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

Matt Walsh and Nick Carter discuss the current state of the DeFi market, noting a decrease in flash loan hacks and smart contract vulnerabilities, indicating a trend towards greater security. However, they highlight ongoing weaknesses in the infrastructure layer that need to be addressed. They express concerns about phone security and SMS two-factor authentication, emphasizing the risks of scams, particularly during time-pressured virtual meetings.

Recent developments in the crypto space include significant funding rounds, such as Sodot's $100 million raise and Mara Holdings' $1.5 billion acquisition of Lone Ridge Energy. They raise alarms about Bitcoin miners potentially operating at a loss and the implications of mercenary miners controlling the hash rate, which could threaten the network's security. The podcast also discusses recent 51% attacks on proof-of-work networks like Monero and Litecoin, reflecting on the implications for exchanges.

A partnership between Computer Share and Secureties aims to integrate tokenized securities with traditional shares, highlighting the need for transfer agents to adapt. Mercury's conditional approval for an OCC banking charter indicates ongoing regulatory developments. Following the KelpDao, Aave, and Layer Zero hack, a coalition has formed, with DeFi United raising over $300 million to address bad debt from the incident, drawing parallels to banking sector responses during crises.

Meta's announcement of creator pads and stablecoins, with Stripe as the payment processor, positions Stripe as a key player in the stablecoin market. The conversation touches on Zuckerberg's past stablecoin attempts and the controversy surrounding Project 11, where John Carlo Leli was awarded a prize for breaking a 15-bit elliptic curve private key, raising questions about the legitimacy of such prizes.

The discussion also addresses the challenges of trusting quantum computing breakthroughs, particularly regarding elliptic curves, and the implications for password security and biometrics. Paul Tudor Jones' interview on "Invest Like the Best" is highlighted for its candid discussion on Bitcoin, comparing it favorably to gold while noting quantum computing as a vulnerability. The need for Bitcoin developers to address vulnerabilities is emphasized, with other blockchains like Solana and Ethereum planning upgrades.

An update on Gemini reveals that the Winklevoss Twins' company has received a DCO license from the CFTC, allowing it to act as a clearinghouse for regulated derivatives. Polymarket is seeking CFTC approval to relocate its primary exchange to the US, amid discussions about insider trading in the cryptocurrency space. A study on political event contracts trading suggests a higher settlement rate than expected, indicating potential insider information in the market.

The trend towards fully KYC participation in the industry is acknowledged as necessary, with Polymarket's previous lack of explicit prohibition on insider trading noted. The podcast also updates on Wasabi Protocol, which reported a loss of 4.5 million due to an admin key attack, emphasizing a shift in industry vulnerabilities from smart contracts to other types. Optimism is expressed about overcoming current vulnerabilities and developing best practices for safety in the future.