Tech Brew Ride Home - Tue. 12/27 – Is The Sun Setting On SOL?

Episode Date: December 27, 2022

Not an exchange blowing up, but is one of the biggest crypto projects in recent years losing developers and maybe entering a death spiral? More supply chain worries for Apple in China. More concerns about the accuracy and efficacy of our new AI bot overlords. And heads up about the new tech hotness from China. Say hello to Temu. It might be responsible for some of the presents you unwrapped recently. Sponsors: Storyblok.com/ridehome Links: Solana’s Top NFT Projects DeGods and Y00ts to Migrate Chains (CoinDesk) Apple’s business under growing threat from China’s Covid wave (Financial Times) Study finds AI assistants help developers produce code that's more likely to be buggy (The Register) IRS Delays $600 Tax Reporting Rule for Venmo, Etsy Sellers (Bloomberg) American Bargain Hunters Flock to a New Online Platform Forged in China (WSJ) Learn more about your ad choices. Visit megaphone.fm/adchoices

On April 4th, 2023, around 2 in the morning, a man was found stabbed multiple times on a sidewalk in downtown San Francisco. Hey, who did this to you? What happened next turned the story into a political firestorm. Reports have identified the victim as Bob Lee, the founder of Cash App. From Bloomberg Podcasts, this is Foundering, the Killing of Bob Lee, beginning April 16. Welcome to the Tech meme right home for Tuesday, December 27th, 2022. I'm Brian McCullough today. Not an exchange blowing up, but is one of the biggest crypto projects in recent years losing developers and maybe entering a death spiral. More supply chain worries for Apple and China. More concerns about the accuracy and efficacy of our new AI bot overlords.

And heads up about a new tech hotness from China. Say hello to Temu. It might be responsible for some of the presence you unwrapped recently. Here's what you miss today in the world of tech. Solana-based NFT projects D-Gods and Utes announced plans to leave the Solana ecosystem for Ethereum and Polygon respectively. These were the top two NFT projects on Solana, so that's super bearish for the whole sole ecosystem, as it might signal that ambitious projects no longer want to build on Solana and might view it as a potentially dying ecosystem, quoting CoinDesk.

There's an argument to be made that Degods has capped out on Solana. The project's leader, Rohun Vora, known as Frank, said in a Monday Twitter spaces, it's hard to accept, but it's been tough to grow at the rate we want to grow. If Ethereum is where we have to go to keep growing, is what we have to do, end quote. The collections are two of the busiest in the Solana NFT market, with Degods commanding a 515 sole. or around $5,750 floor price at the time of writing, the largest in the ecosystem. Ute's Degaud's sister PFP collection that was released this fall has a $148 sole or around $1,60

floor price. Sales of Degaud's rose following the news, with the collections floor price increasing 12% as of Monday. Sales for Yutes have stayed relatively calm, with the floor increasing to just five sole around $55. In the week leading up to the announcement, sales of Degods and Uts accounted for nearly 70% of all Solana NFT sale volume, according to data from Magic Eden. The move was preceded by months of tension on NFT Twitter, with some builders in the Solana NFT space condemning the exit while the collections holders largely cheered on the move. In early December at the Art Basel Festival and Miami rumors circulated on Twitter that the Degods team asked the Salana Foundation for $5 million to stay on.

Sol. A representative from the Salana Foundation confirmed the figure to Coin Desk, though the Degods team declined to comment on the request validity. Ute's move to Polygon came at a price. A Degod's representative told Coin Desk that Polygon paid for the move with a grant from its partnership fund and the details of the deal will be made public eventually. Vora said the grant will last one year, maybe two, and was not paid up front. It's unclear what will happen once the grant runs out. There are a lot of milestones we have to hit, Vora said, and the grant isn't as much as people think, end quote. The migration is the latest in Polygon's partnership winning streak. The Layer 2 blockchain has attracted partners as large as Starbucks, Nike, Reddit, Instagram, and Draft Kings in the past year.

On the back end, Degod's move to Ethereum and Polygon could get complicated. It's rare to see high-profile NFT bridges, which would be required in this case, at the scale. When projects go multi-chain, It's typically instead in the style of doodles, who are considering launching doodles 2 on a layer 2 blockchain while keeping its original collection on Ethereum, end quote. So as mentioned, this is super interesting for Polygon. Again, as mentioned, they seem to be on a winning streak, quoting Pons S. Enorium on Twitter, quote, Polygon is the chain where Normies will buy NFTs without knowing they are buying NFTs, Trump NFTs, Starbucks NFT, Reddit, etc., end quote. that is all referencing recent project news that we might not have talked about on this show, but also this is huge news in terms of Solana.

From a non-cryptocentric perspective, Solana was one of the biggest stories of the last crypto wave. It was supposed to be ETH version 2.0. Remember those huge 5x returns for the Andresen Horowitz crypto fund. Coinbase was responsible for sure, but also Solana. and some big, big VC and tech influencers made an absolute killing on Solana after it debuted, made a killing in only about three months back in 2021. These are names you would know.

So now Solana is the third worst crypto performer in terms of price and market cap in 2022, only surpassed in terms of bloodbaths by FTT and Luna. In terms of total value locked, Solana is down 98. percent, quoting modest rebirth on Twitter. Some will say it's a bottom signal. I would say this is a death signal. The argument for Seoul was its adoption. If big projects leave, what's left is a deserted land, end quote. The hits just keep coming for Apple and China, and I mean that in a negative way, now supply chain experts are warning of a months-long disruption risk to Apple's iPhone production and operations. But wait, why? Weren't COVID restrictions eased in China? Yeah, now that is the problem.

Quoting the Financial Times. As the Chinese government reverses its zero COVID policy, a longer lasting risk now looms. The potential of worker shortages at component plants or assembly factories across the country. We should be seeing a lot of operations get impacted by absenteeism, not just at factories, but warehouse, distribution, logistic, and transportation facilities as well, said Bindia Vakil, chief executive of Resilink, a California-based group that tracks more than three million components to provide supply chain mapping services. The risks to Apple's revenues for 2023 have increased, as modeling has shown one million Chinese people are at risk of dying from COVID during the coming winter months after

President Xi Jinping removed strict pandemic controls. One Apple store in Beijing's main shopping district had to cut hours last week because all its workers were sick. Horace Deju, independent analysts at Asimco, a consultancy, said Apple's production and operational woes in recent months could be followed by a demand crisis in China as consumers reprioritize spending habits. Though the rest of the world saw demand rise during lockdowns, it was due to work from home and stimulus, Deju said. With low immunity and minimal safety nets, Chinese consumers could hunker down and avoid big purchases next year, end quote. China's attempt to stamp out the disease rather than manage it has left the country's assembly lines exposed, said Alan Day, chair of State of Flux,

a London-based supply chain consultancy that has been working with the UN on corporate standards for responding to COVID outbreaks, end quote. There seems to be a narrative developing around these new AI bot tools. Sure, they can wow you with their ability to generate outputs better than you might anticipate, but they also seem to have problems generating outputs that are superior to what you could do previously. Remember, we spoke about those stories of false answers and incomplete results, generated unless you worked hard to refine your inputs. Now, a new study suggests that programmers who use GitHub copilot and other AI tools produce less secure code than those who do not, despite believing that their code has no safety issues. Again, if you're relying on the bots blindly,

that might bite you in the butt, at least for the time being, quoting the register. In a paper title, Do Users Write More Insecure Code with AI Assistance? Stanford, Boffins, Neil Perry, Mega Srivastata, Deepak Kumar, and Dan Bonay answered that question in the affirmative. Worse still, they found that AI help tends to delude developers about the quality of their output. Quote, we found that participants with access to an AI assistant often produce more security vulnerabilities than those without access with particularly significant results for string encryption and SQL injection. The author state in their paper, surprisingly, we also found that participants provided access

to an AI assistant were more likely to believe that they wrote secure code than those without access to the AI assistant, end quote. Previously, NYU researchers have shown that AI-based programming suggestions are often insecure in experiments under different conditions. The Stanford authors point to an August 2021 research paper titled, A Sleep at the Keyboard, assessing the security of GitHub's co-pilot code contributions, which found that given 89 scenarios, about 40% of the computer programs made with the help of copilot had potentially exploitable vulnerabilities. That study, the Stanford authors say, is limited in scope because it only considers a constrained set of props corresponding to 25 vulnerabilities and just three

programming languages, Python, C, and Verilog. The Stanford scholars also cite a follow-up study from some of the same NYU eggheads. Security implications of large language model code assistance a user study, as the only comparable user study they're aware of. They observe, however, that their work differs because it focuses on OpenAI's Codex Da Vinci II model, rather than OpenAI's less powerful Codex-Cushman-1 model, both of which played a role in GitHub co-pilot itself, a fine-tuned descendant of a GPT3 language model. Also, the Stanford study looks at multiple programming languages, Python, JavaScript, and C, while the Security Implications paper focuses just on functions in the C programming language. The Stanford researchers suggest that the inconclusive findings

reported in the Securities Implication Paper may follow from the narrow focus on C, which they said was the only language in their broader study with mixed results. The authors conclude that AI assistance should be viewed with caution because they can mislead inexperienced developers and create security vulnerabilities. At the same time, they hope their findings will lead improvements in the way AI assistants are designed, because they have the potential to make programmers more productive, to lower barriers to entry, and to make software development more accessible to those who dislike the hostility of internet forums. As one study participant is said to have remarked about AI assistants, quote, I hope this gets developed. It's like Stack Overflow, but better because it

never tells you that your question was dumb, end quote. Let's end today with a couple of timely end-of-year stories, first up being, after some pushback, the IRS has delayed requirements for e-commerce apps such as Venmo, PayPal, Cash App, and even Etsy, to send tax forms to small businesses if they do more than $600 in transactions in a given year, quoting Bloomberg. The one-year delay is a reprieve for individuals who use those digital payments platforms to conduct business. Congress reduced the tax reporting threshold to $600 from $20,000 in 2021, and it was slated to affect people filing tax returns in the spring of next year. The IRS said it will use the coming year to transition to the new requirements, and that more information would be

available soon. The additional time will help reduce confusion during the upcoming 2023 tax filing season and provide more time for taxpayers to prepare and understand the new reporting requirements, acting IRS Commissioner Douglas O'Donnell said in a statement Friday. Representatives of PayPal, which also owns Venmo and Block, which owns Cash App, didn't immediately respond to request for comment. The requirement for third-party payment processors to send 1099K forms to taxpayers with more than $600 in business transactions, with no minimum number of transactions required, was included in the 2021 pandemic aid legislation known as the American Rescue Plan Act. Previously, the law had the higher dollar threshold as well as a minimum

of more than 200 transactions. The IRS said the law isn't intended to track personal transactions, such as reimbursing a friend or family member for a meal or gift, or for paying a household member for a bill. However, the difficulty of delineating personal and business transactions has caused critics of the proposal to say that it could result in people receiving IRS forms for payments on which they don't owe taxes. Online marketplaces such as eBay also have pushed for the $600 threshold to be increased, arguing that the lower threshold will cause confusion for taxpayers who sold used goods online for less than the original purchase price. The delay comes after pleas from Congress.

Lawmakers on both sides of the aisle expressed interest in raising or delaying the $600 threshold, but they were unable to include such a change in the year's spending bill, end quote. And finally, let me introduce you to Timu. It's from PinduO Duo. It's a marketplace. And according to Censor Tower, it is the number one app in the United States, quoting the Wall Street Journal. Online shopping site, Timo, has soared in popularity in the U.S. since its launch in September. The rapid growth of the site, which sells ultra-low-priced goods, mostly made in China, has made Shanghai-based Pinduo Duo the latest Chinese firm to find success in a country increasingly wary of Beijing as a technology rival. In less than four months, Timo has racked up 10.8 million installations in the U.S., according to analytics firm, Sensor Tower, making it the country's most downloaded mobile app in any category between November 1st and December 14th. When Kathy Benetti first went on Timo in Thanksgiving, she wasn't planning to splurge. But as she browsed the site, she was struck by the low prices.

Before she knew it, she had filled her shopping cart with 14 items totaling $90. A meat tenderizer cost 69 cents. A sweater went for $10, and a jacket that could be a Christmas gift for her son was $15. Ms. Benetti, a 68-year-old office manager at a storage facility in Dartmouth, Massachusetts, said she was impressed that so many items were cheaper than on Amazon.com. Her order arrived within the promised 17 to 15 business days. You're not getting the top of the line, but that's okay, she said. Days later, she returned for Christmas shopping, this time spending $223 for 34 items. Shoppers like Ms. Benetti helped Timo's November sales volume roughly quadruple from October, peaking over the Black Friday shopping period when daily sales reached $7 million

over a seven-day period, according to research firm Yipit Data. Though still small, Timo's fast rise recalls that of Xie-in, another China-founded retailer that quickly emerged to become a juggernaut. Timu also follows BightDance's short video app TikTok, whose viral success and and Chinese roots had made it a top target in Washington. Timo was launched by Pinduo Duo, a disruptor on China's internet. In seven years, Pinduo Duo, which has started calling itself PDD holdings, captured more than 70% of domestic internet users, prompting it to seek new markets as China's economic and regulatory outlook grew murkier. When Timo opened for business in September, its website made no mention of Pinduo Duo Duo. The site now acknowledges its Shanghai parent,

though Timo says it started in Boston, sources products globally and runs its U.S. business through a Delaware-based company. A Singapore entity works with customers outside the U.S. Timo pledges on its website to protect intellectual property rights, offset carbon emissions, and encrypt consumer data. Sheehan and TikTok have come under scrutiny for some of those very issues. Timu effectively reproduces Pinduoduo's domestic Chinese business model, which focuses on consumers in less affluent areas, encouraging them to ban together and score deals. Timu, like Pin Duo Duo, liberally doles out coupons and other incentives to consumers if they advertise Timu on their social networks. Most Timu bestsellers cost less than $10 and are unbranded, though one-hit product, a pair of Lenovo earbuds, lists for $8.47,

40% less than on Amazon.com. After applying coupons, consumers can get a pair for just $3. $1. Lenovo Audio's product page indicates it has sold more than 100,000 pairs on TEMU, end quote. I gotta admit it was a bit nice not to pay much attention to tech over the last few days. Even I need a break sometimes, but don't worry. My subconscious kept me honest. I had two separate dreams, one where I worked for Elon Musk and the other where I was Mark Zuckerberg's major domo. So even when I take a break, Silicon Valley knows where I'm sleeping. and knows when I'm awake. No show tomorrow. The next show will be on Thursday, December 29th. Talk to you then.