WEBVTT - The Great Wormhole Robbery 0:00:13.680 --> 0:00:17.640 Hello, and welcome to What Goes Up, a weekly markets podcast. 0:00:18.000 --> 0:00:19.919 My name is Mike Reagan. I'm a senior editor at 0:00:19.920 --> 0:00:23.720 Bloomberg Numbled On, a higher across asset reporter with Bloomberg, 0:00:24.400 --> 0:00:27.360 and this week on the show. Well, for years, many 0:00:27.400 --> 0:00:31.040 traditional financial companies were a bit skeptical and cautious when 0:00:31.040 --> 0:00:34.559 it came to cryptocurrencies. But that's all changed, and in 0:00:34.600 --> 0:00:36.800 the last few years some of the most important trading 0:00:36.840 --> 0:00:39.720 firms have started to make big investments in the space, 0:00:40.200 --> 0:00:42.599 and not just a trade bitcoin and ether and all 0:00:42.600 --> 0:00:45.080 the other digital assets, but to actually play a role 0:00:45.440 --> 0:00:49.320 in building out the infrastructure that connects these global decentralized 0:00:49.400 --> 0:00:52.479 markets together. We're gonna talk to the president of a 0:00:52.520 --> 0:00:54.520 trading firm that has taken a big plunge in a 0:00:54.560 --> 0:00:57.040 crypto about what they're up to and where they see 0:00:57.080 --> 0:01:00.480 the industry going next. But filled down before we bring 0:01:00.560 --> 0:01:02.080 him in, I've I've got a bit of a bone 0:01:02.080 --> 0:01:04.040 to pick with you in that I was going through 0:01:04.080 --> 0:01:07.240 the brackets on the Bloomberg terminal. You know, if listeners 0:01:07.240 --> 0:01:09.280 aren't familiar, you can enter it an n C A 0:01:09.400 --> 0:01:12.440 A Brackett right on the terminal. You did not enter 0:01:13.120 --> 0:01:16.000 a bracket. I'm very just. I didn't I know nothing 0:01:16.080 --> 0:01:20.160 about march madness. That's what thinks. That's exactly You're exactly 0:01:20.160 --> 0:01:22.240 the type of person who wins these things. Though. Then 0:01:22.280 --> 0:01:24.200 you know the rest of us, Yeah, we think we're 0:01:24.240 --> 0:01:26.680 a bunch of geniuses. We pick all the upsets for you. 0:01:26.680 --> 0:01:28.640 You you know, you could look at it like, oh, 0:01:28.640 --> 0:01:30.959 they gave me the answers. I'll take one over sixteen 0:01:31.000 --> 0:01:34.720 and two over fifteen. Although my track record was with 0:01:34.800 --> 0:01:37.240 this type of stuff is so bad, as you know, 0:01:37.360 --> 0:01:40.559 and let the listeners know, I asked you who should 0:01:40.560 --> 0:01:42.959 I be betting on, and you never gave me any answers, 0:01:43.000 --> 0:01:45.400 So I have nobody to cheer for. I did tell 0:01:45.440 --> 0:01:47.240 you about on the Delaware Blue Hens, and that was 0:01:47.240 --> 0:01:50.280 probably not It was not a good call, not a 0:01:50.280 --> 0:01:52.840 good call at all. I should have said St. Peter's 0:01:52.840 --> 0:01:56.320 New Jersey City the truth, right, So yeah, from our 0:01:56.400 --> 0:01:59.080 native New Jersey. Yeah. Anyway, I want to bring in 0:01:59.080 --> 0:02:01.720 our guest. His name is Dave Olson. He's the president 0:02:01.800 --> 0:02:05.320 and chief investment officer of Jump Trading Group. Dave, Welcome 0:02:05.400 --> 0:02:07.200 to the show, and thanks so much for joining us. 0:02:07.320 --> 0:02:10.040 Thanks for Donna, Hi Mike, Thanks for having me. Thanks 0:02:10.120 --> 0:02:11.839 Dave and Dave. I can only imagine if you put 0:02:11.880 --> 0:02:14.400 some of that brain power at Jump Trading to work 0:02:14.440 --> 0:02:16.640 on the brackets. I'm just throwing that out there. You know, 0:02:16.720 --> 0:02:19.600 Jump Trading in bracketology. You guys, you guys could be 0:02:19.720 --> 0:02:21.760 uh could be on this something there. But but why 0:02:21.760 --> 0:02:24.320 do you talk to us um a little bit? Uh, 0:02:24.720 --> 0:02:27.000 let the listeners know about your background. I know you 0:02:27.160 --> 0:02:30.680 came from a long career at JP Morgan, uh to jump. 0:02:31.400 --> 0:02:36.560 Jump was a uh computerized trading firm in derivatives and 0:02:36.560 --> 0:02:39.119 and a lot of asset classes. You've sort of made 0:02:39.120 --> 0:02:41.639 that migration into crypto in recent years. Talk us through 0:02:41.680 --> 0:02:43.520 sort of the history of your career and how Jump 0:02:43.560 --> 0:02:46.960 got involved in crypto. Yeah, sure, so quite right. I 0:02:47.000 --> 0:02:49.240 was at JP Morgan for about twenty five years. I 0:02:49.280 --> 0:02:51.840 had a chance over that span to work in a 0:02:51.880 --> 0:02:54.800 lot of different areas of the bank. The bank changed 0:02:54.840 --> 0:02:57.680 a lot. I think it was about employees when I 0:02:57.760 --> 0:03:01.000 joined in the corporate fans inning program, and I think 0:03:01.000 --> 0:03:03.440 when I left it was something like two hundred and 0:03:03.480 --> 0:03:07.800 seventy thousands. So uh, nothing like the merger and getting 0:03:07.840 --> 0:03:12.080 into the retail business to amp those numbers up UM. 0:03:12.080 --> 0:03:16.360 It was a terrific place to be right in the 0:03:16.400 --> 0:03:18.679 middle of a lot of the inner workings of finance 0:03:18.919 --> 0:03:22.960 UH and the global developments, you know. The derivatives market 0:03:23.040 --> 0:03:25.280 grew a lot while I was there. I was involved 0:03:25.280 --> 0:03:28.720 in those markets quite a bit. I did some fintech 0:03:28.800 --> 0:03:33.160 venture capital work around one point, oh we didn't call 0:03:33.200 --> 0:03:36.360 it that back then, but the dot com days UH. 0:03:36.440 --> 0:03:39.400 And then the last several years of my career I 0:03:39.440 --> 0:03:42.960 spent running the clearing businesses and got to know a 0:03:42.960 --> 0:03:45.640 lot of quantitative trading firms UH, and got to know 0:03:45.680 --> 0:03:50.040 more about Jump. And it was a natural progression to 0:03:50.040 --> 0:03:52.520 to be able to work for a company like Jump 0:03:52.600 --> 0:03:56.320 that I had seen handle a lot of alto markets, 0:03:56.400 --> 0:03:58.840 a lot of tough decisions, and really got to know him, 0:03:58.800 --> 0:04:01.480 at least from the outside before I had an interest 0:04:01.520 --> 0:04:04.480 in in coming over. It was actually shortly after I 0:04:04.560 --> 0:04:08.240 started at at Jump that we we started to scale 0:04:08.240 --> 0:04:13.600 into crypto. I joined Jump in starting in around we 0:04:13.720 --> 0:04:18.719 had been incubating an experiment with a group of students 0:04:18.720 --> 0:04:23.080 at University of Illinois. They had come to work in 0:04:23.080 --> 0:04:26.279 a laboratory that we had set up in conjunction with 0:04:26.320 --> 0:04:30.839 the computer science and computer engineering departments there, and crypto 0:04:30.920 --> 0:04:33.200 was really a frontier back then. UH there were no 0:04:33.800 --> 0:04:36.599 organized exchanges to speak of. There are a lot of 0:04:36.640 --> 0:04:41.240 homegrown solutions to liquidity in the crypto markets. We were 0:04:41.279 --> 0:04:44.760 interested in it, and it fit a really nice spot 0:04:45.000 --> 0:04:48.160 to work on with this group of students and interns 0:04:48.160 --> 0:04:51.200 where we wouldn't expose a lot of intellectual property of 0:04:51.240 --> 0:04:54.039 the company. There wasn't much to trade in crypto. Bitcoin 0:04:54.160 --> 0:04:58.120 was still under a thousand dollars, Ether had not traded 0:04:58.440 --> 0:05:03.880 even one coin yet pretty early days, and as an exercise, 0:05:04.520 --> 0:05:09.279 UH several of several of the Jump Labs UH students 0:05:09.279 --> 0:05:12.600 and employees set about the work of building a really 0:05:12.680 --> 0:05:16.720 high performance infrastructure almost as a proving ground to trade 0:05:16.760 --> 0:05:19.120 crypto for the first time. It's never something you would 0:05:19.120 --> 0:05:22.359 have invested in as a business plan kind of matter. 0:05:23.040 --> 0:05:26.080 There wasn't enough volume, the risks were too high, their 0:05:26.160 --> 0:05:29.719 whole litany of problems in solving the post trade and 0:05:29.760 --> 0:05:32.640 movement of FIAT. But as an exercise it was great, 0:05:32.800 --> 0:05:35.760 and it was just very fortunate timing that at the 0:05:35.839 --> 0:05:40.000 end of it we had really a world class infrastructure 0:05:40.040 --> 0:05:44.719 ready to go as soon as bitcoin started to lift off, 0:05:44.800 --> 0:05:47.880 in terms of both price action and volumes. So that 0:05:47.920 --> 0:05:51.160 was really the genesis of how we got involved. It's 0:05:51.200 --> 0:05:54.279 so interesting to hear this backstory because I actually wanted 0:05:54.320 --> 0:05:58.359 you to talk about what building that crypto infrastructure actually 0:05:58.520 --> 0:06:01.280 looks like, what it entails, and then correct me if 0:06:01.279 --> 0:06:05.160 I'm wrong. But the Crypto division, the Jump Crypto division, 0:06:05.240 --> 0:06:08.120 you you announced that officially last year, right, and so 0:06:08.440 --> 0:06:10.919 how what do your goals look like in terms of 0:06:10.920 --> 0:06:12.919 how large of a player you want to be in 0:06:12.960 --> 0:06:16.680 the crypto space? Yeah? Um, yeah, so a bunch of 0:06:16.720 --> 0:06:23.039 that question. The early days of connectivity were wild and wooly. Uh. 0:06:23.360 --> 0:06:25.880 I think one of the coolest thing about being a 0:06:25.920 --> 0:06:31.400 participant in the crypto markets is we're interacting with really bright, 0:06:31.680 --> 0:06:35.839 really talented people, many of whom have had no exposure 0:06:35.839 --> 0:06:42.080 to finance whatsoever. Uh. They might be uh cryptographers, they 0:06:42.160 --> 0:06:46.800 might be a couple of guys in Slovenia that that 0:06:47.000 --> 0:06:50.600 ran a computer parts repair store that we're mining bitcoin 0:06:50.839 --> 0:06:53.240 after hours on the rigs that people had brought into 0:06:53.240 --> 0:06:56.920 fixed and all of them had come at similar problems 0:06:57.320 --> 0:07:01.840 with a totally fresh perspective. Um, And you know that 0:07:01.960 --> 0:07:05.040 leads to a lot of idiosyncrasies in how a matching 0:07:05.040 --> 0:07:08.960 engine works, or where the where the where the data 0:07:09.000 --> 0:07:11.560 center is hosted, or how the cloud is used. So 0:07:12.160 --> 0:07:16.120 we really had our first opportunity to do um you know, 0:07:16.240 --> 0:07:21.800 sophisticated quantitative trading in the cloud because of cryptouh. So 0:07:21.840 --> 0:07:24.200 that was, you know, and now that is starting to 0:07:24.920 --> 0:07:27.760 lead into a lot of other areas of finance, and um, 0:07:27.840 --> 0:07:29.280 you know, we'll see where it goes from here. That 0:07:29.360 --> 0:07:33.480 was a big topic at the Futures Industry Association annual 0:07:33.520 --> 0:07:37.200 meetings which took place last week. Um So crypto is 0:07:37.240 --> 0:07:39.400 really on the on the front edge of that because 0:07:39.440 --> 0:07:42.120 there's not not a lot of baggage with how things 0:07:42.120 --> 0:07:45.560 have always worked or what the cookie cutter approaches to 0:07:45.640 --> 0:07:48.720 building something in finance. That's a very very fun that's 0:07:48.720 --> 0:07:50.960 a very fun part of it. So you're you're right. 0:07:51.320 --> 0:07:55.200 Crypto did start, as you know, combination of a skunkworks 0:07:55.560 --> 0:07:59.880 h stroke experiment. Also, I think we were careful in 0:08:00.040 --> 0:08:03.000 the early years to not tip our hand to the 0:08:03.040 --> 0:08:05.480 market that we were investing as much as we were 0:08:05.520 --> 0:08:09.200 in crypto, it was still relatively green field. There was 0:08:09.240 --> 0:08:12.160 still a lot of first mover advantage out there, so 0:08:12.560 --> 0:08:16.400 We were very tight lipped externally for sure. Even internally, 0:08:16.680 --> 0:08:19.280 we didn't promote or publicized too much, and we had 0:08:19.280 --> 0:08:21.400 a pretty small team working on things for the first 0:08:21.400 --> 0:08:24.520 couple of years. But as it started to scale, so 0:08:25.760 --> 0:08:28.520 seen when it hit ten thousand in bitcoin for the 0:08:28.560 --> 0:08:31.800 first time, and through the crypto winter that ensued in 0:08:33.200 --> 0:08:36.080 and then kind of the grind up from there. We've 0:08:36.120 --> 0:08:41.600 been constantly investing, We've been adding talent. We've become a 0:08:41.640 --> 0:08:45.040 pretty big part of the marketplace, not only trading that's 0:08:45.040 --> 0:08:48.839 where our heritage is, but we've become a pretty big 0:08:48.920 --> 0:08:53.360 venture capital investor in the infrastructure that we see as 0:08:53.440 --> 0:08:58.360 necessary to have crypto and DeFi flourish, and really, starting 0:08:58.360 --> 0:09:00.520 in the last couple of years, a lot of our 0:09:00.559 --> 0:09:03.720 focus has moved to building, so we've hired a lot 0:09:03.720 --> 0:09:07.520 of blockchain engineering talent. We acquired a firm called Service One, 0:09:08.080 --> 0:09:10.719 we believe to be the best blockchain engineers in the 0:09:10.800 --> 0:09:13.839 world we were able to acquire, and we've been adding 0:09:13.840 --> 0:09:16.400 to that team. So all told, we're well over a 0:09:16.440 --> 0:09:19.960 hundred people in Jump Crypto. It is its own business unit. 0:09:20.400 --> 0:09:22.800 It's part of Jump Trading Group, but run really is 0:09:22.840 --> 0:09:27.000 a separate enterprise and continues to scale pretty substantially. I 0:09:27.040 --> 0:09:30.360 find it fascinating that, uh, you know, the origins date 0:09:30.559 --> 0:09:32.679 back to the University of Illinois. You know, it used 0:09:32.720 --> 0:09:34.480 to be back in the day you try to hire 0:09:34.559 --> 0:09:38.680 the smartest coming out of undergrads are coming out of 0:09:38.679 --> 0:09:40.480 grad school. Now you go right to the school. It's 0:09:41.080 --> 0:09:42.720 all that I think. I'm gonna go back to college, 0:09:42.720 --> 0:09:45.800 maybe get get another degree, I don't know, get a 0:09:45.800 --> 0:09:48.360 fun internship. Good to get get that internship, get on 0:09:48.360 --> 0:09:50.360 the ground floor. But Dave, I want to talk about 0:09:50.400 --> 0:09:54.760 some of the the infrastructure projects. UM. Obviously, one big 0:09:54.760 --> 0:09:57.760 one that you guys are heavily involved in, UH is 0:09:57.800 --> 0:10:00.840 what's known as Wormhole. And U me if I'm butchering 0:10:00.840 --> 0:10:03.000 the explanation of this, but the way I understand it, 0:10:03.000 --> 0:10:07.280 it's basically a bridge that lets you take assets trading 0:10:07.480 --> 0:10:11.240 on the Salona blockchain and carry them over the bridge, 0:10:11.240 --> 0:10:15.880 which is Wormhole, onto the Ethereum blockchain. UM. So you know, 0:10:15.960 --> 0:10:20.680 so that there's sort of connectivity between the blue two blockchains. UM. Obviously, 0:10:20.720 --> 0:10:23.040 something uh what was it a month or two ago, 0:10:23.080 --> 0:10:27.520 went went horribly wrong. Someone was able to figure out 0:10:27.600 --> 0:10:34.320 UH software exploit on the Bridge and basically take what 0:10:34.440 --> 0:10:38.360 was it three million worth of ether uh and and 0:10:38.400 --> 0:10:41.400 sort of disappear. Walk us through exactly what happened there 0:10:41.440 --> 0:10:44.040 and sort of how Jump was involved not only with 0:10:44.080 --> 0:10:47.319 the development of Wormhole, but but this whole escapade and 0:10:47.520 --> 0:10:49.360 how you guys came sort of the rescue of the 0:10:49.400 --> 0:10:53.719 project at the end. Yeah, um, the you're right. I 0:10:53.760 --> 0:10:57.440 think your description of Wormhole being across Chain Bridge is 0:10:57.480 --> 0:10:59.760 dead on. I think the you know, the way I 0:10:59.760 --> 0:11:02.960 think of it in UH. An analogy that I think 0:11:02.960 --> 0:11:06.599 of when describing Wormhole is, let's say I've got a 0:11:06.600 --> 0:11:09.319 PayPal account and I go out to dinner with some friends, 0:11:09.760 --> 0:11:12.080 and if they're all using PayPal, were on kind of 0:11:12.120 --> 0:11:15.760 the same quote layer one payment system, and it's very 0:11:15.800 --> 0:11:19.040 easy for us to settle the bill or page other 0:11:19.080 --> 0:11:21.679 for the cab fare or whatever's going on. But if 0:11:21.679 --> 0:11:24.600 one of us uses the cash app or Venmo or 0:11:24.760 --> 0:11:28.080 or some other payment mechanism and I don't, there's no 0:11:28.160 --> 0:11:31.240 way that I can communicate at all. They're just completely 0:11:31.880 --> 0:11:35.760 separate ecosystems. They're closed off from one another. You can't 0:11:36.200 --> 0:11:40.360 pay twenty bucks from from PayPal into UH into the 0:11:40.400 --> 0:11:43.120 cash app. UH. You have to either have them download 0:11:43.160 --> 0:11:45.560 the app, which is a big pain, or you know, 0:11:46.000 --> 0:11:48.720 heaven forbid. By the way, that's usually that's usually me 0:11:48.760 --> 0:11:51.040 when I'm out to dinner with a bigger up, I'm like, oh, sorry, guys, 0:11:51.080 --> 0:11:53.000 I got the app. None of you guys, use I'll 0:11:53.000 --> 0:11:55.280 get the next one. All right, It's gonna cutch up 0:11:55.280 --> 0:11:58.000 with them to sign the check on the dashboard of 0:11:58.040 --> 0:12:02.040 the car. I'll be a parking lot, uh doing that. Um, 0:12:02.080 --> 0:12:05.000 And you know, for a long time, that's how that's 0:12:05.000 --> 0:12:08.520 how the blockchain world worked. If you had ether on 0:12:08.559 --> 0:12:11.920 the Ethereum network and and you were using that layer 0:12:11.920 --> 0:12:15.720 one blockchain, you had this very vibrant community. There were 0:12:15.720 --> 0:12:18.760 smart contracts written their n f T platforms. You could 0:12:18.760 --> 0:12:21.559 do a lot with your ether, But if you wanted 0:12:21.600 --> 0:12:26.520 to spend that ether, or get yourself involved in a project, 0:12:26.679 --> 0:12:28.640 or buy an n f T on a different chain, 0:12:29.440 --> 0:12:33.840 you you either had to convert downstream into FIAT and 0:12:33.880 --> 0:12:37.599 then reload a different wallet and have different providers. It 0:12:37.679 --> 0:12:42.440 was very clunky. So wormhole Um isn't really linked to 0:12:42.520 --> 0:12:45.760 any one specific chain. So the only thing I would 0:12:45.800 --> 0:12:48.839 take issue with with your description is, uh, they're now 0:12:49.080 --> 0:12:53.440 eight layer ones it's totally interoperable. We expect that number 0:12:53.440 --> 0:12:55.760 to grow well into double digits by the end of 0:12:55.760 --> 0:12:57.920 the year. There's a new layer one being added every 0:12:57.960 --> 0:13:01.559 couple of weeks or so. Uh. And that if if 0:13:01.600 --> 0:13:04.199 you've got Ether and you wanted to move that Ether 0:13:04.360 --> 0:13:09.960 to the Oasis network or Terra or Salana or Finance 0:13:10.000 --> 0:13:12.880 smart Chain or a bunch of different chains out there, Uh, 0:13:13.040 --> 0:13:16.559 You've got the ability to do that, uh pretty easily. 0:13:17.040 --> 0:13:21.040 And important to note it's not just token movement. Uh. 0:13:21.160 --> 0:13:23.520 So this could be n f T s, this could 0:13:23.559 --> 0:13:28.080 be messages, it could be data. Really, anything that can 0:13:28.240 --> 0:13:31.200 exist on any of those blockchains can be ported over 0:13:31.679 --> 0:13:36.080 through wormhole to another blockchain. UM. Importantly you don't. It's 0:13:36.080 --> 0:13:38.480 not a hub and spoke model. So let's say that 0:13:38.520 --> 0:13:41.080 you moved Ether over to Salana and then you wanted 0:13:41.080 --> 0:13:44.800 to move that wrapped ethereum over to Tara. You don't 0:13:44.840 --> 0:13:46.360 have to go back all the way through all the 0:13:46.360 --> 0:13:48.559 hops back to the home chain and then start back up. 0:13:48.600 --> 0:13:50.720 You can just move straight from one to the other. 0:13:50.800 --> 0:13:54.319 So a lot of functionality there. Uh. We first got involved, 0:13:54.360 --> 0:13:58.840 actually I've already mentioned Service one. UM. They were they 0:13:58.840 --> 0:14:01.200 were the group writing the first lines of code to 0:14:01.280 --> 0:14:04.360 develop Wormhole, and it's one of the elements that attracted 0:14:04.440 --> 0:14:08.440 us to that team. Um and the community started to 0:14:08.520 --> 0:14:12.000 rally around the idea of across chain bridge. We're very 0:14:12.080 --> 0:14:15.960 enthusiastic about it, so we became UH sponsors and backers 0:14:16.160 --> 0:14:20.240 and and road code and tried to evangelize its use 0:14:20.320 --> 0:14:23.080 to the best we could. It is a decentralized project, 0:14:23.200 --> 0:14:25.720 so you know, it's it's out there and is a 0:14:25.720 --> 0:14:30.080 community effort. But we've had we've had a pretty high 0:14:30.080 --> 0:14:33.560 share of some of the early work that went into 0:14:33.560 --> 0:14:37.120 the thinking. UH. One of the reasons why we've got 0:14:37.160 --> 0:14:41.240 such conviction in a cross chain world is there's a 0:14:41.280 --> 0:14:45.880 lot of creativity happening with layer ones right now. Some 0:14:46.000 --> 0:14:51.640 are really well designed for one attribute, let's say, extremely 0:14:51.720 --> 0:14:56.240 high throughput, very high performance. You know that's Salana right 0:14:56.240 --> 0:14:58.720 now is leading the layer one pack in terms of 0:14:58.720 --> 0:15:02.760 transactions per second to end low gas fees. That's very 0:15:02.760 --> 0:15:05.920 well suited for some areas that start to bleed into 0:15:06.040 --> 0:15:09.760 what looks more like traditional finance. And then you've got 0:15:09.880 --> 0:15:13.480 the Ethereum blockchain, which has got this incredible community of 0:15:13.640 --> 0:15:18.720 passionate developers that are writing smart contracts and UH creating 0:15:18.800 --> 0:15:22.360 n f T marketplaces and things like that. And our 0:15:22.880 --> 0:15:26.560 firmly held belief is that the future is a multi 0:15:26.680 --> 0:15:32.080 layer one future, and that the comparative advantage of the 0:15:32.120 --> 0:15:35.320 different attributes of layer ones is something that should be 0:15:35.360 --> 0:15:37.920 celebrated and that we would expect to continue to scale. 0:15:38.600 --> 0:15:41.000 So you know, right now, if you're an artist and 0:15:41.080 --> 0:15:44.360 you wanted to sell n f T s, UH Ethereum 0:15:44.440 --> 0:15:46.480 is where there is the most liquidity. It's where the 0:15:46.480 --> 0:15:49.040 biggest community for n f T s exists. But it's 0:15:49.040 --> 0:15:52.000 also one of the most expensive places to mint a 0:15:52.040 --> 0:15:54.960 new series of n f T s. So now you 0:15:55.000 --> 0:15:58.280 don't have to force fit yourself into doing everything on 0:15:58.280 --> 0:16:01.240 one layer one. If you wanted to mint on a 0:16:01.320 --> 0:16:06.560 much more efficient home layer one blockchain, you could pay 0:16:06.680 --> 0:16:09.640 much lower gas fees, importantly to a lot of artists 0:16:09.640 --> 0:16:12.320 and certainly to me. You can use a much lower 0:16:12.440 --> 0:16:16.320 energy footprint, and then you've minted a thousand n f 0:16:16.360 --> 0:16:18.920 T s. If you wanted to move a dozen over 0:16:18.920 --> 0:16:22.400 the of those, your most rare copies over into open sea, 0:16:22.760 --> 0:16:24.400 you can use wormhole to do that, and you kind 0:16:24.400 --> 0:16:26.560 of get the best of both worlds. So that's some 0:16:26.600 --> 0:16:29.400 background on on what wormhole is and why we're so 0:16:29.480 --> 0:16:33.840 excited about it and uh and quite right. Uh. In February, 0:16:34.080 --> 0:16:38.280 we had uh, uh just so happened that about two 0:16:38.280 --> 0:16:42.200 dozen of us at Jump Crypto were down in Miami. 0:16:42.560 --> 0:16:46.480 We were in some rented office space. We were spending 0:16:46.760 --> 0:16:49.480 time together going through our plans for the year, doing 0:16:49.520 --> 0:16:52.920 some deep dive on research, debating white papers, you know, 0:16:52.960 --> 0:16:55.720 figure out where we wanted to build next. Uh. And 0:16:55.880 --> 0:16:58.760 in the middle of the afternoon, one of our one 0:16:58.760 --> 0:17:01.880 of our team members who who watches a lot of 0:17:01.920 --> 0:17:04.000 things that are happening on the blockchain like a hawk, 0:17:04.640 --> 0:17:08.840 noticed that there started to become a discrepancy between the 0:17:08.880 --> 0:17:12.680 amount of wrapped eth so uh, the amount of ethereum 0:17:12.760 --> 0:17:16.240 that should have had a one for one deposit locked 0:17:16.240 --> 0:17:20.439 in a smart contract on the ethereum blockchain started to 0:17:21.080 --> 0:17:25.600 those numbers didn't didn't match anymore. So he pressed the 0:17:25.600 --> 0:17:29.760 proverbial big red button. We all happened to be uh 0:17:29.800 --> 0:17:34.800 in a tiny, tiny little room together, uh, and we 0:17:34.800 --> 0:17:37.560 we immediately identified that there was an issue. You know, 0:17:37.720 --> 0:17:40.320 The way I've described to people is it's it's basically 0:17:40.400 --> 0:17:45.240 a high tech check forgery where the attacker or attackers 0:17:45.640 --> 0:17:49.000 were able to spoof the destination chain. In this case, 0:17:49.040 --> 0:17:53.159 that was Salana into believing that ether had been locked 0:17:53.240 --> 0:17:55.720 up on the Ethereum blockchain, so they were able to 0:17:55.800 --> 0:17:58.120 kind of print out of thin air some new rappee. 0:17:59.000 --> 0:18:01.800 Once you've got wrapped ether, you can do a couple 0:18:01.800 --> 0:18:03.800 of things. You can go back kind of to the 0:18:03.840 --> 0:18:06.600 cashier stand and say, okay, I've got this rapteef, I'd 0:18:06.600 --> 0:18:10.200 like to turn it in for the original please. Uh. 0:18:10.240 --> 0:18:14.760 And because of the way the system worked, that uh 0:18:14.960 --> 0:18:18.400 other ether that had been locked previously was made available 0:18:18.440 --> 0:18:21.879 to that person tendering the rap teeth. And you can 0:18:21.880 --> 0:18:25.119 buy stuff with wrap teeth on different chains. So a 0:18:25.119 --> 0:18:27.560 little bit of a little bit happened if the second one, 0:18:27.560 --> 0:18:29.680 a lot happened to the first one, and all told, 0:18:29.680 --> 0:18:34.760 about a hundred two ether was compromised. Our first step 0:18:34.960 --> 0:18:38.560 was to try to bring the system down. UM. One 0:18:38.560 --> 0:18:42.080 of the one of the trade offs of decentralized world is, 0:18:42.680 --> 0:18:44.520 you know, you can't kick the plug out of the 0:18:44.520 --> 0:18:47.240 wall like you if it was all your own. Uh. 0:18:47.600 --> 0:18:49.560 You have to you have to put the word out 0:18:49.600 --> 0:18:53.000 into the community. UM. The way wormhole works, they're nineteen 0:18:53.119 --> 0:18:57.639 guardians that attest to the transactions, and they're all independent. 0:18:57.720 --> 0:18:59.399 So we had to get the word out in the 0:18:59.440 --> 0:19:02.840 Wormhole community that there was there was an attack and 0:19:02.880 --> 0:19:05.639 we we needed to bring the system down. UM. That 0:19:05.680 --> 0:19:08.520 probably took twenty minutes. I would guess, Uh, there was 0:19:08.560 --> 0:19:12.000 a tense twenty minutes because obviously the vulnerability still existed 0:19:12.080 --> 0:19:15.119 and and you know, there was more value locked beyond 0:19:15.160 --> 0:19:19.159 what had been compromised. UM. And then the next step was, Okay, 0:19:19.320 --> 0:19:21.960 what happened and is it over? Like? Have we have 0:19:22.040 --> 0:19:25.080 we effectively taken everything down? Do we know the totality 0:19:25.119 --> 0:19:27.960 of the problem? And then what what caused it? What 0:19:28.000 --> 0:19:29.879 was the was the root issue that was able to 0:19:29.880 --> 0:19:31.880 be exploited? And can we fix it in a way 0:19:31.920 --> 0:19:37.040 that's totally robust. In parallel, we had to make the determination, okay, 0:19:37.240 --> 0:19:40.359 what do we do about the stolen stuff? UM? You know? 0:19:40.480 --> 0:19:42.679 Do we you know? We we don't. We don't have 0:19:42.720 --> 0:19:47.400 any Jump Trading group. Jump Crypto doesn't have any contractual responsibilities. 0:19:48.040 --> 0:19:51.280 We're not liable for anything. Um. But we made an 0:19:51.280 --> 0:19:57.359 elective decision, uh to swiftly make all the participants whole, uh, 0:19:57.400 --> 0:20:00.560 and to go out and acquire a D thousand eight 0:20:00.600 --> 0:20:05.960 ourselves and then inject that into the wormhole smart contract 0:20:06.600 --> 0:20:12.080 to replenish what the attacker had had stolen. And let 0:20:12.080 --> 0:20:14.159 me just put in a sight if for listeners not 0:20:14.320 --> 0:20:17.840 familiar with the price of eight, you're talking about three 0:20:17.840 --> 0:20:20.880 thousand dollars roughly a token at that time, right something, 0:20:20.960 --> 0:20:26.560 so talking about what it was a round million dollars 0:20:27.000 --> 0:20:37.280 that we have to do that. Yeah, I feel like 0:20:37.320 --> 0:20:41.080 when someone pulls off a caper like this in crypto, 0:20:41.200 --> 0:20:43.639 eventually they get caught. It might not be right away, 0:20:43.680 --> 0:20:46.400 but you know, was that in your think, in everyone's 0:20:46.440 --> 0:20:49.160 mind at all? Like, you know what, we can make 0:20:49.160 --> 0:20:51.399 everyone hole in this project, but we're gonna find whoever 0:20:51.440 --> 0:20:53.920 did this eventually and and recoup at least some of that. 0:20:54.280 --> 0:20:56.159 You know, is that part of the thinking that that 0:20:56.280 --> 0:20:58.200 motivates you to to sort of come to the rescue 0:20:58.200 --> 0:21:01.919 for the project like this, Uh, you know it. You 0:21:01.960 --> 0:21:04.119 don't know what is going to happen at the end 0:21:04.119 --> 0:21:06.280 of all the paths that you chase down. All we 0:21:06.359 --> 0:21:09.040 know is we're going to chase down every path. We're 0:21:09.040 --> 0:21:14.359 working in very close consultation with government resources, with private resources. 0:21:14.840 --> 0:21:19.680 There is a lot of firepower that is expert at 0:21:19.840 --> 0:21:25.480 tracking down criminals like this, and we are in this 0:21:25.560 --> 0:21:28.280 fight permanently, UM, So this is not something that we 0:21:28.320 --> 0:21:31.160 will become distracted by next month or next year or 0:21:31.920 --> 0:21:36.720 or whenever this is Ah, this is a permanent condition. 0:21:37.320 --> 0:21:39.960 But I would say that didn't really factor into the 0:21:40.040 --> 0:21:42.800 question as to what our action should be in the 0:21:42.880 --> 0:21:48.479 moment um. That was really motivated by a belief that 0:21:49.520 --> 0:21:53.359 not doing so would have been an enormous setback to 0:21:53.520 --> 0:21:58.760 a cross chain world in crypto and defight in general. Uh. 0:21:59.080 --> 0:22:01.560 Quite quite logically, it may have been the end of 0:22:01.600 --> 0:22:06.480 Wormhole entirely. Uh, And that that kind of a setback 0:22:06.680 --> 0:22:11.600 at this moment when such exciting foundational technology is being 0:22:11.680 --> 0:22:16.320 laid down, UM, would have been a terrible outcome, not 0:22:16.400 --> 0:22:19.240 just for the marketplace. And you know, we're community minded 0:22:19.280 --> 0:22:21.879 for sure, but this wasn't totally an act of altruism. 0:22:21.920 --> 0:22:24.240 You know, this was an investment and what we believe 0:22:24.320 --> 0:22:28.240 is going to be an incredibly robust future for uh, 0:22:28.280 --> 0:22:30.520 for a lot of other projects that we're working on, 0:22:30.640 --> 0:22:34.840 investments that we've made, coins that we hold, just the 0:22:34.840 --> 0:22:38.920 the the entire scaling of a lot of DeFi capabilities Uh, 0:22:39.480 --> 0:22:41.240 we think wormhole is going to be central too. So 0:22:41.480 --> 0:22:43.479 whether or not we ever recoup the money or what 0:22:43.520 --> 0:22:45.600 we do with the ether if we get it back, 0:22:46.040 --> 0:22:49.440 wasn't really top of mind in in thinking about it. 0:22:49.440 --> 0:22:51.600 It was more about this, this event could have blown 0:22:51.640 --> 0:22:54.399 up the your all your future ambitions and goals. I 0:22:54.440 --> 0:22:59.239 guess yeah, and and look you it. You don't know 0:22:59.280 --> 0:23:03.720