Coinbase, Base and the push into social and payments

Transcript

GM, good morning. Welcome to the Milk Road Show, the daily crypto show for people who buy with a 5-year thesis and panic 20 minutes later. I'm your host, Kyhead. Today, we are joined by none other than Jesse Pollock, creator of the L2 base, and on the executive team of Coinbase. And today, we're going to discuss all things Coinbase, the base app, content coins, payments, the DeFi mullet, uh, and so much more. As you guys know, I've been bullish on Coinbase and absolutely love what Coinbase is doing for for a long time. So, I'm excited to to bring Jesse on and talk about that. But before we do, if you want a fast, fun read on what's happening in crypto, join the Milk Road daily newsletter. We get you guys up to speed on everything going on in the space. It takes a couple minutes a day

to read and you literally be on top of absolutely everything. So check out the link in the show notes below and subscribe today. Also, today's episode is brought to you by Nexo, the platform that grows your crypto without locking it away and figure uh grow your cash like a bank. No lockups, just real returns. And so without further ado, let's bring Jesse onto the show. Jesse, how you doing today, my man? >> Doing great. Happy Thursday. >> Happy Thursday. Absolutely. Well, this is coming out on a Friday, uh, for those that are listening, but we are recording a day before. Um, lots we want to get get into. There's a big announcement actually coming out on Friday, so we're going to get into that. Um, but before we do, I want to start more high level.

Zoom out a little bit. Jesse, Coinbase is doing a ton of things. You guys have been doing a ton of things for like I don't know what you've been around for like 10, 13 years maybe. I think you guys were founded in 2012. So, you guys have been around a long time. You've been an exchange. You guys launched an L2. You've launched a wallet. You've launched a new uh a new kind of combination of all these things called the base app. Um you guys are doing payments, stable coins. You guys doing so much. Um and so I just want to get your kind of high level view of like what are you guys trying to accomplish at Coinbase? And if you take me maybe like I don't know five years down the road. I don't know how far out you guys think. Maybe five years, maybe 10 years,

whatever that is for you guys. Like what does Coinbase look like? Who are you guys? What are you guys doing? How does like your customer think of you guys? Give me the high level overview of what Coinbase is and what you guys trying to do. >> Absolutely. Well, at the highest level, Coinbase's mission has always been to increase economic freedom in the world. And when we talk about economic freedom, we're really talking about uh the the experience of people with money and it's about property rights. Uh it's about uh having p access to privacy. It's about knowing that if you, you know, put your money someplace, it's going to be there the next morning. the ability to start a business without people trying to scam you or fraud you or bribe you. Um, and the the the reality is that when you look at economic freedom around the

world, um, a, it's not evenly distributed at all. Depending on where you're born, depending on where you live, you're going to have massively different levels of economic freedom. And then B, it's correlated, positive economic freedom is correlated with so many things. Longer lives, happier families, better businesses. And so our vision from the beginning has always been, how do we increase economic freedom around the world? How do we make it so that everyone everywhere has the same access to opportunity so that they can all then build a better world together? And you know, if you go back to the kind of early days of Coinbase, the the kind of crazy thing about it is that Brian, our CEO, articulated this Coinbase secret master plan which talked about kind of these four phases of how crypto adoption was going to increase

economic freedom, how it was going to kind of take over the whole world. And it started with the actual cryptos. This is, you know, things like Bitcoin and Ethereum. Uh then you needed these kind of second phase of the the ways to access that crypto. That's exchanges like Coinbase. Then finally you have these these consumer interfaces. Uh these are things like the base app. Uh and then you know the fourth phase is that you have everyone living their lives on crypto all powered by this global economy of apps um that are built in this new uh decentralized way that billions and billions of people can use. And I think the first uh maybe 10 or so years of crypto maybe even more. You know, Bitcoin was invented 2009. Here we are 16 years later. We're really stuck in phases one, two, and three. And I

think just in the last kind of couple years, we've started to push into phase four, where we actually have these these apps, whether that's a stable coin, which I think of as an app that's letting you send money to anyone anywhere in the world instantly for free, or it's a new social network, things like, you know, the base app or Zora or Farcaster, where you can get paid to post and you can earn more. um or it's any of the other things around gaming uh or commerce that are starting to crop up. I I think that that's just the taste of what we're going to see over the next five years, which is basically now that the infrastructure is finally ready, we're going to see the whole world be replatformed on top of this infrastructure. And some of it's going to look familiar. You know, you're

still just going to be paying for your coffee or, you know, buying that new thing online, but it's gonna be running on new rails. And those new rails are going to make it so that it's accessible to everyone. So it doesn't matter where you live, you can have the same level of access, so it's faster, so it's cheaper, and so that you can actually build 10 times better product experiences that actually just make it easier for people to do the things that they want to do. And so I think that that will cut across every part of the industry. I think for Coinbase in particular, there's two big ways that I see it manifesting. on the kind of core Coinbase side, you know, I think a lot of what we're focused on is building that next generation primary financial account. So, it's, you know, you're used to banking uh in the

traditional financial system. Everything takes days. You're charged a fee at every point. Uh you don't have access to the best investment opportunities. Over the next few years, you'll be able to do all of those same things, but now it's going to be globally accessible. It's going to be instant. It's going to be, you know, low cost. you're going to have access to every asset that you could ever imagine all running in one place that's all seamlessly manageable. And I think that's going to be kind of this Coinbase path where it's just going to let you do things with your money better. And then on the other side, and this is really what Bass is pushing, I think we're going to see the same transformation happen to the social networks into the app stores where for the last decade, so much of the internet has been powered by social networks, but

the people who actually bring the creativity to those networks haven't earned. They've been cut out of the equation. They earn less than 5% of the total kind of inflows into social networks with 95% of that value going to the underlying platforms. And what we're seeing happen right now on base is that that is being totally inversed where for the first time creators are actually getting paid to post. They're earning they're getting 95% of the value. And I think that's going to lead to the same replplatforming that's happening right now with traditional finance and money happening, traditional social media and this next generation social media that actually rewards creators, rewards the people who make the internet what it is.

And so I think five years from now when we look back the the primary thing we're going to feel is like, oh my gosh, can you believe how quickly that transformation happened? And then if you actually take a step back, you'll see, oh no, that was 20 years. like five years from now it's going to be 2029 which is 20 years after Bitcoin was invented but I think it's gonna it really start to compress because we've done so much investment in infrastructure that now we're finally going to actually have the user experiences that benefit from it. So you guys are basically going after, let's say, the biggest social media companies in the world, trying to be the next Instagram, Twitter, whatever, and at the same time trying to be the next, I don't know, PayPal or, you know, whatever the big bank is you want to say. Like you're

basically trying to accomplish both of those at the exact same time. Is that what I'm understanding? >> Well, I I think that that's directionally spot on, but the really important note is it's not us, it's all of us, >> right? Like this isn't something that Coinbase can do alone, right? If you look at what the primary financial account is being built on. It's being built on Ethereum. It's being built on the open network and base. It's being built on all of these different stable coins. It's being built on open protocols like Aerodrome and Uniswap and Morpho that have built out the infrastructure of this new economy. And then a lot of what we're doing is we're stitching it together. Same thing on the base side. You know, the base app we couldn't have built it alone, right? It runs on the base, then it runs on

Farcaster, it runs on Zora, it runs on XMTP, it runs on Air, it runs on Uniswap. And so when I think about this new internet, the thing that's going to be really different is that it's not going to be controlled by one corporation. It's going to be built on open protocols that everyone can contribute to where we actually earn from the contributions that we make. And so yes, I think that everyone who's watching this podcast and all the people on Twitter and all the all the people who believe in this future, we are the ones who are going to take on the legacy systems because the systems are broken. They don't serve us. They don't help us accomplish what we want to. They cut us out if we don't live in the right place or we don't have the right phone or we don't have, you know, the the right

citizenship. And we can build new systems now that we finally have this technological foundation that actually put us back in control. And so I think that that's a collective task. I was tweeting about that earlier today where I think it really is a thing where we win together. But I also think that that's going to be something that's going to take a lot of hard work. It's going to require unlearning some of these kind of learned habits of like everything is a zero sum competition and it's going to require embracing this new way of building that's f fundamentally open and built on open protocols. >> I think for a long time you guys have wanted to I feel like Coinbase has been like this. You know when you put a Mentos in a in a bottle of Coca-Cola and you shake it up and then it just like

explodes. I feel like it's been like the mentos is in there. You guys are shaking it up and you haven't been able to take that lid off uh because of regulation, because of the SEC, because of everything that's been going on mainly in the US, which is where you guys are obviously predominantly. Last week, we had the SEC Paul Atkins put out the project crypto where basically their goal is let's bring the entire financial system in the US onchain. It was like the most bullish thing I've ever seen in my entire life. Uh from from regulators like now, will that happen right away? I don't know. But it was pretty cool to see. What's that been like for you guys? guys cuz I know you guys were a big part of fighting for for this whole industry which has been really cool but like how

much did that really hold you guys back and like now that that is I don't know you can tell me if it's fully changed it's been a complete 180 is what it seems like to me anyway what does that mean for you guys like are you guys ready to just go hypers scale mode or how is this changing from let's say even basically last year to to this year >> yeah well reading that speech from Paul Atkins was it honestly felt crazy to me because you know two years ago no one was saying onchain like it wasn't it wasn't a word right and you know Jacob Horn and D from Zora they really invented the word and then I think I've popularized it and helped kind of you know say it out loud a million times and to see that repeated back to us this

idea of we're going to bring America on chain and the American financial markets on chain from the regulator who for five years like wouldn't meet with us that was just like holy crap >> right >> like I could have written that but they're writing it now and that's how much kind of impact we've been able to have as industry over the last many years um in terms of kind of bringing this new global financial system making it a reality such that's being recognized at that level um and I think you know to your point you it has been a sea change and and one thing that made that speech particularly special was at the exact same time that they were Paul was giving that speech uh chair Atkins was giving that speech I was actually in the SEC offices uh I met with Hester Pierce I posted a picture of that we had

another bunch of meetings with um SEC staff and the the level of collaboration and engagement where um folks are genuinely trying to understand what's happening and then figure out what's the policies that we can put in place to make it so that this global economy can thrive is it's night and day. They they literally wouldn't meet with us >> for like six years. They sued us but they wouldn't meet with us. And now it's like not only are we having meetings because I I meet with a lot of people, but we're we're having conversations where they're not just making the time to to kind of like hear from us, they're bringing their own ideas and those ideas are good. You know, he wrote that speech and that speech was like visionary in so

many ways. And so I think that that shift from like not only being willing to meet with us, but also coming to the table with a level of depth and expertise and knowledge that is reflective of caring and wanting to build the best policy outcomes or wanting to build the best policy to get to the best outcomes for this new kind of financial system that we're building and wanting to make America at the center of it. I think that that's just been remarkable because, you know, it hasn't been that long. Seven months ago, we were whatever. Eight months ago, nine months ago, it was a totally different game. And it was about how do we defend ourselves from from these kind of like aggressive prosecution that we think is totally lawless. Um uh to now being like having the conversations, getting into

the weeds, really collaborating in many ways to to figure out what this future is going to look like. It's it's remarkable and I feel super grateful and it gives me a lot of confidence that uh you know America as a country um and and the the the government that we've built is resilient. You know like things can go wrong. We you know parts can be wrong. You know, people can have bad opinions, but with the kind of test of time, you do have this kind of like naturally self-healing process where when the citizenry, you know, 52 million Americans who own crypto speak up as they did in the last election, the the government listens and the government changes and the government evolves the way they approach these problems and it's able to actually come back and, you

know, make a positive impact. And so that as an American and someone who who obviously is working hard to build a global economy but wants America to be a big part of that, that's been really inspiring to see. >> Yeah. No doubt. And you guys did an amazing job at helping rally the the American troops to figure that out. Not troops as in, you know, actual troops, but you know what I mean. It felt like you guys were rallying everyone together. Yeah. All the people. So you guys incredible job. Did Did you guys have all these meetings back before this this change? Like was there a bunch of things you guys wanted to launch and wanted to do you just like actually couldn't? Um, and now it feels like you can do that or what's that been like?

>> 100%. Yeah. I mean, I think the the past environment was one where there was so much uncertainty and not only was there uncertainty, there was like active antagonism, whereas like if we did something wrong, we were going to go have to deal with being sued by, you know, the United States regulator. That is a c it creates a culture of fear. And I saw it inside of Coinbase, you know, and Coinbase is a public company that's, you know, the industry market leader. But even at Coinbase, I saw how that impacted product roadmaps and and vision and our ability to actually bring things to market. But then I also, you know, building base have seen it firsthand with smaller business. And there it's like if you think Coinbase is shaken by, you know, having regulatory uncertainty

and not knowing if you're getting sued, you know, Coinbase is also a $50 billion company that, you know, makes billions of dollars revenue and can fund these, you know, defenses and can fund the political campaigns. If you're an average builder, you don't have any of that. And if you get sued, you're dead. And so the culture of fear that it created among builders and and the way that that culture of fear then uh restricted innovation among builders, that for me was the hardest thing to see because I saw builders spending more on legal fees than they were spending on engineers. And so it's it again like this is another thing that I've seen a massive sea change around where really for the first time I feel like builders are are are unleashed right now and they're able to say oh my god like what if we were able to just focus on

building great products focus on designing things in the right way and trust that we we have the safety um to to actually build in in in this future that we're trying to build. And now I will say I don't think our job is done like we still need to pass uh kind of legislation to clarify the market structure. Obviously, there's there's cases in court right now. You know, it was exciting to see parts of the verdict on on Roman Storm yesterday. Also disheartening to see other parts, but I'm sure that's going to get appealed and, you know, continue to push through. Um, we're seeing courts, you know, still ca, you know, look at cases. So, we have a lot more work to do to make sure that uh crypto is is kind of clarified as this piece of technology that's foundationally good for for our society.

But um it has had a huge impact on the Coinbase internal environment and our ability to push and ship products as well as the external builder community. >> If long meetings and judgmental bankers are your thing, Nexo is probably not. Nexo is a premier wealth platform built for people who value their time and money. It's built for people who have idle cash lying around and want it to grow fast. Whether it's Bitcoin, Ethereum, or even Forex pegged assets like USDT or USDC, Nexo offers up to 14% annual interest and access to cryptoback credit in under 24 hours. Your assets need a platform built for growth. Join Nexo. Why do people invest in real

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Uh, but I do want to understand the I mean, we're in a bull market. We've been I believe in a bull market for a number of years. Um, it hasn't been like what we've been used to in 2021, the craziest we had there or 2017, but it's just been feels like this like grind upwards of adoption, grind upwards of both adoption of like using the tokens, but also building on chain and launching new products, everything. It just feels like everything is just getting more and more and more from your guys standpoint. You guys are across I we're going to talk about some of your products in a second, but you guys do basically everything right from the institutional level and whether it's custodying assets, it's your infrastructure as or crypto as a service, let's call it, you've got wallets, embedded wallets, you've got, you know, base the L2. You guys are

doing so much. Talk to me about the demand in this space right now versus let's say maybe the year before or the year before, the year before. What are you kind of seeing at Coinbase in terms of just demand whether it's institutions, normal people, builders, like however you see it? >> Yeah. Well, I I almost tweeted this yesterday, but I didn't. Um I feel like there's sentiment on crypto Twitter at times where it's like, oh, we're in a bare market because like prices are down. And the thing I almost tweeted was like anyone who thinks that we're in a bare market clearly isn't actually in the field talking to builders and creators because from my experience, you know, I I get to work on base and talk to, you know, thousands and thousands of builders and creators all around the world and then obviously have visibility

into what's happening elsewhere at Coinbase. There has never been more excitement. There has never been more energy. There's never been more smart people coming in and building real products on top of this infrastructure. And so the demand for, you know, I'd say really the last three years kind of since it bottomed in 2022, like you said, it's just been grinding up and to the right with the curve bending steeper and steeper and steeper where um you know, we have institutional demand, we have developer demand, we have consumer demand starting. Um and and that to me being on the front lines and actually seeing it and feeling it makes me feel like we're in a complete bull market because that that wasn't the case in like the depth of 2021 or 2022 people people were leaving. Same thing in 2018 2019 people were leaving but now it's

just like people are coming. Now I think one thing that I don't think we've experienced yet but I think we're close to is we are used to I think this kind of like speculriven growth cycle where it's like okay you have this you know prices going up and you have a big pop of people and then it kind of waines down. Um I think we've started on the kind of like infrastructure and builder and creator side to shift into more of this consistent growth but I I also don't think as an industry we've experienced real consumer viral growth. um that's not speculation driven but product driven where you have a product kind of viral growth cycle that's just sucking in people you know think about like Twitter or Instagram or um Tik Tok and like how quickly those products grew and

I think a big thing that that has kind of held back that that moment is that we haven't had the consumer products and the reason why we haven't had the consumer products because we actually didn't have the infrastructure to build the best-in-class consumer products but now we finally have the infrastructure you have those fast and cheap chains like Bass you have the stable coins that are trustworthy uh you you have smart wallets that make it really easy to abstract gas and cover those gas fees from developers. And I think we're just starting to see folks pull those together into consumer experiences that are starting to get traction. Now, they haven't gotten all the way to like full-on viral growth, but they're starting to show signs of this. And we're seeing this with the base app that's been rolling out. Uh there's so much demand for it, and the early

cohorts of people who are in it are super sticky, really high retention. I think we're seeing it with um things like Zora as well where you know it's just people discovering oh my god my content has value as a creator I'm valuable and that's like causing them to bring in their friends and grow more and what I expect will happen sometime soon and I won't put a specific date on it but I think it's coming is that we're going to see that next inflection where it's no longer just a steady grind up in the developer kind of institutional supply side um kind of demand for crypto but it's going to be this like viral grind up uh from the consumer consumer side that's more demand driven where it's like oh my god we finally have these products how do I get it you how do I use that thing that can deliver so

much value to me as a creator or as a consumer I think we're really close >> yeah I think we've been waiting for that chatbt moment for a long time in crypto and it's just never really >> it's been 16 years right >> we've never we've never had it >> I feel like we've all lulled ourselves into a little bit of like a uh a feeling of like oh this is just the way that it is and like we're just going to keep kind of doing this really slow grind, but like that's not the way that these things work. Like the way that these things work is that you do infrastructure buildout for a long period of time and then and then it like snaps into place. It happens and that's the thing that we're all grinding towards and I feel like we're closer than we've ever been

>> and you're already kind of I mean you've heard a bunch of people say it now the chatbt moment of stable coins for crypto. So I guess like we're kind of getting that it's still not chatbt was way faster. So we'll see. >> Yeah. Yeah. I think that I think that in certain ways the the stable coin stuff are and in certain parts of the world. The thing about stable coins though and I generally feel this about um pay payments generally is because you you actually have pretty high saturation of like >> in region um payment systems that are pretty good like whether that's in the US with things like Venmo or credit cards or in India with UPI um you know every country at this point for the most part has a in region uh digital payment systems that works pretty well. I think

that limits the ability for a payments a pure payments use case to be hyperviral, right? >> Because basically you like run into this adoption problem where you know it's good for certain things like now you can do crossber payments way better or you can maybe save and get but you don't have that same thing where like earlier in the payments life cycle with PayPal when it was like all bad you had that viral like send money to a friend it's magic experience they get $5 and that could spread like wildfire. Now, when it starts to spread, you keep running into these nodes where it's like, "Oh, but like my payment system works pretty well. Like, why should I switch to this?" And so, my thesis on this is like we're not gonna actually see that like really raw viral growth from pure payments. You have to start to bring in

other consumer behaviors. And the big one that I have a thesis around is around social. Um because when you look at kind of besides AI, which I would actually classify chatbt in many ways as a social product, um because you're socializing with an AI, even if it's still kind of like a you know onetoone in certain ways. I I I think that like the Tik Toks, the the Instagrams, those are social products. They grow virally because you have this kind of bring your friends along for the ride. I think that that's what's going to grow virally in crypto as well. >> Interesting. So that's what you think is going to be our chat chat GBT moment is the social aspect combining social plus all the things that we're doing crypto.

Let's jump to that then. I was going to wait I was going to move the base app until till the end and talk about some other things but I actually now want to jump to this because you you've piqued my interest. Give me your pitch on why you think that creating a new social app is going to work right there. I mean you have the biggest apps in the world are social apps right Facebook, Instagram, you know Tik Tok etc. YouTube and it's very hard to compete with them obviously, right? Um you've had many have tried. It's very difficult to do. Walk me through your thesis on why you think the base and feel free to also maybe start with like what is the base app? What have you guys built there? And and give me your like um elevator pitch on why you guys think that you're going

to be able to pull the users from their existing social apps to yours because that's not an easy thing to do. >> It's not an easy thing to do. Uh it's a really big ambitious vision that we have. Um, and for those who maybe are new, the base app is an everything app for the onchain economy. Uh, but the core value prop that we're seeing really resonate is the create and earn experience where you can come in, you bring your creativity and you earn from it. And we like to say it pays to be here. And I think what we're seeing in the early kind of adoption of of the base app is that um people really resonate with that in an intuitive way.

And and the reason why they resonate with that is because when you look at the the economics of social networks today, yes, you can say, okay, there's a creator class that's scaled, you know, the people with millions of followers who they can post and they can earn because they get ads deals or because maybe the platforms cut them in. But for the everyday person, they spend so much time creating and they spend so much time consuming, but they are cut out of the economics. And this ranges from, you know, the average creator in the United States who maybe has 10,000 followers or 12,000 followers or a couple thousand followers, um, but a real audience, but isn't big enough to qualify for those kind of creatings earnings program where those platforms kind of pass back money to I think even more ridiculously the

the average creator, not the average creator, but the creators with big audiences outside of the United States in regions that are kind of cut out of the existing financial system, whether this is Nigeria or Argentina or any of these countries, where you have huge audiences um but the the existing financial rails don't work for them. Those people earn nothing. Like you can have 300,000 followers in Nigeria, you can earn nothing. >> And so I I think that that is basically this intuitive thing that all of us in the the creator economy of web 2 today are experiencing where we actually have an intuitive recognition of my content is valuable. I'm bringing something to this network, but I'm underserved and undervalued by it. And so the hook that we're seeing really resonates. You can

come into the base app and you can post and you can immediately start earning. And it's not like, oh, the platform is going to decide like how much do you get paid and then they're going to pay you out six months later. It's like no, you post and you immediately start earning. And it it it's not 100% there. The experience is still choppy. like, yeah, it mostly works for people with audiences, but that experience of having my content be immediately valued and seeing go out and then money stream in, it's unlike anything I've ever experienced before. And it's a hook that we're seeing really really bring people in in a way that's totally new. And it it's leading to these kind of magic moments for creators that I I think have the potential to create that viral spark and bring more people in. And so when I

look at this, it the the reason why we have conviction of uh our ability to do this is that there's trillions of dollars of value locked up in these platforms that is just going to the platforms today. And that is a huge source of opportunity. >> Because if we can figure out, okay, how do we build a new system that actually routes that value back to the creators, then the creators are going to start adopting it. Yeah. It's not going to be everyone at the beginning. It's going to be true believers who, you know, are willing to take some risk, maybe willing to give up their scaled audience a little bit to experiment. Um, because they want to be early because they know that on new social platforms, it pays to be early. But then they're going to start to earn. They're going to start to

realize, whoa, this system works better for me. And then they're going to start telling that story. And that story is going to start to spread vibrally where it's like, this is working better for me as a creator. This new economy is working better for me as a creator. Now I'm going to go tell my fans. And then my fans are going to start to come over. I'm going to monetize better for my interactions with them. They're going to then have that same experience. And over time, the whole world is going to shift over. And then it's not just going to be the creating and earning that they're going to get to experience. They're also going to realize, oh, I can earn, you know, four and a half% on my dollars here instead of 25 basis points. And oh, I can um, you know, message my friends

here and play fun mini apps like directly in line. And oh, like the it actually just works better for me as an economy to live my whole life in this new kind of everything economy that's being built on chain um than it does for me to live in this fragmented kind of hard to use uh gatekept and kind of toll feed at every point economy that exists offchain. And so, you know, it's not going to happen overnight. I don't think we have the perfect product experience, but the early sparks that I'm seeing and and the data that we're seeing from kind of the the beta is really really really positive. And I think from talking to customers, there's just this intuitive groing of they know the systems are broken, whether it's the money systems or the social systems, and they want

something new, and they can intuitively feel, oh, wow, this new system has a ton of potential. We want to be a part of it early. >> Well, I mean, we just talked about how long it's taken for crypto to get even where it is today, right? We had to start with those who are a little bit crazier at first, right? That would, you know, buy Bitcoin or mine Bitcoin early, early early on. And it's gotten more and more and more, and now it's it's basically mainstream. And I think the same is going to happen here. First I want to say you guys have built something incredible. I've been watching Oh, not even you guys, right? It's been a like you said, it's been the community that's really built a lot of these things. It's Farcaster, it's Sora, it's so on and so forth. And I've been able

to play around with a lot of them and and I love what you guys are doing and I and I love innovation. I love um experimenting and I think you guys do just the best job at that. So kudos to you guys. I want to just ask I want to take the other side of it. So don't I'm not a bear so don't don't take me the wrong way. But I know the audience probably thinks this too is like anyone who was around last year, last cycle, let's call it, the same kind of promise happened with NFTs, right? It was like, okay, well, we're going to have these NFTs and the artists are going to make all this money and everyone's going to come over there and all the artists will come. And then that didn't end up happening. Uh there was also I can't

remember with the creator coins from the 2017 world. Um I can't remember the name of of what it was, but anyway. Um so same kind of idea. What is it different about what you guys are doing that this has staying power you think? >> Yeah. Yeah. So, one is I I think it's worth recognizing that the infrastructure has come a long way from 2021, definitely from 2017. You know, when we were doing NFTs in 2021, it was all on L1 Ethereum. You were paying tens of dollars of gas, you know, hundreds of dollars of gas. Um, the the the kind of like product experiences around it were super janky. Um, and I think since then, uh, we've made it so it's fast, it's cheap, it's easy to use, the experiences are getting better and better. like if you use the base app today versus like

where Coinbase wallet was in 2021 or you know MetaMask like it's a completely different experience. It's something I can actually give to my friends and family and they can get it. Um so I think I think that's the big one. I also think that you know candidly like we've spent a lot of time thinking about what are the economic models that actually are going to work better here and you know this has been something that's been pretty controversial on Twitter over the last six seven months but we've zeroed in on this idea that um coins are a really simple economic tool both for kind of capturing and representing the value of content but then also for representing the value of creators and that there's something that you can really powerfully do by bringing those two together where you can create this flywheel where the more powerful and

valuable content a creator makes, the more that creator is going to be worth and the more they're going to earn. And I think Zora, you know, credit to Jacob and Deian team, they've really been at the forefront of this. But if you look at the design that they've kind of built out with the the Zora product where every profile is a coin and then every single post is also a coin and those things get paired so that now whenever there's demand for the posts and content, it actually drives back value to the creator. That's new. Like crypto Twitter talks about flywheels. That is a flywheel.

>> That is a flywheel that acres value to the creators as they create more great content and it is onchain native. It's not skuorphic to the existing web two systems. It is a completely net new innovation that I believe is a really fundamental unlock that is going to just make this work better for creators because now it's not like oh create a creator coin and then have this like totally lossy experience where like you're trying to figure out how do you get people to pay attention to the creator coin. It's like I'm trying to like create content and then hope that people see the content, like the content, and then like go find the contract address and then put it into an experience and like connect up. Oh, if I go buy this thing over there, like maybe attention will seek back to it and it

will eventually work. No, it's like you create your creator coin and then you create content on chain and if you create good content, people are going to consume it and then you're going to make money >> and that is a fully onchain value loop. And so I think that's the second big thing is that we actually have iterated not just on the core infrastructure that can make it easier to do these things but actually on the economic structure that I think gives us something more sustainable that can actually dial this experience in really to to make it work for for creators. And then the third thing that I'd say is you know there's a famous maxim in uh you know startups which is like you're you're you know most startups are not wrong they're just too early. And I think that that is like very true. And I think that that's very

much the case here as well. It's like there's a reason why these things keep coming back. >> And it's not because they're bad ideas. It's actually because they're good ideas. It just takes a long time to figure out how do you turn the good idea into an implementation that actually can work at the scale of billions of people and compete with these products and platforms that have spent trillions of dollars uh you know perfecting the existing web 2 social product. And so I I see the the past attempts not as like uh a kind of like indication that this is never possible. I see as an indication that we're on the right path and that we just need to keep refining, keep iterating, keep putting the pieces together until it works. Um and I will say that um you know being back in the

trenches of building consumer products because I was I was off for a few years um of just building the builder side with base. Now being back with the base app, um it's it's like night and day where we were a few years ago versus where we are now. It's night and day and it's it's not the experience isn't perfect and there's lots of people who are who are, you know, tweeting at me constantly of like how do I get an invite to the base app and I feel bad because like I want to give everyone an invite, but the reality is like we're not scaling access until we feel really confident in the product and that's an iterative thing that we're making progress on every single week. But in terms of like how close I think we are, it it is it's totally night and day.

>> So that was actually I have two questions which are actually from the community which is one when are we going to get to access the base app? >> So tell me whatever you can on that and two are we going to coin this podcast and I was like I don't know how to do that but I'm sure Jesse does so you tell me. >> Yeah. Um so one on when are we can get access to the b the the the the base app? Um we are rolling it out. It's slow. We know it's slow. Um we the team pushed really hard to get out the the beta um a few weeks ago and we we let a bunch of people in um just to like share maybe some numbers that I guess maybe we haven't shared. We've let about 20,000 people in. We're seeing really good

engagement among that among those folks. People are coming back on a daily basis. Like you know good engagement numbers that I would expect for like a real consumer social product. But at the same time we've learned a ton which is that we we just have a ton of rough edges. You know the creator the creator coin content coin flywheel isn't all the way there. like we don't have support for creator coins and that pairing that I just talked about that there's still performance and quality stuff that we have to dial in. The feed isn't isn't good enough. Like we've been working really hard to make it so the feed is engaging, but we're not quite there. And so, you know, it's it's it's really hard to to both feel like, oh my god, there's so much demand for this thing, but also feel like we we want to kind of like

keep it a little bit close. But the the goal is to make it so that we can give people a product that they actually want to use and that that feels exciting and motivating for them. And so our strategy for the next few months is we're going to be increasing people like week over week the number of people that's going to be a combination of kind of pulling people off the weight list as well as giving existing people in the network invites so they can add their friends because we see that as a really powerful way for kind of growing a social network that lets people invite their friends. And then we're just going to be making week-over-week progress and and and we're working right now to share a lot of that much more openly. But ideally we can kind of like bend the curve up in

terms of how many people are in uh grow the kind of density and quality of the network as we're improving the product quality so people are onboarding into something that is really really great. And I expect that that's going to happen for you know a couple months uh and then we're going to open the floodgates fully and we'll hopefully be off to the races. So that's the that's the story on the base app. Stay tuned. More invites coming soon. Uh, we're scaling up as fast as we can and I appreciate everyone's patience. Now, on should we coin this podcast? I mean, hell yeah. Like, I think you should go put it on the base app or put it on Zora like wherever you want. You know, Milk Road should probably have a creator coin um that the content can get paired against.

I I you know, before we launched the BA app, I would say I was, you know, uncertain about whether this kind of model was going to I had a lot of conviction, but you never really know like I wanted to put my product out there. I've I've continued to increase my certainty. you know, it was maybe like 60%, now it's like 80%. Um, and that's because when we're out in the field talking to everyday people, it just really resonates that their content has value. They actually understand that intuitively the the kind of like liquidity and and economic dynamics that we're seeing in the trading marketplace are really starting to work. And so I I don't think that there's a better way to kind of have your content be valued than putting it on chain uh and coining it.

And I think that there's a lot of people who still feel like there's stigma um and feel like, you know, there's risk in doing that. And I just want to say to everyone out out there, like at this point, I think we've broken through basically all of the stigma. Like anyone is posting their content on chain right now and like maybe someone will say something and be like, "Oh, like why are you coining?" Like, but like it's basically gone. Now you >> you've gone through all the battles for us on Twitter. I've watched that over the months >> and it's it's just like posting except for now you're posting on chain. And yeah, there's a there's a value associated with it. And if someone wants to buy it to support you, they can. if someone wants to buy it to speculate, they can. But like the market has

learned that this is a new thing and that they they figured out how to engage with it and there's no longer this kind of mismatch of expectations that I think led to a lot of the initial strife. Um, and so I I think it's safe. It's safe for Milkro to do it. It's safe for any creator out there to put their content on chain, to have their content be valued, to have them be valued in the form of creatorcoin, and to benefit from this new economy that we're building. >> Well, Milk Road's ready to to bring our whole thing on chain. We're just waiting to get access to the base app and we're going to be we're going to be all over it. So, we we can't wait. >> So, I want to I want to go out of the base app conversation just for a second

here and I want to talk about Coinbase again. One of the things that I think have been the most exciting thing or the most inspiring thing I would say of Coinbase is you guys don't just like talk the talk about coming on chain. You guys are literally leading it from every way. You just talked about it with the Bass app and what you guys are doing there, leading the way of bringing, you know, social onchain. But for a long time, you guys have always been like, "Hey, we're going to bring our own company on chain." Since you guys launched Bass, one of the things that excited me the most was I remember seeing a few guys from Coinbase saying, "Hey, we're going to start bringing our our our own like business on base. We're going to move the capital, the users there, etc." And I have a tweet here

from David that I'll just bring up on the screen. Um, who I actually was on stage with at Consensus earlier this year. Um, and he said, this tweet was awesome. It was just earlier uh last week, I think it was. He says, "So excited for more and more of Coinbase's existing and new users assets and products to come on chchain via Bass. Onchain innovation is literally happening across the entire company right now. Base may be the most most visible, but every single team at Coinbase is thinking about how to improve consumer developer business institutional experiences by using onchain rails. And he's just saying the speed is accelerating. >> Can you just explain to me and I know you sort of talked about these phases of of Brian Armstrong, but like what is it you guys are trying to do with bringing Coinbase and think of Coinbase as the

corporate centralized company. You guys are really trying to bring all that on chain. What does that actually mean? Help our help our listeners kind of understand that. Yeah. Yeah. Well, David's he's he's good at articulating this stuff. He's he's such a good um writer and I'm so grateful to have him on the bass team. You know, I I'd say when we started bass three years ago, started working on bass, we had this kind of vague vision of like let's figure out how to bring the company on chain and we didn't actually know what that meant. And so it was like actually a year of me and the team like wandering in the dark trying to figure it out. We tried a bunch of things, none of them worked. We ultimately realized, oh, like if we want to build onchain products, we need a platform. And that platform was

base chain. Uh, and that kind of started in in late 2022. We launched the test net in February 2023. But even then, like we we had this vision and Coinbase, I think, had the vision or parts of Coinbase. Brian had the vision. It was, you know, like unevenly distributed of bring Coinbase onchain, but it wasn't really clear what that meant. I'd say what's really clarified over the last few, you know, you know, maybe like 12 months or so is now that we have this platform, we just see opportunities across the business where we can take existing products and rebuild them on chain to make them like 10 times faster, 10 times cheaper, 10 times more available to customers. And so, like, let me just give you two examples. The first one is a product we launched six months ago, um, which is the ability to

borrow dollars against your Bitcoin. So, you can take your Bitcoin on Coinbase and you can get a USDC loan against it. I think it's like a 6% loan. Um, it's really great if you have long-term Bitcoin holdings that you want, but you need some flexible cash maybe to do a refinance or to, you know, whatever you want, you you know, in it happens instantly. Um, the way that product works is it's fully built on chain. So, when you say, I want a USDC loan, what actually happens is we take your Bitcoin, we wrap it into Coinbase Bitcoin. Uh, we put it into your smart wallet. We deposit it then from your smart wallet into Morpho lending pool onchain on base. We then kind of pull out USDC against it and put it back into your Coinbase account. It's like five steps all compressed into one with the

smart wallet. You do a onetap transaction and then you have money in your wallet. That's a beautiful It's a beautiful thing. And at this point, I think there's like 1.2 2 1.3 billion dollars of Bitcoin locked up in in this product uh with like 500 $600 million of USDC kind of borrowed against it. But the really remarkable thing about this product is we actually had the same product like four and a half years ago uh that we shut down and that product was built on the centralized rails. So it was built with like our balance sheet where we were lending to customers and we were doing all of it offchain and we had all of these licenses that we had to get because we were sitting as an intermediary and we had to build all these different systems and we shut it

down because even though customers really liked it, it was so complex for us to manage. We had to be doing liquidations and figuring that out. We had to be managing the licensing because we're actually sitting as a lender. We had to have the capital because we were literally lending from our books to our customers. Um, and all of that made this this product that yeah, customers like, but because it was so complex for us to run as a business, we couldn't do it. So, we shut it down. And then we got to the point where the infrastructure of onchain matured enough where it's like, okay, now we can build that same product, but it runs onchain. So, we don't have to build any of the backend systems. The the liquidations and all that stuff is managed by the markets, smart contracts, morpho. uh we're not

providing capital because it's all provided by other lenders, folks like Spark who are lending into that and earning market rates. Uh and we're no longer sitting as this intermediary lender because really what we're doing is we're just enabling customers to access those lending pools. And so we're just the front end. And that meant that it it could be cheaper for us to operate, cheaper for the customers with better cost of capital, more accessible globally, uh and way faster because they didn't have to sign all these crazy forms. they just signed the transaction that put the the money into the the smart contract and then got the USDC out against it. And so that for me was the first time where I was like, "Holy crap, >> like onetoone product comparison. This is 10 times better,

>> right?" >> And it's now like scaling way faster and it's going to, you know, it's going to bring tens of billions of dollars of capital on chain. So I I think like you can kind of imagine that that's one example, but like every single part of Coinbase's business in some way looks like the old B borrow product. Like Coinbase was started in 2012. And so there's like this long, you know, history of we built all these products offchain before smart contracts existed, before Ethereum existed, before Base existed. And they've worked and they've given customers access to capital, etc.

access to trading opportunities, but they're built in the old way. And now a lot of what our work is is it's like looking across every single part of the business and being like okay let's take that one and build it on chain. And so another example which is this is coming out on Friday and so I can talk about it openly is the next big product that we're launching is we're launching the ability for anyone on Coinbase to trade any asset on base. And that's not happening by us importing all of those assets into the Coinbase centralized exchange because what we've seen is that it's super operationally intensive to onboard all these assets into centralized exchange and manage liquidity and do all the integrations with our off-chain kind of ledger and and custody and all that stuff. And so instead what we're doing is we're taking

the same infrastructure we used for the borrow product and we're just making it so now they can swap on any decks for any asset on base. But from a consumer experience perspective, it just feels like they're swapping in clinics. And there, like we've again, we've just simplified it. We've made it so instead of having to bring all of this economy into our old legacy systems, we're just using our interface as a browser into like this index of the entire onchain economy that's happening on base. And that means we can give our customers a thousand times more opportunity because now they can access millions of asset instead of hundreds of assets. um we can do it in a super cheap way because we're just providing this interface into these smart contracts in the chain and and we

can just provide value. And I think that's that's the thesis is like we know what it takes to run all these systems offchain and now we're seeing firsthand what it takes to run them onchain and we just want to move everything over because it's going to let us be faster, cheaper, more global and provide better experiences to our customers. And I'm excited to see it scale across our business. And then importantly, like I think we're just at the vanguard, like we're the first, but this is gonna happen to every single business in the world. It's it's so obvious from the inside of Coinbase when you see it where it's like, of course, of course, because now that was like hundreds of thousands of lines of code is like 300 lines of smart contracts and it plugs into your wallet and it's infinitely easier to maintain because it's running on a

global computer that never goes down. Like, yeah, it's way better. So, I think every business will do it over the next decade. >> And that's what David said at the end of his tweet, too. He's like, "Once we do it for ourselves, we're going to go and teach all the Fortune 500 companies how to do it too, right?" And I was like, "Oh, yeah." Like, "What?" >> And we are, you know, like we just launched this um Shopify integration where >> Yeah. >> um you you know, it's rolling out still, but you're going to be able to pay with base pay or any crypto wallet USDC at any Shopify store. And the big thing that we did with them is we basically spent nine months with the Shopify core teams working to figure out, okay, how do we replatform like hundreds of thousands or millions of lines of code

that do all of this complex stuff of settlement and escrow and taxes and merchant of record in their off-chain systems onto smart contracts >> and it distilled into like 800 lines of code, >> right? >> Straight up. 800 lines of code. and we could have really only figured it out because they're the experts and like it took us working with them to design this commerce payments protocol that came out the other side and I think that that will happen again and again where you need the offchain expertise because that's the complexity to figure out how do you bring it onchain but I think that same pattern will repeat again and again and again where it's just way better to do it in this new way because the platform is infinitely powerful >> interesting and by the way for the listeners this is the DeFi moment right

we've talked about this a ton uh on the show and and you know bankless has done as well. We've we've been going at this and and this is exactly what you guys are building with attaching Morpho into the Coinbase app, bringing, you know, the DEXes into the Coinbase app. This is exactly it, right? Uh and it just it makes so much sense. And I I I wrote a report, I don't know, a couple months ago now that said, you know, Coinbase can become a trillion dollar company. And my thesis was around like it was basically comparing to like why did Amazon become bigger than Walmart when Walmart was the biggest retailer in the world. And it was like it did it, you know, internet native. And so there was just so much more efficiencies. And that's exactly what Coinbase is doing.

You know, originally when I wrote this, it was this is what Coinbase is doing for the financial system. Now you're also doing it for the social media world, too. So, like maybe it's even bigger than that. I don't know. But, uh, it's it's impressive to see what you guys are doing. And I think it's it's really really cool to to do it yourselves and then go and teach. Um, so let's wrap up here because I think we've been been going for for a bit too long and and I know you've got you're busy. So, um, we'll start to wrap up. I just want to ask one last question, which is what's next for you guys? You guys have done so much already. Um, and I know, you know, I was listening to the earnings call, was it last week? Uh, and Brian talked about, um, you know,

tokenized equities, uh, prediction markets. There's all these other things that you guys are going to do and and you guys launched kind of the the idea of the the everything exchange, I think it was. Um, and so, uh, it looks like there's a lot more coming. What can you tell us and what can you walk us through there? >> Yeah. Well, I like to say it's still day one. Um, we haven't hit the inflection point. We haven't earned our keep yet. you know, we'll get to pat ourselves on the back when the whole world is on chain. And I think it's going to happen fast, but we got a lot more work to do to get there. Um, I'd say like two things that I'm excited about. One is the everything exchange, and I think this is really just a new vision for the Coinbase product that Brian and Max and

others are driving, which is that once you start to have this infrastructure to do everything on chain, we can then bring all the assets of the world on chain, too, and then trade them all in one place. And I think really that's what Coinbase will start to be is like it will be your primary financial account and that primary financial account will give you access to this everything exchange so that whether you want to buy stocks or bonds or you know meme coins or content coins or creator coins or whatever it is. It's all in one place and then you can manage it alongside all of your other money. You can do payments. Uh you can really do anything you want with money in one place. And I think that that is the the kind of path that Coinbase is charging down right now. There's definitely a

feeling of like now is our time and we got to go and the team has locked in to to deliver that and I'm excited about the progress that they're making. You know, on the base side, I I think it's it's about getting the base app to market and it's about continuing to grow this economy that we we we've we've really started to see take off in the last few months. I'm so excited for, you know, the the launch of Coinbase Dex integration so that now every asset on base is going to be instantly purchasable on Coinbase. Uh, so if you launch a creator coin on Zora or you start publishing content on the base app like you can send it to your grandma or your grandpa or your friends who have a coinbase account, they'll instantly be able to buy it.

>> Hold on. Every every content coin, every content coin is going to be available in >> Yeah. Every every creator coin, every every coin, it's the everything exchange, right? And then as we have more and more assets on base, all of those will be available too. And so like that I I think is going to inject a ton of energy into the base economy. Um, and I think like our goal is to bring this economy to even greater heights and to bringing it to even more people. And so, you know, we're doing that with a front door in the base app >> and then we're also doing it uh in a bottoms up way by bringing other products, companies, businesses on chain all around the world. Um, you know, you know, beginning of this year we had uh someone in one country uh in India,

Samia who's incredible. Today we we've built out a country team uh global team that has country leaders I think in 16 different countries. Uh my goal for the end of the year is to to get to 25. Next year I want to get to 100. Uh and so we're really feeling like we're we're within striking distance of having the consumer product and the economy that can really start to meet this mainstream need of a better system, whether that's social media or faster money, faster payments, um better chat that's encrypted and trustworthy, easier trading. Um and and we want to bring that to everyone in the world. and we want builders and creators to be at the center of it. And so that's what we're going to do. It's going to be a lot of hard work, but I'm super excited about the momentum we have right now. And I'm

excited to see what we get we accomplish over the next year or so. >> Yeah, I'm excited too. Jesse, congrats on everything you guys are doing at Coinbase. It's been wild to see what you guys have built over the last I mean, even just few months, every I feel like every earnings even before that, you guys are just launching, launching, launching, and I love to see it. So, keep shipping, keep doing what you guys doing. We're we're we're full supporters over here at Milk Road. We love you guys and uh yeah, keep going and we can't wait to to use the base app. Uh but thanks so much for joining us. This was uh this was awesome. >> Thanks for having me. Day one. Keep building everyone. Stay based. >> Day one. All right, everyone. A quick friendly reminder before we wrap up. The information we shared today is just for

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