Backstage Pass: The puck skids under the roulette wheel
Founder meltdowns and regulatory glow ups // Fading on Farcaster // EigenBust? // Astroturf the Senate // Bold bets
Okay I really am going to deliver the first episode of Diamond Rhino, my new podcast, this Sunday.
I will steelman an often vilified, never defeated crypto asset. Email me a guess about which one you think it will be (or that you think it should be).
Researching it, I learned something that very much surprised me. Not a secret, but I didn’t know. I bet you don’t either. Blew my mind.
11 years ago today, the price of bitcoin was $375
The 11th largest crypto asset was namecoin
The 111th was razor
Uncle Atkins will pump you up
There’s no crying in the casino, but I guess you can have a total conniption in the parking lot and that’s no harm, no foul. You’re not going to put a guy just trying to throw dice down the table off his game out there.
Ken Chan, a founder in the space, DeFi builder, crypto nouveau riche, had a temper tantrum on X where he wrote that this whole space is nothing but a giant casino. The essay has continued to drive conversation among the cryptourgeousie.
TL;dr — Chan feels like he wasted his 20s building out an industry that’s an infinite prismatic maze of zero-sum games.
He writes that he showed up here driven by idealism founded in the work of Fountainhead author Ayn Rand. So the disillusionment is odd because her whole thing was selfishness. Like where did you get the whole “make the world a better place” vibe from the woman who famously cursed a lover to impotence because he decided he wanted to try being faithful to his actual wife?
And, anyway, bro, you’re supposed to waste your 20s at a party. Modernity gifted the young of this era with decadence. I spent my 20s in non-profits, if you want to talk about wasting time on ridiculous ideology. At least you got rich! The trick is to run it into your 30s, though, because then you have enough maturity to just leave the party quietly — like a grown-up.
It’s fine. You’re ready to go to bed at a decent hour. We get it!
And look yes this space is rife with speculative chicanery, but what do you expect after, against all odds, creating a multi-trillion-dollar something out of very-much-nothing only to have a devilishly hard time doing anything with all those many chunks of valuable ephemera.
Casino was like... just about the only option. Just before I started writing this, I bought some tokens backing the equivalent of an Instagram post using coins that I’m not entirely clear how I earned. These are strange days.
But this is the upshot when the real world has resisted, kicking and screaming, directly interacting with all this new wealth the crypto world has created. So of course it becomes this weird self-referential and inwardly-enfolding game of increasingly oblique financial meme shenanigans. It’s got nothing else to do.
➡️ Yet.
🎵🎵🎵 🥁🥁 🎺 💃
Crypto Uncle, SEC Chair Paul Atkins, popped up at one of the blockchain world’s more sedate shindigs to say: I got this.
“Hold my beer, Senate Republicans,” he said.
He did not say that. I said that for him. I bet he thought that though.
What he actually said was: “You ain’t seen nothin’ yet” at the Blockchain Association’s annual conference.
Which, I suspect, is true.
Let’s just imagine that the industry gets everything it hoped for circa 2018. Not everything it wanted circa 2024, while it’s still recovering from the Gary Gensler hangover. But 2018.
How bullish could that be?
In fact, the CFTC has floated a trial balloon on ETH, BTC and stablecoins as collateral in derivatives markets.
Which is sorta kinda what Chan was building at Ribbon Finance before he decided to make his very loud mic drop on the way out the door.
Who’s going to open a prediction market on whether or not he makes an Andre Cronje-like return once Uncle Atkins lays down rules of the road and our global casino starts making inroads on Main Street?
That will end up another mess of course, but it will be our mess.
And then we can actually get started.
Social media will never love you back
There is gnashing of teeth and rending of clothes this week as the community of the sufficiently decentralized social network, Farcaster, comes to terms with its creators’ decision to focus on providing wallet infrastructure, rather than building more on the social app, to shoot for a larger audience by appealing to traders.
Dan Romero, its co-founder, posted about the pivot with a “cast,” writing, “Earlier this year, we launched a wallet in our app. It has scaled quickly and we think it’s the closest we’ve been to product-market fit in five years.”
Ooph. As one user wrote, “Hell of a grind.”
Traders (continuing our theme from above) are where the energy is in the crypto world. Farcaster has not succeeded in siphoning users off of the big social networks, like X and Facebook and Instagram, so it’s putting some blush on its cheeks and winking at the boys in the Mustang convertibles.
Honest talk for the broken hearted: My first social network was called SixDegrees.com, back in the actual 90s, before Friendster. Since then: Facebook. MySpace. Google+! Hell, I made a little money blogging on Steem before Justin Sun bought it.
Social networks are that perpetual bad idea that looks good in your imagination. Like goatees, Oakleys, most leather jackets and all neck tattoos.
Take heart, Casters, because you were always going to be disappointed. There are only two paths for a social network. Either it grows in a way that pisses you off or it dies (and it will piss you off in many ways while dying).
That nice feeling of a new social network that seems to attract the “right type” early on always goes. Eventually there are too many people and it changes.
It’s like how you go to a bar one night and you’re like: It’s kinda dead in here? But you stay and people start to show up and a vibe kicks in. But just as you become aware that it’s getting kinda cool in there, someone spills his beer on you, there’s a fight two tables over and your girlfriend is leaving with one of the bouncers.
Every time.
I gotta quit going to the bars.
A turducken of verifiable robots
Stop me if you’ve heard this one before. EigenCloud (née EigenLayer) had generated a lot of buzz by promising to completely change how we manage cryptoeconomic networks, but now it is pivoting to AI.
It’s reportedly working with Google on the trustworthiness of agentic payments. In fact, the team is urging the whole world of DeFi to get in on agentic commerce and create ways to check and recheck robots on the internet so that they do what we want rather than something crazy.
No, no, I didn’t send those texts when I was drunk. ChatGPT took my phone — I swear.
The weird part about all this is that it’s being framed as something of a failure, or at least a disappointment, in the whole project, including from the team.
Here’s the thing: It has $13 billion entrusted to it right now. $13 billion!
At. Its. Worst. It fell to $7 billion or so early this year, which, yes, was quite a fall from its prior high, but we’re still talking billions. Money was leaving, I suppose (though it looks much less bad in ETH terms), but that’s still a ginormous crypto protocol.
Quick recap: EigenCloud lets you take the ETH you staked to secure Ethereum itself again to provide security for something else, something people pay to use. So you got native yield off your ETH and profit-share off your staked ETH.
It was the mega-hot story of 2024 (which feels like it was 2014), shooting to the top of the DeFi rankings. I took a close look at it at the time and called it “a turducken of risk” (which is a line I’m still proud of), but — annoyingly— the darn thing never imploded and I never got to say “I told you so.”
Rude.
One of the team members wrote a long post on X about what didn’t go as well as it could have for the EigenCrew.
I read it very carefully because I would very much like to run a multi-billion dollar disappointment. I’m ready to let you all down at those numbers. Put me in, coach.
Teachers union flunks Senate
CNBC expects us to believe that the leaders of the American Federation of Teachers know the difference between a bitcoin and a krugerrand this week, as it drops an exclusive report on a letter the union sent to the Senate urging it not to pass new laws around crypto in the U.S.
My teachers always said that there’s no such thing as a dumb question, so here’s mine: Which Senate office wrote you this letter so you could send it back to them, AFT?
No one is going to convince me that magic space money is the hot topic around the water cooler in the typical Washington, DC, union HQ. You’re telling me this lot knew before this (or knows now) what a tokenized equity is or might be? Sorry. No.
This isn’t the first letter along these lines, either. The AFL-CIO sent a similar one in October.
Everything about this smells like a silly political hustle to get headlines for senators on the anti-crypto side. Which, fine. I don’t really get what the percentage in it is, but go with God.
The Lummis and Gillibrand dynamic duo of the Senate came to the Blockchain Association this year to say that everything is getting close for crypto lawmaking, and there is still hope-springs-eternal talk of a markup on crypto legislation in the Senate Banking Committee this year, which would put it on track to go to the floor.
Though that date has been pushed back more times than a contractor scheduled to check out your crawl space.
Man something just hit me. I’m from the Midwest, where we tend to mean what we say. So I was confused again and again when I moved to New York City and met all these people who would tell me, “Hey we are having a party in a couple weeks. I’ll invite you!” But then they never invited me!
Rugged by society. And I wasn’t even the one to bring parties up, you know? They did.
So weird.
Just thought of that. Tip for fellow Plains staters heading east. Yeah.
The promise of the prophets
There were three big winners in the presidential election last year: Trump, the GOP and Polymarket.
Since then, the GOP has been face-planting in a world where Captain Red Ties isn’t on the ballot any longer. They lost bad in the off-year to a party that blew $20 million on appearing authentic. That’s like not getting an A on the homework when the substitute is grading.
But one leg of that triumvirate is — dare I say it — beating the odds. With no major global election in the conversation and the entire economy starting and stopping like a Ford Pinto attempting I-95 in 1987, Polymarket has more volume now than it ever has.
A fresh new chart on Dune Analytics shows its volume at a stronger place now than it was amidst the presidential election, when the USDC-powered oracle called Trump while the whole world was sure it was a lock for Kamala Harris.
Now. I should note. This result comes against some shade throwing. Kalshi investor and general juggernaut on the chains, Paradigm, put out a blog post this week arguing that Polymarket’s volumes are overstated.
So the new chart comes from one of Dune’s most prolific data whizzes, Hildobby. These days, he’s working for Dragonfly, which is one of Polymarket’s investors.
It’s kind of like the popular kids are split over who should be homecoming queen, so each side is spreading rumors about the hopeful they oppose. I don’t know what to believe!
Other than this: If we don’t play nicely with each other, we won’t feel good about it even if we do win. And isn’t that what we’re here for? Feeling good about a job well done?
It’s hard for me to believe that this little I-think-he-is-wearing-platform-shoes kerfuffle will have a meaningful impact on adoption of either app, but you do you, jillionaires.
And talking about this rivalry distracts from what’s really the most exciting prediction market news right now. I seriously cannot believe anyone cares about double-counting volume or whatever when there is this!
You guys. You guys. You guys!
There’s a market for the question: “Trump declassifies UFO files before 2027?“ Cool, right?
On Saturday, the price for “yes” in that market was 30¢. Then in a day it shot up to 73¢, then 92¢ the next day. Wow! As I write this, it’s sitting at 85¢.
This is all I’ve been thinking about all week. You say crypto doesn’t have real world value? Please. This is out-of-this-world value.
Don’t talk to me about market manipulation. I need this.
What does Barron know?