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Experts say AI has huge potential in smart contract audits and crypto security in future. Unfortunately, ChatGPT sucks at it right now.

Every day this week were highlighting one genuine, no bullsh*t, hype free use case for AI in crypto. Today its the potential for using AI for smart contract auditing and cybersecurity, we’re so near and yet so far.

One of the big use cases for AI and crypto in the future is in auditing smart contracts and identifying cybersecurity holes. Theres only one problem at the moment, GPT-4 sucks at it.

Coinbase tried out ChatGPTs capabilities for automated token security reviews earlier this year, and in 25% of cases, it wrongly classified high-risk tokens as low-risk.
James Edwards, the lead maintainer for cybersecurity investigator Librehash, believes OpenAI isnt keen on having the bot used for tasks like this.

I strongly believe that OpenAI has quietly nerfed some of the bot’s capabilities when it comes to smart contracts for the sake of not having folks rely on their bot explicitly to draw up a deployable smart contract, he says, explaining that OpenAI likely doesnt want to be held responsible for any vulnerabilities or exploits.

This isnt to say AI has zero capabilities when it comes to smart contracts. AI Eye spoke with Melbourne digital artist Rhett Mankind back in May. He knew nothing at all about creating smart contracts, but through trial and error and numerous rewrites, was able to get ChatGPT to create a memecoin called Turbo that went on to hit a $100 million market cap.

But as CertiK Chief Security Officer Kang Li points out, while you might get something working with ChatGPTs help, its likely to be full of logical code bugs and potential exploits:

You write something and ChatGPT helps you build it but because of all these design flaws it may fail miserably when attackers start coming.

So its definitely not good enough for solo smart contract auditing, in which a tiny mistake can see a project drained of tens of millions though Li says it can be a helpful tool for people doing code analysis.

Richard Ma from blockchain security firm Quantstamp explains that a major issue at present with its ability to audit smart contracts is that GPT -4s training data is far too general.

Also read: Real AI use cases in crypto, No. 1 The best money for AI is crypto

“Because ChatGPT is trained on a lot of servers and theres very little data about smart contracts, it’s better at hacking servers than smart contracts,” he explains.

So the race is on to train up models with years of data of smart contract exploits and hacks so it can learn to spot them. 

“There are newer models where you can put in your own data, and that’s partly what we’ve been doing, he says.

“We have a really big internal database of all the different types of exploits. I started a company more than six years ago, and weve been tracking all the different types of hacks. And so this data is a valuable thing to be able to train AI.

Race is on to create AI smart contract auditor

Edwards is working on a similar project and has almost finished building an open-source WizardCoder AI model that incorporates the Mando Project repository of smart contract vulnerabilities. It also uses Microsofts CodeBert pretrained programming languages model to help spot problems.

According to Edwards, in testing so far, the AI has been able to “audit contracts with an unprecedented amount of accuracy that far surpasses what one could expect and would receive from GPT-4.

The bulk of the work has been in creating a custom data set of smart contract exploits that identify the vulnerability down to the lines of code responsible. The next big trick is training the model to spot patterns and similarities. 

Ideally you want the model to be able to piece together connections between functions, variables, context etc, that maybe a human being might not draw when looking across the same data.”

While he concedes its not as good as a human auditor just yet, it can already do a strong first pass to speed up the auditors work and make it more comprehensive.

“Sort of help in the way LexisNexis helps a lawyer. Except even more effective,” he says. 

Dont believe the hype

Near co-founder Illia Polushkin explains that smart contract exploits are often bizarrely niche edge cases, that one in a billion chance that results in a smart contract behaving in unexpected ways.

But LLMs, which are based on predicting the next word, approach the problem from the opposite direction, Polushkin says.

“The current models are trying to find the most statistically possible outcome, right? And when you think of smart contracts or like protocol engineering, you need to think about all the edge cases,” he explains.

Polushkin says that his competitive programming background means that when Near was focused on AI, the team developed procedures to try to identify these rare occurrences.

It was more formal search procedures around the output of the code. So I don’t think it’s completely impossible, and there are startups now that are really investing in working with code and the correctness of that, he says.

But Polushkin doesn’t think AI will be as good as humans at auditing for the next couple of years. It’s gonna take a little bit longer.

Also read: Real AI use cases in crypto, No. 2 AIs can run DAOs

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Genuine, no bullsh*t, hype-free use cases for AI in crypto: How AIs can help run DAOs and make them genuinely autonomous.

For every genuine blockchain project harnessing artificial intelligence there are 100 coins trading off the hype.

Magazine spoke with Near founder Illia Polosukhin, Framework Ventures founder Vance Spencer, MakerDAO founder Rune Christensen, Richard Ma from Quantstamp, Ralf Kubli from Casper and others to explore some of the key hype-free, genuine use cases for AI in crypto and blockchain.

Were rolling out one genuine use case for AI in crypto each day this week including reasons why you shouldnt necessarily believe the hype.

AIs can help run DAOs

Decentralized autonomous organizations, as they exist today, are something of a fraud. As Framework Ventures founder Vance Spencer points out, they are not actually autonomous. Theres a bunch of people in the middle.“

“It just seems like AI is really our only way to actually make the DAO concept work,” he says. 

Given LLMs hallucinate between 3% to 27% of their output at present, the technology is too immature to run a DAO by itself or to enforce governance rules, says Maker founder Rune Christensen. Nevertheless, he’s mapped out an ambitious plan for AIs to help run MakerDAO and its forthcoming subDAOs in his Endgame manifesto.

“People misunderstand what we mean with AI governance, right? Were not talking about AI running a DAO, he says.

“What AI is so great at, is replacing the most soul numbing, dumbest part of the work. 

One of the big difficulties with DAOs is that its very difficult for members dispersed around the globe to understand what everyone else is doing and for tokenholders to understand the issues in the DAO well enough to cast an informed vote.

Near founder Illia Polushkin an expert in both AI and blockchain explains that AIs really shine when it comes to monitoring whats going on and then summarizing and communicating that information effectively.

“In a way, that’s a manager’s job, he says. They know exactly what’s happening and they communicate to everyone exactly the part you need to know, as well as broader context about what’s happening.”

He says AI can scale up to work with thousands of people, onboard new DAO members, manage logistics and coordinate everyones tasks.

The broader direction of the DAO can still be set by the community, likely via an elected board of directors.

“It can still be overseen by the community, they can provide feedback and decide on what are the goals for the DAO.”

The Near future… of AI-assisted DAO

Polushkin says the Near Foundation plans to experiment with the use of AI to coordinate smaller tasks before graduating to more complex and important jobs. The hope is that eventually, the AI will be able to handle the day to day management.

“I think the role of me and other folks in the system should be replaced in many ways, right? Polushkin says.

You know, we can still come up with ideas, but I think the coordination of all the functions (can be handled by AI).”

Members of the Near community have already experimented with building an AI that can autonomously decide which projects to support with funding, based on whether it believes a proposal satisfies the grant program criteria, and then automatically fund it from the treasury. 

Makers AI Atlas

Makers approach will be to use various forms of AI tools called Governance Artificial Intelligence Tools (GAITs) as a guide to the entire project. It’s currently undertaking the mammoth task of cataloging in a formalized dataset what’s going on, who is doing what, along with all the rules that govern the workings of the DAO and everything that Maker has ever done. Theyre calling the dataset Atlas, as it will give a global overview of the entire project and it will be updated in real-time.

“Having that sort of central repository of data just makes it actually realistic to have hundreds of thousands of people from different backgrounds and different levels of understanding  meaningfully collaborate and interact because theyve got this shared language.

Community members can use GAITs to find and bid on projects, with the AI providing instant feedback on whether a proposal fits within the guidelines, overarching aims and budget. The ability to instantly translate between languages will help communicate better with community members based in different parts of the globe.

Fullblown AI-assisted DAO governance is unlikely to be ready for the launch of Makers four new subDAOs in early 2024, but Christensen sees huge potential in the future. 

“The AI strategy just changes how many humans you need in order to have a successful DAO, he says.

It’s possible that once you really get AI-assisted governance to a level of maturity, you may have a lot more DAOs than you have humans.”

You can read more on what Maker is up to here.

Dont believe the hype

AI is already a useful tool for DAOs, but it will be a long time before AI will be mature enough to actually run DAOs.

Given the fierce politics in DAOs (often around who gets funding) there will a temptation to outsource decision-making to an “unbiased AI,” but this is not possible with any degree of confidence yet, given the state of the technology.

The current generation of LLMs hallucinate their answers at least 3% of the time, making them an unreliable guide to DAO governance and could see them potentially steering community members down the wrong path while attempting to coordinate them.

Given this unreliability, itll be a long time before youd trust one with the keys to your treasury without strict guidelines and spending caps to mitigate any errors.

Also read Real AI use cases in crypto, No. 1: The best money for AI is crypto

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No bullsh*t, hype-free use cases for AI and crypto: Crypto is the currency of choice for autonomous AI agents, says Jeremy Alliare & ChatGPT.

For every genuine blockchain project harnessing artificial intelligence in an attempt to create a better world like Dr Ben Goertzels Singularity.net there are 100 coins like AI Doge that have simply wedged the hyped-up terms AI and Crypto together to flog tokens.

“Those are just fundamental buzzwords,” explains Near blockchain founder Illia Polosukhin, who worked on the groundbreaking “Attention Is All You Need” research that led to large language models like ChatGPT and Claude.

As one of the few people in the world who are as well versed in AI as they are in crypto, Polosukhin says that if you ignore the hype, the technologies really are a good fit.

Theres a lot of specific things both in AI and Web3 that can use each other or benefit each other, he says.

Magazine spoke with Polosukhin, Framework Ventures founder Vance Spencer, MakerDAO founder Rune Christensen, Richard Ma from Quantstamp, Ralf Kubli from Casper and others to examine some of the key hype-free, genuine use cases for AI in crypto and blockchain. 

Over the next week, were rolling out one genuine use case for AI in crypto each day including reasons why you shouldnt necessarily believe the hype.

The best money for AI is crypto

Everyone from Circle boss Jeremy Allaire to former BitMEX CEO Arthur Hayes to Animoca Brands Yat Siu is convinced that crypto will be the currency of choice for AI agents.

After all, LLMs are unable to get access to bank accounts but can easily make payments using a funded crypto wallet, and theyre well suited to interacting with the logic of smart contracts and DeFi protocols.

The humans delegating the funds in the wallet can set the overarching strategies and rules, and then observe how the AI agent has performed using the transparent record on the blockchain.

Allaire says that AI “and blockchains are made for each other, with the tech suited to machine-generated and enforced contracts and machine-to-machine value exchange.

Completely agree. AI and Blockchains are made for each other. Provenance of data, machine generated and enforced contracts, and machine to machine value exchange. We are already hearing about AI Bots spinning up on-chain wallets and using USDC. https://t.co/BwmdGdVufJ

Jeremy Allaire (@jerallaire) May 25, 2023

Hayes believes that Bitcoin is the most logical payment system for AI as it is available at all times, digital and completely automated and enables the AI to pay for data and compute powerin order to stay alive. 

That said, Hayes also seems to think AIs will live for trillions of years until the heat death of the universe, and the LLMs will, therefore, choose Bitcoin as it can be mined by robots. So sometimes Hayes ideas tend to get away from him.

Animoca Brands Executive Chairman and founder Yat Siu is another high-profile industry figure who believes that crypto is the only logical way for AIs to transact with each other as autonomous beings in future.

In the future, 70-80% of transactions will happen through autonomous AI agents and the decentralised nature of crypto makes it a perfect match.

But dont take the word of puny humans: ChatGPT also chooses crypto as its preferred currency without any nudges in that direction.

Trading bots that are able to buy and sell crypto already account for up to 80% of spot volumes, and its likely these existing automated bots will progressively be replaced by more intelligent AI agents. (Be warned, however, that LLM-based trading experiments like Autopilots GPT Portfolio have seen mixed results so far, so putting your funds under the control of an AI is going to be a risky proposition for a while.)

Members of Near DAO have begun experimenting with allowing an AI to decide whether a particular new project satisfies the relevant grant criteria to fund it autonomously from the treasury. 

How to add Bitcoin and crypto payments to an AI agent

Its certainly easy enough to integrate crypto payments with AI. Lightning Labs has released a set of developer tools that enable GPT-4 to buy, sell and hold Bitcoin using the layer 2 network. And AI startup Fewsats has already created an agent that is able to pay Lightning Network invoices.

I don’t want you to freak out, but my @OpenAI agent just paid a LN invoice for me

First time #ChatGPT paid in #Bitcoin ? pic.twitter.com/811JdtJ3iB

fewsats (@fewsats) November 14, 2023

Fetch.Ai also offers a service where you can create an AI agent that is able to make payments on your behalf. 

Syndicate.io founder Ian Dao Lee recently wrote a blog detailing how he was able to knock up a GPT in just a few hours, using OpenAis APIs and Syndicates Transaction Cloud, which is able to autonomously make USDC payments from a Safe wallet on the Base network.

He’s excited about the possibilities this holds. The ability for AI to pay for things, hold things of value, exchange value, or create things of value on behalf of itself or others is how AI gets true agency, he says.

Some of the most interesting ideas open up not only when AI agents can transact on behalf of and with people, businesses, or other AI agents but also when AI agents can manage things of value and transact on behalf of themselves.

Lee believes that in the future, AI agents will be able to shop for things autonomously, manage the finances of people and organizations, determine and hand out funding approvals or try and grow wealth to help others. 

However, it turns out that AIs are just as stingy with their money as humans are, donating an underwhelming $3 to charity.

Dont believe the hype

While AI can more easily use crypto at present, banks appear eager to adopt AI for a variety of uses and already use it extensively for the detection of financial fraud.

Payment companies like Brex are working on integrating AI with corporate bank accounts to allow AI agents to automatically make payments in defined circumstances, such as travel expenses.

And a team of researchers recently put out a preprint describing how they successfully trained an AI agent called MM-Navigator to work out how to search through Amazon for a given product within a certain budget and to buy it.

Until crypto payments are more widely accepted, fiat still has a lot of advantages when dealing with businesses in the real world.

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What is it about crypto trading that can make some users susceptible to substance abuse, and how can they get help?

Although documented statistics about cryptocurrency trading and substance abuse are hard to come by, addiction experts are treating an increasing number of crypto traders.

Abdullah Boulard, founder and CEO at The Balance Luxury Rehab, tells Magazine that a number of crypto traders struggle with substance abuse. Our client base is diverse, but this is a unique demographic that weve seen an increase in over the recent years, Boulard says. 

According to Boulard, the high intensity of cryptocurrency trading combined with 24/7 accessibility encourages some to use stimulants to keep up the pace. Substances like amphetamines, cocaine and even excessive caffeine use are common among these individuals, says Boulard. 

Caroline Ellison, the former CEO of Alameda Research, tweeted about the use of stimulants in April 2021.

New York Magazine subsequently reported that a successful trader who met with Ellison commented about her use of stimulants and their overall effects on members of the community. Crypto really fucked with a lot of peoples perceptions of money. A lot of stuff doesnt feel real. And if you add speed

Prior to that, in September 2019, the former CEO of disgraced cryptocurrency exchange FTX, Sam Bankman-Fried, tweeted about his use of stimulants and sleeping pills.

What goes up, must come down

Boulard also sees a lot of patients who use benzodiazepines. Street-named downers or benzos, benzodiazepines include commonly used drugs like Xanax, Valium and Ativan.

He believes that traders use these prescription drugs to cope with anxiety and insomnia, symptoms likely created by the highs and lows of trading and by the use of the stimulants. Boulard says that alcohol is used for the same purpose. 

Dr. Lawrence Weinstein, chief medical officer at American Addiction Centers agrees. Weinstein tells Magazine, Alcohol use disorder is also common among those with a gambling disorder, of which cryptocurrency trading is a subtype.

Although some patients who have come through Weinsteins programs dont necessarily meet the clinical diagnostic criteria for a gambling disorder, they do have a history of cryptocurrency trading experience and typically present with an alcohol use disorder, stimulant use disorder or both.

Whats the link?

Cryptocurrency trading addiction is increasingly becoming a problem for some members of the community. According to Weinstein, compulsive trading addiction and substance abuse can go hand in hand. Behavioral addictions and substance addictions have a lot of overlap in terms of risk factors, but especially from a neurobiological standpoint, Weinstein says. 

A 2022 case study authored by Dr. Harun Olcay Sonkurt of Anadolu Hospital in Turkey presents a 30-year-old research student addicted to cryptocurrency trading and alcohol. The student started out trading Bitcoin and soon added altcoins to his portfolio. After just a few months, he started to trade margins and subsequently lost more than two years worth of his salary. Unable to stop or control his trading, the student struggled with restlessness and anger. His mind was constantly focused on price fluctuations and trades. 

Since he experiences intense anxiety in trades with high leverage, he drinks alcohol before the trade, Sonkurt writes. 

What happens to the brain? 

Weinstein believes that behaviors like cryptocurrency trading can cause increases and decreases in the neurotransmitter dopamine, just like alcohol and some drugs. Dopamine is a chemical messenger that the body produces and that the nervous system uses to send messages between cells. 

The activation of the brains reward system by the neurotransmitter dopamine is a significant factor in the development of an addiction. A dopamine spike caused by the use of a substance (or performance of a behavior) helps reinforce that enjoyable feeling by creating a link between the thing that elicits that feeling with the desire to do it again, Weinstein says.

According to Weinstein, a dopamine spike is followed by a crash. When this happens repeatedly, the extensive neurocircuitry involved with the brains reward system can be damaged, which eventually negatively affects other areas of the brain. 

The brains habit-forming center and the area responsible for impulse control, as well as the section controlling feelings of uneasiness, irritability and anxiety, are all affected. These are also three regions of the brain that play a key role in the development of addiction, says Weinstein. 

Chronic behaviors like addictive crypto trading and the use of substances alter brain circuitry and cause pathological changes. Weinstein says that at this point, individuals no longer have the element of choice. The brain has created new neural connections, and the individual requires the substance to function normally.

If someone with a severe alcohol use disorder were to suddenly cease consumption, they run the very real risk of dying because the body has become so dependent on the substance. Ive seen many patients compare their time in active addiction to starvation its not a choice or a want; its a need. They arent waking up every day choosing to remain addicted to a substance, Weinstein says.

Money doesnt make it any better

Although some cryptocurrency traders who struggle with substance abuse lose it all, some are very successful. Disciplined, experienced traders can make a lot of money very quickly. Even newbies can strike it rich for a little while if they bet on the right coin. 

The student in Sonkurts study says that he finds it thrilling to earn the same amount of money as he earns by working for months with high leverage in minutes.

Boulard believes that access to vast financial resources can exacerbate substance abuse if it remains untreated, and Weinstein says that having the means to sustain an addiction indefinitely can make it worse and prolong it.

He suggests that being able to acquire a chosen substance with ease disincentivizes stopping, all the while mitigating many of the addictions negative consequences. 

Aside from eliminating access to funds, and potentially access to the addictive substance or activity, there may be very few other avenues that would motivate the individual to seek help for their addiction, Weinstein says. The speedy acquisition of wealth can be disorienting, can lead to lifestyle changes and can create pressures that make them more prone to substance abuse, Boulard adds.

What does treatment look like?

Boulard tailors treatment to the individual. Usually, this includes detoxification and psychotherapy. He integrates holistic therapies like mindfulness training, yoga and dietary adjustments. 

We also incorporate financial counseling and educate our clients about healthier trading habits, Boulard says.

Weinstein tells Magzine that CBT or cognitive behavioral therapy is the most common form of therapy used in the treatment of process or behavioral addictions. This form of therapy helps individuals identify certain situations that can be triggering and utilize the coping skills theyve developed through therapy to prevent a relapse in the addictive behavior. 

He feels that Its very likely that someone with a behavioral addiction has a co-occurring mental health condition. Properly and professionally treating both would yield the best outcomes.

According to the National Institute of Health, people addicted to drugs often suffer from other health, legal, familial or social problems that must be addressed simultaneously. The NIH says that the best programs provide a combination of therapies and other services to meet an individual patients needs.

Is it possible to treat yourself?

Boulard advises against it. Although its not impossible to beat an addiction on your own, long-term outcomes may be less likely.

While its theoretically possible to overcome addiction without formal treatment, professional help dramatically improves success rates and reduces the likelihood of relapse, Boulard says.

According to the National Institute on Drug Abuse, there are strong associations between drugs and related cues. When someone tries to stop using drugs, stressful experiences may lead to cravings and drug use again. Returning to use after stopping, or relapse, is not uncommon. And, like addiction itself, its not a sign of weakness, says NIDA.

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Visiting Liberland — a crypto micronation between Croatia and Serbia — required decoys and diplomatic immunity to dodge the border guards.

Disembarking the Liberty houseboat moored off the frontier of the European Union, were met by a pair of Serbian police officers, their lit squad car nearly blinding us in the dark forest.

How many people are staying on the boat? one asks, holding a large dog at bay. I really dont recall, says my colleague from Reuters. Fortunately, they let us go.

We must run, using phone lights to navigate the muddy path to the rally point a bit further in Croatia, in hopes that the departing presidential convoy has not left us behind.

We are meters from the border of Liberland, an unrecognized micronation of crypto fans claiming a piece of land between Croatia and Serbia on the Danube river. At just seven square kilometers 2.7 square miles the piece of land is roughly the size of Gibraltar.

Liberland president Vt Jedlika explains it had not officially been claimed by either neighboring country, making it terra nullius nobodys land when he planted a flag there on April 13, 2015.

Though neither permanent infrastructure nor habitation has been established, the project has attracted a sizable community of Libertarian-minded folk. The de facto home in exile in Liberland is Ark Liberty Village, a nearby campground on the Serbian side.

Its here that Magazine attends Floating Man, a Liberland festival including wilderness and water survival training, music, a two-day blockchain conference, and a daring visit to Gornja Siga, also called Liberland. Getting into the independent state is going to be tricky, says Jedlika.

Its good to get in and out of Liberland without being beat up.

Breaking into Liberland

As the conference concludes, the president takes the stage in front of a huge Liberland flag, pointing out the borders of Croatia and Hungary and the best ways to cross into the micronation on the map.

The route straight into Croatia to access the Danube is fastest, but most perilous the border police know about our gathering and are expecting an incursion and, as such, are likely to prevent suspicious vehicles from entering. Flags, stickers or even Liberland-branded beer are a no-go at the crossing, as they will be confiscated, he explains.

Entering the Schengen area through Hungary is more certain, with the Hungarians being indifferent to Liberland, making it possible to drive into the Croatian countryside and get to its land border with Liberland without prior detection.

The presidential convoy will go this route, while a boat carrying settlers will go upstream from a nearby port in Serbia to distract border patrols. Jet skis dragging inner tubes will take yet another route, with the aim of landing on Liberlands island before interception.

They may arrest you, but you are not breaking any law, so the longest they can hold you without charge is four hours.

It feels like a military operation.

I begin to have doubts and unenlist myself from the jet-ski expeditionary troops to instead go with the convoy I hadnt bought a bathing suit, and being detained in international waters in my underwear was more than Id do for a story.

Also read: Why are crypto fans obsessed with micronations and seasteading?

Not to mention that the last time someone took a jetski to the island, they were brutalized tackled and kicked on the ground by Croatian police in an incident for which the police offered an apology and disciplined the officer in question. The event was widely reported in the country, in part because Croatian police were operating outside the nations borders.

Terra nullius not on firm legal ground

From the perspective of international law, the validity of Liberlands claims depends on which theory of state recognition is considered. According to Declarative Theory, supported by the 1933 Montevideo Convention on the Rights and Duties of States, an entity is a state regardless of outside recognition if it meets four criteria: a defined territory, permanent population, a government and the capacity to enter into relations with other states.

The area in question is neither Croatian nor Croatian-claimed Jedlika says that matter was settled when Croatia entered the visa-free Schengen area at the start of 2023, with clearly defined borders being a set requirement of entry.

The land is also not Serbian. As un-owned and unclaimed land accessible from an international waterway, it appears to fit the definition of terra nullius, nobodys land, which may be freely occupied. A permanent population is the only missing feature, which Jedlika says is only a matter of time. If they can get in, of course.

Also read: Thailands crypto utopia 90% of a cult, without all the weird stuff

The competing Constitutive Theory of Statehood asserts that a state only exists if it is recognized by another state. Here, Liberland fails, though Jedlika argues it is passively recognized already.

They are checking peoples documents before they go to Liberland, and then once in Liberland they dont really care so its happening already, Jedlika explains as we drive toward the border for a ceremony marking the opening the land border with Croatia.

Web3 nation?

Jedlika recalls that he first heard about Bitcoin through his Libertarian circles when its value was under $1 and began to buy it on Mt. Gox for $32. When he proclaimed Liberlands independence in 2015, the coin stood at $225. With many of the early participants in the projects making their contributions in BTC, the treasury gained value with each bull market.

Bitcoin is really one of the most foundational parts of Liberland 99% of our reserves are in BTC.

Attracting blockchain companies is a key part of the micronations strategy, with the vision to offer a low-regulatory jurisdiction with only voluntary taxes just off Europe, directly accessible via the Danube river.

Who can become a Liberlander? Just about anyone willing to pay $150 for an e-residency, which comes with an ID card that looks like any other. Citizenship requires 5,000 Liberland Merits (LLM) a little over $2,000 or can be earned via contributing to the project. 

According to Minister of Justice Michal Ptnk, while Bitcoin is the preferred currency in Liberland, the Liberland Dollar (LLD) will be used to pay transaction fees on the Liberland blockchain, which is envisioned as the backbone of on-chain companies, the judiciary, government contract execution and Liberlands stock market.

The chain is built using Polkadots Parity Substrate Network, a solution from which customized blockchains can be built using modular components. 

As we stand by the Hungarian border crossing, waiting to go in, I chat with the head ambassador of Polkadot, David Pethes. He notes that Liberlands governance token, the LLM, already has 19 live validators, and the website explains the requirements:

Only Liberland citizens can run validators, adding an extra layer of security against bad actors even in a scenario where less than 50% of circulating LLD is staked.

Pethes, who is Polkadots man in Eastern Europe, notes that Liberland is not on our list yet, but Id like to have it formally included in the Polkadot ecosystem. He sees the projects as ideologically aligned. The participants in the ecosystem have very similar views on how money should work, how you can send value without a central point of failure, he says.

Liberland governance and corporate governance have many similarities the blockchain is basically forked from Polkadot, he notes. A land registry functioning on NFTs is also on the roadmap, as well as the Liberverse.

Journey to Liberland

It begins to rain as we approach the Hungarian border. This apparently causes their internet to malfunction, resulting in an hours-long line for processing. Nearly giving up, we pull into the diplomatic channel, which the Hungarian officials are unhappy about upon recognizing Jedlika. They let us through, making us stay put for perhaps 20 minutes after processing, in what I understand is a summary slap on the wrist for abusing diplomatic convention.

Crossing into the Hungarian countryside, we encounter a roadblock meant to catch illegal migrants. But were able to continue and cross into Croatia by ferry.

I am told stories of previous journeys. Last year, police warned that it would be dangerous to venture into Liberland because it was hunting season. We could hear gunshots some distance away, but they thought we could not tell hunting rifles from pistols no one hunts with a pistol, explains our driver, suggesting that police were firing their service pistols to scare them away.

Other times, border patrols would take it upon themselves to rescue those they deemed stuck in Liberland against the wishes of the rescued. Technically, such actions may constitute kidnapping per both Croatian and Liberland law. Jedlika also notes that Liberlanders have been arrested for disobeying a no-parking sign installed in the forest.

Were on the northern border, Jedlika notes as we turn to a back road near the Danube river. Others have already arrived, and a Croatian police boat is tied to the shore with an officer respectfully collecting everyones passports and taking them to the boat. Another police vessel speeds to the location, but within 20 minutes, passports are returned.

The supply van is opened, and each Liberlander takes what they can carry boxes of equipment, rucksacks of supplies, coolers of food and drink. I carry water. We trek 700 meters into the forest, turning toward the river where a houseboat bearing the Liberland flag is moored.

Pictures are taken, and Jedlika carries the border crossing sign to a nearby tree, to which it is attached.

Someone announces that it is time for border control, and a line forms to get Liberland, American and Swedish passports stamped.

Will the stamp cause a problem if I have it in my real passport? one nervous visitor asks.

The answer is yes, it will, but at that moment, we were not aware of the headache it would create.

There is an element of theater the tree and passport table are on shore, still in Croatia. The real border lies 200 meters further down the path, where officers lean against their cruiser, guarding the exit from Europe. I approach them.

Though they at first deny permission to pass, I returned with others to inquire again. They discouraged our entry, saying the forest is too dangerous due to wild boars. I asked how big they are, and the taller officer laughs and brought his hand near chest-level, suggesting that there are monsters beyond the boundary.

But they eventually allow us to pass on the promise that we would return before dark. I walk into the dimming wilderness, exiting the EU and Schengen area. Im in no mans land Liberland. Its something of an anti-climax.

After 20 minutes, we return and our passports are again checked to reenter Croatia.

Back on the boat, theres is much eating and drinking and with some fanfare, Radio Liberland, whose signal was sent from soil of Liberland, makes its first broadcast.

Im an unusual person I dont feel like myself when I have things tying me down, like being in a strict relationship with having commitments to be in certain places at certain times, he explains, saying that he was attracted to the project for its Libertarian philosophy.

I originally expected that we would just go to the land, build a camp, and refuse to leave but its been very different. Ive learned a lot about how diplomatic you have to be, he reflects on Jedlikas approach.

Banick is optimistic about the projects blockchain aspirations. From my understanding, they create smart contracts that can be enforced as a sort of immutable court without third parties, without corruption. He also sees cryptocurrency as promoting economic freedom, which correlates with every single boost in the standard of living, including longevity, literacy rates and infant mortality. He is a true believer.

Theyre interested in utilizing smart contracts and blockchain to revolutionize governance and law.

Jonas, a Czech national who was moving on to the boat that day, compares his vision for Liberland with Hong Kongs former Kowloon walled city, which once contained 35,000 residents on 2.6 hectares. It had like the cheapest rent, the cheapest medical care, the cheapest food, even though it was like the densest population of any place ever, he explains though by most outsider accounts, the city was not exactly a comfortable place.

As I return above deck, there is silence. Ive been left behind.

Croatian border guards break the law

Though some cars have already left, I manage to catch a ride with Jedlika after having my passport checked yet again by newly arrived police officers. Less than two kilometers away at the old guard post, we are again stopped for passport checks.

The final challenge was encountered at the Batina CroatiaSerbia border crossing, where Croatian officers took issue with two Americans and a Swede, whose passports were stamped by Liberland, refusing to return the passports unless they each pay a 230-euro fine.

A Croatian-American dual national with a Liberland stamp in her American passport says later that, in a private room, the Croatian officials threatened her with immediate loss of her Croatian citizenship if she refused the fine. This is legally impossible.

Throughout the ordeal, the officials at the otherwise deserted border post held all passports including the authors Finnish passport for approximately two hours and refused to explain the reason for the delay.

Driving back to the Ark camp through Serbia in the wee hours, we come across a melancholy sight: several dozen migrants traveling under cover of darkness, making their way to the Schengen border. Seeing them struggle and risk it all to get to Europe made me question whether what we had just done with far greater resources and far lower stakes made a mockery of their struggle. Could Liberland realistically become much more than a bunch of Bitcoiners LARPing sovereignty?

And while the early August Floating Man festival appeared a turning point at the time with the construction of small cabins and the establishment of a small settlement on the land mass, relations with neighboring Croatia have since taken a turn for the worse. On September 21, Liberland Press reported an unannounced extraterritorial incursion in which multiple settlers were arrested, newly built structures demolished, and equipment, including a generator, quad bike and food, were taken under the oversight of Croatian police.

The story of Liberland appears far from over.

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Cointelegraph Magazine journalist Felix Ng spent a week working in virtual reality. It was mostly terrible… but does have some potential.

I just spent an entire week working in virtual reality using the new Meta Quest 3. While the experience still mostly sucked, I came away with some renewed optimism for VR in the workplace.

As I took Rons outstretched, virtual hand for a handshake, my actual hand in the real world clumsily whacked into the side of my desk.

Ron started laughing, his avatars animated facial expressions mimicking his real face thanks to his devices eye and facial tracking technology.

A project manager at Microsoft, Ron tells me its something Ill get used to. Hes been working in the metaverse for over a year.

Days later, I meet Heather, a mother whos been working in virtual reality for a couple of months. She likes to jump into the metaverse to work when her kids are at school and the house is quiet.

Then there was Miguel, a recruiter at Netflix, an OG user of the virtual reality app Immersed, whos been using it to work for the last two years.

The big question is: Why would you want to?

Only two hours in, my eyes are burning

As impressive as it all sounds, after working in the metaverse for a week myself, Im not sure how anyone could do it for longer.

I spent most of the seven days clocking in and out through the virtual coworking app Immersed, which can be found on the Meta Quest store but can be downloaded from other platforms, too.

Most days, I would be joined by as many as a dozen other VR users, depending on the time of day and which public workspace I chose. (The Cafe setting seemed to be the most popular.) 

Initially, I was going to spend the week using Metas home-grown Horizon Workrooms, but I quickly switched to Immersed after realizing Horizon Workrooms didnt support public workspaces and also lacked important quality-of-life features, such as the ability to move and adjust screen size and distance.

The setup wasnt too difficult in either case. When you first strap on the Meta Quest 3 headset, the device will scan your surroundings to understand where you are within your room (in my case, the office) and where certain obstacles are, such as bookshelves, desks and chairs. This is so it can warn you if youre getting too close to a wall or obstacle when youre immersed in VR.

To be able to interact with your computer in virtual reality, theres a companion app that needs to be installed on your PC, which will then allow the app to retrieve the necessary information from your computer and beam it into your headset via cable or WiFi in the same way most remote desktop apps work.

In Immersed, your virtual screens can be rotated, resized and moved anywhere you want. You can even choose to work in mixed reality, allowing you to superimpose virtual screens among your real-life surroundings.

But it wasnt much help. At the end of each day, I was left nursing a splitting headache and trying to rub the immense strain from my eyes. My neck always felt stiff, a side effect of being weighed down by the bulky headset.

And for what? Most days, I struggled to achieve the same level of output compared to a regular day in front of the PC.

My experience is far from unique. In 2022, researcher Dr. Jens Grubert at the Coburg University of Applied Sciences in Germany gathered 18 people to participate in a study of the effects of working in VR for a week.

Two dropped out within the first few hours due to nausea, anxiety and migraines, while the others who managed to finish the week reported increased levels of frustration and anxiety.

They also reported a significant decrease in their own perceived productivity compared to working in the real world. All suffered eye strain, though this seemed to diminish as time went on.

In April, research firm Forrester found that, while theres a lot of hype around the possibilities of working in VR, theres not a lot of it happening in reality virtual or otherwise.

Forresters research found that only 2% of respondents said they preferred to use a mixed-reality device for work. The hardware is still too cumbersome to use for a long stretch of time, according to J.P. Gownder, principal analyst of Forresters Future of Work team.

OK, some bits are impressive

But despite all the annoyances, eye strain and headaches, there were also a few times I was genuinely impressed with the experience.

Working in a virtual environment next to other like-minded people turned my regular remote, isolated working existence into something that was far less lonely.

In the week I spent in VR, I sat and worked alongside a digital marketer from Canada, a software developer from the United States and a salesman for a firm offering e-commerce solutions. We chatted about sports, what we each did for work. It felt like real networking.

The biggest benefit is the ability to interact with people all over the world very effortlessly. I work from home with no one around, explains Pat, the digital marketer.

With VR, you can choose whether you want to be chatting with others, or you can either mark yourself as Do Not Disturb or grab a private room.

Ron from Microsoft also tells me he often prefers working out of VR and takes his headset everywhere, including his home office, a clients office, or on occasions he needs to report to the tech firms headquarters in Seattle, Washington.

And he points out that virtual reality is not constrained by carry-on weight or size limits, and the headset essentially allows him to take five monitors with him anywhere he goes.

Conducting meetings can also be a game-changer in virtual reality. 

Theres something very oddly natural about being able to shake hands with someone more than 10,000 miles away, even if they lack a physical form. Its something that a Zoom meeting could never replicate.

Other times, I simply admired how focused my virtual reality co-workers were, prompting me to do the same.

There was also the freedom of being able to switch my office environment from a space station orbiting Earth to a cozy chalet on a snow-capped mountain, a fireplace quietly crackling in the corner.

Maybe Zuckerberg was right?

Metaverse skeptics raised their eyebrows when Meta CEO Mark Zuckerberg touted his lofty vision for the metaverse at the 2021 Connect event.

Well be able to feel present like were right there with people no matter how far apart we actually are, said Zuckerberg.
Many then laughed as the tech magnate sunk tens of billions into research and development for his loss-making Reality Labs division seemingly only to produce legless, blank-eyed monstrosities via Metas Horizon Worlds.

But that laughter is quietening. In September, Zuckerberg showed that the technology is far further forward than we thought.

During a face-to-face conversation with computer scientist and podcaster Lex Fridman, Zuckerberg showed off the latest version of Codec Avatars, one of Metas longest-running research projects aimed at generating photorealistic metaverse avatars.

The tech was met with awe from onlookers, including Fridman himself.

Im already forgetting that youre not real.
However, the tech requires specialized equipment and is at least three years away from being available to everyday consumers. Zuckerberg said he hopes the scanning process could eventually be done with smartphones.

Metas latest version of VR uses a self-contained, standalone headset that displays a stereoscopic image via LCD screens through pancake lenses, offering a wider field of view than its predecessors while being lighter and thinner. Motion and hand tracking are achieved through a mix of accelerometers, gyroscopes and four outward-facing cameras, while another two cameras are used to display colored passthrough useful when engaging in mixed reality experiences.

Meanwhile, theres considerable anticipation over Apples Vision Pro, which is set to launch in the first quarter of 2024. While it comes with eye-tracking, 4K resolution and Apple EyeSight, which may also impact the future of work, it also comes with an eye-watering $3,499 price tag.

Apple says the spatial computing device will allow users to set up the perfect workspace.

So, is VR work ready for primetime?

As I reflect on my week in virtual reality, Im enjoying a coffee in a very real, definitely not virtual coffee shop in Sydneys Western suburbs.

Occasionally, I miss my VR work friends and the serenity of my cozy virtual chalet.

But until the tech gets smaller, lighter and less clunky, Ill probably stick to Slack huddles and my trusty PC on its wooden desk.

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Two years after John McAfee’s death, widow Janice tells Magazine she’s penniless and can’t move on until his autopsy records are released.

Janice McAfee, the widow of tech impresario John McAfee, is still in the midst of grief. She is doing odd jobs to feed herself, has run out of funds, and still doesnt know what really happened to her husband.

Since the death of crypto guru and antivirus pioneer husband John McAfee in a Barcelona prison more than two years ago, she has remained in Spain in an undisclosed location and has only been saved from homelessness by the kindness of friends.

She cant move on because she still doesnt know what happened to her husband in spite of a September ruling this year from a Catalan court that John McAfee died by suicide and the case was effectively closed.

In an exclusive Zoom interview with Magazine, she explained her current situation.

For more than two years, Ive not only had to deal with the tragedy of Johns death, but its so hard to move on because the authorities refuse to release the autopsy of his death. I have tried and tried, but they will not let me see it.

There is the opportunity of an independent autopsy, but that will cost 30,000 euros, and I dont have the money to pay for it. All I want is to see his body for myself and know that really happened.

Not having the money myself to make the decision to find out what really happened is hard, but Im hoping that giving this interview will give people the opportunity to know whats really going on. I still have people contacting me who still cant believe hes dead, she says.

What happened to John McAfees $100-million fortune?

Although John was worth more than $100 million after he resigned from antivirus company McAfee in 1994 and sold his stock, his official fortune had dwindled to an estimated $4 million at the time of his death, according to Celebrity Net Worth.

He claimed in 2019 that he had no money and could not pay a $25-million court order over a wrongful death lawsuit. However, he was arrested the following year on U.S. charges of tax evasion, with authorities claiming he and his team had earned $11 million promoting cryptocurrencies. From prison, he told his 1 million Twitter followers he doesnt have any hidden crypto. I have nothing. But I regret nothing.

According to Janice, her husband didnt have a will or an estate, so there is no money, and because of the judgments against him in the U.S., its highly unlikely that any financial legacy will be passed on to her. 

There are stories that there are secret caches and documents, but Janice was deliberately kept in the dark (about alleged secret treasure) by her husband, so she wouldnt be in danger. She also has a raft of unanswered questions about Johns untimely end. 

I dont think he thought things would have ended the way they did and nor did I. I dont know if he committed suicide; we talked every day after he was imprisoned near Barcelona. I dont know how he got strung up. 

I dont know if it was with a rope or a shoelace. In the prison report, it says that when they found him, he was still alive; he had a pulse and was breathing when they found him. A faint pulse, but a pulse is a pulse.

Janice cannot believe that when he was found in the cell with a ligature or shoelace around his neck, medical practitioners there appeared to have attempted CPR on him without removing it first.

I went to school to be a registered nursing assistant, and I know how to do CPR. Even in the movies, its the first thing you do: clear the airways. 

If somebody has something tight around their neck, thats the last thing you would do. The first thing would be to remove the obstruction, but you can see from the prison video that didnt happen. I dont know if it was negligence or stupidity; it just feels sinister. But now Im speculating, and I dont want to do that. 

Janice McAfee was frightened after Johns death

After her husbands death, Janice was frightened for her safety. While John had told her that the authorities were only after him, not her, she was still worried that she would be a target for others.

John always assured me that he wouldnt tell me anything that would put me in danger; that was a comfort. He was public about the 31 terabytes of information that he apparently possessed, but he never shared that with me, and I have no idea where it is or whether it actually existed.

But I feel safe at the moment. I have nothing to hide, and I dont even know how he really died, let alone what he possessed. If there was an independent autopsy, I can get some peace. There is an opportunity to do so, but its very expensive.

I first met Janice and John at a blockchain conference in Malta in 2018. Like the crypto world at the time, it was chaos but good chaos.

I interviewed him on stage, and it wasnt my finest hour, or maybe it was. There was something about being near him that affected me and made me behave on stage in a more carefree manner. Maybe thats what he could do, a Svengali of sorts.

John had been drinking whisky on the side of the stage but was sober and lucid. Janice was with him, protecting him from the thousands of people who wanted to speak to him.

She reminded me of Kim Kardashian when I interviewed her in Armenia calm, collected and almost zen-like in her presence. I immediately liked Janice and trusted her.

Later after the on-stage interview had been completed, I was approached by a husband-and-wife camera team who was doing a documentary on crypto that was almost finished, but they would love a word with John. Could I help?

I wasnt sure but texted Janice, and she said it was OK; John apparently liked me. I was invited to the penthouse suite and convinced the armed guard outside their room that I could vouch for the people with me. Again, not something I did every day.

John laughed when he saw me. You again, for f–ks sake! But he was civil to the husband-and-wife team and invited me to join him on a private yacht in Valletta Harbour that evening.

What goes on on private yachts stays there, but we became friends there and then, mainly because I was the only one not blowing smoke up my arse, according to John. Further invitations would follow notably to an island off North Carolina when he was still incognito and on the run.

We stayed in touch, and I conducted a couple of interviews with him during the pandemic when I was running a podcast. When I reached out to Janet on Twitter/X to see if she would be interested in doing her first interview, she said John considered me a friend and would be happy to do so.

Janice McAfee still wants to recover John McAfees body

So, thats the backstory to this interview, but what is more important is the journey from this point on. Janice is determined to follow Johns wishes that, if died, he wanted his body to be cremated. 

His body is still in the morgue at the prison where he died. I dont know why they decided to hold on to his body. They dont need it. Two years ago, I had the money for an independent autopsy; a year ago, I had the money, but now I dont. 

Also read: Holy shit, Ive seen that! Coldies Snoop Dogg, Vitalik and McAfee NFTs: NFT Creator

I am surviving by taking little jobs here and there to feed myself; thats not whats important. What matters is what I can do for John. Im not a victim John was the victim and I need that autopsy report, not to continue a fight against Spanish authorities, but to know what really happened to him.

I put it to Janice that the perception was that John had run out of time and had come to the end of the road. An extradition order to the U.S. had been made hours before his death, and it was surely going to be hard for him in a U.S. prison. 

American authorities do not like people who thumb their noses at them, and an example would have been made of him. In some ways, didnt his apparent suicide make complete sense to a proud man?

We never talked about that. Ever. While he did tell me he wanted to be cremated, that was because he knew there were people who wanted him killed, but thats not the point. 

I dont want to be on one side or the other. Just tell me what the body says. Im not trying to seek justice theres no such thing on this earth any more. I just want Johns wishes to be fulfilled.

Janice is an American citizen, but shes understandably in no rush to go back to the U.S. when she doesnt know what her status is.

John McAfee Netflix documentary

A Netflix documentary called Running with the Devil: The Wild World of John McAfee was released last year and portrays her and John as fugitives, which is not something that Janice thinks represents the real story. 

It was more of a tale about the journalists themselves who tried to sensationalize a public figure and werent quite up to it. They centered themselves when the focus should have been on the real story of why McAfee felt disposed to be a so-called fugitive or why Janice was staying with him.

People forget very quickly, and I understand why because the world moves very fast nowadays. I just want him to be remembered properly, and thats the least he deserves.

Janice wants closure. She wants to cremate her husband, remember him with love, and work out what to do next.

I hope she gets her wish. Everybody deserves a chance to move on, and Janice McAfee much more than many others.

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Polygon co-founder Sandeep Nailwal won’t be happy until the project is successful enough to stand alongside Bitcoin and Ethereum.

Read Part 1 here: Slumdog billionaire: Incredible rags-to-riches tale of Polygons Sandeep Nailwal

Growing up in poverty in a Delhi ghetto with an alcoholic father and an illiterate mother, Sandeep Nailwal has always had a fire in his belly to achieve something better.

He wants to go big or go home middling success is not an option.

I am not doing something small, he tells Magazine. Okay, we build some network, and it has a token. It does well for one cycle and then fades into the dawn, and I make a few million dollars for myself and retire or whatever this was not the plan.

We were very clear that we will build this, we will grow the community, and well make it one of the biggest projects in the space.

And thats why, in his mind, Polygon formerly Matic Network is yet to truly succeed, despite nudging a $19-billion market cap at one point and joining the top 10 cryptocurrencies by market capitalization (its currently No. 13 with a $6-billion market cap).

Being in the top 10, top 15 projects brings no satisfaction to me. Its very clear in my mind that I want Polygon to have that kind of impact which Ethereum and Bitcoin have had. We have to go to the top three projects in the space. And thats only when I would say that OK Polygon has made it.

Part 1 of this feature told the story of Nailwals rise from grinding poverty to going all-in on Bitcoin with $15,000 hed borrowed to fund his wedding and the difficult early days of Matic Network, where the threat of running out of funds was ever-present.

By mid-2019, Matic Network had raised $5 million in a Binance initial exchange offering to keep itself afloat and had launched the alpha version of its Ethereum layer-2 sidechain. But it was slowly becoming clear that the Plasma technology it was pursuing was not the answer the market was looking for.

Ideas around scaling had begun to change, and Plasmas shortcomings (TLDR: complicated, better at transferring assets than running smart contracts) had seen it lose favor. Seeing which way the wind was blowing, the research-oriented Plasma Group decided to ditch the framework altogether in favor of building an Optimstic rollup and renamed the project Optimism in early 2020.

But the Matic Network white paper had outlined a Plasma-based solution with fraud proofs and a proof-of-stake checkpoint layer, and the team was determined to follow through and build it in 2019 and 2020, despite waning interest in the tech.

Mainnet market crash and resurrection

Just as the project was gearing up to launch its mainnet in May 2020, a worldwide pandemic and the March Black Thursday market crash intervened. Around 70% was wiped off the already paltry sub-3-cent price of MATIC within the space of 10 days. With fears of a new Great Depression gripping the world, Matic Networks future again looked in doubt.

Suddenly, everything felt like it will go to zero. That shock was there for two to three months. We survived that, but what we realized is that, you know, we started with Plasma technology, and now plasma is dead. And now we are launching our mainnet. People are, like, Plasma is dead; there is no interest from the community.

Nailwal says the team came to two conclusions.

The first is theyd try and get as many developers and builders as possible. This was a success, as they launched their Ethereum layer 2 just in time for DeFi Summers ludicrous gas fees on layer 1.

The second conclusion was to never again put their eggs in one basket.

We realized that we need to be multichain; we cant be relying on one particular technology, he says.

Long-term Ethereum community insider Mihailo Bjelic was also thinking about a multichain future and joined the project to become something of a bridge to markets and communities from which the team felt excluded at the time. Nailwal says the projects roots in India meant it had a low profile in the Western world, where some considered it to be just like another internet scam. 

Also read: Beyond crypto Zero-knowledge proofs show potential from voting to finance

In early 2021, Matic Network rebranded as Polygon to highlight the change in direction. At the time, Nailwal told Cointelegraph the idea was to become Polkadot on Ethereum and to add Optimistic rollups, zero-knowledge (ZK) rollups and StarkWare-style Validiums alongside the PoS network.

But Nailwal says they quickly realized that Optimistic rollups were at best an intermediate solution that wouldnt be able to scale up to have 50 chains working in the ecosystem.

With ZK, you can imagine a world with […] 100,000 chains; each of them has 1,000 transactions per second (TPS); all of them combined together could be tens of millions of TPS in the whole network. And the architecture will still survive and keep scaling.

Infinite scalability, unified liquidity and that is the main point for why we bet on ZK because ZK is the endgame for blockchain scaling.

Polygon bull-run fever

At the dawn of 2021, MATICs market cap was just $87 million. By mid-year, it had surged to almost $14 billion, and it was nearly $19 billion by years end. Thats in no small part due to its surging user numbers and ability to scale Ethereum.

At the end of 2020, it had fewer than 1,000 daily active users, but by October that year, it had surpassed Ethereum for the first time with 566,000 users in a day and had flipped ETHs daily transactions, too, thanks to high gas fees on the L1.

Suddenly, the founders were very wealthy individuals, and the project itself had the funds to embark on a major acquisition spree.

In August, it snapped up the entire Hermez network for 250 million MATIC. The project became Polygon Hermez, an Ethereum Virtual Machine-compatible ZK solution focused on decentralization and a proof-of-efficiency consensus.

In December, it spent another $400 million in MATIC to buy the Mir team of ZK-proof experts to build Polygon Zero (ZK recursive scaling). And the acquisitions kept coming.

We reached out to all of them. We said, You want to work with us? And I think at that point in time, whatever was like number three, number four, number five, like we acquired all of them, because number one, number two did not come with us. (But) the talent in number three, four, five teams is super, super good.

The venture capital seemed to think the new plan was a winner, with Polygon raising another $450 million in early 2022, selling MATIC tokens in a raise led by Sequoia Capital India and including Tiger Global and Softbank Vision Fund.

The advantages of having multiple teams taking different approaches became pretty clear.

We initially kept them completely autonomous so they could pursue their own research, and they collaborated with each other. Due to that collaboration, suddenly, we got a ZK EVM, which people have thought is four or five years away.

He says the ZK EVM took just 12 months to develop because of the cross-pollination of ideas between these teams.

Other ZK flavors developing under the Polygon umbrella include Miden (a StarkWare-like system with its own virtual machine) and Nightfall (Optimistic rollups meet zero-knowledge cryptography).

Bets each way on ZK, JavaScript is for midwits

The other big advantage of having multiple teams building different solutions is it doesnt force Polygon to make the same hard choices other projects have had to make.

For example, StarkWare is betting that the additional performance provided by its Cairo virtual machine will make up for the fact that its much harder to port existing Ethereum projects over to StarkEx.

Most of the other projects zkSync, Linea, Scroll, etc. are making the opposite bet that less performance but easier compatibility with the Ethereum Virtual Machine will attract projects and see their solutions win market share.

Polygon is the only team with bets each way, with Polygon Miden following StarkWare with a ZK-optimised virtual machine. For his part, Nailwal thinks EVM will win in the short term, but other solutions will come into their own in the years ahead.

I almost feel like EVM is like JavaScript right? he says. I remember when I was in first or second year of my engineering college JavaScript was considered to be a programming language of the midwits! But today, JS is everywhere; maybe 80% of the web is powered by JavaScript. So, EVM kind of has those effects no matter how much you say, These are the problems.

Nailwal adds, however, Our plan is a 10-year-long plan. So, we have the ZK EVMs, we have Polygon Zero, but we also have Polygon Miden, which we believe is highly performant, has privacy features inbuilt […] and it will support all the programming languages.

Miden founder Bobbin Threadbare told Magazine earlier this year that the Miden VM will enable users to do things like run high-quality video games and generate ZK-proofs on their home PCs they can send into the network.

What they are doing, it gives me goosebumps, Nailwal says. But Miden will start blossoming in around one year. By that time, we, as the Polygon community, need to win the ZK EVM. He hints that a new token and airdrop are being considered to help with this.

Ethereum upgrades to turbocharge Polygon L2s

Ethereums next big upgrade, EIP-4844, which is supposed to happen sometime before the end of the year, introduces proto-danksharding to make life easier for rollups, which Nailwal says is welcome but not a game changer.

I think some estimates were saying up to 200300 TPS only for the rollups. So, not a huge advantage, but its going to reduce the (gas) cost of the transactions.

Full danksharding, which is several years away, according to the Ethereum Foundation, however, will multiply that improvement by the number of shards, currently expected at around 64.

So, you can imagine that 64 multiplied by 200. So, there will be, like, you know, 12,000 TPS, all the rollups can support.

In June this year, the project unveiled its Polygon 2.0 roadmap to become the Value layer of the internet. The vision is for a network of ZK-powered L2s that will seem like using a single chain to users thanks to a cross-chain coordination protocol. Builders can knock up their own ZK-powered L2 chain in a flash using Polygons Chain Development Kit.

The existing PoS blockchain will become a Validium, which is one approach to dealing with the data availability problem of how to affordably store stuff on Ethereum.

The roadmap will also see MATIC tokens upgraded to a new token called POL (short for Polygon) and introduce the controversial concept of restaking, which enables token stakers to earn additional rewards by helping secure other networks.

The POL token is basically the hyper-productive, third-generation token. You can validate on multiple chains, and you can validate for multiple roles: You can be an aggregator, you can be a sequencer, you can be a data availability provider, and you can be a prover. So, with the same token, you can actually stake on multiple layers.

Restaking is controversial in the Ethereum community, with critics arguing it could turn into an unstable house of cards. But Nailwal says POL will be natively integrated into the ecosystem rather than added by third parties on top, as with Ethereums EigenLayer, which will mitigate the risks.

With Polygon, risk-taking is more enshrined in the protocol; this is part of the protocol; this is how the protocol behaves, he says.

If youre a validator and you are running 100 chains, and of those 100 chains you falter or you do fraud on one chain, you get slashed from all of them, he continues, adding hes not sure EigenLayer could implement that especially when they are building on top of something.

I think there are a lot of nuances where ours is much simpler and easier to do.

Polygon 2.0 is like the internet of money

For Nailwal, the ultimate aim of Polygon 2.0 is to evolve crypto networks in the same way the internet evolved. The forerunner of the internet was ARPANET in the 1970s, then the invention of TCP/IP in 1983 allowed multiple networks to connect, forming an inter-network, which grew into the internet thanks to additional technologies like the Domain Name System and the World Wide Web.

Its interconnectivity of all the networks, he says. This is exactly what you see is happening on blockchains.

Its very hard to move your money trustlessly from one chain to another; you use these bridges, which get hacked all the time. Thats why Polygon 2.0 is not only about having infinite scalability […] But it should also make sure that that value that is being created on these hundreds of thousands of chains also is connected and seamlessly movable.

He says the interoperable layer will enable value to flow between L2 chains, as well as Ethereum and potentially other layer-1 chains as well in the future if they join in.

So, with this Polygon 2.0, we can achieve the same characteristics as the web has, he says. The Web3 network, whichever will win, should have infinite scalability and seamless transfer of value between these chains.

Thats why Polygon 2.0 architecture has got a lot of critical acclaim.

Future for Polygon and Sandeep Nailwal

Even as the founder of a multibillion-dollar blockchain and living in luxury in Dubai, Nailwal still feels unsatisfied, as if he has yet to make the impact he feels he should. He looks up to world changers like Mark Zuckerberg, Satoshi and Vitalik Buterin a truly remarkable man. So, mere wealth is not enough. He wants to make a lasting impact.

Ive never felt that Polygon has made it, he says. That part is very relentless in my mind, like there is no middle ground like this.

I think Bitcoin, Ethereum only can say that they have made it nobody else, no other protocol can say that theyve made it; they can die in a matter of six to 12 months.

So, Nailwal wont be happy until the Polygon ecosystem truly deserves to stand along Bitcoin and Ethereum as the bedrock of the entire industry

We have to go to the top three projects in the space, he says.

Read Part 1 here: Slumdog billionaire: Incredible rags-to-riches tale of Polygons Sandeep Nailwal

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Growing up in poverty in a Dehli ghetto, with an alcoholic father, Sandeep Nailwal went on to found the $6B Polygon crypto empire.

From his childhood living in a ghetto on the east bank of the Yamuna river in Dehli to launching the $6-billion Polygon blockchain, Sandeep Nailwal has an incredible rags-to-riches tale.

Now happily ensconced in the futuristic, air-conditioned cityscape of Dubai, he tells Magazine he was born in a farming village in 1987 with no electricity called Ramnagar in the foothills of the Himalayas.

His parents married as teenagers and then packed up home when Nailwal was just four to try their luck in Dehli. They wound up in the poor settlements on the east banks of the river, often dismissively referred to as Jamna-Paar.

Imagine the Bronx in New York, Nailwal says. It was like a tier-three area. Even now, when you go there is a very kind of ghetto-ish area.

He remembers lots of cows roaming the roads and illegal guns, though he says knives were the weapon of choice. When stuff needs to be done, then knife is the best tool, he says of the attitude.

Nailwal didnt attend school until he was five, in a country and period where many schools accepted children as young as two and a half, mainly because his parents didnt know any better.

My father and mother both were kind of like illiterate people; they did not even realize that the kid should be sent to a school after three years or whatever. So, somebody in my area who used to have a small school said: Why is your kid not going to school? And then I started going to school.

He waves at an ordinary-sized room behind him in Dubai, saying the school was almost the same size with 20 kids crammed in. Home life wasnt much better.

My father became an alcoholic and got into gambling. So, he would make like $80 to $90 a month, and out of that, generally many times, he would lose all of it, says Nailwal. As a result, the family was often behind on paying the schools monthly fees, so they will make you stand outside, and its basically a very traumatic experience as a kid.

Also read: ZK-rollups are the endgame for scaling blockchains: Polygon Miden founder

Experiences like that in his formative years helped Nailwal understand the kind of man he didnt want to be and forge his determination to succeed. Now the head of his own family, with a young child named Adi, he says becoming a dad made him reflect on how he hopes to do things better than his own father. But the conversation takes a surprising turn when Nailwal reveals he was actually thrust into a paternal caring role, looking after his baby brother when he was just 10.

I would say in a way, my first son is my own brother, he says, his voice becoming thick with emotion. So, basically, when he was very young, he met with an accident at that point in time. So, I would say thats where my childhood ended basically because I had to take care of him.

Young entrepreneur

Nailwal got his start in business as a teenager, selling pens from a friends shop at a decent markup in school and tutoring other students. After he graduated, he hoped to take an insanely competitive engineering exam for the Indian Institutes of Technology (IIT) but couldnt afford the extra tuition he needed to get an edge among 1 million students fighting for around 5,000 seats.

He ended up getting accepted into the tier-two MAIT college in Dehli and took out a loan to put himself through a computer science and engineering degree.

Supremely ambitious and possibly a tad overconfident, he saw his future going down two possible paths based on two notable role models: Either join a company and work his way up to become global CEO like PepsiCos Indra Nooyi or start up a revolutionary internet business like Mark Zuckerberg did with Facebook.

I was inspired by all this hype around Facebook in 2004, 2005, he says, recalling the intense media coverage of Zuckerberg in India at the time. I said to myself and it was very stupid at that time like I want to build my own Facebook. Thats why I chose computer science.

During his university degree, his talents in data analysis saw him get a gig working on electorate analysis work for the regional BJP party now Indias ruling party. After a short stint in the workforce after university, he returned to study at the National Institute for Training in Industrial Engineering (now the Indian Institute of Management) to get his MBA, where he met his wife, Harshita Singh.

Although a highly regarded employee at Deloitte, and then Welspun textiles, where he was quickly promoted to head of technology for e-commerce, Nailwal never stopped working on his own projects. Hed spend all day at work, then go home and work on projects like a GPS-based system to optimize cargo vehicle deliveries or a B2B service platform for project management.

Nailwal says he felt he wasnt able to pursue a startup full-time, as he felt cultural pressure and a responsibility to get his family out of the one-bedroom rental they were in and into their own home. And nobody would give a home loan to a 27-year-old with intermittent income from a fledgling business.

But Harshita one day said, You will never be happy this way, he recalls. She said, I dont care about my own house; we can stay and rent. That was a very big burden away from me.

In his last month of work, he borrowed $15,000 so he could afford to pay for a wedding one day, and then started to work on the B2B services marketplace full time, which he ran for a year until he realized it would never scale up the way he wanted.

Bitcoin revolution

Instead, he looked to get into deep tech, first considering then abandoning AI as it was beyond his mathematical abilities. Bitcoin was starting to get some press at that time due to the upcoming halving in 2016.

Nailwal had heard about Bitcoin back in 2013 but initially wrote it off as some sort of Ponzi scheme. After discovering it had lasted the distance, he thought it worthy of further investigation. Reading the beautifully written white paper, he realized:

Oh, this is big this is the next revolution of humanity.

Converted, he was desperate to get skin in the game and, over the next three months, tipped the $15,000 wedding loan into Bitcoin at $800 a piece. Looking back, he says it was an insanely risky move given his finances at the time.

The level of FOMO I had, it would have been exactly the same if I was one year late. And I would have done the same thing at $20,000. Yeah, and I would have lost all that money, and it would have been really, really problematic for me.

But as a builder, he wanted blockchain to be about more than just payments, which led him to Ethereums full programmability. I was like this is the thing, this is the thing I want, he says.

Throwing himself into the space, Nailwal founded a blockchain services startup called Scope Weaver in 2016 and became well-known as a moderator on local Ethereum forums. Thats where he met a hardcore programmer named Jaynti JD Kanan, who kept suggesting he spend his $400,000 Bitcoin stash investing in his startup ideas.

Initially, Nailwal wasnt keen, but then Ethereum started to struggle with its own popularity during the 2017 bullrun, most notably after a 600% increase in transaction fees from CryptoKitties made the blockchain all but unusable.

Also read: Ethereum is eating the world You only need one internet

Kanan suggested they work on fixing Ethereums scaling problems by developing the layer-2 Plasma technology proposed by Vitalik Buterin and Joseph Poon in August that year, which helped offload transactions to faster and less crowded side chains. Nailwal agreed and helped raise $30,000 in seed funding to build a product, with Anurag Arju joining as another co-founder and Matic Network officially launching in early 2018. The project was bootstrapped on the smell of an oily rag. All up, he says, the Matic Network survived for its first two years on $165,000 of total funding.

Matic Network nearly dies

Having watched endless projects raise millions with vaporware initial coin offerings, the team was determined not to launch a token sale until they had a product.

They would come to regret this decision bitterly. Launching directly into the great crypto market crash of early 2018, the ICO market was strong for a few months after but petered out by the time their runway was growing short.

We kind of ignored that opportunity, he says. Which was really, really painful later on.

We had this huge opportunity of raising $10 million. We left it; we did not do it. And now we have no money to build. I remember that one time I had to almost beg one of the other founders of one project from India to grant us $50,000 so that we can run for three more months.

Shortly before his marriage, Nailwal traveled to pitch to a Chinese fund that seemed keen to invest $500,000 in the struggling project. He recalls being delighted two days before his marriage, with a house full of guests, that everything was going to be OK.

Everybodys happy, and Im also content that we will get $500,000 now (for Matic Network), and suddenly, Bitcoin goes from $6,000 to $3,000. That fund after that simply said, No, we will not invest now because we were going to invest 100 BTC; now the value is half, so we are not investing.

Even worse, the projects treasury was still in Bitcoin and had also halved in value.

That was a very traumatic experience for me around that point because I should not have speculated on this money, which is the companys Treasury, he says, meaning that he should have cashed out or turned it into stablecoins.

So, I was really angry at myself, and this thing went away. By that time, we had like seven, eight, 10 people [in Matic]. They are also [attending] my marriage, and we are enjoying it and all that but deep down, I know that shit, we might not have this team in the next two, three months.

Binance is actually diligent

Toward the end of 2018 and early 2019, the opportunity came up to raise funds in an initial exchange offering on Binance Launchpad. While the U.S. Commodity Futures Trading Commission thinks Binance is a bunch of cowboys who will accept any old bus pass as Know Your Customer verification, Nailwal says the exchanges due diligence was possibly too diligent.

Nobody believed that there could be a protocol coming from Indian co-founders. And there were two or three projects which turned out to be scams, and everybody was very wary, he says. Matic ended up going through eight months of evaluation before getting the nod to raise $5.6 million in $300 lots to the winners of a ballot.

Nailwal says, At that point in time, $5 million was a very good amount.

If Binance had said, You can raise $1.5 million or $1 million, we would even settle for that because we had a struggle for survival. But once we launched on Binance, things became much better.

That marked a turning point for Matic, which survived the 2020 pandemic market crash and grew from fewer than 1,000 daily users at the end of that year to surpass Ethereums user numbers with 550,000 in October 2021. It also flipped Ethereums transaction numbers that year, too. Rebranding as Polygon, it surged from a market cap of $87 million at the start of 2021 to almost $19 billion by the end of the year.

Nailwal was now one of the richest and most successful people in the cryptocurrency industry. But he wasnt satisfied, by a long shot.

Being in top 10, top 15 projects brings no satisfaction to me. Its very clear in my mind that I want Polygon to have that kind of impact which Ethereum and Bitcoin have had.

Look out for part two, which tells the story of how Polygon became one of the key players in the space and Nailwals plans to make it a top-3 project. 

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