A brief note on the Block’s article “Addressing Preston Byrne’s MakerDAO criticisms”

I was made aware earlier today of a post in The Block, which has been paywalled, by Teo Leibowitz titled “Addressing Preston Byrne’s MakerDAO criticisms.” This piece focused on a number of points I made about MakerDAO during a podcast recording.

I was a little surprised to learn the piece was being published, as I was in The Block’s offices yesterday afternoon recording the Block’s inaugural crypto-legal podcast with my good friend Stephen Palley. I was not aware that I was being interviewed by anyone other than Stephen Palley. Neither was Palley. I certainly was not being interviewed by Leibowitz, who was present in the room, and with whom I exchanged a handshake and perhaps five words over the course of two hours.

To wit, Mr. Liebowitz critiqued remarks of mine that were not yet on the record and in so doing, was front-running the podcast.

This is not Palley’s fault; he is one of my closest and most trusted professional friends and learned about Leibowitz’s article only after it was published, as I did.

To say that I am annoyed with Leibowitz and The Block is an overstatement. It takes a lot to do that. I am, however, disappointed.

Leibowitz was sat about twelve feet away from me at about 7 O’Clock. He was listening intently to our conversation, and as will be evident from the podcast when it is released, he was even invited to join that conversation. He did not do so. Instead, he published a piece in the Block, behind a paywall, in which the perhaps 23-year-old Leibowitz “takes exception to [Preston Byrne’s] empirical misunderstandings of the MakerDAO mechanics,” primarily by reference to two two-year-old, and therefore a little dated, blog posts of mine written at the end of 2017 and in January 2018, tracing the key points I alluded to during the podcast.

For context, I live about 100 miles from New York City, in the countryside. I drove myself to New Haven, took a two hour train ride into the city, schlepped downtown in a cab, did the podcast free of charge, and then repeated the journey back home to assist with making content for an early-stage startup I like and to support my friend who produces it for them.

Adding insult to injury, Leibowitz’s rebuttal is fairly facile as well, and looks like it has been taken from the talking points of the stablecoin set, with whom I am advised he is closely acquainted, even friendly.

I think the majority of stablecoin people are dilettantes with barely enough brainpower among them to ignite a 20-watt bulb, so I don’t particularly care to repeat Leibowitz’s analysis in full or rehash my own, save to say that it is my belief, and the belief of every professional person I know and respect, that MakerDAO is a shitcoin and Dai is a trash fire. The language scheme promoters use to describe it is confusing (e.g. “stability fee” instead of “withdrawal penalty”), the promises they make are overblown, the representations they have made for the scheme have changed multiple times over the past 20-odd months to match the observed behavior of the scheme, and the behavior of the USD peg was and remains highly unnatural, with little evidence of an organic market and considerable evidence of artificial trading activity.

The second-layer solutions being built on top of it are amateurish, even reckless, and the investors funding these solutions and companies seeking to rely on them are as foolish as anyone who believes that repackaged Ether is safer than AAA-rated debt. Which is what these people actually believe.

Addressing the argument that Dai’s stability is supported by legitimate market making activity, Leibowitz’s rebuttal conveniently leaves out the fact that it is difficult to believe, based on the available data, that early “market making” bots were doing anything but wash trading. He writes:

Preston seems to take issue with market makers, who provide liquidity while capturing spreads. Market makers operate at volume in the Dai market. That this is the case is a) a positive for the MakerDAO ecosystem b) a signal of faith in the MakerDAO mechanisms.

In my 35 years of life the practice of market making has not escaped my notice. I do not take issue with market makers or market making. I take issue with the fact, as I explained on the podcast, that in January 2018, on Dai’s largest market, with daily volumes of $2.6 million, the loss of one bot eliminated all but $300 of volume, being 99.9998846% of the volume on that market. I especially take issue with the fact that Rune Christensen explained this away as “a bot going down” and gullible and inexperienced young grasshoppers such as Leibowitz accepted the explanation on faith without bothering to actually do any follow up. 20 months later, I’m still waiting for someone, anyone, to do the follow up.


I am advised by well-placed sources that the Block is willing to offer an apology in long-form. I do not require an apology. Nor do I want one. I am Catholic, and we prefer to exact penance with forgiveness.

In any case. The podcast will be coming out. Palley is a solid dude and my very close friend, and I will be going back on his podcast in the future, as will other interesting people in the crypto-legal space. So definitely give his content a listen. And keep reading the Block, too. Their content is good, their people, including this chap Leibowitz, are talented if unorthodox and they take a more critical view of the space than most. They raise the bar in that respect.

But without getting into too much detail about recent things they’ve said and done, they need to start behaving a little more professionally. I look forward to continuing to contribute on occasion to Palley and Nelson’s Crypto Caselaw Weekly and provide the Block with hard hitting and dynamic, yet tender and somehow ineffably heartwarming comment of a legal nature.

But to be clear, and to conclude, the article in the Block that has my name in the title is the other half of a conversation in which the author was an eavesdropper, had an opportunity to participate, and did not.

Coda – 18 hours later

Let’s be clear about what happened here. I gave an interview and most of my day over to the Block so I could help my friend, Palley, who writes a weekly legal column with them, generate some interesting legal content for his new podcast.

One of the Block’s reporters, who has 90% of his crypto portfolio in Ethereum, with the knowledge and consent of his editor, eavesdropped on that interview and then surreptitiously wrote a hit piece – on the Block’s own podcast guest – seeking to discredit my critique of a thing called “MakerDAO,” which is the closest thing Ethereum has to a killer app. It was released immediately, with my name in the headline, behind a paywall, ahead of the release of that podcast. In the podcast, which will no longer be released, I am highly critical of that “killer app.”

I forgave them for this.

Leibowitz now claims I’m making it all up.

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Sometimes you give people the benefit of the doubt and they disappoint you. In this instance, it didn’t take long: after receiving written apologies from the Block’s two editors Mike Dudas and Larry Cermak, and an (entirely unnecessary) apology from my friend Palley who was also deceived, the staffer went right back on Twitter and started firing pot shots to defend himself, rather than doing what he should have done, which is apologize.

It wasn’t Leibowitz’s interview, it was Palley’s. If Leibowitz wanted to discuss anything I was saying, one would hope he’d have enough self-confidence to discuss it face to face, as indeed he was invited to do. One should also hope that he would have the decency and courage to apologize directly instead of leaning on his two editors, one of whom is based in the Czech Republic and was asleep at all relevant times, to do so for him via Twitter DM.

Pity he didn’t.