If you're dating any Chinese resellers of your GPUs, maybe double think, you know, your interactions and what you're disclosing to them after your activities.
Pillow talk's a little bit too business forward, you know, she's like, "Yeah, yeah, yeah." No, keep it extracurricular, you know, like let's don't bring in any of your quarterly numbers, not a dividend.
It's a tale of two fun. Now, your losses are on someone else's balance sheet. Generally speaking, airdrops are kind of pointless anyways. Um, unnamed trading firms who are very involved. I like that ETH is the ultimate DeFi protocol is part of the antidote to this problem.
Hello everybody. Welcome to The Chopping Block. Every couple weeks the four of us get together and give the industry insiders' perspective on the crypto topics of the day. Quick intros. First we got Tom, the DeFi maven and master of memes.
Next we got Tarun, the gigabrain and grand puba at Gauntlet.
Next we got Robert, the crypto connoisseur and ghost of Superstate. Hey guys, I'm Lane, and I'm Haseeb, the head pipe man at Dragonfly. We are early stage investors in crypto, but I want to caveat that nothing we say here is investment advice, legal advice, or even life advice. CC chopping blocks at XYZ for more disclosures.
So, we were last week talking about the midterms and we kind of thought that post-midterms there was a bit of a crypto rally. Uh, actually it happened that day that you saw both the stock market and the crypto markets be a little bit energized by what happened with the midterms. Well, what it turned out that uh Friday of the week of the midterms, which I think the day our podcast released, was the single biggest wipeout in the stock market since COVID, and we saw a big drawdown as well in crypto alongside the risk-off sentiment that we saw in the markets. Now, coming into this week, it seems like things have stabilized a bit. The stock market is finding its footing, and crypto is more or less treading water. It seems like it's in a weird spot.
But one of the interesting things that we saw was that there's a new conversation around Ethereum, particularly this idea that Ethereum should be valued as a store of value asset instead of as a revenue-generating asset. So this goes back, it's a very, very long debate in the history of cryptocurrencies, is how do you value a cryptocurrency? And traditionally the two methods is, okay, is it a store of value, in which case you comp it to gold, uh, in which case you're not really thinking about its functionality, its cash flows, its utility value. It's purely something that we are going to choose to store value in in the future and doesn't have any other purpose. Uh, that's traditionally how people view Bitcoin. They think about Bitcoin as being comparable to gold.
The argument for Ethereum has been, well, Ethereum has fees. It has utility. It's used as the oil of Ethereum. And Ethereum, you can sort of think of it as having cash flows because it burns some of the fees over time. And for a long time, the argument was that, oh, this thing is ultrasound money because of the fact that it is deflationary and because it burns these fees. And it's turned out that over time that story has gotten a little bit weaker. Ethereum is not burning so many fees. It's actually gone back to being inflationary rather than deflationary.
And this has led to Vitalik coming out and making a claim that really the right way to think about Ethereum is that it's a store of value. It's not a fee chain. Don't use a DCF to value Ethereum. Instead, you know, we are playing the biggest game that there is, which is the same game that Bitcoin is playing, which is trying to be a store of value. Now, it didn't seem the market was particularly receptive to it. I think I saw the day that Vitalik announced, ETH went down like 4% and Bitcoin was like down 1%. Unclear if this is why, but it's gotten a lot of people talking about whether or not this is a valid claim about how to understand Ethereum and its value proposition. Tarun, what was your response to this debate around is ETH a store of value and how should we think about ETH the asset?
It does feel a little like giving up. There was a sense in which it was like it was supposed to be more, supposed to be what, what was the thing? Wonderful garden. Infinite garden.
Store of value doesn't feel very infinite garden. It feels like, okay, great. We have gold 3.0 or maybe more like gold 2.1, right? If Bitcoin's gold 2.0, and it's like it's kind of an underwhelming vision of the world if like it's really only that. I don't know. To me, that was like my first thought, but I was also like, yeah, everything that has some residual value beyond pure revenue, inevitably that's store value. But it's like if you want to try to make the case that you're like always or very always like revenue-based only and like or always only sort of value-based, there's sort of a, there's sort of something to me that's like a little bit weird about like going so extreme for Ethereum, right? Like the point is like if you want people to build new stuff on you, like you shouldn't really know what the value is. There should be some amount of like, hey, people use this platform, build something crazy, right? Somehow that if you're saying we're pure store of value, you're just like, ah, we're throwing that out completely. At least that's my gut feeling about it, you know.
But we got to separate ETH the asset versus Ethereum the network, right? So he's talking about ETH the asset, not necessarily, okay, Ethereum should stop making changes or anything like that. I don't think that's what he was implying by that statement.
Yeah, but I just mean it's sort of a sense, there's sort of a sense in which ETH the asset and Ethereum were supposed to be the same. That was like the whole L2 boondoggle of like, oh, L2s burn ETH, so like they're Ethereum. And it's like, yeah, but they also cannibalize your main transaction fees. So there's like sort of, there's sort of a sense in which this feels like nothing's consistent. And going back to store value is consistent, but provides no optimism. It's just like, all right, whatever.
Well, I mean, there's a sense in which it's consistent actually to take the store value frame, because if you take the, okay, this is a DCF-able fee stream and that's what you're supposed to value this, then the L2s are parasitic to Ethereum, right? But in the world where Ethereum is a store of value, actually these are not parasitic, and it sort of, it kind of neatly ties together the ontology of Ethereum. Like, Ethereum, like the L2 maximalism thesis works if it's a store of value. If it's not a store of value, then you really have cause for infighting in a way that you wouldn't otherwise.
I think it's just very difficult to like, like I feel like store of value is something that you build up over time. Like this is to Bitcoin's credit. One of the things that they've done kind of well is like actually make it so difficult to change Bitcoin that like there's credibility behind, you know, the monetary policy despite all the sort of inbound and all the interested parties that are trying to get them to change it. They kind of don't, and therefore there's, there's sort of credibility to it. Whereas ETH has changed, it's the product, changed the, you know, emission curve so many different times, it feels less, less credible to be able to say yes, it's, it's a store of value. Though I agree they kind of box themselves into this corner by trying to have this relationship with L2s, understanding that it didn't really work out, and now it's like, well, what's, what's next?
Ultimately, I mean, you ideally want the price of the asset to correlate with success of the network, but that's very tough when a lot of the value that people get from the network is just storing their assets on it and not necessarily moving it. And so you have all these like stablecoins, tokenized assets just kind of sitting on ETH and not, you know, really paying anything to the network other than obviously, you know, some, some nominal transaction fees whenever they, they do move. And the question is how do you actually like align yourself with that? And it's kind of unclear. They didn't really sort of get this bounty of L2s and applications I think they were hoping to get.
And there's obviously also this weird conundrum which we kind of saw play out in like a microcosm on Robinhood chain, where fees are a decent proxy for utility people are getting from the network, right? Their willingness to pay, but they're not perfect in that. Well, you can also just, if you improve throughput substantially but demand doesn't sort of go up a commensurate amount, then, you know, fees can go, you know, way, way, way down even though people are still getting so much more utility out of the network. And so there's like this, this weird dynamic I see in the market right now where you can have something that has tons of activity and tons of usage but also ultimately not, you know, accrue a ton of transaction fees as a result.
Yeah. I mean, this is a classic problem in company building, is like this leaky bucket model of value, which is that there are certain platforms that are very easy to monetize the value you're creating, and there are certain platforms where it's very hard. And so, you know, the classic example of this is a lot of these gig work marketplaces where people go off platform, and it's like you're creating a lot of value by connecting people to like a handyman, but the moment they connect with a person, they're just going to take this offline and they're going to cut you out of the transaction. So your ability to capture the value you're creating will cut you out of recurring future transactions.
Well, even the first one, I mean, a lot of times like it'll be like, give me your number and then I...
I think the first one they make you prepay. There's like a way for them to like force you to earn some...
I mean, a lot of the ones I've used, I have, I don't think I've seen a single dollar transaction through their rails because people are just like, yeah, call me, and then you call them, and then you know, okay, they, by the time they show up, you Venmo them. So, but anyway, I think Ethereum finds itself in one of those situations, is that it's kind of like blockchains are fundamentally these kind of leaky value type systems that it's very hard to capture the value you're creating.
Um, ironically, AI is the opposite. AI is extremely straightforward to monetize. Uh, it's just you charge by the token, and we've kind of figured out like that works quite well. Uh, it's not perfect because some tokens are worth way more than others, and it's hard to price discriminate on, you know, if you're, if you're curing cancer versus, you know, vibe coding a to-do list. Obviously, you'd want to charge much more for the cancer tokens than the to-do list tokens. Um, but I think in many ways blockchains, like L1 blockchains, kind of have the worst of all worlds, is that barring, like, MEV is the only transaction flow that we really have a good idea of how to capture value, and like, you know, traditional MEV auctions did a very good job of this, but you know, for things like just storing state, storing tokenized assets, uh, or you know, hosting L2s that, you know, all the, uh, the actual transaction flow is happening on somebody else's sequencer, that's where, yeah, this leaky bucket, everything is just falling through the floor.
So, I think in part it's definitely true that if Ethereum was making tons of fee revenue, they would not be changing the story because it'd be like, 'Yeah, great. I mean, why even bother repositioning the asset?' At the same time, I do think it's also true that there's a lot of existential stuff that is now up for play again in a way that it wasn't before, in that, for example, if you think about quantum, like Bitcoin could just not make it on quantum time frames, right? It seems pretty precarious in just how poorly Bitcoin is getting its [__] together in responding to what now looks like an accelerated quantum timeline relative to a few years ago. Um, like a lot of Bitcoiners are literally in denial that quantum is even possible. And that makes it almost impossible for there to be like not just an upgrade but like a political solution to what are ultimately political questions about what do you do with Satoshi's coins, what do you do with stranded coins, etc.
So I think like in a way, if you think about what's up for grabs if Bitcoin falls over the next five years, that's kind of where I think Ethereum has its best shot. But I don't know if that's communicated quite by saying, okay, so SOV. So I think it's, look, if you can get the meme to stick, then great. I think it's, you know, potentially, yeah, the silver to gold thing I think was something that always resonated with Wall Street and with like normies who were looking to be like, 'Oh, well, you know, Bitcoin is quite expensive, so why don't I buy the second best?' But I feel like that the argument about quantum and acceleration to me resonates a lot more about why if you think about a non-sovereign currency, Ethereum is basically, you know, it's right there in line beside behind Bitcoin. Like, I don't think it's going to be Litecoin or something else that's going to fall into that role.
Tom, what's your take?
Yeah, I just, uh, I think it's like, you know, in a world where that happens, are people's, you know, inclination is going to be, well, I'm just going to buy the next best, you know, cryptocurrency that is in theory quantum resistant? I think the answer is like it's just for the asset class, people are going to go totally risk-off for a while. And so, and obviously again, ETH has all these other headwinds in the fact that, hey, it is, you know, we changed the monetary policy what, you know, twice now in five or six years. And I think if you want something that has this kind of branding of gold, which is you put it in the bunker and it's this generational thing you can store for your children or take with you across your nations, like it's really hard to get behind that when also there's all this like weird, you know, political drama at the EF and all that. So I don't know. I think surface level I agree, and I agree that it seems like, I mean, I haven't heard the latest on Bitcoin since that Google paper dropped, or was it, um, or is it the OpenAI paper dropped? But it seems like I agree, like as you, what have we seen from at least other forms of cryptography, it seems like everything is accelerating and doesn't really seem like there is a lot of motion on the Bitcoin side. But I think the answer then is just people go totally risk-off. They're not moving to ETH per se.
This will almost certainly happen, right? And I think it is right now it looks like Bitcoin is way behind the ball. So I don't think this is an edge case anymore. I don't think this is like, oh, what if this takes place? I think like within two to three years, this will very high likelihood happen. And I think there's going to be a reshuffling of value that is going to happen relatively soon if Bitcoin does not immediately get its [__] together. Tarun, what's your perspective?
Yeah, I mean, I think the quantum argument is obviously a good one for there could be another SOV. On the other hand, Ethereum seems to not be that aggressive on their quantum timelines. Every time I hear a date, I feel like it's shifting to the future, and there's sort of something interestingly weird where like it feels like in Ethereum land, sometimes they FUD their own timeline on the quantum stuff. So I'm like not sure there's a consistent story there. All the other people who are going direct to quantum, or like they're like really trying to make it their story, and like near Zcash, Solana. I guess I think arguably Zcash has just like a better story for store of value to me than Ethereum. Like being mined proof of work still just has so much, I mean, it is just like much harder to manipulate fundamentally. And I think there's some sense in which a lot of people think about the proof of work as like the fact that there's a tangible input cost is sort of the thing that gives you a floor, a little bit like real metals and like IRL commodities where like people really...
I've seen some people saying this, and I really don't get why proof of work is tied to being a store of value. So like, steelman that argument for me. Why do you feel like proof of work is necessary? Because like the input cost of something obviously does not create a floor in its value. It's the other way around. The floor in the value creates the input cost, or like the willingness to pay the input cost.
Yeah. So I think there's two very simple arguments for why I think in some ways proof of work is better. Now, I'm not the input cost thing, I'm not, I'm saying that's something people like skeuomorphically, like gold has input cost, storage cost, so like a real store of value must. So I'm not sure that's the real rationale. The thing I think is just fundamentally true about proof of work versus proof of stake is like one really does have permissionless entry and the other one's not really, in the sense that in proof of stake there's epoch boundaries and like the stake is fixed over that epoch and you can't join and leave and there's a withdrawal queue and there's all this stuff, and all of those that creates all these timing games, kind of timing issues that you have to think about, whereas in proof of work you can join and leave whenever you want. Now on the other hand you can join and leave whenever you want, but you might also never get selected. So like there is a true trade-off, but this idea that you can, even if like a state-level actor was able to like manipulate things, people could just restart and rejoin.
I think there is some sense in which like proof of stake over all the years of research has slowly but surely tried to bolt on features that get you closer and closer to that, but it hasn't really reached that ideal. And I think that's a sense in which if I'm a store of value and there's like a huge, I don't know, attack or something, like if I want to be like nation-state resistant, I still think you need this arbitrary entry and exit. That's sort of my reason why I think Zcash has just a better claim. Also, privacy plus the quantum stuff as your value prop just seems like those are very directly tied to properties you want in a store of value versus like smart contracts and programmability is not always like it can be, right? Stablecoins have shown that there is clearly a world where that's true, but it's not as direct, right? Like the post-quantum is like someone can't steal your value with a better computer, and the privacy is like, well, that's, I expect I can transfer gold privately, why the [__] can't I do it here privately, right?
Yeah, so look, I don't disagree with you that Zcash is better positioned. The narrative is more straightforward. They've already embraced that, hey, we're, you know, we're the backup system for Bitcoin, and we're the private and quantum-resistant version. I guess my main pushback, I don't think most people, I think that's a quite technocratic perspective on why people think something is or is not a store of value, is like your ability to permissionlessly leave or validate the network. I think most people don't resonate with that.
I do think Tom's argument that, look, Ethereum changes pretty reliably over time, uh, I think that argument does resonate with people, is that, look, you know, if I want to go into a bunker and, you know, it's going to be World War III, then okay, maybe I want to get out of here and I want to hold something that I don't have to think about for 10 years. And you have to think about Ethereum if you're thinking about 10 years. At the same time, you know, Vitalik made the argument that AIs are going to really like Ethereum because Ethereum has a functionality and predictability that some of these other assets will not have. And some of that comes not from like, when you think about this in a deeper sense, right, instead of thinking about, okay, the rules of the system or the particular properties of the protocol, like, okay, those might change, right? And you point out the monetary policy of Ethereum has changed. Now it's only changed in one direction, it's only gone down, but it's still changed in a way that Bitcoin's has not changed.
But I think the thing that AIs will care about is about predictability of good governance. And I think one thing that you can say about Ethereum is that like it predictably has pretty good governance, in that like it doesn't, it's not going to make decisions, like, you know, Ethereum in 2040 or 2050 is not going to suddenly start adding a bunch of bells and whistles that like make the protocol super insecure. It sort of has already this direction that like, yeah, if you come back to Ethereum in 10 years, you're pretty sure that they're going to respect existing state, that they're going to make sure that smart contracts still work, and that things are still transmissible and so on. And so I think the, like, I can imagine AI saying that, yeah, actually Ethereum, I trust their technical decisions and their direction, and that it's going to be post-quantum, it's going to be robust, it's going to be secure over time.
Now all that said, Tom, you pointed out there's been also a lot of drama around the EF. Um, and maybe that's a good segue into the next portion of the show. So, there's a lawsuit right now being filed against the Ethereum Foundation. It's being filed by Caen Falton, also known as NIXO, suing the EF and Vitalik for retaliatory termination and disability discrimination. Uh, so I did not read the full thrust of this. So I have like a just a simple summary, but basically what happened was, if you remember in February, the EF introduced this thing called the Mandate. And the Mandate, if you remember, it was kind of like this philosophy document that everybody at the EF had to sign and endorse that involved a bunch of stuff about the infinite garden and the very kind of pseudo-socialist perspective that Ethereum took at the time.
And it included at the very end of it what they called a seppuku license. And a seppuku license basically says, I agree that I'm going to protect these values of open source and freedom and blah blah blah with my life. And if I do not, then I will fall on my sword and I will kill myself. I will commit seppuku, which is the traditional Japanese kind of self-suicide. And everybody had to sign this. And apparently they were told if you don't sign this, you will be fired. Now some people I think are trying to say, well, I should also note that this, apparently they complained about the seppuku license. They were told, hey, this is kind of weird and I don't really want to sign this. And they were told that after giving this feedback that it was kept verbatim and redrawn with cartoon cats and a winking anime girl and inscribed on chain. Uh, Vitalik apparently said in a recorded conversation, 'Being inoffensive in that sense is not the energy we need right now.' Bastion, the executive director, then gave an ultimatum that you must commit by Monday to signing this, or not signing it will be interpreted as a decision to leave. Most people did pledge. NIXO then disclosed that she had cancer, and uh, but then eventually was let go. And um, yeah, this, I don't know, became a mess. This was publicly disclosed because of this lawsuit, and now uh, internet is up in arms. Tom, what's your reaction to this kerfuffle?
Uh, I mean, I also was kind of surprised by this whole series of events. One, I mean, it's obviously not legally enforceable. So it feels like, you know, obviously fine to like push back because it's absurd, but I think part of it was like, um, this was also happening around the time when I feel like the EF was like trying to get this like, like based energy back in Ethereum. And I think this was part of it. And but yeah, and now obviously looking back, you know, almost a year later.
Well, no, no, this was after they pushed out Damas.
So this is even stranger. Well, I think in my mind Tom was trying to make it more, you know, institutional and also just more understanding of like the development that was happening. And this feels kind of like a reversion to like the infinite garden kind of ethos that Ethereum, you know, has had for a very long time. And so this is just like one extension, one incident in a very long string of incidents. I don't know. Obviously, it seems like unfortunate timing with, I guess, NIXO disclosing cancer and then getting terminated. And I don't know if it was retaliatory or not, but it just feels like a weird blow-up, or again maybe it's one of those things that at the moment people thought it was like a joke or was like kind of in vogue with the culture, but now obviously looking back it reads very poorly.
Yeah, a common advice that I end up giving to startup founders is you get to innovate on one thing and only one thing. You cannot, you absolutely cannot innovate on multiple things at the same time. So if you're building like a super crazy company that has like amazing technology and blah blah blah, keep everything else super [__] vanilla. Like do not innovate in multiple dimensions. It almost always goes wrong. So this really feels to me like they were trying to innovate culturally in a way that's like, dude, just keep it normal, you know? Like at least internally just keep it normal, you know? Don't fire people based on whether they sign some seppuku license with anime girls on it. That's it. Just, it's almost a straight line that like bad things are going to happen to you if you do that.
Tarun, what's your... Oh, go ahead, Tom.
I know. I mean, I'm also just like, I don't know what the purpose of having people sign, you know, a mandate is. It feels like either you're, you know, directly aligned with the company or you're not. Like signing a document, you know, really does it do a whole lot in terms of employability or in terms of like...
Yeah, the whole thing was very, very bizarre. I think you're right that like doing this, it's like just put the chain in the box, bro. Because you know this was especially at the time when they were getting all the sort of external pressure, and they still are, not really what you want to do.
And Tarun, what's your take?
I mean, the fact that it's called a seppuku license already just says everything, right? Like I don't know. I mean, yeah. I feel like there are so many avoidable own goals here that it's like, what are we talking about? Like there's not, I don't know. I don't really have like strong emotions other than it just feels like...
You don't have strong emotions to this.
I just feel like it could have just been completely avoided with like a little bit of tactfulness. And clearly it wasn't. So all right, whatever.
Because the thing is, this is like almost a good idea. Like being like, 'Hey, we're changing the direction. We're going to sign, we're going to, you know, make this big statement, and if you don't agree, get the hell out.' You know, that directionally I'm like, yeah, that's not a bad way to redirect the energy of an institution that has come under criticism and people are feeling like, hey, it's kind of waning, there's a lot of lifers, there's not as much vitality to the people who are working there anymore. So it's like this was almost the right thing to do, but just you don't need the seppuku, you don't need the cat girls, you don't need any of that other stuff. Just if you did it in a normal way, this would... I mean, look, you might still get sued by somebody like that, you know, people who it sounds like...
I think, look, I guess like the thing I would say is the store of value thing is kind of...
indirectly I think related to this, which is Ethereum. Ethereum moved, right? They were like, we're going to help businesses build on Ethereum, and they were like, we're going back to crops. And I would argue that sentiment on crops has just been very poor, partially because it's like been marketed in a weird way. Like there's a very easy sense in which if Ethereum is like, we want to be the store of value in a quantum and AI future where our users are not humans and we need to make sure we don't get destroyed by a quantum computer, censorship resistance is very important because as we know in smart contracts, if you don't have that, then like all of a sudden your store of value is useless because someone can just keep front running you and make sure you never get your transaction. You know, things don't execute as expected, you're always reverting transactions, whatever, right? There was a kind of simpler way of saying it than crops and like all the kind of narrative memeing around it and like trying to frame it as this lady takes over Ethereum thing or whatever, right? Like that in a way that would be much more legible to people who haven't been in crypto for a while.
Crypto. Crypto is like a flat to shrinking number of people, talent-wise especially. And you're alienating any new people who might come in and be like, I want to learn about what this thing is. And I kind of feel like this seppuku thing is the same. They're both kind of that vein of like, guys, it's not 2017 anymore. I think you got to like read the room.
But I don't know. It's just like, okay, isn't that obvious to say? Like, I don't know. To me, that's just like such an obvious observation that it's like, okay, well, who cares? Like, we've been saying this for years on this show in different ways, in my opinion.
Yeah. I feel like we're just kind of in the twilight of the EF. I mean, I was thinking of DevCon last week too, which I feel like I don't know anyone who went, maybe one or two people. I saw very little content from it, and the content that I did see felt very irrelevant. Um, it felt like Vitalik talking about AI, talking about privacy, like just stuff that it's like, okay, we've been talking about this for a long time, like where is this going vis-a-vis Ethereum? And then obviously there's a whole funding drama. And it just feels like every step it feels like has been felt like kind of a step down over the past two years. Drama.
Oh, just like, um, you know, them putting out their sort of, um, budget as well as just like having a plan to sort of, you know, layoffs, etc., etc. So it just feels like the energy is kind of slowly draining, to Tom's point, which is a bummer to see. Like I kind of, um, you know, I think obviously the plan always was for the EF to kind of gradually fade out, but I think having it fade maybe a little bit more intentionally and gracefully versus this feels kind of like, you know, floundering, which is not great.
Not with a bang, but a whimper.
Yeah, it does feel. Yeah.
Yeah. It just sort of seems like, okay, like this marketing, this style of marketing worked once upon a time, but the universe has moved on.
Yeah, industry's grown up. Okay. Well, so speaking of moving on, one of the... well, I don't know, this transition doesn't work, so never mind. Okay. Okay. Well, so one of the big news that has ascended in the last couple days has been Jensen Huang, the founder of Nvidia and CEO, turns out to have been dating a Chinese spy — or sorry, not dating, I don't know, having an affair with a Chinese spy. And it was known and reported that he had some connection with this woman who also shares the name Huang, Li, who is not related, but she was the CEO of a company called Mega Speed, which is one of the largest Nvidia buyers in Southeast Asia. She apparently had some connection with the Chinese government and was reporting to the Chinese government on some of her interactions with Jensen Huang. Unclear what exactly she was relaying and what the sensitivity of some of these things are, but this story has now just exploded. Nvidia is down something like 4% today, even on a day when the Nasdaq is pretty green. And Jensen Huang admitted to the affair. There's now a board investigation into Nvidia and into if there was anything untoward that took place with Mega Speed as a result of his affair. But of course, the bigger story is that, so one, apparently the White House knew about this. There was a memo that Rubio had circulated that named her as a spy. And so this was as early as spring apparently that it was known within the State Department that this was the case. And so far there's been a board investigation going on. There's rumors that maybe he will be forced to step down over this. There's going to be congressional inquiry into what is going on here. But most of all, this gives really ammunition to anybody within the government that is pushing for... I mean, Jensen Huang has been de facto the biggest person to argue for relaxed chip exports to China. And so the entire argument for H200s, which are these nerfed versions of Nvidia chips that have been greenlit for export to China, the entire argument around it now suddenly seems suspect given that anybody can take any clip that Jensen Huang has ever said anything nice about China and be like, 'Oh, he said this because he had this spy in his ear, blah blah blah.' So, a lot of speculation right now about where this is going and what this means, especially with a new Congress to be seated in just a couple months. What were you guys' takes on this story about Jensen Huang dating a Chinese spy?
I mean it is surprising how this was like a meme for years and years and years and now it turns out like the...
years. I think the Sam Altman tweet, the one where it's like I won't get caught by trying or like you can't honeypot me, was like early '25.
That's, I guess that is true. And then like internal training for OpenAI employees are not getting honeypotted. But I think specifically for Jensen and then turning out to be true. I agree with Haseeb. It seems like there's a lot of speculation around what exactly Alice Li wanted from him. Seems like right now it was just like lobbying for reducing chip export controls, but it's... I feel like in crypto when you have, you know, honeypot someone attacking you, it's like you lose, you know, millions of dollars, and then in AI you get drawn in front of a congressional inquiry. And so I don't know, it's like similar. I don't quite know what the analog here is, but like it feels like in crypto it's almost more like you have like a random North Korean person trying to install malware on your laptop, and this is like, oh, you have, you know, your customer is like trying to influence foreign policy. It feels like a very different kind of level in some way.
I mean ironically getting honeypotted means that you're now selling chips to the second largest market in the world. So like arguably he benefited from getting honeypotted in a way.
It's not actually being clear if she did anything. Like I think it's probably actually likely that Jensen would have had the same position regardless of this person's influence. So...
Yeah. No, it's interesting that like there's a reality to the story which is that, okay, you know, rich guy has an affair and you know CCP figures out about it and then is like, hey, tell us what's going on. And you know, they're a public company. There's a lot of ways to get information about what's going on in Nvidia. I'm sure that China has spies within Nvidia as well as opposed to, you know, somebody dating the CEO. Very often somebody dating the CEO is actually getting less information than the people they probably have inside the company. But the story is just so good. Like it gives so much moral authority to anybody saying that...
this was all a setup. This is all fake.
Nathan Fielder needs to go live with Jensen Huang. That's... because I think it would be funny. It would be a great, it'd be amazing movie and documentary.
Yes, probably a little bit more security around him than around Elizabeth Holmes. But...
I mean, also just the memes were so good. Like the fact that The Economist, a publication that's not exactly known for like being the New York Post, had an article titled 'Two Wongs Don't Make a Right' is like, I like...
Well, also like that's not how you pronounce his name. So that's pretty messed up.
Okay, fair. But like I mean it's written that way.
But the fact that The Economist, which is a very boring kind of title, they're not like the New York Post, right? The fact that they're writing titles like that tells you everything.
Well, kudos to them, I guess. Yeah. I mean, look, I do think that this is the beginning of the end for this entire position. Like, I was thinking about this earlier today is that like I usually don't really... I mean, I don't know, maybe I'm an insufficiently moral person, but like some CEO has an affair, I'm like, 'Okay, whatever.' Of course, they did. So...
I mean, I will say my favorite tweet today was some random anon account was like, 'I don't care who this CEO is, whatever,' or something like that. But then right underneath was Elon Musk posting a prayer emoji, which is like I honestly like couldn't stop laughing when I saw...
Okay. Well, so somebody... I saw one viral tweet that was quoting some, I think it was like a Bloomberg article talking about how common it is in China for members of the CCP to have mistresses. And it was quoting a mistress of somebody in the CCP who was saying like, yeah, if you're a member of the CCP you don't have a mistress, you're not a real man. And so like this is definitely a very cultural thing, is that in Chinese culture, and obviously Huang is Chinese American, so he's not Chinese Chinese, but oh sorry, Taiwanese American, there like this is something that if you are in Asia you would be like, how is this even a story? Now, in America, we have a very different set of values about powerful people. And so, like, okay, you know, no, no, no, he should divorce his wife and kind of do things in the right order if he's going to sleep with powerful Asian CEOs or whatever. Honestly, my position is like, I don't really care. Somebody else's sex life is not really my problem. If he's a good CEO, he's a good CEO. Great. You know, have at it. And like you figure it out between you and your wife and your kids.
The story of, okay, we found like basically it's like the ultimate compromat, which is that you are sleeping with a woman who is spying on you to the CCP...
also CEO of a company that's buying a lot of...
that is a, yeah, to which you are the biggest supplier. That is the killshot for anybody ever arguing for, you know, sorry, anti-restrictions on exports to China, and it's just the ultimate argument winner. It like resonates so much with the audience, such a simple story, like all the other arguments about this. I was... a bunch of people were quoting the Durov podcast with Jensen Huang where Jensen gets really worked up about export controls, and you know, Durov is making this argument, and Jensen was like, oh, you take me for a loser, that's a loser mentality, why would you think that, you know, without Nvidia even if we export there, they're not, we're not going to win. And now all of a sudden like you cannot help but to see every single time he's spoken about Chinese exports of like, he's, yeah, you know, must have been that woman in his ear. So, yeah, there's something about the arguments around this were so complex and nuanced and they will never be ever again. I like, until if Jensen is let go, which no way he will be, you know, having stewarded this company in its meteoric rise to being the most valuable company in the world. If Jensen is let go, then maybe...
They're second now to Apple. Yeah, Apple flipped them, but you know, I don't know. Give it a couple weeks. But I think unless Jensen is replaced, like they're just going to lose this battle because he will never be able, he will never be allowed to talk about chip exports to China ever.
Okay. Wait, I have a great hypothetical question for the group, which is: take all the people in crypto. Who would be the most surprising person to get honeypotted? And who's the least surprising?
Most surprising... actually. No, I don't think that one, I don't know, qualifies the most surprising. I don't know. There's not a lot of faith...
