Category: Short-Term Goals

Podcast notes – Do Kwon on Unchained – “Even to this day, I’m proud of work we did…values we tried to defend”

Note: I tried my best to objectively capture what Do Kwon said / meant, but I do think he’s an unremorseful criminal who should be in jail. So clearly I am biased.

Guest: Do Kwon (DK) – Terra / Luna founder
Host: Laura Shin – Unchained

Since last year, hasn’t been living in South Korea (SK)

Doesn’t understand how Red Notice works very well, has asked for clarification but hasn’t heard back

Disappointed that SK prosecutors are attempting to create new regulations through enforcement actions

DK hasn’t seen copy of the arrest warrant; Laura mentions the PDF is posted online, but DK says he hasn’t seen that PDF

“We are cooperating” with all the document requests (from SK govt)

Laura: Are you in Singapore now?
Doesn’t want to talk about his location for personal security – people broke into his apartment building in Seoul (both reporters and private citizens), personal threats

Laura: What about claims that Korean authorities froze $67M in his funds
“Too many things that are not true”
Went through proper procedures to pay residual taxes, hasn’t used KuCoin or OkEx “as far as I can remember”

“LFG only holds 313 bitcoin”
Hired onchain analysis company, will provide report shortly to give more clarity – should be “in next couple weeks”

Laura: Do you feel any remorse?
“Got carried away”, should have held to stricter standards
In personal life “quite a bit of introvert”
Community pull for him to be more frank, transparent
Over time Twitter became his medium to do this
“Largely for entertainment value”
“It is quite cringe” – worthwhile to keep up for record keeping and posterity

Laura: many people lost life savings, Taiwanese man who committed suicide, what do you want to say to them?
“My responsibility alone”
Hundreds of thousands if not millions who used Terra – “I own up to that responsibility fully”
“It’s not easy to live with”

In the process of people dealing with this grief, there were lots of accusations of fraud / theft — “important for them to have correct representation of what happened”

Crypto founder for last 5 years
“Even to this day, I’m proud of work we did…values we tried to defend”

Laura: SBS News reported Do Kwon moved Singapore profits to Virgin Islands; family used proceeds to purchase apartment
“I do own an apartment in Seoul”
Moved TFL corporate structure from Singapore to BVI, no funds were transferred

People who came on Korean shows that claimed to be Terra developers “were literally just interns”
Launched UST early 2021, at that time 20% was not extremely high yield, lots of 3-4 digit Defi yields
Internally, there were questions during launch that the yield wasn’t attractive enough!

Terra’s whitepaper doesn’t describe tokenomics – intentionally written in high level academic way – why decentralized algo important for industry
Didn’t initially consider need to have a stablecoin reserve

All-time high for UST/USD was $1.09
Would use SDT reserves to bring down UST price
Also made SDT stable coins available to ecosystem apps for initial / bootstrap liquidity

Initially used market operations to maintain peg – but gradually became “negligible % of overall volume”
UST became one of largest liquid stable coins, Luna was one of largest PoS networks

Eventual goal was UST would be backed by every large and promising crypto (eg, BTC)

Laura: there’s onchain evidence of cashing out $2.7B into USDT (via MIM), sent to Binance, Huobi, others
“Definitely did sell UST and Luna to fund operations”
“$2.7B or anything to that effect…was not used to cash out or anything like that”

Laura: why continue to claim Chai brought millions of users to Terra, when that arrangement had ended
2020 – Daniel Shin (ex cofounder) left TFL to focus on Chai full-time, while Do left Chai which he also co-founded to focus on TFL
“Consider myself the more active cofounder in building both of those companies”
In terms of Chai, limited visibility into its user data, “I should have been more consistent in how I fact checked numbers”, “definitely shortfalls on my part there”

Laura: Sam Kessler claims that Terra unilaterally re-awarded coins to an investor who lost private key (Translink capital) without discussion
“Terra can’t unilaterally decide to do an upgrade”
“Validator driven process”

Laura: Basis Cash failed, why so confident about Terra still?
Saw TFL as accelerator to create lots of different apps – Pylon (yield), Anchor, Mirror
Initial Anchor team (5-6 people) spent a lot of time yield farming DeFi – Yam, Yearn – DK first got into DeFi through this
These early devs wanted to do implementation of Basis protocol and launch it anonymously
They assumed Rick & Morty pseudonyms – asked him to be “Rick”
“Terra pre-dates Basis Cash”
“Currency failure of developing nation isn’t because monetary policy, it’s because underlying economy is weak”
“Don’t think there’s any underlying problem mechanism wise, it’s because no solid economy built on top”
In terms of Basis Cash, “essentially all I did was join Telegram rooms and shitpost”
“I had no involvement in those things”
“It was an educational experience…why pseudonymous founders makes sense in crypto”
“Basis Cash isn’t something he designed or operated…it’s something he encouraged”

Laura: Have you ever anonymously founded other projects?
“No”

Do’s description of de-pegging event
May 7, Singapore time – UST had de-pegged 2.5%, large trades against Curve LP, depleted pool
Didn’t think it was a serious problem
Over time the disparity got worse and worse
Patterns of large sells against UST
Sentiment was catching on, rumors, runaway situation
Deployed a few hundred $M to market maker, bought a bunch of UST – re-pegged briefly, “then the sells just got worse”
Luna falling, people dumping
War room of OGs, tried to raise fresh capital to buy more UST
Midnight fundraising round – got leaked – even more shorts piled up
Once Luna market cap fell below certain level, the rescue fundraise became untenable

Laura: 5 months later, why no accounting or trading logs of those market makers / peg defense?
“Bound to some confidentiality”
“Lot of transactions… finally in closing phases [on this report to be released]”

“I haven’t personally taken any tokens from TFL from May 2020”

Laura: Monthly unlock tokens (3M+, up to $300M USD value per month) were going to employees / operating expenses?
“Contract obligations and things to that effect”

Laura: After South Korea passport invalidated, what will you do?
“I’m not using it anyway”
“I don’t feel comfortable talking about location”

Laura: When will USDT / USDC disbursements occur?
“Until litigation resolved, not able to distribute tokens”
“Don’t have a lot of clarity on how long process will take”
“Not a refund…more of a goodwill effort” [to re-distribute the 313 BTC they’re still holding]

Laura: How do you feel about direction your life has taken?
“Never about money or fame or success…I like making toys, simply tinkering with things”
“I enjoy building furniture…sometimes cook”
“What happened with Terra wasn’t a scam, it was a massive market failure”
“Believe in need for decentralized stable coins more than anyone else”
“I’m 31 and I would still love to contribute”
“I get to do a lot more engineering”

Laura: Anything you’d do differently?
“Maybe building onchain BTC reserves earlier, more significant”
“Being less aggressive less joking on Twitter”
“Next attempts at decentralized money will look a lot different”
“Without [decentralized money], what are we even doing here?”
“Deeply regretful of how things panned out with UST” but developers need to keep building

Laura: Anything else?
“Working on lots of different things…highly experimental”
“Not working on Luna Classic at all”

Some great data on web3 / crypto from @ttunguz

A few that really stood out to me:

  • 2.5m wallets are active daily across web3. Flat wallet count likely means relatively constant GDP in the ecosystem. We need more products to attract new users to bring in more GDP.
  • NFT buyers outnumber DEX traders about 35:1 over the last 6 months but the traded volume is roughly equal between the two groups.
  • Developers push about 300,000 smart contracts to Ethereum every month, a figure that has been flat for the last five months.

Source: https://tomtunguz.com/state-of-crypto-2022-dunecon

Podcast notes – Robert Waldinger, What makes a good life (TED talk on Harvard study of adult development)

 

Millennial survey – 80+% said major life goal was to get rich, 50% said to become famous

What if we could watch lives unfold as they actually happen?
“Harvard study of adult development” – tracked 724 men for 75 years

60 of those men are still alive and still participating in study – most in 90s
Now they have 2000+ children

First group started as Harvard sophomores – most served in WW2
Second group were group of boys from Boston’s most troubled neighborhoods

All entered the study as teenagers

One became president of the US

Every 2 years, research staff does surveys of the participants
Draw blood, scan brains, talk to their children, videotape them talking to their wives

What’s been learned?
Clearest message: Good relationships keep us happier and healthier

Relationship lessons
1. Social connections are really good for us – family, friends, community; loneliness is toxic – they’re less happy, their brain functions and health decline sooner
2. It’s not quantity but quality of closest relationships that matter – high conflict marriages are very bad for health, perhaps even worse than divorce
3. Good relationships protect not only our bodies but our brains – secure attachments at age 80, those brains and memories stay sharper for longer

Predictors at age 50 of longevity – not health, but “how satisfied were they in their relationships” – these became the healthiest at age 80

Relationships don’t have to be smooth – but need to be able to count on each other through tough times

Those happiest in retirement – actively replaced workmates with new playmates

People who far best are those who lean into relationships – family, friends, community

Twain quote: “There isn’t time – so brief is life – for bickerings, apologies, heartburnings, callings to account. there is only time for loving – & but an instant, so to speak, for that.”

Podcast notes – Hasu and Su Zhu on the Sovereign Individual – Uncommon Core

Last few months crypto lull
Growth tech stocks doing poorly
General washout

Now back to idiosyncratic crypto world
Equities bounced off lows
Are we entering stagflation? Or road bump to secular deflation?

Tech is long duration, story about future
Bonds and fiat are locking in huge losses

Investors realize they have to own growth, can’t sit in fiat or bonds, commodities prices will correct

Regardless of recession / stagflation, world can’t turn away from tech
Longer term, people will allocate fixed % to crypto, and this % will grow

Rare that stocks and bonds go down at same time – happened in 2008
Only natural bond buyer is pensions – fixed annuity
Otherwise it’s just Central Bank – Europe, Japan, US – scary long term because it means government is lending to itself
Only works in secular deflation environment
Technology is wage dis-inflationary

Inflationary spike becomes dis-inflationary because it forces businesses to change, adapt more technology, reduce labor – eg, like ordering food from tablets instead of waiters
This will only accelerate as boomers retire – some think this will be wage inflationary (labor reduces) – but it will be opposite because tech Overton window will open, bring more tech to increase automation / reduce need for labor
We will see this in every industry

If people wanted, they can live very cheap lives – like in Japan
Demographics are also deflationary (slowing population growth, birth rates)

Inflation will top Q2 (2022)
Govs want deflation now, by crushing demand, scaring everyone
They don’t think we’ll still have inflation in 3 years – they know it’s transitory

Stagflation = economy slows, recession, but there’s still wage and price growth
1970s similar environment – oil + commodity spike
Stagflation is dangerous – lots of mortgages + job destruction + rates cycle

Today’s different – less labor entering workforce
Many commodities can be substituted – eg, if gas prices high, people don’t go to movie theaters, etc
Media likes to talk about inflation, good for engagement / clicks – but secular deflation is harder to understand (even though reality in Japan for 30 years)

We won’t enter recession unless Fed forces it
Also will be massive easing in Japan and China

China has massive deflation problem coming – inflated house prices, shrinking demographics, no immigration – must print a lot of money to prop it up
Only question – can they handle rising food prices?
Given reliance on fertilizer which Russia controls

Crypto is entering big leagues now
But still too small for macro to really matter

Ukraine-Russia – no one can argue how speculative crypto is now
Net good – Ukraine using it, people can save wealth and escape
Most people view world as what “should happen” and what “shouldn’t happen” – should Putin have invaded? Etc
Better to focus not on “should”, but on what WILL happen next – and clearly crypto is out of bag

Also crypto in Middle East – parallel system of finance
Benefits of credibly neutral systems
Geopolitical moves – instead of what should happen (“should crypto be adopted and used”), it’s a rational response to what is actually happening in world, and expected outcomes

We sanction people because we can’t arrest them – eg, Russian oligarchs
Suspension of rule of law in pursuit of higher purpose
What are the lines we can’t cross? Eg, we can’t kill dictators’ children
These depend on norms
Crypto can be used for sanctions too – there’s no tech that’s useful for people that ISN’T useful for criminals
Precarious subject since governments are actively writing crypto rules and regs right now
Each society will answer differently based on priorities
For example, India still buying Russian oil bc it’s a life or death necessity, and believe America is hypocritical because even America doesn’t follow its own sanctions (eg, still buying Russian oil too)

Short term, America / Ukraine will win
Long term, other countries will move away from dependence on existing financial systems, embrace alternate systems / credibly neutral

West will continue to adopt crypto as freedom of values, speech
Governments outside west will also adopt – credibly neutral money + platform

“Crypto will become all the things”
Mega-political force – peer to peer encryption – not ban-able similar to how printing press isn’t ban-able
500 year epochs enabled by tech transitions
Printing press attacked power of Church, Church tried to ban it but ultimately failed

Hasu – “Printing press as disintermediating technology”

Now we’re seeing this with p2p internet encryption
US military said it’s military grade tech, we should ban it

Sovereign Individual – as we enter information society, work and value will be increasingly on internet, and nation state monopoly on violence / control will weaken
Where you’re born will have less claim on your productivity
Very disruptive to large governments

Hasu – Nation state is one of great innovations in world history – but today, would be great to have more competition / experimentation

People will move to places advantageous to self (eg, low tax), or with others they met online, setup their own communities

Generational gap never been bigger – older generations are shocked you can form these strong bonds online
Some older guys think internet is actually net-bad
But for young, all their social moments happen online
This pluralism will blow peoples’ minds

Hasu – need one country with free land to allow establish charter cities

In Japan, average age of farmer is 67, you can get free land if you move there and develop the land

China supporting more relaxation, less testing, less stress among young
See the troubles if stress / pressure on youth continue

Dubai – their biz model is sell land to foreigners – almost like metaverse – zero tax on everything, but I want you to buy land here – like a token gated community
Compelling flywheel – freedoms of a liberal monarchy
Monarchy which has business model to attract talent and capital

Liberal democracy promise is everyone gets a voice – but then majority tyranny over minority (eg, poor over rich, dominant ethnicity over ethnic minorities)
Nordic models seem to work

Peru – Fushimori abolished Parliament, very popular move with people who thought Parliament was corrupt and ineffective – transitioning democracy back to authoritarian / monarchy

Ethno-states will be on rise – only way people willing to sacrifice for nation

Crypto abstracts away idea that you must save in your native fiat – but instead save in common with global like-minded individuals

If huge institutions were buying and staking crypto, would almost be anachronism – individuals have been buying these dips, pushing crypto forward
Interesting end game – what are people doing to transact with each other, secure their own wealth? How will governments react to people doing this?

“Back to first principles”

WEIRD versus CHEER

WEIRD is an acronym used by academics, intellectuals, journalists to represent a type of person – or perhaps a population – that is:

  • Western
  • Educated
  • Industrialized
  • Rich
  • Democratic

W. E. I. R. D.

The first time I saw this term was in the context of academic psychology studies, where WEIRD participants are often overrepresented (like your average American university undergrad).

I got to thinking, is there an Eastern counterpart? Can we create an equally pithy or interesting acronym to represent some of the opposing or countervailing properties?

And a bit of noodling led me to CHEER:

  • Collectivist
  • Hierarchical
  • Eastern
  • Emerging
  • Relational

C. H. E. E. R.

Now I’m not an academic or intellectual or anything but a casual interested observer. I had other words in mind, but they didn’t seem as relevant or simply couldn’t fit into an easy acronym: words like Spiritual, Socialist, Group, Consensus…maybe consensus is better than collectivist, etc.

I’m sure others can create even better acronyms. Would love to hear if you do.

PS I thought it interesting, too, that the word “CHEER” has its own connotations, given how some countries in Asia, like Japan and Thailand, place an emphasis on expressing a kind of positive emotion in public. (tatemae and the land of smiles, respectively)