Interviewing tuba on Sifu, ZetaZeroes, and DeFi’s perilous future

I’m incredibly pleased to have been able to interview tuba, CEO of Psyops Capital, builder par excellence, on an exciting and diverse array of topics, covering everything from Sifugate to the Indexed Finance hack and the gradual evolution of DeFi over the coming years.


Overall an incredibly fun discussion, touching on both the timely and the timeless, and without further ado:

Opening comments

fbifemboy: First of all, thank you for agreeing to this interview! You’re of course very prolific on Twitter and I’m sure need no introduction for many readers, but is there anything you’d like to say before we get started?

tuba: None of this is financial advice, but if you end up losing money anyway then DM me for refunds.

fbifemboy: I’ll be sure to include a link to your @0xSifu account for any reimbursement requests in the published transcript.

Sifu and Wonderland

fbifemboy: Which brings us to our first topic: I’d like to spend a bit of time asking for your thoughts on CT’s favorite hustlers, so to speak. You’ve tweeted a fair bit about Sifu in the wake of his doxxing several weeks ago, and the first question I have is:

Sifu is often accused of perpetrating, in part or in full, the theft of >150 million dollars from the Canadian exchange QuadrigaCX in 2019. In your opinion, what probability do you assign to these accusations being true?

tuba: I’d probably assign ~30% chance that he was involved with the Quadriga theft. From most of the sources available online, Cotten seemed like the main perpetrator and Sifu had stepped away from Quadriga a few years prior.

fbifemboy: I notice that’s substantially lower than the sentiment I observe on Twitter, both in a qualitative sense and in a recent poll where >70% of respondents estimated the same probability at >75%; to what, if anything, would you attribute this difference — evaluation of the merits of the case, or perhaps differences in reasoning, or both?

tuba: I don’t there is evidence to show that he stole the funds from Quadriga, so that puts my base estimation at 50%. AFAIK, there were official investigations that did not pin the crime/theft to Sifu, so that puts my probability slightly lower than a coinflip. I think people want to believe that he is responsible/involved in Quadriga because:

  1. The victims want to pin the blame on someone who is alive, not dead
  2. His past history makes people believe that he is a lifelong criminal

Maybe I also like to be contrarian.

fbifemboy: Do you think that people are overly captivated by the narrative of Sifu as a career criminal, which then “naturally” culminates in thousands of people losing money on Wonderland?

tuba: What do you mean “naturally” culminating in people losing money on Wonderland? I really don’t think the project had legs in the first place — it was an Ohm fork (traded at significant multiple over the real assets) that was bound to collapse at some point. Exposing Sifu’s identity was just the straw that broke the camel’s back. Thousands of people would’ve probably lost money with or without Sifu IMO.

There were also a few signs of “mismanagement” of the treasury funds too IMO, so it’s not as if Sifu/Dani bear no responsibility. for the outcome.

fbifemboy: What I mean by “naturally culminating” (and I believe this to be at least partially true) is that by making Sifu out to be the villain in the narrative, so to speak, it absolves them, or the broader community, from some lack of responsibility in the past that caused them to lose money — although I don’t think this is fully explanatory, just one component of the whole.

On the topic of treasury management, I’m curious how you would judge Sifu’s activity in DeFi, both overall in terms of past contributions (if you’re aware of them) and in terms of his role as a treasury manager. For example, are there positive contributions he made that people aren’t aware of at present?

tuba: I’ve had interactions with Sifu in the past on main, he had always seemed like a polite anon whale / yield farmer. I think a bunch of other people would say the same.

fbifemboy: When you tweet about Sifu, should that be interpreted as show of support? Or is there an element of trolling in there?

tuba: A bit of both? I think he was unfairly lynched and cancelled by the crypto community when his identity was exposed. People were implicating that he exploited Wonderland & stole funds from it even though he had not. So I don’t mind voicing some opposing views (although I veil it with comedy so I don’t get cancelled).

I didn’t think he could continue to be the treasurer of Wonderland though, given his past. I think the community decision for him to be removed was correct. So there is some nuance here — I’m not fully in support of Sifu, nor am I fully opposed to letting him be involved in anything.

fbifemboy: That makes sense; for my own part I have largely congruent beliefs, and in particular I did find it a bit absurd to see him getting accused of stealing funds when that was verifiably not true (at least at an explicit level), so here’s to hoping that your tweets helped push the discussion about Sifu in a more considered direction.

Indexed Finance and ZetaZeroes

fbifemboy: I’d like to turn now to discuss a somewhat older incident, namely the Indexed Finance hack where a pseudonymous exploiter (or arbitrageur, as he would insist), ZetaZeroes, drained $16m from the treasury and fled from a court order after being doxxed by the Indexed developers.

In this case, I’m most interested not in how you would adjudicate the exploit itself but in the ensuing response to it. Would you generally agree with the principle that protocol exploiters should face the full force of the law? Regardless of the legality of the exploit itself, do you see there being any implicit “social contract” in DeFi, and if so, how does the pursuit of ZetaZeroes fit into that?

tuba: The ZetaZeroes incident was a really interesting one… Teenage math wizard exploits DeFi protocol for $15m and publicly refuses to return the funds, believing those funds were justly-earned.

I still don’t have a strong opinion about whether or not protocol exploiters “should” face the full force of the law. But ultimately, the world still runs on social contracts, not code… and if real humans in a court agree that you are responsible, you’re fucked. So it’s best that people operate under the assumption that social contracts that underpin everything, even if they are “on-chain.”

I really respect ZetaZeroes’ courage to stick to his principles though. Many of his arguments resonated with why I joined the industry in the first place — code-level objectivity, fairness, anonymity, etc… and I think that resonated with a lot of other people too.

I definitely wouldn’t have had the same courage. I would’ve taken the $1.5m bounty and GTFO lol. Dying on this hill is also a bad strategy for long-term money-making in this industry.

fbifemboy: Yeah, I’m shocked that he didn’t take the deal!

How do you think that the situation could have played out better? Were there any critical mistakes by any party, or was it inevitable in some sense given the mistakes he made combined with his stubbornness?

tuba: I think hackers should always take the 10% bounty, there hasn’t been precedent for people still pursuing the hacker after they strike a deal to take the 10% bounty. And we are seeing more and more advanced ways of deanonymizing mixers/privacy coins and so on. But I also think the NDX team was too freaked out and was desperate. I’m sure ZetaZeroes enjoyed seeing them sweat and maybe that made him become more adamant about not caving in.

fbifemboy: One quote of his that has really stuck in my mind is — “Ok, you know, I believe that if the promise crypto is to succeed it must be a patrician endeavour.”

What do you think this meant to him, and what does this statement mean to you (if anything)?

tuba: My interpretation of his statement is that crypto will be dominated by the most leet/intelligent people over time. “Survival of the fittest,” if you may. Hackers will get better and better, so if we create over-reliance on social contract to reverse bad things, our “immutable blockchains” may not be so resilient after all.

He also has “Aspiring PhD in Critical Race Theories” in his Twitter bio so he may have some obsession with this idea even outside of blockchains lol

fbifemboy: Regardless of where one might want the ideal end state of DeFi to be, do you think we’re “ready” to bring in the SEC/FBI/etc. into high-profile exploits today? Are there tail risks to doing so that aren’t appreciated, or is early engagement with them the path to long-term sustainability?

tuba: They’re already in. Chainalysis and the other competitors are literally billion dollar businesses from selling their services to government agencies around the world. This is the unfortunate reality — convergence of our little virtual cryptoeconomy with the real world & institutions with guns.

I don’t love projects that actively make it easier for regulators to touch our world, especially with very advanced tools that the regular crypto participant does not have access to. And think founders who build these types of companies are not really carrying the “ethos” of crypto — but hey, everyone’s gotta feed their families somehow.

Softrugs and expectations mismatch

fbifemboy: Even beyond large exploits this seems increasingly relevant over time — for example, we’ve recently seen a lot of celebrities called out for essentially abandoning their failed NFT projects. In these cases, where it’s not as clear cut as draining funds from a contract, what would you say is the threshold between a “rug” or a “softrug” vs. a “failed project” with less moral culpability?

tuba: I think the distinction should be made based on the misalignment of expectations between the creators and the participants. I think most DeFi participants are aware that the 15th Ohm fork is a ponzi and should not be taken too seriously, so there isn’t a huge misalignment of expectations even when the project fails.

But when founders make promises and fail to deliver them, that’s where most of the trouble happens regardless of what the project actually is. When Dani & Sifu promised buybacks and failed to do them, that caused thousands of people to feel like they were rugged. When NFT projects promise long roadmaps or large marketing campaigns but fail to deliver, those are also “rugs.”

I think founders should practice better expectation management if they want to be in the industry for a long time. Don’t overhype everything and be genuine when you build & launch new things.

Of course, cults are built on crazy claims and overinflated expectations. And there are many cases of successful cults in crypto. You can choose that path if you want, but be ready to face the wrath of the community if/when your project starts declining.

fbifemboy: I feel there’s some inherent tension here, in that with obscure Ohm forks the investors are largely degens who have some grasp of what they’re buying into, but Wonderland really bought into the ‘DeFi for the people’ narrative and hence advertised heavily on platforms like Youtube and TikTok, bringing in participants with incredibly misaligned expectations — do you think that this was ultimately a mistake on the part of Dani and Sifu? Given the populist or democratic ideals of many DeFi founders, how do you think this tension can be resolved as they seek to expand the audience for their protocols?

tuba: I don’t think it was a “mistake” by Dani and Sifu… in fact, it was extremely successful at appealing to real people outside of our little echo chamber. Wonderland was genuinely one of the biggest crypto projects and brought in a ton of new people into the industry. It just ultimately could not live up to the hype for a multitude of reasons. It’s not that hard to imagine a parallel universe where Frog Nation was very successful and grew to fill its expectations.

fbifemboy: That’s a really good point — seriously considering other plausible counterfactual histories is something we should probably all do more of.

tuba: I think many people resonate with the populist “community-first” ethos of crypto. Bitcoin was a fair launch, anyone could run a program on their computer to earn some BTC. We’ve strayed pretty far away from that, where most projects are pre-sold to private investors first.

We have yet to see a wildly successful community-first, grassroots-driven project in crypto. The last two were Frog Nation and Sushi — both may have failed due to idiosyncratic reasons in org structure (Sushi internal politics & Sifu identity exposed). I hope people keep trying and I’m sure someone will be successful one day.

Closing notes

The transcript above is presented nearly verbatim, with small edits for grammar, capitalization, and general formatting. For all comments, questions, and interview solicitations, I can be reached on Twitter at @0xfbifemboy.

February 26th, 2022 | Posted in Crypto

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