On The Brink with Castle Island

Latest Episodes:

Aditya Palepu and Frédéric Fortier (DerivaDEX) on aspiring to a fully decentralized exchange (EP.119) Aug 31, 2020

Show notes

Aditya Palepu and Frédéric Fortier, the cofounders of DerivaDEX, join the show to talk about DEXes and prospects for their future development, and to introduce their own project. In this episode:

How Adi and Fred chose to build a Dex
Why traders tend to love Dexes despite their shortcomings
Dexes versus noncustodial exchanges
Adi and Fred's Dex taxonomy and where they fit into that
How Derivadex plans to decentralize the operation of their orderbook
Are today's AMM-style Dexes sufficient?
How the Derivadex team is thinking about the shape of the liquidity mining distribution curve
How the distribution curve actually affects which users end up owning a piece of the DAO
Why Derivadex struck a more pragmatic approach than certain other Dexes – and how they're going after CeFi users
Why the team opted for USDT as the default collateral type
The lessons Derivadex took from the MakerDAO exploit
Their approach to capitalizing an insurance fund

For more, see this introduction to DerivaDEX.

Weekly News Roundup 08/28/20 (Fidelity's Bitcoin fund, is whisky a SoV, do security tokens make sense?) (EP.118) Aug 28, 2020

Show notes

Nic and Matt cover news and deals of the week. In this episode:

FTX acquires Blockfolio for $150m
DCG announces a $100m investment in Foundry, a mining subsidiary
Fidelity files with the SEC for a Bitcoin fund – and what this means for other asset managers
Why large asset managers have not built products around Bitcoin just yet
The INX situation explained
Why security tokens might actually make sense
The Boston Fed is evaluating 30 different blockchains for their digital dollar project
Do exchanges owe depositors their forked coins?
How will NYDFS react to the Wyoming SPDI?
The Fed signals a more inflationary environment
Can you use whisky as a SoV?

Zachary Kelman (Kelman Law) on the FATF, Bitcoin, and the International Order (EP.117) Aug 26, 2020

Show notes

Zachary Kelman, managing partner at Kelman Law PLLC, joins the show to shed light on the FATF – it's origins and its current mandate – the travel rule, and what the industry can expect from these developments. Covered in this episode:

Zach's prior career in bank compliance and how he decided to focus on Bitcoin
How Zach noticed the blurring of lines between stopping crime and politics for bank AML
Why overseas payments in the correspondent bank system are expensive
What the Travel Rule actually means
Why Zach thinks Bitcoin compares favorably with the default correspondent banking system
Why banks freeze out certain sectors even without a specific ban or prohibition
How Coins.ph moved the needle for financial inclusion in the Philippines
The history of the FATF and its original mandate and intent
Why the FATF's recommendation could possibly bifurcate the bitcoin market
How the end of the Cold War might have influenced the creation of the FATF
What Fukuyama's End of History has to do with financial crimes enforcement
Will the decline of the US-led international order mean organizations like the FATF will have a reduced ability to police global finance
Zach's thesis that western Europe might end up being a haven for the crypto industry
How the FATF recommendations actually get enforced at the local level
How the FATF black and graylists change bank behavior
Why NYDFS has so much control over global finance
How bank behavior in the US is often more norm based than couched in law
Why a rise of nationalism could advantage Bitcoin

Dick Bove (Odeon Capital) on the banking sector and the future of dollar dominance (EP.116) Aug 24, 2020

Show notes

Dick Bove, senior research analyst at Odeon Capital Group joins the show. In this episode we discuss:

Dick's 52 year career as a research analyst and his path to covering the banking sector
The 2008 financial crisis, the measures that were taken, and how this has impacted the banking industry
The future of dollar dominance and the rise of China on the geopolitical stage
The role of cryptocurrency and the state of awareness in the institutional world
Dick's favorite books and his perspective on the research industry

To learn more about Odeon Capital and to access Dick's research visit www.odeoncap.com

Weekly News Roundup 08/21/20 (Another Bitcoiner in the Senate, Kraken pursues the Wyoming SPDI, autoponzis) (EP.115) Aug 21, 2020

Show notes

Nic and Matt cover deals and the news of the week. In this episode:

Hawaii announces the Digital Currency Innovation Lab
Wyoming's Senate nominee Cynthia Lummis is a Bitcoiner
Why Bitcoin values are American values
How Bitcoin is mutualistic with the US dollar
Evidence that Tether is used for capital outflows from China
Kraken creates Kraken Financial to pursue the SPDI in Wyoming
Warren Buffett buys gold
Our explanation of a new breed of ponzis
Where DeFi is and is not compelling to us

Zac Prince on growing BlockFi through a pandemic (EP. 114) Aug 20, 2020

Show notes

Zac Prince, CEO and Founder of crypto lender BlockFi, joins the show once again to talk their recent growth and milestones. Today, BlockFi announced a $50m Series C round of financing, capitalizing on their recent growth. We dive into the fundraise, BlockFi's eye-popping growth, and what is driving interest in the crypto lending space today. In this episode:

Blockfi announces a $50m Series C fundraising round
What it was like raising a Series C during covid
BlockFi's insane traction and what is driving that growth
Zac's big picture vision for the company as a global bank
The growth that BlockFi has seen in stablecoins on the platform and the role they play
What is really behind the high yields that BlockFi is able to offer
The risk profile of lending BTC with BlockFi
Zac's taxonomy of stablecoins
BlockFi's plan for Tether – and why Zac decided to support it
Zac's view of current institutional participation in the lending market
How Zac thinks about DeFi and the rise of decentralized lending – and whether it competes with BlockFi
What positions BlockFi is hiring for and who they would like to apply

Kyle Powers (LibertyPay) on building remittances on Bitcoin (EP.113) Aug 17, 2020

Show notes

Kyle Powers is the cofounder and CEO of LibertyPay, a Boston business that powers remittances to Brazil and Mexico – settling on Bitcoin, rather than traditional financial rails. LibertyPay has settled nine figures worth of value in its history – and most users never know their transactions are settling via Bitcoin. In this episode:

How LibertyX began with the cofounders standing beside a Bitcoin ATM in South Station in 2014
The origins of LibertyPay and how the cofounders realized that Bitcoin-based remittances were a viable product
How LibertyPay determined the most viable channels for their Bitcoin remittance product
Why Brazil is a goldilocks zone for Bitcoin-powered remittances
In which domains Bitcoin-based remittances outmatch the traditional system
Why LibertyPay uses Bitcoin as their bridge currency and not another asset
Why obtaining banking in 2014 was such a challenge
Whether there was a coordinated attempt to unbank crypto companies in 2014-15
Whether Kyle is optimistic about the future of digital cash
Whether XRP will ever grow into its promise as a touted bridge currency
Why Kyle views Bitcoin's base layer as more of SWIFT analogue rather than a payments network
Why owning Bitcoin gives you exposure to all of its descendants, in the case of a dispute
Why Bitcoiners should be excited about stablecoins

Weekly News Roundup feat. Lucas Nuzzi 08/14/20 (Asteroid gold mining, Microstrategy, Ethereum's "supplygate") (EP.112) Aug 14, 2020

Show notes

Coin Metrics network data product lead Lucas Nuzzi joins the show to help explain how to audit the supply of Ethereum – and other, even more challenging blockchains. Also covered in this episode:

Does the Winklevoss gold asteroid mining talking point have any merit?
Are the Winklevii being ironic or sincere
The Boston Fed is hiring crypto engineers
Why DeFi tokens remind us of PoW launches from 2014
Why we need a new taxonomy for autonomous fair launched DeFi tokens
Why DeFi might not herald a resurgence of the ICO phenomenon
Microstrategy surprises to the upside
Facebook focuses on payments
ETH supplygate explained

James Lovejoy on detecting and mitigating double-spends (EP.111) Aug 10, 2020

Show notes

James Lovejoy, recent MEng MIT grad and former graduate researcher at the MIT Digital Currency Initiative, joins the show to talk about his masters thesis and associated project focusing on detecting double-spends in proof of work cryptocurrencies. Previously, little data was collected in a systematic way to detect double-spends and reorganizations across many cryptocurrencies. James' project sheds light on previously unknown security properties of PoW. In this episode:

How James came to work on Vertcoin
Why James thinks ASIC resistance is valuable
James' blockchain monitoring project and why it matters
Why reorgs are challenging to detect
Why investigating the economic damage of reorgs is difficult
How James noticed a 51% attack in progress on Vertcoin and intervened to save Bittrex money – and how this can be replicated
Why understanding Nicehash is critical to detecting and dealing with 51% attacks
James' critiques of dominant theoretical models of PoW security
How James found reorgs and counterattacks happening on BTG in real time
Why exchange processes like KYC might actually help protect blockchains from reorgs
How permissionless trading and leverage makes certain blockchains more vulnerable to attacks
Rules of thumb for confirmation requirements for exchanges
The issue with calling coins "Nicehash-able" – and why it's likely a lowball
How exchanges can proactively mitigate the risk of 51% attacks and what they should be targeting
How BTG developers finally defeated deep reorgs
Whether James is confident in the long-term prospects of PoW
Whether James still believes in GPU mining