Crypto & Blockchain: Looking beyond the bear market

Transcript

good day everyone uh thank you for joining on today's webinar looking beyond the bear Market uh for crypto and blockchain my name is Sebastian cuccio I'm a general partner at interop we're an early stage uh crypto fund investing in modular improbable blockchain infrastructure and applications also the host of a podcast called epicenter which some of you may be familiar with and uh the interop which is a technical podcast focusing on the interchain and Cosmos ecosystem I am very pleased today to be um

having this webinar to dissect uh you know the current state of the crypto market and looking beyond the bear market and really coming back down to uh to come back to fundamentals uh and understanding why we're here uh why the events of 2022 um you know the the impacts of the events of 2022 uh on the broader ecosystem and what we can hope to see uh in the coming cycle um I'm joined by uh kimonsimo who will just introduce himself briefly yeah hi everyone so yeah my name is Clement Simo I'm always here a GP at interim branches um my head of finance and operations and

like currently uh leading the fundraising thanks everyone and also joined by a panel of experts uh that uh you know we'll be chatting today about um all the topics I discussed earlier um perhaps before we go into introductions I just want to like contextualize you know sort of where we're at in the the moment um that we're in right now so many have dubbed 2022 as kryptos.com boom moment and if we look at back some of the events uh you know in May of 2020 to Terra Luna uh which was an experimental sabalcon project with a market cap of

over 18 billion dollars and it's p collapsed in a pretty spectacular crash and it brought down with it millions of dollars uh or billions of dollars in uh market cap and also millions of retail investors who trusted its stability in July three hours Capital One of the largest crypto hedge funds file for bankruptcy after it's failing to meet its margin calls losing over three billion dollars it created Domino effects that were felt throughout the industry and specifically centralized lending players who could not call back their loans um and perhaps in a final blow this year in November the second largest crypto exchange FTX became insolvent while the world discovered that the firm uh was allegedly and now pretty confidently um engaged in fraud but despite these

setbacks 2022 has been a spectacular year in terms of user growth developer adoption and Investments uh firstly I think one of the biggest Milestones of this year was that ethereum successfully performed performed the merge which was a significant Milestone allowed it to scale while significantly reducing its energy footprint this is a project that had been ongoing for several years beyond that Global adoption of crypto has grown well beyond pre-pandemic levels and specifically in Middle to low income countries like El Salvador Argentina Vietnam Colombia um and who that began adopting crypto and significantly large numbers and also developers in those regions are now

building applications and conferences are now going the Builder conferences are now going to those places and attracting local developers there's also been significant progress on the right it was very front in Europe while ongoing adoption of Mika and TFR is underway and in terms of Investments you know in the first half of 2022 over 30 billion dollars was invested in in crypto companies and protocols and over 36 billion dollars raised by funds investing in the industry these are numbers produced by massari so while we enter the 14th year since the invention of Bitcoin you know we hope to look at today at what are the long-term prospects and opportunities in this space and you know looking at so-called crypto Winters you know how is this one

going to fare differently so with that context I'd like to introduce our panelists to the stage uh for brief introductions before we get into uh into the meat of the subjects today so if you guys could turn your cameras on and um enable your microphones and we'll start doing around uh Roundtable here getting everyone to introduce themselves sure I let's start with a good idea yeah yes we can start your videos because supposed to stop to oh okay let me do that now uh uh

okay how do I not used to doing this on Zoom I usually use you know Creator tools like stream yard and uh Zoom is uh I don't know I think we have to be Coast okay nice to meet you everybody thanks a lot um Sebastian I can start maybe with uh uh a few seconds introduction I'm a Nicola um principal lemness cup we're a crypto native investment firm um solely focusing in crypto assets and and blockchain we focus on the early stage so see them precedes our bread and

butter it's where you would see us deploying uh most of the uh most of the cases and yeah glad to be here excited to to to share my two cents on this bear Market well um I'll go next so great to meet you everyone my name is Jay and I'm a co-founder for sale Labs um my background before this so I was an engineer at Robinhood for almost four years um after spending time over there initially started to build a decentralized Robin Hood saw that there was actually a very big opportunity to build the infrastructure layer instead um and that's what we're working on right now so today is layer one that's optimized for exchanges um if we succeed then the decentralization experience will be identical to that of the

centralized exchange experience cool I'll pass it over to already thank you Jay uh I'm radar the founder of the key Foundation uh we're a blockchain power Adventure studio um that uh actually relies on three pillars the first is the community we launched club which is a investment Club uh with the today 500 members with the global network of 5 billion euros they've invested with us around four four million dollars in the last 18 months um and we're also launching uh Venture studio uh in which uh web 2 companies uh launch projects in the web 3 using our

infrastructure which is the keychain uh Cosmos SDK based chain hi everyone thank you for the invitation uh Sylvester I'm Fusion Frey I am president of Adan the association that is a federating representing and raising the voice of the crypto industry in France and in Europe so today more than 200 companies that are members of The Association thanks everyone uh happy to be here with you all and uh really excited about this conversation so you know I I started uh the the webinar here sort of describing the context uh for for this year and I

know that lots of you have been in the space for you know several years now um looking at like this particular bear Market you know like these are very tumultuous times like narratives are shifting regulatory pressure is Shifting investment PCS are shifting uh also infrastructure is evolving and changing uh you know looking beyond all that I think I'd like to start by asking you all why you still why you think and this is maybe a little bit of a facetious question why you think crypto is still a relevant game-changing technology long term

well I can start I was the first one introducing myself well first of all you you you named and you you mentioned a few um uh enormous differences between what the the environment was in 2017 and what's today in terms of capital in terms of attention and in terms of uh what's ready to be deployed right so this is first of all uh a major uh a major difference I think um I want to step back for for really a second and everybody I'm sure in the panel and also uh people they're listening we made a sort of decision

right a strong um vision for our career in a sense right as investors and as practitioner in the space to join the space I would say somebody 10 6 7 whatever years ago right and we made this Choice with um a strong convention in the space and I believe that uh bull after bear and football after Bell basically um none of those fundamentals that we joined the space for has changed they only improved right and this is why uh I think this convention that we had uh is still present the use cases have

been improving um and I would say only the uh human nature of of of the speculation around new technology um as as you know shown major setbacks for the industry so that's why I believe we see uh still strong conviction from investors still enormous amount of capital deployed um and sitting on this online to be deployed in the in the ecosystem but cycle after cycle we still see um major setbacks that's I think it's a lesson that we have to they have to learn from

yeah I I I'd like to uh double down on this and it's quite hard for me to say that we still believe it's actually I I believe in stronger my belief is stronger than even before because the crisis that we see is not a crisis of crypto or blockchains the crisis of speculation uh we we were in the mother of all the bubbles uh until November 2021 a lot of liquidity a lot of people putting a lot of money in like anything that can be traded and uh yeah uh I think that what's happened is the is a crisis of trust of centralized actors Bad actors that gambled and were hoping

that everything will continue to go up uh but at the end of the day the fundamentals of uh crypto blockchain and D5 uh are actually what protect us from this kind of Crisis and it's actually quite interesting to see that from what's happened uh if you get if you look at what's happened with FTX it actually exploded in less than two weeks why thanks to blockchain uh individual and independent actors were able to audit analyze movement on chain to say hey this smells actually really bad and actually a lot of people I know were saved because there was

transparency and what we are seeing is a cleansing and I think we it's this is a bookcase for me yeah I mean I I definitely agree with the sentiment of both folks um and I mean yeah from from my side like the reason that we that I originally got into crypto and that I originally started building the decentralized robot is because I was there when everything with Robin had happened last year and it was just you felt so bad when you were an Insider working at a place like Robin Hood when management was just not saying anything about what was happening internally and I think that after going through an experience like that like anyone who's been an Insider they just start to Value things for trustless and transparent a lot more

um and that was the original inspiration for us to start building that decentralized Robin Hood and I think that um everything that has happened this year like all this uh centralized kind of sort of app and they really just reinforced that these system originally had the things that are trustless things that are transparent they're inherently going to be more valuable for users um and I think in the long term like that's just not going to be changing like in the long term people are going to be more and more bullish on things that are inherently trustless um so yeah I mean that's so I definitely think that even though there's been a lot of noise in the industry the fundamentals have not changed at all and that's what I'm going to keep looking towards yeah I think uh sorry go go ahead I just just wanted to agree with what I

had been saying and just to uh to push on that direction first I think we can still be really positive and optimistic because of the growing Mass adoption uh of crypto asset by users so eight percent of the French people has crypto assets now you have 10 percent of the European uh citizens you have around a 50 percent of of U.S citizens and the reasons why they they want to adopt the crypto asset is also evolving based on the better understanding of the technological opportunities behind crypto assets and that's very important to uh to note that so it's not only to to make profits but

also because the people understand the the value behind the self-custody the possibility to go in a decentralized word that was not allowed to them before and also the the and that's something that they can also see in the current news at the the possible failures of intimidaries that they can uh overcome in this new word so the mass adoption based on this better understanding is a really optimistic way to see how a crypto is beginning to be more and more democratized and regarding the companies but we can see at this assertion is that despite the

difficulties that they can have in France and in Europe to develop and difficulties that can be very long to solve if I take for example the pancreation of the companies despite those Deadlocks companies are still building uh very interesting and more and more diverse use cases and still creating uh jobs and the wealth in uh in France the European and the word and they that that's a very uh that's uh that's something that we can uh observe at the associations if we have a look we started with 11 members uh three years ago and now we are more than 200 so it's

a very beautiful Dynamics yeah so if I uh if I'm hearing you all correctly um what I'm hearing is that the fundamentals have not really changed and I think this has been the prevailing narrative at least in the space um you know I was watching the Congressional hearings uh where uh John Ray was was speaking uh to uh to the U.S Congress and uh you know towards the end of of that whatever four-hour um you know I don't I don't even know how to how to qualify that whole thing but there there was one representative uh his name is uh Jake I'm gonna butcher's

last name uh close uh uh ocean close um the Americans will will correct me on this but and and basically his message was you know crypto's been around for eight years and it has not produced any value uh compared to say things like artificial intelligence um and you know other other Technologies other emerging Technologies uh and that you know crypto needs to put up or shut up and and I thought wow what what a disconnect between you know policy makers that are um observing this technology and like a sort of political class um and I think more broadly like a media and political class that um that that see things happening but

don't necessarily see all of the Innovation happening uh on what I would call say the Builder side right there's there's tremendous amount of innovation happening on the technology logical layer and you know there really are I think you know several um like different different ecosystems within the crypto ecosystem that I think a lot of people don't really uh can't really fully capture so where where do you think this comes from and what are the biggest misconceptions do you think people still have and you know maybe I think you know you'd be particularly well placed to answer this question what are the biggest misconceptions people still have when looking at the ecosystem and and looking at the Technologies and and really understanding where the

Innovations are where the sort of frivolous you know not really very valuable things are and and what are scams Etc yeah foreign so first I would say that the institution knows don't really know about the real economy behind crypto assets so usually they know about Bitcoin they sometimes know about cryptocurrencies crypto assets and that's uh that's the step after but usually they don't realize that there are companies in the real economy behind that are creating jobs and the wells for the for the state and that will uh actually guarantee our digital

sovereignty tomorrow so that's the first thing that we have to make them realize that is that the Economic Opportunity behind the development of a new sector and behind the the the possibility for this Innovation to be available in also the existing economic segments and actually all the the industries that can benefit from this this revolution so I think that's the first thing to make them understand because the the institutional speech is more focused on risk than on opportunities and that's also really frustrating to see that

actually the speech does not sometimes really evolve years after year and that we still have the same preconceived ideas around crypto assets that are circulating despite evidences and research that can prove the country so the those preconceived ideas are always regarding the environmental Footprints the risks in terms of Financial criminality and also lots of questions regarding the read events and the utility of crypto assets so sometimes we understand that there is a need for Education because those are

really those are questions that must be so but sometimes we also feel that there is a volume the the ambition for the misinformation about crypto assets in order to prevent from their development for several reasons so actually it can be quite frustrating when those pitch does not change years after years and there are some good and bad reasons why it doesn't really work so we still have lots of Education to do and I think our Focus must be on opportunities regarding the use cases and the companies that we create with this uh with this innovation

are you uh you run a company that uh is building a a user-facing product and applications that leverages crypto uh does this resonate with you this this uh this disconnect between you know real uh real usage and uh and the you know the seeming misunderstanding of the real value in in crypto yeah I think I think there are many arguments uh that can explain the reason why there is such a disconnect between Regulators uh politics and uh the usage of the whole technology I think let's start but by what we're we've been doing actually I

uh got to one like main Axiom was like we need to get as many licenses to operate uh as if crypto was regulated like Securities that was the first thing so we we want to get all of the licenses uh we are an agents of investment service provider uh we we are we got our DSA disp uh uh registration in France so that we we would be able to operate uh peacefully now to get back to to the reasons first it's technology Regulators um actually it's hard for them to grasp

uh the concepts of what blockchain is actually disrupting so basically The Regulators are here to protect uh the the the customer and to regulate so basically when they started looking at how they would regulate crypto they took the framework of the old uh space but basically when you build a decentralized exchange there is no reason to regulate the the counterparts risk or custody Parts because the blockchain should protect the whole counterparts aspects there is risk on the technology aspect

security risk so everything that is related to hacking and everything but it's not the same kind of Regulation the same kind of protection um so this is for the regulator part so now the goal of an organization like Adan that uh first in presides is to explain what blockchain provides in terms of value what kind of middleman decent remediation blockchain technology offers and how regulation can actually evolve in this new environment yet the regulator needs to regulate the centralized actors and I don't understand why an actor such as Celsius

or nexo would escape the traditional kind of Regulation that investment service provider need to have minimum Capital uh uh quarterly audits by tier a tier one theorem these are the kind of things that because you're actually handling people's money when you handle people's money you need to be regulated the same way and and if they trust you you need to be trustable so this is for the regulator and on the other end you have politics obviously politics is all about communication and marketing because they need to be elected for the next round so they will serve on whatever narrative is good for

them uh in in the future and I think that we have like three kinds of politics you have the ones that don't know a thing don't understand and don't want to understand so they will just surf on the current narrative that is that brings the most clicks and Views and uh and Bravos you have the second ones that actually don't understand but actually are looking to understand and you have the ones that understand and see the threat of what blockchain and crypto brings into the societal uh environment so basically crypto blockchain decentralization brings freedom and when Society has a taste of Freedom

it's hard to take it away so the one that understands and act in a way as if they don't understand these are the most dangerous one because they actually get it and they know what the society what they don't want the society to get a taste of and I think this is our job to bring the awareness to Society on the reason why crypto is important blockchain is important not on the speculation aspects and this is what actually um brings us so much issue because we don't media only talk about crypto when it's about Bitcoin aiming for a hundred thousand dollars but this is not the

real value this is not the real gain the real gain is freedom hmm uh yeah thank thanks for uh thanks for that I I think I think you're right I mean I I think that crypto is inherently political and uh we I mean we need to remember that but we also need to remember that anything that's political will also attract uh you know the attention of people that uh want to sort of uh deny deny the the freedoms that that the crypto provides um Jay I wonder as you know as someone who's building a you know a platform for uh businesses to build um how does this uh how does this resonate with you in terms of like

looking for customers and looking for people to come and build on the platform and what sorts of you know fundamentals uh need to be sort of put front and center uh for for those folks who are building on the platform yeah I mean the people that are building on state tend to be more crypto native developers so they already kind of get it like they're not over here to like do they understand the more fundamental benefits of building any kind of um blockchain based application I think that one thing that I have noticed more recently which has been interesting is the types of people that we've been chatting with they've become a lot more Mission driven rather than being kind of profit driven and when we originally got started with say um it was in the middle of the bull

market and the kind of people that wanted to build on say there were a lot of opportunities for them to build on other ecosystems as well they're offering them large grants that are offering them the ability to like launch and like make a quick buck and now it seems like people are much more objectively considering like what is the best infrastructure for them to build on so that has been kind of an interesting transition that I started um seeing recently um the other thing I mean just in terms of like misconceptions overall like I'm based in San Francisco um and even in San Francisco a lot of people don't really understand the benefits of crypto and one thing interesting is in the kind of media there's all these portrayals of all these scams that happen with like nfts for example um there's also everything that's

happened with decentralized blow-ups and people tend to take that and like paint the entire crypto industry in that light and oftentimes I end up having conversations with them about more of the nuances between for example why fgx going down isn't reflective of like the inherent is it doesn't really mean anything about the inherent benefits that like any kind of cryptocurrency offers um so I think that's the educational piece is one thing that still needs to happen and I mean even in the barrier where there's a lot of very technical people it seems like that still hasn't necessarily um kind of had Webster or auction yet that that's interesting um and Nikola you know as as a as a as an investor um when um when chatting with with investors specifically uh with LPS uh what what

does that look like in terms of a conversation and what kinds of misconceptions are you still having to uh absolutely absolutely look this is this is very I mean there were great inputs uh from the panel and this is interesting because it's a conversation that you have to have um from our perspective of a money manager and with fiduciary duty right um I think I was tremendously lucky to to come to crypto from a an industry where I was extremely uh you know familiar with volatility I used to trade derivatives and I I really realized that um the misconception is

I think primarily derived by us uh faustin mentioned the risk um the risk Logics and Dynamics and and how they they they they invest the Institutional Investor look at risk versus how they look upside and how retail look at risk and how they look at at a downside so um that's a massive that's a massive difference why because uh the risks that investors and institutional investors look at um it's it's it's basically the only thing that they primarily care well retailers um jump every single on every single use case and and this you know the more uh

extreme retailers and the more speculators I would say let me use a very strong word they abuse of some uh use cases their crypto and the builders have created for the for the common goods and and bring it to the extreme at that moment um the the institutional investors uh you know uh realize the risk and that's where they they just focus on I'll give you a very simple example in 2017 when you know 20 30 maybe 50 million uh were were raised in 30 seconds or one minute for for an Ico everybody focused on how crazy is there where the money is gonna go this is

insane this is like a scam but very few realize that the capital coordination reached by that event never happened in the human history it's impossible to send 50 million uh of you of any currency in US dollars in one place in one second before crypto before blockchain right didn't exist so I think the misconception is really coming from um retailers and speculators really abusing of some use cases and we have seen so many from from icos from D5 from nft any of those that will bring users they are bringing users but also bringing speculation um and and the investors that are of the institutional investors that obviously

are extremely cautious about risk the way we look at it um it's obviously on a very risk-adjusted perspective in a sense that there is a really extensive process of due diligence but start Arts with a very strong thesis right it's very strong Vision very strong identification of of where the space needs to go what are the teams that are building in the direction and what the product that might be needed and what's the demand for that product when you basically have this uh perfect alignment right star alignment with right Vision right team right product then

um taking a sort of a bet from a venture capital point of view it makes sense right and and the app side is so gigantic in a sense if things go well which uh you know in a portfolio perspective it makes sense to to to run those risks so this is the conversation we have with with LPS they do understand uh the nature of of Returns on in on on Venture Capital the nature of the risks but I would say say for us and I speak like uh you know for for from from the risk management that we are applied as a team at lemons cup the sharp focused on early stage uh see them proceed mostly

throughout the cycles and throughout the years as being the key because you know we could have taken so many tangents right so many extra risks so many um you know uh things that could have could have brought us really in a in a different position from where we are right now so I think the diligence to stick to the plan from an investment point of view is very important yeah thank you that's great um the um the thing that I often uh try to do and when explaining crypto to people and you know when explaining people to to non-non crypto native folks is like trying to bring it back to uh you know the the dawn of the internet and I you

know what one of the instances that I remember you know as like a teenager like using the internet in like the late 90s and early 2000s was the uh the invention of the blog right and like you know I think many of you are old enough to remember like when blogs started it was like a very Niche thing it was you know like sort of Geeks writing about geeky topics like movies or or traveling or uh or like specific TV shows or like you know any sort of Niche interest and you know there were a lot of people like I don't have the exact numbers but like I mean I'd love to find these numbers but there there were lots of people I mean some of the people writing blogs

and certainly you know hundreds of thousands perhaps millions of people reading blogs it was still a niche thing though it like millions of people were interacting with this new way of communicating but it still remained a niche thing and so when I hear people say like crypto doesn't have any real adoption and I look at you know things like nfts in the in the last uh bull cycle that brought in like hundreds of millions of people potentially uh to to buy nfts to be interested in crypto I see that as a use case I think that you know similarly to a lot of the sentiment perhaps around new forms of communication and like things like blogs and new forms of expression in the early 2000s where you know you know the the

quote unquote you know like Boomers of the time right like the the the previous generation sort of saw that perhaps as um as something that didn't have a lot of value or wasn't interesting but you know fundamentally change the way you know people and companies communicate to the point where now you know a blog or like some you know like this sort of form of writing you know has sort of you know even become a little bit you know passe uh now that we use Twitter and we we communicate in more short form ways in written format um similarly to to the way that those things were seen as as of not having any value I think like I think there's a there's a similar uh sentiment towards things like an FPS things like like uh like

cryptocurrencies and D5 and things of that nature is that is that an analogy that resonates with you and and if so what are uh what are the the applications the the applications coming that may bring in you know the next big wave of people I think you know looking back to the early days of the web you know Facebook certainly was one of those catalysts that brought in you know hundreds of me millions of people into um onto the internet you know YouTube in 2005 2006 around those times yo what are the the next waves of applications that in the next cycle uh will bring in even more folks onto the uh onto crypto and blockchain I don't know who wants to take that first

I can so I can start well definitely yeah definitely I mean so many of uh use cases have stayed right like Defy is still there uh we need to find a way to make it more functional and less positive obviously uh nft meta versus gaming uh all of all of those are are still there I think um all of those tooling that we have actually a lemons cup heavily involved heavily invested on um they're gonna they're gonna bring their fruits right they're gonna they're gonna she they're gonna show uh their value in a sense and although you know the centralized application the the Creator economy what we like to call the

Creator economy um it will really come to fruition I think reputation is something that has been tackled uh coordination is some is something that has been tackled and is going to be improving for sure a social presence like um a ton of of what we do socially online right now would be on a decentralized fashion I'm pretty pretty sure about that and I believe that um and then I'll post to uh to to to the next panelist we are seeing a massive uh transition between web 2 to web 3 of of knowledge of know-how of uh a b testing of talents right and this is massive

because these people have done five ten years at Google right and and Facebooks and and the Amazons those people know how to work they know how to coordinate themselves in a sense right and see what what's happening with adapters and sui right coming from from from the from the Facebook team so um I think now it's it's really the time where talents have realized that the new uh decades the the the new work is you know for protocols for decentralized entities for Dallas for for crypto networks in a sense and that will come and they are coming big time and they're bringing all those skill sets basically so I think yeah social presence reputation coordination and all that

tooling that's been built will is going to be used because it's built by great Engineers I I I completely agree and I think it's all about user experience um at the end of the day uh I remember in 1997 when I was connected to the internet and started building my first website user experience was really bad and like it was uh awful I was even coding directly on a server and and actually what's going to happen is that everything that was built for web 2 by people that by very structured and knowledgeable people is coming actually to web3 and the user experience that we used to have in web 2 is coming to web3

now um what is the usage what are we currently disrupting so web one was uh consumption you came onto the world wide web and you consume content web 2 was about consuming sharing and connecting I think web3 is about ownership and it's not a coincidence that I think the peak of the usage of blockchain and crypto and what I would call the stakeholder capitalism uh uh system is coming in a period of recession let's not blind ourselves 2023 it's going to be a year of recession and

um what was said by Nicola is the creative economy Creator economy a lot of people are actually wanting to and since kovid wanting to take their Destiny between their hands and a lot of people quit their jobs but at the end of the day they want to make money by doing what they love and most of the people are actually creating value online the problem is that most of the value that is being created is actually channeled by intermediaries I think that's what's going to happen with um with web 3 tokenization daos and all of those things once the user experience will be as easy as just connecting doing a

Facebook connects or something like that is that you will have organization organizations of decentralized people doing their job making money out of their job their job but at the same time building a Equity value in tribes of creators and I think that this will be one of the biggest source of innovation is how we can share the equity value that is being built between all the people all the stakeholders of an ecosystem of value and I think that 2023-2024 are going to be the years that we're going to witness that yeah

um from from my side I think that um so the way that we think about it is that Innovation tends to happen in application infrastructure Cycles um so originally there's some new infrastructure that comes out this leads to a lot of new applications some of which find product Market fit and then for these applications that have product Market fit they suddenly start wanting more specialized infrastructure to enable better performance um one example of this would be the database industry where you started off with general purpose um kind of broad Solutions like Oracle which is created a long time ago and then web one Web Two everyone started using Oracle and similar types of databases and there are some applications that are able to find product Market fit and others more specialized infrastructure that is

getting created so um for example now you have Solutions like databricks Warehouse which is a tool that is custom made for AI and ML and I think in crypto it's going to be very similar right so you started off with ethereum which was extremely general purpose um this led to an explosion of a lot of new types of applications we've seen all the exchanges we've seen all the nfts we've seen and at this point like all the other applications that um nickel andrado mentioned as well and I think that out of these the ones that have true product Market trade right now are exchanges and stable coins a lot of the other types of applications defy a lot of the other types of applications that have come out entirely I think their product Market fit is a little bit more questionable um but definitely for exchanges and

stable coins there's product Market fit so I think what's going to be happening over the next few years is first of all for these things that already have product Market fit there's one to start being more specialized infrastructure getting created for them I mean what we're doing at today is exactly building this infrastructure for these exchanges where stable coins are going to get traded apart among other things so I mean I think that's like one way of Innovation is going to happen and then the other wave is going to be more experimentation around the actual actual application layer which I think the other panelists have gone into so I think there's going to be a combination of both of those things happening in the next couple of years I think that in the the current news there is one huge topic that we that is

already very important that but that will become even more important for users is a regulation because Recreation review tool to uh for Mass adoption and to help the general public to to to go to the actors that we've warranted them uh investor protection and the other protections such as against Financial crime against Market abuse and until now to the the way a very diverse approaches in terms of regulating crypto assets and in France and in Europe we were really in advance about regulating group size

markets but with what happened I do hope that in the current years we will go to regulatory harmonization uh on the international stage because since we have this regulatory fragmentation meaning that in Europe we will have a framework uh implemented in the two next years whereas another jurisdiction you have nothing or it would be implemented later you still have loopholes that that where the users can be trapped and can lose everything and that would be very detrimental and that that is today quite

detrimental to the world crypto which is suffering for a confidence and reputation crisis because of some actors which are a minority but some actors which will make a lot of damage for the world ecosystem so I think that in the coming years users will be more and more cautious about which type of intermed there is they will uh subscribe the services and they will never have maybe have a better look at the regulation that that would be around and the regulatory environment in which

they would evolve and that's something that uh unfortunately uh is uh will be promoted because of those recent bad news but uh that will at the end uh raise the credibility and seriousness of the world ecosystem but that will be achievable only if we have this Regulatory harmonization and the supervision that will guarantee that we have a Level Playing Field uh in Europe and into words and and and it's only because we will have Bulls regulation supervision and promotion of the credible and serious actors that we will be able to offer to the public the

comfortable environments uh to to promote the mass adoption excellent um uh before we you know close up the panel here we are going to do a q a um and so if uh anybody in the audience has any questions uh please use the Q a module here in Zoom where you can ask your question and uh yeah we can we can let you come on stage and and ask your question to the panelists um so I think my you know my last question we've got we've covered a lot is you know a lot of topics here we could you know cover so many more topics uh but I think one of the things that I really wanted to find out was you know yeah we've been through several uh Cycles personally this is my third uh

third uh bear Market um you know I've I've seen the the Cycles I've seen this um uh this this lockstep infrastructure application uh building phase that you mentioned Jay and I think is is very accurate in terms of you know how technology evolves certainly this was the case in the in the case of the internet and in the web uh and it also we also see this in crypto um you know uh we've seen regulation also come and become uh you know a part of you know the the the the discussion and the narrative and you know the crypto broader crypto landscape uh how will this bear Market how is the spare Market that we're entering into how is

it different from previous bear markets uh from you know the uh 2016-2017 uh bear Market from you know if you're if you're uh OG enough to remember you know the the 2014 bear Market uh how is this bear Market different and uh yeah what what are your hopes for as we come out the other side uh into uh into this next cycle I can start teaching please um just for the the chronological order um well I I was around marginally on the very first one I realized that nobody

cared I wanted to build up uh option exchange for for Bitcoin uh and and really nobody nobody cared that time was January 2014. um I can I can clearly say between this one and the one of 2018 2019 well we had very large investment firm doing 250k on a deal if the deal was done and now we have firms we have projects raising 50 million and it's uh it's oversubscribed and and it's on a bear market right and it's hard to get in so this is this is a enormous difference for sure like the capital available and

and the I would say the this the security that if you are building something that the market needs you're gonna get funded it's it's not like uh it's it's not really like 2018 2019 that a lot of people were wondering if you know if there was a a silver lining now there is for sure it's just a cycle I think the major difference is that this time we know it's a cycle has been playing before and there's no doubt about that so there is the security of of of you know it's gonna it's gonna end at some points absolutely the capital and I think over and over two things how the use cases are are multiplying themselves

like we we hope that D5 would become a thing it did become a thing we hope that nft would become a thing it did become a thing we hope that Dao would become a thing it did become a thing then of course there is the the cycle of those but those are actually playing out those Theses are playing out and the and the last thing um uh for for my closing remark is that we are seeing over and over and over which is a good news I think that the reasons why we come to Bear markets is because of Leverage The Leverage that that projects were on if on 2017 because that was their treasury the The Leverage of Luna The Leverage of of all the

centralized entity that blown up so it's over and over a matter of of Leverage and and I think this is the uh you know this is the major major your differences the major Catholics like the insurance the insurance that the space is going forward um did they agree uh Nicola uh like I'm I'm an anti-leverage I hate leverage uh uh because I like to sleep at night um but uh I think that still people will continue to do leverage unfortunately because people are gamblers um I think that's what's going to change in this bear Market is that I think we've moved from the protocol narrative

to the application value narrative and this is where most of the value is going to be created and the application value narrative is possible if and only if the user experience get to a point where we can get to the math markets and not just the five percent uh community of Geeks uh that I sometimes don't care about money but just are playing with tech and I think that's when we get to the point where user experience uh provides these Mass markets adoption will get more of real life value businesses providing value into crypto and will will the value is will not be about leverage but about future gains

provided by technology in real life businesses and I think that this will be the new narrative I'm not sure if it's going to arrive in 2023 or 2024 but I'm quite sure that this is going to be the next big thing yeah I think one of the bigger differences right now versus previous Cycles is that there still seems to be a healthy amount of both optimism and also people that are like actively building and not being discouraged um I mean the Silicon me also kind of believes that that's because we haven't actually about the worst part of the bear market yet like right now it's still um we're still in the early stage which

is why there's still a lot of teams that are relatively well funded there's a lot of teams that haven't given up on what they're trying to build um but yeah I mean it just feels like the biggest difference is that after going through what we've gone through in the past few years like people generally have to believe that crypto is here for the longer term whereas I think in previous Cycles it was a lot more existential um so I mean coming into the cycle it does seem like there are a lot more Builders there's a lot more money on the table as well and assuming things don't become significantly worse like there's a lot more optimism as well if I may finish in a few words I think what's very different is the institutional landscape so the the people that are in the markets uh

actually more and more institutions entered the market that was not uh the the case a few years before because also the regulatory environment evolved and is becoming more and more clear and more and more complete uh and I think finally you can see companies uh even if the crypto industry is based on the large population of small projects you have now copies that can testify that they could survive in the the past few years and that they are still there uh even if they accepted from some some different Cycles so

that's also something to to make to make the vision quite a positive uh so that was in a few words what I could add to to what has been said and that I agree with another really last point because I think your upon your your attendees and and the audience will be interested it's something we discussed quite a bit internally with LPS one thing that has changed and will change in my view is correlation for the uh General crypto crypto assets compared to the other asset classes why because if we um want Mass adoptions and if we want

institutional investors uh you know coming into the space you know we can't have the cake and and and need it too so crypto Bitcoin in general the the large assets will be considered for a long time uh realistically speaking uh a risk asset right and will behave according to to that liquidity supply and demand I would say which we have seen in the market and it's quite uh it's quite increasing what is interesting though and we have run some data and and I'm talking uh because of that investing in in early stage and and the

job of a venture capitalist in a sense uh decreased dramatically this correlation to the Assets in general so uh this is very interesting while you see correlation of of the major crypto assets um increasing with with other asset classes you see that uh the The Venture Capital Industries which you know uh Sebastian and high are uh obviously it's a it's quite uncorrelated because of the uh you know uncertainty on when those companies come to Market so that's quite interesting for for the LPS yeah certainly um thank you everyone for your very thoughtful uh answers on all these

topics I want to open up the questions now if anybody has any questions please raise your hand you'll find the raise hand button down at the bottom of your screen and I'll bring you up on stage so you can ask your question if you prefer not to ask questions um live on the on the live stream you can also add them in the Q a and I'll ask the question for you so yeah if anybody has any questions now's the time we've got four expert panelists here uh ready for you so Clement come on why don't you come on stage and and uh and that's the question instead of in the chat

maybe I can answer a give a first answer well that's uh yeah so so the question so just the question is maybe he can't turn on his camera right now but the question is you know how has the con the regulatory conversation changed and I think you know specifically that means that in the in the in light of you know recent events and the events of this year um our our Regulators still thinking sanely uh about crypto or are they you know leveraging recent events to gain a stronger foothold uh I guess presumably to uh uh to restrict uh access to crypto to restrict application development and things of that nature sorry go ahead

Christine so I think uh that it's not an easy question because we can uh recognize that on some points uh regulators and EU institutions uh did think uh sanely and if I'm coming back to Mika debates we can be really happy of the uh at the end with how tify nfts and the environmental questions were tackled because it was a very pragmative approach that was adopted so both defy and nfts were finally not in the scope of Mika based on the

fact that your institutions understood that it was not the right vehicle and that it was too early to to regulate those Innovation so that was a really positive uh motor relief yes and regarding the environmental questions I think you remember that there were some bad and very bad ideas on how could be addressed the proof of work question and what we call the pan of proof of work and at the end the EU institutions had a very pragmatic approach uh asking and that's a very logical and very very normal that they ask issuers and the service providers about the information

about the environmental the footprint of the protocols that they use to issue or to provide their services so something that actually quite aligned with the general strategy regarding the fight against the climate change so we we can it was 2022 so that's why I wanted to point those those quite the Primitive approaches that that we had so it was quite sane as you say but at the same time of course the the insert what happened with the teraduna case and ftaks more recently so regarding the terror in the case it happened at the time where EU debates were still open on Mika so it's actually

make what was quite bad even worse on the stablecoin regime that's that has always always been a very sensitive topic and so at the end we have something very strict regarding stable coins and I think it's obvious that behind those debates there was really a wish to prevent from the emergence of your stable coins and the wish to push put the ECB project of digital Europe so on this topic it's it was quite hard at the beginning and it became even harder to discuss based on the what happened on Terra Luna regarding FTX it's a bit different because at the EU level so the

discussions on Mika are actually finished so we have the current it's currently being adopted so Mika should not be reopened because of the STX fader but what we see and that's I think uh very negative is that we have some national initiatives and I'm more aware of what's being discussed in France but National initiatives uh that to reinforce regulation that could straighten the regulatory fragmentation and that could actually be very counterproductive regarding the competitiveness of our companies uh but also because those are not the this is

not the right solution if we want to answer what happened on the uh what happened to FTX so it's not an easy question because sometimes you can be really optimistic regarding how Regulators tackle regulatory issues on the crypto asset but at the same times you depending on the topic it can be to the contrary really really difficult to to achieve a pragmatic Solutions thank you um we have two folks have some questions here I'm going to start with Amar uh Amar I'm giving you the chance to speak

uh go ahead I just have to unmute yourself great thanks yeah can you hear me yes okay great um yeah so I wanted to expand on uh the point about you know how we need to move from protocol narrative to application use case narratives and uh I think to maybe follow on on something that Jay said so I do the things where we have found some product Market fit or exchanges and stable coins um so I think the lady talked about stable coins a little bit right now um we'd love to get the panel's thoughts on exchanges so you know obviously with centralized exchanges we've had erosion of frost and I agree that you know a lot of it is

because of you know some Bad actors and it doesn't necessarily mean anything bad about the technology but let's just say you know there's three potential scenarios how this pans out and I'd be interested to see where the panel flustered so one is that in the interim you kind of have these hybrid Solutions where you have custodians coming up with you know these exchange networks where you don't actually have too many assets sitting on Exchange and hot wallets in any time and you kind of happy synthetic ledgers um or secondly you kind of you have more D5 where you're relying on the code and not on the centralized uh parties and thirdly you know scenario where just real money from the institutions refuses to really play until a lot of these

broker dealers are actually regulated um so how do you guys see that dining out I think in the near term like there's already more of a shift towards greater and greater amounts of creating activity and creating volume happening on G5 um I think realistically centralized exchanges are still going to be the de facto where the trading is going to happen in the near term um at least until the user experience becomes a lot better with doing anything in a decentralized fashion like right now the decentralized trading experience is just really really difficult compared to the centralized experience so I do think like near term is going to be centralized players that are having a majority of the volume then longer term I do think the merits of doing things in a decentralized fashion outweigh the downsides of are like substantially

greater than like um the benefits of doing things in centralized fashion so I think long term once the rails have been set up then there'll be more deeper activity happening there and I mean that's exactly why we're building it to help make that user experience a lot better um around the institutional piece I think institutions tend to come after retail is already there so they're probably going to be the last movers to be entering this base and even right now I mean there have been a lot more institutional players that have been entering and starting to do things on chain but a majority of Institutions still are not um so I think that'll be more of a long-term thing that'll probably happen on I would say a few years down the line where like a lot more institutions are participating thanks Jay

um there is one more question uh I think you are you still good today for a few minutes or do you have to sign off yeah I can say for a few minutes okay so we'll do one more question here I think there's one more question and then we'll we'll wrap it up uh Nathaniel uh you had a question yes can you hear me guys yes hi perfect well thanks a lot for your time uh I came a bit late so I'm sorry if the topic was already addressed uh but I had a question regarding the like the next crypto winter we're seeing uh I'm thinking this would be pretty different from all the ones we knew before uh first because of the critical size that's the like

um the crypto uh goods and as well as the modern under Community as well as on the adoption of the technology but also because of the entering of new actors especially big web 2 actors that want to get involved in web 3 want to use it in a way or another whether it's to web 2.5 or pure web 3 and I'm wondering if um what what's your vision on this crypto winter we are going to see but with new actors such as this Tech Giants or big brands in web 3 web 2. all right I I think I think that um we will see the same way uh we saw uh companies like IBM Microsoft uh at uh for during uh web 2 trying to do stuff

uh like startup does I think we'll see the same thing with those big companies trying to get into web3 the problem it's like it's it's about DNA um building what's what people are waiting for in the decentralized environments actually it needs some kind of philosophy and like the same thing I said in a previous conference I went to um there was a company talking about fundraising and hard to fundraise in token and doing mixed fundrais with equity and token I I'm completely against that like uh usually I I see when I see a company raising with tokens and having Equity

um I see misalignments of interest and I see danger in the future at the end of the day I think that's it's it's we're gonna see big companies trying to do things in web3 but it's going to be powered by a hundred percent uh web3 organizations and what I said about fundraising was just an example but I think it's about philosophy of of web3 and and how things are going to be executed but at the end of the day Builders are still here and like Nicola said uh I we still see great teams being funded and we're going to see great projects and great Innovations uh coming together in 2023 2024

um to to to bring the next potentially bull market maybe in 2025. okay thanks a lot but so you you're saying that you don't see any web to actors uh as a catalyst or allowing maybe to go reach the next billion users because as of today they have the like the best ux the best UI so far the most uh they are the most advanced with the most uh amount of uses so you don't think that they can be eventually a help uh within the uh the development of web3 I think I think they help for adoption but I don't think they will be the vessels of the future okay so you see them as simple enablers

or just a high way to go faster but in the end it's only web 3 Builders that's okay thanks when I see for example let's say oh okay let's talk about nfts let's talk about nfts let's talk about uh the the rock that nft that people bite about for half a million dollars when Instagram announced that now you can put your nfts uh on Instagram when on Instagram from like polygon and ethereum people don't care anymore about the nfts about like pfps it's the real value of nfts is utility nft and at the end of the day I'm not displaying my utility nft on Instagram but at the end of the day what's interesting is that the fact that they were interested into

bringing nfts on Instagram was a catalyst for people getting more interest into web 3 and and the whole technology underlying technology so it's going to bring coverage but I think they will always be late but at the end of the day it's people like Jay Nicola and all the builders in the web3 that's going to build the future of uh uh uh this ecosystem okay thanks a lot that's very clear did anybody else on the panel want to react to that question okay I think

um I think that's all we have for questions um thank you everybody for well thanks thanks everybody for tuning in uh for coming into the webinar and ask and participating and also asking questions and thank you so much uh to all of you panelists sorry I'm gonna sneeze here uh Jay 15 and Nicola thanks so much for taking part in this conversation uh this is you know the first time you know that here on on the interop uh we've done this this kind of Round Table um it was an interesting experiment for us to test this format uh with an audience that can you know ask questions and sort of interact so uh it was great thank you so much and thanks for your

thoughtful answers and for you know advancing the conversation and sort of opening everyone's mind as to you know what are the fundamentals and sort of reminding everyone about what are the true fundamentals and why we're here and why we're still building uh but also what's to look forward to over the next couple of years as crypto becomes more it's a serious in terms of um in terms of having regulatory framework having more robust infrastructure uh having better user experience also which is very interesting you know each of these topics we could do a dedicated panel on I think so certainly we'll try to do that again um soon perhaps next year probably actually pretty pretty soon next year we'll do another panel and um yeah I hope you guys uh have a great rest your

day thanks everybody awesome thank you thank you very much thanks for having me cheers