Unchained - How Helium Uses Crypto to Grow Decentralized Wifi and Mobile Networks - Ep. 371

Episode Date: July 8, 2022

Amir Haleem, CEO of Nova Labs and founder of Helium, talks about the use cases for Internet of Things (IoT), how blockchain and crypto help to construct a decentralized internet infrastructure, and what is the future of Helium. Show highlights: what Helium is and what it is trying to solve how, after struggling for years, introducing crypto tokens, finally helped Helium grow who the users of Helium are and how they differ from each other how Helium grew to have one million devices around the world what the challenges and use cases of the IoT space are why Helium decided to add new networks why Helium is launching specific tokens for each of the new networks what proof of coverage is and why it is useful what an open-source cellular network is and how it would work whether there is a need for some centralization of the network what Helium’s roadmap is and what the major milestones are for the future   Thank you to our sponsors!   Crypto.com: https://crypto.onelink.me/J9Lg/unconfirmedcardearnfeb2021  Ava Labs: https://avax.network   EPISODE LINKS   Amir Twitter: https://twitter.com/amirhaleem Helium: Twitter: https://twitter.com/helium Website: https://www.helium.com/ NYT article: https://www.nytimes.com/2022/02/06/technology/helium-cryptocurrency-uses.html Plans to launch new networks: https://www.theblock.co/linked/151491/helium-network-accelerates-multi-network-protocol-expansion https://blog.helium.com/helium-chapter-2-a-network-of-networks-7372262210bd Helium 5G plans: https://blog.helium.com/whats-next-for-helium-5g-data-transfer-proof-of-coverage-rewards-67b54f19f8d5 Number of Helium hotspots growing: https://www.coindesk.com/markets/2022/02/17/helium-network-passing-half-million-hotspots-could-fire-up-hnt-price/ Where Helium users are: https://www.coindesk.com/markets/2022/03/09/helium-miners-from-lisbon-to-miami-say-its-location-location-location/ Nova Labs raises $200 million: https://www.axios.com/2022/02/18/crypto-startup-helium-raises-200-million  $111 million token sale: https://www.theblock.co/linked/114095/helium-token-sale-a16z Learn more about your ad choices. Visit megaphone.fm/adchoices

Hi all, today I'm sharing an interview I conducted at the Helium conference with Amir Halim, CEO of Nobel Labs and founder of helium. We cover Helium's fascinating story of struggling to create a decentralized IoT network until helium introduced a token in 2017. Plus, we go over its plans to introduce new networks, such as for cellular and 5G, which includes having separate tokens for each new network. It was a great discussion. Hope you enjoy it.

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Thanks for coming to our session. I figured that we would start with kind of a basic question around what problem it is that you were trying to solve when you set up to build helium and how you felt helium would resolve that. Yeah, and the initial version of helium, or the version that I think we have now was really aimed at trying to build a ubiquitous IOT network. Like how would you build like a network that was literally everywhere for IOT devices, which are, you know, things like sensors and tracking devices. And it's difficult, it's a difficult problem to solve in a traditional way, right? Like we've seen big telcos really struggle with deploying IOT networks because the cost is just quite frankly too high to build the network, which means that the cost to use the network for the users is too high. So we wanted to figure out how to deploy a network in a slightly different way, right, where there weren't billions of dollars of cost, like, absorbed by a single entity.

Because the downside there is, as I mentioned, like, you have to pass that cost onto users, right? And so companies that are building, like, precision agriculture applications or logistics applications, you know, tracking packages, it can't cost $20 a month, right? Like, in a lot of cases, customers want to spend like a dollar a year or something, right? So you need a very different way of building the network. And, you know, building this crypto economic model was, to me, like, a really interesting way of, like, distributing ownership of the network, right? In the same way that I think of Airbnb as having distributed hospitality to people and Uber, having distributed transportation to people, helium is the first time, I think, that the general public can participate in. in the telecom industry, right?

Yeah, but actually, let's back up because before you introduced the crypto token, you struggled a little bit, and then that sort of solved a problem for you. So can you talk about that moment? Yeah, I mean, we struggled for years. We launched in 2013. Actually, July 4th, it was. And we didn't really know how to solve the problem. Like, we had a lot of ideas on how we might do this differently.

A lot of them were actually similar to what we ended up doing, but we didn't have the right economic structure. We didn't want to build the network. We knew it was going to be too expensive and we would just be like a low-budget version of AT&T or something, right? And so we didn't really want to do it that way. And so we struggled with all sorts of different approaches. We tried to make it sort of developer first

and sort of hope that developers would build the network. We hoped that customers would partially build the network. It wasn't really until probably 2017 that we started paying attention to crypto in any meaningful way. which is sort of embarrassing. It took us that long to figure out that crypto was a thing. Still early.

Yeah, well, it's still very early, right? But it didn't feel like it at the time. But yeah, even back in like 2013 or 14, I think Mark Phillips, who runs business development for us, who's here somewhere, we were joking that we should put ASIC, you know, miners inside hotspots, right, to mine Bitcoin. We didn't really know what that meant at the time. We were like, I don't know if that's even a thing.

But then we sort of forgot about it for two or three years. And for me, when I read the Filecoin white paper, actually, was the first time that I had seen someone trying to build a crypto network that was specific to a public an application, right? It wasn't just about moving money, or it wasn't esoteric in the way that Ethereum or something was. And it was like, okay, would they want to build a file storage network and this is how they're going to do it?

And then it was like a little bit of a light bulb for us. It's like, well, what if we could do the same approximate thing but for network coverage? And that's kind of how it was born. It was probably sort of towards the end of 2017. And so once you introduce the token, kind of what, how did the network behave or how did participants on the network behave before and then how did they behave after?

So it was really a big reboot when we started this version of helium in 2019. As I mentioned a little bit ago, we launched actually here in Austin in 2019. And I think there's three types of like participant in helium, at least this is the way I've come to think of it. There are like crypto enthusiasts, right, who are familiar with mining. Maybe they mine other, you know, crypto protocols. There are IoT enthusiasts, so people who are already involved in IoT that, you know, we're working with Laura Wan or knew about it or we're building sensors or building applications. And then there's a group that I don't know how to describe them any better than to just call them like telco anarchists who like you like hate telcos, right?

And it's an easy one to hate, right? Like I don't think anyone is particularly like thrilled with the telco industry. So those are kind of the three constituents and they all behave kind of differently, right? like the IoT enthusiasts are focused on the developer applications and like how to build, you know, stuff that uses the network. The crypto miners are like purely focused on like mining and ROI and rewards. And the teleco anarchists are just, you know, doing their thing. I don't know.

But that's, you know, those are I think kind of the constituents and they're all motivated in slightly different ways. But ultimately everyone gets to participate in like the economics of this. And I think that's really fascinating. Yeah, I actually feel like those groups apply to pretty much all the crypto networks. You've got the speculators, the actual users, and then the people who are kind of like ideological about it. And so now at this point you've grown to one billion devices. How did you do that?

And kind of give us a picture of like where they are and where you still have kind of dead spots, I guess. I'm not sure how to call them. Yeah. So there are closing in on about a million devices globally now. Oh, sorry. Hot spots. I misheard you when I said the other day. Billion sounds better.

Okay. Not quite there. Definitely a difference. Getting there soon. I still can't believe that this is accurate, but someone said that 10% of the Earth's population is close to helium coverage now, which I don't know if that's true or not. Don't hold me to it, but it sounds good.

And 75% of US zip codes have some amount of helium coverage. And so some of that is a function of the technology that we use. So the protocol that we use is called Laura Wan. It is extremely long range, right? So a single hotspot can create, in some cases, miles and miles of network coverage. But really, I think it's this excitement around getting to participate in this industry for the first time, right? It's like you can't get into the telecom industry. There are so many modes, right?

There's spectrum, and there's the cost of infrastructure, and there's the complexity of, like, actually deploying it and using it. And so I think part of what Helium did really, really well was make the user experience of building a network quite simple, right? Like you got a device that wasn't ugly, right? It wasn't like an ASIC minor, which is kind of like a shoebox of wires, right? It was kind of decent looking and you set it up with a phone app in the same way that you would, a consumer electronic device. And I think making it easy to use is a critical innovation there, right? because it opens it to a much broader audience. And I think crypto in general still has a lot of work to do

in terms of closing that gap. It's still wildly complicated and confusing for the most part. So I think Healim did that well, and it's a big part of why the network has been able to grow and expand and reach so many different people. And so it sounds like there's quite a concentration in the US? I actually don't know the numbers off the top of my head, but there are about 65,000 cities and 170 countries, I think.

is the approximate number. So I actually don't know the percentages, but it's definitely, we started in the US, that we were US-centric for a while, but we now have like all sorts of different vendors that are manufacturing hotspots in different regions of the world. And so it's very global now, but I actually don't know the distribution percentages. And so you started with the Internet of Things. Can you talk a little bit about who it is that began using helium for that purpose and kind of what that usage looks like? Yeah. So I think one of the challenging things with the IOT space is it's, it's different from something like cellular, right? Like with cellular, like there is a use case, right, which is phones, for the most part, right? And with IOT, it is not like that. Like the use

cases are just literally everything, right? Like anything you could think of, right? And so the breadth of applications are both impressive but also a challenge, right? Because it's difficult to focus on any one particular thing and say like, okay, that's where we should be spending all of our business development energy or something, right? It doesn't really work that way. And so it's everything from precision agriculture, which is the whole industry of, you know, how do we make farming more efficient, basically, right?

Using data and sensors through logistics. Like, how do I track packages and, you know, know where everything is all the time? And to, God, there's a drone delivery company that I just mentioned, which is one of my favorite where they're actually delivering packages using drones. You know, so it's very, very broad. I think Salesforce is using it

to track employee badges. So it's all over the place. You couldn't even look at a single use case and say, like, that's the one, right? Like you can in cellular, for example, which is both a strength and a challenge at the same time. I have to say, the Salesforce thing sounds a little creepy. Yeah, I mean, all of it's a little creepy. You know, they've got, like, sensors everywhere, right? And it's like, what it is like tags on you, you know, that you put on an animal or, I don't know.

But anyway, hopefully there, hopefully. I wouldn't speak to Salesforce's HR policies. I don't know. So now let's talk about some new initiatives that you have. You're going to be adding new networks. Talk about what those networks are and why you decided to add them. And something interesting to me is that you're going to have tokens for each of them. So I'm curious about why you decided to go that route as well.

It was really demand-driven is the way I like to think of it. We were very focused on IoT. We've spent so long in that industry that we, I don't want to say expert, I never feel comfortable saying we're experts in something, but we know a lot about IoT. And so there's still a lot of work to do there, right? Like we aren't finished by any means. It was really the FreedomFi team.

So FreedomFi is a company based in the Bay Area also that was building open source cellular networks, right? Like their vision is effectively to be sort of the Linux or Red Hat of cellular networking. Today, like that industry is dominated really by three players, like Nokia, Erickson, and Huawei are the companies, that build base station infrastructure for all the telcos. And the vision there was like, okay, maybe just like you did in the enterprise server market where it used to be dominated by like Sun and HP and Microsoft

and eventually kind of got blown up by open source Linux, maybe the same thing could happen in the telco industry for cellular, right, which is that the infrastructure could get much cheaper and much simpler and be much more broadly available globally. And so they discovered helium at some point in their journey, right, and realized that helium was an interesting way of accelerating that vision. And so that was really how we got introduced to it. We had always toyed with the idea.

Even in our original white paper back in 2018, there's a section there where we talked about, we would like to figure out if we could do the same thing in 5G or cellular or Wi-Fi or Bluetooth or any other type of network. So it wasn't a new idea. I just don't think we knew exactly how to do it. We were still so focused on IoT. and the FreedomFi team had done so much work already on how to do that.

So it sort of became a natural thing that's like, okay, well, how would we fit cellular into the network, right? Because you've got like this token supply and so much of it has already gone to the IOT network. How would you incentivize the creation of the 5G network the same way, right? And that's how this idea of like multiple tokens was born, sort of thinking about helium as like an L1 and an L2 in the same way that like Ethereum has ETH, and L2 tokens are, you know, on top, that was kind of the idea, and that was sort of the vision behind it. Oh, does that mean that with existing helium devices, you can just add, like, to add 5G to your existing device? Or do you need a separate device? It will probably be possible to do some of that, right?

So I know, I'm not even sure if I'm supposed to talk about it, but one of the vendors is thinking about doing that, making an add-on device for their existing hotspots that makes it possible to turn their existing IoT device into a, cellular ready device. But for the most part, you'll be buying new hardware that does a different thing. And how do you encourage people kind of in those dead areas to spin up devices? Because I imagine cities probably have much more coverage simply because there's more people there. Yeah. So I don't think we've done this perfectly by any means, but we came up with this idea called proof of coverage, which tries to verify whether coverage exists in a place. It's like one of the most difficult blockchain problems is this sort of like oracle problem as they describe it,

right? Like how do you get data from the outside world into the blockchain and know that it's true? And the simplest example was always the weather, for example, right? Like how would you know that it's like 72 degrees in San Francisco? Like, and be able to verify that and prove that it's true. Or 100 degrees in Austin. Or 100 degrees in Austin with 80% humidity or whatever it is. So part of the proof of coverage idea, and this was a community proposal like, several years ago, was to try and increase the rewards for areas that were less dense, basically, right? So basically trying to use economics to motivate people to do the right thing. It works reasonably well, but you still have this situation where there are like 4,000 hotspots

in like Manhattan or something, right? And it's, you know, so it isn't, people live where they live to some degree, right? And so some of the, some of the journey is just reaching more people, right? Like is reaching people that are in those rural areas. I think with five, and with cellular it's going to be quite different from IoT because the user can also consume their own network. In IoT, like a lot of the applications are still B2B type applications, right? They're industrial or they're commercial in some way. There are still very few consumer-focused IoT applications. So I think the people building the IoT network don't necessarily get to use it, right?

Like it's for someone else. And with 5G, it's going to be very different to that, right? Like the people building the network may also use the network, right? And so people in rural areas in dead spots who don't have good coverage from an existing telco might be, you know, inspired to try this because it's a way to like build networks in their community or for themselves. And so I think the dynamics there with 5G versus IOT are going to be quite different. And so when you kind of project your vision out for when this network kind of has, you know, a decent amount of coverage and there really is a 5G network, I guess, or a cellular network that you can mostly rely. on, you know, what does that look like? Like you were saying, maybe it would bring cost down,

because I personally don't really know what it means to have an open source cellular network. Does it mean that I won't pay AT&T every month? Or kind of, what does that look like? Yeah, no, I think it's exactly what we would like to end up happening, right? Is that we know of at least one entity building a carrier on top of helium 5G. And I think that's super exciting.

And so you might subscribe directly to them, right? and rather than use AT&T or T-Mobile or Verizon or whatever, you may be a customer of a carrier that lives on the network, right? And I expect there to be a bunch of different benefits for doing that. One is definitely cost, right? Like you can probably bring the cost of using the network down to fractions of what it costs today just because just like in IOT,

the cost of deploying the infrastructure is so much cheaper than the traditional way of doing it. I think there are going to be other benefits depending on what it is that people care about, right? like is going to be much more private in nature. There won't be an entity selling your data to someone else, right? And they'll be harder to do sim swap attacks. And like, you know, so it sort of depends on, I think it will depend on the segment.

Like for some people, price is going to be the main driver for other people. Like for me, privacy would be the main driver. For other people's security would be the main driver. You know, so there's lots of, I think, lots of different ways of looking at it. But ultimately, like, this is infrastructure that anyone can use, including the carriers. So we've constantly been in talks with all of the major carriers. I think FreedomFi announced that two of the three big U.S. carriers are already testing on the Helium 5G network to use it as a offload network for themselves.

And so there's going to be lots of different ways that the network gets consumed, whether you know it or not. And what does that mean offload network? Is that like when there's peak demand or something? They have this kind of backup resource? Something like, it sort of depends on the situation. And I always use the example of airports as being a good one, right? Like if you go into an airport, particularly in the United States, the cell carriers don't actually own those networks, right?

So if I'm an AT&T customer and I go into SFO Airport, it's still going to say AT&T in the corner and it's going to look like I have five bars, but I'm actually using someone else's network. Like it might be run by Boingo. It might be run by someone else. And Boingo has a relationship with AT&T that is sort of passing data back and forth. And increasingly wireless networks are built this way, right? Like often they are owned by multiple parties. And AT&T is sort of the subscriber face or T-Mobile is. a subscriber face, but in the back end, it's actually a network of networks, for one of a better

word. And so you could imagine helium 5G being like that. It would be one of the players in that ecosystem, and AT&T or T-Mobile or Verizon may choose to use the helium network for a bunch of different reasons. There may be coverage in areas where they don't have coverage. It may be cheaper than what they're paying someone like Boingo to use the network. You know, like so it may be congestion, right? Like their main macro network may be too busy or too crowded, and you can think about, especially for events, like if you go to the conference center to try and go to consensus, like the cell phone service there is atrocious, right? Because you've got five bars, but nothing works because there's just so much traffic on the network. And so there are

going to be lots and lots of different situations, I think, where it is interesting to the carriers to, like, use a network like helium to, like offload, basically. That's the sort of industry term for that. Something that was interesting to me was earlier when you were describing the open source cellular networks. You were saying, basically that people would still interface with companies on the network, that it wasn't something, you know, truly decentralized, where maybe people might pay with tokens directly or something. But, you know, why is it that there would still be centralized companies

that they would interface with? I think you could do it either way. Like, you could do it that way, right? Where you interface directly with the network. And we have that on the IoT network today. There are sort of like centralized entities that make it easier for companies to get, to use the network, and some of the reason for that is, you know, like some of these big corporations don't want to hold tokens. Like, sometimes they can't hold tokens for, like, legal reasons.

So sometimes it is necessary for there to be an interface somehow, right? And I think what's important is making it possible for, like, multiple entities to be the interface, right? Like, we don't have to be the interface on the IOT network, for example. Like, there are several providers that make it possible. If you didn't want to do it directly on chain and you did want to, like, you didn't want to hold tokens and you would rather use a credit card, for example, there are entities that will help you do that. And so to me, it's important that it isn't just us. Like, sometimes customers are added to the network.

We have no idea who they are. We don't even know they exist. And that's great, right? Like, it's perfect to do it that way. So I think there will always be multiple paths that you can choose. And if you are a minor, for example, and you have a bunch of tokens, you know, there's going to be a way for you to just use the tokens to consume the network directly. It's going to be more sort of, you know, prosumer focus that way, right?

Like only a certain group of people are going to do that. Others are going to be just like, I want to, you know, just give you my credit card, basically, and, like, treat it as if it was AT&T or T-Mobile or Verizon. So as long as I think there's options, I think it's okay that there are centralized entities that sit there, arguably in the same way that you have crypto, your fiat on and off ramps in crypto in general, right? Like, you need a Coinbase or you need an FTX, or you need someone to, like, be the interface to get in and out of the ecosystem. And so it's similar to that, but I think a little bit more open.

And actually, we didn't, we, you know, kind of touched on this question of why you would have a separate token for each of these new networks that you're building, but like, why is that? Why is that necessary? I think a few different reasons. I mean, one of them is to think about governance, right? Like, the way the networks work is going to be very, very different from each other, right? And as an example, like the cost of using the cellular network should be completely different from the cost of using the IOT network, right?

And as an example, I think using the IOT network is about $400 a gigabyte, right? In cellular land, that's absurd, right? Like, you could never pay that, right? And so in the 5G network, it's 50 cents a gigabyte, right? And so there are going to be these very different considerations and the way the proof of coverage protocol works is going to be completely different from network to network. So one of them is to try and encourage governance of each protocol

to be in the hands of the people actually building those networks. So if you are building the IOT network and you are a holder of the IOT token, like you are the one with governance rights for that token, right? not HNT holders, like IoT holders, right? And the same for 5G, you know, that will be called the mobile token. And so part of it is that. Part of it is this sort of notion of like unit bias, right? So there was an improvement proposal maybe about a year ago

that suggested redenominating HNT, right? So that one HNT would become a thousand HNT. And part of that is minors don't like earning 0.05 HNT a day or whatever the average is, right? they would rather have 50 or 500. And we aren't the only network to have, like, struggled with this. Like PolkaDoubt did this, you know, a while ago. They redenominated and they added, you know, like four zeros to the end of their, you know, to their token.

And so some of it is that, right, like having this sort of redenomination. And some of it is just to allow the economies to exist on their own. Like people might, you know, speculators or investors in those networks, I think want to speculate in different ways, depending on what the network is or they might have different desires or different visions for how this is going to go. So having separate tokens allow. allows for all of that activity, but still accrues value back to HNT, and sort of like HNT is sort of the reserve currency, kind of like gold in the sort of US dollar analogy,

but like back in the 70s. So in terms of the cellular network, I just imagine there's going to be a lot more challenges in growing that simply because, as we mentioned, there's so much more demand for cellular packets. I'm not sure what the terminology is. So how do you imagine overcoming that? Because I do think probably the Internet of Things network is just a lot easier to build

because there's not as much demand. It's easier in a bunch of different ways, right? I mean, that the range of the IOT network devices is much larger, right? And so in radio frequency technology, you're like always trading range for bandwidth, basically, right? So you can make the bandwidth extremely small, right, so that you can only send, you know, tiny bits of data, and you get longer range out of that.

in the cellular applications, it's the opposite of that, right? The bandwidth is very wide, but the range is relatively tiny. So you're going to have a different type of challenge, right? Like you're going to need many more devices, devices being hotspots, in order to create, like, reasonably useful coverage networks. The flip side of that is there's so much more demand, right? So arguably there's more economic incentive to set up more devices because there's going to be a lot of phones using those networks, right?

And so it's different from the IOT network, which is I think still searching for applications, right? Like there's, you know, five or ten year, like, lead time, basically, for IoT to get big, as far as I'm concerned. And, you know, there's one example of a company using this network called Nanothings that has built this tracking device that's like a sticker. And they started before we did, right? And they're only now, you know, like getting their product to market in, like,

a meaningful way. And so that's how long it takes to, like, go from an idea to, like, an actual product. So everyone kind of has to be aware of that, right? like IoT is on a long, long timeline, and that's okay. But cellular is going to be very different. You're going to require many more devices, as you're saying, like the demand is so much higher for bandwidth. The range is so much worse on the device side. But at the same time, the economic incentive is very different, right? Like they're going to be like real data consumption on the network. And that's ultimately where I think helium and HNT as a token needs to be, which is ideally decoupled from the very speculative nature of the crypto markets, right?

It shouldn't be that when Bitcoin goes down 3% H&T goes down 10% or something, right? We want to try and get rid of that coupling so that demand for H&T is primarily driven by usage rather than speculation. All right. Well, what future kind of milestones or challenges are you looking forward to as you move forward with Helium? Yes, I mentioned a little bit earlier. The mobile token launches in a few weeks. And so that's kind of the first major milestone, which is that anyone that owns a 5G hotspot will start to earn mobile tokens. So definitely a good time to start getting involved with that.

And then, you know, there's a lot of like implementation steps required in order to like get to the sort of fullness of a network of network kind of idea. So I think it will realistically probably take us until the end of the year until all of that is finished. And so that, but that's exciting work. And then I'm excited to see what people do with the network, like as it grows, right? And we really know about some of the things that are coming and it will be exciting to announce some of those partnerships and some of those deals. This work that we're doing as Nova Labs as a company, which will also be announcing, which I think is also really exciting. So we have our hands full for the foreseeable future, but it's all, to me, like, incredibly exciting and an amazing journey. And what have I not asked you that you would want this audience to know?

I'm shilling again, but people should buy hotspots while they're here because they are heavily discounted, everyone's here. So go do that upstairs and downstairs. Yeah, and like I said, I just, I couldn't be more excited about where helium is and where helium is going. And so, and I continue to be thankful for the community that has joined us on this journey and is really responsible for all of the growth. Great. Yeah, I have to say, for those of you who read a lot of crypto coverage in the mainstream media, the New York Times generally, I mean, I wouldn't say that everything they read is negative, but there are newspapers. So they're going to cover problems.

And one of the few positive articles I read on crypto in the New York Times was about Helium. So there you have it. I think that says something. But yeah, I really enjoyed this discussion. So thanks so much. Thanks, Laura. Join over 10 million people using crypto.com. The easiest place to buy, earn, and spend over 150 cryptocurrencies.

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Voyager Digital filed for bankruptcy. Crypto broker Voyager Digital filed for Chapter 11 bankruptcy. By applying for this type of bankruptcy, Voyager will be able to stay in business while it restructures its obligations and reorganizes its assets and crypto assets and $350 million in cash held at Metropolitan Commercial Bank, according to the statement released by the firm. Last week, Voyager halted all activities from its platform, including withdrawals. It also issued a notice of default to crypto fund Three Arrow's capital, as the latter failed to repay a loan worth $650 million. Voyager's financials were extremely debilitated by its exposure to 3AC. Stephen Erlick, CEO of Voyager Digital, pointed

to Three Arrow's Capital as the trigger for its bankruptcy. We strongly believe in the future of the industry, but the prolonged volatility in the crypto markets and the default of Three Arrow's capital require us to take this decisive action, Ehrlich said. If the restructuring plan gets passed by the court, customers with assets in the platform will receive a combination of crypto in their accounts, proceeds from the 3AC recovery, common shares, and Voyager or VYG tokens. Matt Levine from Bloomberg estimated that if the VYG token has no value and 3AC doesn't recover at all, users could expect 72 cents on the dollar. Customers have been hit hard and are blaming Voyager for deceitful marketing.

I interviewed Jess Archer, a Voyager customer who has $70,000 locked in the platform. She said on June 20th, they reached out to a bunch of partners and entered into these NDAs to try to bail him out. And six days before that, they sent an email out to us, meaning the customers, reassuring us that they didn't have any exposure to Celsius, they never engaged in defy-lending. In fact, the Wall Street Journal reports that the Federal Deposit Insurance Corporation is investigating Voyager's claims that the dollars in its customer accounts were protected, up to $250,000 by FDIC insurance. By the way, late Wednesday, TPS Capital, which long dubbed itself the over-the-counter trading arm of three arrows, tweeted a statement that it was independent and had separate management. TPS is an independent legal entity and its operations are separate and distinct. from those of 3AC, it said.

FTX bails out BlockFi. FTX, Sam Bankman-Fried's crypto trading platform, has closed a deal to lend struggling crypto lender BlockFi, $400 million in revolving credit. The deal includes an option to buy BlockFi at a variable price up to $240 million max. Zach Prince, BlockFi CEO, explained what he believes led to this deal.

Crypto market volatility, particularly market events related to Celsius and 3,000, AC had a negative impact on BlockFi. The Celsius news on June 12th started an uptick and client withdrawals from BlockFi's platform, despite us having no exposure to them, he said. Last Friday, it was rumored that FTX was going to buy BlockFi for just $25 million, a mighty fall from July 2021 when BlockFi was valued at $4.75 billion. So if it is sold for $240 million, that would mean a $4.5 billion. loss from its peak valuation. This is not the first credit line that BlockFi has secured with

FTX since the start of this bear market. Two weeks ago, FTCX provided BlockFi a $250 million credit line to help BlockFi navigate the market from a position of strength, according to Bankman-Fried. BlockFi is just one of many crypto-lenders that have been struggling in the past few days and weeks. Coin loan announced on Monday it would be reducing the withdrawal limits due to market conditions. The company said that it had no expostal. to the Luna fallout or 3AC. VALD, a Singapore-based crypto platform, backed by major VC firms like Coinbase Ventures and Pintera Capital, halted its operations and paused withdrawals amid financial difficulties in

volatile market conditions. It is now getting acquired by NXO, Disclosure, a former sponsor, which will have 60 days to perform its due diligence. Babel Finance is hiring an investment banking firm to help it restructure after it froze withdrawals last month. Rumors spread that Ku Koiin was insolvent and that it was going to halt withdrawals. However, CEO Johnny Liu dismissed the rumors and warned, for fudders who intentionally spread and verified info, Ku Koi reserves the right to take legal actions. MakerDAO integrates real-world assets. MakerDAO approved a governance proposal to provide a $100 million

die vault to Huntington Valley Bank, a 151-year-old Pennsylvania-based community. Bank with $500 million in assets. To start, the bank will receive a loan participation facility with a $100 million debt ceiling, which will grow to $1 billion over 12 months. These funds will help HVB to grow its businesses and support its existing ones. After creating the vault, the bank will post real-world assets as collateral, which include a variety of loans like commercial real estate, industrial, and government-guaranteed loans. Maker will receive some interesting benefits as well. The first is additional yield. Second is a more diversified portfolio, which reduces risks. Lastly, it will allow real-world assets to enter Defi. Celsius repaid its entire debt to maker.

Cryptolender Celsius has repaid its entire debt to maker. Since the beginning of this month, the company has been reducing its debt by millions at a time. In total, it has paid back more than $200 million over six transactions, and the last one was done yesterday morning. After repaying the totality of the debt, Celsius withdrew 21,962 BTC, which are worth around $440 million. Last month, Celsius halted withdrawals, swaps, and transfers from its platform due to extreme market conditions. Ever since then, many crypto exchanges have followed the same path. Likely to further improve its financial position, the company has fired 150 employees, according to the block.

Celsius released an announcement last Thursday trying to bring calm to its users. We are focused on working as quickly as we can to stabilize liquidity and operations. We continue to take important steps to preserve and protect assets and explore options available to us, it said. However, Thursday afternoon, the anonymous account ZeroxB1 tweeted that his name was Jason Stone and that his company, Keefei, was suing Celsius. In the lawsuit, he alleges that Celsius manipulative. the price of the CEL token, that Celsius failed to hedge against key Fy's trading activities on behalf of Celsius as they had agreed upon, and that the company's financial mismanagement

had created an accounting hole of $200 million. He also described what he calls the Celsius Ponzi scheme, in which he alleges that at one point, the crypto lender offered double-digit interest rates to entice new customers, because it could not redeem customers' ether withdrawals on the platform. As of press time, Celsius had not responded to the allegations. First report issued due to Biden's executive order on digital assets. Thursday afternoon, the U.S. Treasury, in combination with other agencies, released a report on how the Biden administration will regulate cryptocurrencies.

The publication resulted from President Biden's executive order on ensuring responsible development of digital assets in March. The fact sheet provides a framework which is guided by the principal policy objectives of the United States. It is supposed to protect consumers, investors, businesses, the U.S. financial system stability, and mitigate illicit finance and national security risks. What's outlined in the framework is intended to ensure that with respect to the development of digital assets, America's core democratic values are respected, said the report. On a related note on Tuesday, the U.S. Office of Government Ethics issued a legal advisory note with the objective of banning

U.S. government employees who own cryptocurrencies from working on crypto-related policies and regulations because of the influence they could have on the value of the assets. On social media, the news was not taken well by the crypto community. People with zero knowledge are going to make laws to govern crypto. It will involve ways to slow the progression of crypto for their friends. And, excellent, Megasot regulations are created by those most ignorant of the topic, were some of the comments. A fake job offer was behind the Ronan hack. The blog revealed the details behind the Ronan hack, one of the biggest exploits in crypto history, which drained $540 million from the blockchain earlier this year.

Ronan is the network that supports Axi Infinity, the biggest play-to-earned game at that time. The U.S. government later tied the attack to Lazarus, a North Korean hacking group. It appears that the hack was facilitated through a fake company's job offer. The blog said that the hack involved a senior Axi Infinity engineer who applied for a job at another firm. He received the offer in the form of the PDF, and when he downloaded it, the hackers were able to introduce spyware into Ronan systems. In this way, they gained control of the system and proceeded to exploit the blockchain. Bitcoin Miners Roundup. With everyone wondering how miners are doing with prices down, there was a lot of news this week regarding crypto mining companies.

HUDAid, a Canadian crypto miner, added 5,800 mining rigs to its facilities in Ontario. It said it has no intentions of selling the BTC at mines. Core Scientific, a crypto mining firm, sold over 7,000 BTC, worth $165 million. According to Chief Executive Mark Levitt, it had to cover expenses such as increased data capacity and to pay off debts. Bitcoin miner TerraWolf took a $50 million loan to invest in data center infrastructure. The company wants to take advantage of certain value-creating opportunities that might otherwise not be available during more healthy markets. Riot is moving as operations from New York. to Texas to cut third-party hosting fees and lower power costs. In June, the company mined 421 BTC and only

sold 300, accounting for a profit of about $6 million. Bitcoin miner Clean Spark produced 339BTC in June, 9% more than the previous month. However, the firm decided to sell the majority of it. We won't blindly accumulate Bitcoin at the cost of dilating our shareholders and taking on unnecessary debt, CEO Zach Bradford said. Time for fun bits. BitStamp announced fees, then unannounced them. Last Friday, BitStamp, a crypto exchange based in Luxembourg, announced that it would begin charging an inactivity fee, which would be paid by users with balances below $200 who have

not traded, deposited, or staked on its platform in the last 12 months. The fee was supposed to be 10 euros. However, after receiving very negative feedback, the BitStamp team canceled his plans. Our goal has always been to be a secure and reliable trading platform that provides industry-leading services, and we do not intend to deviate from this path, that Stamps said in a statement. Uprise loses millions shorting Luna. Uprice, a crypto startup from Korea, lost 99% of its client funds by shorting Luna, according to Seoul Economic. The company tried to short Luna while it was collapsing, but it got liquidated due to a temporary pump in the price.

They lost about $20 million in the process, with only $3 million. as being part of the company's own treasury. At least the funds lost were not from average retail users. Instead, the report said that the clients were high net worth individuals and corporate entities. Thanks for tuning in. To learn more about helium, Nova Labs, or Amir, check out of the show notes for this episode. Unchained is produced by me, Laura Shin, built up from Anthony Yun, Matt Piltered, Juan Oranovich, Pam, Mijimdar, Shashank, NCLK transcription. Thanks for listening.

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