Unchained - The Chopping Block: NFA for Founders, Worldcoin and UniswapX Launch, Hamster Racing - Ep. 523

Episode Date: July 27, 2023

Welcome to The Chopping Block – where crypto insiders Haseeb Qureshi, Tom Schmidt, Tarun Chitra, and Robert Leshner chop it up about the latest news. This week, they debate whether infrastructure is being over-invested in, explore the potential of UniswapX and the controversial launch of Worldcoin’s token, and dive into the curious world of hamster racing in crypto.  Listen to the episode on Apple Podcasts, Spotify, Overcast, Podcast Addict, Pocket Casts, Stitcher, Castbox, Google Podcasts, TuneIn, Amazon Music, or on your favorite podcast platform. Show highlights:  why Tarun thinks EthCC Paris was much better than ETH Denver whether VCs are overinvesting in infrastructure why Haseeb believes that founders should focus on building applications rather than infrastructure whether the WRLD token is a new “Sam coin” what everyone thinks about Worldoin and the need to develop proof of personhood in crypto what is going on with hamster racing and whether this is the reason "normies hate crypto" UniswapX and its benefits (and tradeoffs)  whether there is a shift toward intents-based trading Hosts Haseeb Qureshi, managing partner at Dragonfly  Robert Leshner, founder of Compound Tom Schmidt, general partner at Dragonfly  Tarun Chitra, managing partner at Robot Ventures Disclosures  Links Unchained:  Worldcoin Launches Token on Mainnet, Plans to Deploy 1,500 Eyeball Scanning Orbs UniswapX Launches With MEV Protection and Gas Free Swaps Is Sam Altman's Worldcoin the End of People's Privacy? Decrypt: You Can Now Bet Crypto on Hamster Races. What Could Go Wrong? What do I think about biometric proof of personhood? By Vitalik Buterin Paradigm: Intent-Based Architectures and Their Risks Learn more about your ad choices. Visit megaphone.fm/adchoices

Not a dividend. It's a tale of two Kwan. Now, your losses are on someone else's balance. Generally speaking, air drops are kind of pointless anyways. Unnamed trading firms who are very involved. I like that eat is the ultimate pump. D5 protocols are the antidote to this problem. Hello, everybody. Welcome to the chopping block.

Every couple weeks, the four of us get together and give the industry insider's perspective on the crypto topics of the day. The quick intro is first you've got Tom, the D5 Maven, and Master of Memes. Next we've got Robert, the Crypto Gautauceur, and the Tsar. of Super State. Then we've got Tarun, the Gigabrain, and Grand Pubodd Conlet. And finally, I'm a seed of head hype man at Dragonfly. So we are early stage investors in crypto, but I want to caveat that nothing we say here is investment advice, legal advice, or even life advice. Please see chopping block that XYZ for more disclosures. So we've been off for a week. I think we were all busy rejoicing

the XRP decision, which is, for now at least the SEC is not appealed, although people are worried that SC might appeal. In the meantime, we can kind of have our little moment as an industry. Tarun, you were just in Paris at ECC. What was the vibe there? Did it feel different than how it's felt previous conferences? Yeah, so I think a very important thing to note is that this year, the Ethereum community is not holding its main developer conference called DevCon, which usually is the biggest conference, like tens of thousands, probably much more than that. People go to it. And also another really big conference in the Ethereum world called DevConnect got moved to later this year.

So there's a sense in which ETC had this whole position as the only summer conference for Ethereum. And one thing I often like to joke about Ethereum development is that all the development gets done at hackathons. So they have to keep having many hackathons because it's the only way decentralized client development happens. Because people, I guess, have to keep synchronizing. But that being said, I do think they're kind of super interesting. I think the interesting thing of this one was it clearly was the, the biggest conference. Like I, I think many of us

went to eat Denver. Eat Denver. It was horrible in comparison. Like, I just can't even Yeah, Paris was so much better. What was the number one Why? Major benefit of Paris over Denver. Denver in February

is like shithole squared. You know, it's like, it's not a very fun city and it's freezing. No one wants to really be there. Paris and summer is kind of the opposite, you know? What does the CC stand for? Community conference. Yeah, beyond the weather, what was a good.

I think a lot of people from virtually every ecosystem in crypto came this time, which is very different, I think, than Eat Denver. I think a lot of people skip. B, the European communities for a lot of protocols have been completely, I wouldn't say like unscathed. Maybe that's definitely too egregious, but significantly less affected by the, events of the last 12 months. I think people in Europe, it's very refreshing compared to being in the U.S. where like all you want... That may be because everything else in Europe has gone down so much. Like, they have horrible inflation and their economies aren't growing. And so it's kind of

like, actually crypto, not so bad. I don't know if it's just that. I think it's also like they seem to be taking a more metered view on like things like FTX. They seem to have like, protocols and teams seem to have been working through that and have focused less on legal stuff, have had less legal things to talk about. And I think their distance from the U.S. regulatory apparatus is very palpable in that people are still extremely positive versus like in the U.S. it feels like a roller coaster. So I think that was really good. There were a lot of side events, almost too many from every possible ecosystem you could think of, except Solano. One thing I actually thing is quite interesting is Solana is like the only layer one that doesn't try to like ride the

coattails of the East conferences like when there's an Eve conference they host a conference before or after or around they're just like no we're doing our own thing and it's going to be completely separate so which is interesting avalanche also i think is like that right there are two ecosystems that completely just they don't try but like every other layer one like has a hacker house or has a little conference in the side, and so there's tons of stuff going on. How was the Cardano presence in Paris? I saw much more Cardano at Consensus in Austin, Cardano and Tron than at ETCC. What about Bitcoin? Any Bitcoin presence?

Any bi-fi? Did you see any bi-fi representation? I saw Eric Wall. I guess that's the closest I got. He is kind of the mascot. He is kind of the mascot. Yeah, I don't think there was too much Bitcoin influence, honestly. I feel like the most I ever here see Bitcoiners in Europe is like in Switzerland or Italy.

But I feel like France is definitely not or doesn't seem to be Bitcoin land in my experience. That's because all of Ethereum is building the future of France. So there's like a very clear bias. Of course. Yeah. I mean, I think the interesting things were,

as highlights were there's a huge focus on infrastructure. And I think this led to some debates over the last few days on Twitter about are you building bridges to nowhere, or are you going to have applications? Or is it like the applications fundamentally need the current state of infrastructure? It's very clear the roll-up world is definitely Ethereum's future versus kind of some of the longer-term ETH roadmap stuff. I think people started, you know, the Ethereum 2 roadmap basically was not talked about that much, but the roll-up centric future was kind of talked about a lot.

There were a lot of stuff around restaking in eigenlayer as well as a lot of stuff around data availability and Celestia. Celestia had a side conference that was probably the most attended thing that I had gone to. I saw a lot about the modular summit. It seems like it was getting a lot of attention. So I'm curious what you guys think about this. I mean, all of us are investors and we're seeing this play out in real time is almost everything that's getting funded these days is infrastructure. And it sounds like that was really the theme of ECCC is. infrastructure, whether it's shared sequencers or ZK Tech or modular, something or other,

blah, blah, blah, data availability. These are all really kind of back-end infrastructure technologies. What's your take after having spent the time in Paris and I'm curious to get everyone else's take on this idea of like, are we over-investing in infrastructure because we don't know what else you invest into? Disclaimer, as investor in many of these companies over the last couple of years before they kind of now are kind of these hot, fuzzy things. I think there was a while we're people didn't care at all about infrastructure, late 2021, early 2022. I feel like it was...

What? No, no, no. I just don't think you were seeing the big rounds for them, right? It was like so much about like big rounds for like sound. dot XYZ or like NFT things or what. That stuff is completely gone. In fact, I barely saw any of that in Paris versus last year. There was a ton of stuff around that.

And I think, you know, this is always what happens in the bear market. Like 2018, 2019 definitely felt like there was tons of, you know, investment infrastructure. I think it's sort of like we're sort of in this part of the market where everyone's waiting for the Hail Mary application to show up. Like, where's the Unisop? Where's the MakerDAO? And in some ways, investors can't construct those things, right? No matter how good or how egotistical an investor might think about themselves creating the market for a product that doesn't exist, realistically, it's very hard to make viral applications from funding. If you think about some the larger application of

theory, I mean, it generally kind of came from some organic usage, although there are some exceptions, but I think in general, applications are extremely hard to invest in comparatively. Whereas infrastructure at least, like, hopefully has these applications using them once they get big, right?

So you could think of it as this like second order derivative on the applications market that happens to be smoother in terms of how its payoff is, which is what happens when the market's down. But I do feel like we're kind of in this like everyone is just like searching for the like the thing that will work and it's not super super clear that we found that I think like the current applications that seem to be having a lot

of hype are more or less just some casinos so I'm not completely sure that that's that's the future of France. It does seem like there may be a bit of overfitting in that you know if you look historically investors know that the biggest returns in crypto have all come from infrastructure. there is basically nothing in the application that has ever performed as well as infrastructure in crypto. And it does seem to be like, it probably can't be true that every single layer of this infrastructure stack all makes a lot of money, right? It would be really weird if, like, Solana makes a lot of money and the data availability layer makes a lot of money and the API layer and, you know, the RPC node and the, you know,

the folks who are hosting the RPC node, like all of them are collecting a bunch of money and building gigantic businesses, and then the applications just kind of, they're just paying the fees for everybody on top. That seems like probably not plausible view of the world, but I think investors just have this shared memory that like, well, infrastructure is the only thing that makes money. And applications kind of come and go,

but infrastructure is forever, basically. I mean, we just not to say that we don't do it. Obviously, we also invest into a bunch of stuff that's infrastructure, but it does seem like it's hard to know where things are going. And like, you know, betting on products is infamously, you know, consumers are infamous. difficult to predict and super fickle, especially in crypto. Yeah.

Tom, what's your take? Oh, yeah. No, the only thing I was going to say is, like, it was very clear there were no applications. Like, versus last year. Like, last year I really felt like there were tons of people trying to sell you on music NFTs or, or God forbid, the thing that makes me want to blow my brains out the most, Web3 fashion, which is fashion for your Metaverse avatar, which obviously we've found to be less exciting nowadays.

So many people made me feel so stupid for not understanding Web3 fashion. I was like, I guess I'm just going to be old. And it turns out that I have survived. I just don't think that. There was so much of that last year or two because I feel like in Paris, they were like somehow like the Paris hype beast, like people who line up at certain stores were just like they found their calling. And of course, I think this year there was like zero of that.

Tom, what's your take on this whole infrastructure applications thing? Yeah, I mean, I think it is very cyclical. People invest in infrastructure. I mean, there's a whole like a block post about sort of infra application on cyclicality. And like oftentimes it doesn't make sense why you're investing into that part of the cycle that you are. Like I remember in like 2018, 2019, people were like, you know, investing like plasma. Plasma going to be a thing. I'm like, why plasma?

Like these blocks aren't even getting filled. Fees are like, you know, pennies. Gas prices are bottoming out. Like there isn't even demand to fill the blocks that we have, let alone trying to create more supply. And then it's like, oh, well, you do that. Sometimes there's an emergent effect where some applications just can't exist without that infrastructure. And then somebody is building capacity to allow things that do blow up to, you have the info that they need. But I think on the investment front, it's much easier to unwrite an infrastructure bet and say, hey, if we're going to get an index, all the stuff that's happening.

And hopefully that is getting some good exposure to whatever application blows up, even if it's maybe not the most directly monetizable. but I think just thinking about deal flow as well, I have not seen as many applications recently. And I think part of it is just there's a really difficult regulatory story around applications. Like, you know, okay, you can't launch a token. You can't charge fees. You can't, you have to KYC everyone who's using your front end. Like it's not really clear what great applications emerge in the current regulatory environment. I think frankly, like OpenC and like Metamask are kind of like the only two that like make a bunch of money

and are kosher, but if you don't want to do either of those, like it's not really clear what that sort of next great story is. Well, an interesting maybe weird take on this is that one of the reasons, I think, developers like the app chain thesis two years ago or a year and half ago, was like, hey, I have a reason for my token. People are validating my network. And in the roll-up-centric world, right, what you're doing is you're pushing the application more towards infrastructure,

right? Because I have to run my own thing. I have to actually, like, understand that. And in that world, you can justify these and maybe tokens a little more, which is sort of feels like that's like kind of the reason people are jumping to roll up eyes things when they don't necessarily need to. But all the funding for roll-ups is not application specific, right? The stories are applicating.

Oh, you can build a roll-up. They can do anything. An OP stack and this stack and that stack. But none of the funding is going to. Yeah, that's true. That's true. I'm saying like, not yet. People are trying to make, like, that would be what I would say is like,

people are trying to make apps look more like infrastructure so that they can like dress it up to investors and be like, hey, look, app for structure. Right. Because if you squint, right, like what's the difference between depositing like in a smart contract first depositing in like a bridge contract to like URL 2? Like it's kind of the same thing in like a very like, you know, squinty way. And so I definitely think L2 sounds better for a single purpose application L2. I think it's because people think of.

an L2 is like, oh, it's like a platform. There's going to be many applications and it's all going to be developing value like in a network effect. And like it's super awesome versus like, oh, this is my one specific application that's highly scalable that you enter as an L2. Yeah. I think they're also just like a monetary premium aren't having an L1 or L2 token. Like just for kids, I was looking this up. Guess what Ronin is trading at right now? 1.2?

700 mil. I mean, it's, it was just still incredibly high. for what is basically like a shitty death fork that you with a bridge that doesn't work for like an app that no one wants to use and so it's like it's like way more i answer aren't they don't they still have like 500,000 dailies or something they still have a lot of users i don't think it's that high but in any scenario i mean if you look at the trend it's not really yeah trend line's not positive but yeah yeah yeah anyway i think it's just more hey saying you're your own chain you just get this huge premium over just having you know an application token if you even want to

going to go the tokenization route. Yeah, no, that's fair. I mean, I would push back on painting all on-chain games with the same brush, because, like, there is a big difference between, like, where DeCentraland landed and where Axi landed. Axi still has a lot of users. I mean, it's not, obviously, it's not doing great. And I don't think it's going to ever set back into its previous valuation.

But it's probably one of the most used things on, on-chain period, still. Yeah. I'm just looking for this 300,000 monthies. So it's, like, not awesome. In any scenario, I mean, I think my point being more broadly, you take these two things, sort of split the universe. One is Axi has their own chain. The other is Axi just your application token. And I think in this case, clearly additive, right? Because you have the application token in addition to the chain and you're sort of, you know, creating value from thin air. I'm going to sound super crumogenely saying this. But I'm going to say it anyway. Just kind of feel how it lands.

Which is that when I was first investing into infrastructure, this was like 2018, 2019, after the 2017 bull run. And at that time, it was really clear that Ethereum was not going to scale. The Ethereum was not performance enough to be able to handle all the demand for transactions. And that created this generation of founders who were like, we need to scale block space. We need to scale smart contract platforms. And that was the genesis of the Solanas and the NIRs and the avalanches and all the plasmas, roll-ups, all that stuff came out of that era because of that very strong need that everybody saw,

that this stuff needs to get better and improve so that we can do the stuff we want to do on chain. right it feels that now in 2023 it feels like the best minds of my generation are once again all working on infrastructure but it's not really clear to me that there is the same crushing need for everybody to be focused on it right like we kind of have roll-ups right but people are oh but you need perfect modular dAs then you need this shared sequencers then you need like some fancy mv contraption to more accurately democratize this and that. And it's kind of like, we finally got a bunch of people on chain. We finally got lots and lots of people on chain.

We got lots of block space. We have so many places where you can launch an application. We have roll-ups. I mean, obviously, yeah, we need fraud groups and stuff to get up and running. But we kind of have the first cut ready to go. But it seems like people are kind of myopically focused on infrastructure at a time when it feels like we really need more people thinking about how to build great applications that bring people on chain.

So it feels like even though we're at the same place, we're almost everybody's focused on infrastructure. It feels much more misdirected in this cohort. Not that nobody should be working on it, but that should really 80, 90% of entrepreneurs be building infrastructure instead of building things for people to use on chain. It feels wrong to me.

The show, this is not investment advice, but if you're a founder, maybe this is founder advice. Here, Haseeb is the VC telling you, there's a wrong ratio of infrastructure to applications to use that infrastructure. Yeah. Now, that said, I understand why people are doing it because they see where the incentives are, right?

see where the funding is going. I don't think we've done any large infrastructure deals this year, but most of the large deals this year have all been infrastructure. So I can understand the, you know, it's a tough time to be building applications, right? There's not a lot of people, you know, with pocketbooks open on chain willing to... Except for hamster racing. And WorldCoyne. Except for Hamster Racing. And WorldCore. Okay. All right. So with that as a beautiful transition, let's go to the two big stories of the week. The first up is WorldCoin. So WorldCoin, for those of you who don't know, it is a project that was originally co-founded by Sam Aldman, who's now the CEO of OpenAI.

So WorldCoin, it's a cryptocurrency, and the idea is that they want a sort of proof of personhood. And the way that you prove you are a person is that there is an orb, a literal physical orb, that you can pick up their bunch of them around the world. And this physical orb will scan your iris, and it will create some basically more or less encrypted record of your iris that will identify you as being a singular person. It gets tied to your address as like a proof of personhood. and this creates a wallet for you inside your scan of your iris.

So they have scanned something like two million people supposedly, mostly in the third world. None of them in the U.S. and in Europe because obviously this is less kosher in the U.S. and Europe. And so they just launched their token on Monday. And their token launched currently

it's about $250 million market cap on a $22 billion FDV and you're reading that right, that is a 1% float. So meaning 1% of the total supply of the token is currently circulating. We're back to 2021. That's right. That's right.

So a lot of people say that this is the new Sam coin, which is a very reminiscent distribution of what... I just hope he doesn't use it as collateral anywhere, though. I think Sam Alderman is a little busier than SPF, but it's right now very suspect in terms of the actual real price discovery of this token because apparently the vast majority of this float is owned by market makers who have, let's say, complex incentives around how they're playing with this thing. But then separately, after this thing launched, Vitalik published a blog post basically critiquing the biometric proof of personhood system that WorldCoin is using.

And then you've got just a lot of people taking shots at them on Twitter saying that, oh, you know, this is like some kind of totalitarian scoop up everybody's eyeballs from the third world. Kind of, I don't know, whatever. People talking shit about WorldCoin. I haven't seen a lot of positivity. Basically, almost everybody on Twitter is kind of mad. It seems like at WorldCoin. I'd be curious to hear from you guys, give me the best positive take. You can give.

Here's my best positive take. It is really hard to figure out a mapping of one person, one set of biometrics, one address. We've seen again and again and again, every civil attack possible against every airdrop that's ever been imagined in crypto. We've seen people try to farm, you know, everything they can. We've seen like armies of people spinning up thousands of accounts. to try to take advantage of things that don't even exist yet. And it is a hard fundamental problem to identify who's a real person, how many real people

are there, how many people are using this application. We have a decade plus of people trying to game the metrics around L1 blockchains, creating fake activity and fake usage, because why not? It's easy to make a million wallets, right? And they make it appear like your blockchain has a million more users. It's a real problem. It affects so much of what we do. And whether or not you think the approach the solution is correct, and personally, I don't know if it is and it's pretty creepy and I don't love it.

It is an incredibly difficult and important problem to solve. And it's worth solving and they're taking a creative approach at solving it. Okay. I have a very different positive story. I actually think Vitalik's post was not critical. It was generally quite positive. And part of the reason is I actually think the, while Sam Altman's probably someone I would not necessarily trust in trying to not resell this type of data.

Some of the people who work there on the ZK side of like encrypt. Basically what it does is there's a device. It has a sensor. The sensor has a particular attestation mechanism so it can sign. And what they do is they take the picture. They create this sort of like hash fingerprint. And then they generate a zero knowledge proof away of proving that, hey, if you took the picture again, you know, machine learning model tagged your eyes and your face like a

normal face detection thing. And it's the same thing without revealing the input. So without revealing like, hey, this is the picture. So that's the only thing is sort of stored publicly. And the head of research there is one of the smartest, but also like very privacy focused people I've ever met in this industry, whose name's Remko. And I genuinely don't think he would work on such thing if they didn't have this kind of long-term goal of actually achieving the attested sensor privacy. Now, that being said, the eyeball stuff is personally, I find a little bit very creepy. I also just don't think that their auditing was particularly good, and I can't really

check a lot of the details of exactly how the system works. It feels like they rushed it. Like, why do you have to launch the token now? That, to me, just seemed like cash grab, the float thing, cash grab. But they do have these, like, engineering. and researchers who are amazing there. So I think to me, the fact that those people, I think if they saw real malevolence would quit,

and then at that point, it's like short-up type of thing. Not trading advice, not investment advice. But like, sorry. Yeah, yeah. Obviously. I think there's a lot of cool things they're doing. But yeah, the token just really felt cash-grabby. I mean, my only argument against the token is,

I'm just disappointed that it's like an L-1 token. Like, I would think if they're trying to make a currency for the whole world to use, they would have waited to release the token. It's not. It's on an L1. It's on an L1. It's on an L1. It's the, yeah, it's on Ethereum. But the wallet that they create for you when you sign up with World Coin, yeah, it used to be on Polygon. Now it's on optimism. So it's like kind of going where the money is so they can buy the token. Yeah. The token doesn't really do anything today. I agree. I think the tech is actually very cool. I think the goal is actually very

admirable. And like, I don't know what people in. envision that like the current way we do K. YC and like passporting is actually superior to this. I think this is actually way better than the sort of the current system. But I agree. I mean, the token, I remember we were looking at the round and like, at some of my business model, it's like, oh, well, you know, maybe we'll like, you know, charge people to, you know, look up your ID or like, maybe we'll, you know, do some like

metamask unispop fees and it's just like kind of a big question mark. So it doesn't feel like that's really figured out and it feels like totally unnecessary to like launch a token when you don't even really have clear PMF and it doesn't really serve a purpose and you know meaningfully decentralizing the system good you know a bunch of people have commented on like their docs are missing a lot of like like they've been working on this in the open for a while but they kind of like rushed to launch it in a way that just didn't seem like timed well it felt like forced whether by and I don't know who force investors whatever it didn't feel like, you know, like a natural kind of launch.

But again, like there's a lot of people who work there who I have the utmost respect for. And I really think if they were doing something duplicitous, I do not think any of those people would stay. And the moment you see any of them leave, that's when that's like, all right, the orb is just trying to fuck you. I will say true. I find this argument of like, I know people there. It's cool. No, no, no. I like that after having gone through 2022.

The difference between, like, Remko and SBF, is Remka is a like long-standing, you know, in Ethereum development, a long-standing, right. Look, Remco is awesome. Remco's awesome. I completely agree with you. I completely agree with you. But I'm sure they're paying him a lot of that same old bill.

But I just kind of think like, there are a lot of things like at this point that if they continued fucking up, I see a lot of people who work there leaving and they've said as such. So it's like, also so a very funny fact is, In 2017, 2018, I met one of the co-founders who's currently now, who was kicked out by Altman and the current co-founder, this guy, Max. And I thought he was a raving, crazy lunatic when he told me this idea.

He was like, yeah, like, you know, I used to work at M-Pesa, which is this payment system in Africa that was on mobile phones. And I think the number one problem is this identity problem. And the reason it worked in Africa is because the cellular companies all made this. like federation and you could kind of like they agreed to tell each other whether someone was a real person or routed the right way. And he was like, what if you could do that with blockchain? And I was like, okay, how do you plan doing that? It's like, I don't know, there's got to be a way to do it. And so I remember when I first heard this, I was like, this is fucking crazy. This is like Silicon Valley hubris that we're going to give UBI to everyone.

Dot, dot, dot, right? Like it started as a UBI project. It didn't start as like identity project. The identity thing was about distributing UBI, but then it was sort of like a MacGuffin. The end goal wasn't the thing that it became, the thing that you had to do to get to the end goal was the main plot in the story, and that's like what you have now.

But yeah, I find it a little bit distasteful in the way the token was launched, and I think they're going to have a very hard time coming back from that. I will say to World Coin's credit, obviously we've all kind of said the main things that there are to say in terms of critiquing them.

The one thing I will say about WorldCoin is that it is a big vision. And that is one thing that I think a lot of people in the last year. When you have that many eyeballs, that is a big amount of vision. Wow.

Great 10 out of 10 dad joke. Thank you, Robert. Yeah, it is ambitious. And it's also, I mean, it is more or less exactly what we were talking about, which is that almost everybody's trying to build infrastructure.

Where are the people building applications? And, I mean, they are an application. Yeah, this is an application. But also infrastructure. This is an application. this is something that people will do. It is kind of, you know, yeah, it's a spectrum.

It's crypto, right? You get, you take what you can get. The better version of WorldCoyne that I hope will happen, but unfortunately investors will require a Sam Alton-like figure to make this thing not sound like it was deranged, suddenly going into actually existing, is just like attested sensors in general, like this idea that like the sensor generates some proof of identity

that wasn't generated by a computer. that's in general going to be one of the biggest applications. I just don't, and I feel like WorldCoin can completely fuck up, be AOL and the AOL Time Warner merger. But like still will have at least given people this idea that like this, you can actually do this at scale, which no one cares about. Here's my startup idea for some crazy founder out there. You make WorldCoyne without the orb where you could just use the webcam right in front of you. And like everyone can just like go on their computer and get 10 coins. There's no 25% for some team.

It's just like everyone who can scan their face onto the computer and rotate their face and do all that. It's 10 coins. And that's your fairly distributed crypto asset. Robert, I have bad news for you about what video generation works these days. A tested sensor thing though is real. That's going to be the future. The question is, how do you get the hardware costs for it down enough that, yeah, anyone and their mom could write what Robert just described, but like your webcam.

happens to have an attested sensor in it and it costs 10 bucks. Put the attested sensor in the webcam. Yeah. Yeah. I was going to say, I think the reason, the optics of the orb are obviously weird. But, you know, they talk about, hey, like, we looked at doing a cell phone cam and like just too low res and like, it's really difficult to scan ground irises. So we do infrared.

So it's like, you know, they've also had kind of similar thoughts. But I think to your point, to ruin, I think kind of, you know, the way they describe it is WorldCoin is like one sort of source of authority for a general sort of attestation network. So I think they have a similar view. And this is just kind of like the way you do it versus, you know, one of N-D-D protocols that are like, oh, you know, you should use, you know, my method for doing attestations. No, you should do my method for doing attestations. They're just building it from.

Yeah. You know what I will say the one thing about WorldCoin that feels like a missed opportunity is that they've been trying really hard to try to like lean away from the, you know, like kind of colonialist Orwellian vibe of a bunch of white guys going to Africa and like taking like taking the like snapshots of people's eyeballs and then taking and giving them small amounts of money in exchange for that. And I feel like like if you look at the website, you look at all the branding, it's like very fuzzy and kind of like, oh, it's like just, it's wonderful tech. But like, you know, this crypto, like people love the kind of like dark cypherpunk like dystopian vision.

What if they just owned the Orwellianness of the brand? And we're like, yeah, World Coin, like the world is ending. Everyone is going to, you know, we're going to have a database of everybody's eyeballs. It's fucking metal. Like it's so awesome. And we have a token. Like go Arkham style, you know, like Arkham. Arkham, I feel like managed to nail the landing of like, yeah, this is dystopian and we own it.

You know, you may as well get $80 for your eyeballs. Exactly. Exactly. Like, look, if everyone's eyeballs are going to be tokenized, we might as well get. Not even $80. I think it's like $8. Yeah. I thought you got like 20 coins or something.

something like that. Yeah. It's like 50 bucks. It's like pretty good. Okay, 50 bucks. That's pretty good. That's pretty good. I would pay 50 bucks for,

okay. We heard, we heard Haseeb say that he would take $50 to get scanned. So Haseeb. Buy an orb and take it to him. He's ready. Wait, how much of the orbs cost?

No, yeah, yeah, because they have the people who are like in whatever country, like scanning people. There is a way to be like a. So you can, you can just buy them off the shelf?

This is where the centralized company part is like, it's an MLM. Oh, it's white listing. Okay. So in addition to the world coin. It is an MLM because like the coin exists to kind of promulgate this like, oh, like you buy more World Coin, scammer eyeballs, and you get more World Coin.

That part is the distasteful part. And that's the part that I find it very hard when I talk to these people working on like the real difficult sensor, attest and censor stuff that like they can never fucking answer. They're just like, yeah, well, how else we're going to get users? I'm like, yeah, by not scamming them out of their eyeballs. Like maybe there's other ways that are like more fair incentive. trying to make this thing where it's like, you have to buy the orb to get more people on.

And like, I hope it works and then they can stop doing the MLM, but like I kind of just don't see how that happens. Like it doesn't feel like there's like a natural like, hey, I went from Tupperware parties to like, you know, flatline, right? Like I'm sold at stores and I don't need to, I don't need to like do this kind of like keep paying for distribution type of stuff. Yeah. This whole thing is just really weird.

And I feel like easy to see coming that there was going to be more weirdness when the token launched. Because with something like this, like it, I mean, the whole premise of the token is that it's valuable because people have it, right? Which I feel like was a thesis that was invalidated a long time ago in crypto. That like, oh, you give this to a bunch of people and that makes it valuable. Well, no one's really done a good job of that. I think the MLM is they want you to stake the token to be able to scan new eyeball. Wait, why do you have to stake it? I don't think you have to stake it, right?

Because it's like the scanning itself is like, there's no need to like have a DDoS thing. Idea of like, hey, there's these people who are getting orbs who are distributing it. One other way of basically incentivizing them without charging them for the orb, which is expensive now, is to have them basically like stake portions of the fees that they get for, yeah, I've seen some crazy things like this. And it's like that is just like.

So the only thing that was missing from the system is, is leverage. So let's find a way to make people lock up, lever up on their world coin. If this didn't have Sam Altman, people wouldn't suddenly be like, it wouldn't have gotten this far where it's like now you're like, okay, so this is FTT for eyeballs. Okay. Wow. It is a Sam coin. It comes full circle. This is like the most annoying part of it. Like the technology is actually like amazing, right? Like they're actually doing the right thing of like, but then they like did the tokenomics in a way that like would make fucking Justin Sun blush.

Oh God. Okay. All right. Well, I don't know how we move on from that, but it's going to be hard to move on to hamsters. I know. All right.

Well, the other ridiculous thing that happened this week was that, unfortunately, I regret to announce that there is a new trend on crypto Twitter. And that new trend is digital hamster racing. Robert, would you do the honors and explaining to the audience? So again,

I will go back. to the preface before the show, which is nothing is advice. Please, in fact, this is like anti-advice. Don't do anything related to hamster racing. Okay, like, please run. Yeah, like run as far away as you can away from this because this is bad. Okay. But basically, some folks on the internet decided that they were going to race hamsters

similar to horse racing or dog racing or like cockfights or like whatever and let people on the internet bet on these hamster races using crypto. And in the midst of this, they released a token for their hamster race betting marketplace. And people on crypto Twitter got really excited about hamster racing and a token associated with hamster racing. And things got out of hand for a couple hours. People discovered that the hamster races might not even be live hamster races. They were just video loops of hamster races. Great use case for attested sensors.

You put an attested sensor on the hamster, and now you're writing the hamster state onto the blockchain. Exactly. There's better ways to do this if you're going to run a crazy illegal animal racing, betting system, right? And so obviously this inspired a lot of conversation about what is the future of crypto-based entertainment, and wagering. It's inspired a lot of discussion, a lot of creativity. You know, there's a couple

nuances to the whole system. One is that the hamster organizational token has a 5% commission built into every buy and sale of the token. This is an innovation in disaster. And the developer is basically pocketing an extremely large fee on every single trade, which is unique. I don't know why they had to add such a wasteful facet onto an otherwise horrible operation. And, you know, we'll see where hamster racing evolves to. I hope it ends. I hope, like, people don't start just, like, spinning up crazy things in their backyard. But, like, if they do marble racing, pretty fun, you could have, like, an online marble racing,

betting ring, you know, we'll see what the world takes this. What if the hamster racing is only deep fake hamster racing? Like, it's only AI. That could also happen. This is why we need those sensors. I'm impressed by all the copycats that spun up because this isn't like a you know sushi swap copy paste thing that you can do in an hour

if you if there's one that's like rat roulette and it's like a rat that runs around the roulette wheel I'm like you have to go acquire a rat and a roulette wheel and I'm like this takes some some legwork to accomplish it so at the very least people are actually the cockroach one was even more impressive I don't know where you get live cockroaches within 24 hours but you can apparently.

I think some people just have them around the house. Yeah, it's true. I mean, Quine Gecko had to add a whole section on like animal racing tokens. Yeah. We've been complaining about innovation on the application layer and I feel like this is the answer that we were basically waiting for as we just said. This is why the normies hate us. Okay.

Please, no more of this. All I'll have to say is like I want to invest in a tested sensor applications because we've clearly proven that like Worldcoin is the right technology idea but like ICO tokenomics. We need to combine World Coin and rat racing and it's perfect.

What else could one want? All right. Well, that's incredibly depressing. Also, I will note the thing that you're talking about, Robert, the take rate on the transfers. That is actually, one, is both a function of Terra. That's one of the things that Terra implemented.

Wait, Terra 2? Terra 2 or a callback to Terra 2 implemented a Terra 1, it was always a function that could be called to recalateralize the system if the collateral was too low. So that was an original OG terra functionality that I love that they now integrated into

one of the worst things ever, into one of the new worst things ever. Also kind of a callback to NFT royalties is I feel like there's some analogy there. I think this has been around for a, there's like, like, bomb token and there are a bunch of these kind of like, yeah, people love that. doing this kind of stuff. I don't even how to describe it.

Yeah, what is it? Yeah, what do you even call this? This sort of high transaction cost tokens? There's no point to it. You know, if they wanted to have a token for their gambling operation, betting on hamsters, there's no reason to overcomplicate it with this like crazy ass tax function. Yeah, they already get a share of fees from the market. Right, from the bets.

It seems like that, you know, that alone. Yeah. I mean, the other crazy token that my friends were talking about at the same time was these Telegram bots, you've read about these, the Unibot and all these other bots where you basically let them have a private key where you send all your crypto and then they can trade for you after you send them all your crypto. Nothing sketchy there. Yeah, nothing sketchy there.

Yeah, that sounds totally normal. Why would you not send all your crypto to a telegram bot? Big step backwards. Yeah. Yeah, I do feel like things are in a weird place. when retail is getting really fixated on like telegram bots for trading and fake hamster races. I think consumers in a bad spot right now. Apparently the jury is still out on the fake races.

The Debs claim it was a bug and that was why you saw the duplicated streams. So, you know. A bug that played prior footage? Yeah, yeah. Yeah. You obviously should give them the benefit of the doubt when it comes to illegal hamster racing rings. Like, come on. All right, let's maybe talk about some more kind of compelling applications in crypto.

So there was a big story last week about Uniswap X. So Uniswap, largest on chain, AMM, exchange. They announced that they're launching a new product, which is basically going to be an off-chain aggregator. So they're going to do, in the style of 1-inch, cow swap, 0-X, what they're going to do is they're going to have these off-chain actors called solvers that are basically going to basically look at all the possible ways in which they could take your order and execute it. And they're going to, these off-chain players will compete

to give you the best execution possible, either one through filling it themselves with some, you know, with their own inventory or by, you know, routing through some fancieness on-chain. So that's more or less the idea. I mean, there's a bunch of other details, but basically Uniswap is expanding the product suite to go beyond just directly being the decks to now also being the aggregator of other decks, effectively kind of pushing them into, you know, the rest of the market, the only part of the market that Unoswap did not have for on-chain dext trading, for spot markets. Obviously, for derivatives, there are other platforms that have market share there.

But for spot trading, basically, the only thing they didn't have was aggregation. So any thoughts on Unoswap X and kind of how, you know, at this point, if they, if they succeed in taking away market share, they're just going to end up kind of owning the entire stack at end. I mean, I think the part of this interesting is the capability of doing cross-chain swaps. I don't think, you know, there's been enough innovation, man. I think, you know, there's been aggregators and really efficient systems for on-chain aggregation and like best execution for quite some time. But I think the actually interesting

thing is that because it's using essentially an off-chain system and you can have two different assets in two different places as part of this solving, that you start to get into like meta-chain aggregation and best execution. Without a bridge. Without lock. Without explicitly locking up capital on both sides. Without locking up capital, which I think is like an extremely under explored area of trading. Now, I think there's some room to explore there. But like that's what excited me the most personally is that like, hey, this could totally change how people think about bridging in general. Like this is like you could just rely on trade execution as the bridge.

And we could potentially get rid of a lot of like existing approaches, like if this were to work. at scale. On the other hand, you do rely on there being active market makers at all time. So you might lose your sort of liveliness of like, you know, in a bridge, you get some guarantee that your transaction, if it makes it into the bridge contract, eventually gets to the other side, given sufficient numbers of validators laundering the bridge. But here you rely on market makers providing a capital just in time. And like if they all disappear on that chain, say phantom multi-chain exploit, you might be out of luck. So there is a, there is sort of, it's on a free lunch. You're also relying on uniswap as the one hosting, I believe, like the order

book and the quotes in the system. And in some ways, it's a much more centralized system than Uniswap v1, V2, B3, in that, like, you're relying on, you know, an entity to me to run the book, so to speak. Tom, you had something to add? Yeah, I mean, I agree. I think it feels a little bit like Uniswap is in its Google era where it has so much dominance that you can sort of just use your distribution to, you know, push new products that are maybe don't depend so much on innovation. Like, you know, I'm sure it's a great product, but we've had stuff like this for a very long time. And it's more, hey, if we have so much traffic, so much intent coming through our own, you know, site, we may as well, you know, modernize that or do something else with it versus

and sort of borrow from what the market has created versus need to sort of create. create brand new products from scratch that bring in new people. So I agree. I mean, I think it's probably going to be great to trade on and has a lot of those properties that people are talking about, including execution, minimize MEP, et cetera. But it does feel kind of, you know, very, very similar to, like a lot of other products that you mentioned, they're already out there, caswap, zero X, one inch, et cetera. And yeah, it does create this weird centralization vector in the sense that, you know,

someone has to host these quotes, someone has to be on the other end of it. It was also interesting that they were talking about fees for this and they're being sort of another fee switch for Uniswop X, which, you know, I don't know how to spread that those two of, yeah, we're hosting this website, but also potentially fees going, you know, through this application that we're hosting. Are the fees meant to go to Unitokin or they meant to be monetized totally separately by Uniswap Labs? I'm assuming Unitoken, but it's not live yet, so who knows. Okay, interesting. What's interesting to me about SwapX is that a fee. feels a little bit of an admission. So Uniswap has been trying to expand

beyond just trading, right? So they acquired Genie, which was the NFT aggregator a while that, you know, used to compete with Jim and now with Blur. That kind of hasn't gone well

as far as I understand. They're not doing a lot of volume on the Uniswap NFT exchange. And this kind of feels like, okay, they're kind of keep, try to push the product suite of all the Uniswap offerings

in Defi to become larger and larger and kind of become this like DeFi Super app, effectively. That kind of seems like the direction they want to go. I remember back in 2020, like late 2020, we were arguing about whether or not to invest into Yearn

internally at Dragonfly. And, you know, Yerne was very explicitly doing the Super App game where they were like, okay, we're going to have, you know, originally it was just basically a yield aggregator, and they're going to launch all these different verticalized products. Oh, we have insurance, we have this, we have that, and they're even like white labeling things to kind of bring into this YERN super app.

And we were arguing like, okay, well, Uniswap is going to do this too, obviously, because Uniswap has so many users. They're basically the front end of DFI. like it makes so much sense for them to just verticalize and have their own lending market and their own this or their own that and just bring it all under the same brand and just combine them under one common token

build a super out thing. And they didn't do it. They didn't even think about doing it. They did almost nothing for years until basically they launched an NFT exchange, which theyirdropped USDC to people who used it. And then that's it. And then this is the next thing that we've seen

that's kind of a real outgrowth beyond just we are a Dex. me one, it feels quite late to be doing this, right? It felt like they could have really done this two years ago, but whatever reason they didn't. But it also feels in a way like a concession that the style of trading is going to change over time toward this model, which is just more efficient, right? Which, you know, a lot of, like, we've been kind of arguing this and making investments along these lines that we thought that, you know, the AMM model was going to eventually get overtaken by this sort of RFQ off-chain, you know, like find the best, find the best way to

fulfill this order, use market makers, or use whatever, that this model was eventually going to win. And it's a little bit sad to see that maybe the way it wins is that by Unoswap just puts it on the front end and then now it wins. But it's pretty clear that like the reason why they're doing this is that presumably they're worried that if they don't, that the one inches of the world, the cow swaps of the world, the hash flows of the world, the zero X of the world that take on this model are just going to outcompete them on price by having market makers essentially standing in and just giving you a better price or just routing it on chain. So my sense is that this might be in a way like kind of the beginning of the end of like the really cool on chain stuff. And also I mean, one of the things

a lot of people have been talking about is that it is in a way a reflection that we're moving away from the transaction based model of on chain trading and more toward the intense based model of on chain trading. And maybe this is a good place to just kind of wrap up the show and talk a little bit about this concept of intense. And a lot of people have been talking about it. it's one that, you know, I know we were just lamenting how much people are talking about infrastructure, but it is one of those big topics and infrastructure that keeps coming up again and again. So it's probably worth at least giving kind of two cents on it. Tom, do you want to explain really briefly what is meant by this concept of intense versus transactions?

Sure. It's basically the zero X order, so I think we're done. But, no, I mean, I think, you know, the basic sort of, you know, like primitive of Ethereum, right, is you specify, hey, here's, like the transition that I like to make and here's like, or here's the function I'm going to call with this specific data. And here's how much I'm going to pay to, you know, perform this transaction. And then we'll make sure that it's valid and it gets included. It's almost like too rigid. It's like if you were like ordering something from Amazon and you're like,

well, I want this specific thing at this time delivered through this, you know, delivery driver. And it's just like, it's actually not really what you care about. It's kind of like you want to be very loose on inputs and rigid on the outputs where the outputs might be, I'd like to purchase this NFT or I will like to swap, you know, one eth for roughly this amount of USDC. And you let the market sort of figure out the best path to get to that output that you want and sort of what the inputs are to get to that output. And so for an intent, it's switching away from very specifically this is the type of transaction I'd like to make and all the different bits that go into that versus here is roughly the output that I would like. and I will let the market figure out how best you accomplish that output. Right.

And so, Tarun, maybe you can speak to, like, why is this such a big deal? Why is everyone talking about this? I mean, especially if you were in Paris, I know there's a lot of discussion about intense and intense-based, like, moving away from transactions toward intense. What's a big deal? Why does it be? Yeah, can you guys see my shared screen? Not yet, but I'm super pumped to know.

You know, this is a talk I gave at Andreessen Research about different types of things that people are uncertain about in the transaction supply chain of like, I send a transaction, how's it get executed, where is it executed, what parties are in the middle. And these are all the different mechanisms that people have studied and, you know, you know, obviously the most used one in the world as an auction. And, you know, I gave this color coding, making fun of the fact that like intents are this kind of like in GitHub comment kind of description. they're not really formally defined.

I think the way people are actually using them is actually quite broader nowadays than sort of a zero X order, for instance. But, you know, I think it's mainly a catch-all for things that have any form of uncertainty. So the user has some type of uncertainty and how their transaction gets executed. But they get some guarantees that,

regardless of how it gets executed, some covenants hold. Like they get at least a certain amount of tokens or they use a certain amount of leverage at most or they dot dot dot like choose a metric, usually a financial metric, but it could be a non-financial metric that you can compute. And you have some way of giving some proof that even though there's all these uncertainties in the transaction supply chain and blockchain, that you can, you're guaranteed some elements. And so there are a lot of people on the internet. he'll just a limit order, right? Because the limit order says, guarantee, if your order was filled, it was filled at this price because the limit order was at a certain price for a certain quantity.

But a lot of the type of stuff people are doing is actually more complicated than that. And it's more like, hey, in this circumstance, I want to trade Pepe for hamster. But actually, if like the hamster people are posting attestations and they're failing, it's not a real hamster. I actually want to sell all my hamster. And I want to make sure I only get ETH out, no other asset. And so these, like, more complicated trading things are kind of important. I had some slide showing the uncertainties, but there's probably too complicated for this podcast.

I mean, I save that for the next. Well, let's show us a slide. I want to see the slide now. No, no, no, no, you're going to claim this is too fancy for our audience. I want to see it. I want to see it. There's a slide. There's just an arrow.

Our audience can get this arrow. These are the uncertainties ordered by sort of some type of, like, mini-max payoff. All right. I like the increasing payoff uncertainty. That means supremum in math, which is like a generalization of that. Obviously, obviously, I know that. I mean, come on. Who doesn't know that?

I thought I meant super, super, super. Yeah. EG. Super. Okay, exactly. Cool. Well, I immediately understood this the moment you pulled it up. So I think we can move on. Okay.

Awesome. All right. Well, I think that's it for this week. All right. Next week will be a totally normal week, but we will be back. and we will be talking about whatever happens between now and then. So until then, signing off.