The Wolf Of All Streets - FTX Lessons Learned | What Brett Harrison Is Building After The Collapse Of FTX

Starting point is 00:00:00 Every American investor, retail, institutional, or otherwise learned quite a bit from the contagion of 2022. Brett Harrison, who was the former CEO of FTX US, arguably took the brunt of that and learned a lot more lessons than the rest of us. The good news is that he's building something on the lessons that he learned, which is Architect, a platform that's going to allow people to access both traditional markets and DeFi and offer the plumbing for fast orders, execution, and high-level trading. Really, really interesting. Can't wait for you guys to hear the conversation we had about it. Let's talk about what you're building now. What's going on? Sure. So we started this company, Architect Financial Technologies in January. And at

Starting point is 00:00:53 a high level, Architect is a set of front-end and back-end technologies that are trying to eliminate market structure complexity, not just in digital assets, but also in regulated derivatives and similar products. And this comes from the experience of having been inside of trading firms for more than a decade, seeing a lot of the clients of FTX struggle with things like connecting to many different exchanges, the DeFi protocols, to custody platforms, and realizing that all of these companies have to basically build the exact same infrastructure. And it's wasteful. And instead, there could just be a company that kind of builds this for everyone to use

Starting point is 00:01:29 so that they can immediately access all these different markets in a unified way, whether that's through manual trading or API trading. And so that's what we started building in Architect. And so does that allow people to hold their own keys, control their own wallets? Is there any custody side to it at all? Or is it basically just that plumbing? Yeah, very good question. So there are a lot of different kind of competitors out there that do similar things to what we're

Starting point is 00:01:57 describing in terms of just sort of straight connectivity. And one issue that we have with a lot of those platforms is that they are a hosted service. And I'm not sure if you would go so far as to call it custody or not, but often you have to kind of give them sensitive information, like whether it's an exchange API key or a private wallet key of some kind so that they can send transactions on your behalf. And we think that really opens up an attack vector of what happens if three commas is hacked and all the API keys are leaked and people start to drain. It did happen, exactly. So we have a different solution, which is basically to give people packaged software that they run and install themselves, and they run locally.

Starting point is 00:02:45 And so they can manage their own keys locally without ever having to give them to us. And otherwise, the software itself is just straight plumbing straight through to the exchange or the protocol. So when they're running the software, do they still take the API risk with connecting to exchange? I mean, I guess there's always some sort of risk if you're connecting to an Exchange API that something could happen, but then I guess that's just out of your hands completely and puts it as their responsibility to handle it and secure their assets.

Starting point is 00:03:16 Right. And so for people with levels of sophistication, what they can do is they can encrypt their keys on disk at rest on their local servers. And then they have the full security of their own local setup. I mean, it is true that if someone hacked their desktop computer where they're running this, then that might be an issue. And if they can decrypt the local key, then that's their issue. But we think that is a much more difficult problem for a hacker to try to solve than to get into a single database on a single server and suddenly get access to hundreds of thousands of keys. Did they ever really figure out what happened with that three commas hack? Because at the time,

Starting point is 00:03:58 I just saw these random reports where people said, I think my account was drained because of three commas, but I never really saw any sort of a conclusion to that. So I think there was a conclusion posted and I don't remember if it was through social engineering or what, but there was like an employee account, I think that got compromised. I can't remember exactly what the conclusion was. I'd maybe be confusing that with a different situation, but I think you're right. Yeah. So with, with what you're building, it seems to have happened really fast. I mean, you just mentioned it started in January.

Starting point is 00:04:29 It's only April and you guys are effectively deploying the product already, correct? Yeah. So in the coming weeks, we're going to start onboarding our first kind of initial customers that are going to try out the product in like a limited fashion. You know, they're not going to have their re have every feature on day one, but they will be able to connect to a couple exchanges and a different DeFi protocol, try out the initial kind of algorithm simulation platform, the initial GUI. And we think that will give people a good taste of what it is that we're building and show that through a single kind of unified front end or or unified API, they can access Coinbase,

Starting point is 00:05:06 they can access Uniswap, they can access CME for regulated futures and options, kind of all from this kind of singular platform. So I've definitely seen some that talk about connecting to DeFi and even CeFi, but I don't think I've seen anything that connects to CME or regulated platforms like that. So how does that work? Because to trade on CME, but I don't think I've seen anything that connects to CME or regulated platforms like that. So how does that work? Because to trade on CME, obviously you have to have a certain level of sophistication, licensing, et cetera, right? I mean, most people have to trade on the CME through an investment advisor or some sort of fund, right? Right. So the way that regulations work in the US for a CFTC regulated exchange like the CME is that you can't access

Starting point is 00:05:47 CME directly. You can't open a CME account the way you can open a Coinbase account. You have to go through what's known as a futures commission merchant, which is the sort of CFTC NFA equivalent of a broker. And you open an account with them, they're the ones who hold your funds. They're the ones that can extend margin. And then they post margin on your behalf to the exchange clearinghouse. What we can be, architect, is what's something called an independent software vendor. And what that means is that we're not a broker. We're not taking customers. We're not onboarding customers or taking customer funds. We are a pure straight through technology provider. And we've already onboarded as a company with several FCMs. In this case, we've onboarded with StoneX and with Wedbush Securities. And they can clear and

Starting point is 00:06:39 onboard customer trades on our behalf. So let's say the earliest version of this will look like the customer wants to trade futures. They'll go, let's say, to StoneX or Wedbush. They'll open an account with them. Same way they kind of open an account with Coinbase, come back with their credentials to Architect. Then Architect will actually have a connection to the CME once we get certified with them to be able to trade directly to the CME. So but on the DeFi and the Coinbase and those sides, it'll be more direct to the consumer, correct? So I guess the platform will have some access to those brokers on your behalf, but also your direct access to the things that you don't need them for.

Starting point is 00:07:15 Exactly. So in the Coinbase case, you will have your Coinbase account, you'll take your API key, put it into Architect. In the case of CME, you'll have your Redbush or Stonex or whatever other FCM that we end up working with. You'll have those accounts, you'll put the credentials into Architect. If you're doing DeFi, you'll either kind of create a wallet through Architect or you'll write down your private key in an encrypted way that will go into Architect and that will be able to let you use a hot wallet in an automated fashion to connect to a place like Uniswap. So why is it important for a trader investor to have access to all of these tools at once or in one place? Is it to execute more sophisticated hedging strategies? I mean, is this for your everyday person who just wants to buy some Bitcoin

Starting point is 00:08:00 or is this really for institutions or sophisticated investors that are looking to deploy these complicated strategies? Sure. So I would say this is for everyone except for the people who want to buy Bitcoin once a month through a Coinbase type interface. This isn't for dollar cost averaging. Yeah. For the kind of interactive brokers type customers of the world, the people who they don't have to be a Jane Street or a Winter Mute, but they might be a sophisticated investor who

Starting point is 00:08:34 they want access to good data and visualization. They might want to run like a VWAP over the course of a day. They might want to kind of see where the best price is in the multiple different venues. They might be sophisticated enough to want to swap on some DeFi swap platform. Having all of that bundled into one application gives them a lot of flexibility. There's another philosophical point for us, which is that we don't exactly know the direction that liquidity is heading, especially when you think about the US markets that are such flux because of the regulatory landscape. Yeah, no liquidity. Yeah, especially when you think about the US markets that are such flux because of the regulatory landscape?

Starting point is 00:09:06 Will the existing centralized crypto exchanges continue to exist and grow in their current form? Will crypto volume move almost entirely to DeFi? Will they move almost entirely to highly regulated exchanges and products like CME Futures? I mean, you saw, I think it was in January, February, CME had its best months ever for volume in the derivatives products. I mean, that is directly a result. I mean, part of it is a result of like the winter starting to thaw a little bit, prices going up. But a lot of it has to do with people still want exposure to crypto, but they know that the spot side of crypto in the US

Starting point is 00:09:48 is under a lot of scrutiny and they want to figure out how they can do this in a way that's compliant so they're going to access a venue like CME. And so we want to provide access to all of them instead of picking a single horse in the race. Trey Lockerbie Well, it's interesting because for two months in a row, which had certainly never happened before as far as I know, Uniswap volumes have far exceeded those on Coinbase. So that has to tell you, I don't know if that's an indictment of Coinbase or even a statement about the popularity of Uniswap. I think it's more just about, like you said, that fear factor and then the just decrease in on and off ramps and liquidity in general to centralize exchanges

Starting point is 00:10:25 in the United States. Right. And on top of that, hearing a lot of stuff now about people trying to create new exchanges in the wake of FTX. And some of the ideas include, and there's a couple of exchanges that already exist that do this, but there are people who are trying to do off-chain matching with on-chain settlement. So having that sort of the speed of like a centralized database for matching customer buys and sells that you can have, you know, transactions that occur in the order of microseconds instead of on the order of seconds or minutes. At the same time, having on-chain chain settlement so that the exchange itself is never holding on to customer files or not holding it on for too long. And people get that. One of the most important aspects of DeFi, which is self-custody of fund and not having to trust an intermediary with holding on to your coins.

Starting point is 00:11:19 And so there's so much flux in the exchange landscape right now that it's really difficult to tell where it's going to head and it's going to be jurisdiction specific. And so what we want to do is position ourselves very well to be there as an infrastructure provider, kind of regardless of where it heads. And that's interesting because the thing that's sort of lacked in DeFi, I think, is the robust orders and order books that you have on centralized exchange. A lot of people have tried it, but I haven't. I've yet to see anyone perfect it. Some of them get pretty close. But to be able to actually see an order book and place a trailing stop at the

Starting point is 00:11:57 same time that you have a take profit... Things that have been so obvious on any major, even retail platform in the past. Really, we've struggled to get there, I think, in DeFi. So it would be pretty nice to be able to do it in the manner that you just described. Yeah. I mean, if you're a market maker and you want to quote a few ticks wide on something like Bitcoin, in order to be able to quote that type, you need to be able to move your order that way quickly. Well, if you are on a platform like Uniswap, where you're market making in a pool, and all of a sudden, Bitcoin moves 2% in a minute, and it's going to take you a few minutes just to get that liquidity order moved in some way because of how slow ethereum is

Starting point is 00:12:46 you're not gonna you're gonna get run over and like i think there's been a lot of studies about you know market makers generally losing on the platform for some someplace like uniswap and so there needs to be evolution in the market structure for dexes whereby either the matching can happen off-chain and be very fast, or the exchanges themselves can provide mechanics that allow for market makers to employ on-chain strategies, like automatically move my order if the underlying oracle moves by a certain amount. Trey Lockerbie Yeah. And we've seen market makers, I think, struggle in this new environment of low liquidity.

Starting point is 00:13:30 I mean, not my core competency, obviously, but I've read enough on it that there really is not that much profit to be had when these banking rails are cut and people aren't trading as much on these centralized exchanges. Anecdotally, we've seen major slippage on Coinbase that didn't seem to exist before. It's becoming really problematic to attempt, especially if you're trading with size, to do that in the US. Yeah, a lot of funds in the wake of FTX, but also as volumes have decreased, as prices have gone down, have either paused or closed up. And it'll be interesting to see what happens over the next three to six months. There might be a lot of shops that are in building and research mode and they'll come roaring back once

Starting point is 00:14:10 things are more stable or there's a little bit less scary regulatory stuff happening right now. Or it could be there's a more permanent dry up in liquidity on certain kinds of exchanges and it's all going to move to DeFi. It's all going to move to DeFi. It's all going

Starting point is 00:14:25 to move to regulated futures. Or there could be other highly regulated players in the security space that step in to build exchanges in the existing traditional finance paradigm for market structure and offer a spot that way. And maybe that's the way that we end up with an SEC-compliant spot exchange. So, we'll have to see. NASDAQ, Fidelity, et cetera. We already see. Yeah. That's kind of a sad future, I think.

Starting point is 00:14:56 Not that it's not somewhat inevitable, but listen, you are fundamentally a part of all of the contagion. Obviously, last year you suffered it probably worse than anyone. But right. I mean, Voyager, BlockFi, Celsius, FTX, the long list of places that Americans trading were otherwise just got access to crypto markets has diminished to almost nothing.

Starting point is 00:15:20 I mean, you still have Gemini, I guess, Coinbase. But now even Coinbase is registering offshore. And this is, I think it's political theater, but they're making a very definitive statement that they're also willing to go offshore. Their business is here. But it seems like there's a non-zero chance that there's just nothing left for us as Americans.

Starting point is 00:15:42 Yeah, it's possible. It's a bad future for a lot of different reasons. At the same time, there are little glimmers of hope. There's all this rhetoric in the US surrounding the market's regulators. And at the same time, was it just yesterday or was it even today that the European Union voted to approve MICA. And so ESMA is going to be writing rules for crypto over the next year. That is going to be in place by 2024. And typically, the US is the largest capital market center for all trading,

Starting point is 00:16:20 whether that's futures, equities, options. It happens in the US. Maybe that's not where crypto heads over the next couple of years until the administration turns over and we have different people in charge. It's hard to tell. The optimistic case would be, well, there's comprehensive regulation in the EU. Hong Kong is trying to attract crypto companies and actually seems to be working with China

Starting point is 00:16:45 to be able to attract business there. Singapore has comprehensive rules. And all these different jurisdictions are coming up with actual clear guidelines for how you might register a security token or a token exchange. And maybe that spills back to the US instead of going the other way around. And finally, we say, okay, well, maybe what we need to do is adopt a very similar framework to what's happening with, you know, with Micah and Esna. And that ends up, you know, forming something that is approachable for crypto companies in the US. Yeah, I think Micah has its problems. And a

Starting point is 00:17:21 lot of people would say that it's suboptimal, but it feels like we're in an environment in the United States now where even negative clarity would be better than no clarity at all. I mean, is that your feeling? Yes, absolutely. I mean, if you think about the CFTC, for example, you know, back in sort of the middle of 2022, there were these articles that were saying things like, oh, CFTC is the software regulator and things like that. It's insane. It's totally untrue. The rules under the CFTC and the SEC are both extremely strict and comprehensive for registration.

Starting point is 00:18:01 It takes two to three years to register a derivatives exchange in the US with the CFTC. It takes five years plus to register a clearinghouse with the CFTC. So like LedgerX, when we acquired them, it took them five years to get their DCO, their derivatives organization license. So these things take a long time. It is not as easy as starting another Coinbase or Gemini. However, those are the most liquid futures and options markets in the world. And so a strict framework that is maybe suboptimal from an innovation perspective can still be a set of constraints within which people can innovate to the maximum that they can and provide really great products for consumers and institutions. And I think that

Starting point is 00:18:52 even if we have that, it would be a giant step forward. Having seen all the failures last year, obviously, being at FTX US, what did you learn from those experiences or seeing, not necessarily the collapses or just seeing what was lacking in those products or what people were looking for that's helped contribute to your thought process for what you're building now? I mean, it was literally only last September you were there. To me, it's just incredible the speed at which things are developed and happen in the crypto space. I'm sure to you, it feels like it was 10 years ago at this point. I have a lot more grace than I had back then. Me too.

Starting point is 00:19:32 So, you know, a couple of high-level learnings. Obviously, you're going to ignore all of the fraud aspect, which was just terrible and shocking and it it definitely raises questions about not how you prevent fraud because criminals will always find a way but more like what kinds of uh systems can you put in place to be able to have proper oversight like uh you know the people working on like proof of reserve or proof of solvency protocols, I think that could be extremely helpful. Having independent agencies looking over centralized entities in the crypto space. I think taking another step back, DeFi has so much promise because it is a way of providing

Starting point is 00:20:18 truly transparent execution and custody that everyone can see and everyone can audit. As long as we're going to have a world where there are centralized actors and digital assets that basically form the function of brokers, they really are. They hold dollars on behalf of customers and they execute orders on behalf of customers. Those basically should be regulated and audited and overseen like brokers. And that should be a separate thing from DeFi, but I think that would be a huge help to regaining trust and confidence in the digital assets world. Some personal learnings are trying to build products and services that are sort of decentralized. I don't necessarily mean that in the blockchain sense.

Starting point is 00:21:03 I mean more in that the customer maintains as much control as possible over their own information. We talked earlier that it was important for us to create a security model by which the clients of architects can maintain control over their own keys, their own wallet keys, their own API keys, their own account information at futures exchanges. And that, to me, was very much like direct learning from what came out of FTX. Another aspect is that we have nine people on our team. Two people are legal and compliance. This has to be in place from day one. There needs to be a comprehensive compliance program, a comprehensive compliance manual. We should start applying for licenses in the US with the

Starting point is 00:21:47 market's regulators as soon as possible. We should not shy away and move offshore. I think a lot of the rhetoric now is like, okay, well, the only way to successfully build a crypto company is to move offshore. I think that's giving up. For us, we want to stay in the US for a US company. And we're going to figure out how to work within that regulatory regime and do things the right way to whatever extent possible that we can. And that's been another learning for us. That's interesting, because I think what you do, you can make compliant and legal, but there's the sort of existential threat that the people you're serving can't find a way to be compliant

Starting point is 00:22:25 and legal. We haven't really seen, I don't think, a huge increase in rhetoric against DeFi per se, I don't think yet. But do you worry about the risk that in the US they would try to find a way to say, listen, you can't even access a Uniswap or DYDX or any of these, and therefore then your US customers still can't use your your platform as a practical matter i find it hard to imagine how you could prevent someone from accessing an open source you know peer-to-peer exchange mechanism on a blockchain that can be infinitely forced and moved and there's there's dozens of different competing chains that you can potentially have these mechanisms on.

Starting point is 00:23:08 So I don't see that being possible. I'm still optimistic that we're going to get to a world where DeFi and CeFi can coexist in a way that is allowed. And it might be that the architects of the world, and I mean that with a capital A for a company, can get licensed in a way where we can be a licensed front end for services. the requirement to access DeFi, but for the institutions that want to try to access DeFi in a way that is allowed, we're going to know the customer anyway, because we're going to hold their funds and provide access to regulated exchanges. Well, why not also be a regulated portal into DeFi so there can be significant liquidity provision so that for all the little guys out there who want to take liquidity from all over

Starting point is 00:24:06 the world and these different swap protocols, these DEXs, other marketplaces, they'll be able to know that they're interacting with sophisticated sources of liquidity. Well, I think whether people like it or not, at this point, the lesson we have to have learned is that if you want institutional adoption, it's not going to happen without regulated rails. And that doesn't take away from DeFi, but if we want DeFi TVLs to be trillions of dollars, okay, maybe that's a little hyperbolic, but if we want that to be the case and we want institutions to be there, they're not just getting a MetaMask wallet and going into Uniswap to trade. It's just not going to happen.

Starting point is 00:24:46 Yeah, there are other ideas too that have been kicked around like not preventing anyone from accessing DeFi. But if you're someone who has scrutiny over which DeFi pools you can access based on the risk profile of those pools

Starting point is 00:25:01 and by risk profile I don't mean the price risk profile, I mean't mean like the price risk profile, I mean more who are the actors in the pool. Yeah, like they're going to get rug pulled or you're trading with North Korea, right? Yeah. Exactly. Exactly. Yeah. Then some combination of on-chain analytics tools, whether it's like a chain analysis, TRM, can tell you sort of like the average risk profile of a pool based on history of transactions that have resulted in liquidity provision for that pool. I think that could be a thing where the institution says, okay, I can provide liquidity in that pool because I have

Starting point is 00:25:37 some assurance over the aggregate risk profile, but I'm going to ignore this other one. It doesn't prevent the other one from existing. It doesn't say we're going to have only regulated DeFi and nothing else, but it does at least provide a path that we can transition into that world. And I think we're going to need that if we're going to get to some wider adoption. Yeah. I mean, the individual can still just open their MetaMask wallet and connect to Uniswap or whatever and do whatever they're going to do. So it's really just providing the access for those institutions and the security and safety to do so, which kind of begs the next question. What else are we lacking in DeFi right now that we would really need for them to start participating in a meaningful way? Is it insurance? I mean, what are the things that we have

Starting point is 00:26:20 in other markets that they're probably waiting for to do this properly? So one of the best aspects of blockchain-based transfer mechanisms, and also simultaneously one of the most concerning for an institution, is the irreversibility. Right. So if you are in any kind of fintech and you take payments through something like ach you know that fraud is one of the greatest things you have to deal with the fact that within within the weeks someone can reverse an ach transfer or they can reverse a credit card transfer and so you have to spend a lot of money and time trying to guess whether you think someone's going to reverse a transaction because you might not have it in a little while. What's so nice with USDC is they send it to you, it's yours, there's basically zero fraud risk. However, humans make mistakes.

Starting point is 00:27:16 Right. And if you're an institution and you send like 100 million to the wrong To the wrong address. Wow. And this has probably happened many, many, many times. I think that's something that's a little bit, it's a hard pill to swallow. And I've written about this before, but it feels like there can be fully on-chain mechanisms to have conflict resolution when it comes to potentially like reversing a transaction. And I don't mean taking blocks off of the record and reordering them. But I do mean like having some kind of,

Starting point is 00:27:52 you know, whether it's like an escrow with approval for transactions, or some kind of like voting mechanism that allows for like, you know, kind of multi-sig transfer back from another wallet, that would allow institutions to become a lot more comfortable with the fact that, okay, 99% of the time they don't need to need this, they will need this, but in like the absolute worst case scenario they make a mistake or there's some kind of conflict resolution that needs to happen, it's possible. And that could be facilitated only between people who effectively sign on to utilize

Starting point is 00:28:24 that process. Exactly. Because I know it's a controversial idea to your average DeFi person to be like, a transaction should be reversible. But if it's two institutions that are transacting together and both sign off or utilize some smart contract for escrow or for some sort of process, that's those people's freedom and choice to do so. It's not forced upon them.

Starting point is 00:28:44 Yeah, let's make this very clear. I am not suggesting we change ERC-20 to require multi-sig on all transactions and reversibility. But I think that there can be opt-in mechanisms that, again, would allow these larger players to start participating in a way that would make them feel safe and comfortable in doing so. That makes a ton of sense. So beyond just the plumbing of being able to connect the APIs and the obvious able to trade, you sort of hinted at the fact that there would also be data, potentially charts, things like that. So how much of that sort of actionable information and data are you going to be providing as part of the platform? Does it really become a one-stop shop where you don't even need a trading view or wherever

Starting point is 00:29:27 you get your data and you can do everything on the singular platform? Yeah. So we are really hoping this is a one-stop shop. We are licensing TradingView. So the TradingView widget will be within the platform. You have to. Yes. And it really is the best.

Starting point is 00:29:42 We built a kind of like Bloomberg Terminal-like application for a desktop that allows you to really quickly build dashboards and view your portfolio. We're experimenting with a couple of interesting features relating to AI, including having various GPT-powered features directly within the platform. So for example, you're a new Alva developer, and you want to get started writing some strategy, and you say, okay, I'd like to arb Bitcoin on Coinbase and Kraken, and then having something just spit out code for you that's a great skeleton that works specifically trained on our api so

Starting point is 00:30:27 they're working on the architect's apis we think would be a really great way of getting people into more sophisticated forms of trading that otherwise you would need a lot of time and experience to be able to create um thinking a lot about how to like use ai for kind of news analysis and sentiment analysis in the platform. So yeah, we're really hoping to build a comprehensive platform over the next three to six months that everyone can try. So I'm kind of shaking my head here because my next question was, were you considering doing any of that in January when you started the AI side? Because it's happening so fast.

Starting point is 00:31:05 No, I think, you know, uh, so some of my background, so in, in college, like my, um, like bachelor's and master's work was in AI. And specifically it was like, I was trying to do move prediction in the game of go. And this was, to DeepMind, AlphaGo, all that stuff. And at that time, I was like, you know, when I wrote my thesis, I said, okay, well, you know, we're probably many years off from AI being able to beat anywhere near the top professionals in Go. And then a couple years later, that was like completely blown out of the water. And we went in such a great leap in AI ability at that point. And now it's like we are totally parabolic and it's something that we've been following. But now that it's available, you can access it via API, it works incredibly well

Starting point is 00:32:02 across so many different fields. It feels like something that's impossible to ignore. And I don't mean in sort of like the cynical way of like, oh, like add AI to your thing and then try to get money from VCs, right? Like this is like, we really like think that there are complimentary aspects to our platform, probably to many others, that with like a little bit of integration

Starting point is 00:32:23 with these new AI tools, we can really give users an amazing experience that they otherwise couldn't have had a few months ago. And with time, that will be totally abstracted away anyways, and we'll just be typing into a search engine on the platform. It's not going to be like people are going to have to even understand that it's AI or understand how to utilize AI at all. They'll just probably ask your platform a question and it'll give them the proper answer. Yeah. There's a lot of talk to your data stuff happening with GPT and other LLMs right now where, let's say you have a... I actually tried this out. So if you go to GPT and say, okay, I'm long a call option on this strike, and I'm short a put

Starting point is 00:33:08 option on this other strike, and I also am long stock this amount, describe my portfolio. It actually does a very good job of saying, oh, you have this particular spread on, which has this risk. It's actually pretty amazing that you just like put in your own data and ask it questions and get reasonable natural language responses. And I think it's simple, but really powerful for something like a trading front end. Does it take the next step and say, Hey, listen, like you're not that zero, your risk is completely like off weight. And this is you need to do to uh get back to your proper strategy i haven't pushed it there but i would be surprised if that wasn't possible with that if not immediately then with a little bit of fine tuning it's so incredible it's so incredible

Starting point is 00:33:59 so for you like you said you wrote your thesis on this i mean i guess you were and humans are this way exceptionally good at predicting what was coming, but the timeline is really, really difficult, right? Well, yeah, I'm not sure I was good at predicting where we were going, but it felt like this was an exciting field to sit, to research and do something in. And, uh, man, if it was exciting, then it's, it's probably one of the most exciting things now. So, I mean, obviously you have a pretty deep understanding of that side. You've been in crypto now for many, many years. Are there other things where you see these two coming together and it being a perfect marriage?

Starting point is 00:34:38 I think another probably clear use case is just blockchain analytics in general. There's a lot of data across a lot of different chains. There's a huge graph, a web of transactions and different wallets in the system. And you have tools like Dune, which lets you kind of create little dashboards of analytics on top of blockchain data, I think being able to ask questions about what's happening across these disparate ecosystems is something that AI will do a very good job of, purely because I think one of the best things you can do with AI is infer patterns from large, somewhat noisy distributions. And that feels like a very good application of that. I've never even thought about this till this moment,

Starting point is 00:35:28 but it seems that this AI would be either a great compliment or threat to existing oracles. I think one thing I'm not too... It's not always accurate, so I guess there's that. I'm not super confident about LLMs in particular. It's price prediction, but probably directional prediction. Yes.

Starting point is 00:35:50 I think there was like a recent headline that GPT does like a better job in existing algorithms on trying to deduce directional sentiments from like that comments and from other news headlines, but actual price prediction. I mean, that's so, it's very much random noise. I mean, I meant more for like verification of data, you know, in the smart contract, kind of like link, you know, chain link or something like that, that, but, I also, you know, we're not there yet. I mean,

Starting point is 00:36:22 I think yesterday I asked chat gpt just jokingly like to summarize the gary gensler congressional hearing and it gave me effectively like a boilerplate summary of what the sec should be doing that was completely irrelevant to the fact that he got grilled on the floor and was like two years old because you know they're probably using it 2021 it was like we should have a robust regulation and it was completely inaccurate to summarize what had actually happened so well what you should try is get the transcript and then right enter that it'll summarize it what do you think the summary is and i bet it would do a pretty good job well yeah i i actually so i use chat gpt on a daily basis to help me summarize articles and do those um for my newsletter right just it's made my workflow 10x.

Starting point is 00:37:05 And I think that that's a lot of people are worried about AI taking everyone's job and crushing the industry, but I think that that's what it does. It just makes you ten times more productive. I use it for programming on a daily basis. And again, it's not going to replace a programmer, but it is like, okay, I can look through seven Stack Overflow articles that are of various degree of quality and staleness. Or I can ask one question of like, give me some examples of how I can achieve this thing.

Starting point is 00:37:33 A very targeted thing in a particular language, a particular library, and it will usually give me the right answer. Yeah. And I've heard that it sort of catches up, you know, like a 1x programmer to the 10x guys, and then it makes the 10x guys just supercharged. What you would have taken a month to do, you can do three times in a day. Right. So that seems really appealing because I think it probably gets rid of a lot of the minutiae and annoying tasks that you have to do to get to where you want. Just eliminating the entire

Starting point is 00:38:02 workflow, like you said, of doing that research. That's really interesting to see where it's going to end up landing in crypto. I think we're going to see some pretty crazy integrations where the blockchain sort of helps to verify what's coming out. But anything else, any final thoughts before I let you go

Starting point is 00:38:20 that we might've missed here that you guys are going to be looking to build maybe after the beta testing is done and something we haven't talked about? Yeah, I think maybe the one thing to end on is we realized as we build out this platform that digital assets are the most modern markets to build infrastructure for, but there's a lot of modernization that is still wanting in traditional assets. And so we see no reason over time to stop at digital assets, especially because... So let's say we support cash treasuries in six months. Well, at some point, fixed income

Starting point is 00:39:01 products might be tokenized. And so the lines between what is a digital asset, fixed income product versus a traditional asset, fixed income product are going to be blurred. And again, we want to be prepared to handle that transition. So we're going to look to do more than just digital assets and digital asset derivatives very soon. Yeah. Other than that, just a plug that if you are a great engineer, either on the front end or back end and looking for work, we'd love to have you, but so would everyone. Just hire the AI, man. Come on. Just hire the AI for that job. But that's really interesting. So you guys are effectively building plumbing that also can be ahead of the tokenize everything trend.

Starting point is 00:39:40 We think so. Yeah. Absolutely. Awesome. Where can everybody follow you and then check out? Do you need beta testers as well? I mean, who are you going to get to try this thing out at first? Sure. So I guess first I'm primarily on Twitter at Brett Harrison, 88. You can also follow architect at architect underscore XYZ. If you go to architect.xyz, the website on the product page, there's a signup link where you can enter for the wait list, or you can email beta at architect.xyz. And looking forward to the future launch. Always a pleasure, Brett.

Starting point is 00:40:16 I love catching up and I love that seemingly you've landed so well. I know for you, it probably wasn't that exciting for a while there or for any of us. I'm still a Voyager creditor. So, you know, I think everybody felt. I'm still an F2F creditor. So I feel your pain. I'm quite sure you are, man. Well, thank you so much for your time and looking forward to see what you built and

Starting point is 00:40:36 catching up down the road. Thanks a lot. Thank you. Let's go.

The Wolf Of All Streets - FTX Lessons Learned | What Brett Harrison Is Building After The Collapse Of FTX

There aren't comments yet for this episode. Click on any sentence in the transcript to leave a comment.