Wolf of All Streets-Scott Melker Interviews Adam and Shingo from Ethos
Adam Lavine and Shingo Lavine, father-son duo and Co-CEOs of Ethos were interviewed by none other than Scott Melker A.K.A. The Wolf of All Streets – one of the largest and most prestigious podcasts in crypto. The pair talked about the factors that led to the centralized collapses of 2022 and what we can learn from these events. Ethos was created in response to the abuse of power that came from centralized operators who cost customers and stakeholders hundreds of billions of dollars. Ethos believes that the future of crypto is decentralized and every individual deserves access to a secure and easy to use self-custody system.
Here are the main topics covered:
|Turning your phone into a hardware wallet (Whitepaper)||Meet The World’s Most Secure Custody Device : Your Mobile Phone|
|Coindesk Opinion Piece (Editorial)||The End of the 'Centralization Era' in Crypto (coindesk.com)|
|Ethos Explainer Vid (2 min)||What is Ethos|
|Ethos Manifesto Vid (90 sec)||The Return of Ethos : Defy with Defi|
- Shingo and Adam first got into the space in 2016 when they started Ethos the first time
- At the time crypto was very developer centric and difficult to use
- It was at that time that they built the Ethos Universal Wallet and Ethos Bedrock
- Ethos Universal Wallet was an easy to use secure multi-chain wallet with over 100k users
- Ethos Bedrock was a developer platform that made blockchain applications easy to build and develop
Working With Voyager
- When the Ethos team met with Cryptotrading Inc (later Voyager) they immediately saw synergies between 2 companies
- Nobody was challenging the Coinbase hegemony and people were becoming increasingly frustrated with existing solutions
- When the companies merged, Ethos brought team, customers, and capital to voyager
- Voyager almost went bankrupt shortly after the merger.
- Ethos team helped restructure the company to become more cost efficient / revenue focused back in 2019
- This created a lot of friction with Voyager CEO
- A lot of the team at Voyager was really great and the CEO didn’t utilize them adequately
- Negotiated salary deal as part of the cash compensation and on the day of closing CEO Steve says “we can’t pay you”
Yield vs Trading
- The trading platform was a profitable business, generating revenue and was significantly less risky than the yield offering
- A CEO’s job is to create value for stakeholders
- Sometimes they get too far out of their job function, can’t do everything, and need to delegate to team
Insolvencies & Proposals for Token Recovery
- put forward a proposal for a recovery token, thought about reaquiring ethos tech, decided to rebuild instead
- floated other proposals as well.
- One being just returning the assets with the haircut.
- Robust automated withdrawal system that could have sustained that.
- No lawyers or other risky transactions.
- Another to restructure and give the equity to creditors through the profitable trading business with opportunity to make 100% (or more) back
- Bitfinex did this with great success and returned over 500% back to creditors
6.2 Trillion in Claims
- All claims from all AG’s adds up to 6.2 trillion
- Using ch 11 as a shield
- Opinion: Steve is more concerned about covering himself than creditors
- 10 mil insurance from creditor assets to cover directors and Steve’s legal fees
- Whole team was ready to hand over the keys to FTX
- In that same week CZ put out the massive tweet about FTX ushering in its collapse.
- “Interesting” timing.
Binance Woud be the Best Deal
- UCC & lawyers arguably cost creditors $30M by not choosing Binance the first time over FTX
- Binance now gives best chance for creditors to get assets back the quickest
- No accountability has been shown.
- No apologies for failure from Voyager
How Much can be Recovered
- Claims pegged to 7/5 date
- Everything socialized via market movements up/down
- SEC isn’t in favor of Binance but the only alternative is liquidation
- Shingo wrote a paper on custodianship
- Have been seeing comingling of funds previously seen in traditional investments
Red Flags at Voyager
- Shingo joined as CIO and experienced poor and hostile negotiations
- Voyager threatened to go bankrupt if they didn’t give up salaries which they previously agreed to
- Left board in 2/21 and voyager still didn’t pay full amount to Adam/Shingo despite being worth billions
- Steve threatened to blow up the financing if he wasn’t allowed to sell stock
- Despite being the largest shareholders, they didn’t sell
Joining Voyager’s Board
- Steve’s pride was a big factor in Voyager
- He wouldn’t listen to Shingo because he was young
- Credit to Shingo for trying to do what was right, but ultimately Steve’s ignorance led company to failure
- Ethos/Shingo still want to help with recovery any way they can
Magic Keys: A New System of Self Custody
- Building a decentralized platform and new system for self custody to solve “Key Anxiety”
- Too much burden is placed on the user for self-custody – Magic keys solves this
- Uses the secure enclave on iPhone and TEE on Android
- Uses multiparty cryptography (MPC), sharding and social guardians
- Patent pending
- Layers best price execution engine and aggregation around the self-custody vault
- Fully decentralized personal vault (Ethos will never take custody)
- easy to use UI
Ethos & Voyager
- Had the deal not gone through with Voyager, Ethos was going to build something similar anyway
- Steve could have left as the hero and brought in a new more tech centric CEO
- Believe that Voyager could have been a thriving company
Will Crypto learn the Lesson?
- Hubris of Do Kwon, 3AC, Celsius, BlockFi brought the industry down
- Everyone was hunting for yield
- 3AC founders are raising money
- Seems like the industry hasn’t fully learned its lesson
- Decentralization is a simple concept
- If it is decentralized then there can’t be a centralized collapse.
- This is why Bitcoin was invented – Bitcoin was created in response to traditional market collapse in 2008/2009
- The crypto community has responsibility to build a better financial system that works for everyone
Ownership and Property
- Great book called “Mine” which talks about the history and legal concepts that surround owning stuff
- Interesting thing about ownership is you don’t really own anything besides self-custodied crypto
- People need to understand this difference and that when you send crypto to an exchange that you no longer own that crypto
Ethos is Decentralized
- Even if Ethos fails, we want to help advance the core ideology of crypto which is decentralization
- Ethos strives to make a decentralized app as easy as a centralized exchange
- With Ethos, everything is under your control, with all the features of centralized exchange
- There is still a lot of room to grow in DeFi
- The centralized collapses of 2022 were like a “Covid Event” for crypto
- Covid accelerated trends that were already in motion – the centralized collapses of 2022 are likely to also accelerate the trend towards decentralization
Ethos Recovery Airdrop
- People impacted by centralized collapse can provide stretto claim and earn free Ethos tokens (Voyager & Celsius)
Important to Remember Why Crypto Exists
- Ethos is still hopeful for the industry
- Centralized collapse isn’t crypto’s fault
- Five people lost over 100 billion dollars – that isn’t the decentralized vision of crypto
- Just a bump along the way building the ideal financial future – a future that is for everyone
- Follow on twitter or visit ethos.io
When are you launching?
We are planning to launch in April or May. We have 120,000 people signed up on our waitlist, so thank you to everyone who has signed up. We also have 300 people on a Product Council that will be testing our alpha and betas, and also 300 Ambassadors who are going to spread the gospel of self-custody around the world.
We’re also sponsoring a recovery airdrop for people affected by the Voyager or Celsius bankruptcies.
Join our waitlist to be the first to know when our app releases!