Welcome to the Block & Mortar newsletter! Every week, I bring you the top stories and my analysis on where business meets web3: blockchain, cryptocurrencies, NFTs, and metaverse. Brought to you by Q McCallum.
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(Photo by Tomasz Gawłowski on Unsplash)
Welcome to the May media roundup! Here are a few web3 podcasts I’ve enjoyed in recent weeks.
A pair of models
Flirting with Models: S06E02: High Frequency Crypto Market Making & the Hyperliquid Exchange
(Listening time: 1hr15)
Flirting With Models: S06E03: High Frequency Trading, MEV Strategies, and CrocSwap
(Listening time: 1hr)
Flirting with Models is a series of deep conversations with experienced quantitative finance professionals. It’s also one of my favorite podcasts.
The show usually covers traditional finance (“tradfi”), which is the stomping ground of host Corey Hoffstein. Today’s episodes take a detour into cryptocurrency and defi, through the lens of high-frequency trading (HFT). The links above include transcripts if you’d rather read than listen.
The first episode features Jeff Yan, founder of Chameleon Trading. Doug Colkitt, founder of DeFi exchange CrocSwap, is in the second. Both guests hail from tradfi so it’s interesting to hear about their moves to defi, plus how the two worlds differ.
Yan’s episode starts with an explanation of HFT in tradfi compared to crypto, and how different strategies work. He then shares his approach to technology infrastructure and sizing up opportunities in the market. Hoffstein also gets Yan to talk about an April Fool’s joke of a tweet that was not too much of a joke.
The interview with Colkitt similarly begins with a deep explanation of HFT topics before moving into crypto. He then walks Hoffstein through the “maker/taker” and “MEV” concepts. One interesting point he raises concerns the atomic nature of a crypto smart contract, and how that takes (some of) the risk out of certain arbitrage opportunities.
Whether you’re an HFT pro who is looking into crypto, or a crypto practitioner who’d like to learn more about HFT, both episodes are worth your listen.
Tracing wallets
(Listening time: 1hr)
Taylor Monahan explains that it all started with a phone call. A security-savvy friend had reached out because his wallet had been drained, and Monahan quickly found herself tracing wallet addresses in the quest to figure out what had happened.
On this episode of The Defiant, Monahan goes into detail on the hack she uncovered, and the realization that it was part of something larger and more sophisticated than she’d originally expected. The minus side: crypto wallets don’t exactly have real names on them, which can complicate detective work. The plus side: since all blockchain transactions are public record, there was no central authority to interfere with her research.
This experience has shaped Monahan’s main job of building crypto wallets. In the second half of this interview, she shares her take on the crypto “code is law” mantra, the responsibility of crypto developers when there is a hack, and how all of this weighs in mainstream adoption of crypto. She wraps up with her ideas on how to improve crypto wallet UI/UX to reduce fraud and user error, and tips for wallet security.
You’re one in a few billion
Empire: Why Proof-of-Humanity Matters in an AI Future | Alex Blania
(Listening time: 1hr)
How can you prove your identity to someone when you’re not standing face-to-face?
Throughout history this question has challenged fields as varied as spycraft, content moderation, and financial fraud detection. And recent advances in generative AI have raised the bar.
Alex Blania says he has a solution. He is co-founder of Worldcoin, which sets out to build “the world’s largest identity and financial network as a public utility.” Other headlines describe Worldcoin as this project that wants to hand out crypto in exchange for scanning eyeballs. The truth? A little from Column A, a little from Column B …
Empire host Jason Yanowitz caught up with Blania in the run-up to Worldcoin leaving its closed beta. Take a listen to hear Blania explain why Worldcoin exists, the connection to universal basic income (UBI), and the idea of this being “a protocol, not a company.” The project currently boasts 1.6M verified users, one-third of which are active on a monthly basis. This makes Worldcoin the fourth-largest crypto wallet as of this writing.
Blania doesn’t shy from the questions around data privacy. He’s open about what data Worldcoin has versus what they don’t, as well as the technical decisions that led to using the retina scan as the basis for truly unique, one-person-to-one-record identification.
His reasoning – that existing methods like fingerprints and face scans would lead to too many collisions in a machine learning sense – makes sense to me, on a technical level. My work in AI has taught me that reducing a real-world concept to a group of numbers often means losing some information along the way. And that sometimes means losing uniqueness in the shuffle.
That said, I’m still asking myself whether the technological means will justify the social ends. A system of globally-unique identifiers could certainly address some problems, yes. But it stands to create or exacerbate quite a few more.
Not quite a remake
The Scoop: Crypto anon Loomdart makes the case for FTX 2.0 to go ahead
(Listening time: 25mn)
eGirl Capital co-founder Loomdart thinks that FTX is due for a comeback.
Yes, that FTX.
No, this is’t the setup for a joke. At least, not intentionally.
Loomdart uses this episode of The Scoop to plead his case to host Frank Chaparro. The gist is that a defi exchange is generally a good business model, and that FTX was dragged down by bad leadership. Perhaps the otherwise-successful, hard-working team could rebuild the exchange to run as it should?
Just last month a member of the FTX adults-in-residence transition team declared that “the dumpster fire is out.” So, maybe. Maybe.
On the other hand, there’s FTX’s $41B tax bill. (That’s about 0.93 Twitters if you are keeping track.) Plus the idea that “FTX” is effectively a four-letter word these days, in no small part because the ongoing legal epic around the company’s (alleged!) fraud and ensuing collapse is still making headlines. I mean, could an ace marketing team work around that? Sure. But would it be worth that money and effort?
Hmmm.
My take: you don’t have to relight a dumpster fire. Just a thought.
The wrap-up
This was an issue of Block & Mortar.
Who’s behind Block & Mortar? I'm Q McCallum. I've spent the past two decades in the emerging-tech space. And I'm very interested in web3 use cases.
Credit where it's due. Big thanks to Shane Glynn for reviewing early drafts. Any mistakes that remain are mine.
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