Tom Lee's BMNR, Neo finance, L2Beat vs. Canton, Figure Co-Founder Calls In, $20M Quantum Raise

Transcript

[music] Back down [music] break down fight down break down break [music] down the back. [music] >> [music] >> I'm about to [music] [music]

the >> [music] [music] >> How the [ __ ] [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. I'm bullish. [music] You said it. You finally said it. So bullish bullish. I'm

bullish. We're bullish. [music] >> [music] [music] >> I'm about the [music] [music] I'm about to [music] [music] [music]

[music] buff the [music] Heat. Heat. [music] [music] >> [music] >> I'm about the [music] [music] above the [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] Bush. He said it. He finally said it.

Bush. [music] I'm bush. We're boys. [music] [music] I'm above [music] the >> [music] >> I'm about the [music] >> [music]

[music] >> I'm the one [music] [music] I'm above the [music] [music] >> [music] [music] >> Corola is headed to the top. If we're not already at the top, we're going to

the top. We're on fourth floor today. We're going to be on floor one and then we're headed straight to the moon, boys. >> Boom. At this rate, we're gonna break through 100K. >> Sarcastic, but it does feel like we're flying. >> Good morning. We have an incredible show. I'm I'm stoked. Animal Spirits are back and uh we're talking to some people that are at the core of Neo Finance today. What better What better way to do it, man. I woke up this morning at 6:30 a.m. to a $97,000 Bitcoin and I didn't really know what to do with myself,

so I just aped more. >> We had a good conversation yesterday about outperformance. >> I think >> FOMO, >> I think we know animal spirits are back. >> Um, yeah, man. >> And, uh, it's a stormy, windy day in Hawaii. It's, uh, early morning here. And yeah just feeling good, living better, man. >> Yeah, 100%. It's uh >> what >> No, I was going to say what happened this morning in the cryptoverse >> into the cryp >> for you. Like what did I miss catch me up here?

>> Well, I think quite a bit happened. Um because uh if we look back, there's uh there's quite a bit. We're going to be talking about it today. Obviously a fire show today uh right at the core of Neo Finance and so obviously uh what's going on in the cryptoverse today. Salana's going at their competitors. Uh meanwhile Salana has more than eight users. That's news to me. Um I'm excited for our guests today. We have Project 11 who raised $20 million. They're going to come on to talk about it. Uh we're going to be going through some of the news and then we've also got someone who I think is really really

cord in Neo Finance and I was quite skeptical of this uh of this chain and this project but we're going to have the Figure CEO uh come on and he's going to announce a new product coming from Figer. uh figure is the heliloc uh capital market uh option that's available on chain. That's obviously home equity line of credit. So they've originated over $20 billion of loans on chain and they're announcing a new product uh as well. So we're going to go uh on a quick standby so that we can uh we can sort out things. Uh we're g we're gonna be right

back. We're extremely excited and then we're going to go through the news and we've got a great panel of guests today. So, let's do let's do standby and then we'll we'll get right into it. Ye 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. [music]

Guys, if you are still using hot wallets in 2025, 2026, you are missing [music] the entire 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 real upgrade, Polygon is now one of the fastest [music] chains for stable coin transfers and payments. Visit Polygon Technology to learn more. [music] Kalshi is the world's largest prediction market. You can trade on anything in all 50 states. Go to kshi.com to trade today. [music] >> All right. All right. All right. Um, did you see we we got to get started here uh before our guest. We got a great great lineup today. We've got L2B versus Canton going.

>> And before we get into it, >> why don't we play the uh the game that we used to play? Right now, I got Bitcoin at 97267. Above or below by the time we finish the stream? >> Above. I'm I'm a god. Ladies and gentlemen, we got him. >> So bullish. >> He's back. >> So bullish. We're back. We are going to be above. >> All right, guys. Let's hop into We just got a couple minutes before Bartche joins. Uh we're going to get into some of the stuff that we wanted to cover today. Starting with some lovely, lovely copy pasta on the timeline. Um quite the quite the drama today from our lovely friends over at Salana who seemed to love to stir the pot. So just in case you guys were wondering, Starknet has eight daily active users, 10 daily

transactions, and still somehow has a $1 billion market cap and $15 billion FTV. LMFAO sending straight to zero. Stark Net's a lovely friend of the show. As you can see there in the bottom ticker here, they have they have developed some epic ZK tech. I don't think this was as much of a jab as people think. If you actually look at it, it's a copy pasta tweet um from uh this other guy like I think last year it was put out and uh yeah, I mean this thing blew up. I mean people people are like what the hell is going on? Why is a chain attacking another chain? Like what's what's happening?

>> This is very unlike this is very dissimilar to like Alex Cutler going after Uniswap. Uh you know, even that occurs from Alex's personal handles. Very very rarely do they have the the main brand accounts going at war with one another. Uh the the best take I saw on this was >> uh the prediction that this is engagement bait >> and there's some sort of Starknet Salana partnership that will be announced. >> That's kind of what I was thinking too. Uh I saw Ellie from um Ellie from um Starkware comment on it and be like, "Yo, like Salana has this, this, and this. They're doing great. Like blah

blah blah." What I think is that Salana is getting in on the uh Zcash Starknet near trifecta and I think that Salana is going to get some privacy embedded natively into the chain somehow also through their work with X. So yeah, Rob, I think you're right. I think I think they are this is some weird massistic form of prearketing for announcement campaign. I don't know if Starknet is incorporating. I don't know if they're going whole ZK privacy. Maybe because obviously Mert is, you know, Zcash pill and privacy pled as well. Um I don't know if Salana is going to be like coming into that whole cabal, but I do think that there's some sort of partnership going on here.

Yeah. Yeah. Yeah, man. All right. Well, I just wanted to cover this. I thought it was funny. I was like, I've never seen this before, but now that you bring that up, I think you're totally right. It is most definitely a uh pre-arketing for it's it's good copy pasta and then it's definitely pre-arketing for uh some sort of partnership. So, we'll see. We'll see how how that turns out. Let's roll over to Salana's favorite friend uh who if this was a jab to Ethereum, I would actually believe it is a jab um into figuring out what's going on with the Ethereum staking queue. Um staking pressure eases in 2025. Hey, fund stratus is bullish. So what you guys can see here and for the longest time early la or middle of last year basically

there was this massive uh waiting period for the Ethereum exit queue to unstake from validators. Um and there's just this there's a a time period you have to wait and then if there's a bunch of people in front of you, you also have to wait for them to go first. As you guys can see, this topped out in early September and then is absolutely kind of went sideways, chopped along, nice little bare flag there and then dumped uh as per the >> technical analysis on the validator Q chart, >> about the same thing as doing TA on the Bitcoin dominance chart. And then um following that uh you can see that the validator entry Q absolutely skyrocketed. Um, so kind of a nice

little Jesse Livermore ascending wedge pattern, uh, followed by the following drop down there in in late home, new alltime highs, which suggests that well, you know what this is, right? It's Tom Lee is staking, he's officially staked 1% of the Ethereum supply. Tom has officially staked one% of the entire Ethereum supply and is keep staking it and and staking ETFs are actually going live now. So I just bought some staking ETFs for Ethereum. It's like a black rock um or grayscale mini staking ETF.

And so that all that capital going to those staking ETFs is also contributing to this because Tom Lee and the institutions they don't want to necessarily stake with Lido or with Rocketpool or with other kind of partners that kind of bring some sort of risk right now. Sharlink has gone and staked with uh or restake with Etherfi Lineia um and kind of done their own thing there. However, here for BMNR, which also has their annual shareholder meeting tomorrow, um they're staking directly natively in Ethereum protocol, which is far less smart contract risk from using external providers and it also contributes directly to this validative.

>> I'm so glad you moved off TA and you said some more more compelling takes. Uh yeah, I think uh Bitmine and Sharlink both deploying their ETH into uh staking nodes is extremely bullish. Uh the takeaway here is that uh these dats are not going away anytime soon. Uh check out a podcast that we did with Joseph Shalom. It's doing incredibly well on YouTube. We talk through this. We talk through some of their staking strategy. Uh and that was recorded before they started deploying. And so you can really understand how they have now executed on the game plan that they laid out months ago. This is something I expect to continue to play out. And Andy, you bring up a great point when it comes to the staking ETH ETFs. This is something

that is only going to further increase the amount of ETH that's staked in the protocol. uh Black Rockck uh uh Bitwise uh the um issuers and and managers of these ETFs are then going to be managing the ETH onchain. And so right now all you have is this inflow outflow and you have BlackRock basically managing, you know, how much they're going to need to sell or buy on the market in order to fund uh these ETFs. soon. There's going to be a whole like robust strategy here about where they're going to be searching for yield. Uh will it just be in the validator queue? Will there be ETFs that express more uh uh you know

more flavor flavors of staking in the ETH protocol, be it in DeFi or in uh liquid staking or restaking protocols. All this uh is to be had over the coming months and I expect we're going to get a lot more complex and robust when it comes to the types of strategies in where we're deploying ETH. Uh so yes, the answer to this question about is this bullish, the answer is yes. And we're seeing it play out in the markets in real time. Let's move on. What do we have up next? >> Yeah, I mean I'm pretty bullish as well.

I'm pretty stoked. And just in the same train of thought, another 500 Ethereum generated $1.5 million of new value in a single week or roughly 78 or 75 to 80 million per year of yield. That's the beautiful thing about these DT these DAT codes, right, is that the yield generated is really really significant. Um, since June, Sharp Link have generated over $32 million from e-staking rewards. This is the Ethereum Treasury flywheel. But asset is >> this is what makes these like actually real companies cuz anyone can raise a bunch of money like Micro Strategy right and go and buy the asset and then do some complicated financial engineering.

I don't mean to interrupt you, but this is what actually like this is what institutional investors are looking for when you're generating, you know, eight to nine figures per year um just by a very very vanilla safe uh deployment of an asset. >> Yeah. Yeah, man. I mean they're just they just keep um stacking >> and and I think you know they can continue to do this at the basic validator level. Uh Bit Mine can sharp link is obviously they're getting creative now too. I think when this entire neo finance flywheel really starts to spin is when they start going

into further into DeFi and I think there is protocols that can support that. So I think we will see um ETH deployed into a I think we'll see it deployed into lending markets. I think we'll see it deployed into NEO finance in general. I think even ETH and Bitcoin can then be used as pristine collateral and methods of credit extension into exogenous sources of yield as we were talking about yesterday. That yield can then be passed on to stakeholders. And I think we will continue to see the flywheel effect of ETH as a collateral asset extended into not just the DeFi ecosystem, the financial ecosystem at large uh and beyond.

>> Yep. Yeah, man. I mean, look at this. 11,157 ETH in cumulative cumulative staking rewards since June 2nd. I mean, that is a massive massive sum for ESB. Um and and again if the business model is simply just generating Ethereum yield I mean at the size that these guys have it's it works. Now ESP has actually also gone out and um used Lineia EtherFi and I layer to create more yield for themselves. They take a little bit more smart contract risk and they're able to kind of uh um you know figure that out.

And so yeah, I mean that's that's that's sharp here. Um, a lot of companies that have, you know, 8, 9, 10 figures of revenue per year are trading at 10, 20, 30x multiples. Um, we're not seeing that here. These companies are trading at their MNAV or potentially below. And I think the reason why a company may trade at a higher multiple is because of their moat. How defensible is their moat around that revenue? How how feeble is it and how futile is it? How quickly could it get taken away? As we've seen, other ETH DATs have not been able to replicate the success of Sharink and

Bitmine. And so, I think there's an argument to say that these companies should actually be trading at a higher multiple uh to their net asset value rather than at at a premium or a discount. I think it should be at a multiple because we've seen that their success in this particular industry is not replicatable. They've done things that others have not been able to do and I think the market is actually mispricing these assets. >> Yeah. Yeah. >> Okay, let's keep going. What else we got? We got our first guest coming up any minute. So, let's see if we can uh cycle through some more news wire here.

PayPal has started working with USDA. Again, we believe USDA is at the heart of NEO Finance because they are exhibiting what we believe is an extension into an exogenous source of yield. USDA if you are not aware is extending credit to AI companies. These AI companies are paying interest on that credit and they are passing that interest. USDA is passing that interest back to its token holders in the form of yield. This is one of the most uh impressive forms of DeFi that I think we've seen in this neo finance category.

The reason as explained by Michael Anderson from framework is that this is not just replicating the CDFI uh wave of what we saw in 2021 and 2022 when there was obviously liquidity contagions and it all came crumbling down. is different because they are going out in search of exogenous sources of yield. Whereas before you saw this crazy rehypothecation cycle that created the liquidity contagion because all intrinsic to the same industry. Everyone had hands in each other's pockets. Here USDAI is going outside the industry.

They're going into the AI industry. They're creating new business. They're bringing that big business back to the the DeFi industry. And that is what we believe is Neo Finance. Yeah, man. I love it, man. I love it. Absolutely love it, man. I mean, these guys are crushing and it's just showing the power of bringing offchain yield onchain, >> the power of finance >> and um yeah, so I love to see it. Uh Eric LFTO, cheers, Eric. Uh what's up, guys? Guys, should be a fun stream today.

Yeah. Okay. PayPal USD growth story on a so PayPal crossed 400 million deposits on a what's new? I mean A is just rising through the ranks as one of the top banks in the entire not just Neo Finance just categorically one of the biggest banks period. um PayPal USD, obviously we just saw PayPal USD partner with USDA as a settlement asset. We believe this is going to continue to grow. I believe they're going to not just grow in terms of uh billions of dollars that's added.

There's going to be new stable coins. These stable coins are going to continue to grow. All of this is a flywheel effect. We're going to have more assets go offch uh excuse me, go from offchain to onchain. Man, shout out to Stani. just use A. These guys are crushing it. I think they're gonna sort out the whole unification thing between the protocol and the Labs Corp. And uh we're gonna see A continue to crush it. Um I I just I have nothing but bullish takes today. >> Yeah. I mean, PayPal is kind of crushing too right now with PUSD.

It's pretty impressive. >> Oh, yeah. Honestly, I mean, this is like they've not only announced this partnership with USDA and and had a their full main account with 1.1 million followers retweet it, they've also got a maximum growth, $400 million deposited on Ethereum mainet as well. You just love to see it. It's exciting. And yeah, guys, we're we're going to get Bart from L2B, our first guest of the day up. Um, and we will be right back to get that started. Let's get the show on the road.

I do a quick pause and quick word from some of our awesome partners and sponsors and friends of the show and Rob and myself. When we're back, we'll have Bartekch with us and we'll get started into this RWA tokenization categorical analysis of stats. 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.

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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 real upgrade. All right, guys. We are here with Bartekch, the co-founder of L2B. So, guys, um L2 beat as you guys know has uh been in the space for quite a long time and uh they have uh typically stuck to the technical Ethereum world going into L2s, going into interoperability, uh

going into DA even. Um but we're we're making our foray uh into RWAS and Bartekch is here to tell us about it. So Bartekch, it's your first time on the show. Thank you so much for joining. Uh please give us a little bit of background on yourself and then we'll we'll get into L2 beats RWA trajectory here. >> Uh great. Thanks so much for uh having me here. So um like I've been in crypto for almost 10 years. So I have to consider myself OG at that point, right? And uh I spent few years at maker dao um which probably everyone knows uh like OG uh defi project doing a lot of work and uh during my last few years there uh we

were trying to um expand to upcoming cultures. at that time, you know, there was just a few of them and to understand them better, I I just researched, you know, uh their properties and um at one point you know, I kind of decided that this research uh is valuable to much broader community than just make a DA and uh we started with uh L2 beat almost like four years ago I guess. uh and what was a very simple website back then today uh became something that we frankly did not expect. I think you know we became a kind of a research uh group uh which

uh it's vetted by by the ethereum community to actually tell everybody like which L2 uh does what and what are the properties and to this end we have bunch of researchers we have a fairly complicated monitoring infrastructure we had to build a lot of internal tooling of sorts and just to give you the the sense of the scale of our operation today uh on a daily basis we get like 10 different updates from from different L2s them upgrading or changing security keys upgrading the multisix or some important security parameters and we look at each and every one of them and um decide like what to do with it right

you know sometimes it can be a minor change sometimes it can be a very significant upgrade that actually decides on on let's say new stage designation and what not right um So yeah, we've been like called by by some people to be I don't know like like kind of a regulating agency of sorts or maybe even a rating agency for these infrastructure projects. Uh so whatever name you you pick uh this is us and um so far the journey has been nothing but exciting I have to say. Yeah, it's it's an important role because there's so much disparit information across the entire crypto landscape and a lot of time you have people shouting back and forth, shouting past each other on

Twitter and a lot of times we don't have a common set of definitions and standards and so L2B has done a great job of pioneering a lot of these definitions setting the standard for security obviously stage zero stage one stage two has really taken the place as the premier uh metric to determine an L2's security model. Uh far too many L2s are still stage zero. We need to get those to at least stage one, if not stage two, very soon. But we're not here to talk about L2 security models today. We're going to talk about RWAs. And you guys have identified uh sort of a gap in the data uh of what RWA are out there.

Now, RWA.xyz is a is a good friend of the show as well. uh and they recently have said look there's sort of this bifurcation in the tokenization world you have distributed and you have represented and so I' I'd love you you wrote a phenomenal thread on this and I'd love from your perspective first maybe you could tell us what is L2B and your personal perspective on the RWA phenomenon and tokenization as a whole and then we'll get into some of the issues with the representation and the data of by which we're measuring these assets Mhm. So um so I guess we stumbled across if you like RWAS uh by initially by trying to assess what is

the uh DVL of different tools uh or what we call today DVS uh so that it's not confused with what the file lama uh reports for us it was all about uh the property rights of tokens right uh initially they were minted on L1 and then you know some of them were moved to L2s but then Later uh people started minting tokens directly on the tools either natively or through some kind of bridges. And one of the most important metrics that we track and we uh we spend a lot of time uh thinking how that should be tracked properly is essentially the TBS, right? Uh which gives you the basic ranking of how big L2s are. And um I guess some time ago um

a lot of chains started uh from our perspective inflating this DVS with uh what they called RWA assets, right? Uh I I think one of them um most prominent was Ziki sync uh that had a lot of different out of plays minted and this is the first time where you know we actually looked very deep into what they really are and uh we were perplexed because uh there's not much you can do with them right it's like literally uh an onchain record of something uh and then nothing happens with the onchain record it's like like literally someone said hey I've just minted I don't know, five billion dollars worth of something of an asset, right? And and you know,

like we decided, hey, no, this is not fair. Uh you can't really uh mix, you know, that uh type of TVs with what people normally assume to be a TV, which is more associated with, let's say, a separating supply of tokens, right, of uh cryptonative assets. uh so you know that was a very deep uh rabbit hole uh to look at different RWAs and uh I was particularly interested in this because in my previous uh uh startup uh we with my other co-founder uh we looked at different decentralized trading v venues for RWS that was five years ago right uh so I was you know fairly um

comfortable uh at looking at these different tokens and that was the first time that you know we had an internal discussion at L2B what should we do with it and uh we ended up essentially um saying hey uh first of all our WAS are different right um so like putting them in one bag and just saying hey this is a total TVs that's misleading clearly because suddenly you know um in the past you had this you question of ZK sync with uh with a lot of TVS uh coming from RWAS. Now of course you've got the much bigger uh interesting case of Canton uh which is kind of similar because people

keep asking things like what's going on right like what's going on on Canton that suddenly it has like what 98% of of share of RWA like what happened and and of course you know we were thinking about our own classification um um so so this is a very interesting issue I have to admit right uh it's it's a it's a hard issue it's a hard thing you know because there are a lot of discussions uh in the space what should be counted uh as actually a useful token uh but we need to have this discussion right we do need to like wrap our heads around that and we eventually we need to agree at some sort of a classification otherwise

it's like it's just a messy information. Yeah, it it feels like right now there the so there's this whole pipeline, this tokenization pipeline, right? And and you w walk through some of this how presumably we don't know for sure because a lot of these assets are are opaque, but um these tokens are minted when someone subscribes to the money market fund and then these tokens are burned when someone redeems and this is why the balance is going up and going down. But and and and and so we don't really see those functions, but we can we can assume that they exist. We know the money is there, right? Whether it's represented or distributed, the money is there and it exists maybe not on even on a blockchain in some cases, but even on

a database, right? >> And what what we're seeing is that uh these tokens are currently limited from existing in the same composable DeFi ecosystem that we've come to know and love, right? Um, and so it feels like there's an industry here. It feels like it's waiting to be unleashed if we can only just from a regulatory perspective and a technical perspective, we can unlock a lot of this capital that is just sitting in these money market funds and we can make it composable with DeFi. Is this do you see this happening? Is this what what you're hoping happens?

Maybe you can just walk us through if you know this pipeline and what what you think is happening. So like for me uh unless we unlock uh these funds uh then uh anyone can essentially mint uh a record on blockchain and claim that that represents some real world uh uh value. I mean the example that you gave uh that sounds like very legit right there's a let's say regulated uh fund which will meant tokens on issuance and will burn on redemptions but what do you do about someone having a let's say a private credit facility or something right and it's completely opaque uh so you can't

really know if minting really represents you know something that really happened offchain and what does burning even mean Right. Um all you see on blockchain is mic and burning. So um so we think that you know for these tokens to be actually counted and useful to anyone uh this kind of an unlock must happen and for this unlock to happen uh there must be some transparency about what you're really trading or you know however you want to use these tokens right these tokens don't move they only minted and then burnt then then I would argue that um it can be anything really it can represent something but it may not

represent anything right and it it's almost impossible for independent observer to verify. Once these tokens are traded on open markets then presumably [clears throat] uh you have some price information you know you have maybe some regulator that is involved in in this right maybe this is like more open market if you like it's not like closed little uh private market for u whitelisted participants and then suddenly this token becomes very relevant right and suddenly suddenly we can talk about not just like unlocking but you can talk about circulating supply of these tokens and and this is by the way the same problem that we have with cryptonative assets, right? Uh uh there are tokens uh that

has huge total supply but very very small circulating supply and most um metrics they only look at the circulating supply because lock tokens um they just it's on almost meaningless measure. Um so um so we do hope that uh the RWA revolution really will actually allow um permissionless access uh of some sorts to these tokens. And if it doesn't then um I wouldn't really call it a revolution, right? I would just say that uh hey um these banks or financial traditional

financial institutions they are just replacing their own internal databases with uh you know like maybe a newer technology that they might actually call it a blockchain but in fact you know like from my or your point of view like nothing changed right you know we don't know really uh how um internally uh let's say DTCC what kind of software do they use for settlement and what not and we don't care right it's like not something that we can verify it's just not something that we can observe it's not something that's transparent to us it's completely opaque they can use whatever they want so if now suddenly they decide to use canton like what difference does it make

to us right it's the same thing >> yeah yeah it certainly is and to them you know that might be an upgrade to them maybe it's a better accounting right than Excel Maybe maybe but you know like like any upgrade right of of the internal software. >> Exactly. Exactly. It does feel like what's one step closer. I must say it feels like maybe it takes decades but eventually we will get to a point where all money is on chain and maybe some of it is on a more private or permissioned L2 and some of it's on a more public open composable blockchain and and you know there are degrees to which this is more helpful to the overall population and it does democratize access but I I

totally agree with you at least to this point you know you've you've gone and you've looked into the the the security set of canton and some of the other the other uh mechanisms here and so you've looked into this you you can speak upon this the security model that these things have and right now these are just databases there's nothing open and composable about these networks but it does seem like at least on a on a the Overton window is open for these companies to start embracing something aside from their own internal databases and becoming one with the rest of the world and and operating a more composable form of finance.

They've come along to this idea of tokenization. Yeah, please. Um I just wanted to say that you know I do have a deja vu from 2016 you know when everybody was creating uh consortium blockchains u I don't know if you guys remember you know these times but uh but canon is not the first network is trying to solve the problem right and you know my understanding I don't have a deep understanding of canon but you know uh what I know is that you know it's it's like uh it's clearly a consortium chain right? You know, there are bunch of u organizations that are validating, you know, the network and uh if you or I wanted to validate that network. I mean,

I'm not sure if we will be allowed because it's just a closed club, right? They may allow more members obviously, but you know, this is like a classic definition of consortion. And moreover, you and I cannot validate u the global state of the network. So we can't even complain you know if they changed something right because it's not verifiable. So so for all intents and purposes is they own private database which is completely opaque to us. Um whether you know internally it's using some hasht data structure. So not that we tend to call blockchain it's irrelevant right for me blockchain is much more than just you know like uh linked blocks of [laughter] data. is

just uh something that you know needs to have more properties because otherwise you just like you know it's too simplistic definition um why would we care what's minted on Canton that's a little bit beyond me frankly I don't know and I don't care what's minted on Canton and that's why you know I have a uh some personal issues with some of the metrics that our WAXYZ guys are proposing I love this site you know I use that site often I think they doing incredible job. However, like conflating uh public and completely private and opaque chains, uh I I would do it differently, frankly. Right.

>> Yeah. I um the the last last thing here for me is that uh you know I'd love to host a uh a session, call it a debate, call it a workshop, whatever you want to call it, of uh of having you and Adam from RWAXYZ, having you both on the show and working through uh maybe some of these classifications, taking some lessons as as to what you've done on L2B and and learning a bit about the evolving RWA space um and everything that's happening in NEO finance and and getting you here together to hash things out. Would you would you be open to something like that?

>> I definitely would be open. I I I say even uh one more thing here. Um >> L2 beat uh at the moment is um actively looking beyond looking at just L2s, right? Uh we will very soon launch uh interop uh dashboards where uh we will provide some important metrics uh on interop solutions, bridges, intent frameworks and whatnot, right? with the goal that you know soon we will uh also add something very similar to the risk framework that we have followed twos but we will try to create a similar risk framework for interrup and the next ones are actually RWAS right because I think

that there's just too much confusion and we feel like you know we gained a lot of experience looking at different tools and working on the risk framework now we can apply uh this knowledge and also our internal monitoring infrastructure uh to like I say interrupt projects uh and then later uh to RWAS and why this is all connected because RWA actually they're issued on different chains so we need to know whether these chains are secure or not and they are very often interconnected you know like if let's say they use zero you really want to know who are DVNs and what it means to you right because there's another counterparty uh and there's another

counterparty risk which may or may not be accepted to you if you care about um let's say censorship resistance, right? And and you know these types of properties for your assets. >> Incredible. Uh we're very aligned here. We believe in user education. You guys have done a great job of cutting through the noise, really separating uh what some of these things look like and uh and setting definitions and standards for the entire industry uh to to rally behind. Bartik, thank you so much for being here and I do look forward to uh having you on and discussing more about the evolving nature of DEO Finance and everything happening here. It's it's exciting nonetheless.

>> Yeah, thank you so much guys. >> Cool. We'll see you next time. Thank you Bartik. >> Thank you. >> All right, guys. We'll do a quick commercial break and we'll be right back. Beat 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 [music] coins.

From the team that pioneered cold storage, Treasure has just released its new wallet. Guys, [music] if you are still using hot wallets in 2025, 2026, you are missing the entire point. Secure your coins. [music] 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 [music] your assets now. Money shouldn't wait for Mondays.

Following his real upgrade, Polygon is now one of the fastest chains for stable coin transfers [music] and payments. Visit Polygon Technology to learn more. 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 and private per trading secured by ZK with Celestia underneath. [music] 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. All right, here we go. All righty, Mike. Welcome to the show, man. Good to have you on. um the co-founder of Figure. Big news today.

The onchain public equity network running on Providence blockchain to allow companies to finally list their equity native onchain. Something that we've had a lot of conversations about here on the rollup. Good. It's good to have you on. >> I appreciate it. >> Yeah. Yeah man. I mean, I had a good conversation with uh Protek, the portfolio manager of VANC, and he talked deeply about how this was the year of this concept of tokenized equity really taking off. Uh and and it seems like you guys are ahead of the game. >> I I think >> yeah, I think it's important for us to mention like how meteoric the rise of Figure Helock has been because that sets the stage for a lot of this. Um and so 20 billion dollars of home equity loans

issued onchain. Uh and and you guys are now expanding that with the launch of open uh which is going to be the onchain public equity network. That's what open stands for there. Uh also running on providence blockchain. So this complements all of the helocks that have already been issued on the chain. So yeah, please take us through what has been the thought process going from uh the figure heliloc product to ultimately you know why you decided to launch this open product on providence. Yeah. And if you look at Figure Helock, if you look at Coin Gecko, I think it's it's like the 12th largest crypto asset on on public chain right now and it it drives um you know, we launched a product on Salana called Hastra uh which is a yielding token that's getting looped

through Camino and and the yield on that token is being driven by that those helocks on chain. So it's you know pretty cool application and you know we think massive extensibility there. But you know we've always felt blockchain does three things that matter. It gives you reduction in transactional expense. It gives you liquidity and most importantly gives you access to DeFi. And we've clearly demonstrated the value prop of that on the credit side with what we've done with home equity line of credit and now now with mortgages and other credit products. And we felt that that was extensible into equities and you know the challenge historically you know obviously the last the prior four years it was very difficult to try to do a new public equity issuance on blockchain. Um, you know, in fact, it was very hard to figure for figure to go

public before and obviously we went public back in September. But when we went public, we said we intend to do a blockchain native public equity issuance. And what we're doing that's very different than what our peers are talking about, you know, most people are saying, well, I'm going to take the security that lives on the NASDAQ or the NY and I'm going to tokenize it and represent it on blockchain so it can trade 247. What we're doing is actually issuing the equity onchain. So it doesn't live at Deposit Trust Clearing Corporation. It's not traded on the NASDAQ or the NY. It's actually a different security than the the NASDAQ version of Figure Equity native on public blockchain. And what that does is it affords us some really valuable things. Most notably, we can take that security into DeFi, borrow against it,

lend it out and control stock loan. like there's real economic benefit that acrews into the buy side because of doing this native on on public blockchain, but also because it's native, it supports this whole idea of of wallet connect. So, our stock is going to trade on our alternative trading system. It's a a limit order book, bids and offers normally, you know, just what you'd see if you were trading on the NASDAQ or the NY. But you're going to be able to attach with your wallet. You don't have to go through an introducing broker. You don't need Robin Hood or or Goldman to let you have access to that marketplace. Just like any decentralized exchange, you're going to take your wallet with your stable coin or or your security, you're going to attach and you're going to trade. And you know, that really opens up access to the marketplace. Makes it a

truly global marketplace, you know, and and that's why 247 trading does matter to support that global access. But what we're doing is very very different than than what the rest of the market's been talking about. and and we hope that our own stock will be the first thing issued on on open, you know, hopefully by the end of this month, fingers crossed, could could bleed a little bit into Jan or into February. Um, but we won't be the only one doing it. We we have folks behind us that are going to come on as fast followers and and you know, this isn't a one-off or proof of concept. We think this is the beginning of a completely new blockchain native public equity market.

>> We have to roll up. we've seen the rise of and and it's it's really the the evolution of what what we're calling the legacy Wall Street era which has been this uh you know legacy banks are now now exploring stable coins they're getting into tokenization and and they're moving more of their business onchain or at least exploring that and then you know Andy and I come from this cryptonative background we've been in crypto for the last six years and we've seen this cryptonnative infrastructure slop that never got product market fit and that was a problem Right. And so both of these industries feel like they're converging and they're evolving to the same point. And this is this this Neo Bank explosion that we think isn't just going to be stable coins and

tokenized cash. You guys are already stepping into this as well. We're calling it NEO finance. It's the idea that we're going to not just uh tokenize stable coins and cash. We're going to Neo we're we're going to evolve the entire industry here and build a lot of the financial tooling around some of the core components. and we're going to do it onchain and we're going to do it digitally so that the entire industry is more efficient and it and it's really a maturation of the entire industry. And so I'm I'm curious how you're seeing the market because I take it you've you know you you've seen Wall Street, you've seen uh legacy finance and now you've seen the crypto side of the world. What are the most important trends that you're following that you think are going to continue to persist into 2026 and

beyond? Yeah, I I think if if you look at fintech, I I view fintech as analogous to web 2.0, right? And fintech did a phenomenal job in terms of product market fit, customer experience, you know, mobile app application and capability. But, you know, fintech is really rooted around the idea of the super app, right? Like I want to build an application that you're going to do everything through. You're going to borrow through it, you're going to lend through it, you're going to bank through it, etc. What what blockchain does and what web 3 does is it changes that paradigm and puts control back to the user through wallets. And now I'm going to have a wallet. It's going to custody my assets, my identity, my liabilities, and I'm going to take that wallet to whatever distributed application I want to trade and transact and borrow and lend. And

I'm going to be able to pick the best of each one in in each marketplace. And so rather than, you know, SoFi or Robin Hood controlling everything that I do through a single app, I'm going to have the ability to take my wallet and choose where I go to transact and where I go to participate. And I think that's a huge benefit to the consumer, to the user of the application. It means that there's a lot of work we have to do on the wallet experience because, you know, historically it's been it's been somewhat challenging. Like I I wouldn't feel comfortable telling my dad to download a crypto wallet and start transacting in D apps. Um but but we'll get there, right? And we'll get there pretty quickly. And I I think that's really, you know, the end of the super app concept and the development of a

wallet centric D app construct is what blockchain's really going to herald in. And that's the big trend that we're buying into for the next couple years. Yeah, Mike, maybe you could just uh talk to us more specifically with that context in mind, how this applies to the open uh open stock and the open issuance process and and how kind of making these securities exchangeable, how that kind of flows into this bigger thesis. >> So, so I view open I view the the ATS, the marketplace, as a DAP that you can attach to and trade. And there could be competitive DAPs out there that you can trade to as well. But the the key is you're taking the stock with you in your wallet, right? It's not sitting at DTCC.

It sits with you. You own it. You control it. You want to borrow against it, you put it up as collateral. If you want to lend it out, you set a rate at which you lend it out. But you have that control now. And you take it with you as you move from venue to venue. And so, um, the way Open set up is it exactly aligns into this is, you know, as does our democratized prime ecosystem. It's one D5 protocol, but you'll be able to choose what DeFi protocols you go to ultimately to lend that stock out and borrow against it and and you know that again just empowers the user to make best selection and provide best of breed services.

What is your vision for open as it expands? It it sounds like you're starting with uh figures stock uh which is listed on NASDAQ and you know you guys are listing that initially but I take it this is just the beginning, right? you're going to build out this entire asset universe and it also sounds like you know you've got the Providence blockchain and all of its DeFi capabilities but you know it's a big world it's a wide openen world of composable blockchains out there what are some of the more expressive applications that you foresee will you connect to some other blockchains out there and how do you how do you see this asset universe expanding >> yeah look I I think to the first point um you know we already have verbal commitment for a second company to issue on open um and then I'm in you I've been

public out on on X having dialogue with a lot of the DATs about uh the fact that they should be listing on open. And the reason being if you're a DAT, you're trading below NAV. You really want to be able to offer a tender to to swap stock for your crypto assets that would bring the price right back up to NAV immediately because the arbitrage. Well, you can't do that on the NASDAQ because there's no way for you to distribute crypto to that equity holder. Whereas an open, it's a digital wallet. So, same wallet that's holding the equity can hold, you know, whether it's Bitcoin or Salana or or what have you. you know, obviously using MPC backend for for keeping it on the native networks. And so, you know, I think we're going to have a very robust pipeline of issuers on open. You know, this is not, as I

said, it's not a a proof of concept. It's not a one-off figure. It's it's the beginning of what we think is the rival ecosystem for the traditional not just NASDAQ and NY, but globally. I mean, we're going after the LLC. We're going out the the Hong Kong exchange. You know, the the beauty of blockchain is there's no doicile to it. And you know we certainly have to adhere to the regulations of the issuers in their countries but we can do that pretty efficiently and you know really just democratize global access to the equity through chain and then you know obviously downstream to DeFi. Um so that's that's that's how we're thinking about it in terms of of subsequent issuance and then remind me what the second point that you asked. Second qu second question is about a more

expressive DeFi ecosystem. Like is there any companies out there you know that you think are doing a particularly good job in the DeFi ecosystem and generally how how do you see Providence and figure and open connecting to the rest of the the blockchain ecosystem that's out there today? >> Yeah, there there was a point in time where I was thinking that you know one blockchain would rule them all in Lord of the Rings analogy. Um, you know, now now I view that there's going to be lots of L1's and and I think the the work that we do, you know, we're minting yields native on SUI and Salana, for example. You know, we have Hastra on Salana. We have other L1s that we're bringing figure assets over to to provide collateral and yield value and trading utility. Um, and so I I I see

extensibility with open as well. So, you know, I'd like to get to a point where you might buy figure stock on the ATS on Providence, but then take that in your wallet to, you know, Camino, for example, to finance it there or to Radium to stand up an AMM pool, right? And, you know, that extensibility into other DeFi protocols, which requires some lifting from a regulatory standpoint, certainly is easier if market structure passes, but there's ways to do that today. Um and you know we we think that that there will be a lot of interoperability just like we're doing with the loans today.

>> Okay. So that's that's you know the the one the web three end of the spectrum. On the other side of the spectrum you're affiliated with SoFi. I think you're you're on the chair there and you know I I >> I'm not I start I started SoFi but I'm not part of SoFi anymore. >> Right. Okay. Okay. Well when when you were when you were I I'm curious how you think that industry will evolve. Not speaking for SoFi in particular, but as like this legacy banking infrastructure evolves, you know, it it sounds like we're we're headed into this world where a lot of these traditional banks end up becoming this neoank thing with a wallet embedded. How do you see this playing out? Do you see more mergers and acquisitions happening? We've seen crypto M&A be really hot or do you think a lot of these are going to, you know,

they're going to be built internally? What h how do you how do you see this evolving over the next few years? Yeah, look, I mean a lot of reasons why crypto M&A is hot because most crypto firms are subscale and that you know they that needs to change and so you know certainly a lot of the the M&A activity has been driven to to get to scale. You know I I think the sofies of the world are still very focused on the super app construct which you know I don't see persisting. I see the genius act and in particular your ability ultimately you will be able to earn yield on your stable coins and you know as that happens that's going to come at the expense of bank liabilities and it's really going to perpetuate a narrow banking construct right where you're going to take the bank um which you know

traditional roles is deposit gather lender and split those into two different businesses you're going to have a deposit gathering business and a lending business they're not going to be the same thing I think what's also interesting is with yielding coin if I'm building a a challenger bank like a chime for example, I'm not building that on bank rails anymore. I'm building that on stable coin rails and because I have fiat on off-ramp. I have, you know, the ability to move money. And what will be really interesting, I think, this year is the beginning of challengers to interchange using stable coin as payment method. And I think, you know, paradoxically, the banks like Chase will actually drive that innovation. And so I think we're going to get some pretty significant innovation coming in from

those traditional financial services firms. And you know, if you just look at the open transaction that we're doing with Figure, you know, Goldman, Morgan Stanley, and Caner are all underwriting that deal. And they're underwriting it because they understand what a watershed moment this is to issue public equity native onchain. They want to be part of that ecosystem. and and so I think you're you know certainly with regulatory clarity going to get a lot more participation from those entities who are very well capitalized and can be very aggressive and you know I think we're going to see a lot of innovation happening across the web3 space and the the use case for the DATs makes perfect sense as arbitrage could bring those DATs back above MNAV are there any

other use cases that you think are particularly suited for public issuance onchain Um, what what are some of the other things that you're looking at? >> Well, I mean, some of the easy ones are if you're a heavily shorted stock and you're worried about naked shorting, you can't naked short on the blockchain, right? You can't sell what you don't have. And so, there's some benefits that you get in that front. But really, I think every public company is going to owe it to their shareholders to have a blockchain native share class because it's so much more valuable to the buy side. It's better collateral value and you control stock loan which is a huge economic and and so you know you almost as a service to your shareholders need to have that blockchain share class.

It's not a heavy lift to do. You're a public company you do another S1 or an S3. Nowhere near as complicated as your first S1 when you initially go public. And so you know I I think that the buy side's going to push companies to do this and and the companies themselves are going to have a responsibility to do it. So, you know, that's why I'm I'm really bullish in terms of adoption here. >> Yeah. Mike, um, last thing for you from my side. Does this neo finance term resonate with you? What is this, uh, kind of convergence of legacy finance and DeFi look like from your perspective? How would you kind of define?

>> It's it's something, right? whether we call it neo finance or or what we call you I'm not sure I buy into the neo finance name yet but but the the the cons the concept I buy into which is I think that the wallet centric deapp structure market system is is going to end up beating out the super app and becoming the next stage of building right so I I view you know traditional finance what we had in web one internet enabled you know basic websites etc fintech in web to um you know more ubiquitous mobile apps and capability and and so forth. I think what web 3 will bring in is wallet centric deppapp services um that really empower the user

and and bring control back to the user through self- custody and uh and do you think this is going to this is a result of further democratizing access and we're almost going to get this iPhone moment with mobile apps. This is sort of the the death of the financial advisor and we're going to kind of take finance into our own hands and kind of explore finance like a like a internet browser going through all these deops. >> Yeah. I don't know if it's death of the financial advisor. I think what it does is it it introduces different ways to manage your finances.

>> Yep. Did we lose Mike there? >> Alrighty. >> I think we might have lost Mike. Unfortunately, >> the death of the financial advisor got him good. >> Maybe we'll get Mike back here in a moment. He dropped. Um, all right. Why don't we do uh Yeah, let's do a quick standby and uh we'll we'll be right back. >> [music] >> Yeet is built for big moments. The most

fun you'll ever have with your crypto. Go to yeet.com to yeet [music] 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 [music] entire point. Secure your coins. Get a treasure at treasure.io. Go anywhere onchain instantly with Relay.Link. [music] Relay is closing in on 10 billion

transferred. Go to relay.link link to bridge your assets. Now, [music] money shouldn't wait for Mondays. Following his real upgrade, Polygon is now one of the fastest chains for [music] stable coin transfers and payments. Visit Polygon Technology to learn more. All right, we got Mike back. Um, Mike, man, it's been a it's been fantastic.

Congrats so much on all the all the success of Figure Helock and figure in general uh open is a big launch. We believe tokenized equity stocks is going to be uh a trend to watch in 2026. Close us out. Uh what are your closing thoughts and and uh maybe you can leave us with a word of wisdom? >> Uh look, I I just think everyone's going to be blown away by how much happens in the blockchain space this year. uh you know and especially we get some regulatory clarity we can codify in law what the current views of the regulators are. It's really going to futureproof our ability to execute and so you just hold on your fasten your seat belts because things are going to move fast.

>> Yeah, it's a roller coaster out there. Thank you Mike. Appreciate it man. Congrats on all the success and congrats on the open launch. >> Yeah, thanks for having me. I appreciate it guys. >> We'll see you next time. Cheers. >> Cheers, man. >> All righty. There we go. I love it. Yeah, it was a pleasure. Let's do a quick commercial break and we'll we'll be right back with our last guest. Ye 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, [music] if you are still using hot wallets in 2025, 2026, you are missing the entire point. Secure your coins. [music] Get a Treasure at treasure.io. Go anywhere onchain instantly with relay.link. Relay is closing in on 10 billion dollar transferred. Go to

relay.link to bridge your [music] assets now. Money shouldn't wait for Mondays. Following his real upgrade, Polygon is now one of the fastest chains for stable coin transfers [music] and payments. Visit Polygon Technology to learn more. Colshi is the world's largest [music] prediction market. You can trade on anything in all 50 states. Go to kshi.com to [music] trade today.

Talk to AI like your lawyer or your doctor or your therapist. Yours, [music] private, and here today. Visit near.ai AI to have a fully private chat experience. Havachi is fast and [music] private per 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 [music] 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. Holiday is unified crypto payments. Give your users more wherever they are. Go to holiday.xyz XYZ to never write a smart contract again. Open, stable, borderless. Frack is building the next generation of stable

coin 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. [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 coins.

[music] 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 [music] assets now. Money shouldn't wait for Mondays. Following his real upgrade, Polygon is now one of the fastest [music] chains for stable coin transfers and payments.

Visit Polygon Technology to learn more. KHI is the world's largest [music] prediction market. You can trade on anything in all 50 states. Go to call sheet.com to trade today. All right, guys. We are here with the CEO at Project 11. These guys just raised $20 million uh to tackle quantum threats against crypto. Um this is something that sounded woo woo for so long. We've been hearing a lot about it.

Uh we've got Alex here to tell us whether uh Quantum is real or if it's going to take another 25 years like they said 25 years ago. Alex, congrats on the raise. Welcome to the show. >> Hey, thanks a lot. I uh I really appreciate the opportunity to be here. >> Absolutely, man. Um yeah, I I we've seen this play out. Like we know that every once in a while there's a breakthrough, but it's still, you know, we also heard the same thing about AI, right? AI was coming, AI was coming, automation was coming. all of a sudden it was real. What is the state of quantum these days?

And then I know there's a whole flip side to this which is what is the state of quantum resistance and it feels like the good and the bad, you know, evil powers are fighting against one another. But first, why don't you start? Let's uh well, it's actually it's your first time on the show. Why don't you give us a sense of your background and uh and and how you arrived here. >> Yeah, cool. Uh great to be here again. Um I'm Alex, CEO of Project 11. I I first got interested in Bitcoin about 11 years ago. Uh I was I was a Green Beret, US Army Green Beret employed in the Middle East. Um and my first exposure to it was kind of around refugees who had lost everything in the Syrian civil war and uh you know had maybe a keen or uh you know an appreciation for money that

wasn't necessarily controlled by governments, right? So that was my first you know how I first was exposed to it. Um, in grad school I got interested in cryptography after I left the army. Then had a bit of time as an investor at a 16Z before joining a a project in the zero knowledge space called Alo before finally finally ended up ending up here. So I guess the takeaway there for for the context of this conversation is I'm a I'm a believer in this technology because I've seen firsthand how people in the real world need it and um you know and I like to think of myself as very pragmatic in terms of working on problems that will matter in the long term. I'm not really that interested in working on stuff that's like hey six months this is the meta I want to jump to the next meta I care about this

technology in the next decade or century and to me the problem of what happens when a quantum computer shows up and threatens all the underlying cryptography for all these systems like that that is the biggest it is the most existential threat that crypto faces right so that so it's it's without a doubt true that when a quantum computer of sufficient scale and fidelity arrives it will effectively destroy the concept of ownership in blockchains, right? Because fundamentally your digital signature is how we send assets. It's ownership, right? If I can produce the signature, I own it. If you can produce signature, you own it. If I can forge your signature, not your keys, not your crypto, right? So, this is it's without a doubt true that quantum will break effectively everything that we've come

to believe about digital or everything about how digital ownership works. Now, there's a question of when and you know, to me, why why did I get into this and why did we start solving this problem? Look, the question of when is always a hard one to your point. You actually I I love how you introduced it because you're like, "Hey, is it always 25 years away?" But you then you immediately followed it with the example from AI. And unfortunately, if you look at techn technological breakthroughs throughout history, it very often follows this nonlinear path. It's like, "Oh, this is never going to work. This is never work." Boom. It works. That's it. The light switch is on. Right? I I think people, for whatever reason, when it comes to this problem, people have in their head that's this is going to be different. There's going to be some kind

of linear step path. And I find that especially shocking in light of like if you think about the applications of a you know a cryptographically relevant quantum computer. I mean if you if you just get spend a few minutes thinking about it you realize there's almost no incentive for the person who builds it to reveal its capabilities. Right? So I think there's a lot of reasons to believe why we may not even know this has happened until after the fact. And again because the the consequences are so existential to me even a 1% risk that it could happen in the next five years is too much. Right? If we think about the total, you know, value of digital assets space today, I haven't checked prices, but $3.2 trillion dollars and you're putting you're you're betting $3.2 trillion dollars on that, >> right? And so again, I I don't think we

can discount the fact that it could happen that soon. And if you look over the last 18 months, I'll just name two things quickly. Google in particular last year uh made this major breakthrough in error correction, which got quantum computers down to what's called below threshold for the first time. What that means effectively the takeaway is that they took it from being a science experiment to showing that it's an engineering problem and now it's just really how fast we progress along that path. So maybe I'll just I'll end there but like my view is that the conservative which is very you know aligned with the philosophy of crypto. The conservative approach is to say hey let's prepare for this now because it's going to be hard and we can talk about why it's going to be hard but this is an urgent problem if we if we don't start

tackling it now because once it becomes obvious it may be too late. >> Yes. At least it now it's an engineering pro and I realize there's also plenty of positive repercussions as a result of quantum computing as well. A technology it depends if it's not, you know, it depends who's whose hands it falls into, right? Uh whether it's >> we should welcome this, >> right? And so uh at the same time, you know, if it's abundantly available, it will fall into the wrong hands and people will try to use it unless there's quantum resistance, which is what you guys are building for. And so, you know, now that it's an engineering problem, at least we can measure how far along we are on that path until there's some step function that, you know, thrusts us even

further along that path. But what is the flip side to this? You know, you you laid out, you know, basically where quantum is and how we should think about it, but what is the quant the state of quantum resistance and how can you effectively protect against the developments that are happening day in and day out on quantum? >> Great question. I just want to like add one little note to kind of the quantum piece and just talk about the economic incentives for quantum computing development. Look, there's $600 billion worth of exposed Bitcoin that like public keys are exposed so that a a quantum computer could theoretically attack. You know, a significant percentage of that is Satoshi's Bitcoin commonly perceived as lost. It's hard to point to another use case of a quantum

computer in the short term with that big of a price tag attached to it. And I think if you put those two together, you realize that the first generation of quantum computers will probably be built explicitly to harvest lost crypto. Um, I think that's what the economic incentives point to. Okay. So, switching gears now to what do we do and put the state of postponed cryptography. The good thing is, you know, actually there's been this is not it's not like we woke up to this being an issue yesterday. In fact, you know, for three decades now, for basically as long as we've known that quantum computing was possible, cryptographers have worked on developing new cryptographic algorithms to counter it. Um, and last year in this, the National Institute of Standards and Technology just standardized the first two, one called MLDDSA and one called SLHDSA. And so, if

you follow any of the dialogue around Bitcoin on this, you'll, you know, a lot of people talk about SLHDSA, which is a hashbased signature scheme. Hashes are also used in mining and other places in, you know, in these protocols. And so they had we have these replacements for the vulnerable signature algorithms which are ECDSA and Bitcoin specifically and you could and you could from a purely technical level just swap those in. So the good news is we have some candidates. It's not like we have to do some new science to invent things. The bad news is we're talking about a very significant change. Imagine you're living in a house and your foundation is ruined and you need to replace the foundation. Like that's not a simple thing. I think I know the answer to this, but this would require a hard fork right?

>> I I there are ways if this from a you know, now not to be pedantic, but you could do this as a soft fork. I think this is a distinction without a difference though because like it's such a huge change that I don't know if it's really worth even calling it a soft fork or a hard fork because here's what here's what needs to happen. I'll tell you for you know in Bitcoin's case specifically and this varies but network by network but more or less this is true across the board. Protocols need to change. What do they need how do they need to change? They need to basically add support for these new signature algorithms which don't exist. Why is that hard? Well, because these new signatures are a lot bigger, a lot slower, and don't have these nice properties of aggregation like the ECDSA

we've come to rely on. Bigger signatures may not matter for something like Bitcoin. But imagine Salana and we've actually done some work with the Salana Foundation to kind of put a test bed or a test net together to to experiment with this. If you put a 20 20x transaction size in there that's going to affect throughput for things like that you know salana but you know advertises as a high throughput blockchain. So there are consequences, right? So but that's the first layer. So even assuming you get consensus across, hey, this is the algorithm. We're willing to eat these costs that's baked in. That's not all. And this is a think I think a lot of people kind of think of this as if it's going to be like an ETH1 to ETH2 or like a Bitcoin cash for. No, everyone who currently has assets in

their wallet today must move them. They will there whatever your wherever your assets are currently secured will not be safe post QA. It's a full lift and shift. Protocols have to upgrade. Smart contracts have to redeploy. All assets must move. That's that is the scale of this. >> I'm sorry. Did you say you said Q day? Is that like the moniker for like the day in which it all like we hit singularity quantum computing is real. Everything has to change. That's Q day. >> Yeah. We call it's like I guess it's like the quantum version of Y2K. Yeah.

We call Qday. Yeah. So QA I guess to to find it's like the day a cryptographically relevant a quantum computer that could break Bitcoin shows up and goes online. That's what we call QA. >> Okay. And so a little bit more specifically it makes makes sense how you're preparing what kind of technical lifts have to happen both on the Bitcoin side as well as on the Salani Ethereum all everything has to change. I I also see Vitalic is posting a lot more how to make these things quantum secure. How much are you pulling from that? what is maybe you could help us kind of parse through if you've have you read a lot of what he's been putting out there and can you could just help us understand like how Ethereum and Vitalic are looking at quantum uh security. Yeah, I actually um you know we're collaborating with uh

with Justin's kind of putting together Justin Drake putting together the lean road map and part of the lean roadmap is is PQ and you know like I said I don't want to overstate here Ethereum is a like all of these decentralized networks is a broad collaborative effort but we've worked with them on discussing some of these issues and we have some of our own solutions in mind for how we can contribute right but broadly speaking the things that need to get solved are again the protocol level cryptography and what Ethereum is doing you know they they're kind of thinking about hey we have this proof ofstake this is distinct now from Bitcoin. In proof of stake, you have people that are basically invested and then they they vote effectively like, hey, these this block is valid.

This one is not. And that vote is attach has a signature attached with it. That signature is insecure. So, you need to replace those. That's a lot of like what the EF has focused on currently is replacing kind of the digital signatures in the proof ofstake consensus algorithm for postquantum secure variants. Now, there's again the whole other problem and I have to say this is kind of a little bit closer to the area that we focus on which is the user assets. you own assets. How are your assets made secure? How can we migrate them from where they are currently insecure to a secure place? Right? So the problem of user migration and securing the value directly is sort of the layer that we tend to focus more on. Although again like we work across the stack is that you can't it's quite hard to break this

problem up because this because these digital signatures go so deep, right? It sort of have has impacts all over just like the foundation of a house. >> Yep. Okay. And so is there anything that a user can do outside of the protocol to help protect themselves like migrate to a more quantum secure wallet? How can we protect our own assets outside of soft forks, hard forks, and what the protocol does? >> Great. So, uh, the answer depends on the network. Um, so for Bitcoin and Ethereum, technically, if you don't spend from a given address or UTXO, your wallet is is hidden behind a hash function, right? your your raw public key as we call it which is kind of your true identity on chain is is not is not exposed to a potential quantum computer.

So this is why if you go we have on our website project11.com we have something called the risk Q risk Q risk a list and it basically tracks all the Bitcoin address addresses where the the key has been exposed aka someone has spent twice that means the key is exposed so if you don't spend twice from the same address in other words if you have good wallet hygiene you're okay for the moment right now there's maybe some point in the future when quantum quantum computers get fast enough that even that's not okay but for the moment you're okay in Ethereum it's a lot harder to do that right because we have accounts and like you're always interacting with same contracts It's just generally speaking more difficult. But there are increasingly, and this is an effort that we're contributing to, ways to implement postquantum security at the smart

contract wallet level. And just to kind of kind of to tease some of like what we've got coming up this year, like there are ways to solve that at the smart contract layer to basically decouple your asset security from the protocol migration timelines, which we want to be very deliberate. Like we don't want to end up in a world where it's like Qday and then everyone's just running around with their hair on fire trying to fix like ironically the biggest cryptographic vulnerability is someone fat fingers something in that world and then a bunch of assets get lost, right? So decoupling the asset security from these protocol migration timelines is really kind of our core ethos and solving that problem for individual users. But today best good wallet hygiene is the way to go. And then you if you want to see kind of what

a potential migration flow could look like, we have a tool for Bitcoin called Yellow Pages. Yellowepages.xyz. You can go check it out. You basically create a new postquantum key pair, attest to that key pair using your Bitcoin wallet, and that kind of like that effectively is an example of what a migration will look like to a postquantum wallet at some point, right? Because Bitcoin doesn't support this cryptography yet. It's not fully complete, but it's a good it's like a mechanism for users to kind of get a taste for it. >> Got it. Okay. Very cool. And you you outlined really what the path is here, but maybe you could just more specifically like what are you guys going to spend this money on? you know, you got $20 million in the bank from this latest raise. Is it just hiring as many and and as talented engineers as

possible to work on this or is there more like what what Yeah. How are you going to put this put this capital to work? >> I I you know, honestly, I think we could have we could have easily raised a hundred in terms of like the scale of the problem. We could have raised a hundred million more dollars, right? And that's just because like look, you have three we have $3.2 trillion dollars of digital assets. It's all zero. If this problem isn't solved, this wide, it's very wide ranging. Like Bitcoin looks different than Ripple looks different than Salana. All these networks are all these different places. Every user has to migrate. By the way, we're not even talking about stable coin networks that have admin keys that themselves are exposed, right? So it's like >> this is going to be a huge issue, right?

And so I think fundamentally like what are we doing? What are we spending the money on? First and foremost, we need to find the talent that can engineer these solutions because right now no solutions exist at all, right? So we're tripling the size of the engineering team. We're hiring a bunch of other product folks to help basically design these migration pathways and these new basically forms of of crypto crypto agile custody solutions right so so we're doing that and then it's just about going and basically getting the business to get started effectively of you know building these within certain ecosystems right so we did some work with Salana we we expect to do a lot more work with protocols in the coming year and you know potentially we even may come up with our own protocol we haven't fully decided yet we may come up with our own

protocol that effectively incentivizes that solves solves the cold start problem for postquantum migration because it's kind of a it's a bit of a chicken in the egg, right? Like there's not a place for someone to migrate to postquantum. You know, there's not like a destination for them to go, but they're also like you articulated at the beginning like is this really 25 years away? Do I need to go? I mean, probably most consumers are going to get to they're not going to do anything unless there's an incentive or there's a fear is high enough, right? [snorts] You could solve that potentially with a well-designed protocol. Bottom line is like the end of the day what we do is future proofing, future building the digital asset rails of the future. And by the way, just to call back to something you said earlier, quantum computers enable new forms of

cryptography and new techniques to secure information that have never existed before. Let's not forget that like this is going to unlock doors just like it, you know, it locks them so to speak. And so again, like that's why for us, I always like to kind of remind our team and remind everyone who follows us that like we're not doomers. Quantum computing is what we should all want to happen. We just have to prepare for it properly and then we can leverage it and we'll all end up in a world where we're where we're better off. >> And if you do end up decoupling the asset layer from the protocol layer, this protocol that you're talking about building to give people a place to go that is quantum secure. Does that look like a wallet? So that that's the place where they can migrate their assets.

>> I think I'm hesitant to put a name on it because I think first off there's many different flavors of wallets that look very different. Like for example, like a privy type thing is very different than a meta mass type thing is different than a coinbased custody type thing, right? But fundamentally the problem that needs to get solved is your current keys are insecure in the in past few days and they need to be made secure and there needs to be so there needs to be a bridge and there needs to be somewhere you're going. So that's like kind of the really the two pieces that need to get solved. Right now everyone's just sitting on an island that's you know a title wave is coming. This is a bad analogy. Let's go with it. Right now we need to build a bridge and we need to go

to some other island or the title wave is not going to hit. Right. >> Right. And so I think certainly wallet infrastructure has to get solved and we're we're going to contribute to solving that. But that's not all right. There also has to be this migration pathway and I think that's that's that's important. H >> yeah that that makes sense and that's more tangible. I have a very intangible question here but I'm just my own curiosity. I can't help myself. How how intertwined is AI and like how much is AI accelerating the timeline to and and I get it timelines are tough when it comes to this kind of thing but is I do you think AI is going to push us closer and closer to the sun when it comes to reaching Qday?

>> Um look I'm so first off caveat I'm not an expert on AI. Uh that said, I I you know, I use these I think these days everyone uses these tools and and we've all seen how they've gotten better and better and better and more capable, more capable and more capable. Um I don't I I think it's very likely we'll see these tools integrated into specific sections of like the quantum computing stack for example like a quantum computer is very errorprone typically. So you have to do this error correction which is quite computationally intensive but that uses classical GPUs. [clears throat] There's a world in which you have an AI assisted error correction stack that makes that better and more efficient and then makes your quantum computers work better. So I don't think you can rule out at all that AI will accelerate this. Right? This is

kind of one of the you know I I would say it's it's not a definitive yes or no, but it just adds [clears throat] to the uncertainty and uncertainty is our enemy here. We need we and this is why like we should do everything we can in our power to control and secure ourselves now because we don't know the answer to the question you posed and we don't know the answer to many others that relate to the quantum computing timeline. It >> is the approach almost like you know we're going to hire the most talented engineers. We're going to try our best to you know sort of to create what we think is quantum resistance. But I've heard this when it comes to AI too and I'm not an expert but I I've heard this philosophy where you know the best way to protect against the threats of AI is

to develop AGI or you know you know super intelligence so that then we know it and we understand it and therefore can protect against it. When you're talking to your internal engineering team, are are you like, "Hey guys, let's try our best to think about quantum, build quantum so that then we can protect against it or like what is the design philosophy when it comes to your engineering team?" >> Yeah, I mean look, don't get me wrong, I think it would be super cool to build a quantum computer that was able to do all this stuff. I think practically speaking, you know, the discipline of cryptographic engineers and the discipline of like quantum physicists that by the way we have a quantum physicist, a gentleman named Job Bluffstein who's authored a lot of the

leading work in quantum computing from Harvard now. He's now at Caltech. He's fantastic guy and this is where we get kind of our up-to-date information on what should we be paying attention to. Anyway, he's our adviser. But the point being is like our engineering team is focusing on security, right? Securing and attacking in this context are very different disciplines. But I do think you know as as you know when you're modeling these systems and you have to think about their security you do have to think about potentially the attacker right now the attack vector is well known and so I don't think you need a lot of creativity there but I think there's a question of for example which wallets would get targeted first right would it be Satoshi's Bitcoin you might think yeah that's the obvious thing to do but then again if Satoshi's Bitcoin

moves it's pretty obvious what happened the quantum computer showed up so maybe you're not gonna go for Satoshi's Bitcoin so what would you go for maybe you go for a bridge wallet and it would look like a hack. No one would really know, right? And so I think there's kind of a wargaming aspect. But I would say in general for the talent that we that we aim to develop, I mean look, it's fundamentally security engineers. It's cryptographic engineers with this specific expertise and part of again like our fundraising and building the team is like look there's not these people don't grow on trees like postquantum cryptography has never been relevant, right? Because it's by you know quantum computers don't exist yet. So there's like a relatively limited pool of talent but we need to get those people. we need to get them working on this because I believe look there's a

lot of places in the world where postquantum cryptography applies banks elsewhere but quite frankly the value at risk nowhere is bigger than than than blockchains and maybe I'll just if I could take a second to address this because I get this question a lot sometimes people are like oh Alex banks are going to be it's like it's the world is going to end if a quantum computer shows up so why would anyone care about Bitcoin >> and I think what I would remind people is like look if you log into a bank there's like a login flow you know and you're using some digital signatures there sure but like if I try and wire if I somehow get into your bank account, Robbie, and I like try and wire all the money out, most likely the bank is going to call you or do something else. Like

point being is like banks have a lot of layers of control. Blockchain and Bitcoin decentralized by definition does not have that because if it had that it wouldn't really be decentralized, right? you have to control everything and that is what makes it like the only thing that's preventing Satoshi's coins or Coinbase's coins from moving is one digital signature potentially a few if it's a multi point being is that's the only thing that stands for so that's why and the value is so obvious like like it's so I think for that reason I think this is really the place where it matters most in the short term and that's where we focus all of our efforts and we also believe fundamentally that like I said we're all pretty bullish on crypto and blockchain rails We think

these are going to ultimately become the foundation of finance, but only if they're made quantum secure. >> And this is another selling point to the banks to say, "Hey, this is ready for those assets." You know, there there's a migration and and I think a lot of assets are still offchain and they're they're limited. They're they're uh not ready to come on chain because there aren't proper controls in place. And you know, we're seeing this trend. You know, first it was it was nothing. Then it was this idea of like, okay, we're going to build these permission blockchains, these consortium chains. They're going to almost be blockchains on training wheels. Those kind of fizzled out. Now we're seeing, you know, a rise of more and more chains. Ultimately, we do believe that there's going to be this

asset migration happening on chain. And it's ultimately the goal is that it does happen on open public blockchains that are composable with the rest of finance, but they have to have the proper controls in place. Otherwise, the asset issuers and the custodians are never going to feel comfortable deploying those assets on chain. >> Exactly. And by the way, like you know this as as cryptos become more accepted, which I think is something we should all celebrate. Over the last 10 years, crypto's gone from being like this weird niche thing that's it's huge. I mean, this is like integrated with finance, right? But with that comes regulation, right? And you have currently in in the US Congress the like market structure bill. in that bill currently in the current last text I saw there is a section on postquantum cryptography encouraging protocols to adopt this now

and pretty soon that suggestion is going to turn into a requirement right so I think >> because banks are like there's already a government mandate for banks to migrate by 2030 right so I think this is like whether or not a quantum computer becomes real by then actually sort of matters less than what you have to do to comply to be part of this broader system so I think that's that's another fundamental tailwind for our Yeah, great great call out. We're we've talked a lot about market structure over the last couple days. We're going to be talking a lot more about it uh over the coming days and weeks. Uh Alex, man, congrats on the raise. Thank you so much for coming on and and best of luck uh as we draw closer and closer to Q day.

>> Yeah, I really appreciate it. Um you know, I hope this wasn't the last time we speak and thanks a lot for having me on today and thanks to your audience for listening. >> Yeah, love to have you uh love to have you on again soon. Cheers. >> Take care. >> See you next time. All right, guys. Well, that wraps us up. It was a good show. Um, wow. We went all across the docket today. Andy, unfortunately, had some uh some tech issues. The Wi-Fi out there in Hawaii isn't isn't too great today. It's a little stormy. Uh, also there was a weird cellular outage across the entire world. Uh, so Andy dropped, but we had a full show. Barta came on from L2B. We talked to RWAs. We heard first and

foremost they're going to be getting into the RWA scene. He said that he's open to coming back with Adam from RWA.XYZ to talk about how RWA data and tokenization data should be displayed. Ultimately, these are the definitions and the standards that get adopted into the mainstream. Um, I had a call and RWA is working with the likes of the S&P, some of the greatest uh the best and and brightest when it comes to the legacy financial markets and generally how this data is transcribed and and proliferated into the rest of the economy. Uh and obviously L2P you guys all know how important they've been uh to the crypto and blockchain landscape and how

everyone uses them as the barometer for something you know a rollup that is secure or not and how it progresses through the stages of decentralization. So shout out to Bartik uh some great perspective on the emerging RWA landscape. followed that up with uh with our guy from from Figure uh who just announced um you know open and tokenized equities are going to be coming to Providence uh that is going to be standing side by side with Figure Heloc which I mean guys everyone you know I think Figure Heloc is maybe the me most under the radar misunderstood coin on the market um if you look at it I think it's number 12 on coin market cap so it's probably going

to make a break into the top 10 and they've originated 20 billion dollars of loans. Uh and so that is just continuing to pile up and pile up and so uh that did extremely well um over the last few months and now they're they're standing up a tokenized equities business. They're going to be putting more equities on chain and they uh at figure are doing something that we heard uh Carlos Domingo from Securitize also talk about which is tokenizing these shares directly. These are not representations of shares that say at the DTCC and are tokenized representations of those shares. Nope, they are tokenizing the

actual shares. So I think him and Bartech actually agree that that is the right way to do things. say also agree with Carlos Domingo from Securitize who will be on the show again sometime soon. And last but certainly not least, uh you guys got the update on Quantum uh from our guy Alex at Project 11. Congrats to him for raising $20 million uh very very recently. So another phenomenal show. We will see you the same time tomorrow hopefully with some better Wi-Fi. That's it. Keep the pumps going guys. Pump it. Loom dart moonat and uh hold on to your coins cuz the institutions are coming.

Signing off. Cheers. [music]