Unchained - Should Yuga Labs Have Charged More For Its Otherside NFTs? - Ep.349

Starting point is 00:00:00 Hi, everyone. Welcome to Unchained, your no-hype resource for all things Crypto. I'm your host, Laura Shin, author of The Cryptopians. I started covering crypto seven years ago, and as a senior editor at Forbes was the first mainstream meter reporter to cover cryptocurrency full-time. This is the May 6th, 2022 episode of Unchained. With the Crypto.com app, you can buy, earn, and spend crypto in one place. Download and get $25 with the code Laura, link in the description. Coin change is the easiest way to earn passive income using crypto. You can safely deposit cash or cryptocurrencies to earn up to 20% annual yield. There is no lending or market risk, just simple, high return yield farming. Create an account today at tri-defi.c. And receive 40 USDC.

Starting point is 00:00:55 That's trydefi.cc slash unc. Today's guest is Eric Golden, host of the Web3 Breakdowns podcast, and owner of Board Ape 7560, and many other Yuga Labs assets. Welcome, Eric. Thank you for having me, Laura. This past weekend saw The Other Sidement, which was for digital land in Yuga Labs' promised metaverse related to the Board Ape Yacht Club and some other NFT projects. Although Yuga Labs and its partners, who include Anamoka brands, Ape Coin Dow, and others, raised about 300,000, $120 million, many view the sale as a debacle. Tell us what happened. So going into APE sale, there was a tremendous amount of demand, and the demand far exceeded

Starting point is 00:01:45 the supply of available plots. So on midnight, there was 55,000 available plots. Everyone with a K-Y-C wallet could buy two. And by some people's estimates, there was at least 100,000 to 200,000 demand. So, you know, supply was exceeded by demand by a number of about four times. And so ultimately, I saw that DeCript reported that the sale actually destroyed more ETH than it issued. And because of how much demand there was on Ethereum blockchain and because of the changes instituted last summer, the chain itself ended up burning 55,843Eth, which was about $157 million worth of Ease. What do you make of all that?

Starting point is 00:02:33 Yeah, so I think the way to think about it is everyone got in line to go into a stadium. And there was 55,000 seats in the stadium that everyone could sit in. And the line outside was very long. In this case, you know, called 100,000 people were outside of the line. But for people to understand Ethereum and Gas Wars, when you're at an auction and there's limited supply, you can increase the amount of gas that you're willing to pay to cut the line. So what happens is, in this case it happened at a scale, I don't think we've seen for some time, that people started increasing the amount of gas.

Starting point is 00:03:09 So even though the price was fixed, in this case it was 305 ape coin, which was roughly $6,000 US dollars, people started to offer to pay the miners to mint their transactions, to guarantee that they would get their mint at much higher and higher increments. So going into it, because they switched from Dutch auction, to just a traditional mint, I think people believed there was possible there was going to be a gas war.

Starting point is 00:03:33 No one really knew what was going to happen. I mean, now in hindsight, everyone seems to have an opinion of what they would have done differently. And I'm happy to jump into like kind of how you go back through the day of how it felt.

Starting point is 00:03:43 But getting up until the last minute, going into 9 p.m., it was abundantly clear there was going to be a gas war. And people thought you might have to pay about half an eth to mint. That would be the gas. And then quickly it was one eath.

Starting point is 00:03:55 And then at the actual game time, it started to range between two and three eath, permit to make sure that you are guaranteed a chance to secure one of the deeds. Wow. Yeah, that's, that's crazy because obviously then, yeah, it's more than what the underlying asset is that they're trying to buy. So actually, let's just backtrack, though, like, why were these in such demand? What exactly were these NFTs that Yucalybs and Anamoka and their partners were selling? So Yuga Labs had tremendous success first with

Starting point is 00:04:28 the board apia club and then board ape kennel club then mutants and then the big news of acquiring larva labs and adding crypto punks and me bits so this is really the premier nfts studio designer creative lab that are launching these nfts and they were had announced that they were going to launch a metaverse and people were very excited but it happened in stages so one of the first pieces of information we got was that we had to KYC or know your customer, which in Web3 is definitely a very hot topic of why do we need to do this. You have your right to your identity. I have my wallet.

Starting point is 00:05:04 For a lot of people that have purchased assets from Yuga Labs in the past, this was never required. And that's just like submitting, you know, like some kind of official ID, like a passport or something, to verify what your real world identity is. Yeah. And it's connecting a wallet to, in this case, a wallet to a real living person.

Starting point is 00:05:24 Now, there's two reasons. I mean, there's lots of, like a lot of this stuff. This is my opinion. People speculated coming from traditional finance, KYC usually means money transfer, some sort of banking arrangement. Maybe you're going to win something and they need to prove it's actually going to someone and no one's rigging in the game. The other best argument I heard was that a lot of these mints have been boughted.

Starting point is 00:05:47 So people show up. They run scripts. They front run everyone. And by forcing someone to prove who their identity is, you're at least. at least limiting to these are real people. And then there's a whole separate issue of how they could collude to still potentially front run the game, but at least these are actually real people lining up to buy whatever item you're selling.

Starting point is 00:06:05 Yeah. And actually, the next day, or sorry, I think it was the same day, Salana was down. And the reason was because of a bunch of bots that were trying to get NFTs and a mint. So maybe that theory isn't so out there. But there were actually other. So there were a number of reasons that the way they structured the sale got a lot of criticism. One other aspect, which you alluded to earlier, was this Dutch auction aspect, which they ended up discarding. That was the original plan. And they ended up just going with a normal price.

Starting point is 00:06:43 By the way, I should say a Dutch auction is where they start with a price ceiling. And then over time it decreases. And so the theory is then people will only buy the price. they're comfortable with that they think is fair. You know, as you mentioned last Thursday, they switched to this flat price of 305-8 coin. What effect do you think that had on the cell? I mean, obviously you talked about the gas wars, but like why do you think they did that?

Starting point is 00:07:07 And then when you talked about how it sort of went down or how it felt that night, maybe you could give us some color there. Yeah. So I was, I don't know why they made the decision they did, but going into it, it was a Dutch auction. And as you said, all of these minting mechanisms, are just price discovery, you know, how do you figure out what the clearing price should be?

Starting point is 00:07:29 And so in this case, a Dutch auction is you start at a high price and it keeps coming down. And then eventually, you actually inducted auctions, like when Proof did their Dutch auction, they started at 5eath, it came down, people started buying. And then when it got to 1th, you also had a gas war. Because once everyone realizes it's officially the price that people are willing to pay, you also get that rush. None of these are perfect. They all have flaws of them.

Starting point is 00:07:53 I actually would have preferred they just kept the Dutch auction, and I wish they set the price higher. I think that one take, and we'll get to the Solana example, people have said, you know, the contract wasn't optimized, this was poorly set up. I don't believe a lot of that. I'm not a technical expert, but even Vitalik came out afterwards and kind of made similar comments to what I believed is that this was an economics problem, not a technical one. When price is set so low, that demand so far outseeds supply, you're going to have this type of event. And so on Thursday, when they said we're doing away with the Dutch auction,

Starting point is 00:08:29 the new plan, which was an interesting one, was we're going to set a fixed price, and what we're going to do is we're going to let every KYC wallet buy two. And they knew a gas spike would happen, but then as a gas spike went down, there would be a second wave, you could buy two more, another wave, and buy two more. And so everyone that I talked to was excited about buying.

Starting point is 00:08:49 people were loading their wallets up and they were saying, I'm going to get four, maybe we'll get to six. But nobody really early on thought that this would be one wave mega gas war and over until much later in the day on Saturday. And what happened at that point that made people suddenly realize that that was likely to be the case? So there's great people that do data analysis on blockchain. It's one of the reasons I love it is how transparent it is. And so what you could see was the information that everybody wanted, which started to come out. There was a Twitter anon named Crumbs, who was amazing and started updating everyone because what we knew was people could figure out how many KYC wallets there were, and you could figure

Starting point is 00:09:27 out how many wallets had ape coin. But the Venn diagram you wanted was how many KYC wallets approved to do this meant had the appropriate number of ape coin. And then you could back into that vision of how big of the line was. The problem was when Crum started pulling the data, originally in the morning of Saturday, there was a lot of KYC wallets, but they didn't have any ape coin. So the theory was a lot of people forgot about this or they registered or they weren't going to do it. But then throughout the day, all of a sudden, ape coin started coming off exchange, starting to fill up these KYC wallets. So when the data first came out on the morning of Saturday, it was there was definitely going to be two waves, probably not a third. Then by the afternoon,

Starting point is 00:10:06 wave two looks smaller, but there were still two waves. But the money kept coming in at a rapid rate. So all of a sudden these KYC wallet started to fill up with ape. So if you were the actual seller, in the morning, you were like, we might not have a sellout. By 6 o'clock at night, I was like, this is a disaster. And the reason why I give the team, I think, doesn't get enough credit is if you know the facts, what are you going to do at that point? Now you've got yourself, do you cancel them in? People will be devastated or do you just let it go? So in hindsight, what the price that the market was willing to bear, so just for simple numbers, I paid roughly US dollars, $12,000 for an ape coin, an $8,000 in gas.

Starting point is 00:10:45 What that tells me is actually the price was 20,000. It wasn't supposed to be 12,000. The price was set so low that got this demand so high that the price should have been a lot higher. But like concert tickets, like sporting events, when people want to have a sellout or a lot of NFTs, you know, by saying that price low, you get demand. In this case, the price should have clearly should have been a lot higher, but it's really hard to price it because if you go the other way, imagine you get a said, we're selling land at $30,000. They would have been skewered the other way that, oh, my God, like, who's going to pay that?

Starting point is 00:11:23 Well, there was 100,000 people willing to pay $20,000 that night. And there was even more people that weren't able to spend that much money to get one of these plots. Wow. This is, yeah, this reminds me so much of the initial coin offering craze, which I read about in my book. But in a moment, we're going to talk about some of the other issues with the sale and dig into why Eric doesn't agree that.

Starting point is 00:11:45 they were maybe problems. But first a quick word from the sponsors who make this show possible. Join over 10 million people using crypto.com, the easiest place to buy, earn, and spend over 150 cryptocurrencies. Spend your crypto anywhere using the crypto.com visa card.

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Starting point is 00:12:26 with low-risk, high-return, passive income through defy. It's simple, just deposit your crypto into a coin-change high-yield account to earn more over time. Your yield is paid out daily and can be withdrawn any time. Coin Change's yield farming doesn't utilize lending or other risky strategies. No minimums, no obligations, just high yield. It's time for a change. Create an account today at try defy.c slash unc to receive 40 USDC. That's try defy.com slash unc. Back to my conversation with Eric. So as you mentioned earlier, a number of people did criticize them for

Starting point is 00:13:12 not optimizing their smart contract. Why don't you explain? that means, but then why don't you then go into why it is that you think that that wasn't actually really a big issue? So this isn't my area of expertise. It's just me trying to do research and reading different people. And a lot of people, this was definitely flawed. This did not go well. So it's not that there weren't problems.

Starting point is 00:13:33 I just think that some of the things that people got upset about probably were not focused on the right areas. When it comes to the technical side, just following people that talked about the optimization, it was Vitalik that said explain this. and that's the person I regard to the highest of the technical ability of perhaps optimization would have helped, but it wouldn't have stopped the problem. Other people had said they should have used a different ERC type, but then we couldn't have had this future state where you'll be able to trade in-game assets. People had talked about, well, we should have done this on Solana. You know, we should have done this on Polygon.

Starting point is 00:14:04 Those are chains that, as you mentioned earlier, have fallen down before. I think personally, even though people were really upset, I'm just maybe the eternal optimist, I was blown away. that the website stayed up, that Ethereum didn't crash, that all of this actually went through. Now, it was a disaster from a sense of people paying a price that the money should have gone to the creators, not to, you know, burning ether or miners, perhaps. And that could definitely be debated. And I see that point, but I'm shocked the whole thing worked. If you tried to do this, I mean, imagine Ticketmaster sold $320 million of tickets and actually processed $500 million in 60 minutes would say up. That's amazing to me that that worked. I mean, maybe it's,

Starting point is 00:14:52 and maybe it's my lack of technical ability that I'm kind of in wonder that this actually stood that type of throughput. But I'd love to see other chains. And I own, I'm not an eth maxi by any means, but I believe that if you put half a billion dollars through something like this with NFTs minting, you, you know, you probably break a lot of different chains. Yeah, that's such an interesting question because, yeah, I don't know how. much because obviously like an entity like Ticketmaster will do multiple sales all at once. Like a lot of times the sales will all open at like 9 a.m. or 10 a.m. on different days. So anyway, I don't actually know what the numbers are, but that's an interesting comparison.

Starting point is 00:15:30 So after this sale, which obviously some people view as kind of a fiasco, Eucalab's tweeted, we're sorry for turning off the lights on Ethereum for a while. It seems abundantly clear that Apoin will need to migrate to its. own chain in order to properly scale. We'd like to encourage the Dow to start thinking in this direction. A number of people speculated that Yuga Labs purposely botched the sale so that they could have an excuse to launch their own chain. What do you think of that theory? This is actually where I personally got as a long time, you know, a lot long time. We've only been doing this for a year, but as a fan of the team and the project, a really big fan of the founders. This was like kind of

Starting point is 00:16:10 my first disappointment in the evening. It wasn't the, I know people were going to be upset. no matter what happened. Like I kind of just assumed that and there was a harsh reaction. It was the comment, that specific tweet that bothered me and rubbed me the wrong way. I didn't like that they were pointing,

Starting point is 00:16:25 because if you take my points earlier that this was an economics problem, I didn't like that fingers were pointed at Ethereum as if Ethereum, like that you had somehow overpowered the Ethereum blockchain. That just wasn't true. So I really disliked that.

Starting point is 00:16:40 And I was even more concerned about this notion of creating your own chain if you look at Dapper Labs and CryptoKitties going to flow or Axi-Builder-R-N-in, like we have examples of people building their own chains when the chain didn't fit their system needs. And that might have made sense. In that moment, people were really upset that they got in line and they weren't able to buy the thing they wanted.

Starting point is 00:17:01 There's always going to be people that get the thing and don't get the thing when there's a scarce resource. So that's expected. But like at that very moment, to kind of declare victory and gloat about it, rubbed myself, but I also know a lot of other people the wrong way. And just reading the communication, listening to people like Gordon, Garner, and Gargamel, the two founders, I mean, they just raised $300 million. Their company raised earlier, you know, $400 million or $5 billion evaluation. If you read their personal tweets, it was not a good night for them. I don't know them personally.

Starting point is 00:17:33 I don't talk to them, but they were gutted by the reaction of the community of this was a fiasco. And I think that when that tweet came out from Yuga, that said, whoever wasn't upset at that point, now everyone started to get upset about that. So I think that it just was poor communication as my only guess of the moment to do it. But then on top of it, I really hope we don't go down that path, just personally as one voter of this giant governance structure we've created. Because I don't see the benefits of moving an off chain like that and creating your own separate chain. There's a lot of things that they can create and add to the community, but I'm not a

Starting point is 00:18:11 huge fan of creating an ape chain. One of the reasons that people believe BordApe Yacht Club took off was that at that time last year, when they launched, they gave their users some meaningful commercial rights to their apes. Well, actually, I should say that they were limited, but it compared to, for instance, Cryptopunks, they were meaningful. But the morning after this sale, Punk 6-2529 tweeted that the TLDR on the other side license was, quote, much worse licenses than prior Uga licenses. So can you describe a little bit what these rights look like for these other D-NFTs?

Starting point is 00:18:47 And do you agree that they're much worse? So 6529, for someone who's not a lawyer, is a great analyst who read the terms of service and did catch a lot of bad language. I think it was Gargamel, the founder, who actually responded to 6529 right away and actually got stuff changed. that day, which I thought was great. I thought it was a good listening to the people that actually

Starting point is 00:19:08 saying. So yes, I agree with 6529 that when the terms of service came out, and this is how I think a lot of people reacted with a gaming company, with big corporations coming in with lawyers, writing documents is a lot different than what we saw a year ago, but you also have an ecosystem worth more than $20 billion, so you're going to get more people at the table. But I agree, the original language came out was pretty poor. And I think that most people thought it was going to be changed. I was actually impressed that they started changing it that day. And so now is it more similar to the rights that Board Ape Yacht Club owners have?

Starting point is 00:19:45 I don't have like a comparison, both. I do, I think the Board Apes rights are a lot, were a lot more open-ended. You know, this talks about using Hong Kong as a jurisdiction for legal disputes. It's a very oddly written terms of service. I think people reacting to it made sense because it was the first time they had seen it. Okay. We'll put in the show notes whatever these updated terms are. So after this whole tumultuous weekend, what has happened to the price of Apecoin,

Starting point is 00:20:16 to the price floor for these other D&FTs and other assets in this universe? So all of them are down from, well, not on mint price, including gas. So if I look at mine, if you kind of equated to Eith, I think we're hovering just above the price that people minted for the lowest piece of land. Apecoins down, I think that was one thing, too, a learning lesson of going into such a large auction was by holding the price back of where they wanted to price it, people weren't sure how much ape coin they needed. So people were buying a coin specifically for this. And I think that that caused a market dislocation where you're like, I want to buy this thing, but I don't know how much I need.

Starting point is 00:21:00 And so people had excess of what they needed. So I kind of anticipated a sell-off. I think most people did of going into this if you don't know how much you need. And then people use it or were left out of line. They're going to be like, why do I want this right now? Because they created kind of a short-term need for the actual token. So that fell significantly. On the land itself, it kind of depended on what type of land you got.

Starting point is 00:21:23 Because like anything, this is now a very complex collection. There are right now about 100,000 pieces that are trading. Some have quotas on them that are worth 60 to 300,000. Yeah, and explain what a coda is. So a coda was the newest character in the Yuga Labs creation that they said that on the 100,000 lands, there would be 10,000 codas. And people were very excited about the chance to own a coda. And so by minting these, and then you had a chance that,

Starting point is 00:21:57 that you might have got one. And so those have traded between 60,000 and 90,000, the cheapest one. So if you got one, then you... Dollars. Yeah, dollars. You did very well. So in ETH terms, 22 to 30th. And then for, there's a, of the 10,000, there's 100 mega codas. And those have traded in the hundreds of thousands. Like anything, I think that if you have participated in any of the mints, not just for Yuga, but for a lot of them, you have, this cycle where people mint, they get excited, there's a pre-reveal period where it trades at this positive because you're taking the probability of getting one of these really high-valued

Starting point is 00:22:38 lands plus the probability of getting a low-valued land. And the pre-reveal is always going to be higher than the floor price after the reveal. Because after it, you're going to settle out. There's winners and losers. So pre-reveal, they were trading at you had made, if you had just minted that night and sold that night, you would have been up 2x. You would have doubled your money. sometimes tripled your money depending on where you were in the evening all the way through three in the morning. Then after the reveal happens, the market starts to separate itself. And now you're in this interesting spot where there's lots of different diversity amongst the assets. There's different land types, environments.

Starting point is 00:23:12 There's so many combinations of like, what am I buying? And Amika hasn't been a release of the game or how it all works. So you have an idea-ish, but no one really knows what's going to happen. So right now people are trying to figure out which type of land. do I want to own because if they make an announcement and they say, oh, this is how it works, then you have a better understanding of what part of this you want to own and at what price. Yeah. So what kind of are the next things that people are looking toward or looking for when it comes

Starting point is 00:23:41 to this whole universe? Well, they're definitely waiting for an announcement from Yuga and Amica more about the game design, not necessarily that the game is ready, but the more they find out about the rules or how you mine resources on the land or how you play the land. I think that's the next big thing that people are waiting for. And until then, you kind of have this switch between people that buy into long-term vision, they want to be part of it, and people that showed up wanting to flip and, you know, buy it on Saturday, sell it on Monday, and move on to the next thing.

Starting point is 00:24:11 And so you kind of have this shift from people that are playing the flipping game to the people that are really excited about the actual game being developed and want to participate for the longer term. And out of curiosity, are you expecting that it will be years before you can play this game because we're seeing some of these other Metaverse projects taking quite a while. So the sales happen at a certain point in time, but then the actual kind of play doesn't happen for a while. So are you just sort of prepared to wait it out? When people talk about game design, when I look at all the different projects that were doing this, I feel like this was a common thing of everyone was launching NFTs and saying they were going to build a game.

Starting point is 00:24:48 And you talk to any game investors and they'll say, Eric, games are the hardest thing in the world to do. There's AAA enterprise software. There's all these things. Like games are so hard. And one example people give is Stuart Butterfield at Slack was actually designing a game. The game failed. He had to lay off a lot of his employees. But they had built a chat engine inside the game.

Starting point is 00:25:08 And the chat engine is actually where Slack came from. So the thing I think about executing hard things, I love founders that want to execute hard things. And I know it's going to take a long time to execute, but they're also going to build a lot of different components to bring this world together. And I believe they'll create value. I also believe they're extremely well financed and capitalized to pull it off. So is this a speculative wild investment?

Starting point is 00:25:30 Absolutely. This is not in my traditional investment portfolio. This is a fun, exciting thing to be a part of. But right now, if you ask me what team of all of these anonymous teams, and they're not anonymous anymore, but of all these teams executing, this is by far the one that's most well positioned in my mind to be able to pull this off. Yeah, and I should just note for listeners, you spent how many years at Fidelity? 16.

Starting point is 00:25:54 Yeah. So clearly you understand that kind of investing. Well, this has been an incredibly illuminating and fun conversation. Thank you so much for coming on Unchained. Thank you for having me, Laura. This has been a lot of fun. Don't forget. Next up is the weekly news recap.

Starting point is 00:26:16 The ScoreBet app here with trusted stats and real-time sports news. Yeah. Who should I take in the Boston game? Well, statistically speaking. Nah, no more statistically speaking. I want hot takes. I want knee-jerk reactions. That's not really what I do.

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Starting point is 00:27:07 Salana went down for roughly seven hours on Saturday. According to its Twitter account, the network lost consensus after an enormous amount of inbound transactions, four million per second, flooded the network. In a post-mortem, the team explained that the influx of transactions targeted a new NFT drop using Candy Machine, Salana's popular NFT minting tool. Since the price had a fixed floor and not a dynamic Dutch auction, the first user to call the mint received the NFT, which created an economic incentive to send a huge number of transactions

Starting point is 00:27:40 in hopes of winning the mint, the team wrote. Due to the overwhelming amount of transactions, the network validators ran out of memory and crashed, leading to consensus stalling until validators restarted the network via Discord and Google Doc coordination. This is not the first significant outage for Solana, which experienced a 17-hour shutdown in September 2021, which Salana says shares characteristics with the Blackout Last weekend. Solana will be adding fee prioritization in its V1.11 release, along with three other mitigations in the wake of the network failure.

Starting point is 00:28:19 Finance and Elon are teaming up. Elon Musk is no longer the sole purchaser of Twitter. According to a Thursday filing, Musk has raised $7 billion in funding from Oracle co-founder Larry Ellison, venture capital firm Sequoia, investment behemoth Fidelity, and finance. The crypto exchange will be putting up $500 million towards the acquisition. By the way, speaking of Fidelity, Senators Elizabeth Warren and Tina Smith sent a letter to Fidelity CEO Abigail Johnson about Fidelity's plans to enable people to save with Bitcoin in their 401ks, saying that Bitcoin was too risky of an asset. It also noted Fidelity may have conflicts of

Starting point is 00:29:02 interest because Fidelity has been mining Bitcoin and because it offers a crypto fund to wealthy clients. Bitcoiners aghast at BIP 119's speed. A Bitcoin Improvement Proposal or BIP introduced an op code called Check Template Verif. or CTV, and it was written by Bitcoin developer and researcher Jeremy Rubin, and it caused quite a commotion in the Bitcoin community this week. BIP 119 is not controversial at face value. Essentially, it allows Bitcoin transactions to be used in a restricted manner in the future, meaning transactions can be programmed in a limited fashion. In BIP 119 terminology, this restriction on future use is called a covenant. It sort of works

Starting point is 00:29:46 like a baby smart contract. According to Rubin, allowing Bitcoins to be programmed via Covenants has interesting applications. For example, exchanges could batch transactions during times of network congestion and settle at a later date. Additionally, BIP 119 would increase the speed of the lightning network and make trustless coin joins easier to execute. However, Rubin has asked the Bitcoin community to vote on the soft fork upgrade via a speedy trial, in which if a soft fork would be voted for by 90% of block miners within a specific period, then the upgrade would be approved. Speedy trial was used in approving the Taproot upgrade, which went into effect earlier last year. However, unlike Taproot, which was proposed in 2018, Bitcoiners are worried that BIP 119 has not

Starting point is 00:30:33 been studied enough. Bitcoin OG and educator Andreas Antonopoulos called Rubin's choice of a speedy trial activation entirely inappropriate. Peter McCormack, the host of what Bitcoin did, tweeted, I'm nervous that something might get activated that a bunch of people just don't agree with. The SEC is beefing up its crypto enforcement team. The U.S. Securities and Exchange Commission announced it is increasing its crypto assets and cyber unit team inside of its enforcement division by 20 positions to 50. The expanded unit, which has already brought over 80 enforcement actions related to crypto, will focus on securities law violations related to crypto crypto asset exchanges, crypto asset lending and staking products, D5 platforms, NFTs, and stable coins.

Starting point is 00:31:23 Gorbier-S. Gruul, the director of the SEC's Enforcement Division, said the regulator is expanding to protect retail investors and offer them a fair chance. Crypto markets have exploded in recent years, with retail investors bearing the brunt of abuses in this space. Meanwhile, cyber-related threats continue to pose existential risks to our financial markets and participants. said Gruel. The bolstered crypto assets and cyber unit will be at the forefront of protecting investors and ensuring fair and orderly markets in the face of these critical challenges. Not everyone at the SEC was excited about the approach to crypto the agency is taking. SEC Commissioner Hester Perce tweeted from her personal account. The SEC is a regulatory agency

Starting point is 00:32:07 with an enforcement division, not an enforcement agency. Why are we leading with enforcement in crypto. Your weekly Defy Hack Roundup. This past weekend, on top of Solana experiencing a network outage and Yuga Labs making Ethereum unusable, there were two major defy exploits. Rary Capital and Faye Faye Protocol fell prey to a re-entrancy bug that cost the platforms more than $80 million. According to Pek Shield, a blockchain security firm, the attack vector was similar to other successful hacks on compound-based forks. For their part, Rari paused borrowing and Faye Proctor offered to give the attacker $10 million as a bounty if the remaining funds were returned. Saddle Finance, a stable coin decks also experienced an exploit this weekend.

Starting point is 00:32:54 Pachshild reports that the hack was made possible due to a wrong library being used to calculate swaps, leading to the hacker getting away with $10 million. On the bright side, a white-hat hacker team at BlockSec was able to recover $3.8 million. There was also an attempted attack on Rainbow Bridge, which connects near protocol into Ethereum. However, a single MEV bot moonlighting as a bridge watchdog was able to thwart the attacker and come away with a 2.5-Eth reward. The IMF says Central African Republic's Bitcoin move is challenging. The International Monetary Fund told Bloomberg this week that the Central African Republic's decision to adopt Bitcoin as legal tender will raise major challenges, politically,

Starting point is 00:33:38 economically, and legally. The news comes just a week after the country's president, signed a law legalizing crypto and making Bitcoin legal tender. The IMF has been similarly negative regarding El Salvador's adoption of Bitcoin. According to Bloomberg, the IMF staff is assisting CAR authorities in addressing concerns regarding the new policy. E&S domains heat up. Ethereum name service domain registrations, aka.eath handles, surpassed one million this week.

Starting point is 00:34:07 With over 350,000 unique owners, the collection also shot up into the top top, 10 of all NFT projects by volume this week on OpenC, a rarity for the domain service. The spike in registration coincides with a search and popularity for three and four-digit ens domains like 123.eath and 6969.Eth. For example, on May 2nd, the floor price for three-digit names was 44Eath, while the four-digit ens names were going for a minimum of 2.45Eath. Starbucks seems to actually understand Web3. Starbucks, the coffee giant with over 30,000 locations and 27 million active rewards members,

Starting point is 00:34:48 is joining Web 3 in a big way. The company announced plans for NFTs this week, explaining the technology's potential for community building and access. We believe NFTs have broad potential to create an expanded, shared ownership model for loyalty, the offering of unique experiences, community building, storytelling, and customer engagement, the team explained in a blog post, and while doing so also being, source of a creative business that can benefit a number of stakeholders in the process, while creating a new type of digital ecosystem to complement Starbucks's current digital platform offering. Details are slim, but the team hinted that the NFTs will drop this year

Starting point is 00:35:25 and will carry community membership and exclusive experience and perks with them. Additionally, Starbucks is thinking of building a Web3 platform that would be chain agnostic. Juno confiscates Wales tokens and does massive self-own. As previously covered on Unchained, the Cosmos-based Juno blockchain community officially voted to confiscate the holdings of a Whales wallet after the entity allegedly gamed the airdrop. The vote was not close, with 72% of users voting in favor of the move. However, it appears that the Juno team accidentally sent the seized Juno worth $36 million to the wrong address due to a copy and paste error in the code. The funds are currently sitting in an unobtainable address, but the team plans to move the funds during an upgrade Juno's ledger to send the funds to the community account it was supposed

Starting point is 00:36:19 to be distant for it to begin with. Luna Foundation Guard buys more Bitcoin. Luna Foundation Guard, the entity working on backing UST with a $10 billion $4X reserve, announced the acquisition of $37,863 Bitcoin on Thursday. The deal was done over the counter with $1 billion. worth of U.S.T. traded via Genesis, and another $500 million in Bitcoin purchased from three arrows capital. The news, however, coincided with a 7% dip in the price of Bitcoin. Time for FunBits. How to Sell Web3. One blog post from At Maddie Gags of Z Prime Capital

Starting point is 00:37:00 was quite humorous this week, titled How to Sell Your BS Web3 Idea to a VC, the blog gives out great advice, like, if you don't have a team or you do not have credentials, then just be in and on. Make sure you use at least three of these trigger words. NFT, Web3, Gameified, X to Earn, value capture, governance token, Dow, and the Metaverse. And my personal favorite, this is the easiest part. However, it requires you to actually have a call with investors. Just memorize the phrases below and slip them into the conversation. So, I cannot say who will leave. but waiting for Kyle to respond next week. This will make them think, which Kyle?

Starting point is 00:37:44 Davies, Samani? Damn, I better be fast. Even if they know one of the Kyle's and they check with them that still can be the other Kyle or some freaking Kyle they've never heard of. Oh my God, I cannot be bested by Kyle. All right, thanks for joining us today. To learn more about Eric and the other side digital land sale,

Starting point is 00:38:02 check out the show notes for this episode. If you haven't yet bought a ticket to the book clubs on the Cryptopians, There is one more book club next Tuesday at 3 p.m. Eastern time with a few tickets remaining. I've had a lot of fun discussing the book with you all and I'm excited to discuss it with more of you. Also, don't forget that buying a ticket to the club also gives you access to my premium offering for the next year, in which I release exclusive interviews not available elsewhere. Head to bits.k.i. slash Laura Shin. Again, the link to buy is bits.k.i. slash Laura Shin. Unchained is produced by me, Laura Shin, with help from Anthony,

Starting point is 00:38:37 June, Daniel Nuss, Mark Murdoch, Shashonk, and CLK transcription. Thanks for listening.

Unchained - Should Yuga Labs Have Charged More For Its Otherside NFTs? - Ep.349

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