Tag: sbf

Podcast notes – Solana with founder Anatoly Yakovenko – Bankless: $20M valuation for Solana at seed round “was ludicrous”

Guest: Anatoly Yakovenko, Solana founder
Hosts: Ryan Sean Adams and David Hoffman

2017 – was following crypto, wanted to build a faster crypto miner
Family left Soviet Union, saw the devastation of a bad currency and economy

Ethereum demonstrated an application platform

Qualcomm, Perl engineer who helped build platform for all those original mobile games

Mining crypto while building deep learning hardware
Had a eureka moment – encode passage of time as a data structure
At that time, it existed as a “verifiable delay function”
Quit job, met Raj Gokal
Raised $3M in seed, network price at that time was $20M – “thought it was ludicrous” – included Multicoin
5 cofounders, colleagues from Qualcomm
Built single node – was doing 100K+ TPS – prove potential of network
Raised $14M Series A in the “last vapors” of the 2017-2018 market
Competitors during that time were raising $100M+ (eg, Hashgraph)

Censorship resistance is like a communication channel – it guarantees delivery

Wireless protocols create a schedule – from X time to Y time, A gets to talk, then B gets to talk, etc
Very ordered and structured, gets you 100% utilization

Tendermint – 100 validators – each has 1 vote, there’s a known block producer who proposes a block, 2/3 vote on a block

Hired a lot of coworkers from Qualcomm who he worked with for 10 years

Solana thesis – smart contracts are good for finance, and finance depends on info propagating as fast as possible around the world
Solana data can move as fast as a piece of news travels

Currently ETH validators have same bandwidth requirements
With sharding the requirements will be reduced

Trustlessness comes from full nodes that can validate

Bitcoin and Ethereum see themselves as money – what about Solana?
Store of Value is a social construct, a meme, and important not to be tied to a sovereign (a nation)
The function of a token is to prevent spam

In PoS, once all full nodes have finalized, you can’t go back – you can only fork – which is a socially messy process

Store of Value that is awesome can be built on Solana, that can surpass bitcoin

How to bootstrap an ecosystem without piggybacking off Ethereum – was a huge unknown when Solana started

2020 – had 9-10 months of cash left, market crashed, thought they might be done

It was Solana’s second hackathon (Break Point) where he really believed they had something
Quality of builders went up, attendees went up

Solana was worth ~$100M at network launch

Thinks VC branding is dumb – most of the “crypto VCs” in last cycle were simply Ethereum ICO investors

Alameda’s balance sheet leak was first time Anatoly learned about the troubles

Sam had supported Solana a lot – especially saying they’d build Serum on Solana drove a lot of defi and builder interest

Bear market is a purge

Bitcoin supporters said Ethereum was full of mercenaries in early days — same criticism that Ethereum supporters had of Solana

“Getting through this phase sucks for sure”

NFT community is very thriving — second to Ethereum – very proud of it

Exhausted by negative news — want to see wins, see people building cool shit

David: Solana is one of only blockchains after Ethereum that has a second client (Firedancer + Jump)
Anatoly: you’re trading liveness for safety; Ethereum’s goal is 4 clients (can maintain liveness if 1 client goes down)

Still focused on monolithic chain with no sharding

Innovation in next 12-18 mos will probably be more than everything that’s come before in crypto

“Pretty sure” Solana can do more TPS than all ETH L2s combined

SBF’s planned congressional testimony was wild: “I am, and for most of my adult life have been, sad”

Just sharing a few memorable excerpts below. Full testimony here.

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b) In addition to being false, the claims do not make sense to me. Alameda Research’s own insolvency was triggered by a market crash, which in turn triggered FTX’s insolvency; it would have been absurd to create a market crash in order to take out 3AC, and then in turn bankrupt my own businesses.

7) Various claims that I created a hard-partying culture at FTX
a) Our ‘parties’ were mostly dinner and board games
b) I didn’t have my first drink until I was 21, and to my knowledge have never been drunk

b) I have a prescription for Emsam, and have for roughly a decade. I use it, daily, for its only on-label use as an antidepressant. It is not generally the case that people are expected to talk about their private medical conditions, but enough paparazzi have snapped photos of my belongings and theorized about it online that I guess I have no choice.

On Twitter, CZ claimed that “we decided to pull out as an investor” in a thread chalk full of lies.
a) In fact, I reached out to CZ in 2021 to initiate discussions about buying them out of their stake in FTX.
b) I initiated these discussions because, among other things, it was becoming increasingly difficult for FTX to operate with CZ as a significant equity owner. CZ was not cooperative in sending his KYC information to regulators that we were applying for licenses with.

c) The last few months have been difficult enough for everyone that it feels unremarkable to me, in comparison, that I need to put on the official Congressional Record that I am, and for most of my adult life have been, sad.

The Venn of blockchain and AI

I’ve been thinking about the relationship between blockchains and AI lately. Both are emerging foundational technologies and I think it’s no accident they are both coming of age at the same time.

Multiple writers have already expressed this view:

AIs can be used to generate “deep fakes” while cryptographic techniques can be used to reliably authenticate things against such fakery. Flipping it around, crypto is a target-rich environment for scammers and hackers, and machine learning can be used to audit crypto code for vulnerabilities. I am convinced there is something deeper going on here. This reeks of real yin-yangery that extends to the roots of computing somehow

From Venkatesh Rao: https://studio.ribbonfarm.com/p/the-dawn-of-mediocre-computing

I think AI and Web3 are two sides of the same coin. As machines increasingly do the work that humans used to do, we will need tools to manage our identity and our humanity. Web3 is producing those tools and some of us are already using them to write, tweet/cast, make and collect art, and do a host of other things that machines can also do. Web3 will be the human place to do these things when machines start corrupting the traditional places we do/did these things.

From Fred Wilson: https://avc.com/2022/12/sign-everything/

In both writers’ examples, blockchain helps solve some of the problems that AI creates, and vice-versa. I’m reminded of Kevin Kelly who said, Each new technology creates more problems than it solves.

Blockchains and AI have a sort of weird and emergent technological symbiosis and I’m here for it.

So the brain flatulence below is just my way to think aloud, using the writing process to work through the question(s).

*Note: when I say “blockchain”, I include what Fred Wilson calls web3 and Venkatesh calls crypto; there are just a few canonical applications that we’re all familiar with (namely, bitcoin and ethereum); and when I say “AI”, I am thinking about the most popular machine learning models like GPT3 and Stable Diffusion

*Note also: I am just a humble user of these new and powerful AI tools, and can barely understand the abstract of a typical machine learning research paper; so part of the reason why I’m writing this is to find out where I’m wrong a la Cunningham’s law

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A blockchain is a tool for individual sovereignty; while an AI is a tool for individual creativity

A blockchain operates at maximum transparency; while an AI operates largely as a black box

A blockchain clearly shows the chain of ownership and history; while an AI… (does something like the opposite in the way it aggregates and melds and mutates as much data as possible?)

A blockchain is “trustless”, in the sense that what you see on-chain is the agreed upon “truth” of all its users; while an AI is (?), in the sense that what it generates is more or less unique to the specific prompt / question / user (and even this can change as the model is updated, or new data is added]

An AI is much easier to use than a blockchain

An AI can create vast quantities of content, very cheaply; while a (truly “decentralized”) blockchain is limited by scalability and cost

An AI is centralized (to a specific company, or model, or data set) in the sense that decision making rests with a team or company; while a blockchain is decentralized and decision making is distributed

A surprising user experience – as in, an unexpected but delightful output – is typically net positive for a user of AI, while seeing something happen on a blockchain that you don’t expect would generally be pretty bad (yes, of course there are airdrops)

Blockchains are a competitive threat to industries with a high degree of centralization (such as fiat currency issuance, and payment networks); AI is a competitive threat to many individual online workers (such as language translators, and freelance writers, and basic QA/QC employees)

Both blockchains and AI have multiple open source products that can be forked by developers

Both blockchains and AI are platforms upon which many other products and services can be built

Both blockchains and AI are technologies that exploded into the popular consciousness in the last 10 years

Both “blockchain” and “AI” are very broad suitcase words, in part because they are both the product of many technologies combined in innovative ways: for blockchain that is everything from cryptography to smart contract programming to PoW mining to distributed consensus mechanisms; for AI that’s, uh…well everything listed here and more, I suppose

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I’ll end here for now, but let me know what I got wrong, what I’m missing, and what questions or ideas this might inspire

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Addendum #1: I asked ChatGPT

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Addendum #2: This NYT article notes that SBF (“Sam Bankscam Fraud”) donated at least $500M to organizations researching AI alignment and AI safety. Not exactly the kind of symbiosis I want to explore, but worth noting.

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Addendum #3:

Blockchains can only give precise answers, while AI can give approximate answers or even fabricate answers

Blockchains are censorship resistant, while AI is centralized (most are created by small doxxed teams) and have implemented restrictions on usage (most have rules against, for example, CSAM or nudity)

SBF (FTX) interviewed by Andrew Ross Sorkin – my meandering and annoyed takes

Worth watching in full. I’ve heard Stephanopoulos’s interview was harder hitting but haven’t watched it yet.

I downloaded an MP3 version of it, so the reactions below are based on his voice and replies alone and not body language, though I’m notably handicapped when it comes to eq:

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Repeatedly distanced himself from Alameda, made clear he ran FTX but claimed not to know what was going on in detail at Alameda — beggars belief considering he owned 90% of Alameda and every prior Alameda CEO was Sam’s close personal friend or *perhaps cough cough* more

Tries to blame the collapse on leverage, which I assume is a hot button issue with regulators and easier to understand by the general public, but annoying that Sorkin doesn’t dig deeper into the obviously fraudulent evidence (like systemic co-mingling and improper usage of customer funds; Alameda front-running / VIP status on FTX exchange; taking out multiple BILLIONS in personal loans, where did those funds go?; the role of close senior execs including Nishad and Gary)

Within FTX structure, shifts blame to regulators (repeatedly claims FTX US and FTX Japan, etc, were ok and solvent because there were stringent regulations). It’s sorta like saying I stole my classmate’s lunch money because the teacher wasn’t in the room

With two Stanford law professors as parents, he clearly understands the importance and practice of “plausible deniability”

His public track record proves beyond a doubt that he is a very effective and disciplined communicator. Just read his many tweet threads. So why would we suddenly assume he’s NOT being disciplined and purposeful in conducting these interviews, despite his *claims* that his lawyers don’t want him to do this?

Hilarious bit at the end where he complains about hypocritical “do-gooderism”, when his publicly stated life’s work was to promote an over-intellectualized neo-facade of do-gooderism known as ineffective altruism. Merriam Webster literally defines a “do gooder” as “an earnest often naive humanitarian or reformer” gtfo of here

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I hope he ends up in jail. I hope it takes many years before he steps foot in a cell, so he has to spend time and brain cells and stress and money defending himself in court and outside it.

But knowing how the American penal system works he’ll probably receive a light sentence served in a cushy minimum security getaway with plenty of utilitarian philosophy books and vegan couscous or whatever the f he pretends to eat

Random thoughts on the FTX scam implosion fraud

I’ve been following the FTX bankruptcy like a mouse in a cheese cupboard. Aside from bankruptcy lawyers, the clear beneficiary of this whole saga is Elon Musk because crypto Twitter usage must be through the roof if my own recent addiction is remotely indicative.

Some half baked thoughts as this saga continues to unfold, thoughts that I wrote in 30 minutes and are worth exactly what you paid for them:

I’m surprised that BTC and ETH – the ONLY two blue chips in crypto (and don’t let anyone mislead you into thinking there’s any other token that qualifies) – have held up fairly well, price-wise. Of course that may change before I even hit publish

SBF’s level of psychopathy is off the charts. Apparently the term “psychopath” is more accurate than “sociopath” because psychopaths have better emotional regulation and can appear more charming, whereas sociopaths are prone to rage and more erratic behavior. Perhaps SBF is transitioning now from psychopath > sociopath. I’m just a blogger what do I know

Prescription drugs are powerful. There’s a reason they’re “prescription”. And even with all that research and regulation, we still barely understand what they do to our bodies and minds. But it’s clear they’re doing something, perhaps quite powerful, perhaps quite permanent.

Crypto will survive and thrive in the long-term. Nothing fundamental has changed. This was a centralized failure, a massive bank fraud and trading scam. There’s a reason the two most mentioned comparables are Enron (a public corporation) and Madoff (a Wall Street investment fund).

Bear cycles are ALWAYS more painful than you expect. History never repeats, but it rhymes. In 2014-16, it was exchange failure and bitcoin clones. In 2018-2020, it was ICOs and China ban and regulatory fud. In this cycle, it’s comprehensive institutional failure – lenders, exchanges, and funds. Crypto has problems, many of them, and the criticisms are deserved. But the tradfi water we’re floating in is secured by a very fragile opaque aquarium. Swimmers beware.

The end game is approaching with accelerating speed, both in the broader global financial system, and for crypto’s own place inside it. This debacle will prompt hard questions and even harder regulations, but crypto continues its march towards global adoption and growing usage. The crypto tail increasingly wags the tradfi dog. Meanwhile the tradfi dog appears more and more sickly, limping behind its Central Bank owner.

Prices could dip another 50% from here, or we could see a massive wick up through some combination of a short squeeze, flight to quality (altcoins>BTC & ETH), Fed slowdown, and survivors’ euphoria. I don’t know. And if you have patience, it doesn’t really matter.