Unchained - Unconfirmed: How MetaMask Grew Its Monthly Active Users By 5X in the Last 6 Months - Ep.233

Episode Date: April 30, 2021

Dan Finlay, co-founder of MetaMask, talks about the meteoric growth of monthly active users of the crypto wallet, which has quintupled in the past seven months. In this episode, he discusses: which crypto use case drove MetaMask’s active user base to grow 5x in under a year what types of scaling solutions are drawing users to MetaMask how MetaMask works what kind of customers are using MetaMask  how MetaMask has grown without targeted marketing  whether the type of crypto usage in developing nations differed from developed nations which feature MetaMask released in 2020 that is bringing in revenue what pivotal moments in crypto over the past six years have brought new users to MetaMask why scalability and security are the most important challenges facing MetaMask in the short term  how MetaMask is trying to make online wallets more secure  how much volume users have traded via MetaMask's new swap feature  what new features are coming up for MetaMask wallets    Thank you to our sponsors! Crypto.com: https://crypto.onelink.me/J9Lg/unchainedcardearnfeb2021  InterPop: https://hellointerpop.io/?utm_source=Unchained&utm_medium=episode-sponsorship&utm_campaign=interpop-launch&utm_content=interpop  NEAR: https://near.org    Episode Links MetaMask Dan Finlay: https://twitter.com/danfinlay MetaMask: https://metamask.io/ $5 Million Monthly Active Users: https://consensys.net/blog/metamask/metamask-surpasses-5-million-monthly-active-users/ MetaMask in Emerging Markets: https://twitter.com/MetaMask/status/1387114770923466755 Filecoin in MetaMask: https://medium.com/metamask/developer-preview-metamask-snap-for-filecoin-c28b01dfdcb    Miscellaneous Robbie Ferguson on Unchained: https://unchainedpodcast.com/this-layer-2-solution-processed-more-nft-trades-in-24-hours-than-ethereum-did-in-1-week/ Marguerite deCourcelle on Unchained: https://unchainedpodcast.com/all-the-ways-crypto-can-make-gaming-more-fun/ Charles Cascarilla + Vlad Tenev conversation: https://t.co/2AG0y5j36B?amp=1   Link to the Crypto News Recap: https://unchainedpodcast.com/a-bitcoin-standard/   Learn more about your ad choices. Visit megaphone.fm/adchoices

Hi, everyone. Welcome to Unconfirmed, the show that reveals how their marquee names in crypto are reacting to the least top headlines. You can see insights give on what they see on the horizon. I'm your host, Laura Shin, a journalist with over two decades of experience. I started covering crypto over five years ago, and as a senior editor at Forbes, was the first mainstream media reporter to cover cryptocurrency full-time. You may have heard about Interpop, a superteam laser-focused on the emerging landscape of fandom. They are tapping into the latest innovations in editing. NFTs to revolutionize gaming, collectibles, and comics on Tezos. Learn more at hellointerpop.io. The crypto.com app pays you up to 8.5% interest on your Bitcoin. Get $25 when you download the crypto.com app with code Laura. The link is in the description. NIR is an open source platform that accelerates the development of decentralized applications,

overcoming high fees and slow speeds with its fast, scalable, low cost, and climate-neutral blockchain protocol. Learn more at N-E-A-R-D-O-R-G. Today's guest is Dan Finlay, co-founder at Metamask. Welcome, Dan. Hey, thanks for having me on Laura. Metamask just passed a big milestone. Five million monthly active users. Congratulations. Yeah, thanks. It's been a long road, and we're really, really proud and excited to have hit this milestone. Yeah, it is quite a milestone for an online wallet. It's something that requires a learning curve for people.

So the fact that there are that many people who've done that, that is pretty amazing. One other thing that I found really fascinating about this milestone is that it wasn't that long ago, just in October, that MetaMask crossed one million monthly active users. So how do you think you quintupled your active user base within the last seven months? Well, I definitely think that there's been a combination of a few factors all coming together. Of course, everybody knows that NFTs have been a really big,

cultural event. And so NFT participation, I think, brought a lot of people in. I think it was a use case that people, it was simple enough that it was engaging and it was fun. And you didn't have to like read a white paper to, you know, appreciate some art. And then at the same time, we're seeing like the rise and emergence of a lot of Ethereum compatible other blockchains, side chains and layer two networks coming about. And that's really increasing the scalability of the entire platform. So while during, you know, last summer, DFI was having a really, really hot moment, the DFI, the DFI trading boom was clearly driven by a much smaller number of users that were getting really into, you know, liquidity providing and derivatives trading and investing

and lending in ways that it was very capital intensive. So they could justify really high transaction fees. But that was also kind of ensuring that a long tail of users, were not going to come in during that time. But having a use case that's as accessible as NFTs at the same time as we had scalability solutions starting to come online, I think was a really perfect storm for a lot of people to get an opportunity to get into it, have it affordable enough, even have a way that anybody could start making money. You know, NFTs as a way for artists to make money immediately, you know, now it's not

just people programming solidity who are doing token sales. You've got, you know, just artists with the following. Yeah, and what are some examples of the scaling solutions or products and services that you feel like have lowered gas fees enough to draw on many more people? Well, obviously there's a lot of, there are some kind of, let's say, more centralized side chains. But there's also varying degrees of ones. So things like Maddo and things like, you know, X-I are still strong. and we're really looking forward to optimism and, you know, ZKSync. And eventually we are very eager to support more, yeah, Stark and Snark-based scaling solutions like Starkware 2.

But yeah, those ones, things like Maddo and X-Dai have definitely been providing a lot of platforms so far. Yeah, and Maddo, I guess now goes by Polygon. Right. So before we dive even further into all this, let's just make sure that for any listeners who aren't familiar, that they understand what MetaMask is. Can you just describe what MetaMask is and what it does? Sure. Metamask started as a browser extension. Now it's also a mobile wallet that let you connect to applications that might have some amount of their logic that lives on a blockchain. And that part of the logic is usually the value-sensitive part. So it could be like a token or it could be an NFT or it could be your voting rights in an organization.

And so Metamask is the thing that lets a user hold their own keys, which means they're really kind of personally in control of their accounts. And now they're able to engage with these decentralized applications that just weren't even a category of five years ago. Yeah, it's quite similar to my Ether wallet or my crypto for people who, are familiar. But yeah, the fact of it, starting as a web extension, I think, is sort of how I always think of it. And so what kind of users does Metamask typically attract? We actually have a very, very diverse kind of user base, both across use cases and across like demographics. We actually just completed a partnership with this organization called Emerging Impact, where they did a bunch of users.

or research where they interviewed something like 300 people around the world. They were doing a lot in Indonesia and Nigeria and in South America. And because we've been seeing that, for example, what is it, India and Indonesia, both broke into the top five countries, but we haven't really been doing any outreach there. So we wanted to better understand, like, what's driving this in Indonesia? And actually, we have a seminar coming up on May 5th, and you can find that on our Twitter, where we're going to be sharing a lot of that research and talking about the use cases that people in emerging markets are finding for MetaMas.

A lot of it was just having access to funds that they had control over. There's different situations where people don't have access to banking where that's valuable. But even aside from the emerging markets thing, obviously, defy was a big thing in the summer and that continues to be a big thing. NFTs are a thing. They continue to be a big thing. There are people trying out lots of new organizations. and DAOs and, you know, I like seeing all these experiments. You know, I got into this

largely because I, you know, I think our society has a lot of trust problems. And I don't have a magic wand for a solution, but I thought we needed a platform where we could iterate on creative solutions. And I think that's part of why it's powerful. And I think that's part of why it's hard to pin down the use case. Because I think we have a lot of things we're trying to work through. And that requires a lot of iteration and experimentation. So, So I don't think we can really pin down a single use case as dominant. Oh, and not to mention gaming. Like there's a whole category of gaming where the collectibles are portable between games and

auction formats and stuff. So yeah, it's spread around a lot. And it is often surprising us. It's not all stuff that we anticipated on. And we've really worked hard to make sure that our wallet is kind of general purpose enough that it can serve this kind of constantly evolving set of use cases rather than just try to pin down a particular customer segment. Yeah, and for listeners who are interested, I did interview Robbie Ferguson of Immutable X recently, or Immutable, and they launched a layer two solution called Immutable X. And I also interviewed Margaret Day Cursell of Neon District slash Blockade Games, and both of them are in that blockchain gaming space. So, you know, just out of curiosity, when you talked about how you haven't done marketing for meta.

mask in the developing world and yet enough people are using it there that now some countries like India and Indonesia are in the top five of users. I mean, granted, of course, India is the second most populated country of the world and Indonesia is the fourth most populated. But I was curious, did you find out how it was that those users had found out about Madamek? Yeah. If I had to put a blanket trend on it, it's people introducing each other. It's not about, yeah, I don't know, a central exchange or, you know, somebody going through and hawking it to everybody. It's, it's, there's usually somebody who's an early adopter in a community who's doing the research, and they may have gotten into it early, and they may have had some success.

And right around now, their friends are asking them how to get involved, too. And so I think we're seeing a lot of kind of grassroots education. And I think that that's great. And I think we're going to continue trying to target the grassroots kind of virality approach. I don't think we will ever be able to serve people as well as they'll be able to serve each other. So as much as we can just facilitate that kind of activity, I think, is the best thing a crypto wallet like us can aspire to. And did you see if there was a difference in the type of usage in the developing world versus in the more developed? Or is it what you were saying about just accessing their funds that they control?

Yeah, you know, the use cases weren't as different as a lot of people thought they would be. So one of the things that I think was interesting is a lot of people have a narrative like, oh, in developing nations, they just want stable currencies. Like, if they just got access to die, they'd be happy or something like that. But what we saw is people are happy to invest in crypto. Like they're here for the gains too, you know. So they're not trying to, they're not trying to just ape into things. They're trying to do their research and understand things. But they're trying to make informed decisions and educate each other and read up. And so I really do think there's like just kind of this. booming enthusiasm to learn more, make better informed decisions. There was a lot of peer-to-peer educating about avoiding scams and fissures. And I think that was a really good, healthy sign. You know, we know fissures are a serious problem. And fissures know that crypto users, you know, you've got money that's yours and it's digital. Like, it's a ripe place to deceive people.

But fortunately, you know, I think that there's also like a bit of a grassroots immune system kicking into gear too. And it was really great to see that also happening. Yeah, clearly some of the echoes of 2017 are reverberating out into 2021. All right. So in a moment, we're going to discuss some of the new features and services of Metamask. But first quick word from the sponsors to make this show possible. Meet Interpop, a super team redefining the feature of NFTs and fandom. From comics and trading card games to digital collectibles and everything in between, they are building the architecture of an entirely new landscape of fandom using technology built on the TASOS blockchain to drive their vision.

Visit hellointerpop.io to learn more. With over 10 million users, crypto.com is the easiest place to buy and sell over 90 cryptocurrencies. Grow your crypto with crypto.com earn, which pays up to 8.5% interest on your Bitcoin and 14% interest on your stablecoins. When it's time to spend your crypto, nothing beats the crypto.com visa card, which pays you up to 8% back instantly and gives you 100% rebates for your Netflix, Spotify, and Amazon Prime subscriptions. Download the crypto.com app now and get $25 by using the code Laura. The link is in the description. Back to my conversation with Dan Finlay. One of the newer features that MetaMask adopted was Swaps in October 2020. Tell us how that works and what the user

uptake has been and what people have been using Swaps for. Cool. So Swaps is a tool that we added to the wallet that helps users discover what's likely the best trade they can make at any given time, given an asset pair they're trying to exchange. So we scan liquidity sources from a wide variety of Dex's and Dex aggregators. And what we found is oftentimes we're able to find, depending on the pair and the depth that the person's trying to trade, we're often able to find a particular trade route that the user wouldn't think of on their own and then let them make that trade on their own. We are taking a small fee on that.

And it's meant that we've had our first revenue stream. And that's been really, really valuable because it's meant we've been able to staff up and actually start improving the wallet in ways that we have been a bit more constrained to previously. And Metamask has been around since May 2016. What have been the pivotal moments for gaining new users? Yeah, well, I think it all started with a couple tutorials about how to build an application for Ethereum and how to connect it to Metamask. There were obviously a lot of experiments, people trying to figure out the best use cases.

I think that games started really paving a lot of ground for user experience and watching transactions a little better. When people started doing lending for the first time, I think the lending protocols started breaking way to the idea that you can deposit one token and get another one. And so you kind of started to get the beginning of derivatives trading. I continuously love all the work on contract accounts. They're coming a long way. a lot of the proliferation of NFTs this year, which has been a lot of the success, is the fact that there's like five viable NFT platforms all in hot competition. And they're competing for artists' interest in distribution.

And I think that plays a major role in this particular run for sure. Oh, and Dex's, of course. You know, like, yeah, like automated market makers and stuff. Like having one-click trading has been huge. And we wouldn't have been able to create our swaps product if there hadn't been such a rich ecosystem of dexes for us to draw on. You know, it's the kind of product we couldn't have launched on our own. It's like the culmination of a lot of other people helping.

Yeah, it's pretty meta, actually, because, I mean, sorry, not to make a funny pun on your name, but because if you're not only aggregating the different dexes, but then even the dex aggregators, it's just, you know, I can't think of an equivalent. because it's not quite kayak, but whatever's above kayak. So anyway, I found that interesting. And I just wanted to ask also, because NFTs are drawing in quite a different crowd from the typical crypto crowd. And I wondered for that crowd, have you noticed any particular challenges with them and using Metamask? And if so, how are you either modifying the wallet in order to accommodate them or how are you trying to get the word out about educating them about how to use it?

Yeah. So some of the two biggest short-term problems that we're working hard on addressing right now are about scalability. So making it easier and easier to use Ethereum-compatible chains and layer twos. And then just security. Because while, you know, users have been able to wield private keys safely, you know, new users are the most vulnerable. And so we're really kind of redoubling and redoubling our efforts to improve our onboarding, education, improving in-app education, just really trying to protect users from fissures as much as possible. The fissures are very alive, and they're coming after all crypto users. I know it sometimes perceived as just a private key-based account issue, but if you ever have control of funds that are digital, people will try to trick you into sending them to you. So I think this is like a critical moment for the internet to start growing up about how people discover information. A lot of the problems stem from people searching Google for support. Just things as simple as that, the habituation towards the search engine.

So we're fighting a big battle, but I think it's the right fight. And I think in the long term, if we're going to have digital currency, we need people finding the trustworthy paths of getting information for what they're investing in and how they're handling it. So that's one of our big fights. This quarter, Fissures were coming for you. I hope you've enjoyed the ride. But when you say that, is it just about the information? Are you also changing the wallet in some way? Yeah.

No, no. I mean, we've been doing a lot of different research on ways of changing the wallet for a ride-way. So we're both, of course, doing some improved education. We are also continuing our extensibility project, which is going to let us integrate more and more account types. So we are interested in facilitating, let's say, multi-sig, multi-factor type accounts, but partly because there are, you know, different kinds of cryptography for different

protocols and different scaling solutions, there isn't exactly a one-size-fits-all a solution to those problems. So we're, you know, working hard to be a kind of wallet that can let users opt into the types of risks that they want to take. So there's a longer story we're doing this year, which is we are working on this extensibility system that we hope will let users lock down their accounts even more. But it still always starts with education and making sure users aren't trusting the wrong people. And for listeners, just a multi-sig wallet is, of course, one where it requires multiple signatures,

for instance, two out of three or three out of five. But is multi-factor, you know, just like with any web service where, you know, it's like a password and a code sent your phone? or a password and a UB key or something. Is that what you mean by that multifactor? Yeah, yeah. And the cool thing about in crypto is, you know, because they're just cryptographic keys,

you can kind of choose your own multifactor solution. You can pick what devices you want. And so, you know, we start with the user having full control, but they can distribute it in whatever way they want, unlike traditional two-factor where you are still just validating your identity to a particular server. There's still kind of a single source of truth there. And so earlier you mentioned that swaps have brought in revenue for the first time for you.

Can you give us any figures on how much you are pulling in? So we did publish a dashboard. I don't have it right now, but we surpassed a total of $2 billion swapped. So that's not revenue, but that's how much has been traded. The math isn't totally trivial to get our revenue because we have made some partnerships with Dex's so that we're not adding a fee to them. But yeah, it's been, it's been substantial. You know, for the size of team that we are that we are, it's, it's been very encouraging and, you know, very motivating. And so we're just, we're just going to be doing more.

And so other than some of the other improvements that you discussed, what are, what else are you going to do next with Metamask? We're doing, we're going to be doing quite a bit. The tip of the iceberg. So, I mean, we're working obviously on. on layer two. And I talked a little bit about that. The first phase of that is just making it easy to add and switch between different ledgers. We are also working on a lot of kind of deep user experience challenges. So we have staffed up and added a lot of designers to our team. We've been doing a lot of design research. And we're working on making sure that not only are we adding all these additional ledgers, but we're making sure that the wallet continues to be coherent and

even, dare say, simple in the context of what's under the hood an increasingly complicated situation. I think we're going to be an increasingly multi-chain wallet this year. And we've got a couple kinds of new variants of the product coming out this year that are going to let us iterate and experiment even faster, which I think is going to be really great because this ecosystem has no end to its appetite for experimentation. So I think we're going to be, we're going to be creating a pipeline where we can validate proposals, experiment with them, and implement them in the wallet a lot faster. So I think we're going to be kicking in a lot of faster innovation. A lot of that in service of our extensibility system.

Our extensibility system is going to let eventually anyone add new blockchains to the wallet, even ones we didn't design to, and new account types. And like multi-sigs, contract accounts. and voting rights in an organization, et cetera, hardware wallets. The list is really, really long. So, yeah, that's kind of what's going on for us. It's actually quite a long roadmap. I hope I didn't summarize it too pithfully.

We're really excited about it. We think that we're going to help turn what's today a kind of rudimentary, cryptographic way of interacting with applications. And we're going to establish kind of the new way of engaging with, you know, untrusted second parties. Like our goal is, you know, look, we're going to, we're going to decentralize digital authority and we want to be the wallet that people use to make deals. And to last quick question, so you've been using this word extensibility and from the way

you're using it, I'm guessing it's kind of like allowing the user to customize, you know, to turn it into a multi-sig if they want or to just add more security. Is that what you mean by that? Yeah, yeah, we've, the same way, you know, the Ethereum blockchain is interesting because people can deploy new contracts to it. We want our wallet to be the kind of thing where you can deploy new features into it. It's kind of like your own personal blockchain you could think of it as, except it has hooks where it could potentially enhance your user experience.

It could maybe add extra security indications when you're interacting with things. It could even include your friends' recommendations of things you're interacting with. I think that it's really going to be the beginning of a whole new chapter. You know, extensibility at the blockchain layer is really valuable, but it just hasn't really been accessible to the end user yet. You know, there's still like every time a new contract comes out, you're waiting for this long pipeline of people to make an interface for it and then make a wallet integration for it and so on and so forth.

We're going to just shorten that bridge. And so the pipeline from innovation to your hands as like, you know, any user, is going to get really short. And I think we're going to enter a time of very exciting and interesting creativity. Sounds super interesting. And then when you said you were going to add other blockchains, which do you think are at the top of the list? Through extensibility, we should be able to support any blockchain.

We are working with a variety of different groups. We're working with groups to make sure that we're covering a general use case. Yeah, I don't know if we have like any arrangements or commitments. yet we have been working with Filecoin. That's actually, that's totally public. We've got a Filecoin beta. So there's a beta version of MetaMask that developers can download today that supports FileCoin.

So that's a good example of one. You know, if you had FileCoin in your crypto wallet that can connect to applications, then that means you could upload things and pay for things to get persistently hosted in a decentralized network from your wallet, or you could commit to hosting something for someone else. and then writing contracts that relate to file presence and et cetera, it kind of opens up another dimension to smart contracts. And the more other purpose-driven blockchains we add, I think they'll really have compounding effects

in the way that they interact with each other. Well, this is just super fascinating, and I'm so glad that we checked in with you, and I look forward to hearing what you guys are up to next. So thank you so much for coming on Unconfirmed. Cool. Thanks so much for having me. Don't forget. Next up is the weekly news recap. Stick around for this week in crypto after this short break. Did you know nearly $338 million worth of NFTs were sent last year? And in 2021, that number is growing faster than ever.

If you're looking to make your first NFT, check out NIR's fast, fast, scalable, low-cost, open-source platform. NIR is investing 80 million NIR tokens in community-led projects over the course of 5%. years to power sustainable innovation through its ecosystem, with fundraising opportunities and support for DAWS and DAPs to engage fans and reach new audiences. Come learn why NEAR is the infrastructure for innovation at N-EA.org. Thanks for tuning in to this week's news recap. First headline. Bitcoin institutional adoption strengthens as Bitcoin ETF is delayed.

Sources tell CoinDesk that JPMarkin Chase will be offering an actively managed Bitcoin fund to certain clients as soon as this summer, marking an about face for the company led by CEO Jamie Diamond, who infamously called Bitcoin a fraud back in 2017. NYDIG, a Bitcoin-Cetric investment firm, will serve as the fund's custody provider. Asian video game publisher Nexon, a publicly traded company, announced the purchase of roughly $100 million worth of Bitcoin. The allocation represents about 2% of its total cash and cash equivalents as of December 2020. The U.S. Securities and Exchange Commission delayed its ruling on Van X Bitcoin ETF application, extending the original 45-day decision window to 90 days. The new deadline is set

for June 17th, though it could be further delayed to encompass 240 days. The extension should not come as a surprise. The securities regulator has delayed other Bitcoin ETF proposals, each ending in rejection. Next headline. Tesla sold 10% of its Bitcoin position. A Q1 earnings report showed that Tesla generated $100 million in income from the sale of Bitcoin, helping boost profits to a quarterly record high to start 2021. The electric vehicle company's original purchase of $1.5 billion in Bitcoin is currently valued a $2.48 billion, even with the sale. Barstool CEO Dave Portnoy, acting as a stand-in for crypto day traders and people who don't know how to huddle, tweet it at Musk. So am I understanding this correctly?

Elon Musk buys Bitcoin. Then he pumps it. It goes up. Then he dumps it and makes a fortune. Listen, I own one Bitcoin, but Bitcoin is exactly who we thought it was. Just don't be last one hoddling the bag. Musk responded, no, you do not. I have not sold any of my Bitcoin. Tesla sold 10% of its holdings essentially to prove liquidity of Bitcoin as an alternative to holding cash on balance sheet.

Bloomberg columnist Matt Levine noted that Tesla's chief financial officer, Zachary Kirkhorn, discussed Bitcoin liquidity a lot on the call. As Levine put it, quote, Tesla decided to put a chunk of its corporate cash to Bitcoin and I guess needed to make sure that its money wasn't trapped. A reasonable concern. He then brought up the accounting rules that can be a negative for companies holding Bitcoin on their balance sheets. He says, quote, when your Bitcoins go up, you don't book a gain,

but when they go down, you do book a loss. The only way to book a gain on Bitcoin's is to sell them. The upshot he says is that, quote, if you are, or Elon Musk and you can make Bitcoin go up by tweeting about it, you almost have an obligation to do it, perhaps a fiduciary obligation to your shareholders, but at least a sort of aesthetic obligation to comedy. If Bitcoin wants Musk to manipulate it, Musk really ought to manipulate it. Speaking of Bitcoin, I recommend two long reads this week. April 26th was the 10th anniversary of Satoshi's last known communication with the Bitcoin community. In Bitcoin magazine, Cracken Editor at Large, Pete Rizzo, analyzes the last days of Satoshi.

When there was, Rizzo writes, quote, A growing belief, stronger perhaps than any confidence in Satoshi himself, that no Bitcoin user could be greater or less than any other, that they were all nodes on the network, authors of code, individuals responsible for the software success. Alex Glassstein, chief strategy officer at the Human Rights Foundation, wrote about the hidden cost of the waning petro dollar and its impact on U.S. fiscal policy and political power. The petro dollar, by the way, is a U.S. dollar paid to a petroleum exporter in exchange for oil.

Gladstein believes a transition to a Bitcoin standard from the petro dollar, quote, plays to the strengths of open societies, does not depend on dictators or fossil fuels, and is ultimately run by citizens, not the entrenched elite. Next headline. Ether reaches a new all-time high. After hitting $2,600 for the first time last week, Ether soared to a new all-time high over $2,700 on Wednesday afternoon. Coinciding with the all-time high, the European Investment Bank, the EU's lending arm, announced it used Ethereum to issue $121 million in digital notes.

Here's how it works. The EIB issues a series of bond tokens on Ethereum. Investors purchase and pay for the bond tokens in Fiat. The money used to purchase the bonds is minted as a CBDC on Ethereum, and then the principal is paid in Fiat at maturity to CBDC holders. Next headline, Ethereum 2.0 updates. Last Friday, Ethereum creator Vitalik Bouturin outlined the development roadmap for ETH 2.0. His plan would see Ethereum evolve into a full proof-of-stake blockchain,

implement sharding strategies to improve throughput, and tweak security measures for the better. On Saturday, Ethereum 2.0 had its first major incident when a bug was discovered that prevented a large set of validators from producing blocks. Validators are users staking 32-Eth or more on Ethereum 2.0 to power the proof of stake blockchain.

The bug was patched after 403 blocks and caused little disruption outside of certain validators losing out on block rewards. Next headline. Binance Smart Chain announcement marred by $50 million hack and potential violation. Cryptocurrency Exchange Binance plans to launch an NFT marketplace that will run on its Ethereum competitor, the Binance Smart Chain.

That announcement was overshadowed by a Binance smart chain, DAP, uranium finance, losing $50 million in a potential rug pull. Several tokens, including Bitcoin and Ether, were drained from the protocol early Wednesday due to a bug that allowed the exploiter to use a swap function to steal the funds. Furthermore, Binance's recent release of stock tokens that track Tesla, Coinbase, and Microstrategy stock caught the ire of Germany's Financial Supervisory Authority, Bafin, as being suspicious. The exchange could incur up to $6 million in fines, 3% of Binance's annual revenue. Regulators in the UK and law firms in Hong Kong have already questioned the legitimacy of the

stock tokens. In related news, Brian Brooks, the soon-to-be CEO at Binance U.S. has grant plans to build the exchange as a Coinbase competitor and out of the shadow of its parent company, Binance. He is determined to expand the exchange's reach across the U.S. Brooks told the block that his, quote, priority is doing what is necessary to get what needs to be done on licenses. For states where finance, U.S. is currently unavailable, such as Texas and New York, amongst others. Brooks said he believes that if the firm, quote, just added those days and nothing else, the business would probably double. Next headline. Payment platforms continue to embrace crypto.

In an earnings call earlier this week, Visa CEO Alfred Kelly described the firm as, quote, extremely well positioned to achieve its crypto goals related to a multi-pronged strategy, including Bitcoin services, stable coins, and CBDCs. MasterCard was revealed as the partner. for Gemini's upcoming credit card, which will offer rewards and crypto for cardholders. Gemini is the crypto exchange founded by the Winklevoss twins. In a recent profile by Time magazine, PayPal CEO Dan Shulman said, quote, demand on the crypto side has been multiple fold to what we initially expected. There's a lot of excitement.

Paxos, the blockchain infrastructure company powering PayPal and Venmo's crypto offerings, raised $300 million. CEO Charles Cascarilla is optimistic about Paxos' growth, telling the block, quote, we thought we could add one customer the size of PayPal this year. I think we can add three to five. By the way, for those of you who are interested, I am conducting a chat between a CEO, Charles Cascarilla, and Robin Hood CEO Vlad Tennev on Tuesday, and I will put the link to that talk in the show notes so you can register for that.

Next headline. NFTs field criticism from art collectors. The New York Times reports old school art collectors are reticent to join the blockchain art craze over concerns about the quality, ownership, and authenticity of NFTs. Critics of NFTs wonder about the exclusivity of an NFT, which anyone can see online, along with, as one put it, the quote, enormous unresolved copyright issues. By the way, I do have an episode on that that came out recently. You can also check the show notes for that. However, the NYT cites artists excited to produce digital content on the blockchain in art galleries adding NFTs to exhibits. Positive aside, Tina Rivers Ryan of the Albright Knox

art galleries said it best. Quote, the $69 million question is whether this is going to become another hype cycle like virtual reality was in 2016 or like net art was before the dot-com bubble burst in 2001. Next headline. The alleged administrator of Bitcoin Fog is arrested. Bitcoin Fog was one of the first Bitcoin washing machines, a service designed to help anonymize cryptocurrency transactions by mixing user funds. On Tuesday, U.S. officials arrested Roman Sterlingov, the alleged administrator of Bitcoin fog on money laundering related charges.

The IRS used an analysis of Bitcoin transactions along with other investigative information to identify Sterlingov. More than 1.2 million BTC was sent through Bitcoin fog worth $336 million at the time. According to Wired, at least $78 million passed through the mixer to illegal marketplaces such as Silk Road. All right, time for fun bits. This article was a terrible idea. The Financial Times published an article titled, A Bitcoin ETF is a terrible idea, saying that for ETFs,

quote, the assets need to be liquid too. That could be a problem with Bitcoin, the supply of which is capped at 21 million coins. In a market plunge, investors could find themselves locked into the shares. All I have to say to this is that maybe before publishing something in an international newspaper, it's a good idea to do some research on it first. Second fun bits, which is more fun. vacationing using Bitcoin? Paradise is on its way. The one Bekoy development where 39 luxury villas are set to be built in the Caribbean and tends to become the world's first fully Bitcoin-enabled community. People will be able to pay for property in Bitcoin while also using BTC for everyday essentials like groceries, paying at restaurants, and at movie theaters.

The property owner Storm Consolves says the adoption of VTC is more necessity than gimmick, citing banking challenges arising from small island nations sending and receiving money internationally because of derisking by large international banks. Okay, well, thanks for tuning in. To learn more about Dan and Metamask, be sure to check out the links in the show notes. Follow Unchained on Twitter at Unchained underscore Pod, where you can find all sorts of content ranging from my weekly newsletter to updates on my upcoming book and a whole lot more. Unconfirmed is produced by me, Laura Schiff,

with help from Anthony Yoon, Mark Murdoch, and Daniel Nuss. Thanks for listening.