DeFi: The Financial Backbone of the New Economy

Transcript

awesome everyone i'm excited we've got i think 30 or 40 minutes to talk about defy um i had this whole great panel scripted out i was super excited for what we were going to talk about and then the space kind of blew up uh and a project uh blew up and 50 billion dollars worth of capital was it was kind of wiped out of the system um just from one one ecosystem and that kind of uh blew up this panel for what i wanted to talk about so uh we're gonna pivot and talk about some interesting things but one thing i want to ask you all first is before all this terra ust luna stuff happened we kept seeing hacks and we kept seeing just different smart contracts pl smart contract platforms blow up we had different bridges that got kind of blown up different

not scams but different smart contract things happened um what we saw with ust and luna and just the terra ecosystem was not a a hack nothing nothing on the infrastructure side broke so maybe josh i'd throw it over to you and just ask you on the infrastructure and on the defy side what do you make of what happened recently with with just last week's events yeah i think it's it's fair to say despite someone else having met each other years ago that this is extremely early days for crypto we're extremely early and with any kind of innovation things break and when they break and it's a large project it's an extremely catastrophic event and so i think to your point

the infrastructure here itself didn't break what did break was the model and the assumptions that came with that model and you know when a project like terra grows so quickly and all the variables of risk coalesce around it it's really difficult to map out however good you are at game theory what's going to happen with a project like this the positive note is that the infrastructure didn't break the infrastructure kept performing there were some problems with the chain but overall the infrastructure that supported the ecosystem kept working but the actual underlying assumptions and the modeling behind some of the for example ust and anchor mechanisms were untested at a scale like this so that's

what broke the model itself broke as opposed to the infrastructure so there is a little bit of a positive note that we can abstract from this story yeah constantine i think i'd throw it over to you and just ask i mean we've got this amazing ethos of title of the conference permissionless we decentralized the world and we finally have this decentralized stable coin that we can use and the whole thing blows up does this make you less optimistic about the entire system does it make you was this very concentrated risk and it makes you less optimistic about decentralized algorithmic stable coins how does this impact just your how you think about using d5 and just the decentralized uh infrastructure as as

the backbone of this new economy yeah sure maybe just to explain my viewpoint into it obviously so block daemon is a node operator we're the largest node operator in the world we run nodes for transaction throughput data reads validation and then yield earning and we do that for the 50 largest protocols so we run a lot of hard physical infrastructure we also obviously run infrastructure on terra and we have api products rpc nodes validators we had the whole shebang app and technically it was a really actually fairly sophisticated network compared to some of the others i think what's interesting when you think about infrastructure it's a really wide term and so there's the physical technical infrastructure

there's a software component and then there's actually a financial component and i think what we're learning a lot is that the tokenomics and the value system driving these decentralized ecosystems um also need um stability components in them and so an algorithmic stable token ideally should have been designed in a way where it can hold a pack but the question is is that mathematically possible if you have you know ultimately you know an attacker with massive resources and and one of the complexities is the interconnectivity of all these different products you know protocols you mentioned the bridges and all those things as well as the 24 7 tradability of all these different

assets and so all i would say is from my perspective i'm super excited about even probably algorithmic stable tokens but i think you need insurance products um you need a lot more institutional grade security systems not just on the physical tech side which i think we have at this point in the in the community but really around insurance for example as well as we talked backstage a little even disclaimers and information rights for people who participate in these networks so i think that's really one of the big learnings here is that the the governance infrastructure needs to evolve a lot for this to be efficient how could governance have fixed this

you say the governance infrastructure needs to get fixed what was wrong with the governance here well i i don't have any particular deep inside views into it i think the the question is that with terror you could make the argument that it was a fairly centralized system where there was you know down to an individual a person who could make economic decisions for the whole of the network and so you know there wasn't decentralized governance deciding how to structure the economic system how to kind of also expose the system how to potentially secure insurances and other bits and pieces and so there was no control mechanisms also looking at

ultimately what the terror foundation did and i'm not necessarily blaming them you know they obviously went in uh pretty heavily um and and um you know and that's they stood by their project and so that's great yeah let's talk about governance for a second with with uh d5 because i think what we realized with dows is that dao's the the the the product market fit for dows was with defy actually and we realized in 2021 and maybe even back to 2020 that a lot of these d5 protocols the best way to govern them is with a dow and so you had a lot of you know uniswap and and maker and um ave grand style is the sponsor of the event and a lot of these d5 protocols ended up getting governed by these dows

uh eric you guys at shapeshift ended up turning it i don't know if you call it dissolving and turning into a dow or evolving maybe and josh you guys are in the process of thinking about what a dow could look like how do you think dow governance will play out as we look into the next maybe 18 to 24 months maybe the market slows down was the debt where dow's of a byproduct of being in this very frothy hot bull market and any sort of dow could have worked what does the future of maybe governance and does look like eric so [Music] dows are a fascinating new area of of organizational development um i was highly skeptical when i first started hearing about them like they

sounded very kind of like ethereum rainbow person kumbaya like communist circle um and yet what i'm what i'm seeing is that like dows are simply the one of the latest outcroppings of the ability to decentralize human interactions right so so bitcoin figured out this with money and we've been discovering all sorts of other ways that we can use decentralization to change how humans interact with each other i think dows have a huge future i don't think every organization should be a dao it's probably appropriate for a minority um but certainly in the realm of crypto where we're doing something that is global natively digital and highly

contentious from a regulatory perspective the decentralized model for governance has risen to fill that void so you know shapeshift is just experimenting with that and i think no one should no one should assume that the best practices of taos have been figured out yet we're at the very earliest days of discovering like how these can be built yeah i'm not going to call out uh which dao this was but i was looking at one of the forums like three weeks ago and on the dao on the forum the entire dow there's like 2 000 people on this thing debating whether or not the company should spend like 500 bucks at their off site to go to the lake in the afternoon i don't know what i don't i don't know much about governance but like i can assure you that is not the right way to

govern a company um so when you think about like why these things are why dows especially as they really relate to d5 like why they're even useful i can look at the numbers right i can look at you know uniswap's volume i can look at you know maker i can look at like i can look at the success stories but when you actually think about why a dow is necessary here uh josh i'd throw it back to you like why are you why are you guys thinking about this this model why is it better yeah dowse for the sake of daos are a recipe for failure because it can tend to become you know this purest direct democracy model where everybody has a voice on absolutely every decision so that that decision that you've you've

referenced there is a great example of that now from our perspective really what credo does is it's a decentralized custody and settlement platform we use a blockchain to track the assets that sit within our custodial technology that blockchain is a delegated proof of state blockchain so that piece of the business the development of that chain the ongoing iteration of that chain we think will fundamentally benefit from being part of a decentralized governance process now the thing that we found difficult is trying to figure out what kind of dow structure to implement because there's very strong views around different types of dow structures federated models commission models council models there are various

types of of dow structures on a full spectrum so for us what we've been struggling with and getting our brain around is exactly what kind of dao would add the most value to the ongoing development of the credo chain but what we have really strong conviction on is that the wealth of kind of insights and ideas that comes with decentralizing your governance process definitely outweighs some of the logistical problems that it may bring we want to move fast but we want to move fast in a way that takes into account the best ideas and minds in this space and by having a dow you open that door and you keep it open to retaining the best ideas and talent participating in

your project so for us it's it's very early days we're operating what we call a distributed model very soon we want to start the actual dao model and i'm sure they're going to be various iterations within that and i'm sure i'm going to be calling eric up asking him for some tips because he's been through it before i'll i'll add that uh probably the the best thing about dows when structured correctly is that they reduce friction in lots of things that a corporation might see friction in so to get to give one anecdote uh so shapeshift was a centralized company for eight years and um you know when we wanted to hire someone we would have to go through this whole

hr nonsense like this whole recruiting that depends not only on like where we're hiring them from but where the person is located so we would have to analyze like the hr law of two two countries many rules of which were were designed like decades ago and and many of the newer rules are even worse and uh it got so bad such high friction with hiring someone that for example we had a corporate policy that we would never hire anyone in in the country of france right so like how many wonderful talented individuals are in france millions but we we would not hire them because in france you can't really fire people without like months of of work and bureaucracy

um and so that that's a friction point and as an organization there were just like swaths of the world that we couldn't ever work with as a dow that concern goes completely away if we find an interesting person that we want to work with we just work with them it's very civilized right they say what they'll do we say what we'll pay and we just work together and it reduces the friction um i think when designed well that's the real benefit of these dowels is that they just let people get back to like building together as humans and uh get away from all the corporate bureaucracy that's built up over two centuries so it's basically regulatory arbitrage yeah yeah i mean capital and talent flow to where the friction is lowest i think that's the

law of the universe and uh dows when designed correctly um are that lowest point in friction so that's why we're seeing attention flow into it yeah i want to bring it back to d5 a little bit one one of the things that d5 has been i really found product market fit with is just borrow and lend and joe i'd throw it over to you when i mean you guys are a you're not a dow you're a centralized company and you do a lot of financing for miners right how do you think about how defy just plays into your business yeah so with the mining business uh we've got the number one bitcoin mining pool at foundry we've deployed about 500 million dollars into the ecosystem of bitcoin between financing bitcoin mining pool and some of the other things that we do

and so when it comes to defy on the mining side specifically we are you know in talks all the time with the top miners and thinking about with them how they can manage their risk what their needs are in terms of the mining pool and what we're seeing happening is that although crypto is still very nascent the miners are the most experienced folks in the ecosystem many times and so to give an example you know they're typically very worried about their costs and that's typically the mining machine costs the electrical costs but they're very good at cutting those costs lowering them squeezing out margin however they can and so something we've seen them do is traditionally when they mine the bitcoin they would sell it cover costs pulled it on their balance

sheets and that was it but now uh in working with our sister company genesis we're seeing them opening up to different ideas around what they can do with that bitcoin on their balance sheets so they are starting to lend it out they are starting to you know hedge against market downturns like this and just overall get more sophisticated and so we're looking at what kind of products we can build alongside genesis for those bitcoin miners on the other side of the equation we do staking just like constantine and we are looking at other unique products we can offer there whether it's around ethereum the upcoming merge and some of the other staking programs that we run [Music] you mentioned staking i was talking to um we had this like vip perme party thing for the speakers and some of the uh permit holders last night

and i was talking to one of the folks and he actually runs his own node still and i said uh you know why don't i ask him about uh lido and just like staking liquid staking and stuff like that he said yeah look if i was just in it for the for the investment i would actually just use just like just allocate capital to liquid staking right and so one thing i'm curious about and it just got me thinking earlier today about will should retail and just consumers ever interact with defy or do you guys when you think about the evolution of defy right now everyone interacts with devi you could be a large institution or you could be i mean a 23 year old with 100 bucks right you could allocating to ave or unicopter or whatever it might be if you project out to like let's say 20

23 20 or i guess that's next year 2025 are consumers ever touching d5 or are they just or is d5 behind just kind of the is it almost like more of a utility in the space and there are these front ends that plug into d5 uh constant i'd throw it to you first yeah i mean so i think one of the points that's interesting is should individuals run nodes and obviously in the context of decentralized protocols that's admirable and something we should want ideally the reality often specifically when it comes for example to staking networks is that there's a lot of risk in doing so right and also the technical requirements in order to

run infrastructure that ultimately supports the network can be very time and resource intensive which is why you have companies like foundry or block demon who really do this probably mostly for institutional great customers right and so um we run this infrastructure as a b2b dc company so um so from that end i agree with that statement is like ultimately rerun the sort of backbone for let's say an exchange who allows their customers to earn yield across certain products and so ultimately it's a i think as a mass product you need intermediaries for a while probably mostly because interacting with software is never a linear experience over time

right like so there's updates to software there's all these sort of different things so interacting with the smart contract as an individual can be fairly complex and you can make mistakes and lose a lot of assets and so then again we talk about insurance products and underlying sort of stability here and stuff but i think it's interesting that uh for ethereum specifically that on one hand there's an interest in the community to have individuals run their own validators on the other hand there's also a risk that you get slash and lose assets and so um you know and so the the disclaimers again on on that should be a little more clear like what are the exact performance requirements so you as an individual can operate your own node um in order to help secure the network

or you know do you interact with uh you know one of the parties here in order to do so so there's a lot of different ways to do it i think it takes a little bit of each to find the right structure over time but i think we're really still an experimentation phase ultimately i mean it's really very very early still on specifically on that level like who should you know run notes and how um i think it'll change a lot over time yeah uh josh i thought this next one to you um santiago and i had olaf carlson wie from polychain on the podcast last week and one thing that he mentioned he said like the the kind of c5 companies will will be the on-ramps because and the reason being they can plug in with the banks

d5 will own the order books so again c5 owns the on-ramp d5 owns the order books would you agree or disagree with that interesting i think historically d5 has been really difficult to access for most people if you say to them you've got to open your metamask you've got to plug your ledger in you've got to add an rpc network you've got to make sure the token's been added most people will look at you like you're a lunatic it's it's really difficult to get your average person to do their first transaction i mean your average person maybe not the people in this room but your average person so the friction associated with being involved in d5 is is pretty high and it has been historically now what we're seeing is a and a great example is what you saw at

the coinbase presentation earlier is making the entry point into d5 easier and easier and and that's a mission that we're on you know enabling people to create mpc secured decentralized wallets and then at their own volition connect those wallets to any for example web3 wallet like metamask or wallet connect or connect that directly to a d5 protocol in our mind it's all about choice freedom of choice i think there will be inevitably easier user journeys and coinbase seem to be you know finding a a place within that i.e giving their centralized coinbase app users the ability to open a self-custodial wallet within that environment and connect that to different ecosystems i think that's

great because it means the whole user journey gets easier and easier the question will be you know can you create a decentralized user journey that is as good or better than a centralized service i think we've seen some examples of that and there are still some teething pains in in the space but overall giving people access to decentralized finance is really important because it's very easy for us in the u.s or the uk or europe to say well do people really need access to to this decentralized space you know having worked at different exchanges and had teams around the world in places where they couldn't get banked where you can't get payroll where

sometimes you can't open a bank account because you live in a certain place or you're from a certain country and your bank account gets shut down you're giving people the means to hold on to and protect and safeguard their own value so from a moral perspective i think it's really important that both the decentralized and the centralized space try and work together to figure out the right way to give people that access because it is so so important for everyone not just us in this room here in the us but for folks that are unbanked as well giving them the tools that they can use to you know receive their salary as one simple example yeah one one addition maybe is is really the key difference between d5 and c5 is around identity and so that's really currently the

really big issue is is the the we're actually still a solid identity product i think in crypto that solves a lot of the issues that we still experience in the flow right and so the whole context of d5 is that the question is is anything that has kyc d5 right and so the the um and so the identity products are really the reason why c5 is so attractive we run a lot of c5 infrastructure for banks and stuff where you know a lot of the regulatory requirements require background checks on individuals who hold assets and stuff and so i think until you have a really cool i don't know if it's a zk product or whatever it is an identity product that can seamlessly slot into these systems

you'll always need c5 on-ramps that's that's one of the thought exercises i go through just for fun in my head is how do the banks adjust to defy and you know one of the things they have going for them is distribution and i know everyone's kind of anti-bank and that's not really the ethos here but you know they have distribution and if we think to nba topshop for an example what that did was it basically made blockchain invisible behind the scenes but you had digital ownership over those moments and so folks could just come in you know i had a lot of friends who didn't have any blockchain experience but they went on to be a top shot bought some moments thought it was cool and they were guaranteed that you know that was a finite amount of that moment you know i've done a lot of work with sports

cards and investing in sports cards and things like that you never know how many lebron rookie cards are really out there unless it's a serial numbered one and even then you're not always sure because there's a lot of fakes so i think about you know do the banks build their own l2s do they each have their own l2 and then you know for the user they simply log in and click a button and they're getting a higher percentage yield because it's generated differently than traditional ways that the bank would that would create that interest um and i think it's just an interesting thought exercise around the product experience again because that's what i try to look through everything through is the product experience and i think we do have a lot of ways to go with d5 whether it's you know disclosures or not but giving people the freedom they

deserve but also you know making it uh somewhat uh predictable joe you're scaring me i i heard a saying that when we start talking about enterprise blockchain again that's how you know we're in the heart of the bear market and gotta get through it gotta work it out you just you just mentioned it my friend but actually i think you touched on an important part so so banks own you said the distribution but really you're talking about the users and they have the capital everyone we all hate the banks but i've yet i still use my bank account that i got like when my mom signed me up when i was a kid i'm sure right and so even though i hate it do you but the but the downside of these banks is that like on on my bank account i have no interest i don't i think they

even just took away the the idea of interest in my bank in my checking account i don't even think they're lying and saying you get .001 i think they just set at zero do these banks look at something like ave and compound and stuff like that and say all right well now we can offer three percent two percent four percent and do they do they integrate with those folks or do they basically just ignore it and say hey you know what we're we've got the regulations we've got the uh we're in with the regulators we've got the licenses we'll keep zero percent and we think we think we are our regulatory mode is strong enough what do you think about that joe you know i think the best banks who are more forward-facing you know fidelity typically comes to mind for an example you know they do a lot of

work on bitcoin and other investable products in the crypto space you know i think they would maybe explore both you know and try both and see what works um while others will probably more be traditional minded and not even give it a second thought and i think those are the ones that are probably not going to make it frankly and this is not a next year bed or a two year or three year bet but over 10 years i mean there's going to be the coinbase and the coinbase equivalents you know more apps popping up that can provide more interest by integrating with ave or other products and ultimately give the users what they want so banks will still have some purpose most likely but i think they're going to just become more relevant if they don't adjust somehow and innovate yeah and i think staking really is the

entry point into yield earning for more traditional banks as far as we see it right like it's sort of kind of the interest on your current account type right you hold ether in a wallet right and and once the merge occurs you automatically will earn interest if you do so on qraken or coinbase or any other exchange and so um companies like paypal and other banks who allow you for example to purchase ether and hold it will have to offer interest if they want to stay competitive and the way we garner this interest is by sticking products and so i think that's a really interesting use case and we definitely have seen a huge uptick in at least interest right and and we work we have investors like goldman sachs and stuff who who engage

in a lot of these activities with a lot of intent these days i would say compared to earlier i think definitely there's been a lot more movement just yeah go ahead so the the web 3 model i think is important here um there's an and there's another analogy of some incumbents which had all the distribution and all the capital and you can think of like the major news media networks pre-internet um they were sitting very comfortably you know they were heavily regulated they'd been there forever they were well capitalized they had all the distribution and yet the internet comes along and suddenly reduces the friction the cost of producing content

to nearly zero and those those companies lost their distribution and they still exist but they are you know a shadow of their former self i think a very similar phenomenon is going to happen with banking and finance there is no reason that a normal person should want to use a bank in which they earn less interest and they have no ownership in the underlying operations of it versus something like ave where once they get over the learning curve it's actually far easier to use than a bank and you can actually own part of ave i mean that that's that is the web 3 ethos um and i think once people get a taste for that they don't they don't go back there's a reason that

these conferences get bigger and bigger each year it's because once you get into this world you realize that the ownership of of networks uh is profound um and the banks the only the banks that will survive will be the ones that tokenize themselves and i see zero banks ever able to tokenize themselves frankly right so um yeah i think the defy apps ux is already better than what banks are and give it a few more years and more people getting comfortable with the stuff and the banks are totally screwed what are they going to do they don't even accept like bitcoin payments yet and they've had a decade to do that so what they're they're in big trouble yeah no i think you make a really good point

yeah once uh once people enter defy you don't go out right nobody nobody ever enters nobody ever gets usdc and turns it back into fiat right so but i think i'd push back on that i think i actually disagree with you because um let's take one of the one one of the web 3 wallets or something i don't want to call out anyone by name but like maybe you're comfortable holding uh 2 000 bucks in there but you're not comfortable holding your your life savings in there and you're not comfortable holding your net worth in your in your google chrome extension right and so going back to my my original question about like where where do you actually interact with these folks do you is it maybe the banks don't interact

with the d5 applications but is it the the fintechs that interact with them or you think that eventually the the the wallets of the world get good enough and the security gets good enough that you do hold your your entire net worth on your google chrome extension uh i would say i'm i'm the one of the world's biggest self-custody advocates and i do not believe that most people will hold most of their wealth in self-custody so there's a there's a hybrid here in which the ability to hold your assets in self-custody is what's really important and anyone who wants to do that can do that easily but i think the service provided by centralized custodians can be profoundly good so i don't see a world in which

centralized custodians go away but they are going to sit on top of the d5 protocols like these networks the money layers the software protocols that's what this is all going to be based on and so whether you're interacting directly with the protocol or whether you're interacting with the custodian they are interacting with the protocol and that's the structure that we're going to see so instead of like governments and fiat currencies and analog banks we have code and blockchains uh cryptocurrencies and and apps and those apps can be centralized or decentralized i don't know who to throw this next question to but just one thing that this conversation has me wondering is about insurance right one thing that you have in let's

say i've got my money at wells fargo or bank of america if like something happens i call them up and say hey this thing just got taken out can you put it back in or the if it ever if it ever gets like hacked there's fdsc insurance why doesn't that exist in crypto yet it does it does yeah yeah i mean there's components of it right like so for example like nexus mutual or whatever for defense well so for example on on our staking notes we have institutional insurance for slashing that we've secured which i think we were the first to do that which means that we can guarantee that if we get slashed you get make hole you know we can make your whole and so i think there's that's beginning um and that's an important bit but ultimately you know you need a balance

sheet and you need ways to kind of engineer it probably a little bit over time um but it's just i think really a regulatory really complex you know problem at least from our side we've offered insurance initially from our own token treasury when we started out because we felt it's never fair that anyone who connects a wallet to a node we operate gets penalized if we make a mistake operating the node right and so our mantra was always we always make people whole it just when we got enough volume we were a little nervous that we might physically not possible it might not possible for us to do so and that's when insurance became paramount and we found a provider finally but it took years before yeah yeah i mean you guys work really closely

with metamask why why so i know you're mentioning yeah constantine you mentioned slashing insurance but how how long is it until you know just the capital in your metamask or your coinbase wallet yeah if something happens to that like why why isn't there insurance there so what we're seeing now in in in d5 is there are various layers of insurance that can apply so if you apply this to us at credo it's taken us two and a half years working with lloyds of london various insurance brokers to get various insurance policies over our infrastructure so at the first layer we have a crime insurance policy that's provided by lloyds of london and that covers crime related events over the assets held in our in our chain

then we have another layer which is called an in specie insurance policy where the cryptographic material i.e the broken up secrets i.e what most people think of them as shards that distribute themselves across our network because that's how our network safeguards cryptographic information that those pieces of cryptographic information are deemed to be a thing so the insurance in specie covers that material it's taken us a long time to get there we've had hours and hours of meetings with different insurance providers to get to this point where we as a decentralized infrastructure solution have centralized insurance over various layers of our stack what this means in my mind is that it's getting easier and easier as a platform

a protocol whatever kind of defy solution that you are to walk into a room with the right insurers and have the right response they may not tick the box and say off you go but they will listen to you they understand your business model they understand concepts like slashing for example they're getting more and more up to speed because this is a really big opportunity for them so as a decentralized infrastructure platform at credo we've managed to get insurance over our decentralized infrastructure but then we overlay that by enabling folks like nexus mutual to offer certain insurance policies to certain clients that have certain assets and a wallet so various layers of insurance start to

apply to your activity in d5 and one could say that this is even more protection than exists in the centralized space if i go and do a certain trade on my broker dealer account and something goes wrong with the infrastructure i've probably lost my funds and if i haven't lost my funds i'm going to get a voucher and they're going to say sorry for that mistake we'll we'll do our best next time whereas in d5 if you want to play smart you can cover yourself with various layers of insurance and i think that's going to expand more and more people are taking on more and more risk from an insurance perspective they're getting more and more comfortable writing larger insurance policies and there certainly is an appetite within the decentralized space to start

leveraging these new innovative insurance policies i i want to maybe point out here that um everyone feels very comfortable with their fdi assured fdic insured bank account but you're all getting robbed and not paid back just on the basis of inflation right so like crypto comes along is actually providing an entirely new paradigm compared to an fdic insured bank which you're still you still have eight eight and a half percent of your your money stolen from that bank account this year um somehow people don't realize that that's what happened to them because the numbers stayed the same but the value went down um but there's a lot of myths i think in traditional finance but people are just comfortable with it that's how they've always done

things and they don't they don't really question it very much crypto comes along and like upload you know turns all this stuff upside down and is going to look very different than traditional traditional finance and because it's all open source and provably knowable i think you can actually see insurance markets that become much more robust and real because the the underlying money can actually be sound finally it's a really good way to put it looking at the clock we've got a couple minutes left here so i just want to zoom far much farther out from like from uh insurance and things like that and ask about two things and the first one is the the eth merge coming up um and constantine i'd probably throw this one

to you on one hand it feels like we are headed into the heart of another bear market on the other hand we've got this eth merge coming up which is turns eth into this yield generating asset that is deflationary and esg friendly so it satisfies the mandates of the large institutions who invest with esg funds what is your framework for looking at the next maybe six to 12 months in crypto do we just slide back into this 2018-2019 bear market or do we is it a rough couple of months and then the en uh then the the the merge catapults us back yeah i mean it's a it's a really good question um anecdotally you know one of our really large investors messaged me

when the market got a little unstable and said hey probably a good idea to brace for a bear market or crypto winter but the ice this time won't be as thick as the last time and so i think um that sort of kind of sounds probably accurate i think they're the parameters have obviously changed drastically right like i mean we have so much more adoption so many more people involved there's also all the funding cycles that are really um uh diametrically opposed to the crisis right like every we still have funding you know fund announcements every week of like hey there's another billion dollar fund launch to invest in uh deep tech right there's permanent capital that is right forced to deploy their 500 million yeah and so it's

interesting you know so so i think we're in a really unpredictable scenario at this point i think right now my motto and as a company we really want to see how the quarter nets out and remain a little calm it's just very hard to really also in this macro environment see how crypto will be affected um and so we've been through crypto winter before i think everyone here has has been through it and i think the other thing is that there's a lot of crypto native companies like us for example who have raised sufficient capital to really come out of it no matter how long it lasts right and so i think the last crypto winter saw the end to a lot of actually really good projects

and this one probably nets out a little differently but when it comes to the eth merge you know we're super excited about it obviously um you know i really think uh a lot about you know what what benefit ethereum also has i think it's one of those ecosystems that doesn't sometimes get the credit that it deserves as a decentralized sort of open source system and so the merge is something technically very very complicated um one description i've seen is you know it's not like you know when people say it's like driving the car and changing the tires this is like flying a plane and changing the engine and so it's it's it's a complex undertaking but i can't see how economically it will not increase the value of eth

it still might go down because of macroeconomic factors but obviously if throttling supply and offering yield over time in the system that currently doesn't have it only allows for one outcome but you know you you uh but it's impossible really a lot of people are feeling down right now and i think the merge to me is like it's a light it's something to be optimistic about and when it goes through i think it'll be a big win for the industry and to answer your original question too i think there's a lot more builders coming to the space over the next year so not only crypto has gotten hammered but tech stocks as well and so a lot of folks who had you know packages at a tech company and they were you know having rsus or options that really bolstered their earnings you know those

are way down those are not looking as hot as they were you know a few months ago and so i think that's going to allow these pockets of people who are web 3 passionate at web 2 companies to think actually maybe i should you know consider the switch now moving into working in crypto full time i don't have these golden handcuffs so to speak anymore i'm seeing that from friends reaching out to me kind of looking at that they're learning solidity they're learning rust they're thinking about how to add a value into the ecosystem and so i think we're going to be going through another big building phase here amazing all right everyone we are up on time i think we could do this conversation for maybe three more hours but unfortunately we are out of time we have more amazing speakers so please help me give everyone

a big round of applause thank you everyone thank you man