Pump.fun’s $370M Burn Was a Mistake, Says Luca Netz: Uneasy Money

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All right.

Hey guys, I'm here with my co-host, Taylor Monahan, security expert, and Luca Netz, CEO of Pudgy Penguins, um, who is an avatar today because he was disfigured in a, an Antarctican plane crash, unfortunately, last week while he was visiting Antarctica.

So, um, we'll just have to make do with a static image of him this week, which will be fine.

Um, welcome guys.

How are you doing?

I'm rocking and rolling a little disfigured, a little chopped up, but you guys can see my penguins, so happy to be here.

Nice, nice.

Um, so, uh, speaking of people being chopped up and disfigured, Defi.

How are we doing?

Um, so, so, uh, the, the KelpDo, um, hack we talked about last week, um, all of the other hacks we talked about the other weeks, um, there have been and continue to be almost daily Defi hacks, but, um, This, this Keltow hack in particular, given the fallout, um, and the impact on Ave, the freezing of various markets and, you know, all of the different people and protocols that this touched, um, there was a movement, I guess you might call it, uh, to try to close some of the gap, basically.

Um.

So, uh, so the first that I saw of this, and, and correct me if I'm wrong, but the first that I saw of this was Danny coming out saying, hey, I'm gonna donate 5000 ET, um, of my personal funds to cover the gap.

It's now up to 137,000 ET, about 307.

Million across 116,000 wallets and 126,000 transfers, um, which is pretty wild.

Um, and I know there's some big, uh, there's some big, you know, uh, people in there, like consensus was, was 30,000 each, um, arbitram.

Is this the 30,0008 that they roll back from the hacker or a different 30,000 e?

No, I think that's the 30,000.

That's the, the, the, the frozen e.

Got it.

Mantle, um, uh, who are insanely rich somehow, um, they also, uh, have donated 30,000 neath, um, Abe Dow 25,000, layer 0, 5000.

Some people might say that's a little stingy, I don't know, given, uh, given the overall situation, but Luca, you'll probably have something to say about that.

Uh, how, how do you feel about layer zero being the lowest contributor on that list?

Pellegrino mode, baby, that's my guy.

I love it.

He gave.

It's, it's, it's because he thought it was the right thing to do.

I support it.

That's my stance.

All right, OK.

All right.

They, I think they're doing some other stuff though.

It's not right.

These are all weird.

These are all a bit weird of deals, right, because they're not, they're not straight donations, are they?

Or are they?

Uh, my understanding was that this is a charity drive, and people are donating eth.

Uh, I don't know if there's like deals where they get anything in background or, or, you know, whatever, but, uh, but my, my understanding was, it's just like you give the eth and plug the hole, basically.

Um.

Uh, I thought Zeller had a pretty, uh, funny take.

We don't have the tweet here, but, um, he was like, I think this is the first time that I've donated money to someone who's richer than me that could have solved the problem themselves, um, which, uh, yeah, I think that, that, that lands for sure.

Um, so, uh, I mean, There's a, there's a bunch of interesting things about this, because there have been many, many hacks over the years.

Um, and some hacks, uh, the holes have been plugged by people like, you know, the wormhole, uh, uh, bridge hack from, God, I want to say 2021, I'm gonna say.

Um, but that was circa 500,000 eth and Jump stepped in and plugged that hole, um, which also, you know, when.

Sometimes it takes like someone stepping in and, and dropping whatever, at the time, $500 million into a hole to like plug a company that they've invested in for you to realize just like how profitable their business must be.

Um, so, so yeah, uh, the, the Like, I think broadly, this is, this is bullish Dei.

Um, it is, it still just feels a little bit weird to me that we weren't able to kind of solve the problem directly by kind of holding accountable the people that, that, you know, should have been accountable.

Like, we don't see Kelpdao on there.

I don't know what the plan is there.

Um.

So, so yeah, I don't know.

What do you, what do you got, are you guys bullish on, on this solution?

This is not a lot, this is not a long term solution, right?

We can't keep doing donation drives if we blow ourselves up, right?

So I think it's a com, it's a bit more complex than we're used to just because.

You have, OK, so you have like layer zero who built this thing that Kelpdao was using, uh, and then Kelpdao was the one that was actually using it though for their assets and had set the configurations and on and on and on.

But then the ultimately like, I guess like where the biggest impact was to end users were Ave end users, right?

We Ave people.

Um, and so it creates a bit of an interesting situation because, like, for example, when people were talking about the, uh, are we gonna socialize the losses across the L1 and the L2.

The arguments were a bit silly because as a user of this thing, like as a as an impacted user, you didn't necessarily have to even know what Kelptow was, like, you had just put your money in Ave to then conceptually have someone make an arbitrary decision about whether or not your losses were gonna be socialized based on like what uh what layer you were on.

Just felt so detached from like reality and from the end users who were impacted.

So I think that's why we sort of ended up in this situation, right?

In like like donation drive situation.

So, so this raises a, uh, fairly important question, I guess you might say, um, which, you know, Tom Dunleavy, uh, wrote an article about, um, about this on X, basically asking the question, is deep. yield actually compensating users for tail risk, right?

Um, so, you know, credit risk, there's like very clear, uh, kind of, you know, risk, uh, algorithms that you can, that you can apply, you know, using the risk-free rate and expected loss, and etc. etc. etc. right?

Um, and, uh, There is even more stuff that can happen in DeFi, um, that is not really present in traditional finance, right?

Um, now, there's like an efficient markets version of this take, which is like, Yes, Dei does price it in, because in, in, you know, practice, usually Dei has higher yields.

Um, you know, the whole point of KelpDow was to juice up yields, right?

Like these levered things, and, you know, when those people are juicing up yields, that does have this flow-on effect to other venues where they have higher yields, and etc. etc. etc. right?

Um, the, the, you know, like Taleb.

100, 1,0001 days of a turkey, you know, picking up pennies in front of a steamroller question here is like, especially lately, right?

If you are getting even 2x the yield, right?

The risk-free rate is 4% and you're getting 8%, right?

So you're getting, you're getting twice the yield in DI that you would have been getting in, in Trafi.

But every week you blow up.

Then the answer is no, you're not being compensated.

You need 104% to or like you like 704%, like something insane, you need like some insane uh yield to compensate you for the fact that like once a week you blow up.

Right, you need to, you need to make back all of your principal plus the proportion of the 4% you would have made in Tradfi, uh, in order to, to justify it.

And, you know, I think a lot of people, uh, were kind of caught out by this, right, in, in Ave because they're like, no, no, Ave's safe.

Yeah, Ave is the risk-free rate, you know, I'm, I'm getting paid 3.2% or whatever to loan out my Eth on Ave, um, and the risk-free rate is, you know, it staking or whatever, which is 1.8%.

So like, yeah, I'm getting compensated.

And then they're like, oh, I didn't know some random L2 nonsense looping thing could blow up Ave.

Like I didn't sign up for that, right?

So, um, so, you know, like, I think.

This, this whole thread from Tom is like a little bit of intellectualizing what is realistically like pretty clear answer of no.

Yeah, exactly, exactly, and like we can, I don't know, we can dive into it all we want, we can rationalize, we can do the numbers around and stuff, but at the end of the day, once again, we're seeing that um all these sort of like loose Tao affiliations and relationships that are not.

Super clearly defined, uh, like we don't have waterfall structure defined for how, how to do this, right?

We're like deciding post hoc, like, is it the L1s or the L2s?

And meanwhile, the end users just sitting there like, wait, what?

Like, I just thought this was an asset, and I also don't, I didn't even know that I was exposed to this asset.

Um, and I think it's just like, it's a bit of an absurd predicament that we found ourselves in.

And therefore, like this, whatever you wanna call it, donation drive, whatever you wanna call it, like, it's good because that's what has to be done to not just like completely wreck everyone, but ultimately, like everyone, like really needs to step up their game.

And I think that Perhaps in like the blame game we lost sight of like who's actually to blame here but like literally everyone is to blame and the incentives are also to blame, right?

Like everyone failed here everyone dropped the ball here, um, and I think the choice moving forward is like, OK, it's not just, it's not as simple as just saying like, OK, layer zero needs to improve their security.

Like that's not gonna be the solution, right?

It'll just, it'll happen in a different way next time.

Yeah, so, and, and, you know, like, fundamentally, I think this is the challenge, right, is in Tradfi, you have counterparty risk, right?

Like you are in some structured product that's lending money to like Venezuela, right?

And Venezuela is like, actually, no.

Sorry, we're not gonna, we're not doing this anymore, right?

Um, like, there are places where you have blowup risk in, in, you know, uh, Tradfi.

It's not like it only happens in DeFi that you get zeroed on something, right?

Um, what you don't really have in TraDF, I would say, is like, you have a counterparty of Goldman Sachs, and North Korea infiltrates them and steals all the money.

Like that's not like a thing that typically happens.

You don't hear about North Korea like raiding an office and like taking all their gold or something and like literally all of it.

Yeah, like all of it.

There's like there's not even a speck of gold left in the whole building.

They just like gone.

All of it.

So yeah, that's, I think, like when we talk about how do we eliminate this or like dramatically decrease the tail risk, it's like, We have got to get away from like this, oh, layer zero needs to be more secure or oh Kelpdell should have done their configs.

No, no, no, no.

Ave cannot allow their, their entire market to get in this position period.

And in part they can do that by having uh things in place to ensure that say kelpde can't get wrecked for 100% of their money or to ensure that the layer zero LFT thing can't get hacked, right?

They can do that, but that's not like at the end of the day.

There you can only go so far because ultimately these are third parties, right?

You don't, you're not literally sitting there running this stuff yourself.

And even if you were, like, then, OK, so then I can get hacked, right?

So, how do you evaluate the risk?

How do you, um, uh, like actually properly price that?

But most importantly, how do you make sure that your thing does not get completely underwater because one of your third parties was relying on another third party.

That wasn't perfectly scary.

Composability, baby.

That's what we're here for, right?

Like, and this is, you know, the, the fact that anyone can just turn up and connect their stuff to other stuff, right?

The only protection you have is having really clear risk gates, right?

Like don't add that random L2 wrapped thing with one of one, you know, multi-SIG control, etc. etc. etc. to your collateral with infinite borrow ability.

Like, don't do that, right?

Which, you know, This is the kind of the interesting thing I think about this is that like, for a long time, you know, there's been this like morpho Abe war of like, who's right, and Morpho's like, oh, we have curators who are responsible for the vault, and therefore, like, you know, you don't have this like principal agent problem where, um, you know, the, the The people who are managing the risk have no exposure to it, it, which is interesting, not necessarily true, as we've seen with Morpho all the time, right?

But like, in theory, it's a different approach to it, as opposed to like a centralized.

Risk management system, you know, where something like this can slip through the cracks, and it's like, oh yeah, we knew that this was a bad idea, and we did it for like this reason, and then we forgot about it and now it's, Right, so, I, I think, uh, Dan Robinson also had an interesting take, and, and, you know, I always like his takes, uh, because they, they're pretty rational, uh, where he was like, I agree that Defi lenders seem to be underpricing risk, right?

Like, if you look at it on paper, you go, this doesn't seem rational, right?

Um, but, you know, he's a market structure guy, right?

And he's like, uh, you know, basically, that doesn't mean that rates should be higher than they are.

Um, you have to take into account demand.

And I think, I think the, the point of that take is that, As much as Defi is connected to the rest of finance, it is still somewhat siloed, and there are market structural reasons why someone may be stuck and not have access to the like global finance risk-free rate for again like.

Weird market structural reasons, it's a global market, etc.

Um, and, and so that, you know, creates more supply than, than, you know, there is demand for borrow, and so there is no arb here, and you end up in a weird situation where like, Maybe it should pay like 25%, but it pays 4%, and everyone's like, oh, this is fine.

Like, the market's telling me this is what it is, right?

And so like the whole market is getting this like mispriced signal of how risky Ave is, and it's actually not a 4, it's a 20.

And, you know, uh, and especially when the, when, when things change quickly, right?

Like if, if the market starts changing quickly, I, Things get hacked every day, um, you know, then, yeah, it's, it's, it's hard to kind of keep track of that as well, like my Ave position was, I wanna say 18 months old.

Was I doing like a weekly re-sanity check of like, no, I was not, I just was not, like, I was like, ah, this is a thing that I'm doing and it's fine, and it just kind of, you know, hangs around there.

Um, Luca, um.

Uh, you guys have been working on building up your DeFi props, right, on, uh, um, Abstract.

Um, how do you guys think about this stuff, like, cause my assumption is that yield, like higher yields are something that, you know, drives TBL, drives demand, like gets the flywheel going, um.

Yeah, how, how do you guys think about this, this, uh, like yield, um, problem?

We were, we were, we were thinking about it a lot, and then now, as of recently, it's like, Reassessing the risks.

I mean, the problem is, is like, It's kind of, you made an interesting point, which is like, I always underwrote Ave as like, I didn't, I didn't really, I, it's probably a little naive, but I didn't really like underwrite necessarily risk in hindsight, obviously, like that was stupid to not underwrite it as such, um.

I think, I think we, over the last 6 months, we've been working in this direction, and I can tell you internally over the last couple of weeks, it's like, is the risk even worth the reward?

And I can probably tell you that the answer is no.

It's not.

Because I think like one of the things One of the things here that's unequivocally clear to me is you can come back from a lot.

A hat with sustained realized losses.

Is not something.

That I think.

Is it, it, it's just the one place where I'm like, scares me to death.

Yeah, it's just like it's not worth the game.

Sorry, let me, let me double click on that for a second, right, because I think I, I like broadly agree with you, but it also depends on how.

Much traction or like PMF or whatever you have.

Like, if you're trying to bootstrap something and it gets hacked, then yes, it's probably dead.

But like, is your take that layer zero or Ave is going to like have some long-lasting kind of headwinds from this whole event, or, or do you think it blows over?

I think if they can't, if they couldn't make users whole, yes.

And so I am I in a position.

You know, am I a part of the Dei cabal, right?

That like has the relationships to go and make a hack like that whole?

No, right?

Like that is just not the place that I've built relationships over the last couple of years, though I'm sure obviously the space would unite and rally and like kind of have they've done.

So the answer is, as long as users can maintain and stay whole, then you're in the game.

And obviously organizations like Layers Zero and Ave, it's as deep into the crypto nucleus and the cypherpunk nucleus as you can probably get, like they have resources, investors, and relationships to go and capture that capital, and the protocols are.

To integral to like the foundation of crypto itself, like, not nothing necessarily that I'm working on, like, I think has that like structural dependency within crypto, where like, You know, if, if something were to happen to pudgy penguin NFTs, God forbid some AI, you know, whatever, like it's, I, I would show up.

Don't worry, I appreciate that.

I would show up.

I know I would, I would, I would bail, I would bail you guys out.

Like I'm, I'm here for it.

I'd be, I'd be rounding it up.

I, I think pudgy penguins are too big to fail.

I, I, I, I appreciate that, but like if I'm underwriting new initiatives, it's just not a risk I'm willing to take, right, or a position I want to put myself in.

And like, dude, in this world with AI, like it's impossible for you to convince me that that risk just doesn't get higher with time until we get like a real breakthrough on the tech stack that like makes me feel otherwise.

Got it.

So, so are they layer zero, too big to fail, uh, and they made users whole, and so they're ready to rock and roll, right?

Users are whole and outcome is users as whole.

If I'm a net new builder trying to get PMF and I'm using yield to leverage that PMF and I'm doing some sort of scheme to do it, like the risk is not worth the reward to me in that function.

Yeah, fair, yeah, fair.

Yeah, I think that, I mean, that's like part of the conversation right now with the um Uh, the, you know, is this a moral hazard?

Is, should we not bail everyone out, like, There's a lot of moral hazard now.

Not.

The whole thing is a moral hazard, like, no matter, it's like this thing about framing and positioning.

I was talking to somebody about this the other day, but it's like, you can like take Warren Buffett, for example.

It's like on one side of the world, like Warren Buffett's the greatest investor of all time, and like anyone who's in finance or on the street has so much respect.

Some like super woke, like just different side of the spectrum type of person would be like, yeah, well, he invested in Coca-Cola.

Contributed to like more and more deaths than like any single human on the planet.

Like it's all so subjective and like it just really comes down from the length, the lens in which you frame it.

Like I just don't think it's productive.

I think like you have to have, you know, it's a deeper conversation that we won't have here.

But you know what I think we've lost track of is like some like 20 years ago and I was very young or even 10 years ago.

When I was more conscious, like, there was some baseline moral barometer, right?

Like, hurt people bad, right?

Like stealing, bad, right?

And, and just the world over the last couple of years, even to like this point, like, how it's like what we went over last week, like, how can you say that making users whole and like preventing huge financial losses is bad.

Yet somehow, some way, somebody has conjured up a perspective and a framing of the situation.

That is making that bad and it's like, where has the moral baseline, like how is it dissipated so insanely over the last couple of years, I couldn't tell you, but like, that's just like, it's not even an argument to me, like people, like that's, that's step number one, but, but besides decentralization and integrity and anything like losing people's hard earned money, bad, solve that first.

It's insane that anyone would think otherwise.

Yeah, I think, you know, this is also part of the like coda's law wing of like, insanity, right?

Like, you know, you're, you have a very user customer centric view of the world, and if you're like, if you nuke your customers, you don't have a business.

And like there are people in Defi that are like, those are bad customers.

It's good that this happened to them.

Like, like, genuinely, right?

Like they're, they're like, they didn't price their risk, uh, adjusted yield correctly, and this is a good lesson for them all.

And so here we are.

That was a real argument, by the way, was like, is it.

It helped out with an Ave and there were people who were like, well, it's the users for putting their money in Ave in the first place, those idiots.

No, I'm sorry.

Like shut up.

Um, I think that I don't know, my biggest takeaway is like, look, you have to fix this.

Mostly because we are in no position to talk about moral hazards at this point.

Like we can talk about that once we, I don't know, once there's a blow up with a waterfall structure, like agreed, generally agreed upon, right?

But like we're literally flying by the seat of our pants post hoc, make people whole, do what we can, come together, try to get the best outcome, um, and in my opinion, like nothing about However this lands, I don't see it dramatically impacting like what people do in terms of the future, like security measures and risk measures.

Like, if you don't bail Ave out, uh, I think that like what they're gonna do next is basically Generally the same as if you do.

The only difference is who's harmed and like whether or not they can come back and like how much is lost and that kind of stuff, but I just don't see any position where any of the involved parties are like, Well, that was fine.

Like, no, this is not freaking fine.

Nobody thinks that, um, you know what, like maybe down the line we can have like more structured conversations where we're like actually adults.

At this point we're not adults again, like we, yeah, I, I think you know the.

The argument of like, oh, if we make these people whole or donate or whatever, then it won't change the behavior.

Like, the behavior needs to change in the protocols, right?

Like, they are the ones that have the responsibility to, to deal with this.

And I think Irrespective of whether users are made whole, they like, are still feeling pain, right?

Like, you know, no one wants to have to donate 5000 each to bail out their users, right?

Like that still hurts, no matter, no matter how much you have.

So, Um, all right, let's, let's move on to the next segment, cause I'm, I'm pretty excited about this for a reason.

So, um, a few hours ago, um, it, it looks like Meta announced, Meta, i.e.

Facebook, right, um, announced that they are going to pay creators in USDC.

Um, so, like, for a bit of background here, um, this is a thing that I think has been around for a long time, but like, definitely from my perspective, X was, was the first time where I saw this, like, become a kind of tactical, highly talked about thing, where, like, you get paid based on views on the social media site that you are on.

Um, and then, you know, uh, Uh, I know that like TikTok has this and, and Instagram, and probably Luca, you have a better sense of this from your, uh, from your, uh, handle marketplace days, um, of, of what the, like, backstory of all of these creator payouts are.

But like my first experience with it was, was X.

Mhm.

Yeah, I mean, it's, it's pretty cool.

I mean, it makes tons of sense, like, those payouts in the past had fees associated to it, like if I met her, like.

There's no way I don't come to this conclusion, so it's nice that they're acting on it.

I mean, fundamentally, like these businesses live and die by how many people are creating on their platform, cause the creators, the custodians of the communities and the audiences, and social networks are quite literally hubs of people's individual personality and community.

And You know, issuing, you know, stablecoin payments just is gonna add less friction to people getting their dollars.

I think people are underestimating just how big USDC and USDT and this whole initiative is just for the strength of America and the, and the dollar system.

I mean, like, the fact that we just keep putting these dollars in people's hands, like it's just creating such an amazing moat for the country.

And you know, I think it's just one of those situations where, you know, Meta's Meta's leading the charge and it's all going this way.

It's just, it's just unequivocally better payment rails.

It's been obvious for a long time.

Probably my great, this is like one of the largest, it must be, you know, like the Instagram.

Industrial complex must be one of the largest creator payout systems, right, like for sure, so.

Top I'm, I'm not sure about Facebook directly.

Like, I don't know if they pay people for, for stuff.

I'm not.

They all do.

They all do in some capacity.

YouTube is the highest paying per 1000 impressions, but they all do now.

So, you know, I mean, the beauty of, but like understand the network effect.

I'm a creator.

I get paid in US dollars.

Obviously we get to see the UXUI, but if I get paid US dollars on chain, then I see NFT on timeline.

Or mean coin and then I just can buy it easily like the network effect of what this is the seeds that are being planted here for all of like my delusional bowls in the room is like continues, right?

Like this is setting up for like the alt run that we've been like waiting for for like that crypto super cycle like it's going to be off the backs of the seeds that are being planted like this.

Right, where everyone, everyone has USCC, uh, easily, they don't need to buy it, they're being paid in it, right?

So the, the, uh, the interesting thing about this is when, when X first, uh, released their payments, I was like, oh, cool.

And me being an idiot, I Literally assumed that it would be in stablecoin.

Like, it did not occur to me that it would not be in stablecoins, because how are you supposed to pay people all over the world?

It was not.

And so I signed up for it just to like see what is this flow.

It took me, I think, like, a day and a half to like get it completely hooked up, because you needed to, like, give a bank account, and there was like KYC and all of these things.

And it was just, like, so painful.

And I get paid, I think, like, I, I wanna say it's like, 50 bucks a month or 100 bucks a month or something like that.

Um, I'm not even sure if I would know how to turn it off at this point.

I don't even know where it goes.

It goes into some random bank account that I have no idea where mine goes, none.

And if it went into my like wallet, I would see it, but like it just goes somewhere and, and that's kind of it, right?

So, um.

Yeah, this, this feels, uh, this feels super bullish.

Um, so there's love to get it.

I would love to get paid in like crypto and have it show up cause I literally don't know where mine go at all right now.

Yeah, I'm your account.

I'll make sure it shows up somewhere.

Just let me sign in.

Well, so, and I came, you're like it took me a day and a half.

It took me freaking like 6 months because my Stripe account was on my, like I hadn't used it in like a decade, but it was still existed, but it had out of date KYC under my maiden name.

So I was like, oh, you need to give your real docs now, and I was like, OK, cool.

And so I give the real docs, and then they're like, what?

And I was like, oh shit, like it was so long, it was so long ago, um, and so yeah, then I had to go through like a whole manual.

It was just a pain in the butt.

And then when I finally, when it finally like worked or whatever, I guess it just goes into that account now, but I don't know where it comes out, like it's completely insane.

So The thing that, the reason, like, this is amazing, and I agree with, with Luca that, like, having millions, tens of millions, hundreds of, I don't know how many people they pay, like, 100 million people getting paid in USDC, uh, every year to the tune of, like, maybe, you know, billions of dollars is insane and amazing.

Um.

But there is another element to this story, right, which is the Facebook, stablecoin coming full circle story, right?

Um, so, uh, we've got, we've got a tweet here, and it's an old tweet.

Um, uh, let's see if we can put it up, um, from Maxine Waters.

Um, so this is, uh, and it's funny cause it's referring to Trump, right?

Um, basically saying, uh, that, This is like, again, I guess 6 years ago, ancient, ancient history.

6 years ago, right?

So she says, um, Facebook let Russia manipulate voters and put Trump in the White House.

So this is not this version of Trump, like she would be horrified to know that like we did round two, right?

Um, now they want to create their own currency with no regulations and run it out of Switzerland.

We need to stop this now.

So.

This tweet, and this moment in time, right, and Facebook's sheer idiocy back in 2016 or whatever it was that they were, they were doing this, right, um, is, for a lot of people, I think, the moment where the Democrats said, actually, crypto is the devil.

Like this was the first thing where they were like, this is not just a weird toy money thing we can ignore or whatever, like, uh, this is actually super dangerous, is like a risk to civilization, basically, because, particularly at that time, and I think this is, this is maybe, um, Kind of, uh, Declined a little bit over the years, but there was a period of time where, uh, the, like, you know, what became the Mag 7, was.

Like, hugely problematic for Democrats, right?

Like they had this real, like, uh, kind of antipathy towards the, the large, you know, tech conglomerates, right?

Google and, and Microsoft and, and, you know, um, there, there was like, you know, antitrust things that, you know, that had been going on for a long time.

But like, there was, there was a real, uh, kind of sense within, um, you know, a wing of the Democrat Party that like these companies were really bad, really too big, really evil, like really, really, really, like it was like a mashup.

And like once they got involved, once the election stuff happened.

It was like, I mean, she says it, right?

She's like.

They let social media who let Russia elect Trump and aren't you, right?

That was the narrative, um, but it was like, yeah, it's this perfect storm of like these powerful people who are like running around Silicon Valley being rich, uh, it's like capitalism in a nutshell rich, and then you have freaking the Russian and the politicians on top of it.

Um, and they just, yeah, it was like a perfect storm, and they really decided that like really all social media was like truly evil, um, and that like there was no way in hell that that Facebook meta was ever going to play a role in, in the economy.

That was just like not, not a thing that they just were not gonna allow that to happen, right?

So, so they killed it.

They killed this, this stablecoin, but here is.

The, and the, you know, the, the fact that like Facebook was so early to this, as well, right?

Like this is like, this was the thing when like stablecoin, you know, there was only Tether, right?

And they were like, oh, we're gonna do our own stablecoin.

That timeline where this doesn't get shut down and like BM becomes a thing.

But the thing that was the dumbest part of this from Facebook, and I do not know how they did not sense check this with like, Someone was the, the, this was not going to be a US dollar stablecoin.

It was going to be a weird bag of uh currencies, right, um, that, that was going to, like some cypherpunk in Facebook somehow like.

Like, did some weird, like, anti-USD pilling of Zuck somehow, and like, got this over the line, but like, it was such a crazy scheme.

I mean, it does speak to the fact that it was early crypto, that you could actually, with a straight face, be like, we're gonna make a, our own weird denomination of currency and, and do a stablecoin.

But, like, This set off what eventually became like the whole, you know, the Gensler era of crypto, of like crypto is dangerous and destabilizing to US interests, and we must stop it and everything about it is bad, etc. etc.

Um, they're, they're like, this is pretty clearly that.

So the fact that 10 years later, crazily enough, where we've come full circle and they're like, actually, USD US dollars are good, bro, let's, let's just give it to people.

Um, it's, it's pretty wild, um, because, yeah, that, that.

They're just gonna do it right like they're just, they're not asking permission anymore, which I think is the way to go.

I don't know why they ever asked Congress for permission in the first place.

That was weird, um.

Because they hadn't shipped it.

That was why Congress got their hands around them in the first place.

It was like they had, they had not shipped it.

Yeah, it was, they announced it.

It took like 2 years.

It was, you know, and like every, every step of the way, Congress was like, get up here and explain why this is fine, and like you can't, like it's a gotcha environment, um.

OK, this was, this was 2019 that this, this happened, um, so 200 I mean that's still like we're still talking pre NFTs, pre-Dfi.

Yeah, it was basically just ICO.

Like that's all just ICO, um, it's weird though, like the, the, uh, I'm, I'm a bit confused on this timeline.

We'll, we'll have to dig into this because, uh, like the, the election was the big thing, right?

This like, you know.

Facebook let Trump, I guess they were still banging on about it like 3 years into his term.

I mean it was the whole they hadn't, they hadn't given up on, on the whole thing.

So, um, all right, let's go to, uh, an ad break, um, and we'll be back with some pump fun action.

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OK, um, so we are back.

Pump Fun yesterday announced that they have burned $370 million worth of pump tokens that they ostensibly bought on the market.

I think that was the, uh, the Um, Explanation of, of where those tokens came from.

Um, although there is a lot of skepticism from a lot of people, I saw a lot of takes on the timeline of like, Did they even burn them?

Are tokens real?

Is Pump Fun real?

Like, people are very weirdly skeptical of almost anything that the Pump Fun team says.

Like, the conspiracy theories are wild every time they, they say something.

And I think a big part of it is that they, I have an expectation that there will be an airdrop, um, and I'm not sure that I have ever seen like an explicit thing where the pump fun people said there'll be an airdrop.

I think it's always just been this assumption of there must be an airdrop.

Um, they keep not airdropping.

Maybe they did say they were gonna do an airdrop and change their mind.

I, I'm not really sure.

They did, they did.

They did, OK.

So, so people had an expectation of an airdrop, um, and they were like, Hey guys, $370 million worth of tokens that we have accumulated over here.

And then they were like, let's light it on fire.

I saw some good memes, uh, of, of Elon burning the tokens instead of distributing them to people.

Um, I mean, we've talked about this before.

As a founder, you have $370 million worth of tokens.

And you have a choice of sending it to I don't know, let's call it.

370 million people and giving them a dollar, right?

Um.

Or you can burn them.

Just from like a very pragmatic standpoint, Luca, like, Sending those tokens out to people, we know what they're gonna do with them.

Mhm.

Oh yeah, we do.

OK, what's the argument for, what's the argument the argument I got, I can argue this all day.

All right, all right.

The argument is, and it said very anecdotal with Pengu is.

And, and I burned tokens too.

Remember, remember, Ken, you gave me some shit for that.

I, I did, yeah, I did.

That's I'm glad you still remember that.

I'm glad you're still upset about it.

Of course, of course.

Now, I remember, but, but, but it was frankly not because I burned it.

It was because I kind of moved the needle on how I burned it.

But that's a different.

Story that we won't, we won't bring back for what it's worth, I think like in, in the light of day two years later or whatever it is, I think like it was definitely the right call, um, seeing the wait, wait, what's the, but why do we burn things?

What's the value here?

OK, so the burn, the, the, and they thought the same thing.

My logic around the burn was.

You know, supply crunching, aligning with community, right?

Like we burned 13% of the supply at a similar number.

It was like $280 million and it's supposed to be a signal that like, look, like, these tokens still exist in the world, and rather than doing something else with them, like we're gonna align with you guys the best of our ability.

And, and that is principally what it is.

Now, the difference though between us and them is we had already given 50% of the supply to people, right?

So we were already like this people's coin.

This idea that, you know, that the airdrop if done right, and I thought we did it right at Pudgy, at least for the time, because everyone and their mom was like, dude, 50% liquid float, you are mad, right, in a world where floats were, you know, 34, 5% of the fully diluted value, it was actually a very contrarian bet.

Uh, and, and I would, and, and if you look at it, right, post that announcement when we talked about the distribution, we went from getting a couple million views a post to like 1015.

I mean, I don't know if anybody remembers, but like, for two weeks, I was clocking like 1520 million views of post.

It was madness.

And that actually was able to kind of wash out the sell pressure on the size of the airdrop cause there was so much volume, so much buying and selling.

Their issue is that they never airdropped.

They had, you know, I think he deleted the tweets, but I'm like 99.9% certain he had mentioned that he was going to Airdrop.

They never did it.

And rather than, you know, fulfilling on that promise and that expectation, you kind of create like this new idea that you're like, aligning, but you still haven't fulfilled the first promise.

So that's where it fell short.

How I would like, I'm actually a component that, like, airdrop. done right can be like hugely beneficial, and that's why I took, you know, put the money where my mouth is in terms of that statement and like actioning on huge distribution and that being beneficial.

Their whole strategy though, Kate, and I know you appreciate this as somebody who's like stared at tokens and tokennomics, it actually functionally makes no sense how they got here.

And I have no reason to believe that these guys aren't.

Incredibly bright.

I mean, they invented the bonding curve.

They are not like stupid operators, but like the emotional quotient is not in that room because if you actually just think about it logically, they're in a position that pretty much almost nobody else is, where the flywheel and the monies that they make are so insane that if I was them, I would literally give the biggest airdrop the world has ever seen, and I would pray it drew down 95% because in the case that it, because in a case where they are not capital constrained, they can then basically buy the entire token and if they would have done this from day one, they would have drawn down 95%.

They would then own the entire float.

This thing would be vertical.

Up only and, and he would be the biggest champion the space has ever seen.

Instead, somehow, some way, they decided to redact the airdrop somehow, some way and not give it to the community.

Half of them like get anytime they get a chance to grave dance on the guy, they try to do it.

And now he's like perpetually fighting not only the market.

Sentiment, but the internal community sentiment, his own users, right, and he has a perpetual float problem that like he could have addressed, you know, at that moment and like, dude, we drew down 95%.

It hurt.

It was the worst time of my life, but like we brought it back, you know, and like he is way more prone and capable to bringing it back because of the resource of capital that they have to.

Basically control their token.

It actually makes zero sense how they've gotten to this point on this side of the spectrum in regards to how their token kind of functions within their ecosystem, because, you know, yeah, so, so I think that's, that's a very good take.

And, and I like broadly agree with you.

The, the fear, right, if, you know, to, to kind of, uh, Like Frame it from their perspective, uh.

Has to be that like, we do have this flywheel, and if we give people the tokens and the token goes down by 95%, what happens if that somehow kills our momentum or whatever.

And like for what it's worth, I think this is unfounded, right?

Like, they have product market fit, the token, they're doing the worst thing that they could do with the token, and.

It doesn't seem to be impacting their, their PMF, so I think they could absolutely, uh, bear this, as, as you say, you know, even if it was to draw down 95%, then put your buybacks, like the buyback revenue is not tied to the token price at all.

They're completely decoupled.

It's not like this is like some token price flywheel where if the token price goes down, the thing stops.

Um, but I can see how there was a period of time where everyone was like, Never airdrop.

Even I say it, like, never airdrop.

It's like the worst idea possible, um, you know, you just end up getting a bunch of people who dump on you and doesn't actually drive awareness or growth or any of the things that you're, you're hoping to get.

Um, of course, they're counterexamples, and I think, you know, Pengu is, is one of them.

Um, but I can see how you get yourself to the point where you're like, actually, airdrops are dumb and we're not doing it.

I would agree, but you have, you know, there, there's two points to that.

They, they, they, their claim is that their, their moat is way more defensible than people think, and I actually don't think that's a Fugazi claim.

I think that's actually true from the branding to the DNA to the behavioral pattern.

I mean, everyone's tried to fucking take market share from them, and they've lost, right?

Yeah.

And so like in a world where you have a real defensible mode.

Right?

Like, the thing that's going to stand the test of time for them to keep the gravy train going is the sentiment of their community, and there's such a discorrelation between price of their token and success of their business that the only thing you can come to is just a complete mismanagement of the community sentiment and the emotional quotient of their users.

Like, and, and the thing is, is like, dude, like I I would argue if he gave a ridiculous airdrop, like, let's just do the math, right?

Let's say it came out at $4 billion.

He did the biggest airdrop of all time, or like one of, he could have been a top 10 easy.

He drew it down 95%, took, you know, that same $370 million bought it back at a, call it a, let's say it drew down 90%.

The thing has a fully diluted value of $400 million.

Within a month, he controlled the entire floor.

Everyone would love him.

He would promise another eardrop 1 year or 2 years from now, right?

They would then use the platform 10 times more because they knew he blessed them.

He could then, you know, say, I'm gonna bless you even more.

He'd have the facts and the, and the credibility to say that.

And then he would get like 20 times more users, just like, no matter how many ways you skin this cat with this specific protocol, with this specific build, the right decision was just.

To give it all, let it draw down, buy it all back up.

I mean, not only is there revenue, I mean, they raised $400 million on the sale.

Like they have so much cash, and then this could have just been an infinite money printer for them till infinity.

How you fix this, I mean, look, Alan, if you're listening to this, you can, you can give me a call.

I'm more than happy to give you a free be free one.

Do you get a free one.

Luca, do you think that there's maybe some element, right, and, and, you know, uh, I'll call out that like I was an investor in the fund to Alliance Dow vintage that these guys like came out of.

It was, it was not much money.

Um, and, and I think we then, uh, went into, or, or tried to go into the billion-dollar round.

Do you think that there's some fear, pressure, whatever coming from those investors that invested at that billion-dollar round?

Right, to be like, do not give out free tokens, we just bought tokens at a billion dollars dollar vow.

If you do that, you're fucking us.

And they're more worried about their like reputational risk when it comes to institutional investors than like the, the actual users of the platform.

Um, well, and they also might, the thing is that that billion dollars dollar deal was not that long ago, right?

So we don't know the terms of that deal.

But if they, if the investors have certain terms, Whatever those may be, those might impact the way that you can do an airdrop, right?

And it's not necessarily saying that.

I do know the terms, and I'm pretty sure that's not the case.

Um, I don't think that there was any restriction on, uh, because I think at the time that they did the deal, there was still this, uh, like assumption of an airdrop.

So I don't think they're prevented from doing an air.

Oh, no, I'm not saying that they're prevented.

I'm just saying, uh.

Yeah Uh, like, like, I don't have to give like 20% of their, yeah, I don't think there's like a clause to like let people sell back to them or anything like that.

I'm, I'm, uh, at least my recollection is that's not the case, but, um, but yeah, so, but assuming that they have nothing.

Preventing them, like, where, where do you sit, Luca, in the sense because it's assuming that they assume the assumption where it wouldn't make sense, where that would be a case if I was an institutional investor would be the assumption that it wouldn't bring more liquidity and dollars to the flywheel that already exists, and I'm convinced that if you do this and do this right, they will only make more.

Monies and the difference about crypto than traditional equities is it's more reflexive, meaning like, OK, will those billion-dollar guys, like, will there be a moment of nervousness?

Sure, but you guys are investors, you have balls on you.

So like, you know, that's part of the game.

The beauty about this and like the money that they make is they can crunch the supply so quickly at the right price that they did this right, there would be Two days of 100% candles back to back and everyone and their mom would be jumping for joy, right?

The variable here that makes them so unique and such in a position to just people please and literally be the man.

Like he's already the man.

He's how, however old he is, worth a billion bucks and they're split amongst a couple of guys like those guys are already like the, the guys, but like they're not the people's champ.

They're actually probably the polar opposite.

Like most people fucking hate them, right?

And I, you know, I'm an entrepreneur.

I'm, I'm, I'm indifferent, like, I'm not a Pump Fun user, right?

But like, dude, Pump Fun, a low, like the function of just issuing tokens and, and just like, it's just being so communal, like, oh my God, dude, if you were the people's champ, you'd be at a $5 billion.

Your run rate, it would just, I just believe that.

And if it's not 5, it's 2, but it's more than whatever they're making, right?

Right.

And and we gotta, we gotta clip this and send it to Elon and, and be like, I mean, I'll just say this, I just pulled up the chart of their revenue.

I'm shocked that their revenue has held.

It's crazy.

It's crazy now, and obviously it peaked up before, but like this is not like your classic ICO open sea graph, right?

Those go to the moon and then the poo that's not that they are still doing numbers like pretty decent numbers.

So that's actually a really interesting dynamic because it's, you do have the business, you have the revenue from the business and then you have the token on top.

It seems like there is, there is a, I should call out, there is a conspiracy theory as well that like the revenue is actually not real.

They just took the money that they raised, and they're like inflating the revenue numbers because it's crypto, right?

So no one believes anything, no one trusts anything.

So, yeah, yeah.

I don't know, I, I'm, I'm not suggesting that's the case, but I'm, if you go and, like, to your point though, Luca, right, um, there aren't that many pudgy penguins conspiracy theories out there.

Budgie Penguin holders are pretty happy.

Even if the price is down, they, they still love the brand, love the, the ecosystem.

They're not inventing crazy stories, whereas you go and look up Pump Fun, the conspiracy theories are wild.

It's crazy.

So there's definitely a.

Connect between like the users of the platform and, and uh the team, um, in that regard.

He can fix that so quick.

He just has to have the willingness to fix it.

A little bit of fucking, you know, he has to believe in the thoughts that I laid out or somebody else who lays out similar thoughts, and they just have to like.

It, it's in that have all the problems you can fix when you're making that much money, even if, you know, whatever the conspiracy is, they're making money, right?

It's all not, you know, cause I know of enough people and, and the principle of that casino, it's, it's the greatest new iteration of casino that we've seen in the last, you know, 5 years, like, they're making real money, right?

Like they're a way to fix this, it's just like, is there, is there a willingness to fix it?

Now, I know the investors are gonna pressure them to fix this because you got guys who are in it who, you know, they thought, you know, they've made a billion dollars on some of their investments and they're great people, but like, they're looking at the reality and they're like, this, the winning here seems lopsided to like the team versus, like, the people who took a bet on this when nobody else would.

And so, like, I know those guys are gonna apply pressure, it's gonna come down to like, willingness to, like, you know, are you, you know, are you willing to take that bet?

But I promise you if they took that bet, that they're gonna win 9 out of 10 times.

Yeah, fair, fair, fair.

Um, all right, let's move on to our next segment.

Um, we, we probably only have time for one more, so, uh, let's, let's talk about this open AI phone.

Um, if you guys, if you guys are open to that.

This is something that I've been, I think we've even talked about it on the show, right?

Like, um, the combination of, uh, vibe coding and this like new form factor of agents is going to force us to get new operating systems, I would say.

Like, operating systems will have to adapt.

Like, the opportunity, um, to Break the stranglehold of like the Windows, Apple operating system, you know, Android, iOS, uh, phone operating system, um, kind of duopoly is like, finally here, and people have tried to do this before, you know, um, Microsoft tried to do it and, and, you know, people have tried to come out with their own phones.

It feels like OpenAI, um, Um, like, to be honest, I'm surprised that they're doing this because they just had this whole thing about focusing on, like, coding agents and, and getting back to like, first principles, but, uh, you know, um, maybe this is their fire phone moment, the Amazon.

Uh, the Amazon phone, uh, is like everyone convinces everyone to do a phone at some point, and 99% of the time they freaking fall on their face.

Ma'am, you're saying that the seeker Salona phone, uh, is, um, not a roaring success.

How dare you?

I, I heard the airdrop was nice though.

The airdrops are good, yeah, yeah, yeah, I've never, I've literally never heard anyone talk about the phone itself though.

They're just like I thought the phone had money on it.

The phone had money on it.

It's a good feature.

You buy a phone and it has more money on it than it costs you to buy it.

That is a good feature.

Yeah, it's honestly a great feature.

It's a great, a great feature in terms of like, does it replace my iPhone?

No, I'm sorry guys.

So, so OpenAI is, uh, there was a hardware leak, um, that they're working on an AI native phone, um, with agents replacing traditional apps, um, targeting 2028, um, and one of the large Chinese manufacturers, Luxshare, um, as the, uh, assembler of this phone.

Um, the, the, Interesting question, I guess, right, here is like, you know, do they build a fork of Android, um, like other people have tried to do before, most people have tried to do because it is open source, um, or do they actually say, no, like, this needs a rethinking of the operating system for, uh, for an agent-based system, um, you know, and also we have like all of the coding agents in the world, and we can just get them to.

Um, so, it's gonna be, it's gonna be a very interesting question.

I mean, the other thing that it brings up as well, though, uh, is the, the, first of all, like Tim Cook, um, you're passing the, the torch over to, um, John Ernest, um, you know, the same way that it happened when Tim Cook took over, like, priorities shifted a little bit.

Um, one of the priorities that I think If you, if you look back at Tim Cook's entire tenure, the thing that Apple butchered the worst of all of the things is AI like.

It's just mind blowing.

Like, the only, the only thing that they have going for them is like the MLX, uh, you know, competitor to, to the Nvidia platform where, um, you know, you can do local inference and, and, uh, things like that.

Outside of that, from like an actual user, which is their fucking jobs, right?

Like, Outside of the like weird hardware, like low level, you know, inference stuff, they have just completely Blocked.

I mean, Siri was never good.

Like it was never, it was never great.

It was too early and then I like, I, I wonder if this like, but they never pivoted it.

They never pivoted it, and they also just never threw her in the trash and replaced her with better AI.

I don't know.

I don't know what happened, but, uh, it's, it was definitely rough because they should have been a contender and it should have made my phone better.

Like I still can't yell at my phone to actually do things reliably, yeah.

Yeah, it's, it's pretty crazy, um, that, that they just didn't land that, right?

Like one of, one of the, they just completely missed.

So, um, you know, the market opportunity though, is that like people are frustrated, right?

It's weird that my MacBook Pro.

Has like all of these agents running, all of these like software agents, and, you know, you've got like, Flaw in, in an iOS app and, and Codex in an iOS app, and Grok, and, uh, you know, uh Perplexity and all these amazing apps, but they're.

Sandbox to a tiny thing.

They can't do anything in the operating system.

The operating system is like, functionally retarded compared to the apps.

Like, the delta between how smart the operating system is and how smart some of the apps are, is insane.

Like it's insane, like it's absolutely insane.

You're like, oh, hey, Siri, like.

What, how do I do this thing?

Like, Siri has no idea, has no idea how to do anything, like, has no awareness of the world, no knowledge, like, it's just, it's wild.

So, um, it will be very interesting to see how this plays out, because there's absolutely no question that The agent form factor in terms of how software works, and the hardware form factor of like holding a rectangle with a piece of glass on it, is probably not gonna change, like, they're gonna have to come together somehow, and we haven't landed this yet, so like, the opportunity is, is massive, right?

Like, they were not going to like be wearing fucking.

Glasses or having brain implants yet, like people are still gonna walk around with a glass rectangle and want the glass to be smart.

Like, so someone has to land this, please, guys, we, we need to solve this.

Yeah, I know, I'm super interested in seeing if they, I hope they, I hope they do a new OS.

I hope they don't just fork Android cause they're gonna be so hamstrung by.

Just how the operating system is already set up.

I think if they get a few good people and let them go to town, give them basically like unlimited budget.

You can do some really interesting things that sort of level up the world, theoretically in the same way that we went from like BlackBerry to the first iPhone, and then like the App Store happened and it just, it was just an insane time.

You can imagine the same thing could happen here, but it takes someone who's actually going to build the operating system, not just for Android.

And I'm not sure, based on what I've read, I'm not sure that that's happening.

Um, like, it's not easy.

Like you have to actually sit down and from first principles of this new thing, like, do it better, actually different, better, in the same way that, again, the first iPhone was not BlackBerry.

It was not Nokia.

It was not every other phone on the market.

It was, it was a sidestep around all of that stuff, right?

Not more buttons, but one button slash infinite buttons.

I, I think, um, the, the interesting question for me, and I've thought about this a lot, uh, over the last few months when it comes to the kind of, um, You know, these duopolies tend to form, right?

Like you've got this open AI anthropic duopoly right now, at least in, in cloud inference, where like, they are out trying to out-release each other and out-feature each other, and it's like, it's amazing for users, right?

Like they just keep pushing things as hard as possible.

Um, what's interesting Though, is because they are both so good, and there is like not really, uh, uh, like strong differentiation, um, that you could just go, I'm never going to use that one and just use this one and like lean into it.

Um, you know, the way that, that you kind of have to with like Apple, uh, Uh, and, and the Google ecosystem, right?

Like you either lean into like having Android and all the Android peripherals and all of that stuff.

It's really hard to mix the two.

I know people do it with like Windows and, and, um, and like iPhone, but that's honestly, frankly retarded.

I can't believe people managed to do that.

I don't know how they live like that.

Um, but this is a weird situation where like, If you want the best coding software, for example, right, um, it's hard to see how either OpenAI or Anthropic can build it, because they are locked into their own ecosystem, and it's shifting so quickly that, like, you also probably want Deepeek or like local inference, or you want to be able to use cloud sometimes for like design stuff.

And so you end up in this weird situation where you can't just use one platform's tools.

You need to have both of them.

And so this is where Cursor was like so well positioned, because they're like, oh, we'll, you can use anyone, you can use Gemini, you can use anyone's, uh, anyone's cloud inference, and we'll just give you the kind of framework to, to operate that in.

Um, so that's the open question for me, I guess, in terms of like, can one of the large labs build hardware.

That locks you into their ecosystem and have it not be super frustrating that like, actually I want Claude, because Claude just released a new version that's smarter than your guy.

They have the money to figure it out, but hardware is not software, I'll tell you that much.

Exactly, yeah, and that's, that's the, I think that's the issue that's gonna be at hand is like what, what is their goal with the phone.

If they go hard on it though, it's going to be Um.

It's, it's, you have to rethink it from again from first principles in terms of like AI interactions and like what these agents are doing and what the user experience is actually like, but conceptually, it's actually not that different from how the iPhone works, right?

Like, in the same way that the iPhone can give applications and certain pieces of the phone and the operating system and the firmware and the software access to like the camera and to these things, right?

But the way that it's set up right now is application focused.

So you have applications like the Nest is like the operating system, the applications, then the applications can access core part of the firmware or the hardware or the software, um, and it's all this sort of like permissioning system.

I, it's really hard to imagine the AI being the same because again you want additional context and you want cross context and that's currently like one of the biggest issues with a lot of the iPhone apps is like you don't have, you don't necessarily have that, yeah, yeah, you're in a sandbox and so how do you, how do you The biggest question is like, how do you get?

Uh, Uh, yeah, how do you allow the AI to access the context it needs without doing so like horrendously dangerously, because we're past the point where you can launch an operating system that's like basically like how Windows or Mac OS is today.

Like it's too, like you can't, there's no going back to how it used to be.

Everything's gonna be more sandboxed over time.

So the question is like, yeah, how do you do sandboxing, secure, truly secure sandboxing with potentially interoperable agents.

Who need context.

Like that is not an easy one.

So yeah, I don't know, we'll see.

Like if it's not easy, but like they really go hard and do it, it's like gonna be a life, like a world changer in the same way the iPhone is.

I don't know if they're, if they're in a position to like actually.

That's the question is like, is the, is the lab the right, you know, someone will do this, and it does require a lot of resources.

Um, it's pretty crazy.

I was, I, I looked this up the other day, um, OpenAI and anthropic are like.

Their market caps are 20x larger than Apple was when it launched the iPhone.

The resources that these guys have, even factoring in inflation or whatever, right?

Like, it's still like, they're 5 times bigger than Apple was when they managed to launch the iPhone.

So like, they have the resources.

There, there is absolutely no, and they also have like magical aliens that they have made that are like really good at coding as well, right?

So, like, the, the, the ability for someone to launch something like this, like a new phone operating system, etc. um.

Um, is, is, you know, has never been greater, um, because they just have so much capital available to them.

So, um, someone's gonna have to try this.

It's just an open question about whether or not one of the frontier labs can pull this off, or if it needs to be a third party.

Like, I just don't know if I would use a phone that was locked into OpenAI.

As much as I love Codex, like, You know, uh, if I couldn't, if I couldn't use cloud or if there's some restriction or it just wasn't as good, I, I feel like I wouldn't.

The answer is no.

The, the iPhone, people forget this.

The first iPhone didn't have an app store.

That what made when took the iPhone from being like a better BlackBerry to a complete like life changing product changing, everything changing was the App Store was third party developers and the Even more interestingly, Jobs was like, fuck you and your like shitty slop code.

You're never touching this phone.

We are the ones that are gonna write software for it.

You will never, you know, it was almost like a rejection of like the whole uh Mac OS ecosystem of like people keep writing this shitty shareware stuff that's running on my beautiful machines and I will not let that happen to the phone, and he capitulated after like, You know, less than a year, less than a year, a year, he was like, all right, like, yeah, you win, we can't, we can't, well, they settled, they settled, right, like the internal people, that's why, that's why the app store, like, it's still like they dictate a lot of stuff and people take issue with this, but like the branding, the buttons, the way that things are, the, right, that's, that's how the apps happened, and you know what, say what you will.

I've always used an iPhone for like a decade now and like it's a better experience than Android, so.

Yeah.

All right, um, let's wrap it up there.

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