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In this conversation, we chat with David Shuttleworth, the managing director of token engineering at Binance. Prior to this, David was a Senior DeFi Economist at ConsenSys, where he focused on mechanism design, tokenomics, and protocol design. David’s experience is extensive and includes leading the development of the Medical Advanced Analytics team at GlaxoSmithKline and was a data scientist at various stage startups in FinTech and predictive analytics.
David also conducted research in behavioral economics and health outcomes at the University of Pennsylvania and has published his work in peer-reviewed scientific journals such as JAMA, the Annals of Internal Medicine, and the Lancet.
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2’21”: A high level overview of what happened to FTX and the bizarre coverage of Sam Bankman-Fried
6’56”: How BitMEX fits into the equation
11’34”: Addressing the relevance of the conspiracy theories surrounding FTX
16’19”: Tokenomics of FTT (FTX’s token) overview - explaining trading on the margin, how this differs from buying at spot rates, and liquidation machanics
20’24”: Crypto holding attacks and why this is profitable for the attacker
22’59”: FTX and Alameda Research’s Balance sheet - collateralization, strategy, and leverage
27’16”: The collapse of Terra LUNA and Three Arrows Capital, how this impacted FTX, and who is likely to fall next
35’02”: Remediation strategies: The Binance Billion Dollar Recovery Fund and Proof of Reserves
39’12”: Channels to use to connect with David
Sneak Peek:
David Shuttleworth: …You had SBF, probably for his effective altruism. He bailed them out and kept BlockFi afloat, but he did it for the people. But I think you're right. He was intertwined doing things that he shouldn't been doing and that if these things fell and more liquidations would've occurred, FTX probably would've been insolvent, and it probably would've imploded earlier on. It probably would've been over the summer, and they might not have lasted.
I don't think we've seen the full extent of it. That's just my sense. At this point, I don't trust anything that any entity or any individual says on crypto Twitter. I don't trust any of it. I think we've seen in the past, even Alameda, like, "Hey, we don't trade customer assets, or we'll buy all." When CZ was saying he was going to sell FTT, he had Caroline from Alameda come out and say, "Hey, we'll buy all it at $22, no big deal." But do they even have that? No. So I really don't trust any entity right now.
I think that, again, it goes back to that a lot of the data is on-chain. I think that detective work and different sleuthing will help figure it out. In terms of some of the lenders we've seen or some of the different entities right now, we've seen BlockFi go under and file for Chapter 11. Even Kraken, I don't even know the extent to which they were involved, but they had to lay off 30% of their workforce, which is brutal. Then Silvergate's another one. I think their exposure, as they were saying they were maybe less than $20 million for their exposure to block buy. I hope they're right, but I don't know.
I think that you also have to look at other... Not to call out people by name, but just off the top of my mind, you have…
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