ZKPodcast: Sushi Beyond the Fork with Joseph Delong

Transcript

[Music] welcome to xero knowledge i'm your host anna rose in this podcast we will be exploring the latest in zero knowledge research and the decentralized web as well as new paradigms that promise to change the way we interact and transact online this week james and i chat with joseph d long from sushi we talk about working with anonymous contributors the evolution of the sushi project from a fork of uniswap to a full-fledged ecosystem of products we also talk about the recently discovered vulnerability in the miso contracts how this was caught

and mitigated and what's next for the project but before we start in i want to highlight something for job seekers in the space if you're looking for a job you want to jump into the zk world the next zk jobs fair is happening on september 30th this will be our fourth so we host these on gather.town and they are an awesome way to get to know the teams that are hiring in a very casual social virtual space so if you're looking for your next job be sure to get your application in i've added the link in the show notes and for potential hiring teams we still have some booths available so do get in touch by emailing sponsorships at xeroknowledge.fm in general i recommend everyone checks out the new website it's been up for now

two weeks and i'm pretty excited about it and the updated jobs board i would also like to thank this week's sponsor centrifuge a real world d5 project centrifuge puts real world assets on the blockchain allowing issuers to get liquidity on their assets and investors to make a safe stable yield in the volatile crypto world it's built on substrate and so centrifuge also is bridging the ethereum and polka dot worlds and speaking of jobs in the space centrifuge is currently hiring for a number of positions this includes senior rust engineers senior full stack engineers security and devops engineers as well as a general counsel head over to centrifuge dot io careers to learn more so thanks again

centrifuge now here is our episode all about sushi so today i'm sitting with james and joe dilong from sushi swap welcome to the show joe cool thanks for having me hey james hey anna it's good to be back glad to have you back so joseph joe this is the first time that we have you on the show but it's not the first time that we've been talking about sushi swap on the show last year right after sushi swap first launched and actually right before unit swap token launched like in that little window we did this episode this two-parter three-parter rather with hassu and

tyrone and uh it's a really cool episode maybe just the primer that early you know story of sushi swap so i'll put that in the show notes but i'm so happy to have you on the show because i feel like you're gonna be able to fill me in on like what's happened in this crazy project since then but before we do that let's hear a little bit about you you've been in blockchain a lot longer than just your work with sushi swap i've i've known you from conferences maybe for like three years so what were you doing before sushi um before sushi i was doing ethereum two research for consensus we had built out a team called txrx research i was working on cross shard transactions

research regarding that and the team was working on a smattering of of research topics that pertain to e2 before that i was helping build the tecu client which is the java implementation of the e2 client built by consensus all right were you working with ben actually yep yep ben almost fired me like a million times oh yeah he's awesome but i was like got a little crazy on twitter a few times once in particular with charles hodgkinson and then another time with some other people getting crazy on twitter is part of the job now right feels like it yeah

i enjoy it what kind of made you step away from that like that's an exciting field of research like what made you decide to move more towards like a dap or dex i've seen a lot of people make this jump from protocols to dapps i feel like working on a working on protocols is similar to maybe doing like military service or something right it's like something that's not incredibly glamorous but it's like something necessary and the risk reward is you know relatively balanced relatively low um yeah and so like um maki asked me to join sushi and i had been kind of participating in all this like defy summer stuff and

it intrigued me to get into d5 especially you know as james will know this mashup of kind of where defy space meets protocols is pretty interesting as well when was that like you weren't part of this first team that we were talking about last year on the show i don't think so yeah at what point did you did you start to think you might be joining yeah it was um maki called me december 27th and i was with my family uh my extended family for like you know around christmas time we were in like an airbnb altogether and i kind of liked it it's like kind of sexy it's a little risk on you know and i had been a sushi farmer supporter community member

and i had talked to maki a bit and respected his leadership style and work and i thought that it would be a great opportunity what was sushi at that time like in december maybe a little backstory about it too like it had it had arrived as this fork clone of uniswap had at some point like gathered a lot of the liquidity and then there was like uniswap launched a token liquidity was moving back and forth like that's where i know the story that's that's like what we covered i actually don't know anything since then so yeah what was happening maybe from that point to when you joined sure i think that's probably a good

place to pick up because kind of the this fork novelty had worn off but the team had huge potential we have like this this is not biased in any way we have the best like development team of any protocol out there right now um and when i arrived we had really solid team at that time as well and really i saw like a lot of potential and just wanted to help in professionalizing the organization helping with architectural direction but also um moving it from kind of like a rag tag team of like outlaws to you know

like a legit d5 project how big was the team when you joined um six okay how big is it now it's like 24 okay cool all that is like most of it is like organizational structure they kind of already had a pretty good thing going and i just wanted to enhance that and i think we have been doing pretty good ever since we still kind of lag behind in some of our hiring i'd like to be hiring maybe at least 12 more developers across protocols front end smart contract developers but yeah i think we're in a really good place right now that's a lot of developers how do you work on

like project management with a distributed team of you know some semi-anonymous people um yeah there are some challenges i would say particularly like ownership of like repos and what kind of access do you give somebody but once they're on core there's a relatively high amount of trust that we're not going to kind of get like poison pill commits or anything and so there's like a huge amount of trust um we kind of do like we'll do team of team style and development for instance in trident we have a smart contracts team we have people working on front-end design we have people working on front-end implementation

we have people working on the routing engine and they're all kind of broken up into teams but just kind of cross-communicate in between each other are there a lot of anonymous like mackie who you mentioned there is kind of an anonymous character online do you know your teammates or do you actually work in like an anonymous state together one of them one of them actually told me i thought he gave me his real name and one of them just told me is like he's like it's a made-up name and i was like of course of course it's a made-up name chester lacroix how could i have not sounds like the name of a jewel thief you know that's good so yeah but do you know your

teammates for the most part yeah okay not as well as you might think though yeah there are a few anons um there are a few like pseudo-anons i would say what would you use then to kind of gauge that trust like maybe you're using a different metric than like seeing their face knowing their name what is it then oh yeah i talked about this a few times is like this like what real professionalism is real professionalism is not suit and tie or you know having a nice email signature real professionalism is committing to doing something and then doing it being accountable for your actions being a good co-worker being a good leader being good faller that sort of stuff i think that is real professionalism and i think that trust

is built up on a basis of exhibition of real professionalism do you use though like any back kind of like maybe previous commits something like looking at their github or any of the other behavior maybe you saw especially when you're thinking of like hiring someone who you will never like you won't know their name you won't be able to check their cv necessarily what we'll do unless it's somebody who's been working with the team already we'll typically kind of like pick the best people that we've been working with to come join core if we have a need that we really need to fill what we'll do is we will find someone who fits the role approach them and ask them to kind of commit either part-time or full-time for

a month um and then we just kind of evaluate their performance this is a great system but it also is terrible for the person who is like maybe has another job or has to live a month you know not knowing that somebody's going to commit to them and so i would like implore the world to find a better system than that because it's hard to judge people that way but don't you feel like when you're hiring james you probably like you're taking a risk you're gonna put in time and effort and you you're sort of it's like both sides are constantly trying to mitigate the risk they're taking you know working in this space at all is very risk on we're all you know doing extremely risky

things that might not work out all the time taking a risk on hiring someone generally is one of the safer things we can do the big risks that i feel like i'm taking and i don't know if this is the same for you joe is is this product going to hit the market and are people going to use it yeah i think that's a risk like especially with kashi we found that we were like everybody's going to use kashi right away and like it took us you know two or three weeks even with rewards to get 10 million dollars in tvl on kashi maybe like one two weeks and is kashi a uh lending market yeah it's an isolated lending market so you can just the way that you design amm pools now i pick token a and token b i can do

the same for a lending market i can pick my lending token and my collateralization token would you only release this each time as like a single pair uh yeah but but you can design any pair that you want right so it's kind of like a permissionless system where you can design those pools and the reason that we do that is where you have pooled lending like on ave or compound there's an inherent risk of any particular like essentially by by lending or borrowing you're taking on the entire risk of any individual token that's in the platform because if there was a failure to liquidate the protocol itself becomes insolvent and by doing risk isolated lending essentially that risk is isolated to that individual

lending pair so if you want to play it out you have compound you know at one end of the spectrum where all of the tokens are in the same pool uh you have rory kind of in the middle with a bunch of different pools with different token combinations and kashi is the other end where each pool has exactly two tokens exactly yeah and permissionless too so you can just create your own pools which is great for you know betting against new tokens who uses it like is it teams that would deploy this themselves or is it individuals deployment within an interface that you've created i think it's more individuals we have had some teams like the fey team and the rye team reflexer labs have uh have approached us

and specifically wanted to do lending markets our plan long term is to basically for for each lending market we need to integrate an oracle and that oracle allows you to tell when to do liquidations and kind of like the utilization rate etc to determine when what kind of like elastic rates you charge for the lend so right now we have chain link integration we would like to enhance that we had started but there was a really bad user experience to integrate t-wap oracles but generally that's the direction that we're headed is so that kind of as long as there is a an amm pool you can lend against something or you can borrow against something so i always hear like chain

link integrations but i don't know what that means is that like you're pulling or their oracle data somehow maybe you've decided to but where where do they get their oracle data like why would you trust their data more than you i don't know like something else so this is um this is a kind of like uh out of simplicity t-waps require uh two snapshots and uh chain link will kind of provide a price feed and so we're relying on like this kind of centralized like authority um to say you know what the price of token a or token b is long term we want it to be kind of like entirely permissionless so just looking at other amm markets but there are also

other like security considerations right like depth of liquidity volatility that we can't really get a good read on on chain whereas like chain link kind of like handles much of that they kind of say the market size is this and there's a good enough liquidity so we're going to provide a price feed but the other way where we're going to use like some t-wap oracles as well to create markets has like positives and negatives the positive is that like i can create any market that has an amm pool the negative is is that like it can get really degenerate really fast you had mentioned something a little earlier in this episode as well trident but i don't know what that is either so and i know that there's like a few

products that you've created this year so maybe we can go through some of them maybe trident's not a product actually i literally have no idea what that is no that's that's perfect i'm glad you asked okay yeah this is like actually some like critique that um dc investor made the other day like we have we get too cute with the names and that and that like that becomes complicated you know if you're talking about an ipod or an ipad like people are going to learn those terms but for like esoteric like lending markets or or capital markets it's kind of like a little bit like i don't know that you could stay cute with the names but um so we've built a few things this year mainly bento is like kind of our like i would say our major development bento is a strategy vault that is also

an application host and so tokens come into bento box those tokens are taken and exercised in strategies and then a virtual balance is made on top available for applications that you can build like kashi like trident etc when you say strategy vault are you thinking is that like yearn strategies is it sort of similar to the idea that like you put money in and behind the scenes like there's all sorts of mechanisms happening with your funds you don't have to know about it you don't care about gas prices is that what you mean when you say strategy vault totally yeah so so that it goes into the vault and then there are strategies that are attached to it right now we only have a compound strategy but we're adding an ave one and

we're um adding like we're integrating with urine more deeply as well but basically those tokens that you deposited into bento are then like getting exercised in the best yields and so um up to 80 underlying of any particular tokens and so this allows us to build applications on top that have access to a virtual balance which is acclaimed tokens underlying so kashi well maybe like you you deposit your collateral and that collateral isn't being used that collateral is actually taken and being used in a strategy underneath oh wow yeah and you said other protocols could also be built on top of bento so it's kashi was this two like the just a

very narrow lending two sides yeah i selected two tokens isolated lending sorry but what else could be built on that um so we we built our next amm uh trident on top um okay there we go there's trident yeah so trident is another application on bento box and um we built a lot of different features into this but like consider this right i'm an lp i'm an lp on sushi right now and we're using kind of v2 contracts and my underlying collateral is only used when a swap happens and then never all at once so if you think of like the uh capital inefficiency of that say i

have 50 markets with eth in it and in terms of vola in like let's say tvl for eth is a billion dollars like in dollars for that e at any moment there are probably 20 million dollars worth of swaps actually occurring and so 880 million dollars of that eth is no sorry 980 million dollars of that e is and that's hard is is being underutilized and so that up to 80 so we would take 800 million of that underlying eth and that would get invested into a strategy and then the other 20 would be made available as like cash on hand for the

swaps that are occurring but the swap pool would behave as if it had the entire amount exactly uh so it would give you the lower market impact implied by the higher amount but it would only have immediate access to a small proportion of that the rest is invested earning returns yes but if you think about it if you spread it across the entirety of the market right the way that we had engineered bento box it kind of like coalesces at the base layer and so if you think about it in the entirety of the market right let's say that we have a billion in tvl of eth right and then there are 800 million invested how many trades are going to happen that occur that are

going to be more than 200 million dollars in each right it's like the price impacts would blow you out anyway and so like that that 20 is is immediately available and then once it's been withdrawn like let's say that i i am a crazy whale and i have 250 million um in eth locked in bento and i trade for 200 million then rebalance is called onto the strategy and that returns another 20 and it kind of creates this inverse log curve of withdrawal and so i can do i can do 200 million and then like whatever the next 20 comes back and then i could do i can withdraw my 50 million so you may have to wait a little while until like compound has the liquidity to

give you that cash back but you're going to get your money back relatively quickly um like in almost 100 of the cases you will be able to have access your money instantaneously there there are only a very like narrow set of circumstances and they're a set of whales who will not be able to access that instantaneously yeah uh i don't know about you but i'm not checking around a few hundred million dollars on sushi swap this week yeah right yeah me there man well we were when with the uh miso you know but yeah huh oh okay so here's another one miso yeah you just mentioned another thing they all they tend to have themes although what is trident like

cashy bento okay the naming is there but trident yeah yeah is it like the gum or is it like the that's the fork exactly you you fell onto it right like so that we got a lot of um for being a fourth like a lot of and and kind of like we spend a lot of our a lot of our time like getting bullied on twitter about being a fork by like people who are bag holders of other projects and so we just decided to kind of like lean into the fork narrative um as a joke and krypto cobain had kind of i don't know he kind of like made this joke that like the trident is a fork if you think about it yeah and so we kind of like thought that was

going to be a great name for the new protocol trident yeah is trident a three-pronged approach though are there are there three strategy prongs to trident or is it just about the fork the metaphor stopped somewhere yeah it's a it's about a fork right but like um so we we built trident as a um as kind of like an amm factory and all of our pools uh conform to an ipool interface so you can implement any pool type that you want and add it to the master deployer and then now we can route to it so you could have several different types of pools following the same interface uh something that's more like the

traditional uniswap pool or something more like a curve pool or a balancer pool so we built four uh different types um we built like a v2 like or like standard traditional constant product pools and we built a concentrated liquidity as well that's like comparable to v3 in some senses we also built a stable swap pool that permissionlessly allows you to add up to 32 pairs so if you want to go from die to usdc like something like that that's a stable swap ran btc to wbtc that's a stable swap where they're like the the equivalent exchange is expected not to have a

huge like price differential and that's similar to like curve and saddle yep exactly and then uh weighted pools then we built all those uh weighted pools would be similar to balancer that's right yeah i'm trying to figure out all the like analogs here that you can compare things to to understand sure you you got to understand that like i want to keep everyone's name out of my mouth you know so uh i'll say them for you okay thank you um so tried it tried it we also built this uh routing engine called tines and tines allows us to go kind of like multi-route and multi-hop um nested and so since we have like these

different pools that different tokens succeed at for instance stables um tend to succeed at these stable swap pools coins tend to do really well in like v2 style pools majors 10 blue chips tend to do really well in b3 style pools we wanted to be able to have the ability to kind of compose that in such a way that would give you best prices oh so the benefit of the ipool interface is that the tines routing engine can you know look at each pool use the same interface to access them and find the best route across many different types of pools and it takes into consideration price impacts gas map topology it's a pretty

rap oh fees too of course very cool uh so the tines is you know roughly equivalent to like all of these other dex aggregators but it works within the trident ecosystem yeah totally and it's cheap it's gpl3 so if anybody wants to fork it and use it for their dexag or something else like we're happy to see that as well great all right so now miso yeah miso is our ideo platform it's like a token launcher platform um okay and what does ido stand for um uh good question investment decentralized offering maybe oh okay

that's a like i've only ever heard it um as uh initial decks okay all right there we go there we go one i just i just googled this it's initial dex offering yeah that's that's what they call these platforms i actually hadn't even ever thought about it but like you know polka starter et cetera there are other um and this is a token launcher platform that we built that allows you to do dutch batch you know just like a regular token sale and looks like we don't take anything up front it's completely free you just can launch your token from there right now we're kind of like in a gated launch phase but the idea long term if we can figure this out is to have it be completely permissionless very cool

is there any equivalent to this in uniswap like i know tokens were launching themselves in unislop kind of no they don't do this you wouldn't call it an ido launching there yeah no they don't have an ideo platform like we're kind of like expanding horizontally and i don't necessarily see uh unit swap as our competition okay that was actually a question that i had i i i know that there's more products so we won't move away from that but that was actually a question of like nowadays a year later i mean it sounds like it's very very different from you to swap i guess you don't consider them competitors but do you still get a lot of comparisons yeah

totally and that's that's fine right and i think uniswap sees us as competitors as well but we really just want to have kind of like the best defy experience for everyone with the best access to lending and swapping and tokens that are being launched i mean we had to stay competitive on the basis of like how our pools were um they just like did price impacts were too high capital efficiency was too low but we're going to see a 2x capital efficiency over unit swap if not more depending on like what the rates on the strategies are you know you said a little earlier that you were horizontally expanding you're moving out into

different lines of business uh but it kind of feels like you're looking to assist with the entire token lifestyle kind of go with a vertical expansion you know you're starting with miso for ido's uh building liquidity in the swap pools and trident pools and moving into vaults and lending for the same tokens are you trying to like build out to get the entire life cycle of new tokens yeah i think so um we have been working on some other like interfaces that allow you to if you're launching a token to kind of like have like a shopify like experience before the like token launcher it's like i have to launch my tokens maybe i want

to have incentivized pools i need to launch pools i kind of like want to manage that i want to manage a treasury those are the kind of problems that we're approaching and we'll we'll have those more deeply integrated i think post trident launch interesting let's finish with the products that you have because i know i have at least one more on this list which is like x sushi is that one of yours would you consider that a product um yes uh it's a very early one like you take sushi and you stake it into ex sushi which has kind of a one-to-one exchange each time that harvest is called on the fees

that were collected from the amm they're collected and then swapped for sushi and then deposited into like this ex-sushi contract and so you deposited sushi and you essentially can withdraw more sushi it's not like a flash loan though no i mean we have we have flashlights too oh god what do you call them we just call them flash loans but they're on bento okay okay okay we we have we have a lot of products i think that is a lot of products we talked about growing the team a little earlier how many of these products existed last december when you

joined and how many of them were built out by new team members and how many were built out by outside contributors and then adopted into sushi so we had bento kashi and miso those were in the pipeline so to speak bento and kashi were co-development between sushi and boring crypto and uh miso was a co-development with chef gone patchy but really it took a lot to get those across the line i think the initial estimates for bento and kashi was november and i joined in january and they weren't done and we weren't done

until like march yeah and then miso was just really launched in may so maybe like five or six month differential from what we thought but trident is kind of like an all new design and i feel like a majority of the trident team has been hired after the fact after that initial team we have working on it we have moody sarong gasper kino david like dude we have yeah we have a decent-sized team that were not there before so when you described your role as uh professionalizing the team and you know adding structure i guess a lot of that was taking these

products that were in the pipeline and making sure that they get across the finish line and out into the world is that about right um no for like professionalizing i just mean like kind of helping to encourage a work environment where it would be because i've been at crypto startups there are a lot of shitty ones out there um and in terms of like toxic environments that's something that i i focus a lot on in my life is once you create a toxic environment let's say that there starts to be an overactive amount of misogyny or sort of like hr problems you can create like a really bad culture and we they didn't have that problem by the way i'm

just saying like kind of helping guide them to a place where they could have a collaborative culture that was like what i would deem more professional just make it a regular business right like why does it have to be some dao blah blah blah just like we've been focusing on the same human problems for like the last like you know the first cuneiform uh letter is about somebody complaining about the quality of copper uh of like a supplier that paid it to him right like these are the same problems that we've been dealing with since the beginning of humanity and so just like because we're a dow doesn't mean that you can act crazy right being a dow just means we're more like um a decentralized company

so your your opinion here is it you know it seems like you're saying that we don't need to throw away 10 000 years of human experience in order to uh work on cool decentralized things yeah totally and it also sounds like just because we're at the cutting edge of something doesn't give us the right to be yeah it's like cowboy it's like cowboys you're like you wanna you wanna you know shoot the guns and be bad yeah but i think we're all just for fun but like that i mean this is like this touch is actually something really close to me it's like if you look at the like let's say the ethereum foundation for example like how many of those like

early founders like vitalik and how many of them were like charlie yeah like it's like trying to find out i was waiting to see who he's gonna say which one do you pick it's like who's that there are so many choices though yeah just because we're out there on the edge doesn't mean that we can't act normal we should like we should treat the people that we're working with the same way that we would treat a co-worker the idea that we're just not in the same like dimly lit like fluorescent building doesn't mean anything you you think we've gone and uh thrown the baby out with the bathwater on this one yeah totally i i think i agree with that so i one thing joe is there any other

products that we did not cover so far you said there's a lot oh there's show you show you is an nft platform we've been working on yeah ooh i actually wanted i had a little nft question coming up so maybe we can explore that one of our uh developers kind of like wanted to work on on an nft platform and so they kind of like applied for a grant and got one and um they're currently building it out i think we're gonna see early alpha next next month sometime and yeah that's that's gonna be great like creating swapping a good space for artists just all around this past week when as we're recording it

sushi was in the was in the news the crypto news again but not for the fork and not for product releases but for a a found vulnerability i think this episode will only come out in two weeks and i know this is quite fresh for you but i would love to hear kind of well i actually i want to understand like which product first of all was this in and what was it exactly so it was in miso which is our ideo platform our token launcher platform and this occurred during the bit dow sale so i see yeah bittowell sale sold 350 million usd worth of bit dial tokens and that was what was at risk

luckily i get a dm from dan robinson shout out that says you up and then i got another one from uh georgios from paradigm and like keep in mind this is on the heels of me just like absolutely publicly eviscerating them for what i i deem to be self-dealing for paradigm and and one of their l2 platforms um and so yeah like fate loves irony uh of course and uh these are the folks that we're gonna save you you didn't know yeah what happened um i think i it gets a bit wild on twitter i think um but yeah so they they message me and uh sam

um sam cc's son has found a specific vulnerability in which our message dot value can be utilized more than once using one of our batching methods like this is why everybody says use weth and not f the reason being is that we have a uniform interface if we're all using erc20 and in this instance it does not and so message.value you make a deposit and message.value can be used multiple times and that would be great it actually wouldn't matter right they could like they could buy a bunch of the token and they would just be stupid but bit dow would just issue a new token and say whatever sorry like because this is an initial launch so like we're not talking

about something that is already like entrenched but we also had a refund method that allows you if you over commit to withdrawal and so you could over commit like the entirety of the e increasing your balance and then you could withdraw at the end and this even could go after the auction was closed uh before the auction was finalized uh so the net effect is that you could steal the whole proceeds of the auction yes wow would you have had to do this in batches or could you do this in like one or two is this like a funneling is it you have to deposit take out deposit take out or is it like you could have done it atomically yeah like as long as

you were inside the gas limit wow yeah pre pretty much sucks yeah it was a pretty stressful day but it didn't happen right like this what you're telling is it's a it's a vulnerability not a exploit right so yeah all the funds were safe but like the thing is about like vulnerabilities is like it's information asymmetry it's like if that information is to get out the fact that anybody knows it right like somebody discovered it and then they they approached us but the fact that like it if there's any information leak on that like it could be exploited and so we're kind of like sweating and looking through like mitigation efforts are

with help from like our partners that you immunify and paradigm and so we're like looking at mitigation methods one of the ways that we could have done it first one was just by the rest of the round right and call it a day and then have them finalize the other strategy was a white hat attack where we become the admin for the auction we take a flash loan to commit the entirety of the remaining then finalize the auction and this is a great strategy i think it's like a nice happy medium there are problems with like accounting that we need to sort out in the end but the the problem is is the information asymmetry still

is we need to get admin from bit dal and you don't want bit doubt to know about the vulnerability no we don't we don't mind that they know about the vulnerability but we want to wait to the absolute because like people don't know how to deal with these situations we want to wait till the absolute last moment to reduce the probability of information leakage so we build out this white hack takes about two hours then we approach bit dao and they say um we don't like this approach we would just like to um ask some people who are going to contribute to this auction to like who are already planning on like participating

to participate now and then we will cover the maximum because dutch auctions end once you reach like a maximum price they will pay to the maximum price and then they will call finalize on the auction and that's what they did they put it together bitdot was great they did it in like i want to say 20 minutes something like that like they got the commitments together had the committers commit and then finalized the auction like very quickly but we we needed to have the white hack prepared because we couldn't really approach them because like then we would cause like more information leakage yeah so there was still one vulnerable contract we had um yeah ncg um so that

ncg auction was coming and that was the only other active miso token auction luckily it was closing in four hours um by the time that we had resolved the bit dao auction there was maybe like two hours left for ncg wow so it wasn't it wasn't just going to affect that that one that you had sort of found it for but rather any that had already started at that point did you stop at that point like the chance for anyone to like launch another one oh yeah definitely like that's that's the first thing we told the pm was like no more no more launchy of options please um but so like only east-based auctions were vulnerable because it is like

wrapped around this message dot value yeah so we we did have a concurrent one that's actually still running that is another bit dial auction but the sale is in sushi which is an erc20 so we're totally fine but ncg we kind of had to keep quiet even after we had accomplished what we needed to with bitdow because this same vulnerability existed although to a lesser extent right like we're not talking about 350 million dollars we're talking about like eight like something that like a sustain a loss that sushi could sustain the other one is like the end the asteroid hitting the dinosaurs do you think uh if there had been losses

that sushi would be responsible for those i i guess like the the question behind the question here is you know we we go through a lot of effort to try to get assurances on these contracts i know that you went through audits and i did some informal review of miso and multiple teams and individuals failed to catch this what is the right way to handle user losses in these sorts of situations because we obviously can't prevent them yeah um like we we had two audits and we had a formal verification which like formal verification is supposed to be like a lot more like assuming that it's complete it's supposed to be like robust

and then we had informal audits right we had people like review it i wasn't gonna blow you up james but yeah like james like helped us like yeah to blow myself up [Laughter] even when we were talking to some of our auditors some of them were like hey you know sorry we missed this it's like i mean you know so did we right so did everybody but back to the question which is like how do you deal with one i feel a sense of responsibility for that sort of stuff right like i would want there to be some amends but you know the sushi treasury is much less than 350 million dollars so what do we do do we inflate all of sushi to to pay back these

stolen funds or i just don't know and so i think long term this is this is it like everything in the world is vulnerable that's why they have cyber security insurance that's why you have car insurance even if it's self-driving it doesn't matter right like something a tree can fall on it everything can fail in some sense and so everything in this world is actuarial risk or memes and um this is this is you know the the former do you think the space is going to move towards ensuring this kind of risk in addition to getting audits and what's the what's kind of the role

of audits versus insurance in the future i think audits and formal verification will be a way to to underwrite the insurance actually i come from the insurance world worked at usaa for quite some while helped them build some blockchain things and some insurance things and the one thing that that our industry is too immature to know is that there's huge risk appetite in re-insurers and so when i insure something reinsurers are like i break off like the most dangerous tranches and i sell them to reinsurers let's say that i have an umbrella policy for somebody that's like a million dollars right my my expected claims are probably going to be less than a hundred

thousand dollars but that like one hundred thousand to a million one that one hundred thousand and one to a million those losses might put my insurance company out of business so what i do is that i i break that risk off and i sell it to a reinsurer and that's how i see it happening in the future i even think like traditional re-insurers like munich re swiss re lloyds of london like i think that they'll they'll have appetite for this sort of thing especially as the expertise grows and we can put an affirmative actuarial risk around something so the the main thing we're missing right now is maturity of the industry so we can understand

the risk better and we can take that risk that we understand and take it to re-insurers or the traditional insurance industry yeah i think smart money will do that and this is something that i think a lot of platforms are asking for and so this is probably the next actual d5 primitive is ensuring protocols as a whole because i would love for sushi to be able to purchase coverage like for this trident launch i'm nervous as you know even though we're gonna have so many um you know audits formal verifications like code contests like bounties but like still there's risk right and so like it would be better to offset that risk yeah to to wrap up this story of this exploit

like has it all been resolved you kind of mentioned you had the the different kinds of ways to mitigate it but what do you do now with that yeah so we're going to improve our contracts the first thing that we're going to do is um disallow eth maybe or that yeah that's that's probably not a bad design um but we should do post checks and that this like kind of this virtual balance of what we say is there and e matches what is underlying in eth we should do that for all tokens i think that that's like a revert check but like i don't think that's satisfactory enough especially because we have encountered like some like intricacies that are not vulnerabilities

per se about these contracts and so we just don't feel confident in the set anymore and so we're going to go through another audit as well as make some like our own internal review on top okay so you're going to kind of like put the product on hold for a bit yeah or like pause this service in a way we're not gonna have any auctions until september so we're gonna we're gonna have time to thoroughly review and make sure there aren't any additional vulnerabilities got it a lot of dexes right now are at least experimenting with l2s there's a lot of daps in general a lot of d5 projects are thinking of having kind of two instances one on the main chain one on the l2 chain sometimes people are like looking

at even other evm compatible chains to potentially deploy to what what is the strategy right now for sushi yeah sure so we're taking this approach of going everywhere oh and so we are one of the you know we're one of the first x's to deploy kind of on all these individual chains we have a huge presence on polygon phantom we have deployments on ocs heko bsc xdi harmony avalanche cello and palm now that's a lot of places yeah so l2s are really not a big deal for us the deployments are approximately the same as they are for our main chain there is like a bit of fragmentation of

liquidity but our current understanding is that that liquidity is going to remain on that chain anyway so it's not really a fragmentation of that liquidity yeah we can't really avoid that i think there's a few missing from what you described like for example you're not like unlike and i know you you've already said don't compare us to uniswap but i'll do one last one so they're you know they're also on optimism you're not i understand that there was some something went down there okay kerfuffle kerfuffle yeah so what what happened was we were excited about optimism we we really wanted to deploy there early in

fact kind of like i think i tweeted something to the effective like whatever the genesis block is will be you will be deployed in the next block and so we helped them early on like debugging some of their tooling um that wasn't working like being one of the first projects to deploy there and we had worked on our deployment it seemed ready to go and we had a call with optimism to say hey you know we're ready to go and they told us that we couldn't go until unifop deployed and we weren't super happy about that especially after we had like kind of worked on their platform and you know sometimes like you one of the things you do is that you

lend your credibility to these early projects and we're kind of lending them this credibility that i guess they just like in my opinion don't deserve um we were getting ready to deploy and basically we had to stop so that their preferential partner uniswap could deploy who wasn't ready we had to wait until they were ready you know that's nice right like but you know we're ready and we want to go and to assert the preference the the problem is is all around protocols actually like there's this idea of credible neutrality for operators they have to be credibly neutral because there's a lot of things that a sequencer or an operator or whatever you

want to call it a block producer can do like transaction censorship etc like unfavorable block ordering like censoring you know like there are just there's a ton of things that you can do yeah in that position and and so we we wanted to like if there's no credible neutrality there and the preference is like what if uniswap says we don't like sushi's contracts right like will you censor them like maybe they will and so we need a credible neutral actor and so that's why we're going to prefer arbitrarium for optimistic roll up and we're going to take a wait and see approach to see if optimism uh succeeds i think that there's they have worse opcode coverage they don't have an on-chain prover there are

a lot of issues there and arbitrary seems ready to go and has really decent opcode support and leadership so i think we're going to prefer that i think it's interesting that you bring up credible neutrality which was introduced in a blog post by vitalik a year and a half ago vitalik and hayden from uniswap and carl from optimism are all old friends do you think that this is a you know example of people not behaving neutrally to you know favor their in-group their friends yes um i say that with an asterisk because this has happened to us with another project that had investment from a16z we had a a better deal for them and they

were um essentially coerced i guess into not launching on sushi um and preferential for uniswap had that never happened i i wouldn't be so like whiny about it but that did happen and we lost um a lot of tvl due to kind of like meddling of venture capital and so my gut instinct on this the first go was that like this wasn't nepotism that this is like something kind of orchestrated because you look at the ones that like optimism is a paradigm a16z investment uh synthetics is a paradigm a16 z investment unisoft is a paradigm a16z investment it's like um i see like it doesn't take like um that much

pattern matching to figure out what you think is going on here but like i know even the names you just mentioned just recently there was maybe not that recently but there was some talk about like the sushi dao potentially or there was a proposal to like give tokens to i don't know if it was one of those vcs or like a bunch of vcs these tokens at preferential prices was it in a way because like there's this feeling of disadvantage because you don't have one of these partners in a way in the ecosystem um yes i think that was the motivation but i would say that i am against this deal and i think i have come out from the start like there are so many like things wrong with it like introducing sushi into this idea of being a security

just like giving a gigantic discount to people that were probably going to market by anyway i just like i've never i've never been in love with this idea yeah what happened to that is that still being considered or it didn't pass did it uh no so it was just a proposal in the forum and on a basis of our feedback from our legal team like we're not gonna move forward with that because it like introduces us into so much risk very interesting you know saying that you feel like you're at something of a disadvantage and that you feel like the shared investors for these projects are one of the reasons they're giving each other preferential treatment do you feel like there is an in-group in the ethereum ecosystem that you're not part of

100 yeah even just like working on these research problems like i'm coming from ethereum research right like ethereum reser dot ch right like this this where we all share information and we collaborate because i was in in protocols before and so like like could you imagine if if vitalik worked on something and then like didn't open source it or didn't make it like publicly available try and make it proprietary it is a really sad situation inside d5 i think isn't vitalik a uh you know notional contributor to optimism and uniswap uh i mean he came up with the idea of amms right like that's that blog post i mean he came up

with a lot of different ideas that he publishes in each research and in his own blog but i wouldn't want them into that like excellent working on protocols with them but like the the point i was making about like research research.ch right is this is this idea of like free and open uh working space i i've tried to work on other like d5 primitives that are coming out that interest me like things that like paradigm are working on but their research is proprietary and i'm kind of like boxed out because i'm like a quote-unquote a competitor it's like okay then we'll fight in the dark or whatever right like the we're fighting the shade that's what they say in uh 300 yeah it seems like for you this is a kind of

about the intersection between ethereum and uh silicon valley the more traditional investment space totally yeah i think so and we're we're moving towards um a future where we're comfortable uh letting go of decentralized ideas so long as it is financially beneficial for me and that is just tradify with blockchains yeah i often get this feeling like i never wanted to work in finance i don't like finance i like this cool tech exactly i mean i feel the same way i remember like sitting like in the car with my wife i i just was like you know what i think i like economics and she's like i

know i was like i thought i was a software developer all this time [Laughter] that's so funny i don't know because i feel like i've been involved in this for seven going on eight years and i feel like that's been the long-term arc of the space is away from decentralization and towards things that capture money let's push back against that like that idea seems really good for business in a short-sighted sense but misses the long-term idea that we wouldn't be here if you know good old hodgkinson had his way and and ethereum was a business and he was the ceo right

and if they have like closed the source on one of the uh clients right or linus torvalds didn't give away linux for us like satoshi said actually i want to turn bitcoin into a business right like that if it wasn't for the those kind of like pioneers if we we wouldn't exist here today and i think that what you're building on top of the chain is in some way like business proprietary like i have some bad news for you i think that there are a lot of people who are smarter than you who saw the incentives for being more collaborative um very interesting i think together we've gone on quite a journey from like last year's defy

summer the episode that we had done to now and all of these products all of these developments for sushi but what's next what's happening in your world you'd mention like you're gonna pause me so for now but like what else is on on the roadmap what do you see next year looking like i mean we're rolling out products just like crazy and so we're gonna continue to improve what we have and roll out new products and we're going to continue to scale horizontally until we feel like we've approached you know critical mass in that sense and then do better like vertical on the product we are going to finish up trident then on the roadmap we have some improvements that we would like to make to our existing platform

we want the ux to be kind of what i would describe as like normy friendly um and that requires us to enhance our gas relayers um integration of the products together more tightly yeah that's kind of like what's in the near term are you excited yeah yeah i like i'm crazy excited about the future of sushi that's the only thing that i because it's stressful you know there's like like i'm not a billionaire and so i have like not billionaire problems um so i i have you know wife and kids and like my normal life sushi is an immense amount of stress at some moments and like that manifests itself sometimes and like crazy

posting on twitter but i wouldn't do it if it wasn't exciting for me i wasn't excited about the future yeah i can't i can't do anything that i'm not excited about do you think it's kind of like a hopeful project in a way sushi it's like you kind of talk about it it's the antithesis of some of these trends yeah i think by the end of this year we'll be so differentiated from anything in the space that people say in hindsight it is inevitable um in hindsight it will seem inevitable for sushi props to maki for like when the absolute darkest days came for sushi before i was even there that i likely would have given up he kind of like stuck it out

and kept it going right and i really appreciate the kind of like fortitude cool well joe it's uh been a pleasure chatting with you as always thanks so much for joining us today thanks pleasure to be here yeah thanks so much for being on the show i want to say thank you to the podcast producer andre the podcast editor henrik and to our listeners thanks for listening [Music]