Erik Voorhees: ShapeShift – Decentralizing a Fox #409

Transcript

[Music] welcome to epicenter the podcast where we interview crypto founders builders and thought leaders i'm sebastian cuccio and i'm here with my co-host brian fabian crane today we're speaking with eric voorhees who's the founder and ceo of shapeshift he's on the pot he's been on the podcast this is his fourth time on the show but before we talk to eric i'd like to tell you about our sponsors for this week so paraswap allows you to beat market prices every single block it's fast it's highly liquid and they just re they just launched their v5 which has a new contract and a new api it's more modular infrastructure and it has more gas-friendly features now which allow you to save gas on your transaction which is great it supports free approvals using ethereum's new

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with relying on courses one's highly available improving infrastructure that enables you to participate directly in decentralized networks course run also uh just helped launch lido for solana solana's liquid staking solution that allows you to stake and participate in defy at the same time so head over to chorus one and start your staking journey eric voorhees thanks for joining us today we were just talking earlier about how long we've all been here in the space and um certainly you know we we were uh in touch with um with shapeshift the epicenter like even before shapeshift was a company you guys were still stealth um how's it feel to be still here like 10 years later it feels great it feels great although

fiat is still around so our mission is not complete uh perhaps it'll take another 10 years and i'm ready for that but yeah i mean it's just exciting to see how far this industry has come and um i i look forward to the next 10 years very eagerly yeah i feel like i feel like millennials are like the boomers of the crypto industry now right yeah i mean anyone anyone over 30 is like a grandpa so yeah exactly so so like from from like your early ideas of how you wanted this to turn out into like how it has actually unfolded uh you know what are maybe some of the biggest i know surprises or the biggest thing you like still wish for that

haven't happened yet that hasn't happened yet um i mean one of the certainly early dreams and predictions of the early bitcoiners was that uh people would be using cryptocurrency bitcoin for payments right and this was like what people's attention went to in the in the first couple years trying to get merchants to adopt it and people to accept it and that's had so little success so far not not zero success but so little and i think generally the time when people receive bitcoin as payment will be sort of the the end of the process not the beginning so that's something that we all got quite wrong

uh but so much other interesting stuff beyond payments has happened that it's it's well worth it yeah that's uh i think that's actually a very interesting observation right i mean obviously right back then it was even bitcoin right the electronic cash and there was so much to focus and it was big pay and all these payment integration was interesting like so your point that like so you think that will be the the final stage or is there something beyond that um i think it's in the it's in the latter part of all the adoption right it's when it's when a i don't know maybe a majority of people in the world are comfortable using cryptocurrency then i think it starts becoming fairly common to pay with it

but so far that certainly has not happened what's so what's like we had you on i think on episode 300 which is probably about two just over two years ago at that point you had just launched shapeshift v2 this was around the time that shapeshift had started doing kyc uh what's been the trajectory since then like what's been the journey of of shapeshift since uh the last time you had joan yeah well quite a bit so that was you know kind of around our darkest hour when we had just implemented kyc in the platform and you know all of our customers hated it we hated it and it was just a you know late 2018 most of 2019 was pretty pretty rough

so that story ended or i would say was resolved uh in 2021 as we started integrating decentralized exchanges and by doing that by integrating decentralized exchanges and simply getting out of the business of trading with customers entirely um we were able to remove ourselves from the regulated activity and so no longer is there kyc on shapeshift and that's been the case since april of this year yeah yeah i remember you you were you were sort of this was one of your big uh selling points right in the beginning right like shape-shift no kyc um because probably a lot of people don't remember like shape shift right but at one point

the original shaped product was like very widely used in the crypto ecosystem yeah and it was like yeah it was nice because you could just send out a bitcoin there and you got ethereum on your other address you didn't have to create an exchange account and it was like sort of not quite very civilized yeah you just arrive at a website you say what you want to do and you do it and that's really all you need all the nonsense around the regulatory compliance um completely destroyed that value proposition and you know we ended up losing 99 of our our users to other competitors of which there were many at the time um few of whom were as concerned with the regulatory situation as we were by

mid-2018 so yeah that was uh that was a difficult time and the technology of dexes wasn't wasn't ready at that time for us to use them so there were a number of ethereum based dexes that were still order books and they never achieved sufficient liquidity the ux was never quite good enough but once the amm model came out you know i think i think bancor invented it but um certainly popularized it uh that that completely changed it and the first time i used uniswap you know i was like wow these guys these guys brought back the magic of what shapeshift done a few years ago how are they doing this what what is this what is this mechanism and um just

realizing how far advanced that had gotten and that we could just integrate that technology into the shapeshift platform was uh was great and very liberating so i mean you you you started off as a uh as a non-custodial exchange right where you could just kind of swap one asset for another we used to call it the google translate of cryptocurrencies basically just kind of switch one for the other convert one for the other and then you know and then that evolved into uh more of um more of a i'd say like uh you know centralized service where there was like this uh kyc even though like the assets were you know non-custodied uh so you put this whole company in this team around

it um you know what explain how you reach the decision now to like go in the full other direction and decentralize shape shift like how did you first you know think of doing this and like how did you reach that decision yeah so as you mentioned at first we were a non-custodial exchange where all you could do is trade one asset for another and um also around 2018 we released the new platform which was more like a wallet that integrated exchange into it um so it was still non-custodial and you could use multiple wallets particularly hardware wallets like ledger or keepkey or trezor and it would allow you to interact with those assets in a self-custody way

through your website and then to do the trades and the trades were the part that still got stuck in the regulation and it wasn't until earlier this year 2021 that we just ripped that entire system out of the platform and hooked up the dexes first ethereum based dexes and then thor chain in april and by that time we could get out of that business entirely so since april shapeshift does not do any trades with customers any longer and uh has no kyc anymore because we're not providing a regulated activity so um a couple months after that after april we announced that we are decentralizing the entire company and that was certainly a process you

know like 12 18 months ago we were not planning to do that but as we started realizing the power of these decentralized protocols as we saw the open immutability of a lot of these defy systems we realized that that's the coolest stuff going on right now that's like the the ethos of crypto is best captured in the d5 projects and to the degree that we were a centralized company with jurisdictions and with shareholders and with closed source code and all that we would be constantly out of alignment with the coolest stuff that was happening in crypto so we decided to decentralize dissolve the entire corporate structure

down to zero and um open source shapeshift and let it be governed by the community of fox token holders instead of governed ultimately by a group of shareholders so that's what we announced in july and it's a it'll be a long process so we're in the middle of that um but the shapeshift dow exists today and is starting to thrive and um half of my job right now is just dismantling the the shapeshift corporation i mean it seems like knowing you and your positions on the legal structures uh that uh are that exist and um and like having to do kyc and all this sort of thing uh this it seems like you were you you you were

destined to do something like this um you know had had you how much of this do you think has to do with just the timing which you found at shapeshift like if you had to start over again you know would you be building a dao from the get-go or would you start a company like you know yeah how do you see this i think this is a really good indication of how far this technology and industry has gone because if i went back seven and a half years ago to when shapeshift was founded with all the knowledge i have now there's no way i could do what would what we're doing now like the tools didn't exist there was no way to do trades across chains you know thor chain was years away amms didn't exist at all

so and the tooling that we're using as a dow like snapshot and boardroom and just sort of all the all the social norms that are starting to be built around how dows can work none of that existed and so we have been trying to adapt as the industry adapts and it's you know as part of the most inspiring things in crypto is just seeing like how quickly this moves and systems that other people are building other entrepreneurs are building is actually helping us and hopefully our software helps other people um that's that's really cool i don't think banks you know have that advantage right like they're all these closed gardens that are you know not helping each other not innovating in any way and then you get crypto which is just this open composable system and

the speed and diversity with which it is innovating is you know unreal so one thing i'm curious about so obviously exchange is one of the most like sensitive things from a like regulatory perspective right where they're very much like oh if you're like trading something right there there's a lot of attention on that and so of course it makes sense and and it's you're very regulated very hard right to build a business that's like you know is fully centralized or you know it's a centralized company but so i'm curious about do you think that dolls have gotten like so much better at in terms of like producing

things as a collective that they'll you know out compete not just in a place like that where regulation ties down centralized companies so much but like across the board yeah you know i'm not someone that thinks daos are like a panacea they don't solve every problem and they certainly create a bunch of new ones not every company can or should become a dao and daos are super experimental and new and there's not any huge success stories of a dow over enough years to call it conclusive yet however you know beyond just normal financial regulations the the friction that you have inside of a company

is everywhere and it comes a lot from things like like here's an example if we want to hire if we if we need an engineer to help us with something and we find this amazing engineer in another country a centralized shapeshift we now have to do a legal review of the hr laws in that country so that's going to take a while that's going to cost thousands of dollars often what happens is that the the hr laws in those countries are prohibitive and make it super hard either to hire or to fire someone and if it's super hard to fire someone that makes it you know less desirable to hire them in the first place because then you can't get out of that situation if it turns bad so you just get all this friction

related to these stupid rules when all you want to do is pay someone to work for you and when that person wants to work for you and get paid and it should really be that simple that's like the civilized way for humans to interact with each other two adults want to do something one wants money the other wants a service make the transaction and as long as there's no fraud the government should stay out of it and um if you're a centralized company you just can't do that so as a dow if shapeshift wants to pay any developer in any part of the world it just does that you know um that's one little micro example of how a dao can operate with far far less friction than a centralized company

so what's the process of decentralizing a company um you know what what are the steps involved uh in breaking apart uh a corporate structure and building it into a tao yeah we're trying to figure that out as we go there's not really any blueprints for this um first shapeshift the company is a swiss ag corp with several subsidiaries in different jurisdictions we're not converting that company into a dow so that's not really what's happening because that doesn't make sense and there's no mechanism by which you do that we're simply dismantling the company and it's going away there will be no shapeshift ag corporation when this process is done

there will be no bank accounts there will be no employees there will be no business contracts like that entity is unwinding uh at the same time in parallel we're cultivating a dow of community members so this is oriented around the discord the forum the snapshot governance mechanisms and the the fox token so those two things are being done in parallel the dismantling of corporate structure and the creation of the dao structure and each you know any company that tries to do this the steps they need to take are going to be a little bit different but generally it's those two halves that we're working on right now maybe this is jumping ahead but one thing and like how do you see shapeshift

as a product uh evolve in the future because i mean you still have like shapeshift.com right where you i mean there's like some like a website how do you decentralize that yeah so so shape-shift the product is really what matters right like everything about a company that is important is just about building a product that customers like using and that improves their lives so as a dow that's what we get to focus now 99 on instead of you know 40 or 50 and the product is is kind of simple but it's quite a big ambition it's essentially an open source multi-chain self-custody crypto interface that the whole world can use

and that vision i think is really important there doesn't currently exist such a thing and so that's what we're building um and where that product goes and you know that's like the grand vision but the specific tactics that are used and the specific things we do that all comes from the community where people think it's important to to focus and spend money on yeah but i mean there's still like ip there's you know brand names and things like that you know like i'm sure you wouldn't be happy if i started like a competing dow tomorrow called shape shift right like you know there's always got to be some sort of structure that you know keeps that stuff right fair yeah so um we are also making a foundation and this

foundation is essentially meant to be like a stopgap interim centralized organization to handle everything that we can't decentralize yet so a lot of things we know how to decentralize today and are working on it some things we think can be decentralized but we can't get to it yet and then some things we don't know how to decentralize for those latter two categories by default they just go to the foundation so that includes things like the ip for now that includes the aws account that's hosting the servers things like that but we believe a lot of that stuff can get decentralized with time and the foundation's mission is to help facilitate that decentralization and ultimately unwind and dissolve itself as well so we don't

ultimately care much about ip at all we're not trying to make money from it you know if someone tries to steal the name and mislead people about who is shapeshift i think that's something more easily handled on a social layer like you can prove what's what with with public private keys situations and um i think anyone who tries to anyone who tries to do that will run into the network effects of the token itself right like the fox token has a market cap it has thousands and thousands of users you can't just like replicate that even if you copy our logo so i think there are market-based mechanisms by which that stuff gets mitigated um and ultimately we don't we don't much care

to protect the ip we're not trying to do that we're opening our ip we're opening our code what if i got the logo under my keyboard here yeah you'll hear from our lawyers soon yeah so and then this application that i'm using is this is gonna be like something i download and it runs on my desktop computer or would it also be through like you know ios app store yeah uh centralized shapeshift right now has a web app and a mobile app open source shapeshift is going to start with a web app and probably will end up with both a desktop app and mobile app um that will be kind of determined by

the community but yeah all three of those mediums have uh pluses and minuses i'm kind of most looking forward to a downloadable one just because the performance is always best but um yeah all three will work and we'll use a framework that uh where the the same functionality basically can be replicated in in all three yeah but like yeah i mean it's hard to be a dow and have an apple developer account i think yeah i mean that's back to that earlier point we don't know how to solve that question yet yeah yeah until until apple allows dows to have apple developer accounts i think there's going to be always some like points of friction but you're right i mean like these things are going to evolve over time and like if the foundation's goal is just to kind of you know uh

walk like so go through that process of of um decentralizing assets as solutions uh you know become available then yeah yeah that's probably like a good the foundation will take over the apple account for now yeah yeah i was just like i i think it makes sense right especially i think if you have like a desktop version it's kind of like uh definitely seems like manageable right because you could host it on different places too right and it doesn't um but i i it is a question i've been wondering about in the end like what is an alternative to the google app store and the play store like some kind of crypto friendly open decentralized you know

mobile operating system because it feels like it would be so useful yeah i mean that's certainly out of scope for what we're trying to solve but i think that's a that's a service product that the world is going to increasingly demand we're going to need a crypto phone someone needs to build a crypto phone yeah i i think part of our thesis here is that a lot of decentralized systems will get better and better they certainly have been you know they've gone from almost zero value 10 years ago to you know most of the cutting edge computer science right now is going into the these blockchains and all this so we just we see that continuing and we will ride that wave as it as it builds so what happens to the employees and i

mean there's like 70 people working at shapeshift right yeah uh yeah so by the end of the year there will be zero employees and we we have basically three waves where all the employees will be gone the first one happened at the end of uh august second one is at the end of october and then the third is at the end of december and by then you know even myself will be fired and i will not be ceo of shapeshift anymore and the employees will then go on to do whatever they want right they all have a lot of fox tokens that unlocked them over the next three years so they all have a strong economic interest in the success of this continuing some of them you know want to go find a w-2 paycheck at a normal job and that's

fine some of them are super excited about the dow structure and you know it's like the best thing that shapeshift's ever done so they're going to be participating in you know small and big ways to the dao and ultimately they all have they all have freedom now and uh they all can be entrepreneurs and they can participate in the dao in whatever way they wish and for some people that's not a good structure and for other people they'll thrive in it cool how many of those employees do you think are going to want to follow the i mean do you have an idea of how many of those employees are going to want to follow with the the dao structure yeah i think i think like at least three-fourths of them really want to proceed with the dao in some way

um but it has to make sense right and they have to have an important role that the dow wants to pay for so there will be some who there just isn't a good role in the dial situation and that's just kind of the hard truth of it others will do you know like part-time or casual work once in a while might not be their day job and others this is just going to be their full-time focus just like it was day to day at shape shift i would guess probably like at least a third of the staff will be heavily involved in decentralized shapeshift and maybe more than half yeah and i remember one of the we did an interview with cz uh some years ago and you know he uh talked about the i

think roll there of the these finance angels you know because they had basically also all these people who had a lot of tokens from this token sale on and then had so much money that they just like didn't need to earn anymore and they were sort of like contributing to finance right even without that so i think you know i guess if the token goes well enough maybe they don't even have to be paid by the dollar yeah there will certainly be some of that i mean that's i you know i'm in that category right so like i'm not going to be paid by the dow i have a lot of fox tokens and i will be very heavily involved in the dao contributing in lots of ways both in ideas and in capital but i am not the chief executive and i

won't ultimately make the decisions so um you know i'm i'm looking forward to that as well i think it'll let me be a lot more a lot more flexible i don't have to answer to anyone i can just do whatever i want regarding the dao and even to me you know that's very freeing so i i'm more excited about the future of shapeshift than i've been in a long time and i hope that as we build out this model of being a dao um it can help inspire others um in the same direction so how do you like you know in in reality how do you expect your day-to-day role to look like like what are they going to be doing after it goes full dow what's your

yeah your plans so yeah right now i'm like torn between these two worlds one where i'm trying to dismantle corporate shape shift and do that responsibly and carefully and the other way i'm trying to participate in the dow but i'm also trying to make sure that i'm not leading it too much because it's important that it starts to self-organize and it's done an amazing job with that already um so i have to walk a careful line there after december when i am not ceo of shapeshift anymore um i will be more involved in the dow and i'll try to figure out what's needed um i will probably find pet projects which i think the product needs and i will be putting out bounties to work on

those and i will vote on you know the various proposals that are going through and offering my feedback and guidance to anyone that wants it so i plan to be an influential member of the community but um hopefully there will be many hmm interesting well i imagine that's going to be very liberating you know after the yeah formal responsibility or i don't know maybe just to what extent you will feel that same kind of like you know responsibility obligation then to the doll but at least legally speaking you don't have it anymore right yeah i mean for several years now i have had to censor myself

significantly in what i want to say publicly what i can say publicly what i want to advocate for part of that comes from just being prudent from a regulatory perspective but the other part is that i have all these shareholders and all these employees that rely on shapeshift being present and successful and so it's a it's very difficult to know like to what degree i want to be to live up to my ideals and say the things that i want to say some of which are very controversial and all of which are very much against the orthodoxy of modern society um you know versus being responsible for the people that have put their trust in me and both of those things are really important they are sometimes conflicting

principles in the dow structure i can do whatever i want and i still need to be a little bit careful right because my name and my brand is attached to shapeshift and it will be for a long time but um shapeshift is is bigger than me already and uh we'll you know i'll be a smaller and smaller part of it okay so the day after the the company is dissolved you have to come back on so you can just like take the gloves off and say what you really want to say it probably won't be that black and white eric uncensored move we will move a little bit more in that direction and and then when you when you think of the future uh off the doll like what what are your sort of hopes

for how this shape-shift phase will play out yeah so when i look at the crypto industry i see so much fascinating work so many fascinating products it's too much to keep up with and it's overwhelming and my vision as a product for shapeshift is that it is the place in which all these projects can be integrated and so people have one interface in which they can interact with digital assets it has to be self-custody it has to integrate with multiple wallets and it has to be cross chain and it has to be open source and it has to be governed and owned by the community so all of that now is is possible with the new shapeshift and you know if we look forward a few years

my hope is that shapeshift is serving you know 100 million people around the world with an open immutable neutral interface in which they can interact with financial assets um that's that's my dream for it and i think that's really uh something that i'm going to be excited to work for uh you know over many years yeah it's just like that that is like a product right that yeah it does feel very needed right because today you're kind of scattered right like maybe there's like you know metamask and kepler and then you know other wallets or ledger life or there's just a lot of different user interfaces for different chains but so it is this would be sort of the

the one wallet would it have a particular focus for example on trading or you think it would be a sync you know it would kind of cover like the entire spectrum of what you want the wallet to do it obviously can't do everything right like it has to focus but if it's open enough then people that want to integrate with it can pull it in the directions that they see interesting and so it will end up resembling what the market really desires over time um and that's that's the goal there i mean the the table stakes are you know easy wallet functionality send receive trade

i'd say you know lend and stake you know like there are a few verticals that are kind of table stakes i would say for a good integrated wallet um and then beyond that you know there could be all sorts of long tail applications built into the platform and um the teams that build those can just put it into the open source software themselves it doesn't have to go through a bottleneck of of shapeshift engineering any longer and um yeah did you also see a sort of like app store um so sort of uh anyone can build in an app into the shapeshift uh platform and so we we will see if the market wants you know kind of everything available which would be

noisy or just a very curated type of experience i don't know which direction it should go the community will will take it there right but i guess eventually you imagine that like okay you'd want different people to like use different kind of interfaces different features different applications no because there's already so much different stuff that people are doing yeah and i think ultimately people will end up building different skins and interfaces for it some of which cater to particular segments right like an advanced trading interface that gives you a lot of tools meant for that and another which might be a super simple like you're a brand new crypto noob interface that abstracts most of the

complicated stuff away um i don't know which of those directions it should go and it can go in both now and people can just build onto this thing what they what they want it's kind of an experiment in in spontaneous order and now that it's open and there's an economic incentive of all the people that hold the fox token um it can it can go in that direction so you talked a little bit about you know cross chain compatibility earlier and i wanted to ask you about that and like what what are your hopes for shapeshift to become uh like a major sort of cross-chain um well and a way for people to to be able to trade access cross-chain

and what are some of the challenges you see there whether technical or you know community uh type challenges yeah cross chain is really hard because these blockchains are they're all fussy in their own ways they have different structures and architecture and if you focus on one you can get really good at that right in a lot of the biggest and best ethereum community apps they just focused on ethereum they work really well in that regard and they're awesome but they only work in ethereum right and they don't even include like the largest asset in the world you know bitcoin they don't include some of these other chains that i think are really important so we have always been multi-chain and

that is that has been hard it's been really hard and it's made us go more slowly um but i think it's critical we did not know how to do cross-chain trading without an intermediary before thor chain so pre-thought chain which launched in april there was no way to do at scale native layer one asset trades from from like eth to bitcoin you'd have to do it with like wrapping and then going only in the ecosystem that's okay and that's valuable but there really needs to be a way to trade native assets across chains and so when thor chain launched that was like the last piece of the puzzle so shapeshift was the first you know known company to integrate thor chain back in april when

it launched and um it's had lots of struggles over the summer it got hacked like multiple times and shut down again and so they've been fixing it i'm still very bullish on it and when it comes back you know we will absolutely support it again and uh it's it's a critical piece of infrastructure so i'm glad people are building it and tackling that really hard challenge have you heard this uh i'm sure you've seen this proposal uh to integrate uh osmosis uh and uh with shapeshift are you how do you feel about the cosmos ecosystem as a way to facilitate cross-chain uh transactions yeah so i'm a huge fan of cosmos um it's been one of the projects i think

which is underrated and underappreciated and they've just been chugging away building some of the best technology with a really good community in the ecosystem without nearly as much hype as some of the other projects it's a little hard to understand it because you have like the cosmos hub which is its own chain and then you have this universe of other cosmos sdk slash tendermint chains all of which build an application specific blockchain using the using some of the patterns of cosmos and they've generally been disconnected from each other so if you're using one like you can't it's not cross-compatible with the others ibc inter blockchain communication solved that earlier this year but now

these different blockchains still have to integrate with each other so it's a long process of this integration of these disparate chains so the cosmos ecosystem from the perspective of interoperability is is great but there's a big asterisk all of the interoperability between cosmos chains happens between only the cosmos sdk chains there's no operability between native bitcoin or native eth and the cosmos hub at least not yet so um i don't know if that can be solved through cosmos technology or not but it certainly is solved through thor chain and interestingly thor chain was built on the cosmos sdk so it itself is becoming integrated into these other

cosmos chains and i i see a really interesting kind of you know point of like a collection point betw around which all these chains are starting to to merge and talk to each other i think by next year the interoperability a lot of these things is going to be quite advanced and really profound yeah you know i think there was a fantastic sort of cosmos overview and i think for me also like actually osmosis has been really amazing as sort of like okay here's this use because in the end right okay it can't quite do what tour chain can do at this point right because it's you know it's relies on ibc it doesn't have this kind of purchase yet but just

in terms of a user as an ipc user experience it's it's like very nice oh yeah you can see like oh this works like pretty well right so yeah you compare it with like an ethereum user experience where you have like metamask and approve something it's it's you know it's better yeah osmosis was fantastic i mean some of the best ux i've seen in the crypto app and it was the first time that i had used ibc so osmosis had integrate integrated three or four other cosmos-based zones including the cosmos sub itself so i you know went through the motion of depositing some native cosmos atoms into osmosis through ibc and it was essentially as easy as depositing crypto

into a centralized exchange roughly about that easy and if i didn't know what ibc was i wouldn't have thought anything of it i wouldn't have realized that these were different chains that it just moved my atom from one to the other quite seamlessly but knowing ibc and experiencing that i was like yeah this is this is a little taste of what's to come and um you know as especially like as the terra ecosystem starts to integrate through ibc with with the other cosmos zones uh this stuff's just gonna get it's it's so exciting i mean i can't keep up with all of it so for now uh at the moment though so shape-shift currently and in its uh dex form

um is going to be primarily you know focused on ethereum assets and bitcoin through thor chain yeah so i'll give you a complicated answer because things are complicated right now centralized shapeshift you know if you go to shapeshift.com or use our mobile app right now all of that is still closed source and all that is centralized all trading done through those apps are done through dexes shapeshift is not a dex we route all trades through other dexes so we're using the matcha api for anything ethan erc20 related that you know connects to like 10 different amms on ethereum and then we're using thor chain for anything involving you know bitcoin litecoin bitcoin cash and the

other chains that get added to that binance chain um we also now have the open source shapeshift which has just been opened and isn't hosted yet but that code is out there currently that's ethereum only and it will have bitcoin integrated into it soon i expect that within three to six months that open source version of shapeshift will outpace the closed version of shapeshift and so the chains that are getting integrated into that is really whatever the community wants and it'll probably follow roughly where the market caps go of these different ecosystems so how do you think shapeshift will compete with you know other dexes and amms in the ecosystem that you already have

quite a bit of network effects around them like yeah so again we're not an amm we're not a dex and we're not trying to compete with texas we integrate dexes and so the more and the more liquid they are the better for us even today someone gets a much better deal going to shapeshift than if they went to uniswap directly because you're getting the exact same rates shapeshift adds no spread and adds no fees of any kind but shapeshift gives you some fox tokens on top of it so if you're going to do a trade on on ethereum through an amm um unless you're using layer twos which we don't support yet then going through shapeshift even if we route your order through uniswap you're gonna get a better deal through shapeshift um so yeah we're not

trying to compete with those more the more the better okay so then it'll look more like a decentralized dex aggregator or a mm aggregator than a dex itself yeah it's really like a decentralized protocol aggregator right so exchange is one function that you can do within shapeshift but as we add lending markets and staking markets and all the normal wallet functionality um it's about more than just exchange but that's certainly a core component and so you then have uh this this dao on ethereum right where you have votes and and i guess you know that's one thing right like you can use their fox token maybe vote on different features

to add but there's another thing which is okay there's like a code base and is there you know how do you deal with that thing and you know github maintainers or yeah so that's that's radical no that'd be a better question for our for our engineers but yeah generally the open source project anyone can contribute to there's a limited number of people that can merge the prs that group will grow you know as the group that's there now starts to trust more and more people um but those people don't have to ultimately be from shape shift the company and they are now building onto open shape shift they're not

they're not making pull requests to the closed source shape shift so the the security parameters are a lot a lot different and we can be a lot more open and experimental so let's talk about the fox token a little bit um you've had a token for some time now um what is going to be the goal of the fox token moving forward and how is it being distributed to yeah how's it being distributed as as uh shapeshift moves into a dao form great question so back in 2017 when everyone and the grandmother was doing a token sale we were very conflicted because we saw the power of tokens and how cool they are and like that they were real innovation and were

very important and at the same time you get like a million different scams and people selling these tokens and then never building anything and it was a big big mess um so we wanted to have a token ever since then but we wanted to be very careful about how we went about it and we ended up releasing our token in 2019 shapeshift has never sold this token we just created it and we held on to about 99.9 of it um since 2019 we had been giving it out to users for various promotions you know like when you're doing trades or if you sign up with us but the vast majority was just held by us uh up until this year when we decided okay we're now ready to know what we what we do this token

so this was a critical part of the decentralization i don't know that a dow can exist without a token because all the economics and the governance have to accrue to something that is distributed so for us that is the fox token and we did the world's largest air drop we airdropped to about 1.1 million addresses all the past users of shapeshift anyone that had a kiki the entire thor chain community and a bunch of people that held tokens in a bunch of the d5 protocols that we had been inspired by you know including uniswap and gitcoin and a number of others so we just dished out it was about a third of all the tokens 300 something million tokens out to the world and then we put about a quarter of all

the tokens in the treasury so at that point more than half of all the tokens uh became you know public they went out to the public or they went to the treasury controlled by the people that owned the tokens about a third of the tokens went to all the insiders so we gave them two employees we gave them to shareholders all of those batches unlock over three years so those people all have an alignment with the long-term success of the project and then the balance there is going to the foundation and so the foundation will have some tokens to do with what it wants okay i need to check my uh key then yeah uh i mean any anyone anyone should check the the

shapeshift airdrop page because you may have addresses that you didn't realize are valid and um any address gets at least 200 fox tokens and sometimes more so that's 100 bucks right now some some people are getting like a few thousand dollars worth of tokens so yeah take 30 seconds and check a few addresses there so i'd like to maybe you know brian unless you have more questions about you know shapeshift and the fox token i'd i'd like to maybe take a step back a little bit and talk about the ecosystem and sort of your views about where things are going if that's okay yeah let's do it yeah so i've been thinking a lot about this lately and as i've started to become interested in

in you know new layer ones like you know obviously like been interested in cosmos for a while becoming interested in solana and things like that and you know there's this old saying in business that um there's no such thing as a first mover advantage and you know we've certainly seen this in like you know web 2 companies like myspace no longer exists anymore and you know nothing tells us that facebook will continue to exist in the next five years and um i wonder you know with regards to bitcoin and ethereum do you think that uh they may also suffer from this uh plagued first mover advantage you know first mover position and that other blockchains at some point will become uh much more prevalent in terms of use

and you know attracting investors and developers and things like that yeah great question uh i don't think it's a binary question of whether first mover advantage exists or not i mean there is a first mover advantage it's a question of to what degree it's useful so bitcoin had a huge advantage by being first and similarly ethereum had a huge advantage in being the first you know evm smart contract platform those give it a great head start but they're certainly not um they don't make it immune to competition so ultimately i see a world with you know millions and billions of different assets

and maybe several dozen maybe a hundred uh chains um not thousands of chains you know something like five to 100 chains seems like where this will end up because these blockchains are complicated engineering machines and they make trade-offs and some of these trade-offs are really good for certain use cases and they make it poor for others so i i don't see a world in which one chain does everything best for everyone that seems unrealistic the example between bitcoin and ethereum is a good one because bitcoin now has this slow conservative culture don't change things too much if at all don't break things

maintain fidelity to you know this one very narrow focus on being money good good sound money and ethereum is a little more wild right more innovative more fast moving it changes fundamental structures like 1559 that just went live this summer that's a it's a big change and it just kind of happened um and more will happen the move to proof of stake is a massive change and so you get these two systems um one which is slower and conservative and one which is faster and much more willing to try new things both of those are really valuable right slow and conservative is very valuable for money

fast and innovative is very valuable for a smart contract platform that's trying to let people build new apps and in defy so i just i see value in both of these things and i know there will be other chains that make different sets of trade-offs you know certainly solana is fast as hell you know probably the fastest popular chain in existence that's a that's a really important attribute but it is not the only attribute and they have had to make design trade-offs to achieve that so a world with with a number of different chains optimizing for different features i think that's a healthy world i think that's part of the decentralization that we should all want i don't think anyone should desire a world where there's only one blockchain i mean that is that is a monolith that is centralization of a form

so i i love the preponderance of this and i i just love the like hyper capitalistic open market competition that we're all getting to witness i think so one theme a little bit i would say in your uh you know in your journey in this crypto land right is that you were always very uh political and you know always cared a lot about you know ideas around your liberty and freedom and very strong opinions there they're like um and now you know crypto is progressing of course the world is also changing in other ways you know there's like corona that has had a big impact and um

you know countries evolving in different ways like how how do you see this playing out like because in some ways there's some sort of like uh things clashing against each other there you know like it yeah well i got interested in bitcoin fundamentally because i thought it was important for the world to separate money and state like that was the original name of my blog back in the day money and state money is so important and is so critical to people's lives it is so central to to so much that they do it cannot be controlled by a monopoly coercive provider it's that is just not a good way to to build a society so this has always for me been about

building an industry that pulls money and finance out of the control of a monopoly provider and into an open market that's it so yeah it is political and that tension you mentioned is going to get crazier and crazier because you you have this these these inventions starting with bitcoin and now this whole world of different blockchains which are immutable they can't be turned off they can't be stopped by any single person or even a group right like they just will it's like a boulder that's been thrown down the hill and no one can no one can stop it and then you have governments and regulators many of whom exist solely

to monitor and control money which now can't be monitored or controlled in the way that they want so what happens when you get systems which can't be monitored or controlled and then regulators which only exist to monitor and control both of those things are now running wild in the world and they are clashing in a huge way and it's going to be very awkward difficult problematic antagonistic for years which side wins because these are mutually exclusive phenomena right a money that can't be governed or people that want to govern money that have all the guns and all the power which system wins um my bet is on open decentralized

technology that makes the world wealthier and freer i think over time that tends to win and i think coercion and violence and monopoly control uh tends to lose but it could get it could be a very problematic conflict and we're seeing it all over the place yeah i think awkward accurately described accurately describes the feeling uh that i get when when talking with you know any anyone who's involved with regulation so you know if you don't know in case you don't know like i i helped co-found uh the french um crypto lobbying association so we're a member organization and we lobby the government

and we're now like moving into the eu and you know there's this dance that happens in these conversations where you know we're sort of like all stepping around the reality that you know crypto is here to just to disrupt what you're doing and like nobody in crypto wants to say it and they certainly don't want to admit that it's a threat but you know i think some of the people that have been reluctant to join as members of this organization are the ones that are on the side going like screw these guys we're trying to disrupt them like you should on you know be honest and upfront about it but of course you know when you're having political you know conversations that you know where you're trying to get ahead you can't really do

that but um but that's i think that's what i this is what i've learned in the last two years is that like there's this elephant in a room and the elephant in the room is like you're going to lose your job you know yeah i i want to i want to comment on that so the purpose of crypto is not to cause regulators to lose their job and is not to disrupt regulators that's not what that's not the reason for being well it's a describe concentration of power like it's it's to it's to move the concentration of power over money from a closed group out to the periphery of all humanity right it's to move that locus of power out to a decentralized base from a centralized core

that's a very a very positive message i mean it's essentially the empowerment of all people on earth right so like how can you be how can you be against that you can be against that if you want the power instead right if you wanted to be collective and focused in your organization then of course you're going to be opposed to that but i do think it's important for people in this industry to to try to focus on the positive goals here and as much as i would love to see every regulator lose their jobs because i have a grudge against them and i see that them like you know ruining lives all over the place with the best of intentions um that isn't the message really that we should be trying to spread it should be about open immutable fair transparent objective finance and money for all people on

earth yeah i mean i think if you kind of compare those two worlds like the thing that gives me a lot of confidence also that the crypto world is the thing that's going to prevail it's just if you look at like the speed at which things change right you have like crypto which is just at an insanely fast rate and it's it's getting faster and faster and faster and you know there's a lot of like fundamental reasons for that and i think decentralization is like a huge part of it right that like you remove so much friction and then you have on the other hand whatever a nation state right that has to make decisions in this like super flawed way and very slow and i

mean if you it's just you know absurd like you know whether it's trump or biden the kind of people who end up like yeah i also having a a role that's basically like impossible to do a good job in yeah that from the moment bitcoin started uh regulators and the government has been falling further and further behind for a long time because they ignored it and they laughed at it i thought it was stupid i think that phase is over they realize that it's real and serious um but for every step they make crypto takes 10 steps and it takes 10 steps in like five different directions it's not just that crypto is moving faster it's

that it's becoming more diverse right this isn't just bitcoin anymore about like narrow money you have this entire defy world you have all these nfts now you have these distributed consensus mechanisms doing all manner of things and how in the world does a government keep up with even one of those branches let alone the whole tree so yeah i don't see how that changes you know the the most the most progressive within the government maybe understand ethereum a little bit you know that's like 2016 level understanding here and we we're five years past that you know so try to tell them about like pulling out liquidity pool tokens and and staking it in a yield farm

i mean a year ago that was kind of foreign to me and i'm in the stuff 24 7. so yeah i love that it can move so quickly i think that is one of its strongest advantages um and ultimately it's doing all this peacefully it's doing it without coercion it's doing it without violence it's just the open market trying to innovate and people can opt in and use it if they want i think that's a beautiful thing yeah i've certainly lost faith in a lot of our government institutions uh since dealing with them in an increasing basis um you know whether elected or non-elected but uh i guess that's the topic for another episode um but you know before we wrap up here you know you've been in in this industry for for a long time you know you you started uh

at bit instant and then you know you did satoshi dice and and now shape-shift and um looking back on this what are you the most proud of what are you you know what are you the most proud of having accomplished uh since you've been in the space and you know how do you sort of you know summarize like what you think your accomplishment and what you've brought to the space has been yeah um i mean one weird answer uh is that back in 2012 so i got into the into bitcoin in 2011 there was a bubble in early 2011 and then it it petered out after may of 2011 and

bitcoin started declining down to like two dollars and very few people were interested in it and most of the people that were lost interest and and left and that looked like that was the beanie baby's bubble and it was over right it looked dead and so for over a year it was like in that miserable state and when i started satoshi dice i certainly didn't think it would be this big and i certainly didn't i can't take a lot of credit for it because a lot of it was just kind of accidental success but if you look at the transaction chart of bitcoin uh april of 2012 is when satoshi dice launched and it you basically see this like flatlining transaction quantity until april of 2012 when it just spikes and ever after that

it just is going up and up and up and up and maybe that's a coincidence maybe but i i like to think that maybe like satoshi dice sparked sparked a realization among people of a way to use blockchains that just compounded itself and so that's part of i that might be my answer of what i'm most proud of because if i could do anything in those early days when no one cared about it like giving it a little kick of life that then caught on and a million other people took it from there you know i'd be very proud of that it's it's hard to know to what degree it was satoshi dice or not um other than that i think i have tried to consistently convey the

principles on which this stuff is is based and it's such a noisy industry with so many people chasing a quick buck and so many scammers and just like so much noise and nonsense trying to remind people for a decade that this is about liberty and this is about empowering all people with sovereignty over their own money um i've tried to stick to that principle no matter what and so hopefully that has been that has been helpful and i i see my role as just helping to cultivate that culture and continuing to to speak it yeah i know you have definitely done that and i think you've also articulated that well and i think you've definitely been like an inspiration in the industry in that way um well i mean in

this next phase of shape shift right well dao means there will be ways more ways for people to like you know get involved and be a part of it and contribute and like what are for people who are interested in that um how should you go about it then like what's your and if you have any kind of advice or message for people yeah i mean we into this world we are learning dows as we go so i don't want to pretend i'm an expert like i'm a noob to daos but the more i learn about them and the think about their potential consequences the more enthusiastic i get they're kind of like taking the principle of decentralization that bitcoin did for money and applying it on a social level

which is super profound um anyone that wants to get involved in the shapeshift dow which has already gotten a lot of activity and which has been pretty exciting to see uh can go to the shapeshift discord um i mean go to shapeshift.com there's links at the bottom to the to our discord that's the best place to start and you can participate at whatever level including just being a lurker and watching uh how it's all going we record all of the discord meetings that we do on a weekly basis and so a lot of the stuff will just kind of be public and and maybe can be helpful for other dows that are trying to get going um i fundamentally think that dows are a like the next chess piece move in terms of regulation

um i do not believe that most regulation can apply when it's a dow structure and that doesn't mean that all regulation doesn't apply and it certainly doesn't mean that the regulators can't change things in the future but for now i think there is this this open door of decentralized groups um and i'm gonna run through that door and and see how many people can go through it as well so i i find it fascinating and i've been inspired by other people that have taught me how these dials work you know because they on their surface they seem a little kumbaya and when you start realizing how they can work and you start seeing the tools that have been built for them they're getting legitimate and um kind of profound yeah well eric thanks so much for

joining us today i think that was really amazing to like go through that it's also so so great that we've been able to sort of accompany you through all these different stages and i'm super excited to see like what this next stage of your own journey and shape-shift journey will be yeah well i i want to thank you guys for being so long a source of signal in all the noise you know this has been one of the podcasts that i listen to regularly and has been so consistent for years uh so thank you guys for the continued work you mentioned like episode 300 i was on last time so i don't know what episode you guys are at at this point but it's that's impressive that's yeah that's a lot of a lot of work and a lot of time and so i just i

appreciate you and anyone in this industry that has helped bringing the signal through the noise so thank you thank you so much eric um thanks for coming on and i've got a i've got a quick little announcement before we wrap up here uh um so i've i've been working with the team over at zengo they're a crypto wallet and they've been on the podcast before and we've launched a new podcast series uh together called the zen crypto show and this podcast isn't meant for any of you who listen to this podcast because it's uh because you know all of you are you know crypto nerds and understand crypto very well this is meant for you know your friend who's like texting on whatsapp and like asking you you know what's this crypto thing should i be

buying into it it's meant for your mom it's meant for you know like people who are uh really early into crypto and just want to learn more about it in fact you know the episodes are very short they're 10 minutes long and each episode covers you know one topic so like we did one episode explaining bitcoin and before we released this episode like it was vetted by my mom so like you know if she she was able to understand it then anybody can so we've got episodes about ethereum basic concepts like what what is money what is uh what are nfts you know what are cryptocurrencies and sort of bite-sized content so uh if there's anybody in your life who you know wants to learn about crypto the zen crypto show is um probably one of the one of the best podcasts i think uh to

get started so you can find it on apple podcast spotify and anywhere else so and you look for xango zen crypto show the zen zen crypto show and that's uh one word or several uh several words yeah the zombies and crypto show okay okay i hope you guys will like it yeah i had a electrician at my house yesterday asking about bitcoin and he total new total noob so that's probably exactly the kind of person i should send this to this yeah this is who it's for man yeah same crypto that's the answer all right cool awesome yeah that sounds like a great great thing um cool thanks thanks eric all right

thanks so much everyone thanks guys see ya