On The Brink with Castle Island - Weekly Roundup 09/05/24 (WorldLibertyFinancial, Galois settles with the SEC, XRP's stablecoin) (EP.559)

Episode Date: September 6, 2024

Matt and Nic are back for another week of news and deals. In this episode: SEC fiscal year ending in September How to get accurate transfer volume figures for stablecoins How much volume do stablecoins really settle? Do SEC rules stop registered venture firms from voting in governance or staking? CFTC settles with Uniswap Robinhood settles with the California DoJ Choke Point 2.0 is still happening What's the latest with World Liberty Financial? John Deaton wins his primary in MA What's the deal with Polymarket versus the polls? Sponsor notes: Withum's Digital Currency and Blockchain Technology Team specializes in crypto-assets, offering accounting, tax and advisory solutions to fortify trust in a dynamic industry. Contact them today to get started. - withum.com/crypto Coin Metrics: An Update on Layer–1 Networks

Matt Walsh and Nick Carter are partners at Castle Island Ventures. All of these expressed by them or the guests on this podcast are solely their opinions and do not reflect the opinions of Castle Island Ventures. Guests and host may maintain positions in the assets discussed in this podcast. You should not treat any opinion expressed by anyone on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of their personal opinion. This podcast is for informational purposes only. Brought down by bad mortgage investments, Lehman, which has 25,000 employees will be liquidated.

The federal government loans American International Group, AI, $85 billion. This is a different kind of market, and the Fed is asleep. The federal government is stepping it to stabilize Fannie Mae and Freddie Mac, the two mortgage giants that have been threatened by the housing crisis. The Bank of England has pumped 75 billion pounds more into Britain's ailing economy with a new round of quantitative easing. You print a couple trillion dollars, and all of a sudden, people start to worry.

So out of this worry, we have something called the Bitcoin. Welcome to On the Brink. I'm Matt Walsh. And I'm Nick Carter. And this episode is brought to you by Witham. So if you listen to this show, you know that we take tax accounting and auditing very seriously. And when it comes to digital assets, building up trust in relationships with your counterparties like custodians, brokerages, and even regulators is critically important.

And that's where Witham comes in. They're a top 25 accounting, tax, and advisory firm with a team of professionals that is dedicated entirely to the digital asset and blockchain ecosystem. They assist some of the highest profile companies in our industry with things like tax advisory, accounting for token sales, stable coin audits, and financial statement audits. These guys are not just accountants. They are crypto enthusiasts, and they were the first accounting firm to build out a digital asset practice. Witham is passionate about the space.

They're passionate about helping you and your company achieve your goals. So head over to witham.com slash crypto to learn more. We had a witham podcast episode this week with Mark Eckerley. That was a fun one. That's right. So you sat down with him, talk about their tax accounting, advisory practice in crypto. Then we also had Sean sat down with Dan Burke's CEO of Nirvana Labs talk about their Web3 cloud offering. So busy podcast week for us. Very busy podcast week. And we have a new podcast page,

new website, new website. Castle Island.V.C. I think it looks great. I think it looks great. So shout out to the forefront team that helped the number of portfolio companies of ours with website design and all manner of things over the years. So really happy with the way that came out. Yeah, I mean, it was way overdue for a facelift. Let's be honest. Yeah, I think this speaks to the brand image. I think we're happy with the outcome here. It betrays a real seriousness and a rigor.

Yes, right. It's minimalistic. I think it's very pretty. But yeah, Mosey on over to castle island. Vector Charlie. Check it out. Well, we have a bunch of news this week. I wouldn't say it's a heavy, heavy news week, but there's a lot of just regulatory things.

Do you know that the fiscal year for the SEC ends on the 30th of this month? So I think we're going to be seeing a flurry of activity. I didn't know that. Yeah. But that presages dark tidings, I think. I think that's right. So we'll get to some of that. But there is some good news here on the deal front.

First one up is robot ventures. They're a crypto investment firm. There is $75 million for their latest fund. So congrats to the robot team. That's great. That's right. Next will be a balance of blockchain AI gaming platform. There is 30 million from A16C Galaxy, Ammova. And oh, that should say Anamoca. I was going to say I've never heard of Anamova and Amber Group.

Then we have Alchemy. This is a Web 3 development firm. They have acquired Beware, a blockchain infrastructure provider. So a little M&A activity. Then we have hypernative blockchain cybersecurity company. They raise 16 million from Kwan stamp, Block Sailorate, Borderless, and Bold Start. Then it's time. This is a time tokenization platform that raised 3 million from Brevin Howard, Coinbase Venturers, BrinkVC, and a number of others. What do you think a time tokenization platform entails? I've been wondering that ever since I just read that.

So the block says there are a startup that tokenizes. people's time. So I guess like a kind of like a tokenized consulting service. It kind of reminds me. I just remembered what it was. So it's it's not dissimilar to the Earn.com thing. We can actually remember Earn.com where you have to pay a certain amount of Bitcoin in order to send an email that got a response from how could I forget? I harvested a stupid amount of Bitcoin on that, especially because I wasn't really very well known at the time. but people still sent me questions. And you just responded.

It's kind of like the orb thing too, right? The orb, if you have the orb, then you can ask a question. Rippin piece to the orb, man. The orb project has been terminated. Oh, it's over? The orb's over. And I initially thought it was very fun and engaging. And I liked the tokenomics.

It was a real world usage of the harbiger tax, which was very cool. but it did become a lot of homework for me specifically because I diligently answered my orb questions and then I think it just fizzled out and I'm kind of sad about it because I thought it was a really cool experiment. So does anyone still own your orb? How does that work?

No, the orb went to auction at the end and it expired. I thought about buying it back but in the end it was, I think the orb was ruling. So thank you to all that participated. Actually, I met one of our future Port co-founders because he owned my orb. Do you know which one? Oh, I, this, yeah, I remember this during the diligence. No, I can't remember. Alexi from Bob. Oh, that's right. He owned your orb. He was an early owner of my orb. Yeah. That's how I first met him and then we invested in Bob.

What a, what a great, you know, did you put that in the investment memo? I probably should. should, yeah. So the orb was useful in the end. Definitely, yeah, got us in to Bob. That's great. So time dot fun. Next up, we have Legends of Arcadia, Web3 game developer. There is 4 million from Anamoca brands, OKX Ventures, and others. Then we have IDA, which is a stable coin issuer that raised $6 million from CMCC, Global, hashed, and HackVC. Then we have Credite. That's to the K, a stable coin-based remittance platform. There is 2 million from blockchain founders fund, tech stars, polymorphic capital, and others.

What is the etymology of the word credente? I really am curious about that too, and I'm going to look it up. The purpose of credite is to allow African immigrants to build credit and send money back home. So I guess it is a derivative of the word credit. Okay, that's what I would have thought. So stable coin remittance platforms, very, very hot category right now.

Not just in terms of capital going into these businesses, but in terms of real traction. So we're talking about that more in our stablecoin report. Yes. And by the way, that's coming out one week from today. So on the 12th of September, our report comes out. The long-awaited stable coin report, we're very excited to share it with you. We will be doing an episode with it on it. Yeah.

This is going to be a great report. I think people really like this one. All right, the last one of the week is a new fund. Halo Capital, which is a new crypto venture fund. It is started by Daniel Howard and Bavin Baud. They have raised $25 million for their debut fund. So congratulations to Daniel and Bavin. Yeah, big congrats to those guys.

Bobin is actually a good friend of mine. So really happy to see that. Those are the deals the week. Before that, let's quickly dive into the metrics minute, brought you by Quine Metrics. This is all about L1 networks. Layer 1 tokens surged early in 2024 but have lost momentum. Bitcoin, Tron, and Solana are still up over 30% year to date,

with a decline of on-chain activity. Ethereum total fees are down 98% from a peak of $38 million daily. While Solana's fees have dropped 89% from a high $4.5 million in March. Solana leads in transaction volume with 80 million daily transactions. But Bitcoin and Ethereum's larger average transaction sizes range from 10,000 to 25,000, reflecting their roles as settlement networks. On Ethereum, the median transfer value is $400 for USDC and $260 for Tether, while Solana has the lowest stable coin transfer values, $7 for USDC, and $50 for Tether. That's your metrics minute. Pretty good metrics minute there.

Any of that surprising to you? No, I think we knew that. And, you know, we do dig into the different networks in our report. One challenge we had was Solana data specifically. If you look at any of the major dashboards covering settlement volume on the different L1, Salana data is very high. As it turns out, a lot of that has MEP activity, so you have to exclude that. Because sometimes you see transactions that are millions of dollars,

but the intended purpose is extracting $10 in Mav. which is amazing. And how do you actually parse that out? You can either attribute the volume to MEV bots or other sources of churn. So in our report, we were able to do about 50% was attributed. And then the other 50% we impose certain heuristics. So we will put a gate on the number of valid transactions or transaction size. The other thing we do is we try and determine the intent.

of a transaction. So many smart contract calls will have many related transactions, but only one of them is kind of the final output. So yeah, there's a lot of tricks that you can do to kind of get to the meat of the transaction. And in the end, the real numbers tend to be much, much lower than sort of the nominal numbers. So that people get the settlement volume stuff for stable coins wrong all the time.

Well, imagine intra-exchange flows probably move the needle to, right? just custody reconfigurations and stuff like that at the exchanges. Yeah, that's another huge source of bias that we also sought to eliminate as well. So people say stuff like you know, stable coins are settling

$20 trillion a year. My estimate is it's closer to $6 trillion in the aggregate. Still enormous. It's a lot. Yeah. And yeah, that's the thing. Like, it's okay if it's not bigger than Visa, you know? like the numbers are still really big.

All right, well, let's hop into some news. First one up this week. So the SEC has charged and settled with Galois Capital Management. This is a crypto fund over failures to comply with the SEC's custody rule and for misleading investors around its redemption policy. So it looks like it was a fine of, I think it was $225,000 back to the LPs in that fund. What did you make of this one? So there was the issue that was that,

Galois was, or Galois, we never know how to pronounce it. Galois. They were used. Le Galois. So as we're both French speakers, we should pronounce it correctly. They were using FTX and or fireblocks for custody of fund assets. Is that it? Yeah.

So the founder of Galois came out and said that this was, you know, they were using fireblocks. So why don't we just kind of tee this up? Because I think the redemption thing is maybe less relevant. So it looks like they had been saying there's a five-day. redemption notice and they'd been honoring a little bit faster than that. So to me, that's maybe a foot fault. I didn't read anything in the complaint that would suggest that that was like nefarious behavior as much as it was just satisfying some of these things faster than the SLA.

Could be wrong on that. Now, the custody rule one is interesting because registered investment advisors are required to hold funds with qualified custodians. And so if you hold assets on FTCS, for instance, that is not a qualified custodian. If you hold assets on fireblocks, just the standard fireblock set up, that is also not a qualified custodian, although fireblocks does operate a qualified custodian in the state of New York, but it's only limited to, I think, like six or seven assets. So there's a lot to unpack here. I mean, obviously having assets on FTX becomes an issue if you're an RIA. Now, you might say,

well, look, I need to move the assets there to trade. And so they might only be there for point in time and it's unclear to me where the SEC would stand on something like that. So should you actually be able to do that or not? I guess the letter of the law would probably say no. You'd probably be looking to transact that with a QC trading desk. So trade that out through like a Coinbase or an anchorage. Now the question is what do you do with assets that are that are not custodied at QCs. So let's say that you hold assets in the fund in Anchorage or Coinbase does not actually support those assets. So you might be pushed into holding them at fire blocks. And that's where I think some of this is, you know, some of the conversation is going to go in that direction around,

okay, I have a fiduciary obligation to my limited partners to safeguard these assets. We hold assets that are not supported by QCs. Does that mean I just can't hold those assets, period, or do I need to take practical steps in order to safeguard the assets. There are types of assets outside of crypto that don't have QCs as well. And so there are self-custody frameworks in place. And you could follow those frameworks, I guess, for crypto and use them, use Firebox. So I think this is an issue where given how aggressive the SEC has been, it would not surprise me to see them ramp up against firms that had assets on FTX. Yeah, this looks like a warning shot.

But it's very problematic, I think, because if you are an RIA, this is an effective prohibition on holding certain assets that aren't supported by the big QCs, which historically has been most assets, although the QCs are getting better at hosting the launch of new assets

and things like that. But I think it's very concerning because it means as a fund that is an RIA registered fund, you just can't touch a lot of this stuff, right? I guess. I mean, I think that's where this kind of gets problematic if you're an RIA, because let's say that you thought that it was in your investor's best interest for you to participate in governance, for instance.

Let's say that there was a governance vote, and you could not do that with your assets held on Coinbase or Anchorage, that you actually needed to take them off, put them in fireblocks, cast a vote on a network. I think you could argue that it is in your fiduciary interest as a limited partner to have your general partner actually voting. It's kind of like a proxy vote in some respects. So if you don't do that, are you on the wrong side of the law?

Now, if you do do that, you obviously don't have the assets in qualified custody. So you're also at risk for a foot fault there. And to have the SEC just dictate what assets you can and cannot hold, to me that seems illegal, right? I mean, if you want to hold a commodity, you really should be able to do that. And I think in some cases, you do see these like,

even like foreign equities that might not have a qualified custodian. You do see hedge funds holding them from time to time. So like international equities where you'd have like a paper cert, that paper cert in some cases could be actually held by the hedge fund physically. To me, it's no different from that.

So you could end up in a situation where the interests of your investees in terms of having you maybe stake or participate in governance trade off against your regulatory obligations and you end up kind of stuck. Yeah, I think so. Now, this gets a lot easier, as you point out, now that Anchorage and Coinbase have much, much broader asset coverage and they're viewed as qualified custodians. So I don't know. I mean, this to me seems like Casewer is kind of easy for Galois to just settle and move about their business. But a larger fund, I think, would have really good grounds to push back on some of this.

Like the FTX one, I'm not as sure. Like you could have probably had most of those assets on a QC depending on what type of asset it was. So I'll reserve judgment on the FTX one. I just don't know enough about what type of assets we're talking about. Yeah, so lots of regulatory news this week. Big news, of course, the CFTC announced a $175,000 settlement with Uniswomp Labs over the use of unlicensed leverage or margin retail commodity transactions. What do you make of this? Well, so my understanding is that this is really against the front end of Uniswap.

So for some period of time, you could go on to the Uniswap front end. again, which is distinct from the protocol itself. And there were some assets on there that had some implied leverage in them. Now, you have those on the protocol always, right? So I think this is just a front end type of a charge. What was interesting to me was CFTC Commissioner Summer Mercinger had a really interesting dissent on this decision. I'm just going to read an excerpt here.

It says, but imagine if Jay Eddickson, Hover had charged Henry Ford with liability for the crimes of John Dillinger and Bodden-Clyde because the Ford V8 was central to their ability to commit crimes. This result is the natural endpoint of the commission's logic that is at play in this settlement. It's worth reading the full dissent here, but it really, the gist of it is, why are we regulating via enforcement when this is a net new technology, and we should do some rulemaking here. Like we should actually engage on this and define the scope of what the rule should be because it's distinct from, you know, there's front ends and then there's the protocol

itself. And I think they should be regulated quite differently. This presumably is not the end of the various enforcement actions against Uniswap though. Yeah. I mean, Uniswap has received, what, a Wells notice from the SEC around being an unregistered securities dealer. And coined also reported this week that Union Square Ventures and Andrews and Horowitz have received subpoenas from the NYDFS in relation to their investment in Uniswap. So who knows what that's about? But I mean, this is one of the biggest and most important projects in all of crypto. And it does seem like there's a lot of activity around the edges here. So elsewhere, in enforcement land, Robin Hood, agreed to settle $3.9 million penalty with the

California DOJ over an investigation into the company's face. to allow customers to withdraw crypto from the platform between 2018 and 2022. Hmm. I mean, wasn't it just pretty clear? I don't get this one. Like they were very clear with their terms and service I thought in the early days that they're not allowing withdrawals. My impression was that it was because they weren't able to initially comply with the travel rule the way they built it. And so you could buy it and then sell it, but you couldn't move it, which is not a great customer.

customer experience, but I think it was clear to everyone that's how it worked. Was there an issue where they delisted Solana? That was the issue. At the low and gave everyone their cash back. So they four sold everyone's Solana positions near the bottom. That was bad. So the SEC, when they named Solana in one of these various lawsuits where they've named Sol to be a security, Robinhead at that point, I guess understandably didn't want to support Solana anymore.

Now, you would argue, like, just let people pull it off the platform, but they basically force-liquidated Solana on the platform. At the low. That got people really, really upset. People are still mad. Yeah. As they should be. I mean.

Talk about investor protection. You were protected from upside. Yeah, you just got zeroed out basically at the low there. It's brutal. It's pretty much paid in the 10x that Salana did in the next year. Yeah. Well, more sunny news here, Operation Choke Point 2.0 keeps rumbling. The Federal Reserve has issued a C&D to United Texas Bank,

citing significant deficiencies in the risk management related to its crypto clients. No coincidence, I think, that another bank with a crypto or digital practice is being harassed here. I'd love to see data on this, but my understanding is if you are a bank that services the fintech sector, the embedded finance sector, and certainly crypto, you have a far, far, far higher likelihood of facing an enforcement action. Pivot's going well, though, right? Right, the Harris reset any day now.

Yeah, that's going well. All right, in sunnier news, I guess, we have a new product announcement here. So Brad Garlinghouse, the CEO of Ripple, has announced that they're launching a new U.S. dollar-backed stable coin called Ripple USD, R-L-U-Sd is the ticker. I said that could be launching in the next couple weeks here. So, I mean, Ripple will be a big player in this market, I'd imagine.

Yeah, I view this as actually an admission of defeat by Ripple. Because do you remember back in the day Ripple's whole thing was that XRP is going to be the bridge currency for cross-border payments, right? Correct. That was the premise of the XRP value. proposition. And I always thought, well, actually, if you look at the data, it's stable coins that are getting traction. And this was clear years ago, like five years ago. And so I always felt that that invalidated the ripple thesis, was the fact people would rather use stable coins. They don't take the risk, the volatility risk, of XRP, even for a short amount of time. Doesn't make

sense. So to me, this signals that they've thrown up their hands and they're accepting defeat, or they're accepting reality, which is that XRP is not going to be the bridge currency, it's stable coins. Well, I'll give a little bit more of a charitable interpretation. And look, I've bashed ripple over the years, primarily because they've decided, historically, I guess,

have decided to really counter signal against Bitcoin and Ethereum in terms of, like, the energy waste and things like that. Basically, they've made some cases publicly that I think are net detrimental to the industry. But you always could use, Ripple's technology without XRP. And I actually think the technology, from what I understand, from the financial institutions

that have used it, is quite good. And so I think you have this like financial plumbing thing that you always could have just used dollars. You could have used bank ledger entries. And now you can use a digital bearer asset. So, you know, maybe some people will continue to use XRP. Maybe XRP ends up being more of like a, I hesitate to say store a value just because the jinny coefficient of the holder base, but it seems to me that XRP is moving more in the

direction of an asset that will eventually have ETFs behind it and probably won't be used as a utility as much. I just don't see the relevance of XRP on the platform. And they monetize themselves by selling XRP. And they implied heavily over the years that XRP would be used by financial institutions it would be the native currency the network it would be used as a bridge currency so it's all seems very paradoxical to me paradoxical maybe i don't know i mean all good startups like pivot right so i do think this is probably just seeing a big market opportunity for dollars on chain and ripple network doesn't have a native one i don't think i don't think us dc is on ripple as far as i know so uh it strikes me that this is more

of just a hey we see a big market opportunity we're going to go after that i doubt they're throwing it in on xrp well i'm excited where r l usd goes yeah i'm excited yeah more stable coins i'm coming off like the the ripple champion i guess we should disclose we don't own any but i just think it's a interesting data point that we have a new stable coin so there's one other piece of political news that we have to discuss this week which is that world liberty financial. Oh, man. The worst project in the world, I think. Well, there's a few more political things to discuss, too. Let's talk about World Liberty Financial first, but I think this is a terrible, terrible idea. Anyone who is a, like, voting for crypto as their core thing should really

hope that Trump decides not to launch this terrible crypto project. So, I mean, we came out against it, I don't know, two episodes ago or last week was it? And since then, more, more horrifying details have come out. So, CoinDusk is reporting, I think they got their hands on the weight paper, that it is basically a re-skin of Doe Finance, which is a yield aggregator, basically,

which was hacked, by the way. And the team consists of characters that are not really known crypto quantities. One of them is a former pickup artist, Baron Trump, who's 18 years old. He's a college student appears to be involved. Eric Trump appears to be spearheading it. It's not really a team with a lot of crypto chops.

And it looks like they are intending to do a token sale. So overall, my read is that this is a shallow attempt to cash in on the Trump name and the fact that he has a newfound affinity for crypto. It doesn't look like the next a novice. D5 primitive at all. You know, this, to me, so if you're Gary Gensler right now,

you're sitting there and you're seeing like a 78 mile an hour fastball straight down the middle that you were just going to knock out of the park because there's no way that this thing is going to be issued in a way that the SEC is comfortable with. You know, doesn't strike me as a good idea,

but even if it was, why would you do it right now? Right. Like the timing is very questionable. It honestly, it smacks of desperation, Because if I'm very confident in my ability to win the election, why would I issue this now? I don't even understand why you'd do this.

I mean, is it to raise money? I think he's raising plenty of money. Right. Is it to signal that you're pro-crypto? Everyone knows you're pro-crypto. You've already said 100% of the things that you would expect to hear from someone who is pro-crypto. Yeah, yeah. You don't need to become a crypto entrepreneur to convince us that you like crypto.

Like, we're convinced. And here's my thought. if they were very confident in victory, they wouldn't release this now. Because, but if they thought they were going to lose, then they would. Because let's say Eric Trump had some internal polls and thought Trump was going to lose.

He understands that he has a window of opportunity between the time of Trump's talk in Nashville and the election, when the crypto community is highly engaged, they're following Trump. He has a lot of social credit built up. that goes away if he loses the election, right? Crypto community is no longer excited about Trump

because he's no longer a political factor. So if you thought you were going to lose, you would rush to do this now. If you thought you were going to win or it's going to be a tight election, why would you risk jeopardizing it by issuing a DFI protocol that is going to be the number one target for hackers

and is going to create significant regulatory exposure, undoubted the SEC is going to be on top of this. I don't think they'll issue it in a compliant way would be my guess. So I find the timing of this also very suspicious. Yeah. Yeah. I mean, that's a good point. It just seems like a grift.

I mean, I don't know who's involved with this thing, but if anyone is involved that actually cares about the future of this industry, now would probably be a good time to speak up. Yeah. Like, if you want Trump to win for the sake of crypto, Try and persuade him to not do this. It's probably not going to be the factor that determines the election, but it can't help him, and it certainly can hurt him at the margin.

So in other political news, in Massachusetts, the Senate primary was this week. Our guy, Ian Kane from Boston Blockchain Week, lost the election to John Deaton. So I guess congrats are in order for John Deaton. He will be facing off against Elizabeth Warren. certainly will have a lot of crypto support. We support anyone who's trying to beat Elizabeth Warren on this podcast.

We do, although I can't seem that optimistic about the prospects of a Republican winning the Senate office in Massachusetts. Well, it's happened before. Scott Brown won 10 years ago or so. Well, we'll see. Strangerous things have happened. We've had Massachusetts senators up here. Not a lot of them, if we're being honest. I mean, if John Deaton prevails, that might be the strangest thing to ever happen in politics.

I think people are pretty upset in Massachusetts, certainly not on crypto issues. It seems like the bigger issues in Massachusetts tend to be the economy and immigration and things like that. But, I mean, Elizabeth Warren is from Oklahoma, so she's not a native Massachusetts person. I think Deaton will have a lot of support. There's a ton of lawn signs for Deaton. This guy's done a great job. job with the lawn sign game. Really? Yeah. And I think that stuff matters. I've seen zero Elizabeth Warren lawn signs. You got to have a good, if you're going to be running for office, you have to have

a good lawn sign game. There's a definition of a grassroots presence. That's true. That's true. So, I mean, it's just going to be a grind here into this election. Don't you wish you could just fast forward? I certainly do. We have two months left. I cannot wait until it's over. Just everything is kind of in a state of, you know, torpor right now. Although the Bitcoin price, you know, selling off. My suspicion here is that the Silk Road coins are being sold through Coinbase. Can you explain to me why the polymarket odds are so at odds with the polling and also Nate Silver's model? Like, what's going on? These things don't agree with each other. They don't agree with each other. And I was talking to someone about this this morning who manages a hedge fund. And I think the

question is, does Polymarket just react to like Nate Silver's polls and to the broader polls? Or does it actually like, do you think there's alpha on Polymarket? Or is it just picking up the polls? I think it's the opposite where I think Polymarket is being used by crypto bros, obviously. And I think they disproportionately favor Trump and they're engaging in wishful thinking. So I think they are going to favor Trump over and above what the actual odds are implying. That's my guess of what's going on. So that's what I've been thinking for a while. But I mean, Polymarket had flipped Harris a few weeks ago in a pretty aggressive way,

by like four or five points. And now it's the exact opposite. Yeah, and you might say, oh, well, it's just low liquidity. But it's very high liquidity. It's an extremely liquid market. Yeah, yeah. over a hundred million waged on there so it's kind of a mystery it's it is a real mystery and Nate silver's model I guess is not open source right do you actually can you see what

yeah I think it's a black box we don't know yeah so I don't know but Nate silver has Trump at like 58% today pretty remarkable given the polling yeah I don't know I mean I guess we'll find out like if on election day there's a 10 point difference between polymark and maybe what the New York Times is forecasting, like we'll find out, right? Which is more predictive power? It's all just sort of probabilistic, right? Ultimately, if you're in that five-point band, it's kind of a coin flip one way or the other. I mean, even in 2016, like Trump was not favored and he did win.

So I guess there was a shy Tory effect, people call it, where people will respond to pollsters and they'll lie to them because they aren't willing to admit that they're Trump supporters. They feel that that's unpopular. So that could be something. But yeah, I think there could be a reverse shy Tory effect as well. I guess we just won't know until the polls close. So I think that's it for the week.

We'll have a busy podcast week next week as well. Got a bunch in the queue here. It's been very, very busy on the pod. It certainly has. Checking the warpcast right now. There's a lot of reaction to the foot guy story. Actually, there have been some new developments with the foot guy. Oh, wow.

Do you tell? Well, I can't share them yet because there's an active investigation. Oh, so the foot guy, so the foot guy for those who are unfamiliar is this random guy walking around Miami trying to, what, smell women's feet? Yeah, to get his close. as possible to various women's feet, including my friend Megan, who was, you know, victimized by the foot guy or rather he just asked to see her feet. And there's a police investigation. They have identified the foot guy. Oh, wow. Good. So more to come on that next week. And then I guess lastly, football season starts tonight. Yeah, actually, thank you for the reminder.

I've just up my fantasy team. I always forget. But yeah, I actually, you know, I think this is our year for the commanders i think is oh you think so yeah yeah could be got a good feeling about it yeah yeah i'm usually pretty arrogant about our chances here but uh i don't know i i'm hopeful that we're going to see drake may uh maybe halfway through the season yeah i mean you sound a little bit downcast compared to prior seasons like maybe reality's finally settling it about the past some of these weekends you just look at it's a tough schedule There's some some of these days you look at them and you're like, I might have to go apple picking that day. Apple picking is great.

Yeah, it is great, actually. I would say infinitely preferable to watching football, frankly. But I don't know. You get to like nine or ten wins here. If you're in the playoffs, anything can happen. That's kind of my orientation on it. What are your top three apple varieties? That's a great question.

I grew up a Macintosh Apple person. Interesting. Macintosh. I like Granny Smith. For me, it's Honeycrisp without a doubt. Oh, I love Honey Crisp. Yeah, that crisp is great. I think it's genetically engineered, but whatever the scientist did was amazing. Speaking of genetically engineered, I had these like cotton candy grapes. Have you ever had these things?

Yeah. Did they change the gene of the grape or do they just soak it in like Kool-Aid? I think they changed the gene. I don't understand how this is even possible, but you eat these things in a taste like you're eating cotton candy. I think we might have gone too far in terms of playing God there. Yeah. I mean, it's really, it actually feels, it tastes like candy. Yeah, that's, that's not right. No.

I don't think that was Providence's intent for us. No, I don't think so either. All right, so that was talking food. We will be back on Monday. Everybody have a safe and healthy weekend.