The Chopping Block: OM’s Collapse, Vitalik’s Morality Test, & Tariff Chaos - Ep. 819
63
Companies
98
Key Quotes
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Topics
2
Insights
🎯 Summary
Podcast Summary: The Chopping Block: OM’s Collapse, Vitalik’s Morality Test, & Tariff Chaos - Ep. 819
This episode of The Chopping Block dives into a volatile mix of global macroeconomics, specifically the US-China trade situation, and a major crypto market event involving the collapse of the OM token (Mantra). The hosts, a group of early-stage crypto investors, offer their insider perspectives on market dynamics, regulatory ambiguity, and project integrity.
1. Focus Area
The discussion centers on Global Macroeconomics (US-China Trade Tariffs) and Cryptocurrency Market Integrity/DeFi Failures, with a specific focus on token liquidity manipulation and project opacity.
2. Key Technical Insights
- Liquidity Misrepresentation Mechanics: The discussion detailed how projects can artificially inflate their circulating supply metrics reported to aggregators (like CoinGecko/CMC). This involves claiming self-custody over large portions of the supposed “community distribution” and routing tokens through market makers to generate fake volume, resulting in extremely low actual retail float and easy price manipulation.
- DeFi as an Antidote (Theoretical): While not deeply explored, the hosts suggest that robust DeFi protocols are theoretically the antidote to the opacity and centralized control seen in projects like OM, implying that transparent, on-chain mechanisms should prevent such liquidity traps.
3. Market/Investment Angle
- Tariff Uncertainty Freezes Producers: The inconsistent communication around US tariffs has created significant uncertainty, causing producers to halt investment decisions, acting as a drag on the real economy.
- Bullish Case for Bitcoin via Fed Intervention: The capital flight from US assets (weakening stocks and Treasuries simultaneously) suggests the Fed may be forced to intervene with liquidity injections (rate cuts or QE) sooner than expected to protect the dollar and bond market, which could buoy financial assets, including crypto.
- Red Flag for Opaque Projects: The OM collapse serves as a major warning sign regarding projects with high nominal market caps but extremely low liquidity and opaque backing (often associated with Middle Eastern/Dubai family money, as cited for OM).
4. Notable Companies/People
- OM (Mantra): The token that experienced a near 90% crash in 90 minutes due to a forced liquidation event revealing near-zero actual liquidity, despite being a top-25 asset.
- Bill Ackman: Mentioned as potentially instigating the 90-day pause in some tariffs.
- Mosy (@IvanaCharmer): The Twitter personality credited with heavily promulgating the warnings about OM’s low float before the crash.
- Coffeezilla: Mentioned in relation to an interview with the OM founder, where the founder allegedly offered a weak defense, seemingly defining market manipulation narrowly (i.e., only if they explicitly trade it, not if a third party does).
- Vitalik Buterin: Briefly mentioned in the title, though the transcript focuses more on macro and OM; his “morality test” likely relates to judging the integrity of projects.
5. Regulatory/Policy Discussion
- Tariff Diplomacy as “Teenage Diplomacy”: The hosts heavily criticized the Trump administration’s tariff rollout as inconsistent, unpredictable, and lacking in strategic game theory, comparing it to childish bargaining where allies and adversaries are treated similarly.
- Incentive for Bilateral Deals: The GTO solution to the tariff chaos is that every country is incentivized to settle quickly with the US to gain a competitive advantage over others who remain tariffed.
- Lack of Enforcement on Float Data: The current system relies heavily on self-reported data for circulating supply metrics on major aggregators, creating a massive vulnerability for manipulation.
6. Future Implications
The industry is heading toward increased scrutiny of tokenomics, especially for projects claiming high market caps without verifiable, deep liquidity. Furthermore, the global trade instability increases the probability that Bitcoin will be tested as a “credibly neutral” asset in a fracturing global economic order.
7. Target Audience
Crypto Investors and Analysts (especially DeFi/Tokenomics focused), as well as Macro Strategists interested in the intersection of geopolitical risk and asset performance.
🏢 Companies Mentioned
Augur
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defi
Zora
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nft
Signal
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infrastructure
Upbit
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exchange
Kaito Yapar
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Platform
Like I
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unknown
Pauli Mark
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unknown
Jesse Pollock
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unknown
Ethereum Solana
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unknown
Terra FTX
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unknown
Xiao Xiao Wei I
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unknown
DVD I
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unknown
Binance I
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unknown
US I
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unknown
Hester Perse I
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unknown
💬 Key Insights
"imagine the C++ have been made by a totalitarian racist fascist would it be a worse language probably not C++ is general purpose there isn't much surface or bad social philosophy if you're an L1 is not quite in that position someone who doesn't believe in decentralization will not add like clients or fossil or account abstraction or spend a decade moving to proof of stake"
"Vitalik was basically criticizing the call it the the aim orality of certain layer ones that don't have a really strong sense of a philosophical grounding about why they're building this L1 and what they think blockchains ought to be used for"
"the answer is Binance if Binance does it the whole industry will shift because everybody wants a Binance listing Binance plus Coinbase is like the that's like the pincer that just closes the whole market"
"what's good for retail is good for Binance"
"what's a who do you think gains in the story who loses and who gains because okay you're saying the exchange loses and the market makers lose that that sounds implausible right then who gains who gains is the the the the the user welfare for the like median or trader right"
"once these agreements are public it's a one-way function you can't turn back because now everyone knows everyone's true cost now the projects will be like well you charge this other project this amount totally totally so the market maker is already made it no no no but that's my point that's why they will demand a higher incentive in rebates from the exchange in order to to make up for that"
📊 Topics
#artificialintelligence
84
#investment
5
#startup
2
🧠 Key Takeaways
be seeing more of that of these dead chains that just have Binance listings or Coinbase listings and it's you know what we're we're as an entrepreneur instead of launching our own chain and our own ticker we're just gonna go acquire that chain buy all the old people out like basically buy the whole market cap and then just to start over but we have the we have the initial distribution of already being on I mean maybe you lose some of the money
start normalizing disclosure of market making agreements now the market makers will fucking hate this they absolutely will not want their agreements to be public this is what happens on s1 yeah this is normal and disclosed with all traditional securities yeah yeah totally totally every single issuer who wants to trade on the nest that goes out and gets three market makers it's a requirement it's like you must have three market makers but the the actual agreement like the market make agreement as well as all the covenants and all the side letters if those are all disclosed in crypto this problem basically goes away now of course you can always lie and like you know not disclose all of them but then okay now you're committing outright fraud and okay if someone commits fraud there's not that much you can do to stop that but having that I think is how you solve this problem curious wait what do you guys think well I think it's I mean first of all there's a difference between like the projects that would even go into a disclosure regime voluntarily in the projects which wouldn't an offshore project that has a crazy checkered history I'm not saying if they're registering with US I just mean there's a norm in the industry like you want to get listed on by and so I want to get listed on Coinbase you have to publicly disclose all of your micimagreements right if this was like a we'll call itself regulatory set of requirements that Coinbase and yeah that's an unpropeasant that's an unpropeasant yeah I mean if everyone implemented that they'd be great right like the more information that's out there the better because you'll get a better allocation of capital to the real projects and less capital allocated to the bad projects there'll be less people complaining that they got rugged by some crazy manipulated asset and more capital be available for the projects that are building amazing stuff and maybe I'll take that other side not more as playing down as I've get but yeah I kind of agree with that philosophically but I would say incentive wise if you think about a centralized exchange whether it's in Tragifie or in crypto the job of a centralized exchange is to maximize fees like just from their profit calculation is to maximize fees and volume I can collect while offshoring the risk of market making and kind of like having to hold inventory risk right like effectively the goal is like you're subsidizing market makers via discounts and rebates and all these other things to try to get them to hold inventory risks so that you can collect fees without you holding the risk right that's sort of the trade-off and I do think there's sort of this inherent thing where like if you start enforcing these things all these market makers will like leave and I think to break that you probably need a real regulatory regime I don't think like that then there'll be like a natural state in which you get an equilibrium where the disclosure thing will have the exchanges will force the disclosure well why why wouldn't the exchanges I mean look I think it's pretty clear that the exchanges themselves have seen that their customers are losing trust in them when they list these kinds of tokens right like basically at any point you got have you ever looked at have you ever looked at tokens around up bit listings I don't think that's always true right like some of them are making much more in fees by actually having this happen yeah but I mean you can see from finances behavior right like I mean they recently did this big Twitter space where they were like basically this kind of thing Binance is the one company that never gets chastised for listing dog shit tokens and recently their community has started basically rebelling against Binance and saying what the fuck are all these garbage listings everything is down only and and when you get something like home which again Binance okay acts by bit it was it was listed everywhere this makes people lose trust in that hey can I trust these new token listings now at the margin is it is it everyone's leaving no but is it bad for business clearly so their interest overwhelmingly is like look most trading volume is not in chic ones most trading volume is in the majors I agree with you but I also think there's like this like weird incentive thing is like you're forcing the exchanges to take more risk but in some indirect way by making them have these kind of listing procedures and that they may have to pay a lot more to get more risk because they may have to pay makers a lot more in rebates to get change the maker makers aren't the projects paying the market makers the exchanges are offering rebates right like how do I ensure there's enough liquidity on a certain side unless until you get to major status when you're a new listing just like in an IPO market you effectively have to provide rebates right like every exchange in the world relies on rebates as this like indirect incentive mechanism for me to outsource the inventory risk that I'm supposed to be that needs to be held in the exchange right and my point is I bet you that the adding these types of disclosure things actually increases the cost they exchange just to pay in terms of rebates to get the same outcome so that but the project not the exchange yeah yeah forcing forcing forcing the market maker agreement disclosure makes the market makers make a lot of money that they want I think the exchanges are all agreed to quote at a particular rebate my point is they will demand a higher rebate in exchange for the disclosure and I'm not sure that's why does that cost get why why would the exchanges or that cost why wouldn't they push it onto the projects like the projects at this point if you're buying ants or if you're Coinbase you this is like an extremely inelastic market I think you have one reason one reason you don't have this is once these agreements are public it's a one-way function you can't turn back because now everyone knows everyone's true cost now the projects will be like well you charge this other project this amount totally totally so the market maker is already made it no no no but that's my point that's why they will demand a higher incentive in rebates from the exchange in order to to make up for that but why would they extract a higher price from the project why would they extract it from the exchange because my point is now the projects have transparency and pricing they can see what other projects paid and be like fuck you I'm not going to pay or like oh try to find you know what I mean like they're going to run the board price could just go up yeah I mean but I don't think I'm talking Amber whoever I you know this project before the disclosure regime started only cost this much now the cost has gone up because you're right the opportunity cost has increased to print ideal out there I think some of that cost will go to the exchange it inevitably I don't think it's like all going to be born by the the kind of project because there is this sort of like aggregate thing by like disclosing all the exact fee agreements and fee schedules and loan terms and etc you're effectively making it much harder for the market makers to do future agreements and they will want some premium for that discount you know like that I agree with you so I would bet you're so I think it may be actually the other way around is that the best market makers actually have a net benefit and the crappy the shady market makers basically lose a ton of business and what you may end up doing is kind of pushing more and more of the demand to a smaller set of market makers such that even even though like yes if they had the same set of customers they would they would be hurt but actually the total demand increases and people at the bottom of the food chain of market makers they basically got a business right if you have something that's so extractive or so shady that basically no project we willing to disclose it you're the ones who got a business because you had you had no edge I think that beyond in tradify that ends up being more true because you enforce things like nbbo where you force all the exchanges to have synchronized prices and if you don't use the exchange get in trouble but in crypto I can always just start a new exchange that is focused on only the shittiest stuff right like I look at your to start there's already a bunch of them yeah yeah yeah that's what I'm saying but but my point is like you will just move that volume away and then you as a big exchange now you're competing against those small ones right like I'm saying finance is not afraid of that right coin base finance up it these guys are not afraid of that I I think finance is afraid of up it and up it would rather have more of these kind of tokens right like they they have a different risk preference in terms of this listing stuff I mean I think that the I think up is there's more risk of worse than finance like the finance less way more stuff than up it does yes but I think you're thinking about like a gate or a mexi which I don't think finances yeah probably don't care about the short term yeah exactly the kind of exchange you're describing I I just kind of think this idea that you're going to squeeze out all the the bad market make it's like a little bit too much of a just so story I think the the costs will be split between the projects and the exchange if you cause a public disclosure because of this notion notion of future bargaining power changing and I think that will mean it's kind of like either very take the long time to reach that naturally without a regulatory force or you it kind of is an unstable thing where like what's a who do you think gains in the story who loses and who gains because okay you're saying the exchange loses and the market makers lose that that sounds implausible right then who gains who gains is the the the the the user welfare for the like median or trader right like right now if I think about these like bad coin I think that's a bad mental model that like finances gaining from having like really shitty token because like people are going to trade whatever's on Binance you know like crypto traders are just addicted to crypto trade and there might be more trading that occurs if everyone's like oh all the assets are good assets like I know yeah if the assets go up and people are not as worried about rug pulls they will likely be more trading right like Binance is not in sore need of I need more random craptalist so like tending the garden and making sure that the assets on Binance go up and our good investments is good for Binance's overall trading volume right like what's good for retail is good for Binance I just think that yes that that's sort of like a nice end state but I don't think that that they're like oh we're gonna do that tomorrow right like it's the type of thing where like they are forsaking some revenue now and they will have to make this very clear decision to be like we are cutting off 20% of our revenue with this goal right like that's what I'm saying like you're asking for the sharp chain on 20% of revenue they don't even make 20% of the revenue from spot I don't know what I'm just pick I'm picking a number to illustrate like sure sure depending on the type of work you're tiring you sliver but it's a tiny sliver but but I'm saying like that that is like a thing where I think like a lot of places will have trouble being like oh yes we want to cut that out right coin basically I think would totally do right but sure Binance I'm not really sure but the thing if you if you're a top project and you don't have a coin base listing like something something something is wrong I think there probably would have to need there wouldn't probably need to be at least a little bit of synchronization in order for this norm to actually spread if both Binance and Coinbase did this the whole industry was good