Is Canton a Real Blockchain? Yuval Rooz, Haseeb Qureshi, and Alex Gluchowski Debate

Transcript

Hi everyone, welcome to Unchained, your no hype free source for all things crypto. I'm your host Laura Shin. Thanks for joining this live stream. Just FYI everyone that we pre-recorded this a few hours before the stream. Before we get started, a quick reminder, nothing you hear on Unchained is investment advice. This show is forformational and entertainment purposes only and my guest and I may hold assets discussed on the show. For more disclosures, visit unchainedcrypto.com. Bitcoin changed how money works. Catraa changes how Bitcoin scales with a trust minimized BTC and a native stablecoin CTUSD. Catraa enables Bitcoin capital markets with lending, privacy, Bitcoin yield, and more. Get started at catra.xyz/unchained.

Etherfi is giving Unchained listeners 15% cash back on food and ride apps, and that's on top of the 3% you get on everything else. Your bank is charging you to use your own money. I switched. Go to ether.fi/chained fi/chained to claim your discount. Today's topic is Canton. Is it a real blockchain? Here to discuss are Yuval Ruse, co-founder and CEO at Digital Asset, Hase Keshi, managing partner at Dragonfly, and Alex Gluovski, co-founder and CEO of Matter Labs. Welcome you all, Hib and Alex.

>> Great to be here. >> Thanks for having us. >> Excited to be here. So, we're going to start with you all. You've all, I'm sure you're aware that you're probably going to be a little bit in the hot seat today. Um, but I actually think you're probably somewhat used to it by now, judging from what I'm seeing on social media. So, uh, let's just set a baseline for the listeners. um why don't you maybe describe what problem you're trying to solve with Canton and how you structured it to solve that problem and then we'll have Alex and Hib kind of give the criticisms that that they want to um have you answer too.

>> Sure. Um so first of all uh great to be here. Um I don't know if I'm going to be in the hot seat. Maybe maybe other other hosts or participants will be in the hot seat but we'll see. Um, you know, I think that for me, you know, when we when we entered the space, so my co-founder started Cumberland, which is a big OTC trading desk. We both came from DRW on your uh on the show. Uh, I can't remember who it was, said that this was founded by DRW. That's just not true. We left DRW to start this company. But nevertheless, our view was we wanted to bring capital markets on chain. And and in order to do that, our view is that you need to be able to convince

issuers to move their books and records to be natively on chain. And in order to do that, you really need to solve the problem of how do you give settlement finality, get an issuer to be comfortable if they don't want their books and records to be public for the whole world to see. There's a whole set of problems that you need to solve. Um, and really how do you do that on a permissionless set of infrastructure? So, it's not to say every application or every asset has to be permissionless, but it's actually kind of similar to the internet. The internet is a permissionless piece of infrastructure.

Yet, if you build a website on the internet, you're not kind of mandated to make your website uh public permissionless for everyone to be able to access it or see the information that is stored on it. So, you know, for us, we're trying to make capital uh markets natively on chain and there's a lot of features that had to be solved as a result of making that happen. >> And actually, I just wanted to go back when you said that DRW didn't launch digital asset. I mean, so you used to work there, you left working there to start it and then I believe Don uh Wilson who is one of the uh who who is the founder of DRW that he is also a co-founder of digital asset. That's is that

>> correct? Yeah. But DRW DRW has no um access to digital assets uh gits or anything like that. It's a separate company. It's an investor in our company. So DRW is an investor. They're not the largest investor. There are other investors. So again, both Eric and I, our third co-founder has nothing to do with DRW and he he shame actually from the world of cryptography. So, it's just that me and Eric, my co-founder, started our career. Well, Eric started his career. I actually started my career at Citadel and then moved to DRW and we both left DRW to start this company.

>> Okay. And just to paint the picture for listeners, you know, you have deals with DTCC. Uh JPM is going to do their deposit token on Canton. um like you just you know Broadidge who is um you know a very more obscure treadfire player I think to the crypto world but you know clearly embedded in that world. So you're sort of at the center of, you know, trends around RWA tokenization, um just just general institutional adoption, um privacy, stable coins, you know, these are all huge trends happening right now in crypto. So, um, you know, I think like you were sort of I I don't want to call it stealth mode because I don't think that's what it was, but to the crypto world, you didn't

really come on the scene until like finally your token launched and all of a sudden we see, oh, there's this token with a high market cap um that's on Coin Gecko. So, um I think that's why suddenly just the last few months there's just been a lot of um public discourse about Canton and what it is. So, let's now start with arguments. Alex, why don't we start with you? I know you have some criticisms against Canton, so why don't you go ahead and lay them out. >> So, actually, hold on before before we go to Alex, let me let me just jump in here because I want to set the scene of how we're going to fan the flames a little bit. Um, because I I don't see my role as necessarily criticizing anybody here, but more accentuating the drama.

So, you've all I'm sure you're well aware there's been a lot of drama in the last couple months around Canton. Uh, a lot of conversation happening on Twitter on X. Um, how would you summarize the drama that has that is catalyzed around Canton? Where do you think it's coming from? And how would you summarize it for the audience? >> I mean, my my honest opinion why the drama have been created is because we've been able to sign a lot of these partnerships and deals and nothing else. Um to be honest I think that um some of the things that have been said canon is a centralized database with a coin on top of it. It's a permissioned network.

um you know I can keep on going are all things that you know first of all are not true and second of all I would say that if people really had those topic deep deep in their heart and really said that this is not good for the industry I would say that those topic would have come about a lot of L2s a lot some L1s uh that would have I would say even worse characteristics than Canton yet didn't seem to be problematic for the industry and I think that you know uh very similarly I would say that some of the partners that have partnered with us if they were to choose different L1s to work with them they would have been

deemed heroes and really like uh the the knights of you know onchain capital markets and yet when they chose canon suddenly turn to be the bad guys and again as you know as you know this industry is uh very good at um you tribalism. And I think that that's for the most part a big part of it, not necessarily because it's focused on on facts. >> So to me, it sounds like the really short version is they're just jealous. Is that kind of >> I don't know if I don't know if it's jealous, but I think I think that again I think that we didn't do a premine. We didn't go and you know publish all of these white papers that we're going to

we're saying how we're going to change the world and we've just very quietly executed and now we're signing all of these deals. Uh just today we announced a partnership in Japan with Mizuo Namora and JPX around tokenized JGBs. We announced a partnership with Hanoa. You know Visa, you mentioned JP Morgan last week it was HSBC payments and we're just executing on those things. I I don't know if they are jealous or what, but you know, a lot of people have been building positions and, you know, they are defending their position and I'm actually okay with it. It's it's normal for them to do that. But again, I you know, I I I would love to understand how what we're doing is so existential for

this industry and is so terrible compared to other things that have been hailed with so much praise to date. you know, we'd love to we'd love to understand that. >> Okay, Alex. So, go ahead with your main criticisms. >> Sure. To uh uh I think this is going to be a really interesting debate. Um uh to give some context to to the to the viewers, uh we are building Previdium, a uh private institutional blockchain infrastructure on Ethereum. So, naturally, we are solving the the same problem as you all formulated. We want to bring traditional institutions, issuance uh issuers and capital markets on chain. And so we are in many of the same rooms where these conversations

happen and we kind of we understand the the perspective uh as it's presented to the capital market uh participants in traditional finance and we see the debate that's happening publicly on X and in other public spaces and what was striking to me about Canton I think where the the core tension where all like major criticism and emotional response of the community is coming from is quite a lot of misrepresentations around this specific project that uh is quite unusual for the space like the the the statements we seen made are not accurately reflecting what's actually happening. So I I would love to talk facts as as you all invited and actually

go and dive and and try to understand not the theoretical ideological you know uh things well oh is it permissionless is it not per is it decentralized not decentralized who cares we're serving traditional institutions we we have a specific set of customers we want to bring them on chain because it's going to help the entire industry so we want to look from their perspective what they actually getting and what what they're being promised what they're getting and I think it starts with with definition. Uh, Canton is calling itself a public permissionless blockchain. This is how it's spelled on the website. This is what you all just said. I think this is the core misconception from to begin

with. I I I believe and like I would like to understand it better in this debate that canon is not really a blockchain because if you uh and like it's not about the definitions it's not about semantics it's really about the properties when you say blockchain you're tapping into more than a decade of an industry with certain values certain certain value that was generated some innovations some new ways of doing things that were not possible before that this industry brought uh into existence starting with the Bitcoin white paper which actually where the the idea of blockchain originates from and so my question my first question to you all in this context would be you all

what is the actual innovation what's the invention what's the breakthrough that uh Kanton has built that was not possible 10 years ago why would something like Kanton uh why why you could not build it 10 years ago. >> Um I mean the ability to have first of all to say that Canton is not a blockchain. I mean Canton follows a UTXO model uh that can be validated by multiple parties. Um you could actually have decentralized composability on Canton which could not be done in a messagebased architecture. So, Canton does do a decentralized state management

which is the idea of a blockchain. Um, unlike Providium which is a single source of you know RPC messages that can be called by their customers uh and we can talk about Alex uh ZK uh architecture but uh no other blockchain offers you know atomic composition of smart contracts with privacy. So you know that's that's what you can achieve on Canton that you cannot achieve on other blockchains to the best of my knowledge including on providium.

So when you say atomic composition with privacy uh you know uh you are talking about uh um like you're saying that this would not be possible to build with uh with traditional messaging systems to which um this sounds strange to me like the uh swift messaging uh is atomic like the message is is passed atomically between the two parties and so it does with >> composition you don't have a guarantee without a without a reliance of on a third party, you don't have any guarantee of composition today. So, >> so this is amazing. So, you're talking so this is I agree with you. This is what makes a blockchain a guarantee like certain guarantees of enforcement of

financial rules without reliance on third parties. This is actually the the point of the Bitcoin white paper where like the the core problem the Satoshi was solving is the problem of double spend. How do you solve d it's actually in the abstract of the white paper. How do you solve double spend without relying on the third parties? And so my question to you is how do you actually solve double spend without with with preserving privacy and with preserving the integrity of uh u the composability with whatever rules that you want to compose in canton. What's the mechanism that prevents the double spend >> uncantor?

I mean the issuer of an asset and the issuer I just want to be clear can be a real world issuer or could be a decentralized party like a bitcoin uh is the mechanism that can protect um you know double spend no different again it's a UTXO model they are a party to the transaction and they are the ones that prevents double spend >> oh so then yeah it sounds like Alex's first point that maybe you don't like it's not a blockchain that it could have it could have been done before blockchains existed. That it sounds like that.

>> Exactly. Exactly. It's like surplus database can guarantee the same. >> Wait. No, that's just not true. Don't don't don't pick and choose what you want to listen to. I said either of a real world issuer or a decentralized party like Bitcoin is. Bitcoin is a decentralized asset. So you could have a decentralized asset that doesn't have a real world issuer, meaning there is no centralized intermediary that can prevent double spend to be clear. >> But you're you're like outsourcing you're outsourcing that function to a different chain then >> but you don't you don't this is not present in >> huh?

>> Yes it is. Why do you say >> how do you prevent a decentralized uh >> sorry how do you prevent a double spend of a bitcoin like you can put bitcoin on canton is that correct >> no I said that bitcoin is a decentralized asset so >> you're I'm I'm asking you about kton >> cool there is an asset CBTC which is a decentralized asset on kanto you don't rely on one third party to actually prevent the double spend it's completely decentralized What what does it mean like who which party you rely on?

>> Which party like what's the actual mechanism that prevents the double >> relying on a consensus no different than other other blockchains. >> Oh, it's very different >> double spin. >> So my understanding I might be out of my death here but my understanding of canon is that the super validators are responsible for no >> like they see all the state >> and they manage all the state. That's not correct. Okay please. Okay. Sorry, I I have clearly a shadowy understanding here. Youvall, can you explain what are the super validators doing if they're not guaranteeing the correct state transitions?

>> Sure. So, the super validators do two two jobs on Canton. Uh what they do is they do act no different than validators on Ethereum and Bitcoin with respect to Canton coin specifically. So imagine with respect to Cantoncoin specifically, Cantoncoin is a fully public permissionless asset like every other crypto asset. In addition to that, they run a composability infrastructure to actually compose transactions and those transaction they be they behave more like ISPs on the internet. They don't know what transactions they compose. They act as an ordering a decentralized ordering service, but they don't have they're not

validating the actual business logic of the app. >> These are almost like Bitcoin side chains. That's sort of the relationship with Canton and the Canton Canton assets, RWAs that are running on mainet. The super validators purely act as a coordination layer and a timestamping layer. They do not get to see the transactions that they are actually helping to process. So who validates the transactions? Who guarantees that when you spend one UTXO that has some asset and produces two different UTX again the issuer of the asset which could be of two types. A centralized issuer which is an issuer of

a real world asset and a decentralized issuer which could be an issuer of a decentralized asset meaning has no real issuer behind it. Well, CBTC is a uh like it's not the Bitcoin validators or Bitcoin miners who validate it, right? It's it's >> but it's a decentraliz Yeah, it could be a some group of >> So, essentially a multi >> no because they run consensus across them, Alex, and they know they don't just sign transactions. I I understand that they're on consensus but in the canton itself when you do the you consume one contract and you one daml contract and you produce two different

daml contracts like how do you ensure that the same you you have one bitcoin locked in this one contract that you consume how do you ensure that you don't produce two versions of bitcoin because your your privacy infrastructure provides each party only with their view so like if I >> I know I know Alex where you're going with the global state verification of an asset. I I I know that that's where you want to go. And we're going to talk about ZK sync and some of your reliance on the third party that sees all the information and they can actually upgrade the smart contract to be a malicious uh smart contract without the user actually ever knowing about it. We can we can go into that. So like honestly I answered the question on

Canton you could have fully decentralized assets and you could have centralized assets that rely on a real world issuer that anyway you run the same risks that you would run on any public permissionless uh network. >> It's absolutely not the same risk. So let me then explain how I understand it and then you can correct me if my understanding is wrong. >> Okay. And before you do that just one quick note for the listener. Uh, Alex mentioned demo contracts which is digital asset modeling language that's specific to canton. It's basically like a smart contract on Canton. I just wanted people who didn't know what that term was to know that.

>> Sure. >> So what happens in reality is the standard demo contract provides the the rules that so the the way like you please correct me if I'm wrong like I'm just going to be sharing my understanding. Obviously, you're the expert here on Canton, but the Canton functions as not as traditional um account-based uh blockchains. It's a UTXO model. So, each contract is a separate UTXO. >> Sorry. >> Like Bitcoin. UTXO. Yes. >> Exactly. Like like Bitcoin. So like all UTXOs are encrypted. So you only see the the hash like only like individual parties that are designated by the DAML can see what's inside the UTXO. And um when you uh and it it basically acts as

like each of the UTXO is really a multi-IG a small multisig with number of parties who are privy to the state approving the state transition like you you and and the validators uh kind of uh or the mediators serve the role of a counter of this votes. If you if you get enough of the votes, then you the jigsaw is consumed and and new new contracts are being created. And so what really happens there to prevent the double spend is the standard demo finance contract templates require the issuer to always be the co-signer and authorizer of every transaction. H and this creates two big problems that that directly uh

go into the the canton's claims about integrity and privacy. On the one hand, your integrity now completely depends on the integrity of each individual um issuer and and so what this practically means and I need I really need we really need to clarify this. You depend on the signature of a single hot server which is basically exactly the same process assumptions as what happened to layer zero yesterday with the DVN one of one uh multisc approving the invalid uh transaction. And if this happens, if the issue gets compromised by a sophisticated attack like a state

uh level actors like North Korea, the the situation gets a lot worse because now the uh minted assets are going to propagate throughout the network without anyone being able to catch it, >> creating the systemic risk for the entire network. >> Thank you for bringing that up, Alex. Actually, very good, very good uh example. So what what I would say >> but but first is is this the correct description of what happens? >> No, it's not. But but um >> so can you can you can you clarify what actually happens there? So the nice thing about canton is that we don't rely on an issuer um to save us unlike in providiums where an issuer whether intentionally or unintentionally hacked

as you said by North Korea or whomever can upgrade your smart contract without your knowledge as a user of a providium can upgrade your contract with >> Alex now I'm gonna talk and you can listen and you can refute my claims later how about that so I You know, so within a block, a user can actually upgrade the smart contracts of ZK sync, can literally drain an account, downgrade the contract, and all you're going to get as a user is an RPC call from a closed sourced piece of software.

Again, your Providium is closed source, which is not a good idea for a securitybased. Yes, it is. Your your your privacy one, your open source one is not the privacy one. can upgrade a contract, drain your account, downgrade the contract, and all you're gonna see is a proof that EVM processed the state transition correctly. You have no idea why your account balance went down. Again, in order for you to know your account balance, you have to keep on pinging an RPC. You don't even have the state on your own node. uh providium just writes some kind of a proof to Ethereum mainet which you have no clue what that proof actually proves other

than EVM acted correctly. Um and that's it on Canton. What I would say to you is that in order for you to actually do a state change first of all you need to have multiple parties agree to a state transition. The issuer would be one of them. So already your point about a one out of one signature is a bit odd. But second of all, I would say if someone wants to change the smart contract, which I would assume on providiums, the issuer has or the operator has that right if you want to see do the the proxy model of being able to upgrade software without to have anyone's at least on Canton. What I would say is every user would know that there's a

change to the smart contract because they are the ones that are actually validating the transaction. They're not looking through an RPC on some proof that they were not even participant to creating that proof. So again, first of all, your description is incorrect. And second of all, I would say that the attack vector on a Providium user not only is worse, the consequences are even more terrible than Canton. So what happens uh on Canton when the issue is compromised is it's not that any of the individual smart contracts that exist before gets uh gets corrupted but instead the isser will just mint a

huge amount of the token and inflate the the token supply with the underlying asset being fixed. It means the everyone is going to lose the they the like corresponding uh proportion of the asset. >> Did they lose? >> Uh well what happened on uh yesterday with layer zero and what happened last week with parity was not that individual users were compromised. Let me just finish this. Yeah, I was not interrupting. Uh but the uh the um asset was printed. there was a in unauthorized inflation of the asset for for the polka dot and for the kelp dowo. So the the attacker basically just minted a huge amount of assets for themselves and

dumped on the market and like inflated like it propagated for the market. This is unpreventable in uh in canton and not just unpreventable it's undetectable. It's way worse than in public blockchains where there is a single canonical state that everyone can see. So what you describe about previdium is uh is is like absolutely incorrect. Whenever you have a public change on any smart contract on Ethereum, it's going to be visible. Anyone will see what's happening in the block. It's impossible to hide. So like if something like that happened, it would be publicly visible.

And we can talk about the consequences. What this means like you know we're we're we're serving institutions. They have very different requirements from the cipher pox. They have other mechanisms to to correct but you cannot hide the the uh uh the change of of the smart contract. But in Canton you cannot prevent it. You're exposed to the same exact attack vector as what happened yesterday to layer zero and you cannot u detect it because if this happens in a so the way the way the attack unfolds is this the issue is compromised. they get a uh proposal proposer or like submitter who is also uh um uh basically like the the attacker just gets a uh uh some asset to themselves. Then they go and

make a submission to the issuer. The compromised server signs the submission and the attacker ends up with hundreds of millions of dollars worth of asset and then they slowly start propagating this through the system. Tell me how you prevent this. So I just want to be clear. So first of all um real quick because you said that it's not closed source. Um Providium use open- source licensing model. The ZK stack is fully open source and provide all components required to run a stand chain period. Providium trademark adds a closed source enterprise modules that enable private permission permission deployments for institutional

environment. >> This is correct. There is no contradiction. The protocol part is fully open. The protocol part is is open and visible. What's closed sourced is the middleware that you run to control, you know, to connect to your banking systems, to connect to your authorization systems and so on. They don't touch on the protocol in any way. >> Well, seems like a stack that does privacy uh with closed source uh should uh enter. And >> the privacy the protocol part smart contracts, zero knowledge proof circuits, everything open source, fully open source. Literally your writing says to provide privacy. Uh >> literally I just explained what this means. It's a middleware that you use to configure the access of the users and role-based account model.

>> Okay. And yeah, this episode isn't about prividium. Um so just >> No, no, no, no, no, no. Sorry. Sorry. If I I'm totally fine, but if a person who runs a chain that is >> I think it's fair play. I think it's fair play. I think he gets a bunch of email >> author of the claims about his his his you know to say to say that Canton is not decentralized but a providium is run by a centralized party that gets to see everything and rights >> I don't care if it's decentralized or not >> again >> I'm saying your properties that you you advertise certain properties that you don't possess in your system your system is worse than public blockchains in

terms of integrity like containment of systemic risks like is in fact it's worse than the traditional systems. So what what like it does not have the characteristics of a blockchain. So I would I would describe Canton as a mediated messaging network and from this perspective it has a role to play in the traditional finance. You know, there are some workflows that don't require a blockchain. And I I believe the Canon uh is actually deployed in some of these workflows maybe like with with something like Broadidge where it's essentially being used as a as a like better database, a database with um uh specific financial workflows that that are more easily configurable and and it it has a value there. It's just not a blockchain

and it does not offer the properties of a blockchain. >> So again, I just want to take I just want to take your your attack vector. What prevents today from any stable coin provider if they got hacked to mint a billion dollars worth of stable coins on chain? How do you know that they got hacked? >> You will immediately see the transactions happening like they >> they are allowed to mint coins, right? >> Uh the way so the way they they usually works. I'm I'm replying. I'm replying. I'm replying. Can >> someone mint a billion dollars of stable coin on chain?

Yes. >> Cool. And they didn't know that. >> I'm I'm Look, I'm I'm replying to the the the way they structure like I we cannot talk about every issue because they all have different uh procedures in place. But uh the way so I'm I'm not deeply familiar with how all of them operate. Okay. But I I'm familiar with the industry-wide best practices and they run something like this. Um in exchanges you have hot wallets and cold wallets and you have different degrees of different permissions on what what can be uh done with hot wallets like they usually have lower limits and then the most of the assets are in cold wallets. Uh I assume the issuers operate similar model. I'm not familiar with

exactly how they structure this but there is a huge difference with the model. One second. You you wanted to attack Canton by saying the issuer got hacked. So, can we acknowledge that the issuer got hacked? Because you can't say like, oh, they they run these great services and all of that stuff. I'm going with your claim. The issuer got hacked. So, now suddenly you're saying that the issuers are all very safe. Like, I'm just going with your model. Just go with me. The issuer got hacked. You started by saying the issuer got hacked on canton. So, let's just say >> is sure fine fine fine. like the depending on how the issues are structured if they have a single function mint which op is operated by a

single hot key on a hot server that's a really bad design of security for the t-shirt and I don't know who am I running >> typically they do >> sorry well Alex let's just give let's just let's just assume somebody is hacked stable coin issuer and they mint a quadrillion USDC >> let's take you hypothetical >> just $100 million. >> Okay. A nice a nice billy. A nice billion. Let's say they they made a nice little billion USD. >> All you see is that now USDC, given the war that has happened in the Middle East, have had really good issuances.

It's just part of normal business, right? You just saw another half a billion dollars of USDC add to the chain. >> So, what what really like what blockchains give you are the uh rules that can be enforced. If you encode your rules as like I can do anything, there are absolutely no checks on what I can do. Sure, this can happen. This is not how it's usually structured. Usually >> entire attack vector, your entire attack vector was that on Canton, if the issuer gets hacked, Canton is terrible. That's >> your your your model depends on the issuer uh enforcing every transaction.

any RWA on any permissionless chain relies on the issuer not being >> okay. >> Yeah. So I I feel like >> No, no, no, no, no. If Alex went down this rabbit hole, I would like for him to dig himself out of it. And my point is, yeah, point is we need to stop throwing these these parachutes into these holes because we can't go into these corners and then like again the referee is separating the fighters. Like he just said an issuer got hacked, an issuer minted an an amount of money on Ethereum, on on on Salana, on any of those things. And nobody knows that the

issuer got hacked, even the issuer themselves, part of business. >> Of course, of course they know. Of course they know. Like on public blockchains, any hack would be im immediately visible. But that that's the thing. How >> is it a hack? It's a it's a it's a legitimate issuance. >> Exactly. They everyone would see that the the issuance would happen that there is a certain amount you know they they can have monitoring systems uh that observe the public state here they would not be able to monitor this. the issuer is the one that needs to say we got hacked because you as an observer even though you've seen a hundred million dollars of USDC issued or USDT or whatever stable coin that even though you could see it

>> all you know is that another hundred million have been added to a public permissionless chains. So you agree with me that the only person who could say we got hacked these are hundred bad million dollars are they issuer. Can we at least agree on that? >> Uh that uh >> um >> you know what you know what I so I so we're we're going to we're going to call this right now because we need to move to ads and then cover a whole bunch of other topics before we before. just point >> raised by the bell wouldn't be a [ __ ] >> In a moment we are going to discuss uh whether Canton is permissionless and um

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works globally. If you want to check it out, go to ether.fi/unchained to claim your offer. That's ether.fi/unchained. back to my conversation with Yuval, Alex and Hibb. So I definitely want to tackle this question of whether Canton is permissionless or not. And I think in order for the audience to understand this, we need to discuss the issue of the super validators. So you all before we dive into the meat on this question, I just had a very quick little fact check I needed to make, which was can you clarify the number of super validators because I saw 13 on a few different sites. I saw 46 on the tie. I didn't know why there was this

discrepancy. >> 46. It's just that they choose to run on like uh and node operators and those are the ones that are 13. >> Oh, okay. That's interesting because yeah, multiple sites said 13, but but only one said 46, so I wasn't sure. Okay. So then why don't you just define what a super validator is and give some examples of the different types of institutions that are in that group and then explain why it's invite only to be a super validator. >> So um I'll start with the end which is not invite only. Um the mo the model of how do you become a super validator has a process no different than any other

chain on Ethereum. you have to stake 32 ETH. On certain chains, you have to stake even more. On certain chains, you can't even become uh part of the sequencer. Most L2s, you have a centralized sequencer. There is no multiple um uh participants in the sequence. There's some L1s like I think Hyera closed uh closed network of uh of a few uh entities that can run the sequencing. On Canton, everybody can become an SV assuming the network agrees with a supermajority that they are an additional value ad to the network. So there's nothing there's nothing that

would prevent Unchained from saying like we think we can add value to the Canton network and as a result of that uh will become. So we decided we decided that you know in most chains today um you know the model is is staking. Uh our view is that although staking has some interesting properties one of the things that a lot of chains have had a lot of challenge is how to actually bring activity to the network. And our view was that although securing the network is a very important component, our thought was that actually adding sweat equity and value to the network is much more important. And and and and again we can be we can be challenged that it was

the wrong decision. It's stupid. It's all good. But our thesis was so many chains have written really good technology, have done a really good job actually creating really novel interesting technology and then fumbled on the go to market. And therefore what we said is securing the network is important but actually we wanted the people that own the network the super validators not own the whole network but own kind of like governance uh on the network and uh make important decisions would be those that actually are not just staking the network but actually have skin in the game. meaning they have

put a significant part of their business or an important investment in the business and therefore anybody can apply to become a super validator. you put uh a proposal and if you got a super majority vote by all of the super validators, you join as a super validator. And those names will go all the way from small wallet providers that have been early in the journey of Canton and have put quite a lot of investment to DeFi protocols that have built on the network and have made serious investments in the network all the way to Broadidge or Trade Webb or SBI or DRW or Visa, right? It's not this is not a closed source network of the you know

Wall Street cabal that is like trying to like preserve their um strength. It's the idea is that everybody can participate but our measurement of why you should become a super validator is because you add some kind of nonlinear value to the network compared to just being a passive participant on the network. That's really that's really what a super validator is. Okay, you all let me let me sharpen this word because permissionless in crypto and blockchain is a very special word.

It's like you know it's like it's like the word democratic. It has all these other extra veilance that we put on it as a culture because it's been so core to what has made crypto crypto historically. So explain to me um so you've you've countered many of the people online saying that oh canon is not permissionless. You said no it is permissionless. Um can you explain what you mean by that? what does permissionless mean in the context of Canton? Um, and what does it mean and what does it not mean? >> So, permissionless to me is that first of all, everybody should be able to build an app on the infrastructure.

Everybody should be able to participate in the infrastructure. Meaning I should allow any person to be able to connect to the infrastructure, participate in the infrastructure. It doesn't mean that um just by connecting to the infrastructure like I gave the example on the internet I will have access to every asset on the network or that I will have access to every application on the network. And again everybody can try to become a super validator on the network. It doesn't mean that they will be able to. Um and again I you know I think that a your point about like it's democratic again I I challenge that because I would say that most L2s then would not fall into this democratic um

um definition and yet nobody said a word about it because again it's a centralized sequencer. the operator of that sequencer the day that they want can flip the switch moving from public permissionless to fully private permission and all of your assets now are locked on that L2 right you cannot do anything they can decide unilaterally to censor any person that they would want on that L2 again I gave example there's a few L1s that have a permissioned set of validators running the consensus for them my my view is that I would say that Canton is much more permissionless than those but again we came up with a different model of how to set who can participate as a super

validator I don't know I can't remember what's the number for some of the L1s today but in order to be a full node from a staking perspective we're talking about tens of millions of dollars that is not very permissionless in the sense that like most average Joe cannot become a full node right so I guess my point is we just came with a different definition of how you can join in a permissionless manner. It doesn't necessarily mean that everybody would be able to participate in it. Right? You agree with me that not everybody can become a full node on SUI today.

>> I mean, >> so your definition of permissionless is basically you come and ask for permission and then if it's granted then you can participate. >> Well, that so I was going to say something like that. I I feel like you're painting this equivalence between there being a minimum requirement on Ethereum and Salana and these other chains, which isn't the same thing as like kind of needing to apply on Canton and then being granted the permission by the existing validators. Like there is literally a permission moment of entities deciding, you know, will we let you in or will we not. So that's not the same as meeting a minimum requirement.

>> Sure. Just to be clear, uh, in order to meet the minimum requirements, a group of individuals came and set their permissioning about it. So just because you could say what what I'm happy for you to say is that the permissioning on some chains are a bit more objective or more objective in the sense. But again, if twothirds of the full nodes on Salana or Suie or Ethereum were to come together, guess what? they can change those permissioning today and they have done that in the past. So, so you're you're you're you're you're again >> Yeah. I mean, but like I said, so I would still say that one is meeting a requirement and then the other like you

apply and then you're granted permission or you're not. >> You're meeting you're meeting the requirement as of right now, I guess, is my point. And again, like it's it's like saying that uh these networks are fully permissionless and and then we find out that a chain went down because the foundation did not pay the AWS bill for all the nodes. I mean we can take this to an extreme of how we want to have these arguments. Everybody can say I want to become an SV and if the SVS vote in their favor that is fine on every chain today if twothirds of the full nodes decide they want to censor one of the full nodes that they can do that as well. And again there have been multiple examples how

all the pure definitions um uh immutable not true there have been hacks we for the hacks I mean it's no longer immutable all of these definitions that we claim to be so pure are only true until they're not and my only point is again I'm happy for Canton to be criticized that it is not permissionless in the same way that Ethereum and Salana I'm totally fine with that. I'm I'm totally in agreement with that. I'm explaining our rationale is that anybody can become a super validator. And if you look at the spectrum of the types of companies that are super validators on Canton, there is no very unique way of

saying like, oh, they're clearly going after just banks because there as as of right now, there's not even one bank that is a super validator. Maybe not for long, but as of right now, there's not even one bank that is super validator and there are traditional FMIs and then there's also like really new DGEN kind of like uh crypto providers that are all SVS. So clearly we are not trying to permission only Wall Street per people. We just thought this is a model that would actually create value to Kanton as we've actually been able to prove and that's it. I mean I I don't have anything else to to defend and I think that this is where where we started my

point to hib was >> I think that suddenly everybody's nitpicking can on use of the word permissionless because like I said I think Hideera is a permission state validator. Nobody's like going and throwing flames about like why are they calling themselves permissionless. Nobody's >> to your earlier point, Hideera is not winning, right? You guys are winning, which is why there is this spotlight. >> Yeah. But so with you all, I and I like I don't want to belabor this, but I I think it's more that like there is actually a moment where the validators are granting permission to whoever is kind of like applying. So it's just it

just like I don't want to go into the semantics. I understand the points you're making that you know all these different entities are setting standards and like you have to meet them or not and this is something that is decided by a certain group like I I get your point. I'm just saying that there is an actual moment where permission is either granted or not in Canton. But I do want to ask about that like what percentage of entities that have applied to become super validators have actually become super validators or been rejected? >> For the most part all have been approved. Not necessarily. Not necessarily immediately. There have been feedback from the network about like hey this is not enough value given where Canton is but again Stellar Ripple B&B every L1 fully permissioned set of uh

validators. I again I'm I'm just I'm just very eager to understand in a in a nonbag in a nonbag uh kind of uh >> Yeah. Well, so you've all let me let me say like I agree with you that there are a lot of chains that have this kind of structure where basically you have a central group or committee that decides on who's going to be led into that committee and they participate in consensus and they're basically stewards of the chain. Um the difference is that usually the way that we describe the consensus for these networks is proof of authority. The authority can be a single party, it can be a small committee. Um but generally there's a term for it's been around forever. It's a long long

history of proof of authority chains that have these kind of committee-l like structures. It sounds like that's what Anton is doing. Not that dissimilar from a lot of other chains that have this kind of um you know institutional banking oriented go to market like stellar like like Ripple. Um I guess the the the reason why you're getting all this push back is that again it's like calling something democratic, right? say, "Well, you know, it is democratic because if you want to vote, you can apply and then we'll decide whether you get to vote." Like, you could you could argue that's democratic, but that's not what people mean when they say democratic, >> right? Um, I think that's why you're getting such an allergic reaction to the use of the word permissionless is that it's a very special word in cryptoculture. The word democratic is a

very special word. Listen, I appreciate that, but I I think I will again disagree because I don't think that anyone would say that B&B is proof of authorship or something like that. And again, most of the chains I I can tell you until Canton started getting a lot of heat, I think would have all described Hyera, Stellar, Ripple, BMBB, Bass, Arbiterum, I can keep on going as public permissionless chains. And I don't think that they would have gone into that nuance. I just don't. But again, I gave my thesis. Our thesis is that the SVS can go up to a 100 can go even beyond right there's nothing there's nothing that actually there's no

cap on that on that model and I guess from my perspective I you know I've explained that a lot of chains when they design their tokconomics and their structure are trying to solve a specific problem and you know some chains said oh in order to have the token rally faster we'll just create the the full node that you have to take significantly more money. They didn't actually solve for the usage and actually building on the chain. And you know, are there other drawdowns to what we've done? Again, clearly from a marketing perspective, we're getting heat from using the wrong word in its purest form. On the other hand, you could say, look, we've

actually brought stakeholders that put a lot of skin in the game and actually build a lot of things without any grants. We've given today two grants uh from the Canton Foundation. >> But what about the rewards? >> The rewards are objective, Alex. They're for everyone to see. So they are objective. There is no kind of foundation that did a premine and is sitting on a treasure of dollars that is deciding in a very opaque manner who gets who gets what reward and for what reason. So yeah, we actually align the incentives in a much more objective way with the builders >> and who decide what degree of rewards you're getting as a validator who joins.

>> What do you mean? >> Well, well, you're saying like it it's unlike grants, we have a transparent and straightforward model of who gets what. So I'm wondering like who who decides what level of super validate? You have these different levels, right? Yeah. >> Uh tiers uh with the higher tier the the more reward you get like who decides on this >> it's vote all all the super validators uh applications are public for everyone. >> Okay that that's fair. So so basically it's a permissionless model where an initial set of participant decide uh uh who becomes the next participant uh and how much they will get and um um >> that's fine with me. So it's I I think

that like I have much less problem with the uh with Kenton calling itself permissionless because it's really obvious for everyone what it is. If you have to apply and you get you guarantee permission uh you can call yourself permissionless like it's it's very you know everyone who has listened to this conversation now make their will make their mind and we'll will have an opinion. I think it's like it's very straightforward. I think it's a lot more interesting to talk about whether it's a blockchain or not because the those this definition gives very different properties and I think we have not yet explored all of them.

Yeah, I actually so why don't we um go into that part because like I so you know I am not a technical person as most people know but from what I could tell of what I read it did seem like Alex's point earlier about how the point of canon is more around messaging was um was valid and you know it wasn't totally clear to me so like and and you know maybe this could apply to literally any RWA on any chain I'm not sure but it's sort of like if Canton were to break or any chain that's holding uh or that's you know uh processing transactions for an RWA then what does that mean for that asset like does it not really affect the

asset because there's simply another sort of backup system that can handle those >> let me try let me try to to to frame the question uh the it's not about the asset it's about enforcing financial rules without a trusting trusted third party. This is what Bitcoin white paper was about. This is what Ethereum is about. This is what all the public blockchains what blockchain technology in general offers. This is what the institutions also look up to blockchains when they embrace this technology. You know, if you are if you still depend on some trusted mediators or or trusted third parties to enforce certain properties, it's not a blockchain. It's it's just messaging

maybe cryptographically facilitated messaging between multiple parties. Maybe it's something like a docu sign for tokens when when the all parties agree they can see their their state like whatever we like we mutually agreed on they approve this it goes forward. Uh what blockchains enable beyond these bilateral relations is enforcement of financial rules in aggregate across like for smart contracts that encompass multiple parties which can be permissionlessly joined. And these are, you know, it it goes from simple use cases like enforcing a token cap to some more really interesting and and exciting

topics like uh liquidity pools, DeFi, um margins uh automated margin liquidations and collateral management. All of that is not possible on Canton without a trusted third party which you completely depend on in basically this one of one uh uh multisig security. >> Okay, so hold on to this. >> It seems very intuitive that like anytime you have a centralized issue where you are trusting a third party, right? Like there's there's no universe in which you have issues. No, no, but but in Kenton you only depend on them.

Like in in in Canton there is no way to enforce uh the rules by consensus by the entire network the way Bitcoin. >> How many times did I tell you to go and look at CBTC which is a decentralized asset on Kenton? I mean maybe you should go and look at it and come back and revise your statement. Second of all, um it's kind of it's kind of odd, I have to say, to sit and listen um to to this argument because again, a providium relies solely on an operator to write proofs for you.

It's it's it's I'm I'm just trying to understand most of the things that happen of the hacks where an issuerbased asset forget about Canton. The reason why these hacks have such a bad outcome is not because of the centralized issuer. Because if USDC or USDT were involved in a bad hack and the hacker wasn't smart and actually stayed on those centralized issued asset, guess what? eventually why why do people get so angry at Circle with the previous hack is because they didn't act fast enough to prevent from the hacker from actually moving into permissionless

assets. So the issue is not with relying on a centralized issuer. Actually, we would have been happier, as we've seen a lot of the crypto space saying, if the centralized issuer were to intervene sooner rather than allowing actually these assets being traded and swapped into permissionless assets where then they can no longer interfere. So again on Canton no different than any other public chain the issuer is centralized in real world assets and they have different properties or similar properties to what they would have on public permissionless chains. We have

stopped the conversation earlier from explaining to me how if the issuer was not aware that they were hacked, similar to any other public chains, how you as a third party observer of what seems to be the same type of activity that they do the same day all day long would actually prevent anything bad happening from again having this newly minted assets be swapped into a permissionless assets which is what always happens. when these hacks take place. So again, I would say that at least on Canton as a party to a transaction, nobody can upgrade the smart contracts on you without your

knowledge. You are the one verifying the transaction yourself. You're not relying on a third party doing a proof for you. Right. And again, we're we're going to go back in circles. And and Laura, I I I have to say if if you're not technical, I think that it's dangerous, especially with someone who has reach like you to say, but it sounds right. I can tell you that if Canton goes down for Broadriidge, it would have a systemic issue on running what today is close to $400 billion of repo. And I would say that within the next 12 months we'll get closer to a trillion dollar worth which actually does have systemic uh

implications on banks that need to meet liquidity threshold. Now would would those uh banks and people like Broadidge consider alternative in the case that one of their uh uh liquidity pathways had an issue? Absolutely. But I will tell you that assets that have uh applications on canton are no different and I would say in most cases are just as systemically critical and canton is not just a messaging base. Again I would say that any RWA the actual asset is not the token it's the asset that sits in a fund admin offchain. Right? That's that's the reason why people want some

of these RWAs to intervene when there's a hack because no money is actually being stolen from Circle. The treasuries that they have are still at Bank of New York Melon. The bank deposits are still at the banks. What actually happens is someone goes and takes a USDC that has been stolen and swaps it into Bitcoin or Ethereum and that's where the control is lost. So it has nothing to do with real world assets that are being stolen and that's it. I mean I just I just think that it's important to stay factual and not to say like if I'm not technical but that sounds that sounds right.

>> So I want to ask you then just to explain because some of the things that I read about Canton were that for the sync domains they are in charge of message cues sequencing. They do timestamping uh for participant nodes. I also heard I think you said earlier in the podcast on our other podcast that Canton does not do state. So can you just >> No, I said on this podcast that we do state decentralized state management and I would say that every every blockchain uses messages. I mean meool are messages waiting literally in a memory pool before they get committed into a block.

I mean RPC messages. I mean like we can just keep on going. There's messages everywhere. the way that computers communicate. >> Let me let me maybe sharpen the question a little bit. So it's I think the charge that Alex is levying when he calls it a messaging system is not literally that okay well obviously all blockchains send messages. Um I think the claim is more that it's not loadbearing right so uh normally when people think of USDC it's like okay if I get USDC I now it's a bearer asset I now have a claim on this dollar and it doesn't really matter what circle says obviously they can later freeze me or whatever but barring that this is mine and I have a claim to it the claim I think and Alex correct me if I'm wrong when you say it's a quote

unquote messaging system is that it's more like these are digital twins in the sense that okay Broadidge has their own back end. They're recording who their counterparties are and who owns what in these reverse repo transactions. But basically what's happening on Canton is just like a a replica of what's happening on their own system. Maybe it's faster, maybe it's easier to read, maybe it's easier for everyone to synchronize on, but it's not loadbearing in the same way that USDC is load bearing. >> But just just listen to what you just said in your words, not mine. I can hold USDC stable coin and it's a bearer asset granted that USDC doesn't freeze me.

>> I mean you yourself said it. So it's not a bare asset. >> Like >> I mean there's there's it's a spectrum, right? It's a spectrum, right? There's there's a it's a bare asset unless >> I I I think this entire like well thank you for answering the question, but you answered not the question I asked. I asked you about the enforcement again I'm going to come back to the this original idea of blockchains blockchains is something that enfor those are systems that enforce financial rules without reliance on third uh trusted third parties and Canton cannot ensure this so when when when like for bilateral agreements >> sure we don't have a trusted third party we just we sign messages between

>> well it's party I mean I don't know how many times I'm going to repeat the same thing and you're going to keep on ignoring You could have an asset on Canton which has a decentralized party. That's not a >> What does it have to do with asset? I'm not asking about the asset. >> All right. All right. I'm going to I'm going to put a kibash on this thread because I I don't I don't think we're making progress. Um I want to I'm just going to say that we had this conversation with your co-founder uh Shaul and Shaul confirmed this. He admitted it in a in a public thread with me that yes, Canton cannot do this. Canton cannot do anything. Canton cannot enforce aggregate.

>> I'm I'm going to actually cut this thread. Actually cutting the thread. Um I I want to come back to this point you all because I think it's a very interesting one. Your claim that like well um is it not also true for USGC like is there really a difference here between um what what I'm describing with USDC and what maybe is the is the trust model on something like Canton? Um I'd like to I'd like to hear um Alex your your reaction to that to that point. Um, do you think there's a difference between an asset on Canton and something like USGC? Um, that's an RWA on Ethereum. I think everybody agrees that this is the canonical model for a permissionless quote unquote RWA. Uh, but to Yuvall's point, like Circle can decide to delete your coins at any time and in fact people are calling for USC

to delete people's coins. So, what exactly is the diff? Is there a real difference worth noting here or is it purely a cosmetic one? Uh so let me describe what's possible on Ethereum. I don't know if circle specifically follows this but what's possible on Ethereum that is not possible on Kanto. Okay. So on Ethereum you can set limits. You can you can create a smart contract and you you you can make it upgradeable with uh the cold keys that you called in hold in the cold storage by circle with a multisync whatever. And this smart contract enforces limits. So it says like sure the service can mint uh some amount of tokens up to you know 1

million per day and beyond this point it requires manual confirmation by people right you can't do this on Ethereum I don't know if circle does this but you can do this you cannot do this on canton on canton your asset can be compromised up to 100% of the asset by compromising a single server that's my point >> okay well let's assume for the sake of argument that circle does not do that let's assume that circle just has mint function and they can mint as many as they want >> then then no difference then no difference I'm talking about capabilities >> if the if circle just does the like you know they have a mint function and it's controlled by a single hot signing key sure like the the the only difference will be that it's going to be immediately publicly visible to everyone

that circle supply all of a sudden jumped like 100%. on Canton, it's not going to be visible. It's going to propagate silently through the system. That would be the only difference. >> Listen, Alex, I really think that >> this level at this at this point in time, I would literally say if you literally just can actually um go and open an account on Twitter, you could hack all of Providiums. You keep on just propagating this lie. And I keep on trying to say to you, you could have a decentralized party and you can keep on just propagating this lie on a live on a live show and we're just gonna technically prove you wrong and you're just going to keep on propagating a lie which is not very good for someone like yourself to do. And I'm just telling you

that we're going to make some proofs on providium on what you can do with providiums and I think that it's not going to look good for you. So you could keep on making this claim and I'm just trying to tell you let's just go under your assumption that an issuer got hacked whether it's a single server and a multiple server and I'm going to make the claim that we cannot prove on this call neither you or me and I'm actually recommending that you stop making the same claim even though I'm telling you that you're wrong that let's say an issuer have been hacked period end of subject whether it was a single server or multiple servers and answer's question that happened. What can you do on Canton or what can you not do on

Canton? What protections do you lose on Canton that you get from any other chain? You don't you on Canton you rely solely on the on the multisc on Ethereum you rely on smart contracts that are enforced by the network. This is the difference. So you know in Ethereum you can construct smart contracts that are going beyond the multisig on canton you can't >> explain to me like a smart contract that will say you can't mint more than a million dollars at a time >> exactly and beyond that threshold it will require a different set of >> keyon you cannot do that >> you cannot do that because it's going to be enforced by the submitted transaction by the issuer or or by the complicit uh party with the issuer and in daml uh you

know the mediator will not see it they will just count votes, they will just >> not count votes. >> It's just not true. It's just absolutely not true. You could have for minting all of the protections that you said that even if a signature by the issuer would not be able to again all of the parties that are participating are the ones validating the smart contract. You would actually have to change the smart contract first and to say now I can actually mint a different smart contract. That's it. It's just you're just you're just spewing falsehoods here without actually doing >> you can't enforce aggregate properties of your asset and this is what your co-founder confirmed. So you cannot do

like uh I guess we'll have to take it after the uh the debate and we'll we'll just provide our PC and you will provide your PC but in Canton you rely on hot servers and this is basically what happened yesterday with uh with layer zero. You you you can't enforce the uh the like the network cannot enforce the rules. The rules are always enforced between a small set of a finite set of participants. You cannot have an open contract that everyone can verify uh that that does not rely on the >> and I would tell you a decentralized party and you're going to keep on ignoring it and I'm going to keep on reminding it. and Canton coin is literally an asset that invalidates your

whole statement. So to say that Canton can't have it is just ludicrous. It's >> you you rely you rely on the multisc of the coin issuers like if you if you put more more uh servers into multisc sure you get it gets better but it's still a multisc. It's not a decentralized >> enforcement. You run a BFT across them. I I don't understand this whole point about a multisc. your the BFT is uh uh a consensus between them. What authorizes the transaction is the signature on the uh like on by the mediator. Mediator approves the transaction.

>> All right. Um, you know, we're running up against time. So, I'm I just want to make sure that we touch on uh two more topics. So, we're going to let's talk about the CC coin. Um, as far as I understand, a large amount of CC, Canton's native token was used to, um, incentivize validators. So, a good percentage of the token was accumulated by super validators who were invited early. So, Evval, I know you were upset by this question somewhere else. Um, but I figured it was worth getting your response here on the record. So, Austin Campbell tweeted, "Canon has many problems. The first of which is a governance problem. I do know many institutions who have looked at Canton

and said, "Why would I invest deeply in a thing where others pre-created all the tokens and who use it only because DRW is paying them to?" Um, what So, what's your response to that? I saw like some back and forth with uh you and your team with Austin, but if you could just in your answer explain what the financial incentives were for those early um partnerships and activity on the network as well. What were the financial incentives for people that participated in Ethereum early on? I mean, >> oh, so there wasn't anything beyond just like you'll get in early?

>> Absolutely not. And honestly, like here here's what I will tell you. I am willing for me as a company for so first of all again DRW did not create canton >> digital >> and actually one other question sorry for the early participants they were just earning from the start there was no kind of like pre-allocation >> no >> okay >> no and and and and here you go I mean we you know it's so easy for someone like Austin to put a statement that DRW paid which is actually making, you know, putting a lie for eternity on on, you know, on something that he will ever, you know, have to defend where he got

that information. But which which network today like if I build an Ethereum today, like should I go like, well, what's my financial incentive to build an Ethereum? No, you build an Ethereum because it actually solves a problem for you and it actually generates for you as a business. So the the this idea that uh people will not build on Canton which I'm actually surprised because I would like to understand which financial institution today did not announce that they already building on Canton or participating in Canton. So I don't know which community bank Austin is talking to but I would like to understand right um you know there's no there have been no payments.

I'm actually happy as as kind of like the creator of the technology to go head-to-head who can get an audit done on his company more efficiently and cleanly because we haven't done any token deals. We haven't done any payment deals. Like, you know, I know it's annoying for people that Canton is a top 20 chain without doing all of those funny stories that crypto have been doing for a very long time. I know it's annoying, but we have been patient. We've been working on this for 11 years.

We haven't done shortcuts. We've tried to do things the right way, right? And you know, I I don't know. I guess it's going to continue to be annoying that we're going to continue to grow the activity on Canton and just do things the right way. I I don't know. I don't know. Like, there haven't been any payments, anything. I mean, like, you know, so I don't know. I don't know even how to respond to someone who clearly has no information to come up with a statement that DRW paid people to join Canton. Like honestly, like it's just it's just outrageous that people even give the stage for statements like that without actually saying, "Wow, that's a big statement. Can you prove that to

us?" And if you can't prove it to us, you're no different than Candace Owens saying that Bron is a man. You're literally a lunatic at this point. >> Thanks for calling me a lunatic. I appreciate that. >> No, I said I didn't say you. I said Austin. >> He's talking about Austin. He was talking about Austin. He wasn't talking about you. >> Austin said that DRW paid. You were just reading his tweet. Right. He made these kind of statements which are big statements better be able to come with the proofs, right? I mean like I think it's I think it's extremely unhelpful for this industry to make these kind of statements and not be able to back them with facts and I think I think that giving the time

of day to these type of things is not good for us as an industry whether you like Camdon or not I'm happy with the criticism but to blame people for effectively bribing people without coming with facts I actually think is not something that we should give the time of day too. >> Okay. All right. Well, um I mean there's a lot of uh other criticism. I'm just going to ask you about one more which I actually think this one was the one that kind of kicked off some of the public debate about Canton. It was when Rebecca Reddig called out Don Wilson who is a co-founder as we mentioned before of Canton or of digital asset for his

remarks at DS when he said that ME was not quote unquote suitable for financial markets. Um you know a lot of people were you know noting well actually ME exists by different names in Tradfi. So I wondered you know what your response was to that. I would love again for anyone to give me in Treadfi how you can reorder transactions once they hit a matching engine. Would love to know that because that's what me does. It reorders. It gives someone the ability to reorder. Uh and by the way, messages, Laura. So messages come into the memp pool and you as an external participant who looks at the mempool can make a

payment to reorder those transactions. I would love to understand where that happens in stratfi. Again I'm happy to get criticism and I'm happy to have these conversations but when people make these big statements on payment for orderflow payment for orderflow can be criticized. I'm totally fine with it. But someone who actually pays for order flow has to meet best execution. Cannot reorder transactions. Cannot say, "Oh, I'm getting this order from Robin Hood and therefore I'm going to first of all do all of my orders and then I'm going to execute." Not allowed to do that. Criminal cannot do that.

Right? So making a comparison between payment for order flow and me is just not an apples to apples. But because people don't understand the nuances, it sounds good. We're against the bad guys. The bad guys are the Citadels, the DRWs, the all of those type of players. But again, in Trafi, once an order hit the matching engine based on price and time, you cannot reorder it. It's just not possible. And that's the only criticism was that at the end of the day payments for order flow and high frequency players have shrunk the spreads on markets and they have provided better execution. If you get reordered your

message because someone saw that your order has enough interesting market data in it where they want to go ahead of you. I'm trying to understand what's the value for the person who submitted that order. And I think that all the dawn claim is that you don't have to have me yet people choose to have me. There are chains that don't have me. And the question is why? What is the value? And I would then go and ask some chains that claim to have a lot of fees on their chains.

Why is majority of the fees on their chains are actually ME chains rather than just regular uh fees. So if most of the fees on your network are ME, someone should ask themselves, well why are people willing to pay so much money for me? People are not stupid. There is value, right? People don't spend money for no reason. So clearly there's a reason why people spend money on me. And I think that all that Don is saying is that if you're Wellington, I don't think you would be okay. Wellington is an example. I didn't have to come up with a specific name, but any type of and you send a big order and you know that people now can see your order and decide

to reorder transactions. His view, personal view is that that's not suitable for markets. And again, that can be criticized. But to say that there's ME in Trafi, I don't know. I've I've yet to see an actual concrete example where people can reorder transactions, >> which is what is >> okay. I'm going to speedrun through a bunch of other criticisms that I came across because I think it's really good for people to be able to hear your responses to these. So, um Sven Wernern uh published a few in an article and um well, actually we'll start with uh one about um privacy. So I guess or or sorry about independent verification. He said

that um in Ethereum when you mint a token the entire network sees it and can verify its existence. And by the way I'm quoting um Gabe Shapiro who summarized these in a tweet. He said in Canton each participant stores and processes only the data relevant to its own contracts. There is no universally shared ledger, just a virtual global ledger composed of private ledger segments that exchange cryptographic proofs. And so Wernern concludes, quote, if Goldman Sachs tokenizes an asset on Canton, that token is just a data entry. It has no independent market presence unlike a real tokenized bond. On Ethereum, a Canton based bond cannot be independently verified unless Goldman Sachs allows it. What's your response

about that? >> Cool. So I I will I will uh again hopefully show uh my uh level of integrity which is that is a true statement. There is no public verifiability on canton. That is true on canton only if you are a party to a transaction you could verify that transaction. That's a true statement. Now I think that um understanding that our view is that the most important thing when it comes to financial services is that parties to a transaction agree on the state of the transaction and that although we are going to introduce in the future as of right now there is no public verifiability

and again I go back to my example earlier and I don't want to open this because clearly we've been going in loops around it and nobody's been willing to actually answer My question when we deal with issuers we are by definition taking a risk on those issuers and the only people that Sven is correct if if if an issuer minted more coins on canton there is no public state you don't get to see it but my point is if that issuance was malicious you are relying on the issuer to tell you that it was malicious so the fact that Again, you would see an issue an issuance uh happening does not tell you anything.

And again, I would I would then venture to say that the thing that happens on public permissionless chains is that when something bad happens with respect to a real world asset, what does the attacker do as fast as humanly possible? they move out of a real world asset to a permissionless asset so nothing can then happen to them later on with respect to this asset because clearly if a real world issuer were to know that something bad happened they would immediately freeze it and would prevent you know prevent from the assets to move as we said on USDC and USDT and everything so I am willing to accept I think people will be surprised how soon public

verifiability is coming to Canton, but it's not because we actually think that and this is where maybe I would go against them. This is not to protect you from Goldman issuing a bond or at the end of the day when it comes to real world assets, the issuer will decide what and who can do things with their assets. You could have an issuer say that an asset is fully permissionless to move on canon. They can decide to do that. The type of use cases that we want to bring Canton to have north of, you know, a few billion dollars of onchain fees are not these use cases. Like I said, you will see JPY versus USD is one of the busiest busiest financial

corridors, but these are Trafi organizations and we think that doing these things natively on chain provides a lot of value. So, it's not it's not for me to disagree with Spven. What he stated is is factually true. I I disagree kind of with his conclusions of what are the implications of that and very soon you will see public verifiability on Canton as well. >> Okay. I know we're at time. I'm just I just really want to ask you about one more of his criticisms. >> Laura, you we got to wrap it up. >> Okay. Okay. Okay. Well, um we'll have to we'll have to call it. We this wow this was intense. Um not the most wellorganized discussion, but it's okay.

That's kind of the nature of these things. Thank you everybody for tuning in and thanks to all of the participants, Hive, Yuvall, and Alex, especially you all. Um, I do feel like you were in the hot seat. Um, but you managed it very admirably. So, um, yeah, this was a great discussion. I hope it was informative for people. Thanks for tuning in. >> I've enjoyed it. Thank you, Laura. Thanks, Hey

baby. Hey people, hey