Unchained - Unconfirmed: MIT's Neha Narula on Why Building DeFi on Bitcoin Is a Great Idea - Ep.257

Episode Date: July 23, 2021

Neha Narula, director of the Digital Currency Initiative at the MIT Media Lab, discusses Elon Musk’s appearance at ‘The B Word’ conference, along with a few current events in the Bitcoin world. Show highlights: her main takeaway from ‘The B Word’ conference why governance plays an essential role in Bitcoin’s block size arguments what Neha thinks of proof-of-work mining and Bitcon’s environmental concerns why Neha is skeptical of Dogecoin becoming a serious cryptocurrency why Jack Dorsey’s new Bitcoin platform business is a good idea what Bitcoin’s dip in hashrate due to China’s crackdown could affect network security going forward what questions Neha has about Bitcoin’s adoption in El Salvador why Neha thinks cryptocurrencies and CBDCs will coexist what DCI has planned for the rest of 2021   Thank you to our sponsors! Crypto.com: https://crypto.onelink.me/J9Lg/unchainedcardearnfeb2021  Oasis: https://oasisprotocol.org/  NEAR: https://near.org    Episode Links: Neha Narula: https://twitter.com/neha MIT Media Lab: ​​https://twitter.com/medialab  Digital Currency Initiative https://dci.mit.edu/ CBDC research https://dci.mit.edu/cbdc-central-bank-digital-currency  Bitcoin network development https://dci.mit.edu/cbdc-central-bank-digital-currency  The B Word conference Elon Musk, Jack Dorsey, Cathie Wood conversation: https://www.youtube.com/watch?v=Zwx_7XAJ3p0  Neha’s appearance: https://www.thebword.org/c/track-3-Supporting-the-Developer-Ecosystem Miscellaneous Square’s Bitcoin DeFi platform https://www.cnbc.com/2021/07/16/square-is-building-a-decentralized-finance-business-for-bitcoin.html Bitcoin and El Salvador https://www.cnbc.com/2021/06/05/el-salvador-becomes-the-first-country-to-adopt-bitcoin-as-legal-tender-.html Bitcoin hashrate drop https://www.cnbc.com/2021/06/15/chinas-bitcoin-miner-exodus-.html  Learn more about your ad choices. Visit megaphone.fm/adchoices

Hi, everyone. Welcome to Unconfirmed, the show that reveals how the marking names in crypto are reacting to the week's top headlines and gets the insight skip 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 six years ago and as a senior editor at Forbes was the first mainstream media reporter to cover cryptocurrency full-time. This is the July 23rd episode of Unconfirmed. My book The Cryptopians, Idealism, Greed, Lies, and the Making of the First Big Cryptocurrency craze is available for pre-order on Amazon, Barnes & Noble, Bookshop.org, or any of your favorite bookstores. Go to Bitley-S-C-T-O-L-L-Y-S-C-R-Y P-T-O-P-I-A-Ns. 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-O-R-G. The OASISS network is a privacy-enabled blockchain platform for open finance and a new data economy. Start building your next idea on the OASIS Network. Today's guest is Neha Nerula, Director of the Digital Currency Initiative at the MIT Media Lab. Welcome, Neha. Hey, Laura. Good to see you. This week on Wednesday, the Crypto Council for Innovation, in conjunction with Arc Invest, Square, and Paradigm, held the B-word virtual conference at which you were a moderator. What was your main takeaway from the event? I think my main takeaway was that the Bitcoin ecosystem is alive and thriving. There are a lot of people and companies and technologists who are very excited about it and are focused on it. So I think overall it was a really successful event and I really

enjoyed it. So the main conference panel was one that featured Kathy Wood of Arc Invest, Elon Musk of Tesla and Jack Dorsey of Square and also Twitter. And when asked about the Bitcoin block size, which is a debate that's sort of like over and yet not over, Elon Musk said, the reality is the average person is not going to run a Bitcoin node. And then referring to the year in which the Bitcoin software code was written, he said, in 2008, there was still a non-trivial number of people on modems. And he said he felt the block size could be increased without affecting the decentralization of the network because technology has improved so much since 2008. I think this is antithetical to what some of the Bitcoin community believes. What's your take on these comments?

Yeah, that's a great question, Laura. I remember hearing that. And I think one of the things he said as well was, I like to run things in reverse. So let's think about decreasing the block size. What would that be like? And actually, there are some people who want to do that. So it was really funny that he sort of posed it as a as a ludicrous idea. You know, I think fundamentally, you know, you have to think from first principles. The fact of the matter is that, you know, copying all of this data to everyone's computer and verifying it on everyone's computer, you just can't do that. with too much data. So I think the really important thing to note here is that you have to look at trend lines and sort of, you know, how things work in the limit. And the fact of the matter is that we can't just keep increasing the block size as we go. It's entirely possible and, you know, that it that it could be increased today. I think, I don't think that, you know, there are very many people who disagree with that technically. I think it's more about the, um, the governance model and sort of who gets to decide that and under what circumstances it's decided and what is the upgrade path for something like that to happen? You know, if I think back to 2015, 2016, 2017 when we were

having this conversation the first time around, that was really the debate, I think, that a lot of people didn't understand that it wasn't about the exact number. It was about the method by which that upgrade happens. So, you know, I think it could be raised a little bit, but the fact of the matter is putting everything on the blockchain is a bad idea. And we're going to to have to figure out sooner or later how to do things off-chain or it's just not going to scale. I mean, we saw Ethereum go through this, right? So, you know, I remember back when the plan was sharding, right? And now it's all about roll-ups.

And I think, you know, what you realize is you just can't put and verify everything that's on the chain. So when you come at it from that perspective, you know, whether the limit, a good block size is one megabytes or four or eight, it's just a number. and you have to realize that our hope is that the demand is going to outstrip whatever number we pick. So we better start preparing for that right now. Yeah, I found how he posed what would, you know, what would it be like to make the block size smaller? I found that interesting because, yes, since some people do want it, and he clearly thought that was a ridiculous idea.

I thought that was kind of a funny moment. And so Elon in the beginning kind of like danced a little bit around environmental issues. I felt when it came to Bitcoin. And basically, if I kind of was reading his comments, it seems like, you know, he supports Bitcoin. And then as an afterthought in the beginning, he sort of was like, oh, I have to mention these environmental caveats due to Tesla's position. But then when he was asked directly about it, he basically said he would want to do more

due diligence on Bitcoin to confirm that the amount of renewable energy usage is at or above 50% before Tesla would adopt Bitcoin transactions again. As we all know, Tesla has bought what at the time of purchase was $1.5 billion worth of Bitcoin, and it still is holding the Bitcoin on its balance sheet. So what do you make of his comments? Do you think that this is a serious concern of his, or is it more like a PR play or something else? Yeah, that's a really good question. You know, I can't sort of presume to know what he's thinking.

But I do think we suffer from a serious lack of data, and that's starting to change. The past few months, people have actually started measuring really well, you know, how much green energy is used to produce Bitcoin, which is, which is really important. I think that we have to do more measurement in this area, and we have to really surface the data and understand what kind of energy is being used and what the climate impact of that is. And then people can make their own decisions. There are a lot of washing machines in the world, and I'm sure that they use a lot of energy in aggregate, but we don't tell people, well, because washing machines use so much energy,

you just can't use them. We weigh the balance of how much value we think that thing brings to society and then decide whether it's worth the energy costs. And the really interesting thing about Bitcoin and other proof of work currencies is that that tradeoff is made really obvious. The amount of hash rate that will go into Bitcoin is exactly the reward that comes out of mining Bitcoin. And so what that means is that the higher the Bitcoin price, the more hash rate that's going to go into it. That doesn't necessarily mean more climate impact. I want to be very careful about that. But it is kind of a way of showing that the energy use is proportional to how much people value it.

Now, you might ask, do people really understand the climate impact? And would they be as interested in Bitcoin if they really understood it? And I think that's what's unfolding right now, which is, good thing because it's forcing everyone to think about, well, what is the climate impact and are we really okay with it or not? I think another really important piece of information that's missing from this debate and where people like me can contribute is around exactly what the security guarantees are that we're getting from proof of work. This is, you know, you've probably participated in proof of work versus proof of stake debates so many times. And I think that we still don't really

have the right language and models to characterize the security guarantees. of proof of work versus proof of state. They're clearly different, but we don't really have the language to completely explain exactly how they're different and quantify, you know, the security tradeoff if there is one. So that's another place where I think we can, we hope to find more data and to sort of have a more productive, informed debate. Yeah, and about the data for the renewable energy aspect, I feel like it's going to take a while because there's this major shift happening in the network and where,

the miners are located. And so we're kind of not going to really know where a lot of the hash rates coming from anyway for like six to nine months. And then after that, it's going to take a while to figure out what is a renewable energy mix now? And so, yeah, maybe like in two years we might know. Yeah. I feel like this conversation is making the incentives go in the right direction. So that's positive. And hopefully in, you know, two years it shakes out and it turns out it's really high. Yes, hopefully. So Elon also talked about how he holds doge coin. And he was talking about how it was a reverend and it has great memes and how he loves dogs and how he loves how Dogecoin doesn't take itself too seriously.

And then he gave a twist on Occam's Razor saying that the most ironic outcome or the most entertaining outcome are the most likely ones. And he thought it would be great if the crypto that started as a joke and was meant to make fun of crypto became the biggest one. So these were kind of unusual remarks for someone at a Bitcoin conference. Do you think that Dogecoin could become a serious cryptocurrency? Laura, I'm really bad at predicting this stuff. Not really so up on investing or predicting prices and things like that.

You know, I think I don't know how many nodes there are in the Dogecoin network. I don't know how robust it is, but definitely security and thinking about the attack surface and vulnerabilities and bugs and things like that. And my understanding is that there weren't really a lot of people contributing to the Dogecoin. Codebase, applying patches, running nodes, monitoring the network, things like that. So I'm honestly, I'm kind of amazed that it's that it stood up this long. And I wonder if it's just because there isn't anybody sort of bothering trying to attack it. So that would be really interesting to see. But I think, you know, in the long term, the true value of this technology is that it operates in a really decentralized adversarial environment. And that means it needs to be really, really secure

and well-written. And, you know, if there's no developers maintaining it, then I would not be very, I wouldn't have a lot of confidence that it is very secure. But I don't know. I'm not exactly sure what's going on. I don't track Dogecoin very carefully, the technical development. You know, one of the panels that I was on at B Word was about security. And I just think that's so critically important. And we need to have more of a discussion about that as well. Yeah. I think we're going to have to see now that apparently Elon is working with them and with all. all the meme stock mania and Wall Street vets and everything pushing of Dogecoin. Like, I guess there's incentives there.

Well, but is it decentralized? You know, Elon can't just hire a bunch of developers and have them build it because if it does get really big, then, you know, there's a small group of developers who can, someone can go to them and say, hey, this thing's happening on your network. I want you to shut it down, right? That's the question, I guess. But that might take some time to shake out. Right, right.

But I also meant like if the price goes up, that might incentivize people to start working on it. Yeah, very true. Very, very true. Who knows? All right. In a moment, we're going to discuss Squares plans for Bitcoin, but first a quick word from the sponsors who make this show possible. Designed for the next generation of blockchain, the Oasis Network is the first privacy-enabled blockchain platform for open finance and responsible data economy. Combined with its high throughput and secure architecture, the Oasis Network is able to power private, scalable, defy, revolutionizing open finance and expanding it beyond traders and early adopters to a mass market. Its unique privacy features can not only redefine defy, but also create a new type of digital asset

called tokenized data that can enable users to take control of the data they generate and earn rewards for staking it with applications, creating the first ever responsible data economy. With over 10 million users, crypto.com is the easiest place to buy and sell over 90 cryptocurrencies. Grow your crypto with crypto.com earned, 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 Neha Nerula. So Jack, and this was before the Beatward conference, recently announced that Square would be building a Bitcoin hardware wallet and that the company would also be creating a new business to foster decentralized finance on Bitcoin by creating an open developer platform.

A number of Ethereum people made fun of the announcement saying that this already existed in Defi. What do you think is Jack just trying to build something that already exists? No, I don't think he's trying to build something that already exists because it doesn't exist on Bitcoin. And they're very different coins with very different properties and communities and supporters. So, you know, I think, you know, one of the, one of the parts of that hardware announcement was building something for mainstream users. And I think that is so important. And that this area really needs a lot more development and research and user research. And how can we, you know, everyone talks about how the great thing.

about this technology is, you know, it could help with financial inclusion that you don't need a bank account. You, it's open to anyone. But, you know, where's the data showing who's actually using it? And where's the data showing how to actually build tools that really make it open to everyone? Because everyone's not going to run a full node or understand how to store their private keys securely. And I think it's part of our job as technologists to help build tools that help them do that. because I'm really not excited about a solution where all the Bitcoin in the world is held on, you know, 10 exchanges and it's all custodial. That's, that's really not the revolution that I signed up for. And so that means that we have to solve this challenge of, you know, educating people, but also building tools that work for them. And so it was really exciting to see that emphasis in the open hardware announcement. And, you know, we're hoping to do more work in this area as well, invest in user research, especially for underprivileged populations to find out where we can make the biggest difference. With respect to defy on Bitcoin, I mean, I think Ethereum has shown that this is a really exciting area. And it's much, much easier for developers to build applications on Ethereum. It's

pretty challenging to build secure applications on top of Bitcoin. And huge kudos to all the people who have been able to do that. But I think the idea of building, you know, seeing what works from Ethereum and bringing it over to Bitcoin is a great idea. Oh, interesting. Okay. Yeah, we'll see because, you know, now we've got Thor chain making it possible to transact in between chains without using wrapped coins. So who knows? Although maybe that could be connective tissue. All right. So Bitcoin mining is undergoing a big shift, as we alluded to earlier. It's been leaving China in a big way. And as those miners go offline, the Bitcoin mining hash rate has also dropped quite a bit, you know, by more than half, actually, over the course of a few months, although recently there has been a little bit

of a rebound. So what do you think is the significance of this decrease in the Bitcoin hash rate? Yeah. So I mean, I think, you know, short term, it's not that big of an issue. The network can adjust. Blocks might come out slower for a little while, but that's the beauty of the difficulty adjustment algorithm. Sort of in the long term and more abstractly and theoretically, I think it's really interesting to think about, I love to think about how things can break. So I love to think about all the ways that things can go wrong. And, you know, half the hash rate going online is, you know, is pretty juicy in terms of thinking about ways things could go wrong. Now, whether that will actually happen or not is a completely different story. It seems very unlikely. But certainly it's,

it's interesting to think about what that might mean and how that hash rate could be used. if someone wanted to use it in an adversarial way. That said, it seems like it's pretty difficult to mount that kind of attack on Bitcoin at this point in time. So what we see with the hash rate is that I think drops, though they do, you know, reduce the underlying security of the blockchain. It's also the case that we're not really sure yet how much hash rate is enough, so to speak. We're still kind of trying to figure that out and understand exactly what kind of security guarantees we get for hash rate. there's been some really interesting work by economists, and we did some work as well, showing that maybe it's the case because you can think about sort of the game theory behind it.

You can think about the threat of counterattacking that incentives might be lined up to just kind of go with whatever the longest chain is, even if an attacker has 51% of the hash rate. So, you know, I don't think it really has much of an effect in the short term, but I think the long-term questions and sort of the theoretical questions are really interesting. So Bitcoin recently became legal tender in El Salvador. And that was a little bit controversial because President Naïbe Buckelis has links to corruption. And he also has some authoritarian proclivities. How do you think this association with El Salvador will affect the perception of Bitcoin?

Well, it certainly generated a lot of press and excitement. You know, I'm just really curious about the details. how who's going to custody the Bitcoin? Will people be able to custody it themselves? You know, who's going to run wallets? Who's going to run Bitcoin full nodes? I think, you know, I haven't seen a lot of details on this. And I think, you know, it's one thing to say that something's legal tender.

And then it's another thing to actually do the work of making sure that people can access it fairly and safely. So I think we'll have to see how that shakes out. Yeah. I did see something. like only 45% of Salvadorans have access to the internet. So that's also an issue. Yeah, that doesn't seem like

it's going to be a good environment to take off. So yeah, it seems a little bit more like PR. So the digital currency initiative worked with the Fed of Boston on a paper or some kind of work to determine whether a central bank digital currency could be possible

here in the U.S. And I realize you probably I can't say exactly what it says, but just tell us, what are your thoughts about a U.S. digital currency? Yeah. So we're working with the Federal Reserve Bank of Boston, and we're studying the question of how you might design and build and test a hypothetical digital currency. So a couple things. First of all, it's technology research. So we're not engaging in the policy discussion, which I think is really important and deserves a lot

of attention and research. But we're really looking at it from the perspective of, you know, what? But how might you build one? How might you make it perform really well? What are some of the tradeoffs? How do you think about security and fault tolerance and redundancy? And in particular, we want to surface data for policymakers. There's too many people out there who are just kind of running these very unrealistic sort of, you know, three-node DLT setups or something like that. And that's just, that's not how this is going to work. If it ever happens, it's not clear to me that it's necessarily a good idea either. We're still, we're still gathering all of the data on that.

and we're trying to understand. But I have to say it's really exciting, and I think it's a really exciting question to research. I also think, you know, unfortunately, there's this false narrative out there that it's either CBDC or crypto, and people are often quite shocked when they find out that we work with the Federal Reserve Bank of Boston,

and we also support several, you know, really important developers on Bitcoin, and we spend a lot of time working on Bitcoin and thinking about the security of decentralized networks. it really does make sense to us, though, because we're just really excited about the future of money and the future of cash and the future of value transfer. And whether that innovation is happening in the cryptocurrency world or, you know, it can't just happen in the cryptocurrency world. It's if fiat currencies are still such a big part of everyone's lives that I think we need to figure out how to bring that innovation to fiat currency as well. And I think that doing so will strengthen the cryptocurrency world.

Can you imagine if something like the dollar actually did get launched as a digital currency, that would put wallets in the hands of so many people and would teach them so much about the technology. So, yeah, I don't really see these things in competition at all. I think that they will coexist and there's use cases for both. Yeah, yeah, I agree. It'll be a huge on-ramp, essentially. So last question, what are the main things you're working on at the digital currency? initiative that the audience should look out for in the short term? Yeah, well, the upcoming research

with the Federal Reserve Bank of Boston on social bank digital currency, we're really excited about that, the technical research. In addition to that, we recently announced that we had raised some funding for a dedicated Bitcoin security initiative. So this is an effort where we are dedicating resources to thinking about the longevity of Bitcoin. So, So DCI has been a home for Bitcoin core developers for, gosh, six years now. So we have provided a stable home for, for example, the lead maintainer of Bitcoin. And I think that's really important. You know, there's a lot of people out there who are giving grants, which is fantastic.

But whether or not that's a long-term solution for senior developers is another question. And there are people who like to say that you basically have to get a PhD in Bitcoin in order to really get to the level where you are trusted to do. code review and you can do code review on some of the thornier parts of the system. And so, you know, as I've been learning more about it this past few years and thinking about it, it just seemed to me like there needed to really be this dedicated effort towards the longevity of the system and the security. And it's also just a fascinating question. Bitcoin's been around for 12 years. And so a lot of people say, look, it hasn't been hacked. It's been 12 years. And there's certainly

some truth to that. It's definitely, you know, security first. But I also don't know if it's really been tested. You know, what happens if a nation state really comes after Bitcoin in a, you know, and, you know, drops a couple zero days and, you know, how will the network recover? And like I said, I really like to think about how things will break. So part of this effort is to figure out how we can secure it against something like that from a technical point of view. And, you know, what are the problems that arise and what do we need to put in place? And to be clear, there's already a tremendous this amount happening across the Bitcoin ecosystem in this area. And we hope to encourage that and plug into some of that. All right. Well, sounds like there's a lot of interesting stuff

coming up for you. Thank you so much for coming on unconfirmed. Yeah, thanks, Laura. It was great to see you again. 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, scalable, low-cost, open-source platform. NIR is investing 80 million NIR tokens in community-led projects over the course of five 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 NIR is the infrastructure for innovation at N-EA.org. Thanks for tuning in to this week's news recap. First headline. Gensler speaks on synthetic assets as the Fed discusses stable coins.

In a conversation with the American Bar Association, Securities and Exchange Commission Chair, Gary Gensler, hit that digital assets backed by traditional securities could fall under U.S. securities law. Gensler said, quote, it doesn't matter whether it's a stock token, a stable value token backed by securities, or any of a virtual product that provides synthetic

exposure to underlying securities. These platforms, whether in the decentralized or centralized finance space, are implicated by the securities laws and must work within our securities regime. His speech occurred just days after Binance announced the suspension of its stock token program, which had allowed customers to purchase tokenized versions of Tesla, Coinbase, MicroStrategy, Microsoft, and Apple. The SEC was not the only U.S. regulator looking into digital assets this week. Notably, the president's working group for financial markets, a presidential advisory group, met on Monday at the behest of U.S. Treasury Secretary Jen Yellen to discuss, quote, the rapid growth of digital assets. According to a readout published after the meeting, the PWG expects

to issue staple coin-related recommendations in the coming months covering potential benefits, risks, and how stablecoins could fit into the U.S. regulatory framework. And speaking of stablecoins, Next headline, Circle reveals reserves and Paxos snaps back. On Tuesday, Circle, the company behind USDC, the second largest stable coin in circulation, released its latest reserve attestation revealing how USDC is backed. Based on data from mid-July, 61% of USDC is backed by cash or cash equivalents. 13% is in the form of Yankee CDs, 12% sit in U.S. treasuries, commercial paperbacks 9%, and 5% of the reserves allocation is in corporate bonds.

If those numbers are confusing, don't worry. Even decrypts Jeff Roberts needed clarification asking on Twitter, finance people, is it a big deal that Circles USTC reserves are 14% non-cash equivalents? Someone told me these aren't liquid enough to withstand a run on the stable coin, but I really don't know. Paxos gave an answer in a downright frothy blog post on Wednesday, which started with a shot across the bow at Circle. Dan Bernstein, General Counsel, and Chief Compliance Officer at Paxos, wrote, quote, I have been reading with a combination of disbelief and exasperation,

the recent claims by Circle, that, quote, USTC has become the world's most trusted and regulated dollar digital currency. Neither USC nor Tether is a regulated digital asset, for the simple reason that neither token has a regulator. These tokens are backed by, illiquid and risky debt obligations, a critical weakness that no prudential regulator would allow to exist as this creates undue risk for their customers. Bernstein contrasted USDA's 61% cash or cash equivalent reserves and USDT's 49.6% commercial

paper reserves to that of PACS and BUSD, both of which are managed by Paxos, in which he described as regulated stable coins tied directly to the value of the U.S. dollar. Pax and BUSD are backed by 96% cash and cash equivalents. Before signing off, he added, Regulatory oversight is important because it assures stablecoin users that the dollars underlying their stable coins are secure and will be immediately available when they want them. To round out a hectic week in stablecoins,

Tether's general counsel went on CNBC's tech check and announced that an official audit of USDT, the largest stable coin, could be months away. Tether has spoken of producing an audit since 2017. Next headline, New Jersey, Alabama, and Texas regulators warn BlockFi. On Monday evening, Reforms reported the New Jersey Bureau of Securities ordered Cryptolender BlockFi to stop accepting new BlockFi interest account clients in New Jersey. The report was later confirmed by BlockFi CEO, Zach Prince.

New Jersey contends that BlockFi interest accounts are a form of unregistered securities, while BlockFi believes that its BlockFi interest accounts are lawful and appropriate for crypto market participants. As if now, BlockFi has until July 29th to stop accepting new BlockFi interest account clients. In his tweet thread, Prince assured current clients and others that the order would not impact their experience. On Wednesday, the Alabama Security Commission, or ASC, joined New Jersey, claiming BlockFi has sold $14.7 billion, worth of unregistered securities through its BlockFi interest account program. The ASC took a slightly different approach by issuing a show-cause notice, ordering BlockFly to explain why they should not be directed to cease and assist from selling unregistered securities

in Alabama. Blockfly responded on Twitter saying, quote, we are aware of the show-cause order issued by the Alabama Securities Commission. Our stance hasn't changed. The BlockFi interest account is not a security. And lastly, on Thursday, this Texas State Securities Board, or TSSB, filed for a cease and desist against BlockFi, according to CoinDesk. For now, BlockFi is allowed to continue operations in the state with a TSB director noting, quote, This legal action affords BlockFi and its affiliates the opportunity to respond to our allegations and present admissible evidence.

Next headline. FTX announces crypto's largest funding round ever. Cryptocurrency Exchange FTCS announced a $900 million funding round at an $18 billion evaluation on Tuesday. Over 60 investors participated in the race, including Sequoia, Paradigm, SoftBank, Third Point, Multi-Coin Capital, among others. According to the block, the raise represents the largest funding round in crypto history. Forbes reports that Binance, which had invested in FTCS as part of its strategic play in 2019, is already given up its equity stake. The Sam Bankman-Fried-led company has seen explosive growth since its May 2019 launch. FTX says the exchange revenue has increased tenfold year-to-date and 75 times since early 2020. The company now has over one million users and averages $10 billion in daily trading volume.

The near billion-dollar influx of cash will immediately be put to use, purchasing, quote, the fanciest beanbag available. OpenC also announced a large, Funding Round this week, bringing in $100 million at a $1.5 billion valuation through a Series B led by A16C. OpenC plans to launch cross-blockchained support, starting with a partnership with Polygon that includes a gas-free marketplace. In related news, cryptocurrency minor course Scientific is merging with Power and Digital Infrastructure Acquisition Corp, a SPAC, and will trade on NASDAQ. The deal values the company at $4.3 billion, nearly two times larger than rival Bitcoin miners, Riot Blockchain and Marathon Digital's Market Cap. Core minted more than 3,000 Bitcoin in 2021, while Riot and Marathon combined have generated only 2,000 BTC.

Next headline. Axi Infinity revenue nearly matches Ethereum's. According to data from token terminal, Axi Infinity generated nearly equivalent revenue to Ethereum over the past seven days. more than doubling any other protocol, DAP or blockchain and crypto. Ethereum still led the week with $32.8 million in revenue, though Axi Infinity came in a close second place, bringing in $31.7 million. The following three participants, Uniswap, Pancake Swap, and Ave, combined total just around $27 million in revenue during the same period. According to Coin Desks, Leah Callin-Bettler,

Axy Infinity's revenue growth is just the tip of the iceberg. Butler reports that Axi Infinity is creating real-world wealth, especially in the Philippines. She notes that out of Axi Infinity's nearly 500,000 daily active users, over 60% come from the Philippines. Indeed, Butler estimates that Axi player revenue amongst Filipinos could reach over $10 billion annually. Next headline. A class action lawsuit claims DFINITY was sold as an unregistered security. California resident Daniel Ocampo has filed a class action lawsuit. against DFINITY, claiming that the company sold its internet computer project or ICP tokens as an unregistered security. The complaint was filed, quote, on behalf of all investors who purchased

internet project tokens on or after May 10th, 2021. The lawsuit alleges that over 400 million ICP tokens were sold in violation of the 1933 Securities Act. In addition to coming after DFINITY's founder, Dominic Williams, the suit also targets polychain capital and A16C, both, early backers of the project. ICP has faced scrutiny ever since its Genesis launch in May due to extremely volatile price action and whispers of insider trading. Time for fun bits. Imagine explaining Ethereum with Vitalik listening. Actor and investor, Ashton Kutcher, posted a hilarious video explaining the basics of Ethereum featuring himself, Milakounis, his wife, and Ethereum creator, Vitalik Woodrin. In the first part of the video, Kutcher asked Kunis easy questions

like what's crypto or what's blockchain, to which Coonis responds with succinct answers. About halfway through, Coutcher asked for a description of Ethereum before turning the camera past Coonis to show a kitchen table where Vitalik Boudarin gives a one-minute spiel on its fundamentals. The video was created to promote Coutcher's StonerCats' NFT collection, which consumers must hold to access the Stoner Cat's NFT animated series. Second fun bits. Twitter throws shade at Ethereum. For a while now, tweeting hashtag Bitcoin or hashtag BTC would enable a little Bitcoin symbol to pop up just after it.

Well, now, hashtag ETH comes with its own emoji as well, but in a massive troll of Ethereum, it's the flag for Ethiopia. All right, well, thanks for tuning in. To learn more about Neha and the Digital Currency Initiative, be sure to check out the links in the show notes. Heads up, everyone. The Unchained newsletter has switched from a weekly newsrenews. recap to a daily email. Each morning, you'll get four to five quick headlines, a crypto meme or two, and a few recommended reads. Head to Unchainedpodcast.com, and the sign-up for the newsletter is right on the homepage. Unconfirmed is produced by me, Laura Shin, with help from Anthony Yoon, Mark Murdoch,

and Daniel Ness. Thanks for listening.