Hacks, Wind Downs and the Safe Governance Debate

Transcript

other is after bit. >> Yeah. Well, it comes down to like same conversation you went before of like Yeah. Every protocol, you know, has fees that it generates from every transaction whether we're talking about one protocol or another. And sometimes those fees are, you know, illicit like unis swap has made money off of, you know, uh, North Korean trades as well, right? And so anybody who contributes to that system, including the the was it 8% they cut for themselves for the uni token or whatever that is, whatever. It it just goes back to our original kind of sense of like we just believe in centralization, permissionlessness. This is what's important for humanity to move forward in our financial systems. I'm not sure it's such a small percentage of the income that the protocol makes is through realistic funds. Look at it one day like like Taylor sometime likes to

tweet about oh in the last 24 hours all the funds are from this one trade. It's like >> I mean it was like $10 million in fees. >> I know. But if you look at over the the time span of the entire protocol's history, it's barely a blip. >> I'm advocating for if that's the only functionality you have, right? And the the vast majority of funds. So like for example the XRP throughout, right? We can look at the numbers, but it was not it was not 20%, it was not 50%, it was nearly 100% of assets on that route for that period of time were directly stolen funds, right? If you had turned it off, I'm not saying a time limit. I'm saying any amount of time, right? That would have to them off somewhere else, right?

And then you wouldn't have laundered stolen funds for DPRK. >> No, that's not that's not correct. So, what you would have to done is is to turn off trading, right? And assuming that there's in-flight trades, those have to be reallocated. they have to go through a store migration requires two-thirds majority of the nodes which would take on average one to two weeks for that to occur and for those funds that have not been traded through the through the protocol you could theoretically you could say hey I want to let's go ahead and ban this ETH address ox blah blah blah whatever it is but then the attacker would just change addresses to send to some any arbitrary address they want to then keep on trading you can't have the the fast enough response because the protocol is decentralized if it was centralized you're totally right that's what near

does decide to be centralized the choice that they made for their protocol, which is, you know, their choice. That's fine. It's good to have a diversity of thought and opinions in the industry in general. I'd say >> I don't make excuses for my behavior. I don't like people who make excuses for their behavior based on words that have no meaning. So, I think that if you want to live in society, meaning that like we have pro-social things, where we help each other, where we try to create value in this world, right? Then those are choices that every single individual, every single group, every single entity makes. And ideally, everyone is making ones that sort of benefit themselves, their communities, society, the world, etc. I think that when people support and help thieves, that's bad because it hurts people and it incentivizes harm.

And I think that's bad for society. I think it's bad for the world. So, when I see Thor Chain, like my biggest issue with Thor Chain, right, is you guys celebrate, you financially benefit. Okay, in my opinion, and you can disagree with me, okay, there's a lot of coercive [ __ ] that happens. Okay. I think it would be better if Thor chain tried to stop the bad activity that impacts this ecosystem specifically direct if we just did that. I think the world would be better. >> What I think now many people are talking about this. So it's I I don't think it's new is that what they want to say is hey AI is dangerous. You need to regulate this. You need to prohibit open source model. They want to go against open source models for sure and to say okay we need to regulate. We need to put

guards here. We like open AI, entropic and two or three ones we are good regulators the rest you you you will not be able to grow. So as the society we need to decide do we think this is a good thing that these hyperscalers need so much money that they're so risky that there is a lot of upside left when they hit the market and that that risk the trade-off space is that they could go bankrupt and be worth nothing and a bunch of retail people could lose $2 trillion. Are we willing to take that risk for the chance to give a bunch of retail people the chance to make $20 trillion? My heart take is yes, absolutely.

>> This is the thing that that I find strange, right? Like if you know arbitum 2 months ago, 3 months ago could like kind of credibly say like it's not possible, right? Like it's theoretically possible, but it's not practically possible. We'd never get everyone to agree, etc., etc. And therefore, no, right? like we're in L2 and you know whatever moon math like whatever [ __ ] [ __ ] that they would say right to to justify that this is not a thing they could do they can never say that again unless they change how the chain works right unless they change the way that the chain works in a way that stops them from ever doing it in the future the cat is out of the bat right and not just for arbitum also for optimism also for like every other L2 that actually know like

you literally can just reach in and change the balances of any address on the chain arbitrarily because of course you can like how could anyone think that you couldn't and unless you're going to move to like some you know immutable system that doesn't have a valid like unless you're going to change the entire architecture of your system for ever now you have the ability to do this. So if you don't do it, that's a decision that you're making, right? >> There was a recent ruling in a federal district court about flock where they basically said, "No, this is a search."

Right? Like the whole, "Hey, observing people in public is not a search thing was predicated around those being individual and discreet observations." Like the police saw you walk into the doughut shop. That's fine. But flock cameras creating a comprehensive visual record of all public spaces at all times is the equivalent of following that person around. That is a very different sort of search than oh we were incidentally there and saw them. Rom to your point I feel like AI is posing a similar problem for the way the world is currently structured which is nobody really thought about what if there's a device with all these connectors that has all of your context about all things like that is obviously much closer to somebody's papers and personal effects

in like fourth or fifth amendment terms in the United States. >> Yeah. Well, it's the classic trade-off between security and liberty. And people historically have traded away liberty for convenience and security. So then OpenAI says, "Wait a minute, we've lost the narrative. Anthropic has faster revenue, better revenue growth. The best like the technical staff at Anthropic is the who's who of like the NBA dream team. It's incredible what they've done." So then we have this incident where these agents run a muck and hugging face which is an open- source project that no one really cares about because it's open source. There's no one from Hugging Face coming out and talking about this. It's if you're going to have a target that was run over by these little pushing agents for a press release event, it would be Hugging Face.

This is the nothing. This is it's just a media stunt. That's all it is. I we use these agents every day. They are not capable of this. They're not they're not that capable. They're not I wish they were. We're not entering the age of AGI or super intelligence anytime soon. We're not. They're incredibly productive. I'm excited. I think agents are more powerful, more impact than the computer, but we're entering the age of midwit AGI. So, if you're a consumer staple that generates this long tail of free cash, rates go up, your stock declines. It's not actually creating a earnings impact. What it's doing is discounting those cash flows at a lower rate. And it's it's oversold. And those names are attractive now. Like, now is the time to go shopping. I I say this with like high conviction. You can quote me on this. in 30, 60, 90 days. And like

I think all these ETFs are quite interesting. Right now, the rates aren't going to 6 and a half%. I had dinner uh in Nashville last Thursday with an individual as a CIO of an endowment. That means you're always looking backwards in the rearview mirror. Okay? I used to work at Archagos of all things, too. I hope he's not listening. So, what he said is, "I don't see why rates can't go to 6 12% to 7%." And he said it with such conviction. And I remember immediately after that moment, I said, "That's it. Rates stop. That's the guy." And there are going to be thousands and tens of thou like, well, I don't think rates are going to go 6 and 1 half to seven. Okay, great. The market just achieved consensus that rates are going to go higher. Now it's done and and rates come lower.

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>> 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 if 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. >> Don't panic. >> 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, guys. 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 in 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 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? cuz 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 uh 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 sent 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 >> what happened? 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 Metamas situation. Not because I formally worked at Metamas but because I read the MetaMask 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 a specified address. This is actually not signed. Well, it's sort of signed. >> You have to sign to to ship it, right? Like to ship 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 ETH was redirected from the original fee addresses that people had specified into new addresses, >> right?

>> And that set off the alarm in terms of like wait what the [ __ ] happened? >> Metavas 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, 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 fees 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 e, >> but that just a testament to like actual like strong. >> Yeah. 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 09 is is our policy. Um zero nines.

>> I would notice mine. I would notice mine my that'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 nothing there's there's nothing you can do, 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 fallable right and so the confabulations that I have about the process that I went through to set up these validators 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 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 figure this out.

>> Do this and that." >> You would still have no idea how you did it, right? Exactly. Because the AI did it for you. >> Yes. Yeah. >> But you would you'd at least have the session you'd have the session, right, to to go back like Yeah. 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 did 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.

>> 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 R word 10 times and then >> Sorry, Ben. >> No, I was gonna I mean, what I was thinking is like so this the the MetaMask 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 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 hey, I can talk to chat GBT or whatever. And like they don't, you know, it's not kind of And by the way, I'm not saying that AI is going to be like bad or a disaster 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 terminally 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 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'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 X the keys then that is basically ECC being 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's 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. Whatever, right? >> I mean, like the W the W address to me feels like a fun one like >> or or Zero address even better. Yeah. Yeah. ZeroX dead, right? Like but you know, Wet 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 so >> yeah, 5.5 billion in wealth right now. >> Yeah. >> 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 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 agree. >> 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 going to be like, "Oh, hey guys, like we're just going to 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 a trove of all of the solutions to the things cuz 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 would know they have a process. They're like, "Oh man, remember like the 30th planet? They nuked each other because they told them that their gods weren't real or whatever the [ __ ] happened right? >> They haven't come up with the same directive yet, you know?" >> Yeah. Exactly. And and so >> 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 it's 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. 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 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 >> you 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 actually 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 rollbacks 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 reactive. Yeah. They won't have the ability to to react. Absolutely won't. Yeah, 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 Joe Luben's coins. >> They wouldn't start with something that's like extremely obvious, you would assume, right? They would be doing, you know, doing what like real power like geopolitical like people of the world type [ __ ] Yeah. Um, >> yeah. Yeah. >> Like to your point, if Open AI 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 OpenAI 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 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 >> money come into some system somebody stole now we're talking about math breaking down then this is kind of interesting you know >> 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 >> death of the universe they used to say death of the universe now they're saying 2027 2028 >> which by the way like we might not make it there Right. 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 for >> it's been a lot the density of energy in the universe and then it's like it's like 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. >> For today, >> 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, $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 2 years ago, right? And and what's interesting is the the skill 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? 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 were 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 6 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. >> It is an 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 >> right? >> 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. Um, all right. We got to go. >> Let's go to ads quickly. Uh, then we'll come back. We can we can uh do you want to quickly talk about the near stuff or should we should we move on to uh to Zach? >> Let's we'll go to ads. Let's go to ads and we'll figure out.

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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 imagine the money 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? >> 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 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 knows the 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, uh,

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 >> they don't That's the thing, Kane. It's like they don't go mad. 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." Like it's such a >> It's not 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 axible. He's like, "I'm not even a bother with an onchain message. I know this [ __ ] is watching my Twitter." Like >> literally, >> you know, 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. >> And then Yeah, the guy is like immediately like sends all the money back. By the way, he also he 0% bounty. >> Like that's how it's done. >> 100%. Like why are you paying a [ __ ] bounty to these guys? Nuke them from space. Yeah.

>> Like [ __ ] like UAV straight into their house. Yeah. 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 >> 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 Zack 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 BBET hack um and even before the BBET hack, but the BBET 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 going to 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 money launderer. 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 money launderer for DPRK. Uh, he basically became friends with him. He also did like a full undercover

operation multiple times to get his addresses to 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. 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 like it's it's over a billion dollars that they laundered in like four or five months. So you know that there's handoffs happening. what this story and these conversations and other conversations that have happened reveal is like the money lenders, 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 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. >> 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 [ __ ] with Zach.

>> 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 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. Now you know he'll come have coffee with you right away. Yeah, exactly. 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. 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 T 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.

>> I like something went wrong with their ICO like >> Yeah. >> 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 what you're mean. >> You feel taken advantage of. You also are like I mean, I hate to say it, 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 by 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 again, it's just like like you guys make and I mean I still do it when I 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 don't 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 this 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 to 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 any more 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, >> like Yeah. >> Yeah. >> Yeah. >> I think I don't know. This this investigation felt good. 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 don't know 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. So 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 in 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, postbivbit, even

pre-bet, you would see me bitching at the a lot of the exchanges for for >> not 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 the walts into all the different like any defi 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.

>> You guys were talking about 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." >> Yeah. 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 Twitter like >> Yeah. the bad actors like like we we um because of our gas sponsorship set up 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 cuz 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 uh and it's not there yet like cuz 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 5 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 were 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 then >> 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. So, >> the outrage guys are the the outrage guys are the usually the worst. And usually >> when 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 who are 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. It's 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. >> 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? >> 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 hey >> like this is the epitome of autism, right? It's like the bullish bull market is like hype hype hype and people were 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. 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? Um and uh 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 Augre 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 have it 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 cuz 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 you It's 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

triers of things you know this is why I think the the we'll get into the investors being like ah lazy [ __ ] 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 >> they find a way they do find 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 multistig 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 and it's [ __ ] 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 asked 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 the 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 [ __ ] here. >> 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? It

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. It's 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 chancery court. 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 they just 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 your 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 >> still 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 >> the Ethereum way. >> I know this is the irony of irony, 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 of 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 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 offchain 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 governance. 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 dayto-day 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 obfuscation

of what's actually happening, right? 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. Like thank [ __ ] god that they built it, right? Because if they hadn't >> never build a wallet, guys. Never ever build a wallet.

>> Life advice. Why? >> 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 put a fee a small fee because >> I've 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 etc. Right? 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 >> $100 billion 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 where >> they did try they did they 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." Get in here.

>> 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? >> Like this should be a core feature. >> I'm not saying it's easy. I'm not saying easy. I'm saying actually the opposite. It's 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 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 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 >> L2s 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 >> they 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. >> The theme of the episode is never build a wallet. Absolute absolute 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 this has been a very fun show.

>> Um, all right. Thanks everyone for joining us for this episode of Uneas 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. Everything.