Weekly Roundup 05/30/26 (DeFi's worst ever month, PTJ on Bitcoin, quantum canaries) (EP.718)

“I found a chart online today saying that even though it seems like there's a lot of hacks, we're still not at our peak in terms of hack to TVL ratio for DeFi. That's almost hard to believe. When was the peak? Well, now I can't find the chart again, but safe to say it's not the worst time ever in DeFi. I think because we figured out the flash loan thing. You don't hear about flash loan hacks anymore, do you? No. And you you hear fewer smart contract hacks as well, don't you? It's it feels like the, maybe the infrastructure is hardening in certain categories, but the hackers are always one step ahead. Yeah. But it's just actually a good sign. Right? So the smart contract cryptoeconomic aspect is more secure, it seems. We've sort of incorporated a lot of those lessons. The gap is that infrastructure layer. Yeah. So that's not fully secure yet. But we kind of we're learning. That's the thing. It's an adaptive system. Each hack selects for the most secure smart contracts.”

“The other thing is these, these attacks that are, like, the fake Zoom links where people just get in and all of a sudden they have key logger information on your device. That's a big issue. Yeah. That seems I'm so surprised that people still fall for that, actually. Like, I get it. It's like someone you've talked to in the past, oh, they wouldn't be scamming you. Right? And then they send you a Zoom link. You can see them on the Zoom. You can't hear. And it's like, oh, download this plug in, whatever. Okay. Don't do that. But, like, would there have been so many cases of this? How how are people still fall I don't know. I don't want a victim blame, but how are you still falling for it? I can I can kinda see it because when a Zoom link is starting or you're kind of in a race to get your next Zoom, all of a sudden things are popping up? You're just clicking to try to minimize the screen. You could see how someone could get put in the headspace.”

“I haven't looked at Mara specifically, but virtually every Bitcoin miner has they're in various stages of doing this pivot. And it makes sense. I mean, with Bitcoin, you're selling to one client, you're completely undi or diversified. With AI, obviously, it's thousands and you're just better able to monetize those units of power way better. Yeah. It does various questions actually because, you know, part of Bitcoin security models that the miners hold ASICs whose value is indexed to Bitcoin. They hold Bitcoin. So the miners have this sort of long term view of the Bitcoin network, so they're incentivized not to misbehave, not to lease their ASICs to a malicious entity. Right? So this is the Bitcoin security model as it developed over time. If those miners no longer have a stake in the Bitcoin network, they don't actually care anymore about, you know, what happens to it long term. So they might just be willing to run their ASICs to a malicious party or sell them.”

“There was they paid out this Q Day prize to a researcher called Giancarlo Lelli, and his claim, and their admission was that he'd broken a 15 bit elliptic curve, private key. Of course, that's very far from 256 bits. The prize came under suspicion after the 1 Bitcoin prize was paid out. The allegation was that the quantum computer hadn't really done the work and that it had been primed with a result that was achieved classically. Of course, it's trivial to break a 15 bit key classically. Actually, the record is all the way up to a 117 bits. And, so there are a lot of questions about this. I think it does illustrate the challenge of trying to create a quantum canary because, as I said, elliptic curves have been broken all the way up to a 117 bits with classical methods.”

“Speaking of quantum, did you listen to this Paul Tudor Jones interview on Invest Like the Best yet? No. I heard it's quite good. Oh my gosh. It's first of all, it's just awesome. Like, the the way that he was interviewed by Patrick O'Shaughnessy and just the level of candor that he had and some of the just the life stories were unbelievable. But he brought up Bitcoin a couple of times and, you know, at one point he was talking about not being remembered on his deathbed for, you know, predicting this crash or, you know, predicting when to invest. And he brought up Bitcoin, which made me think that he had probably just crushed it on the Bitcoin trade, during COVID. Well, because he famously bought in 2020. He did. Yeah. He went on CNBC and said that I think he was the one that said Bitcoin's the fastest horse. Yeah. He did. So I think he must have just cleaned up on that. But he talked about Bitcoin being better than gold on a lot of dimensions, but he specifically brought up quantum, as a vulnerability. And here's the best investor in the world.”

“And and I know we've been talking about insider trading a lot. I wanted to draw your attention. I saw a study this week that for political event contracts that traded for around 25¢, what rate would you expect them to settle at? If you if you're buying the contract for 25¢, what what percentage of the time would you assume that that would be correct? I don't know. 25%? Yeah. You'd think so. Right? You'd think so. That's what a kind of orderly market would look like. Now this study looked at political large bets. Right? Specifically large political bets on PolyMarket that were initially purchased for 25¢ on the dollar. They settled on or they won on average 50% of the time. They so they converge to a payout at a 10050% of the time after trading at 25%. That's interesting. Which is a much higher rate than you'd expect in an efficient market. So why might that be? Insider information. Correct. So this is a way of seeing that there's a general presence of insider information on the market without pointing fingers at any trader or any market specifically.”