Rollup TV: Drift Protocol, AI Supercycle, Liquid Collective, Flow Blockchain

Transcript

[music] [music] I'm about to [music] [music] [music] I'm the mother.

[music] [music] >> [music] [music] >> JP Morgan, Black Rock, DTCC, Fidelity, the entire thing was just institutions. [music] 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.

[music] You said it. Finally said it. Boys, boys, boys. We're boys. [music] [music] [music] >> [music] >> I'm about [music] [music]

to [music] >> [music] >> I'm the [music] [music] H above the [music] heat [music] [music] [music]

is headed to the top. If we're not already at the top, we're going to the top. We're [music] on fourth floor today. We're going to be on floor one and then we're headed straight to the moon, boys. [applause and cheering] >> Need some music. H how uh how we doing? >> To the moon. >> To the moon. >> It is Thursday, December 4th. We are live again. It is such a different flow going live every day virtually versus being in the same room. We were in Buenos. We were sitting there, we were going live, but [snorts] like this just feels it feels different.

It doesn't necessarily feel good or bad. Just feels different. The lights going. Yeah, I don't have that figured out on my end yet, but I >> I think I got a tan now. >> I'll figure it out. >> Yeah. Um, it's another beautiful day in Florida. I'm back with my tan. And uh >> I think I'm back. Am I back?

>> Yeah, you're here. We got you. >> Um, yeah, man. I I actually I actually I like the virtual vibe. I feel like we can kind of, you know, we're way I'm way over here, you're way over there. we can kind of come together in this weird way, whereas otherwise it's almost like in the same room. It's like kind of like we're speaking on the same on the same thing. Um, but the ver the virtual vibe, it feels a little bit more like we're we're kicking it, which is cool. >> Um, there's just obviously quite a bit of infrastructure behind the scenes uh that's necessary in order for us to properly connect.

>> Yeah. Yeah. No, I mean, we're definitely kicking it. I'm chilling. It's Thursday. It's noon. It's almost noon. Um, there's so much going on. It's [snorts] Man, so I'm watching this show uh Last Frontier. It's pretty great. >> Is this the one that >> on Apple TV only? >> This one you were telling me about. It's uh you were watching it where I was about to leave. >> That was a different one. That was all her fault. That one was crazy, too. >> Yeah. >> But I finished that one. So there's this new trend in shows that is like >> um they make these like 10 episode or eight episode season shows and it's the full show in one.

>> Yes. >> It's like I feel like I feel like it's the same concept with like why clips are popular now and why uh you know it's just like this like no no there's no longer like a Breaking Bad six season 40 episode show. It's like we're just going to put it all into 10 episodes and put it into one season a and make it so the terminally online attention deprived attention span deprived folks can just get through it all which I actually appreciate. >> It's almost like an extra long movie. >> Yeah. >> Cuz like a lot of times those episodes are like an hour long and if you get eight episodes it's almost like a threepart movie trilogy series but all in one go.

>> I think it's possible because like you have it's not like you have like this whole production. It's like Netflix or Apple TV is the one financing that operation. >> Yeah. >> They don't need to go and like monetize the IP for like four or five seasons, see how much they can get out of it, you know? They can they can just rip it and then move on to the next show. They don't >> But also the shows the same show. >> They're so rapid fire as well. Like I think they're inspired by um like shorts and and different like [snorts] social platforms where like it there's a scene change every couple seconds and there's always something like happening in this show.

It's like you can't even look at your phone because you have to like rewind 30 seconds because something happened. >> I think that that goes for like any sort of like active listening, active watching. I don't know about you, but when I watch a show now, I feel like I'm looking at things where I didn't like if I'm listening to a podcast, I'm like thinking like, "Oh, they set that up." Well, >> yeah. >> Or, "Oh, they explain like I'm I'm [snorts] almost thinking about it in terms of like what is creating the best experience." Same thing for a movie, too. I'm like, "Oh, they made that plot turn. they created something that you didn't see coming.

>> Yeah. >> Um whereas before I feel like I would have just like sat back almost like more passively. Um but now I feel much more engaged in I feel like it's it's a it's a result of uh working in media. >> Yeah. like recognizing more of what goes into a particular scene and then thinking about how that went or how it could have gone rather than like being absorbed in the story. It's almost almost like a peak behind the curtain and understanding what goes into the production of that is almost more uh like almost more indicative of like where where the like where the where the

experience is. >> Dude, so I put out a couple tweets that have been getting some attention. uh one about hyperlquid bull. It's pretty important to understand what's coming in the um per market. Um I'd like to just pull this up. It would be great. Um but basically I I I said >> in the link I'll pull it up. >> It's um it's pretty important to understand what's coming in the per market. Um as a hyperlquid bull you've got lighter mainet and token launch, variational mainet and token launch. Aium $20 million raise just happened yesterday. GRVT extended, Pacifica, Advantis, Vest, Rya, Habachi is a token launch coming. The winner is currently hyperlquid by all basically by all

metrics, but the per landscape will be entirely different by Q2 2026. Um, yeah, I mean, I don't know. People are kind of pushing back on this. Basically, just seems that people think that there's one winner. It's just going to be hyperlquid and and that's it. And uh that's kind of where they're at. So, I don't really know what the market thinks about this. I mean, we had uh somebody said there was the many of the next bitcoins, too. Uh some Tyler Whittle from uh Taproot said, "I think the real interesting award for per supremacy will come from when they're in inevitably legalized in the US. Hyperlid versus Coinbase versus Robin Hood, onchain versus offchain for the real per champion." I thought that

was interesting. I uh I think you got to look at what's kind of playing out in the prediction market landscape and that is going to almost be a proxy for what's going to happen in the per landscape. >> Yes, same thing. >> Prediction markets are becoming legalized and what you see is like Robin Hood is pushing a lot of volume to KHI. And I think you would imagine that because a lot of these primitives got started on chain first, some of them are going to verticalize, but then others are going to use their distribution in the US and push that volume onchain. Like I could see Coinbase pushing volume to Aium similar to how Robin Hood pushes volume to Koshi.

>> Well, they have their own per platform now. Coinbase does. They have their own purpose stuff, so they would never do that. But like um the the issue that this guy's bringing up is more about like, yeah, why would you use these kind of non KYC sketchy platforms when you can use other ones? um a and that are like KYC not guaranteed not going to steal your your money and can bring you pretty much the same result. Um dude, did you watch any of the clips from that L1 debate yesterday? I feel like there's some really good nuggets in there. Um that >> I got I got a few >> that we should react to.

>> This one did well. This one about why ETH is overvalued. >> Yeah, this one got all the ETH maxis pissed. >> Yeah, super clean this up. super pissed, which was absolutely hilarious actually because you got Santi's like this like PE guy um right and he's like you know the guy talking about uh you know trying to make the cash flows versus Metaf's law for L1 valuation where it's like you know Metcaf's law of network effects applies for so long and then you got to actually start to generate real cash flows and revenues, but Santi was saying like basically, yeah, these L1s have

moes, but they're not monetizable moes. So, do they really even have a moat? Um, and so yeah, I mean that that was a question was like, how do you say you you have a moat if it's not monetizable? Um, dude, I think uh I think you've got people who are putting and this has always been the thing is been like are we going to use traditional business modeling techniques to model valuations for things that are are new inventions.

Um, I mean I can see the argument both ways, right? And that was essentially this debate. You got Santi that's arguing like look these things are typical businesses. Why are we going to you know invent something new when these things are just not any different? Um, and then you've got Hib who's arguing like, look, these are networks. They should be valued as such. Their stores of value. Uh, and you should you should uh, you know, you should be changing the valuation model, right?

So, let's get this. Yeah, let's put it up. That looks good. Uh, Leo, I'll play Leo, I'll play this video here. >> Ethereum is a $380 billion. We'll crank out a billion. Frank got a billion, you know, 380 times price to sales, right? Amazon never traded more than 28 at the peak of the do bubble. It historically has traded at two to four times sales. >> Everything is price companies trading. >> Well, that's for you. >> Yeah. >> Three times price >> that sounds for you. >> Look at that sales because that's the cleanest metric. It's like are you capturing value or are you not? And I would argue that Ethereum is not capturing the value that people would have wanted to. Most of that's going twos. What's going on guys? Ethereum is >> most of that's going to L2.

>> I mean the other thing to say here is that um incentives for L1s are are fundamentally [snorts] like they're not incentivized to maximize shareholder value or profit or sales. Like what you see from Fusaka is pushing fees down. >> Yeah. >> To lower sales. So there's a very misaligned economy here where these L1s are trying to trying to minimize the amount of rent that they're charging to these rollups or their users which is [snorts] going to cause their revenue to decrease but in theory it's going to cause their

activity to go up. >> Y get more share of the transaction volume flowing through the network. >> Yeah. But the idea is that okay, it's trading at 380 times it's whatever he's saying price to sales. >> Yeah. And so it's like there's no other asset in the world that is like like why like like why would you buy ETH at 380 times price to sales when you could buy and Santi literally used Western Union as the example here for like um like like why would you use this as the uh like like why would you buy ETH um if if it's so aggressively um you

overvalued by this metric. So, I don't know, man. It there's just there's just too there's too much >> understood >> like the L1 versus the like it's like, okay, we have these store value assets and all the people are going to say like, oh, why would you apply this like uh trying to apply this price to sales ratio on a store value asset? I mean that's kind of like the actual um that's like the actual push back I think that they're basically getting. >> Yeah. So then now so now let's look at counterargument which is essentially that these L1s are networks. They're like cities. Yeah. And if you have a market share of a city it's not like a city is making sales. I mean you could say that it's the the aggregate of all

of the sales in that city. Yeah. Let's let's see what is better understood like a city or like a state. It's better understood as a geography. in a geography like take Singapore for example. I think Singapore is actually a great analogy for Ethereum. Um, Singapore is a city with a very low tax rate, right? That's a lot a lot of people reason why people move to Singapore is because the tax rate is very very low and they have great rule of law. It's a very reliable place. It's not very big. So, >> fees are low, taxes are low, >> very stable, and it's actually very a great place to to run a business because the fact that tax rates are low. Now, Singapore, you could think of it as a place that's like, well, it's they make so little tax revenue. Think about all the value that's on Singapore, right?

Like, how should you think about the value of Singapore? The answer is you should in some very deep sense think about the value of Singapore as not the tax receipts of Singapore the country. You should think about it as in terms of all the wealth that exists within Singapore >> is valued at 26. >> Wait, this is a good one too, dude. This >> Yeah. Well, let me get your reaction to like what Okay, so we've heard both sides of the argument now, right? It's like valuing L1's as networks and the economic value of that should be equated to how much economic output or like GDP is going through that particular network or city or state. Yeah. Versus >> how much in fees or sales or tax revenue that particular network generates.

>> Do you have a which way do you lean? >> I mean I just I I'm not even sure if the anal Yeah. I find it like it's so hard to argue against the the like the history of Bitcoin and and and ETH and um seeing how they've got to these prices. The reality is like if you want to see a 250k Bitcoin, a $10,000 ETH, you have to agree with the Hib's thinking or you have to see a whole different train of thought for where all these revenues coming from. So, um, yeah, I I I'm struggling to see how you would it would

be I'm struggling to see how you can be a long-term bull in the space and not be, um, you know, uh, in Hib's kind of realm of thought. >> I I think what's interesting here is that Bitcoin is different is a different L1 than all the other L1s. Bitcoin is obviously in the store value category. I think you could see how you don't really need fees in order at least right now and then the security model of Bitcoin as it goes is like you know a whole different story if miners will continue to mine it just you know based on the fees and not the block reward.

You could kind of see how like Bitcoin right now is more like uh city, but it actually is going to transition into the revenue based model if they're going to need to generate fees and then there's going to need to be like tax revenue on Bitcoin to survive. Whereas I think this is where Bitcoin and ETH are different. ETH started as a tech company. It needed revenue. It needed to grow. it needed uh to charge these fees in order to subsidize its growth. And then it starts to transition out of a revenue-based model and starts to transition into a store of value type of asset in order to think about like what growth could look

like further. All of the other all no nothing else can be considered money. Like I I I would you know it's you can't buy like a portion of Singapore, you know, like what does that really give you? If you It's not like you're buying land in Singapore that you're going to go and monetize. It's not like it's not like you're buying like a a a parliament seat that you can go and like that was a whole governance token thing, right? like these things are either money in the in which case you could potentially buy like a fraction of economic output of Singapore and like buy like a uh Singapore equity token.

>> Well, the question is like do the you know do the apps on Ethereum actually drive value to you know ETH? Um and it's like >> if ETH continues to drive down how much fees it charges? I would argue no. >> Well, yeah. And then it's like, okay, if Singapore has low tax, ETH has low has, you know, very little tax and like, but like, yeah. So, it's like it's kind of tough to wrap your head around the whole like blockchain as a city or as a as a as a place because um yeah, it's just it it these things are not the same. And so, guys, we're gonna we're going to take a super quick break. We've got our first guest ready. I think we need we'll need to revisit this part of the convo,

but um I'm going to be right back and we'll we'll get our first guest up and loaded. [music] Yeet is built for big moments, the most fun you'll ever [music] have with your crypto. Go to yeet.com to yeet into your next game. Not your keys, not your coins. From the team that pioneered cold storage, Treasure has just released its new wallet. Guys, if you are still using hot wallets in 2025, [music] 2026, you are missing the entire point.

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Visit Polygon Technology to learn more. >> [music] >> KHI is the world's [music] largest prediction market. You can trade on anything in all 50 states. Go to kshi.com to trade [music] today. Talk to AI like your lawyer or your doctor or your therapist. Yours, private, and here today. Visit near.ai AI to have a fully private chat experience.

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[music] Yeet is built for big moments. The most fun you'll ever have with your crypto. Go to yeet.com to yeet into your next game. [music] Not your keys, not your coins. From the team that pioneered cold storage, Treasure has just released its new wallet. Guys, if you are still using hot wallets in 2025, 2026, you are missing the entire point. Secure [music] your coins. Get a treasure at treasure.io.

[music] Go anywhere onchain instantly with Relay.link. Relay is closing in on 10 billion transferred. Go to relay.link to bridge your assets now. [music] Money shouldn't wait for Mondays. Following his Rio upgrade, Polygon is now one of the fastest chains for stable coin transfers and payments. Visit Polygon Technology to learn more. KHI is the world's largest prediction [music] market. You can trade on anything in all 50 states. Go to

cshi.com to trade today. [music] Talk to AI like your lawyer or your doctor or your therapist. Yours, private and here today. Visit near.ai to have a fully private chat experience. [music] Havachi is fast and private per [music] trading secured by ZK with Celestia underneath. Go to habachi.xyz to start trading today.

[music] Looking for yield that stands out? Infinify gives you just that. Deposit stable coins and earn far more than the current savings rate. Infinify is a battle tested, reliable DeFi platform that is ready to go. Head to infinifi.xyz. [music] Holiday is unified crypto payments. Give your users more wherever they are. Go to holiday.xyz to never write a smart contract again.

[music] Open, stable, borderless. Frack is building the next generation of stablecoin infrastructure for the digital finance era. Visit frack.com to learn more today. Yeet is built for big moments, the most fun you'll ever have with your crypto. Go to yeet.com to yeet into your next game.

Not your keys, not your coins. From the team that pioneered cold storage, Treasure has just released its new wallet. Guys, if you are still using hot wallets in 2025, 2026, you are missing the entire point. Secure your coins. Get [music] a Treasure at treasure.io. >> [music] >> Go anywhere onchain instantly with Relay.link. Relay is closing in on 10 billion transferred. Go to relay.link to bridge your assets now.

All righty. We got Sydney coming up. Up next, um they just released Drift V3 today. A new UX. um other updates. So, we're going to get Cindy up here shortly. Talk all things drift. Good timing because I just like I said, I put out that post showing uh the perpetual pulse, which is the best website for per information, I think. Um and we have Sydney up now. Sydney, welcome to the show. >> Hey guys, how's it going?

>> Good. Congrats V3. >> Thank you. a big big day for us. >> Welcome to the show. You guys haven't been building for a while. Um it's your first time on the show. Maybe you could tell people uh how you got into the space and how you ultimately found Drift. For sure. I got into crypto about eight years ago now, which kind of feels crazy to even say out loud. Uh initially started off um in Korea doing some arbitrage between the US and Korea. uh as many traders in the space have started uh ran a prop hedge fund um after that for about four years. Um so

one of the early traders of options and uh one of the first traders on perks um when they they first launched in uh 1617 and then basically saw a huge gap in the space with um how most of the perks at the time and all of the perks at the time were fully offchain. No one was building per people were building onchain options. Uh but it was clear that the biggest opportunity in the space was actually in uh onchain perks. So um met a bunch of Salana guys to arj back in 21 and was really excited by the energy in the Salana ecosystem. So um

decided to you know shut the fund down and run drive fulltime. >> Nice. Nice. And you guys have been So I'm actually looking at uh Perpetual Pulse right now. You guys have been pretty consistently in the top I would say four to six in terms [snorts] of OI and and volume for quite a while. I've just announced V3 has been described as built for outperformance. I don't know if you're in Dubai or Abu Dhabi now. I know Breakpoint's coming out u or is happening next week. I'm sure you're excited for >> for that. I guess like when it comes to the difference between V2 and V3, it's a big big launch for you guys. What is the single kind of biggest upgrade that traders will feel as a result? Like

tangibly speaking, what [snorts] does VP bring for for me as a trader? >> So V3 is the biggest performance upgrade since we've launched in 2021 and the the core differences are in uh the trading performance, speed of fills, liquidity. So between V3 and V2, we're looking at a 10x improvement in the time to to fill a an order, we're looking at about 15x faster stop-loss, profit, take profit triggers, looking at about 10x reduction in slippage as well. So uh 10x more liquidity than than in B2. So it's a radically different experience. And uh

to be honest, I think having been having been building in the space for so long, we a lot of our UI uh was um was based on what was popular and what was um the patterns of UX back in 22 or 23, but the space has changed a lot since then. [snorts] So um we've really done a big facelift on the brand colors, brand identity, uh UX, and general responsiveness, snappiness. Um, and you know, pulled it forward to to the present and the future. Um, so you know, I think you'll notice that it's just a much more delightful user experience than than um than before. And there's no other way to put it, right? I think

that's that to me, besides all the performance improvements, is the biggest uh upgrade. >> This uh this launch video is pretty sick. Um, I don't know. Are you a runner by chance? >> I I mean, I wouldn't call myself a runner. I do run. >> I used to be a runner, but uh it's it's been harder to to to be very consistent with that. [laughter] >> Oh, yes. It's a very like Nike. >> It's like acceleration like bang. >> Yeah. >> Yeah. Um, Sydney, I know this is certainly not in the list of questions, but I'm just super super curious about how like post TGE perexes think about the pre-TGE competition perexes because

like I put out this tweet u yesterday basically saying like hey like it's pretty important to understand what's coming in terms of of the per market and and in my realm I was like you know kind of framing it from like the hyperlquid perspective but you've got lighter mainet tok launch variational Austin, you know, I listed all these others and and so like there's like this there's this meta of like, all right, let's all farm the perexis because you know there's big air drops coming, but like you know that volume is it really sticky? Is it long-term? How like is that OI going to be kept? Um, obviously Aster has been running these crazy programs, but you guys have have about $400 million of OI right now, which is like I think the number one for post TGE outside is how do you think about like

the whole pre-TGE longevity, sustainability, like the whole game that is being played there versus like what you guys are doing? >> That's a great question. Uh ultimately a user is going to like a potential airdrop generally has a lot of potential energy and people are are going to farm a product with a lot of potential energy because your airdrop could either be zero or millions of dollars, right? So it's very very high variance in in the outcome. Whereas if you're looking at a postc project, the variance and the rewards for um what you get is is already pretty much set in stone in in a sense of um your your postg project isn't going to

100x tomorrow um in terms of outcomes. Um so the the rewards are definitely a lot more stable. Um but but we found actually really really great user retention across the board despite these new um protocols popping up and ultimately it's the same hot ball of money that we we see rotating in crypto like um there's not that many new per traders in the space that that um these new exchanges are are necessarily bringing on. Um, so a lot of it is like pubs of money rotating between the pre-TG projects whereas postG projects have kind of reached a level of PMF and I [snorts] would say that we've hit

pretty good PMF within the Solana community um where you know we're the only crossol perex we enable people to use their soul as as collateral and we've really hit a a good group of users that are very very sticky and ultimately the the way to grow it it's not really by participating in the hot ball of money that ultimately goes away outside of Perfect Exis anyways, but to um continue carving a path within um user groups that are are you know outside of that and um bringing more people people on. So yeah, I would say that most of the pretming is is a similar group of people. Um but we're we're interested in

in expanding the the you know frontier um baseline by actually bringing on more people from centralized exchanges as well. >> Yeah, makes sense. Cindy, I think we're getting some audio issues. We're going to go to standby real quick and we'll we'll be right back. >> Okay, is built for big moments. The most fun you'll ever have with your crypto. Go to yeet.com to yeet into your next game. [music] Not your keys, not your coins. From the team that pioneered cold storage,

Treasure has just released its new wallet. Guys, if you are still using hot wallets in 2025, 2026, you are missing the entire [music] point. Secure your coins. Get a Treasure at treasure.io. Go anywhere onchain instantly with relay.link. Relay is closing in on 10 billion transferred. Go to relay.link to bridge your assets now. Money shouldn't wait for Mondays.

Following his Rio upgrade, Polygon is now one of the fastest [music] chains for stable coin transfers and payments. Visit Polygon Technology to learn more. [music] KHI is the world's largest [music] prediction market. You can trade on anything in all 50 states. Go to kshi.com to trade today. Talk to AI like your lawyer or your doctor or your therapist. Yours, private and here today. Visit near.ai to have a fully private chat experience.

Havachi is fast [music] and private per trading secured by ZK with Celestia underneath. Go to habachi.xyz [music] to start trading today. Looking for yield that stands out? Infinify gives you just that. Deposit stable coins and earn far more than the current savings rate. Infinify is a battle tested, reliable DeFi platform that [music] is ready to go. Head to infinifi.xyz. Holiday is unified crypto payments. Give your users more wherever they are. Go to

holiday.xyz to never write a smart contract again. Open, stable, borderless. Frack is building the next generation of stablecoin infrastructure for the digital finance era. Visit fracks.com to learn more today. Yeet is built for big moments. The most fun you'll ever have with your crypto.

Go to yeet.com to yeet into your next game. [music] Not your keys, not your coins. from the team that pioneered cold storage. Treasure has just released its new wallet. Guys, if you are still using hot wallets in 2025 2026, you are missing the entire point. Secure your >> All righty. We just got liquidated. Um [laughter] but uh luckily we like James Win had a bit more collateral to add to our balance.

>> Steady lads. >> So I'm on my I'm on my last clip right here. I've just gone to the pawn shop and sold my last gold bar that was in my safe. So now I'm back. Sydney's back. Um, all right. Let's get back to V3. Um, let's talk about some >> It wasn't me this time that liquidated. >> No, it was Arthur Hayes. It's always Arthur. [laughter] >> Yeah, BitMX has been liquidating us since 2018. >> It's always Arthur. >> Uh, Cindy, one of the things that I wanted to ask you and it makes makes complete sense when you're thinking about the, you know, the relation between pret. >> I'm curious when you're thinking about product upgrades, you're thinking about, you know, V2 to V3 and so on.

How much of this is reaching feature parody with centralized exchanges tra even traditional financial uh futures and derivatives platforms at a certain point? Is it time to like push the boundaries? How do you is there things that you guys still need to do to get to feature parody and then go beyond that or or generally where are you looking for inspiration to add some of these new features? >> Great question. I mean I think there's still um I would say from a feature parity perspective um we we've hit a majority of what we can do on chain um with with um with parity and centralized exchange sides like of course you know orders can always be faster uh marginally but if

you try the exchange right now uh the other thing that that you'll see is uh fully gasless trading where when you click enable trading you actually just have to hit a single button and after that you never have to click approve again which was a bane of many onchain traders existence right >> so it's like like that's actually amazing uh that you don't have to click approve every single time you want to trade um so we've built in all these things that make the experience really really good uh even with privy you know you can log in with an email now and it's substantially better than than a KYC centralized experience on from that perspective of Um because we're entirely built on chain, there are some

trade-offs um with how ex how fast orders can get filled. Um there's still, you know, there's still slowness there um compared to a fully centralized play. But but virtually, I think if if you're just looking at it from a trader perspective, you won't really see that many differences unless you're really like microscopically trying to um compare times, right, or latency. Um so so for most traders and most big use cases I would say that we've we've hit um close to parity on on on performance regard. And now I think the next big step is to think about uh what are some unique things that you can do on chain that you can't do in centralized

exchanges and apply new growth playbooks because the the reality is that it's quite like the existing growth playbooks are pretty boring like running trading competitions um leaderboards uh they're they're all done already done and dusted right like people have shown what what it takes to to build out a an operation like like a like a DEX or in the per situation and now it's like how can you bring in new things to the mix that people have never done before. Like we've built kind of the the groundwork and the the framework for a a highly performing exchange, but that alone isn't going to create a winner, right?

Like the next step is is actually figuring out what are some um really interesting product UX ideas. Like can you can you take a leaf out of um basically uh traditional finance funded accounts to to help people uh you know prove out their ability to to win uh before giving them fund accounts to trade with. All this stuff is possible in in DeFi. you know, we we launched things like vaults last year where anyone now can be a a vault manager um fully like trackable and verifiable on chain and and those are the types of products that um will ultimately pull people in after they see

okay like the the general performance is already really good but I'm going to stay for these tertiary products um ultimately that that we've spent so much time building on and so um what we're looking for now is not really parity it's it's deck specific specific innovation and um I think what we've done with you know putting swaps putting earn like no other centralized exchange for instance has been able to build something like uh you know you're earning USC yield even when you're not trading uh within your like full account. So uh I think those are the the areas that you ultimately win. It's like yes we can play the airrop game. Yes, you can play the leaderboard game but um

why do people stay? is because you have a differentiated product. So, um yeah. >> Yeah. A as part of, you know, this feature set onchain for V3, you've kind of uh adapted your liquidity pool uh as well as the insurance fund in V3. What does that actually look like uh for capital efficiency, for LP incentives? uh people are kind of I think the community is going to want to understand what that changes for traders as well as how that makes it makes a better experience for them and then what that changes for LPS with regards to this new liquidity pool model as well as insurance fund model.

>> Yeah. So there's no changes to the insurance fund model. Um one thing to highlight as well is that we have one of the largest insurance funds in in all of DeFi. It's sitting at about 25 mil now. Um and the insurance fund exists to protect users. Um especially in the case of 1010 liquidations where you know uh if there are any bankruptcies in the system, the insurance fund steps in as uh the senior um senior debt you know before it gets to users uh getting u ADL. So that's always been a good buffer and that's going to stay the same for for V2 as for V3.

Um as for DLP um what what it exists to do is essentially to supplement the efforts of the EMM right now and the EMM uh exists to provide back salt liquidity for u the markets that that we have on and that's why a lot of our recent uh market listings and launches have seen much improved liquidity. Um so uh at at some point um the DLP could be opened to um to have external depositors in but uh right now you know we're we're keeping it as a part of the protocol where um the protocol itself is going to boost its uh liquidity on on markets and so

there's virtually no changes to you know how a user interfaces with the protocol except that they'll see much better liquidity on the books. >> Yeah. Got it. Okay. Okay. So no major changes but just you know further kind of beefing up the system and making it more reliable, more robust uh for all the users basically. >> Exactly. Yeah. So it's it's possibly the smoothest migration because you don't have to Yeah. Your previous accounts all move over uh there's no need to migrate uh you know re rebridge anywhere else.

Um and then market makers don't have to update their SDKs too. So, um, everything is like as if, uh, is as seamless as as as it can be. >> Yeah. Yeah. I I'm I'm curious again to kind of like thinking about this this convergence between, you know, what we typically call Tradfi and DeFi are really, you know, lines are becoming blurred and they're not really they're just becoming finance, right? Especially as, you know, in America, they're looking at PERS and they're looking at uh regulation that would legalize PERPS trading in the US, probably oversight by the CFTC. And so it it's almost like these regulated exchanges. I'm curious from your perspective if you think that would increase their moat or if it would decrease their moat as they widen access

and allow more purpose exchanges into the US. Do you guys have a strategy for what it would what that would look like as you guys enter what could be a more regulated space? >> Yeah. Um I we're on the road to exploring um some CFTC exclusions and um working with with a couple of um excl parties to ensure that you know we would be able to operate ultimately um in in regulated spaces. I think that's the natural path pathway for uh DeFi derivatives. It's going to take a while but but there is a path forward and you know if uh especially in this regulatory climate um we want to be the ones um

spearheading these efforts. So um yeah I think there there is there is a path um to to doing that. I think for us the philosophy has always been um continue to innovate on on product first and then um pave the way for for regulatory optimization and uh that's exactly what we're doing now. >> Sydney, last thing for I know we're tight on time here. um pers versus prediction markets. I don't know why, but this has been created this year. It's been a battle. It's been uh which one is going to be better? Are we going to perpication of the world? Are we going to prediction market the world? Is it going to be like this general trend of like, all right, we're going to enter a more speculative environment where people want to essentially weigh their opinion on a variety of different things. From from from uh your

perspective, from Drift's perspective, um you know, are you thinking about integrating prediction markets? Do you see these two as like uh opposing forces, similar forces? How do you kind of view the pers versus prediction markets uh kind of landscape? >> I think they're similar forces uh driven by the same speculative behavior. It's just a different way of expressing it and in in different scopes. And I think that I don't think the answer is like perus prediction markets, right? Perks and prediction markets and any other instrument that that can help people express their views on the world and be able to be compensated financially for it and to allow people to to take risks.

Um, you know, we saw zero day options really take off in 2021. Yeah. >> And prediction markets today are just another form of binary options uh in in a different UI. And I think it's a it's a really great innovation because it helps people contextualize the kind of bets that they're taking. And I think with per that was also a very big 0ero to1 moment for for crypto. And I actually think that with the base of per you can do things like prediction markets you can build um new versions that that people can express um their views on outside of just like a simple per model. So, you know, I I'm actually quite excited by um what what our team

has to to offer in terms of the the continued wrapping of perks into different forms. So, things like games, things like um showcasing different types of UI for it. Um we have a mobile app coming out for instance um that will enable you to trade per a lot more easily. um frame it in in in the form of questions like prediction markets, but ultimately the the baseline is just how do you want to showcase um the user experience of trading to to a user and uh per prediction markets are all just rappers on on the same behavior of speculation.

>> Yeah. And per are going for the zero date options market as well. >> Exactly. Exactly. Yeah. >> Yeah. Uh on the same thread, you say uh like true or false pers are prediction markets that don't expire. >> Yeah, I would say so. Yep. >> Well, or or they're expiring every time there's a funding rate. >> Change. Yeah. Yeah, it's probably more accurate. Awesome. Sydney, thanks so much for joining. Uh congrats on V3. Per is uh taking the world by storm and uh you guys are at the top of the leaderboard. Yeah, congrats on the on the on the OI growth. Like I said, it's it's always top five here on Perpetual

Paul. So, it's been it's impressive. >> Thank you guys. Um, thanks for having me and uh yeah, make sure you try out V3. Let me know how you like it. >> Don't get liquidated, Rob. Thanks, S. >> Enjoy Breakpoint, Cindy. We'll see you next time. >> Thank you. See you. >> See Arthur Hayes in your in your dreams with the goggles. The boogeyman. [laughter] And Boogeyman is coming. >> Boogeyman. [laughter] >> Awesome, Sydney. We'll see you next time. And uh next up, we've got Ilia, the uh co-founder of Near. They just launched their Near AI product. So Ilia is going to join us in just a moment.

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Go to yeet.com to yeet into your next game. >> [music] >> Not your keys, not your coins. From the team that pioneered cold storage, Treasure has just released [music] its new wallet. Welcome back to AI Supercycle, our [music] premier AI show airing every single week presented by Near. We cover the ins and outs of decentralized AI, privacy, and the future of this massive technology. Near is the blockchain for AI and the execution of AI native apps.

You can check out Near's latest AI product at near.ai. Sit back, relax, and enjoy the show. >> Welcome back. All righty, Ilio, welcome to the show. Good to have you back, man. >> Thanks for having me. >> Good to >> Absolutely. >> Guys, welcome to AICycle episode 12. We've got the black dragon calling in from the layer here, the private layer himself, which is a undisclosed location because we're all about privacy here in this world. Near AI has just dropped today. Ilia, the marketing is amazing.

Can we talk somewhere private? I hate to tell you, Ilia, this is not a private call. We are public. We are live right now. Good to have you, man. >> Yeah. No, we've been cooking, so it's great to be here to talk about it. Yeah, for sure. U I mean just some just some context, right, Rob? Last six weeks, I mean, we saw Zcash went on this insane run. Privacy really came back into the zeitgeist of kind of the uh general kind of crypto Twitter population and just more broadly uh kind of like this return to fundamentals ethos that we've been pushing on the show. near intense facilitated a ton of the Zcash bridging uh in in in terms of actually getting assets from Bitcoin, ETH, Salana into Zcash to be able to actually buy Zcash.

Uh the volumes went through the roof revenues as well. And then you guys had been working on this near AI chat product, this private chat product. So it feels like all of the perfect time for Near. Um man, how has it been the last two months at Near? Ilia, it feels like a lot of things are coming together. >> Yeah, exactly. It feels like a lot of stuff we've been building for past like year, year and a half is actually like all coming together and really like starts to gel. Uh so really excited there. There's actually more things coming in next, you know, few few days to a week. Uh I'm not I'm not going to drop too much alpha, but uh a lot of exciting stuff there. But yeah, I mean it's it's just like teams are jelling.

We have you know intenser firing in all cylinders. Uh I think momentum is like insane. It's it's like there's a PMF, people are willing to pay for it and it's getting integrated everywhere and kind of really like the vision of like hey this is going to unify liquidity plug everything together is is really there and so now it's like hey what else can we build built into this right and how else it can leverage now AI and you know real world assets and other things as well and then on privacy as you said I mean I feel like in in the crypto circles, privacy always been like an important aspect, but uh generally I' had kind of like not

been talked about and so I've been talking about like the importance for AI for your data like you cannot own your data if it's not private like if if you're giving it to you know third parties to Googles to apples to open ais like you're not owning it right you actually sign off the terms of service uh in many cases Google I just released that the training or or it was reported that they're training on your Gmails. >> You can pro you should probably go and opt out from that. You need to opt out explicitly.

>> Um so that's what's happening right like all your all your data that you given is effectively been you know used in some way by companies. So privacy is paramount and kind of money is one you know one aspect of that the data AI is you know pretty big fundamental another >> yeah we were just talking about this Gmail Google training model and it came up in the context Andy and I were both looking at the same email we were thinking about a response and it was like wait there's a one-click response right here and it was not just the canned responses that they've had for a long time it's like wait this response is actually pretty good that was the surface level the deeper level is The reason why it's better than it always has been is because they've been

training on the millions of emails that we've had in our database for going going back that long. >> Yeah. >> Pair that with what we're seeing from ChateBT. They're training not only on our data, but then they're going to start serving ads based on those prompts, based on those responses, and embed those directly into the responses that we see from ChatgBT. All of this was helpful to ultimately provide the value proposition of a private AI and you guys have capitalized on that near AI. Talk to it like your doctor. You know, talk to it like your lawyer. And >> the the litmus test for this has always been look, you know, chatbt has said we're going to share, you know, if the authorities come to us, we're going to share the data with the authorities.

Yeah. You know, the idea here is even if you guys wanted to, and I I I'll frame this as a question, but let's say an authority came to you and they said, "Hey, this person, we know they've been using near AI. [snorts] We want we we're going to serve a subpoena or we we want access to this person's records so that we can understand how their criminal mind was working." Would would that be an instance where you could give up that data? Would you give up that data? So for near AI for this product we cannot like we don't have any access um the all the AI inferences right they all they're encrypted with the specific GPU hardware uh where that runs and um yeah I mean like effectively even the like

even with access to hardware you cannot decry it and it's all kind of in the moment. Yeah, I mean I think like like the like like the context here, the general trend is that the people have been far more willing to provide different AI uh services with more and more information. Like as you get used to using the product, you become more and more kind of acclimated to like actually uh you know giving this product a ton of information. Um and and so you know today you guys uh launched AI cloud and private chat. Um and so these are kind of like two separate things that work together within this lens of understanding the this this kind of

growing human behavioral trend of of using LLM in these more like uh intimate ways. What is AI cloud private chat? How do they come together in the lens of like this growing user adoption of AI? >> Yeah. So, AI cloud is really the developer tool, right? It's an infrastructure that any developer can use to leverage private inference, private uh and verifiable inference and we're going to be adding more things to that product offering. And so, uh for example, Brave has integrated neari cloud into the Brave browser. It's right now in nightly uh and uh effectively when you talk you can choose near AI

provided u in in your Leo AI in brave uh we have uh open mind which is a robotics company that building a robot operating system as you can imagine having a physical robot at your home that can that is effectively listening at all time looking at all time what's happening you really care about privacy at that point right probably don't want to you know you and your boxers uh continuously streamed to some third parties. So, that's a really great use case. Anything effectively touching sensitive information, but also just like a day-to-day like live mic uh should probably be private. And so, um so that that's uh for AI cloud and so AI chat is really just a pro private chat

is product built on top of this, right? So this is just our demonstration of how you can leverage the AI cloud to build products and have all of the privacy features. Um and so I mean obviously it's open source and so people can uh build on top of that or uh we expect you know there's a lot of kind of ways to expand this now to add more functionality with now private MCP servers with memory etc. So we want to explore that as well. Uh imagine now you are for example right now you know OpenAI is like hey allow us to access your email right your your AI will be better but now OpenAI has literally you know access to all your emails and even

non-maliciously right there's like accidentally issues can happen with this but it also includ if if there's any kind of leak or anything all the data will um you know potentially versus in our case you can actually run the MCP server itself in the same kind of verifiable private infrastructure and so now your AI can have access to it and only it and nobody else can you know get into that as well. Yeah. So that's the idea like we can actually keep expanding and adding more privac like privacy verifiable services on top of this and really make your AI also smarter and better have more context be able to actually do actions on your behalf be able to manage private keys as well

right because you know this is something where you actually care about privacy and verifiability as well. >> Yeah. So, you're wearing your uh Jensen Huang um leather jacket today and uh part of this uh near AI cloud is using Intel TDX uh uh hardware as well as Nvidia uh confidential computing hardware where data is processed in this kind of sealed isolated environment. Um so that's kind of the AI cloud. I'm curious like what from your perspective using the this you know high level commercial grade hardware. What is the biggest unlock from uh combining actual privacy at the hardware level with the onchain guarantees that you get using the the

private chat product? What is the what is the unlock there that is uh novel about this launch? >> Yeah. So the I mean first like effective this confession computing hardware mode is only like been around let's say a year. Uh some of the recent like updates that were needed only came out at NVIDIA GTC this year. So all of this is very kind of new and and the reason why we haven't seen this as much. uh but this layer of hardware allows you to effectively run computing like you know AI model inference agents etc in a way where you know that nobody was able to

access what happening inside uh even if you know somebody's running out of computer like they they cannot actually access through uh just like inspecting processes or whatever what's happening there now that on itself is only a part of the story right I'm as a user sitting you know on the other side of the planet how do I know that computer is running how do I find it and how then how do I encrypt my data for only being able to decrypt it inside there and then how do I manage my context my you know my all my history this is where our uh kind of near chain signatures uh which is effectively a multi-party computation system comes in allow you to effectively manage like do the key management

provisioning all of those things in a in a trustless way as well so you really combine ing all of the pieces both hardware security and cryptographic security. Uh you know as like we allow more and more parties to join uh you know the payment for the hardware providers will be done on the crypto rails. So really combining all the pieces together. >> Yeah. And it and it does feel like there's a lot of things that Near has been building for a long time that are starting to come together. Uh, another pretty significant piece of this is $7 billion that has flown uh uh moved through near intense since you guys have launched that that helped unlock this whole Zcash movement. Um, give us a sense of how these things ultimately

come together as you're thinking forward. I also saw that you know just recently put out sort of what what you're aiming is that soon private AI chat will have near intents integrated. This will allow for some interactions across web three, but then you also said web two coming soon. Could you give us a sense as as these things start, you know, continue to develop? >> That's alpha that that that was previously mentioned. >> So So yeah, can you give us an idea of how these what this might look like as as these pieces continue to develop on on their own and then ultimately come together?

>> Well, I'm laughing because this is literally a tweet from 10 minutes ago. So uh >> we're live, baby. We do our we do our research >> real time [laughter] >> or or you're reading Twitter while while interviewing previous guests. [laughter] Uh no I mean so so here's like I mean maybe like couple couple year vision right and then we can work backward couple year vision I think more and more of our interaction with computers with phones with our devices is going to be AI facilitated right because AI will know so much about you like you won't need you know go and click through stuff you won't need to go like Uber you know enter an address or copy paste it from

the calendar or whatever like all of that was just automatically done like it knows you have a meeting it'll get you a car and so how does it work well your AI is you know the brain obviously needs to be private needs to have all your contacts privately needs to be able to predict and reason and do all those things this is why by the way the just local doesn't work right you need this background intelligence that's running there that's able to consume all those information that's why we need this kind of decentralized confidential cloud now whenever it knows what you need Right? Let's say you need a taxi to airport or you you know you want to get some food that's healthy and you know will make sure you have energy for the next meeting. it it will effectively issue an intent saying hey like you know I'm

looking for this kind of food you get different providers it sc you know evaluates them chooses the right one and then does a transaction right all of that is happening on the you know potentially in the background or maybe comes back to you and says like hey confirm this exact interaction but intense is effectively as a language that AI is talking to other AIS or service providers to really get to the the agreement and execution across the internet, right? And you can imagine this not just for consumer use cases but also for you know real commerce businesses where you know hey we need to deliver steel you know like the solver comes in and says cool I will be able to you know procure it from a mine get the shipping containers get the

port you know allocated etc of our houses rented and insurance and I will get a loan for the float of the money while while this is in transit right like all of this package boom you get like a full package you know have like RWA is effectively packaged into a single NFT that you can deal with, right? So that's kind of where all of this is going >> and so intense really right now we're proving it out on the simplest thing which is crypto. >> Crypto is simplest because it's the simplest to verify, right? It uh we have all the uh kind of easy tools to verify it. We have chain signatures to really manage assets across all these chains.

This is why like indeed with Zcash it was kind of really powerful because it was very easy to kind of integrate and and and start get it going and make sure it's trustless and now um going forward yeah [snorts] like intense starting to really connect into web two service providers right be travel uh but actually like also just any API right like hey you know my AI needs weather report my AI needs this and that. Right now, if you're trying to do this, I was actually trying to do something and I needed like a price in my Google spreadsheets and I need like go sign up for another API provider, get the API key. It's like super

complicated right? >> Like my should just be able to figure it out, not needing to register for so intent infrastructure and then AI kind of and they all work together. agents effectively are solvers on the back end and we already have some of the examples where some agents are effectively running and solving intents on the financial side but you can see this expanding to more and more use cases. >> Yeah. And I will will you your AI travel with you? Like when you're filling in, let's say it's a Google sheet, is that going to be your AI that you're kind of bringing from service to service, traveling, whether it's on a local device or it's kind of omniresent across all of your devices, or is that Google's AI, right, that is filling in the Google

sheet, it's going to go have to communicate with other agents. How do you see this this interoperability working? >> Yeah, I actually think it's going to you're going to have like a one uh AI that's yours that like similar how wallets work. Like I actually think web 3 kind of run this shift like traditionally you have you know a service providing you software you come in you register and you use it. Web 3 said no no no actually you come with identity and developers push software to you right you know so smart contract is kind of lives there and you can call it uh you know front ends in theory can actually just be like fetched and and and run on your side and so I think same idea happening here and we'll see this already with like again kind of how we

imagining with cloud right you can actually have developers build services MCP servers or agents that run on users context and information inside this private enclaves right and so this way as a as a user you don't need to share information with third party with developer right their stuff comes to you right this can be just AI model or it can be a full AI like service and agents >> and so then your AI effectively travels with you it has all the context it knows everything about you and it's go it's able to still communicate with other people's AI other companies AI or some other autonomous agents in this intent architecture were affected some kind of transaction, some kind of counterparty

agreement. >> Got it. [snorts] Uh and you're on mute. >> Yeah. If we think about uh wallets in as a as a similar analogy to like how we'll use AI in the future kind of across multiple applications, multiple websites and things when when it comes to how we're you know generating actual uh like yield using agents. I think you guys in introduced this or near 20 introduced this agentic yield concept um that I think is relevant to the private chat as well as relevant to kind of like what Rob's getting at here. Um how how do you see agents then reshaping yield across DeFi over the next year or so? You know,

whether it's I want to use near private chat to, you know, go and do strategies on chain or if it's just embedded into my wallet. within the lens of that previous point, how do you kind of see this agentic yield and this uh AI agent yield kind of uh concept uh coming about? >> Yeah, I think I mean it can come from both directions, right? It [clears throat] can be that you instruct your AI to effectively like hey every hour go check you know what's the best rates where the best uh things are given my risk tolerance and you know rebalance and reallocate and and so that you can actually again nearance is a great platform to do the execution of that exact system and we have you know

something interesting coming on that side. Now the other side that um is similar is you know we've seen this with Morpho right there has been a lot of like kind of curators which may not been managing risks very well and it's really just opaque from a blockchain perspective how it actually working and so you can imagine actually curators being AI agents autonomous agents and so they're very transpar you know you know exactly what they are right there's you know the prompt and the data feeds etc are all verified auditable but they run inside you know neari cloud so they're verifiable and private so because you know you don't want to reveal the decision that they make when they

allocate things so this was the example we had launched called mind share agent which was effectively using you know analyzing Twitter sentiment about different assets and rebalancing uh portfolio around that so you can have kind of this coming from both directions and it will depend really like the the curator model is good when you have kind of way to access to you know various different assets and then that might be even offchain right it like this agent can actually have a legal representation and it can go and actually get you know like real credit from bank or whatever or you know invoices this travel insurance etc like all of those things

like can be packaged and then provided as a yield >> or your AI agent which more about being personal about understanding your needs like hey you know I'm spending this much per month so I need to like withdraw that uh to pay my bills like all of those management like your AI agent will your AI assistant effectively will be doing all of those actions and kind of reallocating between different curators and and different assets. >> Yeah. Okay then. So that's kind of like the DeFi crypto native version of this. When we zoom out to, you know, because I know you're extremely well connected in kind of like the traditional AI space as as well. So I'm sure you've, you know, talked to a lot of your friends about

this product launch and now that it's out there. Um, so kind of zooming out from like the the web 3 world, but into the more kind of like broad space here. Um, I guess very bluntly, like does anybody care about this private AI stuff outside of like us like cipher punk kind of people? Like how has like Silicon Valley, San Franand type people reacted to this? Do you think that you can kind of push the needle towards this movement happening more broadly within like the big players, you know, just let's kind of have have a more holistic uh conversation about the the state of affairs um outside of crypto.

>> Yeah. So great question and and this is why we you know we launched a few different like non-cryp non-pure crypto or non-crypto at all uh clients because that was kind of we wanted to validate this um and as I mentioned I think there's few aspects where this is extremely needed right so robotics is one legal is another one because they literally have the confidential and privileged >> y >> that they need to deal with and right now you know some of them just like set up their like local models and do stuff on on their local computer which you know the model quality is really bad. Um and also you know you cannot share like there's a lot of challenges with that

finance like non-crypto but actual finance as well they have a lot of like actual limitations on how the customer data can be moved around. Um so again like if you want to do something something more than just like ask basic questions to AI but actually analyze the internal data that that's uh highly valuable and then interestingly governments every every government outside of US wants to make sure they don't depend on just us for the AI and even between departments in a government imagine there's a government department that's IT and government department that deals for example example like police right well police doesn't want all of

their information be available to some employee of the IT department government like they have no idea who they are right so like in general it's extremely valuable for kind of enterprise government use cases and then for users I think it's a it's a nice to have for sure it's not like hey we're gonna you know we're going to change our behavior per se uh except for you know the slice of users who are on signal th those kind of people uh which you know we are [laughter] um and uh and then that's why we're partnering with Brave we're partnering with like applications who really

bringing this kind of experiences forward now medium-term it's about building better product as I said to me privacy is enabler where we now can kind of allow users to connect all kinds of data uh all kinds of access. You know, again, you like you as a company have internal databases that you individually have access, but you probably want going to give it to a third party software. Uh and so that that is, you know, really where the opportunity is like, hey, look, this is as if you were running stuff locally. You can now give access to, you know, tools like to databases, to your CRM, to your emails, to all of this information. Now, your AI is way

smarter. can do a lot of actions on your behalf. You can like set up background, you know, update processes, etc. Which again, for example, we're using CRM. I don't trust that CRM provider with my email. Like my email is too sensitive, right, as as a CEO foundation. And so like I'm missing on all the features of the CRM being able to track my meetings and stuff for example because of this. And so like you kind of need this type of tech to really kind of integrate all of the different aspects of your uh of your life really uh and and kind of trust with you know there's medical data finance you know your cryptobalances etc like all of those can be integrated in

one. >> Yeah. >> Yeah. For this to really work that that's how it has to happen. And one of the foundational pieces of this technology stack, you know, obviously there's the privacy point, but there's also there's also this model that is is feeding the responses and doing a lot of the work underneath the hood. And I'm curious how this works when you're training a model that is still private like uh the near AI private chat uses zyorg. This is different from like Llama and Meta and GBT and like all of these other models that are you know on the on the more centralized uh uh uh you know platforms. Where did this model come

from? Could you give us just a little bit of history about what is what makes this model special? Why you guys chose to use it for near AI and how it helps enable privacy? >> Yeah. So we actually have uh well we have four models available in the chat. You can use deepseek 3.1 quen GLM and uh GPTOSS which is openAI's open source model. So you actually have an options and the idea is to be able to support um more and more over time including we want to support third parties being able to upload their models. So if for example open entropic want to upload their model we like we guarantee that it's not going to get decrypted right

it's going to always stay encrypted at rest and then only gets decrypted inside secure enclave and so there's an idea actually that this is a better way to monetize maybe not for this big players but for smaller players who may not have enough capacity to do in like to provide inference services and to deal with users data and do all the things like this is actually a way to for them to serve models to users. Um the reason why we picked this models I mean this is actually you know set of best open weight models right now in the market and we've been kind of updating as as things change the yeah generally we just we use openweight models uh we're working on some improvements around like tool calling and a few other things to

uh but right now relying definitely on the open open source community. >> Cool. I mean in that in that lens Ilia if you're talking about if you're talking about a better product right not just the private aspect but a better product there are tons of uh kind of rappers where you can choose whatever model that you want to like or you can get the result from three models at the same time if you're think about from the better product lens to get this thing adopted outside of you know let's say the signal type people or the or the CEOs of foundations like what is required for you guys to to to do that like like what is on your product roadmap or what are you thinking about from the product perspective to make it a better product because there are just

kind of like these model aggregators that exist. They may not be private. So you've got a private model aggregator here but what is what is required to really make this better than uh what's already out there. >> Yeah. So we have few hypothesis and we're testing them right now. So that that that's an important part part here is like you know a lot of it comes from the users and you know we can only hypotheize but you know personally I think it's a combination of improving memory and context management. So right now outside of for I mean probably only open honestly everything else has you know very forgetful model it it doesn't really know much about you open done pretty good job at like really

extracting a lot of the context background context and then providing it to the next messages so I think that's a big part and again the benefit here is like we can connect to more data sources and so we can actually get a lot more context and keep it private for you. Now that goes into the second part which is really enabling to connect to more tools to more MCP servers to more uh kind of external information and so that's uh really about kind of um I mean MCP server support um which which would in turn enable a lot of things like actually using crypto. So for example, we do have near intent MCP server and so

your AI can actually start doing those actions. uh and there's like few other interesting product kind of ideas we have around how to display the out outputs etc to really enable um kind of better like I think in a lot of cases the people use text as an output which is not always the best when you actually going like you know for example trading a lot of people like oh I want to say you know buy me $100 but in reality nobody really wants that you want the trading UI right and so you kind of want like you maybe want to start with like hey I'm I'm in the trading mode but then you want you want actual like UIs ch like charts etc. So there's like a good mix and match of you know UI and kind of

text and tools that needs to be working together and again this is where potenti like relying on open source community to be able to build those uh you know let's say skills or plugins uh and really surface them uh would be very valuable and and so the idea is that you kind of open up this uh this platform almost make it permissionless maybe there's some gatekeeping that that you guys can do initially. Uh but you allow this to be a platform where you can encrypt these other models and then you can help people route and move between these things. Um we've heard a lot about X42 and MCP and these different models that or these different standards that can

help connect models together ultimately use a lot of these things at our fingertips to but use it more efficiently and seamlessly coordinate across these different things. How much weight do you put on these? Have you seen a standard that has really stuck out to you and says, "Yeah, this is something that, you know, we know is going to stick around. We're going to build around this particular standard. You guys creating your own standards." What do you what do you think is is the trajectory for these things? >> Yeah. So, I think it's it's important to understand that. Yeah. There's very different levels of the stack, right? So, MCP server is really just an API kind of standard for for AI to call. I mean AI can figure out without this

honestly but it it it did become kind of standard that so now the in in AI the thing is like there's actually a really interesting refer referential loop because as something more people use it it's more in the training data it's more in training data it actually just becomes like AI gets better at using it so so that that's probably like for MCP already happening uh X42 I think the 402 itself itself is a very useful primitive right so 402 is the HTTP code which was not used historically it was there for like last 20 years and now we say like hey let's use 402 so that that was that's the conceptual idea uh we were part of the

X42 launch uh and kind of as near intense as well we have we have a demo how it works um I think there's like more work needed to really improve this uh but I think directionally like the 402 as a concept where effectively in the HTTP request you can establish a session and pay for it versus go and sign up for API key separately like that that's extremely valuable and so I think that that going to be a part and then the intense is again flipping the script where instead of saying hey I need I need to call this API it's calling hey I need this outcome I need weather I need weather for Lisbon for tomorrow and somebody says like cool I'll provide it

to you for whatever a microscent so that's where 42 can be used and so intense plus for for two plus mcp all the things really working together that's kind of where we're going uh with this >> uh Ilia as we kind of come to a close here thinking about um the the kind of effect of of where we're headed with uh private AI privacy as a concept near the protocol you guys have had some also interesting protocol updates. Uh things like you know cutting inflation by half um these types of of general ideas.

There was this uh there was this L1 debate yesterday with Hib and Santiago and talking about what you know the valuations are and people are going to be wondering how a lot of these products that you've developed in including the intense product kind of retie in back to near the blockchain as well as near the asset. uh for the community uh out listening today kind of how are you thinking about uh 2026 as a year of kind of of reigniting uh near the the chain near the asset and kind of participating in this more pragmatic uh crypto environment let's say that we found ourselves in the return to fundamentals environment here um you know what what do you have to say to the community who have been alongside NE for so long and

uh you know we can kind of come to a close here Yeah, I think uh I mean obviously at the end it's all supply demand, right? And so the indeed you know we had a half halfing of inflation and so reducing reducing the upcoming supply future supply and then all this efforts one way or another driving more demand. um you know think of it as like the the decentralized confessionial cloud itself is going to use near as kind of a fee structure underneath it is a you know profitable business with you know 20 30 40% margin depending on like efficiency of the inference and so you

know that kind of generates surplus of near uh from what it provides to validators the similarly with intense right there's you know actual revenue being generated Um it's a it's more complicated because there is actually because the way the different UIs use it um it's not as as kind of visible right now like we we we show the total fees paid by the users but the actual revenue like we're working on how to display it properly because uh there's some agreements with some of the front ends because they like they want to charge a fee and so like there's a little bit of just like um structure but I think one thing I want

to mention given your uh always return to fundamentals there is actually an interesting comparison let's say somebody you know let's say there's whatever hundred parties that pay $10 million in fees you this is one model and you take this fees and you buy back the token and you know you burn it or you just keep it or You can imagine the same parties actually just end up buying the token directly with instead of paying the fees and you know maybe lock it for year, two years, three years etc.

Economically the same amount of near or whatever a token was taken out from supply for at least some period of time but now you have this 100 parties super aligned with near right and their fees are zero. So from a competitive perspective, they're actually going to choose this product versus another product which will have nonzero fees. >> So we're going to we're going to force token we're going to force people to be token holders as a result of using this awesome product. >> This actually sounds a lot like AI companies in the mag like these larger AI [laughter] companies that are trading token stocks for you know compute.

>> Yeah. Yeah, but but I think I mean there there is something about that where >> like there is a value in having your customers to be token holders instead and and instead of them just directly paying and so one of the things we're working on is is proposing some of the dynamics around that for near token where yeah we want we want more near token holders who are getting value out of all of the products we're building right I mean things s like simple if you stake some amount of near you have you know private private AI inference uh you know up to some limit for free >> those kind of things now it's like hey there's a value in holding near and then you know maybe your fees are reduced when you're trading so like you're

actually getting more and more benefits uh from doing that >> yeah last thing for you IA from me we actually had a really good conversation yesterday with S turnelo the CEO of sovereign who is uh building out the uh current near uh treasury company I think the largest or the or the only And basically uh in that conversation we spoke about how uh because of the acquisition of of such a a sizable quantity of the supply of a given asset uh you know in this case he was speaking about up to 10% of the total near uh supply you become a large you know shareholder stakeholder and you know contributor to the network almost like a separate labs corp. We were speaking about how there's this labs and the

foundation because of the regulatory uh you know body and now you've kind of got like like these third entities who are like Tom Lee now owns 4% of something or of ETH and um you know now Cell is going to try to get up to 10% of Near. How do you think about uh this dynamic when it comes to these treasury companies when it comes to them owning you know a a substantial portion of these networks um and then hearing their opinions acting on them keeping them at you know as happy as possible etc h how do you think about this either with near and sell or just you know at at large >> so I actually think this this is something yeah I've been thinking a lot about when this stats starting to um

come out and I think there that is actually the most aligned third party to the ecosystem right it's actually more aligned than even foundation from like a structural perspective because it effectively means that their market cap is directly attached to the value of the token and they can go in and like their fiduciary duty is to maximize their market cap right so like foundations for example don't have that as fid doing right I mean obviously like some foundations are very much looking enough to do that but regulatory environment etc it's been hard to even go and say that but the DATs actually don't have that challenge

they are very much directly like hey we're publicity security our market cap directly depends on market cap of the underlying token and our fiduciary duty is to maximize this market cap and and usually the executives are incented directly with the equity of company. So, uh now the challenge of that has I mean been that they mostly been just like a kind of whole hold and maybe stake type uh vehicle. And so what you know with S the the exciting thing is really like hey we have you know a really executive team that can actually build interesting businesses in this that you know generate surplus that they can reinvest

into buying more near or they can reinvest into providing more GPU compute to the network which in turn will get them more near right because GPU compute gets paid in near and so so the idea is like hey look this actually value additive to the ecosystem they and build a business. But this business is like normally if you build a business your goal is to maximize the business. So you're going to go and do other stuff, other ecosystems, whatever. Here it's very directly like, hey, but our at the end goal is to maximize value of the token. And so from this perspective, yeah, it's actually a better structure than even foundations. Uh be and so yeah, it's pretty exciting and I'm I'm

excited to working with Sal on keep growing near. >> Yeah. Yeah. S was great. Uh, one of the more active approaches, more intentional of driving value back to the token holder because of the incentive alignment like you said. >> It sounds like you're in a crime scene over there, Leah. [laughter] >> We're looking for you. >> That's because I talked about maximizing value of the token like immediately. [laughter] >> Oh man, Ilia, man, thank you for uh spending some time with us today. have a great evening and congrats on the big launch.

Uh it's been awesome working together, seeing you guys grow. It feels like this has been the perfect time for not only this show, but for all the pieces that you guys have been putting together from Near's perspective. So, uh props to you guys and uh return to fundamentals, man. >> Thanks for having me and everybody should check out the private near. >> Awesome. Yes, >> sir. All righty. Thanks, >> See you soon, man. >> Bang. All righty, guys. We will be right back with our next guest. But real quick, we just got to recap that thing. Rob, key takeaways, thoughts, how are you feeling?

>> I think the the forethought from uh Ilia as well as the near team obviously the the first time Ilia came on, you know, he was kind of describing this vision because at a high level it is somewhat counterintuitive. Why go and build, you know, it's primarily an AI company? I think that's what people fair to realize. the blockchain intense, all of these are side quests and then you end up having, you know, the the some of the best crypto companies out there, like I saw cow swap is now choosing near intense for like >> Quest became the main quest really quick with the Near Intense product, >> right? And so these things, you know, were kind of born out of necessity and because there weren't products out there on the market, uh, they had to build it themselves and then, [clears throat]

well, would you look at that? they ended up building the best version of that product even after people realized that there was a gap in the market and ended up choosing that as their their main focus. Ilia and the team still had the forethought and and uh and the execution to end up going and build the best product on the market. So I think you know because of that early vision now they have a full suite and it was just a matter of time these things were all being built in parallel. Yeah. Uh but now you know it's really really cool to see a lot of these things come together and I do think you made the point at the end there where you know we're seeing this happen in the war web 2 AI market as well.

>> They're basically creating the next iteration of the problem and Ilia and Near have always been two steps ahead at creating the solution. the chatbt sponsored post thing. Really? >> Yeah. >> Like look, I'll be honest. >> We knew it was coming though. >> We knew it was coming. Chat BT was kind of my daily driver when it came to AI. >> Is it not anymore? >> It's certainly not not looking that way for the near future. Yeah, >> the near future. >> Um I think um if this can push the needle for web 2 AI to think more seriously about privacy, then I think that's the biggest win here. That's why I was trying to you know kind of get to that with Ilia like is this going to drive uh broader bigger companies to be like oh there is a clear consumer demand

for this kind of like private AI solution and so that is yet to be seen but I think would be one of the more exciting outcomes from this uh general launch and product. So guys we're going to take a super quick break here. We're going to uh shuffle some things around get ready for our next guest. We got a big M&A acquisition with Galaxy and Aluvial coming in. Just happened today, fresh off the wire a couple hours ago. So, we we're going to get them on and talk about that. It's M&A season in crypto, guys. Thanks for being here for episode 12 of the AI Supercycle. See you guys in just a second.

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All righty, guys. It is M&A season. We've got Zayn from Galaxy and Chris of Liquid Collective Alivuvial uh in the back. We're ready to get fired up. Uh Galaxy has been making quite a few moves uh as of late in in the in the M&A and kind of acquisition slash IPO. I don't know. All I know is there's an institutional tokenization bull run happening in New York City. We were there a couple weeks ago at SmartCon and it felt like we were in a episode of um Wolf of Wall Streets and then you go on crypto Twitter and it feels like you're in an episode of like your your like worst your worst sad you know dream that is a nightmare that you can't you can't escape. So we're going to stay on the positive side of history. We're going to

stay in the institutional bun. Let's get the guys up and let's get started. Uh Zayn and Chris, Galaxy Digital Acquires, Alubial Finance. Guys, welcome to the show. >> Thank you so much for having us. >> Pleasure to have you guys. >> Absolutely. It's M&A season. Like we were saying, congrats guys. Galaxy Digital's been making waves. And I I think you know the the question on everyone's mind is why now? How did this happen? How did this come together? You know, we want to we want to hear the whole story. >> Yeah. Chris, give us the lore from your side, right? Being the acquiry, you know, you're working hard to build a business. you know, people are te telling you to launch a token. They want to, you know, your investors need to get paid. People are are on your ass. You you've built an amazing product. Talk to

us about kind of how this all happened. [snorts] >> Yeah. So, I mean, if we if we go back a few years, um, actually my my interaction with this was I was the chief strategy officer at a company called 3IIQ and this was 2022 2023. I was trying to launch the first ether staking ETF in North America and trying to solve the unbonding issues, trying to solve the liquidity challenges for ETF was a real problem and there was no solutions really in the market solving this. That's when I actually met the liquid collective folks back then and I quickly became an adviser. I've been working with them for the last few years. Um, and today if we zoom forward to today, like we're at an inflection point where 2025 has been a breakout year for liquid staking. The SEC

released guidance on LSTs. Um, we've been thought leaders in that space for years, kind of designating LSTs as quote unquote warehouse receipts. You can kind of think of it like in the commodity ecosystem, like you have a barrel of oil sitting in a warehouse. You want to be able to have people trade those those barrels without having to actually move the physical barrels, right? And so the SEC came out with guidance that LSTs essentially are are very similar to that. They're a receipt token. They're not securities. And so that really is like the the huge inflection point that's just starting to allow real true institutions to start thinking about engaging with these types of products.

We're seeing ETF issuers start to activate staking. Uh uh treasury companies start to activate staking. you know on bonding cues have been brutal in the ETH space 40 50 plus days. So like all of this is kind of culminating at the same time where there's this void in the ecosystem for uh for institutional liquid staking solutions and that's what Liquid Collective is really uh uh filling the void for and the partnership with Galaxy is like a a watershed moment for us in the ability to um really amplify uh the liquid collectives presence through obviously the institutional channels that Galaxy uh has super strong relationships in. Amazing. And so Zayn,

from from your perspective, Galaxy expands into Liquid Staking as the development company for Liquid Collective here. Chris just gave us an amazing background and backdrop as to how they kind of started. And it's actually pretty pretty ironic. Chris Brian Armstrong just put out this tweet saying that they finally uh created this uh uh no waiting time product for unstaking on Coinbase officially live. I saw a couple gnarly quote tweets saying it's kind of a sign of the times. are trying to get out of their bags. I don't [laughter] know what they're doing, but Zane, from your perspective, why is this so important? Why is liquid staking and becoming this Devco for Liquid Collective a great move? Why did you acquire Alu?

>> Yeah, sure. Absolutely. Um, well, my story uh starts a few years ago as well when I first met the Liquid Collective and Aluvial team. Um, we've been building an institutional staking platform for the past couple of years. We've grown substantially. Um, as of our last earnings report, you know, we've got a 17 billion dollar global platform of which 6.6 billion is assets under stake. And for us really, you know, Galaxy has been a major institutional player and a force. And what do we have that I think the liquid collective maybe hasn't uh had exactly behind it before?

We have excellent trading services, lending services, derivative and structuring desks. We are integrated into every major uh custodian into every major exchange. And so really to us the future is on chain and we go from you know physical staking if you will uh to liquid staking that is the next unlock for us like we are obsessed with the institutional you know uh onboarding experience. We have been really focused on the regulatory moment but also capital efficiency real onchain utility clever financial structures. These are the things that I think can all be paired quite nicely into an institutional LST platform like liquid collective. Like the the foundation is

there. We're really here to turbocharge our efforts, but then also um be very mindful of keeping the foundation and Chris and his efforts separate and distinct as a as a neutral entity because really the future is in we think a consortium model around driving an institutional liquid staking standard. Because what what separates an institutional stake product from a a retail one like you know we've all seen some of the and there was a a big wave when it came to Rocketpool Lido right some of these guys they they were around and and caught a lot of attention a while ago and they got some they got some adoption but it's really been an institutional cycle as of late this is where the attention is now what is the

difference maker is it compliance is it custody where where you guys say you guys have an edge >> yeah I think it's a variety of things. I think first and foremost um you know the the retail products that have been out there are designed for retail users. They're completely permissionless, right? So that's for the first thing. Anyone can mint and redeem into these other liquid staking pools and that doesn't really jive super well with like institutional users. Is is someone like Black Rockck going to stake into an institutional pool where there's been no KYC AML on the assets going in and out?

there's no OFAC compliance around the the the assets that are coming in and out of the pool. It doesn't really seem likely. Also, under these retail platforms, there's, you know, in some cases 100 plus validators, many of which are like small community validators. And that's a good design for a retail product which is very focused on being uh leaning totally into the decentralized narrative. But for an institution who really wants to have their arms wrapped around institutional diligence for the underlying validator operators like the node operators, they want to have a select subset of institutional node operators that give them diversification but aren't aren't you know Zayn in his basement uh staking

uh at his mom's house. They wanted to be really robust institutional entities like like Galaxy and like Coinbase and Figment. And so I think those are some of the design decisions that are fundamentally different. And then we can go beyond that like thinking about other ways that institutions are going to want to engage here. Things like governance. Uh Zayn mentioned this before, but like these these retail platforms have this decentralized government governance model. So they're they're very much um like more like a Dow structure with all these retail participants voting.

institutions want to have more of a more institutional consortia model uh where they have decision-making and oversight capabilities over the protocol itself. And so I think those are fundamental design decisions that we're taking into account and we've baked into the way that the liquid collective is structured today. >> Yeah. Um Zayn, I mean from your perspective here, um you know, you guys are are looking to, you know, so you got this five or 6.6 billion in assets under stake. Um it's a very institutional firm. A as I had mentioned there's this kind of institutional Wolf of Wall Street style bull run happening you know in the offices in New York. It it's it's actually insane the the justosition of

of sentiment and of of desire to participate in in in the space from those who've been around for a while versus those who are really trying to you know uh make a a long-standing stance and and really enter with size. it is is the furthest separated I've ever seen it. Um, when it comes to actually scaling Aluvial here, right, and scaling this liquid um kind of staking opportunity, I'll throw you a curveball here. We actually had Terrun from Gauntlet on the show at uh in June at Permissionless and we were speaking about how kind of proof of stake is dead, right? There's this idea that we're overpaying for security that validators are uh effectively uh earning

all this inflation when it's really not it's not really contributing to the network security. We can cut these rates down. Near is talking about pulling their uh or actually they've already cut their inflation rate by by 50%. Salon is trying to do the same thing. How do you think about this from Galaxy's perspective about the trajectory of these networks? Where do you see the value in staking uh continuing to acrue? How do you plan to kind of like uh capture that? >> Yeah, [snorts] that's awesome. Okay, a lot to unpack there. Um, so I would also agree with the view that we will have to wean ourselves off of inflation uh in due course because we've built all this tremendous block space, this incredible

technology, but really inflation shouldn't be keeping us afloat. It should be like rev or realized, you know, economic activity on these chains. And I think what you're going to find and this is sort of our thesis as well on the institutional side is that you know crypto a couple years before especially in an institutional context was more of just an idea. Um a lot of people for various obvious you know obvious reasons were uh dismissing the idea of digital assets and transformation as that as a competitive threat. I think it's no longer a conversation about if it's more of a when. And even in the past week, right, I'm I'm not going to name names, but a number of tier one financial institutions, wealth platforms, all these guys are are now onboarding native

Bitcoin, Ethereum, Salana, whatever it is, trading that is a major unlock, right? In order to retain their assets and keep their customers sticky to their platforms, they have no choice but to, you know, uh, hold their noses and onboard crypto. That's an amazing moment for us, right? Uh there was it was an eventuality and now we're here, right? Inevitability. Um but to move that thing even further, right? Staking is still fundamentally important. We think that uh everything that uh Chris was saying before around um bonding cues and Ethereum for example and like a more capital efficient transferable tokenized representation of that staking object is quite powerful in its own right. And so I think there's there's a a a real home for liquid staking tokens versus just

native staking in general. And that's kind of part of the play here. But bigger picture, we subscribe to the view that the future truly is on chain. I know that sounds a little bit hokey, but the reality is like we've gone from a conversation around oh tokenized money market funds or whatever it is, but people are going full steam ahead into tokenized equities, right? and all this block space and the stake that's you know securing this block space there's going to be I think a lot of interesting stuff around owning that that block space which is basically the information rails for all these you know this economic activity that we expect to happen which is QIPS trading on chain right like if the world truly moves on chain then validators will still have

economic um you know uh it'll still be accreative to them economically just not in the way it is today and I think that's that's that's the healthy maturation of what proof of stake and securing the network actually looks like. >> Chris, anything to add there? >> Yeah, I was just going to say I I also think it's worth noting that like native staking um has design challenges for like for institutional users for all users like the lack of liquidity, the lack of customization, the inability to make the assets productive. Um, and I think our view and what Galaxy shares is like longer term, all staking ultimately becomes liquid staking. I I I think that's really the path. It's the current native staking um uh meta is becoming

more and more commoditized. There's not a ton of differentiation across um across the ecosystem today. I think certain folks like Galaxy have a really interesting position because they have this whole suite of services. it's not just a staking business that are super complimentary, but some of these other standalone like just staking operator businesses, they don't really have a really strong competitive advantage in my view. And so what I think is really powerful here is the union of Galaxy and Liquid Collective actually is like the first time that a native stake an institutional native staking solution and institutional liquid staking solution are really being paired together side by side and being offered to the to the institutional landscape.

So I think that's going to be a really a really huge differentiator that that no one else in the in the landscape has. >> Yeah. And and now that the engineering roadmap is is really spearheaded by Galaxy, what are some of the more the upgrades that you guys are targeting right by unifying? Ultimately, you're looking at the next segment of customers that you're trying to onboard or ultimately upgrading uh the existing customer set. What are some of the features that you're particularly geared towards and targeting as unlocking what this next wave of adoption is going to look like?

>> Totally. I will um I will disappoint in saying you know this is still fresh and and we just announced this morning. Um you know we just passed embargos but I I think in in broad brush strokes right like Galaxy we have the good fortune of being in this space for many many years. It has not always been easy. Um you know we've navigated a bunch of market cycles. I mean you guys have been there through it all as well. Um but really we've been institutional only. I mean obviously we just uh you know uh launched our own retail ambitions but setting that to the side for a second we have been in the rooms with all the platforms of today all these major custodians the the crypto consumers

right hedge funds allocators whatever it is and we're also in the rooms with the the tier one financial institutions of tomorrow and you better believe that we understand everything there is uh about the institutional condition because we'd have We we not only have we've been servicing our clients this whole this whole way, but we've been navigating it for ourselves, right? We are now a publicly traded, you know, USlisted company on the NASDAQ that comes with its own rigors and controls. And, you know, everything that we do, I think, is contextualized from our our our tradey roots and that DNA. And so we're going to find ways to transpose all of that uh into the product design because really

to to to harp on the governance thing once more, Galaxy is a partner to the liquid collective uh in in providing development services. That's sort of a day one, but really and and Chris, I'd love to hear your thoughts on this as well. This is just the first leg of the journey and we're so excited to bring other strategic institutional partners into the fold and also contributing to the collective design and and the steer of the road map because this could also lend itself to the creation of uh what what institutional protocol governance could look like.

Yeah, I am curious to to hear from Chris because we we know liquid collective is governed by this liquid foundation uh and then ultimately this is going to make you know some of the some aspects of this governance stronger some things are going to stay the same. So Chris maybe you can build on on uh on what Zayn is is describing here. >> Yeah absolutely. So as they mentioned we we see the Galaxy partnership as like the first step and in 2026 one of our key uh goals is going to be to expand the liquid collective. So, for those that don't know, the Liquid Collective was originally founded as like a a joint um uh initiative between Coinbase, Kraken, and Figment. Those were like the founding members of the Liquid Collective. And so, the goal here is really now we talked about like the

inflection point and how the market is changing in the regulatory environment. Now, uh, as Zayn mentioned, we're focused on bringing in the next wave of institutional users, ETF issuers, treasury companies, Trafi institutions that potentially will sit around the table and be part of the governance structure. And and we're super excited because Galaxy actually shares very much in this vision of keeping the liquid collective independent. That's the only way we actually really make the liquid collective and and the institutional LST products um, pervade the entire ecosystem. I think we've seen that with like stable coins. Like if you just have like branded stable coins on platforms, a lot of times they don't really get that escape velocity and get integrated everywhere in order to make the liquid

collective the most robust. We want it to be integrated everywhere. We want all these different institutional participants to be part of this governance model. And so that will be a key part of the the growth in 2026. We have the partnership with Galaxy. We have partnerships Coinbase and all these other institutions in crypto. We want to expand that user base and those institutions to sit around the table and be part of an institutional consortium that helps bring the liquid collective into the future. >> Yeah. >> And and could you describe how this next wave of adoption ends up getting involved just even at a conceptual level? Right. We know that Black Rockck and some of these other ETF issuers are they're doing really well. The Bitcoin ETFs, the Ethereum ETFs are some of the

most successful ETF products that >> Yeah, Larry's calling for 700k Bitcoin today by the way. just wow 700k for sorry he's saying the sovereign wealth funds are buying Bitcoin. So clearly those Bitcoin ETF fees are are getting to his uh his his level of the balance sheet kind of a conversation here >> and and so they're making ETF fees but at at the end of the day you know they've got all of this ETH and all of this Bitcoin that is not really being put to productive use. What is the mechanic for for Black Rockck to either go and stake that and pass it back in the form of a staking ETF or just go and stake it and pocket the extra yield?

>> Yeah. >> Yeah. So, I mean, firstly, with with the recent guidance from the SEC, ETF issuers have started to be able to activate staking in their products. Um, you know, there's there's limited from like Bitcoin, you can contemplate things like securities lending type structures or finding other ways to generate yield. We're not really there yet. on the on the east side and Salana and other proof ofstake assets though um ETF is have started to stake. I believe Gayscale was was the first to activate staking in their in their ETH ETF uh back in October and and so now you know that world is changing. That said the ETF issuers um do have limitations really about how much they can stake because of the liquidity challenge with staking. So depending on the protocol, certain

protocols obviously have shorter unbonding periods, but like for ETH, which as we mentioned before, 40 plus day unbonding periods, the ETF issuers are being relatively conservative and staking 50 to 60% roughly of their assets. And in order for them to continue to stake more of that, that's where this infrastructure that we were talking about really comes into play. Having robust, scaled, and liquid institutional liquid staking solutions that can allow those issuers to to marginally continue to increase how much of the portfolio they can stake. That will help them increase the amount of staking rewards for their for their shareholders and to ultimately also

benefit them as the manager. >> Yeah, >> exactly right. If I could just add one more thing, you know, um we are moving into uh you know with the maturation of the industry, it's not a game of percentages necessarily anymore. It's a game of basis points, right? You think about the fee compression and like the relentless competition in the ETF and the ETP complex, right? How do you make your product a more competitive product? Well, you could cut fees, but that's not necessarily sustainable in the long run.

Or you can find, you know, riskaware ways to increase the amount of your your staking or your utilization ratio, whatever you want to call it, to pass along, you know, another 5, 10, 15, I don't know, one and a half percent um, you know, to your end customers. And it's it's an interesting concept where you know the the the more you can actually allocate to staking and effectively put it to productive use within the product the better the better the product becomes which probably begets more inflows and you've got this virtu virtuous cycle uh you know in the context of a staked uh fund that actually is quite advantageous

um you know to us here right we think that LSTs definitively play a role in the allocation matrix and that portfolio of the future. Now, to be clear, we're still working through some regulatory issues, some tax issues. Um there is there is work yet to be done, but you know, an optimal outcome is this is a much easier, you know, um sort of like abstracting away all the complexity, all of the liquidity dynamics that maybe you know work against the allocators. This is actually now a superior product that anyone could be using to um improve the attractiveness of their product visa v their peers.

>> Yeah. and and Zan and Chris, do you guys anticipate that, you know, once we get the staking kind of aspects of, you know, Bitcoin staking is kind of a weird thing because it's not exactly you have to do it in a very unique way, uh, because obviously just based on the network design from the consensus layer, but for ETH, for Salana, for some of these others, uh, do you anticipate that the staked versions of these institutional u instruments like ETFs, ETPs, etc., do these just become the de facto going forward? I guess like what I'm trying to ask is like in a world of of staking enabled, is there any non-staking ETFs that get demand or like how are these consumers and and allocators actually thinking about whether it be the risk, the yield, do

they really care about the yield? Because I I've gotten different opinions just kind of like how do you see this playing out? >> Yeah, I I would say that um for institutions like ETF issuers, it it doesn't move at the same pace that crypto does. I think we're all in in the c the crypto trenches, we're all used to things flying at light speed. And these guys um even though some of them are a little more cryptonative, they generally operate, especially the black rocks and the fidelities, they operate much more thoughtfully, much more long-term oriented. They're much more riskaverse. They do much deeper diligence. And so today, the the the version of staking that they may interact with doesn't necessarily look like the final version of of what their staking infrastructure

looks like. three, four, five plus years from now. And I think when you go on that time scale, five plus years, I think all of these proof ofstake ETPs will ultimately be staking the vast majority if not 100% of their assets. There will be robust infrastructure like institutional LSTs that are powering those solutions and credit facilities and all these all these different components that are required. The market infrastructure that's not robust enough today, it will be there in five years. as these guys are continuing to scale their products.

>> And I'll just add one more thing because I come from an interest rate derivatives background. Um I am I I I love the idea of staking because in effect you're passing on uh and I'm probably going to get slapped for this, but a risk for you right now. There's non-zero risk. Of course, they're slashing all kinds of other stuff, but you've got a nominal productive, you know, yield or rewards rate on your underlying asset. And I think Andy, what you're driving at is yes, in theory there could be a future in which it's not enough just to hold Ethereum, but your default way to get beta exposure to Ethereum is through an LST because you've got Ethereum plus just kind of out of the box. Now, what do we need to get there? Everything that Chris was saying before around market

structure, etc., you know, it is a liquid staking token. It's only as good as the liquidity behind it. But if you've got very efficient markets in the future, then in theory LSTs could just be, you know, sort of like the default way to leg into a position and then we sort of move on to to the next evolution of of tokenized representations of things on chain. >> Yeah. And and because it's composable and that's the to the nature of Ethereum, it's uh still usable on all the same places that ETH ETH proper is. I I'm I'm curious maybe. So, at an institutional level, one of the things that we've seen play out is this basis trade where people are they're buying the spot uh and then they're shorting on the future, whether that be per or it

might be CME, right? And they're capturing they're capturing the basis in between. How does implementing a stake rate change this basis trade? Is is it going to create more uh a a a deeper spread or wider spread and cause more basis uh as we have a staking rate that's available at the ETF level? Will this create a new basis trade for ETH and other staking ETFs? Zane, what what do you think? >> Yeah, I think um there's a lot to explore there. I would say that you know um to the extent you're you're introducing another uh you know rate into the the basis math then yes I mean

where my mind goes immediately is you know to the extent we we do our job and we get you know the LS tokens on board in as many places as possible if this is eligible collateral with the right haircuts um you know at these exchanges where you can seamlessly use that as collateral against the futures position then yeah you'll have you know LST basis opportunities. you've got I it's cool like it I mean really I think where this ultimately goes and and this is where you're kind of driving Rob is like you know markets are are somewhat efficient right you're going to find new ways to express uh views and trades uh incorporating now like the receipt of a rewards rate on your core collateral

that's very cool there's a lot of interesting applications there certainly a basis trading application but just thinking of you know that as part of your collateral basket for any credit product, any deriv product. I think there's a lot of design space and that's also what gets us excited at Galaxy because, you know, that's that's what we do really well here and we have been doing for quite some time. >> I I would just add too like some some of the folks that have been running the basis trade for a long time, you guys might know the Superstay Eyes, right? They have like a tokenized basis uh carry fund. They've used uh the liquid collective LSTs as part of those strategies over the last year uh for the long leg of that trade. And again, I think the efficiency will increase over

time to Zayn's point, like being able to post it as collateral everywhere. It will make the economics better, but there's people even testing that exact type of strategy today. So, I I think that validates the the thesis that you're getting at. >> Yeah. Beautiful. Um, gentlemen, congratulations on on this collaboration, on this acquisition. Uh, really looking forward to seeing how this plays out and just seeing how this ETF landscape plays out. We've got uh Paul Atkins earlier this week said that he's introducing this uh innovation exemption for our industry sometime early next month. Uh which hopefully paves further for new IPOs, new acquisitions, and just more broad collaborative opportunities for this

space like this one. So again, congratulations. Thanks for spending some time with us. Uh and look forward to seeing what comes next. >> Absolutely. Thanks for having us. >> Next time. Thanks, guys. >> Cheers, boys. Boom. >> What a uh what a segment, Rob. I mean, I just like to spend more time in the uh in the institutional tokenization bull run than on the crypto Twitter doomer. >> I'll see you on the I'll see you in the tokenization tower. We'll be in New York. We'll be uh we're we're we're looking at office space. We're we're going to make it happen. And uh >> TV is is in an institutional bull run in New York City and uh the rest of you

guys who are stuck on crypto Twitter, I'm sorry. I'm sorry. It is not that pleasant down there. Well, what a great conversation there, Rob. >> Yeah. Yeah. I uh I I love thinking about this. You know, at times you could say that the institutional wave tends to get you could call it boring, you could call it simple, you call it peaceful. Ultimately, we we're rebuilding a lot of these financial things. But, you know, I think the basis trade, if you're looking at the pure math of it, this is where a lot of flows come in. Like you have Black Rockck. Black Rockck's a company. It's been around what a hundred years, 50 to 100 years, been around a long time. Makes a ton of money. And you introduce a product like a Bitcoin ETF or an ETFs >> and all of a sudden that rises to the

number one revenue producing product >> of their entire stack for 1988. >> And they've made the most money this year off of Bitcoin ETFs. >> It's insane. >> Crypto. Of course, Larry Frink is saying that that um of course Larry Frink is saying that uh that >> show me the incentives. I'll show you the outcomes are buying. >> And so so much of that uh those flows that revenue comes from fees on the flows. They're basically getting trading fees for their ETFs. And a lot of that has been due to the basis trade. People are taking out leverage. They're buying the ETFs. Those are the flows. Then they're going to go short on the CME.

But as more and more people are going to, you know, take out leverage, it widens the basis. they're going to buy the ETF more and more. Adding this liquid staking rate on top of the ETF is going to widen the difference between the rate that you're getting on the ETF, which was zero, now you're going to make it positive, and then the rate that is getting paid to you over on the other side when you short the CME or the per depending on what what venue you choose. I think that wider spread is going to cause a greater basis trade and it's just going to cause more and more capital to flow into >> Well, that was the FUD though, man. That was the FUD. The FUD was like, "Oh, no."

uh the ETF inflows aren't real. We're actually just buying um a bunch of uh ETH so we can short it on, you know, CME or whatever. And that's what this like institutional basis trade was. Um >> I mean, we'll see what happens there. But >> the it's FUD on one side when the basis trade unwinds, but it's it's bullish on it's positive on the other side when it expands, right? And these things go through es and flows. >> We get the CEO of of Dapper Labs, the co-founder of Flow.com, Roam. He's in the back. Uh, this guy just put out an absolute banger uh that that shook the entire market two days ago. Had to have him on to talk about it. To talk about the Rob, you remember NBA Top Shots?

>> Of course. >> That's this guy. You remember the the most viral app of the entire 2020 2021 run. Yeah, >> that was Rohan. >> Look, Board Apes, Dapper Labs. I mean, the NFT super it was an NFT mega run there back in 2020. NBA Top Shots was something that got out of the cryptosphere and made sense and resonated with real people. >> Yes. >> So, >> yes, >> let's get Ro up. Uh, let's get firing. Rohan, welcome to the show, man. Thanks for thanks for joining us. >> Thanks for having me. Good to be here. >> Absolutely.

>> It's good to it's good to hear you. I mean, I must say your whoever you involved on your copywriting skills here, that that headline just got me like bang. It was like what? We up. Okay. We built apps with the world's most loved brands, protocols with millions of users onboarded and billions in volume. But our mistake was not enough of the value flowed to the believers who made it possible. We're fixing that now. Honestly, Rohan, no fault to you. I think this is the broader trend of the industry as we're in this kind of maturation phase trying to figure out where this value is occurring, trying to figure out kind of like, you know, what's happening in in terms of token holders, shareholders. So before we get into the tweet, maybe just a little bit of context. um about what

you guys have been building over the last several years since the Top Shot era and just kind of like generally where you're at uh in your development as a founder, as an entrepreneur. Well, welcome to the show, man. >> Thanks, man. Thanks for having me. Big fan and excited to be here. I mean like you said we're we're we announced to the world that hey we've been building these products been building them for a couple of years and you know we think that that this sort of trend towards consumer finance and what it can enable for for everybody is is is an absolute gamecher and it's going to change uh the way people live their lives and the way that they save their money the way they think about finances over the next few years.

>> [clears throat] >> You know, our mission from the very beginning has always been take crypto technology and then build products that everyone can benefit. Uh whether it's for the NBA, NFL, Disney, we've I think shown that we can build products that everybody can understand at least. Uh but but but now we're using that to kind of bring um sort of empowerment to people's financial lives. So it's a it's a very exciting chapter for Dapper and Flow. And the biggest change that I think has also happened this year is finally we feel free to actually innovate instead of you know being afraid of the regulatory environment and and all of these things. So so it's finally we can actually sort of think about alignment of interests and and really the purpose of crypto is to share the value that's created with the people

that help create it. Um and that's kind of the mantra whether whether in the NBA Top Shot team or or now the Peak Money team. Um, everyone's about, okay, how do we make uh more value for our users and token holders? >> Yeah. And uh and you you've unveiled the flow tokconomics as part of this as part of this post. Um I I'm curious, was there one thing that stopped you from doing this? Was this an idea that you had back then? You guys kind of all always were thinking that you were going to do this, but you were blocked by some reason or did this gradually end up building and building ultimately to now and you said okay now is the time because of his regulatory clarity or just this philosophical incentive alignment. What what was it that

ultimately clicked and said yes now is the time to do this? >> Yeah. Yeah. So I mean the DeFi direction I think was was really the the understanding that hey that the adoption this cycle is actually happening through stable coins through real world asset tokenization but no one's building the product for everyone to access that value. You everyone's hearing about it black rockck JP Morgan and sure you can go buy an ETF but but what's the actual sort of uh uh interface into this new tokenized world? Um and when when you know it was clear that you know everyone from the white house to treasury department were talking about the modernization of the US financial system through tokenization um it was we have to have we have to make this happen. Um you know we started laying the

groundwork uh for for a while like flow became EVM equivalent at the end of last year that took about a year or so to sort of make sure that the even environment on flow functions the same way as um as as expected across every other L2. And so that made it really easy for layer zero for for Fireblocks for all of the sort of tooling necessary to kind of be seamless across the chains and and that's fundamentally what's led to kind of this point. But but so that was that was one big unlock. Um and then and you know we've always been sort of uh on the trend of okay what else can we do with crypto beyond currency?

>> Yeah. And and I mean in this post you kind of put that you're applying all this complex tech to the this biggest market which is money. So kind of let's go through some of these elements here and we can kind of talk through some of the decision- making and a and what our audience what the community can expect. So first is this flow credit markets. It's a lending protocol uh that that is open source being developed by the flow foundation. um you know a a and you kind of have this vision of traditional DeFi lending being kind of uh antagonistic let's say versus like the view that that that you have with regards to how onchain lending should happen. What what's the lore here with with flow credit markets and what do you expect to

achieve uh by building this product? >> Well, I mean think about it when you put your whether it was the maker contracts back in the day or now with a etc. you sort of take out a bunch of money, you have to manage that manually or through off-chain agents. Um, and if the markets flash crashes or or whatnot, you get you get liquidated or you're at risk of liquidation. Um, with flow credit markets, it's sort of saying, well, how can we maximize LTV? So, you have you take out instead of 50% or 40%, have you take out 80% 90%. Uh but then the instant that the markets uh is is adjusted and you need to top up your balance um it actually just pulls that balance out of your wallet automatically instead of um instead of uh basically liquidating you. And so without any

action whatsoever, the lending protocol can ask the wallet, hey, I need uh you know, I need some dollars back or else you're going to get liquidated. And then what the wallet does is takes your uh yield position, unwinds it, pays back your debt. Um, and then when Bitcoin goes back up or whenever your collateral goes back up, it takes out more debt, puts it in the yield source and and whatnot. So, it's a lending protocol that automatically manages your position to maximize LTV and minimize liquidation sort of in one sentence. Um and it's it's possible because all of that onchain actions happens on flow where you know we have subsecond block times and every block it can basically just check the prices and rebalance atomically and say well you know hey I need to sell a little bit I need to buy

a little bit and because again the costs are so low because there's no me uh because of the flow architecture all of that kind of becomes um tractable whereas on let's say on any other network you know salana or base included um you're sort of you get chopped by by fees const constantly and uh even if the automation was possible which which um um flow flow is the most uh sort of leading chain in terms of being able to actually build these things without the need for off-chain agents and and so you kind of feel more uh protected because the as long as the protocol is functioning the thing that would liquidate you um you're constantly getting rebalanced.

>> Got it. And so this >> Yeah. which >> and and that's this is the first component of this this trifecta uh this lending market as you mentioned it it you know can maximize LTV minimize liquidation uh and this is complementaryary to the second component which is a product you guys are calling peak money um my understanding of this is it's effectively uh a a financial super app whether you call that a neo bank kind of depending on up to interpretation but like uh like you out in your post here. Peak money is the finance app for a generation that has stopped believing in banks. So maybe you could talk through what the philosophical backing to this is. For so long, this industry has been bank the

unbanked, right? But I I I think you're absolutely right and this is why we're seeing the rise of neo banks. We're losing faith in these traditional institutions. They've been giving us 0.00001% on our on our, you know, savings accounts for so long. we know that there's better options out there now. There are alternatives that we can go and get. What was the the inspiration behind Peak Money and and maybe you can give us a little bit more detail into uh what Peak Money is going to be capable of? Yeah, I mean look, I think the the big inspiration is that crypto finance, consumer finance, the next generation of it should be open and in the control of consumers and the interface to that is going to not be the old uh uh sort of

established institutions. It's going to be a native product that wraps around these these uh new opportunities in ways that sort of give the benefit to the consumer. You know, we talk to a lot of financial institutions. They talk about they're they're excited about tokenization because of reduced uh friction and and lower fees and 247 um you know, markets and this this kind of thing. But it's really the programmability that is most interesting to us. And what what kind of interface can you provide to consumers when there's sort of infinite uh variety of different strategies they can they can participate in where they don't have any middlemen to kind of from anywhere in the world to access any market at any time with any sort of derivative on top of it. You know, if you include sort of

what's possible with perfs, etc. And so that was kind of the inspiration is how do you build a an open interface into this world, but that's as easy to use as Topshot and you don't have to sort of set up a traditional wallet, transfer money from a from a sort of Coinbase or whatever it might be. Um, you can just onrap super easily with whatever payment method you have. um and then participate in these D5 products which by the way a lot of this the the new tokenization of the world will mean sometimes you're using DeFi but you're not actually using crypto as in you might be interacting with real world assets like stocks or bonds or real estate or whatever it might be or stable coins and so it shouldn't feel like a blockchain product even though it's using blockchain to do

everything that it's doing um a lot of the users might just be you know US dollars and you might think of it as I'm just using a high yield uh account or hey, I'm participating in some sort of lossless lottery. I'm participating in kind of a a prediction market style game. Um, but on the back end, these are all just like autonomously executing smart contracts and and smart contract code. Um, and so nobody was talking about it that way. And and you know, for for us, the um the the mission has always been what how do you build a product that introduces the the benefits of all this stuff to people without sort of the the crowd and the technology? And what's the benefit? It's higher yield.

What's the benefit? It's uh it's sort of the same opportunities as these institutions or or high net worth individuals would have access to uh but now it's sort of delivered to you in a very simple packaging. >> Yeah, you're you're absolutely right. The pragmatic approach here is you you juice the efficiency gains that you get from blockchain. You apply those to things that people are are accustomed to. People don't they don't want, you know, the the wide variety of fluctuations in their currencies. This is why Bitcoin isn't it's a store of value and it's not a currency, but they do want the efficiency gains and pass that back in the form of yield. And I maybe you could fact check something that our our team did some research.

They found 15% is what you're suggesting on on Peak Money. Uh 15 what I have here. I again I don't know if this is true, but maybe you could fact check. Peak money promises 15% plus APY and no liquidation risk. Is this is this what you guys are suggesting on on peak money? >> Yeah, I mean look the the the sort of the actual yield sources will be dependent on what the market can kind of provide. These aren't going to be juiced yield sources, but yes, the product will uh sort of incorporate the best yield sources across uh every chain and they'll be bridged to flow also through uh layer zero etc. Um and and then when you come with a uh collateral like bitcoin, we don't go farm bitcoin

yields. What we do is we put the Bitcoin in the flow credit market. We take out stable coin and then go farm stable coin uh yield. And so you're which which is typically the highest uh yield available out there. There's some sort of like sometimes there's cryptocurrencies that um have high yield as well. And the cool thing is we're not taking currency risk because for example, if you're putting in dollars and you're borrowing a cryptocurrency and going far and crypto yield, your your debt is denominated in the currency that you're borrowing. So if it crashes, you just take out more. if it if it pumps, you just pay it back. Um, and so you're never kind of it's always delta neutral. And that's the beauty of this thing. You can match any collateral with any uh yield type. Um, and so I think, you know, the numbers

right now uh that that we we think we can get is 50% for um stable coins and you have to then deduct the cost to borrow um for the Bitcoin holders because it's a slightly different risk profile. So we think you can get high single digits for someone someone like Bitcoin um which is absolutely unprecedented. And so so again like the the the actual yields will be dependent once the product sort of is is at scale and it'll obviously be dependent on um on um sort of the size of the market as well. Um and then the next thing that we're going to do is obviously bring sort of the consumer best practices here. And so it might be that up to a certain amount you you're getting a higher yield. Um we're trying to sort of democratize and bring kind of more accounts in. Um and then you know beyond

that amount you're getting a a lower yield because you couldn't get that yield anywhere anyway. So it effectively is going to help drive the whatever the most efficient yield is somewhere else. We can bring it here and then get higher leverage out of the lending protocol. And so um you know naturally we'll get a better offering than most things. And then the other piece is it's going to be super easy to use. Yeah. >> And so even for crypto people it's kind of like it's set and forget it. It's non-custodial, but it runs on chain and uh so why wouldn't I use it because it's not trying to tax me or take you know junk like a fund manager would.

>> Yeah. Yeah. And and and I I appreciate your uh you know just straightforwardness with the yield question. I think a lot of people will wonder where the yield comes from or kind of how that how that is set up. And I think you know the third part of this is the tokconomics and I'd like to get there but but I think there's there's uh something to be said about the growth that you guys have had 15 million users 200 plus million mints onchain and we've seen this kind of relationship between apps and chains together change a lot over the last couple years right there was like you know let's build everything on Ethereum L1 then we had different rollups launch and L2s launch and you know you know L1's like flow like soul etc. Then we kind of brought into okay

why don't apps launch their own chain? Okay, why don't we have these different like uh economic relationships based on how much value a given app uh creates back to its chain. Then you got these things like application specific sequencing and these types of different like technical models. Um but you guys have now moved into a a thought camp of enshrining protocols and creating flywheel apps as your new model. Could you just explain why this is the decision that you guys have and like what this general mental model of that you have between apps and the chain itself and kind of why this is like the yeah like what is that mental model?

Well, the mental model from the first version of Dapper and Flow was if you build it, you have to you have to create some reason for people to use it u for them to come come participate in the protocol. Especially what you're trying to do is go across the chasm and bring a new generation of uh people in. They're not just going to try because it's new. Um and so Topshot did that for FL um where where it brought the first wave of people to try the technology. Um CryptoKitties did that for the original NFC standard. Nobody cared about ERC721. We published it um a month or more before we showed the first version of CryptoKitties. So, end of September, end of October. Um and it was kind of like, you know, some people cared, but it wasn't this this thing until people got

their hands on it and you could flip cats for thousands of dollars. Um and and so >> or NBA trading cards as well >> for for hundreds of thousands. Yeah. Abs. Absolutely. So, so that that like you have to have a killer app to make to make the show the platform's value um and then kick off that those network effects which then bring the wave of developers, bring the next wave of liquidity. Um, the thing we're doing differently is the enshrined protocol where instead of building that killer app in sort of a closed way, we're building it in a fully open way where there's zero privileges that the app has o over the underlying protocol and anybody else can come in and build derivative apps and we hope they will because you can do a lot of very

interesting things when you combine onchain automation, tokenization of assets and uh sort of this automated lending protocol and other automated versions of um of of a DeFi primitives and so so that that those two differences are I think where we're going to win this time where you know we've done the killer app thing multiple times but the last time we did it that billions of dollars liquidity etc stayed in a silo and even things like you know the ticket master product 100 million mints more than 10 million users but they're in the ticket master app whereas here it's sort of their own non-custodial wallets open infrastructure smart contract is open source you can go check it out right now um and anybody else can kind of spin off derivatives from it once it sort of hits

that um breakaway point. So it'll start it'll keep compounding. >> And so the goal there would be basically okay we had a really successful uh application setup and development and usage in the past but we weren't able to actually like fully convert those users into actual onchain consistent users because they were in other apps that were using flow kind of underneath if you will. But now it's like okay no no no they're going to come into the app. we're going to give them a really good UX onchain and then they're going to become sticky users of our blockchain for whatever future offerings that we have, future derivatives, um, you know, that you've mentioned. And so the goal is more of a retentionbased game here as well as like almost like in-housing

these applications and these users versus like outsourcing all of the all all of kind of the management of these users. Yeah, it's it's it's it's that but also when we did Topshot um you know that inspired hey you know a whole wave of other players but those players couldn't use the topsh shot ecosystem they couldn't build for those customers they couldn't launch even new tokens on float they had to go to do it on Ethereum and Solana and so that's why board apes is on Ethereum that's why uh you know all of these doodles etc they happen on other networks um first and so here it's the it's different so when the first thing works the second thing, the third thing, the fourth thing, the all of the ecosystem stays uh sort of gets stacked

on top and um and becomes fully compatible and adds value to that same user base. Um which I think is super important. >> If uh if you could go back and and change some things, would would this would you have done this first and that would have been something that you would have changed? [laughter] Like I mean you guys >> I would have bought board apes at two ether Rob inside back in time, you know, >> bought the entire punks collection, right? But I'm curious like what you guys got a lot of things right. What do you think you could have done that maybe you know would have gotten you further ahead of the curve or or not falling off as much >> or even just like any cool stories about Top Shot that you like can reminisce about is cool.

>> Well, I mean we had so many learnings because there was no playbook for hey this is how you build this economy. And so if I could go back on Topshot, building in syncs really early on um and daily like activities and gameplay that's not just >> flywheel >> um not even in that case just like an entertainment sort of flywheel and on the DeFi side >> open infrastructure would have been given rise to DeFi for sort of that that that era whether it's uh lending protocols whether it's tokenized sort of rappers whether it's the punk strategy and style tokens that you're seeing today we' seen them evolve at that time just because the volume was so rapid and and and run away. But it's really hard for me to say we could have would have

because >> right right >> you know it wasn't actually possible on flow at that time because flow was not EVM compatible at that time. It couldn't have been because the the all the pieces were too early and if we hadn't done that we wouldn't be here five years later with a mature enough stack where we can actually build decentralized finance products on top of it. So it's sort of like we they had to go through that phase and now we're comfortable you know potentially saying this thing can run a trillion dollar economy on top of it. what what were some of the learnings that you you realized from the uh convergence of these two worlds because we we think a lot about this when you know the DeFi typically financialized world sorts of sort of runs into we've talked about web 3 gaming we've talked

about NFTTS you know there's a there's a convergence between these two worlds when it actually does work and you know you guys got enough to to really say that you had product market fit was there a customer segment where they they just got it or was there a learning and people, you know, kind of approached it from one end or the other? What did you learn about the consumer behavior of this particular segment? >> I mean, look, the consumer behavior is has only gotten more uh into this direction, which is people want skin in the game. They want to play with with stuff that they enjoy and it makes them happy, but they also want to have money involved. Whether they're watching sports, they want to be betting on it.

If they're uh involved in politics, they want to have prediction markets. if they want, you know, the the the intersection of money and consumer life and entertainment and sort of social media has become so seamless. You know, you're scrolling on Instagram, people are pitching investment uh opportunities. you know, you're people are posting about their wins and losses from from memecoin trading or at least they were back when uh you know that but but that was the key part of it where where finance and social are are getting more in meshed and there is no real platform for it where all of the social apps stay very far away from being financial and all of the financial apps stay very far away. You know, Venmo shows you what money you send to people. That's the extent of social in finance, right? And and so so that's what what kind of also

get gets me really excited is there's so much unexplored design space where um you know you can do things with friends, you can do things against friends, you can uh find new friends that are I mean that's what NFTTS were, right? We're interacting based on our love for very valuable digital assets that that say something about our personality. Um and that is financial. You know, there's no way people spend $100,000 on an NBA Top Shot without considering, you know, where am I putting my money? What what sort of uh uh uh what decisions am I making here? And and you know, the we process billions of dollars in in transactions. And you you know, the the piping to do that is the same piping that people have to be trusting to use

whether it's yield, whether it's u sort of speculation of of different forms. Um that's >> Yeah. Uh, I'm curious what it was like um, watching and managing Top Shark's growth. Like that thing went from zero to 100 really freaking quick. Like, like maybe you could just clue us in on on what it's like to be a founder watching your product go from, you know, basically launch to like the one of the most used applications on chain all within a matter of months, weeks really. Um and and really like what that process taught you about scaling products uh about reaching product market failure about scaling a team just kind of like what did that meteoric growth teach you about being a founder that uh you know

those who haven't experienced you couldn't have had that opportunity to learn. >> Well I mean look I I could talk for a week about that. Um the biggest thing is like it looks overnight. It wasn't overnight, right? Even when Topsh shot it was May 2020, April 2020 we opened the alpha. May 2020 we opened the beta, it didn't really go viral until January, February 2021. Um, and so we were even through Christmas there was like doubts in the community a certain whales wanted to sort of and and then when it went viral obviously everybody sort of made uh made a lot of money and so part of that is just community sentiment in these products is also very important to sort of uh manage. Um the biggest thing we learned was obviously the economy

management aspect of it where you know when you issue an NFT you're effectively starting a little economy and so you're your own fed you have to control supply you have to control demand um and it's very sensitive because um you know the the in the NFT world especially floors are really thin in certain areas and and so there's there's a million in one learnings there and if I can say any secret sauce we have that that's it because I think we've started to figure out um the economy management side of top shot this is the best season we've had yet. And and if you look at the high end of Top Shot, it's actually healthy and the commodities are healthy and the response to market what happens on court, you know, is reflected in the market. And so it's starting to make a lot of sense. Whereas at the craziness

of 2021, it was a little bit of, you know, even the worst player was was, you know, thousands of dollars for >> I remember >> um >> I had this Jokic card flip that was just so insane. So >> hey, you know, Yokic is still uh still top of the charts right now. >> But but but hey man, my biggest advice to like other founders is don't over specialized. I think we we scaled the company so fast in terms of like you know we have to have all of these departments and you know we we we hired all of these very senior people from from a lot of big companies and took a while to kind of get back to our roots which was really engineering driven uh open first right we kind of we we we should have when we knew we had to sort

of replicate NBA Disney we should have worked to kind of open up the tech as we went rather than um sort of copyping what what we had. So, lot of lot of little stuff, but I think um the biggest one was just you got to keep the startup mentality until you're, you know, well more mature. And I think that that when you over um over kind of bulk up, over specialize too early, it reduces flexibility. >> Um you know, when Tasha went viral, we had no operations, you know, financial operations people. We had no HR or we had one HR person, but we had no support people. We had no, it was just us doing all of the work, right? it was kind of, you know, engineers, product managers just sort of um held hands and got it done. Um and and that meant we could

improve the product faster because we could, you know, understand what was wrong faster. So that's important. >> Last uh last question for me is uh you know the the NFT market as a whole has gone through lots of trials and tribulations. What's your take on on NFTTS in 2025 and 2026 and beyond? Look, I think it's an un uh it's it's it's it's a unquestionable part of the financial infrastructure of the future. Uh and and you know, I can't comment on individual NFTts, but it's so special that these are digital assets that can exist forever and go anywhere and anyone can build anything for them. Nothing like that has exist has existed and as digital life becomes more and more

important to people um I think I think the lines are are blurring. I was on a podcast uh earlier today where we're talking about, hey, digital art, I think it's just going to become art. There's no there's no sort of for for the people that are fans of digital art, it's just art, you know, and and of course, if it's art, you're going to want it to be fully authenticated. You're going to want it to be always transferable. You're going to want it to be in your own control. And so, the people that get it get it, and the people that don't get it are going to sort of cycle out of the market eventually, and so more and more people are are going to kind of get it. Same thing with sports collectibles. the people that collect them aren't they're not like, you know, I'm a I'm a digital

just I'm collecting and I want them to be digital because I want them on my phone. I want them to be able to uh sell them at any point. I want to know what price it exactly is and there's some pros, some cons and and you know that it's just is what it is. And I think that that's what's special here is sort of no longer this thing of like I'm an NFT sports collector. It's just it's just yeah, I collect this digital stuff just like some people say. I collect, you know, Star Wars helmets or I collect jerseys. just a category of things that I that I collect. Um, and then for us, we want to like deepen that just to say, hey, if you're an NBA fan, you should have a Top Shot account. And even if you're, you know, if you're an extreme

collector, you're sort of at the top of these leaderboards. But if you're a small fan, it's still where you go uh chat with your friends, bet against them, fantasy lineup, whatever it sort of sort of might be. Um, so we still have those those, you know, visions, but it starts with healthy economy. Um, is is sort of the message. One last thing for you, Rohan. What is it like uh being in contact with Adam Silver? I'm sure it comes and goes, but uh any any cool stories you can share there? >> I mean, Adam's such a great partner. Um you know, I think my Twitter background was him and I sitting >> Yeah. It's on the stage. Yeah.

>> And he's he's um he's always been a great supporter. He's always been a great partner. He's always been forward facing. And I went to him after the NFT crash to sort of talk to, you know, talk through how they feel about it to let them know we're committed. We're going to be around. and he said look 2003 uh it was the crash of you know internet etc we made we released league pass and so he's always been the thing of saying well I'm I don't do what's possible sorry I don't do what's what's popular um I sort of see that hey this is going to be a part of our future and yeah we support you let's get through it and and sort of um you know but let's let's sort of invest in the fan let's do the authentic thing and um he's a very very

inspiring uh guy I'm a big I'm a big Adam fan >> dude awesome man roam I'm CEO of Dapper Labs, co-founder Flow Blockchain. Power to the people, man. Thank you for joining us today. Absolute pleasure. >> Who's your team? >> Who's your team? >> I love all my uh babies equally. No, I'm a >> You know, we'll we'll see. This season, it's hard to say Lakers, but but so so we'll see. I'm still uh I'm a free agent right now. >> It's hard to fade the thunder this season. My goodness. They're on a generational tear.

>> Oh, yeah. Young young talent. Yeah. I just want game sevens, man. That's what's good for our business. >> Yes. Yes. >> Get highlights. >> All right, Ro. We'll see you next time. Thank you, man. Thanks for joining. >> Thanks, guys. Good to see you. >> Success. See you. Cheers to you, man. >> Love to see. >> Wow. >> What a what a segment there for the boys. >> Roam is dude, he is in there with Adam Adam Silver, the NBA commissioner. You know, they have a deep relationship. They've helped out a ton. Um yeah, it's it's pretty it's pretty amazing.

>> Consumer DeFi. >> Yeah. >> Yeah. Uh there's going to be more like it. I mean, these guys uh are now in the trough of disillusionment of the J curve >> on the NFT side. You mean? >> Yes. But more so in like the consumer blockchain space, I think. M >> like um I'm I'm trying to think about like you know the other ones that you know maybe get washed out are like the uh you know Starbucks NFTts like these kinds of things but you know there's sort of this >> you know there was this peak >> Starbucks NFTts on Polygon and like you know NBA Top Shot 2020 2021 board apes you know all of these things

>> and now I feel like a lot of that has gotten washed out but what we're ultimately going to see is like this J curve where yeah that that you know starts up washes out >> and you know we do have Pudgy Penguins basically ubiquitous across yeah >> GIFs and outside of crypto you know cipher punk world and >> people has an NF has NFT collections he's down in in Miami at Art Bosle and like has these robot dogs walking around and you know NBA Top Shot these guys like there is going to be compound interest and I think Rojo made a good point like the young younger people are growing up making more money and are capitalizing more of the consumer economy.

>> Yeah. Like >> that mentality, that mindset, people with that mindset are becoming a greater proportion of consumers. >> Yes. >> And that is diluting all the people that think on a different wavelength that are like take the money out of the game, right? Like we don't, you know, like there shouldn't be. And if you look at the Koshi CNN uh announcement, which by the way, they they just also announced CNBC today. >> Pretty insane. Um they people are quote tweeting it and and they're like, "This is terrible." Like um this is uh totally accelerating the problem. We don't want to >> hyper financialization of everything.

>> We don't want to bet on everything like yada yada yada. Look, there's there's people on both sides, but what I'm seeing is that millennials and boomers are the ones that are uh fighting this. >> Yeah. >> It's zoomers and things that are like so apathetic anyway. >> Yeah. >> That they're like, "Yeah, bring it on." Like, >> yeah. No, exactly. It's the boomers and the older folks who are seeing this like, "Wow, this is we we this is just accelerating the problem. It's part of the problem. We don't want this." All that stuff. >> The zoomers are the ones that are like, "Look, if I don't like this, I'm not going to pay attention to it. I'm just going to go watch Mr. Easter sign off.

Yeah, >> guys, great stream today. Um, good. See you guys tomorrow. We got another great lineup today. Was great. Um, and see you guys soon. Uh, stay stay cozy. >> Stay cozy. See you. [music]