Why SAB-121 is Massive for Crypto | Round Up

Transcript

let me ask you the question you're American like you work in the industry like is it not refreshing in a breath of fresh air to hear someone actually be supportive of the industry like can you not empathize with people that have been feeling very stressed under the current Administration say you know what yeah I'm a single-issue voter does that make you a fool I don't think so this episode is brought to you by SE se's V2 upgrade introduces the first High high performance parallelized evm already live on public devet M net comes later in Q2 you can follow along with the say Journey on X say Network say is spelled s eii go follow say on X say Network

scary stat for you the odds of falling victim to online crimes are one in four Aura provides digital security protection to keep your personal information passwords online activity and Technology safe from online threats Empire listeners Aura is offering 14 days free plus up to 55% off an Ora subscription when you visit Aura Au a.com blockworks terms and conditions apply cite for details you'll hear more about Aura later in the show this episode is brought to you by Kinto the safety first layer 2 that features user-owned kyc and Native account abstraction to solve the two biggest roadblocks to mainstream adoption One Security and two user experience their

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Roundup time what's up man well not much you know it's just uh coming back from New York feeling very refreshed wishing I'd be there give me the highlights and the low lights of the trip H there's too much going on to go into that but uh we did a great uh Meetup bunch of people showed up that was really cool um and yeah I met with a bunch of people in the salana team a bunch of teams they have an office there in SoHo and so I was there uh really got to see a lot of the teams building I just really energizing to be there and meet with a lot of these guys and teams and so yeah really cool nice nice little pleaser dinner Friday night well that too that

was also really nice can't believe never listen to the wuang album Lesner actually was the one who first called out the oped that kind of went viral over the weekend he's like look he's like what is this oped had like three likes and I was like oh I don't he was the first I was like oh I don't know probably nothing whatever and then woke up Saturday morning with about 70 DM so we'll talk about this oped I want to talk about also research Day New York that DBA put on I want to talk about um this me like doj took down a couple me guys um what else we talking about GameStop came back I'm curious if you think that's like sign of retail coming back we can talk about that there's like an ongoing thing as we are recording this about

margin fi and pump. fun it's very unclear of like what really happened because it just came out five minutes ago but first uh let's talk Sab Sab 121 yeah yeah let's definitely do that cool let me pull um so we've got Casey Wagner um from blockworks joining case has been on the show a bunch so case welcome to uh welcome back to Empire hi thanks for having me thanks for coming on uh I did ask Casey to come on about four minutes ago so we've got ample prep time but case maybe if you could lay out um you've had some really good coverage of of uh I guess it's not it's not a bill it's a you were explaining to me it's a bulletin board or something or another can you can you explain to us what Sab 121 is okay yeah so Sab 121 is is kind

of the background policy from the SEC which inspired joint resolution 109 it's not a bill it's a resolution but the process to pass is very similar and that is what passed in the house last week and it passed in the Senate just a few minutes ago with actually a lot more bipartisan support than I think anyone was expecting so what was Sab 121 why why was it so important what what is the related to custody and banks and can you just give us an outline of it people in the crypto industry were interested in Sab 121 because it basically says that anyone who custodies crypto assets has to hold a corresponding um group of assets on their balance sheet and they have to

list it as a liability so it makes accounting a lot more difficult for custodians um that was really the the main point that got the crypto industry's attention um the other kind of component of this is like I said because it was an accounting bulletin and not a formal rule there was a lot of um concern about over how the SC decided to publish this guidance um it seemed a little sneaky to a lot of people the fact that they didn't do it through a formal rul making process so so this was gensler's kind of rule or Bill or I or bulletin or guideline I'm not even sure the right

word to describe this that said basically uh unlike all other forms of custody if you custody crypto assets you have to hold them on your balance sheet as though you own them and you therefore you have to hold Capital against them as well and so that is a completely insane thing to do so it makes it so that the likes of maybe a bny melon who's ready to turn on crypto custody uh and has been ready for years hasn't actually done it which is therefore limiting to other folks um who maybe want to enter the space and don't want coinbase to custody to their assets they want maybe a qualified custodian to do it what is the there's a political element to this right case so there's uh Republicans wanted to repeal it um tell me if I get this right Republicans wanted to repeal

it uh in in the big surpris was that 21 Democrats came out and joined the Republican effort kind of breaking from the mold can you just explain this a little bit to us yeah so like I said the SEC staff passed this bulletin in 2022 which is when the conversation kind of started in Washington there was actually the the government accountability office did a review um and basically said that the SEC kind of overstepped and that this guidance was inappropriate to be issued in an accounting Bulet versus a rule the office basically said the SEC didn't do things really correctly and it it kind of was not necessarily by the book um so that's really when when interest in Washington started to pick

up the joint resolution started in the house it was a bipartisan effort um one Democrat Senator um C the or Kristen gelan from New York she signed on to that um at the time she was the only Democratic senator to support it um but eventually the resolution worked its way through the house it was voted on last week and like you said 21 Democrats actually supported it um which is more bipartisan support than they initially had as co-sponsors and then you know if we remember the song of how bills become laws once the house passed it it went to the Senate which is the vote that they

had today and I believe there were 12 Democrats that voted in favor so in the Senate we all know they only need a simple majority we were expecting like maybe three to five Democrat Democrats to support it so 12 is definitely a lot higher than anyone that I spoke to was expecting um they only needed two so it it definitely shows that there's a lot more bipartisan support um the next step is it goes to the White House Biden said last week that he would veto it should it pass the Senate which now it has um the interesting point there though is if he still goes forward with the veto process and decides to kill the

resolution it would be the Congressional review act with the most bipartisan support ever that Biden has not also supported so it' be very overtly Biden being very overtly anti-crypto um essentially yeah you could say it like that it would be surprising um for him to veto something with this much bipartisan support um and again like I said yesterday when we were working on this story and talking to people on the hill they thought it was going to pass they thought a few Democrats would get on board but what we saw today is like way way more than we were expecting how do you read into this like obviously crypto's become very has

always been very political but like in this election cycle it feels like it's BEC more and more important Trump obviously we saw the clips from his uh Speech in Mar Lago uh what the like the first second order effects here on this particular Bill and like play out the tape like if it were to go to that and Biden would like exercise his veto like does that what's going on in terms of the election strategy like do you think that's even Computing in his brain yeah that's his his team's brain because you know I guess yeah that that's a really good question I mean I'm inclined to think that there was some reconsideration on the Democrat side in terms of this specific resolution um so Chuck Schumer

who controls the Senate basically he pushed the bill vote um it was supposed to be a little bit earlier he pushed it to today which again in my mind signals that they were trying to give it a little bit more time get some more support um from people that I've talked to the Biden Administration was pretty surprised at the response to them saying that they would veto so they issued a statement right after the house passed it saying if the Senate passes this we're not on board and the response was was pretty negative and pretty widespread and from what I understand that was not what the administration was expecting no one was expecting 12 Democrats to to get on board today in

the Senate so that kind of adds adds more to it um it's interesting I mean I think a year ago I I didn't necessarily think that crypto would be a significant Topic at all in the presidential election um I'm starting to to think a little bit differently I know crypto is definitely a really hot topic with some of the Congressional races um and it's interesting to see how it's starting to play out in the in the presidential race as well do you think what what else are you following here case as you as you speak with people in DC like what are the what what are folks saying on the ground in DC right now know just about

this specific bill or crypto yeah about just like this bill and then like what I guess what happens next yeah yeah I mean I'm I'm really curious what the the conversations with the White House are like um I talked to rep nickel yesterday um he supported the bill in the house and then yesterday morning actually he sent a letter to Gary Gensler asking Gensler to just get rid of Sab 121 and then that would kind of it wouldn't matter if Biden V toed this or not because Gensler has the power to kind of like end this and that's what rep nickel was asking him to do and you know when I spoke with him yesterday afternoon he said that he hasn't talked to the SEC like they're not responding um so it's seems like there's definitely

a lack of communication from what I understand at least um you know I'm only hearing one side of it um the SEC frequently declines to comment but it seems like a lot of lawmakers are trying to go to the agencies directly and that's not necessarily getting them anywhere which is then why you see joint resolutions case anything else on this I don't think so um we'll we'll see the official vote count should come out tonight or tomorrow so keep an eye on that and it's headed to the president's desk we'll keep reporting on it cool appreciate you coming on case thank you thank you Casey pretty interesting man I mean we we had this oped over the weekend um that actually I I would love to talk

about um we had this oped that uh Molly Jane published so we have so we so blockworks has like news and then we have the oped section right op-eds which we later learned a lot of people don't know what an oped is is um like they're opinion pieces right so we published a uh oh say I just opened up our opinion section and I now see that there's a bright red thing that just says op opinion so apparently are not the views of block works yeah yeah so um so we published this article it said only fool would vote on crypto alone and the sub subtitle was called uh was Americans should not prioritize their own selfish Financial interests over broader societal and ethical concerns and um yeah it was actually

Lesner uh actually both Hayden and Lesner at dinner they like he kind of showed me the phone he's like what is this tweet um I was like oh don't know I so I don't even see a story Mike and I both don't see stories until they're on the blockworks website because I'm in I'm involved in sales and sponsorships we have a pretty strong church and state here and uh I was like I'm not sure haven't seen that but I'll I'll read it after dinner and then I woke up on Saturday morning with about 70 messages um just very very angry messages I would say and then pulled up Twitter it's like oh boy something's something's happening and yeah sure enough I mean there's probably 300 or 400 quote tweets on that a lot of and I think the the general consensus after reading all this myself included

yeah yourself included was um the I think actually the content of the piece um I think the general consent as I could get it from after having SE really dozens of conversations with folks over the weekend on calls and getting feedback was the content of the piece people were not as upset about it was more the tone and the the tone and and the word fool and calling people fools and calling people and the the tone of being like I know better than you this is what you should do yeah like how they patronizing yeah I think a lot that was the tone of it I I would yeah I would actually love to hear your your thoughts on it as someone who obviously likes block works and we had dinner Friday night and stuff but also

tweeted about it like would love to get your thoughts on there's a like opinion pieces like there's like this uh really controversial I think I think opinion writers sometimes fall into this Dynamic of they need to create and stir up drama there's Janina there's this opinion writer in the financial times it constant like and I've come to terms with like no matter how much you want to reason with her reach out to her she does not engage in discussion because her role is to create controversy and piss people off that that's just like fundamentally what I think her she assumes her role to be um and I think there's a little bit of that here uh primarily on the title and to your point like the I don't know

iFly or what went into the decision to uh very explicitly attack people that I think it was just a stab at you know folks like Ryan cus and others that you know have rallied behind Trump after he became and he's become um really Pro crypto um and so yeah I mean the question is like we always talk about like journalism here what is the role of journalists I think it's like to report I mean this is an opinion piece so I get it you know I think the way you guys handle it is is I don't have any problem with that obviously there's opinion pieces people don't know what opinion pieces are they're not the views of block work are not the views of you guys

like there's church and state that's what makes a good uh media organization so I respect that I think that is really well managed uh I'm just going into the substance of the piece itself if that makes sense yep yeah it does make sense um yeah so I end up talking crypto crypto is very political and it is a single like if you've been in the industry After all you've gone through I mean the amount of hostility like is it unreasonable to Rally behind a candidate that is pro crypto I don't think so are you a fool for doing that I don't think so um are you I mean obviously it it does seem very

patronizing to say you're wrong for voting Trump essentially you're an idiot you're a fool uh I understand that perspective uh I don't agree with it I think Trump is and if you look at what his his administration did I don't think he's dumb at all I don't vote I'm not American but if I were to vote I would vote I will vote like I would vote Trump because if you look at what he did over the last four years it's one thing to hear him talk and he has to play to his constituent base and what they want to hear but what actually happens under the hood I thought was real progress for the US during his administration and we talk

about that but people don't want talk about that I don't want to go into the details but it was real progress like whether you agree with how he communicates and how yeah he's a polarizing character that's fundamentally why he got elected I think he's very anti not doesn't represent a politician so he's just going to speak his mind why fine whatever so yeah I don't know like that was not the nature of the discussion people don't want to talk about it because you know we're in a very polarized political world so that's fine but I don't know like let me ask you the question you're American like you work in the industry like is it not refreshing in a breath of fresh air to hear someone actually be supportive of the industry like can you not empathize with people that have been feeling very

stressed under the current Administration say you know what yeah I'm a single issue voter does that make you a fool I don't think so yeah yeah I'm not I'm gonna I'm gonna refrain from sharing my political thoughts too too early because we we're still uh we we still are six months out from this election thankfully but yeah know Mike and I had many conversations over the weekend and this week and conversations with people at blockworks like there's a decision to be made here H at blockworks right do you lean into this do you lean into politics because it is the conversation it is the most important topic of the next six months

um the election has a huge impact on on crypto so do you lean in and kind of try to be at the center of that conversation and really drive the conversation forward in a responsible way or do you say look hands off like we're not touching politics like that's just and I think we're GNA lean in like I think we will you know I had I had a few conversations with celus over the weekend he you know we'll probably have a like I think celus is gonna publish an oped from the other side we'll have oped from the middle we'll have other op-eds from it's it's it's not even left and right it's like that's not the right way to put it it's um just different views on on politics because there are there there are other conversation I had a few calls

with uh friends who are women in crypto who have been in crypto for several years and they're Founders and investors and like you know the way they put it to me is like look I'm I'm having I'm between a rock and a hard place right now like I'm having to choose between voting for crypto or voting for like protection of my body um with things around abortion yeah Healthcare and things like that so I mean it's just a it's a tricky topic but I will I do think that blockworks is going to try to lean into this and like try to drive the conversation about this forward in a responsible way because like what you know I like whatever happened this weekend like it it really it did spark this good conversation I think it sparked well

look that that's what media organizations should but somehow stop being becoming is this like we should be openly talking about top topics but we're in a state where we've become more and more polarized as a society the people that have strong like are knowledgeable are very afraid speak freely because of cancel culture and because of you know just look at you know platforms like Twitter are great obviously a lot of the conversation happens there but it can be a very hostile Place yeah look at comments on YouTube like it's not I empathize with people that are afraid to speak their mind and unfortunately the people should have the microphone don't have

it so I think if you guys can somehow become and enable people to feel comfortable to drive a conversation to have good discussion then I think that would be progress matter what the outcome is like you know what I mean like it's not gonna happen on Twitter it can happen in a format like a podcast it's not going to happen on National I think podcasts are a good medium like I would love to on Empire have some of these folks on and you know have some debates and have some conversations like I was seeing the tweets there's this one guy it looks like he's a I mean his bio says dumb person [ __ ] poster Trader but he has 200,000 followers very smart this crypto news site just destroyed their business with

one article send block Works to zero got like two and a half thousand likes and 350 retweets and I'm just like I mean there's no having a conversation with whoever this person is um but I do think actually podcast will be a good medium for that so you know I I've um there was a time where I was when I started to become more vocal on salana there was some accounts that came out and I think you sort of expect that to happen whether you're talking about you know what the sensitive hot topics are whether it's politics or eth versus salana Whatever tribalism Whenever tribalism enters things and you take the other side of it yeah but you know it's

gonna it's going to happen so I actually you go into that knowing it's going to happen and there was this account fishy who was very critical um and opinionated but actually informed um and he got a lot of responses particularly from the salana community because he was sort of being critical of salana and the fees and whatnot and I actually got on the phone with him and now when you reason with them and you know you actually have a private conversation I actually think he is very well informed he obviously has bag bias and that's okay we all do but he's he's obviously I might perception was that he was a very smart competent

individual who been around the space for a long time he actually brought up some very valid excellent points than then I Ed to go and you know talk to people in the salana ecosystem and then think about um and I thank him for that and I think you know um look there's just always this phenomenon where there's a very vocal minority it happens in crypto Community discords it happens in politics it happens in media organizations that are very you know skew in One Direction left or right you just sort of have to accept that um there's a a lot of hate online that's fine I mean that's part of the the nature of the game um but I don't think that should ever stop you from

speaking your mind yeah because if we are in a position where you're afraid to do it or you feel like you I don't know for speaking your mind in a reason informed way you're going to be cancelled or you're going to you know jeopardize a lot of things and we've lost a plot I mean my my comment to want a person out there was like freedom of speech is also allowing people within your organization to posst things you do not agree with you know the worst thing would have been for you to not publish that article in my op that opinion in my opinion because then then you're not allowing for both sides of the

conversation to like post their own opinions and then what's the point yeah yeah I agree with that I mean we're going to keep I mean we'll probably publish op EDS that make the other group of folks very unhappy too and we'll keep publishing I mean it's gonna be I think it'll be tricky but I think it's a good I think if anyone can do it blockworks have always prided us on being very non-tribal I will say so there are some media organizations in crypto that are very tribal um and I think we've always done a good job of trying to look past the tribalism and I think have built some pretty good credibility and reputation and Trust by by being able to do that and take the other side and hopefully we can try to do this with this election

which is going to be a tricky topic but two thoughts just parting here one I think if there's one area of improvement is just the headlines sometimes headlines are just scandalous for to drive attention I get it that's a business um had the word fool not if the word fool you strike that and use another word I think you would have gotten like a fraction of the visceral reaction most people don't read the contents they just read the headline respond to it so yeah you know everyone you know I don't know more balanced uh choice of words probably would have been better

but maybe we wouldn't be talking about it the particular individual wouldn't have used the word fool so maybe it's a good thing that they use fool I don't know it's like the it's like the YouTube thumbnails you know Joseph is always pushing us to do like you know the ridiculous faces that like you know things and it's like well we're in a world where you want to game the algorithm or you want to play the algorithm like would you rather have 5,000 views and not do a ridiculous face or 20,000 D views do a ridiculous face it's the same content but one of them like makes you you're you play yeah you're falling victim to the game we we we purposefully don't uh there are crypto podcasts that have 10 times more views than

ours because you know they they they give the audience what they want they want price targets want to talk about that like it's fine um I don't know I'm not optimizing for views I think the people that like this podcast are listening to it and I hope we're balanced I think hopefully we're balanced we're driving the conversation forward I don't care if we reach a million people or a thousand people but I think in the long term if we keep doing this and have a we're known for being a space where we can talk freely about things and entertain multiple opinions if we're wrong we go on the record of you know saying we're wrong and we try to bring in the most competent people then I think that's

what I'm optimizing for I'm not optimizing for you know being the most for like views you know yeah next topic me doj um let me pull up this I'm actually G to pull up the do I'm just going to read directly from this doj indictment uh so so summary to not bury the lead the me there's an me boost exploit for about $25 million exploit from about a year ago and the two folks were behind that were just charged by the doj um and face up to 20 years um for for the exploits I'm going to read directly from the doj indictment Anton Bueno and James Bueno took the following steps among others to plan and execute the exploit a

establishing a series of ethereum validators in a manner that concealed their identities through the use of shell companies intermediary crypto addresses foreign exchanges and a privacy layer Network B deploying a series of test transactions or bait transactions designed to identify particular variables most likely to ract me Bots that would become the victims of the exploit collectively the quote victim Traders and C identifying and exploiting a vulnerability in the me boost relay code that caused the relay to prematurely release the full content of a proposed block D reordering the proposed block to the defendants advantage and E last but not least publishing the reordered block to the ethereum blockchain which

resulted in the theft of approximately 25 million in crypto from the victim Traders it is um it's pretty wild to see uh just that like that I don't know I don't know how you feel about this but the doj like commenting on me boost and talking about relays and um and and honestly getting these I don't know I don't know how you feel about getting these people in trouble but I have some I have I have some thoughts on it like so I follow this guy called Collins belon Collins belon on on Twitter he is usually one to you know have good takes I think he's a lawyer he is a lawyer um and he the Nuance here is he's pring

through a complaint he has a good thread I just sent you a link it seems to be that the Nuance here is the um they faked a signature um and and then they of course like were after doing this you know Meb baiting they you know were Googling uh you know exchanges with limited kyc how to wash crypto so like that that obviously is uh you know something that they point to as like the intent of what they were trying to do that that that right there though Santi is crazy that they can Google that they can use I didn't even know you

could do this right so what they what they're actually saying here is uh they can the prosecutors can use your Google es for legal like you Google what they were doing for was like Googling for legal advice right and they can use that as evidence against you I honestly didn't know that they could do that well it's come up time and time again in these uh cases not just in crypto but you know they Google top crypto lawyers like that's that's crazy that they can that they can so so the expert is uh for people that want to read the entire um I guess document uh 26 um it you know I'll just read the point exploited a vulnerability in the relayer

computer code by sending the relay a false signature in Li of a valid digital signature based on their research and planning prior to the exploit the you know um these folks these Traders knew that the information contained in the false signature could not be verified for ultimate publication to the blockchain Instead This false signature was designed to and did trick the relay to prematurely release the full cont of the proposed block to the defendants including the private transaction information um once in possession of the victims Traders order transactions the defendant tampered with the proposed Block in the following matter so he um when I read that in Colin seems to um point to this particular um false

signature as uh would make the distinction between like a general swich attack and other me activity um meaning the fall signature was was key here so it will actually be interesting how this um you know the resolution of this case um I think that this idea of a false signature will be Central and also lay a precedent into just general me um and how it's conducted because again I don't you know I think when people use and talk about me it's just very BL like blanket statement I think there's Nuance in me well the Nuance here that I think that

so I think the doj I was very impressed by how much the doj knew about like ethereum and me and realiz the only thing they missed is that they so the the stealing the 25 million by finding an exploit in the me bot the the me boost relay implementation is I think how how how this $25 million exploit worked so what they really did they weren't this was an me coming from like this wasn't an me bot front running retail right this was an B this was like a creating a fall signature and tampering a transaction yeah but this was they baited the me Bots into sending them money so this wasn't nothing to do with retail right is like they like like

Jared from Subway regardless of whether it's I think the distinction of yeah you're baiting an me bot I get it but um I think it said differently I don't think it would have mattered if it's uh baiting be bought or just oh I see I see it's just the idea of the false signature like tampering with the transaction and I'm and I'm using this terminology transaction of col I I think that's the heart of the issue here now I'm gonna be very I think we should pay a lot of attention how this gets resolved um just to think about generally like Meb right I think the the fall signature tampering with the transaction I can understand why there would be like

obviously like issues with that General me you know not so much if if that makes sense but we should link to this people should go follow Collins uh Belton he he's always one to comment on these and uh I personally get a lot of value in his interpretation yeah we can link it did you follow the um Alexi thing as well what was that tornado cash oh yeah there was uh something came out two days ago right yeah he was found guilty of uh laundering 1.2 billion c$ 1.2 billion dollars and uh he was

sentenced to 64 months in jail very sad yeah I think it was the Netherlands that came down on him yeah it was it was in the Netherlands I think he was arrested in the in Amsterdam yeah and then there's the Roman storms case in the southern district of New York I think as well coming up um so the two Compounders of tornado right yeah but uh then I I guess I I was actually reading a Collins uh Collins Belton thing as well like the Netherlands is apparently extremely aggressive amongst EU members with regards to like uh kyc AML and basically they're just trying to make an example of Alexi but I mean it's quite it's quite sad when you think about it he's getting five years in prison for writing code

yeah yeah we'll see how the Roman storm um um uh case unfolds in the US this episode is brought to you by SE se's belief about the world I think is a good one they believe that the evm is here to stay agree with that they believe that the evm is going to look kind of like what JavaScript ended up looking like in the web 2 world agree with that they also believe that the evm and its current iteration lacks a lot of the performance and scalability that developers need so what SE has done with their V2 upgrade is they just introduced the first high performance parallelized evm into the market today they've got Lightning Fast block times and finality

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that just happened uh earlier today this is Thursday uh initially of course there's a lot of drama um in and confusion amongst uh you know in crypto Twitter uh but it was the hacker also as I understand just like tweeting um this guy stack Overflow wait stack Overflow worked for pump he worked for pump. fun uh I believe so yes yeah yeah um oh here I have the there's a lot of noise uh margin fi recently pushed out an update

yesterday um like my prude understanding of it and I'm processing through all of it is is is they leverage margin F like use Flash loans to exploit pump. font it wasn't a margin F exploit definitely not a margin F exploit can I read the summary from someone internal a block someone just sent this in blockworks they said um an attacker is exploiting pump. Fun by buying up all the tokens so pump. fun you can launch these new tokens right for anyone who hasn't used it they're buying all the tokens of every single new project within minutes and that fills the bonding curve to 100% And then they are using flash loans from margin fi to get soul to keep buying up

all the Pumped Up fund tokens without actually using their own soul and by quickly bonding out the token supplies to 100% the attacker is preventing any tokens from getting listed on the radium decks uh as ATT tendon so then uh so then the radium listings keep getting stuck um and then there are what's coming out right now is that pump up funds been exploited for around 80 million via this like kind of lending vulnerability that has somehow been exploited because of what I just explained I don't this is I think we're watching this unfold in real time but I think that's the summary it's not small amount it's 80 million yeah noticeably this is uh has been a like an attack on salana in a long time that I could

there's constantly defi exploits happening but this in my as far as I could tell is large but also been fairly quiet in the salana camp terms of exploits but this seems like large and also something that doesn't happen regularly yeah uh okay so sis okay it's kind of seems like he's just flash loaning to buy a bunch of newly launched meme coins and that's it like all he has are the coins but now he actually needs to sell all the valueless tokens to someone to make money then sisifus responds everyone who's deploying coins is getting drained coin laches with initial dollars flash loan happens coin goes to bonding with zero LP loan is repaid he's not actually making money

but I think the user money from initial deployment gets incinerated every time it happens got it okay that makes more sense yeah oh huh then the then the exploiters is like launching uh an airdrop um with these like funds that he's been able to get away with uh and anyways it's uh we're clearly not reporting here we're just interpreting but it's all happening in real time so uh there there's a lot of other margin fly was exploited as far as I know the the flash does not process does not go through unless you can

like if bad dead gets created the flash would not go through so margin fly is not like there's no that that 80 million is not like margin FES on the hook as far as like just an important yeah distinction here because there's a most people they're quick to just like you know post stuff but and create fud but anyways uh safe to say uh maybe uh stop using PP up one if you have any concerns about margin five you know get in touch with a team go on Discord um but uh yeah maybe not not use pump. fun right all right I'm coming in

with some uh an uplifting segment new segment to the Roundup the YouTube comments every week we publish the Roundup and every week I wake up and Santi and I just get shredded in the YouTube comments so I want to read you guys some of these comments oh wait just one sec I'm I'm going through a tweet here margin five supposed to 52 minutes ago so from margin fi margin fight is ready to help the pump up fun team with their exploit reminder operations on margin fi aren normal be wary of disinformation where able to help the pump team to remedy their situation yeah it's definitely not a margin I hack it's a yeah yeah okay moving on moving on YouTube comments

baby this is uh this is from the episode I did with uh with Arthur and Sean that you weren't able to make someone comments so talking about me says I thought the guy interviewing folks was an intern had noide he's a Founder gives us all hope that anybody can start a successful company thanks for the inspiration oh man if we lended Credence and like really took it Yo's eyes keep moving closer together he'll be a cyclops by the end of the Bull Run oh God we gotta go on this I will be Li I mean I always reference YouTube comments because I find them hilarious it's great so someone says it's great that sea Lael

was able to join the podcast from 1998 he must be baffled by our technological advancements Jesus let's see uh I'm gonna I'm gonna pull the oh these are so good our weekly Roundup the weekly Roundup we did last week uh let's see the comments on this one where do I see comments uh oh this was actually good but I won't read it because um these are surprising two whole minutes of ads at the beginning how much are you strapped for cash seriously though guys this guy posts the same comment on every every uh every pot uh Santi sounds so arrogant a lot of people always say you sound

arrogant do I I don't know oh yeah San sounds so ARG when he says that Tana should be at parody with eth with his logic Dogecoin would have overtaken Bitcoin long ago or EOS to ethereum or B&B like come on man we know you're smarter than this [Laughter] oh just getting roasted out here just getting um what else happened this week dude what about what about GameStop GameStop came back in is G is this going to be the the is this the Catalyst for retail coming back in um what what do you think of this what is it uh gme like the stock is up like 3x uh it's coming down a bit

but 3x since ring Kitty came back and I think what was interesting is roran Kitty had like a NDA like a silence period after the movie came out or something like that like he was finally able to like be public after was it the Netflix doc uh produce movie yeah anyways that expired so he came back uh really weird content on his Twitter account like just these videos and cryptic stuff and anyways um G there's also of course a salana version of a mem coin GameStop which is ripped like orders of magnitude more than gme and roaring Kitty went up 15,000 per. oh is that another meme coin yeah because his name is roaring Kitty

right yeah yeah no no I know that yeah so the main coins uh you know' been in this choppy like down only trend for the last couple of months I'd say you know it's been off all their highs for quite substantial amount like down 40 50 60% even more for others um and they they they picked up they caught a bid um in line with you know gme and um what was the other one the cinema company uh EMC no AMC AMC yeah um yeah and it's so fun to watch like Bloomberg and all them trying to interpret what's going on and who's buying and uh granted this is not too

dissimilar from crypto like uh if we look at uh GameStop is down from its high quite a quite a lot I mean it's like down 90% I believe or at one point was down similar to you know your typical crypto coin from alltime high in last cycle and so you know it's the same commentary that you hear from crypto folks like you were hearing it on Bloomberg like oh yeah you know you have all these people that bought the high and then you're dumping you know on they you know this this this is caught a bit but they're still heavily underwater like just a reminder that very so often because a particular token is down only people are quick to

call it a you know it's a scam it's a worthless thing you know this is not only happening in crypto like it happens in traditional markets too like I think it's important just objectively make the distinction be a little bit more sophisticated in your thought process sorry if I sound arrogant uh but it's just like because something goes down 90% that does not necessarily make it a scam or a worthless token it's just maybe it shouldn't have been worth you know what I mean like it's just important to if if you truly want to find gems you have to maybe put aside that and go deep into particular projects that you like and if the token's down 90% And it's trading at like distress value some tokens are trading up below what like the treasury Holdings are like there's just a lot of

irrationality but people are just uh they block them El out when they see something that is down a ton um no I'm not suggesting GameStop is a fundamentally like a good company no it's important do the work I'm not gonna do that for you sorry go listen to someone else I don't I don't I don't do this to feed you Alpha I do this personally all right I got info on the uh on the exploit not really it looks like it's not really an exploit it looks like um in the 80 million I think Haka Haka said this this is an $80 million exploit in the same way that alam's internal balance sheet marked their maps and oxy oxy bags in the billions like that's what it seems I guess because of

the bonding curve you're valuing these tokens at a certain amount and like it's really not 8 million I think this will come out as being like just don't use pump for a little bit uh but not like a big hacker exploit that's what it seems like did you just say how did you pronounce that hackera no Haka how do you pronounce it I think it's silent h to or no silent like Saka no uh it's not don't know I don't knowa if you're listening if you're listening to this please most Empire episodes he told me so he will he should come on then we uh I asked him he said no thank you he said I don't do pods we'll continue serving

my role as a regular listener of Empire I was like well we appreciate your um your uhen please enlighten Us in the comments I think it's Saka not Saka uh DBA research day was yesterday research Day N one of the best days of the year DBA John charbin Michael Jordan put on a great day big shout out to them there's great talks from um we had Lee Yang from Mega eth give a talk on it was called why ethereum sync sucks um uh the CTO of jeto um gave a great talk on uh on uh just improving salana um and like potential ideas for for different like

um a couple different like Salon infrastructure ideas uh Stefan from Frontier gave a great talk on um on cake the cake protocol uh Chris go gave a great talk on like why we shouldn't call things like X's money like eth's money um and talked about breaking the crypto wheels just a really good research day it was like it's the event I look forward to where you just get to sit in a chair and listen to Great talks and nerd out all day and there's not really networking there's not no one's drinking like it's just a great day yeah that's good yeah I was gonna go to that I just had to come back and uh I I was there I mean I think uh I was with

John actually in the salana event it was just him and him and I uh just having like a open conversation just like with a lot of the teams that are in New York like with getting mentorship and guidance and so it was just a real treat yeah uh I met Lily also from salana Foundation to dinner just was chatting with her and um OE who runs salana or leic growth International especially in Asia um and so yeah it's really really exciting uh what I found to be most interest or one of the things that I find most interesting generally about the salana community is that they're very open to listening

to feedback and I think it starts from the very top like toally is someone that you know is very open to hearing criticism and they've even optimized fee markets based on criticism from a lot of the you know ethereum folks um I think that's one of their edges just always being open and and open to criticism and very interested in you know especially maybe as someone like me who not like there you know because become more interested in Sal over time um but I look at other stuff um so yeah it's always really nice to interact with people within the salana community and team uh speaking of salana there was an

interesting stat on May 12th so four days ago Solana generated more what is called total economic value turn baby we're we're we're pushing that turn through I was gonna say I mean Dan Dan Smith uh you know black H's research thank you Dan uh I retweeted this and yeah it was quite interesting I think this goes back to and and for context the total economic value that you're linking at here people that are not watching is defined as transaction fees plus Meb and people should go listen to the episode that uh we recorded with Kyle talk about this

point but uh I think this is something this chart is probably one of the most important to watch going forward um and yeah a big part of my sonon thesis yeah it's interesting total economic value we are spending a lot of time thinking about how to Value these l1s and l2s and protocols and total economic value while it's not maybe the cleanest term it's uh we we're we're trying to think of different ways to Value it's very straightforward I mean it's easy to understand yeah um we announced some new I was just recording a podcast and I was just recording sorry I was just recording a podcast in Spanish and we like people are catching on to this idea that like what I said Flex on oh people yeah people are

um um it'san Haro it's just like these guys that have been en crypted for a long time I think they're the most they're one of the most popular in Latin America anyways this guy they there this side concept that like the two revenue streams of Block Base blockchains are not only transaction fees but IB is catching on and I think it's just interesting that the market you know Market participants are and the community in general is like understanding that so the biggest push back that we got to this post was that um Dan's post which went pretty viral was that uh that we didn't include l2s fair and I'm curious what you think of this should we include l2s in this or not

I can think of reasons why you should and why you shouldn't so I don't know because okay it depends right and again I'm thinking of the episode that we had with um um what's his name Stephen yeah from Arbitron we were talking about like it's always been this l2s are l2s parasitic to the L1 like they're posting to the L1 so some value does crew to the L1 but like in the proportion of how much value is captured are you not double counting if you're using the L2 if you're if you're including the L2 as part of the L1 two separate assets right they all have their native token R op except Bas um but the sequencers

capturing a lot of that value right like when you think about the values been created in L2 the sequencer is creating a lot of like a lot of that's like me but that's not being distributed back to the L1 so if you're an eth holder you're not directly benefiting from that the only thing that you're benefiting from is the L2 posting to the L1 and that would show up that would already show up in this in this measure right in this in this metric through transaction fees no or even marginally M but mostly transaction fees I'm I'm thinking like if you include l2s aren't you like in some way

here Dan did the the work Dan did it there's a lot of push back that this chart doesn't include Ethel 2s I do not think it should and have my reasoning in the Tweet below if you count the 340k of L2 transaction fees on May 12th anyways it edges ethereum ahead but shows just how close the two truly are that but it's only transaction fees what I'm saying they're marginal right oh yeah that's like that's a whole point of like uh more and more especially with like uh the modular movement like more more you have more l2s you have a lot of economic activity but like the the amount of fees that are go flowing back to the L1 are are very very small as a percentage of the total economic value that's created in L2 and what trickles

down to an L1 it's a fraction of that so yeah I think you should count it um like that but but it's a small number is what I'm trying to say right yeah I mean the argument again there's another argument against couny it which is what we talked about with stepen to which is like look a lot of these things like op like optimism doesn't have fraud proofs and is governed by multisig like they're they don't inherit any of the security from ethereum at all is my is is my understanding and someone should correct me if I'm wrong there um because I feel like I sometimes talk out of my ass with this stuff but like if you if you don't have a decentralized sequencer you don't have the bridge an immutable Bridge contract and it was actually shout out Westy at blockworks research was talking about this too like

immutable Bridge contract decentralized sequencer and a permissionless proof system like how like like why would you include them you know it however you're counting my point is however you're counting transaction fees in Meb ndl1 should Encompass all the activity that it's flowing into the El that should by default include whatever is happening in the L2 and is posting and acre value to the old one but it's just counting economic activity in the L2 no I don't think so because it doesn't uh the analogy would be Salesforce so think about Salesforce Salesforce CRM like you're an equity holder in Salesforce it has an ecosystem of

apps that benefit from the you know the ecosystem of Salesforce all the clientele that may tap into the App Store but like you have all these companies independent of Salesforce that are creating businesses in of themselves yeah now Salesforce like apple might take a cut from that but that's going to show up in their p&l that's going to show up in their like commission fees or whatever they take some cut of the App Store Revenue in the same way here you should be including that like marginal 310k or whatever that wesy didn't include originally but it you should include it because it is it is like it's a stream of income to the ethereum if you were to do a p&l on ethereum you would include it as like L2

posting PES include that but it's really small the vast majority of the value that's created in these base layers like Salon ethereum is Meb right yeah which is like one of the more like you remember like in a state where like there was a very contentious and probably still is some debate around you know l2s and yeah of course they bring a lot of scalability to ethereum but there was some discussion on are they actually parasitic are they not how much Val is actually going to flow down to eth and if you're an eth holder right if you think about you know e559 and the burn you know if if a lot of that value is created an

L2 and L3 and L10 but not occuring down to the L1 then it makes again the argument of well shouldn't you be perhaps thinking of maybe I should be owning an L2 token not an L1 because like in the state where like with arbit ASAS for instance and again the the the podcast with Stephen is really really instructive I think he's one of the smartest people out there and he I think lays out very clearly they when we talk about l3s you know um if people are using arbit stylus and like they using the or op right like they you know bases using op in the game uh you know there's like some there's some like uh fee that the arbitrum as an ecosystem

is acur if you have more apps there if you have people that are using that stack to built on top of arbitrum um that makes you bullish like arbitrum is an ecosystem marginally ethereum more so arbitrum if you know what I mean yep does that make sense yeah it does make sense yeah yeah okay yeah sweet I have a call five minutes I need to for this is good well um stay safe out there everyone um important to when you see this when there's smoke there's fire um so if you have any doubts you know just uh play it

um and it seems like margin f is okay pump just give it a break you know just pump the breaks and pump up on yeah while uh you know I say that as an investor pop that fun so hopefully everyone is okay and this disclosure what uh Saka Haka Haka is uh saying so anyways uh we'll be reporting that next week and just uh hopefully more clarity there yeah we got some new permissionless speakers too we got um Devon fcer CEO of openc Spencer bogar GP of blockchain cap tar from multicoin Harry the C of arbitrum Uma um heart Lambert Umar Roy from succinct Labs I was with Hart

actually yesterday um nice Eva uh from graph Foundation Jake trinsky um B be from hashed oh yeah um that's great oh man Nick Dodson uh Co fuel uh frederiek the co-founder of nois so good people go register amazing fun so speaking of I'm actually like uh I'm going to I'll make a quick trip there's a part of what I did with salant I'm going to do now with h another ecosystem it's actually L2 and I'm really excited they're in Berlin so yeah this reminds me of like early early ethereum days like Berlin used to be this like very web we're uh we're cooking something for

Berlin I can't yeah I can't share yet you're coming in closer here that's great yeah yeah yeah more Europe stuff so all right that's a good place to end before I share too much thanks for listening folks we'll uh we'll see you Tuesday awesome folks don't forget to post on YouTube [Laughter] please all right you heard about SE a couple times just want to give them one last shout out big thanks to se for sponsoring this episode of Empire there are a ton of reasons to build on say if you want to get in touch with them you can reach out to me I'll put you in touch directly with the team you can also get in touch with them on Twitter at say Network you can follow the journey at say Network they are currently live they've got SE V2 on public devet today mainnet goes live

later in Q2 really excited to have SE sponsoring and partnering with us on this episode of Empire [Music]