How FASB Ruling Paves The Way for Bitcoin Corporate Treasuries | Roundup

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no no that's what caused Leman Brothers in the entire [ __ ] Financial system to blow up yeah these things happen they're not in here crypto but my biggest point and I'll say time and time again is whenever people are critical of some like a and maker and Def I'm like at least you know where that money is going and you have full transparency into that process whether you want to look that's your problem and that's on you it's always on you you always bear the responsibility it's at the end of the day your money but that's it's your money when you deposit in these protocols it's not your money it's not your money when you deposit in a bank there's a very big difference all right everyone so on Empire you obviously know that we talk a lot about the institutions coming into crypto and that

is why we are super excited to share that we are hosting the digital assets Summit we've hosted this since 2019 it's coming up in London March 18th to 20th don't miss your chance to get ahead of the curve you can get 20% off with code Empire 20 we'll see you in London this episode is brought to you by North stake the secure and compliant staking platform for institutional investors North stak's eth staking service lets institutions earn staking rewards while maintaining maximum flexibility on all of their Capital you can learn more about North Stakes institutional staking Services by clicking the link in the show notes or that QR code that is on your screen right now if you're on YouTube now let's get into the

show all right everyone welcome back to another episode of Empire We Got The Round Up Santi is coming from can you can you say where you are no yeah I mean I tweeted about how great coffee was in New Zealand it is a beautiful country I've been in I've been down under for for a while now um I love it coffee is my good trip so far it's been great yeah I mean I me with with a lot of the founders that are there like Kane uh you know kieren's there Robbie at immutable we record an episode met with uh a couple of funds there just like a very virant ecosystem I didn't go to Melbourne which also has like other folks there but really really nice it's actually an amazing country which most

people don't appreciate like Australia is really big because you know fun fact you know that Australia is almost the size of the United States I don't I don't believe that for a second you don't I don't believe that I don't believe this I don't believe it if you look at Antartica basically the way cartography and the the map the way maps are drawn to fit in this kind of when you look at a globe when you flatten it out what is closer to the Equator is is true in size as you go farther yeah it gets stretched out no the the size is disproportionately smaller so when you look oh as you get away from it then it gets smaller yeah as you get a away for it the item the the basically it looks smaller than what

it actually is so Australia being quite South um um you know looks smaller than the United un States actually is very very similar in size now you you're Googling this right now just verify this but I'm pretty sure cheing you yeah yeah it's like it's not it's smaller but it is not that like it's not like as size as us okay I'll put it different [ __ ] yeah you're not yeah yeah yeah I'm not like I I when I say stuff I like 80 it's 83% as big all right all right all right it's a parto 8 flying from Perth which is on the west coast to Sydney 6 hours how long does it take to

fly from champis to New York yeah six hours depends depends on which way you go right because the golf stream but yes five half to six and 50 six hours 15 but all right so do you want to start with the good news or the bad news we want to start with Ledger or fby in my mind those were the two biggest things that happened this week we can Al also talk about Salon fee markets we can also talk about uh points we can talk about Eclipse test net uh Manta L2 to uh salana nfts people hated that we talked about that too much the other day so uh we could continue talking about it yeah I got a lot of messages saying you guys are just trying to shill salana nfts and I was like my friend uh these things are up like 10x there's that's why we're

talking about them I mean we're gonna talk about stuff that we a find interesting because I'm sorry folks I'm sitting on a chair here and I could be doing other stuff and I got so many salty messages that we were talking about bunk and I was like I mean you can hate it or like go look you should go yeah go look at chia's posts I think chia's been nailing uh maybe we can talk about that at some point because I think he's CH is one of those guys that is not afraid to look stupid and actually speaks the truth and I think you know it's also speaks to this idea it's very liberating it has been for me like at some point you just say I'm just here to talk about stuff because you're in the pursuit of Truth

and Shia is one of those guys that he's come on the Pod so many times people go here from because he speaks the truth like heally doesn't care what other people think he's just gonna I'm just G the best and I'll stop here the best one of the best things I've heard him say is you know you build community make everyone Rich that was true for ethereum we try to over intellectualize how Community was built and ethereum Alignment well guess what folks there's a lot of salana L now because the devs made uh very is the same reason why why VC chains like a VC chain all that really means is that you launched it too high of an FTV so nobody could make money so then they didn't get uh you know they didn't have bag bias basically that's what a VC chain really means it's

not that everyone raised Capital at some point like everyone everyone's technically a VC chain a VC chain is you just made the mistake of launching it way too high of an FTB so nobody got rich Let's talk about fbe um okay so Faz uh big big actually this was um big news but didn't get covered like it was big news obviously blockworks covered it pretty closely but I don't think the industry was talking about it too much so uh yesterday on or on Wednesday fby officially adopted fair value accounting for Bitcoin for fiscal years beginning after December 15 2024 um and let me just give kind of a primer on why this is so important so actually if you looked at some of the folks in the industry so Hong the president of okx said this is big news even comparable to

having one more Pro Bitcoin president in a country this removes a system hurdle for companies to hold Bitcoin long-term treasury reserves Bill baright CEO of Abra said this is way bigger news than the Bitcoin ETF this is huge David Marcus um I think he was head of payments at Facebook said you may think this is a small accounting change that doesn't mean much it's actually a really big deal this removes a large obstacle standing in the way of Corporations holding Bitcoin on their balance sheet 2024 will be a landmark year for Bitcoin so um the reason that this is just like a two- sentence primer here why this is such a big deal is right now the way that Bitcoin is treated on balance sheets is it's technically I think an

treat it as an intangible or something like an intangible so the way that that works is uh when the price of Bitcoin goes down you can mark the asset you can Mark to mark it on the way down but you can't mark it on the way up um and maybe you can give like another example of this or kind of what what this really means but like if you buy if blockworks were to hold Bitcoin on balance sheet uh and we got it at 40,000 it fell to 30,000 we have we mark it at 30,000 it it comes back up to 40,000 or 50,000 we can't mark it back up at 40 or 50,000 so it's been a pretty insane uh kind of archaic rule um but they are the big update is that they are changing that so

that crypto is going to be measured at fair value on corporate balance sheets yeah as you said it is a long-term intangible asset so it is like treated like a think of it like a patent and it's crazy to actually think about that one it's actually liquid very liquid so it should be not long term should probably be current asset like a kind of a marketable like a shortterm like go so so and the other one is like I think if you think about um you know like micro strategy for instance has a ton of Bitcoin in their balance sheet right like as price has come down because a lot of their you know they've been

buying at different levels then that when you look at their balance sheet it's it's uh it's not an accurate representation of the of the current value of those Holdings now of course people can do the math right you can go in there and say oh okay there they're holding 100 Bitcoin that translates into X um and then their loan dots right their covenants um they also obviously are marking them at you know what is a the fair value of that which is what they could sell it for so they're not like tripping covenants but nonetheless I mean I think it's still important when analysts look at a at a company right and you're just looking at the Financial Health of a company and if this thing is not being accurately reflected in the balance sheet you know I think it's uh it's

difficult right I think it it may be another yet another reason why if you're on the fence about holding Bitcoin on your balance sheet this this treatment has hasn't helped um and the fact that it's going now to a more accurate you know treatment lot patent but something that is liquid and marketable and you know and you can actually Market to Market then I think it's um yeah you know I guess the real question is how many people like I mean this happened to micro strategy right so so sailor bought billions of dollars of Bitcoin price increased he had to hold the Bitcoin on micro strategies balance sheet at the purchase price then Bitcoin fell in value micro strategy had to recognize the what is what's that called it's oh

an uh an impairment list impairment listed as a loss then Bitcoin recovered in price micro strategy couldn't recognize the recovery they had to yeah they had to keep the value on its books at the impaired level uh even though bit you're looking at uh all the metrics right and think about like how how like uh automated the the stock market is like if you just look at like these current ratios and solvency ratios the asset tests like all these like Financial metrics if you were to compare it it just is out of whack it's not an accurate represent right so um yeah I think it's important the real question in my mind is the impact I don't know if it's as impactful actually as ETF or a sovereign like announcing um the interesting about ETF

is that it wouldn't actually matter right because the ETF would be if you're holding an ETF on your books it's going to be Mark the market um but I think the real question is like how many companies have actually been on the fence or have disposed of their Bitcoin Holdings like Tesla because of this unfair accounting treatment I would argue very little but it's it's more of a sentiment I think like you read you're the lines like the ETF is coming a more accurate account and treatment I think everyone's just sort of realizing this industry is real uh not only that but it could also bring in meaningful you know economic stimulus jobs Capital formation and and fees for all the different kind

of constituents that matter um and so I think it's I think that's the more in my mind that's the more relevant thing it's like it just brings more legitimacy and in a fair treatment to this that's good yeah I've always thought it was this like Bitcoin on corporate uh balance sheets was a bit of a a a meme and like not something that was actually going to play out that much I mean micro strategies obviously performed they're I mean it's looking really really good for them a 40 50% premium yeah so it's looking great for them but like I don't know you don't have corporates going out and buying like stocks and putting it on their bill she let me put it this way like I I

think like as if you think about payments and stable coins as that you know it like that they won't matter right because the the question I think if you're holding a stable coin in your balance sheet I'm not actually sure if the treatment would be like a longterm um intangible um I guess it sort of because we don't really but presumably with the state coin Bill like it would be treated like cash cash equivalent but you know if if you're accepting payments in other currencies uh or whatever um and you're getting so and eth in your balance sheet then I think this more favorable treatment now I making an assumption also I say if

you're accepting payment in Soul e yeah now this makes the assumption that I'm I'm not not actually sure this applies to things other than Bitcoin but let's just assume that it does I think it matters more longer term for Commerce where there may be an less of an incentive to dispose of what you're getting and swapping for cash if you have this type of treatment right which sort of makes sense if you're getting payments in E and soul if you're selling it like blockworks Sayes blockworks gets payment in crypto all the time ex yeah yeah so yeah I I don't know it's on the margin it's more of like accounting and uh I think for what it's worth an ETF and a sovereign coming out saying that

it's going to buy these things is way more impactful but you know agree to disagree with these folks yeah one step forward though in the right direction it's cool yeah absolutely um okay less good news uh we've got ledger so maybe I can take a St times have we talked about Ledger incidents in this pod in the last year yeah but where like and how much money do you have on your Ledger like still you know yeah I mean like let's let's talk about what happened and then like dissect it a bit okay so Ledger launched I'm gonna do my best

here um Ledger launched something yeah Ledger launched something called The Ledger connect kit which is basically a JavaScript library that implements a button that allows users to connect their Ledger device to thirdparty apps um like a you know Unis swap or a or kind of any any any dap um basically there's an exploit at some point this week I've got the timeline pulled up here so I can get get into the details it was hours ago this morning yeah it was it was yeah it was this morning it was this we're recording this on Thursday it was this morning it was 9:00 am UTC I told that from the CTO polygon which is Moody I think he's pretty on top of this stuff 9:00 a.m. UTC that was like 900 p.m. my time it would have

been early your morning I guess yeah so what happened is there was a formal former employee that fell victim to a fishing attack which then allowed a bad actor to upload a malicious file to Ledger uh npmjs which is this like package manager for JavaScript uh code that's like shared between apps um and basically any any app that you connected to that used connect kit now had this uh I think a drainer basically inserted into it so you had the potential to basically have your wallet get drained if you if if you interacted

with any of those apps that used uh The Ledger connect kit that's my that's my high levels and by interaction it's not just connecting it's like a like signing a transaction signing yeah so um yeah so I think the tldr had this ious version of The Ledger connect SD that was pushed to uh yeah basically pushed into into the like Live code and what's important is as soon as this happened my understanding is it sort of gets rolled out to pretty much most apps by default like automatically I think it was any app that used wallet wallet connection any app used this would have approved now yeah so the effed chains dur a lot

basically most evm like like it was obviously eth1 all the different base arbitrum like polygon basically nothing it was just like I think it was contained most of those apps there was some chatter about salana but I think it was largely unaffected because most teams hav even use I pinged the soul flare guys as soon as I woke up and saw this and I was like guys are affected and they're like no we actually have a very strict policy of how when when you connect to the app like we we there's like a second layer here so they're not affected a lot of projects have come out saying so so so I guess I guess the patches the vulnerability has been patched right um it's been patched yeah

it's fixed you have to you you should though update your um uh I think even though it's fixed on Ledger's end there is still a way don't quote me on this that the malicious code is still cashed on browsers that have visit if you have visited a compromised front end and hadn't made a transaction still cashed on your browser so for me like I just I just cleared my my browser caching I was like did I do something on chain I was like I don't really remember cleared my cash um I guess the important thing is if you haven't used your your sign where you used anything on chain for the last like day call it that for conservatism I think you're fine everything see everyone seems to say that but just for caution and you can never be too cautious in the space is

just clear a cap shap your browser to which whichever one you use for uh you know interacting on the Chain yeah and then and then wait like like just don't do anything right I know the jerk reaction is oh I'm gonna go and revoke all everything and move like just for again yeah not anything I was gonna send I was gonna send USD I was going to send usdc today um for a for like an angel check and I was like you know what I'm I was like I just told I was like I'm gonna send this on on Monday like I'm just not interacting on chain for a day or two like honestly guys it's you're going to be listening to this on Friday just like just don't do anything and take some time okay so I have I have a couple questions here so the way that I

understand the origins of the Leger the way like the way I understand the origin of this exploit is that there was this ex developer junichi sugua sure I'm watching that name that still had access even though he was an ex employee still had access to the GitHub repo he clicked a link in a fishing uh fishing email targeted at GitHub users his GitHub account got compromised and then Bad actors push that malicious code into the library via his account why two twofold why did this ex employee still have access to a GitHub re to the to Ledger GitHub repo and two why don't they have two-party uh like verification for code updates or something like why do they have it so that a single person can

deploy code without review by any other party that's crazy to me that's crazy uh you shouldn't surprise no but actually like you should have access controls internal reviews multi- codes when it comes to like H I don't know dude I I literally it's a third strike or more that we know for I don't know Pascal Pascal's speaking of D in March so well I mean I'm sure they'll be pass this by then but it beg it's like I don't know you got you got a company that's fundamentally built around security and I'm sure 99% of the times this happens but like you can't you can't have a 1% moment you know this this is like a class this is like probably there's a

couple of things that are very uh on edge when they happen I think the good thing is the entire crypto Twitter everyone was on top of it fairly quickly and learning people my latest check is that the drainer has gotten like 500k of funds maybe 600 I've also seen that it only included it only included like gas tokens could drained so not ERC 20s only gas so that would be you know eth or Soul meaning the units that you pay for for gas now I haven't verified that I just saw one tw around that um and uh and then there's a revoke I I tweet

retweeted this there's a revoke uh app site where you can go and enter your address if you have any doubts and it could actually tell you the approvals that you have what's it what what's it called the revoke cash app I think it's uh I read they have a specific site where you a specific part of the site where it it will check your wallet and the approvals interactions you've done and and tell you if your safe or not now revoke docash that's what it is yeah revoke docash but anyways it's on my Twitter profile we'll link it here in the show notes if you have any doubts there's Al there's also two others I'd give a shout out to which is wallet guard and pocket universe so there's some there's I I haven't used either of

those I have no affiliation with them but um I saw some people tweeting out saying like wallet guard flagged this immediately like big very thing Wallet card I guess the the important thing here is like so let Let's uh unpack this a bit like what is the issue here I guess the supply chain attack is is is real and it's a a real threat to the industry right um you know this came up also in May of earlier this year when when Ledger kind of came out with the social recovery feature everyone's like now unpacking like well no one's actually been able to verify like it's like closed source and you know is there a back door like that's always a risk right and so you're kind

of trusting these people when you do these upgrades like there's no malicious code right you go on Ledger live you update your Ledger you know you're inherently there's always trust for for all these wallets the keep um a sort of risk um and so yeah when the supply chain attack happens it's it's pretty bad now this hope you know good thing is is probably contained um and then like zero day exploits right Chrome and all that stuff that just affects a bunch of people but nonetheless um I think it raises a couple of things that I would love to get your take and just talk about one is this this as an industry when these things happen you appreciate how like the dependencies

right and certain areas of unability and I think this is just um like how how do we overcome that um what can we do to this like I guess like blind signing is something that they I know has been talked about is removing it and just creating a better flow the other is just like you know you sort of assume that people are just going to click their Ledger and not really you know or or their Hardware when they're signing a transaction they're not they're probably going to be care l or not really understand the full details of it it has happen to not only you know less sophisticated user it has happened to so many sophisticated people the you know

Nexus Mutual founder for instance you get a compromised version mamas sign right um and it was my flow and I know you wanted to talk about like having Tay and other people that to have a very dedicated plot on security but like my advice is when you see this stuff don't overreact understand what's happened follow a couple people and we can link them the show notes you know folks that I might like but also um take time to to like so if you're using minimas you're signing right you can always like I always inspect where it's going right so when you're actually proving you how that pay shows up the fees on the top right you can actually see the

destination address and so whatever controvert you're going to be inter acting so what do you do I check that address I go into ether scan or whatever scan to see that address and just by critically inspecting that address and all the transactions that are happening it may be tagged the safe but even then just click into a couple transactions look at the history of the contract understand what the contract kind of does you don't have to be extremely technical if you just click into that and say what is this contract doing like what are the last 20 transactions so click randomly on five and understand what those transactions are doing I know but listen to what you're saying that's so insane that you have to do that like you're sending something on sh then have to go look at the address on ether scan look at five transactions like let me my

dad was just in town in New York and I got him set up on uh's he's been set up on metamask but he's set set up on salana um he's got a phantom wallet he's trading on Jupiter he's got a metam mass wallet he's trading on Unis swap he wanted to buy some like weird longtail things that he read about in a newsletter that he subscribes to and so I helped him buy them but then this morning and he's not on crypto Twitter right he doesn't have a Twitter account this morning I had to text him do not open metamask or Unis swap or any of that today and I didn't know how to describe it to him so I just said big industrywide bug like he's think of think of the hopefully as crypto grows like that he will be in the 99% of users

who aren't like spending all their days on crypto Twitter um that's just my second advice which is probably the best one one you got to assume in this chaotic phase of innovation ever expanding surface area there's going to be exploits continue to be exploits so approach my Approach is do the horcrux model separate it doesn't cost anything to spin up new wallets break it down have a hot wallet for doing nfts trading and then send those to a vault is never interacting with anything just I think it's just

proper hygiene where the same way you have a checking account in a savings account or you have a you know you have different bank accounts same here guys use you use hundreds of wallets I know it you want the convenience of aggregating and seeing how much you're worth on a tick by tick basis but guys like you can aggregate that you can you can track that easily what you don't want is to have one wallet with all your assets you do a wrong like and then drains it and so you know I I think uh I was for instance active during this period um I was daging the doing some Deen stuff on chain and it it actually happened during this time and so I

immediately knew which wallets I interacted with I checked I looked at what had happened after and and so I was what I'm trying to say is it was contained to like less than 05% all my assd so it's like you know a worst case scenario where I've you know where I just you know got get affected by this it doesn't destabilize me just sort of of like you live and so I think that's um that's my best approach right if you don't trust Ledger well maybe get other wallets or maybe get three of them have a multisig where you using different Hardware wallets like there there's a lot of things you can do I definitely agree with you look it's not uh it yeah yeah I mean it makes you zoom out and just think about

things it's like yeah you know there Ledger had a bunch of fuckups recently um but I'm like okay like what am I what else am I going to go use like I'm using leder still and then it makes you think think about like wallets too like everyone in the industry uses metamask which is run by the same company that also runs the largest RPC provider and it's like you know there's a anyways moments like these are always is when people start digging in and and understanding there are a lot still a lot a lot of dependencies yeah um you know people talk about nfts and like where the data is actually stored yeah you think how many people care about that no they just

want to look at like nice pictures on the phone yeah well are you certain that that metadata is stored in a like immutable like way or is it just stored and look like you know what I mean like it's important to dissect all of this but you go down this Rabbit Hole from uh as you know security is an area that I've been mostly focused on for for a long time and there's many ways to attack security like improve security I would say there's a lot of people focused on that yeah but it's still still challenging yeah um all right anything else on this topic well as an aside like I had this idea of like a wallet flow and then and

and then Tay was like pretty vocal around it she didn't like the proposal but I'm like why don't we by default like if we assume the most users are going to come for in like in some of these mobile wallets Argin Phantom whatever Soul flare pick your flavor then I think there's a big opportunity to embed certain security features by default for your users and sure it may compromise user experience on the margin but I think that's easier to overcome with like training right and and the user with some guides um like setting them up with a couple wallets a vault wallet and a hot wallet and different wallets for

nfts and Defi and just core Holdings and for any approval like if if your wallet you know for any approval of a new contract um it simulates a transaction for you you know and warns you and I there are features like this that would warn you hey are you sure you want to send all your 25 orian to some brand wallet well probably not and so I think we're getting better at this but alerting and simulation of transactions is probably the easiest and lift for a lot of a lot of users which still they're not going to understand what the contract does they're not going to understand anything and they're just going to click immediately but um anytime you're interacting with a new contract there's a delay um you know

stuff like this I think there's a couple of ways that we can probably improve this for at at the wallet level that that's I think where a lot of these changes by default and it can have a huge huge Improvement in protecting a vast majority of users all right everyone so we talk a lot about the institutions coming into crypto on Empire Santi and I are both headed out to London March 18th to 20th for Block works' eighth ever digital asset Summit Das this is an Institutional buttoned up conference that we've hosted since 2019 I like to joke that it is probably the last remaining kind of suit and tie event in crypto people are still wearing suit and tie it's pretty funny but you'll actually hear from a lot of the largest institutions in the world coming

from Standard Charter FIS JP Morgan framework folks coming out winner mute vanc Goldman Sachs there are a couple big themes of this conference one Bitcoin catalysts the having and the spot ETF two A View From the buy side three rw's tokenization and stable coins four Global regulatory Frameworks five institutional infrastructure including Banking and payments and six the macro case for crypto if you have anything to do with the institutional side of crypto you have to be there Santi and I got your back we hooked you up with a 20% off code it is Empire 20 there is a little competition running internally at blockworks to see who can drive the most number of tickets so help Santi and I out register with our code and you get

20% off that is Empire 20 all right what do you want to talk about next you want to talk about these points sure I mean I I don't get I don't get the hate on on the points that I like I I don't understand why everyone's so up in arms about points it's so rain so rainbow launched points on uh all right so rainbow tweeted out on Tuesday saying welcome to Rainbow points the first step towards including our community in the future success of rainbow every ethereum user has been dropped points today claim your points and start earning more by doing the things you already do on chain so use ethereum earn rewards uh do things get rewards like play on chain get Rewards

what is uh so so the push back here ask what point G be I don't I don't hate it like I don't get why like like I don't know my wife shops at Sephora and like she gets points for doing that you know like Ikea gives you points Microsoft gives you points like Starbucks gives you points if if you're already using it like you don't mind it and if you know like yeah I don't get it people are just in this state of why do we need another L2 and I hate the strategy and look uh I don't know I'm all for experimentation and I don't think you

know time and time again people get frustrated like why do we need another L1 it's a copycat and yada y y it's like instead of like bitching about it like it's going to happen any yeah let the interation play out like let people do points I don't know like I have no issue with these points points or calling whatever like f by me like ultimately like I don't see a problem with that so were you on the two Shar podcast that we did when he was talking about every cycle has its own novel token distribution so you had icos in 2017 uh I think it was iOS in9 binance really kicked off remember

the binance iOS in 2019 and then you had uh you know you had defi summer and like airdrops and things like that you had nfts like there's always these new novel token distribution things now the new novel token distribution is points and I think points are basically becoming the like this system's mechanism of token distribution yeah of course yeah uh by the way I had a I have a startup idea for you which is where that I want to get your take that I'm Builder or an investor or both um um from probably from the I know I know you're a bad Builder so we'll approach her from [Laughter] perspective build um okay so I was talking to some

of the teams on jet uh on salana that are launching uh that have recently launched tokens and done these airdrops and are launching tokens um and I was listening to the zerox research podcast with uh with Lucas from jeto and he was just talking about how hard like a lot of these Founders are just like it's so hard to prevent cibil attack or cyal however you pronounce it um and it's really really hard to prevent the gaming of airdrops there why isn't there a company that shouldn't be on the founder to figure out how to build a system to prevent that why isn't there a company there is one what's it called I'm sure you're invested I've looked at two and I

passed but CK capture like ZK capture ZK capture yeah that's the one I looked at well hey you know can't get everything right that's names a cloud flare for web 3 capture service that verifies challenges on Smart contract level I guess that is how it's done in web 2 is you have to do captas and yeah verifies look we're getting better and better and more sophisticated at like preventing like what is for unsuspec like just to level set the conversation what happens in crypto is you can have multiple wallets and so tied to one one person and so it's not like you can claim a free pizza

in you know your student council by showing up and showing your ID here no one's asking for your ID so you can have 50 versions and clones of you showing up to get the same pizza so all of a sudden you get all the pizza and that's not good um and there have been instances where um that has been an issue it has like there's always there's always some uh Farmers out there um you hear that picture like that that guy like riding at the scooter with like 50 phones and China you like clicking all that's basically what you're trying to prevent you're trying to distribute these tokens to as many people as possible not just one but yeah with with with AI like you can you can I think we've gotone better at understanding bot behavior um and like preventing just them getting a

disproportionate share of air drops I think what I give more I've also thought a lot about and discusses some teams about how do you how do you think about airdrops um and the programs of airdrops like Jupiter for instance announced that they were doing one of many airdrop campaigns blur has done multiple uh rounds right uh not just one I've simple things like that I think like are are pretty good right ultimately what you don't want to do is blow your entire load in one like one airdrop and it's like well then up to governance you can distribute but it's like I I think it's better to have a lot of

flexibility um you know and and and multiple campaigns because you're going to also get a better sense of reten user Behavior you you don't want to be in a position where you you totally gave all the air drops and then you don't you don't even have anything and more Firepower for marketing and acquisition yeah so I think a lot of companies basically took there's a lot of examples in crypto of um baking uh basing things off the first time something happened for example what I'm talking about here is uh like every nft collection is like 10,000 pfps why because you know first big one was basically um sense yeah or but to tie this together with this

conversation like uh I think a lot of companies or protocols in crypto whatever you want to call them have fixed supply of tokens because Bitcoins 21 million hard cap but if you think about how a company should be built like that fundamentally does not make any sense you should have more and more shares that get issued as the company grows and needs to do more things with their with their Equity um and so I think like you know when I see these chart these pie charts where it's like 20% to investors 20% to the team I'm like what a stupid stupid model that we're even focusing on this thing it's like you should have I

don't hear Point look at static point in time you have to kind of chart say this is the distribution of this valuation no I get I get what to do it yeah but but but I mean look I mean I went through the exercise of of making the proposal for yarn to Mint an incremental what was it 4,000 Wi-Fi because of course they needed to fund the developers right and and new you know ongoing development of the protocol and they you know they had like all the Wi-Fi had been far but I agree with you um I think ultimately the the the response that is yeah maybe you fix the supply you have certain inflation to to because that's what the mark like that's just the I

think still good to do but then say look um I know we're gonna have a discussion tomorrow with with uh Kyle and and Demetri I think on deepen I think certain use cases to your point gaming uh deepen require like more thoughtful approach to token emissions and inflation on a dynamic manner based on user activity based on like it's very different if you have like if you're a game and you said oh we're going to have 10,000 pfps well good luck this being a mainstream game guys like you basically are capping your users to 10,000 that's not gonna fly okay maybe you can launch derivative pfps which is where most other teams have got in this direction right like asuki did like a clone of the original asuki but that yeah but that

that never other teams have done it more successfully so I think like yeah to your point um my you're absolutely right we've been operating under this assumption in crypto around scarcity driving value whereas for gaming for nfts for social it is a like utility and that is abundant and so you you want to have if you want to have billions of users when you want to have like all these different um Collections and maybe tokens now maybe the counterargument to that is even if you have a fixed Supply well you can divide these units up to like like companies go through this motion too right once the stock price goes up over 10020 bucks they do a a stocks plit because unit unit buy like unit um what do you call it they unit

bias right oh you can buy 40,000 Bitcoin oh you can be a billi a Shea billionaire or a bong billionaire psychologically companies even in the public markets have realized this once their stock price go reaches a certain level 100 200 300 psychologically because you can only buy one share it it boxes out so many people so they do these splits so that the stock is two bucks five bucks 10 bucks right Apple's done this like the best companies have done this right it's not like only inherent to crypto um Behavior but um I I guess like you can divide ethereum and and salana and all these different tokens into you know 18 zeros are basically infinite like you know I

mean but still yeah I don't know um there was uh one thing I want to talk about I watch the layer two video uh layer zero soay launch is sort of this communication protocol F this CL I'm bester uh I think the team's extremely talented and state wants V2 there's a great video with primordial the the founder Brian um people should go watch that because I think he he like why I think this is Rin is because he talks about like the importance of um security liveness he talks about and decoupling that he talks about the importance of communication and the core principles of crypto like immutability censorship resistance and I think it was just like a really put together a very

good video um even if you don't care about ler zero does I think it's still a good video because it talks about the the kind of the core ethos of crypto um so it's really nice the point I wanted to make is a lot of times you can change these things up to governance so obviously the idea of how many tokens are emitted like some of these parameters not immutable like it's not like Bitcoin 7 St but like you can in theory upgrade a lot of these parameters for many protocols and I go back and forth on that um if these are things that can or can't be upgraded at the Smart contract level

um I think you can make Arguments for for B with and certainty of not having it ever be upgraded but uh I I think certain features maybe like token Supply May if there's a quar but I don't know I'm not wait so just to make sure I understand it correctly layer zero is the V2 basically upgrades the the the architecture um and the main change is that it decouples the security in the execution is that the uh it's really liveness so like I'm gonna V to explain it I'd rather not but I think what do what does live what does liveness even mean well like like basically like what layer zero

allows you to do is like for instance say you want to swap a token you're an ethereum L1 and you want to swap a token in arbitrum but you don't have any tokens in arbitrum right or you don't have any tokens in base and you want to go across These Chains what they've done is they would just make that extremely easy abstract all the complexity they will swap your your tokens in one chain for that in the other um and then execute whatever transaction you want to do and so I think that's uh that's I super important it can also be for voting and other components so um a lot of it is when you think about the communication between chains is is my appreciation is well how quickly that

happens with what certainty one chain is more secure than the other so you have to deal with like different mechanisms consens validation like basically one chain is more secure than the other it's just like there is fairly complex thing to do when you think about all that and layer zero is just doing it in a I think it's a big Improvement in what they've done in making that just far easier um for people to interact across so that's cool taking a bit of a different approach from like Axel and ccip and Wormhole and that's cool yeah is live is liveness basically like what what like the ability of a distributed system to process transactions like what what is yeah I

think that's um I think that's a good way of putting it I got to ask our analysts by the way we published we just published a report on uh on layer zero uh on I just saw on our research platform ien read so we we'll link that in the show notes today's episode is brought to you by North stake the secure and compliant staking platform for institutional investors North stake is purpose-built for institutions that want to enable the ability to move in and out of staked e seamlessly while controlling all aspects of their fund management North Stakes tokenized eth staking service offers institutions easy lowrisk crypto yield opportunities complies with both AML and Ma regulations making it

possible for institutions to tap into ethereum's growth and earn staking rewards even through these pretty turbulent regulatory times in crypto if you are an Institutional Investor seeking compliant crypto exposure and yield North stake streamlines that all for you to get started head over to nor stake. DK tokenized hyen ehen staking I know you're probably not going to go to that long URL so just click the link in the description of the episode that'll take you right to North Stak site or if you're on YouTube scan the QR code on your screen right now now let's get back to the episode ah my prediction for 20 we're going to do a predictions episode next week which I'm pumped on but one of my predictions that I've talked about in here before is that blast uh blast is fine but what blast is going to cause is

all these l2s starting to create l2s with yield and we saw that for the first time this this week with uh Manta is that right Manta what is Manta well well well I full disclosure also an investor seed investor way back in the day so they uh their privacy their whole thing was privacy since day one like we need better privacy ah I remember these guys yeah yeah it guys and and so they're very focused on uh again like a privacy chain so that to me was the most thing they're they're still in that direction they're launching now L2 um like a privacy focused L2 and of course they they DT it the new paradigm

you know and so a lot of it is native yield is that is that a jab is that a jab at Paradigm for uh funding blast well I mean I don't think it's a coincidence um and they're using I think the different mechanism that they're doing and I had a call with Kenny founder not too long ago actually two days ago about like um they're using Mountain protocol which I think Newcastle like Nick fond is an investor in which is basic I think we we talked about this in the Pod when he was on but basically it's a it's a basically like a a treasury yield bearing stable coin uh and they're using that to capture yield and the same with that blast is using

maker and Lio to capture Meer to capture yield from treasuries Lio to capture yield from native e uh staking um you know Mon's taking a similar approach by using Mountain uh on the stable coin side to capture U you know treasure yield but but yeah you're right I mean I think it's uh once someone does it then everyone else will do it if it works everyone else will do it and that's the nature of the space yeah and something like manta's going to be fine and then someone else has 5% yield and then someone's got 10% yield and then someone offers 20% yield now we've recreated it's this Cycle's version of Celsius and blockfi uh no see this is where I

struggle that because I know you're going there Mike I saw a tweet from Mike your co-founder that he said this right said this is going to be a problem because it's Pon zunami and yield go people going to chase high yield but it's I agree look this happened in D5 summer new protocols were launched they advertised yield in the thousands of apy and then that very quickly compressed for Riders reasons primarily the token price collapses as like you know sell pressure start as soon as start farming like there there's a lot of mercenary Capital but it's a very different thing it's not like so if you're a Celsius user and you were advertised above average yields on your Bitcoin or

eth then you're like okay great I'm going to trust Celsius to do whatever it is that they're doing on the back end to give me 2% higher yields or even more well terms what that was not the right thing because they were taking a lot of risk they were not doing proper due diligence and underwriting for a lot of their counter parties the difference between all this happening on chain is that you can see where that money goes exactly like the counterparty risk is yeah you're you're taking no matter what the yield is you're taking smart contract risk always like and no one should ever use the term risk free ever for anything there's always risk in even treasuries there may be a

benchmark rate but there's always risk whether you want to see it or understand it that's your problem um so there's always going to be a risk of interacting with any contract whether it has yield or not yield is an incentive whether you understand where the yield comes comes from is a different thing but safe to say is that the higher the yield the higher the risk and dependencies and interactions of a smart contract so I don't think it's an issue actually now they could they MAA or blast or protocol XYZ may offer points and they may say that their token's worth a billion and a jillion FTV well we all know what happens right

Ys compest very quickly and capital is very mercenary the other thing that you have now is you have this sort of like natural rebalancing of you have eat staking which is the Benchmark right think about like that is buying treasuries on chain right I'll say it is kind of like if you hold eth staking it and whatever yield you get that's like the Benchmark rate so so say you're earning 4% staking your e and then all of a sudden that goes um you know that goes a lot of a lot of eth St people staking eth say oh wait a minute I can earn five times more with this other protocol let me unstake and go there well what happens right um they're go

chase that yield by virtue of more demand that yield goes down and the and the and the and the eth yield goes up so what does that do that's a natural rebalancing right some people say oh well yield is now like 10% here and eth went up to six well 4% incremental is not worth the risk I'm G to go back and so there's a natural like yeah like defi summer where You' you you you'd run into a pool the pool yield would go down you'd Chase into another one it would rebalance the nice thing here though is that you have like this kind of Nate that you have this Benchmark which is going back to like the base asset like ethereum right or to stake it and so just changes the dynamic a bit on the margin so Capital should be more

efficient because before it was like if you held e you could deposit an a your compound and clip like whatever you yield when there was like a lot of dgen uh leverage on chain you you could be earning a a pretty penny on on the borrowed assets that were in high demand um but now you can just do it without without even interacting with a money market and taking that risk of that Pro call incurring bad debt you're like depositing your money in a bank here just keeping your money by staking it so anyways I don't think I don't think it's I think it's an unfair characterization is what I'm trying to say if you say it's gonna it's the same it's no different than Celsius and yeah I don't think this is no different than Celsius I think what this causes is people

launching products that are are basically marketing what will eventually be yield that is not real yield they're you know like today today like blast like blast is great like or I don't know if it's great or not but blast puts your money in what Lio and maker treasuries that's totally fine but then some L2 is gonna come along and put it in a you know something riskier and then someone's gonna basically take your capital and do like a hedge fund like strategy with it how how's that any different from you putting your money in the bank B way do you know where that money is being invested I mean no no obviously obviously have no

idea but with like Bank of America JP Moran at that yeah and that's what caused things like Celsius to blow up no no that's what caused Lan Brothers in the entire [ __ ] Financial system to blow up yeah these things happen they're not an a crypto but my biggest point and I'll say time and time again is whenever people are critical of some like Ai and maker and Def I'm like at least you know where that money is going and you have full transparency into that process whether you want to look that's your problem and that's on you it's always on you you always bear the responsibility it's at the end of the day your money but that's it's your money when you deposit in these protocols it's not your money it's not your money when you deposit in a back there's very big

difference and trying to regulate def all right all right that's a that's good that's good like that you've already end this discussion all I always bring it back to that in defi you're the bank you control where that money goes and what these smart contracts can do with that sometimes you can approve certain things that these smart contracts can be just like a back they can move your money around they can do these strategies you have to understand that but you have at least you always always always have transparency of where that money is flowing and going in real time 247 365 always you can inspect and look and revoke access and bring it back

can't do that with in your bank that's why people have 20 bank accounts or put money in treasury seriously I mean that's why that's why D5 works I mean that i' rather put SM contract yeah that was a preview of the predictions episode which going to be a little spicy next week it seems like Define and gaming are back well we're also going to hopefully we spend some time looking at how dumb uh some predictions were because I always like to go back I have a I have a price I have a price question for you so oh um do you think there's any money to be made on like buying like a and uni and

these kind of like OG defi things are that that's a that's a Fool's game I tweeted about this too and I keep saying this because that's what I do for Ling now I should post um San you're basically an influencer now how do you feel about that you're you're a Content you're a content creator I don't know what I am to be honest um look I think you do fundamentals matter it's okay not yet makes more fees

in a day than salana but it's not it's valued at you know 135th uh yeah uh what's the right way to look at these things I think I think one way certainly is to look at profitability synthetics um is having its moment because it can't you uh it stopped inflation and you know it's getting a lot of onchain like activity through quenta and all these other products Lyra and the whole ecosystem of apps you know per activity they're making a million bucks like this week alone in up and down environments basically you look at that and you say well that's pretty compelling and then you look at okay what's the supply what do I like if if

basically protocol has got to earn more fees in a year than the entire fully diluted market cap well I would argue that's a disconnect in value right what happens when these BuyBacks happen people look at RIT like it's trading at a decent discount there there's rits I think is priced the way it is because it's fundamentally quite risky on um because you don't know it's non-founders but like these protocols like I mean Maker's been you can look at the buybacks on chain and you could think it so my argument is over the last two years if you look at

eth defi eth charts they've been terrible like absolute dog [ __ ] are they do for a rebound I think there are arguments to be made that defi is is is is back it's working it always has worked you looked at also the stress test that we had early this week uh you know there's like a draw down down five 20 30 like percent day um 20 10 20 depending on the tokens but like salana def was was stress tested and that was uh very good to see um and defi just continues to work and so it's always a relative game I think people also understand and like better infrastructure Investments like Lan's

like very generalized like look at cardano the less you ship the more it Spurs people's imaginations of what can be yeah look at look at nfts with utility it's like the more the more you attach utility to an nft the more that someone can put a value on it which drives the price down yeah I mean maybe the more intellectual question fun question is the top 10 how's that going to change of the next year because I've always been wrong about that consistently been wrong what I think the top 10 should look like yeah xrp's number five cardano's number eight yeah Doge Dogecoin is top 10 right now do is the top and and by the way it will stay there this whole cycle

grow look at the look at actually the more interesting is 11 through 20 polka dot Tron chain link polygon tcoin which I think is telegrams maybe Shiva you know Litecoin is still top 20 yeah Litecoin exactly I mean but like you can make the argument Tron is actually fundamentally like what are you like Justin or not putting that aside like like Sable coin it's actually like the Tron stable coin is like probably is like the most widely popular in place oh yeah like so that's tether on Tron is I mean also IMX is going parabolic since our your podcast with Robbie it's crazy I mean to say that it was because my podcast is it's a unfair charactera causation full

causation definitely zero causation causation but gaming and defi probably two areas that I I think are are are being underappreciated for sure but yeah my top 10 have always been wrong and probably will continue to be wrong so a part of my brain is entertaining well if it's going to be wrong then counter trade that and then do what a lizard brain or take the left curve approach I'll leave you with this I think and you and I were talking about this before uh starting this episode again going back to sh he's a great thinker he's not afraid of being called out and being controversial not because he wants to be controversial because I think he says things that a lot of people may think but are not are too afraid to say

publicly and I think he has a great post and I we'll end it there not a video or a uh podcast like not a video or another podcast recommendation but I will encourage people to go and read shows post on on on on tens right forget the name of it but we'll link it I think it's a a very honest like Expos I don't maybe not Exposition you know it was a it was a counter poost to uh I think Olie at uh Andre posted something being like what are we all doing here if we're all just dejting and child's like you're missing the point my friend all right let's call today yeah absolutely sir anyways great great chatting um will'll we'll be there's an interesting lineup right of new pods

just to we have a we have Empire coming out next week we have uh we have Avalanche coming out next week got Empire we got Avalanche coming out next week uh we are recording a really interesting debate tomorrow with Dimitri who used to be at 1kx or fund 1K yeah K and then Kyle Sani from multicoin Kyle is taking the pro deepin corner and Demitri is taking the anti- deepen Corner we'll release that soon as well so a lot of good pods yeah and I'm recording one with the founder of modulus um and Casey who was a Google and studied AI before it was cool um and one of the best investors in the space I think h on AI and crypto and kind of

parsing through the narratives the uh so yeah a lot a lot of stuff we try to be relevant and touch on things that we care about and I think are important in the Limelight uh so if you want to hear anything in particular let us know and if we're doing everything wrong also let us know we read the comments what do you think is more uh what do you think is more of like a neg influencer or content creator what should I call you God I think content creator is like a sof influencer I'd rather just rip the Band-Aid off you know be like come the Lord Jesus all accepted um the content creator just feels like you're kind of like a you're still an

influencer but you're [ __ ] you haven't made it yeah you haven't made it yet you're you're creating content but not getting paid for it I what it's worth like this ain't making living books but I do it because it's fun and uh so uh you can call whatever you want Man by the way okay next episode I will look very different and I will do something that you haven't been you haven't you haven't actually lived up to this B shave your beard uh I don't know we'll leave it at that that this is the perfect place to this is the perfect place to end why are you

doing because I haven't done it in 10 years nice and we're entering a new paradigm of because the bed [Laughter] pivoted all right let's wrap my friend go enjoy your poker games go enjoy uh Kane and the crew out there and I will uh I'll see you next week all right man great as always thanks everyone for listening we'll see you next week everyone thank you so much for watching today's episode really hope you enjoyed it we wanted to take a second to just remind you about our upcoming digital asset Summit in London March 18th to 20th Santi and I got your back seats are limited and we hooked you up with a 20% off discount code it is Empire 20 if you heard it earlier in the podcast there's

a little competition running at blockworks to see who can drive the most number of tickets so when you register for the digital asset Summit make sure you use our code Empire 20 see you in [Music] London