Unchained - The Chopping Block: Live at TOKEN2049 feat. Balaji Srinivasan & Arthur Hayes on Kazakhstan, Crypto Bunker Mode, and the L2 Shutdowns

Episode Date: October 9, 2026

Live from TOKEN2049 in Singapore, Haseeb, Tom, and Tarun sit down with Balaji Srinivasan and Arthur Hayes. Welcome to The Chopping Block, where crypto insiders Haseeb Qureshi, Tom Schmidt, and Tarun Chitra chop it up about the latest in crypto. This week they are live on the BingX Stage at TOKEN2049 in Singapore, joined by Balaji Srinivasan and Arthur Hayes. Balaji explains why Network School moved its headquarters to Kazakhstan, which he calls Singapore with space to build, and why courting a country works a lot like enterprise sales when half of all countries have fewer than 10 million people. Then OpenAI drops 700 AI-written math papers and Justin Drake tells crypto to go into bunker mode: Tarun separates theoretical attacks from practical ones, Balaji proposes a social smart contract that would let chains rewind after a cryptographic break, and Arthur pitches the Flop Network as food for AI agents. Finally, Blast and Abstract shut down, nobody booked Marquee this year, and the panel debates whether the L2 era was a necessary search or crypto's version of Chinese ghost cities. Listen to the episode on Apple Podcasts, Spotify, Pods, Fountain, Podcast Addict, Pocket Casts, Amazon Music, or on your favorite podcast platform. Show highlights 🔹 TOKEN2049 is still the one retail mega conference left, even in the first year with no wrapped Lambo out front. 🔹 Balaji says crypto is M&A-ing Western institutions, and that anything holding long-dated Treasuries is wrecked. 🔹 Network School has moved its headquarters to Kazakhstan, which Balaji calls Singapore with space to build: 21 million people, a tie with China and India at the physics Olympiad, about 40% of the world's uranium, and room for 10,000 acres of Arthur Hayes City. 🔹 More than 10 countries bid for Network School. Balaji says courting governments works like enterprise sales, because half of all countries have under 10 million people and a billion dollars goes a long way there. 🔹 Why Hollywood misleads you about the rest of the world, from Borat to Squid Game, and why Balaji splits countries into a descending world and an ascending world. 🔹 The ascending world has murals of Elon and will build Arthur a statue, preferably on a horse, while blue states drive their billionaires out. 🔹 OpenAI drops 700 AI-written math papers with nothing on cryptography, and Justin Drake tells crypto to go into bunker mode by moving funds to addresses that have never signed. 🔹 Tarun says there is still a big gap between a theoretical attack and a practical one, and Haseeb asks who will even tell us when ECDSA is broken. 🔹 Balaji proposes a social smart contract that lets a chain rewind after a cryptographic break, Haseeb says cross-chain dependencies make that far harder than it was five years ago, and Balaji warns that anti-tech is the new anti-capitalism. 🔹 Tom says to watch what people do rather than what they say, and Balaji argues there are hard mathematical bounds on what AI can do. 🔹 Tarun on quantum money, Balaji on blockchains that spend their own token budget trying to hack themselves, and Arthur on the Flop Network as food for AI agents. 🔹 Blast and Abstract shut down, and Arthur reports that Marquee, fully booked all week last year with half a million Singapore dollar minimum spends, has not had a single booking this year. 🔹 Balaji says every failed L2 was part of a search worth running, Arthur jokes that it was all a search for Base and Robinhood Chain, Tarun calls the L2s Chinese ghost cities that can at least be demolished, and Haseeb tallies the middlemen that make running one so expensive. Hosts ⭐️Haseeb Qureshi, Managing Partner at Dragonfly ⭐️Tom Schmidt, General Partner at Dragonfly ⭐️Tarun Chitra, Managing Partner at Robot Ventures Guests ⭐️Balaji Srinivasan, Founder of Network School  ⭐️Arthur Hayes, CIO of Maelstrom & CEO of Flop Labs Disclosures Learn more about your ad choices. Visit megaphone.fm/adchoices

I mean, you motherfuckers come to my city and traffic is insane for like, you know, a whole week. That if you want 10,000 acres for Arthur Hayes City, we can do that. Even Squid Game is showing all the soft greens, killing each other or whatever, right? And how much by Joe? This is your pay-t-t-te-tree. Not a dividend. It's a tale of two quons. Now, your losses are on someone else's balance.

Generally speaking, air drops are kind of pointless anyways. Unimaged trading firms who are very involved. I like that eat is the ultimate pump. D5 protocols are the answer. to do it to this problem. Welcome to the chopping block. Every couple weeks, the now five of us get together and give the industry insider's perspective

on the crypto topics of the day. So quick intro, this is here's got Tom, the D5 Maven, and Master of Memes. Hello, everyone. Nice to get to ruin the gigabrain and grand Puba at Gauntlet. Yo. And joining us again a token 249 tradition. We've got Arthur Hayes,

the Arbiter of Alpha at Maelstrom. Howdy. And then, of course, we've got Bologi, the Bitcoin Brainiac. And I will see the head. at Hyde Man at Dragonfly. We're early issues investors in crypto, but I want to caveat that nothing we say here

is investment advice, legal advice, or even life advice. Please see Chopin Block. That XYZ for more disclosures. So we are here at Token 2049 in Singapore. It is, I think, at this point, the biggest crypto conference in the world. It's one of the only places where I think you still feel this kind of energy.

And it's sort of like the U.S. conferences have gotten very institutional, a lot of suits. This is like the one retail mega conference that still gets the June. is flowing. How have you guys felt about token 249? I mean, you motherfuckers coming to my city and traffic is insane for like, you know, a whole week. But it's not just us. It's like, it's everything happening at the same time. You know, there's like five conferences happening. There's like milk in. There's, there's obviously

F1 happening this weekend. So it's not just us. Also, the air here is insanely bad for some reason. It's like Delhi. It's bad. Yeah. It's a worse than that's going to be. Yeah, that's what I've heard. The fires in Indonesia. I feel like the institutional shift. You also feel it here. There's like the first year there's been no, like, wrapped Lambo out front. And it's like just everyone is growing up a little bit, which makes me a little bit sad. I kind of was looking forward to more kind of jubilation. There's still one more day.

There's enough money. Everyone broke. There's one more day. You could make your dream happen still. Yeah. That's true. That's true. The Lambos are tomorrow.

Yeah. You know, I have an observation, by the way, which is I think crypto is sort of emanating Western institutions, but Eastern institutions are more functional, so they will survive. Western institutions, financial institutions won't. Anything that's holding a lot of 10-year, 20-year, 30-year treasuries.

I'm sure Arthur has some opinions on that. They're wrecked. Fair enough. Well, I wanted to start with this story. So speaking of fires in Southeast Asia, the network state has recently pulled the plug on its headquarters in Southeast Asia and is now moving to Kazakhstan. Well, so, yeah, so we actually already moved. Already moved to Kazakhstan. Tell us the story of how this all played out.

So actually, we actually still have, you know, an office in Singapore, and we're actually going to open up something else in South the stage, so stationed on that. But basically, Kastan, just to talk about Kastan, Kastan, Kastan is going to be the next L-Salvo, or the next UAE, the next Singapore. And the reason is, so first, why was it off the radar, right? Well, there's a Barat movie, which really misled everybody about what Kausan is. It's not, you know, you see a movie and you think, okay, it's like a caricature of reality, but it's like in the ballpark, you know, but like Jurassic Ballpark, you know, your ballpark approximated, like the DNA in Jurassic Park, but it's actually totally not. And, and, and, and, and, you know, and, and,

And really what Kazakhstan is is it's land Asia. And you're all familiar with like coastal Asia because, you know, the way Americans or Westerners learn geography is America fights wars there. So like Vietnam, Korea, Japan, Americans know those countries exist, right? And they're on the coast, right? China also, you know, is a part of the Korean War, right? Singapore recently Crazy Rich Asians, there's a movie. They know Singapore exists.

But they're all on coast. And Kazakhstan is so far inland and it's adjacent to Russia and China. It speaks Russian. so it doesn't post in English, right? So for all these reasons, you know, Americans don't really have a reason to go. Plus, Barat made it seem like it's not like a great place. And so because of that, it's like this encased in amber, absolutely amazing country, which is, I would call it Singapore, but with space to build.

So it has all of the quality of governance of a UAE or Singapore were really high IQ people and government, like they're number one in the physics Olympiads tying with China and India, which is pretty legit as a country, right? Wow. Yeah, with 21 million people, they're tying countries at 70. 70. With 21 million people in Kazakhstan. Yeah. Because it is an enormous landmass.

Exactly. So there are 3,000 times the size of Singapore, but only 3x of size population-wise. So Kazakhstan is the place that if you want 10,000 acres for Arthur Hayes City, we can do that. Oh, right? I club at every corner. Yeah, you can get it and they'll want you there. Okay. And the people will love it.

They want to build startup cities. They want to build crypto cities. In fact, if you come to Network State Conference on Friday, you're going to see a delegation from Kausen. Many senior ministers have come down. This is Kaston's sort of big thing on the world stage. Binance is now opening off Sarah Salana. You know, last year had a special economic zone. Shervin Pischvar just is setting up there.

Olaf has come up there. There's going to be a lot of things happening there because it has all the digital stuff that we know. It's got actually a really, really good crypto law. If you want to build data centers, they've got the space. is now banning them, you know, or stopping them. Kastan has the lowest energy in building costs in Asia, because it's got like enormous amounts. It's like 40% of the world's uranium. So it's got all the digital and all the physical.

See, Singapore's amazing, amazing place, but doesn't have any land, right? Or there's countries that have land, but they don't have great governments. It's very unusual to have both. So when you left Southeast Asia, I remember you were sort of looking at many different jurisdictions to go to next. And I think you might be one of the only people in the world who has, done this kind of jurisdiction shopping under duress in the way that things played out. Yeah.

What was that like? So great question. So the thing is, first of all, you know, 10 different countries bid for network school, okay? More than 10, in fact. And we're going to open up nodes all around the world. We've clearly got something where we can print out Silicon Valley in a new place, especially with all the visas being cut off to the U.S. There's this flow of talent that wants to go somewhere and now it will go everywhere, right?

and it'll decentralize just like crypto itself, just like our community here is whatever, you know, 50 passports in this room, that's something just like cryptocurrency doesn't map to legacy currencies. Crypto identity doesn't map to legacy identities, right? That's the next big step for us, you know, get out of your currency, then get out of your legacy identity, get a new passport, you know. Second passport is much more important than the first home. So many of these countries, go ahead.

No, no, no. I mean, that's a perfect apologism. I think, yeah, I'm more curious. What does like horse trading look like when you're shopping for a new jurisdiction? Like who's coming after you? What are the leverage you can pull? Good question. What do they offer?

What do the offers look like? Yeah, yeah. So without kissing and telling, so to speak, okay. It's actually a lot like, I'm just saying. I'll give a little bit. They'll like it. Yeah, it's like it's like it's a lot like enterprise sales, you know? It's like basically as you ascend from retail to SMB to like enterprise to small governments,

to large governments, small governments are actually a lot like enterprises. See, the thing is, this is one of the secrets, ready? Most countries are small countries. Okay, most people have not actually made this graph. Take the 193 UN members, let's use it as an operational definition of what a country is, okay? There's exceptions and so on, let's use that. And you make a histogram of their populations, and you'll find that half of them have less than 10 million people, and like 20% have less than 1 million people, right?

only a small fraction of countries by number are the 100 million plus countries like Russia, China, India, America. Most sovereigns are small. Like Cayman Islands, you know the population of Cayman Islands? Who knows the hubb? 60,000? Yeah, 70,000. Yeah, exactly. But it's BVI.

It's like 30K. Okay. That's smaller than Palo Alto. So the number one asset that they have is a flag. Okay. And so the complementarity between what we do, we've got these gigantic crypto networks. social networks. We're gigantic international networks, but we have no physicality. They are small states. They have physicality. They have legitimacy, but they don't have anywhere near the capital

or connections in many sense of the term that we have. That's a really great deal to be done, right? A billion dollars goes a long way in a country with 100,000 people or a million people. It's like a thousand dollars ahead, 10,000 dollars ahead, right? So you have a lot more leverage than you think. and the key is to... Now, here's the tricky part. You actually have to go to these places. And the reason you have to go to them is you have to just assume that Hollywood...

Hollywood is wrong, but you don't know what is right. You can't ballpark... Do you see what I'm saying? Yeah, yeah, yeah. And here's why Hollywood is actually deeply wrong. Essentially, Hollywood doesn't show... I don't want to give the ball to you guys. I want to get a demoplay...

But Hollywood does not show movies of prosperous non-Western countries. With the exception of crazy rachations, that's like, you know, even Squid Game is showing all the South Koreans killing each other or whatever, right? And these are, you know, and the reason is it's depressing for Americans to see other people doing well. So even if you post a video of like Chinese glowing cities, they'll be like, oh my God, they just put LEDs on their cities, right? They don't understand. You'll see this, you know, complete cope on social media.

And it neglects the fact that Shenzhen basically didn't exist in its current form 40 years ago. It's like, no, they put LEDs on the cities. They built the cities, right? So the point is that without travel, you can't calibrate as to some countries really are bad. And you have the whole two by two, right? You think it's bad, it is bad. You think it's bad. It is bad.

You think it's bad. You think it's good. It is good. Literally the whole two by two is there. And you saw all of those when you were evaluating shooters. That's right. And that just means you just have to put a lot of miles and you actually have to see it on the ground. So who are the folks who were you think it's good and is good?

And who are the folk you thought it was bad and they were good? Well, you know, who's bad? I'll say who is, who do people think is good and is bad? Yeah. Is Western countries? They were Western countries also. But they actually did on your network state? Do they want?

No, no, what I mean is, like, they are, they're in a bizarre, you know what it is? The terms first world and third world are obsolete. I just think about it in terms of descending world and ascending world, right? So the quote first world is like the fail son who's like, inherited something that they couldn't build, right? The Brooklyn woke, you know, and they're like, you were really trying to pry a list of countries out of you and you are not.

Yeah, yeah. Come on, man. Who did you sing KTV with? How much by Joe does you drink? Zero KTV. Zero KTV, absolutely. But, but, but. It's not that much like enterprise sales.

Yeah. Yeah, yeah. What I'll say is countries under 10 million people, which is like 100 countries, really like, you know, a billion dollars goes a long way, right? And so, I mean, one of the things, here's another way to calibrate it. Okay, take your Twitter following, you know, Arthur, your Twitter following. Make a histogram.

And just, you know, AI can do this for you in a day. Take any country, take its legislators, its president, and so on. And compare how many followers they have to how many followers you have, right? Your visit to that jurisdiction will be the number one news event of their year. Okay. I realize even for congressmen and senators in America, tech guys actually have much. more distribution than you think. If you just took a liking to a certain politician and just wanted to retweet everything they did, like, I mean, obviously you have to, like, there's no,

it's something where you actually actually believe in it, right? But you would be a very important constituent for them. You know, you should live in the jurisdiction and so and so forth, right? So our, you know, like, basically we radically underestimate our leverage. This is a short version. So we have Bologi has given us an experiment. We have to go look at who's retweeting him to figure out the list of kinds of. He won't think the country, but the data. I didn't make it that easy for you. I'm not.

By this time next year, we're each buying a politician. No, no, no, no, no, no. It's not very clear. You're not buying a politician. What you're doing is you're actually making a capital investment in the country, right? So that's the thing is the ascending world countries are ascending world because they actually have a... Many of them are post-communist or they're like in Latin America, they're post, I don't know what you call it, post-drugs, you know, right? Like what Kelly is seen, right?

Post-inflation in the case of Argentina, right? It's like everyone in the U.S. keeps making post-economic memes, given some of the recent tweets. And now we're talking about the post-drug economy. Well, actually. I don't know if you're at the hit the post-drug economy. Okay, it's actually interesting. It's like post-economic normally means, you know, okay, you're wealthy enough you don't have to worry about things, right?

These guys are like sort of post-anteeconomic. Whatever communism was, whatever Keynesianism is, is like anti-economics. So the great thing about them is they have immunity, they have antibodies to all the communist, Keynesian stuff. I love it so much. I don't have to explain it from scratch. We don't have to debate about whether, you know, effort leads to results or whatever. So that whole part of the world, all those people, they're ready to do business.

And here's the thing. You know the best part? You go to these countries and there's multiple of them. They have murals of Elon. Okay? They have murals of all the tech guys. They're not like trying to shoot at them or stuff. You know, it's saying a profit is without honor.

in his own home. Okay. They love tech. Okay. Arthur, they'll build you a statue. Okay. I'm serious.

They really will. If you find a country and you basically adopt it, right? I mean, you have to actually commit. That's everything. So are you moving to Kazakhstan?

Huh? Yeah. I've already set up there. Is there a statue of you in Kazakhstan? Yeah. I never asked for a statue of me. I'm kind of, you're on a horse.

Statues, you can ask for it. You can't be in a horse. Arthur, Arthur will have a great statue. It'll be like a Greek god, kind of statue. So that's why I recommend. Yeah, like holding a long bow. I can do that.

Yeah, something like that. That's right. But, you know, I just mean there's a figure of speech. The point being, they will welcome you as opposed to throw maltaught of cocktails at San Maltaudman's houses, which they're doing in San Francisco, right? So, like, and to be very clear about this. Some countries

will welcome you, depending on who you are. Yeah, look, there's a bunch of blue states that think billionaires should not exist. Okay? And there's a bunch of small states that want those tech billionaires there. And so they're both going to get what they want, kind of, which is blue billionaires will not exist. You will not be able to be a billionaire in a blue state because they'll pass these taxes and

so and so that's why Larry Page is out. That's why Sirgiprin is out. That's why Zuck is out. That's why Larry Ellison's out. That's why Elon is out. Teal is out. Bezos is out. Ken Griffin is out.

All them out of blue states, right? So those all just go to zero and lose their tax base and lose their billionaires and lose their cent to millionaires and so on. And where they go? Okay. They can go within America, but actually the world is a lot bigger than that. Kazakhstan. He also mentioned teal, so Uruguay, right?

Paraguay and Uruguay. That has to be on the list. Okay, so Latin America, Latin America, very interesting. Do you have Latin American bidders? What's that? Were there any bitters who were from Latin America? What can I say about that? It's a big one.

Yeah, it's a big place. Let's say it's potentially. Potentially. Yeah, yeah. Come on. Okay, okay. We're not getting in it. You know we like to do, Tina.

You know that. Let's move on. Let's move on. Okay, okay. So speaking of going to zero, one of the big announcements yesterday was this giant drop by OpenAI. Open AI released something like 700 AI written manuscripts producing new mathematical results that they, some of which they had formalized in Lean, some of which they just kind of had this, I don't know, AI slop that they published.

There was a couple of really massive results in this drop, one of which is considered to be one of the most significant results in in the last hundred years, which is known as the quasi-remont hypothesis. There was some stuff about matrix multiplication. There were some stuff about fast four-year transforms, particularly weird results, I think, in improvement in asymptotics. It's freaked a lot of people out. And part of the reason why it's freaked a lot of people out is that, of course, there's this idea that, okay,

mathematicians are maybe now either obsolete or they're very quickly facing a complete change in what their job is going to look like. And we're not immune to what's happening in mathematics, Because, of course, crypto is dependent on mathematics. And so yesterday, Justin Drake, one of the cryptographers at the Ethereum Foundation, he posted that it is time for crypto to go into bunker mode. Now, what is bunker mode?

Bunker mode in his parliament, it's like, look, mathematics is now going into overdrive. Things that took, you know, five, ten years are now happening in days. And we don't know what's going to change. Normally, a lot of the cryptography that we use in blockchains, they change over time, right? We used to use SHA-2, now we use SHA-3 in Ethereum. Back in the day, we used MD5 20 years ago, and we move across cryptographic algorithms over time.

But the pace at which we move is much slower than the pace at which this math is now happening. We had 700 drops in this Open AI drop that, oh, sorry, 700 results that came this open-a-draud. There were zero related to cryptography. That's really weird. It's really weird because probably the most economically significant part of math is cryptography, and yet there was not a single result in cryptography,

which probably implies that there were some results, but they didn't publish them because they may be doing some responsible disclosure, or they may just be saying, look, this is so potentially damaging that we need to do some totally different paradigm of how we deal with this. So Justin Drake's recommendation is that, look, freeze. Do not move. Take all of your assets that are of any size and put them into addresses that have never signed any transaction because we don't know what's coming.

And if a lot of the mathematics that undergirds blockchains, like the discrete log problem, which is the foundation of public cryptography, if it turns out that we don't have any proofs that this stuff is hard for classical computers, we're pretty sure it is because a lot of smart people have tried and they haven't been able to prove anything. But that's true of a lot of stuff that's now falling in mathematics. And so the kind of pace that we used for crypto in the past may not be the right pace to think about what's happening going forward.

And so his recommendation is this, we're now maybe going through a critical period and everybody should be a little bit scared. How do you guys react to this warning from Justin Drake? So I think there's like two things that are a little bit. So also, by the way, a lot of people had responses to this, including Vitalik and others that were like, this might be a little extreme. I think the first thing to note is that most of the advances that people found are not like practical algorithms. they're generally like, okay, there's something that you learn in intro-CS class that, like, you can't multiply two numbers faster than a certain amount of time. That's clearly wrong, but it also assumes that you have, like, infinite memory.

So I think there's a sense in which the practical algorithms that break this stuff versus, like, the theory of, like, oh, there exists an attack are actually quite, there's still quite a big gap. But that's said, like, practical when there's... Open AI has infinite compute resources to put at that. these things, whereas if you're an attacker, you don't. We don't know how much... I haven't gone through this, but how much compute did it cost for them to do each one of these discoveries?

Have they published that? I mean, they said three hours. They said three hours on average. On average, but that's right. But you can now add up the 2100 hours, right? So it's not like that crazy. I think the main... Or 20,000 hours.

The main thing I think is worth thinking about is like, okay, even if ECDSA breaks tomorrow, the question is like, can I forge a signature in... X amount of time. Like there is some proof of work even with I know an attack. Right. So let's say it takes five days to 40s.

Yeah, yeah. I think then you have to be a lot more worried. But we're not going to know. How are we going to know? Who's going to tell us, hey, guess what? Everybody, ECDSA is broken. What the fuck do you do now? I would say also the rest of the financial system

is broken first. Yes, to be sure. It's not just crypto. We have much shittier cryptography and most of tradfite. Right. And so like at least crypto in the open, you'll see an attack. There has to be some public kinder in the coal mine.

But I think like the bunker mode thing is also a little bit weird because it's like, okay, go to an address you never signed from. Well, if they already broke the signature, they found a reverse, you know, one-time thing to supposedly one-way function. You're fucked anyway. Like, who cares whether it's never signed before? Like even the known ciphertext is not going to help you attack. So I think the whole thing is like, yes, there is something to be afraid of. But the thing to be afraid of is more that someone figured how to make these things practical quickly with AI versus like, okay, they found the theoretical attack, but it's like 10 to the 80th. The constants in front of everything are 10 to the 80th. We were talking about that yesterday,

right? It's like... I have several. Go ahead. You're going to finish? We were talking about this yesterday, right? Like, there is this the thing about humans and that they've over-indexed on elegance in the answer, right? They want to make math have an elegant answer versus just like what's the most efficient answer and I think that's the thing that we probably have that's the biggest philosophical difference in so I have several thoughts on all this the first is um this kind of drop of results is similar you know there's actually a journal called ramanogen's notebooks where people go through ramanogens old results and try to prove them and so on and this is kind of similar to that where you just get these results dropped and then you have to

try to figure out you know how to make sense somehow you relate to things number one number Number two is, I think crypto, in the fullness of time, maybe it's the first hit, but it's also the one that survives. And I've been thinking about this for years, which is, you know, there's only really two large groups in the world that take the Internet seriously, which are China and Crypto, because of the great firewall and the blockchain, respectively. Those are defensive structures on the Internet. The Pentagon, by contrast, gets hacked over and over and over again.

OPM gets hacked. All Web 2 systems, with maybe the exception of Google and 3.5. Facebook owners that have the tokens to insulate them are all going to get hacked. And Web3 systems, by contrast, have at least a live bug bounty, where if they get hacked partially or what have you, then their price drops, but they don't totally die. And the reason is they actually also have a social component. Second is the next point. One thing I think we might have to do is a new social smart contract among blockchains,

which is basically something as follows. It's like you use Ethereum, and by using Ethereum, you may have to. assent to something on chain that says if there's a hack of this, that, or the other hash function or, you know, digital signature or what have you, then the miners can rewind state to like something a week ago or something like that and all transactions are reversed. And everybody has consented to that as part of the terms of service on chain. So there's no controversy as to whether or not you could rewind the chain. Okay. Proof-estake chains can do that, right? They can do long-range unwinding, okay? And then other chains may

decide not to that, but that's a great thing about blockchains. You can have many different types of things like this, right? I mean, that was more possible, let's say, five, ten years ago, right? Now there's so many cross-chain dependencies and so many other systems. Like, if you're rewinding all these bridges. It depends what chain it is. Sure, sure. If it's like a Bitcoin style, there's not a lot of state, there's not a lot of complexity, then yeah, that's doable. But I think the reality is that any such unwind would be so damaging. And the other thing, too, is we're really not ready for a new architecture. Well, it's damaging, but it's always quantifiable how much money is lost, right? It's like some amount, you know, a crash in price.

Like, okay, whatever people lose, whatever million dollars, even a billion dollars, but then the thing, I mean, that's like, I don't know, like the financial crisis of 2008, right? The people will lose money when financial things happen. it's not going to be zero loss. It's just going to turn out that that chain, and people might have, there might be a coinholder vote, which legitimates whether that chain rewinding happens, right?

Because maybe it's only a hundred million. Post-hack, you can't do a coneholder vote anymore because the coins themselves are suspect. So that's what you have to contemplate that. Is it like the Dow attacker, where they've got 30% of the coins, and then they can corrupt it? You know, or maybe it's only the coins

from 30 days ago can vote and so and so forth, then your old keys work. There's many ways you can do this as you start thinking through the verticality of this. And crypto is, if there's one thing we're good at, it's this kind of thing, right? This is the thing we are good at, right? And legacies systems are not good at this, right? Now, the other thing I think is going to happen is this is going to accelerate the Ted Kaczynskiification of a large segment of the population where there's a growing

anti-tech movement. I mean, I think anti-tech is the new anti-key. capitalism and it's morphed just enough evolutionary. It's like a virus that's adapted just enough that it appeals enough to the right that it doesn't see it as exactly communist, but it's kind of a morph on communism where it says, look, there's all these crazy things that are happening with the emergence of all these technologies. Let's just throw it all away and go back to living in the woods like men were supposed to, you know? And that's like a, right? That's a, there's a, it's a, it's very similar to the same romantic sentiment that accompanied the Industrial Revolution

for many of the same reasons because people were in the middle of the disruption and everything was changing and they weren't yet in a stable state and so a big part of communism was the rejection of all this change and there was a rightist aspect of that as well anyway point is a lot of people are going to be like I just want physical coins I just want to be offline everything I just want to be a caveman again why does my and the problem is that yeah you can you can potentially do that it's pretty hard to do that in our our modern world so much the supply chain is is going to be digital So you're going to have this rage at, that's why, like, that's why I'm out here. Right.

Like, the East will deal with it better because it's got a better social fabric. In the West, you know, America's got 300 million guns. Okay. Anyway. Tom, what's your take on this thing? Yeah, I think when it comes to anything like this or, you know, AI safety, I think, looking at actions is like usually a lot more instructive than looking at words. It's very cheap to go in Bloomberg and, you know, get some eyeballs.

It's another thing to, you know, I think of the anthropic safety researcher that retired about a year ago and said he's going to go live in the countryside in England and like write poetry. And I respect that. To my mind, that's kind of more showing action. And so for this, you know, I think I take more worry when I see sort of large whales actually enacting this protocol and sort of moving on chain. And so I think we see exchanges, protocols, large holders actually doing this. Then you're actually like putting, you know, words, you're putting action behind your words.

And then I think there's not more belief to it. But I think a lot of this things kind of fall victim. There's a Goldilocks idea. I mean, same with these really elegant proofs of, well, kind of like with Q-Day, it's so far out. We're going to kind of very gradual sort of heads-up when in reality we've gone from you need a quantum computer to maybe break ECVSA, which is to it's five days

with a commercial-grade hardware to maybe three months from now. You can do it on your MacBook. And I think there's something scary I saw a couple hours ago. Matt Green, who's a famous photographer from John Hopkins, tweeted that he thinks maybe public private key. cryptography is over. And that was, you know, again, talk is cheap, but

hey, maybe he's going to put everything in clear text from now on. To be fair, he was fighting with another cryptographer in that thread about this. I mean, social media amplifies to be as a shock value as possible. Well, I think it's more funny that Vitalik had to write this post. I was like, actually

don't listen to Justin Drake in like a different it was like a longer post. Yeah, I think this is kind of the crypto equivalent to humorism, which is that, like, you know, the people who are saying this, like, even Justin Drake. That's very good. Like, the reality is that... I think it's good for him to...

I think it's very good for him to... I think it's very good to... It's very good to argue and counter-argue this very important point. I'm nothing against Justin on this, but that's clever. Cryptodomerism is very clear. Yeah. And look, the reality is that even Justin Drake is not claiming that this will happen. But he's saying that, look, the probability went from, like, 0.1% to, like, 5%.

And 5% is enough that, like, you should probably get insurance against a 5% outcome that results in wiping out all of crypto. The thing about this is, like, one thing I do want to talk about is there are, and I was arguing this with Gikowski years ago, and I probably should repost it now, there are hard bounds on what AIs can do. Why? You can prove that turbulent or chaotic phenomenon, you can't forecast them out, like, no matter, you know, like, there's computational limits on how many time steps out you can

forecast them given finite precision arithmetic. you know, and then if, depending on, you know, where certain, you know, theorems are, there's cryptographic systems that you also can't forecast out. So there's like boxes, mathematical boxes that you can put these AIs in, that they can't break out of mathematical and, in some cases, physical limits. And so a lot of people treat them as being completely omnipotent. They can crack anything, but unless, like, there's an error in our derivation of a theorem,

which is possible, right? Well, but the point is for public cryptography, we have no hardness proofs. Like, we don't actually. any proof that ECO-P-L-P-E-L-P-E-L-P-P-E-L-P-P-E-L-PATOS. Then you have a proof. Sure, sure. But I think also, there was a bunch of these, I think there were Chinese post-quantum signature algorithms that were candidates for post-quant algorithms.

And some researcher basically disproved every single one in a single AI-fueled data drop. So, like, the reality is that even, okay, we're not even talking about post-quantum, right? because quantum is a lot of engineering problems, not just scientific problems. But even going to post quantum, it's like, okay, well, a lot of these algorithms might just get busted over the next year or two, in which case that also speaks to waiting longer

for a post-quant transition if the algorithms that we're considering right now, we have very weak evidence of how robust they are, unless they're purely hash-based algorithms, which are in a less-of-based algorithms. There's going to be something where there's like a hack-proof physical component to many things. Like, you know, basically that, you know, what AI is like very strong in the digital world,

but not yet really strong offline. It has to actually animate a robot, animate a drone to go and do something, right? So, like a lot of things are going to be ritualized offline kinds of things. Like AI makes the offline more valuable. Proof of human, you know, like in-person things become more valuable. Something I think a lot. But I would add one thing, which is, you know, most people in crypto, they hear, okay, there's a quantum computer.

It's going to break ECDSA. It's going to break integer factorization, whatever. But there are known money schemes that look like blockchains that use quantum states where you basically can't clone them and you get a very blockchain like no double-spanned properties. And in fact, these were like kind of theorized in the 1970s and only in the last like 10 years of people like make them kind of usable. And so there are everyone's always like quantum computer or crypto is over.

But there's also like quantum computer. Now I can have these much harder to copy physical states that you can generate secret keys on demand from. And that stuff is actually much more secure than kind of our existing cryptography system. So I think it should be a little more optimistic that if we have the quantum cure to break stuff, there's also the quantum computer to be the new money system.

So something actually, you just kind of property of thinking. A lot of blockchains may start to actually bundle an AI model with the node. Why? Because they'll throw some of the compute, not just at mining, but at tokens to keep trying to hack the chain itself, right? Because you have a token budget for defense to try to find a compromise before the attacker does. And in general, it's not 100 percent. Obviously, you need to have better prompting and so on. But if the token budget for the defender is greater than the token budget of the attacker by 10x, and the defender cares more, right, which it would, you take some of that crypto, you spend it on AI tokens, you spend some of the compute, on AI tokens, you start bundling AI models with your nodes, right, with your Bitcoin node, with your Ethereum node and so on. So this actually rhymes with what you're working on with Flop. Yeah, more like a sediment layer, but we're not like bundling nodes, but I mean, this isn't

the problem we're trying to solve. Yeah. Trying to be more a little bit less cryptography and more like, what the fuck are they going to spend? What are you doing? Can you explain? I don't, I'm not up to date. Basically, it's the flop network is, we call it food for your AI agent.

So what is the payment network of AI? our theory that should be whatever some currency that we create, that's directly a convertible into compute. And that is why you would hold it. Similarly, we hold dollars because we can buy food. So maybe it's self-referential where it used that compute to fortify itself. Sure. Yeah, I think it's the other way around. It's you, you know, bundle a blockchain with your, with your matrix multiplication. Yeah. And basically, like, formal verification, I mean, well, formal verification only gets you so far if there's, like, new math or what have you. But even still, whatever the new model is, you have some open router style model registry.

It's almost like high frequency trading, right? As soon as that new model is listed, your blockchain has a token budget. It hits that. It asks questions of every single line of the codebase. You're getting new prompts, obviously. That's also an important kind of thing. And it's constantly trying to hack itself and patch itself before an attacker can kind of do that. and probably the defender cares more.

So that's one possible model. Agentic blockchain may actually be something very different that people think it's not spending but defending. Oh, there you go. Okay, last story I want to touch on is there's been another spat of recent shutdowns. So just in the last week, we had Blast, the L2 that came about after the launch of Blur, and then Abstract,

which associated with Pudgy Penguins and that whole ecosystem, also announced that they were shutting down. Naturally, whenever these things shut down, you've got a lot of people getting mad saying, oh, you know, I was farming this, I had points. You know, why is this thing, why are you doing this to me? But I think it's a sign of the times that we used to tell ourselves in crypto, it's like, okay, well, we have infinite block space. We can create new ones on demand.

It's so cheap. These things live on forever. They never shut down. And now, of a sudden, these things seem surprisingly terrestrial. They have these economic concerns of, oh, you know, the abstract guys were saying, you know, we spent tens of millions of dollars running this L2. And, you know, where, where's those tens of million dollars going? It's not in the sequencer.

It's like on the indexers. It's on the integrations. It's on this, on that. So how should we think about this moment with now it seems like block space is consolidating? Maybe we overbuilt. And what does that mean for the future? I mean, when number goes down, people leave, period, in a sentence. It's all about the price.

Like, look in the chart of any of these dollar-shed coins down 90s. Well, but I actually, they didn't. Did they have a coin? They didn't TG, right? I think they did. Yeah. Yeah. Of course. You were saying no one booked out Marquis.

Yeah, so Marquis last year was, I think, half a million single dollars on like a random weekday, minimum spend, and it was fully booked all week last year. This year, not a single booking. And it was all shit coin projects spending investor money on Marquis and, you know, average DJs. Really? Really? Wow. So first I want to say, it's really hard to build a company. So I feel bad for these guys. They got very far.

It's much, it's like many people died at zero. they don't even get to tens of millions of anything. So a huge sympathy for them, props for them. The second thing is you can think of, you know, Carloa Perez's work on, you know, or you've heard of the Gardner hype cycle, right? Carloa Perez shows that goes back all the way to railroads and earlier. Basically, you can think of almost every new market

as a financial bubble that incentivizes the search for, like, like Web 1.0 was the search for Amazon, right? And then like Web 2.0 was Amazon, Google, Web 1.0. is on Web 2.0 was a search for Facebook and Twitter, right? And so all of that spend and L2s and so on got you Salana. It got you near. It got you stable coins. It got you all this stuff. And if you go back and look at all the money that was invested in Web 1.0, it's like a rounding error relative to Amazon or to Google's market cap today, even like inflation adjusted and discount rate adjusted and so forth. Every failure was worth the successes by a lot. So it's like

this giant parallel search of the world for what technology would scale blockchain. So it was a huge deal five years ago. And now we take that for granted that you can just blast transactions on both Ethereum and Salana for the most part, right? That's worth it. So the L2s were a search for base in Robinogen. Yeah. You know, you're 100% outlaw in your portfolio.

It was in the greater good. Yeah. Okay. Sure enough. But their thing is actually, on your earlier point, there's one other thing in terms of these hack chains. It's just going to mean diversification. I think there's like, like, with,

the math problem thing from Miller, just want to make one remark. There's at least three approaches you can take. The first is go like mountain man physicality, right? Minimum necessary online, and some people are going to do that, okay? The second approach is actually to trust a government, like the Chinese government that'll just reset whatever and... We'll run the chains for you.

Yeah, yeah, exactly. El-2s are the ghost cities that die and then get the mom. That's true, actually. Yes. So basically, you know, you can trust Fiat, you can trust physical, or you can trust multiple, right? So fiat is like you're trusting like the Chinese government or some government. Physical is you're just going totally offline.

You're only trusting like the physical world. And then multiple is you're diversified across multiple chains and maybe physical gold and maybe like Singapore dollars and so and so forth. So if there is a hack, you're only losing like 10% or something like that, right? Because now you have to re-underwrite your portfolio with, hey, what is probably this actually literally goes to zero due to a hack? then even if it's got the upside of 10x, it's got the possibility of going down 100%.

So therefore, I don't put it all in the best asset. Instead, I intentionally diversify it on this way. Maybe the answer is we just got to go to like username, password logins for blockchains. Like, oh off with Facebook? Well, that would itself be. Yeah. Okay. Thurun, what's your take?

Yeah, it's like the Chinese ghost cities. Like there are too many that were overbuilt. There was a bubble. Then there was kind of tons of scams. All the debt was essentially planned bubble. Except instead with the blockchain, I can just shut with the L2 at least. I can say bye-bye sequencer and the entire town gets demolished. True, true.

Right? Although it's like it's a more efficient version. Look, all those L2s were good because they kind of made Ethereum improves. You know, it was like not all. No, no. Not all. Not all. I'm going to say a lot did not.

What I mean by that is the space. How much money did you lose on L2s? Zero. Okay, there we go. Very significant ticket. Very noble of you to point out. The nice externalities of L2's failure. Yeah, there's a positive externalities.

Look, I mean, look, it's just... Hey, I'm not knocking. He's a good investor, right? That's true. Yeah. I will say, no, look, I do think there is a sense in which is similar to Chinese ghost cities in that Ethereum really did encourage the creation of L2s, right? This was, in a way kind of loosely centrally planned in Vitalik and the EF being like,

L2 is a solution. everyone make an L2 and like almost certainly it was almost like hyperstitioned that there was going to be demand for all these L2s and that they would be cheap and efficient to run and turns out they're not it turns out like there's so many middlemen that kind of take little pieces when you launch an L2 of pay us for indexing pay us for being included on coin market cap and defy llama and blah blah blah blah what's that and Oracle that's right that's right that's right and so like to be relevant as an L2 is actually quite expensive and that that probably explained a lot of the capital destruction beyond just But also, like, there are a lot of L2s, like, abstract and blasts that were just like, we copy pastaed. We didn't really change much of the L2. We provided no technological innovation, provide no economic innovation in terms of the fee model. Okay, what do you expect is going to happen? I'm just copy pasting a bunch of potential.

But for Robin the chain, that was the right answer. We don't need technology. Yeah, but they have distribution. They have clients. Exactly. Distribution. Distribution is the innovation. But they're bringing, that's bringing economic activity.

These other ones were like, hey, if you build it, they will come. Like have the party at Marquis and maybe we'll have some clients. No. Well, look, Elton. The entire L2 model was a thesis that was like, you know, I mean, like, Salon had just proved that thesis in many ways. And then Ethereum responded. But, like, you needed essentially like a global search, a global draft to find the Anatoly who could code as well as, you know, a Vitalik, right? And, you know, that was like, otherwise it would have, you actually needed an example of an L1 that could actually scale that then forced it to not.

be L2s. So you kind of just need to run the experiment and see what version was going to work. Okay, fair enough. On that note, we're at time. We've got to wrap. Thank you, everybody. And we'll see you around in Singapore.