Rethinking DeFi: Tokens, Tech, and Regulations with Julien & Lucas

Transcript

I think there was a lot of momentum coming out of the 2020 like def Bull Run I would say it was like that year and everything that happened that like finally got people outside of our very small bubble in crypto to actually understand what understand that like it is financial technology stuff that we were um building couple years ago for the centralization are still super centralized and think today that we raising for the centralization I wonder if they will still be centralized in one or two or three years what will be the impact on the Trump presidency from the crypto perspective in Europe if black goes somewhere then people must also go that same pass for [Music]

sure my co-host for today's podcast what's his name Zach Zach all right cool well um I'm here with Julian and Lucas Julian from state capital group WX organizer of unstable Summit and Lucas of centrifuge thanks guys for doing this hey buddy good to see you uh yeah day two of pre Devcon warm up warm up yeah it's already pretty hot um but yeah you know what are the kind of main themes uh that we're exploring here at unstable Summit this year the main teams yeah well we got

a s we have C we have a as a sponsor or as a theme like sort of like broadly what are the topics that you guys are interested in exploring I think regulations one find big companies launching Their Own St FES I I'd say I mean in in general like defi is like now really maybe 5 years old at most right um I think we've gone through like a bit of a period of low interest in it and I think that's like changing again with all the big big companies coming in what we haven't seen yet is like a big like technological move forward I guess except for like some of the Cross chain well maybe like over the last two

years you've had a big shift to like offchain settlement versus onchain settlements yeah um right so like univ like Unis swab X being the most recent one but like I mean kind of like just just the idea that like chains are only used as the last resort most of the trading it's offchain I think now now I'd say like probably next days like what I want to see is just better better like trading models for other products um like today I spoke to someone that's been like trying to optimize the like amm for for fixed income products which like are very different than like crypto tokens so I think there's stuff like that that is going to be relevant I

don't know everyone's trying to meme uh D5 Renaissance into existence I don't know what do you think we're going to have a I don't know like I think for the after the US election uh beginning of next year to be interesting is is this new uh vate yeah and uh from TR bring to BR uh when tring value to Define love sham or just the way that he saw that he could be more in favor of getting elective I think the first four years of trump really got anybody to blockchain yeah so actually market and change I mean massive inflation brought value too

like printing man yeah yeah exact and he's going to print more money it's going to print more money but also are we going to see because of the regulation and because of apply people be more friendly in this new government with P we're going to see like new type of products in city where d space it's a was a good freshman answer so is 2025 he going to be do run in PTO mob I mean I think one one thing it could potentially accelerate is like with you know perhaps more regulatory Clarity or the removal of unclarity that we've had in the last

you know Administration is fintech and trafi being more open to building products on on tutorials like Revol Sable coin I think like actors like rev that are you know fintech actors that are already I think like pretty forward thinking it's it's obvious for them maybe less so like the trafi more like traditional Finance institutional Finance types but it could like bring in some new level of interest and less reluctancy to deploy black brow yeah engaging pretty seriously but we hav like big startup company like rol or we paper launching it own stable coin but this didn't go like as a massive success so having a big startup

company two years ago two years ago it was a Tesla that bought Bitcoin but apparently in some State United States they now starting to get into treasury the accumulation of Bitcoins yeah I think I mean when you look at it like in those companies they take they take like a couple years right to to to react and so I mean I think there was a lot of momentum coming out of the 2020 like defi um bull run like I would say it was like that year and everything that happened that like finally got people

outside of our very small bubble in crypto to actually understand what understand that like it is financial technology right I think like before that most people had like you talk to random person in finance and either they didn't have an opinion at all about crypto or they thought Bitcoin is a highly volatile asset if maybe it's gold maybe it's not I can trade it and that's interesting um and I think like the in 2020 and then like 21 um like more and more people didn't just think about Bitcoin as an asset but oh actually like an onchain Lending Market is actually very interesting and maybe ultimately better than how we're doing it today unfortunately what happened right is like Ty Luna and then maybe even more

so like FTX could like is put a pretty big damper on a lot of their Corp like bigger um companies financial service providers to actually do that like I think now we're like far away from that that we're starting to see like not it's two years ago if well now when you mention crypto blockchain people don't get scared exact I think you pass this Faith since yeah he's changing everything and it's more like people from traditional companies I need to learn how to do it oh traditional jobs they actually want to learn how to jump into the wagon the the chain so I think like and I think if you're like timing that with like Trump hopefully passing some Pro Cryptor legislation or at least like we know that like there won't be a

lot of uh negative stuff coming out I think I mean even even not not just Trump but also all the other like Senate races ever like heavily push in the direction of electing like and they're in the yeah I mean so I think that like just that together with like this momentum I do think is going to lead to a pretty big corporate adoption and I mean back Rock black rock also was a huge win for this industry because it's like undisputable that like as a financial service provider you have to do something in cryp because like black Rock's doing if Black Rock goes somewhere then people must also go that same pass for sure yeah so when uh yeah when Rock goes everybody follows basically yeah if you don't follow them you'll being the the guy that is on his

same shooting yeah I actually one thing I wanted to ask you guys like we're we're all based in Europe um and you know the the crypto sentiment in Europe has been at least from institutions and politicians has not been super welcoming uh and I wonder I wonder if the Trump presidency is going to an adverse effect on on European uh politicians and leaders because like the the general consensus among like EU leaders is that they have some adversity to Trump uh because he's not establishment and so I wonder if like Trump going all in sort of crypto and promoting sort of American values of

capitalism and Free Speech Etc won't have some sort of like a adverse effect where European leaders are taking the adverse stance just just out of principle you know um I wonder if that's something you guys have thought about or like what will be the impact on the Trump presidency from the crypto perspective in Europe I think it's actually a good thing for Europe the Trump presidency in term of monetary policies uh governance and defense in term of political actions so that was a discussion yesterday from the French president maon that was saying that Trump was elected because he served the the Americans but now we need

to think as a as a nation or Europeans how we can actually serve our own Nation our own people so and we know the policy of the US will be quite aggressive towards uh Asia or Europeans so we need to make sure we can first protect ourself and also engage Innovations which for now has been quite slowing down or we've been focused more on regulations so if we have there some show going on in Germany in term of Politics as well yeah so think in term of the two main discussion for the Europeans of right now it's um of course monetary policy so crypto blockchain potentially enter that subject we also have ai big subject and then defense

so if we let the US continue driving Innovations in in Europe and nothing is different from Asia in Europe most of the tools that we using are all coming from us like can be Twitter Google AWS Amazon everything is ring by us tools and we all know that H so I think it's a matter of what other the type of decision that we want to make happen in order to have sovereignity and uh self independence from either Asia or or us yeah so I think it's a good thing and we'll see more either we Embrace this new technology or we even go deeper into feeling as as your parents and I think

regulatory wise I don't agree with you I think we're the first one like with mik and trying to bring some clarity along uh do you think mik will actually promote Innovation or uh like I'm reled to think that mik will help European companies really in I think I think it doesn't necessarily push for Innovation accurac it brings Clarity to what you can do which I think is better than having no no vation think like it doesn't it doesn't lead to someone coming up with the next crazy DJ and D5 prod yeah but it does help with like any regular Financial products and the use of crypto and those I think I mean the problem with with it with it is like the US has the most Progressive

Financial uh Zach is financial mindsets right like like if you talk to anyone like they're the ones that have pushed like Finance forward for the last uh decades so so kind of Europe you don't see that much happening with m just because it's and and and miid like because of I'd say like generally a more conservative Financial system I mean Europe doesn't really have an investment culture mindsets yeah so what I but um I think the minute that some of this stuff starts getting Traction in US you you'll see like Europeans catching up right I think actually the interesting thing is like in fintech right like NE are much better in in in Europe than on the US

like n26 and revolute like compare that to uh like the sign up process with the popular US Bank like it's it's night and day and you see like some like you see actually that is maybe a trend that is moving over to the US I think if we if we see like crypto being adopted in the likes of Robin Hood in the likes of um like some of those other like very consumer oriented projects like we'll probably get um also more of that happening in Europe and and for that like Micah is actually good I I agree with you now it's it's um it does create some other hurdles for like the the def like decentralized stuff but um for like a lot of the users that that like want

to work within a regulated um framework it's it's a it's a decent one uh way better than in us right in US everyone's doing these things offshore like black rock is not is not doing it in in in the US best product they doing it with the BVI products um the only fear that I had is because us is adopting and Nona I it's going to be easier to start a company and they bring him more like to us people being able to build type of product with be J by value order regulations then a lot of people have decided to move to Europe to build uh projects we s the solo of Americans

to uh they might actually s tries and Tam going back to the US but it's easier to raise capital and if it's also easy and friendly to establish and run a company then they might actually go back to the Silicon Dy and what we seen the train over the past 5 years ESP in kter was not M but this massive amount of crypto blockchain family were actually establishing and uh ter of investment yeah a lot of investment kind from Europe and doing the bare Market was more investment coming in ter of trend from Europe for the US so Asia okay might change yeah yeah it's interesting times ahead I mean I like my feeling is like the current sort of

establishment parties in France and Germany and uh the Netherlands and like that block are very traditionalist and and even conservative when it comes to sort of like Innovation and Technology I mean just like look at the you know in France like the discourse around Ai and the discourse around crypto in mainstream media and politics is just like very bearish um now I agree like on the entrepreneurial side there there's it's it's much different but there's such like a disconnect between the way people talk about crypto and talk about Ai and and the reality on the ground of like people building um I think that that needs to change in order for like the Sea of change to come in you know Neo Banks adopting it Banks adopting it

Etc what else are you excited about this week I mean I think I think in defi what I am what I'm most curious about to see is like where the like what the next wave of defi Innovation is going to be right like I mentioned the offchain settlement is a or offchain like kind of order matching and trading like like um with with onchain settle with onchain settlement as being like a big thing that happened over the last few years I think we're we're seeing a lot of like people trying to build regulated uh decentralized exchanges which uh is actually very cool um because it in theory could prevent something like FTX happening again um

and and that is like good like now of course like I like using Unis Swap and as long as I can I will use it like a lot of financial institutions will never use it and so like actually building a regulated decentralized exchange is like a a very a very very good thing to do because you're you are like you you can I think for me like I've had this mindset that like it everything has to be decentralized because otherwise like even the tiniest piece of centralization is just like uh it's it's like thre is the entire thing but I I kind of like my thinking shifted here a little bit because I think if you use decentralization Smart contracts to like create transparency in a system that is always good even if the entire system isn't like more transparency is helpful

and so and I think right like so so thinking about about these like somewhat regulated D5 projects it's like it's still better right than than like a centralized alternative and you you can make it better it's it's like a lot of work but um and I think that's like one thing I'm interested in seeing and and you do see like some some projects going in that direction um so what's your what's your take on the the defi Renaissance then is it uh is I'm I'm quite interested in knowing if any rollup or thises new blockchain will actually solve any problem well I mean we need more rollups you need like more rollups more l2s really l3s l4s we need to go

like upper levels let's let's go to the Moon with the rollups see yeah so and we certainly need more evm rollups like definitely more there's more money have more more me more tokens are always good more tokens no the thing is like some all different projects raising a huge amount of capital and having large amount of valuation yes um but not necessarily processing any yet any anent value or making any money it's interesting and also the the tech behind them like it's none of those Al actually they were they were built for

the sake of decentralization or saying okay we'll this centralize and speed up the L1 eum but I haven't seen any of them that actually decentralized and either they have the sequencer or the prover or anything that is super high uh centralized or the bridge before it was the bridge and now it's a and the bridges are still centralized yes Bridge are still centralized um that we were um building couple years ago for the centralization are still super centralized and think today that we raising for the centralization I wonder if they will still be centralized in one or two or three years so we always like and something I I was asking myself

yesterday is like I wonder if we're opening the gate for more problems or we actually naring down the number of problems by opening these Gates because it looks like today we're talking about SE we're talking about different opponents that we having in this L but maybe you're right maybe then will be out three and Nar will change into something else that we need to decentralize so is there any end to decentralization or can we actually achieve it that's a good so you mentioned like you know do we need more tokens and uh I don't know if you guys follow this this mide guy who talks about meme coins all the time he gave a talk at token 2049 where he says basically like you know crypto is an industry is not a tech industry it's an industry of producing tokens and um and at the end of the day like the token is

the product and that's what people want like people want to be able to gamble and people want to be a and then you remove remove the tech away you still have the token and you still have the narrative and you still have the cess of of all of all these things and that's how you get to meme coins like it's a little bit Deus I think to go that far in the in in in that idea that the only thing that people want actually is just to be able to gamble on you know like new interesting narratives um but at the same time like the market is kind of telling us that that's what people want like there's just like tons of interest and money in in meme coins in the same way that there was like tons of interest and money in nfts last quarter or last last cycle um

yeah what your take on sort of the balance between utility and and kind of token as the product or price price as the product and as a builder it's uh I would say it's quite tough because you might spend uh years on buing Tech or spending L of energy and resources into something that actually s follow but at the end of the day you don't really necessarily have the attention of if you just spend an hour building a m coin and releasing it and biggering the next foral for more pill so I think the market doesn't necessarily reward builders in a sense of it's just a small spectrum because what makes people talk

is as you said like is a token or the price going up and if the if you can build something that solve your problem but the token doesn't go up people will believe the poic is and I think it's it's quite complicated and if you make correlation with traditional Finance I think the problem is because here we in crypto we give The Narrative of um as you said the token being more important than the F that but in traditional Finance you you will use uh Google or Amazon or any of those part without actually knowing them but yeah on the other side you might trade the token the the stock and exchange but doesn't mean that you have exposure to

the tech Lo right near we make a right cross connection between the token and the tech so maybe that's a fine yeah I mean you make a good point right at I think you know if you look at uh the Ico cycle and then the NFC nft cycle uh the products that the token didn't take off are the ones that don't exist anymore like everybody forgot right uh so you you need the tech but you also need like people talking about your token and like pop popping up the price um but sometime the most valuable product are the one that in Notch sorry sometime the most um in the space the most valuable um products uh product with tech and the the product that

people talk talk the most but Meed coins and I complete zero te yeah so where are we at in the cycle right now where uh where do things go from here I mean I think there's going to be a lot of action um going into the new year and I guess like how how important do you think like our I mean you're in rwa like uh but how much liquidity and you think rwa like will contribute to uh to this cycle how much importance is that going to have I think I mean so far it's very hard to trade R so like liquidity is still very limited right I think that is something

that's going to change um but I think the and ultimately like bull markets are bearish for rwa Bare markets are bullish for just because relative like right like actually even now I think yields are I don't know what they are not today but like last week they're already like 11% right in in Auber for example um so that that like immediately like new moves money away from traditional Financial products and everyone's was gone again and I think we haven't like as an industry matured enough yet where like people don't just start like keep chasing like the the highest yielding thing and the next the next thing so angle still see quite a big focus on these like very liquid very new tokens

that just like everyone speculates on and and like our de ways will continue like to grow slowly but it's not like the the main thing um and in a bull market in a bare market right it's very differently we saw that like the last I mean I don't know if it was a bare Market the last few months but it it's definitely like not a lot of demand for the bare Market of the bull market yeah it was yeah that's if you look at the chart this exactly is people say we had a bare Market but you look the this zoom and you see actually it's a the bottom of the B yes yeah it's it's been like really interesting last year and I think you know we've been raising funds as a fund right and and it's like investor narratives uh or like the feedback you

get from investors is you know waiting for the election waiting for the election waiting for the election and uh and I think a lot of people even the space have been like waiting for the election to figure out what their next moves yeah definitely feels like now we're here and everyone's like resp on again let's go was like lfg Party part is on Ian we had we had our leadership meeting the day before the elections and somehow we got into like a strategy topic and like like five minutes like 5 minutes into this discussion are like actually you know what like let's just let's just wait a week and not talk about this now because who knows what's going to happen tomorrow and I do think like it it is like I mean for for a lot of projects it was like a yeah like difference of his SK are going to

regulate or or not not even I mean he's refusing to regulate right he was just uh he was just trying to enforce a lot of this stuff and that was super unhealthy and now like I I feel a lot of people are saying okay well like I guess it's it's going to be more open open to Innovation kind of environment again and and yeah I I would say very much for us also like you were in some way a bit of in a holding pattern um I think for actually for larger institutions it was much more extreme for them like like a a crypto-friendly sec and crypto friendly political climate is is very important for them to be able to do something um no bank would want to risk uh doing anything with a D5 protocol that will

like see an enforcement action right um so out cool anything you want to share about San fuse or anything you're up to before we uh grab this up I mean I think the right like over five over 10 years like D5 will look more and more like trafi not in how it works but in kind of the activity the participants the assets that have demand um and I think it's very interesting to see like we went from this like like defi used to be only Crypton native assets where like maybe like you could say this was as if like the entire financial industry in the US was only for AI stocks right like you'd have trading lending like all of the

stuff right but it was all utility tokens and like stable PS and I think we're now like starting to really slowly move away from that it's still going to take a very long time but but it is like super interesting to see that like with now like a couple of billion in like treasury bills on chain you actually have an asset class that's big enough to have like a a traditional asset class is big enough to get like a lot of traditional trading firms involved and that is I think like the big next unlock for us is like the market makers The High Frequency trading firms the like also dors yeah exactly all the I mean yeah we missing the derivatives what I would like to add is um you said D5 will look more and more C5 but also think that on the Spectrum C5 will even look even more

D5 than what D5 will look to CI could be or J more like Ci already have the market I mean already has the market already has the billions of users for example Twitter uh revolute uh Facebook uh Super H in Asia so those guy are integrating um blockchain and crypto and defon at the end of the day I'm not sure if retail users or people using those app will realize that's actually using blockchain or crypto but this is what we're moving towards is like to co where when you use internet or Whatsapp you don't even know

what it's using for email SMTP protocol or HTP protocol for surfing the web this is what we're moving into at some point I wonder if there will still be conference like that where we chill the next EIP or protocol update or something but actually just focus on the on the product and what is the product doing oh I I do hope so I mean I'd love to see more more products using lowkey like using crypto lowkey nobody knows about it but it's just making their lives better because was better infrastructure better censorship resistant permissionless Innovation and opportun for growth so thanks guys hey thank you thank you man Che

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