Unchained - The Chopping Block: Tokenomics Reset — ICOs Rise, UNI Turns On Fees, MEV Goes to Court - Ep. 949

Episode Date: November 15, 2025

Welcome to The Chopping Block — where crypto insiders Haseeb Qureshi, Tom Schmidt, Tarun Chitra, and Robert Leshner chop it up about the latest in crypto. This week, the crew dives into the shift from airdrops to ICOs as Monad, MegaETH, and Coinbase’s new sale format spark a rethink of how tokens should be distributed. They discuss ICO Beast’s hedging fiasco, why most airdrops fail to create real users, and whether fixed-price ICOs are a better path for long-term alignment. The gang also unpacks Uniswap’s major “unification,” the end of Labs vs. Foundation, and UNI finally becoming the protocol’s value-accrual asset. In the back half, they touch on the “low carb crusader” MEV trial, the hung jury, and the broader question of whether MEV games belong in criminal court at all. A concise, high-signal look at where tokenomics, distribution, and crypto’s legal boundaries are heading next. Show highlights 🔹 ICOs vs Airdrops, Again — Monad & MegaETH reignite the debate: should teams stop airdrop farming meta and lean fully into ICOs? 🔹 The ICOBeast Meltdown — Hedging tweets, revoked allocations, and “airdrop farmers are parasitic” spark a broader conversation about good vs. bad buyers. 🔹 Airdrops = Bad CAC — Most airdrops fail to create real users; the crew argues they’ve become toxic, easily gamed, and deliver almost no retention. 🔹 When Airdrops Actually Work — Only linear, DeFi-native “pay-for-performance” drops (Hyperliquid/Ethena style) reliably build product moats. 🔹 ICOs as the Cleaner Model — Fixed-price, IPO-style sales may be the better path for decentralization, long-term alignment, and selecting real holders. 🔹 Uniswap’s Great Unification — Labs + Foundation merge, fees turn on, 100M UNI burned; UNI becomes the single value-accruing asset at last. 🔹 Post-Lawfare Tokenomics — With Gensler-era pressure gone, protocols can finally ship real economic models without regulatory fear. 🔹 Simple Capital Structures Win — Tokens + companies with split incentives are a trap; unified value flow is the new meta. 🔹 MEV Showdown: Low Carb Crusader — Sandwiching the sandwichers leads to a hung jury; prosecutors want a retrial despite jurors in tears. 🔹 Is This Even Criminal? — The crew questions why murky MEV games get charged while blatant rug pulls go untouched. Hosts⁠ ⭐️Haseeb Qureshi, Managing Partner at Dragonfly ⭐️Robert Leshner, CEO & Co-founder of Superstate ⭐️Tarun Chitra, Managing Partner at Robot Ventures ⭐️Tom Schmidt, General Partner at Dragonfly  ⁠Disclosures⁠ Links Hayden Adams “UNIfication Proposal”  🔗 https://gov.uniswap.org/t/unification-proposal/25881/1  Timestamps 00:00 Intro 01:01 ICOBeast x MegaETH Allocation 10:40 Farming Airdrops vs. ICOs 21:00 Uniswap's Fee Switch and UNIfication 27:13 Unifying Shareholders: A New Meta 29:05 Legal & Regulatory Challenges 30:51 Celebrating Uniswap's Milestone 36:38 The MEV Bot Trial 48:36 Facing Accusers in Crypto Cases Learn more about your ad choices. Visit megaphone.fm/adchoices

You're putting in the hands of someone, but you're not putting in the hands of your users. You're putting in the hands of somebody who's turning around and selling those tokens directly on the market, in which case, why don't you just sell the tokens of the market and skip the middleman, which is essentially what an ICO is. So I think the ICO is the right answer. Not a dividend. It's a tale of two fun. Now, your losses are on someone else's balance.

Generally speaking, air drops are kind of pointless anyways. I'm in the trading firms who are very involved. I like that eat is the ultimate policy. 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 insight of perspective on the crypto topics of the day. So quick intro, it's first you got Tom, the defy maven and master of memes.

Hello, everyone. Thanks you got Robert, the cryptic connoisseur and czar of super state. Insert AI, Robert voice. Good evening. Then we got Tarun, the gigabrain, and grand poohbaugh at Gauntlet. Yo. And I am a C of the head hype man at Dragonfly. We're early-stage investors in crypto, but I want to caveat that nothing we say here is

invest in advice, legal advice, or even life advice. please see chopping block at XYZ for more disclosures. So gentlemen, the market is hurting once again. It seems like every time the NASDAQ sneezes, crypto catches a cold. And once again, it's like a down day and crypto is just getting walloped. So it seems like a lot of this has trickled into private sales

and pre-launches and optimism around token launches. And a lot of this is coming into now the rise and re-rating of ICOs. So let's talk through this. So Monad, in which I believe everybody on the show is an investor, Monad is doing an ICO. And so originally they did anirdrop, that air drop garnered, I'd say both positive and negative sentiment from people in the community. But then they disclosed very recently that they're actually doing the first ICO that's being done through Coinbase.

they're going to be selling, I believe it's $187 million of Mon tokens at a fully dilated valuation of $2.5 billion. Now, if you look at the private markets right now, there are pre-market futures for, you know, basically people guessing what the TGE price is going to be when it finally comes out. That is floating up and down quite a bit, but it's like roughly in the neighborhood of 2x where the reserve price seems to be for the sale. And this is leading to a lot of discussion about, is this the new future of the future of token distributions. So there's a lot of discussion about both this ICO as well as the

mega-Eath ICO, mega-Eath also in which we are all on the show, our investors, and very different reactions to both of them. But I think it's kind of galvanized this conversation about if we are moving away from AirDrops as the primary method of token distribution or moving toward ICOs, the first thing is like, what does it mean for the way in which these tokens are going to get distributed for the way in which we think about decentralization, the way in which we think about retail participation. There was a big conversation that I got involved in. I wrote this thread because this guy, ICO Beast, we'll talk about it a little bit. He's like a big crypto influencer kind of token sheller guy. ICO Beast basically first, two things that he got in the

news for, which I related to the story. So the first thing was that he got a big allocation in the mega-Eath ICO, which we talked about a little bit on a previous show. And in the mega-Eath ICO, he got, I think, like a million dollars of allocation, and he tweeted, oh, I'm going to go, I have so much allocation, I'm up so much, I got to figure out how to hedge this thing. And when his tweet about this went viral, the mega-eat team decided to take back his allocation and cancel it, and give back his money. They didn't like take his money. They gave him back his money.

They said, you are refunded, we're going to give your allocation to somebody else, because, of course, the sale was massively oversubscribed. And this led to a big conversation about, is this cool? Is this the way that we should be doing things? And then the second story, concerning the same guy, ICO Beast, was he later tweeted that basically airdrop farmers are parasitic, they're a terrible foundation in which to build a community, and air drop farmers complain about everything, and they're just kind of down-only signals of just the failure of crypto distributions, and that we should stop rewarding

air-drop farmers. And he got crucified, mostly by farmers, seemingly, for this take. and then I kind of came on afterwards from a VC's perspective to give my perspective as somebody who obviously we deal a lot with looking at airdropped, air drops, farmer metrics, the dilation of metrics that are caused by farmers. And I basically said that as an investor, we try to remove farmed metrics as much as we can from our analysis of a protocol. And we think farming at this point has become pretty toxic and difficult to consider to be

positive sum for projects. So all that being said, wanted to get your guys' reactions to the panoply of things that we're seeing around both the ICOs and around the airdrops and what's changing in the meta. Tom, why don't why don't you start? Well, first of all, I see Obeast, I have to say typical Kalshi affiliate. I'll just leave it at that. Secondly, the amount of bias in this episode from the beginning to now is hilarious. It's just a fact. You know, it's not an opinion.

It is literally a fact. I think maybe you brought this up in your tweet. It's come up, I think, in other investments too, that generally for these pre-launch sales or investments, you are contractually prohibited from selling forwards on your tokens or hedging your tokens and the team reserves the right to revoke your allocation if you found out that you're doing that. And so it's like you didn't read the docs,

you didn't read the contract, like, you know, this is kind of part for the course. So I guess that was kind of on him for not even reading that. But I do think it's more of just a ethical thing that, like, yeah, I don't blame the team for not wanting people who are going to, you know, immediately try to flip their token for a quick profit. The whole point of doing it this way, instead of doing it through anirdrop or, you know, other sort of distribution mechanism to try to find people who are long-term aligned and are going to be holders and are going to

believe in the project and they're excited about it. And so, you know, even, even short of that, like, I don't know why you would tweet that when this kind of defeats the whole purpose of why there is a token sale in the first place. So interestingly, so Robin Hood, you know, they have these IPO, IPO direct-to-retel feature within Robin Hood. And within Robin Hood, anybody can participate. However, if you quickly flip your shares that you get in the IPO, you basically get like, you sort of get on timeout and like you can't participate in IPOs for a while if you're like flipping too aggressively. So they can't not offer it to you, but they can sort of like give you a timeout from the product. Apparently Coinbase is doing the same thing. So this is their first IP or first

ICO in their ICO product, but there's a rule there that like, okay, you can participate in the ICO and flip it, but if you do, you may not get to participate into future ICOs. And so it's kind of the same idea is that, you know, these kinds of private sales, they're meant to be a reward for good buyers. And there is a distinction between good buyers and bad buyers, right? In an IPO, it's the same thing. You're doing a roadshow, and you look for people who are going to be long-term aligned, who are going to be good holders of your asset.

and you're trying to place the asset, and that's why you're giving them an attractive price. If it's literally just, hey, take the thing and flip it and I don't really care how long you hold it, then just, you know, let the token float, buy it on the open market. Why am I buying it? Why am I selling it to you in a private transaction? Yeah, I mean, these, you know, sales are extremely oversubscribed. And so obviously the leverage sits with the sellers. And so in a market where maybe that weren't the case, I could see how they could kind of get away with it.

But this kind of comes back to like the luxury goods, our discussion we had like two episodes ago where yeah there's this huge asymmetry in the market so why would you think that you know you as one of many many buyers way too many buyers than there are uh sellers why you would think you would therefore to like you have this additional privilege the additional right to like you know sell this thing immediately like obviously that's not true to run what's your take i feel like everyone is just rediscovering all the constraints that people have in IPOs and you know we're just like researching the same search space except maybe having different restrictions against derivatives and stuff.

But also, I just kind of think, like, why were you bragging about your hedging strategy? Like, my main question is, like, what's the deal with the guy who did, a person who did this? I think it's like, when you're a yapper, you just like, you know what's going to do numbers and you can't turn off that part of your brain. It's just like, I know if I post this, people are going to like it. And so they're going to engage. So I should just post it. It's just like you become kind of broken in your inability to like, hey, you should not. talk about this, even if you're going to do it.

Yeah, there's just like something very weird to me about it because it's just kind of like, okay, you're telling everyone, so you're also creating adverse selection for yourself. Like everyone knows you're going to be hedging this. It's like, I don't know, I don't get the point. Yeah, it's also like everyone knows, even if, even if you weren't going to have your allocation pulled, everyone knows that you're a shitty person to give allocation to in the future. Something about the whole thing doesn't make sense. Like, is this guy just that much of a moron?

Like, I never understood. Well, the flip side of it is maybe that that controversy generates attention and followers and the attention and the followers are going to get him on the list in the first place. And so, I mean, I'm not saying the calculus is perfect here, but maybe inside their head, it's like being a KOL is all about getting the clicks anyway. So why not just get more clicks? I think there are some things that like inside voice, you know, keep that in there, don't put it out here.

And I think this is one of these things that retail, I mean, retail investors, especially in this cycle. Obviously, they love this idea that VCs are the root of all problems. But one of the things that they're coming to understand now, all of a sudden that they're actually getting the ICOs that they wanted, is that one thing VCs do is they compete with each other on holding period, right? VCs compete with each other to be long-term aligned, to be good holders, to like, hold for, to show the founder, I'm somebody that you can rely on for the long journey.

And that's part of the reason why founders choose certain VCs over others. And if you're a VC that's known for quick flips and you're not a long-term holder, you're like trying to go hedge or trying to sell OTC. Teams find that shit out. They talk, they tell each other, and people learn to avoid you if they can. The same thing is true of people who participate in ICOs. It's no different.

The democratization of finance means you're democratizing every part of that. So, no, that being said, it's obviously very hard to police people hedging because, you know, you can just go on hyperliquid or whatever. It's not hard to police them when they're telling you. Yeah, exactly. The only way you could possibly fuck up this badly is by literally tweeting it. So, yeah, I don't know.

Like that part of the story is funny, but I want to maybe fix it a little bit away from ICU in particular, but more around the dynamics that we're seeing change, right? So a lot of this discussion was galvanized by his tweet about, is the farming meta over? Is farming now at this point where we think it's not valuable for projects to be farmed?

I wrote a blog, I wrote a sort of tweet, long-form tweet about it. And then Jesse from Bass tweeted yesterday that he was taking the other side, basically. Is that like, no, no, no. I actually think farmers are great. I think farmers should be rewarded.

And instead, we should build a bridge to allow those farmers to become more valuable community members, to become builders, to become all this other stuff, kind of seemingly in response to what I was saying that I think the experiment has been run and that farming is basically a net negative to projects. How do you guys think about it? I mean, I feel like we talked about this at least three times a year for the last four years that we've done the podcast. there's always the cycles of our farmers good, our airdroft's good, is any of this good?

And there's moments where we're like, oh, yeah, like this is how you gain visibility and attention and like attention is the only true currency for a project. And there's other times where it's like, oh, it's played out. You're just getting the wrong people. It's the wrong attention. Dot, dot, dot, dot, dot. I think in general, an aggregate at this point in 2025, we can look at all of this is just marketing. Right?

Marketing for a chain, marketing for an application. marketing to catalyze a user base. And in general, if you're attracting the right users, then that marketing is well spent. If you're attracting the wrong users, marketing poorly spent. And I think nine times out of ten, it's poorly spent. People are attracting the wrong users, the wrong audience. They're not attracting the things that create long-term value. And it's just a waste of everyone's time.

And once in a while, like a project does it really well and they attract the right people and they build a user base for their whatever, for their per platform, for their protocol, for their thing correctly, and it's a good use of time. But otherwise, I mean, there's so much automation of these things now. And like, it's just a hotball of users and capital that generally I think it's poorly spent. So if it's nine times out of 10 that air drops are a failure, are you basically saying that 90% of projects should not do air drops? Correct. Invent a new meta. Try something new. Tough. Tough words from less shaddy. I mean, I, I think I more or less agree in the sense of, I think the implementations

are bad. It's kind of, it's kind of, it's kind of like good heart's law kind of thing where it's like the measure becomes a goal and then it seems to be a good measure. And like, I think that is basically what happened with, that's basically what's happened with air drops where it's like, teams don't know what they optimize for, so they choose something that's really not precise and, and, you know, it doesn't really correlate with success. And then that just gets optimized the shit. And then, of course, okay, this actually doesn't have the end result that we want. But maybe there's a little bit of kind of sleepwalking to it. And so people feel this obligation to go do it. But I think also as we've discussed, like, I think a lot of teams

are just afraid to try something new. And so when someone else is the pioneer and they show that you can do an ICO and maybe it's successful, I think we will just see a million people kind of, you know, drafting behind them. That's a great man once said. Air drops are kind of pointless anyway. Great quote. Yeah, that's right. Wait, Taron. Who said that? Are you. Are you serious? Tern, do you watch this show? I'm going to blame it on the norovirus. Yeah, sorry.

I'm just like, it's me. It's literally in the opening of the show, dude. Yeah, that's like in like the marketing commercial clip that we have. Yeah. Every show. Lawyers are now on someone else's balance. Air drops are kind of useless. Yeah.

Yeah. I think capitalism is always moving between cat customer acquisition costs and long-term value of users. And there's always just a, it's going back and forth between which one you spend on. And crypto, ironically, right now, you know, whenever people talk about revenue, revenue meta or whatever, which just basically means long-term value needs to be valued much higher than customer acquisition costs. It's funny because crypto is like usually the KAC versus LTV tradeoff for crypto and the rest of tech is the same direction. Like if everyone in tech is spending on KAC, crypto is all about spending KAC. Everyone is focused on making money.

Cryptos are folks on making money. But right now in AI, everyone's focused on KAC and no real LTV at all. or just look at the bottom lines of everyone that's like growing tremendously. And crypto is like in the opposite direction. Like focus on this long-term value thing. So I think like that separation is kind of interesting to me. And in some ways, that's why air drops are kind of useless like right now. It's like people are really valuing things a lot more.

Not like fully, but yeah, a lot more on the LTV basis. Whereas like in the normal economy, people are not valuing things on LTV basis, especially because of the AI stuff. So like it's sort of to me, that's the bigger thing is like if like an AI company did an air drop right now, it would probably be successful. You know, and I think part of the reason is like it's basically like they're all competing for the same. They're all competing for like locking in users and they need to spend a ton on customer

acquisition so they don't move. You know, like the number of IDE products I've used in the last three months is at least seven. that's like the last time I had no stickiness in a product was defy summer. It does seem like the experiment has been run and that we don't have almost a single example of a stickyirdrop. It just is crazy how much churn airdrop recipients have. And like that doesn't mean that there aren't good products. That doesn't mean there aren't retentive users, but they just never coming through

air drops. Like it's just a terrible channel. And if you look at the nominal value of all the airdrops that have been delivered in crypto, you compare that to the amount of revenue, even the biggest apps in crypto have, it's completely lopsided, right? If this was a company, if this was like, you know, Google ads and you were to learn that they have this bad of a conversion ratio on the spend that's going out the door, this company would be in the ground, like AirDrops as a product would just be not existent already. You know, it would be a crater. So I think the theory of AirDrops was that,

okay, well, this, maybe it's not justified in this in terms of marketing. spend, right? Maybe it's more about, well, this is a necessary thing in order to decentralize your protocol and or to put it in the hands of users. But now there's just an obvious, like that, that lack of retention, what it implies is that these are not your users. You're putting the hands of someone, but you're not putting in the hands of your users. You're putting in the hands of somebody who's turning around and selling those tokens directly on the market, in which case, why don't you just sell the tokens on the market and skip the middleman, which is essentially what an ICO is. So I think the ICO is the right answer. If you know that this interim thing of like,

okay, people who show up and, like, do random actions on my test net is not actually my long-term users, then, like, I'm not accomplishing the goal of getting tokens in the hands of long-term users. So it might as well get them in the hands of long-term buyers. And getting in the hands of long-term buyers, the right mechanism for that is an ICO. So now that basically the regulatory bramble is cleared, it does seem like this is obviously the right answer is for people to move toward ICOs. Now, all that being said, I want to caveat that, and I wrote this in the post, which I think some people glossed over, is that there's a category of air drops that are these sort of linear

air drops that are more like classic liquidity mining. So this is like, you know, what Athena was doing, what hyperliquid was doing, where you're awarding a tangible metric that actually contributes to a product mode. So, you know, the liquidity has increased or the Len Barrow has increased on a protocol. This kind of thing, which is mostly a defy, it basically doesn't exist outside of defy. If you're looking at L1, you're looking at L2, you're looking at a consumer product, these are never white get airdropped. It's almost always some easily gamable metric of like touch every little thing on the app and then you get anirdrop. And what you just do is you end up getting a lot of random people coming in and touching things on your app and then leaving. So I think that is the future

is basically either linear air drops pay for performance. This actually is necessary to bootstrap a product mode or ICO or and ICO. So you're saying we go back to Defy Summer in 2020 and ICO's in 2017. and there lies the answers. Pretty much, yeah. I think, like, we kind of had the right answer, but if you just take the union of those two. But the other thing that I think that I like that people are doing now with ICOs,

is, again, it's not totally free-for-all, right? It's not just a public auction. Because if you're just going to run a public auction, then you might as well just float the token, right? So this, like, more IPO-like ICO-like process actually seems like an interesting evolution. So we'll see maybe that's not the right answer. Maybe we discover that, hey, the mega-eat sale wasn't as great as we once anticipated.

Maybe it wasn't quite as much of value add. I'm genuinely uncertain what to expect to see how these ICOs work out. But I think it's worth seeing. It's worth experimenting and seeing this kind of fixed-price ICO process if this is the right answer for these things. I mean, actually, I was just looking at revenue per protocol. and it's like of the top 10 I think the only two that did an airdrop or aerodrome and hyperliquid

as of right now and both of them are defy ones where is it the other top 10? Not right now. I'm looking at just like instantaneous right now. Top 10 right now. Yeah, sorry, I'm not looking at moving average.

But yeah, it's like actually kind of interesting to just look because you're like very few of the things that actually do well long-term value have done bigger drops. That's kind of the, to my point of like, this is the KAC versus LTV story. There's just not been any proof that KAC buys anything for you

in terms of like your product. Like it certainly buys liquidity for your investors but it doesn't buy anything else. Yeah. Yeah, I think the story is a little too facile to claim that this is, this is a marketing spend Because if it's marketing spend, your CMO should be like fired every which way,

if that's the kind of return on investment they're getting. I mean, these projects don't have CMOs for the most part, right? It's like someone on the team, like has a Google sheet. When I start a token, there's only a CTO. There's no CMO. I'm kidding. Tarun coin, is that the announcement? No.

There we go. So speaking of tokens and CTOing, another big story in DFI has been the unification. of Uniswap and the activation of their fee switch. So historically, one of the criticisms of Uniswap has been, there's kind of this two-headed Hydra, which is that there's Uniswop the protocol and there's Uniswap the company.

Uniswap the company controlled the front end. The front end charges its own fee. They had a wallet. They had a number of different products. They have the aggregator. And the Uniswap the Protocol on chain, and Uniswap the protocol on chain, has never actually had a protocol level fee.

And this was largely understood to be a product of the regulatory environment in the U.S., that they were sort of, they had to do this, they were forced to do this, whatever. And Hayden, the founder of Uniswap, recently put out his first proposal to Uniswop governance, stating that they were basically collapsing the distinction between the labs and the foundation, they called Unification. They're burning 100 million uni-uny to compensate the prior non-accrual of fees in Uniswap. They are dropping all the front-end fees, the wallet fees, the API fees,

allocating $20 million a year to a Uniswop growth budget, and turning on the fee switch. and this will basically finally make us that the UniToken is the primary beneficiary of everything within the UNISWAT ecosystem. So this was met with a lot of fanfare, a lot of excitement. They also introduced some new

protocol discount fee auction, which is like some fancy way to allocate more of the fee revenue away from validators, more toward arbitrageurs, and more toward the actual LPs in the pool. But the main headline is that Unoswap fee switch turned on,

a response to the new regulatory environment in which they find themselves, and potentially a new day for Defi where all of a sudden these protocols that really should have been monetizing the whole time finally can start to accumulate these fees and to really actually make money. Turin, what were your thoughts on the unification?

Yeah, I mean, I think it has been in the works for a long time and there's been lots of jostling to get this over the line over many years. So first off, congratulations to everyone who has been beating themselves over the head with just the bureaucracy and stuff involved while also getting pilloried on CT, even though it's not like they weren't trying to do this. They just kind of had a lot of other constraints at the same time. I think the one thing that I will say that in the final structure, that was like a little bit

different than what I had expected, like the one example where you have of like a labs company dissolving into the foundation completely as opposed to being separate was Morpho or Morpho's foundation like Andy bought the labs company. But here the labs bought the foundation so it went the other way and I thought that was kind of a weird different like I don't really understand. Can you buy a nonprofit? Well, I don't know. Yeah. Also Mark also also also also yes that's true. But also also there was something crazy where like Mark Zuckerberg brought like a biotech the other day from the Fountain CI from the foundation.

So right now I think foundation law seems very suspect because people are doing some weird games. But anyway, I don't totally understand how that worked. That was the number one thing that stood out to me in the announcement. I was like, how does that? How does that? Like, I had the exact same question as you. And I was not totally sure. Although it could just be that they were taking the employees and the foundation winds down.

I think that might be what's really going on. But yeah, I, look, I think they've been talking about doing this for a while. It kind of has been needed. And, you know, I think it's good to finally get to the era where, you know, yeah, like I'm saying, like the long-term value of these assets is like the front and center thing. And yeah, so. But I will say, having seen many sub little pieces of this whole thing, there were a lot of people and a lot of pain that went through this.

There was like a very funny interaction today where this former SEC person who now is at better markets was just like, they're just doing this to take advantage of the thing. And like, I don't know, I feel like all the people who had to sit through all the crazy dumb SEC stuff that then ended up just kind of being more of a personal attack effectively. Like, I feel like they're at least vindicated after many years. Yeah, there was this parade of people coming out and sharing their stories of being harassed by the SEC over the last four years. So I think we had the sushi swap guys come out.

Actually, Ryan Sean Adams from Bankless shared his story about he used to run a validator company and he got harassed into shutting it down and that's actually why he went to go start a media company instead. So many people have gone through the same experience and I think Hayden as well as many people were responding to, I think her name was Amanda Fisher, we're responding to her with like, hey, we lived through this. This is not a theoretical thing for us. We lived under the specter of arbitrary enforcement and just this kind of like these scare tactics that the SEC was using over the last several years to impede us from building something that they just didn't politically like.

Yeah, I think that's the thing that like Amanda Fisher and that kind of crowd missed that like, well, first, the SEC didn't win any of these cases, like, you know, obviously. But it's like the act of, you know, issuing a subpoena and, and, um, you know, rating these cases is extremely expensive and invasive. I mean, you know, I'm talking about like thousands of hours of my, you know, life lost on this and millions of dollars spent in legal fees, I imagine. And obviously also hamstringing the product roadmap. Like I assumed he wanted to do this for a long time. And that was kind of why you had this weird labs foundation split. So it's like there's sort of this in between where it's like the act of not even really enforcement can still

ruin these companies. So I think it's an extremely sick move by Uniswop, honestly. I think at the back in my mind, I thought maybe there's a chance that like, you know, there's sort of an opportunity to double dip a little bit where it's like, okay, you can have the labs and it can generate profit and can go, you know, public or something and you can also have the token. But I think actually like, again, I'm hoping this is the start of a meta where, hey, if Uniswap can do it, maybe, you know, I can do it. And we see more teams sort of moving towards, you know, unifying these two different, you shareholders. Yeah, I think this is the start of a new meta, frankly. I think people were waiting for Uniswap as a standard bearer for a long time.

I think there's like three different aspects of this story and they're all incredibly important. You know, one is their writing, I think the biggest wrong that has existed. For the longest time, the uni token itself was in a lot of ways cannibalized by Uniswap Labs the company. Uniswap Labs, the company was generating a lot of fees from the interfaces and the token was earning generating nothing. The token was pointless, very can't think, right? The token had basically no point.

It was a meme token associated with U2Swap protocol. this is the biggest conflict of interest that existed, and they are writing that wrong. They're acknowledging the fact that there was this weird divide between the two. There shouldn't be. I think something should either be a protocol that's entirely token-driven or it should be a company, it doesn't have a token. They went down the route of having both, and there was always questions about where value accrued, how it would accrue, how it worked, what the different roles were.

Those questions are over. Like, they are put to bed. And I think that's an incredible victory, right? I wish it never happened in the first place. But they are writing that. Second, I think this is going to directly lead to an improved economic model for projects. If Uniswap's not afraid to do this the right way, your point, no one's going to be. I think we're going to see this being the inflection point and a catalyst for a lot of experimentation in the same way that DFI Summer was.

where it was like, oh, okay, there's a new model. Like everyone, let's try like offshoots of this. Let's see what like we can tweak. What can we improve? You know, how do we do it differently? With Uniswap going to a revenue token, I think a lot of other teams are going to be inspired. And lastly, there's the legal lawfare side of this that, you know, they're addressing. And this is overdue.

I mean, a lot of these stories came out at the end of the Gensler, you know, term like back in, you know, when Uniswap was served and all of these things. It's no surprise. But I think this also is just a testament to the fact that the lawfare era against D5 protocols ended a long time ago, right? It ended long enough ago that UNICEF had a year to basically plan for this moment and turn it on, right? Because there's not an overnight thing. They're not just like flipping the switch. I don't think they've really had the pieces together a year ago. I think they basically, you know, when the lawfare ended, they were able to sort of think clearly and plan and set in motion this execution of what the token should be. And up until that point, they were persecuted, right?

Like very flat out, like, you know, whether it's Amanda Fisher or whoever, you know, from that era of the SEC, Uniswap as a company was unfairly and deliberately targeted in a vindictive manner. And it was chilling for Uniswap. this is something that they might have done years ago had it not been for a campaign of lawfare being waged against them. And honestly, it probably should have happened years ago, right? I'm relieved that it's happening now. I think everyone who's a developer, everyone who's an investor, everyone who's a user should say better late than never. And let this be the beginning of Act 2 in a lot of ways of defy tokenomics in a post-Gensler era.

But I think this is going to open the door to a lot more positive effects that are unforeseen. That was incredibly well said, Robert. And especially as one of the defy-oGs or maybe even the defy-o-g, it means it's especially powerful coming from you. I have tremendous respect for them doing this. I view this as just such a major milestone that everybody should celebrate. Totally.

Like I, this was one of the things, I mean, obviously I, everybody in the space loves Uniswap because they're just such the apotheosis of what makes crypto crypto, what makes Defi so special. At the same time. That's right. That's right. And they fought the fight for Defi against Gensler very nobly. And I think Hayden has always been one of these just luminaries in the space that has really always, again, been a great representative for the industry.

That said, this was the one thing I was always critical of Uniswap for. And it's kind of like the original sin of having a token while also having a company and not making it clear that everyone's rowing in the same direction. And it's one of the things that I have been personally, because we work with a lot of startups. We invest in a lot of companies. And they saw what Unoswap did and they said, well, we should do that too. And very often I was the only person in the room telling them, do not do that. It is a mistake.

you will eventually have a conflict between your company and your token. And the right answer, everyone knows the right answer is there's one asset. And we're all unified, all investors, whether they hold the token or whether they hold the stock. Unified. We're all unified, unified in favor of one asset. And if that's not the case, you're going to get conflicts of interest, you're going to get drama, you're going to get people working at odds of each other.

And it's just the wrong answer. And if it's the wrong answer, you shouldn't do it. And so I've managed to talk some people out of this. But now that Uniswap has finally combined the two and gotten to that right answer that we all kind of knew was the right answer in the end. And look, I get it. There was obviously an enormous amount of regulatory pressure on them.

And it's easy to say when you're sitting in the stands, it's a lot harder to say when you've got the barrel of the gun of the executive branch, you know, pointed at your head, which is what Uniswap, which is the position Uniswap was in because they are the biggest protocol in defy and the most obvious target for many, many years. So respect to them for having gotten to the right answer and now showing a way for everybody in the space

that this is the way the protocols ought to be run. Is regardless of whether or not you've raised venture capital or whether or not you have the ability to monetize on different layers of the stack, the value should go to a single asset. If you're raising stock, great. Money can go to the stock. If you have a token, value should go to the token.

But you should not try to do both because it's a recipe for disaster. Right. And I think they're going to excel at all the value goes to the token. It's a very simple capital structure. I think if every project has a very simple structure where it's all the value goes to the token, then everybody's going to be well served. I guarantee you at some point complexity is going to be introduced to not, I'm not speaking about you just generally in the token space.

And we're going to see conflicts of interest emerge again. Okay. It's going to be slightly different, and it'll take a different structure. But if you look at capital markets in traditional finance, right, you have equity holders. Equity holders look like the token holders. And then you have bondholders and they fight and they try to undermine each other and they try to steal value from each other. And they fight within one projects like economic structure.

We'll see that as well, right? We'll see even when all the value accrues to the token, we're going to see projects. have other sort of value leakage or competition emerged. We'll see projects where all the value cruised a token also issue some sort of debt. And then at some point there's going to be some conflict that does emerge again. Or we'll see a project with, you know, call it a partnership with another project to exchange value and there's going to be conflicts that emerge and it's going to get messy. But at least we can start with a consistent and simple framework for how projects think

about the economics of a crypto application or system, which is as simple as the simple as gets, which is it does a bunch of things. It makes money. That value flows to the token holders. Everybody's happy. I would also say props to Miles Jennings from Andreessen for, I think the putting out the dunas, which was obviously instrumental in helping this happen. I think I was originally kind of critical. It was like, it's easy to put out some like new legal theory, but it's like, you know, why don't you dog food it? Like, why don't you invest in some dunas? Why don't you cut your portos to be dunas? And they did. And it worked apparently or so far. So I'll take a Which one is the Duna?

So Uniswap converted to the Duni, which is a Duna, maybe a few months ago. Uniswap Foundation converted to a Duna. I don't know which one. Because, because, Turoreene, I think this is why, yes, that's like kind of why I was confused. Because I'm not sure this actually happened as the, we should just get Miles as a guest. Yeah, we should have him as a guest no matter what happened. Because honestly, the blog post did not specify this. And except it said everyone from Foundation is joining LAP.

And so that makes it sound like labs still is the surviving entity, but then foundation was supposed to be the Dune. So like I, maybe there's a contracting agreement somehow where there is a Duna and everyone works for labs and provides services to the Duna. All right. Let's not speculate on corporate structuring. This is kind of why I'm like,

I don't know. That was the only surprising thing where I was like, how does this work? Yeah, yeah. I don't think they acquired a nonprofit. That's probably not the way that they structured this. But we should get Miles on the show at some point. I think it would be a great guest.

I agree. Okay, well, so speaking of the legal side, one of the other big stories this week has been the ongoing trial of low-carb crusader. Low-carb crusader, of course, being the M.V. Bot, run by these two brothers, the Pereira Buen brothers, these two MIT grads, very sharp, sort of MEV sharps that were trading on chain. They famously had this sandwich attack, where they sandwich attack, sandwich attackers by creating these like fake coins that essentially would cause sandwich attack bots

to lose a lot of money. They end up getting indicted by the DOJ for this MEV exploit that they did, which involved them as kind of masquerading as a validator. I think that was part of the way that the DOJ framed it was that they pretended to be validators when they were actually these evil honey potters and they ended up causing these people to lose a lot of money who were otherwise running sandwich bots. So the bot made about $25 million in 12 seconds. They were charged with wire fraud, conspiracy, and money laundering.

And it looks like they ended up having a hung jury. So the defense was basically saying, look, there's no victim. The victims did not complain. Not there's no victims, but the victims are not complained. Everything was transparent on chain. But this is not a crime.

This is not us going and victimizing these people. These are just, you know, there's sophisticated players, you know, kind of hitting each other. It's kind of like when you have these what is like bond market vigilantes that are going out, like, you know, kind of tricking each other with bond covenants

that they're reading better than each other. This is that kind of stuff. This is grown-up stuff. These are sophisticated players. If my bot beat their bot, that's nobody else's business. You know, they shouldn't have been out there if they didn't know what their bots were doing.

And the prosecution said, like, no, these people were exploiting the menpool. They were also searching on Google about statute of limitations and about prisons and what prisons is like or something like what minimum security prisons are like. You know, this kind of, by the way, guys,

if you're running MV bots or doing anything questionable, never ever Google what prison is like because it's going to show up in your trial, just top tip. Maybe ask a friend instead of Googling it. Anyway, so the trial ended up with- The Siebe's legal advice. No, I'm kidding. This is the only legal advice I'll give on the show.

So multiple jurors ended in tears proclaimed that they had multiple nights of insomnia because they could not decide based on the evidence in this trial. To be clear, the trial was extremely complex. A lot of stuff about PBS and M.EV and flashbots and all the stuff that I'm sure none of these jurors have any idea

what the hell's going on. Anyway, they were deadlocked for three days. The judge decided these jurors are not going to reach a verdict and declared a mistrial. The DOJ announced that they want to retry the case. So a mistrial is for those who are unclear on how jurisprudence works in criminal trials.

A mistrial basically means that jury cannot make a decision. Jury has to be unanimous to indict somebody on criminal charges. In a mistrial, that means that, jury was split. It was not an acquittal nor a conviction. The prosecutor can decide to go at it again. And it looks like the prosecutors did decide that we're going to run it back, which would mean a new trial in February. Now the counsel for the boys is trying to have it dismissed on what's called a Rule 29 hearing, which is basically like, hey, I think even on the facts pled, this should not be a guilty verdict.

But this is seen by many people as being one of these big is code law cases. kind of the inverse of the tornado cash case. So curious to get your guys' reactions to what we're seeing here with this hung jury and maybe the kind of prosecutors coming at it for a second go. I haven't followed the case. And even if I did all this MV sandwich stuff is above my intellect, above my level. So I'll leave it to the rest of the thing. What do you think the right answer is?

What do you think the right answer is? I just don't, I actually haven't followed this case at all. I don't really know the details of it that well. So I leave it to you all. Neither did the jurors. So I don't know. I mean, it made them cry and made their heads explode. So I'm in their camp.

Okay, major, it was crazy. It was like, you know, this is obviously if you just pick 12 people off the street, there's like zero chance I understand anything. But I feel like for this case, they were talking about, oh, no, we selected these jurors very carefully. Over half of them have like master's degrees. And like, still it was, you ended up with a hungry. M. M.EV, M.V attack.

Yeah, exactly. Yeah. So I guess I have more of a direct connection to. this case. I know James quite well for many years. By like four or five years at least. No. Five or six years. This is one of the defendants. I also know the

person who referred the case to the U.S. Who is the person who was sandwiched? The victim. Oh, wow. You should be on the jury's room. You're like the perfect juror. I would be

biased. Yeah, you can't be on the jury if you know the defendant. Yeah, that's not how it works. Actually, the other thing is the person who referred the case, you know, who is a non-US national and was trying to get me in a civil case they were going to sue under to be like expert witness, which I declined. So basically, I would say that person is quite sophisticated. And, you know, if you're making this argument.

So they were running one of the MEV bots that got sandwich. Yeah. So basically, basically, you know, a sandwich attack, right, is like, I see it. order. Let's suppose it's a buy order. But the person didn't put, you know, when you're used to trading on an order book, you might say, okay, I want to put, I want to buy one unit at one dollar, one unit, one cent, and two units at one dollar two, sorry, flip that two units at one dollar, one unit, one cent. Now, imagine if you make an order where you say, I'll take any price, I don't care, just get me three units, right? And so someone could front run you by basically

pushing up the price, then your three units execute, then they sell backwards. that's what a sandwich attack is. And it has to do with the user not picking the right limits. And so there are people who do sandwich attacks, and basically what someone else realized was actually if I bundle all their sandwiches and reorder them in the right way, which is what James and then realize.

I could sandwich the sandwiches and then take all their profit plus a little more from choosing the ordering. So it was sort of like a smarter sandwich attacker sandwiching a less smart sandwich hacker. But the interesting thing is the less smart sandwich attacker had a lot more capital. And so that's sort of where

the losses kind of came for them. I would say it's actually kind of hard for me to know whether I consider this right or wrong. Because it reminds me of the same way that spoofing has a different definition in commodities markets

versus equities markets. And in some ways this has like spoofing regulation and normal SEC and CFTC world is sort of the analog of what a sandwich attack regulation might look like. At least it's the closest thing I can think of. And I don't know which side do you count this on of Commoddy versus security. If you're going to just fit the square peg into the round hole, I don't know what that looks like. I think in a world of permissionless transactions, all it's fair and love and war and someone lost. But I,

I do kind of get the idea that, like, this is extra protocol in the sense of Ethereum's consensus rules do not give you any guarantee on this, right? But the MEV auction sort of gives you some weaker guarantee on this. So, like, is that bad? I think at the end of the day, you know, like the crying jurors, it's a question where there's clearly a victim and there's clearly someone who perform the actions. But it's not clear if the victim and the person who perform the actions under, it's not zero sum between them in some way. weird way. Did the victim testify? No.

So they haven't even seen who the victims are. They just know theoretically that they're victims. Yes, but basically the permissioned aspect of Ethereum transaction submission, which is how they figured out who the sandwiches were, is that there, so in an MIVV transactions, there's this notion of a relayer. And the relayer takes the validator who won the block, and then they take a block that's formed with all the MED transaction and they send it to them. If the relayer somehow, their identity has somehow been used before, whether it's by an

IP address, whether, like, they didn't hide their identity, or the person submitting the block to the relator didn't hide their identity, well, then I can go to the relayer and ask who sent that. And the relayer, you know, that's like an on-chain, you can find out who the relator was. So basically, there is this argument that, like, some of the M-EV supply chain is, like, just centralized enough that this is not the decentralized protocols fault, which I think was like if the prosecutors weren't kind of probably needed expert witnesses or something, prosecutors weren't kind of making deft arguments and more making these technical arguments. I actually think there is

a kind of this case that like this thing is outside the rules of Ethereum and so it's not really permissionless, whatever. But I read the prosecution transcript and it sounded moronic to me and I was like, wow, no one talked to these guys before. And I'm kind of happy for it because I do still think there's something smart. You would be the person to talk to them, wasn't it? Like, how are they going to learn? I think there's something smart, though, about solving the optimization problem they solved to get to the right ordering.

That was very clever. Clearly it was very clever. I think the answer here is that, like, clearly these guys should be acquitted. Because if you had asked me, or if you had asked a reasonable person, is sandwiching sandwich attackers illegal, like under criminal law, I think you probably get different answers, right? Some people would say, yeah, obviously.

Or some people say, no, obviously not. And if it's not obvious, then it should not be criminal. That's kind of the rule of lenity, which is that if a person of ordinary intelligence cannot understand whether something is illegal or not, then if the law is not clear, then you should not give criminal charges to anybody. And if you feel like, hey,

this kind of behavior should be illegal, then go to Congress, get Congress to pass a law and make that law really, really clear about what kind of behavior is legal as opposed to illegal. Now, for a civil suit, it's a different story, right? If you want to go sue this person for damages and say, hey, this person intentionally harmed me, that's all well and good. Fine. I think that's perfectly fair, and maybe they'd settle somewhere halfway. Who knows? But the idea that these guys should be on criminal trial for something that even the prosecution kind of doesn't totally understand and the jurors definitely don't know if you read that

yeah yeah I don't think the prosecution presented a very good case to be honest yeah it's just like this this kind of thing it's like look it's totally understandable that like look there's bad stuff that happens in crypto there are absolutely people who are out there and hurt other people and who are breaking the rules and who should be put in jail I think

that like that is a big part of the role for these agencies for the DOJ which you know has gone after frauds and crime rings and Ponzi schemes and all this sort of stuff, which is very, very important. I think that's great. It's also true of the SEC. The SEC, even under the Gensler regime, was going after frauds and going after these people who are really out there to harm other people and lie about what they're doing. And I think that's really important. It's really valuable to believe that. But this is not either of those two.

By the way, one reason I brought up the spoofing laws is the spoofing laws don't impact like your retail trader or after trade, right? They really are laws protecting market makers against one another or not, which is why I think they're qualitatively the most similar thing to this. But it's also not clear that they apply. So, like, that's another kind of point in your argument. Yeah, exactly. It's like when it's not clear, the answer almost always is that you're not supposed to be indicting these kinds of cases. But it's also just because I do know that I do know the person who is sandwiched really was pushing to get this case through it. So I do think it's a little funny that the U.S. prosecuted this case on behalf of a foreign national.

that part to me. What is their nationality? I won't docks, but you know. If they brought this case and put some people in prison, they can just be anonymous like that? How is that okay? European. Shouldn't you be able to face your accuser?

European. That's all I'll say. European. That seems kind of fucked up if they can't actually face the person. Well, I just think it's like kind of weird. The referral came from a foreign. Isn't that also a principle of criminal law is your ability to face your accuser?

Yeah. Well, the thing, no, no, no, but the point is that the accuser, instead of doing the civil case, which I think they found would have, like, low chance, decide to just try to push governments to go. Right, which is kind of bullshit, right? Because, like, he's the only victim. The accuser is the government, right? The accuser is not this other person who's the victim. You don't have the right to face your victim. But the victim is trying to push the prosecutor, right? And that was very clear in this case because they started trying civil and then they kind of. Yeah, I mean, obviously, every criminal case. is brought by the government, right? It's not brought by a third party. But in general, in criminal case, you have the right to face your accuser. The accuser cannot just say, like, oh, I don't want to testify because that seems unpleasant. But because it's the blockchain, you can say, like,

well, I don't need testimony from the accuser because it's all in the blockchain. You know, I don't know. So it's a weird case all around. It just gives me bad vibes. Yeah, I also just didn't think it was like, if you told me, like, someone made a scam token and then owned 80% of the supply and rugged someone. I've seen zero cases of that form prosecuted. Why are we not prosecuted that? That's very, very well, that's very well said. Yeah.

Like there's so many bad things that have happened in crypto over the last like two years. Why this? You know? All right. So just for the record, I quickly chat GPT this because none of the four of us are lawyers. So when it comes to facing your accuser, this comes from the Sixth Amendment. But really what that means is you have the right to be present. when witnesses testify, and you have the right to cross-examine those witnesses.

Right. So if somebody instigated a criminal suit, it doesn't mean that you have the right to interrogate them, I guess. Right. So obviously, if they're not actually there in the documents and like they didn't get a quote. Yeah, I mean, it means you can cross-examination is what this means. Right, right, right. Anyway, okay, well, I think we're up on time.

So we've got to wrap, but we will be back next week. Thank everybody. Stay strong out there. And we'll be back soon.