Kelp DAO Exploited, DeFi Over?

追加: 2026-05-04

[00:00:14]I can't.

[00:00:36]I take I go hey go Hallelujah.

[00:01:38]Yeah.

[00:01:44]Hallelujah.

[00:01:50]Take go.

[00:02:17]I'm here for you.

[00:02:51]Good morning everyone. Welcome to the modern market where every day we discuss all the things to do with the markets.

[00:02:57]The fast way to keep up to speed with the latest world developments and how to express a financial view via traditional trades, perpetuals and predictions.

[00:03:04]Today I have Rahim in the coho seat with me. Uh we cannot wait to get into it.

[00:03:09]But just to remind friends before we do, nothing that we say here is financial advice. This market is very very risky.

[00:03:14]We do not know anything for sure. So please do receive caution and exercise your own judgment. So getting into it today, the main headline is of course kelp dow exploit likely by North Korea's Lazarus group. Uh big big question marks around crypto defy. Now $7 billion already have seen uh outflowed away from the crypto ecosystem uh which is not good to see. We'll discuss some of the implications in a bit. We'll also talk Poly Market seeking a $400 million raise at a $15 billion valuation. And finally, straightforward is closed again as US naval blockade appears to seize a Chinese ship. certainly can't verify that definitively. That's what some of the conversation was around. We'll get into what that means for the rest of the markets as well. Remember, S&Ps hit all-time highs last week after unprecedented uh day after day gains uh last week. In other news, Binance and BBE announces an investigation into the Ra pump to $20 billion plus. Jupiter announces borrowing against X stocks is live. USDA announces chip launch on April the 21st, which is tomorrow. Drift has secured $148 million funding from Tether after an exploit. Peter Till and Bellari fund objection a startup to help protect protect reputation with AI. Ripple announces building government bonds trading platform with $89 billion South Korean insurance company. Cryptounk token has been launched an airdrop to some holders trading at $5.9 million.

[00:04:51]And finally, Pante reveals its technological manifesto. It's quite an interesting read. We'll try to touch on that uh later in today's show. Uh in terms of price action, this is what you need to know. We've got Bitcoin flat around 75K.

[00:05:07]Ether is around 2.3K. Oil is up a percent to $87. Brent is up a third of a percent to 90. We have Hype down 4% to $41. Soul is down half a% to 84. The S&P is flat around 7,085.

[00:05:25]remember big big gains in that over the last two weeks or so. Ave is down 5% after uh all of the kelp exploits affecting Ave in a big way. We'll de dive into that a bit more in a moment.

[00:05:39]Um you also have Zcash Zcash down 6% to 311. Gold is flat around 4793 and uh lay zero at $154.

[00:05:51]Um, so those are those are some of the main the main moves um to get you up to speed with everything that you need to know. We're going to get into the headlines in just a little bit as always, but just checking in with you first Rahim to see how things going.

[00:06:06]Anything catching your attention? How are things your side?

[00:06:09]GMG everybody a very very eventful like weekend. There's a lot of like craziness happening which obviously we'll go in detail during the entire show but there was also like a lot of like risk assets doing like really well like we saw like an an insane runup on like certain NFTts boards were up like 30%. And as someone who has been in that ecosystem for close to 5 years now actually in like two weeks the energy that has been there in like the last couple of days has been pretty interesting. And I think this goes broadly in all like risk assets. We obviously saw the asteroid meme coin pump absolutely ridiculously after Elon Musk's tweet. And I think it created a lot of like conversation because there were two meme coins happening. One is it's called Asteroid. It's on Solana and ETH and we obviously had both parties uh waiting for the launch. The Solana one ended up like uh so initially he was responding to someone's tweet and the entire space was waiting for him to give an answer whether he's okay of let for letting asteroid which is like this plushy to become the mascot for Space X.

[00:07:20]And the moment >> ju just just to explain it a little a little bit D because I think Legendary told me the story over the weekend. I had had no idea. It's pretty insane.

[00:07:29]>> It is. Yeah. I think like uh uh you want to go into the story a bit?

[00:07:34]>> Yeah. You you you can do it.

[00:07:36]>> Yeah. Uh it was basically I I believe it was like the grandmother who passed away. I know like the DJ asked it.

[00:07:44]>> Yeah. So and like she had like a list of questions that she always wanted to ask Elon Musk. Uh which was like which was like favorite anime? Did he visit visit like Japan? A bunch of things. And at the end the question, >> so this is a woman who is about to pass away, right?

[00:07:59]>> Yes. She had like a terminal disease and she wanted to ask like a bunch of questions. So it was seen in like a very supportive like a wholesome way that Elon Musk responded to some like random person just giving like the condolences and uh one of the questions was is that can you make this like plushy into the Space X mascot? And the entire space was waiting for him to essentially like respond cuz he said he's going to come back and respond. So there was this one day of insane speculation. So you had the Solana memecoin run up about like 6 to 7 million and this is before him saying yes or no. And then everyone was focused on like Solana. There was another memecoin based on like on the exact same plushy because the story has been out on on the internet for a while on ETH that was pretty much like dormant. And 24 hours later, lo and behold, he came and said, "Okay, let's do it." It ended up taking the Salana memecoin to from 2 million to 15 million and then it quickly sank back. However, the ETH one ended up going from 12 million straight to 100 million in like one straight candle. dipped a bit and went all the way up to 180 million and it created this like insane turmoil of like Solana versus ETH and like Solana people were just like really like on each other being like you guys don't know how to hold whether whereas like the nuance for the ETH memecoin was also the fact that this memecoin has been out for a year. So there were holders that were completely unaware of this happening and they came back the very next day seeing their $100 investments turn into like six figures overnight. So that definitely contributed to a lot but insane meme volume. To keep in mind, we haven't had a 100 million runner in months. Punch ended up like reaching 30 to 35 million.

[00:09:42]The last one was Penguin, which ended up reaching 180 million. This is right after the uh uh the president and the White House account was tweeting. But pretty significant to see that volume in in the memecoin market.

[00:09:56]>> Yes, indeed. That is um I I I It's pretty That's pretty crazy. That's pretty crazy. Um, it almost made me think when Legendary was telling me this because it sat it almost sounded suspiciously contrived. Like, I don't know. Has anyone verified that this person is real and that someone is I mean, this is the the cynic in me talking like all of these storylines real uh in order to move this meme coin the way that it did.

[00:10:29]I I I don't know anymore. My my trust in the general humanity of the cryptospecific frankly not not just the cryptospecific meme like I I think the level of grift across the board is uh astronomical. So uh I do have a reasonable amount of skepticism across the board but nevertheless ultimately that is why people were participating in crypto in some capacity. Like the whole point is um every now and again to have these things and your point that interested me most was I guess just trying trying to figure out where we are in the risk takingaking cycle. I was looking at even the coins today rhyme and near was at 138. You had VVV still at $9. And it just makes me think okay all of this kelp stuff which we're going to go into in a little bit.

[00:11:25]the exploit I think it's up to $300 million uh exploited but $7 billion has left D5 TVL which is I I think of of of a TVL of total around 26 bill I think we're down to 19 now which is a humongous humongous chunk of D5 TVL leaving the ecosystem because people are just like this is not safe this is not okay it is interesting that as you said okay we haven't had 100 mil run in a long time people are willing to speculate Right. Um, and so VBV is still at $9. Like the these like very the riskier side of things haven't really sold off. So it makes me think that there is still more appetite than there was some time ago.

[00:12:10]What what do you think about that perspective?

[00:12:13]>> Yeah, I think you're spot on. Like I've always believed that there are always like these smaller opportunities, these niche opportunities and like markets that are completely decoupled from like broader what's happening like in the world. You have Venice which is like this this ven diagram between like privacy and like AI which is on a rise.

[00:12:31]It doesn't care about like the straight of hormones being like close. It's similarly like it's almost like there's like a cultural shift of everyone like focusing on uh AI and you see the same with like NFTs. you saw like boards run up like 30%. People were like absolutely like livid in the entire ecosystem and like people who are obsessed with like IP who are obsessed with like this cultural aspect of it of like meeting people and like building out this like IRL culture is like completely like decoupled and I think this segus into something that I've been like meaning to ask you because I think it's an important question for us to like discuss. Of course you and uh Ledge were representing mod market. You guys did a fantastic job commentating the Legend Trade event, which was like personally I was sitting at like 3:00 a.m. and watching that entire thing. How was that experience? Like we have to talk about it before we get into like some of the serious news.

[00:13:23]>> It was really fun. It was really really fun. So just for people who might have missed it, we uh were in New York uh commentating on the Legend Trade series.

[00:13:34]It was a pretty pretty awesome pretty awesome event. Max, there's one maybe photo to pull up here. I'll just share it with you. If you go um onto my my profile. Uh there's a there's a a pic of the the the group of presenters. Um I'll just put it in the chat here. This is a pretty cool one. So, it was headline sponsored by Poly Market, which is pretty cool. And the thesis is, you know, you're gonna there's so so many games and so much energy and social enjoyment involved in trading, which I guess is traditionally captured on crypto Twitter. Like there's always people flexing their P&Ls, talking about their trade ideas, celebrating people's wins, getting jealous of people's wins, uh some people laughing, and some people pretending to, you know, not necessarily being uh honest about what they're doing. And the idea is like look, let's try to capture that energy, excitement, competition, and put it into a competition. And so, Legendary and myself along with Go, who's the other uh presenter you can see on the screen here, uh kind of tried to turn the event into or are trying to turn the event into a sport. Obviously, with Legend, they're the team behind it. They have a platform built on top of Hyperlquid and um want to do these types of events around the world. There were eight traders in a boxing ring underground in New York. Um and so there was three rounds. Eight turned into four, four turned into two and we were commentating each round and it was a lot of fun. It was a lot of fun. It's pretty incredible what you see behind the scenes to put the effort in to make this type of of an event happen.

[00:15:21]There were so many people on the kind of building the infrastructure. There was so many people behind the scenes making all the tech work. Um, unbelievable execution from the Legend team and all the help that they enlisted to to get it over the line. And it was very very exciting. I think we did a we did a pretty you know there's things we want to improve for next time on the viewer experience for the audience who turned up um but also on the online side. I think we did a decent first attempt.

[00:15:52]Ryan, what what what was your core experience from as a viewer?

[00:15:57]>> Well, I thought like you guys like absolutely killed it. Firstly, I think there is some irony to point out that like you know there was a point where everyone was talking about that we are bringing like the suits in crypto and they're going to make like everything like so corporate and now you have like this picture in front of us on the stream where like the two of you were like sitting there in suits commentating and a sports tournament that has to do with like per trading which I just find like so like a weird like a full circle like moment which I thought was like super entertaining and I thought like you guys did like a fantastic job. I'm curious to know for like the fact that you guys have uh hosted the show for like so long and you guys do this on a weekly basis. Obviously, this is way more like informative journalism compared to what you guys were doing there, which is like seeing what's happening, having to switch between screens and not know what to expect. How was like the the experience in terms of like if you had to compare from a media angle? If you could touch on that quickly.

[00:16:53]>> Um it's very it's obviously very different. um in some ways the same like you you the preparation is key. We we we had made a 27page booklet to prepare from like the introduction to the whole show into the transition into our part.

[00:17:12]Remember we we we're kind of the halftime analysts as well. We had prepared endlessly for like all right what if there's a delay in between round one and round two and we need to talk for 30 minutes. What what if they can't disconnect the computers fast enough and put them back together and instead of only being us with us for five minutes, they need us to talk for 20? What what are we going to talk about? What are the topics? What would be the metrics we want to discuss? But, you know, I'm a big sports fan. I've watched a lot of football, UK football as a kid and now I'm a big American football fan. So, I'm like very very familiar with sports broadcasting and so just trying to take as much as I can I could from all the different sports that I like. I'm a big even aside from those two sports I'm a I'm a big uh sports fan. So, it was just kind of like trying to take all the different aspects from all the sports, roll it into uh this thing and then just just just roll with the roll with the punches. I I you know, you ask how to how to execute on it. I kind of think about it in the same way I do sport.

[00:18:14]Like you just just do what you see other people do. Like when I tried to learn to play tennis, if you see someone play a good player play tennis, just try and be like them. If you see when you like someone the way they hit their forehand, just try and hit it like them. Uh and so it's the same way with broadcasting.

[00:18:29]It's like, all right, do you do you like particular kind of commentator? Well, just try and find your version of being like that person and then you kind of settle in and find your own place.

[00:18:39]Although I suspect it will take us many many shows to really find our own kind of live persona.

[00:18:45]>> Yeah, of course. My favorite bit has to be when there was that one contestant and she was doing a bit where like, you know, she closed her eyes off and she was pretending to sleep and you were there. You were like, "Guys, she's sleeping. She's sleeping." And I hope there are people who clipped this, you turned this into GIFs because I thought it was fantastically done. But I know we have like a lot of stuff to go through.

[00:19:04]There's a lot happening in the industry.

[00:19:07]So, uh, let's carry on.

[00:19:09]Yeah, let's do it. But um yeah, final final point on it is I do think and maybe this is actually linked to the the points we're about to go into. One of the reasons why I like what Legend are doing so much and actually any company is like them is that it it just feels a little bit less correlated to the market. like every other stuff all the other stuff that we do is very very correlated to the market because like oh if bitcoin goes down then suddenly um the demand for something else automatically goes down whereas when you're building a brand and when you're building a sport and when you're building a competition and you're building like the kind of competit building on top of the competitive nature of humans I feel like that can persist beyond just um just like the fluctuations in crypto and so I'm very bullish IRL stuff whether that's Legend or anyone you know TCG cards for example that's why I I really like the guys who are building out IP in a really high quality way it's just a little bit less correlated you know as as much as crypto has struggled the last year Pokemon has surged through the roof. You know that better than most, right? You've been following that very closely. So, I I just think getting exposure to the real world. Uh you people have spoken about, you know, the the the world of atoms instead of being so focused on digital which has dominated like the world of software, the world of digital has absolutely dominated the last few years. And when you layer that on top of Anthropic coming out every four days and uh you know sizing down some established software business because their latest update somehow uh puts their puts the former business model completely at risk. You just got to I think it's a sign you got to uh just get more exposure to the real world is my is my take. Do you have a view on that uh Rahim as we kind of move into the first headline?

[00:21:25]>> No, I'm 100% like aligned and I think it's that conversation you need to constantly have with yourself is like like just like how markets are very like future focused. You think about like what are the generations that like will be like in 5 years 10 years you think about like how Gen Z is adapting to the world whether it's like the way they interact with technology the way they interact with like people the way they interact with like assets. And I think it's I think this is a conversation that gets like really underplayed that you you need to find that balance of okay, you see how like the markets are right now, how they've been in the past, but make sure that you look into the nuance of like why is it why is it that like all of a sudden there's like a whole generation of people who are interested in like Pokémon and somehow the newer generation has gotten like their parents involved who were into it like in like 1990s. And yeah, like I'm I've always been like someone who's who's very infused with like the music culture, the the cinema culture, the collecting culture. And I think it's Yeah, I think like especially like the way the more digital we go with like AI content and like you know, I think in the future instead of creating content, it'll be people building out products. They will die in a day, but that's how you would create content. And you can already see that and people would just like want to live in the real world and have experiences. And so I think like you're 100% like on and very bullish on that idea too.

[00:22:44]>> Very very very much so. Um something I've been thinking about for quite some time I think. Um okay look and in a way that's kind of ti it is kind of tied into this this first headline which we'll get into now which is of course the news that um Keldal was exploited likely by North Korea's uh Lazarus group. It's news that the RS ETH bridge was exploited for $292 million via a layer zero configuration flaw. Um, I actually taken uh this short write up I'm about to share from a really good newsletter that I share. It's called that I check in with routinely. It's called today in DeFi. I thought they did a good a very good explanation. said, "An attacker forged a crosschain message that tricked Kelp's bridge into releasing 116,500 RS E, which is 18% of the supply with no ETH locked on the source side, effectively minting unbacked RS out of thin air. The bridge was secured by a one of one DFN validator stack of on a $ 1.5 billion plus protocol. Unconfirmed reports point to a compromised layer zero labs signer key. The attacker deposited the unbacked uh ETH on RV V3 uh V4 Compound V3 and ULA borrowing $236 million in Weath before Kelp's emergency pause fired 46 minutes later. The positions are unlquidatable leaving Ave with around 177 to $196 million of bad debt compound 39 million and Ula less than a mil. Ave's weed pool hit 100% utilization as $5.4 billion fled the protocol suppliers can no longer withdraw. That's one of the just an an awful situation, right? So usually if you have provided liquidity provided ETH into um uh a you assumption is you can take it out whenever you want because there's always an amount there. Now you cannot do that. Um, spark and fluid have also frozen the RS markets. Um, the drained mainet reserve back backed wrapped RS across 20 plus networks including ETH, arbita, blast, mantle, scroll, optimism and mode. Redeemability on every non-mainet chain is an open question.

[00:25:09]Um, so I think this is still a developing story. Lezer has published its official report um attributing the attack to North Korea's Lazarus group.

[00:25:19]The attackers secretly replaced the bridg's transaction verification system, the RPC nodes, with fake ones, then knocked out the legitimate ones to force the bridge into confirming transactions that never happened. The attack only affected kelp dow because they used a single verifier instead of multiple independent ones as recommended by layer zero, meaning there was no backup to catch the fraud. All other layer zero integrations remain unaffected. So look, this is this is really bad news. Um I'm trying to think if there's any other helpful updates here. Uh, one comment from Ox Quit, who is one of the most, I think, trusted people on the developer side, said this. He said, um, uh, feel for everybody that was affected these last few days. Sometimes you just get outplayed. And DPRK, that's the uh, North Korean group, outplayed the good guys once again.

[00:26:23]Here, he said, "This attack was sophisticated.

[00:26:27]Make no mistake."

[00:26:29]Um, layer zero DBN is back online and fully operational, but I suspect there will be some serious introspection over the next weeks to months about further hardening security. Look, I'm sure we can get into more technical detail. I'm sure that we could kind of go into more uh technical detail, but I'm going to stop there. I think that sufficiently explains what happens, who was in charge, maybe where some of the uh if you were to attribute responsibility where that should lie. It sounds like um yes, layer zero was um uh did did have um the attackers did replace the bridges transaction verification system but um kelp only had used a single verify instead of multiple. So I think there's clearly uh a lot of responsibility with kelp because they did not follow the protocol or the recommended protocol uh which is recommended by layer zero which I think is actually a humongous oversight in this industry right I think only having a single one is is a is a huge problem when so much money is at stake so look I think that's the situation to to thinking about the introspection which quit was alluding too.

[00:27:59]It's hard to see for me how Defi can respond from this. We've remember what one of the messages we've been saying on the show for actually multiple months. Remember when we started going into the bare market started to say just be just be aware guys like when when the bare market hits I remember this from last time around in 2022.

[00:28:22]people who haven't made the money that they thought they were supposed to make, uh, bad things just start happening because people realize, gosh, we've run out of time. We've run out of time to make all the money that we were supposed to. All of these smart contracts that maybe we were running or maybe someone else was running or whatever, just bad things start happening in the bare market. I don't know whose fault it is.

[00:28:43]I'm not sophisticated enough to know.

[00:28:45]All I knew was that bad things happen in a bare market because people get greedy because the natural way to make money in crypto, which is just the prices go up, isn't happening anymore. Therefore, bad things start happening. And you start to realize when when you when you layer on top of that the the the yield that you can earn from taking smart contract risk, when that's down to 3 4% in DeFi, it's not worth it. It's not worth losing 50, 100, 150, 200, seven figures, however much in DeFi when you're getting 3% back. Like you can get two and a half% probably just sitting in one of your bank accounts um as like in a high interest saving account.

[00:29:32]So the the riskreward in DeFi has been quite poor for a while since probably September last year. You just have to be alive to alive to recognizing that. It doesn't mean that you maybe don't have a portion that you want to allocate to deeper for the things that you want to experiment with. But, you know, it's it's hard to see how people who've been through this multiple times. And then you have to, you know, you have to wake up on a Saturday in a panic and kind of rushing around to make sure that the money that you think you have is still in your possession. It's just not really acceptable long term. And I think people are getting going to get incredibly fatigued of this type of thing happening. Thinking that crypto is maturing on the one side, but then this is still happening. So I think it's very disappointing from that perspective. Um Rahim, what do you think?

[00:30:31]Yeah, I think like one of the pitfalls that we going to like see more and more and this is only going to like take time to show up is that you have so many projects and protocols they essentially keep their entire like balance sheet in some form uh in like a way to essentially like generate like that yield cuz especially when you're in crypto you have like this itch that even though if like you're running a business that you should get some sort of like exposure to the upside of like crypto.

[00:30:58]So you you take your your company stables, you borrow against it, you take your ETH, you borrow against it. And I think like I think the pitfalls that it's going to have on like protocols, protocols that maybe you and I haven't even like heard about that'll get like completely wiped out. No one will ever hear about. But the fact that these are people like who are building products, who are building ecosystems, this is like it is actually like pretty pretty bad to like lose that like trust that entire ecosystem that has been built like crypto is like built on DeFi and it's especially like the way it was done like so meticulously and like for like a simple way to understand it, I have like this quick analogy cuz I feel like everyone who loves like Hollywood cinema like Oceans 11 type of like movies and the way to like think about it If like a lot of this like technical wordings that you're seeing on the timeline are confusing is think of it like you have a bank. The bank you have a head of security. So over here your head of security is basically the layer zero verifier. You have senior guards and then you have junior guards who are standing at the door. What uh Lazarus did is they went and ended up poisoning the food for all the senior guards. So none of the senior guards could essentially work. This is the DOS attack that was flooded into their ecosystem.

[00:32:14]So now what the head of security had to do is he had to go and reach out to the junior ones because they were the only two availables. These were the two RPCs that they essentially corrupted. So if you think about like a bank heist, you always think about that like you know you either corrupt like the main manager or like the people who have access to the money not the people who are like the least connected into that ecosystem who have like don't have security clearance who don't have like proper access to information but that's how like they did it and essentially the way they corrupted them. So think of it like they swapped out their walkie-talkies.

[00:32:47]So when these guys saw the transaction moving, they communicated to the head of security that oh yes, all this money moving is fine. Uh uh go ahead, you can approve it. So these RPCs did not know that they were doing this like move.

[00:33:00]They were using this walkie-talkies to manipulate and flip that conversation.

[00:33:05]Uh and uh the head of uh uh the security which is essentially the layer zero verifier did not know this was happening. you as a consumer who's like scanning blockchains if you're like very geeky looking into protocols. There's nothing shady about any of this and like you have an entire hack planned out and like millions and millions of dollars of money completely gone only to find out later that the walkie-talkies of these two people were like corrupted. So the information that was being supplied to layer zero was wrong. So on paper, if you were as a consumer, everything would seem transparent, but the only person who had fake information was actually the layer zero verifier. So it was like insanely like sophisticated. And I think I think we have to and especially for like people who don't know, I come from a forensics background and we have this concept that there's no such thing as like a perfect crime. It means you have like broken ecosystems. And I saw this uh tweet that was like retweeted by Punk 6529 who was saying that this is not just like a regular DOS attack. There's a conversation to be had that how did they get access to basically being able to like do the entire thing? Going back to the analogy is how did Lazarus get into the kitchen? How were they able to poison the food of all those senior guards? There must be like loopholes in their security system. there must be definitely some sort of like supply chain issues which don't even involve on like the protocol level but just like how company infrastructures are involved and it's uh definitely definitely a sad day. Yeah, it's it's interesting analogy. I the thing that I hear as a slightly less technical person and purely more on the commercial side is that to the extent that we say assuming the analogy is exactly correct um maybe it is perfectly maybe it isn't but assuming that it is people the the on the commercial side users don't want to have to think about this stuff like you just don't want to have to think that on a Saturday you as a depositor or a liquidity provider have to go through all this stuff and then start to figure out what on earth is going on and be part of some endless back and forth on Twitter to try to figure out the solution to the problem. I understand if you're if you're building this stuff that you want to be a part of that, but I think I think ultimately we're failing as an industry if we can't figure out a way for people to do this stuff safely and in the end this is not going to be acceptable. I read a number of takes about how, you know, if you have institutional cap, people talk about institutional capital coming onto Ethereum or or Salana or whatever. It it doesn't really matter where. I mean, frankly, on Salana, Drift got um uh hacked for what was it 15? I don't want to make up the number now. I know I know Tether invested 150 million to them. Um I don't know if that that was the number of the hack, but it was a very significant hack. So that was on Salana.

[00:36:17]Okay. Now you've got this um exploit taking place in the ETH ecosystem.

[00:36:22]Institutional capital can't a see can't afford to tell their LPs that they money's just gone to zero. Um especially not what portions that are supposed to be risk off like fair. Look I'll clarify that slightly. If you're running a uh a VC fund, okay, fine.

[00:36:43]People know that some of your investments are high risk. A proportion of those are supposed to not work out.

[00:36:49]That's just how the game works. People know that if you're taking money and depositing it in for 5% or doing some looping strategy, which I guess is what DeFi is also good for. You know, you keep you input stables, you borrow against them, you loop it around, and you do this kind of thing. Yeah, allegedly that's riskoff, right? If you keep the borrowing ratio low enough, but then what? You're you're selling a riskoff strategy and then suddenly your money's disappeared. It's like this is just not this is not a serious way to attract either serious money or serious people. Uh Hu here had this tweet which uh Max is sharing on screen just dear BR bridge providers add circuit breakers you clowns like it it it just it shouldn't be possible to do some of this stuff and I fear that whilst people say on the one hand that our industry is maturing it is not maturing fast enough and I think in trying to revolutionize traditional finance and break away from it. It's not learning that some of those aspects uh that traditional finance has evolved from the beginning are useful and should be incorporated as soon as possible if you want a mature industry.

[00:38:19]Big question mark as to whether that renders all of crypto pointless if it just has to emulate finance to such a degree. I I I I get that. I think that could be a valid question mark. Um and may maybe one final thought here is the take to maybe even push back against myself a little bit. Um Eric Forhees, who is the founder of Venice, obviously a very big crypto proponent, a very big uh privacy proponent, very big kind of self-responsibility proponent.

[00:38:56]um had this to say. I'm just trying to find the specific tweet. He said um I'm trying to find okay here. He said in crypto and DeFi i.e. in honest markets when a component fails those closest to the component where the wildly negligent or innocent victim suffer the loss and are burdened with that responsibility. Unequal but proper in trading i.e. In coercively manipulated markets, when a component fails, the entire society is forced under the burden of its resolution. Costs are socialized, which is equal but improper.

[00:39:36]The former, with time, becomes self-correcting, self-improving, and crucially retains vitality. The latter, regardless of time, becomes stagnant and soulless. And here, everyone can wallow in an equivalent gray. Any man of agency should prefer the former, taking care over that to which he is proximate. It is from that that the virtue of markets emerges. I don't actually mind that take. I I I I guess um I I guess the question is yeah to what to what extent do you socialize the problem after or do you let things who things who which do poorly um suffer and I think in traditional markets uh the government's always there to back things up and then the cycle just continues um whereas in crypto which is sub meant to be this more kind of true and honest market uh you get you you are going to get failures. Um so that's one alternative take let uh Rah curious for your your thought on that idea which way you lean um before we maybe move it on.

[00:40:50]>> Yeah, I think that's a like I completely uh align with that take. I think it's a very smart take. I'm a big fan of like how Eric Warhees just like operates in general. But I think that's a great conversation to have because this puts into perspective a couple of conversations is I feel like even when we when people talk about centralization they always take this angle of like oh it's like this like evil thing and the government is like trying to control it and like you know we shouldn't accept that and stuff but the conversation that no one brings up is why people sometimes align with centralized systems because it makes their life easier. And this goes back to like the first point that you started with is like when you're on a Saturday, this is not what you want to like worry about. When you're out with like your family, you're going about if you keep your money somewhere, you're like I want it safe. Yes. One school of thought says that it's only safe when you are the only one who has like access to it. The other school of thought says that okay there are credible people credible uh keep like store it like this is your banks and try to fight ecosystems. And I think this is the conversation is going to come back to over time. It's like a philosophical discussion about understanding the nuances of centralization and decentralization and the pitfalls and the upside on both ends. But also thinking about it from like a consumer lens or why is the consumer doing it?

[00:42:08]Like how many people who borrow against or like take yield on a are doing it because it's like such a good number or because they're using it to farm something else versus how many people are doing it because they 100% believe in the decentralized integrity of like the platform and stuff. And it's a it's a philosophical conversation, I guess.

[00:42:27]>> Yeah. I just think the net effect of all of this is that if you're a wise allocator, you can't there's there's almost not a number that could force you to uh go into these protocols at the moment. not with and this is the thing to layer on top of right which just touched on at the start of the show but it's worth bringing up again not with uh two things happening although maybe one less so I mean there's this quantum question around Bitcoin which from a technical I don't think that's necessarily relevant here but people are concerned about that on the on the Bitcoin side ETH is making some moves towards figuring out how to be more quantum resistant so there's like this kind of quantum vulnerability that is up in the air uh a little bit. Maybe more pressing immediately is this Mythos update um which a Anthropic has pushed at the moment specifically to core businesses because very important uh American businesses and they have not made it available on a widespread basis because they say it is so capable of identifying potential exploitable holes. s in companies security. So they're trying to release it only to the companies so that they can sort this stuff out themselves, patch any gaps. But if you're if we're going moving forward into a world where the AI tools are so powerful that they are able to uh find exploits so easily.

[00:44:12]I don't know. I I I I don't want to uh be participating. I mean who who knows what else is vulnerable, right? And this is why I mentioned the Versal hack as well. The web3 hosting back when Versal confirms breach as supposed hacker demands $2 million in ransom. This was a security incident on Sunday um involving unauthorized access to certain internal systems. There's just so many of these hacks taking place now. Is it related to AI? I don't know. But again, we we don't know all of the details around these things. All we can do is look and observe and here's some of the stuff. It is some of the AI uh fear specifically to pump AI valuations to make you think that it is so powerful that it is capable of all of these things. Therefore, yes, Ananthropic should IPO above a trillion, which by the way is where it is trading uh on ventuals on the hyperlquid premarkets.

[00:45:15]It could be that it could absolutely be part of the whole narrative and the whole story. Um, but there could also be some truth to it. So when you layer that on top of just the general bare market state of DeFi, which is, you know, people getting hacked left and right at the moment, it's it's not a encouraging environment to be a riskoff capital allocator in crypto in my view. Um, so let's leave that that that part there.

[00:45:50]Um, we've actually, you know, we've actually been speaking about that for a while, right? Like generally risking off from the summer last year and not thinking that DeFi was a great um spot to be in, at least not in any com any kind of complicated way. Um, okay. So, that's that is that we got two more headlines to touch on today. Ryan, why don't you tell us what's going on with this polyarket raise here? We've got Poly Market seeking a $400 million raise at a $15 billion valuation. I've got a couple of thoughts here, but what what's the core information we need to know?

[00:46:28]>> Well, as you guys know, Poly Market because it's like a two-sided like bet, it's a very capital intensive ecosystem like all of prediction markets. And on the backs of that, Poly Market is essentially looking to raise about $400 million at a $15 billion evaluation.

[00:46:44]This comes on the backs of the conversations we saw going around in October where they were looking to raise about at 12 to 15 billion dollars back then. During then that's when international exchange ICE not to be confused with the customer custom office uh immigration company in the US promised uh committed to essentially $2 billion at their $9 billion post money evaluation which they said they will do it in segments. So back then they did 600 million and they are essentially adding 400 million to that. Uh Poly Market has said that they're looking to essentially get more additional strategic partners to increase this current 400 million cap to uh about a billion dollars. We've obviously seen an insane amount of capital flow into prediction markets in general. Like if you look at Cali, they raised about a billion dollars in March at $22 billion of valuation. So crazy volumes. Cali H is having 13 billion monthly volume whereas Poly market has tipped down as slightly under at 10.5 on an average basis. We're obviously seeing like this sports betting, gambling, uh taking bets on culture becoming like a bigger and bigger thing. We saw the the Oscars had like a high peak in viewership because there were a lot of people essentially betting on who's going to win, who is not. We are obviously seeing we uh the Donald Trump post the other day where he essentially made a tweet about like stake. So there's clearly like this cultural shift going around where people want to bet on outcomes in one form or the other and we are seeing like this insane evaluation on prediction markets and gambling as a whole.

[00:48:36]>> Indeed, it's a good a good little summary there. Two things I would say.

[00:48:42]You mentioned the sports betting aspect of it. I do think we've been saying on the show a bunch of time, you know, there are um states pushing back against these things. And I think from a pure gambling perspective, one of the things I did as a lawyer was I was I actually did a little bit of gambling law and the the the bar is so so high for you to participate in that arena. I don't know if people are super familiar. the bar is really really high. If you want to offer people gambling products, the bar is so so high. And so I think you know the the that whole that aspect of the business model is going to be under threat I think. Um but maybe a separate point which I think is interesting you mentioned these colossal valuations. I think one of the things they're going to need to do these guys is close these rounds ASAP. I mean I know Koshi you you mentioned raised very big at around 20 I think. Poly market seeking 400 at 15.

[00:49:50]Remember hit four is just around the corner. I think Poly Market's doing an amazing job in building their side of the brand and their product suite. And the reason why I like what Poly Market is doing is that I I I just find their information markets super helpful at the moment. Um I don't find myself looking at their sports side a great deal, but I do find myself looking at their inflation perspective or their interest rate um perspect markets or um you know the the Iran conflict markets which we'll talk about in a second. I do find myself looking there and I think that is a tremendous opportunity. Um but hip remember hip 4 hyperlquids uh outcome market is just around the corner now and uh if the execution on hip 3 has anything to go by um I think you want to secure this funding now whilst you're still definitively in a two-way battle rather than in a three-way battle. And I think, you know, look, these these two pro teams are doing a fantastic job. Um, they're they're marketing everywhere.

[00:51:04]They're raising huge amounts. They are attracting loads of capital. They're doing a good job. Uh, but they're they're in a two-way battle at the moment, right? And I think HIPP 4 will change that. And I don't know that the allocators who are allocating towards uh this $15 billion valuation uh will be as familiar with HIP. In fact, I think most people are still only finding out about Hyperlid via HIP 3 when you can trade oil there over the weekend. So, I think that's something to keep in mind. You want to close this round ASAP so that you don't see uh HIP 4 kind of uh siphoning off some of that attention and capital. Um that's my view there. Ryan, do you have a take before we hit the final headline?

[00:51:47]>> Uh that's actually a fantastic take because like you could argue like the biggest hurdle prediction markets have is essentially liquidity, right? This is why like they keep raising money and if you're able to essentially provide like some sort of an ecosystem where you provide liquidity to these pools and you get some money. In fact, as I'm saying this, I'm thinking if you think about like so much of DeFi is like currently like struggling and this is again DeFi but it's in like a sector where if you are saying that this is like the next industry where everyone's focusing at and then if you essentially provide liquidity to hip four, you essentially make like certain yield. So you have a so much capital that has like moved out of a lot of these markets from a that has like lost trust to hyperlquid which is one product that has gained the most amount of trust like the cycle. I actually think that's a great great take for them to be looking this out because if people would start providing liquidity to foreign points or whatever it's a big game changer >> h indeed. Okay, one final point just to, you know, maybe set the scene on the prediction market scene is that whilst I do think on one hand they're vulnerable to some regulation or law lawfare on the sports betting side, you have to also remember the CFTC I think has more or less been captured by the prediction markets, the gambling markets, the speculators markets. It's been absolutely loaded with people from the industry and that's why even when you think of Hyperlid like Hyperlid have appointed I think his name is Josh someone there there's a very wellrespected lawyer I think in in Washington who's been appointed as like the hyperlquid policy center or something like that is going to go and kind of do hyperlquids lobbying in Washington.

[00:53:36]I think all of these teams across the board are very very aware that that's part of the game that they need to play and I think this administration is very pro letting these guys do their thing.

[00:53:48]This is why when I say that my biggest concern for Hyperlquid is that they are uh taking uh activity from centralized exchanges who have to do all of these jump through all these v various hurdles and I don't think Hyperlid does have to and I actually do think that is unfair.

[00:54:06]I think that is unfair. Um I think that is their biggest weak point despite thinking Hyperlid is amazing product and being significantly invested in that direction. Uh but I think it's still going to be fine because the administration seems to have signaled if you want to speculate under in in this administration you are allowed to like this is part of our uh modus operandi like we want speculation therefore don't worry about it. That is my view. I could be wrong. I don't see them becoming aggressive yet. Maybe that changes. I don't think it will. Um, okay. Just a couple minutes left now to hit the final headline, which is give you a quick update on the straight of Hormuz. Of course, um, uh, it is unfortunately, I don't if you saw that meme over the weekend, that the opening hours of the straight of Hormuz is 9 a.m. to 5:00 p.m. Eastern time.

[00:55:03]That is when it is open, when the US markets are open. And aside from that, it will be closed uh just like any other American uh business. Um the Iranian speaker of parliament uh commented on vibe trading, crude oil prices and US treasuries. He concludes with the Bloomberg terminal command uh of uh dated Brent oil prices. Um he said vibe trading digital oil is like vibe hedging in treasuries during Hormoo's risk off.

[00:55:34]both share one house of cards that works on paper. Um, this is just a nonsensical situation where I think both sides are aware that they are playing the markets to some degree in their communications.

[00:55:49]I think that is why people are increasingly getting f finding the communications around the conflict tiring and exhausting because um there's just this constant communication around it and it is often mo it is moving the markets over and over again and uh whilst there doesn't seem to be any material progression to a a resolution to the conflict. So, it sounds like now after um the ceasefire last week and this potential resolution that that ceasefire is off um the the straight is now closed again. It appears that a vessel targeted by the US blockade was on route from China to Iran. And there was um a tweet from President Trump which said that this uh this uh this um ship has been seized.

[00:56:51]And so now we go into another week of is it open, is it not open, uh how much oil is moving, how much oil is not moving, and we repeat the cycle. And we do that with um WTI oil at $87. Now Brent is at 90.

[00:57:10]Stocks at all-time high. So I guess they've got a bit of room for conflict if they wanted to do something. They've uh they could they could see a bit of a draw down here on the S&P and it not be that bad because they've pushed it again back to 7K.

[00:57:26]So that would be the cynical view.

[00:57:28]They've kind of put the S&P back in a much higher position. Therefore, if they wanted to escalate, they have some room to maneuver now without causing too much carnage on in the markets.

[00:57:41]But, um, it's a very hard read. It's, um, it looks like maybe we escalated this week, but frankly, at this point, it's just very, very difficult to read.

[00:57:52]I would have no specific view. I would not specifically want to trade it anymore. Um I think the first uh energy into the around the conflict that might have been uh positions to take I think is harder to see now. I do think maybe the general take of higher energy for longer on a more kind of structural level would be a decent one. I'm still holding my Chevron shares for example which did dip back on the the ceasefire news. I think just holding those for some time because energy is going to cost more for a while now is still a reasonable play. But beyond that, I don't I don't think um I'm not thinking about or I'm trying to decrease the amount that I'm trading these headlines because it's becoming impossible. Uh Rahim, what what's your view here? What do you think?

[00:58:44]>> Yeah, I think you're spot on. I feel like we've been doing this like copy paste uh market movement for the like last 3 weeks. Something comes out on Friday night after markets close, we dip a bit, all of a sudden for some godforsaken reason, even though things look bleak on Monday, open like we pump and then in the night we'll end up like dumping again. And I think like all of this has become like so manipulative.

[00:59:07]This goes back to like the start of like the show when we were talking about that there are certain markets that are completely like decoupled. If you look at like the charts of uh VVV obviously like Hyperlquid is very connected to the the oil trading so that's been like a different trade but I think like finding opportunities either you take like longer bets like you just mentioned if you want to like capitalize on energy but you're like okay I'm going to take this like the yield profit of this in like 2 3 months do that but if you are like day trading like all of this it's like so stressful you don't really know what's going to happen like when a lot of information is like skewed. Uh yeah, it's it's a it's really hard to gauge and like time the uh markets and Bitcoin was for example like again uh yesterday was trading at like around like 73 and right now it's at 75.2 again. So there's clearly like a lot of market manipulation and just like be very careful if you're per trading, if you're like day trading that everything is based on certain tweets and you don't want to be get caught in this war between these big people who end up moving entire markets.

[01:00:21]You're muted.

[01:00:24]Just as we say that we're going into 8 am Eastern time now with there being headlines like the very vague headlines capital letters from Walter Bloomberg on Twitter. Iran signals new talks in Islamabad. Iran may send a delegation to Islamabad this week for a second round of talks. According to two Pakistani officials, speaking anonymously, of course, they expressed cautious optimism that both Iranian and US delegations could attend. Pakistan will not disclose travel details for security reason and urge media to avoid speculation. Um strange that you should avoid media speculation whilst releasing this uh anonymous news to the media uh for speculation. So look, I think there's a lot of fatigue around it now.

[01:01:14]That's certainly my just my my my feeling. And so, you know, maybe you just get out of the way of it at this point. I do think maybe higher the way that I'm thinking about this now, and this is something for discussion maybe for the rest of the week now that we're coming to the end of the show. I'm thinking about higher energy for longer. I'm thinking about inflationary pressure. How do you want to position on that time frame? I'm also thinking about just simplifying things out a little bit and not trying to everyone's time frames has really really got compressed when it comes to investing at the moment. And maybe that's right.

[01:01:56]Maybe it's right to just be a bit more riskoff for a period of time because and remember it's not just the conflict that's going on the this the the potential disruption and the current disruption to significant business models by open AAI and anthropic and what they are pushing and what AI is potentially capable of is causing significant distress and uncertainty in uh in the markets. Like I know the S&P is super high still. I get that. Um although that's predominantly certain shares, right? But I just think there's it's a great time for uncertainty because you don't know how much of that is going to translate into like which companies survive that. I think maybe we spoke about Figma uh Rahim once because you said you used to do a lot of design work and stuff. Um something like Figma I believe someone just even mentioned the other day. I mean, it's down 7% again today. Um, it's down 20% in the last month. It's down 66% in the last 6 months. Like, you know, this this was a very popular product.

[01:03:10]Um, very popular software for designers.

[01:03:13]So, it's I I think it's right to be more cautious in general. I think there is a little bit of transition away from software into things in the world that you're going to need and um and yeah, just just thinking through that trade a little bit more, trying to lengthen the time horizon, being a bit more riskoff as you try to figure out what things get most affected um by this revolutionary technology that we're undergoing and take it from there.

[01:03:42]That's my my concluding set of thoughts for the end of the show. We'll obviously talk about it more this week. Ryan, do you have a final view before we close out?

[01:03:51]>> No, I think that's a wonderful way to close it out.

[01:03:54]>> Let's close out there then, guys. Thank you so much for joining. We'll be back same time, same place tomorrow, live on XXVideo, YouTube, and you can catch us on Apple and Spotify as well. Um, see you tomorrow. Thank you to Rahim, my co-host for today. See you tomorrow.

[01:04:12]Bye-bye.