WEBVTT - Solana Is Trying to Break Its Ties With Bankrupt FTX

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<v Speaker 1>This is Bloomberg Crypto, a daily Bloomberg I Heard podcast,

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<v Speaker 1>and I'm Stacy Marie Ishmael, Managing editor of Crypto for

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<v Speaker 1>Bloomberg News. It's Monday, January nine. The collapse of ft

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<v Speaker 1>X has had some obvious reverberations. It's creditors, most importantly

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<v Speaker 1>aren't show if they'll ever get their money back. But

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<v Speaker 1>the fall of Sam Bankman Freed's empire has also affected

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<v Speaker 1>a blockchain network called Solana. One of the newer and

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<v Speaker 1>buzzier players on the crypto scene, bank Win Freed was

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<v Speaker 1>a champion of both the blockchain itself and of its

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<v Speaker 1>associated token, Soul or Soul fd X and s Lawn

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<v Speaker 1>Adventures even had a multimillion dollar fund to support crypto

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<v Speaker 1>gaming and am to Research famously or infamously invested directly

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<v Speaker 1>into that token. But what does the collapse of ft

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<v Speaker 1>X mean for the future of this block chain and

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<v Speaker 1>of that token. Bloomberg's Hannah Miller has been reporting on

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<v Speaker 1>this and joins me. Now the narrative that they're really

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<v Speaker 1>trying to push forward is that they've outgrown fd X,

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<v Speaker 1>that they're more than fd X, and they want to

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<v Speaker 1>move beyond this association In this episode, you'll hear excerpts

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<v Speaker 1>from Hannah Miller's interviews with the founders of Salona, Anatolya

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<v Speaker 1>Yoka Venko, and Roj Google. Hello, welcome back to the podcast.

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<v Speaker 1>Thanks so much for having me today. We're not going

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<v Speaker 1>to talk about venture capital, but we are going to

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<v Speaker 1>talk about a little blockchain, or supposed not so little anymore,

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<v Speaker 1>called Solana, and what that blockchain and its founders and

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<v Speaker 1>its native token have to do with Mr Bakman, Freed

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<v Speaker 1>and all things f X. Yeah. So Salana came about

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<v Speaker 1>as this blockchain that was supposed to be faster and

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<v Speaker 1>cheaper to use than Ethereum. And yeah, its speed is

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<v Speaker 1>its big selling point. And it was created by Anatoli Yakovenko,

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<v Speaker 1>and he, you know, kind of put it together. It's

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<v Speaker 1>actually named after Salana Beach in California, where he liked

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<v Speaker 1>to surf. The blockchain really only just launched in the

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<v Speaker 1>past few years. It's pretty young, especially in comparison to

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<v Speaker 1>big names like Bitcoin and Ethereum, but it's really just

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<v Speaker 1>shot up in in in Providence. Really. One of the

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<v Speaker 1>people who kind of helped it, you know, get to

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<v Speaker 1>this point was Sam Bankman Freed you know, he was

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<v Speaker 1>a major champion of Salana in its early days. Why though,

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<v Speaker 1>like what what you know, what was his interest in

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<v Speaker 1>the founders in in the token, Like was it financial?

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<v Speaker 1>Was it a partnership? Yeah, so we do know that

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<v Speaker 1>he did have this relationship with the founders. He and

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<v Speaker 1>Anatolely you know, would appear together at conferences, do virtual

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<v Speaker 1>fireside chats um and SPF was really you know, pushing

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<v Speaker 1>this forward as um you know, a great alternative to

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<v Speaker 1>you know, things like ethereum and especially bitcoin. SPF is

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<v Speaker 1>not a big Bitcoin fan. Think the bitcoin people are

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<v Speaker 1>fun of FBF. Yes, yeah, it definitely goes two ways.

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<v Speaker 1>But with Salona, you know, SPF took some big chances

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<v Speaker 1>on it. So for example, f t x US has

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<v Speaker 1>an n f T marketplace, and when you think of

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<v Speaker 1>non hot fungible tokens, you think of ethereum. Like most

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<v Speaker 1>n f T s are based on ethereum. But Bankman

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<v Speaker 1>Fried chose to launch f t x s U s

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<v Speaker 1>f t x U s s n f T marketplace

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<v Speaker 1>on Salana. So that was like a really big stamp

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<v Speaker 1>of approval for the blockchain. And it also has a

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<v Speaker 1>lot of associations with gaming, and as we know SPF

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<v Speaker 1>is a huge gamer. You know that he was playing

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<v Speaker 1>games during calls with VC invest Ventric Capital Investors, and

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<v Speaker 1>you know it's I think that was part of the

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<v Speaker 1>blockchain's appeal to him as well. He also built sarum Um,

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<v Speaker 1>which is a decentralized crypto exchange on Salana, and I

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<v Speaker 1>always thought that was kind of interesting because because f

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<v Speaker 1>t X was a centralized crypto exchange and saram is decentralized,

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<v Speaker 1>it doesn't really seem to go together. So there's this

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<v Speaker 1>idea in in crypto and when folks are talking about

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<v Speaker 1>block chains of something called the blockchain tri lemma, which

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<v Speaker 1>if you think about it as being kind of three

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<v Speaker 1>legs of a triangle. On one side, you have this

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<v Speaker 1>idea of speed. Is this thing fast or is it slow?

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<v Speaker 1>You have this idea of scala bill pity. Can this

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<v Speaker 1>scale up to handle really large volumes of things at

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<v Speaker 1>once or is it more shall we say, bespook? And

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<v Speaker 1>then is it really decentralized? Right like, are there lots

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<v Speaker 1>of different relatively independent players contributing to the safety, security,

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<v Speaker 1>stability of this platform or does it rely to an

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<v Speaker 1>extreme degree on a concentrated group of entities as far

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<v Speaker 1>as so where Salana is in this, you know, three

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<v Speaker 1>legs of this triangle. You've mentioned speed, but what are

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<v Speaker 1>the concerns, like, what are the sacrifices it's making in

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<v Speaker 1>order to be that fast? Yeah, well, I think with Salana,

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<v Speaker 1>one of the criticisms that sort of followed the blockchains

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<v Speaker 1>since it's its inception, is that it's too centralized, that

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<v Speaker 1>there aren't enough parties you know, verifying and adding transactions

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<v Speaker 1>to the blockchain, and that actually makes it susceptible to

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<v Speaker 1>attacks and not as secure. Um and we've also seen,

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<v Speaker 1>you know, this is a blockchain that suffered multiple outages

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<v Speaker 1>you know, in the past year. So that's another point

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<v Speaker 1>of concern that this is just not a stable enough blockchain. So, yeah,

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<v Speaker 1>maybe it does hit on speed and scalability, but I

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<v Speaker 1>do think that there's still this lingering concern among people

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<v Speaker 1>within the crypto industry. And how do the founders because

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<v Speaker 1>they have to deal with a few lingering concerns right now,

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<v Speaker 1>including you know, the elephant in the room of their

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<v Speaker 1>perceived association with Sam Bankman Freed. You interviewed them quite extensively,

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<v Speaker 1>like how would you summarize where their heads were at

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<v Speaker 1>in that interview. Yeah, so I think it did hurt

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<v Speaker 1>them on a personal level, and it totally spoke about

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<v Speaker 1>being in shock. You know that he couldn't really square

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<v Speaker 1>what happened with FDx with you know, how he knew

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<v Speaker 1>Sam Bankman freed to be like put the two together.

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<v Speaker 1>In my head, still, I'm still trying to like square

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<v Speaker 1>what I perceived them to be and like what actually happened.

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<v Speaker 1>It just feels really really jarring here Salona's rod Google. Yeah. Same.

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<v Speaker 1>I think you know, everybody in the industry that knew Sam,

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<v Speaker 1>and especially the other people at ft X, there were

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<v Speaker 1>a lot of really good people that um you know

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<v Speaker 1>that that worked with f t X and and worked

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<v Speaker 1>even within ft X UM and I think even they

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<v Speaker 1>are are just totally shocked. I don't think anybody knew

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<v Speaker 1>that the you know, the problems in that organization would

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<v Speaker 1>would be. The narrative that they're really trying to push

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<v Speaker 1>forward is that they've outgrown ft X, that they're more

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<v Speaker 1>than f t X, and they want to move beyond

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<v Speaker 1>this association and that there is great things, there are

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<v Speaker 1>great things happening on the blockchain, that there are still

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<v Speaker 1>you know, projects and teams committed to Salana, but it

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<v Speaker 1>wasn't It was tough, tough to talk to them about it.

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<v Speaker 1>I mean, they had their big conference in Lisbon around

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<v Speaker 1>this time, around when you know, the stuff started coming

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<v Speaker 1>out about f t X, and they sort of realized

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<v Speaker 1>the magnitude of us on the way home, on the

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<v Speaker 1>flight home from their Breakpoint conference and the conference they

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<v Speaker 1>felt had been a huge success, but this just sort

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<v Speaker 1>of dampened everything really great. And then in a flight

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<v Speaker 1>back we started seeing the news of like ftxploring up

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<v Speaker 1>and like finance buying them and not buying them, and

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<v Speaker 1>this like fallout of that was really hard to square

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<v Speaker 1>with like the energy that we felt during the conference.

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<v Speaker 1>But like the last basically right after that, a lot

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<v Speaker 1>of people in the industry, they're they're really still grappling

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<v Speaker 1>with what happened here. As part of that grappling, is

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<v Speaker 1>there anything that they said they would do differently, Like

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<v Speaker 1>do they feel confident I'm going to use our favorite

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<v Speaker 1>phrase in the underlying technology of the blockchain, or are

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<v Speaker 1>there changes that they need to make too, for example,

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<v Speaker 1>address the concerns about the lack of decentralization. I think

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<v Speaker 1>they percent feel confident in the underlying technology, and I

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<v Speaker 1>feel like that's they think that's what's going to carry

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<v Speaker 1>them through. Um. You know that they believe that there

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<v Speaker 1>are amazing decentralized projects being built on Salana and that

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<v Speaker 1>this will mitigate, you know, the risk of centralized sentities

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<v Speaker 1>like f t X, you know, potentially taking advantage of people.

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<v Speaker 1>Up next more with Bloomberg reports Hannah Miller on the

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<v Speaker 1>future of Salana, one of ft x's most champion blockchain networks.

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<v Speaker 1>We'll be right back. So, still a couple of days

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<v Speaker 1>before bank man freed officially, you know, files for officially

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<v Speaker 1>filed for bankruptcy. But when he was engaged in a

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<v Speaker 1>very public sess of Twitter conversations with the CEO of finance,

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<v Speaker 1>it all feels like history. But it was the last

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<v Speaker 1>couple of months. So, but Salana had been declining pretty

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<v Speaker 1>significantly that week. You know, they were down like multiple

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<v Speaker 1>percentage points in a given day, and then over the

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<v Speaker 1>course of the seventies, including following the bankruptcy, you know,

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<v Speaker 1>tens of percents at a time. Do they think that

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<v Speaker 1>the Salona token is going to come back? You know,

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<v Speaker 1>where people just worried about the prospects for a post

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<v Speaker 1>bankman freed future, Like, where does their optimism for the

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<v Speaker 1>pricing come from? Yeah, So when I asked them about

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<v Speaker 1>you know this these massive declines in you know, the

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<v Speaker 1>price of soul, uh, they said they don't really care

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<v Speaker 1>about token price or they don't comment on it. They

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<v Speaker 1>don't comment on it publicly. And you know that there's

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<v Speaker 1>more to blockchain than just token price, that it's really

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<v Speaker 1>all about the technology underlying it. But they did point

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<v Speaker 1>out that ethereum has gone down a lot too, so

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<v Speaker 1>I think they want to make that clear. So it's uh,

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<v Speaker 1>you know, but I think it's hard to separate the two.

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<v Speaker 1>I mean, the token is for a lot of people,

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<v Speaker 1>how they know about the blockchain. It's you know, what

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<v Speaker 1>they used to trade on it, that's what they associate

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<v Speaker 1>with it. So I do think it's hard to separate

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<v Speaker 1>the two. And and whatever way you look at it,

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<v Speaker 1>there's just been this huge decline since it's all time

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<v Speaker 1>high in one I mean, you go from hundreds of

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<v Speaker 1>dollars to you know, around ten dollars, and that that's

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<v Speaker 1>a that's a hard thing to to argue against. You know,

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<v Speaker 1>it's hard. It's hard to argue against that being a

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<v Speaker 1>bad thing for your the overall image of your blockchain.

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<v Speaker 1>Now you mentioned n f t s, and you know

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<v Speaker 1>the fact that bank when Trade and f t X

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<v Speaker 1>and sort of backed n f t s on Salana.

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<v Speaker 1>But as you've also been reporting, the overall n f

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<v Speaker 1>T market is not doing super well. Is the Solana

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<v Speaker 1>n f T markets an outlier in anyway? Is it's

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<v Speaker 1>you know, in line with the rest of you know,

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<v Speaker 1>the Ethereum based tokens. Is it is it seeing better

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<v Speaker 1>or worse performance. N f t is based on Salona

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<v Speaker 1>have taken hits as well. And also thing I want

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<v Speaker 1>to point out is is actually too prominent projects that

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<v Speaker 1>have their n f t s based on Salana are

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<v Speaker 1>actually migrating over to Ethereum and Polygon. So and that

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<v Speaker 1>was just announced recently. So it is interesting to kind

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<v Speaker 1>of see that maybe some projects have had their confidence

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<v Speaker 1>shaken in the Salona blockchain. So as much as you know,

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<v Speaker 1>these founders say the underlying technology is strong, you know

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<v Speaker 1>the fact that you have projects leaving that's not a

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<v Speaker 1>good thing. That's not a good thing. Yeah, And with

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<v Speaker 1>with n f t s in general, I mean, you know,

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<v Speaker 1>there is this big question are they just a fat?

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<v Speaker 1>Is this a dead fat now? Because sales are down

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<v Speaker 1>so enormously and there's such a mistrust um within the

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<v Speaker 1>crypto community in general now and actually this this just happened,

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<v Speaker 1>but Magic Eden, which is the top n FD marketplace

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<v Speaker 1>on Salona, has just had major purity issues, you know,

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<v Speaker 1>where they've actually had to work out bugs that people

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<v Speaker 1>were buying fake n f T s. You know, it's

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<v Speaker 1>it's not a good look right now, and it's especially

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<v Speaker 1>not a good look going to three, which I think

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<v Speaker 1>has to be a reset here for all of the

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<v Speaker 1>digital asset industry. I mean, I just saw someone tweet

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<v Speaker 1>it's time to build, and I was like, really, are

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<v Speaker 1>we still doing this? Yeah? I think I think that

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<v Speaker 1>would be that would probably be a useful thing for

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<v Speaker 1>for various folks in the industry to consider. But on

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<v Speaker 1>on the point of reflection, there was an absolutely to

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<v Speaker 1>me revealing line in the story that you wrote about

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<v Speaker 1>your interview with the Salona founders, and it was the

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<v Speaker 1>idea that one of the reasons that they think they'll

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<v Speaker 1>be fine is because people in crypto have very short memories. Now,

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<v Speaker 1>on the one hand, yes, we have certainly seen folks

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<v Speaker 1>and projects, shall we say, rehabilitate themselves under many different

0:14:13.520 --> 0:14:17.840
<v Speaker 1>circumstances and guys is on the other hand, it does

0:14:18.000 --> 0:14:20.560
<v Speaker 1>look like folks in crypto are more than willing to

0:14:20.640 --> 0:14:25.560
<v Speaker 1>hold a grudge for a very very long time. Where

0:14:25.600 --> 0:14:30.240
<v Speaker 1>does there kind of belief in the eternal sunshine, as

0:14:30.280 --> 0:14:35.520
<v Speaker 1>it were, um of the crypto mind come from? Yeah, well,

0:14:36.080 --> 0:14:39.240
<v Speaker 1>Raj go call. You know, he made this point that

0:14:40.240 --> 0:14:43.200
<v Speaker 1>crypto has overcome a lot of adversity in the past.

0:14:43.240 --> 0:14:45.360
<v Speaker 1>You know, if you look at Bitcoin, there's Mount Cox

0:14:45.560 --> 0:14:48.920
<v Speaker 1>and that took forever to resolve. But you know Bitcoin

0:14:48.960 --> 0:14:52.120
<v Speaker 1>is still around, Bitcoin still, you know, still here. But

0:14:52.680 --> 0:14:56.440
<v Speaker 1>I think in this scenario it's it's quite different. You know,

0:14:56.600 --> 0:15:01.400
<v Speaker 1>Crypto has become more mainstream. You know, your grandmother knows

0:15:01.520 --> 0:15:05.320
<v Speaker 1>what bitcoin is now. And even though crypto is more

0:15:05.360 --> 0:15:08.440
<v Speaker 1>popular and more well known now, there's also this huge

0:15:08.520 --> 0:15:11.680
<v Speaker 1>trade off that every misstep happens on a bigger scale.

0:15:12.880 --> 0:15:17.080
<v Speaker 1>You know, people are gonna seize on the headlines. They're

0:15:17.120 --> 0:15:20.520
<v Speaker 1>going to kind of lap up what's happening here. You know,

0:15:21.040 --> 0:15:24.200
<v Speaker 1>there there are people who are actively excited about this downfall.

0:15:24.640 --> 0:15:27.920
<v Speaker 1>So yes, even though there have been these setbacks, in

0:15:27.960 --> 0:15:30.680
<v Speaker 1>the past, I don't think there's been anything on the

0:15:30.720 --> 0:15:34.920
<v Speaker 1>scale of FTX. And the fact of the matter is,

0:15:35.000 --> 0:15:39.000
<v Speaker 1>like Sam bankman Fried was so well known and loved

0:15:39.080 --> 0:15:41.840
<v Speaker 1>by a lot of people, and a lot of people

0:15:41.840 --> 0:15:45.800
<v Speaker 1>looked up to him, and the fact that you know,

0:15:45.880 --> 0:15:49.800
<v Speaker 1>his his empire has collapsed is just causing a ripple

0:15:49.840 --> 0:15:53.320
<v Speaker 1>effect across everything in the industry. And Salana is no

0:15:53.400 --> 0:15:56.160
<v Speaker 1>exception here. And I know they've looked, you know, like

0:15:56.200 --> 0:15:58.440
<v Speaker 1>there's been a lot of talk about using Salana and

0:15:58.520 --> 0:16:01.520
<v Speaker 1>gaming and you know, actually f t X an Alometer

0:16:01.640 --> 0:16:06.080
<v Speaker 1>research supported a bunch of projects, including games that are

0:16:06.080 --> 0:16:11.640
<v Speaker 1>based on Salana. But I think it's there's still a

0:16:11.680 --> 0:16:15.119
<v Speaker 1>pretty long road ahead in terms of, you know, proving

0:16:15.320 --> 0:16:21.560
<v Speaker 1>that this is the blockchain to use for a specific

0:16:21.600 --> 0:16:24.280
<v Speaker 1>set of use cases. Yeah, I mean, they want to

0:16:24.320 --> 0:16:27.120
<v Speaker 1>conquer all of DeFi de centralized finance, and you know,

0:16:27.120 --> 0:16:30.560
<v Speaker 1>when I asked where the future of Salana lives, they

0:16:30.680 --> 0:16:34.760
<v Speaker 1>they have a very you know, big vision and they

0:16:34.840 --> 0:16:37.880
<v Speaker 1>want to hit all of all of DEFY and who knows,

0:16:37.960 --> 0:16:40.720
<v Speaker 1>maybe you know, with the fear around centralized densities caused

0:16:40.720 --> 0:16:44.320
<v Speaker 1>by the collapse of fd X, people will migrate towards

0:16:44.360 --> 0:16:47.160
<v Speaker 1>the centralized finance to a greater degree. We don't know,

0:16:47.920 --> 0:16:50.200
<v Speaker 1>but I think that's sort of what they're banking on

0:16:50.320 --> 0:16:53.480
<v Speaker 1>right now. Well, I think certainly one story we'll be

0:16:53.560 --> 0:16:55.680
<v Speaker 1>keeping an eye on is whether a blockchain with a

0:16:55.720 --> 0:17:00.280
<v Speaker 1>reputation for being too centralized can successfully convince people it

0:17:00.320 --> 0:17:05.720
<v Speaker 1>should be a backbone of decentralized finance. So interesting times.

0:17:05.800 --> 0:17:08.159
<v Speaker 1>Thank you as always, Hannah. You can find more of

0:17:08.160 --> 0:17:11.800
<v Speaker 1>Hannah Miller's reporting on the Bloomberg terminal Adam Bloomberg dot com,

0:17:11.800 --> 0:17:14.520
<v Speaker 1>and you'll sometimes find her in our twice weekly newsletter,

0:17:14.600 --> 0:17:24.400
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