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Uniswap – UNI The Chopping Block: Why Uniswap V4 Has a Bigger Attack Surface Area Not a dividend It’s A Tale of Two fun now your losses are on someone else’s balance sheet generally speaking airdrops are kind of pointless anyways um I named trading firms who are very involved I like to have the ultimate D5 Protocols are the antidote to this problem hello everybody Welcome to The Chopping Block every couple weeks the four of us get together and give the industry Insider’s perspective on the crypto topics of the day though quick intros first we’ve got Tom the D5 Maven and master of memes next we’ve got Robert the crypto connoisseur and captain of compound then we’ve got Tarun the Giga brain and Grand Puba at Gauntlet and then I receive the head hype man at dragonfly the we are early stage investors in crypto but I want to caveat that nothing we say here is investment advice legal advice or even life advice please see chopping block that XYZ for more disclosures So it’s been a pretty tough week we’ve had a lot of tough weeks lately but this one has been especially tough so I was thinking Robert maybe we could open the show with a little bit of crypto ASMR what do you say is everybody ready let’s begin slowly flipping the pages Of boys club the comic that introduced Pepe to the world this is the original Pepe let me let me add a little bit of accompaniment Dude can we get something on your side Why do you have this actually um I was actually walking through like a bookstore in like Upstate New York randomly and I saw this in like this like old bookstore and I was like really like I’ll take one copy please what what is this it’s where the Pepe Character was introduced oh I found a copy of boys club which is the comic book by Matt Fury which created Pepe and I was like randomly in this old bookstore in New York and they just like had it on a Shelf so what is what is boys club like have You actually read it uh yeah it’s like a comic book um there’s all these characters they’re like little cartoon guys and there’s frogs and there’s Pepe and this is where Pepe came from is it is it an alt-right conspiracy no does friends something ethnonational yeah exactly claim that friends stands for far right Ethno nationalists that’s a hundred percent acronym they like back yeah no but so actually Pepe did not start far right um there’s actually a really good documentary about this this is a total non-sequitur um but there’s a documentary it’s called feels good man uh which is actually the Line from the original comic book that I have that made Pepe famous and it’s a documentary all about how different communities have taken Pepe and morphed it to themselves which includes at one point like the alt-right but how Pepe has evolved over the years and the meme has evolved and the copyright has Evolved and like how it’s all come together and how this random comic book character has turned into a symbol for like so many different communities really good documentary feels good man check it out okay interesting was the original Comics a kind of a cute little comic I mean It’s basically a comic of like a bachelor pad where there’s these four animals that are like these 20-something dudes and they’re gross and they live there and they like you know play pranks on each other and that’s where it came from one day Pepe was um relaxing without his pants on and his Roommates were making fun of him and that’s where the comic originated and how it catapulted into the mainstream relaxing without his pants on okay I believe he was peeing and his pants were around his ankles like a child and uh he feels good man and that was that’s the worst I have to say the other other sort of media psyop that I for like like I did with Pepe is definitely the Zuck Zuck uh meme ones because like I mean the fact that Zuck has like completely done the 180 we’re like he’s now the open source hero is kind of like One of the most amazing turnarounds I’ve seen for a tech CEO in like oh what’s the open source heroism uh llama and just LOL like the open source language model the world llama was leaked right they intentionally only made it available for researchers and non-commercial use but now they’re Getting all the credit and open sourcing other things so like like in the same way that like developers went from like hating Microsoft to being neutral to Microsoft to like not really hitting Microsoft as much Zuck has made a similar transition where a lot of people hated him for like 10 years and All of a sudden I’ve just observed a lot of people suddenly changing like very quickly to that anyway I I’m just pointing point the reason the Pepe thing made me think about that was I was thinking about psyop’s media psyops I fell for in the past you know media psiops I have known And loved and the zakawan was one of them I think let me let me float a controversial contrarian perspective are you ready for this I think part of the animosity towards crypto amongst certain segments of the political structure actually results from Zuck and the Libra hearings I think If you go all the way back there was very few people that were like anti-crypto and then when Facebook wanted to launch a crypto asset suddenly was such like a stratifying extreme moment that I think it actually created like some of the first like outward hostility towards crypto because it was going to Be a Facebook crypto and you know I’m not a political historian but like as a member of our industry like I remember that as being one of these moments that was like you know really a catalyst for just outright Anger from members of the political class that’s a very interesting question is I Remember at the time when we saw Libra go launch their announcement that they were they were going to you know they launched a white paper and all this collateral that they were marketing the the Libra project with and only then did they actually go and present this to Lawmakers and Regulators in Congress and all this at the time it felt like such a Vindication of crypto it’s like oh this validates the industry the shows that we’re working on is super legit one of the largest companies in the world is building on this in retrospect I think It’s a very open question of whether Libra was actually good or bad for crypto despite the fact that it never actually launched it certainly made a lot of people especially internationally I think outside the US Libra was very good for crypto because it made a bunch of countries realize they needed an answer To this thing that this thing was really important and really powerful if given the right distribution engine um and I feel like in the US it may have heard crypto because it may have like you said galvanized a lot of people think ah crypto is in some way it’s a Tool of the powerful and the opaque and the you know the the oppressors or whatever I mean obviously Facebook had a lot of I mean that was a program that was also Peak peek Zuck is a villain air like that time period was like a hundred percent that narrative was now it’s now It’s like he does he did the Murph with the weight belt you know it’s like that’s what I’m saying it’s like it’s it’s kind of funny how like this change I guess the same thing was true with Bill Gates Right like he was like huge [ __ ] and then he worked really hard To like try to change that and then I guess he undid it in the last three years Epstein on did it Todd you were previously at Facebook what’s your perspective on this whole like post Libra retro yeah I mean it’s actually a good point and not really sort of considered that Maybe being a turning point so I guess I can’t really like pinpoint kind of when sentiment changed I and yeah I mean I think overall in retrospect maybe it drew too much you know negative attention but I was gonna say going back to like true your point I think Facebook Has always had like a pretty strong open source contribution culture I mean even like react right that’s like Facebook um so people don’t give them credit for it though yeah but my point is that that’s always been the case and so it’s like yeah maybe people don’t like the Product or Zuck but you know I don’t think that’s independent from like uh the ocean Source philosophy but I I think all of a sudden now I I’ve just observed people who who would be like not giving them credit even giving Zuck credit for something that leaked you Know like positively like like it like it’s kind of like Pepe where like I noticed that their their face flipped at the same time like Zuck and pepe they both kind of went from like persona non grata politically to like I remember in 2015 I was giving I think it was my First like Tech talk at uh a local like Tech Meetup it was not crypto just like a general Tech Meetup and uh I had in my presentation I had a Pepe Meme and I didn’t know what Pepe was I didn’t know that it was like this far right thing And that people like it was super politicized I just had seen it a lot of memes and I thought oh this is like a funny frog and you just put it when you’re making a joke and so I put this thing in there and it was it was it was A well-received talk but I had a bunch of people come up to me afterwards and be like you know I loved your talk except for the one thing you put the far right thing in there the little frog and like I I don’t know if you know about The background of this it’s like very sensitive and far right people use it and it wasn’t until it wasn’t until I got into crypto that like everybody was attuned to this like political they’re like no no yeah yeah it’s uses a far right symbol but [ __ ] you we’re totally Gonna use it as like just uh you don’t care as we just learned it comes from a totally different place yeah right you know I mean obviously like you know protesters in Hong Kong used it or like someone just I just saw some pics there’s like a Pepe store in Shanghai Now and so they have like Pepe merch which is obviously not official or licensed but like it’s got this you know like an internet youth culture kind of thing so and going back to it feels good man I guess yeah going back to you know talking about how The regulatory environment in the US is shifting this last week it was been a it was a pretty bombshell week with the SEC filing lawsuits against both coinbase and binance and then implying in or not implying but stating out right in uh it’s lawsuits that many of the top 10 Crypto assets are securities so today starting today Tuesday June 13th and um today we just got a drop from the old xrp lawsuit that is still going on and has still not found a a resolution uh basically what xrp did is they sued the SEC demanding unredacted access to the Hinman emails now what are the Hinman emails so in 2018 Bill Hinman who is at the time a pretty senior person at the SEC and like the enforcement division or something commercial Division I don’t remember something not not a commissioner but like a pretty important Guy at the SEC uh gave a speech in which he basically described ether no longer being a security due to some of the facts and circumstances around how ether is now you know sufficiently decentralized quote unquote so this term sufficiently decentralized came from this speech given by uh bill himman at The SEC now this speech kind of stands a bit in opposition to the SEC stance that they’re taking about Solana and about algorand about these other tokens nowhere does the term sufficiently decentralized appear uh it’s just purely a question of how we test these prongs investment contract blah blah and so the Xrp was like look we want to we want to get an understanding of where this speech came from uh who signed off on it and that is potentially integral to building their case that the SEC was acting unfairly or did not give them Fair notice about its views on these Things and perhaps there was even internal disagreement about what the rules were and how they were going to be applied to digital assets so those emails which were basically the planning emails around the speech that was given in 2018 were released and there’s been a lot of anticipation Around these emails because the belief was that maybe there’s a Smoking Gun in here about what the SEC really thought in 2018 especially with it with respect to its enforcement strategy toward different digital asset issuers so uh there’s there’s a few key quotes that have been focused on by a lot of the Folks who have gone through these emails there’s not a ton of them basically the big thing is this term regulatory Gap where the SEC internal folks at the SEC basically acknowledge that there is a regulatory Gap meaning that there is not sufficient rules to make it really clear What how it is that something like ether which they clearly decided in in the course of these emails in the course of planning this speech there was broad agreement that this is that ether is not a security but the the understanding of why and what are the rules why and how Would the SEC actually give a framework to the industry there there was really nothing there there was a regulatory Gap so to speak so this term regulatory Gap I think is going to come again and again and again in all of these cases um as the perfect kind of encapsulation Of the problem today with the sec’s approach the digital assets um and uh there was there was a couple other things about the meeting with uh vitalik and asking him for perspective and taking his input and when they were giving the speech other than that I didn’t really see anything that was that Surprising to me I don’t know Robert I know you’re um kind of closest to a lot of the folks who are looking at this what was your take looking through the hidman emails well the thing that struck me and I only had a Nursery read through mostly from like tweets from other People that surfaced to the top of my feed but the thing that struck me was that there’s actually you know a lot of weigh-in from many different departments within the SEC helping you know him and to craft the speech and you know it seemed incredibly Obvious to me as a Layman that this was not a speech of personal opinion this was a speech that was crafted with broad like inter-agency work and you know it didn’t seem like a personal view process because you know the output was created by so many different departments espousing their Views and you know asking for changes and modifications and recommendations and providing input and so my first free throw of it was like okay this is a policy speech and there’s a lot of references within that process that this is going to create policy for the market to create Clarity and other People are commenting oh it’s going to increase confusion not create Clarity but it was designed as a market influencing and policy creating speech seemingly on par with like you know the Dow report or one of these other artifacts that were the few and far between you know mile post that the SEC Created for industry participants to understand how to think about this stuff and so it was not a personal speech this was policy first and foremost and that was my takeaway from everything that I’ve read so far but again I am not the expert and to be clear the reason why That matters is that it’s been repeatedly stated by the SEC that this was just bill Hinman stating his own personal views this is not the position of the SEC and so you can’t take this as a policy indication the process that was gone through here and all these drafts And all these like hey change this do that blah blah blah this might not be good for our future goals so don’t say this shows that this is really part of the policy process and the fact that I think what a lot of commentators are pointing to is that Um the the way in which this was drafted shows that there was some consternation internally at the SEC about what exactly is the analysis how exactly should Howie be interpreted in light of the fact that yes we all kind of agree that ether should not be a security but why is it Not a security like what what exactly are the important prongs of Highway that are not met um is this kind of pushing forward the analysis of Howie in a way that is not met by you know currently existing rules or or laws and it’s kind of showing that Look genzler’s claim that the laws are clear and the rules are clear and you know if you are pretending that they’re not clear you’re just you know you’re just uh intentionally you’re being willfully ignorant of what the laws actually are it kind of shows a little bit that we’re being gaslit that even The SEC agrees internally in 2018 that the rules are not clear and that there is this fundamental cloud of uncertainty that the SEC is not stepping into and was very careful how they stepped into in 2018 when Bill Hinman gave the speech and since then there’s been no rulemaking and no legislation and Nothing is fundamentally changed since then the only thing that’s changed is just the interpretation you know at some level yeah it’s a very funny timing on this uh release because if you remember um you know coinbase was doing the SEC asking for um guidelines on how to um You know register different ones if it’s business or assets and then a week ago a judge said um you know you’re right as you see you need to come out with rules or more guidance or um you know something with the next week and so today it was a week from from Um that and SEC just asked for more time I think obviously they’re not going to come up with you know a framework they didn’t ask for a tiny amount of time they asked for like quite a bit of time yeah but it is like the whole thing Is kind of goofy it’s like so you need four months to make rules but like why did you know you had years and years to make them but you didn’t and so the whole thing is just kind of a very kind of kind of circus I guess Well the real question is do you think the jut you know in some sense shouldn’t shouldn’t there had that have been done prior to filing I I kind of imagine the judge won’t look at it as favorably I mean not a lawyer but the the way the the way it was worded Seemed weird to me to like because like okay you asked for like 30 days or two weeks for that fine but it seems like this was a trial that they’re like purposely also trying to delay feels like political reasons or something to be clear you’re talking About uh coinbase and joining the SEC in order to uh the rule yeah petition yeah my understanding from again reading crypto Twitter lawyer so I’m not a lawyer so don’t take this as direct legal advice but my understanding is that the reason why they’re doing that Is not because they think the SEC is actually going to make a rule yes he doesn’t do anything they don’t want to it’s so that basically there is you know coinbase can say we went and talked to the SEC 30 times and they said this and they said that or whatever but there’s Nothing um you know it’s just basically he said she said right yes he could say well you know we did you didn’t really ask us for rules you sort of said things in formal conversations or whatever like this is how you formally ask for a rule and it’s a very kind of Byzantine Lawyerly process that doesn’t you know we kind of know what the answer is which is that the SEC is not going to make a rule numbers like we already made the rules you know we don’t need to make any new rules so everyone knows what the answer is but this basically helps them Build the legal case that like look the SEC is not responding they’re not being you know kind of good faith Regulators of this industry which you can see Boom the fact that the lawsuit dropped I mean this process began before the law who dropped it happened started after the Wells notice but you know the fact that the lawsuit dropped at that point I I don’t think it really matters what the order of operations was in this case right the the point is that coinbase tried to get some clarity they didn’t get it SEC is going to make the argument We already gave you Clarity and quite a bit is going to say the clarity was never there so these hidman emails they’re not dispositive of anything really we already kind of knew that the SEC did not see ether’s security just from their actions right they’re not doing anything about ether they allowed A um a cftc registered uh Futures product to go listed which like if it was a security then they would presumably say hey that’s under our jurisdiction so the SEC has kind of shown their hand they don’t think ether’s security but very clearly they don’t want to deal with this in court Because if they do say yes correct there is there is this possibility that something can start as a security and become a non-security which is this totally new legal concept right there’s no precedent for exactly what is this process by which non-securities can become Securities um in fact hinman’s email the original Draft title of the email was called uh it had the word morphing in it so it was like digital asset morphing or security morphing and this morphing concept if if now that we know that this was in the minds of the people at the SEC and this Was endorsed by other people at the SEC then the question is actually going to be okay well did xrp morph did Solana morph right or are the secondary sales that are now happening in a decentralized system that is a you know live product that can be used for for Consumptive uses has this now morphed into a non-security the way that ether did because either it’s still true that vitalik is walking around writing blog posts about the roadmap of ethereum it’s still the case that there’s an ethereum Foundation it’s still the case of news about the team and about their goals Affects the ether price and it’s still the case that you know there are times when the ethereum foundation needs to Rally together and do things that they know about and other people don’t know about if there’s a hacker if there’s you know some whatever some you know we had Down time on on uh or some blocks to fail to finalize and there was some bug and they went and fixed it it’s still the case that there is some degree of asymmetry of information but actually actually one one thing for ethereum there’s we’re actually at a point where It’s quite different even for fixing these consensus bugs whether it’s like the Mev consensus bug that happened like two months ago or the the missed uh prism stuff it’s actually done by independent teams that are not doing the ethereum foundation at this point there’s so many teams that work Independently that they barely even do coordination they literally only work on Research almost all the engineers like 2018.in 2018 when the speech was given and ether was sort of declared not to be a security it was still the case of the ethereum foundation was very actively involved in the Um basically the uptime security all that stuff for ethereum so if if it’s a Continuum which is essentially what is being implied here that there’s a Continuum between security and non-security then where is the Continuum how do you draw the Continuum where do things fall and I think this is probably Going to be the shape of the argument that is going to find its way into these cases that uh ultimately you’re going to get litigated you know you know um an interesting kind of thought experiment about this type of thing you know when you’re when you mentioned did salon on morph or not Is the Solana Community is kind of in a funny spot they’re a little bit like ethereum in 2017 early 2017 where like they don’t really have more than one team working on it like they kind of have jumped doing a client but it’s a lot of labs funded part of it so it’s Like it’s it’s still not so separated yet and people are fighting over whether how the Alameda sold coins are like the Dow hack where they’re they want to have a hard Fork they’re having like community fight brawl it might be the first ever fight I’ve ever seen in the Solana Community you know versus like the five millionth one in Cosmos but it’s actually interesting to see that like they are fighting over kind of having a hard Fork to remove alameda’s coins and I suspect these facts the the there’s only sort of one real main team maybe 1.5 plus the idea that they want to Fork out some coins is going to be extremely important to the security status of Solana based on all these types of results that’s actually um can you share more about I’ve read a little bit about it but I don’t really know the details About the drama in Solana about forking out alameda’s coins and how do the front lines draw out who’s who’s on what side yeah so I think there’s you know I think the the it it feels like the as far as I can tell the foundation is on the side that Property rights or property rights when you know don’t don’t Fork but um there are a bunch of applications that are more on the side of please fork and it sort of seems like apps first spacer um basically the the entire Alameda Supply is being dumped as soon as by The Liquidators like every time it’s unlocked and it’s it is a large form of cell pressure and so the applications are more angry about that yeah it’s to pay back the Predators like that’s their money like yeah that’s ridiculous and also look look look look I’m I’m I’m Just saying this is like they’re having a Schism over this I mean it’s crazy I mean if let’s say Alameda wasn’t a criminal organization they would still own all of that asset and when it unlocks they would still probably be selling it and all these things like the fact that they’re Bad guys and malicious and like screwed over a huge number of participants doesn’t make those tokens bad tokens look look I’m just trying to say this is this is the the fault lines are here there’s another thing where people were trying to argue that by getting rid of Alameda we’ll we’ll have less SEC scrutiny and I was like I don’t think that’s true at all like why would that happen but the Solana app devs are a little bit um some of them are are you know like I feel like it’s like developers trying to Grapple with the existence of a legal system for the first time in their life that’s like developers Pro the fork or the anti-fork so app developers are sort of there’s quite a few apps that are pro the fork they’re quite a few uh infrastructure providers on the Solana Foundation that are anti the fork who’s performing can you name some names like it’s mainly the nft protocols uh that makes sense like the nft protocols are the ones that are that are basically seem to be want want to get rid of this I love this story because it’s so human This is so like blockchains are not magical escapes from Human politics and human foibles this is very it’s very like like all the Hillary Clinton Locker up stuff of just like pure Vengeance politics that’s what this feels like in a way it reminded me um I was listening to Um some some history lectures that were talking about uh famous court cases and one of them is this famous trial of a dead Pope in the Middle Ages where literally they like they they took this Pope who’s who’s dead and they like what’s it called disintered him or Whatever took him out of his Crypt and then put him into trial and like had a whole like whole criminal proceeding accusing him of all these crimes I feel like that’s what’s right now going on for Sam banquet freed through this Alameda Schism is like we trusted you we Believed in you you betrayed us and now we’re going to punish you indirectly even though it doesn’t really make sense because it’s the creditor’s money it’s not really Sam’s money or whatever but it’s sort of like you’re the stand-in because humans demand blood some some action yeah something it definitely Reads that way and I all I have to say is I think it is kind of interesting given kind of the ethereum classification stuff um that like such an action probably might might actually do the opposite and make the SEC more in in in your face I Love the populism of it it really um it just tickles me it really seems yes the same thing happened before you remember with steemit I think there was like some Justin Sons tokens right that’s right that’s right Justin Sun did like a takeover or something and then uh The Stephen Community was really upset and they said to Fork out all of Justin’s coins and Fork away which uh there was a big hullabaloo because people decide which Fork to to respect and Justin was like it’s illegal for you to delete my coins I didn’t Finance Weigh in with like all the user tokens to vote for the pro Justin Fork it was it was it was a circus circus I I really um I think when prices go down right when prices go down people suddenly find excuses to Fork like this absolutely I I Want somebody to compile like a history of these kinds of political dramas where the the code is law kind of Matrix gets pierced through and like the human the messiness of human politics breaks in I I really enjoy those stories but anyway to be clear I I don’t think that There should be a fork I think that’s a bad idea uh and a very bad yeah yeah I I just I was just pointing out that some of the things you’re talking about like these kind of factors like who the development teams are and you know whether they have whether they’re able To coordinate around forking particular assets or changing property rights seem to be quite important for based on the results in this case I mean it’s like you mentioned it’s sort of like the populist kind of nft influencer types that are all like yeah Fork them out Fork them out if the dev team demures and says okay fine we’ll forth them out because that’s what the community wants that’s kind of a sign that they’re not in control because they’re against the fork it’s true but like you know I I think if But there’s this cast 22 of not doing it allows you to be like you didn’t listen to the minority uh hard to tell if it’s the minority at this point cool okay so there’s another story that I wanted to get to this week which uh it was there was just today There was this drop of a new white paper from uniswab so unisoft has launched uniswap V4 there are uh it’s still kind of pre-launched so you can’t actually use it today uh they kind of did a draft of a draft so this is not usable code and they were Very clear that’s not don’t don’t try to use this yet um there’s still probably a lot of bugs and a lot of weaknesses and vulnerabilities in the code um there are a few big improvements in unison before so one is that it’s massively more gas efficient it Simplifies a lot of the you know deployment of pools a lot of the accounting of assets to make it so they don’t need to be as many allowances and transfers and all that stuff so everything just becomes much more efficient when you’re routing through pools and across pools the other big Thing is there are now hooks or callbacks that you can use in uniswap so that when you deploy a pool you can also specify uh before a trade do this after a trade do this before um what else is there there’s about a six hooks uh before initializing pull After initializing pool before adding a position or moving a position before swaps before and after swaps and before after donations so these are basically callbacks you can use to make them more complex life cycle to your interactions with the unit swap pool before these types of things were generally done by Third-party protocols so something like gelato which you could use to like manage your pool positions and do things automatically over uniswap V3 now those things will all be doable within uniswap directly and there are hooks for these things to also charge fees on top of the fees that unit swap charges itself so Before and after hooks can also have different kinds of fees and uh lastly there’s also a new a brand new everyone’s favorite a brand new license and this new license is called a business source license and it is four years basically meaning that you cannot Use uniswap V3 or sorry V4 code for any commercial or you know Deploy on a blockchain use cases for four years but you can look at the code all you want um so until 2027 this baby is only allowed to be used by the uniswap team so thoughts guesses projections what do You guys think of unity before so should we just like speculate on what they’re going to do differently with unit swap V4 versus V3 besides gas improvements and all this stuff well what do you all think like the best use case for hooks are like what do you think people are Going to build I mean the the snarky Twitter answer I’ve read was like oh people are going to be able to rug pools way more easily now but like what do you think like the actual use cases are going to be for hooks like what gets built well first we should say The thing everyone on Twitter is saying which is that the security surface area of hooks is way higher yeah I was about this before that was that was one thing I was going to point out is that I think there’s sort of this very weird thing about enshrining certain callbacks of This form without making them private because at the end of the day someone still has to push the trend they’re supposed to be Keepers who are maintaining the state of these things and there’s sort of a lot of Mev that comes out of this right like reordering How the hooks get executed if there’s multiple in the same block it could be much more of a loss to LPS potentially than than reordering just raw swaps right like it depends on what the Callback is and the space of that is huge and so yeah that’s security type of Stuff I think grows quite a bit but maybe in the positive I think a really interesting thing for callback is you know a lot of bridges between chains have this have a bunch of different liquidity problems right like one side of a bridge maybe you know you know when I go on Solana there doesn’t exist real eth there exists of synthetic ease like a wrapped teeth equivalent and I have to have some pool where I can like trade the the synthetic eats for the release or the soul for the synthetic Heath and a lot of bridges kind of only operated By like getting people to place a lot of liquidity on both sides at all times to like make the bridge function but that’s sort of very capital and efficient because you’re just like leaving a bunch of capital there waiting for a bridge transaction but the hooks could be used To be like before you have people who approve their Capital being used but it’s only sort of used just in time for doing these Bridge transactions uh and so you can kind of have something that’s like a better version of an RFQ system it has some on-chain guarantees does That make sense like like I think that’s so I’m gonna say zero X you’re older yeah yes I yes you can do stuff like just in time wrapping liquidity provision and like cool things like that um I do Wonder though like the benefits of baking these into sort of core versus Having these we call them like peripheral contracts or like um like wrapper contracts because you could do any of these things before right like you’re basically the one who said hey if a swap is going through my contract do this before do this after whatever and you have your own you know You’re writing your own contract um so it’s like a lot of stuff that you guys are mentioning it’s like well if I’m a bridge and I want to provide you know just in time liquidity or wrapping for assets I can say hey if you want to Swap if you just swap you know do it through this contract and do it through this interface and then you can sort of do the same thing so yeah maybe there’s some benefits to having it be baked natively and have every single Swap or every single pool creation Um call these hooks but like I don’t know what that specifically is I mean they call it like you know on-chain limit orders but like you know you could already you know do that effectively you know today if you’re using an external set of smart contracts um versus you Know doing it natively within the protocol my guess also is that I mean one of the problems that this introduces obviously Beyond just the security stuff is that now pools are not fungible right there are many more things you need to know about a pool than just its feet here and The quote pair so my suspicion is that what’s going to happen is you’re going to see a bifurcation within uniswap is that there’s going to be the vanilla pools that all you need to know is sort of these two pieces of information which is or you know not just two but you know The liquidity the what the what the what the uh with the range liquidity looks like and then what what’s the quote pair and what’s the tick size uh and then these other ones that are like doing lots of fancy things that you need to Look at the code or you need to look at who was involved in creating this and can sort of stamp it that like yes this is not rug pulling your assets it’s not doing anything weird this is not going to be charging you crazy fees on every Single before and after callback so it it makes these things uh less easy to understand uh what what they’re doing and it’s certainly not going to be the case that you can automatically route through all of these unless they’re standardized in some way you’re not gonna be able to route through every Single pool if it has before and after callbacks that are changing the mechanics of how the contract gets executed or how the how the swap gets executed so I think it’s going to result in basically two different kinds of pools fancy pools and let’s call them non-fancy pools and for simple pools Okay gas efficient great you know you saved a bunch of accounting uh with the router and everything for the fancy pools there’s so much more security uh um surface area there’s a lot of the virtue of unit swap that you don’t need to think like you can interact with Uniswap and not have to worry about do I need to know who deployed this how they deployed it where the fees are blah blah blah all this stuff is supposed to be super transparent and it’s much harder to make that transparent when every single pool can have a totally different Set of callbacks uh and those callbacks can be mutable they can be changed just in time if if they’re programmed in such a way right each each pool can be as complex as a whole D5 protocol essentially that yeah that being said you already had to do that if you used any Vault Type of thing right like the vaults were managing these for you totally totally but vaults are very explicitly a non-uniswa product right so when you when you put your money into something that’s not uniswab you know okay I need to underrate this thing and understand what it’s doing I I do think the Security thing although it’s the most obvious thing that everyone’s pointing out I do think it’s really important I mean you just swap one of the beautiful things about uniswap that we can all point to is that unit swap is so simple it’s completely decentralized nobody Needs to ever touch it or change it it’s totally immutable I I think making those kinds of claims gets harder when there will eventually be a pool that gets rug pulled there will be a pool that gets hacked there will be a pool that like bad things happen and yes well this was A callback and you this was not a default pool but it just muddies the story for everybody in the industry of being able to point to uniswap as this Paragon of simplicity and minimalism and say well all you need is you know this little thing and the curve and the blah Blah it’s good you know the uniswell router just today actually the same day that they announced you just saw before the unit swap router just announced that there was a giant bug a reindeeracy bug in the router that could have caused a massive funds drain uh that thankfully They patch because they you know just deployed a new router and pointed the front of that but it goes to show that like yeah this stuff is hard and the more surface area you make on these things the more bad things will happen yeah at the same time I think from more Of the perspective of uniswap the Developers you know it is it is in some ways a good way to have more control over the order flow that’s going through uniswap for or through the routers themselves if they’re particular pools at particular properties and that like your particular Router does better on so like from a competitive lens I think it kind of makes sense right because like otherwise there is sort of a sense in which it does help it does help a lot of those types of applications and I think cross chain stuff has been quite it’s been quite Hard to do liquidity management whereas this I think is the type of thing that does help you know a lot of people doing cross chain liquidity management yeah you have to basically be running in structure or paying someone running infrastructure free and like you know there’s this trade-off between like Purely simple on one chain but really annoying on multi-chain and you’re kind of like balancing those two at least that in my mind that to me that’s sort of the benefit yeah I I feel you when I think about like V2 to V3 you need you know the whole goal right is like Improving turnover right like how do you get do as much volume as possible have as like as little idle Capital as possible and V3 was obviously a huge step forward there I think V4 is definitely us I can see it being a step forward if people as you sort of said Use this as sort of almost like an RFQ system where I can have my capital B elsewhere earning yield doing something else with it and then someone when someone wants to swap um pulling it in and you know uh not having it just being sit in the pool and Hope someone shows up to start trading but like it almost feels like you’ve like backed into like an RFQ system you know where it’s like actually that’s kind of what you want and we sort of you know jerry-rig this thing but um maybe that’s okay maybe there’s other Stuff that you can do with this that we’re not really seeing right now well I think I think that idea of the asset sits somewhere else is really interesting because like they could sit in you know any format like ether could be sitting as you know Lido State Theater Or whatever you know there’s a million things that you could do positive compound perhaps or anything yeah exactly um anything could be anything could be a compound could be in compound lie down yeah I mean like that’s one use case right like you know so we have a contest to Come up with other use cases besides the really good ones arguably arguably in some ways this is bad for potentially bad for amms that are trading like kind assets because instead of having to keep yes as an example like you could just do the just in time conversion instead of Having to route through them and they have to have a lot of liquidity to provide very low slippage so you don’t feel like you’re routing through them like I do think that part is interesting because like that’s the Lido piece you’re talking about right if I look at The steth East pool and line and curve it’s like hey well if I I can like just in time have eth for something and then go back to Steve and do the swap it would would be nice right I I agree you can do that with an RFQ system but like Right now the programmability of these things are not as easy and so like like again I I think there’s always going to be this trade-off between like efficiency and developer ease and user ease and like you you kind of like it’s it’s sort of a trilemma you get a Bunch of points you get like 10 coins and you have to distribute those 10 coins those three things and that’s it when you make something uh I um I I agree with that I think um one sort of weird artifact with um amens too is dealing with like rebasing assets Where it’s like you need to you know basically usually poke the contract unless it’s sort of built ahead of time to accept rebasing contract assets so you don’t sort of bleed out value over time or it doesn’t get stolen from LPS but the flip side is if you have like a Non-rebasing asset like a c token you know your your price is going to go up over time and so you like constantly readjust your bands if it’s supposed to be something one to one like you know cusdc or like coinbase if as their rap sticky product but it’s not reducing and So it’s like you bleed out if you try to Market make it on on uniswap whereas you can imagine you know you build make like a CBE pool that can sort of uh re-update itself and rebalance itself you know automatically as a sort of the exchange rate adjusts and like Um that feels like maybe a nice ux Improvement that again sort of goes back to the capital efficiency story but you know TBD well couldn’t that also work with you know the rebasing token approach as well if you can call out after every trade and say rebase me like Update the balances at the lp level definitely definitely makes those easier um it’s more hey right now if you want to LP rebasing tokens that are supposed to be pegged there are pools that will make it leave sort of set it and forget it and it will sort of do its thing Whereas if you want to go uh LP CPE like you have to keep readjusting your bands because CBE is going up in each terms over time but like um you know it’s not really present in the in the um in the pool but yeah I will agree that like these Are quite nuanced things the average user of uniswap who likes to hit one button is never going to know any of these benefits I would bet like like to them it’s not gonna be I don’t know what would the front end even show you it is difficult to convey exactly what these Callbacks are doing and how they should be understood by an end user um again that’s why I think there will probably be standardized kind of minimal callback pool and then like the more complex fallback pool and this is kind of for advanced users buyer beware like you know this is running arbitrary code And you should check this yourself or see who’s who’s who signed off on it it does seem like it’s continuing the march of uniswap trying to eat everything in defy trading right kind of from you from univ 2 to univ3 you know swap basically eight kind of specialized pools where You can create specialized pools for just about anything using you know soft V3 and specifying arbitrary curves and now it’s kind of like okay any advanced functionality that you’re trying to superimpose over unison three we’re gonna try to eat that too um so it it’s uh it’s a smart strategy On uniswap’s part for sure and I think it’s likely to succeed in gobbling up more and more market share for you as well okay so last story we’re running up on time uh so one of the big lawsuits last week of course was binance and it’s it centered around binance us Finance us Um so for coinbase they were sued but nothing really seems to have changed their coinbase they’re not deliciting any assets they’re just kind of continuing on business as usual and that’s been the that’s been the consistent message that we’re getting from the coinbase team binance is a very different story so Binance us pretty much immediately after the SEC lawsuit dropped the SEC asked for an injunction uh a temporary restraining order asking for two things one for a repatriation of all assets which meant that anything that CZ had access to or that binance Global the offshore business had access to that are Supposed to be in the control of the US entity should be brought back into the US under the control of U.S persons and controlling people at binance us and then second that they wanted a full asset freeze and a full asset freeze means no money moves no bank accounts no Crypto no nothing and of course the philosophies also would implicate binance Global because presumably some of their assets are intermingled and that was the claim that was made was that there’s a bunch of co-milling of assets which represent binance Global might also get liquidity issues or whatever because of this asset freeze so The they basically went to a judge and the SEC said look we want this restraining order if not there may be irreparable harm whatever blah blah if the judge did not Grant this portion of the restraining order about the asset freeze the asset freeze basically said look surely there’s something else you Can do without getting a philosophies why don’t we just do repatriation of assets they negotiated with the SEC and so they’re just going to repatriate the assets no asset phase it looks like for buying into us that said despite there not being an asset freeze binance us immediately delisted a bunch of assets And announced that they were going to lose access to Fiat banking rails within a couple of weeks so presumably this is because the banks themselves were like oh [ __ ] yeah we don’t want to work with you anymore bye bye you have you know weak left until uh you have to go bank Somewhere else so I assume it’s just the simple the the spotlight from the SEC has caused their banking Partners to probably just drop by an Instagram I’m speculating that could there could be something else but I’m assuming that’s the case and we’ve also seen massive price discrepancies between binance us For Bitcoin for all you know all assets On binance Us and other exchanges implying that people are having trouble getting their money out which is why nobody dares Arbitrage the prices between bin sus and other exchanges now all that being said the frenzy of people trying to pull their money out or you Know the thing that we would expect to see if this is all the House of Cards waiting to collapse when FTX collapsed there was a massive amount of outflows coming from a binance global coming from all the exchanges of people pulling their money and no longer wanting to keep them in exchanges Um I believe as of yesterday binance Global outflows have stopped so binance Global is now was now flat ish yesterday there was like I think slight positive but roughly flat uh uh alphalos from binance Global and it seems that and now the the market has roughly digested what’s happening it’s Like cool this is not at least immediately going to be a systemic event um but it looks like uh binance us is in for a really rough ride given what’s going on here with the SEC so do you guys have any Reflections any perspectives on what’s been happening with binance and finance us Uh one thing I would say is I considered you know FTX users who especially the ones who pulled their money quickly significantly brighter than the people who I think who use binance us as their main Exchange I don’t know exactly how to explain that in more direct terms but like there’s a Little bit like more sophistication amongst those users first of all none of them were in the US or like sorry none of them were in the US right uh to use the domain FTX and B the sheer volume of of transfers out was like unreal right they’re just getting ddosed Binance us just certainly makes me think of users who like during 2021 like they saw bitcoin price go up and they’re like where do I go let me Google where to buy crypto and I bought half the Bitcoin and I forgot I had it there do any of you Know anyone who uses binance us or has used binance us anyone know anybody people wait um I’m sure I have not met anyone who’s used binance us I mean we’ve learned obviously that their market share was also fabricated because they did a bunch of wash rating right so they didn’t never had the Market share they claim to have I I just yeah it’s just like somehow I I found I I think you can’t have like the like everyone’s talking about how the the liquidity on binance us went down like 80 but the AUM didn’t go down to 80 Which is like you know I I think it is really they they really during the my suspicion just my conjecture obviously I I’m not totally sure because who knows because we don’t they’re not a public D5 protocol where I could see the balances I suspect they really grew their assets From like 2021 and like people they like did a ton of SEO or something and like just got the first click on Google for like how do I buy Dogecoin type of thing and then after that they had like no volume like it even through the FTX Thing they were like quite low on the volume chart compared to other places okay are you guys ready for my crazy idea for uniswap V4 to ruin just made me think about it when he said that Finance us has no liquidity but the AUM is the same I’m ready an exchange not binance us but like some Exchange could keep its customer assets but also utilize the liquidity of uniswap V4 and have a pairing between the unit swap V4 still left this is actually a real idea I have a pairing between the unit swap V4 liquidity and the exchange’s OWN Off-chain order books and come up with this hybrid model kind of like what bullish the EOS pivot slash whatever exchange had the idea of doing at some point but like melding an amm and a traditional web to order book I thought where you were going was re-hypothecating customer assets to Provide liquidity no no no no no no to get extra yield you were talking about creating an exchange through uniswap and showing the Unison liquidity on the exchange yes on screen yes okay um I mean exchanges could not do that because they don’t know who they’re trading against right like you can’t do AML kyc stuff when you’re trading against you to swap per se The Exchange would have to figure all that stuff out but the other thing hooks can do is hooks can actually check AML kyc white yes okay I have kyc pools so as you can check before you can have A kyc pool like an exchange actually could create a hybrid web 2 web 3 architecture because you could easily just give like a kyc token to all the people who sign up for exchange coinbase could for sure do this is how you know it was a reasonably good Idea in that everyone on the show has come up with a random product or idea to use this right like that’s like a good sign right in some ways mine might be the worst idea so far but let’s keep going I’m just saying that like it inspired an idea which is okay Yeah look I mean I I remember there was some story a while back about Brian Armstrong wanting to have uniswap trading be accessible through coinbase and it was poo pooed by compliance some unsurprisingly it was by compliance it does seem like the the problem of course with doing that On like having the unisop liquidity on screen is that as we’ve talked about many times on the show The Unit swap on-screen liquidity is kind of fake because of the fact that there’s so much just in time liquidity and so much Mev and so much other stuff that’s going on That you you can’t really give very strong guarantees about what execution is going to look like and what liquidity looks like when you’re looking at unit swap especially when you’re talking about not just random you know retail folks who are going on uniswap.com and clicking buttons or clicking buttons Through metamask but rather you know these giant market makers who are trading on you know these big exchanges they are they are just going to wreak havoc on Unison liquidity if they were trading on mass with uniswap yeah but given enough time there’s a lot of smart people who’ve listened to this show Someone’s going to figure that out possibly possibly and maybe there is some some benefit to an exchange sort of acting as a broker for all of those different Traders like some of the flow is going to be toxic some of the flow is going to be retail and it sort of benefits Exchange asking acting as Brokers not uh not I think the vehicle thing coinbase would like to hear the Judgment say all right Robert you’re you’re your proposal is dead in the water sorry about that thanks tarun you killed it ah thank the lawyers I I just I’m just I’m Just stating what I hear I don’t I don’t know I leave it to the people listening to figure out how to do it correctly yes there are lots of lawyers who listen to this show I’ve learned so someone out there and people who are connected to Red Bull [Laughter] I haven’t gotten it yet okay the next show next show will be unofficially sort of quasi-sponsored by Red Bull yes so there was somebody who listened to the show who has a family member who works somewhere in the corporate Machinery of Red Bull and was able to get a case of Red Bull shipped to Turin free of charge so next show or whatever the thing gets there that show is going to be informally sponsored by Red Bull so everyone’s gonna drink not this one I’ll give a shout out to the person who did it who is Paul from Cambrian Protocol who thank you for the the hookup amazing all right well we are uh just about up on the end of time but uh next time this is gonna be we’re going to be like doing dad like BMX tricks and skateboarding under the show it’s gonna be super Red Bull decked out yeah tarun is going to be doing it okay okay here’s a question for each person on the show if say there was a crypto sport that was somehow sponsored by Red Bull like an extreme sport but it somehow had to do there had to be some element of cryptocurrency Involved what do you think it would be base jumping but does that involve crypto it involves it involves death so I think that’s why you you could you could you could do base jumping while having a hardware wallet in your pocket and it doesn’t fall out And you’re judged on both it not falling out and the base jumping skill I see I see I feel like the the appetite for self-inflicted pain is what crypto is basically have in common I’m gonna go with nft illustration like Bob Ross like Bob Ross Like You Gotta paint some nfts in real time you gotta like you know okay does that count it’s on ESPN2 it’s a game ESPN it is I think that counts Call of Duty yeah I think I want to see sort of like a a ZK version of like Magic the Gathering As like the replacement of Mount gox the magic the Gathering online exchange with with the Privacy preserving version I guess if poker is a sport Magic the Gathering has to be a sport but I still resist it very strongly the international I don’t want to admit it But I guess it does Follow by analogy the international Olympic Committee can decide this they have a list of all the sports that includes things that you would maybe think are games but are also Sports what’s the name of it the international Olympic Committee ioc I should have said Uh pickleball or pickleball or whatever but I kind of feel like that was the Bahama Bahamian crypto Sports so I might might have Gone Gone With the Wind as they say Bahamian picklebally I remember during that salt conference which I didn’t go to but I saw these memes on Twitter of like People play like suzu playing pickleball anything suzu’s doing you don’t want to do all right guys um I think we gotta wrap it up but uh appreciate you guys tuning in until next week thanks everybody all right The Chopping Block: Why Uniswap V4 Creates a Bigger Attack Surface Area – Ep.506 Welcome to “The Chopping Block” – where crypto insiders Haseeb Qureshi, Tom Schmidt, Tarun Chitra, and Robert Leshner, chop it up about the latest news.In this episode, Robert stirs the debate over Hinman’s 2018 speech and what it means for the debate at the SEC over whether BTC and ETH should be considered securities, the similarities between Ethereum and Solana, and how Binance.US is dealing with a move to freeze its assets.Moreover, the group kicks off with a brief history lesson on the infamous PEPE meme! 🔥 EPISODE LINK 🔥 CHECK OUT THE EPISODE LINKS AND DETAILS HERE 👉 https://unchainedcrypto.com/podcast-chopping-block/the-chopping-block-hinman-highlights-regulatory-gaps-division-within-sec/ 👈 Show highlights: 🔹 where the PEPE meme comes from 🔹 whether Mark Zuckerberg and the project Libra played a role in the animosity toward crypto 🔹 why Robert says that Hinman’s speech in 2018 was crafted with broad inter-agency work, in contrast to what the SEC has been saying 🔹 how the documents show that the SEC didn’t believe there was enough clarity to classify ETH as a security 🔹 whether these documents diminish Gary Gensler’s claims that almost everything in crypto is a security 🔹 the similarities between Ethereum in 2017 and Solana at the moment 🔹 what the drama is in Solana around forking Alameda coins 🔹 what the new features of the Uniswap V4 draft code are 🔹 whether the ‘hooks’ in the new code facilitate rug pulls and introduce much more complexities 🔹 how Binance.US has dealt with the SEC lawsuit and request to freeze its assets 🔹 Robert’s crazy idea to use Uniswap V4 and why Tarun killed it 🔹 what extreme sports represent crypto more accurately Hosts ⭐️ Haseeb Qureshi, managing partner at Dragonfly ⭐️ Robert Leshner, founder of Compound ⭐️ Tom Schmidt, general partner at Dragonfly ⭐️ Tarun Chitra, managing partner at Robot Ventures Time Stamps: 00:00 Introduction 00:56 PEPE 03:50 Zuckerberg and Libra 10:15 Hinman emails 21:43 Alameda coins 28:59 Uniswap v4 43:55 Binance.US #bitcoin #ethereum #crypto #cryptocurrencies FOLLOW UNCHAINED! 📹 WHY BITCOIN NOW? → https://www.youtube.com/watch?v=cuRRVo2Cmsc&list=PLySrw1Nvf-so8QESa6HuO50pPhAreEjO9 CHECK OUT THE CRYPTOPIANS → https://www.youtube.com/watch?v=DFzunCFXrv4 WEBSITE → https://unchainedpodcast.com UNCHAINED DAILY NEWSLETTER → https://unchainedpodcast.com/category/newsletters/ BULLETIN NEWSLETTER → https://laurashin.bulletin.com LAURA’S TWITTER → https://twitter.com/laurashin UNCHAINED TWITTER → https://twitter.com/unchained_pod FACEBOOK → https://www.facebook.com/unchainedwithlaurashin YOUTUBE → https://www.youtube.com/c/unchainedpodcast INSTAGRAM → https://www.instagram.com/laurashin/?hl=en LINKEDIN → https://www.linkedin.com/in/laurashin/ MERCHANDISE → https://shop.unchainedpodcast.com/ NEW EPISODES OF 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