Voyager and 3AC bankrupt, BTC miners capitulate, MakerDAO progress

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 this might be the most important like news that coming out of in a long time defy and no one is because in bear markets these things go unnoticed right but if you're paying attention you look at this and you're like and we talked about it with eric yesterday what needed to happen for d5 in whatever shape form it's going to be to become the operating standard this introducing real-world assets is messy it's complicated it's tricky but the fact that this is happening is very moment it is it could set it could set us up

for the next bull run if when whenever that happens and d5 leading the charge [Music] we are live back with another episode of empire we got the weekly roundup coming at you mono imano with santi your favorite uh hope you guys all had a good weekend uh last weekend hope you guys had a good fourth i know we were all happy to see that the arthur hayes doomsday predictions for the july 4th weekend did not happen even the smartest people in crypto have no idea what's going to happen uh we've actually seen a few green candle days since last week with btc and eth currently sitting at uh btc over 20k eat over 1100 and macro the fed's june

minutes came out on wednesday nothing too surprising to me i don't know what you think santi but the tldr is really the fed is gonna keep hiking until uh a either we go into like a deep deep deep recession um or b uh the november election which you know i think is gonna be a turning point uh for the fed gold uh extended sell-off to a nine-month low on wednesday while the dollar hit a two-decade high um there are just some weird things going on in the markets right now you've got like the the yield curve inversion from front to from the front end to the 10-year rates are skyrocketing back up commodities are showing weaknesses but like the major stock indices are up on the day and yesterday it's just funky things like

stocks seem very disconnected from the bond and the credit and the commodity markets right now um it's just weird weird markets in general um still not looking great obviously we're rooting for a turnaround but not looking great uh in in better news spf came in uh said that the worst of the liquidity crunch appears to be over and that ftx has a few billion still to support the industry uh if things still start uh keep falling so anyways santi per usual i'll ask you the same question how are we feeling today i'm feeling great actually um this morning i felt more bullish than bearish and and maybe it was coming off of a great episode that we recorded yesterday with eric peters shout out to eric he's such a great thinker

and and he was talking a lot about survival and um and yeah it just got me reflecting i i feel i mean i've felt calm throughout this entire period um disappointed in a lot of things uh perhaps things that i should have like been more aware of but i'm feeling great you know i think uh i think we're beginning to chop we're beginning to understand how things might unfold um it has felt like a lot of the chaos um it just felt like week after week there was just chaos after chaos and i mean i'm not prepared to say that we've seen the full extent of like the the cascading effect of three arrows and how that kind of pierces through a lot of a lot of crypto but uh i've it's felt to me like that has

been i don't know i agree with spf that i think we've seen probably the worst of times um i do sense a shift in in the narrative in macro away from inflation and more towards like lack of growth and and i think that might be percolating now and i wouldn't be surprised if we start seeing more of recessionary kind of narrative alongside growth which i think is encouraging for crypto over medium to long term because we know that there's a lot of growth in this industry there's a lot of innovation and capital at least in the private side looking to be deployed and i i felt as always and i've been saying it for a while that you know crypto is a very high growth area

and just a testament of that and i'll stop talking is i i like watching bloomberg one it's like kind of therapeutic to have it in the background i've just like i grew up a jp morgan in a trading floor environment like these tvs were always on so it's like feels like i'm in like you know my mother's womb or something hopefully my mother's not listening to that i've replaced boomer you should just say your mother's womb is uh like a bloomberg like cnbc playing in the background yeah fyi nonetheless uh mom i love you um i i feel that like i read the paper too every day there's a huge column of full

dedicated like financial times today like every day there's a full column on crypto and some takes are pretty accurate other takes are very extreme um but to me i mean that's that alone just tells you that i mean there's something there and i feel like a lot of people are just continuously being exposed to this and the narrative keeps evolving so i i think that whether you we have our views around how the media portrays crypto like jim cramer's of the world just make a mockery of this space but um it's a nasa class and it's growing and it's attracting a lot of eyeballs and that's positive i think um all right so you've got spf talking about how this could be the bottom uh you're feeling pretty optimistic

financial times is making a mockery of crypto right now or at least they're trying to maybe they're making a mockery of themselves actually jim cramer is coming out his stance obviously completely flipped it feels like if i'm reading between the lines maybe two or three weeks ago you were kind of just sitting back taking all of this in you were buying you were kind of just taking all this in now it feels like i would assume you're still not buying but maybe figures finger is moving a little closer to the trigger am i am i right there i think so yeah yeah to be fair like i haven't done anything different but um i feel that we're perhaps closer to entering that period of three to six to nine months where we're going to be chopping but it's not going to be as violent as volatile

and i think these are the periods where i start thinking of accumulating slowly and then ramping that up interesting feature and this is not an endorsement to fdx but they just rolled out i think a t-wap feature um if you're using which i think has always been like t-whopping into these positions cost averaging your way in however you want to do it is always like a for me it's been a sensible strategy where i'm not looking at time markets i'm just looking to accumulate a certain allocation of my portfolio over some period of time yeah um all right today's episode we are talking about the latest updates on contagion running through c5 it might get a little repetitive it might feel like that but i i personally feel like it's really important to just review what's happening with voyager

blockfi celsius three arrows alameda et cetera spf coming in ftx so we're gonna give a couple quick updates there an update on the btc minor crises and contagion that is flowing through miners right now we've been talking about it it's starting to finally hit uh maker dow has some really interesting things that we're going to talk about bringing real world assets if you ever see rwa that's real world assets into defy and then if we have time i might ask santi a series of some insider questions that i want to get his take on and if we don't have time for that we will put him on the spot next week so anyways uh santi ready to dive in let's do it amazing all right voyager update uh

alameda's 500 million dollar line of credit could not save uh voyager crypto brokerage voyager uh who just filed for chapter 11 bankruptcy on tuesday our team went through some of the filings here are the things we found uh voyager has an estimated 100 000 creditors and somewhere between a billion and 10 billion in assets with a similar range of liabilities their plan is to restructure and maximize value for stakeholders the question is at what cent on the dollar rate will the depositors and the creditors get paid back uh some estimates are coming in around 70 cents on the dollar i've seen 80 cents on the dollar um this is really where you wish you had fdic insurance but uh voyageur's bank um is saying that

there's no fdic insurance and that uh there's no insurance on some of those assets if i understood that correctly alameda who is interestingly the second largest borrower from voyager at 376 million has a 75 million dollar line of unsecured loans to voyager they also own nine percent of voyager's equity uh they will likely take about a 20 30 haircut on the 75 million dollar loan um as it is paripastu with customer deposits and that equity is going to zero um i think it's also important just in in this last note here and then i'll get your take on is we it's tough to talk about voyager without mentioning the the primary catalyst of the bankruptcy which is three arrows right can three hours continues to be a major problem for

voyager three hours represents about sixty percent of voyager's total loan book over 650 million in loans uh they uh also made i think they made the 650 million loan voyager did on an uncollateralized basis not under collateralized uh fully uncollateralized zero collateral if i understand that correctly um that is just uh right so what three hours would do is they were borrowing from voyager 12 against zero collateral depositing those funds in anchor at nine uh 19 free money until it all blew up so anyways uh tldr voyager filed for bankruptcy chapter 11 bankruptcy this week any thoughts there santi and that was a great uh summary the only thing that is going to be interesting is this idea of

fdfc insurance um you know as um as a as sweet and as great as d5 can be and and you know attracting a lot of people on this higher interest rate historically we've been in a low record low interest rate environment so this this precedent is pretty interesting it leaves you wondering um you know can we ever uh can we get fdic insurance um if and when your financial institution is tapping into d5 like i i would be looking at this and asking the the hard question which is am i fdac insured and i think um it's important um fds insurance is super important it only covers remind me um jason this applies only to u.s depositors right uh there's other kind

of similar versions of this elsewhere but it's like up to what 150 000 i think 250 000. 250 000 right um so look it's something and so uh that that's something that i found interesting um had it been regulated like a normal bank then perhaps you could have argued but these these institutions are not or have have argued for a long time not to be regulated as banks and so naturally they don't get the benefit of fdsc insurance i think yeah and the reason we're talking about this there's a tweet from november 12 2020. voyager tweeted out have you heard usd with voyager is fdic insured up to 250k so voyager in their marketing was saying your

money is usdc insured um it's looks like fdic insured it looks like the fdic insurance is not protecting voyager against this bankruptcy well we'll i don't have all the details i haven't fully done by the way that that might be that might be what comes and bites him in the ass because that opens exactly a class action lawsuit right i mean that screams to me misrepresentation um and if you're a depositor in in voyager and had expected that then you have a pretty good claim pointing towards that um and so look i i don't want to trigger like ambulance chasing lawyers but i think as a depositor i sympathize with a lot of people that might thought that they were going to be protected the same way that they get protected in a normal bank right i'm looking at voyager's website

here uh there's a blog post from december of 2019 the blog post is titled usdc held with voyager is fdic insured i just pulled up their disclosures and it said and on their disclosures page today it says crypto held on the voyager platform is not protected by fdic insurance so these are two polar opposite statements uh so this could be what comes back to bite them in the ass um you know it sucks actually i have a little bit of money on uh circle circle's retail app from back in the day if you remember circle had that retail app in like 2016 uh and that's where i bought some crypto voyager acquired them um

and uh now my yeah well it's still in that circle app because it's a new york because i signed up with a new york license and technically then they weren't able to transfer it over to to uh to voyager because of the bit license so so basically only the new york residents have their money still sitting in the circle app and i just kind of left i was just sitting on i was like yeah whatever um and i can't pull it out which sucks but what are you gonna do yeah three arrows um has been ordered into a liquidation we talked about this briefly last week by a british virgin islands court bvi court they filed for chapter 15 bankruptcy on saturday um adam cochran had some good takes on this that i want to try to summarize um in terms of the bankruptcy the

three arrows liquidation feels pretty comical uh first they self-filed for the liquidation this is a this is actually a big deal this was not appointed by a court they decided to file themselves this typically means as adam says i'm not a lawyer it means that they know it's over um it's also an interesting play that usually results in more favorable treatment when you actually self-file now getting into the more favorable treatment what are they actually looking for here uh suzu is listed as a creditor himself in the application so sue actually put himself is claiming himself as a creditor meaning in a liquidation the assets are always distributed back to the creditors right sue is claiming himself as a creditor that is a and and right there

there are reasons why this could happen right that maybe sue put up some of his own starting capital for the phone fund he loaned uh three hours some of his own personal money maybe he uh made himself a guarantor on the fund assets but it just feels like a like a shameless and bold move to make himself a creditor on these assets and i feel like there are a lot of startups that gave capital to three hours that should get that money before sue should so um and i think the last piece from the bankruptcy again taken from adam is the whole bankruptcy filing in in summary shows that or suggests that a there are still assets b those assets include coins and tokens c those assets are worth fighting over and d uh maybe most importantly we have not seen the

end of this quote unquote dicey saga as adam says so uh any any thoughts on three errors here no i mean i again like i don't have any information other than what's out there available um the thing that i found interesting is um you know obviously they moved to dubai and he's been trying to liquidate a house that is in singapore under his son's name and then other assets pretty quickly um it has felt obviously the there's going to be a lot of forensics and i think crypto twitter does a pretty good job at this uh there seems like a trading arm and an operation so i think a lot of what is happening here my interpretation is they've started this bankruptcy to protect and kind of insulate perhaps where the

true value and any sort of money that is left uh in sort of a trading arm i think that they had um and so that feels to me like they they triggered this bankruptcy to protect themselves and isolate themselves from kind of creditors coming after everything right um and the other of course is uh starry night which is their nft fund i've seen some kind of things being circulated and uh it sounds like uh the manager of starry night vincent bandeau vince vincent van doe i think doe what's up yeah i was caught off guard along with who is vpd is that is that kyle no idea no no i actually don't know who this person is i mean i think it's

pseudonymous um he's a collector who is managing this fund uh one of the things that 100 million uh nft fund right yeah correct uh any it's i'm looking at that because there might be some fire sales in the nft land and so i find that pretty interesting and compelling i don't know if they're gonna how they're gonna liquidate that um but at some point you assume that they will and what was interesting is that my understanding is that all of those wallets were kind of controlled by like three arrows so it feels like like three hours had like and there's a lot of connectivity that three hours had with like these two fonts but their ability to like sweep wallets and control wallets was was pretty like

deep and i don't know like i think i don't think you should be structuring things like that like uh you know if someone like even if they have like some sort of majority ownership like you typically have like some sort of like compliance and like processes in place where in order to move assets you need to have like two or three approvals and i don't know these are the things that like pro like you have certain protocols internally as a fund to like make sure that there's not like key man risk like if like kyle were to go crazy or suit goes crazy like he can't just sweep a wallet but it sounds like they actually could which to me just screams like like who

who advised them on the structuring of this stuff you know i mean like it is alarming uh candidly and it's you should always never you should never skip on lawyer fees and accounting fees as much as they are painful but like in this asset class like you just need to structure things in a very like as perfect way possible because i don't know like these things are pretty real and you never think it's gonna happen to you and then you know it does so yeah like like in your i mean and you don't have to tell us everything but like for your wallets like can you move them around just at will or do you have like a controller and like maybe your co-founder that like there's a multi-sig and people

need to sign and like improve a transaction over a certain threshold like these are like common governance practices and best practices that it's not only crypto but just in any company yeah i mean pretty much all of my crypto is you you need a multi-sig to move it you need there need they're neat there's there are multiple signers i cannot move probably 95 percent of my crypto um and yeah so um are you are were you uh an investor an lp in defiance in arthur's no nope no i had no exposure to three arrows or terra or any of that you know knock on board but no yeah um another a couple other companies we'll move move on from this uh genesis the institutional crypto trading desk prime brokerage confirmed when say that the

large counterparty who failed to pay their margin calls in june was in fact three arrows this was the speculation and it is true uh genesis sold three arrows collateral upon the failed margin calls to hedge their downside uh but this still led to some material losses um genesis genesis will be fine they've got the full weight of like a they're probably the most successful lending desk and crypto of all time um or trading desk and then uh b they're backed by the full weight of dcg so genesis will be just fine celsius looks like they're actually paying down some loans and it looks like they could make it out of this actually which is just nuts they let go of i think about 150 employees to reduce the burn they have now paid off over i think

200 million dollars of their debt um i think when we were i think maybe an hour ago or so as we were recording this uh celsius or right before we recorded this they finished paying off their loan to make her um and maker got how much was this 440 million collateral back yeah yeah i know 41 million well they owed them i think the debt outstanding was 41 million um and the collateral posted against that was 220. oh yeah 2 000. big wrap bitcoin so that's worth 440 million sorry yeah yeah exactly exactly yeah um it looks like okay i'm just reading some of these other notes here celsius reshuffle their board of directors they

appear to be finding ways to stave off bankruptcy via other restructuring measures um it's interesting ftx and out so so like on one hand you could say that celsius might actually make out make it out of this which then it's like well should they make it out of this and who's going to give them their capital and on the other hand it's like well ftx and alameda who like clearly desperately wanted to give capital to folks to start acquiring people on the cheap for pennies on the dollar they extended loans to both blockfy and voyager um who are even worse off now than perceived last week but they passed on celsius after looking at their balance sheet um so it seems yeah i'm i'm not sure my gut in my head if you have any money in celsius take it

out if you can as soon as possible like would you say that about the uh would you say that about exchanges like would you be so i think it's hopefully it's obvious to people take your money out of these c5 land and borrow platforms what about the exchanges right now maybe like the tier two like the coin bases and finances of the world i'm will be totally fine but what about maybe like the tier two or tier three well my view is not like an idealistic one and then i'll give you a practical and the idealistic one is minimize any significant sums of money and put them in like a multi-sig like your keys you control that and you minimize counterparty risk but i would say for now you know tier ones as you said ftx

binance coinbase seem the the better ones out there um but and so you know i don't want to sound alarms here but there's been a lot of i think fighting out there um on some of these tier two exchanges and it can cause a lot of harm to them uh just like a bad triggered bank run maybe without merit but um yeah i'd be cautious on that you know um i think if if you have any degree of of uncertainty and you have your spidey senses go off don't risk it honestly just go to a safer place um and and and and don't uh you know minimize minimize your exposure when when you say set up a

multi-sig where like are you doing this through like coinbase now hasn't the ability to set up uh a multi-sig through coinbase or are you doing this on um gnosis like no thank you thank you yeah it's tricky right because gnosis only covers my understanding i think is only your like ethereum and erc20 tokens uh they may have launched and so on but actually like so yeah for now like i mean yeah gnosis is is pretty battle tested um but you know like depends on the sum some of these providers like fire blocks that you're still in control of your keys don't take like retail money it's just purely if you're a fund or like a you know a protocol of sorts um but yeah like again the the the strategy that i

like to use is and i'll use a harry potter analogy is the horcrux model which is just segregate have multiple wallets multiple like you know if you're going to use ftx coinbase use all of them candidly and minimize your exposure right if one wallet gets compromised one counter party gets compromised you don't lose it all right and so i think that strategy is i think a sensible one yeah not just in this environment just in any environment you want to like have multiple like layers of redundancy and and and diversification i agree um can i ask you a you you can skip this question if you don't want to answer it what percentage of your capital is on centralized platforms so i'm talking the you know

finance or coinbase or whoever may be like that gemini um versus uh gnosis metamask in in crypto wallets of my crypto portfolio of your crypto portfolio yeah and then the third bucket would be self-custody like a ledger or a tracer oh like one percent of my assets are with like kind of like well maybe no more than five percent or with like centralized institutions that control my keys i'm comfortable with that yeah cool yeah moving on uh block by announced their deal with fdx while the rumor was a buyout at a measly 25 million valuation uh the real deal involves 680 million dollars of total potential capital uh

there's a 400 million credit facility and then the option for ftfs to acquire the firm at up to 240 million i think if they hit maybe i think it's honestly like i think it's like an earn out basically like zach and flory have to probably stay on and uh hit different milestones so uh much better than the original deal but still values block fight much less than the is it because i mean exactly better than 25 million it may be 25 though well no no i know i know i know it's a better there is up to 240 million i know miles certainly right okay what if you don't hit any milestones you still have the option to acquire them maybe at 25 maybe at 10

million who knows like i don't have details of this you're an investor you should know why don't they email you these things well yes uh in process but nonetheless i saw you on twitter like i was like i'm like wait a minute you're like what the hell is the deal you're like no up to 240 million which is a massive discount what was the latest valuation three billion or a billion i forget was it three i think i think three uh they were gonna raise a five that got yanked yeah yeah you're left wondering like i think at some point uh uh it was there's a speculation of them going public like what would have happened in like block five was public company i guess like voyager but um voyager is public just not in the u.s but correct yeah

um but yeah anyways i would be really curious to see what those earn outs and miles to like those milestones are to get to 240. i agree i agree um does this change how you view private market investing um because a company like block fight it was like block five is one of the golden childs right like if you got into the seed round or seriously what does it pop like you know get on the rocket ship shout out i love pomp so i don't i can't i can't hate on paul um i don't hate him but i just don't love him you don't watch it's too much man it's like it's a clown like like lo like get off like tone it down okay

that's a problem that i have with crypto it's like a bunch of like charlatans out there and like guys like let's stop using superlative like stop using extreme like you know like sometimes it's excited about we're excited about this technology but you know that kind of stuff just i i don't know it's cringe i got nothing for love for pop po you know pop is uh probably the reason i post on twit on twitter mike and i when we met pomp we each had like 100 followers and palms and we did a race to 2000 followers and pomp taught us how to how to tweet and uh actually i think mike beat me to 2004. he taught you to follow and then unfollow and use bots and buy and buy followers i'm just kidding i should have brought this up should have god i'm i'm gonna get an angry text from

someone okay in the next couple of days so anyways moving past that um does this does this change your mindset on c like seri like early stage private investing right because even the best private investments like block five seem to be the golden child of the last market that um that like the like i mean yeah even in a bull market i think if you're a series c and above for coinbase at the peak of its public market valuation once it ipo'd you would have still underperformed bitcoin or ethereum and so like i had the ability to invest in coinbase after the series c and i didn't and for a while like i was i was kicking myself for that and then

and then obviously you know as it turns out um you know it it became clear that you know you're better off holding a liquid asset um that you control like i mean i think like people ask me this a lot it's like you know as fun man like a lot of fun managers i think out there trying to like get too sophisticated and i've always told people look sometimes like it's okay to charge people like to manage a position and just owning bitcoin ethereum might be the cleanest bet that you can make in this space or take a basket of like an index of of the top crypto assets however you want to slice that cut that thematically or by market cap or whatever but um

yeah increasingly like i've sort of come to that conclusion that sometimes the best bet and the cleanest bed is just on honestly just owning bitcoin ethereum pick your other flavors you know but um like i've said this before in the episode with travis it's like you know i would surmise that like if you construct a portfolio today one which is say just a like eric did it like you know some sort of ratio 60 40 50 50 bitcoin eth that's one another one is an index of like the top 10 by market cap that rebalances constantly like kind of like an smp for crypto and then the other one is like you

invest in a fund i think i think the first two portfolios outperform the third one yeah for the most part unless you're like the best font out there um but for the most part i think you're gonna outperform and the nice thing is that the first two strategies anyone can access literally and so that's like uh the last thing i'll say is like uh there's a great interview of a lot of really good headphone managers including like or venture guys like andreas and hortons like uh mark andreessen you can ask this question like hey if you had like 10 million hundred million dollars today a million dollars today like where would you invested coming from one of the best investors of all time honestly i would just put an s p index and let it ride and you know like

we talk a lot about the catalyst for next cycle and what really is going to take crypto mainstream i think it's hard to predict these things but a rebalancing index is going to capture that and from a time management perspective it will do that for you and so like as simple as it may sound i think those strategies will outperform most like not like 99 of other strategies out there yep i agree i agree and and especially on the private side like it's tough to say because i like it a lot um for a number of reasons there is sort of this power law dynamic that like one two three investments on the private side super early will

can make for a lot of your losses um it's difficult it's not yeah it's not very scalable strategy either i would say it requires a lot of time i'm moving on we got a clock yes um bitcoin miners capitulating if you guys have been listening to the roundup you would know this was coming we've been talking about it last week we talked about how many uh bitcoin miners are how bitcoin miners are struggling to remain solvent due to high leverage bitcoin prices falling liabilities from pre-ordered mining rigs on tuesday we saw this thesis play out with core scientific uh they sold and 7202 bitcoin last month at an average price of twenty three thousand dollars for anyone doing the mental math

on that that is about 167 million dollars uh why did they do this they have to cover the cost of their servers increase data capacity pay debts this represents over 75 of their bitcoin holdings man what a dagger to have to sell 75 percent of your holdings um their ceo noted uh that they will continue to sell mind bitcoin uh to strengthen their balance sheet and enhance liquidity but noted that they will take advantage of other distressed opportunities as they arrive that sounds like a nice pr message um despite the market conditions core scientific says they still expect to deploy another 70 000 new self-mining a6 servers over the next six months and that they've already

paid off 90 of the cost for these new editions um all right it's happening minor capitulation it's coming i mean yeah that's something a lot of uh folks like monitor how much of like uh reserves that miners haven't sold are in their balance sheet and or their wallets and as that again talks about the cell pressure right and so if you monitor that and as soon as they kind of exhaust that um then then you start bottoming out or at least forming a range or a view that okay that selling pressure is gone um i was thinking about this as an aside it's it must be one of the hardest jobs in crypto running a fund yes like being an operator even more so because it's the community just shouts at you when

things go marginally wrong but a minor is a very tough business not only so hard so you need to constantly replace asic miners as a security you have to buy inventory 18 months in advance yeah it depreciates very quickly it's more competitive there's geopolitical risk um and and not only that you need to kind of also like have a view on the price of the underlying and like hedge it and or and i think a lot of people a lot of miners get into trouble when they try to be too greedy and like run a fund and meaning have a directional view on the asset like of course you're mining it because you think it's profitable but yeah it's like managing the capex the optics and also taking a directional view and where the assets

gonna go it's really tough in a space that you can't like if you're an oil like like extract like if you're an oil and gas company or whatever like there are very like the market is more sophisticated in terms of instruments to hedge your exposure and all this stuff they even get into trouble too uh so in crypto obviously you don't even have these instruments uh or the markets that like not as sophisticated to hedge this sort of stuff it's possible but it's like difficult more difficult so i sympathize with lot miners out there yeah i mean you have lower bitcoin price right now higher hash difficulty higher energy costs it put put serious pressure on the miners margins right hash is now the lowest it's been since i think like october of 2020 i need to look back at

the data that was from a week or two when i was looking at uh who had that glass node glass node's really good for this kind of stuff but um we have a really good mining episode coming up that you guys should uh if you guys aren't subscribed to empire already you should subscribe we've got uh foundry which is dcg's mining arm uh we've got galaxy digital's uh bitcoin mining team coming on and maybe one other person who we'd be lucky to get as well so that'll be a really good mining episode we will we're recording it next week so we'll try to do a rush edit get it out next week as well i think the things to be looking at in mining right now that we'll be sure to talk about on that next episode uh distressed debt is definitely coming to mining right

opportunities are going to exist for those with dry powder i would not be surprised to see ftx make a play in the mining space as well um m a acquisition of hardware acquisition of sites all these things are going to be at a steep discount i think rigs are going to go on sale at a steep discount as miners kind of start defaulting on their prior uh right like you're talking about sonity you buy these things 18 months in advance i i have a feeling you start to see some of some defaults on some of those contracts uh for selling of existing and ordered rigs and so this is going to give miners with dry powder the the ability to expand operations at a much lower cost than ever let me ask you one simple question would you rather own mining stock or bitcoin or like

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

display for all of your nft collections all your crypto assets you can execute asset swaps directly inside the wallet it's a really nice experience uh maybe you want to earn yield or borrow against your bitcoin uh but you don't want to do it on one of those c5 platforms right now core's native bridging functionality makes it really easy to bridge your bitcoin to avalanche's robust defy ecosystem last but not least core makes on-ramping super easy you can convert dollars to crypto right now using the moonpay integration just takes a few clicks download core today using the link in the show notes it's really really nice if you are interested in the avalanche ecosystem at all you have to be using

core download core using the link below now let's get back to the show anyways moving on maker dow is serious about bringing real world assets into defy um have you been following this with maker uh the maker community has uh mostly aligned on the need to onboard real-world assets and other off-chain collateral to help die scale and meet user demand um correct me if i'm wrong but the kind of reliance on off-chain assets uh was was almost like forced into the protocol in the aftermath of march of 2020 uh when usdc was onboarded via an emergency vote to help stem a liquidity crisis i know you were very deep in the maker back

then oh yeah during that time i think we didn't we were running very low on sleep to try to felt like maker was in a very precarious situation and we made the decision i'll be controversial to onboard ustc is that when you got addicted to coffee oh no no i've been addicted to coffee like since i was 12 or something can't you tell can't you tell yeah exactly wait can you can you tell us about that time is that uh is there anything that happened behind the scenes that was just like i i honestly i'd love to hear about that just it just felt like today you know people people like take for granted how powerful and beautiful defy is like the extent of

these orderly liquidations is is i always am shocked and surprised in a good way of how how good this system works back then there's a couple things that went wrong including the most important one which is maker didn't have a very good keeper ecosystem meaning people that liquidate the collateral when when the price when the price falls and needs to be liquidated um and it was some things that have been solved i think it was just too difficult there was not a lot of documentation it wasn't easy now it's become easier but uh yeah for a while there you were just looking at the screen so like if eath goes down another 20 bucks i don't know what's gonna happen to maker like i don't know if we're gonna be able to absorb all these liquidations and so it was just a very it was a very

difficult time and historically the community has been there's a subset of the maker community that has been very vocal against keeping it pure pristine collateral like single collateral die back purely by eth um but i think in that moment in time it was just like all right let's just kind of survive yeah and introduce other forms of collateral because eth just felt like it was you didn't know when it was going to stop eric talked about this in the episode yesterday it's like there's no bailouts here guys like there's no no halting markets you know these are 24 7 markets it's pure like laissez faire it's just it's just it could be savage out there yeah and you didn't know where it was gonna

bottom and so introducing another form of collateral just felt like it would it was the right thing to do to ensure that you know the survivability of the protocol yeah um so here's what happened basically uh onboarded usdc that helped ensure dies liquidity helped prevent deviation from the peg the the downside of that is you don't earn any revenues to counterbalance some of the increased credit and centralization risk that maybe you have when you bring on usdc so usd tldr usdc has been great for for maker to maintain the dollar peg but maker misses out on this massive amount of revenue that these uh that they could be receiving right um from from the interest on these stables and so uh the community passed mip65 last friday this dictates where

500 million dollars of usd c should go the winning choice was a combination of 80 u.s short-term treasuries and 20 investment-grade corporate bonds purchased by our friends over at blackrock uh the how also approved this morning a 100 million dollar die debt facility uh proposed by hvb huntington valley bank that is a bank that is 151 years old uh this would be the largest real world asset maker vault to date and the first collateral integration from a u.s base bank into the defy ecosystem this is a big freaking deal um i think this is not being talked about enough uh it's a hundred i mean this might be the most important like news that coming out of in a long time defy and no one's great

because in bear markets these things go unnoticed right but if you're paying attention you look at this and you're like and we talked about it with eric yesterday what needed to happen for d5 in whatever shape form it's going to be to become the operating standard this introducing real-world assets is messy it's complicated it's tricky but the fact that this is happening is very moment it is it could set it could set us up for the next bull run if and when whenever that happens and d5 leading the charge you know i mean like yep yeah agreed i mean this is huntington valley bank is not a big bank but i think the number to look at here uh hbb has about i think 500 million in assets they're putting 100 million into a maker vault that is 20 of the bank's

assets are going into a maker vault if i understand this correctly so um pretty damn big deal also some big governance decisions are being made over at maker uh it feels like they're kind of two camps you've got the like the roon camp and you've got the hassou camp uh big shout out to hasu who is doing a lot to i think move governance uh forward really really think deeply about daos why are they valuable why are they necessary what is the best way to organize them so i would recommend folks pay attention to that hasu's going to come on the podcast we're doing a big episode on maker we've got monet supply coming on sam from over at maker so i'm really excited about some of those episodes that are coming up um also on the d5 side of things uh

ave our friends your friends donnie uh our our lads over at ave uh launched their own stable coin today no or they're announcing uh they're voting on a proposal to build a stablecoin i have a feeling it'll get passed it feels like a no-brainer um yeah it's been in the works for a while and uh it would be very interesting to see um you know um how the community responds to that but yeah this is something we should definitely talk about i know we're running short on time but this is something that again it's very momentous and we should be paying attention to covering it yeah do you think compound regret do you remember back in 2020 uh with the do you remember compound chain yeah uh just didn't really make it to market um is is that total i i don't know has it

been totally shelved or is that just i'm not sure but i think compound was close actually to releasing a stable coin in 2020 in 2020 when they announced compound chain but it didn't it just didn't really make it to market um or has not yet made it to market it has not yeah which is funny i remember 2020 looking at comp like hearing that compound was thinking about a stable coin i was like ah so so late like too too late to the market with a stable uh and just like whenever i think there's this feeling you always feel like you're late in crypto oh yeah but still so early so yeah um we do have to wrap it i have a uh we're recording with um matthew ball an amazing metaverse episode uh in a couple minutes um i think that's

solo episode from me so uh unfortunately we have to wrap this some other things i'd recommend folks pay attention to we can drop these in the show notes uh mika or micah i forget how to pronounce his name uh juan casalo who's been on the show before has an idea for uniswap a road map for uni holders to take control the uniswap protocol it's got a fee switch experimentation recognized delegation program a public development roadmap forming teams outside of uniswap labs i'd really recommend people read that proposal uh from micah or mika ave proposed that yeah mika thank you uh ave proposed a native decentralized collateral backstable coin gho that is peg to usd we'll put some notes um in the show notes like we just talked about and then i would recommend folks look at

the data from openc openc users are absolutely dropping off a cliff a research analyst at block works ryan westy westy on twitter showed that openc users have dropped or fallen from 50 000 to 4 000 um which is just a colossal uh colossal drop um it's really the tail end of users yeah it's it's really that small yeah volume volume per user has skyrocketed right so it's gone from half an eth per user to three eth but so it's really just the power users which we know what happened we knew this would happen it's the power users in crypto and then uh the last last but not least reddit is launching a new uh nft marketplace on polygon so uh interesting development yeah the last thing is obviously board a

the metaverse it was uh i think it was a beta dry run which a lot of people were really psyched about i think 2500 people like showed up and pretty interesting uh here's here's why that news is actually way more interesting than people realize is um i have buddies that like epic games and and fortnite and uh roblox and and things like that there's a big issue in gaming which is it's really hard to get a lot of people in these like metaverse worlds together board so like fortnite for example caps caps each server at a couple hundred people i think it's actually only a hundred per game board ape had 2500 people in their world yesterday which is really impressive the clips it looked like like total like burning man chaos people were joking i mean it was i mean

it didn't like look amazing like it looked like a new york playground with like where people bring their dogs and you everyone as if everyone like let their dogs like unleash their dogs and they they're just running around like crazy it was just like total chaos but somehow awesome to see so it's super it's just really awesome yeah it's uh tough to bet against human ingenuity as eric peters talks about dropping that episode next week really excited for it santi this has been a pleasure i know i said i'd ask you some insider questions come prepared next week for the hard-hitting queues we got we gotta we gotta leave some breadcrumbs with people to come back next week so we'll see you next week guys uh and stay safe out there and you know have fun alrighty be well folks thank you [Music]