but it didn't belong to people in that moment like it was a it was an iou and it was only an iou if you had liquidity mined with compound like no there's no guarantee that you would have been able to claim those rewards in the future because maybe you took your liquidity out of compound so it's like okay well you stole from the compound protocol technically like stall quarter quarter it's like okay well the compound protocol isn't a pers it's like an autonomous machine like you know because we have intentions yeah exactly exactly so and then you fall back on well okay what it just it gets really murky it's like how do we how do we solve this so i'm sure we're

going to see it play out in in the courts but i think yeah i mean i think what what our disagreement was like just generally about was the fact that yes i mean i agree with you the humans are kind of like at the at the you know the layer zero of this like it's it's the ultimate layer but sometimes uh code is actually uh it is actually law um where people don't have to be a good human they can be a shitty human and not return the funds and and exploit things and nothing will come of it they won't get in trouble for it uh they'll pay their taxes on it right like and it'll be all well and dandy uh but i mean i think the ethos of defy is you shouldn't go and and to regulate as to nation states to big institutions

central institutions and be like hey save us but the ethos of ethereum and crypto generally should also be that hey if you take advantage of of something um it's a really shitty thing to do so you should return you know some or all of the funds just to be a good person i mean that's like kind of like a moral debate it's not a legal debate uh and we've seen this play out before where people have returned funds like alchemics 55 percent of the eight that was exploited got returned which is a pretty good outcome um but you can't rely on altruism and people being like you know good citizens it's about more enforceable yeah exactly so and that's why we have chords and laws and everything is because most people it's also why we have code and smart contracts those are also enforcement mechanisms right

exactly having this desire of like oh you know you shouldn't have gotten that comp like it's not scalable like there's a reason why we have the phenomenon of whole smart contracts is like well it's enforceable and it's scalable like saying like oh the ethos is that we do good things like sure you yeah these protocols are designed with the with the worst case uh kind of like uh person in mind like what if the like the 100 evil person wanted to attack this network we have to design for that that's what ethereum is designed for and we've seen like if there's an exploit in in ethereum in the theorem called protocol it will get exploited like uh sorry if there's a bug it will get exploited we saw this happen with with the gethbug a few weeks ago this is an

extremely adversarial environment people would will do things for for different reasons some people do it because they just want to have fun want to watch the world burn some people will do it because they want to profit from it um some people are just like downright evil and want to inflict pain on others and things like that so you can't rely on the goodness of people uh to to kind of like uh uh do these sorts of things and that's why we have the the courts and legal system but in a decentralized world where none of this kind of stuff has been fought in the courts before and we don't have any kind of precedent here what happens legally you have to just rely on the code you have to basically code up your contract so they're resilient so they don't have exploits in them you have to be really careful about

what you do and when you do suffer an exploit you have to just accept the fact that it happened you can ask for the funds back i have nothing against asking for the funds back but don't use the kind of like threat of legal force of like the irs especially um to to kind of enforce that and to try and like scare people into it like i'm i'm all for people being like hey you know hakka like or exploiter you know return the funds please but other than that there's not much you can do like you know even if you know who the person is you could try taking them to court but maybe that's what needs to happen for people to kind of like settle on this thing well the courts aren't going to help us so let's build better code but generally we should just be building better

systems and code anyway there shouldn't be any um kind of like lapses there everyone should be building a system that considers the worst case scenario i do think that that that is the ultimate point is that like well if we built good code we wouldn't have to have this conversation so like that is like the final like lesson that we should all learn but i do think the step that comes right before that is like when we do take this to court like the judge has two options right it looks at the intent of the compound protocol and it sees that like well the protocol is a protocol it has no intent so whatever the basically the judge says well code is law there aren't any intents baked into this thing there's just code and so i'm going to have to

take the state that comes out of it as truth and therefore sorry robert you get nothing or the judge takes the case of like all the the intent of all of these compound governors and like subjectively interprets what their intent was and to see that their intent was violated like that is there maybe there does come a day where a court case is of that nature it's like well do do they interpret the intent or do they interpret the absence the complete absence of all intent ever and if there is a court that a court case that happens like that literally all of crypto will be watching that like i was like

is cody's law is code law or human's law like what was it going to be what's it going to be the the funny thing is is that you mentioned the compound governors and they were the ones who voted to make this change and to put in this in this bunker so like could they be held legally responsible for this we don't know right like could you argue in court and say well these um people are the actual stewards of the network these entities are the stewards of the network they should have checked this they're responsible for what happens on the protocol what changes happen therefore we can bring a case against these people and if that happened what you're gonna have is you're gonna have um you're gonna have lots of people not wanting to get involved with decentralized governance at all there's gonna be no one using their tokens for

governance because there's a threat of legal action um or you're just gonna have like anonymous people doing it uh it's yeah it gets very kind of like murky then we haven't seen this play out on the courts yet from my understanding so when it does we're gonna see if the government is like and the the the the delegates like people that are actually um have tokens delegated to them and putting the changes into the network uh if they have responsible for whatever happens on the network if they are well yeah that gets uh it gets very shitty for day five i think right yeah as we come we're a little bit beyond halfway everyone thank you for tuning in to this semi-regular friday weekly livestream here's anthony's daily gray youtube channel just posted that into

chat where anthony talks about stuff like this five days a week and then has his weekend-ish data pump videos as well so overall producing a ton of content so if you want more ethereum things you can go and give him a follow in the link i just put into the chat there anthony i think this conversation wraps up with um this this part of the conversation damn i had this in my head right beforehand uh uh oh yeah it's like again my learning lesson is that it's not that like over the very long time code will ultimately supersede nation states but for the shorter time frames of like one year to a few decades like people are going to learn that these things engage with the

other things right nation stage engaged with blockchains blockchains engage with nation states they're going to weave themselves together and we are all going to have to like traverse that chasm because it's a frontier no one knows right and so like that this is my like learning lesson is that like this is going to be some a subject matter that we revisit very very frequently yeah i mean this is what it's like to be on the frontier you have to deal with all these sorts of things all the unknowns like you have no idea what's going to happen and yeah i think we'll eventually see these play out in an actual high-profile kind of court case and we'll see i guess what happens from there uh it might be a good result it might be a [ __ ] result but as i said like there's

different nation states so it doesn't matter what happens the u.s is one nation state there are plenty of other ones and ones that aren't allies with the us either so yeah it's going to be an interesting thing to see play out i think while i was taking whatever stance that i was taking with regards to this whole debate i was like wait a second am i vlad is this what happens what vlad says yeah yeah i mean yeah he's yeah he's got a lot of interesting ideas around governance um i remember listening to a podcast with him and gavin wood a long time ago like this would have been 2017 or 2018 or something where they were talking about governance and man you can talk about governance forever because it's so subjective like it's just extremely subjective and it's just

highly dependent on the individual's view of things and i mean that's exactly why we have courts and court systems to battle these things out because the law is never black or white like it is always grey and and you know even if you say okay well this person murdered this person well you have to consider all the context around it is it actually murder was it intent what was the intent exactly exactly and you have to prove it like to prove murder you have to prove intent to kill or otherwise that's manslaughter or some other kind of like um uh definition there but um and it's the same thing with a lot of other things you have to prove intent a lot of the time to get like a a strong guilty verdict so uh yeah governance is is a rabbit hole that you can get lost in for a long time

right this is why the conversation on blockchains is always so interesting right because like if you want to understand them you basically have to go back to like recorded history right it's like you have to learn about like all the ways that human because this layer zero all the way down and the culture of humans goes back to like as far as culture can go right that's why blockchains are so cool they talk they they reference everything some people like to sweep this under the rug and say oh the blockchains are autonomous and whatever like no they're not who do you think's running the chains like it's not an ai it's humans maybe in the future when an ai is running from like mars or something yeah yeah exactly so uh it's it's definitely uh i think important to be reminded about that

constantly is that like humans are the ones running these humans are the ones building everything on it humans are the ones interacting with it the most i mean there are bots but those bots are also programmed by humans it's not like we have ais that are fully artificially intelligent like they create like they create themselves they replicate themselves maybe we will in the future but yeah it's all humans right now so that's something people forget unfortunately yeah yeah i mean no one really wants to like think of that stuff as like the dirty laundry of humanity is like oh yeah governance is this thing that we've literally never been able to get right because as soon as we get it right other people have problems with it there's no i mean yeah that's the thing there's no right or wrong because you have different morals you have different

subjective opinions on things like um that's exactly again why we have like the court system is because they're i mean and then it's funny because like different nations have different laws based on different kind of like reasoning then you have like um different religions have different kind of like morals and stuff like that so it's yeah it's it's kind of like and it's funny because like there are certain places in the world where yes they believe murder is wrong but only against certain people if you murder other people then it's fine that's the thing you know what's funny the thing is is that like this was even prevalent in places like the united states with you know the slavery era like when you treated slaves as property and they weren't actually humans so you could kill them and they'd be fine right um so like just thinking from that

perspective that that's why everything's so subjective and everything and like what your morals or what your view on something should be is not the same with someone else's view uh uh you know necessarily so and i think that's going to be the same thing with blockchains like not everyone believes some people truly believe that cody's law whatever was programmed into a contract if it got exploited well bad luck that was part of the the the um the code um other people believe well that's a shitty way to look at it like these things are still run by humans it's still social kind of like contracts here um you know you should be able to kind of fall back on that so just depends who you talk to i think 100 100 and that's why we say it's always people all the way down and even

the bitcoiners who are like no no no it's math to to bring back what you said earlier it's like well what happens when like 70 percent of them lose all their bitcoins to the same 75 80 like what's it gonna take bitcoiners like 99 and all of yours you're like well i guess i just lost my bitcoins like no at some point in time like the bitcoiners would be like we're hard forking bitcoin because i want my bitcoins back like it'll happen to them too yeah yeah exactly exactly so i mean it's a it's a low chance obviously but the thing is is that as i said these systems need to be built with the worst case scenario in mind and the worst case scenario is a major bug that affects most of the network and what's your

recovery mode from that well it's the social layout so if your recovery mode is the social layer then you can't claim that it's cody's law and that the whole thing's autonomous right and you also have better been doing a a damn good job like building that social layer too like i think yeah exactly one of the biggest mistakes that bitcoiners will will have faced in the future is that they optimize for shattering their social layer they have a great social layer regardless but it's one that is specifically optimized to not coordinate right it's just like oh bitcoiners yay whereas aetherians are being like hey guys like we need to figure out what the [ __ ] we care about because like we have to hard fork in six months

exactly so and you know that might that issue may kind of like get more and more prevalent for them as they as we go through the years where their security budget comes down that's something that we've spoken about before and a lot of people have spoken about where the bitcoin block subsidy gets harved every four years which means security budget goes down and if the fees don't match uh kind of like the subsidy then the network becomes insecure you know maybe they have to kind of like fork to a proof of stake which you know looking and thinking about that today just like is hilarious because i can't imagine any any of the single bitcoin right if you say it you're not a bitcoiner exactly if you even entertain the idea you're not a bitcoiner um and especially the more hardcore ones and then you know

removing the cap that is even worse than suggesting proof of stake like adding i'm in that camp actually i i'm in the camp that if you change bitcoin's 21 million hardcap is no longer bitcoin like bitcoin is 21 million hardcap or die that's the thing but you know okay let me let me push back on that for a little bit because i've heard this before i actually think that bitcoin is whatever the majority wants bitcoin to be so if the majority wants bitcoin not to have a 29 million cap anymore then it's not you know that that then bitcoin is the inflation coin now so it doesn't matter that right now people think that bitcoin is 21 million it could be different in the future i'll i'll walk back my statement and i've i'll say that there are many many things that make bitcoin bitcoin

and the 21 million hard cap is the thing that will go last as in like they will fork the proof of sake before they give up the 21 million hard cap yes yes but the the funny thing is is that proof of stake works best when it has perpetual inflation coupled with coupled with a fever like you know that's that's kind of like the the trojan horse getting pregnant it only works when you also have a smart contract layer right yeah so the smart contract layer and proof of stake those things have insane symbiosis with with each other and like bitcoiners just discount all of that and they say really really intensive security cost by budget also no security budget

yeah yeah yeah you know the funny you said like symbiosis i mean i wrote a piece about one five five nine a while ago like over a year ago in in the daily gray where it was one of my first pieces where i said where it's titled creating a symbiotic relationship which is basically that like because ethereum has an expressive base layer because it generates so much fear revenue and because we can harness that fear of and put and burn it and because we're going to go to proof of stake with a perpetual issuance we can i mean justin drake obviously has talked a lot about this on bank list but we can secure the network while also um ensuring that we capture the value as well we don't pay too much for security so bitcoin can't do that like unless it adds smart contracts i mean it won't i

think the thing that bitcoin might do in the future maybe is add a way to verify zk starks and snarks because then they could do layer two then they could do roll ups but i even think that would get pushed back from people being like that's because ethereum already owned it i mean yeah oh that's what the ethereum people are doing that we can't do it yeah yeah and but also like it's a big it's a big change for bitcoin like relative to the other changes that they've put in maybe they'll say oh it's a soft fork gotta hate that terminology a soft fork is is is a hard fork in you know maybe not on a technical level but like in spirit it's a hard fork man it's coercive it forces people to upgrade um so it's just yeah i mean no software don't force you to upgrade that's their

one thing no no no no but see this is the confusion soft forks on the technical level they don't force you to upgrade on the social level they do because it's basically saying if you want the benefits of this new cool thing we introduced to bitcoin then you have to basically upgrade okay well the difference is is that like if you are a bitcoin og with a million bitcoins and you've been running the same node that you've been running since 20 2009 you still have your bitcoin then you didn't upgrade yes but i don't think you can actually run clients from that early on i think the earliest clients you can run are like 2012 or 2013. the point still stands yes yeah but the thing yes and it depends what other soft forks

they do in the future and what they introduce but the reason why i mean vitalik has argued this as well where he says that i think it was vitality where he says that soft forks are more coercive than hard forks because software is like a subtle subtle force change where it's like they're promising you that oh well you can still use the old network if you want to but if everyone kind of like adopts this new thing like if everyone adopted segwit well then your old transactions from my understanding like your old would would um be second-class citizens to the segwit transactions and you'd be better off just upgrading which means you're kind of like forced to upgrade anyway to enjoy the benefits it's more insipidus yeah yeah so yeah and and i i think that like they use that terminology because they really don't want to to go back on that that

kind of like oh we don't do hard fork sort of thing but i don't know man it's just it's always been bizarre to me it's like as you said their social layer is i wouldn't call it a broken social layer i would call it like as you said they optimized for something completely different where they actually can't handle this sort of stuff uh so uh there's a youtube comment from uh virat sorry virat but like i wholeheartedly disagree i'm going to read this out loud we need a justice system for crypto integrated directly into the blockchain that's on chain governance right that's what something like polkadot is trying to do i believe um yeah i guess that's me yeah yeah it goes it just boils down to on train governance

yeah but yeah yeah to an extent because you can have different forms of on-train governance i mean i disagree with that as well you start introducing subjectivity into the base layer uh like extreme subjectivity i know that there are like with ethereum we have this kind of like culture of hard forking regularly to introduce upgrades and those upgrades are subjective but if you have like a court system like i mean how does that even work like does that mean that anyone can who are the arbiters yeah yeah and the thing is that ethereum does have a court sys a court system like not a subjective one a technical one where you like uh for example with layer twos uh with uh kind of like optimistic rollups you can submit fraud proofs to prove fraud like but that's on a technical level that's like a kind of

process that optimistic rollups go through over a period of seven days but then then it goes back to like well was it even legitimate in the first place regardless of the math right yeah yeah yeah i mean yeah so there's that's the thing it's just funny when you think about that but like i think i think ethereum already implicitly has like a court system the chord is the code the the code dictates what the rules of the system are and if you want to challenge that in in a court so to speak you want to challenge the rules of the system well you just look at the the code and you can say okay well the code ran exactly as it was programmed to um you know that and and and you go to ethereum as your source of truth because if you're that only works if the judge that

you're talking to agrees with that is the actual rule of law the judge is ethereum though right ethereum the ethereum world but not the greater world no no not the subjective yeah like i'm just saying ethereum then yes yes in the ethereum protocol context itself the ethereum itself is the final arbiter of everything that happens on the network because you can see the state at any given time the state at this block was this now the state is this this is the this is what changed this is the ethereum network telling me that the this is the source of truth because the ethereum network is run by thousands of nodes around the world uh the you know they have the miners and stakeholders with group of stake and you have people come into consensus of your peers if you will exactly exactly the nodes are the

peers that come to consensus on saying and then ethereum is the ultimate kind of like uh uh the ethereum block or the theorem state is the is the judge of everything but i guess what they were talking about was like a subjective system where you could basically have like a council of people who come together and say okay well you know we can change the math was wrong guys math was wrong and we're doing something else yeah yeah but the thing is to an extent we have that as the final layer zero defense against something catastrophic happening on the network but it's not an everyday thing and i think that's that's the way to play it you can't have it for everything you have to have it for like the existential threats only so vera to answer your question i think we agree that we do need a justice

system what anthony are saying is that that justice system is called humanity and we don't want it directly integrated into the blockchain we want it so far separated that if we have to actually invoke humanity to make state updates to a blockchain that don't actually align with the math then we will do that when a time comes but we also don't want to formalize that because we want that to be difficult and i mean as i mentioned before it's called an irregular state change where is exactly what happened with the dow where the chain wasn't rolled back for the doubt what ended up happening was that they went in they they in the code they have like a black list of all the addresses that um were used to drain funds out of the dow and they basically

say you know take this and put it into this contract and then everyone who had ethan there can claim their eighth back and everything and then everyone who disagreed with that change went to ethereum classic and then really at the end of the day humans decided what the winning chain was like humans are like okay well you know ethereum is the winning chain ethereum classic is not the winning chain even though ethereum classic is technically the quote-unquote original chain and the theorem is the fork it doesn't matter because ethereum is the canonical ethereum chain uh the the the theorem we all know and love today i think it's so awesome that ethereum is actually a fork it's actually a secondary chain yeah yeah you know technically bitcoin's a fork too because early on in its life they had that inflation bug right um they had that they had to fix that so uh

and and and i think that's fine um i i think as as we've been saying the social layer ultimately decides what is ethereum what is bitcoin what is x and x chain um but if you don't if you have a weak social layer it's very easy for a small group of people to kind of like dictate what the chain is um and that's what we mean by centralized chains where people can't run nodes and there's not a great culture of um of kind of like social contracts and layer zero culture and that's why i mean that's why a lot of us kind of like reject a lot of these other chains that spin themselves especially the ones that require like beefy hardware to run because if users can't run their own full nodes if users can't verify things for themselves then there's never going to be a culture that

forms around that the culture that forms will be one that is kind of like implicitly relying on these kind of like handful of people to steward the network and those handful of people can do whatever they want and you know the users won't even know if that happened like who's to say that one of these uh networks that has like a very centralized validator set doesn't do uh doesn't kind of like come together and be like hey let's print ourselves extra kind of like x and x tokens who's going to notice that like if if there's no one running nodes uh you know they could just do a stealth inflation or they could do something else they could censor users like there's all this sort of stuff that goes on and i think if you have a weak social layer you can't recover from that it becomes like very

very if not hard if not impossible to kind of like recover from that yeah i think you and i will just be like harping on the importance of the social layer like forever and not that many people i think are gonna get it and i think that crypto will still like unfold the way that you and i like hope and desire it will but not necessarily because like you and i actually just were harping on the importance of the social layer for like years and years and years i just think like to some degree like i embarrass on any protocol that has never made it through a bear market right like if you never got tried as a protocol at the social layer then are you really a protocol and bitcoiners

have gotten tried multiple times ethereum has had its very big trial of like potentially losing everything with absolutely zero funding throughout 2018 2019 and early 2020 but like name one other protocol that has gone through trials right if these are social systems all the way down then like culture is formed in bear markets right like value and vision and commitment is formed in bear markets and when any other like blockchain that is uh only formulated in bull markets only comes alive and like that does swimmingly in bull markets like great it's easy to do well in bull markets like let me see you go through a bear first yeah and that's the funny thing because

like if you want to be a bit um i guess like what's the word i'm looking for a bit uh realistic here for a second but also um it's kind of like shitty to think about sometimes the reason why most people are here is because they want to make money and that's fine there's nothing wrong with that but uh you can't form a culture or a strong layer zero just with people who are around because they may want to make money and that's to your point of in a bear market most if not all of those people are gone and you have the core believers left and they set the culture they set the the layer zero they set kind of like the path forward for the network and then you have like other people coming in over time and and doing whatever uh you know during the bull

market so yeah i mean i totally agree with you but at the in the same sense i actually don't believe we're ever going to have another two-year bear market for for crypto which is a is a double-edged sword again it's good because like i hate two-year bear markets they're brutal as hell and like everyone i mean even though everyone's like still motivated to build it just feels so shitty watching kind of like the price do nothing in the face of all this adoption and building but on the other end on the other side it's uh it it's good because uh i mean sorry it's shitty because like we won't be able to kind of like weed out these i guess shitty projects as easy as easily as we did in the past um but i you know again i think it's comes back to the social thing like

social signaling as well like whatever people within the ecosystem especially the ogs that have been around for a while while whatever they put their weight behind obviously uh and kind of like their social signal is like a good thing obviously uh is something to pay attention to um but yeah i think this industry is just going to get much bigger from here and it's going to be much harder to form a good social layer of any of these networks anymore and i think ethereum is in a very unique position to to kind of like you know keep the one that we've got but also attract more people that think like like awesome bullet and buy into the ethereum vision as well 100 brother and on that note i'm going to put the daily gray youtube into the youtube chat one more time if you guys

like what you have heard today go ahead and give anthony a follow at his daily great youtube fan channel he talks about stuff like this five days a week 30 to 40 minutes a day i listen to it every single day to keep up with the world of ethereum anthony thank you coming back on a friday semi-regular bankless daily way uh livestream cheers thank you for having me sir i can see you're tired so have a good have a good sleep i will i will i mean i got i got a couple hours of dark souls left in me before tonight but yeah other than that yeah yeah fair enough see you man