What Durov's Arrest Means, Maker's Sky Money Pivot and Crypto's Censorship Bull Case | Hivemind

all the new buyers are going to Solana, all the new users are going to Solana. And then like on the institutional level, it's like clearly just like Bitcoin. They're just like buying Bitcoin.

They complain about free speech in places like Russia, Iran, and China, but then they arrest a guy like this for basically upholding— they arrest Durov for like upholding free speech. I almost think people get pushed towards crypto rather than pulled. Like they get pushed by the current things becoming more and more restrictive rather than pulled by Superior UX.

Don't get chopped out of your bags.

Nothing said on The Hive Mind is a recommendation to buy or sell securities or tokens. This podcast is strictly for informational purposes only, and any views expressed by anyone on the show are solely our own opinions, not financial advice. Hi everyone. My name is Jose Macedo and welcome to the second episode on Empire of the Hive Mind podcast. The goal of the podcast is to provide an inside look into what we like to call the Delphi hive mind, bringing together some of our brightest minds from each of the divisions to share insights, alpha, and shitposts. So today was a bit of a slower two weeks in crypto, but we're going to start with markets. Jan, you want to lead us off here?

Yeah, uh, so I guess main development that's happened over the past 2 weeks has been the, uh, dovish pivot at Jackson Hole by, uh, Jay Powell. And so, um, you kind of immediately saw a pretty broad rally across equities and, and crypto, uh, and, and, you know, equities have continued to do well, but crypto has kind of reversed the entire move, which isn't great to see, particularly when you see equities doing well and crypto selling off. And so you try and, you know, figure out, is there a reason why, or is this just kind of, you know, what the market's doing? Um, it's, you know, on one hand there's rumors that the U.S. is still kind of continuing to sell a lot of the seized tokens, which is possible. It's harder to tell now that they've custodied a bunch with Coinbase. And so there's, you know, they do OTC deals, they're doing a bunch of other stuff that makes on-chain sleuthing a bit less signal-y. So you kind of have that.

That is honestly way better than fucking Germany just sending coins straight to exchanges and then everyone front runs them. Like that was— The worst way to do it ever. That was terrible.

I do think that it is easier in the long run though, right? Because you're basically ripping off the bandaid and you have that clarity.

Well, I think if they announce that the sale is complete or something, then that would be useful. But also there's got to be some OTC desks, if that's how they're doing it, that know that this is happening.

Yeah, I've been asking around, haven't been able to get too much info.

I mean, the, the coins have definitely been complete dog shit compared to like everything else for the past little while. I mean, BTC is the only thing that looks like relatively— it still looks bad, but it's looked like okay at least. Like, ETH has been awful, SOL's been awful, uh, everything else has been— it's just been, yeah, pretty bad. People are— again, people are still like kind of going insane, but everything kind of sets up well. Right? Like, we're still up a lot from last year and we have like all these rate cuts coming, this, all this liquidity coming. As long as the economy just doesn't totally like nuke and go to shit.

Yeah.

Bitcoin's still up a lot. Lots of other stuff.

It's basically just been 6 months of chop. I think that's the right word.

Yeah, chop in Bitcoin, but like zero in alts.

Like, oh, well, there's like pockets of exuberance and then just brutal sell-offs out of nowhere.

Well, like Infra and memes and Cosmos and like, I guess I'm like, yeah, some alts with actual businesses have been okay, but a lot have gotten murdered.

What about ETF flows? Did you want to touch on that? Just like, yeah, Cedars, you brought this up, maybe.

Well, no, it was kind of like Crazy how there are like back-to-back days where BTC had like a quarter bill of inflows both days and ETH was like -5 mil one day and then zero the other day. It's just not— I think it's fair to say that like there hasn't been this like institutional demand for ETH.

They're just sharpening their pencils, Cedars. Don't worry.

Yeah, they're just, they're just sharpening it up. But like, this is— we talked about this before though, how it would have been better if the ETF kind of got delayed until post-election.

You know, more time to sharpen the pencils.

Yeah. Think about how sharp they'd be.

Yeah. But honestly, the BTC, like BTC keeps chugging along. It's almost at $18 billion in net flows, which is pretty— it's at like $17.8 right now. So BlackRock, there was probably like $400 million in flows last week, $300 million, keeps on chugging along. It's like over time it adds up. I think it's kind of like kind of drifted into the background a bit. People are still watching it, but not as much as when the ETF first came out. And I think that over time it really helps and just they're taking a lot of supply off the market over periods of time.

On the 1000— I don't know if you guys listen to the 1000x Pod. I only started listening to it because it's on the Empire feed. And so now that I get these, but Avi Feldman, he was like, he thinks ETH could be the XRP of this cycle. Like, what do you think about that?

What does that mean? I think it's just like that it's going to $589.

No, like, I think the ratio will just like keep going down against BTC every, every little like there's like nothing is going to make ETH start outperforming now except for some like massive news. And so basically every single pump on like the ETH/BTC ratio, you just kind of like don't get like shaken out of being short BTC. And then like if something massive comes and there's this big news, you kind of have time to like position. That's what his kind of take was. He thinks that there's like no reason to own ETH for like rest of the cycle.

I think it's a reasonable argument. Uh, the biggest catalyst now is just how bearish everyone is, but that, that really isn't enough. Like, that— it's certainly a good setup for, you know, maybe a short-term rally because everyone's caught offsides and, and there's, you know, covering that needs to happen. Uh, but I don't necessarily think we're quite there yet. Um, it seems like something that will happen more so after there's been more selling and people get more confident in trying to short ETH as like a pair trade or whatever it might be. And so, um, yeah, the argument that everyone's bearish, I don't think can really move the market right now.

People know, like, I have— people were calling ETH contrarian in December of last year. So it's still like $300 billion or whatever.

It's just like a terrible reason to be bullish in the long term, in the medium to long term. But listen, I also think, yeah, I also think, I mean, that's your only thesis. Everyone's bearish.

That's me. No, I'm saying, no, I'm not saying you.

I know you're only the main bull case. It's the number one smart contracting platform in crypto. Like, by— if you look at it as an ecosystem basis, by TVL, right, there's like $60 billion in TVL by developers, by new developers, by like commits shipped to the ecosystem. Like, it's just the number one. Like, I don't know how you need to find a— it's so hard to find a bull case for this.

Well, I think because markets are forward-looking, right? And so it's more about, you know, yes, at the moment it certainly is, but there's not a lot of reasons for why the gap between ETH and the others shouldn't converge over time from here until something changes.

Who are the others? There's only really Solana, basically.

I think it's like right now everything else is on ETH. Yeah.

Like whether it's the rollups or like the app-specific rollup thesis, it's most likely to happen like on ETH.

Right now, but you're seeing more of like, you're seeing more of these move chains and like rollups that'll continue to like gain relative adoption because they're so small. You're seeing SVM, a lot of like SVM app rollups, app chains now, which further, you know, eats into that EVM market share or whatever. And again, ETH is just like a massive fucking valuation.

So yeah, but I think it's all about like, who are the— like, since there's not a ton of new users and capital coming in, all of like, there's not enough for everyone, right? So it's like, where are all the new marginal users and marginal capital going? And it seems to be, at least on the retail level, it seems to be ETH— or sorry, Solana. Like, all the action's happening there. All the new buyers are going to Solana. All the new users are going to Solana. And then like on the institutional level, it's like clearly just like Bitcoin. They're just like buying Bitcoin.

Yeah. Here's the thing. I actually think that, like, I don't know what the right SOL/ETH ratio is, but it kind of feels like maybe where we've been the last few months is like kind of where it's going to be for a while. I think that you could actually see ETH and SOL both just being like boring assets for the rest of the cycle. And you actually know, but like you actually start to see some of these other assets maybe with like some actual fundamentals behind them start to get more interest and everyone will continue arguing like ETH versus SOL, but it'll kind of just stay like flat ratio-wise. I could, I could see that happening.

I mean, I'm partially playing devil's advocate as we know from previous shows, but I do think that like ETH and the L2 ecosystem are still the leaders by almost any metric you can possibly conceive of. And so I think, I don't know, I do think it's tough to, you don't need to come up with this crazy bull case. There's a lot of narrow shots on goal that ETH has. Any one of these L2s could take off. Any of these applications could take off. Even this like ZK proofs or like these proofs of off-chain actions thing that we consider putting on the podcast, that's being built on ETH. Like, in general, the marginal new thing that launches in crypto is built on ETH because almost all the new developers are coming in on Ethereum and L2s. So I just think there's like a lot of ways that— there's a lot of ways that ETH can do well. Yeah. I mean, yeah.

No, I agree it's not impossible, uh, but I think with the current information—

yeah, and it's also like it can get more adoption in some of those areas without really affecting like the fundamental value of it as much as, you know, people may have thought before, right?

Like, I also think ETH's gonna do lower, like, lower block time and, and probably a few other changes within the next like 6 months to a year. Um, I don't think— I don't know about pre-comps or anything like that, given just how long kind of more fundamental stuff takes in Ethereum. But I think we've seen, like, with Vitalik engaging more recently and stuff, that there is somewhat of a fire up the Ethereum community's ass now from, from the competition from Solana. Um, I am pretty bearish on the L1 moving, moving at any sort of speed. But yeah, I still think ETH is dominant.

Okay.

So most people probably saw Pavel Durov, the founder of Telegram, was arrested in Paris last Saturday. So we're recording this on Thursday, the 29th of August. And then he was— they officially filed charges, I believe yesterday, and he was released on a €5 million bail. Yesterday as well. So this is an interesting story for a bunch of reasons. For those who don't know, this guy has a history of sort of going against governments. So he's the founder of VK, which was kind of the Russian Facebook in 2006. In 2011, he refused to honor police requests to delete opposing political party pages on VK. He actually posted a picture of his of his dog instead. And that very picture and meme coin is what got like pumped to infinity over the last week and took down Telegram, which is pretty funny. Yeah. And then he did it again in 2014 where he was asked to cut out like Ukrainian protesters, to dox Ukrainian protesters and to delete Navalny's page. He refused to do both and eventually had to leave Russia and sold VK to to Kremlin-friendly owners. And then obviously at the same time, like he already knew he was going to have to do that. He was starting Telegram. He ended up getting French and UAE citizenship but had his phone hacked by them both. 2018, he had another spat with Russian authorities where he refused to give encryption keys to them and ended up actually like winning that somehow. And Telegram didn't get banned in Russia. And then apparently, like a few articles say that he's received a bunch of different subpoenas from European governments and refused to comply with them. Which is what France is alleging in this case, that basically he received subpoenas about, you know, child pornography and terrorism and all these things and refused to comply with them. And that's why they're arresting him. Ton went down a bit, but not too much considering how big in news this was, it feels like. And then obviously there was the outages and stuff as well. I don't know, anyone want to add anything to that or go straight to just giving your, your two cents on it?

Nothing to add. Yeah, it's a good summary. Um, yeah, basically very sharp guy, entrepreneur his whole life. Um, very ideological in terms of, you know, kind of some libertarian values, but basically preserving privacy, preserving freedom, and, and basically kind of had to sacrifice his first company that was incredibly successful that he built from the ground up. And yeah, he had to sell his stake and then kind of went passport hunting around the world.

Yeah.

And what's really interesting about this is it's like, I think Russia has asked for him to be sent there and has like spoken out against the Western double standard on free speech. Right, that they complain about free speech in places like Russia, Iran, and China, but then they arrest a guy like this for basically upholding— they arrest Durov for like upholding free speech. And yeah, this guy is just— it's— yeah, he's just gone against governments his whole, his whole life. And I think he thought he'd have a better time in the West, but seemingly not.

All right. Can we talk about it like from the Ton angle. Um, so I've like never been bullish on Ton. Uh, I'm not going to be after this either. Does anybody have like the bull case though that this is like bullish for Ton for some reason?

I mean, it kind of depends on the response, um, and, and what, what he comes out and says in terms of, you know, is there some leaning into the whole censorship resistance idea, is there some element of trying to put something, some of this on-chain or lean deeper into the TON ecosystem? I think there's a decent argument to be made there. I don't know that— I guess what's the longer-term bearish argument for this Anton.

I feel like the bearish argument is that like, at least I listened to the Tucker Carlson interview with Pavel and it was really good, but it sounds like there's not a lot of people who work at Telegram. And if like, I think he said there's like 30 engineers or something. So I feel like if you take the lead guy and he ends up going to jail and then like you start kind of exerting force over the company in some way, and it like degrades or I don't know what they would end up doing to it. But if like—

here's a hypothetical. Let's say Telegram is shut down.

Yeah.

Is that bullish for Todd? Probably not, right?

That, that, yeah, agreed.

Yeah. But I think shutting it down seems super extreme.

Yeah.

Yeah. It's probably in between like them exerting, if he gets arrested, them exerting like what level.

I mean, they can't shut it down. Like they've, like even Russia tried to shut it down in Russia and there was this whole like Telegram channel of people operating proxies around the world. To keep it running and they literally couldn't shut it down. There were, there was like 2-year-long campaign. You can, you can, you can ban it in France or, or in Europe or whatever.

You can take it off of app stores and stuff. And then sure, people can still get around it, but you're going to lose all like that mass market.

I just don't like, I, I mean, what they, obviously we have incomplete info, but just from a surface level perspective, what they've arrested him for, they could in theory arrest every other founder for.

That's like the whole, you know, as long as North Korea doesn't use your protocol, you're fine. Uh, but if North Korea starts using your protocol, now you're breaking the law as a founder, like regardless of it's like a privacy thing or whatever. Right. Um, so yeah, I know, I get what you're saying. That's what all these regulators or like politicians seem to care about. Is like they don't actually seem to care about how any of the underlying tech works. It's just if bad actors start using what you've created.

Well, it's, I think that's, that's a scapegoat. And reality, it's we want access to your back door and we want you to censor and do actions on our behalf. And then if not, then there's, you know, price to pay. And so you've seen Zuck come out and talk about how that was interesting. Yeah, so like you probably touch on that, but it's clear that, you know, it's either cooperate or get arrested. And I think, you know, because North Korea uses it as a scapegoat.

Yeah, this is highly speculative, but I assume that when France gave him citizenship and stuff like this, they assumed there would be some kind of quid pro quo, that they'd have some special access or whatever, and he wouldn't just leave all their subpoenas unread. Or, you know, whatever he's doing. And, and they got angry that he did that anyway. Um, but I agree, it's interesting, uh, like, and the same thing with Elon, right, to some extent. Like, he's also— he outed the Twitter Files, like, refused to cooperate. He had that whole thing in Brazil where he was literally, like, publicly sparring with the Brazilian president or whatever. And it's one thing for regulators to be like this, but hopefully the— you hope the judiciary sort of stays independent like they have in the US mostly, although they haven't with Tornado Cash in Europe as we covered on like a previous episode. But it's pretty scary when, yeah, exactly what you guys said, you can get arrested for someone using your platform, right? Someone doing criminal activity on your platform regardless of whether you had anything to do with it. And especially in a crypto sense, because once you publish a smart contract, it's there forever. So you have this unlimited liability for someone to come in and use your use your platform. Yeah.

I feel like arresting him would be incredibly shortsighted in terms of the second order effects for incentivizing any kind of entrepreneurship in your country.

Yeah. But it's like, I don't, I feel like they're coming to a point where it seems like a lot of the world governments in the West are getting more authoritarian and more censorship. Like I think the, the Facebook letter, if no one read it, I think basically Zuckerberg came out and said we were influenced to like censor certain things during COVID Well, it was COVID and, and like election-related stuff, which is crazy.

Like it's one, if you, yeah, it's one thing if you can, if you, you know, it's the scapegoat, if the scapegoat is it's for the greater good because we don't want disinformation about this disease, which I think you can somewhat, you know, rationalize as being. For the greater good, but, but like the other one is just, you know, pretty cut and dry election interference. Yeah.

Yeah. No, that's pretty wild. And even the COVID one, like I remember when that was going on, they were like censoring doctors, like across, like actual doctors who were just giving their opinion across like these platforms, like on all social media. So it's definitely kind of scary that. You're heading towards this. And I think the world would look a lot different without Elon having bought Twitter, because like now we know, like Meta coming out confirming it, the Twitter Files, that these governments have, are in direct con, like contact with all these social media companies influencing what is said and what stories they want to like kind of amplify or censor. And you know, you have to imagine that's also happening with the traditional news outlets. And I'm sure there's like, you know, some confirmation of that. So really you have like X in the US and maybe Telegram as like two really widespread apps that have put up a big like stand against, you know, censorship. And one of those, and like Elon's come under like a lot of scrutiny in the US, but as Jose said, hopefully, you know, the legal system's upheld better there, but now like you have the Telegram founder potentially facing 20 years in prison. So it'll be interesting to see what happens.

Yeah, I agree with censorship. There is like an argument for some censorship though, right? Like, I mean, even in the law right now, like freedom of speech has, at least in Europe, I don't know about the US, but in Europe it definitely has limits. Like there's things you can't say. And I think I'm pretty sure they're wider than they are in the US. And I think we've kind of seen some of that with like Twitter. Twitter has definitely become a, like, I don't know if it has more information, misinformation, but there's definitely a lot of misinformation on Twitter these days. Like even the UK riots, right? There was this, everyone was saying the, the stabber was a, was a migrant and then turns out he wasn't, right? He was born in the UK, son of, of migrants. And that was basically the, the, the tinder that lit the, whatever the expression is, you know, the, the ember that lit the fire. And caused a lot of those riots. And you had people like massive accounts like Andrew Tate or whatever just spreading this despite the fact that they knew at the point that it was already clear that it was false, still spreading it because obviously it gets people angry, right? Oh, UK, bunch of losers. You won't even protect your country. Migrant comes like migrants straight off the boat, comes in and stabs 3 kids. All this stuff is super inflammatory and it's going to get people angry and cause violence. And there is like some limits that you I don't know. Like I think community notes is a really good system for it, although it's not working particularly well. It's sort of been like taken over a bit.

Yeah.

But I feel like there is an argument for it. Yeah.

I think it's all trade-offs though, right?

The problem is— Yeah, it's trade-offs.

On one side. Yeah. I like, you know, there are negative effects of inflammatory language, but the problem is the way that you police it gives basically control of what you're able to say to an impartial government authority who, whose motivation is, is to maintain power and maintain control.

I do understand Jose's point though. Like, these, these riots, they're kind of like a partial government. They're kind of like— this is kind of like a societal bank run. Like, if you remember how quickly, like, the SVB stuff and all that spread on social media. And you just like get these bank runs. Like, this is a whole thing now that economists are— and like regulators are looking at— is like bank runs in the social media era, right? Because of how quickly things can spread, even if it's like not necessarily true or not. And yeah, you're seeing that when you actually have it like start riots purely based on misinformation. Like, yeah, I don't know what the right— I don't know what the right answer is.

The riots though, right? Like those it was something that was building up for a host of reasons, and it was going to be triggered one way or another. And I think this was just the event that triggered it.

Yeah, like, this stuff's very difficult because it's obviously extremely complex, but it definitely feels like we're heading— not to say that some rules or guidelines around, like, censor freedom of speech, like, you know, hate speech or something, isn't important, but it definitely feels like we're leaning more towards, okay, like they are censoring stuff like that. Zuckerberg said like that was fully a political thing that they were censoring. It was like the Hunter Biden laptop story, which, right, like that has nothing to do with— I'm trying to think if there's like implications there on like—

no, I don't think so.

That seems very political.

Yeah.

Yeah.

So I think the one takeaway, though, was that was really political.

Yeah, agreed.

Yeah, very—

I mean, all these organizations. Yeah. So I think the one interesting— one of the interesting takeaways from the Zuck thing is if you think about his motivations, right, he, he is— he's pretty agnostic to Dems or Republicans. He is fully focused on what's best for Meta, right? And so for him, he also has an insane, uh, backend full of probably the, the, the best source of info on the opinions, uh, of, of the minds of, of Americans, right? Like, there's— it's hard to argue that there's someone who has better collection of information on opinions. And so for him to come out and say this probably suggests, or could suggest, that, you know, what he's seeing leads to a kind of Republican victory, and he's trying to better align himself with the next administration. If he thought that, that, you know, the Dems were we're set to do well here, then realistically there's no real reason for him to come out and burn that relationship. Um, so I do think there's some kind of takeaway on that front in terms of what his opinion is of kind of the— maybe, yeah, yeah.

I wonder if there's this— but the Pavel stuff got me thinking, um, you know, if we are worried about more censorship in the future, like, are there any projects that we think are kind of interesting? I know, like, are we even like like Arweave, ArDrive, kind of the permaweb. I know like Filecoin, there's some other storage platforms, but it's like, you know, some, I don't know, like Farcaster, like decentralized Twitter, that sort of stuff seemingly is going to become more important as like the Web2 versions of those systems come like increasingly under attack or like under threat.

I saw a tweet the other day. And it was, we need a social media platform created by an anonymous founder. And I was like, oh yeah, that's actually, that makes a lot of sense. Like you need a Satoshi-style social media platform. Cause even Farcaster, you can probably, you can probably go after.

Sir, I'd have just what you asked for.

Please, anything. Give me anything.

Cheaper than any VC round you can find.

Yeah. This is a seed, this is a 2014 seed round.

Anything.

Yeah, I think that this seems like an obvious use case for crypto that is becoming more and more like important. And just how like the financial crisis, I guess, like pushed Satoshi or that group into making Bitcoin, right? Like, I think, you know, increasing censorship could kind of force people into trying out like a decentralized social media or internet of some sorts.

I do think all this stuff is like, narrative-wise, all this stuff has been pretty good for crypto. Um, like, you're seeing way more people talk about these things that only crypto people would talk about like 5 years ago, and it's because it's just like continued to become more like prevalent. And, um, like, dude, family members even like talk to me about some of this stuff now, whereas 5 years ago they would be like, you're a conspiracy theorist.

Um, yeah, I've always had like this theory that people like— it's hard for crypto to provide because like ultimately crypto gives you like the censorship resistance and the cost is this way worse and like pretty different UX. It's, I mean, worse is a, like, it's better in some ways, but definitely like clunkier UX. And so the only way that people can get pushed to use this is if like the sort of costs of using your existing stuff just become so high that you don't want to do it anymore, right? And so I almost think people get pushed towards crypto rather than pulled, like they get pushed by the current things becoming more and more restrictive rather than pulled by superior UX. And I think you've kind of seen a slow progress towards that in all of crypto's history. And to me, the world we're going towards now is pretty much like if you could have written the script for a world where crypto really thrives, it'd be pretty similar to where it seems like we're going now. But just last thing on the Durov thing. Again, like, it does seem like if— who knows what's true with this stuff, um, but it does seem like if he's not answering subpoenas for like child pornography and terrorism and stuff like that, like, that, that's pretty bad, right? Like, we, we all agree that you should be, you know, child pornography and terrorism is bad. If there's people doing that on the platform, you should probably be, uh, and there's suspicions, you should probably be providing information about them. It's just that that needs to be obviously well delineated and stuff like that. And I guess the argument is people have is that it's, it's a slippery slope until you start asking for information about your political opponents, about people you just don't like, about, about whoever it might be. And just being like quite radical. I think, I think Europe is becoming pretty radicalized.

I mean, it's also because he like had that information because Telegram is like an unencrypted app that their servers just have all this. So for like something like Signal, like sure, I'm sure all that stuff is happening on Signal. No, it's not. Not by default.

I think we've talked about this before.

We talked about this before. Telegram.

Are you sure?

Are you guys being serious right now?

Setters is the security.

I'm so like disappointed that you guys think that Telegram is secure. It's like the most insecure messaging app.

No, I don't think it's secure. I think, but I thought it was. Like encrypted, but they, but, but they had the decryption key.

No, no, it's unencrypted. That's why all your devices like will sync very easily too. Uh, no, but like I'm sure all this stuff happens on Signal too, right? But Signal actually has no control to like get any of this information, right? Whereas he actually does with Telegram. And so it's kind of like if you now develop something where you're in the position that you can, you actually are able to access this information.

Yeah, obviously if those claims are legitimate, then. But I also don't— I don't know who knows it's true, as Jose said. But listening to him speak on like the Tucker Carlson interview, which, assuming that he's being genuine with what he's saying, it sounded like they tried to cooperate with law enforcement on issues that were like, you know, on illegal things, like definitely child porn. And terrorism would fall under that category where they would be cooperative with governments. But at the same time, it seemed like they had gotten a lot of subpoenas about stuff that would be crossing the line, like people that don't like political opponents, you know, protesters. That's what it's made it— that's what he made it seem like on that interview, that there's like a lot of times they said no to governments because, you know, they're trying to do what's right and uphold freedom of speech. But obviously it's a very— at some point it becomes a blurry line. Like in Canada, this is a great example. There was like peaceful protests during COVID about the vaccine mandate in Ottawa that the truckers were doing. And like there was a lot of like the government started freezing people's bank accounts saying that they were like violent, which like there's a lot of—

first, okay, okay. So I just need to say I wouldn't call them peaceful necessarily.

Okay. They're blocking the roads, but it's not—

they were like, no, they were being very aggressive to like nurses and doctors. Too. Like, it was pretty bad. So I wouldn't say that it was like completely—

were they harming anyone? I don't think that there was any reports of anyone being harmed. But anyways, like, what if you start to label those people terrorists then because they're like shutting down the roads, which, you know, that's like a very slippery slope. And they started shutting down some people's bank accounts. So it's like, that's—

yeah, that's not grounds for freezing of assets.

That's—

I know. So it, it def—

no, I mean, even the, the Canadian like Supreme Court even like ruled against that like that was unconstitutional too.

Yeah. But my whole point is it's a very slippery slope, right? Like on one time you could just say, okay, they're, they're protesters who are like maybe getting like aggressive with blocking the roads and stuff. And then like it slips to like, oh, we're calling them terrorists because of this. And it, it can get very messy. Like nobody knows really what the full truth is in some of these situations.

Yeah. I mean, I think the EU is heading to a point where it's basically going to have its own internet, similar to China or whatever. You saw the guy send that open letter to Elon threatening him or whatever. I mean, already the cookies thing and like, EU just has a different approach to things, right? They believe that regulation by this bureaucratic central body is what markets need. And I fundamentally disagree with that even as a European. We kind of saw it with these the cookies law, like what changed? I just have to click accept before I go onto all these websites. Like everyone just goes and clicks accept. And I think that this, he's like forcing people to comply with the FSA, right? That's just been put in, like they're basically threatening to ban Twitter, right? That was what was implied in that letter that he sent to Elon. If that's the case, you end up with your own siloed, European internet, which seems even worse for innovation and tech in Europe, which is already like—

No better way to kickstart a dwindling continent.

Well, you're not kickstarting it, sadly. You're just sort of continuing.

Like to try and— well, they need to do something to kickstart the innovation, growth, anything.

Yeah, honestly, fuck Europe for the cookies thing. That is just like so stupid.

Europe's just turning into a museum.

It's like the worst possible.

Oh, but yeah, so this lays a really nice breeding ground for these decentralized— if someone were to make like, you know, it's very hard because you have to get the network effects, you have to get the users, you have to make the UX comparable, and people have to have a reason to switch. But it definitely feels like we're heading in that direction. And maybe even like if Pavel gets released, maybe he's going to think more about putting stuff on, on TON or, you know, blockchain.

It's just, it also makes the stakes way higher though, right? Like, it also means that you have to have way bigger, way bigger cojones to go develop on Crypto Rails if you can literally get arrested. Like, whether it's the Tornado Cash case or this. And this is not like SEC sort of like fines and civil cases. This is like hard jail.

No, no, but this is Crypto Rails. This is just like a message.

Yeah, but I mean, if regulators get increasingly aggressive, on people developing these kinds of platforms and hold them responsible for any action that happens on them, it's definitely going to make it harder for people to want to do that.

Yeah. Yeah. I feel like entrepreneurship is being less and less celebrated in the West.

Yeah.

Which is more kind of sad.

Like they're enforcing more censorship. Then let's sprinkle a 25% unrealized.

Anyway, should we get back to coins? People don't come to us for political commentary. I feel like we should allow Jason Yanowitz to talk.

I was trying to tie it into coins.

AreWe, Filecoin, the coins, coins are really dumping, dumping now.

Uh, yeah, I know, but, but honestly, like, what are interesting projects in this area? I feel like Arweave is the one that keeps— I keep coming back to. Does anyone—

Arweave is like permanent storage. Yeah, but you can make like an NFT on it. Yeah, I feel like we probably need some more time. Yeah, just on this stuff.

We'll research that. For next week?

I think crypto x AI is one of the most interesting sectors here just because I think AI is the next— it's already happening in terms of people passing stupid AI regulations. But yeah, I think that's going to be a big one too. Do we want to move on to Maker on theme with their Skynet rebrand? Yeah.

So Maker, long-awaited rebrand that's been kind of hinted at for a while. Basically, in 21 or so days, it'll launch, and what you can do is DAI will be upgradable 1:1 for USDS. Maker will be upgradable 1:24,000 redenomination to SKY. And you don't have to do it. So some can stay with the native asset, some can rebrand. The, the reason you'd want to rebrand is because there are going to be kind of incentives that, that'll exist for Maker holders. So basically, if you're, if you're as a SKY holder, you'll be able to lock up tokens and they'll stream. There's the kind of, you know, a few games to play in terms of like locking up for an extended period or a short amount of time. But without going into each specifically, Basically, people will lock up to earn a combination of surplus income from the protocol and a certain portion of the Spark supply, which is going to be a new token that'll launch. And then USDS holders will also be able to get a yield, the Spark token kind of being distributed. And so, yeah, the idea is The big one of the— I think the big sticking points for people is the fact that now USDS is freezable, right? So DAI still won't be, but, but USDS will be, which, you know, goes against the vision of the concept of a decentralized stablecoin backed by a decentralized asset. You still have it backed by— partially backed by decentralized asset in terms of ETH, but now it's no longer you know, a decentralized stable because accounts and wallets can be frozen. And so, yeah, price reacted pretty negatively to the news. I think it's just, you know, because of where the market is right now, most things are a sell the news. And then I think it was a bit underwhelming in terms of, you know, the shift away from a decentralized stablecoin via the freezing. And then, yeah, all of this stuff will go live in like, I think it's on in 21 or so days in September.

And how does it get frozen, by the way? Is it like, is it a multisig or?

Yeah.

Who controls the freezing function?

That I'm not sure of.

I also think the redenomination is kind of cringe. Like, you're making it— it's like $0.08 or something.

I think unit bias is a real thing in crypto though.

No, but it's like—

There's been enough, but there's been enough, there's been enough studies on this, and psychologically the optimal price range is like $20 to $80, and they could have just done that.

For stocks or crypto? For stocks.

For stocks.

Yeah.

But crypto, I don't know. But like, I don't know if this is, it's true with meme coins, but like what low unit bias, like somewhat fundamental play has done well? Because of this. Like, didn't Wi-Fi try this with like Woofy or whatever and it pumped for a bit? It was just people arbing the price between the two. Like, um, I don't know, I found it kind of like lame, to be honest.

Yeah, I mean, if there's a time to do it, it's now. I think it makes sense.

I, I notice it even Like with Meta, that's $3,000 a coin. I feel like I have so few shares. Like, I feel poor when I hold my Meta versus holding something that's like, if it was 3 cents a share, I have a lot of shares. It really messes with your head. I swear.

I've never had this like feeling.

Me neither.

Something going from 1 cent to 2 cents is totally different than something going from $100 to $200.

Like just in my I know it's not different at all, but psychologically still, as long as it impacts some people, then it makes sense to do it, right? That's the kind of the calculus.

No, but the counterargument to it and why 20 to 80 is the, is like the prime range is because it begins, it makes a lot of people now take your product or like whatever less seriously. Right. And so there's actually a negative effect from having like the low unit, um, And he kind of just come off as like a joke in a sense.

And like, I think that makes sense in with like, um, stocks because older generations might associate it with like pink slip, uh, not pink slip, uh, what are they, what's the, like the pink sheets, the pink sheets. Yeah, the pink sheet stocks. So those are all like kind of traded with those prices. And so I think there's some kind of negative association from the older investor base, but I feel like the younger crypto peeps probably gravitate towards the smaller numbers.

More shares, better.

Yeah, I mean, it was hard for a 1-year rebrand to really like not be a sell-the-news event, right? Like you've been hinting it for so long, people are going to have really high expectations for it. I don't know, the whole rebrand and like having all these coins and stuff just seems like Maker trying to be— I mean, I'm, and I've been holding Maker all through this, unfortunately. But it seems like Maker trying to be, trying to be something it's not, right? It's like, like, hey kids, are we pumping some coins today? You know, you know what I mean? Like, it's—

I was just going to say it's the meme when the guy like, yeah, I'm somewhat of a whatever myself. Yeah, I'm somewhat of a meme coin myself.

Yeah, exactly. You know, after hating on DeFi Summer and stuff like that. But I do think, yeah, I don't know, I was a bit underwhelmed with the rebrand, but I kind of expected it to be, you know, it's probably like a branding agency thing. But I do think that this overall, it's like pretty bullish Maker having all these coins. They're going to basically be used to kind of subsidize DAI growth. Like Spark itself is, especially with the AAVE growth, recently. It seems like Spark itself is going to be like 9 figures of dollar distribution to Maker holders.

Robbie from our research team put out a post on it and basically he was saying that he's expecting a decent amount of USDS supply growth somewhere to the tune of $1.5 billion based on kind of, you know, an assumed $1 billion FDV for Spark and then an accepted yield of 15% for USDS. So I do think that combined with, you know, yield for holding Maker will kind of, you know, you have your supply/demand kind of growth, like boost in demand increases supply sink mechanics that I think it'll probably do well into the launch, or at least from here, considering how much it sold off.

Yeah, I saw another take though that was good. That is like, this wasn't a new product launch, it was like a compliance launch because they added way more compliance features than they ever had with Maker. So it's like, you know, blocks US obviously. It also blocks VPN, so it can tell if you're using a VPN. They've got the freeze function that we talked about. And so there was like a lot of added compliance features. And so, I mean, when you think about MakerDAO now, it's basically like, I guess you want a piece of the, like, the Circle, the Tether business. You can kind of get that here, right? And so it kind of democratizes, like, ownership in that business. But it is like, it's not like what it originally was. Like the original Ethos, right? And maybe that's just like a function of there just was not product-market fit with that. Because like, how many people really ended up needing a, like, I don't know, how many people actually use DAI because they needed to use DAI?

No, it was a byproduct of leverage.

Yeah.

Well, it was also like early on it was move fast and break stuff. And then once you get bigger, it's like, all right, how do we preserve this and let it grow. I do wonder if it was, you know, something that the adjustment was to cater to the current administration. And if there's a change and regulations ease up, then maybe they get another rebrand and make some adjustments.

Yeah. I mean, so they're getting 17.5% of total SparkDAO supply per year for the next 2 years, right?

So yeah, but the whole way you get these in total, you have to like lock up your tokens, I think, for some egregious amount of time. And then if you like unstake, you lose like 15% of your tokens or something. Like, I gotta look into it, but there's some massive— yeah, like penalties. There's some massive penalties for unstaking.

I don't know how this works, but if you have to lock up liquid tokens, be careful. It almost never works out.

Yeah, I need to look into the details. I didn't see that.

There's a no exit, there's a no lock one also, which you assume it just has lower yield.

Yeah, true.

Yeah, just be care— if you care about trading and stuff, that's like— I've seen a lot of them.

You care about losing money?

Yeah, like, don't, unless you're a long-term investor. And really want whatever you're getting, be very like, put a heavy discount on whatever extra yield you're getting.

Gem Hunter always looking out for the common man.

Extra 10% yield when the bag goes down 50% is not worth it.

Yeah, yeah, yeah. I do think it's overall it's the right approach though. Like every kind of stablecoin learns this, right? You need to vertically integrate the whole stack. It's just really not going far enough and like kind of took too long. Like Robbie in the Alpha Feed note mentioned they should have launched like a wallet, right? And gone deeper into payments and stuff like this, which I think would have been pretty interesting. I also wonder how much DAI actually moves over. I think that'll be really interesting because I heard someone told me— I never checked if this was true actually— but that basically over $1.5 billion of DAI hasn't moved in 2 years. Which is wild, right? Because you're basically giving up like the sDai yield, which at some point was like 15% or something along those lines and hasn't moved. And that's like the most bullish thing I heard about Maker in a while. And I wonder if that will now move to USDS or if it just stays stuck in Dai and like what all those people are doing.

Yeah, that's like 30% of the— that's a lot.

Yeah, it's bullish for expansion.

I agree.

Nothing moves over, then there's a lot more yield to be had for new USDS supply.

Yeah. Jose, you think Spark are there any other?

10% yield.

You know what DAI was actually useful for is when Tornado Cash, because it had like no freeze on it and then people used it. But now that's like gone as a use case too.

Yeah, people just swap.

I mean, it kind of does, but I mean, Tornado Cash just doesn't have the same value that it used to with US not using it.

Yeah, I agree.

It's not what it, what it used to be, and it's sort of pivoting closer to USDC and stuff. Definitely agree with all that.

Um, there's a lot of stablecoin designs, like there's like M0 and Agora are doing these interesting things too, where like, actually Robbie's posting a piece today, uh, he goes into like moats, uh, it's pretty cool, but he talks about some of like these different stablecoin models too, about how something like M0 actually lets like applications mint, um, the stablecoins. The yield actually goes to the application. So instead of like Circle or like Tether holding these treasuries and banking all the yield, uh, the application actually gets a lot of that pass-through, which is pretty cool model. Um, but yeah, what did you want to go into, like prediction markets?

Yeah, yeah, I need to look into the M0 thing. I've heard good things about it. Um, yeah, I don't know, I still, still, still think Athena is best positioned in the in the stablecoin vertical. Yeah. And I still think you do have to verticalize. You can't just build the stablecoin and hope they will come. That's why mZero is kind of interesting because I guess you use apps as your distribution for your stablecoin. But I feel like you can kind of do that anyway, right? For instance, all the L2s did that with Athena, right? You would deposit USD and then they would like stake it and keep the yield or distribute some of it or whatever. Doesn't seem that innovative.

Sure. It's also a different model though. We're talking about like a fiat-backed cash stablecoin versus this like synthetic dollar. It's like just a completely different— it's like some people just might not want— they just want the fiat dollar in the bank stablecoin, right?

So yeah, I think the other difference is basically like what the natural source of yield is for a lot of these. If you, you know, if you pass through via treasuries as rates come down, that kind of becomes less appealing versus one that's a function of just demand to go long. So you have an organic yield that actually improves as rates come down.

Yeah, I think everyone's going to end up doing treasuries. Like, I think Athena will end up doing treasuries too, honestly. I think everyone's just going to have that baseline of treasuries, and then you're just going to have to, like, find higher sources of yield. And then I think it's mostly honestly like go-to-market. Like the— yeah, and building an ecosystem around your, your stablecoin.

Yeah, but I don't know, like, now that the BTC and ETH ETF are out, will yields for BTC and ETH ever get like really crazy again? Because like the hedge funds can put on the basis trade and they can do it with a lot more capital than I feel like, and better margin requirements via the ETF than like crypto hedge funds.

Couldn't you do this for the CME anyway?

I think that, uh, you can maybe post the BTC as collateral, like the BTC ETF as collateral for, for doing the CME trade versus before, like, what— I don't know what you're actually posting as collateral for the CME, like if they would accept something else, but I could be not true. I think I've read that. I don't know the intricacies of it, but it makes sense in theory.

Yeah. All right. Prediction markets.

No, I think we should— I think we should just end it. Maybe we'll talk about prediction markets next week.

It's been summer.

I mean, it's been an hour. You want to like go into this? This is like a big topic.

Yeah. We can maybe cut some of the long political stuff. I don't know.

I thought that was good. That's important.

I thought that was fun.

Yeah.

All right. All right.

Don't get chopped out of your bags.

Yeah.

Don't get chopped out of your bags. Yeah, exactly. That's true. That is the message of this episode. No actionable tickers. Duncan has not yet shilled Banana. All right, guys, thanks very much for tuning in to another episode of the Hive Mind. Hope you enjoyed it. And yeah, please leave us comments. We should actually respond to the YouTube and everything comments. I'll go through and do that. We'll start responding, we promise. Uh, see you again in 2 weeks.