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Chamath Palihapitiya

@chamath

Dec 23

What I Read This Week…

The Federal Reserve cut interest rates by 25 basis points on Wednesday, lowering the federal funds rate to 4.25%-4.50%.

Jerome Powell described the decision as a "closer call" and indicated only two rate cuts for 2025, down from four rate cuts projected earlier this year.

Powell emphasized they are entering "a new phase" where they will be "cautious about further cuts" after having reduced rates by a full percentage point since September, reflecting the Fed's growing concerns about persistent inflation.

Public markets responded negatively to the Fed's more cautious approach to future cuts, with the S&P 500 decreasing 3% within hours of the announcement.

OpenAI announced their latest reasoning model, o3, demonstrating another step function advance in AI capabilities.

The model sets new performance records across multiple benchmarks, achieving 96.7% on the American Invitational Mathematics Exam, 87.7% on graduate-level science questions, and a Codeforces rating above the 99th percentile.

Using a "private chain of thought" approach, o3 can adjust its reasoning time across three settings (low, medium, high compute), taking longer to respond but providing more reliable answers.

However, o3 still has limitations in handling basic tasks despite its advanced capabilities. The model also requires higher computational costs, at $20 per task in low-compute mode.

o3's approach to problem-solving differs from previous models: instead of retrieving memorized information, it searches through possible solutions and reasons about them step by step, though this process takes more time and computing power.

This addresses a limitation of previous LLMs because it can recombine existing knowledge in new ways to solve novel problems rather than just applying memorized patterns.

New research shows that many smartwatch wristbands contain concerning levels of leachable PFAS chemicals.

Researchers at University of Notre Dame tested 22 wristbands across various brands and prices, finding that 15 contained fluorine indicating fluoropolymer content, which are chemicals containing fluorine atoms that create water and stain-resistant surfaces.

Nine bands had measurable PFHxA, a specific type of PFAS used in manufacturing, with four showing levels above 1 part per million, the highest concentrations ever seen in wearable consumer products applied to the skin.

The findings raise concerns because smartwatch bands maintain direct skin contact for extended periods - often more than 12 hours daily - and recent studies indicate PFAS can pass through human skin under normal conditions.

While the specific health effects of this exposure remain unclear, this discovery provides the first evidence of high PFAS levels in products that come into prolonged contact with the skin.

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Chamath Palihapitiya

@chamath

Dec 5

Deep Dive: A Primer on Cryptocurrencies

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Check the date.

In July, President Trump spoke at a Bitcoin conference and told the audience he would make the United States "the crypto capital of the planet". The crowd went wild.

Since then, President Trump won the presidential election with an unprecedented sweep of all seven battleground states, Gary Gensler announced his departure from the SEC next month, and earlier today, Bitcoin passed the $100,000 milestone.

The cryptocurrency market now commands $3.5 trillion in value, with over 15 million daily active users across all decentralized networks.

Yet many people are still puzzled by what Bitcoin and other cryptocurrencies actually are, and some people still can't see past all the speculation and scams to understand the real use cases driving this ecosystem.

Moreover, I've read many articles and flipped through many slide decks on crypto, but they all miss something crucial – those key "a-ha" moments that help someone really understand what's going on in this space.

For people still skeptical, I've realized that people don't necessarily need more information – they need the right guide to navigate the crypto rabbit hole.

Our fundamental goal with this deep dive is to deliver those "a-ha" moments in an accessible way. We start from first principles and review crypto's evolution from Bitcoin to smart contract platforms, to stablecoins and "P'nut the Squirrel" memecoins.

If we've done our job right, by the end of the deck, you should have a more visceral understanding of why cryptocurrencies command trillions of dollars in value, what projects in the ecosystem have achieved varying levels of product-market fit, as well as what are some of the takeaways from failed experiments.

For people that have already experienced those "a-ha" moments, I think this deep dive is a great framework to zoom out from the fractal edges and review everything that's happened since Satoshi's white paper was published.

By the way, I want to give a special thanks and shout-out to @vaneckpk , @GabeRabello, and the team at @vaneck_us for their contributions to this deep dive. Their expertise and understanding of the space was invaluable.

I hope you enjoy reading, and let me know what you think.

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Chamath Palihapitiya

@chamath

Dec 2

What I Read This Week…

Alibaba recently released QwQ, an open-source AI model that competes with OpenAI's o1 in reasoning capabilities.

What is QwQ and how does its performance compare with OpenAI's o1?

QwQ is an open-source, 32-billion-parameter model with a 32,000-token context window that is strong in mathematical and scientific reasoning.

It outperforms o1-preview on mathematical reasoning benchmarks AIME and MATH, and it beats o1-mini on GPQA for scientific reasoning tasks.

While it performs worse than o1 on LiveCodeBench coding tests, it still surpasses other leading models like GPT-4o and Claude 3.5 Sonnet.

QwQ shows that open-source models continue to rival the capabilities of closed-source models and that Chinese AI models continue to rival the capabilities of U.S. AI models.

Ethereum, despite being the second-largest cryptocurrency by market capitalization, faces challenges to its growth model.

The network's heavy reliance on Layer-2 solutions, which are separate networks built on top of Ethereum for faster and cheaper transactions, has created unexpected complications.

While Layer-2 adoption has seen an increase with popular networks like Base and Arbitrum, this success has undermined Ethereum's main network.

Users increasingly prefer the more efficient Layer-2 networks, which have reduced activity and fee generation on Ethereum's base layer.

This shift has two implications.

First, it weakens Ethereum's deflationary economic model, which relies on network activity to reduce token supply, and second, it has fragmented the ecosystem's liquidity and user base, leading to a more convoluted user experience.

This situation has created an opportunity for Solana, a competing cryptocurrency that processes transactions quickly and inexpensively without requiring additional layers.

Solana's native token has demonstrated stronger performance, rising 300% over the past year compared to Ethereum's 75% gain.

As a result, Solana has established itself as the second-largest platform for decentralized finance applications.

Amgen's recent clinical trial data shows how dominant Eli Lilly and Novo Nordisk's market positions currently are in the obesity drug market.

What's going on?

While dozens of companies are racing to enter this market, Amgen has emerged as the closest competitor to Eli Lilly and Novo Nordisk with its drug MariTide.

However, MariTide faces two headwinds.

First, its trial results show only 20% weight loss compared to over 25% achieved by Eli Lilly and Novo Nordisk's next-generation drugs.

Second, Amgen trails in timeline to FDA approval - having only completed Phase 2 trials, it needs several more years of large-scale Phase 3 studies before possible FDA approval and release to the market.

Meanwhile, Eli Lilly and Novo Nordisk are already finishing Phase 3 trials for their latest obesity medications.

Other companies like Pfizer, AstraZeneca, and smaller biotechs are even further behind than Amgen, which suggests that Eli Lilly and Novo Nordisk's early success has given them a leading position that may grow even stronger over time.

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Chamath Palihapitiya

@chamath

Nov 25

What I Read This Week…

Elon and Vivek shared their plans to reduce the size and scope of the U.S. federal bureaucracy.

Their plan focuses on five main areas.

First, they aim to remove regulations that Congress never explicitly authorized, using recent Supreme Court decisions as legal backing.

Second, they plan to cut the number of federal workers through workforce reductions, bypassing civil service protections by using existing "reduction in force" authorities rather than targeting specific employees.

Third, they will stop federal spending that wasn't authorized by Congress, which they estimate exceeds $500 billion per year.

Fourth, they intend to improve cost efficiency in government procurement by conducting large-scale audits of old contracts.

Fifth, they plan to address waste at the Department of Defense, which has a budget of more than $800 billion and has failed its seventh consecutive audit.

They plan to make these changes using presidential powers granted under existing legislation rather than trying to pass new laws through Congress, with a goal to complete this overhaul by July 4, 2026.

Bitcoin's price has nearly approached $100,000 multiple times this week.

What's driving this price increase?

First, political support from President Trump and his cabinet nominees has increased confidence in cryptocurrency markets. President Trump's pro-crypto stance has increased support for legislation to establish a strategic U.S. Bitcoin reserve and more favorable regulation of crypto markets, which would increase Bitcoin's mainstream adoption and legitimacy of the entire industry.

Moreover, institutional investors are increasingly buying Bitcoin through Bitcoin ETFs, which saw over $2 billion of net inflow over the last few days and represents a shift from previous years when Bitcoin was mainly bought by individual investors.

Furthermore, market psychology and increased attention on both traditional and social media are creating momentum as Bitcoin breaks through previous price records. With no historical price levels to act as resistance above these levels, and sentiment indicators showing extreme optimism, investors are increasingly targeting $100,000 as the next milestone.

Adding further pressure, the amount of new Bitcoin being created by miners is far lower than current buyer demand. This scarcity means buyers must compete for a limited supply, pushing prices higher. As prices rise, this attracts even more investors hoping to profit from further increases.

A recent study in Nature offers a new explanation for why it's difficult for people to maintain weight loss.

Scientists discovered that fat cells keep a biological record of previous obesity, even after someone loses weight. This record is stored through chemical modifications that affect which genes are activated (called epigenetic changes), which influences cell behavior.

When studying both humans and mice, the researchers found that these epigenetic changes persist even after successful weight loss and when overall health otherwise appears to return to normal. In their experiments with mice, the mice that had previously been obese gained weight more quickly when given high-fat foods compared to mice that had never been obese.

This helps explain why many people who lose weight often regain it – their fat cells retain a molecular "memory" of their previous obese state.

These findings are important because they show that obesity causes lasting changes in fat tissue that don't simply reverse with weight loss. This discovery could lead to new treatments that target these epigenetic changes in fat cells, potentially making it easier for people to maintain weight loss in the future.

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Chamath Palihapitiya

@chamath

Oct 30

Deep Dive: Understanding Federal Agencies

When Elon, RFK Jr., and Vivek talk about an overgrown and ineffective federal bureaucracy, they are referring to the 400+ federal agencies that form the operational backbone of the U.S. federal government.

Why have federal agencies become a lightning rod for criticism?

First, federal agencies are the largest employer in the U.S., employing more civil servants than both Walmart and Amazon.

They also issue thousands of regulations annually, which far exceeds the number of laws passed by Congress during its biennial term.

Given that these regulations touch nearly every aspect of American life today and the vast majority of federal employees within the agencies are unelected, there have been calls to reform the federal government's agency system. In order to do that, we need to look at the problem from first principles.

This deep dive provides an insider's look into our federal agencies, focusing on understanding the issues from first principles. We will deduce and uncover the structural problems facing our federal agencies and propose some of the actions that the Department of Government Efficiency could take to solve these structural issues.

The following topics will be covered:
- How our federal agencies work in practice
- How our federal agencies create regulations
- How our bureaucracy is an unintentional byproduct of our governing system
- Why previous reforms have not addressed the core structural challenges
- What actions the Department of Government Efficiency could take to address the core structural challenges

Our deep dives are designed to be read in one sitting, like a flip book. If we've done our job well, after 20-30 minutes of reading, you should be able to form a clear picture of how our government works in practice, the structural challenges facing our federal agencies, and the actions necessary to drive real change. We've also included a companion podcast, which we think introduces the deep dive well.

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Chamath Palihapitiya

@chamath

Oct 21

What I Read This Week…

Scientists at Harvard Medical School have developed a versatile, ChatGPT-like AI model called CHIEF capable of performing various diagnostic tasks across multiple forms of cancer.

What makes CHIEF different from current AI approaches to cancer diagnosis?

CHIEF stands out by performing a wide range of tasks across 19 cancer types, maintaining consistent performance regardless of cell sample collection or digitization methods. The model detects cancer cells, predicts tumor origins, forecasts patient survival, and identifies treatment-related genetic patterns, achieving 94% accuracy in cancer detection across 11 of the 19 cancer types.

CHIEF was pretrained on 44 terabytes of high-resolution pathology data and validated using 19,491 images from 32 independent sets across 24 international hospitals and cohorts.

Through more efficient and accurate cancer evaluations, CHIEF could enable clinicians to better diagnose and treat cancer patients.

Four college students from the University of Toronto developed an anti-drone technology that outperformed systems from major defense companies like Boeing in a competition hosted by the Canadian military.

How did they do it?

The students built a device that emits high-frequency sound waves to disrupt drones in flight. It works by exploiting materials' resonant frequencies, causing drone components to vibrate and malfunction, similar to how a powerful sound can shatter a wine glass.

To create this device, the team first experimented with car speakers in a living room, testing various sound frequencies on drone parts. They then upgraded to more powerful speakers that could produce ultrasound waves beyond human hearing. Through repeated backyard tests, they refined their system to destabilize drones' navigation systems from 50 meters away, making them unstable, veer off course, or crash.

This final prototype cost the students about $17,000 to develop.

U.S. output per capita remains the highest in the world, with each worker generating about $171,000 in annual economic output on average.

What is driving this?

One key driver is the nation's commitment to innovation, with the U.S. investing roughly 3.5% of GDP in research and development—a percentage surpassed only by South Korea and Israel.

This investment fuels growth in digital-intensive sectors like tech, finance, law, and consulting, where the U.S. provides high-value products and services to the world.

The American economy also thrives on a constant influx of new startups and a flexible labor market which allows workers to easily change jobs or relocate to where they can be most productive.

Together, these factors facilitate efficient resource allocation in the economy, driving a 70% increase in labor productivity since 1990.

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