November 2, 2022 • 55 mins
Mike and Guy are reunited this Friday for another in-depth discussion with plenty of lame jokes thrown in, but before all that we have another couple of recent hits from our YouTube channel for you to enjoy.
First up is a look at some recent recommendations for crypto regulations from Sam Bankman-Fried, or SBF as he’s better known, the CEO of the FTX exchange. These were unleashed upon the world just a couple of weeks ago and the fallout from them has been pronounced. Put mildly, many in the industry were not happy with what he was proposing.
To be fair, SBF was at pains to point out that these recommendations were intended to spark debate over how possible future regulations should look and they more than succeeded in doing just that. In the first part of today’s episode, we take a look at what exactly was proposed and whether or not SBF was on the right track. This is an important conversation to have because regulations are heading towards the crypto industry and anything that we can do to influence how they might look could make all the difference to crypto’s future.
Then, that rarest of beasts these days, a new layer-one blockchain project to review. Aptos launched its mainnet a couple of weeks ago and its APT coin was listed on all major exchanges around the same time - this despite a lack of available tokenomics. Those were only published after APT had listed and this is unfortunately just one of many gripes we have with the project.
There’s no denying that Aptos has some top tech and heavy investment backing it up, as well as an experienced team. But, the more we dug into the project, the less we found to like about it. So, have a listen to our review of it and, if it piques your interest, consider looking into Aptos for yourself too - because doing your own research is vital for anyone interested in learning more about crypto.
We hope you enjoy the show.
Producer for iHeartMedia: Noel Brown
Editor: Semir Mutapcic
Theme music composed by: Noel Brown
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Hello everyone, and welcome to the latest episode from the
midweek edition of the coin bureau podcast. Every week, I
pick out two of my favorite videos from coin bureaus
YouTube channel to present to you in podcast form. The
audio you're about to hear is from those videos I've
chosen this week, many of you have been in touch
to ask whether it's possible to listen to our videos
(00:21):
in podcast format, and so voila for your delectation. This week,
may I present our videos on the recent controversy surrounding
some proposed crypto regulations and our deep dive review of
ap toss, the brand new Layer one blockchain that recently
launched to some controversy of its own. Sam Bankman Freed
(00:41):
is the CEO of FTX, one of the biggest and
most influential crypto companies in the industry. He's well connected
to those in power and has been a prominent figure
in Washington in recent months giving his input into how
future crypto regulations might look. He recently published some of
his thoughts on this press matter on the ft X
website and on Twitter, and it's no exaggeration to say
(01:05):
that they stirred up some rather heated debate crypto regulations
are a hot button issue at the moment, and sam
suggestions on how they might look were intended to spark
further conversation among the crypto community. They did that and
then some, and in the first part of today's episode
you'll hear what those suggestions were and what we and
others made of them. Then, a couple of weeks ago,
(01:27):
we saw the launch of a brand spanking new crypto
project called app Toss. This has been brought to us
by the folks behind Facebook's ill fated d M project,
which coincidentally opened the crypto space up to massive regulatory
scrutiny when it first appeared a few years ago. So
ap Toss has some pretty serious backing and some cutting
(01:48):
edge tech. But what's it all about? Is it any good?
Does it have a worthwhile role to play in the
crypto industry? And is it a project to get excited about.
It's been a while since we had a new crypto
project review on the channel, so you can be sure
we got thoroughly stuck into this one. I hope you
enjoy listening to these two pieces, and I'll be back
talking crypto with Mike very soon, so be sure to
(02:10):
stay tuned, and if you want even more content from
coin Bureau, be sure to subscribe to our YouTube channel
and visit us on social media too. F t X
(02:39):
is known for being one of the most influential companies
in cryptocurrency. This is due in large part to founder
and CEO Sam Bankman Freed, who has lots of friends
on Wall Street and in Washington, d C. That's why
Sam's recent crypto regulation recommendations were taken so seriously. Sam
(02:59):
and t X have the power to influence actual crypto policy,
and not everyone is a fan of what they're recommending.
So today I'm going to summarize Sam's recent cryptoregulation recommendations,
analyze each one, and tell you what effects they could
have on crypto if they become law. The post detailing
(03:20):
Sam's cryptoregulation recommendations can be found on the f t
X policy website. It's titled Quote Possible Digital Asset Industry Standards,
and I'll leave a link to the full post in
the description if you're interested. Now, I'll start by highlighting
something that's mentioned in the very first paragraph of the post.
(03:41):
That's that what Sam is proposing is intended to be
a draft that's meant to stimulate discussion about possible cryptoregulations.
I mean, it's literally in the title. In other words,
what SAM is suggesting is not the be all and
end all of what cryptoregulations in the United States and
elsewhere will be. To be clear, SAM and f t
(04:04):
X do in fact have significant influence over crypto policy,
but they are by no means the only entities with
this kind of influence. It's also worth pointing out that
this isn't exactly the first time that SAM and f
t X have put out crypto regulation recommendations. SAM and
ft X also aren't the only entities that have been
making these sorts of recommendations. Finance and coin Base basically
(04:28):
did the same earlier this year. If you're wondering which
other entities in crypto are influencing crypto regulations, you can
watch our video about crypto lobbying that will be in
the description. I digress. So the first set of recommendations
relates to sanctions, allow lists, and blocklists. These recommendations seem
(04:51):
to be the ones that generated the most backlash. Now
that's because SAM is in favor of blocklists, i e.
Blocking certain wallet addresses from interacting with the rest of
the crypto ecosystem. In theory, this is a good idea,
but in practice it ain't. In theory, blocklists would be
(05:12):
used to rightfully restrict bad actors in cryptocurrency. In practice, however,
blocklists would be used to restrict anyone who opposes the
entity that's in charge of determining which wallet addresses are blocked. Now.
In this case, Sam believes that the Office of Foreign
Assets Control or oh FHAG, should be the entity that
(05:33):
oversees the crypto blocklist. This is a problem because oh
FHAG is part of the U S government, specifically the
U S Department of the Treasury. It's safe to say
that could get ugly very quickly. To Sam's credit, he
does note that the task of maintaining this list could
be given to a quote responsible actor. Unfortunately, that opens
(05:57):
another can of worms, as it would be arguably imp
possible to agree which entity should have the power to
block people from the crypto ecosystem. There's also the issue
of dusting, which is when a sanctioned wallet address sends
crypto to other wallet addresses that haven't engaged in any
illicit activity. This became an issue after opak sanctioned Tornado Cash,
(06:20):
and it's an issue that Sam also acknowledges in his post.
In addition to a blocklist, Sam also suggests creating a
standardized database of crypto wallet addresses suspected of being associated
with illicit activity. These would be shared with other centralized
entities in cryptocurrency. Note that these wallets would not be blocked,
(06:44):
just very closely watched. Yikes. As a cherry on top,
Sam seems to suggest that blocklists should be enforced on chain.
This means that crypto wallets would automatically be frozen the
moment that oh FHAK or whichever other entity is doing
the overseeing determines they've done something sufficiently naughty. This is
(07:06):
something that was picked up by Unbanked podcast host Ryan
Sean Adams, who blasted Sam for suggesting that the freezing
of crypto on chain should be normalized. He also criticized
Sam for suggesting defy applications must comply with blocklists. It
looks like Sam has since removed that suggestion. The second
(07:27):
set of Sam's recommendations relates to crypto hacks and accountability.
I who is responsible when a crypto protocol or project
is hacked. Sam again suggests creating a list of crypto
wallets that are associated with these hacks so that they
can be blocked by centralized and decentralized services. Regarding the
retrieval of funds from a hack, Sam notes that there
(07:50):
are often negotiations between the hacker and the affected crypto
protocol or platform. Sam also points out that it's not
always clear whether the hack did anything legally wrong nor
how much money they ought to return. For context, a
lot of the big hacks in crypto have actually been
flash loans. Now, if you've watched any of our videos
(08:13):
about r you'll know that a flash loan involves borrowing
a large amount of crypto to execute an arbitrage trade
by a token for a low price in one protocol
and sell it at a higher price in another instantly.
Depending on the quality of the protocol, a flash loan
can be extremely damaging. Some have resulted in millions of
(08:37):
dollars in losses, and the cause is almost always an
issue related to the oracle the protocol is using to
keep track of crypto prices. Is this kind of arbitrage
legal well, apparently not in Canada. Now. What Sam proposes
is an admittedly complex formula of how the hacker should
(08:58):
be compensated. The shore explanation is that the users of
the crypto protocol or platform that was hacked should be
made whole i have their crypto returned. Assuming the hacker
didn't do anything that was clearly illegal and was cooperating
with the affected protocol or platform to return the funds,
then he or she would get five percent of the
(09:18):
assets they took as a de facto bug bounty for
discovering the exploit in the code. Besides being cooperative, the
hacker must also return the funds within twenty four hours.
If the hacker tries to take his or her time
returning the stolen crypto or tries to keep more than
five percent of what was taken, then it's no more Mr.
(09:38):
Nice guy. The hacker will be deemed a bad actor
and authorities would get involved. Now. Sam's reasoning here is
that this so called five five standard would have reduced
the severity of previous crypto hacks by He emphasizes that
he's open to suggestions on this front, given that crypto
hacks aren't always clear cut, and the right course of
(10:01):
action is likewise often unclear. Now call me crazy, but
in the absence of any other legal clarity, I tend
to lean more towards the idea that code is law.
If a crypto project, protocol, or program is hacked because
of a bug in the code, then it's the developers
(10:21):
that should be held accountable, especially if it's a bug
that they were already aware of. There have been cases
like this, again, though, these situations are not always clear cut,
and there is something to be said about what hackers
do with funds that are stolen. Remember that many of
the cross chain bridge hacks we've seen since the start
(10:42):
of the year were perpetrated by North Korea. I think
we can all agree that is very, very bad. Now.
The third set of recommendations relates to the classification of
cryptocurrencies as securities or commodities. For reference, securities are assets
like a stock in a company and are heavily regulated.
(11:04):
By contrast, commodities are assets like oil and are not
subject to extensive regulations. Since the seventeen crypto bull market,
there has been lots of debate about which cryptos are
securities and which ones are commodities. So far, only bitcoins
BTC has been concretely classified as a commodity. Comments by
(11:26):
a former SEC official suggest that ethereums eth is also
a commodity, but that is not official. As we've seen,
any cryptocurrency that's classified as a security gets delisted from
crypto exchanges in the United States and is made inaccessible
to American investors. Given that most crypto investors are in
(11:47):
the United States, a securities designation is a devastating blow
to any coin or token. Now, as far as SAM
is concerned, it's up to policymakers to decide which bucket
each crypto falls into. In the interim, f t x
S U s M will have its legal team assess
coins and tokens to determine whether they satisfy the criteria
(12:10):
of the Howe test. For those unfamiliar, the Howie test
consists of four criteria which must be met for an
asset to be classified as a security. In the case
of cryptocurrency, the most important criterion is the fourth, the
expectation of profit from buying that coin or token is
coming from an identifiable third party. SAM notes that f
(12:33):
t x U s will delist any cryptocurrencies that meet
all four criteria of the Howe test, which is really
just the fourth criterion. Any crypto that does not meet
that fourth criterion will be treated as commodities by f
t X US unless the SEC comes out and says otherwise.
This is a bit annoying because the SEC hasn't exactly
(12:55):
been using the Howie test to determine which cryptos are securities.
If you've watched any of our recent videos about the
infamous regulator, you'll know that it really does just seem
to be picking and choosing which crypto projects to go after.
More importantly, SEC chairman Gary Gensler believes that centralized stable
coins are securities. Now, this makes zero sense, since there's
(13:18):
no expectation of profit to be had for an asset
that maintains a stable value. This begs the question of
what f t X would do if circles U s
DC is determined to be a security. In any case,
Sam reveals at the end of this section that he
and f t X are working closely with regulators to
(13:38):
establish a framework for cryptocurrencies that count as securities. Something
tells me that these frameworks will be kind to the
coins and tokens f t X has invested in, but
that's just my speculation. The fourth set of recommendations relates
to tokenized equities, that is, tokenized stocks. Some of you
may know that some crypto exchange just started offering token
(14:01):
ized stocks last year. Some of you may also know
that exchangees got in a lot of trouble for doing that,
particularly Binance. This is unfortunate because token ized stocks are
the ideal way to access these assets. This is something
that Sam is hyper aware of, which is why he
is advocating for replacing the half dozen middlemen involved in
(14:22):
every stock trade with transparent, decentralized blockchains that offer near
instant settlement. This fourth set of recommendations is interesting because
f t X is heavily invested in Slana. Those of
you who are familiar with Solana will know that the
project's endgame is to become an alternative to centralize stock
exchanges like the NASDAK. This is why it's odd that
(14:46):
Sam told What Bitcoin Did podcast host Peter McCormack that
these recommendations are not what's best for f t X,
but rather what's best for the industry. From where I'm standing,
f t X clearly stands to ben if it from
some of these recommendations if they are implemented. Regardless, Sam's
focus on token ized stocks can therefore be taken as
(15:08):
a bullish sign for Salana. From what I've seen, Sam
and FTX have been pushing for token ized stocks for months,
if not longer. If they succeed in getting some regulation past,
Soul could seriously benefit. That is, if Salana can stay online.
Of course, more about Salana in the description. And yes,
I hold Soul as part of my personal portfolio, not
(15:30):
financial advice. You know the drill. Now. The fifth set
of recommendations relates to consumer protection and disclosures by crypto
companies and projects. Sam starts with a common sense suggestion,
and that's to ensure that crypto projects and companies properly
disclose what they do and get punished if they mislead investors.
(15:52):
Sam then proposes something a bit more contentious, and that's
that retail investors should be prevented from taking on x
sessive amounts of debt when investing in cryptocurrency. This is
another slippery slope, which we touched on in our video
about the upcoming retail crypto investing ban. Perhaps Sam was
(16:13):
inspired by that video because he essentially calls for setting
limits on crypto investing for retail traders for what it's worth.
Sam doesn't believe that these limits should be determined by
the net worth of the trader, as is currently the
case with accredited investors. Instead, Sam believes that each crypto
platform should have a test that retail investors will have
(16:35):
to pass if they want to access certain cryptocurrencies or
methods of investing. I reckon that most crypto exchanges have
small tutorials and disclaimers to that end already, but these
could be improved. In fact, I would go one step
further and say that defied protocols should all have tutorials
and disclaimers as well. This doesn't necessarily need to be
(16:58):
enforced by law, but setting this kind of standard would
hopefully help protect defied protocols from unwarranted scrutiny when something
goes wrong. Speaking of DEFY, the sixth set of recommendations
relates to just that. Here, Sam begins by saying that
it's hard to quote think about DEFY in the context
of existing financial regulations. I would say that DEFY should
(17:22):
not be subject to a new set of regulations, as
it will otherwise just become a part of trad Five.
It appears that Sam disagrees with creating new regulations for
a new kind of technology, as he calls for regulating
defied protocols that offer financial services which exist in the
traditional financial system. This is something that Ryan also blasted
(17:44):
Sam for, but it looks like Sam didn't backtrack on
this suggestion. The specific bullet point that Ryan took issue
with was the following quote. If you host a website
that makes it easy for US retail to connect to
and trade on a decks, you would likely have to
register it as something like a broker dealer slash, FCM, slash,
et cetera. You would also potentially have k y C
(18:08):
obligations put Differently, defied protocols with centralized front ends would
have to register with regulators in the United States and
collect k y C from their users. This would make
such defied protocols no different from centralized exchanges in my book,
and perhaps that's the purpose of such regulations big think
(18:29):
conspiracies aside. The defy related bullet point that caught my
eye was quote dows with purely on chain activity do
not require licenses similar to individuals. However, a DOW that
e g. Controls are centralized g U I or markets
to US retail might This suggestion is concerning because it's
(18:49):
not clear what Sam means by markets to US retail
using the SEC standards. If a website of a DOW
lists the price of the governance token, that would be
considered a form of marketing. This kind of threshold could
seriously stunt this promising crypto niche. Sam finishes off this
section by reiterating that nothing he's saying here is set
(19:12):
in stone. It's just a series of suggestions that's meant
to get the ball rolling on cryptoregulations. This would be
great were it not for the fact that Sam seems
to be fixed on forcing defy to fit into the
existing financial system hard pass. Now, the seventh and final
set of recommendations relates to stable coins. In short, Sam
(19:34):
believes all stable coins should be backed by an equivalent
amount of the fiat currency they represent or the government
debt of the country or countries which use the currency.
This is not surprising given that ft X seems to
have a close relationship with Circle. If you watched our
recent video about Europe's upcoming cryptoregulations, you'll know that Circle
(19:55):
appears to be pushing for strict reserve requirements for stable
coins as a way of keeping decentralized stable coins down.
Another thing that SAM and Circle have in common is
that both entities don't want k y C to be
applied to all stable coin transactions. This is because ky
C would negatively affect stable coin adoption. All they want
(20:17):
is for k y C to be applied to on
and off ramps for stable coins, which makes sense to me.
By the way, you should know that applying k y
C to all stable coin transactions isn't even necessary. That's
because blockchain companies like chain Analysis already track all crypto transactions.
This makes it easy for them to identify which crypto
(20:39):
wallets you own and where the crypto in your wallet
came from. Spooky I know, just in time for Halloween too.
Lame jokes aside. You should also know that the bulk
of SAM stable coin recommendations actually aren't in this particular post.
These recommendations can be found in another post on the
ft X policy website from way back in October past year.
(21:00):
I'll leave a link to it in the description if
you're interested. The TLDR there is that SAM and ft
X view a stable coin as being a token that
is backed by the fiat currency it represents, or the
government debt of the country that uses that currency. This
is significant because this definition of a stable coin once
again excludes decentralized alternatives. That said, the stable coin post
(21:23):
seems to include the possibility of stable coins being collateralized
by other assets. It specifically mentions a U S dollar
stable coin being collateralized by a large amount of BTC,
something that Terror tried doing with us T shortly after
the post was published. Too bad, they didn't fully collateralize
ust painful memories. Aside, the stable coin post contains a
(21:47):
handful of reasonable recommendations such as regulatory oversight of stable
coin issuers, transparency and reporting of reserves, audits of reserves,
sufficient reserves, and other logical stuff that also conveniently cuts
out decentralized stable coins. So this brings me to the
big question, and that's what effect Sam's crypto regulation recommendations
(22:09):
could have on the crypto market if they became law.
Let me reiterate that Sam's post was intended to be
a starting point for discussions around cryptoregulations and standards. Sam's
apparent editing of the post after receiving feedback reveals that
he and FTX are taking the crypto community seriously here,
(22:29):
and that's a very good sign in my book. Sam's
openness to feedback could result in very pro crypto regulations
if he's able to rally the rest of the industry
behind him. The thing is that Sam is likely to
have a hard time doing that if he's truly trying
to turn crypto into another arm of the existing financial system.
(22:50):
Don't get me wrong, there are definitely some projects, platforms,
and protocols that belong there. There are others that fall
in the middle as well. However, the projects, platforms, and
protocols that are decentralized, permissionless and trust less should not
be lumped in with their more centralized, permissioned and trusted counterparts.
(23:13):
Now I can't say I know where exactly that line is,
but it exists somewhere, and crossing it means the end
of financial freedom. Now. This is something that shape Shift
founder Eric Vorhees noted in his lengthy response to Sam's post,
which is well worth reading if you have the time,
(23:33):
and another big takeaway from that for me was the
difference between regulations and standards. So, in Eric's own words, quote.
Regulations are rules enforced coercively by the state. You probably
agree with some and disagree with others, but they are
fundamentally unique in that they rely on violence, not consent
(23:56):
end quote. By contrast, standards are voluntary and often determined
by free market forces. Many of the crypto regulation recommendations
Sam made would be better off as standards. An easy
example here is stable coin collateral. I reckon that the
quality of stable coin collateral would increase regardless of regulations
(24:18):
due to stable coin competition, and I would say that
this is happening already. Other cryptoregulation recommendations Sam made would
in fact be better off as regulations. Which ones should
be regulations would naturally vary depending on who you ask.
If you ask me, though, I think that disclosures should
(24:39):
be regulated for some crypto projects, platforms, and protocols. That said,
Eric and many others would disagree, and I understand why
disclosure requirements could be made extremely high by influential crypto
entities to keep competition out, something that's being done with
Europe's aforementioned upcoming crypto regulations. Similarly, I'm sure Sam and
(25:03):
many others would disagree with my opinion. On having stable
coin collateral standards rather than regulations. That's simply because standards
aren't exactly enforceable, and they're typically set by the largest
entity in any given industry, which is not always good.
At the end of the day, it's a trade off.
Regulations and standards both have their pros and cons. It's
(25:25):
going to say lots of time and money to figure
out which elements of crypto should be regulated and which
ones should be standardized, but it will happen eventually. Let's
just hope that the regulations and standards aren't designed to
turn crypto into a dystopian CBDC type system. Some would
say we're dangerously close to this outcome already thanks to
(25:47):
those blockchain tracking companies and centralized stable coin issuers. More
about that in the description. Last week, the main net
for ap toss, the so called Salana Killer, officially went live.
It's apt coin listed on every major crypto exchange shortly afterwards,
(26:10):
and this sent its price soaring for days on end. However,
the crypto project's close connections to big tech, it's heavy
venture capital backing, and it's messy main net launch have
left many in the crypto community questioning aptoss is end game. Today,
I'm going to tell you everything you need to know
about aptos, including where it came from, who made it,
(26:32):
how it works, the tokenomics of apt and whether this
crypto project has any potential. Okay, I'll start by saying
that nothing in this video is financial advice. It's an
analysis of a crypto project based on publicly available information
and intended for educational purposes. Note that this information may
(26:54):
change given that aptos is brand new. A few resources
will be in the description if you're a trusted now.
As some of you will know, the history of aptoss
begins with DM. For those unfamiliar, DM was Facebook's now
metters failed digital currency project. Facebook's blockchain arm started working
(27:16):
on d M in back then, d M was known
as Libra, which might ring a bell now. In contrast
to actual cryptocurrencies, Libra was going to be a centralized
blockchain controlled by Facebook and its constituents. The Libra coin
itself was going to be a stable coin backed by
a basket of Fiat currencies. What's interesting is that Libra
(27:40):
was actually supposed to decentralize after five years now. When
Libra was revealed to the public in t governments around
the world went into crisis mode. The idea of a
big tech company with billions of users rolling out its
own digital currency terrified them. If you watched any of
our video is about crypto regulations, you'll know they were
(28:02):
largely inspired by Libra. So the regulators cracked down on
Libra harder than the asteroid that killed all the dinosaurs
sixty six million years ago. Libra tried ditching its plans
to decentralized, tried to bow to the global banks, and
even tried rebranding to d M to get through all
the red tape. It didn't work, and d M died
(28:25):
in January this year. However, that didn't stop some of
d m's developers from starting their own crypto projects. To
my knowledge, there are two. The first is Aptoss and
the second is Sue. Sue recently raised three hundred million
dollars from crypto vcs but has yet to launch its
main net. We will cover Suy once it's up and running.
(28:48):
As for Aptoss, it was founded in late As a
fun fact, Aptos is the name of an unincorporated town
on the coast of California. Aptos reportedly means for the
people in the indigenous language of the area, but some
sources suggest it means meeting of two waters. In any case,
(29:08):
being named after a coastal area of California is one
of the many similarities Aptoss shares with Salana. For context,
Salana was named after a Californian beach town that's about
thirty minutes north of San Diego. Not surprisingly, the teams
behind both Salana and Aptos are based in Silicon Valley. Anyways,
(29:29):
Aptos was founded by Mohammed Sheik and Avery Ching. Mohammad
holds a master's in business administration, and his previous work
experience is as impressive as it is terrifying. His resume
includes black Rock, the Boston Consulting Group, Ethereum, Builder, Consensus,
and of course Meta. Avery meanwhile, holds a PhD in
(29:50):
computer science and has spent most of his career working
as a principal software engineer at Facebook, one of the
highest positions in the company. I all so couldn't help
but notice that Avery briefly worked at the Los Alamos
Laboratory in Nevada, a facility famous for its military research.
Now what's odd is that Aptos reportedly has over three
(30:12):
hundred and fifty developers working on its blockchain, yet only
Mohammad and Avery are noted as being part of the
aptoss Labs team on the company's website. The aptoss Labs
linked in also has a low number, with just seventy
eight employees at the company. What's even more odd is
that there isn't any information about the Aptos Foundation, which
(30:34):
oversees the crypto project's development, nor its members. The terms
and conditions of the website revealed that the Aptos Foundation
is based in the Cayman Islands. Recall that aptos Labs
is based in the USA. Despite these peculiarities, Aptos managed
to raise three hundred and fifty million dollars from various
crypto vcs across two funding rounds. The first funding round
(30:58):
was for two hundred million dollars in March this year,
and the second was for one fifty million dollars in
July this year. The aptoss white paper was published in August. Now,
Aptos's second funding round was especially significant because it was
led by f t X Ventures. It looks like f
(31:19):
t X is one of the largest, if not the largest,
investor in Aptos. Heavy investment from f t X is
another thing that Salana and aptos have in common. F
t x is investments in Aptos seemed to have either
made Binance nervous or just more bullish. That's because Finance
announced it had invested an additional undisclosed amount in aptos
(31:41):
labs in September. Some have taken this as a sign
that aptos has serious potential. The VC battle makes sense
when you realize that aptos uses a proof of steak blockchain.
This means whichever entity owns the most apt has the
greatest influence over the block chain. In aptoss is case,
(32:02):
this investor influence is especially acute due to aptoss is
upcoming on chain governance now. It's also important to note
that one of the largest investors in Aptos's first funding
round was Three Arrows Capital, the infamous crypto hedge fund
that went bankrupt earlier this year. What's concerning is that
(32:23):
aptos has since removed all references to three A C
from its blog posts. You can learn about how Three
Arrows Capital collapse using the link in the description. Anyways,
on with the show now. Whereas d M was essentially
a centralized shit coin, aptoss aims to be what Libra
(32:44):
was supposed to be at the end of its original roadmap,
a decentralized cryptocurrency. That said, aptoss seems to have a
lot more in common with DM than it does with say,
Bitcoin or ethereum. Maybe it's just me, but the way
that Mohammad and Avery have spoken about aptos in the
few interviews they've given makes it sound like the project
(33:06):
is a covert continuation of d M case and point.
Aptoss is mission is to unite Web two and Web three,
and it is working uncomfortably closely with Google in order
to do this. There is more evidence under the hood.
Aptoss uses a delegated proof of state blockchain. Like many
(33:28):
modern cryptocurrencies, the team behind aptos claims its blockchain is
simultaneously scalable I fast, decentralized, and secure, something that's logically
impossible due to the blockchain trial lemma. To quickly recap
the blockchain trial lemma states that a cryptocurrency can only
be decentralized and scalable, scalable and secure, or secure and decentralized.
(33:52):
Every crypto project ultimately makes a trade off of some kind.
In Bitcoin's case, for instance, it trades scalability for robust
security and decentralization. In aptoss is case, it not so
subtly trades decentralization for scalability and security. Although the app
(34:13):
toss blockchain boasts tens of thousands of full nodes, it
only has one hundred and two validators. What's annoying is
that the number of full nodes on apptos does not
appear to be noted on any of its blockchain explorers.
But don't let the term full node fool you. Aptoss
is documentation suggests it's blockchain only stores the current state
(34:37):
of the ledger i e. Account balances and transactions. This
is similar to another cryptoproject called mina protocol, which stores
the current state of its blockchain in a small digital snapshot.
Like MINA protocol, aptoss has a series of nodes which
store its historical blockchain data on a quote single version
(34:58):
distributed database. Then, number of nodes storing aptos is full
transaction history here is unknown. The documentation suggests it's the
one two validata nodes, but they aren't obligated to store
it now. If you watched our video about cryptocurrency decentralization,
you'll know that storage of a cryptocurrency's long term transaction
(35:20):
history is an important part of decentralization. Without this information,
a cryptocurrency could be easily corrupted over time or manipulated
by malicious nodes. This is why I was seriously saddened
to hear that Slana had started using Google Big Table
to store its data in lieu of our weave, which
(35:40):
is a decentralized storage cryptocurrency. It wouldn't surprise me at
all if it turns out that Aptos is doing something similar,
especially since its blockchain is growing quickly too. The relative
centralization of the aptoss blockchain makes it possible for it
to process up to forty transactions per second, with a
theoretical maximum of one hundred and sixty thousand transactions per second.
(36:05):
Current and maximum TPS scores for major cryptos can be
seen here courtesy of f t x. Note how it
chills Salana. Now. What's impressive is that aptos is current
TPS also applies to more complex smart contract transactions. This
is one of the reasons Binance gave for its additional
(36:26):
investment into Aptos, which was again probably also motivated by
f t x is own additional investment during the second
funding round. Another reason why Finance invested so much in
aptoss is because of its novel coding language and new
virtual machine. Everything on aptoss is coded in Move, a
(36:46):
programming language based on Rust that was invented by d
MS developers. Aptos uses its own Move virtual machine for
smart contracts. So three things to note here. The first
is that Move isn't the only thing that DMS developers invented.
In an interview, Mohammad explained that d M basically had
(37:07):
access to unlimited resources for research and development. As a result,
Aptoss uses cutting edge tech that I am barely scratching
the surface of here. What's cool is that aptoss Labs
actually has a research papers page that looks eerily similar
to the research papers library page of Cardano builder I
(37:27):
O h K. Aptoss is cutting edge research and development.
Might be why the company behind it is keeping the
details of its developers under wraps. After all, the last
thing the project wants is to lose its top talent
to equally well capitalized competitors. And this relates to the
second thing to note. It's very rare that a cryptoproject
(37:49):
comes up with its own virtual machine for smart contracts.
Almost all of the vms are variants of ethereums Virtual machine.
Believe it or not, but it's aptoss is move M
that makes it a Salana killer, by Salana's own admission.
In a panel discussion earlier this year, Salana founder Anatolely
(38:10):
Yakovenko tacitly admitted that the Salana team is extremely nervous
about the introduction of a competing execution layer for smart contracts.
Anatoly is also hyper aware of how developer friendly the
Move programming language is. This is in stark contrast to
the developer experience on Salana, which Anatotlely has likened to
(38:33):
quote eating glass to make things worse, Salana is coded
in Rust and your recall move is based on Rust.
This makes it easy for developers from Salana's ecosystem to
migrate to aptoss is. The same applies for developers working
on near protocol and Polka Dot. However, the cryptoproject that's
(38:54):
most of risk of being killed by aptoss is actually Flow.
That's because Flow is coded in Cadence, which is based
on MOVE. If you watched our video about Flow, you'll
know that it actually worked with d MS developers to
develop Cadence. You'll also know that flow uses a multinode
architecture that separates the collection, ordering, processing, and verification of
(39:17):
transactions on its blockchain for efficiency. As it so happens,
app toss does something similar with its own transaction process,
which is outside the scope of this video. Now, I'll
just mention the third thing to note, and that's the
tokens on the app toss blockchain, which are called coins
for some reason, are apparently controlled by the entity that
(39:39):
issues them. What this means is that any token on
the ap toss blockchain can be frozen, burned, and or
minted at will by whoever created it. This seems to
be an intentional design choice, as Mohammed mentioned in an
October panel discussion, that the app toss blockchain can be
compliant with regulations just like DM Make of that what
(40:00):
you will. Now, when it comes to tokenomics, nobody actually
knew what the tokenomics of apt would look like until
shortly before it started trading. This was perhaps the biggest
red flag for the crypto community, who questioned how crypto
exchanges could possibly list a coin that had just published
(40:21):
it's tokenomics. So apt is used to pay for transaction
fees on the aptos blockchain, apt is also used for
staking and is used for on chain governance of the
app toss. Blockchain governance is currently limited to validators, but
will eventually be expanded to delegators as well. The apt
coin had an initial supply of one billion. Around thirteen
(40:45):
point five percent of this initial supply was allocated to
early investors, sixteen point five percent was allocated to the
aptos foundation was allocated to core contributors, which presumably means
ap toss labs. The remain was set aside for the
app toss community. The vesting schedules for these entities can
(41:07):
be seen here For those just listening in. The apt
allocated to core contributors and investors will only begin investing
after one year. This means the only APT in circulation
for the first year will come from that allocated to
the aptss community. According to the ap toss Explorer, around
one hundred and eighty million apt coins are currently in circulation.
(41:31):
This is significantly fewer than the one hundred and thirty
million apt noted by coin market Cap and coin geck.
Then again, it's not clear whether all the one eighty
million apt coins not being staked are in circulation. From
what I can tell. Coin market Cap and coin Gecko
got the details about apt s initial supply from the
(41:52):
tokenomics post by the aptos Foundation. It notes that one
five million APT were made immediately available to the community
and five million APT were made immediately available to the foundation.
Of the one and twenty five million APT that was
allocated to the community, twenty million was air dropped to
early test net users after apt started trading the rest
(42:15):
who knows. What's more is that apt has a seven
percent inflation rate with no maximum supply, and it looks
like APT supply has already increased by over two million.
This is because of the roughly eight hundred and twenty
million staked APT that I alluded to a few moments ago.
What's scary is that the aptoss Foundation notes that staking
(42:39):
rewards are quote not subject to restrictions on distribution. This
means the early investors, the team, and the foundation can
sell their staking rewards. Did I mention that the aptoss
Foundation and aptoss Labs custody the apt allocated to the
aptss community. That's more than of the initial supply, and
(43:02):
it looks like they're staking this APT two. That is
a lot of money when you do the maths. On
the bright side, all transaction fees are burned and apt
S inflation will decline by one point five annually until
it hits three point to five, which is estimated to
take fifty years. Meanwhile, the APT initially allocated to the team,
(43:24):
early investors, the foundation, and the community will finish festing
in late two. Now the timeline to be on the
lookout for is late three. This is when the big
vesting cliffs will begin. The worst of them will happen
in four, which is coincidentally around the time the next
crypto bull run should begin. You can find out how
(43:46):
bad the current bear market could get using the link
in the description. In terms of price action, there isn't
much I can say about APT just yet because it's
a brand new cryptocurrency. Even so, at first glance, ap
toss looks grossly overvalued, a market cap of over one
billion and a fully diluted market cap of over nine billion.
(44:07):
Upon closer examination, however, it does look like some fundamentals
are starting to form. According to the app toss explorer,
there are over one point seven million wallet addresses, and
chances are that number will be over two million by
the time you see this video. To put things into perspective,
Cardarno has around two point three million wallet addresses according
(44:28):
to the Aida stat Explorer. This means that ap toss
is on track to surpass Cardano by number of users
within two weeks of launch. Cardano's main net went live
over five years ago. That is some serious adoption. The
thing is that the number of wallet addresses on app
toss doesn't necessarily correspond to the number of users. That's
(44:50):
why I prefer to look at downloads of any web
or mobile wallets associated with a crypto. In this case,
app tosses, Petra and Martian wallets have of a one
million downloads combined on Chrome alone. This would be an
impressive statistic were it not for the fact that defy
lama suggests that's only around seventeen million dollars of total
(45:11):
value locked in aptoss is dozen defy protocols. What's frustrating
is that defy lama statistics are also inconsistent with the
stats on the website of the aptoss DAPs. For example,
liquid apt staking protocol Tortuga has nearly three billion dollars
in total value locked with over three hundred and thirty
million apt deposited. This suggests that some early Investors, team members,
(45:37):
and maybe even the aptoss Foundation are secretly liquid staking.
This detail isn't noted in apt s tokenomics. If this
is true, then it means you probably can't trust the
tv L on any defied protocol on ap toss which
supports Tortuga's liquid staked APT. That's because it would be
(45:58):
very easy for early Investors, team members or the aptos
Foundation to fake a high TVL using their liquid staked
APT spooky stuff. On that note, Tortuga seems to be
the only way that APT holders can currently delegate to validators.
This begs the question of which validators Tortuga is delegating to.
(46:19):
It also begs the question of who is running the
largest validators, given that they're staking almost identical amounts of APT.
What I'm wondering is what the minimum and maximum steak
for validators is. Ap toss is documentation is unclear on this,
along with the locking and unlocking time for the APT coin.
(46:42):
What is clear is that there is no slashing risk
for misbehavior, so at least all the vcs won't have
to worry about losing their precious apt It would also
be nice to know exactly how many DAPs there are
on ap toss and how many unique wallets are actually
using them. Dap Radar hasn't started tracking Aptoss dabs yet,
(47:02):
but the dab list in the Martian Wallet suggests there
are at least twenty up and running, not bad for
a brand new crypto project. Unfortunately, this doesn't change the
fact that we are in the middle of a crypto
bear market that's likely to last for at least another year.
The harsh reality is that almost all apt s price
(47:22):
action has so far been driven by speculation, not organic adoption. Luckily,
Aptoss has lots of milestones ahead of it. The closest
thing Aptoss has to a roadmap is a blog post
from March this year titled quote the Aptoss Vision. The
(47:44):
t l d R is that aptoss wants to scale
to support billions of users and every use case you
can think of, just like every other new crypto. The
difference is that Aptoss actually has the tech to do it.
That doesn't mean Aptoss will scare ail overnight. However, the
team and founders mentioned many times that aptos would be
(48:05):
incomplete out of the gates, I reckon most of the
issues I've identified so far can be attributed to the
fact that aptos is still very much in development, so
don't take them all too seriously. The first major upgrade
to aptos is expected to happen later this year or
in the first quarter of next year. This is consistent
(48:27):
with a note in aptoss is documentation which implies that
the validata requirements will be increased significantly at the start
of three and it suggests that aptoss is speed will
increase significantly now. Additional aptoss milestones can be found in
a m as and interviews with the aptos team and
its founders. I'll reiterate that these a m as and
(48:50):
interviews are few in number and surprisingly difficult to find.
These a m as were on limited non English language
YouTube channels because is no official ap toss channel. In
an a m A from April, the aptoss team revealed
that the project is looking to partner with other big
tech companies besides Google. At the same time, the aptoss
(49:12):
team revealed that it wants to implement privacy preserving technologies
to its blockchain in the future. I reckon it's one
or the other. In September, Avery explained that aptos will
eventually have a unique fee market for each DAP and
use case on ap toss. This is very cool and
very logical because it will allow aptos to remain resilient
(49:34):
to the kinds of didos attacks that have taken Salana offline,
while simultaneously keeping transaction fees low. In October, Avery explained
that aptoss will have a major upgrade every four to
six months. This is to ensure that the blockchain will
remain future proof. Avery also explained that aptoss will start
(49:55):
sharding its blockchain once it starts to become to bloat.
It's something that Ethereum is also planning now. I was
hoping to find a few more milestones in Aptos's governance forum,
but there was nothing about aptoss is improvement proposals. Funnily enough,
I somehow managed to find a link to Aptoss's governance
portal for validators. There was only one governance proposal to
(50:18):
reduce voting power. So this brings me to the concerns
I have about aptos, and by now you'll know that
I have quite a few. My biggest concern is the
ridiculous disconnect between the supposed quality of the project and
its transparency and organization. I mean aptoss has technically been
in development since seen it had access to unlimited resources
(50:43):
for research and development for years. It raised three hundred
and fifty million dollars without a white paper or tokenomics,
and there are literally three hundred and fifty people working
for aptoss Labs supposedly. Pardon my French, but how the
holy hell has aptos still not hammered out the token
(51:04):
omics of the apt coin. Why did our research team
have to go digging through every single link and blog
post to find information that should be on the front
page of the aptos website. Why is there no YouTube channel?
Who is running the validator notes? How come you can't
see the details of the tokens and n f t
(51:25):
s on the aptos blockchain. Where is the information about
which crypto wallets belonged to aptos Labs and the Aptos Foundation.
There's no way apt supply is distributed as equitably as
the explorer suggests. And don't even get me started about
the allegations of aptos shutting down its discord channel and
(51:47):
other socials when people started asking these kinds of questions,
or about how all the A M A s seemed
to be restricted to discord and not published anywhere else.
My second con learn about aptoss is almost as big,
and that's the crypto project's mission. I still don't quite
understand what aptoss is endgame is, and it's not just me.
(52:12):
Massari CEO Ryan Selkiss was asking what krypto niche aptos
is trying to claim or the angle it's trying to
take at the recent main Net conference. He didn't really
get an answer. As far as I can tell, the
Aptos vision of cryptocurrency is a maximalist one where everything
is built on the APTOS blockchain. I haven't seen or
(52:33):
heard any discussion about interoperability with other cryptocurrencies, only interoperability
with big tech companies and the existing financial system. This
attitude comes at a time when crypto vcs are betting
on a multi chain future with projects like Cosmos. That's
because they know there is no way for everything to
(52:55):
be built on a single blockchain unless it's extremely centralized,
and that point you're not dealing with a cryptocurrency anymore.
From where I'm standing, extreme centralization looks like the path
that aptoss wants to take. All the talk of decentralization
just seems to be an attempt to get retail investors
on board to be blunt. The aptoss team is not
(53:19):
even good at selling these talking points, and it might
be because they don't really believe them. This ties into
my third concern, and that's regulation. D M died a
brutal death, and if aptoss is in fact a de
facto continuation of d M, then it is doomed to
suffer the same fate. Regulators might be biased, but they're
(53:41):
not stupid. Speaking of which, I am shocked that US
exchanges like coin Base listed a p T. I am,
by no means an expert in securities laws, and this
is purely speculation, but I have been watching the SEC
for a long time. Apt seems to take every box
on the SECS target list. The only thing that could
(54:05):
protect app toss is the unprecedented amount of backing it
has from both Wall Street aligned crypto vcs and big tech.
Both parties are powerful lobbyists and they will make sure
they're golden geese don't get caught in any regulatory nets.
In some then, I have to say that I'm extremely
skeptical about app toss. At this point in time, there
(54:27):
is no question that aptos is on the bleeding edge
of Web three, but it doesn't seem to be seriously
interested in the core values of cryptocurrency. If anything, it
seeks to cement the values of Web two using blockchain technology.
Thank you so much for listening to the coin Bureau podcast.
If you'd like to learn more about cryptocurrency, you can
(54:50):
visit our YouTube channel at YouTube dot com forward slash
coin Bureau. You can also go to coin bureau dot
com for loads more information about all things crypto. You
can follow on Twitter at at coin bureau or one word,
and I'm also active on TikTok and Instagram too. M
Hello everyone, and welcome to the latest episode from the
midweek edition of the coin bureau podcast. Every week, I
pick out two of my favorite videos from coin bureaus
YouTube channel to present to you in podcast form. The
audio you're about to hear is from those videos I've
chosen this week, many of you have been in touch
to ask whether it's possible to listen to our videos
(00:21):
in podcast format, and so voila for your delectation. This week,
may I present our videos on the recent controversy surrounding
some proposed crypto regulations and our deep dive review of
ap toss, the brand new Layer one blockchain that recently
launched to some controversy of its own. Sam Bankman Freed
(00:41):
is the CEO of FTX, one of the biggest and
most influential crypto companies in the industry. He's well connected
to those in power and has been a prominent figure
in Washington in recent months giving his input into how
future crypto regulations might look. He recently published some of
his thoughts on this press matter on the ft X
website and on Twitter, and it's no exaggeration to say
(01:05):
that they stirred up some rather heated debate crypto regulations
are a hot button issue at the moment, and sam
suggestions on how they might look were intended to spark
further conversation among the crypto community. They did that and
then some, and in the first part of today's episode
you'll hear what those suggestions were and what we and
others made of them. Then, a couple of weeks ago,
(01:27):
we saw the launch of a brand spanking new crypto
project called app Toss. This has been brought to us
by the folks behind Facebook's ill fated d M project,
which coincidentally opened the crypto space up to massive regulatory
scrutiny when it first appeared a few years ago. So
ap Toss has some pretty serious backing and some cutting
(01:48):
edge tech. But what's it all about? Is it any good?
Does it have a worthwhile role to play in the
crypto industry? And is it a project to get excited about.
It's been a while since we had a new crypto
project review on the channel, so you can be sure
we got thoroughly stuck into this one. I hope you
enjoy listening to these two pieces, and I'll be back
talking crypto with Mike very soon, so be sure to
(02:10):
stay tuned, and if you want even more content from
coin Bureau, be sure to subscribe to our YouTube channel
and visit us on social media too. F t X
(02:39):
is known for being one of the most influential companies
in cryptocurrency. This is due in large part to founder
and CEO Sam Bankman Freed, who has lots of friends
on Wall Street and in Washington, d C. That's why
Sam's recent crypto regulation recommendations were taken so seriously. Sam
(02:59):
and t X have the power to influence actual crypto policy,
and not everyone is a fan of what they're recommending.
So today I'm going to summarize Sam's recent cryptoregulation recommendations,
analyze each one, and tell you what effects they could
have on crypto if they become law. The post detailing
(03:20):
Sam's cryptoregulation recommendations can be found on the f t
X policy website. It's titled Quote Possible Digital Asset Industry Standards,
and I'll leave a link to the full post in
the description if you're interested. Now, I'll start by highlighting
something that's mentioned in the very first paragraph of the post.
(03:41):
That's that what Sam is proposing is intended to be
a draft that's meant to stimulate discussion about possible cryptoregulations.
I mean, it's literally in the title. In other words,
what SAM is suggesting is not the be all and
end all of what cryptoregulations in the United States and
elsewhere will be. To be clear, SAM and f t
(04:04):
X do in fact have significant influence over crypto policy,
but they are by no means the only entities with
this kind of influence. It's also worth pointing out that
this isn't exactly the first time that SAM and f
t X have put out crypto regulation recommendations. SAM and
ft X also aren't the only entities that have been
making these sorts of recommendations. Finance and coin Base basically
(04:28):
did the same earlier this year. If you're wondering which
other entities in crypto are influencing crypto regulations, you can
watch our video about crypto lobbying that will be in
the description. I digress. So the first set of recommendations
relates to sanctions, allow lists, and blocklists. These recommendations seem
(04:51):
to be the ones that generated the most backlash. Now
that's because SAM is in favor of blocklists, i e.
Blocking certain wallet addresses from interacting with the rest of
the crypto ecosystem. In theory, this is a good idea,
but in practice it ain't. In theory, blocklists would be
(05:12):
used to rightfully restrict bad actors in cryptocurrency. In practice, however,
blocklists would be used to restrict anyone who opposes the
entity that's in charge of determining which wallet addresses are blocked. Now.
In this case, Sam believes that the Office of Foreign
Assets Control or oh FHAG, should be the entity that
(05:33):
oversees the crypto blocklist. This is a problem because oh
FHAG is part of the U S government, specifically the
U S Department of the Treasury. It's safe to say
that could get ugly very quickly. To Sam's credit, he
does note that the task of maintaining this list could
be given to a quote responsible actor. Unfortunately, that opens
(05:57):
another can of worms, as it would be arguably imp
possible to agree which entity should have the power to
block people from the crypto ecosystem. There's also the issue
of dusting, which is when a sanctioned wallet address sends
crypto to other wallet addresses that haven't engaged in any
illicit activity. This became an issue after opak sanctioned Tornado Cash,
(06:20):
and it's an issue that Sam also acknowledges in his post.
In addition to a blocklist, Sam also suggests creating a
standardized database of crypto wallet addresses suspected of being associated
with illicit activity. These would be shared with other centralized
entities in cryptocurrency. Note that these wallets would not be blocked,
(06:44):
just very closely watched. Yikes. As a cherry on top,
Sam seems to suggest that blocklists should be enforced on chain.
This means that crypto wallets would automatically be frozen the
moment that oh FHAK or whichever other entity is doing
the overseeing determines they've done something sufficiently naughty. This is
(07:06):
something that was picked up by Unbanked podcast host Ryan
Sean Adams, who blasted Sam for suggesting that the freezing
of crypto on chain should be normalized. He also criticized
Sam for suggesting defy applications must comply with blocklists. It
looks like Sam has since removed that suggestion. The second
(07:27):
set of Sam's recommendations relates to crypto hacks and accountability.
I who is responsible when a crypto protocol or project
is hacked. Sam again suggests creating a list of crypto
wallets that are associated with these hacks so that they
can be blocked by centralized and decentralized services. Regarding the
retrieval of funds from a hack, Sam notes that there
(07:50):
are often negotiations between the hacker and the affected crypto
protocol or platform. Sam also points out that it's not
always clear whether the hack did anything legally wrong nor
how much money they ought to return. For context, a
lot of the big hacks in crypto have actually been
flash loans. Now, if you've watched any of our videos
(08:13):
about r you'll know that a flash loan involves borrowing
a large amount of crypto to execute an arbitrage trade
by a token for a low price in one protocol
and sell it at a higher price in another instantly.
Depending on the quality of the protocol, a flash loan
can be extremely damaging. Some have resulted in millions of
(08:37):
dollars in losses, and the cause is almost always an
issue related to the oracle the protocol is using to
keep track of crypto prices. Is this kind of arbitrage
legal well, apparently not in Canada. Now. What Sam proposes
is an admittedly complex formula of how the hacker should
(08:58):
be compensated. The shore explanation is that the users of
the crypto protocol or platform that was hacked should be
made whole i have their crypto returned. Assuming the hacker
didn't do anything that was clearly illegal and was cooperating
with the affected protocol or platform to return the funds,
then he or she would get five percent of the
(09:18):
assets they took as a de facto bug bounty for
discovering the exploit in the code. Besides being cooperative, the
hacker must also return the funds within twenty four hours.
If the hacker tries to take his or her time
returning the stolen crypto or tries to keep more than
five percent of what was taken, then it's no more Mr.
(09:38):
Nice guy. The hacker will be deemed a bad actor
and authorities would get involved. Now. Sam's reasoning here is
that this so called five five standard would have reduced
the severity of previous crypto hacks by He emphasizes that
he's open to suggestions on this front, given that crypto
hacks aren't always clear cut, and the right course of
(10:01):
action is likewise often unclear. Now call me crazy, but
in the absence of any other legal clarity, I tend
to lean more towards the idea that code is law.
If a crypto project, protocol, or program is hacked because
of a bug in the code, then it's the developers
(10:21):
that should be held accountable, especially if it's a bug
that they were already aware of. There have been cases
like this, again, though, these situations are not always clear cut,
and there is something to be said about what hackers
do with funds that are stolen. Remember that many of
the cross chain bridge hacks we've seen since the start
(10:42):
of the year were perpetrated by North Korea. I think
we can all agree that is very, very bad. Now.
The third set of recommendations relates to the classification of
cryptocurrencies as securities or commodities. For reference, securities are assets
like a stock in a company and are heavily regulated.
(11:04):
By contrast, commodities are assets like oil and are not
subject to extensive regulations. Since the seventeen crypto bull market,
there has been lots of debate about which cryptos are
securities and which ones are commodities. So far, only bitcoins
BTC has been concretely classified as a commodity. Comments by
(11:26):
a former SEC official suggest that ethereums eth is also
a commodity, but that is not official. As we've seen,
any cryptocurrency that's classified as a security gets delisted from
crypto exchanges in the United States and is made inaccessible
to American investors. Given that most crypto investors are in
(11:47):
the United States, a securities designation is a devastating blow
to any coin or token. Now, as far as SAM
is concerned, it's up to policymakers to decide which bucket
each crypto falls into. In the interim, f t x
S U s M will have its legal team assess
coins and tokens to determine whether they satisfy the criteria
(12:10):
of the Howe test. For those unfamiliar, the Howie test
consists of four criteria which must be met for an
asset to be classified as a security. In the case
of cryptocurrency, the most important criterion is the fourth, the
expectation of profit from buying that coin or token is
coming from an identifiable third party. SAM notes that f
(12:33):
t x U s will delist any cryptocurrencies that meet
all four criteria of the Howe test, which is really
just the fourth criterion. Any crypto that does not meet
that fourth criterion will be treated as commodities by f
t X US unless the SEC comes out and says otherwise.
This is a bit annoying because the SEC hasn't exactly
(12:55):
been using the Howie test to determine which cryptos are securities.
If you've watched any of our recent videos about the
infamous regulator, you'll know that it really does just seem
to be picking and choosing which crypto projects to go after.
More importantly, SEC chairman Gary Gensler believes that centralized stable
coins are securities. Now, this makes zero sense, since there's
(13:18):
no expectation of profit to be had for an asset
that maintains a stable value. This begs the question of
what f t X would do if circles U s
DC is determined to be a security. In any case,
Sam reveals at the end of this section that he
and f t X are working closely with regulators to
(13:38):
establish a framework for cryptocurrencies that count as securities. Something
tells me that these frameworks will be kind to the
coins and tokens f t X has invested in, but
that's just my speculation. The fourth set of recommendations relates
to tokenized equities, that is, tokenized stocks. Some of you
may know that some crypto exchange just started offering token
(14:01):
ized stocks last year. Some of you may also know
that exchangees got in a lot of trouble for doing that,
particularly Binance. This is unfortunate because token ized stocks are
the ideal way to access these assets. This is something
that Sam is hyper aware of, which is why he
is advocating for replacing the half dozen middlemen involved in
(14:22):
every stock trade with transparent, decentralized blockchains that offer near
instant settlement. This fourth set of recommendations is interesting because
f t X is heavily invested in Slana. Those of
you who are familiar with Solana will know that the
project's endgame is to become an alternative to centralize stock
exchanges like the NASDAK. This is why it's odd that
(14:46):
Sam told What Bitcoin Did podcast host Peter McCormack that
these recommendations are not what's best for f t X,
but rather what's best for the industry. From where I'm standing,
f t X clearly stands to ben if it from
some of these recommendations if they are implemented. Regardless, Sam's
focus on token ized stocks can therefore be taken as
(15:08):
a bullish sign for Salana. From what I've seen, Sam
and FTX have been pushing for token ized stocks for months,
if not longer. If they succeed in getting some regulation past,
Soul could seriously benefit. That is, if Salana can stay online.
Of course, more about Salana in the description. And yes,
I hold Soul as part of my personal portfolio, not
(15:30):
financial advice. You know the drill. Now. The fifth set
of recommendations relates to consumer protection and disclosures by crypto
companies and projects. Sam starts with a common sense suggestion,
and that's to ensure that crypto projects and companies properly
disclose what they do and get punished if they mislead investors.
(15:52):
Sam then proposes something a bit more contentious, and that's
that retail investors should be prevented from taking on x
sessive amounts of debt when investing in cryptocurrency. This is
another slippery slope, which we touched on in our video
about the upcoming retail crypto investing ban. Perhaps Sam was
(16:13):
inspired by that video because he essentially calls for setting
limits on crypto investing for retail traders for what it's worth.
Sam doesn't believe that these limits should be determined by
the net worth of the trader, as is currently the
case with accredited investors. Instead, Sam believes that each crypto
platform should have a test that retail investors will have
(16:35):
to pass if they want to access certain cryptocurrencies or
methods of investing. I reckon that most crypto exchanges have
small tutorials and disclaimers to that end already, but these
could be improved. In fact, I would go one step
further and say that defied protocols should all have tutorials
and disclaimers as well. This doesn't necessarily need to be
(16:58):
enforced by law, but setting this kind of standard would
hopefully help protect defied protocols from unwarranted scrutiny when something
goes wrong. Speaking of DEFY, the sixth set of recommendations
relates to just that. Here, Sam begins by saying that
it's hard to quote think about DEFY in the context
of existing financial regulations. I would say that DEFY should
(17:22):
not be subject to a new set of regulations, as
it will otherwise just become a part of trad Five.
It appears that Sam disagrees with creating new regulations for
a new kind of technology, as he calls for regulating
defied protocols that offer financial services which exist in the
traditional financial system. This is something that Ryan also blasted
(17:44):
Sam for, but it looks like Sam didn't backtrack on
this suggestion. The specific bullet point that Ryan took issue
with was the following quote. If you host a website
that makes it easy for US retail to connect to
and trade on a decks, you would likely have to
register it as something like a broker dealer slash, FCM, slash,
et cetera. You would also potentially have k y C
(18:08):
obligations put Differently, defied protocols with centralized front ends would
have to register with regulators in the United States and
collect k y C from their users. This would make
such defied protocols no different from centralized exchanges in my book,
and perhaps that's the purpose of such regulations big think
(18:29):
conspiracies aside. The defy related bullet point that caught my
eye was quote dows with purely on chain activity do
not require licenses similar to individuals. However, a DOW that
e g. Controls are centralized g U I or markets
to US retail might This suggestion is concerning because it's
(18:49):
not clear what Sam means by markets to US retail
using the SEC standards. If a website of a DOW
lists the price of the governance token, that would be
considered a form of marketing. This kind of threshold could
seriously stunt this promising crypto niche. Sam finishes off this
section by reiterating that nothing he's saying here is set
(19:12):
in stone. It's just a series of suggestions that's meant
to get the ball rolling on cryptoregulations. This would be
great were it not for the fact that Sam seems
to be fixed on forcing defy to fit into the
existing financial system hard pass. Now, the seventh and final
set of recommendations relates to stable coins. In short, Sam
(19:34):
believes all stable coins should be backed by an equivalent
amount of the fiat currency they represent or the government
debt of the country or countries which use the currency.
This is not surprising given that ft X seems to
have a close relationship with Circle. If you watched our
recent video about Europe's upcoming cryptoregulations, you'll know that Circle
(19:55):
appears to be pushing for strict reserve requirements for stable
coins as a way of keeping decentralized stable coins down.
Another thing that SAM and Circle have in common is
that both entities don't want k y C to be
applied to all stable coin transactions. This is because ky
C would negatively affect stable coin adoption. All they want
(20:17):
is for k y C to be applied to on
and off ramps for stable coins, which makes sense to me.
By the way, you should know that applying k y
C to all stable coin transactions isn't even necessary. That's
because blockchain companies like chain Analysis already track all crypto transactions.
This makes it easy for them to identify which crypto
(20:39):
wallets you own and where the crypto in your wallet
came from. Spooky I know, just in time for Halloween too.
Lame jokes aside. You should also know that the bulk
of SAM stable coin recommendations actually aren't in this particular post.
These recommendations can be found in another post on the
ft X policy website from way back in October past year.
(21:00):
I'll leave a link to it in the description if
you're interested. The TLDR there is that SAM and ft
X view a stable coin as being a token that
is backed by the fiat currency it represents, or the
government debt of the country that uses that currency. This
is significant because this definition of a stable coin once
again excludes decentralized alternatives. That said, the stable coin post
(21:23):
seems to include the possibility of stable coins being collateralized
by other assets. It specifically mentions a U S dollar
stable coin being collateralized by a large amount of BTC,
something that Terror tried doing with us T shortly after
the post was published. Too bad, they didn't fully collateralize
ust painful memories. Aside, the stable coin post contains a
(21:47):
handful of reasonable recommendations such as regulatory oversight of stable
coin issuers, transparency and reporting of reserves, audits of reserves,
sufficient reserves, and other logical stuff that also conveniently cuts
out decentralized stable coins. So this brings me to the
big question, and that's what effect Sam's crypto regulation recommendations
(22:09):
could have on the crypto market if they became law.
Let me reiterate that Sam's post was intended to be
a starting point for discussions around cryptoregulations and standards. Sam's
apparent editing of the post after receiving feedback reveals that
he and FTX are taking the crypto community seriously here,
(22:29):
and that's a very good sign in my book. Sam's
openness to feedback could result in very pro crypto regulations
if he's able to rally the rest of the industry
behind him. The thing is that Sam is likely to
have a hard time doing that if he's truly trying
to turn crypto into another arm of the existing financial system.
(22:50):
Don't get me wrong, there are definitely some projects, platforms,
and protocols that belong there. There are others that fall
in the middle as well. However, the projects, platforms, and
protocols that are decentralized, permissionless and trust less should not
be lumped in with their more centralized, permissioned and trusted counterparts.
(23:13):
Now I can't say I know where exactly that line is,
but it exists somewhere, and crossing it means the end
of financial freedom. Now. This is something that shape Shift
founder Eric Vorhees noted in his lengthy response to Sam's post,
which is well worth reading if you have the time,
(23:33):
and another big takeaway from that for me was the
difference between regulations and standards. So, in Eric's own words, quote.
Regulations are rules enforced coercively by the state. You probably
agree with some and disagree with others, but they are
fundamentally unique in that they rely on violence, not consent
(23:56):
end quote. By contrast, standards are voluntary and often determined
by free market forces. Many of the crypto regulation recommendations
Sam made would be better off as standards. An easy
example here is stable coin collateral. I reckon that the
quality of stable coin collateral would increase regardless of regulations
(24:18):
due to stable coin competition, and I would say that
this is happening already. Other cryptoregulation recommendations Sam made would
in fact be better off as regulations. Which ones should
be regulations would naturally vary depending on who you ask.
If you ask me, though, I think that disclosures should
(24:39):
be regulated for some crypto projects, platforms, and protocols. That said,
Eric and many others would disagree, and I understand why
disclosure requirements could be made extremely high by influential crypto
entities to keep competition out, something that's being done with
Europe's aforementioned upcoming crypto regulations. Similarly, I'm sure Sam and
(25:03):
many others would disagree with my opinion. On having stable
coin collateral standards rather than regulations. That's simply because standards
aren't exactly enforceable, and they're typically set by the largest
entity in any given industry, which is not always good.
At the end of the day, it's a trade off.
Regulations and standards both have their pros and cons. It's
(25:25):
going to say lots of time and money to figure
out which elements of crypto should be regulated and which
ones should be standardized, but it will happen eventually. Let's
just hope that the regulations and standards aren't designed to
turn crypto into a dystopian CBDC type system. Some would
say we're dangerously close to this outcome already thanks to
(25:47):
those blockchain tracking companies and centralized stable coin issuers. More
about that in the description. Last week, the main net
for ap toss, the so called Salana Killer, officially went live.
It's apt coin listed on every major crypto exchange shortly afterwards,
(26:10):
and this sent its price soaring for days on end. However,
the crypto project's close connections to big tech, it's heavy
venture capital backing, and it's messy main net launch have
left many in the crypto community questioning aptoss is end game. Today,
I'm going to tell you everything you need to know
about aptos, including where it came from, who made it,
(26:32):
how it works, the tokenomics of apt and whether this
crypto project has any potential. Okay, I'll start by saying
that nothing in this video is financial advice. It's an
analysis of a crypto project based on publicly available information
and intended for educational purposes. Note that this information may
(26:54):
change given that aptos is brand new. A few resources
will be in the description if you're a trusted now.
As some of you will know, the history of aptoss
begins with DM. For those unfamiliar, DM was Facebook's now
metters failed digital currency project. Facebook's blockchain arm started working
(27:16):
on d M in back then, d M was known
as Libra, which might ring a bell now. In contrast
to actual cryptocurrencies, Libra was going to be a centralized
blockchain controlled by Facebook and its constituents. The Libra coin
itself was going to be a stable coin backed by
a basket of Fiat currencies. What's interesting is that Libra
(27:40):
was actually supposed to decentralize after five years now. When
Libra was revealed to the public in t governments around
the world went into crisis mode. The idea of a
big tech company with billions of users rolling out its
own digital currency terrified them. If you watched any of
our video is about crypto regulations, you'll know they were
(28:02):
largely inspired by Libra. So the regulators cracked down on
Libra harder than the asteroid that killed all the dinosaurs
sixty six million years ago. Libra tried ditching its plans
to decentralized, tried to bow to the global banks, and
even tried rebranding to d M to get through all
the red tape. It didn't work, and d M died
(28:25):
in January this year. However, that didn't stop some of
d m's developers from starting their own crypto projects. To
my knowledge, there are two. The first is Aptoss and
the second is Sue. Sue recently raised three hundred million
dollars from crypto vcs but has yet to launch its
main net. We will cover Suy once it's up and running.
(28:48):
As for Aptoss, it was founded in late As a
fun fact, Aptos is the name of an unincorporated town
on the coast of California. Aptos reportedly means for the
people in the indigenous language of the area, but some
sources suggest it means meeting of two waters. In any case,
(29:08):
being named after a coastal area of California is one
of the many similarities Aptoss shares with Salana. For context,
Salana was named after a Californian beach town that's about
thirty minutes north of San Diego. Not surprisingly, the teams
behind both Salana and Aptos are based in Silicon Valley. Anyways,
(29:29):
Aptos was founded by Mohammed Sheik and Avery Ching. Mohammad
holds a master's in business administration, and his previous work
experience is as impressive as it is terrifying. His resume
includes black Rock, the Boston Consulting Group, Ethereum, Builder, Consensus,
and of course Meta. Avery meanwhile, holds a PhD in
(29:50):
computer science and has spent most of his career working
as a principal software engineer at Facebook, one of the
highest positions in the company. I all so couldn't help
but notice that Avery briefly worked at the Los Alamos
Laboratory in Nevada, a facility famous for its military research.
Now what's odd is that Aptos reportedly has over three
(30:12):
hundred and fifty developers working on its blockchain, yet only
Mohammad and Avery are noted as being part of the
aptoss Labs team on the company's website. The aptoss Labs
linked in also has a low number, with just seventy
eight employees at the company. What's even more odd is
that there isn't any information about the Aptos Foundation, which
(30:34):
oversees the crypto project's development, nor its members. The terms
and conditions of the website revealed that the Aptos Foundation
is based in the Cayman Islands. Recall that aptos Labs
is based in the USA. Despite these peculiarities, Aptos managed
to raise three hundred and fifty million dollars from various
crypto vcs across two funding rounds. The first funding round
(30:58):
was for two hundred million dollars in March this year,
and the second was for one fifty million dollars in
July this year. The aptoss white paper was published in August. Now,
Aptos's second funding round was especially significant because it was
led by f t X Ventures. It looks like f
(31:19):
t X is one of the largest, if not the largest,
investor in Aptos. Heavy investment from f t X is
another thing that Salana and aptos have in common. F
t x is investments in Aptos seemed to have either
made Binance nervous or just more bullish. That's because Finance
announced it had invested an additional undisclosed amount in aptos
(31:41):
labs in September. Some have taken this as a sign
that aptos has serious potential. The VC battle makes sense
when you realize that aptos uses a proof of steak blockchain.
This means whichever entity owns the most apt has the
greatest influence over the block chain. In aptoss is case,
(32:02):
this investor influence is especially acute due to aptoss is
upcoming on chain governance now. It's also important to note
that one of the largest investors in Aptos's first funding
round was Three Arrows Capital, the infamous crypto hedge fund
that went bankrupt earlier this year. What's concerning is that
(32:23):
aptos has since removed all references to three A C
from its blog posts. You can learn about how Three
Arrows Capital collapse using the link in the description. Anyways,
on with the show now. Whereas d M was essentially
a centralized shit coin, aptoss aims to be what Libra
(32:44):
was supposed to be at the end of its original roadmap,
a decentralized cryptocurrency. That said, aptoss seems to have a
lot more in common with DM than it does with say,
Bitcoin or ethereum. Maybe it's just me, but the way
that Mohammad and Avery have spoken about aptos in the
few interviews they've given makes it sound like the project
(33:06):
is a covert continuation of d M case and point.
Aptoss is mission is to unite Web two and Web three,
and it is working uncomfortably closely with Google in order
to do this. There is more evidence under the hood.
Aptoss uses a delegated proof of state blockchain. Like many
(33:28):
modern cryptocurrencies, the team behind aptos claims its blockchain is
simultaneously scalable I fast, decentralized, and secure, something that's logically
impossible due to the blockchain trial lemma. To quickly recap
the blockchain trial lemma states that a cryptocurrency can only
be decentralized and scalable, scalable and secure, or secure and decentralized.
(33:52):
Every crypto project ultimately makes a trade off of some kind.
In Bitcoin's case, for instance, it trades scalability for robust
security and decentralization. In aptoss is case, it not so
subtly trades decentralization for scalability and security. Although the app
(34:13):
toss blockchain boasts tens of thousands of full nodes, it
only has one hundred and two validators. What's annoying is
that the number of full nodes on apptos does not
appear to be noted on any of its blockchain explorers.
But don't let the term full node fool you. Aptoss
is documentation suggests it's blockchain only stores the current state
(34:37):
of the ledger i e. Account balances and transactions. This
is similar to another cryptoproject called mina protocol, which stores
the current state of its blockchain in a small digital snapshot.
Like MINA protocol, aptoss has a series of nodes which
store its historical blockchain data on a quote single version
(34:58):
distributed database. Then, number of nodes storing aptos is full
transaction history here is unknown. The documentation suggests it's the
one two validata nodes, but they aren't obligated to store
it now. If you watched our video about cryptocurrency decentralization,
you'll know that storage of a cryptocurrency's long term transaction
(35:20):
history is an important part of decentralization. Without this information,
a cryptocurrency could be easily corrupted over time or manipulated
by malicious nodes. This is why I was seriously saddened
to hear that Slana had started using Google Big Table
to store its data in lieu of our weave, which
(35:40):
is a decentralized storage cryptocurrency. It wouldn't surprise me at
all if it turns out that Aptos is doing something similar,
especially since its blockchain is growing quickly too. The relative
centralization of the aptoss blockchain makes it possible for it
to process up to forty transactions per second, with a
theoretical maximum of one hundred and sixty thousand transactions per second.
(36:05):
Current and maximum TPS scores for major cryptos can be
seen here courtesy of f t x. Note how it
chills Salana. Now. What's impressive is that aptos is current
TPS also applies to more complex smart contract transactions. This
is one of the reasons Binance gave for its additional
(36:26):
investment into Aptos, which was again probably also motivated by
f t x is own additional investment during the second
funding round. Another reason why Finance invested so much in
aptoss is because of its novel coding language and new
virtual machine. Everything on aptoss is coded in Move, a
(36:46):
programming language based on Rust that was invented by d
MS developers. Aptos uses its own Move virtual machine for
smart contracts. So three things to note here. The first
is that Move isn't the only thing that DMS developers invented.
In an interview, Mohammad explained that d M basically had
(37:07):
access to unlimited resources for research and development. As a result,
Aptoss uses cutting edge tech that I am barely scratching
the surface of here. What's cool is that aptoss Labs
actually has a research papers page that looks eerily similar
to the research papers library page of Cardano builder I
(37:27):
O h K. Aptoss is cutting edge research and development.
Might be why the company behind it is keeping the
details of its developers under wraps. After all, the last
thing the project wants is to lose its top talent
to equally well capitalized competitors. And this relates to the
second thing to note. It's very rare that a cryptoproject
(37:49):
comes up with its own virtual machine for smart contracts.
Almost all of the vms are variants of ethereums Virtual machine.
Believe it or not, but it's aptoss is move M
that makes it a Salana killer, by Salana's own admission.
In a panel discussion earlier this year, Salana founder Anatolely
(38:10):
Yakovenko tacitly admitted that the Salana team is extremely nervous
about the introduction of a competing execution layer for smart contracts.
Anatoly is also hyper aware of how developer friendly the
Move programming language is. This is in stark contrast to
the developer experience on Salana, which Anatotlely has likened to
(38:33):
quote eating glass to make things worse, Salana is coded
in Rust and your recall move is based on Rust.
This makes it easy for developers from Salana's ecosystem to
migrate to aptoss is. The same applies for developers working
on near protocol and Polka Dot. However, the cryptoproject that's
(38:54):
most of risk of being killed by aptoss is actually Flow.
That's because Flow is coded in Cadence, which is based
on MOVE. If you watched our video about Flow, you'll
know that it actually worked with d MS developers to
develop Cadence. You'll also know that flow uses a multinode
architecture that separates the collection, ordering, processing, and verification of
(39:17):
transactions on its blockchain for efficiency. As it so happens,
app toss does something similar with its own transaction process,
which is outside the scope of this video. Now, I'll
just mention the third thing to note, and that's the
tokens on the app toss blockchain, which are called coins
for some reason, are apparently controlled by the entity that
(39:39):
issues them. What this means is that any token on
the ap toss blockchain can be frozen, burned, and or
minted at will by whoever created it. This seems to
be an intentional design choice, as Mohammed mentioned in an
October panel discussion, that the app toss blockchain can be
compliant with regulations just like DM Make of that what
(40:00):
you will. Now, when it comes to tokenomics, nobody actually
knew what the tokenomics of apt would look like until
shortly before it started trading. This was perhaps the biggest
red flag for the crypto community, who questioned how crypto
exchanges could possibly list a coin that had just published
(40:21):
it's tokenomics. So apt is used to pay for transaction
fees on the aptos blockchain, apt is also used for
staking and is used for on chain governance of the
app toss. Blockchain governance is currently limited to validators, but
will eventually be expanded to delegators as well. The apt
coin had an initial supply of one billion. Around thirteen
(40:45):
point five percent of this initial supply was allocated to
early investors, sixteen point five percent was allocated to the
aptos foundation was allocated to core contributors, which presumably means
ap toss labs. The remain was set aside for the
app toss community. The vesting schedules for these entities can
(41:07):
be seen here For those just listening in. The apt
allocated to core contributors and investors will only begin investing
after one year. This means the only APT in circulation
for the first year will come from that allocated to
the aptss community. According to the ap toss Explorer, around
one hundred and eighty million apt coins are currently in circulation.
(41:31):
This is significantly fewer than the one hundred and thirty
million apt noted by coin market Cap and coin geck.
Then again, it's not clear whether all the one eighty
million apt coins not being staked are in circulation. From
what I can tell. Coin market Cap and coin Gecko
got the details about apt s initial supply from the
(41:52):
tokenomics post by the aptos Foundation. It notes that one
five million APT were made immediately available to the community
and five million APT were made immediately available to the foundation.
Of the one and twenty five million APT that was
allocated to the community, twenty million was air dropped to
early test net users after apt started trading the rest
(42:15):
who knows. What's more is that apt has a seven
percent inflation rate with no maximum supply, and it looks
like APT supply has already increased by over two million.
This is because of the roughly eight hundred and twenty
million staked APT that I alluded to a few moments ago.
What's scary is that the aptoss Foundation notes that staking
(42:39):
rewards are quote not subject to restrictions on distribution. This
means the early investors, the team, and the foundation can
sell their staking rewards. Did I mention that the aptoss
Foundation and aptoss Labs custody the apt allocated to the
aptss community. That's more than of the initial supply, and
(43:02):
it looks like they're staking this APT two. That is
a lot of money when you do the maths. On
the bright side, all transaction fees are burned and apt
S inflation will decline by one point five annually until
it hits three point to five, which is estimated to
take fifty years. Meanwhile, the APT initially allocated to the team,
(43:24):
early investors, the foundation, and the community will finish festing
in late two. Now the timeline to be on the
lookout for is late three. This is when the big
vesting cliffs will begin. The worst of them will happen
in four, which is coincidentally around the time the next
crypto bull run should begin. You can find out how
(43:46):
bad the current bear market could get using the link
in the description. In terms of price action, there isn't
much I can say about APT just yet because it's
a brand new cryptocurrency. Even so, at first glance, ap
toss looks grossly overvalued, a market cap of over one
billion and a fully diluted market cap of over nine billion.
(44:07):
Upon closer examination, however, it does look like some fundamentals
are starting to form. According to the app toss explorer,
there are over one point seven million wallet addresses, and
chances are that number will be over two million by
the time you see this video. To put things into perspective,
Cardarno has around two point three million wallet addresses according
(44:28):
to the Aida stat Explorer. This means that ap toss
is on track to surpass Cardano by number of users
within two weeks of launch. Cardano's main net went live
over five years ago. That is some serious adoption. The
thing is that the number of wallet addresses on app
toss doesn't necessarily correspond to the number of users. That's
(44:50):
why I prefer to look at downloads of any web
or mobile wallets associated with a crypto. In this case,
app tosses, Petra and Martian wallets have of a one
million downloads combined on Chrome alone. This would be an
impressive statistic were it not for the fact that defy
lama suggests that's only around seventeen million dollars of total
(45:11):
value locked in aptoss is dozen defy protocols. What's frustrating
is that defy lama statistics are also inconsistent with the
stats on the website of the aptoss DAPs. For example,
liquid apt staking protocol Tortuga has nearly three billion dollars
in total value locked with over three hundred and thirty
million apt deposited. This suggests that some early Investors, team members,
(45:37):
and maybe even the aptoss Foundation are secretly liquid staking.
This detail isn't noted in apt s tokenomics. If this
is true, then it means you probably can't trust the
tv L on any defied protocol on ap toss which
supports Tortuga's liquid staked APT. That's because it would be
(45:58):
very easy for early Investors, team members or the aptos
Foundation to fake a high TVL using their liquid staked
APT spooky stuff. On that note, Tortuga seems to be
the only way that APT holders can currently delegate to validators.
This begs the question of which validators Tortuga is delegating to.
(46:19):
It also begs the question of who is running the
largest validators, given that they're staking almost identical amounts of APT.
What I'm wondering is what the minimum and maximum steak
for validators is. Ap toss is documentation is unclear on this,
along with the locking and unlocking time for the APT coin.
(46:42):
What is clear is that there is no slashing risk
for misbehavior, so at least all the vcs won't have
to worry about losing their precious apt It would also
be nice to know exactly how many DAPs there are
on ap toss and how many unique wallets are actually
using them. Dap Radar hasn't started tracking Aptoss dabs yet,
(47:02):
but the dab list in the Martian Wallet suggests there
are at least twenty up and running, not bad for
a brand new crypto project. Unfortunately, this doesn't change the
fact that we are in the middle of a crypto
bear market that's likely to last for at least another year.
The harsh reality is that almost all apt s price
(47:22):
action has so far been driven by speculation, not organic adoption. Luckily,
Aptoss has lots of milestones ahead of it. The closest
thing Aptoss has to a roadmap is a blog post
from March this year titled quote the Aptoss Vision. The
(47:44):
t l d R is that aptoss wants to scale
to support billions of users and every use case you
can think of, just like every other new crypto. The
difference is that Aptoss actually has the tech to do it.
That doesn't mean Aptoss will scare ail overnight. However, the
team and founders mentioned many times that aptos would be
(48:05):
incomplete out of the gates, I reckon most of the
issues I've identified so far can be attributed to the
fact that aptos is still very much in development, so
don't take them all too seriously. The first major upgrade
to aptos is expected to happen later this year or
in the first quarter of next year. This is consistent
(48:27):
with a note in aptoss is documentation which implies that
the validata requirements will be increased significantly at the start
of three and it suggests that aptoss is speed will
increase significantly now. Additional aptoss milestones can be found in
a m as and interviews with the aptos team and
its founders. I'll reiterate that these a m as and
(48:50):
interviews are few in number and surprisingly difficult to find.
These a m as were on limited non English language
YouTube channels because is no official ap toss channel. In
an a m A from April, the aptoss team revealed
that the project is looking to partner with other big
tech companies besides Google. At the same time, the aptoss
(49:12):
team revealed that it wants to implement privacy preserving technologies
to its blockchain in the future. I reckon it's one
or the other. In September, Avery explained that aptos will
eventually have a unique fee market for each DAP and
use case on ap toss. This is very cool and
very logical because it will allow aptos to remain resilient
(49:34):
to the kinds of didos attacks that have taken Salana offline,
while simultaneously keeping transaction fees low. In October, Avery explained
that aptoss will have a major upgrade every four to
six months. This is to ensure that the blockchain will
remain future proof. Avery also explained that aptoss will start
(49:55):
sharding its blockchain once it starts to become to bloat.
It's something that Ethereum is also planning now. I was
hoping to find a few more milestones in Aptos's governance forum,
but there was nothing about aptoss is improvement proposals. Funnily enough,
I somehow managed to find a link to Aptoss's governance
portal for validators. There was only one governance proposal to
(50:18):
reduce voting power. So this brings me to the concerns
I have about aptos, and by now you'll know that
I have quite a few. My biggest concern is the
ridiculous disconnect between the supposed quality of the project and
its transparency and organization. I mean aptoss has technically been
in development since seen it had access to unlimited resources
(50:43):
for research and development for years. It raised three hundred
and fifty million dollars without a white paper or tokenomics,
and there are literally three hundred and fifty people working
for aptoss Labs supposedly. Pardon my French, but how the
holy hell has aptos still not hammered out the token
(51:04):
omics of the apt coin. Why did our research team
have to go digging through every single link and blog
post to find information that should be on the front
page of the aptos website. Why is there no YouTube channel?
Who is running the validator notes? How come you can't
see the details of the tokens and n f t
(51:25):
s on the aptos blockchain. Where is the information about
which crypto wallets belonged to aptos Labs and the Aptos Foundation.
There's no way apt supply is distributed as equitably as
the explorer suggests. And don't even get me started about
the allegations of aptos shutting down its discord channel and
(51:47):
other socials when people started asking these kinds of questions,
or about how all the A M A s seemed
to be restricted to discord and not published anywhere else.
My second con learn about aptoss is almost as big,
and that's the crypto project's mission. I still don't quite
understand what aptoss is endgame is, and it's not just me.
(52:12):
Massari CEO Ryan Selkiss was asking what krypto niche aptos
is trying to claim or the angle it's trying to
take at the recent main Net conference. He didn't really
get an answer. As far as I can tell, the
Aptos vision of cryptocurrency is a maximalist one where everything
is built on the APTOS blockchain. I haven't seen or
(52:33):
heard any discussion about interoperability with other cryptocurrencies, only interoperability
with big tech companies and the existing financial system. This
attitude comes at a time when crypto vcs are betting
on a multi chain future with projects like Cosmos. That's
because they know there is no way for everything to
(52:55):
be built on a single blockchain unless it's extremely centralized,
and that point you're not dealing with a cryptocurrency anymore.
From where I'm standing, extreme centralization looks like the path
that aptoss wants to take. All the talk of decentralization
just seems to be an attempt to get retail investors
on board to be blunt. The aptoss team is not
(53:19):
even good at selling these talking points, and it might
be because they don't really believe them. This ties into
my third concern, and that's regulation. D M died a
brutal death, and if aptoss is in fact a de
facto continuation of d M, then it is doomed to
suffer the same fate. Regulators might be biased, but they're
(53:41):
not stupid. Speaking of which, I am shocked that US
exchanges like coin Base listed a p T. I am,
by no means an expert in securities laws, and this
is purely speculation, but I have been watching the SEC
for a long time. Apt seems to take every box
on the SECS target list. The only thing that could
(54:05):
protect app toss is the unprecedented amount of backing it
has from both Wall Street aligned crypto vcs and big tech.
Both parties are powerful lobbyists and they will make sure
they're golden geese don't get caught in any regulatory nets.
In some then, I have to say that I'm extremely
skeptical about app toss. At this point in time, there
(54:27):
is no question that aptos is on the bleeding edge
of Web three, but it doesn't seem to be seriously
interested in the core values of cryptocurrency. If anything, it
seeks to cement the values of Web two using blockchain technology.
Thank you so much for listening to the coin Bureau podcast.
If you'd like to learn more about cryptocurrency, you can
(54:50):
visit our YouTube channel at YouTube dot com forward slash
coin Bureau. You can also go to coin bureau dot
com for loads more information about all things crypto. You
can follow on Twitter at at coin bureau or one word,
and I'm also active on TikTok and Instagram too. M
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