The PulseChain Sideshow Tent Is Collapsing

For some crypto projects, actually launching is the worst possible plan.

AccessTimeIconMay 31, 2023 at 6:47 p.m. UTC

One of the perverse truisms of crypto is that for a certain kind of founder, the clearest path to success is to never actually build anything. Token presales incentivize infinite delay because you can cash in so effectively on grandiose promises – and the reality of what you create is always going to fall short of those fantasies.

Backers of Richard Heart (aka Richard James Schueler), longtime crypto raconteur and leader of the Hex and PulseChain projects, have spent the past two weeks learning that the hard way. PulseChain and PulseX, essentially a clone of the Ethereum smart-contract platform and the Uniswap decentralized exchange (DEX), had been eagerly anticipated by investors – sorry, “sacrificers” – for years by the time they launched this month. And yea, there was much rejoicing.

But in the weeks since PulseChain’s May 13 launch, as laid out by Protos, the system has seized up and failed in a variety of ways. That included high fees, despite the entire rationale for the PulseChain project being essentially “Ethereum, but with lower fees.” After Protos published its analysis, another devastating bug was discovered which is thought to have robbed liquidity providers on the PulseX DEX of millions of dollars’ worth of fees. In another index of how busted the economics of the system are, wrapped bitcoin briefly spiked to $70,000 per token on PulseX, more than twice its open market price.

Meanwhile, the price of related assets including HEX, PLS and PLSX have sold off aggressively since launch, dropping on the order of 30% or more in the days since PulseChain launched.

Some version of this comical catastrophe was easily predictable. PulseChain, you see, isn’t just a fork of the Ethereum code, but was pitched as a copy of the Ethereum state. That is, it includes all wallet balances and assets as they existed on Ethereum, apparently as of the mid-May launch. Numerous critics over the years have pointed out that this ignores the vast number of dependencies behind these Ethereum assets, which would break in a dazzling variety of ways if cloned. A simple example would be stablecoins like USDC that are backed by reserve assets. Clones of such assets on PulseChain have no backing, and hence no actual value.

PulseChain’s most devoted critic is blockchain researcher Eric Wall, who recently referred to PulseChain as part of “bizarro crypto world.” While it’s difficult to be specific about what makes something Bizarro Crypto, it’s a hugely useful label.

On the one hand, you have the likes of Ethereum and Bitcoin and Uniswap and Filecoin, things that more or less work as intended. Then you have projects that look a lot like the real thing, but are inverted or compromised in crucial ways – the same way DC Comics’ Bizarro represents the inverse shadow-self of Superman. The differences that mark out Bizarro Crypto can be far more subtle and arcane, though, sometimes only visible to those of us who have, as the saying goes, seen too much.

One thing I’ve definitely seen too much of is Richard Heart’s backside. His specific brand of carnival-barker shtick centers around four things: track suits, gold chains, cars and twerking. He has made vulgar displays of his poor taste and apparently vast wealth – wealth largely harvested from Hex and Pulse investors – the defining characteristic of his online persona.

Perversely, this is one of the reasons you may not have heard much about Hex or PulseChain. Heart’s absurd persona seems calculated to keep his projects firmly in Bizarro Crypto World, beneath serious attention. It’s the tactical equivalent of misspellings in deceptive emails, which security experts say are intentionally included to scare off people with good critical thinking skills. By selecting his own pool of credulous (and possibly vulnerable) investors, Heart has created a parallel universe where he is viewed as some mix of Satoshi Nakamoto, Vitalik Buterin and Tai Lopez. (Because, you know, Lambos prove you're smart).

That kind of parallel universe can, it seems clear, be very seductive. But eventually, Bizarro Crypto does have to come face to face with the real thing – and that rarely goes well.

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David Z. Morris

David Z. Morris was CoinDesk's Chief Insights Columnist. He holds Bitcoin, Ethereum, and small amounts of other crypto assets.