Unchained - The Chopping Block: Uniswap's SEC Scrutiny, Token2049 Flood Catastrophe, and Bitcoin's Halving Impact - Ep. 636

Episode Date: April 25, 2024

Welcome to The Chopping Block, where Haseeb Qureshi, Tom Schmidt, Tarun Chitra, and Robert Leshner dissect the crypto world’s topics of the day. In this episode, we delve into the SEC's recent scrutiny of Uniswap, exploring the potential legal and regulatory impacts on the DeFi landscape. We also discuss the unprecedented flooding in Dubai and its effects on the recent crypto conference, highlighting the resilience of the crypto community in the face of natural disasters. Shifting our focus to Bitcoin, we analyze the implications of the latest halvening event and what it means for Bitcoin’s inflation rate and market dynamics. Through these discussions, we unpack the intricate relationships between regulatory actions, environmental challenges, and technological advancements in cryptocurrency. Join us as we navigate through these complex topics, offering deep insights and expert analysis on the events that are shaping the future of blockchain and digital currencies. Tune in to understand how these pivotal moments are influencing the strategic direction and ethical considerations within the crypto space. Listen to the episode on Apple Podcasts, Spotify, Overcast, Podcast Addict, Pocket Casts, Pandora, Castbox, Google Podcasts, TuneIn, Amazon Music, or on your favorite podcast platform. Show Highlights 🔹The devastating floods in Dubai and their impact on the Token 2049 conference 🔹 Analysis of Bitcoin's halvening event, exploring whether it's a bullish signal or just market noise. 🔹 Examine the evolution and market impact of new Bitcoin protocols like ordinals and runes, assessing their effectiveness and reception within the community. 🔹 Explore the dynamics of the Asian market's influence on Bitcoin's secondary layers, discussing the integration of substantial Bitcoin deposits and yield strategies. 🔹 Dive into the SEC's Wells Notice to Uniswap and its broader implications for decentralized finance (DeFi). Hosts ⭐️Haseeb Qureshi, Managing Partner at Dragonfly  ⭐️Tom Schmidt, General Partner at Dragonfly  ⭐️Robert Leshner, Founder of Compound ⭐️Tarun Chitra, Founder and CEO of Gauntlet Disclosures Links Fighting for DeFi by Uniswap: https://blog.uniswap.org/fighting-for-defi  Learn more about your ad choices. Visit megaphone.fm/adchoices

That's what I'm saying. Like, I feel like maybe this is just a way to figure how to run up bills so that, and then you can go, I made you so much money. I, I don't think it's like that turn. I think it's, I like,

I like that. I like that. So the question is, what venture fund is going to hire Gensler? That's the, that's the big question. And they seem to hire all the regular. You think Andreessen is going to hire?

Well, I just mean, look at, look at how many. They're hired. 100, 100, a solo GP fund.

It's Gensler Ventures. coming to you, 2026. I think actually all the big funds would probably band together and fund him just to get him to stay out of politics. That's what I'm saying. This might be a genius boy on his part.

And you're all not, you're all not thinking deep enough. Not a dividend. It's a tale of two funds. 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 pomp.

DFI 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 insiders perspective on the crypto topics of the day. So quick intros. First you got Tom, the Defy Maven and Master of Memes. Hi, everyone. Next, we've got Robert, the Cryptoconassur, and Tsar of Super State.

Howdy. Next, we've got Tarun, the Gigabrain, and Grand Puba at Gauntlet. Yo. And finally, I'm Hesieve the Head Hype Man at Dragonfly. We are early-stage investors in crypto, but I want a caveat that nothing we say here is investment advice, legal advice, or even life advice. Please see Chopin Block. That XYZ for more disclosures. So it has been another very eventful week.

Tarud and I were just in Dubai for token 2049, which was basically like an end-of-the-world situation going on over there. I don't know if anybody followed what was happening on Twitter, but there were insane storms that beset Dubai, or just generally around that area. in UAE and some of the neighboring countries. Most people flew in early part of that week, and then Tuesday, which is actually the same day that I flew in, a crazy storm flooded Dubai. It was, I think, two years' worth of rain in about 24 hours. All of the streets got flooded.

A bunch of people who were actually on my flight. So I had a driver that was waiting for me when I arrived because I was worried about what was going to happen with the floods. I was supposed to go to Abu Dhabi after I landed, which was a couple hours. I was like, you know what, never mind. I'm just going to go to my hotel. like this kind of seems really dicey.

People who were on my same flight, who were just behind me, they had to wait multiple hours to get a taxi and to get, like it took me 15 minutes to get to my hotel. It took the people who were on my same flight. I was texting with them during the day. It took them six hours to get from the airport

to the hotel, same hotel that I was staying at. And they were like, you know, they're fjording through like flooded tunnels and like, you know, cars were floating through insane. It was total, fucking apocalypse stuff. It was crazy.

Taruie, you had an ordeal when you were getting in, right? Yeah, so I, like you, saw the weather and was like, I'm going to reserve a car. And then instead, because I'm like, this city, I bet you, if it rains too much, like Uber drivers all crash everywhere.

It's like Texas and the snowstorm. And so it turned out there were other people who made the same decision as me. and unfortunately we landed later than you so we didn't get our cars so the car company car service company rented a bus and this bus took about like five or six hours to drive it would normally take like 20 or 30 minutes but the best part about it was I spent my bus journey sitting next to one Anthony Scaramucci and it was a very funny funny ride because

we get almost all the way from the airport to where all these hotels are and everyone's like excited. We're like, finally it's done. Mr. Scaramucci does not feel that way. He gets off at the first stop and he says, I'm going to get a cab back to the airport after we've fjorded through tunnels,

as you put it, so that I can leave right now. And it was like... Wow. But all I got to say, he was very nice. I was like, you know, I was like, first of all, I was just not expecting. end up sitting next. What?

Wait, how did it get a flight out? Like the airplane? I have no clue. I have no clue what happened after he left the bus. That's, that's beyond, above my pay grade.

But I will say, that was very funny that, you know, after already conquering the thing he wanted to your turn. That's nuts. That's what you like. You want a contrarian fund manager,

you know? Yeah. Well, he's also very good at exiting, right? That's his thing. Trump campaign, markets, FtX.

he's good at getting out and moving on to the next thing. So you got to respect that. Well, it's also funny to me, he's like coming conferences and like still, you know. It's a lot of doing that type of stuff. Yeah. Yeah. I was surprised. So, okay, I will just one more note about like just the aftermath of all this.

So a bunch of venues got flooded. So pretty much everything that was scheduled. So the main conference was to start on Thursday. But like Tuesday and Wednesday, everyone had all these other events and lunch. and kind of pre-conference side events, everything got canceled. So many venues got flooded. A bunch of people who I knew

who lived in Dubai, like their houses got flooded, you know, water was seeping in through the windows. It was just total mayhem for everybody in the city. Even the hotel that I was staying in, which is a nice hotel, like the ground floor of the hotel,

I was on the third floor, ground floor got flooded. So those people had to like move rooms or just like live in a flooded hotel, I guess. Like the ceiling was dripping. So if you were on the, top floor, you were also getting issues with the rain. It was just, it was so insane. Like,

I did not think that that was even possible in a city of, of this stature, you know, like Dubai. And then the next day, it took a little while for the streets to clear up, but basically the city was like bifurcated, where certain parts of the city were still basically underwater. And certain parts of the city were traversable, right? So like the part of the city that I was, I was in, you could get around within that area, but anybody who was like downtown, you were just like, I can't see you today. Maybe I'll go up there on Thursday or Friday when the streets clear up. And so, like, if you drove going through downtown or like going to downtown, they were just abandoned cars, like, Rolls Royces and like, you know, Lamborghinis that were just like, they'd just

been abandoned because they were just floating. You know, they were just, you were like, fuck it. I'm just leaving. I also think a hilarious thing that I was reading some articles about how Dubai's not like covering, like, no one gets real insurance there. And so a lot of those cars may not be covered in any way, shape, or form. So you might as well write them off as a complete loss. Yeah. Well, I don't think anyone is insuring water damage in Dubai. No, definitely not.

Definitely not. And anybody who's a water insurer is out of business. So that's, you know, game over for them because the amount of property damage in that city was absolutely nuts. And I'm sure there's going to be like mold problems and stuff from all these buildings that have had water sleeping everywhere. I mean, I thought it was all the, the government was like, oh, you don't. don't talk about on social media.

But then they were like, we're building a 60 billion diram drainage system or something. Well, they said specifically, so I mean, UAE, it's a kingdom, right? So it's not, you know, obviously they're kind of restrictive on what you can do there. But so they immediately announced that it is illegal to tweet or put anything on social media,

implying that the storms were caused by cloud seeding. So there was somebody who I heard of, I don't know if this is true, but I heard that there was like some tourist who basically was like on Instagram, Instagram talking about, oh, it's because of cloud seating and they were thrown in jail. Normally, they would deport you, but they can't, there are no flights, right? They can't deport you.

So they just threw her in jail until, like, the plane started going again. Anyway, I don't know if this is true, but this is what I heard. How was the conference? How was the conference? The conference, you know, I was expecting that we've said nothing about the conference. Yeah. No, so I will say I was expecting that the conference itself, like, it was a stacked conference. I was really surprised the number of heavy hitters

who were attending this conference. It was like almost everybody was there besides obviously the two of you because you're both lazy. But everybody else was there. Well, we didn't have a right call. We avoided it. It's funny because I was thinking about not going

and I remember I was actually, I was in our slack talking about like, oh, you know, I'm going to delay my flights. Like it kind of seems dicey. There's like all this weather shit and then Iran and Israel are kind of fighting and I don't want to be in the neighborhood because maybe the airspace is going to get closed.

And everybody I spoke to, I was like, hey, you know, I'm thinking I might cancel my flights and not go. And they were like, what? You're the only one who's not going to go? Like, everyone else is going. And I was like, oh, maybe I'm an idiot. Like, am I just paranoid? And it's classic VC move is that I asked everyone else what they're doing and nobody else is canceling.

And I was like, oh, I guess I should just go. And absolutely the wrong move. I should have just, I should have just fucking followed my gut and canceled. And then that weekend, Israel retaliated against Iran, which is exactly what I was worried about. And I was lucky my flight was a day after. So, but if it was, my flight would have been canceled because the airspace got closed. So, but anyway, the conference itself was actually pretty good. Like, I was surprised how many people showed up and like still kind of, you know, I mean,

everyone was there. You were kind of stuck. And hats off. Hats off to Alex, the organizer. Yes. And others. Because like, I don't know how they pulled that together, given all the slutting. and stuff.

And I feel like they, they like somehow, by the seat of their pants, somehow were able to pull it off. But like, they worked their asses off to get it that even happen after Gilgamesh level flood. So.

Yeah. It was kind of like, I was a little worried that it was going to be like Crypto Fire Festival where just everything was kind of enshamples. No, no, it was crypto burning.

Yeah. It was more like, no, Burning Man. Burning Man is crypto Burning Man. No, no. This is more like, yeah, fine, Middle Eastern desert, desert, you know, more authentic burning man. Yeah, but UAE has its own flavor of degeneracy, right? So there was this, there was a big fight, this thing called Crypto Fight Night that I actually went to where Ansem, who I was on a panel with him, talking about meme coins.

Ansem fought some crypto influencer guy named Barney, who I'd never heard of, got his, ass whooped in the ring. He ended up crashing the price of whiff, apparently, like, the moment that he started getting hit. Like, he just had no, he had no ability. He did not train or something. I don't know. It was, like, kind of embarrassing to watch him in the ring. Because he was the headliner. And so I was like there. And it was kind of like, oh, man, why? I don't know. This is, like, very depressing to see all these crypto influencers just, like, beating each other up in a ring. And they're all, you know, not. They're all influencers. This is a very Dubai thing, too. Like, I don't really. Exactly. Exactly. It's kind of like, you have like your, you have, like, you

have your tigers that you keep in like your little ranch over here and then you've got like, oh, let's let's pay the crypto influencers to just beat each other up in a ring and and then we'll fly them out for that. But my favorite thing was it was sponsored by Bonk. All of the boxing gloves had Bonk. Yes. I was like, what the fuck? How does Bonk have this much of a marketing budget? I don't understand. I thought it was a meme. Bond bot makes a lot of money. No, yeah. Bunk is a revenue generating meme coin. It is. Bunk bot is the telegram bot, right? that you can use to trade. And like,

charge it. I didn't realize. Yeah, I didn't realize that it was owned by Bonk, the meme coin, uh, or team or something. I guess the foundation or so. I don't know. Foundation. Yeah.

I don't know. I don't know if they have a buttoned up structure in that way. New paradigm, new paradigm to see, there are no foundations. I love you. There are no foundations. Yeah.

Fair enough. Anyway. Um, so yeah, that's the recap on Dubai. Um, I'm finally back in civilization. very relieved to be out of their B-housing experience.

The interesting thing, so this was all happening right around the time of the Bitcoin happening. So that is kind of the big story of this week. The Bitcoin happening for those who do not know is every four years, Bitcoin supply cuts in half. So when we talk about Bitcoin being deflationary, not to supply. Supply issuance. The rate of issuance, the inflation rate of Bitcoin cuts up.

Yeah, I was going to say, this is a bad rebasing coin. Sorry, sorry. So ever since Satoshi Nakamoto originally programmed Bitcoin, there was basically a rule that roughly every four years, the issuance rate of Bitcoin cuts in half, meaning the blocker word that you get cuts in half, every four years until the year like 2100 something, at which point there is no more new Bitcoin being minted.

And so that's what we mean when we say that Bitcoin is deflationary. Technically, it's disinflationary. I mean the inflation rate is going down every single year. So that happening happens every four years on the dot, and this was the fourth happening. So, you know, it's been 16 years, basically, since Bitcoin started, and therefore the inflation rate and the mining reward cut in half one more time. So this was widely anticipated because Bitcoiners love to talk a lot about the having

happening as being a very bullish event for Bitcoin. The theory of why the happening is bullish always been a little bit of a mystery to me, and I'm going to show my cards here that I'm a having nihilist. I don't think the happening matters. But Bitcoiners will say that the happening is, a very bullish event. They will draw all these charts and they'll show, you know, roughly a few months after the having is usually an all-time high and something something.

I don't know. I don't totally follow the arguments. But the having happened. I think it was Friday or Saturday, depending on what time's on you're in, that the happening took place. Yeah, 420. 420. Okay, 420 happening.

Just as Satoshi wrote it up. And the Bitcoin price has not really done a ton. It seems to most save track macro. So thoughts, Bitcoin happening. Was it real? Is it bullshit? Are we waiting three months for the Bitcoin happening to have? Is it priced in?

Is it priced in? Or do you have to, I don't know? Okay. Let me ask one technical question for anyone who knows the answer. Maybe none of us know the answer. Is it four years based on like a Unix time or in the actual Bitcoin software? Or is it based on an expected number of blocks based on expect a block time.

It's a number of blocks. It's a number of blocks. It's like the difficulty adjustment deals with the time delay and then the actual tabling's block. So it's not every four years. So to be clear, it's close every four years.

Approximately. With pretty high certainty, right? Because like over that long a period of time, it's just going to average out to basically be four years. Yeah, but approximately. Okay, approximately. Yeah, okay. So, I mean, are we having a

accuracy versus precision. No, not on this, not on the show. We'll save that debate for offline. All right. So my initial take is like the very like, you know, midwit take on the habiting, which is all things equal. It's both good and bad, right? So the security budget of Bitcoin gets cut in half in that if the price of Bitcoin

stays the same for an extended period of time, then there's. really like less incentive to secure the network. But on the other side, there's half as many coins being minted per day, which are being sold. From a technical perspective, there's fundamentally less of a gravity on the price of Bitcoin. Because miners are in the business of selling, right? They are good at electrical engineering and they make Bitcoin. In order for them to actually achieve a profit, they have to sell the Bitcoin or hedge it in some way that sells the Bitcoin. And so less block reward, less selling.

And so selling has gone down. I mean, due to miners mining Bitcoin, you know, it's a drop in the ocean compared to the total market for Bitcoin and like how many people want to buy or sell on a given day. But like directionally, there is less gravity to the price. And so I think it's so generally like are you. So are you having realist or are you having nihilist? I'm a realist. I actually do think there is an impact to it. You think it wasn't priced in?

Oh, I definitely think it was priced in, given that. That's what I mean when I say, a realist. Do you think it's priced in or not? I think it's priced in. I think it is good for the price of Bitcoin. I think it's priced in like the near term, like, you know, how far can people? Do you think it was priced in like a week before the happening, a month before the happening, a year before the happening? Two weeks.

Okay. Do you think two weeks before the happening, it got priced in? But three weeks before the happening, it was not priced in. Well, it's a gradient. It's a gradient. It's not a binary thing, right? It was gradually getting priced in two weeks before, but then like it. Yeah, most of the price in two weeks before. Okay. Turin, what's your take?

The reason that I'm taking the other side is actually because there was a very big launch of a standard called Bruins on Bitcoin, which led to the largest ever transaction fee block. I think it was like almost 40 BTC in transaction fees, which is much higher than the subsidy, which is what got cut in pass. And so I think it wasn't priced in because no one knew how much demand there would be for ruins right around the happening. Now, that's a

very tongue-in-cheek answer because that's kind of nothing to do to happening. But the idea that the Bitcoin transaction fees were higher than the block reward, multiple for like a non-trivial percentage of blocks post-havening, it's more a sign that the like security budget thing, like

in the sense that the happening is a religious event for Bitcoin Maximilus. And people have found ways to add new things around each religious event to increase the net fees around that time. Then maybe that will be a counterbalancing force, but it's sort of more random than the happening itself. So hence it becomes harder to price it. Yeah. So, okay, we'll talk about Roons in a second, but Rooms is only about a day of crazy transaction volume. But my point is like include now that people know that there's like this like doing a launch on happening day is like the best time to do something on chain. I think this is not an undone.

This won't those won't go backwards. Instead they're going to get all sorts of weird stuff happening. And if it comes too hard to predict. We'll see in four years. I mean, if you're going to. Yeah, it's kind of like, okay, there's like Black Friday's like one day a year that, you know, a bunch of people go shopping. But that's not, you know, that's not enough to offset what's happening on. on the happening side.

I'm just trying to find the closest to rational it's not priced in. I think the only like, it's like the most, obviously predictable supply shock ever. And I think to Roberts point two, you know, we're talking really a minuscule amount of Bitcoin that's being produced these days compared to exchange volumes compared to ETF inflows, things like that. Really, I think the reason why, you know, you could argue that as bullish is because it just creates a news event. for Bitcoin. Every single Bitconer is on network television, on mainstream press, talking about the happening, getting it back in the new cycle. And short of that, there isn't, there aren't really that many opportunities to talk about Bitcoin unless the ETF is launching or, you know,

something else is happening, but usually you're talking about the price. And so I think that is really the story is it's just reflexive and it's an opportunity to talk about Bitcoin, which itself is maybe bullish for the price of Bitcoin. Right. But everyone knows that people are going to be on TV you talking about the happening, right? So it's not even, it's not even, like, that's not something that you could price in. Most people don't follow this. In our crypto-maid sphere. But the people who are buying- Right, but the question is who is setting the price for Bitcoin, right? Who is the marginal buyer of Bitcoin, which is also the person who sets the price. Well, one, it's global, right? It's not like, I don't think of it in terms of like, you know, who's watching like

US business television. Like, it's global. The happening, the happening is a event covered worldwide. Yeah. So, okay, it sounds like then you're saying that it's, you're saying that it's, not priced in because people who are buying Bitcoin aren't paying that much attention and it's only nerds like us who even know that the happening is happening. So it sounds like Robert, you are implying the happening is not priced in. I think it's mostly priced in. Like, let's go with mostly. That contradicts what you just said. You just said that, look, it's only us who are paying attention. Most people are not. Therefore, it's not priced in. So what do you think? Do you think it's priced in or not? I don't think of these things as binary. There's not like a thing. Like,

Everything about priced in, like in financial markets, is a gradient, right? So like some people like expected, some people don't. It doesn't go from zero to one, like for any prediction market, right? There's a gradient. And so like my personal view is probably around like two weeks, most of the flow for people who actually like are involved in Bitcoin have like figured out that the happening is happening. Right. When it happens, yeah, there's absolutely incremental people learning about it for the first time in four years.

or the first time in general, I don't know how many of them are running out being like, oh, this is the reason I'm going to buy Bitcoin now is because, like, of this event. I think of it like kind of like a brand awareness campaign where like everybody knows that Coke exists and yet they still buy massive billboards and they sponsor a bunch of stuff. And it's like, why? It puts the idea out there and kind of incepts you. And I think I'm sure there are marginal buyers of Bitcoin who see people on Bloomberg talking about Bitcoin and maybe they'll put 1% you know into Bitcoin. And this is kind of what we see. I don't know

if you saw some of the holders from the Bitcoin ETF's were revealed this week. And it's kind of random. It's a lot of random wealth managers from all around the world who are putting, you know, small allocations of their assets into Bitcoin. And, you know, I'm sure, you know, maybe it's not those people. Maybe it's some of those people. Maybe it's retail investors. But it's a brand awareness campaign, and I think that alone is, you know, maybe good. Okay, so if you analogize it to a brand awareness campaign and say, oh, it's kind of like Coca-Cola buying ads, you know Coca-Cola's going to buy ads, but still they can, like, affect the amount of people buying Coca-Cola.

But Coca-Cola buying ads, like, they can do a bad job with ads this year, right? They just have some ads that are kind of like, whatever, or they could do like the polar bear and everyone feels warm and fuzzy, and they're like, oh, I want to go out and drink some Coke. So, like, they can underperform or overperform relative to the fact that, yes, they're going to do brand awareness, but sometimes it sucks and sometimes it's awesome. And I guess it feels like the same thing must be true of the having Is that sometimes the having marketing brand awareness people on TV talking about it

It hits and it's like wow actually more people are going to buy Bitcoin than we thought we're going to buy Bitcoin because of the having But it can underperform it seems like maybe it's not priced in It's like there's a baseline of price in but you can kind of do a better job than the median or a worse job than the median of what the market is expecting to happen with a having But by this logic meme coins are brand of awareness for Solana. I think New Corn is a brand awareness for Names. No, for Solana, I mean, like, the number of people I talk to are like, oh, yeah, you work in that crypto stuff, right?

I downloaded Phantom. That has been like something I have encountered more in the last few months than anything I've ever encountered where people knew about crypto. It is, it is, it cuts across demographics and age groups much more. Okay, so, all right. I think we've betrayed a little bit, our cards here on Price-In or not Price-In, And one of the things that Tarun was alluding to was this new phenomenon called Roons. So Roons, created by Casey Rod Armour, who is the originator of ordinals and inscriptions on Bitcoin.

So he created this new standard, basically trying to create a better version of what was previously known as BRC20, which is basically a way to try to create an ERC20 token on Bitcoin. BRC20s, however, were super inefficient. They were very expensive. They were kind of a really stupid way to implement. a fungible token on top of Bitcoin. And so Casey created this much more efficient standard that's much more aligned with the UTXO model that's used on Bitcoin already.

And so there were a bunch of rules that were implemented around Roon. It was going to kick off. You could basically mint the first runes by taking a ticker. The ticker, there's certain rules around the tickers have to be a certain number of letters long and there are only certain characters you can use.

And so people could mint those tickers for a new run. I think it's called a Roon. starting with the having, the first block of the having. And that's why there was this crazy, effectively an auction that took place in the first Bitcoin block post-having of people trying to find the best tickers

and mint these new runes and all this stuff. So that drove a crazy amount of fees on Bitcoin for about 24 hours. Since then, the activities really died down. I was looking through the Roons Explorer and it looks like a ton of them didn't really get minted out. It seems like most of them actually are not fully minted.

And I don't know. This kind of seems like a bit underwhelming. So there was $80 million in fees on Bitcoin on day one. And those fees have basically gone down to pretty close to baseline now a few days later. So thoughts on Roons. I've seen a lot of chatter about it online, but it seems like people have mostly stopped talking about it today. I have not interacted with Rooms. So I will excuse myself from this part of the conversation.

Yeah, very, very, very barish for ruins. Very bearish for ruins. If Robert doesn't ape into it, that's very bearish. Why did you, okay, let me ask, why, why did you not decide to buy some ruins? I'm not that active in the Bitcoin ecosystem. That's why. Yeah. It's not something you got to spend down.

Did you do any BRC20s or ordinals or anything? No, not really. I've done like a tiny, tiny, tiny bit of ordinal stuff, but. Okay. So you did some, though. You did non-zero amount, but you didn't. Rune's is just not worth it to you. I'll say this.

I went into the deep research phase of Ordinals and talking to people and learning about it. I did not do the same thing for Rooms. Okay. Got it. Tom, Turun, did you guys mess around with Rooms at all? Any perspective? Also dabble with the ordinals, but have not gotten to Roons. I, yeah, something about the whole.

you know, BRC20 and Roon's ecosystem is very strange to me, where, like, you're basically totally dependent on these off-chain indexers to determine, like, the amount of the token that you have. Like, there's no real enforcement of the validity of these transactions on Bitcoin itself. So it just feels very, like, antithetical to, I feel like what Bitcoiners always talk about and kind of what the ethos of the spaces until, like, yeah, actually, we're going to be, like, relying on this wallet or this third party to allow us to trade these things or to tell me what the balance of my assets even is. And so, yeah, I really don't get it. And obviously it's

like just, you know, short of having an application or something that this stuff puts into, it is just meme coin trading, not to disparage meme coin trading. But, you know, we've seen this before. I do think like the problem is like, I think ordnals when they first came out where there was like a lot of novelty, but now people have gone to the extreme of like these very, you know, the Bitcoin L2 space is basically a lot of fake L2s. Like none of them have the viability of like, I can withdraw my assets from the bridge contract in a very reliable manner or at all in some cases without a centralized third party or, you know, some extra trust assumption.

And like, you know, a lot of the Bitcoin L2 stuff, I mean, the ZK stuff is real because like, okay, they're actually just posting the proofs of Bitcoin. That's kind of reasonable. But those ones are not live. And the ones that are live seem like three guys in a trench coat with a multi-sig. You know, it's like they're not, they're not three, but three guys, I mean, three Asian mid-tier Asian exchanges in a trench coat with a multi-sig. And, you know, do they, none of them seem particularly. really real. They seem like this like merry-go-round Hansi thing that I don't, it's like the Bitcoin L2 space that feels just like fake inside. I like for lack of a better word, I don't want

to get flamed now for saying that. But you will absolutely get flamed. But it's all right. There are some real ones. Like the ZK ones, I think are that people are trying. Well, real but not live, right? So like, real but not like. Yeah. But the ones that are live are like basically multi-sigs. But they're sidechains. Yeah, they're a side chain. They're side chain. But that's fine if you call them a side chain, but there's no data availability. So I spent a lot of time on this when I was in Hong Kong a couple weeks ago before I went to Dubai for the Web 3 Festival. And in Hong Kong, so the first thing I'll say, the Bitcoin ecosystem very concentrated in Asia.

So, you know, a lot of the demand for BRC20s and ordinals are actually not in the U.S. or in the, you know, kind of Anglophone world, which is I think a lot of the reason why a lot of this stuff feels somewhat opaque to a lot of folks who are living on crypto Twitter. Because it is just the case that most of the BRC20 ordnals activity was happening in the Chinese-speaking community, and less so in the Anglophone community. Or ordinals make much more sense. Like you look at the code basis, like I know what it's doing. I look at the code base for these Bitcoin L2s and either it's close source or like pseudo-open. So it's I don't know what's really doing. Or it's like, yeah, like I said, it's like an EVM chain that happens to have a multi-sig that you peg in and out of. Okay, we've seen RFC forever, right?

It's like, they're not L2s. I don't know. I don't understand how these people think. I was in Hong Kong and I met a ton of people who are very big into the Bitcoin L2 ecosystem. And it was very curious for me because almost everybody I know on the Western side thinks the Bitcoin L2s are bullshit and basically did not invest in almost anything. A few Western VCs have invested into them. But overwhelmingly, if you look at these Bitcoin L2 raises. They're a bunch of out.

They're a bunch of out. The ones that are coming out of the U.S. are like these very kind of academic, high integrity teams. They all suck. Like, Bitcoin L2 game is not about tech innovation. It's about gathering up lots and lots of Bitcoin from Bitcoin Wales. And like, if you look at, like, the granddaddy of these is Merlin. Merlin, yeah.

I mean, Merlin is unreal. I mean, you look at the, like, there's like single wallow with a billion dollars in Bitcoin depositing into it. Yeah, yeah. There's a huge amount. of capital in there. That's basically, I mean, everybody in Asia kind of knows. It all comes from a small amount of super Bitcoin mega whale miners.

So in Asia, you know, people love Bitcoin because Bitcoin equals proof of work, equals mining. Everyone in Asia gets that, right? So lots of super wealthy OGs are miners in Asia. And so the Bitcoin L2 story, basically the reason why it's so compelling for many folks in Asia is that they want yield on Bitcoin, which sounds stupid because it's like, what? How does that solve that problem? And the answer is, well, points.

You guys in the West do all this point stuff and you get yield on whatever you're putting into the points things. So we're going to create Bitcoin points. And you can put Bitcoin in this thing and you'll get yield. And the miners are all like, great. I love that. I love my Bitcoin. I love yield.

Here you go. Here's a big pile of Bitcoin. Give me yield. And it's weird to call it an L2. It's like blast. It's a blast. It's a blast of the service for Bitcoin Maxis. So here's the thing.

Here's thing. I was talking to the Nervos team, which is like super OG, proof of work guys, very legit. and they're building a Bitcoin L2 effectively. And so I asked them like, look, you guys are technical. You know, like I talked to some of these teams and they have no idea what the Falker they're saying, but like you guys are really technical.

How is this in L2? Right? This is not trustless. Obviously, Bitcoin is not validating any of this. It can't validate any of this. You're running an EVM chain. How are you going to validate EVM on Bitcoin? And the answer is that, no, no, no.

In Bitcoin, the word L2 means something different. In Bitcoin, L2 means that you are Bitcoin aligned. that's what it means. So if you're aligned with Bitcoin, you're an L2. And I'm like, wait, what? What? Wait, then what's, is RSK in L2? And he's like, well, you know, I don't know.

It depends on, you know, it depends on your definition. But yeah, that's what L2 means. So it's kind of like I was telling you guys, like fair launch in meme coins means that no VCs. That's what fair launch means for meme coins. In the same way, like the word L2 has just been reclaimed by Bitcoiners to mean Bitcoin aligned. Yeah, it makes sense. Does it? Does that make sense?

I feel like that does not make sense. Yes, because every phrase gets completely twisted in general to the point where everyone on the outside world doesn't really understand it. That is going to true. Yeah, I mean, literally the term ERC 20, right, which now at this point like ERC 20, ERC 20. Yeah, exactly. Like at least the first ERC 20 knockoff, the TRC 20 is bitwise identical. minus for the one character of the T in the name. But the BRC 20, not so.

Yeah. Like, so, I mean, EURC 20, like, literally, there was a list of 20 of these Ethereum, uh, uh, sort of, uh, what's the word? What are they? Well, they're EIPs. Yeah. Improred the proposals.

And they convert into ERC, yeah. And they convert into ERC's right. What does EURC stand for? Ethereum Request for Comet. Ethereum Request for Comet. Is it? Is it? Mm-hmm.

Okay. Yeah. So Ethereum Request for Comme. So you do in the IP, it gets approved or whatever, and then it becomes a request for comment. And that's what ERC20 comes from. And so now they're just everything 20. And RC20 is just like means token in people's minds.

And so they just copy this thing over and over again. Anything, even if it doesn't obey the ERC20 standard, they call it RC20 just because it just kind of sounds like a token. And so I can see that happening to L2, and that's kind of an interesting language on the move, kind of linguistic phenomenon. At the same time, we have the term side change. which was invented in Bitcoin land.

And there's a bunch of things that are still called side chains in Bitcoin land. You know, like all the stuff that, what's it called? The Bitcoin, shoot, what's the company that does all the Bitcoin stuff?

Stacks? No, no, not stacks. Blockstream? The centralized company that raised a bunch of venture. Blockstream, right? Blockstream has their side chain that everybody points and laughs at and is like, oh, this is just a centralized

side chain. And it's like, oh, yeah. But that's also what the Bitcoin L2s are. So what exactly is the difference, you know, I guess it's like aspirational? I don't know. But it's vibes. Basically, TLDR, it's all vibes. At least that's what I've been told.

I don't know. Are you guys looking at any of the Bitcoin L2 stuff? We invested in one Bitcoin L2, which is a ZK1. Yes. But a real L2. Real L2. It's trying to launch a VM or something. How does it be a new thing?

Sorry? It's not it. Is it a bit VM thing? It's its own VM, yeah, yeah. It's sort of like the VM, but they have a specialized prover. It's like all the Blockstream dark people who left, because Blockstream was building sort of this thing and then no one wants to stay there. So it's called Alpin.

I think they just came out of stealth like last week. Oh, yeah, yeah, yeah. We spoke to them. Okay, Alpin. Yeah, they're, yeah, I kind of sort of count them in like the Western high integrity teams of like people who are making a real honest effort at building something good. Unfortunately, I mean, no disrespect to them, but I think like if you're not plugged in to these Chinese whales who are basically, you know, plugging huge amounts of Bitcoin into these

networks, I don't know if you can win this game because it feels very stacked against you, so to speak. Yeah, maybe. I mean, I feel like there's enough non-Asian whales, you know, the wences of the world who maybe will be the patron. But those guys all hate this stuff. Like, there are other people like, oh, just wait for lightning. Why are you guys doing this EVM bullshit? You know, this is all like clogging up the chain.

I think, I think people have learned that lightning is secretly more centralized than your multi-sigl-2 in some ways. I do think that they've kind of, they're kind of turning the corner on that, more than you think. Is that right? It doesn't feel like that from the, you know, what do you think the sentiment of,

What do you think the sentiment to Lightning is on Twitter? I would argue that it's had this extreme crash lately. Yeah, I would bet it's actually just like not even that well understood. Lightning for the L2s. Like no one's talking about it anymore, you know, for the moment. Like most of the people have come into crypto the last couple of years might not even know. Oh, true. Yeah.

Yeah. Yeah. If you were, if you're a class of like 21, 22, you probably have. you know, you've only heard of lightning in passing. You probably think it's an ERC20 token. Wasn't there, what was the... There's a token standard for lightning. Radin. Radin was the Ethereum Lightning.

So there was an EARC20, though. Well, there were a couple. There were a couple. There was also all the state channels, L4. Yeah. Yes, yes. But they didn't have a token. L4 didn't have a token.

They didn't have a token. But a lot of people who work there are now have tokens. The Spain chain had a token and it's some great, you know, state channel tech. Oh, I forgot about that. Yeah, actually, Funfair did too. So it's like the casinos and like the kind of unsavory stuff were very experimental. You know what they say about, you know, it's the toughest industries that have to experiment with new technology. It's true.

Yeah, yeah. Okay. Well, speaking of tough industries, there was a big story this week about Uniswap that got hit with a Wells notice from the SEC. So let me explain what all those things mean. Uniswap, most of you are probably familiar. It's the biggest decks. It's an AMM completely decentralized. It runs with no on-chain kind of administration whatsoever.

It's been around forever, run by Hayden Adams. So not run by, I should say, founded by Hayden Adams. So the SEC, which we know both the CFTC and the SEC have been interacting with Uniswap labs for quite a while, since, of course, Uniswap has been around since, I think, 2018 or 19. The SEC, it was announced on April 10th, issued a Wells notice to UNISWOP. So a Wells notice is when the SEC is considering bringing a lawsuit or some kind of enforcement action against a counterparty, they are required by law to first give a Wells notice. It basically says, hey, we are planning to sue you.

If you have any kind of contradicting evidence that would lead us to think that maybe we should not be suing you or that this would be an error, here is your chance to present us that information. almost always after Wells Notice, the response to the Wells Notice doesn't end up causing the SEC not to go forward with the lawsuit, but at least gives the company time to prepare themselves and potentially get their affairs in order effectively

for what's to come. Now you might remember when the SEC sued Coinbase, as well as when the SEC sued Ripple, in both cases, when the SEC sent them their Wells notice, both Coinbase and Ripple front ran the SEC, went to the public and basically started a PR campaign immediately, saying, We got issued with the Wells notice.

We believe the SEC is doing this thing is unfairly, and they're kind of, you know, trotting over the rights of Americans, interact with crypto, blah, blah, blah. We're going to fight them to the death. And they kind of control the narrative, which I'm sure very much frustrated the SEC. At the time, this was considered to be a crazy thing to do. Like, this is not what happens generally.

Like, normally in most other industries, when your regulator suing you, you kind of, you know, you slink away, you start preparing lawyers and, you know, kind of preparing to say lots and lots of no comment. And instead, Coinbase and Ripple sort of showed that actually you want to go on the offensive. And so far, it seems to have been largely effective, although, you know, it's not over, but it's hard to tell. But it looks like so far people think that, hey, it actually looks like this was the right strategy. Well, Uniswap has done the exact same thing.

Once they got the Wells noticed from the SEC, Unoswap went to Twitter and basically said, hey, you know, the SEC is supposed to be protecting investors, maintaining fair orderly markets. I think Uniswap does a better job of this. The SEC should not be coming after us. You know, we are founded by American entrepreneurs. We've been following all the laws, you know, blah, blah, blah, effectively stating that, hey, we're going to fight this. We think the SEC is in the wrong. We have no control over Uniswap the protocol. And, you know, basically come at me, bro, was effectively the energy that UNISWP was giving.

The Uniswap token, UniToken, did took a hit on the day that the Wells Nose was announced. I think it went down roughly 15%. But the industry really rallied around Uniswap under the belief that Uniswap is going to be a very, very strong defendant. Now that said, we don't know what the charges are. People are speculating that these charges may be, you know, being an unregistered broker or something, which, you know, many people are saying that this would probably not stick

because judges have been very unsypathetic to this claim. Coinbase, of course, in their case, had this claim thrown out for Coinbase wallet, saying that, you know, they had no custodial control. However, it's also possible to go after a unitoken, claiming that uny token is a security, in which case this might be the first battleground case to decide whether a governance token or something like this ends up being an unregistered security. So I'll stop there. That was a lot. What's your guys take on the Uniswap, Wells Notice?

Well, none of us have actually seen, at least as I understand it, the Wells Notice. All we've seen is Uniswap's response. You know, it came from Hayden. It came from there was a great blog post. I've read the blog post. I thought it was wonderfully written where they framed really, you know,

the arguments for why, A, uniswap is important. B, you know, it really shouldn't be a target of, you know, enforcement when there's extremely vague and nebulous applicability of, you know,

historical laws to them. And see why, you know, they think that whatever the charges may be, they're going to win. And I thought it was a, wonderfully written blog post. You know, since then there's been a lot of more sophisticated commentary coming on crypto

Twitter and starting to be in the press. You know, I feel like in one of the next episodes, you know, once things start to come out into the public, maybe we should have on, you know, a guest who's like more familiar with these issues. But I thought the response, and that's really the only thing that any of us on this show or on Twitter or anywhere have available, their response was great. And, you know, I give a lot of kudos to the whole team at Uniswai Foundation. and the UNISWOP Labs and everyone peripheral to it and like the community,

because, you know, I feel like they are ready and willing to champion and fight to the death on a case that they have an extremely good shot at winning, according to pundits online. And so, you know, if this is the thing that creates case law where there's absolutely not enough or no case law, you know, Uniswap isn't phenomenal. shape, you know. If they'd gone after, you know, some scammers, you know, I feel like the SEC would be better position, but they're not going after scammers. They're going after a company that has been trying to innovate the right way for a long time. And I think they make a terrible

target. Mahaden is such a genuine believer, right? He's done everything right. They've been probably one of the most kind of fastidious and upstanding teams in crypto period, much less in Defi. In Defi, I mean, I don't know, I think he's a national treasure. And the SEC, it really feels like a huge, huge miscalculation in choosing Uniswap as a defendant here, right? It's been much better going after like sushi swap or one of these other things that like just plays worse as a defendant, you know, like they were kind of faster and looser. I'm sure they didn't, they're not as well defended of a door. They don't have as much resources. They're not as beloved by the community, they didn't actually invent the fucking thing.

Like, so many people are like, wow, AMMs blew my mind. They changed my idea of what was possible in finance. Literally the example that people give of why Defi is so transformational is uniswap. And the idea that you would go after this guy and this team to say, hey, let's make an example out of how bad this industry is and how, you know, noncompliant they are with like the laws that they're supposed to mind read is just insane to me. It is. I mean, there's, to your point, like, you know, even if they're looking to build case law, because I feel like at this point, most of what the SEC is doing when it comes to crypto is about defining their political perimeter, right? They should be going after a garbage project that, like, forced Uniswap's code, behaved badly, you know, stole money from people, and will have zero sympathy from a judge instead of going after Unistow. It is weird. I mean, I agree.

that it seems like it would be more likely to be about Uni than Uni swap the protocol or, you know, un swap the website being a broker or something like that. But it is weird that Uni was not named as a security in the SEC's lawsuits against Coinbase or finance. They had a huge laundry list of tokens that they claim for securities. Uni was not on it. And yet somehow now they are getting a Wells notice that seems possibly related to the Uni token. Yeah, very, very strange. Well, but it's clearly not exhaustive, right? I mean, they only listed like 12 or 13 tokens total across all the lawsuits and there's, you know, you need is like number 30 or something on corn like that.

Sure. But why sit on this for, you know, so long if, you know, nothing's fundamentally changed? Here's my totally non-lawyer layman from the outside perspective. It's because there's a good chance the SEC will lose their case against me. And if it's a part of like the Coinbase case or whatever and they lose and it happens, you know, even if like the coin-based thing is going through appeal and it's years and it's going to the Supreme Court, I feel like it wasn't named in there because they know that it's a risky case for them. And you don't want it to influence like a Coinbase case.

No, this makes sense. But I think it's actually the other way around because, okay, when they go after Coinbase, right, they list these 13 proclaimed securities. Coinbase wins the case if they can prove that none of those 13 assets are securities, right? because those are the ones that the SEC actually claimed. If they put Uni on that list and Coinbase wins that case, then now it has bearing on the enforcement action against Uniswap. And the SEC wants to win as many cases as possible,

which means that it implies that the assets they listed on the Coinbase case they were not planning to pursue. So you put things on there that you're not actually planning to go after one by one. If you were planning to go after Solana and you put Solana on the Coinbase case, then if they win either case, it fucks over the other case, right? But if you go after independent enforcement actions from the ones that you list as securities, then one judge over here in this district could be like, oh, yeah, I think this is fine. Another judge says, well, this has no bearing on this other case.

So, like, I actually think that unity is a security and screw these guys. Whereas if the same question was litigated in two different venues, very likely the judge would defer to whatever the other judge did, given that the same question was being adjudicated. That actually makes a lot of sense as to why they didn't list uni because they want to pursue it independently. and they're not planning to go after any of the L1s because that's way too hard. Go after an L1 and it's like, well, but Ethereum is not a security.

And if Ethereum is not a security, on what basis is sold on a security, right? So it's very safe to go after the L1s. Because, oh, sorry, very safe to name the L1 because you don't want to go after the 101 because if you actually, they take you to court, they're going to bring out Ethereum as an example

and it's going to make the SSE look really bad and kind of picking, playing favorites. Whereas Uni is very unique, right? There is nothing really like Uni. And so Uni kind of has to go make a very different kind of shaped argument than the L1's good. That's my theory crafting of maybe why the SEC choose to pursue it this way. I will say, you know, one thing I thought was very funny was after this news came out, they just turned on front-end fees for all their pools.

That was like a very funny form of rebellion or it's like, fuck you. Like we're going to like, because they already charge fees on some of the front-end pools and then there's like now he's going to turn them on for everything. I think there's like a great dune dashboard of like their revenue from the front head fees like spiking on the Wells notice. Yeah, I mean if I looked at it like

the day came out, I haven't looked at like the dashboard since then but like are they still doing like half a million a day in income? I think it was something. I haven't actually looked either since the look at the day. Tom, you happen to have it handy to any chance? I can pull it up. I don't think it was half a mill a day.

I don't think of volume or revenue. And fees. And fees. Yeah. No, no, no. It was nowhere near half a million a day. No, no. Once, yeah.

No, it was like 12 mil annualized. Yeah, yeah, yeah. No, when they raised a fee. Oh, they raised the fees. It breached over half a million. Yeah. It, it, it, okay, so 411, 281K, 412, 335, 335, 335. 332.

I think it didn't quite go to half a mill, but it's like... Yeah, yeah, yeah. You're right. It spikes, though. It's spike, though. What is it now? It went from like 20, 20 to 30 K to like hundreds. Now it's like 100K.

100K a day. Okay. So annualized... 35, 36. Mill. Yeah. Yeah. Okay.

That's pretty good. You know? You have to have a legal case. illegal kiss fight. I just thought that was a funny form of rebellion. You're like, you're going after us already. Whatever we're trying to one of the views. Kind of true. Kind of true. Yeah, interesting. I mean, they also know the content of the Wells noticed, so it may have had nothing to do with the front end. So that may have been the basis on which they decided to do that. I don't know. So, I mean, this obviously will be a very consequential case for Defi generally. I mean,

again, we don't know the contours, so we're kind of guessing, but regardless of what this particular case is, it's definitely going to be monumental within the space. At the same time, the weird thing about it is that, you know, Gensers are already fighting a lot of fronts. I sort of assumed that they were going to stop here because they have the Binance case, they have the Coinbase case, they have the Ripple case. They have a lot of resources that they're expending and, you know, they fired a couple lawyers. That's right.

There was the whole, yeah, there was the whole debt box thing where they got censured by a judge for gross misconduct in a different enforcement case, they were bringing in some random DeFi project. So the SEC kind of feels like they're overstretched. But this feels like a Hail Mary. This is like, hey, election year, we might be out.

Let's just like throw the Hail Mary. That's what this. At least that's my impression of this. It's like, got to keep everyone busy until the election, the election. Why, though? Like, that doesn't make sense. Maybe it's like the only way to justify your budget or something.

that that sounds strange yeah i don't know if trump ends up winning gensler's out there's a decent chance that even if biden isn't winning that he replaces gensler given how unpopular he's been even within the democratic party um it does feel like it's a very strange move to be going after this i mean it's one thing if you go after some scam project and they're going to settle and it's going to be a quick thing but he had to know that uniswap is going

to fight this given how much resources they have Yeah, it's going to be a ripple-like case where, you know, both sides come out slugging. And it's going to be years. You know, this thing is not going to happen soon. As usual, the only winners here are law firms. So you'll be hilarious if Gensler ends up going to the law firm that makes the most fees off these cases. Because they're like, thank you so much for the donation. Wait, Gensler?

I think the ESA uses their own lawyers. No, no, no. So let's say there's like three firms used for these cases. And let's like Gensler gets kicked out office and needs a new job. Who do you think Wombs Notherham the most? The one who made them the most billable hours. And so maybe this is all a secret, indirect play for that. Right.

That's funny. Actually, after the debt box thing, which was when the SEC lawyers got censured for gross misconduct, there were a bunch of people on crypto Twitter who were calling, you know, there are a few folks who are ex-SEC who have worked, who've come into the crypto industry and have. Some people have fairly senior roles. Obviously, you'd want to work with somebody who knows the insides of how the SEC works. And a few people from crypto Twitter were calling for, guys, let's freeze the SEC.

No more hiring anybody who's worked at the SEC. So people learn this is not a way to get into the crypto industry. If you work for this institution, screw you, we're not going to hire you. I don't know if people are going to stand strong on that. Because when you actually want to be dealing with the SEC, obviously it helps to have people who've been on the other side. And I imagine for Ripple or Coinbase, they are very, very grateful to have,

you know, legal support from people who understand the SEC from the inside. But the spirit of it, I think, is quite sensible. Because, of course, many people who are working in government, they are kind of hoping that on the other side, they can end up getting a cushy, you know, private-insche job. That's what I'm saying.

Like, I feel like maybe just a way to figure out how to run up bills so that, and then you can go. I made you so much money. I don't think it's like that turn. I like that conspiracy, though. I like that. So the question is, what venture fund is going to hire Gensler?

That's the big question. And they seem to hire all the regular. You think Andreessen's going to hire? Well, I just mean look at, look at how many. They're hired. 100,000 dollar solo GP fund. It's Gensler Ventures coming to you. I think actually all of all the big funds would probably band together and fund him just

to get him to stay out of, out of politics. That's what I'm saying. Just might be a genius boy on his part. And you're all not, you're all not thinking deep enough. Well, first, I'm sure the first deal he leads would probably be Prometheus. I think the thing that was Gensler is already pretty wealthy. So I, this wouldn't be true. But if it was someone who was less wealthy than Gensler, it would be like, I'd be funny.

Yeah. Well, I guess we'll see where all this plays out. We're up on time. So we're going to have to wrap. But another fun week. We'll be back soon. Hopefully, by the time that we learn more about the particulars of the case, we're going to have some more color on exactly what Yenisop is facing. But until then.

Day dry. Thanks, everybody.