DeFi By Design EP#29: Is POKT The Missing Piece of Web3.0?

Transcript

welcome to d5 by design where we talk all things blockchain and cryptocurrency while striving to educate empower and enrich what's going on guys real quick break for the d5 by design podcast sponsors and a defy slate sponsors who make this all possible first we have ave a money market protocol that allows you to borrow and lend and leverage your assets to earn interest right so if you want to deposit some stable coins in there currently you can get three four five six eight percent apys on stable coins which else any bank in the world uh as far as we're concerned you can deposit uh any uh ethereum based asset that is listed there borrow against it you can borrow stable coins you can borrow other assets like ether wi-fi link even the ave token itself ave is

the go-to protocol for any sort of borrowing lending check it out at app.com the next one we have is access auxis is a new crypto wallet auxis.com you can store all of your crypto there they have quite a few options uh they're integrating new dex features soon um and allow you to have a non-custodial way to store your crypto safely off of centralized exchanges and also just not in a meta mask or in your own ledger a bit of extra security there next we have mcdex mcdex is a decentralized perpetual swap protocol basically allowing you to trade on leverage uh on the ethereum chain right they're coming out with v3 very soon at that time you're listening this might already be out they are super solid team um and they're pumping updates and

allowing you to trade decentralized perpetual swaps on eth link and a few others all on ethereum all decentralized so that is mcdex next video ramify ramify is a decentralized stablecoin it's an algorithmic stablecoin that is pegged to the purchasing power of commodities and then basically it measures what value one dollar buys in terms of a commodity index each week and then it provides you with essentially a store value that allows you to continuously evade inflation while maintaining you know a stable aspect as if it was a dollar and that is the ramify protocol check them out on twitter finally we have diversify it is an l2 decentralized exchange they allow you to basically trade in a gasless and feedless manner

big volumes whatever quantities you need it's almost like a centralized exchange on ethereum but you are the custodian they do not hold your coins as a centralized exchange would you have full control full power so really it's almost like centralized exchange capabilities on a decentralized exchange and that is diversified all those sponsors make this possible i know it's a lot to take in but thank you very much for listening and let's get back to it welcome to the d5 by design podcast uh today we have the honor of sharing our time with michael from pocket network pocket is building a web 3 kind of decentralized backend and the data network honestly it's tough to explain for a non-techie like me someone's gonna get into the usual it's

a beautiful day out here in florida now i'm kidding robbie how are you doing buddy yeah i'm doing great hit the gym this morning so my legs are feeling like a million pounds but you know what i'm happy to be here happy to be sharing the uh the zoo meeting here with mike super cool we're uh we're all florida guys down here so yeah it's uh beautiful outside as always weather's great um happy to be here and uh yeah mike what's going on man how are you today yeah good guys thanks for the invite florida man is uh is making a comeback so you know uh no super great as well uh really really happy to be here and chat with you guys yeah if you search florida man in google with your birthday you guys will be very surprised on what

you come up with maybe say that after the show not very crypto related or check this check the subreddit as well if you've seen the subreddit the floor demand subreddit were you ever on those on those reddits michael like in the early days of crypto kind of i guess what i'm asking is what's your origin story in the crypto you know did you ever hop on reddit back in like 2015 or kind of once you get into crypto and did reddit play a role i'm just genuinely curious yeah it definitely did um actually back in 2013 is when i first discovered bitcoin i think it was a culmination of a couple things uh one i'm from the caribbean so i've sent money to my family via western union 2008 i was i was interested in the

in the kind of occupy wall street movement and and learned a lot about the financial system at the time and i kind of worked at a credit union for a couple years in like 2010 2011 time frame and just learned a lot about the financial system probably was i don't know if radicalized as a red word but really saw how dysfunctional things are and i remember reading a wired article on the silk road back in like 2013 and ended up on the subreddit you know and just really kind of dove in it was in the kind of 2013 bull run um i got in like late summer you know bitcoin you know just there's bitcoin at the time mostly of course and and and just you know i went in that first

kind of bull run and and ended up staying just because i discovered the subreddit read the white paper fell in love with the technology you had amazing podcasters like andreas antonopoulos just like preaching the preaching the gospel if you will and i was i was bought in from there on um it was kind of perfectly uh kind of set up with my previous kind of past to be pretty receptive to bitcoin you know a little bit before that too i was playing a lot of video games from neopets to runescape to world of warcraft and just generally super comfortable with digital coins and assets and things like that and just kind of really took to it and and fell in love with the technology back in back in 2013 so that was the beginnings of my crypto journey if you will

nice yeah it's crazy to everyone's like oh yeah if i was in 2013 i would have been rich by now but as you're saying back then it's a bit of a different landscape yeah it was you know it's funny i at one point i had you know 20 30 bitcoin and ended up having to to sell it i moved to silicon valley for about six months i learned a code before i got into kind of engineering and stuff like that and ended up selling all my bitcoin to pay rent so i really didn't get to realize any of those 2017 gains at the time but in the end you know i ended up working out just because through that whole process met my co-founders for pocket and and just you know became best friends with them and and we've been on that journey ever since

yeah it's super cool um kind of like seeing andros antonopoulos you know voice his bitcoin gospel to like empty rooms back in the day it was 2012 or 2013. and now you know he's filling up stadiums not maybe not stadiums but you know he he's definitely getting an audience and there's conferences you know left and right people just coming out and just talking about bitcoin networking we always talk about it here like education is is still the biggest gap so as much as we can do to bridge that gap and and educate on um crypto bitcoin just the inner workings of what's going on you know i i think people are very interested and it makes people a little bit more protective of their bitcoin because obviously it's very hard to hold on to um even back in the day when you see it

running up you're like well how high can this really go and price aside you know there is just more and more use cases developing um all across the ecosystem uh you know you mentioned kind of your background as getting into engineering and then moving to silicon valley did you always have a coding background you know what kind of how did you first get involved not just in crypto but like your entrance into pocket and maybe your your uh backstory a little bit more into your your skill set yeah you know i started getting interested in in startups like right after i graduated high school in in 2007 and and really tried everything to get into startups like uh that that wasn't involved with coding so marketing i had a big garyvee kind of tip uh phase where i was just reading

everything of garyvee trying to do marketing and trying to do these random startups business development these sorts of things i never was able to to break in i tried to learn to code a ton of times probably like seven eight times or something like that with different programming languages and um ended up starting going to college for for business it was actually a business degree and i ended up failing out i couldn't even pass business cal took it three times and still couldn't pass it um and uh just failing out from really playing too much wow and smoking too much pot and i ended up going back i ended up with an international studies degree just because i'm a big fan of history and uh because i had tried so many different things i ended up uh talking about reddit uh i had this idea

for a fantasy sports app i'm pretty big into into fantasy sports fantasy football fantasy basketball and and dfs and that whole thing and and i hired this guy spent like three or four thousand dollars to build this kind of random fantasy sports app and basically burned my money and it was like they built an empty front end you know just just a basic ui basically with no real kind of infrastructure or back end behind it and that was really the the catalyst for me to learn to code i was like well he's not going to build it i'm going to have to build it myself so that was kind of the beginning of my journey in learning to code and it wasn't until apple released swift a programming language um back in 2014 that really if everything finally clicked and it's it's it's interesting because

for the first time it was almost like drag and drop like you know these were empty code blocks but you could see how things were kind of connected and that kind of made it really easy for me to progress and learn and i think probably because it was a mobile app i could be like hey dude check out my check out this thing i built you know and and i had a good like tight feedback loop and that kind of is what kept me going to be honest and yeah i ended up graduating with that international studies degree but about a year before i graduated i learned a code after graduated like i said moved to silicon valley for about six months to pass those interviews and then i

wasn't experienced enough for the kind of scrappy startups so i ended up finally getting a job back in in sarasota florida uh where i met my co-founders and and that's kind of where you know stayed in florida ever since here in here in tampa so nice and that's kind of an interesting point on uh on the progression of the coding languages that have released uh you mentioned swift and you know one could say that web one was kind of like the you know the early 2000s we're really just trying to get websites up you know the dot-coms and and a lot of people were buying you know like their name as a domain and like all sorts of rand like like you know cake.com and pizza.com you know and then you kind of entered the scene on like the web 2

realm you know with the googles and the facebooks and the startups and the and the innovation and the content creation and the youtubes and the um you know we can have mobile apps you know and we can you know have iphones use these apps to do this and you know it seems like now you've basically said okay well i'm gonna take it to the next phase and work on web three um so for our audience uh my understanding of web3 is basically bringing everything that that the internet has but bringing the ability to transfer wealth and capital uh in the same sense that files and data are effectively transferred online now right i can send you an email a text and a phone call uh you know all within seconds but you know i the bank transfers and other things take

a different route effectively so what i'm getting at is web 3 is what's coming and that's what pocket is working on so you know i'm curious what your vision of web 3 is and you know for our audience who might have heard this term before kind of what is web 3 to you yeah that's a good question that's a deep that's a deep question um the way i put the context or frame it is is you know over the last you know 120 140 years we've seen kind of um the cycles of industry right where you know back in the 1900s we had the robber barons with with monopolies uh moving forward we've got kind of these big tech companies that have um through kind of like aggregation and information and data have really monopolized and and really taken control of of all

the information that we send through the internet right and for me part of this evolution of web 3 is is to really break a lot of that open i think in the end we're going to have thousands if not tens of thousands of blockchains and i think effectively uh web3 allows for collective ownership and even collective scale of owning and using and managing these services that we use every day whereas the traditional model through kind of this you know explosion cycle and and consolidation cycles of of kind of industry you know it's generally owned by one person right um or or a couple people or or really controlled by very few people and i think um with this web 3 we have this opportunity to

to really kind of break that open and and kind of change the model in which we access information the way we use services and and everything um in such a way that's really censorship resistant and in a meaningful way um and that really all kind of initially boils down to bitcoin right because that was really the first uh you know kind of mind-blowing thing where where you know i remember hearing is probably andreas to be honest i was like yeah one day we're going to see the separation of money the same way that we see the separation of of religion and state right uh uh from from the state and and that kind of is a pretty mind-blowing idea or sentence right and and i think it's kind of further decoupling uh while still aligning these kind of crazy financial incentives that we're

seeing across the entire space is is reflective of of the need for something like this right i think it's pretty clear that that we live in a world where we're really get get control maybe for the first time um you know uh in these these products and services and needs that we have every day yeah and you know let's take andres's uh hypothesis that that is kind of um the future that lies ahead it's the separation of money and state what does that look like and this might be a couple different questions here but you know kind of what changes what is the infrastructure that's necessary to provide people with um the tools they need in order to transact with a money that isn't tied to a state and you know how does that kind of change the landscape

of i guess money as we know it today and you know it might not change things politically so much i guess that's not necessarily why we're here but um you know maybe you can bring in pocket a little bit into into how um you know you're you're kind of supplying the tools necessary to um really just support this web 3 movement and ultimately bring that that vision into into more of a reality yeah yeah to that point i mean i'd argue that bitcoin is fundamentally a political statement um in in many ways right um uh and and it's all i i like to think of it as as layers of the stack right um at the most base layer we've got bitcoin

which which is acting as as really the hardest money right and as we've learned about this technology as the incentives of you know crypto and and these really kind of tight cycles that we've had over the last rough you know every four years right has helped reinvest uh these capital back into crypto into research into um new experiments economic experiments new consensus and and so on and so forth so the way i see this is uh really an unbundling of of the stack that exists today right from uh you know we've got this kind of money right uh you know there's a whole bunch of things on you know from on-ramps to how you spend it to you know stable coins to you know there's a whole you know lending

derivatives you know the whole that whole part of it and then there's kind of the internet stack right where we use you know we're on zoom right now you know you know we're using a whole bunch of protocols on the internet today but the challenge is uh uh that the protocols themselves you know even though these are the most widely used uh technologies in the world haven't captured any of that value right the the really people who have captured the value are the companies built on top of it right like facebook you know google whoever amazon and and so on and so forth and in my view as we've learned as an industry um we're starting to unbundle uh and reimagine uh the stack of of protocols right like a like an application like zoom is using

you know who knows you know tcp https ftp you know a whole bunch of different things right um that that we use every day and and and the difference here is protocols that are being built today are are going to effectively replace the ones that we use uh that we've used in the past right uh specifically and and pocket of course is a part of that kind of stack right if you will um i think i think in in the future when someone builds a future version of whatever social network or whatever social networks look like in the future because you know i i would be willing to bet that they're probably very different than what they are today you know they're going to use a stack of these decentralized technologies instead of

you know depending on um you know people like amazon web services or you know facebook login or or whatever it might be right and and i think that's where the real magic lies and and what's amazing about crypto right and it's open source nature because it's just allowed for just an explosion of experimentation which is incredibly exciting and and you know there isn't any other kind of bleeding edge technology industry from like ai to you know biohacking that has incentives tied so so tightly coupled with kind of what's being built and as a result has just accelerated in just you know the 10 11 12 years that that the space has even been in existence so as a result i think things are just going to continue accelerating

and i think we're going to start to see even more experiments and more different successes and massive failures and and and much more learning across across time right it's a lot to unpack there as uh as a full-blown scope of what uh the future internet kind of looks like it's it's really makes you think about what you're doing today on the internet and and how it's possible and you know what could be improved and what's better and you know what's worse and where where people are on on a spectrum because you know there's a lot of different people in terms of what they prefer and different types and uh and different use cases for all sorts of protocols platforms um and everything and to cater to all is sort of a fool's errand but at

the end of the day the internet is is really is open for everyone i mean and i think that's kind of like like the thesis that we're getting at here is that open protocols open source open everything is effectively going to be able to conduct more commerce uh and more interaction than ever before and it kind of gets me to like this thought process of uh push towards an era of leisure rather than an era of maximum output and productivity uh which is really kind of trippy to think about because ultimately all that we've ever known is all right we are we live in a capitalistic kind of world here in america other countries have a different setup but ultimately everybody is very profit driven

you know but with these new tools uh possibly we start to enter this world of more uh productive leisure if you will and less kind of uh for profit driven nature now we're obviously running a business here at d5 slate all of our guests uh robbie i'm getting paid michael's time is here right but what we're getting as we are we're kind of collaborating towards a uh a future that that we like to share rather than competing for the future share um and so just kind of take that into a mindset if you will guys um and kind of dwell on that um and then let's switch it over to pocket and kind of what we're actually building here

um kind of get into more stuff on ethereum rob kind of looks like he has a comment if you want to add something real quick yeah i will just kind of build on what you're saying because i find it really interesting i mentioned i'm meeting with this professor after this podcast and it's one of my philosophy professors and we happen to be reading marks in in the class um obviously marx is no capitalist he's a communist and you know your your kind of political views aside it's really interesting to kind of take his literature and and kind of scope it out on on the current world that you know as it exists today and something that i i found interesting and i didn't realize until actually reading him and this class was marx didn't see capitalism as

necessarily an issue even though he's communist capitalist those are two completely opposite ends of the spectrum he actually saw capitalism as a necessary and beneficial step in the process in order to get to a communist society which depending on how you define that that the communist society is um a little bit more of what you're talking about andy is kind of the the society built around leisure rather than maximum productivity that's kind of my personal views aside but you know i i think even though it's kind of um it's two different philosophies it is baked into the system that now we are very reliant very

focused on maximizing production and we all kind of are intertwined in the system of production where ultimately our leisure time is almost more valuable than um the the production time that we're putting in so you know we don't have to we we could spend all day on this but um i'm happy to pass it over to michael or uh start start going into pocket yeah if i could add to that yeah there's there's a couple things there right um uh the idea of bitcoin being a political statement right uh for the first time we have optionality to exit the existing financial system right and build this entirely new one and moving forward from from kind of just bitcoin to the many protocols and

blockchains that are being built today we still have that optionality right if solana versus ethereum versus you know dfinity versus etc you know if one of these doesn't work for me i can just as easily move to the other one right and to have this kind of you know those are interesting points on in terms of communism and and what you said about about marx you know i i do think we're gonna hit this era of abundance right i think us as humanity need to figure out how to grapple with that because for um you know however many thousands of years uh we've been you know eat sleep hunt kind of mode um and i think we're gonna have to uh kind of grapple that as as as humanity but i mean you see it today right like

like whatsapp for example right that was a i think it was like 20 25 people that you know built a you know however many billion dollar company i think it was 20 billion dollars when they sold right we're seeing in d5 a couple d5 founders are building protocols worth you know hundreds of millions of dollars like almost overnight right and i think we're starting to see kind of the leverage that each individual human being has in building these value added services products whatever it is to society increasing that leverage is is i think massively increasing and and what does that mean for the rest of us right well that's you know you see gme you know the financialization of everything right like you know i feel like i know a bit about fantasy

football right so i'm gonna you know bet in daily fantasy sports right i might know more about you know the weather tomorrow in tampa because i've lived here for most of my life right so maybe i'm gonna put a bet on on raining at four o'clock tomorrow because i can sure as hell better probably will right you know these sorts of things um it's it's opening up uh kind of kind of what you said about this this kind of passive or or um you know less focus on on income and more focus on on on doing what i want to do right uh while still trying to provide value in some form of fashion because i think as humans we still want to feel valuable right and and we find that through work and and meaningful work um but but yeah it's just something i think that we're going

to have to figure out how to grapple with uh particularly with all these other crazy technologies that are being built and and and you know outside of just crypto right um uh it's it's a i would say this is the most interesting time to be alive if anything yeah i think ethereum is the big driver for the uh for the social change we talked a lot about bitcoin but i think ethereum basically the ultimate ethereum maximalist point of view is like ethereum is what solves all the world's social problems um obviously that's a little bit far-fetched uh but the point is the ability to intrinsically incentivize people uh through basically uh permissionless code is basically puts everyone on the

same playing field of trust and kind of allows people to interact in ways that haven't seen before i mean just in d5 we're seeing it uh you know then we can have a whole other conversation about the regulators who are going to try to stop some of this stuff and the mon and the money laundering and all sorts of stuff but you know i think ethereum is the basis for for this kind of change in the money system i mean it's just there's so much going on there let's dive into pockets so first of all pocket is uh an ethereum based kind of platform is it kind of chain agnostic you know what even is pocket i guess yeah yeah so so pocket's its own blockchain um uh built on on kind of the cosmos tendermint stack we actually tried everything we could to not build our own blockchain like if you

look at our github repository we have like the initial smart contracts from like 2017 from when we start started working on it but in the end due to the costs uh and and some other kind of efficiencies uh that we that we found out about it was way more beneficial for just the protocol to actually have its own blockchain but um to take a step back as to as to kind of where we sit in the space um basically all all of web 3 is built on a web 2 paradigm um and and what i mean by that is kind of this kind of traditional what we call client server model where you've got a web app like you know your browser and you know you're refreshing for information whether it's price or you know you got some likes on your

facebook post or instagram post uh that information is coming from a server owned by a single company and to kind of help uh kind of give some context on this i'll talk about kind of coinbase and how they even ended up becoming a thing um back in i think it was 20 2011 um every bitcoin wallet was a server the bitcoin node and it had the the client or the interface to interact with that node right and this was massively difficult really technical 99.9 of people didn't want to deal with it and coinbase was like okay what if we just make a nice interface we run the bitcoin nodes ourselves and the end user just has to worry about sending receiving you know buying

bitcoin right and what that means and and and this is a pretty big departure from kind of the initial vision where everyone should have been running their own bitcoin node right it's it's it's verified don't trust right and and and that's a huge you know that meme is is incredibly powerful and and the moment that coinbase decided to run their own bitcoin nodes we started trusting them with the data that they were showing me right and and the problem with this is that this creates a massive centralizing choke point right very much how we see kind of the choke point with like on-ramps and fiat into crypto right you see many it's just impossibly hard to get the licenses or whatever it is you know

to get past the regulations to just allow me to receive fiat uh uh or on on on-ramp and fiat and uh because of this uh uh paradigm and frankly the the technology wasn't there uh to to really know how to do it but we have these decentralized networks like bitcoin and ethereum but we've got these very strong and intractable centralized choke points uh even outside of the fiat on wraps right so what i mean by that is um you've got a couple companies running all of the nodes uh for for most of the services that we use today right in in web3 uh and that's problematic um and and when i tell you go ahead real quick you kind of mean like

like all the interfaces that were using ave uniswap compound all these are just kind of built on amazon web servers and use like the typical https and whatnot yeah and even it's even worse than just amazon web services because you have another middleman another centralized company that's built on amazon web services right so not only is amazon taking rent or charging rent right but this com the centralized company also is running a traditional business right so you pay 50 bucks a month 200 bucks a month a thousand bucks a month whatever it is and and that those costs are being uh uh sent over to the users of these platforms or the developers or the builders of these platforms so we've got two kind of middlemen in this kind of web 3 ecosystem that we've built

that are uh one really inefficient two really expensive to run and three uh really infringing on a lot of our privacy because they're you know all of our data is being leaked uh to these third-party providers right and and that's really problematic and in my view just antithetical to to to kind of why we're here i think you mentioned uh uh theory maximalism i'm kind of like an ethereum culture maximalist right like like for me the the the culture of ethereum and and and the reason why people care about the space so much in the ethereum ecosystem is what's important to me um and and and the current the way that the current um

uh uh the way in which we interact with web3 applications across the stack um is is is not in line with that culture uh personally and and that's what we're trying to solve we're solving one specific part of that stack like if you think of us with if you've heard of handshake for example or althea or um you know these these other kinds of services they're in different parts of this kind of stack that they're trying to solve to help kind of break that open right specifically but we sit on what we call as kind of the networking layer so you've got the application let's say metamask right you see your balances of your wall of your of what you have on metamask that is going

from your from your browser through a centralized company to a server on amazon web services that is that is running an ethereum full node right and what pocket does is completely remove those two middle steps and basically allow you your meta mask application to get the data of your balances for example or interact with you know some smart contract it completely removes those two middlemen in terms of aws and these kind of centralized counterparties so we sit in between kind of the application and the full node that you're interacting with because in the end all this data lives on ethereum full nodes and and that's really fundamentally what pocket does it it incentivizes people

to run full nodes by giving data to end users like on metamask for example for the applications that they want to use every day yeah it's it is a bit kind of uh contradictory to have your decentralized applications running on centralized servers but it's not as easy as it seems to just kind of pop in there um you know uproot a blockchain uh better than amazon web servers and then have everybody running on that so you know what's been some of your challenges there kind of you know what do you see uh and what have you experienced that have just been kind of slow to grow or you know yeah like what's some challenges that you faced

and and you know how are you how are you overcoming them yeah that's an interesting question um we definitely have a i'd say a chip on our shoulder because of the experiences we've had over the last three three or four years um you know we started thinking about pocket in late 2016 when my co-founder co-founders and i were writing some solidity you know writing some smart contracts we used some of these services to deploy them and we were like oh damn um this is uh uh particularly as 2017 went along um that really concentrated um uh uh and still is frankly but um we saw the importance of these infrastructure services and and you know part of our thesis is that we think there's gonna be thousands of

blockchains in the future so we try to design this protocol um and and for for me personally the largest challenges have frankly been convincing people that and investors particularly that that this is possible um as as kind of outsiders you know we're you know i mentioned that was from the caribbean you know i was actually born in the dominican republic so really three dominicans in colombia and one living in tampa two in dr and one in in bogota like you know no credentials you know no silicon valley none of that it was pretty difficult to convince people that this kind of invention was possible um in the first place so so so to be able to to gather enough you know funding to be able to have the time to build our

own blockchain um was was probably the biggest hurdle that we've that we faced as a company and kind of the standard like cliche things like running out of money multiple times not being able to pay salaries not knowing you know you know how long we'd be able to survive uh you know that that was a grind for like three years to be honest up until we launched mainnet finally uh about about eight months ago at this point right um things got a bit easier then because we proved it and we showed we showed that it worked right so if i had to single in on one challenge you know i've probably spoken to 90 of the active funds in the space at this point and and of course most of them you know didn't

pass on us or for various reasons whatever it might be right um that that's probably by far been been been the most difficult thing um you know designing it that was i i found a lot of enjoyment out of it it was hard me and kind of the core initial team um you know so many i mean if you see the whiteboards behind me we've got we still use whiteboards but um just the whiteboarding sessions of figuring out like okay is this gonna work and what's funny is that i would go to to a bunch of ethereum conferences and talk about pocket and someone would be like um hey what about how do you validate you know requests trustlessly what about this this and that and i'd be like huh i have no idea that's a great question

so then i'd go back to to try you know fly back to tampa and then we just figured out right uh and it kind of was this iterative process and and i really found a lot of enjoyment out of that uh it was difficult but but if i had to focus on one thing it was it was really getting the kind of initial capital we needed to have the breathing room to actually build the thing right since then you know it's been a little bit easier but um it's it's been that if i had to point one thing that's definitely been it kind of taking on that note um now we're seeing the emergence of uh some decentralized venture funds i guess would be the best way to describe them um and there's also kind of a mix of decentralized asset management in there i'm not exactly sure how to phrase this

question but you know we're talking about centralized choke points and one of your biggest challenges being uh that initial capital or funding for for people that are kind of looking to start new projects or just looking to innovate in the space you know what's kind of a path forward there like you know if you could kind of lend some advice to someone so that they don't you know repeat the same mistakes that you did um kind of how would you have done anything differently would you have you know explored um the venture scene a little bit differently or do you think kind of the emergence of these decentralized funds could uh kind of expedite a lot of the uh the funding struggles that some new projects are seeing yeah that's a that's a great question um i'll take that

in a couple of ways first we did have a dao invest in us meta cartel ventures um did invest in us which is which is pretty cool um but it was a if i had to give like one word of advice it'd be learn to tell a story um because so much i was in the weeds like you know just technical just blah blah blah blah blah and you know i think i got really lucky that a couple of local angels here in tampa really had no idea what we were building but believed in in us and the team and actually are like our strongest supporters and have learned along in the ride but at the very very beginning it was like look listen kid i have no idea what you're saying i'm just going to give you some money

because i think i think you guys can can do it kind of a thing but that became increasingly difficult to fly particularly through the fundraising process because you can talk about all the technical things but if you can't if you can't really paint it in a compelling narrative and this vision right of of you know for example pocket becoming the default infrastructure provider for every blockchain in existence right and all the other things that can happen outside of that but but but learning to do that took me a really long time and and i'd still argue that i still have a lot of work to do on that front but we managed to to scrape along by by improving that narrative getting some feedback and the other important thing

that i would say is is i'd say the barrier i'll use swift as an example um like for me swift lowered the barrier of entry for programming and building things back when i was in bitcoin in 2013 i wasn't yet an engineer or a developer and and it wasn't until ethereum launched where i could take just the simple web development skills like object-oriented programming and actually build something right i think it's it's a much larger ask to build your own blockchain and i think we got really lucky with that but even building simple proof of concepts as an individual or a small team i think is totally possible as like a weekend after work kind of a thing and and i think it's so competitive these days

that um if you can build a quick mvp and tell a good story around it um it makes things much much much easier so much easier yeah and when and when building like a web three uh company i guess and this is kind of something that i'm interested in in the in the terminology here uh you know i'm pitching to investors and uh you know obviously there's some sort of return for profit there's token holders there's shareholders there's equity to give out kind of um you know so as building a protocol right like is pocket considered to be like a for-profit llc is it like a is it like a non-profit organization dao like in the same sense that like you

know uni swappers and um other sort of like web 3 protocols like you know like how do you how did you go about you know assessing that uh in your creation um you know i i guess is what i'm curious about because everybody every other other businesses give me some money i'll give you some percentage of equity this is our profit this is our our revenue model but kind of with like you know like i'm saying as as like unit swap as an example right or as a sushi swap or all these other other like you know uh protocols that are dexes or lending protocols or infrastructure it's like you know who's really making the profit here and like where you know what i'm saying so like how did you do it like what do you think about that yeah so there's a couple uh a couple

things to unpack there i think but um it's funny just a side note you know so many times i was asked so what's your revenue model and i feel like we don't have one actually right so so so particularly you know you know here in tampa bay and florida generally that that was a tougher sell i think it was much easier when when we were talking to like crypto vcs and stuff like that but but um on the governance side um it's interesting you know if i'm honest i think that most protocols have have taken the easy way out in terms of in terms of governance um i i i and and i think there's different ways to think about it not to disparage for example token weighted voting but that really and truly acts more as a

traditional board and company right where the people with the most shares have the most say and they're the ones that really decide where things go right i've always viewed pocket as a foundational protocol that i believe is is really going to change how we think about infrastructure for the rest of our lives um and i viewed building these protocols very much how you know we've had these kind of facebook monopolies and google monopolies and back in the day um and facebook is coming across these problems because they've they've superseded governments actually um in many ways um i've always been pocket as as a jurisdiction a country like like a city um and and and what was important for us was to have proper

checks and balances within the protocol and and and and to answer your question you know uh what kind of company are we where so there's two entities for pocket network right now there's the c-corp in delaware and there's the foundation that's based out of the cayman islands and the c-corp in delaware is just a company that's building the the protocol itself we have developed a way instead of kind of the traditional token weighted voting we developed an anti-sybil [Music] where you can't create a bunch of uh one person can't create a bunch of entities right in terms of what a sybil is a way where you prove that you're a human

you prove that you understand pocket to a certain degree and you can claim a vote in the dao so we call it something like a permissive democracy in pocket in fact we have 11 people who are voters today six of which have claimed their votes in this kind of fashion which is really really exciting for us and the way that we've designed the kind of way in which people participate in pocket is that we actually have a constitution like we put like a lot of thought and effort into this constitution i want to say it's like i don't remember probably 10 or 20 pages at this point um where if you were a voter in the dow you are abiding by this constitution and the intention is to fully use for

example um uh crypto native arbitration mechanisms like aragon court cleros these sorts of things to decide uh conflicts conflict resolution based on this constitution now in the end there's you know it's interesting because and and what the dow really governs are three things in pocket it's the monetary policy it's the treasury um and and its protocol upgrades right um there's a whole bunch of other off-chain stuff that needs to be governed uh so that's why we have the foundation uh the world doesn't yet know how to interface with dows in a real way like let's say we throw up a conference for example like no one is going to take a payment from the pocket dow or very few people will maybe in crypto yes but but you know service providers

hotels whatever um so we designed this foundation in such a way where they act on behalf of the dow so the dow votes to execute something the foundation directors then execute it and in fact we picked the cayman islands because in cayman in the foundational documents of the foundation we were able to put the dao has the right to hire and fire the directors based on the work that they're doing so in terms of checks and balances you've got these people who are kind of um a proxy for the dow uh to interact to execute on things and in many and it's really important for us now especially because that a lot of the technology isn't there for kind of autonomous uh transactions right like like

you know the dow can vote but someone has to submit the transaction in the pocket blockchain today that's that's the that's that's the foundation directors in the future that's going to be um some smart contract on ethereum or some other blockchain that you know creates the signature from the signatures of the dow voters and executes it autonomously right so in this kind of middle ground we've got this foundation that is this proxy that allows the dow to interact with the real world and and do some other uh kinds of transactions right based on the dao's wishes but fundamentally through the dao and and by participating in the dao you are acknowledging and abiding by the constitution that we designed because in the end i think governance you know there's two routes you can go you can go governance minimization or or um something with uh

you know i won't say maximization but for example pocket has a lot of parameters that needs to be governed and these sorts of things so um we're on the other end of the spectrum right and in the end that's a it's a human problem we can automate we can you know in the end we're all humans managing and governing these things and and and i think in in many cases and maybe even most cases um we're going to have to figure out these human problems in some capacity so what we tried to design was a framework for people to be able to interact and with pocket uh uh with real checks and balances and we put so much thought and effort in in in the principles of of of the dow um the way in which we work the things that are important to us

um and and and and yeah you know and things might change right the same way there's been amendments in the us constitution um i'm sure there will be amendments in the pocket dow constitution right uh but but but you know in this new kind of world it's it's hard to even look you know three years in the future much less six months right um so so so we tried to do this in such a way where it was kind of flexible we got the base kind of baseline of of things that we need and and with the intention of of this basically you know evolving over time yeah that's awesome there's a lot to unpack there again it's just it's like a uh a push of um you know the centralization of your business starting off is easy you know it gets things done and then

what really allows you to kind of transcend legal borders if you will is to be able to structure your dow and your and your you know decentralized using tokens and and governance i mean it's all just it's always crazy how these next protocols and companies are being formed um you know it's it's so new yeah yeah and i think it's gonna be super interesting how these digital jurisdictions right interface with the real world right because you know you know thought about like like dystopian futures where you know these digital jurisdictions hire armies to protect data centers for their nodes as an example right like like you know you can imagine some you know oh god

what's the show right so some episode in in uh i can't remember blackmail black mirror yeah thank you um where it's like you know it's cryptocurrency hyper successful okay let's hire them army and everything kind of you know repeats itself in in in in a rhyming kind of a fashion right i mean we're obviously trying to avoid that future but but but you know i think these things the way that they interact with with the real world is just going to be super interesting and fascinating particularly because like really what blockchains are in my opinion are like coordination human coordination mechanisms right like religion was probably the first human coordination mechanism and that's existed for for eons at this point right uh businesses like the the invention of an llc like like that that's a coordination

mechanism that that hasn't gone away governments another one right i fundamentally believe that that blockchains and that's a very small list of of kind of uh uh these coordination mechanisms i fundamentally believe that that blockchains are kind of this new version of coordination uh within the confines of the internet for the first time and and you know it's it's going to start interacting with the real world much much more and how that happens um it's going to be probably scary fascinating exciting and everything in between right so so it's it's it's it's to repeat it again you know i think we live in the most exciting time uh in human history yeah yeah i know we're we're kind of running close on time here but um just to kind of

i guess give my two cents here like you know it's really interesting to um take these systems of human coordination that you mentioned religion being one of the first ones businesses being another and now um dao is really being um a third you know i'm sure there's a couple more that i'm missing on the list but um they adhere to different philosophies um decentralization being the premier one behind taos and maybe morals being the one behind um religion and you know we kind of the list goes on each system has their own philosophy that kind of governs it um and we're starting to to see that decentralized movement take

shape right like each individual is now becoming a more ingrained part of some different communities those communities are open and free but you kind of your identity is now more a part of these different communities that you align with um and it's interesting now that we've seen facebook supersede uh government in a certain way i i kind of see something similar happening in these dows right each individual is a part of these different communities and each community has its own governing process so i i really agree with you in the fact that it sounds like um the dows are almost um

you know forming their own government styles or flavors and um some things work well for certain use cases and then some things work um you know better better in other ways so it's really interesting to to see this take shape and um just you know the the a protocol you know there might be two protocols doing almost the exact same thing in the same market but uh the way that their checks and balances function to create a uh a governing process with longevity um really seems to be proving the successful model here um yeah and and like you said it's just

it's a really interesting time to be alive and uh just kind of as this is evolving just watching it um right before our eyes yeah yeah to that point you know you know i don't work for you know i mean i i'm employed by pocket network inc but in reality i work in service of pocket network the protocol right and and all of us are kind of collectively doing that right and and in the end they're you know uh uh we're a bunch of humans coordinating incentivized you know through through ideals and and and the mission and everything that we're trying to do right and and and but in the end you know it's a different paradigm of thinking right like you know i you know i go to service at the at the at the um

at the church right i i work for my boss at this at this company right uh now uh uh we we work for protocols right you just see people who are just you know getting grants from protocols right and i think that's that's going to become much much much more the norm uh particularly in the context of as i work for these protocols i have a say you know i can i can i you know i have a real impact in the direction that things are going right um in this kind of you know kind of um uh abundant future right it's it's so many options yeah and um we i mean we can talk more about like what protocols really mean in that sense but i think the meme economy is here like we're working for a goal we're

working for a meme at a certain extent absolutely just super cool to think about um michael this was this was solid bro like this was awesome i feel like i learned a lot and uh just i mean we we went deep here into uh all different kinds of things not just pocket in the technical sense but also uh philosophy and um you know what what the future could look like in a few years or maybe you know way down the line in several years um so i really appreciate you coming on man yeah no thanks for the opportunity for the conversation you guys are you guys are awesome dudes this is this was great yeah thanks michael it was a pleasure thanks for listening to the d5i design podcast

until next time d5 slate team