Sudoswap Hype, Ethereum Censorship Risk & ETH PoW Debate | Roundup

Transcript

this episode is brought to you by core the brand new non-custodial wallet that offers a seamless and secure experience on avalanche you'll hear more about core later in the show all right everyone welcome back to another episode of empire we got the weekly roundup coming at you santi is traveling right now so we got two sub ins we got the a list we got the a squad coming to the table today we got dan smith and sam martin two absolute d gen research analysts uh from block works dan sam welcome to the show guys yeah thanks for having us yeah i appreciate it of course first thing first we're talking about ofac and censorship issues um last week we talked about this on the roundup two we saw the us treasury add tornado cache to the ofac list usdc

freezing related tokens inferior alchemy github d5 front ends and other providers began to censor the addresses crypto twitter and discords became flooded with debates around censorship risk um i think the first place that we should really start here is around validator censorship so after the merge um just a reminder after the merge miners and mining pools get replaced by valid the validators who stake right and the most notable shift in power dynamics sits with the exchanges and the liquid staking pools that control a large percentage of stake teeth and this has created this hot debate about validators like are they ofac compliant essentially like are we bringing censorship to the ethereum protocol base

layer via these validators so uh dan sam i'm curious to get your guys's take on uh on what you're seeing what are what are potential outcomes that are going to happen here dan can i can i pick on you first yeah for sure uh there's definitely this is this is a hot topic you know the ethereum is kind of built around the premise of decentralization and d5 that you know the core tenant is anybody can transact and offac has come in and basically said that's not true and you can't really argue with ofac if you're a centralized entity those they kind of make the rules that you have to play by and uh it's it's definitely kind of putting a weight on crypto especially crypto twitter uh but i kind of have the opposite take here you know all crypto

twitter gets obsessed about certain things as we know and that becomes the discussion around everything but the way i see this playing out is kind of three different scenarios so you have two on either end of the spectrum and one in the middle so case one is regulation comes in ofac says you can't transact with these blacklisted addresses and that essentially kills d5 everything goes to zero and in that scenario you know what are we gonna do about it it's gonna be a like a legal regulatory lawyer based battle um that probably puts a significant time like a multi-year depression onto the t5 ecosystem uh that puts extreme

negative pressure on asset prices and in that case you know why why are we wasting time like getting bogged down by this and not focusing on you know some of the exciting uh developments that are occurring so that's like this one bad scenario in the great scenario nothing ends up coming of this the regulations don't weigh on d5 the way we think they're going to and in that case everything keeps chugging along as is again why are we getting bogged down by this and then you have this like scenario in the middle where there are the regulation regulatory uh ofac rules come in and say yeah you can't do this we're not going to let this happen but instead of sending everything to zero there's legitimate forks of

ethereum that become viable so you have the proof of stake uh ethereum that is ofac compliance and you know this is probably where the large smart money would end up uh thinking like hedge funds or uh new entities that are coming into this into this uh institutional money basically and that's where they would go and end up playing and then you'd have another chain that's the same proof of stake ethereum uh that's not ofac compliant so that i'm thinking this would be like a dj playground basically i know you can't really be bringing legitimate money over like smart money institutional money over here because they have to comply by the rules but there are essential or decentralized entities

uh that don't that believe that they don't have to play by these rules so i like that fork will exist um but the question is who's transacting over there what's happening and what kind of protocols exist there so you have two forks of proof of stake ethereum and then you also have the proof of work ethereum still chugging along that fork uh it would probably not be ofac compliant as well and you get into this situation of like how what does that look like how does that how does that operate and so this is like this middle scenario that's probably the most likely outcome in my mind at this stage um and proof of work ethereum will be interesting because circle has already come out and said

they're not going to support it i believe tether has done the same so if there's no fiat stable points there which makes sense because they're trying to be these regulated entities they are very centralized so they do have to play by these ofac rules then there's no like stable value on chain uh so that essentially breaks all of d5 which currently runs around usdc and usdt so that'll be interesting i think you're going to see these a rise in protocol algorithmic stable coins like you know not necessarily things like fully algorithmic like luna but maybe there's some blend like some frax approach that instead of holding usdc and tether they're holding maybe mim or over collateralized stable coins again these are we know these are

harder to scale as over collateralized stable coins just don't scale but i think it's going to create this like situation that kind of breeds around innovation and i do think we're probably gonna end up with as it stands now i i believe we're gonna be ending up with multiple ethereum forks that serve different purposes for different users all right i'm gonna try my best to break that down to try to summarize that and then sam i want to get your take on this so basically three scenarios here you've got picture spectrum on one end of the spectrum uh ofac comes down really really like really clamps down tries to almost shut down a lot of defy activity uh in that case what can we really do it becomes a massive years-long legal battle uh so almost in your opinion you're like why

are we even worrying about that that's not something that we can that's don't try to control the uncontrollables on the other side of the spectrum you're like okay ofac maybe tries to sanction things like tornado cache um some like deep kind of privacy tools but most of the other things are like fine they kind of lay off and like okay d5 keeps running as usual but maybe there's a more likely scenario which kind of sits in in between these two scenarios which is um uh if regulatory com regulatory compliant validators have a big enough percentage of the stake then blocks by non-censoring validators could be ignored which would make the non-censoring validators unprofitable and this would result in this this fork

that would kind of separate the two validator sets so you would end up having two different proof-of-stake eth chains uh one would be like an ofac compliant chain one would be a uh like a total d gen chain that's not o fat compliant and then you would have a third chain which is looks like we'll have this uh continue with the the proof of work eth chain when you extend this out and try to think about where the space goes from here you'd have all the money would probably most of the institutional capital would flow into the uh proof of ofac compliant proof of stake chain the other two chains i think the proof of work one ends up dying but teach their own uh the proof of stake ofac uh or like d-gen chain non-ofat

compliant that's maybe where you'd get a bunch of like experiments you'd have to have like algo stables um because circle will not uh because ustc will not participate in that chain so that's where you'd probably get a bunch of the degen activity and then maybe once they evolve past you know they they it's almost like a test net it's like a new test net once they kind of realize like okay this kind of dj and once once a project realizes that it works they maybe move on to the the ofac compliant proof of stake chain uh sam what do you think about that yeah i mean the whole situation just unfortunate like i'm no ofac expert but i mean i've just been really excited about the merge for a long time now and

uh it's like a bullish catalyst obviously and it's unfortunate that it's being kind of overshadowed by by all this stuff and i can't even imagine being like a retail investor and trying to understand all this and and how it pans out so i think that is a bearish slant on an otherwise bullish uh a bullish development with the merge um but yeah i mean there's just two two big parts of this equation obviously you've got probably 75 of the validator set the the node operators are lido and then big centralized exchanges so it's like where where are they going to choose uh to validate are they going to censor are they not going to censor and then you've also got the stable coin issuers that's a huge piece of the equation because like dan alluded to you need a stable you know store value to be able to trade

back into in order to actually like facilitate like efficient activity so yeah we'll see where people choose uh and where they stand on which side of the line but uh i saw brian armstrong tweeted the other day about uh how he would you know seize the staking business if you had to support the uh the um the the censored chain uh i don't know if that's all talk i mean you know even legally speaking he should like be looking out for the best interest of like his his shareholders so i don't know how he'd even be allowed to do that but that'll be interesting to watch pan out and i think jeremy alaire the ceo and founder of circle hasn't hasn't said anything about it at least not that i've seen but you'd have to imagine they'd choose the uh

the ofac compliant fork um so it's gonna be interesting to watch pan out but i'm excited yeah i mean you you have like a fiduciary duty to your shareholders to do to follow the u.s sanctions obviously but then you have an almost this inherent duty that doesn't doesn't really exist actually if you think about it in any other industry to like follow the decentralization and like follow the it's the crypto ethos right it's like the i don't know you don't want to just bend the knee basically and just recreate the traditional financial system so yeah sam i saw that same tweet it was 66 percent of the beacon chain validators um who is it lido coinbase kraken uh who's this other one state uh staked

in bitcoin sweets make up over 65 of state teeth right so regulators come to them they ask them to censor at the eth protocol level with their validators the big question becomes a do they comply in sensor at the protocol level or b do they shut down their staking service and preserve network integrity and lose the revenue that they generate from the staking services right so so yeah brian said it's a hypothetical we we hopefully won't face but if we did uh we think we'd go with b shut down the staking service and preserve network integrity uh but he said there may be some better option which is option c a legal challenge and that's what dan's kind of talking about which is like look who knows if they really come down it's just gonna end up in with the lawyers so

yeah and government moves so slow that and it's it'll be super frustrating to go through that and this is obviously an unprecedented battle uh that would be occurring so i can't imagine the the years that that would take to actually get a true resolution for either so i'm curious why you think the proof of work chain will just die who's going to build on the proof of work trade fair point but i think i think the interesting thing about this fork rather than like the ethereum classic fork is there's so many protocols that are that exist now like when ethereum classic fork there was the only thing that was built was essentially the dow and now you have hundreds of d5 protocols that are like if the blocks are being minted or blocks are being uh mined then you're

still going to get these systems that are like organisms now like they're going to keep producing uh so let's put in an example so curve emits crv tokens with every new block and that's going to still occur on the proof of work chain as long as new blocks are being mined and so if curve has any value at all like even one cent then these tokens will have value that people will be chasing after so i feel like while you're totally i totally agree that why would you build over there if you're a new project your your market is exponentially smaller most likely um but it's just going to be like this weird degen playground again that's that's like these systems will still be

operating and it's it's like this massive experiment it's like building in prod really it'll be interesting but let's here let's let's think about it this way who wants to keep a proof of work chain i'd ask you that dan miners because if a lot of proof of work ethereum has any value at all then they can still generate a profit right so the miners want to keep this chain going but who where does the why does value accrue to eth and where does the why does why do users do anything on each it's because developers and builders build really cool projects uh they are going to want to build everything on this new proof of stake chain i would assume so i think that like i mean eth whatever you want to call it

like eth1 will probably continue to exist because of support from the miners um and i think like d5 protocols and exchanges and devs are going to need to deal with that um but i feel like that you're going to have these yeah almost like these black markets emerge uh or like yeah you called it like these dj corners probably these like black markets will develop on on the proof of work chain where like there's just yeah i don't know i mean maybe what what about this what if there's uh maybe maybe the nft market really develops on eth1 because like would you rather have i i actually realizing as i speak say this out loud i don't fully understand how it works like will you have a crypto pump like let's use punks for example will there be a punk on eth

on the eth proof of work chain and on the east proof of state chain yeah there will be which makes it really interesting because technically the proof of work chain is is you know the original but uh right so like let's use punks do you want to do you want to own the the new punk that's been around for two weeks or do you want to own the punk that's been around for five years you want the one with social consensus right right so i i will i think the the ofac stuff does kind of make proof of work eth more of an insurance policy you know like we we know that it works and if you know everything just hits the fan then you know you could always migrate back to the proof of work chain so i do

think that the ofac drama does provide each proof of work with a little bit more of a built-in insurance value so i think it'll hold some value but i agree social consensus around nfts you know all the stable coin issues issuers are going to support proof of stake like that's where the value will be but i do think there's a little bit of value left in the proof of work do you guys remember the bitcoin forks do you guys remember bitcoin cash and then bitcoin sv which was the fork of bitcoin cash ultimately they just become these ghostlands and it like i don't know that's i'm probably basing this off of off of all of what happened just with bitcoin and watching that and like the fork seemed like such a massive distraction but um yeah we'll see

cool let's talk flashbacks uh controversy this uh kind of the ofac controversy basically fled into the flashbot software uh for those who don't know flashbots we're doing up with them next week it's gonna be really really good you guys should listen to that but flashbots is the kind of de facto mev software that is leveraged by it's like 80 or 90 of miners today uh it was reported that flash the flashbart's rpc had the ofac list hard-coded into the software meaning that non-compliant transactions would be disallowed at the client level uh not not just on the front end as we see with a lot of like d5 protocols like uniswap and ava and things like that on wednesday flashbots announced that they are open sourcing the mev boost relayer

so rather than a single default uh what this does is it encourages competition it reduces single points of failure huge move by the flashbots team really really loved this move um dan what are you uh what do you think about this one this is sort of the [Music] the justification for my thesis that you'll see a fork between proof-of-stake ethereum for ofac compliance and fat compliance i mean this is a centralized entity that they again they have to be ofac compliant they don't really have an option here um and i mean i this you could argue that this is like a bullish catalyst for eve because it's a path towards regulatory regulatory compliance um and protocols can be built on ofac

eth that like don't have to worry about this this issue like for example uni swap has been debating the fee swap for how long now and they're like turning it on now but i think there's some some back room uh thoughts with the the ud swaps labs team and they're like we really want to set up the foundation before we get this v switch going or else this looks a lot like a security uh so i think you know kind of more on that into things having an ofac compliant chain would probably get some favorable views from regulatory bodies and i think that adds a lot of value there um but again you know i don't think people like people are acting super surprised that centralized entities are now

becoming like acting like kind of showing their true colors and being regulatory compliant even though there was all the decentralization talk but in reality they they really have no choice yeah i mean i think it's not by accident that flashbots open source the relayer code so that way someone could you know fork it and essentially make a non-ofac compliant one because they're just you know wherever they're located they're bound by regulatory authorities to to comply which makes sense and they clearly stated like this is a work in progress like beware like like this you know is a a code base that is definitely changing a lot more from now until the merge and i think there was just a worry on whether other solutions would be

available by the time the merge actually was completed so they just wanted to get it out there so people could start building on it and making sure that there's a non-ofac compliant alternative yeah yeah i think this is a legendary move by flashbots i think this ends up setting a standard for the industry i think what a lot of folks have done is basically followed what uniswap did which is they make the um uh they make the front end what it shoot what did you just walk do like a year ago they made the front end compliant and then but you can't touch the protocol and then you basically race to uh exit to the community through a dow and a foundation and things like that i think a lot of folks have have taken that playbook from uniswap um but i am hopeful that a lot of people take the

flashbots playbook it'd be really interesting to see yeah i totally agree with that uh i think it's a reminder that like a good reminder of just how centralized a lot of crypto still is massari had this good tweet three major cloud providers are responsible for 69 of the 65 of ethereum nodes hosted in data centers of the estimated 95 of solana nodes hosted in data centers 72 are hosted with the same cloud provider as ethereum dan concerning no you don't really care about that decentralization's super important and i really want that to be the end result but people forget that you can't just start there like that decent to me decentralize something decentralization is something you work

towards and end up at rather than begin at and maintain um and you know perfect example of that is launching d5 protocols there's generally you know two to eight core devs say and that are building this product and the community has input but there's not that there's not like the community is the one building uh the actual upgrades to the protocol for example and it's yeah it's the race to decentralization i think that people have understood that at the protocol level but at the base layer that sometimes gets like over there's oversight at the base layer and and people are just assumed decentralization um but yeah i i really see that an end goal that we have is a

decentralized general purpose smart contract platform in ethereum yeah i've always just kind of thought of scalability not just as like transaction throughput but also like transaction throughput you know in in conjunction with like the cost to validate so like if if you know if if we do get an ofac compliant ethereum then it's like i might as well just be using solana and like the entire ethereum roadmap doesn't even make sense anymore because it's just it's censored so so yeah i don't know i i really hope that we'll we'll be able to get past it and i believe that we will because the the social consensus of the ethereum community just everyone believes that we should have non-censorship at the

baseline all right folks this episode is brought to you by our friends at avalanche and ava labs they have just dropped a new crypto wallet called core you're going to be hearing a lot about it over the coming months you can now be one of the first to try it out here's the reason i'm excited to partner with them on empire right now crypto wallets and browser extensions they feel clunky they feel non-intuitive that's why ava labs built core it's a free non-custodial browser extension that gives avalanche users a seamless and secure web through experience across the entire avalanche ecosystem here are a few reasons to try core here's what i'm experimenting with number one core has intuitive dashboards with a unified display for all of your nft collections

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link below now let's get back to the show uh sam you're writing a big piece on pseudoswap yeah when does that come out yeah that should be coming out a week from today cool yeah i'm pretty excited about it see this swap's like super super interesting um the first iteration of it was like an otc service that just enabled users to to swap nfts with other users without any fees but uh last month they launched an on-chain nft amm that basically lets users buy and sell nfts in like a really gas efficient manner and also like um it requires less position management through like customizable bonding curves so basically users can lp single-sided with nfts or eth to like um

[Music] basically set like a buy order or like a sell order on an nft or like you know so dollar cost averaging in 10 ft's or dollar cost averaging out of nfts into eth and then also you can provide liquidity on both sides and set the parameters of a customizable bonding curve which can be like linear where there's a delta so let's say i have you know 10 nfts and i set the delta at 0.1 then every time an nft is bought or sold the price either increases or decreases by 0.1 eth and that's really nice because if anyone's used openc and they're trying to like adjust their listings to floor like that's a lot of management it can require a lot of gas to list all the

nfts individually but then pseudoswap lets you do it like kind of all in one go and automate the curve you know you've seen projects like nftx try and do this the same thing um but the problem is is there's a lot of friction and the the nfts end up getting fractionalized and they're also using like an xy cave x y k curve so the slippage is just really really bad and it's exacerbated like with thin uh pools like if there's only 10 8 and 10 nfts in the pool then your slippage is going to be like over 10 and even a perfectly balanced pool um so the customizable bonding curve kind of makes the slippage constant for the buyers and sellers um and yeah it's just uh it's pretty revolutionary in the terms of uh

nfts it's definitely the financial financialization of them you know some people aren't super happy with it because it foregoes the uh the royalties that uh openc traders and uh looks rare provide um but but yeah it's uh it's interesting to watch it all pan out yeah i i agree with that sam i think or i mean this so i'm i was never into nfts in the beginning of crypto i saw them i paid attention to them but trading them was just never something that that got me going i came into crypto for more of the finance side so d5 was super interesting probably because it was something i understood a little bit more and probably more so because of how poorly

the nfts i did purchase performed uh but uh superswap feels like a zero to one for me like when i use the ui it's obviously a news and a little glitchy here and there but like using it feels like a great experience this is like it's created a new mechanism in nfts and it's been pretty refreshing for me and one thing that i find super interesting is i've seen projects using pseudoswap to essentially create like a minting feature for their nfts so in the in without using pseudoswap uh you know the project would host a website that you you know users would go on to connect your wallet in minton nft which was a pretty sketchy experience for me i don't i really hate like connecting a

hot wall to random websites but projects have been instead of minting them out through this website to individual users the project itself will mint the entire supply of the nfts and then put them into a pseudoswap pool where you don't or users can then go and swap eth for the nfts and so that allows the user to interface with one trusted website in pseudoswap and still get this minting experience and so a couple different projects have been experimenting with this and a lot of that has gone pretty well and pretty poorly like we've seen it all over the map but pseudo knots is a project that recently did this

and it was like a pretty interesting experience and they had pretty great success they noted that it kind of like this style like reduced reveal volatility so when the project reveals you know a lot of people have been trading nfts on openc no know that when reveal happens you're either getting a 0 or a 5x right there but that wasn't really the case with this project and it kind of remains to be seen if that's more of a project specific thing or if a lot of this had to do with the fact that uh they used pseudoswap as this minting feature uh and you know i i i actually don't think i'm fully getting why pseudoswap is so interesting i'll be honest like you said you got a zero to one moment so i'm on pseudoswap

for anyone watching on youtube uh dan sam can you see my screen yeah so you can see this all right so i'll pull up the best collection in crypto crypto dick buts uh one d equals 1b uh and we've got this like it just looks kind of like a open c with less with less active with less uh with less stuff you can do but what am i missing here yeah so if you scroll up to the top you see how there's the best offer so you know let's say i need three grand for a car repair in real life you can go into this pool and instantly sell that nft for that best offer which is really advantageous in itself and then the offer tvl oh so you've basically got a limit you can do like limit orders on

here exactly yeah and so that's the that's an example of someone um providing basically uh eth at a certain buy price um for this nft collection um and i know that there's been a lot of arbitrage going on too between right this is the offer for with the entire collection you're saying that's the amount of eth that is in an off like in a position to offer so people in an offer at 2.848 probably have like a delta set up and basically as you know this order gets filled the next order will be lower and then lower and then lower and so there's there's only two apes on this entire thing so you have to it says two but i don't even see any

here so so like or let's say uh let's say azuki's there's 30 azuki's on here so you have to go you basically go to pseudoswap and you list your you list your azuki's on here directly like it's not like gem it's not like gem right where it'll pull in ever like it'll j like what what exists on gem is basically the exact same stuff that exists on open c for pseudo swap you'd have to go list your stuff here directly yeah you'd put it into a pool and then if someone selects your nft that's in the pool and purchases it then you know the price will increase based on that pool's parameters so at 6.5 if the delta on a linear curve is 0.2 then the next one's going to sell for 6.7 interesting i mean you guys aren't alone and think this is really cool right if

the dune stats are right sudo swap has 16 of the market share versus open c after less than one month of launching um this was this guy xerox wengarian yeah he tweeted past 24 hours open c did 14 million in volume pseudo did 2 million in volume uh about 15 of the market share as as he said this is probably the most exciting application to hit the market in 2022 as traction is completely unincentivized dan you agree with that take i do and there's more innovation that's yet to come for pseudoswap right now you can only pool nfts alongside eth uh but in the future you're gonna be able to pool nfts with other nfts as well as any erc20 token so that's when things start to get

way more in the weeds um that creates a lot of new opportunities and that's a again another zero to one so we don't really know what's to come out of that but yeah i do agree with that take pseudo swap is a blast to use and it's been a fun experience so far yeah it's probably not completely unincentivized though right there's there's probably a bunch of people who are just air drop hunting but that's big exactly yeah the x-mon token is a good reflection of that there's links between the x1 token and pseudo swap and if you pull up the x-mon chart you'll see that people are definitely air-dropped say that again with x-mon i don't get that uh there's like links that x-mon the token is tied to pseudoswap and so like long x-mon

would probably get some conversion to a pseudo token so x-mon holders would get a conversion to sudo i heard owen say to the founder of pseudoswab say that he took some inspiration from cow swap for the airdrop design so if anyone remembers that that's uh basically you want to trade some solid volume on on sudo swap to get the air drop so are you two about trading on pseudoswap yes trading on pseudoswap yeah for science nice what i love for science yeah exactly for the research uh let me let me push back here why won't this you guys remember looks rare uh you guys remember looks um by the way this t-shirt was block work swag pre looks coming out the looks rare swag

at our off site and then looks launched i was like well um so now everyone thinks i'm pumping looks but uh why so why why won't this just look look like looks and just get faded so i think luxor was a it will kind of had this issue where it wasn't trying to essentially do the same thing as openc it opens the giant hard to compete with that you know they had the the revenue share which was their diversification i would say but pseudoswap is something different like if you have a super rare nft where the uh this sorry like the stats of the nft actually matters traits sorry attributes um then you're probably not going to

want to just throw that in a pseudo pool where someone can click it at the for price and buy it but so that's kind of why i think the that's that's why the board a holders aren't going to be posting their board apes into this unless you have like a floor board eight then maybe toss it in to pseudoswap see what happens but um yeah so superflop's really for more like priced nfts if that makes sense yeah like land it makes a lot of sense for like metaverse land because a lot of it it's almost like fungible non-fungible tokens what if you guys were the head of product at openc what would you do and you see something like this launched what would you do to compete with sudo swap i would plug them in and use them as an aggregator

so that way you're not losing everything you know what i mean like didn't they acquire um was it gem yeah yeah they acquired gem so i assume that's kind of like why they acquired jim um but yeah i think that they should use gem to plug into pseudoswap to take advantage of the trading volume let me rephrase it for you do you uh give it give it 18 months is openc the largest nft marketplace in the world i'm still going to say yes because you if you go by volume i think that these larger like board apes sell for you know hundreds of thousands of dollars where what's selling on pseudoswap right now

are like 0.02 and for the most part of course there's like the dick butts going for three eth but most of them are like less than 18 nfts and right now it's still like there's not any it's mostly people just experimenting i think real projects will get built and sold and hosted on pseudoswap but we are not there right now uh and i still think that openc is the giant that has such a dominant market share like a lot of people know what openc is and have no idea about anything of crypto and also with pseudoswap there is a uh a learning curve that you need to adapt to because it is it's incredibly

complicated it's not just like oh go in click an nft place a bid by nft well i want to sell an nft all i have to do is list it pick a number of the amount of eth i want for it and i can easily list it it's super simple super user friendly uh and i think pseudostop is probably more for crypto native people that enjoy the experimentation i would say i would take the other side of that honestly dan like i feel like most people in nfts aren't really in it for the community or the the creators like people are just trying to make a quick buck so i would say i don't know financialization of entities is a good thing but i will say it's inevitable um i think you know djinns are going to degen so i would take uh open c gets gets replaced as the

top volume marketplace in the next 18 months by who sam uh i don't wanna i don't wanna stick my name on on a bet i'm not sure i guess i'll go with sudo because i'm bullish on it all right let's take the other side of sudo let's talk about the other thing that's been uh in the conversation with sudo which is that they are not uh they do not so sudo swap does not pay any royalties to creators on nft trades right if you look at something like openc they pay on average like five percent to nft issuers on secondary sales they keep an extra like two and a half percent i think for themselves pseudo charges just uh i think it's like 50 bips on trades and then those funds are sent to their treasury not to creators um the the obviously the low fees on top of

the liquidity pool structure has become really attractive for nft traders but if you're a creator or you're an artist you probably feel a different way dan thoughts on uh royalties pseudoswap not not offering royalties yeah the analysts had this debate the other day and royalties to creators was such a narrative for nfts during the bull run and you know music nfts were kind of spawned out of this royalty feature but i i don't know so muni tweeted the other day that essentially why wouldn't nft projects keep a portion of the supply for themselves and that

becomes their royalties uh because if the nfts do well then the value of the nfts that they keep would obviously increase as well and that would kind of be your share or your profits as the creator and then nfts really just start looking like erc20 tokens and is that a good thing is that a bad thing i'm not sure that kind of bleeds directly into the whole argument about how kobe was saying nfts are essentially just all coins with pictures which i wholeheart wholeheartedly agree with 99.9 percent of them are of course there are like true innovations and there is real art that's being made but that's that's just not what most nfts are and especially on pseudoswap there's

like no real art or no real meaning there it is just all coins with pictures uh so yeah i don't necessarily think that that's a bad thing that superswap's doing that i think you know if you have the belief that royalty should go to creators then you have the ability to use the ability to use platforms that support that like open c kind of kills the narrative uh that this like enforceable royalties on chain uh is one of the best things about nfts so it's a good it's a good reminder that the uh those royalties are not enforced on chain they're enforced by the marketplace who who uh puts in the matching contract or in this case doesn't put the matching contract in so so you agree with uh you like kobe's

take i really do i mean that's just how i thought about nfts the whole time that's mostly why i never really touched them i was focused on you know what are actual innovations happening in defy and why would i mess around with these dumb pictures basically of course you know i've come around to it a bit it is it is fun but uh yeah i really do i think they're just all coins with pictures that essentially are just erc 20 tokens that that's that's the dogecoin with the actual doge on it feels like uh uh in it for the community is the 2022 version of uh 2018's in it for the tech let's uh sam any takes on this you want to move past sudo uh no i would agree with everything dan said like you know keep a portion of the

collection you could even lp it to earn fees um so yeah just echo everything dan said yeah all right we're going we're pushing past uh my realm of understanding here we're going into the d-gen corner of the episode the i don't even know how to pronounce this thing guys canto canto uh permissionless general purpose blockchain running the evm i'm not even gonna try to read these notes that you guys put up dan or sam who's taking this and why why is this important enough to get included in this week's roundup i finally got my funds off kanto and i haven't looked back since so i'm going to hand this one to dan uh i can take it i can take the lead here um as say i mentioned uh the bridging experience is a little sketchy so full disclosure this is the edges of crypto innovation

uh but yeah as you mentioned jason kanto is a permissionless purpose blockchain running the evm so the ethereum virtual machine and it uses cosmos sdk so a good comparison here would be fmos it's essentially a very similar model because atmos is also running the cosmos sdk are built on the cosmos sdk and uses tendermint consensus for its proof-of-stake validation so it's strong tech cosmos infrastructure is some of the best proof-of-stake infrastructure we have uh today and the whole value proposition around kanto is like free public infrastructure so it's like core tenants i would say

are liquidity as a free public good uh and so to how it justifies this is there's a can of conical dex that has zero trading fees for uh traders and lps which creates this strange scenario right because if there's no trading fees then lps are earning nothing and therefore only exposing themselves to impermanent loss so the way that that's mitigated is through liquidity mining incentives and so as as uh mining rewards go to the lps then they kind of offset their impermanent loss and allows there to be liquid uh liquidity at the base layer

but that that kind of gets into the whole ponzi scheme vibes because the only thing keeping lps there are liquidity incentives and if that's the case then what happens if the token doesn't continue to appreciate so a little bit suspect on how that's going to play out but the i think this is kind of just like a step one of like let's get the chain launched let's get liquidity at the base layer and then let's build and innovate on top of that and so backing up to like the whole broader view of what kanto is it's free public infrastructure so it has a free cantaconical bridge decks and lending platform and all of these have no no fees associated with them and gas

fees on kanto are like incredibly low uh like less than one cent basically i mean but aren't they incredibly low because there's like a thousand wallets total there's no using there's like 1500 transactions i'm looking at a dune dashboard there's like 1500 transactions total by the way i'm putting like the biggest not financial advice like massive like nfa huge stamp going on right now on the youtube and uh if we had some like sound alert thing going off on spotify and apple that we can figure out i'm i'm putting that i'm putting that in like 10 times because 100 airborne sirens that's the whole bit we need to go all of it just to put a perspective where we are in this thing like the chain launched a couple days ago and

horrible experience almost nothing went right uh but you know that's that's how it goes it's a little sketchy still there's almost no liquidity in this decks right now i think there's like 100k so buying like 500 of kanto or usdc or the native stablecoin note uh you're moving the market i mean it's it's ridiculous but liquidity incentives do start today or tomorrow as oh that's well let me say that's going to start that's the schedule you never know these things do get pushed back uh and so that kind of opens the door for people to actually bridge over money and so that dune dashboard you're looking at is the amount of money that's bridged from ethereum mainnet to kanto and it's probably on the order now of

like maybe four or five million i would guess so still there's almost nobody here because the chain hasn't really officially launched yet it's producing blocks and there are validators in the set but there are still there's no apps built on top of this there's no like real use case it's essentially just a new chain with an interesting value proposition that is like a testing in production experiment so it's really it's core tenant again it's just it's free public infrastructure so there's like no official foundation no pre-sale no vesting contracts to investors no venture backers uh 13 of the supply went to the core contributors so essentially the dev team

two percent went to an airdrop to test net users and the other 85 percent is distributed to the community through liquidity incentives uh i think about half of that is over the short term so the first six months and half of that is then over the long term so it's it's i'm not exactly bullish on it to be honest in the long term just because it really revolves around these liquidity emissions um but that's not to say that this base layer free public infrastructure uh won't get built on and it is evm compatible so you developers will be able to fork product protocols on ethereum over to kanto um and yeah if you wanted a super bullish case scenario for it

uh evmos is a multi-billion dollar market cap and this is quite similar to that again just with the modification of this free public infrastructure but again worst case scenario probably most likely scenario zero is there is there a lock on those tokens for the founders or are they able to farm and compound their uh their ownership of the tokens uh that's actually a great point so there is no lock and they probably i assume would be farming so they're staking rewards paid out to stakers with a 21 day unbonding period so that's like staking to a validator similar to how you would in many other proof-of-stake chains built on the cosmos sdk so it's delegated proof of

stake and yeah so it's sort of like that looks rare model where it looks like a very fair and distributed uh token distribution but in reality the core team will be able to use their tokens to farm these future liquidity incentives and then they end up taking so they start with 13 of supply but they're the ones collecting most of these liquidity mining incentives and then that 13 can grow quite quickly the the main risk in my opinion is just making sure there's enough eth and usdc liquidity to exit kanto and actually get back to ethereum if you had is there the actual liquidity there yeah yeah we're moving past kanto big non-financial advice air horns all that

kind of good stuff last thing is um actually real quick how do how do you guys keep track of all of uh like when you're djing into kanto and then you're coming at like do you guys have do you guys have your own like personal spreadsheets going on he's like zapper or zirion like i saw nansen obviously acquired uh who they acquired like eight board or whatever three months ago they just rolled out their portfolio tracker how do you guys keep track of all this stuff i i just spread cheated i'm a spreadsheet warrior i'm also a spreadsheet warrior but and mostly because so things like a board like it's not going to have support for a lot of the djinn activity you take part in perfect examples kanto that's gonna cancel have to actually be something before it gets support uh but

aport is great i use that for all my ethereum based transactions they have bitcoin integration as well uh and solana integration is pretty good over there too so a port is great that's i would definitely recommend that for people looking to kind of keep track of multiple wallets at the same time uh in they do a great job so even if you have tokens lp'd in say like a curved pool or uni swap pool they will actually capture the value of those tokens as well which is super cool last thing i want to touch on here is just the regulations in canada uh there was uh this guy mo chains came out kind of shared a screenshot that went viral of uh new canadian regulations that say you are only allowed to buy as much uh you're allowed to buy as much bitcoin

eth litecoin and bitcoin cash as you want but any other crypto has a limit of thirty thousand dollars uh thirty thousand dollars net buy per year our director of research rasheed shared something on twitter that made it look i think it makes it i think it's a little different than that actually it's uh it's per platform so on on different centralized exchanges i think the real regulations say that if you're an accredited investor there's no limit if i'm reading this correctly there's no limit if you're an accredited investor quote unquote eligible investors can do up to a hundred thousand and then all under all other investors are thirty thousand dollars and those numbers are per platform is what it looks like rasheed said um any takes on this one i mean this one

just seems ridiculous in my mind but i'm curious if you guys have a different take totally agree yeah go ahead tim it seems like just a nothing burger i mean you can use another exchange it's not based in canada and and not regulated in canada and completely get around it like rashid was saying that he uses kraken and he has no limitations um so yeah it seems like a lot more talk and like fun on twitter than actual material regulation um but yeah that's just my take on it yeah would have to agree anything else guys anything we're missing for this week's roundup uh that's pretty solid i gotta give a shout out to byron here though he had a great quote on the canada thing this morning and i think it probably is the

biggest takeaway from this because it is just a silly rule uh in general but he mentioned that so essentially these rules were designed to like ensure that like investor protection right if you're only only let them buy a certain amount of uh these tokens if they know right if they're knowledgeable around crypto and brian had the great point that it's pretty funny the people who think that bitcoin cash and litecoin should be eligible for unlimited purchases are also the same people telling you that you need to know more about crypto before you invest in it i just don't understand that you know it's 2022 and there's a lot of people that know a lot about crypto and like win and bitcoin cash still get like get put in this blue chip conversation is it's just pretty

funny to me yeah yeah i mean it reminds me of um who was it i think the fed or i forget who it was but one of the big um one of the big uh institutions government institutions said anyone making policy on crypto is not allowed to hold crypto like how in the world are you gonna understand what what ave and uniswap do if you've never used the platform so anyways that's it for this week's roundup dan sam appreciate you guys coming on hope you guys enjoyed if you guys aren't subscribed already hit subscribe and apple and spotify hit the subscribe on youtube all right see you next week everyone you