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 finance industry, referencing the liquidation of Lehman Brothers and the Federal Government's intervention to stabilize AIG, Fannie Mae, and Freddie Mac during the housing crisis. They note the Bank of England's £75 billion injection into the economy as a measure to ease financial strain.

In DeFi, Matt highlights a notable week for deals despite quieter industry news, with no major hacks reported. Nick mentions a smaller hack but emphasizes improvements in security, particularly regarding the hack-to-TVL ratio. They acknowledge ongoing vulnerabilities, especially with SMS two-factor authentication and phishing attacks, while reflecting on the need for changes in outreach methods and communication security.

The conversation touches on the concept of a high trust society, which has diminished over time, complicating the sharing of personal details. They discuss Kelp-Dowhack and the nature of bailout funds in the industry, questioning whether they are donations, equity, or loans. In crypto developments, Aave is identified as a recipient of funds related to bad debt, with comparisons made between recovery rates of the FTX and Madoff cases.

Several deals are highlighted, including SODOT's $100 million raise and Blockworks' Series A extension at a $192 million valuation. Concerns about Bitcoin's security model are discussed, particularly regarding miners' long-term incentives and the potential risks if they pivot to AI. The need for long-term stewards to maintain the hash rate is emphasized, alongside unresolved issues related to block rewards and vulnerabilities in proof-of-work networks.

The partnership between ComputerShare and Securitize for tokenization in blockchain-based shares is noted, moving tokenized securities from manual processes to on-chain. The future of transfer agents is questioned, but their relevance in corporate actions is acknowledged. Mercury's conditional approval for an OCC banking charter indicates progress in the regulatory landscape.

The podcast discusses the coalition formed after the Kelp Dow, Aave, and Layer Zero hack, highlighting the establishment of DeFi United, which has raised over $300 million to address bad debt. Aave's role as a blue-chip protocol in DeFi is emphasized, alongside speculation about the future of pooled models versus isolated pools.

Meta's announcement of creator pads and stablecoins, with Stripe as the payment processor, is noted, recognizing Stripe's influence in the stablecoin sector. Controversy surrounding Project 11 and the Q-Day prize awarded to researcher Jim Carlow-Lelley is discussed, particularly allegations regarding the independence of the quantum computer's work. The challenges of creating reliable quantum canaries, especially concerning elliptic curve keys, are examined.

Paul Tudor Jones' interview on "Invest Like the Best" is highlighted, where he praises Bitcoin as superior to gold but acknowledges its quantum vulnerabilities. An update on Gemini reveals its approval for a DCO license from the CFTC, allowing it to act as a clearing house for regulated derivatives. The podcast also discusses Polymarket's efforts to gain CFTC approval to relocate its primary exchange to the U.S., with a study on political event contracts indicating a higher-than-expected settlement rate.

The competitive dynamics between Polymarket and Cal are noted, with Cal being clearer about prohibiting insider trading. The podcast concludes with news about the Wasavi protocol being drained for $4.5 million through an admin key attack, highlighting the prevalence of vulnerabilities in the market and expressing optimism about establishing best practices for safety in the future.