Lessons Learned from Building with Terra and Celsius w/ McDavid Stoddard (Aperture Finance)

[00:00:00] Hello and welcome back to the Strange Water Podcast. Thank you for joining us for another episode.

[00:00:22] All across the history of modern finance, we have dealt with investment cycles characterized by irrational exuberance and moral eroding greed.

[00:00:33] Crypto takes this phenomena to a whole new scale, both in terms of the sheer size of the bubbles that we create and in the speed in which we cycle through them.

[00:00:45] And regrettably, we also create some of the most cartoonish examples of fraudsters and charlatans.

[00:00:54] Let's look back at the last cycle where we can name at least a dozen people who went on a main character arc and ended up in prison or running from the law after 10 plus figure scams.

[00:01:07] But let's focus on two in particular, Doe Kwan and Alex Machinsky.

[00:01:12] Doe Kwan was the cult-like leader of Terraform Labs, the company responsible for Luna and UST.

[00:01:21] UST was launched in 2020 and by May 2022 had grown to a circulating supply of over $18 billion, while the Luna token was valued at around $40 billion.

[00:01:35] Alex Machinsky was the founder and CEO of Celsius Network, a crypto lending company that boasted over $20 billion under management and hundreds of thousands of global customers.

[00:01:50] Both of these men built enormous businesses that stood at the very center of our industry during the peak of the last cycle.

[00:01:59] And both of these men are not only remembered for their violent crashes, but are generally held responsible for the end of last cycle.

[00:02:08] And these are not just embarrassing professional failures.

[00:02:12] Both Doe Kwan and Alex Machinsky have been arrested and face trial for federal crimes and long-term prison sentences.

[00:02:22] For as long as they will be remembered, the names Doe Kwan and Alex Machinsky will be forever associated with fraud and failure.

[00:02:31] But that is only from today's vantage point, after we all know and paid for what happened.

[00:02:38] But back in 2021 and early 2022, these men were titans and the companies they led were the most exciting projects in crypto.

[00:02:49] Today, we're going to look back at those times before it all fell apart and remember what it felt like to be working with the great heroes of the post-COVID cycle.

[00:03:01] McDavid Stoddard is the growth lead for Aperture Finance.

[00:03:05] During the last cycle, McDavid and Aperture were working with both Terraform Labs and Celsius Network to build projects, service clients, and grow their businesses.

[00:03:15] During the next hour, we walked through what it was like to work with these cursed projects and how these experiences felt when the collapse finally came.

[00:03:26] While this is an incredibly interesting walk down memory lane, it's not just an old battle story.

[00:03:32] It's an important reminder of what's coming during this next cycle.

[00:03:37] One more thing before we begin.

[00:03:39] Please do not take financial advice from this or any podcast.

[00:03:45] Ethereum will change the world one day, but you can easily lose all of your money between now and then.

[00:03:53] Okay, let's bring on McDavid.

[00:04:01] McDavid, thank you so much for joining us on the Strangewater Podcast.

[00:04:04] GM, thanks for having me.

[00:04:05] Of course, man. So I'm so excited for this conversation.

[00:04:08] But before we really deep dive into it, I'm a big believer that the most important part of every conversation are the people in it.

[00:04:16] So can you give us a little bit about yourself, your background, and how did you find this kind of absurd industry?

[00:04:23] Yeah, for sure. So I'm McDavid.

[00:04:24] I am heading up like growth product BD related stuff at Aperture Finance.

[00:04:30] I've been there for since basically the very end of 2021.

[00:04:37] So I've witnessed a couple different meteoric rises and collapses within crypto.

[00:04:45] We can get into that later.

[00:04:48] And yeah, I've been in tech my whole career.

[00:04:52] And just prior to actually going full time into DeFi, I was at a news app where I was heading up sort of like Web3 exploration project for them.

[00:05:01] And the project was very interesting, but I could tell the company wasn't very serious about it.

[00:05:06] So I was like kind of like I need I need to just go full time into the industry and I live in the Bay Area.

[00:05:11] So it was fairly easy to get plugged in with some of the builders down here.

[00:05:16] Cool. Makes a lot of sense.

[00:05:17] And so it sounds like you've been at Aperture since like your whole, I guess, like jump into DeFi.

[00:05:25] So can you talk a little bit about like when you're transitioning from this company that you can tell like aren't really that into the thing that you're super into?

[00:05:32] Like what are the types of stuff you're looking for?

[00:05:34] And I guess like spoiler alert, you ended up at Aperture.

[00:05:38] But like kind of how did that happen?

[00:05:40] Yeah, I mean, it wasn't like I had some like super long drawn out job search.

[00:05:45] And I had like 10 offers and was like strategically picked Aperture.

[00:05:50] I basically kind of just started like my girlfriends at the time I was like manifesting it, but I was sort of just like, yeah, I want to like pivot into crypto.

[00:05:59] And I started just like telling people my network this I never actually applied for a job.

[00:06:04] I just sort of like when I was catching up with people like, yeah, like I'm looking to just like get full time into crypto and just saying that out loud kind of like, you know,

[00:06:12] this Aperture job kind of like shook out of my local network.

[00:06:17] You know, ex colleagues, you know, a friend of an ex colleague was plugged in with the company and made the introduction.

[00:06:25] And I was kind of like, yeah, sure. Like they're local. Like let's do it.

[00:06:29] I had no at the time I wasn't like, you know, Aperture we were building these like structured product vaults at the time.

[00:06:35] I had no that wasn't like some thesis. I was bullish on per se. It was kind of just the opportunity that was that looked I liked the team that it was close.

[00:06:44] So I was like, yeah, sure.

[00:06:46] Like I just aped in as you would say. Nice. Yeah.

[00:06:49] And I think there's probably a lesson in there about like finding something that you're passionate about.

[00:06:53] And like we say it with a laugh, but manifesting is like a real thing.

[00:06:57] And I guess like it's more of the converse that's the true thing, which is like if you want something but you're not manifesting it, like it's just not going to happen.

[00:07:05] So kudos and like for all of our sakes, I'm glad you made it into the industry.

[00:07:11] Yeah, yeah, me too. It's been a like going back to my girlfriend when I first joined.

[00:07:16] She was like, yeah, you're kind of like getting in bed with the dragon going into crypto.

[00:07:19] Like you just don't know if you're going to be riding on the back of this thing or getting like fire spewed at you.

[00:07:24] It could go either way. It could both things could happen at the same time.

[00:07:27] So she was definitely right.

[00:07:30] I think that's like the perfect frame your girlfriend gave to us for this conversation, which is like she's absolutely right.

[00:07:36] Like crypto is like trying to ride a dragon where like we can soar really high and like conquer the world if we do it right.

[00:07:44] But like every single second is an opportunity to like get burnt or to fall off the back or to like find catastrophic failure.

[00:07:53] And so over the next like hour, I really want to talk about like some of these moments and what it was like to be like so close to the maelstrom and survive through.

[00:08:03] But I think like we'll start our story in twenty twenty one when you're joining Aperture.

[00:08:08] So like I want to kind of like put us in that mind space back then.

[00:08:11] Twenty twenty one, I guess, depending on the point of the year was like probably a pretty exciting time.

[00:08:17] And this is like really the the moment where like SBF is like reaching his like most iconic and the height of his powers.

[00:08:30] Exactly like Celsius and like the centralized lenders, like they just seem like they're running a good business and like we're all just feeling like a little bit like dumb and slow for not doing that.

[00:08:40] Like, can you can you talk a little bit about as you're entering DeFi and like now knowing what's going to come?

[00:08:47] Can you just like give us a little bit about into your understanding of the space?

[00:08:51] Like, did it feel like as sketchy as it ended up being like?

[00:08:54] How did you feel when you started Aperture?

[00:08:56] So the Aperture team, the three like initial team members all came from Big Tech in the Bay Area.

[00:09:03] So there was two engineers at Google and then the CEO came from I think he was at Amazon at the time.

[00:09:09] It was his last Web2 job.

[00:09:11] So it's a very like Web2 background that the team had.

[00:09:15] But through some just like chance networking and connections that we got really plugged in with TFL, the Terra, you know, the team running Terra, the blockchain at the time.

[00:09:29] And that included like Do Kwan, who was actually like a seed investor.

[00:09:35] I mean, he never actually paid us.

[00:09:37] So like, I don't think it was valid.

[00:09:39] But like we had I think there was a saft out to Do Kwan at one point.

[00:09:43] And we were in some group chats with him.

[00:09:46] And our kind of initial idea was, you know, team is very strong technical background.

[00:09:51] So we're going to leverage that to build some of these like automated vaults on chain.

[00:09:57] You know, at that time, DeFi was still pretty crazy with all this like Pond to Yield going on.

[00:10:02] All these like emissions were so that was the peak of DeFi emissions.

[00:10:06] I think emissions today are still pretty prevalent, but it's not nearly as egregious as it used to be even like a year and a half ago.

[00:10:16] So we had kind of settled like I show up.

[00:10:20] I have all this like, you know, general marketing and business development experience in Web2.

[00:10:24] But I show up and I'm thrust into trying to like market and explain this like kind of complicated structured product that we were running on Terra.

[00:10:36] So for any listeners out there that were active on Terra Classic, you probably were you definitely were familiar with Anchor Earn at the very minimum,

[00:10:44] which was that like super unsustainable yield they're paying out on UST.

[00:10:49] It was around 19% for most of its history.

[00:10:55] But one thing I mean, a lot of people in Terra, I think, were familiar with this, but they had there was another project that the first time actually DoQuan ever got in trouble was for this other project that they were running called Mirror,

[00:11:07] which was like these synthetic stock assets, like, you know, very obviously problematic for a number of reasons.

[00:11:18] But the way those things worked was there was like a farm token that would incentivize people to short or long the asset.

[00:11:27] And that farm token, like the weights of the distribution of it would be, were kind of dynamically updating to keep the asset close to the peg of like what the real world asset was trading at.

[00:11:43] So for legal purposes, I will use a somewhat more kosher example.

[00:11:49] Like one of the assets on there was just like even Bitcoin.

[00:11:52] So there was a synthetic version of Bitcoin that like was pegged to the price of Bitcoin by this like emission schedule in Mirror.

[00:12:00] Anyways, the point being like we were, we basically created this delta neutral vault where you, the user would come in and like deposit like two thirds of your initial position would go into Anchor Earn.

[00:12:16] So a position would go into Anchor Earn. You would take out AUST, which was like the receipt token from Anchor Earn.

[00:12:23] You would use that to short an asset on Mirror.

[00:12:27] And then you would use the other part of your capital that you had not deployed at the start to long the same asset on Mirror.

[00:12:34] And the end result was you had like all these random, like, absurd emissions from various activities.

[00:12:43] You were getting yield from Anchor Earn not sustainable.

[00:12:46] You were getting emissions from Mirror for shorting and longing the asset and providing liquidity on the asset not sustainable.

[00:12:53] And there was also like, I think an additional emissions token from the compound we were using to like auto-compound the LP position.

[00:13:02] So it's like this absurd like laundry list of yield points.

[00:13:09] And so my first initial like foray into DeFi was like, oh wow, like this is kind of absurdly complicated.

[00:13:19] But people at the end of the day would just see this like end yield number, which was higher than Anchor Earn.

[00:13:24] So the end yield for the strategy was like 35 to 50 percent.

[00:13:32] And the strategy was also pretty well known in the Terra community.

[00:13:41] There was like lots of YouTubers showing the strategy and a lot of people across the industry.

[00:13:50] I think basically all the major blowups from the 2022 cycle had some exposure to Luna or Anchor Earn or both.

[00:13:58] And that includes like three arrows had they had exposure Celsius had a ton of exposure,

[00:14:03] which I know for Sam because we like work closely with their DeFi team as they were vetting our vaults and putting in like starting to like deposit money into them.

[00:14:13] So this is a very like I think this was the most important ecosystem in 2022 because it was kind of like the canary in the coal mine for all the collapses that happened.

[00:14:26] Like all these often all the stories you see of the major bluffs from FDX, three arrows, Celsius, they all kind of started with the Luna slash UST DPEG.

[00:14:35] That was the thing that kind of set the dominoes tumbling.

[00:14:42] And yeah, so like we launched this thing at Aperture. So I've been there for like less than two months at this point.

[00:14:49] And part of that was only part time because I was kind of like still had a foot in job A for a while before I switched over full time and.

[00:14:56] Like two months into this thing, we went from like being a nobody to having 120 million of TVL just a few weeks after launching, which was just like an insane roller coaster.

[00:15:13] You know, at that point we're like eyeing TGE like a few months later, like we're, you know, tripling the whatever the last valuation was from the fundraising round.

[00:15:22] Like we're going to easily clear this number in our TGE and everyone was just kind of like, you know, we were on the good part of the dragon ride, so to speak.

[00:15:33] And yeah, it was during this time like we're.

[00:15:38] Like, in addition to the vault being really solid and having a product market fit, we were getting like retweets from Do Kwon and you know, like we're sending him updates in the chats.

[00:15:48] And he was just like very pretty point and shoot at the time with like any Terra project, I think.

[00:15:56] Like basically, I think he had a piece of every single project that had launched on Terra at that juncture.

[00:16:05] And for him, like really anything, and it makes sense, like anything on the chain that does well is like ultimately was good for them.

[00:16:15] So that was like quite crazy to to see like one of the biggest, you know, immediately jump into this industry and you see like one of the biggest, most controversial.

[00:16:24] Figures on crypto Twitter, like showing your platform.

[00:16:29] And you like immediately seeing like a huge upswing and usage right after that happens.

[00:16:36] So that was all pretty crazy. And then, of course, like.

[00:16:40] We're also now, you know, the Celsius team has like started to reach out to us.

[00:16:45] Because they want, you know, they have a team, so I said I can go a little bit more into that if you want, Rex.

[00:16:50] Yeah, no, let's for sure go into that. And I really want to get to this moment where the dominoes start to fall.

[00:16:56] But while we're still talking about this moment, I would love for you to answer the same question from three different perspectives.

[00:17:02] The perspectives being like the general community, you guys aperture as like people building in the community.

[00:17:08] And then I'm going to ask you to think like on behalf of TFL and Doe Kwan.

[00:17:14] But like during these early times before the musical chairs stopped, like how well understood do you think it was that like this is like so incredibly rickety and like can't last forever?

[00:17:30] Or how much of it? And again, from the three different perspectives felt like, yeah, this is obviously a little crazy.

[00:17:36] But like there's something real here. And like if we can grip onto the dragon, like we're going to make it through on the other side with like real game changing technology.

[00:17:45] Yeah, this is a great question.

[00:17:50] Basically, to summarize like if you look at all the major vested parties in the lunar ecosystem.

[00:17:56] How many of them were like somewhat aware or fully aware of like the the like utter risk of this algorithmic stable coin and the unsustainable anchor yield payout rate?

[00:18:10] So if you start, I'll start with aperture. So I think within aperture we were to be to be honest, like pretty naive and for good reasons.

[00:18:21] Like we're all new to the space.

[00:18:24] We like everyone's kind of left web too. We've gotten on the crypto rocket ship and now like boom, Doe Kwan retweet boom TVL zero to 120 million and like 60 seconds.

[00:18:35] And we're all like seeing our bags pump before our eyes. And so we're all like drunk off the insane product market fit growth story.

[00:18:45] That I don't think we were being.

[00:18:49] I mean, we even like to back this up. We had a large portion of our treasury, a very large portion of our treasury was in UST.

[00:18:59] So that shows you that we were not like even remotely considering. I would actually put us at the bottom of this list, like the most blinded group was our own team.

[00:19:12] Which sort of makes sense. Like you know your startup, you kind of got to be long whatever thing you're building on.

[00:19:21] Yeah, and I guess like as a developer you're like just as long as the community of the investors, regardless if you put money in.

[00:19:28] Like you're just as long but you're even more so because you've like bet your career and your protocol and your company on the specific technology.

[00:19:36] So it wasn't until you just said it, but like you're totally right.

[00:19:39] Like the bottom, I guess like the most zealot but also means most blinded probably does fall to like the actual developer and the project level.

[00:19:50] Yeah. And you see this like if you read the Michael Lewis book on FTX, like I feel so bad for those employees.

[00:19:56] They probably got the most turbo fucked out of everyone because they had both their like career and their own brand was tied up in this thing as well as all their personal business.

[00:20:08] But yeah, anyways back to Tara. So like that's aperture. We're heavily exposed including our own personal money. I had a ton of money in this vault myself.

[00:20:17] I was like 30% yield. Why not? Like sure I'll move a large like dumb amount of my savings into this vault.

[00:20:27] But if you look at the other, I'll talk about the community next. I think that's the thing I'm the second most educated on.

[00:20:36] TFL is a little bit of a black box but we'll get to that. If you looked in the community, I felt even within the like Tara diehards, I would say a healthy portion of the community.

[00:20:49] If you looked in the community, I felt even within the like Tara diehards, I would say a healthy portion maybe even up to half were kind of suss about either the anchor earn sustainability or the potential risk of

[00:21:11] death spiral with UST. I read quite a bit of content in Q1 2022 about these pundits, this kind of crypto like think boys that were posting like doom scenarios for UST.

[00:21:30] And I feel like within the community, it sort of seemed like there was like there were definitely everyone was getting drunk off the Kool-Aid.

[00:21:40] But half of the people that were getting drunk were kind of like maybe we should stop drinking this kind of soon. You know, like there was some trepidation.

[00:21:50] And sorry just to interrupt you a little bit here. Do you feel like that trepidation with with let's call it half of the community? Do you think that came from this like true understanding of the system and the vulnerabilities or do you think it really came from just like standing in the corner of the party and watching that it's starting to get like really manic and like, oh I see that like these guys that are dancing like right by like the candle station and these guys are like tossing around gasoline and like.

[00:22:19] I don't really know what's going to go wrong, but like I can just tell by the energy that like I probably need to be ready to dash for the door. Like what what sense did you get for like why people were starting to get bad vibes?

[00:22:33] Yeah, or like seeing Mike Novogratz get a tattoo of like the Terra logo on his shoulder.

[00:22:44] That's a good question. How much of it was just like.

[00:22:47] People having some spidey senses about things getting too frothy and bubble like versus like an actual understanding of the flaws in the design mechanism for UST or anchor.

[00:23:00] I would say it's hard to expect that there's definitely a portion of people that were, I think overall for the entire economy, all risk assets. There was obviously a lot of people at the time that were like.

[00:23:12] I mean, you famously had like Bezos and Elon Musk selling. I think it was in like the end of 2021 if I'm fact checked me on this, but I think they had both of those guys had done like huge sales of their stake in Amazon or Tesla.

[00:23:27] And there were a lot of pundits at the time like the the all in VC group just kind of calling out that this was.

[00:23:36] Like a potential top signal and like if these guys are selling, like what do they know that you don't know?

[00:23:43] So there's definitely some of that, but there was also a surprising amount of I think even amongst retail companies that were like, oh, I'm going to sell this.

[00:23:53] There was also a surprising amount of I think even amongst retail users like at least an understanding that the UST, the anchor earn rate was unsustainable. That was pretty easy to grasp.

[00:24:04] Like you could just look at the amount of money sitting in the like the account that's paying this thing out versus how much UST is locked in anchor earns.

[00:24:15] And then like you can just there was a very easy.

[00:24:18] Like, you could check that there's 100 days worth of the old blast or whatever.

[00:24:24] And it didn't seem like.

[00:24:27] CFL was being like aggressive enough to cut the rates.

[00:24:32] So I feel like a lot of people like since that was an issue, but you could both hold the belief that.

[00:24:38] You could both hold the belief that anchor earn was unsustainable and also still be bullish on the ecosystem at large.

[00:24:46] So that wasn't really enough, I think to like fully spook people. It was the smaller group of more analytical skeptics who I think within that group there was also a camp that were purely just based on the fundamental design had issues with UST.

[00:24:53] And there's another group that was like, oh, I'm going to sell this.

[00:24:56] Yeah, and I did like I remember back to that time.

[00:24:59] And I remember it was like a very common occurrence to like be on crypto Twitter having like a lot of people like, oh, I'm going to sell this.

[00:25:05] And then like, yeah, I'm going to sell this.

[00:25:08] So I think that was the first group that was like, oh, I'm going to sell this.

[00:25:13] And then like, I think that was the second group that was like, oh, I'm going to sell this.

[00:25:18] Yeah, and I did like I remember back to that time.

[00:25:21] And I remember it was like a very common occurrence to like be on crypto Twitter having a conversation and like you get to Tara and then like immediately both people would be like anchor not sustainable.

[00:25:33] This is going to run out. Check, check. Okay.

[00:25:35] We've put that in a box now we can both safely say that like because we've addressed it, it's no longer a concern.

[00:25:42] Let's like continue the conversation.

[00:25:44] And like, I don't know why just TFL and just anchor got that treatment.

[00:25:50] It was pretty crazy.

[00:25:51] Like I mean, I'm probably slightly biased here just because of my exposure, but I felt like Doe Kwan was probably one of the most effective cult leaders in like the entire history of crypto more so than like Vitalik or CZ ever was.

[00:26:10] I feel like he was able to he was so crypto native.

[00:26:15] He was so active.

[00:26:16] He was so like laissez faire about what he said that it was sort of like the Elon Musk of crypto in many ways.

[00:26:24] And as a result of that, you had a very, very, very loyal following that would overlook some pretty obvious shortcomings.

[00:26:33] So what what do you think about Doe Kwan?

[00:26:35] And of course, like nobody can really speak about it.

[00:26:38] But like your understanding based on how everything played out, like and let's not talk about Doe Kwan specifically.

[00:26:44] Let's talk about TFL as a whole.

[00:26:46] Like how much do you think they understood that this was like one of the most high stakes games of musical chairs ever invented?

[00:26:54] Or how much do you think that they were true believers?

[00:26:57] Yeah. And so like to answer the last part of the question, like how aware they were of the potential risk.

[00:27:05] So I don't actually have anything like firsthand that I think gives me more insight.

[00:27:10] We're very far. I think today Aperture is very, very far removed from the inner thinkings of TFL.

[00:27:17] But like just based on my speculation on like what is public knowledge, I think.

[00:27:22] I think they had a very minimum realized they were vulnerable to.

[00:27:27] Like a short sale type of attack and and possibly also sort of aware of the general death spiral potential of USC because there was a lot of effort to like build up this defense fund that.

[00:27:38] And possibly also sort of aware of the general death spiral potential of USC because there was a lot of effort to like build up this defense fund that had a vaccine Bitcoin and Ethan like other.

[00:27:51] Like quote unquote blue chip assets in crypto that they would use to backstop.

[00:27:56] The backstop Luna and USC.

[00:28:01] And.

[00:28:04] Like they were doing quite I think there was like even more plans to like that backstop was supposed to be bigger, like they were like pretty aggressively trying to ramp it up and they just kind of like too late in the game.

[00:28:17] So my, my speculation is that they were like bullish on the ecosystem, but they weren't totally stupid.

[00:28:25] I think they did. You know, they have tons of incredibly smart people around them and they have they were somewhat aware of the risk.

[00:28:31] So I think there was a decent amount of awareness of like what could go wrong.

[00:28:38] They were just too slow to act in my opinion.

[00:28:42] Yeah. And I'm not going to ask you to like comment on if Doe Kwan is like a good faith actor or not.

[00:28:47] Like I think to even categories like that is to like miss an important part of human nature.

[00:28:53] But I do think it's probably fair to say that like regardless of what you think of Doe Kwan, that project just like got it grew so much faster than it should have.

[00:29:04] And like yeah maybe some smart guys realized once it was like a 40 billion dollar project that like this isn't safe.

[00:29:10] But it was just too late at that point. And you know, if anything like you can make the argument that like building up that defensive fund like sent the signal to attack now before it's too late.

[00:29:22] Yeah, that's a good way to look at it.

[00:29:25] There was also some like executional mishaps that they had when USC initially like the very beginning of the DPEG that killed them was because there was a temporary like blip and liquidity as they were migrating.

[00:29:42] I think they were moving liquidity onto curve or off of curve to somewhere else. I don't remember exactly the order of events, but they did not do it in an atomic transaction.

[00:29:51] It wasn't like the liquidity immediately show up. There was a gap in the blockchain time where liquidity was a lot lower and that was when the attack happened.

[00:30:05] So you could one could also expect to that like what would have happened had maybe it was still inevitable. Maybe I just would have bought more time, but there were some executional mishaps as well.

[00:30:18] And yeah, it's a good point. Like they were very public about announcing the backstop.

[00:30:22] Like to what extent did that also put them in danger? Who knows?

[00:30:29] Yeah, no, for sure. So earlier you kind of like gestured that the collapse of Luna was more important than just like the collapse of this like very large protocol and all the retail that was like directly exposed to it because like it turns out that

[00:30:47] and we all didn't realize this until it was too late, but like basically every large player was like playing in that ecosystem as well.

[00:30:55] And so you brought up Celsius. That's what I want to talk about right now. But like as we go into this conversation, I think it's important to recognize that like Celsius is one example of somebody who like really, really fucked up and like that.

[00:31:09] That we'll talk about how that ended out. But like everybody was doing this. Everybody thought that like this like, yeah, we understand it's not safe. We've addressed that we're going to run out of yield.

[00:31:21] But like because we put it in the box, move forward like everybody from SBF to Alex Mischinsky to you know, like very reputable people.

[00:31:32] Galaxy, the Winklevoss twins like everybody was in there. So I want to start this with the like the understanding that the story we're about to tell about Celsius is not a unique story.

[00:31:44] It like really can be told again and again through every other protocol. But with that being said, can you tell us a little bit about like at least from your understanding?

[00:31:54] Like how did Celsius, which essentially just takes Bitcoin or whatever crypto and lends it back out? Like how did they even find themselves in this situation where they're playing again the most high stakes of high stakes game of musical chairs ever invented?

[00:32:10] Yeah, so I'll start off by confessing. I don't actually know the exact set of transactions that Mischinsky took that got Celsius in trouble. That's it. That whole part of the story to me is I've never gotten like a very clear answer.

[00:32:25] But I can speak to like what we saw at Aperture working with a particular team at Celsius that was responsible for managing their DeFi book.

[00:32:35] And the funny thing about that team was they were they did incredible due diligence. They were very smart, very thoughtful.

[00:32:44] And seem like truly like a very like blue chip.

[00:32:49] Like prop shop sort of team operating this massive massive book.

[00:32:56] On behalf of Celsius.

[00:32:59] So.

[00:33:02] You contrast that with Mischinsky who like I watched some of the lives I had money in Celsius as well.

[00:33:08] And I watched some of the like those like AMAs they would do once a week.

[00:33:14] And those things to me always that was where I got the sense of like there's something off about this.

[00:33:20] Like his wife is on this AMA. They're like showing random customer service people.

[00:33:26] They're like.

[00:33:28] Trying to like overhype this like sell token burn thing they're doing.

[00:33:32] I'm like what? Like at the time I'm also like new enough to crypto and you know everyone's kind of so drunk on the.

[00:33:39] The bull market that I'm not like putting A and B together but now like if I saw something like that going forward for the rest of my life I would be immediately like no I'm like not touching this with a 50 foot pole.

[00:33:52] But yeah I basically my comment overall Celsius is that.

[00:33:56] The there were clearly some like inexperienced people in that company but the team that was actually deploying on the deep on the deep side was very very competent.

[00:34:06] To the point of they could do their own smart contract audits on a chain like Tara which is you know has some nuances it's not just like standard EDM chain.

[00:34:16] It was still pretty new back then.

[00:34:19] But yeah the team was incredibly competent very very like cautious they were they were like would do test amounts of capital first and then would slowly scale that up.

[00:34:28] And I think like at the time they had gotten up to like 10 million worth of UST into this like aperture vaults and we're telling us they were targeting like 100 million or more.

[00:34:40] Was the kind of their end goal if they thought the.

[00:34:45] Like strategy itself could even hold that much hold that much capital.

[00:34:53] But as we've now come to see like somewhere else in the company someone was like deciding to put rates on UST that were not.

[00:35:03] Not sustainable long term.

[00:35:07] Because I was seeing like one thing we can I could kind of speculate is like they were offering.

[00:35:15] Like UST rates that were slightly above anchor earn.

[00:35:19] For quite some time and what the expectation would be that they're like they need to be taking a cut.

[00:35:25] Like I would I wouldn't expect to be like fully passing that rate through to the users and then furthermore the rate was above that of anchor earn so I'm like okay then they were definitely doing other stuff where they were rehypothicating the UST to some other market.

[00:35:36] So there was definitely something like some breakdown within that company.

[00:35:43] But I would say like not the entire like I would somewhere to FDX there are tons of very competent people working inside that company that kind of got fucked by some bad decisions that were made at the top or in some other department.

[00:35:55] Yeah, so let me let me tell me if this is fair from what you just said that like from your actual work with the Celsius team like you're doing.

[00:36:05] Like these guys knew what they were doing and like you sounds like you still only have good things to say to them.

[00:36:12] I would say even go a step further we were actually taking advice from them on what vault to build next because they had such a deep and nuanced understanding of.

[00:36:22] Of which sort of structured products could be built across DeFi anywhere Solana on EVM chains or all elsewhere in the cosmos ecosystem that we were actively like getting them to tell us what should we productize next.

[00:36:37] And their advice there was like incredible like they had like some of the best knowledge of like what strategy could hold the most amount of capital for the longest amount of time that would justify building a vault.

[00:36:50] So yeah very impressed with their team so you're super impressed with the team you're working with them and then like.

[00:36:56] You're watching am a's or you're watching YouTube or maybe we're going to conferences and you're saying Alex machine ski and there's something there where you're like.

[00:37:04] The work that I'm doing doesn't feel like it's the same company as like what I'm saying in front of you and like.

[00:37:11] Unfortunately like we all learn this at some point in our life like our gut is actually like smarter than all of us and it's trying to tell us something and we all ignore it the first time and then we never ignored ever again.

[00:37:23] But I guess.

[00:37:25] I guess like with this understanding that like you have so much respect and like admiration for the Celsius people like can you talk sorry that the Celsius DeFi team.

[00:37:35] Can you talk a little bit about like that moment when Luna is blowing up and then it's like pretty shortly afterwards like within a month that Celsius like the games over at Celsius as well like working with them.

[00:37:50] Like what was it what were their reactions like were they reacting in a different way than you expected because like there was other things going on I guess like take me to the like this like catastrophic moment and like what was it like working with the Celsius people.

[00:38:07] Yeah so I don't know.

[00:38:11] I don't have any specific memories of what our communications were with the Celsius team.

[00:38:17] But one bit of history that I think kind of got swept under the rug a bit and this whole story was that when.

[00:38:30] UST D pegs it became we sort of realize at that moment that there had been an exploit and mirror.

[00:38:40] That it happened many many months prior and there was like basically a contract that held like the collateral for the short positions something of this nature and that contract had been drained.

[00:38:54] And so the only way people had the way people had actually been withdrawing from mirror was like just based on new capital coming in a lot of the like.

[00:39:04] Ponzi literal Ponzi yeah and because there was enough new capital coming in there was never an issue withdrawing.

[00:39:11] It wasn't until the entire thing needed to like revert to zero that we realized there wasn't enough money in that smart contract not just in the smart contract.

[00:39:21] And so what happened.

[00:39:24] When the D peg people everyone's trying to flee Tara.

[00:39:29] So exiting anchor earn exiting mirror exiting the aperture fault and.

[00:39:36] The the way the.

[00:39:40] The exiting worked was basically like.

[00:39:43] If you were a super large position you were fucked.

[00:39:47] It was just like was not enough liquidity possibly flowing in to help you out but there were enough like speculative people on the other side that were like depositing UST into the vault even as things were going down.

[00:39:58] There was a period where like people were buying the dip right like it took.

[00:40:02] It took like well over a week before the it was kind of inevitably doomed.

[00:40:07] And so those it was those people that were providing exit liquidity for basically smaller retail users because it was like a thousand here five thousand here.

[00:40:16] It was never like seven million worth of UST.

[00:40:19] Those was coming in so Celsius and all the other larger institutional users of that vault were just like they were totally as well.

[00:40:29] And we did have this wasn't Celsius. We did have this other.

[00:40:33] There's this other gentleman. I won't like name his fund or who his name but he had like set up this.

[00:40:43] This company that basically would like invest treasury like invest like the treasury of like some traditional non crypto company that had like a bunch of cash on their balance sheet and he would basically like tell them what hey I can get you 15%

[00:40:57] or 20% on this on this cash just like give it to me.

[00:41:01] And he was literally just like taking those dollars from their treasury and like on ramping into these like defy strategies one of which was aperture and

[00:41:15] we I'll never forget we got an email like

[00:41:18] like sometime during that like the DPEG the like DPEG week where he was basically just like you know dear my name and our CEO's name like I'm so fucked.

[00:41:31] I've lost all my investors money I don't know what to do. I'm I think my career.

[00:41:39] My career is over. I think I'm legally in like a world of shit that was like sort of verbatim what the email was and we were just like

[00:41:48] oh my God.

[00:41:50] Talk about being caught with your pants down like when the tide goes out like that was

[00:41:57] pretty awful to see that

[00:41:59] and it was those sorts of people that I feel the worst

[00:42:04] I feel for the most like the DGNs that had

[00:42:10] 10k 50k 100k you know tied up caught up somewhere in like some UST based strategy like I those people like whatever like you know

[00:42:20] that most of those guys were playing around with money that was made on the back of it like incredible bull run

[00:42:29] so I don't feel as bad for those types. It was the people that had like I mean what was in hindsight like an incredibly stupid business idea had set out to like bet the house

[00:42:41] on UST. Those are the ones I think you know that that's like a major type of event like you know aperture we ended up taking a hit to our treasury.

[00:42:54] We got out of UST at like 72 cents on the dollar painful sure but like there's still money like we were able to keep building.

[00:43:01] We're still alive you know well over two years later and thriving and doing quite well.

[00:43:07] So you know despite the fact that we still had a post at a pretty big L it's not as bad as some of these people that had sort of like bet the house.

[00:43:17] No man I totally feel you and I remember back in 2022 when this started like you know when Tara went down it took my bags with it which were nothing to do with Tara but were like you know

[00:43:27] just everything went down and I remember my first thought was like well this is what I signed up for and like every single tweet I see on Twitter it's just like you whiny fucking babies like welcome.

[00:43:39] And then like all of these stories started coming like the story you just told is like definitely sad but I'm also like well you kind of were like a little bit doing fraud there so suck it like your chickens came to root.

[00:43:48] But like there were just so many stories that immediately came out about like people that had built like consumer savings apps or just like payment apps or like just so many people that didn't even understand that crypto was like invented like lost money in this and like that's the thing where like we all need to sober up.

[00:43:58] Yeah it's actually the number of companies and products that were purely built on top of anchor earned 20% at the end of the day.

[00:44:03] Like the number of names on that list is like shockingly large and the amount of money that they're making on that list is like like it's like it's like a big group of people that were like you know like really trying to get like the

[00:44:20] actually the number of companies and products that were purely built on top of anchor earn

[00:44:26] 20% at the end of the day, like the number of names on that list is like shockingly large

[00:44:32] and the amount of money that those projects raise is not trivial. So just like seeing

[00:44:39] all those companies get nuked at the same time is insane.

[00:44:44] Yeah. And so I guess like final point of conversation on like Luna and like let's

[00:44:54] so depending on like who you are in and like you hear what happened as described as like the

[00:45:01] collapsing of an unstable mechanism or an attack on a vulnerable mechanism.

[00:45:07] And I guess like I just want to hear your perspective as someone who was like building

[00:45:12] in the system really understood it like and had capital at stake and lost from that.

[00:45:17] I'm sure like you were paying attention, like what did actually happen here to turn

[00:45:22] the music off and start the scramble for musical chairs?

[00:45:25] Yeah, like what was the mechanism by which it died on?

[00:45:31] Yeah. And like you said this, like maybe it always had to happen. Like,

[00:45:35] I don't know, maybe we could have survived. Maybe it always had to happen, but like

[00:45:39] it happened this way. And my question is like, well, what did happen?

[00:45:44] Yeah. So it's hard to orally describe the algorithmic stablecoin mechanism for UST.

[00:45:52] But the like for any listener out there that I guess wasn't familiar with

[00:45:57] the general setup, I recommend you Google it to read about it. But basically the gist was

[00:46:03] that UST never had like a, there wasn't like an account holding dollars that was one-to-one with

[00:46:09] UST. UST was minted from Luna. Like the two assets were inextricably linked. And there was

[00:46:17] a conversion you could do between UST to Luna that was always kind of like set at a certain

[00:46:21] price. And if the market rate for either of those assets deviated from that price,

[00:46:27] you could just arb it. And there was always people just arbing

[00:46:31] the market rate by doing the direct conversion between UST and Luna.

[00:46:38] And so that's all fine and dandy if either of the assets is still worth something,

[00:46:44] but if one of the assets is worth nothing, then that arb and the whole process kind of

[00:46:49] breaks down. That was essentially what happened was like, you know, the value of UST started

[00:46:57] collapsing and the value of Luna also started collapsing, which meant that Luna could not be

[00:47:02] used to like re-peg the price. And Luna could also like mint. There's just like this infinite

[00:47:07] mint structure where like Luna could be continually minted to like cover. UST was

[00:47:12] sort of meant that like the price would just further go down if there was no market demand

[00:47:16] to buy Luna. So it was basically just a case of like both assets go down very fast

[00:47:24] if there's no demand for either of them. And super clear how like this mechanism allowed

[00:47:30] for this to happen, but like is your understanding that in this moment when like liquidity was

[00:47:35] pulled out of a curve pool to migrate it to another curve pool, like did SBF come in and

[00:47:42] just like hit the short button and start this death spiral? Like was there a third party actor

[00:47:47] that like launched an attack or like, was this just like somebody broke first and like once

[00:47:55] somebody saw the first person running, the second person running, the third person,

[00:47:58] and then the stampede started? I think the general consensus on this is that it was a

[00:48:05] third party actor that strategically struck when the liquidity was at an unusually low point

[00:48:12] and sold a shitload of UST. There's probably, I think like I've seen people talk about this,

[00:48:18] there's just like a handful of firms that could have done this. It's one of the

[00:48:23] big players from the 2022 cycle most likely. We don't know which one exactly. Maybe like

[00:48:29] Arkham or someone has kind of deduced exactly who it might have been or has like a

[00:48:37] more data backed theory. But yeah, my understanding is it was definitely an attack.

[00:48:42] Someone wanted to prop it from shorting UST and they placed a pretty large bet. Like it

[00:48:48] was still a like very, very large sell order of UST that triggered like, you know, people then

[00:48:58] to start panic selling. And of course, this is all timed alongside like a Fed announcement about

[00:49:05] like rates coming up and inflation. And so the whole economy was quite vulnerable. It was very

[00:49:10] easy. Like, you know, there's a lot of dry timber and like any match could have started this

[00:49:15] fire, so to speak. And then we haven't really talked about it. But the other thing that's

[00:49:19] going on in parallel throughout this time is like the great collapse of the GBTC trade. So

[00:49:26] for those who weren't around, essentially, there's the grayscale Bitcoin trust. And for a while,

[00:49:32] you could mint these shares and the shares were trading at a premium over Bitcoin.

[00:49:37] The reason why is not relevant. But there were a bunch of firms specifically three

[00:49:41] errors capital that we're just realizing they could just run that play over and over and

[00:49:46] over and over again. And they made a ton of money. But the problem is, eventually that

[00:49:51] premium flipped and was no longer a premium, it was like a negative amount. So one share

[00:49:57] corresponded to less than the equivalent amount of Bitcoin. And like, it is hard to

[00:50:02] overstate just how much capital was locked up in that trade. And so I guess my question for you

[00:50:07] is like, is your understanding that that whatever was going on with three euros capital and GBC,

[00:50:14] was that like a direct stressor and a direct component in what happened in the collapse? Or

[00:50:19] was that more just part of like, the macro background news that like you're talking about

[00:50:24] when you refer to like, you know, the the S&P frothiness and the billionaire selling major

[00:50:29] stakes? Yeah, I don't remember the exact timing of all these things. But my memory was always

[00:50:36] that like Luna was really the first domino that fell. If I'm remembering correctly.

[00:50:43] Yeah, okay. Yeah, no, makes sense. And and then, you know, I think we all know what

[00:50:48] happens from there, which is like Luna collapses, then we have the first wave of

[00:50:53] crypto bank failures. But SPF is like our Rockefeller or our JP Morgan and says, like,

[00:51:02] I am going to bail out all the crypto banks and make sure that this industry survives.

[00:51:06] And then we find out six months later that the reason he did that was because he had

[00:51:10] like a bunch of fraudulent loans and stakes and whatever. And if everything collapsed, then

[00:51:15] like FTX would have collapsed. And so I think, yeah, like that that is the story of like,

[00:51:23] what ended the party in twenty twenty two and like, basically the story of the twenty

[00:51:29] twenty two bull cycle. But yeah, so man, such a wild story. And I'm so happy that

[00:51:34] you shared it with us. So I want to spend the last 10 minutes talking about like,

[00:51:38] what's happened to Aperture since and like where you guys are right now. But

[00:51:41] before we go there, do you just have any like final reflections or thoughts or even stories

[00:51:46] that you want to share about that crazy May in twenty twenty two? I guess one final thought

[00:51:52] for me is that. Like. But anyone out there who's familiar, like now that it's two years later,

[00:52:00] no one's touched an algorithmic stable coin. That idea has not.

[00:52:04] Garnered any traction. And there were a lot of projects that had algo stable coins

[00:52:11] that like basically. Like. Undid that design mechanism to have it be fully pegged for good

[00:52:18] reasons. But like I did see something quite recently that I was like, hmm, the cycle

[00:52:23] starting again, what which was with the announce of Athena, which for anyone who's not

[00:52:30] familiar, Athena launched this basically had tons of blue chip investors. All the major

[00:52:35] centralized exchanges have invested in them. There's a reason why I get to that,

[00:52:39] and including some very, very blue chip VCs like Dragonfly were in the round for Athena.

[00:52:44] And what Athena has basically done is created a stable coin that they quickly

[00:52:51] retraced and have decided not to call it a stable coin, but it's called USD like

[00:52:55] that. The name of it is very stable coin. Ask your not fooling anyone if you try to

[00:53:00] call it a tokenized fault asset or whatever their marketing name for it is. But the way

[00:53:06] this thing works is it like really reminded me of aperture. And our vault in 2022, which was

[00:53:15] this delta neutral vault. And basically, Athena has made a delta neutral vault using a different

[00:53:21] kind of finance play called the cash and carry trade, which

[00:53:26] the way it works for Athena is basically there's a lot of demand right now to

[00:53:30] go long on futures markets on centralized exchanges or on on chain places like GMX.

[00:53:37] Do I DX, etc. And what it means is that if you want to short the assets on that chain,

[00:53:42] you can collect a funding rate for doing so. And you can be quote unquote delta neutral if you

[00:53:47] have simultaneously have an equal amount of long exposure to that asset. And so you just

[00:53:54] basically collect the spread for the funding rate. The longs pay the shorts and everyone

[00:53:59] wants to be long right now. And so Athena has basically created this like on chain off chain

[00:54:06] like hedge fund vault that they've turned into a stable coin.

[00:54:11] That's supposed to be equal. You know, it's basically the same as us to be equal one to

[00:54:13] one to us to see or us to see. But if you stake it, you get this yield

[00:54:19] that's like somewhere from like 20 to upwards of like 60 percent.

[00:54:23] I think like this week has been around like 50 to 60 percent. And this is all fine and Danny

[00:54:29] except when the funding rate flips and people overall want to be short assets.

[00:54:35] And then now like this whole thing kind of breaks down. And Athena has claimed they've

[00:54:41] done some like similar hand wavy like, oh, like in our back tests, this was only ever an issue

[00:54:47] like for like three weeks over the past two years. And based on our understanding,

[00:54:52] this would be totally fine. And just anyways, all of this, there's lots of great FUD out

[00:54:57] there if you want to read about people like myself who had a very knee jerk reaction to

[00:55:03] seeing this thing come to the market. It reminds me of UST, to be frank. And

[00:55:13] my thought is like, wow, this is really just going to come back every cycle. There will be

[00:55:17] some kind of someone who just like pushes the edge a little bit on what is like sustainable

[00:55:23] and viable because they can tap into just the inherent like the greed, like the crypto

[00:55:32] core audience right now is just inherently a much more like greedy risk on audience than

[00:55:37] any other subset slice of humanity. And until that overall, until we have a lot more users

[00:55:44] on chain, they can kind of like rationalize the whole ecosystem. I'm like, we're going to

[00:55:48] keep seeing this stuff. Maybe Athena works out. I don't know. But like it could very well.

[00:55:52] There's a very plausible path to that thing like blowing up and deep hacking to zero.

[00:55:57] So without like, like what are what are the echoes of Luna that you see in Athena?

[00:56:05] Let me guess and you tell me if this is right. So one, like too much like suspicious

[00:56:10] amount of institutional buy in by like blue chip people, like too many people getting way

[00:56:16] too excited about yield. That's obviously unsustainable and a mechanism that like

[00:56:22] seems viable on paper, but like has this like one weird scenario where if it happens,

[00:56:29] like the whole thing falls apart. And it feels like those are the three ingredients.

[00:56:34] And then you layer on the mania of a bull run that like creates the terrors.

[00:56:40] Exactly. And I would even go a step further, like this doesn't apply to dragonfly. I think

[00:56:46] they're truly bullish and believe in the product, but the centralized exchanges,

[00:56:51] if I was being a little bit cynical, if you're Binance, even if you cut a check for like

[00:56:58] three million dollars, a million dollars or so to put into this like early stage DeFi protocol,

[00:57:03] even if that goes to zero, Binance, I'm pretty sure will make much more than that

[00:57:12] on their futures product. If they have, if it's very, very cheap to go long on Binance,

[00:57:18] which is what they want, they want someone to come in and like arb this funding rate as close

[00:57:23] to zero as possible so that it's even more cheap for the core users of Binance to go long.

[00:57:29] And I suspect for them, it was some pretty easy math to see like, oh, even if this Athena token

[00:57:35] is never worth a dollar, like we could probably greatly profit from this in the short run by

[00:57:40] just having better pricing for our futures product. Like you said, I think that it's

[00:57:46] 100% the ingredients for things to go wrong. We have bull run mania, we have blue chip

[00:57:52] institutional investors, we have frothy yield and we have just one little

[00:58:01] design flaw that could send everything tumbling to zero.

[00:58:06] All right. Well, let's walk away from that very scary conversation and end on a high note. So

[00:58:13] McDavid, you told her this story of like aperture, like literally entering the inferno

[00:58:18] and like you've gestured this a few times that like you walked out the other side and

[00:58:24] like made it through the last two years, still building. So I guess like now in 20, March 2024,

[00:58:31] like there's no, there's, I guess there is, but for all intents and purposes, there is no

[00:58:39] Luna chain. There's no anchor. Like the things that you were building before just don't exist.

[00:58:43] So can you just talk to us about like, what was the journey to get from like walking around the

[00:58:49] wreckage to where you are today? Which spoiler alert is like building products for Uniswap.

[00:58:56] Yeah. So we basically, our kind of journey post Luna was like a flight to safety,

[00:59:03] which wound us on top of Uniswap, which is one of the oldest, longest standing

[00:59:09] unhacked protocols within DeFi. And yeah, what we do today at Aperture, basically we use solvers

[00:59:18] to help the LPs on Uniswap v3. And shortly we'll be soon to be announcing other concentrated

[00:59:26] liquidity dexes that we'll be deploying on as well. And basically like if anyone who's

[00:59:31] LP'd on a concentrated liquidity dex, you know the actual like management process

[00:59:36] for those positions is very, very tricky and cumbersome. And so like what you can do with

[00:59:41] solvers is basically just have a much simpler user experience, but also get some like better

[00:59:46] pricing and execution on some like really basic concepts, like rebalancing or moving the range

[00:59:54] of your liquidity position from, yeah, like point A to point B to from point T to point D.

[00:59:59] And yeah, and that's what Aperture is today. We've just launched a points campaign. We're gearing up

[01:00:03] to TGE, you know, almost two years post USC death spiral. We're hoping to TGE

[01:00:12] here at the end of April. And where we're going from here like in the future is like kind

[01:00:16] of further, as I mentioned solvers, like we are in the kind of intense space and our kind

[01:00:21] of grand vision is to build out some more generalized intent infrastructure. And so

[01:00:27] more generalized intent infrastructure that will be from the user's experience,

[01:00:33] your interaction with the front end will actually be through a chat bot

[01:00:37] where you will kind of like basically work with the chat bot to figure out what your

[01:00:42] declared intent is going to be. And the chat bot will help you translate that intent into

[01:00:46] a highly readable language that can be posted into a mempool for solvers to look at

[01:00:53] and compete on finding the best solution for whatever DeFi action it is that you want to do.

[01:01:02] And yeah, so that's where we are, where we're going. It's been

[01:01:06] quite the journey. We've really tried to get out of the space of selling APR and selling

[01:01:11] yield and just instead giving people like world-class execution and tooling to go out and

[01:01:18] do something very conservative or do something very degenerate. It's up to you.

[01:01:21] That's a super cool frame. I love that, that you're getting out of the business of selling

[01:01:26] APR and you didn't say this, but let me try it out. You're getting out of the business

[01:01:30] of selling APR and you're getting into the business of providing functionality.

[01:01:34] Exactly. Yeah.

[01:01:35] Cool. And I just like, I'm the biggest believer. Like I understand why literally

[01:01:40] the only thing we can talk about in crypto is money and finance. And like that's a

[01:01:44] huge part of like our history and it's a huge part of just like crypto economic security

[01:01:50] is inherently about money. But like I am so confident that in the long history of blockchain,

[01:01:58] this is technology that's meant for other stuff other than like saving, trading and speculating.

[01:02:06] And so I can totally see this world that you're talking about where aperture starting

[01:02:11] with like we're going to use solvers to do the Uniswap thing and then we're going

[01:02:14] to grow to different DeFi protocols. But like the second you said you interact with a chat bot

[01:02:20] to help make your intent, like what I'm saying is like a world where these solvers and these

[01:02:27] intents aren't just about like how to do financial operations. They're about like really

[01:02:32] what do you intend to do on the internet? And like how can aperture help that happen?

[01:02:38] And so like that's the future that I'm super excited for.

[01:02:41] Yeah, likewise. I mean I'm also very bullish on a future where like almost all of our

[01:02:47] any kind of complicated decision we have to make that involves allocating a resource,

[01:02:52] so usually money, will be kind of managed this like chat bot like interface where you

[01:03:00] can work with some sort of smart agent or solver to like get you much better pricing

[01:03:04] or execution. I mean the obvious example is travel. You know, I spent like an hour

[01:03:11] earlier this morning trying to book a flight that had like a specific budget

[01:03:14] and there's some other constraints and it was just like the amount of

[01:03:19] like little many decisions you have to make on that journey is still mind-boggling

[01:03:23] for 2024. And I think, you know, I look forward to a future where, you know, we offload

[01:03:28] a lot of that computational load to our, you know, AI overlords.

[01:03:36] Awesome man. Well, I could keep going like there's so much to continue to unpack about

[01:03:41] like the history of how we got here and aperture and all the exciting stuff you're doing but

[01:03:46] for the sake of your schedule and everyone's attention span, I will cut us off here.

[01:03:50] So McDavid, thank you so much for coming in and taking the time to just like

[01:03:55] talk through perhaps like hopefully what will be one of the most traumatic things in this industry

[01:04:01] and like really help us think through like, what do we need to take away from this? What

[01:04:04] do we need to be looking for? And like, what can we fix? What doesn't need to happen again?

[01:04:11] So just again, so grateful. So thankful. McDavid, thank you for coming on the show.

[01:04:16] Yep. Thanks for having me.

[01:04:17] Of course. And before I let you go, can you just share with the audience if they want to

[01:04:21] find you or they want to find aperture? What's the best way to find you guys?

[01:04:25] Yeah. I mean, aperture or aperture finance on Twitter. And you can find me on Twitter at

[01:04:31] rob mcstoda s-t-o-d-d-a or I'm at McDavid on Farcaster. Everyone's doing that.

[01:04:39] Cool. Yeah. No, the best part about Farcaster is we are all able to get the names that we

[01:04:43] wanted. Right. Yeah. All right. McDavid, thank you so much and have a great rest of

[01:04:49] your day. Sweet. Take care, y'all.