Speaker 1: This is Bloomberg Crypto, a daily Bloomberg I Heard podcast,
Speaker 1: and I'm Stacy Marie Ishmael, Managing editor of Crypto for
Speaker 1: Bloomberg News. It's Monday, January nine. The collapse of ft
Speaker 1: X has had some obvious reverberations. It's creditors, most importantly
Speaker 1: aren't show if they'll ever get their money back. But
Speaker 1: the fall of Sam Bankman Freed's empire has also affected
Speaker 1: a blockchain network called Solana. One of the newer and
Speaker 1: buzzier players on the crypto scene, bank Win Freed was
Speaker 1: a champion of both the blockchain itself and of its
Speaker 1: associated token, Soul or Soul fd X and s Lawn
Speaker 1: Adventures even had a multimillion dollar fund to support crypto
Speaker 1: gaming and am to Research famously or infamously invested directly
Speaker 1: into that token. But what does the collapse of ft
Speaker 1: X mean for the future of this block chain and
Speaker 1: of that token. Bloomberg's Hannah Miller has been reporting on
Speaker 1: this and joins me. Now the narrative that they're really
Speaker 1: trying to push forward is that they've outgrown fd X,
Speaker 1: that they're more than fd X, and they want to
Speaker 1: move beyond this association In this episode, you'll hear excerpts
Speaker 1: from Hannah Miller's interviews with the founders of Salona, Anatolya
Speaker 1: Yoka Venko, and Roj Google. Hello, welcome back to the podcast.
Speaker 1: Thanks so much for having me today. We're not going
Speaker 1: to talk about venture capital, but we are going to
Speaker 1: talk about a little blockchain, or supposed not so little anymore,
Speaker 1: called Solana, and what that blockchain and its founders and
Speaker 1: its native token have to do with Mr Bakman, Freed
Speaker 1: and all things f X. Yeah. So Salana came about
Speaker 1: as this blockchain that was supposed to be faster and
Speaker 1: cheaper to use than Ethereum. And yeah, its speed is
Speaker 1: its big selling point. And it was created by Anatoli Yakovenko,
Speaker 1: and he, you know, kind of put it together. It's
Speaker 1: actually named after Salana Beach in California, where he liked
Speaker 1: to surf. The blockchain really only just launched in the
Speaker 1: past few years. It's pretty young, especially in comparison to
Speaker 1: big names like Bitcoin and Ethereum, but it's really just
Speaker 1: shot up in in in Providence. Really. One of the
Speaker 1: people who kind of helped it, you know, get to
Speaker 1: this point was Sam Bankman Freed you know, he was
Speaker 1: a major champion of Salana in its early days. Why though,
Speaker 1: like what what you know, what was his interest in
Speaker 1: the founders in in the token, Like was it financial?
Speaker 1: Was it a partnership? Yeah, so we do know that
Speaker 1: he did have this relationship with the founders. He and
Speaker 1: Anatolely you know, would appear together at conferences, do virtual
Speaker 1: fireside chats um and SPF was really you know, pushing
Speaker 1: this forward as um you know, a great alternative to
Speaker 1: you know, things like ethereum and especially bitcoin. SPF is
Speaker 1: not a big Bitcoin fan. Think the bitcoin people are
Speaker 1: fun of FBF. Yes, yeah, it definitely goes two ways.
Speaker 1: But with Salona, you know, SPF took some big chances
Speaker 1: on it. So for example, f t x US has
Speaker 1: an n f T marketplace, and when you think of
Speaker 1: non hot fungible tokens, you think of ethereum. Like most
Speaker 1: n f T s are based on ethereum. But Bankman
Speaker 1: Fried chose to launch f t x s U s
Speaker 1: f t x U s s n f T marketplace
Speaker 1: on Salana. So that was like a really big stamp
Speaker 1: of approval for the blockchain. And it also has a
Speaker 1: lot of associations with gaming, and as we know SPF
Speaker 1: is a huge gamer. You know that he was playing
Speaker 1: games during calls with VC invest Ventric Capital Investors, and
Speaker 1: you know it's I think that was part of the
Speaker 1: blockchain's appeal to him as well. He also built sarum Um,
Speaker 1: which is a decentralized crypto exchange on Salana, and I
Speaker 1: always thought that was kind of interesting because because f
Speaker 1: t X was a centralized crypto exchange and saram is decentralized,
Speaker 1: it doesn't really seem to go together. So there's this
Speaker 1: idea in in crypto and when folks are talking about
Speaker 1: block chains of something called the blockchain tri lemma, which
Speaker 1: if you think about it as being kind of three
Speaker 1: legs of a triangle. On one side, you have this
Speaker 1: idea of speed. Is this thing fast or is it slow?
Speaker 1: You have this idea of scala bill pity. Can this
Speaker 1: scale up to handle really large volumes of things at
Speaker 1: once or is it more shall we say, bespook? And
Speaker 1: then is it really decentralized? Right like, are there lots
Speaker 1: of different relatively independent players contributing to the safety, security,
Speaker 1: stability of this platform or does it rely to an
Speaker 1: extreme degree on a concentrated group of entities as far
Speaker 1: as so where Salana is in this, you know, three
Speaker 1: legs of this triangle. You've mentioned speed, but what are
Speaker 1: the concerns, like, what are the sacrifices it's making in
Speaker 1: order to be that fast? Yeah, well, I think with Salana,
Speaker 1: one of the criticisms that sort of followed the blockchains
Speaker 1: since it's its inception, is that it's too centralized, that
Speaker 1: there aren't enough parties you know, verifying and adding transactions
Speaker 1: to the blockchain, and that actually makes it susceptible to
Speaker 1: attacks and not as secure. Um and we've also seen,
Speaker 1: you know, this is a blockchain that suffered multiple outages
Speaker 1: you know, in the past year. So that's another point
Speaker 1: of concern that this is just not a stable enough blockchain. So, yeah,
Speaker 1: maybe it does hit on speed and scalability, but I
Speaker 1: do think that there's still this lingering concern among people
Speaker 1: within the crypto industry. And how do the founders because
Speaker 1: they have to deal with a few lingering concerns right now,
Speaker 1: including you know, the elephant in the room of their
Speaker 1: perceived association with Sam Bankman Freed. You interviewed them quite extensively,
Speaker 1: like how would you summarize where their heads were at
Speaker 1: in that interview. Yeah, so I think it did hurt
Speaker 1: them on a personal level, and it totally spoke about
Speaker 1: being in shock. You know that he couldn't really square
Speaker 1: what happened with FDx with you know, how he knew
Speaker 1: Sam Bankman freed to be like put the two together.
Speaker 1: In my head, still, I'm still trying to like square
Speaker 1: what I perceived them to be and like what actually happened.
Speaker 1: It just feels really really jarring here Salona's rod Google. Yeah. Same.
Speaker 1: I think you know, everybody in the industry that knew Sam,
Speaker 1: and especially the other people at ft X, there were
Speaker 1: a lot of really good people that um you know
Speaker 1: that that worked with f t X and and worked
Speaker 1: even within ft X UM and I think even they
Speaker 1: are are just totally shocked. I don't think anybody knew
Speaker 1: that the you know, the problems in that organization would
Speaker 1: would be. The narrative that they're really trying to push
Speaker 1: forward is that they've outgrown ft X, that they're more
Speaker 1: than f t X, and they want to move beyond
Speaker 1: this association and that there is great things, there are
Speaker 1: great things happening on the blockchain, that there are still
Speaker 1: you know, projects and teams committed to Salana, but it
Speaker 1: wasn't It was tough, tough to talk to them about it.
Speaker 1: I mean, they had their big conference in Lisbon around
Speaker 1: this time, around when you know, the stuff started coming
Speaker 1: out about f t X, and they sort of realized
Speaker 1: the magnitude of us on the way home, on the
Speaker 1: flight home from their Breakpoint conference and the conference they
Speaker 1: felt had been a huge success, but this just sort
Speaker 1: of dampened everything really great. And then in a flight
Speaker 1: back we started seeing the news of like ftxploring up
Speaker 1: and like finance buying them and not buying them, and
Speaker 1: this like fallout of that was really hard to square
Speaker 1: with like the energy that we felt during the conference.
Speaker 1: But like the last basically right after that, a lot
Speaker 1: of people in the industry, they're they're really still grappling
Speaker 1: with what happened here. As part of that grappling, is
Speaker 1: there anything that they said they would do differently, Like
Speaker 1: do they feel confident I'm going to use our favorite
Speaker 1: phrase in the underlying technology of the blockchain, or are
Speaker 1: there changes that they need to make too, for example,
Speaker 1: address the concerns about the lack of decentralization. I think
Speaker 1: they percent feel confident in the underlying technology, and I
Speaker 1: feel like that's they think that's what's going to carry
Speaker 1: them through. Um. You know that they believe that there
Speaker 1: are amazing decentralized projects being built on Salana and that
Speaker 1: this will mitigate, you know, the risk of centralized sentities
Speaker 1: like f t X, you know, potentially taking advantage of people.
Speaker 1: Up next more with Bloomberg reports Hannah Miller on the
Speaker 1: future of Salana, one of ft x's most champion blockchain networks.
Speaker 1: We'll be right back. So, still a couple of days
Speaker 1: before bank man freed officially, you know, files for officially
Speaker 1: filed for bankruptcy. But when he was engaged in a
Speaker 1: very public sess of Twitter conversations with the CEO of finance,
Speaker 1: it all feels like history. But it was the last
Speaker 1: couple of months. So, but Salana had been declining pretty
Speaker 1: significantly that week. You know, they were down like multiple
Speaker 1: percentage points in a given day, and then over the
Speaker 1: course of the seventies, including following the bankruptcy, you know,
Speaker 1: tens of percents at a time. Do they think that
Speaker 1: the Salona token is going to come back? You know,
Speaker 1: where people just worried about the prospects for a post
Speaker 1: bankman freed future, Like, where does their optimism for the
Speaker 1: pricing come from? Yeah, So when I asked them about
Speaker 1: you know this these massive declines in you know, the
Speaker 1: price of soul, uh, they said they don't really care
Speaker 1: about token price or they don't comment on it. They
Speaker 1: don't comment on it publicly. And you know that there's
Speaker 1: more to blockchain than just token price, that it's really
Speaker 1: all about the technology underlying it. But they did point
Speaker 1: out that ethereum has gone down a lot too, so
Speaker 1: I think they want to make that clear. So it's uh,
Speaker 1: you know, but I think it's hard to separate the two.
Speaker 1: I mean, the token is for a lot of people,
Speaker 1: how they know about the blockchain. It's you know, what
Speaker 1: they used to trade on it, that's what they associate
Speaker 1: with it. So I do think it's hard to separate
Speaker 1: the two. And and whatever way you look at it,
Speaker 1: there's just been this huge decline since it's all time
Speaker 1: high in one I mean, you go from hundreds of
Speaker 1: dollars to you know, around ten dollars, and that that's
Speaker 1: a that's a hard thing to to argue against. You know,
Speaker 1: it's hard. It's hard to argue against that being a
Speaker 1: bad thing for your the overall image of your blockchain.
Speaker 1: Now you mentioned n f t s, and you know
Speaker 1: the fact that bank when Trade and f t X
Speaker 1: and sort of backed n f t s on Salana.
Speaker 1: But as you've also been reporting, the overall n f
Speaker 1: T market is not doing super well. Is the Solana
Speaker 1: n f T markets an outlier in anyway? Is it's
Speaker 1: you know, in line with the rest of you know,
Speaker 1: the Ethereum based tokens. Is it is it seeing better
Speaker 1: or worse performance. N f t is based on Salona
Speaker 1: have taken hits as well. And also thing I want
Speaker 1: to point out is is actually too prominent projects that
Speaker 1: have their n f t s based on Salana are
Speaker 1: actually migrating over to Ethereum and Polygon. So and that
Speaker 1: was just announced recently. So it is interesting to kind
Speaker 1: of see that maybe some projects have had their confidence
Speaker 1: shaken in the Salona blockchain. So as much as you know,
Speaker 1: these founders say the underlying technology is strong, you know
Speaker 1: the fact that you have projects leaving that's not a
Speaker 1: good thing. That's not a good thing. Yeah, And with
Speaker 1: with n f t s in general, I mean, you know,
Speaker 1: there is this big question are they just a fat?
Speaker 1: Is this a dead fat now? Because sales are down
Speaker 1: so enormously and there's such a mistrust um within the
Speaker 1: crypto community in general now and actually this this just happened,
Speaker 1: but Magic Eden, which is the top n FD marketplace
Speaker 1: on Salona, has just had major purity issues, you know,
Speaker 1: where they've actually had to work out bugs that people
Speaker 1: were buying fake n f T s. You know, it's
Speaker 1: it's not a good look right now, and it's especially
Speaker 1: not a good look going to three, which I think
Speaker 1: has to be a reset here for all of the
Speaker 1: digital asset industry. I mean, I just saw someone tweet
Speaker 1: it's time to build, and I was like, really, are
Speaker 1: we still doing this? Yeah? I think I think that
Speaker 1: would be that would probably be a useful thing for
Speaker 1: for various folks in the industry to consider. But on
Speaker 1: on the point of reflection, there was an absolutely to
Speaker 1: me revealing line in the story that you wrote about
Speaker 1: your interview with the Salona founders, and it was the
Speaker 1: idea that one of the reasons that they think they'll
Speaker 1: be fine is because people in crypto have very short memories. Now,
Speaker 1: on the one hand, yes, we have certainly seen folks
Speaker 1: and projects, shall we say, rehabilitate themselves under many different
Speaker 1: circumstances and guys is on the other hand, it does
Speaker 1: look like folks in crypto are more than willing to
Speaker 1: hold a grudge for a very very long time. Where
Speaker 1: does there kind of belief in the eternal sunshine, as
Speaker 1: it were, um of the crypto mind come from? Yeah, well,
Speaker 1: Raj go call. You know, he made this point that
Speaker 1: crypto has overcome a lot of adversity in the past.
Speaker 1: You know, if you look at Bitcoin, there's Mount Cox
Speaker 1: and that took forever to resolve. But you know Bitcoin
Speaker 1: is still around, Bitcoin still, you know, still here. But
Speaker 1: I think in this scenario it's it's quite different. You know,
Speaker 1: Crypto has become more mainstream. You know, your grandmother knows
Speaker 1: what bitcoin is now. And even though crypto is more
Speaker 1: popular and more well known now, there's also this huge
Speaker 1: trade off that every misstep happens on a bigger scale.
Speaker 1: You know, people are gonna seize on the headlines. They're
Speaker 1: going to kind of lap up what's happening here. You know,
Speaker 1: there there are people who are actively excited about this downfall.
Speaker 1: So yes, even though there have been these setbacks, in
Speaker 1: the past, I don't think there's been anything on the
Speaker 1: scale of FTX. And the fact of the matter is,
Speaker 1: like Sam bankman Fried was so well known and loved
Speaker 1: by a lot of people, and a lot of people
Speaker 1: looked up to him, and the fact that you know,
Speaker 1: his his empire has collapsed is just causing a ripple
Speaker 1: effect across everything in the industry. And Salana is no
Speaker 1: exception here. And I know they've looked, you know, like
Speaker 1: there's been a lot of talk about using Salana and
Speaker 1: gaming and you know, actually f t X an Alometer
Speaker 1: research supported a bunch of projects, including games that are
Speaker 1: based on Salana. But I think it's there's still a
Speaker 1: pretty long road ahead in terms of, you know, proving
Speaker 1: that this is the blockchain to use for a specific
Speaker 1: set of use cases. Yeah, I mean, they want to
Speaker 1: conquer all of DeFi de centralized finance, and you know,
Speaker 1: when I asked where the future of Salana lives, they
Speaker 1: they have a very you know, big vision and they
Speaker 1: want to hit all of all of DEFY and who knows,
Speaker 1: maybe you know, with the fear around centralized densities caused
Speaker 1: by the collapse of fd X, people will migrate towards
Speaker 1: the centralized finance to a greater degree. We don't know,
Speaker 1: but I think that's sort of what they're banking on
Speaker 1: right now. Well, I think certainly one story we'll be
Speaker 1: keeping an eye on is whether a blockchain with a
Speaker 1: reputation for being too centralized can successfully convince people it
Speaker 1: should be a backbone of decentralized finance. So interesting times.
Speaker 1: Thank you as always, Hannah. You can find more of
Speaker 1: Hannah Miller's reporting on the Bloomberg terminal Adam Bloomberg dot com,
Speaker 1: and you'll sometimes find her in our twice weekly newsletter,
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