Kiln: Democratising Value Creation in Digital Assets - Laszlo Szabo. Ep. 583

Transcript

from running a node on your computer a solo Staker to like being an Institutional grade operator there there's a couple of things that that differ we tend to overperform the network a little bit we do M Inu timing games uh you delay a little bit block proposal so that you can get a little bit more me and then like we are the largest independent not operator welcome to App Center the show which talks about the Technologies projects and people driving decentralization and the blockchain revolution I'm fr ANS and today I'm speaking with Lao Sabo who is the co-founder of K an Institutional great rewards platform which offers staking and keepi acces before I talk with llo I'd like to tell you about our sponsors this week if you're looking to

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network with just one gno and affordable Hardware start your decentralization journey today at nosis doio llo it's a it's a pleasure to have you on thanks Frid so you've been in this space for quite some time um but maybe let's focus on what happened before so tell us about your journey leading up to uh founding killing so I I I'm I did an Hospitality schools nothing related to to Tech or or even crypto uh then I I discovered Bitcoin in 2014 I had in I had found this guy uh very interesting in in Japan

actually that uh uh was building brg wallet I don't know if you remember it was one of the largest um Bitcoin wallets at the time in um and he explained me Bitcoin and and um you know digital gold um the the old um story behind it so I bought my first Bitcoin back in Europe and and then in 2016 I had a childhood friend that started to work at consensus um so consensus in 2016 was working at on variable which is basically trying to to do a decentralized stable coin like a type of maker at consensus and yeah I was just mindblown by uh this idea of like well computer with decentralized application so I I invested it in ethereum uh in some ether

in 2016 but I never I never really came from for for the the the financial aspect of it um I was I've always and I think still very bad at like managing my own money maybe I shouldn't say this on the podcast but um so now I came for the kind of the tech and then like 2017 was the crazy Ico period and um and then I was uh just for more I was already an um an entrepreneur since 2015 because I launched my uh Tech recruitment company um 10 years ago so um also when I started to to look at uh at blockchains and and crypto in general and in 2017 I was just two things first frustrated to not work with the engineers I was

working uh I was uh sorry recruiting for other companies I wanted to build products with them and not uh recruit them for other companies building cool products uh I wanted be you know on the other side of the of the river um and then also I was just formal by the blockchain and crypto system as a whole I think I did a first Meetup in 2017 in Paris um and when you do a meop like you just find bunch of nerds Builders all together um and I I was like okay um a week after I was like I'm done with recruitments uh I'm still shoulder of this of this

company in the sou of France they're still you know good friend Partners but I'm like guys uh I need to I need to um to try to um to build a company in blockchains and it's what I did there's a lot to unpack here so um H how um kind of coming from a Hospitality background um how did you get a lack up in kind of tech recruiting yeah there was I think just my my uh my friends and in Mars sou of France at the time just went uh to be and um said hey uh we we want to build uh a company uh we don't know what to build we just want to be entrepreneurs

and because we don't think we we any other companies will will like to hire us um we we are not recruitable um this is a great start start for Tech recruitment um company kind of like trying to kind of uh help unrecruitable people that's right exactly right you the best Consultants uh at least you you you can you can tell um not to uh to you know candidates not to uh to look like us at the time so that they had they get more chance to to get hired but yes um and and it came to me and and I was still finishing my

Hospitality School say hey um you are from Paris uh and Tech is is very centralized in France um and you uh might know more companies that want to recruit Engineers um so do you do you want to be part of the journey while we find the engers you you have this relationship with the startups that want to recruit and I'm like yeah well guys uh okay but you know I need to finish my school and everything so if it doesn't work after months because I don't have time or I'm not just delivering um you know we'll shake hands and um and and and you will move on um so that's we we started and it kind of worked um and and then I got just uh very very excited about the tech industry in general right

like uh and and very excited about engineers um for me was we're good people good people the artists of like the 21st century it's like I think that was the best part of my job is like sometimes it was a hard job recruiting is a hard job uh you have to you know um scrp numbers on LinkedIn and then call like 100 people there's 70 people that won't be interested or even not answering you 30 27 people that are uh you know answering you but say they're not interested two people that literally uh insults you it's like oh where did you find my number uh and maybe one person saying like oh yeah maybe this job might be interesting for me so it's a hard one but sometimes you have a

discussion with 30 minutes an hour was an engineer talking about like aiio at the time you know blockchain and and you you you just like find this person so passionate like wow uh if I get to work with this person every day uh my life would be better that that's that's a super nice blockchain origin story let's talk about how you honed in on kind of um the staking space because kind of Kil kind of started off in eorum staking so how did you identify this as a target for your for your own company yep so 2017 18 from a recruitment background the only thing I knew was like I try I was trying to put CBS on Shain um a wallet for

candidate uh that would certify uh the fact that he worked for this company on this Mission and and was the next employee would he would show certification there uh maybe with zero knowledge uh would you know kind of like a decentralized professional ID um then we of obviously P we tried to explain this to the French State into 2018 they were like what the are you talking about so um so then we pooted and in 2019 we did our first blockchain as a service platform uh at the time in France uh consensus actually had a office in France and and most of the proof of concept uh being done were on private blockchain so I kind of like we're deploying like um private eum Corum Corda these kind of stuffs where it's

like today sounds uh sound terrible and I think I think they were uh and in but I was looking at the staking space from 2018 I had friends at Cosmos like go and others that launching uh or even like you know the ogs like chorus onean uh um stickfish PTP um um they were launching validators or participating in the cosmos Network for me it was just too too much of a retail Market I didn't understand it right like uh it I couldn't grasp the the the understanding of it and seeing uh at the time buys and shs jol L um explaining that uh the platforms uh exchanges at the time 2019 and 2020 will

be able to offer staking to their users while retaining making it as a b business model I was like okay now I understand it like a B2B type of company uh that um you'd leverage to then have like indirect hundreds of thousands of millions of users um so in 2020 the first taking product we launch was for pocket Network it was a a decentralized RPC Network we were offering RPC ourselves so like wow if you can decentralize it this is this is genius so like Michael the CEO I met him in Berlin actually in Berlin blockchain 2019 I was like wow um uh this guy is so smart so bright and if if the future is

to centralized the access of blockchains are decentralized um that that could be we could potentially be part of it and in 2020 he comes to HC in Paris we do an event and um together in the office and and then he covered it and he it comes to me and say man like I I need a professional infrastructure company to offer staking to my investors um while deploying nodes and it's a pure proof of stake Network so not it's not a delegated proof of stake Network meaning that every X number of tokens in that case was like 15,000 number of token you have to launch another validator so we're not running one validator on

Pockets we're running like thousands of validators actually right uh it was for of tenament um at a time and anyway we build this we was like okay we didn't find a market on on our PC so let's focus on staking in summer 2020 we we ready to launch the product we launch the product um and you know it's defi summer so price goes up uh the demand for thinking is just like insane and suddenly we from zero customers and struggling blockchain for for two two years two years and a half like we had like 50 customers in two months right from everywhere in the world like us uh New Zealand Europe um uh so yeah we we

we our product was terrible but uh we found we found a market that was the first um staking product we launched and then um ethereum was a very natural um Evolution for us because ethereum was the first major pure proof of State Network right you would have to run a validator every X number of token as on pocket um every 33 you have to run a validator so we were we were good at like running valid Des scale on Reon pockets it's just there was a much bigger protocol to secure much bigger playground so we we launched um our ethereum uh operations uh when the beon sh launched uh in December 2020 and

quickly we we also had Lio as a customer um so I have to um sh out to the LI team for trusting us at the time because we we're not known at all um and we owe them quite a lot and then yeah then you know guess can can give you more details about the rest and rest is history but um that's that's how we started give us some um Nuance for what it takes to kind of run a validator kind of add an Institutional grade for clients because kind of I think a lot of people will have experience with kind of like running kind of like an ethereum or nosis J or so validator but usually it's pretty um there are some challenges and

these are kind of the networks on which it is super easy to kind of run nodes right kind of like like there's a lot of networks where kind of running a node is extremely it it kind of it it requires close maintenance and the professional expertise so kind of give us some Nuance to kind of like what it takes to kind of operate this um as a business no that's a very good question um yeah first off you're right there's some blockchains for example ethereum or Cosmos where it's easier to run validat than like on ton for example for those who know ton we love ton it's a it's a fantastic blockchain it's just harded to to operate um in um and yeah I mean the even on let's say ethereum um from

running a node on your computer a solo Staker that you mentioned to like being an Institutional grade uh operator there's there's a couple of things that that differ um first we tend to sometimes over and I mean sometimes but on regular basis overperform the network a little bit uh I guess that's our the first um type of um advantage that we offer our clients meaning we we do um we do me um we introduced um um we the some of the ones that Inu timing games uh uh in I think September 2022 if I recall um because there was there was papers from

the foundation but no nobody really like um put it in production so that you you delay a little bit um the um block proposal so that you can get a little bit more me and then like we did a lot of research was like how um the network will be impacted by this um and with all definitely all operators and the foundation themsel um so that we work hand in hand uh not to slow down or not to impact it there as a whole and and and we found like kind of a recipe so that so I mean this this is the first um Advantage the second is definitely so the rewards right the rewards part and in onchain rewards onchain yields there's always this like Risk and rewards components um so rewards like

you we try to overperform the network a little bit uh this is the case on ethereum this is also the case on Solana and other networks um the risk part uh is also very very very important when you you try to be institutional right so you you trying to offer first Insurance um in case of slashing um so uh this you know I think three to four million dollar is the total amount of that has ever been slashed on the beacon trade which is quite um minimal if you if you look at like you know the number of billions asset States um um but still we we try to to be insured in case there's a

slashing events for clients uh so that they are sure their clients will be paid back then we try to have like internal security measures we you you know try to avoid double um uh d double voting double proposing and and we we a double signing and we have a couple of and we published some blog post with the foundation on this actually um even our monitoring validated monitoring tool is open source you can if you're a solo ster you can use it uh but the the you'd never want to be slashed right and and slashing measures are like um a Swiss cheese it's couple of layers it's um you know um double slashing double voting

prevention it's definitely insurance it's definitely monitoring at different level external and internal monitoring um it's um the signing we we use of web 3 signer but we might use like more uh type of um HSM signers um when when we we sign locks um in the future and you decouple the signing from from the validator infrastructure and then you spread this validated infrastructure across the globe and and lastly we use different uh validated clients prism Lighthouse and teu we were onethird 1/3 and one3 so we would like splits but we realize that if you run a majority clients so for

example lighthous and te Lighthouse and and prism sorry that I have like more than uh 33% of the uh of the network you might in case of a large slashing event a bug on the client um they you know it might be very um damaging for all infrastructures we we decided to actually reduce drastically the lighthouse and prism exposure that we have and run a majority of teu validat clients anyway I hope I don't go too much into the weeds but all of that is how you differentiate of from being a solo Staker maybe we can just very quickly kind of give some color to the some

background to the um slashing discussion so kind of the background here is that kind of if you double sign you're always slashed but kind of if you just um if you're validated just goes down and stops kind of attesting and proposing blocks then you're slash based on um how much of the network kind of goes down with you so um kind of if you're just a solo Staker and kind of you lose power on your on your server or something that's that actually doesn't get you slashed a lot but kind of like if you and half of the network go down that is actually a very stashable event um so kind of you want to prevent you want to prevent kind of your users to be penalized that way by

kind of being CAU in a situation where they are a part they are a large part of the network or they are part of the large part of the network that kind of goes down right yeah that's right um but so you you said it like being down will be always less damageable a party of a larger part of the network goes down at the same time than being slashed so we have a mantra ET is like better be down than slashed right um and and there's there's a couple of events that you you you it's okay to be down or you you're you're fine to be down right um yep then like avoiding assession events tell us about the team that kind of that it that it takes to kind of operate this so kind

of I just know this kind of from our side kind of we operate um a number of nodes and kind of like archive nodes and so on um and I know there's a that our devops team they do a lot of monitoring and they have kind of like they have um on call duties and and so on so so H how is that set up with within Kil and how many people do you have dedicated um for kind of just maintenance of infrastructure right so we have a team um and infrastructure for us is two sides is like running the nodes but also um sticking data which is also like sitting your apart from like being intial inal Staker like for example and happy to come back to it but if you're

an ETP or an ETF uh and you offer stick ETP then you need the granularity of the data um to get taking reconciliation what's the nav uh what's the the the rewards on you know daily weekly yearly basis the data needs to be and that's actually a very very tricky part indexing I mean you know this right but and in blocks you have two type of data you have like the execution later data smart contracts and the consensus lay data and consensus L data we very few in this in on the planet to just like index it because it's usually means you need staking data right so it's basically it's usually like institutional staking providers um that that does it so we have a team of uh 15 devops just um

running you know all the infrastructure running the nodes on 47 different chains and as you mentioned there's there's on calls so 247 um they have an application on their mobile and they can be waken up at 4 um a.m. uh on uh Saturday morning um and and and that rotates um and today it's mainly concentrated in Europe but in the future we could we could have teams across the globe so that you know maybe like um you you don't get waken up in at 4m. in on a satday morning uh um so and then on the data part it's it's another 15 other uh people they're

working and indexing 20 different chains um so that's and it's valid agnostic right so we don't we don't only index our validators a lot of our clients actually are using our data to index other providers because they using one two three or four providers because they want to spread the risk because they they want to have more coin coverage and so forth uh but they still using our data um to to to index the the network and get the nav get the the the the rewards on all these validators and so forth um this being said um you know coming back that's a recruiter is talking it's not about like number of Engineers at the end right it's it's never about the number of Engineers it's always about like spending a lot of time

to finding the the right engineer so you might say oh 15 and 15 oh 30 people oh it's a big team well I mean but the number of things they're doing it's quite a small team I can tell you right um and and we we and I I I meet every one of them I know all all of their names um some of them I've been working for for four five years um and and some um the ones for example in charge of ethereum and are ethereum infrastructure called mxs or Sebastian ranu he's doing a lot of research uh himself um he's uh doing open source with or ether validator Watcher mean like our monitoring tool to um to um monitor e validators is is doing open source Rec

comit boost so basically the pre-con um project uh post pectra uh that we we will use um working a lot with the foundation uh doing some research about the impact on M for example on the network and so forth like so on and so forth so um so they're not they're not only devops right they are protocol Specialists um in a way yeah yeah absolutely um can you give us an an idea how much um of the Stak eth is Stak via K and kind of compare this to other networks you're also operating on yes so in total we have 13 billion asset that are stick on the platform um

it's don't want to uh so we have 4.6% of the E network um which means uh in I don't want to um wrong the numbers I think I think would mean like uh between five six Bill billion of assets also dollars of e that are Stak through validators running 149,000 of adors um and um yeah that's that's that's I think kind of about it we we say that we are the largest independent uh like not operator meaning you still have like large platforms like kbase uh you can argue maybe binance they're running more than than we do but

like as an independent uh staking provider yeah we we we tend to say on ethereum we're the largest what are your biggest clients yeah so we work um with exchanges wallets custodians asset managers so the you know the ETF uh ETP like um and uh Neo Banks and you know maybe maybe the banks and the like that are coming into the space um and and we have a couple of um direct clients it's it's it's a small portion of a business but when you go on Ledger for example uh or you go on safe um you you you know safe has a Marketplace and um you can

stake directly through D so you will see Kil there um most that I would say that's five to five to 10% of our volume um 90% of our volume it's actually our white lab infrastructure that is used by I don't know Banda uh that is used by B wallet uh that is used by um uh you know five blocks and alike um so that their customers either retail or insal customers can can stake we should probably stress that kind of like all the staking that you guys do is non-custodial so I mean kind of like if you kind of have funds on an exchange on a centralized exchange and kind of you

let them stake for you kind of they are in custody of your funds but you are never in custody of someone's funds so kind of how does this work um on a technical level yeah so the exchanges and um in exchange for example we use our apis that then like coins to validators um and our apis automates the flow the end sticking and scking flow and also uh give them the right data right hey today um you have stti this number of amounts and you have earned this number of rewards for this number of customers um a wallet will use example safe will use our smart contracts um and we have a smart contract platform so that on eum

for example you can stake 32th a validator if you want to St validator that's how you know you are um example co- swap is on um also the the it's the white label solution that is used for the the swapping engine on on on the safe uh um interface we are now the the the white Lael solution for the the sticking engine on on on on the safe dashboard for now you can only stick 32 e so a validator but maybe in the future um you will be able to stake any amount of e if you don't have 32 e to stake uh and in that case we have um a smart contract that pulls customers FS uh and then uh redirect to a validator that

that's validator agnostic for example some of this smart contract uh on Shan rewards management platform um is used by coinbase uh Cloud for example um and they running the nodes but they they for coinbase wallet but they use our SM contract platform to offer pooling staking so that the customers non-custodial can stake any amount or um consensus um is offering 32 e staking um while using our our smart contract on minim mask so um yeah that that's the type of non-c control staking that we we can also offer to our to our customers custodial staking with the exchanges the asset managers and some of the the cust

custodian that are regulated custodian or non-custodial taking for wallets or um technology uh custody that's super interesting um kind of I want to come back to that in just a second but maybe kind of let's zoom out a little bit so kind of when we look at kind of the evolution of um of staking on ethereum um or maybe even pre you know preceding the the switch to proof of stake on ethereum what we see as kind of the major Milestones kind of in the history of proof of stake in this ecosystem yeah that's um that's a good question I

think I mean the first uh I remember doing like the E taking right like the first staking uh protocol um were like 2013 um 2014 we kind of the first iteration of staking then like in 2014 203 for 2014 the THM already speaks about proof stake in the white paper and they say it's going to be next year right next year for for the next five years um and and then in 201 17 18 you start to have I would say the the first proof of stake Network that launched at scale so it's Cosmos it's t uh in

2020 um and basically in 2027 2018 is like hey we we just going to do like a smart contract platform with taking um it's not going to be scalable at the time the scalability was not yet I would say part of the discussion uh or even like you know technically uh available or um in 2020 you start to have um smart contract platform using staking that say we're going to be a proof of stake Network and we're going to be scalable on L1 so that's Solana and then in in in the end of 2020 ethereums five or four or six years after saying that staking will be the end game finally uh launch the Bon chain and and two years after launching the

beacon chain they um they move you know finally from proof of Earth to proof of stake um in that's kind of the history of proof of stake Network the history of adoption of staking I would say would be that we feel that until 2019 2020 it was um and even even ahead because Lio also was was a Wells to retail type of type of adoption I would say since 2019 2020 uh then the adoption became very platform right so you you would start staking from an exchange you would start staking from a wallet you would start staking from custodian versus you invested in the Ico of salana

and you would delegate directly to a validator right like nobody none of the Ledger five blocks uh safe uh or bit Ponda coinbase or bybit at the time would tell you hey by the way you have you know uh Solana online platform so you can start the state this came a little bit after and so the it was very platform adoption I would say from 20122 onward and and now you really seeing because everybody say oh in the insal ad option what institutions means right but you're really seeing like traditional financial institutions that are and will start to stake uh and and it starts with the etps ETF right uh so for example in

Europe uh we have Vanek uh as a client Vanek is is you know a traditional financial institution in the US uh that has a ETP product in Europe and can start to say you have a e stake ETP so that you invest in ethereum but you also invest in ethereum that get rewards um annually with taking um and it's not yet available in the US but you know you might um argue that maybe this year or the next year now that the administration is changing and is becoming proc crypto stinking is going to come for these products so uh

and then you know from from from now on other institutional type of players will will start to offer sticking the banks uh the new Banks the banks the the the other large Pension funds and Edge funds and and we we have very meaningful discussions with these players we were looking at us like crazy dents um three four years ago yeah I I I totally hear that one of the things that kind of no one I think initially kind of foresaw was the emergence of both kind of liquid staking and then reaking and so kind of with liquid liquid staking the ideas that kind of you um you st and um for

instance via Lio and you kind of get a representation of your steak token back so you can use that as collateral and you can kind of Leverage up um how how do how do you view that because kind of you you don't offer that to your institutional customers right right so there's some opportunity cost for them there so we do we do offer liquid staking to our customers um and there's there's two offering we have it's it's one if you're a retail platform and exchanger wallet you can offer liquid staking uh we do liquid staking as a service with pooling right so let's say uh you're an exchange you want to launch your own um ex e the name of the exchange or the name of the wallet e uh

and in that case it's a it's very similar to white label Lio if you want um okay and we do offer liquid staking for institutions uh ETF uh and alike with we tokenize the validator right because we think the in ETF needs liquid saking because you you um they can stake a um more than a specific amount of the of the ETF of the fund because you know they still need to be liquid um on a daily basis they have t plus1 or t plus2 Redemption requirements and the way for them to stake more would be to use Liquid staking Solutions but they don't want to use pulling Solutions comingling Solutions because um it would mixed

jurisdiction right like when you st on Lio for example um you have people from all over the world staking on in the Lido pool um and we think it it doesn't fit them so we we what we did is we we tokenized the validator and we represent it with an nft and this nft can be can be traded from one ETF to the other or from one ETF to a market maker anyway coming back to good sing I think it's um it's a fantastic product and Lio really um explained to the crypto Market um was the the adoption of the product that it's a needed product and it the first sticking is is is the first is the primary rewards um the risk free rate if you will of crypto but it's not

defi right it's it's a it's a protocol reward where uh liquid staking became the first T5 product uh and start to flow this reward back to Landing Waring protocols or um liquidity providing or um you know um options um and and and risk fee rate protocols and so forth so liquid staking is very needed first of all because you you need of you need liquidity but you also you might need um higher source of rewards um and you you can't combine this this staking rewards with with other type of rewards if you don't have a liquid staking token so uh um yeah I think um I think your liquid

sing is great of course it introduces a bit more risk right uh what are these risks so of course the smart contract by you know staking is this the risk of staking is quite low I told you it's a it's three three to four million dollar slashed on um dozens of billions of dollars of assets are staked uh on on liquid staking you you start to have a complex smart contract and we we we build the smart contract ourselves so I can I can tell you there's a rest there uh it's not risk-free uh then of course you can mitigate it um using great Auditors and and and using continuous smart contract monitoring tools and of course the the security um standards from like three years ago to now

completely changed I think the industry is uh is is much more mature in that regard um and then restating um yeah I can talk about reaking as well but I I see maybe just this I see staking as the the use of the staking position horizontally um and I I see reaking as the user the taking position vertically right like you you think um you oh sorry the other way around anyway uh but basically yeah reaking uh invented by Ager was explained to the market as Lio explained you know to the market that you know

liquid staking was was a thing and was the primary defi Source primary defi protocol that you know restating um could be used to secure other networks or other applications that needs decentralization it's quite complex and I'm sure you've launched F your um your chain so you know it's complex to launch a chain and to manage a network right you have to manage go to markets or uh you have to manage um you know lot of validators um and do these two things at the same time um is you know actually very very timec consuming it's it's

often um not at all the same thing um and what's your chaining your token is going to worse if you if you don't focus on goto market so I can a come and say hey if you are a a startup if you're a project and you want to um use this decentralization this validation Marketplace we already have a set of validators that you can use and you can use a platform or Marketplace to bootstrap your decentralized application and project yeah that's that's that's very compelling let's see um you know how it and where it hands with the maturity of all these AVS and startup that was launched with with ag and out stic is the kind of the second mover on ethereum

and Babylon on on bitcoin uh but but that's interesting from a a a startup project uh this cation application point of view that's also interesting from the other side of the marketplace it's like hey I have Heath I have Bitcoin and suddenly you introducing this new type of rewards on the market this is not staking plus defi it's uh staking plus staking uh it's two type I getting rewarded two of two two times or three times to secure uh one two or three network with the the same security pull coming from ethereum or Bitcoin um yeah the you know that's

that's a very interesting concept and and that's uh something that our clients even if they are taking the time to um use or integrate these products they're still they're looking at on on regular basis and and I'm I'm confident this uh ecosystem will grow do you think it potentially messes up um the security of um the underlying uh protocol in this case ethereum yes it could for sure leveraging the security of ethereum with five or 10 different networks with the same security pool that could mess up e

uh I this that's a that's a very good point and I think uh it's hard to tell where the um guard rail should be uh is it at the protocol level but then it's not really permissionless is it at you know the the Dow level uh the community level maybe combination of all of that but um you know Le leveraging on ethereum should be um prevent prevented somehow because you you're not um yeah you you you are playing with the security of the network um so that's the risk for sure but you know does like an oracle protocol or a

stablecoin or anyone building around ethereum or even Bitcoin now won't want to leverage the security of the underlying protocol um I think they they they should right I think I think it's a it's a interesting mechanism that they they should leverage how do you see um the staking ecosystem kind of evolve over in the next let's talk about long time scales in terms of blockchain let let's say over the next 5 to 10 years how how do you think it's going to evolve is it going to be all kind of institutional great staking providers or do you think we'll still have some Solo stakers or do

you think the Pand pandum will actually swing the other way and kind of we will have a majority of uh smaller um stake smaller Solo stakers or uh staking providers yeah it's that's that's a very good question um and I'm still hopeful in the like disiz aspect of it even if um you know there will be consolidation and I mean I'm I'm not um you know playing on for for for the Kil flag and out because of course um you know having having more part of the of the market um is is one of our objective but but but as well as like keeping the network

decentralized I think the difference between Bitcoin because if you look at Bitcoin today mining like mining is a clear consensus mechanism that push the small players out of the network right it's like if you don't have like three um if you don't pay your kilow water three to four cents um while you know having like great AIC infrastructure to run it um to validate the Bitcoin Network then you just out and today you know they they like FR frankly Bitcoin might be validated by 40 50 main companies if if not less like you know there's there's a

lot I I can list you at least um three companies that have more than 10% of the the you know validation power on bitcoin uh I can list you only one company that has this on on on ethereum so I think Pro St in that sense is it's a better consensus mechanism to keep the network decentralized because even in 5 years years or 10 years it will be easier and easier for a solo Staker to run a validator on his computer right which is the the main difference from Pro of work to Pro of stake though will it happen um that's that's the question you ask in the first place I think there will be a definitely a combination of it uh I

think that there will definitely be consolidation uh because you know these ETF example they will they will they will start to to use one two or three or four for providers and they will need um you know performance insurance I mean everything in Social grade that I mentioned to you earlier which solo Staker cannot provide but maybe maybe there's a there's a solo Staker type of aggregator that helps them to decentralize also their staking Set uh because they they they have the incentives to keep eum decentralized if you if you think about it as well right um and I think a part um a part of the uh the validation P will will be run by

solo stakers and the ones that are decentralization Maxi and we need them right we need them to keep e decentralized um so by the way one of the reason we are doing we offering liquid staking product and and defi products to our customers and we can talk about it later it's because of course they ask it but also because like we don't want to be in a world where we we have to keep growing on the staking business um and it it actually could potentially hurt uh the decentralization of the network itself that we we are trying to sck her in the first place there's efforts underway kind of in the eorum ecosystem to kind of um make staking easier in terms of capital

requirements So currently you need 32 eth which is uh $100,000 um and kind of the idea is to kind of reduce this marketly um what are your thoughts on this I think it's great I think it's great I think uh it also Advantage um us in a way because uh it concentrates the um I mean we we won't have to run that many validators uh anymore uh we we will be able to merge validators uh one to another and run as much as 64 validators um 248 e um I don't know please I'm not I'm not sure about the calculation but I think that it that's

it and and and these 6 there is this 2048 versus 32 will uh kind of Auto compound right so you will have kind of like validated pools uh in a way um at the protocol level which is pretty compelling also for the large players but it's also comping for a solo Staker because now the the requirement will be much lower um so I think it's great um I think it's going the the right way a little while ago you kind of ventured outside of um kind of your core staking business and you kind of launch killing Kei um which kind of lets um your same clients kind of um uh tap into defi yields um tell us about that yep

and actually you remember we we had a discussion I think we were in prag together conference and and that was the the beginning of our discussion um I mean um we we think like and we think it's it's evident that stoc coins um will push the payment Market uh and the value market in general to a nonch future at least that's what's that's what we think right like I like this uh quote from safe let's put the GDP on chain yes let's put the GDP on chain if we need to push the the GDP on chain stability in these transactions need to happen and that's why stable coins are there um and the stoc market already found Prof

Market I think there's 170 billion um stable coins um in circulation right now usdt usdc and others um and we we realized that most of our clients um had and most of their users most of their clients had a lot of Step coin on the platform but wouldn't access rewards wouldn't access yields and there are some fantastic yals uh you know on on in in on chain um the first ones are provided by lending and boring protocols such as uh Moro I'm sting them first because I love them I it's not only because they're French because I think it's a fantastic protocol maybe maybe one of the best if not the best

one out there um and and there's a and there's compound of course and and there's um there there's many others and on the other side it was only 4% at the time when we started I think now it's it went up to six six s% of stable coins that are were getting interest right which if you compare it to ethereum sorry etherum is 30% of of assets that are staked and if you compare to stable assets all P assets I think it's um 45% of all P assets that are Stak so this this ston rewards Market is very immature uh at least 10x when we started at 10x um less mature than than the staking markets so we thought okay well

as we did for staking we'll provide infrastructure for these exchanges wallet custodians new Banks Banks um to offer um ton rewards um so that's how we we start Ki was we we we aggregated with our own smart contract Vault infrastructure the main lending and boring platforms um so that the you know these um it changes wallets custodians can start to monetize this while offering 10 or 15 different protocols on uh 10 or 15 different assets asss stab coin assets and now we expanding this to um to other other type of of rewards on chain for example if you want to lend e

and get close to eight or or 10% type of of rewards and not you're not um happy of the 3% staking you want higher type of yields we we also offer that and and maybe just lastly is like you know retail customers they they need usually one click experience and if you want to keep them on Shain which is all of our product do is like keeping them on chain you you need to simplify this experience on chain so if if you want to and what that's one of the reason why uh a lot of customers were sitting on exchanges not moving onchain because the ux is not as good you know like the exchanges that can just build a front end and use Omnibus setup in the background whereas

now um you can start to build with Pass Key can abstraction uh the EMB boarding is getting much better and also the onchain uh experience the one click you can rebalance from any yield position to to the other on shading one click whatever the the asset whatever the def5 protocol whatever the chain is uh and that's that's something we we we heavily working on and and that's something that will that will increase the adoption U of of these products oning how do you evaluate which products to include in this because kind of like you're in a way this is a huge endorsement right because kind of like if if I um I'm your client I kind of expect you to kind of do the due

diligence on these protocols yeah that's a that's a very good question and uh you would be disappointed of the answer because frankly we started to to um take the ones that our clients uh wanted and also the largest one right like you you you know um um we assume that a a moreful work grade protocols when we start to to to offer them to our users then it it starts to get tricky when specifically the case of Maro for example when you have like different vaults different risk profile that are managed by strategist and curators are third party that that is managing uh the risk so the risk is not even uh managed

by the cook protocol itself is managed by a third party so in that case you you also need to to access the risk of the third party so what we doing now naturally is like as we did for smart contract in the beginning we we had only um security team outside of our company right we using Auditors like the SP bit uh and the likes um and and continuous monitoring tool uh um where vendors like exate but but now we have a security team in house uh and we we still use these external providers but we we definitely need an expertise inous um it's going to be the same for risk uh in defi um we we access external vendors um

and we are building a risk team in house so to say hey um why are we pushing this type of Vault on Moro managed by this Creator was this um risk rewards approach uh versus the other because because because the it's not the only greater that managed um volan Mor so so that's that's what we we building up at the moment and and and I guess that's what our clients as well uh will require in the future yeah that that makes a lot of sense when you look at your clients and I mean you kind of you have your ear to the ground here right so kind of when it comes to institutional investors and so

on are they in it just for the yield or do they also kind of believe in the underlying asset do you think kind of in in in as how much do you think this capital is mercenary it's hard to tell um it's hard to tell they definitely have to run a business right and and to see the revenue opportunity so in that sense but but I don't think mercenary is the is the is the right word because if it's if it's a shortterm like a platform that is thinking 10 20 30 years ahead and say hey actually the the world is going to or the transaction um on this planet will be on chain so I

I still want to be there in 20 years cannot offer a yield that is shortterm right if they don't believe for example I give you an example if they don't believe in Bitcoin staking I can tell you I'm not going to site some platforms but they won't offer it uh regardless of the revenue they can make regardless of the amount of Bitcoin they have on the platform which is much higher than any other assets uh because they they they're thinking longterm right they're thinking well I mean I don't really understand the risk yet so I don't want to offer it to my users even if I know the day they will launch it it will be a success uh because you know suddenly people can start to have heals on on bitcoin same for stable coins so um we

we tend to think that most of our largest clients largest platform they think longterm so they they really still assess the risk and I don't think Master is the the word here they're they thinking okay um is this source of yields sustainable is basically uh for our clients lending makes sense because there's borers uh on the other side of the spectrum and it it will um essentially make this um economy better okay I'm I'm I'm able to to support it uh and same for us like we we're thinking long term we we we definitely need to to grow our revenue and and the yield we offer on the platform but if we have one up let say like it's the

end of our business um and if we treat our customers or their customers badly uh it's the end right so um so so that's a good point I think like uh I I think because we're starting to for example on a Mor we're starting to see fintex actually using integrating the this infrastructure to do credit lines right and and and you you working in a way um on this uh infrastructure as well where basically you know you have a wallet you have a card you might have eth on the wallet but you still want to pay on usdc or teder or basically stable coin so that you can pay real life uh we strar to see proper use cases of that uh in

the background uh you need to land your eth against usdc usdt and then you you have a credit uh that where you spend your money in real life um so I think um and by the way I think moving forward the biggest part of the adoption is going to come from these use cases because we think all the fex the new Banks uh the stripe and alike and we have we're seeing that they did do of course a big push on stablecoin will um offer these type of rails and in that case it's like a saving account right you will need your saving account close to your to your payment accounts um and that's what we we trying to to provide we we call it the saving account for the world

um I hope yeah I I hope um uh we we'll make it happen I think this future is uh it's exciting to to us yeah super cool so um what what's on the road map for K in the coming year or so yeah definitely and I haven't think uh any type of rewards on the platform on chain um and then seeing uh onchain movement right I think like for example exchanges the first stack of an exchange that will move onchain is the earn section because they don't need low latency of trading uh and the earn section can move onch B before the others so so we'll definitely push the the the exchanges to to move on chain at least dur section at first because

that's our topic um and we will also look at institutional adoption um worldwide the US um is now opening up um post election with the admin Administration changing though we were still waiting for for more clarity but the the hope and excitement is there and um we'll we'll try to um build this saving account for the world uh while you know still we our mission is democratize value Creation in digital assets we think once you're on chain of course we have a business of course we'll make Revenue but at least everyone will see how much we making our commissions and if if we really driving

value to our clients so that's what we'll we'll try to do cool those are super nice parting words tell us where can we send listeners to kind of find out more about killing yes please go on our website kill. um STI on our dabs directly on the website or via our um Partners Marketplace save for Ledger um we have a Twitter uh accounts uh LinkedIn for the movers and um you know in conferences if you go on conferences and you see a K T-shirt please um come and say hi cool thank you so much for coming on l thanks for Theo