Why Taylor Monahan Thinks a $23M Crypto Hack Was by North Korea: Uneasy Money

Transcript

So, I'll give you it's the end of the episode. I will say we have not attributed this to a specific threat actor whatsoever. However, since I spent eight hours tracing this [ __ ] straight yesterday, non-stop and they did not stop and I I could not keep up. That is a pretty strong indicator that it's probably someone in North Korea who's doing this [ __ ] >> Hey everyone, I'm Kane Work and welcome to Uneasy Money because what happens on chain never stays on chain. Uh before we begin, here's a word from the sponsors that make this show possible. >> This episode is brought to you by Cape, America's privacy first mobile carrier.

Same premium service you'd expect from any other carrier, but designed so your number, your location, and your data actually stay yours. Get 33% off 6 months at cape.co/chained. All right. Hey guys. Um I am here with my uh co-host and we have two guests this week. Um Luca is still out uh as Taye pointed out um during the break.

He's out hunting more advertisers for us. Uh so hopefully hopefully he's uh doing a good job out there. Um we seem to have some new advertisers so it must be working. Uh good luck Luca. Godspeed. Um so uh we have Tay um our resident security expert and we also have uh two uh people joining us um from CAP uh Benjamin and Whiso. So So our first uh segment this week uh is CAP and the stable drop blow up. Um, now I should say I'm an investor in cap, so uh I'm definitely going to throw these guys some softballs, but

it's up to them to knock them out of the park. So, we'll see how we go. Um, good luck, guys. Um, >> thanks. >> So, uh, let's let's roll through. So, so is so cap is a stable coin. um met you guys through uh Mega ETH um through like the one of the mafia uh like groups, right? Um I feel like this is back three years ago or something. Um so, uh you got Roncoin, you mintc USD. We're really running out of tickers here. Uh it's getting we're into the nine tick uh USD uh stable coins. um and

and CU um which have uh redemptions um there's no um no white list uh and you deployed around mega e um so the the controversy was this stable drop um so in Feb uh you committed to an 11 million token stable drop reward and and just to be clear the stable drop was like you're going to give people stable coins instead of tokens Right. It's a new new stable job. Yeah. >> Okay. And then what happened?

>> Okay. Got it. Got it. >> Um >> Yeah. >> And then then some stuff happened. >> And then some stuff happened. A lot of stuff happened. I mean look um we did a points program like many people do. And um the points program ended. Everybody most people left like again most people do. And uh we were very happy with our early users. So we decided to give them a reward. Uh and instead of giving them tokens, which is usually what happens, projects give around 5% of their token supply for the first air drop. This is the expected unspoken rule. We decided to uh try something different and creating certainty. There's people that want to buy the token when we TG and there's people that want to get the

airdrop when we TG. And they're not aligned at all. Right? the people that want to buy the token have to wait until the airdrop people sell. The airdrop people want to sell as fast as possible so they all get the the best yield possible. So, we said, let's arrange this so that we do an ICO, get some money, give that money to the stable drop guys, and then everybody should be happy. Um, we jumped the gun a bit and we told people the amount of money we wanted to give them, the stable coins we wanted to give them, which is around 5% of the value of our token, which we thought would be 112 million. Um, at the time we were going to do the ICO. Uh, long story short, market tanked and we

started a winter. Uh, it's not great. So, we postponed the ICO and we did it now recently. And in the end, that 5% of value is no longer worth 11 12 million. We were able to raise around $4 million. So $4 million was our new budget. Now we have a new budget much less than the original. And we debated a lot what to do. You know, do we give tokens? Definitely not in the in the plans because then we go to zero. Then what's the point of doing this at all? Right? You need to take care of your stakeholders. And so we decided to stick to our 5% budget and uh we debated it with our investors with our you know users and we decided that instead of giving some people maybe one or 2%

reward whereas some people were losing 90 100% on the whites we said let's just make everybody whole so at least nobody lost any money and so the people that really were losing were the YT guys and we we made them whole and then everybody else they didn't make any money but they didn't lose any money in that's sort of the background that's the context. >> Got it. Got it. And and so I mean I guess this is like classic you know startup founder dilemma right? Um you need to to you know start off uh with like a little bit of irrational exuberance and and you know uh try and get some momentum into something and

then you know unfortunately reality sets in and and you know you're not in a position to uh to you know necessarily um close out every uh thing that you've committed to. And so now you got to like figure out how to balance all of this out so that all the various parties are uh the least unhappy possible, right? I'm guessing. Um and so so were you guys the first ones to do this stable drop concept? >> Was the first we uh >> before us I think most people just do regular airdrop. They take their token and they give it to people. And I just see time and time again these projects

coming up and they all do the same thing. They give a token airdrop to the early users, they pay Binance a bunch of money and then they go to zero. And so we that's why sort of we created something um one to make sure our project continues to be successful long term, but to hopefully make farmers happy. Obviously uh the farmers are not happy, so that that didn't go to plan. >> That's that's that's normal. Don't worry about it. They're never happy. It doesn't. You could have given them $20 million. >> They still matter to us. I mean, I don't want to >> of course they matter. No, no, no. Of course, farmers matter, but uh but yeah, farmers farmers have a track record of uh being unhappy about things. Uh so, so I think you know, obviously anytime this

is the the fundamental problem in crypto, I think, is that you have way too many autists, right? And if you change the rules on an autistic person, God help you. you're gonna have a bad time right? >> We talked about this. I remember like months ago we were debating like how should I bootstrap cap? Is the points the best way? Uh yeah, honestly, a lot of your advice should have been taken. I think you have a >> a pretty good uh take on these like points programs. >> Wait, what was your take?

>> Don't do it. >> I have no idea. >> No, I think you said program. Just grow it slowly. >> Yeah. >> Oh, yeah. Okay. >> How it would have been differently. I guess >> I also think that points programs are they're marketing and so there's this weird thing in in crypto where we decide to give tokens as a marketing expense and then expect people not to just immediately sell them. Uh so I think we're trying to shift that right like hey like if we're going to give you tokens you're just trying to farm for yield. So you're going to sell them. We'll just give you the yield. Uh but the problem is that this marketing expense is now uncapped. Right. And so we ended up with way more TVL that was very unproductive for us early on and

really didn't feed into the flywheel and and that budget now is like well you know I don't we don't need $500 million of liquidity. We don't even have that much borrow demand or can execute on that uh you know early on. But you know because people can kind keep keep coming in keep uh putting in money keep getting points now your marketing expense has no cap to it. And so you can grow pretty large. It's all temporary. The points end, everybody leaves. You got really no productivity from it. And it's like how much now do you actually spend on this program that isn't, you know, for the future. So I guess that's probably like the dilemma that a lot of people kind of fall into. And if you were to go and say, hey, like I'm going to make everybody happy and give away $12

million. Now you've just like cut your throat on the business side for, you know, your runway, your token, everything in the future. So it's a very hard decision to make. Yeah, the incentives are just like I don't know, they're pretty [ __ ] right? Would you guys agree? And like I think we do this to ourselves though, right? Like we uh >> we keep coming up with new mechanisms and new creative ways to try to like sort of fix them. But if you guys were to like let's say like like wave a magic wand go back in time to like the very beginning like what do you think like what would be the ideal sort of path right with everything that you know now

what do you think like you could have done? I think first is you have an idea of how much you actually want to spend to the program and then you cap it at that and then you can kind of work towards that that budget and I think the second thing is communicating better like uh we didn't communicate very clearly um you know we committed to a number uh you know where we couldn't fulfill and so you know those are pretty big mistakes and I think if I we could definitely go back we would have done those two things strategically better. >> Yeah. Yeah. I mean that's we hear hear this a lot actually but it is um I think it's hard to build in public as well like the criticism and just like the instant criticism and the ulterior

motives uh like for example Kane has gotten in trouble for uh talking back to the mob at times um to put it lightly you know what I mean but it's like it is hard to build in public with that instant feedback and criticism Someone's got to do it. >> Someone's got to do it. It's hard to resist. >> You have to make a decision and um kind of live with it. We did talk to a lot of our investors, you know, try to survey, but at the end of the day, you have to make a decision and um you know, not pick favorites, not treat anybody differently, uh and then live with it, right? And there will be a lot of people

online as I'm sure all of us know being in this space for so many years that that will kind of like attack you and do say things. >> Yeah, absolutely. Um and so what you know you guys mentioned earlier like obviously the market has taken a turn. I think a lot of companies in the space are feeling this like I mean a lot of companies did layoffs and now they're doing more layoffs, right? Like it's going to this is going to be this is going to hit. What are you guys? Let's look at like a two-year timeline. Like what's the ideal sort of path from here? How are you going to regain trust of the of the mob, you know, and then what are you guys going to ship?

>> Well, first of all, I think we're in a better spot today than we were during the points program. Uh, for two reasons. one today 98% of our TVL comes from people that are not farming points right these are just institutions that we go we pitch them they say yeah I like cap I'm going to use it and now they have you know multi- multi-month deals with each other to to work at CAP and it's very sustainable um and on the other side yields are very much down onchain yields haven't been this bad in a long time whereas at cap our whole business model is bringing yield from the real world, importing yield from the economy.

So, our yield is pretty good. And so, it doesn't take that much for us to go to an LP and and make uh like TVL deals or or sort of uh bring users into our platform. So, I'd say that's that's been good. Um on the bad side, obviously, now we have to repair some of this like mistrust that might have a a reason. Um even though you know it's not our user base in retail I do think as builders in the space we've been here for many years I was at Cheetah Weso was at beefy um this is our community right we've we've been part of creating this community and we didn't leave we didn't go to robotics we didn't go to AI and so there's nothing

else but just to continue shipping and and not make more promises >> yeah I'd also want to say like they had nothing to do with the protocol. The protocol itself functions exactly it's supposed to. Um, you know, we had some redemptions. We actually calculated ahead of time uh post the announcement what we or what we thought was going to happen in redemptions making sure that we'd have enough liquidity coverage and all that. That all was fine. Um, you know, coincidentally, uh, we just got listed on A's, uh, you know, Maggie ETH deployment, uh, and gained some TVL from that, uh, 10 days prior to the announcement. Um at the same time over the weekend post the announcement um you know the big the biggest liquidity

provider on a mega east decided to pull out uh ran borrow rates really high which led to obviously that same TVL that was not there 10 days ago to withdraw now on a loop. >> Um I think that kind of played into like this narrative that the something was functionally wrong with the protocol >> which was not not the case at all. Yeah. And so I think that's the most important thing for us is to go ahead and say, hey, like just because the incentive program didn't work out like it was expected and people are unhappy with it, the protocol functionally works just as it did before the announcement. Uh and it's the same trustworthy uh you know overcolateralized borrowing mechanism that we have been selling to everybody for like the last year. Uh I think you know our system also is you know

bringing institutional borrowers on chain and a lot of times those deals take time so they're not they don't happen within like a month or two months. There's a lot of like legal requirements that you have to go through. Um there's a lot of uh different people and different that have to make decisions on whether or not they're going to you know you know move forward with it. So those decisions take you know months over time. So for us it's executing our entire pipeline that we have in place over the next few months uh to showcase hey like you know this is a real demand right we have we're bringing private credit borrowing on chain uh we have this pipeline of borrowers that are lined up to go ahead and execute via the cap plat uh cap platform and then uh from there it's just like you know showing hey like we

can be more transparent with our communication so I think the number one way we're going to regain trust is learn from our communication errors just making sure that we're being a little bit more transparent, less opaque around different programs um and delivering transparent yield. >> Yeah. Yeah, that makes sense. >> Um so, so I think like you know you guys talk about communication, right? Um and I think it's fair to say that uh you know you guys made some mistakes in in the comms, right? But the fundamental issue that I that I see here is um you tried to reduce uncertainty. like we live in an uncertain world. We operate in an uncertain space. You try to reduce uncertainty by saying we'll give you

this fixed thing, right? Um without knowing necessarily that you could deliver it on the basis that you know if you did all of the things right, it would work, right? Um so that reduced the uncertainty on on one hand, but there's an implicit uncertainty that comes along with that which is like if we don't have that money, we can't give it to you, right? the the the alternative on a points program is we'll give you some tokens that we printed from nothing, which we definitely will have because we can print them. Uh we just don't know if they'll be worth anything, right? And so you're in this situation where you're like, we'll give you some magic beans that may or may not be worth zero, right? Or we'll give you some other thing, but like something has

to give in that tradeoff space, right? Now you know uh this is the frustration that I have with people who are farming right is like they have this expectation that things should only go well for them right that they should get a 15% yield with no risk >> which is nonsense right if if yields are at 4% and they're like no but you promised me that I would get 15% and that there was no risk right um you know or 20% or whatever the the number is right like it it's just not reasonable.

Now you guys could have said hey just a heads up you know there are implicit risks in like we may no longer exist in six months time right and you will get no yield like you know a bunch of things could go wrong you know the world could uh have a nuclear fallout like you know there are inherent risks in the world that may mean that this doesn't get delivered right um I feel like that is probably the thing that if you guys had communicated that a little bit more clearly that like there is no guarantee that you will get these stable coins.

This is our intention. It's not wouldn't have stopped the FUD. It wouldn't have stopped the FUD. Just to be clear, you would have still got it futed, but you could have at least slept well at night going, "But we told you," right? I think the miss here is that you were like, "Ah, we'll definitely do this." And then you're like, "Oops, we can't." >> Right. No, I I definitely agree. Lot lots of good lessons learned on that side. Um trying to reduce the risk. I think that's you know, especially when it it comes to the TG, you know, we're really focusing on TGE, we're launching this token because it's not just about the farmers, it's also about our investors.

You know, what are you going to do when you launch the token and you have all these like tokens that had just been sold in this market is tough, but I think we did TG okay. I think uh TG happened. We didn't go to zero, which is always good. Um >> Yeah, but if you do TG bad, right? Yeah. And I mean >> the farmers are happy, but the farmers are happy and you do TGAD. Then you have this the same mob now yelling at you that the token's going to zero. And what are you going to do to fix it when it's because everybody's just dumping your token incentives.

>> So it's you're dealing with a mob no matter what you do. Yeah. >> Yeah. Yeah. It's I don't know. Let me ask you this. If you guys were advising a like young team been around for a couple years, who's considering doing like points, TG token for whatever their product is, what advice would you give them? >> Well, this market condition is very different. Right now, we're in a very low interest rate environment in crypto. Uh and so it is much cheaper for a new project to skip on all the incentives alto together and go to liquid funds and strike deals. Much easier. Much much

easier. And then you can leverage that to get retail interested because typically they look at TDL when making decisions. That's that's what I would do. >> All right. Yeah. Yeah. I mean, I'm scared I'm I'm scared of the mob personally like >> like I don't think you can win against them. And that's just, you know, from my experience like you know and so you have to sort of I guess fall back to like what you know best and and have >> but not super ideal. >> So So can we talk can we talk here? I we got to go to our next segment. Uh but um I was just looking through our our run here that we not covering this. I think we we kind of

need to cover because it's become increasingly obvious to me uh just like how wild what was going on. Uh right. Uh Crypto Twitter is back. >> Oh yes. >> Like the the people that we have all been we've all been here. This is like the wildest thing, right? like we've all been here, but we couldn't see each other. We couldn't see each other. We only saw the what Nikita what we did in Nikita. But he's like, "These 20 guys are the only ones you're allowed to see.

The absolute most trash [ __ ] people on the timeline. This is all you get." And we're like, "Oh man, like this is like the whole of crypto is bad." Like the vibes were so bad cuz everyone's like all I see is this guy like Coup Capital or like whatever like some other like [ __ ] right? And and we were just like we were just like everyone's gone, everyone's abandoned us. Meanwhile, like everyone's feeling like that, but no one can. It's it's insane to me that they could construct the algo in this way that like only these these like it's wild. And yet then al they're just like flick they're like okay the like switch is flicked and you're all back

>> and now like all these people I'm like tweeting and people are like replying to me and I'm like oh you I remember you you're >> should come to New York >> friendly guy >> I know >> you're here in New York uh everybody that you don't see on the algo is here and it's there's a different air you know folks here are all bullish because the institutions are here uh everybody's working hard uh but on crypto there's different story. I give myself one Twitter session a day and that's it because uh it's been bad. But now recently it's been a bit better. >> Yeah. I mean my timeline turned over I would say completely. And also thank god there was so much just [ __ ] that I don't I didn't really want to see but I also loved seeing. So for me everyone has a

little algo fix like weirdness. >> Yeah. Um, for me it was the cute animal videos. And so I'd be like on crypto Twitter and then these like cute animal videos and especially the AI generated ones that I'm like like a penguin eating a fish but it's 100% AI. It was horrible. And I was like, wait, why am why am I not why am I seeing a [ __ ] penguin and not a [ __ ] my friends? And overnight like Nikita like flipped the switch and it was overnight. So I'm happy about that. But it is it is wild. And it's wild that they have [ __ ] the algo for that long to be honest.

>> It was like a year. >> Yeah, it's been forever. I've been watching Penguins for so long. Game, >> we're going to ask and then we'll be right back to talk about e systems and another EF spin out and all the fun stuff that's going on there. >> If you hold crypto on your phone, your biggest vulnerability isn't your wallet. It's your carrier. AT&T, Verizon, and T-Mobile have been breached again and again, and SIM swaps are still one of the easiest ways for attackers to drain accounts. That's where Cape comes in.

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All right, so we are back and we have yet another I guess spin out from the EF. This has been uh gosh the talk for the last few weeks. This one is called ETH systems. This was a bunch of the guys that were at the EF that were doing a bunch of institutional stuff, privacy stuff. Um, and they've spun out to create ETH systems. Um, it's actually a pretty stellar lineup of folks. Once again, backed by all sorts all sorts of the the ETH dieards. Uh, Joe, Luben, Sharp, Bitmine, all them. So, there I mean, I don't I guess one takeaway is like there are

these institutional folks that are that are betting big on Ethereum and builders and like infra layer. Um uh and then they're going to be working on I guess sort of like I don't know it's a bit weird when when with all these spin outs they're going to keep doing basically what they're doing but now in a slightly different format and not within the EF. Um, I don't know. Bullish, bearish. What do you guys think? Jump in, guys.

>> I mean, I generally I generally like it when when people have this. >> I think they're scared of Vitalic. >> Vitalic on this show. >> No, I mean, we're we're huge. We're Ethereum people. I mean Wes and I we are Ethereum builders so we we're very bullish on on ETH and um I like it when people do these spinouts because then they have more agency. It's kind of like do you want everything to be done by state on entities or do you want to privatize? I think the real world shows us that privatization is better. I think maybe not to get political but hopefully um now that they have their own uh group they can have a little bit more agency

and get actually get stuff done. But yeah, I mean that's the that's the hope, right? Is and now we have so if I'm keeping track correctly, we now have three sort of spinouts. We have ETH labs. We have the I guess like the old like actual institutional team ETH. And then we have this one ETH systems. And then ETH systems is doing a whole bunch of the privacy stuff as well, which I find quite interesting because um I thought the EF was super focused on privacy, but okay, that's fine. Like I mean, but yeah, maybe we'll actually get to do it, right? Maybe we'll actually get real progress there. Um, I don't know. I'm bullish on it. I think

that anything to get people, I guess, as you say, I like the word agency. >> Yeah. Any I mean, we just got to we got to build stuff. We got to ship stuff. We got to have people proud of what they build. Um, and for some reason, the just the amount of drama and both internally and externally around the EF in the last like year or two has just been, I think, brutal. Um >> I think it's also about the the price irrespective of what's being shipped or not. When people are poor, they start pointing fingers and they get upset and there's like more infighting.

>> Let me tell you, if the same thing was happening at Eve, but Eve was 10k, >> there wouldn't be any infighting. There wouldn't be any uh kind of drama. >> Oh, 100%. 100%. Um what do you think it'll take to get ETH to 10K though? Like are these like orgs going to be the thing? >> If I knew if I knew I would if it would be 10k, let me tell you. >> Uh yeah, I mean I don't Yeah, it's true. I think I think we do actually I think the biggest thing for me that would give me faith in ETH again and I have faith in ETH. I hold way too much ETH. So, let's not be delusional and say that I don't have faith in, but that would like I would be super happy about is

yeah, I think people just like actually committing to something that they really want to build, they really want to ship, and then just executing on it and executing really well on it. I think we talk a lot and we do a lot of theoretical stuff in Ethereum in general and I would love to see us like as an ecosystem just get a lot better uh a lot better at executing on our dreams to say the least. >> Yeah, we're a we're a community of researchers it seems at FL and not a community of shippers. Obviously, the researching is extremely important and there's a lot of value to it, but I've I've always been maybe because I'm a founder, I've always been um biased

towards action. Let's just ship something. Let's test it out. Let's see how it works. Um but there there's definitely a need for both. >> Yeah. No, 100% 100%. Um I want to actually talk on that note. I actually want to jump to like what our our next segment is because I think it's super relevant. Did you guys see so Jesse Coinbase Jesse base Jesse handed off a whole bunch of stuff to Kobe. Did you see this? >> Yeah. He's in charge of BAP now.

>> Yeah. What? Okay. So, what's your read? Bullish. Bearish. Give it to me. >> Probably bullish. I wasn't a really big fan of the whole creator coins thing that he kept pushing over and over and over again. >> I don't really I don't really understand it. Maybe that's just not my >> I think I think the most interesting thing was Jesse made the mistake of uh writing like 8,000 words in the same and so no like or whatever and and so everyone was like uh Jess is giving me base and now uh Uh

no no it's just app uh people for the coin was their Coinbase wallet and it was base and now it's been given back which is just kind of funny. >> Wait, what's the difference though? Does anyone know or where what's the delineation? I guess >> he's just doing I don't know whatever Kobe actually got versus like all of Bass >> the base app is that that's the wallet right >> the wallet so he so he's basically Kobe's running products for that but like the wallet app >> okay >> I mean >> base can be like all the DeFi stuff and maybe infra everything like this

>> yeah I mean base is huge it's a whole [ __ ] network Um, >> Kobe had a a funny tweet. It was like, uh, somebody's complaining about something and he's like, "Well, give me 30 days to fix it and if I can't, you can call me a scammer." >> No, one thing to note is that they have such great talent. Like imagine in your team, you have, you know, Jesse and you have Kobe, >> right? >> I think they've done such a great job at bass and general at attracting top tier people. And so I I I think there I think Kobe, you know, anything he touches, he'll probably figure something out.

Obviously just even though Jesse has some issues with this whole like raider stuff. Um also very top tier and very glad that they're in crypto and they haven't moved over to AI or something like this. >> I mean it's it's lowkey amazing that Kobe is still here. Like let's be real. Like >> Kobe should have retired like a decade ago. What is he doing? So, whenever I see founders like that that are still here when they definitely should have been long gone, I I do have a lot of respect for that because they're in it for just like the love of the game. Um, and Kobe's definitely like one of those like he is >> Yeah, >> he's never >> But we have Kane right here. Come on.

>> Kane, he's like one of the legendary founders of crypto is >> still here gracing us with his presence. >> Um, yeah. And Kobe too. I think when Kobe joined Coinbase originally, I was so >> [ __ ] just like Kobe. >> Yes, that you that's also me by the way. I should retire like I don't know what I see her doing. Um but I was saying when Kobe joined Coinbase originally it was like I could see it it like two things could happen. First is that he just gets so disgusted by Coinbase and

their ivory tower [ __ ] and just like immediately gets super disenchanted and gives up. And the other is like powers through and brings his unique sort of like the way he approaches things, right? Never up in the ivory tower. Like he is always on the ground floor. He's always listening to people. um bringing that to Coinbase and Coinbase employees. I think he's still doing that. Like he's been quieter on Twitter lately, but um it seems like he's bringing some of the product guys at Coinbase down a notch and and back into the community and back listening, which is if they can do that successfully, I

think it's massively important. Um >> I think I think the fact that he's so engaged still is like very positive for Coinbase, right? because it seems like they're at least letting him have some autonomy to go and try to fix things >> or like uh you know letting him come to like with different ideas on like what's broken. I think he tried to tackle like customer service when they first got him over from >> Yeah, it was he's just answering like you know I can't access my wallet and he's like like the customer service rep and like the the Twitter replies. >> It was great.

>> It's so good. It's so good. That's what you have to be though and especially when you do get so big and you get sort of hung up in processes like is a large or at this point that's been around for a long time. >> Um >> but like if you Yeah. on Twitter like the biggest complaints for the longest time was like you can't reach anyone. You get an AI bot support agent. You're locked out of your wallet. Um and Kobe was like I'm just going to stay here on Twitter and cuss and also help you. And that's what the ecosystem [ __ ] wants. >> So good.

It was really good. >> Guys, Kane, by the way, if we didn't say Kane is in New Zealand fighting the evil internet gods in New Zealand, apparently we cannot do anything. Um, all right. Next segment. Should we move on? Yeah. You guys have thoughts on Robin Hood chains? >> What a flash. >> Yeah, but I I have a fear. Uh, I've seen this over and over again where like the hot new thing is really hot for like a month and then we see it kind of play out like uh over time and it loses it momentum. So it'd be interesting to see like

what real difference it's going to change over like you know from base or some other ecosystem that was really exciting for a few months and see how sustained it can be but for right now people are loving it >> does okay so for listeners who have not been in the trenches with the rest of us it's been live for two weeks now basically they launched um And it was they had big goals. Let's say Robin Hood chain has big goals. >> However, >> yeah, but the biggest I guess actually activity that we've seen just like exponentially go up over the last well two weeks has been the mostly the meme

coins. >> So surprising >> which is not what I expected. >> I mean how is that surprising though? That's like the they don't really have any >> mean coin in this market. >> Lots of people. >> I thought natural selection there was the handsome coin went up for like >> everybody lost their money that like was going to trade these type of things. I think it's trash. I think like memecoins are trash and we should get rid of them and it's bad for space and there's no attention economy doesn't mean anything.

Um, what I want to see Robin Hood, you know, they have Robin Hood Gold where you can earn kind of TB low yield, put that on chain or do what Stripe did. You know, they brought a lot of their deposits onto Tempo. I think that's the stuff I want to see Robin Hood do and forget about this like namecoin stuff because last long anyways like Wes said, >> yeah, but they are going to do like uh tokenized stocks and stuff like that. So I think they're trying to use the change for like trying to do a mix of like what they do proprietary to them like their, you know, application their Robin Hood app where they're stock trading, option trading, you know, crypto trading and also trying to bring that stuff on chain. I think that's sort of the connection you're trying to make there.

But um I think you can already trade certain like equities and stuff on Robin Hood chain. So that's their proprietary >> and the big morpho integration that was very good. I mean let's talk about morpho they've been getting some very good integrations you coinbase and now what they did with Robin Hood that's that's amazing because it sets like the it says the path for a lot of other DeFi startups to do similar things. I I I think they're doing fantastic. >> Yeah. And I think I mean ultimately I don't necessarily have a problem with Robin Hood accidentally stumbling into the memecoin madness and you know volume speaking on that. I do think that they

have to get diversity though. You have to get and and convert some of those memes into something else. It's not enough to just >> ride that wave. >> Um especially because >> everything's fine until everyone gets rugged and then none of your users have any money. >> So you have to protect the user. >> That's what I mean by I said meme quest are trash. I'm not trying to hate on anyone. >> That's probably like the early like how do we grab early attention, right? >> If they just launched, they had nothing. Like it was like, hey, we have Morpho lending where you can earn 7% yield.

People be like, "Okay, >> it's pretty sexy to me." >> Yeah. >> I'm I'm grabbed all that uh attention with like Cash Cat and stuff like that, which I didn't even realize. Oh, you you knew that. But like Cash Cat was supposed to be like Robin Hood's original name or something. >> I didn't know. I didn't know that before. >> I was like, why is this meme so popular? I don't really get it. I was like, oh, it's cuz it was the name of before Robin Hood was Robin Hood was supposed to be Cashcat or something like that. So, >> that's a terrible name. >> It is a bad name. They did much better than Robin Hood.

good to have more of these retail because I maybe it's just me but I see Robin Hood and Base in a similar neighborhood of like what they're trying to attract. So you have Coinbase with base and then Robin Hood with Robin Hood chain and the more of these you have the more competition and competition is fantastic >> because then it makes your space better. >> Well, they're porting their users, right? Coinbase is porting the Coinbase application users and then same thing with Robin Hood porting those users onto their chain. So >> yeah, let me tell you, it's >> it's pretty it's much easier for me to convince a Robin Hood chain user to use their platform than it is for them to convince an average person on the street to, you know, download a wallet and

start using their platform. And so I think um you know, the more users we can get anywhere in the blockchain, I think it will it will benefit all of us because then I could go pitch them they come use CAP now that they're already using the blockchain. Yeah, exactly. And then so the second half of this I guess conversation and I'm I'm really interested to hear your guys' takes on this is obviously Robin Hood chain has taken off and it's only been a short amount of time but it there is activity mad activity going on but then people are sort of looking at how much Robin Hood chain is uh put simply paying Ethereum mainet right

>> and they're getting quite upset about the fact that there's not uh you know it's sort of starting it's starting to feel on the surface that like you know Ethereum is perhaps undercharging people for settlement being the settlement layer. Um and obviously there's two sides to this. There's people who are like yeah it's way too cheap. Crank up the prices. Like what are we doing? And there's other people that are like just leave. Right. So what's what do you guys think?

>> This is not new though, right? like all the sequencer L2. Yeah, I mean the the same argument we've had for years, I think about L2s. I think Vitalic himself even came out and and said something >> uh in that regard about how you know the L2 vision didn't work out like you thought it was going to work out. It's really it's bringing in very little revenue for actually you know the mothership. So I don't think that's >> you get what you pay for, right? It's not like you have >> Ethereum level security on these L2s.

>> They're extremely centralized. >> And so at the end of the day, >> yes, it's cheap. Yes, they're not paying a lot, but they're also you're not getting that much either, but you're at the completely at the realm of these uh teams that are running the L2s. >> Yeah. Yeah. And I go back and forth because on the one hand I think whatever if you look at say how much like Robin Hood chain Robin Hood like how much they're making and also in this case they're paying a percentage to Arbitum Foundation whatever right that's how the the Dow works right >> you look at those two numbers and then you look at the number that's going to

Ethereum and you're like wait we should be charging more, right? Like just from a basic business perspective. On the other hand, if you I don't know. >> Would they still be here? >> Would they still be here? Is it Is it really like Can you really say that it's lost revenue? I'm not convinced. >> How do you charge How do you charge more? I mean you could well I mean we lowered the the whole blobs was this years ago when you know with the introduction of blobs they made the settlement cheaper and at the time it was massively important that we did this because uh

the L1 was impossibly expensive but even L2s were massively expensive um and so they introduced some new technology some new settlement They're called blobs, which is a great name. Love it. Now they're But now they're super super cheap. And then of course now in hindsight, we're like, wait, is this really the is this the vision? Was this the way to go? What's the val value acre and ETH the asset? you know, it is an old debate, but I think yeah, it's it's interesting to have the conversation restarted in light of Robin Hood chain, but also just in light of like people kind of I'm not saying that people are completely over L2s at this point, but it's not, you know, it's not

2022 anymore. It's not and it's definitely not like 2017, 2018 when you couldn't even settle on mainet, right? I I think you still have to keep transaction fees down for people to still wanting to like interact on chain and build. Uh I think when I was deploying contracts a few years ago, it was costing me like $300 to deploy a contract. Uh I think upwards of a thousand is like the most I've spent. So it becomes like and that's just to to do to deploy a contract but interact. I think when I first used A like 2019, I think it cost me like $50 to deposit $100 worth of visa into a to try it out.

>> Yeah, it's like me so much voice. >> It was really bad. It was really bad. >> Actually, guys, I think for startups, because let's think about Ethereum as a startup, you don't really need to monetize that fast. How how many years did it take for Amazon to turn a profit? And did it matter? I think our KPI for Ethereums should be how many companies are posting to Ethereum because the reality is if you're not building on Ethereum, you're paying in tokens. Every chain outside of Ethereum, if you want to get real capital, you're paying it with tokens. And that says everything.

Um, and so at least at least Robin Hood is is building on on Ethereum and they're not making their own chain like Stripe. Um, and and I hope more people do it because I I would I would take that a hundred times over than um making a few more bucks over like a lesser brand for example. >> Yeah. Yeah. 100%. And I think I don't know I still think that there is immense value to keeping I guess things a bit eentric even if the you know if you run the hard numbers and you're like ah it's you are still there's still a consistency if everything I think we'd be in a worse

position if everything was like a truly completely separate like you just had all L1 L1 L L1 I just like the innovation goes down the interoperability goes down like it's even like the L2 Ethereum experience is not the best but like it's way better than if you go back in time to like when it was like Bitcoin, Litecoin, Doge, Monero, >> right? >> Yeah, >> we do have interoperability. We do have settlement. We do have asurances um where yeah you can like force yourself back to to the L1.

We don't have to rely on fully centralized things to bridge back and forth. You can have innovation. You can have different rules, but you still do get that the interoperability. So I don't know. I I'm not I guess my my take ultimately is like I'm not super upset that that Ethereum isn't making more here. I get the conversation, but I think it's more important to keep people just using this stuff, right? >> Yes. >> Uh we're just talking about Robin Hood chain, but also like you know the conversation on like is is Ethereum undercharging these L2s?

>> Yeah, I mean yes. I've I've been I've been an advocate for like I've been an advocate for this for a while. Like Ethereum should charge more. Um you know, it's it's like there's a massive advantage that uh L2s get from uh not needing to deal with all of the stuff that Ethereum has to deal with. Um but still, you know, getting to be a chain. Um and I think that like it does not capture enough of that value. Like unequivocally it should capture more. Um the question is can it like it should definitely try right? Um what would the consequence be of trying to capture that? Maybe all the L2s are forced to become L1's that actually would also not

be too bad because if all of the L2s stopped laring as decentralized and had to actually be decentralized, they would find that it's much harder than it looks and it would be at least an equal playing field, right? Like I promise you like the 85th L2 is not viable as no one if they had to actually like produce their own blocks and have validators and clients and all of that stuff, right? Um so so I I you know I think it would be the the fact that like we have this weird L2 thing in the first place is like such a strange path weird thing. Um, I think we will

eventually kind of they'll they'll either die off or they'll become L1's and it'll be a bunch of L1's competing against each other. Um, and you won't just be able to like be a parasite hanging off Ethereum the way that we have now. >> Yeah. But do you think that we can I mean do you think like it's realistic that ETH could like raise the prices now or do you just wish that >> Yeah. Yeah, like I Yeah, for sure. Like what are they going to do?

>> No, I mean this is true. >> I mean there are benefits that to be aligned to these if you look at the because I think in terms of capital right we have a defi startup if you look at the cost of capital for incentivizing outside of the L2s outside of Ethereum is meaningfully higher. I mean go to a on monad and look at the price that the market is giving for supplying USDC and compare that to all the L2s it's much higher but go to any of these other alt ones either they have no liquidity or if they have it at scale it's costing them much higher and so I think that's the market saying it cost you more and so I as an L2 I'd pay a little bit more right now I'm paying nothing if it means I can

save 2% APR on the capital. >> Yeah, agreed. I I just think it would force a much like more clear competitive landscape is what I think would happen. Right. At the moment, you have this weird uncanny valley where like, you know, there's so many flavors of L2s. It's not clear how decentralized they are relative to each other. We've been trying to figure this out for five years. No one really has a good sense of it. So my my like my view would be if if Ethereum jacked up the price, either people who couldn't leave would have to pay it, right? And the people who could leave would leave and then they're competing on equal playing field. So I think it's it's good on both sides for

Ethereum, right? Like if you know if Arbitum had to be an L1, it would probably be good for Arbitum on some level, right? To actually just be like, "All right, fine. [ __ ] it. We're an L1. Let's go. Let's let's try and compete directly. >> Yeah, >> we'll see. We'll see. >> I mean, yeah, there's arguments on both sides. Again, we're back to incentives, though. And I do think if we if anyone >> if anyone wants to change anything, I think bare markets had time to do it. Rip the [ __ ] bandit off.

>> Oh, yeah. >> Let people get mad. Let it Let >> You can do anything in a bare market. >> Yeah. Yeah. The thing, you know, the thing that I always say, right, is like the status quo is what reigns, right? The status quo can be [ __ ] insanity. Look at some of the status quo things that we have right now. It can be sheer lunacy, but because you have so many autists in the space, they will defend that because it's the current rule structure that they exist in, like their lives depend on it, right? And so when you come out of a bare market, whatever the status quo is, yeah, you'd have to fight with them a little bit, but like they will be the ones who will be like getting the pitchforks out in the bull market if anyone tries to change

anything. And so you actually like build up this like, you know, kind of uh defense system so that when you get into a bull market, this the new status quo, whatever comes out of the bare market is like the thing that is the stable equilibrium now. And that's what will run through the the bull. So, >> but it takes guts, man. You make a mistake and uh you get burned. >> You get burned. Yeah. >> But better to get burned in a in a bare market, right? Because people will have short memories. They'll forget about it. >> No one will even remember in a bull market that that even happened.

>> There'll be like five guys who are still crying about it. >> So, >> yeah. And you can rebuild stronger, right? You can you can you can you know I think the community is a bit more it's they still get very upset about things. Let's not be let's not be crazy. >> And I was looking at the timeline today some people like attacking Kodora and I'm like man can we all just calm down? >> Just go down. It is. I think when there's I don't know. It's It's a bit narrower of a community. The anger lasts a bit. It's a bit shorter. I think you can weather it a bit easier. Like bull market anger is

>> what But here's here's the thing though, right? Is like in a bare market it used to be that you had all of your friends around and so the people who were angry were like really balanced by like your friends kind of being like, "Ah, it's okay, right?" But we lost that until like three days ago because on the timeline all you had was like the, you know, cancer people who were just like, you know, [ __ ] like losing their [ __ ] about like you couldn't see your friends. Right now at least as of like 48 hours ago, your friends are back on the timeline, right? So like you see a balanced thing. You do something and you see like someone tweets like, "Hey, it's okay. Like don't worry about it."

Because they actually saw that people were attacking you and they jump in to be like, "No, no, this is a good guy. a week ago that didn't happen. It was just like wallto-wall like [ __ ] cancer people. So, uh yeah. Anyway, here we are. Um hopefully Nikita doesn't [ __ ] with Yago anymore and we're we're back for good. >> Literally. >> All right. Should we Should we What's the next uh >> talk? Well, we have a choice. So, we can end it here or we can do a little we can do like a rapid fire on the latest and greatest hacks that happened this week.

Your guys' choice. >> Yeah, let's do it. Let's do it. >> You got you got my favorite CTO here. So, >> all right. So, we'll start with my favorite I hate this, but my favorite one. Barnbridge. You guys remember Barnbridge? >> Dude, don't even get me started. Don't even get me started. >> Barnbridge. Poor Barn Bridge. good team, good guys, got absolutely screwed by the >> SEC. Oh my god, the SEC like so, so I was really involved in Barb Bridge, right? Like and Tyler showed up and was like, "Hey, I've got this idea." And I was like, "Yeah, I'll help you." This was I was on my like, you know, arc of like trying to help

founders and and wasn't as busy as I am now. And now I'm like, "Sorry, I can't help you guys." Um, but uh but you know, I was like, "All right, how are you guys want to do this? like you're in America, you want to do this DAO, like what you know. Um I was like my my hot take is your only way to protect yourself here is like no entities, no anything. If you set up a foundation, it'll be a target or whatever. Um and it worked until it didn't >> and then the SEC was like unincorporated association.

uh you know I mean at the end of the day like I think anyone who did anything during the last SEC regime in America is certifiably insane. Like any any crypto person in in America during that reign of terror uh certifiably insane. But these guys in particular got got singled out unfairly because I think that they >> that like they did you know like I Tyler lost me a lot of money, right? like I I lost a lot of money in a bunch of schemes of Tyler's um even things that he wasn't involved in like uh Olympus D.

I don't know if you guys remember. So there was a thing called Olympus, >> dude. So So I went into Olympus super early. >> I say I lost money. I I probably didn't even really lose money. I probably put like a 100K in and at the peak it was 5 mil, right? And Tyler comes into my DMs and he goes, "Hey, uh, you have a bunch of M. You need to do something with it." And I'm like, "Do I?" And he's like, "Yeah, of course you do." Like, "What do you like?" It's just sitting there gathering dust. And I was like, "What should I do with it?" And he's like, "You should put it into Fiat Dow." And I was like, "Uh, that doesn't sound great. I don't know about I was like I was like, "Okay, what do I have to do?" And this is like before agents,

right? So, you had to do everything manually yourself. So, he sends me this like 17step process, which was so convoluted and insane. And I'm like, I'm not doing this, man. Like, I'm just not. I'm sorry. And he's like, "No, no, no. Like, we need the TVL. Like, you got to do it." And I was like, "Ah, fine. Whatever." So, it literally took me like six hours of doing transactions. I finally get in there. I'm in fiat down. >> Yeah. It was like, it was like genuinely 17 transactions and you had to move stuff around on different chains. It was a nightmare, right? >> You have to use like scan contracts test. Yeah, of course. Of course he did.

Of course you had to go into the ether. Yeah. Yeah. Of course. Like there's no interface for this [ __ ] right? Um and like it didn't work. And like this it was like one of those and I used to do this stuff all the time, right? Like I used to be like I'm just going to figure it out. Anyway, so I finally get through it all. Um I put all of my M into Fiat Dow and then like a week later starts crashing, right? And I'm like, "Oh [ __ ] I better get it out of Fiat D. fine print. There's a 28 day unlock window in the fiat pack.

>> 28 >> and by the time it was all said and done, my own was like back to like 400 grand or something like that. So, I like roundts that entire thing and it was all Tyler's fault. So, he's the good guy, but like man, >> but man, like I've got some battle scars from that guy. >> Yeah. >> Okay. So, and I mean Barnbridge too is pretty I mean I I I never played with Barnbridge, but like my impression was like the real OG Dens were the ones in in Barn.

>> Oh yeah. Oh my god. They were so degenerate those guys. >> Like everything that they did was like so DGEN and like Djens loved it, right? Like that was the audience. like Barnbridge came up at like the exact right time where they had a chance to like design this system purely because you know when when we're building synthetics we didn't even know what a DGEN was like DJ Spartan coined that term well into the synthetics arc right like in the in the synthetics discord he's like all right we're all dens and we're like we are and we were and he was like yeah yeah we're dgens like that's what it is right and we're like okay cool um and so So, you know, you didn't have a chance to like custom design a

system for DJs. You would build a system and it happened to be interesting to them and they like got super excited about it. The Barnes Barn guys were like, "No, no, no. We're going to design this from first principles to be like as degenerate as possible. >> Like every aspect of it was like super DJ." And so the DJs just loved it. and and it it was so much more su I really didn't like I was like this is a cool idea but it became so much more successful than I was expecting it to which of course then SEC shows up and all of that stuff right so um it was a bit it the whole thing was was very unfortunate >> yeah so that's what happened >> go ahead go ahead >> no yeah so the SBC showed up and also because of the SEC and this is like

super important to remember like the literally going after these guys and other people legit legitimately really hard going after them. So, one thing that Barnbridge did to try to avoid that outcome, which happened anyways, was they set up governance over the protocol for certain things so that it was controlled by the DAO or whatever. >> The Dow. Yeah, exactly. >> That's what everybody did, right? You just set up a >> we forgot about >> like we forgot because the FCC was trying to take you down and throw you in jail. Okay, so fast forward to this week like Monday or something.

Uh very similar to last week, nobody was watching the governance and so a proposal and this is like how inactive the governance was in general. Proposal 14 or bridge is like what? Five years old now. Six years old or something. >> Yeah. Five six years old. Yeah. >> Proposal 14 passed and then 15. There might be a 16 at this point. But basically someone I mean it's a standard governance attack. Someone acquired a bunch of tokens and then create a proposal to um in this case they're actually not going after like the treasury. They're going after they're basically updating like the the various

proxies and contracts that run Barnbridge and then they're taking they're able to take end users money via the anyone that has an open approval and so this is like such an Ethereum classic like [ __ ] the approvals. So, in order to use Barnbridge at some point in the last five, six years, any address that had like approved their contracts to be able to like spend the tokens and move the positions or whatever, they have like an open infinite approval. And some of these are literally 5 years old. Um, and then now fast forward, someone does these proposals for the governance and now they can take all the end users money. Um, and so that's what they've done. There's been like three waves. I

think it's it's kind of flying under the radar because the amounts of money. It's like 600k, 700k, 800k time. >> It's not a huge huge amount, but >> I guarantee you that some of that is my money. Like 100% it's like some forgotten wallet. Like this is like Tyler back from the grave to like wreck me one more time. Like I like I'm confident that I interacted with Barbridge and didn't revoke approvals in some like random wallet that I is like a dormant wallet. Like for sure. I haven't even looked because I'm like I don't even want to see it. But like >> well I feel pretty certain.

>> I did look and we did a poll for all the NS names and Twitter handles and stuff and database and you were not on it. So as long as you >> Okay. But but >> it would be it would not be my main wallet. It would not be my main. It would be like some side wallet. Exactly. Yeah. Yeah. >> Use guys if you use pain. for your your degeneracy. Downside, Twitter might find you and come after you. Upside, Taylor will message you on Twitter and let you know that you have an open approval. >> Yeah, exactly.

>> Trade-offs. >> Exactly. >> Um, yeah, trade-offs. Can I ask some question about this? >> Yeah. Yeah. >> Is there any real reason to hook upgradability around a DAO governance proposal nowadays? Is there like how many how many active actual Dows Are there? >> No, >> I think a is actually No, because now they're doing more lab stuff, right? >> Yeah, but their stuff their stuff isn't like auto executing, right? >> No, no, no. This was this was this was pure DGEN, right? This was like like we're just going to wire it all into the chain >> and see what happens.

>> Yeah. And the D the tokens control it. Tyler has no control. And the way that you sort of like proved that was like either can't update the contracts. >> Yeah. >> Or like Tyler and his buddies can't update >> the standard. We wanted everything to be automatic and everything >> fully onchain token weighted. Exactly. >> Right. Y >> um and so yeah, this is the I guess another outcome. I think it's just sad like the SEC just in my opinion just failed so magnificently on every level. They came after people that they didn't really make a difference though, right? Like they didn't really save anyone there and then as a result like FTX and UC they weren't able to protect us from them.

>> But they protected us from Barnbridge >> and and like open like the open guys. >> Yeah. >> Like Squeef like why are you coming after Squeef? >> Like what the hell is your problem? like it was like so nonsensical the people that but like you know I've said this before the the the reason why they went after those people was very tactical like the SC that SEC were they were smart but they were monsters and they were smart right like they went after people to send a message like they would like you know kick down someone's door and like blow their brains out and be like this could be you >> yeah no >> stay stay away from stay away from

crypto. This we don't want would be be a real unfortunate if that happened to you. Like it was like like genuinely to send a message. They would go after people that they thought that they could roll um that wouldn't fight back and they would go and just skull [ __ ] them and then like tweet about it. >> It was great. >> They went off they went after like unis swap and stuff too, right? Like so >> sorry. Yeah. Yeah. Just to be clear, they went out but they but remember they would they would set this up, right? This again, this is very tactical. They would go after someone for something that they were planning to then leverage with a bigger protocol. So they would go and like get the win and have someone roll and you know uh go uh like I don't

have the money to defend myself against this thing. Like sure, right? They would settle or whatever. The settlement means nothing. But then they would go and take these settlements and show up at the door of like unis swap or a and be like listen look at all this precedent that we've got here of your friends that we killed. We're coming for you. Right. And obviously unis swaps are not [ __ ] They would be like h that's not precedent guys. That's just like you killed a bunch of people. >> You have to have really good lawyers for that. And like you have to like have like you have to be eager and willing and good lawyers and that those guys cost money.

Yeah, I think that's what we learned this cycle is we used to do these like DAO workarounds but this cycle we just pay lawyers. >> It's not the worst upgrade to be honest. >> It's Yeah, it's not the worst. It's not the worst. I mean like I'll put my hand up and say like I was like h I don't know that we need lawyers anymore. I think we've solved the law. Um it turns out that was that was maybe a little a little uh early to call that one. Um, so yeah, >> but I do want one little >> So I have one little note on this. So >> because I was literally messaging people on Monday being like, you have an open approval. You have 12 hours before the proposal goes, right? Revoke cash using MetaMask. MetaMask ship something, guys.

Amazing. Shout out MetaMask. Yay. Yeah. >> Um, so basically they're using the MetaMask permissions which is like the new these new um it's like the delegator gator the 7702. It's all the new like smart not smart contract but smart contract stuff. So you can now via Revoke I think this is so cool. Okay. Via Revocach you can give them permission to revoke your open approvals. Does that make sense?

>> Wow. >> Yeah. Nice. >> And so now if we like find out that like Barnbridge is about to get back in all the open approvals, >> it's pretty good. >> We work with Revoke and be like, "Yo guys, like you know, everything's verified." And then anyone who's basically given Revoke the authority to like auto revoke their stuff, it'll just happen automatically, which >> maybe I'm just weird, but personally in my wallet, the moment I do something, I revoke immediately. Like even if you have uniso I don't know like don't have any open approvals ever for anything.

>> Yeah. But that's not that's not in real life though. That's not how people are. >> And there's a lot there's a lot of interfaces that just like yolo max approve everything. >> Nowadays they all do max approve. I was I was popping something on a I'm not going to say which one because I don't want to fud but whatever. >> Infinite approvals. Infinite approvals. >> The UI wouldn't let me continue unless I did infinite approval. >> Yeah. >> I like guys come on. It is. And used to be, >> but remember a lot of this was because of gas. It was because of gas. Like >> it was literally like gas was too the price of gas is too high, too damn high.

So we had to do all this nonsense and it cost us so much more money. >> Yeah. Exactly. So I'm excited for this. I think this is one of the first use cases sort of like low-key use case for the permissions, right? where you're delegating a very specific permission or authority to a third party, >> right? You're just allowing this third party provoke your open approvals. That's it. Nothing else. >> And you're if you're willing to do that, you you sign uh you sign once and then they can do that. But they can't spend your money. They can't open approvals for you. You know what I mean? They can just do this thing.

>> Um and that's like I don't know. We've been talking about this for a decade with like smart contract wallets >> and uh >> I don't look at remote cash, guys. Like we're doing the things. I'm so excited. >> Okay. >> Things are hard. There's a lesson there. It's hard to do things. It takes way longer than you think. >> Like it is hard to do things. >> All right. Alium. Uh let's wrap it up with Alium. Give us the the quick rundown of Alium. I got a funny story about a but you tell us what happened first.

>> So there was a private key. There were multiple private keys and then the hackers got the private key and then they stole the money. >> Yeah. >> How did they get the keys? >> We don't know how they got the keys. Why would >> the same the same story every week now? >> Every week. >> Oh man. >> I will. Okay. So I'll give you it's the end of the episode. I will say we have not attributed this to a specific threat actor whatsoever. However, since I spent eight hours tracing this [ __ ] straight yesterday, non-stop, and they did not stop, and I I could not keep up, that is a pretty strong indicator that is probably someone in North Korea who's doing this [ __ ]

>> Any guy? >> Um, >> there. Yeah, cuz eight I mean dude for 8 hours they and they just by the way I I had to take a shower and like do other things in my life. They kept going. I could see the address was flowing for and I woke up and they were still going. So >> it just sucks. Once again reminder guys >> multi multi where your keys are stored. who has access to the keys, where they are, uh, anti virus, edr logs, turn your logs on, >> running devices,

>> all of these basic things. Um, you know, obviously when you have sophisticated threat actors, they can there's always like this thing where you're like, they could they could do this, like that's not going to protect you perfectly. Like you just like you we have to raise the bar. >> You got to mitigate mitigation mitigation mitigation. Like there's like you just have to be not the slowest runner when the bear is coming after you. That's it. >> Yeah. >> Once the bear gets the slow guy, you're good. >> Yeah. And it's um I think they they basically got all the money. There's actually a little bit of money left, but they basically got all the money. So it's about my account was like 23 mil and I think there was like one other wallet that somehow couldn't be hit or

whatever that had 7 mil in it or 9 mil. But and it's bas and >> basically already laundered like again it just sucks like to watch this and just how fast they move >> all because of ease that existed that shouldn't have existed >> and people I think as a builder in the industry you just have to like start with the fact of any EOA that you use is already compromised. >> Yeah. >> You don't ever trust any EOA ever. then maybe that'll help you when you're designing your systems whether it's in control of whatever functions um that you're say hey this is already compromised is that going to affect us in some way I think that's a good

starting point but the amount of builders who still trust whether it's because of convenience or ignorance that like their hot wallet is going to be able to do some administrative tasks on their platform it's amazing to me it's like every single week it's the same story over and over. Somebody gets their private keys leaked. >> You know, you go on a Google interview with somebody >> or something like that. Oh, >> I can't. They sound like Kane. You're like, "Oh, maybe it's my connection. I got to download this software." And then, >> you know, it's crazy. I I used to um when there was like a lot more DeFi protocols. I would always just do the Beefy Finance check. There's like this

different things that you have to do if you wanted Beefy Finance to integrate you. And the number one thing was okay all admin functions need to be secured by a multi-y pretty simple >> and so I maybe it's just me and Wesa but I thought the standard was multi-yix always for admin functions always >> it is but then but you know like complex systems like this is you know there there's there's a there's a concept in like complex systems like a normal accident right um and you know you have all of these like fail safes and in mitigations, but you know, you're running a nuclear re reactor at Three-Mile Island, right? And one day there's like a mouse or something and

the guy's like, "Ah, I'm just going to prop the door open, right?" And they prop the door open and then the air conditioning fails in that room because it can't [ __ ] switch on. There's like something that the temperature goes and then it's like this cascading thing where like all the fail and you know if you have a complex system uh that's running for long enough right and people are involved entropy just gets you right and I'm sure that this like price upkeep forwarder thing was like probably not set up the way that it is now and someone's like tweets something like I'll just put this as like an interim solution then we'll replace it and it's only going be a temporary thing. I'm just going to prop the door open

overnight just to let like like make sure that the mouse doesn't [ __ ] get in or whatever the hell the problem is. Or like there's birds in there. I think three Mile Island there was like birds were pooping and so they're like ah we're going to like put this sheet here and then like >> Yeah. >> meltdown. Yeah. Yeah. Yeah. Like like it's you know humans go ah like what could this great be here for? It's like, oh, that's the water slooh grate that like allows the water to come in and cool the thing and you're like, like you don't know and you just cover the grate because you like want to stop the bird poop from getting through, right? And here we are.

>> Yeah. >> So, like I just It's so hard. So hard. It's so hard. >> It's Yeah. And you have to you just have to be disciplined. And this was a case where and maybe I undersold it a bit, but like the private keys that were compromised, it was like those controlled the forwarder or the oracle or whatever, which then right it wasn't it wasn't like the the hot EOA that had all the money in it where you could just get Yeah. Exactly. Yeah. Um, >> but this like but this I'm sure that connection just wasn't connect like you know it's it's just the other thing is right like it's one thing you're running a complex system right okay cool um you're dealing with entropy right but you're not probably dealing with

adversarial humans that are like sending an email to the maintenance guy being like hey there's birds pooping like cover the great right because they know like literally that's what we're dealing with, right? Like is like, you know, like it's it's an it's so much harder when you have like people that are like getting the schematics for your nuclear reactor and they're like, "Okay, I think I've found like one flaw in this system where if I can get someone to like flick this light switch at the right time, then the whole thing melts down." And like that would never happen. But like you have humans that are like actively probing and like trying to like break in, right? And and so like therefore the

level of defense in depth that you need is just so much higher because humans are smart. Those North Korean guys are smart. Unfortunately, >> it's so hard. I actually kind of think about it as like think about all of the times that your information gets stolen, you know, from like your cell phone provider, your TV provider, your, you know, whoever you gave your information to to, you know, sign up for an account somewhere gets stolen all the time, right? And for us as a builder, it's like, well, that's just data. Like, somebody's stealing your data now. It's sensitive information. Somebody's impacted. They go, hey, I'm sorry. For us, it's like, hey, uh, you know, we made one little error.

>> $25 million. Come on. >> Yeah. >> Yeah. It's it the the amount of like blood pressure rising that you get as a builder in this industry. It's like every morning you wake up, you check, you're like, I hope nothing bad happened. you you know your whole concentration is >> yeah your whole concentration is focused on security like making sure that people don't lose money we never lose like >> you're you're basically thinking about like how is somebody going to attack me at all times right um but there's always something you can miss and so you you have a lot more tools I feel like we have a lot more tools than we used to >> we have a lot I'm always feeling hyper native to everyone for some reason >> but there's just so many tools that are that we didn't have before

>> I also think like the the code's getting better. So like in general we're seeing a lot less I think code related bugs that are being exploited and it's a lot of just like human error private key management sort of related issues. >> Yeah. >> Which I I guess is good right because it means like at least the code level strength is getting better but still we got to figure out like how to secure our system better. >> Yeah. I mean in theory for me in theory the private key like admin like feel like it's solvable. We've actually seen like the centralized exchanges go from >> it's like well yeah but we have to actually execute >> once again um where the code ones I think often felt like really like

impossible. But I do think that's why crypto in general has spent way more time and energy trying to solve the quoteunquote unsolvable like these crazy like logic vulnerabilities in the code >> and they were like because yeah infra like basic opsac is solved but it's actually not solved like the majority of of money loss this year so far has been basic basic >> um and so it's yeah it's not that it's it's not that it's unknown how to solve it like we know how to solve it but we completely failed to do so again and again and again. Um, and

>> yeah, what can you do other than sigh, right? >> We know the illness. We know the medicine. It's just kind of we refuse to take it. Uh, >> yeah. Nor sitting in the bath last night after tracing for like literally eight hours. I was sitting in the bath and I was just like, "Oh my god, I can't I can't believe I did that again." like like it's just it's exhausting, you know, and you and I think the worst thing about hacks is that once you're h like once the hack happens, like once it it [ __ ] goes, you're just sitting there responding and trying to mitigate and trying to do literally anything after the fact. And there's all you can spend so much time and energy at that

point. You can go all in. You can you can literally sit at your computer and raise all the funds and make phone calls and right pull favors, do all this stuff, but at the end of the day, like none of it really has a huge impact, right? Like we got some funds frozen, but like nothing huge. There's just not like And then you're like, "Wow, we just spent so much energy. So many people's lives got upended. The builders, right? These guys were building. Now they're [ __ ] the users.

>> Yeah. >> Right. We're gonna have to figure all this out. >> So, this is this is the this is the funny story, right? Um so, so Alium uh we had a synthetics event in New York uh in like 2021, I want to say. Um and uh it was like I want to say 1:00 a.m. or something and someone was like, "Oh, hey, like uh these kids want to meet you." And I was like, "Okay, cool, whatever." I was like, "I'm kind of off the clock at this point." like I've done my meeting and greeting like I'm I was probably like high on ketamine or something but but I was like yeah sure whatever. Um and so these three uh there must have been like 18 19 they were like super young uh kids like front up and

they're like hey can we ask you about synthetics and I was like it's like 1:00 a.m. but sure like whatever. um and then proceeded to have like I swear to God like a 90minute conversation about like all of the mechanism design whatever like why we made decisions that we did. Um it's now like 2:30 in the morning. I'm like can I just go and have fun like please? I was just like let me live my life. Um and they're like I was like what's your deal anyway? Like why are you guys so curious about this? I'm like oh we're building a like derivatives protocol and it was the Osteium guys.

And I was like, "Oh, cool. Good luck with that." And I literally said to them, I was like, I was like, "Honestly, if there's like one like piece of advice, because this is 2021, like probably again, I want to say like mid 21." I was like, "Honestly, my advice to you is like don't. >> The amount of pain and suffering that you're going to go through if you do this is like it's just not worth it. Like, do something else with your lives." Like, >> it's so [ __ ] painful to build in DeFi. Like, you have no idea. And like then and like I've met them multiple times and like we still talk about that conversation where you're like don't do this and like we did it and look at how well it's going and it's like uh

>> I mean not >> you have to do it uh out of ideology like if we're here >> we do it because we fundamentally believe this is happen. Yeah. This is this is why I think this is why like these incidents just like pain me so much, right? So that's 2021. I think they like officially launched in early 2022. Okay, >> after ignoring By the way, stop ignoring Kane's advice, guys. That's the lesson of this episode. Kane is always right. >> But they did, right? They [ __ ] said, "No, [ __ ] you, Kane. We are going to [ __ ] launch this [ __ ] in 2022." They launch, >> they build it up. They survive. They I'm sure it took an immense amount of effort, right? The 2022, 2023, 2024, 2025, and halfway through 2026, they

built all that and then one freaking mistake and it's gone. >> And like hopefully they >> were my neighbors. So we had another office before this um very famous like office. A lot of people are there in crypto and literally my neighbors in front of me. So I could see Kdor in her meetings every day. Those guys work super hard. >> Yeah. >> Um and so it's a shame all that work. >> Yeah. And it's >> I mean like they might they might like people recover from worse hacks. Like it's possible that they they recover. Um you know especially when you got that long of a track record, but it's really hard. It's really hard. It's going to be,

>> you know, like it's it's, you know, like the Oiler guys, like it took them two years to grind their way back and, >> you know, it's going to be >> that had a major hack and they came back. Well, >> hack, right? It was like the Kelp wormhole. >> Wormhole helps if you've got billionaire friends to >> Yeah. It also it depends a lot on like timing. It depends on the team. Oiler. I mean, Oiler was I would put Oiler in a league of their own. They for one, they managed to get the money back, which is super rare, but that was like, >> yeah, >> I still don't know how Michael did, but like he did. It's it was that team was >> assassins.

>> There's like it's the ownership over that >> like they got [ __ ] right? And the ownership over that team to like be like, "No, we are not accepting this outcome. >> We don't accept this." I know. I I remember talking to Michael and I was like, "This guy's like insane." Like after it happened, right? Like we were we were talking about it like maybe like >> two three weeks later and he's like, "No, no, no. We like this will not stand." >> It was like it was like the it was like the taken guy, right? Like it was like I've built up a you know set of uh [ __ ] skills over my career. I'm going to I'm going to hunt these guys down.

And they did. It's nuts. It was No, it literally and that energy rubbed off on I mean I I worked that case for way longer than I would work any other case because I was like, "Oh, >> but you like these guys are all in." >> Yeah, they're all in. They're all in. >> And I kept looking. >> They remember they had the whole language hack or something like there was a hack, but they found the money almost immediately. Hey, did you did you like participating? >> That was that was a Viper bug, which was that was >> That's what it was. That's what it was. I was Yeah, that one was That one scared the [ __ ] out of me because I was like, "Oh, you can have lower lower level bugs." [ __ ] >> It's like, "Oh, Jesus."

>> Compiler bugs. That's That's Now we got a whole new we got a whole new problem to deal with. >> Yeah. >> All right, let's wrap it up here. Uh we're way over. Um thank you guys. appreciate you jumping in. This was this was really fun. Um despite the uh New Zealand induced uh or maybe vibe coding induced. I don't know. I don't know if I blame my machine or or the country of New Zealand. A bit of both. Um but yeah, uh thank you very much for jumping in. Um it was a great episode. I really appreciate the time. Um thanks everyone for joining us for this episode of Uneasy Money. Remember what happens on chain never stays on chain. We will be

back next week. Until then, do your own research before aping in. Nothing you hear on Uneasy Money is financial advice. We're just three builders talking about what's happening on chain, and we want you to always do your own research before aping in. You can find all our disclosures at unchaincrypto.com/unemoney.