🟢 LIVE SPECIAL: Charles Hoskinson & Mert Call In On Today's Show

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[music] [music] >> JP Morgan, BlackRock, DTCC, Fidelity. The entire thing was just institutions. It's just It's next level. This industry is going to the next level. And guys, I I don't know what else to say. I'm bullish. >> [music] >> He said it. He finally said it. I'm so bullish. And he's bullish. I'm bullish. We're bullish. >> [music]

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[music] [music] [music] >> Five new mouths. Institutions aren't coming, they're simply here. This is the [music] golden age of crypto, guys. Get right. Let's go. Welcome to the nest. See you on the show. Hey. Welcome to the tokenization tower, Thursday, April 16th.

>> Broadcasting live from the financial capital of the world. You're watching the Rollup. As you said, today is April 16th. We have a great show ahead. >> We've got Charles Hoskinson. We've got Mert. We got new books in the studio. Crypto assets by Bernice Intelligent Investor, Benjamin Graham. Shout out to Zama. Let's give Zama some love, guys. Let's get fired up, man. Let's go, Rob. Let's ask What What do you think is more centralized, Cardano or Solana? I don't know, man. We're about to find out about midnight. >> We got Charles Hoskinson. And Mert. Yes, sir. Man. Um, stocks all-time highs. We're here at The Nest, brought to you by Plume. The Nest bringing on-chain infrastructure for

asset management. Let's give Plume some freaking love, man. Let's go, Plume. Yes, sir, Rob. How we doing today, man? Love Plume. Look, I uh I think we [snorts] just had a riveting conversation with a mystery guest. I don't know if it's public, but absolutely banger. Char- or Cathie Wood recorded podcast, one of our first in a while. >> Yes. Coming soon, Monday on the roll-up. First thing in the mornings. You guys will see it then. It was a banger. Yeah. >> Bullish. It was >> look, that was that was a great time. Uh we talked about the tokenization thesis.

She agrees. First, you start with stablecoins, you start with the non-speculative assets, you go to treasuries, you go down the risk curve, tokenize equities. All of these things come on chain. Larry Fink said so. Yeah. >> And so, he did. It shall happen. The largest asset management company in the world is going on chain. They are tokenizing their ETFs and their assets, and I heard they're choosing Ethereum. Uh Indeed, they are. Let's get to today's topics, Rob. >> Rob is always going to defend his Ethereum bag, no matter what. Live from the tokenization tower. Midnight founder joins the show, Charles Hoskinson.

Helios CEO, Mert, joins the show as well. Guys, we are in for a show today. I'll tell you that much. We are in for a show. It's going to be fun. We're going to talk Zcash, Midnight, get caught up with Hoskinson. He's dogging on the um quantum stuff as well, after Corey came on yesterday. And Yeah. >> Yeah, he's Yeah. >> Look, that that was actually one thing I wanted to mention to Cathie, because in her big ideas for 2026 report, she mentioned how obviously there's all of these converging big technologies, robo taxis and data centers on the moon and all these crazy convergence of technologies.

Yet, she said quantum is still like, I think aggressive, it was like 2040, and then conservative was like 2060. And so, still 20 to 30 years like from now. Um the reality is that, you know, you just see this on the timeline. You see there's fear, people are saying that the institutional capital is not allocating to Bitcoin because there's risks of quantum. And so, as much as like, you know, uh Corey wanted to deny this yesterday, trust Kathy, you know, in terms of her research and analytics on this as well, in terms of, you know, realistically when this becomes a possibility.

People are front-loading the risk now. And so, >> I'm just saying Q day is not coming. And so, how do you But you still have to overcome the the fear? Right. And I think the point is that the institutional investor is fearful Right. of Exactly. this narrative for Bitcoin. So, we will talk about that a bit more, guys. We are going live from the Tokenization Tower. Today's topics powered by Trezor. Use code roll up 10 at trezor.io to grab yourself a Trezor, one of the best hardware wallets on the market. Let's give them some love before we move in to Markets and Weather today in New York City and in Miami down south in Florida.

Before we do, we're going to tell you about Frax, our stablecoin partner here on the Rollup, building infrastructure for the future of digital money, open, stable, borderless. Start using future digital money today at frax.finance. Guys, it is warm in New York City today. It is 85, sunny, feels like summer. And yeah, I mean, the trench coat season is clearly officially over. It's probably about the same the same temperature in Florida down there, Rob. It's definitely warm here in New York.

Oh, yeah. It is warm down here. It's warm up there. Spring is here. Winter is over. >> I see Eigen is up 20% today. What's that? Interesting. Eigen is up 20% today. Let's go to our markets. That was weather sponsored by Relay. And he's getting distracted by the charts. Let's kick it over. Let's go to markets powered by Zama. Yeah, a little bit of a mixed bag here. We're sort of figuring out how we're reacting to stocks hitting all-time highs. Bitcoin up, ETH down, Solana up, Chainlink up, Near down. Everything kind of sort of flat on the day. 1% here, 2% there.

What do you think's going on with Eigen? I don't know. Uh, they are obviously going into the um AI cloud narrative pretty hard. Yeah. So, I think that's probably driving something. Um, equity is just absolutely flying. I mean, they're up another half percent or a little bit or a quarter of a percent. All-time highs. Oil is bouncing up a bit, but really kind of being stable. Crypto's just not moving. Um, and it's a bit worrying, I think, if you're a crypto bull watching stocks rip, you're a bit worried right now.

But, at at the same time, I mean, we are we are literally just on the edge right now for Bitcoin and for Ethereum and in terms of a massive multi-month range breakout. It's really really hard to be bearish here if you really if you want to see this market go up, this is the time where you're putting your neck out a bit and saying like, "Hey, you know what? I want to see this market go up. I'm going to ride this thing." We're literally at the cusp of resistance here. We'll see. We'll see, you know. Um But yeah.

We got a message from one of our portfolio companies. This is the state of Crypto Venture. We are going to extend our cliff for another year. So, instead of a one-year cliff, you guys are getting a two-year cliff. That was uh it was quite the message earlier in the week, just in case you guys were curious as to what the state of Crypto Venture is currently. Yeah, that certainly uh that certainly depicts it well. Um yeah, we are on the cusp. It really feels like this is a make-or-break moment. We've got to hold this 74 75 level. We've got to start pushing higher to keep the momentum up. Otherwise >> 8%. ETHFI up 6%.

Okay. It's another >> Celestia up 20% today as well. 40 cents. Wow. There's a lot of green on the board. Look, you know, Ethereum, the ETH Bitcoin ratio, I'm not going to harp on Ethereum here, but just it's an index for the altcoin complex as a whole. Yeah. You think we just continue to outperform uh the big orange? I don't know. What is it looking like? Uh let's see. ETH BTC here. I mean, it's just kind of just slowly just making its way up.

>> up. Yeah. I don't know, man. I'm I'm a little bit taken aback by the lack of follow-through from digital assets compared to equities right now. It's not It's not super It's not super inspiring for bulls. But I think we have a very strong chance still here, guys. So, I'm staying strong on hyper liquid. Um and again, Quant is saying that we're at least half a year too early here. So, see who's We'll see who's right. Um our today's It's fascinating just to respond to that because, you know, we've had institutional capital allocators in the tokenization tower telling us that this

comeback if you will is going to happen sooner. Yeah. And so hearing contradictory things here on the roll up It's just funny with the four-year cycle. If it just plays out to the T again it would be it would be it would be quite the simulation. >> I mean the way that would work is that usually we got a one-year [clears throat] downturn, one year before the halving we start to pick up and then the halving happens and then one year after halving is when we get the all-time high. That that following year the cycle resets markets go down and so that would mean basically buy 2027 because you got the halving in 2028

and then you got an all-time high shortly thereafter, maybe late 2028, early 2029. Yeah. >> Which I mean serendipitously aligns with election cycles, liquidity cycles Yes. >> kinds of things. Yeah, I mean digital asset market is powered by Zama, encrypted transactions, encrypted crypto on Ethereum with USDT as the leading pair for them. Guys, let's move on into the news. Before we do, let me tell you about our premier AI partner of the show Near, near.ai to learn more about Iron Claw and everything that they're doing there at the Near team.

Guys, we have quite the news cycle hit today. Um we got new fud. What a surprise. In the bull market in the bear market you get never-ending fud. Here we are with more fud, this time from Jon Stewart. Uh 154 billion dollars of illicit crypto flows. I also actually heard or saw a tweet from Bloomberg saying that they were reporting that only 6% of crypto taxpayers actually filed their sales with the IRS. Um this is Daily Show host Jon Stewart highlighting that 154 billion in crypto was used to fund illicit activity 2025.

I find it hard to believe this. Let's listen to what Jon has to say here. Last year uh a crypto uh organization estimated crypto company estimated that 154 billion dollars of illicit activity was financed via cryptocurrency. 154 billion last year and that was a crypto company that made the estimate. Here's what's [ __ ] crazy about that. So Donald Trump is literally shilling for the product that allows our enemies to avoid our sanctions. Is that what this ultimately Yes.

>> wild It's wild and to give you an example of how deep the corruption goes, the biggest stablecoin company by far is this company Tether. And Tether is their broker is Cantor Fitzgerald. >> He's Cantor And Howard [clears throat] Lutnick The commerce Yes, that's how I mean guys we're talking about >> Tether Yes. And like who knows what's actually going on cuz you said it's synonymous, but is it possible that through Tether Russian oligarchs are moving oil to let's make it worse. Moving Iranian oil to China in exchange for drones and weapons.

It's not like It's not possible. It happened. It does happen. I mean if you you can write you can read these stories and profits from that. Or his kids technically cuz he's technically not that but I mean come on what are we talking about? Yeah. Holy [ __ ] Oh yeah. And then I mean can we talk about Jeffrey Epstein for a second? Uh I I'm not that I'm aware of. >> [laughter] >> I don't I don't think you're allowed to. Yeah, oh boy, let's talk about it. an early crypto dude? Is that what that was? >> So, his sex trafficking was enabled by that same system. One can assume. I mean, we don't have evidence of it cuz again, pseudonami pseudonamity of the the ledger and who knows, but what we do >> And and redactions and redactions. And redactions. But, here's what we know. We

know in the emails that Epstein was uh funding something called Bitcoin core development, which is the group of programmers, software engineers who maintain Bitcoin's operating system. Yes, there are people behind this supposedly, you know, computer completely computerized future. So, he was funding that through the MIT Media Lab. You remember the MIT Media Lab? There was a blowup some years ago, big article in the New Yorker. It's like this offshoot of MIT this guy Joi Ito was running and they were had relationships with a lot of very wealthy people, including Bill Gates, and funding various projects. So, Epstein was was basically funding, keeping the Bitcoin system alive in 2015 at a point when it was kind of

languishing. Silk Road had been shut down. There was a lot of fighting. And and why would why would Jeffrey Epstein like crypto? Well, if your main businesses are blackmail and money laundering, you know, We have We have buried the lead here, Ben. >> [music] >> Oh my gosh. Last year, uh Oh, man. >> Where do you start with this one? Trump is going to get the entire digital assets space into some serious serious serious serious serious narrative violation, sentiment violation territory. I mean, the Democrats are going to come out in

November and just tear this stuff apart, man. As you said yesterday or day before um Epstein? Lutnick, Iran, Russian oil, oligarchs, China. I mean, it doesn't really get much worse. Now, you can see how they string these things together. Yeah, I mean, these guys are just trying to get a clip. But I think that's how >> trying to get clips, man, and the collective intelligence of the world is just dropping drastically.

>> And so the clippers are going to generate this, and then it's going to make their its ways into the social media feeds, and then into the politicians' heads, and then the politicians put it into the laws and the regulations, and then all of a sudden our industry goes kaput. Man, I mean, I these types of takes to me, I don't even really worry about them. I'm sure maybe they are the mainstream take that is problematic for people who don't really understand what's happening, but I As you've been in the industry long enough, all you've ever heard is this is used for illicit activity, for gambling, for dark web, for uh illegal, you know, operations.

And so I don't know. The The big numbers here that's a little bit disheartening, but I mean, once you've been in the space for several years, you've heard this 10 times. I don't care if it comes from Jon Stewart, if it comes from Trump, if it comes from freaking, you know, Muhammad Ali. It It It's the same same stuff over and over and over again, and you kind of just learn to put it in the back and just keep going forward. So, you know, what's funny is like these guys these guys are profiting off of the system that is allowing them to have the rich get richer, to have the

uh monetary policy from the central bank allow them and their entire family stock portfolios to absolutely go to the moon the last 30 years with a really not a whole lot of constructive output from that portfolio. Just put the money in, watch it go up, watch your home value fly to the roof. All of this inflationary and money printing of course benefited guys like John Stewart who are in the older generation. Meanwhile, you got guys like us come in, look at the stock market trading over 7,000 today the S&P straight straight up only parabola. These guys have just gotten rich off of and then they have the audacity come in and say, "Oh, we missed this thing and so it must be illegal and must be a scam." Get the

hell out of here, man. Stay on your boomer train. I'll just say what I have to say about that. I mean, I was going to I was going to fight you on that, but I think it's I think it's funnier to just go with you and just add to the the fire here and say, "Look, now it's the AI companies propelling the S&P forward and they're taking our jobs. They're retiring. They don't need jobs. They're profiting off of our lack of labor." Terrible. All right, guys. Well, let's move on. Um I Yeah, I I don't have anything to say about this. Uh Professor Oh my god. Here we go. All right, play the damn video.

Play the damn video. This is just I mean, how much worse can it get? So, the moment people people recognize that this is a CIA operation, people won't put their money into blockchain. People won't put their money in into Bitcoin. They'll they'll they'll be like, "I mean, uh why would I do that?" You have to ask yourself this question. Where are the blockchain servers located? Right? Because I imagine if you're able to control the hardware, you can also control the software. I don't care what they tell me tell me about open source and all that. I want to know where the databases are, where the servers are physically.

>> [laughter] >> So, the moment people people recognize that this is a CIA >> Unknown servers and databases are the cause for this guy, Professor Jang, to think that uh this entire industry is controlled by the CIA. Like, what is this guy even saying right now? >> Is he um Is he satirical? I don't know. He might be. >> I mean, that sounds like jokes. I mean, look, the concept of decentralization is hard to grasp. Like, it is hard to understand that you have like these computers distributed globally, they competing on this really hard math

puzzle, and the one who competes it or completes it, some pool or single gets this reward, you know, who started this thing, the immaculate conception. Look, I get it. I get it. I get it. I get it. But, to come out and to just say that due to the unknown location of the servers and databases that is a CIA operation just makes absolutely no sense. I mean, what is this guy saying? Like, how do you even How do you How do you listen to this seriously as a consumer? The problem is though, I think that guys like John Stewart, Professor Jang, people actually listen to this, and they go and they tell their friends

that they saw a clip on Twitter saying that Bitcoin is CIA, and it spreads. Yeah. And of course, the good spreads faster than the bad. And so, we're going to be stuck in this world of perpetual FUD. Like, we might as well just start FUDing just for the sake of creating more additional FUD, so that way that this silly stuff doesn't actually keep surfacing. I remember when this kind of thing would actually move markets. Like, people like John Stewart that would claim these things, this guy would claim things, CIA operation, Epstein ties, would actually move the market. Market's gotten so much more mature that now we have institutions [clears throat]

that are just buying. I also think it's going to be hilarious when, you know, if Democrats win the midterms and they're throwing all kinds of lawfare at Trump and and you know, impeaching him for World Liberty Finance corruption, but BlackRock and anchoring like all of these institutions are going and just like pushing tokenization to the absolute limits. Yep. The industry is going to continue to progress and the narrative is going to be completely backwards. And then I think you might see asset prices rise despite narratives and then the retail gets disillusioned with the government and says "Wait these things are going up no matter how negative the sentiment is.

I'm and then people are So there's going to be some holdouts, people that never buy despite their disbelief. They just cling onto the to to the contradictory beliefs. And then there's going to be people that realize that, you know, the government's going after Trump for their own motives. They're facing him for corruption. Uh these things are continuing to go up. They're going to sacrifice They're going to say, "This government doesn't know what they're talking about. I'm going to buy this thing anyway despite the narrative violation." And then they're going to go and then it's going to go up and they're going to be they're going to be well off for making that decision. Yeah.

All right, let's move on here from uh Professor Jang. I think uh I think we've we've had enough of the random fud. Uh no one is ever bigger than the market. The market will always win. Uh Lily Liu, president of Solana Foundation, explains why liquidity is the ultimate force in crypto. Let's see what she has to say about this. No one is ever bigger than the market. The market will always win. Liquidity will always win. And people will ultimately trade off every last thing in order to be part of the largest market. That's just the force of the market.

That's, you know, kind of standing in the face of a tsunami. It doesn't matter how well you built the house. And so, given that, the the idea that you could potentially create a marketplace that would be available to 5.9 billion people, which is the population of people on the internet, there's no pool of liquidity which is ever going to be larger than that. And I think that ultimately, that is the end of this kind of logic of, "Okay, well, if I can distribute to everyone on the internet, what does that mean?" It means that you could potentially access largest liquidity pool in the world that could possibly created, and that's going to be more powerful than really anything else, uh which I think is also another reason why having unified architecture, and kind of go back to, "Okay, well, what are blockchains actually good for?" I

think that uh that reinforces why the architecture of Solana from the beginning has been the preferred one because it prioritizes number one thing about financial markets, which is having unified liquidity. Yeah. She's basically like the the monolithic thesis in a nutshell, but now for institutions. Like she's basically saying, anything that's spread out across different chains, that's not unified, that isn't able to like go all together, doesn't make as much sense to institutions. The reason that we have an advantage in the blockchain world is because we have a composability effect with the on-chain protocols, all within the same state, all within the same

chain. Doing this on Solana at scale makes the most sense. That's why we were able to uh build this architecture in this way. That's why we thought about doing it this way. And the modular concept or the roll-up concept or the multi-chain roadmap doesn't really make sense here. Should all be on Solana. Everything should be on my blockchain, and this is the future of finance. And I mean, look, to the institutional people, I think it's is pitch. I think it makes sense. Why do you need everything else? You just just build on Solana. What? Why do you need Ethereum and all these other blockchains and all these other just put everything into one put all your product suite into one blockchain. We'll handle your trading,

your perps, your yield, everything. You don't need a multi-chain strategy. Just come build on Solana. You're telling me that I can have my institutional capital right next to creator coins and pump fund Trump's meme coin? They can share liquidity pools? This kind of composability is available to me and my trillions of dollars of allocation? Are you Yeah, are you are you telling me that the 280 No, I'm not going to clown on Drift. Uh people lost money. That's unfair. Yeah, Drift um I think we're going to talk about this a little later.

There's there's some uh recovery in there. So, we'll we'll get after that. No actually um Lily Liu as she was describing this thesis about this vertical integration, this unified architecture of Solana, um I also remember Logan Jastremski coming on the show talking about how trading is the ultimate product market fit use case of blockchain. These things go hand in hand and I could see a scenario. I don't think it's the scenario that will play out, but I could see one where trading happens on a fast throughput high throughput chain like Solana and then duration assets. Think um treasuries, right? Like these things that you like you buy them in batches. You do order block trades. You

you don't really need high-frequency treasury trading. Maybe to trade the interest rates, you know, but then ultimately those things are going to settle and then you're going to move the the treasuries themselves. That could occur on something like an Ethereum where things are a little slower, but maybe you have a higher sense of security. You want resiliency, security, you don't care as much about throughput. So, duration. I I do think that maybe there's you know, there's something to say about the fragmentation of the liquidity in that in that world. I also could see how if trading is one of the primary use cases here, well, Hyperliquid's got a pretty freaking good moat.

Right? So, it kind of feels like if if this is kind of where we're headed, Ethereum's playing more on these like duration stablecoins >> playing the maximum throughput, not playing any decentralization games. In the same way that Ethereum was between a rock and Okay, look, this is a really really interesting thought to have to think about in the >> tell us more. In the same way Ethereum last cycle was between a rock and a hard place between Bitcoin as a store of value and Solana as its high throughput fast chain for all of DeFi, for all of trading, Solana finds itself in a very interestingly similar position this cycle ahead because Ethereum has cemented itself as

the home of duration assets, uh um lending, RWAs, tokenized assets, tokenized equities, and everything there, and Hyperliquid has established itself as the primary leader in trading. Solana's kind of in the middle doing a bit of both, but not dominating any single one, and it's a very interesting and peculiar place to be in from a price outperformance perspective as well. I expect to see an interesting dynamic play out there. We had somebody in the chat saying that Professor or Professor Jang has recently blown up on social media because he's been super accurate in predicting events, especially Iranian events. He has social aura now, I I I suppose.

Um so, all right, guys, let's move on from Solana. But, Rob, that's my rock and a hard place >> No, it make It makes sense. I I always think it's funny when people call their own thoughts interesting, but, you know, >> I mean, like a interesting thought experiment. I think you're right. It uh I I think Solana's in this in this middle area where, yeah, Ethereum owns duration assets. Uh you can just look. I mean, this was also in Cathie's Big Ideas deck. Uh Ethereum just outpaces every other chain in terms of the quantity of assets tokenized on it. Hyperliquid is dominating trading. It was pretty interesting to hear her talk about the big four, Bitcoin, ETH, Solana, and Hyperliquid.

>> Yeah, I mean, look, Solana is sort of just brute forced its way up there. Yeah. >> But, you can't keep having just cracks in the infrastructure. Um Yeah, we'll talk about that. >> They need to fix this exploit issue. Let's move on to uh our next post from uh I believe it's uh Raoul Pal talking about Metcalfe Metcalfe's law being the best way to value blockchains. He again is on this kind of wave of network effects from L1s being the main primary kind of go-to for how we should think about valuing these things. Value transacted per user uh and user growth. And so, again, I

mean, this is like the other side of the revenue meta where it's like, "Look, guys, stop fixating on revenue. These networks are just focused on expansion, user expansion, growth, and making that happen at scale, not really focused on on charging fees for block space on L1s and L2s. That's not their main initiative. Their main initiative is to get as many users on chain and increase the value transacted per user rather than making money today. Rob, do you agree or disagree?

So, um think about the way that some of these companies are valued uh today. And and specifically think about high growth potential companies. Uh I think companies with their real earning potential, you know, decades into the future. Tesla, Palantir, a lot of these AI companies, you can put Ethereum and some of these blockchains into that bucket. They are forced They They have um high multiples on their on their revenue, right? Because people are projecting them to make even more money uh further down the road into their high They have a higher market capitalization now to help fund that innovation into

the future. That multiple's a headwind because the longer that they go on without generating said revenue, the multiples compress. And so, you can think, you know, something like Ethereum might have an infinite, you know, uh multiple uh to their earnings. Tesla, I think is 40 or 50x. You know, these These are quite high. Typically, you know, the stock market, I think, is around 10 to 11. And then you have uh some of these SaaS companies that have got compressed because their time time horizons are so short now that they're at like five to seven. Yeah. Um And so, that is a headwind. Those earning multiples are going to compress, but the idea is that they can generate so much more revenue as they scale that they will start to compress, but

Metcalfe's law is going to come into effect and say that they have that many more users, that much more revenue. They don't need to multiply their earnings as much in order to justify this high market cap. And so, Metcalfe's law is, you know, born from the telecom wave where they said that the um value of a telecom network is proportional to the exponential of its connected users. Basically, you take the number of connected users to the network and you square it, right? And then you get the value of that network. And so, similarly, you have that playing out in blockchains. I you know, but but you have this headwind of this earnings multiple. And so, I think the way to invest this into this thesis

is you go at the app layer now and you go at the infrastructure layer later. Yeah. Because you've you've already got high multiple. If you could have gotten into some of the infrastructure private rounds before they scaled, would have made it a lot more sense because then you could have capitalized on those high multiples, gotten in early, and then and then rode those multiples higher. Ladies and gentlemen, Robbie is right. I think that that revenue is going to keep mattering in the immediate term, Rob. But we're going to find out. We're going to talk to Charles Hoskinson, the co-founder of Cardano and of Midnight about his Midnight launch and what he's working on in privacy.

Charles is obviously an American entrepreneur mathematician and blockchain pioneer, co-founder of Ethereum, and founder of C and CEO of Input Output, the company behind Cardano. We're really talking about Midnight, privacy, and what's happening here. He's committed 200 million himself personally. I do want to ask him about this quantum stuff that he was talking about. I thought it was pretty funny, pretty interesting, also that we had Clo Rick Seen on talking about it. So, let's bring Charles up and let's get the show on the road. First guest here. Hey guys. Charles. There he is. Charles, welcome to the show. Good to see you.

How you all been? Good, man. Good, man. Prob- probably not as busy as you fighting all the quantum uh quantum bulls on Twitter. I got six companies, man. I don't sleep. >> [laughter] >> Well, congrats on the Midnight launch. The the mainnet was March 31st, I believe. Um you had some big companies in there as federated validators. Um maybe just give us the high level here, Charles. Why Midnight? Why does this make sense from your kind of purview of the space and what is needed going forward? And really kind of like what is this product? Yeah, so I I've been in the industry a really long time, like a decade and a half. And one of the problems with being in the industry is

that everything starts repeating itself and rhyming. You know, so you hear the same narrative again and again. So you guys probably notice this too cuz you've been around for a bit. We're like a big company will announce, "We're using cryptocurrency. We're using cryptocurrency. We're going to do this pilot." Everybody gets all excited. Like "Ooh Google's coming in or Microsoft's coming in or Sony's coming in or whatever." And then like a year or two later is like, "What What ever happened to that Mercedes-Benz bond issue on top of Ethereum?" Or whatever happened to that project adapt with IBM? Like I I remember hearing about it. Why did that thing fail? So actually years ago I took the time to start looking into these things cuz I was interested myself. I said, "I want to, you know, big people come on in do things in the space." And

generally speaking, they fail along one of three lines or or collection of the three lines. So it's either it's too hard to use for their user base, the compliance team or regulatory side goes crazy and they say there's just no safe way for us to do this, or the the balance of privacy and publicity is is somehow mismatched and they have to do all this off-chain stuff to add privacy in uh and then it's no longer a blockchain cuz you have like a centralizing function to do that or some combination of these types of things. So uh what we asked is could we build like a metachain that's like the chat GPT of of privacy and simplicity and compliance and it can work with Ethereum and Solana and Bitcoin and Cardano and these other systems and people can pay in the assets

they want to pay in. So they can pay in Bitcoin or SOL or stablecoins or what have you. And what it allows you to do is reason about these things, privacy and abstraction and compliance. And then it makes it very easy to build these things into your application. Whether that be a DEX or that be a prediction market or a privacy-preserving stablecoin. And and where it gets really fun is then you can start facilitating cross-chain activity. So you think of like Bitcoin DeFi as an example. Let's say you're a Bitcoin holder, you can lend your Bitcoin to a stablecoin. You can do that as a taproot transaction on the Bitcoin network. And then you can deploy that stablecoin in some yield bearing thing somewhere and then you can as you get yield buy Bitcoin with the yield and then it comes to your wallet.

Now, the end user doesn't want to do 14 steps, know how four dApps work and six networks they just have an intention. Okay, so like a chain abstraction type of deal and an account abstraction type of deal. I want to make yield with my Bitcoin. So, I want to click like stake my Bitcoin or something like that. So, you click it. Well, somebody has to be a coordinating layer and also you'd probably like to do that with some degree of privacy so people don't know you're doing it and they don't know how much yield is coming in or any of these other things. It's kind of hidden from the space as a whole. So, that's really the space that Midnight occupies. The other thing is Midnight occupies the Web 2.5 space. So, the most valuable companies in our industry are not Web 3, they're Web 2.5. Like Binance is a great

example. There's this big regulated exchange network but then you also have Binance Smart Chain and when you put them together it's 400 million people and CZ's worth more than Bill Gates. Or you look at Tether where it's a regulated business, it's it's got bank accounts and there's an owner. But then there's the Tether asset and that lives on the blockchain side. But it's not really one or the other cuz it's kind of a little bit of both. It's the peanut butter and jelly. So, the problem with Web 2.5 is there's no obvious way to do that that's repeatable. So, what ends up happening is they end up building their own chains whether it be BNB Chain or Arc or these types of things. And it reminds me a lot of the like just years ago we had the consortia chains like Fabric and R3 versus the open system.

And open systems tend to win over consortia. So, we really wanted a home that was open that could live above all the other chains. It could be a natural place to put Web 2.5 as well. So, those two those two verticals >> go ahead. The the way that you think about implementing privacy on chain is completely antithetical to the Canton network database institutional private black box then. >> Right. It it it's self-sovereignty is the third pillar of it is like everything's got to be self-sovereign.

You you have to own your own identity, you have to own your own wallet, and you need to be in charge of the disclosure regime. Now, you can negotiate disclosure. It's a two-way relationship or a multi-party relationship. Somebody has the right to say to do business with me, I need to know certain things, but ultimately you're the person clicking the button, not a third party on your behalf. You have to have the ability to click that button, say that thing. And the thing is we have all the technology for selective disclosure. You know, when you look at solutions like ZK me, they can already do ZK KYB and KYC. You can do proof of location and all these other things. You can like you want to blacklist things. For example, I don't want to be under US jurisdiction. Well, how do you prove that you're not a

United States participant? Well, you need to somehow prove like an IP address or some artifact to verify that. Well, I'd like to be able to do that in a zero-knowledge way and say, "Yes, I'm not under US jurisdiction, but I don't want to tell you where I'm at." And it's the same for age verification or any of these other things. And when you have those capabilities, there's no reason for a trusted third party to have all this information and to be a data warehouse. You see, and so Midnight's trying to occupy that part of the space and kind of be the next generation of it. And then it suddenly uh settlement is compliance, and everything is basically algorithmically automated, and it becomes very easy to start building uh rooms of execution flow for applications. So, you can have an unregulated and a regulated marketplace,

and you can put your RWAs inside that marketplace, and everything just runs, and it's all seamless, and basically Midnight can do the routing, and you know, it gets a fee, and you pay your fee in whatever currency you want to pay it in to cuz the way that we designed the tokenomics for it. So, I think there's a big demand for it, and what's nice is it solves the bootstrap problem because whenever you build new network, they're like, "Well, where do you get the users from?" And how do you get liquidity and all this other stuff? Well, we're not telling people to leave Ethereum or Solana or Bitcoin or other places. We're saying, "Use this framework, and you can go now abstract and multi-chain and multi-institution and you get all these emergent capabilities with it and you pay the fees with your own currency. So it feels

like a natural extension of Bitcoin or Ethereum or Solana. Um if you look at like last year 11 million tokens were issued. Didn't really do much, did it? You know. No. None of them were successful. So we don't live in an age of network effect moving rapidly from one chain to another chain. Instead you have to meet users where they're at, not where you want them to be and you have to figure out where they're at, what you can do for those users and how to take care of them. Yeah. Um you know, some of the the entrepreneurs that we've talked to with multiple companies, it seems like there's usually a grander vision. I I take it Midnight maybe leveraging some of Cardano, you know, whether it be users or applications.

How how do you think about your company's fitting together? Uh Cardano working with Midnight, your other companies, everyone working together. What is your grander vision for how this could play out? Well, you know, the partner chain model was really built in for Cardano in response to what happened with the layer two model in Ethereum. The layer twos were solving a very specific problem at a very specific point in time. Ethereum didn't scale. So all these people built these layer twos to scale, but in the process they became quite parasitic. They took the traffic, the token value, the users and then Vitalik is like, well, thanks for all the fish, but you got to come home now.

You have to come and so there's this natural conflict between the layer two and the layer one. So what we wanted in the partner chain model is a true partnership. The the partner chain basically gets something from Cardano. In this case it gets security, decentralization, a stable place to launch a token. And then the partner chain adds uh something uh it get to to the equation. So in this case the partner chain now adds privacy to Cardano and it adds all these other capabilities, Cardano and more revenue streams for the stake pool operators. So basically both sides get something out of the relationship. And if you have a natural partnership tends to stay stable. Yeah, so a lot of these side side chain schemes are like master-slave, you know, like the primary network, uh basically

you're slave to it, you can't leave, you can't do anything. Well, partner chains, we have multi-resource consensus. And so basically, you start on Cardano, but then you can leave. You know, you can actually mix and match the the different consensus algorithms. So, if the partnership is not working for that chain, there's a very natural way to drift off. If it is working, they can stay forever. Um and what's really cool is because we use Cardano, we were able to do a distribution for the token. We didn't have any VCs. I spent my own money and, you know, we gave the token away for free to eight ecosystem seven blockchains. 33.6 million accounts were eligible. And so we were able to do this nice beautiful drop. The token launched in December, and within 3 months, it has near ubiquitous liquidity. In fact, at the all-time high in liquidity, it had

$9 billion of trading volume in one day. That's like Tether level or Circle level uh trading volume. You couldn't do that as a new layer one, cuz they have to do all this other work to integrate everything. But that's a Cardano native asset. So, it's kind of like an ERC-20. So, any place that had listed ADA, it was trivial for them to list the Midnight asset and get that trading. So, that alone was worth the price of admission, but then also having a large distribution base and about a million people redeemed out of the 33.6 million, which is a great redemption rate for an airdrop. It's one of the best of all time. Uh you know, so we already have a large community. We already have full decentralization with respect to the asset distribution.

And then we have an operator system to run our network, and those operators have been running Cardano for 8 years, 24 hours a day, 7 days a week. They're very good. They're very well trained. And then when we're ready to grow, we can move beyond that and eventually have a multi-resource network where Midnight can actually be maintained by a collection of networks, like Ethereum and Solana and so forth. And what's really cool is it's directly observing all those networks. So, we can produce a lot of zero knowledge capabilities. Like we can fold all those chains and become kind of like an oracle what's going on in all those systems and get proofs of that. And so it can offer that service to Cardano as well. So it's very synergistic relationship. We kind of built the partner chains that way. We tried to avoid the parasitism of the

Ethereum L2 and say, "Okay, these guys are natural partners and whether they stay or go, it's completely material." The other really cool thing, and this is very unique to Midnight, is by having a two-token model, a private token that lives on that's capacity token on the main ledger of the system, so the Midnight ledger, and then the Cardano native asset that's kind of like the governance and the consensus and the generating function to create that other token, you can separate public from private. And that means you can list ubiquitously. So we're likely going to be the first privacy framework to be listed in Japan and the first one to list it in Korea and other places where they're they're actively removing Zcash and Monero and other systems because it's against their regulation. But yet we still have privacy because of the other asset and

that other asset is decentralized. It's traded on a capacity exchange for a consumption. And the the really cool part two is the tokenomics are non-inflationary then cuz your returns as a night holder are related to the consumption of the network. It generates dust and then the dust is traded on a capacity exchange. So you end up getting an index of like Bitcoin and Ether and stable coins and other things. So as a token holder, you're actually aligned for cooperative equilibria. Okay, so you're saying, "I want more people to use Midnight. More people to be connected to Midnight as opposed to buy night token." It's like, "No, I just want you to use the network and I want as many networks to use the network as possible." So it's a non-adversarial tokenomics, which is a very unique thing in the space. Everybody's a maxi and

this is the first coin I think where there's actually an anti-maximalism built into the tokenomics itself. >> Yeah. Yeah. Um for from the the uniqueness standpoint, sometimes it requires a lot of education. And And there was a a fellow that came on here uh somewhat recently and kind of kind of gave us this this uh this word, this concept of research fetish, which is something that we've talked about with relation to the Ethereum community. You know, some some of this fixation on, you know, these esoteric uh you know, uh whether it be tokenomics designs or protocol designs or or scientific research uh attempts uh without sort of looking at what the market is is demanding and and gearing more for product market fit, especially in the wake of uh in the light of

something like hyperliquid where, you know, they've kind of maybe sacrificed on decentralization, but have gotten a ton of product market fit. What's your reaction to the rise of these sorts of things? You know, you mentioned Web 2 2.5 has kind of been the stronghold of the industry. Also, hyperliquid, you know, given that it's got somewhat limited in validators, but has so much so much traction now. How how do you avoid research fetish and you make sure that you you know, you stay steadfast and build things that people want? Yeah, yeah and you'll notice a lot of things in Midnight are pure pragmatism instead of purism. So so you have three buckets when you build a cryptocurrency and you can't get away from them and everybody's indexed differently. So you have purism, pragmatism, and not and aspiration.

So purism, that's like Bitcoin or Cardano. It's like it's decentralized and this and this and you know, you have to be this way. In our case, formal methods and peer review. Pragmatism's like Solana or these types of things. It's just whatever [ __ ] works or hyperliquid. Let's just go. We want user acquisition. We'll eventually, you know, figure out the right way later on. And then aspiration is kind of like the meme coins. One day it'll be rich, you know, we'll be valuable. It's stuff that's not quite here or it's not possible, but people aspire to it. Every cryptocurrency has some connection to these things and they kind of rotate back and forth. Every market cycle, there's a different reward function and a different winner. So in the last cycle, the third generation cycle, it

turned out that the Solana approach was actually the way to go. In In first cycle, the purism approach was the way to go. The second cycle, Ethereum one, it was kind of a more a hybrid of purism and pragmatism. Uh so, now we're in the fourth cycle with the fourth generation, where we're really talking about abstraction, we're talking about meta chain, we're talking about smart compliance for RWAs, the web 2.5, talking about privacy. Yeah. And and so, I think pragmatism is probably still going to be one of the key drivers, but you also now have a huge index on purism as well and security because of uh things like cloud code. When you look at Mithril and Project Glasswing, we have maybe 6 to 12 months before AI models get to a point where they have superhuman hacking capabilities. Yeah.

And one of the first industries that's going to get hit is the cryptocurrency space because all the code is public, all the platforms are openly accessible, and there's an actual reward for hacking connected to stealing tokens. So, you're going to see an exponential increase in people attacking uh cryptocurrency smart contracts, protocols, damaging networks for financial gain. So, what's going to happen is the industry's going to overcorrect, and and you notice that the Ethereum people are now talking like formal methods, you know, so I created the Hoskinson Center for formal mathematics, you know, back in 2021. They didn't really care too much back then about lean, but now it's like everything has to be formal methods because they're actually they understand that this is coming. So, pragmatism will certainly be important, but purism is

also going to be important. From our point, Midnight, we've taken a little bit from everything. Like, we used Parity Substrate instead of Cardano's uh as the base architecture, so it's all written in Rust, but then we put some Cardano technology in. The programming language of Midnight is Compact, which is a variant of TypeScript, the most common programming language in the world, and we built it from the ground up to be uh chain abstraction and account abstraction. So, when you look at these open standards, you can create Bitcoin wallets with Midnight or create Ethereum wallets with Midnight or these other things. So, we learned a lot from the NEAR ecosystem, you know, for this type of stuff. So, Midnight is really a combination of best practice thinking from about a half dozen cryptocurrency ecosystems cuz we wanted to read index on pragmatism and then we can lean into

Cardano for some of the purism that comes. And so we have both sides basically and you get the best of both worlds with that. Uh and you know, very quickly you can get a large amount of user acquisition. This is why we were able to do deals so quickly like the Monument Bank deal, 250 million pounds of tokenized deposits to be moved on chain. That's a regulated UK bank. It's not a small entity and that's a lot of money to be moving onto a new project. The reason why they feel comfortable is because of that pragmatism that's come through and the fact that we're using a lot of technology that's already well proven and we know where to innovate and you know, we know where to be conservative uh with that type of stuff.

We have a 10-year track record of making mistakes and fixing those things and learning where we go. So we're pretty good at this stuff at this point. Yeah. Charles, I'm curious um I know you're you know, a big Bitcoin bull, you know, and and you're around in that era. Obviously Zcash is getting like this privacy kind of construct as a way to you know, get excitement around it. Are are you a believer in Zcash? Are you bullish on Zcash? Like what is your your take on the state of privacy tokens? Well, I mean Zcash we use some of their technology in Midnight. They invented Halo 2 and it's it's the proof system uh heart of Midnight right now. We have a replacement system we're working on called uh

Nightstream which uses lattice-based folding so it's post-quantum but you know, Zcash's legacy is legion. Um the these guys were the OGs of OGs and they they did many of the amazing things. The biggest issue right now is Zcash not programmable and so it's fixed function ledger and so they they do have a path to it. They created a framework called ZEXE uh for that and they've been doing amazing things but we're the first to market right now with programmable Zcash, you know, so it's it's a big step change and we kind of read each other's papers and there's a lot of uh professional respect and mutual admiration.

Very principled project, you know, the way they distributed was proof of work and the team is you know, they're they're Cypherpunks at their core. So, those are examples of good actors. You know, you may have philosophical disagreements or you may have you know, like engineering disagreements about what the approach is or product market fit, but you don't dislike them or think they're bad actors. You think they add a lot of value to the space whereas other projects, you know, maybe you have a different opinion. The big thing that Zcash has to contend with is liquidity. Because if you look at where regulation is going protocol level privacy where the asset is shielded by default, that is having a harder and harder time

getting listed on exchanges. You know, and so that's why they're losing liquidity not gaining liquidity and they're having a hard time maintaining it. And so they have to kind of always contend with that. The dual token model sidesteps this cuz you have public asset private assets. So, you get the utility of privacy through a capacity token, but then you you basically use a pseudonymous token that has the same characteristics as Bitcoin or Ada for the listing purposes and everybody seems to be okay with that compromise. So, we think we have better liquidity story than they do, but you got to understand it's like there was a different era when they launched their token. It was a very different time in cryptocurrency and you can't like retroactively go back and change the fundamental social contract of your tokenomics. So, we had the benefit of hindsight where as they did

not. So, we learn a lot from them. There's obviously collaborations that are possible and you know, we we we like our our approach to privacy a little bit better because it's more holistic. We're also including multi-party computation and trusted execution and we have direct line of sight how to do homomorphic encryption. They can't quite do that with Plonk and Halo 2. You know, the other thing is our arithmetization in the system, we're going to translate to tensors and when you have a tensor CCS arithmetization, it works natively with all the AI GPUs. So, we can use that hardware in linear scale with that hardware, and there's trillions of dollars of data centers that are being built to optimize for that function. And that's not the case with these legacy systems or what Ethereum is doing with

hashes. So, I think we have a lot better long-term scalability story as well, in addition to a better post-quantum story, and also a more holistic pet framework, you know, for these things. But, you got to understand, it's like I have the benefit of 7-plus years of hindsight on the on that project. So, it's unrealistic to assume that, you know, they're they're they're just going to be able to keep up with with a new project in that respect. But, they have the network effect. Yeah. Charles, you mentioned that you were inspired with some of the tech from Near side, perhaps it was their sharding with regards to creating this kind of like more uh commutative properties with the uh you know, types of different kind of

like chains within this ecosystem or or different kind of shards, if you will. Um do you have any thoughts on on the intense design from Near? >> Yeah, we didn't do anything with the sharded side. So, their sharding scheme is Doom slug. Um it's great, and they're great people. I love the Near people. We actually looked at the intense, uh and we've been examining both the intense and the Near account model, cuz you have to have these days some protocol level strategy for wallet abstraction, account abstraction, as well as chain abstraction. And chain abstraction is like Wi-Fi. You don't invent your own Wi-Fi. There's a standard, adopt those standards. So, there's OIF and the ERC standards and what Near is doing, be interoperable with those standards, and

that's not hard to do. The account abstraction is a little bit more opinionated, because you have to decide what is your root of trust. And really, when you construct an account abstraction scheme, you have to also, at the same time, really have a strong opinion about how to do account recovery. Cuz what you want is to get to a world where the keys live in a trusted execution environment on a phone or laptop, and the user never has 24 keywords. They never have to have the private key or mess with the private key. It's in their custody. It's not connected or possessed by a third party, but it's in an in an environment like kind of like Ledger or Trezor, where they don't actually mess with those keys. And there's some form of interface for that. What people don't understand is that every phone has a Ledger built

into it. It's called trusted execution environment. And actually the TEEs that Apple builds and Google builds and all these other people build for their phones are actually much more capable than the trusted execution environments that are in Ledgers or Trezors and far more secure. Because, you know, you have these trillion-dollar companies with armies of people basically working on this, and you have a much larger attack vector and attack surface for it. And when you look at the the broader world of confidential compute, it's one of the fastest-growing verticals in hardware. In fact, the reports I saw by 2029, confidential compute will be a $50 billion a year marketplace. And mostly it's being driven by AI. 75% of all enterprise AI workloads will be under confidential compute by 2029. So, when

you look at Nvidia and AMD and these other people, they're building these virtualized trusted execution environments into their graphics cards and into their their their integrated cores for phones so that you can do these things. Well, that is the perfect environment for outsourcing computation. That's the perfect environment for a wallet to live within. Then your access control is a fingerprint and a PIN code or a face scan. And then what you do is you just create a recovery system on the back end. So, we worked with Alogrand, Hashgraph, and Ripple through an alliance called Drect, and we developed a decentralized recovery scheme. So, when you put these two things together, you have a 60-second account creation.

You can just scan a QR code, you get something like a passkey inside your trust execution device. It becomes a master seed for a keychain. You create multiple keychains, and every time you have a cryptocurrency, just create a bespoke keychain for it. So, you have a Bitcoin keychain, an Ethereum keychain, a Cardano keychain, and then, you know, because it is universal recovery system, it's easy to go. And by the way, you also use it for your identity and your off-chain encryption keychain. So, then you can link in OneDrive, you can link in Google Drive, you can link in iCloud, and everything that goes to Apple, Microsoft, or Google is encrypted before it gets to them. So, they can't see [ __ ] And then, when you look at the identity side, it's can be generated this way, and then you build your disclosure stack on top of it. So, one

credential can build an identity, arbitrarily many. One credential can build arbitrarily many accounts. And then, you add a name space on it, like Ethereum name service or other things, and then you send to Charles@midnight as opposed to an address. And it just goes there, you know, you don't know the mapping. It just magically does cuz it's a privacy-preserving system, and then you put the intents on top of that. And then, you have the chain abstraction with the system. So, we call this Midnight Passport. It's a seven-layer model, and we even have an extra layer above it for dApps, where we're using web components and web GPU, and it's one-click install. So, you have like the Google Play and the iOS. We don't have to be smart. You know, you have 5 billion people in mobile devices, and you know, these guys have kind of

figured out over the last 20 years how to do that well and have a wonderful user experience with it, and they're super secure. I mean, these things are they they geotag, they're biometric sensors, they have trusted execution devices, and they're you know, there's a lot of money going into making this quite usable. So, what crypto needs to do is add that in. And what's really cool is because of our dual token model, we also are one of the only cryptocurrencies that has uh free transactions if you want. Because you can have user pay, you you pay with a token for something, or you have provider pay, somebody who has night lend their dust to a user. So, an app builder can basically have like a a certain amount of free transactions per day per user just by giving them an NFT.

Cuz you know, when I go to Google, I I maybe I'm not very smart, but I don't see any place where I put a token in to do a Google search. It's free. Yeah. And you know, like all the normal users, this is their lived experience, right? So, why would we go to a model where people have to pay? Usually go in the other direction. So, you have to bring that in if you're going to bring billions of people in. It has to be a simple account creation. It has to be uh free to use, and you have to have one-click installs for your dApps, and it has to be multi-chained by default. So, you don't really care if you're using an Ethereum dApp or a Bitcoin dApp. What's really cool is once you have this, you have standards like the open wallet standard, where you can add agents on top of it.

And then you can have delegation. So, you know, do you really want to figure out how to use all this cryptocurrency stuff, or do you just want to tell your agent, "Hey, go trade some crypto for me, and here's what I want," and it'll go figure that stuff out. So, when you look at intents, they very naturally layer onto externally owned accounts, and very naturally layer onto agentic workflows. And what OWS did is they built a whole standard stack for everything for the agent. So, how the agent has the wallet, X.509 for how they do payments, and with intents, they can navigate any chain, and they can act as a solver and a settler once they have permission to to do that from the application. So, uh so, we're also building that direction, and we have a framework called Midnight City, where we're going to test all of this at

scale, and we'll probably integrate with the OWS standard in a few months, and then we can pull that into the system and make it part of Midnight Passport, and then, you know, it's really easy to use crypto, cuz it's just one-click install with your phone. You never have the keys. You know, if you lose your phone, there's a recovery mechanism. It's secure. And you know, you often you're just going to use an agent to use crypto. And you don't even particularly care what crypto you're using. And and to get the the wallet inside of the TEE, and then you can start to layer on the identity and the pass keys and the security, the replication, these accounts, intents, and so on and so forth. Well, What what what is the initial penetration into that hardware device? Is because the Apple Store, I guess, for for so

long has been somewhat at odds with the cryptocurrency industry and app developers at large have kind of they've had you know these differences where they've had to you know recoup some of those earnings from those apps. How do you initially get this into the hands of you know everyone with a phone? Uh we can, but the viewers cannot. >> Can you guys add my screen share on cuz I actually show you. So, how we do things, we write a specification, and then we actually create a website for the specification. So, this is an interactive website, and this is actually the design of Midnight Passport V1. And we're we're still going through the design and going to write a whole

thing. You're asking a question like here, the trusted execution environment. So, Strongbox is for Android, and Secure Enclave is for iOS, but these are built-in capabilities, and they do not require app installation to work. You have direct access of them. And And the reason why is because of passkeys. So, when you go and to your browser or other things, you create a passkey for lock. Erek is the recovery system. And then you have your wallet layer, then you have your account model, your identity credentials, your naming system. So, this is what gives you that alice@midnight or you know robbie@midnight. Then you chain

abstraction, and then then you have your dapp operating system, and then you have to use a standard for your dapp connector if you want it to be multi-chain. But really, you build this around this idea that you want in 60 seconds for the user to be able to create their account. So, they scan the QR code, and then they get into the enclave, and then you start initializing all the stuff, and then you kind of get some dust air dropped to you so you can kind of use the system to start with and then you link it to some sort of payment capability for perpetual on turn use so in 60 seconds is the benchmark and then you have design principles and so these are some of the principles that we have and then over here we have like 21 different use cases so you have like

that upgrades and keychain sync and encrypted backup and borrowing and token swap lending staking so you can model the flow for each of these use cases as a primitive of how would that work with a wallet system like this and then you have personas so these are different people so here's like Nadia and description of who she is and then what she wants to do and then how does that persona fit in with each of these layers of the system and then you have the off chain and you have the on chain component so the off chain component is all the non derivable data well that has to be stored somewhere so you create an encrypted keychain so you use technology in this case we're looking at Bitwarden's open source technology and you encrypt it and then you basically upload it to OneDrive Google Drive or

things and from the user experience it's just one click link to OneDrive link to Google Drive and it does all the syncing between devices so that's how you move between a laptop to a cell phone to other such things and what's nice is you know this right here is super secure and if you lose your phone you have a a pretty good way of getting that credential back and then everything flows up from it and it doesn't require installing a dedicated application per se on the phone we you can and there's a lot of things you can do but if you want to bypass the web store you just use those APIs or use a progressive web application you know to be able to bypass that but this will go into a special skunk works in my organization called arc applied research and creative

engineering you turn this into a formal specification and into a improvement proposal and then we have several partners that will go and build this with us and about 80% of this is open standards and most of those standards have been around for at least 3 years some over 5 years, so they're pretty mature at this point. So, we have high confidence in the design of the system, and it works in both post-quantum, and it works in legacy. So, you can do it with elliptic curves, you can do it with lattices. And so, what we'll do, uh probably after night stream watches, is upgrade the system so it's resistant to quantum computers as well.

Yeah Charles. >> Um and I wanted to ask you about that, Charles. Yeah, go ahead. Go ahead, Andy. Um I saw you on a clip, I think it was yesterday or the day before, about BIP 361. Um I think you called it welcome to shitcoin land >> [laughter] >> for Bitcoin. Um so, we had Corey Klipsten on yesterday asking about the quantum conversation. He said it was total BS, total VC prop up, just classic narrative to get into Bitcoin's head, and that nothing was going to need to be changed, that there's going to be tons of other advancements in computing, and that, you know, Q day is not something that Bitcoin needs to worry about.

>> Okay. You may have a different opinion thinking that if there's an implementation proposal that goes through, Bitcoin kind of loses its ossification, loses its immutability. What's your take on this quantum side of things for Bitcoin? Uh first off, you know, I I love it when people who have absolutely no idea in the subject speak about the subject. You know, I have some credibility about post-quantum because we worked on post-quantum standards with NIST, the National Institute of Science and Technology, FIPS 203, 204, or 205. Okay? Uh we we also write papers about quantum computers at our research group.

We have over 250 publications, and we wrote the very first paper about Bitcoin against a quantum adversary. We wrote that paper in 2019, 7 years ago. So, it's not exactly like a problem that we haven't thought about. So, it's a simple problem to solve. The problem is you don't like the solution. Bitcoin has three options. Only three options, okay? So, option one is to nothing. Everything's perfect. Satoshi's got What will happen is the entire system will be broken if that's the case, if a quantum computer exists. Option two is a soft fork. And like Taproot or SegWit, you add a new transaction capability, a new signature scheme, and you Yeah, now have post-quantum capabilities, and you run these systems in parallel, and anything on the legacy side will get

stolen at some point. Uh either in use or keys at rest are vulnerable. About 34% of the accounts are vulnerable on Bitcoin. Okay. So, 34% of the Bitcoin supply is vulnerable to a quantum attacker at rest. Um Option three is to actively might mitigate migrate people. Okay? So, you you put in the soft fork, you add the new quantum signature scheme, and then you say you can only spend to that, and if you don't, your coins will get frozen. So, BIP 361 is the most extreme. It's option three. Okay, so they add in the post-quantum signature scheme, and they add a ZK recovery system along with hourglass to to basically try to allow people to recover by proving they they

have the BIP 39 derivations. The challenge is it's only a partial recovery capability. What that means is about 1.7 million coins will be lost if they implement BIP 361 as written. Mostly Satoshi's coins and some legacy stuff. Not good. Option two, uh probably 15-20% of the Bitcoin supply will be stolen. And the reason being is that a lot of those keys that are vulnerable um and they the actual public keys are on the chain, uh they're they're lost. So, nobody can rotate. And so, basically people will take them with a quantum computer when available and just divest them. You see?

So, option two, you know you're going to have a bunch of Bitcoin dumped on the market. And of course, option one is untenable. The whole system breaks down. Yeah, it just all kinds of attacks with the quantum adversary, which are very problematic. And read our paper if you want to know about it. So, will quantum computers exist or not? Google's paper is not the paper to read for that. You what you do, if you want objective reality, is you ask who has the biggest incentive and capability to care about this thing. Cuz those are the people are going to solve the problem one way or the other. You know, if Xi Jinping develops a rare a rare weird disease, it will be the most studied rare weird disease in the history of humanity, cuz he has all of China that are going to do that, right? So, who's

the big 800-lb gorilla that wakes up every day and says, "Okay, our quantum computers are an issue or not?" The United States military and the United States intelligence apparatus. Because if they do exist, it's a humongous issue for them. So, they launched something through the brain of the Pentagon, it's called DARPA, called the Quantum Benchmarking Initiative. It's an open project, you can Google it. If you Google DARPA QBI. And what they basically did is they brought all these giga brain physicists and engineers together, and they created a rigorous way of taking a look at all the different quantum computing approaches that exist. And what they're doing is they're running them through stages, and they're seeing who will have a working quantum computer by 2033, and what the capabilities of that quantum computer

will be. So, already they've had 11 major companies, IBM, Quantinuum, and so forth, uh through, and and all 11 of those have passed phase one. And they have two more phases, uh B and C is what they call them. So, uh there's a strong belief that in the early 2030s, sovereigns and major organizations have a high probability of having some form of quantum capability. And there's this a belief that that will be get more democratic over time. Uh so, what will happen more likely than not is China and America will be probably the two first countries to develop quantum capabilities, and then they'll be available through cloud provisioning, and then smaller nations will be able to acquire it. So, China

will provision this to North Korea and the Lazarus Group will use it to steal everybody's stuff that's not secure. And so, there's probably a greater than 50% chance by 2033 according to QBI uh that a quantum computer will exist. And then that computer will have enough qubits to be able to defeat uh legacy encryption. So, it's it's not a trivial thing. It's not a minor thing. And 34% of all Bitcoin in circulation at rest is vulnerable according to the paper that Google wrote uh in the forensics they've done on chain. And it's pretty self-evident and they also know how to do it cuz they wrote in the paper a quantum circuit and created zero-knowledge proof to prove how that circuit would do these things if it had a infrastructure to run it.

So, yeah, these are mathematicians and physicists and engineers and these are very well-funded endeavors by Fortune 10 companies and nation-states seeking to kill each other or to make billions of dollars. It's not a It's not a VC thing. It's a real It's a real concern. And so, you think BIP 361 is the Yes, it is the most aggressive, but it is the best case for not losing for for losing the least amount of Bitcoin due to quantum. >> Well, in case this is where you run into a problem of philosophy versus business. So Bitcoin should do option two if they want to be philosophically pure. You add via soft fork a new signature capability and you let the coins be stolen that don't

migrate. And then you just move on as an ecosystem and you accept a dump like we accepted the collapse of Mt. Gox and accepted the collapse of the Silk Road. But you understand that Bitcoin has new masters now like BlackRock and MicroStrategy and all these other things. And I don't think they really like the idea of 10 or 20% of the supply going to North Koreans and being dumped on the open market. I I just It's not really a good world for that, man. That's That's problematic. And the issue is it's not like when they steal these coins that somebody puts up, Oh, those coins have been stolen and and and they're there.

Well, the issue is like how do you prove they're stolen? It's just a transaction that occurs on the blockchain. So, you can't differentiate a theft from an upgrade event. Charles, quick quick quick question. Is there a possible reality here where US gets quantum, China gets quantum, and we have some sort of white hat race a black hat, and the American or the Chinese race to Satoshi's coins and get them before Lazarus Group? Sure. Uh but that would require stealing. And then how do you give them back? You have a custody issue then. It's It's just like, "Okay, I steal Satoshi's coins. Okay, so uh Satoshi, just come to me and I'll give the coin."

He's doxing himself in that process. So, that's that's the fundamental issue is that you And having run into this with the ADA vouchers with Cardano where, you know, we had these people that participated in the ICO way back in the day trying to give them their ADA for like 10 [ __ ] years even at $3 ADA when they bought it to 0.2 cents. And it took 10 years to get 99.7% of people redeemed. That was a much, much smaller set than historical Bitcoin set. That was about about a few hundred people, and we're talking about millions of people here. So, there's no real good solution to just steal people's coins and then create a redemption pool cuz you're just taking an off on-chain problem making an off-chain problem, but still fundamentally an issue. And who wants to take custody of something like that? And given that the US government's

a bag holder, BlackRock's a bag holder, all these other people are bag holders, they're not going to want to live in a world where uh you know, a big chunk of supply gets stolen and cycled. So, they're going to push aggressively behind the scenes for BIP 361, but it will require a hard fork. It's the first time ever that Bitcoin would require a hard fork. And if that's the case, is it really Bitcoin? I do hard forks all the time with Cardano cuz we have a governance upgrade system called the hard fork combinator, and we have backwards compatibility with old eras. We designed the system to be able to do hard forks. Bitcoin was never designed to have a hard fork. It's just not. There's only one canonical Bitcoin at any time. So, Corey and these other guys, they don't think very highly of me. I

don't think very highly of them because they they speak out of their ass and they speak out of back holding. He has absolutely no technical knowledge to back up what he's saying. I've just given your viewers things to check. They can go reference our 2019 paper, which was peer-reviewed, published at major universities. They can reference DARPA's Q I. They can read the BIP themselves. The 34% didn't come from me. It came from the Stanford paper and it's in the BIP written by Bitcoin core developers. >> Yeah. >> These are facts and they're inconvenient facts, but it's objective reality.

Whereas Corey just picks a straw man and says VCs are pushing this thing. No, they're not. Quantum computers, we all want to have them because we want super fast AI. We want to be able to come up with magical new batteries. Nation states want to read each others intelligence reports. Uh we want to be able to have brand new capabilities like, you know, quantum entanglement for communication and things. So, quantum internet and quantum encryption. Uh all these types of things. So, there's huge financial incentives to build these capabilities that don't even matter to the cryptocurrency space and you have hundreds of billions of dollars being put into more than 10 different approaches that are independent of each other. Photonic quantum computers, topological quantum computers, nitrogen vacancy, trapped ion. It's It's not like

we're just putting it like one company and I don't know if IBM can do it. A lot of people are working on this problem and there's unlimited money to like fusion to solve this particular problem. It's going to get cracked. We don't know if it's early in the 2030s or later in the 2030s, but it's going to get cracked in the 2030s one way or the other. Yeah, man. And do you believe in Q day now? I I I'm still been a non-believer of Q day and Charles is not going to like that. Charles, we're going to have to let you go. Thank you for your time for sharing some insights on Midnight, on privacy, on some of the leading protocols and themes, quantum, Bitcoin at large. Um, first time on our show. We would love to have you back in the future, man. Thanks

for joining and uh always a fun time hearing your takes, man. Thanks, guys. This was a lot of fun. Cheers. Same here. Thanks, Charles. All righty, guys. All right, guys. We're going to We're going to roll into uh Mert. Mert is going to be our next guest. He is uh ready in the back, I believe. Uh that was something. Rob, I'll tell you that. Eddie, how are you still a disbeliever in QDay? I don't I don't get it. >> I am and I don't know, it feels kind of silly after that one, to be honest. >> it sounds like you're aligning with Corey after uh after Charles just gave us a DARPA QBI rundown for the ages.

He's going 23 years out. >> to believe in the technical people, you know? You got to have You know, you got to believe in them. But you don't You don't believe in them. No, I mean, yeah, I don't know. I uh I I can see I can see QDay being very, very far out. That's for sure. Okay. So, at the very least, very, very far out. >> Look, this uh this this uh this roll-up journey has uh you know, put us in touch with a lot of very smart people. I like to just believe them. Yeah. Um Rather than just kind of think about it on your own, right?

As much as possible, yeah. I mean, look, Pete, sometimes smart people come on the show and they disagree with one another. And then it's up to us to do the deciphering, you know, >> right from wrong. Yeah, which is the beautiful thing about it. So, um we've got Mert in the back. Let's bring him up. Um what a interesting segue from Charles to Mert. Uh Mert, how are you, man? I am great. How are you guys? I'm good, man. We uh we're talking We're talking quantum and can't tell if Zcash is quantum resistant. Had to get the local zillions on the show to talk about it more cuz we're getting all these different opinions, man, and it's hard to kind of rationalize what's going on out here.

Sure, ask away. Yeah, I mean, Charles just came in though and had a lot of really strong positive things to say about about Zcash just with regards to the tech, to the team. But, we had Alex Prud'homme on the show and he basically said, and he is running a VC-backed quantum company. Let's just put that out there. He said that Zcash is less quantum resistant than Bitcoin because there is not a lot of Zcash in shielded pools. There's a lot of deprecated pools, and there's a ability potentially for a unlimited mint function to happen in Zcash that it would be effectively untraceable.

Well, uh that that is all incorrect. Um some of it maybe is correct in a narrow sense if you are to ignore other pieces of let's say factual information. So, like if you consider the system in parts as opposed to the whole system, then then perhaps it might make sense. And I think um on one of your posts, uh the lead dev, one of the lead devs, dev, uh d e v, or Dave is I'm pretty sure you're supposed to pronounce it. Uh former Osmosis guy, Cosmos guy, now he's on Zcash, and he has a pretty good post as a reply.

>> [snorts] >> There is a also an entire whiteboard session. I think it's only like 19 minutes on Shawn Bow and and Dev talking about this as well. But, um I would say um there's there's a few things to understand here. Um so, one is that there is the star- side of Zcash that's transparent, which is like Bitcoin, and then there's a side that's shielded. Now, for shielded, um we will be quantum recoverable in the next 2 weeks. So, very soon, actually.

Meaning, basically, what you can do is leave funds in the shielded pool, and then you're good. You then have some proof that um like the way this works is you have some proof that shows that you own a note in that pool. And that's it. You can just go on vacation. You can get knocked out for 20 years from some coma, and then come back and all your stuff still belongs to you, right? So, that alone is pretty big. Now, that is on the um Takion, or not Takion, the Orchard pool. So, for people who don't know Zcash, there has been three shielded pools as they kept upgrading the system.

The first two are deprecated, as I think Alex himself also said. Meaning, they should not actually be used. And with the next wallet upgrade, it's going to be super quick to just migrate your funds to the latest shielded pool. And then, once the quantum recoverability comes, which again, only two, three weeks, one, two, three weeks, um then you're safe. You're you're quantum recoverable at that point. Okay. So, that already gets you probably the biggest win in crypto, as far as I'm aware already. Now, um after there's something called Project Takion, which is primarily a scaling project.

However, um it also changes how key exchanges is done in Zcash. So, it changes it from ECC to um a quantum post post-quantum scheme. So, then you also have full privacy soundness in Zcash post-quantum. And that is slated for the summer. And with those two things alone, you're you're quite very, very safe. And then, as a final result, there will be a new shielded pool that will transition from SNARKs to STARKs, which are also quantum proof.

And you combine all that stuff, and you have, I would say, what is, and I've looked at a few of these the best um quantum proving story in crypto. Now Alex might say something like okay, but that is for the shielded pool, right? So what about uh the transparent stuff, right? The Zec that's not shielded. Well, there's a few ways to think about this. One is that this is a very obvious incentive for everybody to shield their money. Right? So it is a and um the shielded pools have a I have a website on this zecprice.com uh and you can see the shielded Zec uh going up over time. We're currently at 31%. So almost a third of Zec and that's the

total supply not even circulating so it's actually more than a third of the supply and that's going to keep increasing as we kind of keep improving the UX. Um and so it's like a very obvious benefit um to just shield your stuff your quantum safe secure then now you're also private. Right? Um and then the final gap there of course is okay, well, what if people just do not shield their money? Right? What if they're like I'm just going to treat this exactly like Bitcoin. I'm not going to do anything else with it. I'm just going to leave it here. >> [snorts] >> Um and then there's again I mean there's even proposals in Bitcoin around this and on Zcash.

You know, we we have the benefit that we're nowhere near as large and so you can move uh you can be much more nimble and have a more cohesive direction let's say without the you know, the BlackRocks of the world and the Corda's and the you know, and then the Corda's being split into many different groups. Uh and then we'll we'll figure out whatever's the best option for the transparent stuff. My my suggestion is get rid of the [ __ ] transparent stuff all together and just make [laughter] everything shielded. Um so that's the that's the state of things. Mer taking you know, the the Zcash hat off putting on the Solana hat but keeping the quantum hat on like what is Solana's like approach to quantum? How how how are you thinking

about this with with Solana? You know, is it important that that Solana go get quantum resistant or quantum proof? How what should they do? So, well, I mean, one thing we know as from Solana is that the core protocol Solana can evolve very fast, right? Even in 2021, we didn't have fee markets, then we added them, and then it was the most scalable. And so, you the there is a a very fast culture of shipping in Solana.

Now, there is these things called let's shorten them for WZ vaults that my friend Dean built, which basically once you migrate your money into this vault, you are you can wait basically the attack out, and then once there's an upgrade to the protocol, then you can withdraw it and start moving it around. Now, there are some interesting considerations because Solana is very focused on performance, of course, and post-quantum signature schemes are much larger than regular signature schemes, which means perhaps there is some hit to performance or latency, but my guess is quantum is, you know, best-case scenario, let's say, 7 years

away. By that point, all the performance bottlenecks have been re-shifted such that I don't think that'll make that big of a difference. And I think Solana's actually working with other Project 11 or another lab to actually prepare a few solutions for the quantum possibility. So, with Solana, you know, my answer is generally something like this is in our bones, like we just ship stuff when there's a problem, and we'll be prepared. Yeah. Yeah. Something that Charles said earlier that I thought was particularly interesting, and of course, you know, he's got his Cardano hat on here in a big way, as always.

Talk He's talking about how there's now this dual token model, right? Where there's a private token and a public token, which kind of allows them to have listings on big exchanges for this private token, or sorry, for this public token. The the private one can be traded on chain primarily, and that kind of also avoids the regulatory dynamic, if you will. I'm not sure how much credence there really is into this dual token model, but that's kind of what his his perception was. I'm curious when it comes to kind of the the the public Zcash side and the private Zcash side. Look, if we get to a world where we're going very, very much into the fully shielded nature, how does how do you think that reflects amongst the

tradability of the asset, amongst the usability, discoverability, right? Like, I think Zcash has a bit of a liquidity issue. Near and tense has helped quite a bit, but even further, if we get into this fully shielded dynamic, whether it be regulatory, liquidity side, I'm just trying to get to a bit of of the bear case here and and understand kind of how you think about that dynamic as it plays out. It's a good question. I think this is a relatively unique concept. Like, it just doesn't exist too much in crypto. One of the things I've done is I've really helped export Zcash to other ecosystems that are tradeable. So,

obviously, we listed Solana as Zcash on Solana. And so, we actually quite a bit of volume there, and has very steadily. We exported two versions of it on HyperLiquid. So, one with Shogun unit, and then one with Bifrost, Bitfrost, something like this. Obviously, it's on Near as well. But but obviously, those are all transparent Zcash, right? You can't actually export private Zcash because you have the zero-knowledge guarantees and the the pool structure is quite different. So, I don't know ex- I think the effects probably would be like, you know, you assume as more and more ZEC gets shielded, then there's less and less liquidity and supply on the trading

desks, which is obviously, um, you know, as demand goes up, supply is not there, and you get some pretty crazy upwards price action or downwards. Um, so you I think that just basically means you get increased volatility. Um, but I so like the interesting thing about privacy, of course, is that, um, reflexivity to the asset can actually help increase the technical privacy property of the asset. Meaning as more people trade, there's more notes that get mixed into the anonymity set, which means that there is uh there's a higher anonymity set, which means the privacy property itself increases of the pool. So, this is I I made a tweet about

this uh 6 7 months ago, maybe, which is that uh for re- reflexivity for any other token is just reflexivity, but for a privacy protocol, it actually has this feedback loop where it improves the privacy of the protocol cuz now there's much more unstructured data uh to to cover like the the the the crowd's track, so to speak. Okay, so more privacy node or more nodes in the privacy pool gives a a stronger sense of privacy for the entire network as you can have more more capital or more users within that network that will remain shielded. Could you just, you know, eat eat like like I'm 5 here for a sec one more time?

Right, so there's a few things going on here, but as capital gets shielded, then obviously um the anonymity set, which is the thing you want to look at when you're discussing privacy, like, what are the guarantees that I have here? Like if the anonymity set is one, like only one person has ever deposited into this pool, then it's not you're not private, right? Like you can just tell who's who. But as more people shield and as there's more transactions going in, out, and the size of the trans- the shielded pool itself, then you get better and better privacy guarantees, right? It's a probabilistic guarantee in some sense.

So as as as more of that happens, um obviously you you get more privacy. However, um as the price goes up because now the supply on the transparent side, which is the tradeable side, is reducing, that draws attention. Um and that attention, obviously we saw we already saw this, right? We already saw this when Zcash um really really went I think it went to about 700. And then if you look at the shielded chart, it's kind of this thing that just keeps going up, right? So like there's that self-reinforcing effect.

Um and so yeah, that's that's that's basically what I mean. Yeah. Yeah. Yeah, I mean it's just simple supply and demand, right? Um one of the things that Rob said actually, Rob, in one of the clips in in one of the posts was um thinking through kind of like the Iran like the Strait of Hormuz and how there was going to be payments in cryptocurrencies and we were kind of talking about oh, Trump was saying do it in Bitcoin and Rob, you were kind of saying that now that Bitcoin's become more institutionalized and Charles literally said Mer, he said uh Bitcoin has new masters now. He says, you know, BlackRock and these are Bitcoin's new masters. Um and Rob said that, you know, Zcash is now kind of becoming this more of this chaos hedge asset that Bitcoin once was

due to this kind of institutionalization, if you will, of Bitcoin. I- Is that like a fair like narrative to to to play on? Like how do you think about the changing of the guard of Bitcoin as it relates to kind of the original vision and then where Zcash kind of can play in there? Well, I think look, you need to look at this from a few levels of analysis, but if you're just thinking from first principles on the technical properties of what constitutes each network, then for something like uh a hedge, let's say, to geopolitical events, privacy is very obviously an extremely important part of that, right? Like, if

you can be tracked, if you can be surveilled, you can be coerced. Um if money like a core very core property of cash is that it's liquid. Okay, and why is it liquid? Well, one of the reasons is that it has no history, meaning um I always accept $1 bill for another dollar bill. However, in a digital world, that's not how it works because every asset has a history attached beyond it, right? So, for example, like, oh, well, this Bitcoin actually came from such and such North Korea, well, you know, we saw this with all the hacks where you can just like use that against them in some sense, right? The history's actually a digitally um unique artifact that works against it. Um and I think

people have their own biases. And and and everybody has their own risk ca- uh calculation that they must make. For Zcash, you are getting true fungibility. Um you are getting complete privacy. Uh however, you are, let's say, opting into the risk of something like cryptography uh bugs, right? Maybe there's some issue in Zcash. Right? Now, I would counter that with saying, well, you are using cryptographic currencies, and so you have already opt in you have already opted in to the possibility of cryptographic bugs, right? So, I think that's like a a relatively overstated point. And then with Bitcoin, the risk is something like, well, not only is it traceable and

surveillable, and by the way, like, the Twitter account for Bitcoin literally says trackable gold, and I'm like, that that is why would you okay >> [laughter] >> and that is terrible yeah but but of course the bigger problem is and nobody talks about this is that this is a compounding network effect because the more connected people become to this graph transparent graph the exponentially more information you can derive from that graph right let's say you added two people that are KYC to that graph and now they interacted with and other people on Bitcoin well now you have just derived many new relationships you didn't have access to and so the more it remains transparent the worse it gets over time

and like some people are okay with that trade-off I mean I obviously still have Bitcoin I don't think that I mean look there's certainly no doubt that it the masters have let's say evolved over time I would say it's it doesn't have a master today I would say it's still quite decentralized but I would say obviously dynamics have changed to an extent and I think from a first principles perspective and if you have a higher risk appetite then you know personally Zcash makes much more sense for me and like look it's just more aesthetic to me like the cypherpunks created industry so why aren't we using you know cryptography to actually fulfill the mission of privacy >> the radar that needs a lot more

attention. You mean just as an industry overall? Particularly with with Zcash. Okay. Well, with with Zcash, I think so other than the quantum stuff which, you know, I'm quite sure that it'll be the most prepared and the fastest prepared. Obviously, there's the issue of scale. Like, okay, do you want to treat this as bunker coin where you just store it there and it's like your Swiss vault and literally Switzerland overseas, which by the way is like a pretty big use case to begin with. Right. Or do you want it to be more used in commercial activity, let's say. So, for example, one thing that will come up a lot on Twitter

is something like, "Oh, well, you know, all the criminals use Monero." And it's like then they use that to say, "Well, Monero must be more private." Well, there's a few things to say about this. What One is that I don't necessarily take my cryptographic advice from drug dealers. Um and two is that it's actually exactly what you said. It's there's path dependency. Right? When when ZK first came out, and by the way, Zcash uh literally pioneered it, right? It was the first-ever production ZK system. That is not a small thing. >> [snorts] >> Uh however, when you when you do something like that, uh it's hard. And, you know, the SDKs, the the trust assumptions, the the integrations with wallets, like it was a huge headache for everybody. And so,

that wasn't meaningly solved until like let's say a year and a half ago, I would say, right? Like, it took a while. And obviously, in that meantime, you use Monero and you amass privacy uh network effects. And that's just the kind of Like, it's the same thing for like why >> [snorts] >> uh vendors in Asia might be or LatAm might use Tron over Solana. It's not because Tron is like way faster than Solana. It's like, this is what I already know uh because it was there for me first, right? Um So, I think that scale question of like, okay, how do we make it such that it's more usable? And so, we have project for this, and we're also re-parameterizing the block parameters. So, lower block

times, bigger blocks, slightly higher bandwidth, better TPS, lower finality, all this stuff. Which will not only help make the cross-chain things with near intense better and faster. But also, obviously, transactions within the pool for, you know, vendor payments, merchant acceptance, stuff like this. I think that'll be a pretty big one. Um diversity of clients is something we're working on as well. Um I don't think I can say too much about that just yet, but there will be more news on it.

Um and, you know, I think there's the idea of like, okay, look, once this asset becomes sufficiently lendy, do you then export it via an alt two such that you want to enable some DeFi on it? Right? So, something I'm looking at is extending Zcash to Solana with a light client such that you can actually, let's say, deposit some shielded Zcash into some vaults on Zcash, and then use it for DeFi on Solana. Right? So, like making the asset more interesting as collateral.

Yeah. Makes it Makes a ton of sense. Um just on the back kind of back on the Solana note, especially with regards to DeFi, um you know, we we've been kicking around this idea of, well, you know, uh Solana, given that it's the high-throughput chain, has the capacity to handle high, you know, frequency trading and be kind of the venue for trading. And then over on Ethereum, they're really pushing this I mean, obviously, you know, large swath of stable coins there. We think that there's, you know, a potential for duration assets. You know, the treasury, it's kind of the things that you don't really need high frequency trading back and forth. Maybe you just want to hold for a long time and just sit on it. It would probably

benefit to have these two things composable but you know, at the moment it seems like Ethereum could be, you know, in position for these duration assets. Solana could be in position for trading as a whole. How How do you do does this thesis make sense to you or do you ultimately think these two converge? So, I I would frame it similar, but slightly different in that I think V said something like Ethereum should be for low-risk DeFi. So, borrow land and, you know, basically what you mentioned.

And then, yeah, I mean, Solana is more for trading. Now, one inherent conflict in that frame is that low-risk DeFi doesn't necessarily generate income. Right? So, when trading activity picks back up, that's when you see, you know, the high rev numbers on these chains like Hyperliquid and Solana because that's just generally speaking where the money is. People It's a time preference of money. Um and then, you know, what that means is that also means that's where the users go. And so, once the users are there and maybe there's some slow bleed into like, okay, well, what are they holding? Are they holding USDC?

Okay, now that they're holding that, it composes nicely with other things like payments, payments which are, by the way, a lost leader. Um and and and uh low-risk DeFi. Right? So, I think Let me put it this way. I think to get a low-risk DeFi ecosystem going is much easier if you are already very good at trading than the opposite, which is to say, it's very hard to bootstrap trading if you have started with low-risk DeFi. Now, I do think there's no reason why both shouldn't coexist. Um but I I do think like, for example, Aave is just um j- just uh very very uh like trustworthy, right? They have a good track record. Um Um, Ethereum is

known for this. Camino is also very good, but like they're just inherently newer, right? I mean, I use them, but like, you know, I I know people who are very early in crypto still have some weird uh preconceptions of Solana. So, I would look at the trajectory and I again, the only mental model I have for this is that getting DeFi going in a lower risk way while you already have it going in a higher risk way, I think is easier than the counterfactual. Yeah. Then I would kind of throw a throw a different variable here, basically saying that and suggesting that in the last cycle Ethereum was kind of in between a rock and a hard place. Bitcoin was very clearly the institutional asset that was getting adopted at scale, ETFs,

actual traction. Solana was the place where all of the trading activity was happening, all of the speculation, anything from the you know, president's launch all the way down to the smallest of token launches. Um, it was very clearly like that that that was where the traction was. Ethereum was kind of in the middle of of of it all, had some store value, kind of you know, you could argue had some trading activity, but didn't really get it like either either or. I think that kind of explained its lack of performance. You're you know, you fast forward to now and you could argue Solana's in a similar spot and here's why. Ethereum is kind of is solidly in this low risk DeFi, institutional DeFi, RWAs, tokenized assets, stable coins, whatever all of

that is going to amount to. >> of tokenized assets. Yeah, it's like it's the tokenized asset institutional chain for lack of better word. Then you've got Hyperliquid who's kind of just gone out on a limb and say, we don't really care about decentralization, we don't really care about anything. We're going to build the most high throughput, best trading experience product on chain for perps and spot, do it at scale, launch our own kind of like EVM landscape, and just do it in a better way than anybody else who wants to compete solely on trading. Of course, you got lighters and asters and these types. And so then you got kind of Solana in the middle, which is growing stable coin supply, a lot of really high quality DeFi protocols like Camino, and has a lot of trading activity on spot for things like X stocks, but also just

things like any sort of tokens, meme coins Zcash etc. Near Starknet these kind of like non-SPL tokens that has done a very good job, but not on the same level of throughput and product as Hyperliquid. And so I'm just curious like how you would reason about this construct in your mind and if you if you see it similarly, if you see it if you see it any different and probably will lead to thoughts on Hyperliquid as well. Yeah, I mean I think the diagnosis is directionally correct.

I would say Solana is certainly the most well-rounded, but well-roundedness isn't necessarily the sexiest thing. And Hyperliquid has really, really uh masterfully, I would say, executed, especially the real world asset perps. Uh like being featured on some of these magazines for like oil perps is no small feat. I think that's quite impressive. Um I I would say though like when you're like it really depends on who the customer is.

Right? So, as a smart contract platform like like like a like a Solana or Ethereum, your customers are generally speaking businesses and startups and and and developers, right? And and for them, what you want to do is you want to give them what I would say is a low entropy stable channel that you can construct things on top of. No surprises, no counterparty risk, things that just work for you to be able to express your knowledge as an entrepreneur on chain. Um I would say during cycles like this where the the sentiment is just awful and like capital early stage seed capital has dried up. That section tends to suffer quite a bit because there's no real experiments happening.

However, like app teams, so to speak, like like Hyperliquid, are of course are not reliant on this, right? Like there is the Hypercore blockchain, but if you look at the activity on Hypercore blockchain, it's roughly non-existent. Their entire success um cash cow, let's say, is the business of trading, which is great. However, it's just not the same game, right? It's kind of like Solana competing with Binance. Okay, sure, you can say Hyperliquid is more decentralized than Binance, that's fair and true. However, it's still not necessarily this same thing. There's overlap, but it's basically like Solana competing with Coinbase or Binance or Hyperliquid. It's I I view it as similar

to that. Um and I think over a long time horizon, the ecosystem that can attract the most startup capital, attention, developers, businesses, tends to basically um I'm not going to say they like win out or something like this, but I think they'll be just fine, right? Like so, one great analogy here is look at the um history and and and market segmentation of any platform today. So, you have operating systems, you have, you know, Windows, Mac, Linux. So, there's three different sections um with different market, you know, shares and different monetization.

You have, you know, PlayStation, Xbox, Nintendo. Uh you have, you know, Android versus iOS. Um you have always these different types of platforms with what they're promising to the user. And I think that's basically what this comes down to, which is like let's say Ethereum is like this low-risk um somewhat slower, but also maybe more focused on something like privacy. And then you have something like Solana, which is just very fast. It's very well-rounded. No inherent weakness, but not um you know, for example, uh running a node at home is not as easy.

Uh and then you have Hyperliquid, which is like, okay, look, this is the product. We're just going to vertically integrate everything there. Um and then maybe they get other people building on that blockchain as well. My guess is that'll be much harder cuz of the counterparty risk present there, but not impossible. Yeah. Um so, that's that's my rough mental model today. Um another kind of more technical thing on this. Um we had Logan Jastremski on talking about his kind of localized ingestion thesis with regards to having multiple leaders for a trading system rather than like a single sequencer or in Hyperliquid's case, like all all of the or a lot of the nodes, let's say, in Tokyo.

Basically, uh suggesting that the alpha in latency should be derived not from proximity, but rather uh availability of information that's distributed on a global setting rather than proximity to a a database or a server. He basically highlighted that uh Hyperliquid is almost like recreating like a better Nasdaq on chain, whereas like the Solana or distributed kind of trading vision is more of like an entirely new design of like distributed set of nodes that that are, again, not fighting for proximity, but rather for information or asymmetric information flow. Kind of creates an entirely new unique design only possible on chain. And he he kind of feels that this is the this is like the step

function change compared to TradFi and and the Nasdaq, which has or the CME or whoever has their has their data center here in New Jersey. And obviously, everyone's very close to it on Wall Street. >> [snorts] >> Um curious your your thoughts on this. Do you Do you agree? Do you disagree? Do you see holes in this? Just Generally, what do you think about this kind of like multiple multiple leaders system that is more distributed? Can that achieve the similar scale as like a single sequencer as a hyper liquid? Does it matter? Just How do you feel about this? Well, I think the last question there of does it matter is the important part cuz I think yes, you can change upgrade the physics in such a way that you get better performance and let's say a

fundamentally new system that does information discovery better. But fundamentally >> Absolutely. It's like who gives a [ __ ] rights Certainly certainly uh my you know, a trader friend from college does not give a [ __ ] about this, right? All that matters for these trading systems, only thing is the retail flow, right? That is that is the only thing that matters. Once you have that that Okay, then then you can talk >> about All right, what's the best way to actually have market structure structure here? But if you don't have retail flow, then you're optimizing nothing for no one in some sense.

>> And so that that just has to be the most important part. And again, this goes back to my previous point, which is to say that to have that happen, you need to be the best place where apps and developers and startups come to to believe that they can build their business there, right? This is why like Axiom and pump and I mean Phantom started on Solana, right? Solana's just proportionate uh ratio, let's say, of successful apps to their market cap uh compared to other chains, let's say. So, for example, like BNB um or or or or XRP for sure, right? And um that part is the most important.

The MCP stuff, look, we can get in a room, we can hash out the designs, you know, maybe half the block times first, all these other things, but fundamentally speaking nothing that is purely technical is going to close a gap with hyper liquid. Like nothing. It is not going to be the new architecture. It's just going to be user base, that market structure, and and and gaining market share. Yeah. Yeah. Merch, thanks for your time, man. Appreciate you joining. I know it's late over there. Uh I hope you were able to stay safe amidst all the craziness going on. It's I assume you're quite safe as you're on the show. Thanks for joining us.

Uh love the uh love the push to the core ethos of what we're doing here with Zcash. I I said in that clip, I think you saw it last week, it just makes sense uh as we get to this institutionalization of the industry, if you will. Um you know, it's really important to to keep these things here. So, appreciate that. Chairman, thanks for having me. Have a good day. >> All right, buddy. See you next time, man. Rob, did you did you leave that bullish on Zcash or what? Yeah. Yeah, look, man. I I I think um you know, we've been hearing a little bit of pushback as far as what the quantum resistance is, but Merch is saying that I mean, they're going to have updates as soon as 2 weeks. So, obviously there's >> pool. Oh, yeah. Yeah, so obviously

obviously they're shipping. Um And also, yeah, I I mean, you know, Charles' projections here 7 years away, even if you know, that that's believing the technical uh you know, field expert here. So, I I I I think at least on the quantum side, they're you know, Zcash is in a in in a relatively good position. Um and then I I still stand by my comments that you know, Zcash is taking more of this chaos hedge uh asset. Yeah. >> you know, I I think Bitcoin is becoming institutionalized.

Uh you know, BlackRocks and and these guys they they don't want Bitcoin to change. They want it the way it is, uh and they don't want, you know, the the wars in the Middle East touching it. No. >> and so, I think Zcash is kind of becoming like a people's coin. It's almost like uh you know, tidal uprising in that sense. [snorts] And it's the it's the ethos coin, too, man. It's the privacy matters coin. It's that. so. Yeah, and it's also, you know, I I like what just kind of reminding us what these things are. Mertz said these are cryptographic secure [laughter] currencies. Like it's important to remember that, especially as Bitcoin has become so so ossified, and now we're we're, you know, caught behind the eight ball with

with Bitcoin. If you know, some of these things were in implemented sooner, it it you know, Bitcoin didn't have to be so far behind on some of these things and now have to play catch-up. I agree. And it it just has, because it's been ossified for so long, it has inferior cryptographic security, which makes it an inferior cryptographic currency. >> And it also can't move as fast. And it's large, so it can't move as fast, it can't implement these changes. So yeah, I think Zcash is in a good spot. I was bullish after that. I mean, it was yeah, it was it was good. It was good. I I I need to get more Zcash. I want to shield it. I want to hide it away.

Bunker vibes. Never be touched. >> I told you I bought the top when it ran up, and I just [laughter] I never I just haven't sold. Let's give Rob some love. I never sold. So I'm still holding it. I I I've held I think I bought it at 600. Wow. >> Um so I almost I pretty much top lasted, and then I've just held it all the way. >> lasting here anymore, guys. Let's get into some of the other uh things that we didn't get to cover earlier. I think that there's a couple more. Um Tom Tom Dunleavy here says, "Paradigm is bigger than AUM than A16Z, Pantera, Dragonfly, Multicoin, and Haun."

Surprising. We had Tom on. Uh if we scroll down a bit, you can see the chart. And yeah, I mean I mean, look. I mean, Paradigm, A16Z, Pantera, and Haun. These are the companies that are going to be able to raise and participate for Series A rounds. Dragonfly just raised. Paradigm's looking to raise again. I I believe Multicoin is without Kyle, you could argue, you know, where they're going to be. a16z two and a half bill, Pantera four. Uh yeah, it is kind of shocking I guess that Paradigm is bigger than a16z, but these six plus Framework, I would even maybe swap out Framework for Multicoin, but either way uh will be the uh six VCs that can raise and

participate in series A rounds in this industry. Um and there is still a lot of competition from what Tom said on series A and above, likely because Paradigm, a16z, Dragonfly, all these firms have raised $500 million and they need to deploy in 20 to $30 million checks, not five to $10 million checks. And so you get these the best series A projects have a lot of competition is what we understand. So the the difficulty here is, you know, five out of these six lost money from 2020 four to 2025. And so >> you you got to look at, you know, the rest of the crypto VC complex, you know, these six are probably much better

off. And if five out of the six lost money, you think about what happened to the rest of the the VCs out there. They they got >> Yeah. you know, destroyed. And so they already didn't have a large principal basis. Add, you know, subtract money from that after losing money over the year uh and and, you know, not only did they not return capital to investors, it makes it more difficult to raise another fund. Uh they also decrease their principal. So yes, I think there's going to be like just like the crypto VC world is kind of like the trenches, especially pre-seed and seed. And then as you get up to series A, you end up with more competition because you start getting into the convergence of these technologies. And

you end up with general purpose VCs that are coming in, not necessarily crypto ones. And they're going to be looking at these deals, too. And so, I think then you get into a world where, you you know, there's 50 billion-dollar funds out there that are like Sequoia, play, you know, some >> That's what Tom was saying, right? Like competing with those types now. >> Exactly. And so, that makes, uh, you know, these Paradigm Dragonfly guys, who have done incredible work, they've been, you know, a massive, uh, VCs get a bad rap, but honestly, they they are helping to propel the industry forward. Um, they are used to being the the big guys in this industry, and now they're going to have to cut their teeth, uh, and get out there and and and fight for deal access with the even bigger

guys. Yep. Yeah, I mean, that's what Tom was saying in these Series A, it's like a Web 2.5 round. Um, and, you know, we just don't we just don't we just can't can't compete with these kind of Web 2.5 companies and their funds, the amount of size that they have, whether it's the AI rounds or fintech rounds in crypto. So, all right, let's move on. I think we've got our lovely friends here, Mr. Mondani, um, standing outside of hedge fund billionaires, Ken Citadel's penthouse. Tom, let's give Mondani something. I think he needs something.

Um, you know, he is going to tax the rich. Let's watch this video. When I ran for mayor, I said I was going to tax the rich. Well, today, we're taxing the rich. I'm thrilled to announce we secured a pied-a-terre tax, the first in New York's history. This is an annual fee on luxury properties worth more than $5 million whose owners do not live full-time in the city. Like for this penthouse, which hedge fund CEO Ken Griffin bought for $238 million. This pied-a-terre tax is specifically designed for the richest of the rich. Those who store their wealth in New York City real estate, but who don't actually live here. But even so, they're able to reap the huge financial rewards of owning property in, dare I say, the greatest city in the

world. And most of the time, [music] these units are sitting empty since, again, they don't actually live here. This is a fundamentally unfair system that hurts working [music] New Yorkers. Now, it's coming to an end. This tax will raise at least $500 million [music] directly for the city. And it'll help fund things like free child care, cleaner streets, and safer neighborhoods. As mayor, I believe everyone has a role to play in contributing to our city. And some, a little bit more than others. Happy tax day, New York. >> Let's take notes. We need music like this. Oh, man. Wowzers.

Happy tax day, New York. Happy tax day. >> Any thoughts as a as a New Yorker? >> I'm looking out in the beautiful day. I see a helicopter. I see Brooklyn. I'm 70 I'm 77 floors up. Um and I can I can relate to a couple of friends who I know in the city who have $5 million or more penthouses with no when they just don't live here. So, I'm sorry to those guys. I I just don't know that this is the right way to think about this. Like, Mumdani's assuming that just parking your money in New York real estate is a

guaranteed way to make money. That's just not the case. Real estate's not a free money machine. It has been for a while. But, um yeah, I mean, this is the best advertisement to move down to where Rob is in South Florida, park up on the beach, grab a beautiful place in South Florida in Miami, parked up, got a place in in Palm Beach, and call it a day on New York. So, I don't know if that's what Mumdani's trying to do, but it sure seems like it. Guys, Palm Beach, Fort Lauderdale, I'm going to be moving to Naples this summer. The West Coast is beautiful. St. Petersburg, the Bay Area. It's the new Bay Area. There's so many great places in Florida. The best thing is the more people that come

here there's still no tax. One [laughter] person comes or 10,000 people are come or 10 million people come, there's still no income tax. The more that people leave California and New York, the greater they're going to have to raise taxes in order to compensate for the lack of income that people are leaving on the table after they leave. Yeah. Yeah. Yeah. Yeah. I mean, look man, I don't have much here other than I thought it was a fun video to show just to show the state of things among Donny's first year. Guys, I think that about wraps us for the day. I think we're going to close out.

Um we got another show tomorrow, but I think Mr. Rob is getting his wisdom teeth out. So maybe Rob, you can tell us how you feel about getting your wisdom teeth out. >> to have big cheeks. I'm going to have a bunch of stuff shoved in my mouth. And so um >> going to be fun. That's what That's what I'm going to be doing tomorrow. You guys are going to be having fun on the show. Um you know, just send send a send a green candle for your boy. Yes. Yes, that I can do. That I can do. All right, guys.

>> We'll see you tomorrow. Let's get some some love for today's show. Hoskinson, Mert, Zcash, Midnight, everything that happened today. Great show, guys. Thanks for being here. If you guys are watching on YouTube, press the like, press the subscribe. We are live every single day, Monday through Friday, 12:30 p.m. Eastern here from the financial capital of the world, New York City, the tokenization tower New York City to Miami. Brought to you by Plume. >> Worldwide. Coast to coast. North to south. >> Sayonara. Have a good >> [music] [music]

>> Hey. >> [music] >> Hey. Hey. >> [music] >> Hey. Hey. Hey.